AGREEMENT
DATE 29th November, 2002
(pound)80,000,000
CREDIT FACILITY
FOR
DEVONPORT ROYAL DOCKYARD LIMITED
ARRANGED BY
THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND
HSBC BANK PLC
THE ROYAL BANK OF SCOTLAND PLC
WITH
HSBC BANK PLC
as Facility Agent
INDEX
Clause Page
1. Interpretation......................................................................................1
2. Facilities.........................................................................................13
3. Purpose............................................................................................13
4. Conditions precedent...............................................................................14
5. Utilisation........................................................................................15
6. Repayment..........................................................................................16
7. Prepayment and cancellation........................................................................17
8. Interest...........................................................................................20
9. Terms..............................................................................................21
10. Market disruption..................................................................................23
11. Taxes..............................................................................................24
12. Increased Costs....................................................................................27
13. Mitigation.........................................................................................28
14. Payments...........................................................................................28
15. Guarantee and indemnity............................................................................30
16. Representations....................................................................................33
17. Information covenants..............................................................................36
18. Financial covenants................................................................................39
19. General covenants..................................................................................42
20. Default............................................................................................50
21. Working Capital Facilities.........................................................................54
22. The Administrative Parties.........................................................................55
23. Evidence and calculations..........................................................................60
24. Fees...............................................................................................61
25. Indemnities and Break Costs........................................................................61
26. Expenses...........................................................................................63
27. Amendments and waivers.............................................................................63
28. Changes to the Parties.............................................................................64
29. Disclosure of information..........................................................................68
30. Set-off............................................................................................69
31. Pro rata sharing...................................................................................69
32. Severability.......................................................................................70
33. Counterparts.......................................................................................70
34. Notices............................................................................................71
35. Governing law......................................................................................72
36. Enforcement........................................................................................73
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Schedules
1. Original Parties...................................................................................74
2. Conditions precedent documents.....................................................................75
3. Form of Request....................................................................................79
4. Calculation of Mandatory Cost......................................................................84
5. Form of Transfer Certificate.......................................................................86
6. Existing Security..................................................................................88
7. Form of Compliance Certificate.....................................................................89
8. Form of Accession Agreement........................................................................90
9. Form of Resignation Request........................................................................91
10. Form of Security Agreement.........................................................................92
11. Form of Legal Opinion.............................................................................110
12. Material Contracts................................................................................115
Signatories................................................................................................116
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THIS AGREEMENT is dated 29th November, 2002
BETWEEN:
(1) DEVONPORT ROYAL DOCKYARD LIMITED (registered number 02077752) (the
Company);
(2) DEVONPORT MANAGEMENT LIMITED (registered number 2959785) (the Parent);
(3) THE COMPANIES listed in Schedule 1 (Original Parties) as original
guarantors (in this capacity the Original Guarantors);
(4) THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND, HSBC BANK PLC AND THE
ROYAL BANK OF SCOTLAND PLC as arrangers (in this capacity the Mandated
Lead Arrangers);
(5) THE FINANCIAL INSTITUTIONS listed in the Schedule 1 (Original Parties)
as original lenders (the Original Lenders); and
(6) HSBC BANK PLC as facility agent (in this capacity the Facility Agent).
IT IS AGREED as follows:
1. Interpretation
1.1 Definitions
In this Agreement:
Accession Agreement means a letter, substantially in the form of
Schedule 8 (Form of Accession Agreement), with such amendments as the
Facility Agent may approve or reasonably require.
Additional Guarantor means a member of the Group which becomes a
Guarantor after the date of this Agreement.
Administrative Party means a Mandated Lead Arranger or the Facility
Agent.
Affiliate means a Subsidiary or a Holding Company of a person or any
other Subsidiary of that Holding Company.
Agency includes, in relation to a state or supranational organization,
any agency, authority, central bank, department, government,
legislature, ministry, official or public person (whether autonomous or
not) of, or of the government of, that state or supranational
organization.
Applicable Margin means:
(a) for a Term Loan, subject to Clause 8.3 (Adjustment of the
Applicable Margin), 1.375 per cent. per annum; and
(b) for a Revolving Credit Loan, subject to Clause 8.3 (Adjustment of
the Applicable Margin), 1.0 per cent. per annum.
Availability Period means the period from and including the date of
this Agreement to and including:
(a) for the Initial Term Loan, the date which is 90 days from the
date of this Agreement; and
(b) for any other Term Loan, 30th June, 2003; and
(c) for a Revolving Credit Loan, the date which is one month before
the Final Maturity Date.
Break Costs means the amount (if any) which a Lender is entitled to
receive under this Agreement as compensation if any part of a Loan or
overdue amount is prepaid.
Business Day means a day (other than a Saturday or a Sunday) on which
banks are open for general business in London.
Commitment means a Commitment, as so designated, of a Lender under a
particular Facility.
Compliance Certificate means a certificate substantially in the form of
Schedule 7 (Form of Compliance Certificate) setting out, among other
things, calculations of the financial covenants.
Costs Report means a report in the form of Part II of Schedule 3 (Form
of Costs Report) prepared by the Company, covering details of:
(a) Works completed since the date of the most recent Costs Report
provided to the Facility Agent (and not included in any other
Costs Report) or, in the case of the first Costs Report to be
provided to the Facility Agent, the Works completed since the
certificate to be provided by the Company under Schedule 2;
(b) the costs and expenses incurred by the Company in relation to
those Works;
(c) any other matters that the Facility Agent may, after consultation
with the Company, reasonably request; and
(d) projected expenditure required for completion of the Works
together with confirmation that the costs and expenses
incurred in respect of the Works up to the date of the Costs
Report and the projected expenditure required for completion
of the Works are not more than the amounts specified therefor
in the Works Budget, provided to the Facility Agent with a
Request for a Term Loan (other than the Initial Term Loan) in
accordance with Clause 5.2 (Completion of Requests).
Crown Right of Set-Off means all contractual or statutory rights of
set-off enjoyed by the monarchy, the government or its agencies in
relation to the Company.
Current Facility means the (pound)10,000,000 revolving credit facility
between HSBC Bank plc and the Company dated 8th January, 2002.
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D154 Construction Contract means the contract dated 10th February, 1997
between the Secretary of State for Defence and the Company relating to
the upgrade of nuclear submarine facilities as supplemented, varied and
revised from time to time.
DART Alliance means the alliance between the Company, Strachan
& Henshaw Limited, Babtie Group Limited, Rolls Royce Power Engineering
PLC, British Nuclear Fuels PLC and Kellog Brown & Root Limited.
Default means:
(a) an Event of Default; or
(b) an event which would be (with the expiry of a grace period, the
giving of notice or the making of any determination under the
Finance Documents or any combination of them) an Event of
Default.
Event of Default means an event specified as such in this Agreement.
Existing Works means the means the work completed as at the date of
this Agreement in respect of the design, development and construction
of upgraded submarine facilities for refitting and refuelling
submarines and new facilities for refitting and refuelling the Vanguard
class of nuclear powered submarines at Devonport Royal Dockyard,
Plymouth, England, pursuant to the D154 Construction Contract, as
described in the certificate by the Company to be provided to the
Facility Agent by the Company under Schedule 2.
Facility means a credit facility made available under this Agreement.
Facility Office means the office(s) notified by a Lender to the
Facility Agent:
(a) on or before the date it becomes a Lender; or
(b) by not less than five Business Days' notice,
(c) as the office(s) through which it will perform its obligations
under this Agreement.
Fee Letter means any letter entered into by reference to this
Agreement between one or more Administrative Parties and the Company
setting out the amount of certain fees referred to in this Agreement.
Final Maturity Date means:
(a) for a Term Loan, 30th September, 2009; and
(b) (subject to Clause 7.9 (Extension of Revolving Credit Facility))
for a Revolving Credit Loan, the date which is 364 days from date
of this Agreement.
Finance Document means:
(a) this Agreement;
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(b) a Security Document;
(c) a Fee Letter;
(d) a Letter of Awareness;
(e) the Inter-creditor Deed;
(f) a Transfer Certificate;
(g) an Accession Agreement; or
(h) any other document designated as such by the Facility Agent and
the Company.
Finance Party means a Lender or an Administrative Party.
Financial Indebtedness means any indebtedness for or in respect of:
(a) moneys borrowed;
(b) any acceptance credit;
(c) any bond, note, debenture, loan stock or other similar
instrument;
(d) any redeemable preference share;
(e) any finance or capital lease;
(f) receivables sold or discounted (otherwise than on a non-recourse
basis);
(g) the acquisition cost of any asset to the extent payable after its
acquisition or possession by the party liable where the deferred
payment is arranged primarily as a method of raising finance or
financing the acquisition of that asset;
(h) any derivative transaction protecting against or benefiting from
fluctuations in any rate or price (and, except for non-payment of
an amount, the then mark to market value of the derivative
transaction will be used to calculate its amount);
(i) any other transaction (including any forward sale or purchase
agreement) which has the commercial effect of a borrowing;
(j) any counter-indemnity obligation in respect of any guarantee,
indemnity, bond, letter of credit or any other instrument issued
by a bank or financial institution; or
(k) any guarantee, indemnity or similar assurance against financial
loss of any person in respect of any item referred to in
paragraphs (a) to (j) above.
Group means the Parent and its Subsidiaries (other than any member of
the LSC Restricted Group).
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Guarantor means an Original Guarantor or an Additional Guarantor.
Holding Company means a holding company within the meaning of section
736 of the Companies Act 1985.
Increased Cost means:
(a) an additional or increased cost;
(b) a reduction in the rate of return under a Finance Document or on
its overall capital; or
(c) a reduction of an amount due and payable under any Finance
Document,
(d) which is incurred or suffered by a Finance Party or any of its
Affiliates but only to the extent attributable to that Finance
Party having entered into any Finance Document or funding or
performing its obligations under any Finance Document.
Initial Term Loan means a Loan in an amount of (pound)41,819,402 under
the Term Loan Facility and identified as such in its Request, the
purpose of which is to finance or refinance the Company's costs and
expenses in respect of the Existing Works carried out under the D154
Construction Contract.
Intellectual Property Rights means:
(a) any know-how, patent, trade mark, service mark, design, business
name, domain name, topographical or similar right;
(b) any copyright, data base or other intellectual property right; or
(c) any interest in the above,
in each case whether registered or not, and includes any related
application.
Inter-creditor Deed means the inter-creditor deed dated on or about the
date of this Agreement between the Transaction Parties and the Original
Obligors.
Letter of Awareness means each letter of awareness addressed to the
Finance Parties from the ultimate Holding Company of each of the
Shareholders, in each case in a form agreed between the Company and the
Facility Agent.
Lender means:
(a) an Original Lender; or
(b) any person which becomes a Lender after the date of this
Agreement.
LIBOR means for a Term of any Loan or overdue amount:
(a) the applicable Screen Rate; or
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(b) if no Screen Rate is available for the relevant currency or
Term of that Loan or overdue amount, the arithmetic mean
(rounded upward to four decimal places) of the rates, as
supplied to the Facility Agent at its request, quoted by the
Reference Banks to leading banks in the London interbank
market, as of 11.00 a.m. on the Rate Fixing Day for the
offering of deposits in the currency of that Loan or overdue
amount for a period comparable to that Term.
Loan means, unless otherwise stated in this Agreement, the principal
amount of each borrowing under this Agreement or the principal amount
outstanding of that borrowing.
LSC Restricted Group means LSC Group Holdings Limited (registered
number 3533640) and all of its Subsidiaries.
Majority Lenders means, at any time, Lenders:
(a) whose share in the outstanding Loans and whose undrawn
Commitments then aggregate 66 per cent. or more of the
aggregate of all the outstanding Loans and the undrawn
Commitments of all the Lenders;
(b) if there is no Loan then outstanding, whose undrawn
Commitments then aggregate 66 per cent. or more of the Total
Commitments; or
(c) if there is no Loan then outstanding and the Total Commitments
have been reduced to zero, whose Commitments aggregated 66 per
cent. or more of the Total Commitments immediately before the
reduction.
Mandatory Cost means the cost of complying with certain regulatory
requirements, expressed as a percentage rate per annum and calculated
by the Facility Agent under Schedule 4 (Calculation of the Mandatory
Cost).
Material Adverse Effect means a material adverse effect on:
(a) the business or financial condition of any Obligor or the Group
as a whole;
(b) the ability of any Obligor to perform its obligations under any
Finance Document; or
(c) the validity or enforceability of any Finance Document.
Material Contract means any agreement to which a member of the
Group is a party and where the gross value of receivables payable to
the Group under that agreement (and any related agreements) is equal to
or exceeds (pound)40,000,000 (or its equivalent) in any financial year
of the Company and includes the agreements specified in Schedule 12
(Material Contracts).
Maturity Date means the last day of the Term of a Revolving Credit
Loan.
Obligor means the Company or a Guarantor.
Original Financial Statements means the financial statements of the
Company for the year ended 31st December, 2001.
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Original Obligor means the Company or an Original Guarantor.
Party means a party to this Agreement.
Pro Rata Share means:
(a) for the purpose of determining a Lender's share in a
utilisation of a Facility, the proportion which its Commitment
under that Facility bears to all the Commitments under that
Facility; and
(b) for any other purpose on a particular date:
(i) the proportion which a Lender's share of the Loans (if any)
bears to all the Loans;
(ii) if there is no Loan outstanding on that date, the
proportion which its Commitment bears to the Total
Commitments on that date;
(iii) if the Total Commitments have been cancelled, the
proportion which its Commitments bore to the Total
Commitments immediately before being cancelled; or
(iv) when the term is used in relation to a Facility, the above
proportions but applied only to the Loans and Commitments
for that Facility.
(c) For the purpose of sub-paragraph iv) above, the Facility Agent
will determine, in the case of a dispute whether the term in any
case relates to a particular Facility.
Rate Fixing Day means the first day of a Term for a Loan, or
such other day as the Facility Agent determines is generally treated as
the rate fixing day by market practice in the relevant interbank
market.
Reference Banks means HSBC Bank plc, The Governor and Company
of the Bank of Scotland and The Royal Bank of Scotland Plc and any
other bank or financial institution appointed as such by the Facility
Agent under this Agreement in consultation with the Company.
Repayment Instalment means each instalment for repayment of the Term
Loans, as set out in Clause 6.1 (Repayment of Term Loans).
Repeating Representations means the representations which are deemed
to be repeated under this Agreement.
Request means a request for a Loan, substantially in the form of Part I
of Schedule 3 (Form of Request).
Reservations means the principal that equitable remedies are
remedies which may be granted or refused at the discretion of the
court, the limitation of enforcement by laws relating to bankruptcy,
involvency, liquidation, reorganization, court schemes, moratoria,
administration and other laws generally affecting the rights of
creditors, the time barring of claims under any applicable limitation
acts and the possibility that a court may strike out provisions of a
7
contract as being invalid for reasons of oppression, undue influence,
the possibiilty that a charge expressed to be fixed may nevertheless
take effect as a floating charge, rules against contractual penalites
or similar reasons.
Revolving Credit Commitment means:
(a) for an Original Lender, the amount set opposite its name in
Schedule 1 (Original Parties) under the heading "Revolving
Credit Commitments" and the amount of any other Revolving
Credit Commitment it acquires; and
(b) for any other Lender, the amount of any Revolving Credit
Commitment it acquires, to the extent not cancelled,
transferred or reduced under this Agreement.
Revolving Credit Facility means the revolving credit facility made
available under this Agreement.
Revolving Credit Loan means a Loan under the Revolving Credit Facility
and identified as such in its Request.
Rollover Loan means one or more Revolving Credit Loans:
(a) to be made on the same day that a maturing Revolving Credit Loan
is due to be repaid;
(b) the aggregate amount of which is equal to or less than the
maturing Revolving Credit Loan;
(c) in the same currency as the maturing Revolving Credit Loan;
and
(d) to be made for the purpose of refinancing a maturing Revolving
Credit Loan.
Screen Rate means the British Bankers Association Interest
Settlement Rate (if any) for the relevant currency and Term displayed
on the appropriate page of the Telerate screen (or such other service
as may be used for the publication of such rates) selected by the
Facility Agent. If the relevant page is replaced or the service ceases
to be available, the Facility Agent (after consultation with the
Company and the Lenders) may specify another page or service displaying
the appropriate rate.
Security Agreement means a security agreement in the form of
Schedule 10 (Form of Security Agreement) with such amendments as the
Facility Agent may approve or reasonably require.
Security Document means:
(a) each Security Agreement;
(b) and
(c) any other document evidencing or creating security over any
asset of an Obligor to secure any obligation of any Obligor to
a Finance Party under the Finance Documents.
8
Security Interest means any mortgage, pledge, lien, charge,
assignment, hypothecation or security interest or any other agreement
or arrangement having a similar effect.
Shareholders means the holders of all the issued ordinary shares in
the Parent as at the date of this Agreement, being:
(a) Halliburton Holdings Limited;
(b) The Weir Group plc; and
(c) Balfour Beatty plc.
Shareholders Agreement means the agreement between the Shareholders
dated 13th March, 1997.
Special Shareholder means the owner from time to time of the special
share issued by the Company in accordance with its memorandum and
articles of association, being one of the Secretary of State, his
nominee, the Lords Commissioners of Her Majesty's Treasury, a minister
of the Crown or their respective nominees.
Strategic Assets has the meaning given to that term in the Company's
memorandum and articles of association.
Subsidiary means:
(a) a subsidiary within the meaning of section 736 of the
Companies Act 1985; and
(b) unless the context otherwise requires, a subsidiary undertaking
within the meaning of section 258 of the Companies Act 1985.
Tax means any tax, levy, impost, duty or other charge or
withholding of a similar nature (including any related penalty or
interest).
Tax Deduction means a deduction or withholding for or on account of
Tax from a payment under a Finance Document.
Tax Payment means a payment made by an Obligor to a Finance
Party in any way relating to a Tax Deduction or under any indemnity
given by that Obligor in respect of Tax under any Finance Document.
Term means each period determined under this Agreement by
reference to which interest on a Loan or an overdue amount is
calculated.
Term Loan means a Loan (including the Initial Term Loan) under the
Term Loan Facility and identified as such in its Request.
9
Term Loan Commitment means:
(a) for an Original Lender, the amount set opposite its name in
Schedule 1 (Original Parties) under the heading "Term Loan
Commitments" and the amount of any other Term Loan Commitment
it acquires; and
(b) for any other Lender, the amount of any other Term Loan
Commitment it acquires,
to the extent not cancelled, transferred or reduced under this
Agreement.
Term Loan Facility means the term loan facility made available under
this Agreement.
Total Commitments means the Commitments of all the Lenders.
Total Revolving Credit Commitments means the aggregate of the
Revolving Credit Commitments of all the Lenders, being the total amount
specified as such in Schedule 1 (Original Parties) at the date of this
Agreement.
Total Term Loan Commitments means the the aggregate of the Term Loan
Commitments of all the Lenders, being the total amount specified as
such in Schedule 1 (Original Parties) at the date of this Agreement.
Transaction Documents means each of the Finance Documents and any
Working Capital Facility Document.
Transaction Parties means each Finance Party and each Working Capital
Facility Lender.
Transfer Certificate means a certificate, substantially in the
form of Schedule 5 (Form of Transfer Certificate), with such amendments
as the Facility Agent may approve or reasonably require or any other
form agreed between the Facility Agent and the Company.
U.K. means the United Kingdom.
Utilisation Date means each date on which a Facility is utilised.
Working Capital Facility Document means any document providing for a
Working Capital Facility.
Working Capital Facility means each of the following:
(a) the (pound)15,000,000 uncommited overdraft facility dated 8th
January, 2002 between the Company, Devonport Management
Limited (formerly known as Dorhold Limited), Devonport
Engineering Services Limited, Dorhold Limited (formerly known
as Devonport Management Limited) and HSBC Bank plc as amended
by letter dated on or about the date of this Agreement between
the same parties; and
(b) the (pound)10,000,000 bank guarantee facility dated 8th
January, 2002 between the Company, Devonport Management
Limited (formerly known as Dorhold Limited), Devonport
Engineering Services Limited, Dorhold Limited (formerly known
as Devonport Management Limited) and HSBC Bank plc as amended
10
by letter dated on or about the date of this Agreement between
the same parties; and
(c) any other facility or financial accommodation required in
connection with the business of the Group and established
under this Agreement. This may include any overdraft, foreign
exchange, interest rate hedging or guarantee or other banking
facility.
Working Capital Facility Lender means a Lender that provides a Working
Capital Facility.
Working Capital Outstandings means the principal amount outstanding
under a Working Capital Facility, as calculated under the Working
Capital Facility Document for that Working Capital Facility.
Works means the design, development and construction of upgraded
submarine refitting facilities for refitting and refuelling submarines
and new facilities for refitting and refuelling the Vanguard class of
nuclear powered submarines at Devonport Royal Dockyard, Plymouth,
England, and any other works contemplated by the D154 Construction
Contract other than the Existing Works.
Works Budget means the budget for the implementation of the Works to be
provided to the Facility Agent by the Company under Schedule 2.
1.2 Construction
(a) In this Agreement, unless the contrary intention appears, a reference
to:
(i) an amendment includes a supplement, novation, restatement or
re-enactment and amended will be construed accordingly;
assets includes present and future properties, revenues and
rights of every description;
an authorisation includes an authorisation, consent, approval,
resolution, licence, exemption, filing, registration or
notarisation;
disposal means a sale, transfer, grant, lease or other
disposal, whether voluntary or involuntary, and dispose will
be construed accordingly;
indebtedness includes any obligation (whether incurred as
principal or as surety) for the payment or repayment of money;
a person includes any individual, company, corporation,
unincorporated association or body (including a partnership,
trust, joint venture or consortium), government, state,
agency, organisation or other entity whether or not having
separate legal personality;
a regulation includes any regulation, rule, official
directive, request or guideline (whether or not having the
force of law but, if not having the force of law, being of a
type with which any person to which it applies is accustomed
to comply) of any governmental, inter-governmental or
supranational body, agency, department or regulatory,
self-regulatory or other authority or organisation;
11
(ii) a currency is a reference to the lawful currency for the time
being of the relevant country;
(iii) a Default being outstanding means that it has not been remedied
or waived;
(iv) a provision of law is a reference to that provision as
extended, applied, amended or re-enacted and includes any
subordinate legislation;
(v) a Clause, a Subclause or a Schedule is a reference to a clause
or subclause of, or a schedule to, this Agreement;
(vi) a person includes its successors in title, permitted assigns
and permitted transferees;
(vii) a Finance Document or another document is a reference to that
Finance Document or other document as amended; and
(viii) a time of day is a reference to London time.
(b) Unless the contrary intention appears, a reference to a month or months
is a reference to a period starting on one day in a calendar month and
ending on the numerically corresponding day in the next calendar month
or the calendar month in which it is to end, except that:
(i) if the numerically corresponding day is not a Business Day, the
period will end on the next Business Day in that month (if
there is one) or the preceding Business Day (if there is not);
(ii) if there is no numerically corresponding day in that month,
that period will end on the last Business Day in that month;
and
(iii) notwithstanding sub-paragraph (i) above, a period which
commences on the last Business Day of a month will end on the
last Business Day in the next month or the calendar month in
which it is to end, as appropriate.
(c) Unless expressly provided to the contrary in a Finance Document, a
person who is not a party to a Finance Document may not enforce any of
its terms under the Contracts (Rights of Third Parties) Act 1999 and
notwithstanding any term of any Finance Document, the consent of any
third party is not required for any variation (including any release or
compromise of any liability) or termination of that Finance Document.
(d) Unless the contrary intention appears:
(i) a reference to a Party will not include that Party if it has
ceased to be a Party under this Agreement;
(ii) an amount in euro is payable only in the euro unit;
(iii) a word or expression used in any other Finance Document or in
any notice given in connection with any Finance Document has
the same meaning in that Finance Document or notice as in this
Agreement; and
12
(iv) any obligation of an Obligor under the Finance Documents which
is not a payment obligation remains in force for so long as
any payment obligation of an Obligor is or may be outstanding
under the Finance Documents.
(e) The headings in this Agreement do not affect its interpretation.
2. Facilities
2.1 Term Loan Facility
Subject to the terms of this Agreement, the Lenders make available to
the Company a sterling term loan facility in an aggregate amount equal
to the Total Term Loan Commitments.
2.2 Revolving Credit Facility
Subject to the terms of this Agreement, the Lenders make available to
the Company a sterling revolving credit facility in an aggregate amount
equal to the Total Revolving Credit Commitments.
2.3 Nature of a Finance Party's rights and obligations
Unless otherwise agreed by all the Finance Parties:
(a) the obligations of a Finance Party under the Finance Documents
are several;
(b) failure by a Finance Party to perform its obligations does not
affect the obligations of any other Party under the Finance
Documents;
(c) no Finance Party is responsible for the obligations of any
other Finance Party under the Finance Documents;
(d) the rights of a Finance Party under the Finance Documents are
separate and independent rights;
(e) a debt arising under the Finance Documents to a Finance Party
is a separate and independent debt; and
(f) a Finance Party may, except as otherwise stated in the Finance
Documents, separately enforce those rights.
3. Purpose
3.1 Term Loans
(a) The Initial Term Loan may only be used to finance or refinance
costs and expenses incurred by the Company in order to carry out
the Existing Works.
(b) Each other Term Loan may ony be used to finance or refinance
costs and expenses incurred by the Company in order to carry out
the Works.
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3.2 Revolving Credit Loans
Each Revolving Credit Loan may only be used for general corporate
purposes.
3.3 No obligation to monitor
No Finance Party is bound to monitor or verify the utilisation of a
Facility.
4. Conditions precedent
4.1 Conditions precedent documents
A Request may not be given until the Facility Agent has notified the
Company and the Lenders that it has received all of the documents and
evidence set out in Part I of Schedule 2 (Conditions precedent
documents) in form and substance satisfactory to the Facility Agent.
The Facility Agent must give this notification to the Company and the
Lenders promptly upon being so satisfied.
4.2 Further conditions precedent
The obligations of each Lender to participate in any Loan are subject
to the further conditions precedent that on both the date of the
Request and the Utilisation Date for that Loan:
(a) the Repeating Representations are correct in all material
respects;
(b) no Default or, in the case of a Rollover Loan, no Event of
Default is outstanding or would result from the Loan;
(c) in relation to Term Loans:
(i) if the Loan is the Initial Term Loan, the amount of the
Loan is no greater than the costs and expenses incurred by
the Company (less any funds provided by the Secretary of
State for Defence or the members of the DART Alliance) in
order to carry out the Existing Works, as specified in the
certificate to be provided by the Company under Schedule 2
(Conditions precedent documents);
(ii) for any other Term Loan, the amount of the Loan is no
greater than the value of costs and expenses incurred by
the Company to carry out Works as specified in the Costs
Report provided to the Facility Agent with the Request for
that Term Loan; and
(iii) the costs and expenses incurred in respect of the Works up
to the date of the Costs Report provided to the Facility
Agent with the Request for that Term Loan and the
projected expenditure required for completion of the Works
are not more than the amount specified therefor in with the
Works Budget.
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4.3 Maximum number
Unless the Facility Agent Agrees, only one Request in respect of Term
Loans (excluding the Request for the Initial Term Loan) may be given in
any calendar month.
5. Utilisation
5.1 Giving of Requests
(a) The Company may borrow a Loan by giving to the Facility Agent a duly
completed Request.
(b) Unless the Facility Agent otherwise agrees, the latest time for receipt
by the Facility Agent of a duly completed Request is 11.00 a.m. one
Business Day before the Rate Fixing Day for a Revolving Credit Loan or
the Initial Term Loan, and 11.00 a.m. five Business Days before the
Rate Fixing Day for a Term Loan (other than the Initial Term Loan).
(c) Each Request is irrevocable.
5.2 Completion of Requests
A Request for a Loan will not be regarded as having been duly completed
unless:
(a) it identifies the Facility the Loan applies to;
(b) the Utilisation Date is a Business Day falling within the
Availability Period;
(c) for a Term Loan (other than the Initial Term Loan) a Costs Report
is attached to the Request;
(d) the amount of the Loan requested is:
(i) a minimum of (pound)500,000;
(ii) not greater than the maximum undrawn amount available under
this Agreement for Loans under the relevant Facility on the
proposed Utilisation Date; or
(iii) such other amount as the Facility Agent may agree; and
(e) the proposed currency and Term comply with this Agreement.
Only one Loan may be requested in a Request.
5.3 Advance of Loan
(a) The Facility Agent must promptly notify each Lender of the details of
the requested Loan and the amount of its share in that Loan.
(b) The amount of each Lender's share of the Loan will be its Pro Rata
Share on the proposed Utilisation Date.
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(c) No Lender is obliged to participate in a Loan if as a result:
(i) its share in the Loans under a Facility would exceed its
Commitment for that Facility; or
(ii) the Loans would exceed the Total Commitments.
(d) If the conditions set out in this Agreement have been met, each
Lender must make its share in the Loan available to the Facility Agent
for the Company on the Utilisation Date.
6. Repayment
6.1 Repayment of Term Loans
(a) Subject to Clause 7 (Prepayment and cancellation), on each date
specified below (each a "Term Loan Repayment Date"), the Company shall
repay an amount of the Term Loans equal to the amount set opposite that
date below (a "Repayment Instalment"):
Term Loan Repayment Date Repayment Instalment(pound)
30th September, 2003 (pound)2,800,000
31st December, 2003 (pound)2,800,000
31st March, 2004 (pound)2,800,000
30th June, 2004 (pound)2,800,000
30th September, 2004 (pound)2,800,000
31st December, 2004 (pound)2,800,000
31st March, 2005 (pound)2,800,000
30th June, 2005 (pound)2,800,000
30th September, 2005 (pound)2,800,000
31st December, 2005 (pound)2,800,000
31st March, 2006 (pound)2,800,000
30th June, 2006 (pound)2,800,000
30th September, 2006 (pound)2,800,000
31st December, 2006 (pound)2,800,000
31st March, 2007 (pound)2,800,000
30th June, 2007 (pound)2,800,000
30th September, 2007 (pound)2,800,000
31st December, 2007 (pound)2,800,000
31st March, 2008 (pound)2,800,000
30th June, 2008 (pound)2,800,000
30th September, 2008 (pound)2,800,000
31st December, 2008 (pound)2,800,000
31st March, 2009 (pound)2,800,000
30th June, 2009 (pound)2,800,000
Final Maturity Date Balance then outstanding
(b) Amounts repaid under this Clause may not be re-borrowed.
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6.2 Repayment of Revolving Credit Loans
(a) The Company must repay each Revolving Credit Loan in full on its
Maturity Date.
(b) Subject to the other terms of this Agreement, any amounts repaid
under paragraph (a) above may be re-borrowed.
7. Prepayment and cancellation
7.1 Mandatory prepayment - illegality
(a) A Lender must notify the Company promptly if it becomes aware that it
is unlawful in any relevant jurisdiction for that Lender to perform
any of its obligations under a Finance Document or to fund or maintain
its share in any Loan.
(b) After notification under paragraph (a) above:
(i) the Company must repay or prepay the share of that Lender in
each Loan made to it on the date specified in paragraph (c)
below; and
(ii) the Commitments of that Lender will be immediately cancelled.
(c) The date for repayment or prepayment of a Lender's share in a Loan will
be:
(i) the Business Day following receipt by the Company of notice
from the Lender under paragraph (a) above; or
(ii) if later, the latest date allowed by the relevant law.
7.2 Mandatory prepayment - change of control
(a) The Parent must promptly notify the Facility Agent if:
(i) it becomes aware of any person or group of persons (other than
the Shareholders) acting in concert gaining control of the
Parent; or
(ii) the percentage of the issued ordinary shares of the Parent held
by a Shareholder changes; or
(iii) the Special Shareholder becomes entitled to acquire all the
issued ordinary shares in the Company.
(b) After notification under paragraph (a) above, if the Majority Lenders
so require, the Facility Agent must, by notice to the Company:
(i) cancel the Total Commitments; and
(ii) declare all outstanding Loans, together with accrued interest
and all other amounts accrued under the Finance Documents, to
be immediately due and payable.
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Any such notice will take effect in accordance with its terms.
(c) In paragraph (a) above:
control has the meaning given to it in section 416 of the Income and
Corporation Taxes Act 1988; and
acting in concert means acting together pursuant to an agreement or
understanding (whether formal or informal).
7.3 Voluntary prepayment
(a) The Company may, by giving not less than 14 days' prior notice to the
Facility Agent, prepay any Loan on the last day of its current Term in
whole or in part.
(b) A prepayment of part of a Loan must be in a minimum amount of
(pound)1,000,000.
7.4 Automatic cancellation
The Commitments of each Lender will be automatically cancelled at the
close of business on the last day of the Availability Period.
7.5 Voluntary cancellation
(a) The Company may, by giving not less than 14 days' prior notice to the
Facility Agent, cancel the unutilised amount of the Total Commitments
in whole or in part.
(b) Partial cancellation of the Total Commitments must be in a minimum
amount of (pound)1,000,000.
(c) Any cancellation in part will be applied against the relevant
Commitment of each Lender pro rata.
7.6 Involuntary prepayment and cancellation
(a) If the Company is, or will be, required to pay to a Lender a Tax
Payment or an Increased Cost, the Company may, while the requirement
continues, give notice to the Facility Agent requesting prepayment and
cancellation in respect of that Lender.
(b) After notification under paragraph (a) above:
(i) the Company must repay or prepay that Lender's share in each Loan
made to it on the date specified in paragraph (c) below; and
(ii) the Commitments of that Lender will be immediately cancelled.
(c) The date for repayment or prepayment of a Lender's share in a Loan will
be the last day of the current Term for that Loan or, if earlier, the
date specified by the Company in its notification.
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7.7 Partial prepayment of Term Loans
(a) Except where this Clause expressly provides otherwise any partial
prepayment of a Term Loan will be applied against the remaining
Repayment Instalments pro rata.
(b) Any voluntary prepayment of a Term Loan will be applied against the
remaining Repayment Instalments pro rata.
(c) No amount of a Term Loan prepaid under this Agreement may subsequently
be re-borrowed.
7.8 Re-borrowing of Revolving Credit Loans
Any voluntary prepayment of a Revolving Credit Loan may be re-borrowed
on the terms of this Agreement. Any mandatory or involuntary prepayment
of a Revolving Credit Loan may not be re-borrowed.
7.9 Extension of Revolving Credit Facility
(a) Subject to paragraph (c) below, the Company may, by notice to the
Facility Agent not more than 60 days nor less than 30 days prior to the
Final Maturity Date for the Revolving Credit Loans, request that the
Final Maturity Date in respect of such Loans be extended to the date
falling 364 days after the then current Final Maturity Date for
Revolving Credit Loans.
(b) Subject to paragraph (c) below, the Facility Agent may, with the
consent of all the Lenders, agree to such request by giving written
notice of such extension to the Company no later than 15 days prior to
the then current Final Maturity Date for Revolving Credit Loans. If
such agreement is given by the Facility Agent on behalf of the Lenders,
the Final Maturity Date in respect of Revolving Credit Loans shall,
with effect from the then current Final Maturity Date, be deemed to be
the date falling 364 days after that date.
(c) The Final Maturity Date in respect of Revolving Credit Loans shall not
be extended to a date falling after 30th September, 2009.
7.10 Miscellaneous provisions
(a) Any notice of prepayment and/or cancellation under this Agreement is
irrevocable and must specify the relevant date(s) and the affected
Loans and Commitments. The Facility Agent must notify the Lenders
promptly of receipt of any such notice.
(b) All prepayments under this Agreement must be made with accrued interest
on the amount prepaid. No premium or penalty is payable in respect of
any prepayment except for Break Costs.
(c) The Majority Lenders may agree a shorter notice period for a voluntary
prepayment or a voluntary cancellation.
(d) No prepayment or cancellation is allowed except in accordance with the
express terms of this Agreement.
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(e) No amount of the Total Commitments cancelled under this Agreement may
subsequently be reinstated.
8. Interest
8.1 Calculation of interest
The rate of interest on each Loan for each Term is the percentage rate
per annum equal to the aggregate of the applicable:
(a) Applicable Margin;
(b) LIBOR; and
(c) Mandatory Cost.
8.2 Payment of interest
Except where it is provided to the contrary in this Agreement, the
Company must pay accrued interest on each Loan made to it on the last
day of each Term and also, if the Term is longer than six months, on
the dates falling at six-monthly intervals after the first day of that
Term.
8.3 Adjustment of Applicable Margin
(a) Following delivery of the first Compliance Certificate under Clause
17.3 (Compliance Certificate), the Applicable Margin for each Term of a
Loan commencing after the date of the relevant Compliance Certificate
will be adjusted as appropriate by reference to the ratio of Total
Borrowings to EBITDA for the relevant Measurement Period (as defined
and calculated in accordance with Clause 18 (Financial covenants) and
as set out in the most recent Compliance Certificate) as follows:
Total Borrowings: EBITDA Applicable Margin (per cent. per annum)
Revolving Credit Loan Term Loan
Less than 1.5:1 0.625% 1.00%
Greater or equal to 1.5:1 0.75% 1.125%
but less than 1.75:1
Greater or equal to 1.75:1 0.875% 1.25%
but less than 2.0:1
Equal to or greater than 2.0:1 1.00% 1.375%
(b) For so long as:
(i) the Company is in default of its obligation under this Agreement
to provide a Compliance Certificate; or
(ii) an Event of Default is outstanding,
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the Applicable Margin will be 1.375 per cent. per annum in respect of
Term Loans and 1.0 per cent. per annum in respect of Revolving Credit
Loans.
8.4 Interest on overdue amounts
(a) If an Obligor fails to pay any amount payable by it under the Finance
Documents, it must immediately on demand by the Facility Agent pay
interest on the overdue amount from its due date up to the date of
actual payment, both before, on and after judgment.
(b) Interest on an overdue amount is payable at a rate determined by the
Facility Agent to be one per cent. per annum above the rate which would
have been payable if the overdue amount had, during the period of
non-payment, constituted a Revolving Credit Loan in the currency of the
overdue amount. For this purpose, the Facility Agent may (acting
reasonably):
(i) select successive Terms of any duration of up to three months;
and
(ii) determine the appropriate Rate Fixing Day for that Term.
(c) Notwithstanding paragraph (b) above, if the overdue amount is a
principal amount of a Loan and becomes due and payable prior to the
last day of its current Term, then:
(i) the first Term for that overdue amount will be the unexpired
portion of that Term; and
(ii) the rate of interest on the overdue amount for that first Term
will be one per cent. per annum above the rate then payable on
that Loan.
After the expiry of the first Term for that overdue amount, the rate on
the overdue amount will be calculated in accordance with paragraph (b)
above.
(d) Interest (if unpaid) on an overdue amount will be compounded with that
overdue amount at the end of each of its Terms but will remain
immediately due and payable.
8.5 Notification of rates of interest
The Facility Agent must promptly notify each relevant Party of the
determination of a rate of interest under this Agreement.
9. Terms
9.1 Selection - Term Loans
(a) Each Term Loan has successive Terms.
(b) The Company must select the first Term for a Term Loan in the relevant
Request and each subsequent Term in an irrevocable notice received by
the Facility Agent not later than 11.00 a.m. one Business Day before
the Rate Fixing Day for that Term. Each Term for a Term Loan will start
on its Utilisation Date or on the expiry of its preceding Term.
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(c) If the Company fails to select a Term for an outstanding Term Loan
under paragraph (b) above, that Term will, subject to the other
provisions of this Clause, be three months.
(d) Subject to the following provisions of this Clause, each Term for a
Term Loan will be one, three or six months or any other period agreed
by the Company and the Lenders.
9.2 Selection - Revolving Credit Loans
(a) Each Revolving Credit Loan has one Term only.
(b) The Company must select the Term for a Revolving Credit Loan in the
relevant Request.
(c) Subject to the following provisions of this Clause, each Term for a
Revolving Credit Loan will be one, three or six months or any other
period agreed by the Company and the Lenders.
9.3 Consolidation - Term Loans
Unless the Company otherwise requests, a Term for a Term Loan will end
on the same day as the current Term for any other Term Loan. On the
last day of those Terms, those Term Loans will be consolidated and
treated as one Term Loan.
9.4 Coincidence with Repayment Instalment dates
(a) The Company may select any Term of less than six months for a Term Loan
(and may redesignate any Term Loan as two Term Loans) to ensure that
the amount of the Term Loans with a Term ending on a date for repayment
of a Repayment Instalment is not less than the Repayment Instalment due
on that date.
(b) If the Company fails to make a selection in the circumstances envisaged
in paragraph (a) above, the Facility Agent may prior to the Rate Fixing
Day for the relevant Term shorten any Term for a Term Loan (and may
designate any Term Loan as two Term Loans) to achieve the same end.
9.5 No overrunning the Final Maturity Date
If a Term would otherwise overrun the Final Maturity Date, it will be
shortened so that it ends on the Final Maturity Date.
9.6 Other adjustments
The Facility Agent and the Company may enter into such other
arrangements as they may agree for the adjustment of Terms and the
consolidation and/or splitting of Loans.
9.7 Notification
The Facility Agent must notify the Company and the Lenders of the
duration of each Term promptly after ascertaining its duration.
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10. Market disruption
10.1 Failure of a Reference Bank to supply a rate
If LIBOR is to be calculated by reference to the Reference Banks but a
Reference Bank does not supply a rate by 12.00 noon on a Rate Fixing
Day, the applicable LIBOR will, subject as provided below, be
calculated on the basis of the rates of the remaining Reference Banks.
10.2 Market disruption
(a) In this Clause, each of the following events is a market disruption
event:
(i) LIBOR is to be calculated by reference to the Reference Banks
but no, or only one, Reference Bank supplies a rate by 12.00
noon on the Rate Fixing Day; or
(ii) the Facility Agent receives by close of business on the Rate
Fixing Day notification from Lenders whose shares in the
relevant Loan exceed 50 per cent. of that Loan that the cost
to them of obtaining matching deposits in the relevant
interbank market is in excess of LIBOR for the relevant Term.
(b) The Facility Agent must promptly notify the Company and the Lenders of
a market disruption event.
(c) After notification under paragraph (b) above, the rate of interest on
each Lender's share in the affected Loan for the relevant Term will be
the aggregate of the applicable:
(i) Applicable Margin;
(ii) rate notified to the Facility Agent by that Lender as soon as
practicable, and in any event before interest is due to be
paid in respect of tha t Term, to be that which expresses as a
percentage rate per annum the cost to that Lender of funding
its share in that Loan from whatever source it may reasonably
select; and
(iii) Mandatory Cost.
10.3 Alternative basis of interest or funding
(a) If a market disruption event occurs and the Facility Agent or the
Company so requires, the Company and the Facility Agent must enter into
negotiations for a period of not more than 30 days with a view to
agreeing an alternative basis for determining the rate of interest
and/or funding for the affected Loan and any future Loan.
(b) Any alternative basis agreed will be, with the prior consent of all the
Lenders, binding on all the Parties.
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11. Taxes
11.1 General
In this Clause:
Qualifying Lender means a Lender which is:
(a) a U.K. Lender; or
(b) a Treaty Lender.
Tax Credit means a credit against any Tax or any relief or remission
for Tax (or its repayment).
Treaty Lender means a Lender which is, on the date a payment of
interest falls due under this Agreement:
(a) resident (as defined in the appropriate double taxation
agreement) in a country with which the U.K. has a double
taxation agreement giving residents of that country exemption
from U.K. taxation on interest; and
(b) does not carry on a business in the U.K. through a permanent
establishment with which the payment is effectively connected.
U.K. Lender means a Lender which is:
(a) within the charge to U.K. corporation tax in respect of, and
beneficially entitled to, a payment of interest on a Loan made
by a person that was a bank for the purposes of section 349 of
the Income and Corporation Taxes Act 1988 (as currently
defined in section 840A of the Income and Corporation Taxes
Act 1988) at the time the Loan was made; or
(b) a U.K. Non-Bank Lender.
U.K. Non-Bank Lender means:
(a) company resident in the U.K. for tax purposes;
(b) a partnership each member of which is a company resident in the
U.K. for tax purposes; or
(c) a company not resident in the U.K. for tax purposes which carries
on a trade in the U.K. through a branch or agency and brings into
account payments made to it under this Agreement in computing its
chargeable profits for the purpose of section 11(2) of the Income
and Corporation Taxes Act 1988, which, in each case, is
beneficially entitled to payments made to it under this
Agreement and which has provided to the Company and not retracted
confirmation of the above.
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11.2 Tax gross-up
(a) Each Obligor must make all payments to be made by it under the Finance
Documents without any Tax Deduction, unless a Tax Deduction is required
by law.
(b) If:
(i) a Lender is not, or ceases to be, a Qualifying Lender; or
(ii) an Obligor or a Lender is aware that an Obligor must make
a Tax Deduction (or that there is a change in the rate or the
basis of a Tax Deduction), it must promptly notify the Facility
Agent. The Facility Agent must then promptly notify the affected
Parties.
(c) Except as provided below, if a Tax Deduction is required by law to be
made by an Obligor or the Facility Agent, the amount of the payment due
from the Obligor will be increased to an amount which (after making the
Tax Deduction) leaves an amount equal to the payment which would have
been due if no Tax Deduction had been required.
(d) Except as provided below, an Obligor resident for tax purposes in the
U.K. is not required to make an increased payment under paragraph (c)
above to a Lender that is not, or has ceased to be, a Qualifying Lender
in excess of the amount that the Obligor would have had to pay had the
Lender been, or not ceased to be, a Qualifying Lender.
(e) Paragraph (d) above will not apply if the Lender has ceased to be a
Qualifying Lender by reason of any change after the date it became a
Lender under this Agreement in (or in the interpretation,
administration, or application of) any law or double taxation agreement
or any published practice or concession of any relevant taxing
authority.
(f) An Obligor resident for tax purposes in the U.K. is not required to
make an increased payment to a Lender under paragraph (c) above if that
Lender is a Treaty Lender and the Obligor making the payment is able to
demonstrate that the Tax Deduction would not have been required if the
Lender had complied with its obligations under paragraph (h) below.
(g) If an Obligor is required to make a Tax Deduction, that Obligor must
make the minimum Tax Deduction and must make any payment required in
connection with that Tax Deduction within the time allowed by law.
(h) Within 30 days of making either a Tax Deduction or a payment required
in connection with a Tax Deduction, the Obligor making that Tax
Deduction or payment must deliver to the Facility Agent for the
relevant Finance Party evidence satisfactory to that Finance Party
(acting reasonably) that the Tax Deduction has been made or (as
applicable) the appropriate payment has been paid to the relevant
taxing authority.
(i) A Treaty Lender must co-operate with each Obligor by using its
reasonable endeavours to complete any procedural formalities necessary
for that Obligor to obtain authorisation to make that payment without a
Tax Deduction.
(j) Any confirmation by a Lender of its status for the purpose of the
definition of U.K. Non-Bank Lender must be given to the Facility Agent
on or promptly after the date it becomes a Lender. The Facility Agent
25
must promptly forward any confirmation received by it to the Company. A
U.K. Non-Bank Lender must promptly notify the Company and the Facility
Agent of any change to its status that may affect any confirmation made
by it.
11.3 Tax indemnity
(a) Except as provided below, the Company must indemnify a Finance Party
against any loss or liability which that Finance Party (in its absolute
discretion) determines will be or has been suffered (directly or
indirectly) by that Finance Party for or on account of Tax in relation
to a payment received or receivable (or any payment deemed to be
received or receivable) under a Finance Document.
(b) Paragraph (a) above does not apply to any Tax assessed on a Finance
Party under the laws of the jurisdiction in which:
(i) that Finance Party is incorporated or, if different, the
jurisdiction (or jurisdictions) in which that Finance Party is
treated as resident for tax purposes; or
(ii) that Finance Party's Facility Office is located in respect of
amounts received or receivable in that jurisdiction,
if that Tax is imposed on or calculated by reference to the net income
received or receivable by that Finance Party. However, any payment
deemed to be received or receivable, including any amount treated as
income but not actually received by the Finance Party, such as a Tax
Deduction, will not be treated as net income received or receivable for
this purpose.
(c) A Finance Party making, or intending to make, a claim under paragraph
(a) above must promptly notify the Company of the event which will
give, or has given, rise to the claim.
11.4 Tax Credit
If an Obligor makes a Tax Payment and the relevant Finance Party (in
its absolute discretion) determines that:
(a) a Tax Credit is attributable to that Tax Payment; and
(b) it has used and retained that Tax Credit,
the Finance Party must pay an amount to the Obligor which that Finance
Party determines (in its absolute discretion) will leave it (after that
payment) in the same after-tax position as it would have been in if the
Tax Payment had not been made by the Obligor.
11.5 Stamp taxes
The Company must pay and indemnify each Finance Party against any stamp
duty, registration or other similar Tax payable in connection with the
entry into, performance or enforcement of any Finance Document, except
for any such Tax payable in connection with the entry into of a
Transfer Certificate.
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11.6 Value added taxes
(a) Any amount (including costs and expenses) payable under a Finance
Document by an Obligor is exclusive of any value added tax or any other
Tax of a similar nature which might be chargeable in connection with
that amount. If any such Tax is chargeable, the Obligor must pay to the
Finance Party (in addition to and at the same time as paying that
amount) an amount equal to the amount of that Tax.
(b) The obligation of any Obligor under paragraph (a) above will be reduced
to the extent that the Finance Party determines (acting reasonably)
that it is entitled to repayment or a credit in respect of the relevant
Tax.
12. Increased Costs
12.1 Increased Costs
Except as provided below in this Clause, the Company must pay to a
Finance Party the amount of any Increased Cost incurred by that Finance
Party or any of its Affiliates as a result of:
(a) the introduction of, or any change in, or any change in the
interpretation or application of, any law or regulation; or
(b) compliance with any law or regulation, made after the date of
this Agreement.
12.2 Exceptions
The Company need not make any payment for an Increased Cost to the
extent that the Increased Cost is:
(a) compensated for under another Clause or would have been but for
an exception to that Clause;
(b) a tax on the overall net income of a Finance Party or any of its
Affiliates; or
(c) attributable to a Tax Deduction required by law to be made by an
Obligor; or
(d) compensated for by the payment of Mandatory Costs; or
(e) attributable to a Finance Party or its Affiliate wilfully failing
to comply with any law or regulation.
12.3 Claims
A Finance Party intending to make a claim for an Increased Cost must
notify the Company promptly of the circumstances giving rise to, and
the amount of, the claim.
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13. Mitigation
13.1 Mitigation
(a) Each Finance Party must, in consultation with the Company, take all
reasonable steps to mitigate any circumstances which arise and which
result or would result in:
(i) any Tax Payment or Increased Cost being payable to that Finance
Party;
(ii) that Finance Party being able to exercise any right of prepayment
and/or cancellation under this Agreement by reason of any
illegality; or
(iii) that Finance Party incurring any cost of complying with the
minimum reserve requirements of the European Central Bank,
including transferring its rights and obligations under the
Finance Documents to an Affiliate or changing its Facility
Office.
(b) The Company must indemnify each Finance Party for all costs and
expenses reasonably incurred by that Finance Party as a result of any
step taken by it under this Subclause.
(c) A Finance Party is not obliged to take any step under this Subclause
if, in the opinion of that Finance Party (acting reasonably), to do so
might be prejudicial to it.
13.2 Conduct of business by a Finance Party
No term of this Agreement will:
(a) interfere with the right of any Finance Party to arrange its
affairs (Tax or otherwise) in whatever manner it thinks fit;
(b) oblige any Finance Party to investigate or claim any credit,
relief, remission or repayment available to it in respect of Tax
or the extent, order and manner of any claim; or
(c) oblige any Finance Party to disclose any information relating
to its affairs (Tax or otherwise) or any computation in respect
of Tax.
14. Payments
14.1 Place
Unless a Finance Document specifies that payments under it are to be
made in another manner, all payments by a Party (other than the
Facility Agent) under the Finance Documents must be made to the
Facility Agent to its account at such office or bank:
(a) in the principal financial centre of the country of the relevant
currency; or
(b) in the case of euro, in the principal financial centre of a
Participating Member State or London, as it may notify to that
Party for this purpose by not less than five Business Days'
prior notice.
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14.2 Funds
Payments under the Finance Documents to the Facility Agent must be made
for value on the due date at such times and in such funds as the
Facility Agent may specify to the Party concerned as being customary at
the time for the settlement of transactions in the relevant currency in
the place for payment.
14.3 Distribution
(a) Each payment received by the Facility Agent under the Finance Documents
for another Party must, except as provided below, be made available by
the Facility Agent to that Party by payment (as soon as practicable
after receipt) to its account with such office or bank:
(i) in the principal financial centre of the country of the relevant
currency; or
(ii) in the case of euro, in the principal financial centre of a
Participating Member State or London, as it may notify to the
Facility Agent for this purpose by not less than five Business
Days' prior notice.
(b) The Facility Agent may apply any amount received by it for an Obligor
in or towards payment (as soon as practicable after receipt) of any
amount due from that Obligor under the Finance Documents or in or
towards the purchase of any amount of any currency to be so applied.
(c) Where a sum is paid to the Facility Agent under this Agreement for
another Party, the Facility Agent is not obliged to pay that sum to
that Party until it has established that it has actually received it.
However, the Facility Agent may assume that the sum has been paid to
it, and, in reliance on that assumption, make available to that Party a
corresponding amount. If it transpires that the sum has not been
received by the Facility Agent, that Party must immediately on demand
by the Facility Agent refund any corresponding amount made available
to it together with interest on that amount from the date of payment
to the date of receipt by the Facility Agent at a rate calculated by
the Facility Agent to reflect its cost of funds.
14.4 Currency
(a) Unless a Finance Document specifies that payments under it are to be
made in a different manner, the currency of each amount payable under
the Finance Documents is determined under this Clause.
(b) Interest is payable in the currency in which the relevant amount in
respect of which it is payable is denominated.
(c) A repayment or prepayment of any principal amount is payable in the
currency in which that principal amount is denominated on its due date.
(d) Amounts payable in respect of costs and expenses are payable in the
currency in which they are incurred.
(e) Each other amount payable under the Finance Documents is payable in
Sterling.
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14.5 No set-off or counterclaim
All payments made by an Obligor under the Finance Documents must be
made without set-off or counterclaim.
14.6 Business Days
(a) If a payment under the Finance Documents is due on a day which is not a
Business Day, the due date for that payment will instead be the next
Business Day in the same calendar month (if there is one) or the
preceding Business Day (if there is not).
(b) During any extension of the due date for payment of any principal under
this Agreement interest is payable on that principal at the rate
payable on the original due date.
14.7 Partial payments
(a) If any Administrative Party receives a payment insufficient to
discharge all the amounts then due and payable by the Obligors under
the Finance Documents, the Administrative Party must apply that payment
towards the obligations of the Obligors under the Finance Documents in
the following order:
(i) first, in or towards payment pro rata of any unpaid fees,
costs and expenses of the Administrative Parties under the
Finance Documents;
(ii) secondly, in or towards payment pro rata of any accrued
interest or fee due but unpaid under this Agreement;
(iii) thirdly, in or towards payment pro rata of any principal
amount due but unpaid under this Agreement; and
(iv) fourthly, in or towards payment pro rata of any other sum due but
unpaid under the Finance Documents.
(b) The Facility Agent must, if so directed by all the Lenders, vary the
order set out in sub-paragraphs (a)(ii) to (iv) above.
(c) This Subclause will override any appropriation made by an Obligor.
14.8 Timing of payments
If a Finance Document does not provide for when a particular payment is
due, that payment will be due within three Business Days of demand by
the relevant Finance Party.
15. Guarantee and indemnity
15.1 Guarantee and indemnity
Each Guarantor jointly and severally and irrevocably and
unconditionally:
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(a) guarantees to each Finance Party punctual performance by the
Company of all its payment obligations under the Finance
Documents;
(b) undertakes with each Finance Party that, whenever the Company
does not pay any amount when due under any Finance Document,
that Guarantor must immediately on demand by the Facility
Agent pay that amount as if it were the principal obligor; and
(c) indemnifies each Finance Party immediately on demand against
any loss or liability suffered by that Finance Party if any
obligation guaranteed by it is or becomes unenforceable,
invalid or illegal; the amount of the loss or liability under
this indemnity will be equal to the amount the Finance Party
would otherwise have been entitled to recover.
15.2 Continuing guarantee
This guarantee is a continuing guarantee and will extend to the
ultimate balance of all sums payable by the Company under the Finance
Documents, regardless of any intermediate payment or discharge in whole
or in part.
15.3 Reinstatement
(a) If any discharge (whether in respect of the obligations of any Obligor
or any security for those obligations or otherwise) or arrangement is
made in whole or in part on the faith of any payment, security or other
disposition which is avoided or must be restored on insolvency,
liquidation or otherwise without limitation, the liability of each
Guarantor under this Clause will continue as if the discharge or
arrangement had not occurred.
(b) Each Finance Party may concede or compromise any claim that any
payment, security or other disposition is liable to avoidance or
restoration.
15.4 Waiver of defences
The obligations of each Guarantor under this Clause will not be
affected by any act, omission or thing which, but for this provision,
would reduce, release or prejudice any of its obligations under this
Clause (whether or not known to it or any Finance Party). This
includes:
(a) any time or waiver granted to, or composition with, any
person;
(b) any release of any person under the terms of any composition or
arrangement;
(c) the taking, variation, compromise, exchange, renewal or
release of, or refusal or neglect to perfect, take up or
enforce, any rights against, or security over assets of, any
person;
(d) any non-presentation or non-observance of any formality or
other requirement in respect of any instrument or any failure
to realise the full value of any security;
(e) any incapacity or lack of power, authority or legal
personality of or dissolution or change in the members or
status of any person;
31
(f) any amendment (however fundamental) of a Finance Document or
any other document or security; or
(g) any unenforceability, illegality, invalidity or non-provability
of any obligation of any person under any Finance Document or any
other document or security.
15.5 Immediate recourse
Each Guarantor waives any right it may have of first requiring any
Finance Party (or any trustee or agent on its behalf) to proceed
against or enforce any other right or security or claim payment from
any person before claiming from that Guarantor under this Clause.
15.6 Appropriations
Until all amounts which may be or become payable by the Obligors under
the Finance Documents have been irrevocably paid in full, each Finance
Party (or any trustee or agent on its behalf) may:
(a) without affecting the liability of any Guarantor under this
Clause:
(i) refrain from applying or enforcing any other moneys,
security or rights held or received by that Finance Party
(or any trustee or agent on its behalf) in respect of those
amounts; or
(ii) apply and enforce them in such manner and order as it sees
fit (whether against those amounts or otherwise); and
(b) hold in an interest-bearing suspense account any moneys received
from any Guarantor or on account of that Guarantor's liability
under this Clause.
15.7 Non-competition
Unless:
(a) all amounts which may be or become payable by the Obligors
under the Finance Documents have been irrevocably paid in
full; or
(b) the Facility Agent otherwise directs,
no Guarantor will, after a claim has been made or by virtue of any
payment or performance by it under this Clause:
(i) be subrogated to any rights, security or moneys held, received
or receivable by any Finance Party (or any trustee or agent on
its behalf);
(ii) be entitled to any right of contribution or indemnity in
respect of any payment made or moneys received on account of
that Guarantor's liability under this Clause;
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(iii) claim, rank, prove or vote as a creditor of any Obligor or its
estate in competition with any Finance Party (or any trustee
or agent on its behalf); or
(iv) receive, claim or have the benefit of any payment,
distribution or security from or on account of any Obligor, or
exercise any right of set-off as against any Obligor.
Each Guarantor must hold in trust for and immediately pay or transfer
to the Facility Agent for the Finance Parties any payment or
distribution or benefit of security received by it contrary to this
Clause or in accordance with any directions given by the Facility Agent
under this Clause.
15.8 Additional security
This guarantee is in addition to and is not in any way prejudiced by
any other security now or subsequently held by any Finance Party.
15.9 Limitations
This guarantee does not apply to any liability to the extent it would
result in this guarantee constituting unlawful financial assistance
within the meaning of Section 151 of the Companies Act 1985.
16. Representations
16.1 Representations
The representations set out in this Clause are made by each Obligor or
(if it so states) the Company to each Finance Party.
16.2 Status
(a) It is a limited liability company, duly incorporated and validly
existing under the laws of its jurisdiction of incorporation.
(b) It and each of its Subsidiaries has the power to own its assets and
carry on its business as it is being conducted.
16.3 Powers and authority
It has the power to enter into and perform, and has taken all necessary
action to authorise the entry into and performance of, the Finance
Documents to which it is or will be a party and the transactions
contemplated by those Finance Documents.
16.4 Legal validity
(a) Subject to the Reservations, each Finance Document to which it is a
party is its legally binding, valid and enforceable obligation.
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16.5 Non-conflict
The entry into and performance by it of, and the transactions
contemplated by, the Finance Documents do not conflict:
(a) with any law or regulation applicable to it;
(b) with its or any of its Subsidiaries' constitutional documents; or
(c) in any material respect with any document which is binding
upon it or any of its Subsidiaries or any of its or its
Subsidiaries' assets.
16.6 No default
(a) No Default is outstanding or will result from the execution of, or the
performance of any transaction contemplated by, any Finance Document;
and
(b) no other event is outstanding which constitutes a default under any
document which is binding on it or any of its Subsidiaries or any of
its or its Subsidiaries' assets to an extent or in a manner which is
reasonably likely to have a Material Adverse Effect.
16.7 Authorisations
Except for registration of each Security Agreement under the Companies
Act 1985 all authorisations required by it in connection with the entry
into, performance, validity and enforceability of, and the transactions
contemplated by, the Finance Documents have been obtained or effected
(as appropriate) and are in full force and effect.
16.8 Financial statements
Its audited financial statements most recently delivered to the
Facility Agent (which, in the case of the Company at the date of this
Agreement, are the Original Financial Statements):
(a) have been prepared in accordance with accounting principles
and practices generally accepted in its jurisdiction of
incorporation, consistently applied; and
(b) fairly represent its financial condition as at the date to
which they were drawn up, except, in each case, as disclosed
to the contrary in those financial statements.
16.9 No material adverse change
In the case of the Company only, as at the date of this Agreement there
has been no material adverse change in the financial condition of the
Company since the date to which the Original Financial Statements were
drawn up.
34
16.10 Litigation
As at the date of this Agreement, no litigation, arbitration or
administrative proceedings are current or, to its knowledge, pending or
threatened, which, if adversely determined, are reasonably likely to
have a Material Adverse Effect.
16.11 Information
(a) In this Subclause, Information means any information provided by or on
behalf of the Company to the Finance Parties in connection with this
Agreement.
(b) In the case of the Company only:
(i) the written factual information contained in the Information
was true and accurate in all material respects as at its date
or (if appropriate) as at the date (if any) at which it is
stated to be given;
(ii) any financial projections contained in the Information have
been prepared as at its date, on the basis of recent
historical information and assumptions believed by the Company
to be reasonable;
(iii) each expression of opinion or intention contained in the
Information was made after careful consideration and enquiry
and is believed by the Company to be reasonable as at the date
at which it is stated to be given;
(iv) the Information did not omit as at its date any information
which, if disclosed, would make the Information untrue or
misleading in any material respect; and
(v) in respect of any Information provided before the date of this
Agreement, as at the date of this Agreement, nothing has
occurred since the date of the Information which, if
disclosed, would make the Information untrue or misleading in
any material respect.
16.12 D154 Contract
(a) The Company is not in default of any of its material obligations under
the D154 Construction Contract;
(b) there is no outstanding breach of the D154 Construction Contract by any
other party to the D154 Construction Contract; and
(c) the expenditure on the Works completed to date does not exceed the
amount specified for such works in the Works Budget.
16.13 Material Contracts
(a) All payments to it by any other party to a Material Contract are not
subject to any right of set-off or similar right (other than the Crown
Right of Set-Off);
(b) each such Material Contract is its legally binding, valid, and
enforceable obligation;
35
(c) it is not in default of any of its material obligations under any such
Material Contract;
(d) there is no outstanding breach of any Material Contract by any other
party to such Material Contract;
(e) there is no prohibition on granting the Security Interest contained in
the Security Agreement in any such Material Contract; and
(f) its entry into and performance of the Finance Documents will not
conflict in any material respect with any term of any such Material
Contract.
16.14 Times for making representations
(a) The representations set out in this Clause are made by each Original
Obligor on the date of this Agreement.
(b) Unless a representation is expressed to be given at a specific date,
each representation is deemed to be repeated by:
(i) each Additional Guarantor and the Company on the date that
Additional Guarantor becomes an Obligor; and
(ii) each Obligor on the date of each Request and the first day of
each Term.
(c) When a representation is repeated, it is applied to the circumstances
existing at the time of repetition.
17. Information covenants
17.1 Financial statements
(a) The Parent must supply to the Facility Agent in sufficient copies for
all the Lenders:
(i) its audited consolidated financial statements (other than the
Original Financial Statements) for each of its financial years;
(ii) the audited financial statements of each Obligor for each
of its financial years; and
(iii) monthly management accounts of the Company and each other
Obligor incorporating balance sheets and profit and loss
accounts; and
(iv) a projected balance sheet, profit and loss account, and cash
flow statement for the Company and each other Obligor for the
following financial year, together with a description of the
proposed activities of the Company and each Obligor during such
financial year, and, generally, all such budgetary information
relating to the Company and each Obligor as is agreed between the
Facility Agent and the Company prior to the date of first
delivery of information required under this sub-paragraph (iv).
36
(b) All financial statements must be supplied as soon as they are available
and:
(i) in the case of the Parent's audited consolidated financial
statements, within 180 days;
(ii) in the case of each Obligor's audited financial statements,
within 180 days; and
(iii) in the case of the monthly management accounts, within 30 days,
of the end of the relevant financial period or, in the case of
the information referred to in sub-paragraph (iv) of Clause
17.1(a) (Financial statements) above, not later than 15 days
before the commencement of each of the Company's financial years.
(c) The Parent must supply to the Facility Agent in sufficient copies for
all the Lenders its audited Original Financial Statements within 30
days of the date of this Agreement.
17.2 Form of financial statements
(a) The Parent must ensure that each set of financial statements supplied
under this Agreement gives (if audited) a true and fair view of, or (if
unaudited) fairly represents, the financial condition of the relevant
person as at the date to which those financial statements were drawn
up.
(b) The Parent must notify the Facility Agent of any change to the basis on
which its audited consolidated financial statements are prepared.
(c) If requested by the Facility Agent, the Parent must supply to the
Facility Agent:
(i) a full description of any change notified under paragraph (b)
above; and
(ii) sufficient information to enable the Finance Parties to make a
proper comparison between the financial position shown by the set
of financial statements prepared on the changed basis and its
most recent audited consolidated financial statements delivered
to the Facility Agent under this Agreement.
(d) If requested by the Facility Agent, the Parent and Company must enter
into discussions for a period of not more than 30 days with a view to
agreeing any amendments required to be made to this Agreement to place
the Parent, the Company and the Lenders in the same position as they
would have been in if the change had not happened. Any agreement
between the Parent, the Company and the Facility Agent will be, with
the prior consent of the Majority Lenders, binding on all the Parties.
(e) If no agreement is reached under paragraph (d) above on the required
amendments to this Agreement, the Parent must supply with each set of
its financial statements another set of its financial statements
prepared on the same basis as the Original Financial Statements.
17.3 Compliance Certificate
(a) The Company must supply to the Facility Agent a Compliance Certificate
with each set of its:
37
(i) financial statements sent to the Facility Agent under
sub-paragraph (a) (i) and (ii) of Clause 17.1 (Financial
statements); and
(ii) monthly management accounts for the months ending in March,
June, September and December in each year, sent to the Facility
Agent under sub-paragraph (a)(iii) of Clause 17.1 (Financial
statements).
(b) A Compliance Certificate must be signed by two authorised signatories
of the Company (including the Finance Director).
17.4 Information - miscellaneous
The Company must supply to the Facility Agent, in sufficient copies for
all the Lenders if the Facility Agent so requests:
(a) copies of all documents despatched by the Company to its creditors
generally or any class of them at the same time as they are despatched;
(b) promptly upon becoming aware of them:
(i) details of any breach or contravention of the rights of the
Special Shareholder under the Company's memorandum and
articles of association included (without limitation) those
rights set out in Article 6(B) of the Company's memorandum and
articles of association;
(ii) any circumstances which might give rise to the Special
Shareholder being entitled to exercise its right to acquire
all the issued ordinary shares of the Company; and
(iii) any circumstances which might give rise to the Special
Shareholder being entitled to exercise its right to acquire
the Startegic Assets (in whole or in part).
(c) copies of any notices received by the Company from the Special
Shareholder notifying that assets are Strategic Assets;
(d) promptly upon becoming aware of them, details of any litigation,
arbitration or administrative proceedings which are current,
threatened or pending and which could reasonably be expected to, if
adversely determined, have a Material Adverse Effect; and
(e) promptly on request, such further information regarding the financial
condition and operations of the Group as any Finance Party through the
Facility Agent may reasonably request.
17.5 Notification of Default
(a) Unless the Facility Agent has already been so notified by another
Obligor, each Obligor must notify the Facility Agent of any Default
(and the steps, if any, being taken to remedy it) promptly upon
becoming aware of its occurrence.
38
(b) Promptly on request by the Facility Agent, the Company must supply to
the Facility Agent a certificate, signed by two of its authorised
signatories on its behalf, certifying that no Default is outstanding
or, if a Default is outstanding, specifying the Default and the steps,
if any, being taken to remedy it.
17.6 Year end
The Company must not change its financial year end.
18. Financial covenants
18.1 Definitions
In this Clause:
Adjusted Tangible Net Worth means at any time the aggregate of:
(a) the amount paid up or credited as paid up on the issued share
capital of the Company; and
(b) the amount standing to the credit of the capital and revenue
reserves of the Company, based on the latest published audited
balance sheet of the Company or the balance sheet in the most
recent monthly management accounts of the Company delivered to
the Facility Agent pursuant to sub-paragraph (a)(iii) of
Clause 17.1 (Financial statements) (the latest balance sheet)
but adjusted by:
(i) adding any amount standing to the credit of the profit and
loss account of the Company for the period ending on the date
of the latest balance sheet to the extent not included in
sub-paragraph (b) above;
(ii) deducting any dividend or other distribution declared,
recommended or made by the Company;
(iii) deducting any amount standing to the debit of the profit and loss
account of the Company for the period ending on the date of the
latest balance sheet;
(iv) deducting any amount attributable to goodwill or any other
intangible asset;
(v) deducting any amount attributable to an upward revaluation of
assets after 31st December, 2001;
(vi) reflecting any variation in the amount of the issued share
capital of the Company after the date of the latest balance
sheet;
(vii) reflecting any variation in the interest of the Company in any
other member of the Group since the date of the latest balance
sheet;
(viii)excluding any amount attributable to deferred taxation; and
(ix) excluding any amount attributable to minority interests.
39
EBITDA means the net pre-taxation profits of the Company for a
Measurement Period:
(a) including the net pre-taxation profits of a business or assets
acquired during that Measurement Period for the part of that
Measurement Period when the business or assets were not owned by
the Company; but
(b) excluding the net pre-taxation profits attributable to any
business or assets sold during that Measurement Period,
and all as adjusted by:
(i) adding back Interest Payable;
(ii) taking no account of any exceptional or extraordinary item;
(iii) excluding any amount attributable to minority interests;
(iv) adding back depreciation and amortisation; and
(v) taking no account of any revaluation of an asset or any loss or
or gain over book value arising on the disposal of an asset
(otherwise than in the ordinary course of trading) by the
Company during that Measurement Period.
Interest Payable means all interest and other financing charges
(whether, in each case, paid, payable or capitalised), incurred by the
Company during a Measurement Period.
Interest Receivable means all interest and other financing charges
received or receivable by the Company during a Measurement Period.
Measurement Period means a period of 12 months ending on 31st March,
30th June, 30th September or 31st December, in each financial year of
the Company.
Net Interest Payable means Interest Payable less Interest Receivable
during the relevant Measurement Period.
Total Borrowings means, in respect of the Company, at any time the
aggregate of the following:
(a) the outstanding principal amount of any moneys borrowed;
(b) the outstanding principal amount of any acceptance under any
acceptance credit;
(c) the outstanding principal amount of any bond, note, debenture,
loan stock or other similar instrument;
(d) the capitalised element of indebtedness under a finance or
capital lease;
(e) the outstanding principal amount of all moneys owing in
connection with the sale or discounting of receivables (otherwise
than on a non-recourse basis);
40
(f) the outstanding principal amount of any indebtedness arising
from any deferred payment agreements arranged primarily as a
method of raising finance or financing the acquisition of an
asset;
(g) any fixed or minimum premium payable on the repayment or
redemption of any instrument referred to in paragraph (c)
above;
(h) the outstanding principal amount of any indebtedness arising
in connection with any other transaction (including any
forward sale or purchase agreement) which has the commercial
effect of a borrowing; and
(i) the outstanding principal amount of any indebtedness of any
person of a type referred to in paragraphs (a) - (h) above
which is the subject of a guarantee, indemnity or similar
assurance against financial loss given by the Company.
18.2 Interpretation
(a) Except as provided to the contrary in this Agreement, an
accounting term used in this Clause is to be construed in
accordance with the principles applied in connection with the
Original Financial Statements.
(b) Any amount in a currency other than Sterling is to be taken
into account at its Sterling equivalent calculated on the
basis of:
(i) the Facility Agent's spot rate of exchange for the purchase
of the relevant currency in the London foreign exchange
market with Sterling at or about 11.00 a.m. on the day the
relevant amount falls to be calculated; or
(ii) if the amount is to be calculated on the ast day of a
financial period of the Company, the relevant rates of
exchange used by the Company in, or in connection with, its
financial statements for that period.
(c) No item must be credited or deducted more than once in any
calculation under this Clause.
18.3 Adjusted Tangible Net Worth
The Company must ensure that Adjusted Tangible Net Worth is not, at any
time during each period specified below ("Test Period"), less than the
amount set opposite that period below ("Minimum Net Worth"):
Test Period Minimum Net Worth
From (and including) 31st December, 2002 to (pound)70,000,000
(and including) 30th December, 2003
From (and including) 31st December, 2003 to (pound)75,000,000
(and including) 29th June, 2004
41
From (and including) 30th June, 2004 to (and (pound)80,000,000
including) 30th December, 2004
From (and including) 31st December, 2004 to (pound)85,000,000
(and including) 29th June, 2005
From (and including) 30th June, 2005 and (pound)90,000,000
thereafter
18.4 Gearing
The Company must ensure that Total Borrowings do not, at the end of
each Measurement Period, exceed 2.5 times EBITDA for that Measurement
Period.
18.5 Interest cover
The Company must ensure that the ratio of EBITDA to Net Interest
Payable is not, at the end of each Measurement Period, less than 4 to
1.
19. General covenants
19.1 General
Each Obligor agrees to be bound by the covenants set out in this Clause
relating to it and, where the covenant is expressed to apply to each
member of the Group, each Obligor must ensure that each of its
Subsidiaries (other than members of the LSC Restricted Group) performs
that covenant.
19.2 Authorisations
Each Obligor must promptly obtain, maintain and comply with the terms
of any authorisation required under any law or regulation to enable it
to perform its obligations under, or for the validity or enforceability
of, any Finance Document.
19.3 Compliance with laws
Each member of the Group must comply in all respects with all laws to
which it is subject where failure to do so is reasonably likely to have
a Material Adverse Effect.
19.4 Pari passu ranking
Each Obligor must ensure that its payment obligations under the Finance
Documents rank at least pari passu with all its other present and
future unsecured payment obligations, except for obligations
mandatorily preferred by law applying to companies generally.
42
19.5 Negative pledge
(a) Except as provided below, no member of the Group may create or allow to
exist any Security Interest on any of its assets.
(b) Subject to paragraph (b) below, paragraph (a) does not apply to:
(i) any Security Interest constituted by the Security Documents;
(ii) any Security Interest listed in Schedule 6 (Existing Security)
except to the extent the principal amount secured by that
Security Interest exceeds the amount stated in that Schedule;
(iii) any Security Interest comprising a netting or set-off
arrangement entered into by a member of the Group in the
ordinary course of its banking arrangements for the purpose of
netting debit and credit balances;
(iv) any lien arising by operation of law and in the ordinary
course of trading;
(v) any Security Interest comprising the Crown Right of Set-Off;
(vi) any Security Interest arising out of title retention
provisions in a supplier's standard conditions of supply in
respect of goods acquired by the relevant member of the Group
in the ordinary course of business; and
(vii) any Security Interest securing indebtedness the amount of
which (when aggregated with the amount of any other
indebtedness which has the benefit of a Security Interest not
allowed under the preceding sub-paragraphs) does not exceed
(pound)1,000,000 or its equivalent at any time,
provided that no member of the Group may create or allow to exist any
Security Interest on any Strategic Assets or on any Security Assets (as
defined in the Security Agreement).
(c) No member of the Group may:
(i) sell, transfer or otherwise dispose of any of its assets on
terms where it is or may be leased to or re-acquired or
acquired by a member of the Group or any of its related
entities; or
(ii) sell, transfer or otherwise dispose of any of its receivables
on recourse terms, in circumstances where the transaction is
entered into primarily as a method of raising Financial
Indebtedness or of financing the acquisition of an asset.
19.6 Disposals
(a) Except as provided below, no member of the Group may, either in a
single transaction or in a series of transactions and whether related
or not, dispose of all or any part of its assets.
43
(b) Paragraph (a) does not apply to any disposal:
(i) made in the ordinary course of trading of the disposing entity;
(ii) of assets in exchange for (or where the proceeds are applied
within 6 months of the disposal towards the acquisition of)
other assets comparable or superior as to type, value and
quality;
(iii) from one Obligor to another Obligor; or
(iv) where the higher of the market value or consideration
receivable (when aggregated with the higher of the market
value or consideration for any other disposal not allowed
under the preceding sub-paragraphs) does not exceed
(pound)2,500,000 or its equivalent in any financial year of
the Company, provided that no member of the Group may dispose
of all or any part of its interest in any Strategic Assets.
19.7 Financial Indebtedness
(a) Except as provided below, no member of the Group may incur any
Financial Indebtedness.
(b) Paragraph (a) does not apply to:
(i) any Financial Indebtedness incurred under the Finance Documents;
(ii) any Financial Indebtedness incurred under the Working Capital
Facilities;
(iii) any Financial Indebtedness of one member of the Group to another
member of the Group where both the creditor and debtor are
Obligors;
(iv) any derivative transaction protecting against or benefiting from
fluctuations in any rate or price entered into in the ordinary
course of business; or
(v) Financial Indebtedness which in aggregate does not exceed
(pound)1,000,000 or its equivalent at any time.
19.8 Third party guarantees
(a) In this Subclause, a guarantee includes any guarantee or indemnity or
other assurance against loss as well as any agreement to maintain the
solvency of any person.
(b) No member of the Group may incur or allow to be outstanding any
guarantee by such member of the Group or any of its Subsidiaries (other
than members of the LSC Restricted Group) in respect of any person.
(c) Paragraph (b) does not apply to:
(i) the endorsement of negotiable instruments in the ordinary course
of trade;
44
(ii) performance bonds guaranteeing performance by a member of the
Group under any contract entered into in the ordinary course
of trade;
(iii) guarantees in respect of the Financial Indebtedness of Obligors
where such Financial Indebtedness is permitted by the terms of
this Agreement.
19.9 Loans out
(a) Except as provided in paragraph (b) below, no member of the Group may
be the creditor in respect of any financial Indebtedness.
(b) Paragraph (a) does not apply to:
(i) trade credit extended by any member of the Group to its customers
on normal commercial terms and in the ordinary course of its
trading activities; or
(ii) any Financial Indebtedness of one member of the Group to another
member of the Group where both the creditor and debtor are
Obligors; or
(iii) any loans provided to members of the LSC Restricted Group not
exceeding an aggregate amount of (pound)1,000,000 (or its
equivalent in other currencies) at any one time provided that
no such loan may be outstanding for more than 30 days.
19.10 Change of business
The Parent must ensure that no substantial change is made to the
general nature of the business of the Company or the Group from that
carried on at the date of this Agreement.
19.11 Mergers
No Obligor may enter into any amalgamation, demerger, merger or
reconstruction otherwise than under an intra-Group re-organisation on a
solvent basis or other transaction agreed by the Majority Lenders.
19.12 Acquisitions
(a) In this Subclause
Acquisition means the acquisition directly or indirectly (whether by
one transaction or by a series of related transactions) of any interest
whatsoever in the share capital (or equivalent) or the business or
undertaking (including without limitation, any franchise rights) or
assets constituting a separate business or undertaking of any company
or other person.
(b) Except as provided below, no member of the Group may make any
Acquisition.
45
(c) Paragraph (b) does not apply to Acquisitions where the consideration
(when aggregated with the consideration of any other Acquisition) does
not exceed (pound)1,000,000 or its equivalent in any financial year of
the Company provided that:
(i) no subscription or acquisition or, in respect of the Parent,
additional subscription or acquisition, may be made of any
interest whatsoever in the share capital (or equivalent) of
any member of the LSC Restricted Group; and
(ii) the Company may not have any Subsidiaries.
19.13 Environmental matters
(a) In this Subclause:
Environmental Approval means any authorisation required by an
Environmental Law.
Environmental Claim means any claim by any person in connection with:
(i) a breach, or alleged breach, of an Environmental Law;
(ii) any accident, fire, explosion or other event of any type
involving an emission or substance which is capable of causing
harm to any living organism or the environment; or
(iii) any other environmental contamination.
Environmental Law means any law or regulation concerning:
(i) the protection of health and safety;
(ii) the environment; or
(iii) any emission or substance which is capable of causing harm to any
living organism or the environment.
(b) Each member of the Group must ensure that it is, and has been, in
compliance with all Environmental Law and Environmental Approvals
applicable to it, where failure to do so is reasonably likely to have a
Material Adverse Effect.
(c) Each Obligor must promptly upon becoming aware notify the Facility
Agent of:
(i) any Environmental Claim current, or to its knowledge, pending or
threatened; or
(ii) any circumstances reasonably likely to result in an
Environmental Claim, which, if substantiated, is reasonably
likely to either have a Material Adverse Effect or result in
any liability for a Finance Party.
46
19.14 Insurance
(a) Each member of the Group must (to the extent not covered by the
Indemnities) insure its business and assets with insurance companies
against such risks and to the extent as is reasonable and customary for
a business engaged in the same or a similar activity and the same or
similar localities to that member of the Group, including (but not by
way of limitation) in respect of damage caused by terrorism, in respect
of Environmental Claims and, to the extent that any Indemnity is not
effective, in respect of the risks referred to in any such Indemnity.
(b) The Company must:
(i) perform all of its obligations under the Indemnities in
accordance with the terms of those Indemnities; and
(ii) not do or knowingly permit to be done any act as a result of
which all or any part of an Indemnity may be terminated or
otherwise cease to provide cover against the risks referred to in
that Indemnity.
(c) The Company must as soon as reasonably practicable notify the Facility
Agent upo becoming aware of the cover provided by any Indemnity
terminating or being reduced in any material respect.
(d) In this Subclause:
Indemnity means each indemnity provided to a member or members of the
Group by the Secretary of State for Defence.
19.15 Dividends
The Parent may not:
(a) declare, make or pay, or pay interest on any unpaid amount of,
any dividend, charge, fee or other distribution (whether in
cash or in kind) on or in respect of its share capital (or any
class of its share capital);
(b) repay or distribute any share premium account; or
(c) pay or allow any member of the Group to pay any management,
advisory or other fee to or to the order of the shareholders
of the Company (or any of their respective Affiliates which is
not a member of the Group), unless no Default is outstanding
or would be reasonably likely to arise as a result of such
action.
19.16 Arm's-length terms
No member of the Group may enter into any material transaction with any
person (including any Shareholder or Affiliate of a Shareholder or
member of the LSC Restricted Group) otherwise than on arm's-length
terms and for full market value.
47
19.17 Amendments to documents
(a) No member of the Group may:
(i) amend any material provision of its memorandum or articles of
association or other constitutional documents;
(ii) enter into any agreement with any shareholders in the Parent
(other than the Shareholders Agreement) or any of their
Affiliates which is not a member of the Group which affect the
rights of the Special Shareholder; or
(iii) amend or waive any material term of the Shareholders Agreement,
or any of the other documents delivered to the Facility Agent
pursuant to Subclause 4.1 (Conditions precedent documents),
without the prior written consent of the Original Lenders.
(b) The Parent must promptly supply to the Facility Agent a copy of any
amendment to or waiver of any of the documents referred to in paragraph
(a) above.
19.18 Material Contracts
(a) The Company must not, without the consent of the Majority Lenders,
waive or amend any term of any Material Contract in any material
respect where the waiver or amendment would reasonably be expected to
be prejudicial to the interests of the Lenders.
(b) The Company shall:
(i) perform all of its material obligations under the Material
Contracts in accordance with those documents; and
(ii) not do or knowingly permit to be done any act as a result of
which all or any part of or schedule to any Material Contract may
be terminated.
(c) The Company shall:
(i) supply such information as the Facility Agent may reasonably
request in sufficient quantities for the Lenders regarding all
material claims under the Material Contracts where such claim
would have a Material Adverse Effect;
(ii) promptly notify the Facility Agent of any breach by any person
of its material obligations under any Material Contract which
could reasonably be expected to have a Material Adverse Effect or
which is not remedied 30 days of its occurrence;
(iii) promptly notify the Facility Agent of any waiver or amendment of
any term of any Material Contracts (other than in respect of
administrative or day to day operational matters) which could
have a Material Adverse Effect or be materially prejudicial to
the interests of the Finance Parties; and
(iv) promptly notify the Facility Agent of any Material Contract it
enters into after the date of this Agreement and supply a
copy of that Material Contract to the Facility Agent.
48
(d) The Company shall enforce the terms of the Material Contracts against
the other parties to those documents where such other parties have
breached those documents and such breach would have a Material Adverse
Effect.
19.19 Inspection
If an Event of Default is outstanding the Company shall allow the
Facility Agent and, if the Facility Agent so requests, any other person
appointed by the Facility Agent on behalf of the Lenders, access upon
reasonable notice to inspect any assets of the Group, the technical and
statistical data, accounting books, records and other data in its
possession or control with respect to those assets as they may
reasonably require.
19.20 Intellectual property rights
(a) Except as provided below, each member of the Group must:
(i) make any registration and pay any fee or other amount which is
necessary to retain and protect the Intellectual Property
Rights which are material to the business of a member of the
Group;
(ii) record its interest in those Intellectual Property Rights;
(iii) take such steps as are necessary and commercially reasonable
(including the institution of legal proceedings) to prevent
third parties infringing those Intellectual Property Rights;
(iv) not use or permit any Intellectual Property Right to be used
in a way which may, or take or omit to take any action which
may, adversely affect the existence or value of such
Intellectual Property Right; and
(v) not grant any licence in respect of those Intellectual
Property Rights.
(b) Subparagraph (v) of paragraph (a) above does not apply to:
(i) licence arrangements entered into between members of the Group
for so long as they remain members of the Group; or
(ii) licence arrangements entered into on normal commercial terms
and in the ordinary course of its business.
19.21 Special Shareholder
The Company shall ensure that it complies with its obligations under
the Company's memorandum and articles of association and that no breach
or contravention of the rights of the Special Shareholder under the
Company's memorandum and articles of association occurs.
49
20. Default
20.1 Events of Default
Each of the events set out in this Clause is an Event of Default.
20.2 Non-payment
An Obligor does not pay on the due date any amount payable by it under
the Finance Documents in the manner required under the Finance
Documents, unless the non-payment:
(a) is caused by technical or administrative error; and
(b) is remedied within three Business Days of the due date.
20.3 Breach of other obligations
(a) An Obligor does not comply with any term of clause 18 (Financial
covenants); or
(b) an Obligor does not comply with any other term of the Finance Documents
not already referred to in this Clause, unless the non-compliance:
(i) is capable of remedy; and
(ii) is remedied within fourteen days of the earlier of the Facility
Agent giving notice and the Obligor becoming aware of the
non-compliance.
20.4 Misrepresentation
A representation made or repeated by an Obligor in any Finance Document
or in any document delivered by or on behalf of any Obligor under any
Finance Document is incorrect in any material respect when made or
deemed to be repeated, unless the circumstances giving rise to the
misrepresentation:
(a) are capable of remedy; and
(b) are remedied within fourteen days of the earlier of the Facility Agent
giving notice and the Obligor becoming aware of the misrepresentation.
20.5 Cross-default
Any of the following occurs in respect of a member of the Group:
(a) any of its Financial Indebtedness is not paid when due (after the
expiry of any originally applicable grace period);
(b) any of its Financial Indebtedness:
(i) becomes prematurely due and payable;
50
(ii) is placed on demand; or
(iii) is capable of being declared by a creditor to be prematurely
due and payable or being placed on demand, in each case, as a
result of an event of default (howsoever described); or
(c) any commitment for its Financial Indebtedness is cancelled or suspended
as a result of an event of default (howsoever described), unless the
aggregate amount of Financial Indebtedness falling within paragraphs
(a)-(c) above is less than (pound)50,000 or its equivalent.
20.6 Insolvency
Any of the following occurs in respect of a member of the Group:
(a) it is, or is deemed for the purposes of any law to be, unable
to pay its debts as they fall due or insolvent;
(b) it admits its inability to pay its debts as they fall due;
(c) it suspends making payments on any of its debts or announces
an intention to do so;
(d) by reason of actual or anticipated financial difficulties, it
begins negotiations with any creditor for the rescheduling of
any of its indebtedness; or
(e) a moratorium is declared in respect of any of its
indebtedness.
If a moratorium occurs in respect of any member of the Group, the
ending of the moratorium will not remedy any Event of Default caused by
the moratorium.
20.7 Insolvency proceedings
(a) Except as provided below, any of the following occurs in respect of a
member of the Group:
(i) any step is taken with a view to a composition, assignment or
similar arrangement with any of its creditors;
(ii) a meeting of it is convened for the purpose of considering any
resolution for (or to petition for) its winding-up,
administration or dissolution or any such resolution is
passed;
(iii) any person presents a petition for its winding-up,
administration or dissolution;
(iv) an order for its winding-up, administration or dissolution
is made;
(v) any liquidator, trustee in bankruptcy, judicial custodian,
compulsory manager, receiver, administrative receiver,
administrator or similar officer is appointed in respect of it or
any of its assets;
51
(vi) its directors or other officers request the appointment of a
liquidator, trustee in bankruptcy, judicial custodian, compulsory
manager, receiver, administrative receiver, administrator or
similar officer; or
(vii) any other analogous step or procedure is taken in any
jurisdiction.
(b) Paragraph (a) does not apply to a petition for winding-up presented by
a creditor which is being contested in good faith and with due
diligence and is discharged or struck out within fourteen days or to
the solvent winding up or dissolution of Dorhold Limited or Devonport
Engineering Services Limited.
20.8 Creditors' process
Any attachment, sequestration, distress, execution or analogous event
affects any asset(s) of a member of the Group, having an aggregate
value of (pound)50,000, and is not discharged within fourteen days.
20.9 Cessation of business
A member of the Group ceases, or threatens to cease, to carry on
business except as a result of any disposal allowed under this
Agreement.
20.10 Effectiveness of Finance Documents
(a) It is or becomes unlawful for any Obligor to perform any of its
obligations under the Finance Documents.
(b) Any Finance Document is not effective or is alleged by an Obligor
to be ineffective for any reason.
(c) An Obligor repudiates a Finance Document or evidences an
intention to repudiate a Finance Document.
20.11 Ownership of the Obligors
An Obligor (other than the Parent) is not or ceases to be a direct
Subsidiary of the Parent.
20.12 Material Contracts
(a) Any party to a Material Contract does not comply with any provision of
that Material Contract and that non-compliance could reasonably be
expected to have a Material Adverse Effect.
(b) Any Material Contract is repudiated or is or becomes void or
unenforceable.
(c) Any obligation expressed to be assumed by a party under a Material
Contract is not or ceases to be a valid and binding obligation of, or
is repudiated by, that party or becomes void or unenforceable in each
case, to an extent that could reasonably be expected to have a Material
Adverse Effect.
52
(d) Any Material Contract terminates or is or becomes capable of being
terminated or any party to a Material Contract issues a notice of
termination of that Material Contract in each case otherwise than by
reason of full performance of the Material Contract or expiry of its
term and the Company fails within 180 days to supply to the Facility
Agent a substitute contract for that Material Contract in form and
substance satisfactory to the Majority Lenders.
20.13 Nationalisation
(a) The Special Shareholder becomes entitled to acquire the Strategic
Assets (in whole or in part).
(b) The government of the United Kingdom or any Agency of that government
takes, or states officially that it proposes to take, any step with a
view to the seizure, expropriation, nationalisation or acquisition
(whether compulsory or otherwise, in whole or in part, and whether or
not for fair compensation) of the Company or any of its assets.
20.14 Public procurement
Any Material Contract was awarded in breach of any European Community
Directive in relation to public procurement or any litigation or other
proceedings, are commenced, pending or threatened against the Company
alleging that any Material Contract was awarded in breach of any such
Directive.
20.15 Material adverse change
Any event or series of events occurs which, in the opinion of the
Majority Lenders, is reasonably likely to have a Material Adverse
Effect.
20.16 Nuclear authorisations
Any material authorisation required under any law or regulation to
enable the Group to conduct its business including, without limitation,
the Nuclear Site Licence held by the Company pursuant to the Nuclear
Installations Acts 1965 and 1969 and the Radioactive Waste Disposal or
Accumulation Authorisations held by the Company pursuant to the
Radioactive Substances Act 1993, is revoked, surrendered, suspended or
varied in a material respect or if any enforcement or prohibition
notice is served in relation to any such authorisation.
20.17 Acceleration
If an Event of Default is outstanding, the Facility Agent may, and must
if so instructed by the Majority Lenders, by notice to the Company:
(a) cancel the Total Commitments; and/or
(b) declare that all or part of any amounts outstanding under the
Finance Documents are:
(i) immediately due and payable; and/or
(ii) payable on demand by the Facility Agent acting on the
instructions of the Majority Lenders.
53
Any notice given under this Subclause will take effect in accordance
with its terms.
21. Working Capital Facilities
21.1 Availability
(a) If the Company and a Lender agree and subject as provided below,
the Lender may provide a Working Capital Facility on a bi-lateral
basis to an Obligor.
(b) A Working Capital Facility (other than those existing at the date
of this Agreement) may not be made available unless the Facility
Agent (acting reasonably) has first approved it.
(c) If the Facility Agent approves a Working Capital Facility, then:
(i) in relation to a Working Capital Facility, the Lender
concerned will become a Working Capital Facility Lender;
and
(ii) the Working Capital Facility will be available,
with effect from the date agreed by the Company and the Working Capital
Facility Lender. The Facility Agent must promptly notify the other
Lenders.
21.2 Approval process
The Facility Agent will not approve a Working Capital Facility, unless
it has received:
(a) a notice specifying:
(i) the members of the Group which may use the Working Capital
Facility;
(ii) the start and expiry dates of the Working Capital
Facility;
(iii) the type of Working Capital Facility being provided;
(iv) the Working Capital Facility Lender or the Lender
providing the Working Capital Facility; and
(v) the amount of that Working Capital Facility;
(b) a copy of the Working Capital Facility Document; and
(c) any other information which the Facility Agent may reasonably
require in connection with the Working Capital Facility.
21.3 Terms of Working Capital Facilities
(a) Except as provided below, the terms of any Working Capital Facility
will be those agreed by the Working Capital Facility Lender and the
Company.
54
(b) However, those terms:
(i) must be based upon normal commercial terms at that time;
(ii) may only allow Obligors to use the Working Capital Facility; and
(iii) may not allow the maximum aggregate Working Capital
Outstandings to exceed (pound)25,000,000 in aggregate.
(c) Any Working Capital Facility Document is a Transaction Document.
21.4 Refinancing of Working Capital Facility
No Working Capital Facility Lender may demand repayment or prepayment
of any amounts, or demand cash cover for any liabilities made available
or incurred by it, under its Working Capital Facility, unless:
(a) the Total Revolving Credit Commitments have been cancelled in
full; or
(b) the Working Capital Outstandings under that Working Capital
Facility can be refinanced by a Revolving Credit Loan.
21.5 Information
Each Obligor and each Working Capital Facility Lender must, promptly
upon request by the Facility Agent, supply the Facility Agent with any
information relating to the operation of a Working Capital Facility
(including the Working Capital Outstandings) as the Facility Agent may
reasonably request.
21.6 Miscellaneous
For the avoidance of doubt, a provider of a Working Capital Facility is
a Transaction Party for the purposes of the Security Documents.
22. The Administrative Parties
22.1 Appointment and duties of the Facility Agent
(a) Each Finance Party (other than the Facility Agent) irrevocably appoints
the Facility Agent to act as its agent under the Finance Documents.
(b) Each Finance Party irrevocably authorises the Facility Agent to:
(i) perform the duties and to exercise the rights, powers and
discretions that are specifically given to it under the Finance
Documents, together with any other incidental rights, powers and
discretions; and
(ii) execute e ach Finance Document expressed to be executed by the
Facility Agent.
55
(c) The Facility Agent has only those duties which are expressly specified
in the Finance Documents. Those duties are solely of a mechanical and
administrative nature.
22.2 Role of the Mandated Lead Arrangers
Except as specifically provided in the Finance Documents, no Mandated
Lead Arranger has any obligations of any kind to any other Party in
connection with any Finance Document.
22.3 No fiduciary duties
Except as specifically provided in a Finance Document, nothing in the
Finance Documents makes an Administrative Party a trustee or fiduciary
for any other Party or any other person. No Administrative Party need
hold in trust any moneys paid to it for a Party or be liable to account
for interest on those moneys.
22.4 Individual position of an Administrative Party
(a) If it is also a Lender, each Administrative Party has the same rights
and powers under the Finance Documents as any other Lender and may
exercise those rights and powers as though it were not an
Administrative Party.
(b) Each Administrative Party may:
(i) carry on any business with any Obligor or its related entities
(including acting as an agent or a trustee for any other
financing); and
(ii) retain any profits or remuneration it receives under the
Finance Documents or in relation to any other business it
carries on with any Obligor or its related entities.
22.5 Reliance
The Facility Agent may:
(a) rely on any notice or document believed by it to be genuine and
correct and to have been signed by, or with the authority of, the
proper person;
(b) rely on any statement made by any person regarding any matters
which may reasonably be assumed to be within his knowledge or
within his power to verify;
(c) engage, pay for and rely on professional advisers selected by it
(including those representing a Party other than the Facility
Agent); and
(d) act under the Finance Documents through its personnel and agents.
22.6 Majority Lenders' instructions
(a) The Facility Agent is fully protected if it acts on the instructions of
the Majority Lenders in the exercise of any right, power or discretion
or any matter not expressly provided for in the Finance Documents. Any
56
such instructions given by the Majority Lenders will be binding on all
the Lenders. In the absence of instructions, the Facility Agent may act
as it considers to be in the best interests of all the Lenders.
(b) The Facility Agent is not authorised to act on behalf of a Lender
(without first obtaining that Lender's consent) in any legal or
arbitration proceedings in connection with any Finance Document.
(c) The Facility Agent may require the receipt of security satisfactory to
it, whether by way of payment in advance or otherwise, against any
liability or loss which it may incur in complying with the instructions
of the Majority Lenders.
22.7 Responsibility
(a) No Administrative Party is responsible to any other Finance Party for
the adequacy, accuracy or completeness of:
(i) any Finance Document or any other document; or
(ii) any statement or information (whether written or oral) made in
or supplied in connection with any Finance Document.
(b) Without affecting the responsibility of any bligor for information
supplied by it or on its behalf in connection with any Finance
Document, each Lender confirms that it:
(i) has made, and will continue to make, its own independent
appraisal of all risks arising under or in connection with the
Finance Documents (including the financial condition and
affairs of each Obligor and its related entities and the
nature and extent of any recourse against any Party or its
assets); and
(ii) has not relied exclusively on any information provided to it
by any Administrative Party in connection with any Finance
Document.
22.8 Exclusion of liability
(a) The Facility Agent is not liable or responsible to any other Finance
Party for any action taken or not taken by it in connection with any
Finance Document, unless directly caused by its gross negligence or
wilful misconduct.
(b) No Party may take any proceedings against any officer, employee or
agent of the Facility Agent in respect of any claim it might have
against the Facility Agent or in respect of any act or omission of any
kind by that officer, employee or agent in connection with any Finance
Document. Any officer, employee or agent of the Facility Agent may rely
on this Subclause and enforce its terms under the Contracts (Rights of
Third Parties) Act 1999.
22.9 Default
(a) The Facility Agent is not obliged to monitor or enquire whether a
Default has occurred. The Facility Agent is not deemed to have
knowledge of the occurrence of a Default.
57
(b) If the Facility Agent:
(i) receives notice from a Party referring to this Agreement,
describing a Default and stating that the event is a Default; or
(ii) is aware of the non-payment of any principal or interest or
any fee payable to a Lender under this Agreement,
it must promptly notify the Lenders.
22.10 Information
(a) The Facility Agent must promptly forward to the person concerned the
original or a copy of any document which is delivered to the Facility
Agent by a Party for that person.
(b) Except where a Finance Document specifically provides otherwise, the
Facility Agent is not obliged to review or check the adequacy, accuracy
or completeness of any document it forwards to another Party.
(c) Except as provided above, the Facility Agent has no duty:
(i) either initially or on a continuing basis to provide any Lender
with any credit or other information concerning the risks arising
under or in connection with the Finance Documents (including any
information relating to the financial condition or affairs of
any Obligor or its related entities or the nature or extent of
recourse against any Party or its assets) whether coming into its
possession before, on or after the date of this Agreement; or
(ii) unless specifically requested to do so by a Lender in accordance
with a Finance Document, to request any certificate or other
document from any Obligor.
(d) In acting as the Facility Agent, the agency division of the Facility
Agent is treated as a separate entity from its other divisions and
departments. Any information acquired by the Facility Agent which, in
its opinion, is acquired by it otherwise than in its capacity as the
Facility Agent may be treated as confidential by the Facility Agent and
will not be treated as information possessed by the Facility Agent in
its capacity as such.
(e) The Facility Agent is not obliged to disclose to any person any
confidential information supplied to it by a member of the Group solely
for the purpose of evaluating whether any waiver or amendment is
required to any term of the Finance Documents.
(f) Each Obligor irrevocably authorises the Facility Agent to disclose to
the other Finance Parties any information which, in its opinion, is
received by it in its capacity as the Facility Agent.
22.11 Indemnities
(a) Without limiting the liability of any Obligor under the Finance
Documents, each Lender must indemnify the Facility Agent for that
Lender's Pro Rata Share of any loss or liability incurred by the
58
Facility Agent in acting as the Facility Agent, except to the extent
that the loss or liability is caused by the Facility Agent's gross
negligence or wilful misconduct.
(b) The Facility Agent may deduct from any amount received by it for a
Lender any amount due to the Facility Agent from that Lender under a
Finance Document but unpaid.
22.12 Compliance
The Facility Agent may refrain from doing anything (including
disclosing any information) which might, in its opinion, constitute a
breach of any law or regulation or be otherwise actionable at the suit
of any person, and may do anything which, in its opinion, is necessary
or desirable to comply with any law or regulation.
22.13 Resignation of the Facility Agent
(a) The Facility Agent may resign and appoint any of its Affiliates as
successor Facility Agent by giving notice to the Lenders and the
Company.
(b) Alternatively, the Facility Agent may resign by giving notice to the
Lenders and the Company, in which case the Majority Lenders may appoint
a successor Facility Agent.
(c) If no successor Facility Agent has been appointed under paragraph (b)
above within 30 days after notice of resignation was given, the
Facility Agent may appoint a successor Facility Agent.
(d) The person(s) appointing a successor Facility Agent must, if
practicable, consult with the Company prior to the appointment.
(e) The resignation of the Facility Agent and the appointment of any
successor Facility Agent will both become effective only when the
successor Facility Agent notifies all the Parties that it accepts its
appointment. On giving the notification, the successor Facility Agent
will succeed to the position of the Facility Agent and the term
Facility Agent will mean the successor Facility Agent.
(f) The retiring Facility Agent must, at its own cost, make available to
the successor Facility Agent such documents and records and provide
such assistance as the successor Facility Agent may reasonably request
for the purposes of performing its functions as the Facility Agent
under the Finance Documents.
(g) Upon its resignation becoming effective, this Clause will continue to
benefit the retiring Facility Agent in respect of any action taken or
not taken by it in connection with the Finance Documents while it was
the Facility Agent, and, subject to paragraph (f) above, it will have
no further obligations under any Finance Document.
(h) The Majority Lenders may, by notice to the Facility Agent, require it
to resign under paragraph (b) above.
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22.14 Relationship with Lenders
(a) The Facility Agent may treat each Lender as a Lender, entitled to
payments under this Agreement and as acting through its Facility
Office(s) until it has received not less than five Business Days' prior
notice from that Lender to the contrary.
(b) The Facility Agent may at any time, and must if requested to do so by
the Majority Lenders, convene a meeting of the Lenders.
(c) The Facility Agent must keep a register of all the Parties and supply
any other Party with a copy of the register on request. The register
will include each Lender's Facility Office(s) and contact details for
the purposes of this Agreement.
22.15 Facility Agent's management time
If the Facility Agent requires after consultation with the Company, any
amount payable to the Facility Agent by any Party under any indemnity
or in respect of any costs or expenses incurred by the Facility Agent
under the Finance Documents after the date of this Agreement may
include the cost of using its management time or other resources and
will be calculated on the basis of such reasonable daily or hourly
rates as the Facility Agent may notify to the relevant Party. This is
in addition to any amount in respect of fees or expenses paid or
payable to the Facility Agent under any other term of the Finance
Documents.
22.16 Notice period
Where this Agreement specifies a minimum period of notice to be given
to the Facility Agent, the Facility Agent may, at its discretion,
accept a shorter notice period.
23. Evidence and calculations
23.1 Accounts
Accounts maintained by a Finance Party in connection with this
Agreement are prima facie evidence of the matters to which they relate
for the purpose of any litigation or arbitration proceedings.
23.2 Certificates and determinations
Any certification or determination by a Finance Party of a rate or
amount under the Finance Documents will be, in the absence of manifest
error, conclusive evidence of the matters to which it relates.
23.3 Calculations
Any interest or fee accruing under this Agreement accrues from day to
day and is calculated on the basis of the actual number of days elapsed
and a year of 360 or 365 days or otherwise, depending on what the
Facility Agent determines is market practice.
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24. Fees
24.1 Facility Agent's fee
The Company must pay to the Facility Agent for its own account an
agency fee in the manner agreed in the Fee Letter between the Facility
Agent and the Company.
24.2 Arrangement fee
The Company must pay to the Mandated Lead Arrangers for their own
account an arrangement fee in the manner agreed in the Fee Letter
between the Mandated Lead Arrangers and the Company.
24.3 Term Loan commitment fee
(a) The Company must pay a commitment fee computed at the rate of 30 per
cent. of the then prevailing Applicable Margin (on the basis of the
rate that would apply by reference to the most recently delivered
Compliance Certificate) on the daily undrawn, uncancelled amount of
each Lender's Term Loan Commitment.
(b) Accrued commitment fee is payable quarterly in arrear. Accrued
commitment fee is also payable to the Facility Agent for a Lender on
the date its Term Loan Commitment is cancelled in full.
24.4 Revolving Credit commitment fee
(a) The Company must pay a commitment fee computed at the rate of 30 per
cent. of the then prevailing Applicable Margin (on the basis of the
rate that would apply by reference to the most recently delivered
Compliance Certificate) on the daily undrawn, uncancelled amount of
each Lender's Revolving Credit Commitment.
(b) Accrued commitment fee is payable quarterly in arrear. Accrued
commitment fee is also payable to the Facility Agent for a Lender on
the date its Revolving Credit Commitment is cancelled in full.
25. Indemnities and Break Costs
25.1 Currency indemnity
(a) The Company must, as an independent obligation, indemnify each Finance
Party against any loss or liability which that Finance Party incurs as
a consequence of:
(i) that Finance Party receiving an amount in respect of an Obligor's
liability under the Finance Documents; or
(ii) that liability being converted into a claim, proof, judgment or
order, in a currency other than the currency in which the amount
is expressed to be payable under the relevant Finance Document.
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(b) Unless otherwise required by law, each Obligor waives any right it may
have in any jurisdiction to pay any amount under the Finance Documents
in a currency other than that in which it is expressed to be payable.
25.2 Other indemnities
(a) The Company must indemnify each Finance Party against any loss or
liability which that Finance Party incurs as a consequence of:
(i) the occurrence of any Event of Default;
(ii) any failure by an Obligor to pay any amount due under a
Finance Document on its due date, including any resulting from
any distribution or redistribution of any amount among the
Lenders under this Agreement;
(iii) (other than by reason of negligence or default by that Finance
Party) a Loan not being made after a Request has been
delivered for that Loan; or
(iv) a Loan (or part of a Loan) not being prepaid in accordance
with a notice of prepayment.
The Company's liability in each case includes any loss or expense on
account of funds borrowed, contracted for or utilised to fund any
amount payable under any Finance Document, any amount repaid or prepaid
or any Loan.
(b) The Company must indemnify the Facility Agent against any loss or
liability incurred by the Facility Agent as a result of:
(i) investigating any event which the Facility Agent reasonably
believes to be a Default; or
(ii) acting or relying on any notice which the Facility Agent
reasonably believes to be genuine, correct and appropriately
authorised.
25.3 Break Costs
(a) The Company must pay to each Lender its Break Costs.
(b) Break Costs are the amount (if any) determined by the relevant Lender
by which:
(i) the interest which that Lender would have received for the
period from the date of receipt of any part of its share in a
Loan or an overdue amount to the last day of the applicable
Term for that Loan or overdue amount if the principal or
overdue amount received had been paid on the last day of that
Term;
exceeds
(ii) the amount which that Lender would be able to obtain by placing
an amount equal to the amount received by it on deposit with a
leading bank in the appropriate interbank market for a period
starting on the Business Day following receipt and ending on the
last day of the applicable Term.
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(c) Each Lender must supply to the Facility Agent for the Company details
of the amount of any Break Costs claimed by it under this Subclause.
26. Expenses
26.1 Initial costs
The Company must pay to each Administrative Party the amount of all
costs and expenses (including legal fees) reasonably incurred by it in
connection with the negotiation, preparation, printing, execution and
syndication of the Finance Documents.
26.2 Subsequent costs
The Company must pay to the Facility Agent the amount of all costs and
expenses (including legal fees) reasonably incurred by it in connection
with:
(a) the negotiation, preparation, printing and execution of any
Finance Document (other than a Transfer Certificate) executed
after the date of this Agreement; and
(b) any amendment, waiver or consent requested by or on behalf of
an Obligor or specifically allowed by this Agreement.
26.3 Enforcement costs
The Company must pay to each Finance Party the amount of all costs and
expenses (including legal fees) incurred by it in connection with the
enforcement of, or the preservation of any rights under, any Finance
Document.
27. Amendments and waivers
27.1 Procedure
(a) Except as provided in this Clause, any term of the Finance Documents
may be amended or waived with the agreement of the Company and the
Majority Lenders. The Facility Agent may effect, on behalf of any
Finance Party, an amendment or waiver allowed under this Clause.
(b) The Facility Agent must promptly notify the other Parties of any
amendment or waiver effected by it under paragraph (a) above. Any such
amendment or waiver is binding on all the Parties.
27.2 Exceptions
(a) An amendment or waiver which relates to:
(i) the definition of Majority Lenders in Clause 1.1 (Definitions);
(ii) an extension of the date of payment of any amount to a Lender
under the Finance Documents;
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(iii) a reduction in the Applicable Margin or a reduction in the amount
of any payment of principal, interest, fee or other amount
payable to a Lender under the Finance Documents;
(iv) an increase in, or an extension of, a Commitment or the Total
Commitments;
(v) a release of an Obligor;
(vi) a term of a Finance Document which expressly requires the consent
of each Lender;
(vii) the right of a Lender to assign or transfer its rights or
obligations under the Finance Documents; or
(viii)this Clause, may only be made with the consent of all the
Lenders.
(b) An amendment or waiver which relates to the rights or obligations of an
Administrative Party may only be made with the consent of that
Administrative Party.
27.3 Change of currency
If a change in any currency of a country occurs (including where there
is more than one currency or currency unit recognised at the same time
as the lawful currency of a country), the Finance Documents will be
amended to the extent the Facility Agent (acting reasonably and after
consultation with the Company) determines is necessary to reflect the
change.
27.4 Waivers and remedies cumulative
The rights of each Finance Party under the Finance Documents:
(a) may be exercised as often as necessary;
(b) are cumulative and not exclusive of its rights under the general
law; and
(c) may be waived only in writing and specifically.
Delay in exercising or non-exercise of any right is not a waiver of
that right.
28. Changes to the Parties
28.1 Assignments and transfers by Obligors
No Obligor may assign or transfer any of its rights and obligations
under the Finance Documents without the prior consent of all the
Lenders.
28.2 Assignments and transfers by Lenders
(a) A Lender (the Existing Lender) may at any time assign or transfer
(including by way of novation) any of its rights and obligations under
this Agreement to any other person (the New Lender).
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(b) Unless the Company and the Facility Agent otherwise agree, a transfer
of part of a Commitment or the rights and obligations under this
Agreement by the Existing Lender must be in a minimum amount of
(pound)5,000,000.
(c) The consent of the Company is required for any assignment or transfer
unless the New Lender is another Lender or an Affiliate of a Lender.
The consent of the Company must not be unreasonably withheld or
delayed. The Company will be deemed to have given its consent five
Business Days after the Company is given notice of the request unless
it is expressly refused by the Company within that time.
(d) A transfer of obligations will be effective only if either:
(i) the obligations are novated in accordance with the following
provisions of this Clause; or
(ii) the New Lender confirms to the Facility Agent and the Company in
form and substance satisfactory to the Facility Agent that it is
bound by the terms of this Agreement as a Lender. On the transfer
becoming effective in this manner the Existing Lender will be
released from its obligations under this Agreement to the extent
that they are transferred to the New Lender.
(e) Any assignment or transfer by a Lender to a New Lender shall only be
effective if it transfers or assigns the Lender's share of each
Facility pro rata.
(f) Unless the Facility Agent otherwise agrees, the New Lender must pay to
the Facility Agent for its own account, on or before the date any
assignment or transfer occurs, a fee of (pound)1,000.
(g) Any reference in this Agreement to a Lender includes a New Lender but
excludes a Lender if no amount is or may be owed to or by it under this
Agreement.
28.3 Procedure for transfer by way of novations
(a) In this Subclause:
Transfer Date means, for a Transfer Certificate, the later of:
(i) the proposed Transfer Date specified in that Transfer
Certificate; and
(ii) the date on which the Facility Agent executes that Transfer
Certificate.
(b) A novation is effected if:
(i) the Existing Lender and the New Lender deliver to the Facility
Agent a duly completed Transfer Certificate; and
(ii) the Facility Agent executes it.
The Facility Agent must execute as soon as reasonably practicable a
Transfer Certificate delivered to it and which appears on its face to
be in order.
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(c) Each Party (other than the Existing Lender and the New Lender)
irrevocably authorises the Facility Agent to execute any duly completed
Transfer Certificate on its behalf.
(d) On the Transfer Date:
(i) the New Lender will assume the rights and obligations of the
Existing Lender expressed to be the subject of the novation in
the Transfer Certificate in substitution for the Existing Lender;
and
(ii) the Existing Lender will be released from those obligations and
cease to have those rights.
28.4 Limitation of responsibility of Existing Lender
(a) Unless expressly agreed to the contrary, an Existing Lender is not
responsible to a New Lender for the legality, validity, adequacy,
accuracy, completeness or performance of:
(i) any Finance Document or any other document; or
(ii) any statement or information (whether written or oral) made in
or supplied in connection with any Finance Document, and any
representations or warranties implied by law are excluded.
(b) Each New Lender confirms to the Existing Lender and the other Finance
Parties that it:
(i) has made, and will continue to make, its own independent
appraisal of all risks arising under or in connection with the
Finance Documents (including the financial condition and affairs
of each Obligor and its related entities and the nature or extent
of any recourse against any Party or its assets) in connection
with its participation in this Agreement; and
(ii) has not relied exclusively on any information supplied to it by
the Existing Lender in connection with any Finance Document.
(c) Nothing in any Finance Document requires an Existing Lender to:
(i) accept a re-transfer from a New Lender of any of the rights
and obligations assigned or transferred under this Clause; or
(ii) support any losses incurred by the New Lender by reason of the
non-performance by any Obligor of its obligations under any
Finance Document or otherwise.
28.5 Costs resulting from change of Lender or Facility Office
If:
(a) a Lender assigns or transfers any of its rights and obligations
under the Finance Documents or changes its Facility Office; and
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(b) as a result of circumstances existing at the date the
assignment, transfer or change occurs, an Obligor would be
obliged to pay a Tax Payment or an Increased Cost,
then, unless the assignment, transfer or change is made by a Lender to
mitigate any circumstances giving rise to the Tax Payment, Increased
Cost or a right to be prepaid and/or cancelled by reason of illegality,
the Obligor need only pay that Tax Payment or Increased Cost to the
same extent that it would have been obliged to if no assignment,
transfer or change had occurred.
28.6 Additional Guarantors
(a) The Parent shall procure that, subject to paragraph (c) below, each
company (other than a member of the LSC Restricted Group) which becomes
one of its Subsidiaries after the date of this Agreement, or any of its
Subsidiaries which ceases to be dormant or carries on business or owns
any assets, becomes an Additional Guarantor within 30 days of it
becoming a Subsidiary by delivering to the Facility Agent an Accession
Agreement (containing such limits in relation to the guarantee as may
be required by any applicable law), duly executed by that Subsidiary
and the relevant documents and evidence listed in Part II of Schedule
2.
(b) If the Parent demonstrates to the satisfaction of the Facility Agent
that:
(i) it is illegal; or
(ii) it is impractical,
for the Parent to comply with its obligations under paragraph (a)
above, the Parent shall only be obliged so to comply within 21 days
after it becomes legal or ceases to be impractical (as the case may be)
to do so. "Impractical" in this context means that there is a risk that
compliance by the Parent or the relevant Subsidiary with its
obligations under paragraph (a) above would breach any duty of any
officer of the Group where such duty is derived from the laws of the
relevant jurisdiction and applies to directors generally and result in
personal liability or criminal sanctions.
(c) The relevant Subsidiary will become an Additional Guarantor when the
Facility Agent notifies the other Finance Parties and the Company that
it has received all of the documents and evidence referred to in
paragraph (a) above in form and substance satisfactory to it. The
Facility Agent must give this notification as soon as reasonably
practicable.
Delivery of an Accession Agreement, executed by the relevant Subsidiary
and the Company, to the Facility Agent constitutes confirmation by that
Subsidiary and the Company that the Repeating Representations are then
correct.
28.7 Resignation of a Guarantor
(a) In this Subclause, Resignation Request means a letter in the form of
Schedule 9 (Form of Resignation Request), with such amendments as the
Facility Agent may approve or reasonably require.
(b) The Company may request that a Guarantor ceases to be a Guarantor by
giving to the Facility Agent a duly completed Resignation Request.
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(c) The Agent must accept a Resignation Request and notify the Company and
the Lenders of its acceptance if:
(i) the Majority Lenders have consented to the Resignation Request;
(ii) it is not aware that a Default is outstanding or would result
from the acceptance of the Resignation Request; and
(iii) no amount owed by that Guarantor under this Agreement is still
outstanding.
(d) The Guarantor will cease to be a Guarantor when the Facility Agent
gives the notification referred to in paragraph (c) above.
(e) A Guarantor may also cease to be a Guarantor in any other manner
approved by the Majority Lenders.
28.8 Changes to the Reference Banks
If a Reference Bank (or, if a Reference Bank is not a Lender, the
Lender of which it is an Affiliate) ceases to be a Lender, the Facility
Agent must (in consultation with the Company) appoint another Lender or
an Affiliate of a Lender to replace that Reference Bank.
29. Disclosure of information
(a) Each Finance Party must keep confidential any information supplied to
it by or on behalf of any Obligor in connection with the Finance
Documents and must only use such information in connection with the
Finance Documents. However, a Finance Party is entitled to disclose
information:
(i) which at the time of its disclosure is in the public domain;
(ii) which after disclosure comes into the public domain for any
reason except failure on the part of any Finance Party to comply
with the terms of this Clause;
(iii) which was lawfully in that Finance Party's possession before the
disclosure;
(iv) by reason of law, legal process or any regulatory or government
authority;
(v) to the extent allowed under paragraph (b) below; or
(vi) with the agreement of the relevant Obligor.
(b) A Finance Party may disclose to an Affiliate or any person with whom it
may enter, or has entered into, any kind of transfer, participation or
other agreement in relation to this Agreement (a participant):
(i) a copy of any Finance Document; and
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(ii) any information which that Finance Party has acquired under or in
connection with any Finance Document.
However, before a participant may receive any confidential information,
it must agree with the relevant Finance Party to keep that information
confidential on the terms of paragraph (a) above.
(c) This Clause supersedes any previous confidentiality undertaking given
by a Finance Party in connection with this Agreement prior to it
becoming a Party.
30. Set-off
A Finance Party may set off any matured obligation owed to it by an
Obligor under the Finance Documents (to the extent beneficially owned
by that Finance Party) against any obligation (whether or not matured)
owed by that Finance Party to that Obligor, regardless of the place of
payment, booking branch or currency of either obligation. If the
obligations are in different currencies, the Finance Party may convert
either obligation at a market rate of exchange in its usual course of
business for the purpose of the set-off.
31. Pro rata sharing
31.1 Redistribution
If any amount owing by an Obligor under this Agreement to a Lender (the
recovering Lender) is discharged by payment, set-off or any other
manner other than through the Facility Agent under this Agreement (a
recovery), then:
(a) the recovering Lender must, within three Business Days, supply
details of the recovery to the Facility Agent;
(b) the Facility Agent must calculate whether the recovery is in
excess of the amount which the recovering Lender would have
received if the recovery had been received by the Facility
Agent under this Agreement; and
(c) the recovering Lender must pay to the Facility Agent an amount
equal to the excess (the redistribution).
31.2 Effect of redistribution
(a) The Facility Agent must treat a redistribution as if it were a payment
by the relevant Obligor under this Agreement and distribute it among
the Lenders, other than the recovering Lender, accordingly.
(b) When the Facility Agent makes a distribution under paragraph (a) above,
the recovering Lender will be subrogated to the rights of the Finance
Parties which have shared in that redistribution.
(c) If and to the extent that the recovering Lender is not able to rely on
any rights of subrogation under paragraph (b) above, the relevant
Obligor will owe the recovering Lender a debt which is equal to the
redistribution, immediately payable and of the type originally
discharged.
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(d) If:
(i) a recovering Lender must subsequently return a recovery, or an
amount measured by reference to a recovery, to an Obligor; and
(ii) the recovering Lender has paid a redistribution in relation to
that recovery,
each Finance Party must reimburse the recovering Lender all or the
appropriate portion of the redistribution paid to that Finance Party,
together with interest for the period while it held the
re-distribution. In this event, the subrogation in paragraph (b) above
will operate in reverse to the extent of the reimbursement.
31.3 Exceptions
Notwithstanding any other term of this Clause, a recovering Lender need
not pay a redistribution to the extent that:
(a) it would not, after the payment, have a valid claim against the
relevant Obligor in the amount of the redistribution; or
(b) it would be sharing with another Finance Party any amount which
the recovering Lender has received or recovered as a result of
legal or arbitration proceedings, where:
(i) the recovering Lender notified the Facility Agent of those
proceedings; and
(ii) the other Finance Party had an opportunity to participate
in those proceedings but did not do so or did not take
separate legal or arbitration proceedings as soon as
reasonably practicable after receiving notice of them.
32. Severability
If a term of a Finance Document is or becomes illegal, invalid or
unenforceable in any jurisdiction, that shall not affect:
(a) the legality, validity or enforceability in that jurisdiction of
any other term of the Finance Documents; or
(b) the legality, validity or enforceability in other jurisdictions
of that or any other term of the Finance Documents.
33. Counterparts
Each Finance Document may be executed in any number of counterparts.
This has the same effect as if the signatures on the counterparts were
on a single copy of the Finance Document.
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34. Notices
34.1 In writing
(a) Any communication in connection with a Finance Document must be in
writing and, unless otherwise stated, may be given in person, by post
or fax;
(b) Unless it is agreed to the contrary, any consent or agreement required
under a Finance Document must be given in writing.
34.2 Contact details
(a) Except as provided below, the contact details of each Party for all
communications in connection with the Finance Documents are those
notified by that Party for this purpose to the Facility Agent on or
before the date it becomes a Party.
(b) The contact details of the Parent for this purpose are:
Address: Devonport Royal Dockyard,
Devonport,
Plymouth PL1 4SG
Fax number: 01752 564 541
Attention: Finance Director.
(c) The contact details of the Company for this purpose are:
Address: Devonport Royal Dockyard,
Devonport,
Plymouth PL1 4SG
Fax number: 01752 564 541
Attention: Finance Director.
(d) The contact details of the Facility Agent for this purpose are:
Address: Level 17,
8 Canada Square,
London E14 5HQ
Fax number: 020 7991 4348
Attention: Debt Finance, Support and Agency Services.
(e) Any Party may change its contact details by giving five Business Days'
notice to the Facility Agent or (in the case of the Facility Agent) to
the other Parties.
(f) Where a Party nominates a particular department or officer to receive a
communication, a communication will not be effective if it fails to
specify that department or officer.
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34.3 Effectiveness
(a) Except as provided below, any communication in connection with a
Finance Document will be deemed to be given as follows:
(i) if delivered in person, at the time of delivery;
(ii) if posted, five days after being deposited in the post, postage
prepaid, in a correctly addressed envelope; and
(iii) if by fax, when received in legible form.
(b) A communication given under paragraph (a) above but received on a
non-working day or after business hours in the place of receipt will
only be deemed to be given on the next working day in that place.
(c) A communication to the Facility Agent will only be effective on actual
receipt by it.
34.4 Obligors
(a) All communications under the Finance Documents to or from an Obligor
must be sent through the Facility Agent.
(b) All communications under the Finance Documents to or from an Obligor
(other than the Company) must be sent through the Company.
(c) Each Obligor (other than the Company) irrevocably appoints the Company
to act as its agent:
(i) to give and receive all communications under the Finance
Documents;
(ii) to supply all information concerning itself to any Finance Party;
and
(iii) to sign all documents under or in connection with the Finance
Documents.
(d) Any communication given to the Company in connection with a Finance
Document will be deemed to have been given also to the other Obligors.
(e) The Facility Agent may assume that any communication made by the
Company is made with the consent of each other Obligor.
35. Governing law
This Agreement is governed by English law.
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36. Enforcement
36.1 Jurisdiction
(a) The English courts have exclusive jurisdiction to settle any dispute in
connection with any Finance Document.
(b) The English courts are the most appropriate and convenient courts to
settle any such dispute and each Obligor waives objection to those
courts on the grounds of inconvenient forum or otherwise in relation to
proceedings in connection with any Finance Document.
(c) This Clause is for the benefit of the Finance Parties only. To the
extent allowed by law, a Finance Party may take:
(i) proceedings in any other court; and
(ii) concurrent proceedings in any number of jurisdictions.
This Agreement has been entered into on the date stated at the beginning of this
Agreement.
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SCHEDULE 1
ORIGINAL PARTIES
Registration number
Name of Original Guarantor (or equivalent, if any)
DEVONPORT MANAGEMENT LIMITED 2959785
Name of Original Lender Term Loan Commitments
THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND
(pound)23,333,333.33
HSBC BANK PLC (pound)23,333,333.34
THE ROYAL BANK OF SCOTLAND PLC (pound)23,333,333.33
-----------
Total Term Loan Commitments (pound)70,000,000.00
-----------
Name of Original Lender Revolving Credit Commitments
THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND
(pound)3,333,333.33
HSBC BANK PLC (pound)3,333,333.34
THE ROYAL BANK OF SCOTLAND PLC (pound)3,333,333.33
-----------
Total Revolving Credit Commitments (pound)10,000,000.00
-----------
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SCHEDULE 2
PART I
CONDITIONS PRECEDENT DOCUMENTS
TO BE DELIVERED BEFORE THE FIRST REQUEST
Original Obligors
1. A copy of the constitutional documents of each Original Obligor.
2. A copy of a resolution of the board of directors of each Original
Obligor approving the terms of, and the transactions contemplated by,
this Agreement.
3. A specimen of the signature of each person authorised on behalf of an
Original Obligor to execute or witness the execution of any Finance
Document or to sign or send any document or notice in connection with
any Finance Document (including a Request).
4. A certificate of an authorised signatory of the Company:
(a) confirming that utilising the Total Commitments in full would
not breach any limit binding on any Original Obligor; and
(b) certifying that each copy document specified in Part I of this
Schedule is correct, complete and in full force and effect as
at a date no earlier than the date of this Agreement.
Security Document(s)
1. The following Security Document(s) each duly executed by the parties to
it:
- Security Agreement by the Company in favour of the Facility
Agent.
2. The Letters of Awareness.
3. The Inter-creditor Deed.
Legal opinions
A legal opinion of Allen & Overy, legal advisers to the Mandated Lead Arrangers
and the Facility Agent, substantially in the form of Schedule 11 (Form of legal
opinion of Allen & Overy), addressed to the Finance Parties.
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Other documents and evidence
1. Evidence that all fees and expenses then due and payable from the
Company under this Agreement have been or will be paid by the first
Utilisation Date.
2. Evidence that the Current Facility will be prepaid and cancelled in
full on or by the first Utilisation Date.
3. Due diligence report addressed to the Finance Parties by Bond Pearce.
4. List of Strategic Assets and confirmation that none of the Security
Assets are Strategic Assets.
5. List of Material Contracts and certified copies of same.
6. Certified copy of the Shareholders Agreement.
7. A certificate of the finance director of the Company in respect of the
Existing Works, setting out the costs and expenses incurred by the
Company in respect of the Existing Works, less amounts provided by the
Secretary of State for Defence and members of the DART Alliance to
finance the Existing Works.
8. The Original Accounts (unsigned by the Company's auditors).
9. The Works Budget.
10. A copy of any other authorisation or other document, opinion or
assurance which the Facility Agent has notified the Company is
necessary or desirable in connection with the entry into and
performance of, and the transactions contemplated by, any Finance
Document or for the validity and enforceability of any Finance
Document.
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PART II
FOR AN ADDITIONAL GUARANTOR
Additional Guarantors
1. An Accession Agreement, duly executed by the Company and the Additional
Guarantor.
2. A copy of the constitutional documents of the Additional Guarantor.
3. A copy of a resolution of the board of directors of the Additional
Guarantor approving the terms of, and the transactions contemplated by,
the Accession Agreement.
4. A specimen of the signature of each person authorised on behalf of the
Additional Guarantor to execute or witness the execution of any Finance
Document or to sign or send any document or notice in connection with
any Finance Document.
5. In the case of an Additional Guarantor incorporated in the U.K., a copy
of a resolution, signed by all (or any lower percentage agreed by the
Facility Agent) of the holders of its issued or allotted shares,
approving the terms of, and the transactions contemplated by, the
Accession Agreement.
6. If applicable, a copy of a resolution of the board of directors of each
corporate shareholder in the Additional Guarantor approving the
resolution referred to in paragraph 5 above.
7. A certificate of an authorised signatory of the Additional Guarantor:
(a) confirming that utilising the Total Commitments in full would
not breach any limit binding on it; and
(b) certifying that each copy document specified in Part II of
this Schedule is correct, complete and in full force and
effect as at a date no earlier than the date of the Accession
Agreement.
8. If available, a copy of the latest audited accounts of the Additional
Guarantor.
Security Document(s)
1. Security Document(s) over its assets, duly executed by the Additional
Guarantor.
2. A copy of any notices required to be sent under the Security
Document(s).
3. Evidence that the procedure contemplated by sections 155-158 of the
Companies Act 1985 has been completed in relation to any relevant
Finance Document.
4. Evidence of insurance cover in compliance with this Agreement.
77
Legal opinions
1. A legal opinion of Allen & Overy, legal advisers to the Facility Agent,
addressed to the Finance Parties.
2. If the Additional Guarantor is incorporated in a jurisdiction other
than England, a legal opinion from legal advisers in that jurisdiction,
addressed to the Finance Parties.
Other documents and evidence
1. Evidence that all expenses due and payable from the Company under this
Agreement in respect of the Accession Agreement have been paid.
2. A copy of any other authorisation or other document, opinion or
assurance which the Facility Agent has notified the Company is
necessary or desirable in connection with the entry into and
performance of, and the transactions contemplated by, the Accession
Agreement or for the validity and enforceability of any Finance
Document.
78
SCHEDULE 3
PART I
FORM OF REQUEST
To: HSBC BANK PLC as Facility Agent
From: [ ]
Date: [ ]
DEVONPORT ROYAL DOCKYARD LIMITED-(pound)80,000,000 Credit Agreement
dated [ ], 2002 (the "Agreement")
1. We refer to the Agreement. This is a Request.
2. We wish to borrow a[n] [Initial Term Loan/ Term Loan/Revolving Credit
Loan]1 on the following terms:
(a) Utilisation Date: [ ]
(b) Amount/currency: [ ]
(c) Term: [ ].
3. Our payment instructions are: [ ].
4. We confirm that each condition precedent under the Agreement which must
be satisfied on the date of this Request is so satisfied.
5. This Request is irrevocable.
6. Attached with this Request is a Costs Report.2
By:
Authorised signatory for
Devonport Royal Dockyard Limited
- --------------------------------
1 Delete as appropriate.
2 To be attached to any Request for a Term Loan (other than the Initial Term
Loan).
79
PART II
FORM OF COSTS REPORT
D154 Project
Total Amount paid out as per attached summary as at [ ]
- - See attached (pound)[ ]
Amounts received from Ministry of Defence
[Datails of Claims] (pound)[ ]
Total Paid by MoD (pound)[ ]
Amount Recovered from Alliance Partners
Rolls Royce Contribution (pound)[ ]
S&H Contribution (pound)[ ]
B&R Contribution (pound)[ ]
Babtie Contribution (pound)[ ]
BNFL Contribution (pound)[ ]
Total Paid by Alliance Partners (pound)[ ]
---------------------------
Total Net Cost Incurred by DRDL (pound)[ ]
===========================
80
LAST ACCOUNTS AVAILABLE TO PERIOD END: [ ]
- -------------------------------------------------------------------------------------------------------------------
Major Contractor Costs
Supplier Previous Claims Post MS 52 Total
on MoD (Last Claim on MoD)
(pound) (pound) (pound)
ALLIANCE PARTNERS
[Partners Listed] (pound)[ ]
---------------------------------------------------------
(pound)[ ] (pound)[ ] (pound)[ ]
PRIME SUPPLY
[Supplier(s) Listed] (pound)[ ] (pound)[ ] (pound)[ ]
CONSTRUCTION & ENGINEERING
[Suppliers Listed] (pound)[ ] (pound)[ ] (pound)[ ]
Transferred Costs Equipment Costs (pound)[ ] (pound)[ ] (pound)[ ]
14 Dock Costs (pound)[ ] (pound)[ ] (pound)[ ]
A/c 6500 Materials (pound)[ ] (pound)[ ] (pound)[ ]
Minor Sub-Contract Costs (pound)[ ] (pound)[ ] (pound)[ ]
---------------------------------------------------------
Sub-total Construction & Prime Supply (pound)[ ] (pound)[ ] (pound)[ ]
Alliance Project Team (pound)[ ] (pound)[ ] (pound)[ ]
Insurance Costs & Management Fee (pound)[ ] (pound)[ ] (pound)[ ]
Dis-allowed Costs (pound)[ ]
---------------------------------------------------------
Total Professional & Technical Service Costs (pound)[ ] (pound)[ ] (pound)[ ]
=========================================================
81
End of
CONTRACTOR / AREA [Previous [Week 1] [Week 2] [Week 3] [Week 4]
month]
ROLLS CUMULATIVE [ ]
ROLLS IN WEEK [ ] [ ] [ ] [ ]
S&H CUMULATIVE [ ]
S&H IN WEEK [ ] [ ] [ ] [ ]
BABTIE CUMULATIVE [ ]
BABTIE IN WEEK [ ] [ ] [ ] [ ]
BEL CUMULATIVE [ ]
BEL IN WEEK [ ] [ ] [ ] [ ]
B&R CUMULATIVE [ ]
B&R IN WEEK [ ] [ ] [ ] [ ]
CARILLION CUMULATIVE [ ]
CARILLION IN WEEK [ ] [ ] [ ] [ ]
KIERS CUMULATIVE [ ]
KIERS IN WEEK [ ] [ ] [ ] [ ]
JAMES SCOTT CUMULATIVE [ ]
JAMES SCOTT IN WEEK [ ] [ ] [ ] [ ]
AMEC LLRF CUMULATIVE [ ]
AMEC LLRF IN WEEK [ ] [ ] [ ] [ ]
AMEC CSS CUMULATIVE [ ]
AMEC CSS IN WEEK [ ] [ ] [ ] [ ]
NUTTALLS CUMULATIVE [ ]
NUTTALLS IN WEEK [ ] [ ] [ ] [ ]
TAYLOR CUMULATIVE [ ]
TAYLOR IN WEEK [ ] [ ] [ ] [ ]
DOCKSIDE CRANES CUMULATIVE [ ]
DOCKSIDE CRANES IN WEEK [ ] [ ] [ ] [ ]
OTHERS CUMULATIVE [ ]
82
End of
CONTRACTOR / AREA [Previous [Week 1] [Week 2] [Week 3] [Week 4]
month]
OTHERS IN WEEK [ ] [ ] [ ] [ ]
Insurance costs to go (7.54761488 [ ] [ ] [ ] [ ]
paid as at 27/90
15 Dock Kier costs to go [ ] [ ] [ ] [ ]
SEC [ ] [ ] [ ] [ ]
B&R Management fee costs to go [ ] [ ] [ ] [ ]
(2.5 paid as at 27/9)
Ritchies (m dinham) [ ] [ ] [ ] [ ]
Serco (m dinham) [ ] [ ] [ ] [ ]
Halcrow [ ] [ ] [ ] [ ]
CSS Misc (B Smith/J Kerry) [ ] [ ] [ ] [ ]
AEA ( p burkhalter) [ ] [ ] [ ] [ ]
Simon Hartley (p burkhalter) [ ] [ ] [ ] [ ]
Jordan llrf claim (g podmore) [ ] [ ] [ ] [ ]
Claims [ ] [ ] [ ] [ ]
Error adj to match accounts [ ] [ ] [ ] [ ]
Others estimated [ ] [ ] [ ] [ ]
Others authorised [ ] [ ] [ ] [ ]
Others estimated [ ] [ ] [ ] [ ]
[ ] [ ] [ ] [ ]
APT CUMULATIVE [ ]
APT IN WEEK [ ] [ ] [ ] [ ]
APT authorised in week [ ] [ ] [ ] [ ]
APT estimated in week [ ] [ ] [ ] [ ]
APT Labour estimated in week [ ] [ ] [ ] [ ]
B&R Money due [ ] [ ] [ ] [ ]
Babtie 75% payments [ ] [ ] [ ] [ ]
B&R 95% payments [ ] [ ] [ ] [ ]
TOTAL PAYMENTS [ ]
CUMULATIVE
TOTAL PAYMENTS IN WEEK [ ] [ ] [ ] [ ]
83
SCHEDULE 4
CALCULATION OF THE MANDATORY COST
1. General
The Mandatory Cost is the weighted average of the rates calculated
below by the Facility Agent on the first day of a Term. The Facility
Agent must distribute each amount of Mandatory Cost among the Lenders
on the basis of the rate for each Lender.
2. For a Lender lending from a Facility Office in the U.K.
(a) The relevant rate for a Lender lending from a Facility Office in the
U.K. is the arithmetic mean of the rates notified by each of the
Reference Banks to the Facility Agent and calculated in accordance with
the following formulae:
for a Loan in Sterling:
AB + C(B - D) + E x 0.01
------------------------ per cent. per annum
100 - (A + C)
for any other Loan:
E x 0.0l
-------- per cent. per annum
300
where on the day of application of the formula:
A is the percentage of the Reference Bank's eligible liabilities
(in excess of any stated minimum) which the Bank of England
requires it to hold on a non-interest-bearing deposit account
in accordance with its cash ratio requirements;
B is LIBOR for that Term;
C is the percentage of the Reference Bank's eligible liabilities
which the Bank of England requires it to place as a special
deposit;
D is the interest rate per annum allowed by the Bank of England
on a special deposit; and
E is the charge payable by the Reference Bank to the Financial
Services Authority under the fees rules (but, for this
purpose, ignoring any minimum fee required under the fees
rules) and expressed in pounds per (pound)1 million of the
tariff base of that Reference Bank.
(b) For the purposes of this paragraph 2:
84
(i) "eligible liabilities" and "special deposit" have the meanings
given to them at the time of application of the formula by the
Bank of England;
(ii) "fees rules" means the then current rules on periodic fees in
the Supervision Manual of the FSA Handbook; and
(iii) "tariff base" has the meaning given to it in the fees rules.
(c) (i) In the application of the formulae, A, B, C and D are
included as figures and not as percentages, e.g. if A = 0.5%
and B = 15%, AB is calculated as 0.5 x 15. A negative result
obtained by subtracting D from B is taken as zero.
(ii) Each rate calculated in accordance with a formula is, if
necessary, rounded upward to four decimal places.
(d) (i) Each Reference Bank must supply to the Facility Agent the
information required by it to make a calculation of the rate
for that Reference Bank. The Facility Agent may assume that
this information is correct in all respects.
(ii) If a Reference Bank fails to do so, the Facility Agent may
assume that the Reference Bank's obligations in respect of
cash ratio deposits, special deposits and the fees rules are
the same as those of a typical bank from its jurisdiction of
incorporation with a Facility Office in the same jurisdiction
as its Facility Office.
(iii) The Facility Agent has no liability to any Party if its
calculation over or under compensates any Lender.
3. For a Lender lending from a Facility Office in a Participating Member
State
(a) The relevant rate for a Lender lending from a Facility Office in a
Participating Member State is the percentage rate per annum notified by
that Lender to the Facility Agent as its cost of complying with the
minimum reserve requirements of the European Central Bank.
(b) If a Lender fails to specify a rate under paragraph (a) above, the
Facility Agent will assume that the Lender has not incurred any such
cost.
4. Changes
The Facility Agent may, after consultation with the Company and the
Lenders, notify all the Parties of any amendment to this Schedule which
is required to reflect:
(a) any change in law or regulation; or
(b) any requirement imposed by the Bank of England, the Financial
Services Authority or the European Central Bank (or, in any
case, any successor authority).
Any notification will be, in the absence of manifest error, conclusive
and binding on all the Parties.
85
SCHEDULE 5
FORM OF TRANSFER CERTIFICATE
To: HSBC BANK PLC as Facility Agent
From: [THE EXISTING LENDER] (the Existing Lender) and [THE NEW LENDER] (the
New Lender)
Date: [ ]
DEVONPORT ROYAL DOCKYARD LIMITED - (pound)80,000,000 Credit Agreement
dated [ ], 2002 (the Agreement)
We refer to the Agreement. This is a Transfer Certificate.
1. The Existing Lender transfers by novation to the New Lender the
Existing Lender's rights and obligations referred to in the Schedule
below in accordance with the terms of the Agreement.
2. The proposed Transfer Date is [ ].
3. The administrative details of the New Lender for the purposes of the
Agreement are set out in the Schedule.
4. This Transfer Certificate is governed by English law.
86
THE SCHEDULE
Rights and obligations to be transferred by novation
[insert relevant details, including applicable Commitment (or part)]
Administrative details of the New Lender
[insert details of Facility Office, address for notices and
payment details etc.]
[EXISTING LENDER] [NEW LENDER]
By: By:
The Transfer Date is confirmed by the Facility Agent as [ ].
HSBC BANK PLC
By:
87
SCHEDULE 6
EXISTING SECURITY
Member of the Group creating Maximum principal amount
security Details of security secured
Devonport Management Limited Fixed Charge on book
debts dated 13.03.97 Unlimited
i.f.o. HSBC Bank plc
Devonport Royal Dockyard Limited Fixed Charge on book
debts dated 13.03.97 Unlimited
i.f.o. HSBC Bank plc
Dorhold Limited Fixed Charge on book
debts dated 13.03.97 Unlimited
i.f.o. HSBC Bank plc
Devonport Engineering Services Fixed Charge on book
Limited debts dated 13.03.97 Unlimited
i.f.o. HSBC Bank plc
88
SCHEDULE 7
FORM OF COMPLIANCE CERTIFICATE
To: HSBC BANK PLC as Facility Agent
From: DEVONPORT ROYAL DOCKYARD LIMITED
Date: [ ]
DEVONPORT ROYAL DOCKYARD LIMITED - (pound)80,000,000 Credit Agreement
dated [ ], 2002 (the Agreement)
1. We refer to the Agreement. This is a Compliance Certificate.
2. We confirm that as at [relevant testing date]:
(a) Adjusted Tangible Net Worth is [ ];
(b) EBITDA was [ ]; and
Total Borrowings are [ ]; therefore, Total Borrowings are
[ ] x EBITDA;
(c) EBITDA was [ ] and Net Interest Payable was [ ];
therefore, the ratio of EBITDA to Net Interest Payable was
[ ] to 1; and
3. We set out below calculations establishing the figures in paragraph 2
above:
[ ].
4. Total Borrowings are [ ] x EBITDA so therefore, the Applicable Margin
is [ ]% for Revolving Credit Loans and [ ]% for Term Loans.
5. [We confirm that no Default is outstanding as at [relevant testing
date].3
DEVONPORT ROYAL DOCKYARD LIMITED
By:
3 If this statement cannot be made, the certificate should identify any
Default that is outstanding and the steps, if any, being taken to remedy
it.
89
SCHEDULE 8
FORM OF ACCESSION AGREEMENT
To: HSBC BANK PLC as Facility Agent
From: DEVONPORT ROYAL DOCKYARD LIMITED and [Proposed Guarantor]
Date: [ ]
DEVONPORT ROYAL DOCKYARD LIMITED - (pound)80,000,000 Credit Agreement
dated [ ], 2002 (the Agreement)
We refer to the Agreement. This is an Accession Agreement.
[Name of company] of [address/registered office] agrees to become an Additional
Guarantor and to be bound by the terms of the Agreement as an Additional
Guarantor.
This Accession Agreement is governed by English law.
DEVONPORT ROYAL DOCKYARD LIMITED
By:
[PROPOSED GUARANTOR]
By:
90
SCHEDULE 9
FORM OF RESIGNATION REQUEST
To: HSBC BANK PLC as Facility Agent
From: DEVONPORT ROYAL DOCKYARD LIMITED and [relevant Guarantor]
Date: [ ]
DEVONPORT ROYAL DOCKYARD LIMITED - (pound)80,000,000 Credit Agreement
dated [ ], 2002 (the Agreement)
1. We refer to the Agreement. This is a Resignation Request.
2. We request that [resigning Guarantor] be released from its obligations
as a Guarantor under the Agreement.
3. We confirm that no Default is outstanding or would result from the
acceptance of this Resignation Request.
4. We confirm that as at the date of this Resignation Request no amount
owed by [resigning Guarantor] under the Agreement is outstanding.
5. This Resignation Request is governed by English law.
DEVONPORT ROYAL DOCKYARD LIMITED [Relevant Guarantor]
By: By:
The Facility Agent confirms that this resignation takes effect on [ ].
HSBC BANK PLC
By:
91
SCHEDULE 10
FORM OF SECURITY AGREEMENT
SECURITY AGREEMENT
DATED
BETWEEN
DEVONPORT ROYAL DOCKYARD LIMITED
- and -
HSBC BANK PLC
92
INDEX
Clause Page
1. Interpretation.....................................................................................94
2. Creation of Security...............................................................................95
3. Representations - general..........................................................................97
4. Restrictions on dealings...........................................................................97
5. Contracts..........................................................................................97
6. When Security becomes enforceable..................................................................98
7. Enforcement of Security............................................................................98
8. Receiver...........................................................................................99
9. Powers of Receiver................................................................................100
10. Application of proceeds...........................................................................102
11. Expenses and indemnity............................................................................103
12. Delegation........................................................................................103
13. Further assurances................................................................................103
14. Power of attorney.................................................................................104
15. Miscellaneous.....................................................................................104
16. Release...........................................................................................105
17. Governing law.....................................................................................105
Schedule
1. Forms of letter for Contracts.....................................................................106
Signatories................................................................................................109
93
THIS DEED is dated between:
(1) DEVONPORT ROYAL DOCKYARD LIMITED (registered number 02077752) (the
Chargor);
(2) HSBC BANK PLC (the Security Trustee) as agent and trustee for the
Transaction Parties (as defined in the Credit Agreement defined below).
BACKGROUND:
(A) The Chargor enters into this Deed in connection with the Credit
Agreement (as defined below).
(B) It is intended that this document takes effect as a deed
notwithstanding the fact that a party may only execute this document
under hand.
IT IS AGREED as follows:
1. Interpretation
1.1 Definitions
In this Deed:
Act means the Law of Property Act 1925.
Credit Agreement means the(pound)80,000,000 credit agreement dated on
or about the date of this Deed between (among others) the Chargors and
the Security Trustee.
Party means a party to this Deed.
Receiver means a receiver and manager or (if the Security Trustee so
specifies in the relevant appointment) a receiver, in either case,
appointed under this Deed.
Secured Liabilities means all present and future obligations
and liabilities (whether actual or contingent and whether owed jointly
or severally or in any other capacity whatsoever) of the Chargor to any
Transaction Party including, without limitation, under each Transaction
Document to which the Chargor is a party, except for any obligation
which, if it were so included, would result in this Deed contravening
Section 151 of the Companies Act 1985.
Security Assets means all assets of the Chargor the subject of any
security created by this Deed.
Security Period means the period beginning on the date of this
Deed and ending on the date on which all the Secured Liabilities have
been unconditionally and irrevocably paid and discharged in full.
1.2 Construction
(a) Capitalised terms defined in the Credit Agreement have, unless
expressly defined in this Deed, the same meaning in this Deed.
(b) The provisions of Clause 1.2 (Construction) of the Credit Agreement
apply to this Deed as though they were set out in full in this Deed,
except that references to the Credit Agreement will be construed as
references to this Deed.
(c) (i) The term Finance Document includes all amendments and
supplements including supplements providing for further
advances; and
(ii) the term this Security means any security created by this
Deed.
(d) Any covenant of the Chargor under this Deed (other than a payment
obligation) remains in force during the Security Period.
(e) If the Security Trustee considers that an amount paid to a Finance
Party under a Finance Document is capable of being avoided or otherwise
set aside on the liquidation or administration of the payer or
otherwise, then that amount will not be considered to have been
irrevocably paid for the purposes of this Deed.
(f) Unless the context otherwise requires, a reference to a Security Asset
includes the proceeds of sale of that Security Asset.
2. Creation of Security
2.1 General
(a) All the security created under this Deed:
(i) is created in favour of the Security Trustee;
(ii) is created over present and future assets of the Chargor;
(iii) is security for the payment of all the Secured Liabilities;
and
(iv) is made with full title guarantee in accordance with the Law
of Property (Miscellaneous Provisions) Act 1994.
(b) If the rights of the Chargor under a document cannot be secured without
the consent of a party to that document;
(i) this Security will secure all amounts which the Chargor may
receive, or has received, under that document but exclude the
document itself and all rights or assets which the document
provides may not be charged or secured without that consent;
and
(ii) in relation to all present and future agreements between the
Chargor and the Secretary of State for Defence (together with
other parties, as the case may be), the Chargor must use
95
reasonable endeavours to obtain the consent of the Secretary
of State for Defence to such documents being secured under
this Deed and in any event such consent must be obtained
within 3 calendar months of the date of this Deed in form and
substance satisfactory to the Security Trustee.
(c) The Security Trustee holds the benefit of this Deed on trust
for the Finance Parties.
2.2 Credit balances
The Chargor charges by way of a first fixed charge all of its rights in
respect of any amount standing to the credit of any account (including
any account contemplated by this Deed) it has with any person and the
debt represented by it.
2.3 Book debts etc.
The Chargor charges by way of a first fixed charge:
(a) all of its book and other debts;
(b) all other moneys due and owing to it; and
(c) the benefit of all rights, securities or guarantees of any
nature enjoyed or held by it in relation to any item under
paragraph (a) or (b) above.
2.4 Other contracts
To the extent that it is legally able to do so without breaching the
terms of the relevant agreement and subject to Clause 2.1(b) (General)
above, the Chargor charges by way of a first fixed charge, all of its
rights in respect of any agreement to which it is a party.
2.5 Assignment
To the extent it is legally able to do so without breaching the terms
of the relevant agreement and subject to Clause 2.1(b) (General) above,
the Chargor assigns absolutley, subject to a proviso for re-assignment
on redemption, all of its rights in respect of any agreement to which
it is a party; this includes the Relevant Contracts.
2.6 Floating charge
(a) Except to the extent that it is subject to any fixed security created
under any other term of this Clause and to the extent that it is
legally able to do so without breaching the terms of the relevant
agreement, the Chargor charges by way of a first floating charge all of
its rights in respect of the assets referred to in Clauses 2.2 (Credit
balances) to 2.5 (Assignment) (both inclusive).
(b) The Lender may by notice to the Chargor convert the floating charge
created by the Chargor under this Subclause into a fixed charge as
regards any of the Chargor's assets specified in that notice, if:
(i) an Event of Default is outstanding; or
96
(ii) the Lender considers those assets to be in danger of being
seized or sold under any form of distress, attachment,
execution or other legal process or to be otherwise in
jeopardy.
3. Representations - general
3.1 Nature of security
The Chargor represents to each Finance Party that this Deed creates
those Security Interests it purports to create and is not liable to be
amended or otherwise set aside on its liquidation or administration or
otherwise.
3.2 Times for making representations
(a) The representations set out in this Deed (including in this Clause)
are made on the date of this Deed.
(b) Unless a representation is expressed to be given at a specific date,
each representation under this Deed is deemed to be repeated by the
Chargor on each date during the Security Period.
(c) When a representation is repeated, it is applied to the circumstances
existing at the time of repetition.
4. Restrictions on dealings
No Chargor may:
(a) create or permit to subsist any Security Interest on any
Security Asset; or
(b) sell, transfer, licence, lease or otherwise dispose of any
Security Asset, except as expressly allowed under the Credit
Agreement.
5. Contracts
5.1 Notices of assignment
If an Event of Default is outstanding and the Security Trustee
requests, the Chargor must:
(a) immediately serve a notice of assignment, substantially in the
form of Part I of Schedule 1 (Forms of letter for Contracts),
on each counterparty to such contracts as the Secrity Trustee
may specify to which it is a party; and
(b) use its reasonable endeavours to procure that each such party
acknowledges that notice, substantially in the form of Part II
of Schedule 1 (Forms of letter for Contracts).
97
6. When Security becomes enforceable
6.1 Event of Default
This Security will become immediately enforceable if if an Event of
Default is outstanding and the Security Trustee gives notice to the
Chargor that this Security is enforceable.
6.2 Discretion
After this Security has become enforceable, the Security Trustee may in
its absolute discretion enforce all or any part of this Security in any
manner it sees fit or as the Majority Lenders direct.
6.3 Power of sale
The power of sale and other powers conferred by Section 101 of the Act,
as amended by this Deed, will be immediately exercisable at any time
after this Security has become enforceable.
7. Enforcement of Security
7.1 General
(a) For the purposes of all powers implied by statute, the Secured
Liabilities are deemed to have become due and payable on the date of
this Deed.
(b) Section 103 of the Act (restricting the power of sale) and Section 93
of the Act (restricting the right of consolidation) do not apply to
this Security.
7.2 No liability as mortgagee in possession
Neither the Security Trustee nor any Receiver will be liable, by reason
of entering into possession of a Security Asset, to account as
mortgagee in possession or for any loss on realisation or for any
default or omission for which a mortgagee in possession might be
liable.
7.3 Privileges
Each Receiver and the Security Trustee is entitled to all the rights,
powers, privileges and immunities conferred by the Act on mortgagees
and receivers duly appointed under the Act, except that Section 103 of
the Act does not apply.
7.4 Protection of third parties
No person (including a purchaser) dealing with the Security Trustee or
a Receiver or its or his agents will be concerned to enquire:
(a) whether the Secured Liabilities have become payable;
(b) whether any power which the Security Trustee or a Receiver is
purporting to exercise has become exercisable or is being
properly exercised;
98
(c) whether any money remains due under the Finance Documents; or
(d) how any money paid to the Security Trustee or to that Receiver
is to be applied.
7.5 Redemption of prior mortgages
(a) At any time after this Security has become enforceable, the Security
Trustee may:
(i) redeem any prior Security Interest against any Security Asset;
and/or
(ii) procure the transfer of that Security Interest to itself;
and/or
(iii) settle and pass the accounts of the prior mortgagee, chargee
or encumbrancer; any accounts so settled and passed will be,
in the absence of manifest error, conclusive and binding on
the Chargor.
(b) The Chargor must pay to the Security Trustee, immediately on demand,
the costs and expenses incurred by the Security Trustee in connection
with any such redemption and/or transfer, including the payment f any
principal or interest.
7.6 Contingencies
If this Security is enforced at a time when no amount is due under the
Finance Documents but at a time when amounts may or will become due,
the Security Trustee (or the Receiver) may pay the proceeds of any
recoveries effected by it into a suspense account.
8. Receiver
8.1 Appointment of Receiver
(a) The Security Trustee may appoint any one or more persons to be a
Receiver of all or any part of the Security Assets if:
(i) this Security has become enforceable; or
(ii) the Chargor so requests the Security Trustee in writing at any
time.
(b) Any appointment under paragraph (a) above may be by deed, under seal or
in writing under its hand.
(c) Section 109(1) of the Act does not apply to this Deed.
8.2 Removal
The Security Trustee may by writing under its hand (subject to any
requirement for an order of the court in the case of an administrative
receiver) remove any Receiver appointed by it and may, whenever it
thinks fit, appoint a new Receiver in the place of any Receiver whose
appointment may for any reason have terminated.
99
8.3 Remuneration
The Security Trustee may fix the remuneration of any Receiver appointed
by it and the maximum rate specified in Section 109(6) of the Act will
not apply.
8.4 Agent of the Chargor
(a) A Receiver will be deemed to be the agent of the Chargor for all
purposes and accordingly will be deemed to be in the same position as a
Receiver duly appointed by a mortgagee under the Act. The Chargor is
responsible for the contracts, engagements, acts, omissions, defaults
and losses of a Receiver and for liabilities incurred by a Receiver.
(b) No Finance Party will incur any liability (either to the Chargor or to
any other person) by reason of the appointment of a Receiver or for any
other reason.
8.5 Relationship with Security Trustee
To the fullest extent allowed by law, any right, power or discretion
conferred by this Deed (either expressly or impliedly) or by law on a
Receiver may after this Security becomes enforceable be exercised by
the Security Trustee in relation to any Security Asset without first
appointing a Receiver and notwithstanding the appointment of a
Receiver.
9. Powers of Receiver
9.1 General
(a) A Receiver has all of the rights, powers and discretions set out below
in this Clause in addition to those conferred on it by any law,
including all the rights, powers and discretions conferred on a
receiver under the Act and a receiver or an administrative receiver
under the Insolvency Act, 1986.
(b) If there is more than one Receiver holding office at the same time,
each Receiver may (unless the document appointing him states otherwise)
exercise all of the powers conferred on a Receiver under this Deed
individually and to the exclusion of any other Receiver.
9.2 Possession
A Receiver may take immediate possession of, get in and collect any
Security Asset.
9.3 Carry on business
A Receiver may carry on the business of any Chargor in any manner he
thinks fit.
9.4 Employees
(a) A Receiver may appoint and discharge managers, officers, agents,
accountants, servants, workmen and others for the purposes of this Deed
upon such terms as to remuneration or otherwise as he thinks fit.
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(b) A Receiver may discharge any person appointed by any Chargor.
9.5 Borrow money
A Receiver may raise and borrow money either unsecured or on the
security of any Security Asset either in priority to this Security or
otherwise and generally on any terms and for whatever purpose which he
thinks fit.
9.6 Sale of assets
(a) A Receiver may sell, exchange, convert into money and realise any
Security Asset by public auction or private contract and generally in
any manner and on any terms which he thinks fit.
(b) The consideration for any such transaction may consist of cash,
debentures or other obligations, shares, stock or other valuable
consideration and any such consideration may be payable in a lump sum
or by instalments spread over any period which he thinks fit.
9.7 Compromise
A Receiver may settle, adjust, refer to arbitration, compromise and
arrange any claim, account, dispute, question or demand with or by any
person who is or claims to be a creditor of any Chargor or relating in
any way to any Security Asset.
9.8 Legal actions
A Receiver may bring, prosecute, enforce, defend and abandon any
action, suit or proceedings in relation to any Security Asset which he
thinks fit.
9.9 Receipts
A Receiver may give a valid receipt for any moneys and execute any
assurance or thing which may be proper or desirable for realising any
Security Asset.
9.10 Subsidiaries
A Receiver may form a Subsidiary of any Chargor and transfer to that
Subsidiary any Security Asset.
9.11 Delegation
A Receiver may delegate his powers in accordance with this Deed.
9.12 Lending
A Receiver may lend money or advance credit to any customer of any
Chargor.
9.13 Protection of assets
A Receiver may:
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(a) effect any repair or insurance and do any other act which any
Chargor might do in the ordinary conduct of its business to
protect or improve any Security Asset;
(b) commence and/or complete any building operation; and
(c) apply for and maintain any planning permission, building
regulation approval or any other authorisation,
in each case as he thinks fit.
9.14 Other powers
A Receiver may:
(a) do all other acts and things which he may consider desirable
or necessary for realising any Security Asset or incidental or
conducive to any of the rights, powers or discretions
conferred on a Receiver under or by virtue of this Deed or
law;
(b) exercise in relation to any Security Asset all the powers,
authorities and things which he would be capable of exercising
if he were the absolute beneficial owner of that Security
Asset; and
(c) use the name of any Chargor for any of the above purposes.
10. Application of proceeds
Any moneys received by the Security Trustee or any Receiver after this
Security has become enforceable must be applied in the following order
of priority:
(a) in or towards payment of or provision for all costs and
expenses incurred by the Security Trustee or any Receiver
under or in connection with this Deed and of all remuneration
due to any Receiver under or in connection with this Deed;
(b) in or towards payment of or provision for the Secured
Liabilities; and
(c) in payment of the surplus (if any) to any Chargor or other
person entitled to it.
This Clause is subject to the payment of any claims having priority
over this Security. This Clause does not prejudice the right of any
Finance Party to recover any shortfall from the Chargor.
11. Expenses and indemnity
The Chargor must:
(a) immediately on demand pay all costs and expenses (including
legal fees) incurred in connection with this Deed by any
Finance Party, Receiver, attorney, manager, agent or other
person appointed by the Security Trustee under this Deed; and
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(b) keep each of them indemnified against any failure or delay in
paying those costs or expenses; this includes any arising from
any actual or alleged breach by any person of any law or
regulation, whether relating to the environment or otherwise.
12. Delegation
12.1 Power of Attorney
The Security Trustee or any Receiver may delegate by power of attorney
or in any other manner to any person any right, power or discretion
exercisable by it under this Deed.
12.2 Terms
Any such delegation may be made upon any terms (including power to
sub-delegate) which the Security Trustee or any Receiver may think fit.
12.3 Liability
Neither the Security Trustee nor any Receiver will be in any way liable
or responsible to any Chargor for any loss or liability arising from
any act, default, omission or misconduct on the part of any delegate or
sub-delegate.
13. Further assurances
The Chargor must, at its own expense, take whatever action the Security
Trustee or a Receiver may reasonably require for:
(a) creating, perfecting or protecting any security intended to be
created by this Deed; or
(b) facilitating the realisation of any Security Asset, or the
exercise of any right, power or discretion exercisable, by the
Security Trustee or any Receiver or any of its delegates or
sub-delegates in respect of any Security Asset.
This includes:
(i) the execution of any transfer, conveyance, assignment or
assurance of any property, whether to the Security Trustee or
to its nominee; or
(ii) the giving of any notice, order or direction and the making of
any registration; or
(iii) the obtaining of any consents (including without limitation
consents in relation to the charging or assignment of
contracts referred to in Clauses 2.4 (Other contracts) to 2.6
(Floating charge) (both inclusive)). which, in any such case,
the Security Trustee may think expedient.
14. Power of attorney
The Chargor, by way of security, irrevocably and severally appoints the
Security Trustee, each Receiver and any of its delegates or
sub-delegates to be its attorney to take any action which the Chargor
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is obliged to take under this Deed. The Chargor ratifies and confirms
whatever any attorney does or purports to do under its appointment
under this Clause.
15. Miscellaneous
15.1 Covenant to pay
The Chargor must pay or discharge the Secured Liabilities in the manner
provided for in the Finance Documents.
15.2 Tacking
Each Lender must perform its obligations under the Credit Agreement
(including any obligation to make available further advances).
15.3 New Accounts
(a) If any subsequent charge or other interest affects any Security Asset,
the Finance Party may open a new account with the Chargor.
(b) If the Finance Party does not open a new account, it will nevertheless
be treated as if it had done so at the time when it received or was
deemed to have received notice of that charge or other account.
(c) As from that time all payments made to the Finance Party will be
credited or be treated as having been credited to the new account and
will not operate to reduce any Secured Liability.
15.4 Time deposits
Without prejudice to any right of set-off any Finance Party may have
under any other Finance Document or otherwise, if any time deposit
matures on any account the Chargor has with any Finance Party within
the Security Period when:
(a) this Security has become enforceable; and
(b) no Secured Liability is due and payable,
that time deposit will automatically be renewed for any further
maturity which that Finance Party considers appropriate.
15.5 Notice of assignment
This Deed constitutes notice in writing to the Chargor of any charge or
assignment of a debt owed by the Chargor to any other member of the
Group and contained in any other Security Document.
16. Release
At the end of the Security Period, the Finance Parties must, at the
request and cost of the Chargor, take whatever action is necessary to
release its Security Assets from this Security.
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17. Governing law
This Deed is governed by English law.
This Deed has been entered into as a deed on the date stated at the beginning of
this Deed.
105
SCHEDULE 1
FORMS OF LETTER FOR CONTRACTS
PART I
NOTICE TO COUNTERPARTY
To: [Contract party]
[Date]
Dear Sirs,
Security Document dated [ ] between Devonport Royal Dockyard Limited
and HSBC BANK PLC (the Security Document)
This letter constitutes notice to you that under the Security Document we have
assigned by way of security to HSBC Bank plc (the Security Trustee) all our
rights in respect of [insert details of Contract] (the Contract).
We confirm that:
(a) we will remain liable under the Contract to perform all the obligations
assumed by us under the Contract; and
(b) none of the Security Trustee, its agents, any receiver or any other
person will at any time be under any obligation or liability to you
under or in respect of the Contract.
We will also remain entitled to exercise all our rights, powers and discretions
under the Contract, and you should continue to give notices under the Contract
to us, unless and until you receive notice from the Security Trustee to the
contrary stating that the security has become enforceable. In this event, all
the rights, powers and discretions will be exercisable by, and notices must be
given to, the Security Trustee or as it directs.
Please note that we have agreed that we will not amend or waive any provision of
or terminate the Contract without the prior consent of the Security Trustee.
This letter is governed by English law.
Please acknowledge receipt of this letter by sending the attached
acknowledgement to the Security Trustee at [ ].
Yours faithfully,
[Chargor]
(Authorised signatory)
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PART II
ACKNOWLEDGEMENT OF COUNTERPARTY
To: [Security Trustee] as Security Trustee
Copy: [Chargor]
[Date]
Dear Sirs,
We confirm receipt from Devonport Royal Dockyard Limited (the Chargor) of a
notice dated [ ] of an assignment on the terms of the Security Document dated [
] of all the Chargor's rights in respect of [insert details of the Contract]
(the Contract).
We confirm that we will pay all sums due, and give notices, under the Contract
as directed in that notice.
This letter is governed by English law.
Yours faithfully,
(Authorised signatory)
[Counterparty]
107
SIGNATORIES
Chargor
EXECUTED AS A DEED by )
DEVONPORT ROYAL DOCKYARD )
LIMITED acting by )
Director
Director/Secretary
Security Trustee
HSBC BANK PLC
By:
108
SCHEDULE 11
FORM OF LEGAL OPINION OF ALLEN & OVERY
To: The Finance Parties named as
original parties to the Credit Agreement
(as defined below).
[DATE]
Dear Sirs,
DEVONPORT ROYAL DOCKYARD LIMITED - (pound)80,000,000 Credit Agreement
dated [ ], 2002 (the Credit Agreement)
We have received instructions from [ ] in connection with the Credit Agreement.
Definitions
In this opinion words defined in the Credit Agreement have the same meaning in
this opinion.
Documents and searches
For the purposes of this opinion we have examined the following documents:
(a) a signed copy of the Credit Agreement;
(b) a signed copy of [the/each] Security Agreement;
(c) a certified copy of the memorandum and articles of association and
certificate of incorporation of each Original Obligor;
(d) [a certified copy of the minutes of a meeting of a committee of the
board of directors of the Parent held on [ ];]
(e) a certified copy of the minutes of a meeting of the board of directors
of the Company held on [ ];
(f) a certified copy of the minutes of a meeting of the board of directors
of each Original Obligor (other than the Company) held on [ ];
(g) a certified copy of a resolution, signed by all the holders of the
issued or allotted shares in each Original Guarantor, dated [ ]; and
(h) a certificate of the Company confirming, amongst other things, that the
entry into and performance of the Agreements will not contravene any
borrowing or guarantee limit contained in the articles of association
of any Original Obligor.
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On [ ] we carried out a search of each Original Obligor at the Companies
Registry. On [ ] we made a telephone search of each Original Obligor at the
winding-up petitions at the Companies court.
The above are the only documents or records we have examined and the only
searches and enquiries we have carried out for the purposes of this opinion.
Assumptions
We assume that:
(a) each Original Obligor is not unable to pay its debts within the meaning
of section 123 of the Insolvency Act, 1986 at the time it enters into
an Agreement and will not as a result of any Agreement be unable to pay
its debts within the meaning of that section;
(b) no step has been taken to wind up or dissolve any Original Obligor, put
any Original Obligor into administration or appoint a receiver,
administrator, administrative receiver, trustee in bankrupcy or similar
officer in respect of it or any of its assets although the searches of
the Companies Registry referred to above gave no indication that any
winding-up, dissolution or administration order or appointment of a
receiver, administrator, administrative receiver, trustee in bankrupcy
or similar officer has been made;
(c) all signatures and documents are genuine;
(d) all documents are and remain up-to-date;
(e) the correct procedure was carried out at all the board meetings
referred to above; for example, there was a valid quorum, all relevant
interests of directors were declared and the resolutions were duly
passed at each meeting;
(f) any restrictions on the ability of an Original Obligor to borrow or
guarantee contained in its Articles of Association would not be
contravened by the entry into and performance by it of any Agreement to
which it is a party;
(g) the Agreements have been duly executed on behalf of the Original
Obligors party to them by the person(s) authorised by the resolutions
passed at the relevant meeting referred to above;
(h) each Agreement is a legally binding, valid and enforceable obligation
of each party to it other than each Original Obligor;
(i) the guarantee contained in the Credit Agreement was given for the
legitimate purposes of each Original Guarantor and the giving of the
guarantee may reasonably be regarded as having been in its interests;
and
(j) no foreign law affects the conclusions stated below.
110
Opinion
Subject to the qualifications set out below and to any matters not disclosed to
us, it is our opinion that, so far as the present laws of England are concerned:
1. Status: Each Original Obligor is a company incorporated with limited
liability under the laws of England and is not in liquidation.
2. Powers and authority: Each Original Obligor has the corporate power to
enter into and perform the Agreements to which it is a party and has
taken all necessary corporate action to authorise the execution,
delivery and performance of those Agreements.
3. Legal validity: Each Agreement to which any Original Obligor is a party
constitutes its legally binding, valid and enforceable obligation.
4. Non-conflict: The entry into and performance by each Original Obligor
of each Agreement to which it is a party will not violate any provision
of (i) any existing English law applicable to companies generally, or
(ii) its memorandum or articles of association.
5. Consents: No authorisations of governmental, judicial or public bodies
or authorities in England are required by any Original Obligor in
connection with the performance, validity or enforceability of its
payment obligations under each Agreement to which it is a party.
6. Taxes: All payments due from any Original Obligor resident for tax
purposes in the U.K. under the Credit Agreement may be made without
deduction of any U.K. Taxes, if, in the case of interest:
(a) (i) the person that advanced the participation in the
Loan to which the interest relates was a bank for the
purpose of Section 349 of the Income and Corporation
Taxes Act 1988 (as currently defined in section 840A
of the Income and Corporation Taxes Act 1988) at the
time the Loan was made; and
(ii) the person beneficially entitled to that interest is
within the charge to U.K. corporation tax as regards
that interest at the time the interest is paid;
(b) the person beneficially entitled to the income in respect of
which the interest payment is made is:
(i) a company resident in the U.K. for tax purposes;
(ii) a partnership each member of which is a company
resident in the U.K. for tax purposes; or
(iii) a company not resident in the U.K. for tax purposes
which carries on a trade in the U.K. through a branch
or agency and brings into account payments to it
under this Agreement in computing its chargeable
profits for the purposes of section 11(2) of the
Income and Corporation Taxes Act 1988; or
111
(c) the interest is payable to a Treaty Lender and the Financial
Intermediaries and Claims Office has given the necessary
authorisation.
7. Registration requirements: Except for registration of each Security
Agreement at the appropriate registries, it is not necessary or
advisable to file, register or record any Agreement in any public place
or elsewhere in England.
8. Stamp duties: Except for any registration fees payable at Companies
Registry in respect of each Security Agreement, no stamp, registration
or similar tax or charge is payable in England in respect of any
Agreement.
9. Security: Subject to due registration where required, each Security
Agreement creates security interests in the Security Assets concerned.
Qualifications
This opinion is subject to the following qualifications:
(a) This opinion is subject to all insolvency and other laws affecting the
rights of creditors generally.
(b) No opinion is expressed on matters of fact.
(c) No opinion is expressed as to:
(i) the title of any Original Obligor to any Security Asset;
(ii) the priority of any security created or to be created by any
Security Agreement;
(iii) the nature of the security created by any Security Agreement
(whether fixed or floating);
(iv) the marketability of, or rights of enforcement over, any
Security Asset; or
(v) any other restriction affecting any Security Asset or the
security created by the Security Agreement.
These matters are too lengthy to cover in this opinion.
(d) The term enforceable means that a document is of a type and form
enforced by the English courts. It does not mean that each obligation
will be enforced in accordance with its terms. Certain rights and
obligations may be qualified by the non-conclusivity of certificates,
doctrines of good faith and fair conduct, the availability of equitable
remedies and other matters, but in our view these qualifications would
not defeat your legitimate expectations in any material respect.
This opinion is given for your sole benefit and may not be relied upon by or
disclosed to any other person.
Yours faithfully,
112
SCHEDULE 12
MATERIAL CONTRACTS
Contracts with MoD
1. WSMI Service Contract dated 17 June 2002 between (1) the Secretary of
State for Defence (2) the Company and providing the terms on which the
Company will provide warship support and maintenance services to the
MOD.
2. Enabling Agreement dated 13 March 1997 between (1) the Secretary of
State for Defence (2) the Company and providing the basic terms on
which the Company is to carry out certain (non-competitive) work for
the Secretary of State for Defence, together with:
(a) HMS Vanguard agreement dated 14 August 2002 between (1) the
Secretary of State for Defence (2) the Company which is a
contract to undertake the long overhaul period (refuel) of HMS
Vanguard including planning, management, materials and
services procurement activities at Devonport Royal Dockyard.
(b) HMS Trenchant agreement between (1) the Secretary of State for
Defence (2) the Company to undertake the long overhaul period
(refuel) of HMS Trenchant including planning, management,
materials and services procurement activities at Devonport
Royal Dockyard which commenced on 3 April 2000 the terms being
accepted by the Company by way of letter dated 30 March 2001.
113
Signatories
Parent
DEVONPORT MANAGEMENT LIMITED
By: HENRY WILLIAM WARREN
Company
DEVONPORT ROYAL DOCKYARD LIMITED
By: HENRY WILLIAM WARREN
Original Guarantor
DEVONPORT MANAGEMENT LIMITED
By: HENRY WILLIAM WARREN
Mandated Lead Arrangers
HSBC BANK PLC
By: MICHAEL JESTER
THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND
By: STEVE HETHERINGTON
THE ROYAL BANK OF SCOTLAND PLC
By: RICHARD COLLENS
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Original Lenders
HSBC BANK PLC
By: AIDAN R. HAILE
THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND
By: STEVE HETHERINGTON
THE ROYAL BANK OF SCOTLAND PLC
By: RICHARD COLLENS
Facility Agent
HSBC BANK PLC
By: MICHAEL JESTER
115