SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED SEPTEMBER 30, 1997
COMMISSION FILE NUMBER 1-9875
[GRAPHIC OMITTED]
STANDARD COMMERCIAL CORPORATION
Incorporated under the laws of I.R.S. Employer
North Carolina Identification No. 13-1337610
2201 MILLER ROAD, WILSON, NORTH CAROLINA 27893
Telephone Number 919-291-5507
Former name, former address and former fiscal year, if changed since last report
Not applicable
On November 10, 1997 the registrant had outstanding 12,687,700 shares of Common
Stock ($.20 par value).
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 and (2) had been subject to such filing requirements for
the past 90 days.
YES X NO
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
STANDARD COMMERCIAL CORPORATION
CONSOLIDATED BALANCE SHEET
(In thousands, except share information)
<TABLE>
<CAPTION>
September 30 March 31
1997 1996 1997
---- ---- ----
ASSETS (unaudited)
<S> <C> <C> <C>
Cash..................................................... $ 51,278 $ 48,241 $ 41,117
Receivables.............................................. 214,907 198,303 266,560
Inventories.............................................. 421,027 346,020 256,519
Prepaid expenses......................................... 8,335 7,288 6,285
Marketable securities.................................... 961 1,510 837
-------- -------- --------
Current assets....................................... 696,508 601,362 571,318
Property, plant and equipment............................ 115,767 133,734 122,013
Investment in affiliates................................. 12,720 11,791 12,533
Other assets............................................. 38,376 34,887 29,821
-------- -------- --------
Total assets......................................... $863,371 $ 781,774 $735,685
======= ======== =======
LIABILITIES
Short-term borrowings.................................... $291,725 $ 385,025 $272,325
Current portion of long-term debt........................ 4,212 8,469 8,985
Accounts payable......................................... 149,283 120,432 141,145
Taxes accrued............................................ 24,404 26,217 28,758
-------- -------- --------
Current liabilities.................................. 469,624 540,143 451,213
Long-term debt........................................... 128,066 28,923 70,252
Convertible subordinated debentures...................... 69,000 69,000 69,000
Retirement and other benefits............................ 19,284 19,173 19,127
Deferred taxes........................................... 4,974 8,808 5,819
-------- -------- --------
Total liabilities.................................... 690,948 666,047 615,411
-------- -------- --------
MINORITY INTERESTS....................................... 31,019 29,605 30,312
-------- -------- --------
ESOP redeemable preferred stock.......................... - 8,748 -
Unearned ESOP compensation............................... - (6,320) -
-------- -------- --------
SHAREHOLDERS' EQUITY
Preferred stock, $1.65 par value; authorized shares
1,000,000
Issued none (1996 - 87,477 to ESOP)
Common stock, $0.20 par value; authorized shares
100,000,000
Issued 15,304,115; (Sept 96 - 11,867,465; Mar 97 - 3,061 2,373 2,425
12,126,270)..............................................
Additional paid-in capital............................... 100,163 46,157 50,324
Unearned restricted stock plan compensation.............. (271) (385) (321)
Treasury shares, 2,617,707 (Sept 96 - 2,540,722; Mar 97 - (4,250) (2,997) (3,799)
2,591,790)
Retained earnings........................................ 63,150 48,787 58,089
Cumulative translations adjustments...................... (20,449) (10,241) (16,756)
-------- -------- --------
Total shareholders' equity........................... 141,404 83,694 89,962
-------- -------- --------
Total liabilities and equity......................... $863,371 $ 781,774 $735,685
======= ======== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
STANDARD COMMERCIAL CORPORATION
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
(In thousands, except share information; unaudited)
<TABLE>
<CAPTION>
Second quarter ended Six months ended
September 30
September 30
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Sales - tobacco................................... $207,686 $169,629 $420,533 $384,892
- nontobacco................................ 79,567 79,376 167,035 174,504
------- ------- ------- -------
Total sales................................... 287,253 249,005 587,568 559,396
Cost of sales
- materials, services and supplies............ 254,128 218,881 527,317 499,775
- interest.................................... 5,414 8,152 12,680 15,763
------- ------- ------- -------
Gross profit.................................. 27,711 21,972 47,571 43,858
Selling, general and administrative expenses...... 17,520 18,272 35,179 36,268
Other interest expense............................ 3,955 2,450 6,171 4,837
Other income (expense) - net...................... 2,082 2,729 4,472 5,564
------- ------- ------- -------
Income before taxes........................... 8,318 3,979 10,693 8,317
Income taxes...................................... (2,243) (944) (2,602) (2,056)
------- ------- ------- -------
Income after taxes............................ 6,075 3,035 8,091 6,261
Minority interests................................ (1,218) (268) (1,509) (2,204)
Equity in earnings of affiliates.................. 424 144 550 362
------- ------- ------- -------
Net income.................................... 5,281 2,911 7,132 4,419
ESOP preferred stock dividends net of tax......... - (116) - (231)
------- ------- ------- -------
Net income applicable to common stock......... 5,281 2,795 7,132 4,188
Retained earnings at beginning of period.......... 57,869 47,051 58,089 46,450
Common stock dividends............................ - (1,059) (2,071) (1,851)
------- ------- ------- -------
Retained earnings at end of period................ $ 63,150 $ 48,787 $ 63,150 $ 48,787
======= ======= ======= =======
Earnings per common share
Primary - net..................................... $0.41 $0.29# $0.60 $0.44#
- average shares outstanding.............. 12,798 9,497# 11,950 9,495#
Fully diluted..................................... $0.40 * * *
- average shares outstanding.............. 15,146
</TABLE>
*Not applicable because fully diluted calculations include adjustments which are
antidilutive.
#Adjusted for subsequent stock dividends.
The accompanying notes are an integral part of these financial statements.
<PAGE>
STANDARD COMMERCIAL CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands; unaudited)
<TABLE>
<CAPTION>
Six months ended
September 30
------------
1997 1996
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net income ............................................................. $ 7,132 $ 4,419
Depreciation and amortization......................................... 10,511 9,130
Minority interests.................................................... 1,509 2,204
Deferred income taxes................................................. (614) -
Undistributed earnings of affiliates net of dividends received........ (550) (362)
Gain on disposition of property, plant and equipment.................. (3,410) (184)
Other................................................................. 911 913
------- -------
15,489 16,120
Net changes in working capital other than cash
Receivables......................................................... 42,853 50,950
Inventories......................................................... (170,743) (87,701)
Current payables.................................................... 18,283 (10,441)
--------- ---------
CASH USED FOR OPERATING ACTIVITIES...................................... (94,118) (31,072)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Property, plant and (8,928) (7,673)
equipment...........................................- additions
- dispositions................................ 5,519 334
Business (acquisitions) dispositions.................................... (3,353) 2,993
------- -------
CASH USED FOR INVESTING ACTIVITIES...................................... (6,762) (4,346)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in short-term borrowings..................................... (27,642) 11,400
Proceeds from long-term borrowings...................................... 110,028 10,012
Repayment of long-term borrowings....................................... (15,498) (16,210)
Net proceeds of equity offering......................................... 47,043 -
Dividends paid, net of tax.............................................. - (231)
Other................................................................... (2,890) -
------- -------
CASH PROVIDED BY FINANCING ACTIVITIES................................... 111,041 4,971
------- -------
Increase (decrease) in cash for period.................................. 10,161 (30,447)
Cash at beginning of period............................................. 41,117 78,688
------- -------
CASH AT END OF PERIOD................................................... $51,278 $48,241
====== ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
STANDARD COMMERCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
o The interim statements presented herein should be read in conjunction with the
financial statements and notes thereto included in the Company's latest Annual
Report on Form 10-K.
o The interim period financial statements have been prepared by the Company
without audit and contain all of the adjustments which are, in the opinion of
management, necessary for a fair statement of the results of operations. All
such adjustments are of a normal, recurring nature. Because of the seasonality
of the Company's businesses, fluctuations in results for interim periods are not
necessarily indicative of business trends or results to be expected for other
interim periods or the full year.
o Prior period earnings per share and weighted average shares outstanding have
been restated to give effect to the increase in shares outstanding resulting
from subsequent stock dividends.
o Inventories for the periods shown were as follows:
September 30 March 31
(In thousands) 1997 1996 1997
---- ---- ----
Tobacco $345,081 $274,997 $181,349
Nontobacco 75,946 71,023 75,170
-------- -------- ---------
Total $421,027 $346,020 $256,519
======= ======= =======
o There were no changes in accounting policies during the period ended September
30, 1997.
o On August 1, 1997, the Company completed a $115.0 million private placement of
8-7/8% Senior Notes due 2005, the net proceeds of which were used to repay
indebtedness under existing bank credit facilities and certain other long-term
debt. The notes were issued by Standard Commercial Tobacco Co., Inc. (the
"Issuer"), a wholly-owned subsidiary of the Company. The Company and Standard
Wool, Inc., a wholly-owned subsidiary of the Company (the "Guarantors"), jointly
and severally, guarantee on a senior basis, the full and prompt performance of
the Issuer's obligations under the terms of the indenture. Management has
determined that full financial statements of the Guarantors would not be
material to investors and such financial statements are not provided. The
following supplemental combining financial statements present information
regarding the Guarantors and the Issuer.
<PAGE>
STANDARD COMMERCIAL CORPORATION
SUPPLEMENTAL COMBINING BALANCE SHEET
September 30, 1997
(In thousands; unaudited)
<TABLE>
<CAPTION>
Other
Standard Tobacco
Standard Commercial Subsi- Other Wool
Commercial Tobacco diaries Standard Subsidiaries
Corporation Co, Inc (Non- Wool, Inc (Non-Guran- Elimin-
(Guarantor) (Issuer) Guarantors) (Guarantor) tors) ations Total
----------- -------- ----------------------- ----- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C>
Cash........................ $ - $20,167 $23,197 $ 300 $7,614 $ - $51,278
Receivables................. 3,303 24,284 134,069 867 52,384 - 214,907
Intercompany receivables.... 18,380 142,937 37,491 8 23,459 (222,275) -
Inventories................. - 71,618 288,367 1,178 57,036 2,828 421,027
Prepaids and other.......... 208 53 7,143 13 918 - 8,335
Marketable securities....... 1 - 947 - 13 - 961
--------------------------------------------------------------------------
Current assets.......... 21,892 259,059 491,214 2,366 141,424 (219,447) 696,508
Property, plant and equipment - 21,890 79,997 59 13,821 - 115,767
Investment in subsidiaries.. 211,199 81,460 62,648 34,620 35,451 (425,378) -
Investment in affiliates.... - - 11,519 - 1,201 - 12,720
Other noncurrent assets..... 13,252 7,732 10,138 - 2,635 4,619 38,376
--------------------------------------------------------------------------
Total assets............ $246,343 $370,141 $655,516 $37,045 $194,532 $(640,206) $863,371
==========================================================================
Liabilities
Short-term borrowings....... $ - $5,740 $233,179 $ - $52,806 $ - $291,725
Current portion of long-term - 328 3,312 - 572 - 4,212
debt........................
Accounts payable............ 308 25,133 109,902 48 21,790 (7,898) 149,283
Intercompany accounts payable 34,811 28,063 129,956 4,713 17,664 (215,207) -
Taxes accrued............... - 3,776 14,892 - 5,736 - 24,404
--------------------------------------------------------------------------
Current liabilities..... 35,119 63,040 491,241 4,761 98,568 (223,105) 469,624
Long-term debt.............. - 120,742 5,182 - 2,142 - 128,066
Convertible subordinated 69,000 - - - - - 69,000
debentures..................
Retirement and other benefits 559 7,990 6,786 - 3,949 - 19,284
Deferred taxes.............. - 82 3,852 - 1,040 - 4,974
--------------------------------------------------------------------------
Total liabilities....... 104,678 191,854 507,061 4,761 105,699 (223,105) 690,948
Minority interests.......... - - 30,986 - 33 - 31,019
Shareholders' equity
Common stock................ 3,061 993 30,856 22,604 35,893 (90,346) 3,061
Additional paid-in capital.. 100,163 132,513 13,780 - 55,710 (202,003) 100,163
Unearned restricted stock
plan compensation....... (10) (80) (169) - (12) - (271)
Treasury stock at cost...... (4,250) - - - - - (4,250)
Retained earnings........... 63,150 44,861 93,707 8,040 (4,391) (142,217) 63,150
Cumulative translation (20,449) - (20,705) 1,640 1,600 17,465 (20,449)
adjustments.................
--------------------------------------------------------------------------
Total shareholders' 141,665 178,287 117,469 32,284 88,800 (417,101) 141,404
equity......................
--------------------------------------------------------------------------
Total liabilities and $246,343 $370,141 $655,516 $37,045 $194,532 $(640,206) $863,371
equity......................
==========================================================================
</TABLE>
<PAGE>
STANDARD COMMERCIAL CORPORATION
SUPPLEMENTAL COMBINING STATEMENT OF INCOME AND RETAINED EARNINGS
Quarter ended September 30, 1997
(In thousands; unaudited)
<TABLE>
<CAPTION>
Other
Standard Tobacco
Standard Commercial Subsi- Other Wool
Commercial Tobacco diaries Standard Subsidiaries
Corporation Co, Inc (Non- Wool, Inc (Non-Guran- Elimin-
(Guarantor) (Issuer) Guarantors) (Guarantor) tors) ations Total
----------- -------- ----------------------- ----- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C>
Sales....................... $ - $ 61,046 $179,938 $883 $74,386 $(29,000) $287,253
Cost of sales:
Materials services and - 54,809 157,545 835 69,939 (29,000) 254,128
supplies....................
Interest.................. - 1,009 3,221 - 1,184 - 5,414
-----------------------------------------------------------------------
Gross profit.............. - 5,228 19,172 48 3,263 - 27,711
Selling, general &
administrative expenses.. 545 2,415 10,819 69 3,548 124 17,520
Other interest expense...... 1,378 2,204 345 - 28 - 3,955
Other income (expense) net.. 962 1,093 (742) (78) 723 124 2,082
-----------------------------------------------------------------------
Income (loss) before taxes (961) 1,702 7,266 (99) 410 - 8,318
Income taxes................ (184) 579 2,815 - 98 (1,065) 2,243
-----------------------------------------------------------------------
Income (loss) after taxes. (777) 1,123 4,451 (99) 312 1,065 6,075
Minority interests.......... - - (1,218) - - - (1,218)
Equity in earnings of - - 342 - 82 - 424
affiliates..................
Equity in earnings of 6,058 - - 412 - (6,470) -
subsidiaries................
-----------------------------------------------------------------------
Net income................ 5,281 1,123 3,575 313 394 (5,405) 5,281
Retained earnings at
beginning
of period............... 57,869 43,738 90,132 7,727 (4,785) (136,812) 57,869
Common stock dividends...... - - - - - - -
-----------------------------------------------------------------------
Retained earnings at end $63,150 $44,861 $93,707 $ 8,040 $(4,391)$(142,217) $ 63,150
of period...................
=======================================================================
</TABLE>
<PAGE>
STANDARD COMMERCIAL CORPORATION
SUPPLEMENTAL COMBINING STATEMENT OF INCOME AND RETAINED EARNINGS
Six Months Ended September 30, 1997
(In thousands; unaudited)
<TABLE>
<CAPTION>
Other
Standard Tobacco
Standard Commercial Subsi- Other Wool
Commercial Tobacco diaries Standard Subsidiaries
Corporation Co, Inc (Non- Wool, Inc (Non-Guran- Elimin-
(Guarantor) (Issuer) Guarantors) (Guarantor) tors) ations Total
----------- -------- ----------------------- ----- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C>
Sales....................... $ - $128,830 $376,298 $ 2,188 $156,969 $(76,717) $587,568
Cost of sales
Materials services and - 119,472 334,948 2,047 147,567 (76,717) 527,317
supplies....................
Interest................ - 2,124 8,072 - 2,484 - 12,680
-----------------------------------------------------------------------
Gross profit............ - 7,234 33,278 141 6,918 - 47,571
Selling, general &
administrative
expenses.................. 1,283 5,302 20,942 136 7,242 274 35,179
Other interest expense...... 2,745 2,503 812 - 111 - 6,171
Other income (expense) net.. 1,445 1,076 (402) (153) 2,232 274 4,472
-----------------------------------------------------------------------
Income (loss) before taxes.. (2,583) 505 11,122 (148) 1,797 - 10,693
Income taxes................ (878) 171 2,815 - 494 - 2,602
-----------------------------------------------------------------------
Income (loss) after taxes... (1,705) 334 8,307 (148) 1,303 - 8,091
Minority interests.......... - - (1,509) - - - (1,509)
Equity in earnings of - - 468 - 82 - 550
affiliates..................
Equity in earnings of 8,837 - - 1,385 - (10,222) -
subsidiaries................
-----------------------------------------------------------------------
Net income.................. 7,132 334 7,266 1,237 1,385 (10,222) 7,132
Retained earnings beginning 58,089 44,527 86,441 6,803 (5,776) (131,995) 58,089
of period
Common stock dividends...... (2,071) - - - - - (2,071)
-----------------------------------------------------------------------
Retained earnings end of $63,150 $44,861 $93,707 $ 8,040 $(4,391)$(142,217) $63,150
period......................
=======================================================================
</TABLE>
<PAGE>
STANDARD COMMERCIAL CORPORATION
SUPPLEMENTAL COMBINING STATEMENT OF CASH FLOWS
Six Months Ended September 30, 1997
(In thousands; unaudited)
<TABLE>
<CAPTION>
Other
Standard Tobacco
Standard Commercial Subsi- Other Wool
Commercial Tobacco diaries Standard Subsidiaries
Corporation Co, Inc (Non- Wool, Inc (Non-Guran- Elimin-
(Guarantor) (Issuer) Guarantors) (Guarantor) tors) ations Total
----------- -------- ----------------------- ----- ------ -----
Cash provided by (used for)
<S> <C> <C> <C> <C> <C> <C> <C>
Cash provided by (used for)
operating activities...... $(46,686)$ 79,999 $(173,145)$ 214 $ 3,486 $ 42,014 $(94,118)
-----------------------------------------------------------------------
Cash flows from investing
activities
Property, plant and equipment
- additions............... - (2,073) (5,009) (33) (1,813) - (8,928)
- disposals............... - 15 224 - 1,870 3,410 5,519
Minority interests.......... - - (708) - (1) 709 -
Net advances from (to)
group companies........... - (128,548) 128,548 - - - -
Collections of note - - - - - - -
receivable..................
Business (acquisitions) - - (3,353) - - - (3,353)
dispositions................
-----------------------------------------------------------------------
Cash provided by (used for)
investing activities...... - (130,606) 119,702 (33) 56 4,119 (6,762)
-----------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from long-term - 109,028 106 - 894 - 110,028
borrowings..................
Repayment of long-term - (8,819) (4,279) - (2,400) - (15,498)
borrowings..................
Net change in short-term - (30,537) 54,862 - (4,925) (47,042) (27,642)
borrowings..................
Net proceeds of equity 47,043 - - - - - 47,043
offering....................
Other....................... (684) - (3,005) - (110) 909 (2,890)
-----------------------------------------------------------------------
Cash provided by (used for)
financing activities...... 46,359 69,672 47,684 - (6,541) (46,133) 111,041
-----------------------------------------------------------------------
Net increase (decrease) in (327) 19,065 (5,759) 181 (2,999) - 10,161
cash........................
Cash at beginning of period. 327 1,102 28,956 119 10,613 - 41,117
-----------------------------------------------------------------------
Cash at end of period....... $ - $20,167 $23,197 $300 $ 7,614 $ - $51,278
=======================================================================
</TABLE>
<PAGE>
STANDARD COMMERCIAL CORPORATION
SUPPLEMENTAL COMBINING BALANCE SHEETS
March 31, 1997
(In thousands)
<TABLE>
<CAPTION>
Other
Standard Tobacco
Standard Commercial Subsi- Other Wool
Commercial Tobacco diaries Standard Subsidiaries
Corporation Co, Inc (Non- Wool, Inc (Non-Guran- Elimin-
(Guarantor) (Issuer) Guarantors) (Guarantor) tors) ations Total
----------- -------- ----------------------- ----- ------ -----
Assets
<S> <C> <C> <C> <C> <C> <C> <C>
Cash........................ $ 327 $ 1,102 $28,956 $ 119 $10,613 $ - $41,117
Receivables................. 1,648 35,737 174,535 1,258 53,382 - 266,560
Intercompany receivables.... 16,606 15,083 26,040 - 36,545 (94,274) -
Inventories................. - 74,309 139,386 1,256 52,675 (11,107) 256,519
Prepaid expenses............ 155 4,190 4,790 5 1,173 (4,028) 6,285
Marketable securities....... - - 823 - 14 - 837
---------------------------------------------------------------------------
Current assets.......... 18,736 130,421 374,530 2,638 154,402 (109,409) 571,318
Property, plant and equipment - 22,513 83,255 35 16,210 - 122,013
Investment in subsidiaries.. 159,014 - 63,714 36,946 34,261 (293,935) -
Investment in affiliates.... - - 11,321 - 1,212 - 12,533
Other assets................ 12,897 1,878 12,373 - 2,673 - 29,821
---------------------------------------------------------------------------
Total assets................ $190,647 $154,812 $545,193 $39,619 $208,758 $(403,344) $735,685
===========================================================================
Liabilities
Short-term borrowings....... $ - $36,277 $178,317 $ - $57,731 $ - $272,325
Current portion of long-term - 2,312 5,633 - 1,040 - 8,985
debt........................
Accounts payable............ 982 14,123 110,675 127 15,238 - 141,145
Intercompany accounts payable 29,895 28,757 15,393 4,734 31,740 (110,519) -
Taxes accrued............... - 2,470 19,723 - 6,565 - 28,758
---------------------------------------------------------------------------
Current liabilities..... 30,877 83,939 329,741 4,861 112,314 (110,519) 451,213
Long-term debt.............. - 12,576 57,195 - 3,451 (2,970) 70,252
Convertible subordinated 69,000 - - - - - 69,000
debentures
Retirement and other benefits 499 7,797 6,734 - 4,097 - 19,127
Deferred taxes.............. - 1,064 7,136 - 783 (3,164) 5,819
---------------------------------------------------------------------------
Total liabilities....... 100,376 105,376 400,806 4,861 120,645 (116,653) 615,411
Minority interests.......... - - 30,278 - 34 - 30,312
Shareholders' equity
Common stock................ 2,425 993 29,681 22,604 35,893 (89,171) 2,425
Additional paid-in capital.. 50,324 4,010 15,414 - 55,710 (75,134) 50,324
Unearned restricted stock
plan compensation....... (12) (94) (198) - (14) (3) (321)
Treasury stock.............. (3,799) - - - - - (3,799)
Retained earnings........... 58,089 44,527 86,441 6,803 (5,776) (131,995) 58,089
Cumulative translation (16,756) - (17,229) 5,351 2,266 9,612 (16,756)
adjustments.................
---------------------------------------------------------------------------
Total shareholders' 90,271 49,436 114,109 34,758 88,079 (286,691) 89,962
equity......................
---------------------------------------------------------------------------
Total liabilities and $190,647 $154,812 $545,193 $39,619 $208,758 $(403,344) $735,685
equity......................
===========================================================================
</TABLE>
<PAGE>
STANDARD COMMERCIAL CORPORATION
SUPPLEMENTAL COMBINING BALANCE SHEETS
September 30, 1996
(In thousands; unaudited)
<TABLE>
<CAPTION>
Other
Standard Tobacco
Standard Commercial Subsi- Other Wool
Commercial Tobacco diaries Standard Subsidiaries
Corporation Co, Inc (Non- Wool, Inc (Non-Guran- Elimin-
(Guarantor) (Issuer) Guarantors) (Guarantor) tors) ations Total
----------- -------- ----------------------- ----- ------ -----
Assets
<S> <C> <C> <C> <C> <C> <C> <C>
Cash........................ $ 199 $ 7,384 $22,946 $ 99 $17,613 $ - $48,241
Receivables................. 5,806 18,149 119,192 1,679 53,477 - 198,303
Intercompany receivables.... 16,991 20,224 47,963 84 5,863 (91,125) -
Inventories................. - 84,795 208,632 1,515 51,078 - 346,020
Prepaid expenses............ 648 298 4,964 16 1,362 - 7,288
Marketable securities....... - - 1,497 - 13 - 1,510
----------------------------------------------------------------------------
Current assets.......... 23,644 130,850 405,194 3,393 129,406 (91,125) 601,362
Property, plant and equipment - 22,556 92,739 38 18,401 - 133,734
Investment in subsidiaries.. 156,242 - 62,208 38,193 45,075 (307,718) -
Investment in affiliates.... - - 10,590 - 1,201 - 11,791
Other assets................ 9,849 2,408 19,544 - 3,086 - 34,887
----------------------------------------------------------------------------
Total assets............ $189,735 $155,814 $590,275 $41,624 $197,169 $(392,843) $781,774
============================================================================
Liabilities
Short-term borrowings....... - 47,865 289,977 - 47,183 - 385,025
Current portion of long-term - 2,298 5,339 - 832 - 8,469
debt........................
Accounts payable............ 605 12,833 84,912 154 21,928 - 120,432
Intercompany accounts payable 32,886 20,289 8,894 5,220 18,434 (85,723) -
Taxes accrued............... - 4,009 15,433 - 6,775 - 26,217
----------------------------------------------------------------------------
Current liabilities..... 33,491 87,294 404,555 5,374 95,152 (85,723) 540,143
Long-term debt.............. - 13,736 11,281 - 3,906 - 28,923
Convertible subordinated 69,000 - - - - - 69,000
debentures
Retirement and other benefits 751 7,548 6,444 - 4,430 - 19,173
Deferred taxes.............. - 411 7,432 - 965 - 8,808
----------------------------------------------------------------------------
Total liabilities....... 103,242 108,989 429,712 5,374 104,453 (85,723) 666,047
Minority interests.......... - - 29,569 - 36 - 29,605
ESOP redeemable preferred 8,748 - - - - - 8,748
stock.......................
Unearned ESOP compensation.. (6,320) - - - - - (6,320)
Shareholders' equity
Common stock................ 2,373 993 47,848 22,604 27,492 (98,937) 2,373
Additional paid-in capital.. 46,157 4,010 16,606 - 66,716 (87,332) 46,157
Unearned restricted stock
plan compensation....... (14) (109) (241) - (21) - (385)
Treasury stock at cost...... (2,997) - - - - - (2,997)
Retained earnings........... 48,787 41,931 81,314 6,157 (7,579) (121,823) 48,787
Cumulative translation (10,241) - (14,533) 7,489 6,072 972 (10,241)
adjustments.................
----------------------------------------------------------------------------
Total shareholders' 84,065 46,825 130,994 36,250 92,680 (307,120) 83,694
equity......................
Total liabilities and $189,735 $155,814 $590,275 $ 41,624 $197,169 $(392,843) $781,774
equity......................
============================================================================
</TABLE>
<PAGE>
STANDARD COMMERCIAL CORPORATION
SUPPLEMENTAL COMBINING STATEMENT OF INCOME AND RETAINED EARNINGS
Quarter Ended September 30, 1996
(In thousands; unaudited)
<TABLE>
<CAPTION>
Other
Standard Tobacco
Standard Commercial Subsi- Other Wool
Commercial Tobacco diaries Standard Subsidiaries
Corporation Co, Inc (Non- Wool, Inc (Non-Guran- Elimin-
(Guarantor) (Issuer) Guarantors) (Guarantor) tors) ations Total
----------- -------- ----------------------- ----- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C>
Sales...................... $ - $54,378 $162,258 $2,395 $73,314 $(43,340) $249,005
Cost of sales
Materials services and - 48,217 141,667 2,269 69,873 (43,145) 218,881
supplies...................
Interest............... - 1,060 5,528 175 1,389 - 8,152
-----------------------------------------------------------------------
Gross profit........... - 5,101 15,063 (49) 2,052 (195) 21,972
Selling, general &
administrative
expenses................. 752 2,780 10,584 307 3,556 293 18,272
Other interest expense..... 1,378 258 613 - 201 - 2,450
Other income (expense) net. 95 48 1,217 76 1,000 293 2,729
-----------------------------------------------------------------------
Income (loss) before taxes. (2,035) 2,111 5,083 (280) (705) (195) 3,979
Income taxes............... (573) 716 1,129 - (328) - 944
-----------------------------------------------------------------------
Income (loss) after taxes.. (1,462) 1,395 3,954 (280) (377) (195) 3,035
Minority interests......... - - (268) - - - (268)
Equity in earnings of - - 144 - - - 144
affiliates.................
Equity in earnings (losses)
of subsidiaries.......... 4,373 - - (381) - (3,992) -
-----------------------------------------------------------------------
Net income................. 2,911 1,395 3,830 (661) (377) (4,187) 2,911
ESOP preferred stock
dividends
net of tax............... (116) - - - - - (116)
Net income (loss) applicable
to common stock.......... 2,795 1,395 3,830 (661) (377) (4,187) 2,795
Retained earnings beginning 47,051 40,536 77,484 6,818 (7,202) (117,636) 47,051
of period
Common stock dividends..... (1,059) - - - - - (1,059)
-----------------------------------------------------------------------
Retained earnings end of $48,787 $41,931 $81,314 $6,157 $(7,579)$(121,823) $48,787
period.....................
=======================================================================
</TABLE>
<PAGE>
STANDARD COMMERCIAL CORPORATION
SUPPLEMENTAL COMBINING STATEMENT OF INCOME AND RETAINED EARNINGS
Six Months Ended September 30, 1996
(In thousands; unaudited)
<TABLE>
<CAPTION>
Other
Standard Tobacco
Standard Commercial Subsi- Other Wool
Commercial Tobacco diaries Standard Subsidiaries
Corporation Co, Inc (Non- Wool, Inc (Non-Guran- Elimin-
(Guarantor) (Issuer) Guarantors) (Guarantor) tors) ations Total
----------- -------- ----------------------- ----- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C>
Sales....................... $ - $90,078 $376,084 $ 4,275 $163,104 $(74,145) $559,396
Cost of sales
Materials services and - 81,146 333,501 4,041 155,037 (73,950) 499,775
supplies....................
Interest................ - 1,637 10,884 175 3,067 - 15,763
-----------------------------------------------------------------------
Gross profit............ - 7,295 31,699 59 5,000 (195) 43,858
Selling, general &
administrative
expenses.................. 1,593 5,583 20,959 422 7,248 463 36,268
Other interest expense...... 2,829 342 1,295 - 371 - 4,837
Other income (expense) net.. (66) 58 3,535 6 1,568 463 5,564
-----------------------------------------------------------------------
Income (loss) before taxes.. (4,488) 1,428 12,980 (357) (1,051) (195) 8,317
Income taxes................ (1,407) 485 3,475 - (497) - 2,056
-----------------------------------------------------------------------
Income (loss) after taxes... (3,081) 943 9,505 (357) (554) (195) 6,261
Minority interests.......... - - (2,204) - - - (2,204)
Equity in earnings of - - 362 - - - 362
affiliates..................
Equity in earnings of 7,500 - - (561) - (6,939) -
subsidiaries................
-----------------------------------------------------------------------
Net income.................. 4,419 943 7,663 (918) (554) (7,134) 4,419
ESOP preferred stock
dividends
net of tax................ (231) - - - - - (231)
Net income (loss) applicable
to
common stock.............. 4,188 943 7,663 (918) (554) (7,134) 4,188
-----------------------------------------------------------------------
Retained earnings beginning 46,450 40,988 73,651 7,075 (7,025) (114,689) 46,450
of period
Common stock dividends...... (1,851) - - - - - (1,851)
-----------------------------------------------------------------------
Retained earnings end of $48,787 $41,931 $81,314 $6,157 $(7,579)$(121,823) $48,787
period......................
=======================================================================
</TABLE>
<PAGE>
STANDARD COMMERCIAL CORPORATION
SUPPLEMENTAL COMBINING STATEMENT OF CASH FLOWS
Six Months Ended September 30, 1996
(In thousands; unaudited)
<TABLE>
<CAPTION>
Other
Standard Tobacco
Standard Commercial Subsi- Other Wool
Commercial Tobacco diaries Standard Subsidiaries
Corporation Co, Inc (Non- Wool, Inc (Non-Guran- Elimin-
(Guarantor) (Issuer) Guarantors) (Guarantor) tors) ations Total
----------- -------- ----------------------- ----- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C>
Cash provided by (used for)
operating activities...... $ 7,751 $ 9,746 $(72,581) $ 29 $ 26,301 $ (2,318) $(31,072)
Cash flows from investing activities:
- additions............. - (1,505) (5,802) - (366) - (7,673)
- disposals............. - 27 54 - 69 184 334
Minority interests.......... - - (2,133) - (1) 2,134 -
Net advances from (to)
group companies........... - (13,882) 13,882 - - - -
Collections of note - - - - - - -
receivable..................
Business (acquisitions) - - 2,993 - - - 2,993
dispositions................
-----------------------------------------------------------------------
Cash provided by (used for)
investing activities...... - (15,360) 8,994 - (298) 2,318 (4,346)
-----------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from long-term - 10,000 5 - 7 - 10,012
borrowings
Repayment of long-term (11,172) (472) (3,755) - (811) - (16,210)
borrowings
Net change in short-term - (2,551) 39,842 - (25,891) - 11,400
borrowings
Dividends paid net of tax... (231) - - - - - (231)
Purchase and retirement of - - - - - - -
ESOP........................
Preferred stock............. -
Other....................... - - - - - - -
-----------------------------------------------------------------------
Cash provided by (used for)
financing activities...... (11,403) 6,977 36,092 - (26,695) - 4,971
-----------------------------------------------------------------------
Net increase (decrease) in (3,652) 1,363 (27,495) 29 (692) - (30,447)
cash........................
Cash at beginning of period. 3,851 6,021 50,441 70 18,305 - 78,688
-----------------------------------------------------------------------
Cash at end of period....... $ 199 $ 7,384 $ 22,946 $ 99 $17,613 $ - $ 48,241
=======================================================================
</TABLE>
<PAGE>
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Results of Operations
Sales for the quarter ended September 30, 1997 were $287.3 million, an
increase of 15.4% from a year earlier. Sales for the six months were $587.6
million, up 5.0% from the same period last year. Sales for the tobacco division
of $207.7 million and $420.5 million for the second quarter and year to date,
respectively, were up 22.4% and 9.3% from the corresponding periods in 1996.
Tobacco sales for the quarter from Europe, the Far East and South America were
significantly higher than a year earlier. On a year to date basis, the U.S. and
South America provided most of the increase. Overall, tobacco volume was up 1.9%
for the quarter and down 2.1% year to date. The sales increases were the result
of higher average prices due to improved market conditions and a change in mix.
Nontobacco sales were flat for the quarter and down 4.3% for the six months,
primarily as the result of lower volumes of wool sold. These volume declines
were partly offset by improved mix as the wool business continues to stabilize
and the Company continues to focus on the more profitable processing elements of
the business.
Gross profit of $27.7 million and $47.6 million for the quarter and six
months, respectively, increased 26.1% and 8.5% from the 1996 comparable periods
due primarily to the increase in sales and reduced interest expenses resulting
from the application of $47.0 million of equity proceeds in the first quarter
and the application of the proceeds of a $115.0 million senior notes offering in
the second quarter to reduce short-term borrowings.
Selling, general and administrative expenses decreased by 4.1% and 3.0% for
the quarter and six months, respectively, as the Company continues to focus on
operating efficiencies. Higher personnel-related expenses and travel costs
related to the expansion of business in new markets were offset by tighter
control of other costs and expenses and favorable foreign exchange. Other
interest expense was higher for both the quarter and year to date and reflects
the impact of the $115.0 million issue of long-term debt. Other income (expense)
- - net was lower for both the quarter and year to date due to lower interest
income on short-term deposits as the Company continues to focus on efficient
cash management. Gains on sales of property in Australia and Greece were
slightly higher than the prior year gain on sale of marketable securities.
The effective tax rate for the quarter was slightly higher than a year
earlier and basically level for both six-month periods. The income tax charges
or credits can vary as a percentage of pretax income due to differences in tax
rates and relief available in areas where profits are earned or losses are
incurred.
Earnings attributed to minority interests were $1.0 million higher for the
quarter due mostly to the gain on sale of property in Greece. For the six
months, earnings attributed to minority interests were down $0.7 million because
the 1996 period included the timing effect of carryover sales from the prior
year. Equity in earnings of affiliates was up for 1997 both periods due to
improved trading conditions in the Far East.
Net income was $5.3 million for the quarter, or $0.41 per share on 12.8
million average shares outstanding, versus $2.9 million, or $0.29 per share on
9.5 million shares outstanding for the September 1996 quarter adjusted for
subsequent stock dividends. Net income for the six months was $7.1 million, or
$0.60 per share on 12.0 million average shares outstanding, versus $4.4 million,
or $.044 per share on 9.5 million average shares outstanding. The increase in
shares outstanding was attributable to the Company's 3.0 million share public
offering during the June 1997 quarter.
Liquidity and Capital Resources
Working capital at September 30, 1997 was $226.9 million, compared to $61.2
million a year earlier. Most of the increase was due to applying the $47.0
million net proceeds of the 3.0 million share public offering completed in the
June 1997 quarter and $103.1 million of the net proceeds of the senior notes
offering completed on August 1, 1997 to reduce short-term borrowings. The
remaining increase was due to contributions from operating activities that
further reduced short-term borrowings and the current portion of long-term debt.
Capital expenditures of $8.9 million consisted primarily of routine expenditures
in the
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION (continued)
tobacco and wool divisions, expansion of warehouse facilities in Greece and
Turkey, and new machinery for the French topmaking facility. The Company
continues to closely monitor its inventory levels, which fluctuate depending on
seasonal factors and business conditions. Uncommitted tobacco inventory
decreased to $22.6 million at September 30, 1997 from $29.1 million a year
earlier, while total tobacco inventories increased as a result of recent
expansion of business in Africa and South America.
As a result of the recent equity offering, which appreciably broadened the
Company's shareholder base, the Board of Directors has voted to discontinue
issuing quarterly stock dividends. Certain debt agreements to which the Company
and its subsidiaries are parties contain financial covenants which could
restrict the payment of cash dividends. Under its most restrictive covenant, the
Company had approximately $12.1 million of retained earnings available for
distribution as dividends at September 30, 1997. At this time, it is uncertain
when or if the Board will resume the payment of cash dividends.
On August 1, 1997, the Company completed a $115.0 million Rule 144A private
placement of 8-7/8% Senior Notes due 2005. Concurrently, commitments of $200
million were obtained for a three-year Global Bank Facility, which replaced the
U.S. and certain European bank facilities. These fundings, in combination with
the recent equity offering, have largely accomplished the Company's refinancing
plans. The Company used net proceeds of the funding to repay existing
indebtedness outstanding under certain bank credit facilities and certain other
long-term debt. The Global Bank Facility, in addition to local bank lines of
approximately $265.0 million for tobacco operations in Africa, Europe and Asia
will be used to finance tobacco operations. Separate bank facilities of
approximately $127.0 million exist to finance wool operations.
Based on the outlook for the tobacco and wool divisions, and the recent
refinancing activity, management anticipates that it will be able to service the
interest and principal on its indebtedness, maintain adequate working capital
and provide for capital expenditures out of operating cash flow for at least the
next year.
Forward-Looking Statements
Statements in this report that are not purely statements of historical fact
may be deemed to be forward-looking. Readers are cautioned that any such
forward-looking statements are based upon management's current knowledge and
assumptions, and actual results could be affected in a material way by many
factors, including ones over which the Company has little or no control, e.g.
unforeseen changes in shipping schedules; the balance between supply and demand;
and market, economic, political and weather conditions. More information
regarding certain of these factors is contained in the Company's other SEC
filings, copies of which are available upon request from the Company. The
Company assumes no obligation to update any of these forward-looking statements.
<PAGE>
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS - Not applicable
Item 2. CHANGES IN SECURITIES - Not applicable
Item 3. DEFAULTS UPON SENIOR SECURITIES - Not applicable
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
a. An annual meeting of shareholders was held on August 12, 1997.
b. Three persons nominated by management were elected as directors,
without opposition, for terms expiring in 2000 as follows:
Nominee Votes For Votes Withheld
------- --------- --------------
Henry R Grunzke 10,375,445 140,913
Ery W Kehaya 10,374,269 142,089
Daniel M Sullivan 10,401,775 114,583
In addition, the following other directors remained in office after the
meeting: Williams S Barrack, Jr; Marvin W Coghill; Thomas M Evins, Jr;
Robert E Harrison; Charles H Mullen; J Alec G Murray and William A
Ziegler.
c. The appointment of Deloitte & Touche LLP as the Company's independent
auditors for fiscal 1998 was approved by a vote of 10,462,087 shares
in favor, 3,079 shares against and 51,192 shares abstaining.
d. Not applicable.
Item 5. OTHER INFORMATION - Not applicable
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
a. The following exhibits are filed as a part of this report:
4 (i) Third Supplemental Agreement dated August 1, 1997 between the
Company and certain subsidiaries and Deutsche Bank A.G. et al.
11 Computation of Earnings per Common Share.
27 Financial Data Schedule.
b. The Company filed the following current reports on Form 8-K during the
quarter ended September 30, 1997:
On July 10, 1997, pursuant to Item 5 of Form 8-K and Rule 135C, the
Company filed its press release regarding its intent to issue Senior
Notes.
On August 4, 1997, pursuant to Item 5 of Form 8-K and Rule 135C, the
Company filed its press release regarding closing of its Senior Note
offering and the Global Bank Facility.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: November 13, 1997 STANDARD COMMERCIAL CORPORATION
(Registrant)
By /s/ Robert E Harrison
-------------------------------
Robert E Harrison
President, Chief Executive
Officer and Chief Financial
Officer
By /s/ Guy M Ross
-------------------------------
Guy M Ross
Vice President and
Chief Accounting Officer
DATED August 1, 1997
Trans-Continental Leaf Tobacco Corporation Limited, (1)
Standard Commercial Tobacco Company (UK) Limited
and
Standard Commercial Tobacco Co., Inc.
(as Borrowers)
Standard Commercial Corporation (2)
(as Guarantor)
The Steering Committee (3)
Deutsche Bank A.G. in Hamburg (4)
(as Lead Bank)
Bankers Trust Company (5)
(as Co-Lead Bank and Documentation Agent)
MeesPierson N.V. (6)
(as International Security Agent)
Bankers Trust Company (7)
(as US Security Agent)
-and-
The Banks (8)
---------------------------------------------
THIRD SUPPLEMENTAL AGREEMENT
TO THE MASTER FACILITIES AGREEMENT
---------------------------------------------
LOVELL WHITE DURRANT
65 Holborn Viaduct
London EC1A 2DY
A1/KB/112557-1
<PAGE>
THIS AGREEMENT is made the day of 1997
BETWEEN:
(1) THE COMPANIES LISTED IN SCHEDULE 1 (the "Borrowers");
(2) STANDARD COMMERCIAL CORPORATION (Federal Tax Identification Number
13/1337610) whose registered office is at 2201 Miller Road, PO Box 450,
Wilson NC 27894-0450, USA ("SCC");
(3) BANKERS TRUST COMPANY, DEUTSCHE BANK A.G. IN HAMBURG, MEESPIERSON N.V.,
NORDDEUTSCHE LANDESBANK GIROZENTRALE AND WESTDEUTSCHE LANDESBANK
GIROZENTRALE (the "Steering Committee");
(4) DEUTSCHE BANK A.G. in Hamburg(the "Lead Bank");
(5) BANKERS TRUST COMPANY (the "Co-Lead Bank" and the "Documentation Agent");
(6) MEESPIERSON N.V. (the "International Security Agent");
(7) BANKERS TRUST COMPANY (the "US Security Agent"); and
(8) THE BANKS LISTED IN SCHEDULE 2 ("the Banks").
WHEREAS:
(A) On 5 May, 1995, certain of the parties entered into the MFA (as
defined below).
(B) The parties now wish to amend and supplement the MFA as set out in
this Agreement.
IT IS AGREED:
1. DEFINITIONS
1.1 Save as expressly provided in this Agreement, expressions defined in the
MFA shall bear the same meanings in this Agreement and principles of
interpretation applicable to the MFA shall also apply to this Agreement.
1.2 In this Agreement the following expressions shall have the following
respective meanings:
"MFA"means the Master Facilities Agreement dated 5th May 1995 as amended by
a first Supplemental Agreement dated 1 February 1996 and by a Second
Supplemental Agreement dated 16 July 1996 and otherwise as amended, varied,
supplemented and in force immediately prior to the Effective Date;
"Effective Date" means the first date on which the Lead Bank shall have
received the documents and payments referred to in clause 2.3 below,
satisfactory in form and substance to the Lead Bank and on which the Lead
Bank is satisfied with the matters referred to in clause 2.3 of this
Agreement;
"Exiting Banks" means the Banks listed in Schedule 3;
"Obligor" shall have the meaning given in the Appendix to this Agreement.
<PAGE>
- 16 -
1.3 Unless otherwise specified, any reference in this Agreement to a Clause or
a Schedule is to a Clause or a Schedule of the MFA.
1.4 The MFA shall be amended as set out below.
2. AMENDMENT
2.1 With effect from the Effective Date, the MFA shall be amended to read as
set out in the attached Appendix and the Borrowers, SCC, the Steering
Committee, the Lead Bank, the Co-Lead Bank, the Documentation Agent, the
International Security Agent, the US Security Agent and the Banks shall
each be parties to the MFA in their respective capacities and on the terms
set out in the Appendix to this Agreement.
2.2 SCC enters into this Agreement on behalf of itself, Spierer Freres & Cie
S.A., Werkhof GmbH, W.A. Adams Company and General Processors Inc. In
respect of Spierer Freres & Cie S.A., Werkhof GmbH, W.A. Adams Company and
General Processors Inc, SCC enters into this Agreement on their behalf to
agree the amendment of this Agreement which releases them from their
obligations to the Banks under the MFA.
2.3 (a) Arrangement Fees: the fees being the arrangement and renewal fee
stated in the fees letter of even date from the Lead Bank to Standard
Commercial Tobacco Company Inc. ("SCTC Inc").
(b) Payment of Fees: all fees payable to the Lead Bank, MeesPierson NV and
Bankers Trust Company together with any disbursements and any
applicable taxes shall have been paid in full.
(c) Agreement: this Agreement duly signed on behalf of each of the
parties.
(d) Company Documents
(i) Constitutional Documents: certified copies of the certificate of
incorporation, certificate of incorporation on change of name (if
any) and current memorandum and articles of association of each
person named in Schedule 1 to this Agreement or, if previously
provided to the Lead Bank, a certificate signed by a director of
such person confirming that the copies previously provided to the
Lead Bank under the MFA remain unchanged;
(ii) Certificate of Authorisation: in relation to SCTC Inc, SCTC (UK),
and SCC, a certificate of two of its directors to the effect that
the requisite resolution of its board of directors, in the Agreed
Terms, has been duly and properly passed:-
(aa) authorising its execution, delivery and performance of this
Agreement and each other Finance Document to be executed by
it; and
(bb) authorising a named person or persons specified in such
certificate and whose specimen signatures appear there to
sign (where appropriate, as a Deed) this Agreement and each
other Finance Document to be executed by it and any
amendments and renewals thereof and to give any notices or
certificates required in connection with such documents,
<PAGE>
and confirming that such resolutions are still in effect and
have not been varied or rescinded or a certificate in such
other form as local legal counsel to the Lead Bank and the
Security Agents consider to be satisfactory;
(iii) Authorising Board Resolutions: a certified copy of the
resolutions of the board of directors referred to in
paragraph (d) (ii) above or an original Resolution by
Circular Letter of TCLTC in the agreed terms unless
local legal counsel to the Lead Bank and the Security
Agents advises that this is not necessary;
(iv) Certificate of Authorisation of other Obligors: in
relation to each Obligor other than SCTC Inc, SCTC
(UK), TCLTC, and SCC, a certificate of two of its
directors to the effect that the requisite resolution
of its board of directors, in the Agreed Terms, has
been duly and properly passed:-
(aa) approving this Agreement and each other Finance
Document and authorising the execution of any Finance
Document to be executed by it; and
(bb) authorising a named person or persons specified in such
certificate and whose specimen signatures appear there
to sign (where appropriate, as a Deed) any amendments
and renewals of any Finance Document to which it is a
party and to give any notices or certificates required
in connection with such Finance Documents,
and confirming that such resolutions are still in effect and
have not been varied or rescinded or a certificate in such
other form as local legal counsel to the Lead Bank and the
Security Agents consider to be satisfactory;
(v) Authorising Board Resolutions: a certified copy of the
resolutions of the board of directors of each Obligor
referred to in paragraph (d)(iv) above unless local
legal counsel to the Lead Bank and the Security Agents
advises that this is not necessary;
(e) Directors' Certificates: a certificate (signed in each case by two
directors) of each of SCTC Inc. SCTC (UK) and TCLTC and SCC that,
after making diligent enquiry, the directors are not aware that any
Event of Default or Potential Event of Default under the MFA has
occurred and is Continuing.
(f) Budgets, Accounts and Reports
(i) Budget: a Budget for SCTC Inc. and its tobacco trading
Subsidiaries for the 12 month period ending 31 March 1998;
(ii) The Cash Flow Forecast: a Cash Flow Forecast for SCTC Inc. and
its tobacco trading Subsidiaries on a 12 month rolling basis for
the period ending 31 March 1998.
(g) Security Documents and Legal Opinions
(i) UK:
(aa) Supplemental Deed to a Guarantee and Debenture by SCTC (UK)
in favour of MeesPierson NV dated 11 May 1995;
<PAGE>
(bb) Supplemental Deed to a Guarantee and Debenture by SCTC (UK)
in favour of MeesPierson NV dated 5 May 1995;
(cc) Deed of release by MeesPierson NV and SCC of the Charge over
Shares by SCC to MeesPierson NV as Security Agent of its
shares in SCTC (UK) and SCTS (UK) dated 5 May 1995;
(dd) Charge over Shares by SCTC, Inc to MeesPierson NV as
International Security Agent of its shares in SCTC (UK) and
SCTS (UK);
(ee) Minutes of SCTC (UK) and SCTS (UK) Directors' meetings
approving entry into the above documents; and
(ff) Legal Opinion of Lovell White Durrant;
(gg) Legal Opinion of Clifford Chance; and
(hh) Share Certificates to be delivered in connection with (dd)
above.
(ii) USA:
(aa) Documents Associated with Cancellation of Intercreditor and
Subordination Agreement
(1) the Junior Lender Release (Exhibit B to Intercreditor
Agreement) .
(bb) Documents Associated with Satisfaction of ABL Indebtedness of
Release of ABLs' Security Interests and Liens
(1) Payoff Letter which terminates the Intercreditor and
Subordination Agreement, dated July 15, 1996.;
(2) Escrow Letter which relates to, inter alia, the
cancellation of the $2,000,000 Standby Letter of
Credit;
(3) UCC termination Statements for UCC-1 Financing
Statements by SCTC Inc. filed in favour of ABLs in the
following locations:
(x) North Carolina:
(A) Secretary of State; and
(B) Wilson Country;
(y) Virginia:
(A) State Corporation commission; and
(B) City of Danville; and
(z) Kentucky:
(A) Secretary of State; and
<PAGE>
(B) Washington Country.
(4) UCC Termination Statements for UCC-1 Financing Statements by
General Processors, Inc, filed in the following locations:
(x) North Carolina:
(A) Secretary of State; and
(B) Granville County.
(5) UCC Termination Statements for UCC-1 Financing Statements by
W A Adams Company files in the following locations:
(x) North Carolina:
(A) Secretary of State; and
(B) Granville County.
(6) Release Deed of Trust for the Deed of Trust and Security
Agreement by SCTC Inc. ABLs (Wilson County, North Carolina
Property).
(7) Release of Deed of Trust for the Deed of Trust and Security
Agreement by General Processors, Inc. to ABLs (Granville
County, North Carolina Property).
(8) Release of Deed of Trust for Deed of Trust and Security
Agreement by W A Adams Company to ABLs (Granville County,
North Carolina Property).
(9) Release of Mortgage by SCTC Inc. to ABLs (Washington County,
Kentucky Property).
(cc) Documents Relating to Guaranty, Security, etc that may be Amended
and/or Restated
(1) amended and restated Guaranty Agreement.
(2) amended and restated Security Agreement.
(3) amended and restated Hazardous Materials Indemnity
Agreement.
(4) amended and restated Deed of Trust and Security Agreement by
SCTC, Inc. (Wilson County, North Carolina Property).
(5) amended and restated Deed of Trust and Security Agreement by
General Processors, Inc. (Granville County, North Carolina
Property).
(6) amended and restated Deed of Trust and Security Agreement by
W A Adams Company (Granville County, North Carolina
Property).
<PAGE>
(7) amended and restated Mortgage by SCTC Inc. (Washington
County, Kentucky Property).
(8) UCC-3 termination financing Statements amendments by SCTC
Inc. filed in the following locations:
(x) North Carolina:
(A) Secretary of State; and
(B) Wilson County;
(y) Virginia:
(A) Secretary of State; and
(B) City of Danville;
(z) Kentucky:
(A) State Corporation Commission; and
(B) Washington County.
(9) UCC-3 termination Financing Statements by General Processors,
Inc. Filed in the following locations:
(x) North Carolina:
(A) North Carolina;
(B) Granville County.
(10) UCC-3 termination Financing Statement by W.A. Adams Company filed in
the following locations:
(x) North Carolina:
(A) Secretary of State; and
(B) Granville County.
(11) Opinion Letters:
(x) State of North Carolina by Robinson, Bradshaw & Hinson
(y) State of North Carolina by Narron, Holdford, Babb, Harrison & Rhodes
P.A.
(z) State of Kentucky by Wyatt Tarrant & Combs.
(iii) Belgium:
<PAGE>
(aa) Supplemental Agreement to General Letter of Pledge by SCTC (UK)
to MeesPierson NV as Security Agent dated 30 May 1995;
(bb) Supplemental Agreement to General Letter of Pledge by TCLTC to
MeesPierson NV as Security Agent dated 30 May 1995;
(cc) Supplemental Agreement to Warehouse Locking Agreement between
MeesPierson NV and SCTC (UK) and Tabaknatie; and
(dd) Supplemental Agreement to Warehouse Locking Agreement between
MeesPierson NV and TCLTC and Tabaknatie.
(ee) legal opinion of Lovell White Durrant in Brussels;
(iv) Jersey:
(aa) Supplemental Agreement to the Security Agreement granted by TCLTC
dated 26 February 1996 in respect of all the shares in TCLTC
Jersey;
(bb) Deed of Covenant by TCLTC Jersey, TCLTC and SCTC Inc. in favour
of the Security Agent in relation to TCLTC Jersey;
(cc) Supplemental Agreement to Guarantee and Debenture by TCLTC Jersey
in favour of the Security Agent dated 26 February 1996;
(dd) power of attorney in respect of the TCLTC Jersey signatories of
the documents at (bb) and (cc) above
(ee) legal opinion of Bedell & Cristin;
(ff) legal opinion of Mourant du Feu & Jeune;
(gg) legal opinion of Clifford Chance.
(v) Canada:
(aa) Deed of release by MeesPierson NV and SCC of the
Pledge by SCC to MeesPierson NV as Security Agent of
its shares in SCTC of Canada Limited dated 5 May 1995;
and
(bb) Pledge by SCTC, Inc to MeesPierson NV as International
Security Agent of its shares in SCTC of Canada
Limited.
(vi) Liechtenstein:
(aa) Pledge by SCTC, Inc to MeesPierson NV as International
Security Agent of its shares in TCLTC including a
release of SCC in respect of shares pledged in
TCLTC;.and
(bb) letter of instruction from SCC to Dr Batliner
concerning the shares in TCLTC
(vii) Switzerland:
<PAGE>
(aa) Deed of release by MeesPierson NV and SCC of the Pledge
by SCC to MeesPierson NV as Security Agent of its
shares in Spierer Freres Cie dated 5 May 1995; and
(bb) Pledge by SCTC, Inc to MeesPierson NV as International
Security Agent of its shares in Spierer Freres Cie.
(cc) a legal opinion to be given by Swiss counsel.
(dd) Spierer Freres & Cie S.A. 1996 Annual Report;
(ee) power of attorney given in favour of SCC and the
addendum thereto;
(ff) certificate in relation to negative pledges;
(gg) certified true copy of the Memorandum and Articles of
Association of the Spierer Freres & Cie S.A.;
(hh) directors' certificate (in facsimile form);
(ii) attestation of negative result of a search regarding
any pending debt collection proceedings against the
Spierer Freres & Cie S.A.;
(jj) certified excerpt from the Geneva Companies registry
regarding the Spierer Freres & Cie S.A.; and
(kk) statement as to real estate currently held by Spierer
Freres & Cie S.A. in Switzerland.
(viii) Germany:
(aa) the release of the Pledge by SCC to MeesPierson NV as
Security Agent of its shares in Werkhof dated 2 May
1995 and the pledge of the same shares by SCTC Inc.
after the transfer of shares to SCTC, Inc.
(h) Insurance Arrangements: a letter from SCC's insurance brokers
addressed to the Lead Bank (on behalf of itself and the other Finance
Parties) setting out in relation to each Tobacco Group Company the
insurance arrangements which will be in effect as at the date of this
Agreement and showing that the resulting level and extent of insurance
cover are sufficient to enable the Borrowers to comply with the
covenant in Clause 14.12 (Insurance) of the MFA (as amended by this
Agreement);
(i) Reorganisation: confirmation that the group reorganisation of the
Tobacco Group has been carried out and that the structure of the
Tobacco Group is as set out in Schedule VII to the Appendix to this
Agreement;
(j) Auditors' Letter: a faxed copy of the signed Auditors' Letter;
(k) Bonds: written confirmation from SCTC Inc. and BT Securities Inc. that
the Bonds have been fully subscribed in an amount not less than
$80,000,000 subject only to this Agreement becoming unconditional.
<PAGE>
(l) Financial Statements: a copy of the audited consolidated
financial statements of SCC and the individual financial
statements of SCTC Inc. each for the Accounting Reference Period
ending 31 March 1997.
(m) Exiting Banks: with respect to each of the Exiting Banks a letter
signed on behalf of such Exiting Bank confirming that subject to
receipt of payment of amounts outstanding to it, its commitments under
the MFA are cancelled, it agrees to the proposed changes to the MFA
and it authorises the International Security Agent to execute certain
releases on its behalf;
(n) Bank Mandates: such bank mandates, specimen signatures and similar
documentation as each of the Banks may require in order to enable each
of the Facilities made available by a Bank to be utilised by each of
the Borrowers, duly signed on behalf of the relevant Borrower(s);
(o) Payment of Exiting Banks: written confirmation from BT Securities Inc.
and Deutsche Bank AG in Hamburg that they have sent, by telegraphic
transfer, sufficient funds to the Exiting Banks to repay all of the
sums due to the Exiting Banks.
(p) Share Transfer Agreement: the share transfer agreement between SCC and
SCTC Inc transferring ownership in the sahres referred to in that
agreement for the purposes of the group reorganisation duly executed
by all parties to it.
(q) Other Documentation: such other documentation as the Lead Bank may
specify in writing.
2.4 The other matters referred to in the preamble to clause 2.1 of this
Agreement are that no Event of Default or Potential Event of Default shall
have occurred and be Continuing.
2.5 The Lead Bank shall be entitled to disregard discrepancies in any of the
conditions precedent produced to it pursuant to clause 2.3 of this
Agreement where it considers that such discrepancy is of a minor and
non-material nature.
3. Conditions Subsequent
3.1 The Borrowers shall procure the delivery to the Lead Bank of the following
conditions subsequent, no later than two Business Days after the date of
this Agreement (in the case of the condition subsequent set out in
sub-clause (vii) below) and no later than 10 Business Days after the date
of this Agreement (in the case of all other conditions subsequent set out
below) in form and substance satisfactory to the Lead Bank:
(i) Canada:
(aa) a legal opinion to be given by Canadian counsel; and
(bb) Company Certificate of SCTC of Canada Ltd.
(ii) Germany:
(aa) a German law cash charge over Designated Accounts held at
Deutsche Bank AG in Hamburg.
(bb) a legal opinion to be given by German counsel.
(iii) Greece:
<PAGE>
(aa) Amendment to the Pledge by TCLTC to MeesPierson NV as Security
Agent of its shares in Transhellenic Tobacco SA dated 30 May
1995.
(bb) (1) certificate to be issued by the supervising authority, i.e.
the Prefecture of Thessaloniki, confirming that Transhellenic
continues to carry on its activities;
(2) certificate to be issued by the Court of First Instance of
Thessaloniki confirming that Transhellenic is not declared
bankrupt;
(3) certificate to be issued by the Court of First Instance of
Thessaloniki confirming that Transhellenic is not subject to
compulsory administration;
(4) certificate to be issued by the Court of First Instance of
Thessaloniki confirming that Transhellenic confirming that
there is no pending application for the declaration of
bankruptcy or for the appointment of a compulsory
administrator.
(iv) Liechtenstein:
(aa) Supplemental Deed to a Guarantee and Debenture by TCLTC in favour
of MeesPierson NV as Security Agent dated 5 May 1995; and
(bb) a legal opinion to be given by Liechtenstein counsel.
(cc) (1) extract from the Liechtenstein Public Register for TCLTC;
(2) board resolution of TCLTC approving the new share pledge by
SCTC, Inc, the Supplemental Deed to the Guarantee and
Debenture and the amended MFA and any other Finance
Documents it enters into
(3) power of attorney of TCLTC in favour of those persons who
will execute the above mentioned documents;
(4) the Share Certificates in TCLTC (held by MeesPierson NV as
Security Agent) which should be in Liechtenstein at the time
of the new pledge and which should be endorsed with the name
of SCTC, Inc. when ownership is transferred;
(5) letter from SCC and SCTC, Inc. to TCLTC informing it that
ownership of the shares in TCLTC has passed to SCTC, Inc.;
(6) extract from the share registry of TCLTC;
(7) board resolution of TCLTC approving the registration of the
new share pledge in the share register of TCLTC and of any
sale of the Shares as a consequence of the Pledge Agreement.
(dd) Supplemental Agreement to a charge over shares dated 30 May 1995
granted by TCLTC in favour of the Security Trustee over shares in
Stancom Tobacco (Zimbabwe).
<PAGE>
(ee) Security Agreement granted by TCLTC in favour of the International
Security Trustee in respect of receivables (governed by the laws of
North Carolina)
(ff) if and to the extent the agreements entered into by TCLTC at
2.3(g)(iv)(aa) and (bb) and 3.1 (iv) (aa) are not notarised a Deed
Poll executed by each Obligor party to such agreement;
(v) Philippines:
(aa) Supplemental Deed to a Deed of Assignment relating to
Philippine receivables by TCLTC in favour of MeesPierson NV
as Security Agent dated 29 November 1995, including schedule
of outstanding invoices payable by Philippine customers as
at the same date.
(bb) a legal opinion to be given by Philippines counsel.
(vi) Switzerland:
(aa) a board resolution ratifiying the execution of the Agreement
by SCC on behalf of Spierer Freres & Cie S.A.; and
(bb) the share certificates in Spierer Freres & Cie S.A..
(vi) Jersey:
(aa) members' resolution in respect of TCLTC Jersey.
(vii) USA:
(aa) Endorsement to Chicago Title Mortgagee's Insurance Policy.
3.2 It is agreed that the Security Trustee will release the share pledges
granted by Standard Wool Inc. and Advhus Gestion SC over their shares in
Standard Wool France SA after completion of the conditions precedent listed
in clause 2.3
3.3 All fees payable to the respective legal advisers of the Lead Bank,
MeesPierson NV and Bankers Trust Company shall be paid together with any
disbursements and any applicable taxes in full within five Business Days of
the Effective Date.
3.4 In the event that the conditions subsequent listed in Clause 3.1 above are
(i) not satisfied within the relevant time limit set out therein; or
(ii) not waived in writing by the Lead Bank; or
(iii) the relevant time limit is not extended in writing by the Lead Bank
the Lead Bank (acting on the instructions of the Majority Banks) may
declare all of the Outstandings in respect of the Facilities
immediately due and repayable.
4. Construction
<PAGE>
4.1 The MFA and this Agreement shall after the date of this Agreement be read
and construed as one document and references in the MFA and each Finance
Document to the MFA shall be read and construed as references to the MFA as
supplemented and amended by this Agreement.
4.2 The MFA shall continue in full force and effect, save as otherwise
expressly amended by this Agreement.
4.2 The amendments contained in this Agreement shall be without prejudice to
any rights and liabilities arising under the MFA by reference to any acts,
omissions and events occurring before such amendments come into effect.
5. Costs and Expenses
SCTC Inc. will reimburse the Lead Bank and each of the Security Agents
on demand all reasonable costs and expenses (including legal costs and
out-of-pocket expenses) and all value added tax thereon incurred by
the Bank in connection with the negotiation, preparation and execution
of this Agreement and any condition precedent documentation
contemplated in it.
6. Counterparts
This Agreement may be executed in any number of counterparts, all of
which when taken together shall constitute a single instrument.
7. Notices
The provisions of Clause 32 (Notices) of the MFA shall be deemed to be
incorporated, mutatis mutandis, in this Agreement.
8. Governing Law and Jurisdiction
The provisions of Clause 40 (Governing Law and Jurisdiction) of the
MFA shall be deemed to be incorporated, mutatis mutandis, in this
Agreement.
AS WITNESS the hands of the parties the day and year first above written.
<PAGE>
SCHEDULE 1
THE BORROWERS
Standard Commercial Tobacco Company (UK) Limited
Trans-Continental Leaf Tobacco Corporation Limited
Standard Commercial Tobacco Co., Inc.
<PAGE>
SCHEDULE 2
THE BANKS
Deutsche Bank A.G. in Hamburg
MeesPierson N.V.
Bankers Trust Company
Norddeutsche Landesbank Girozentrale
Westdeutsche Landesbank Girozentrale
Berliner Bank Aktiengesellschaft
Commerzbank A.G.
BHF-Bank Aktiengesellschaft
Berenberg Bank
ABN Amro Bank
Crestar Bank, Inc.
Kredietbank N.V.
Standard Chartered Bank
<PAGE>
SCHEDULE 3
THE EXITING BANKS
The Thai Farmers Bank Public Company Limited
Bank Julius Baer & Co Limited
Bank of America National Trust and Savings Association
The Royal Bank of Scotland PLC
<PAGE>
SIGNATURE PAGES
THE BORROWERS
TRANS-CONTINENTAL LEAF TOBACCO CORPORATION LIMITED
FL-9490 Vaduz,
Liechtenstein
Facsimile No: (0)75 236 5555
Attention: The Finance Director
By:
STANDARD COMMERCIAL TOBACCO COMPANY (UK) LIMITED
Standard House
Weyside Park
Godalming
Surrey GU7 1XE
England
Facsimile No: 01483 860176
Attention: The Finance Director
By:
STANDARD COMMERCIAL TOBACCO CO., INC.
C/o C.T. Corporation Systems
225 Hillsborough Street
Raleigh
North Carolina 27603, USA
Facsimile No:
Attention: The Finance Director
SCC
STANDARD COMMERCIAL CORPORATION
2201 Miller Road, P O Box 450,
Wilson NC 27894-0450, USA
Facsimile No: 00 1 919 237 1109
Attention: The Finance Director
By:
<PAGE>
THE LEAD BANK
DEUTSCHE BANK A.G. IN HAMBURG
Firmen und Institutionen
Konzernbetreuung II
Adolphsplatz 7
20079 Hamburg, Germany
Facsimile No: 00 49 40 3701 4684
Attention: Michael Ziesenitz
By:
THE CO-LEAD BANK AND DOCUMENTATION AGENT
BANKERS TRUST COMPANY
14 Wall Street - 3rd Floor
NY 10005
USA
Facsimile No: 00 1 212 618 2630
Attention: Maureen Reilly
By:
THE INTERNATIONAL SECURITY AGENT
MEESPIERSON N.V.
Camomile Court
23 Camomile Street
London EC3A 7PP
Facsimile No: 0171 444 8810
Attention: Iain Lappin-Smith
By:
<PAGE>
THE US SECURITY AGENT
BANKERS TRUST COMPANY
14 Wall Street - 3rd Floor
New York
NY 10005
USA
Facsimile No: 00 1 212 618 2630
Attention: Maureen Reilly
By:
THE STEERING COMMITTEE
DEUTSCHE BANK A.G. IN HAMBURG
Firmen und Institutionen
Konzernbetreuung II
Adolphsplatz 7
20079 Hamburg, Germany
Facsimile No: 00 49 40 3701 4684
Attention: Michael Ziesenitz
By:
MEESPIERSON N.V.
Coolsingel 93
PO Box 749
3000 AS Rotterdam
Netherlands
Facsimile No: 0031 10 401 6558
Attention: Jaap Van Beveren
By:
BANKERS TRUST COMPANY
14 Wall Street - 3rd Floor
New York
NY 10005
USA
Facsimile No: 00 1 212 618 2630
Attention: Maureen Reilly
By:
<PAGE>
NORDDEUTSCHE LANDESBANK GIROZENTRALE
Brodschrangen 4
20457 Hamburg
Germany
Facsimile No: 00 49 40 3765 5304
Attention: Mrs Glindmeyer
By:
WESTDEUTSCHE LANDESBANK GIROZENTRALE
Domstrasse 10
20095 Hamburg
Germany
Facsimile No: 00 49 40 339 68265
Attention: Mr T Richter
By:
THE BANKS
DEUTSCHE BANK A.G. IN HAMBURG
Firmen und Institutionen
Konzernbetreuung II
Adolphsplatz 7
20079 Hamburg, Germany
Facsimile No: 00 49 40 3701 4684
Attention: Michael Ziesenitz
By:
MEESPIERSON N.V.
Coolsingel 93
PO Box 749
3000 AS Rotterdam
Netherlands
Facsimile No: 0031 10 401 6558
Attention: Jaap Van Beveren
By:
<PAGE>
BANKERS TRUST COMPANY
14 Wall Street - 3rd Floor
New York
NY 10005
USA
Facsimile No: 00 1 212 618 2630
Attention: Maureen Reilly
By:
NORDDEUTSCHE LANDESBANK GIROZENTRALE
Brodschrangen 4
20457 Hamburg
Germany
Facsimile No: 00 49 40 3765 5304
Attention: Mrs Glindmeyer
By:
WESTDEUTSCHE LANDESBANK GIROZENTRALE
Domstrasse 10
20095 Hamburg
Germany
Facsimile No: 00 49 40 339 68265
Attention: Mr T Richter
By:
BERENBERG BANK
Neuer Jungfernstieg 20
20354 Hamburg
Germany
Facsimile No: 00 49 40 354 248
Attention: Mr Schroder
By:
BHF-BANK AKTIENGESELLSCHAFT
Paulstrasse 5
20095 Hamburg
Germany
Facsimile No: 00 49 40 3200 9203
Attention: Mr Theodore Budde
By:
<PAGE>
BERLINER BANK AKTIENGESELLSCHAFT
Niederlassung Hamburg
Domstrasse 21
20095 Hamburg
Germany
Facsimile No: 00 49 40 3020 5319
Attention: Mr Gubel
By:
COMMERZBANK A.G.
Ness 7-9
20457 Hamburg
Germany
Facsimile No: 00 49 40 368 33305
Attention: Mr Weidner
By:
ABN AMRO BANK
Frankrijklei 121
B-2000 Antwerpen
Belgium
Tel: +32 3 2220425
Fax: +32 3 2311031
Attention: Mr. Paul Lenaerts/Mr. Rudolf Oldeman
By:
CRESTAR BANK
919 East Main Street
Richmond, VA 23219
USA
Tel: +1 804 782 5237
Fax: +1 804 782 5413
Attention: Mr. C Gray Key
By:
KREDIETBANK N.V.
5th Floor, Earl Place
15 Appold Street
London EC2A 2AA
England
Tel: +44 171 256 4891
Fax: +44 171 256 4870
Attention: Mr. Kevin Giles
By:
<PAGE>
STANDARD CHARTERED BANK
37 Gracechurch Street
London EC3V OBX
England
Tel: +44 171 280 7585
Fax: +44 171 280 7598
Attention: Mr. Robert Dean
By:
<PAGE>
THIS AGREEMENT is made the 5th day of May 1995
BETWEEN:
(1) THE COMPANIES LISTED IN SCHEDULE I (the "Borrowers");
(2) STANDARD COMMERCIAL CORPORATION (Federal Tax Identification Number
13/1337610) whose registered office is at 2201 Miller Road, PO Box 450,
Wilson NC 27894-0450, USA ("SCC");
(3) BANKERS TRUST COMPANY, DEUTSCHE BANK A.G. IN HAMBURG, MEESPIERSON N.V.,
WESTDEUTSCHE LANDESBANK GIROZENTRALE and NORDDEUTSCHE LANDESBANK
GIROZENTRALE (the "Steering Committee");
(4) DEUTSCHE BANK A.G. in Hamburg (the "Lead Bank");
(5) BANKERS TRUST COMPANY (the "Co-Lead Bank" and the "Documentation Agent");
(6) MEESPIERSON N.V. (the "International Security Agent");
(7) BANKERS TRUST COMPANY (the "US Security Agent"); and
(8) THE BANKS LISTED IN SCHEDULE II (the "Banks"). .
IT IS AGREED:
PART I
DEFINITIONS AND INTERPRETATION
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
In this Agreement, the following terms shall have the following respective
meanings:
"Accounting Reference Period" shall have the same meaning as "accounting
reference period" in Part VII of the Act;
"Accounts Date" 31 March in each year;
"Accounts" (a) each of the Original Accounts; and
(b) each of the accounts delivered to the Agent pursuant to
Clauses 15.4 (Quarterly Accounts) and 15.5 (Accounts);
"Act" the Companies Act 1985 under the laws of England and Wales;
<PAGE>
"Additional Costs Rate" in relation to any Indebtedness outstanding under
any Finance Document to a Bank, the rate per annum determined in accordance
with Schedule XIV (Additional Cost Rate);
"Affiliate" in relation to any Group Company means:
(a) any person in whom any Group Company holds (directly or
indirectly) ten per cent. or more of the issued share
capital or stock (but which is not a Subsidiary of SCC); and
(b) any person which is not a subsidiary of SCC whose policies,
management, officers or directors are directed or controlled
(directly or indirectly) by any Group Company;
"Affiliate Advances" any Financial Accommodation provided by a
Borrower to an Affiliate;
"Aggregate Bank Indebtedness" shall have the meaning given to that
expression in Clause 26.1 (Notification);
"Agreed Terms" in relation to any document, means the form of that
document initialled by or on behalf of the Lead Bank and SCTC Inc.;
"Approved Warehouse" a warehouse approved by a Security Agent from
time to time;
"Auditors" at any time the auditors of the Group, being Deloitte &
Touche or any other firm of accountants of international repute
appointed in accordance with clause 14.32 (Auditors);
"Auditors' Letter" a letter from the Auditors addressed to the Lead
Bank on behalf of the Banks confirming that the Auditors will provide
all certificates and confirmations which the Lead Bank is entitled to
request from the Auditors under the terms of this Agreement;
"Available Commitment" in relation to a Bank and any Facility, the
Dollar Equivalent of that Bank's Commitment in respect of such
Facility, less the Dollar Equivalent of all Outstandings (including,
in the case of foreign exchange transactions, the amount deemed to be
outstanding by Clause 5.5 (Foreign Exchange) and, in the case of any
unmatured liability, the maximum amount of such liability capable of
maturing into an actual liability) under such Facility at that time;
"Bank" (a) each of the banks identified in Schedule II; and
<PAGE>
(b) any additional or substitute bank or financial institution
at any time hereafter designated as a Bank by agreement
between the Lead Bank (acting with Majority Bank approval)
and SCTC Inc. pursuant to this Agreement
and each of their respective successors in title including
assignees and transferees (but only for so long as such
person has any rights or obligations under the Finance
Documents);
"Bank Loss" shall have the meaning given to that expression in Clause
26.9(a) (Final Equalisation);
"Basle Paper" the paper entitled "International Convergence of Capital
measurement and Capital Standards" dated July 1988 and prepared by the
Basle Committee on Banking Regulations and Supervision as amended in
November 1991;
"Bill" a bill of exchange or promissory note presented to a Bank by a
Group Company for acceptance and discounting pursuant to the terms of
the Facility made available by such Bank to a Borrower and
satisfactory in form and substance to such Bank;
"Bonds" the $100 million interest bearing notes due 2005 issued or to
be issued by SCTC Inc. pursuant to an indenture dated 1st August 1997;
"Bondholders" the holders from time to time of the Bonds in accordance
with their terms;
"Borrower" each of the companies listed in Schedule I;
"Borrowers Borrowing Base" at any time means an amount equal to the
sum (without double counting) of:
(a) 80 per cent. of the sum of the value of:
(i) Inventory which is not subject to any Encumbrance
(other than any Encumbrance in favour of the Banks);
(ii) Receivables;
(iii)Eligible Intercompany Loans (less Intercompany
Payables) up to a maximum aggregate amount of
$40,000,000; and
(iv) Supplier Advances and Affiliate Advances up to a
maximum aggregate amount of $40,000,000;
<PAGE>
LESS
(v) Trade Payables; and
(b) 50 per cent. of the value of Fixed Assets;
each as shown in the most recent Borrowing Base Certificate
delivered to the International Security Agent in accordance
with clause 15.2 (Borrowing Base) (or, if such Borrowing
Base Certificate is not the latest required to be delivered
pursuant to that clause, as determined by the International
Security Agent acting reasonably);
"Borrowing Base Certificate" a certificate provided by SCTC Inc. to the
International Security Agent pursuant to clause 15.2 (Borrowing Base) in
the form set out in Schedule XII;
"Borrowings" in relation to any person (including, without limitation, a
Group Company), at any time, any Indebtedness incurred by that person in
respect of all or any of the following (but without double counting):-
(a) money borrowed or raised;
(b) any debentures, bonds, notes, loan stock, commercial paper
or similar instruments or acceptance credit, bill
discounting or note purchase facilities (except for bills
discounted without recourse of any kind to the Borrowers);
(c) counter-indemnity obligations of such person in respect of
letters of credit, guarantees or similar instruments issued
by banks or financial institutions;
(d) receivables sold, assigned or discounted;
(e) the capital element of conditional purchase, hire purchase
and leases which are defined as finance leases in SSAP 21;
(f) any guarantee, indemnity or other assurance against
financial loss in respect of any Indebtedness of any other
person of a kind referred to in this definition;
<PAGE>
(g) any interest rate or currency swap, forward rate agreement,
cap, floor or collar transaction calculated by reference to
the net amount payable under any such agreement if
closed-out or terminated at that time (but giving credit for
any net amount receivable by that person under a connected
transaction of a similar nature); and
"Budget" (a) the budget for the Tobacco Group including the
projections to 31 March 1998 and projections for 1999 and 2000 annexed
as Appendix A to this Agreement; and
(b) each budget now or hereafter delivered or to be delivered to
the International Security Agent pursuant to Clause 15.6
(Budget);
"Business Day" a day (other than a Saturday or Sunday) on which the
relevant financial markets are open for dealings between banks (a) in
London, New York and Frankfurt and (b) where a payment is to be made
under this Agreement in any currency other than Sterling, Dollars or
DM, the principal financial centre of the currency concerned;
"Capital Adequacy Requirement" a request or requirement relating to
the maintenance of capital, including one which makes a change to or
is based upon any alteration in, the interpretation of the Basle Paper
and/ or the Solvency Directives or which increases the amount of
capital required thereunder, other than a request or requirement made
by way or implementation of the Basle Paper or the Solvency Directives
in the manner in which any of them is being implemented at the date of
this Agreement;
"Capital Expenditure" in relation to any person means:
(a) expenditure made and liabilities incurred for the
acquisition of assets which would be shown as capital
expenditure in the audited financial statements of such
person (prepared in accordance with GAAP); and
(b) to the extent not included in (a) above, Investments;
"Cash Flow Forecast" (a) the rolling four quarter cash flow forecast
for the Tobacco Group for the period to 31 March 1998 attached as
Appendix B to this Agreement; and
(b) each cash flow forecast now or hereafter delivered or to be
delivered to the International Security Agent pursuant to
Clause 15.3 (Cash Flow Forecast);
"Code" the Internal Revenue Code of 1986, as amended from time to
time, and the regulations promulgated and rulings issued thereunder
under US law;
<PAGE>
"Co-Lead Bank" Bankers Trust Company in its capacity as Co-Lead Bank
under this Agreement and any successor appointed under the terms of
this Agreement;
"Committed Banks" all Banks (to the extent and in respect only of
their respective Commitments);
"Commitment" in relation to a Bank and a Facility, means the amount
set opposite such Bank's name in Schedule II under the heading
"Commitment" in relation to such Facility as the same may be
transferred (in whole or in part), reduced, varied or terminated in
accordance with the terms of this Agreement;
"Continuing" in the context of an Event of Default shall be construed
as follows:-
(a) so that where the underlying circumstances which caused that
Event of Default are incapable of remedy, that Event of
Default is Continuing, unless and until it has been
expressly waived in writing by the Lead Bank (acting on the
instructions of the Majority Banks) and any conditions of
such waiver have been fulfilled to the satisfaction of the
Lead Bank (acting on the instructions of Majority Banks); or
(b) in any other case, that Event of Default is Continuing
unless and until either:-
(i) it has been expressly waived in writing by the Lead Bank
(acting on the instructions of the Majority Banks) and any
conditions of such waiver have been fulfilled to the
satisfaction of the Lead Bank (acting on the instructions of
the Majority Banks); or
(ii) the underlying circumstances which caused that Event of
Default have been remedied to the satisfaction of the Lead
Bank (acting on the instructions of the Majority Banks);
"Convertible Subordinated the $69,000,000 principal amount of 7 1/4%
convertible Debentures" debentures maturing March 31, 2007 issued by
SCC to refinance certain working capital facilities;
"Disposal" any sale or disposition prior to the Enforcement Date of
any of the shares or the goodwill and/or assets of the business of any
Tobacco Group Company, but excluding (a) stock in trade sold by a
Tobacco Group Company in the normal course of its business; and (b)
any sale or disposition of shares, goodwill and/or assets by one
Tobacco Group Company to another Tobacco Group Company as part of an
intra-Group reorganisation.
<PAGE>
"DM" lawful currency of the Republic of Germany;
"Documentation Agent" Bankers Trust Company in its capacity as
Documentation Agent under this Agreement and any successor
Documentation Agent appointed under the terms of this Agreement;
"Dollar Equivalent" (a) on any date in relation to an amount
denominated in Dollars means the amount thereof; and
(b) on any date in relation to an amount denominated in a
currency other than Dollars means the amount of Dollars
which would be required to purchase such sum at the spot
rate of exchange quoted by the Lead Bank at 11.00 a.m. on
that date for the purchase of the relevant currency with
Dollars;
"Dollars" and $ lawful currency of the United States;
"EBITDA" in respect of any period and any person or any person and its
Subsidiaries (a "Group"), means the consolidated profits of that
person or Group on ordinary activities for that period as shown in the
consolidated profit and loss accounts of that person or Group for that
period before the deduction of interest and corporation tax on the
overall income of that person or Group payable in respect of that
period:
(a) adding back an amount equal to any depreciation and
amortisation charged during such period;
(b) excluding any gain or loss realised on the disposal of any
assets (other than stock in trade already taken into account
in the calculation of the profit or loss of the person or
Group) and excluding any exceptional or extraordinary items;
(c) not including interest of whatever nature received by a
person or member of the Group;
(d) adding back any debits arising as a result of amortisation
of goodwill and/or know-how or other intangible assets;
(e) deducting any profit arising out of release of provisions
for liabilities and charges, (other than in the normal
course of business and in accordance with GAAP);
(f) excluding any share of the profits of associated companies
which are not wholly owned by such person, except for
dividends actually received by such person;
<PAGE>
(g) reversing any adjustments required to be made by applicable
GAAP;
"Eligible Intercompany Loans" principal Indebtedness in respect of
Borrowings of an Eligible Tobacco Group Company from a Borrower
arising in connection with a transaction for the sale or purchase of
tobacco in the ordinary course of business of such Eligible Tobacco
Group Company;
"Eligible Tobacco Group Company" a member of the Tobacco Group (except
a Borrower) over whose shares a Security Agent holds an effective
charge or pledge for the benefit of the Finance Parties or in relation
to which share certificates representing the entire shareholding of
members of the Tobacco Group in that company have been deposited with
a Security Agent;
"Eligible Transferee" includes a commercial bank, financial
institution or other "accredited investor" (as defined in United
States SEC Regulation D) in each case which is not a direct competitor
of a Borrower or SCC or engaged in the same or similar business as a
Borrower or SCC or any of their Subsidiaries or is not an affiliate of
any such competitors of a Borrower or SCC or any of their
Subsidiaries;
"Encumbrance" any mortgage, pledge, lien, hypothecation, charge,
security interest, assignment or deposit by way of security or any
other agreement or arrangement whatsoever (whether conditional or not
and whether relating to existing or to future assets) having the
effect of providing a security or preferential treatment to a creditor
(including set-off, title retention, defeasance or reciprocal fee
arrangements) or any agreement or arrangement to give any form of
security or preferential treatment to a creditor;
"Enforcement Date" the date on which a Security Agent first enforces
any part of the security constituted by any Security Document pursuant
to the terms of this Agreement or the relevant Security Document;
"Environmental Claims" any and all administrative, regulatory, or
judicial actions, suits, demands, demand letters, claims, liens,
notices of non-compliance or violation, investigations or proceedings
relating in any way to any Environmental Law or any permit issued
under any such law (hereafter "Claims") including without limitation:
<PAGE>
(a) any and all Claims by governmental or regulatory authorities
for enforcement, cleanup, removal, remedial or other actions
or damages pursuant to any applicable Environmental Law; and
(b) any and all Claims by any third party seeking damages,
contribution, indemnification, cost recovery, compensation
or injunctive relief arising from Hazardous Materials or
arising from alleged injury or threat of injury to health,
safety or the environment;
"Environmental Law" means any federal, state, foreign or local
statute, law, rule, regulation, ordinance, code guideline, policy or
rule of common law now or hereafter in effect and in each case as
amended, and any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent decree or
judgment, relating to the environment, health, safety or Hazardous
Materials, including without limitation the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as
amended, 42 U.S.C.ss. 9601 et seq.; ------ the Hazardous Materials
Transportation Act, as amended, 49 U.S.C.ss.1801 et seq; the Resource
Conservation and Recovery Act, as amended, 42 U.S.C.ss.6901 et seq;
------ the Federal Water Pollution Control Act, as amended, 33
U.S.C.ss. 1251 et seq; ------ the Toxic Substances Control Act, 15
U.S.C.ss.2601 et seq; the Clean Air Act, 42 ------ U.S.C.ss. 1401 et
seq; the Safe Drinking Water Act, 42 U.S.C.ss. 300f et seq; the Oil
Pollution Act of 1990, 33 U.S.C. et seq; and their state and local
------- counterparts and equivalents under US law.
"ERISA" the Employee Retirement Income Security Act of 1974 as amended
from time to time, and the regulations promulgated and rulings issued
thereunder under US law;
"ERISA Affiliate" each person (as defined in Section 3(9) of ERISA)
which together with the Borrowers or Subsidiaries of the Borrowers
would be deemed to be a "single employer" (i) within the meaning of
Section 414(b), (c), (m) or (o) of the Code; or (ii) as a result of
the Borrowers or any Subsidiary of the Borrowers being or having been
made a general partner of such person;
"Event of Default" shall unless otherwise stated mean a declaration by
the Lead Bank that an event of default has occurred in accordance with
Clause 17.1 (Termination in Case of Default);
"Existing Security" Encumbrances over assets of members of the Tobacco
Group which are in existence as at the date of this Agreement and are
detailed in Part II of Schedule IV;
<PAGE>
"Facility" (a) each facility made available pursuant to a Facility
Letter; and
(b) each facility made available by a Bank as at the date of
this Agreement and detailed in Schedule II (notwithstanding
that such facility may not be documented); and
(c) each other facility at any time hereafter designated as a
Facility by agreement between the Lead Bank (acting with
Majority Bank approval) and SCTC Inc. pursuant to this
Agreement;
and "Facilities" shall be construed accordingly;
"Facility Agreements" (a) the Facility Letters;
(b) the security documents details of which are set out in Part
II of Schedule IV;
(c) each other agreement, deed, document, notice, guarantee,
indemnity or certificate entered into by any Obligor in
favour of any Bank pursuant to any document referred to in
(a) or (b) in this definition or otherwise in connection
therewith; and
(d) each other agreement or document at any time hereafter
designated as a Facility Agreement by agreement between the
Lead Bank (acting with Majority Bank approval) and SCTC Inc.
pursuant to this Agreement;
and "Facility Agreement" shall be construed accordingly;
"Facility Letters" (a) the facility letters and agreements, details of
which are set out in Part I of Schedule IV as amended and supplemented
from time to time in accordance with this Agreement; and
(b) each other facility letter, agreement or document at any
time hereafter designated as a Facility Letter by agreement
between the Lead Bank (acting with Majority Bank approval)
and SCC pursuant to this Agreement,
and each is a "Facility Letter";
<PAGE>
"Facility Office" in relation to a Bank or a Transferee, means the
office identified at the end of this Agreement or in the relevant
Transfer Certificate, as the case may be, or any replacement facility
office nominated in accordance with Clause 32 (Notices);
"Final Repayment Date" 31st July 2000 or, if that day is not a
Business Day, the immediately preceding Business Day;
"Finance Documents" this Agreement, the Facility Agreements, the
Security Documents, any Transfer Certificate and any other agreements
or documents entered into by any Tobacco Group Company pursuant to the
terms of the Finance Documents or any of them and any other agreement
or document now or in the future designated as a Finance Document by
agreement between the Lead Bank (acting with Majority Bank approval)
and SCTC Inc. and includes each such Finance Document as extended,
supplemented, varied, restated and/or replaced in any manner from time
to time (even if changes are made to the composition of the Finance
Parties and/or the other parties to the Finance Documents) and/or any
document which extends, supplements, varies, restates and/or replaces
such Finance Document and also includes each or any such Finance
Document and each is a "Finance Document";
"Finance Parties" the banks and financial institutions for the time
being comprising Finance Parties pursuant to the terms of this
Agreement (including, without limitation, the Banks and any additional
or substitute bank or financial institution at any time hereafter
designated as a Finance Party to the extent and for the purpose(s) so
designated by agreement between the Lead Bank (acting with Majority
Bank approval) and SCTC Inc. pursuant to this Agreement) and each of
their respective successors in title and permitted assignees or
transferees (but only for so long as such person has any rights or
obligations under any Finance Document) and also includes each or any
of them and each is a "Finance Party";
"Financial Accommodation" financial accommodation given by a person to
a second person (the "Debtor") where such financial accommodation
constitutes a Borrowing by the Debtor;
"Fixed Assets" any real property unencumbered, otherwise than in
favour of the Security Agents, located in the USA and owned by General
Processors Inc., W.A. Adams Company or SCTC Inc. and the land and
buildings located in Godalming, Surrey, United Kingdom and owned by
SCTC (UK) (but only after the RBS Legal Charge has been released) and
effectively mortgaged or charged to a Security Agent for the benefit
of the Finance Parties for the avoidance of doubt any such property
released from a mortgage or charge by the Security Agent in accordance
with Clause 23.4 shall no longer constitute a Fixed Asset;
<PAGE>
"Foreign Pension Plan" any plan, fund, or other similar program
established or maintained outside the USA by the Borrowers or any one
or more of their Subsidiaries primarily for the benefit of employees
of the Borrowers or such Subsidiaries residing outside the USA which
plan, fund or similar program provides or results in, retirement
income, a deferral of income in contemplation of retirement or
payments to be made upon termination of employment and is not subject
to ERISA or the Code;
"Free Cash Flow" means for any period, without double counting, the
aggregate unconsolidated EBITDA of the Borrowers plus the aggregate of
Borrowings (excluding the proceeds of the Bonds) received by the
Borrowers during that period (except for Borrowings pursuant to the
Facilities);
LESS
(a) all Capital Expenditure incurred by the Borrowers during
such period (to the extent not financed by a Borrowing
pursuant to the Facilities as permitted under clause 14.4
(a);
(b) all permanent repayments of Borrowings made by the Borrowers
during such period;
(c) interest, commissions and other costs payable by the
Borrowers in cash in connection with Borrowings during such
period;
(d) cash payments of corporation and other Taxes payable by the
Borrowers during that period;
(e) cash payments of dividends, distributions, management fees
and other payments to shareholders during that period; and
(f) other acquisitions and Investments made by the Borrowers
with cash during that period (to the extent not financed by
a Borrowing pursuant to the Facilities as permitted under
clause 14.4 (a);
"GAAP" in relation to any Group Company means generally accepted
accounting principles in its country of incorporation;
"Greater Group" at any time SCC and its Subsidiaries at that time;
"Group Company" a member of the Greater Group;
"Hazardous Materials"
(a) any petroleum or petroleum products, radioactive materials,
friable asbestos and polychlorinated biphenyls; and
<PAGE>
(b) any chemicals, materials or substances defined as or included in
the definition of "hazardous substances", "extremely hazardous
wastes", "hazardous materials", "restricted hazardous wastes",
"toxic substances", "toxic pollutants", "contaminants", or
"pollutants" or words of similar import under any applicable
Environmental Law;
"Holding Company" a "holding company" as defined in Section 736 of the
Act;
"Indebtedness" at any time any obligation for the payment or repayment
of money, whether present or future, actual or contingent;
"Intangible Assets" means, as at the date of any determination
thereof, the total amount of all assets consisting of goodwill,
patents, trade names, trademarks, copyrights, franchises, experimental
expense, organisation expense, unamortised debt, discount and expense,
deferred assets other than prepaid insurance and prepaid taxes, the
excess of cost of shares acquired over book value of related assets
and such other assets as are properly classified as "intangible
assets" in accordance with generally accepted accounting principles in
the United States of America;
"Intercompany Payables" at any time, amounts owing by a Borrower to an
Eligible Tobacco Group Company at such time;
"Interest" in respect of any period, means the aggregate of:
(a) interest payable (on an accruals basis) by the Borrowers under
the Facilities and this Agreement during the period;
(b) interest, commission and other charges on any other Borrowings
payable (on an accruals basis) by the Tobacco Group during that
period, including the interest element of hire purchase and
finance leases; and
(c) the consideration attributable to the finance cost given by the
Tobacco Group during that period (whether by way of discount or
otherwise) in connection with finance for the Tobacco Group by
way of acceptance credit, bill discounting, debt factoring or
other like arrangement, and further adjusted:
<PAGE>
(i) by deducting any such interest or consideration payable by
one Tobacco Group Company to another Tobacco Group Company
(to the extent not already netted out on consolidation);
(ii) deducting other interest income received, of whatever
nature;
"Interest Cover Ratio" for any period means the ratio of consolidated
EBITDA of the Tobacco Group to Interest for that period as shown in
the most recent quarterly management or audited accounts (as the case
may be) delivered to the International Security Agent pursuant to
clause 15.4 (Quarterly Accounts) or 15.5 (Accounts);
"Interest Indebtedness" all accrued, but unpaid, amounts of interest,
commission, bank charges, costs and expenses payable to a Finance
Party by an Obligor under a Facility which have not been capitalised
to become Principal Indebtedness;
"International Security Agent" MeesPierson N.V. in its capacity as
security agent for the Finance Parties and any successor security
agent appointed under the terms of this Agreement;
"Inventory" stocks of tobacco owned by a Borrower;
"Investments" investments in and subscriptions for and acquisitions of
shares and capital stock in a person or any Subsidiaries and
Affiliates of a person (including SCC) or in any joint venture or any
similar or analogous investment or any purchase of the assets or
business of a person but not including the purchase of stock in trade;
"JTI Letter of Credit" a Joint Liability Letter of Credit issued for
the benefit of the Japanese Tobacco Monopoly;
"Lead Bank" Deutsche Bank A.G. in Hamburg in its capacity as lead bank
to the Banks under this Agreement and any successor thereto appointed
under the terms of this Agreement;
"Letter of Credit" a letter of credit, bank guarantee, standby letter
of credit, bid bond or performance bond;
"Majority Banks" at any time those Banks whose Commitments at such
time are equal to or exceed 67 per cent. of the aggregate of all
Commitments at such time;
"Margin" for the period from the date of this Agreement until 31 March
1998, means 1.0 per cent. and thereafter shall; be determined in
accordance with clause 6.2 as follows:
Interest Cover Ratio Margin
greater than 3.25:1 0.625 per cent.
<PAGE>
equal to or greater than 3.00:1 and 0.75 per cent. less than or equal
to 3.25:1
equal to or greater than 2.5:1 1.00 per cent. and less than 3.00:1
equal to or greater than 2.25:1 and less than 2.5:1 1.25 per cent.
equal to or greater than 2.00:1 and less than 2.25:1 1.5 per cent.
equal to or greater than 1.75:1 and less than 2.00:1 1.75 per cent.
less than 1.75:1 2.00 per cent.
"Master Facilities Termination the earlier of 5.00 p.m. on the Final
Repayment Date Date" or the time when an Event of Default occurs;
"Material Adverse Change" an event or circumstance which (when taken alone
or together with any previous event or circumstance) constitute(s) an
adverse change in the assets, financial or trading position of any Tobacco
Group Company such that, in the opinion of the Majority Banks any Borrower
or SCC is likely to be unable to comply with its obligations under any
Finance Document to which it is a party;
"Material Adverse Effect" an event or circumstance which (when taken alone
or together with any previous event or circumstance) has, or could
reasonably be expected in the opinion of the Majority Banks to have, a
serious effect on the assets, business or financial condition or trading
prospects of any Borrower or of the Tobacco Group as a whole such that any
Obligor is unlikely to be able to comply with its obligations under any
Finance Document;
"Month" a period starting on one day in a calendar month and ending on the
numerically corresponding day in the next calendar month or, if that
corresponding day is not a Business Day, ending on the next Business Day
unless that falls in another calendar month in which case it shall end on
the preceding Business Day, save that if there is no corresponding day in
the month in which the period ends, that period shall end on the last
Business Day in the later month;
"Mortgaged Property" any real property and improvements owned, leased,
used, operated or occupied by any Tobacco Group Company and mortgaged in
favour of a Security Agent;
<PAGE>
"Net Borrowings" all Borrowings of the Borrowers (excluding liabilities of
a Borrower in respect of Letters of Credit to the extent that such Letters
of Credit are (a) back to back with another Letter of Credit of the same
amount and payment terms in favour of the same Borrower; or (b) issued by a
Bank at the request of a Borrower to a customer of that Borrower to secure
a pre-payment made by that customer to that Borrower or (c) documentary
Letters of Credit issued by a Bank at the request of a Borrower in respect
of the purchase and shipment of tobacco where no obligation to pay has
arisen as a result of such tobacco not having been delivered;) less ---cash
for the time being deposited by a Borrower with a Bank which are at all
times capable of being set off by such Bank against such Borrower's
liabilities to it;
"Net Income" net income of any person as shown in the audited financial
statements of that person prepared according to GAAP less any extraordinary
gains and positive adjustments attributable to such person;
"Net Disposal Proceeds" the proceeds of any Disposal by a Borrower after
deducting the reasonable costs of that Disposal and any Taxes payable by a
Borrower in connection with that Disposal;
"Obligors" at any time, each of SCC, the Companies listed in Schedule III
and any other person now or in the future designated in writing as an
Obligor by the Lead Bank (acting with Majority Bank approval) and SCTC Inc.
pursuant to this Agreement and each is an "Obligor";
"Original Accounts" each of:
(a) the audited accounts of the Greater Group; and
(b) the audited consolidated accounts of the SCTC Inc. Group and
each member of the SCTC Inc. Group (both consolidated and
unconsolidated)
for their respective Accounting Reference Periods ended 31st
March 1997;
"Outstandings" at any time in respect of a Bank means the aggregate of the
Dollar Equivalent of each amount which a Borrower may at any time owe to
such Bank under the terms of its Facility or in respect of which such Bank
has recourse to a Borrower under its Facility and including (without double
counting) the maximum potential liability of a Bank in respect of a Letter
of Credit from time to time;
<PAGE>
"PBGC" the Pension Benefit Guaranty Corporation established pursuant to
Section 4002 of ERISA or any successor thereto;
"Permitted Borrowings" (a) Borrowings under the Facilities on the terms and
up to the limits applicable therein as at the date of this Agreement (as
such limits may be reduced from time to time in accordance with the terms
of the respective agreement and/or this Agreement);
(b) Borrowings by any Tobacco Group Company (except a Borrower)
from a third party lender on arms length terms to finance
stock in trade in the ordinary course of its business as
carried on at the date of this Agreement, provided that if
security is given for such Borrowing, such security shall be
granted only to such lender and only over stock in trade
financed by such lender and without recourse to any
Borrower;
(c) Borrowings pursuant to any Bankers Automated Clearing System
facility provided by Lloyds Bank Plc to Standard Commercial
Tobacco Services (UK) Limited from time to time for the
purpose of paying employees wages and to the extent such
Borrowings are outstanding for a period not in excess of 2
Business Days; and
(d) Borrowings which constitute normal trade credit and other
agreed periods for payment of Indebtedness incurred by a
Tobacco Group Company in the ordinary course of carrying on
its business as carried on at the date of this Agreement;
(e) Indebtedness incurred pursuant to a Ring Fenced Financing
Arrangement;
(f) liabilities assumed under guarantees given by a Tobacco
Group Company prior to the date of this Agreement or
Indebtedness incurred by a Tobacco Group Company prior to
the date of this Agreement where, in each case, such
guarantee or Indebtedness is detailed in Part III of
Schedule IV;
(g) liabilities assumed under guarantees given by SCC in respect
of (i) Borrowings of a subsidiary of SCC which are Permitted
Borrowings under paragraph (b) above; (ii) the Bonds; or
(iii) obligations of a Wool Group Company incurred in the
ordinary course of carrying on its business as carried on at
the date of this Agreement;
<PAGE>
(h) Borrowings by any Tobacco Group Company which is not a
Borrower by way of term loans on arms length terms from any
bank or financial institution which have no recourse in
respect of such term loans to any of the Borrowers;
(i) discounting of bills of exchange and promissory notes by a
Tobacco Group Company on arms length terms without recourse
to any Tobacco Group Company;
(j) in relation to SCTC (UK), the RBS Guarantee;
(k) hire purchase and leasing arrangements;
(l) in relation to SCTC, Inc. the Bonds; (m) any Borrowings not
falling within any of (a) to (l) above up to a maximum
aggregate Dollar Equivalent amount of $2,000,000; (n)
Borrowings detailed in Schedule XIII;
"Permitted Disposal"
(a) the disposal of the whole of the issued share capital in
Standard Wool (UK) to SCC or any of its Subsidiaries which
is not a Tobacco Group Company for the purpose of
transferring Standard Wool (UK) Limited out of the Tobacco
Group;
(b) a disposal of stock in trade on arms length terms in the
ordinary course of business; and
(c) a disposal of any asset of a Borrower or an Obligor (other
than stock in trade) where:
(i) the relevant Borrower or Obligor (excluding SCC) has
notified the Lead Bank of its intention to dispose of
that asset (if that asset has a book value in excess of
$2,000,000 or is subject to a fixed charge in favour of
a Security Agent);
(ii) no Event of Default has occurred and is Continuing;
(iii)such disposal is made on arms length terms at book
value for cash; and
(iv) the proceeds of such disposal are applied in accordance
with Clause 8 (Prepayments); and
<PAGE>
(d) any other disposal which has been approved in writing by the Lead
Bank, acting on the instructions of the Majority Banks;
"Permitted Encumbrances"
(a) Encumbrances granted to a Security Agent for the benefit of the
Finance Parties or granted with the prior consent of the Lead
Bank (acting on the instructions of the Majority Banks);
(b) any Existing Security provided that such Existing Security is not
amended, extended or renewed so that the amounts secured thereby
are not increased;
(c) liens arising by operation of law in the normal course of
business as conducted at the date of this Agreement;
(d) Encumbrances comprised in the Security Documents or arising under
any agreement existing at the date of this Agreement in favour of
any of the Banks in connection with credit balances held by that
Bank which permit the netting of credit balances, or in
connection with any Bankers Automated Clearing System facility or
any conditional purchase, hire purchase or finance lease
arrangement which, in each case, is a Permitted Borrowing, to the
extent that it may otherwise constitute an Encumbrance;
(e) any Encumbrance arising in the normal course of business of any
Tobacco Group Company (except for a Borrower) over stock in trade
of such Tobacco Group Company;
(f) any Encumbrance created by any Group Company (except SCC or a
Borrower) in relation to any Borrowing to finance tobacco and
which is granted to the relevant lender only over tobacco
financed by such lender or the right to receive such tobacco
and/or the proceeds of sale of such tobacco where such tobacco
and proceeds have not been pledged and are not required to be
pledged to the Security Agent (or, if they are so pledged or
required to be pledged, the Security Agent has given a consent or
release to enable such Encumbrance to be created);
<PAGE>
(g) any Encumbrance over any asset acquired after the date of this
Agreement and created solely for the purpose of securing
indebtedness incurred only to finance the payment of (and where
the principal amount of such indebtedness does not exceed) the
purchase price at fair market value of such asset;
(h) any Encumbrance (the "New Encumbrance") created solely to replace
an existing Encumbrance (the "Old Encumbrance"), provided that:
(i) the New Encumbrance subsists over the same asset as had been
secured by the Old Encumbrance and is made available on terms no
more onerous than the terms governing the Old Encumbrance; (ii)
the New Encumbrance secures no greater amount of Indebtedness
than the Old Encumbrance; and (iii) the Old Encumbrance was a
Permitted Encumbrance;
(i) any Encumbrance arising in connection with a Permitted Borrowing
where such Encumbrance arises solely by reason of entering into a
hire purchase agreement, finance lease or operating lease and not
by the creation of specific security;
(j) any Encumbrance arising pursuant to a title retention arrangement
with a supplier to the relevant Tobacco Group Company on such
supplier's normal business terms for supply of any asset or
product (other than tobacco or wool) in the ordinary course of
the business of such Tobacco Group Company as carried on at the
date of this Agreement;
(k) any Encumbrance granted by a Subsidiary of a Borrower to a bank
or financial institution to secure Borrowings permitted under
paragraph (h) of the definition of Permitted Borrowings;
(l) in relation only to SCC, the share pledges to be granted in
favour of the holders of the Bonds over the shares of SCTC Inc.
and Standard Wool Inc.;
(m) in relation only to SCTC Inc., the share pledges to be granted to
the Security Agents or either of them over the shares in SCTC
(UK) and TCLTC;
(n) in relation to SCTC (UK), the RBS Legal Charge;
(o) any Encumbrance which does not fall within (a) to (n) inclusive
above, provided that the aggregate Dollar Equivalent of the
payment obligations of all Borrowers secured by such Encumbrance
does not exceed $2,000,000 (or its equivalent) at any time; and
<PAGE>
(q) any Encumbrance referred to in Schedule XIII;
(r) in relation to SCTC Inc. the deed of trust granted in favour of
Branch Banking & Trust Company over land, buildings and machinery
located in Springfield, Kentucky, USA.
"Plan" any pension plan as defined in Section 3(2) of ERISA, which is
maintained or contributed to by (or where there is an obligation to
contribute of) any Borrower or any Subsidiary of a Borrower or an
ERISA Affiliate and each such plan for the five year period
immediately following the latest date on which the Borrowers, or any
Subsidiary of the Borrowers, or any ERISA Affiliate maintained,
contributed to or had an obligation to contribute to such plan;
"Potential Event of Default"
(a) any event or the existence of any circumstance which, with the
giving of notice, the lapse of time, any determination of
materiality, the satisfaction of any applicable condition, or any
combination of them is likely in the opinion of the Lead Bank
(acting on the instructions of the Majority Banks) to constitute
or bring about any event set out in clause 17.1(a)-(t); or
(b) that financial circumstances exist, such that (in the opinion of
the Lead Bank (acting on the instructions of the Majority Banks))
on the subsequent publication of any audited or quarterly
accounts by reference to which the financial covenants in Clause
16.1 (Financial Covenants) are to be calculated, there would then
be a breach of one or more of those financial covenants;
"Preferential Claim" means a claim by a Bank for sums advanced to a
Borrower to which Section 386 and Schedule 6 of the Insolvency Act
1986 (or any analogous provision in any other applicable jurisdiction)
applies;
"Principal Indebtedness"
(a) means, in relation to a Facility under which actual Indebtedness
is owing, the principal amount for the time being owing
thereunder (including the face amount of any outstanding Bills
accepted and discounted by a Bank under an acceptance credit
Facility and the amount of any interest which has been
capitalised to become Principal Indebtedness but excluding
Interest Indebtedness);
<PAGE>
(b) means, in relation to a Facility under which unmatured
liabilities exist, the maximum unmatured liability from time to
time capable of maturing into an actual principal liability
thereunder or (if such liability has matured) the principal
amount of it (excluding Interest Indebtedness but including
interest which has been capitalised to become Principal
Indebtedness), except that unmatured liabilities under spot and
forward foreign exchange currency Facilities shall be valued in
accordance with Clause 5.5 (Foreign Exchange) and matured
liabilities under all such Facilities shall be valued at the net
actual amount of such liabilities;
"Properties" at any time, all interests in freehold and leasehold
property then owned by any member of the Group;
"Proportion of Aggregate in relation to any Bank, means the proportion
which its Commitments" Commitment bears to the aggregate of all
Commitments on the Enforcement Date;
"Proportion of Aggregate in relation to any Bank, means the proportion
which its Outstandings" Outstandings bear to the aggregate of all
Outstandings on the Enforcement Date except in relation to Clause 26.2
(Calculation) when it shall mean, in relation to any Bank, the
proportion which its Aggregate Bank Indebtedness bears to the
aggregate of all the Aggregate Bank Indebtedness of the Banks on the
Enforcement Date;
"Proportion of Bank Loss" in relation to any Bank, means the
proportion which its Bank Loss bears to the aggregate of all the Bank
Loss of the Banks on the date on which the relevant notice delivered
pursuant to Clause 26.9(a);
"Pro Rata Share" in relation to any Bank at any time, means a
percentage equal to that proportion which such Bank's Commitment at
such time bears to the aggregate of all the Commitments of the Banks
at such time;
"Quarter Date" each of 31 March, 30 June, 30 September and 31 December
in any year;
"RBS" The Royal Bank of Scotland plc;
"RBS Guarantee" the two guarantees given by SCTC (UK) to RBS in
respect of the obligations of Standard Wool (UK) Limited dated 12
February 1992 and 30 June 1994 respectively;
"RBS Legal Charge" the first legal charge dated 19 December 1991
granted by SCTC (UK) to RBS in respect of land and buildings in
Godalming, Surrey;
<PAGE>
"Realisation Account" an interest-bearing Dollar account opened in the
books of Deutsche Bank A.G. entitled "Deutsche Bank A.G. - Realisation
Account re [*Group Company*]" into which Net Disposal Proceeds are to
be paid pursuant to Clause 14.8 (Realisation Account);
"Receivables" the aggregate of all amounts owing to the Borrowers by
debtors and representing the purchase price payable to the Borrowers
in respect of tobacco supplied or to be supplied by them for customers
but excluding:
(a) any such receivables which are outstanding more than 90 days
after their due date;
(b) receivables whose due date for payment falls more than 180
days after the date the relevant goods or services are
supplied;
(c) receivables in respect of which the relevant Borrower has
made provision in its books in accordance with GAAP on the
basis that it considers it unlikely that those receivables
will be paid;
(d) receivables owed by Wool Group Companies;
(e) receivables owed by one Borrower to another;
"Recoveries" the net amounts (after deducting and retaining or paying
all proper costs, charges and expenses (including legal expenses) and
receivers and other costs of enforcement) received, recovered or
realised by:-
(a) a Security Agent pursuant to the Security Documents on or
after the Enforcement Date; and/or
(b) any Bank, the Co-Lead Bank or the Lead Bank in respect of
the Indebtedness of the Obligors or any of them under or
pursuant to the Facilities, this Agreement and/or the
Finance Documents or any of them on or after the Enforcement
Date,
and includes any proceeds derived on or after the
Enforcement Date from an insurance claim in respect of any
asset or property charged under any Security Document;
"Recoveries Account" shall bear the meaning attributed thereto in Clause
25.3 (Recoveries to be held as Trustee);
"Regulation D" Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor to all or a
portion thereof establishing reserve requirements.
<PAGE>
"Relevant Date" 1st August 1997;
"Reportable Event" an event prescribed in Section 4043(c) of ERISA with
respect to a Plan that is subject to Title IV of ERISA other than those
events as to which the 30-day notice period is waived under subsection -22,
-23, -25, -27, or -28 of PBGC Regulation Subsection 4043;
"Reserve" a reserve for unmatured liabilities made in accordance with the
provisions of this Agreement;
"Ring Fenced Financing Arrangement" a Borrowing by a Tobacco Group Company
which is wholly financed by SCC or third parties who have recourse only (a)
to the assets acquired with the proceeds of such Borrowing and not to any
other assets of a Tobacco Group Company; and/or (b) to SCC on an unsecured
basis under a guarantee given by SCC which is a Permitted Borrowing by SCC;
"SCC" Standard Commercial Corporation, a company registered in the laws in
the State of North Carolina, USA, with Federal Tax Identification Number
13/1337610;
"SCC Tangible Net Worth" means at any time, consolidated net shareholders'
equity of SCC and its Subsidiaries determined in accordance with generally
accepted accounting principles in the United States of America applied on a
consistent basis, with no upward adjustments due to a revaluation of
assets, less all Intangible Assets of SCC and its Subsidiaries and
excluding cumulative transaction adjustments.
"SCTC Inc's Borrowing Base" at any time means an amount equal to the sum
(without double counting) of:
(a) 80 per cent. of the sum of the value of:
(i) SCTC Inc.'s Inventory which is not subject to any
Encumbrance (other than any Encumbrance in favour of
the Banks);
(ii) SCTC Inc.'s Receivables;
(iii)SCTC Inc.'s Eligible Intercompany Loans (less
Intercompany Payables) up to a maximum aggregate amount
of $40,000,000; and
<PAGE>
(iv) SCTC Inc.'s Supplier Advances and SCTC Inc.'s Affiliate
Advances up to a maximum aggregate amount of
$40,000,000;
LESS
(v) SCTC Inc.'s Trade Payables; and
(b) 50 per cent. of the value of Fixed Assets except those owned by
SCTC (UK).;
each as shown in the most recent Borrowing Base Certificate
delivered to the International Security Agent in accordance with
clause 15.2 (Borrowing Base) (or, if such Borrowing Base
Certificate is not the latest required to be delivered pursuant
to that clause, as determined by the International Security Agent
acting reasonably);
SCTC Inc.'s Net Borrowings all Borrowings of SCTC Inc. (excluding
liabilities of SCTC Inc. in respect of Letters of Credit to the
extent that such Letters of Credit are (a) back to back with
another Letter of Credit of the same amount and payment terms in
favour of SCTC Inc.; or (b) issued by a Bank at the request of
SCTC Inc. to a customer of SCTC Inc. to secure a pre-payment made
by that customer to SCTC Inc. or (c) documentary Letters of
Credit issued by a Bank at the request of SCTC Inc. in respect of
the purchase and shipment of tobacco where no obligation to pay
has arisen under the relevant documentary Letter of Credit as a
result of such tobacco not having been delivered;) less cash for
the time being deposited by ---- SCTC Inc. with a Bank which are
at all times capable of being set off by such Bank against SCTC
Inc.'s liabilities to it;
"SCTC (UK)" Standard Commercial Tobacco Company (UK) Limited, a
company registered under the laws of England and Wales with
registered number 1411968;
"SCTC Inc." Standard Commercial Tobacco Company, Inc. a company
registered under the laws of the State of North Carolina;
"SCTC Inc. Group" the Tobacco Group Companies and (for so long
only as Standard Wool (UK) Limited remains a Subsidiary of SCTC
(UK) or another Tobacco Group Company) Standard Wool (UK)
Limited;
"Security Agents" the International Security Agent and the US
Security Agent and each is a "Security Agent";
<PAGE>
"Security Documents" each of the documents detailed in Schedules
IV and V and any new, substituted or additional security or
guarantees entered into by any person in favour of the Security
Agent on or after the date of this Agreement to secure amounts
now or hereafter due or owing (actually or contingently) to any
Finance Party under or pursuant to the Finance Documents or any
of them;
"Solvency Directive" the EC Directives on Solvency Ratios for
Credit Institutions and Own Funds of Credit Institutions
(89/647/EEC of 18 December 1989 and 89/299/EEC of 17 April 1989
respectively) as amended and in force on the date of this
Agreement;
"SSAP" a Standard Statement of Accounting Practice issued by the
Institute of Chartered Accountants;
"Standard Wool Tangible Net Worth" means at any time,
consolidated net shareholders' equity of Standard Wool UK Limited
and its Subsidiaries determined in accordance with generally
accepted accounting principles in the United States of America
applied on a consistent basis, with no upward adjustments due to
a revaluation of assets, less all Intangible Assets of Standard
Wool UK Limited and its Subsidiaries and excluding cumulative
transaction adjustments.
"Steering Committee" means Bankers Trust Company, Deutsche Bank
A.G. in Hamburg, MeesPierson N.V., Norddeutsche Landesbank
Girozentrale and Westdeutsche Landesbank Girozentrale and in each
case their successors approved in accordance with the terms of
this agreement.
"Sterling" or "(pound)" lawful currency of the United Kingdom;
"Subsidiary"
(a) a subsidiary as defined in Section 736 of the Act; and
(b) for the purposes of Clause 15 (Information Covenants)
and Clause 16 (Financial Covenants), a subsidiary
undertaking as defined in Section 258 of the Act;
"Supplier" a supplier of tobacco or other goods or services (not
being a Group Company or Affiliate) to a Group Company;
"Supplier Advances" Financial Accommodation provided by a
Borrower to a Supplier;
<PAGE>
"Taxes" all present and future taxes, levies, imposts, duties,
charges, fees, deductions and withholdings imposed or levied by
any governmental, fiscal or other competent authority (and
includes without limitation any penalty payable in connection
with any failure by any Group Company to pay or delay by any
Group Company in paying any of the same) and "Tax" and "Taxation"
shall be construed accordingly;
"Tax on Overall Net Income" of a Finance Party shall be construed
as a reference to tax (except tax deducted or withheld from any
amounts paid or payable under this Agreement) imposed on that
Finance Party by the jurisdiction under the laws of which it has
been incorporated or in which its Facility Office is located on
(a) the net income, profits or gains of the Finance Party
worldwide or (b) such of the net income, profits or gains of the
Finance Party as are considered to arise in or to relate to or
are taxable in that jurisdiction;
"TCLTC" Trans-Continental Leaf Tobacco Corporation Limited, a
company registered under the laws of Liechtenstein with
registered number H.LIV/14;
"TCLTC (Jersey)" Trans-Continental Leaf Tobacco Corporation
(Jersey) Limited a company registered under the laws of Jersey
with registered number 64368;
"Tobacco Group Company" SCTC Inc. and each other body corporate
detailed in Schedule VII save for Standard Wool UK Limited or
such other group of companies as SCTC Inc. and the Lead Bank may
agree in writing from time to time and the "Tobacco Group" means
all the Tobacco Group Companies and references in this Agreement
to the audited accounts of the Tobacco Group shall be deemed to
be references to the audited accounts of the SCTC Inc. Group
having deducted any entries relating to Standard Wool (UK)
Limited from such audited accounts;
"Tobacco Group Tangible Net Worth" means at any time,
consolidated net shareholders' equity of SCTC Inc. and its
Subsidiaries determined in accordance with generally accepted
accounting principles in the United States of America applied on
a consistent basis, with no upward adjustments due to a
revaluation of assets, less all Intangible Assets of SCTC Inc.
and its Subsidiaries and excluding cumulative translation
adjustments but deducting the Standard Wool Tangible Net Worth.
"Trade Payables" the aggregate of all amounts owing by the
Borrowers to trade creditors in the ordinary course of the
respective businesses of the Borrowers;
"Trading Period" the three monthly periods by reference to which
SCC prepares:-
<PAGE>
(a) the management accounts to be delivered to the Lead
Bank under Clause 15.8 (Quarterly Accounts); and
(b) the Cash Flow Forecasts to be delivered to the Lead
Bank under Clause 15.3 (Cash Flow Forecast);
"Transferee" a bank or other financial institution to which a
Bank seeks to transfer or has transferred all or part of its
rights and obligations under this Agreement and each other
Finance Document in accordance with Clause 21 (Assignments and
Transfers);
"Transfer Certificate" a certificate substantially in the form
set out in Schedule VI signed by a Transferee and a Bank;
"Unfunded Current Liability" of any Plan shall mean the amount,
if any, by which the actuarial present value of the accumulated
plan benefits under the Plan as at the close of its most recent
plan year, determined in accordance with actuarial assumptions at
such time consistent with Statement of Financial Accounting
Standard N.-87, exceeds the market value of the assets allocable
thereto;
"United States" or "USA" the United States of America;
"unmatured liability" an unmatured, contingent or future
liability or any other liability which is not immediately due and
owing;
"US Security Agent" Bankers Trust Company in its capacity as
security agent for the Finance Parties and any successor US
Security Agent appointed under the terms of this Agreement;
"WAFS System" the record keeping system used by the Tobacco Group
(as varied from time to time with the prior written consent of
the Security Agent) to record and monitor the uncommitted tobacco
owned by the Borrowers and other Tobacco Group Companies. WAFS is
an acronym for World Available For Sale;
"Wool Group Company" a Subsidiary of SCC which is not a Tobacco
Group Company; and
1.2 Interpretation
In this Agreement, save as otherwise expressly provided:-
<PAGE>
(a) references in this Agreement to this Agreement or any other
document include references to this Agreement, its Recitals and
its Schedules or such other document as extended, varied,
supplemented, restated and/or replaced in any manner from time to
time (even if changes are made to the composition of the Finances
Parties and/or the other parties to this Agreement) and
references to this Agreement shall also include any document
which extends, supplements, varies, restates or replaces this
Agreement;
(b) subject to Clause 21 (Assignments and Transfers), references to
any party shall, where relevant, be deemed to be references to or
to include, as appropriate, their respective lawful successors,
assigns or transferees;
(c) references to Clauses, paragraphs and Schedules are to be
construed as references to Clauses and paragraphs of, and
Schedules to, this Agreement;
(d) references to any enactment shall be deemed to include references
to such enactment as re-enacted, amended or extended;
(e) references to a "person" shall include any individual, company,
corporation, firm, partnership, joint venture association,
organisation, institution, trust or agency, whether or not having
a separate legal personality;
(f) references to the "assets" of any person shall be construed as a
reference to the whole or any part of its business, undertaking,
property, shareholdings, assets, rights and revenues (including
any right to receive revenues and uncalled capital);
(g) references to the one gender shall include all genders, and
references to the singular shall include the plural and vice
versa;
(h) headings are inserted for convenience only and shall be ignored
in construing this Agreement;
(i) references to "including" and "in particular" shall not be
construed restrictively but shall be construed as meaning
"including, without prejudice to the generality of the foregoing"
and "in particular, but without prejudice to the generality of
the foregoing" respectively;
(j) references to "law" shall be construed as including any present
or future common law, statute, statutory instrument, treaty,
regulation, directive, order, decree, other legislative measure,
code, circular, notice, demand, or injunction, including those
with which it is customary for persons to whom it is directed to
comply, even if compliance is not mandatory;
(k) references to "writing" include telex and facsimile transmission
legibly received, except in relation to any certificate,
forecast, report, notice, resolution or other document which is
expressly required by this Agreement to be signed, and "written"
has a corresponding meaning;
(l) any consent or approval required from the Lead Bank, and/or
any of the Banks, to any Borrower under this Agreement must
be obtained in writing and shall be of no effect if it is
not in writing;
(m) a reference to time is to London time;
(n) the value of assets for the purpose of the definition of
"Borrowing Base" shall be determined as follows:
(i) the value of Inventory and Fixed Assets shall be their
value in the books of the relevant Tobacco Group Company
provided such books are maintained in accordance with
GAAP;
<PAGE>
(ii) the value of Receivables, Intercompany Loans, Intercompany
Payables, Supplier Advances and Trade Payables shall be
their principal face value exclusive of any interest; and
(o) a reference to the approval of the Steering Committee is a
reference to an approval by at least four out of five of the
members of the Steering Committee.
<PAGE>
PART II
FACILITIES, LETTERS OF CREDIT AND BILLS
2. FACILITIES
2.1 Facilities:
(a) Subject to the terms of this Agreement, each of the Banks agrees to
make available its Facilities up to the amount of its Commitment. The
Banks may if they wish make such Facilities available under the terms
of a facility letter substantially in the form set out in Schedule XV.
(b) No Bank shall be required to permit a utilisation of its Facilities
where an event set out in Clause 17.1(a)-(t) (ignoring any grace
periods or notice requirements therein) has occurred and is continuing
or would result from such utilisation. If at any time following the
delivery to the International Security Agent of a Borrowing Base
Certificate pursuant to clause 15.2 (Borrowing Base), the
International Security Agent notifies SCTC Inc. that:
(i) the aggregate Net Borrowings exceed the level of the Borrowing
Base demonstrated in such Borrowing Base Certificate; or
(ii) the aggregate Outstandings exceed all aggregate Commitments; or
(iii)SCTC Inc's Net Borrowings exceed SCTC Inc's Borrowing Base as
demonstrated in such Borrowing Base Certificate.
SCTC Inc. shall, within two Business Days, prepay or procure the
prepayment of an amount of the Outstandings necessary to ensure
that the relevant defect set out above is remedied.
(c) All Facilities shall be available within the limits applicable under
the Borrowers Borrowing Base and in the case of SCTC Inc. within the
limits applicable under SCTC Inc.'s Borrowing Base to all Borrowers.
For the avoidance of doubt neither TCLTC nor SCTC (UK) shall be
jointly liable with SCTC Inc. to the Banks in respect of any
Borrowings of SCTC Inc. under the Facilities.
(d) The obligations of the Banks are several and no Bank shall have any
liability for another Bank except as expressly stated in this
Agreement.
3. LETTERS OF CREDIT
3.1 Letters of Credit:
(a) Where a Borrower wishes to utilise a Facility for the issuance of
Letters of Credit, the Borrower shall deliver to such Bank, no later
than noon on the Business Day before the proposed issue of the Letter
of Credit (or such later time as such Borrower and such Bank may
agree) a written request stating:
(i) the beneficiary of the proposed Letter of Credit;
(ii) the expiry date thereof;
<PAGE>
(iii)instructions as to the form of such Letter of Credit and the
manner in which is it to be issued (which must be acceptable to
such Bank).
(b) A request for the issue of a Letter of Credit shall be irrevocable.
(c) Where a Bank (the "Issuing Bank") agrees to issue a Letter of Credit
under its Facilities and this Agreement, each of the Borrowers jointly
and severally:-
(i) agrees to keep the Issuing Bank indemnified from and against all
actions, proceedings, liabilities, claims, demands, damages,
costs and expenses in relation to or arising out of or appearing
to such Issuing Bank to arise out of a Letter of Credit or any
indemnity given by the Issuing Bank in relation thereto and to
pay to such Issuing Bank on demand all payments, losses, costs,
charges, damages and expenses suffered or incurred by such
Issuing Bank in consequence thereof or arising in connection
therewith, whether directly or indirectly other than those
incurred, suffered or sustained as a direct result of the gross
negligence or wilful default misconduct of such Issuing Bank;
(ii) irrevocably authorises the Issuing Bank to debit to any account
of the Borrowers with the Issuing Bank all such payments, losses,
costs, charges, damages and expenses and agrees that the Issuing
Bank shall be entitled at any time without notice to or consent
from any Borrower to apply or transfer any money at any time
standing to the credit of any account of such Borrower with such
Issuing Bank in part payment or payment of such sums of money as
may now or hereafter from time to time be or become due or
arising from such Borrower pursuant to paragraph (i) above;
(iii)irrevocably authorises and directs the Issuing Bank to make any
payments and comply with any demands which may be claimed or
appear to the Issuing Bank to be claimed or made under or
pursuant to such Letter of Credit or any indemnity given by the
Issuing Bank in relation thereto without any reference to or
further authority from any Borrower and agrees that any payment
made by the Issuing Bank in accordance with or appearing to the
Issuing Bank to be in accordance with the Letter of Credit and/or
any indemnities of the Issuing Bank in respect thereof shall be
binding upon each of the Borrowers and shall be accepted by the
Borrowers as conclusive evidence that the Issuing Bank was liable
to make such payment or comply with such demand and the Issuing
Bank may at any time determine or procure the determination of
any Letter of Credit and/or any of the indemnities of the Issuing
Bank in respect thereof;
(iv) agrees that the liability of the Borrowers under this Clause 3
shall apply also to any extension or renewal of a Letter of
Credit (whether in the same terms or otherwise and whether
arising by agreement, operation of law or otherwise howsoever)
and the liabilities and obligations of the Borrowers under this
Clause 3 shall continue in respect of the relevant Letter of
Credit as so extended or renewed;
<PAGE>
(v) agrees to provide to the Issuing Bank on demand made at
any time following the declaration by the Lead Bank of
an Event of Default in accordance with Clause 17.1,
cash cover for all liabilities of the Issuing Bank
under or pursuant to each Letter of Credit or any of
their Outstandings at the time of such demand;
(vi) agrees that nothing in this Clause 3 shall impose on a
Bank a duty to give or procure the giving of any Letter
of Credit requested by a Borrower if such Bank
certifies to the relevant Borrower that it is unlawful,
or that it would not be in such Bank's general business
interests to issue such a Letter of Credit;
(vii)agrees that the indemnity contained in this Clause 3
shall be in addition to and not in substitution for any
other indemnity or reimbursement right which any Bank
may hold as at the date of this Agreement;
(d) From time to time a Bank may agree to issue a Letter of Credit
which the Lead Bank has designated by not less than 2 days prior
notice to the Banks to be a "Joint Liability Letter of Credit".
Where a Bank issues a Joint Liability Letter of Credit, such Bank
shall have, in addition to the benefit of the indemnity set out
in clause 3(c) above, the benefit of the counter guarantee from
the Banks set out in clause 3(e) below. Joint Liability Letters
of Credit shall be priced at the applicable Margin from time to
time, but the JTI Letter of Credit shall be priced at the
applicable Margin less 1/4 per cent. per annum, but shall never
be priced at less than 1/2 per cent. per annum;
(e) Where a Bank (the "Joint Liability Issuing Bank") issues a Joint
Liability Letter of Credit each of the Banks agrees as follows:
If any demand is made upon the Joint Liability Issuing Bank under
the Joint Liability Letter of Credit, each other Bank guarantees
and undertakes that it will pay to the Joint Liability Issuing
Bank forthwith on demand by the Joint Liability Issuing Bank an
amount equal to its Share (as defined below) of the liability of
the Joint Liability Issuing Bank under such Joint Liability
Letter of Credit. The amount of any actual or Contingent
Liability for or payment made by a Bank under its guarantee
contained in this clause 3(e) shall be deemed to constitute a
utilisation of such Bank's Facility by the Borrowers in respect
of which the Borrowers shall be jointly and severally liable and
the amount of each Bank's Facility available for drawing shall be
reduced accordingly, but such guarantee may not be for an amount
which would allow Outstandings owed to a Bank to exceed such
Bank's Commitment.
In this clause 3(e) a reference to a Bank's Share means the
proportion which its Commitments as at the date of issue of the
Joint Liability Letter of Credit, bears to the aggregate of all
the Commitments of the Banks liable under this Sub-Clause (e) on
such date.
(f) No Bank shall be entitled to refuse to participate in a Joint
Liability Letter of Credit except where the issue of the Joint
Liability Letter of Credit would infringe any general policy of
such Bank and such Bank has confirmed that fact in writing to the
Lead Bank and each of the Banks no later than 24 hours prior to
the issue of such Joint Liability Letter of Credit giving
reasons.
<PAGE>
(g) If a Bank is required by law to make a withholding or deduction
from any amount payable by it pursuant to clause 3(e), the
relevant sum payable by such Bank shall be increased to the
extent necessary to ensure that, after the making of such
deduction or withholding, the Joint Liability Issuing Banks
receives and is entitled to retain (free of any liability in
respect of any such deduction or withholding) a net sum equal to
the amount which it would have received and so retained had no
such deduction been made or required to be made.
(h) If a Bank makes a payment in respect of a Joint Liability Letter
of Credit, the amount of such payment shall be treated as a
Borrowing under the Facilities.
3.2 The Banks may call for cash cover from the Borrowers in respect of Letters
of Credit issued in accordance with Clause 3.1 and Bills discounted in
accordance with Clause 4 if it is required to do so under any regulation
imposed by any central bank or other fiscal or monetary authority.
4. BILLS
4. Bills:
(a) If a Bank (an "Accepting Bank") agrees, pursuant to the terms of its
Facility to accept a Bill, such acceptance shall (unless such bill is
discounted without recourse to the Borrower) give rise to a debt from
the Borrower by whom or on whose behalf such Bill was presented to the
Accepting Bank for acceptance equal to the face value of such Bill,
which debt shall be due for payment on the maturity of such Bill. An
Accepting Bank may at any time following the declaration by the Lead
Bank of an Event of Default in accordance with Clause 17.1 demand full
cash cover for the aggregate amount of all outstanding Bills.
(b) The Borrowers will provide an Accepting Bank with such information
with respect to any Bill proposed to be discounted by it as such
Accepting Bank may reasonably request.
<PAGE>
PART III
MASTER FACILITIES ARRANGEMENTS
5. MASTER FACILITIES ARRANGEMENTS
5.1 Application:
(a) The terms of the Facilities and the Facility Agreements shall
be amended and supplemented to the extent expressly provided
in this Agreement.
(b) In the event of any conflict or inconsistency between the
terms of this Agreement and the terms of any Finance Document,
the terms of this Agreement shall prevail.
(c) Save as varied or supplemented by this Agreement, the terms of
the Facility Agreements and the Facilities and all of the
rights, benefits, commitments, obligations and liabilities of
the Banks and each of the Obligors thereunder or in respect
thereof shall continue in full force and effect and continue
to be regulated by the terms applicable thereto.
(d) Nothing contained in or done or omitted to be done pursuant to
this Agreement shall discharge, release or otherwise adversely
affect the obligations of any person under any Encumbrance or
guarantee granted or created by such person in relation to or
in connection with the Facilities. References in any such
guarantee or Encumbrance to any Facility Agreement shall
(where the terms of such guarantee or Encumbrance so permit)
apply as if the references were to such document as varied and
supplemented by the terms of this Agreement.
5.2 Amendments:
(a) Save as expressly provided in this Agreement, no Finance Party
shall, or shall agree to, vary, amend, waive or supplement the
terms of any of the Facilities or the Facility Agreements
(save with the prior written consent of the Lead Bank acting
with Majority Bank approval), provided that a Finance Party
may amend, vary or waive in writing any provision of a
Facility or a Facility Agreement to the extent that:-
(i) such amendment, waiver or variation is of a purely
technical, non-material and mechanical nature and is
not inconsistent with the terms of this Agreement
and does not have the effect of conferring on any
Finance Party any priority over the rights of or
otherwise prejudicing or adversely affecting any
other Finance Party; and
(ii) the Lead Bank receives at least 7 Business Days'
prior written notice of the full terms thereof and
has not objected to such amendment, waiver or
variation in writing.
5.3 Survival of Provisions of Master Facilities Agreement: Save as expressly
provided in this Agreement, the provisions of this Agreement shall remain
in full force and effect after the Master Facilities Termination Date for
so long as any amount is due or owing or may be or become due or owing from
any Obligor to any Finance Party under or pursuant to any Finance Document
and as otherwise required to give full effect to the provisions of this
Agreement.
<PAGE>
5.4 Outstandings: For the purpose of calculating any amount in any currency
as between a Borrower and a Bank, the Outstandings and the Commitments
shall continue to be calculated in accordance with the terms of the
relevant Facility Agreements (save as provided in Clause 5.5 (Foreign
Exchange) and Clause 28 (Calculation of Outstandings)). Where it is
necessary for the purpose of this Agreement to calculate any such
amount, then the Lead Bank shall make such calculation after
consultation with the relevant Bank and the relevant Borrower and shall
notify the relevant Bank and the relevant Borrower of such amount and
such notification shall, save in the case of manifest error, be prima
facie evidence for the purposes of this Agreement.
5.5 Foreign Exchange: In determining the amount of any Outstandings from time
to time at any time prior to the Enforcement Date, each foreign exchange
transaction between a Bank and a Borrower shall be treated as follows:-
(a) with respect to any foreign exchange transaction whose initial
term is 210 days or less, an amount equal to 10 per cent. of
the gross amount payable by the Borrower under such foreign
exchange transaction shall be deemed to be the amount
outstanding under the relevant Facility for the purpose of
calculating such Bank's Outstandings;
(b) with respect to any foreign exchange transaction whose initial
term is greater than 210 days, an amount equal to 20 per cent.
of the gross amount payable by the Borrower under such foreign
exchange transaction shall be deemed to be the amount
outstanding under the relevant Facility for the purpose of
calculating such Bank's Outstandings.
<PAGE>
PART IV
INTEREST AND COMMISSION
6. INTEREST AND COMMISSION
6.1 Interest Rate:
(a) The interest rate per annum payable by the Borrowers on any advance
(including any overdraft) under any of the Facilities shall be a rate
per annum equal to the aggregate of:-
(i) the Margin;
(ii) the funding rate as provided in the relevant Facility Agreement
or if no rate is specified or the relevant Facility is not
documented, the cost of funds to such Bank (as conclusively
determined by it) in respect of such advance; and
(iii)the Additional Costs Rate (if any) applicable to the relevant
Facility;
(b) All other interest, commission, fees and charges payable under each of
the Facilities shall be agreed between each Bank and the Borrowers
and, failing such agreement, shall be the rates prevailing under the
relevant Facility at the Relevant Date.
6.2 Changes in the Margin:
(a) On receipt by the International Security Agent of the management
accounts covering the six month period to each of 31 March and 31
September in each year of the term of this Agreement (commencing 31
March 1998), if the most recent accounts provided to the International
Security Agent pursuant to clause 15.4 (Quarterly Accounts)
demonstrate that the Margin may be adjusted in the manner set out in
the definition of "Margin", then the Lead Bank shall notify the new
Margin to the Banks and the Borrowers and the Margin applicable to
each Facility shall be adjusted accordingly with effect from the next
rollover date for that Facility. Provided that, following the
occurrence of an Event of Default and for so long as such Event of
Default is Continuing, the Margin shall be three per cent. For the
purposes of this sub-clause adjustments of Margins in respect of each
period shall be calculated with reference to the four preceding
consolidated quarterly accounts delivered pursuant to clause 15.4(e)
(Quarterly Accounts) of the Tobacco Group on a rolling basis.
(b) Where the ratio of EBITDA to Interest has been tested by reference to
unaudited management accounts of the Tobacco Group, the ratio shall be
retested on delivery of the audited consolidated accounts of the
Tobacco Group to the International Security Agent in accordance with
clause 15.5 (Accounts) and if such retesting indicates that the Margin
charged for any Interest Period applicable to an advance under a
Facility was less than the Margin which would have been charged on the
basis of the audited accounts of the Tobacco Group, a correcting
payment shall be made by the relevant Borrower or Borrowers to the
Banks within 14 days of a notice from the International Security Agent
to SCTC Inc. requiring a correcting payment to be made;
6.3 Commission and Other Charges: Commissions, guarantee fees and similar
charges applicable to Letters of Credit and all other utilisations of
Facilities (except for advances) shall be those agreed between the Banks
and the Borrowers from time to time;
<PAGE>
6.4 Interest Periods: The periods for which each interest rate is calculated
and by reference to which interest is to be paid, interest rests and
debiting intervals shall be determined by agreement between the relevant
Borrower(s) and the relevant Bank (and, failing such agreement, shall in
each case be 30 days), provided that the maximum duration of any such
period and of any advance under any Facility shall be 180 days and provided
that accrued interest shall be paid additionally on the Master Facilities
Termination Date.
6.5 Default Interest Rate:
(a) If any Borrower or SCC fails to pay any amount of principal, interest
or any other sum (each referred to in this Clause 6.5 as an "overdue
sum") when it is due under this Agreement and/or the terms of any
Facility (as amended by this Agreement), then the Borrower or SCC (as
the case may be) shall pay interest on such overdue sum for the period
from the due date to the date of actual payment, as well after as
before judgment.
(b) Such interest shall be calculated and payable by reference to
successive interest periods which may be of variable durations. The
first interest period shall begin on the due date and each subsequent
interest period shall begin on the expiry of the previous one. Each
such interest period shall be of such duration as the relevant Finance
Party may at its absolute discretion select.
(c) The rate of interest applicable for each such interest period shall be
the rate per annum (as determined by the relevant Finance Party) equal
to the sum of (a) 3% and (b) the cost of funds to such Finance Party
(as conclusively determined by it) in respect of such overdue sum.
(d) Any interest payable under this Clause 6.5 which is not paid when due
shall be deemed an overdue sum and itself bear interest accordingly.
6.6 Alternative Interest Rates: If it becomes impossible for any Finance Party
to determine any appropriate interest rate basis under the terms of any
Finance Document (as varied or supplemented by this Agreement) then:-
(a) the relevant Finance Party shall promptly notify the Lead Bank and the
Borrowers;
(b) the rate of interest applicable to the sum in respect of which
interest is to be determined from time to time during any period
applicable to it shall be the rate per annum which is the aggregate of
(i) the Margin, (ii) the Additional Costs Rate (if any) and (iii) the
rate per annum determined by the relevant Finance Party to be the cost
to it of funding such sum during such period from whatever sources it
may select.
6.7 Accrual: Interest shall accrue from day to day and be payable on the basis
of a 365 day year (in the case of Sterling) and a 360 day year or other
customary term in the case of any other currency.
<PAGE>
6.8 Payment of Interest etc: Any payments to be made by any Borrower or SCC
under or pursuant to any Finance Document shall be made in immediately
available funds before 11.00 a.m. on the day in question to the account
specified by the relevant Finance Party. Interest, principal and all other
amounts payable to any Finance Party under this Agreement or the terms of
any Facility shall be paid by the relevant Borrower or SCC (as the case may
be) directly to the relevant Finance Party on the date applicable under the
terms of the relevant Facility Agreement or if no such date is specified,
on the last Business Day of each month during the term of this Agreement
and additionally on the Master Facilities Termination Date. Each payment
shall be made in the manner provided under the terms of the relevant
Facility or otherwise as agreed between the relevant Borrower or SCC (as
the case may be) and the relevant Finance Party.
6.9 Indemnity: Each Borrower and SCC shall on demand indemnify any Finance
Party against any funding or other loss, cost or expense or liability
sustained or incurred by such Finance Party as a result of any sum payable
by any Obligor under any Finance Document not being paid when due; and the
occurrence and/or continuance of any other Event of Default and/or the
declaration of all the amounts outstanding to be due and payable as a
result thereof.
<PAGE>
PART V
REPAYMENT AND PREPAYMENT
7. REPAYMENT
7. Final Repayment: The Borrowers shall repay all outstanding amounts under
(a) the Facilities and (b) each Finance Document and provide cash cover for
all unmatured liabilities of the Banks under or pursuant to each of the
Facilities in each case on or before the Final Repayment Date.
8. PREPAYMENT
8. Prepayment: Subject to clause 9.7(b):
(a) Subject to clause 8(b) and 8(c) all Net Disposal Proceeds shall be
applied within 180 days of receipt by any Borrower either;
(i) where such Net Disposal Proceeds arise from the sale of an asset
by an Obligor (excluding SCC), in or towards the purchase of a
replacement asset for use in the business of such Obligor
(excluding SCC) where such replacement asset will not be subject
to any Encumbrance (except in favour of the Banks) and the
replacement assets will have an aggregate market value at least
equal to the market value immediately before the disposal of the
assets to be replaced; or
(ii) by way of prepayment of Outstandings to each Bank individually
under the Facilities pro rata pari passu.
(b) Any proceeds payable to a Tobacco Group Company on a disposal of the
whole or any part of the shares or business of a Wool Group Company
shall be paid into an account of a Borrower with the Lead Bank but are
not required to be applied as contemplated in clause 8(a) above.
(c) Net Disposals Proceeds not exceeding $2,000,000 in any one
Accounting Reference Period need not be applied as prepayments
nor used to purchase replacement assets.
<PAGE>
PART VI
NO DEDUCTIONS
9. NO DEDUCTIONS
9.1 Payments:
(a) Each payment to be made by any Borrower or SCC to any Finance
Party shall be made free and clear of and without any
withholding, deduction or set-off whatsoever, including for or
on account of Taxes, unless that Borrower or SCC (as the case
may be) is required by law to make such a payment subject to
deduction or withholding.
(b) If a Borrower or SCC is required by law to make such a
deduction or withholding from such a payment, the relevant sum
payable by such Borrower or SCC (as the case may be) shall be
increased to the extent necessary to ensure that, after the
making of such deduction or withholding, the payee receives
and retains (free from any liability in respect of any such
deduction or withholding) a net sum equal to the sum which it
would have received and so retained had no such deduction or
withholding been made or required to be made.
9.2 Withholdings:
Each Borrower and SCC shall:-
(a) pay the full amount of any deduction or withholding, which it is
required to make by law, to the relevant authority within the
payment period stipulated by the relevant law; and
(b) promptly after any such payment, deliver to the relevant Finance
Party, an original (or certified copy) official receipt issued by
the relevant authority in respect of the amount withheld or
deducted or, if the relevant authority does not issue such
official receipts, such other evidence of payment of the amount
withheld or deducted as is reasonably acceptable to such Finance
Party.
9.3 Indemnity: Without prejudice to the provisions of Clause 9.1, if any
Finance Party is required by law to make any payment on account of
Taxes (other than Tax on Overall Net Income of such Finance Party) on
or in relation to any sum received or receivable by such Finance Party,
or any liability in respect of any such payment is imposed, levied or
assessed against such Finance Party, the relevant Borrower or SCC (as
the case may be) shall, on demand by such Finance Party, indemnify such
Finance Party against such payment or liability together with any
interest, penalties and expenses payable or incurred in connection with
it.
9.4 Tax Credits:
<PAGE>
(a) If a Finance Party in its sole discretion determines that it
has received the benefit of a Tax credit or an allowance
resulting from a payment which includes an amount paid by a
Borrower or SCC under Clause 9.1 or Clause 9.3, it shall (to
the extent that it can do so in its sole discretion without
prejudice to the retention of such credit or allowance and to
the extent that it is lawful and not contrary to any official
directive for it to do so) pay to the relevant Borrower or SCC
(as the case may be) such part of that benefit as is, in the
opinion of that Finance Party, attributable to the withholding
or deduction giving rise to payment of that additional amount,
provided that such Finance Party shall:-
(i) be the sole judge of the amount of any such benefit to be so
paid to the relevant Borrower or SCC and of the date on
which it is received;
(ii) have an absolute discretion as to the order and manner in
which it employs or claims Tax credits and allowances
available to it or otherwise arranges its Tax affairs; and
(iii)not be obliged to disclose to any person any information
regarding its Tax affairs or Tax computations.
(b) Any payment by a Finance Party under this Clause 9.4 shall be
conclusive evidence of the amounts due to a Borrower or SCC
(as the case may be) under this Clause.
9.5 Readjustment: If any Finance Party makes any payment to a Borrower or
SCC pursuant to Clause 9.4 and such Finance Party subsequently
determines, in its opinion, that the credit, relief, remission or
repayment in respect of which such payment was made:-
(a) was not available to it; or
(b) has been withdrawn from it; or
(c) was unable to be used by it in full;
the relevant Borrower or SCC (as the case may be) shall reimburse such
Finance Party for the amount determined by such Finance Party, in its
sole opinion, to be necessary to place it in the same after-Tax
position in which it would have been if such credit, relief, remission
or repayment had been obtained and had been fully used and retained by
such Finance Party.
9.6 UK Increased Costs: in relation to any Bank domiciled in or providing
Facilities from a branch, Subsidiary or Affiliate situated in the
European Union, if by reason of (i) the introduction of, or any change
in, any law, treaty or directive (whether or not having the force of
law or in its interpretation, application or administration or
compliance with any Capital Adequacy Requirement or other request from
or requirement of any central bank (other than the requirements of the
Bank of England reflected in the Additional Costs Rate) or other
fiscal, monetary or other authority (but if such request or requirement
does not have the force of law, only if compliance with such request or
requirement is in accordance with the general practice of persons to
whom such request or requirements is intended to apply) in each case
after the date of this Agreement and, as a consequence thereof:
(a) a Finance Party (or any holding company of such Finance Party)
is unable to obtain the rate of return on its capital which it
would have been able to obtain but for such Finance Party
having entered into and/or assumed and/or maintaining its
Commitment and/or performing its obligations under the Finance
Documents;
(b) a Finance Party (or any holding company of such Finance Party)
incurs any greater cost, increased cost or additional cost as
a result of its having entered into and/or performing its
obligations under this Agreement and/or the Facilities and/or
its assuming or maintaining a Commitment under any Facility
and/or making any advances and/or permitting any utilisations
under a Facility and/or accepting any Bills and/or issuing,
participating in or making a payment under any Letter of
Credit pursuant to a Facility; or
<PAGE>
(c) there is any increase in the cost to a Finance Party (or any
holding company of such Finance Party) of funding or
maintaining all or any of the advances made or to be made by
such Finance Party under its Facilities or in funding any
amount paid or to be paid under any Letter of Credit; or
(d) a Finance Party (or any holding company of such Finance Party)
becomes liable to make any payment on account of Tax (not
being a Tax on Overall Net Income) on or calculated by
reference to the amount of the advances and/or drawings and/or
utilisations made and/or the amount of any Bills accepted or
any Letter of Credit issued or to be issued under or pursuant
to any Finance Document and/or any sum received or receivable
by it under this Agreement or under the Facilities;
then the Borrowers shall, from time to time on demand by the relevant
Finance Party, pay to that Finance Party amounts sufficient to
indemnify that Finance Party (or to enable that Finance Party to
indemnify its holding company) from and against, as the case may be,
such reduction, cost, such increased cost or such liability (or such
proportion of such cost as is, in the opinion of such Finance Party,
attributable to its obligations under any Finance Document), provided
that:
(i) no Bank may make any such claim for indemnity in respect of any
such reduction, cost, increased cost or liability to the extent
that additional amounts have are payable under Clause 9.1 or
Clause 9.3 in respect of the same amount;
(ii) no payment under this Clause 9.6 shall be made in relation to any
matter compensated for by the application of the Additional Costs
Rate;
9.7 Other Increased Costs: In respect of Banks other than those to which clause
9.6 applies:
(a) in the event that (x) in the case of subclause (i) below, any Bank or
(y) in the case of clauses (ii) and (iii) below any Bank shall have
determined (which determination made in good faith shall in the
absence of manifest error be prima facie evidence):
(i) on any date on which the cost of funds to any Borrower, as set
out in clause 6.1(a)(ii) (the "Costs of Funds"), is determined,
that by reason of any changes arising after the date of this
Agreement affecting the interbank markets, adequate and fair
means do not exist for ascertaining the applicable Costs of Funds
on the basis provided for in the relevant Finance Document; or
(ii) at any time that a Bank shall incur increased costs or reductions
in the amounts received or receivable hereunder with respect to
any Facility because of (x) any change since the date of this
Agreement in any applicable law, governmental rule, regulation,
guideline, order or request (such as but without limitation (A) a
change in the basis of taxation or payment to any Bank of the
principal of or interest on any Facility or any other amounts
payable hereunder (except for changes with respect to any tax
imposed on or determined by reference to the net income or net
profits of such Bank pursuant to the laws of the jurisdiction in
which such Bank is organised or in which such Bank's principal
office or applicable lending office is located or any subdivision
thereof or therein or (B) a change in official reserve
requirements but in all events excluding reserves required under
Regulation D to the extent included in the computation of the
Costs of Funds and/or (y) other circumstances affecting such
interbank market or the position of such Bank in such market); or
<PAGE>
(iii)at any time since the date of this Agreement that the making or
continuation of any Facility has become unlawful by compliance by
such Bank with any law, governmental rule, regulation, guideline
or order (or would conflict with any law, governmental rule,
regulation, guideline, order or request not having the force of
law but with which such Bank customarily complies even though
failure to comply therewith would not be unlawful) or has become
unpracticable as a result of a contingency occurring after the
date of this Agreement which materially and adversely affects the
interbank market;
then and in any such event such Bank shall promptly give notice
(by telephone confirming in writing) to the Borrowers and to the
Lead Bank of such determination (which notice the Lead Bank shall
promptly transmit to each of the other Banks). Thereafter (x) in
the case of sub clause (i) above Facilities to be provided by
such Bank shall no longer be available until such time as the
relevant Bank notifies the Borrowers and the other Banks that the
circumstances giving rise to such notice by the relevant Bank no
longer exist notices of drawdown in respect of such Facilities
which have not yet been incurred (including by way of conversion)
shall be deemed rescinded by the Borrowers, (y) in the case of
sub clause (ii) above the Borrowers agree to pay to such Bank
upon written demand therefor such additional amounts (in the form
of an increased rate of or a different method of calculating
interest or otherwise as such Bank in its sole discretion shall
determine) as shall be required to compensate such Bank for such
increased costs or reductions in amounts received or receivable
hereunder (a written notice as to the additional amounts owed to
such Bank showing in reasonable detail the basis for the
calculation thereof submitted to the Borrowers by such Bank in
good faith shall in the absence of manifest error be final
conclusive and binding although the failure to give any such
notice shall not release or diminish any of the Borrowers'
obligations to pay additional amounts pursuant to this clause
upon the subsequent receipt of such notice) and (z) in the case
of sub clause (iii) above the Borrowers shall take one of the
actions specified in sub clause 9.7(b) as promptly as possible
and in any event within the time period required by law.
(b) At any time that any Facility is affected by the circumstances
described in sub clauses (a)(ii) or (iii) above the Borrowers may (and
in the case of Facilities affected pursuant to sub clause (a) (iii)
the Borrowers shall) either (i) if the affected Facility is then being
made pursuant to a Borrowing cancel and if necessary prepay such
Borrowing by giving the Lead Bank telephone notice (confirmed promptly
in writing) thereof on the same date that the Borrowers were notified
by a Bank pursuant to sub clauses (a) (ii) or (iii)) or (ii) if the
affected Facility is then outstanding upon at least three Business
Days notice to the Lead Bank require the affected Bank to convert such
Facility into a base rate loan: provided that if more than one Bank is
affected at any time then all affected Banks must be treated the same
pursuant to this clause 9.7 (b)
<PAGE>
(c) If any Bank shall have determined that after the date hereof the
adoption or effectiveness of any applicable law rule or regulation
regarding capital adequacy or any change therein or any change in the
interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the
interpretation or administration thereof or compliance by such Bank or
any corporation controlling such Bank with any request or directive
regarding capital adequacy (whether or not having the force of law of
any such authority, central bank, or comparable agency has or would
have the effect of reducing the rate of return on such Bank's or such
other corporation's capital or assets as a consequence of such Bank's
Commitments or obligations hereunder to a level below that which such
Bank or such other corporation could have achieved but for such
adoption effectiveness change or compliance (taking into consideration
such Bank's or such other corporation's policies with respect to
capital adequacy) then from time to time upon written demand by such
Bank (with a copy to the Lead Bank) accompanied by the notice referred
to in the last sentence of this sub clause (c) the Borrower shall pay
to such Bank such additional amounts as will compensate such Bank or
other corporation for such reduction. Each Bank upon determining in
good faith that any additional amounts will be payable pursuant to
this sub clause (c) will give prompt written notice thereof to the
Borrowers (a copy of which shall be sent by such Bank to the Lead
Bank) which notice shall set forth in reasonable detail the basis of
the calculation of such additional amounts although the failure to
give any such notice shall not release or diminish the Borrowers'
obligations to pay additional amounts pursuant to this sub clause (c)
upon the subsequent receipt of such notice. A Bank's reasonable good
faith determination of compensation owing under this sub clause (c)
shall in the absence of manifest error be prima facie evidence.
9.8 Increased Costs Claims:
(i) A Finance Party intending to make a claim pursuant to clauses 9.6 and
9.7 shall notify the Borrowers and the Lead Bank of the event by
reason of which it is entitled to do so and shall set out the basis on
which the claim was computed. Nothing herein shall require such
Finance Party to disclose any confidential information relating to the
organisation of its affairs; and
(ii) to the extent that any Bank gives notice of any increased costs under
clause 9.6 or 9.7 more than six weeks after such Bank becomes aware of
the required payment, such Bank may not be entitled to such increased
costs for any period prior to the date being six weeks before the date
it gives such notice to a Borrower.
10. CHANGE IN LAW OR REGULATIONS
10.1 Change in Law or Regulations: If, as the result of the enactment or making
of or any change (after the date of this Agreement) in any applicable law,
or in its interpretation administration or application by any authority
charged with its administration, or compliance with any requests (whether
or not having the force of law, but if not having the force of law, being
requests with which banks generally (operating in the relevant
jurisdictions) are accustomed to comply) of any central bank or any
governmental, regulatory or comparable authority, any Finance Party
demonstrates to the reasonable satisfaction of the Lead Bank (acting with
Steering Committee approval) that it has or will become unlawful (or
contrary to any such directive or request) for it to maintain or give
effect to its obligations as contemplated by this Agreement, then such
Finance Party (the "affected party") shall so inform the Borrowers through
the Lead Bank and (while such circumstances are continuing) such Finance
Party shall not thereafter be obliged to permit any further drawings or
utilisations of its Facilities.
10.2 Notice to Repay: If no agreement to the contrary shall be reached before
the expiry of any grace period allowed by such enactment, change or
request, the affected party's Commitment under this Agreement shall reduce
to zero, and the relevant Borrowers shall repay to such affected party
within 30 days or such earlier date (if any) as that affected party shall
certify to be necessary to comply with the relevant law all of the amounts
due or owing to such Finance Party under or pursuant to this Agreement and
the relevant Finance Documents.
<PAGE>
11. CANCELLATION
Subject to clause 9.7(b) and subject to clause 14.7 (c), the Borrowers may
inform the Lead Bank who shall in turn inform the Banks that they wish to
cancel all or any part (being $5,000,000 or more) of the Facilities at any
time on a pro rata basis in respect of the Commitments of the Banks who
indicate to the Lead Bank that they wish to have part or all of their
Facilities cancelled, provided that:-
(a) no amount is on such date outstanding in respect of the part of the
Facility to be cancelled under or pursuant to any Finance Document;
(b) the Borrowers shall have given not less than 6 months' prior written
notice during the period ending one calendar year from the date hereof
and thereafter 90 days prior written notice to the Lead Bank of the
date of cancellation; and
(c) the Borrowers have paid to the Lead Bank sufficient funds, for
distribution amongst such of the Banks as have indicated to the Lead
Bank that they wish to have part or all of their Facilities cancelled
accordingly pro rata to their respective Commitments as at the
Relevant Date. Provided that the Borrowers have paid to the Lead Bank
sufficient funds, they may cancel all of the Facilities made available
by the Banks who have indicated to the Lead Bank that they wish to
have their Facilities cancelled.
(d) if the amount of the Facilities which the Banks, who indicate that
they wish to have cancelled part or all of their Facilities, does not
equal or exceed the amount the Borrowers wish to cancel, the excess
shall be applied in cancelling the Facilities of all Banks pro rata to
their respective Commitments.
(e) if no Banks indicate to the Lead Bank that they wish to have part or
all of their Facilities cancelled, then the Facilities of all Banks
shall be cancelled pro rata to their respective Commitments.
<PAGE>
PART VII
GUARANTEE
12. GUARANTEE
12.1 Guarantee: SCC irrevocably and unconditionally:-
(a) as principal obligor, guarantees to each Finance Party prompt
performance by each Obligor of all its payment obligations under each
Finance Document;
(b) undertakes to each Finance Party that whenever an Obligor does not pay
any amount when due under or in connection with any Finance Document,
SCC shall forthwith on demand by the Lead Bank (acting on the
instructions of the Majority Banks) pay that amount as if SCC instead
of the relevant Obligor were expressed to be the principal obligor;
and
(c) indemnifies each Finance Party on demand against any loss or liability
suffered by such Finance Party if any obligation guaranteed by SCC
hereunder is or becomes unenforceable, void, voidable, invalid or
illegal (whether or not such defect was known to such Finance Party
prior to the date of this Agreement).
12.2 Continuing Guarantee: This guarantee is a continuing guarantee and will
extend to the ultimate balance of all sums payable by the Obligors under
the Finance Documents or any of them, regardless of any intermediate
payment or discharge in whole or in part and for the avoidance of doubt
will continue until the discharge of all sums hereby guaranteed
notwithstanding any termination or cancellation of all or any of the
Facilities or Facility Agreements or the occurrence of the Master
Facilities Termination Date.
12.3 Reinstatement:
(a) Where any discharge (whether in respect of the obligations of an
Obligor or any security for those obligations or otherwise) is made in
whole or in part or any arrangement is made on the faith of any
payment, security or other disposition which is avoided or must be
restored on insolvency, liquidation or otherwise without limitation,
the liability of SCC under this Clause 12 shall continue as if the
discharge or arrangement had not occurred.
(b) A Finance Party may concede or compromise any claim that any payment,
security or other disposition is liable to avoidance or restoration.
12.4 Waiver of Defences: The obligations of SCC under this Clause 12 will not be
affected by any act, omission, matter or thing which, but for this
provision, would reduce, release or prejudice any of its obligations under
this Clause 12 or prejudice or diminish those obligations in whole or in
part, including (whether or not known to it or any Finance Party):-
(a) any time or waiver granted to, or composition with, any Obligor or
other person;
<PAGE>
(b) the taking, variation, compromise, exchange, renewal or release of, or
refusal or neglect to perfect, take up or enforce, any rights against,
or security over assets of, any Obligor or other person or any
non-presentation or non-observance of any formality or other
requirement in respect of any instrument or any failure to realise the
full value of any security;
(c) any incapacity or lack of powers, authority or legal personality of or
dissolution or change in the members or status of an Obligor or any
other person;
(d) any unenforceability, illegality or invalidity of any obligation of
any person under any Finance Document or any other document or
security, to the intent that the obligations of SCC under this Clause
12 shall remain in full force and its guarantee be construed
accordingly, as if there were no unenforceability, illegality or
invalidity;
(e) any postponement, discharge, reduction, non-provability or other
similar circumstance affecting any obligation of any Obligor under
this Agreement resulting from any insolvency, liquidation or
dissolution proceedings or from any law, regulation or order so that
each such obligation shall for the purposes of the obligations of SCC
under this Clause 12 be construed as if there were no such
circumstance; and
(f) any variation or departure (however fundamental) of or from this
Agreement, and any such variation or departure shall, whatever its
nature, be binding upon SCC in all circumstances, notwithstanding that
it may increase or otherwise affect the liability of SCC.
12.5 Immediate Recourse: SCC waives any right it may have of first requiring any
Finance Party to proceed against or enforce any other rights or security or
claim for payment from any person before claiming from SCC under this
Clause 12.
12.6 Appropriations: Until all amounts which may be or become payable to a
Finance Party under or in connection with the Finance Documents have been
irrevocably paid in full, such Finance Party may:-
(a) refrain from applying or enforcing any other money, security or rights
held or received by any such Finance Party (or any trustee or agent on
its behalf) in respect of those amounts, or apply and enforce the same
in such manner and order as it sees fit (whether against those amounts
or otherwise) and SCC shall not be entitled to the benefit of the
same; and
(b) hold in a suspense account (with full set-off against interest payable
under the Finance Documents) any money received from SCC or on account
of the liability of SCC under this Clause 12.
12.7 Non-Competition: Subject to Clause 12.3 (Reinstatement), until all amounts
which may be or become payable by the Obligors under or in connection with
the Finance Documents have been irrevocably paid in full, SCC shall not,
after any failure by any Obligor to pay any sum in accordance with the
relevant Finance Documents or by virtue of any payment or performance by it
under this Clause 12:-
(a) be subrogated to any rights, security or moneys held, received or
receivable by any Finance Party or be entitled to any right of
contribution or indemnity in respect of any payment made or money
received on account of SCC's liability under this Clause 12;
<PAGE>
(b) claim, rank, prove or vote as a creditor of any Obligor or its estate
in competition with any Finance Party; or
(c) receive, claim or have the benefit of any payment, distribution or
security from or on account of any Obligor, or exercise any right of
set-off as against any Obligor.
SCC shall hold in trust for and forthwith pay or transfer to the Lead
Bank, any payment or distribution or benefit of security received by
it contrary to this Clause 12.7.
12.8 Additional Security: This guarantee is in addition to and is not in any way
prejudiced by any other security now or hereafter held by the Finance
Parties or any of them or by any agent or trustee for their benefit.
12.9 Currency: The obligation of SCC hereunder shall be to make payment in the
same currency as that in which the principal obligation in respect of which
such payment is being made was incurred. If:-
(a) for any reason any amount payable by SCC under this Agreement is paid
to or is recovered by a Finance Party (in whatever manner) in a
currency (the "payment currency") other than that in which it is
required to be paid under the relevant Finance Document (the
"contractual currency"); and
(b) the payment made in the payment currency to the relevant Finance
Party, when converted at the applicable rate of exchange into the
contractual currency, is less than the relevant unpaid amount under
the relevant Finance Document;
then SCC shall, as a separate and independent obligation, fully
indemnify such Finance Party against the amount of the shortfall. If
the payment made in the payment currency to such Finance Party when
converted at the applicable rate of exchange into the contractual
currency exceeds the relevant unpaid amount under the relevant Finance
Document, then the relevant Finance Party shall promptly pay to SCC
(or, after the Enforcement Date, each of the Security Agents) an
amount equal to the amount of such excess. For the purposes of this
Clause 12.12 the expression "applicable rate of exchange" means a fair
market rate at which the relevant Finance Party is able, as soon as
reasonably practicable after receipt, to purchase the contractual
currency with the payment currency, taking into account any costs
associated with the exchange.
<PAGE>
PART VIII
REPRESENTATIONS AND WARRANTIES
13. REPRESENTATIONS AND WARRANTIES
13.1 Representations and Warranties: each of SCC and the Borrowers jointly and
severally represents and warrants to each of the Finance Parties that:-
(a) Status: each Obligor is a limited company duly incorporated, validly
existing and registered under the jurisdiction of its incorporation
and has the power and all necessary governmental and other consents,
approvals, licences and authorities under any applicable jurisdiction
to own its assets and carry on its business;
(b) Powers: each Obligor is empowered to enter into, exercise its rights
and perform and comply with its obligations contained in the Finance
Documents to which it is a party and no limits on the powers of any
Obligor will be exceeded as a result of the borrowings, grant of
security and giving of guarantees or the taking of any other action
contemplated by any Finance Document;
(c) Due Authorisation:
(i) all actions, conditions and things required to be taken,
fulfilled or done (including the obtaining of any necessary
consents) in order to enable each Obligor lawfully to enter into,
exercise its rights and perform and comply with its obligations
contained in any Finance Document to which it is a party, and to
ensure that those obligations are legally binding and enforceable
(subject to all necessary registrations of the Security
Documents) have been taken, fulfilled or done; and
(ii) the requisite resolutions of each Obligor's board of directors
have been duly and properly passed at a duly convened and
constituted meeting at which all statutory and other relevant
formalities were observed to authorise its execution and
performance of the Finance Documents to which it is a party (or,
in the case only of SCC, the requisite resolutions have been
passed by (aa) a written resolution of each of the directors of
SCC in accordance with the by-laws of SCC or (bb) the Executive
Committee of the board of directors of SCC in accordance with the
authorities granted to such Executive Committee) and such
resolutions are in full force and effect and have not been varied
or rescinded;
(d) Obligations Binding: each Finance Document and the Borrowings under
the Facilities, the grant of security and the giving of guarantees
contemplated by this Agreement constitute the legal, valid and binding
obligations of each Obligor enforceable in accordance with its terms,
except as such enforceability may be limited by:-
(i) application of equitable principles;
(ii) the non-availability of the equitable remedies of specific
performance or injunctive relief; and
(iii)administration, bankruptcy, insolvency, liquidation and similar
laws generally affecting the rights of creditors;
<PAGE>
(e) Non-Contravention: neither the execution or delivery of any Finance
Document nor any borrowing under the Facilities by any Borrower nor
the grant of any security or the giving of any guarantees by any
Borrower or any other Obligor nor the carrying out of any transaction
or the exercise of any rights or the performance of any obligations
contemplated by any Finance Document by any Obligor will result in:-
(i) any violation of any law to which such persons are subject; or
(ii) any breach of any of the memorandum and articles of association
or other constitutional documents of any Obligor or of any
borrowing limits contained in any such document; or
(iii)any breach of any deed, agreement or obligation of any such
persons made with or owed to any other person (including, without
limitation, any negative pledge or similar restriction); or
(iv) any breach of any limits on any powers of any Obligor;
(f) Encumbrances:
(i) there are no Encumbrances affecting any of the assets of the
Borrowers or the assets of any Tobacco Group Company except for
Permitted Encumbrances; and
(ii) neither the execution of any Finance Document by any Obligor nor
the performance by or exercise of any rights of any Obligor under
the terms of any such Finance Document will result in the
existence of, or oblige any Group Company to create, any
Encumbrance in favour of any person (except the Finance Parties
or as contemplated by this Agreement) over the whole or any part
of the undertaking or assets (present or future) of such Obligor;
(g) Invoice Discounting: except for the arrangements between TCLTC and
Trans-Continental Leaf Tobacco (Jersey) Limited in force as at the
Relevant Date, there are no invoice discounting, factoring or similar
goods or receivables sale or assignment arrangements in existence
relating to the receivables of any Borrower except for those detailed
in Schedule XIII;
(h) No Default: no event listed in Clause 17.1(a)-(t) has occurred which
is Continuing;
(i) No Litigation: no Tobacco Group Company is involved in or engaged
in any litigation, arbitration or other legal proceedings of a
litigious nature (whether as plaintiff or defendant and whether
civil, criminal or administrative) (other than the litigation in
respect of Transcatab SpA previously disclosed to the Lead Bank)
which, (alone or taken together with any other litigation,
arbitration or legal proceedings) if adversely determined, would
be likely to result in a liability (including costs) to it of the
greater of (i) $2,000,000 (or its foreign currency equivalent
from time to time) and (ii) 3 per cent. of the net worth of such
Tobacco Group Company (as shown in its latest available quarterly
accounts delivered pursuant to Clause 15.4(e) (Quarterly
Accounts)) nor are there any circumstances likely to give rise to
any such litigation, arbitration or proceedings, provided that
this representation shall not apply to any such litigation,
arbitration or proceedings where the whole of the actual or
potential liability of the relevant Tobacco Group Company in
respect of such litigation, arbitration or proceedings is fully
covered by insurance;
<PAGE>
(j) No Material Adverse Change: since the last Accounts Date there has
been no Material Adverse Change in the financial or trading condition
of any Borrower or Obligor or of the Tobacco Group taken as a whole;
(k) Plans and Reports: each Budget and each Cash Flow Forecast fairly
presents the business and financial condition of the Tobacco Group
when they are submitted and, in particular:-
(i) all statements of fact relating to the Tobacco Group and its
business contained in those documents were true and accurate in
all material respects at the date when such documents were issued
and no events have occurred since such date which make any such
statements of fact untrue or inaccurate or misleading in any
material respect, or mean that they have in any material way
ceased to represent the current position as at the date of this
Agreement;
(ii) all statements of opinion, intention and expectation expressed in
those documents were honestly made after careful consideration;
(iii)the assumptions upon which the forecasts and projections
contained in those documents are based were and are reasonable
and made in good faith after careful consideration;
(iv) the forecasts and projections contained in those documents were
and are reasonable and consistent with the assumptions referred
to in (iii) above; and
(v) none of the Borrowers is aware of any facts or matters not stated
in those documents the omission or failure to take into account
of which makes any factual statements contained in them
misleading or unlikely to be fulfilled in each case in any
material respect;
(l) Audited Accounts: the Original Accounts of the Greater Group
and the SCTC Inc. Group and the Tobacco Group and (where
these representations and warranties are repeated) the most
recent Accounts, including the notes to them, delivered to
the International Security Agent pursuant to Clause 15.5(a)
(Audited Accounts) or 15.5(b) (Tobacco Group Accounts) or
Clause 15.5 (Quarterly Accounts) give a true and fair view
of the state of affairs and financial position of the
companies to which they relate as at the date to which they
were made up. In particular, the Accounts either make
adequate provision for or, as appropriate, disclose all
other material liabilities, whether actual, contingent or
disputed (including financial lease commitments, pension
liabilities and liabilities to Taxation) of the companies to
which they relate and all material capital commitments of
the companies to which they relate as at such date in each
case in accordance with, and if and to the extent required
by, generally accepted accounting principles in the United
States (in the case of the consolidated financial statements
of the Greater Group, the Tobacco Group or the SCTC Inc.
Group) or the jurisdiction of incorporation of the relevant
Borrower (in the case of any other financial statements)
consistently applied;
(m) Non-Disclosure: the Borrowers have not failed to disclose to the Lead
Bank any facts or circumstances which are within their knowledge and
which could reasonably be expected to have a significant effect upon:-
<PAGE>
(i) any Borrower's ability to pay or repay any Indebtedness under this
Agreement or any Obligor's ability to comply with the terms of any of
the Finance Documents; or
(ii) the validity or enforceability of any of the Finance Documents;
(n) Minority Interests: except in respect of interests:-
(i) held by the Finance Parties pursuant to the Security Documents;
(ii) detailed in the group structure set out in Schedule VII; or
(iii) of the Bondholders in the shares of SCTC Inc;
no person has any interest in the issued share capital of any
Tobacco Group Company (including an interest derived through an
option over or other agreement in relation to such shares);
(o) Group Structure: the structure of the Tobacco Group is as set out in
Schedule VII;
(p) Tax Liabilities: no claims are being or are likely to be assessed
against any Tobacco Group Company with respect to Taxes which, if
adversely determined, would have (either individually or collectively)
a Material Adverse Effect. No Tobacco Group Company is overdue in the
filing of any Tax returns required to be filed by it and to the extent
the same have been finally settled with the relevant taxation
authority each Tobacco Group Company has paid all Taxes shown to be
due on such returns or on any assessments made against it unless any
such failure would not have a Material Adverse Effect;
(q) Borrowings: no Tobacco Group Company has any Borrowings other than
Permitted Borrowings;
(r) Joint Ventures: no Tobacco Group Company has entered into any
partnership, joint venture or other agreement, arrangement or
understanding with any person outside the Tobacco Group for the joint
development of any business or the sharing of any assets or revenues
derived from any business other than as existing as at the date of
this Agreement and set out in Schedule X. All transactions detailed in
Schedule X are approved for the purposes of this Agreement, together
with their associated Borrowings and Encumbrances detailed in Schedule
XIII;
(s) Budget: the Budget for the Tobacco Group for the period from 1 April
1997 to 31 March 1998 annexed as Appendix A to this Agreement was
prepared on the basis of the information available to SCTC Inc. after
making diligent enquiries and SCTC Inc. considers that as at the date
of this Agreement such Budget is fair and reasonable based on that
information;
(t) Intra-Group Indebtedness: details of the Indebtedness as at March 1997
of:
(i) Tobacco Group Companies to other Tobacco Group Companies or Wool
Group Companies; and
(ii) Wool Group Companies to Tobacco Group Companies,
are set out in Schedule IX;
<PAGE>
(u) Environment:
(i) no Tobacco Group Company has generated used treated or stored on
or transported to or from any Mortgaged Property or any adjoining
property any Hazardous Materials except in the normal course of
that Tobacco Group Company's business and in compliance with
Environmental Laws;
(ii) to the best knowledge of each Tobacco Group Company Hazardous
Materials have not at any time been released or disposed of on
any Mortgaged Property or any property adjoining any Mortgaged
Property;
(iii)to the best knowledge of each Tobacco Group Company each member
of the Tobacco Group is an compliance in all material respects
with all applicable Environmental Laws with respect to any
Mortgaged Property and the requirements of any permits issued
under such laws with respect to such property;
(iv) to the best knowledge of each Tobacco Group Company there are no
past, pending or threatened Environmental Claims against any
Tobacco Group Company or any Mortgaged Property which, if
adversely determined, would have a Material Adverse Effect;
(v) to the best knowledge of each Tobacco Group Company there are no
facts, circumstances, conditions or occurrences on any Mortgaged
Property or any property adjoining any Mortgaged Property that
could reasonably be anticipated (aa) to form the basis of an
Environmental Claim against any Tobacco Group Company or any
Mortgaged Property or assets which, if adversely determined would
have a Material Adverse Effect, or (bb) to cause such Mortgaged
Property or assets to be subject to any restrictions on the
ownership, occupancy, use or transferability of such Mortgaged
Property under any Environmental Law;
(vi) to the best knowledge of each Tobacco Group Company there are not
now and never have been save in respect of the underground
storage tanks details of which have been disclosed any
underground storage tanks located on any Mortgaged Property;
(v) ERISA:
(i) each Plan (and each related trust, insurance contract or
fund) is in substantial compliance with its terms and with
all applicable laws including, without limitation, ERISA and
the Code;
(ii) each Plan (and each related trust if any) which is intended
to be qualified under Section 401(a) of the Code has
received a determination letter from the Internal Revenue
Service to the effect that it meets the requirements of
Sections 401(a) and 501(a) of the Code or the Plan is a
standardised prototype plan for which no such determination
letter is required under the Code and whose sponsor has
received a favourable determination from the Internal
Revenue Service;
(iii) no Reportable Event has occurred;
(iv) no Plan which is a multi employer plan (as defined in
Section 4001 (a) (3) of ERISA) is insolvent or in
reorganization;
<PAGE>
(v) no Plan has an Unfunded Current Liability;
(vi) no Plan which is subject to Section 412 of the Code or
Section 302 of ERISA has an accumulated funding deficiency
or extension of any amortization period within the meaning
of Section 412 of the Code or Section 303 of 304 of ERISA;
(vii)all contributions required to be made with respect to a
Plan have been timely made;
(viii) neither the Borrowers nor any Subsidiary of the Borrowers
nor any ERISA Affiliate has incurred any material liability
to or on account of a Plan pursuant to Section 409, 502(i),
502(1), 515, 4062, 4063, 4064, 4069, 4201, 4204, or 4212 of
ERISA or Section 401(a)(29), 4971 or 4975 of the Code or
expects to incur any such liability under any of the
foregoing sections with respect to any Plan;
(ix) no condition exists which presents a material risk to the
Borrowers or any Subsidiary of the Borrowers or any ERISA
Affiliate or incurring a liability to or on account of a
Plan pursuant to the foregoing provisions of ERISA and the
Code;
(x) no proceedings have been instituted to terminate or appoint
a trustee to administer any Plan which is subject to Title
IV of ERISA, no action, suit, hearing, proceeding, audit or
investigation with respect to any Plan is pending, expected
or threatened;
(xi) no lien imposed under the Code or ERISA on the assets of the
Borrowers or any Subsidiary of the Borrowers or any ERISA
Affiliate exist or is likely to arise on account of any Plan
and the Borrowers and their Subsidiaries may cease
contributions to or terminate any employee benefit plan
maintained by any of them without incurring any material
liability;
(xii)each Foreign Pension Plan has been maintained in substantial
compliance with its terms and with the requirements of any
and all applicable laws, statutes, regulations and orders
and all contributions required to be made with respect to a
Foreign Contributions Plan have been timely made;
(xiii) neither the Borrowers nor any of its Subsidiaries has
incurred any obligation in connection with the termination
of or withdrawal from any Foreign Pension Plan. The present
value of the accrued benefit liabilities (whether or not
vested) under each Foreign Pension Plan, determined as of
the end of the Borrowers' most recently ended fiscal year on
the basis of actuarial assumptions, each of which is
reasonable, did not exceed the current value of the assets
of such Foreign Pension Plan allocable to such benefit
liabilities.
13.2 Repetition: On each occasion on which a drawing or utilisation is made
under the Facilities and on each Interest Payment Date the representations
and warranties set out above shall be deemed to be repeated by reference to
the then existing circumstances on such date save for:
(1) the representations and warranties in Clause 13.1(k) and (l) which
shall be deemed to be repeated on the date of delivery of the
documents specified in such sub-clauses, by reference to the then
existing facts; and
<PAGE>
(2) the representations and warranties in Clause 13.1(f), (g), (i), (n),
(o), (q), (r), (s), (t), (u) and (v).
13.3 Acknowledgement by Borrowers and SCC: Each Borrower and SCC acknowledges
that the Finance Parties are relying on the representations and warranties
and not on any other information contradictory to them or varying them of
which the Finance Parties or any of them or their respective agents or
advisers may have actual or constructive knowledge.
<PAGE>
PART IX
COVENANTS
14. GENERAL COVENANTS
For so long as any liability remains outstanding or any amount is capable
of being drawn down under the Finance Documents, SCC and the Borrowers
undertake that:-
14.1 Ranking of Liabilities: the liabilities (whether actual or contingent) of:-
(a) each of the Obligors (except SCC) under the Finance Documents to which
it is a party shall at all times constitute the direct, unconditional
obligations of such Obligor and will rank in priority to all present
and future Indebtedness issued, created, assumed or guaranteed by such
Obligor (except for Indebtedness which is entitled to priority solely
by operation of law or by reason of a Permitted Encumbrance); and
(b) SCC under this Agreement shall at all times constitute the
unconditional obligations of SCC and shall rank at least pari passu
with all present and future liabilities issued, created, assumed or
guaranteed by SCC (except for Indebtedness which is entitled to
priority solely by operation of law or by reason of a Permitted
Encumbrance);
14.2 Restriction on Encumbrances: neither SCC nor any member of the Tobacco
Group shall create or agree to create or permit to arise or subsist any
Encumbrance on its present or future undertaking, property, assets, rights
or revenues or any part of them (except Permitted Encumbrances);
14.3 Restriction on Borrowings: neither SCC nor any member of the Tobacco Group
shall incur or permit to subsist Borrowings, except Permitted Borrowings;
14.4 Capital Expenditure: the aggregate Capital Expenditure of the Borrowers at
any time shall not exceed the aggregate of:
(a) $40,000,000 which shall be financed by Borrowings pursuant to the
Facilities;
Plus an additional amount in each Accounting Reference Period equal to the
aggregate of:
(b) 50% of Free Cash Flow calculated by reference to the audited financial
statements of the Borrowers for the preceding Accounting Reference
Period most recently delivered pursuant to clause 15.5 (Accounts)
commencing with the audited financial statements for the Accounting
Reference Period ending 31 March 1998; and
(c) all Net Disposal Proceeds received by a Borrower in cash during that
Accounting Reference Period.
Any part of any unused additional amount as calculated above which is
not used for the purposes of Capital Expenditure in the relevant
Accounting Reference Period may be carried forward and utilised in the
following Account Reference Period.
14.5 Inter-Company Indebtedness:
(a) no Tobacco Group Company will give any Financial Accommodation to any
person except in accordance with this clause;
<PAGE>
(b) a Tobacco Group Company may give Financial Accommodation to another
Tobacco Group Company provided that the net Financial Accommodation
given to any single Tobacco Group Company by any Borrower does not
exceed $40,000,000;
(c) Tobacco Group Companies may not give Financial Accommodation in excess
of $20,000,000 in aggregate to the Wool Group Companies. Such
Financial Accommodation shall be deemed to be Capital Expenditure and
shall be applied against the $40,000,000 limit in Clause 14.4(a);
(d) the loans detailed in Schedule IX may be continued provided the
aggregate principal Indebtedness under those loans is not increased;
14.6 Loans to Suppliers and Affiliates:
(a) for each period referred to below, the maximum aggregate Financial
Accommodation made to Suppliers and/or Affiliates by the Borrowers at
any time shall not exceed the figure set out against that period:
Period Aggregate Limit
Date of this Agreement to $50,000,000 31 March 1998 1 April 1998 to 31
March 1999 $60,000,000 1 April 1999 to Final Repayment Date
$70,000,000
(b) within the limit in (a) for each period referred to below, the maximum
aggregate Financial Accommodation made at any time by any Borrower to
any single Supplier or Affiliate shall not exceed the figure set out
against that period:
Period Individual Limit
Date of this Agreement to $20,000,000 31 March 1998 1 April 1998 to 31
March 1999 $25,000,000 1 April 1999 to the Final Repayment Date
$27,500,000
14.7 Restriction on Disposals:
(a) No Borrower shall (except with the prior consent of the Lead Bank,
acting on the instructions of the Majority Banks) sell, transfer,
lend, license, lease, surrender or otherwise dispose of, whether by a
single transaction or a number of transactions and whether related or
not, the whole or any part of its undertaking, business or assets,
except for a Permitted Disposal;
<PAGE>
(b) Nothing in this Clause 14.7 shall enable any Borrower to dispose of
assets which are subject to a fixed charge unless the disposal of such
assets shall be a Permitted Disposal (including any floating charge
which has crystallised) in favour of either of the Security Agents on
behalf of the Finance Parties ("Fixed Charge Assets") without prior
written consent from the Lead Bank (acting on the instructions of the
Majority Banks). The Lead Bank (acting on the instructions of the
Majority Banks) shall have an absolute discretion to give or refuse
any such consent or to grant a consent subject to such conditions as
it may think fit, without giving any reason for so doing. However,
unless an Event of Default or Potential Event has occurred and is
Continuing, consent will generally be given provided the proceeds of
such disposal are applied in accordance with Clause 8 (Prepayments);
and
(c) Notwithstanding sub-clauses (a) and (b) the Borrowers may not dispose
of assets whose aggregate market value exceeds $2,000,000 in any one
Accounting Reference Period nor dispose of assets whose aggregate
market value exceeds $5,000,000 in three consecutive Accounting
Reference Periods without the prior written consent of the Lead Bank
(acting on the instructions of the Majority Banks), such consent not
to be unreasonably withheld if the proceeds of such disposals are to
be used to purchase new assets. For the avoidance of doubt, no such
consent shall be required if the proceeds of sale are used to make
cancellations in accordance with Clause 11.
14.8 Realisation Account: Following the occurrence of an Event of Default, the
Borrowers shall procure that all Net Disposal Proceeds shall be paid into
one or more Realisation Accounts with the Lead Bank or such other Bank as
the International Security Agent may nominate and charged to the Security
Agent for the benefit of the Finance Parties by way of fixed security;
14.9 Nature of Business: each Borrower shall carry on its business in the normal
course in the manner carried on by it at the date of this Agreement and not
make any material change to the nature or extent of any business carried on
by it at the date of this Agreement;
14.10Restriction on Issue and Disposals of Shares: SCC shall not dispose of any
of its legal or beneficial interest in the share capital of SCTC Inc.
without the prior written consent of the Lead Bank (acting on the
instructions of the Majority Banks);
14.11Dividends and Distributions: the Borrowers shall deliver to the Lead Bank
not less than ten Business Days prior to the date on which a dividend or
distribution is proposed to be paid by a Borrower, a certificate from two
directors of the relevant Borrower addressed to the Lead Bank containing
calculations where necessary and to the effect that:-
(a) the directors are not aware, after reasonable enquiry, of the
occurrence of a Potential Event of Default or of an Event of Default
which is Continuing;
(b) so far as the directors are aware, after reasonable enquiry, if such
payment(s) were to be made, no Event of Default or Potential Event of
Default would occur;
(c) following delivery of such certificate, the Borrowers may pay
dividends to SCTC Inc. (in the case of SCTC (UK) and TCLTC) or SCC (in
the case of SCTC Inc.) in each Accounting Reference Period of an
aggregate amount up to the higher of:
(i) such amount as is required to enable SCC to meet its obligations
to creditors; and
(ii) during the period:
(aa) of the first calendar year from the date hereof 60% of the
Borrower's Net Income demonstrated by the audited accounts
of the Borrowers;
(bb) of the second calendar year from the date hereof 70% of the
Borrower's Net Income demonstrated by the audited accounts
of the Borrowers; and
(cc) of the third calendar year from the date hereof 80% of the
Borrower's Net Income demonstrated by the audited accounts
of the Borrowers.
<PAGE>
14.12Insurance: the Borrowers shall procure that each Tobacco Group Company
shall, either under a group policy maintained by SCC or separately,
maintain such policies of insurance in relation to its business and assets
as a reasonably prudent person carrying on a similar business to that
Tobacco Group Company might be expected to maintain over such assets and/or
in respect of such liabilities (including policies to cover public,
environmental, terrorism and third party liability) and from time to time
upon request supply to each of the Security Agents copies of all schedules
of insurance relating to such insurance policies or certificates of
insurance or such other evidence of the existence of such policies as may
be acceptable to each of the Security Agents together with confirmation of
payment of premiums;
14.13Tobacco Inventory: the Borrowers shall forthwith, upon demand by a Security
Agent in writing, if a Security Agent (acting on the instructions of the
Majority Banks) considers that it would improve the security to the Finance
Parties, transfer or procure the transfer any stocks of tobacco owned by a
Tobacco Group Company and not held in an Approved Warehouse, into an
Approved Warehouse and deliver to such Security Agent such documentation in
connection therewith (including, without limitation, warehouse warranties
and executed pledges) as such Security Agent may require;
14.14Registrations: the Borrowers will effect all necessary registrations and
notices to perfect and protect the Security Documents from time to time and
meet all proper costs in connection with them save in respect of the
registrations listed in Schedule XIII;
14.15 Consents and Filings: the Borrowers will ensure that:
(i) all consents, licences, approvals and authorisations shall be
obtained, complied with, renewed and maintained;
(ii) all filings, recordings, registrations or enrolments shall be
effected; and
(iii) any stamp, registration or similar tax shall be promptly paid;
from, with or to any governmental authorities or agencies or
courts to the extent required under any applicable law or
regulation to enable any Obligor to perform its obligations under
any Finance Document to which it is a party or to ensure the
legality, validity and enforceability of any such Finance
Document save in respect of those listed in Schedule XIII;
14.16Maintenance of Licences: the Borrowers will take all necessary action to
protect and maintain (and take no action which could reasonably foreseeably
imperil the continuation of) the licences and statutory authorisations,
intellectual property, trade names, franchises and contracts (referred to
in this Clause 14.16 as the "Authorisations") which are necessary for the
conduct of the business of each of the Tobacco Group Companies
substantially as it is presently conducted and to enable such business to
be carried on substantially as at present;
14.17Maintenance of Accounts: All proceeds from a transaction financed by a
Bank entered into with or for the account of any Borrower shall be paid
into an account designated by the Lead Bank;
14.18Access: each of the Borrowers and SCC will permit any one or more
representatives of the Lead Bank, the Security Agents or their respective
advisers to have access to the property, assets, books and records of SCC
and any Tobacco Group Company and to inspect the same;
<PAGE>
14.19Substantial Contracts: the Borrowers will notify the Lead Bank if any
contract entered into by any Tobacco Group Company which represents 10 per
cent. or more of the gross turnover of any Borrower or of the Tobacco Group
is terminated for any reason (and for these purposes turnover shall be
calculated by reference to the then most recent audited consolidated
accounts of the Tobacco Group delivered to the Lead Bank);
14.20Derivatives: no Tobacco Group Company will enter into any transaction in
derivatives with any person, except:
(a) an interest rate or currency swap, a forward rate agreement or a cap,
floor or collar transaction entered into solely to hedge an existing
or future liability permitted under this Agreement of such Tobacco
Group Company in the ordinary course of business (as conducted at the
date of this Agreement); or
(b) a transaction in derivatives entered into by SCTC Inc. to hedge its
liability under the Bonds;
4.2 No Payment: so far as reasonably practicable, no bank, financial
institution or other lender will be paid or repaid from a drawing under any
of the Facilities (other than in the ordinary course of business);
4.3 Compliance with Laws: each Tobacco Group Company will comply in all
respects with all laws and regulations binding upon it in connection with
the carrying on of its business where a failure so to comply would have a
Material Adverse Effect;
4.4 Taxes: each Tobacco Group Company will pay all Taxes due and payable by it
on the relevant due date where a failure so to pay would have a Material
Adverse Effect;
4.5 Delivery of Deeds: each Tobacco Group Company will if, and whenever
reasonably required by a Security Agent, execute and deliver to such
Security Agent or procure the execution and delivery to such Security Agent
of all or any guarantees and/or debentures and/or mortgages and/or charges
and/or pledges and/or deeds, documents and certificates reasonably required
by such Security Agent to guarantee or (as may be required) create security
for all or any part of the money and liabilities outstanding in respect of
or pursuant to the Facilities and/or any of them and/or to perfect and
protect the Security Documents or any of them. Any such guarantees and/or
security and other documents referred to in this Clause 14.24 shall be in
such form as such Security Agent may reasonably require;
4.6 Security: each Tobacco Group Company will give to each of the Security
Agents such assistance as it may reasonably require in connection with
obtaining security over stocks of tobacco or other assets (including
receivables and shares) owned by any Tobacco Group Company from time to
time and pay and discharge on demand all reasonable costs, charges and fees
(including legal fees) incurred by each of the Security Agents in
connection with such security and execute or cause to be executed in favour
of each of the Security Agents such new or additional guarantees, charges
and/or other security over such of its assets as each of the Security
Agents may from time to time reasonably specify to secure all money and
liabilities for the time being due, owing or incurred to any Finance Party
whether outstanding under any Finance Document or otherwise;
4.7 Write Offs: no Tobacco Group Company will make provisions or write-offs in
its accounting records or financial statements, except to the extent
required to comply with the Act (or other applicable legislation for
companies incorporated outside England) or good accounting practice;
<PAGE>
4.8 Pro Rata Utilisation: each Borrower will use reasonable endeavours to
ensure that the proportion which the aggregate of the Outstandings from
time to time under the Facilities bears to the aggregate of the Banks'
Commitments is the same as the proportion which each Bank's Outstandings at
such time bear to such Bank's Commitment at such time;
4.9 Property: each Tobacco Group Company will maintain all Properties and all
plant and machinery used in the business of any Tobacco Group Company in
good repair;
4.10 Report: each Tobacco Group Company will co-operate fully with any reporting
accountants or consultants (each a "Consultant") from time to time
appointed at the request of the Lead Bank, each of the Security Agents and
the Steering Committee following the occurrence of an Event of Default, to
investigate and report upon the Tobacco Group and/or any Tobacco Group
Company and provide on demand all information requested by any such
Consultant and pay the fees of any such Consultant promptly on demand;
4.11 Accounting Reference Period: the Borrowers will ensure that the Accounting
Reference Period of each Tobacco Group Company shall end on 31 March and
that no Tobacco Group Company shall alter its Accounting Reference Period
so as to end other than on 31 March without the prior approval of the Lead
Bank and in giving any such approval the Lead Bank may require such change
in the financial covenants contained in Clause 16 (Financial Covenants) as
will reflect the change notified to it), and procure that the Accounting
Reference Date of each Tobacco Group Company shall be the same;
4.12 Auditors: the Borrowers will not change the Auditors except with the prior
approval of the Lead Bank in writing. The Borrowers may not request the
consent of the Lead Bank to a change in the Auditors unless they have
delivered to the Lead Bank written details of the reasons for the change.
Provided the Lead Bank has received such details, the Lead Bank shall
approve the appointment of KPMG, Coopers & Lybrand, Price Waterhouse,
Arthur Andersen or Ernst & Young or their respective successor firms;
4.13 Limit on Term: the Borrowers will ensure that the maximum period for which
any advance or Bill is outstanding under any Facility is 180 days and the
maximum period for which any foreign exchange transaction, Letter of
Credit, indemnity or other contingent obligation entered into by a Bank
under a Facility is capable of being outstanding is 180 days;
4.14 Constitutive Documents: no Obligor will alter its memorandum and articles
of association or other constitutive documents unless:
(a) it has previously given not less than 14 days prior written notice to
the Lead Bank of its intention so to do; and
(b) such alteration will not adversely affect the position of any Finance
Party;
4.15 Claims: SCC and the Borrowers will not during the period from the Effective
Date of this Agreement until the Master Facilities Termination Date,
compromise, discharge, postpone, release or subordinate claims or debts in
excess of a maximum aggregate amount of $2,000,000 or waive their right of
action in connection with any such claim or debt provided that this Clause
14.34 shall not apply to:
(a) normal substitutions of tobacco in the ordinary course of the business
of such Borrower as conducted at the date of this Agreement; or
(b) the subordination of the debt owed by Standard Wool (UK) Limited to
SCTC (UK) pursuant to a Subordination Agreement dated on or about the
date of this Agreement made between SCTC (UK), Standard Wool (UK)
Limited, the Financial Institutions identified therein and National
Westminster Bank Plc;
<PAGE>
(c) the loan of up to (pound)1,700,000 to be made by SCC to Tentler & Co
B.V. and subordinated pursuant to a Deed of Subordination executed on
or about the date of this Agreement and made between Deutsche Bank de
Bary N.V., MeesPierson N.V., SCC and Tentler & Co B.V.;
(d) the conversion of inter-company loans into equity as may be required
from time to time by Italian regulators in relation to Transcatab in
order to enable continued trading (not exceeding an aggregate amount
of $10,000,000);
4.16 Announcement: any public announcement which a Tobacco Group Company
proposes to make which directly refers to the Banks, the Steering
Committee, the Lead Bank, the Co-Lead Bank or the Security Agents (or any
of them) or the arrangements contained in any Finance Document, will not be
made until the Lead Bank, the Security Agents and any Bank named in such
announcement have been given ten Business Days to consider the form of such
announcement, provided that the restriction set out above shall not apply
to an announcement which is required to be made pursuant to any regulatory
requirement and which does not identify any Finance Party by name and the
Borrowers shall deliver a copy of each public announcement contemplated by
this Clause 14.35 to the Lead Bank;
4.17 Co-operation: each Obligor shall co-operate with the Lead Bank and each of
the Security Agents and provide each of them with such information as they
may reasonably require in order to carry out their functions hereunder;
4.18 Compliance: the Borrowers shall not pay or discharge or satisfy by set-off
or otherwise any amount of principal to any Bank or other lender, save as
expressly contemplated in this Agreement;
4.19 Revaluation of Assets: no Tobacco Group Company shall revalue any of its
assets, except in accordance with applicable GAAP;
4.20 Book Debts: the Borrowers and TCLTC (Jersey) shall pay all amounts received
by them in respect of book and other debts into the account(s) from time to
time designated by the Lead Bank in writing.
4.21 Inventory: the aggregate uncommitted inventory of the Tobacco Group (as
shown on the WAFS System) shall not exceed $65,000,000 at any time provided
that the Steering Committee may authorise an increase in this limit to
$80,000,000.
4.22 Refinancing: the Borrowers shall not use the Facilities to refinance
Borrowings of any Tobacco Group Company from any lender which is not a Bank
except in the course of a transaction for the sale or purchase of tobacco
in the ordinary course of business where the facility made available by
such lender is not permanently reduced as a result;
4.23 Environment:
(a) the Borrower will comply with all Environmental Laws applicable to
ownership or use of the Mortgaged Property and will causes all other
Tobacco Group Companies and all tenants and other persons occupying
the Mortgaged Property to comply with all such Environmental Laws,
will immediately pay or cause to be paid all costs and expenses
incurred in such compliance and will keep or cause to be kept all such
Properties free and clear of any liens imposed pursuant to such
Environmental Law;
<PAGE>
(b) no Tobacco Group Company will generate, use, treat, store, release or
dispose of or permit the generation, use, treatment, storage, release
or disposal of Hazardous materials on any Mortgaged Property, or
transport or permit the transportation of Hazardous Materials to or
from any Mortgaged Property;
(c) On the written request of the Lead Bank at any time and from time to
time during the existence of this Agreement, the Borrowers will
provide, at the Borrowers' sole cost and expense, an environmental
site assessment report concerning any Mortgaged Property, prepared by
an environmental consulting firm approved by the Lead Bank, indicating
the presence or absence of Hazardous Materials and the potential cost
of any removal or remedial action in connection with any Hazardous
Materials on such property;
4.24 ERISA: As soon as possible and, in any event, within ten (10) days after
the Borrowers, any Tobacco Group Company or any ERISA Affiliate knows or
has reason to know of the occurrence of any of the following, the relevant
Borrower will deliver to the International Security Agent a certificate of
a director setting forth the full details as to such occurrence and the
action, if any, that such Borrower or Tobacco Group Company or such ERISA
Affiliate is required or proposes to take, together with any notices
required or proposed to be given to or filed with or by such Borrower or
Tobacco Group Company, the ERISA Affiliate, the PBGC, a Plan participant or
the Plan administrator with respect thereto:
(1) that a Reportable Event has occurred (except to the extent that such
Borrower or Tobacco Group Company has previously delivered to the
International Security Agent a certificate and notices (if any)
concerning such event pursuant to the next clause hereof):
(2) that a contributing sponsor (as defined in Section 4001(a)(13) of
ERISA) of a Plan subject to Title IV of ERISA is subject to the
advance reporting requirement of PBGC Regulation Section 4043.61
(without regard to subparagraph (b)(1) thereof), and an event
described in subsection .62, .63, .64, .65, .66, .67 or .68 of PGBC
Regulation Section 4043 is reasonably expected to occur with respect
to such Plan within the following 30 days;
(3) that an accumulated funding deficiency, within the meaning of Section
412 of the Code or Section 302 of ERISA, has been incurred or an
application may be or has been made for a waiver or modification of
the minimum funding standard (including any required instalment
payments) or an extension of any amortization period under Section 412
of the Code or Section 303 or 304 of ERISA with respect to a Plan;
(4) that any contribution required to be made with respect to a Plan or
Foreign Pension Plan has not been timely made;
(5) that a Plan has been or may be terminated, reorganised, partitioned or
declared insolvent under Title IV of ERISA;
(6) that a Plan has an Unfunded Current Liability;
(7) that proceedings may be or have been instituted to terminate or
appoint a trustee to administer a Plan which is subject to Title IV of
ERISA;
(8) that a proceeding has been instituted pursuant to Section 515 of ERISA
to collect a delinquent contribution to a Plan;
<PAGE>
(9) that the relevant Borrower or Tobacco Group Company or any ERISA
Affiliate will or may incur any liability (including any indirect,
contingent, or secondary liability) to or on account of the
termination of or withdrawal from a Plan under Section 4062, 4063,
4064, 4069, 4201, 4204 or 4212 of ERISA or with respect to a Plan
under Section 409 or 502(i) or 502(1) of ERISA or with respect to a
group health plan (as defined in Section 607(1) of ERISA or Section
4980B(g)(2|) of the Code) under Section 4980B of the Code;
(10) or that relevant Borrower or Tobacco Group Company may incur any
material liability pursuant to any employee welfare benefit plan (as
defined in Section 3(1) of ERISA) that provides benefits to retired
employees or other former employees (other than as required by Section
601 of ERISA) or any Plan or any Foreign Pension Plan.
The Borrowers will deliver to the International Security Agent:
(i) a complete copy of the annual report (on Internal Revenue Service
Form 5500-series) of each Plan (including, to the extent
required, the related financial and actuarial statements and
opinions and other supporting statements, certifications,
schedules and information) required to be filed with the Internal
Revenue Service; and
(11) (ii) copies of any records, documents or other information that must
be furnished to the PBGC with respect to any Plan pursuant to Section
4010 of ERISA. In addition to any certificates or notices delivered to
the International Security Agent pursuant to this Clause, copies of
annual reports and any records, documents or other information
required to be furnished to the PBGC, and any material notices
received by the Borrowers and the Tobacco Group Companies or any ERISA
Affiliate with respect to any Plan or Foreign Pension Plan shall be
delivered to the International Security Agent no later than ten (10)
days after the date such annual report has been filed with the
Internal Revenue Service or such records, documents and/or information
has been furnished to the PBGC or such notice has been received by the
Borrowers, the Tobacco Group Companies or the ERISA Affiliate, as
applicable.
4.25 Invoice Discounting: Save for the arrangements between TCLTC and TCLTC
(Jersey) no Borrower shall enter into invoice discounting, factoring or
similar goods or receivables sales or assignment agreements relating to the
receivables of such Borrower save for those detailed in Schedule XIII.
15. INFORMATION COVENANTS
For so long as any liability remains outstanding or capable of being drawn
down under the Finance Documents, the Borrowers shall:-
15.1 Borrowings: provide to the Co-Lead Bank, the International Security Agent
and any other Bank which requests it, within two Business Days of the last
day in each week, details of the outstanding Net Borrowings under this
Agreement of the Borrowers due to each Bank as at the last day of the
preceding week;
15.2 Borrowing Base: provide to the International Security Agent monthly within
30 days of the last day of each month, or weekly within five Business Days
of the last day of that week for so long as the aggregate Available
Commitment under the Facilities is less than $10,000,000, a Borrowing Base
Certificate setting out a calculation of the Borrowing Base as at the last
day of such month (or week, as the case may be) in the form or
substantially the form of Schedule XII;
<PAGE>
15.3 Monthly Reports: deliver to the International Security Agent in sufficient
numbers for distribution to each of the Banks:
(a) Cash Flow Forecast: no later than the thirtieth day in each month with
respect to the preceding month, a rolling twelve month Cash Flow
Forecast for the Borrowers in the form or substantially the form
attached as Appendix B for the Trading Periods next following such
date and the International Security Agent agrees to use reasonable
endeavours to distribute such Cash Flow Forecast to the Banks as soon
as reasonably practicable; and
(b) Receivables: not later than 30 days after the end of each month, a
report on receivables of each of the Borrowers arising during the
month preceding such report including their payment terms and due
dates for payment and details of all debts owed by debtors which were
due for payment in that month and are over 90 days past their due date
for payment, in a form notified to SCTC Inc. by the International
Security Agent;
15.4 Quarterly Reports: deliver to the International Security Agent in
sufficient numbers for distribution to each of the Banks not later than 45
days after each Quarter Day:
(a) Receivables: a report on receivables of each of the Borrowers arising
during the quarter preceding such report including their payment terms
and due dates for payment and details of all debts owed by debtors
which were due for payment in that quarter and are over 90 days past
their due date for payment, in a form notified to SCTC Inc. by the
International Security Agent;
(b) Supplier and Affiliate Advances: for the Borrowers, details of all
Supplier Advances and Affiliate Advances provided or agreed to be
provided by such Borrowers during the preceding quarter, in each case
in a form notified by the International Security Agent to SCTC Inc.;
(c) Additional Information:
(i) a report on the amount of Capital Expenditure incurred or
committed for during the preceding quarter by each of the
Borrowers, together with the aggregate amount of Capital
Expenditure incurred by each of those companies as at the last
day of the preceding quarter; and
(ii) a report of all amounts payable and all liabilities incurred to
trade creditors by each of the Borrowers during the preceding
quarter;
in each case in a form notified to SCTC Inc. by the International
Security Agent;
(d) Bank Facility Utilisation Report: details of all Borrowings of each
Tobacco Group Company as at the end of the Trading Period ending on
such Quarter Date in such detail as the International Security Agent
may require;
(e) Quarterly Accounts: with respect to the Trading Period preceding such
Quarter Date:
(i) individual profit and loss accounts and balance sheets for each
of the Borrowers;
(ii) a consolidated profit and loss account and balance sheet for the
Tobacco Group; and
<PAGE>
(iii)a consolidated profit and loss account and balance sheet for the
Greater Group;
(iv) accompanied by a compliance certificate signed by the Finance
Director of SCTC Inc. indicating whether or not the financial
covenants contained in Clause 16.1 have been complied with and
containing calculations demonstrating in reasonable detail
compliance (or otherwise) with such covenants.
15.5 Accounts: deliver to all the Banks:
(a) Audited Accounts: as soon as reasonably practicable and in any event
within 90 days from the end of the relevant Accounting Reference
Period copies of:
(i) the audited consolidated profit and loss account of the Greater
Group;
(ii) the audited consolidated profit and loss account of the SCTC Inc.
Group;
(iii)individual profit and loss accounts and balance sheets of the
Borrowers and each other member of the Tobacco Group;
(iv) accompanied by a certificate signed by the Auditors confirming
(or otherwise) that the financial covenants set out in Clause
16.1 have been complied with and containing calculations
demonstrating in reasonable detail compliance (or otherwise) with
such covenants.
(b) Tobacco Group Accounts: at the same time as the audited consolidated
accounts of the SCTC Inc. Group are to be delivered pursuant to (a)
above, SCTC Inc. shall also deliver pro forma consolidated accounts
for the Tobacco Group based on the audited accounts for the SCTC Inc.
Group but excluding any figures relating to Standard Wool (UK)
Limited;
(c) Other Information: any other information concerning the business or
financial condition of any Tobacco Group Company or the Tobacco Group
as a whole which the Lead Bank, or either of the Security Agents may
reasonably require or any Bank may reasonably require from time to
time;
15.6 Budget: submit, not later than 30 days before the beginning of each
Accounting Reference Period of SCTC Inc. commencing with the Accounting
Reference Period beginning on 1 April 1997, to the International Security
Agent (in sufficient numbers for distribution to the Banks), copies of an
itemised consolidated budget, in the format reasonably approved by the Lead
Bank for the forthcoming Accounting Reference Period for the Tobacco Group.
Each such budget shall contain, inter alia, (in such detail as the Lead
Bank reasonably considers to be necessary) the aggregate amount of Capital
Expenditure (separately specifying individual items of Capital Expenditure
in excess of $5,000,000) intended to be incurred by the Tobacco Group
during that Accounting Reference Period.
<PAGE>
Such budget shall have been approved by the senior tobacco management of
SCC and shall include consolidated statements for each of SCC, the Tobacco
Group and each of the Borrowers and individual statements of each of the
Borrowers (in each case for each Trading Period during such Accounting
Reference Period), of forecast profit and loss, revenue and cash flow
including a rolling four quarter cashflow in a format approved by the
International Security Agent and a balance sheet, to include a commentary
on the above and to be in such form and to contain such other information
as is, in the reasonable opinion of the International Security Agent,
necessary;
15.7 Circulars and Trade Information: deliver to the International Security
Agent copies of all circulars issued to shareholders of any Tobacco Group
Company or any class of them, all filings with regulatory authorities
relating to any Tobacco Group Company and such other trade information as
is available to the Tobacco Group as the Lead Bank may reasonably require
from time to time;
15.8 Inventory Programme: maintain a programme to the satisfaction of the
Security Agents, as far as possible, for the purpose of monitoring and
reporting levels of Inventory not sold to third parties;
15.9 Consistent Application: ensure that all accounts and other financial
information submitted to the Lead Bank and the Co-Lead Bank have been
prepared using accounting bases, policies, practices and procedures
consistent with the policies applied in the Original Accounts and in
accordance with generally accepted accounting principles consistently
applied, (except in any case as approved by the Auditors in which event
SCTC Inc. shall notify such modifications to the Lead Bank). In such
circumstances the Lead Bank (in consultation with SCC and the Auditors) may
require such changes to the financial covenants contained in this Agreement
as shall reflect such modifications. SCTC Inc. shall ensure that such
accounts give a true and fair view of the results of its (and, where
consolidated, its Subsidiaries') operations for the period in question and
the state of its (and, where consolidated, its Subsidiaries') affairs as at
the date to which such accounts are made and disclose or reserve against
all of its (and, where consolidated, its Subsidiaries') liabilities, actual
and contingent;
15.10Auditor's Certificate: require the Auditors for the time being (and at
SCTC Inc.'s expense) if required by the Lead Bank at the request of the
Majority Banks:-
(a) to verify to the Lead Bank's satisfaction and certify any financial
information required by this Agreement to be provided to the Lead Bank
and/or the Banks; and
(b) to verify and certify any figures required to calculate any of the
financial covenants contained in Clause 16 (Financial Covenants);
15.11Litigation: advise the Lead Bank immediately of the details of any
litigation, arbitration or administrative proceeding (to the best of its
knowledge and belief) pending or threatened against any Tobacco Group
Company which could, if adversely determined, result in a liability to the
Group (including costs) in excess of $2,000,000 and detailing to what
extent such liability is covered by insurance;
15.12Event of Default: notify the Lead Bank in writing of any event set out in
Clause 17.1(a)-(t) (ignoring any grace periods or notice requirements
therein) or any Potential Event of Default immediately upon becoming aware
of such occurrence;
15.13Notification: notify the International Security Agent in writing promptly
upon becoming aware of any request received by a Borrower to give any
Encumbrance, guarantee or indemnity or of any demand by any person for
repayment of any principal amount or forthwith upon becoming aware that any
person is taking any steps to recovery any principal amount from it;
15.14Revision of Time Limits at Year End: notwithstanding the provisions of this
clause, where information to be provided under those clauses with respect
to any month relates to the month immediately preceding the financial year
end of the Borrowers, the period of 30 days referred to in this Clause
shall be deemed to be changed to 60 days.
<PAGE>
15.15Environment: the Borrowers will immediately notify the Lead Bank in
writing of the occurrence of any of the following:
(a) any pending or threatened Environmental Claim against any Tobacco
Group Company or any Mortgaged Property;
(b) any condition or occurrence on any Mortgaged Property that (i) results
in material noncompliance by any Tobacco Group Company with any
applicable Environmental Law or (ii) could reasonably be anticipated
to form the basis of an Environmental Claim against any Tobacco Group
Company or any Mortgaged Property;
(c) any condition or occurrence on any Mortgaged Property or any property
adjoining or in the vicinity of any Mortgaged Property that could
reasonably be anticipate to cause such Mortgaged Property to be
subject to any restrictions on the ownership, occupancy, use or
transferability of such Mortgaged Property under any Environmental
Law;
(d) the taking of any removal or remedial action in response to the
presence or alleged presence of any Hazardous Material on any
Mortgaged Property;
All such notices shall describe in reasonable detail the nature of the
claim, investigation, occurrence, condition or removal or remedial
action and the Borrowers' response thereto. In addition, the Borrowers
will provide the Lead Bank with copies of all communications with any
government or governmental agency relating to Environmental Laws, all
communications with any person relating to Environmental Claims and
such detailed reports of any Environmental Claim as may reasonably be
requested by the Lead Bank.
(e) the Borrowers will undertake any cleanup, removal, remedial or other
action necessary to remove and clean up all Hazardous Materials from
any Mortgaged Property in accordance with the requirements of all
applicable Environmental Laws;
(f) the Borrowers agree to defend, protect, indemnify and hold harmless
each of the Finance Parties and each of their respective officers,
directors, employees, attorneys and agents (the "Indemnitees") from
and against all liabilities, obligations, losses, damages, (including
foreseeable and unforeseeable consequential damages and punitive
damages) penalties, actions, judgments, suits, claims, costs, expenses
and disbursements (including reasonable attorney's and consultants'
fees and disbursements) of any kind or nature whatsoever that may at
any time be incurred by, imposed on or asserted against such
Indemnitees directly or indirectly based on or arising or resulting
from (i) the actual or alleged presence of Hazardous Materials on,
under or at any Mortgaged Property (ii) the failure of any
representation or warranty made by the Borrowers (iii) any
Environmental Claim relating to any member of the Tobacco Group or any
Mortgaged Property or arising out of the use of any Mortgaged Property
or (iv) the exercise the rights of the Finance Parties under any of
the provisions of this Clause (the "Indemnified Matters") regardless
of when such Matters arise but excluding any Matter based solely on
the gross negligence or wilful misconduct of any Indemnitee;
(g) to the extent that the foregoing paragraph may be unenforceable
because it is violative of any law or public policy, the Borrowers
will contribute the maximum portion that they are permitted to pay and
satisfy under applicable law to the payment and satisfaction of all
Indemnified Matters incurred by the Indemnitees;
<PAGE>
(h) the undertakings set forth in this clause and in clauses 13 and 14
with respect to environmental matters shall survive the repayment of
the Facilities, the release of the mortgage on any Mortgaged Property,
any foreclosure of any such mortgage or delivery of a deed or
assignment in lieu of foreclosure or otherwise, and the transfer of
all or any right, title or interest in and to any Mortgaged Property
by any Tobacco Group Company;
16. FINANCIAL COVENANTS
16.1 For so long as any liability remains outstanding or capable of becoming
outstanding under any of the Finance Documents, the Borrowers shall procure
that:
(a) Tobacco Group Tangible Net Worth: Tobacco Group Tangible Net Worth for
each of the periods detailed below shall not fall below the amounts
specified below:
Minimum Tangible Net Worth Period
$ 80,000,000 Date of this Agreement to 31 March 1998
$ 95,000,000 1 April 1998 to 31 March 1999
$ 110,000,000 1 April 1999 to 31 March 2000
$ 125,000,000 1 April 2000 until the Final Repayment Date
(b) SCC Tangible Net Worth during each of the periods set out below shall
not fall below the amounts set out below:
SCC Tangible Net Worth Period
$125,000,000 Date of this Agreement to 31 March 1998
$140,000,000 1 April 1998 to 31 March 1999
$155,000,000 1 April 1999 to 31 March 2000
$170,000,000 1 April 2000 until the Final Repayment Date
(c) Tobacco Interest Cover Ratio: the ratio of the consolidated EBITDA to
Interest for the Tobacco Group shall not at any time fall below 1.5:1.
16.2 Testing of Covenants:
(a) The covenants contained in Clauses 16.1(a) (Tobacco Group Tangible Net
Worth) and 16.1(b) (SCC Tangible Net Worth) shall apply on a
continuing basis and shall be tested quarterly.
(b) The covenant contained in clause 16.1(c) (Interest Cover Ratio) shall
apply on a continuing basis and shall be tested quarterly first by
reference to the three month period ending 30 June 1997, second by
reference to the six month period ending 30 September 1997, thirdly by
reference to the nine month period ending 31 December 1997, fourthly
by reference to the 12 month period ending 31 March 1997 and
thereafter on a rolling 12 month basis by reference first, to the
quarterly accounts delivered pursuant to clause 15.4(e) and secondly
by reference to the audited accounts of the Tobacco Group delivered
pursuant to clause 15.5(a).
(c) The Lead Bank may require any calculation based on the management
figures to be restated and certified as accurate by the Auditors if in
the bona fide opinion of the Lead Bank the subsequent publication of
audited figures or any other information becoming available to the
Lead Bank casts doubt on any relevant management figures.
<PAGE>
PART X
EVENTS OF DEFAULT
17. TERMINATION IN CASE OF DEFAULT
17.1 Demand on Event of Default: Upon the occurrence of any of the following
events:-
(a) Failure to Pay: failure by any Obligor to pay in full any sum due
under, and in the manner required by, this Agreement or any other
Finance Document on the due date (or, if such failure is due solely to
an administrative failure on the part of such Obligor's bank and not
to any default of such Obligor, within two Business Days of the due
date); or
(b) Incorrect Representation: any representation, warranty or statement
made by or in relation to SCC or any Tobacco Group Company in this
Agreement or any other Finance Document or in any document furnished
under or in connection with such documents being incorrect as at the
date on which it is made or deemed to be repeated; or
(c) Breach of Agreement: failure by any Obligor to comply duly and
punctually, or to procure that any Tobacco Group Company so complies,
with any other provision of any Finance Document and such failure (if
capable of remedy) is not remedied within ten Business Days; or
(d) Failure to Discharge Indebtedness:
(i) failure by SCC or any Tobacco Group Company to discharge on its
due date (but only on the expiry of any applicable grace period
contained in the original document evidencing the same) any
Indebtedness unless the Indebtedness is being disputed in good
faith by SCC or the relevant Tobacco Group Company with (in the
opinion of its legal advisers) a good prospect of success; or
(ii) any Borrowings of SCC or any Tobacco Group Company are declared
due and payable prior to their stated maturity or are placed on
demand by reason of an event of default (however called) or any
circumstances arise as a result of which any Borrowings could be
so declared due and payable prior to their stated maturity; or
(iii)any money repayable on demand by SCC or any Tobacco Group
Company is not repaid on demand being made; or
(iv) any lender or other person in whose favour SCC has granted a
guarantee, makes demand under such guarantee;
where the aggregate liability of SCC and/or members of the
Tobacco Group in respect of such claims exceeds $10,000,000;
(e) Suspension and Expropriation:
(i) the suspension or the threatened suspension of all or a
substantial part of the operations of any Borrower or SCC; or
<PAGE>
(ii) the expropriation of all or a substantial part of any assets of
any Borrower or SCC by any governmental or other competent
authority; or
(f) Insolvency:
(i) Winding Up:
(aa) a meeting is convened; or
(bb) a petition is presented (unless (a) the relevant Company is
able to satisfy the Steering Committee that such petition is
frivolous or vexatious and/or (b) such petition is
discharged within 10 Business Days of the date of its
presentation if presented in a jurisdiction in which any
Obliger is domiciled and/or (c) such petition is discharged
within 21 Business Days of the date of its presentation if
presented in a jurisdiction in which no Obligor is
domiciled); or
(cc) an order is made; or
(dd) a resolution is passed;
for the winding-up of any Obligor (except for the purposes
of a reconstruction or amalgamation while solvent on terms
previously approved in writing by the Lead Bank); or
(ii) Administration:
(aa) a meeting is convened; or
(bb) an application is made; or
(cc) a petition is presented;
for the appointment of an administrator in relation to any
Obligor; or
(iii)Request by Directors or Members: the directors or a member of SCC
or a Tobacco Group Company request the appointment of a
liquidator, receiver, administrative receiver, administrator or
similar official; or
<PAGE>
(g) Bankruptcy: Obligor shall commence a voluntary case concerning itself
under Title 11 of the United States Code entitled "Bankruptcy" (the
"Bankruptcy Code") or an involuntary case is commenced against any
Obligor and the petition is not controverted within 30 days or is not
dismissed within 60 days after commencement of the case or a custodian
(as defined in the Bankruptcy Code) is appointed for, or takes charge
of, all or substantially all of the property of any Obligor or any
Obligor commences any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction whether
now or hereafter in effect relating to any Obligor or there is
commenced against any Obligor any such proceeding which remains
undismissed for a period of 60 days; or any Obligor is adjudicated
insolvent or bankrupt; or any order of relief or other order approving
any such case or proceedings is entered; or any Obligor suffers any
appointment of any custodian or the like for it or any substantial
part of its property to continue undischarged or unstayed for a period
of 60 days; or any Obligor makes a general assignment for the benefit
of creditors; or any corporate action is taken by any Obligor for
purpose of effecting any of the foregoing; or
(h) Distress etc.: a distress, execution or other legal process is levied
in respect of a judgement for an amount in excess of $500,000 against
any of the assets of any Obligor and is not discharged or paid out
within 14 days; or
(i) Enforcement Proceedings:
(i) an encumbrancer takes possession; or
(ii) a receiver or an administrative receiver, administrator,
liquidator, special manager, trustee, supervisor or similar or
equivalent officer is appointed,
of the whole or any part of the assets or undertaking of any
Obligor; or
(j) Ceasing Payment of Debts: any Obligor:-
(i) becomes insolvent or bankrupt or ceases or suspends generally
payment of its debts (or announces an intention to do so) or is
unable to pay its debts or is deemed unable to pay its debts
within the meaning of Section 123 of the Insolvency Act 1986
(provided that the figure of (pound)750 referred to in Section
123(1)(a) of the Insolvency Act 1986 shall be deemed to have been
increased to $10,000); or
(ii) commences, or announces an intention to commence, negotiations
with one or more of its creditors with a view to the general
readjustment or rescheduling of all or any class of its
Indebtedness or seeks protection from its creditors; or
(iii)proposes or its directors make a proposal for a voluntary
arrangement under Part I of the Insolvency Act 1986; or
(iv) enters into any composition or other arrangement for the benefit
of its creditors generally or any class of creditors; or
(v) is the subject of any proceedings under any law, regulation or
procedure relating to reconstruction or readjustment of its
debts; or
(vi) has a moratorium declared in respect of its Indebtedness; or
(k) Unlawful Performance:
(i) it becomes unlawful for SCC or any Tobacco Group Company to
perform any of its obligations under any Finance Document to
which it is a party; or
(ii) any Finance Document is not or ceases to be legal, valid and
binding on and enforceable against SCC or any Tobacco Group
Company which is a party thereto or is materially impaired; or
<PAGE>
(iii)any Obligor shall at any time give notice purporting to determine
its liability under any guarantee or security securing the
amounts from time to time due under any Finance Document
(including further amounts which may be drawn down under it); or
(l) Material Adverse Change:
(i) there occurs a Material Adverse Change; or
(ii) litigation is brought against SCC or a Tobacco Group
Company which is likely to succeed and which if
successful would result in a Material Adverse Change;
or
(iii)the Majority Banks consider that, since the Effective
Date, there has been a Material Adverse Change;
(m) Auditors' Report: the Auditors qualify their report to the audited
Accounts; or
(n) Change of Control: any person (whether acting alone or with any other
person) which does not have control at the date of this Agreement
becomes the beneficial owner of shares in the share capital of SCC
carrying the right to exercise more than 25 per cent. of the votes
exercisable at a general meeting of SCC or otherwise acquires the
power to control the affairs and policies of SCC; or
(o) Ceasing Business: any Tobacco Group Company ceases or threatens to
cease to carry on any material part of the business it carries on at
the date of this Agreement, except as expressly permitted under this
Agreement; or
(p) Repudiates Obligations: any of the Obligors repudiates any of its
obligations under any of the Finance Documents; or
(q) Analogous Events: any event occurs which, under the applicable law of
any relevant jurisdiction, has an analogous or equivalent effect to
any of the above events mentioned in this Clause 17.1;
(r) Borrowing Base:
(i) any Borrower makes a utilisation of the Facilities where such
utilisation would cause the Net Borrowings to exceed the level of
the Borrower's Borrowing Base, as at the date of that
utilisation; or
(ii) SCTC Inc. makes a utilisation of the Facilities where such
utilisation would cause SCTC Inc.'s Net Borrowings to exceed the
level of SCTC Inc.'s Borrowing Base, as at the date of that
utilisation in each case demonstrated by the most recent
Borrowing Base Certificate delivered pursuant to Clause 15.2
(Borrowing Base) and such default is not remedied within five
Business Days;
(s) Erisa:
<PAGE>
(i) Any Plan shall fail to satisfy the minimum funding standard
required for any plan year or part thereof under Section 412 of
the Code or Section 302 of ERISA or a waiver of such standard or
extension of any amortization period is sought or granted under
Section 412 of the Code or Section 303 or 304 of ERISA, a
Reportable Event shall have occurred, a contributing sponsor (as
defined in Section 4001(a)(13) of ERISA) of a Plan subject to
Title IV of ERISA shall be subject to the advance reporting
requirement of PBGC Regulation Section 4043.61 (without regard to
subparagraph (b((1) thereof) and an event described in subsection
.62, .63, .64, .65, .66, .67 or .68 of PGBC Regulation Section
4043 shall be reasonably expected to occur with respect to such
Plan within the following 30 days, any Plan which is subject to
Title IV of ERISA shall have had or is likely to have a trustee
appointed to administer such Plan, any Plan which is subject to
Title IV of ERISA is, shall have been or is likely to be
terminated or to be the subject of termination proceedings under
ERISA, any Plan shall have an Unfunded Current Liability, a
contribution required to be made with respect to a Plan or a
Foreign Pension Plan has not been timely made, the Borrowers or
any Tobacco Group or any ERISA Affiliate has incurred or is
likely to incur any liability to or on account of a Plan under
Section 409, 502(i), 502(1), 515, 4062, 4063, 4064, 4069, 4201,
4204 OR 4212 of ERISA or Section 401(a)(29), 4971 or 4975 of the
Code or on account of a Group health plan (as defined in Section
607(1) of ERISA or Section 4980B(g)(2) of the Code) under Section
4980B of the Code, or the Company or any Subsidiary of the
Company has incurred or is likely to incur liabilities pursuant
to one or more employee welfare benefit plans (as defined in
Section 3(1) of ERISA) that provide benefits to retired employees
or other former employees (other than as required by Section 601
of ERISA or any other applicable continuation of coveraged laws)
or Plans or Foreign Pension Plans;
(ii) there shall result from any such event or events the imposition
of a lien, the granting of a security interest, or a liability or
a material risk of incurring a liability; and
(iii)such lien, security interest or liability, individually, and/or
in the aggregate, in the opinion of the Majority Banks, has had,
or could reasonably be expected to have, a material adverse
effect upon the business, operations, condition (financial or
otherwise) or prospects of the Borrowers or any Tobacco Group
Company; or
(t) any of the Finance Documents ceasing to be binding on the parties to
it or any provision of it ceasing to be legally enforceable or any of
the Finance Documents being amended, supplemented or varied without
the consent of the Lead Bank,
then and in any such event and at any time while it is Continuing, the
Lead Bank may, in its sole discretion, and at the instruction of the
Majority Banks shall, by notice in writing to the Borrowers declare
that an event of default has occurred and such declaration shall
constitute an Event of Default or any analogous such event (however
described) under each Facility Agreement whereupon each Bank (or the
Lead Bank on its behalf) may declare that its Commitment is cancelled
and reduced to zero and all amounts outstanding to such Bank under or
in connection with any Facility and/or Finance Document shall be
repayable on demand whereupon they shall become immediately due and
payable together with all accrued interest and other costs,
commissions and charges owing under such Facility and/or Finance
Document forthwith upon demand being made by such Bank (or the Lead
Bank on its behalf). For the avoidance of doubt, an Event of Default
may be waived only with the consent of the Majority Banks.
17.2 Demand: no Bank may demand permanent repayment of any Indebtedness as a
result of an acceleration under a Facility Agreement to which it is a party
except in accordance with clause 17.1;
<PAGE>
17.3 Enforcement of Existing Security: no Bank may enforce any guarantee or
Encumbrance granted to it by an Obligor in connection with the Finance
Documents unless the Lead Bank has instructed the Security Agents pursuant
to clause 17.1 to enforce the security granted to the Security Agents;
17.4 Foreign Exchange and Cash Cover: Upon the making of a declaration by the
Lead Bank of an Event of Default under Clause 17.1 above, each Bank shall
be entitled, in addition to any rights conferred upon it under Clause 17.1
above:-
(a) to close out all or any foreign exchange contracts then currently
outstanding under or pursuant to the Facility; and
(b) to call for the immediate payment to it of full cash cover in respect
of all unmatured liabilities of any Obligor to such Bank.
<PAGE>
PART XI
FEES, EXPENSES AND STAMP DUTIES
18. FEES
18.1 Arrangement Fees: the Borrowers shall on the Effective Date pay to the Lead
Bank for the Banks a fee of an amount equal to _ per cent. of the aggregate
of the Commitments of the Banks on the date of this Agreement and the Lead
Bank shall distribute such fee amongst all the Banks, pro rata to their
respective Commitments on the date on which such payment falls to be made.
18.2 Management Fee: On the Effective Date the Borrowers shall pay the following
management fees:
(a) to the Lead Bank $400,000;
(b) to the Co-Lead Bank $300,000;
(c) to the International Security Agent $100,000;
18.3 Commitment Fee: During the term of this Agreement, the Borrowers shall pay
to the Lead Bank for the account of the Banks on the Effective Date and
thereafter on each subsequent Quarter Date, a commitment fee calculated at
the rate of 0.25 per cent. per annum on the aggregate Commitments. Such fee
shall accrue from day to day and on the basis of a 360 day year and shall
be distributed between the Banks in their Pro Rata Shares. For the purposes
of this Clause 18.3 Commitments shall be calculated by reference to the
Commitments of the Banks on the day on which such payment falls to be made.
18.4 VAT: Where the costs and fees specified in this Clause 18 attract value
added tax or any similar tax, the relevant Borrower and/or SCC shall pay
the relevant amount of such tax in addition to the cost or fee concerned.
19. EXPENSES
The Borrowers shall reimburse the Finance Parties on demand (on a full
indemnity basis and whether or not any of the Facilities are utilised after
the date of this Agreement) for all reasonable fees, costs and expenses in
any relevant jurisdiction (including, without limitation reasonable legal
fees, valuation, accountancy and consultancy fees and communication and
out-of-pocket expenses) and any value added or similar tax upon such costs
and expenses, incurred by:-
(a) the Lead Bank, the Co-Lead Bank and the Security Agents in connection
with the carrying out of due diligence procedures, negotiation,
preparation, execution, and completion of the Finance Documents or any
of the documents referred to in any Finance Documents or the
transactions contemplated by them including, for the avoidance of
doubt, any such fees, costs and expenses incurred by each of the
Security Agents in connection with the taking of any security from
time to time as contemplated by this Agreement; and
<PAGE>
(b) the Lead Bank, the Co-Lead Bank, the Security Agents and the Steering
Committee in connection with the operation of this Agreement and/or
any Finance Document and/or the performance of their duties under any
such agreement including, without limitation, legal fees and reporting
accountants' fees; and
(c) the Lead Bank, the Co-Lead Bank, the Security Agents and each Bank in
connection with the enforcement or preservation of any of their
respective rights under any of the Finance Documents or any of the
documents referred to in such Finance Documents in any jurisdiction.
20. STAMP DUTY
The Borrowers jointly and severally agree to pay on demand all present and
future stamp, registration and similar taxes or charges which may be
payable or determined to be payable in any jurisdiction in connection with
the execution, delivery, performance or enforcement of any of the Finance
Documents or any judgment given in connection with them and shall indemnify
each of the Lead Bank, the Co-Lead Bank, the Security Agents, the Steering
Committee and the Banks against any and all liabilities, including
penalties with respect to or resulting from its delay or omission to pay
any such stamp, registration and similar taxes or charges (except for any
such stamp, registration and similar taxes or charges incurred in
connection with any assignment or transfer by a Bank in accordance with
Clause 21 (Assignments and Transfers)).
<PAGE>
PART XII
ASSIGNMENTS AND TRANSFERS
21. ASSIGNMENTS AND TRANSFERS
21.1 Borrower: No Borrower may assign or transfer any of its rights or
obligations under any Finance Document.
21.2 Banks: Any Finance Party may, after prior consultation with the Lead Bank
and with the prior written consent of SCTC Inc. (which shall not be
unreasonably withheld or delayed), (save in respect of assignments,
transfers or sub-participations to a Subsidiary or Affiliate of such
transferor, assignor or sub-participator or a Finance Party or a Subsidiary
or an Affiliate of a Finance Party in which case the consent of SCTC Inc.
shall not be required, but the transferor, assignor or sub-participator
shall notify SCTC Inc. promptly after such transfer, assignment or
sub-participation) and subject to Clause 21.3:-
(a) assign its rights and benefits under its Facilities and this Agreement
and each other Finance Document to which it is a party; or
(b) transfer in accordance with Clause 21.4 its obligations under this
Agreement and each other Finance Document; or
(c) sub-participate all or any of its rights and/or obligations under the
terms applicable to its Facilities and this Agreement and each other
Finance Document to which it is a party;
to an Eligible Transferee, where in each case (i) such assignee,
transferee or sub-participant is acting as principal only; and (ii)
the rights and/or obligations being assigned transferred or
sub-participated to it represent all or a minimum of $5 million of the
Commitment of the assignor, transferor or sub-participator; (iii) and
such transfer does not of itself result in any Borrower or SCC being
required to make an additional payment under Clause 9 in connection
with any Finance Document. Any sub-participation to a Subsidiary or
Affiliate of the sub-participator shall not be subject to the
restrictions in (i), provided the sub-participator remains the
principal, and (ii) above.
<PAGE>
Any Finance Party wishing to assign or transfer any of its rights
and/or obligations under this Agreement (the "Proposed Transferor")
shall first notify the Lead Bank of its intention so to do and the
proposed terms of such assignment or transfer (the "Transfer Notice")
and shall not be entitled to make such assignment or transfer until a
period of fourteen days (the "14 Day Period") shall have elapsed from
the date of receipt by the Lead Bank of the Transfer Notice. If,
within the 14 Day Period, any Finance Party has notified the Proposed
Transferor that it is willing to accept an assignment or transfer on
the same terms as those detailed in the Transfer Notice and otherwise
on the terms of this Agreement (which notification shall be binding on
such Finance Party) (an "Acceptance Notice") then the Proposed
Transferor shall be obliged to make such assignment or transfer to
such Finance Party and not to any third party. Such 14 Day Period
shall not apply in respect of any assignment, transfer or
sub-participation to a Finance Party, a Subsidiary or Affiliate of a
Finance Party and the terms set out above shall not apply. If more
than one Finance Party shall have given an Acceptance Notice to the
Proposed Transferor within the 14 Day Period, the obligation of the
Proposed Transferor hereunder shall be to transfer to the first
Finance Party to give an Acceptance Notice to the Proposed Transferor.
If no Acceptance Notice is received from any Finance Party during the
14 Day Period with respect to a Transfer Notice, the Proposed
Transferor may assign or transfer its rights and obligations specified
in the Transfer Notice on the terms specified in such Transfer Notice
and otherwise in accordance with the terms of this Agreement. No
assignment or transfer of any rights and/or obligations of a Finance
Party hereunder may be made on terms which have not previously been
notified in full to the Lead Bank in a Transfer Notice in accordance
with the terms of this Clause.
21.3 Transfer Certificate: Any permitted transfer of the obligations of a
Finance Party (a "Transferor") under this Agreement and each other Finance
Document to which it is a party may be made in whole or in part and shall
be effected by the delivery to the Lead Bank of a Transfer Certificate duly
completed and signed by the Transferor and the Transferee.
21.4 Effective Date: Each of the parties to this Agreement agrees that following
receipt by the Lead Bank of a completed and signed Transfer Certificate and
with effect from the date specified in such certificate:-
(a) to the extent that the Transferor elects in such Transfer Certificate
to transfer its obligations under its Facilities and this Agreement
and each other Finance Document to which it is a party, the Transferor
shall be released from further obligations to each Obligor and their
respective rights against each other (except for rights accrued prior
to the date on which such Transfer Certificate takes effect) shall be
cancelled;
(b) the Transferee shall assume obligations towards each Obligor and each
Obligor shall acquire rights against the Transferee which differ from
the rights and obligations so discharged only insofar as each Obligor
and the Transferee have assumed and/or acquired the same in place of
the Obligors and the Transferor (as the case may be); and
(c) the Lead Bank, the Transferee and the other Finance Parties (as the
case may be) shall acquire towards each other the same rights and
assume the same obligations between themselves as they would have
acquired and assumed had such Transferee been an original party to
this Agreement and each other Finance Document as a Finance Party with
the obligations acquired and/or assumed by it as a result of such
transfer (and, to that extent, the Lead Bank, the Transferor and the
other Finance Parties shall each be released from further obligations
to each other under this Agreement and such Finance Documents).
21.5 Lead Bank's Notification: The Lead Bank shall promptly notify SCTC Inc.,
the Security Agents and the other Finance Parties for the time being of the
receipt of a Transfer Certificate and shall deliver a copy of such Transfer
Certificate to SCTC Inc..
21.6 SCC's and Borrower's Authorisation: SCC and the Borrowers irrevocably
authorise the Finance Parties to deliver, and the Lead Bank to receive,
Transfer Certificates in accordance with this Clause 21.
21.7 Further Assurance: Each of SCC and the Borrowers agrees to enter into and
to procure that the other Obligors shall enter into such additional
documentation (if any) as may be required by the Lead Bank or any Security
Agent to effect any assignment or transfer in accordance with this Clause
21.
21.8 Transferee Acknowledgement: Each Transferee, by its execution of a Transfer
Certificate, acknowledges that none of the other Finance Parties is
responsible to it for:-
<PAGE>
(a) the accuracy and/or completeness of any information supplied to the
Transferee in connection with the Finance Documents, the matters
referred to in those documents or the Group;
(b) the financial condition, creditworthiness, condition, affairs, status
and nature of any of the Group Companies or the observance by any of
the Obligors of any provisions of the Finance Documents of any of its
obligations under this Agreement or any document so relating; or
(c) the legality, validity, effectiveness, adequacy or enforceability of
the Finance Documents or any document relating to this Agreement or to
those documents.
21.9 No Obligation: The Transferor shall not be obliged by any Finance Document
to:-
(a) accept a re-transfer from the Transferee of any of the rights and/or
obligations assigned or transferred under this Clause 21; or
(b) indemnify the Transferee for any losses arising by reason of any
Obligor's failure to perform its obligations under the Finance
Documents or otherwise.
21.10Fee: On the date that a transfer becomes effective, the Transferee shall
pay to the Lead Bank a fee of $100 for its own account.
21.11 Information
Each of SCC and the Borrowers agrees that the Finance Parties may at any
time disclose such information relating to it and each other Tobacco Group
Company as shall come into their possession, whether or not in relation to
the Facilities:-
(a) save in respect of any publicly available information, with the prior
consent of SCTC Inc. to any prospective assignee, Transferee or
sub-participant not being a licensed bank;
(b) to any person which is a licensed bank (not falling within (d) below);
(c) to their respective advisers, (professional or otherwise) and to any
reporting accountant, consultant or surveyor appointed from time to
time in relation to any Tobacco Group Company and to the Auditors;
(d) to the other Finance Parties and their Subsidiaries and Affiliates
(provided such Subsidiary or Affiliate has either executed a
confidentiality agreement in favour of SCTC Inc. reasonably acceptable
to SCTC Inc. or the Finance Party disclosing such information remains
liable for any failure by such Affiliate or Subsidiary to keep
information disclosed confidential);
(e) if required to do so by an order of a court in any jurisdiction;
(f) pursuant to any law or regulation or to any applicable regulatory
authority (including, without limitation, the Bank of England) in any
jurisdiction; and
(g) where such information shall have already entered the public domain,
<PAGE>
and in the case of paragraphs (a) and (b) above, subject to requiring
and SCTC Inc. receiving a written confidentiality agreement from the
recipient of the information in form and substance reasonably
acceptable to SCTC Inc. that it will treat in confidence any
confidential information so disclosed to it and not use it for any
unauthorised purpose.
PART XIII
AGENCY AND INTER-BANK PROVISIONS
22. LEAD BANK, CO-LEAD BANK, DOCUMENTATION AGENT, SECURITY AGENTS AND STEERING
COMMITTEE
22.1 Appointment:
(a) Each Finance Party appoints:-
(i) the Lead Bank to act as its agent in connection with this
Agreement and authorises the Lead Bank to exercise such rights,
powers and discretions as are specifically delegated to it by the
terms of this Agreement together with all such rights, powers and
discretions as are reasonably incidental to them;
(ii) the Co-Lead Bank to act as its agent in connection with this
Agreement and the Documentation Agent to act as its Documentation
Agent in connection with this Agreement and authorises each of
the Co-Lead Bank and the Documentation Agent to exercise such
rights, powers and discretions as are specifically delegated to
them by the terms of this Agreement together with all such
rights, powers and discretions as are reasonably incidental to
them. References in clauses 22, 23 and 24 to the Co-Lead Bank
shall be deemed to include a reference to the Documentation
Agent;
(iii)the Steering Committee to act on its behalf in exercising such
rights, powers and discretions as are specifically delegated to
it by the terms of this Agreement together with all such rights,
powers and discretions as are reasonably incidental to them; and
(iv) the US Security Agents to act as its agent and the International
Security Agent to act as its agent and trustee in relation to the
Security Documents and authorises the Security Agents to exercise
such rights, powers and discretions as are specifically delegated
to them by the terms of this Agreement and the Security Documents
together with all such rights, powers and discretions as are
reasonably incidental to them.
The Obligors shall be entitled to assume that the Lead Bank, the
Co-Lead Bank, the Security Agents and the Steering Committee act
with the approval of all Banks or the Majority Banks (as the case
may be), and that all consents and notices given or decisions
made, by the Lead Bank, the Co-Lead Bank, the Security Agents or
the Steering Committee under or in connection with the Finance
Documents are validly given or made.
22.2 Powers: Each of the Lead Bank, the Co-Lead Bank, the Security Agents and
each member of the Steering Committee may:-
(a) assume that:-
<PAGE>
(i) any representation made by the Obligors in or in connection with
the Finance Documents is true;
(ii) no Event of Default or Potential Event of Default has occurred;
and
unless the Lead Bank, or the Co-Lead Bank, as the case may be,
Security Agents or the Steering Committee has in its capacity as
such received actual notice to the contrary, at its address for
communications under this Agreement from any other party to this
Agreement;
(b) assume that each Transferee's Facility Office is that identified in
the Transfer Certificate pursuant to which it became a party to this
Agreement until it has received from such Transferee a notice
designating some other office of such Transferee as its Facility
Office and act upon any such notice until the same is superseded by a
further such notice;
(c) (in the case only of the Lead Bank and the Security Agents) engage and
pay for the advice or services of any lawyers, accountants or other
advisers whose advice or services may to it seem necessary, expedient
or desirable and rely upon any advice so obtained;
(d) rely as to matters of fact which might reasonably be expected to be
within the knowledge of an Obligor or any officer or employee of an
Obligor upon a certificate or statement signed by or on behalf of that
Obligor or that officer or employee;
(e) rely upon any communication or document believed by it to be genuine
and correct and to have been communicated or signed by the person by
whom it purports to be communicated or signed;
(f) refrain from exercising any right, power or discretion vested in it
under any Finance Document unless and until instructed by the Majority
Banks whether or not such right, power or discretion is to be
exercised and, if it is to be exercised, the manner in which it should
be exercised, and it shall not be liable for acting or refraining from
acting in accordance with or in the absence of instructions from the
Majority Banks;
(g) refrain from taking any step to protect or enforce the rights of any
Finance Party under any Finance Document, or beginning any legal
action or proceeding arising out of or in connection with any Finance
Document until it shall have been indemnified and/or secured as it may
require (whether by way of payment in advance or otherwise) against
all costs, claims, expenses (including legal fees) and liabilities
which it will or may expend or incur in complying with such
instructions;
(h) refrain from doing anything which would or might in its opinion be
contrary to any applicable law or any requirements (whether or not
having the force of law) of any governmental, judicial or regulatory
body or otherwise render it liable to any person and may do anything
which is in its opinion necessary to comply with any such applicable
law or requirement;
(i) do any act or thing in the exercise of any of its powers and duties
under any Finance Document which may lawfully be done and which in its
absolute discretion it deems advisable for the protection and benefit
of the Finance Parties;
(j) perform any of its duties, obligations and responsibilities under any
Finance Document by or through its personnel or agents;
<PAGE>
(k) accept deposits from, lend money to and generally engage in any kind
of banking or other business with any Tobacco Group Company without
any liability to account (and it is expressly agreed that this will
not be a breach of any of their duties to the Finance Parties); and
(l) accept instant enquiry, requisition, objection or investigation
such title as any person may have to any property or assets of
such person which is the subject of any Security Document;
(m) (in the case only of the Lead Bank and the Security Agents) from time
to time send to each Finance Party (other than itself) a notice
requesting such details of such Finance Party's Facilities, Facility
Agreements, Outstandings, Commitment and other information relating to
the Facilities as it may require and each Finance Party undertakes to
complete and return promptly any such notice which it receives.
22.3 Duties: Each of the Lead Bank, the Co-Lead Bank, the Security Agents and
Steering Committee shall:
(a) (in the case only of the Lead Bank, the Co-Lead Bank and the Security
Agents) except as regards purely administrative acts which do not have
a material effect upon any of the Banks, consult whenever reasonably
practicable with the Banks before doing or refraining from doing any
act or thing in the exercise of its powers as such;
(b) (in the case only of the Lead Bank, the Co-Lead Bank and the Security
Agents) promptly notify each Bank of the occurrence of any Potential
Event of Default or Event of Default or any material breach by any
Obligor in the due performance of its obligations under any Finance
Document which the Lead Bank, Co-Lead Bank or, as the case may be, a
Security Agents (in its capacity as such) has received actual notice
from any other party to such Finance Document;
(c) subject to the foregoing provisions of this Clause 22.3 and to Clause
22.4, act in accordance with any instructions given to it by the
Majority Banks; and
(d) if so instructed by the Majority Banks, except in circumstances set
out in Clause 25.1(b) (Enforcement), refrain from exercising any
right, power or discretion vested in it under the Finance Documents.
22.4 Emergency Powers: If it becomes necessary in the opinion of the Lead Bank,
the Co-Lead Bank, any Security Agent or the Steering Committee to do any
act or thing in the exercise of any of its powers, trusts, authorities
and/or discretion under this Agreement or any other Finance Document in any
case where (in the opinion of the Lead Bank, the Co-Lead Bank, any Security
Agent or the (as the case may be)) it is not practicable to obtain the
prior agreement of the Majority Banks or all the Banks (as the case may
require) before doing so, then the Lead Bank, the Co-Lead Bank, any
Security Agent or the Steering Committee (as the case may be) shall be at
liberty to take such steps as it shall in its absolute discretion deem
advisable for the protection and benefit of the Finance Parties or to
refrain from taking any steps and shall have no liability to any Finance
Party by reason of any exercise or failure to exercise such powers,
authorities and discretions.
<PAGE>
22.5 Waivers and Deemed Consents: Each Bank shall be deemed to consent to the
Lead Bank (i) granting such waivers as the Lead Bank considers appropriate
in relation to Clause 14.2 (Restriction on Encumbrances) and/or any
provision of a similar nature applicable to any Facility to any proposed
lender to any subsidiary of a Borrower where the Borrowing by such
Subsidiary would be a Permitted Borrowing or (ii) agreeing the terms of the
financial covenants to be incorporated in this Agreement (pursuant to
Clause 16), where:-
(a) the Lead Bank shall have notified all Banks in writing by facsimile of
(i) details of the waiver requested and the terms of the waiver
proposed to be given by the Lead Bank or (ii) the terms of the
financial covenants proposed to be incorporated in this Agreement, as
the case may be; and
(b) the Banks shall have been given at least two clear Business Days after
the later of the notifications given to the Lead Bank in sub-clause
(a) above to respond to such notification (in the case of a waiver) or
five clear Business Days to respond to such notification (in the case
of financial covenants); and
(c) (in the case of a waiver) the Majority Banks shall have expressly
agreed to such waiver, or shall not have objected to it prior to the
time specified in such notification, or (in the case of financial
covenants) all Banks which have responded prior to the time specified
in such notification have expressly agreed such financial covenants or
have not objected to them.
22.6 Exoneration: Notwithstanding anything to the contrary expressed or implied
in this Agreement, none of the Lead Bank, the Co-Lead Bank, any Security
Agent nor any member of the Steering Committee shall:-
(a) be bound to enquire as to:-
(i) whether or not any representation or warranty made by any Obligor
under or in connection with any Finance Document is true;
(ii) the occurrence or otherwise of any Event of Default or Potential
Event of Default;
(iii)the performance by any Obligor of its obligations under any
Finance Document;
(iv) any breach of or default by any Obligor of or under its
obligations under any Finance Document;
(b) be bound to account to any Finance Party for any fee or other sum or
the profit element of any sum received by it for its own account;
(c) be bound to disclose to any other person any information relating to
any Tobacco Group Company if such disclosure would or might in its
opinion constitute a breach of any law or regulation or be otherwise
actionable at the suit of any person;
(d) be under any fiduciary duty towards any Finance Party or under any
obligations other than those expressly provided for in this Agreement
and the Security Documents;
(e) be liable (in the absence of its own gross negligence or wilful
misconduct):-
(i) for any failure to obtain any licence, consent or other authority
or for any failure, omission, or defect in the due execution,
delivery, validity, legality, adequacy, performance,
enforceability, or admissibility in evidence of any Finance
Document or any communication, report or other document delivered
under this Agreement or under any Finance Document; or
<PAGE>
(ii) in respect of its exercise or failure to exercise any of its
powers, duties and discretions under this Agreement or under any
Finance Document; or
(iii)for any failure to effect or procure registration of or otherwise
protect all or part of the security created by any Security
Document or for any failure to take or require any Tobacco Group
Company to take any steps to render the Security created or
purported to be created by or pursuant to any security Document
effective or enforceable or to perfect any such security or to
secure the creation of any ancillary charge under the laws of any
territory
(f) be under any obligations except those expressly provided for in this
Agreement and shall have no liability or responsibility of whatever
kind (in the absence of its own gross negligence or wilful misconduct)
to:-
(i) any Tobacco Group Company arising out of or in relation to any
failure or delay in the performance or breach by any Finance
Party of any of its obligations under any Finance Document; or
(ii) any Finance Party arising out of or in relation to any failure or
delay in the performance or breach by any Tobacco Group Company
of any of its obligations under any Finance Document.
22.7 The Security Agents:
(a) Any Security Agent shall receive and apply as agent and/or (in the
case of any Security Agent other than the US Security Agent) trustee
as the case may be for the Finance Parties all amounts paid to them by
way of Recoveries under or pursuant to this Agreement or any Finance
Document (except any amounts paid to it in respect of fees, costs or
expenses of any Security Agent, the Lead Bank, the Co-Lead Bank, the
Steering Committee or any professional advisers appointed by the Lead
Bank or any Security Agent).
(b) Except as stated in Clause 22.6(a), amounts received by the Security
Agents in respect of Recoveries will be applied between the Banks in
accordance with the provisions of Part XIV (Enforcement) and Schedule
VIII (Distribution of Recoveries between Finance Parties).
(c) All interest earned on money held by any Security Agent in respect of
Recoveries pending application will be added to and from part of the
money held.
(d) Any Security Agent will use reasonable endeavours to distribute
amounts received by them in respect of Recoveries as soon as
reasonably practicable following receipt.
(e) Each of the Security Agents shall be at liberty to place any of the
Finance Documents and any other instruments documents or deeds
delivered to it pursuant to this Agreement or in connection with any
Finance Document and for the time being in its possession in any safe
deposit or safe selected by it with the Lead Bank of any other bank or
any company whose business includes undertaking the safe custody of
documents or any lawyers and shall not be responsible for any loss
thereby incurred (otherwise than as a result of its gross negligence
or wilful misconduct).
<PAGE>
(f) Each of the Security Agents may, whenever it thinks fit, delegate by
power of attorney or otherwise to any person or persons all or any of
the rights, powers, authorities and discretions vested in it by any of
the Finance Documents and such delegation may be made upon such terms
and subject to such conditions as the Security Agents shall think fit
and the Security Agents shall not be bound to supervise or be in any
way responsible for any loss incurred by reason of any default or
misconduct on the part of such person or persons.
(g) Each of the Security Agents may refrain from doing anything which
would or in their opinion might be contrary to any relevant law in any
jurisdiction or any relevant directive or regulation or which would or
might render it liable to any person and may do anything which is, in
its opinion, necessary to comply with any such law, regulation or
directive.
(h) Each of the Security Agents and every attorney or other person
appointed by it under any of the Finance Documents may indemnify
itself out of the Security and/or the Recoveries against all claims,
demand, liabilities, claims, costs, proceedings, losses and expenses
incurred by any of them in relation to or arising out of any Security
Document or its enforcement or the exercise of any of the rights,
powers and discretions vested in them or any other matter or thing
done or omitted to be done in connection with any of the Finance
Documents (otherwise than as a result of its gross negligence or
wilful misconduct).
(i) Each of the Security Agents may take such security (if any) on behalf
of the Finance Parties after the date of this Agreement as such
Security Agent in its sole discretion may consider appropriate
provided that the Security Agent shall use reasonable endeavours to
notify the Banks from time to time of the security taken or proposed
to be taken by it. The Security Agent shall have no liability to any
Finance Party in respect of any such security or any failure to take
any such security or any failure, omission or defect in the due
execution, delivery, validity, legality, adequacy, enforceability or
admissibility in evidence of any such security.
22.8 The Steering Committee, Duties:
(a) Except as regards purely administrative acts, whenever in its
reasonable opinion practicable, the Steering Committee shall notify
all the Banks of any proposal to do or refrain from doing any act or
thing in the exercise of its duties or, if it is not, in the
reasonable opinion of the Steering Committee, practicable to so notify
the Banks beforehand, it will so notify the Banks promptly thereafter.
(b) Any decision of the Steering Committee shall be made by a majority of
at least four out of five by number of the members of the Steering
Committee. In any case where the Steering Committee cannot reach such
a decision, the matter shall be determined by the Majority Banks (save
where some other or additional majority is expressly specified in this
Agreement).
(c) The Steering Committee shall promptly notify each Bank of the
occurrence of any Event of Default of which the Steering Committee has
actual knowledge or actual notice.
22.9 Group Indemnity: SCC and the Borrowers hereby jointly and severally
undertake to indemnify forthwith upon demand from time to time on a full
indemnity basis:-
<PAGE>
(a) the Lead Bank, the Co-Lead Bank, any Security Agent and each member of
the Steering Committee against all reasonable costs (including, but
not limited to, professional fees and reporting accountants' fees and
disbursements) claims, expenses, demands and liabilities incurred or
sustained by the Lead Bank, the Co-Lead Bank and/or any Security Agent
and/or each member of the Steering Committee in the performance of
their duties as contemplated in this Agreement, or by reason of any
act or omission of the Lead Bank, the Co-Lead Bank, any Security Agent
and/or the Steering Committee acting in its capacity as such, together
with value added tax and any other applicable taxes and undertake not
to challenge any costs so incurred;
(b) each Finance Party against all actions, charges, claims, costs,
damages, demands, expenses, liabilities, losses or proceedings (each a
"Claim") which may be brought or threatened against such Finance Party
or incurred or sustained by such Finance Party in connection with any
Finance Document (save where such Claim arises as a result of the
gross negligence or wilful misconduct of such Finance Party).
Each Finance Party agrees (without prejudice to the obligations of SCC
and the Borrowers under this Clause 22.9) to provide reasonable
details of any Claim in respect of which it makes demand under this
Clause 22.9.
22.10Banks' Indemnity: Each Bank shall, on demand by the Lead Bank, the Co-Lead
Bank, any Security Agent or any member of the Steering Committee, indemnify
the Lead Bank, the Co-Lead Bank, any Security Agent or such member of the
Steering Committee (as the case may be), against any and all fees (to the
extent properly chargeable by the Lead Bank, the Co-Lead Bank, any Security
Agent or the Steering Committee (as the case may be) under this Agreement
or under any other Finance Document but not promptly reimbursed by SCC and
the Borrowers) and all costs, claims, demands, expenses and liabilities
which the Lead Bank, the Co-Lead Bank, any Security Agents or the Steering
Committee (as the case may be) may pay or incur (except by reason of its
own gross negligence or wilful misconduct) in acting in its capacity as
such on behalf of the Finance Parties or any of them or by reason of any
act or omission of the Lead Bank, the Co-Lead Bank, any Security Agent
and/or the Steering Committee acting in its capacity as such. The cost of
indemnifying the Lead Bank, the Co-Lead Bank, any Security Agent or the
Steering Committee (as the case may be) shall be borne by each Bank in the
proportion which its Commitment on such date bears to the aggregate amount
of the Commitments of all Banks on such date, provided that the Lead Bank,
the Co-Lead Bank, any Security Agent or such member of the Steering
Committee shall make an appropriate refund to such Banks of any amount
subsequently received by it from SCC and/or the Borrowers or any person in
respect of such fee, cost, claim, expense and/or liability.
If a Bank (referred to in this Clause 22.10 as a "defaulting Bank") fails
to pay its due contribution under this indemnity, then:-
(a) The Lead Bank, the Co-Lead Bank, any Security Agent or the Steering
Committee (as the case may be) may (without prejudice to its other
rights and remedies) deduct the amount due from the defaulting Bank
from any sums which are then or afterwards in its possession or
control which would otherwise be payable to the defaulting Bank;
(b) If the Lead Bank, the Co-Lead Bank, any Security Agent or the Steering
Committee is at the relevant date unable to recover the full amount
due from the defaulting Bank from such Recoveries either because the
Security Documents have not been enforced or because there are no or
insufficient Recoveries then available for the purpose, the other
Banks liable to contribute under Clause 22.10 (the "non-defaulting
Banks") shall pay to the Lead Bank, the Co-Lead Bank, any Security
Agent or the Steering Committee (as the case may be) the amount or
balance of the contribution outstanding from the defaulting Bank (to
the extent that it has not been satisfied out of Recoveries) in the
proportion in which the non-defaulting Banks would otherwise have been
required to indemnify to it if the defaulting Bank had not been a
party to this Agreement and in this event:-
<PAGE>
(i) any money subsequently recovered from the defaulting Bank; and/or
(ii) the proportion of any Recoveries subsequently received by any
Security Agent which would, in the normal course of events, have
been paid to the defaulting Bank up to an amount not exceeding
the aggregate amount of the payments made by the non-defaulting
Banks under this Clause 22;
shall be shared between the non-defaulting Banks in the
proportions that such non-defaulting Banks have paid the
outstanding contribution of the defaulting Bank. 22.11
Disclaimer: The Lead Bank, the Co-Lead Bank, any Security Agent
and the Steering Committee accept no responsibility to any
Finance Party for the accuracy and/or completeness of any
information supplied in connection with any Finance Document or
for the legality, validity, effectiveness, adequacy or
enforceability of any Finance Document and the Lead Bank, the
Co-Lead Bank, any Security Agent and the Steering Committee shall
be under no liability to any Finance Party as a result of taking
or omitting to take any action in relation to any Finance
Document (save in the case of the gross negligence or wilful
misconduct of the Lead Bank, the Co-Lead Bank, any Security Agent
or the Steering Committee (as the case may be)). The Lead Bank,
the Co-Lead Bank, any Security Trustee and the Steering Committee
shall not be liable for any failure to take any action if it is
not expressly obliged to take such action under this Agreement.
22.12No Actions against Individuals: Each Finance Party agrees that it will not
assert or seek to assert against any director, officer or employee of the
Lead Bank, the Co-Lead Bank, any Security Agent or any member of the
Steering Committee any claim it may have against any of them in respect of
the matters referred to in this Clause 22.
22.13Credit Appraisals: It is agreed by each Finance Party that it has itself
been, and will continue to be, solely responsible for making its own
independent appraisal of and investigations into the financial condition,
creditworthiness, condition, affairs, status and nature of each Tobacco
Group Company and SCC, and, accordingly, each Finance Party confirms to the
Lead Bank, the Co-Lead Bank, the Security Agents and each member of the
Steering Committee that it has not relied and will not hereafter rely on
the Lead Bank, the Co-Lead Bank, any Security Agent, the Steering Committee
or any other Bank:-
(a) to check or enquire on its behalf into the adequacy, accuracy or
completeness of any representation, warranty, statement or information
provided by or on behalf of any Tobacco Group Company in connection
with any Finance Document or any communication or document delivered
under any of them and/or the security contemplated in such documents
(whether or not such information has been or is after the date of this
Agreement circulated to such Finance Party by the Lead Bank, the
Co-Lead Bank, either Security Agent or the Steering Committee (as the
case may be)); or
(b) to provide it with any information in relation to any Tobacco Group
Company or (save as expressly provided in this Agreement) assess or
keep under review on its behalf the financial condition,
creditworthiness, condition, business affairs, status or nature of any
Tobacco Group Company; or
(c) to advise it on the effect of or the implications of any provisions of
any Finance Document or any security rights or obligations hereunder.
<PAGE>
22.14Information: Each Finance Party (other than the International Security
Agent) agrees that it will deliver to the International Security Agent no
later than ten Business Days following the end of each calendar month
(commencing on or about 31st August 1997) details of its Outstandings as at
the last Business Day of the preceding month in such detail as the Lead
Bank may require. If any Finance Party fails to provide details, a
calculation by the Lead Bank of the Outstandings of such Finance Party
shall be conclusive for the purposes of this Agreement.
22.15Security Agent Report: The Security Agents shall report to the Banks
monthly in a format to be agreed between the Security Agents and the Lead
Bank (acting on the instructions of the Majority Banks).
22.16 Security Matters:
(a) Each Bank authorizes and directs each Security Agent to enter into the
Security Documents for the benefit of the Banks. Each Bank hereby
agrees that, except as otherwise expressly set forth herein, any
action taken by the Majority Banks in accordance with the provision of
this Agreement or the Security Documents, and the exercise by the
Majority Banks of the powers set forth herein or therein, together
with such other powers as are reasonable incidental thereto, shall be
authorised and binding upon all of the Banks. Each Security Agent is
hereby authorised on behalf of all of the Banks, without the necessity
of any notice to or further consent from any Bank, from time to time
prior to an Event of Default or Potential Event of Default, to take
any action with respect to any Security or Security Documents which
may be necessary to perfect and maintain perfected the security
interest in and liens upon the Security granted pursuant to the
Security Documents.
(b) The Banks hereby authorize each Security Agent, at its option and in
its discretion, upon the direction of the Lead Bank (acting with the
approval of the Majority Banks) to release any Encumbrance granted to
or held by such Security Agent upon any Security:
(i) upon termination of the commitments and payment and satisfaction
of all of the obligations at any time arising under or in respect
of this Agreement or the Finance Documents or the transactions
contemplated hereby or thereby;
(ii) constituting property being sold or disposed of upon receipt of
the proceeds of such sale by such Security Agent in compliance
with this clause; or
(iii)if approved, authorized or ratified in writing by the Majority
Banks, unless such release is required to be approved by all of
the Banks hereunder. Upon request by the Lead Bank at any time,
the Banks will confirm in writing any Security Agent's authority
to release particular types of Security pursuant to this Clause;
(c) Upon any sale and transfer of Security which is expressly permitted
pursuant to the terms of the Agreement, or consented to in writing by
the Majority Banks or all of the Banks, as applicable, and upon at
lease five (5) Business Days' (or such shorter period as is acceptable
to the relevant Security Agent) prior written request by the Borrowers
the relevant Security Agent shall (and is hereby irrevocably
authorized by the Banks to) execute such documents as may be necessary
to evidence the release of the Encumbrances granted to the Security
Agent for the benefit of the Banks herein or pursuant hereto upon the
Security that was sold or transferred; provided, that
<PAGE>
(i) no Security Agent shall be required to execute any such document
on terms which, in such Security Agent's opinion, would expose
such Security Agent to liability or create any obligation or
entail any consequence other than the release of such
Encumbrances without recourse, representation or warranty; and
(ii) such release shall not in any manner discharge, affect or impair
the obligations or any Encumbrances upon (or obligations of the
Obligors in respect of) all interests retained by the Obligors,
including, without limitation, the proceeds of the sale, all of
which shall continue to constitute part of the Security. In the
event of any foreclosure or similar enforcement action with
respect to any of the Security, the relevant Security Agent shall
be authorised to deduct all of the expenses reasonably incurred
by such Security Agent from the proceeds of any such sale,
transfer or foreclosure.
(d) No Security Agent shall have any obligation whatsoever to the Banks or
to any other person to assure that the Security exists or is owned by
the Obligors or is cared for, protected or insured or that the
Encumbrances granted to any Security Agent herein or pursuant hereto
have been properly or sufficiently or lawfully created, perfected,
protected or enforced or are entitled to any particular priority, or
to exercise or to continue exercising at all or in any manner or under
any duty of care, disclose or fidelity any of the rights, authorities
and powers granted or available to such Security Agent in this Clause
or in any of the Finance Documents, it being understood and agreed
that in respect of the Security, or any act, omission or event related
thereto, each Security Agent may act in any manner it may deem
appropriate, in its sole discretion, given such Security Agent's own
interest in the Security as one of the Banks and that no Security
Agent shall have any duty or liability whatsoever to the Banks, except
for its gross negligence or willful misconduct.
23. AMENDMENTS AND DECISIONS
23.1 Majority Bank Decisions: Except as provided in Clause 23.2, with the prior
written consent of the Majority Banks, the Lead Bank and SCTC Inc. may from
time to time enter into written amendments, supplements or variations to
this Agreement (however fundamental) for the purpose of adding any
provisions to the Finance Documents or changing in any manner the rights
and/or obligations of all or any of the parties to this Agreement and the
Lead Bank may execute and deliver to any Borrower a written instrument
waiving, prospectively or retrospectively, on such terms and conditions as
the Lead Bank may specify in such instrument, any of the requirements of
any of the Finance Documents.
23.2 Unanimous Consent:
(a) No waiver of and no amendment, supplement or modification to any
Finance Document shall, without the prior consent of all the Banks:-
(i) amend the definitions of Borrowings, Encumbrance, Event of
Default, Majority Banks, Potential Event of Default or Final
Repayment Date;
(ii) amend or waive any provision of Clause 6 (Interest), this Clause
23, Clause 25 (Enforcement of Security and Distribution of
Recoveries), 26 (Equalisation) or 27 (Interim Distributions of
Recoveries and Creation of Reserves) or Schedule VIII;
<PAGE>
(iii)have the effect of changing the amount of any Facility or any
Bank's Commitment or the principal or face amount or currency of
any utilisation, or extend the term of any Facility; or
(iv) have the effect of decreasing the amount of, or change the
currency of or extend the date for any payment of interest, fees
or any other amount payable to all or any of the Finance Parties
under any of the Finance Documents; or
(b) notwithstanding any other provision in this Agreement, the Lead Bank,
the Co-Lead Bank, the Security Agents or the Steering Committee, as
the case may be, shall not be obliged to agree to any such waiver,
amendment or supplement if the same would:-
(i) amend or waive any provision of this Clause 23; or
(ii) otherwise amend or waive any rights of the Lead Bank, the Co-Lead
Bank, the Security Agents or the Steering Committee under any of
the Finance Documents or subject the Lead Bank, the Co-Lead Bank,
the Security Agents or the Steering Committee to any additional
obligations under such documents.
23.3 Costs: If any Borrower requests any amendment, supplement, modification or
waiver in accordance with Clause 23.1, then the Borrowers shall, within
five Business Days of demand by the Lead Bank or a Security Agent,
reimburse the Lead Bank or a Security Agent (as the case may be) for all
reasonable costs and expenses (including, without limitation, legal fees),
together with any value added tax on them, incurred by the Lead Bank or a
Security Agent in the negotiation, preparation and execution of any written
instrument contemplated by Clause 23.1.
23.4 Release of Security: Each of the Security Agents shall release at the
request of a Borrower any asset or assets from the Security Documents to
the extent that their disposal or release is permitted or required by the
terms of this Agreement or any of the Security Documents, without reference
to the Banks. In addition, each of the Security Agents shall be entitled to
release:-
(a) any fixed security held by it over any stock in trade of a Tobacco
Group Company at any time in order to permit a disposal of such stock
in trade by such Tobacco Group Company in the ordinary course of
carrying on its business (but so that the proceeds of such stock shall
continue to be subject to such security);
(b) and will release any fixed security held by it over the shares in any
Tobacco Group Company which is not a Borrower provided that the
Borrowers have confirmed that Eligible Intercompany Loans made to such
Tobacco Group Company are not required for either the Borrower's
Borrowing Base or SCTC Inc.'s Borrowing Base to exceed Net Borrowings
or SCTC Inc.'s Net Borrowings respectively; and
(c) any security held by it upon written instructions from the Lead Bank
(acting on the instructions of the Majority Banks).
23.5 Administrative Determinations: The Lead Bank shall be entitled to determine
purely administrative matters which do not materially affect the position
of any Finance Party without reference to the Finance Parties.
<PAGE>
23.6 Prior Notice: Where a Finance Document provides for any matter to be
determined by reference to the opinion of the Majority Banks or to be
subject to the consent or request of the Majority Banks or for any action
to be taken on the instructions of the Majority Banks, such opinion,
consent, request or instructions shall only be regarded as having been
validly given or issued by the Majority Banks if all the Banks shall have
received prior notice of the matter on which such opinion, consent, request
or instructions is sought, but so that the Borrowers shall be entitled (and
bound) if so informed by the Lead Bank to assume that such notice shall
have been duly received by each Bank and that the relevant majority shall
have been obtained to constitute Majority Banks whether or not this is the
case.
24. RETIREMENT OF LEAD BANK, CO-LEAD BANK, SECURITY AGENTS AND STEERING
COMMITTEE
24.1 Notification of Intention: If the Lead Bank, the Co-Lead Bank or, as the
case may be, any Security Agent wishes at any time to retire, it shall
notify the Borrowers and the other Finance Parties (and in the case of
retirement of a Security Agent any other beneficiaries under the Security
Documents), of its intention to do so and upon receipt of such notice the
Majority Banks may in writing (after consultation with SCC for a period not
exceeding 7 days) appoint a successor Lead Bank, a successor Co-Lead Bank
or, as the case may be, a successor Security Agent. If such a successor has
not been appointed and accepted office in writing within thirty days after
the Lead Bank or Co-Lead Bank's, as the case may be, a Security Agent's
notice of proposed retirement, the Lead Bank, or Co-Lead Bank or, as the
case may be, such Security Agent may within a further fourteen days give to
the Borrowers and the other Finance Parties (and in the case of the
retirement of a Security Agent any other beneficiaries under the Security
Documents) fourteen days' prior written notice nominating an alternative
successor Lead Bank or Co-Lead Bank or, as the case may be, an alternative
successor Security Agent.
24.2 Nominee: Unless the Majority Banks shall have appointed a successor which
has accepted office within such notice period of fourteen days, then, upon
the expiry of such fourteen day period and upon the written acceptance in
such form as the Banks may unanimously approve (such approval not to be
unreasonably withheld or delayed) of its nomination by the Lead Bank's or
Co-Lead Bank's or, as the case may be, a Security Agent's nominee as
successor Lead Bank or successor Co-Lead Bank or, as the case may be,
successor Security Agent and, in the case of a successor Security Agent,
due execution of such documentation as may be necessary to transfer and
vest in such successor Security Agent all the rights and obligations of the
retiring Security Agent under the Security Documents, such nominee shall be
deemed to have been appointed to the office of Lead Bank or Co-Lead Bank
or, as the case may be, Security Agent.
24.3 Provisions relating to Successor: With effect from the date that a
successor is appointed and accepts the office of Lead Bank or Co-Lead Bank
or, as the case may be, a Security Agent and executes such necessary
documentation in accordance with this Clause 24:-
(a) as regards the other Finance Parties, and the Obligors, such successor
shall become bound by all the obligations of the Lead Bank or the
Co-Lead Bank or, as the case may be, a Security Agent and become
entitled to all the rights, privileges, powers, authorities and
discretions of the Lead Bank or the Co-Lead Bank or, as the case may
be, a Security Agent under the Finance Documents;
<PAGE>
(b) the agency of the retiring Lead Bank or Co-Lead Bank or, as the case
may be, the trusteeship of the retiring Security Agent shall terminate
and the retiring Lead Bank or Co-Lead Bank or, as the case may be, the
retiring Security Agent shall be discharged from any further liability
or obligation under the Finance Documents, but without prejudice to
any liabilities which the retiring Lead Bank or Co-Lead Bank or, as
the case may be, the retiring Security Agent may have incurred prior
to the termination of its agency;
(c) the costs, charges and expenses of the retiring Lead Bank, or the
retiring Co-Lead Bank or, as the case may be, the retiring Security
Agent shall be discharged if recoverable under the provisions of this
Agreement; and
(d) the provisions of the Finance Documents shall continue in effect for
the benefit of the retiring Lead Bank or the retiring Co-Lead Bank or,
as the case may be, the retiring Security Agent in respect of any
actions taken or omitted to be taken by it or any event occurring
before the termination of its agency.
24.4 Retirement of Steering Committee:
(a) The role of any Bank as a member of the Steering Committee may be
terminated at any time by:-
(i) that Bank giving at least 21 days' prior written notice to all
Finance Parties of its resignation; or
(ii) the Majority Banks (which shall be calculated by excluding the
Commitment of the Bank whose resignation is sought) notifying the
relevant Steering Committee member of the proposed termination
with effect from a date at least 21 days after the date of
delivery of such notice.
(b) As soon as practical after delivery of such notice, or in any case
where any Banks request the appointment of any additional member or
members, the Steering Committee shall consult with the Finance Parties
as to whether a successor (or additional member or members) is
considered necessary. If so, the Steering Committee shall make
arrangements for the Majority Banks (voting on the basis of
Commitments) to appoint a successor.
(c) With effect from the operative date of resignation/termination of a
Steering Committee member:-
(i) the role of the retiring Steering Committee member shall
terminate but without prejudice to any liabilities which the
retiring Steering Committee member may have incurred or rights it
may have acquired prior to its termination;
(ii) the retiring Steering Committee member shall be discharged from
any further liability or obligations as a member of the Steering
Committee under this Agreement; and
(iii)the costs, charges and expenses of the retiring Steering
Committee member incurred in such capacity shall be paid in full
by the parties liable.
(d) With effect from the operative date of appointment of a new Steering
Committee member, such successor shall become bound by all the
obligations of a member of the Steering Committee and become entitled
to all the rights, privileges, powers, authorities and discretions of
a member of the Steering Committee under this Agreement.
<PAGE>
PART XIV
ENFORCEMENT
25. ENFORCEMENT OF SECURITY AND DISTRIBUTION OF RECOVERIES
25.1 Enforcement: Each of the Security Agents shall enforce the security
constituted by the Security Documents:
(a) before the Final Repayment Date if the Majority Banks so direct after
the Lead Bank has declared an Event of Default pursuant to Clause 17.1
(Demand on Event of Default) of this Agreement and demand has been
made for the payment of all or part of the Indebtedness owing under
the Facilities; or
(b) if after the Final Repayment Date any Bank so requests in writing not
less than 90 days after the Final Repayment Date in circumstances
where a Obligor has failed to repay Indebtedness due and owing to such
Bank under its Facilities; or
(c) at any time, if requested to do so in writing by an Obligor (with
respect only to the security granted by such Obligor).
provided that the Security Agents may only be required to enforce the
security in accordance with the terms of the Security Documents.
25.2 Distribution of Recoveries: The Recoveries shall be distributed between the
Finance Parties in the order of priority set out in Schedule VIII.
Distributions of Recoveries shall be made in the manner set out in Clause
27.1 (Interim Distributions of Recoveries and Creation of Reserves).
25.3 Recoveries to be Held as Trustee: Each Finance Party (other than a Security
Agent) shall pay any Recoveries received by it to a Security Agent
forthwith upon receipt. Each Security Agent shall hold the Recoveries
received by it in an interest bearing Dollar deposit account (the
"Recoveries Account") as trustee for distribution to the Finance Parties in
accordance with the provisions of Clause 27 (Interim Distributions of
Recoveries and Creation of Reserves) and Schedule VIII of this Agreement
and shall hold the security constituted by the Security Documents as agent
and trustee for the Finance Parties to give effect to this Agreement and
shall exercise its rights, powers and duties under the Security Documents
(and particularly those concerned with the protection and enforcement of
the security afforded by such documents) and/or under this Agreement for
the benefit of all Finance Parties. For the avoidance of doubt, each
Security Agent agrees that it will not exercise or purport to exercise any
right of set-off over any amount from time to time standing to the credit
of the Recoveries Account.
<PAGE>
25.4 Proceeds of Existing Security: Proceeds derived by a Bank from enforcement
of or sale or disposition of property subject to Existing Security in
favour of such Bank shall (after providing for any claims ranking in
priority) be applied, first, in or toward payment or discharge of the money
and liabilities due, owing or incurred (actually or contingently)
(including the provision of cash cover for any contingent liabilities) to
the Bank in whose favour such Existing Security was granted up to the limit
of such Bank's Commitment (and shall reduce such Bank's claim on any
Recoveries accordingly) and, second, the balance of such proceeds
(including the amount of any cash cover which proves to be excessive) shall
be deemed to be Recoveries where it is recovered from any Tobacco Group
Company or other person from which a Security Agent also holds a guarantee
and/or security.
25.5 Proceeds of Litigation: any amounts received by any Bank, the Lead Bank,
the Co-Lead Bank or either Security Agent after the Enforcement Date
pursuant to any legal action or proceeding arising out of or in connection
with any Finance Document shall (after deduction of all costs and expenses
payable in connection therewith) be deemed to form part of the Recoveries.
25.6 Treatment of a Bank's Preferential Claims: All Preferential Claims
recovered by a Bank on or after the Enforcement Date shall be retained by
the relevant Bank and its claim on any Recoveries reduced accordingly.
25.7 Currency Conversion:
(a) Each Security Agent is authorised to make such currency conversions as
it considers necessary or appropriate in order to convert into Dollars
any Recoveries received by it in any currency other than Dollars,
provided that, where Recoveries are available for distribution in the
same currency as that of the Indebtedness in respect of which a
payment or Reserve is to be made out of such Recoveries, then the
amount of such payment or Reserve shall be calculated in accordance
with Clause 25.7(b) but paid or made in such currency.
(b) Where it is necessary to calculate the amount of Recoveries
distributable to a Bank, such Bank's Commitment and the amount
outstanding to such Bank under any Finance Document in a currency
other than Dollars shall be deemed, for the purpose only of such
calculation, to be converted from such currency into Dollars at the
spot buying rate of the Lead Bank for the purchase of that currency
with Dollars in similar amounts at or about 11.00 am on the date
following receipt by a Security Agent of the relevant Recoveries.
26. EQUALISATION
26.1 Notification: Within five Business Days after the Enforcement Date, each
Bank shall notify the Lead Bank and the Security Agents of the aggregate
amount of Indebtedness incurred by each Tobacco Group Company to such Bank
(actually or contingently) under its Facilities and each Finance Document
as at the Enforcement Date; (its "Aggregate Bank Indebtedness").
26.2 Calculation: The Lead Bank shall calculate as at the Enforcement Date
(taking into account both actual Indebtedness and any provisions made for
unmatured liabilities): the balancing credit or balancing payment (if any)
due to or from each Bank, being the amount required to be paid or received
in order to equalise each Bank's Proportion of Aggregate Outstandings with
its Proportion of Aggregate Commitments and shall notify each Bank of the
amount (if any) payable or receivable by such Bank accordingly.
26.3 Payments: Forthwith upon receipt of a written request from the Lead Bank,
each relevant Bank shall pay to the Lead Bank the amount of the balancing
payment shown as payable by it under Clause 26.2.
<PAGE>
26.4 Distribution of Balancing Payments: Out of the amounts paid to it pursuant
to Clause 26.3, the Lead Bank shall, as soon as practicable, pay to each
Bank to which a balancing credit is due the amount of such credit, provided
that where an amount is claimed by a Bank as a Reserve for an unmatured
liability, then the amount of the Reserve (as determined pursuant to Clause
27.2) (Calculation of Reserves) shall be paid into an interest-bearing
deposit account in accordance with Clause 27.6 (Account).
26.5 No Change in Indebtedness: The provisions of Clauses 26.1, 26.2, 26.3, and
26.4 shall not operate to increase or reduce the indebtedness of the
Obligors to the Banks nor shall any amounts received by a Bank pursuant to
Clause 26.4 be applied in actual reduction of any part of the indebtedness
of any Obligor to the Banks until the Lead Bank shall notify the Banks that
no further distributions of the Recoveries will be made; nor shall any such
payment be deemed to constitute an assignment to another Bank of a debt due
to one Bank.
26.6 Interest: Any payment made by any Bank under Clause 26.3 shall be deemed as
between the Banks for the purposes only of this Agreement (including
distribution of Recoveries) to bear interest from the date of payment at
the rate stated by the Lead Bank from time to time. It is agreed, for the
avoidance of doubt, that in the case of any unmatured claim by a Bank
against a Tobacco Group Company, interest thereon shall be calculated with
effect from the date on which it matures into an actual liability.
26.7 Suspense Account:
(a) Where any Bank receives funds pursuant to Clauses 25.2 (Distribution
of Recoveries), 26.4 or 27.1 (Interim Distribution of Recoveries) it
shall not (unless required by law) apply any part of such funds in or
towards payment of the relevant indebtedness but shall instead place
the funds on an interest bearing overnight suspense account until
otherwise agreed by all the Banks.
(b) If any estimate made by the Lead Bank (or any other Finance Party) in
order to calculate, directly or indirectly, the distributions
hereunder shall prove to be inaccurate when made or becomes inaccurate
through the passage of time or otherwise, then the amounts received by
each Bank shall be adjusted by the Lead Bank to take account of such
inaccuracy and such Bank shall forthwith upon notice by the Lead Bank
pay to the Lead Bank any part of the funds standing to the credit of
such suspense account as may be required to achieve such a correction.
26.8 Currency Conversions: Where it is necessary to calculate the amount of any
payment to be made to or by any Bank pursuant to this Clause 26, the
amounts outstanding to a Bank in a currency other than Dollars shall be
deemed, for the purpose only of such calculation, to be converted into
Dollars at the spot buying rate of the Lead Bank for the purchase of that
currency with Dollars in similar amounts at or about 11.00 am on the date
on which the calculation falls to be made.
26.9 Final Equalisation: The provisions of this Clause 26.9 shall be applied at
such time or times after the Enforcement Date as the Security Agents shall
consider appropriate, (provided that such provisions will, unless otherwise
agreed by all the Banks, be applied at least once by no later than the
first anniversary of the Enforcement Date), as follows:
(a) before each occasion on which it intends to implement the provisions
of this Clause 26.9, a Security Agent shall send a notice to each Bank
requiring it to notify that Security Agent of (i) the aggregate amount
of Indebtedness incurred by each Group Company to such Bank (actually
or contingently) under its Facilities and each Finance Document as at
the date of such notice and which has not been paid or cash cover or
other security provided therefor as at the date of such notice; (its
"Bank Loss").
(b) Each Bank shall deliver the information requested by a Security Agent
no later than 10 Business Days after receipt by it of a notice
pursuant to sub-clause (a) above.
<PAGE>
(c) Based on the information given to it under Clause 26.9(b) (subject to
any adjustments it regards as appropriate) the relevant Security Agent
shall calculate the balancing credit on balancing payment (if any) due
to or from each Bank, being the amount required to be paid or received
in order to equalise such Bank's Proportion of Bank Loss with its
Proportion of Aggregate Commitments, and shall notify each Bank of the
amount (if any) payable or receivable by each Bank accordingly.
(d) Forthwith upon receipt of a written request by a Security Agent, each
relevant Bank shall pay to a Security Agent the amount of the
balancing payment notified as payable by it under Clause 26.9(c) and
the Security Agent shall, as soon as practicable, pay to each Bank to
which a balancing credit is due, the amount of such credit, provided
that where an amount is claimed by a Bank as a Reserve for an
unmatured liability, then the amount of the Reserve shall be paid into
an interest-bearing deposit account in accordance with Clause 27.6
(Account).
(e) If a Bank fails to make a payment due from it under this Clause 26.9,
a Security Agent shall be entitled to take action on behalf of the
Banks to whom such payment was to be redistributed (subject to being
indemnified to its satisfaction by such Banks) but shall have no
obligation or liability to those Banks or any other person as regards
such default and any loss suffered as a result of such default shall
lie where it falls.
Any equalisation under this Clause 26.9 shall be in addition to any
equalisation conducted pursuant to Clause 26.1 and will take account
of previous adjustments under Clauses 26.1 and 26.9 as appropriate.
27. INTERIM DISTRIBUTIONS OF RECOVERIES AND CREATION OF RESERVES
27.1 Interim Distribution of Recoveries: The Lead Bank shall as soon as
practicable following receipt of Recoveries and applying the order of
priority set out in Schedule VIII:-
(a) pay to each Bank that part of its pro rata share (calculated pursuant
to paragraph 3 of Schedule VIII) as is referable to claims which have
matured; and
(b) create a Reserve equal to that part of a Bank's pro rata share
(calculated pursuant to paragraph 3 of Schedule VIII) as is referable
to the provision made for unmatured liabilities in accordance with the
following provisions of this Clause 27.
27.2 Calculation of Reserves:
(a) The Lead Bank shall, after consultation with the Banks, and acting on
the instructions of the Majority Banks, decide on the amount of the
provision which should be made in respect of unmatured liabilities
under the Facilities as soon as practicable after the Enforcement Date
for the purpose of creating Reserves for such claims.
(b) Any provision made by the Lead Bank in respect of an unmatured
liability of a Bank shall be regarded as the amount of its potential
claim in respect of the relevant unmatured liability solely for the
purpose of creating a Reserve and shall not prejudice the claim of a
Bank under Clauses 25 (Enforcement of Security and Distribution of
Recoveries) or 26 (Equalisation) if the amount of such provision
proves to have been insufficient.
27.3 Release of Reserves: Subject to Clause 27.4, a Reserve shall be released to
the relevant Bank upon the maturity of the unmatured liability in respect
of which that Reserve had been created.
<PAGE>
27.4 Excess Reserves: If the provision for an unmatured liability proves to have
been excessive, then an amount equal to the difference between (i) the
amount of the Reserve actually made for such liability and (ii) the amount
of the Reserve which otherwise would have been made if the amount of the
provision had equalled the amount of the liability which actually arose at
maturity, shall form part of the Recoveries and shall be applied in
accordance with the provisions of Clause 25.2 (Distribution of Recoveries).
27.5 Insufficient Reserves: If the amount of any Reserve proves to be
insufficient to meet the pro rata claim of the relevant Bank intended to be
covered by such Reserve, then such adjustment shall be made between the
Banks forthwith on demand by the Lead Bank as shall be necessary to ensure
that such pro rata claim is met in full.
27.6 Account: Pending distribution pursuant to this clause:-
(a) the Recoveries shall be placed in an interest bearing deposit account
in the joint names of a Security Agent and the relevant Bank (or, if
that Bank is a Security Agent, in the name of a Security Agent acting
as Security Agent);
(b) any Reserve may, at the option of a Security Agent, be paid to the
relevant Bank (whereupon such Reserve shall be held by such Bank in an
interest bearing deposit account until released to the relevant Bank
pursuant to Clause 27.3) or be placed in an interest bearing deposit
account in the name of a Security Agent pending release pursuant to
Clause 27.3. The interest earned on any Reserves shall form part of
such Reserve.
27.7 Alternative Method: Notwithstanding the foregoing provisions of this Clause
27, each Finance Party shall (if requested by the Lead Bank) implement such
alternative method as the Lead Bank may reasonably require (on the basis of
legal advice received by it) to achieve the same result contemplated by
Clauses 26, 27, 29 and 31 and Schedule VIII without the creation of
Reserves, having regard to the law applicable in each relevant
jurisdiction.
28. CALCULATION OF OUTSTANDINGS
For the purpose of calculating any payments due to a Bank under Clause 26.3
(Payments), Equalisation Payments and amounts payable to a Bank by way of
distribution of Recoveries in accordance with the terms of this Agreement,
Outstandings shall be calculated as follows:-
(a) Overdrafts: the amount recorded in the relevant Bank's books at the
opening of business on the Enforcement Date (or, if that is not a
Business Day, the next following Business Day) together with accrued
interest thereon;
(b) Acceptance Credits: the face amount of the Bill(s) accepted and
discounted by such Bank as at the Enforcement Date, to the extent that
the relevant Bank has not already received cash cover for such
Bill(s);
(c) Loans and Advances: the aggregate amount of principal and accrued but
unpaid interest outstanding from each of the Borrowers to the relevant
Bank at the opening of business of the relevant Bank on the
Enforcement Date;
(d) Foreign Exchange: the amount of the loss which the relevant Bank would
have incurred on a foreign exchange transaction entered into with a
Borrower pursuant to a Facility prior to Enforcement Date, if it had
closed out that transaction on the Enforcement Date or (if that is not
a Business Day) the next succeeding Business Day or on such other
basis as may be approved by the Steering Committee;
<PAGE>
(e) Applications: sums received by a Bank which it is free to apply to
reduce Indebtedness under any Finance Document and cash collateral
held by a Bank in respect of any Outstandings as at the Enforcement
Date shall, for the purposes of calculations to be made under this
Clause 28, be deemed to have been applied to reduce the relevant
indebtedness;
(f) Dual Claims: in any case where a Bank has claims against two or more
Tobacco Group Companies in respect of the same Facility, (including,
but not limited to the case where a Bank makes a Facility available to
one Tobacco Group Company and holds a guarantee from another Tobacco
Group Company) calculation of its entitlement under this Schedule
shall be based on its Facility claim only and no greater entitlement
will be permitted by reason of its having more than one claim in
respect of the same Facility;
(g) Letters of Credit: the amount of the maximum potential liability of a
Bank (without double counting) in respect of a Letter of Credit from
time to time.
29. FURTHER SECURITY, SET-OFF AND EXCESS CASH COVER
29.1 Sureties, Set-off and Excess Cash Cover: Except as otherwise expressly
stated in this Agreement including, in particular Clause 25.4, if any Bank
shall, on or after the Enforcement Date:-
(a) hold (otherwise than as a Security Agent pursuant to this Agreement)
from any Tobacco Group Company or any other person, any Encumbrance
(which expression shall include any guarantee or indemnity) of any
nature in respect of any Facility granted by it; or
(b) be otherwise entitled to have recourse to any of the assets of any
Tobacco Group Company or of any other person in respect of Facilities
provided by it; or
(c) be entitled to any negotiable or other instruments, being instruments
on which any Tobacco Group Company is or may be liable, but excluding
cheques, bills or notes which a Bank may have purchased without
recourse from a Tobacco Group Company and in respect of which the
relevant Bank has already given value (such Bank being entitled to
retain for its own benefit any proceeds recoverable from any third
party in connection therewith); or
(d) shall receive any other money, whether by way of contractual or
voluntary payment or otherwise, from or on behalf of any Tobacco Group
Company in respect of the liabilities of any Tobacco Group Company to
the Banks;
then, in any such case, subject to Clause 29.2, such Bank shall
account to a Security Agent for the proceeds thereof and the Security
Agent shall (i) distribute such proceeds as Recoveries in accordance
with Schedule VIII and (ii) pay any surplus after such application to
the Bank which received such proceeds for its sole benefit.
29.2 Permitted Exception: The provisions of Clause 29.1(b) shall not apply to
any credit balance (in whatever currency denominated) held by a Bank at the
Enforcement Date to the extent that it is capable of being set off against
any accrued liability to that Bank at the Enforcement Date, where:-
<PAGE>
(a) the amount represents cash cover for an existing Facility which the
Bank is permitted to hold under this Agreement, in which case the cash
cover may be applied against the liability (if any) under such
Facility and any surplus from such cash cover shall be distributed as
Recoveries in accordance with Schedule VIII;
(b) the set-off arises from operation of a composite accounting or similar
scheme in existence at the date of this Agreement which case the
set-off may be operated and the Bank concerned may retain the benefit
of such set-off to the extent permitted by the documentation for the
existing Facility and any surplus shall be distributed in accordance
with Schedule VIII.
In all other cases, the relevant amounts shall be distributed as Recoveries
in accordance with Schedule VIII.
29.3 In the event that any distribution pursuant to Schedule VIII called for by
Clause 29.2 is prevented by mandatory statutory set-off, the affected
Security Agent shall notify the relevant parties of the adjustments which
are required to their entitlements to Recoveries and deemed indebtedness
(and, if required, by way of inter-bank payments) to produce the same
result as if no such mandatory statutory set-off had occurred and instead
distribution had been made pursuant to Schedule VIII and (if required) such
parties shall promptly make such payments among themselves.
29.4 Excess Cash Cover: If, after the Enforcement Date, a Bank is holding cash
cover for a Facility (which it is permitted to hold under this Agreement)
but the liability in respect of which the cash cover is held fails to arise
or arises for less than the amount of the cash cover, then that Bank shall
(if it is lawfully able to do so) pay such excess to the Lead Bank who
shall distribute the same as Recoveries.
30. THIRD PARTY SECURITY
Third Party Security: Save as otherwise expressly provided below, where any
Security secures both the liabilities of a Group Company under the
Facilities and the liabilities of a person (other than a Tobacco Group
Company) and where the Bank holding such Security is entitled to elect (at
its discretion) how the recoveries or benefit derived therefrom should be
applied and appropriated as between the Indebtedness thereby secured, then
such Bank shall bring into account as part of the Recoveries any benefit
derived therefrom to the extent that such benefit is not actually
appropriated and applied in or towards the discharge of any Indebtedness
incurred to such Bank by such person.
31. CLOSING OUT OF FOREIGN EXCHANGE TRANSACTIONS
31.1 Closing out: Each Bank may at its option close out any foreign exchange
facilities forthwith upon either Security Agent taking any steps to enforce
the security constituted by the Security Documents or any part of it or at
any time or times thereafter as it thinks fit and, in each case, all costs,
losses and liabilities resulting from such closing out shall become
immediately due and payable to such Bank by the relevant Borrower.
31.2 Retention of Net Profit: A Bank shall be entitled to retain any net profit
made on the closing out of any foreign exchange transactions of a Borrower
(having deducted any losses arising from the closing out of any such
transactions) and shall apply the same against any amounts owing to it by
any Obligor in such manner as it deems appropriate and such profits, to the
extent they are so applied, shall not be treated as forming part of the
Recoveries.
<PAGE>
PART XVI
NOTICES, ETC.
32. NOTICES
32.1 Communications through Lead Bank: A copy of any communication or document
from or to any party to this Agreement in connection with any Finance
Document shall be sent in writing to the Lead Bank.
32.2 Addresses: Any notices, demands, proceedings or other documents made in
writing to be sent to any party to this Agreement pursuant to this
Agreement shall be addressed to such party at the address or telex or fax
number and marked for the attention of the person (if any) from time to
time designated by that party in writing to the Lead Bank (or, in the case
of the Lead Bank, by it to each other party to this Agreement) for the
purpose of this Agreement. The initial address, telex and fax numbers and
person(s) (if any) so designated by each party are set out under its name
at the end of this Agreement. The initial address, telex and fax numbers
and person(s) (if any) so designated by a Transferee are those set out at
the end of the relevant Transfer Certificate.
32.3 Time of Delivery:
(a) Any communication to any Obligor or to any Bank shall be deemed to
have been received by that Obligor or that Bank:-
(i) if delivered by hand, at the time of actual delivery;
(ii) if transmitted by telex or facsimile, at the time of
transmission;
(iii)if sent by pre-paid first class post within Great Britain, at
noon on the next Business Day following the day of posting or, if
sent by pre-paid first class air mail post to or from an address
outside Great Britain, at noon on the fifth Business Day
following the day of posting and in each case shall be effective
notwithstanding that it may be misdelivered or returned
undelivered.
In proving such service it shall be sufficient to prove that
personal delivery was made, or that the envelope containing the
communication was correctly addressed and posted or that the
telex was transmitted with the correct answer back or that a
facsimile transmission report (or other appropriate evidence) was
obtained that the facsimile had been transmitted to the
addressee.
(b) Any communication by any Obligor to the Lead Bank, the Co-Lead Bank, a
Security Agent, the Steering Committee or any Bank shall be deemed to
have been given only on actual receipt by the Lead Bank, the Co-Lead
Bank, a Security Agent, the Steering Committee or such Bank (as the
case may be).
32.4 Language: all communications pursuant to this Agreement shall be in the
English language.
33. INDEMNITIES
33.1 Currency of Account: Dollars are the currency of account and payment for
each sum due from any Tobacco Group Company hereunder, provided that:-
<PAGE>
(a) each repayment of any of the Facilities or a part thereof shall be
made in the currency in which the relevant obligation is denominated
at the time of that repayment;
(b) each payment of interest shall be made in the currency in which the
sum in respect of which such interest is payable is denominated;
(c) each payment in respect of costs and expenses shall be made in the
currency in which the same were incurred; and
(d) any amount expressed to be payable in a currency other than Dollars
shall be paid in that currency.
If any Finance Party receives an amount in a currency other than the
currency payable as provided above, it shall convert that currency
(the "received currency") to the relevant currency at its spot buying
rate for the relevant currency with the received currency as soon as
reasonably practicable after the date of receipt and, for the purposes
hereof, shall be deemed to have received that amount of the relevant
currency on the date of such conversion.
33.2 Currency Indemnity: If:-
(a) for any reason any amount payable under this Agreement is paid or is
recovered by any Finance Party (in whatever manner) in a currency
(referred to in this Clause 33.2 as the "received currency") other
than that in which it is required to be paid under any Finance
Document (referred to in this Clause 33.2 as the "contractual
currency"); and
(b) the payment made in the received currency to the Finance Party when
converted at the applicable rate of exchange into the contractual
currency, is less than the relevant unpaid amount under the applicable
Finance Document;
then, the Borrowers shall, as a separate and independent obligation,
fully indemnify the relevant Finance Party against the amount of the
shortfall. For the purposes of this Clause 33.2 the expression
"applicable rate of exchange" means the rate at which the relevant
Finance Party is able, as soon as reasonably practicable after
receipt, to purchase the contractual currency in London with the
received currency, taking into account any costs associated with the
exchange.
33.3 Miscellaneous Indemnities: The relevant Borrower shall on demand indemnify
each Finance Party against any funding or other costs, loss, expense or
liability sustained by such Finance Party as a consequence of:-
(a) a requested utilisation under a Facility not being made for any reason
(other than default by such Finance Party in its obligations
hereunder) on the date specified in the relevant request by any
Borrower;
(b) the receipt by any Bank of any payment, or an overdue sum, otherwise
than on the due date for payment thereof;
(c) any default or delay in payment by any Borrower of any sums when due
under any Finance Document; or
(d) the occurrence or continuance of any Event of Default or Potential
Event of Default and/or the declaration of amounts outstanding to be
due and payable as a result.
<PAGE>
34. CERTIFICATES, CALCULATIONS AND EVIDENCE OF DEBT
34.1 Basis of Calculation: Interest and fees shall accrue from day to day and be
calculated on the basis of the actual number of days elapsed and a 365 day
year in the case of sums denominated in sterling and a 360 day year or
other customary period in the case of sums denominated in Dollars, DM or
any other currency. In determining the number of days in a period from one
day to another, the first day shall be included but the last day shall not.
34.2 Accounts as Evidence: Evidence made in the accounts maintained respectively
by each Finance Party in connection with this Agreement shall, in the
absence of manifest error, be conclusive evidence of sums owing to that
Finance Party.
34.3 Certificates from the Finance Parties: A certificate of:-
(a) the Lead Bank as to (i) an interest rate payable under Clause 6
(Interest) or (ii) the Additional Costs Rate or (iii) any costs
claimed under Clause 33.3 (Miscellaneous Indemnities); or any other
certificate, determination, notification or opinion provided for in
this Agreement; and
(b) a Bank as to (i) any amount by which a sum is to be increased under
Clause 9.1 (Payments) or 9.3 (Indemnity); (ii) any increased costs
claimed under Clause 9.6 (Increased Costs); (iii) any costs claimed
under Clause 33.3 (Miscellaneous Indemnities);
shall constitute prima facie evidence in the absence of manifest
error.
35. SET-OFF
Each Borrower authorises each Finance Party without notice to any Borrower
to apply any credit balance to which such Borrower shall be entitled on any
account of such Borrower (in whatever currency such credit balance may be
denominated and whether or not there are any restrictions on the withdrawal
of such credit balance with any office anywhere of such Finance Party)
against any amounts due from such Borrower pursuant to a Finance Document
but unpaid. Each Finance Party is authorised by each Borrower to purchase
with the money standing to credit of any such account such other currencies
as may be necessary to effect such application. Notwithstanding the
provisions of this Clause 35, no charge or proprietary or other security
interest shall be created by this Clause 35.
36. FORBEARANCE AND PARTIAL INVALIDITY
36.1 Forbearance: No failure or delay in exercising any right, power or
privilege by any Finance Party under any Finance Document shall operate as
a waiver, nor shall any single or partial exercise of any such right, power
or privilege preclude any other or further exercise of such right, power or
privilege, or the exercise of any other right, power or privilege. The
rights and remedies provided in any Finance Document are cumulative and not
exclusive of any rights or remedies provided by law or under any other
Finance Document.
36.2 Partial Invalidity: If at any time any provision of this Agreement is or
becomes illegal, invalid or unenforceable in any respect, the legality,
validity or enforceability of the remaining provisions of this Agreement
shall not in any way be affected or impaired.
<PAGE>
36.3 Waiver:
(a) Each Bank consents to the charges created or to be created at any time
pursuant to this Agreement or any Security Document and for such
purpose hereby waives any rights exercisable by it during the
subsistence of any Security Document to prevent or restrict any
Obligor from creating such charges.
(b) Each Bank waives any restrictions on any Obligor imposed by it under
its Facility Agreement on (a) the sale or disposal of the assets of
any Tobacco Group Company or (b) changes in the business carried on by
any Tobacco Group Company for so long and to such extent as may be
necessary to implement and enforce this Agreement and the Security
Documents.
37. AUTHORITY OF SCTC INC.
37.1 Amendment: Each Tobacco Group Company which is a party to this Agreement
(other than SCTC Inc.) hereby irrevocably authorises SCTC Inc. to sign on
its behalf any document extending the term of this Agreement or otherwise
extending, amending, varying, supplementing, replacing and or restating
this Agreement or any Finance Document or any documents ancillary or
supplemental to it in any way (even if changes are made to the composition
of the Finance Parties and/or the other parties to this Agreement) and
further irrevocably authorises SCTC Inc. on its behalf:-
(a) by agreement with the Lead Bank (acting with Majority Bank approval),
to designate or cease to designate any person as a Bank and/or a
Finance Party from time to time under this Agreement;
(b) by agreement with the Lead Bank (acting with Majority Bank approval),
to designate or cease to designate any person as a Tobacco Group
Company or an Obligor from time to time under this Agreement; and
(c) by agreement with the Lead Bank (acting with Majority Bank approval),
to designate or cease to designate any agreement or document as a
Facility Letter or a Finance Document under this Agreement.
37.2 Agreement: TCLTC hereby irrevocably appoints SCTC (UK) as its agent to
execute on its behalf an agreement for the purpose of the re-execution
before a Notary Public in London of the agreement contained in Clause 40
(Governing Law and Jurisdiction) for the submission by such company to the
non-exclusive general jurisdiction of the English Courts and other matters
dealt with therein to comply with the relevant provisions of the
Liechtenstein Law on Civil Procedure.
38. COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of which
when taken together shall constitute a single instrument.
39. FINANCE PARTIES
The Finance Parties as at 31st July 1997 constitute the Banks, the Lead
Bank, the Co-Lead Bank, the International Security Agent, the US Security
Agent, the Documentation Agent and the members of the Steering Committee as
at that date.
<PAGE>
40. GOVERNING LAW AND JURISDICTION
40.1 This Agreement shall be governed by and construed in accordance with
English law.
40.2 (a) For the benefit of each other party, each party to this Agreement
irrevocably agrees that the English Courts are to have jurisdiction to
settle any disputes which may arise out of or in connection with this
Agreement or any other Finance Document and that accordingly any
proceedings (referred to in this Clause 40 as the "Proceedings") arising
out of or in connection with this Agreement may be brought in the English
Courts.
(b) Each of SCC and the Borrowers hereby designates, appoints and empowers
Standard Commercial Tobacco Services (UK) Limited ("SCTS") at its
registered office at the date of this Agreement (or such other address
in England as SCTS may notify to the Lead Bank in accordance with the
provisions of Clause 32 (Notices)) to accept service of process in
such jurisdiction in any Proceedings and agrees that failure by such
firm to give notice of such service of process to the Borrowers or the
Covenantors shall not impair or affect the validity of such service or
any judgment based on it.
(c) Each party to this Agreement irrevocably waives any objection which it
may have now or hereafter to the laying of the venue of any
Proceedings in the English Courts and any claim that any such
Proceedings have been brought in an inconvenient forum and further
irrevocably agrees that a judgment in any such Proceedings brought in
the English Courts shall be conclusive and binding upon it and may be
enforced in any other jurisdiction.
(d) Nothing contained in this Clause 40 shall limit the right of any party
to take action against any other party in any court of competent
jurisdiction, nor shall the taking of Proceedings by any party against
another party in one or more jurisdictions preclude the taking of
Proceedings in any other jurisdiction whether concurrently or not.
(e) Each party whose registered office is outside England and Wales
further irrevocably consents to the service of process out of the
English Courts in any such Proceedings by the mailing to them of
copies by registered or certified airmail, postage prepaid.
AS WITNESS the hands of the parties the day and year first above written.
<PAGE>
SCHEDULE I
THE BORROWERS
Name Company Number
Trans-Continental Leaf Tobacco Corporation Limited H.LIV/14
Standard Commercial Tobacco Company (UK) Limited 1411968
Standard Commercial Tobacco Co., Inc. 56-0323420
<PAGE>
SCHEDULE II
THE BANKS
Banks Commitment
Berliner Bank Aktiengesellschaft $15,000,000
Berenberg Bank $ 7,500,000
BHF-Bank Aktiengesellschaft $15,000,000
Commerzbank A.G. $15,000,000
Deutsche Bank A.G. in Hamburg $37,500,000
MeesPierson N.V. $15,000,000
Norddeutsche Landesbank Girozentrale $20,000,000
Westdeutsche Landesbank Girozentrale $20,000,000
Bankers Trust Company $15,000,000
ABN Amro Bank $ 5,000,000
Crestar Bank, Inc. $10,000,000
Kredietbank N.V. $10,000,000
Standard Chartered Bank $15,000,000
<PAGE>
SCHEDULE III
THE OBLIGORS
Place of
Name Incorporation Company Number
Standard Commercial Corporation North Carolina 13/1337610
Trans-Continental Leaf Tobacco
Corporation Limited Liechtenstein H. LIV/14
Standard Commercial Tobacco Company
(U.K.) Limited England 1411968
Standard Commercial Tobacco
Co., Inc. North Carolina 56-0323420
Trans-Continental Leaf Tobacco
Corporation (Jersey) Limited Jersey 64368
W.A. Adams Company North Carolina 56-1783750
General Processors Inc. North Carolina 56-0887857
<PAGE>
SCHEDULE IV
PART I
THE FACILITY LETTERS
<TABLE>
<CAPTION>
- ------------------------------------ ------------------------------------------- ---------------------------------------
<S> <C> <C>
Bank Borrower Type of Facility
- ------------------------------------ ------------------------------------------- ---------------------------------------
- ------------------------------------ ------------------------------------------- ---------------------------------------
BHF-Bank Aktiengesellschaft Trans-Continental Leaf Tobacco Revolving
Corporation Limited and Spierer Freres &
Cie S.A.
- ------------------------------------ ------------------------------------------- ---------------------------------------
- ------------------------------------ ------------------------------------------- ---------------------------------------
Commerzbank Aktiengesellschaft Trans-Continental Leaf Tobacco Revolving
Corporation Limited and Spierer Freres &
Cie S.A.
- ------------------------------------ ------------------------------------------- ---------------------------------------
- ------------------------------------ ------------------------------------------- ---------------------------------------
MeesPierson N.V. Standard Wool Argentina S.A., Tentler & Revolving
Co. B.V., Lohmann & Company GmbH,
Standard Commercial Tobacco Company (UK)
Limited, Trans-Continental Leaf Tobacco
Corporation Limited, Spierer Freres & Cie
S.A., Standard Wool (UK) Limited and Foreign Exchange
Jacomb Hoare (Bradford) Limited
- ------------------------------------ ------------------------------------------- ---------------------------------------
- ------------------------------------ ------------------------------------------- ---------------------------------------
Norddeutsche Landesbank Standard Commercial Tobacco Company (UK) Revolving
Girozentrale Limited, Trans-Continental Leaf Tobacco
Available for cash credits, short
Corporation Limited and Spierer Freres &
term loans, L/Cs/bank guarantees Cie S.A
- ------------------------------------ ------------------------------------------- ---------------------------------------
- ------------------------------------ ------------------------------------------- ---------------------------------------
Westdeutsche Landesbank Trans-Continental Leaf Tobacco Revolving
Girozentrale Corporation Limited
- ------------------------------------ ------------------------------------------- ---------------------------------------
- ------------------------------------ ------------------------------------------- ---------------------------------------
Joh. Berenberg, Gossler & Co. Trans-Continental Leaf Tobacco internal credit facility
Corporation Limited
- ------------------------------------ ------------------------------------------- ---------------------------------------
- ------------------------------------ ------------------------------------------- ---------------------------------------
Berliner Bank Aktiengesellschaft Werkhof GmbH, Trans-Continental Rohtabak Revolving
A.G., Standard Commercial Tobacco Company
(UK) Limited and Spierer Freres & Cie S.A
- ------------------------------------ ------------------------------------------- ---------------------------------------
- ------------------------------------ ------------------------------------------- ---------------------------------------
Deutsche Bank SCTC (UK), TCLTC and SCTC Inc. $37,500,000 Revolving Facility
AG in Hamburg
- ------------------------------------ ------------------------------------------- ---------------------------------------
PART II
THE EXISTING SECURITY
- --------------------------------------- ==========================================================================
Bank Details
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
Deutsche Bank A.G. Import Finanzierung (Mantelvertrag) mit Sicherheitenbestellung of
Trans-Continental Leaf Tobacco Corporation Limited.
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
The Royal Bank of Scotland plc All money
first legal charge by Standard
Commercial Tobacco Company (UK) Limited
over office premises in Godalming,
Surrey, England.
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
Joh. Berenberg, Gossler & Co Importsicherungsvertrage mit Sicherheitenstellung (Waren/Forderungen) of
Trans-Continental Leaf Tobacco Corporation Limited
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
BHF-Bank Aktiengesellschaft Import security
agreement to be entered into to cover
import transactions of Trans-Continental
Leaf Tobacco Corporation Limited
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
MeesPierson N.V. The Bank's general terms and conditions provide for a pledge on all
goods and documents of title which are in the possession or will come
into possession of the Bank or a third
party on the Bank's behalf from or for
the benefit of the customer.
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
Westdeutsche Landesbank Girozentrale Importsicherungsvertrag of Trans-Continental Leaf Tobacco Corporation
Limited.
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
Norddeutsche Landesbank Girozentrale The Bank's general terms and conditions provide for a pledge on all the
Borrowers' assets (e.g. goods, money, securities, etc.) which are in the
possession or will come into the possession of the Bank
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
Thai Farmers Bank Public Company Sicherungsvereinbarung Import-Kredite of Trans-Continental Leaf Tobacco
Limited Corporation Limited dated 18 May 1978
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
ABN Amrobank Charge over assets of Exelka Greece
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
ABN Amrobank Charge over assets of SPI Turkey
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
Barclays Charge over assets of Exelka Greece
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
Barclays Charge over assets of Stancom Malawi
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
Citibank Charge over assets of Exelka Greece
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
Egnatia Bank Charge over assets of Exelka Greece
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
Ioman Bank Charge over assets of Exelka Greece
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
Midland Bank Charge over assets of Exelka Greece
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
National Bank of Greece Charge over assets of Exelka Greece
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
Xkebank Charge over assets of Exelka Greece
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
Toronto Dominion Charge over assets of SCTC Canada
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
Chemical Bank Charge over assets of SPI Turkey
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
MeesPierson Charge over assets of SPI Turkey
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
T. Ekonomi Bank Charge over assets of SPI Turkey
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
UOB Geneva Charge over assets of SPI Turkey
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
Commercial Bank of Malawi Charge over assets of Stancom Malawi
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
Equator Bank Charge over assets of Stancom Malawi
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
Indebank Charge over assets of Stancom Malawi
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
Merchant Bank of C.A. Charge over assets of Stancom Zimbabwe
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
National Merchant Bank Charge over assets of Stancom Zimbabwe
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
Stanble Charge over assets of Stancom Zimbabwe
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
Syfrets Charge over assets of Stancom Zimbabwe
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
Thai Farmers Bank Charge over assets of Stec Thailand
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
Assic Edila Charge over assets of Transacatab Italy
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
Banco di Napoli Charge over assets of Transacatab Italy
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
Monte dei Paschi Charge over assets of Transacatab Italy
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
Asefa Charge over assets of WWY Spain
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
Banca Commerciale Italiana Charge over assets of WWY Spain
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
Banca Nazionale del Lavoro Charge over assets of WWY Spain
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
Banco Bilbao Vizcaya Charge over assets of WWY Spain
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
Banco Extrenadura Charge over assets of WWY Spain
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
Banco Centra Hispana Charge over assets of WWY Spain
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
Banco Popular Charge over assets of WWY Spain
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
Bancato Charge over assets of WWY Spain
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
Maofre Charge over assets of WWY Spain
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
NationsBank Charge over assets of Standard Commercial Tobacco Inc.
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
National Bank of Australia Charge over assets of Standard Wool Australia
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
Bank West Charge over assets of Standard Wool Australia
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
BHF Bank Charge over assets of Standard Wool Germany
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
Bremer Bank Charge over assets of Standard Wool Germany
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
Bremer Landesbank Girozentrale Charge over assets of Standard Wool Germany
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
Commerzbank A.G. Charge over assets of Standard Wood Germany
- --------------------------------------- ==========================================================================
- --------------------------------------- ==========================================================================
Westdeutsche Landesbank Girozentrale Charge over assets of Standard Wool Germany
- --------------------------------------- ==========================================================================
</TABLE>
<PAGE>
SCHEDULE V
SECURITY DOCUMENTS
1. Pledge by SCTC Inc. to MeesPierson NV as Security Agent of its shares in
Werkhof dated 2 May 1995.
2. Pledge by SCTC Inc. to MeesPierson NV of its shares in SCTC of Canada
Limited dated 5 May 1995.
3. Share Pledge Agreement relating to 75% of the shares in Standard Wool
France SA and made between SCTC (UK), Advhus Gestion SNC, the Steering
Committee, the Lead Bank, the Security Agent and the Banks dated 5 May
1995.
4. Share Pledge Agreement relating to 25% of the shares in Standard Wool
France SA and made between Standard Wool, Inc., the Steering Committee, the
Lead Bank, the Security Agent and the Banks dated 5 May 1995.
5. Guarantee and Debenture by TCLTC in favour of MeesPierson NV as Security
Agent dated 5 May 1995.
6. Pledge by SCTC Inc. to MeesPierson NV as Security Agent of its shares in
Spierer dated 5 May 1995.
7. Guarantee and Debenture by SCTC (UK) in favour of MeesPierson NV as
Security Agent dated 5 May 1995.
8. Charge by SCC to MeesPierson NV as Security Agent of its shares in SCTC
(UK) and SCTS (UK) dated 5 May 1995.
9. Guarantee and Debenture by SCTC (UK) in favour of MeesPierson NV as
Security Agent dated 11 May 1995.
10. General Letter of Pledge by SCTC (UK) to MeesPierson NV as Security Agent
dated 30 May 1995.
11. General Letter of Pledge by TCLTC to MeesPierson NV as Security Agent dated
30 May 1995.
12. Warehouse Locking Agreement between MeesPierson NV and SCTC (UK) and
Tabaknatie dated 30 May 1995.
13. Warehouse Locking Agreement between MeesPierson NV and TCLTC and Tabaknatie
dated 30 May 1995.
14. Pledge by TCLTC to MeesPierson NV of its shares in Transhellenic Tobacco SA
dated 30 May 1995.
15. Second Equitable Mortgage of Shares in Tobacco Processors (Malawi) Limited
by Stancom Tobacco (Malawi) Limited to MeesPierson NV as Security Agent
dated 30 May 1995.
<PAGE>
16. Charge by SCTC (UK) to MeesPierson NV of its shares in Stancom Tobacco
Company (Malawi) Limited and Siemssen Threshie (Malawi) Limited dated 30
May 1995.
17. Security Agreement between TCLTC Limited and MeesPierson NV as Security
Agent relating to receivables dated 30 May 1995.
18. Charge by TCLTC Limited to MeesPierson NV as Security Agent of its shares
in Stancom Tobacco (Private) Limited dated 30 May 1995.
19. Pledge by SCTC Inc. to MeesPierson NV as Security Agent of its shares in
TCLTC dated 17 July 1995.
20. Deed of Assignment relating to Philippine receivables by TCLTC in favour of
MeesPierson NV as Security Agent dated 29 November 1995, including schedule
of outstanding invoices payable by Philippine customers as at the same
date.
21. Deed of Covenant by TCLTC Jersey, TCLTC and SCC in favour of MeesPierson NV
as Security Agent in relation to TCLTC Jersey dated 26 February 1996.
22. Guarantee and Debenture by TCLTC Jersey in favour of MeesPierson NV as
Security Agent dated 26 February 1996.
23. Security Agreement by TCLTC in respect of shares of TCLTC Jersey in favour
of MeesPierson NV as Security Agent dated 26 February 1996.
24. Guaranty Agreement made jointly and severally by SCTC, Inc, General
Processors, Inc and W.A. Adams Company (the "Companies") in favour of the
Finance Parties and MeesPierson NV as Security Agent dated 12 July 1996.
25. Security Agreement made by the Companies in favour of MeesPierson NV as
Security Agent dated 12 July 1996.
26. Hazardous Materials Indemnity Agreement by the Companies in favour of
MeesPierson NV as Security Agent dated 12 July 1996.
27. Deed of Trust and Security Agreement by SCTC, Inc (Wilson County, North
Carolina Property) dated 12 July 1996.
28. Deed of Trust and Security Agreement by General Processors, Inc (Granville
County, North Carolina Property) dated 12 July 1996.
29. Deed of Trust and Security Agreement by W.A. Adams Company (Granville
County, North Carolina Property) dated 12 July 1996.
30. Mortgage and Security Agreement by SCTC, Inc (Washington County, Kentucky
Property) dated 12 July 1996.
<PAGE>
SCHEDULE VI
Form of Transfer Certificate
To: (1) [The Lead Bank]
[*insert address*]
Attention:***
(2) [The Borrowers]
[*insert address*]
Attention:***
("the Borrowers") [Date]
Transfer Certificate
This Transfer Certificate relates to a Master Facilities Agreement ("the
Agreement" which expression shall include any amendments to it in force from
time to time) dated [*insert date*] between [* insert names of parties*]. Terms
defined in the Agreement shall have the same meanings in this Transfer
Certificate.
1. [insert name of Transferor Bank] (the "Transferor") (a) confirms that the
details appearing in the attached Schedule are correct and (b) requests
[*insert name of Transferee Bank*] (the "Transferee") to accept and procure
the transfer to the Transferee of the obligations of the Transferor
specified in the attached Schedule by countersigning and delivering this
Transfer Certificate to the Lead Bank at its address for the service of
notice specified in the Agreement.
2. The Transferee requests the Lead Bank to accept this Transfer Certificate
as being delivered pursuant to and for the purposes of Clauses 21.4
(Transfer Certificate) and 21.5 (Effective Date) of the Agreement so as to
take effect in accordance with the terms of such clauses on [*insert date
of transfer*] (the "Transfer Date") or if applicable on such later date as
may be determined in accordance with the terms thereof.
3. The Transferee undertakes to the Lead Bank, the Transferor and each of the
other parties to the Agreement that it will:-
(a) perform in accordance with their terms all those obligations which by
the terms of the Agreement will be assumed by it after delivery of
this Transfer Certificate to the Lead Bank and after satisfaction of
the conditions (if any) subject to which this Transfer Certificate is
expressed to take effect; and
(b) comply with and be bound by the terms of the Agreement and each
Finance Document to which the Transferor is a party as if it had been
an original party to such Agreement and each such Finance Document in
the capacity of [*specify capacities*].
4. The Transferee confirms that:-
<PAGE>
(a) it has received copies of the Agreement and each such Finance Document
and each Security Document and all other documentation and information
required by the Transferee in connection with the transactions
contemplated by this Transfer Certificate;
(b) it has made and will continue to make its own assessmen of the
adequacy, legality, enforceability and validity of the Finance
Documents and this Transfer Certificate and has not relied and will
not rely on the Lead Bank, the Security Agent or the Steering
Committee or any statements made by any of them in that respect;
(c) it has made and will continue to make its own credit assessment of
SCC, the Borrowers, and the other parties to the Finance Documents and
has not relied and will not rely on the Lead Bank, the Security Agent
or the Steering Committee or any statements made by any of them in
that respect; and
(d) the Lead Bank, the Co-Lead Bank, the Security Agents or the Steering
Committee shall not have any liability or responsibility to the
Transferee in respect of any of the foregoing matters.
5. The Transferor makes no representation or warranty and assumes no
responsibility with respect to the adequacy, legality, enforceability or
validity of any Finance Document and assumes no responsibility for the
financial condition of SCC, the Borrowers, or any other party to any
Finance Document or for the performance and observance by SCC, the
Borrowers, or any other such party of any of its obligations under any
Finance Document and all such conditions and warranties, whether expressed
or implied by law or otherwise, are excluded.
6. Nothing in this Transfer Certificate or any Finance Document obliges the
Transferor to:-
(a) accept a re-transfer from the Transferee of any of the rights and/or
obligations assigned, transferred or novated under Clause 21
(Assignments and Transfers) of the Agreement; or
(b) support any losses incurred by the Transferee by reason of the
non-performance by any Borrower of any of its obligations under any
Finance Document or otherwise.
7. The Transferee confirms that, in executing this Transfer Certificate, it
acts as principal.
8. This Transfer Certificate and the rights and obligations of the parties
under it shall be governed by and construed in accordance with English law.
Note:This Transfer Certificate is not a security, bond, note, debenture,
investment or other similar instrument.
AS WITNESS the hands of the authorised signatories of the parties hereto on the
date appearing below.
<PAGE>
SCHEDULE TO TRANSFER CERTIFICATE
Details of Obligations to be transferred
[All] obligations of the Transferor under or pursuant to each of the Finance
Documents including, without limitation, the obligations of the Transferor in
respect of its Commitment referred to below.
Portion of Commitment
Transferor's Commitment under: Transferred
[*details to ] Facility $[***] $[***]
[ be inserted*] Facility $[***] $[***]
Administrative Details of Transferee
Name of Transferee:
Lending Office:
Address for service of notices (if different):
Account for payments:
Telephone:
Telex:
Attention:
Dated: ...................... Dated: ......................
SIGNED by ................... SIGNED by ...................
for and on behalf of for and on behalf of
[Transferor Bank] [Transferee Bank]
<PAGE>
SCHEDULE VII
GROUP STRUCTURE
<PAGE>
SCHEDULE VIII
DISTRIBUTION OF RECOVERIES BETWEEN FINANCE PARTIES
(Clause 25.2)
5. Each Security Agent shall hold the Recoveries received by it on trust for
distribution in accordance with the provision of this Schedule. Each other
Finance Party shall, promptly on request from a Security Agent, pay to such
Security Agent all Recoveries held by such Finance Party or apply the same
as such Security Agent may direct.
6. Recoveries shall be distributed by each Security Agent between the Finance
Parties in the following order of priority:-
(1) FIRST, to pay to the Security Agents, the Co-Lead Bank and the Lead
Bank the amount of any fees due from the Group Companies pursuant to
Clause 18 (Fees) of this Agreement and to reimburse each of them for
all costs (including legal costs) charges and expenses incurred by it
in connection with the Finance Documents and in addition such sums as
shall be sufficient to indemnify the Security Agents, the Co-Lead
Bank, the Lead Bank and the Steering Committee fully against any
obligations or liabilities incurred in their respective capacities as
such (except if and insofar as incurred as a result of their own gross
negligence or wilful misconduct);
(2) SECOND, to pay to the Banks the amount of any losses incurred by them
in respect of any foreign exchange transaction which the relevant Bank
has agreed not to close out on the Enforcement Date at the request of
a receiver of the relevant Group Company and with the approval of the
Lead Bank (acting with the consent of all the Banks);
(3) THIRD, to pay to the Banks pro rata pari passu all Principal
Indebtedness then due, owing or incurred under the Facilities (up to
the level of each Bank's Commitment) and to create Reserves for any
such indebtedness as is unmatured (as adjusted, where applicable, to
take into account any Equalisation Payments made under Clause 26
(Equalisation)), together with all Interest Indebtedness accrued
thereon, until all such matured indebtedness has been repaid and full
Reserves have been made for all such unmatured liabilities;
(4) FOURTH, to pay to the Banks pro rata pari passu all other money and
liabilities (if any) due, owing or incurred by the Obligors to the
Finance Parties under or in connection with the Facilities and/or the
Finance Documents and to create Reserves for any such liabilities as
are unmatured, until all such matured liabilities have been paid in
full and full Reserves have been created for all such unmatured
liabilities;
(5) FIFTH, to pay any surplus to whomsoever is entitled to it;
where the expression "pro rata" means: -
(i) in relation to paragraph 2(c) above, the proportion which a
Bank's Outstandings as at the Enforcement Date bears to the
aggregate amount of all Outstandings of the Banks as at the
Enforcement Date; and
<PAGE>
(ii) in relation to paragraph 2(d) above, the proportion which the
amount of indebtedness of the Obligors to each Finance Party
under or in connection with the Facilities and/or the Finance
Documents at such time bears to the aggregate amount of
indebtedness of the Obligors to all Finance Parties under or in
connection with the Facilities and/or the Finance Documents at
such time; and
(iii)in relation to paragraph 2(e) above, the proportion which the
amount of the Indebtedness described in paragraph 2(e) above of
the Obligors to each Finance Party at such time bears to the
aggregate amount of such Indebtedness of the Obligors to all
Finance Parties at such time.
For the purpose of this Schedule there shall be no double counting. Where
there are two claims for the same debt (for example a guarantee of a
Facility) only one such claim shall be taken into account.
7. For the purposes of calculating the claim of each Finance Party under this
Schedule and calculating the amount of Indebtedness outstanding to each of
them for the purposes of this Schedule:-
(1) the provisions of Clause 26 (Equalisation) shall be applied, where
applicable, before establishing Indebtedness for such purpose;
(2) any claim made by a Bank in respect of any foreign exchange
transaction shall be limited to the amount of the loss which that Bank
would have incurred on that transaction if it had closed out that
transaction on the Enforcement Date or (if that is not a Business Day)
on the next succeeding Business Day, or on such other basis as may be
approved by the Lead Bank (acting with all Bank consent) if such Bank
is asked by a receiver of the relevant Group Company not to close out
the transaction or not to do so immediately;
(3) sums received by a Finance Party and passed or to be passed to a
Security Agent pursuant to Clauses 29.1 (Further Security, Set-Off and
Excess Cash Cover) or 30 (Third Party Security) shall be disregarded,
so that as between the Finance Parties for such purpose, the
outstanding Indebtedness of the Group Companies to a Finance Party
shall be deemed to be the amount of the indebtedness of the Group
Companies to such Finance Party before the sums to be passed to a
Security Agent are received by such Finance Party.
8. Where any Finance Party receives funds pursuant to this Schedule it shall
(unless required by law) apply such funds in or towards satisfaction of the
relevant debt or liability or (if so directed by a Security Agent with the
consent of the Majority Banks) instead place the funds on an
interest-earning suspense account until otherwise specified by a Security
Agent.
9. If any calculation or estimate made by a Security Agent (or any other
person) in order to determine directly or indirectly the distributions
hereunder shall prove to be inaccurate when made or becomes inaccurate,
whether through the passage of time or otherwise, then the amounts received
by each Finance Party shall be adjusted to take account of such inaccuracy
and such Finance Party shall forthwith upon notice by a Security Agent pay
to such Security Agent such funds as may be required to achieve such
correction.
<PAGE>
10. If requested by a Security Agent, a Finance Party shall purchase for cash
such portion of the monetary amounts and claims owing to one or more of the
other Finance Parties from the Group Companies, or to sell for cash such
portion of the monetary amounts and claims owing to it from Group
Companies, or adopt such alternative method as a Security Agent may
reasonably require (on the basis of legal advice received by it) to give
effect to the provisions of Clauses 26 (Equalisation), 27 (Interim
Distributions of Recoveries and Creation of Reserves), 29 (Further
Security, Set-Off and Excess Cash Cover) or 30 (Third Party Security),
having regard to the law applicable in the relevant jurisdiction.
11. Where the amount of any unmatured liability is to be estimated for the
purpose of this Schedule, the Finance Party to which such liability is
owing shall provide such information to each of the Security Agents as it
may reasonably require to agree or determine the amount of such estimate
and the amount so agreed or determined by the Security Agents shall apply
for such purpose.
<PAGE>
SCHEDULE IX
EXISTING INTRA-GROUP INDEBTEDNESS
(Clause 13.1(v))
<PAGE>
SCHEDULE X
DETAILS OF GROUP JOINT VENTURES
(Clause 13.1(r))
<PAGE>
SCHEDULE XI
WOOL GROUP COMPANIES
<PAGE>
SCHEDULE XII
<TABLE>
<CAPTION>
NEW GLOBAL FACILITY - PROFORMA BORROWING BASE
Amounts show as of 31 March 1997
- ----------------------------- ------------------- --------------------- ------------------ =====================
<S> <C> <C> <C> <C>
(US $ millions) SCTC Inc. TCLTC SCTC(UK) TOTAL
- ----------------------------- ------------------- --------------------- ------------------ =====================
- ----------------------------- ------------------- --------------------- ------------------ =====================
Inventory 66.2 35.7 3.3 105.2
Receivables 34.0 40.6 13 87.6
Less: ineligibles N/A N/A N/A N/A
Sub Total 100.2 76.3 16.3 192.8
- ----------------------------- ------------------- --------------------- ------------------ =====================
- ----------------------------- ------------------- --------------------- ------------------ =====================
Eligible InterCompany Loans 0.3 9.2 1.8 11.3
Less payables
Sub Total 0.6 7.2 1.3 9.1
(cap $40,000,000) (0.3) 2.0 0.5 2.2
- ----------------------------- ------------------- --------------------- ------------------ =====================
- ----------------------------- ------------------- --------------------- ------------------ =====================
Supplier Advances and 3.8 11.4 11.8 27.0
Affiliates Advances (cap
$40,000,000) (2.0) (52.3) (7.3) (61.6)
Less Trade Payables 101.7 37.4 21.3 160.4
Total Cur Assets
- ----------------------------- ------------------- --------------------- ------------------ =====================
- ----------------------------- ------------------- --------------------- ------------------ =====================
Availability 81.4 29.9 17.0 128.3
@ 80%
- ----------------------------- ------------------- --------------------- ------------------ =====================
- ----------------------------- ------------------- --------------------- ------------------ =====================
Fixed Assets 21.0
Availability 10.5
@ 50%
Total 91.9 138.8
Borrowing Base
- ----------------------------- ------------------- --------------------- ------------------ =====================
- ----------------------------- ------------------- --------------------- ------------------ =====================
- -Borrowings (less all 23.7 21.3 15.7 60.7
guarantees and letters of
credit)
- -plus all guarantees and 25.7 11.3 36.5
letters of credit
- -less back to back,
prepayment secured and
undrawn documentary letters
of credit
- -less cash 0.4 13.4 3.5 17.3
Net Borrowings 48.5 19.2 12.2 79.9
- ----------------------------- ------------------- --------------------- ------------------ =====================
- ----------------------------- ------------------- --------------------- ------------------ =====================
Availability 43.4 10.7 4.8 58.9
- ----------------------------- ------------------- --------------------- ------------------ =====================
N.B. all figures set out above are illustrative only.
</TABLE>
<PAGE>
SCHEDULE XIII
GRANDFATHERED BORROWINGS AND ENCUMBRANCES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Borrowing Guarantor of Nature of Type of Amount Currently
Company Encumbrance Encumbrances Lender Credit Facility Secured
- ---------------------------------------------------------------------------------------------------------------------
- ---------------- ----------------- ----------------- ------------------- ---------------- -------------------
Stancom Tanzania Stancom Tanzania Trading Assets, Bank syndicate led Seasonal credit $37.5 million,
(Jersey) Limited (Jersey) Limited SCC's shares in by AGN-Amro. lines renewed amounts will vary
the local company annually. depending on crop
or land and buildings size and sales plan.
depending on the Term Loan for
final joint venture purchase of shares $5-15 million,
arrangements. and construction depending on final
of new tobacco joint venture
storage in Tabora. arrangements.
- ---------------- ---------------- ---------------- ------------------- ---------------- ------------------
Standard Brazil Standard Brazil Inventory and Bank syndicate led Seasonal credit Up to $50 million,
Limited Limited Receivables AGN-Amro lines. amounts will vary
depending on crop size
and sales plan.
- ---------------- ---------------- ---------------- ------------------ ---------------- -------------------
Standard's joint Standard's joint Inventory and Local Indian banks Seasonal credit To be determined
venture in venture in Receivables. lines.
Gunthur, India Gunthur, India
(name to be (name to be
determined). determined).
- ---------------- ---------------- ---------------- -------------- ---------------- ------------------
Seakins Limited Seakins Limited Inventory and United Overseas Seasonal credit Up to $50 million.
Receivables Bank
- ---------------- ---------------- ---------------- -------------- ---------------- -----------------
Various SCC Various SCC Trading Assets Local Banks Ring-Fenced Varies by country
Subsidiaries and Subsidiaries and and local fixed Financing and season
Affiliates in Affiliates in assets Arrangements as
tobacco sourcing tobacco sourcing defined in the
countries countries MFA
- --------------- ---------------- ----------------- --------------- ----------------- ------------------
Various Wool Various Wool Trading Assets and Local Banks Seasonal credit Varies by country
Group companies Group companies local fixed assets lines and season
Standard Wool Standard Wool Land and buildings Royal Bank Seasonal credit $5,395,000
(UK) Ltd (UK) Ltd of Scotland lines
- --------------- ---------------- ----------------- --------------- ------------------ -----------------
Standard Standard Land, buildings Branch Banking Industrial Revenue $2,940,000
Commercial Commercial and machinery and Trust Bonds
Tobacco Co, Tobacco Co, in Springfield,
Ltd Ltd Kentucky, USA
- ---------------- ---------------- ----------------- --------------- ------------------ -----------------
Carolina Tobacco CRES Tobacco CRES factory land Bank of America Term Loan $3,102,000
Inc Inc and Standard and buildings
Commercial Tobacco
Co, Inc
</TABLE>
<PAGE>
SCHEDULE XIV
ADDITIONAL COSTS RATE
* Subject to review by the Banks *
The Additional Cost Rate to compensate each of the Banks for the cost
attributable to the Facilities, or other sum for any period for which such cost
is to be computed under this Agreement resulting from the imposition from time
to time by the Bank of England (or other governmental authorities or agencies)
of a requirement or request to place non-interest-bearing deposits with the Bank
of England, for the payment of special deposits and the maintenance of secured
money with certain financial institutions (recognised for this purpose by the
Bank of England) will be the rate determined by the Bank (rounded upwards, if
necessary, to the nearest one-sixteenth of one per cent (1/16%)) on the first
day of the relevant period and for the duration of such period (or, if for a
period longer than three Months, the average of the rates (rounded upwards as
aforesaid) computed on a three Monthly basis during such period) in accordance
with the following formula:
rate = XL+ B(L-C) + S(L-D) 100 -
(X + S)
Where:
"X" is the amount required to be maintained by the Bank as
non-interest-bearing balances with the Bank of England
expressed as a percentage of eligible liabilities fixed
by the Bank of England (or other governmental
authorities or agencies).
"L" is the average of the offered quotations in the London
Interbank Market for Sterling deposits for the period
for which the formula is being applied in the London
Interbank Market at or about 11.00 am on the first day
of that period.
"B" is the average level of secured deposits expressed as a
percentage of eligible liabilities which the Bank is
required by the Bank of England to maintain with
certain financial institutions (recognised for this
purpose by the Bank of England).
"C" is the average of the rates at which certain financial
institutions (recognised for this purpose by the Bank
of England) bid for Sterling deposits for the period
for which the formula is being applied from the Bank at
or about 11.00 am on the first day of that period.
"S" is the amount of special deposits required to be
maintained by the Bank expressed as a percentage of
eligible liabilities fixed by the Bank of England (or
other governmental authorities or agencies).
"D" is the rate of interest paid by the Bank of England on
special deposits.
In the application of the above formula X, L, B, C, S and D will each be
expressed as a number and not as a percentage rate per annum.
<PAGE>
In the event of any change in circumstances (including the imposition of
alternative or additional official requirements) which renders the above formula
inapplicable, any relevant Bank shall notify SCTC Inc. in reasonable detail of
the manner (including the basis and computation) in which the Additional Cost
Rate shall be determined thereafter and, if appropriate, substitute a new
formula for that set out above.
If the above formula does not represent the cost to any relevant Bank of such
compliance as mentioned earlier, the Borrowers will on demand by such Bank
indemnify the Bank for any such cost of compliance demonstrated by such Bank to
the Borrowers in reasonable detail and certified by such Bank as not being
otherwise covered by such formula. A certificate as to such further cost signed
on behalf of such Bank shall be conclusive in the absence of manifest error.
<PAGE>
SCHEDULE XV
STANDARD FORM BI-LATERAL FACILITY LETTER
To: Standard Commercial Tobacco Co., Inc. Standard Commercial Tobacco Company
(UK) Limited Trans-Continental Leaf Tobacco Corporation Limited
[date]
Dear Sirs,
We are pleased to offer to make available to you (the "Borrowers" and each is a
"Borrower") the following facilities (the "Facilities") subject to the terms and
conditions set out in this letter and the MFA (as defined below). [This letter
supplements and amends our existing facility letter dated [*] as amended and in
force on the date of this letter.] This letter is a Facility Letter as defined
in the MFA.
1. Facility Amount
Up to a maximum of $[*] in aggregate of which up to $[*] may be
drawn by way of revolving credit advances for periods of up to
[*] days and up to $[*] by way of the issuance of Letters of
Credit. [state any other forms of permitted utilisations].
2. Purpose
The Facilities may be used for the general corporate purposes of
the Borrowers (excluding hostile acquisitions).
3. Interest and Commissions
Interest on advances shall be payable in accordance with clause
[6] of the MFA. Commissions and fees on Letters of Credit and
[state any other permitted utilisations] shall be payable as
follows:
[State amounts and times]
4. Letter of Credit Documentation
<PAGE>
If any Borrower requests us at any time to issue a Letter of
Credit on its behalf, such Borrower shall deliver to us a copy of
our standard form application for the issue of a letter of credit
and counterindemnity duly executed on behalf of such Borrower
together with any other documentation referred to in that
application and any fees then payable. All Letters of Credit
proposed to be issued by us shall be in a form acceptable to us.
Where a Borrower requests the issue of a Letter of Credit in
connection with the acquisition of tobacco by that Borrower, such
Borrower shall also deliver to us duly executed pledge
documentation in our standard form in respect of such tobacco and
deliver to us the documents of title to such tobacco. Each
Borrower agrees that it will execute such trust receipts and
other documents and give such instructions to warehouses as may
be necessary to give effect to any such pledge.
5. Other utilisations
All utilisations of the Facilities shall, except to the extent
expressly provided in this letter or in the MFA, be made on our
standard terms and conditions which shall be deemed to be
incorporated in this letter. To the extent that there is any
inconsistency between the terms of this letter and/or our
standard terms and the terms of the MFA, the provisions of the
MFA shall prevail.
6. Repayment
The Facilities shall be repayable at the times and in the manner
stated in the MFA.
7. Security
The obligations of the Borrowers under or pursuant to this letter
and the Finance Documents from time to time shall be secured by:
(a) [list existing security held by that Bank];
(b) the Security Documents; and
(c) any express or implied rights of security to which we may,
now or hereafter, be entitled as a matter of law or
contract.
8. Other Terms
[state any other terms applicable to the Facilities]
9. Interpretation
In this letter "MFA" means the Master Facilities Agreement dated
5 May 1996 as supplemented and amended on [*] 1997 and made
between the Borrowers (1) Standard Commercial Corporation (2) the
Steering Committee (3) Deutsche Bank AG in Hamburg as Lead Bank
(4) Bankers Trust Company as Co-Lead Bank and Documentation Agent
(5) MeesPierson NV as International Security Agent (6) Bankers
Trust Company as the US Security Agent (7) and the Banks (8).
Expressions defined in the MFA and not otherwise defined in this
letter shall have the respective meanings given to those terms in
the MFA and principles of interpretation applicable to the MFA
shall also apply to this letter.
10. Governing Law
This letter shall be governed by and construed in accordance with
[*] law.
<PAGE>
Each of the Borrowers should countersign and return the enclosed copy of this
letter to indicate its agreement to its terms together with a copy of a
resolution of its board of directors approving this letter and authorising a
named individual to countersign this letter on its behalf. This letter shall
remain open for acceptance until [*] after which time it shall lapse.
Yours faithfully,
For [Bank]
[On copy only]
We agree to and accept the terms of the above facility letter
........................................... Date
........................................... Date
........................................... Date
[NB/ All Borrowers to sign]
<PAGE>
THE BORROWERS
TRANS-CONTINENTAL LEAF TOBACCO CORPORATION LIMITED
FL-9490 Vaduz,
Liechtenstein
Facsimile No: (0)75 236 5555
Attention: The Finance Director
By:
STANDARD COMMERCIAL TOBACCO COMPANY (UK) LIMITED
Standard House
Weyside Park
Godalming
Surrey GU7 1XE
England
Facsimile No: 01483 860176
Attention: The Finance Director
By:
STANDARD COMMERCIAL TOBACCO CO., INC.
C/o C.T. Corporation Systems
225 Hillsborough Street
Raleigh
North Carolina 27603, USA
Facsimile No:
Attention: The Finance Director
SCC
STANDARD COMMERCIAL CORPORATION
2201 Miller Road, P O Box 450,
Wilson NC 27894-0450, USA
Facsimile No: 00 1 919 237 1109
Attention: The Finance Director
By:
<PAGE>
THE LEAD BANK
DEUTSCHE BANK A.G. IN HAMBURG
Firmen und Institutionen
Konzernbetreuung II
Adolphsplatz 7
20079 Hamburg, Germany
Facsimile No: 00 49 40 3701 4684
Attention: Michael Ziesenitz
By:
THE CO-LEAD BANK AND DOCUMENTATION AGENT
BANKERS TRUST COMPANY
14 Wall Street - 3rd Floor
NY 10005
USA
Facsimile No: 00 1 212 618 2630
Attention: Maureen Reilly
By:
THE INTERNATIONAL SECURITY AGENT
MEESPIERSON N.V.
Camomile Court
23 Camomile Street
London EC3A 7PP
Facsimile No: 0171 444 8810
Attention: Iain Lappin-Smith
By:
THE US SECURITY AGENT
BANKERS TRUST COMPANY
14 Wall Street - 3rd Floor
New York
NY 10005
USA
Facsimile No: 00 1 212 618 2630
Attention: Maureen Reilly
By:
<PAGE>
THE STEERING COMMITTEE
DEUTSCHE BANK A.G. IN HAMBURG
Firmen und Institutionen
Konzernbetreuung II
Adolphsplatz 7
20079 Hamburg, Germany
Facsimile No: 00 49 40 3701 4684
Attention: Michael Zietsenitz
By:
MEESPIERSON N.V.
Coolsingel 93
PO Box 749
3000 AS Rotterdam
Netherlands
Facsimile No: 0031 10 4016558
Attention: Jaap Van Beveren
By:
BANKERS TRUST COMPANY
14 Wall Street - 3rd Floor
New York
NY 10005
USA
Facsimile No: 00 1 212 618 2630
Attention: Maureen Reilly
By:
NORDDEUTSCHE LANDESBANK GIROZENTRALE
Brodschrangen 4
20457 Hamburg
Germany
Facsimile No: 00 49 40 3765 5304
Attention: Mrs Glindmeyer
By:
<PAGE>
WESTDEUTSCHE LANDESBANK GIROZENTRALE
Domstrasse 10
20095 Hamburg
Germany
Facsimile No: 00 49 40 339 68265
Attention: Mr T Richter
By:
THE BANKS
DEUTSCHE BANK A.G. IN HAMBURG
Firmen und Institutionen
Konzernbetreuung II
Adolphsplatz 7
20079 Hamburg, Germany
Facsimile No: 00 49 40 3701 4684
Attention: Michael Ziesenitz
By:
MEESPIERSON N.V.
Coolsingel 93
PO Box 749
3000 AS Rotterdam
Netherlands
Facsimile No: 0031 10 401 6558
Attention: Jaap Van Beveren
By:
BANKERS TRUST COMPANY
14 Wall Street - 3rd Floor
New York
NY 10005
USA
Facsimile No: 00 1 212 618 2630
Attention: Maureen Reilly
By:
<PAGE>
NORDDEUTSCHE LANDESBANK GIROZENTRALE
Brodschrangen 4
20457 Hamburg
Germany
Facsimile No: 00 49 40 3765 5304
Attention: Mrs Glindmeyer
By:
WESTDEUTSCHE LANDESBANK GIROZENTRALE
Domstrasse 10
20095 Hamburg
Germany
Facsimile No: 00 49 40 339 68265
Attention: Mr T Richter
By:
BERENBERG BANK
Neuer Jungfernstieg 20
20354 Hamburg
Germany
Facsimile No: 00 49 40 354 248
Attention: Mr Schroder
By:
BHF-BANK AKTIENGESELLSCHAFT
Paulstrasse 5
20095 Hamburg
Germany
Facsimile No: 00 49 40 3200 9203
Attention: Mr Theodore Budde
By:
BERLINER BANK AKTIENGESELLSCHAFT
Niederlassung Hamburg
Domstrasse 21
20095 Hamburg
Germany
Facsimile No: 00 49 40 3020 5319
Attention: Mr Gubel
By:
<PAGE>
COMMERZBANK A.G.
Ness 7-9
20457 Hamburg
Germany
Facsimile No: 00 49 40 368 33305
Attention: Mr Weidner
By:
ABN AMRO BANK
Frankrijklei 121
B-2000 Antwerpen
Belgium
Tel: +32 3 2220425
Fax: +32 3 2311031
Attention: Mr. Paul Lenaerts/Mr. Rudolf Oldeman
By:
CRESTAR BANK
919 East Main Street
Richmond, VA 23219
USA
Tel: +1 804 782 5237
Fax: +1 804 782 5413
Attention: Mr. C Gray Key
By:
KREDIETBANK N.V.
5th Floor, Earl Place
15 Appold Street
London EC2A 2AA
England
Tel: +44 171 256 4891
Fax: +44 171 256 4870
Attention: Mr. Kevin Giles
By:
STANDARD CHARTERED BANK
37 Gracechurch Street
London EC3V OBX
England
Tel: +44 171 280 7585
Fax: +44 171 280 7598
Attention: Mr. Robert Dean
<PAGE>
By:
APPENDIX A
THE BUDGET
<PAGE>
APPENDIX B
THE CASH FLOW FORECAST
APPENDIX
DATED 5 May 1995
Trans-Continental Leaf Tobacco Corporation Limited, (1)
Standard Commercial Tobacco Company (UK) Limited
and
Standard Commercial Tobacco Company, Inc.
(as Borrowers)
Standard Commercial Corporation (2)
(as Guarantor)
The Steering Committee (3)
Deutsche Bank A.G. in Hamburg (4)
(as Lead Bank)
Bankers Trust Company (5)
(as Co-Lead Bank and Documentation Agent)
MeesPierson N.V. (6)
(as International Security Agent)
Bankers Trust Company (7)
(as US Security Agent)
-and-
The Banks (8)
---------------------------------------------
MASTER FACILITIES AGREEMENT
AS AMENDED AND RESTATED ON
1st AUGUST 1997
---------------------------------------------
*DRAFT 23 July 1997*
LOVELL WHITE DURRANT
65 Holborn Viaduct
London EC1A 2DY
A1/KB/105079-4
*Subject to the Banks' comments*
<PAGE>
CONTENTS
Heading Page
Parties
Recitals
PART I
1. Definitions and Interpretation
PART II
2. Facilities
3. Letters of Credit
4. Bills
PART III
5. Master Facilities Arrangements
PART IV
6. Interest and Commission
PART V
7. Repayment
8. Prepayment
PART VI
9. No deductions
10. Change in Law or Regulations
11. Cancellation
PART VII
12. Guarantee
PART VIII
13. Representations and Warranties
PART IX
14. General Covenants
15. Information Covenants
16. Financial Covenants
<PAGE>
PART X
17. Termination in Case of Default
PART XI
18. Fees 19. Expenses 20. Stamp Duty
PART XII
21. Assignments and Transfers
PART XIII
22. Lead Bank, Co-Lead Bank, Security Agents and Steering Committee 23
Amendments and Decisions 24. Retirement of Lead Bank, Co-Lead Bank,
Security Agents and Steering Committee
PART XIV
25. Enforcement of Security and Distribution of Recoveries 26. Equalisation 27.
Interim Distributions of Recoveries and Creation of Reserves 28.
Calculation of Outstandings 29 Further Security, Set-Off and Excess Cash
Cover 30. Third Party Security 31. Closing out of Foreign Exchange
Transactions
PART XV
32. Notices 33. Indemnities 34. Certificates, Calculations and Evidence of Debt
35. Set-Off 36. Forbearance and Partial Invalidity 37. Authority of SCTC
Inc. 38. Counterparts 39. Finance Parties 40. Governing Law and
Jurisdiction
<PAGE>
SCHEDULES
Schedule I : The Borrowers
Schedule II : The Banks
Schedule III : The Obligors
Schedule IV : Existing Security Documents
Schedule V : Security Documents
Schedule VI : Form of Transfer Certificate
Schedule VII : Group Structure
Schedule VIII : Distribution of Recoveries
Schedule IX : Existing Intra-Group Indebtedness
Schedule X : Details of Group Joint Ventures
Schedule XI : Wool Group Companies
Schedule XII : Borrowing Base Certificate
Schedule XIII : Grandfathered Borrowings and Encumbrances
Schedule XIV : Additional Costs Rate
Schedule XV : Standard Form Bi-Lateral Facility Letter
Signing Pages
Appendix A : The Budget
Appendix B : The Cash Flow Forecast
STANDARD COMMERCIAL CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE
(In thousands, except share information; unaudited)
<TABLE>
<CAPTION>
Second quarter ended Six months ended
September 30 September 30
------------ ------------
1997 1996* 1997* 1996*
---- ----- ----- -----
PRIMARY EARNINGS PER SHARE
<S> <C> <C> <C> <C>
Income from continuing operations............................. $ 5,281 $ 2,911 $ 7,132 $ 4,419
Less - ESOP preferred stock dividends net of tax.............. - (116) - (231)
------ ------ ------ ------
Net income applicable to common stock......................... $ 5,281 $ 2,795 $ 7,132 $ 4,188
====== ====== ====== ======
Primary average shares outstanding............................ 12,797,716 9,497,210* 11,950,459 9,494,890*
Earnings per common share - net............................... $0.41 $0.29* $0.60 $0.44*s
FULLY DILUTED EARNINGS PER SHARE
Income from continuing operations
applicable to common stock............................... $ 5,281 $ 2,795 $ 7,132 $ 4,188
Add - after-tax interest expense on 7 1/4% convertible
subordinated debentures at November 1................ 825 825 1,650 1,650
------- ------- ------- -----
Net income applicable to common stock......................... $ 6,106 $ 3,620 $ 8,782 $5,838
====== ====== ====== =====
Primary average shares outstanding............................ 12,797,716 9,497,210 11,950,459 9,494,890
Increase in shares outstanding assuming
- conversion of 7 1/4% convertible subordinated
debentures at November 1............................... 2,348,536 2,257,115 2,348,536 2,257,115
- conversion of ESOP convertible preferred stock
at July 1, 1993........................................ - 268,334 - 263,113
------- ------- ------- -------
Fully diluted average shares outstanding...................... 15,146,252 12,022,659* 14,298,995 12,015,118*
Earnings per common share - net............................... $0.40 $0.30* $0.61 $0.49*
</TABLE>
*Calculation of fully diluted earnings per share includes adjustments which
are antidilutive. Therefore, no fully diluted earnings per share are shown on
the face of the income statement.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET, CONSOLIDATED STATEMENT OF INCOME AND RETAINED
EARNINGS, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<CASH> 51,278
<SECURITIES> 961
<RECEIVABLES> 214,907<F1>
<ALLOWANCES> 0<F2>
<INVENTORY> 421,027
<CURRENT-ASSETS> 696,508
<PP&E> 115,767<F1>
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 863,371
<CURRENT-LIABILITIES> 469,624
<BONDS> 197,066
<COMMON> 3,061
0
0
<OTHER-SE> 138,343
<TOTAL-LIABILITY-AND-EQUITY> 863,371
<SALES> 587,568
<TOTAL-REVENUES> 587,568
<CGS> 539,997
<TOTAL-COSTS> 539,997
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 10,693
<INCOME-TAX> 2,602
<INCOME-CONTINUING> 7,132
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,132
<EPS-PRIMARY> 0.60
<EPS-DILUTED> 0.61
<FN>
<F1>SHOWN NET IN FINANCIAL STATEMENTS.
<F2>NOT SHOWN SEPARATELY UNDER MATERIALITY GUIDELINES.
</FN>
</TABLE>
