NOTE: This document does not provide legal advice – it is only intended as a discussion draft to be
updated and modified to fit the circumstances. The publishers and authors shall not be liable to any person
with respect to any loss or damages caused or alleged to be caused directly or indirectly by the information
or any mistake in this document. In particular, all statutory references should be checked and users are
reminded that changes are continually being made to the law and the document will not be up to date. [25
August 2011]
!Investor Agreement – long form – loans and shares!
DATED
[
]
- and -
[
]
- and -
[
]
- and -
[
]
- and -
[Investor]
[draft]
AGREEMENT
for
[Consolidated] [Secured] [Unsecured] [Guarantee] [Further]
1
INVESTMENT AND OPTIONS - INVESTOR AGREEMENT (LONG FORM)
[Loan] [and Share [Subscription] [Option]]
MASTER AGREEMENT
TABLE OF CONTENTS
Front page
Parties
Recitals
Nature of investment
Consolidation
Method of advance [and commitment fee]
Purpose of investment
Guarantee fee
Waiver
Indemnity for guarantee
Security
Guarantee
Interest - variable
Interest - multi-option
Interest - fixed or annuity
Interest - consolidation
Commission on default
Substitution or repayment provisions
Repayment - normal
Repayment – annuity
Voluntary early repayment
Earlier repayment on transfer of control
Early repayment compensation
Method of payment
Compulsory repayment subject to demand
Compulsory repayment without demand
Funding of repayment of the Loan
Option to subscribe for shares and application of proceeds
Protection of share option
Share protection
2
INVESTMENT AND OPTIONS - INVESTOR AGREEMENT (LONG FORM)
Future transactions
Positive undertakings
Further borrowing and creation of charges
Frozen loan agreement
Subsidiaries
Liaison and information
Exchange of information
Special director
Observer
Directors' emoluments and pensions
Future business development
Other Investments
Warranties
Certificate of amount
Application of terms and conditions
Duration of agreement
Restrictive Trade Practices Act 1976
Notices
Definitions
Interpretation
Testimonium
Governing jurisdiction
THE SCHEDULE
The existing security
Form of guarantee by the Investor
Conditions precedent to stage advances
Purpose of [the Loan] [and] [the subscription moneys]
Fixing notice by customer
Rate enquiry notice
Rate offer notice
Rate acceptance notice
Annuity table
Particulars of frozen loans
3
INVESTMENT AND OPTIONS - INVESTOR AGREEMENT (LONG FORM)
Investment agreement – long form – loans and shares
THIS AGREEMENT is made the
day of
BETWEEN
(1)
LIMITED (registered number
(hereinafter called "the Company"); and
!guarantors!
()
LIMITED (registered number
) [and
LIMITED (registered
number )] [and
LIMITED (registered number ) each of] whose registered office
is at
(hereinafter [together] called "the Guarantor[s]"); and
!existing guarantors!
()
LIMITED (registered number
) [and
LIMITED (registered
number
)
each of] whose registered office is at
(hereinafter [together] called "the Existing Guarantor[s]") and
!new guarantors!
()
) whose registered office is at
LIMITED (registered number
) [and
) each of] whose registered office is at
LIMITED (registered number
(hereinafter [together] called "the New Guarantor[s]"); The Existing Guarantor[s] and the
New Guarantor[s] are hereinafter together called "the Guarantor[s]"; and !directors - only
define as Mr if required!
()
whose address is
[(hereinafter called Mr
)] and
whose
address is
[(hereinafter called Mr
)] (hereinafter together called "the
Directors"); and
!loanholders!
()
LIMITED (registered number
) whose registered office is at
]
whose address is
and
whose address is
(hereinafter
[together with Mr and Mr
] [together] called "the Loanholder[s]"); and
()
PLC (registered number
](hereinafter called "the Investor");
!first loan or subscription!
) whose registered office is at [
WHEREAS the Investor has been requested to make an investment in the Company which the
4
INVESTMENT AND OPTIONS - INVESTOR AGREEMENT (LONG FORM)
Investor has agreed to do upon the terms and conditions hereinafter contained;
!further loan only!
SUPPLEMENTAL TO the deeds and documents set out and defined in part [1] of the Schedule
(in this agreement together referred to as "the (Existing] Security");
WHEREAS
()
The principal sum of £ (which sum is hereinafter referred to as "the Existing Loan")
together with current interest thereon remains owing by the Company to the Investor at the
date hereof on the terms and security of the [Existing] Security;
()
the Investor has been requested to make a further investment in the Company which the
Investor has agreed to do upon the terms and conditions of this agreement.
!all investments!
THE parties agree as follows:
Nature of investment !"Further Loan" only if consolidating!
(A)
the Investor shall [forthwith] lend to the Company and the Company shall borrow from
the Investor the sum of £ (which sum or such part thereof as is for the time being owing
by the Company to the Investor is hereinafter referred to as "the (Further) Loan") upon the
terms hereinafter mentioned. !shares!
(B)
the Investor or its nominee shall forthwith subscribe in cash a total of £
for
["A"
ordinary) shares of £1 each [and a total of £
for
preference shares of £1 each] in
the capital of the Company and upon payment of the subscription moneys the Company
shall procure that such shares are allotted to the Investor or as the Investor may direct.
Such shares shall have attached thereto the rights set out in the articles of association of
the Company at the date hereof.
!guarantee!
(C)
the Investor shall contemporaneously herewith execute and deliver to
Bank plc
(hereinafter referred to as "the Bank") a guarantee substantially in the form set out in part
[2] of the Schedule (hereinafter referred to as "the Guarantee" which expression shall
include any variation or extension of such guarantee agreed between the Investor and the
Bank).
Consolidating !further - consolidated!
5
INVESTMENT AND OPTIONS - INVESTOR AGREEMENT (LONG FORM)
WITH effect from and including the date hereof the Further Loan shall be consolidated with the
Existing Loan and the aggregate of the Further Loan and the Existing Loan namely the sum of £
(which sum or such part thereof as is for the time being owing by the Company to the Investor is
hereinafter referred to as "the Loan") shall be repaid in the manner hereinafter appearing.
Method of advance [and commitment fee] !"Further Loan" only if consolidated!
[(A)
THE first £
of the [Further] Loan shall be advanced on the date hereof and the balance
of the [Further] Loan shall be advanced by [[ ] equal instalments of £ on [ ]] [such
instalments (being not less than £ or a multiple thereof) and at such time or times as the
Company shall from time to time specify by at least fourteen days' previous notice in
writing to the Investor].
!conditions precedent!
[However the Investor shall be under no obligation to advance any such instalment unless it is
satisfied that at the date of each such advance the conditions precedent set out in part [3] of the
Schedule have been fulfilled]
!cesser of obligations!
[(B) ANY remaining obligations of the Investor hereunder to advance any moneys to the
Company shall be at an end on
(that date or such later date as may be agreed in
writing by the Investor being hereinafter referred to as "the Cessation Date") or upon the
Company being in default of any of the terms of [the [Existing] Security or] this
agreement or any document supplemental hereto or thereto.
!commitment fee!
[(C) UNTIL the Cessation Date or the date the whole of the Loan has been advanced
(whichever is the earlier) the Company shall pay to the Investor a commitment fee
calculated on a daily basis at the rate of [0.5]% per annum (plus any VAT which may
become payable thereon) of the undrawn balance of the Loan from time to time such
commitment fee to be paid in arrear on the dates applicable for the payment of interest on
the Loan.]
Purpose of investment !"Further Loan" only if consolidated!
THE [Further] Loan [THE facilities from the Bank referred to in the Guarantee] [and the]
[subscription moneys] shall be applied by the Company solely for the purpose specified in part
[4] of the Schedule.
6
INVESTMENT AND OPTIONS - INVESTOR AGREEMENT (LONG FORM)
Guarantee fee !guarantee by the Investor!
[THE Company shall pay to the Investor forthwith upon the execution of this agreement a
guarantee fee of £ .] [So long as the Guarantee continues the Company shall pay to the Investor
a guarantee fee of [£
per annum (plus any VAT that may become payable thereon) payable]
[%
per annum of the amount of the Investor's maximum potential liability under the
Guarantee calculated on a daily basis (plus any VAT which may become payable thereon)
payable] [quarterly] [monthly] in [advance] [arrear] on the last day of [March June September
and December] [January April July and October] [February May August and November] in every
year] [each month in every year]. [The first payment shall be made on the date hereof and shall be
such proportion of the guarantee fee as the period from and including the date hereof to the
next bears to a whole year.]
Waiver !always if guarantee by the Investor!
EACH of the Directors hereby waives all right of contribution or otherwise which he may have
against the Investor (including any right to enforce or benefit from the rights of a guarantor
against or relating to security held by the Investor) arising from any liability or obligations of the
Investor under or pursuant to the Guarantee.
Indemnity for guarantee
(A)
(B)
THE Company agrees that it shall:
(i)
indemnify the Investor in respect of any liability which the Investor shall have
incurred under the terms of the Guarantee and shall pay the Investor forthwith
upon demand all sums which the Investor may have been required to pay to the
Bank pursuant to the terms of the Guarantee; and
(ii)
pay to the Investor forthwith on demand interest on sums due to the Investor under
the immediately preceding sub-clause from the date of payment of such sums by
the Investor to the Bank at a rate of
above [The Royal Bank of Scotland plc]
Base Rate current at the date of such payment by the Investor to the Bank.
THE Company [and the Guarantor[s]] agree[s] that the Investor is authorised to make any
payments and comply with any demands which may be claimed or made under the
Guarantee without any reference to or further authority from the Company [or the
Guarantor[s]] and any payment which the Investor shall make in accordance with or
purporting to be in accordance with the Guarantee shall be binding on the Company [and
the Guarantor[s]] and shall be accepted by the Company [and the Guarantor[s]] as
conclusive evidence that the Investor was liable to make such payment or comply with
such demands.
7
INVESTMENT AND OPTIONS - INVESTOR AGREEMENT (LONG FORM)
(C)
THE Company [and the Guarantor[s]] acknowledge[s] that [it][they] shall not be
exonerated by the Investor's liability under the Guarantee being varied at any time or by
time being given or by any concessions granted to the Investor by or with the consent of
the Bank or by anything which the Investor or the Bank may do or omit or neglect to do or
by any other dealing or thing which but for this provision would operate to exonerate the
Company [or the Guarantor[s] (as the case may be)].
Security
(A)
THE Company shall contemporaneously herewith execute and deliver to the Investor a
[debenture][floating charge] [supplemental legal charge] [mortgage] [chattel mortgage]
[standard security] [bond and floating charge] in the form already agreed between the
Investor and the Company.
(B)
THE [New] Guarantor(s) shall [each] contemporaneously herewith execute and deliver to
the Investor a collateral [debenture] [floating charge] [mortgage] [chattel mortgage)
[standard security] [bond and floating charge] (hereinafter [together] referred to
as "the [New] Collateral Security") in the form already agreed between the Investor and
the [New] Guarantor[s].
(C)
THE [!insert from para (A)!] [the [New] Collateral Security] [and the Existing Security]
[are] [is] herein [together] referred to as "the Security".
(D)
THE Company [and the Guarantor[s]] hereby agree[s] that repayment of the Loan together
with interest thereon [and the Redemption Premium (as hereinafter defined)] and all other
moneys and liabilities that may be owing or incurred by the Company to the Investor
[including for the avoidance of doubt sums payable under the indemnity[,] [and] interest
thereon] [and all fees herein referred to] shall be secured by the Security.
Guarantee
THE Guarantor[s] hereby guarantee[s] to the Investor the due payment by the Company of the
[Existing Loan and the] Loan and of all other moneys now or at any time hereafter due or owing
by the Company to the Investor and of all interest and other sums payable by the Company to the
Investor (whether under this agreement or otherwise and whether as principal or as surety)
[including for the avoidance of doubt sums payable under the indemnity, interest thereon and any
fees herein referred to] and so that the following provisions shall have effect in relation to such
guarantee:
(A)
whenever the Company makes default in the payment of the [Existing Loan and/or the]
Loan or of any interest or of any other moneys now or at any time due or owing by the
Company to the Investor the Guarantor[s] shall forthwith on demand therefor by the
8
INVESTMENT AND OPTIONS - INVESTOR AGREEMENT (LONG FORM)
Investor pay to the Investor the sum in regard to which such default has been made;
(B)
the Guarantor(s) shall not be exonerated by time being given or by any concessions
granted to the Company by or with the consent of the Investor or by anything the Investor
may do or omit or neglect to do or by any other dealing or thing which but for this
provision would or might operate to exonerate the Guarantor[s];
(C)
this guarantee is to be a continuing guarantee and accordingly is to remain in operation
until the [Existing Loan and the] Loan and all other moneys due or owing by the Company
to the Investor including all such interest and other sums as aforesaid have been duly paid
in accordance with the provisions hereof [and of the Security];
(D)
the Guarantor[s] shall in respect of any sum paid by the Guarantor[s] hereunder and in
respect of any other rights which may accrue howsoever to the Guarantor[s] in respect of
any sum so paid rank and be entitled to enforce the same only after the [Existing Loan and
the] Loan and all other moneys due or owing by the Company to the Investor including all
such interest and other sums as aforesaid shall have been duly paid to the Investor in
accordance with the provisions hereof [and of the Security];
(E)
any security for the time being held by the Guarantor[s] from the Company in respect of
the liability of the Guarantor[s] hereunder shall be held by the Guarantor[s] in trust for the
Investor security for the liability of the Guarantor[s] hereunder [and under the Security];
[(F)
where there is more than one guarantor the Investor may at any time and from time to time
release discharge compound with or otherwise vary or agree to vary the liability of any
guarantor without prejudice to or in any way affecting the Investor's rights and remedies
against any other guarantor;]
[(G)
for the purposes of this guarantee the expression the Guarantor[s]' shall where any such is
an individual include his personal representatives and executors.]
Interest !total variable! !'Further Loan' only if consolidated!
(A)
THE Company shall pay to the Investor interest on the Loan at the rate or rates set out
below quarterly on the last day of each of the months of [March June September and
December] [January April July and October] [February May August and November] in
each year the first such payment to be made on whichever of the interest payment dates
first occurs after the [first] advance of the [Further] Loan and to be in respect of the period
from and including the date of such advance until the next interest payment date.
(B)
THE rate per annum shall be
(as defined below).
above the higher of [7%] and the relevant LIBOR Rate
9
INVESTMENT AND OPTIONS - INVESTOR AGREEMENT (LONG FORM)
(C)
THE following expressions used in this agreement shall have the meanings set out below:
(i)
"Interest Rate Review Date" means such quarterly days in each year as the
Investor shall specify in writing to the Company following the [first] advance of
the [Further] Loan.
(ii)
"the relevant LIBOR Rate" means the rate of interest per annum as determined by
The Royal Bank of Scotland plc (or any other member of the London and Scottish
Clearing House selected by the Investor) at which banks are prepared to offer
domestic sterling deposits in the London inter-bank market for a three month
period (rounded upwards where necessary to the nearest integral multiple of one
quarter per cent) at approximately 11.00 a.m. on the last occurring Interest Rate
Review Date PROVIDED THAT until the first Interest Rate Review Date the
relevant LIBOR Rate shall be determined as hereinbefore provided on the date of
the [first] advance of the [Further] Loan. If the relevant LIBOR Rate can no longer
be so determined then from the next Interest Rate Review Date the relevant LIBOR
Rate shall be such rate as the Investor on that and each subsequent Interest Rate
Review Date shall in its absolute discretion determine as being the rate at which
the Investor is then able to borrow sterling funds of an amount equal to the Loan
then outstanding for repayment in accordance with the then outstanding repayment
terms of this agreement.
Interest !multi-option! !'Further Loan' only if consolidated!
(A)
THE Company shall pay to the Investor interest on the Loan at the Floating Rate or the
Fixed Rate as set out below quarterly on the last day of each of the months of [March June
September and December] [January April July and October] [February May August and
November] in each year the first such payment to be made on whichever of the interest
payment dates first occurs after the [first] advance of the [Further] Loan and to be in
respect of the period from and including the date of such advance until the next interest
payment date.
(B)
THE Floating Rate shall be the rate per annum [
]% above the higher 7% per annum
and the relevant LIBOR rate (as defined in sub-clause (H) below).
(C)
THE Fixed Rate shall be such rate per annum as the Investor may specify in the Rate
Offer Notice referred to below.
(D)
THE Company shall pay interest on the Loan at the Floating Rate from the date of the first
advance of the Loan until the rate is converted to the Fixed Rate under the provisions of
sub-clauses (E) and (F) below.
10
INVESTMENT AND OPTIONS - INVESTOR AGREEMENT (LONG FORM)
(E)
AT any time [after the earlier of the Cessation Date and the date the full amount of the
Loan has been advanced] the Company shall be entitled with effect from the next Interest
Rate Review Date (as defined in sub-clause (H) below) to convert the interest payable on
the Loan from the Floating Rate to the Fixed Rate. If the Company wishes to convert
from the Floating Rate to the Fixed Rate it shall serve notice (a "Rate Enquiry Notice") on
the Investor:
(i)
requesting the Investor to specify the Fixed Rate which would apply with effect
from the Commencement Date (as defined in sub-clause (H) below);
(ii)
specifying the period ("the Fixed Rate Period") for which the Fixed Rate is to
apply and being a period of whole years not exceeding 10 years.
(F)
A Rate Enquiry Notice may only be served before 11.00 am (London time) on any
business day by a telex or facsimile transmission substantially in the form set out in part
[6] of the Schedule. the Investor shall so soon as practicable on or before the business day
immediately preceding the Commencement Date respond to the Rate Enquiry Notice by
telex or facsimile transmission substantially in the form set out in part [7] of the Schedule
("the Rate Offer Notice"). If the Company confirms its acceptance of the terms of the
Rate Offer Notice by a Rate Acceptance Notice substantially in the form set out in part [8]
of the Schedule and such acceptance is received by the Investor within the period specified
in the Rate Offer Notice, the rate shall convert to the Fixed Rate on and with effect from
the Commencement Date. The Fixed Rate shall apply for the Fixed Rate Period and
thereafter the Floating Rate shall apply until the rate is again converted. If the Company
does not confirm its acceptance within the period stated in the Rate Offer Notice the rate
shall not convert.
(G)
EACH time the interest rate is converted from the Floating Rate to the Fixed Rate the
Company shall pay to the Investor an arrangement fee equal to [ ]1% of the Loan then
outstanding (plus any VAT which may become payable thereon). The Company shall pay
the arrangement fee within five business days of the relevant Commencement Date.
(H)
THE following expressions used in this agreement shall have the meanings set out below:
(i)
"Interest Rate Review Date" means such quarterly days in each year as the Investor
shall specify in writing to the Company following the [first] advance of the
[Further] Loan or such other quarterly days in each year as the Investor shall
specify in writing following the date the interest rate reverts from a Fixed Rate to a
Floating Rate.
(ii)
"the relevant LIBOR Rate" means the rate of interest per annum as determined by
11
INVESTMENT AND OPTIONS - INVESTOR AGREEMENT (LONG FORM)
The Royal Bank of Scotland plc (or any other member of the London and Scottish
Clearing House selected by the Investor) at which banks are prepared to offer
domestic sterling deposits in the London inter-bank market for a three month
period (rounded upwards where necessary to the nearest integral multiple of one
quarter per cent) at approximately 11.00 a.m. on the last occurring Interest Rate
Review Date PROVIDED THAT until the first Interest Rate Review Date the
relevant LIBOR Rate shall be determined as hereinbefore provided on the date of
the [first] advance of the [Further] Loan and following an interest rate change from
the Fixed Rate to the Floating Rate the relevant LIBOR rate shall be determined as
above on the date the rate reverts to the Floating Rate. If the relevant LIBOR Rate
can no longer be so determined then from the next Interest Rate Review Date the
relevant LIBOR Rate shall be such rate as the Investor on that and each subsequent
Interest Rate Review Date shall in its absolute discretion determine as being the
rate at which the Investor is then able to borrow sterling funds of an amount equal
to the Loan then outstanding for repayment in accordance with the then
outstanding repayment terms of this agreement.
(iii)"Commencement Date" means the Interest Rate Review
Date next following the date of the Rate Offer Notice.
Interest !fixed or annuity - not consolidated!
THE Company shall pay to the Investor interest on the Loan at the rate of
per annum [.]
!delete the following if annuity!
quarterly on the last day of each of the months of [March June September and December]
[January April July and October] [February May August and November] in each year the first
such payment to be made on whichever of the interest payment dates first occurs after the [first]
advance of the Loan and to be in respect of the period from and including the date of such
advance until the next interest payment date.
Interest !interest on consolidated loan and existing loan!
(A)
WITH effect from and including the date hereof interest on the Existing Loan shall cease
to be payable under the provisions of the [Existing] Security but without prejudice to the
right of the Investor to receive payment on the next interest payment date hereafter of
interest on the Existing Loan up to and including the day preceding the date hereof.
(B)
THE Company shall pay to the Investor interest on the Loan quarterly on the last day of
each of the months of [March June September and December] [January April July and
October] [February May August and November] in every year the first such payment in
12
INVESTMENT AND OPTIONS - INVESTOR AGREEMENT (LONG FORM)
respect of interest on the Loan to be made on whichever of the interest payment dates first
occurs after the [first] advance of the Further Loan and to be in respect of the period from
and including the date of such advance until the next interest payment date.
Commission on default
IF the Company does not pay on the due date any interest or other sum the Company shall pay
commission to the Investor on the amount in respect of which such default has been made from
and including the date of such default until the date of actual payment at the rate 4% above the
rate of interest which would otherwise be payable on the Loan [or on the Existing Loan as the
case may be]. No interest shall accrue on any capital amount on which commission is then
accruing. Commission shall cease to accrue if the Investor demands the early repayment
compensation referred to in clause [ ].
Substitution of repayment provisions !consolidated loans only!
CLAUSES and of the
shall be deleted and the provisions of the next following clauses of
this agreement shall have effect in substitution therefor.
Repayment !Bullet or instalments!
(A)
SAVE as otherwise herein or by the Security provided the Company may only repay the
Loan [by a single payment on
] [by
[annual] [half-yearly] [quarterly] fixed
redemption instalments (hereinafter referred to as "the Fixed Instalments") [consisting of
instalments of £ and a final instalment] of £ each to be paid on the last day of !specify
months! in each year commencing on the
!stage advances but not if bullet!
(B)
IF the whole of the Loan is not advanced [the amount of each Fixed Instalment shall be
reduced proportionately] [the Fixed Instalments shall be paid at the same rate until the
Loan has been fully repaid].
(C)
THE Company shall repay or discharge all other moneys due or owing by the Company to
the Investor on demand unless otherwise agreed in writing.
Repayment !annuity repayment!
(A)
SAVE as otherwise herein or by the Security provided the Company shall repay the Loan
together with interest by [monthly] [quarterly) instalments (hereinafter referred to as "the
Fixed Instalments"] consisting of instalments of £
and a final instalment of £
comprising both capital and interest as shown in part [10] of the Schedule and the
Company may not repay the Loan or any part thereof in any other way.
13
INVESTMENT AND OPTIONS - INVESTOR AGREEMENT (LONG FORM)
(B)
THE Fixed Instalments shall be paid [on the last day of every month] in each year
commencing on the last day of the month following the month in which the [final]
advance of the Loan takes place] [on the last day of each of the months of [March June
September and December] [January April July and October] [February May August and
November] in each year commencing on the last day of the quarter following the quarter
in which the [final] advance of the Loan takes place].
(C)
THE Company will pay interest separately on the Loan for the period from and including
the [first] advance until the beginning of the period covered by the first of the Fixed
Instalments [on the last day of every month] [March June September and December]
[January April July and October] [February May August and November] in each year.
(D)
THE Company shall repay or discharge all other moneys due or owing by the Company to
the Investor on demand unless otherwise agreed in writing.
Voluntary early repayment !only if specified in offer letter!
[(A)]
THE Company may not make any payment or payments in reduction of the Loan
[additional to the Fixed Instalments] on or before
unless otherwise hereinafter
provided but thereafter may at any time [and from time to time] give to the Investor not
less than three months' previous notice in writing of the Company's intention to repay
the whole of the Loan [or part thereof (such part being an amount of £ or a multiple
thereof)] and immediately upon the expiration of such notice the Company shall repay
the amount of the Loan specified in such notice (hereinafter called "the Specified
Amount") together with:
(i)
all interest accrued due on the Specified Amount under the provisions
hereof from the date of the last payment of interest down to the date of
repayment of the Specified Amount; and
(ii)
early repayment compensation of an amount calculated as, set out
below[;][.]
!multi-option only!
[PROVIDED ALWAYS that during any period while the interest on the Loan is at the Fixed Rate
the Company shall not be entitled to repay the Loan pursuant to this clause if the rate of interest
was last fixed less than five years before the proposed repayment date.]
14
INVESTMENT AND OPTIONS - INVESTOR AGREEMENT (LONG FORM)
!not bullet repayments!
[(B)
ANY payment in reduction of the Loan made under the provisions of sub-clause (A) of
this clause shall be treated as [reducing the amount of the Fixed Instalments
proportionately] [having been made on account of the remaining Fixed Instalments in
inverse order of maturity and accordingly shall not otherwise prejudice or affect the
obligation of the Company to continue to pay the full Fixed Instalments falling due
after the date of any such repayment.]
Earlier repayment on transfer of control
(A)
IF on a sale or a transfer or an allotment of any shares in the capital of the Company
[or
Limited (the Company's holding company)] the Company [ceases to be a
subsidiary of
Limited or Limited or the Company] becomes a Quoted Company
(as hereinafter defined) or a Controlling Interest (as hereinafter defined) in [the
Company] [ Limited] is obtained:
(i)
by a company any part of whose share or loan capital is listed, or dealt in, on
the Stock Exchange or on the Unlisted Securities Market or on any other
recognised investment exchange (herein called "a Quoted Company"), or
(ii)
by a company which is a member of a group of companies any one of which
is a Quoted Company; or
(iii)
by a person (whether or not a body corporate) resident outside the United
Kingdom; or
(iv)
by any body corporate resident in the United Kingdom which is by any
means controlled (whether directly or indirectly) by persons resident outside
the United Kingdom; or
(v)
by a person (whether or not a body corporate) who is not a member of [the
Company] [ Limited] at the date hereof;
the Company will notify the Investor forthwith in writing of the
circumstances which have occurred whereupon the Investor may at any time
during the Call Period (as hereinafter defined) by not less than three months'
previous notice in writing require the Company to repay the Loan and
immediately upon the expiration of such notice the Company shall repay the
Loan together with all interest until the date of repayment and any other
sums due to the Investor.
15
INVESTMENT AND OPTIONS - INVESTOR AGREEMENT (LONG FORM)
(B)
THE expression "a Controlling Interest" means shares or the right to acquire shares or
the power to exercise voting rights conferring in the aggregate 50% or more of the total
voting rights conferred by all the shares in the capital of a company for the time being
in issue other than shares with restricted voting rights.
(C)
THE expression "the Call Period" means the period commencing on the date upon
which the Company [or
Limited (as the case may be)] becomes a Quoted Company
or the date of the sale or transfer or allotment referred to in sub-clause (A) above (as
the case may be) and ending one month after the receipt by the Investor of written
notification of that event.
Early repayment compensation !refer to clause
(A) for bullet loans!
IF the Loan or any part thereof shall have become repayable at any time other than [by the Fixed
Instalments] (as provided in clause
(A) hereof] the Company shall pay to the Investor early
repayment compensation of a sum equal to [twelve months' interest on the principal sum
repayable calculated at the interest rate applicable thereto] [unless such interest rate is [at the
Floating Rate] [variable] when such compensation shall be a sum equal to] [1%] of the principal
sum repayable multiplied by the number of years (including part of a year as a whole year) that
would elapse if repayment of the Loan was made by the Fixed Instalments] [as provided in clause
(A) hereof].
Method of Payment
PAYMENTS of capital and interest [and any fees payable hereunder] shall be paid by Direct
Debit or in such other manner as the Investor may require so that each such payment is credited
by the due payment date to the bank account of the Investor numbered [
] at
Bank (Sort Code
) or such other bank account in the United Kingdom as the Investor
shall from time to time notify in writing to the Company.
!unsecured loan!
Compulsory repayment subject to demand
the Investor may by notice in writing to the Company demand the immediate payment of all
moneys and discharge of all obligations (or any part thereof) due or incurred by the Company to
the Investor together with all interest and any other sums forthwith (or otherwise as the Investor
may require) at any time after the happening of any of the following events:
(A)
if the Company does not pay on the due date any money which may have become due
hereunder or under any document supplemental hereto;
!England!
16
INVESTMENT AND OPTIONS - INVESTOR AGREEMENT (LONG FORM)
(B)
if any distress, execution, sequestration or other process is levied or enforced upon or
sued out against the Company [or the Guarantor[s]) or any of [its] [their respective]
property or the Investor is of the opinion that such property is otherwise in jeopardy;
!Scotland!
(B)
if any inhibition, arrestment (other than an inhibition or arrestment on the dependence
of an action or an arrestment to found jurisdiction), charge or other process is
threatened, placed or enforced against the Company [or the Guarantor[s]] or any of
[its] [their respective] property or the Investor is of the opinion that such property is
otherwise in jeopardy;
(C)
if the Company [or [any of] the Guarantor[s]] is unable to pay its debts within the
meaning of section 123 of the Insolvency Act 1986 or any statutory modification or reenactment thereof for the time being in force or certifies that it is unable to pay its
debts as and when they fall due;
(D)
if the Company [or [any of] the Guarantor[s]] fails to comply with any of the
covenants, undertakings, conditions, obligations or provisions contained herein or in
any deed or document supplemental hereto or if any warranty given by the Company
[or [any of] the Guarantor[s]] or any of the Directors to the Investor proves to be
materially untrue;
(E)
if the property of the Company [or [any of] the Guarantor[s]] or any part thereof is
compulsorily acquired by or by order of any local or other authority and as a result the
business of the Company [or [any of] the Guarantor[s]] is seriously affected;
(F)
if a proposal is made to the Company [or [any of] the Guarantor[s]] and [its] [their]
creditors for a voluntary arrangement pursuant to section 1 of the Insolvency Act 1986;
(G)
if a meeting of the Company [or [any of] the Guarantor[s]] is convened for the purpose
of considering a resolution for the winding up of the Company [or [any of] the
Guarantor[s]];
(H)
if an application is made to the Court for an order for the winding up of the Company
[or [any of] the Guarantor[s]].
If any of these events occurs the Investor shall be freed from all obligations to advance any
moneys to the Company.
17
INVESTMENT AND OPTIONS - INVESTOR AGREEMENT (LONG FORM)
Compulsory repayment without demand !unsecured loan!
ALL moneys and obligations due or incurred by the Company to the Investor shall become
immediately due and payable on the happening of any of the following events:
(A)
if an order is made for the winding up of the Company [or [any of] the Guarantor[s]]
by the court or if an effective resolution is passed for the creditors' voluntary winding
up of the Company [or [any of] the Guarantor[s]];
!Unincorporated Guarantor - Scotland!
[(B)
if [any of] the Guarantor[s]] becomes apparently insolvent within the meaning of the
Bankruptcy (Scotland) Act 1985 or makes a composition contract or arrangement with
his creditors or if a judicial factor is appointed to his estate;
(B)
if a petition is presented for an administration order to be made in relation to the
Company [or [any of] the Guarantor[s]] pursuant to the Insolvency Act 1986;
(C)
if the Company [or [any of] the Guarantor[s]] ceases to carry on its business or
substantially the whole of its business or threatens to cease to carry on the same or
substantially changes the nature of its business;
(D)
if any secured creditor or encumbrancer takes possession or a receiver (which
expression shall include an administrative receiver as defined by the Insolvency Act
1986) is appointed of all or any part of the property and assets of the Company [or [any
of] the Guarantor[s]];
!not Scotland!
[(E)
if [any of] the Guarantor[s) (being an individual) makes application to the court for a
voluntary arrangement pursuant, to section 253 of the Insolvency Act 1986 or enters
into some other scheme of arrangement with creditors or is unable to pay his debts
within the meaning of section 268 of the Insolvency Act 1986 or presents a debtor's
petition to the court pursuant to the Insolvency Act 1986.]
!where loans to Company by Guarantors would be financial assistance!
Funding of repayment of the Loan
SO long as any moneys remain owing by the Company to the Investor the Company and the
Guarantor[s] agree that:
18
INVESTMENT AND OPTIONS - INVESTOR AGREEMENT (LONG FORM)
(A)
if requested by the Company the Guarantor[s] shall forthwith lend to the Company
such sums as the Company considers necessary to allow it to make payment on the due
date of all sums due or to become due by the Company to the Investor in respect of the
Loan and all other moneys due or owing by the Company to the Investor;
(B)
if the Company shall make default in payment of any sum due to the Investor in
respect of the Loan or any other sum due or owing by the Company to the Investor the
Guarantor[s) shall forthwith lend to the Company such sums as will allow the
Company to remedy such default;
(C)
unless otherwise agreed between the Company and the Guarantor[s] all loans made by
the Guarantor[s] to the Company pursuant to this clause shall be interest free and
unsecured and repayable on demand PROVIDED ALWAYS that while the Loan
remains outstanding the Company and the Guarantor[s] shall not without the previous
written consent of the Investor demand repayment of or create any security over the
assets of the Company for any money lent by the Guarantor[s] pursuant hereto.
Option to subscribe for shares and application of proceeds
(A)
the Investor may at any time during the Option Period (as hereinafter defined) by
notice in writing direct the Company to issue for the greater of the aggregate nominal
value and £ to the Investor or to one or more other members of the the Investor Group
(as hereinafter defined)
"A" ordinary shares of £1 each in the capital of the
Company (hereinafter referred to as "the Shares") or such greater number of shares as
represent
of the total equity share capital of the Company after such issue and
having attached thereto the rights set out in the articles of association of the Company
at the date hereof. The Option Period means the period commencing on the date
hereof and ending two months after the Investor receives the audited balance sheet and
profit and loss account of the Company for the financial year of the Company ended on
or current at
together with a notice from the Company to the Investor stating
that the Investor's share option will expire unless exercised within two months.
!delete square bracketed words for bullet loans!
(B)
THE Company shall within twenty eight days of such direction take all necessary steps
to comply therewith and upon the issue of the Shares pursuant to such direction and
upon receipt of the subscription moneys such moneys shall if the Investor so directs
and if the Loan is then outstanding forthwith be applied by the Company in or towards
repayment of the Loan [and such repayment shall be applied at the option of the
Investor either to reduce the number or the amount pro rata of the remaining Fixed
Instalments].
19
INVESTMENT AND OPTIONS - INVESTOR AGREEMENT (LONG FORM)
(C)
NO early repayment compensation shall be payable under clause [
] of this
agreement in respect of that part of the Loan repaid at the request of the Investor from
the proceeds of the subscription moneys for the Shares.
Protection of share option
THE Company and the Directors agree with the Investor that until the earlier of the expiry of the
Option Period and the date the Investor exercises its right to subscribe for Shares they shall
procure that:
!Sufficient unissued shares!
(A)
there shall be at all times a sufficient number of unissued shares in the capital of the
Company to enable the Company to discharge its obligations hereunder without
increasing its authorised share capital;
!Alteration of share capital!
(B)
the Company shall not without the previous written consent of the Investor issue any
shares or consolidate or sub-divide or alter any of the rights attached to any of its
issued shares or reduce its share capital or repay any amount standing to the credit of
any share premium account or capital redemption reserve fund or otherwise reorganise
its share capital in any way or enter into any scheme of arrangement with its creditors;
!Notices of meetings and resolutions!
(C)
not less than thirty days' previous notice shall be given to the Investor of all resolutions
which are to be proposed at any general meeting of the Company and in addition
copies of notices of all general meetings of the Company and of all circulars to
shareholders or debenture holders issued by the Company or the directors shall be sent
to the Investor immediately;
!Offers to shareholders!
(D)
if any offer is made to the Company's shareholders or any of them to purchase from
them any of their ordinary shares in the capital of the Company (or if any intention or
proposal to make such offer becomes known to the Company) the Company shall
notify the Investor of such offer or intention or proposal and the Company and the
Directors shall use their respective best endeavours to procure that such offer is not
accepted and the Directors agree that they will not register any transfer relating to such
offer unless the offer extends at the option of the Investor in such manner as the
Investor may require either to the Investor's right to subscribe for shares as
hereinbefore mentioned or (the Investor having been given full and adequate
20
INVESTMENT AND OPTIONS - INVESTOR AGREEMENT (LONG FORM)
opportunity to exercise its right to subscribe for shares before the offer is accepted) to
the shares then held by the Investor and any other member of the the Investor Group;
!alteration of memorandum and articles!
(E)
no amendment or alteration may be made to the Company's memorandum and articles
of association.
Share Protection
THE Company hereby agrees with the Investor that so long as the Investor or any other member
of the the Investor Group is the holder of any share in the capital of the Company:
!control of subsidiaries!
(A)
the Company shall not without the previous written consent of the Investor dispose of
any share in the capital of any of its subsidiaries from time to time nor alter increase or
reduce the issued share capital of any such subsidiary;
!dividend up!
(B)
the Company shall procure that each of its subsidiaries which has profits available for
distribution shall declare and pay to the Company such dividends as are necessary to
permit lawful and prompt payment of the dividends accrued on the shares held by the
Investor in the Company [and lawful and prompt redemption of any shares held by the
Investor falling due for redemption];
!participation in listing!
(C)
any listing on the Stock Exchange, the Unlisted Securities Market or any other
recognised investment exchange of any part of the Company's share capital shall at the
request of the Investor extend to any shares held by the Investor and the Investor may
also participate pro rata in any such listing or marketing;
!free dealing in after market!
[(D)
if any part of the Company's share capital is listed or dealt in on the Stock Exchange,
Unlisted Securities Market or any other recognised investment exchange the Investor
may thereafter deal freely in any shares in the Company held by it.]
Future transactions
21
INVESTMENT AND OPTIONS - INVESTOR AGREEMENT (LONG FORM)
THE Company [and the Guarantor[s]] agree[s] with the Investor that [the Company] [they] will
not nor will any of [its] [their respective] subsidiaries without the previous written consent of the
Investor:!Hire purchase none!
(A)
enter into any hire purchase agreement or credit sale agreement or equipment leasing
agreement for any purpose whatever;
!Hire purchase with limit!
(A)
enter into any hire purchase agreement or credit sale agreement or equipment leasing
agreement for any purpose whatever if as a result the aggregate liability of the
Company [and the Guarantor[s]] and [its] [their respective] subsidiaries under all such
agreements would exceed £
;
!Investments!
(B)
subscribe for or purchase or acquire any share or debenture or mortgage or security (or
any interest in any of them);
!Guarantees!
(C)
give any guarantee or provide any credit (other than normal trade credit);
!Loans!
(D)
make any loan or advance;
!Disposal!
(E)
grant any lease over or sell or transfer or assign or otherwise dispose of their respective
undertakings or [freehold] [or heritable] [or leasehold] property or any part thereof or
interest therein or contract so to do or factor or assign or charge or otherwise deal with
any of their respective book debts or (except in the ordinary and usual course of
business as currently transacted) sell or part with any other assets or any interest
therein;
Positive Undertakings !only if specified in offer letter!
(A)
UNTIL all moneys owing to the Investor are repaid the Company shall procure that:
(i)
Group-Book Debts shall not at any time be less than [twice] [
22
INVESTMENT AND OPTIONS - INVESTOR AGREEMENT (LONG FORM)
times] [
% of] the Loan;
(ii)
in respect of each financial year of the Company Group Interest shall not
exceed [
] 1% of Group Profit;
(iii)
Group Borrowings shall not at any time exceed
[
]% of Shareholders' Funds;
(iv)
Group Net Assets shall at all times exceed £ ];
(v)
Group Net Assets in respect of each financial year of the Company shall be
at least [£
greater than] [ of] Group Net Assets in respect of the
immediately proceeding financial year of the Company;
and the Directors agree that they shall diligently monitor the Company's compliance
with the positive undertakings in this sub-paragraph and shall notify the Investor
within 7 days of any breach of such obligations.
(B)
IN sub-clause (A) above the following expressions shall have the meanings set out
below:
(i)
"Group Book Debts" means the amount of debts owed to the Company and
its subsidiaries arising in the ordinary course of business as shown by the
most recent audited consolidated accounts of the Company and its
subsidiaries and/or by the most recent management accounts of the
Company and its subsidiaries but excluding any debts arising through intra
group trading;
(ii)
"Group Interest" means the amount of interest paid in the relevant financial
year of the Company on moneys borrowed by the Company and its
subsidiaries in the relevant financial year [and amounts paid by the
Company and its subsidiaries under credit sale, hire purchase and
equipment leasing agreements less so much as can properly be attributed to
capital all] as shown in the audited consolidated accounts of the Company
and its subsidiaries for the relevant financial year;
(iii)
"Group Profit" means the amount of net profit of the Company and its
subsidiaries calculated on the historical cost accounting basis and shown in
the audited consolidated accounts of the Company and its subsidiaries for
the relevant financial year before deducting corporation tax on the profits
and gains of the Company and its subsidiaries [but after adding back Group
Interest];
23
INVESTMENT AND OPTIONS - INVESTOR AGREEMENT (LONG FORM)
(iv)
"Group Borrowings" means the amount of moneys borrowed by the
Company and its subsidiaries [and any liability (whether ascertained or
contingent) under any guarantee given by the Company or any of its
subsidiaries] and amounts due under any credit sale, hire purchase and
equipment leasing agreements as can properly be attributed to capital (but
excluding any loans or guarantees by the Company to or in respect of any of
its subsidiaries or by any of such subsidiaries to or in respect of the
Company or any other such subsidiary) all as shown by the most recent
audited consolidated accounts of the Company and its subsidiaries and/or by
the most recent management accounts of the Company and its subsidiaries;
(v)
"Shareholders' Funds" means the nominal amount of the issued paid up
share capital of the Company and the sums standing to the credit of the
capital and revenue reserves and the share premium account of the
Company and its subsidiaries (excluding amounts arising from writing up
book values of capital assets, amounts attributable to goodwill and minority
interests and amounts set aside for future taxation) all as shown by the most
recent audited consolidated accounts of the Company and its subsidiaries
and/or by the latest management accounts of the Company and its
subsidiaries;
(vi)
"Group Net Assets" means the amount of net assets of the Company and its
subsidiaries after deducting goodwill and other intangible assets as shown
by the latest audited consolidated accounts of the Company and its
subsidiaries and/or by the latest management accounts of the Company and
its subsidiaries.
Further borrowing and creation of charges
SO long as any moneys remain owing by the Company to the Investor the Company [and the
Guarantor[s]] agree[s] with the Investor that neither the Company [nor the Guarantor[s)] nor any
of [their respective] [its] subsidiaries will without the previous written consent of the Investor
create or issue or allow to come into being any mortgage or charge or standard security upon any
part of their respective property or assets or uncalled capital or create or issue any debenture or
debenture stock or borrow any moneys secured or unsecured or give any guarantee or obtain any
advance or credit in any form other than normal trade credit PROVIDED that each of them the
Company [the Guarantor[s]] and [their respective] [its] subsidiaries may [(i)] obtain from their
respective bankers [unsecured] advances or accommodation and give guarantees to bankers for
the indebtedness of the other or others of them but so that the aggregate amount (exclusive of any
such guarantees) due or owing or which may be accruing due or incurred by the Company [the
24
INVESTMENT AND OPTIONS - INVESTOR AGREEMENT (LONG FORM)
Guarantor[s]] and [their respective] [its] subsidiaries to their respective bankers shall not without
such consent as aforesaid exceed the principal sum of £
at any one time outstanding and in
addition interest commission costs charges and expenses [and (ii) obtain from [
] [a] [an
unsecured] loan of £ ] [AND PROVIDED FURTHER that as security for all sums so owing or
guaranteed the Company [the Guarantor[s]] and [their respective] [its] subsidiaries may create or
continue in favour of their respective bankers [and ] fixed and floating charges over all their
respective undertaking and assets.]
Frozen Loan Agreement
THE Loanholder[s] agree[s] with the Investor that the Loanholder[s] will not without the
previous written consent of the Investor either directly or indirectly apply for or demand payment
of or accept any payment of any kind in settlement or reduction or discharge or otherwise
howsoever in satisfaction of or assign or charge or dispose of any interest in the indebtedness
short particulars of which are set out in part (9) of the Schedule or agree any variation to the terms
now existing. The Company agrees that it will not make any payment of any kind in settlement
or reduction or discharge or otherwise howsoever in satisfaction of such indebtedness or agree
any variation to the terms now existing without such consent.
Subsidiaries
THE Company agrees with the Investor that the Company will procure that all of its subsidiaries
both present and future shall observe and perform the provisions and conditions contained in this
agreement to be observed and performed by subsidiaries of the Company.
Liaison and information
THE Company agrees with the Investor that the Company will keep the Investor informed of the
progress of its business and that of each of its subsidiaries and furnish the Investor to such extent
and in such form and detail as the Investor may from time to time reasonably require with
particulars of any matters concerned with and arising out of the activities of the Company and
those of each of its subsidiaries and in particular but without limiting the generality of the
foregoing shall furnish the Investor with:
(A)
copies of the trading and profit and loss account and audited balance sheet in respect of
each financial year of the Company and every subsidiary thereof forthwith upon the
same becoming available and not in any event later than four months after the end of
each such financial year; and
(B)
[monthly] [quarterly] financial statements in such form [and for such period] as shall
be agreed from time to time between the Company and the Investor [which shall in any
event provide sufficient information to allow the Investor to determine whether or not
25
INVESTMENT AND OPTIONS - INVESTOR AGREEMENT (LONG FORM)
the Company has complied with the positive undertakings contained in clause ]; and
(C)
written notice forthwith upon the Company becoming aware of the same of any offer
made to all ordinary shareholders of the Company to purchase from them any of their
shares;
!33% of equity held by the Investor!
(D)
particulars (immediately the same are available to the Company) of (i) any licence
issued to it under the Consumer Credit Act 1974 or to any company it controls (within
the meaning of the said Act) (ii) the revocation of any such licence and (iii) its
acquisition or loss of control (within the meaning of the said Act) of any company
which holds such a licence.
!Property participation!
(E)
details of any revaluation of or of any rent reviews affecting the Mortgaged Property or
any part thereof.
Exchange of information
THE Company [and the Guarantor[s]] authorise[s] the Investor to consult fully with the bankers
[and auditors] to and any investors or proposed investors in the Company [and the Guarantor[s]]
as to [their respective] [its] affairs and the affairs of any of the Company's subsidiaries and to
exchange information whether oral or written in such manner as the Investor and the said bankers
or any other investors or proposed investors shall deem necessary. This authority shall also
extend to any disclosures which the Investor is required to make to any regulatory body to which
the Investor or any member of the the Investor Group is subject.
Special director
the Investor shall be entitled from time to time to appoint as a director of the Company any one
person (hereinafter referred to as a "Special Director") approved by the directors of the Company
(whose approval shall not be unreasonably withheld) and to remove from office any person so
appointed and (subject to such approval) to appoint another person in his place. [Upon request by
the Investor the Directors shall procure that any Special Director is appointed and acts as
Chairman of the board of directors of the Company.] A Special Director shall not be required to
hold any share qualification nor be subject to retirement by rotation. The remuneration to be paid
to a Special Director shall be payable by the Company and shall be such sum as may be agreed
between him and the Company or failing agreement such reasonable sum as shall be fixed by the
Investor. Upon request by the Investor the Company shall also procure that a Special Director be
appointed a director to any subsidiary of the Company.
26
INVESTMENT AND OPTIONS - INVESTOR AGREEMENT (LONG FORM)
Observer
[(A)]
the Investor shall be entitled from time to time to appoint any one person to attend all
meetings of the directors as an observer and the person so appointed ("the Observer")
shall be given (at the same time as the directors) notice of all meetings of the directors
and all agendas, minutes and other papers relating to such meetings. The Observer
shall be entitled to attend any and all such meetings and to speak and place items on
the agenda for discussion provided that the Observer shall not be entitled in any
circumstances to vote. the Investor may remove any Observer and appoint another
person in his or her place.
[(B)
THE Company shall pay the Investor the sum of £ per annum plus VAT in respect of
the attendance of the Observer payable [quarterly] [half yearly][annually][in arrear][in
advance] on the last day of [
] in each year.]
Directors' emoluments and pension !basic only!
THE Company agrees with the Investor that the aggregate sum receivable in respect of each
financial year of the Company by all the persons who during that year are directors or former
directors of the Company or of any subsidiary of the Company [(exclusive of any Special Director
appointed pursuant hereto)] or their Connected Persons in respect of their services rendered to the
Company or to any subsidiary of the Company by way of emoluments and pensions (including
payments to pension schemes) shall not without the previous written consent of the Investor
exceed £ per annum
!index linking!
[such sum to be adjusted annually on !insert month! in each year commencing on !insert first
review date! by a percentage equal to the retail price index published by the Government to
!insert date one month before review date! in the year in question from !insert date one month
before review date! in the previous year] !plus extra related to profits! [(hereinafter referred to as
"Directors' Basic Remuneration") PROVIDED that such directors and Connected Persons may be
paid additional emoluments and pensions in excess of Directors' Basic Remuneration but not
exceeding in the aggregate a sum of
per annum out of the aggregate net profits of the
Company and each of its subsidiaries for such financial year in excess of
remaining after
deducting Directors' Basic Remuneration in respect of such financial year.]
!plus commission!
[(hereinafter referred to as "Directors' Basic Remuneration") PROVIDED that such directors and
Connected Persons may be paid such further sum by way of commission in respect of such
financial year of the Company as shall not exceed
% of the aggregate net profits of the
27
INVESTMENT AND OPTIONS - INVESTOR AGREEMENT (LONG FORM)
Company and of each of its subsidiaries for such financial year in excess of
deducting Directors' Basic Remuneration in respect of such financial year.]
remaining after
!linked to dividend!
[(hereinafter referred to as "Directors' Basic Remuneration") PROVIDED that sums in excess of
Directors' Basic Remuneration may be paid without the Company first obtaining the Investor's
written consent (if all preference shares held by the Investor falling due for redemption have been
redeemed and] if all dividends have been paid on the "A" ordinary shares (grid preference shares]
in accordance with the Company's articles of association in respect of the Company's financial
year in which the Directors' Basic Remuneration is exceeded and in respect of all the Company's
prior financial years in which the "A" ordinary shares [and preference shares) were in issue.
"net profits" means the profits of the Company or such subsidiary as the case may be for such
financial year calculated on the historical cost accounting basis and (after] [before] charging
provisions or reserves for corporation tax in respect of profits earned during such financial year
but otherwise as certified by the auditors of the Company (or such subsidiary as the case may be).
Future business development !exclude any guarantors which are not subsidiaries!
THE Company [and the Guarantor[s]] agree[s] with the Investor that [it] [they] will procure that:
(A)
any expansion development or evolution of the Company's business [or the
Guarantor['s] [s'] business] (whether to be conducted as part of or in connection with
the Company's [or the Guarantor['s] [s'] (as the case may be)] main business or
ancillary to it) will only be effected through the Company (or the Guarantor[s]] or a
wholly owned subsidiary;
(B)
the Company shall take all reasonable action to protect its and any of its subsidiaries'
intellectual property rights and information which is confidential to it or to any of its
subsidiaries.
Other Investments
THE Directors agree with the Investor that save with the prior written consent of the Investor they
will not make any investment in any other company [save for investments not exceeding [1]% in
total of any class of security dealt with on the Stock Exchange or any other recognised investment
exchange].
Warranties
THE Company and [the Guarantor[s] and] the Directors WARRANT to the Investor that save to
28
INVESTMENT AND OPTIONS - INVESTOR AGREEMENT (LONG FORM)
the extent that such information is modified or altered by a disclosure letter accepted by the
Investor (the "Disclosure Letter"):
[(A)
prior to the date hereof the Company has not undertaken any trading and has not
incurred any liabilities of any nature whatsoever whether actual or contingent;]
[(B)
!accountants' report!
the factual information contained in the [!insert details of accountants' report!] is true
and accurate in all material respects and the opinions and expectations expressed
therein are reasonable and no material facts have been omitted which would render
such information inaccurate or misleading or such opinions and expectations
unfounded;]
[(C)
!business plan!
the [!insert details of business plan!] ("the Business Plan") was prepared after due and
careful enquiry and in particular:
(i)
all assumptions on which any profit or cash flow forecasts contained in the
Business Plan have been based are set out therein and all expressions of
opinion intention or expectation contained in the Business Plan are fair and
honest and are made on reasonable grounds;
(ii)
there are no material omissions from the Business Plan known (or which
ought to be known) to any of the Directors;]
(B)
the financial position of [
Limited] [the Company] [and its subsidiaries] at was
that disclosed to the Investor by the [audited] [certified] [consolidated] balance sheet
and accounts of [
Limited] [the Company] as at that date (such balance sheet and
accounts being hereinafter referred to as "the Accounts");
(C)
the value of the fixed assets appearing in the Accounts has been arrived at by the
method therein stated;
(D)
full provision has been made in the Accounts for bad or doubtful debts and for old or
depreciated or unsaleable stocks;
(E)
full disclosure has been made in the Accounts or in correspondence with the Investor
of all known or foreseeable liabilities whether present or contingent including
provisions and reserves for taxation on profits earned up to the date of the Accounts
and of all encumbrances and onerous commitments in existence or in contemplation;
29
INVESTMENT AND OPTIONS - INVESTOR AGREEMENT (LONG FORM)
(F)
since the date of the Accounts the financial position of
Limited] [the
Company] [and its subsidiaries] has not been adversely affected by losses or other
changes;
(G)
the Investor has been informed in writing of all unusual or non-recurring items
materially affecting the trading and profit and loss accounts of
Limited] [the
Company] [and its subsidiaries] for [its] [their] last [ ] financial years;
(H)
the Investor has been informed in writing of all payments made or proposed by [the
Company] [ Limited] or its subsidiaries since the date of the Accounts in respect of:
(i)
dividends; and
(ii)
exceptional payments in respect of directors' emoluments (including
pension contributions); and
(iii) extraordinary or exceptional items;
(I)
the Company [and Limited] [and its subsidiaries] [is] [are] not engaged in nor about
to initiate any litigation or arbitration of any material importance and to the best of its
and the Directors' knowledge information and belief no such litigation or arbitration is
pending or threatened against [it] [them];
(J)
the written information furnished by the Company [and the Guarantor[s]] and the
Directors to the Investor in connection with the negotiation of the [Loan] [and
subscription for shares] [and option for shares) including the information set out in any
Disclosure Letter was and remains true and accurate in all material respects and there
are no facts known to the Company [the Guarantor[s]] or the Directors which have not
been disclosed to the Investor and which would make any such information
misleading;
(K)
none of the Directors of the Company or its subsidiaries has in any service contract;
(L)
there are no options or agreements outstanding which call for the issue of or accord to
any person or company the right to call for the issue of any shares in the capital of the
Company or of any of its subsidiaries and the authorised share capital of the Company
immediately prior to the Company's execution hereof was £
divided into [
preference shares of £1 each] "A" ordinary shares of £1 each and ordinary shares
of £1 each, of which ordinary shares have been issued and are fully paid;
(M)
the Company has not (and will not following completion of the transactions envisaged
30
INVESTMENT AND OPTIONS - INVESTOR AGREEMENT (LONG FORM)
in this agreement have) any interest in the shares of any other company [save for the
following companies all of which are [or will forthwith upon completion of the
transactions envisaged in this agreement be] wholly owned subsidiaries of the
Company:
(N)
except for his shareholding in the Company and shares quoted on the Stock Exchange
or any other recognised investment exchange and held for normal personal investment
purposes none of the Directors has any interest in any business or partnership nor is he
interested in the shares of any company nor (except for any service contract) does any
of the Directors or any person connected with him have any interest in any contract or
agreement with the Company;
(0)
the entering into of this agreement by the Company has been decided on by the
directors of the Company;
[(P)
the Guarantor[s) [is][are] not unable to pay [its][their] debts at the date hereof and will
not become unable to pay [its][their] debts as a consequence of or immediately
following the execution and issue by the Guarantor[s] of this agreement and the
Collateral Security and the expression "unable to pay its debts" shall have the meaning
ascribed to it by section 123 of the Insolvency Act 1986;]
[(Q)
the Company's accounting reference date is
[(R)
the Directors have disclosed to the Investor all material information relating to the
terms and conditions of any former or existing employment of any of the Directors and
any resignation or proposed resignation of any of the Directors from any such
employment has been or shall be conducted in strict compliance with the provisions of
any contract of employment or agreement regulating such employment;]
[(S)
neither the Company nor any of the Directors has wrongfully made use of or exploited
in the business of the Company [or any of its subsidiaries] any trade secret or other
[intellectual] property which an existing or former employer of any of the Directors is
legally entitled to protect and neither the Company nor any of the Directors has
engaged in any business or activity in competition with the business of any such
employer which such employer was legally entitled to prevent;]
[(T)
no property owned by the Directors or their Connected Persons is used in the business
of the Company.]
]
The warranties in this clause shall be deemed to be given immediately before [the first] advance
of moneys by the Investor pursuant to this agreement [.] [and [save for warranty
] shall be
deemed to be repeated on each further advance of moneys by the Investor pursuant to this
31
INVESTMENT AND OPTIONS - INVESTOR AGREEMENT (LONG FORM)
agreement. [The following additional warranties shall also be deemed to be given on each such
further advance:
.]
Certificate of amount
IT is agreed by the parties hereto that any account or certificate signed by an authorised signatory
of the Investor shall in the absence of manifest error conclusively determine the amount from
time to time owing to the Investor.
Application of terms and conditions
THE parties hereto agree that save as hereby or by writing between the parties varied all the
provisions contained in the [Existing] Security shall so far as applicable apply to the payment of
the Loan together with all interest thereon and shall remain in full force and effect so long as the
Loan remains outstanding. If there is any conflict between the terms of this agreement and the
(Existing] Security then the terms of this agreement shall prevail.
Duration of agreement
SAVE as otherwise contemplated by this agreement notwithstanding the repayment of all moneys
owing to the Investor hereunder the provisions of this agreement shall remain in force so long as
the Investor or any other member of the Investor Group is the holder of [or has the option to
acquire] any share in the capital of the Company.
[Restrictive Trade Practices Act-1976
NO provision (if any) of this agreement (or of any agreement or arrangement of which this
agreement forms part) by virtue of which it is subject to registration under the Restrictive Trade
Practices Act 1976 shall take effect until the day after particulars of this agreement (and any
agreement or arrangement of which it forms part) have been provided to the Director General of
Fair Trading in accordance with that Act.]
Notices
WHERE a notice is to be given to any party hereto it may be served by leaving it at the registered
office or last known address of that party or by sending it first-class letter post to the registered
office or the last known address of that party when it shall be deemed to have been served at the
expiration of forty-eight hours after it has been posted or by transmitting it by telex to that party
when it shall be deemed to have been served upon the correct "Answerback" appearing at the end
of the sender's copy of the telex
Definitions
32
INVESTMENT AND OPTIONS - INVESTOR AGREEMENT (LONG FORM)
WHERE words and expressions used in this agreement are also used in the Companies Act 1985
such words and expressions shall have the meanings attached to them respectively by that Act
and the following expressions used in this agreement shall have the meanings as set out below:
!shares and share options!
"the Investors' Group" means the Investor, any parent company of the Investor and any
subsidiary of the Investor or any such parent company;
!always!
"Connected Persons" means any person or persons connected with a director or former
director of the Company within the definition of connected persons contained in
Section 839 of the Income and Corporation Taxes Act 1988; !warranties future
investment and limitation on transfer of control!
"recognised investment exchange" means an investment exchange as defined in
Section 207 of the Financial Services Act 1986.
Interpretation
IN this agreement unless the context otherwise requires:
(i)
the masculine gender includes the feminine and words denoting the singular
number only shall include the plural and vice versa;
(ii)
covenants, warranties, undertakings and guarantees by more than one party
hereto shall be deemed to be made jointly and severally;
(iii)
covenants warranties and undertakings given by an individual shall be
binding on his personal representatives and executors.
!Testimonium England only!
EXECUTED as a deed on the day and year first above written
Governing Jurisdiction !Scotland only!
THIS agreement shall be governed by the law of Scotland.
!Scotland only. All signatures to be on last page containing part of the text of the agreement.
Also sign on last page of each Schedule!
33
INVESTMENT AND OPTIONS - INVESTOR AGREEMENT (LONG FORM)
THE SCHEDULE
Part 1
The [Existing] Security
Date
Description
Parties
Part [2]
Form of Guarantee by the Investor
34
INVESTMENT AND OPTIONS - INVESTOR AGREEMENT (LONG FORM)
Part [3]
Conditions precedent to stage advances
Before each stage advance is made the Investor must be satisfied:
1.
that the Company has achieved the performance objectives [set out in paragraph [
] of the business plan
dated
] [agreed between the Company and the Investor];
2.
with the financial position and level of trading of the Company and its subsidiaries;
3.
with the terms of any disclosures made in relation to the warranties by the Company
[the Guarantors] and the Directors;
4.
[with an architect's certificate] that the building works referred to in Part [4] of the
Schedule have been carried out in accordance with plans and specifications approved
by the Investor;
5.
in the case of the final stage advance only with a final inspection of the building works
referred to in part [4] of the Schedule.
Part [4]
Purpose of [the Loan] [and] [the subscription moneys]
35
INVESTMENT AND OPTIONS - INVESTOR AGREEMENT (LONG FORM)
Part [5]
Fixing Notice by Customer
To:
The Investor
Ref: !case number!
Date: !date!
In accordance with the agreement with you dated
("the Agreement") WE
HEREBY GIVE YOU NOTICE that we wish to FIX the rate of interest payable by us
under the Agreement with effect from the next Interest Rate Review Date (as defined
in the Agreement) after receipt of this notice by you at
above the Investor
Term Base Rate (as defined in the Agreement) prevailing on your receipt of this notice.
This notice is irrevocable and the fixed rate is to apply without variation until the
Loan (as defined in the Agreement) has been repaid in full in accordance with its
terms.
Dated
For and on behalf
.
Limited
............................
Director duly authorised
36
INVESTMENT AND OPTIONS - INVESTOR AGREEMENT (LONG FORM)
Part [6]
Rate Enquiry Notice
To:
The Investor
Ref: !case number!
Date: !date!
Dear Sir
Loan pursuant to [Secured] Loan [and Share Subscription] [and Share Option] Agreement dated [
]
We may wish to convert the interest payable on the Loan to the Fixed Rate with effect from the
next Interest Rate Review Date.
The period for which we would wish the Fixed Rate to apply is [
] years (maximum 10 years).
Please inform us of the Fixed Rate which would apply with effect from that date for that period.
Our facsimile number is:
Our telex number is:
37
INVESTMENT AND OPTIONS - INVESTOR AGREEMENT (LONG FORM)
Part [7]
Rate Offer Notice
To:
The Directors
[
] Limited
Case number:
Date:
Dear Sirs
In reply to your Rate Enquiry Notice dated [
]
(a)
The Fixed Rate which would apply with effect from 9am on [!insert next
Interest Rate Review Date!] ("the Commencement Date") for a period of [
] years is [ ]% per annum.
(b)
An arrangement fee of £[
of acceptance.
] (plus VAT) is payable within 5 working days
Please confirm to us by fax or telex only in the manner outlined below by
.
38
INVESTMENT AND OPTIONS - INVESTOR AGREEMENT (LONG FORM)
am/pm on
Part [8]
Rate Acceptance Notice
To:
The Investor
Ref: !case number!
Date:
Dear Sirs
We confirm that we require to convert the interest rate payable on the Loan to the Fixed Rate
stated in your Rate Offer Notice dated [
] with effect from the Commencement Date and for
the period stated in your Rate Offer Notice.
We agree to pay the arrangement fee stated in your Rate Offer Notice before the Fixed Rate takes
effect.
Part [9]
Annuity Table
39
INVESTMENT AND OPTIONS - INVESTOR AGREEMENT (LONG FORM)
Part [10]
Particulars of Frozen Loans
Name of Creditor
Nature of Indebtedness
Amount
)
Unsecured Interest Free
)
Loans
)
(
(
(
TOTAL
40
INVESTMENT AND OPTIONS - INVESTOR AGREEMENT (LONG FORM)
£