**Exhibit10.3.1**

 
|                | ** ** | **Major Client Group**                       |
|---------------------|------------|----------------------------------------------|
| Tel: (02) 9237 9731 | ** ** | ** **                                   |
| Fax: (02) 9237 9773 |       | Level 23  255 George Street  SYDNEY NSW 2000 |

 

 

24th October 2003

 

The Directors

Channell Pty Limited

Q3, 391 Park Road

REGENTS PARK NSW 2143

 

Dear Sirs,

 

**BANKING FACILITIES**

 

Further to our recent discussions we are pleased to advise thatNational Australia Bank Limited ABN 12 004 044 937 (the **Bank**)has agreed to provide the facilities (each a **Facility**and collectively the **Facilities**)described below to Channell Pty Limited ABN 29 002 735 622 (the **Company**). The word **Borrower** usedin this letter means the.

 

The Facilities are offered subject to the terms and conditions of thisletter of offer and the normal conditions applicable to Bank facilities of thissort and this letter of offer supersedes all prior understandings andagreements between the Bank and the Borrower, whether written or oral, unlessspecified in this letter of offer.

 

**DEBTOR FINANCE FACILITY**

 
| **Company:**         |   | Channell Pty Limited ABN 29 002 735 622                                                                                                                                                                                         |
|----------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                 |   |                                                                                                                                                                                                                            |
| **Limit:**           |   | $1,200,000 (One million two hundred  thousand dollars).                                                                                                                                                                         |
| ** **           |   |                                                                                                                                                                                                                            |
| **Purpose:**         |   | To cover financial requirements of the day  to day operations of the Borrower.                                                                                                                                                  |
|                 |   |                                                                                                                                                                                                                            |
| **Purchase Charge:** |   | $1,750 per month, charged monthly in  advance.                                                                                                                                                                                  |
| ** **           |   | Refer “Agreement – Annexure “F” Attached.                                                                                                                                                                   |
|                 |   |                                                                                                                                                                                                                            |
| **Interest:**        |   | The Bank’s Base Lending Rate as published  in the financial press from time to time or the rate which replaces it minus  a margin of 2.00% per annum.  The Base  Lending Rate is currently 9.10% per annum, variable. |
| ** **           |   |                                                                                                                                                                                                                            |
| ** **           |   | Any balance in excess of the Limit will be  subject to the Default Rate as defined in Clause 24 Annexure A to this letter  of offer.                                                                                            |
| ** **           |   |                                                                                                                                                                                                                            |
|                 |   | Interest is payable monthly in arrears on  the last business day of each month, and will be debited to the Participating  Company’s account.                                                                               |

 

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| **Expiry Date:** |   | 31st October  2004. Being a Debtor Finance,  the availability of this Facility and its repayment are at all times at the  Bank’s discretion. |
|------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

 

**GUARANTEES BY BANK FACILITY**

 
| **Company:**     |       | Channell Pty Limited ABN 29 002 735 622                                                                                                                                                                                                                                                                                       |
|------------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|             |       |                                                                                                                                                                                                                                                                                                                          |
| **Limit:**       |       | $408,224 (Four hundred and eight thousand and  two hundred twenty four dollars).                                                                                                                                                                                                                                              |
|             |       |                                                                                                                                                                                                                                                                                                                          |
| **Purpose:**     |       | To allow for the issue of performance  guarantees in the form of the Bank’s usual Bank Guarantee.                                                                                                                                                                                                                        |
| ** **       | ** ** | ** **                                                                                                                                                                                                                                                                                                                    |
| **Fees**:        |       | An establishment fee of 3.00% per annum is  payable on establishment of each guarantee and thereafter calendar  half-yearly in advance calculated by reference to the aggregate of all  guarantees then on issue and adjusted each subsequent half-year until the  Bank’s liability under all guarantees has terminated. |
|             |       |                                                                                                                                                                                                                                                                                                                          |
| **Conditions:**  |       | Subject to the Bank’s usual terms and  conditions documented in **Annexure D**.  Guarantees will not be issued unless the Bank receives an executed Guarantee  by Bank Indemnity and Request Form. No guarantee will be issued after the  Expiry Date.                                                                   |
|             |       |                                                                                                                                                                                                                                                                                                                          |
| **Expiry Date:** |       | 31st October  2004.                                                                                                                                                                                                                                                                                                      |

 

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**REVOLVING LEASE LIMIT**

 
| **Company:**     |       | Channell Pty Limited ABN 29 002 735 622                                                                                                                            |
|------------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **       | ** ** | ** **                                                                                                                                                         |
| **Limit:**       |       | $250,000 (Two hundred and fifty thousand  dollars).                                                                                                                |
| ** **       | ** ** | ** **                                                                                                                                                         |
| **Purpose:**     |       | To purchase equipment under lease  arrangements.                                                                                                                   |
| ** **       | ** ** | ** **                                                                                                                                                         |
| **Fee:**         |       | As agreed for each individual lease.                                                                                                                               |
| ** **       | ** ** | ** **                                                                                                                                                         |
| **Conditions:**  |       | Subject to the Bank’s usual terms and  conditions documented separately, and including without limitation the Bank’s  duly executed lease documentation. |
| ** **       | ** ** | ** **                                                                                                                                                         |
| **Expiry Date:** |       | 31st October  2004                                                                                                                                            |

 

**TREASURY FACILITIES**

 

In addition to the above facilities, theBank’s Treasury Operations have been allocated the necessary authority to quotefor the Company’s risk management requirements. Such facilities will remain uncommitted.

 

**SECURITY**

 

The documentation required by the Bank assecurity for the Facilities is set out in the**Schedule **and must be provided in a form and substanceacceptable to the Bank.

 

**REVIEW DATE**

 

All Facilities are subject to annual reviewby 31st October 2004.  If theBank decides to extend one or all of the Facilities, it may do so on whateverterms it thinks fit, in its absolute discretion after consulting with theCompany and will notify the Company accordingly.

 

**GENERAL**

 

In addition to the normal banking terms andconditions applicable to the Facilities, the special terms and conditions setout in the following annexures will also apply:

 

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| ** ** | **Annexure** | ** ** | **Title**                                                        | ** ** |
|------------|--------------|------------|------------------------------------------------------------------|------------|
|       |         |       |                                                             |       |
|       | A            |       | General Terms and Conditions                                     |       |
|       | B            |       | Financial Undertakings                                           |       |
|       | C            |       | Conditions Precedent                                             |       |
|       | D            |       | Letters of Credit and Guarantees by Bank -  Terms and Conditions |       |
|       | E            |       | Schedule                                                         |       |
|       | F            |       | Debtor Finance Facility Agreement                                |       |

 

**VARIATIONOF INTEREST RATES, MARGINS AND FEES**

 

Unless specifically stated, interest rates, marginsand fees may be varied by the Bank in the light of conditions, prevailing fromtime to time.  Although we will endeavourto notify the Company of any change to fees as it occurs, if the Bank does notdo so for any reason, this will not prevent the charging of the new or adjustedfee.

 

**ACCEPTANCE**

 

This offer remains availablefor acceptance until 31st December 2003 after which it will at theBank’s option lapse.

 

Acceptance of these Facilitiesand all the terms and conditions of this letter of offer is required by way ofa certified extract of resolution of directors of the Company.

 

**THE CODEOF BANKING PRACTICE**

 

The Bank has adopted the Code of Banking Practice andrelevant provisions of the Code apply to this Letter of Offer if the Borroweris a small business customer (as defined by the Code).  The Borrower can obtain from the Bank uponrequest:

 

(a)                        informationon the Bank’s current interest rates and standard fees and charges relating tothe Facilities as described in this Letter of Offer if any;

 

(b)                       generaldescriptive information concerning the Bank’s banking services including:

 

(i)                           foraccounts with cheque access, general descriptive information about cheques;

 

(ii)                        accountopening procedures;

 

(iii)                     the Bank’sobligations regarding the confidentiality of the Borrower’s information;

 

(iv)                    complainthandling procedures;

 

(v)                       bankcheques;

 

(vi)                    theadvisability of the Borrower informing the Bank promptly when the Borrower isin financial difficulty;

 

(vii)                 the advisabilityof the Borrower reading the terms and conditions applying to each bankingservice the Bank provides to the Borrower;

 

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(c)                        generaldescriptive information above:

 

(i)                           theidentification requirements of the Financial Transactions Reports Act 1988;

 

(ii)                        theoptions available to the Borrower under the tax file number legislation; and

 

(d)                       a copy ofthe Code of Banking Practice.

 

**GENERAL**

 

Please note that the terms,conditions and pricing detailed in this letter have been provided for the soleuse of the Borrower on the understanding that none of the material will bedivulged to outside parties without the prior written consent of the Bank.

 

We trust that the Facilities meet Borrower’s current requirements.  If any matter needs clarification, please donot hesitate to contact me or Sam Mandoukos.

 
| Yours faithfully            |
|-----------------------------|
|                        |
| ** **                  |
| **Graeme Johnson**          |
| Senior Relationship Manager |

 

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**ANNEXURE A**

 

**GENERAL TERMS AND CONDITIONS**

 
|   | **CONTENTS** |                           |
|--------|--------------|--------------------------------|
|   |         |
|   | 1.           | REPRESENTATIONS AND WARRANTIES |   |
|   | 2.           | GENERAL UNDERTAKINGS           |   |
|   | 3.           | ACCOUNTS                       |   |
|   | 4.           | EVENTS  OF DEFAULT             |   |
|   | 5.           | POTENTIAL EVENTS OF DEFAULT    |   |
|   | 6.           | OPEN TREASURY TRANSACTIONS     |   |
|   | 7.           | NON-WAIVER                     |   |
|   | 8.           | CLASS  ORDER                   |   |
|   | 9.           | COSTS AND EXPENSES             |   |
|   | 10.          | PAYMENTS AND TAXES             |   |
|   | 11.          | LATE  PAYMENTS                 |   |
|   | 12.          | ILLEGALITY                     |   |
|   | 13.          | CHANGE IN CIRCUMSTANCE         |   |
|   | 14.          | TRUSTS                         |   |
|   | 15.          | SET-OFF                        |   |
|   | 16.          | CHANGE OF OWNERSHIP            |   |
|   | 17.          | APPOINTMENT OF CONSULTANTS     |   |
|   | 18.          | BREAK  COSTS                   |   |
|   | 19.          | HOLDING  OVER                  |   |
|   | 20.          | ASSIGNMENT                     |   |
|   | 21.          | CONFIDENTIALITY                |   |
|   | 22.          | INCONSISTENCY                  |   |
|   | 23.          | GOVERNING LAW AND JURISDICTION |   |
|   | 24.          | DEFINITIONS                    |   |

 

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**1.****                             REPRESENTATIONSAND WARRANTIES**

 

The Borrower represents and warrants to theBank that as at the date of this letter of offer and at all times thereafter:

 

(a)                        (**incorporation**)  It isduly incorporated and validly existing under the laws of its place ofincorporation;

 

(b)                       (**power**)  It has fullpower, authority and legal right to carry on its business as presentlyconducted;

 

(c)                        (**information is accurate**) All financial accounts, reports and factual information furnished to theBank at any time are true and accurate and not misleading in any materialrespect, and no material change has taken place in respect to any of them sincethe date they were presented to the Bank;

 

(d)                       (**no default**)   It isnot in material default of any law or any agreement, security or instrumentwith the Bank or any other financial institution, and it is not in default inrespect of any material monetary obligation contracted by or imposed upon it;

 

(e)                        (**no litigation**)   Nolitigation, arbitration or administrative proceedings are current or pendingor, to its knowledge, threatened against it;

 

(f)                          (**solvency**)   It issolvent;

 

(g)                       (**no potential event of default**)  No Potential Event of Default has occurredand is continuing;

 

(h)                       (**no undisclosed trusts**) Except as disclosed to and agreed to by the Bank in writing, it is nottrustee of any trust;

 

(i)                           (**insurance**)  It hastaken out and kept in full force and effect insurance over all of its physicalassets and its premises for such amounts and against such risks as a reasonablyprudent person in the Borrower’s position would take out including, withoutlimitation, terrorism insurance.

 

The Borrower also gives the aboverepresentations and warranties in respect of every guarantor and SecurityProvider.

 

These representations and warranties aredeemed to be repeated with reference to the facts and circumstances thenexisting at each date of utilisation of any financial accommodation, rolloverof any bills of exchange or notes, at the beginning of each new interest periodand at the date of execution of each new document under which credit orfinancial accommodation is granted by the Bank.

 

**2.****                             GENERALUNDERTAKINGS**

 

The Borrower undertakes to the Bank that,except with the prior written consent of the Bank:

 

(a)                        (**notify defaults**)  Itwill promptly advise the Bank of any Event of Default or potential Event ofDefault;

 

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(b)                       (**insurance**)  It willtake out and keep in full force and effect the insurance policies referred toin sub-paragraph 1(i) above, and further:

 

(i)                          provideevidence to the Bank of the currency of all insurances on each annual review,or upon request by the Bank, whichever is the earlier, and promptly comply withany request to take out further insurance cover as the Bank may reasonablyrequire to supplement the existing insurance policies of the Borrower; and

 

(ii)                       not do oromit to do, or suffer or permit to be done or not done, anything which maymaterially prejudice any insurance policy; and

 

(iii)                    not vary, rescind,terminate or cancel any insurance policy without the written consent of theBank;

 

(c)                        (**comply with laws**)  Itwill comply with all applicable laws and pay all obligations that if unpaidmight result in a lien or claim against any of the Borrower’s assets;

 

(d)                       (**plant and machinery**) It will maintain its plant and machinery in a state of good repair, fairwear and tear excepted;

 

(e)                        (**other financial accommodation**)  It will not raise any financial accommodationfrom any other party, or give any security in relation to it;

 

(f)                          (**disposal of assets**) it will not dispose of any assets having an aggregate value greater than$100,000 other than in its usual and ordinary course of business;

 

(g)                       (**continue to stay in business**)  It will not engage in any other businessother than that in which it is presently operating;

 

(h)                       (**no merger or acquisition**) It will not merge with or acquire another company or entity;

 

(i)                           (**no disposal of subsidiaries**) It will not dispose of any of its subsidiaries; and

 

(j)                           (**not give security**)  Itwill not give any security over its assets.

 

**3.****                             ACCOUNTS**

 

The Borrower will prepare its financialaccounts in accordance with generally accepted Accounting Standards

 

The Borrower will deliver to the Bank:

 

(a)                        (**annual accounts**) within four months after the close of eachfinancial year a copy of the annual report of the Borrower, and an auditedconsolidated balance sheet and consolidated profit and loss account of theBorrower for that financial year;

 

(b)                       (**quarterly management accounts**) within 30 days after theclose of each financial quarter, a copy of the unaudited quarterly balancesheet and profit and loss account of the Borrower;

 

(c)                        (**Budgets**) by 30th November each year theborrower is to provide a copy of the annual budget projected monthly for theensuing 12 months with assumptions attached; and

 

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(d)                       (**other information**) such other financial information as theBank may reasonably require, within fourteen days after request.

 

**4.****                             EVENTSOF DEFAULT**

 

If an Event of Default occurs, the Borrowerwill immediately notify the Bank.  Thenotice will contain full details of the Event of Default, and such furtherinformation as the Bank may require from the Borrower regarding the Event ofDefault.

 

If an Event of Default occurs, the Bank may,by written notice to the Borrower, terminate the Facilities and demandrepayment of the Money Owing.

 

**Event of Default**means:

 

(a)                        (**payment default**) the Borrower fails to pay to the Bank anyMoney Owing from time to time due and payable to the Bank;

 

(b)                       (**other defaults**) the Borrower fails to perform and observeany other terms or conditions of the Documents;

 

(c)                        (**representations and warranties**) a representation or warrantygiven to the Bank in a Document or otherwise is incorrect or false in amaterial respect when made or deemed to be repeated;

 

(d)                       (**other financial accommodation**) the Borrower fails to dulyperform or observe any of the terms and conditions of any other financialaccommodation (whether provided by the Bank or any other person);

 

(e)                        (**orders and judgments**) an order for payment is made orjudgment is entered or signed against the Borrower and is not satisfied within7 days;

 

(f)                          (**receivers**) a receiver, manager, receiver and manager,liquidator, provisional liquidator or administrator is appointed in respect ofthe Borrower for the whole or any part of its undertaking, property or assets;

 

(g)                       (**investigators**) a person is appointed under legislation toinvestigate or manage any part of the affairs of the Borrower;

 

(h)                       (**winding up**) a ground for winding up or bankruptcy of theBorrower arises;

 

(i)                           (**stop payment**) the Borrower or any Security Provider stopspayment generally or ceases or threatens to cease to carry on its business orthe material part of its business;

 

(j)                           (**meeting of creditors**) the Borrower convenes a meeting of itscreditors or proposes or enters into any arrangement or composition for thebenefit of its creditors;

 

(k)                        (**winding up resolution**) a resolution is passed for thewinding up of the Borrower, other than for the purpose of a reconstruction oramalgamation previously approved in writing by the Bank;

 

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(l)                           (**material adverse change**) a change occurs in the financialcondition or in the whole or a major part of the operations of the Borrower,which has had or could reasonably be expected to have a materially adverseeffect on the ability of the Borrower to perform its obligations to the Bank;

 

(m)                     (**other security providers**) any of the above events occurs inrelation to any person or Borrower who is a guarantor, or Security Provider inconnection with the Facilities;

 

(n)                       (**loss of security**) anything occurs which in the Bank’sreasonable opinion terminates or reduces the enforceability of any part of theSecurity Documents.

 

**5.****                             POTENTIALEVENT OF DEFAULT**

 

If a Potential Event of Default occurs, theBorrower will keep the Bank fully informed of all developments in resolving thematter.

 

If a Potential Event of Default occurs, theBank retains the right to review the availability of the Facilities and tonotify the Borrower of the outcome of the review.

 

**6.****                             OPENTREASURY TRANSACTIONS**

 

If the Bank terminate the Facilitiesfollowing the occurrence of an Event of Default, and if at that time there areany Treasury Transactions in existence between the Bank and the Borrower (**Open Positions**) then:

 

(a)                        the Bankmay close out the Open Positions, by entering into opposite positions for thebalance of the unexpired term, or by such other means as may be usual in therelevant market.  Any such close outshall be at market rates prevailing at the time;

 

(b)                       any costsincurred by the Bank in closing out Open Positions under **paragraph(a)** will be paid by the Borrower to the Bank upon demand by the Bank.  Any gain derived from the closing out of theOpen Positions will be credited to the Borrower and set off against the MoneyOwing;

 

(c)                        the Bankwill give to the Company reasonable particulars of the manner of close out ofthe Open Positions, and the basis of calculation of any amounts payable by orto the Borrower arising from that close out.

 

**7.****                             NON-WAIVER**

 

The liabilities of the Borrower and therights of the Bank are not affected by anything which might otherwise have thateffect at law or in equity including, without limitation, one or more of thefollowing (whether occurring with or without the consent of a person):

 

(a)                        anyinaccuracy, insufficiency or forgery of or in any certificate or otherinstrument which purports to be made, issued or delivered under the Documentsor under any letter of credit, Bank guarantee or other instrument issued underthe Documents; or

 

(b)                       the Bank oranother person granting time or other indulgence (with or without theimposition of an additional burden) to, compounding or compromising with orwholly or partially releasing the Borrower or another person in any way; or

 

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(c)                        laches,acquiescence, delay, acts, omissions or mistakes on the part of the Bank oranother person; or

 

(d)                       anyvariation or novation of a right of the Bank or another person, or alterationof a document, in respect of the Borrower or another person including, withoutlimitation, an increase in the maximum liability of or other variation inconnection with a letter of credit or guarantee; or

 

(e)                        theinvalidity or unenforceability of an obligation or liability of a person otherthan the Borrower; or

 

(f)                          invalidityor irregularity in the execution of this agreement by the Borrower or anydeficiency in the powers of the Borrower to enter into or observe itsobligations under this letter of offer.

 

**8.****                             CLASSORDER**

 

If the Borrower applies for a Class Order, itwill notify the Bank immediately in writing. The Bank may review (and if considered appropriate, terminate) all orany of the Facilities made available to the Borrower.

 

In this paragraph a “Class Order” means anorder made by the Australian Securities and Investments Commission pursuant toPart 2M.6 of the Corporations Act.

 

**9.****                             COSTSAND EXPENSES**

 

The Borrower will pay to the Bank on demandall Taxes, costs and expenses of any nature incurred by the Bank in relation tothe Documents and the Facilities, whether payable directly or indirectly.  These amounts are payable regardless ofwhether the Facilities are ever drawn down.

 

The Borrower will pay to the Bank all legalcosts incurred in relation to the preparation, negotiation, execution,registration, administration and enforcement of the Documents (including theBank’s solicitors’ fees on a solicitor and own client basis).

 

**10.****                      PAYMENTSAND TAXES**

 

All payments due by the Borrower to the Bankmust be made on the due date in immediately available funds.

 

If payment is due on a day on which the Bankis not open for business in the relevant State, then payment must be made onthe next business day in that State.

 

Notwithstanding, and without limitation to,any other provision of this letter of offer:

 

**(a)**                        if GST is imposed on any supply made bythe Bank under or in connection with this letter of offer or the facilitiesoffered in this letter of offer, where any amount or consideration (“consideration”)payable or to be provided by or on behalf of the Borrower under or inconnection with this letter of offer or the facilities offered in this letterof offer in relation to that supply is exclusive of GST (“GST-exclusive consideration”), the Bank may in addition to that GST-exclusive consideration,recover from the Borrower, or from a person acting on its behalf, an additionalamount on account of GST, such additional

** **

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** **

**amount to be calculated by multiplying theGST-exclusive consideration for the relevant supply by the prevailing GST rate.This sub-paragraph (a) does not apply to a supply for which the considerationis inclusive of GST; or**

** **

(b)                       where theBank makes a supply under or in connection with this letter of offer or thefacilities offered in this letter of offer which is not a taxable supply andthe Bank is not entitled to an input tax credit (whether in whole or in part)in respect of the amount of any GST charged to or recovered from the Bank byany person, or payable by the Bank, or in respect of any amount which isrecovered from the Bank by way of reimbursement of GST referable directly orindirectly to that supply, the Bank shall be entitled to increase any amount orconsideration payable by the Borrower on account of such input tax and recoverfrom the Borrower the amount of any such increase.

 

Anyadditional amount on account of GST, or on account of an amount for which theBank is not entitled to an input tax credit, recoverable from the Borrowerpursuant to sub-paragraph (a) or sub-paragraph (b) of this paragraph shall becalculated without any deduction or set-off of any other amount and is payableby the Borrower upon demand by the Bank whether such demand is by means of aninvoice or otherwise.

 

Inrelation to any consideration payable or to be provided under or in connectionwith this letter of offer or the facilities offered in this letter of offerthat is inclusive of GST (“**the existing GST inclusiveconsideration**”) in the event of an increase in the GST rate, theBank may, subject to issuing a Tax Invoice or Adjustment Note, as appropriate,recover from the Borrower an additional amount on account of the increase inthe GST rate. This additional amount is to be determined by converting theexisting GST inclusive consideration to a GST exclusive amount (“**value**”) and multiplying it by the new prevailing GST rateand by subtracting from that result the previous GST component.

 

For thepurposes of the above paragraph:

 

(i)                           the existing GST inclusive consideration is to be converted to thevalue by using the GST rate immediately prior to the new prevailing GST rate;and

 

(ii)                        theprevious GST component is equal to the difference between the existing GSTinclusive consideration and the value.

 

**11.****                      LATEPAYMENTS**

 

If any amount is not paid to the Bank whendue, it will accrue interest at the Default Rate until it is paid.  That interest will be calculated on dailybalances and added to the debt monthly if not paid.  This paragraph does not relieve the Borrowerof its obligation to make payments when due.

 

All payments must be made without set-off orcounter-claim, and be free and clear of any withholding or deduction for taxes,levies, imposts or government charges of any kind unless prohibited bylaw.  If any deduction is required byLaw, the Borrower will make the deduction, pay the Tax, and pay to the Bankfurther amount(s) sufficient to ensure that the Bank receives the same netamount as it would have received if no deduction had been made.

 

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**12.****                      ILLEGALITY**

 

If any change in Law makes it unlawful orimpossible for the Bank to maintain or give effect to its obligations under theDocuments, then the Bank shall promptly notify the Borrower.

 

The Bank and the Borrower will negotiate ingood faith to restructure each affected Facility in a manner which resolves theproblem.  If no agreement is reached within30 (thirty) days after the Bank notified the Borrower, then the Borrower willrepay to the Bank on demand so much of the Money Owing as relates to theaffected Facility.

 

**13.****                      CHANGEIN CIRCUMSTANCE**

 

Thisparagraph applies if any order of any court or any change in Law, or in theofficial interpretation or application of Law by any government authority:

 

(a)                        subjectsthe Bank to any Taxes or duties with respect to the Facilities or any part ofthem, or changes the basis of taxation of the Bank for payment under theDocuments (except for taxes on the overall net income of the Bank); or

 

(b)                       imposes,modifies or deems applicable any reserve, capital, adequacy or liquidityadequacy requirements against any asset of, deposit with or for the account ofor loans by the Bank; or

 

(c)                        imposes onthe Bank any other condition with respect to the Documents or the obligationsof the Bank under them, or if the Bank complies with any request from anyapplicable fiscal or monetary authority (whether or not having the force oflaw);

 

If theresult of the above is to increase the cost to the Bank of making available ormaintaining a Facility, or to reduce the amount receivable in respect of aFacility, or reduce any other amount due to the Bank in connection with aFacility by an amount which the Bank considers material, then:

 

I.                               theBank will use its best efforts to notify the Borrower of that event; and

 

II.                           theBorrower and the Bank will negotiate in good faith to restructure each affectedFacility in a manner which resolves the problem; and

 

III.                       if noagreement is reached within 30 days after the Bank notified the Borrower, theBorrower will pay to the Bank on demand, as additional interest or charges, anamount which will compensate the Bank for the additional costs, calculated fromthe date of that notification.

 

**14.****                      TRUSTS**

 

The Borrowerwarrants to the Bank that it is not the trustee of any trust.

 

**15.****                      SET-OFF**

 

If an Event of Default occurs, the Bank mayat any time without notice to the Borrower combine, consolidate or merge all orany of the Borrower’s accounts, and may set off the whole or any part of theMoney Owing against any credit balance in those accounts.

 

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For that purpose, the Bank may redeem and/orappropriate all or any part of any account, deposit or other arrangementbetween the Bank and the Borrower under which the Bank may be indebted to theBorrower, even if the balance on any such account and the Money Owing are notexpressed in the same currencies.  TheBank may make any currency conversion it considers necessary or desirable forthis purpose.

 

**16.****                      CHANGEOF OWNERSHIP**

 

If the Borrower is listed on a stockexchange, the Borrower will promptly notify the Bank if a majority of theshares in the Borrower becomes held by a person who did not hold a majority ofthe shares as at the date of the letter of offer.  For this purpose, associates shall be treatedas the one person.

 

In the case of a company which is not listedon a stock exchange, no transfer of shares (or issue of shares) in that companymay be made, without the Bank’s prior written consent.  That consent will not apply to a transfer orissue to any company which is a related corporation of the Company.

 

The Bank may review (and if considered appropriateterminate) all Facilities made available to the Borrower upon the occurrence ofa change in shareholdings or an issue of shares referred to in this paragraph.

 

**17.****                      APPOINTMENTOF CONSULTANTS**

 

The Bank may at any time appoint accounting,financial management and other consultants to examine the affairs of theBorrower and to make recommendations relating to the manner in which theBorrower carries on its business.  TheBorrower will provide all assistance considered necessary or desirable by theconsultant to enable the consultant to conduct a proper examination of theaffairs of the Borrower.  This includes,without limitation, making the Borrower’s financial records available to theConsultant.  The Borrower shall pay thefees of the Consultant.

 

**18.****                      BREAKCOSTS**

 

The Borrower indemnifies the Bank against anyloss, cost, charge, loss of profit or expense incurred by the Bank inconnection with:

 

(a)                        theBorrower making a payment under any Document on a date which is not expresslycontemplated in the Document, whether that payment is made as a result ofdemand by the Bank following an Event of Default or any other reason; and

 

(b)                       anyfinancial accommodation provided by the Bank at a fixed rate being repaid inwhole or in part during the period to which that fixed rate applies.

 

**19.****                      HOLDINGOVER**

 

If the Bank continues to make a Facilityavailable to the Borrower after its Expiry Date, and this letter of offer hasnot been extended, amended or replaced, then the terms of this letter of offerwill continue to apply to the Facility unless the Bank otherwise notifies theBorrower.  The previous sentence is not awaiver of any Event of Default, or a waiver of any of the Bank’s rights underthis letter of offer.

 

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**20.****                      ASSIGNMENT**

 

The Bank may assign, novate, sub-participateor sell down by whatever form, all its rights under the Documents with theprior consent of the**Borrower,which consent will not be unreasonably withheld or delayed.

 

The Borrower may not assign its rights ornovate its obligation under the Documents.

 

**21.****                      CONFIDENTIALITY**

 

The Bank and the Borrower will keepconfidential the terms of the Facilities, the Documents, and any informationwhich either of them may provide to the other. This obligation does not prevent disclosure:

 

(a)                        if allowedor required by Law, or required by any stock exchange;

 

(b)                       inconnection with legal proceedings relating to the Documents;

 

(c)                        if theinformation is generally and publicly available;

 

(d)                       to asubsidiary of the Bank, in which case this **paragraph 21**will apply to the subsidiary.

 

**22.****                      INCONSISTENCY**

 

If any provision of this letter of offer isinconsistent with any provision of the Documents, this letter of offer willprevail.

 

**23.****                      GOVERNINGLAW AND JURISDICTION**

 

This letter of offer is governed by the Lawsof New South Wales.  Each party submitsto the jurisdiction of the Laws of that state, including appeal courts.

 

**24.****                      DEFINITIONS**

 

The following terms shall have the followingmeanings in this letter of offer:

 

**Accounting Standards**means the accounting standards prescribed under the Corporations Act, Chapter2M to the Corporations Regulations and, where not inconsistent with thoseaccounting standards and schedule, the accounting standards adopted from timeto time by the major accounting bodies in Australia in respect of thepreparation of accounts and financial statements.

 

**Authorised Officer**means:

 

(a)                        in thecase of the Bank, a director, secretary or an officer whose title contains theword **manager** or a person performing thefunctions of any of them; and

 

(b)                       in the caseof the Borrower or a Security Provider, a person appointed by the Borrower orthat Security Provider to act as an Authorised Officer under the Documents towhich it is a party and whose specimen signature as Authorised Officer has beenprovided to the Bank.

 

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**Base Lending Rate**means the rate described as such or any rate replacing that rate as publishedfrom time to time by the Bank in the financial press and includes any rateadopted by the Bank to replace it.

 

**Bill** has the samemeaning as in the Bills of Exchange Act 1909 (Cwlth) and a reference to thedrawing or acceptance or endorsement of, or other dealing with, a Bill is to beinterpreted in accordance with that act.

 

**Business Day** means aday (not being a Saturday or a Sunday) on which the Bank is open for generalbanking business in Sydney.

 

**Default Rate** means4.50% per annum above the Bank’s Base Lending Rate from time to time.

 

**Documents** means thisletter of offer, the Security Documents and each security document (howeverdescribed) including every guarantee, mortgage, charge, debenture, set-offagreement and other instrument, notice, form, agreement or encumbrance fromtime to time held by the Bank from the Borrower and any Security Provider.

 

**Dollars**,**$ or A$** means the lawful currency of Australia.

 

**Law** means any law orregulation (including any policy, directive or guidelines, whether or nothaving the force of law, but compliance with which is in accordance with thepractice of responsible bankers).

 

**Money Owing** meansall money owing to the Bank by the Borrower on any account, and includeswithout limitation:

 

(a)                        all moneylent or advanced by the Bank to the Borrower, in any currency, and which havenot been repaid to the Bank;

 

(b)                       all moneyowing by the Borrower to the Bank in respect of any bills accepted and/orendorsed and/or discounted facility made available by the Bank, including theface value of all bills of exchange which are from time to time outstanding(although the maturity dates of such outstanding bills has not occurred);

 

(c)                        theaggregate amount of the Bank’s liability under any documentary letter ofcredit, standby letter of credit, performance bond or bank guarantee issued bythe Bank on behalf of or at the request of the Borrower, although no paymentunder it shall have been made or demanded;

 

(d)                       theaggregate amount of money unpaid to the Bank in respect of any TreasuryTransaction, in any currency;

 

(e)                        all interest,fees, charges and other money which the Borrower is required to pay to Bankunder any Document, and which are from time to time owing or unpaid to theBank; and

 

(f)                          BreakCosts being any loss, cost, charge or expense incurred pursuant to paragraph 18of this Annexure.

 

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The term includes, without limitation, anymoney and amounts owing by the Borrower to the Bank which:

 

(a)                        arepresently owing and payable, are owing but not presently payable or are owingupon a contingency;

 

(b)                       may becomeowing or remain unpaid or for which the Bank may become liable by reason whollyor partly of past events or by reason of anything done or omitted by the Bankor the Borrower;

 

(c)                        mayreasonably, foreseeably become owing or remain unpaid on any account or in anymanner whatsoever by reason of the relation of bank and customer or byoperation of law or equity or otherwise by reason of anything done by the Bankwith the consent or at the express or implied request of the Borrower.

 

**Potential Event of Default**means an event omission or circumstance which with the giving of notice and/orlapse of time and/or other condition would become an Event of Default.

 

**Schedule **meansthe schedule to this letter of offer set out as **Annexure E**.

 

**Security Documents**means the various documents described in the **Schedule **tothis letter of offer.

 

**Security Provider**means each person who is party to any of the Security Documents****but excluding the Bank and the Company.

 

**Taxes** or **Tax** means any tax, levy, impost, deduction, charge,withholding and duty imposed by any authority and includes without limitationany withholding tax, financial institutions duty, stamp duty, transaction dutyand other government charges or any kind (including penalties) payable inrespect of the Documents, or any payments, or transactions under them.  It does not include income tax on the Bank’sown income.

 

**Treasury Transaction**includes,without limitation, any interest rate or currency forward rate agreement, swap,financial option, futures contract, currency exchange agreement, reciprocalpurchase agreement, swaption, floor, collar, cap and any similar type ofinterest rate or currency risk management or forward purchase or saleagreement, however described.

 

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**ANNEXURE B**

 

**FINANCIAL UNDERTAKINGS**

 

**1.****                             FINANCIALRATIOS**

 

The Borrower undertakes to the Bank to complywith the following financial undertakings unless the Bank otherwise consents inwriting:

 

(a)                        InterestCover Ratio: earnings before interest and tax (EBIT) must not at any time fallbelow a figure of 2 times the total amount of interest payable by the Borrower.

 

**2.****                           **Theratios in **paragraph 1** will be determined on anannualised basis, based on the most recent accounts of the Borrower availableat that time.

 

**3.****                             TERMSUSED**

 

In this Annexure, the terms TotalLiabilities, Contingent Liabilities, Total Tangible Assets, Total CurrentAssets, Total Current Liabilities, Earnings before Interest, Tax and FinanceLease Repayments, Gross Interest Expense plus Finance Lease Repayments and NetProfit after Tax and any other accounting or financial terminology will beinterpreted in accordance with the Accounting Standards in respect of theaccounts of the Borrower on a consolidated basis.

 

**4.****                             DEPARTURESFROM ACCOUNTING STANDARDS**

 

If the Borrower wishes to depart from theAccounting Standards in preparing its accounts, the parties will consult witheach other on the changes (if any) required to the undertakings in **paragraph 1** to ensure that they remain consistent.

 

**5.****                             COMPLIANCECERTIFICATE**

 

The Borrower will also deliver to the Bank ona calendar quarterly basis a certificate as to compliance, with FinancialUndertakings, giving reasonable particulars of any calculations.  The certificate will be signed by a directoror chief financial officer of the Borrower.

 

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**ANNEXURE C**

 

**CONDITIONS PRECEDENT**

 

The Bank is not obliged to make the Facilities available to theBorrower unless the Bank has received the following in form and substanceacceptable to the Bank:

 

(a)                        (**board minutes**) a certified copy of:

 

(i)                           anextract of the minutes of a meeting of the board of directors of the Borrowerwhich evidences the resolutions authorising the acceptance and observance ofobligations under (and acknowledgment that the Borrower will benefit from) thisletter of offer and the appointment of Authorised Officers of the Borrower; and

 

(ii)                        an extractof the minutes of a meeting of the board of directors of each Security Providerwhich evidences the resolution authorising the appointment of AuthorisedOfficers of the Security Provider;

 

(b)                       (**other authorisations**) a certified copy of each authorisationnecessary to enter into, observe obligations under and enforce the Documents;

 

(c)                        (**power of attorney**) the original of each power of attorneyunder which any person signs and delivers a Document for the Borrower or anySecurity Provider and, if required by the Bank, evidence of its stamping andregistration;

 

(d)                       (**specimen signatures**) a certified specimen signature of eachAuthorised Officer of each Borrower and of every Security Provider;

 

(e)                        (**signed Documents**) each Document signed and delivered and, ifrequired by the Bank, evidence of its stamping and registration;

 

(f)                          (**solvency declaration**) a statutory declaration that eachBorrower is solvent, signed by a director of the Borrower;

 

(g)                       (**securities**) the Security Documents;

 

(h)                       (**no Events of Default**) evidence that no Event of Default orevent which with the giving of notice, lapse of time or fulfilment of anyconditions would be likely to become an Event of Default continues unremediedor would result from the provision of the proposed drawing;

 

(i)                           (**other documents**) the Bank has received the other approvals,opinions or documents which it has reasonably requested;

 

(j)                           (**establishment fee**) payment of the establishment fee, if anyand however described;

 

(k)                        (**other requirements**) such other conditions precedent as theBank may specify by notice to the Company;

 

(l)                           (**legal opinion**) if requested, a legal opinion from solicitorsfor the Bank, the Borrower and each Security Provider; and

 

(m)                     (**payment of costs**) evidence that all legal and other costsand expenses (including stamp duty and registration fees) incurred by the Bankin connection with the Facilities have been paid.

 

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**ANNEXURE D**

 

**LETTERS OFCREDIT AND GUARANTEES BY BANK - TERMS**

 

References to **Borrower** inthis Annexure are references to the company or companies specified as **Participating Companies** in respect of any Letters Of Creditor Guarantees By Bank Facility in the letter of offer.

 

**1.****                             REQUESTFOR ISSUE**

 

The Borrower may request the Bank to issue aletter of credit or guarantee by delivering to the Bank a properly signedrequest (in a form specified by the Bank from time to time) stating:

 

(a)                        theamount;

 

(b)                       thebeneficiary;

 

(c)                        thecontract in respect of which the letter of credit or guarantee is requested;and

 

(d)                       the expirydate, if applicable.

 

Each letter of credit and guarantee will bein the Bank’s usual form, unless otherwise agreed and the Borrower agrees toexecute such additional documentation or forms required by the Bank’s normalpractice.

 

**2.****                             AUTHORITYTO MAKE PAYMENTS**

 

The Borrower irrevocably authorises the Bankto immediately pay any amount for which a demand or request is made at any timeunder a letter of credit or guarantee without reference to or further authorityfrom the Borrower.  The Bank need notinvestigate or enquire whether a claim or demand on the Bank has been properlymade.  The Bank may meet any claim ordemand on the Bank notwithstanding that the Borrower may dispute the validityof the claim or demand.

 

**3.****                             BORROWER’SUNDERTAKING TO REIMBURSE**

 

The Borrower agrees to pay to the Bank ondemand an amount equal to each amount demanded from or paid by the Bank underany letter of credit or guarantee together with any incidental costs orexpenses.

 

**4.****                             INDEMNITYBY THE BORROWER**

 

As a separate obligation, the Borrower indemnifiesthe Bank against all actions, proceedings, claims and demands brought or madeagainst the Bank and against all losses, costs, charges, damages and expenseswhich the Bank incurs or sustains or for which the Bank becomes liable,directly or indirectly, because of the issue of any letter of credit orguarantee.

 

**5.****                             PRESERVATIONOF BORROWER’S LIABILITY**

 

The liabilities of the Borrower and therights of the Bank under this **Annexure D** arenot affected by anything which might otherwise have that effect at law or inequity including,

 

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without limitation, one or more of thefollowing (whether occurring with or without the consent of a person):

 

(a)                        anyinaccuracy, insufficiency or forgery or in any certificate or other instrumentwhich purports to be made, issued or delivered under this letter of offer orunder any letter of credit or guarantee; or

 

(b)                       the Bank oranother person granting time or other indulgence (with or without theimposition of an additional burden) to, compounding or compromising with orwholly or partially releasing the Borrower or another person in any way; or

 

(c)                        laches,acquiescence, delay, acts, omissions or mistakes on the part of the Bank oranother person; or

 

(d)                       anyvariation or novation of a right of the Bank or another person, or alterationof a document, in respect of the Borrower or another person including, withoutlimitation, an increase in the maximum liability of or other variation inconnection with a letter of credit or guarantee; or

 

(e)                        theinvalidity or unenforceability of an obligation or liability of a person otherthan the Borrower; or

 

(f)                          invalidityor irregularity in the execution of this letter of offer by the Borrower or anydeficiency in the powers of the Borrower to enter into or observe itsobligations under this letter of offer.

 

**6.****                             LATEPAYMENTS**

 

If a drawing is made under a letter of creditor guarantee and is not promptly reimbursed by the Borrower to the Bank, aninterest rate of 4.50% per annum over the Bank’s Base Rate shall apply to theamount of the drawing.  That amounttogether with interest shall be debited to any account in the name of theBorrower.

 

**7.****                             INSURANCEUNDERTAKINGS**

 

The Borrower undertakes to:

 

(a)                        insuregoods relating to each letter of credit to the Bank’s satisfaction; and

 

(b)                       deliver tothe Bank a copy of any insurance policy or certificate relating to those goodswhen received or at a time agreed to by the Bank.

 

**8.****                             UNIFORMCUSTOMS AND PRACTICE**

 

Each documentary letter of credit will besubject to the terms of the Uniform Customs and Practice for DocumentaryLetters of Credit (1993 Revision) International Chamber of Commerce PublicationNo. 500, or any subsequent revision of it and otherwise must be in a formsatisfactory to the Bank.

 

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**ANNEXURE E**

 

**SCHEDULE**

 

**GROUP MEMBERS:**

 
| **Company Name** | ** ** | **ABN**        | ** ** | **Registered office**               | ** ** |
|------------------|------------|----------------|------------|-------------------------------------|------------|
| Channell Pty Ltd |       | 29 002 735 622 |       | 5/391 Park Rd Regents Park NSW 2143 |       |

 

**SECURITIES:**

 

The following Security Documents must be held in a form and substancesatisfactory to the Bank prior to drawdown of the Facilities.

 

1.                             Firstranking registered charge given to the Bank by Channell Pty Ltd ABN 29 002 735622 over all its assets and undertakings.

 

2.                             DebtorFinance Agreement

 

3.                             MasterLease Agreement between the Bank and Channell Pty Ltd ABN 29 002 735 622

 

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