NATWEST ACQUISITION FINANCE
Thc Directors
Regis Europe Limited
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
10 August 1998
Dear Sirs
CREDIT AGREEMENT DATED 22 SEPTEMBER 1995 AS VARIED AND RESTATED BY VARIATION AND
RE-STATEMENT AGREEMENTS DATED 22 MARCH 1996 AND 10 AUGUST 1998 MADE BETWEEN
(1) REGIS EUROPE LIMITED (THE "BORROWER") AND (2) NATIONAL WESTMINSTER BANK PLC
(THE "BANK") (THE "CREDIT AGREEMENT")
We refer to the Credit Agreement. This letter is the Overdraft Facility Letter
referred to in the Credit Agreement and this letter replaces the overdraft
facility letter of 6th February 1997.
Words and expressions defined in the Credit Agreement shall have the same
meaning when used herein, unless otherwise defined.
The following facilities are to be granted on the Bank's usual banking terms and
are repayable on demand.
For the avoidance of doubt, the Borrower by signing this letter, agrees that it
will comply with the obligations expressed to be undertaken or imposed upon it
under the Credit Agreement as if such obligations were set out in this letter
and, without prejudice to the Bank's right to make demand, if the Borrower fails
to comply with the said obligations then the Bank's rights shall be those under
the Credit Agreement.
The overdraft facility granted pursuant to this letter (the "Overdraft
Facility") is available through the Bank's Mayfair branch at P0 Box 4ND, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇ for the purpose of financing the overdraft
requirements of the Borrower from time to time and, without prejudice to our
right to make demand, it is our present intention to review the Overdraft
Facility annually.
No utilisation under the Overdraft Facility may be used for any unlawful purpose
including, in particular, for any purpose in breach of section 151 of the Act.
BORROWER: The Borrower
FACILITY Overdraft
LIMIT The maximum amount of the Overdraft Facility
(the "Limit") shall be L2,750,000.
[LETTERHEAD]
INTEREST 1.75 per cent per annum over the Bank's base lending
rate from time to time. Interest will be debited to the
Borrower's current account on each quarter day in
accordance with the Bank's usual practice.
PAYMENTS: All payments under these facilities by the Borrower are
to be made free and clear of any set-off, deduction and
withholdings.
SECURITY: The Overdraft Facility ranks pari passu with the Term
Loan Facility and is to be secured under the Guarantees
and Debentures granted by each of the Borrower and
Target and the Keyman Insurance Assignment granted by
the Borrower.
GOVERNING LAW: The Overdraft Facility is to be governed by and
construed in accordance with English law.
AVAILABILITY: These facilities are available on the later of the date
when a signed copy of this letter is received by the
Bank and the Effective Date (as defined in the Second
Variation and Restatement Agreement).
Yours faithfully
/s/ [ILLEGIBLE]
For and on behalf of
NATIONAL WESTMINSTER BANK PLC
Accepted and Agreed,
/s/ [ILLEGIBLE]
For and on behalf of
REGIS EUROPE LIMITED
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DATED 10 August 1998
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REGIS EUROPE LIMITED
- and -
NATIONAL WESTMINSTER BANK Plc
------------------------------------
SECOND
VARIATION AND RESTATEMENT AGREEMENT
relating to a Credit Agreement dated
22nd September 1995
(as amended and restated by
an amendment and restatement agreement dated 22nd March 1996)
------------------------------------
W I L D E S A P T E
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LONDON
TABLE OF CONTENTS
CLAUSE DESCRIPTION PAGE NO.
1. INTERPRETATION . . . . . . . . . . . . . . . . . . . . . . 1
2. AMENDMENT. . . . . . . . . . . . . . . . . . . . . . . . . 2
3. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . 2
4. FEES AND EXPENSES. . . . . . . . . . . . . . . . . . . . . 2
5. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . 3
6. CREDIT AGREEMENT TO REMAIN IN FULL FORCE AND EFFECT . . . 3
7. SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . 3
8. COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . 3
9. LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SCHEDULE 1 - REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . 4
SCHEDULE 2 - RESTATED CREDIT AGREEMENT . . . . . . . . . . . . . . . 6
THIS AGREEMENT is made the 10 day of August 1998
BETWEEN:
(1) REGIS EUROPE LIMITED, a company incorporated under the laws of England and
Wales with registered number 02108396 (the "BORROWER");
(2) NATIONAL WESTMINSTER BANK Plc acting through its Mayfair Branch at P0 Box
4ND, 18a Curzon Street, London W1A 4ND (the "BANK");
WHEREAS
(A) Pursuant to a Credit Agreement dated 22nd September 1995 (as amended and
restated by an amendment and restatement agreement dated 22nd March 1996)
made between (1) the Borrower and (2) the Bank, (the "CREDIT AGREEMENT")
the Bank has made available to the Borrower loan facilities upon the terms
and conditions thereof.
(B) The Borrower has requested and the Bank has agreed to vary and amend
certain provisions of the Credit Agreement, and to restate the Credit
Agreement as so amended and varied.
NOW IT IS HEREBY AGREED as follows:
1. INTERPRETATION
1.1 References herein to this Agreement shall include the Schedules hereto and
words and expressions defined in the Credit Agreement shall have the same
meanings in this Agreement unless otherwise defined herein and in addition
the following words and expressions shall have the following meanings:
"AMENDING DOCUMENTS" means this Agreement and the Overdraft Facility
Letter.
"CONDITIONS PRECEDENT" means each of the conditions set out in Clause 3.
"EFFECTIVE DATE" means the date on which the Bank confirms in writing to
the Borrower that each of the Conditions Precedent has been satisfied in
full or waived.
"OVERDRAFT FACILITY LETTER" means the letter dated on or about today's date
under which an overdraft facility in an amount of L2,750,000 is to be made
available to the Borrower by the Bank.
1.2 For the avoidance of doubt only, but without prejudice to the generality of
Clause 2.1 below, it is hereby agreed and declared that the provisions set
out in Clauses 1.3 and 1.4 of the Credit Agreement shall apply to this
Agreement save that references in that Clause to "this Agreement" are
deemed to be references to this Agreement and not to the Credit Agreement.
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2. AMENDMENT
2.1 With effect from the Effective Date, the Credit Agreement shall be amended
and varied so as to be in the form set out in Schedule 2.
2.2 The terms of this Agreement shall be deemed to have been incorporated into
the Credit Agreement as of and with effect from the Effective Date. The
Credit Agreement as amended, varied and restated by this Agreement shall
remain in full force and effect and any reference therein to "this
Agreement", "hereof", "hereunder" and expressions of similar import shall,
unless the context otherwise requires, be read and construed as references
to the Credit Agreement amended and restated by this Agreement.
2.3 Clause 2.1 and the amendment and variation of the Credit Agreement effected
thereby shall not reduce, extinguish or otherwise adversely affect any of
the rights or remedies of the Bank, under the Credit Agreement prior to the
Effective Date.
3. CONDITIONS PRECEDENT
This Agreement shall only take effect upon the satisfaction of each of the
following conditions on or prior to 14th August 1998 (unless waived in
writing by the Bank on or prior to that date):
(a) The Bank shall have received each of the following in form and
substance satisfactory to the Bank:
(i) this Agreement duly executed by the parties hereto;
(ii) the Overdraft Facility Letter duly executed by the parties
hereto;
(iii) certified copies of the Certification of Incorporation and
the Memorandum and Articles of Association of each company
in the Charging Group or a certificate from the Company
Secretary of such company certifying that such Memorandum
and Articles of Association have not been amended since the
date on which copies of the same were last provided or so
certified to the Bank;
(iv) a Certified Copy of the minutes (in the agreed form) of a
meeting of the board of directors of the Borrower, approving
and authorising the execution and performance of the
Amending Documents and authorising a person or persons to
sign or otherwise attest the due execution of such
documents; and
(b) The Bank shall have received the arrangement fee referred to in
Clause 4.
4. FEES AND EXPENSES
4.1 In consideration of the Bank entering into this Agreement, the Borrower
shall on the date hereof pay to the Bank an arrangement fee of L36,000.
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4.2 The Borrower shall pay on demand all costs, fees and expenses (including
but not limited to legal fees) and any VAT thereon incurred by the Bank in
connection with the negotiation, preparation and execution of this
Agreement.
5. REPRESENTATIONS AND WARRANTIES
5.1 The Borrower hereby acknowledges that the Bank has entered into this
Agreement and accepted the security, guarantees and indemnities granted in
favour of the Bank in full reliance of the representations and warranties
made under this Clause 5.
5.2 The Borrower represents and warrants to the Bank in relation to itself and
each of the companies of the Charging Group that on the Effective Date the
representations and warranties made in Schedule 1 of this Agreement are
true and accurate.
6. CREDIT AGREEMENT TO REMAIN IN FULL FORCE AND EFFECT
Save as expressly amended by this Agreement, the Credit Agreement shall
remain in full force and effect.
7. SEVERABILITY
If at any time any provision of this Agreement is or becomes illegal,
invalid or unenforceable in any respect under the law of any jurisdiction
and the legality, validity or enforceability of the remaining provisions
hereof nor the legality, validity or enforceability of such provision under
the law of any other jurisdiction shall in any way be effected or impaired
thereby.
8. COUNTERPARTS
This Agreement may be executed in any number of counterparts which taken
together shall constitute one Agreement.
9. LAW
This Agreement shall be governed by and construed in accordance with
English law.
IN WITNESS whereof the parties hereto have caused this Agreement to be duly
executed the day and year first written above.
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SCHEDULE 1
REPRESENTATIONS AND WARRANTIES
1. It is a limited company incorporated under the laws of its jurisdiction of
incorporation, which possesses the capacity to ▇▇▇ and be sued in its own
name and which has the power to carry on its business and to own its
property and other assets.
2. It has power and capacity to execute, deliver and perform its obligations
under the Amending Documents to which it is a party and all necessary
corporate, shareholder and other action has been taken and consents given
to authorise the execution, delivery and performance of the same.
3. Its obligations under the Amending Documents to which it is a party
constitute its legal, valid and binding obligations and are in full force
and effect.
4. Its execution and delivery and performance and discharge of its obligations
and liabilities under the Amending Documents to which it is a party do not
and will not:
(i) contravene any law or regulation or any order of any governmental
or other official authority, body or agency or any judgment, order
or decree of any court having jurisdiction over it; or
(ii) conflict with, or result in any breach of any of the terms of, or
constitute a default under, any agreement or other instrument to
which it is a party or any licence or other authorisation to which
it is subject or by which it or any of its property is bound; or
(iii) contravene or conflict with any provision of its memorandum and
articles of association and, in particular, it has no limit on its
power to incur Indebtedness.
5. All licences, consents, exemptions, clearances, filings, registrations,
payments of duties or taxes, notarisations and authorisations as are or may
be necessary or desirable for the proper conduct of its business, trade and
ordinary activities and for the performance and discharge of its
obligations and liabilities under the Amending Documents to which it is a
party and which are required in connection with the execution, delivery,
validity, enforceability or admissibility in evidence of the Amending
Documents to which it is a party are in full force and effect;
6. It has not taken any action nor have any steps been taken or legal
proceedings been started or threatened in writing against it for
winding-up, dissolution or re-organisation, the enforcement of any
Encumbrance over its assets or for the appointment of a receiver,
administrative receiver, or administrator, trustee or similar officer
of it or of any or all of its assets or any other procedure under which
it obtains protection from any of its creditors.
7. It is not in breach or in default under any of any deed, instrument or
agreement to which it is a party or which is binding on it or any of its
assets.
8. No action, litigation, arbitration or administrative proceeding has been
started or (so far as it is aware having made all appropriate enquiry) is
pending or threatened against it, nor is there
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subsisting any unsatisfied judgment or award given against it by any court,
board of arbitration or other body.
9. All of its assets are free from any Encumbrances, other than Permitted
Encumbrances.
10. It has no Indebtedness outstanding other than Permitted Indebtedness.
11. No Default or Default Occurrence has occurred or is continuing unwaived.
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SCHEDULE 2
RESTATED CREDIT AGREEMENT
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22ND SEPTEMBER 1995
REGIS EUROPE LIMITED
- and -
NATIONAL WESTMINSTER BANK PLc
------------------------------------------------
CREDIT AGREEMENT
(as amended by amendment and restatement agreements dated 22nd March 1996
and 10 August 1998)
------------------------------------------------
WILDE SAPTE
London
TABLE OF CONTENTS
CLAUSE HEADING PAGE NO.
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1. DEFINITONS AND INTERPRETATION . . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Financial Undertakings Definitions. . . . . . . . . . . . . 9
1.3 Clause Headings . . . . . . . . . . . . . . . . . . . . . . 9
1.4 Interpretation. . . . . . . . . . . . . . . . . . . . . . . 9
2. CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . . 10
2.1 Satisfaction of Conditions Precedent. . . . . . . . . . . . 10
3. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . 10
3.1 Acknowledgement of Reliance on all Representations and
Warranties. . . . . . . . . . . . . . . . . . . . . . . . . 10
3.2 Original Representations and Warranties . . . . . . . . . . 10
4. THE TERM LOAN FACILITY. . . . . . . . . . . . . . . . . . . 10
4.1 The Term Loan Facility. . . . . . . . . . . . . . . . . . . 10
4.2 Purpose of the Term Loan Facility . . . . . . . . . . . . . 10
4.3 Availability and Drawdown of the Term Loan. . . . . . . . . 11
5. INTEREST. . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.1 Amount. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.2 Duration of Interest Periods. . . . . . . . . . . . . . . . 11
5.3 Default Interest. . . . . . . . . . . . . . . . . . . . . . 12
5.4 Calculation and Payment of Interest . . . . . . . . . . . . 12
5.5 Bank's Determination. . . . . . . . . . . . . . . . . . . . 13
6. REPAYMENT AND PREPAYMENT. . . . . . . . . . . . . . . . . . 13
6.1 Repayment of the Term Loan. . . . . . . . . . . . . . . . . 13
6.2 Voluntary Prepayment of the Term Loan . . . . . . . . . . . 14
6.2.5 Order of Application of Prepayments . . . . . . . . . . . . 14
6.3 No re-borrowing . . . . . . . . . . . . . . . . . . . . . . 14
7. MARKET DISRUPTION, ILLEGALITY, INCREASED COSTS, GROSSING UP
AND OTHER INCREASED COSTS AND EXPENSES. . . . . . . . . . . 14
8. PAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . 14
8.1 Funds and Place . . . . . . . . . . . . . . . . . . . . . . 14
8.2 Business Day. . . . . . . . . . . . . . . . . . . . . . . . 14
8.3 Breakage Costs. . . . . . . . . . . . . . . . . . . . . . . 15
8.4 Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.5 Appropriation . . . . . . . . . . . . . . . . . . . . . . . 15
9. UNDERTAKINGS. . . . . . . . . . . . . . . . . . . . . . . . 15
9.1 Information Undertakings. . . . . . . . . . . . . . . . . . 15
9.2 Financial Undertakings. . . . . . . . . . . . . . . . . . . 18
9.3 Positive Undertakings . . . . . . . . . . . . . . . . . . . 28
9.4 Negative Undertakings . . . . . . . . . . . . . . . . . . . 29
10. DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.1 Default . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.2 Acceleration. . . . . . . . . . . . . . . . . . . . . . . . 33
11. SET-OFF . . . . . . . . . . . . . . . . . . . . . . . . . . 34
12. FEES AND EXPENSES . . . . . . . . . . . . . . . . . . . . . 34
12.1 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 34
12.2 Arrangement Fee . . . . . . . . . . . . . . . . . . . . . . 34
12.3 Monitoring Fee. . . . . . . . . . . . . . . . . . . . . . . 34
13. SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . 34
13.1 Severance . . . . . . . . . . . . . . . . . . . . . . . . . 34
13.2 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . 35
14. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . 35
14.1 Method. . . . . . . . . . . . . . . . . . . . . . . . . . . 35
14.2 Delivery. . . . . . . . . . . . . . . . . . . . . . . . . . 35
14.3 Addresses . . . . . . . . . . . . . . . . . . . . . . . . . 35
14.4 Deemed Receipt. . . . . . . . . . . . . . . . . . . . . . . 36
15. ASSIGNMENTS AND TRANSFERS . . . . . . . . . . . . . . . . . 36
15.1 Benefit of Agreement. . . . . . . . . . . . . . . . . . . . 36
15.2 Assignments and Transfers by the Borrower . . . . . . . . . 36
15.3 Assignments and Transfers by the Bank . . . . . . . . . . . 36
15.4 Disclosure of Information . . . . . . . . . . . . . . . . . 37
15.5 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . 37
16. LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SCHEDULE 1 - Details of the Group. . . . . . . . . . . . . . . . . . 38
SCHEDULE 2 - Conditions Precedent for the purpose of Clause 2. . . . 39
SCHEDULE 3 - Mandatory Liquid Assets Costs Formula . . . . . . . . . 41
SCHEDULE 4 - Part 1- Drawdown Notice . . . . . . . . . . . . . . . . 43
SCHEDULE 5 - Representations and Warranties made under Clause 3.2. . 44
SCHEDULE 6 - Part 1 Auditors' Confirmation . . . . . . . . . . . . . 46
Part 2 Certificate for Clause 9.1(e). . . . . . . . . . 49
SCHEDULE 7 - Market Disruption/Increased Costs etc. . . . . . . . . 55
SCHEDULE 8 - Base Case Model . . . . . . . . . . . . . . . . . . . . 59
THIS AGREEMENT is made the 22nd day of September 1995
BY:
(1) REGIS EUROPE LIMITED, a company incorporated in England and Wales and
registered under number 02108396 (the "BORROWER"); and
(2) NATIONAL WESTMINSTER BANK PLc acting through its Mayfair Branch at P0
Box 44ND, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇ (the "BANK").
1. DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
In this Agreement, unless otherwise expressly provided:
"ACCOUNTANTS' REPORT" means the report prepared by Coopers & ▇▇▇▇▇▇▇
relating to the Group dated on or about 19th September and addressed to
the Bank;
"ACCOUNTING PERIOD" has the meaning given to it in Clause 9.1(b);
"ACCOUNTING PRINCIPLES" means the Generally Accepted Accounting
Principles used in the preparation of the Business Plan as such
principles may be amended; modified or supplemented in the way
contemplated in Clause 9.2.3;
"ACCOUNTS" means, for each Financial Year of the Borrower, the
Borrower's audited consolidated accounts (including all additional
information and notes thereto) for that Financial Year, audited by the
Auditors, together with the relative directors' report and Auditors'
report;
"ACQUISITION AGREEMENT" means the sale and purchase agreement dated 9th
August 1995 relating to the sale by the Vendor and purchase by the
Borrower of the Target Shares and under which Regis Corporation has
guaranteed the obligations of the Borrower to the Vendor on the terms
and subject to the conditions of that agreement;
"ACQUISITION DOCUMENTS" means all of:
(a) the Acquisition Agreement including the Exhibits referred to in
that agreement;
(b) a letter dated 9th August 1995 signed by Wella
Aktiengesellschaft; and
(c) a letter dated 9th August 1995 addressed to Regis Corporation
from the Vendor;
"ACQUISITION PURCHASE PRICE" means the aggregate purchase consideration
payable by the Borrower for the Target Shares under clause 4 of the
Acquisition Agreement;
"ACT" means the Companies ▇▇▇ ▇▇▇▇;
"AUDITORS" means, in relation to any company in the Charging Group,
Coopers & ▇▇▇▇▇▇▇ or any other firm of chartered accountants which shall
have been previously approved by the Bank;
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"BASE CASE MODEL" means the base case model set out in Schedule 8;
"BUSINESS DAY" means a day on which banks are open for business in
London (excluding Saturdays and Sundays);
"BUSINESS PLAN" means the business plan for the Charging Group (in the
agreed form)
"CERTIFICATE DATE" has the meaning given to it in Clause 9.1(e);
"CERTIFIED COPY" means, in relation to any document, a copy of such
document bearing the endorsement "Certified on [specify date **] a true,
complete and accurate copy of the original, which has not as at the
above date been amended, varied, novated or supplemented otherwise than
by each document, a Certified Copy of which is attached hereto", signed
by a duly authorised officer of the company in question (or solicitors
acting on behalf of the company in question) and which complies with
such endorsement;
"CHANGE" means in relation to the Bank (or any company of which the Bank
is a Subsidiary), the introduction, implementation, repeal, withdrawal
or change in, or in the interpretation or application of, (a) any law,
regulation, practice or concession, or (b) any directive, requirement,
request or guidance (whether or not having the force of law but if not
having the force of law, one which applies generally to a class or
category of financial institutions of which the Bank (or that company)
forms part and compliance with which is in accordance with the general
practice of those financial institutions) of the European community, any
central bank including the European Central Bank, or any other fiscal,
monetary, regulatory or other authority.
"CHANGE OF CONTROL" means a change in the ownership of the issued share
capital of the Borrower where a person, other than a person which is
beneficial owner of shares in the capital of the Borrower on the date of
this Agreement, (whether alone or together with any associated person or
persons) becomes the beneficial owner of shares in the issued share
capital of the Borrower carrying the right to exercise more than 50 per
cent. of the votes exercisable at a general meeting of the Borrower:
(for the purposes of this definition, "associated person" means, in
relation to any person, a person who is either (a) acting in concert (as
defined in the City Code on Take-Overs and Mergers) with such aforesaid
person, or (b) "a connected person" of such aforesaid person as defined
in section 839 of the Income and Corporation Taxes Act 1988);
"CHARGING GROUP" means:
(a) the companies details of which are set out in Schedule 1; and
(b) any other company within the Group which shall have granted a
Guarantee and a Debenture in favour of the Bank;
"COMPLETION DATE" means 22nd September 1995;
"CONDITIONS PRECEDENT" means each of the conditions precedent listed in
Schedule 2;
"DEBENTURE" means a debenture in the Banks standard form NWB 1014;
"DEFAULT" means any of the events specified in Clause 10.1;
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"DEFAULT OCCURRENCE" means any event which would constitute a Default if
all notices required to be given and periods of time required to have
expired under Clause 10.1 to make such event a Default, had been given,
or expired;
"DORMANT SUBSIDIARY" means a company in the Group incorporated in
England and Wales which is dormant within the meaning of section 250(3)
of the Act and has assets the aggregate gross value of which do not
exceed L5,000;
"DRAWDOWN DATE" means the Business Day on which any Term Loan Tranche is
or is proposed to be borrowed pursuant to a Drawdown Notice;
"DRAWDOWN NOTICE" means a notice substantially in the form set out in
Part 1 of Schedule 4;
"EMPLOYMENT CONTRACT" means the service agreement made or to be made
between the Borrower and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇;
"ENCUMBRANCE" means any mortgage, charge, assignment for the purpose of
security, pledge, lien, right of set-off, retention of title provisions
or hypothecation or preferential right or trust arrangement for the
purpose of, or which has the effect of, granting security or other
security interest of any kind whatsoever, and any agreement, whether
conditional or otherwise to create or grant any of the same;
"FINANCIAL YEAR" has the meaning given to it in section 223 of the Act;
"FINANCING DOCUMENTS" means this Agreement, the Overdraft Facility
Letter, the Interest Rate Protection Agreements, any Drawdown Notice and
the Security Documents;
"FIRST VARIATION AND RESTATEMENT AGREEMENT" means the variation and
restatement agreement relating to this Credit Agreement between (1) the
Borrower and (2) the Bank dated 22nd March 1996.
"FRS" means a financial reporting standard issued by the Accounting
Standards Board for application in England and Wales and where
referenced by a number means that particular financial reporting
standard;
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" means, in relation to
companies incorporated anywhere in the United Kingdom, accounting
principles, concepts, bases and policies generally adopted and accepted
in England for the preparation and presentation of audited financial
statements;
"GROUP" means the Borrower, all of the companies details of which are
set out in Schedule 1 and their respective Subsidiaries from time to
time;
"GUARANTEE" means a guarantee in the Bank's standard form NWB 1019;
"INDEBTEDNESS" means, in relation to any person, its obligation (whether
present or future, actual or contingent and whether incurred as
principal or surety) for the payment or repayment of money (whether in
respect of interest, principal or otherwise) incurred in respect of any
of:
(a) monies borrowed or raised;
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(b) any bond, note, loan stock, debenture or similar instrument;
(c) acceptance credit, ▇▇▇▇-discounting, note purchase, factoring
facilities and documentary credit facilities;
(d) any liability for the supply of any goods and services which is
more than 30 Business Days past the expiry of the period
customarily allowed by the relative supplier after the due date;
(e) payment obligations under hire purchase agreements, conditional
sale agreements and leases;
(f) guarantees, bonds, standby letters of credit or other similar
instruments issued in connection with the performance of
contracts;
(g) interest rate or currency swap agreements and any other hedging
instruments in respect of interest rates or currencies; and
(h) counter-indemnities, guarantees or other assurances against
financial loss in respect of the liability of obligation of any
person;
"INFORMATION PACKAGE" means:
(a) the Accountants' Report; and
(b) the Business Plan;
"INSTALLMENT" has the meaning given to it in Clause 6.1;
"INSTALLMENT REPAYMENT DATE" has the meaning given to it in Clause 6.1;
"INTEREST DATE" means the last day of an Interest Period;
"INTEREST PERIOD" means each period ascertained in accordance with
Clause 5.2 for the purpose of calculating interest on the Term Loan or
as the context requires, each period ascertained in accordance with
Clause 5.3 for the purpose of calculating interest on any sum which is
due and payable and unpaid;
"INTEREST RATE PROTECTION AGREEMENTS" means each of the agreements,
entered into or to be entered into by the Borrower and the Bank for the
purpose of hedging the Borrower's interest rate liabilities in relation
to all or any part of the Term Loan Facility;
"KEYMAN INSURANCE" means a keyman life assurance policy (in form and
content satisfactory to the Bank and with such insurer as the Bank has
approved) maintained or to be maintained by the Borrower in respect of
the death and disability of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or his successor, in the
amount of L300,000 and for a period of 4 years:
"KEYMAN INSURANCE ASSIGNMENT" means an assignment by way of security (in
the agreed form) of the benefit of the Keyman Insurance;
"LIBOR" means in respect of the Term Loan, part thereof or other sum,
the rate per annum at which the Bank offers deposits in Sterling in an
amount comparable with the Term Loan,
-4-
such part thereof or such sum, as the case may be, for a period equal to
the relative Interest Period to lending banks in the London Inter-Bank
Market at or about 11.00 a.m. (London time) on the first day of the
relative Interest Period;
"MANAGEMENT ACCOUNTS" has the meaning given to it in Clause 9.1(b);
"MANDATORY LIQUID ASSET COSTS" means the additional cost to the Bank of
compliance with the reserve asset ratio required by the Bank of England
from time to time (if any), expressed as a rate per cent. per annum,
calculated in accordance with the formula set out in Schedule 3;
"MARGIN" means 2.0 per cent. per annum;
"NEW ACCOUNTANTS' REPORT" means the reports prepared by Coopers &
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇ relating to SHL, SSL and Demigod each dated on or
about 6th March 1996 and addressed to the Bank together with a letter
from Coopers & ▇▇▇▇▇▇▇ dated 6th March 1996 and addressed to the Bank;
"NEW ACQUISITION AGREEMENTS" means the sale and purchase agreements
dated 29th December relating to the sale by the New Vendor and the
purchase by the Borrower of the Shares of SHL and SSL;
"NEW ACQUISITION DOCUMENTS" means all of the New Acquisition Agreements
including the Exhibits and documents referred to therein;
"NEW BUSINESS PLAN" means the business plan for SHL and SSL in the
agreed form;
"NEW INFORMATION PACKAGE" means the New Business Plan and the New
Accountants Report;
"NEW TRANSACTION COSTS" means the costs and expenses (including VAT)
incurred by the Borrower under the New Transaction Documents (as defined
in the First Variation and Restatement Agreement) and in relation to the
New Information Package;
"NEW VENDOR" means ▇▇▇▇▇▇▇ Group Limited, a company incorporated in
England and Wales;
"OPERATING BUDGET" means:
(a) in relation to the period from the Completion Date to 30th June
1996, the Business Plan and the New Business Plan projections for
that period; and
(b) in relation to each Financial Year of the Borrower and Target SHL
and SSL starting after 30th June 1996, a projected consolidated
balance sheet, projected consolidated profit and loss account,
projected consolidated cash flow statement and projected Capital
Expenditure (as defined in Clause 9.2.1), (each on a month by
month basis) together with a summary of all material assumptions
and other bases upon which those projections were made for each
such Financial Year;
"OVERDRAFT FACILITY LETTER" means the letter dated 10 August 1998 under
which an overdraft facility in an amount of L2,750,000 is to be made
available to the Borrower by the Bank;
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"OVERSEAS APPROVED FUNDING" means funding by the Borrower of Regis S.A.
or S & L out of the proceeds of:
(a) subscription for shares in the Borrower by Regis Corporation; and
(b) a loan or loans made to the Borrower by Regis Corporation,
in each case on terms and conditions approved by the Bank;
"OVERSEAS CAPITAL EXPENDITURE PROGRAMME" means expenditure by Regis S.A.
and S&L on fixed assets which is incurred within 3 years of the date of
this Agreement and which cumulatively does not exceed L100,000 in
aggregate per annum during such 3 year's period;
"PERMITTED ENCUMBRANCE" means, in relation to any company in the Group:
(a) Encumbrances subsisting under or in connection with any of the
Financing Documents;
(b) Encumbrances granted with the consent of the Bank;
(c) liens arising and subsisting by operation of law in the ordinary
course of trading activities;
(d) any retention of title to goods supplied to that company where
such retention is agreed in the ordinary course of its trading
activities and on customary terms; and
(e) rights of set-off arising by operation of law;
"PERMITTED INDEBTEDNESS" means:
(a) Indebtedness outstanding under the Financing Documents;
(b) Indebtedness outstanding under Finance Leases (as defined in
Clause 9.2) not exceeding in aggregate L60,000;
(c) Indebtedness outstanding under operating leases;
(d) Indebtedness in favour of Regis Corporation for Overseas Approved
Funding;
(e) Indebtedness outstanding under the Wella Agreement;
(f) Indebtedness outstanding under an unsecured loan to Barclays Bank
PLC in the sum of L15,000;
(g) Indebtedness in favour of Regis Corporation pursuant to Clause
9.2.2(e)(iv).
"PROPERTY" means all those freehold and leasehold properties owned by
companies within the Charging Group from time to time;
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"QUALIFYING BANK" means an institution which is a bank for the purposes
of section 349 of the Income and Corporation Taxes ▇▇▇ ▇▇▇▇;
"QUARTERLY ACCOUNTING PERIODS" means, in each Financial Year, the third,
sixth, tenth and thirteenth Accounting Periods;
"REGIS CORPORATION" means Regis Corporation, a company organised and
existing under the laws of the state of Minnesota, whose principal
places of business is at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇, ▇▇▇;
"REGIS CORPORATION INDEBTEDNESS" means the sum of L955,000 provided to
the Borrower on inter company account by Regis Corporation for the
purposes of financing the acquisitions made under the New Acquisition
Agreements;
"REGIS S.A." means Regis South Africa (Proprietary) Limited, a company
incorporated in the Republic of South Africa and registered under number
73/11138/07;
"REGIS S.A. COMFORT LETTER" means the letter (in the agreed form) issued
or to be issued by the Borrower in favour of Regis S.A.;
"REPAYMENT DATE" means 10th June 2001;
"RESTRUCTURING COSTS" means the costs and expenses anticipated in the
Business Plan and incurred by either the Borrower or Target on or after
the Completion Date in connection with the reorganisation of the Target;
"S & L" means S & L du Lac, Inc., a Delaware corporation having its
principal office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇;
"SECOND VARIATION AND RESTATEMENT AGREEMENT" means the variation and
restatement agreement relating to this Credit Agreement (as amended and
restated by the First Amendment and Restatement Agreement) between (1)
the Borrower and (2) the Bank dated 10 August 1998;
"SECURITY DOCUMENTS" means each Guarantee and each Debenture executed by
a company within the Group, the Keyman Insurance Assignment and any
other guarantee and security documents executed and delivered to the
Bank after the date hereof by any company in the Group;
"SECURITY PERIOD" means the period starting on the Completion Date and
ending on the date on which all of the obligations and liabilities of
the Borrower and the other companies in the Charging Group under each of
the Financing Documents to the Bank have been unconditionally discharged
in full and the Bank has no continuing liability to the Borrower in
relation to the Term Loan Facility;
"SSAP" means any statement of standard accounting practice issued by the
Institute of Chartered Accountants for application in England and Wales
and where referenced by a number means that particular statement;
"STERLING" and "L" each means the lawful currency for the time being of
the United Kingdom;
-7-
"SUBSIDIARY" means any subsidiary within the meaning of section 736 of
the Act and any subsidiary undertaking within the meaning of section 258
of the Act and "Subsidiaries" shall be construed accordingly;
"TARGET" means Essanelle Limited, a company incorporated in England and
Wales under registered number 1115693;
"TARGET SHARES" means all of the issued share capital of the Target;
"TAX" includes all present and future taxes, charges, imposts, duties,
levies, deductions, withholdings, or any amount payable on account of or
in connection with any of the foregoing;
"TAX ON OVERALL NET INCOME" means, in relation to the Bank, Tax (other
thin Tax deducted or withheld from any payment) imposed on such Bank on
its net profits by the United Kingdom;
"TERM LOAN" means the principal aggregate amount of the Term Loan
Tranches drawn down or to be drawn down under the Term Loan Facility and
thereafter the aggregate principal amount from time to time outstanding;
"TERM LOAN FACILITY" means the term loan facility referred to in
Clause 4.1;
"TERM LOAN TRANCHE" means any of Tranche A, Tranche B and Tranche C;
"TRANCHE A" means a tranche of an original principal amount of
L3,800,000 made available under the Term Loan Facility;
"TRANCHE B" means a tranche of an original principal amount of L500,000
made available under the Term Loan Facility under Clause 4.3.2;
"TRANCHE C" means a tranche of an original principal amount of
L1,000,000 made available under the Term Loan Facility under
Clause 4.3.2;
"TRANSACTION COSTS" means the costs and expenses (including VAT)
incurred by the Borrower under the Transaction Documents and in relation
to the preparation of the Information Package;
"TRANSACTION DOCUMENTS" means the Financing Documents, Acquisition
Documents and the New Acquisition Documents;
"VALUE ADDED TAX" and "VAT" means value added tax as provided for in the
Value Added Tax ▇▇▇ ▇▇▇▇ and legislation supplemental thereto;
"VENDOR" means FDB Friseur Dienstleistungs Betriebe GmbH & Co. Kg., a
limited liability company organised and existing under the laws of
Germany;
"VENDOR LOAN NOTES" means the retention note dated 29th December 1995
issued by SHL in favour of the New Vendor; and
-8-
"WELLA AGREEMENT" means a finance agreement dated 1st December 1995
between (1) Intercosmetic (G.B.) Limited (trading as Wella Great
Britain), (2) Openpark, (3) California Lines Limited and (4) the
Borrower.
1.2 FINANCIAL UNDERTAKINGS DEFINITIONS
Various defined terms used for the financial undertakings in Clause 9.2
are set out in Clause 9.2.
1.3 CLAUSE HEADINGS
Clause headings in the Financing Documents are not to be used for the
construction or interpretation of any of the Financing Documents.
1.4 INTERPRETATION
In this Agreement, unless otherwise provided:
(a) references to this Agreement or any other agreement are to be
construed as references to this Agreement, or agreement in force
for the time being and as amended, varied, supplemented or
novated from time to time;
(b) references to any person are to be construed so as to include
that person's assigns or transferees (in accordance with the
terms of the relative agreement or deed) or successors in title;
(c) references to a document being "IN THE AGREED FORM" means that
the document has been approved by the Bank and which shall be
attached to a letter from the Bank to the Borrower confirming
that the relative document is in the agreed form;
(d) accounting terms are to be construed to be consistent with
Generally Accepted Accounting Principles;
(e) references to liabilities are to be construed so as to include
all actual, contingent, present or future liabilities of the
relative person;
(f) references to "COMPANY" or "COMPANIES" are to be construed to
include all persons and associations which are companies (within
the meaning of section 735 of the Act), bodies corporate (within
the meaning of section 740 of the Act) or would constitute (if
acquired by any person) subsidiary undertakings (within the
meaning of section 258 of the Act);
(g) references to Clauses and Schedules are to clauses and schedules
in this Agreement; and
(h) the words "including" and "in particular" shall be construed as
being by way of illustration or emphasis only and shall not be
construed as, nor shall they take effect as, limiting the
generality of any foregoing words.
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2. CONDITIONS PRECEDENT
2.1 SATISFACTION OF CONDITIONS PRECEDENT
All conditions precedent have been satisfied.
3. REPRESENTATIONS AND WARRANTIES
3.1 ACKNOWLEDGEMENT OF RELIANCE ON ALL REPRESENTATIONS AND WARRANTIES
The Borrower acknowledges that the Bank has entered into each of the
Financing Documents and has accepted the guarantees, indemnities and
security granted in its favour under the Security Documents in full
reliance on each of the representations and warranties made in this
Clause 3.
3.2 ORIGINAL REPRESENTATIONS AND WARRANTIES
3.2.1 It is acknowledged by the parties to this Agreement that the
representations and warranties set out in Schedule 5 of this Agreement
were given and made by the Borrower on or about the Completion Date and,
subject to Clause 2 of the First Variation and Restatement Agreement and
Clause 2 of the Second Variation and Restatement Agreement are not, nor
shall they be deemed to be given, by the Borrower at any time
thereafter.
3.2.2 Pursuant to Clause 2 of the First Variation and Restatement Agreement
and Clause 2 of the Second Variation and Restatement Agreement, the
Bank's right in relation to the above representations and warranties
continue in full force and effect.
4. THE TERM LOAN FACILITY
4.1 THE TERM LOAN FACILITY
Subject to the terms and conditions of this Agreement, the Bank, in full
reliance on each of the representations and warranties made by the
Borrower under Clause 3 agrees to make available to the Borrower a term
loan facility in the maximum principal amount of L3,040,000, to be made
available as Tranche A, Tranche B and Tranche C.
4.2 PURPOSE OF THE TERM LOAN FACILITY
4.2.1 (a) Tranche A has been used, in discharge of the Borrower's
obligations in relation to the Acquisition Purchase Price for the
Target Shares, repayment of certain of Target's Indebtedness and
payment of the Transaction Costs.
(b) Tranche B has been used in and towards the discharge of the
Restructuring Costs and Transaction Costs.
(c) Tranche C has been used in and towards the discharge in full of
the Regis Corporation Indebtedness and any balance of Tranche C
after discharge of the Regis Corporation Indebtedness has been be
used for the general corporate purposes of the Borrower.
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4.2.2 The Bank shall not be obliged to enquire into the application by the
Borrower of the proceeds of any Term Loan Tranche and the Bank shall not
be responsible for the application of the proceeds of any Term Loan
Tranche.
4.3 AVAILABILITY AND DRAWDOWN OF THE TERM LOAN
4.3.1 Tranche A was drawn down by the Borrower in full on 25th September 1995.
4.3.2 Tranche B has been drawn down in lull by the Borrower.
4.3.3 Tranche C was drawn down in full by the Borrower in March 1996.
4.3.4 The first Interest Period for Tranche B and Tranche C respectively shall
start on the respective Tranche B, or Tranche C Drawdown Date and end on
the next Interest Date for Tranche A.
4.3.5 Once given, any Drawdown Notice shall be irrevocable and shall oblige
the Borrower to borrow in accordance with such notice.
4.3.6 The proceeds of each Term Loan Tranche will be paid to the credit of the
Borrower's account with the Bank or otherwise as the Borrower may
reasonably direct.
5. INTEREST
5.1 AMOUNT
Interest shall accrue on the Term Loan from and including the Drawdown
Date to, but excluding, the Repayment Date, at the rate determined by
the Bank to be the aggregate of
(a) the Margin;
(b) LIBOR; and
(c) the Mandatory Liquid Asset Costs.
5.2 DURATION OF INTEREST PERIODS
5.2.1 Interest payable on the Term Loan shall be calculated by reference to
successive periods ascertained in accordance with this Clause 5.2 (each
an "INTEREST PERIOD").
5.2.2 (a) Except for the purpose of Clause 4.3, each Interest Period will
be of 1, 3 or 6 months' duration (or such other period as is
necessary for the Borrower to comply with its obligations under
Clause 5.2.6) or such other period as the Bank may allow.
(b) With effect from the Interest Date relating to Tranche B and
Tranche C falling on or after 31st March 1996 all the Term Loan
Tranches shall be consolidated into one Term Loan Tranche which
will constitute the Term Loan.
-11-
5.2.3 The first Interest Period for any Term Loan Tranche shall start on the
relative Drawdown Date. Each succeeding Interest Period shall start on
the last day of the preceding Interest Period.
5.2.4 The Borrower shall, not less than 3 Business Days before the last
Business Day of each Interest Period, notify the Bank in writing of the
duration of the next Interest Period.
5.2.5 If for any reason the Borrower fails to select the duration of any
Interest Period for the Term Loan, it shall be deemed to have selected
an Interest Period of 3 months or such other period as is necessary for
the Borrower to comply with its obligations under Clause 5.2.6.
5.2.6 The Borrower shall ensure that an Interest Period ends on each
Installment Repayment Date.
5.2.7 Notwithstanding any contrary provision in this Agreement, no Interest
Period may be for a period such that it would expire after the Repayment
Date and if the Borrower selects an Interest Period expiring after the
Repayment Date, it shall be deemed to have selected one expiring on the
Repayment Date.
5.2.8 Any Interest Period which commences on the last Business Day in a month
or on a Business Day for which there is no numerically corresponding day
in the month in which that Interest Period is to end, shall (subject to
Clause 5.2.7) end on the last Business Day in that later month.
5.2.9 Any Interest Period which would otherwise end on a day which is not a
Business Day shall on the next succeeding Business Day or, if that day
falls in the following month, on the immediately preceding Business Day.
5.3 DEFAULT INTEREST
5.3.1 If the Borrower defaults in the payment of any amount due and payable
under any of the Financing Documents on the due date, the Borrower shall
pay default interest on such amount to the Bank from the due date to the
date of actual payment in full calculated by reference to successive
Interest Periods (each of such duration as the Bank may from time to
time select and the first beginning on the relative due date) at the
rate per annum being the aggregate of:
(a) 1 per cent. per annum;
(b) the Margin;
(c) LIBOR; and
(d) the Mandatory Liquid Asset Costs.
5.3.2 So long as such default continues, such rate shall be recalculated in
accordance with this Clause 5.3 on the last day of each such Interest
Period and unpaid interest then payable but unpaid under this Clause
shall be compounded at the end of each such Interest Period.
5.4 CALCULATION AND PAYMENT OF INTEREST
5.4.1 As soon as is practicable following the beginning of each Interest
Period, the Bank will notify the Borrower of the rate and amount of
interest payable for that Interest Period, (but
-12-
in the case of such interest calculated under Clause 5.3.1, any such
notification need not be more than weekly).
5.4.2 Interest due from the Borrower to the Bank under this Agreement shall:
(a) accrue from day to day on the relative amount at the appropriate
rate calculated under this Clause 5;
(b) except as otherwise provided in this Agreement, be paid by the
Borrower to the Bank in arrear on each Interest Date, save that
in the case of any Interest Period which is longer than 6 months,
the Borrower shall pay interest 6 monthly in arrear and on the
relative Interest Date;
(c) be calculated on the basis of the actual number of days elapsed
and a 365 days year; and
(d) be payable after as well as before judgment.
5.5 BANK'S DETERMINATION
The determination by the Bank of the amount of any interest payable
under any of Clauses 5.1 and 5.3 shall, save for manifest error, be
conclusive and binding on the Borrower.
6. REPAYMENT AND PREPAYMENT
6.1 REPAYMENT OF THE TERM LOAN
Subject to the terms of this Agreement, the Borrower shall repay the
Term Loan by payment to the Bank on each date set out in Column A below
(each date being an "INSTALMENT REPAYMENT DATE"), the Sterling amount of
the instalment (each an "INSTALMENT") set out in Column B below opposite
the relevant Installment Repayment Date (so that the Term Loan is repaid
in full on or before the Repayment Date):
COLUMN A COLUMN B
25th September 1998 L250,000
21st December1998 L250,000
25th March 1999 L250,000
l0th June 1999 L250,000
25th September 1999 L250,000
21st December 1999 L250,000
25th March 2000 L250,000
l0th June 2000 L250,000
25th September 2000 L250,000
21st December 2000 L250,000
25th March 2001 L250,000
l0th June 2001 L290,000
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6.2 VOLUNTARY PREPAYMENT OF THE TERM LOAN
6.2.1 The Borrower may prepay all or any part of the Term Loan and, if part
only, in a amount of L100,000 and multiples of L100,000.
6.2.2 The full amount of any such prepayment shall be made on an Interest
Date.
6.2.3 The Borrower may make any such prepayment by giving not less than
10 Business Days' prior written notice. Such notice shall be irrevocable
and shall specify the amount of the prepayment and the date upon which
it is to be made.
6.2.4 Every prepayment must be accompanied by interest accrued on the amount
prepaid and all other amounts due in relation to the amount prepaid
(including amounts, if any, due under Clause 8.3)
6.2.5 ORDER OF APPLICATION OF PREPAYMENTS
Each prepayment made is to be applied in or towards the discharge and
reduction of the Instalments in inverse order to maturity.
6.3 NO RE-BORROWING
No amount repaid or prepaid in relation to the Term Loan may be
re-borrowed.
7. MARKET DISRUPTION, ILLEGALITY, INCREASED COSTS, GROSSING UP AND OTHER
INCREASED COSTS AND EXPENSES
All the Borrower's rights and liabilities under this Agreement are
subject to the provisions of Schedule 7.
8. PAYMENTS
8.1 FUNDS AND PLACE
All payments to be made by the Borrower under any of the Financing
Documents shall be made on the due date to the Bank in cleared Sterling
funds for value on the due date to such account, at such office or bank
in London as the Bank may from time to time designate to the Borrower by
not less than 2 Business Days' prior notice.
8.2 BUSINESS DAY
If, but for this Clause, any sum would become due for payment under this
Agreement on a day which is not a Business Day, such payment shall be
made on the next succeeding Business Day; if the next succeeding
Business Day falls in a new calendar month, then such payment shall be
made on the immediately preceding Business Day.
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8.3 BREAKAGE COSTS
8.3.1 The Borrower agrees to indemnity the Bank on demand against any loss or
expense sustained or incurred by the Bank in liquidating or employing
deposits required or contracted for to effect or maintain any part of
the Term Loan as a consequence of any of:
(a) any part of the Term Loan not being borrowed, following the
service of the Drawdown Notice (unless as a result of a breach by
the Bank of its obligations under this Agreement); and
(b) failure to make any prepayment or repayment on an Interest Date.
8.3.2 Any certifications of the calculation of any such loss or expense issued
by the Bank under this Clause shall be conclusive and binding on the
Borrower.
8.4 ACCOUNTS
The Bank shall maintain in accordance with its usual practice an account
or accounts, which shall, as between the Borrower and the Bank be prima
facie evidence of the amounts from time to time advanced by, owing to,
paid and repaid to the Bank under this Agreement.
8.5 APPROPRIATION
The Borrower hereby waives any rights it may have to make any
appropriation as between any amounts payable under any of the Financing
Documents.
9. UNDERTAKINGS
9.1 INFORMATION UNDERTAKINGS
The Borrower agrees with the Bank that throughout the Security Period it
shall:
(a) furnish to the Bank within 120 days of the end of each of its
Financial Years two copies of the Accounts together with a copy
of the management letter (if any) addressed by the Auditors to
the directors of the Borrower in connection with the preparation
of the relative financial statements as soon as reasonably
practicable after its receipt by the Borrower;
(b) within 30 days following the end of each successive Accounting
Period during the Security Period (none of which shall be more
than 4 weeks in duration ("ACCOUNTING PERIOD") furnish to the
Bank two copies of the management accounts ("MANAGEMENT
ACCOUNTS") for the relative Accounting Period for the Charging
Group and which shall include, without limitation, the following
information in respect of such Accounting Period:
1. a statement of its consolidated profit and loss
2. its consolidated balance sheet;
-15-
3. its consolidated cash flow statement and a statement showing
separately all cash movements between any of the companies
in the Charging Group and Regis Corporation;
4. a schedule of all Capital Expenditure incurred by companies
in the Charging Group during that Financial Year and
budgeted to be incurred but not at that time incurred
(together with a commentary in reasonable detail on the
purpose for which any such Capital Expenditure has been or
is to be incurred together with a schedule of any moneys
paid to Regis S.A. and S&L for the Overseas Capital
Expenditure Programme), details of all BHS Receipts (defined
in Clause 9.2) and receipts relating to Reverse Premia
(defined in Clause 9.2) received during that Accounting
Period and details of all amounts received from Regis
Corporation during any one Financial Year on a cumulative
basis pursuant to Clause 9.2.2(f)(iv); and
5. any revised profit and cashflow forecasts for the Charging
Group for the remainder of the then current Financial Year,
including a reforecast of the results for that Financial
Year.
together with a commentary setting out in reasonable detail a
comparison of all such information with the projections,
forecasts and estimates contained in the Operating Budget (or any
replacement or substitution made in accordance with
Clause 9.1(d)(ii)) and including an analysis explaining any
material variations therefrom; and
within 45 days after each calendar quarter provide to the Bank, a
summary of the management information for S & L and Regis S.A.,
prepared on substantially the same basis as the information
provided in the Management Accounts; and
furnish to the Bank the audited accounts, and any other published
accounts of the Regis Corporation immediately after the same are
published and the quarterly results of the Regis Corporation as
soon as the same are produced.
(c) procure that all Management Accounts are prepared on a basis
consistent with the Accounting Principles and disclose with
reasonable accuracy the financial position of each company in the
Charging Group;
(d) (i) provide to the Bank a copy of the Operating Budget
(prepared on a basis consistent with the Accounting
Principles) for each of its Financial Years during the
Security Period, not less than 30 days before the start
of the relative Financial Year; and
(ii) if the Borrower shall determine that any of the
information, projections, estimates and forecasts made in
relation to any of its Financial Years during the
Security Period should be materially different from those
set out in the relative Operating Budget, provide the
Bank with revised information, projections, estimates and
forecasts in respect of any part of such Financial Year
in respect of which such revised information,
projections, estimates and forecasts are to apply
promptly following their approval by the board of
directors of the Borrower and subject to their approval
by the Bank, such revised information, projections,
estimates or forecasts shall be
-16-
deemed to have replaced the projections, estimates or
forecasts previously applicable to such period as part of
the Operating Budget; and
(iii) not less than 30 days before each such 12 months' period,
provide to the Bank a cashflow forecast for the companies
in the Charging Group for the 12 months' period starting
on each 1st July and 1st January during the Security
Period;
(e) deliver to the Bank within 30 days after the end of each
Quarterly Accounting Period (each a "CERTIFICATE DATE") a
certificate (in substantially the terms set out in Part 2 of
Schedule 6) executed under the authority of the board of
directors of the Borrower certifying that in relation to the
3 months' period ending on the relative Certificate Date (or in
the case of the first Certificate Date, in respect of the period
from the Completion Date to the first Certificate Date) the
Borrower is in compliance with all of the undertakings given by
the Borrower under the Financing Documents (and including a
calculation of the financial undertakings set out in Clause 9.2
falling to be complied with at the end of that 3 months' period)
PROVIDED THAT for the purpose of this Clause 9.1(e):
(i) the calculations for Clause 9.2 shall be made by
reference to the Management Accounts prepared for the
period ending on the Certificate Date in relation to
which the certificate is to be given;
(ii) if there have been any breaches of any undertakings at
any time during the period to which such certificate
relates then the Borrower shall include in such
certificate relevant details of all such breaches and the
steps taken to remedy the breaches; and
(iii) the Borrower shall use all reasonable and practicable
endeavours to procure that the Auditors shall (if they
are so satisfied) within 120 days of the end of each
Financial Year of the Borrower and by reference to the
relative Accounts certify (if they are so satisfied) to
the Bank that any certificate given under this
Clause 9.1(e) in relation to the last Certificate Date in
such Financial Year is correct in relation to the
financial undertakings set out in Clause 9.2;
(f) as soon as practicable following the Bank's request, furnish to
the Bank, such information, projections, estimates or forecasts
in relation to any company in the Charging Group and any of their
respective businesses, turnover, assets, financial condition,
ownership or prospects as the Bank may from time to time
reasonably require;
(g) promptly notify the Bank of:
(i) any Default or any Default Occurrence which is
continuing;
(ii) any litigation, arbitration or administrative proceedings
commenced against any company in the Charging Group
involving a potential liability of at least L25,000;
(iii) any Encumbrance other thin a Permitted Encumbrance
attaching to any of the assets of any company in the
Charging Group;
-17-
(iv) upon becoming aware thereof, any occurrence which will or
is likely to affect the ability of any of the companies
in the Charging Group to perform or discharge any of its
payment obligations under any of the Transaction
Documents; and
(v) any Change of Control;
(h) notify the Bank at least 15 Business Days before any proposed
Overseas Approved Funding is made and provide to the Bank details
of the amount of such proposed Overseas Approved Funding and the
terms and conditions upon which it is proposed to be made;
(i) notify the Bank of any notice given by Regis S.A. in relation to
the Regis S.A. Comfort Letter;
(j) deliver to the Bank the Closing Accounts (as defined in the
Acquisition Agreement) as soon as is practicable after their
being prepared in accordance with the Acquisition Agreement and
no later than the Accounting Date in December 1995;
(k) promptly deliver to the Bank within 30 days of the date of the
First Variation and Restatement Agreement the accounts of SHL at
Completion and the Completion Accounts of SSL (as Completion and
Completion Accounts are defined in the New Acquisition
Agreements);
(l) promptly deliver to the Bank a Certified Copy of all assignments
and consents that are completed in relation to Property and
promptly notify the Bank of any disputes or material delays in
relation to the completion of any assignment or consents
regarding Property; and
(m) provide regular updates on progress and a final report to the
Bank within 3 months on the pension arrangements that have been
made for employees previously employed by the New Vendor and who
are now employed by SHL or SSL, such report to contain
confirmation that the benefits accrued by such employees during
the course of their employment with the New Vendor are properly
secured or provided for under the New Vendor's pension
arrangements and that appropriate pension arrangements have been
made for them.
9.2 FINANCIAL UNDERTAKINGS
9.2.1 For the purpose of this Agreement and in particular this Clause 9.2,
unless otherwise provided:
"ACCOUNTING DATE" means the last date in an Accounting Period;
"ACQUISITION GOODWILL" means the net goodwill arising on the acquisition
of the Target Shares and the shares of SHL and SSL;
"CAPITAL EXPENDITURE" means, m relation to any period for which the
calculation is made, any expenditure which should be treated as capital
expenditure in accordance with the Accounting Principles after deducting
any amounts received by any company in the
-18-
Charging Group in that period in relation to reverse premia for any
property leases which are capital expenditure in accordance with the
Accounting Principles ("REVERSE PREMIA"); and
amounts received by any company in the Charging Group from British Home
Stores in connection with the termination of any licence, tenancy
concession or similar agreement ("BHS RECEIPTS") where such receipts are
expended in accordance with Clause 9.2.2(g);
"CONSOLIDATED ADJUSTED NET WORTH" means, on any date, the aggregate
amount of the paid up share capital of the Borrower including amounts
standing to the credit of the share premium account and any capital
redemption reserves plus or minus the aggregate amount standing in the
Charging Group's capital and revenue reserves (on a consolidated basis):
(a) adding back any diminution due to the writing off of Acquisition
Goodwill and any diminution due to the writing off of any
Restructuring Costs;
(b) deducting any amounts attributable to any intangible asset
included as an asset in the Borrowers consolidated balance sheet
(excluding amounts attributable to Acquisition Goodwill and trade
marks or similar property);
(c) deducting any amounts of any capital accounts or reserves derived
from any writing up of book value of any assets of any of the
companies in the Group above historic cost less accumulated
Depreciation at any time after the Completion Date:
(d) deducting the amount of any minority interests arising on
consolidation;
(e) deducting the amount of any profits from Extraordinary Items and
Exceptional Items since the Completion Date;
(f) deducting the amount of any exchange gains or losses arising on
consolidation accounted for through reserves in accordance with
SSAP20;
(g) adding back any finance or issue costs arising from the
transaction, in accordance with FRS4, to the extent that they
have been written off against either the capital or revenue
reserves;
(h) deducting any amounts attributable to its investment in Regis
S.A. and S&L;
(i) adding any management charges accrued due and payable by the
Borrower in favour of Regis Corporation; and
(j) any amounts written off in the Financial Year ending 26th June
1998 in respect of computer equipment.
"CONSOLIDATED CASH FLOW BEFORE FINANCING" means, in relation to the
Charging Group and any period for which the calculation is made, the
aggregate of PBIT (but adding any loss and deducting any profit arising
on the disposal of a fixed asset to the extent that such profit and loss
has been included within PBIT), Depreciation charged to the profit and
loss account for such period and the amount of any management charge
payable by the Borrower to Regis Corporation in relation to that period
which is charged to the profit and loss account, but which has not been
paid:
-19-
(a) plus the proceeds of disposal of fixed assets during such
period, to the extent that they have been included in the
Business Plan for that period;
(b) plus income received from associated undertakings to the extent
received in cash and less any payments made to associated
undertakings whether Overseas Approved Funding or otherwise;
(c) plus dividends received;
(d) plus any decrease or minus any increase in Net Working Capital
for such period;
(e) plus or minus the movement in provisions for liabilities and
charges to the extent that this has been debited or credited to
PBIT;
(f) plus any receipts by way of Extraordinary Items and deducting
payments by way of Extraordinary Items in each case made during
such period;
(g) minus the aggregate of Taxes paid during such period;
(h) minus the amount of Capital Expenditure:
(i) funded otherwise than under a Finance Lease where the
Finance Lease Expenditure in respect thereof is included
in such Capital Expenditure paid or contractually required
to be paid during such period;
(ii) and in respect of any sums made available to the Borrower
by Regis Corporation in accordance with the terms of
Clause 9.2.2(f)(iv);
(i) plus realised exchange gains and minus realised exchange losses
charged during such period;
(j) plus any monies received from Regis Corporation in consideration
for additional share capital in the Borrower to the extent that
any monies so received from Regis Corporation do not exceed the
amount of monies paid to Regis Corporation by the Borrower during
the period; and
(k) deducting amounts paid by the Borrower to Regis Corporation in
relation to management charges that do not relate to the period
being tested, to the extent not already included in PBIT for the
period being tested.
PROVIDED ALWAYS THAT no item shall be counted more than once and all
payments in relation to Total Obligations shall be excluded;
"CURRENT ASSETS" means, in relation to the companies in the Charging
Group, the aggregate value of its assets which are treated as current
assets in accordance with Accounting Principles;
"CURRENT LIABILITIES" means, in relation to the companies in the
Charging Group, the aggregate value of its liabilities which are treated
as current liabilities in accordance with Accounting Principles;
-20-
"DEPRECIATION" has the meaning given to it by Accounting Principles;
"EXTRAORDINARY ITEMS" has the meaning given to that term in FRS3,
including those items listed in Paragraph 20 of FRS3;
"EXCEPTIONAL ITEMS" has the meaning given to that term in FRS3, but
shall exclude those items listed in Paragraph 20 of FRS3;
"FINANCE LEASE" means any lease, hire agreement, credit sale agreement,
purchase agreement, conditional sale agreement or instalment sale and
purchase agreement which should be treated in accordance with SSAP 21
(or any successor thereto) as a finance lease or in the same way as a
finance lease;
"FRS" means a financial reporting standard issued by the Accounting
Standards Board for application in England and Wales and, where
referenced by a number, means that particular financial reporting
standard;
"GEARING" means at any time the Total Debt of the Charging Group divided
by the Consolidated Adjusted Net Worth of the Charging Group;
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" means, in relation to the
companies in the Charging Group, accounting principles, concepts, bases
and policies generally adopted and accepted in the United Kingdom for
the preparation and presentation of audited financial statements;
"NET WORKING CAPITAL" means at any time the aggregate of:
(a) Current Assets (excluding all cash at a bank and in hand, all
assets in relation to Tax and accrued interest receivable);
(b) less the aggregate of Current Liabilities (excluding monies due
in relation to Total Debt, and liabilities in relation to Tax,
Extraordinary Items, and dividends payable): for the avoidance of
doubt Tax excludes PAYE, VAT and Customs and Excise duty;
"PBIT" means, in relation to the companies in the Charging Group and any
period for which the calculation is made, the consolidated profit on
ordinary trading activities (including Exceptional Items and credit
interest receivable in respect of positive cash balances) before Tax and
Total Debt Costs, excluding:
(a) amounts written off the value of investments;
(b) profit attributable to minority interests;
(c) amounts written off the value attributed to Acquisition Goodwill
and amounts written off in relation to Restructuring Costs;
(d) Extraordinary hems;
(e) any profit arising on the disposal of fixed assets;
-21-
(f) income from shares in interests in associated undertakings and
income from any other fixed asset investment;
(g) acquisition expenses required to be capitalised in accordance
with Paragraph 85 of FRS7;
(h) amounts amortised on finance costs and issue costs arising from
this transaction in accordance with FRS4;
(i) realised and unrealised exchange gains and losses;
(j) any costs associated with the completion, acquisition and start
up costs; and
(k) excluding any payments by Openpark or the Borrower in accordance
with the Wella Agreement; and
(l) any amounts written off in the Financial Year ending 26th June
1998 in respect of computer equipment;
PROVIDED ALWAYS THAT no item shall be counted more than once and all
Total Debt Costs shall be excluded;
"SSAP" means any statement of standard accounting practice issued by the
Institute of Chartered Accountants for application in England and Wales
and, where referenced by a number, means that particular statement;
"TOTAL DEBT COSTS" means, in relation to a period of time, the aggregate
of:
(a) all interest, commissions, periodic fees and other financing
charges (except fees and commissions due and payable on the
Completion Date) paid or accrued by any member of the Charging
Group during such period (including the interest element payable
under Finance Leases, but excluding any amounts amortised on
finance costs and issue costs arising from this transaction in
accordance with FRS4);
(b) less any sums receivable or plus any sums paid or accrued by the
Borrower under any interest rate protection agreement of whatever
description during such period;
(c) excluding interest receivable; and
(d) for the avoidance of doubt excluding all scheduled repayments of
Total Debt and any fees and commissions paid on completion and
any interest payable under the Vendor Loan Notes and the Wella
Agreement;
"TOTAL DEBT" means, at any time in relation to the Charging Group, the
indebtedness for or in respect of:
(a) monies borrowed;
(b) bonds, notes, loan stock, debentures or similar instruments;
-22-
(c) monies raised under acceptance credit, ▇▇▇▇ discounting,
factoring, note purchase and documentary credit facilities;
(d) the acquisition cost of assets or services to the extent payable
on deferred terms, but only to the extent the same involves
deferral of payment of any sum for more than 90 days;
(e) the capital element of rental payments under leases (whether in
respect of land, machinery or otherwise) entered into primarily
as a method of raising finance or financing the acquisition of
the property or asset leased but excluding rental payments under
a lease of property which would not be treated as a Finance
Lease;
(f) payments under hire purchase and conditional sale agreements;
(g) guarantees, bonds, standby letters of credit or similar
instruments issued in connection with the performance of
contracts; and
(h) guarantees, indemnities or other assurances against financial
loss in respect of the liability of any person falling within (a)
to (g) above;
(i) payments under the Vendor Loan Notes; and
(j) payments under the Wella Agreement;
"TOTAL OBLIGATIONS" means, in relation to the Charging Group and the
period for which the calculation is made, the aggregate of:
(a) Total Debt Costs for such period;
(b) all scheduled repayments and any prepayments of the Term Loan in
that period to the extent, for the purposes of this definition
only, that any scheduled repayments do not exceed, in aggregate,
L1,000,000 in any such period
(c) all dividends declared in that period;
(d) the capital element of all rentals or, as the case may be, other
payments payable or paid in that period under any Finance Leases
entered into by any member of the Charging Group; and
(e) any interest payments made in accordance with the Vendor Loan
Notes and any payments of interest and principal in relation to
the Wella Agreement;
9.2.2 The Borrower hereby undertakes with the Bank to ensure that:
(a) PBIT TO TOTAL DEBT COSTS
The ratio of PBIT to Total Debt Costs of the Charging Group in
respect of each period referred to in Column A shall not be less
than the ratio set out in Column B below opposite such period;
-23-
COLUMN A COLUMN B
The 4 Quarterly Accounting Periods preceding the Accounting Date in 2.50
June 1998
The 4 Quarterly Accounting Periods preceding the Accounting Date in 2.25
September 1998
The 4 Quarterly Accounting Periods preceding the Accounting Date in 2.25
December 1998
The 4 Quarterly Accounting Periods preceding the Accounting Date in 2.25
April 1999
The 4 Quarterly Accounting Periods preceding the Accounting Date in 2.25
June 1999
The 4 Quarterly Accounting Periods preceding the Accounting Date in 3.00
September 1999
The 4 Quarterly Accounting Periods preceding the Accounting Date in 3.50
December 1999
The 4 Quarterly Accounting Periods preceding the Accounting Date in 3.50
April 2000
The 4 Quarterly Accounting Periods preceding the Accounting Date in 4.00
June 2000
The 4 Quarterly Accounting Periods preceding the Accounting Date in 4.00
September 2000
The 4 Quarterly Accounting Periods preceding the Accounting Date in 4.00
December 2000
The 4 Quarterly Accounting Periods preceding the Accounting Date in 4.00
March 200l
(b) CONSOLIDATED CASH FLOW BEFORE FINANCING TO TOTAL OBLIGATIONS
The ratio of Consolidated Cash Flow Before Financing to Total
Obligations in respect of each of the periods set out in Column
A below shall be no less than the ratio set out in Column B:
COLUMN A COLUMN B
The 4 Quarterly Accounting Periods preceding the Accounting Date in 1:1
June 1998
The 4 Quarterly Accounting Periods preceding the Accounting Date in 1:1
September 1998
The 4 Quarterly Accounting Periods preceding the Accounting Date in 1:1
December 1998
The 4 Quarterly Accounting Periods preceding the Accounting Date in 1:1
April 1999
The 4 Quarterly Accounting Periods preceding the Accounting Date in 1:1
June 1999
The 4 Quarterly Accounting Periods preceding the Accounting Date in 1:1
September 1999
The 4 Quarterly Accounting Periods preceding the Accounting Date in 1:1
December 1999
The 4 Quarterly Accounting Periods preceding the Accounting Date in 1:1
April 2000
-24-
The 4 Quarterly Accounting Periods preceding the Accounting Date in 1:1
June 2000
The 4 Quarterly Accounting Periods preceding the Accounting Date in 1:1
September 2000
The 4 Quarterly Accounting Periods preceding the Accounting Date in 1:1
December 2000
The 4 Quarterly Accounting Periods preceding the Accounting Date in 1:1
March 2001
(c) CONSOLIDATED ADJUSTED NET WORTH
The Consolidated Adjusted Net Worth of the Charging Group shall
not at any time during the period set out in Column A below be
less than the amount set out opposite the relative period in
Column B below:
COLUMN A COLUMN B
the Accounting Date in March 1998 to L6,660,000
the day before the Accounting Date in
June 1998
the Accounting Date in June 1998 L6,965,000
the day after the Accounting Date in June L6,845,000
1998 to the day before the Accounting
Date in September 1998
the Accounting Date in September 1998 L7,000,000
to the day before the Accounting Date in
December 1998
the Accounting Date in December 1998 to L7,320,000
the day before the Accounting Date in
April 1999
the Accounting Date in March 1999 to L7,575,000
the day before the Accounting Date in
June 1999
the Accounting Date in June 1999
to the day before the Accounting Date in L8,135,000
September 1999
the Accounting Date in September 1999 L8,255,000
to the day before the Accounting Date in
December 1999
the Accounting Date in December 1999 to L8,645,000
the day before the Accounting Date in
April 2000
the Accounting Date in April 2000 to the L9,010,000
day before the Accounting Date in
June 2000
the Accounting Date in June 2000
to the day before the Accounting Date in
September 2000 L9,490,000
the Accounting Date in September 2000 L9,570,000
to the day before the Accounting Date in
December 2000
-25-
the Accounting Date in December 2000 to L9,975,000
the day before the Accounting Date in
March 2001
the Accounting Date in March 2001 to L10,340,000
the Accounting Date in June 2001
(d) CAPITAL EXPENDITURE
the aggregate amount of Capital Expenditure incurred by the
companies in the Charging Group together with any expenditure
incurred in relation to any acquisition permitted under Clause
9.4(g)(ii) for each period referred to in Column A below shall
not exceed the amount referred to in Column B below opposite
such period:
COLUMN A COLUMN B
The 3 Quarterly Accounting Periods preceding L900,000
the Accounting Date in June 1998
The 6 Quarterly Accounting Periods preceding L1,400,000
the Accounting Date in December 1998
The 10 Quarterly Accounting Periods preceding L1,800,000
the Accounting Date in April 1999
The 13 Quarterly Accounting Periods preceding L2,000,000
the Accounting Date in June 1999
The 3 Quarterly Accounting Periods preceding L900,000
the Accounting Date in September 1999
The 6 Quarterly Accounting Periods preceding L1,400,000
the Accounting Date in December 1999
The 10 Quarterly Accounting Periods preceding L1,800,000
the Accounting Date in April 2000
The 13 Quarterly Accounting Periods preceding L2,000,000
the Accounting Date in June 2000
The 3 Quarterly Accounting Periods preceding L900,000
the Accounting Date in September 2000
The 6 Quarterly Accounting Periods preceding L1,400,000
the Accounting Date in December 2000
The 10 Quarterly Accounting Periods preceding L1,800,000
the Accounting Date in April 2001
The 13 Quarterly Accounting Periods preceding L2,000,000
the Accounting Date in June 2001
(e) that at no time during the Security Period will the net cash flow
between Regis Corporation and the Borrower or any other company
in the Charging Group (where it is a negative amount in relation
to the Borrower or any other company in the Charging Group)
exceed L25,000 in any one Financial Year (except during the
period from the Completion Date to the Accounting Date in June
1996 in which period the negative amount which it may not exceed
is L37,000) and in aggregate L50,000 throughout the Security
Period. For the avoidance of doubt any calculation of the amount
of such net cashflows is to exclude:
(i) the payment by the Borrower of the inter company balance
(not exceeding in aggregate L737,000) to Regis Corporation
out of the
-26-
proceeds of the subscription for ordinary shares referred
to in the certificate referred to in paragraph (k) of
Schedule 2;
(ii) any monies received by the Borrower from Regis
Corporation in December 1995 in connection with
acquisitions made under the New Acquisition Agreements;
(iii) the payment by the Borrower of the Regis Corporation
Indebtedness;
(iv) subject to Clause 9.1(k), any sums made available to the
Borrower either by subscription for ordinary shares in
the share capital of the Borrower or by loan or loans
made to the Borrower by Regis Corporation at its
discretion up to a maximum aggregate of L500,000 in any
one Financial Year save that such sums shall be applied
exclusively in Capital Expenditure;
(v) Overseas Approved Funding;
(f) that BHS Receipts defined in the definition of Capital
Expenditure (Clause 9.2.1) are to be applied in Capital
Expenditure within 6 months after receipt.
9.2.3 If the directors of the Borrower determine at any time during the
Security Period that any of the Accounting Principles applied in the
preparation of any of the Accounts and the Management Accounts shall be
different from the Accounting Principles or if as a result of the
introduction or implementation of any SSAP or FRS or any other
accounting standard or any change in any of them or in applicable law,
the Accounting Principles are required to be changed, then the Borrower
shall promptly give written notice to the Bank of such determination or
requirement. Thereafter, in the case of any change in any of the
relative Accounting Principles, and as soon as practicable after the
Bank's demand, the Borrower and the Bank shall agree such adjusted or
amended financial undertakings as would in the Bank1s opinion, provide
the Bank with substantially the same protections as the financial
undertakings set out in Clause 9.2 (but which are not materially more
onerous than those set out in Clause 9.2 as at the date of this
Agreement to the extent that any revised financial undertakings will, as
nearly as practicable, be based on a similar differential as that
between the financial projections in the Business Plan and the financial
undertakings as at the date of this Agreement).
9.2.4 In the circumstances set out in Clause 9.2.3, until amended financial
undertakings are agreed under Clause 9.2.3, the Borrower shall procure
that there are delivered to the Bank copies of the Borrower's Accounts
audited by the Auditors in accordance with the Accounting Principles
prevailing before the relative determination, introduction or
implementation and all Management Accounts required to be delivered to
the Bank under Clause 9.1 shall also be prepared in a manner consistent
with such Accounting Principles and, for the avoidance of doubt, during
such period, the financial undertakings set out in this Clause 9.2 shall
be calculated in accordance with the Accounting Principles prevailing
before the relative determination, introduction or implementation.
9.2.5 The calculation of ratios and other amounts under this Clause 9.2 shall
be made by the Bank on the basis of the latest information required to
be delivered to the Bank under Clause 9.1 for the period in relation to
which the calculation is to be made and such calculations shall, in the
absence of manifest error, be conclusive and binding on the Borrower.
-27-
9.3 POSITIVE UNDERTAKINGS
The Borrower agrees with the Bank that throughout the Security Period it
shall, and it shall procure that each of its Subsidiaries in the
Charging Group shall, unless the Bank agrees Otherwise:
(a) at all times comply with all laws and regulations applicable to
it and which are required in relation to the conduct of its
business, trade and activities as anticipated in the Business
Plan and the New Business Plan and obtain, effect and maintain in
full force and effect all governmental and other regulatory
consents, licences, exemptions, clearances, filings,
registrations and authorisations required for the validity and
enforceability in evidence of any of the Financing Documents;
(b) that where it maintains its transmission and banking business in
the United Kingdom with the Bank, it continues to maintain such
business with the Bank throughout the Security Period PROVIDED
THAT where companies in the Charging Group use other banks and
building societies authorised by the Bank of England and the
Building Societies Commission respectively for the purpose of
receiving cash and transferring it to the Bank credit balances
with each branch of each bank or building society may never
exceed L5,000 (and the aggregate of all such credit balances may
never exceed L250,000) and all such credit balances are
transferred to the Bank at the end of each week during the
Security Period;
(c) immediately upon request by the Bank permit that any one or more
persons representing or instructed by the Bank, be allowed to
have access to its assets, books and records and to inspect the
same during normal business hours and it shall, promptly
following the request of the Bank authorise and instruct any of
its officers to discuss all such information relating to any of
its financial condition, trading activities and prospects as the
Bank may request;
(d) maintain insurances as are usually maintained by prudent
companies carrying on similar businesses;
(e) use all practicable endeavours to procure that within 30 Business
Days of the date of their appointment as auditors of the
Borrower, the relative firm of chartered accountants shall
deliver to the Bank a letter addressed to the Bank from such
newly appointed Auditors in substantially the form set out in
Schedule 6;
(f) take all steps to preserve its rights arising under any of the
Acquisition Documents and New Acquisition Documents and in the
event of any breach of any of the warranties and indemnities
given thereunder by the Vendor the New Vendor, Regis Corporation
or any other person promptly and at its own cost and expense take
all practicable steps to enforce such rights;
(g) pay and discharge all Taxes and governmental charges before the
date on which the same become overdue unless, and only to the
extent that, such Taxes and charges shall be contested in good
faith by appropriate proceedings, pending determination of which
payment may lawfully be withheld, and there shall be set aside
adequate reserves with respect to any such Taxes or charges so
contested in accordance with Generally Accepted Accounting
Principles;
-28-
(h) comply in all respects with Sections 151 to 158 of the Act
including in relation to the execution of the Security Documents
and the payment of amounts due under this Agreement;
(i) change the Target's accounting reference date from 31st December
to 30th June within 30 days after the date of this Agreement;
(j) change SHL's and SSL's accounting reference date to 30th June
within 30 days after the date of the Amendment and Restatement
Agreement;
(k) enter into the Interest Rate Protection Agreements within 14 days
after the Completion Date;
(l) within 14 days after the Completion Date, properly execute and
deliver to the Bank the Keyman Insurance Assignment;
(m) procure that all necessary assignments and other consents
relating to Property are obtained expeditiously;
(n) procure that equivalent pension arrangements and death in service
benefits enjoyed by those employees previously employed by the
New Vendor and now employed by SHL or SSL are maintained
throughout the duration of their employment with SHL or SSL;
9.4 NEGATIVE UNDERTAKINGS
The Borrower agrees with the Bank that during the Security Period it
shall not, and it shall procure that none of its Subsidiaries in the
Charging Group shall, unless the Bank agrees otherwise:
(a) create or permit to subsist any Encumbrance (other than a
Permitted Encumbrance) over any of its assets from time to time;
(b) incur or permit to remain outstanding any Indebtedness other than
Permitted Indebtedness;
(c) sell, transfer, lease, factor, discount, lend or otherwise
dispose of or enter into any agreement under which it may be or
become obliged to sell, transfer, lease, factor, discount, lend
or dispose of any of its assets (whether in a single transaction
or a series of connected transactions) other than:
(i) in the ordinary course of its trading activities;
(ii) the exchange of assets for other assets required for or
in connection with its trading activities of similar or
greater value than the assets disposed of and otherwise
on normal commercial terms;
(iii) disposals of assets by any company in the Charging Group
except to a company in the Charging Group;
-29-
(iv) in any such case which would not result in the companies
within the Charging Group making disposals (not included
in paragraphs (i) to (iii) above) of assets in any
Financial Year of the Borrower with an aggregate book
value or if higher the actual consideration in excess of
L50,000;
(v) in relation to the Overseas Capital Expenditure
Progranmme during the 3 years' period starting on the date
of this Agreement or Overseas Approved Funding; and
(vi) any disposals arising in relation to any arrangement
under which any company if the Charging Group receives
payments as compensation for the undepreciated element of
fixed assets used for any trading activity conducted from
property in relation to which the relative licence,
tenancy or occupation is terminated;
(d) merge or consolidate with any other person (whether by
winding-up, dissolution or other means);
(e) make, pay or declare any dividend or other distribution in
relation to any shares forming part of the issued share capital
of the Borrower or make any payment or repayment in relation to
Indebtedness owed to Regis Corporation in relation to Overseas
Approved Funding;
(f) make any loans or grant any credit to or for the benefit of any
person other than:
(i) credit allowed by the relative company in the normal
course of the conduct of its trading activities (subject
to Clause 9.4(m));
(ii) loans made between companies in the Charging Group;
(iii) loans made to employees of any companies in the Charging
Group not exceeding L50,000 in aggregate; and
(iv) loans or credit for the purpose of funding the Regis S.A.
Capital Expenditure Programme during the 3 years' period
starting on the date of this Agreement or Overseas
Approved Funding;
(g) incorporate any company as its Subsidiary or acquire any business
of or shares or securities issued by any company after the
Completion Date or enter into any agreement under which it may be
or become bound to acquire any business of, shares or securities
issued by, any company except for the acquisition of businesses
(similar to those carried on by the Borrower or Target at the
date hereof), where the aggregate purchase consideration for any
acquisition, when taken together with similar consideration
incurred by any companies in the Charging Group and the gross
liabilities, which when taken together with similar liabilities
incurred by any companies in the Charging Group assumed at the
time of the acquisition by any companies in the Charging Group in
any Financial Year, do not exceed in aggregate for any period
specified in Column A in Clause 9.2.2(e) the amount set out
opposite that period in Column B opposite such period (on the
basis that all monies used in such acquisitions are classified as
Capital Expenditure);
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(h) otherwise than in the ordinary course of the conduct of its
trading activities, make any material change in the terms and
conditions upon which it does business or carry on any trading
activities other than the trading activities carried on at the
date hereof;
(i) pay any fees or commissions to any person other than:
(i) those on open market terms in the ordinary course and for
the purpose of its trading activities;
(ii) the Transaction Costs;
(iii) fees due and payable under the Acquisition Documents; and
(iv) subject to Clause 9.2.2(f), management charges due and
payable by the Borrower to Regis Corporation;
(j) subject to Clause 9.3(i) change its accounting reference date
from 30th June;
(k) permit or effect any variations, novations or amendments, or
waive any conditions to, any of the Acquisition Documents;
(1) make any payment directly or indirectly under the Vendor Loan
Notes prior to funds being received from Regis Corporation in
accordance with the terms of a letter of undertaking set out in
Schedule 2 of the First Variation and Restatement Agreement;
(m) vary, amend, restate or extend the terms of the Wella Agreement,
or repay Indebtedness in excess of L780,472 thereunder without
the written consent of the Bank;
(n) take any action to dissolve any member of the Charging Group
without the prior written consent of the Bank and any other party
to any of the Transaction Documents, the New Transaction
Documents or the Wella Agreement where the consent of that other
▇▇▇▇▇ is required; and
(o) directly or indirectly make any repayments of principal and
interest under the Wella Agreement exceeding L112,000 in any
Financial Year.
10. DEFAULT
10.1 DEFAULT
There shall be a Default if:
(a) any amount payable under this Agreement is not paid by the
Borrower on the date and at the place at which it is expressed to
be payable in accordance with the terms of this Agreement; or
(b) any of the members of the Charging Group fails to comply with any
of its obligations and undertakings under any of the Financing
Documents (other than
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the obligations and undertakings referred to in the foregoing
Clause 10.1(a) and, if such failure is capable of remedy (as
determined by the Bank) such default is not remedied within 5
Business Days after notice of such failure has been given by the
Bank to the Borrower; or
(c) any representation, warranty or statement made or deemed to be
repeated by or on behalf of any of the companies in the Charging
Group under any of the Financing Documents or in any notice,
certificate, confirmation or statement referred to in or
delivered under any of the Financing Documents is not or proves
not to have been true and accurate in any respect when made or
deemed to have been repeated; or
(d) any of the Financing Documents is not or ceases to be in full
force and effect or the validity or enforceability of any of the
terms of any of the Financing Documents shall be contested by any
of the companies in the Charging Group; or
(e) any Indebtedness of any of the companies in the Charging Group:
(i) is declared to be or otherwise becomes due and payable
prior to its specified maturity; or
(ii) is not paid when due or within any applicable grace
period;
or a creditor or any creditor or creditors of members of the
Charging Group become(s) entitled to declare any such
Indebtedness due and payable prior to its specified maturity; or
(f) a creditor or encumbrancer attaches or takes possession of, or a
distress, execution, sequestration or other process is levied or
enforced upon or sued out against, any of the assets of any of
the companies in the Charging Group; or
(g) any of the companies in the Charging Group:
(i) suspends payment of its debts or is unable or admits its
inability to pay its debts as they fall due; or
(ii) commences negotiations with one or more of its creditors
with a view to the general readjustment or rescheduling
of all or part of its Indebtedness which it would
otherwise not be able to pay as it falls due; or
(iii) proposes or enters into any composition or other
arrangement for the benefit of its creditors generally or
any class of creditors; or
(h) any person takes any action or any legal proceedings are started
or other steps taken for:
(i) any of the companies in the Charging Group (other than a
Dormant Subsidiary) to be adjudicated or found bankrupt
or insolvent; or
(ii) the winding-up or dissolution of any of the companies in
the Charging Group (other thin a Dormant Subsidiary); or
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(iii) the appointment of a trustee, receiver, administrative
receiver, or similar officer to any of the companies in
the Charging Group (other than a Dormant Subsidiary) or
the whole or any part of their respective assets; or
(i) any adjudication, order or, as the case may be, appointment is
made under or in relation to any of the proceedings referred to
in Clause 10.1(h); or
(j) an application is made to the Court for an administration order
under the Insolvency ▇▇▇ ▇▇▇▇ with respect to any of the
companies within the Charging Group; or
(k) any of the companies in the Charging Group suspends, ceases or
threatens to suspend or cease to carry on its business; or
(l) at any time there occurs a material adverse change in the
financial condition, business condition or prospects of any of
the companies in the Charging Group constituting a material
adverse change to such company in the Charging Group so that it
appears that any of the companies in the Charging Group may be
unable to meet its obligations under any of the Financing
Documents; or
(m) there is any redemption, purchase or reduction of the Borrower's
issued share capital or any distribution in relation to any of
the Borrower's issued share capital without the Bank's prior
written consent; or
(n) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ceases to be both an officer and an employee of
the Borrower or a company in the Charging Group or ceases to
devote the whole of his working time to the activities of the
companies in the Charging Group under the terms of his Employment
Contract and is not replaced within 6 months of the date of such
cessation with a person satisfactory to the Bank; or
(o) there occurs a Change of Control; or
(p) any event occurs or proceeding is taken with respect to any
company in the Charging Group or Regis Corporation in any
jurisdiction to which it is subject which has an effect in
relation to that company equivalent or substantially similar to
any of the events mentioned in Clauses 10.1(f), (g), (h), (i) or
(j), or any appointment or order is made in relation to Regis
Corporation for protection from its creditors generally.
10.2 ACCELERATION
At any time when any Default remains unremedied the Bank may take any of
the following steps:
(a) by notice to the Borrower, cancel the Term Loan Facility (or part
thereof) and require the Borrower immediately to repay all or
part thereof together with accrued interest thereon and
immediately to pay all or any other sums payable by them under
this Agreement to be paid or repaid, whereupon the same shall
become immediately due and payable; and
(b) by notice to the Borrower, place all or any of the Term Loan on
demand, so that it shall become immediately due and payable upon
the Bank's demand.
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11. SET-OFF
The Borrower authorises the Bank:
(a) to apply any credit balance on any of its accounts with the Bank
(by set-off, combination or otherwise) in satisfaction of any
sum due and payable and unpaid from it pursuant to the terms of
any of the Financing Documents; and
(b) to purchase with the moneys standing to the credit of any such
account such other currencies as may be necessary to effect such
application.
12. FEES AND EXPENSES
12.1 EXPENSES
The Borrower shall pay on demand all costs, fees and expenses
(including, but not limited to, legal, valuation and accounting fees) and
any VAT thereon incurred by the Bank:
(a) in connection with the negotiation, preparation and execution of
any of the Financing Documents and the other documents
contemplated hereby or thereby;
(b) in connection with the grant of any release, waiver or consent or
in connection with any variation of or supplement to any of the
Financing Documents; or
(c) in exercising, enforcing, perfecting, protecting or preserving
(or attempting so to do) any of its rights, or in suing for or
recovering any sum due from the Borrower or any other person
under any of the Financing Documents.
12.2 ARRANGEMENT FEE
The Borrower has previously paid on 25th September 1995 an arrangement
fee of L75,000 to the Bank and on 22nd March 1996 an arrangement fee of
L20,000.
12.3 MONITORING FEE
The Borrower shall pay to the Bank a monitoring fee of L10,000 per annum
payable on the 22nd September 1997 and each anniversary thereof provided
that such monitoring fee shall be reduced to L5,000 per annum from the
Financial Year ending 26th June 1999 onwards if in the 12 month period
preceeding such date there has been no breach of any of the financial
undertakings specified in Clause 9.2 of this Agreement. In the event of
such a breach, the monitoring fee shall remain at L10,000.
13. SEVERABILITY
13.1 SEVERANCE
If at any time any provision hereof is or becomes illegal, invalid or
unenforceable in any respect under the law of any jurisdiction neither
the legality, validity or enforceability of the
-34-
remaining provisions hereof nor the legality, validity or enforceability
of such provision under the law of any other jurisdiction shall in any
way be affected or impaired thereby.
13.2 WAIVERS
No failure to exercise, and no delay in the exercise, by the Bank of any
right or remedy under any of the Financing Documents shall operate as a
waiver of such right or remedy, nor shall any single or partial exercise
of any right or remedy prevent any further or other exercise thereof or
the exercise of any other right or remedy. The rights and remedies under
this Agreement are cumulative and not exclusive of any rights or
remedies provided by law.
14. NOTICES
14.1 METHOD
Each communication to be made under this Agreement shall be made in
writing but, unless otherwise stated, may be made by facsimile message
or letter.
14.2 DELIVERY
Any communication or document to be made or delivered by one person to
another for any purpose under this Agreement shall (unless the one has
by 15 days' written notice to the other specified another address) be
made or delivered to that other person at the respective addresses given
in Clause 14.3.
14.3 ADDRESSES
The addresses referred to in Clause 14.2 above are:
(a) the Borrower:
Regis Europe Limited
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: Managing Director/Finance Director
Fax: (▇▇▇▇ ▇▇▇ ▇▇▇▇)
(b) the Bank:
(for the issue of Drawdown Notices and selection of the duration
of Interest Periods)
National Westminster Bank Plc
Mayfair Business Centre
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: Manager
Fax: ▇▇▇▇ ▇▇▇ ▇▇▇▇/1/2
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and otherwise for all other notices to
National Westminster Bank Plc
Acquisition Finance ▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇/▇▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇▇ ▇▇▇ ▇▇▇▇
14.4 DEEMED RECEIPT
Any notice given in relation to any of the Financing Documents by the
Bank shall be deemed to have been received:
(a) if sent by facsimile message followed by receipt at the
transmitting terminal of a confirmatory transmission report
acknowledging receipt by a terminal with the facsimile number to
which the relative notice was transmitted, on the Business Day on
which transmitted;
(b) in the case of a written notice lodged by hand, at the time of
actual delivery; or
(c) if posted, on the second Business Day following the day on which
it was properly despatched by first class mail postage prepaid.
14.5 Any notice given to the Bank shall be deemed to have been received by
the Bank only upon actual receipt by the Bank.
15. ASSIGNMENTS AND TRANSFERS
15.1 BENEFIT OF AGREEMENT
This Agreement shall be binding upon and enure to the benefit of each
party hereto and its successors and assigns.
15.2 ASSIGNMENTS AND TRANSFERS BY THE BORROWER
The Borrower shall not be entitled to assign or transfer all or any of
its rights, benefits and obligations under this Agreement.
15.3 ASSIGNMENTS AND TRANSFERS BY THE BANK
The Bank may assign or transfer all or any of its rights and obligations
under any of the Financing Documents provided that any transferee is a
Qualifying Bank and the Borrower shall enter into such documents as the
Bank may stipulate in order to effect such transfer or assignment.
-36-
15.4 DISCLOSURE OF INFORMATION
The Bank shall keep confidential any information furnished or made
available to it under any of the Financing Documents by the Borrower
other than that which is available in the public domain, or which the
Bank is by law or regulation required to disclose. The Bank may disclose
such information to its professional advisers and to any actual or
potential assignee, transferee or sub-participant, subject to the
condition that each of the same keeps confidential any such information.
15.5 PUBLICITY
Save where immediate disclosure of information is required by law or by
any regulatory authority or by any court of competent jurisdiction,
neither the Bank nor the Borrower and any companies in the Group shall
make or consent to the making of any public statement or announcement
concerning the terms of this Agreement or the continuance or the
provision of the Term Loan Facility or any security therefor, to the
Stock Exchange or otherwise, without first obtaining the approval of the
other party as to the content thereof.
16. LAW
This Agreement shall be governed by, and construed in all respects in
accordance with, English Law.
IN WITNESS whereof the parties hereto have caused this Agreement to be duly
executed the day and year first above written.
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SCHEDULE 1
CHARGING GROUP AS AT * 1996
Jurisdiction of
Name Incorporation Registered Number Shares Owned By
---- ----------------- ----------------- ---------------
Regis Europe Limited England and Wales 02108396 Regis Corporation
Essanelle Limited England and Wales 1115693 Regis Europe Limited
▇▇▇▇▇▇▇ Hairdressing Limited England and Wales 3112915 Openpark Limited
▇▇▇▇▇▇▇ Salons Limited England and Wales 146422 Openpark Limited
Openpark Limited England and Wales 2457287 Regis Europe Limited
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SCHEDULE 2
CONDITIONS PRECEDENT FOR THE PURPOSE OF CLAUSE 2
The Bank is satisfied that no Default or Default Occurrence is continuing and
shall have received each of the following (in form and substance satisfactory to
the Bank):
(a) a Certified Copy of the certificate of incorporation (and any
relative certificate of incorporation on change of name) of each
member of the Charging Group;
(b) a Certified Copy of the Memorandum of Association and the
Articles of Association of each member of the Charging Group;
(c) a Certified Copy of the minutes (in the agreed form) of a meeting
of the board of directors of each member of the Charging Group
approving and authorising the execution and performance of each
of the Transaction Documents to which such company is a party on
the terms and conditions thereof and in each case establishing:
(i) that the meeting was duly convened and quorate in
accordance with the relative company's articles of
association;
(ii) due consideration by all the directors of the relative
company of the obligations and liabilities arising
thereunder and in particular where necessary, the
application and relative relaxation procedures in
relation to the provisions of sections 151 to 158 of the
Act;
(iii) the making of all declarations of interests as may be
required in connection with any of the Transaction
Documents; and
(iv) the authorisation of any of the directors of the relative
company whose names and specimen signatures are set out
therein to sign or otherwise duly attest the execution of
such documents and any other documents to be executed or
delivered pursuant thereto;
(d) Certified Copies of any necessary statutory declarations made in
the prescribed form (and each being in the agreed form) by all of
the directors of each company listed in Part 2 of Schedule 1 as
required by Section 155 of the Act together with a Certified Copy
of the statutory report by its Auditors required under Section
156(4) of the Act and confirmation by the Auditors that each such
company has net assets (as defined in section 152(2) of the Act)
and that the relative net assets are not reduced by the giving of
the financial assistance or any reduction in net assets does not
exceed distributable profits;
(e) a Certified Copy of each of:
(i) the Acquisition Documents;
(ii) the Disclosure Letter;
(iii) the Employment Contract;
(iv) a consultancy contract made between the Borrower and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇;
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each having been duly executed by the parties thereto;
(f) a Guarantee and a Debenture duly executed by each company listed
in Part 1 of Schedule 1 together, in each case, with all
documents deliverable therewith;
(g) evidence from the Borrower that the Keyman Insurance has been
properly effected;
(h) the Overdraft Facility Letter duly executed by the Borrower;
(i) a certificate (in the agreed form) from a director of the
Borrower to the effect that:
**[number] ordinary shares in the Borrower have been
duly allotted to Regis Corporation;
such shares have been subscribed for an amount of at
least L2,700,000 out of which the Borrower has received
in cash at least L2,700.000;
share certificates in respect of such shares have been
issued to Regis Corporation;
(j) all items forming the Information Package;
(k) a letter from the Auditors addressed to the Bank in substantially
the form set out in Schedule 6;
(1) the Drawdown Notice duly executed by the Borrower;
(m) a cheque for all fees and expenses payable on the Drawdown Date
pursuant to Clause 12;
(n) a cheque for all legal expenses payable to Wilde Sapte pursuant
to Clause 12;
(o) a letter of comfort addressed to the Bank from Regis Corporation;
(p) all relative deeds of release (in the agreed form) relating to
all Encumbrances over any of Target's assets (other than
Permitted Encumbrances) existing on or before the Completion
Date;
(q) the Bank being satisfied with the provisions of all arrangements
relating to all premises from which the Target conducts its
business or trading activities;
(r) a Certified Copy of all documents under which the Borrower is to
purchase or has purchased all the issued share capital of S & L;
and
(s) a Certified Copy of the Regis S.A. Comfort Letter.
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SCHEDULE 3
MANDATORY LIQUID ASSETS COSTS FORMULA
The additional rate relative to the Term Loan is, subject as hereinafter
provided, arrived at by applying the following formula:
Additional Costs = BY + L(Y-X) + S(Y-Z) per cent. per annum
-------------------
100 - (B+S)
(a) Where on the day of the application of the formula:
B is the percentage of the Bank's eligible liabilities which the
Bank of England then requires the Bank to hold on a
non-interest-bearing deposit account in accordance with its cash ratio
requirements;
Y is the rate at which Sterling deposits are offered by the Bank to
leading banks in the London inter-bank market at our about 11.00
a.m. on that day for the relative period;
L is the percentage of eligible liabilities which (as a result of
the requirements of the Bank of England) the Bank maintains as
secured money with members of the London Discount Market
Association or in certain marketable or callable securities
approved by the Bank of England, which percentage shall (in the
absence of evidence that any other figure is appropriate) be
conclusively presumed to be 5 per cent.;
X is the rate at which secured Sterling deposits may be placed by
the Bank with members of the London Discount Market Association
at or about 11.00 a.m. on that day for the relative period or, if
greater, the rate at which Sterling bills of exchange (of a tenor
equal to the duration of the relative period) eligible for
rediscounting at the Bank of England can be discounted in the
London discount market at or about 11.00 a.m. on that day;
S is the percentage of the Bank's eligible liabilities which the
Bank of England requires the Bank to place as a special deposit;
and
Z is the interest rate per annum allowed by the Bank of England on
special deposits.
(b) For the purposes of this Schedule:
(i) "ELIGIBLE LIABILITIES" and "SPECIAL DEPOSITS" have the meanings
given to them at the time of application of the formula by the
Bank of England; and
(ii) "RELEVANT PERIOD" in relation to each Interest Period means:
(A) if it is 3 months or less, that Interest Period; or
(B) if it is more than 3 months.
-41-
(c) In the application of the formula, B, Y, L, X, S and Z
are included in the formula as figures and not as
percentages, e.g. if B = 0.5 per cent. and Y = 15 per
cent., BY is calculated as 0.5 x 15.
(d) The formula is applied on the first day of each relative
period. Each amount is rounded up to the nearest four
decimal places.
(e) If the Bank determines that a change in circumstances has
rendered, or will render, the formula inappropriate, the
Bank shall notify the Borrower of the manner in which the
additional rate will subsequently be calculated. The
manner of calculation so notified by the Bank shall be
binding on the Borrower.
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SCHEDULE 4
PART 1
DRAWDOWN NOTICE
To: National Westminster Bank Plc
Mayfair Branch
P0 Box 4ND
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Date:
Dear Sirs,
CREDIT AGREEMENT DATED 22ND SEPTEMBER 1995 (AS AMENDED FROM TIME TO TIME) MADE
BETWEEN (1) REGIS EUROPE LIMITED AND (2) NATIONAL WESTMINSTER BANK PLC (THE
"CREDIT AGREEMENT")
Words and expressions defined in the Credit Agreement have the same meaning in
this Drawdown Notice.
We hereby give you notice of the borrowing of a Term Loan Tranche:
(a) date: **
(b) tranche
(c) amount: **
(d) duration of Interest Period: ** months (n.b. Clause 4.3.2(d))
(e) ** payment instructions
For and on behalf of
REGIS EUROPE LIMITED
(a company incorporated in England and Wales with registered number 02108396)
------------------------
NOTE: Where a Term Loan Tranche is a tranche within Tranche B, a schedule of
the Restructuring Costs or Transaction Costs to be paid or reimbursed
out of the proceeds is to be attached to this notice and the amount of
the further tranche may not exceed the amount of such Restructuring
Costs or Transaction Costs.
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SCHEDULE 5
REPRESENTATIONS AND WARRANTIES MADE
UNDER CLAUSE 3.2
1. It is a limited company incorporated under the laws of its jurisdiction
of incorporation, which possesses the capacity to ▇▇▇ and be sued in its
own name and which has the power to carry on its business and to own its
property and other assets.
2. It has power and capacity to execute, deliver and perform its
obligations under each of the Transaction Documents to which it is or is
to be a party and all necessary corporate, shareholder and other action
has been taken and consents given to authorise the execution, delivery
and performance of the same.
3. Its obligations under each of the Transaction Documents to which it is a
party constitute its legal, valid and binding obligations and are in
full force and effect.
4. Its execution and delivery and performance and discharge of its
obligations and liabilities under each of the Transaction Documents to
which it is or is to be a party do not and will not:
(i) contravene any law or regulation or any order of any governmental
or other official authority, body or agency or any judgment,
order or decree of any court having jurisdiction over it; or
(ii) conflict with, or result in any breach of any of the terms of, or
constitute a default under, any agreement or other instrument to
which it is a party or any licence or other authorisation to
which it is subject or by which it or any of its property is
bound; or
(iii) contravene or conflict with any provision of its memorandum and
articles of association and, in particular, it has no limit on
its power to incur Indebtedness.
5. All licences, consents, exemptions, clearances, filings, registrations,
payments of duties or taxes, notarisations and authorisations as are or
may be necessary or desirable for the proper conduct of its business,
trade and ordinary activities and for the performance and discharge of
its obligations and liabilities under each of the Transaction Documents
and which are required in connection with the execution, delivery,
validity, enforceability or admissibility in evidence of each of the
Transaction Documents are in full force and effect;
6. It has not taken any action nor have any steps been taken or legal
proceedings been started or threatened in writing against it for
winding-up, dissolution or re-organisation, the enforcement of any
Encumbrance over its assets or for the appointment of a receiver,
administrative receiver, or administrator, trustee or similar officer of
it or of any or all of its assets or any other procedure under which it
obtains protection from any of its creditors.
7. It is not in breach or in default under any of any deed, instrument or
agreement to which it is a party or which is binding on it or any of its
assets.
8. No action, litigation, arbitration or administrative proceeding has been
started or (so far as it is aware having made all appropriate enquiry)
is pending or threatened against it, nor is there
-44-
subsisting any unsatisfied judgment or award given against it by any
court, board of arbitration or other body.
9. Since the date of Accountants' Report, there has been no material
adverse change in any of its business or financial constitution,
prospects and undertaking.
10. All of its assets are free from any Encumbrances, other than Permitted
Encumbrances.
11. It has no Indebtedness outstanding other than Permitted Indebtedness.
12. In relation to the Information Package:
(i) all assumptions and presumptions contained in the Accountants'
Report were reasonable at the time they were made and in relation
to the period in respect of which they were made;
(ii) all factual information contained in the Information Package was,
at the date of the relative reports, true and accurate in all
respects and not misleading, and there are no other facts the
omission of which would make any fact or statement therein
misleading; and
(iii) all forecasts, projections and estimates attributable to it
contained or referred to in the Information Package and all
assumptions and presumptions upon the basis of which the same
were made, at the time they were made were reasonable and nothing
has occurred since the date of the Accountants' Report which
makes it necessary to change any of those forecasts, projections
and estimates.
13. Immediately prior to the Completion Date, the Borrower has no
Subsidiaries other than Regis S.A.
14. There are no arrangements (whether legally binding or not) between the
Borrower and any of its Subsidiaries for financial support other than
under the terms of the Regis S.A. Comfort Letter.
15. There is no disclosure made in any Exhibit to the Acquisition Agreement
or any other disclosure to any of the Acquisition Documents that is not
fully and accurately disclosed in the Information Package.
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SCHEDULE 6
PART 1
AUDITORS' CONFIRMATION
National Westminster Bank Plc
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
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[Date]
Gentlemen,
CREDIT AGREEMENT TO BE DATED 22ND SEPTEMBER 1995 AS VARIED AND RESTATED BY
VARIATION AND AGREEMENTS DATED 22ND MARCH 1996 AND [** 1998] MADE BETWEEN
(1) REGIS EUROPE LIMITED AND (2) NATIONAL WESTMINSTER BANK PLC (THE "CREDIT
AGREEMENT")
We confirm, as auditors of Regis Europe Limited and those of its subsidiary
companies that are registered in England and Wales, that we will, from time to
time and at your request, issue to you a report in substantially the form
enclosed.
Your draft letter of instructions and our draft form of report are enclosed
initialed for purposes of identification.
Yours faithfully,
-------------------------------
for and on behalf of
** as Auditors
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(TO BE SENT BY NATIONAL WESTMINSTER BANK PLC
TO AUDITORS OF REGIS EUROPE LIMITED)
Auditors' details **
[Date]
**
Dear Sirs,
REGIS EUROPE LIMITED (THE "BORROWER")
We refer to the Credit Agreement entered into between the Borrower and ourselves
dated 22nd September 1995 as varied and restated on 22nd March 1996 and
[** 1998] an executed copy of which is enclosed with this letter (the "CREDIT
AGREEMENT").
Clause 9.2 of the Credit Agreement sets out the financial undertakings of the
Borrower. We or, as the case may be, the Borrower, may require you to review the
covenant calculations under Clause 9.2 (whether for the purpose of Clause 9.1(e)
or otherwise).
In any such event, whether the request is made by either the Borrower or us we
should be grateful if your review would confirm that such calculations have been
made in accordance with the terms of the Credit Agreement, or if not, that any
revised calculations made by you in relation to such calculations have been so
made.
According to the provisions of Clause 9.1(a) of the Credit Agreement the
Borrower is required to send us its Accounts within 120 days of the end of each
Financial Year. You should report to us the results of your review of the
calculations of those covenants which fall to be tested as at the end of each
such Financial Year, in the terms set forth in the enclosed draft, within 14
days following the compliance by the Borrower with that requirement.
Your fees for this work are for the account of the Borrower and should be agreed
with them in advance.
Yours faithfully,
-------------------------------
for and on behalf of
NATIONAL WESTMINSTER BANK PLC
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[FORM OF AUDITORS' REPORT]
[Date]
Dear Sirs,
We refer to the Credit Agreement entered into between Regis Europe Limited (the
"Borrower") and yourselves, dated 22nd September 1995 as varied and restated on
22nd March 1996 and [** 1998] (the "CREDIT AGREEMENT").
The definitions set out in the Credit Agreement shall have the same meaning in
this report.
In accordance with your instructions set out in your letter dated ** 19** we
have reviewed the enclosed schedule of calculations for the financial
undertakings in Clause 9.2 for the Financial Year ended on ** 19**. The
schedule has been initialed by us for purposes of identification.
As Auditors of the Borrower, we confirm that the respective amounts of PBIT,
Total Debt Costs, Consolidated Cash Flow Before Financing, Total Obligations,
Consolidated Adjusted Net Worth, Gearing and Capital Expenditure have been
calculated in accordance with the provisions set out in the Credit Agreement for
the Financial Year ended ** 19**.
Yours faithfully,
----------------------------
for and on behalf of
** as Auditors
-48-
SCHEDULE 6
PART 2
The Manager
Acquisition Finance
NatWest Markets
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Dear Sir/Madam,
CREDIT AGREEMENT DATED 22ND SEPTEMBER 1995 MADE BETWEEN REGIS EUROPE LIMITED AND
NATIONAL WESTMINSTER BANK PLC AS VARIED AND RESTATED ON 22ND MARCH 1996 AND
[** 1997] (THE "CREDIT AGREEMENT")
In accordance with Clause 9.1(e) of the Credit Agreement dated xxxxx, we hereby
certify that during the period xxxx to xxxx, all of our undertakings under the
Financing Documents including the financial undertakings in Clause 9.2
(calculations of which are attached) have been complied with.
Signed
on behalf of the Board of Regis Europe Limited
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FINANCIAL UNDERTAKING CALCULATIONS FOR THE PERIOD XXX TO XXX
1. PBIT: TOTAL DEBT COSTS
PBIT
July x
August x
September x _
... x
x
---
---
Total Debt Costs
July x
August x
September x
... x _
x
---
---
Ratio x
Covenant x
2. CONSOLIDATED CASH FLOW BEFORE FINANCING TO TOTAL OBLIGATIONS
Consolidated Cash Flow Before Financing
PBIT
July x
August x
September x
... x _
x
---
---
+Depreciation
July x
August x
September x
... x _
x
---
---
-50-
+ management charges payable but not paid
July x
August x
September x
... x _
x
---
---
+ receipts from Regis Corporation for share subscriptions
July x
August x
September x
... x -
x
---
---
-payments to Regis Corporation not already included in PBIT
July x
August x
September x
... x _
x
---
---
+/- Net Working Capital Movement
July x
August x
September x
... x _
x
---
---
+/- Extraordinary Items
July x
August x
September x
... x _
x
---
---
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- Capital Expenditure
July x
August x
September x
... x _
x
---
---
- Taxes Paid
July x
August x
September x
.. x _
x
---
---
Consolidated Cash Flow Before Financing _
x
---
---
Total Obligations
Total Debt Costs
July x
August x
September x
... x _
x
---
---
Loan Repayments
July x
August x
September x
... x _
x
---
---
-52-
Loan Prepayments
July x
August x
September x
... x -
x
---
---
Finance Lease Repayments
July x
August x
September x
... x -
x
---
---
Total Obligations x
Ratio x
Covenant x
3. CONSOLIDATED ADJUSTED NET WORTH
Share Capital x
Regis Corp Intercompany Loan x
Acquisition Goodwill Written Off x
Less Intangibles (excluding Acquisition Goodwill) x
Less Investment in Regis SA and S&L x
Profit and Loss Reserve x
Covenant x
4. GEARING
Total Debt
Term Loan x
Overdraft Facility x
Finance Leases x
Other x
Consolidated Adjusted Net Worth x
Gearing x%
Covenant x%
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5. CAPITAL EXPENDITURE
Charging Regis South Total Cumulative Covenant
Group Africa YTD
July x x x x x
August x x x x x
September x x x x x
... x x x x x
--- --- --- --- ---
x x x x x
*Please also schedule:
(i) Reverse Premia received in respect of new leases;
(ii) BHS Receipts that have been reinvested as Capital Expenditure.
-54-
SCHEDULE 7
1. MARKET DISRUPTION
If the Bank determines that, by reason of circumstances generally
affecting the London inter-bank market, means do not exist for
ascertaining LIBOR:
(a) the Bank shall promptly notify the Borrower in writing of such
event ("MARKET DISRUPTION NOTICE");
(b) the Bank and the Borrower shall, as the circumstances may
require, discuss an alternative basis for calculating the
relative rate of interest for the Term Loan on the basis that the
net return to the Bank shall be no less (but no more) than it
would have been had such event not occurred;
(c) the Borrower shall either:
(i) throughout any period in relation to which a market
disruption notice is in effect, subject always to
paragraph 1(d), pay interest to the Bank on the Term Loan
at the rate per annum determined by the Bank to be the
aggregate of:
(x) the Margin;
(y) the rate determined by the Bank to be the rate
which expresses as a percentage rate per annum the
cost to the Bank of funding the Term Loan from
whatever sources it may select (acting
reasonably); and
(z) Mandatory Liquid Asset Costs; or
(ii) promptly following receipt of a market disruption notice,
prepay the Term Loan, together with interest accrued
thereon and all other amounts payable under this
Agreement (including all amounts payable under Clause
9.2); or
(d) if the Borrower and the Bank shall agree an alternative basis,
then such alternative basis shall take effect in accordance with
its terms and shall be deemed to take effect under this Agreement
until such time the circumstances giving rise to the market
disruption notice have ceased.
2. CHANGES IN CIRCUMSTANCES
2.1 ILLEGALITY
If by reason of the introduction of; or any change in, any applicable
law or any regulation or regulatory requirement of the Bank of England
or of any other governmental, monetary or other authority (with the
requests or requirements of which the Bank is accustomed to
-55-
comply and whether in the United Kingdom or elsewhere) or any change in
the interpretation or application thereof it becomes unlawful or it is
prohibited for the Bank to maintain the Term Loan Facility or otherwise
give effect to any of its obligations under this Agreement, the Bank
shall inform the Borrower to that effect, whereupon its obligation to
permit the Term Loan Facility to remain outstanding shall forthwith
terminate and the Borrower shall, within such period (if any) as may be
allowed by the relevant law, regulation or regulatory requirement,
prepay to the Bank the Term Loan together with all other amounts payable
under this Agreement (including all amounts payable under Clause 9.2).
Without prejudice to the foregoing, the Bank confirms that if it informs
the Borrower as aforesaid it shall thereafter use reasonable endeavours
to avoid or mitigate the effects of such unlawfulness or prohibition
(including, without limitation, designation of an alternative Lending
Office or the transfer or assignment of the Term Loan Facility to a
Qualifying Bank pursuant to Clause 15) and will enter into negotiations
in good faith with the Borrower with a view to finding a means of
avoiding or mitigating the effects of such unlawfulness or prohibition
PROVIDED THAT the Bank shall not be obliged to continue such
negotiations for a period exceeding 30 days (or if shorter, the period
from notification to the date upon which the relative law, regulation or
requirement comes into effect) after the day upon which the Bank informs
the Borrower pursuant to this paragraph 2.1.
2.2 INCREASED COSTS
If, after the date hereof, any of the implementation: introduction,
abolition, withdrawal and any change in:
(a) any law, regulation, practice and concession; or
(b) any official directive, regulatory requirement, request and
guidance (whether or not having the force of law but if not
having the force of law, imposed by any body or authority with
whose requirements, requests or guidance the Bank customarily
complies) of the Bank of England, the European Union and of any
other governmental, monetary or other authority (whether in the
United Kingdom or elsewhere) having jurisdiction over the
relative Bank; or
(c) any change in the interpretation or application thereof,
shall increase the cost to the Bank of making available the Term Loan
Facility or maintaining the Term Loan or any part thereof or of carrying
out any of the transactions provided for or contemplated by any of the
Financing Documents or reduce the amount of any payment received or
receivable by the Bank or reduce its return from the Term Loan Facility,
then and in any such case the Bank shall notify the Borrower who shall
pay (as additional interest) from time to time to the Bank within 5
Business Days of such notification all amounts which the Bank certifies
(in a certificate which shall set out in reasonable detail so far as is
practicable the basis of the computation of such amounts) to be
necessary to compensate the Bank for the additional cost or reduction.
Without prejudice to the foregoing, the Bank confirms that on notifying
the Borrower as aforesaid the Bank shall take such steps as the Bank
considers reasonable to reduce or avoid the additional cost or reduction
and, if the Borrower so requests, the Bank shall consult with the
Borrower with a view to finding a means of reducing or avoiding the
additional cost or reduction PROVIDED THAT the Bank shall not be obliged
to continue such negotiations in respect of any such notification for a
period of longer than 30 days after the date of the giving of
notification pursuant to this paragraph 2.2.
-56-
The Borrower will not be obliged to compensate the Bank under paragraph
2.2 (Increased Costs) in respect of any increased cost:
(a) compensated for by payment of the MLA Costs; or
(b) attributable to a change in the rate of Tax on the Overall Net
Income of the Bank; or
(c) compensated for by the operation of paragraph 3 (Grossing Up) or
would have been so compensated for but for the operation of
paragraph 3.4.
2.3 CERTIFICATES
The certificate or notification of the Bank as to any of the matters
referred to in paragraphs 2.1 and 2.2 shall, in the absence of manifest
error, be conclusive and binding on the Borrower.
3. GROSSING UP
3.1 Subject to paragraph 3.2, all sums payable to the Bank pursuant to or in
connection with any of the Financing Documents shall be paid in full
without any set-off or counterclaim whatsoever and free and clear of all
deductions or withholdings whatsoever.
3.2 If any deduction or withholding is required by law in respect of any
payment due to the Bank pursuant to or in connection with any of the
Financing Documents, the Borrower shall ensure that the deduction or
withholding is made and that it does not exceed the minimum legal
requirement therefor and that the full amount deducted or withheld is
paid to the relevant taxation or other authority in accordance with the
applicable law.
3.3 If any deduction or withholding is made in relation to any payment
payable by the Borrower to the Bank, the Borrower shall pay to the Bank
that amount which results in the net amount received by the Bank after
the deduction or withholding (and after taking account of any further
deduction or withholding which is required to be made as a consequence
of the increase) being equal to the amount which the Bank would have
been entitled to receive in the absence of any requirement to make any
deduction or withholding.
3.4 A Borrower shall not be required to pay an additional amount under this
CLAUSE 11.9 if the payment in respect of which the deduction or
withholding is required is a payment of interest on an Advance and:
(a) at the time that Advance was made, the Bank was not a Qualifying
Bank otherwise than as a consequence of a Change occurring after
the date of this Agreement (and the obligation to deduct or
withhold would not have arisen if that Advance had been made by a
Quilting Bank); or
(b) at the time when the interest is paid, the Bank is not
beneficially entitled to it or, being beneficially entitled to
it, the Bank is not within the charge to United Kingdom
corporation tax as respects it otherwise than as a consequence of
a Change occurring after the date of this Agreement (and the
obligation to deduct or withhold would not have arisen if the
Bank had been beneficially entitled to the interest and had been
within the charge to United Kingdom corporation tax as respects
it).
-57-
3.5 If the Borrower pays to the Bank any additional amount under this
paragraph 3 by reason of a deduction or withholding for or on account of
Taxes and the Bank determines in its absolute discretion that it has
obtained a refund of Tax, or credit against Tax, by reason of the
payment of that additional amount and the Bank is able to identify such
refund or credit as being attributable to that payment, then the Bank
shall reimburse to the Borrower such amount as the Bank shall determine
in its absolute discretion to be the proportion of the credit or refund
in question as will leave the Bank (after that reimbursement) in no
better or worse position than that in which it would have been had the
payment of the additional amount concerned not been required, but the
Bank need not make any reimbursement if it believes the making of the
reimbursement would cause it to lose the benefit of the credit or
refund. The Bank will have an absolute discretion as to whether to claim
any credit for or refund of Taxes and, if it does claim, the extent,
order and manner in which it does so. The Bank will not be obliged to
disclose any information regarding its tax affairs or computations to
the Borrower.
4. DOCUMENTARY TAXES INDEMNITY
All stamp, documentary, registration or other like duties or Taxes,
including any penalties, additions, fines, surcharges or interest
relating thereto, which are imposed or chargeable on or in connection
with any of the Financing Documents shall be paid by the Borrower
PROVIDED THAT the Bank shall be entitled but not obliged to pay any such
duties or Taxes (whether or not they are its primary responsibility),
whereupon the Borrower shall on demand indemnify the Bank for all costs
and expenses so incurred.
5. VAT
All payments made under the Financing Documents are calculated without
regard to VAT. If any such payment constitutes the whole or any part of
the consideration for a taxable or deemed taxable supply (whether that
supply is taxable pursuant to the exercise of an option or otherwise) by
the Bank, the amount of that payment shall be increased by an amount
equal to the amount of VAT which is chargeable in respect of the taxable
supply in question.
-58-
SCHEDULE 8
BASE CASE MODEL
-59-
THE BORROWER
SIGNED BY )
and ) /s/ [Illegible]
for and on behalf of )
REGIS EUROPE LIMITED )
THE BANK
SIGNED BY )
) /s/ [Illegible]
for and on behalf of )
NATIONAL WESTMINSTER BANK PLC )
-60-
The Borrower
SIGNED by )
for and on behalf of ) /s/ [Illegible]
REGIS EUROPE LIMITED )
The Bank
SIGNED by )
for and on behalf of ) /s/ [Illegible]
NATIONAL WESTMINSTER )
BANK PLC )
-7-