EXHIBIT 10.18
CONFORMED COPY
Bank of Scotland
55 Temple Row
Birmingham
B2 5LS
The Directors
DDI EUROPE LIMITED
Green Lane Business Park
Green Lane
Tewkesbury
Gloucestershire
GL20 8DN
(Registered No.: 3731403)
(the "Parent") Telephone: 0121 255 2580
Direct Line: 0121 255 2599
Fax: 0121 255 2572
The Directors
DDI GROUP LIMITED (Registered No.:445250), CLASSICAL CIRCUITS
LIMITED (Registered No.:1034995), DDI TECHNOLOGIES LIMITED (Registered No.:
1336602), PRETAN ENGINEERING LIMITED (Registered No.: 2407995), INTEGRATED
DESIGNS & SYSTEMS LIMITED (Registered No.: 2624416), DYNAMIC DETAILS LIMITED
(Registered No.: 3232495), ZLIN ELECTRONICS LIMITED (Registered No.: 1338479),
DDI PRECISION LIMITED (Registered No.:2900127), DDI INTERNATIONAL LIMITED
(Registered No.: 3328896), DDI SALES LIMITED (Registered No.: 3292688) and
THOMAS WALTER LIMITED (Registered No.: 1415705)
Each with its registered office at:
Green Lane Business Park
Green Lane
Tewkesbury
Gloucestershire
GL20 8DN
(each, a "Subsidiary")
15 November 2001
Dear Sirs
WORKING CAPITAL
We are pleased to offer you (each a "Borrower" and together the "Borrowers") a
working capital facility (the "Working Capital") on the terms set out in this
letter. This offer is open for acceptance by the Borrowers until the date seven
days after the date of this letter when it will lapse. If accepted, this letter
and its Schedules will form the agreement between the Borrowers and BoS for the
Working Capital. Definitions are given in Clause 16 below.
1. Conditions Precedent
--------------------
The Working Capital may not be drawn or utilised:
1.1 by the Parent to pay any amount in respect of the Term Loans (as
defined in the Facilities Agreement);
1.2 unless each Borrower has accepted this letter and any Borrower which
has not accepted will not be permitted to draw or utilise it;
- --------------------------------------------------------------------------------
1
1.3 unless an account mandate from each Borrower has been received by BoS;
and
1.4 by any Borrower that has not entered into the Third Debenture or the
2001 Debenture.
2. Working Capital
---------------
2.1 The Working Capital may be drawn as:
2.1.1 Overdraft (the "Overdraft");
or be utilised for:
2.1.2 Business Visa (the amount so utilized from time to time, the
"Business Visa Utilization");
2.1.3 Guarantees ;
2.1.4 Letters of Credit ;
2.1.5 Currency Borrowings;
on the terms and conditions set out below.
2.2 In addition to the Working Capital facilities specified above and not
taken into account in relation to calculation of the limit specified
below, BoS will also make the following payment system(s) and
facilities available to the Borrowers on the terms and conditions set
out in Schedule 1:
2.2.1 BACS facilities up to(pound)3,000,000 (the "BACS Limit");
2.2.2 CHAPS facilities with a daylight limit of(pound)500,000;
2.2.3 CHOBS facilities with a daylight limit of(pound)250,000; and/or
2.2.4 Forward Foreign Exchange Contracts facilities up to
(pound)3,000,000 (the "FFEC Limit").
2.3 Limit
-----
2.3.1 The total limit applicable to the Working Capital is
(pound)10,000,000 (the "Limit").
2.3.2 The Borrowers may operate a number of current accounts on which
the Working Capital may be drawn. BoS may refuse to pay any
cheques, orders or withdrawals on any one or more of the
Borrowers' current accounts where payment would result in the
Limit (taking into account the notional offsets referred to
below) being exceeded.
2.3.3 To ascertain compliance with that part of the Limit which is
only attributable to the Overdraft, BoS will notionally set off
(1) those of the Borrowers' current account credit balances over
which BoS considers it has a valid right of set off against (2)
the Borrowers' current account debit balances.
2.3.4 To ascertain compliance with the Limit, the total indebtedness
of the Borrowers to BoS in respect of the Working Capital shall
be calculated by adding together:
(1) the net balances on the Borrowers' current accounts
calculated in accordance with Clause 2.3.3 above;
(2) the Business Visa Utilization;
- --------------------------------------------------------------------------------
2
(3) the aggregate amount of BoS exposure under all guarantees
issued by BoS under this letter;
(4) the aggregate amount of BoS exposure under all Letters of
Credit issued by BoS under this letter; and
(5) the sterling equivalent of all currency borrowings
calculated in accordance with this letter.
2.3.5 The Borrowers must at all times provide sufficient funds to
ensure that the Limit is not exceeded. If the Limit is likely to
be exceeded, the Parent must notify BoS and advise which
cheque(s) are to be honoured in the case of competition. If the
Parent fails to do so BoS may, in its discretion, refuse to pay a
cheque or allow any other drawing or utilisation under this
letter which would have the effect of exceeding the Limit. If BoS
does pay a cheque or allows a utilisation of the Working Capital
so as to exceed the Limit, that does not mean that the Limit has
changed or that BoS will agree to pay any other cheque or meet
any other payment instruction which would have the effect of
exceeding the Limit.
2.3.6 Unless otherwise agreed with BoS, any debit balance over the
Limit and, where the Working Capital has ceased to be available
(whether on the Review Date or by earlier demand) the total debit
balance of the Working Capital, will attract interest at the BoS
unauthorised rate which will be three and a half per cent (3.50
%) per annum over the BoS base rate as that rate fluctuates.
2.3.7 From the date of this letter, each Borrower ceases to be
entitled to use any working capital facilities of the type
specified in this letter previously made available by BoS and any
existing utilisation of them shall, to the extent not repaid or
discharged, be taken into account when assessing compliance with
the Limit.
2.4 Availability
------------
2.4.1 BoS shall review the Working Capital annually (the last Business
Day before each anniversary of the date of this letter being the
"Review Date"). On the Review Date, the Working Capital will
cease to be available unless BoS has agreed in writing to its
renewal or extension. In ascertaining whether or not the Working
Capital will be renewed or extended, BoS will require the
Borrowers to deliver the financial information required by clause
11 by way of financial information prior to that decision being
made.
2.4.2 In accordance with normal banking practice, the Overdraft will
be payable on demand.
2.4.3 In some circumstances, BoS may demand payment before the Review
Date. This may happen if BoS considers that:
2.4.3.1 any of the terms or conditions of this letter have been
breached; or
2.4.3.2 the financial condition of any Borrower or any guarantor
of any Borrower has altered in any material way; or
2.4.3.3 the Working Capital was agreed on the basis of incorrect
or incomplete information from the Borrowers; or
2.4.3.4 the basis upon which the Working Capital was agreed by
BoS has altered in any material way.
- --------------------------------------------------------------------------------
3
2.4.4 If repayment of the Overdraft is demanded, any other utilisation
will cease to be available (save in respect of payments already
instructed by a Borrower in respect of BACS, CHAPS or CHOBS and
not yet debited to the relevant Borrower's account) and BoS will
be entitled to request the Borrowers to lodge a sufficient amount
as security for all other outstanding liabilities under this
letter (whether actual or contingent) and the Borrowers shall
immediately comply with that request. Any determination by BoS of
any amount of principal, interest, commission or charges or an
applicable interest rate shall, in the absence of manifest error,
be conclusive and binding on the Borrowers.
3. Overdraft
---------
3.1 The rate of interest applicable to the Overdraft shall be the annual
rate which is the sum of (1) one and a half per cent. (1.5%) and (2)
BoS base rate as that rate fluctuates. Interest will be calculated by
BoS on a day to day basis on the cleared daily debit balance of the
amount drawn down and will be debited to the relevant Borrower's
current accounts monthly in arrears on the Standard Application Dates.
A notice of the accrued interest will be issued each month and
interest applied 14 days after the date of that notice.
3.2 Interest at one and a half per cent. (1.5%) per annum over BoS base
rate as that rate fluctuates will accrue on the cleared credit
balances on any current accounts held with BoS of each Borrower in
respect of which BoS considers it has a valid right of set off (the
"Credit Balances") calculated on a daily basis and set off monthly in
arrears on the Standard Application Dates against the interest due on
the Working Capital, provided that interest on the Credit Balances
will be calculated as follows:
3.2.1 Where the aggregate amount of the Credit Balances is less than
or equal to the aggregate amount of the debit balances on any
current account held with BoS of each Borrower (the "Debit
Balances"), interest will be calculated on the full amount of the
Credit Balances; and
3.2.2 where the aggregate amount of the Credit Balances is greater
than the aggregate amount of the Debit Balances, interest will be
calculated on an amount equal to the aggregate amount of the
Debit Balances.
4. Business Visa
-------------
Facilities may be drawn by the use of BoS Business Visa Cards subject to
the published terms and conditions and charges applicable to BoS Business
Visa Cards from time to time.
5. Guarantees
----------
5.1 On request by a Borrower, BoS will issue guarantees or performance
bonds on its behalf. Before BoS issues a guarantee or bond on behalf
of a Borrower:
5.1.1 BoS must have approved the terms of the guarantee or bond; and
5.1.2 that Borrower shall have executed and delivered to BoS a counter
indemnity in a form acceptable to BoS agreeing to indemnify BoS
against any claim under the guarantee or bond and authorising BoS
to debit the amount of a claim to any of the Borrowers' accounts.
5.2 A charge of one and a half per cent (1.5%) of BoS outstanding
liabilities (whether actual or contingent) from time to time under the
guarantees shall be payable by the Borrowers in respect of guarantees
or performance bonds issued by BoS on its behalf. This charge will be
payable quarterly in advance on such dates as may be intimated by BoS.
- --------------------------------------------------------------------------------
4
6. Letters of Credit
-----------------
6.1 On receipt of an acceptable written application, BoS will issue
Letters of Credit (up to in aggregate the Letters of Credit Limit) on
behalf of a Borrower under the terms of the Uniform Customs and
Practice for Documentary Credits (as revised from time to time) and
otherwise on BoS standard terms and conditions (which will be set out
in the BoS application for the documentary credit, a copy of which
will be provided to the relevant Borrower if so requested).
6.2 Charges will be payable for the issue of Letters of Credit in
accordance with the tariffs applicable to those services issued to the
Borrowers from time to time.
7. Currency Borrowings
-------------------
7.1 A Borrower may borrow such part of the Working Capital in any optional
currency (which means, for the purpose of this Letter, any currency
which is freely transferable and convertible into Sterling and is
approved by BoS) on giving BoS two days prior written notice.
7.2 Currency borrowings shall be repayable on demand.
7.3 The Borrowers shall pay interest in regard to currency borrowings
drawn down at a rate equal to the cost of funds incurred by BoS for
purchasing such currencies plus one and a half per cent (1.5%) per
annum, such interest payable in arrears. The relevant interest rate
will be set by BoS on a weekly basis and calculated and accrued daily.
Interest will be debited to the relevant Borrower's currency current
account with BoS half yearly in February and August in each year or on
such other dates in each year as BoS shall notify to the Borrowers.
7.4 All sums payable under this letter shall be paid in the currency in
which they are due and owing.
7.5 If the Borrowers fail to pay any amount due under the currency
borrowings on demand BoS may at any time purchase so much of an
optional currency as BoS considers necessary or desirable to cover the
currency borrowings at the then prevailing BoS spot rate of exchange
and the Borrowers shall indemnify BoS against the full Sterling price
(including all costs, charges and expenses) paid by it.
7.6 Whenever the "sterling equivalent" of any currency borrowings require
to be calculated, it shall be calculated at the BoS spot rate of
exchange for such currency on the applicable day at such time as BoS
may select.
8. Termination
-----------
Each of the utilisations above including the facilities made available
under Clause 2.2 shall immediately cease to be available if BoS makes a
demand for payment under Clauses 2.4.2 or 7.2 or gives notice to the Parent
that they are withdrawn.
9. Other Borrowers
---------------
The Working Capital shall not be available to any other person (whether a
subsidiary of the Parent or not) unless with the express written agreement
of BoS and after having provided BoS with whatever security it requires in
respect of that person and its assets.
10. Security
--------
The Working Capital will be secured by the Security Documents and any other
security granted by any Group Company in favour of BoS from time to time.
- --------------------------------------------------------------------------------
5
11. Financial Information
---------------------
The Borrowers will supply the financial information specified in the
Facilities Agreement which will also be required by BoS prior to its
agreeing to any renewal of the Working Capital.
12. Obligations
-----------
The obligations of each Borrower in relation to the Working Capital are
joint and several.
13. Notices
-------
All notices or communications to or between the parties will be in writing
and:
13.1 will be by first class prepaid post or by telefax transmission,
authenticated to the satisfaction of BoS and if by letter, receipt
will be deemed forty-eight hours after posting (unless hand delivered
and then at time of delivery) and if by fax, when sent (provided a
transmission report is received);
13.2 if given to BoS, it will be given at the address at the head of this
letter or at any other address in the UK BoS may designate at any time
by notice to the Parent;
13.3 if given to the Borrowers it will be deemed to be duly given if given
only to the Parent at the above address or at any other UK address
that it designates by notice to BoS;
13.4 BoS may rely upon any communication by telephone or fax or purporting
to be on behalf of any Borrower, by anyone notified to BoS as being
authorised, without enquiry as to authority or identity. The Borrowers
agree to indemnify BoS against any liability incurred or sustained by
BoS as a result; and
13.5 in order to prove that a notice or demand has been made, BoS need only
establish that the notice or demand was properly addressed and posted
or transmitted.
14. Fees and Expenses
-----------------
14.1 The Borrowers will pay to BoS an arrangement fee of(pound)15,000
payable on acceptance of this letter.
14.2 The Borrowers will meet or reimburse to BoS (on a full indemnity
basis) all reasonable legal, accountancy, valuation, due diligence and
other fees, costs and expenses or tax charged to or incurred by BoS
(which shall include any fees and expenses of external solicitors
engaged by BoS in relation to the Security Documents) in connection
with this letter and the Security Documents (including the enforcement
or preservation of BoS rights).
15. Third Party Rights
------------------
A person who is not party to this letter shall have no right under the
Contracts (Rights of Third Parties) Act 1999 to enforce any term of this
letter. This Clause does not affect any right or remedy of any person which
exists or is available otherwise than pursuant to that Act.
16. Accession to Facilities Agreement
---------------------------------
As Agent of the Senior Lenders, BoS agrees that, to the extent that any
Subsidiary (as defined above) has not previously acceded to the Facilities
Agreement so as to become a Borrower thereunder, by the execution of this
letter each Subsidiary that has not so acceded shall so accede and each
such Subsidiary agrees to observe and be bound by the terms and provisions
of the Facilities Agreement insofar as they apply to it as if it were an
original party to the Facilities Agreement as a Borrower (as defined
therein).
- --------------------------------------------------------------------------------
6
17. Interpretation and Definitions
------------------------------
The definitions given in the Facilities Agreement and in Schedule 2 of this
letter shall apply in this letter save where the context requires
otherwise.
18. Law
---
This letter will be governed by and construed according to English law and
each of the Borrowers submits to the jurisdiction of the English Courts.
Yours faithfully
For and on behalf of
THE GOVERNOR AND COMPANY OF
THE BANK OF SCOTLAND
Agreed and accepted on behalf of Agreed and accepted on behalf of
DDI EUROPE LIMITED DDI GROUP LIMITED
acting by acting by
M Malone Director M Malone Director
M Glanfield Director/Secretary P Fowler Director/Secretary
Date: 15 November 2001 Date: 15 November 2001
Agreed and accepted on behalf of Agreed and accepted on behalf of
CLASSICAL CIRCUITS LIMITED DDI TECHNOLOGIES LIMITED
acting by acting by
M Malone Director M Malone Director
P Fowler Director/Secretary P Fowler Director/Secretary
Date: 15 November 2001 Date: 15 November 2001
- --------------------------------------------------------------------------------
7
Agreed and accepted on behalf of Agreed and accepted on behalf of
PRETAN ENGINEERING LIMITED INTEGRATED DESIGNS & SYSTEMS
LIMITED
acting by acting by
M Malone Director M Malone Director
P Fowler Director/Secretary P Fowler Director/Secretary
Date: 15 November 2001 Date: 15 November 2001
Agreed and accepted on behalf of Agreed and accepted on behalf of
DYNAMIC DETAILS LIMITED ZLIN ELECTRONICS LIMITED
acting by acting by
M Malone Director M Malone Director
P Fowler Director/Secretary P Fowler Director/Secretary
Date: 15 November 2001 Date: 15 November 2001
Agreed and accepted on behalf of Agreed and accepted on behalf of
DDI PRECISION LIMITED DDI INTERNATIONAL LIMITED
acting by acting by
M Malone Director M Malone Director
P Fowler Director/Secretary P Fowler Director/Secretary
Date: 15 November 2001 Date: 15 November 2001
Agreed and accepted on behalf of Agreed and accepted on behalf of
DDI SALES LIMITED THOMAS WALTER LIMITED
acting by acting by
M Malone Director M Malone Director
P Fowler Director/Secretary M Glanfield Director/Secretary
Date: 15 November 2001 Date: 15 November 2001
IMPORTANT NOTICE: As with any legally binding agreement, we recommend that you
consult your solicitor or other independent legal adviser before accepting this
letter.
- --------------------------------------------------------------------------------
8
This is the Schedule 1 referred to in the preceding facility letter between BoS
and, amongst others, DDI EUROPE LIMITED dated 15 November, 2001.
SCHEDULE 1
SETTLEMENT LIMITS
1. BACS Facility
-------------
1.1 BACS Limit (pound)3,000,000.
1.2 Purpose
-------
TheBACS facility may only be used by the Borrowers to make fund
transfers utilising the Bankers Automated Clearing System, subject to
sufficient funds being made available by the Borrowers to cover the
BACS payments by close of business on the day on which each of those
payments is debited to their relevant accounts without exceeding the
Limit specified in 2.2.1.
1.3 Terms and Conditions
--------------------
The BACS facility shall be made available to the Borrowers subject to:
1.3.1 the terms and conditions of the Bankers Automated Clearing
System operated by BACS Limited; and
1.3.2 its rules of operation as agreed between BoS and the Borrowers
from time to time.
1.4 Throughout the duration of the Working Capital, BoS shall be entitled
to vary both the limit and the terms and conditions referred to above
by notice to the Borrowers.
2. CHAPS Facility
--------------
2.1 CHAPS daylight limit (pound)500,000.
2.2 Purpose
-------
TheCHAPS facility may only be used by the Borrowers to make fund
transfers utilising the automated money transmission systems available
from BoS, subject to sufficient funds being made available by the
Borrowers to cover each of those CHAPS payments by close of business
on the same day without exceeding the Limit specified in 2.2.1.
2.3 Terms and Conditions
--------------------
TheCHAPS facility shall be made available to the Borrowers subject to
the standard terms and conditions of the Clearing House Automated
Payments System as advised by BoS.
2.4 Throughout the duration of the Working Capital, BoS shall be entitled
to vary both the limit and the terms and conditions referred to above
by notice to the Borrowers.
3. CHOBS Facility
--------------
3.1 CHOBS daylight limit (pound)250,000.
- --------------------------------------------------------------------------------
9
3.2 Purpose
-------
The CHOBS facility may only be used by the Borrowers to make fund
transfers utilising the BoS Corporate Home and Office Banking System,
subject to sufficient funds being made available by the Borrowers to
cover each of those CHOBS payments by close of business on the same
day without exceeding the Limit specified in 2.2.1.
3.3 Terms and Conditions
--------------------
The CHOBS facility shall be made available to the Borrowers subject
to:
3.3.1 the terms of and conditions of the BoS Corporate Home and Office
Banking System; and
3.3.2 the rules of operation thereof as agreed between BoS and the
Borrowers from time to time.
3.4 Throughout the duration of the Working Capital, BoS shall be entitled
to vary both the limit and the terms and conditions referred to above
by notice to the Borrowers.
4. Forward Foreign Exchange Contracts Facility
-------------------------------------------
4.1 FFEC Limit: (pound)3,000,000.
4.2 Purpose
-------
A Borrower may enter into Forward Foreign Exchange Contracts (up to in
aggregate the FFEC Limit) with BoS for the purchase or sale of any
freely convertible currency and with a maturity period of up to twelve
months.
4.3 Terms and Conditions
--------------------
The Forward Foreign Exchange Contracts facility shall be made
----------------------------------
available to the Borrowers subject to the following:
4.3.1 for the purpose of calculating utilisations of this facility,
BoS will assess its risk at 10% of the face value of each
contract for a duration of up to 12 months and 20% in respect of
contracts for more than 12 months unless BoS advises the relevant
Borrower otherwise.;
4.3.2 the Borrowers must ensure that each of them make sufficient
funds (either in Sterling or in the appropriate foreign currency)
available to meet their obligations under each of the Forward
Foreign Exchange Contracts as and when they fall due. In the
event that the Borrowers fail to do so, the Borrowers shall be
liable to BoS in respect of the difference between (1) the
Sterling equivalent of the amount the Borrowers were due to pay
BoS on completion of the relevant Forward Foreign Exchange
Contract and (2) (if less) the Sterling equivalent of the amount
which BoS would have received by completing that contract at the
prevailing spot rate of exchange for the relevant currency on the
date of completion of the contract;
4.3.3 whenever the sterling equivalent of any currency amounts require
to be calculated, it shall be calculated at the BoS spot rate of
exchange for such currency on the applicable day at such time as
BoS may select; and
4.3.4 charges will be payable for the issue of Forward Foreign
Exchange Contracts in accordance with the tariffs applicable to
those services issued to the Borrowers from time to time.
- --------------------------------------------------------------------------------
10
4.4 Throughout the duration of the Working Capital, BoS shall be entitled
to vary both the limit and the terms and conditions referred to above
by notice to the Borrowers.
- --------------------------------------------------------------------------------
11
SCHEDULE 2
DEFINITIONS
"2001 Debenture" has the meaning given to it in the Amendment and Restatement
Deed to be entered into, inter alios, between BoS and the Parent on or after the
date hereof.
"BoS" means The Governor and Company of the Bank of Scotland and its successors,
assignees and transferees.
"Facilities Agreement" means the facilities agreement entered into between the
Parent and BoS on 27 May 1999 (as modified, amended, supplemented or restated
from time to time).
"Financial Statements" means the audited annual profit and loss account and
balance sheet of the relevant company for each of its financial years
(consolidated for each financial year during which that company has a
Subsidiary) together with related directors' and auditors' reports.
"Group" means the Borrowers and each of their Subsidiaries which is not dormant
and "Group Company" is construed accordingly.
"Relevant Margin" has the meaning given to it in the Facilities Agreement.
"Schedules" means the Schedules attached to this letter.
"Security Documents" has the meaning given to it in the Facilities Agreement.
"Standard Application Dates" means the last business day in each month or such
other dates as BoS may advise the Borrowers from time to time.
"Subsidiary" and "holding company" shall have the meanings given to them in
section 736 of the Companies Act 1985 (including any Subsidiary acquired after
the date of this Letter) and "Subsidiaries" shall mean all or any of them, as
appropriate.
"Third Debenture" has the meaning given to it in the Facilities Agreement.
Any references to an Act of Parliament is to the Act as amended, substituted,
modified or re-enacted from time to time.
A reference to "including" shall not be construed as limiting the generality of
the words preceding it.
References to this letter and to any provisions of it or to any other document
referred to in this letter shall be construed as references to it in force for
the time being and as amended, varied, supplemented, restated, substituted or
novated from time to time.
References to statutes, statutory provisions and other legislation shall include
all amendments, modifications and re-enactments for the time being in force.
Words importing the singular are to include the plural and vice versa.
References to a person are to be construed to include references to a
corporation, firm, company, partnership, joint venture, unincorporated body of
persons, individual or any state or any agency of a state, whether or not a
separate legal entity.
References to any person are to be construed to include that person's assignees
or transferees or successors in title, whether direct or indirect.
Clause headings are for ease of reference only and are not to affect the
interpretation of this letter.
- --------------------------------------------------------------------------------
12