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EXHIBIT 10.1
CORPORATE BANKING SERVICES
Advice of Borrowing Terms
for
KRUG INTERNATIONAL (UK) LTD GROUP
From:
BLACKWATER VALLEY BUSINESS CENTRE
18 September 2000
[LOGO NATWEST]
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ADVICE OF BORROWING TERMS
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RELATIONSHIP OFFICE: Blackwater Valley Business Centre DATE: 18 September 2000
BORROWER(S) REGISTERED NUMBER:
Krug International (UK) Ltd Group 516171
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We intend that the facilities listed in Part 1 of the attached Facility
Schedule (the "on-demand facilities") should remain available to the
borrower(s) until 11 February 2001 and all facilities should be reviewed on or
before that date. The facilities are, however, subject to the following:
-- the terms and conditions below,
-- the specific conditions applicable to an individual facility as
detailed in the Facility Schedule,
-- the Security detailed in the attached Security Schedule, and
-- the attached General Terms.
ALL AMOUNTS OUTSTANDING ARE REPAYABLE ON DEMAND WHICH MAY BE MADE BY US AT OUR
DISCRETION AT ANY TIME AND THE FACILITIES MAY BE WITHDRAWN, REDUCED, MADE
SUBJECT TO FURTHER CONDITIONS OR OTHERWISE VARIED BY US GIVING NOTICE IN
WRITING.
PRECONDITIONS:
Preconditions which must be satisfied before facilities can be utilised:
-- A signed copy of this Advice of Borrowing Terms to be returned to us.
-- Receipt of a board resolution confirming: -
-- certification by the chairman of the meeting that a valid
quorum was present
-- acceptance of the terms and conditions of the facility
-- who is authorised to take action necessary (i.e. enter into
the facility documentation on behalf of the company) for the
purpose of the Advice of Borrowing Terms.
CONDITIONS:
The following conditions must be satisfied at all times while the facilities
are outstanding, but this will not affect our right to demand repayment at any
time:
-- Monthly management accounts including Balance Sheet and Profit and
Loss Statements to be provided to us within 21 days of the end of the
month to which they relate.
-- 10K and 10Q documents for Krug Inc. to be provided on an annual and
quarterly basis respectively.
-- Confirmation that the additional loan funding will not be utilised to
upstream cash to Krug Inc.
/s/ ROB COOK
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ROB COOK
Senior Corporate Manager
For and on behalf of National Westminster Bank Plc
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FACILITY SCHEDULE
PART 1 - FACILITIES REPAYABLE ON DEMAND:
LOAN: - BASE RATE
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ACCOUNT NUMBER: XXXXXXXX
NAME OF BORROWER Beldray Ltd
LIMIT: (Pound) 1,000,000
PURPOSE: Originally to assist with purchase of Beldray
premises. Additional (Pound) 250,000 added to loan to
address short/long term liabilities in balance sheet/
provide additional working capital
CURRENT REPAYMENT: Monthly payments of (Pound) 8,334 to achieve full
repayment over a ten year term
INTEREST: 1.25% above the Bank's Base rate.
ACCOUNT TO BE DEBITED: Current Account
INTEREST PAYABLE: Quarterly
ARRANGEMENT FEE: (Pound) 3,125 paid on draw of loan and debited to
account number XXXXXXXX
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INTEREST SET-OFF ARRANGEMENT
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THE INTEREST SET-OFF NAME: ACCOUNT NUMBER:
ACCOUNTS: Krug International (UK) Ltd XXXXXXXX
Beldray Ltd XXXXXXXX
Beldray Ltd Loan Account XXXXXXXX
Klippan Ltd XXXXXXXX
Bradley International Holdings Ltd XXXXXXXX
1st DEBIT INTEREST RATE 1.25% above the Bank's Base rate
RELATING TO BELDRAY LTD
LOAN ACCOUNT:
SET-OFF RATE: No charge
INTEREST/SET OFF Quarterly
PAYABLE:
ACCOUNT TO BE DEBITED: Beldray Ltd Current Account
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SETTLEMENT RISK
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NAME OF BORROWER: Beldray Ltd
LIMIT/FREQUENCY: (Pound) 411,000 per month
TYPE AND PURPOSE: BACS facility
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SETTLEMENT RISK
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NAME OF BORROWER: Klippan Ltd
LIMIT/FREQUENCY: (Pound) 60,000 per month
TYPE AND PURPOSE: BACS facility
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TERMINABLE INDEMNITIES
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NAME OF BORROWER: Beldray Ltd
LIMIT: (Pound)81,650
TYPE AND PURPOSE: HM Customs and Excise Guarantee
COSTS OF EXPIRY: Until further notice
INDEMNITY FEE: 1.5% p.o. payable quarterly in advance, to be debited
to account number XXXXXXXX
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TERMINABLE INDEMNITIES
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NAME OF BORROWER: Klippan Ltd
LIMIT: (Pound)15,000
TYPE AND PURPOSE: HM Customs and Excise Guarantee
COSTS OF EXPIRY: Until further notice
INDEMNITY FEE: 1.5% p.o. payable quarterly in advance, to be debited
to account number XXXXXXXX
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CHEQUE NEGOTIATIONS
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NAME OF BORROWER: Beldray Ltd
LIMIT: (Pound)10,000
PURPOSE: Negotiation of Foreign Cheques with Recourse
FEES: Subject to separate tariff, calculated on sterling
value of cheque. Information available upon request
or at the time the service is provided
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PART 2 - FACILITIES SUBJECT TO SEPARATE DOCUMENTATION:
The following facilities are made available on the terms of the separate
documentation between us.
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DATE AGREEMENT
NAME OF BORROWER FACILITY AND PURPOSE AMOUNT SIGNED
---------------- ------------------------ ----------------- ----------------
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Beldray Ltd Medium Term Loan - To be (Pound) 1,500,000 7 March 1995
repaid on draw down of new loan
Klippan Ltd Business Card (Pound) 6,000 10 December 1999
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SECURITY SCHEDULE
We rely on the security detailed below (and require additional security where
specified) to repay, on demand, all your current and future liabilities (both
actual and contingent) to us. These liabilities include, without limitation,
those incurred by you under the facility(ies) specified in the Facility
Schedule.
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DATE EXECUTED/NEW: SECURITY: GIVEN/TO BE GIVEN BY:
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26 June 1995 Mortgage Debenture Krug International (UK) Ltd
29 June 1995 Mortgage Debenture Beldray Ltd
2 October 1997 Mortgage Debenture Klippan Ltd
26 August 1997 Mortgage Debenture Hago Products Ltd
2 October 1997 Mortgage Debenture Bradley International Holdings Ltd
2 October 1997 Composite Cross Guarantee Krug International (UK) Ltd,
Beldray Ltd, Hago Products Ltd,
Klippan Ltd and Bradley
International Holdings Ltd
29 June 1995 First Legal Mortgage over Albion Works, Beldray Ltd
Mount Pleasant, Bilston, West Midlands
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GENERAL TERMS
THIS SECTION SETS OUT IN MORE DETAIL THE BASIS ON WHICH WE MAKE FACILITIES
AVAILABLE TO YOU. IT COVERS ISSUES SUCH AS HOW LIMITS AND INTEREST ARE
CALCULATED, HOW WE CAN VARY AGREED TERMS AND WHAT WE MEAN BY "ON DEMAND".
These General Terms apply to all on demand facilities listed in the Advice of
Borrowing Terms (the "AOBT"), but do not apply to those facilities which are
subject to separate documentation, unless such documentation expressly
incorporates these General Terms. In cases where the expression "you" includes
more than one person (for example joint account holders) it shall be taken to
refer to all or any one or more of you, and your obligations shall be joint and
several.
-- INDEPENDENT ADVICE. Unless we expressly agree in writing to do so we do
not hold ourselves out as providing advice on or considering the
general suitability of facilities for your particular circumstances
(including tax) and neither we nor our employees shall be liable for
any indications given as to such suitability. We make no warranties or
representations about the advisability of any underlying transaction
entered into by you. You should obtain independent professional advice
on such matters, and upon any security or guarantee required by us.
-- ACCEPTANCE. Any offer of a facility must be accepted within the time
period specified in the AOBT. We may, at our option, repeal any usage
of any of these facilities as acceptance (without amendment) of the
terms and conditions of the AOBT.
-- AVAILABILITY. Our normal practice is to review all credit facilities
periodically. Any reference in the AOBT to a review of, or availability
until, a future date are merely indicative of our current intention,
and we may, at our discretion, review on demand facilities at an
earlier date. Facilities which are not loans or overdrafts are offered
on the basis that there is no commitment on our part to enter into any
such facility with you. We may, at our absolute discretion, decide
whether a utilisation may be made and any conditions subject to which
utilisations may be made.
-- REPAYMENT. Notwithstanding any reference to review or availability or
repayment term in the AOBT, all facilities are repayable on demand
which we may make at our sole discretion at any time and may by notice
be withdrawn reduced or made subject to (further) conditions or
otherwise varied. You must ensure that we receive by way of repayment,
the full amount of any indebtedness irrespective of any taxes, duties
or charges, in immediately available funds in the currency in which the
facility is outstanding at the branch or office where the facilities
are provided.
-- VARIATION AND WAIVER. We may vary these General Terms by giving one
month's written notice to you. If a change in any currency of the
United Kingdom occurs (including introduction of the euro), the AOBT
and these General Terms will be amended to the extent we specify to
reflect the change in currency and put us in the same position, so far
as possible, that we would have been in if no change in currency had
occurred. If we refrain from exercising any of our rights this shall
not preclude us from exercising any rights at a later date.
-- LIMITS. The limits specified in the AOBT or the Facility Schedule for
each facility and/or each account (including any Group or Composite
Facility limits) must not at any time be exceeded. In addition, the
aggregate utilisation of any Composite and/or Group Limit specified for
any group of accounts and/or facilities must not be exceeded,
notwithstanding the total of any individual or sub limits allocated. If
we have agreed that there will be a gross limit for one or more
facilities, the means that the aggregate utilisation of those
facilities must not at any time exceed the gross limit. If we have
agreed that there will be a net limit for one or more facilities, this
means that the aggregate utilisation at those facilities, less the
aggregate amount of the cleared credit balances on the accounts
specified by us in the AOBT, will not exceed the net limit (if no
accounts are specified we may determine which accounts are utilised for
this purpose). We are not obliged to allow or continue to allow any
borrowing in excess of agreed facilities. Any reference to a particular
account will include any successor account.
-- INTEREST. All interest rates are variable. Interest is payable monthly
or quarterly (as detailed in the AOBT) on our usual charging days and
on final repayment of the indebtedness. Interest accrues on the daily
cleared debit balance on the account(s) concerned at the annual rate or
rates shown in the AOBT (both before and after demand and/or
judgement). It is calculated on the basis of a 365 day year for
sterling (and either a 365 or 360 day year for currencies other than
sterling or on such other basis as we may from time to time specify)
and the actual number of days elapsed and is compounded monthly or
quarterly. Our variable unarranged borrowing rate for the relevant
currency will apply to any indebtedness from time to time (i) in excess
of agreed facilities or (ii) outstanding after the expiry date of
agreed facilities or, in respect of (i) only such other interest rate
as we may specify.
-- CHANGES TO INTEREST. We may alter the basis on which interest is
calculated including the size of the interest margin charged over our
Base Rate or other published rate and/or the amount of any regular
repayments of facilities which are repayable on demand by providing you
with one month's written notice. As a change in our Base Rate or other
variable rate is not an alteration of the basis upon which interest is
calculated, no written notice need by given of such a change. Changes
in our Base Rate or other published rates take effect when made.
Details of current rates are available from any branch or office, and
are published in selected national newspapers. Omission to publish
details of any change in a newspaper shall not stop the change from
taking effect. For a currency account, written notice of changes to the
relevant Currency Base Rate will normally be given, although failure to
do so will not stop the change taking effect when made.
-- FEES. Fees quoted exclude charges for money transmission or similar
services which are either advised (i) separately, or (ii) at the time a
facility is used. All costs, charges and expenses incurred or suffered
by us, including legal costs and our internal management costs, arising
at any time in connection with any facility or with any related
security or guarantee are payable by you on demand.
-- UNCOVERED PAYMENTS. An "uncovered payment" is a payment where the
cleared credit balance or agreed credit facility is insufficient to
meet that payment and all other payments requested, disregarding
uncleared credits to that account. We do not accept any obligation to
make uncovered payments to third parties unless we have agreed to do so
in writing. We need not make any uncovered payment which is in excess
of any settlement risk limit.
-- SET OFF. We may, without notice, set off against any credit balances on
any of your account(s) (in any currency), your liability in respect of
any facilities (including any uncovered payment) and may combine
accounts. We are authorised to use all or any such credit balances to
buy such other currencies as may be necessary in order to exercise any
rights of set off to which we may be entitled.
-- APPROPRIATION AND LIEN. Where more than one debt is owing to us we may
use the whole or any part of any repayment to reduce or discharge the
principal amount of your indebtedness as we may select, to meet any
accrued interest or to discharge any other liabilities to us. We shall
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have a lien over securities of any kind and other items deposited by or on your
behalf with us (including, without limitation, cheques given to us for
selection).
-- SECURITY. Unless the AOBT expressly provides otherwise, any
mortgage, charge or debenture must be a first legal mortgage, charge or
debenture over the unencumbered title of the property in question. You
may not grant (or allow to be created) without our prior written
consent any other security interest in the property in question or part
with possession of it. We may, at our sole discretion, require from
time to time additional valuations (at your expense) by such valuer as
we may approve, of any or all of the assets held by us as security.
-- ENVIRONMENT. You represent and warrant (both now and in the future)
that you have and will comply in all material respects with any
applicable environmental law, regulation or code of practice
("environmental law") and with the terms and conditions of any
applicable environmental licences or other consents or approvals
required by environmental law ("environmental licences").
-- INFORMATION. You must provide us with any information which we may at
any time reasonable require, and must inform us of any material change
of facts or circumstances. You authorise us to disclose to your
auditors any such information concerning your accounts with us as they
may from time to time require.
-- CURRENCY ACCOUNTS. If in our opinion deposits in a currency are
unavailable to us at any time to fund a currency drawing then we will
not make a drawing available in that currency. All payments (including
interest) required to be made by you under a facility in a currency
other than sterling must be made in the currency of the drawing (The
"Agreed Currency") and by credit to our account with such banking
office as we may require.
Any amount payable by you which is received by us in a currency other
than the Agreed Currency, will be calculated by converting (at the
prevailing spot rate of exchange on such date and in such market as we
shall determine as being most appropriate) the Currency so received
into the Agreed Currency. If the amount received is less than the
relevant amount of the Agreed Currency then you will indemnify us for
the deficiency and for any losses we may sustain as a result. You will
in addition pay the costs of such conversion. All payments shall be
deemed to have been made on such date as we shall determine in
accordance with our normal practice from time to time.
-- CURRENCY EQUIVALENTS. The Sterling/Currency Equivalent of any amount
denominated in another currency shall be calculated by reference to the
Bank's then current spot rate of exchange for the purchase of the
relevant currency with the currency in which the facility is
denominated. We may calculate the aggregate Sterling/Currency
Equivalents of all drawings outstanding/proposed at any time to
determine compliance or otherwise with the relevant facility limit.
-- CONTINGENT LIABILITIES. You will, on demand, pay to us an amount equal
to the full face value of any contingent or future liabilities incurred
by us at your request (such as letters of credit, bonds or guarantees).
We may hold any such payment in our own name and may use it to meet
such liabilities. You must in any event indemnify us against such
liabilities and we will require you to execute a formal
counter-indemnity in our standard form.
-- NEGOTIATIONS. You agree that all foreign cheques submitted to us for
negotiation and/or collection will be dealt with on the basis that you
have good title to all cheques and that you agree to indemnify us
against all liabilities claims losses costs of expenses including
exchange fluctuations and agents' charges which may be imposed upon,
asserted against or incurred by us in any way relating to or arising
out of the negotiation and/or collection of cheques on your behalf. If
the cheque is subsequently returned unpaid you authorise us to debit
your account with the amount credited to your account plus any losses,
costs, expenses or charges which we may have incurred.
-- FORWARD EXCHANGE. Where we make a forward exchange facility available
to you, you confirm and understand that no forward purchase or sale of
foreign currency shall be made for investment purposes (see paragraph 8
of Schedule 1 of the Financial Services Act 1986) without our prior
written consent.
-- GENERAL.
a) Whenever facilities are subject to Part V of the Consumer
Credit Act 1974 additional documents and procedures may be
necessary before facilities can be drawn.
b) If we consider that any proposed payment or use of a facility
might be made for an unlawful purpose, then we may refuse to
make such a payment or allow such use.
c) We may give written notice or make demand by post or by hand
or by facsimile machine or by other form of electronic
communication. A notice or demand may be addressed to you at
your Registered Office or address or the place of business
last known to us and shall be deemed to have been received
when transmitted or (if posted) on the business day after
posting. We may use the facsimile number or electronic address
last known to us.
d) The relationship between us, these General Terms and the AOBT
are governed by English law and the English courts shall have
jurisdiction in respect thereof. However when we consider it
appropriate we may take proceedings against you in any other
court of competent jurisdiction (whether concurrently or not
with any other proceedings). These terms are in addition to
the usual terms which apply to the relationship between a bank
and its customer and to the operation of bank accounts
(whether in credit or debit) and to the terms of your mandate
with us and to all other consistent terms which may be implied
by law.
e) You must maintain a current account with us throughout the
life of any facilities and we may charge to your current
account all amounts, including interest, due in respect of any
facility.
