Date: 30 June 1999
Grand Hotel Group Limited
as Borrower
Cygnet Ventures Limited
as Junior Creditor
The Lenders
as Lenders
Arab Bank plc
as Administrative Agent
Arab Bank plc
as Security Agent and Trustee
Arab Bank plc
as Hedge Provider
Inter-Creditor Agreement
Field ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
Contents
No Heading Page
Clauses
1. Interpretation 2
1.1 Defined Terms 2
1.2 Construction of certain terms 9
2. Consents 10
2.1 Creditors 10
2.2 Borrower 10
2.3 Hedging Arrangements Charge 10
3. Subordination 10
4. Undertakings of Cygnet 11
5. Documentation 11
6. Undertakings of Cygnet 12
7. Non-Permitted Recoveries 13
8. Payments 13
8.1 Payments under the Hedging Arrangements 13
8.2 Order of Payments 14
8.3 Loan Agreement and Charges Prevail 14
9. Agreed Priorities and Application 15
10. Retention of Property Deeds, Custody of Assets and Insurance 16
10.1 Deeds etc 16
10.2 Insurance Proceeds 17
11. Unenforceability 17
12. Appointment of Receiver 17
12.1 Consultation 17
12.2 Crystallisation 19
12.3 Co-operation by ▇▇▇▇▇▇ ▇▇
▇▇. Release of Secured Assets 20
13.1 Prior to the Enforcement Date 20
13.2 After the Enforcement Date 20
14. Effective Security 20
14.1 Creditors' Remedies 20
14.2 Purchaser 21
15. Indulgence 21
16. Disclosure 21
17. Memorandum 21
18. HM Land Registry 21
19. Discharge 21
20. Assignment/Representations 22
21. Waiver of Defences 23
22. Notices 24
23. Variation 25
24. Counterparts 26
25. Law and Jurisdiction 26
1. First Schedule 27
2. Second Schedule 28
3. Third Schedule 29
Signatories 30
THIS INTER-CREDITOR AGREEMENT is made the 30th * day of June 1999
BETWEEN:-
(1) GRAND HOTEL GROUP LIMITED, as borrower under the Loan Agreement defined
below;
(2) CYGNET VENTURES LIMITED;
(3) THE LENDERS whose names are specified in the First Schedule;
(4) ARAB BANK plc, in its capacity as Administrative Agent under the Loan
Agreement;
(5) ARAB BANK plc, in its capacity as Security Agent under the Loan
Agreement;
(6) ARAB BANK plc, in its capacity as party to the Hedging Arrangements; and
WHEREAS:
(A) By the Loan Agreement the Lenders have agreed to make available to the
Borrower a loan facility of up to (pound)10,000,000 on the terms stated
therein.
(B) In accordance with the Loan Agreement the Borrower has also entered into
an interest rate management agreement with the Hedge Provider the benefit
of which has been assigned to the Security Agent as trustee for the
Senior Creditors.
(C) The Borrower has created security over various assets as security for the
performance by the Borrower of its obligations under the Loan Agreement
and the other Security Documents.
(D) By the Facility Letter Cygnet has agreed to make available to the
Borrower a loan facility of (pound)100,000 and to provide the Indemnity
on the terms stated therein.
--------
* Inserted in manuscript in executed Agreement
1
(E) The Borrower has issued a Loan Stock Instrument (the "Loan Stock
Instrument") to Butlin's Limited ("Butlin's") as part consideration for
the price payable to Rank under an asset sale agreement relating to
Butlin's Provincial Hotels and the Loan Stock Instrument has been secured
by the issue to Butlin's of a Standby Letter of Credit (the "Standby
Letter of Credit") by Citibank, N.A in the maximum principal amount of
(pound)10,400,000.
(F) ▇▇ ▇▇▇▇▇ has entered into a facility letter (the "Citibank Facility
Letter") in respect of the issue of the Standby Letter of Credit.
(G) Cygnet has undertaken by the Indemnity to indemnify ▇▇ ▇▇▇▇▇ against any
liability incurred by ▇▇ ▇▇▇▇▇ to Citibank, N.A. pursuant to the Citibank
Facility Letter.
(H) ▇▇▇▇▇▇ has entered into a mortgage of shares in respect of 5,820,000
ordinary shares in ML Laboratories Plc (the "▇▇▇▇▇▇ Charge") in favour of
Citibank, N.A. as security for the Standby Letter of Credit and Cygnet
has also undertaken by the Indemnity to indemnify ▇▇▇▇▇▇ against any
liability incurred by ▇▇▇▇▇▇ to Citibank, N.A. pursuant to, or any loss
to ▇▇▇▇▇▇ as the result of the exercise of any rights by Citibank, N.A.,
under the ▇▇▇▇▇▇ Charge.
(I) The Borrower has granted security to Cygnet as security for its
obligations under the Facility Letter.
(J) The principal purpose of this Deed is to regulate the ranking of claims,
the priority of security interests and the enforcement of rights between
the Lenders, the Hedge Provider and Cygnet.
NOW IT IS HEREBY AGREED as follows:-
1. Interpretation
1.1 Defined Terms
In this Deed, in addition to terms defined in the Recitals, unless the
context otherwise requires the following words and expressions shall have
the following meanings:-
"Administrative Agent" means Arab Bank plc in its capacity as
administrative agent for the Lenders and the Hedge
Provider;
2
"Agents" means the Administrative Agent and the Security
Agent, and "Agent" means either of them, as the
context requires;
"Borrower" means Grand Hotel Group Limited, a company
registered under the Laws of England and Wales
under number 3657769 whose registered office is
situate at Derbyshire House, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇;
"Charges" means the Senior Charges and the Junior Charge;
"Creditors" means the Senior Creditors and Cygnet and
"Creditor" means any of them;
"Crystallisation" means first crystallisation of any of the floating
charges contained in the Charges whether arising
by operation of law or effected pursuant to the
express provisions of the relevant Charge and
"Crystallise" and "Crystallised" shall have a
corresponding meaning;
"Cygnet" Cygnet Ventures Limited, a company registered
under the Laws of Guernsey under number 35357
whose registered office is at National ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇;
"Enforcement Date" means the earliest of:-
(i) the first date on which any Creditor (or the
Security Agent on its or their behalf in the
case of the Senior Lenders) appoints a
Receiver of all or any part of the property
of the Borrower or
3
takes any other step to enforce the Charges
or any part thereof;
(ii) the first date on which the Borrower is wound
up voluntarily or ordered to be wound up
compulsorily;
"Facility Letter" means the facility letter dated 28 June 1999 from
Cygnet to the Borrower;
"Hedge Provider" means Arab Bank plc in its capacity as
counterparty to the Hedging Arrangements;
"Hedge Provider's means the beneficial interest of the Hedge
Security Interest" Provider and the Agents (in their capacities as
agents for the Hedge Provider) in the Senior
Charges;
"Hedge Provider's means the aggregate amount of all monies due from
Indebtedness" time to time to the Hedge Provider (in its
capacity as such) together with any interest
accrued due and payable thereon and any
commission, fees, costs and expenses payable by
the Borrower under the Security Documents;
"Hedging
Arrangements" means an agreement in the form of the
International Swaps and Derivatives Association
Master Agreement (Multicurrency Cross Border) 1992
Edition (the "ISDA Agreement") entered into
between the Hedge Provider and the Borrower and a
confirmation between the Hedge Provider and the
Borrower and a confirmation between the Hedge
Provider and the Borrower evidencing or
constituting on interest rate management agreement
under the ISDA
4
Agreement, both the ISDA Agreement and the
confirmation being dated 30 June * 1999;
"Indemnity" means the deed of indemnity executed by Cygnet in
favour of ▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇, as referred to in
Recitals (G) (H) and (I);
"Junior Charge" means the debenture details of which are specified
in the Third Schedule and the assignments,
mortgages, charges and other security interests
created thereby or pursuant thereto and made
between the Borrower and Cygnet and any other
security interest now or hereafter securing any
Junior Indebtedness including (for the avoidance
of doubt) any fixed charge arising on the
Crystallisation of any charges created thereby);
"Junior Indebtedness" means all present and future sums, liabilities and
obligations payable or owing by the Borrower to
Cygnet (whether actual or contingent, jointly or
severally or otherwise howsoever) including,
without limitation, the principal amount and all
other monies (including interest, commissions and
fees, legal and other costs and expenses and any
payment by way of indemnity or counter-indemnity)
due from time to time to Cygnet from the Borrower
under the Facility Letter, and any other liability
or obligation under or secured by the Junior
Charge;
"Lenders" means the bank or banks and financial institutions
set out in the First Schedule and includes their
successors in title,
--------
* Inserted in manuscript in executed Agreement
5
Transferees and assignees under the Loan
Agreement;
"Lenders'
Indebtedness" means the aggregate principal amount and all other
monies (including interest, commissions and fees,
legal and other costs and expenses) due from time
to time to the Agents and the Lenders by the
Borrower under the Loan Agreement and the other
Security Documents;
"Lenders' Security
Interest" means the beneficial interest of the Lenders and
of the Agents (in their capacity as agents for the
Lenders) in the Senior Charges;
"Loan Agreement" means a loan agreement dated 30 June* 1999
herewith and made between the Borrower (1) the
Lenders (2) Arab Bank plc in its capacity as
administrative agent for the Lenders and the Hedge
Provider (3) Arab Bank plc in its capacity as
security agent and trustee for the Senior
Creditors (4) and Arab Bank plc in its capacity as
hedge provider (5);
"▇▇▇▇▇▇" means ▇▇▇▇▇▇ Laboratories Limited (Registered in
Jersey) whose registered office is at ▇▇-▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ Channel Islands;
"▇▇ ▇▇▇▇▇" means ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ of La Vignette, Rue la
Vignette, St Saviour, Jersey, Channel Islands;
"Permitted Demand" (a) at any time prior to the making of any demand
for the repayment of the Senior Indebtedness
pursuant to the Loan Agreement
--------
* Inserted in manuscript in executed Agreement
6
and prior to the appointment of a Receiver of
the Borrower by or on behalf of the Senior
Lenders (or any of them) or the commencement
of any liquidation or administration of the
Borrower, a demand upon the Borrower which
states that repayment of the amount or
liability demanded is subject to the terms of
this Deed; and
(b) at any other time, any demand made upon the
Borrower,
Provided always that, in each such case, such
demand is without prejudice to the subordination
of the Junior Indebtedness to the Senior
Indebtedness herein contained and to the other
terms of this Deed.
"Permitted Payments" means payments and receipts of scheduled interest,
commissions and costs payable under the Facility
Letter and principal of up to (pound)100,000
payable under the Facility upon expiry of the
period specified in paragraph 3 of the Facility
Letter) but only so long as no Senior Indebtedness
is due and unpaid and no Event of Default or
Potential Event of Default has occurred and is
continuing unremedied under the Loan Agreement and
for the avoidance of doubt no payment which is or
represents (directly or indirectly) or is any way
attributable to or liability which arises in
connection with or as a result of the payment of
the principal amount of (pound)10,400,000 (or any
part thereof) represented by the Loan Stock
Instrument and/or the Standby Letter of Credit
shall be a Permitted Payment notwithstanding the
terms of the
7
Facility Letter, to the intent that no payment
shall be made in respect of the said principal
amount of (pound)10,400,000 until the Senior
Indebtedness has been irrevocably paid in full;
"Receiver" means a receiver, receiver and manager,
administrative receiver, administrator or other
person appointed to carry out the duties of any
such person;
"Security Agent" means Arab Bank plc in its capacity as security
agent and trustee for the Secured Parties;
"Security Interests" means the Lenders' Security Interest and the Hedge
Provider's Security Interest;
"Senior Charges" means the legal charges and debentures, the
security agreements and the other instruments of
which details are specified in the Second Schedule
and the assignments, mortgages, charges and other
security interests created thereby or pursuant
thereto and made between the Borrower and the
Security Agent as agent and trustee for the Senior
Creditors and any other security interest now or
hereafter securing any Senior Indebtedness
including (for the avoidance of doubt) any fixed
charge arising on the Crystallisation of any
charges created thereby;
"Senior Creditors" means the Lenders, the Agents and the Hedge
Provider and "Senior Creditor" means any of them;
"Senior Indebtedness" means the Lenders' Indebtedness and the Hedge
Provider's Indebtedness.
8
1.2 Construction of certain terms
In this Deed unless the context otherwise requires:
(a) terms defined in the Loan Agreement have, unless expressly defined
in this Deed, the same meaning in this Deed;
(b) clause and schedule headings are for ease of reference only;
(c) references to a Clause or Schedule shall be construed as a
reference to a clause hereof or schedule hereto;
(d) a sub-clause shall be construed as a reference to a sub-clause of
the clause in which such reference appears;
(e) a paragraph shall be construed as a paragraph of the sub-Clause in
which such reference appears;
(f) any reference to any statute or regulation shall be construed as a
reference to such statute as regulation as the same may have been,
or may from time to time be, amended or re-enacted;;
(g) the singular shall include the plural and vice versa
(h) a reference to a person includes bodies corporate and
unincorporate;
(i) a reference to this Deed, the Loan Agreement, the Indemnity, the
Charges (or any of them) or any other document shall be construed
as a reference to this Deed or, as the case may be, the Loan
Agreement or such other document as the same may have been or may
from time to time by, amended, supplemented or novated;
(j) a reference to a person (including the parties hereto) includes
its successors and assigns and persons deriving title through or
under such person. Without limitation, a reference to the Agents
(or either of them) includes any successor appointed under the
Loan Agreement; and
(k) a reference in this Deed to a creditor's enforcing a security
interest include references to:
9
(i) its retaining or applying in or towards the discharge of a
liability of the Borrower any amount which it receives by
virtue of an assignment of, or other security interest
over, an insurance policy or receivable owned by the
Borrower; and
(ii) taking or retaining possession of any moveable property,
including any negotiable instrument, document of title or
other document owned by the Borrower.
2. Consents
2.1 Creditors
The Senior Creditors consent to the execution by the Borrower of the
Junior Charge and, subject to the terms of this Deed, to the existence of
the Junior Indebtedness.
2.2 Borrower
The Borrower hereby agrees to the terms of this Deed and undertakes with
the Creditors, to observe the provisions hereof and not to do or omit to
do anything which may prejudice or affect the enforcement of such
provisions, but none of the undertakings in this Deed are given to, or
shall be enforceable by, the Borrower.
2.3 Hedging Arrangements Charge
The Hedge Provider confirms that notwithstanding the provisions of
Section 7 (Transfer) of the ISDA Agreement it consents and agrees to the
execution of the Hedging Arrangements Assignment in favour of the
Security Agent as agent and trustee for the Senior Lenders.
3. Subordination
The rights of Cygnet in respect of the Junior Indebtedness are
subordinated to the Senior Indebtedness and accordingly payment by the
Borrower of any amount of the Junior Indebtedness (other than Permitted
Payments) is conditional upon the Borrower having irrevocably paid in
full all of the Senior Indebtedness.
10
4. Undertakings of the Borrower
So long as the Senior Indebtedness is outstanding the Borrower will not,
without the prior written consent of the Senior Creditors:
(a) secure all or any part of the Junior Indebtedness other than by
way of the Debenture specified in the Third Schedule;
(b) make a loan or provide credit to or acquire any ▇▇▇▇ ▇▇▇▇ or
security issued by Cygnet, ▇▇ ▇▇▇▇▇ or ▇▇▇▇▇▇;
(c) redeem, purchase or otherwise acquire any of the Junior
Indebtedness;
(d) save by means of Permitted Payments, repay or prepay any principal
amount of, or pay any interest, fees or commissions (but without
prejudice to accrual thereof) on, or by reference to, or on
account of the Junior Indebtedness;
(e) take or omit to take any action whereby the subordination of the
Junior Indebtedness or any part thereof to the Senior Indebtedness
would be terminated or impaired;
(f) incur any Junior Indebtedness other than under and on the terms of
the Junior Charge and the Facility Letter and will procure that at
all times the maximum principal amount of or contingent liability
in respect of the Junior Indebtedness shall not exceed the lesser
of (1) the principal amount due under the Facility Letter
aggregated with a sum equal to the amount for the time being
unpaid under the Loan Stock Instrument and (2) (pound)10,500,000,
together with, in each case, any and all interest, costs, fees and
expenses payable in connection therewith.
(g) give notice of any assignment or any other security created by the
Junior Charge to any other person and if, notwithstanding but
without prejudice to the foregoing, any such notice is given, to
join with the Senior Lenders in notifying such person of the
priority afforded to the Senior Charges by this Deed.
5. Documentation
This Deed, the Facility Letter, and the Junior Charge and the Indemnity
form the entire agreement as to the Junior Indebtedness.
11
If there is any inconsistency between the terms of this Deed and the
terms on which the Junior Indebtedness was or is incurred by the
Borrower, the terms of this Deed shall prevail. If there are any other
terms relating to the Junior Indebtedness existing at the date hereof and
not comprised in this Deed, the Facility Letter the Indemnity and the
Junior Charge, such terms shall be of no further force and effect. Any
amendment to the Junior Charge the Facility Letter or the Indemnity made
or purported to be made without the consent of the Senior Creditors shall
be void.
6. Undertakings of Cygnet
So long as the Senior Indebtedness is outstanding, Cygnet will not
without the prior written consent of the Senior Creditors or save as
expressly otherwise permitted by this Deed:
(a) assign or purport to assign to any person the whole or any part of
the Junior Indebtedness;
(b) save in respect of Permitted Payments, purport to set off at any
time any amount of the Junior Indebtedness against any amount
payable by Cygnet to the Borrower;
(c) save in respect of Permitted Payments or by a Permitted Demand,
attempt to obtain repayment from the Borrower or prepayment or
payment on account of principal or payment of any interest, fees
or commissions (but without prejudice to accrual thereof) on, or
by reference to, any of the Junior Indebtedness;
(d) petition for, or vote in favour of, any resolution or take any
other action whatsoever for, or which may lead to, the
administration, winding-up or dissolution of the Borrower;
(e) take or omit to take any action whereby the subordination of the
Junior Indebtedness or any part thereof to the Senior Indebtedness
would be terminated or impaired;
(f) permit any Junior Indebtedness to arise other than under and on
the terms of the Facility Letter or the Junior Charge and will
procure that at all times the maximum principal amount of or
contingent liability in respect of the Junior Indebtedness shall
not exceed the lesser of (1) the principal amount due under the
12
Facility Letter aggregated with a sum equal to the amount for the
time being unpaid under the Loan Stock Instrument and (2)
(pound)10,500,000, together with, in each case, any and all
interest, costs, fees and expenses payable in connection
therewith;
(g) amend or supplement the Indemnity;
(h) notwithstanding Clause 3 of the Indemnity (but without prejudice
to Clause 3 of this Deed and any other provision of this Deed by
which the Junior Indebtedness is subordinated to the Senior
Indebtedness) not to make any payment under the Indemnity without
due enquiry as to whether the amount demanded from Cygnet under
the Indemnity relates to a payment which is properly due and
payable under any Undertaking (as defined in the Indemnity);
(i) give notice of any assignment or other security created by the
Junior Charge to any other person and if, notwithstanding and
without prejudice to the foregoing, any such notice is given to
join with the Senior Lenders in notifying such person of the
priority afforded to the Senior Charges by this Deed.
7. Non-Permitted Recoveries
If, notwithstanding (and without prejudice to) Clauses 3, 4 and 6, Cygnet
shall receive any payment from the Borrower in respect of the Junior
Indebtedness (save for Permitted Payments) before the Senior Indebtedness
has been discharged in full (whether before or after the commencement of
any liquidation or other insolvency or rescheduling or restructuring of
debts of the Borrower) then to the extent of the outstanding Senior
Indebtedness Cygnet will hold any sums so received and its entitlement in
respect thereof upon trust for the Senior Creditors and will pay the same
to the Senior Creditors forthwith upon receipt.
8. Payments
8.1 Payments under the Hedging Arrangements
(a) All payments (after the application of Section 2(c) (Netting) of
the ISDA Agreement, where applicable) falling due from the Hedge
Provider to the Borrower under the Hedging Arrangements shall be
paid by the Hedge Provider to the
13
Security Agent (or retained in the capacity of Security Agent
where the Hedge Provider and the Security Agent are the same
person) pursuant to the Hedging Arrangements Charge (unless and
until the Hedging Arrangements Charge has been released by the
Security Agent).
(b) All payments (after the application of Section 2(c) (Netting) of
the ISDA Agreement, where applicable) falling due from the
Borrower to the Hedge Provider under the Hedging Arrangements
shall be paid by the Borrower to the Security Agent.
(c) The Agents shall utilise all payments specified in Clause 8.1(a)
by the Security Agent paying the same to the Administrative Agent
and by the Administrative Agent utilising or appropriating the
same in or towards payment of interest payable on the Loan
pursuant to the Loan Agreement or otherwise in or towards payment
or discharge of the obligations of the Borrower to the Agents and
the Lenders under the Loan Agreement.
(d) Unless and until an Event of Default shall have occurred pursuant
to the Loan Agreement the Security Agent shall utilise all
payments specified in Clause 8.1(b) by paying the same to the
Hedge Provider (or retaining the same in the capacity of Hedge
Provider where the Security Agent and the Hedge Provider are the
same person) to retain for its own account.
(e) All the parties hereby irrevocably instruct and authorise the
Hedge Provider, the Security Agent, the Administrative Agent and
the Borrower to effect payments in accordance with the foregoing
provisions.
8.2 Order of Payments
Unless and until an Event of Default shall have occurred pursuant to the
Loan Agreement payments or utilisations pursuant to Clause 8.1(d) shall
be made in priority to payments to or by the Agents for the account of
the Lenders in respect of interest falling due under the Loan Agreement.
8.3 Loan Agreement and Charges Prevail
14
Nothing contained in this Clause 8 shall as between the Senior Creditors
and the Borrower vary any matters agreed between the Senior Creditors and
the Borrower and contained in the Loan Agreement or the Senior Charges.
9. Agreed Priorities and Application
9.1 The Creditors respectively confirm that the details of their respective
Charges specified in the Second Schedule and the Third Schedule (and, in
the case of Cygnet, the Facility Letter and Indemnity) and the copies
thereof provided to the other parties to this Deed (as appended to this
Deed) are true, complete and accurate in all respects and the Charges
have to be best of their knowledge and belief not Crystallised. It is
hereby agreed and declared between the Creditors that for the purpose of
this Deed (but not so as to prejudice or affect any rights or remedies of
any Creditor against the Borrower), the priorities of the Charges and the
Security Interests shall rank in point of security as between the
Creditors so that:-
(a) the Senior Charges shall rank prior to the Junior Charge in all
respects; and
(b) the Lenders' Security Interest shall in respect of the Lender's
Indebtedness rank in priority to the Hedge Provider's Security
Interest.
9.2 Accordingly upon enforcement of each or any of the Charges all monies
and/or assets received in respect thereof by the Creditors (or, in the
case of the Senior Lenders, either of the Agents on their behalf) or any
Receiver appointed by or at the request of any or all of them shall be
applied (after retention of sufficient monies to make payment in
satisfaction of the costs, charges, expenses and liabilities incurred by
the Receiver, including the remuneration of the Receiver) first in or
towards satisfaction of the Lenders' Indebtedness in priority to any
payment to the Hedge Provider or Cygnet or any other person, secondly
(subject only to payment of the Lenders' Indebtedness) shall be next
applied in or towards satisfaction of the Hedge Provider's Indebtedness
in priority to any payment to Cygnet or any other person, and thirdly
(subject to payment of the Lenders' Indebtedness and the Hedge Provider's
Indebtedness) shall next be applied by payment to Cygnet in or towards
satisfaction of the Junior Indebtedness.
15
9.3 The priorities set forth above shall rank as provided in this Clause
notwithstanding:-
(a) the nature of the Charges and the Security Interests and the
respective dates or times of their execution, creation or
registration;
(b) the respective date or dates or time or times at which any of the
Creditors received notice of any of the Charges held by the other
Creditors and the respective date or dates or time or times at
which monies may be or have been advanced or become owing or
payable or secured under the Charges;
(c) the appointment of any liquidator, Receiver, administrator or
similar officer in relation to the Borrower; and
(d) any other provisions contained in the Charges or the other
Security Documents.
10. Retention of Property Deeds, Custody of Assets and Insurance
10.1 Deeds etc
(a) The Creditors agree that where the requirements of the Charges
conflict as to the deposit of deeds and documents, the relevant
deeds and documents, if required to be deposited under the Senior
Charges (or any of them), shall be held with and deposited with
the Security Agent during the subsistence of the Senior Charges
(or any of them) and such deposit shall be deemed to be a
sufficient performance of any obligation of the Borrower to
deposit deeds and documents under the Charges.
(b) For the avoidance of doubt and for the purposes of the Senior
Charges, the Lenders, the Agents and the Hedge Provider confirm
that the Security Agent is approved as a custodian of any assets
charged to the Security Agent as agent and trustee for the Agents,
the Lenders and the Hedge Provider and the Security Agent hereby
confirms that it holds and will hold such assets and the accounts
to which they are credited in accordance with and subject to the
Senior Charges and the Lenders' Security Interest, the Hedge
Provider's Security
16
Interest and this Deed. Forthwith upon any discharge of the
Lenders' Security Interest in respect of any such property or
assets the Security Agent will unless and until otherwise
instructed by the Hedge Provider hold such assets for the Hedge
Provider in accordance with the Senior Charges.
10.2 Insurance Proceeds
In the event of any monies being received prior to the Enforcement Date
under any insurance covering any of the property or assets charged under
the Charges such monies shall (subject to the rights of any landlord or
the holder of any prior encumbrance or the obligation to any tenant) be
applied in replacing, restoring or reinstating the property or assets
destroyed, damaged or lost unless the Majority Lenders shall otherwise
direct in writing.
11. Unenforceability
If any of the Charges shall be released or be or become wholly or partly
invalid or unenforceable the Creditor in whose favour such Charges is
given shall itself bear the loss resulting and shall not be entitled to
share in moneys derived from the assets over which it has no effective
security but the Creditors shall not themselves challenge or question the
validity or enforceability of the Charges.
12. Appointment of Receiver
12.1 Consultation
If any Senior Creditor wishes pursuant to the powers in the Senior
Charges to appoint a Receiver of the Borrower or to exercise its power of
sale under or otherwise enforce any of the Senior Charges or wishes the
Security Agent to do so it shall forthwith inform the other Creditors and
endeavour to agree with them on the method by which the Charges will be
enforced. In such event the Creditors shall consult together with a view
to agreeing upon the method of enforcement and where appropriate upon a
suitable person or persons to be appointed as Receiver (and such
consultation and agreement shall also precede the removal of any such
agreed Receiver and any appointment of a successor) and shall co-operate
with each other in ensuring that the net proceeds after deduction of the
expenses of realisation are paid in accordance with the provisions of
this Deed provided that
17
(a) nothing herein contained shall prevent the Lenders, or the
Security Agent (but not the Hedge Provider or Cygnet) so
appointing a Receiver of the Borrower forthwith without such
consultation or agreement where the appointor reasonably believes
that the immediate appointment of a Receiver is necessary to
protect its interests (or in the case of the Security Agent, the
interests of the Senior Creditors or any of them) but the
appointor shall as soon as practicable thereafter inform the other
Creditors of such appointment and consult with the other Creditors
with a view to the retention in office of such Receiver or (if not
agreed) to the removal of such Receiver and the appointment of a
successor;
(b) in case of dispute between the Majority Lenders and the other
Creditors or any of them the Majority Lenders shall be entitled to
determine whether or not a Receiver is appointed and whether or
not any power of sale is exercised or the security is otherwise
enforced and the Hedge Provider shall not be entitled to appoint a
Receiver or to otherwise enforce the Charges without the consent
of the Majority Lenders;
(c) no action taken by the Senior Creditors or any of them or by a
Receiver appointed by any of them shall be invalid or ineffectual
because of any failure to consult in accordance with this Clause;
(d) for the avoidance of all doubt, until the Senior Indebtedness has
been irrevocably paid in full Cygnet shall not without the prior
written specific consent of the Senior Creditors be entitled to
take any step to enforce the Junior Indebtedness (including, but
without limitation, by the exercise of its power of sale or by
appointing a Receiver), nor to serve on the Borrower a demand for
payment of or an account of any Junior Indebtedness (other than a
Permitted Demand), nor make any direction or requirement
whatsoever under Clause 6 of the Junior Charge and in favour of
the Senior Creditors but not the Borrower hereby waives the
requirement under that clause for payment of Charged Debts (as
defined in the Junior Charge) into a particular account to the
extent inconsistent with the terms of the Senior Charges or any
agreement or arrangement from time to time between the Borrower
and the Security Agent.
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12.2 Crystallisation
Each Creditor hereby covenants with each of the other Creditors to notify
each of them forthwith in writing after it becomes aware of the
Crystallisation of any charge contained in its Charges. Cygnet covenants
with the Senior Creditors (while any Senior Indebtedness remains
outstanding) not without the prior written specific consent of the Senior
Creditors to take any step (whether under Clause 7 of the Junior Charge
or otherwise) which would or might Crystallise the floating charge
created under the terms of the Junior Charge provided that this Clause
12.2 shall not prevent Cygnet serving a Permitted Demand on the Borrower.
12.3 Co-operation by Cygnet
(a) Cygnet shall co-operate with the Senior Creditors in realising the
assets charged to them under the Senior Charges or otherwise
exercising their Security Interests and shall execute any deeds or
documents and take any steps which the Senior Creditors or any of
them may reasonably request for the purpose of enabling or
facilitating any exercise by the Senior Creditors or any of them
or by any Receiver appointed by or on their behalf, of any of
their or his powers under the Senior Charges or the general law or
for any similar or related purpose including, but without
limitation, any deed or document which the Senior Lender may
request for the purpose of ensuring that (or avoiding any
uncertainty that) a person who is to acquire an asset covered by
the Senior Charges upon any exercise of the security conferred by
the Senior Charges (whether by sale by the Security Agent, any
Receiver or otherwise) will acquire good title to such asset free
from the Junior Charge. Without limitation, Cygnet hereby
irrevocably consents to the sale of the assets charged by the
Senior Charges by the Security Agent or by any Receiver appointed
by the Security Agent or any other Senior Lender for the purpose
of any restriction or other entry which may be made on the title
to any of the said assets at HM Land Registry and by which such
consent is required.
(b) Cygnet irrevocably and by way of security appoints the Security
Agent as its attorney and on its behalf and in its name (or
otherwise) to execute any deeds or documents or take any other
steps which it is obliged to execute or take under sub-clause (a).
19
13. Release of Secured Assets
13.1 Prior to the Enforcement Date
If at any time prior to the Enforcement Date the Loan or any part thereof
is irrevocably and unconditionally repaid or prepaid in whole and in
accordance with and subject to the terms of the Loan Agreement and upon
such repayment and in accordance with such terms the Lender's Security
Interest (or any part of it) is to be released the Agents, the Lenders,
and the Hedge Provider will release the Senior Charges subject to and
conditionally upon:
(a) the Borrower paying to the Hedge Provider any amount which may be
payable pursuant to Clause 17 of the Loan Agreement in respect of
such prepayment;
(b) the rights (if any) of the Hedge Provider in accordance with the
terms of this Deed in the proceeds of any sale or other disposal
of the Secured Assets being preserved to the Hedge Provider's
reasonable satisfaction following such prepayment if the Hedging
Arrangements then remain in effect; and
(c) no Event of Default having then occurred.
13.2 After the Enforcement Date
If at any time after the Enforcement Date any such repayment or
prepayment shall occur as is contemplated in Clause 13.1 and the amount
realised from the enforcement of the Charges is insufficient to discharge
in full the Lender's Indebtedness and the Hedge Provider's Indebtedness,
the release by the Hedge Provider shall not be subject to the
satisfaction of the condition specified in Clause 13.1 above, and the
Hedge Provider shall be obliged to release the Secured Assets to enable
the same to be realised.
14. Effective Security
14.1 Creditors' Remedies
No provision contained in this Deed shall as between the Borrower and any
Creditor affect or prejudice any rights or remedies of any Creditor under
the Charges which shall remain in full force and effect as effective
continuing securities for all moneys obligations and
20
liabilities therein mentioned subject only to the ranking of the Security
Interests and the Charges as herein provided.
14.2 Purchaser
No purchaser dealing with any Senior Creditor or any Receiver appointed
by any Senior Creditor shall be concerned in any way with the provisions
of this Deed but shall assume that the Creditors or any such Receiver
acting on behalf of them as the case may be are acting in accordance with
the provisions of this Deed.
15. Indulgence
Each Creditor shall (subject in the case of Cygnet to Clauses 3,4 and 6)
be entitled until the date upon which a Receiver is appointed without
reference to the others to grant time or indulgence and to release
compound or otherwise deal with or receive moneys from any person liable
or to deal with exchange release modify or abstain from perfecting or
enforcing any of the rights which it may now or hereafter have against
the Borrower or otherwise without prejudicing its rights under this Deed.
16. Disclosure
The Creditors shall be at liberty from time to time to disclose to each
other information concerning the affairs of the Borrower in such manner
and to such extent as they shall from time to time desire.
17. Memorandum
Each Creditor agrees to endorse a Memorandum of this Deed upon the
Charges and acknowledges the right of each of the other Creditors to
production and to delivery of a copy of the same.
18. HM Land Registry
The parties to this Deed hereby apply to the Registrar to note in the
appropriate manner at HM Land Registry the priority arrangements agreed
in this Deed in so far as the same affect any registered land comprised
in the Charges where an entry relating to the Charges has been made on
the register in accordance with the terms of this Deed.
19. Discharge
21
This Deed shall cease to have effect as regards any Creditor when the
Security Interest under the Charge or Charges (as the case may be) which
have been created in its respective favour is/are finally discharged but
shall remain in full force and effect until such time.
20. Assignment/Representations
(a) Each Creditor covenants with each of the other Creditors not (save
as permitted in this Clause) to assign or transfer the benefit of
its Charges unless the assignee or transferee first agrees in
writing with the Creditor transferring its interest and the other
Creditors to be bound by the provisions of this Deed including
this provision. This provision shall apply to each and every
successive assignment or transfer. For the avoidance of doubt,
notwithstanding the foregoing, there shall be no restriction on
the ability of the Lenders assigning or transferring their
interests under the Loan Agreement and the Security Documents in
accordance with their respective terms.
(b) Cygnet shall not effect any such transfer without the consent of
the Majority Lenders.
(c) Cygnet warrants and represents to the Senior Creditors that:
(i) this Deed is binding on it in all respects;
(ii) this Deed is within its power and has been duly authorised;
and
(iii) this Deed does not and will not breach any instrument,
agreement or undertaking or violate any applicable law,
rule or regulation;
(iv) all consents and authorisations necessary in relation to
this Deed have been obtained and are in force;
(v) during the three months before the date of this Deed Cygnet
has not entered into any arrangement which would have
contravened this Deed if it had been entered into after the
date of this Deed; and
22
(vi) it is at the date of this Deed, and will remain at the date
of any transfer referred to in sub-clause (b) the
registered holder of not less than 85% of the issued share
capital in the Borrower.
(d) Cygnet and the Borrower jointly and severally warrant and
represent to the Senior Lenders that:
(i) the Borrower has not given any form of security to ▇▇ ▇▇▇▇▇
or ▇▇▇▇▇▇ which secures any obligation or liability
(present or future, actual or contingent, given alone or
jointly) of ▇▇ ▇▇▇▇▇ or ▇▇▇▇▇▇ to Citibank, N.A. in
relation to the Standby Letter of Credit, other than
insofar as the Junior Charge secures obligations given by
Cygnet under the Indemnity; and
(ii) the Borrower has no obligation or liability to Citibank,
N.A. (present or future, actual or contingent, given alone
or jointly, express or implied) in relation to the Standby
Letter of Credit.
(e) References in this Clause to the transfer or assignment of the
benefit of a Charge include any declaration of trust and an
equitable charge.
21. Waiver of Defences
The subordination effected by this Deed and the obligations of Cygnet
hereunder shall not be affected by any act, omission or circumstances
which, but for this provision, might operate to release or otherwise
exonerate Cygnet from its obligations hereunder or affect such
obligations including, without limitation, and whether or not known to
Cygnet or the Senior Creditors:
(a) any time or indulgence granted to or composition with the Borrower
or any other person; or
(b) the taking, variation (no matter how fundamental or expensive),
compromise, renewal or release of or refusal to effect or enforce,
any rights, remedies or securities against or granted by the
Borrower or any other person; or
23
(c) any legal limitation, disability or other circumstances relating
to the Borrower or to any other person or any amendment to, or
variation of the terms of the Loan Agreement or other Security
Documents or any other document or security.
22. Notices
Except as otherwise provided in this Deed
(a) each communication to be made hereunder shall be made in writing
and shall be served by sending the same by pre-paid first class
post or telex or facsimile transmission to the addressed to the
party to be served or notified as follows
(i) to the Administrative Agent or the Security Agent or the
Hedge Provider or Arab Bank plc in its capacity as Lender
at ▇▇ ▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ marked for the
attention of the Credit Department (fax no. ▇▇▇▇ ▇▇▇ ▇▇▇▇);
(ii) to Irish Nationwide Building Society at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇ marked for the attention of
▇▇▇▇ ▇▇▇▇▇▇▇▇ (fax no. __________________);
(iii) to the Borrower at ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ marked for the attention of ▇▇▇▇▇▇
▇▇▇▇▇ (fax no. ▇▇▇▇▇ ▇▇▇▇▇▇) and copied to ▇▇▇▇▇▇▇ ▇▇▇▇▇ &
Co at Derbyshire House, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ marked for the attention of ▇▇ ▇▇▇▇▇
(fax no ▇▇▇▇ ▇▇▇ ▇▇▇▇);
(iv) to Cygnet at National ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ marked for the
attention of ▇▇▇▇ ▇▇▇▇▇▇▇ (fax no. ▇▇▇▇▇ ▇▇▇▇▇▇) and copied
to ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co at Derbyshire House, ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ marked for the attention
of ▇▇ ▇▇▇▇▇ (fax no. ▇▇▇▇ ▇▇▇ ▇▇▇▇).
(b) any notice sent by post as provided in this clause before the last
scheduled collection of letters from the place of posting shall be
deemed to have been served on the next succeeding business day (or
on the third succeeding business day in the case of a letter sent
to or from the Channel Islands) and in
24
proving the service of the same it will be sufficient to prove
that the relevant letter was properly stamped addressed and placed
in the post. Any notice sent by telex or facsimile and duly
despatched to a current telex number with confirmed answerback or
facsimile number of the addressee shall be deemed to be received
at the time of despatch if such time is during business hours on a
business day but shall otherwise be deemed to be received at the
opening of business on the next following business day.
(c) Cygnet irrevocably appoints ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ of Derbyshire House,
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ to receive, for
and on its behalf, service of process in proceedings in England.
Such service shall be deemed completed on delivery to the process
agent (whether or not it is forwarded to and received by ▇▇ ▇▇▇▇▇
or Cygnet). If for any reason either the process agent ceases to
be able to act as such or no longer has an address in England
Cygnet irrevocably agrees to appoint a substitute process agent
acceptable to the Senior Creditors and to deliver to the Senior
Creditors (such acceptance not to be unreasonably withheld) a copy
of the new agent's acceptance of that appointment within fifteen
days.
23. Variation
23.1 No variation to this Deed is effective for any purpose unless it has been
specifically agreed to in writing by the Senior Creditors.
23.2 The Senior Creditors do not need:
(a) the consent of Cygnet to effect a variation of this Deed which
alters only the obligations of the Borrower and the corresponding
rights of the Senior Creditors or any of them;
(b) the Borrower's consent to effect a variation of this Deed which
alters only the obligations of Cygnet and the corresponding rights
of the Senior Creditors or any of them.
25
24. Counterparts
This Deed may be executed in any number of counterparts and by the
different parties on equivalent counterparts and each shall when so
executed be deemed an original
25. Law and Jurisdiction
This Deed shall be governed by and construed in all respects in
accordance with English law, and the parties hereby submit to the
non-exclusive jurisdiction of the English Courts.
Nothing herein contained shall restrict the right of any party hereto to
initiate proceedings in any other jurisdiction.
EXECUTED as a Deed and delivered on the date stated at the beginning of this
document
26
1. First Schedule
The Lenders at the date of this Deed:
Arab Bank plc
Irish Nationwide Building Society
27
2. Second Schedule
Senior Charges
Document
Debenture
Key-Man Charge
Hedging Arrangements Charge
each being dated the same date as this Deed and made between the Grand Hotel
Group Limited (1) and Arab Bank plc as security agent and trustee for the Senior
Creditors (2)
28
3. Third Schedule
Junior Charge
Date Document Parties
30 June 1999* Debenture Grand Hotel Group Limited (1)
Cygnet Ventures Limited (2)
--------
* Inserted in manuscript in executed Agreement
29
Signatories
The Borrower
30
Signed as a deed by
GRAND HOTEL GROUP LIMITED
acting by a director and
its secretary (or two directors)
Director....................▇▇▇▇▇▇ ▇▇▇▇▇
Secretary/Director..........▇▇▇▇▇▇▇ Last
Cygnet
Signed as a deed by ▇▇▇▇▇▇▇ ▇▇▇▇▇ as
attorney for and in the name of CYGNET
VENTURES LIMITED under a Power of ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attorney dated 22 June 1999 in the
presence of:-
Signature of witness:.....AJ Pendlesbury
Name:.....................AJ Pendlesbury
Address:737a ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇
The Lenders
Signed as a deed by ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
as attorney for and in the name of ARAB
BANK plc under a Power of Attorney ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
dated 15th August 1998 in the presence of:-
Signature of witness:....▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Name:....................▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Address:.......15 ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇ (Banker)
31
Executed as a deed by IRISH NATIONWIDE
BUILDING SOCIETY by its authorised ▇▇▇▇ ▇▇▇▇▇▇▇
signatories
The Administrative Agent
Signed as a deed by ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
as attorney for and in the name of ARAB
BANK plc under a Power of Attorney ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
dated 15th August 1998 in the presence
of:-
Signature of witness: ...▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Name: ...................▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Address: ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇
(Banker)
The Security Agent
Signed as a deed by ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
as attorney for and in the name of ARAB
BANK plc under a Power of Attorney ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
dated 15th August 1998 in the presence
of:-
Signature of witness:....▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Name: ...................▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Address: ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇
(Banker)
32
The Hedge Provider
Signed as a deed by ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
as attorney for and in the name of ARAB
BANK plc under a Power of Attorney ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
dated 15th August 1998 in the presence
of:-
Signature of witness: ...▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Name: ...................▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Address: ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇
(Banker)
33
