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EXHIBIT 10.64
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FIRST SUPPLEMENTAL AGREEMENT
AMENDING AND RESTATING THE
MULTICURRENCY CREDIT FACILITIES AGREEMENT DATED
18 SEPTEMBER 1996
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30 JUNE 1998
CARATTI SPORT LIMITED
AND
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
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FIRST SUPPLEMENTAL AGREEMENT made on 30 June 1998
BETWEEN
(1) CARATTI SPORT LIMITED of 0-0 Xxxxxx Xxxxxx, Xxxxxx XX0X 0XX (the BORROWER);
(2) BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION (the BANK) acting
through its London Branch at 0 Xxxx Xxxxxx, Xxxxxx X0 0XX.
WHEREAS:
(A) The parties to this Supplemental Agreement are parties to a multicurrency
credit facilities agreement dated 18 September, 1996 (the FACILITY AGREEMENT).
(B) The parties to this Supplemental Agreement wish to amend and restate the
Facility Agreement on the terms set out in Schedule 1 (the RESTATED FACILITY
AGREEMENT) and subject to the terms of this Supplemental Agreement.
IT IS AGREED:
DEFINITIONS
1.1 Unless otherwise defined herein or the context requires otherwise, terms
defined in the Restated Facility Agreement have the same meanings when used in
this Supplemental Agreement.
1.2 In this Supplemental Agreement, unless the contrary intention appears or the
contract requires otherwise:
EFFECTIVE DATE means the date on which the conditions precedent in Clause 3 are
satisfied;
1.3 Clauses 1.2, 1.3, 1.4, 22.1, 22.2, 22.3, 27, 28 ,29.1, 29.2, 29.3, 31.1,
31.2, 31.3, 31.4, and 31.5 of the Restated Facility Agreement shall apply to
this Supplemental Agreement, mutatis mutandis.
AMENDMENTS TO FACILITY AGREEMENT
2. Subject to clause 4.2 below, on the Effective Date the Facility Agreement
shall for all purposes be amended and restated so as to incorporate all the
amendments reflected in Schedule 1 hereto and so that the Facility Agreement
shall be read and construed as so amended and restated.
CONDITIONS PRECEDENT
3.1 The obligations of the Bank and the amendments to the Facility Agreement
reflected in Schedule 1 hereto shall each be subject to and conditional upon:
(a) receipt by the Bank of a duly executed original of this Supplemental
Agreement;
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(b) receipt by the Bank of the following (each in form and substance
satisfactory to it) in respect of the Borrower:
(i) copies of the Memorandum and Articles of Association,
certificate of incorporation and certificates of name change (if
any);
(ii) evidence of all relevant corporate authority to enter into and
perform this Supplemental Agreement; and
(iii) secretarial or director's certificate certifying copies of the
foregoing;
(c) receipt by the Bank of the documents listed in the First Schedule to the
Restated Facility Agreement set out in Schedule 1 hereto.
3.2 The Bank will notify the Borrower when the conditions precedent described in
clause 3.1 have been satisfied and the date of the Effective Date.
REPRESENTATIONS AND WARRANTIES
4.1 On the date of this Supplemental Agreement the Borrower represents and
warrants to the Bank, with reference to the facts and circumstances now
subsisting, that each of the representations and warranties contained in clause
14 of the Restated Facility Agreement remains true, accurate and correct as if
the Restated Facility Agreement were in full force and effect.
4.2 The Borrower shall be deemed to represent and warrant to the Bank on the
Effective Date with reference to the facts and circumstances then subsisting,
that each of the representations and warranties referred to in clause 4.1 above
remains true, accurate and correct.
FINANCE DOCUMENT
5. This Supplemental Agreement is a Finance Document for the purposes of the
Restated Facility Agreement.
COUNTERPARTS
6. This Agreement may be executed in any number of counterparts, all of which
taken together and delivered to the Bank shall constitute one and the same
instrument. Any party may enter into this Agreement by signing any such
counterpart.
GOVERNING LAW AND SUBMISSION TO JURISDICTION
7. This Agreement is governed by and shall be construed in accordance with
English law.
THIS SUPPLEMENTAL AGREEMENT has been executed on the date stated above.
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SIGNED by )
for and on behalf of )
CARATTI SPORT LIMITED ) XXXXXX XXXX XXXX
in the presence of: )
S XXXXXXXX
SIGNED by )
for and on behalf of )
BANK OF AMERICA NATIONAL ) XXX XXXXX
TRUST AND SAVINGS )
ASSOCIATION in the presence of: )
XXXX XXXXXX
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SCHEDULE 1
CARATTI SPORT LTD
AND
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
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MULTICURRENCY CREDIT FACILITIES AGREEMENT
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CONTENTS
CLAUSE PAGE
1. INTERPRETATION..............................................................8
2. THE FACILITIES.............................................................17
3. PURPOSE....................................................................18
4. CONDITIONS PRECEDENT.......................................................18
5. UTILISATION OF THE FACILITIES..............................................18
6. INTEREST...................................................................21
7. REPAYMENT, NETTING OFF AND TERMINATION.....................................21
8. PREPAYMENT AND CANCELLATION................................................22
9. TAXES......................................................................22
10. TAX RECEIPTS/CREDITS.......................................................23
11. INCREASED COSTS............................................................24
12. ILLEGALITY.................................................................25
13. MITIGATION.................................................................25
14. REPRESENTATIONS............................................................25
15. COVENANTS..................................................................29
16. EVENTS OF DEFAULT..........................................................40
17. DEFAULT INTEREST AND INDEMNITY.............................................43
18. CURRENCY OF ACCOUNT AND PAYMENT............................................44
19. PAYMENTS...................................................................44
20. SET-OFF....................................................................45
21. FEES.......................................................................45
22. COSTS AND EXPENSES.........................................................46
23. BENEFIT OF AGREEMENT.......................................................46
24. ASSIGNMENTS AND TRANSFERS..................................................46
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CLAUSE PAGE
25. DISCLOSURE OF INFORMATION..................................................47
26. CALCULATIONS AND EVIDENCE OF DEBT..........................................47
27. RIGHTS CUMULATIVE, WAIVERS.................................................47
28. PARTIAL INVALIDITY.........................................................48
29. NOTICES....................................................................48
30. LAW........................................................................50
31. JURISDICTION...............................................................50
THE FIRST SCHEDULE ..............................................................51
Condition Precedent Documents...............................................51
THE SECOND SCHEDULE..............................................................53
Notice of Drawdown..........................................................53
THE THIRD SCHEDULE...............................................................54
Part 1......................................................................54
Ineligible Accounts.........................................................54
Part 2......................................................................55
Ineligible Inventory........................................................55
THE FOURTH SCHEDULE..............................................................56
Hire Purchase Agreements....................................................56
THE FIFTH SCHEDULE...............................................................57
Foreign Exchange Contracts..................................................57
THE SIXTH SCHEDULE...............................................................58
Borrowing Base Certificate..................................................58
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THIS AGREEMENT is made on 18 September 1996
BETWEEN
(1) CARATTI SPORT LTD a company incorporated in England and Wales (No.
01702392) whose registered office is at 0-0 Xxxxxx Xxxxxx, Xxxxxx XX0X
0XX (the BORROWER); and
(2) BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION (the BANK),
acting through its London Branch at 0 Xxxx Xxxxxx, Xxxxxx X0 0XX.
NOW IT IS HEREBY AGREED as follows:
INTERPRETATION
1.1 In this Agreement:
ACCOUNT means the Borrower's right to payment for a sale or lease and delivery
of goods or rendering of services;
ACCOUNT DEBTOR means each person having any obligation on or in connection with
an Account;
ADVANCE means a Revolving Advance or a Spike Advance (as the context requires);
AFFILIATE means:
(a) a person which, directly or indirectly, controls or is controlled by or
is under constant control with, the Borrower;
(b) a person which beneficially owns or holds, directly or indirectly 5% or
more of any class of voting shares of the Borrower; or
(c) a person in which 5% of any class of voting shares is beneficially owned
or held, directly or indirectly, by the Borrower;
APPLICABLE GAAP means generally accepted accounting principles and policies in
the United Kingdom;
AVAILABLE COMMITMENT means at any time the Commitment of the Bank at such time
less the Outstandings;
BANK'S ACCOUNT means the account with Midland Bank plc sort code 16-50-50 in the
name of the Bank into which cleared funds from the Barclays Collection Account
are deposited on a daily basis;
BARCLAYS COLLECTION ACCOUNT means the Borrower's account numbered 00000000 with
Barclays Bank PLC (sort code 20-13-34) into which Eligible Accounts Receivable
are deposited;
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BARCLAYS OPERATING ACCOUNTS means the Borrower's operating accounts at Barclays
Bank PLC as set out in the Caratti Bank Agreement and into which Advances are
credited and BARCLAYS OPERATING ACCOUNT means any one of them;
BARCLAYS RETAINED FACILITIES means the unsecured BACS, Business Master II and
Barclaycard facilities which are or are to be made available to the Borrower by
Barclays Bank PLC;
BMBF FACILITIES means all the unsecured finance lease or lease purchase
facilities and the equipment lease facilities made between the Borrower and
Barclays Mercantile Business Finance Limited the outstandings in respect of
which shall not at any time exceed in aggregate (pound)300,000 or such higher
figure as may be agreed between the Bank and the Borrower;
BONDING FACILITY means the (pound)600,000 bonding facility provided by the Bank
to the Borrower for the issue of duty/VAT deferment guarantees in favour of H.
M. Customs & Excise on the terms and subject to the conditions set out in the
Bonding Facility Letter;
BONDING FACILITY LETTER means the letter dated 10 September 1996 under which the
Bank has agreed to provide the Bonding Facility;
BORROWER GROUP means Caratti Sport Ltd and its subsidiaries from time to time;
BORROWINGS has the meaning given to it in clause 15.1(e);
CAPITAL EXPENDITURE means all payments due (whether or not paid) in respect of
the cost of any fixed asset or improvement, or replacement, substitution or
addition thereto, which has a useful life of more than one year, including,
without limitation, those arising in connection with the direct or indirect
acquisition of such assets by way of increased product or service charges or
offset items or in connection with finance leases;
CARATTI BANK AGREEMENT means the bank operating agreement dated 30 June 1998
entered into between the Borrower, the Bank and Barclays Bank PLC;
CARATTI BORROWING BASE means, at any time, an amount equal to the sum of:
(a) Eligible Accounts Receivable multiplied by 85% or such lesser amount as
the Bank (in its reasonable discretion) may determine subject to the
proviso below; and
(b) Eligible Inventory multiplied by 60% (except that during the months of
June, July, August, September and October 1998, Eligible Inventory shall
be multiplied by 70% and for the month of November 1998 Eligible
Inventory shall be multiplied by 65% to account for the Spike Facility)
or such lesser amount as the Bank (in its reasonable discretion) may
determine subject to the proviso below; less
(c) an amount equal to 10% (or such other percentage as the Bank may require
in its absolute discretion subject to the proviso below) of the
contingent liabilities of the Borrower at any time under the FX
Contracts ignoring for the purposes of this calculation any contingent
or actual liabilities of the Borrower's counterparty under such FX
Contracts; less
(d) all Outstandings; less
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(e) all other reserves which the Bank deems necessary in the exercise of its
reasonable credit judgement to maintain with respect to the Borrower's
account including, without limitation, any amounts which the Bank may be
obliged to pay in the future for the account of the Borrower,
where all calculations and determinations to be made in respect of Eligible
Accounts Receivables and Eligible Inventory shall be made by the Bank in its
reasonable credit judgement and such determinations by the Bank shall, save in
the case of manifest error, be binding provided that in relation to Eligible
Accounts Receivable and Eligible Inventory which is already constituting the
Caratti Borrowing Base and is supporting current Outstandings the Bank shall use
its reasonable discretion in determining such lesser amounts and shall use
reasonable efforts to notify the Borrower as soon as reasonably practicable
after making such determination;
CLOSING DATE means the date on which the conditions precedent in clause 4 are
satisfied;
COMMITMENT means the Revolving Credit Facility Available Commitment or the Spike
Commitment (as the context requires) and COMMITMENTS means both of them;
CONTAMINANT means any radioactive emissions and any natural or artificial
substance (whether in solid or liquid form or in the form of a gas or vapour and
whether alone or in combination with any other substance) capable (in each case)
of causing harm to man or any other living organism or damaging the environment
or public health or welfare, including (without limitation) any controlled,
special, hazardous, toxic, radioactive or dangerous waste;
DISTRIBUTION means all rights, money (including without limitation, dividends)
and property whatsoever which may from time to time be derived from, accrue on
or be offered in respect of shares or other securities of any Borrower Group
company whether by way of redemption, exchange, conversion rights, bonus,
capital reorganisation or otherwise howsoever;
DOLLARS and $ means the lawful currency of the United States of America;
ELIGIBLE ACCOUNTS RECEIVABLE means, without intending to limit the Bank's
discretion to establish other criteria of eligibility those Accounts which are
not Ineligible Accounts as the basis for Advances and Undertakings;
ELIGIBLE INVENTORY means, without intending to limit the Bank's discretion to
establish other criteria of eligibility, Inventory which is not Ineligible
Inventory as the basis for Advances and Undertakings which may at no time, when
aggregated with the face value of any Undertakings, exceed (pound)7,000,000 of
the Commitments;
ENVIRONMENTAL LAW means all applicable laws, regulations, codes of practice,
circulars, guidance notices and the like (whether in the United Kingdom or in
any other jurisdiction in which the Borrower or any member of the Borrower Group
carries on its business or in which its assets may be situated) concerning the
protection of human health, living organisms or the environment or the
conditions of the work place or the generation, transportation, storage,
treatment or disposal of Contaminants, the compliance with which is customary or
required by law;
ENVIRONMENTAL LICENCE means any permit, licence, consent, authorisation or other
approval required by or pursuant to any Environmental Law;
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EVENT OF DEFAULT means any of those events specified in clause 16.1;
EURO means the currency adopted by two or more European Union states as the
single currency of the European Union;
FACILITIES means the Revolving Credit Facility, the L/C Facility, the Bonding
Facility and the Spike Facility;
FINAL MATURITY DATE means the date falling 3 years from the Closing Date or if
such day is not a business day the next preceding business day;
FINANCE DOCUMENTS means this Agreement, the Bonding Facility Letter, the
Guarantees, the Security Documents, the general indemnity dated on or around the
date hereof as such may be amended from time to time and the FX Contracts;
FINANCIAL PERFORMANCE PROJECTIONS means the financial performance projections
delivered to the Bank by the Borrower in January 1998 and subsequently pursuant
to clause 15(b)(iv);
FINANCIAL STATEMENTS means, according to the context in which it is used, the
Original Financial Statements or any other financial statements required to be
given to the Bank in accordance with clause 15.1(b);
FINANCIAL YEAR means the period from the Closing Date to 31 December 1998 and
thereafter any period of twelve months ending on 31 December;
FIXED AND FLOATING CHARGE means the fixed and floating charge dated the date
hereof as such may be amended or modified entered into by the Borrower in favour
of the Bank;
FX CONTRACTS means the interest rate and currency rate hedging agreements to be
entered into between the Borrower and the Bank referred to in clause 15.2(f);
GROUP means GT Bicycles, Inc. and its subsidiaries for the time being;
GTBC CREDIT AGREEMENT means the credit agreement dated 29 April 1998 between
Bank America Business Credit, Inc., GT Bicycles California, Inc. and others as
amended from time to time;
GUARANTEES means the guarantees given in favour of the Bank by the Guarantors;
GUARANTORS means GT Bicycles, Inc., GT Bicycles California, Inc., Riteway
Products East Inc., Riteway Products North Central Inc., Rite-Way Distributors
Central, Inc., Rite-Way Distributors, Inc. and any wholly owned future domestic
subsidiaries of GT Bicycles, Inc. which are incorporated or acquired after the
date of this Agreement;
INDEMNITY means the general indemnity in clause 5.14 in favour of the Bank in
respect of the Bonding Facility and the L/C Facility;
INELIGIBLE ACCOUNTS means those Accounts set out in Part 1 of the Third Schedule
as such may be defined and amended from time to time by the Bank in its absolute
discretion;
INELIGIBLE INVENTORY means the Inventory set out in Part 2 of the Third Schedule
as such may be defined and amended from time to time by the Bank in its absolute
discretion;
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INTERCOMPANY ACCOUNTS means all assets and liabilities, however arising, which
are due to the Borrower from, due from the Borrower to, or which otherwise arise
from any transaction by the Borrower with, any Affiliate;
INVENTORY means all of the Borrower's now owned and hereafter acquired
inventory, goods and merchandise, wherever located, to be furnished under any
contract of service or held for sale or lease, all raw materials,
work-in-progress, finished goods, returned goods and materials and supplies of
any kind, nature or description which are or might be used or consumed in the
Borrower's business or used in connection with the manufacture, packing,
shipping, advertising, selling or finishing of such goods, merchandise and such
other personal property, and all documents of title or other documents
representing them;
L/C FACILITY means a multicurrency facility for the issue of irrevocable
commercial letters of credit of up to 180 days' validity;
LOAN means the aggregate principal amount for the time being outstanding under
this Agreement under the Revolving Credit Facility and the Spike Facility;
LOAN ACCOUNT means the loan account denominated in sterling maintained with the
Bank to which the Bank is authorised to debit all Revolving Advances and Spike
Advances together with all interest thereon and all commissions, costs, expenses
and other charges under or pursuant to the Finance Documents and all payments
made and out of pocket expenses incurred by the Bank pursuant to the Finance
Documents;
MANAGEMENT ACCOUNTING PERIOD means each period of one calendar month ending on
the last day of that month;
MANAGEMENT ACCOUNTS means, as at the date of this Agreement, the unaudited but
consolidated management accounts of the Borrower in respect of the Management
Accounting Period ended 30 April 1998 to be prepared in accordance with
Applicable GAAP and in a format agreed by the Bank on or prior to the date of
this Agreement and thereafter those accounts or the then latest such accounts
for successive Management Accounting Periods required to be delivered to the
Bank;
MARGIN means the Revolving Credit Facility Margin or the Spike Margin (as the
context so requires);
MATERIAL ADVERSE EFFECT means any effect which is or is reasonably likely to be
materially adverse to (i) the Eligible Accounts Receivable and/or the Eligible
Inventory, (ii) the ability of the Borrower to perform its obligations under any
of the Finance Documents to which it is a party or (iii) the business, assets or
financial condition of:
(a) the Borrower; or
(b) the Group taken as a whole.
NOTICE OF DRAWDOWN means a notice delivered under this Agreement substantially
in the form set out in the Second Schedule;
OPTIONAL CURRENCY means subject to the written agreement of the Bank (which may
be withheld in its absolute discretion) any currency (other than sterling) which
is freely
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transferable and freely convertible into sterling (or Euros after the Sterling
Conversion Date) in the London market or, in relation to the L/C Facility, means
dollars;
ORIGINAL FINANCIAL STATEMENTS means the audited (and consolidated, where the
Borrower has one or more Subsidiaries) accounts for the Borrower in respect of
the fourteen month period ended 31 December 1997;
ORIGINAL STERLING AMOUNT means, in relation to an Advance denominated in
sterling, the amount of such Advance as requested in the relevant Notice of
Drawdown relating thereto (as the same may be reduced pursuant to clause 5.4)
or, if such Advance is not denominated in sterling, the equivalent of such
amount (as the same may be so reduced) in sterling, calculated as at such
business day as the Bank and the Borrower may agree;
OUTSTANDINGS means
(a) in relation to the Revolving Credit Facility at any time the aggregate
of the Sterling Amounts of:
(i) all outstanding Revolving Advances and accrued interest thereon;
and
(ii) all outstanding Undertakings; and
(iii) all amounts outstanding under the Bonding Facility, or
(b) in relation to the Spike Facility at any time the aggregate of the
Sterling Amounts of all outstanding Spike Advances and accrued interest
thereon;
QUALIFYING BANK means a bank as defined for the purposes of section 840A of the
Income and Corporation Taxes Act 1988 which is within the change to United
Kingdom corporation tax as respect interest payable to it at the time when such
interest is paid;
PERMITTED SECURITY INTEREST means any security interest referred to in clause
15.3(a);
POTENTIAL EVENT OF DEFAULT means any event which would become (with the passage
of time, the giving of notice, the making of any determination of materiality
under this Agreement), an Event of Default;
RELEASE means a release, spill, emission, leaking, pumping, injection, deposit,
disposal, discharge, dispersal, leaching or migration of a Contaminant into the
indoor or outdoor environment or into or out of any real estate or other
property, including the movement of Contaminants through or in the air, soil,
surface water, groundwater or real estate or other property;
REFERENCE RATE means the rate of interest determined from time to time by the
Bank as its reference rate for sterling and for each Optional Currency (as
appropriate) being the rate set by the Bank applicable to any borrower based on
various factors including the Bank's costs and desired return, general economic
conditions and other factors and which is used as a reference point for pricing
some loans provided that (i) the Bank may price loans at, above or below such
determined rate and (ii) any changes in the Reference Rate shall take effect on
the day determined by the Bank;
RELEVANT ACCOUNTING INFORMATION has the meaning given to it in clause 15.1(d);
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RESTRICTED INVESTMENT means any acquisition of any assets by the Borrower or any
member of the Borrower Group in exchange for cash or other assets, whether in
the form of an acquisition of shares, debt securities or other indebtedness or
obligation, or the purchase of acquisition of any other assets, or a loan,
advance, capital contribution or subscription, except acquisitions of the
following:
(a) those permitted under clause 15.3;
(b) gilt-edged securities issued by the United Kingdom government;
(c) any other freely negotiable and marketable debt securities issued by the
government of either the United Kingdom or the United States of America,
or any agency thereof, and which constitute direct, primary and
unsubordinated obligations of the same, provided that such obligations
mature within one year from the date of acquisition thereof;
(d) certificates of deposit maturing within one year from the date of
acquisition, bankers acceptances, Eurodollar bank deposits, or overnight
bank deposits, in each case issued by, created by, or with a prime bank
organised under the laws of the United Kingdom or the United States of
America or any state thereof having capital and surplus aggregating at
least (pound)60,000,000;
(e) commercial paper given the highest rating by a national credit rating
agency and maturing not more than 270 days from its date of creation;
and
(f) other assets acquired with the consent of the Bank.
REVOLVING ADVANCE means the principal amount of each amount made available to
the Borrower under this Agreement by way of loan under the Revolving Credit
Facility or (as the context requires) its principal amount for the time being
outstanding;
REVOLVING CREDIT FACILITY means the multicurrency revolving credit facility
referred to in clause 2;
REVOLVING CREDIT FACILITY AVAILABLE COMMITMENT means the lesser of (a)
(pound)10,000,000 (ten million pounds) and (b) the Caratti Borrowing Base;
REVOLVING CREDIT FACILITY MARGIN means 1.8 per cent. per annum or if financial
ratios in clause 15.1(d) are met at 30 June 1999, 1.7 per cent. per annum, or if
such financial ratios are met at 30 June 2000, 1.6 per cent. per annum, or if
such financial ratios are met at 31 December 2000, 1.5 per cent. per annum, in
each case so that the rate is applied from that specified date;
SECURITY DOCUMENTS means the Fixed and Floating Charge together with such other
security documents as may from time to time be required to be entered into by
the Borrower pursuant to any of the Finance Documents;
SPIKE ADVANCE means the principal amount of each amount made available to the
Borrower under this Agreement by way of loan under the Spike Facility (or as the
context may require) its principal amount for the time being outstanding;
SPIKE COMMITMENT means (pound)2,500,000;
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SPIKE FACILITY means the spike facility referred to in clause 2;
SPIKE MARGIN means 2.5 per cent. per annum;
STERLING AMOUNT means:
(i) in relation to any Advance, its Original Sterling Amount as reduced by
the proportion (if any) of such Advance which has been repaid;
(ii) in relation to any Undertaking issued under the L/C Facility, the
equivalent in sterling of the contingent maximum liability of the Bank
under any such Undertaking calculated at the spot rate of exchange of
the Bank; and
(iii) in relation to the Loan, the aggregate of the amounts referred to in
paragraph (i) of this definition;
STERLING CONVERSION DATE means the date on which sterling becomes a currency of
the Euro;
STERLING, POUNDS STERLING or (POUND) means the lawful currency of the United
Kingdom;
UNDERTAKING means an irrevocable commercial letter of credit of up to 180 days'
validity issued by the Bank under the L/C Facility; and
1999 MODEL BICYCLES means new bicycles to be imported to meet new specifications
for the 1999 model year
1.2 Any reference in this Agreement to:
an AFFILIATE of the Bank shall be construed as a reference to a subsidiary or
holding company of the Bank or to a subsidiary of such holding company;
BANK shall be construed so as to include its and any subsequent successors,
transferees and assigns in accordance with their respective interests;
a BUSINESS DAY shall be construed as a reference to a day (other than a Saturday
or Sunday) on which banks are generally open for business in London and if such
reference relates to a date for the payment or purchase of any sum denominated
in an Optional Currency, a day (other than a Saturday or a Sunday) on which
banks are generally open for business in the principal financial centre of the
country of such Optional Currency;
CASH COLLATERAL, CASH COLLATERALISE or CASH COLLATERALISATION and any other
similar expression shall be construed as a reference to the deposit of cash in
sterling or the relevant Optional Currency by the Borrower in an account with
the Bank in support of any liability whether actual or contingent it may owe to
the Bank under the L/C Facility on terms satisfactory to the Bank;
a CLAUSE shall, subject to any contrary indication, be construed as a reference
to a clause of this Agreement;
an ENCUMBRANCE shall be construed as a reference to a mortgage, charge, pledge,
lien or other encumbrance securing any obligation of any person or any other
type of agreement or
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arrangement (including, without limitation, title transfer and retention
arrangements) having the effect of conferring security;
the EQUIVALENT on any given date in one currency (the FIRST CURRENCY) of an
amount denominated in another currency (the SECOND CURRENCY) is a reference to
the amount of the first currency which could be purchased with the amount of the
second currency at the spot rate of exchange quoted by the Bank at or about
11.00 a.m. on such date for the purchase of the first currency with the second
currency;
a HOLDING COMPANY of a company or corporation shall be construed as a reference
to any company or corporation of which the first-mentioned company or
corporation is a subsidiary;
INDEBTEDNESS shall be construed so as to include any obligation (whether
incurred as principal or as surety) for the payment or repayment of money,
whether present or future, actual or contingent;
a MONTH is a reference to a period starting on one day in a calendar month and
ending on the numerically corresponding day in the next succeeding calendar
month save that, where any such period would otherwise end on a day which is not
a business day, it shall end on the next succeeding business day, unless that
day falls in the calendar month succeeding that in which it would otherwise have
ended, in which case it shall end on the immediately preceding business day
Provided that, if a period starts on the last business day in a calendar month
or if there is no numerically corresponding day in the month in which that
period ends, that period shall end on the last business day in that later month
(and references to MONTHS shall be construed accordingly);
a PERSON shall be construed as a reference to any person, firm, company,
corporation, government, state or agency of a state or any association or
partnership (whether or not having separate legal personality) of two or more of
the foregoing;
a SCHEDULE shall, subject to any contrary indication, be construed as a
reference to a schedule hereto;
a SUBSIDIARY of a company means:
(i) a subsidiary within the meaning of section 736 of the Companies Xxx 0000
as amended by section 144 of the Companies Xxx 0000; and
(ii) unless the context otherwise requires, a subsidiary undertaking within
the meaning of section 258 of the Companies Xxx 0000 (as inserted by
section 21 of the Companies Act 1989).
or as the context requires a subsidiary of a company or corporation incorporated
in the United States shall be construed as a reference to any company or
corporation:
(i) which is controlled, directly or indirectly, by the first-mentioned
company or corporation;
(ii) more than half the issued share capital of which is beneficially owned,
directly or indirectly, by the first-mentioned company or corporation;
or
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(iii) which is a subsidiary of another subsidiary of the first-mentioned
company or corporation
and, for these purposes, a company or corporation shall be treated as being
controlled by another if that other company or corporation is able to direct its
affairs and/or to control the composition of its board of directors or
equivalent body;
TAX shall be construed so as to include any tax, levy, impost, duty or other
charge of a similar nature (including, without limitation, any penalty or
interest payable in connection with any failure to pay or any delay in paying
any of the same);
VAT shall be construed as a reference to value added tax including any similar
tax which may be imposed in place thereof from time to time; and
the WINDING-UP, DISSOLUTION or ADMINISTRATION of a company or corporation shall
be construed so as to include any equivalent or analogous proceedings under the
law of the jurisdiction in which such company or corporation is incorporated or
any jurisdiction in which such company or corporation carries on business
including the seeking of liquidation, winding-up, reorganisation, dissolution,
administration, arrangement, adjustment, protection or relief of debtors.
1.3 Words importing the singular shall include the plural and vice versa.
1.4 Save where the contrary is indicated, any reference in this Agreement
to:
(i) this Agreement or any other agreement or document shall be construed as
a reference to this Agreement or, as the case may be, such other
agreement or document as the same may have been, or may from time to
time be, amended, varied, novated or supplemented;
(ii) a statute shall be construed as a reference to such statute as the same
may have been, or may from time to time be, amended or re-enacted; and
(iii) a time of day shall be construed as a reference to London time.
1.5 Clause and Schedule headings are for ease of reference only.
THE FACILITIES
2.1 The Bank grants to the Borrower, on the terms and subject to the
conditions of this Agreement:
(i) a multicurrency revolving credit facility;
(ii) a multicurrency L/C Facility,
in an aggregate amount equal to the lesser of (a) (pound)10,000,000 (ten million
pounds sterling) or its equivalent from time to time in Optional Currencies and
(b) the Caratti Borrowing Base.
2.2 The maximum potential liability of the Bank under the L/C Facility shall be
limited to (pound)7,000,000 (seven million pounds sterling) or its equivalent
from time to time in Optional Currencies.
18
2.3 The Bank also grants to the Borrower, on the terms and subject to the
conditions of this Agreement a spike facility in an aggregate amount of
(pound)2,500,000 (two million five hundred thousand pounds sterling) or its
equivalent from time to time in Optional Currencies.
2.4 On the date of this Agreement and subsequently as soon as reasonably
practicable after receiving the information to be delivered on a weekly basis by
the Borrower in accordance with clause 15.1(c), the Bank shall calculate and
determine, in its discretion acting reasonably, the Caratti Borrowing Base for
the forthcoming week and shall advise the Borrower of its determination.
PURPOSE
3.1 The Revolving Credit Facility shall be used to repay the Spike Facility, to
pay all fees referred to in clause 21 and for the working capital purposes of
the Borrower. The L/C Facility shall be used for the issue of Undertakings. The
Spike Facility shall be used solely for the importation of 1999 Model Bicycles.
3.2 Without prejudice to the obligations of the Borrower under clause 3.1, the
Bank shall not be obliged to concern itself with the application of amounts
raised by the Borrower under this Agreement.
CONDITIONS PRECEDENT
4. Save as the Bank may otherwise agree, the Borrower may not deliver any Notice
of Drawdown under this Agreement unless the Bank has received all the documents
listed in the First Schedule, in each case in form and content satisfactory to
the Bank.
UTILISATION OF THE FACILITIES
REVOLVING CREDIT FACILITY AND SPIKE FACILITY
5.1 Subject to there remaining Available Commitment of at least 10% of the
Available Commitment calculated prior to the making of the first Advance, the
first duly completed Notice of Drawdown to be delivered by the Borrower to the
Bank shall request the making of an Advance in sterling of an amount sufficient
to discharge the Borrower's overdraft with the Bank in full (having regard to
any other payments made by or on behalf of the Borrower). Such Notice of
Drawdown, which shall be irrevocable, shall specify (i) the proposed date for
making the Advance, which shall be a business day and (ii) the amount of the
Advance.
5.2 Save as otherwise provided in this Agreement, the Borrower may from time to
time request the making of an Advance by the Bank by the delivery to the Bank in
the case of an Advance to be denominated in sterling by 11.00 a.m. on, and in
the case of Optional Currencies not less than two business days before, the
proposed date for the making of such Advance of a duly completed Notice of
Drawdown therefor.
5.3 Each Notice of Drawdown delivered to the Bank pursuant to clause 5.2 shall
be irrevocable and shall specify:
(i) whether the Advance is to be made under the Revolving Credit Facility or
the Spike Facility;
19
(ii) the proposed date for the making of the Advance requested, which shall
be a business day falling before the Final Maturity Date in the case of
a Revolving Advance or a business day falling on or before 30 July 1998
in the case of a Spike Advance;
(iii) the currency of denomination of the Advance requested, which shall be
sterling or an Optional Currency;
(iv) the amount of the Advance requested, which shall be a minimum amount of
(pound)100,000 (or, if the Advance is to be denominated in an Optional
Currency, such comparable and convenient amount thereof as the Bank may
from time to time specify) which is less than or equal to the amount of
the Available Commitment, and the Original Sterling Amount of which
shall not exceed the Available Commitment, adjusted to take account of:
(i) any reduction in the Commitment; and
(ii) the Sterling Amounts of any Advances which are scheduled to be
made or repaid on or before the date of drawdown of the proposed
Advance; and
(v) the account to which the proceeds of the proposed Advance are to be paid
which shall in all cases be a Barclays Operating Account.
5.4 If the Borrower requests that an Advance be denominated in an Optional
Currency and no later than 12.00 noon on the business day falling one business
day before the date for such Advance, the Bank notifies the Borrower that it is
of the opinion that it is not feasible for such Advance to be made in such
Optional Currency then, unless the Borrower and the Bank otherwise agree, such
Advance shall not be made.
5.5 If the Borrower requests an Advance in accordance with the preceding
provisions of this clause 5 and on the proposed date for the making of such
Advance:
(i) the Original Sterling Amount of such Advance when made will not exceed
the Available Commitment; and
(ii) either:
(a) no Event of Default has occurred;
(b) no Potential Event of Default which (in the Bank's absolute
discretion) might have a Material Adverse Effect has occurred;
and
(c) the representations set out in clause 14 are true on and as of
the proposed date for the making of such Advance
or the Bank agrees (notwithstanding any matter mentioned at (a) or (b)
or (c) above) to make such Advance,
then, save as otherwise provided in this Agreement, such Advance will be made by
crediting the proceeds of the Advance to a Barclays Operating Account in
accordance with the provisions of this Agreement.
20
5.6 The Bank, in its discretion, may elect to allow the limits of the Caratti
Borrowing Base to be exceeded on one or more occasions but, if it does so, the
Bank shall not be deemed thereby to have changed the limits of the Caratti
Borrowing Base on any other occasion. If the Original Sterling Amount of the
unpaid balance of the Revolving Advances exceeds the Caratti Borrowing Base
(with the Caratti Borrowing Base determined for this purpose as if the amount of
the Revolving Advances were zero), then the Bank may refuse to make or otherwise
restrict Revolving Advances on such terms as the Bank determines until such
excess has been eliminated.
5.7 Notwithstanding the provisions of clause 5.2, in lieu of delivering a Notice
of Drawdown, the Borrower may request Advances by telephone. Each oral request
for an Advance, if accepted by the Bank, shall be conclusively presumed to be
made by a person authorised by the Borrower to do so and the crediting of an
Advance to a Barclays Operating Account shall conclusively establish the
obligation of the Borrower to repay such Advance as provided in this Agreement.
L/C FACILITY AND BONDING FACILITY
5.8 The Borrower may from time to time request the issue by the Bank of
Undertakings.
5.9 Subject to the terms of this Agreement, the Bank shall, upon the Borrower's
request from time to time issue Undertakings for the Borrower's account. The
Bank will not issue any Undertaking if:
(a) the maximum face amount of the requested Undertaking plus the aggregate
undrawn amount of all outstanding Undertakings, would exceed
(pound)7,000,000;
(b) the maximum face amount of the requested Undertaking plus all
commissions, fees and charges due from the Borrower to the Bank in
connection with its issue, would cause the Caratti Borrowing Base to be
exceeded at such time; or
(c) the expiry date of the Undertaking would be later than the Final
Maturity Date or a date falling more than 180 days from the date of
issue.
5.10 All Undertakings issued under this Agreement shall be in a form and on
terms satisfactory to the Bank. Applications for the issue of Undertakings shall
be made on the Bank's standard form. Each Undertaking shall require, for
payment, the presentation of bills of lading drawn to order and blank endorsed,
or drawn to the Bank's order, or drawn to order of the Borrower endorsed in the
Bank's favour. The Borrower hereby irrevocably and unconditionally undertakes to
endorse any xxxx of lading according to the Bank's instructions. Payments
pursuant to Undertakings shall be at sight.
5.11 All goods financed in relation to any Undertaking issued under this
Agreement shall be kept insured on such terms, against such risks and with such
insurers as are reasonably satisfactory to the Bank. The Borrower hereby
undertakes to have all such insurance policies (including, without limitation,
marine insurance policies) contain loss payable clauses in the Bank's favour.
5.12 If any Undertakings issued under this Agreement are cash collateralised at
the request of the Bank or otherwise in accordance with the provisions of this
Agreement, the Bank shall be entitled to hold all and any such sums with
interest accruing for the account of the Borrower at the Bank's normal deposit
rate as determined by the Bank in its absolute
21
discretion and to apply such sums against the Bank's potential liability under
any such Undertakings. The Borrower shall not be entitled to the repayment of
any such sums unless all the Bank's obligations in respect of such Undertakings
have been discharged and only to the extent that there are sums left over after
such discharge.
5.13 Subject to the terms of the Bonding Facility Letter the Bank shall make
available to the Borrower the Bonding Facility.
5.14 The Borrower agrees to indemnify and hold harmless the Bank from and
against all claims, demands, liabilities, damages, losses, costs, charges and
expenses (including reasonable legal fees) which the Bank may incur or sustain
as a consequence, direct or indirect, of the issue of any Undertaking or the
performance of its obligations thereunder or the performance of its obligations
under the Bonding Facility. This is a continuing indemnity, extends to the
ultimate balance of the Borrower's obligations and liabilities and shall
continue in force notwithstanding any intermediate payment in whole or in part
of those obligations or liabilities.
INTEREST
6.1 Interest shall accrue on each Advance on a daily basis and shall be debited
to the Loan Account monthly in arrears.
6.2 The rate of interest applicable to each Advance from time to time shall be a
fluctuating rate per annum which is the sum of the Reference Rate and the
Margin. Each change in Reference Rate shall be reflected in such interest rate
as of the effective date of such change.
REPAYMENT, NETTING OFF AND TERMINATION
7.1 All amounts received into the Bank's Account shall be used on a daily basis
to reduce Outstandings under the Revolving Credit Facility.
7.2 Subject to clause 7.1, the Borrower shall repay all the Outstandings under
the Revolving Credit Facility by the Final Maturity Date and all Outstandings
under the Spike Facility by 30 October 1998.
7.3 The Borrower shall not repay all or any part of any Advance except at the
times and in the manner expressly provided in this Agreement but, subject to the
terms and conditions of this Agreement, shall be entitled to re-borrow any
amount repaid.
7.4 If on any date:
(a) the Bank is required to make an Advance; and
(b) a payment is due to the Bank pursuant to this clause 7
then the Bank may (without prejudice to the Borrower's obligation to make the
payment in question pursuant to this clause 7 prior to any application pursuant
to this clause 7 and without prejudice to the Borrower's remaining obligation in
relation to such payment after any such application) apply any amount payable by
the Bank to the Borrower on that date in or towards satisfaction of the amount
payable by the Borrower to the Bank on such date pursuant to this clause 7
provided that such amounts are in the same currency.
22
7.5 On or before the Final Maturity Date, the Borrower shall pay to the Bank an
amount equal to the Bank's maximum potential liability under all Undertakings
issued under the L/C Facility. The Bank shall be entitled to hold such amount
and to apply such amount against the Bank's maximum potential liability under
all Undertakings which have been issued. The Borrower shall not be entitled to
repayment of all or any part of such amount unless all the Bank's obligations
under all Undertakings have been released or discharged and only to the extent
that there is any amount left over after such release or discharge.
7.6 The Borrower shall repay the Outstandings under the Spike Facility to the
Bank in four instalments on a monthly basis, commencing with a minimum payment
of (pound)625,000 (or such lesser amount as may been utilised) on 31 July 1998
and thereafter on the last day of each month such that the overall advance rate
against Eligible Inventory shall not exceed 65% on or after 30 November 1998 and
60% on or after 31 December 1998.
7.7 Notwithstanding the other terms and conditions of this Agreement, if any of
the facilities made or to be made available under the GTBC Credit Agreement is
terminated by the Bank, for whatever reason, the Bank's Commitment will be
reduced to zero and the Bank may demand immediate repayment of the Loan and cash
collateralisation of any outstanding Undertakings.
PREPAYMENT AND CANCELLATION
8.1 The Borrower may, subject to clause 21.6, by giving the Bank not less than
five business days' prior written notice to that effect, cancel the whole of the
Commitment.
8.2 Any notice given by the Borrower under clause 8.1 shall be irrevocable and
shall specify the date upon which such cancellation is to be made. No amount
cancelled under clause 8.1 may subsequently be reinstated.
8.3 If the Bank claims indemnification from the Borrower under clause 9.2 or
clause 11.1, the Borrower may, within sixty days thereafter and by not less than
five days' prior notice to the Bank (which notice shall be irrevocable), without
paying any fee in accordance 21.6 cancel the Commitment of the Bank whereupon
the Bank shall cease to be obliged to make any further Advances or issue any
Undertakings to the Borrower and the Bank's Commitment shall be reduced to zero.
TAXES
9.1 All payments to be made by the Borrower under this Agreement shall be made
free and clear of and without deduction for or on account of tax unless the
Borrower is required to make such a payment subject to the deduction or
withholding of tax, in which case the sum payable by the Borrower, in respect of
which such deduction or withholding is required to be made, shall be increased
to the extent necessary to ensure that, after the making of the required
deduction or withholding, the Bank 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 Without prejudice to the provisions of clause 9.1, if the Bank is required
to make any payment on account of tax (not being a tax imposed on its overall
net income) or otherwise on or in relation to any sum received or receivable
under this Agreement by the Bank (including, without limitation, any sum
received or receivable under this clause 9) or any
23
liability in respect of any such payment is asserted, imposed, levied or
assessed against the Bank the Borrower shall, upon demand, promptly indemnify
the Bank against such payment or liability, together with any interest,
penalties and expenses payable or incurred in connection therewith.
9.3 If the Bank intends to make a claim pursuant to clause 9.2 it shall notify
the Borrower of the event by reason of which it is entitled to do so, Provided
that nothing in this Agreement shall require the Bank to disclose any
confidential information relating to the organisation of its affairs.
9.4(a) The Bank warrants to the Borrower, that at the date of this Agreement
the Bank is a Qualifying Bank;
(b) If the Bank ceases to be a Qualifying Bank, the Borrower shall not be
obliged to pay to the Bank under clause 9.1 any amount in excess of the
amount it would have been obliged to pay if the Bank had not ceased to
be a Qualifying Bank provided that this clause 9.4 shall not apply and
the Borrower shall continue to be obliged to comply with its obligations
under clause 9.1 if after the date of this Agreement there shall have
been any change in, or in the interpretation or application of, any
relevant law or the practice of the United Kingdom Inland Revenue and as
a result of such change (i) the Bank ceases to be a Qualifying Bank or
(ii) the Bank would be required to make a deduction or withholding on
account of tax irrespective of whether the Bank was or was not a
Qualifying Bank.
TAX RECEIPTS/CREDITS
10.1 If, at any time, the Borrower is required by law to make any deduction or
withholding from any sum payable by it under this Agreement (or if thereafter
there is any change in the rates at which or the manner in which such deductions
or withholdings are calculated), the Borrower shall promptly notify the Bank.
10.2 If the Borrower makes any payment under this Agreement in respect of which
it is required to make any deduction or withholding, it shall pay the full
amount required to be deducted or withheld to the relevant taxation or other
authority within the time allowed for such payment under applicable law and
shall deliver to the Bank, within thirty days after it has made such payment to
the applicable authority, an original receipt (or a certified copy thereof)
issued by such authority evidencing the payment to such authority of all amounts
so required to be deducted or withheld in respect of such payment.
10.3 If the Borrower pays any additional amount under clause 9.1 and the Bank
effectively obtains a refund of tax or credit against tax on its overall net
income by reason of such payment and the Bank is able to identify any credit as
being attributable to such payment, then the Bank shall reimburse to the
Borrower such amount as it shall determine to be the proportion of such credit
as will leave the Bank, after that reimbursement, in no better or worse position
than it would have been in if that payment had not been required. The Bank shall
have absolute discretion as to whether to claim any such credit and, if it does
so claim, the extent, order and manner in which it does so, provided that
nothing in this Agreement shall require the Bank to disclose any confidential
information relating to the organisation of its affairs.
24
INCREASED COSTS
11.1 If, by reason of:
(i) any change in law or in its interpretation or administration;
and/or
(ii) compliance with any request from or requirement of any central
bank or other fiscal, monetary or other authority, whether or
not having the force of law but with which it is customary to
comply, (including, without limitation, a request or requirement
which affects the manner in which the Bank or the holding
company of the Bank is required to or does maintain capital
resources having regard to the Bank's obligations under this
Agreement and to amounts owing to it under this Agreement):
(a) the Bank or the holding company of the Bank incurs a cost as a result of
the Bank having entered into and/or performing its obligations under
this Agreement and/or assuming or maintaining its Commitment and/or
making one or more Advances and/or making a payment under or in respect
of any Undertaking;
(b) the Bank or the holding company of the Bank is unable to obtain the rate
of return on its overall capital which it would have been able to obtain
but for the Bank having entered into and/or performing its obligations
and/or assuming or maintaining its Commitment under this Agreement;
(c) there is any increase in the cost to the Bank or the holding company of
the Bank of funding or maintaining all or any of the advances comprised
in a class of advances formed by or including the Advances made or to be
made by the Bank under this Agreement;
(d) the Bank or the holding company of the Bank becomes liable to make any
payment on account of tax (not being a tax imposed on its overall net
income) or otherwise on or calculated by reference to the amount of the
Advances made or to be made or the Undertakings issued or to be issued
by the Bank under this Agreement and/or to any sum received or
receivable by it under this Agreement
then the Borrower shall, from time to time on demand promptly pay the Bank
amounts sufficient to indemnify the Bank or its holding company against, as the
case may be, (1) such cost, (2) such reduction in such rate of return (or such
proportion of such reduction as is, in the opinion of the Bank, attributable to
its obligations under this Agreement), (3) such increased cost (or such
proportion of such increased cost as is, in the opinion of the Bank,
attributable to its funding or maintaining advances under this Agreement or
amounts paid under or in respect of any Undertaking) or (4) such liability.
11.2(a) If the Bank intends to make a claim pursuant to clause 11.1 (whether in
respect of itself or its holding company) it shall notify the Borrower
as soon as reasonably practicable after it becomes aware of such change
or has received any such request;
(b) the Bank shall not make the same claim in respect of both itself and its
holding company; and
(c) nothing in this Agreement shall require the Bank to disclose any
confidential information relating to the organisation of its affairs.
25
ILLEGALITY
12. If at any time, it is unlawful for the Bank to make, fund or allow to remain
outstanding all or any of the Advances made or to be made by it under this
Agreement, or to issue or allow to remain outstanding any Undertaking, then the
Bank shall, promptly after becoming aware of the same, deliver to the Borrower a
certificate to that effect and:
(i) the Bank shall not thereafter be obliged to make Advances, or issue any
Undertakings under this Agreement and the amount of its Commitment shall
be immediately reduced to zero;
(ii) if the Bank so requires the Borrower shall on the date specified by the
Bank (which shall, unless otherwise required by any relevant law
affecting the Borrower or the Bank, be not less than ninety days from
the date that the certificate in question is delivered to the Borrower)
repay any outstanding Advances together with accrued interest thereon,
pay all other amounts owing to the Bank under this Agreement and cash
collateralise any outstanding Undertakings.
MITIGATION
13.1 If circumstances arise which would or would upon the delivery of a
certificate in accordance with clause 12 result in the reduction of the Bank's
Commitment to zero, repayment of the Loan and cash collateralisation of all
outstanding Undertakings, then, without in any way limiting, reducing or
otherwise qualifying the Bank's rights or the Borrower's obligations under
clause 12, the Bank shall as soon as reasonably practicable upon becoming aware
of the same notify the Borrower and (so long as request for repayment shall have
been made as referred to in clause 12(ii) in relation thereto) the Bank shall,
at its own discretion take such steps, during a period not exceeding 30 days
from the date it shall have given notice to the Borrower as aforesaid, as may
reasonably be open to it to mitigate the effects of such circumstances.
13.2 If circumstances arise which would cause the Bank to demand payment under
clauses 9.2 or 11.1 the Bank shall at its own discretion take such steps as may
be reasonably open to it to mitigate the effects of such circumstances.
REPRESENTATIONS
14.1 The Borrower represents and warrants to the Bank that:
(a) STATUS: it is a limited liability company, duly incorporated and validly
existing under the laws of England and Wales and has the power to own
its property and assets and carry on its business as it is now being and
will be conducted. No administrator, receiver, liquidator or similar
officer has been appointed with respect to it or any of its assets nor
is any petition or proceeding for such appointment pending;
(b) POWERS AND AUTHORITY: it has the power to enter into and perform the
Finance Documents to which it is a party and the transactions to be
implemented pursuant thereto and has taken all necessary action to
authorise the entry into and performance of those documents and
transactions;
26
(c) LEGAL VALIDITY: this Agreement constitutes, and each other Finance
Document to which it is or may become a party (when executed by it or on
its behalf) will constitute, its legal, valid and binding obligations
and (without limiting the generality of the foregoing) each Security
Document to which it is a party creates the security interests which
that Security Document purports to create or, as the case may be,
accurately evidences a security interest which has been validly created;
(d) NON-CONFLICT: the entry into and performance by it of this Agreement and
each other Finance Document to which it is a party and the transactions
to be implemented pursuant to those documents do not and will not
conflict with:
(i) any law or regulation or any official or judicial order
applicable to it, or
(ii) its memorandum or articles of association, statutes, by-laws or
other constitutional or governing documents or any of its
resolutions (having current effect), or
(iii) any agreement or instrument to which it is a party or which is
binding upon it or on its assets nor will it result in the
creation or imposition of any encumbrance on any of its assets
(save for any encumbrance created pursuant to the Security
Documents);
(e) NO DEFAULT: (i) no Event of Default has occurred and is continuing which
has not been waived, and (ii) no event has occurred and is continuing
which has not been waived and which constitutes or which, with the
giving of notice, expiry of any cure period, determination of
materiality or satisfaction of any other condition in each case as
provided for in the relevant agreement or document to which it is a
party (other than the mere occurrence of such event), is reasonably
likely to constitute a default under or in respect of any such agreement
or document and, in the case of (ii) only, which would have a Material
Adverse Effect;
(f) CONSENTS: all material authorisations, approvals, consents, licences,
exemptions, filings, registrations and other matters required by law for
or in consequence of (i) the entry into and performance by it of and/or
the validity of any of the Finance Documents or the transactions to be
implemented pursuant thereto and/or (ii) the carrying on of its business
in the ordinary course have been obtained or effected or will be
obtained or effected prior to the date required by law, save (in the
case of(i)) for the filing in the United Kingdom of the prescribed
particulars of the Security Documents pursuant to Section 395 of the
Companies Act 1985 (as amended), and other filings and registrations
necessary in connection with the Security Documents, all of which
filings and registrations will be effected promptly after execution by
the Borrower of the Finance Documents;
(g) FINANCIAL STATEMENTS: (i) the audited financial statements (including
the income statement, balance sheet and cash flow statement) of the
Borrower for the 14 months ended 31 December 1997 and (ii) the
management accounts for the period ended 30 April 1998 have been
prepared on a basis consistently applied in accordance with generally
accepted accounting principles and practices in England and Wales and
give in respect of (i) a true and fair view of, and in respect of (ii)
fairly represent, the results of its operations for that period and the
state of its affairs at that date, and in particular accurately disclose
or reserve against all the liabilities (actual or contingent) of the
Borrower;
27
(h) LITIGATION AND LABOUR DISPUTES: no litigation, arbitration or
administrative or regulatory proceedings or investigations for which
process or initiation claims have been served on it or labour disputes
involving it are current and, to its knowledge, no litigation,
arbitration, administrative or regulatory proceedings or investigations
or labour disputes involving it are pending or threatened, which (i) in
the case of any such litigation, arbitration, administrative or
regulatory proceedings or investigations are reasonably likely to be
determined adversely to it and which, if so adversely determined would
have a Material Adverse Effect or (ii) in the case of any such labour
disputes, would have a Material Adverse Effect;
(i) TAX LIABILITIES: no claims are being or are reasonably likely to be
asserted against it with respect to taxes which are reasonably likely to
be determined adversely to it and which, if so adversely determined,
would have a Material Adverse Effect; it is not materially overdue in
the filing of any tax returns required to be filed by it and it has paid
all taxes shown to be due on any tax returns required to be filed by it
or on any assessments made against it for non-payment, or a claim for
payment, and which would in each such case have a Material Adverse
Effect;
(j) ENCUMBRANCES: no encumbrance exists over its assets which would cause a
breach of clause 15.3(a);
(k) OWNERSHIP OF ASSETS: it has good title to all Inventory and Accounts and
has good title to or valid leases or licences of or is otherwise
entitled to use all material assets necessary to conduct its business as
conducted by it;
(l) DISTRIBUTIONS: since 31 December 1997 no Distribution has been declared,
paid, or made upon or in respect of any shares or other securities of
the Borrower;
(m) ENVIRONMENTAL LAWS: no member of the Borrower Group has breached any
Environmental Law which might give rise to a material liability and no
condition exists or act or event has occurred which could give rise to
any material breach of, or any material liability of any kind under, any
Environmental Law;
(n) ENVIRONMENTAL LICENCES: each member of the Borrower Group is in
possession of all material Environmental Licences required for the
conduct of its business or operations (or any part thereof) and no
member of the Borrower Group has breached any of the terms or conditions
of any such Environmental Licence which might give rise to a material
liability;
(o) NOTICES OF ENVIRONMENTAL BREACHES: (i) no member of the Borrower Group
has received any summons, complaint, order or similar written notice
that it is not in compliance with, or any public authority is
investigating its compliance with, any Environmental Laws or that it is
or may be liable to any other person as a result of a Release or
threatened Release of a Contaminant and (ii) none of the present or past
operations of any member of the Borrower Group is the subject of any
investigation by any public authority evaluating whether any remedial
action is needed to respond to a Release or threatened Release of a
Contaminant;
(p) NO DEPOSIT OF CONTAMINANTS: no Contaminant has at any time been used,
disposed of, generated, stored, transported, dumped, released,
deposited, buried or emitted at, on, from or under any premises owned,
leased, occupied or controlled by any
28
member of the Borrower Group in breach of any Environmental Law which
might give rise to a material liability;
(q) LIABILITY FOR ENVIRONMENTAL CLAIMS: no member of the Group has entered
into any negotiations or settlement agreements with any person
(including, without limitation, any prior owner of its property)
imposing material obligations or liabilities on any member of the Group
with respect to any remedial action in response to the Release of a
Contaminant or environmentally related claim;
(r) MATERIAL ADVERSE CHANGE: there has been no material adverse change in
the Borrower's financial condition since the date to which the most
recent Financial Statements delivered to the Bank were made up, nor in
the consolidated financial condition, business or operations of the
Borrower Group since that date. On the basis of a comprehensive review
and assessment undertaken by the Borrower of its computer applications
and inquiry made of its material suppliers, vendors or customers, the
Borrower believes that the "Year 2000 Problem" (that is, the risk that
computer applications used in connection with or otherwise affecting its
business may be unable to recognise and perform properly dated sensitive
functions involving certain dates prior to, and any date after, 31
December 1999) will not have a material adverse effect on the Borrower
or any other member of the Borrower Group;
(s) ACCOUNTS:
(i) each existing Account represents, and each future Account will
represent, a bona fide sale or lease and delivery of goods by the
Borrower, or the rendering of services by the Borrower, in the
ordinary course of the Borrower's business;
(ii) each existing Account is, and each future Account will be, for a
liquidated amount payable by the Account Debtor thereon on the
terms set forth in the invoice therefor or in the schedule
thereof delivered to the Bank, without set-off, deduction,
defence, or counterclaim;
(iii) no payment will be received with respect to any Account, and no
credit, discount, or extension, or agreement therefor will be
granted on any Account, except as reported to the Bank in
accordance with this Agreement;
(iv) each copy of an invoice delivered to the Bank by the Borrower
will be a genuine copy of the original invoice sent to the
Account Debtor named therein; and
(v) all goods described in any invoice representing a sale of goods
will have been delivered to the Account Debtor and all services
of the Borrower described in any invoice will have been
performed; and
(t) INVENTORY: all of the Inventory is and will be held for sale or lease,
or to be furnished in connection with the rendering of services in the
ordinary course of the Borrower's business and is and will be fit for
such purpose and will be kept by the Borrower, at its own expense, in
good and marketable condition.
(u) BORROWINGS: the Borrower has no Borrowings other than those under the
Facilities, the Bonding Facility, the Barclays Retained Facilities, the
BMBF Facilities, the FX
29
Contracts, the hire purchase agreements listed in the Fourth Schedule,
the foreign exchange contracts listed in the Fifth Schedule and any
other foreign exchange contracts entered into by the Borrower from time
to time, trade credit on standard terms incurred in the ordinary course
of the Borrower's business or such other extended period as may be
agreed with the Bank and Borrowings in favour of a Guarantor.
(v) REPORTS: the Financial Performance Projections are prepared in good
faith and are based on reasonable assumptions.
14.2 The representation and warranties set out in clause 14.1 shall survive the
execution of this Agreement and the making of each Advance under this Agreement
and shall be made on the date hereof and be deemed to be repeated on the date of
delivery of each Notice of Drawdown hereunder and on each day an Advance is made
and on each date interest is payable, with reference to the facts and
circumstances then subsisting, as if made at each such time.
COVENANTS
15.1 ACCOUNTS INFORMATION: The Borrower undertakes with the Bank that, from the
date of this Agreement until all its liabilities under the Finance Documents
have been discharged:
(a) PREPARATION OF ACCOUNTS: it will prepare the financial statements
referred to in paragraph (b) on a basis consistently applied in
accordance with generally accepted accounting principles in England and
Wales and those financial statements shall (i) in the case of the
audited financial statements give a true and fair view of, and (ii) in
the case of all other financial statements fairly represent the results
of its operations for the period in question and the state of its
affairs as at the date to which the financial statements are made up and
shall accurately disclose or reserve against all liabilities (actual or
contingent) of the Borrower;
(b) INFORMATION:
(i) it will deliver to the Bank as soon as they become available (and
in any event within 90 days of the end of each of its financial
years) copies of its unaudited financial statements for that
period which shall contain an income statement and a balance
sheet;
(ii) it will deliver to the Bank as soon as they become available (and
in any event within 120 days of the end of its Financial Years)
copies of is audited Financial Statements for that period
together with the auditors report relating thereto;
(iii) it will deliver to the Bank as soon as they become available (and
in any event within 21 days of the end of each Management
Accounting Period, its Management Accounts as at the end of and
for that Management Accounting Period;
(iv) it will deliver to the Bank no later than 30 days before the end
of its Financial Year, annual Financial Performance Projections;
30
(c) REPORTS: it will deliver to the Bank, in accordance with clause 29 or by
such form of electronic medium as agreed with the Bank prior to the date
of this Agreement, the following documents at the following times in
form satisfactory to the Bank:
(i) within 45 days after the end of each financial quarter, a report
of the Capital Expenditure of the Borrower Group for such
quarter.
(ii) on a weekly basis, a schedule of credit memos and reports, a
schedule of collections of accounts receivable, a schedule of
Accounts created since the last such schedule, a report of the
inventory balance (by location) based on the perpetual inventory
reports and a schedule of the 1999 Model Bicycles purchased in
the form of the borrowing base certificate set out in the Sixth
Schedule;
(iii) upon request, copies of invoices, credit memos, shipping and
delivery documents;
(iv) weekly ageings of accounts receivable to be delivered no later
than two business days after the end of the week for such week;
(v) weekly inventory reports by category to be delivered no later
than two business days after the end of the week for such week;
(vi) upon request, monthly perpetual inventory reports;
(vii) weekly ageings of accounts payable no later than two business
days after the end of the week for such week;
(viii) upon request, copies of purchase orders, invoices and delivery
documents for Inventory and equipment acquired by the Borrower;
(ix) such other reports or additional financial or other information
as the Bank shall reasonably request from time to time; and
(x) at the end of each of the periods specified in clause 15.1(d), a
certificate of an authorised signatory of the Borrower (without
personal liability) setting out in reasonable detail computations
establishing compliance with clause 15.1(d) and certifying that
all the representation and warranties are true as at that date
and that no Potential Event of Default which would have a
Material Adverse Effect or Event of Default has occurred during
such period;
(xi) certificates of an authorised signatory of the Borrower (without
personal liability) certifying that the foregoing reports fairly
represent the results of the Borrower's operations for that
period and the state of its affairs at that date.
If any of the Borrower's records or reports are prepared by an
accounting service or other environmental agent, the Borrower hereby
authorises such service or agent to deliver such records, reports and
related documents to the Bank.
31
(d) FINANCIAL RATIOS:
The Borrower shall ensure that, at all times, the consolidated financial
condition of the Borrower Group shall be such that:
MINIMUM INTEREST COVERAGE
(A) the ratio of (i) EBIT for the period specified below to (ii)
Borrowing Costs for such period shall be not less than:
RATIO
From Closing to 30 September 1998 3.2:1
Closing to 31 December 1998 3.2:1
Closing to 31 March 1999 3.5:1
Closing to 30 June 1999 3.5:1
12 months to 30 September 1999 3.5:1
12 months to 31 December 1999 4.3:1
12 months to 31 December 2000 5.5:1
From 1 January 2001 to 30 June 2001 5.5:1
ADJUSTED TANGIBLE NET WORTH
(B) Adjusted Tangible Net Worth shall be not less than the
following amounts during the following periods:
PERIOD AMOUNT
(POUND)
From Closing to 30 September 1998 3,250,000
1 October 1998 to 31 December 1998 3,456,000
1 January 1999 to 31 March 1999 3,500,000
1 April 1999 to 30 June 1999 3,700,000
1 July 1999 to 30 September 1999 3,800,000
1 October 1999 to 31 December 1999 4,250,000
1 January 2000 to 31 March 2000 6,000,000
1 April 2000 to 30 June 2000 6,000,000
1 July 2000 to 30 September 2000 6,000,000
1 October 2000 to 31 December 2000 6,000,000
From 1 January 2001 to 30 June 2001 6,000,000
all as calculated by reference to the account information
(the RELEVANT ACCOUNTING INFORMATION) most recently delivered
under this Agreement.
32
(e) FINANCIAL RATIOS: definition of terms:
The expressions used in clause 15.1(d) shall have the following
meanings:
ADJUSTED TANGIBLE ASSETS means all of the Borrower's assets
except:
(A) deferred assets, other than prepaid insurance and
prepaid taxes;
(B) patents, copyrights, trademarks, trade names,
franchises, goodwill and other similar intangibles;
(C) Restricted Investments;
(D) unamortised debt discount and expense;
(E) assets of the Borrower constituting Intercompany
Accounts; and
(F) fixed assets to the extent of any write-up in the book
value thereof resulting from a revaluation effective
after the Closing Date;
ADJUSTED TANGIBLE NET WORTH means, at any date:
(A) the book value (after deducting related depreciation,
amortisation, valuation and other proper reserves as
determined in accordance with Applicable GAAP) at which
the Adjusted Tangible Assets would be shown on a balance
sheet of the Borrower at such date prepared in
accordance with Applicable GAAP; LESS
(B) the amount at which the Borrower's liabilities would be
shown on such balance sheet, including as liabilities
all reserves for contingencies and other potential
liabilities which would be required to be shown on such
balance sheet.
BORROWINGS means a sum equal to the aggregate amount for the
time being of the principal, capital or nominal amount
(determined on a consolidated basis) of all financial
indebtedness of any member of the Borrower Group (other than
monies borrowed or raised from another member of the Borrower
Group) and, without prejudice to the generality of the
foregoing, shall be deemed to include the following:
(A) the principal amount of any debenture, bond, note, loan
stock, preference share capital, commercial paper or
similar instrument of any member of the Borrower Group;
(B) any amounts raised by any member of the Borrower Group
under any xxxx of exchange (but excluding any xxxx drawn
or accepted in the ordinary course of trade of the
relevant member of the Borrower Group and which is
payable at sight or not more than 90
33
days after sight or has a final maturity or not more
than 90 days from the date thereof and is not
refinancing another xxxx whether or not relating to the
same underlying transaction) and the indebtedness of any
member of the Borrower Group under any acceptance
credit, xxxx discounting, note purchase or documentary
credit facility;
(C) the aggregate amount remaining to be paid by any member
of the Borrower Group under any credit agreement save
for amounts remaining to be paid which cannot properly
be attributed to capital in accordance with Applicable
GAAP;
(D) the capitalised value (determined in accordance with
Applicable GAAP) of the outstanding commitments of any
member of the Borrower Group under any finance lease;
(E) indebtedness under any receivables purchase, factoring
or discounting arrangement (to the extent there is any
recourse against any member of the Borrower Group);
(F) the aggregate amount remaining to be paid in respect of
any credit (other than normal trade credit which has
been outstanding for a period of less than 90 days or
such longer period as may be agreed with the Bank)
granted to, or of any deferred payments due from, any
member of the Borrower Group in respect of the
acquisition or constitution price of assets acquired or
constructed or the purchase price of services supplied;
(G) indebtedness of any member of the Borrower Group in
respect of any other transaction having the commercial
effect of a borrowing or other raising of money entered
into by it in order to finance its business or
operations or capital requirements; and
(H) (without double counting) indebtedness of any member of
the Borrower Group under any guarantee or other
assurance against financial loss in respect of the
financial indebtedness of any person.
For the purpose of determining the amount of BORROWINGS at any
time, any amount which is on a particular day outstanding or
repayable in a currency other than sterling shall on that day be
taken into account (i) if that day is the last day of a
Financial Year or financial quarter, at its equivalent in
sterling at the rate of exchange used for the purpose of
preparing the balance sheet forming part of the Relevant
Accounting Information prepared as at such date and (ii) in any
other case, at its equivalent in sterling as determined by the
Bank by reference to the Bank's spot rate of exchange for the
purchase of sterling with the relevant currency at or about
11.00 a.m. on the date on which the relevant determination falls
to be made.
BORROWING COSTS means in relation to any financial period a sum
equal to the aggregate amount of all continuing, regular or
periodic costs,
34
charges and expenses incurred by the Borrower Group in respect
of such period (and whether paid or not) in effecting, servicing
or maintaining Borrowings including:
(A) interest (whether the same shall be payable immediately
or be capitalised or otherwise deferred);
(B) any fixed or minimum premium or dividend paid or payable
on the maturity of any Borrowings;
(C) consideration given whether by way of discount or
otherwise in connection with finance by way of
acceptance credit, xxxx discounting, note purchase,
receivables purchase, debt factoring or other like
arrangement; and
(D) the gross amount payable under any finance lease or
credit agreement less so much as can properly be
attributed to capital,
the amount of any such cost, charges and expenses to be
allocated to each such period over the term of any Borrowings in
accordance with Applicable GAAP;
EBIT means, in relation to any financial period a sum equal to
the Borrower Group's profit on ordinary activities before
taxation (save to the extent that such profit is attributable to
any interest received) after adding back Borrowing Costs in
respect of such period but excluding:
(A) profits or losses on the sale or termination of an
operation;
(B) profits or losses on the disposal of fixed assets; and
(C) extraordinary items.
(f) CHANGES IN BASIS OF PREPARATION OF RELEVANT ACCOUNTING INFORMATION:
Where any Relevant Accounting Information to be delivered under clause
15 has been prepared in a manner which is inconsistent with the
accounting principles or policies in accordance with which the Original
Financial Statements were prepared, the Borrower shall provide to the
Bank a written explanation of any such inconsistency, together with
details of its effects. If the Bank is satisfied that such inconsistency
has not altered any of the numerical information which would otherwise
have been provided and which would have been required for the purposes
of establishing compliance with the provisions of clause 15.1(d) then,
notwithstanding such inconsistency, the Relevant Accounting Information
shall be deemed to have been prepared in accordance with Applicable
GAAP.
(g) CHANGES IN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES: If, as a result of
any Financial Reporting Standard or other statement issued by the
Accounting Standards Board or any successor authority responsible for
the establishment and promulgation of generally accepted accounting
principles, there shall be any change in such principles such as would
be likely to affect the ability of the Bank to satisfy itself from the
information delivered as Relevant Accounting Information as to
compliance with the provisions of clause 15.1(d), the Bank shall have
the right to adjust the
35
financial ratios set out in clause 15.1(d) or the relevant definitions
set out in clause 15.1(e) so as to reflect so far as is practicable the
effect of any such change.
15.2 GENERAL UNDERTAKINGS: The Borrower undertakes with the Bank that, from the
date of this Agreement until all its liabilities under the Finance Documents
have been discharged:
(a) CONDUCT OF BUSINESS: it has, and will ensure that each other member of
the Borrower Group has, the right to conduct its business and operations
as they are conducted in all applicable jurisdictions and will do, and
will procure that each other member of the Borrower Group does, all
things necessary (including compliance with all terms and conditions of
any licences and consents) to obtain, preserve and keep in full force
and effect all rights, licences (including, without limitation, all
Environmental Licences) and consents as are necessary for the conduct of
such business and operations;
(b) PAYMENT OF TAXES AND CLAIMS: it will, and will procure that each other
member of the Borrower Group will, duly and punctually pay and discharge
(i) all taxes imposed upon it or its properties (save where the same are
being contested in good faith and by appropriate proceedings and where
adequate reserves are being maintained with respect thereto) and (ii)
all lawful claims which, if unpaid, would by law become encumbrances
upon any of its properties;
(c) CONSENTS: it will obtain and promptly renew from time to time, and will
promptly deliver to the Bank certified copies of, any authorisation,
approval, consent, licence, exemption, registration, recording, filing
or notarisation as may be necessary or desirable to ensure the validity,
enforceability or priority of the liabilities and obligations of its or
the rights of the Bank under the Finance Documents to which it is a
party and it shall comply with the terms of the same;
(d) NOTICES TO BANK: the Borrower shall notify the Bank in writing of the
following matters at the following times (each such notice to describe
the subject matter thereof in reasonable detail and to set out the
action that the Borrower has taken or proposes to take with respect
thereto):
(i) promptly after becoming aware of the existence of any Event of
Default or Potential Event of Default;
(ii) after becoming aware that any shareholder in the Borrower or any
creditor of an amount in excess of (pound)10,000 in the Borrower
has given notice or taken any action with respect to a claimed
default;
(iii) promptly after becoming aware of any material adverse change in
the Borrower's assets, business, operations or condition
(financial or otherwise);
(iv) promptly after becoming aware of any pending or threatened
action, suit, proceeding or counterclaim by any person which if
adversely determined would have a Material Adverse Effect, or
any pending or threatened investigation by a public authority;
(v) after becoming aware of any pending or threatened strike, work
stoppage, material unfair labour practice claim, or other
material labour dispute affecting any member of the Borrower
Group;
36
(vi) after becoming aware of any violation of any law, statute,
regulation, or ordinance of a public authority applicable to any
member of the Borrower Group or its assets which may have a
Material Adverse Effect;
(vii) promptly after becoming aware of any violation by the Borrower
of Environmental Laws which is likely to result is a material
liability in the Borrower Group or immediately upon receipt of
any notice that a public authority has asserted that the
Borrower is not in compliance with Environmental Laws or that
its compliance is being investigated;
(viii) not less than ten days prior to the Borrower changing its name
or the address of its registered office.
(e) INSURANCE: it will procure that it takes out and maintains insurance
cover over its assets and undertaking of a type and in an amount which
is consistent with good business practice in the industry concerned. It
further undertakes to keep and maintain all such insurance either in the
joint names of the Borrower and the Bank or (as the Bank may, in any
case, require) with the interest of the Bank as loss payee endorsed on
each relevant policy;
(f) HEDGING: it will within 90 days of the Closing Date and at all times
thereafter enter into such currency hedging agreements as are required
by the Bank in order to implement and maintain a hedging policy agreed
with the Bank;
(g) ENVIRONMENTAL LAWS: it shall take prompt and appropriate action to
respond to and remedy any non-compliance with Environmental Laws and
shall regularly report to the Bank on such response and remedying.
Without limiting the generality of the foregoing, whenever the Borrower
gives notice to the Bank the Borrower shall, at the Bank's request and
the Borrower's expense:
(i) cause an independent environmental engineer acceptable to the
Bank to conduct such tests of the site where the Borrower's
non-compliance or alleged non-compliance with Environmental Laws
has occurred and prepare and deliver tot he Bank a report
setting forth the results of such tests, a proposed plan for
responding to any environmental problems described therein, and
an estimate of the costs thereof; and
(ii) provide to the Bank a supplemental report of such engineer
whenever the scope of the environmental problems, or the
Borrower's response thereto or the estimated costs thereof,
shall change;
(h) YEAR 2000 PROBLEM: it will, on a timely basis, take all necessary or
appropriate steps to address the "Year 2000 Problem" referred to in
clause 14.1(r) so as to ensure that the Year 2000 Problem does not
have a Material Adverse Effect.
37
15.3 NEGATIVE UNDERTAKINGS: The Borrower undertakes with the Bank that, from the
date of this Agreement until all its liabilities under the Finance Documents
have been discharged:
(a) SECURITY: it will not without the prior written consent of the Bank:
(i) create or permit to subsist any encumbrance on the whole or any
part of its present or future property, assets or revenues; or
(ii) sell or otherwise dispose of any of its property or assets on
terms whereby such property or assets are or may be leased to or
re-acquired or acquired by it; or
(iii) sell or otherwise dispose of any of its receivables;
except that it may:
(aa)create or permit to subsist a lien arising in the normal
course of trading or by operation of law or any right of
set-off arising by operation of law securing obligations not
more than thirty days overdue;
(bb)create or permit to subsist any conditional sale or title
retention on the suppliers standard terms of business arising
under or pursuant to any contract for the purchase of goods
in the normal course of business;
(cc)create or permit to subsist any encumbrance over any capital
asset to secure the payment of all or any part of the
purchase price of any capital asset (which shall not include
real property) on the acquisition of such capital asset
(whether such capital asset is purchased or leased), provided
that the aggregate of all such payments to be secured shall
not exceed (pound)526,000 in the Financial Year to 31
December 1998 and (pound)200,000 (or such other higher amount
as may be agreed by the Bank) in each Financial Year
thereafter and provided further that any such acquisition
shall have been previously notified to the Bank; and
(dd)permit to subsist any encumbrance created under any of the
Finance Documents;
(b) DISPOSALS: it will not, either in a single transaction or in a series of
transactions whether related or not and whether voluntarily or
involuntarily, sell, transfer, lease, loan or otherwise dispose of any
of its property or assets (including but not limited to Inventory and
Accounts) except that it may dispose of property or assets provided
always that any such disposal is:
(i) made in the ordinary course of the Borrower's business and for
full value and on arm's length terms; or
(ii) made in exchange for other property or assets comparable as to
type and value; or
(iii) of an asset or assets whose value is not more than (pound)200,000
in aggregate in any Financial Year;
and in each case provided the proceeds are credited to the Barclays
Collection Account.
(c) INDEBTEDNESS: it will not incur or have outstanding any Borrowings or
indebtedness other than indebtedness under (i) the Facilities; (ii) the
Bonding Facility; (iii) the FX
38
Contracts (iv) the Barclays Retained Facilities and the BMBF Facilities;
(v) trade credit on standard terms incurred in the ordinary course of
the Borrower's business or any extended period as agreed with the Bank;
(vi) subject to the prior consent of the Bank, in favour of a Guarantor
or (vii) under other foreign exchange contracts as notified to the Bank;
(d) ACQUISITIONS: it will not, without the Bank's prior written consent (not
to be unreasonably withheld or delayed), make any acquisition of any
asset or business except that it may acquire:
(i) assets in the ordinary course of its business and for the
purpose of its trading activities;
(ii) any capital asset (which shall include real property) (whether
such capital asset is purchased or leased) provided that the
aggregate of all such acquisitions and Capital Expenditure does
not exceed (pound)526,000 in the Financial Year to 31 December
1998 and (pound)200,000 (or such other higher amount as may be
agreed by the Bank) in each Financial Year thereafter and
provided further that each such acquisition shall have been
notified to the Bank prior to making such acquisition; and
(iii) subject to notifying the Bank prior to any such acquisition, any
asset not otherwise included in sub-paragrapgh (i) and (ii) above
provided such expenditure does not exceed (pound)200,000 in any
Financial Year and will not result in any change of control of
any member of the Borrower Group, cause a Potential Event of
Default or an Event of Default or have any Material Adverse
Effect;
(e) DISTRIBUTIONS AND CHANGES IN CAPITAL STRUCTURE: no member of the
Borrower Group shall (i) directly or indirectly declare or make, or
incur any liability to make, any Distribution, except Distributions to
the Borrower by a Subsidiary wholly-owned by the Borrower or (ii) make
any change in its capital structure which could have a material adverse
effect on the Borrower or that member of the Borrower Group;
(f) GUARANTEES: it will not, and will procure that no other member of the
Borrower Group will, give any guarantee to or for the benefit of any
person or otherwise voluntarily assume any liability, whether actual or
contingent, in respect of any obligation of any other person;
(g) TRANSACTIONS WITH AFFILIATES: subject to the Bank's written consent, no
member of the Borrower Group shall:
(i) other than on arms' length terms and in the ordinary course of
business, sell, transfer, distribute or pay any money or assets
to any Affiliate except that, prior to a Potential Event of
Default or Event of Default which is continuing the Borrower may
repay principal and interest in whole or part of the intercompany
loan dated 31 August 1997 to GT Bicycles Inc., provided always
that after making such payment there shall be remaining Available
Commitment of at least (pound)750,000 of the Available Commitment
calculated prior to making such payment;
(ii) lend or advance money or assets to any Affiliate;
39
(iii) invest in (by capital contribution or otherwise) or purchase or
repurchase any shares or indebtedness or any assets of any
Affiliate; or
(iv) become liable on any guarantee of the Indebtedness, dividends or
other obligations of any Affiliate.
(h) RESTRICTED INVESTMENTS: no member of the Borrower Group shall make any
Restricted Investment;
(i) ACCOUNTS: it shall not re-date any invoice or sale or make sales on
extended credit beyond that customary in its business or extend or
modify any Account; if the Borrower becomes aware of any matter
affecting any Account, including information regarding the Account
Debtor's creditworthiness, the Borrower will promptly so advise the Bank
in the case of Account Debtors owing more than (pound)35,000 promptly,
and in the case of other Account Debtors on a monthly basis;
(j) ACCEPTANCE OF NOTES OR OTHER INSTRUMENTS: it shall not accept any note
or other instrument (except a cheque or other instrument for the
immediate payment of money) with respect to any Account without the
Bank's written consent; if the Bank consents to the acceptance of any
such note or other instrument, it shall be considered as evidence of the
Account and not payment thereof, and the Borrower will promptly deliver
such note or instrument to the Bank appropriately endorsed. Regardless
of the form of presentment, demand, notice of dishonour, protest and
notice of protest with respect thereto, the Borrower will remain liable
thereon until such note or instrument is paid in full;
(k) DISPUTES WITH ACCOUNT DEBTORS: it shall notify the Bank promptly of all
disputes and claims with Account Debtors in excess of(pound)50,000 and
settle or adjust them at no expense to the Bank, but no discount, credit
or allowance shall be granted to any Account Debtor without the Bank's
consent, except for discounts, credits and allowances made or given in
the ordinary course of the Borrower's business when no Event of Default
exists hereunder. The Borrower shall send the Bank a copy of each credit
notes in excess of(pound)50,000 as soon as issued and copies of all
credit notes on a weekly basis. The Bank may at all times after a demand
for payment has been made under clause 16.2 settle or adjust disputes
and claims directly with customers or Account Debtors for amounts and
upon terms which the Bank considers advisable and, in all cases, the
Bank will credit the Borrower's loan account with only the net amounts
received by the Bank in payment of any Accounts;
(l) RETURNS OF INVENTORY: if an Account Debtor returns any Inventory to the
Borrower when no Event of Default exists, then the Borrower shall
promptly determine the reason for such return and shall issue a credit
note to the Account Debtor in the appropriate amount. The Borrower shall
immediately report to the Bank any return involving an amount in excess
of(pound)50,000 and shall report all returns to the Bank on a weekly
basis. Each such report shall indicate the reasons for the returns and
the locations and condition of the returned Inventory. If any Account
Debtor returns Inventory to the Borrower after a demand for payment has
been made under clause 16.2, the Borrower shall:
(i) hold the returned Inventory in trust for the Bank;
(ii) segregate all returned Inventory from all of its other assets;
40
(iii) dispose of the returned Inventory solely according to the Bank's
written instructions; and
(iv) not issue any credits or allowances with respect thereto without
the Bank's prior written consent.
Whenever any Inventory is returned, the related Account shall be deemed
ineligible, and the Caratti Borrowing Base shall be adjusted
accordingly;
(m) INVENTORY: it will not, without prior written notice to the Bank,
acquire or accept any Inventory on consignment or approval;
(n) INVENTORY - REPORTING SYSTEM: it will maintain a perpetual inventory
reporting system at all times, through which a physical count of the
Inventory is conducted at least twice per Financial Year, and at such
other times as the Bank reasonably requests, and shall promptly, upon
completion, supply the Bank with a copy of such count accompanied by a
report of the value of such Inventory (valued at the lower of (i) costs,
on a first in, first out or weighted average basis or (ii) market
value); the Borrower will not without the Bank's prior written consent,
sell any Inventory on a sale or return, sale on approval, consignment or
other repurchase or return basis; and
(o) HEDGING/SPECULATIVE TRANSACTIONS: it will not enter into any interest
rate or currency swap, cap, ceiling, collar, floor or financial futures
or commodity contract or option or any similar treasury transactions
unless the same forms part of the hedging policy required by the Bank
pursuant to clause 15.2(f) or as part of an interest rate hedging
policy;
(p) CAPITAL EXPENDITURE: no member of the Borrower Group shall make or incur
any Capital Expenditure if, after giving effect thereto, the aggregate
amount of all Capital Expenditure (which for the avoidance of doubt
shall include any acquisitions made under clause 15.3(d)) by the
Borrower and its Subsidiaries in any Financial Year would exceed
(pound)526,000 in the Financial Year to 31 December 1998 and
(pound)200,000 (or such other higher amount as may be agreed by the
Bank) in each Financial Year thereafter;
(q) OPERATING LEASE OBLIGATIONS: no member of the Borrower Group shall enter
into any lease of real or personal property as lessee or sublessee
(other than a finance lease) if, after giving effect thereto, the
aggregate amount of Rentals (as hereinafter defined) payable by the
Borrower and its Subsidiaries in any Financial Year in respect of such
lease and all other such leases would exceed (pound)320,000. The term
RENTALS means all payments due from the lessee or sublessee under a
lease, including, without limitation, rent, service charge, utility or
maintenance costs and insurance premiums together with any VAT thereon.
EVENTS OF DEFAULT
16.1 If any of the events set out below occurs, the Bank may take any action as
is provided for in any of the Finance Documents:
(a) NON-PAYMENT: the Borrower or any Guarantor fails to pay any amount due
under any Finance Document within 2 business days of the due date or on
demand, if so payable;
41
(b) BREACH OF OBLIGATIONS: the Borrower or any Guarantor fails to observe or
perform any of its obligations under the Finance Documents or under any
undertaking or arrangement entered into in connection therewith, other
than an obligation of the type referred to in clause 16.1(a), and, in
the case of any failure in respect of clause 15.1(b)(i) and (ii), such
failure if capable of remedy is not remedied to the satisfaction of the
Bank or not waived in writing by the Bank within 10 days of its
occurrence and, in the case of any failure in respect of clauses
15.1(c)(i), (ii), (iii) and (iv) such failure if capable of remedy is
not remedied to the satisfaction of the Bank or is not waived in writing
by the Bank within 5 days of its occurrence;
(c) MISREPRESENTATION: any representation, warranty or statement which is
made (or deemed or acknowledged to have been made) by the Borrower or
any Guarantor in the Finance Documents or which is contained in any
certificate, statement, legal opinion or notice provided under in
connection with the Finance Documents proves to be incorrect in any
material respect, or if repeated at any time with reference to the facts
and circumstances subsisting at such time, would not be accurate in all
material respects;
(d) INVALIDITY: any provision of any of the Finance Documents or the GTBC
Credit Agreement is or becomes, for any reason, invalid or
unenforceable;
(e) CESSATION OF BUSINESS: the Borrower changes or threatens to change the
nature or scope of its business, suspends or threatens to suspend a
substantial part of the present business operations which it now
conducts directly or indirectly, or any governmental authority
expropriates or threatens to expropriate all or part of its assets and
the result of any of the foregoing is, in the determination of the Bank,
materially and adversely to affect the financial condition of the Group
or the Borrower's or any Guarantor's ability to observe or perform its
obligations under the Finance Documents;
(f) CROSS-DEFAULT: either (i) any indebtedness in respect of Borrowings of
an aggregate amount of (pound)150,000 or more of the Borrower or any
member of the Borrower Group becomes due or capable of being declared
due before its stated maturity or is not paid on maturity or on demand
(if so payable), any guarantees of an aggregate amount of(pound)150,000
or more are not discharged at maturity or when called or the Borrower or
any member of the Borrower Group goes into default under, or commits a
breach of, any instrument or agreement relating to any such indebtedness
in respect of Borrowings or guarantee; or (ii) any default, howsoever
described, which entitles the Lenders (as defined in the GTBC Credit
Agreement) to demand early repayment, occurs under the GTBC Credit
Agreement, the Bonding Facility Letter or the FX Contracts;
(g) APPOINTMENT OF RECEIVER, LEGAL PROCESS: an encumbrancer takes possession
of, or a trustee or administrative or other receiver or similar officer
is appointed in respect of, all or any part of the business or assets of
the Borrower or distress or any form of execution is levied or enforced
upon or sued out against any such assets and is not discharged within
fifteen days of being levied, enforced or sued out, or any encumbrance
which may for the time being affect any of its assets becomes
enforceable;
(h) INSOLVENCY: the Borrower is unable to pay its debts within the meaning
of Section 123(1) of the Insolvency Xxx 0000 or becomes unable to pay
its debts as they
42
fall due or suspends or threatens to suspend making payments (whether of
principal or interest) with respect to all or any class of its debts;
(i) COMPOSITION: the Borrower convenes a meeting of its creditors or
proposes or makes any arrangement or composition with, or any assignment
for the benefit of, its creditors;
(j) ADMINISTRATIVE, WINDING UP: a petition is presented or a meeting is
convened for the purpose of considering a resolution or other steps are
taken for making an administration order against or for the winding up
of the Borrower or an administration order or a winding up order is made
against the Borrower (other than for the purposes of and followed by a
reconstruction previously approved in writing by the Bank, unless during
or following such reconstruction the Borrower becomes or is declared to
be insolvent);
(k) ANALOGOUS PROCEEDINGS: anything analogous to any of the events specified
in paragraphs (g), (h), (i) or (j) occurs under the laws of any
applicable jurisdiction;
(l) MATERIAL ADVERSE CHANGE: any event or series of events whether related
or not occurs which would be likely materially and adversely to affect
the financial condition of the Group or the ability of the Borrower or
any Guarantor to perform its obligations under the Finance Documents;
(m) OWNERSHIP: the Borrower ceases to be a member of the Group;
(n) SECURITY DOCUMENTS: any of the security interests purported to be
granted pursuant to the Security Documents is not effective or is
alleged by any member of the Group to be ineffective in whole or part
for any reason; and
(o) CARATTI BORROWING BASE: as calculated by the Bank at any time the
Caratti Borrowing Base is exceeded by the Outstandings under the Spike
Facility and the Revolving Facility except if such occurrence is as a
result of the Bank varying the amount of the Caratti Borrowing Base in
relation to the current Outstandings in which event if the Caratti
Borrowing Base is exceeded by Outstandings under the Spike Facility and
the Revolving Facility and is not remedied by the Borrower within 10
days of receiving notice from the Bank.
16.2 ACTION ON EVENT OF DEFAULT: In the case of any of the events described in
clause 16.1 then, at once or at any time thereafter while the same is
continuing, the Bank may by notice to the Borrower:
(a) cancel its Commitment under the Revolving Facility and/or the L/C
Facility and/or the Spike Facility; and/or
(b) declare all or part of the Loan to be immediately due and payable
whereupon it shall become so due and payable together with accrued
interest thereon and any other amounts then payable under this
Agreement, such payment to be effected on a date to be notified by the
Bank to the Borrower; and/or
(c) demand immediate repayment of any amounts to which paragraph (b) above
applies or in the case of any Undertakings, demand cash
collateralisation of any such Undertakings; and/or
43
(d) place all or part of the Loan on demand, whereupon it shall immediately
become repayable on demand and at any time thereafter:
(i) make any further amendment to the repayment or cash
collateralisation obligations relating to such Advances, and the
L/C Facility; and/or
(ii) demand repayment of all or part of the Advances together with
accrued interest and any other amounts then payable under this
Agreement.
DEFAULT INTEREST AND INDEMNITY
17.1 If any sum due and payable by the Borrower under this Agreement is not paid
on the due date therefor in accordance with the provisions of clause 19 or if
any sum due and payable by the Borrower under any judgment of any court in
connection with this Agreement is not paid on the date of such judgment, the
period beginning on such due date or, as the case may be, the date of such
judgment and ending on the date upon which the obligation of the Borrower to pay
such sum (the balance thereof for the time being unpaid being in this Agreement
referred to as an UNPAID SUM) is discharged shall be divided into successive
periods, each of which (other than the first) shall start on the last day of the
preceding such period and the duration of each of which shall (except as
otherwise provided in this clause 17) be selected by the Bank.
17.2 During each such period relating thereto as is mentioned in clause 17.1 an
unpaid sum shall bear interest at the rate per annum which is the sum from time
to time of two per cent. per annum above the cost of funds to the Bank from
whatever sources it reasonably selects.
17.3 Any interest which shall have accrued under clause 17.2 in respect of an
unpaid sum shall be due and payable and shall be paid by the Borrower at the end
of the period by reference to which it is calculated or on such other date or
dates as the Bank may specify by written notice to the Borrower.
17.4 The Borrower undertakes to indemnify the Bank on an after tax basis
against:
(i) any cost, claim, loss, expense (including reasonable legal fees) or
liability together with any VAT thereon, which it may reasonably sustain
or incur as a consequence of making any Advance, maintaining or funding
any Advance, issuing or maintaining any Undertaking, the occurrence of
any Event of Default or any default by the Borrower in the performance
of any of the obligations expressed to be assumed by it in this
Agreement; and
(ii) any loss it may suffer as a result of its funding an Advance, or issuing
Undertakings requested by the Borrower under this Agreement but not made
(other than by reason of negligence or wilful default by the Bank) by
reason of the operation of any one or more of the provisions of this
Agreement.
17.5 Any unpaid sum shall (for the purposes of this clause 17 and clause 11.1)
be treated as an Advance and accordingly in this clause 17 the term ADVANCE
includes any unpaid sum.
44
CURRENCY OF ACCOUNT AND PAYMENT
18.1 Sterling is the currency of account and payment for each and every sum at
any time due from the Borrower under this Agreement Provided that:
(i) each repayment of an Advance or a part thereof shall be made in the
currency in which such Advance is denominated at the time of that
repayment;
(ii) any cash collateralisation in respect of any outstanding Undertakings
shall be made in the currency in which such amount to be repaid or cash
collateralised is denominated at the time of that repayment or cash
collateralisation;
(iii) each payment of interest shall be made in the currency in which the sum
in respect of which such interest is payable is denominated;
(iv) each payment in respect of costs and expenses shall be made in the
currency in which the same were incurred;
(v) each payment pursuant to clause 9.2 or clause 11.1 shall be made in the
currency specified by the Bank; and
(vi) any amount expressed to be payable in a currency other than dollars
shall be paid in that other currency.
18.2 If any sum due from the Borrower under this Agreement or any order or
judgment given or made in relation hereto has to be converted from the currency
(the FIRST CURRENCY) in which the same is payable under this Agreement or under
such order or judgment into another currency (the SECOND CURRENCY) for the
purpose of (i) making or filing a claim or proof against the Borrower, (ii)
obtaining an order or judgment in any court or other tribunal, or (iii)
enforcing any order or judgment given or made in relation hereto, the Borrower
shall indemnify and hold harmless the Bank from and against any loss suffered as
a result of any discrepancy between (a) the rate of exchange used for such
purpose to convert the sum in question from the first currency into the second
currency and (b) the rate or rates of exchange at which the Bank may in the
ordinary course of business purchase the first currency with the second currency
upon receipt of a sum paid to it in satisfaction, in whole or in part, of any
such order, judgment, claim or proof.
PAYMENTS
19.1 The following provisions shall apply to the making of payments:
(a) all payments by the Borrower to the Bank under this Agreement shall be
made to the Bank to its account at such office or bank as it may notify
to the Borrower;
(b) payments under this Agreement to the Bank shall be made for value on the
due date at such times and in such funds as the Bank may specify to the
Borrower as being customary at the time for the settlement of
transactions in the relevant currency in the place for payment.
19.2 All payments required to be made by the Borrower under this Agreement shall
be calculated without reference to any set-off or counterclaim and shall be made
free and clear of and without any deduction for or on account of any set-off or
counterclaim.
45
SET-OFF
20. The Borrower authorises the Bank to apply any credit balance to which the
Borrower is entitled on any account of the Borrower with the Bank at any of its
branches in satisfaction of any sum due and payable from the Borrower to the
Bank under this Agreement but unpaid; for this purpose, the Bank is authorised
to purchase with the moneys standing to the credit of any such account such
other currencies as may be necessary to effect such application. The Bank shall
not be obliged to exercise any right given to it by this clause 20.
FEES
21.1 Facility Fee: The Borrower shall pay to the Bank a facility fee for the
Revolving Credit Facility of (pound)25,000 payable on the Closing Date.
21.2 AUDIT FEE: The Borrower shall pay to the Bank an audit fee at the rate of
(pound)500 per person per day, to be debited to the Loan Account as of the date
incurred by the Bank. The Bank's reasonably and properly incurred out-of-pocket
expenses together with any VAT payable thereon will be for the account of the
Borrower.
21.3 REVOLVING CREDIT FACILITY COMMITMENT FEE: The Borrower shall pay to the
Bank a commitment fee for the Revolving Credit Facility on the amount which is
equal to (pound)10,000,000 less any amounts cancelled in accordance with clause
8.2 (the COMMITTED AMOUNT) and less Outstandings from day to day during the
period beginning on the date of this Agreement and ending on the Final Maturity
Date (the USED AMOUNT). The commitment fee payable under this clause 21.3 shall
accrue daily and be calculated at the rates set out in Column 2 below and a 365
day year and shall be debited to the Loan Account on the last day of each month
and on the Final Maturity Date.
COLUMN 1 COLUMN 2
PERCENTAGE UTILISATION (%)* PERCENTAGE FEE RATE (%)
75-99 0.25% per annum
70-75 0.30% per annum
65-70 0.35% per annum
60-65 0.4% per annum
50-60 0.45% per annum
0-50 0.5% per annum
21.4 L/C FEE: The Borrower shall pay to the Bank a fee for the L/C Facility on
the amount of Outstandings under the L/C Facility calculated at the rate of 1.25
per cent. per annum and a 365 day year and shall be debited to the Loan Account
on the last day of each month and on the Final Maturity Date. The Bank's
out-of-pocket expenses reasonably and properly incurred together with any VAT
payable thereon will be for the account of the Borrower.
21.5 SPIKE FACILITY FEE: The Borrower shall pay to the Bank a Facility Fee for
the Spike Facility of (pound)5000 payable on the first drawdown under the Spike
Facility.
21.6 EARLY TERMINATION FEE: Except upon a change of control in the ownership of
GT Bicycles Inc. or if cancelled in accordance with clause 8.3 or clause 12, the
Borrower shall
--------
* The Used Amount expressed as a percentage of the Committed Amount.
46
pay to the Bank an early termination fee of one per cent. of the amount
cancelled under clause 8.1 or clause 16.2(a) (an EARLY TERMINATION) within 12
months of the Closing Date; or 0.5 per cent. of any amount cancelled if
termination occurs after 12 months but within 24 months of the date of the
Closing Date provided that if the Early Termination is as a result of a change
of control in the Borrower, the Borrower shall pay to the Bank an early
termination fee of 0.5 per cent. of the amount cancelled within 12 months of the
Closing Date; or 0.25 per cent. of any amount cancelled if termination occurs
after 12 months but within 24 months of the date of the Closing Date.
COSTS AND EXPENSES
22.1 The Borrower shall, from time to time on demand, reimburse the Bank for all
reasonable costs and expenses (including reasonable legal fees and
disbursements) (including, without limitation, the allocated cost of in-house
counsel to the Bank) together with any VAT thereon properly incurred by the Bank
in connection with the negotiation, preparation and execution of this Agreement.
The Bank's legal fees, excluding disbursements and VAT for the negotiation,
preparation and execution of this Agreement, the Fixed and Floating Charge, the
Caratti Bank Agreement and all documents ancillary thereto prior to the Closing
Date shall be capped at (pound)20,000 (which figure for the avoidance of doubt
shall be in addition to any fees previously paid by the Borrower).
22.2 The Borrower shall, from time to time on demand, reimburse the Bank for all
reasonable costs and expenses (including legal fees) together with any VAT
thereon incurred in or in connection with the preservation and/or enforcement of
any of its rights under this Agreement or in connection with any future
amendments or waivers to this Agreement.
22.3 The Borrower shall pay all stamp, registration and other taxes to which the
Finance Documents or any judgment given in connection with the Finance Documents
is or at any time may be subject and shall, from time to time on demand,
indemnify the Bank against any liabilities, costs, claims and expenses resulting
from any failure to pay or any delay in paying any such taxes.
BENEFIT OF AGREEMENT
23. This Agreement shall be binding upon and enure to the benefit of each party
hereto and its or any subsequent successors, transferees and assigns.
ASSIGNMENTS AND TRANSFERS
24.1 The Borrower shall not be entitled to assign or transfer all or any of its
rights, benefits and obligations under this Agreement.
24.2 At any time prior to an Event of Default the Bank shall only, if possible
assign or transfer the whole of its rights or obligations under this Agreement
to any assignee of BankAmerica Business Credit Inc. under the GTBC Credit
Agreement. After the occurrence of an Event of Default which is continuing, or
if it is not possible to assign or transfer the whole of its rights or
obligations under this Agreement to an assignee of BankAmerica Business Credit
Inc. under the GTBC Credit Agreement, the Bank may assign or transfer to any
other bank or financial institution the whole or part of its rights and/or
obligations under this Agreement.
47
DISCLOSURE OF INFORMATION
25. The Bank may disclose to:
(i) any person with whom it is proposing to enter, or has entered, into any
kind of transfer, participation or other agreement in relation to this
Agreement; or
(ii) its professional advisers or any banking or other regulatory or
examining authorities (whether governmental or otherwise) with whose
instructions banks are accustomed to comply; or
(iii) any affiliate or holding company of the Bank,
such information about the Borrower and the Group or details of the Finance
Documents as the Bank shall consider appropriate.
CALCULATIONS AND EVIDENCE OF DEBT
26.1 Interest, commitment fee and commission shall accrue from day to day and
shall be calculated on the basis of a year of 365 days (or, in any case where
market practice differs, in accordance with market practice) and the actual
number of days elapsed.
26.2 Any repayment of an Advance denominated in an Optional Currency shall
reduce the amount of such Advance by the amount of such Optional Currency repaid
and shall reduce the Sterling Amount of such Advance proportionately.
26.3 The Bank shall maintain the Loan Account in accordance with its usual
practice evidencing the amounts from time to time lent by and owing to it under
this Agreement.
26.4 In any legal action or proceeding arising out of or in connection with this
Agreement, the entries made in the accounts maintained pursuant to clause 26.3
shall be conclusive evidence of the existence and amounts of the obligations of
the Borrower therein recorded.
26.5 A certificate of the Bank as to (i) the amount by which a sum payable to it
under this Agreement is to be increased under clause 9.1 or (ii) the amount for
the time being required to indemnify it against any such cost, payment or
liability as is mentioned in clause 9.2 or 11.1 shall, in the absence of
manifest error, be conclusive for the purposes of this Agreement.
RIGHTS CUMULATIVE, WAIVERS
27. The rights of the Bank under this Agreement are cumulative, may be exercised
as often as the Bank considers appropriate and are in addition to its rights
under the general law. The rights of the Bank in relation to the Facilities
(whether arising under this Agreement or under the general law) shall not be
capable of being waived or varied otherwise than by an express waiver or
variation in writing; and in particular any failure to exercise or any delay in
exercising any of such rights shall not operate as a waiver or variation of that
or any other such right; any defective or partial exercise of any of such rights
shall not preclude any other or further exercise of that or any other such
right; and no act or course of conduct or negotiation on its part or on its
behalf shall in any way preclude the Bank from exercising any such right or
constitute a suspension or any variation of any such right.
48
PARTIAL INVALIDITY
28. If, at any time, any provision of this Agreement is or becomes illegal,
invalid or unenforceable in any respect under the law of any jurisdiction,
neither the legality, validity or enforceability of the remaining provisions of
this Agreement nor the legality, validity or enforceability of such provision
under the law of any other jurisdiction shall in any way be affected or impaired
thereby.
NOTICES
29.1 Each communication to be made under this Agreement shall be made in writing
but, unless otherwise stated, may be made by telefax or letter.
29.2 Any communication or notice to be made or delivered by one person to
another pursuant to this Agreement shall (unless that other person has, by
fifteen days' written notice to each of the other parties, specified another
address) be made or delivered to that other person at the address identified
with its signature below and shall be deemed to have been made or delivered when
the same has been received in a legible form on a business day in the case of
any communication made by telefax and provided that a hard copy of such telefax
in contemporaneously despatched by letter by first class post to the addressee
thereof or in the case of any communication made by letter when left at that
address or as the case may be ten days after being deposited in the post postage
prepaid in an envelope addressed to it at that address.
THE BORROWER
CARATTI SPORT LTD
Address: 0000 Xxxxx Xxxx
Xxxxxxx
XX00 0XX
Attention: Xxxx Xxxxxxx/Xxxxxx Xxxx
Telephone: 00000 000000
Telefax: 01179 612 413
Copy to:
Name: Xxxx Xxxxxx
Telefax: 001 714 513 7115
and in the case of any notice delivered in accordance with clause 16.2 copy to:
GT BICYCLES, INC.
Address: 0000 Xxxx Xxxx
Xxxxx Xxxx
Xxxxxxxxxx
XX 00000-0000
XXX
49
Attention: Xxxxxxx Xxxxxxxx
Telephone: 000 000 000 0000
Telefax: 001 714 481 7115
and
XXXXXXX XXXXXX
Address: 00 Xxxxx Xxxxxxxxx Xxxxxx
Xxxxxxx
XX0 0XX
Attention: Xxxxxxxx Childs
Telephone: 0000 000 0000
Telefax: 0117 929 2470
THE BANK
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, LONDON BRANCH
Address: 0 Xxxx Xxxxxx
Xxxxxx X0 0XX
In respect of any Notice of Drawdown:
Attention: Loans Services Group
Telephone: 0000 000 0000
Telefax: 0181 313 2140
In respect of all other matters:
Attention: Xxx Xxxxx and Xxxxxx Xxxxxx
Telephone: 0000 000 0000/4631
Telefax: 0171 634 4754
29.3 Each communication and document made or delivered by one party to another
pursuant to this Agreement shall be in the English language or accompanied by a
translation thereof into English certified (by an officer of the person making
or delivering the same) as being a true and accurate translation thereof.
50
LAW
30. This Agreement is governed by, and shall be construed in accordance with,
English law.
JURISDICTION
31.1 The Borrower hereto irrevocably agrees for the benefit of the Bank that the
courts of England shall have jurisdiction to hear and determine any suit, action
or proceeding, and to settle any disputes, which may arise out of or in
connection with this Agreement and, for such purposes, irrevocably submits to
the jurisdiction of such courts.
31.2 The Borrower irrevocably waives any objection which it might now or
hereafter have to the courts referred to in clause 31.1 being nominated as the
forum to hear and determine any suit action or proceeding, and to settle any
disputes, which may arise out of or in connection with this Agreement and agrees
not to claim that any such court is not a convenient or appropriate forum.
31.3 The submission to the jurisdiction of the courts referred to in clause 31.1
shall not (and shall not be construed so as to) limit the right of the Bank to
take proceedings against the Borrower in any other court of competent
jurisdiction nor shall the taking of proceedings in any one or more
jurisdictions preclude the taking of proceedings in any other jurisdiction
(whether concurrently or not) if and to the extent permitted by applicable law.
31.4 The Borrower hereby consents generally in respect of any legal action or
proceeding arising out of or in connection with this Agreement to the giving of
any relief or the issue of any process in connection with such action or
proceeding including, without limitation, the making, enforcement or execution
against any property whatsoever (irrespective of its use or intended use) of any
order or judgment which may be made or given in such action or proceeding.
31.5 To the extent that the Borrower may in any jurisdiction claim for itself or
its assets immunity from suit, execution, attachment (whether in aid of
execution, before judgment or otherwise) or other legal process and to the
extent that in any such jurisdiction there may be attributed to itself or its
assets such immunity (whether or not claimed), the Borrower hereby irrevocably
agrees not to claim and hereby irrevocably waives such immunity to the full
extent permitted by the laws of such jurisdiction.
AS WITNESS the hands of the duly authorised representatives of the parties
hereto the day and year first before written.
51
THE FIRST SCHEDULE
CONDITION PRECEDENT DOCUMENTS
1. A certified and dated copy of the certificate of incorporation and the
memorandum and articles of association of the Borrower, as currently in
force.
2. Audited accounts for the 14 months ended 31 December 1997.
3. Management accounts for the period to 30 April 1998 in form and
substance satisfactory to the Bank.
4. A borrowing base certificate in the form of the Sixth Schedule together
with supporting ageings, reports and warranty from an authorised
signatory (without personal liability).
5. An original Fixed and Floating Charge duly executed by the Borrower.
6. An original Caratti Bank Agreement duly executed by the Borrower and
Barclays Bank PLC.
7. The Indemnity executed by the Borrower.
8. The original Guarantees.
9. A certified and dated copy of a resolution of the directors of the
Borrower approving the execution, delivery and performance of the
Finance Documents to which it is a party and the terms and conditions of
the Finance Documents to which it is a party, authorising a named person
or persons to sign the Finance Documents to which it is a party and any
documents to be delivered by it pursuant thereto or in connection
therewith (including but not limited to the certificate referred to in
paragraph 14 below relating to the Financial Performance Projections)
and authorising a named person or persons to operate the Facilities and
the Bonding Facility, to sign Notices of Drawdown and generally to give
instructions on which the Bank may act in connection with any of the
Finance Documents to which it is a party.
10. A certificate of a duly authorised officer of the Borrower setting out
the names and signatures of the persons authorised to sign, on its
behalf, the Finance Documents to which it is a party and any documents
to be delivered by it pursuant thereto or in connection therewith and to
operate the Facilities and the Bonding Facility, to sign Notices of
Drawdown and generally to give instructions on which the Bank may act in
connection with any of the Finance Documents to which it is a party.
11. Evidence that the indebtedness of GT Bicycles Inc. has been refinanced
to the satisfaction of the Bank.
12. Letter of undertaking from GT Bicycles Inc to the Bank confirming that
the Borrower will be permitted to use the GT name for the duration of
this Agreement.
13. Confirmation from the Bank that all fees payable prior to or on Closing
have been paid.
52
14. A certificate of an authorised officer of the Borrower certifying that
the Financial Performance Projections previously delivered to the Bank
have been met together with supporting accounts to the satisfaction to
the Bank.
15. Evidence that after taking into account Advances or Undertakings issued
or to be issued on the Closing Date there shall be remaining Available
Commitment of at least 10% of the Available Commitment calculated prior
to the making of such Advances and the issue of Undertakings.
16. Evidence of satisfactory insurance either in joint names of the Borrower
and the Bank or with the interest of the Bank as loss payee endorsed on
each relevant policy.
17. Completion of an audit by the Bank satisfactory to the Bank.
53
THE SECOND SCHEDULE
NOTICE OF DRAWDOWN
From: Caratti Sport Ltd
To: Bank of America NT & SA, London Branch
Dated:
Dear Sirs
1. We refer to the agreement (as from time to time amended, varied, novated or
supplemented, the FACILITY AGREEMENT) dated 18 September, 1996 and made between
us. Terms defined in the Facility Agreement shall have the same meaning in this
notice.
2. We hereby give you notice that, pursuant to the Facility Agreement and upon
the terms and subject to the conditions contained therein, we wish an Advance to
be made to us as follows:
(i) Revolving Credit Facility/Spike Facility:
(ii) Currency and Amount:
(iii) Drawdown Date:
3. We confirm that, at the date of this Agreement, the representations set out
in clause 15 of the Facility Agreement are true and that no Event of Default or
Potential Event of Default has occurred.
4. The proceeds of the drawdown should be credited to the Barclays Operating
Account, Account number [_____ _____ _____ ] in the name of Caratti Sport Ltd.
Yours faithfully
.............................
for and on behalf of
Caratti Sport Ltd
54
THE THIRD SCHEDULE
PART 1
INELIGIBLE ACCOUNTS
Ineligible Accounts includes:
DEBTORS:
1. Subject to paragraph 9 below, any amount outstanding more than 90 days
past date of invoice or 60 days past due.
2. Any debtor balance where more than 50% of outstanding is more than 90
days old or 60 days past due.
3. Debtor balances in excess of 25% of Outstandings.
4. Cash Sales.
5. Sales to other Group companies.
6. Pro forma invoices.
7. Sale or Return.
8. Contra or potential contra accounts where the debtor is also a supplier.
9. Any account with extended terms that are more than 30 days past due.
10. House and promotional accounts.
55
PART 2
INELIGIBLE INVENTORY
Ineligible Inventory includes:
STOCK
1. Bicycle and frames, initially model year 1996 and before, and thereafter
more than two calendar years old.
2. Promotional material.
3. Kryptonite and other suppliers point of purchase displays.
4. Shogun models purchased before 31 December 1997.
5. Rock Shox initially model year 1996 and before and thereafter more than
two calendar years old.
6. Stock returned under warranty claims or suppliers.
7. Used bikes that have been utilised as demonstration models and used on
promotions.
8. In-Transit stock, in which payment has not been made, title has not
passed and is not subject to any Undertaking.
56
THE FOURTH SCHEDULE
HIRE PURCHASE AGREEMENTS
1. BMBF Facility
2. Lloyds
57
THE FIFTH SCHEDULE
FOREIGN EXCHANGE CONTRACTS
None
58
THE SIXTH SCHEDULE
BORROWING BASE CERTIFICATE
----------------------------------------------------------------------------------------
ACCOUNTS RECEIVABLE DATE RATE OF TOTAL BANK OF
ADVANCE AMERICA
USE ONLY
----------------------------------------------------------------------------------------
Beginning Balance (previous ending
Balance) ________ ________
Plus: Sales as of ________ ________ ________
Less: Credits as of ________ ________ ________
Less: Gross Collections as of ________ ________ ________
+/- Adjustments ________ ________
Ending Balance ________ ________
Less: Ineligible Accounts (details to be ________ ________
attached)
Eligible Accounts Receivable Availability 85% ________ ________
not to exceed
----------------------------------------------------------------------------------------
________
----------------------------------------------------------------------------------------
INVENTORY ________
Raw Material as of ________ ________ 0% ________
WIP as of ________ ________ 0% ________
Finished Goods as of ________ ________ ________
________ 60% ________ ________
1999 Model Bicycles as of ________ ________ 60% ________ ________
Less: Ineligible Inventory (details to be ________ ________ ________
attached)
Eligible Inventory Availability not to
exceed (pound)7,000,000
----------------------------------------------------------------------------------------
LESS PREFERENTIAL CREDITORS
----------------------------------------------------------------------------------------
TOTAL AVAILABILITY
----------------------------------------------------------------------------------------
THE UNDERSIGNED REPRESENTS AND WARRANTS (WITHOUT PERSONAL LIABILITY OF THE
SIGNATORY) THAT THE INFORMATION SET FORTH ABOVE IS TRUE AND COMPLETE. THE
UNDERSIGNED REPRESENTS AND WARRANTS THAT SAID COLLATERAL COMPLIES WITH THE
REPRESENTATIONS, WARRANTIES, CREDIT AND COVENANTS CONTAINED IN THE CREDIT
AGREEMENT BETWEEN BANK OF AMERICA NT & SA AND THE UNDERSIGNED
BORROWER ___________________________________________
AUTHORISED SIGNATURE ___________________________________________
TITLE ___________________________________________
