EXHIBIT 10.4
DATED 30 JUNE 2000
--------------------------------------------------------------------------------
THE DERBY CYCLE CORPORATION AND OTHERS
as Borrowers and/or Guarantors
CHASE MANHATTAN plc
as Arranger
THE FINANCIAL INSTITUTIONS NAMED HEREIN
as Banks
CHASE MANHATTAN INTERNATIONAL LIMITED
as Facility Agent
CHASE MANHATTAN INTERNATIONAL LIMITED
as Security Agent
_______________________________________
WAIVER
AND
AMENDMENT AGREEMENT
relating to
a facility agreement dated 12 May 1998
________________________________________
________________________________________________________________________________
CONTENTS
1. INTERPRETATION............................................................................. 3
2. PERMANENT WAIVER AND AMENDMENT AGREEMENT................................................... 4
3. AMENDMENT.................................................................................. 5
4. REPRESENTATIONS AND WARRANTIES............................................................. 6
5. COUNTERPARTS; EFFECTIVENESS................................................................ 7
6. ACKNOWLEDGEMENT AND CONSENT BY GUARANTORS.................................................. 7
7. FEES AND COSTS............................................................................. 7
8. CONDITIONS SUBSEQUENT...................................................................... 7
9. STURMEY-▇▇▇▇▇▇ EUROPA B.V.................................................................. 7
10. GOVERNING LAW AND JURISDICTION............................................................ 8
SCHEDULE 1.................................................................................... 9
The Borrowers............................................................................. 9
SCHEDULE 2.................................................................................... 10
The Guarantors............................................................................ 10
SCHEDULE 3.................................................................................... 12
The Banks................................................................................. 12
SCHEDULE 4.................................................................................... 13
Further Amendments to the Facility Agreement to take effect on the First
Effective Date.......................................................................... 13
SCHEDULE 5.................................................................................... 16
Conditions Precedent to Further Amendments to the Facility Agreement which take
effect on the First Effective Date...................................................... 16
SCHEDULE 6.................................................................................... 16
Further Amendments to the Facility Agreement to take effect on the Second Effective Date.. 16
SCHEDULE 7....................................................................................
Condition Precedents to Further Amendments to the Facility Agreement
which take effect on the Second Effective Date.......................................... 16
________________________________________________________________________________
THIS WAIVER AND AMENDMENT AGREEMENT is made on 30 June 2000
BETWEEN
(1). THE DERBY CYCLE CORPORATION, a company incorporated in Delaware, United
States of America, having its principal office at 300 First Stamford Place,
Stamford CT06902-6765, Connecticut, United States of America ("the
Company");
(2) THE COMPANIES identified as Borrowers in Schedule 1 ("the Borrowers");
(3) THE COMPANIES identified as Guarantors in Schedule 2 ("the Guarantors");
(4) CHASE MANHATTAN PLC as arranger ("the Arranger");
(5) THE FINANCIAL INSTITUTIONS identified as banks in Schedule 3 ("the Banks");
(6) CHASE MANHATTAN INTERNATIONAL LIMITED as facility agent ("the Facility
Agent");
(7) CHASE MANHATTAN INTERNATIONAL LIMITED as security agent ("the Security
Agent")
RECITALS
A. By a facility agreement dated 12 May 1998, as amended and restated pursuant
to an amendment and restatement agreement dated 3 February 1999 and as
further amended pursuant to an amendment agreement dated 30 April 1999 and
as further amended pursuant to a amendment agreement dated 31 August 1999
and as further amended pursuant to a amendment agreement dated 25 November
1999 and as further amended pursuant to an amendment agreement dated 17
December 1999 and as further amended pursuant to an amendment agreement
dated 3 February 2000 and as further amended pursuant to an amendment
agreement dated 2 March 2000 (collectively the "Facility Agreement") by and
among the Company, Borrowers, Guarantors, Arranger, the Banks, Facility
Agent and Security Agent, the Banks have agreed to make certain credit
facilities available to the Borrower.
B. The Banks have agreed to further amend the Facility Agreement and waive
compliance with certain provisions of the Facility Agreement as more
particularly set out herein but subject always to the provisions of this
Waiver and Amendment Agreement.
NOW, THEREFORE IN CONSIDERATION of these premises and the agreements, provisions
and covenants herein contained, the parties agree as follows:
1. INTERPRETATION
1.1 DEFINITIONS
In this Agreement:
"Deed of transfer" means together (i) the deed of sale, purchase and
transfer dated on or about 30 June 2000 and made between Sturmey-
▇▇▇▇▇▇ Limited and Derby Nederland BV and (ii) the deed of transfer
dated on or about 30 June 2000 and made between The ▇▇▇▇▇▇ Saddle
Company Limited and Sturmey-▇▇▇▇▇▇ Limited;
________________________________________________________________________________
3
"Excluded Assets" has the meaning set out in the Offer to Sell;
"First Effective Date" means the date on which the Facility Agent has
confirmed to the Company and the Banks that it has received evidence
satisfactory to it and it has received all the conditions precedent as
set out in Schedule 5, in each case in a form and substance
satisfactory to the Facility Agent;
Offer to Sell" means the letter dated 24 June 2000 addressed to the
directors of The ▇▇▇▇▇▇ Saddle Company Limited from Sturmey-▇▇▇▇▇▇
Limited for the sale of the assets and business of Sturmey-▇▇▇▇▇▇
Limited as more particularly set out therein.;
directors of The ▇▇▇▇▇▇ Saddle Company Limited from Sturmey-▇▇▇▇▇▇
Limited for the sale of the assets and business of Sturmey-▇▇▇▇▇▇
Limited as more particularly set out therein.;
"Pension Transfer" means the transfer of the Sturmey-▇▇▇▇▇▇ Limited
pension scheme to Lenark Limited for an amount equal to 50% of its
actuarial value as verified by ▇▇▇▇▇▇ ▇▇▇▇▇, on terms and conditions
satisfactory to the Facility Agent and provided that such transfer
takes place no later than 31 December 2000;
"Sale Transaction Documents" means the Share Sale Agreement, Offer to
Sell and the Deed of Transfer;
"Second Effective Date" means the date on which the Facility Agent has
confirmed to the Company and the Banks that it has received evidence
satisfactory to it and it has received all the conditions precedent as
set out in Schedule 7, in each case in a form and substance
satisfactory to the Facility Agent;
"Share Sale Agreement" means the share sale agreement dated 24 June
2000 and made between the Company, Sturmey-▇▇▇▇▇▇ Limited and Lenark
Limited;
"Sturmey-▇▇▇▇▇▇ Group" means Sturmey-▇▇▇▇▇▇ Limited, Sturmey-▇▇▇▇▇▇
Europa B.V., ▇▇ ▇▇▇▇▇▇ & Company Ltd, and The ▇▇▇▇▇▇ Saddle Company
Limited;
1.2 Interpretation
Unless the context otherwise requires, words and expressions defined
in the Facility Agreement shall have the same meaning herein.
2. PERMANENT WAIVER AND AMENDMENT AGREEMENT
2.1 Subject to Clause 2.2 below and the other terms and conditions set
forth herein and in reliance on the representations and warranties of
the Obligors herein contained, the Banks hereby waive any Event of
Default under the following clauses:
2.1.1 Clause 18.1 (j) (Group Structure) resulting solely from the
disposal of the Sturmey-▇▇▇▇▇▇ Group pursuant to the provisions
of the Sale Transaction Documents;
2.1.2 Clause 19.5(b) (Disposals) resulting solely from the sale of
the shares in The ▇▇▇▇▇▇ Saddle Company Limited to Lenark
Limited pursuant to the Share Sale Agreement, the sale of the
shares in Sturmey-▇▇▇▇▇▇ Europa BV to Sturmey-▇▇▇▇▇▇ Limited
pursuant to the Deed of Transfer and the sale of the business
and assets of Sturmey-▇▇▇▇▇▇ Limited pursuant to the provisions
of the Offer to Sell;
________________________________________________________________________________
4
2.1.3 Clause 19.5(d) (Acquisitions) resulting solely from the
acquisition by Sturmey-▇▇▇▇▇▇ Limited of the shares in Sturmey-
▇▇▇▇▇▇ Europa BV pursuant to the provisions of the Deed of
Transfer;
2.1.4 Clause 24.3 (Conditions for Release) resulting solely from the
disposal of the Sturmey-▇▇▇▇▇▇ Group and its assets other than
the Excluded Assets in accordance with the Sale Transaction
Documents; and
2.1.5 Clause 21.1(s) (Ownership of Obligors) resulting solely from
the sale of the shares in The ▇▇▇▇▇▇ Saddle Company Limited to
Lenark Limited in accordance with the provisions of the Share
Sale Agreement and the sale of the shares in Sturmey-▇▇▇▇▇▇
Europa BV to Sturmey-▇▇▇▇▇▇ Limited in accordance with the
provisions of the Deed of Transfer;
2.2 Without limiting the generality of the provisions of Clause 32 and 35
of the Facility Agreement the Waiver and Amendment Agreement set forth
above in Clause 2.1 shall be limited precisely as written and nothing
in this clause 2.2 shall be deemed to:
2.2.1 constitute a waiver of any other term, provision or condition
of the Facility Agreement or any other Finance Documents or
agreement referred to therein or otherwise; or
2.2.2 prejudice any rights or remedy that the Agents or Banks may now
have or may have in the future under or in connection with the
Facility Agreement or any other Finance Documents referred to
therein (other than the rights and remedies which they
otherwise would have had as a consequence of the breaches set
out in Clause 2.1 above);
2.3 Except as expressly set forth therein, the terms, provisions and
conditions of the Facility Agreement and the other Finance Documents
shall remain in full force and effect and in all other respects are
hereby ratified and confirmed.
3. AMENDMENT
3.1 Each of the parties agrees that, as from the First Effective Date, the
amendments referred to in Schedule 4 shall become effective;
3.2 Each of the parties agrees that, as from the Second Effective Date,
the amendments referred to in Schedule 6 shall become effective;
3.3 The Facility Agreement and this Waiver and Amendment Agreement shall
be read and construed as a single document;
3.4 References in the Facility Agreement to the Facility Agreement
howsoever characterised shall with effect from the First Effective
Date be references to the Facility Agreement as amended pursuant to
Clause 3.1 of this Waiver and Amendment Agreement;
3.5 References in the Facility Agreement to the Facility Agreement
howsoever characterised shall with effect from the Second Effective
Date be references to the Facility Agreement as amended pursuant to
Clause 3.2 of this Waiver and Amendment Agreement.
________________________________________________________________________________
5
4. REPRESENTATIONS AND WARRANTIES
The Obligors hereby each represents and warrants to the Agents and the
Banks that:
4.1 as at the date hereof, there exists no Event of Default under the
Facility Agreement, and after giving effect to this Waiver and
Amendment Agreement there will exist no Event of Default or Potential
Event of Default under the Facility Agreement;
4.2 all representations and warranties contained in the Facility Agreement
and the other Finance Documents are true, correct and complete in all
material respects on and as at the date hereof except to the extent
such representations and warranties specifically relate to an earlier
date, in which case they were true, correct and complete in all
material respects on and as at such earlier date, and will be deemed
repeated by each Obligor on each date that a condition precedent
listed at Schedule 7 of this Waiver and Amendment Agreement is
delivered in accordance with this Waiver and Amendment Agreement with
reference to the facts and circumstances existing at each such time;
4.3 as at the date hereof, each Obligor has performed all agreements to be
performed on its part as set forth in the Facility Agreement;
4.4 each Obligor is duly organised and validly existing under the laws of
the jurisdiction of its organisation and has all necessary power and
authority to execute and delivery this Waiver and Amendment Agreement
and to consummate the transactions contemplated hereby;
4.5 neither the execution and delivery of this Waiver and Amendment
Agreement, nor the consummation of the transactions contemplated
hereby, violates or will violate (i) any law, regulation, decree or
other legal restriction applicable to any Obligor; (ii) the charter,
by-laws or other constitutional documents of any Obligor; or (iii) any
instrument or agreement to which any Obligor or any of its assets is
subject or by which it is bound;
4.6 there is no legal requirement of any governmental authority (including
any requirement to make any declaration, filing or registration or to
obtain any consent, approval, licence or order) which is necessary to
be met by the Company or any other Obligor in connection with its
execution, delivery or performance of this Waiver and Amendment
Agreement other than the filing at Companies House of duly completed
forms 403 and the filing of forms DS1 at H.M. Land Registry;
4.7 this Waiver and Amendment Agreement has been duly authorised, executed
and delivered by the Company on behalf of each Obligor and this Waiver
and Amendment Agreement, the Facility Agreement and the other Finance
Documents to which any Obligor is a party, constitute the legal, valid
and binding obligations of such Obligor, enforceable against it in
accordance with their terms; and
4.8 All information provided to the Facility Agent in connection with this
Waiver and Amendment Agreement was or will be as at the time it was
given, true, complete and accurate in all respects and each Obligor
represents that no circumstances have arisen, or any event has
occurred between the date when such information was provided to the
Facility Agent and the date hereof which would render such information
to be untrue, inaccurate or incomplete in any respect.
________________________________________________________________________________
6
5. COUNTERPARTS; EFFECTIVENESS
5.1 This Waiver and Amendment Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one
and the same instrument;
5.2 Signature pages may be detached from multiple separate counterparts
and attached to a single document so that all signature pages are
physically attached to the same document;
5.3 This Waiver and Amendment Agreement shall become effective upon the
Effective Date.
6. ACKNOWLEDGEMENT AND CONSENT BY GUARANTORS
Each of the Guarantors hereby acknowledges that it has read this Waiver and
Amendment Agreement and consents to the terms thereof and, with the
exception of Sturmey-▇▇▇▇▇▇ Europa B.V, further hereby confirms and agrees
that, notwithstanding the effectiveness of this Waiver and Amendment
Agreement, the obligations of such Guarantors under their respective
Guarantee shall not be impaired or affected and such Guarantee is and shall
continue to be in full force and effect and is hereby confirmed and
ratified in all respects.
7. FEES AND COSTS
The Company shall reimburse the Agents and the Banks for all costs and
expenses (including legal fees) properly incurred by them and their
professional advisers in connection with the negotiation, preparation and
execution of this Waiver and Amendment Agreement and any related
documentation, including but not limited to any release of security and any
filings, registrations or any other action required by law or otherwise.
8. CONDITIONS SUBSEQUENT
The Company shall procure by no later than 30 days after the date of this
Agreement that it delivers to the Facility Agent a copy of the resolutions
of the members of each Obligor certified by an Authorised Signatory (or
appropriately authorised person of such Obligor) ratifying, approving, and
confirming the execution and delivery of this Agreement by the Company as
Obligors' Agent and any other communication or documents delivered by on or
on behalf of each Obligor in connection herewith.
9. STURMEY-▇▇▇▇▇▇ EUROPA B.V.
The parties agree and acknowledge that on the Effective Date, Sturmey-
▇▇▇▇▇▇ Europa B.V. shall cease to be an Obligor under the Finance Documents
(including, without limitation be released from its obligations to provide
security and give guarantees relating to Sturmey-▇▇▇▇▇▇ Europa B.V, its
assets and business or the Group).
10. GOVERNING LAW AND JURISDICTION
10.1 This Waiver and Amendment Agreement and the rights and obligations of
the parties hereunder shall be governed by, and shall be construed and
enforced in accordance with the laws of England.
________________________________________________________________________________
7
10.2 Clause 38 (Jurisdiction) of the Facility Agreement shall be deemed to
apply as if it had been set out in full in this Agreement.
________________________________________________________________________________
8
SCHEDULE 1
The Borrowers
Raleigh Industries Limited
Sturmey-▇▇▇▇▇▇ Limited
Derby Holding (Deutschland) GmbH
Koninklijke Gazelle BV
The Derby Cycle Corporation
Raleigh Industries of Canada Limited
Raleigh Europe B.V.
Raleigh B.V.
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Bike Parts GmbH
▇▇▇▇▇▇-▇▇▇▇▇▇▇ GmbH
Derby Holding Limited
Raleigh Fahrrader GmbH
Derby Cycle Werke GmbH
Raleigh International Limited
Curragh Finance Company
Raleigh Ireland Limited
________________________________________________________________________________
9
SCHEDULE 2
The Guarantors
Derby Holding Limited
Raleigh Industries Limited
Raleigh International Limited
Sturmey-▇▇▇▇▇▇ Limited
Raleigh Industries of Canada Limited
The Derby Cycle Corporation
Raleigh BV
Raleigh Europe BV
Koninklijke Gazelle BV
Derby Nederland BV
Derby Holding BV
Sturmey-▇▇▇▇▇▇ Europa BV
Lyon Investments BV
Derby Holding (Deutschland) GmbH
Raleigh Fahrrader GmbH
NW Sportgerate GmbH
Derby Cycle Werke GmbH
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Bike Parts GmbH
Univega Worldwide Licence GmbH
Univega Beteiligungen GmbH
Univega Bikes & Sports Europe GmbH
Derby Fahrrader GmbH
Derby WS Vermogenswerwaltungs GmbH
▇▇▇▇▇▇-▇▇▇▇▇▇▇ GmbH
Curragh Finance Company
--------------------------------------------------------------------------------
10
Raleigh Ireland Limited
The British Cycle Corporation Limited
BSA Cycles Limited
Triumph Cycle Co. Limited
Raleigh (Services) Limited
Derby Sweden AB
--------------------------------------------------------------------------------
11
SCHEDULE 3
The Banks
Name
The Chase Manhattan Bank
ABN Amro Bank N.V.
Bank of Scotland
BHF - Bank ▇▇
▇▇▇▇▇▇▇▇ Bank AG, New York and Grand Cayman
Branches
Lloyds TSB Bank Plc
HSBC Bank Plc
Scotia Bank Europe plc
The Bank of Nova Scotia
The Sumitomo Bank, Limited
Banque Nationale de Paris
San Paolo IMI SPA
KBC Bank (Nederland) N.V.
Oldenburgische Landesbank AG
The Governor and Company of the Bank of Ireland
The Industrial Bank of Japan, Limited
--------------------------------------------------------------------------------
12
SCHEDULE 4
Further Amendments To The Facility Agreement To Take Effect On The First
Effective Date
1. The definition of "Consolidated Net Worth" at Clause 1.2 (Definitions)
shall be deleted and replaced with the following:-
"Consolidated Net Worth" means the amount (including any additional paid in
capital) for the time being paid up or credited as paid up on the issued
share capital of the Company (other than any Excluded Share Capital):
plus an amount (of up to $45,000,000) in respect of the value attributable
to equity retained by on or behalf of DFS;
plus any amount standing to the credit of, or (as the case may be) minus
any amount standing to the debit of the consolidated income statement of
the Group before any adjustment made in respect of dividends on any class
of shares of the Company to the extent that the holder of such share(s) is
only entitled to receive, in respect thereof, payment in kind, and not cash
or other assets. For the avoidance of doubt, the net income of $5,588,000
loss reported in the audited consolidated Financial Accounts of the Group
for the Accounting Period ended 31 December 1998 is the only amount
credited or debited to the audited consolidated Financial Accounts for the
Accounting Period ended 31 December 1998 which shall be included in the
definition of Consolidated Net Worth;
plus for the period from 6 March 2000 to 31 December 2000 only, the
aggregate amount of principal outstanding under the GSIC Notes (but
excluding for the avoidance of doubt any interest (whether in cash or in
kind) or any other amount accruing thereon);
plus, an amount of up to (Pounds)5,225,000 which represents the estimated
book loss resulting from the disposal of the Sturmey-▇▇▇▇▇▇ Group in
accordance with the Sale Transaction Documents;
minus any amount included in the above which is attributable to (a) the
aggregate of all goodwill (to the extent created or purchased after
Closing), titles, trademarks, copyrights, patents, capitalised research and
development expenditure (other than research and development expenditure
which is capitalised in accordance with the accounting policies of the
Company in force at the date of this Agreement) and other intangible
assets, and (b) any upwards revaluation of assets by any Group Member after
Closing; and
minus (to the extent otherwise included) the amount attributable to the
interests (if any) of outside holders of issued share capital in any Group
Member other than the Company other than RIC Preference Shares for so long
as the same are exchangeable solely for B Common Stock and carry no rights
greater than as at the date of this Agreement and RIC is prohibited from
redeeming such RIC Preference Shares pursuant to the provisions of this
Agreement.
For the purposes of the foregoing, no items shall be effectively taken into
account more than once in this calculation and all items shall be
calculated on a consolidated basis and (subject only as may be required in
order to reflect the express inclusion or exclusion of items as specified
in this definition) in accordance with the Applicable Accounting Principles
and, where the calculation is being made as at the end of any Accounting
Period for which a consolidated balance sheet of the Group has been or is
required to be delivered to the Facility Agent hereunder, shall be as
determined from that balance sheet.
--------------------------------------------------------------------------------
13
2. The definition of "Consolidated Adjusted EBITDA" at Clause 1.2 of the
Facility Agreement shall be deleted and replaced with the following:
"Consolidated Adjusted EBITDA" means for any period comprising an annual
Accounting Period of the Company or four consecutive quarterly Accounting
Periods of the Company (taken together as one period) means the operating
income of the Group for such period:
before taking into account all Extraordinary Items (whether positive or
negative) and one-off expenses not exceeding, in aggregate, $2,900,000
insured in the Annual Accounting Period ended 31 December 1997 and in
aggregate $9,600,000 incurred in the annual Accounting Period ended 31
December 1999 as detailed in the Information Memorandum dated 4 August
1999, and US$1,200,000 in the annual Accounting Period ending 31 December
2000 which represents the total of (i) consultancy fees payable to Concours
Group and incurred by Derby Cycle Werke GmbH and (ii) severance costs of
reorganising the Derby USA sales force incurred by the Company;
before taking into account any Transaction Costs required to be expensed
through the income statement up to a maximum aggregate amount of $6,200,000
in the annual Accounting Period ending 31 December 1998 whether an
Extraordinary Item or otherwise and any one-off payments of premia or
otherwise made by any Group Member in connection with Hedging Protection
Agreements entered into in accordance with the Approved Hedging Programme
within 30 days of the date of this Agreement;
before taking into account to the extent deducted from operating income any
amounts expended that relate solely to Year 2000 Expenditure to the extent
that such expenditure, when aggregated with any other Year 2000 Expenditure
incurred since the date of this Agreement and prior to 31 December 1999
does not exceed $2,700,000 (or the equivalent in other currencies);
before deducting income tax expense;
before deducting charges to depreciation and amortisation excluding
amortisation attributable to a prepaid cash item arising in the ordinary
course of business, the amortisation of any goodwill and amortisation of
Transaction Costs in an amount not exceeding $8,800,000 in aggregate in all
Accounting Periods post Closing;
before deducting Interest (whether accrued, paid, deferred or capitalised)
as an obligation of any Group Member or Interest accrued in favour of, or
paid to, any Group Member;
after deducting (to the extent otherwise included in operating income) any
gain over book value arising in favour of the Group on the sale, lease or
other disposal of any fixed or intangible asset during such period and any
gain arising on any revaluation of any fixed or tangible asset during such
period;
after adding back (to the extent otherwise deducted in operating income)
any loss against book value incurred by the Group on the sale, lease or
other disposal of any fixed or intangible asset during such period and any
loss arising on any revaluation of any fixed or intangible assets during
such period;
after deducting (to the extent otherwise included) the amount of retained
profit (or adding back the retained loss) of any Group Member (other than
the Company) which is attributable to the interest of any shareholder of
or, as the case may be, partner in such Group Member which is not a Group
Member other than the amount of retained profit or the amount of the
--------------------------------------------------------------------------------
14
retained loss of RIC which is attributable to such non-Group Member's
interest in RIC Preference Shares for so long as such shares may be
exchanged solely for B Common Stock of the Company and carry no rights
greater than as at the date of this Agreement and RIC is prohibited from
redeeming such RIC Preference Shares pursuant to the provisions of this
Agreement;
after deducting items which have not, or are not due to be paid in cash,
including any amortisation, credit, income or provision release (where such
provision was not originally increased by reducing operating income) or
other credit where cash was received in an earlier period. For the
avoidance of doubt, any income related to the defined benefit pensions
plans of the Group recognised in accordance with FAS 87 and FAS 132 shall
be deducted when calculating Consolidated Adjusted EBITDA and any
unrealised income or loss in respect of the change in the ▇▇▇▇ to market
value of foreign exchange contracts recognised in accordance with FAS 52
and FAS 133 where such contracts are in accordance with the Approved
Hedging Programme, shall not be included when calculating Consolidated
Adjusted EBITDA;
and for the purposes of the foregoing no item shall be effectively taken
into account more than once in this calculation and all items shall be
determined on a consolidated basis and subject only as may be required in
order to reflect the express inclusion or exclusion of items as specified
in this definition) in accordance with the Applicable Accounting Principles
and as determined from the consolidated Financial Accounts of the Group for
such annual Accounting Period or for the quarterly Accounting Periods
falling within such period or, to the extent that such period, or part
thereof, relates to the period prior to Closing, from the Pre-Closing
Accounts relating to such period;
3. Clause 11.1 shall be deleted and replaced with the following:
"11.1 Reduction of the Facility
On each date specified in Column 1 below (each such date being a
"Reduction Date") the Total Commitments shall be reduced such
that they are equal to the amount set opposite such Reduction
Date in Column 2 below less the aggregate amount of the
Commitments that have been previously cancelled under this
Agreement prior to that Reduction Date otherwise than solely as
a result of the operation of this Clause 11.1 or Clause 7,
whereupon the Revolving Commitment of each Bank (including, for
the avoidance of doubt, the Revolving Commitment of each
Ancillary Bank and without double counting a Bank's Ancillary
Commitment) shall be reduced by a proportionate amount and pro
rata to their respective Revolving Commitments at such time and
the Standby L/C Commitments of the Banks shall be reduced by a
proportionate amount pro rata and the Company shall procure that
the aggregate Deutschmark Amount of all outstanding Advances,
Standby L/Cs, Ancillary Facilities and amounts owing under
Clause 11.3 (if any) shall on such date (and at all times
thereafter) not exceed the Total Commitments on such date.
Column 1 Column 2
Reduction Date Total Commitments
on or before 30 June 2000 DM214,000,000 minus (i) the
Deutschmark Equivalent of
(Pounds)8,400,000 and (ii)
the Deutschmark Equivalent of
(Pounds)1,576,000, in each
case computed as at the date
falling 4 Business Days
before
--------------------------------------------------------------------------------
15
the relevant Reduction Date
Fifth Anniversary of the date of this DM194,000,000
Agreement
Sixth Anniversary of the date of this DM169,000,000
Agreement
Final Repayment Date Zero"
--------------------------------------------------------------------------------
16
SCHEDULE 5
Conditions Precedent to Further Amendments to the Facility Agreement which take
effect on the First Effective Date
1. An opinion, addressed to the Facility Agent, the Security Agent and the
Banks of Wragge & Co., legal advisors to the Sturmey-▇▇▇▇▇▇ Group, as to
such matters relating to the United Kingdom, the Sturmey-▇▇▇▇▇▇ Group and
their obligations under the Sale Transaction Documents to which they are
party as the Facility Agent may require;
2. An opinion, addressed to the Facility Agent, the Security Agent and the
Banks of Trenite Van Doorne,, legal advisors to the Sturmey-▇▇▇▇▇▇ Group,
as to such matters relating to the Netherlands, the Sturmey-▇▇▇▇▇▇ Group
and their obligations under the Sale Transaction Documents to which they
are party as the Facility Agent may require;
3. An opinion, addressed to the Facility Agent, the Security Agent and the
Banks of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, United States of America legal advisors to the
Company as to such matters as a Facility Agent may require;
4. Certified copies of each of the Sale Transaction Documents;
5. Confirmation from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ as to the accounts book value as of 4
June 2000 of assets being disposed of] and the tax position of Sturmey-
▇▇▇▇▇▇ Limited as a result of its disposal;
6. Confirmation from Loyens Loess as to the tax position of Sturmey-▇▇▇▇▇▇
Europa BV as a result of its disposal;
7. Evidence confirming the breakdown of US$1,200,000 in respect of consultancy
fees and severance costs referred to in Schedule 4.
8. Summary terms of the spoke purchase agreement with Lenark Limited dated on
or about the date of this Waiver and Amendment Agreement.
9. A certificate of an Authorised Signatory of the Company confirming:
(i) that the Total Commitments have been reduced by the Deutschmark
Equivalent of (Pounds)8,400,000 and (Pounds)1,576,000
respectively;
(ii) that no Default pursuant to Clause 21.1(a) has occurred which is
continuing, or unwaived in writing by the Facility Agent, and
(iii) if the Sponsor Facility is repaid prior to or on 30 June 2000,
that the Revolving Facility Available Amount is greater than the
amount of the Sponsor Facility immediately prior to the
repayment of the Sponsor Facility;
(iv) designating the non-cash proportion of the consideration for the
sale of the Sturmey-▇▇▇▇▇▇ Group as Designated Non Cash
Consideration (as such term is defined in the Note Indentures);
--------------------------------------------------------------------------------
17
(v) that the board of the Company has determined in good faith that
the purchase price is equal to the fair market value of the
assets and shares sold;
11. If the Sponsor Facility is repaid on or prior to 30 June 2000, confirmation
from ▇▇▇▇▇▇ and Perseus that the Sponsor Facility has been repaid in full
and that the Company's liability thereunder has been unconditionally
discharged;
12. If the Sponsor Facility is repaid, evidence that the Company has prior to
or contemporaneously with such repayment issued share capital to ▇▇▇▇▇▇ and
Perseus in an amount equal to the Sponsor Facility provided that such
share capital is of a type permitted pursuant to Clause 19.5(w)(a) (Share
Capital);
13. A certified copy of the minutes of the meetings of the shareholders (if
necessary) and the resolutions of the board of directors of each of the
Company, Sturmey-▇▇▇▇▇▇ Limited, The ▇▇▇▇▇▇ Saddle Company and Derby
Nederland B.V. authorising the execution, delivery and performance on
behalf of that company of those of the Sales Transaction Documents to which
that company is a party; and
14. Evidence that Derby Nederland BV has or will withdraw any guarantees,
including any guarantees pursuant to Article 2:403 Dutch Civil Code.
--------------------------------------------------------------------------------
18
SCHEDULE 6
Further Amendments to the Facility Agreement to take effect on the Second
Effective Date
2. The definition of "Consolidated Net Worth" at Clause 1.2 (Definitions) shall
be deleted and replaced with the following:-
"Consolidated Net Worth" means the amount (including any additional paid in
capital) for the time being paid up or credited as paid up on the issued
share capital of the Company (other than any Excluded Share Capital):
plus an amount (of up to $45,000,000) in respect of the value attributable
to equity retained by on or behalf of DFS;
plus any amount standing to the credit of, or (as the case may be) minus any
amount standing to the debit of the consolidated income statement of the
Group before any adjustment made in respect of dividends on any class of
shares of the Company to the extent that the holder of such share(s) is only
entitled to receive, in respect thereof, payment in kind, and not cash or
other assets. For the avoidance of doubt, the net income of $5,588,000 loss
reported in the audited consolidated Financial Accounts of the Group for the
Accounting Period ended 31 December 1998 is the only amount credited or
debited to the audited consolidated Financial Accounts for the Accounting
Period ended 31 December 1998 which shall be included in the definition of
Consolidated Net Worth;
plus for the period from 6 March 2000 to 31 December 2000 only, the
aggregate amount of principal outstanding under the GSIC Notes (but
excluding for the avoidance of doubt any interest (whether in cash or in
kind) or any other amount accruing thereon);
plus, an amount of up to X + Y where:
X is the actual book loss resulting from the disposal of the Sturmey-▇▇▇▇▇▇
Group in accordance with the Sale Transaction Documents; and
Y is (without double counting) the actual book loss resulting from the
Pension Transfer.
minus any amount included in the above which is attributable to (a) the
aggregate of all goodwill (to the extent created or purchased after
Closing), titles, trademarks, copyrights, patents, capitalised research and
development expenditure (other than research and development expenditure
which is capitalised in accordance with the accounting policies of the
Company in force at the date of this Agreement) and other intangible assets,
and (b) any upwards revaluation of assets by any Group Member after Closing;
and
minus (to the extent otherwise included) the amount attributable to the
interests (if any) of outside holders of issued share capital in any Group
Member other than the Company other than RIC Preference Shares for so long
as the same are exchangeable solely for B Common Stock and carry no rights
greater than as at the date of this Agreement and RIC is prohibited from
redeeming such RIC Preference Shares pursuant to the provisions of this
Agreement.
For the purposes of the foregoing, no items shall be effectively taken into
account more than once in this calculation and all items shall be calculated
on a consolidated basis and (subject only as may be required in order to
reflect the express inclusion or exclusion of items as
--------------------------------------------------------------------------------
19
specified in this definition) in accordance with the Applicable Accounting
Principles and, where the calculation is being made as at the end of any
Accounting Period for which a consolidated balance sheet of the Group has
been or is required to be delivered to the Facility Agent hereunder, shall
be as determined from that balance sheet.
2. Clause 19.5(b) (Disposals) shall be amended by the insertion of a new sub-
clause (xv) as follows:
(xv) "The Pension Transfer".
--------------------------------------------------------------------------------
20
SCHEDULE 7
Condition Precedents to Further Amendments to the Facility Agreement which take
effect on the Second Effective Date.
1. Actuarial valuation in an agreed form prepared by ▇▇▇▇▇▇ ▇▇▇▇▇;
2. Certified copies of all agreements and documentation in relation to the
Pension Transfer, each is an agreed form;
3. a certificate of an Authorised Signatory of the Company confirming the
actual book loss resulting from the disposal of the Sturmey-▇▇▇▇▇▇ Group in
accordance with the Sale Transaction Documents;
4. a certified copy of the minutes of the meeting of shareholders (if
necessary) and the resolution; of the board of directors of Sturmey-▇▇▇▇▇▇
Limited authorising the Pension Transfer and authorising the execution,
delivery and performance on behalf of that company of any agreements or
other documents entered into in connection with or in respect to the Pension
Transfer.
--------------------------------------------------------------------------------
21
THE DERBY CYCLE CORPORATION )
for itself and on behalf of each of the )
Borrowers and Guarantors as Obligors' Agent )
By:
CHASE MANHATTAN INTERNATIONAL )
LIMITED for itself and as the Facility Agent )
and Security Agent and for and on behalf of the )
Arranger and each of the Banks (other than Lloyds )
TSB Bank Plc, Scotia Bank Europe plc and The Bank
of Nova Scotia)
By:
By:
LLOYDS TSB BANK PLC
By:
SCOTIA BANK EUROPE PLC
By:
THE BANK OF NOVA SCOTIA
By:
DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN BRANCHES
By:
--------------------------------------------------------------------------------
22