EXHIBIT 10.11
LLOYDS TSB BUSINESS LOAN AGREEMENT
We LLOYDS TSB BANK PLC (the "Bank") of PO Box 18436, 39 Threadneedle Street,
EC2R 8PT offer you XCEL CORPORATION LIMITED (company registered number (969006)
of Brunswick Road, Cobbs Wood, Ashford, Kent TN23 1EB a loan on the following
terms and conditions
SPECIFIC TERMS AND CONDITIONS
THE LOAN
The maximum amount of the loan (excluding any amounts of interest that will be
added to the loan) shall be (pound)500,000. This amount is to be used for
working capital purposes. The loan shall be borrowed in one amount on or before
31st August 2005 or such later date as the Bank may agree. You will not be
entitled to borrow any amount that has not been borrowed by the agreed date. The
proceeds of the loan will be credited to your current account no. 00450767.
Unless the Bank agrees otherwise, the loan may not be borrowed until all the
PRECONDITIONS set out below have been satisfied
PRECONDITIONS
Unless received by the Bank prior to the date on which this agreement is signed
by the Bank, the Bank is to receive in form and substance acceptable to the Bank
the security and other documents (if any) listed in the Security Schedule lo
this agreement and the documents, evidence or other requirements of the
preconditions (if any) set out in the Preconditions Schedule to this agreement.
Any security received should be accompanied by such evidence as the Bank may
reasonably require to confirm the value of such security and to confirm that
such security is fully effective.
FEES AND COSTS
You shall pay any costs and expenses incurred by the Bank in assessing the loan,
in the preparation of this agreement and of any amendment, waiver or consent
letter at any time entered into, in the preparation, valuation, taking or
release of any guarantee or t security at any time given in connection with this
agreement and in connection with the revaluation of any such security from time
to time. In particular the following charges shall be paid by you on demand by
the Bunk. These charges are to be paid even if the loan is not borrowed.
Security Costs (pound)530 (estimated)
Estimated charges have been calculated on the basis of the Bank's experience
with similar transactions. The actual amount charged to you may be more or less
than the estimated figure.
An arrangement fee of (pound)10,000 is also payable. This fee shall be paid to
the Bank by you on the date the loan is borrowed.
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As mentioned in clauses 3 & 6 of the GENERAL TERMS AND CONDITIONS, other costs
may arise in connection with the loan or in connection with the repayment of the
loan.
INTEREST
The rate of interest payable on the loan will be Base Rate plus 2.5% per annum,
currently 7.25% per annum in total.
Interest shall be added to the loan 1 month after the date of borrowing, at
monthly intervals thereafter and on the date of final repayment of the loan.
Interest is calculated on a daily basis on the amount of the loan from time to
time outstanding. Interest for any particular period is calculated on the number
of days in that period and a year of 365 days.
If you fail to pay any amount payable under this agreement when due the rate of
interest may be increased in accordance with clause 6.3 of the GENERAL TERMS AND
CONDITIONS.
REPAYMENT
The loan is repayable in 36 consecutive monthly installments representing
principal and interest commencing on the date which is 1 month after the date
the loan is borrowed. The amount of these instalments will vary with changes in
the interest rate and the number of days in the charging period.
EARLY REPAYMENT
The loan may be repaid early in accordance with clause 2 of the GENERAL TERMS
AND CONDITIONS.
FINANCIAL COVENANTS
For as long as any moneys are owing to the Bank under this agreement or the Bank
is under any obligation under this agreement you shall comply with the financial
covenants set out below. These covenants will be tested against each financial
statement.
Your consolidated profit before taxation and interest paid and payable is not at
any time to be less than 500% of the consolidated interest paid and payable
(whether to the Bank or to any other person) for the period covered by the
accounts.
Your consolidated profit before taxation, depreciation, amortisation of goodwill
and of other intangibles and interest paid and payable (but after dividends paid
and payable) is not at any time to be less than 300% of the aggregate of the
consolidated principal repayments and the consolidated interest paid and payable
(whether to the Bank or to any other person) for the period covered by the
accounts.
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PERIOD OF OFFER
This agreement shall come into effect only if the Bank receives from you and
finds in order a signed copy of this agreement on or before 31st July 2005.
GENERAL TERMS CONDITIONS
USEFUL LOAN PROCEEDS
1.1 Unless the loan is only for working capital or general
business purposes, the amount borrowed shall be held in trust
for the Bank until used for the purpose stated in the SPECIFIC
TERMS AND CONDITIONS.
REPAYMENT
2.1 You will repay the loan on the dates and in the manner set out
in the REPAYMENT section of the SPECIFIC TERMS AND CONDITIONS.
2.2 You may at any time after giving at least 5 business days'
notice to the Bank make early repayment of all or any part of
the loan together (in either case) with interest accrued to
the date of payment. Each early repayment of part of the loan
must be of at least (pound)5,000 (excluding accrued interest)
and no amount repaid early may be borrowed again. If the loan
is to be repaid in more than one amount, the Bank will decide
how to apply the early repayment, either (a) by reducing
subsequent repayments proportionately or (b) by applying the
early repayment to then latest scheduled repayment instalments
so as to reduce the terms of the loan.
INCREASED COSTS AND CHANGES IN CIRCUMSTANCES
3.1 In running its business the Bank and any holding company of
the Bank each has to comply with certain regulations and
requirements laid down by regulatory and other official
organisations or bodies as well as the law generally. The rate
of interest quoted in the SPECIFIC TERMS AND CONDITIONS has
been set in the light of how this affects the cost (to the
Bank and any such holding company) of the Bank funding,
agreeing to make and of making the loan available at the time
the Bank signed this agreement. If, as a result of any new
laws, regulations or requirements or any changes in existing
ones, such cost is increased, the Bank may increase the rate
of interest charged on the loan to compensate for that extra
cost.
3.2 If at any tine the currency in which the loan is denominated
is due to be or has been converted into the euro or any other
currency as a result of a change in law or by agreement
between the Bank and you, then:
(a) the Bank may in its sole discretion determine and
shall notify you in writing of the currency or
currency unit in which amounts payable under this
agreement shall be paid. After the expiry of 7 days
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from the date of such notice all payments falling due
under this agreement shall be made in such currency
or currency unit, and
(b) (i) the Bank may by giving you not less than
21 days' written notice change any of the
terms applying to the loan but only to the
extent that the Bank reasonably considers
any such change necessary to take account of
differences in market practice or to
compensate for increases in costs to the
Bank or to any holding company of the Bank
arising from or related to such conversion
or arising from or related to the
introduction of or to the extension of
monetary union within the European Union.
Any such change shall amend the terms of
this agreement upon expiry of such period of
notice, and
(ii) at any time within 21 days of receipt of the
Bank's notice you may make early repayment
of all (but not part) of the loan. Such
repayment shall be in accordance with
clauses 2 and 3.2(a) above.
REPRESENTATIONS
4.1 You represent that:
(a) all action required or necessary to authorise the
execution of this agreement and the performance of
your obligations under and in connection with this
agreement has been taken and neither the execution of
this agreement nor the performance of your
obligations will constitute or result in any breach
of any agreement, law, requirement or regulation,
(b) no material litigation, administrative or judicial
proceedings are presently pending or threatened
against you or any of your subsidiaries,
(c) there has been no material adverse change in your
financial condition or that of any of your
subsidiaries since the date of the financial
statement received by the Bank prior to the date on
which this agreement is signed by the Bank, and
(d) no Event of Default (as described in clause (6.1
below) has occurred and is continuing and no
circumstance has occurred which, with the giving of
notice or the passing of time, could become or cause
an Event of Default.
4.2 You shall be deemed to repeat the above representations on
each day (with reference to the facts and circumstances then
existing) prior to borrowing the loan and thereafter until all
amounts payable to the Bank under this agreement have been
paid.
UNDERTAKINGS
Prior to borrowing the loan and thereafter until all amounts payable to the Bank
under this agreement have been paid:
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5.1 neither you nor any of your subsidiaries shall:
(a) without the Bank's consent create or allow to be in
place any mortgage, charge or other security interest
or encumbrance over the whole or any part of your or
their business or any of the property, income or
other assets of your or their business or enter into
any transaction which in the Bank's opinion has a
similar effect, or factor or assign any debits,
(b) part with, sell, transfer, lease or otherwise dispose
of (or attempt or agree to do any such thing) the
whole or any material part or your or any of your
Subsidiary's undertaking, property, revenue or assets
(either by a single transaction or a number of
transactions whether related or not) other than for
full value on an arm's length basis (save that no
such parting with, sale, transfer, lease or other
disposal may be made or entered into (i) if it would
breach the terms of any security document given lo
the Bank, or (ii) in respect of any undertaking,
property, revenue or asset over which the Bank then
has a fixed charge or fixed security interest), or
(c) change the nature or your or their business as it is
now conducted,
5.2 you shall promptly provide the Bank with copies of any
financial information that the Bank may from time to time
reasonably request, including but not limited to:
(a) copies of your financial statement within 270 days of
the end of each financial year, and
(b) copies of your periodic management accounts at such
intervals as the Bank may require in a form
acceptable to the Bank within 45 days of the end of
the period to which they relate. The Bank may at its
option require such management accounts to
incorporate an age-analysis of debtors, a schedule of
all tenancies (if any) of any properly held by the
Bank as security at the date of the accounts, and/or
a breakdown of stock in trade,
5.3 you and each or your subsidiaries shall maintain with
reputable underwriters or insurance companies adequate
insurance on and over your respective business and assets,
such insurance to be against such risks and to the extent
usual for persons carrying on a business such as that carried
on by you or, as the case may be, by the relevant subsidiary
and, from time to time upon the request of the Bank, you shall
furnish the Bank with evidence of such insurance,
5.4 in respect of any pension policy or life policy held by or
charged to the Bunk, you agree to ensure that the premiums are
paid when due and, upon request from the Bank at any time,
promptly to provide the Bank with evidence that payment has
been made. In the case of any such pension policy you also
agree:
(a) upon request by the Bank at any time, promptly to
provide the Bank with evidence that the commutation
proceeds will be paid to the Bank,
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(b) except to the extent that you have and apply other
funds in repayment of the loan, to take the maximum
benefit of the pension policy by way of commutation
and its apply that benefit in repayment of the loan
when due, and
(e) not to agree to any arrangement that would reduce the
commutation amount of the pension policy nor arrange
for any transfer to be made from the pension policy,
5.5 if the purpose of the loan (as stated in the SPECIFIC TERMS
AND CONDITIONS) involves building works or works enabling
building works affecting any properly, you agree that promptly
upon request by the Blank at any time you shall:
(a) provide the Bank with evidence in a form acceptable
to the Bank that you have obtained all necessary
permissions and approvals for the proposed works and
have entered into (in a form of contract acceptable
to the Bank) all contracts necessary for the due
completion of the proposed works. You will at all
times ensure that any other party to any such
contract (whether or not such contract has been
provided to the Bank) complies with the contract in
accordance with its terms. You shall not, without the
consent of the Bank, agree to any modification in the
terms of any contract which has been provided to the
Bank, or terminate any such contract or stop work on
any proposed works prior to completion of the works,
and
(b) provide to the Bank confirmations (each in a form and
from a party acceptable to the Bank) of all
expenditure on the works. The Bank may refuse to
permit the borrowing of the loan if the amount to be
borrowed under this agreement in respect of the works
exceeds the total expenditure detailed in the
confirmations, and
5.6 you agree to reduce the loan (in accordance with clause 2
above) or to provide the Bank with additional security
acceptable to the Bank if the ratio of the loan to the value
of the security given to the Bank is at any time higher than
that applicable on the date this agreement was signed by the
Bank and agree to provide such evidence as the Bank may from
time to time require to confirm the value of such security and
to confirm that the security remains fully effective. If the
loan is to be repaid in more than one amount, the Bank will
decide how to apply any early repayment, either (a) by
reducing subsequent repayments proportionately or (b) by
applying the early repayment to the then latest scheduled
repayment instalment(s) so as to reduce the term or the loan.
DEFAULT AND TERMINATION
6.1 The events listed in (a) to (j) below are called "EVENTS OF
DEFAULT". As soon as an Event of Default happens or at any
time thereafter, by giving notice to you, the Bank may cancel
any obligations it has to lend money to you and may also make
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the loan become repayable on demand. When the loan is
repayable on demand, you must repay the loan to the Bank
together with all interest which has accrued on the loan and
any other amounts owing under this agreement as soon as the
Bank requests you to pay these amounts. The Bank may do this
at the time the loan becomes repayable on demand or at any
later time.
EVENTS OF DEFAULT
(a) you fail to pay when due any indebtedness owed by you
to the Bank or fail to comply with any other
obligation or undertaking to the Bank,
(b) you fail to pay when due any indebtedness owed by you
to another creditor or any of your creditors changes
(or obtains the right to change) the original date on
which that indebtedness is or was due to be paid to
an earlier date us a result of your failure to comply
with obligations in connection with that
indebtedness,
(c) any representation or statement made by you to the
Bank, whether or not in connection with this
agreement, proves in have been incorrect or
inaccurate when made or deemed made,
(d) any person with a legal claim takes possession or a
receiver, administrator, custodian, trustee,
liquidator or similar official is appointed of the
whole or any part of your business or of any of the
assets of your business or an administration
application is presented or made for the making of an
administration order or a notice of intention to
appoint an administrator is issued by you or your
directors or by the holder of a qualifying floating
charge or notice of appointment of an administrator
is filed by any person with the court or a judgment,
decree or diligence is made or granted against you,
(e) proceedings are commenced or a petition is presented
or an order is made or a resolution is passed for
your winding up or you are or become insolvent or you
stop or threaten to stop payment of your debts
generally or you are deemed by law unable to pay your
debts or you or your directors convene or become
obliged to convene a meeting of shareholders or
creditors with a view to winding up or an application
is made in connection with a moratorium or a proposal
to creditors for a voluntary arrangement by you or
you take any action (including entering negotiations)
with a view to readjustment, rescheduling,
forgiveness or deferral of any part of your
indebtedness,
(f) you cease or threaten to cease to carry on your
business in the normal course or fail to maintain or
breach any franchise, licence or right necessary to
conduct your business or breach any legislation
relating to your business, including but not limited
to any applicable environmental protection laws,
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(g) the persons who now control you cease to have such
control,
(h) any guarantee, other security or other document or
arrangement relied upon by the Bank in connection
with the loan ceases to be continuing or ceases to
remain fully effective or notice of discontinuance is
received by the Bank or if the Bank reasonably
believes that the effectiveness of any such document
or arrangement . is in doubt or if any provision of
such document or arrangement is not complied with for
any reason or any favourable tax treatment afforded
to any pension policy or to any life policy held by
or charged to the Bank ceases to be available,
(i) any of the above events occur in relation to any
parent or subsidiary or any guarantor of or other
provider of security for the loan or, in the case of
any individual that provides any guarantee or other
security for the loan, a petition is presented for a
bankruptcy or sequestration order against any such
individual or any such individual dies or becomes
incapable of managing his or her affairs by reason of
mental disorder, or any action is taken in any
jurisdiction which is similar or analogous to any of
the above events in respect of you or any of the
above mentioned panties, or
(j) you fail or have failed to disclose to the Bank any
important information that is relevant to the loan or
the security required or you undertake or are subject
to any action or occurrence which the Bank reasonably
believes could place at risk the payment of any
amount owing to the Bank.
6.2 If any Event of Default happens or anything happens that might
lead to an Event of Default, you shall inform the Bank
immediately.
6.3 If any amount payable in respect of this agreement is not paid
when due (including any amount payable under this clause 6,
you shall pay interest on that amount at the default rate from
the date on which the amount was due until it is paid to the
Bank. Interest, if unpaid, shall be added to the amount in
default at monthly intervals. The default rate shall be the
rate determined by the Bank to be 3% per annum higher than the
rate of interest specified in the SPECIFIC TERMS AND
CONDITIONS that would normally apply.
6.4 You shall indemnify the Bank against any costs incurred or
losses reasonably sustained by the Bank as the result of any
Event of Default.
6.5 You shall also pay any costs and expenses reasonably incurred
by the Bank in enforcing or perfecting any security for the
loan and in enforcing or preserving its rights under this
agreement.
OTHER
7.1 This agreement shall be construed mind have effect in
accordance with English law and is subject to the jurisdiction
of the English Courts. The Bank may take action against you in
any other jurisdiction where proceedings may be lawfully
commenced.
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7.2 No delay or omission by the Bank in exercising any of its
rights hereunder shall operate or be construed as a waiver,
nor shall any single or partial exercise of any such right
prevent any other or further exercise thereof or the exercise
of any other right.
7.3 If the loan is to be borrowed, or if any payment becomes due
from you, on a day which is not a business day then the amount
concerned will be borrowed or, as the case may be, will become
payable on the next business day.
7.4 The Bank may use any credit balance there may be on any of
your accounts towards payment or any amounts owed by you to
the Bank under this agreement without notifying you
beforehand, whether such credit balances are in sterling or
any other currency or are deposited for fixed or determinable
periods.
7.5 Unless otherwise agreed by the Bank you shall at all times
during the term of this agreement keep a current account (or
other account for the purposes of meeting all payments due to
the Bank under and in connection with this agreement) with the
Bank and all amounts from time to time due lo the Bank under
this agreement may be debited to that account. You shall keep
enough money in the account (or ensure that there are
sufficient funds available within any agreed overdraft.) to
meet all such payments as they become due.
7.6 Any security given to the Bank (whether given before the date
on which this agreement is signed by the Bank or at any time
in the future and whether or not. specified in this agreement)
shall, unless otherwise agreed by the Bank. be security not
only for the loan but also for all other moneys and
liabilities whether certain or contingent at any time due,
owing or incurred by you to the Bunk.
7.7 Members of the Lloyds TSB group from time to time may transfer
information regarding you among themselves, to their auditors
for the time being and to any potential assignee or transferee
of the loan. Information may not be transferred further or
otherwise (including for marketing purposes) without prior
written consent unless such information is in the public
domain or unless the Bunk is required by law so to do.
7.8 This agreement and all communications from you to the Bank in
connection with this agreement and the loan (all of which are
to be sent in writing to the Bank at the address given at the
heading of this agreement or to such other address as the Bank
may from time to time advise) shall be signed on your behalf
either in accordance with the mandate given by you to the
Bank, or if requested by the Bank, in accordance with a
specific resolution of your Board of Directors. All
communications (whether given by you or by the Bank) relating
to loan and any change to this agreement shall he in English.
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7.9 This agreement is for the benefit of the contracting parties
only and shall not confer any benefit on or be enforceable by
a third party.
7.10 Any change to this agreement that is not permitted in this
agreement must be made in writing and be signed by the
contracting parties.
7.12 The SPECIFIC TERMS AND CONDITIONS and GENERAL TERMS AND
CONDITIONS shall be read and construed as one agreement.
7.12 References in this agreement to:
THE BANK includes its successors and assigns.
BANK RATE means the Bank's Base Rate from time to time. This
rate will be displayed in branches of the Bank and may be
varied (either up or down) by the Bunk at any time.
a BUSINESS DAY means a day other than a Saturday or a Sunday
on which banks are open for normal business in England and
Wales.
CONTROL shall have the meaning given to it in Section 840 of
the Income and Corporation Taxes Act 1988 or any amendment to
or restatement of that Act for the time being in force.
FINANCIAL STATEMENT means any particular time the latest
consolidated balance sheet and profit and loss account (being
audited or signed by an independent accountant if so required
by law or by the Bank at any time and being prepared on the
some basis, containing a similar level of detail and in
accordance with the same accounting principles as, and for an
accounting reference period consistent with, the latest such
balance sheet and profit and loss account received by the Bank
prior to the date on which this agreement is signed by the
Bank) of you and your subsidiaries together with the notes to
both.
LOAN means, at any particular time, the total amount which may
he borrowed by you under this agreement or, it appropriate,
the total amount which has been debited to the loan account
and remains outstanding at such time. The loan may, at any
time, include any interest, costs and charges added to the
loon account in accordance with this agreement.
MONTH means a calendar month.
PARENT and SUBSIDIARY shall have respectively the meaning
given to parent undertaking and subsidiary undertaking in
Section 258 of the Companies Act l985 or any amendment to or
restatement of that Act for the time being in force. During
any period in which you do not have a SUBSIDIARY, all
references to your subsidiaries shall be ignored and the
relevant text read and construed accordingly.
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7.13 For the purposes of the financial covenants:
PROFIT BEFORE TAXATION shall include items of an exceptional
nature and shall exclude items of an extraordinary nature
unless taken into account at the Bank's discretion for the
purpose of any relevant calculation.
PRECONDITIONS SCHEDULE
No preconditions required.
SECURITY SCHEDULE
(1) an all moneys guarantee from Emrise Corporation for a
principal amount of (pound)5000,000 plus interest and other
costs as detailed in the guarantee and in respect of your
debts and liabilities to the Bank,
(2) admission of Pascall Electronics Limited to the omnibus
guarantee and letter of set off,
(3) an unlimited debenture from Pascall Electronics Limited,
(4) an assignment of the proceeds a life insurance policy of not
less than (pound)500,000 which is to be taken out in respect
of Graham Jefferies with assurers acceptable to the Bank,
(5) a deed of postponement from Emrise Corporation in respect of a
loan of US$5,000,000 to you,
(6) an unlimited debenture dated 7th August 1986 from Xcel
Corporation Limited,
(7) an omnibus guarantee and set off agreement dated 4th April
2000 among the Bank, Xcel Corporation Limited, Xcel Power
Systems Limited, Belix Wound Components Limited,
(8) an unlimited all moneys guarantee dated 18th March 1998 from
Xcel Power Systems Limited in respect of your debt, and
liabilities to the Bank, and
(9) a letter of comfort dated 14th December 1987 from XCEL
Corporation Limited.
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You acknowledge having received, read and understood a copy of this agreement
and, in consideration of the Bank agreeing to grant the loan, agree to the
SPECIFIC TERMS AND CONDITIONS and to the GENERAL TERMS AND CONDITIONS set out
above (together the "agreement"). You also acknowledge that this agreement
comprises all the terms currently applicable to the loan and that no
representation, warranty or undertaking has been made by the Bank in connection
with the loan which is not set out in this agreement and, in deciding to enter
into this agreement and to proceed with any transaction or project for which the
loan has been sought, you recognise that the Bank has no duty to give you advice
and you have not received or relied upon any advice given by the Bank.
Signed for and on behalf of Xcel Corporation by
/S/ G.M.J. Jeffries (signature) /S/ Carmine T. Oliva (signature)
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*Director/Authorised Signatory/ *Director/Authorised Signatory/Secretary
G.M.J. Jeffries (signature) Carmine T. Oliva (signature)
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Pursuant to a Resolution of the Board dated #
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Date June 30, 2005
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Signed for and on behalf of the Bank by
# This will be either the date of the account
- -------------------------------------------- mandate if an appropriate resolution is
Manager/Authorised Signatory/ contained herein, or the date of a specific
resolution passed in respect of this loan
Date June 30, 2005
--------------------------------------- * Delete as appropriate
IMPORTANT NOTE:
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THIS AGREEMENT CREATES LEGAL OBLIGATIONS. BEFORE SIGNING YOU MAY WISH TO TAKE INDEPENDENT ADVICE.
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Lloyds TSB Bank plc Registered Office 25 Graham Street, London EC2V 7HN.
Registered in England Number 2065 Authorized and regulated by the Financial
Services Authority and a signatory to the Banking Codes.
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