EXHIBIT 10.C.3
Term Sheet
DSG International Limited
1. Borrower DSG International Limited ("DSG" or the "Company")
2. Lender Breakers Investment Holding Limited, a BVI Company
("BIHL")
3. Principal Amount US$15,000,000 (United States Dollars Fifteen
Million) ("Loan") to be drawn in full at one time
4. Fees and Expenses DSG will pay an Advisory Fee equal to 1.0% of the
Loan to Schroder Capital Partners Limited ("SCPL"),
to be deducted by BIHL from the Loan upon draw
down.
In addition DSG shall pay all out of pocket
expenses including any legal and other fees
incurred by SCPL or BIHL in respect or in
connection with the Loan.
5. Interest Rate 14.5% per annum. Failure to repay the Loan or any
part thereof on the due dates will result in an
increase in the interest payable to a note of 3%
per annum above the Interest Rate on all
outstanding amounts whilst they are outstanding.
6. Interest Period Interest will be paid and calculated monthly in
advance on the principal amount of the Loan and
Interest outstanding as of the beginning of the
Interest Period in question.
7. Maturity The Loan shall be repaid in full twelve months from
the date of advance. DSG will have the ability to
prepay the Loan in whole or in part at any time
after the six-month anniversary of the date of
-----
advance. For the avoidance of doubt, DSG will not
have the ability to prepay the Loan prior to six-
month anniversary of the advance.
8. Collateral The Loan will be secured by a first priority
perfected security interest in DSG's (i) Australian
subsidiary companies - DSG Pty Limited and Napples
DSG Pty Limited (the "Australian Subsidiaries")
9. Covenants DSG and the Australian Subsidiaries will be
required to maintain a minimum level of tangible
Net Worth and EBITDA identical to the covenants in
that regard contained in the $35 Million Loan
Agreement and for the Australian Subsidiaries, the
covenants and the ratios will
-1-
be the same as those contained in the $35 Million
Loan Agreement for AHP. DSG will covenant that all
necessary consents have been obtained and that
this Loan and the terms contained in this Term
Sheet do not and will not breach or result in the
breach of the $35 Million Loan Agreement or any
other agreement to which DSG or any company within
its group is party. DSG shall otherwise provide
BIHL with such covenants as the Lender considers
in its sole absolute discretion appropriate.
10. Warrants DSG will grant BIHL Warrants priced at $0.01 for
0.75% of the Company's fully diluted common stock
for each month whilst any part of the Loan is
outstanding - i.e., during the first 12 months
after the date of the advance Warrants equivalent
to a total of 9.0% of the Company's full diluted
common stock.
Regardless of the repayment or any prepayment of
this Loan, in no event will BIHL receive Warrants
equivalent to less than 4.5% of DSG's fully
diluted Common Stock.
11. Conditions Precedent (1) DSG is a corporation in good standing in the
state of its incorporation and qualified to
do business in other states and countries
where it has collateral.
(2) Evidence satisfactory to BIHL that DSG has
or will have adequate funds available to
consummate the acquisition of Drypers
Corporation's US Assets based on the terms
of the Asset Purchase Agreement dated
February 20, 2001.
(3) All necessary consents will be obtained.
(4) Such other conditions precedent as BIHL
considers appropriate in the circumstances.
BIHL may in its discretion waive any such
conditions precedent.
12. Indemnification DSG will provide BIHL with same indemnification as
provided to Foothill under the $35 Million Loan
Agreement.
13. Representations and DSG will provide BIHL with Representations and
Warranties Warranties as BIHL in its sole absolute discretion
thinks appropriate but which shall include the
same Representations and Warranties as have been
provided to Foothill Capital Corporation under the
$35 Million Loan Agreement with the additional
proviso that such
-2-
Representations and Warranties shall be true with
respect to DSG in addition to AHP.
14. Governing Law Hong Kong
15. Formal Documentation All Formal Documentation evidencing the Loan and the
collateral therefor shall be in form and having
contents satisfactory to BIHL and its legal counsel.
-3-
The undersigned hereby certifies that: (i) DSG International Limited has or
will have adequate funds available to consummate the acquisition of Drypers
Corporation's U.S. Assets based upon the terms of the Asset Purchase Agreement
dated February 20, 2001 and (ii) all necessary consents to complete the
acquisition referred to in (i) above will be obtained.
/s/ Brandon Wang
-----------------------------------
Brandon Wang
Chairman, DSG International Limited
To: Breakers Investment Holding Limited
Romasco Place, Wickhams Cay 1
Tortola BVI
In consideration of your agreeing at my request to advance to DSG International
Limited ("DSG"), a British Virgin Island company, the sum of US$15,000,000
pursuant to the terms of a letter of even date herewith addressed to DSG and the
undersigned a copy of which is attached hereto I the undersigned hereby
guarantee to you the repayment on the due dates therefor by DSG of all sums of
money advanced by you to DSG as aforesaid with interest thereon subject as
hereinafter mentioned that is to say:
1. Notice in writing of any default on the part of DSG is to be given by you
to me and within 14 days from its receipt payment shall be made by me of
all sums then due from me under this guarantee.
2. This guarantee shall not be considered as satisfied by any intermediate
payment or satisfaction of the whole or any part of any of such sums of
money owing as aforesaid but shall be a continuing security and shall
extend to cover any of such sums of money which shall for the time being
constitute the balance due to you by DSG on any account and shall be
binding as a continuing security on me, my executors, administrators and
legal representatives.
3. No illegality or invalidity of or in respect of the said letter or sums of
money advanced by you to DSG as aforesaid shall affect or impair my
liability hereunder.
4. I shall not be discharged or released from this guarantee by any
arrangement made between you and DSG without my consent or by any
alteration in the obligations undertaken by DSG or by any forbearance
whether as to payment time performance or otherwise.
5. A certificate under your hand or that of your duly authorized agent as to
the amount due at any time from DSG to you and/or any interest due thereon
shall be conclusive and binding on me in the absence of manifest error.
6. The proper law of this guarantee is Hong Kong law and I submit to the
non-exclusive jurisdiction of the Hong Kong Courts.
As Witness whereof I have executed this guarantee the 12th day of March 2001.
/s/ Brandon S.L. Wang
- ----------------------------
Brandon S.L. Wang