EXHIBIT 10.2
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DATED 2003
(1) DAISYTEK - ISA LIMITED
(AS BORROWER)
- AND -
(2) GMAC COMMERCIAL CREDIT LIMITED
(GMAC)
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FACILITIES AGREEMENT
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CONTENTS
<Table>
1. CONSTRUCTION.........................................................................................1
2. THE FACILITIES......................................................................................11
3. PURPOSE.............................................................................................11
4. INVOICE DISCOUNTING FACILITY........................................................................12
5. SUPPLIER FINANCE FACILITY...........................................................................12
6. TERM LOAN FACILITY..................................................................................12
7. CONDITIONS PRECEDENT/SUBSEQUENT.....................................................................13
8. FEES................................................................................................13
9. REPAYMENT OF PRINCIPAL..............................................................................13
10. DEPOSIT.............................................................................................14
11. INTEREST............................................................................................14
12. PREPAYMENT..........................................................................................14
13. MANDATORY PRE-PAYMENT...............................................................................15
14. DEFAULT INTEREST ON TERM LOAN FACILITY..............................................................15
15. PAYMENTS............................................................................................15
16. CHANGES IN CIRCUMSTANCES AND INCREASED COSTS........................................................16
17. REPRESENTATIONS AND WARRANTIES......................................................................17
18. FINANCIAL INFORMATION/REPORTING.....................................................................19
19. FINANCIAL COVENANTS.................................................................................20
20. NEGATIVE COVENANTS..................................................................................22
21. POSITIVE COVENANTS..................................................................................23
22. EVENTS OF DEFAULT...................................................................................24
23. ASSIGNMENT AND TRANSFER.............................................................................26
24. NOTICES.............................................................................................26
25. WAIVERS.............................................................................................26
26. EXPENSES............................................................................................27
27. CONVERSION OF CURRENCIES/TRANSFER FEES..............................................................27
</Table>
<Table>
28. ILLEGALITY..........................................................................................28
29. SET-OFF.............................................................................................28
30. GOVERNING LAW AND JURISDICTION......................................................................28
31. DEMANDS AND NOTIFICATION BINDING....................................................................29
32. EURO................................................................................................29
33. CERTIFICATIONS......................................................................................29
34. COUNTERPARTS........................................................................................29
35. CONTRACTS (RIGHTS OF THIRD PARTIES) ACT.............................................................30
36. JOINT AND SEVERAL LIABILITY.........................................................................30
SCHEDULE 1...................................................................................................31
Pre-Conditions Documents................................................................................31
Part 1 ...............................................................................................31
Part 2 ...............................................................................................33
The Security Documents..................................................................................33
SCHEDULE 2...................................................................................................35
(Form of Compliance Certificate)........................................................................35
SCHEDULE 3...................................................................................................37
Form of Notice of Drawdown..............................................................................37
SCHEDULE 4...................................................................................................38
ANNEX 1......................................................................................................43
Forecast................................................................................................43
</Table>
THIS FACILITIES AGREEMENT is made on 2003
BETWEEN:
(1) DAISYTEK - ISA LIMITED (company number 04226999 whose registered office
is at 66/70 Vicar Lane, Bradford, West Yorkshire, BD1 5AG (the
"BORROWER");
(2) GMAC COMMERCIAL CREDIT LIMITED (company number 0661920) whose
registered office is at Sovereign House, Church Street, Brighton BN1
1SS (GMAC);
WHEREAS
It is agreed to make available to the Borrower financing facilities upon the
terms and subject to the conditions set out in this Agreement.
IT IS AGREED as follows:
1. CONSTRUCTION
1.1 DEFINITIONS
In this Agreement, unless the context otherwise requires, the
following words and expressions will have the meaning set out
opposite them:
"ACCOUNT REFERENCE DATE" means 31 December 2002 or such other
date as GMAC shall agree to;
"ACCOUNTS" means the Term Loan Account, the Client Account and
all other accounts maintained by GMAC in relation to any of
the Facilities;
"ACCOUNT BALANCES" means the debit balance on the Accounts
from time to time;
"ACT" means the Companies Act 1985;
"AGREEMENT" means this Agreement as the same may be amended or
supplemented in writing by the parties from time to time and
shall include the Schedules and the Annex hereto;
"APPROVED CURRENCY" means in relation to the Term Loan
Facility, Sterling, in relation to the Invoice Discounting
Facility, Swedish or Norwegian Kroner, euro or Sterling and/or
any other currency which GMAC shall approve in writing and in
relation to the Supplier Finance Facility, euro or any other
currency which GMAC shall approve in writing;
"ARRANGEMENT FEE" means an amount of Pound Sterling130,000
payable pursuant to clause 8.3;
"AUDITED ACCOUNTS" means the latest available consolidated
audited accounts of the Borrower prepared in accordance with
Clause 18.1;
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1
"AVAILABLE INVOICE DISCOUNTING FACILITY" means at any time the
lesser of:
(i) at any time such sum as shall be produced by
deducting the Special Margin from the Outstanding
Debts Notified to GMAC under the Invoice Discounting
Facility and multiplying the result by the Prepayment
Percentage and thereafter deducting therefrom the
aggregate of all Outstanding Prepayments, the Term
Loan Reserve; and
(ii) Pound Sterling27,500,000 minus the Term Loan Reserve;
"AVAILABLE SUPPLIER FINANCE FACILITY" means the Supplier
Finance Facility less the aggregate unpaid invoices purchased
by GMAC under the Supplier Finance Facility;
"BORROWINGS" means the following:
(i) money borrowed or raised and includes capitalised
interest;
(ii) any liability under any bond, note, debenture, loan
stock, instrument or security;
(iii) any liability for acceptance or documentary credits
or discounted instruments;
(iv) any liability for the acquisition cost of assets or
services payable on deferred payment terms where the
period of deferment is more than 90 days;
(v) any liability under debt purchase, factoring and
similar agreements and capital amounts owing under
finance leases, hire purchase or conditional sale
agreements or arrangements; and
(vi) any liability under any guarantee or indemnity
(except product warranties);
"BUSINESS DAY" means a day (other than a Saturday or Sunday)
on which banks are open in London for business of the nature
required for the purposes of this Agreement;
"CAPITAL EXPENDITURE" has the meaning given to that term by UK
GAAP;
"CASH DEPOSIT" means the sum (if any) deposited from time to
time pursuant to Clause 10;
"CLIENT ACCOUNT" has the meaning ascribed to it in the UK
Invoice Discounting Agreement;
"COLLATERAL MONITORING FEE" means Pound Sterling45,000 payable
as provided in clause 8;
"COMMENCEMENT DATE" means the date of this Agreement;
"COMPLIANCE CERTIFICATE" means the certificate in the form
shown in Schedule 2 (or such other form agreed between GMAC
and the Borrower) to be delivered to GMAC pursuant to Clause
18.5 (Financial Information) and signed by the finance
director or the managing director of the Borrower, or by the
Borrower's auditors if delivered at the same time as the
Audited Accounts;
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2
"COSTS OF CONVERSION" means the currency conversion costs
incurred by GMAC in providing any of the Facilities in the
Approved Currencies, less such costs incurred in relation to
conversion already deducted under the separate Facilities.
"DEFAULT RATE" means the rate which is 2% (two per cent) per
annum above the Interest Rate;
"DIRECT OBLIGATIONS" means any amounts directly or
contingently owed by any Obligor to GMAC (including Costs of
Conversion) together with the aggregate of Prepayments under
the Invoice Discounting Agreement and payments made in respect
of the Invoice Purchase Prices under the Supplier Finance
Agreement;
"DRAWDOWN DATE" means any date on which the whole or any part
of the Facilities are drawn hereunder including when requests
for Prepayments are made under the Invoice Discounting
Agreement and when any Invoice Purchase Prices are paid
pursuant to the Supplier Finance Agreements;
"EARLY TERMINATION FEE EXCEPTIONS" means any/all of the
following:
(i) the Group makes an acquisition which GMAC chooses to
finance independently or as agent of a syndicate
group which in turn results in a revision or
revisions being made to any of the Finance Documents
notwithstanding that the fees which GMAC requires to
be paid in respect of such revisions are paid by the
relevant parties; or
(ii) GMAC agrees to accept a new funding package in
relation to the Group to be provided by a third party
financier as agent (for itself and GMAC) ("NEW
FUNDING PACKAGE") provided that:
(a) GMAC retains a holding in such New Funding
Package, the returns on which are the same
or better than these GMAC is entitled to
receive under the Facilities; and
(b) the Group reimburse GMAC for all its legal
and due diligence costs in respect of such
New Funding Package on or before the date of
entering into that New Funding Package;
in which case GMAC will be entitled to a
revised participation fee, net of any early
termination fee which it would have been
entitled to receive but for its agreeing to
enter into the New Funding Package.
(iii) termination of the Invoice Discounting Facility is
effected as a consequence of an increase in the
Administration Charge (as defined in the UK Invoice
Discounting Agreement) payable under clause 18.2 of
that agreement;
"EVENT OF DEFAULT" means any of the events specified in clause
22 (Events of Default);
"ENVIRONMENTAL APPROVAL" means any permit, licence, approval,
ruling, exemption or other authorisation required under
applicable Environmental Laws;
"ENVIRONMENTAL LAWS" means any and all laws, rules, orders,
regulations, statutes, ordinances or codes of any Governmental
Authority regulating, relating to or imposing liability or
standards of conduct concerning environmental protection
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3
matters, including without limitation, in relation to the
manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Materials of
Environmental Concern, as now or may at any time hereafter be
in effect;
"FACILITIES" means the Invoice Discounting Facility, the
Supplier Finance Facility and the Term Loan Facility and
"FACILITY" means any of them;
"FINANCE DOCUMENTS" means this Agreement, the Invoice
Discounting Agreements, the Supplier Finance Agreements, the
Security Documents and the H-P Invoice Purchase Agreement, the
Participation Agreement and Trust Deed the Source Supplies
Acknowledgement and Indemnity, the Supplies Team
Acknowledgement and Indemnity, the RAW Acknowledgement and
Indemnity, the LRB Acknowledgement and Indemnity and all other
deeds and documents entered into pursuant to or ancillary to
such documents;
"FORECAST" means the forecast as set out in Annex 1.
"GERMAN OBLIGORS" means ISA Deutschland GmbH, PAR Beteilgungs
GmbH and Supplies Team GmbH;
"GOVERNMENTAL AUTHORITY" means any nation or government, any
state or political sub-division thereof and any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of any of the foregoing;
"GROUP" means the Borrower and all of its Subsidiaries and any
Subsidiaries of such Subsidiaries from time to time and
"MEMBER OF THE GROUP" or "GROUP COMPANY" means any of them;
"HEWLETT PACKARD" means Hewlett-Packard Europe BV Amsterdam,
Meyrin Branch 150, route du Nant d'Avril , 1217 Geneva,
Switzerland;
"HEWLETT PACKARD INVOICE PURCHASE AGREEMENT" means the
agreement made between GMAC and Hewlett-Packard on or about
the date hereof pursuant to which GMAC may purchase from
Hewlett Packard debts arising in respect of invoices issued by
Hewlett Packard to the Supplier Finance Beneficiaries;
"INSOLVENCY EVENT" and "INSOLVENT" shall, where applicable,
have the same meanings as "Insolvency" as such terms are
defined in the Invoice Discounting Agreements;
"INTELLECTUAL PROPERTY RIGHTS" means know-how, patents,
trademarks, service marks, designs, business names,
topographical or similar rights, copyrights or other
intellectual property monopoly rights, and any licence or
other interest in any such rights and "INTELLECTUAL PROPERTY"
shall be construed accordingly;
"INTEREST PAYMENT DATE" means the last Business Day of each
calendar month after the date hereof;
"INTEREST RATE" means the rate which is 1.55% (and reducing to
1.35% with effect from the Margin Reduction Date) above the
base rate of Lloyds TSB Bank Plc as fluctuating from time to
time;
"INVOICE DISCOUNTING AGREEMENTS" means the UK Invoice
Discounting Agreement and the Overseas Invoice Discounting
Agreements;
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"INVOICE DISCOUNTING FACILITY" means the UK Invoice
Discounting Facility and the Overseas Invoice Discounting
Facilities in the maximum aggregate amount of Pound
Sterling27,500,000;
"ISA INVOICE DISCOUNTERS" means collectively the Overseas ISA
Invoice Discounters and the UK ISA Invoice Discounter;
"LRB ACKNOWLEDGEMENT AND INDEMNITY" means the acknowledgement
and indemnity to be given by LRB Trading Limited to GMAC on or
about the date hereof;
"MARGIN REDUCTION DATE" means the date when:
(i) Audited Accounts for 2002 are available which confirm
that the profits before tax in such accounts are at
or exceed those forecast in the base case forecast as
set out in the Forecast; or
(ii) interim accounts confirmed by an auditor for the 6
month period to 30 June 2003 confirm that profits
before tax are at or exceed the Forecast or a
subsequent forecast prepared by the Company and
agreed with GMAC; or
(iii) full period Audited Accounts after 31 December 2002
confirm that profits before tax are at or exceed the
Forecast or a subsequent forecast prepared by the
Company and agreed with GMAC;
AND a reconciliation is provided of the different accounting
methods (where applied) that have been used within the
Forecast and audited figures;
"MATERIAL ADVERSE EFFECT" means any effect which could be
expected to be materially adverse to:
(i) the ability of any member of the Group to perform its
payment obligations under any of the Finance
Documents;
(ii) the business, assets, financial condition or
prospects of the Group taken as a whole;
"MATERIALS OF ENVIRONMENTAL CONCERN" means chemicals,
pollutants, contaminants, wastes, toxic substances, petroleum
and petroleum products and distillates, and all hazardous
substances defined or regulated as such in or under any
Environmental Law;
"MONTHLY MANAGEMENT ACCOUNTS" means each set of management
accounts of the Group prepared by the Borrower at such
intervals and in such manner as is set out in Clause 18.2;
"NEW GROUP COMPANY" means any company which becomes part of
the Group subsequent to the Commencement Date;
"NORWEGIAN OBLIGORS" means the Supplies Team Norge AS and ISA
Scandinavia AS;
"OBLIGORS" means the Borrower and each other member of the
Group (including the ISA Invoice Discounters, the Swedish
Obligors, the Norwegian Obligors, the German
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5
Obligors, the UK Obligors and the Supplier Finance
Beneficiaries) which have undertaken (or in the future
undertake) obligations pursuant to one or more of the Finance
Documents, and "OBLIGOR" means any of them;
"OVERSEAS INVOICE DISCOUNTING AGREEMENTS" means the invoice
discounting agreements in a form acceptable to GMAC to be
entered into between GMAC and the Overseas ISA Invoice
Discounters in relation to the Overseas Invoice Discounting
Facility;
"OVERSEAS INVOICE DISCOUNTING FACILITY" means the invoice
discounting facilities made available by GMAC to the Overseas
ISA Invoice Discounters pursuant to clause 2.4 and on the
terms of the Overseas Invoice Discounting Facility Agreements;
"OVERSEAS ISA INVOICE DISCOUNTERS" means Oscar Dellert AB and
Supplies Team Norge AS;
"OVERSEAS SUPPLIER FINANCE AGREEMENTS" means the supplier
finance facility agreements in a form acceptable to GMAC to be
entered into between GMAC and the Overseas Supplier Finance
Beneficiaries on or about the date hereof;
"OVERSEAS SUPPLIER FINANCE FACILITIES" means the distribution
finance facilities made available by GMAC on the terms of the
Overseas Supplier Finance Agreements;
"OVERSEAS SUPPLIER FINANCE BENEFICIARIES" means Oscar Dellert
AB (for itself and for Supplies Team Norge AS) and ISA
Deutschland GmbH;
"PARENT" means Daisytek International Corporation ;
"PARTICIPATION AGREEMENT AND TRUST DEED" means the deed
pursuant to which GMAC agrees to the participation of Barclays
Bank PLC in the Facilities on the terms agreed therein and
made between GMAC and Barclays Bank PLC on or about the date
hereof;
"PERMITTED BORROWINGS" means:
(i) Borrowings under invoice discounting facilities made
available by Euro Sales Finance plc to ISA Daisytek
SA, ISA Deutschland GmbH and by any third party
sources of finance to ISA Scandinavia AS and Supplies
Team SRL;
(ii) intra-group loan facilities made between Obligors
which may be made after the Commencement Date;
(iii) any Borrowings of any New Group Company provided that
no Group Company being part of the Group on the
Commencement Date provides any guarantee or security
whatsoever in respect of such borrowing; and
(iv) trading debts any member of the Group has with the
Parent or any subsidiary of the Parent in the
ordinary course of business.
(v) any Borrowings pursuant to the facility in existence
at the date hereof between KBC Bank Deutschland and
ISA Deutschland GmbH.
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6
"PERMITTED SECURITY INTEREST" means:
(i) a lien or right of set off arising in the ordinary
course of trading solely by operation of law (or by
contractual provisions having a substantially similar
effect) except for any lien the rights to which have
been asserted;
(ii) Security Interests arising under the Security
Documents; and
(iii) Security Interests which GMAC have at any time in
writing agreed shall be a Permitted Security
Interest;
(iv) the security currently in existence which has been
granted to Eurosales Finance plc by ISA Daisytek SA
and ISA Deutschland GmbH and security granted to any
third party financier pursuant to (i) of the
definition of "Permitted Borrowings" by ISA
Scandinavia AS and Supplies Team SRL; and
(v) the security currently in existence which has been
granted to KBC Bank Deutschland AG by ISA Deutschland
GmbH.
"PREFERENTIAL CREDITORS" means those creditors of any Obligor
who, upon the insolvency of such Obligor, would have a
preferential or priority right to repayment ahead of the
holder of a floating charge in England (or, in the case of any
other jurisdiction, any creditor which may have equivalent
priority over any security granted to GMAC by the Security
Documents);
"PRIOR CHARGEHOLDERS" means the holder or beneficiary of any
mortgage, charge, trust, lien, reservation of ownership,
security interest or any other interest effecting the absolute
and unfettered ownership of or a first priority security
interest in the charged property;
"QUALIFYING INVENTORY" means all Hewlett Packard branded
inventory which is evidenced by (i) a supplier invoice and
(ii) proof of delivery form signed by the Borrower and/or
relevant Supplier Finance Beneficiary both in form
satisfactory to GMAC;
"QUARTERLY PERIOD" means each of the respective periods of
three months ending on the last day of March, June, September
and December;
"RAW ACKNOWLEDGEMENT AND INDEMNITY" means the acknowledgment
and indemnity to be given by RAW The Real Alternative
Wholesale Company Limited to GMAC on or about the date hereof;
"RESERVE" has the meaning ascribed to it in the UK Invoice
Discounting Agreement;
"SECURITY DOCUMENTS" means those documents listed in part 2 of
Schedule 1 and any other documents for the time being securing
(directly or indirectly) all or any of the Borrower's
obligations under this Agreement and/or all or any other
obligation (present or future, actual or contingent) of an
Obligor under the Finance Documents and references to any such
documents shall include the same as varied or amended in
writing by the parties thereto from time to time;
"SECURITY INTEREST" includes any mortgage, pledge, lien,
charge (whether fixed or floating), assignment by way of
security, hypothecation, security interest, standard
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7
security, assignment or assignation by way of security or any
other security agreement, retention of title, encumbrance of
any kind or arrangement relating to existing or future assets
having substantially the same economic affect as any of the
foregoing (including, without limitation, the deposit of
monies or property with a person with the primary intention of
affording such person a right of set-off or lien);
"SHARES" means shares of any class or description in the
Borrower or any Obligor;
"SOURCE SUPPLIES ACKNOWLEDGEMENT AND INDEMNITY" means the
acknowledgement and indemnity to be given by Source Supplies
Limited to GMAC to be dated on or about the date hereof;
"STERLING" means the lawful currency for the time being of the
United Kingdom;
"SUBSIDIARY" means:
(i) a subsidiary as defined in section 736 of the
Companies Act 1985; and
(ii) a subsidiary undertaking as defined in section 53(1)
of the Companies Act 1989;
"SUPPLIER FINANCE AGREEMENTS" means the UK Supplier Finance
Agreement and the Overseas Supplier Finance Agreements;
"SUPPLIER FINANCE ANNUAL FEE" means the annual fee of Pound
Sterling120,000 payable under clause 8:
"SUPPLIER FINANCE BENEFICIARIES" means collectively the UK
Supplier Finance Beneficiary and the Overseas Supplier Finance
Beneficiaries;
"SUPPLIER FINANCE FACILITY" means collectively the UK Supplier
Finance Facility and the Overseas Supplier Finance Facilities
up to the maximum aggregate amount of Pound Sterling6,000,000;
"SUPPLIES TEAM ACKNOWLEDGEMENT AND INDEMNITY" means the
acknowledgement and indemnity to be given by Supplies Team
Limited to GMAC on or about the date hereof;
"SWEDISH OBLIGORS" means Oscar Dellert AB and CTS Svenska AB;
"TAXES" means all present and future taxes (including VAT and
PAYE), levies, duties, withholdings or similar charges of
whatever nature and wherever levied or assessed, together with
interest thereon and any penalties in respect thereof;
"TERM LOAN ACCOUNTS" means an account or accounts in the name
of the Borrower with GMAC opened in connection with the Term
Loan Facility;
"TERM LOAN ACCOUNT BALANCES" means the debit balance on the
Term Loan Accounts from time to time;
"TERM LOAN ADVANCE" means a single advance made under Term
Loan Facility;
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8
"TERM LOAN FACILITY" means the loan facility to be made
available by GMAC to the Borrower pursuant to which GMAC will
make available the maximum aggregate amount of Pound
Sterling15,000,000, on the conditions contained herein; "TERM
LOAN INDEBTEDNESS" means the outstanding principal amount of
the Term Loan Facility and shall include interest due thereon
but unpaid as from time to time reduced by repayment or
prepayment or by any Cash Deposit (as defined in clause 10);
"TERM LOAN MATURITY DATE" means 3 years from the date of this
Agreement;
"TERM LOAN RESERVE" means the aggregate amount from time to
time outstanding under the Term Loan Facility;
"TOTAL LINE SIZE" means Pound Sterling33,500,000;
"TRANSFER FEES" means fees which GMAC incurs on the bank
accounts maintained in respect of the Facilities and in
relation to the movements between such accounts and GMAC's
general bank accounts;
"UK INVOICE DISCOUNTING AGREEMENT" means the invoice
discounting agreement in a form acceptable to GMAC to be
entered into between GMAC and the UK ISA Invoice Discounter on
or about the date hereof;
"UK INVOICE DISCOUNTING FACILITY" means the invoice
discounting facility made available by GMAC to the UK Supplier
Finance Beneficiary upon the terms of the UK Invoice
Discounting Agreement;
"UK ISA INVOICE DISCOUNTER" means ISA Wholesale Plc;
"UK OBLIGORS" means the Borrower, the UK ISA Invoice
Discounter, ISA International plc, Supplies team Limited, LRB
Trading Limited, ISA International Holdings Limited, ISA
Multimedia Limited, Computanet Corporation Limited, Hundleby
Computer Supplies Limited, Source Supplies Limited; OST Office
Supplies Team Limited and R.A.W. The Real Alternative
Wholesale Company Limited;
"UK SUPPLIER FINANCE AGREEMENT" means the agreement entered
into between GMAC and the UK Supplier Finance Beneficiary in a
form acceptable to GMAC to be entered on or about the date
hereof;
"UK SUPPLIER FINANCE BENEFICIARY" means ISA Wholesale Plc,
"UK SUPPLIER FINANCE FACILITY" means the extended payment
facility made available by GMAC to the UK Supplier Finance
Beneficiary upon the terms of the UK Supplier Finance
Agreement.
"VALUER" means any reputable Valuer appointed by GMAC from
time to time.
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9
1.2 INTERPRETATION
In this Agreement:
1.2.1 unless otherwise defined in this Agreement or the
context requires otherwise, words and expressions
defined in the UK Invoice Discounting Agreement and
the Supplier Finance Facility Agreement shall have
the same meanings when used in this Agreement;
1.2.2 a clause or schedule shall (except where the context
otherwise requires) be construed as a reference to
the relevant clause in or schedule to (and forming a
part of) this Agreement;
1.2.3 a person shall include a body corporate, individual,
firm or an unincorporated body of persons (as the
case may be);
1.2.4 the singular shall include the plural and vice-versa
and the masculine, the feminine and the neuter;
1.2.5 any statutory provision shall be deemed to mean and
to include a reference to any modification,
consolidation or re-enactment thereof for the time
being in force and any analogous provision or rule
under any applicable law;
1.2.6 "BORROWER" shall, where the context admits, include
their respective personal representatives, successors
in title or permitted assigns (whether immediate or
derivative);
1.2.7 any reference herein to any document, including to
this Agreement includes such document as amended,
novated, supplemented, substituted, extended,
assigned or replaced from time to time and includes
any document which is supplemental hereto or thereto;
1.2.8 the meaning of general words introduced by the word
"OTHER" and the word "OTHERWISE" shall not be limited
by reference to any preceding words or enumeration
including a particular class of acts, matters or
things;
1.2.9 where a word or phrase has to be considered in
relation to a jurisdiction outside England and there
is no exact equivalent of such word or phrase then it
shall have the meaning of the closest equivalent in
such jurisdiction;
1.2.10 "INDEBTEDNESS" includes any obligation (whether
incurred as principal, guarantor or surety) for the
payment or repayment of money, whether present or
future, actual or contingent.
1.2.11 whether something is "MATERIAL" shall be determined
by GMAC acting reasonably taking into account the
financial position of the Group and/or any potential
adverse effect on GMAC's security.
1.2.12 a "MONTH" is a reference to a period starting on one
day in a calendar month and ending on (but not
including) the numerically corresponding day in the
next succeeding calendar month save that, where any
such period would otherwise end on a day which is not
a business day, it shall end on the next succeeding
business day, unless that day falls in the calendar
month succeeding that in which it would otherwise
have ended, in which case it
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10
shall end on the immediately preceding business day;
provided that, if a period starts on the last
business day in a calendar month or if there is not
numerically corresponding day in the month in which
that period ends, that period shall end on the last
business day in the later month (and references to
"MONTHS" shall be construed accordingly).
1.2.13 for the purposes of identification of the Obligors,
the full names and corporate details of each of the
Obligors are set out in Schedule 4.
The headings in this Agreement are inserted for convenience
only and shall not affect its construction or interpretation.
2. THE FACILITIES
2.1 Subject to the terms of this Agreement and the Invoice
Discounting Agreements, GMAC agrees to make available to the
UK ISA Invoice Discounter and the Overseas ISA Invoice
Discounters the Invoice Discounting Facility.
2.2 Subject to the terms of this Agreement and the Supplier
Finance Agreements, GMAC agrees to make available to the
Borrower and the Overseas ISA Supplier Finance Beneficiaries
the Supplier Finance Facility.
2.3 Subject to the terms of this Agreement, GMAC agree to make
available to the Borrower the Term Loan Facility.
2.4 The Invoice Discounting Facility, Supplier Finance Facility
and Term Loan Facility shall be made available to the relevant
Obligors, provided that at no time the aggregate of:
2.4.1 the Term Loan Advance;
2.4.2 the total aggregate of Prepayments Outstanding under
the Invoice Discounting Facility;
2.4.3 the total aggregate of unpaid invoices outstanding
under the Supplier Finance Facility;
2.4.4 the Direct Obligations other than those specified in
Clauses 2.4.1 to 2.4.3; and
2.4.5 the Reserves;
shall exceed the Total Line Size.
2.5 GMAC shall make the Facilities Available in the Approved
Currencies.
3. PURPOSE
The Facilities may be used by the Borrower and the relevant Obligors:
3.1 to fund the working capital and medium term financing
requirements of the Group; and
3.2 for such other purposes as GMAC may agree,
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11
but may not be used for any purpose which could constitute unlawful
financial assistance and GMAC shall not be bound to enquire as to, nor
shall it be responsible for, the use or application by the Borrower or
the Obligors of all or any part of the Facilities.
4. INVOICE DISCOUNTING FACILITY
4.1 UTILISATION OF THE INVOICE DISCOUNTING FACILITY
Subject to the provisions of clause 7 (Conditions Precedent)
being satisfied, the UK ISA Invoice Discounter and the
Overseas ISA Invoice Discounters may only request Prepayments
under the Invoice Discounting Facility if the amount of the
Prepayment requested to be made does not exceed the Available
Invoice Discounting Facility.
4.2 GOVERNING TERMS
The Invoice Discounting Facility shall be available to the UK
ISA Invoice Discounter subject to and upon the terms and
conditions of the UK Invoice Discounting Agreement and to the
Overseas ISA Invoice Discounters on the terms and conditions
of the Overseas Invoice Discounting Agreements.
5. SUPPLIER FINANCE FACILITY
5.1 Subject to the provisions of clause 7 (Conditions Precedent)
being satisfied, the UK Supplier Finance Beneficiary and the
Overseas Supplier Finance Beneficiaries may only utilise the
Supplier Finance Facility if the amount of the payment
required to be made, or the liability to be assumed by GMAC in
respect of such payment or other utilisation does not exceed
the Available Supplier Finance Facility.
5.2 GOVERNING TERMS
The Supplier Finance Facility shall be available to the UK
Supplier Finance Beneficiary and the Overseas Supplier Finance
Beneficiaries subject to and upon such terms and conditions as
set out in the UK Supplier Finance Agreement and the Overseas
Supplier Finance Agreements respectively.
6. TERM LOAN FACILITY
Subject to the provisions contained in clause 7 (Conditions Precedent)
and the terms contained herein, the Term Loan Facility shall be
available for drawing by the Borrower subject as follows:
6.1 the Term Loan Facility shall be available for drawing subject
to the provisions of this Agreement by the Borrower by way of
a single advance to the Borrower for the period of 3 Business
Days from the date of this Agreement, after which the Term
Loan Facility will cease to be available (without prejudice to
the availability of the Supplier Finance Facility and the
Invoice Discounting Facility);
6.2 The receipt by GMAC of a drawdown notice as per Schedule 3.
The Borrower acknowledges that any notice of drawdown given in
accordance with the Term Loan Facility shall be irrevocable
and shall oblige the Borrower to borrow the amount specified
on the relevant Drawdown Date.
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12
7. CONDITIONS PRECEDENT/SUBSEQUENT
7.1 The Facilities will only become effective once GMAC has
received in form and substance satisfactory to them, all of
the documents and evidence listed in parts 1 and 2 of Schedule
1;
7.2 The Facilities will only be available for drawing if:-
7.2.1 there is no Event of Default and no event has
occurred which, with the lapse of time or giving of
notice or both, would constitute an Event of Default;
7.2.2 the representations and warranties set out in clause
17 (Representations and Warranties) are true and
accurate as of the date of the proposed Drawdown Date
and would remain true following such drawdown and
thereafter the representation and warranties set out
in clause 17 (Representations and Warranties) which
are deemed to be repeated on the dates set out
therein are true and accurate;
7.2.3 the ISA Invoice Discounters shall have entered into
the Invoice Discounting Agreements and the Invoice
Discounting Agreements are then in full force and
effect and none of the ISA Invoice Discounters are in
default thereunder;
7.2.4 the Supplier Finance Beneficiaries shall have entered
into the Supplier Finance Agreements and none of the
Supplier Finance Beneficiaries are in default
thereunder.
7.3 The Term Loan Facility will only be available for drawing
under clause 6 if at the relevant time, the Available Invoice
Discounting Facility is at least Pound Sterling15,000,000.
8. FEES
8.1 All fees will be fully earned upon becoming due and will not
be refundable.
8.2 The Collateral Monitoring Fee shall be payable by equal
monthly instalments in arrears.
8.3 The Arrangement Fee shall be paid by the Borrower to GMAC on
the earlier of Commencement Date or the Drawdown Date.
8.4 Fees payable under this clause 8 (Fees) shall be paid in
accordance with clause 15 (Payments).
8.5 The Supplier Finance Annual Fee shall be payable by the
Supplier Finance Beneficiaries on the last Business Day of
each anniversary of the Commencement Date or in accordance
with Clause 15.5;
8.6 An Administration Charge shall be payable in accordance with
Invoice Discounting Agreement;
9. REPAYMENT OF PRINCIPAL
9.1 Subject to the other provisions of this Agreement, the
Borrower shall repay all amounts outstanding under the Term
Loan Facility in one instalment on the Term Loan Maturity
Date.
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13
10. DEPOSIT
10.1 In the event that the Available Invoice Discounting Facility
(but prior to the deduction of the Term Loan Reserve) is less
than the Term Loan Reserve the Borrower shall immediately on
demand place with GMAC a cash deposit (the "CASH DEPOSIT")
equal to such deficit (the "DEFICIT").
10.2 If the Deficit increases, the Borrower shall increase the Cash
Deposit pro tanto. If the Deficit decreases, GMAC shall refund
the Cash Deposit pro tanto.
11. INTEREST
11.1 Interest on the Term Loan Facility will be charged on the Term
Loan Account Balances less the Cash Deposit (if any) at the
Interest Rate and will be due and payable on each Interest
Payment Date.
11.2 All interest on the Term Loan Facility shall accrue from day
to day and shall be computed on the basis of a 365 day year
and the number of days elapsed.
11.3 Interest payable under this clause 11 (Interest) shall be paid
in accordance with clause 15 (Payments).
12. PREPAYMENT
12.1 The Borrower or any Group Company may voluntarily prepay the
whole but not part of the Facilities (including any Direct
Obligations) provided that GMAC has received from the Borrower
not less than 90 days' prior written notice of the proposed
date of prepayment. Such written notice when given shall be
irrevocable. Any such amount once it has been prepaid may not
be re-drawn.
12.2 The Borrower may voluntarily prepay the whole or part of the
Supplier Finance Facility on or after the first anniversary of
the Commencement Date provided that:
(i) the relevant Supplier Finance Beneficiary or
Beneficiaries give not less than 90 days prior
written notice to GMAC; and
(ii) a prepayment fee equal to the Supplier Finance Annual
Fee (or instalments thereof) which would, but for the
prepayment being made, be payable up to the
anniversary of the Commencement Date if the
prepayment is made in the first year or up to
subsequent applicable anniversaries depending on
which year the prepayment is made, being paid in
full.
Upon satisfaction of (i) and (ii) above the Collateral
Monitoring Fee and the Supplier Finance Annual Fee will cease
to be payable. For the avoidance of doubt, termination of the
Supplier Finance Facility pursuant to this Clause 12.2 shall
not result in a requirement for the Borrower to terminate any
of the other Facilities.
Such written notice when given shall be irrevocable. Any such
amount once it has been prepaid may not be re-drawn.
12.3 Subject to the Early Termination Fee Exceptions, upon
termination of any of the Facilities other than the Supplier
Finance Facility, prior to the end of the initial 3 year term,
or prior to any subsequent annual renewal thereafter, GMAC
will be entitled to an early termination fee equal to 1% of
the Total Line Size, but less any sum paid by
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14
an Obligor under similar provisions in any of the other
Finance Documents and less the amount of any prepayment fee
payable under Clause 12.2.
12.4 For the avoidance of doubt, should the Hewlett Packard Invoice
Purchase Agreement be terminated for whatever reason, such
termination shall trigger a requirement that the whole (not
part) of the Supplier Finance Facility be immediately repaid
and the appropriate prepayment fee as set out in part (ii) of
Clause 12.2 shall become immediately payable to GMAC.
13. MANDATORY PRE-PAYMENT
13.1 If at any time during the availability of the Term Loan
Facility any of the events described in Clause 19.1 and 19.2
of the Invoice Discounting Agreements (or their equivalent in
the Overseas Invoice Discounting Agreements) occur
(irrespective of whether GMAC subsequently terminates the
relevant agreement as a result) the Borrower shall prepay all
the Facilities on demand by GMAC together with interest and
other amounts payable thereunder.
14. DEFAULT INTEREST ON TERM LOAN FACILITY
14.1 If the Borrower fails to pay any amount due on the Term Loan
Facility under this Agreement on its due date, the Borrower
shall be liable (if GMAC so requires) for interest on such
amount from the date of such default until the date of actual
payment (as well after as before judgement or demand) at the
Default Rate. The Borrower's liability under this clause shall
be in substitution for the liability for interest on such
defaulted amount at the otherwise applicable rate of interest
under this Agreement. Such interest shall be payable on demand
and, to the extent not actually paid, shall be compounded
monthly in arrears and debited to any of the Accounts as GMAC
shall at its option nominate.
14.2 For so long as any Event of Default has occurred and is
continuing, (if GMAC so requires) the rate specified for the
purpose of the definition of "Interest Rate" shall be
increased so that such rate is equal to the Default Rate. The
other provisions of this Agreement relating to the calculation
and payment of interest shall continue to apply. This clause
14.2 shall not apply to any amount on which the Borrower is
liable to pay interest under clause 14.1.
14.3 GMAC and the Borrower agree that the Default Rate and any
increase to the Interest Rate which takes effect pursuant to
clause 14.2 represents a genuine pre-estimate of the GMAC's
administrative, funding and other costs, loss and increased
risk and is not a penalty.
15. PAYMENTS
15.1 The Borrower and relevant Obligors will make all payments due
under this Agreement:
15.1.1 in cleared funds for value on the relevant date; and
15.1.2 without set-off or counterclaim and, except when
required by law, without any deduction for taxes or
for any other reason. If the Borrower or any Obligor
is compelled by law to make any deductions, the
Borrower or any Obligor shall pay such additional
amounts ("ADDITIONAL AMOUNTS") as are necessary to
ensure receipt by GMAC of the full amount which GMAC
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15
would have received but for such deduction. Without
prejudice to the foregoing, in the event of any such
deduction for tax, the Borrower or any Obligor will
within seven days of effecting any such deduction
provide GMAC with any appropriate certificate (R185
or similar certificate) in favour of GMAC in relation
to such tax deduction and shall provide GMAC with
evidence satisfactory to GMAC of payment to the
Inland Revenue of the tax deducted within seven days
of the due date for payment of the same to the Inland
Revenue. On receipt by GMAC of such appropriate
certificate, GMAC shall repay to the Borrower or the
relevant Obligor an amount equal to the relevant
Additional Amounts.
15.2 For the purposes of this clause, GMAC confirms that it is the
person beneficially entitled to interest under this Agreement
and is a company resident, for United Kingdom tax purposes, in
the United Kingdom.
15.3 GMAC shall be entitled (and is hereby authorised by the
Borrower who will procure that each Obligor which is a party
to any of the Facility Agreements shall consent thereto) to
debit all payments (including, without limitation, principal
and interest and other amounts due under the Facilities) due
under this Agreement or any of the Security Documents either
to the Accounts or any other Accounts(s) of the Borrower or of
any such Obligor held with GMAC.
15.4 The Borrower and relevant Obligors shall repay the amounts
owing under the Facilities in the Approved Currency in which
that Borrower or relevant Obligor borrowed or utilised the
relevant portion of that Facility.
15.5 Notwithstanding Clause 8.1 and 8.5, the Supplier Finance
Annual Fees in respect of each annual sum (payable in
accordance with clause 8.5) may be payable to GMAC by way of
equal instalments in advance, the first such instalment being
payable on the Commencement Date with successive instalments
being payable thereafter at successive three monthly
intervals.
15.6 Sterling is the currency of account and payment for each and
every sum at any time due from the Borrower under the Term
Loan Facility.
15.7 If any sum due from the Borrower under the Term Loan Facility
or any order or judgment given or made in relation thereto is
in a currency other than sterling, GMAC shall convert such
currency into sterling at its spot rate for such other
currency and the Borrower shall indemnify and hold harmless
GMAC from and against any loss suffered as a result of any
such conversion.
16. CHANGES IN CIRCUMSTANCES AND INCREASED COSTS
16.1 If at any time it becomes unlawful or impossible for GMAC to
advance, maintain or fund the whole or any part of the Term
Loan Facility or the Accounts Balance, GMAC may at any time by
written notice to the Borrower require the Borrower to repay
the whole or any part of the Term Loan Facility, and/or the
Accounts Balance (in addition to its obligations under the
Invoice Discounting Agreements and the Supplier Finance
Agreements) immediately, together with any outstanding
interest and all other sums due under this Agreement and the
Security Documents.
16.2 The Borrower shall pay to GMAC on demand such amount as GMAC
may from time to time certify as being necessary to compensate
it for any increase in the cost of funding the Term Loan
Facility or the Accounts Balance or for any reduction in the
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16
rate of return under this Agreement, incurred by GMAC as a
result of compliance with any official directives,
requirements or requests of any regulatory authority (whether
or not having the force of law) or any law or regulation
(including any changes to, or change in the interpretation of,
the 1988 Capital Accord as a result of any proposals made by
the Bank Committee on Basel Regulation and Supervisory
Practice for Reform of the 1988 Capital Accord, published in
June 1999 as revised or amended, including any further
proposals of the Basel Committee (including, without
limitation, those relating to reserve assets, special
deposits, taxes (other than tax on its overall net income),
capital adequacy and/or asset ratios).
17. REPRESENTATIONS AND WARRANTIES
The Borrower hereby represents and warrants in relation to itself and
each other Obligor that:
17.1 it is a limited liability company incorporated under the laws
of England and Wales (or relevant overseas jurisdiction) and
has the power to own its property and assets and carry on its
business as it is now being and will be conducted;
17.2 it has the power to enter into and perform its obligations
under each of the Finance Documents to which it is a party and
all necessary action (corporate or otherwise) has been taken
to authorise its unconditional entry into and performance of
its obligations under each of the Finance Documents to which
it is a party and the borrowing or utilising of the Facilities
upon the terms and conditions contained herein;
17.3 all authorisations, approvals, consents, licences, exemptions,
filings, registrations, notarisations and other matters
required in connection with the entry into, performance and
validity of the Finance Documents, the borrowing or
utilisation of the Facilities and the granting of the Security
Documents have been obtained and are in full force and effect,
and any requirements thereof have been or will be at the
appropriate time complied with or fulfilled;
17.4 the Finance Documents to which it is a party constitute its
legal, valid, binding and enforceable obligations or will,
following appropriate registration, constitute legal valid and
enforceable obligations and subject in each case to the
principle that specific performance and other equitable
remedies (where relevant) are discretionary remedies of the
court and subject to insolvency laws affecting the rights of
creditors generally;
17.5 the entry into and performance of the Finance Documents to
which it is party and the transactions contemplated hereby and
thereby do not and will not conflict with (a) any law or
regulation or any official or judicial order, or (b) its
memorandum or articles of association (or overseas
equivalent); or (c) any agreement or document to which it is a
party or which is binding upon it or its assets;
17.6 no member of the Group is in default under any agreement to
which it is a party which would have a Material Adverse Effect
and no litigation, arbitration or administrative proceedings
are current or pending or (to the knowledge of the Borrower)
threatened which would have a Material Adverse Effect;
17.7 it is not aware of any material fact or circumstances that has
not been disclosed to GMAC which, if disclosed, would be
likely at the date of this Agreement to be relevant in
relation to (a) any material liability of GMAC under the
Finance Documents, or (b) in respect of Environmental Laws;
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17
17.8 there has been no material adverse change to the nature of
business of the Group Companies since the decision was taken
by GMAC to provide the Facilities to the relevant Group
Companies;
17.9 it is in all material respects in full compliance with all
Environmental Laws as presently applied and enforced which are
currently applicable to its operations and all Environmental
Approvals required in respect thereof have been obtained from
the appropriate authorities and are in full force and effect;
17.10 the latest Audited Accounts delivered to GMAC under clause
18.1 hereof have been prepared in accordance with generally
accepted Accounting principles which have been consistently
applied (or if not consistently applied, such inconsistency
has been notified to GMAC) and such audited Accounts represent
a true and fair view of the financial position of the
companies in the Group for the relevant period for which such
Accounts were prepared;
17.11 the Monthly Management Accounts delivered to GMAC under clause
18.2 hereof:
17.11.1 fairly represent the financial condition and
operations of the Group as at the date up to which
they have been prepared and for the period for which
such management Accounts relate; and
17.11.2 were or will when the same are produced be prepared
on a basis substantially in accordance with the
Accounting principles used in the latest audited
Accounts (other than in the event of any change
notified to GMAC),
in each case within the reasonable parameters which may be
expected of management Accounts not the subject of audit
procedures;
17.12 none of its assets, property and undertaking are subject to
any Security Interest (other than as constituted by Permitted
Security Interests) and it is not a party to, nor are its
assets bound by any order, agreement or instrument under which
it is, or in certain events may be, required to create, assume
or permit to arise any Security Interest;
17.13 no Event of Default has occurred or is outstanding and no
event has occurred which with the giving of notice or the
lapse of time or both would constitute an Event of Default;
and
17.14 it has good valid and marketable freehold or leasehold title
to each or valid leases or licences of the properties over
which it purports to create security under the Security
Documents;
17.15 all of the assets, property and undertaking which are not
subject to any lease or lease agreement are legally and
beneficially owned by it and all filings necessary for the
registration of title have been obtained or made;
17.16 the Intellectual Property Rights owned by, or licensed to, an
Obligor:
17.16.1 are all of the Intellectual Property Rights required
by it in order for it to carry on its business as
currently conducted, and the relevant Obligor, in
carrying on its business, does not infringe any
Intellectual Property Rights of any third party;
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18
17.16.2 are (in the case of Intellectual Property Rights
which are owned) free of any Security Interests (save
for those created by Permitted Security Interests)
and any right or interest in favour of a third party.
Any Intellectual Property Rights licensed to the
relevant Obligor are free from any Security Interests
and any rights or interests in favour of a third
party save for those created by this Deed and for
those in favour of the owner(s) of such Intellectual
Property Rights; and
17.16.3 there is no actual or, to the best of the relevant
Obligor's knowledge and belief, threatened
infringement of the Intellectual Property Rights
owned by such Obligor.
The representations and warranties set out in this clause 17 shall be
deemed to be repeated on each Drawdown Date and on each Interest
Payment Date with reference to the facts and circumstances then
subsisting as if made at each such time.
18. FINANCIAL INFORMATION/REPORTING
18.1 As soon as available and in any event within 150 days after
the end of each of its financial years the Borrower will
deliver to GMAC the Audited Accounts of the Group as at the
end of such financial year which shall have been audited or
certified by an Accountant acceptable to GMAC.
18.2 No later than 45 days after the end of each calendar month the
Borrower will deliver to GMAC Monthly Management Accounts in
respect of itself and the rest of the Group for the most
recent calendar month.
18.3 No later than 60 days after the end of each calendar month,
the Borrower will deliver to GMAC Monthly Management Accounts
in respect of Kaye Office Supplies Limited.
18.4 No later than 30 days after the end of each financial year (or
at other intervals which GMAC shall determine) the Borrower
will provide to GMAC annual projections and monthly cash flow
statements in the form required by GMAC. At GMAC's option
those projections and/or cash flows will be compiled by a
director of the Borrower.
18.5 No later than 45 days after the end of each Quarterly Period
the Borrower will deliver a Compliance Certificate to GMAC.
18.6 The Borrower shall deliver to GMAC confirmation of:
(i) all insurance policy renewals or, as the case may, be
replacements provided their the levels and nature of
the replacement policies or are the same or better
than the policies to be replaced; and
(ii) premiums paid in respect of the Group.
18.7 Notwithstanding the specific provisions set out in clause 18.1
to 18.6 (inclusive) GMAC reserve the right so long as the
Facilities (or any of them) remain in place to require the
Borrower to provide GMAC (at the Borrower's cost) with such
financial information or other information about the Borrower
and/or the Group as GMAC may from time to time reasonably
require.
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19
19. FINANCIAL COVENANTS
19.1 For the duration of the Facilities, the Borrower shall procure
that:
19.1.1 Tangible Net Worth in respect of the Group shall not
be less than:
(i) Pound Sterling2,000,000 as at 31 December
2002; and
(ii) not less than the following amounts at such
Quarterly Periods thereafter:
31 March 2003 Pound Sterling2,500,000
30 June 2003 Pound Sterling2,500,000
30 September 2003 Pound Sterling2,750,000
31 December 2003 Pound Sterling3,000,000
This covenant shall be reset for the remainder of the
term of the Facility from future forecasts provided
by ISA which are acceptable to GMAC.
19.1.2 The ratio of Total Operating Profit to Gross
Financing Costs shall not be less than:
(a) 1.5:1:0 for all tests up to and including 30
September 2003;
(b) 2.0:1.0 for all tests thereafter
19.1.3 Accounts Payable Turn in respect of the Borrower on a
consolidated basis shall not exceed 42 days.
19.1.4 Accounts Receivable Turn in respect of the Borrower
on a consolidated basis shall not exceed 52 days.
19.1.5 the aggregate gross value (including VAT) of all
credit notes issued by the ISA Invoice Discounters,
expressed as a percentage of the Gross Purchase Price
of all Debts purchased by GMAC pursuant to the
Invoice Discounting Agreements, shall not exceed six
per cent (6%) in any given period.
19.1.6 The monthly declaration of dilutions in respect of
the UK Supplier Finance Facility and each of the
Overseas Supplier Finance Facilities shall not exceed
5% on each respective facility.
19.1.7 With regard to the financial covenants specified in
clause 19.1.1 to 19.1.5 (as the case may be):
(a) in the case of the covenant at 19.1.2, it
shall be measured at successive three
monthly intervals commencing on 31 March
2003 and on a rolling twelve month basis
with effect from 31 December 2003 and
thereafter but prior to that date, at the
ends of March, June and September 2003 on
three, six and nine months rolling bases
respectively.
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20
(b) in the case of the covenant at 19.1.5, it
shall be measured at successive monthly
intervals, on a rolling three month basis,
commencing with the three month period
ending on 31 March 2003.
(c) each of the covenants will be tested by
reference to the relevant monthly financial
statements in a format containing at least
the information in those received from the
Group for the period ending October 2002
unless the Audited Accounts required to be
delivered to GMAC pursuant to clause 18.1
for the relevant period are available on the
relevant testing date, in which case such
Audited Accounts shall be used instead
together with any available relevant monthly
financial statements on a pro-rata basis;
(d) if the Audited Accounts are not available
when the covenant is tested but when such
Audited Accounts become available they
demonstrate that the figures in any relevant
Monthly Management Accounts or financial
statements used for any calculation of the
financial covenant cannot have been
substantially accurate, then GMAC shall
require such adjustment to the calculations
made or to be made as it, in its sole
discretion, considers appropriate to rectify
such inaccuracy and compliance with the
financial covenants will be determined by
references to such adjusted figures;
(e) the components of the relevant financial
covenants shall be calculated in accordance
with accounting principles, standards and
practices of the Borrower from time to time
provided always that they are consistent
with those generally accepted from time to
time in the United Kingdom and approved by
the Accounting Standards Board ("UK GAAP").
In the case of any component calculated by
reference to management accounts or
unaudited financial statements, UK GAAP will
be applied within the reasonable parameters
which may be expected of such accounts or
financial statements not the subject of
audit procedures.
19.2 In this Clause 19, the following terms shall bear the
following meanings:
"ACCOUNT RECEIVABLES TURN" means Trade Accounts Receivable
divided by cumulative sales (including VAT) in the year to
date multiplied by the number of days in the year to date;
"ACCOUNT PAYABLE TURN" means Gross Trade Accounts Payable
divided by cumulative Gross cost of sales (including VAT) in
the year to date multiplied by the number of days in the year
to date;
"CAPITAL EXPENDITURE" has the meaning given to that term by UK
GAAP.
"DILUTIONS" means the total credit notes given by
Hewlett-Packard to the Group in the last 12 months divided by
the total number of credit notes plus total remittances
received from the Group in the last 12 months;
"GROSS FINANCING COSTS" means in respect of any relevant
period, all interest, acceptance commission, payments under
interest rate management arrangements (whether by way of swap,
cap, collar, floor, option, forward rate agreement or
otherwise) and other continuing, regular or periodic costs,
charges and expenses in
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21
the nature of interest (whether paid, payable or capitalised
and including the interest element in hire purchase and
finance leasing charges) incurred by the Group during such
relevant period in effecting, servicing or maintaining
borrowings or borrowing facilities;
"GROSS TRADE ACCOUNTS PAYABLE" means all amounts inclusive of
tax payable by all the members of the Group in respect of
purchases by them of goods for the purposes of resale;
"TANGIBLE NET WORTH" means the aggregate of the amount paid up
or credited as paid up on the issued share capital and the
amount standing to the credit of the consolidated capital and
revenue reserves (including share premium account capital
redemption reserve and profit and loss account) of the Group
but after deducting:
(i) goodwill (including goodwill arising on
consolidation) and other intangible assets;
(ii) (to the extent included) any reserve created by any
upward revaluations of fixed assets made after the
Account Reference Date of the most recent Audited
Accounts published prior to the date of this
Agreement;
(iii) (to the extent included) amounts attributable to
minority interest and deferred taxation;
(iv) any debit balance on profit and loss account, (but so
that no amount shall be included or excluded more
than once); and
(v) any other item identified by GMAC acting reasonably
but in its sole discretion;
"TOTAL OPERATING PROFIT" means in respect of any relevant
period, the consolidated total operating profit for continuing
operations, acquisitions (as a component of continuing
operations) and discontinued operations (as set out in
Financial Reporting Standard No. 3) of the Group but ignoring
any exceptional items.
"TRADE ACCOUNTS PAYABLE" means sums due by any of the Group in
respect of goods purchased by them for the purposes of resale;
"TRADE ACCOUNTS RECEIVABLE" means Debts (as defined in the UK
Invoice Discounting Agreement);
20. NEGATIVE COVENANTS
So long as the Facilities (or any of them) remain in place the Borrower
shall not (and shall procure that no member of the Group shall) without
GMAC's prior written consent:
20.1 create or permit to subsist any Security Interest over any of
its assets, property or undertaking except for Permitted
Security Interests;
20.2 by one or a series of transactions, whether related or not,
sell or otherwise dispose of all or any material part of its
property, assets or undertaking including without limitation
by any form of sale and leaseback or factoring (except in the
normal course of its business);
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22
20.3 carry on any trade or business with a company which is not an
Obligor other than in the normal course of trading;
20.4 subscribe for any shares, loan notes, debentures, commercial
paper or other financial instrument issued or proposed to be
issued by a company which is not an Obligor or make any other
type of investment in such a company;
20.5 save as between Obligors pay any dividends or other
distributions or issue or redeem any Shares with the exception
of payment of preferential dividends provided that:
20.5.1 performances to the Forecast or subsequent forecasts
which are provided by the Group and which are
acceptable to GMAC;
20.5.2 relevant covenants (which are to be determined by
GMAC) are given; and
20.5.3 that a minimum of Pound Sterling5,000,000 of the
Total Line Size shall be available for drawing but is
undrawn on the date of such payment and remaining
available but undrawn for 30 days after such payment
has been made;
20.6 lend to, provide trade credit other than on arms length terms
to, or guarantee the obligations of, any company (or person)
which is not an Obligor; and
20.7 enter into any Borrowings (save for Permitted Borrowings)
other than pursuant to the Finance Documents.
21. POSITIVE COVENANTS
21.1 The Borrower shall procure upon GMAC's written request that
any Subsidiary who is not already an Obligor of the Borrower
shall enter into security documents in form similar to those
entered into by the Obligors.
21.2 The Borrower will promptly notify GMAC if any Event of Default
arises and of anything which might result in an Event of
Default.
21.3 The Borrower shall and will procure that each Group Company
will pay all material Taxes due and payable by it or that
Group Company within a reasonable time of the relevant due
date.
21.4 The Borrower shall and will procure that each Group Company
shall effect and maintain adequate insurances in relation to
its business and assets (which shall be insured for their full
replacement value) with reputable underwriters or insurers
against such risks as are usual for companies carrying on a
business such as that carried out by such Group Company and
that all such insurance policies shall name GMAC as first loss
payee.
21.5 The Borrower shall and will procure that it and each Overseas
ISA Invoice Discounter will effect and maintain credit
insurances at its own expense in respect of all Domestic Debts
with reputable insurers. Such insurances shall:
21.5.1 provide cover against all risks which are normally
insured against by other companies;
21.5.2 be in such amounts as would in the circumstances be
prudent for such companies; and
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23
21.5.3 have the interest of GMAC as mortgagee noted on all
relevant policies (where it is possible to do so),
and the Borrower will supply on reasonable request copies of each
policy of insurance required to be maintained in accordance with this
clause 21.5, together with the current premium receipts relating
thereto.
22. EVENTS OF DEFAULT
In the event that:
22.1 any Obligor fails to pay on the due date any amount payable by
it under any Finance Document to which it is a party except
where such failure arises solely from an error in the
transmission of funds and the failure to pay is not remedied
within two Business Days of the due date for payment; or
22.2 any Obligor:
22.2.1 fails to comply with any of its obligations in clause
18 (Financial Information) or clause 19 (Financial
Covenants); or
22.2.2 fails to perform any of its respective obligations
under any Finance Document (other than those
specified in clause 22.1 or 22.2.1) within 3 Business
Days of such Obligors becoming aware of the relevant
breach; or
22.3 any representation, warranty or statement made under or in
connection with any Finance Document is or proves to be untrue
in any material respect on the date as of which it was made or
deemed to be made or repeated; or
22.4 there is any termination of any waiver, consent or priority
arrangement in GMAC's favour;
22.5 an Insolvency Event occurs in respect of any Obligor ; or
22.6 it becomes impossible or unlawful:
22.6.1 for an Obligor or any member of the Group to perform
any of its respective material obligations contained
in the Finance Documents or any of them; or
22.6.2 for GMAC to exercise any of its rights under this
Agreement and/or the Supplier Finance Agreements
and/or the Invoice Discounting Agreements and/or the
Security Documents or any of them; or
22.7 any Finance Document does not come into or ceases to be in
full force and effect or is not for any reason valid and
binding upon and enforceable in all respects against an
Obligor; or
22.8 GMAC is of the opinion acting reasonably that an event or
events have occurred which have caused a Material Adverse
Effect; or
22.9 anything is done or permitted or omitted to be done by an
Obligor which GMAC is of the opinion acting reasonably may
materially impair the security created by the Security
Documents and/or prejudice or detract from an Obligor's
ability to perform the obligations contained in any Finance
Document; or
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24
22.10 any of the events specified in clauses 22.6 to 22.9 above
occurs in relation to any other Company which is (for the time
being) the holding company of the Borrower or which is a
subsidiary of any such holding company (if any); or
22.11 the Invoice Discounting Agreements (or any of them) are
terminated for any reason or the Borrower or any of the
Obligors are in default of obligations under the Invoice
Discounting Agreements (or any of them) in circumstances which
gives GMAC the immediate right to terminate the Invoice
Discounting Agreements (or any of them);
22.12 any of the UK Supplier Finance Beneficiary, the Overseas
Supplier Finance Beneficiaries or the Obligors are in default
of obligations under the Supplier Finance Agreements (or any
of them) in circumstances which give GMAC the immediate right
to terminate the Supplier Finance Agreements (or any of them);
22.13 the UK ISA Invoice Discounter fails to comply with any of one
of its obligations under the UK Invoice Discounting Agreement
or any of the Invoice Discounters fail to comply with the
equivalent clauses of the relevant Overseas Invoice
Discounting Agreements;
22.14 the UK Supplier Finance Beneficiary fails to comply with any
of one of its obligations under the UK Supplier Finance
Agreement or any of the Overseas Supplier Finance
Beneficiaries fail to comply with their obligations under the
relevant Overseas Supplier Finance Agreements;
22.15 if the Borrower or any Obligor has any obligation to a third
party for repayment of borrowed money in an amount in excess
of Pound Sterling50,000 which is declared due prior to its
stated maturity date or which the Borrower or any Obligor does
not pay it when due;
22.16 if there is any change of control of the Borrower or any
Obligor which for these purposes shall mean a change in the
beneficial ownership of 50 per cent or more of the issued
share capital of the relevant company, or
22.17 any application is made by any creditor of the Borrower or any
Obligor for a court order that GMAC must pay money to such
creditor; or
22.18 any Obligor ceases or threatens to cease to carry on its
business; or
22.19 the Insolvency or death of any person who has given a
guarantee or indemnity to GMAC for the obligations of the
Obligors, or notice of intention to end such guarantee or
indemnity is served or the legal disability of that person
arises unless a person satisfactory to GMAC is prepared to
provide a replacement guarantee or indemnity; or
22.20 the Borrower or any Obligor factors or discounts its debts
with another party save for the invoice discounting
arrangements which have been entered into by ISA Daisytek SA
and ISA Deutschland GmbH with Euro Sales Finance plc and those
entered into by Supplies Team SRL and ISA Scandinavia AS with
any other financing source; or
22.21 the Borrower or any Obligor suspends or threatens to suspend
its operation or except in the ordinary course of business
sell lease transfer or otherwise dispose of all or any
substantial part of its assets (whether by a single
transaction or by a series) or all or any part of its assets
are seized or appropriated by or on behalf of any governmental
or other authority or are compulsorily acquired;
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25
then, in any such event GMAC may by notice in writing (a) terminate the
Facilities (or any of them) and/or (b) declare the Accounts Balance and
any other amounts due hereunder immediately due and payable whereupon
the Borrower and the relevant Obligor will immediately comply with such
demand by repaying the Accounts Balance together with all outstanding
interest and any other amounts due under the Finance Documents.
23. ASSIGNMENT AND TRANSFER
23.1 The Borrower may not transfer or assign any of its rights
under any of the Finance Documents.
23.2 GMAC may, without notice, transfer or assign all or any part
of and/or grant co-participation in the Facilities (or any of
them) and/or the Security Documents to any company, person or
body and the Borrower hereby irrevocably consents to any such
transfer, assignment or participation (and the disclosure by
GMAC to a transferee, assignee or participant or prospective
transferee, assignee or participant of any information about
the Borrower or the Group and the Facilities as GMAC may
consider appropriate) and undertakes to execute any
documentation GMAC may require to effect any such transfer or
assignment or participation.
23.3 Any costs, charges or expenses (including legal expenses)
incurred by GMAC by reason of or in connection with the
transfer or assignment of, or grant of a participation in,
this agreement or the benefit of all or any part thereof shall
be for the sole account of GMAC, including the cost of
preparing any documentation to be entered into by the Borrower
to give effect to or otherwise facilitate such transfer,
assignment or participation PROVIDED that:
23.3.1 for the avoidance of doubt, this clause shall not
affect the responsibility of the Borrower in relation
to the costs (including legal costs) incurred in
relation to the participation granted to Barclays
Bank PLC by GMAC on the date of this Agreement; and
23.3.2 GMAC will reimburse the Borrower for any
out-of-pocket legal expenses (excluding VAT)
reasonably incurred by the Borrower in connection
with its execution of any documentation required by
GMAC for the purpose of any such transfer, assignment
or participation (save costs incurred under clause
23.3.1).
24. NOTICES
Any notice by either party to another shall be sent to the address or
telefax number and marked for the attention set out on the signature
page to this Agreement or such other address or telefax number as may
from time to time be notified by that party to the other in accordance
with this clause and shall be deemed duly given, if delivered
personally or sent by facsimile, when so delivered or sent and, if sent
by first class, registered or recorded delivery post, two days after
the notice is posted. Any notice which by virtue of the provisions of
this clause 24 be deemed served on a day which is not a Business Day or
after 5.30pm on a Business Day shall be deemed to have been served at
9.00am on the next succeeding Business Day.
25. WAIVERS
No failure or delay by GMAC in exercising any right, power or privilege
under any Finance Document shall operate as a waiver thereof nor will
any single or partial exercise of any right,
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26
power or privilege preclude any further exercise thereof or prejudice
any other or further exercise by GMAC of any of its rights or remedies
under any Finance Document. Such rights and remedies are cumulative and
not exclusive of any right or remedy provided by law.
26. EXPENSES
26.1 The Borrower shall be obliged pay to GMAC on demand on a full
indemnity basis (taking into account any expenses already
accounted for by GMAC under Finance Documents other than this
Agreement) whether or not there is a drawing under the
Facilities (or any of the foregoing):
26.1.1 any stamp documentary registration and other similar
duties or taxes in connection with the Finance
Documents; and
26.1.2 all costs and expenses (provided that any such costs
or expenses have been agreed by the Borrower in
advance) incurred in connection with the preparation,
negotiation or enforcement of the Finance Documents
(including legal fees, charges, disbursements, survey
and valuation fees, and value added tax and
disbursements, incidental to the administering of the
Term Loan Facility and/or the Accounts incurred by
GMAC).
26.2 The Borrower shall also indemnify GMAC against any loss or
expense incurred by it as a consequence of the occurrence of
any non-payment.
26.3 As soon as any of the above amounts become due from the
Borrower GMAC shall be entitled to debit such amounts either
to the Accounts or any other Accounts(s) of the Borrower.
27. CONVERSION OF CURRENCIES/TRANSFER FEES
27.1 In the event that GMAC makes any Prepayment in a currency (the
"PAYMENT CURRENCY") other than the currency of the relevant
Debt (the "DEBT CURRENCY"), GMAC shall be entitled (but not
obliged) on a daily basis whilst the relevant Debt is
Outstanding, to calculate the amount (the "CONVERTED AMOUNT")
of the Payment Currency which could be purchased with the
original amount of the Prepayment expressed in the Debt
Currency.
27.2 If the above calculation reveals that the Converted Amount is
less than the amount of the Prepayment, GMAC shall be entitled
to deduct the amount of such deficit from the amount which
would otherwise be available to be drawn down by the Borrower
and the respective Overseas ISA Invoice Discounters.
27.3 Furthermore GMAC shall be entitled to deduct the amount of
such deficit from the amount which would otherwise be
available to be drawn down by the Borrower and the respective
Overseas ISA Invoice Discounters for any Costs of Conversion
which GMAC incurs as a result of converting repayments in
currencies other than the Payment Currency, whether received
through enforcing security or otherwise.
27.4 In the event that the Borrower or any of the other Obligors
becomes Insolvent, GMAC shall be entitled to claim the
equivalent in any of the Approved Currencies of any Costs of
Conversion which have been incurred by GMAC and remain unpaid.
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27
27.5 GMAC shall be entitled to deduct from the amount which would
otherwise be available to be drawn down by the Borrower and
the other Overseas ISA Invoice discounters the amount
equivalent to any Transfer Fees.
28. ILLEGALITY
If any of the provisions of this Agreement become invalid, illegal or
unenforceable in any respect under any law, the validity, legality and
enforceability of the remaining provisions shall not in any way be
affected or impaired.
29. SET-OFF
In addition to any right of set-off or other similar right to which
GMAC may be entitled in law, GMAC acting (through any of its branches)
may at any time and without notice to the Borrower combine and
consolidate all or any of the Accounts between the Borrower and GMAC
and/or set-off any monies and in any currency whatsoever, which GMAC
may at any time hold for the Accounts of the Borrower, against any
liabilities whatsoever which may be due and payable to GMAC from the
Obligors.
30. GOVERNING LAW AND JURISDICTION
LAW
This Agreement shall be governed by and construed in accordance with
English law.
JURISDICTION
30.1.1 SUBMISSION
Each of the parties to this Agreement irrevocably
agrees that the courts of England shall have
jurisdiction to hear and determine any suit, action
or proceeding, and to settle any disputes which may
arise out of, or in connection with, this agreement
and, for such purposes, irrevocably submits to the
jurisdiction of such courts.
30.1.2 FORUM
Each of the parties irrevocably waives any objection
which it might now or hereafter have to the courts
referred to in clause 30.1.1 being nominated as the
forum to hear and determine any suit, action or
proceeding, and to settle any disputes which may
arise out of, or in connection with, this Agreement
and agrees not to claim that any such court is not a
convenient or appropriate forum.
30.1.3 OTHER COMPETENT JURISDICTIONS
The submission to the jurisdiction of the courts
referred to in clause 30.1.1 shall not (and shall not
be construed so as to) limit the right of GMAC to
take proceedings against the Borrower or any Obligor
in any other court of competent jurisdiction nor
shall the taking of proceedings in any one or more
jurisdictions preclude the taking of proceedings in
any other jurisdiction, whether concurrently or not.
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28
30.1.4 CONSENT TO ENFORCEMENT
The Borrower hereby consents and procures the consent
of the Obligors generally in respect of any legal
action or proceeding arising out of, or in connection
with, this Agreement, to the giving of any relief, or
the issue of any process in connection with such
action or proceeding including, without limitation,
the making, enforcement or execution against any
property whatsoever (irrespective of its use or
intended use) of any order or judgment which may be
made or given in such action or proceeding.
30.1.5 WAIVER OF IMMUNITY
To the extent that the Borrower or any Obligor may in any jurisdiction claim for
itself or its assets, immunity from suit, execution, attachment (whether in aid
of execution, before judgment or otherwise) or other legal process and, to the
extent that in any such jurisdiction there may be attributed to itself or its
assets such immunity (whether or not claimed), the Borrower hereby irrevocably
agrees that it and procures that the Obligors shall not claim and hereby
irrevocably waives such immunity to the full extent permitted by the laws of
such jurisdiction.
31. DEMANDS AND NOTIFICATION BINDING
Any demand notification or certificate given by GMAC in writing and
signed by a duly authorised officer of the GMAC specifying any rate of
interest or any amounts due and payable under or in connection with any
provision of the Finance Documents shall be conclusive and binding upon
the Borrower (in the absence of manifest error) and in any proceedings
against the Borrower shall be prima facie evidence of such rate of
interest or amounts so due and payable unless the Borrower objects
thereto within 30 days.
32. EURO
If the United Kingdom moves to the third stage of EMU, GMAC shall be
entitled to make such changes to this Agreement and/or any of the
Invoice Discounting Agreements and/or any of the Supplier Finance
Agreements and/or the Security Documents as it reasonably considers are
necessary to reflect the changeover to the euro (including, without
limitation, the rounding (up or down) of fixed monetary amounts to
convenient fixed amounts in the euro and amending any provisions to
reflect the market conventions for a euro facility of the kind
contemplated in this Agreement).
33. CERTIFICATIONS
Any certification given by any director or other officer of the
Borrower to GMAC under this Agreement shall be given on behalf of the
Borrower and without any personal liability on behalf of such director
or officer unless given fraudulently.
34. COUNTERPARTS
This Agreement may be executed in any number of original or facsimile
counterparts and by different parties hereto in separate original or
facsimile counterparts, each of which when so executed and delivered to
GMAC shall be an original, but all counterparts shall together
constitute one and the same instrument. Upon receipt by GMAC of
original or facsimile counterparts executed by all parties hereto, GMAC
shall forthwith date each such counterpart and give notice in writing
of such delivery and dating to all other parties.
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29
35. CONTRACTS (RIGHTS OF THIRD PARTIES) ACT
A person who is not party to this Agreement shall have no right under
the Contracts (Rights of Third Parties) Act 1999 to enforce any term of
this Agreement. This clause does not affect any right or remedy of any
person which exists or is available otherwise than pursuant to that
Act.
36. JOINT AND SEVERAL LIABILITY
If there are two or more persons comprised in the expressions "THE
BORROWER", "THE BORROWERS", "THE OBLIGOR" or "THE OBLIGORS" such
persons shall be bound as joint and several obligors and such
expressions shall be deemed to include all or any or each of such
persons. None of such persons shall be released from liability
hereunder by reason of this Agreement never being or ceasing to be
binding as a continuing security on any other or others of them.
IN WITNESS whereof the parties have executed this Agreement as a Deed on the
date set out above.
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30
SCHEDULE 1
PRE-CONDITIONS DOCUMENTS
PART 1
1. Certified copy board resolutions of each Obligor approving and
authorising the execution of the Finance Documents to which it is a
party (and containing specimen signatures of the person(s) authorised
to execute the Finance Documents).
2. A certified true copy of the Certificate of Incorporation (or overseas
equivalent) of each Obligor.
3. A certified true and up-to-date copy of the Memorandum and Articles of
Association (or overseas equivalent) of each Obligor.
4. Such other documents, licences, waivers, approvals, resolutions and
evidence as GMAC and its advisers shall deem necessary or advisable and
notified to the Borrower prior to the first Drawdown Date.
5. Originals of the Finance Documents.
6. Evidence (including, without limitation, Forms DS1) (or their overseas
equivalent) of the discharge of all existing financial arrangements
with third parties and all security interests pursuant thereto over the
assets and the properties of the Obligors and, in respect of any
floating charges, certificates of non-crystallisation from the relevant
chargee and evidence that none of the Obligors has any outstanding
liabilities to such third parties save in respect of Permitted Security
and Permitted Borrowings.
7. A search of the register of mortgages and charges for the Borrower at
the Companies Registry or Register showing, inter alia, no appointment
of a receiver, liquidator or administrator or the presentation of any
petition in respect of any of the same and similar exercise in respect
of the other Obligors.
8. Evidence that the insurances required to be taken out pursuant to the
Security Documents have been (or will prior to the Drawdown Date be)
taken out and are in full force and effect and a letter from the
Borrower's insurance brokers in form and substance satisfactory to GMAC
confirming, inter alia, that GMAC will be noted as first loss payee on
all insurance policies.
9. A letter from Hewlett Packard to GMAC confirming details of their bank
Accounts for payments under the Supplier Finance Facility Agreement.
10. Confirmation from GMAC's solicitors that the Borrower has title to all
Qualifying Inventory and that such Qualifying Inventory is free from
any Security Interest in favour of any third party.
11. GMAC is to be satisfied with the results of its pre-funding audit of
the Borrower including Qualifying Inventory.
12. Annual Accounts filed on 22 May 2002.
13. GMAC is to be satisfied with the up to date Monthly Management Accounts
of the Borrower.
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31
14. GMAC is to be provided with a detailed sources and uses of cash as at
closing and a pro forma balance sheet reflecting the detailed closing
adjustments.
15. Confirmation from the Borrower that no event has occurred since 5 April
2002 which would cause a Material Adverse Effect.
16. Compliance with GMAC's money laundering policies including the
provision of satisfactory bank references and such other status
information upon all directors, shareholders and senior managers of the
Group as GMAC shall require.
17. Satisfaction that the overall Facilities meet with the Group's ongoing
cashflow requirements.
18. Completion of all GMAC's internal due diligence.
19. There must be available for drawing but remain undrawn on the
Commencement Date a minimum of Pound Sterling1,000,000.
20. Sight of and satisfaction with up-to-date management accounts of Kaye
Office Supplies Ltd.
21. Written confirmation that Norwegian taxes are paid up to date.
22. Up to date credit insurance limits from Sweden and Norway.
23. Written confirmation of renewal of UK and Norwegian trade credit
insurance.
24. The conclusion by GMAC of satisfactory arrangements between it and
Barclays Bank Plc for the participation by Barclays of 50% of the
facilities.
25. Sight of and satisfaction with a pro-forma report of covenant
calculations (except interest cover) for the period to 30 October 2002.
26. Certified copies of Board Resolutions confirming the capitalisation of
Pound Sterling11 million at 30 April 2003 and Pound Sterling6.9 million
at 20 December 2002 of the Daisytek International Corporation loan to
the Group.
27. The Group will quarantine any Qualifying Inventory purchased directly
by the Group.
28. Satisfactory review by GMAC's Swedish and Norwegian lawyers of all
documentation relating to post giro and bank giro arrangements and
confirmation from Nordea that all necessary bank account/clearing
numbers have been satisfactorily transferred to Nordea.
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32
PART 2
THE SECURITY DOCUMENTS
1. A pledge over floating shares of Oscar Dellert AB and all other
Subsidiaries of the Group in Sweden.
2. Share Pledges by CTS Svenska AB in respect of their shares in Oscar
Dellert AB, ISA International Holdings Limited in respect of their
shares in CTS Svenska AB and Oscar Dellert AB in respect of their
shares in Supplies Team Sverige AB.
3. Factoring Agreement and Agreement for charge over inventory for
Supplies Team Norge AS providing a registered first security interest
on inventory and book debts of Supplies Team Norge AS.
4. Factoring Agreement and Agreement for charge over inventory between
Supplies Team Norge AS and Oscar Dellert AB together with an Assignment
of this Agreement for charge over inventory to GMAC.
5. Guarantee from ISA Scandinavia AS in favour of Oscar Dellert AB for
Supplies Team Norge AS' obligations to Oscar Dellert AB.
6. Guarantee from ISA Scandinavia AS in favour of GMAC for Oscar Dellert
AB's obligations to GMAC.
7. Guarantee from Supplies Team Norge AS in favour of GMAC for Oscar
Dellert AB's obligations to GMAC.
8. Guarantee from ISA Scandinavia AS in favour of GMAC for Supplies Team
Norge AS' obligations to GMAC.
9. Security Agreement for Supplies Team Norge AS and Oscar Dellert AB.
10. Security Agreement for Supplies Team Norge AS and GMAC.
11. A first security interest over the Qualifying Inventory of ISA
Deutschland GmbH PAR Beteiligungs GmbH and Supplies Team GmbH;
12. First priority all assets debenture from ISA Wholesale Plc, Daisytek -
ISA Limited, ISA International Holdings Ltd, ISA International Plc and
all their respective UK Subsidiaries together with the guarantees of
all such companies in respect of all liabilities of all UK and overseas
Subsidiaries.
13. German law and English law Guarantees from ISA Deutschland GmbH, PAR
Beteiligungs GmbH and Supplies Team GmbH in respect of ISA Wholesale
Plc, the Borrower and the Group Overseas ISA Invoice Discounters and
Overseas Supplier Finance Beneficiaries and their subsidiaries.
14. A guarantee from Daisytek Inc Limited to Pound Sterling4,000,000 in
respect of liabilities of the Group under the Supplier Finance Facility
plus related costs and interest.
15. An assignment of acceptable trade credit insurance policies effected
with Royal and Sun Alliance, Hermes and Gerling NCM and for such
policies to name GMAC as first loss payee.
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33
16. Inter-creditor agreements in form acceptable to GMAC with all other
secured creditors.
17. Such consents and waivers as GMAC and its solicitors consider necessary
including any landlords, mortgages and others who may have liens or
other security interests which may impeded GMAC's access to the Group's
asset or may adversely affect the enforcement of any security.
18. The execution of an agreement for the use of GMAC's Interface Computer
Link.
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34
SCHEDULE 2
(FORM OF COMPLIANCE CERTIFICATE)
GMAC Commercial Credit Limited
The Victoria
150-182 The Quays
Harbour City
Salford
M5 2SP
For the attention of : David Nadler
[Date]
Dear Sirs
RE: ISA WHOLESALE PLC
We refer to the Facilities Agreement dated [ ] 2003 (the "AGREEMENT") and
deliver this certificate pursuant to the covenants in clauses 19, 20 and 21
thereof (the "COVENANTS"). Terms defined in the Agreement shall have the same
meaning when used in this certificate.
We confirm that on or as of the last day of the financial period ending [ ], as
determined by reference to the (Audited)/Monthly Management Accounts of the
Group in respect of such period:
MONTHLY REQUIREMENTS:
1. No Group Company is in default or has agreed a revised payment schedule
in making any due payments with respect to any liability due to
Preferential Creditors.
2. To the best of the Borrower's knowledge there are no County Court
judgements issued against any Group Company.
3. All disputes arising in respect of invoices raised by Hewlett Packard
to the Borrower have been appropriately advised to GMAC as they have
arisen.
4. Accounts Payable Turn was [ ] days, (clause 19.1.3).
5. Accounts Receivable Turn was [ ] days (clause 19.1.4).
6. Dilutions in respect of the Supplier Finance Facility equal [ ]%
(clause 19.1.6).
QUARTERLY PERIOD (CUMULATIVE):
7. Tangible Net Worth is not less than Pound Sterling [ ] (clause
19.1.1).
8. The Ratio of Total Operating Profit to Gross Financing Costs is not
less than [ ] (clause 19.1.2).
9. The value of credit notes issued as a percentage of the Gross Purchase
Price is [ ]% (clause 19.1.5).
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35
Based on the above we confirm that the Group was in compliance with the
covenants as contained in clause [*] of the Facility Agreement [or, if not
indicate the extent of any non-compliance] as at the end of such financial
period.
For and on behalf of:
ISA WHOLESALE PLC
MANAGING DIRECTOR/ FINANCE DIRECTOR
Signatory's name in full:
------------------------
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36
SCHEDULE 3
FORM OF NOTICE OF DRAWDOWN
From: +
To: +
Dated:
Dear Sirs,
We refer to the facilities agreement dated + and made inter alia
between [+ ] (the "FACILITIES AGREEMENT").
Terms defined in the Facilities Agreement shall have the same meaning in this
notice.
We hereby request, subject to the provisions of clause 6, an advance under the
Term Loan Facility in the amount of Pound Sterling +.
Please make such advance available on the date hereof by way of a telegraphic
transfer to +.
We confirm that:
(i) the representations and warranties repeated pursuant to clause 17, 18
and 19 of the Facilities Agreement are true and correct and will be
true and correct immediately as such advance is made as if made in
relation to the facts and circumstances existing at that date; and
(ii) no Event of Default has occurred and is continuing (which has not been
remedied to the satisfaction of GMAC or expressly waived in writing by
GMAC), or would occur as a result of the making of such advance.
Yours faithfully
For and on behalf of
+
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37
SCHEDULE 4
NAMES AND ADDRESSES OF ISA COMPANIES
SWEDEN
CTS SVENSKA AB
Registered Number 556292 - 5288
Registered Address Box 23143
104 35
Stockholm
Sweden
OSCAR DELLERT AB
Registered Number 556037 - 4364
Registered Address Box 23143
104 35
Stockholm
Sweden
NORWAY
SUPPLIES TEAM NORGE AS
Registered Number 960806 263
Kakkelovnskroken 2
0901 Oslo
Norway
ISA SCANDANAVIA AS
Registered Number 968 250 043
Kakkelovnskroken 2
0901 Oslo
Norway
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38
UK
DAISYTEK - ISA LIMITED
Registered Number: 04226999
66/70 Vicar Lane
Bradford
West Yorkshire
UK
BD1 5AG
UK
ISA INTERNATIONAL PLC
Registered Number: 01925205
66/70 Vicar Lane
Bradford
West Yorkshire
UK
BD1 5AG
UK
ISA INTERNATIONAL HOLDINGS LIMITED
Registered Number: 01109744
66/70 Vicar Lane
Bradford
West Yorkshire
BD1 5AG
UK
ISA WHOLESALE PLC
Registered Number: 01431689
66/70 Vicar Lane
Bradford
West Yorkshire
BD1 5AG
UK
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39
SUPPLIES TEAM LIMITED
Registered Number: 03257705
66/70 Vicar Lane
Bradford
West Yorkshire
BD1 5AG
UK
LRB TRADING LIMITED
Registered Number: 02307833
66/70 Vicar Lane
Bradford
West Yorkshire
BD1 5AG
UK
ISA MULTIMEDIA LIMITED
Registered Number: 02794008
66/70 Vicar Lane
Bradford
West Yorkshire
BD1 5AG
UK
COMPUTANET CORPORATION LIMITED
Registered Number: 03305341
66/70 Vicar Lane
Bradford
West Yorkshire
BD1 5AG
UK
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40
OST OFFICE SUPPLIES TEAM LIMITED
Registered Number: 00634814
66/70 Vicar Lane
Bradford
West Yorkshire
BD1 5AG
UK
R.A.W. THE REAL ALTERNATIVE WHOLESALE COMPANY LIMITED
Registered Number: 01104019
66/70 Vicar Lane
Bradford
West Yorkshire
BD1 5AG
UK
SCOTLAND
HUNDLEBY COMPUTER SUPPLIES LIMITED
Registered Number: SC 62913
Custom House
Bo'ness
West Lothian
EH51 9AU
Scotland
NORTHERN IRELAND
SOURCE SUPPLIES LIMITED
Registered Number: NI24039
ISA House
Unit 4
537 Saintfield Road
Belfast
BT8 8ES
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GERMANY
PAR BETEILIGUNGS GMBH
Europadamm 2-6,
41460 Neuss
Germany
ISA DEUTSCHLAND GMBH
Europadamm 2-6,
41460 Neuss
Germany
SUPPLIES TEAM GMBH
Europdamm 2-6,
41460 Neuss
Germany
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ANNEX 1
FORECAST
See separate Schedules
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43
EXECUTED AS A DEED BY
DAISYTEK - ISA LIMITED acting by
a Director and }
----------------------------------------
a Director/Secretary* }
----------------------------------------
(Insert full names above and where indicated by * clarify whether the person is
a Director or a Secretary)
GMAC
EXECUTED AS A DEED by )
)
as Attorney for GMAC COMMERCIAL CREDIT LIMITED )
in the presence of )
)
Witness Name:
----------------------------------------
Witness Signature:
----------------------------------------
Witness Address:
----------------------------------------
----------------------------------------
----------------------------------------
Occupation:
----------------------------------------
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44