<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 29, 1996.
REGISTRATION NO. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SOUTHERN INVESTMENTS UK PLC
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
ENGLAND AND WALES 4911 NONE
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
INCORPORATION OR
ORGANIZATION)
800 PARK AVENUE
AZTEC WEST
ALMONDSBURY
BRISTOL BS12 4SE, ENGLAND
44-1454-201-101
(ADDRESS AND TELEPHONE NUMBER OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES,
INCLUDING ZIP CODE)
JAMES A. WARD
900 ASHWOOD PARKWAY
SUITE 500
ATLANTA, GEORGIA 30338-4780
(770) 379-7000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
PLEASE SEND COPIES OF ALL CORRESPONDENCE TO:
JOHN T. W. MERCER, ESQUIRE JOHN A. MILLARD, ESQUIRE
TROUTMAN SANDERS LLP SHEARMAN & STERLING
600 PEACHTREE STREET, N.E., SUITE 5200 599 LEXINGTON AVENUE
ATLANTA, GEORGIA 30308 NEW YORK, NEW YORK 10022
(404) 885-3000 (212) 848-4000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after the Registration Statement becomes effective.
----------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
----------------
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE TO BE OFFERING PRICE OFFERING REGISTRATION
REGISTERED REGISTERED PER UNIT(1) PRICE(1) FEE
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
% Senior Notes due
2006................... $235,000,000 100% $235,000,000 $81,035
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) Estimated solely for the purpose of computing the registration fee
pursuant to Rule 457(a).
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion, Dated , 1996
$235,000,000
SOUTHERN INVESTMENTS UK PLC
% SENIOR NOTES DUE 2006
------------
Southern Investments UK plc, a public limited company incorporated under the
laws of England and Wales (the "Company"), is offering (the "Offering")
US$235,000,000 aggregate principal amount of its % Senior Notes due 2006 (the
"Senior Notes"). Interest on the Senior Notes will be payable semiannually on
and of each year, commencing , 1996. The Senior Notes will
mature on , 2006.
The Senior Notes will be redeemable prior to maturity only as follows: The
Senior Notes will be redeemable, in whole but not in part, at the principal
amount thereof, plus any accrued and unpaid interest, in the event of certain
tax law changes and other events requiring the payment of Additional Amounts
(as defined herein); and the Senior Notes will be redeemable in whole or in
part at the option of the Company at any time, at a redemption price equal to
the greater of (i) 100% of the principal amount of the Senior Notes being
redeemed or (ii) the sum of the present values of the remaining scheduled
payments of principal of and interest on the Senior Notes being redeemed
discounted to the date of redemption on a semi-annual basis (assuming a 360-day
year consisting of twelve 30-day months) at the Treasury Yield (as defined
herein) plus basis points; plus, for (i) or (ii) above, whichever is
applicable, accrued interest on the Senior Notes to the date of redemption. The
Senior Notes will not be subject to any sinking fund. See "Description of the
Senior Notes."
The Senior Notes will be direct, unsecured and unsubordinated obligations of
the Company ranking pari passu with all other unsecured and unsubordinated
obligations of the Company (other than those obligations preferred by operation
of law). The Senior Notes will effectively rank junior to any secured
indebtedness of the Company to the extent of the assets securing such
indebtedness and to any indebtedness of the Company's subsidiaries to the
extent of the assets of such subsidiaries. Substantially all of the Company's
consolidated assets other than the stock of its only Significant Subsidiary (as
defined herein) are currently held by the Company's subsidiaries. The Indenture
for the Senior Notes contains no restrictions on the amount of additional
indebtedness which may be incurred by the Company or its subsidiaries; however,
the Indenture contains certain restrictions on the ability of the Company and
its Significant Subsidiaries to incur secured indebtedness. See "Description of
the Senior Notes--Covenants--Limitation on Liens."
The Senior Notes will be represented by a global Senior Note (the "Global
Note") in bearer form and deposited with Bankers Trust Company, as depositary
(the "Book-Entry Depositary"), which will hold the Senior Notes for the benefit
of The Depository Trust Company ("DTC") and its participants, including
Euroclear (as defined herein) and Cedel Bank (as defined herein). The Book-
Entry Depositary will issue to DTC one or more certificateless depositary
interests (the "Book-Entry Interest") which together will represent a 100%
interest in the underlying Global Note. DTC will operate a system of dealing in
the Book-Entry Interest in book-entry form. Interests in the Book-Entry
Interest will be shown on, and transfers thereof will be effected only through,
records maintained by DTC and its participants. Except in
limited circumstances, registered definitive Senior Notes will not be issued in
exchange for interests in the Global Note. Interests in the Book-Entry Interest
will clear and settle in DTC's Same-Day Funds Settlement System. Interests in
the Book-Entry Interest will be issued only in denominations of US$1,000 and
integral multiples thereof. See "Description of the Senior Notes--Description
of the Book-Entry System."
Application has been made to list the Senior Notes on the Luxembourg Stock
Exchange.
------------
SEE "RISK FACTORS" BEGINNING ON PAGE FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED IN EVALUATING AN INVESTMENT IN THE SENIOR NOTES.
------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public(1) Commissions(2) Company(3)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Per % Senior Note........................ % % %
- --------------------------------------------------------------------------------
Total..................................... $ $ $
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Plus accrued interest, if any, from , 1996.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(3) Before deducting expenses payable by the Company estimated at $ .
------------
The Senior Notes offered hereby are being offered by the Underwriters named
herein, subject to prior sale, to withdrawal, cancellation or modification of
the offer without notice, to delivery and acceptance by the Underwriters and to
certain further conditions. It is expected that delivery of the Senior Notes
will be made through the facilities of DTC on or about , 1996.
------------
LEHMAN BROTHERS
MERRILL LYNCH & CO.
J.P. MORGAN & CO.
, 1996
<PAGE>
[MAP DEPICTING DISTRIBUTION NETWORK.]
2
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SENIOR NOTES
AT LEVELS ABOVE THOSE THAT MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
----------------
ENFORCEABILITY OF CIVIL LIABILITIES
The Company is a public limited company incorporated under the laws of
England and Wales. Several of the directors and executive officers of the
Company (and certain experts named in this Prospectus) are citizens or
residents of the United Kingdom (the "UK"). All or a substantial portion of
the assets of such persons and substantially all the assets of the Company are
located outside the United States of America (the "US"). As a result, it may
not be possible for investors to effect service of process within the US upon
such persons or the Company or to enforce against them judgments of US courts
predicated upon civil liabilities under US federal securities laws. There is
doubt as to the enforceability in England and Wales, in original actions or in
actions for enforcement of judgments of US courts, of civil liabilities
predicated upon US federal securities laws.
----------------
The Company accepts responsibility for the information contained in this
document. To the best of the knowledge and belief of the Company (which has
taken all reasonable care to ensure that such is the case) the information
contained in this document is in accordance with the facts and does not omit
anything likely to affect the import of such information.
----------------
NOTICE TO NEW HAMPSHIRE RESIDENTS
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A
LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED
STATUTES WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS
EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE
CONSTITUTES A FINDING BY THE SECRETARY OF STATE THAT ANY DOCUMENT FILED UNDER
RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE
FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A
TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE
MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON,
SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY
PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT, ANY REPRESENTATION INCONSISTENT
WITH THE PROVISIONS OF THIS PARAGRAPH.
----------------
The Company publishes its consolidated financial statements in pounds
sterling. In this Prospectus, references to "pounds sterling," "(Pounds),"
"pence" or "p" are to UK currency and references to "US dollars," "US$" or "$"
are to US currency. For the convenience of the reader, this Prospectus
contains translations of certain pounds sterling amounts into US dollars at
specified rates, or, if not so specified, the noon buying rate in New York
City for cable transfers in pounds sterling as certified for customs purposes
by the Federal Reserve Bank of New York (the "Noon Buying Rate") on March 29,
1996 of $1.5262 = (Pounds)1.00. No representation is made that the pounds
sterling amounts have been, could have been or could be converted into US
dollars at the rates indicated or at any other rates. See "Exchange Rates" for
historical information regarding Noon Buying Rates.
3
<PAGE>
The Company prepares its consolidated financial statements in accordance
with accounting principles generally accepted in the US ("US GAAP"). However,
the consolidated financial statements of South Western Electricity plc
("SWEB") included in this Prospectus were prepared in accordance with
accounting principles generally accepted in the UK ("UK GAAP"), which differ
in certain significant aspects from US GAAP. The principal differences between
UK GAAP and US GAAP are summarized in Note 21 to SWEB's consolidated financial
statements, included elsewhere herein. Except as otherwise specifically stated
herein, all financial data for accounting periods ending after September 18,
1995 is prepared in accordance with US GAAP.
4
<PAGE>
SUMMARY
The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed financial and other information contained
elsewhere in this Prospectus. References herein to the "Predecessor Company"
mean SWEB prior to its acquisition by the Company. All references to a "fiscal"
year mean a year ended March 31 and all references to a "calendar" year mean a
year ended December 31. References to Pro Forma Fiscal Year 1996 mean the
unaudited pro forma financial information of the Company presented for fiscal
year 1996 as if the acquisition of SWEB by the Company had occurred as of April
1, 1995.
THE COMPANY
The Company is a wholly-owned subsidiary of Southern Investments UK Holdings
Limited ("Holdings"), of which 75% is owned indirectly by The Southern Company
("Southern", together with its subsidiaries, the "Southern Company system") and
25% is owned indirectly by PP&L Resources, Inc. ("PP&L Resources"). The Company
was incorporated as a public limited company under the laws of England and
Wales on June 23, 1995, as a vehicle for the acquisition of South Western
Electricity plc ("SWEB"), one of the 12 regional electricity companies ("RECs")
in England and Wales licensed to distribute, supply and, to a limited extent,
generate electricity. In September 1995, the Company gained effective control
of SWEB, having acquired approximately 84% of its shares. The Company
subsequently replaced SWEB's board of directors and certain senior managers
with officers and employees of companies from within the Southern Company
system. In December 1995, the Company acquired the remaining shares of SWEB.
The Company's sole investment and only significant asset is the entire share
capital of SWEB, which is headquartered in Bristol, England. At March 31, 1996,
the Company had consolidated assets of (Pounds)1.686 billion ($2.573 billion).
See "The Company."
SWEB's two main business lines are the distribution of electricity and the
supply of electricity to approximately 1.3 million customers primarily in its
franchise area in southwest England (the "Franchise Area"). This area covers
approximately 5,560 square miles and has a resident population of approximately
2.8 million. The distribution business and the supply business are distinct
business segments and produced operating income of (Pounds)115 million ($176
million) and (Pounds)16 million ($24 million), respectively, in Pro Forma
Fiscal Year 1996, representing substantially all of the Company's consolidated
operating income in that pro forma fiscal year. See "Business--SWEB's Main
Businesses."
SWEB is the only distributor of electricity in its Franchise Area, and
management believes that economic, environmental and regulatory factors are
likely to prevent competitors from entering this business in SWEB's Franchise
Area. SWEB has an exclusive right to supply electricity to customers in its
Franchise Area with demand of not more than 100kW, which is scheduled to
continue until at least March 31, 1998. The supply business to consumers with
demand above 100kW, both inside and outside SWEB's Franchise Area, is open to
competition, and SWEB is able to competitively bid or negotiate to supply
electricity to such customers. See "The Electric Utility Industry in Great
Britain."
The operations of SWEB are regulated under its Public Electricity Supply
license ("PES license") pursuant to which the distribution business, and the
supply business to consumers with demand of not more than 100kW, are subject to
a price cap regulatory framework that provides economic incentives to SWEB to
increase the number of units of electricity distributed and supplied and to
operate in a more cost-efficient manner.
SWEB also has ancillary business activities that support the main businesses,
including power generation and gas supply. See "Business--SWEB's Other Business
Activities."
5
<PAGE>
THE OFFERING
Issuer........................ Southern Investments UK plc.
Securities Offered............ $235,000,000 aggregate principal amount of
% Senior Notes due 2006.
Maturity Date................. , 2006.
Interest...................... The Senior Notes will bear interest from
the date of original issuance at the rate
of % per annum payable semiannually in
arrears.
Interest Payment Dates........ and , commencing , 1996.
Ranking....................... The Senior Notes are direct, unsecured and
unsubordinated obligations of the Company
ranking pari passu with all other unsecured
and unsubordinated obligations of the
Company (other than those obligations
preferred by operation of law). The Senior
Notes will effectively rank junior to any
secured indebtedness of the Company to the
extent of the assets securing such
indebtedness and to any indebtedness of the
Company's subsidiaries to the extent of the
assets of such subsidiaries. Substantially
all of the Company's consolidated assets
other than the stock of SWEB, the Company's
only Significant Subsidiary (as defined
herein), are currently held by the
Company's subsidiaries. The Indenture for
the Senior Notes contains no restrictions
on the amount of additional indebtedness
which may be incurred by the Company or its
subsidiaries; however, the Indenture
contains certain restrictions on the
ability of the Company and its Significant
Subsidiaries to incur secured indebtedness.
See "Description of the Senior Notes--
Covenants."
Ratings....................... The Senior Notes have been assigned ratings
of by Standard & Poor's Ratings
Services ("S&P"), by Duff & Phelps
Credit Rating Company ("DCR") and by
Moody's Investors Service, Inc.
("Moody's"). These ratings have been
obtained with the understanding that S&P,
DCR and Moody's will continue to monitor
the credit rating of the Company and will
make future adjustments to the extent
warranted. A rating reflects only the views
of S&P, DCR or Moody's, as the case may be,
and is not a recommendation to buy, sell or
hold the Senior Notes. There is no
assurance that any such rating will be
retained for any given period of time or
that it will not be revised downward or
withdrawn entirely by S&P, DCR or Moody's,
as the case may be, if, in their respective
judgments, circumstances so warrant.
6
<PAGE>
Optional Redemption........... The Senior Notes will be redeemable in
whole or in part at the option of the
Company at any time, at a redemption price
equal to the greater of (i) 100% of the
principal amount of the Senior Notes being
redeemed or (ii) the sum of the present
values of the remaining scheduled payments
of the principal of and interest on the
Senior Notes being redeemed discounted to
the date of redemption on a semi-annual
basis (assuming a 360-day year consisting
of twelve 30-day months) at the Treasury
Yield (as defined herein) plus basis
points; plus, for (i) or (ii) above,
whichever is applicable, accrued interest
on the Senior Notes being redeemed to the
date of redemption. See "Description of the
Senior Notes--Optional Redemption."
Optional Tax Redemption....... In the event of changes in the tax laws of
the UK after the date hereof and certain
other events that would obligate the
Company to pay Additional Amounts, the
Senior Notes may be redeemed at the option
of the Company, in whole but not in part,
at the principal amount thereof, plus
accrued and unpaid interest. See
"Description of the Senior Notes--Optional
Tax Redemption."
Principal Covenants........... The Indenture under which the Senior Notes
are to be issued will not contain any
limitation on the Company's or its
subsidiaries' right to incur indebtedness.
The Indenture will, however, contain
certain covenants, including covenants
applicable to the Company and its
Significant Subsidiaries with respect to
(i) limitations on liens, (ii) limitations
on sale and lease-back transactions and
(iii) limitations regarding consolidation,
merger, conveyance, sale or lease
transactions. See "Description of the
Senior Notes--Covenants--Limitation on
Liens," "--Limitation on Sale and Lease-
Back Transactions" and "--Consolidation,
Merger, Conveyance, Sale or Lease."
Events of Default............. For a discussion of certain events that
will permit acceleration of the principal
of the Senior Notes (together with all
interest accrued and unpaid thereon), see
"Description of the Senior Notes--Events of
Default."
Withholding Tax............... Payments in respect of the Global Note will
be made free and clear of any present or
future UK withholding and other deductions
existing in the UK, except as set forth
under "Description of the Senior Notes--
Additional Amounts." Subject to certain
exceptions, the Company will pay such
additional amounts (the "Additional
Amounts") as will result in receipt by the
holder of the Global Note of such amounts
as would have been received by it had no
such withholding or deduction been
required. See "Description of the Senior
Notes--Additional Amounts."
7
<PAGE>
Use of Proceeds............... The Company intends to use the net proceeds
of the Offering principally to refinance a
portion of its existing debt. See "Use of
Proceeds" and "Capitalization."
Form and Denomination......... The Senior Notes will be issued only in the
form of one global bearer note and
deposited with the Book-Entry Depositary
which will hold the Senior Notes for the
benefit of DTC and its participants. The
Book-Entry Depositary will issue the Book-
Entry Interest to DTC which will operate a
system of dealing in the Book-Entry
Interest. Ownership of interests in the
Book-Entry Interest will be limited to
persons who have accounts with DTC
("Participants") or persons who may hold
interests through such participants
("Indirect Participants"). Interests in the
Book-Entry Interest will be shown on, and
transfers thereof will be effected only
through, records maintained by DTC and its
Participants, including The Chase Manhattan
Bank (National Association), as operator of
the Euroclear System ("Euroclear"), and
Cedel Bank, societe anonyme ("Cedel Bank").
Except as set forth under "Description of
the Senior Notes," Participants and
Indirect Participants will not be entitled
to receive physical delivery of Definitive
Registered Notes or to have Senior Notes
issued and registered in their names and
will not be considered the owners or
holders of the Senior Notes under the
Indenture pursuant to which the Senior
Notes are issued. See "Risk Factors--
Considerations Related to Book-Entry
Interest."
Interests in the Book-Entry Interest and
the Definitive Registered Notes, if any,
will be issued in minimum denominations of
US$1,000 and integral multiples of US$1,000
in excess thereof.
Governing Law................. The Indenture and the Senior Notes will be
governed by, and construed in accordance
with, the laws of the State of New York.
Trustee, Registrar and Book-
Entry Depositary.............
Bankers Trust Company.
Paying Agents................. Bankers Trust Company and Bankers Trust
Luxembourg S.A.
8
<PAGE>
SUMMARY FINANCIAL INFORMATION
The following table sets forth summary consolidated financial data for the
Company (the "Successor Company" or the "Company") and the Predecessor Company.
For a description of the financial statements and records from which the
following financial data have been derived, see "Selected Financial Data." This
information should be read in conjunction with "Capitalization," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the consolidated financial statements and notes thereto of the Successor
Company and the Predecessor Company included elsewhere in this Prospectus.
The unaudited pro forma condensed consolidated income statement and other
data presented below for fiscal year 1996 reflect the acquisition by the
Company of SWEB as if it had occurred as of April 1, 1995. Such unaudited pro
forma condensed consolidated income statement and other data have been prepared
by the Successor Company based upon assumptions deemed proper by it and reflect
a preliminary allocation of the purchase price paid for the Predecessor
Company. The unaudited pro forma condensed consolidated income statement and
other data presented herein are shown for illustrative purposes only and are
not necessarily indicative of the future results of operations of the Successor
Company or of the results of operations of the Successor Company that would
have actually occurred had the transaction been in effect for the period
presented. The Successor Company's consolidated financial statements reflect
the operations of the Successor Company from September 18, 1995, the date on
which the Company acquired effective control of SWEB.
PREDECESSOR COMPANY
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED MARCH 31, APRIL 1 TO
---------------------------------------------------------- SEPTEMBER 17,
1992 1993 1994 1995 1995(1)
------------- ------------- ------------- ------------- -------------
(POUNDS STERLING IN MILLIONS)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED INCOME
STATEMENT DATA:
UK GAAP
Turnover............... (Pounds)847.1 (Pounds)892.0 (Pounds)899.6 (Pounds)874.9 (Pounds)318.7
Operating costs........ (759.1) (789.5) (791.0) (755.4) (286.9)
------------- ------------- ------------- ------------- -------------
Operating profit....... 88.0 102.5 108.6 119.5 31.8
Exceptional item(2).... -- -- -- (20.0) --
Other income........... 9.8 10.7 15.3 16.5 1.4
Interest, net.......... (14.8) (12.1) (7.1) (4.5) (3.5)
Tax on profit.......... (20.7) (23.4) (23.9) (25.6) (7.4)
------------- ------------- ------------- ------------- -------------
Profit for financial
period(3)............. (Pounds) 62.3 (Pounds) 77.7 (Pounds) 92.9 (Pounds) 85.9 (Pounds) 22.3
US GAAP
Net income(4).......... (Pounds) 99.0 (Pounds) 25.8
<CAPTION>
MARCH 31,
----------------------------------------------------------
1992 1993 1994 1995
------------- ------------- ------------- -------------
(POUNDS STERLING IN MILLIONS)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE
SHEET DATA:
UK GAAP
Fixed assets........... (Pounds)490.1 (Pounds)544.2 (Pounds)578.5 (Pounds)615.0
Current assets......... 211.5 213.2 301.0 253.6
Creditors: Amounts
falling due within one
year.................. (178.8) (175.8) (204.5) (242.7)
------------- ------------- ------------- -------------
Total assets less cur-
rent liabilities...... 522.8 581.6 675.0 625.9
Creditors: Amounts
falling due in more
than one year (84.9) (86.7) (92.3) (94.9)
Total shareholders'
funds................. 425.3 478.8 542.9 493.8
US GAAP
Total shareholders' eq-
uity(4)............... (Pounds)391.4
<CAPTION>
PERIOD FROM
YEAR ENDED MARCH 31, APRIL 1 TO
---------------------------------------------------------- SEPTEMBER 17,
1992 1993 1994 1995 1995(1)
------------- ------------- ------------- ------------- -------------
(POUNDS STERLING IN MILLIONS, EXCEPT RATIO)
<S> <C> <C> <C> <C> <C>
OTHER CONSOLIDATED DATA:
UK GAAP
EBIT(5)................ (Pounds) 98.7 (Pounds)114.7 (Pounds)125.5 (Pounds)141.5 (Pounds) 35.0
EBITDA(6).............. 122.7 141.0 153.8 172.6 50.1
Cash flow from opera-
tions(7).............. 128.3 139.6 245.0 124.2 70.1
Ratio of earnings to
fixed charges(8)...... 6.3 8.4 11.6 12.5 6.6
</TABLE>
9
<PAGE>
SUCCESSOR COMPANY
<TABLE>
<CAPTION>
PRO FORMA
PERIOD FROM YEAR ENDED
SEPTEMBER 18, 1995 MARCH 31, 1996
TO MARCH 31, 1996(1) (UNAUDITED)(9)
----------------------------------------------
(Pounds) $(10) (Pounds) $(10)
-------------- ---------------------- ------
(AMOUNTS IN MILLIONS)
<S> <C> <C> <C> <C>
CONSOLIDATED INCOME STATEMENT
DATA:
US GAAP
Operating revenues............ (Pounds) 481 $ 734 (Pounds) 780 $1,190
Operating income.............. 86 131 125 191
Interest, net................. (21) (32) (59) (90)
Gain on sale of investments... 14 21 14 21
Other, net.................... 2 4 5 8
Provision for income taxes.... (28) (43) (31) (47)
Extraordinary gain on early
extinguishment of debt....... 6 9 6 9
Discontinued operations....... -- -- (2) (3)
-------------- ------- ------------- ------
Net income.................... (Pounds) 59 $ 90 (Pounds) 58 $ 89
============== ======= ============= ======
<CAPTION>
MARCH 31, 1996
-------------------------
(Pounds) $(10)
-------------- ---------
(AMOUNTS IN MILLIONS)
<S> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DA-
TA:
US GAAP
Property, plant and equipment,
net.......................... (Pounds) 1,207 $ 1,842
Total assets.................. 1,686 2,573
Short-term debt............... 650 992
Total stockholder's equity.... 368 562
<CAPTION>
PRO FORMA
PERIOD FROM YEAR ENDED
SEPTEMBER 18, 1995 MARCH 31, 1996
TO MARCH 31, 1996(1) (UNAUDITED)(9)
----------------------------------------------
(Pounds) $(10) (Pounds) $(10)
-------------- ---------------------- ------
(AMOUNTS IN MILLIONS, EXCEPT RATIO)
<S> <C> <C> <C> <C>
OTHER CONSOLIDATED DATA:
US GAAP
EBIT(5)....................... (Pounds) 109 $ 167 (Pounds) 152 $ 232
EBITDA(6)..................... 131 201 194 296
Cash flow from operations..... 12 18 74 113
Ratio of earnings to fixed
charges(8)................... 3.9 2.3
</TABLE>
10
<PAGE>
BUSINESS SEGMENTS
PREDECESSOR COMPANY
(PREPARED UNDER UK GAAP)
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED MARCH 31, APRIL 1 TO
---------------------------------------------------------- SEPTEMBER 17,
1992 1993 1994 1995 1995(1)
------------- ------------- ------------- ------------- -------------
(POUNDS STERLING IN MILLIONS)
<S> <C> <C> <C> <C> <C>
TURNOVER:
Electricity distribu-
tion.................. (Pounds)230.1 (Pounds)236.4 (Pounds)249.8 (Pounds)274.0 (Pounds)105.1
Electricity supply..... 762.9 786.8 771.6 724.8 276.0
Retailing(2)........... 52.9 72.1 79.0 82.4 9.6
Other.................. 20.8 35.2 77.8 83.6 29.9
Less: Intra-busi-
ness(11).............. (219.6) (238.5) (278.6) (289.9) (101.9)
------------- ------------- ------------- ------------- -------------
Total............... (Pounds)847.1 (Pounds)892.0 (Pounds)899.6 (Pounds)874.9 (Pounds)318.7
OPERATING PROFIT (LOSS):
Electricity distribu-
tion.................. (Pounds) 89.6 (Pounds) 87.2 (Pounds) 76.6 (Pounds) 95.7 (Pounds) 37.2
Electricity supply..... 4.1 16.7 25.4 15.3 1.8
Retailing(2)........... (0.4) (1.9) 0.5 1.3 (0.7)
Other.................. (5.3) 0.5 6.1 8.5 (5.9)
Less: Intra-busi-
ness(11).............. -- -- -- (1.3) (0.6)
------------- ------------- ------------- ------------- -------------
Total............... (Pounds) 88.0 (Pounds)102.5 (Pounds)108.6 (Pounds)119.5 (Pounds) 31.8
<CAPTION>
MARCH 31,
----------------------------------------------------------
1992 1993 1994 1995
------------- ------------- ------------- -------------
(POUNDS STERLING IN MILLIONS)
<S> <C> <C> <C> <C> <C>
ASSETS:
Electricity distribu-
tion.................. (Pounds)448.9 (Pounds)454.1 (Pounds)472.2 (Pounds)503.8
Electricity supply..... 138.8 134.7 90.6 88.5
Retailing(2)........... 31.7 37.7 55.5 64.5
Other.................. 82.2 130.9 261.2 211.8
------------- ------------- ------------- -------------
Total............... (Pounds)701.6 (Pounds)757.4 (Pounds)879.5 (Pounds)868.6
</TABLE>
11
<PAGE>
BUSINESS SEGMENTS
SUCCESSOR COMPANY
(PREPARED UNDER US GAAP)
<TABLE>
<CAPTION>
PRO FORMA
PERIOD FROM YEAR ENDED
SEPTEMBER 18, 1995 MARCH 31, 1996
TO MARCH 31, 1996(1) (UNAUDITED)(9)
--------------------------------------------
(Pounds) $(10) (Pounds) $(10)
-------------- -------------------- ------
(AMOUNTS IN MILLIONS)
<S> <C> <C> <C> <C>
OPERATING REVENUE:
Electricity distribution......... (Pounds) 147 $ 224 (Pounds)252 $ 385
Electricity supply............... 450 687 726 1,108
Other............................ 33 50 54 82
Less: Intra-business(11)......... (149) (227) (252) (385)
-------------- ------- ----------- ------
Total......................... (Pounds) 481 $ 734 (Pounds)780 $1,190
OPERATING INCOME (LOSS):
Electricity distribution......... (Pounds) 72 $ 110 (Pounds)115 $ 176
Electricity supply............... 13 20 16 24
Other............................ 1 1 (6) (9)
Less: Intra-business(11)......... -- -- -- --
-------------- ------- ----------- ------
Total......................... (Pounds) 86 $ 131 (Pounds)125 $ 191
<CAPTION>
MARCH 31, 1996
-------------------------
(Pounds) $(10)
-------------- ---------
(AMOUNTS IN MILLIONS)
<S> <C> <C>
ASSETS:
Electricity distribution......... (Pounds) 1,249 $ 1,906
Electricity supply............... 102 156
Other(12)........................ 335 511
-------------- -------
Total......................... (Pounds) 1,686 $ 2,573
</TABLE>
- --------
(1) On September 18, 1995, the Successor Company obtained effective control of
the Predecessor Company pursuant to the Successor Company's offer to
acquire the Predecessor Company.
(2) A provision for the disposition of the electrical appliance retailing
business resulted in an exceptional item for the fiscal year ended March
31, 1995. The actual disposition of this business segment occurred in June
1995.
(3) Excluding the exceptional item, profit for fiscal year 1995 would have
been (Pounds)98.2 million.
(4) US GAAP net income and total shareholders' equity reflect the impact of
converting profit and total shareholders' funds on a UK GAAP basis to US
GAAP. Differences between US GAAP and UK GAAP relate primarily to pension
accounting, deferred taxation, the use of revaluation reserves, the
treatment of dividends and the treatment of discontinued operations. See
Note 21 to the consolidated financial statements of the Predecessor
Company.
(5) EBIT equals income from continuing operations before the sum of interest
expense and income taxes.
(6) EBITDA equals income from continuing operations before the sum of interest
expense, income taxes, depreciation and amortization.
(7) Cash flow from operations increased by (Pounds)85 million in fiscal year
1994 as a result of customers who paid bills in advance in order to avoid
paying value added taxes which were introduced by the British government.
(8) The ratio of earnings to fixed charges is computed as the sum of pretax
income from continuing operations and fixed charges divided by fixed
charges. Fixed charges consist of interest expensed.
(9) Pro Forma Fiscal Year 1996 financial information gives effect to the
acquisition of the Predecessor Company by the Successor Company as if it
had occurred on April 1, 1995. See pages A-1 and A-2 included in this
Prospectus.
(10) Solely for the convenience of the reader, pounds sterling amounts have
been translated into US dollars at the Noon Buying Rate on March 29, 1996
of $1.5262 = (Pounds)1.00.
(11) Intra-business eliminations consist primarily of intercompany transactions
between the distribution business and the supply business. Pursuant to the
UK regulatory framework, SWEB's distribution of electricity to its supply
customers within its own Franchise Area is billed to SWEB's supply
business, which in turn incorporates the distribution charge into the bill
sent to the final end user.
(12) Includes goodwill, net of amortization, and prepaid pension costs of
(Pounds)173 million ($263 million) and (Pounds)95 million ($145 million),
respectively.
12
<PAGE>
RISK FACTORS
In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating an investment in the
Senior Notes offered by this Prospectus.
FACTORS RELATING TO THE ELECTRIC UTILITY BUSINESS IN GREAT BRITAIN
PRICE REGULATION OF DISTRIBUTION
The distribution business of SWEB is regulated under its PES license
pursuant to which revenue of the distribution business is controlled by the
Distribution Price Control Formula (as defined herein). The Distribution Price
Control Formula determines the maximum average price per unit of electricity
(expressed in kilowatt hours, a "unit") that a REC may charge. The elements
used in the Distribution Price Control Formula are established for a five-year
period and are subject to review by the Director General of Electricity Supply
(the "Regulator") at the end of each five-year period and at other times in
the discretion of the Regulator. At each review, the Regulator can adjust the
value of certain elements in the Distribution Price Control Formula. In July
1994, a review resulted in a 14% price reduction, before allowing for
inflation, effective April 1, 1995. In July 1995, a further review of
distribution prices was concluded by the Regulator for fiscal years 1997 to
2000. As a result of this further review, SWEB's distribution prices were
reduced by a further 11%, before allowing for inflation, effective April 1,
1996. There can be no assurance that any review by the Regulator will not
adversely affect the Company. See "The Electric Utility Industry in Great
Britain--Structure of the Electric Utility Industry in Great Britain--
Distribution of Electricity."
COMPETITION IN SUPPLY
Each PES license holder currently has an exclusive right, subject to price
cap regulation, to supply customers in its franchise area with a maximum
demand of not more than 100kW ("Franchise Supply Customers"). However, the
supply business is being progressively opened to competition. The market for
customers with a maximum demand above 1MW has been open to competition for
suppliers of electricity since privatization while, for customers with a
maximum demand above 100kW ("Non-Franchise Supply Customers"), the market
became competitive in April 1994. The final stage of this process is expected
to occur on March 31, 1998, when the exclusive right to supply Franchise
Supply Customers is scheduled to end. There can be no assurance that
competition among suppliers of electricity will not adversely affect the
Company. See"Business--SWEB's Main Businesses--Supply Business."
POOL PURCHASE PRICE VOLATILITY
SWEB's supply business to Non-Franchise Supply Customers generally involves
entering into fixed price contracts to supply electricity to its customers.
SWEB obtains the electricity to satisfy its obligations under such contracts
primarily by purchases from the wholesale trading market for electricity in
England and Wales (the "Pool"). See "The Electric Utility Industry in Great
Britain." Because the price of electricity purchased from the Pool can be
volatile, to the extent that SWEB purchases electricity from the Pool, SWEB is
exposed to risk arising from differences between the fixed price at which it
sells and the fluctuating prices at which it purchases electricity unless it
can effectively hedge such exposure. SWEB's ability to manage such risk at
acceptable levels will depend, in part, on the specifics of the supply
contracts that SWEB enters into, SWEB's ability to implement and manage an
appropriate hedging strategy and the development of an adequate market for
hedging instruments. No assurance can be given that this risk will be
effectively mitigated. See "Business--SWEB's Main Business--Supply Business."
OTHER FACTORS
CHANGE IN GOVERNMENT POLICY
The Conservative Party has held power in the UK since 1979 and currently has
a one-seat majority over all other parties. The next general election in the
UK must be held no later than May 1997, and may be called at
13
<PAGE>
approximately three weeks' notice at any time before then. Certain senior
members of the Labour Party, which is the main opposition party, have recently
made statements regarding policies which a Labour government would intend to
introduce, including a windfall tax on excess profits of privatized utilities
and referring the whole electricity industry to the competition authorities.
There can be no assurance that the policies of the UK government, by whichever
party it is controlled, would not adversely affect the Company.
CURRENCY RISKS; HEDGING TRANSACTIONS
The Company expects to obtain a significant portion of its financing from
the sale of the Senior Notes which will be denominated in US dollars. The
Company's revenues will be generated primarily in pounds sterling while the
Company's interest and principal payment obligations with respect to the
Senior Notes will be payable in US dollars. As a result, any change in the
currency exchange rate that reduces the amount in pounds sterling obtained
upon conversion of the US dollar-based net proceeds of the Senior Notes or
that increases the effective principal and interest payment obligations
represented by the Senior Notes upon conversion of pounds sterling-based
revenues into US dollars may, if not appropriately hedged, have a material
adverse effect on the Company or on its ability to make payments on the Senior
Notes. See "Exchange Rates" for certain information concerning the Noon Buying
Rate for pounds sterling expressed in US dollars. Although the Company expects
to enter into certain transactions to hedge risks associated with exchange
rate fluctuations, there can be no assurance that the Company will engage in
such transactions or that any such transaction will be successful in reducing
such risks.
LACK OF ESTABLISHED MARKET FOR THE SENIOR NOTES
Although the Underwriters have informed the Company that they currently
intend to make a market in the Senior Notes, they are not obligated to do so,
and any such market-making may be discontinued at any time without notice.
There can be no assurance as to the development or liquidity of any market for
the Senior Notes. If an active public market does not develop, the market
price and liquidity of the Senior Notes may be adversely affected.
CONSIDERATIONS RELATED TO BOOK-ENTRY INTEREST
Unless and until Definitive Registered Notes are issued in exchange for
interests in the Book-Entry Interest, owners of interests in the Book-Entry
Interest will not be considered the owners or holders of Senior Notes under
the Indenture. The Book-Entry Depositary, or its nominee, will be the sole
holder (the "Holder") of the Senior Notes in the form of a single global
Senior Note in bearer form. Accordingly, each person owning an interest in the
Book-Entry Interest must rely on the procedures of the Book-Entry Depositary
and DTC and, if such person is not a Participant in DTC, on the procedures of
the Participant (including Euroclear and Cedel Bank) through which such person
owns its interest to exercise any rights and obligations of a Holder under the
Indenture.
Payments of principal, interest and other amounts owing on or in respect of
the Global Note will be made to the Book-Entry Depositary, which will in turn
distribute payments to Cede & Co. (as nominee of DTC), and thereafter payments
will be made to DTC Participants (and to persons who own an interest in the
Book-Entry Interest through DTC Participants). None of the Company, the
Trustee, the Book-Entry Depositary, any paying agent or any registrar will
have any responsibility or liability for any aspect of the records relating
to, or payments made on account of, the Book-Entry Interest or interests
therein or for maintaining, supervising or reviewing any records relating to
such Book-Entry Interest or interests therein.
Unlike Holders of the Senior Notes themselves, owners of interests in the
Book-Entry Interest will not have the direct right under the Indenture to act
upon solicitations by the Company of consents or requests by the Company for
waivers or other actions from Holders of the Senior Notes. Instead, owners of
interests in the Book-Entry Interest will be permitted to act only to the
extent they have received appropriate proxies to do so from DTC and, if
applicable, DTC Participants. There can be no assurance that procedures
implemented for the granting of such proxies will be sufficient to enable
owners of interests in the Book-Entry Interest to vote on any
14
<PAGE>
requested actions on a timely basis. Similarly, upon the occurrence of an
Event of Default (as defined), unless and until Definitive Registered Notes
are issued, owners of interests in the Book-Entry Interest will be restricted
to acting through DTC, its Participants and the Book-Entry Depositary. There
can be no assurance that the procedures to be implemented by DTC, its
Participants and the Book-Entry Depositary under such circumstances will be
adequate to ensure the timely exercise of remedies under the Indenture. See
"Description of the Senior Notes--Description of the Book-Entry System."
15
<PAGE>
THE COMPANY
The Company is a wholly-owned subsidiary of Holdings, of which 75% is owned
indirectly by Southern and 25% is owned indirectly by PP&L Resources. The
Company was incorporated as a public limited company under the laws of England
and Wales on June 23, 1995, as a vehicle for the acquisition of SWEB, one of
the 12 RECs in England and Wales licensed to distribute, supply and, to a
limited extent, generate electricity. In September 1995, the Company gained
effective control of SWEB, having acquired approximately 84% of its shares.
The Company subsequently replaced SWEB's board of directors and certain senior
managers with officers and employees of companies from within the Southern
Company system. In December 1995, the Company acquired the remaining shares of
SWEB. The Company's sole investment and only significant asset is the entire
share capital of SWEB, which is headquartered in Bristol, England. At March
31, 1996, the Company had consolidated assets of (Pounds)1.686 billion ($2.573
billion). The following organizational chart illustrates the ownership
structure of the Company and SWEB in summary form.
[ORGANIZATIONAL CHART APPEARS HERE]
SWEB's two main business lines are the distribution of electricity and the
supply of electricity to approximately 1.3 million customers in its Franchise
Area. The distribution business and the supply business are distinct business
segments and produced operating income of (Pounds)115 million ($176 million)
and (Pounds)16 million ($24 million), respectively, in Pro Forma Fiscal Year
1996, representing substantially all of the Company's consolidated operating
income in that pro forma fiscal year.
The Company's registered office and principal executive offices are located
at 800 Park Avenue, Aztec West, Almondsbury, Bristol BS12 4SE, England, and
its telephone number is 44-1454-201-101.
FRANCHISE AREA
SWEB operates primarily in its Franchise Area which covers approximately
5,560 square miles extending from Bristol and Bath in the northeast, 188 miles
southwest along the peninsula to Land's End and 28 miles beyond to the Isles
of Scilly. SWEB's Franchise Area has a resident population of approximately
2.8 million. The map on the inside front cover of this Prospectus outlines
SWEB's Franchise Area.
16
<PAGE>
REGULATION
The revenues and operations of SWEB are regulated by the Regulator through
SWEB's PES license. Under that license, SWEB provides electricity distribution
services to virtually all consumers in its Franchise Area (whether supplied by
SWEB's independent supply business or by other suppliers) and must offer
electricity supply services to all consumers in its Franchise Area. Franchise
Supply Customers within the Franchise Area (primarily residential/domestic and
small commercial consumers) can only be supplied by SWEB. Non-Franchise Supply
Customers within the Franchise Area (primarily large commercial and
agricultural and industrial consumers) may choose to be supplied by SWEB or
another supplier. Similarly, SWEB may supply electricity to Non-Franchise
Supply Customers outside SWEB's Franchise Area.
Under the terms of SWEB's PES license, the distribution business and the
supply business to Franchise Supply Customers are subject to a price cap
regulatory framework that provides economic incentives to SWEB to increase the
number of units of electricity distributed and supplied and to operate in a
cost-efficient manner. The price cap framework, however, does not apply to
Non-Franchise Supply Customers, and SWEB is able to competitively bid or
negotiate to supply electricity to such customers. SWEB's PES license also
limits the scope of SWEB's business activities and its ability, among other
things, to transfer assets and make loans. See "The Electric Utility Industry
in Great Britain--The Structure of the Electricity Industry in Great Britain--
Distribution of Electricity" and "--Electricity Supply."
DISTRIBUTION BUSINESS
SWEB's distribution business is the ownership, management and operation of
the electricity distribution network within SWEB's Franchise Area. The primary
activity of the distribution business is the receipt of electricity from the
national grid transmission system and its distribution to end users of
electricity that are connected to SWEB's power lines. Virtually all
electricity supplied (whether by SWEB's independent supply business or by
other suppliers) to consumers in SWEB's Franchise Area is transported through
its distribution network, thus providing SWEB with distribution volume that is
stable from year to year.
SWEB's distribution business has grown in both its customer base and in the
number of units distributed, primarily reflecting economic growth in the South
West of England. The South West, of which the Franchise Area forms the greater
part, has benefited from economic growth (as measured by gross domestic
product, "GDP") which exceeded the UK average from 1991 through 1995 and has
also benefited from an average unemployment rate during calendar year 1995 of
approximately 6.9%, which was below the UK average of 8.2%, according to a
recent study by Cambridge Econometrics. At March 31, 1996, SWEB had
experienced a 5-year compound annual growth rate of 0.8% in customers and a 5-
year compound annual growth rate of 1.6% in units distributed.
Since its acquisition by the Company, SWEB has introduced several
initiatives that focus on its distribution business. A number of areas for
cost savings and performance improvement have been identified which, together
with service innovations, are expected to improve the current level of
customer satisfaction and SWEB's financial performance. In this regard, a
total of 704 staff reductions (mainly in the distribution business and
representing 21% of staff at the time of the acquisition by the Company of
SWEB) are planned, of which 460 occurred prior to June 30, 1996. In addition,
new work practices developed in consultation with SWEB's unions have
contributed to cost savings. See "Business--SWEB's Main Businesses--
Distribution Business--Strategy."
SUPPLY BUSINESS
SWEB's supply business is selling electricity to end users, purchasing such
electricity, primarily from the Pool, and arranging for its distribution to
those end users. SWEB's supply business is comprised predominantly of
supplying Franchise Supply Customers. In fiscal year 1996, these customers
accounted for approximately 82% of all units of electricity supplied by SWEB.
SWEB's exclusive right to supply these customers is scheduled to
17
<PAGE>
continue, subject to price regulation, until March 31, 1998, at which time
competition to supply Franchise Supply Customers is scheduled to commence.
Since its acquisition by the Company, SWEB has completed a review of the
supply market, established new goals for its supply business and adopted new
strategies for achieving those goals. The key goals established are the
retention of its current Franchise Supply Customers as supply customers after
March 31, 1998 and the increase of SWEB's share of electricity supplied to
Non-Franchise Supply Customers both inside and outside SWEB's Franchise Area.
As a result of this strategy, SWEB expects to supply a larger portion of units
to Non-Franchise Supply Customers than in fiscal year 1996.
SWEB's strategy for retaining its Franchise Supply Customers is to build
customer loyalty and offer competitive prices. SWEB seeks to build customer
loyalty by providing superior service, including reliable distribution
service. To provide responsive service for billing and other matters, SWEB has
installed a state-of-the-art call center to handle customers' needs and is
completing work on a new billing system to provide customers with important
information in a user-friendly format.
Most of SWEB's Non-Franchise Supply Customers, who are primarily large
commercial and industrial companies, are located in SWEB's Franchise Area.
They are typically supplied through individual contracts for a duration of one
to two years based on competitively bid or negotiated prices.
SWEB's strategy for increasing market share among Non-Franchise Supply
Customers is to provide more competitive pricing, the superior service
described above and customized service that will be supported through an
expanded staff of key customer account managers utilizing new integrated
information systems.
OTHER BUSINESS ACTIVITIES
SWEB also has ancillary business activities that support the main
electricity businesses, including power generation and gas supply. See
"Business--SWEB's Other Business Activities."
PARENT COMPANIES
Southern owns several companies that together constitute one of the largest
investor-owned electric utility systems in the United States in terms of total
sales, electricity revenues and installed capacity. The Southern Company
system provides energy to approximately 4.8 million customers in Alabama,
Georgia, the panhandle of Florida, southeastern Mississippi and southwestern
England through its five southeastern United States utility operating
subsidiaries, which are Alabama Power Company, Georgia Power Company, Gulf
Power Company, Mississippi Power Company and Savannah Electric and Power
Company, and in England through SWEB. The Southern Company system currently
has ownership interests in over 70 power plants with more than 300 generating
units and with total electric generating capacity of over 32,000 MW. Southern
Electric International, Inc. ("Southern Electric"), a wholly owned subsidiary
of Southern, focuses on management of, and investment opportunities related
to, international and domestic power generation, the independent US domestic
power market and international electricity businesses. Within the Southern
Company system, Southern Electric has management oversight responsibility for
Holdings, the Company and SWEB, as well as certain other investments by the
Southern Company system in electricity businesses in the United States,
Argentina, Chile, the Bahamas and Trinidad and Tobago. SWEB is the third
largest operating company in the Southern Company system in terms of revenue,
assets and number of customers. The acquisition of SWEB is consistent with
Southern's stated objective of growing businesses outside of its core US
regulated utilities to contribute to the consolidated earnings growth of
Southern.
In late 1994, PP&L Resources established the Power Markets Development
Company ("PMDC") as its non-regulated, international power business. In
addition to its indirect minority ownership interest in SWEB, PMDC owns
interests in operating companies in Portugal, Bolivia and Argentina and is
currently developing
18
<PAGE>
power projects in Peru, Spain and India. The investment by PP&L Resources in
Holdings is significantly greater than that in any of these other companies.
USE OF PROCEEDS
The net proceeds from the Offering are estimated to be approximately US$229
million ((Pounds)150 million) after deduction of underwriting commissions and
discounts and expenses payable by the Company.
The Company intends to use such net proceeds principally to refinance a
portion of an existing term loan. The existing term loan matures on February
5, 1997 and bears interest at the London inter-bank offered rate for pounds
sterling plus 20 basis points. Morgan Guaranty Trust Company of New York, an
affiliate of JP Morgan Securities Inc, is a lender and agent under the
Company's term loan, and as such lender will receive a portion of the proceeds
of the Offering in repayment of a portion of such term loan. See
"Underwriting."
CAPITALIZATION
The following table sets forth, at March 31, 1996 (i) the actual
consolidated capitalization of the Successor Company, and (ii) the
consolidated capitalization adjusted to reflect the issuance of the Senior
Notes and the application of the net proceeds thereof, as described under "Use
of Proceeds." This table should be read in conjunction with "Selected
Financial Data," "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the consolidated financial statements and notes
thereto of the Successor Company included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
MARCH 31, 1996
--------------------------------------------------------
ACTUAL AS ADJUSTED
------------------------ ------------------------------
(Pounds) $(1) % (Pounds) $(1) %
------------- ------ --- ------------- ------ ---
(AMOUNTS IN MILLIONS, EXCEPT %)
<S> <C> <C> <C> <C> <C> <C>
Capitalization:
Short-term debt........ (Pounds) 650 $ 992 64% (Pounds) 500(2) $ 763(2) 49%
Senior Notes offered
hereby................ -- -- -- 154 235 15
Total stockholder's eq-
uity.................. 368 562 36 368 562 36
------------- ------ --- ------------- ------ ---
Total capitalization... (Pounds)1,018 $1,554 100% (Pounds)1,022 $1,560 100%
============= ====== === ============= ====== ===
</TABLE>
- --------
(1) Solely for convenience of the reader, UK pounds sterling amounts have been
translated into US dollars at the Noon Buying Rate on March 29, 1996 of
$1.5262 = (Pounds)1.00.
(2) Calculated by assuming that the net proceeds of the Offering will be $229
million ((Pounds) 150 million).
EXCHANGE RATES
The following table sets out, for the periods indicated, certain information
concerning the exchange rates between UK pounds sterling and US dollars based
on the Noon Buying Rates.
<TABLE>
<CAPTION>
PERIOD
FISCAL YEAR END AVERAGE(1) HIGH LOW
----------- ------ ---------- ---- ----
($ PER (Pounds)1.00)
<S> <C> <C> <C> <C>
1991.......................................... 1.87 1.76 1.99 1.60
1992.......................................... 1.51 1.77 2.00 1.51
1993.......................................... 1.48 1.50 1.59 1.42
1994.......................................... 1.57 1.53 1.64 1.46
1995.......................................... 1.55 1.58 1.64 1.53
1996.......................................... 1.53 1.53 1.56 1.50
</TABLE>
- --------
(1) The average of the Noon Buying Rates in effect on the last business day of
each month during the relevant period.
19
<PAGE>
SELECTED FINANCIAL DATA
The financial information contained in the following tables is derived from
the audited financial statements of the Predecessor Company for each of
preceding the four fiscal years ended 1995 and for the period from April 1 to
September 17, 1995, and from the audited financial statements of the Company
(the "Successor Company" or the "Company") for the period from September 18,
1995 to March 31, 1996. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the consolidated financial statements
and notes thereto of the Predecessor Company and the Successor Company
included elsewhere in this Prospectus.
The unaudited pro forma condensed consolidated income statement and other
data presented below for fiscal year 1996 reflect the acquisition by the
Company of SWEB as if it had occurred as of April 1, 1995. Such unaudited pro
forma condensed consolidated income statement and other data have been
prepared by the Successor Company based upon assumptions deemed proper by it
and reflect a preliminary allocation of the purchase price paid for the
Predecessor Company. The unaudited pro forma condensed consolidated income
statement and other data presented herein are shown for illustrative purposes
only and are not necessarily indicative of the future results of operations of
the Successor Company or of the results of operations of the Successor Company
that would have actually occurred had the transaction been in effect for the
period presented. The Successor Company's consolidated financial statements
reflect the operations of the Successor Company from September 18, 1995, the
date on which the Company acquired effective control of SWEB.
PREDECESSOR COMPANY
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED MARCH 31, APRIL 1 TO
---------------------------------------------------------- SEPTEMBER 17,
1992 1993 1994 1995 1995(1)
------------- ------------- ------------- ------------- -------------
(POUNDS STERLING IN MILLIONS)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED INCOME STATEMENT DATA:
UK GAAP
Turnover............................................. (Pounds)847.1 (Pounds)892.0 (Pounds)899.6 (Pounds)874.9 (Pounds)318.7
Operating costs...................................... (759.1) (789.5) (791.0) (755.4) (286.9)
------------- ------------- ------------- ------------- -------------
Operating profit..................................... 88.0 102.5 108.6 119.5 31.8
Exceptional item(2).................................. -- -- -- (20.0) --
Other income......................................... 9.8 10.7 15.3 16.5 1.4
Interest, net........................................ (14.8) (12.1) (7.1) (4.5) (3.5)
Tax on profit........................................ (20.7) (23.4) (23.9) (25.6) (7.4)
------------- ------------- ------------- ------------- -------------
Profit for financial period(3)....................... (Pounds) 62.3 (Pounds) 77.7 (Pounds) 92.9 (Pounds) 85.9 (Pounds) 22.3
US GAAP
Net income(4)........................................ (Pounds) 99.0 (Pounds) 25.8
<CAPTION>
MARCH 31,
----------------------------------------------------------
1992 1993 1994 1995
------------- ------------- ------------- -------------
(POUNDS STERLING IN MILLIONS)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
UK GAAP
Fixed assets......................................... (Pounds)490.1 (Pounds)544.2 (Pounds)578.5 (Pounds)615.0
Current assets....................................... 211.5 213.2 301.0 253.6
Creditors: Amounts falling due within one year....... (178.8) (175.8) (204.5) (242.7)
------------- ------------- ------------- -------------
Total assets less current liabilities................ 522.8 581.6 675.0 625.9
Creditors: Amounts falling due in more than one year.. (84.9) (86.7) (92.3) (94.9)
Total shareholders' funds............................ 425.3 478.8 542.9 493.8
US GAAP
Total shareholders' equity(4)........................ (Pounds)391.4
<CAPTION>
PERIOD FROM
YEAR ENDED MARCH 31, APRIL 1 TO
---------------------------------------------------------- SEPTEMBER 17,
1992 1993 1994 1995 1995(1)
------------- ------------- ------------- ------------- -------------
(POUNDS STERLING IN MILLIONS, EXCEPT RATIO)
<S> <C> <C> <C> <C> <C>
OTHER CONSOLIDATED DATA:
UK GAAP
EBIT(5).............................................. (Pounds) 98.7 (Pounds)114.7 (Pounds)125.5 (Pounds)141.5 (Pounds) 35.0
EBITDA(6)............................................ 122.7 141.0 153.8 172.6 50.1
Cash flow from operations(7)......................... 128.3 139.6 245.0 124.2 70.1
Ratio of earnings to fixed charges(8)................ 6.3 8.4 11.6 12.5 6.6
</TABLE>
20
<PAGE>
SUCCESSOR COMPANY
<TABLE>
<CAPTION>
PERIOD FROM
SEPTEMBER 18, 1995 PRO FORMA YEAR ENDED
TO MARCH MARCH 31, 1996
31, 1996 (1) (UNAUDITED) (9)
--------------------- ---------------------
(Pounds) $ (10) (Pounds) $ (10)
------------- ------ ------------- ------
(AMOUNTS IN MILLIONS)
<S> <C> <C> <C> <C>
CONSOLIDATED INCOME STATEMENT
DATA:
US GAAP
Operating revenues.............. (Pounds) 481 $ 734 (Pounds) 780 $1,190
Operating income................ 86 131 125 191
Interest, net................... (21) (32) (59) (90)
Gain on sale of investments..... 14 21 14 21
Other, net...................... 2 4 5 8
Provision for income taxes...... (28) (43) (31) (47)
Extraordinary gain on early
extinguishment of debt......... 6 9 6 9
Discontinued operations......... -- -- (2) (3)
------------- ------ ------------- ------
Net income...................... (Pounds) 59 $ 90 (Pounds) 58 $ 89
============= ====== ============= ======
<CAPTION>
MARCH 31, 1996
---------------------
(Pounds) $ (10)
------------- ------
(AMOUNTS IN
MILLIONS)
<S> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
US GAAP
Property, plant and equipment,
net............................ (Pounds)1,207 $1,842
Total assets.................... 1,686 2,573
Short-term debt................. 650 992
Total stockholder's equity...... 368 562
<CAPTION>
PERIOD FROM
SEPTEMBER 18, 1995 PRO FORMA YEAR ENDED
TO MARCH 31, 1996 MARCH 31, 1996
(1) (UNAUDITED) (9)
--------------------- ---------------------
(Pounds) $ (10) (Pounds) $ (10)
------------- ------ ------------- ------
(AMOUNTS IN MILLIONS, EXCEPT RATIO)
<S> <C> <C> <C> <C>
OTHER CONSOLIDATED DATA:
US GAAP
EBIT (5)........................ (Pounds)109 $167 (Pounds) 152 $232
EBITDA (6)...................... 131 201 194 296
Cash flow from operations....... 12 18 74 113
Ratio of earnings to fixed
charges (8).................... 3.9 2.3
</TABLE>
21
<PAGE>
BUSINESS SEGMENTS
PREDECESSOR COMPANY
(PREPARED UNDER UK GAAP)
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED MARCH 31, APRIL 1 TO
---------------------------------------------------------- SEPTEMBER 17,
1992 1993 1994 1995 1995(1)
------------- ------------- ------------- ------------- -------------
(POUNDS STERLING IN MILLIONS)
<S> <C> <C> <C> <C> <C>
TURNOVER:
Electricity distribu-
tion.................. (Pounds)230.1 (Pounds)236.4 (Pounds)249.8 (Pounds)274.0 (Pounds)105.1
Electricity supply..... 762.9 786.8 771.6 724.8 276.0
Retailing(2)........... 52.9 72.1 79.0 82.4 9.6
Other.................. 20.8 35.2 77.8 83.6 29.9
Less: Intra-busi-
ness(11).............. (219.6) (238.5) (278.6) (289.9) (101.9)
------------- ------------- ------------- ------------- -------------
Total................ (Pounds)847.1 (Pounds)892.0 (Pounds)899.6 (Pounds)874.9 (Pounds)318.7
OPERATING PROFIT (LOSS):
Electricity distribu-
tion.................. (Pounds) 89.6 (Pounds) 87.2 (Pounds) 76.6 (Pounds) 95.7 (Pounds) 37.2
Electricity supply..... 4.1 16.7 25.4 15.3 1.8
Retailing(2)........... (0.4) (1.9) 0.5 1.3 (0.7)
Other.................. (5.3) 0.5 6.1 8.5 (5.9)
Less: Intra-busi-
ness(11).............. -- -- -- (1.3) (0.6)
------------- ------------- ------------- ------------- -------------
Total................ (Pounds) 88.0 (Pounds)102.5 (Pounds)108.6 (Pounds)119.5 (Pounds) 31.8
<CAPTION>
MARCH 31,
----------------------------------------------------------
1992 1993 1994 1995
------------- ------------- ------------- -------------
(POUNDS STERLING IN MILLIONS)
<S> <C> <C> <C> <C> <C>
ASSETS:
Electricity distribu-
tion.................. (Pounds)448.9 (Pounds)454.1 (Pounds)472.2 (Pounds)503.8
Electricity supply..... 138.8 134.7 90.6 88.5
Retailing(2)........... 31.7 37.7 55.5 64.5
Other.................. 82.2 130.9 261.2 211.8
------------- ------------- ------------- -------------
Total................ (Pounds)701.6 (Pounds)757.4 (Pounds)879.5 (Pounds)868.6
</TABLE>
22
<PAGE>
BUSINESS SEGMENTS
SUCCESSOR COMPANY
(PREPARED UNDER US GAAP)
<TABLE>
<CAPTION>
PERIOD FROM PRO FORMA YEAR ENDED
SEPTEMBER 18, 1995 MARCH 31, 1996
TO MARCH 31, 1996(1) (UNAUDITED)(9)
-----------------------------------------------
(Pounds) $(10) (Pounds) $(10)
-------------- --------------------- --------
(AMOUNTS IN MILLIONS)
<S> <C> <C> <C> <C>
OPERATING REVENUE:
Electricity distribution....... (Pounds) 147 $ 224 (Pounds) 252 $ 385
Electricity supply............. 450 687 726 1,108
Other.......................... 33 50 54 82
Less: Intra-business(11)....... (149) (227) (252) (385)
-------------- ------- ------------ -------
Total........................ (Pounds) 481 $ 734 (Pounds) 780 $ 1,190
OPERATING INCOME (LOSS):
Electricity distribution....... (Pounds) 72 $ 110 (Pounds) 115 $ 176
Electricity supply............. 13 20 16 24
Other.......................... 1 1 (6) (9)
Less: Intra-business(11)....... -- -- -- --
-------------- ------- ------------ -------
Total........................ (Pounds) 86 $ 131 (Pounds) 125 $ 191
<CAPTION>
MARCH 31, 1996
-------------------------
(Pounds) $(10)
-------------- ---------
(AMOUNTS IN MILLIONS)
<S> <C> <C>
ASSETS:
Electricity distribution....... (Pounds) 1,249 $ 1,906
Electricity supply............. 102 156
Other(12)...................... 335 511
-------------- -------
Total........................ (Pounds) 1,686 $ 2,573
</TABLE>
- --------
(1) On September 18, 1995, the Successor Company obtained effective control
of the Predecessor Company pursuant to the Successor Company's offer to
acquire the Predecessor Company.
(2) A provision for the disposition of the electrical appliance retailing
business resulted in an exceptional item for the fiscal year ended March
31, 1995. The actual disposition of this business segment occurred in
June 1995.
(3) Excluding the exceptional item, profit for fiscal year 1995 would have
been (Pounds)98.2 million.
(4) US GAAP net income and total shareholders' equity reflect the impact of
converting profit and total shareholders' funds on a UK GAAP basis to US
GAAP. Differences between US GAAP and UK GAAP relate primarily to pension
accounting, deferred taxation, the use of revaluation reserves, the
treatment of dividends and the treatment of discontinued operations. See
Note 21 to the consolidated financial statements of the Predecessor
Company.
(5) EBIT equals income from continuing operations before the sum of interest
expense and income taxes.
(6) EBITDA equals income from continuing operations before the sum of
interest expense, income taxes, depreciation and amortization.
(7) Cash flow increased by (Pounds)85 million in fiscal year 1994 as a result
of customers who paid bills in advance in order to avoid paying value
added taxes which were introduced by the British government.
(8) The ratio of earnings to fixed charges is computed as the sum of pretax
income from continuing operations and fixed charges divided by fixed
charges. Fixed charges consist of interest expensed.
(9) Pro Forma Fiscal Year 1996 financial information gives effect to the
acquisition of the Predecessor Company by the Successor Company as if it
had occurred on April 1, 1995. See pages A-1 and A-2 included in this
Prospectus.
(10) Solely for the convenience of the reader, pounds sterling amounts have
been translated into US dollars at the Noon Buying Rate on March 29, 1996
of $1.5262 = (Pounds)1.00.
(11) Intra-business eliminations consist primarily of intercompany
transactions between the distribution business and the supply business.
Pursuant to the UK regulatory framework, SWEB's distribution of
electricity to its supply customers within its own Franchise Area is
billed to SWEB's supply business, which in turn incorporates the
distribution charge into the bill sent to the final end user.
(12) Includes goodwill, net of amortization, and prepaid pension costs of
(Pounds)173 million ($263 million) and (Pounds)95 million ($145 million),
respectively.
23
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion should be read in conjunction with the consolidated
financial statements and the notes thereto of Southern Investments UK plc (the
"Successor Company" or the "Company") and of South Western Electricity plc
(the "Predecessor Company" or "SWEB") and "Selected Financial Data" included
elsewhere in this Prospectus.
INTRODUCTION
BACKGROUND
The Company was incorporated as a public limited company under the laws of
England and Wales in June 1995, as a vehicle for the acquisition of SWEB. In
September 1995, the Company gained effective control of SWEB, having acquired
approximately 84% of its shares. The Company subsequently replaced SWEB's
board of directors and certain senior managers with officers and employees of
companies from within the Southern Company system. In December 1995, the
Company acquired the remaining shares of SWEB. Total consideration for the
acquisition was (Pounds)1.063 billion ($1.622 billion) excluding a special
dividend of (Pounds)52 million ($79 million) paid by SWEB to its former
shareholders (other than those whose shares the Company had purchased in the
open market).
ACCOUNTING FOR THE ACQUISITION
As a result of the acquisition, the basis of accounting for the Successor
Company differs from that for the Predecessor Company in two principal
respects. First, the consolidated financial statements of the Predecessor
Company are presented in accordance with UK GAAP, while the consolidated
financial statements of the Successor Company are presented in accordance with
US GAAP. Second, the consolidated financial statements of the Predecessor
Company are presented on a historical cost basis with certain revaluations as
allowed under UK GAAP, while the consolidated financial statements of the
Successor Company reflect the acquisition under the purchase method of
accounting. Under the purchase method of accounting, fair value was assigned
to the assets and liabilities of SWEB at the date the Company acquired
effective control of SWEB. Goodwill was created to the extent the purchase
price exceeded the difference between the fair value of SWEB's assets and the
fair value of its liabilities. Purchase accounting applies only to the
consolidated financial statements of the Company, not to those of SWEB. As a
result of the differences between US GAAP and UK GAAP and the differences
between the historical cost method and the purchase method of accounting, the
consolidated financial statements of the Successor Company are not comparable,
in certain respects, with those of the Predecessor Company. See "--US GAAP
Reconciliation."
The recorded assets and liabilities of SWEB immediately prior to the time
the Company gained effective control of SWEB were (Pounds)844 million and
(Pounds)375 million, respectively. As a result of the purchase method of
accounting, the amount of SWEB's assets recorded on the books of the Company
was increased by (Pounds)921 million to their fair value of (Pounds)1.765
billion ($2.694 billion), and the amount of SWEB's liabilities recorded on the
books of the Company was increased by (Pounds)502 million to their fair value
of (Pounds)877 million ($1.338 billion). The increase in liabilities included
the establishment of reserves totaling (Pounds)44 million related to staff
reductions and the disposition of ancillary businesses. The resulting
difference between the purchase price of (Pounds)1.063 billion and
the difference between the fair value of the assets acquired and the fair
value of the liabilities assumed as well as the reserves established resulted
in goodwill of (Pounds)175 million.
The unaudited pro forma information presented for fiscal year 1996 ("Pro
Forma Fiscal Year 1996") consists of the historical results of operations of
the Predecessor Company prior to the acquisition and the results of operations
of the Successor Company subsequent to the acquisition, both of which have
been adjusted for the effects of the acquisition as though it had taken place
on April 1, 1995. The effects of the acquisition that are reflected in both
periods include: (i) adjustments necessary to align the Predecessor Company's
consolidated
24
<PAGE>
financial statements to US GAAP, (ii) depreciation expense based on property,
plant and equipment valued according to the purchase method of accounting as
if the acquisition had occurred on April 1, 1995, (iii) amortization of
goodwill valued according to the purchase method of accounting as if the
acquisition had occurred on April 1, 1995, (iv) fair valuation of existing
liabilities and the related interest expense as if the acquisition had
occurred on April 1, 1995, (v) debt issued to finance the acquisition and the
related interest expense as if the acquisition had occurred on April 1, 1995
and (vi) recognition of pension fund surplus and the reduction of pension
expense in the accounts of the Company. The historical results of operations
of the Predecessor Company included in Pro Forma Fiscal Year 1996 results have
been adjusted to conform to US GAAP. See "US GAAP Reconciliation." This
unaudited pro forma information for Pro Forma Fiscal Year 1996 is presented
for illustrative purposes only and does not purport to represent the actual
results that would have occurred if the acquisition had taken place on April
1, 1995.
SIGNIFICANT EVENTS
During fiscal year 1996, the sale by SWEB of its shares in The National Grid
Group plc ("NGG") and related actions produced a non-recurring pre-tax gain of
(Pounds)14 million over the fair value established at the time of the
Company's acquisition of effective control of SWEB and resulted in net pre-tax
cash flow of (Pounds)241 million. In October 1995, the 12 RECs and Her
Majesty's Government (owning one special share) agreed to seek a listing for
the NGG shares on the London Stock Exchange. The listing took place in
December 1995. Following that, SWEB progressively sold its approximately 6.3%
ownership interest in NGG for total proceeds of (Pounds)213 million, including
(Pounds)12 million in respect of shares sold by SWEB to the Company. The
listing was conditional upon the prior demerger of NGG's pumped storage
electricity generation business ("PSB") in order for NGG to sell that
business. PSB was sold in December 1995. SWEB had received (Pounds)36 million
of its share of the total proceeds from that sale by the end of fiscal year
1996. SWEB's estimated total share of the proceeds from the sale is (Pounds)43
million. As part of the agreement among the shareholders of NGG, each of the
RECs agreed to provide a discount to each of their respective Franchise Supply
Customers which, together with the associated reduction in the Fossil Fuel
Levy (as defined in "The Electric Utility Industry in Great Britain"),
produced a credit on each Franchise Supply Customer's bill of just over
(Pounds)50. The cost to SWEB of providing the discount amounted to (Pounds)57
million which was credited to customers in the last quarter of fiscal year
1996. In order to compensate the RECs for the cost of the customer discount
and other costs associated with the listing and sale, NGG paid a special
dividend shortly before the listing. SWEB's share of the special dividend
after taxation amounted to (Pounds)61 million.
SWEB has progressively withdrawn from its involvement in non-core
businesses. Neither the contribution to SWEB's or the Company's operating
income from the disposed businesses nor the effect of the dispositions on
SWEB's or the Company's net income was material after taking into account the
reserves established in connection with the acquisition. SWEB sold its
appliance retailing business in June 1995; its appliance servicing business in
February 1996; its creditor and warranty insurance business and electrical
installation and contracting business in March 1996; and its interest in a
cable television and telecommunications company in July 1996.
RESULTS OF OPERATIONS
FISCAL YEAR 1995 COMPARED WITH PRO FORMA FISCAL YEAR 1996
The fiscal year 1995 information has been prepared in accordance with UK
GAAP, whereas Pro Forma Fiscal Year 1996 information has been prepared in ac-
cordance with US GAAP. See "--Introduction--Accounting for the Acquisition."
Therefore, the results of fiscal year 1995 are not comparable, in certain re-
spects, to the results of Pro Forma Fiscal Year 1996.
Earnings and Dividends
Operating income increased from (Pounds)120 million in fiscal year 1995 to
(Pounds)125 million in Pro Forma Fiscal Year 1996. Reductions in operating
costs were largely offset by reduced revenue in the distribution business
resulting from the price reduction mandated by the Regulator (discussed
below), exceptional bid defense costs and increased depreciation and
amortization resulting from the application of the purchase method of
accounting.
25
<PAGE>
Following the Regulator's distribution price review in 1994, the Regulator
reduced SWEB's allowable expected distribution revenues, effective beginning
fiscal year 1996, by 14%, before an allowed increase for inflation. The impact
on distribution business revenues, together with additional unit sales, was a
decrease of (Pounds)22 million. Subsequently, the Regulator announced a
further distribution price reduction which will have the effect of reducing
SWEB's allowable expected distribution revenues, effective beginning fiscal
year 1997, by 11%, before an allowed increase for inflation. See "The Electric
Utility Industry in Great Britain."
Net income decreased from (Pounds)86 million in fiscal year 1995 to
(Pounds)58 million in Pro Forma Fiscal Year 1996. The decrease was primarily
due to increased after-tax interest expense of (Pounds)37 million primarily
due to debt issued for the acquisition and (Pounds)9 million expended
defending against the Company's takeover bid. This was partially offset by
non-recurring items, including an after-tax gain of (Pounds)9 million on the
sale of SWEB's interest in NGG, an after-tax gain of (Pounds)6 million on the
early extinguishment of debt, and (Pounds)10 million relating to expenses
associated with the sale and closure of the electrical appliance retailing
business in fiscal year 1995 that were not incurred in Pro Forma Fiscal Year
1996.
As part of the Company's acquisition of SWEB, SWEB paid a special dividend
of (Pounds)52 million in October, 1995 to certain of its former shareholders.
Between the acquisition date (September 18, 1995) and March 31, 1996, SWEB
paid to the Company and the Company paid to Holdings a dividend of (Pounds)191
million which was made possible because of the proceeds from the sale of
SWEB's interest in NGG.
Revenues
Operating revenues decreased by (Pounds)95 million (11%) from (Pounds)875
million in fiscal year 1995 to (Pounds)780 million in Pro Forma Fiscal Year
1996 as follows:
<TABLE>
<CAPTION>
OPERATING REVENUE
INCREASE (DECREASE) FROM PRIOR YEAR
PRO FORMA FISCAL YEAR 1996
-----------------------------------
((Pounds) MILLIONS, EXCEPT %)
<S> <C>
Electricity distribution................. (22)
Electricity supply....................... 1
Discontinued activities.................. (82)
Other activities......................... (30)
Intra-business........................... 38
---
Total operating revenue................ (95)
===
Percent change......................... (11)%
===
</TABLE>
Two factors determine the amount of revenues produced by the main
electricity distribution business: the unit price of the electricity
distributed (which is controlled by the Distribution Price Control Formula)
and the number of electricity units distributed. In fiscal year 1996,
application of the Distribution Price Control Formula resulted in a reduction
in SWEB's distribution revenues. The number of units distributed depends on
the demands of SWEB's customers for electricity. That demand varies based, in
part, upon weather conditions and economic activity. Revenues from the
distribution business decreased by (Pounds)22 million (8%) from (Pounds)274
million in fiscal year 1995 to (Pounds)252 million in Pro Forma Fiscal Year
1996 as a result of the following factors:
<TABLE>
<CAPTION>
OPERATING REVENUE FROM
ELECTRICITY DISTRIBUTION
INCREASE (DECREASE) FROM PRIOR YEAR
PRO FORMA FISCAL YEAR 1996
-----------------------------------
((Pounds) MILLIONS, EXCEPT %)
<S> <C>
Application of Distribution Price Con-
trol Formula.......................... (20)
Sales growth, including impact of
weather............................... 9
Other revenue attributed to distribu-
tion business(1)...................... (11)
---
Total distribution revenues.......... (22)
===
Percentage change.................... (8)%
===
</TABLE>
- --------
(1) Represents non-recurring revenues received in fiscal year 1995 for
installing the telecommunications fiberoptic infrastructure.
26
<PAGE>
Two factors determine the amount of revenues produced by the supply
business: the unit price of the electricity supplied (which, in the case of
Franchise Supply Customers, is controlled by the Supply Price Control Formula)
and the number of electricity units supplied. Until April 1998, SWEB is
expected to have the exclusive right to supply all Franchise Supply Customers
in its Franchise Area.
Franchise Supply Customers are generally residential/domestic and small
commercial customers. The volume of unit sales of electricity for Franchise
Supply Customers is influenced largely by the number of new customers in the
Franchise Area, weather conditions and prevailing economic conditions. Unit
sales to Non-Franchise Supply Customers are determined primarily by the
success of the supply business in entering into contracts to supply customers
with electricity.
Revenues from the supply business were higher in Pro Forma Fiscal Year 1996
by (Pounds)1 million reflecting an increase of (Pounds)11 million in revenues
from the franchise supply market which offset a (Pounds)10 million reduction
in revenues from the non-franchise supply market which was primarily due to
lower unit sales. In fiscal year 1996, application of the Supply Price Control
Formula resulted in a slight increase in SWEB's revenues from its Franchise
Supply Customers. This increase was a result of increased sales to Franchise
Supply Customers and an upward inflation adjustment that exceeded the downward
regulatory factor adjustment, these being partly offset by a reduction in the
cost of energy passed through to customers.
Businesses disposed in fiscal year 1995 resulted in a (Pounds)82 million
decrease in revenues in Pro Forma Fiscal Year 1996 compared to fiscal year
1995.
Cost of Sales
Cost of sales decreased by (Pounds)46 million (8%) from (Pounds)551 million
in fiscal year 1995 to (Pounds)505 million in Pro Forma Fiscal Year 1996. This
decrease is principally the result of a reduction in cost of sales related to
discontinued activities and a reduction in the amount of energy purchased due
to lower unit sales in the non-franchise supply market.
Operating Expenses
Operating expenses decreased by (Pounds)55 million from (Pounds)205 million
in fiscal year 1995 to (Pounds)150 million in Pro Forma Fiscal Year 1996. This
decrease was principally due to a reduction in operating expenses from
discontinued activities of (Pounds)32 million, a decrease in severance costs
of (Pounds)6 million as a result of providing for severance costs under the
purchase method of accounting at the acquisition date, a net decrease in
information technology development costs expensed and a decrease in pension
and other expenses attributable to adjustments from UK GAAP to US GAAP.
Interest Expense
Interest expense increased by (Pounds)56 million from fiscal year 1995 to
(Pounds)67 million in Pro Forma Fiscal Year 1996 principally as a result of
the financing costs associated with the increased amount of debt issued for
the acquisition.
Income Taxes
Income taxes increased by (Pounds)5 million from (Pounds)26 million in
fiscal year 1995 to (Pounds)31 million in Pro Forma Fiscal Year 1996. This
increase is primarily attributable to differences in accounting for deferred
income taxes under US GAAP and UK GAAP.
FISCAL YEAR 1994 COMPARED WITH FISCAL YEAR 1995
The information for fiscal years 1994 and 1995 has been prepared in
accordance with UK GAAP.
27
<PAGE>
Earnings and Dividends
Operating profit increased by (Pounds)11 million from (Pounds)109 million in
fiscal year 1994 to (Pounds)120 million in fiscal year 1995, primarily due to
a (Pounds)19 million increase in operating profit from the distribution
business which was partially offset by a (Pounds)10 million decrease in
operating profit from the supply business. The additional increase of
(Pounds)2 million is the result of a non-recurring restructuring expense from
the prior year, partially offset by a decrease in operating profits from
ancillary businesses.
Net profit decreased from (Pounds)93 million in fiscal year 1994 to
(Pounds)86 million in fiscal year 1995. The decrease was primarily due to a
one-time, after-tax loss of (Pounds)13 million on the sale of the retail
appliance business which was partially offset by an increase of (Pounds)6
million in after-tax operating profit.
Turnover
Turnover decreased by (Pounds)25 million (3%) from (Pounds)900 million in
fiscal year 1994 to (Pounds)875 million in fiscal year 1995 as follows:
<TABLE>
<CAPTION>
TURNOVER
INCREASE (DECREASE) FROM PRIOR YEAR
FISCAL YEAR 1995
-----------------------------------
((Pounds) MILLIONS, EXCEPT %)
<S> <C>
Electricity distribution................. 24
Electricity supply....................... (47)
Retailing................................ 3
Other activities......................... 6
Intra-business........................... (11)
---
Total operating revenue................ (25)
===
Percent change......................... (3)%
===
</TABLE>
Turnover from the distribution business increased by (Pounds)24 million
(10%) from (Pounds)250 million in fiscal year 1994 to (Pounds)274 million in
fiscal year 1995 as a result of the following factors:
<TABLE>
<CAPTION>
TURNOVER
INCREASE (DECREASE) FROM PRIOR YEAR
FISCAL YEAR 1995
-----------------------------------
((Pounds) MILLIONS, EXCEPT %)
<S> <C>
Application of Distribution Price Con-
trol Formula.......................... 8
Sales growth, including impact of
weather............................... 2
Other revenue attributed to the distri-
bution business(1).................... 14
---
Total distribution revenues.......... 24
===
Percentage change.................... 10%
===
</TABLE>
- --------
(1) Represents primarily non-recurring revenues received in fiscal year 1995
for installing the telecommunications fiberoptic infrastructure.
Turnover from the supply business decreased in fiscal year 1995 by
(Pounds)47 million (6%) almost entirely as a result of lower unit sales in the
non-franchise supply market. The impact of the first supply price review was
to reduce revenues from Franchise Supply Customers by approximately (Pounds)3
million, although additional revenues of (Pounds)14 million were achieved in
the franchise supply market as a result of extinguishing the under-recovery
from fiscal year 1994.
Cost of Sales
Cost of sales decreased by (Pounds)19 million (3%) from (Pounds)570 million
in fiscal year 1994 to (Pounds)551 million in fiscal year 1995. This decrease
was principally the result of a decrease in the amount of energy purchased due
to a
28
<PAGE>
reduction in unit sales to Non-Franchise Supply Customers and was partially
offset by the increased cost of sales in retailing and electrical contracting
of (Pounds)6 million and (Pounds)5 million, respectively.
Other Operating Costs
Other operating costs decreased by (Pounds)16 million from (Pounds)221
million in fiscal year 1994 to (Pounds)205 million in fiscal year 1995
resulting from a (Pounds)10 million reduction in severance costs, a (Pounds)4
million reduction of restructuring costs in the appliance servicing business
and general cost reductions in other activities.
Interest Expense
Net interest expense decreased by (Pounds)2 million from (Pounds)7 million
in fiscal year 1994 to (Pounds)5 million in fiscal year 1995, principally as a
result of increased interest earned due to increased cash and short-term
deposits.
Income Taxes
Income taxes increased by (Pounds)2 million from (Pounds)24 million in
fiscal year 1994 to (Pounds)26 million in fiscal year 1995 as the result of
the net effect of the reversal of current provisions in fiscal year 1994, the
recognition of deferred tax liabilities in fiscal year 1994 and the
recognition of deferred tax assets in fiscal year 1995.
LIQUIDITY AND CAPITAL RESOURCES
To meet short-term cash needs and contingencies, the Company had
approximately (Pounds)20 million of cash and cash equivalents, on a
consolidated basis, at the end of fiscal year 1996.
The Company's sole investment and only significant asset is the entire share
capital of SWEB. The Company is therefore dependent upon dividends from SWEB
for its cash flow. The Company's primary need for liquidity is to pay interest
on its debt, and the Company expects to receive sufficient amounts of
dividends from SWEB to make such payments. SWEB can make distributions of
dividends to the Company under English law to the extent that it has
distributable reserves, subject to the retention of sufficient financial
resources to conduct its supply and distribution businesses as required by its
PES license. The Company believes that sufficient distributable reserves will
exist at SWEB to allow for any and all cash flow generated at SWEB through
operations to be distributed to the Company through dividends to the Company.
SWEB's need for liquidity is to pay interest on its debt and to fund its costs
of operations and capital expenditure programs.
The Company, on a consolidated basis, has four primary sources of liquidity
available to it. SWEB's internal source of funds is cash from operations,
which totalled (Pounds)74 million in Pro Forma Fiscal Year 1996. SWEB has a
(Pounds)275 million, three-year revolving credit facility provided by a
banking consortium. SWEB also has five bilateral committed loan facilities
totaling (Pounds)120 million and several uncommitted loan facilities totalling
(Pounds)105 million provided by banking institutions. At the end of fiscal
year 1996, a total of (Pounds)292 million had been drawn from these
facilities.
Demand for electricity in Great Britain, in general, and in SWEB's Franchise
Area, in particular, is seasonal, with demand being higher in the winter
months and lower in the summer months. SWEB bills its Franchise Supply
Customers on a staggered quarterly basis while it is generally required to pay
related expenses (principally the cost of purchased electricity) on 28-day
terms. However, one quarter of the Franchise Supply Customers settle their
accounts using monthly payment plans which spread the cost of their annual
bill evenly throughout the year. A majority of SWEB's contracts for supply of
electricity to Non-Franchise Supply Customers require SWEB's customers to pay
a fixed price per unit, while the cost of supply to SWEB from the Pool, if not
covered by hedging mechanisms, varies throughout the year, generally being
higher in winter months and lower in summer months. SWEB balances the effect
of these timing and cyclical influences on its working capital needs with
drawings under its available credit facilities.
29
<PAGE>
The distribution business charges licensed suppliers monthly for the
provision of its distribution services. The majority of the distribution
revenue is received from SWEB's supply business. In the case of second-tier
suppliers to Non-Franchise Supply Customers in SWEB's Franchise Area,
distribution charges are billed directly to the suppliers on a monthly basis.
SWEB's capital expenditures are primarily related to the distribution
business and include expenditures for load-related, non-load-related and non-
operational capital assets. Load-related capital expenditures are largely
required by new business growth. Customer contributions are normally received
where capital expenditures are made to extend or upgrade service to customers
(except to the extent that such capital expenditures are made to enhance
SWEB's distribution network generally). Non-load-related capital expenditures
include asset replacement which is expected to continue until at least the
next decade. Other non-load-related expenses include system upgrade work that
provides for load growth and has the additional benefit of improving network
security and reliability. Non-operational capital expenditures are for assets
such as generation, fixtures and equipment. For the fiscal years 1994, 1995
and 1996, total capital expenditures, net of customer contributions, were
(Pounds)60.9 million, (Pounds)67.7 million and (Pounds)59.6 million,
respectively. SWEB expects total capital expenditures, net of customer
contributions, to be approximately (Pounds)75 million in fiscal year 1997. The
increase from prior years is due primarily to increased capitalization of
significant expenditures on new information technology systems. The Company
expects the levels of load-related and non-load-related capital expenditures
to remain stable relative to current levels for several years. It expects the
level of non-operational capital expenditures to decline in the future as the
new information technology billing system work is completed. Since its
inception, SWEB has generated sufficient funds from operations to meet its
capital expenditure requirements and is expected to do so in the future.
The Company currently has a (Pounds)325 million term loan outstanding that
is scheduled to mature in February 1997. The Company does not intend to create
reserves to repay the loan at maturity. Thus, it is anticipated that the
outstanding principal of the loan will be repaid from the proceeds of
refinancings. The net proceeds of the Offering will be used to partially repay
the term loan. The Company anticipates additional capital markets borrowings,
the proceeds of which will be used to repay the remainder of the term loan and
which the Company expects will have the effect of extending the maturities of
the Company's debt. At the end of fiscal year 1996, the Company also had
outstanding approximately (Pounds)27 million of loan notes issued as part of
the Company's acquisition of SWEB. Holders of the loan notes have the right to
require the Company to redeem the loan notes on semi-annual interest payment
dates. The Company intends to meet those redemption obligations with cash on
hand.
To assure the stability of future interest charges, the Company has entered
into a series of interest rate swap transactions with total notional amounts
of (Pounds)450 million. These transactions have maturities of between 5 and 10
years. The Company expects to effectively reverse the swap agreements at the
time of issuance of additional fixed rate debt.
The Company does not have any foreign currency hedging contracts in place;
however, it does intend to swap the US dollar liabilities associated with the
Offering back to pounds sterling to effectively hedge the currency risk
associated with the interest on and principal of the Senior Notes.
Management believes that cash flows from operations, together with its
existing sources of credit and future refinancings, will provide sufficient
financial resources to meet the Company's projected capital needs and other
expenditure requirements. However, there can be no assurance that future
refinancings will be available to the Company or that they will be on terms
favorable to the Company.
US GAAP RECONCILIATION
The consolidated financial statements of the Predecessor Company are
presented in accordance with UK GAAP, which differs in certain respects from
US GAAP. The main differences that affect the Company and which are summarized
below are the differences in accounting for pension costs, differences in
deferred taxation,
30
<PAGE>
the use of revaluation reserves, the treatment of dividends and the
classification of non-recurring items and discontinued operations. These and
other differences between US GAAP and UK GAAP are described and quantified in
Note 21 to the consolidated financial statements of the Company.
PENSION COSTS
Under UK GAAP, the expected cost of pensions may be calculated by the use of
any actuarial methodology whose assumptions reflect the long-term nature of
the assets and liabilities involved and is charged to the profit and loss
account so as to spread the cost over the expected service lives of employees.
US GAAP Statement of Financial Accounting Standards ("SFAS") No. 87
"Employers' Accounting for Pensions" also requires provision for employee
pension benefit arrangements over the service lives of the employees but
requires use of a specific actuarial methodology, the projected unit credit
method, which is different from the methodology used by the Predecessor
Company for UK GAAP purposes. Accounting for pension costs under US GAAP would
have had the effect of decreasing pension costs by (Pounds)32 million and
increasing consolidated net income for the Predecessor Company by (Pounds)22
million for fiscal year 1995 and of increasing the Predecessor Company's
shareholders' equity by (Pounds)45 million as of March 31, 1995.
DEFERRED TAXATION
The primary difference between US GAAP and UK GAAP in the treatment of
deferred taxes is that under UK GAAP deferred taxes are provided only to the
extent that temporary differences are expected to result in an actual payment
obligation in the foreseeable future. Under US GAAP, deferred taxes provide
for a temporary difference using the liability method. Accounting for deferred
taxes under US GAAP would have had the effect of increasing the Predecessor
Company's deferred taxes and reducing its net income for fiscal year 1995 by
(Pounds)9 million and of reducing shareholders' equity by (Pounds)121 million
as at the end of fiscal year 1995.
REVALUATION RESERVE
Under UK GAAP, SWEB revalued its investment in NGG to a net asset value as
at March 31, 1990 of (Pounds)49.1 million, with a corresponding credit to
equity. Under US GAAP, this investment would be recorded at cost, which was
zero.
TREATMENT OF DIVIDENDS
Under UK GAAP, any final dividends proposed after the end of an accounting
period and any related advance corporation tax expensed during the accounting
period are deducted in arriving at retained profit for that period when the
directors specifically relate the dividends to such period. Under US GAAP,
dividends and the related tax implications are not recorded until formally
approved.
NON-RECURRING ITEMS
The Predecessor Company has recorded (Pounds)20 million of exceptional items
relating to the sale of the retail appliance business under UK GAAP. Under US
GAAP, such items would have been accounted for as a discontinued operations in
accordance with Accounting Principles Board Opinion No. 30. As such, in fiscal
year 1995, under US GAAP, (Pounds)12 million associated with costs relating to
withdrawal from the discontinued operation, including related severance costs,
would have been included in determining the gain or loss on sale of the
discontinued operation. Under US GAAP in fiscal year 1995, (Pounds)8 million
of the exceptional item relating to the write-down of asset values would have
been included in the determination of operating income.
31
<PAGE>
BUSINESS
GENERAL
The Company is a wholly-owned subsidiary of Holdings, of which 75% is owned
indirectly by Southern and 25% is owned indirectly by PP&L Resources. The
Company was incorporated as a public limited company under the laws of England
and Wales in June 1995 as a vehicle for the acquisition of SWEB, one of the 12
RECs in England and Wales licensed to distribute, supply and, to a limited
extent, generate electricity. In September 1995, the Company gained effective
control of SWEB, having acquired approximately 84% of its shares. The Company
subsequently replaced SWEB's board of directors and certain senior managers
with officers and employees of companies from within the Southern Company
system. In December 1995, the Company acquired the remaining shares of SWEB.
The Company's sole investment and only significant asset is the entire share
capital of SWEB, which is headquartered in Bristol, England. At March 31, 1996
the Company had consolidated assets of (Pounds)1.686 billion ($2.573 billion).
SWEB's two main business lines are the distribution of electricity and
supply of electricity to approximately 1.3 million customers in its Franchise
Area in southwest England. The distribution business and the supply business
are distinct business segments and produced operating income of (Pounds)115
million ($176 million) and (Pounds)16 million ($24 million), respectively, in
Pro Forma Fiscal Year 1996, representing substantially all of the Company's
consolidated operating income in that pro forma fiscal year.
SWEB's Franchise Area covers approximately 5,560 square miles extending from
Bristol and Bath in the northeast, 188 miles southwest along the peninsula to
Land's End and 28 miles beyond to the Isles of Scilly, and has a resident
population of approximately 2.8 million. The South West of England, of which
the Franchise Area forms the greater part, has benefitted from economic growth
(as measured by GDP) which exceeded the UK average from 1991 through 1995 and
has also benefited from an average unemployment rate during calendar year 1995
of approximately 6.9% which was below the UK average of 8.2% according to a
recent study by Cambridge Econometrics. The largest cities and towns in SWEB's
Franchise Area are Bath, Bristol, Exeter, Plymouth and Taunton. Business
activity is generally concentrated in the population centers around Bristol,
Bath and Plymouth. The Bristol and Bath area is served by the M4 and M5
motorways, a strong rail network, the rail link between Bristol and London and
a commercial port at Avonmouth.
The Company and SWEB have undertaken to make SWEB a more focused and
competitive company concentrating on the main electricity businesses of
distribution and supply. Several businesses not related to distribution and
supply have been sold, and the remaining ancillary businesses have been
redirected to focus on support for the main electricity businesses.
The key goals which the Company and SWEB are pursuing include cost savings
and improved customer service. The objective of cost savings is to increase
profitability. Cost savings have been realized through programs of staff
reduction and working with the unions on a program of job redesign leading to
changes in work practices. The objective of improved customer service is to
prepare for the increasingly competitive aspects of the supply business by
building customer loyalty through improvements in system performance and
responsiveness to customers' needs, and to meet and exceed the performance
criteria established by the Regulator. Improvements in customer service are
being pursued in part through improvements in system performance, as measured
primarily by reductions in customer minutes lost and overall number of
outages.
OVERVIEW OF THE ELECTRIC UTILITY INDUSTRY IN GREAT BRITAIN
In 1990, the electric utility industry in Great Britain was privatized, and
SWEB was created along with the other 11 RECs. In connection with the
privatization, distribution assets in England and Wales, previously owned
indirectly by Her Majesty's Government, were allocated among the RECs,
licensing requirements were established for the RECs and price controls were
implemented in the areas of distribution and supply. In England and Wales,
generation assets (other than nuclear facilities) were allocated to two
generating companies, and the
32
<PAGE>
high voltage transmission assets were allocated to The National Grid Company
plc ("NGC," which is wholly owned by NGG). See "The Electric Utility Industry
in Great Britain."
The high voltage transmission system in England and Wales, which is
generally referred to as the "national grid," carries the generated
electricity in bulk from the power stations to the regional and local
distribution systems. This transmission system is owned and operated by NGC.
Distributors transfer electricity over their networks, generally at lower
voltage than the national grid, from supply points on the national grid to
final consumers. The distribution systems in England and Wales are owned by
the 12 RECs. Virtually all customers in England and Wales are connected to the
distribution system of the RECs and have no choice as to the distribution
system from which they receive their electricity. Distribution prices charged
by the RECs are regulated by the Distribution Price Control Formula.
Suppliers sell electricity to end users. Each REC is required to have a PES
license which authorizes it to supply electricity to any customers within its
franchise area. Electricity customers fall into two categories, Franchise
Supply Customers and Non-Franchise Supply Customers. Prices for supply of
electricity to Franchise Supply Customers are regulated by the Supply Price
Control Formula. Such price control is currently scheduled to expire on March
31, 1998, at which time the franchise supply market is expected to be open to
any competitors who have obtained the necessary license, which is generally
referred to as a "second tier license." Such second tier suppliers, including
SWEB, compete for business nationally and at prices determined by competitive
bids or negotiation.
At the time of privatization, the Pool was established for bulk trading of
electricity in England and Wales between generators and suppliers. The Pool
reflects two principal characteristics of the physical generation and supply
of electricity from a particular generator to a particular supplier. First, it
is not possible to trace electricity from a particular generator to a
particular supplier. Second, it is not practicable to store electricity in
significant quantities, creating the need for a constant matching of supply
and demand. Subject to certain exceptions, all electricity generated in
England and Wales must be sold and purchased through the Pool. All licensed
generators and suppliers must become signatories to a pooling and settlement
agreement, which governs the constitution and operation of the Pool and the
calculation of payments due to and from generators and suppliers (the "Pooling
and Settlement Agreement"). The Pool also provides centralized settlement of
accounts and clearing. Prices for electricity are set by the Pool daily for
each half hour of the following day based on the bids of the generators and a
complex set of calculations matching supply and demand and taking account of
system stability, security and other costs. See "The Electric Utility Industry
in Great Britain--The Structure of the Electricity Industry in Great Britain--
The Pool."
SWEB'S MAIN BUSINESSES
DISTRIBUTION BUSINESS
SWEB's distribution business is the ownership, management and operation of
the electricity distribution network within SWEB's Franchise Area. The primary
activity of the distribution business is the receipt of electricity from the
national grid transmission system and its distribution to end users of
electricity that are connected to SWEB's power lines. Virtually all
electricity supplied (whether by SWEB's independent supply business or by
other suppliers) to consumers in SWEB's Franchise Area is transported through
its distribution network, thus providing SWEB with distribution volume that is
stable from year to year. As a holder of a PES license, SWEB is subject to a
price cap regulatory framework that provides economic incentives to increase
the number of units of electricity distributed and to operate in a more cost-
efficient manner. See "The Electric Utility Industry in Great Britain."
SWEB's distribution business has grown in both its customer base and in the
number of units distributed, primarily reflecting economic growth in the South
West of England. At March 31, 1996 SWEB had experienced
33
<PAGE>
a 5-year compound annual growth rate of 0.8% in customers and a 5-year
compound annual growth rate of 1.6% in units distributed.
Strategy
Since being acquired by the Company, SWEB has reviewed and refined its
distribution strategy and has established key goals of cost savings and
improved customer service.
Staff reductions play a key role in cost savings. SWEB has implemented a
plan of voluntary and other staff reductions to reduce the number of employees
by 704 (mainly in the distribution business and representing 21% of staff at
the time of the acquisition of SWEB by the Company), of which 460 reductions
occurred prior to June 30, 1996. Part of these reductions are made possible
due to new work practices which SWEB has developed with the cooperation of
SWEB's unions. Team restructuring in the engineering department of SWEB has
commenced, and the establishment of multi-skilled independent teams has been
achieved. In addition, management restructuring has produced a flatter
organizational structure by reducing management levels from seven to three.
Improvements in customer service in the distribution business, if achieved,
are part of SWEB's strategy to retain Franchise Supply Customers in its
Franchise Area after March 31, 1998 and are expected to enable SWEB to meet or
exceed the performance criteria established by the Regulator who is
responsible for setting the performance standards of the RECs. SWEB believes
that achieving these goals is important both for building customer loyalty for
the benefit of the supply business by maintaining and improving customer
satisfaction and for maintaining good relations with the Regulator.
Improvements in customer service are being pursued, in part, through
improvements in system performance, measured primarily in terms of customer
minutes lost and overall number of outages. To that end, several initiatives
are being pursued including:
. eliminating the backlog of tree-trimming near distribution lines;
. implementing a program of network improvements that will create more dual
routing;
. reordering the priorities of SWEB's capital expenditure program to focus
on improving system reliability; and
. introducing a single-number telephone call center supported by new
computerized information systems which allows employees at the call
center (including advisory engineers) to initiate engineering work orders
to satisfy customer needs for repairs or maintenance of the distribution
network.
Customers
Most of SWEB's distribution customers are Franchise Supply Customers. This
customer group consists predominantly of residential and small commercial
consumers which provides SWEB a stable customer base. SWEB's fastest growing
category of distribution customers, in terms of units distributed and
revenues, is large commercial and small industrial customers. Commercial
activity of SWEB's customers is mostly service based and includes financial
services, electronics and technology-related businesses. SWEB also distributes
electricity to industrial concerns in its Franchise Area. The principal
activities of SWEB's largest distribution customers include china clay
extraction, ship repair, fertilizer production, aerospace, defense
engineering, cement and paper manufacturing and water supply. SWEB's 20
largest distribution customers in its Franchise Area accounted for 9.8% of
total electricity distributed by SWEB in fiscal year 1996 in terms of units
distributed, with no single customer exceeding 2.3% of total electricity
distributed. The following table sets out details of SWEB's distribution
customers, units distributed and distribution revenues.
34
<PAGE>
<TABLE>
<CAPTION>
DISTRIBUTION BUSINESS
------------------------------------------------------------------------------
DISTRIBUTION CUSTOMERS ELECTRICITY UNITS DISTRIBUTED REVENUES(5)
---------------------------- ---------------------------------- -----------
5 YEAR VOLUME % OF 5-YEAR
NUMBER(1) % OF TOTAL CAGR(2) (TWH)(3) TOTAL CAGR(4) % OF TOTAL
--------- ---------- ------- ----------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
not more than 100kW..... 1,298,795 99.79 0.81% 8.2 62 0.19% 81
above 100kW to 1MW...... 2,300 0.19 4.50 2.1 16 5.11 11
above 1MW............... 230 0.02 6.47 2.9 22 1.98 8
--------- ------ ---- ---------- --------- ---------- ---
Total................. 1,301,325 100.00 -- 13.2 100 -- 100
========= ====== ==== ========== ========= ========== ===
</TABLE>
- --------
(1) At December 31, 1995.
(2) Represents the compound annual growth rate ("CAGR") for the period from
July 1, 1990 through December 31, 1995.
(3) In terawatt hours for calendar year 1995.
(4) Represents the CAGR for the period from January 1, 1991 through December
31, 1995.
(5) For calendar year 1995.
Distribution Facilities
Electricity is transported across the national grid transmission system at
400kv or 275kv to eight grid supply points within SWEB's distribution network,
where it is transformed by SWEB to 132kv and enters SWEB's distribution
system. Electricity is also transported to two national grid supply points
located in neighboring RECs' franchise areas, which are connected to SWEB's
distribution system by overhead lines and underground cables. Substantially
all electricity which enters SWEB's system is received at these ten grid
supply points.
At March 31, 1996, SWEB's electricity distribution network (excluding
service connections to consumers) included overhead lines and underground
cables at the operating voltage levels indicated in the table below:
<TABLE>
<CAPTION>
OVERHEAD LINES UNDERGROUND CABLES
OPERATING VOLTAGE: (CIRCUIT MILES) (CIRCUIT MILES)
- ------------------ --------------- ------------------
<S> <C> <C>
132kv........................................ 907 37
33kv......................................... 1,736 607
11kv......................................... 10,676 3,839
6.6kv........................................ 15 77
480 or 415/240v.............................. 4,759 6,896
------ ------
Total...................................... 18,093 11,456
====== ======
</TABLE>
In addition to the circuits referred to above, SWEB's distribution
facilities also include approximately:
<TABLE>
<CAPTION>
AGGREGATE CAPACITY
TRANSFORMERS: NUMBER (MEGAVOLT AMPERES)
- ------------- ------ ------------------
<S> <C> <C>
132kv/lower voltages................................ 91 5,348
33kv/11kv or 6.6kv.................................. 533 7,255
11kv or 6.6kv/lower voltages (including 36,336 pole
mounted transformers).............................. 47,936 6,504
SUBSTATIONS:
- ------------
132kv/33kv.......................................... 40
33kv/11kv or 6.6kv.................................. 309
11kv or 6.6kv/415v or 240v.......................... 11,790
</TABLE>
Substantially all substations are owned in freehold, and most of the balance
are held on leases which will not expire within 10 years.
35
<PAGE>
Electricity is received by customers at various voltages depending upon
their requirements. At March 31, 1996, SWEB's distribution system was
connected to over 1.3 million customers. In providing service connections to
customers and to street lighting, traffic lights and other installations from
its network, SWEB uses lengths of overhead lines and underground cables in
addition to those referred to above.
Operation and control of SWEB's distribution system is continuously
monitored and coordinated from two control centers located in Bristol and
Exeter. The Exeter control center is responsible for the entire 132kv network.
Responsibility for the 33kv and 11kv networks is divided between the two
control centers. A telecontrol system has been implemented to provide remote
information gathering and to provide remote operation of 132kv and selected
33kv and 11kv switchgear. See also the map on the inside cover page of this
Prospectus.
SUPPLY BUSINESS
SWEB's supply business is selling electricity to end users, purchasing such
electricity, primarily from the Pool, and arranging for its distribution to
those end users. SWEB's supply business is comprised predominantly of
supplying Franchise Supply Customers. In fiscal year 1996, these customers
accounted for approximately 82% of all units of electricity supplied by SWEB.
SWEB's exclusive right to supply these customers is scheduled to continue,
subject to price regulation, until March 31, 1998, at which time competition
to supply Franchise Supply Customers is scheduled to commence. Supply prices
for these customers are regulated, and SWEB's prudent costs of purchasing and
delivering electricity and hedging the purchase price are charged to them.
The market to supply Non-Franchise Supply Customers is fully competitive,
principally with other RECs and the major generators. Non-Franchise Supply
Customers are typically supplied through individual contracts for a duration
of one to two years with competitively bid or negotiated prices.
Strategy
Since its acquisition by the Company, SWEB has completed a review of the
supply market, established new goals for its supply business and adopted new
strategies for achieving those goals. The key goals established are the
retention of its current Franchise Supply Customers as supply customers after
March 31, 1998 and the increase of SWEB's share of electricity supplied to
Non-Franchise Supply Customers both inside and outside SWEB's Franchise Area.
As a result of this strategy, SWEB expects to supply a larger portion of units
to Non-Franchise Supply Customers than in fiscal year 1996.
SWEB's strategy for retaining its Franchise Supply Customers is to build
customer loyalty and to offer competitive prices. SWEB seeks to build customer
loyalty by providing superior service, including reliable distribution
service, responsive service in dealing with billing and other matters and
providing other service enhancements. SWEB is revamping its marketing, sales
and customer service operations under the direction of Executive Directors of
SWEB transferred from other companies within the Southern Company system, who
are experienced in competitive electricity marketing.
Initiatives in relation to the Franchise Supply Customers include:
. a single-number, local rate, telephone service call center;
. a state-of-the-art billing and customer service system which enables
employees at the call center to act on or resolve customer billing and
account inquiries on line during their calls; and
. a restructuring of meter reading operations which should enable almost
all meters to be read quarterly, thereby reducing estimated readings. (In
Great Britain, most meters are located within structures, and meter
readers are required to obtain access from occupants in order to read
meters. As a result, actual readings were often obtained only on an
annual or biennial basis.)
36
<PAGE>
SWEB's strategy for expanding its market share of electricity sold to Non-
Franchise Supply Customers both inside and outside its Franchise Area is to
offer competitive pricing and, with respect to its Non-Franchise Supply
Customers inside its Franchise Area, to build customer loyalty through the
measures described above and through the measures described in "--Distribution
Business."
Additional initiatives to support growth in market share in the Non-
Franchise Supply Customer market include:
. the expanded use of account managers for Non-Franchise Supply Customers;
. increase the number of proposals and bids made to customers and potential
customers;
. development of an integrated contract customer sales, electronic
registration and marketing system with full customer life-cycle
management and tracking facilities; and
. further enhancement of a competitive price setting system used to
determine appropriate contract supply prices.
Franchise Supply Market
Under the terms of its PES license, SWEB currently holds the right to supply
approximately 1.3 million Franchise Supply Customers within its Franchise
Area. See "Business--General." During fiscal year 1996, sales to Franchise
Supply Customers represented 82% of total units supplied by SWEB and produced
86% of SWEB's total supply revenue.
The exclusive right to supply Franchise Supply Customers is scheduled to end
on March 31, 1998, at which time all supply customers will have the ability to
choose their electricity supplier. SWEB intends to retain its market share of
these customers by providing superior customer service and competitive
pricing. In fiscal year 1995, SWEB met or exceeded the Regulator's overall
standards of performance in 99.9% of the services measured by the Regulator.
See "--Strategy."
Non-Franchise Supply Market
In addition to competing for Non-Franchise Supply Customers in its Franchise
Area, SWEB holds a second tier license to compete with the RECs and other
suppliers to provide electricity to Non-Franchise Supply Customers outside its
Franchise Area. At the end of fiscal year 1996, SWEB had approximately 1,500
Non-Franchise Supply Customers, consisting primarily of large commercial and
industrial accounts. Revenue from these customers during fiscal year 1996
accounted for only 14% of total supply revenues. SWEB has achieved a
significant increase in the number of Non-Franchise Supply Customers since the
Company acquired SWEB.
SWEB'S OTHER BUSINESS ACTIVITIES
SWEB also has ancillary business activities that support its main
electricity distribution and supply businesses, including electricity
generation and gas supply. SWEB owns generating assets with 24MW of capacity
used to back up the distribution network as well as minority investments in
windfarms and a 7.7% interest in Teesside Power Limited, owner of a 1,875 MW
combined cycle plant. SWEB has a 75% joint venture interest in a supplier of
gas and derives small amounts of revenue from the lease of fibers within the
fiber optic cables carried on its distribution network. SWEB also markets and
develops property no longer used in the main electricity businesses.
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RISK MANAGEMENT
Because SWEB's distribution business does not involve the purchase and sale
of electricity, SWEB's risk management efforts are focused on the supply
business which is exposed to Pool price volatility.
Regulations governing the franchise supply market permit the pass-through to
customers of prudent costs which include the cost of arrangements such as
contracts for differences ("CFDs") to hedge against Pool price volatility.
CFDs are contracts predominantly between generators and suppliers which fix
the price of electricity for a contracted quantity of electricity over a
specific time period. Differences between the actual price set by the Pool and
the agreed prices give rise to difference payments between the parties to the
particular CFD. At the present time, SWEB's forecast franchise supply market
demand for fiscal year 1997 is substantially hedged through various types of
agreements including CFDs.
The most common contracts for supply to Non-Franchise Supply Customers are
for a twelve-month term and contain fixed rates. SWEB is exposed to two
principal risks associated with such contracts: load shape risk (the risk
associated with a shift in the customer's usage pattern, including absolute
amounts demanded and timing of amounts demanded) and purchasing price risk
(the cost of purchased electricity relative to the price received from the
supply customer). SWEB employs risk management methods to maximize its return
consistent with an acceptable level of risk. Generally load shape risk
decreases as SWEB's portfolio of supply customers in the non-franchise supply
market increases. SWEB hedges purchasing price risk by employing a variety of
risk management tools, including management of its supply contract portfolio,
hedging contracts and other means which mitigate risk of future Pool price
volatility.
SWEB's ability to manage its purchasing price risk depends, in part, on the
future availability of properly priced risk management mechanisms such as
CFDs. No assurance can be given that an adequate, transparent market for such
products will in fact be available.
UK ENVIRONMENTAL REGULATION
SWEB's businesses are subject to numerous regulatory requirements with
respect to the protection of the environment. The Electricity Act 1989 (the
"Electricity Act") obligates the UK Secretary of State for Trade and Industry
(the "Secretary of State") to take into account the effect of electricity
generation, transmission and supply activities upon the physical environment
in approving applications for the construction of generating facilities and
the location of overhead power lines. The Electricity Act requires SWEB to
have regard to the desirability of preserving natural beauty and the
conservation of natural and man-made features of particular interest, when it
formulates proposals for development in connection with certain of its
activities. The Company mitigates the effects its proposals have on natural
and man-made features and is required to carry out an environmental assessment
when it intends to lay cables, construct overhead lines or carry out any other
development in connection with its licensed activities. SWEB also has produced
an Environmental Policy Statement which sets out the manner in which it
intends to comply with its obligations under the Electricity Act.
The Environmental Protection Act 1990 addresses waste management issues and
imposes certain obligations and duties on companies which handle and dispose
of waste. Some of SWEB's distribution activities produce waste, but SWEB
believes that it is in compliance with the applicable standards in such
regard.
Possible adverse health effects of electromagnetic fields ("EMFs") from
various sources, including transmission and distribution lines, have been the
subject of a number of studies and increasing public discussion. The
scientific research currently is inconclusive as to whether EMFs may cause
adverse health effects. The only UK standards for exposure to power frequency
EMFs are those promulgated by the National Radiological Protection Board and
relate to the levels above which non-reversible physiological effects may be
observed. SWEB fully complies with these standards. However, there is the
possibility that passage of legislation and change of regulatory standards
would require measures to mitigate EMFs, with resulting increases in capital
and operating costs. In addition, the potential exists for public liability
with respect to lawsuits brought by plaintiffs alleging damages caused by
EMFs.
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SWEB believes that it has taken and continues to take measures to comply
with the applicable laws and governmental regulations for the protection of
the environment. There are no material legal or administrative proceedings
pending against SWEB or the Company with respect to any environmental matter.
EMPLOYEES
SWEB had 3,178 employees (3,079 full time equivalent) and the Company had no
employees at the end of fiscal year 1996. Of SWEB's employees, 95% are
represented by labor unions. All SWEB employees who are not party to a
personal employment contract are subject to a collective bargaining agreement
called The Electricity Business Agreement. This Agreement may be amended by
agreement between SWEB and the unions and is terminable with 12 months notice
by either side. SWEB is currently holding discussions with the unions to
introduce a separate collective bargaining agreement to include meter reading
staff. SWEB believes that its relations with its employees are favorable.
PROPERTY
The Company through a subsidiary of SWEB owns the freehold of its principal
executive offices in Bristol. SWEB has both network and non-network land and
building.
NETWORK LAND AND BUILDING
At March 31, 1996 SWEB had freehold and leasehold interests in approximately
12,000 network properties, comprising principally sub-station sites. The
recorded cost of total network land and buildings at March 31, 1996 was
(Pounds)62 million. SWEB owns, directly or indirectly, the freehold of such
land and buildings.
NON--NETWORK LAND AND BUILDING
At March 31, 1996 SWEB had freehold and leasehold interests in non-network
properties comprising chiefly offices, former retail outlets, depots,
warehouses and workshops. The recorded cost of total non-network land and
buildings at March 31, 1996 was (Pounds)40.3 million.
The number of properties in each category is:
<TABLE>
<CAPTION>
FREEHOLD OR
LONG LEASEHOLD LEASEHOLD
-------------- ---------
<S> <C> <C>
Depots.............................................. 24 1
Offices............................................. 8 --
Surplus property(1)................................. 78 25
</TABLE>
- --------
(1) Largely unused retail sites. The number of freeholds is approximated.
For a discussion of other properties and other assets of SWEB, see
"Business--SWEB's Main Businesses--Distribution Facilities."
LEGAL PROCEEDINGS
The Company and SWEB are routinely party to legal proceedings arising in the
ordinary course of business which are not material, either individually or in
the aggregate. The Company is not a party to any material legal proceedings
nor is it currently aware of any threatened material legal proceedings.
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THE ELECTRIC UTILITY INDUSTRY IN GREAT BRITAIN
THE STRUCTURE OF THE ELECTRICITY INDUSTRY IN GREAT BRITAIN
The electric utility industry in Great Britain consists of the following
activities:
Generation: the production of electricity at power stations;
Transmission:
the bulk transfer of electricity across a high voltage
transmission system;
Distribution: the transfer of electricity from the high voltage transmission
system and its delivery, across low voltage distribution
systems, to consumers; and
Supply: the bulk purchase of electricity by suppliers and its sale to
consumers.
INDUSTRY STRUCTURE
Great Britain has two separate but connected markets, each with a different
commercial framework. In England and Wales electricity is produced by
generators, the largest of which are National Power, PowerGen and Nuclear
Electric, a subsidiary of the recently privatized British Energy. Electricity
is transmitted through the national grid transmission system by NGC and
distributed by the twelve RECs in their respective franchise, or authorized,
areas. Most customers are currently supplied with electricity by their local
REC, although there are other suppliers holding second tier supply licenses,
including other generators and RECs, who can compete to supply larger
customers in that REC's authorized area.
In Scotland there are two vertically integrated companies, Scottish Power
and Hydro-Electric, each generating, transmitting, distributing and supplying
electricity within their respective franchise areas as well as competing to
supply electricity elsewhere. Scottish Nuclear, another subsidiary of British
Energy, sells all the electricity it generates to Scottish Power and Hydro-
Electric under the Nuclear Energy Agreement.
The interconnection between the two transmission systems, owned by Scottish
Power and NGC, is capable of transferring electricity between Scotland and
England and Wales. There is also an interconnection with France, owned by NGC
and Electricite de France, through which electricity can be transferred
between the transmission systems of France and England and Wales.
Virtually all electricity generated in England and Wales is sold by
generators and bought by suppliers through the Pool. A generator which is a
Pool member and also a licensed supplier must nevertheless sell all the
electricity it generates into the Pool, and purchase all the electricity which
it supplies from the Pool. Because Pool prices fluctuate, generators and
suppliers may enter into bilateral arrangements, such as CFDs, to provide a
degree of protection against such fluctuations.
There is no equivalent to the Pool in Scotland, but Scottish Power and
Hydro-Electric are obligated by their licenses to offer electricity for sale
to second tier suppliers. They are also required to provide access to their
transmission and distribution systems on a non-discriminatory basis to
competing suppliers and generators.
INDUSTRY BACKGROUND
The industry structure described above was put in place in March 1990. At
the same time, a licensing regime was introduced for the electricity industry
both in England and Wales and in Scotland. The Regulator was first appointed
in 1989.
The RECs, which at that time collectively owned NGG, NGC's holding company,
were privatized in December 1990. National Power and PowerGen were privatized
in March 1991 (with the balance of the UK Government's holding being sold in
March 1995), Scottish Power and Hydro-Electric were privatized in June 1991
and British Energy was privatized in July 1996. NGG was listed on the London
Stock Exchange in
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December 1995. Since the summer of 1995, seven of the RECs have been acquired
by other companies. In particular, SWEB was acquired by the Company in
September 1995.
In 1990, the vast majority of generating capacity was owned by three
generators. However, since that time competition in generation has increased
as RECs and other new entrant generators have constructed new plant and as
imports through the interconnections with Scotland and France have grown. In
addition, pursuant to undertakings given to the Regulator, National Power and
PowerGen have disposed of an aggregate of 6,000 MW of plant to Eastern Group
plc (a REC holding company which was recently acquired by Hanson PLC).
Competition in supply has also been progressively introduced both in England
and Wales and in Scotland. The RECs in England and Wales, and Scottish Power
and Hydro-Electric in Scotland, are subject to competition from second tier
suppliers for the supply of electricity to larger customers in their
respective franchise areas. Under the current licensing regime, all
electricity customers in Great Britain, including domestic customers, are
scheduled to be able to choose their electricity supplier from April 1, 1998.
DISTRIBUTION OF ELECTRICITY
Each of the RECs is required to offer terms for connection to its
distribution system to any person, for use of its distribution system to any
authorized electricity operator and for the provision of top-up and stand-by
supplies to any person. In providing use of its distribution system, a REC
must not discriminate between its own supply business and that of any other
authorized electricity operator, or between those of other authorized
electricity operators; nor may its charges differ except where justified by
differences in cost. Similar principles apply to the provision of top-up and
stand-by supplies of electricity, and in the carrying out of connection works.
Disputes over the terms of offers may be determined by the Regulator.
Most revenue of the distribution business is controlled by a formula based
on P+RPI-Xd where Xd is currently 3% (the "Distribution Price Control
Formula"). P reflects the previous maximum average price per unit of
electricity distributed. RPI reflects the percentage change in the Retail
Price Index between the previous year and the current year. The Xd factor is
established by the Regulator following review. This formula determines the
maximum average price per unit of electricity distributed (in pence per
kilowatt hour) which a REC is entitled to charge. This price, when multiplied
by the expected number of units to be distributed, determines the expected
distribution revenues of the REC for the relevant year. The Distribution Price
Control Formula permits RECs to partially retain additional revenues due to
increased distribution of units and allows for a pound-for-pound increase in
operating income for efficient operations and reduction of expenses. The
current Distribution Price Control Formula has been in effect since April 1,
1996 and applies for the four year period ending March 31, 2000.
On August 11, 1994, the Regulator announced the results of a review of the
Distribution Price Control Formula. A one-time reduction in the distribution
charges of all the RECs was made with effect from April 1, 1995 and ranged
from 11% to 17% (the reduction in SWEB's case being 14%), in each case before
allowing for inflation. In addition, the Regulator halved from 100% to 50% the
weight of units in the Distribution Price Control Formula and allocated the
remaining 50% to the number of customers. The stated intention of the
Regulator in introducing this change was "to remove any artificial incentive
on the companies to sell more electricity, while retaining a general incentive
for companies to seek out and meet the needs of their customers." In the light
of information concerning the financial position of the RECs that emerged
during the course of the unsuccessful bid by Trafalgar House plc for Northern
Electric plc (one of the RECs), the Regulator further reduced distribution
charges of all the RECs with effect from April 1, 1996 ranging from 10% to 13%
(the reduction in SWEB's case being 11%), in each case before allowing for
inflation.
The Distribution Price Control Formula is expected to be further reviewed
with effect from April 1, 2000. A REC may seek disapplication of its
Distribution Price Control Formula with effect from that date by request to
the Regulator. If the Regulator wishes to refuse the request, he must refer it
to the Monopolies and Mergers Commission ("MMC").
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<PAGE>
In setting the distribution charges each year, the holder of a PES license
will have to make a projection of the permitted maximum charge per unit
distributed in that year. The projection will have to take account of
forecasts of units distributed, distribution losses and the actual change in
RPI. Failure to forecast accurately may result in over or under charging; this
is taken into account in the following year through a correction factor in the
price control formula. If a REC has overcharged in the previous year, the
maximum average charge per unit distributed is reduced by an amount to reflect
the excess income received, to which is added interest. In the event of
undercharging, the Distribution Price Control Formula allows the licensee to
recover the shortfall in income plus interest.
If, in any year, the average charge per unit distributed exceeds the
permitted maximum average charge per unit distributed by more than 3%, then,
in the next following year, the REC may not increase distribution charges
unless it has satisfied the Regulator that the average charge per unit in that
next following year is not likely to exceed the permitted maximum average
charge. If, in respect of any two successive years, the sum of the amounts by
which the average charge per unit distributed has exceeded the permitted
maximum average charge per unit distributed in the second of those years is
more than 4% of that permitted maximum average charge, then, in the next
following year, the REC may be required by the Regulator to adjust its charges
so that they fall within the maximum permitted average charge. If, in respect
of two successive years, the licensee undercharges by more than 10% of the
maximum average charge, the Regulator may, by directions to the licensee,
limit the amount by which such undercharging may be recovered.
ELECTRICITY SUPPLY
Subject to minor exceptions, all electricity customers in Great Britain must
be supplied by a licensed supplier. Licensed suppliers purchase electricity
and make use of the transmission and distribution networks to achieve delivery
to customers' premises.
There are two types of licensed suppliers; public electricity (or first
tier) suppliers ("PESs"); and second tier suppliers. PESs are the RECs,
Scottish Power and Hydro-Electric each supplying in its respective franchise
area. Second tier suppliers include National Power, PowerGen, Nuclear
Electric, Scottish Power, Hydro-Electric and other PESs supplying outside
their respective franchise areas. There are also a number of independent
second tier suppliers.
At present, a Franchise Supply Customer can only buy electricity from the
PES authorized to supply the relevant franchise area. Franchise Supply
Customers typically include domestic and small commercial and industrial
customers. Non-Franchise Supply Customers are not limited to buying
electricity from the local PES and can choose to buy from a second tier
supplier. Such customers are typically larger commercial, agricultural and
industrial electricity users. Second tier suppliers compete with one another
and with the local PES to supply customers in this competitive (or "non-
franchise") sector of the market.
Under the current licensing regime, from April 1, 1998 all customers,
including those who are currently Franchise Supply Customers, will be free to
choose their electricity supplier.
The supply of electricity to Franchise Supply Customers is subject to price
control. The maximum average charge per unit supplied (in pence per kilowatt
hour) is controlled by a formula based upon P+RPI-Xs+Y (the "Supply Price
Control Formula") where Xs is currently 2%. As with the Distribution Price
Control Formula, P reflects the previous maximum average price per unit of
electricity supplied (in pence per kilowatt hour). RPI reflects the percentage
change in the Retail Price Index between the previous year and the current
year. The Xs factor is established by the Regulator following review. The Y
term is a pass through of certain costs which are either largely outside the
control of the REC or have been regulated elsewhere. It thus covers the REC's
electricity purchase costs, including both direct Pool purchase costs and
costs of hedging, transmission charges made by NGC, distribution charges made
by its own and other REC distribution businesses and the Fossil Fuel Levy
(described below) or amounts equivalent thereto in respect of the purchase of
non-leviable electricity which are attributable to Franchise Supply Customers.
As with the Distribution Price Control Formula, there is a correction factor
in the Supply Price Control Formula in the event of over or under charging.
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<PAGE>
If a REC has overcharged in the previous year, the maximum average charge
per unit supplied is reduced by an amount to reflect the excess income
received, to which is added interest. In the event of undercharging, the
Supply Price Control Formula allows the licensee to recover the shortfall in
income plus interest.
If, in any year, the average charge per unit supplied exceeds the permitted
maximum average charge per unit supplied by more than 4%, then, in the next
following year, the REC may not increase supply charges to Franchise Supply
Customers unless it has satisfied the Regulator that the average charge per
unit in that next following year is not likely to exceed the permitted maximum
average charge. If, in respect of any two successive years, the sum of the
amounts by which the average charge per unit supplied has exceeded the
permitted maximum average charge per unit supplied in the second of those
years is more than 5% of that permitted maximum average charge, then, in the
next following year, the REC may be required by the Regulator to adjust its
charges so that they fall within the maximum permitted average charge. If, in
respect of two successive years, the licensee undercharges by more than 10% of
the maximum average charge, the Regulator may, by directions to the licensee,
limit the amount by which such undercharging may be recovered.
The initial value of Xs was set at 0 for all the RECs on March 31, 1990. The
Supply Price Control Formula was reviewed by the Regulator with effect from
April 1, 1994, when the Xs term was set at 2% for all the RECs. This will
apply to the period ending March 31, 1998. On this date, the exclusive right
of the RECs to supply Franchise Supply Customers is scheduled, under the
current licensing structure, to come to an end. However, the Regulator has
indicated that price regulation for supply to Franchise Supply Customers may
be extended for an interim period until an adequate level of competition is
established.
THE POOL
The Pool was established at the time of privatization for bulk trading of
electricity in England and Wales between generators and suppliers. The Pool
reflects two principal characteristics of the physical generation and supply
of electricity from a particular generator to a particular supplier. First, it
is not possible to trace electricity from a particular generator to a
particular supplier. Second, it is not practicable to store electricity in
significant quantities, creating the need for a constant matching of supply
and demand. Subject to certain exceptions, all electricity generated in
England and Wales must be sold and purchased through the Pool. All licensed
generators and suppliers must become signatories to the Pooling and Settlement
Agreement, which governs the constitution and operation of the Pool and the
calculation of payments due to and from generators and suppliers. The Pool
also provides centralized settlement of accounts and clearing. The Pool does
not itself buy or sell electricity.
Prices for electricity are set by the Pool daily for each half hour of the
following day based on the bids of the generators and a complex set of
calculations matching supply and demand and taking account of system
stability, security and other costs. A computerized system (the settlement
system) is used to calculate prices and to process metered, operational and
other data and to carry out the other procedures necessary to calculate the
payments due under the Pool trading arrangements. The settlement system is
administered on a day-to-day basis by NGC Settlements Limited, a subsidiary of
NGC, as settlement system administrator.
FOSSIL FUEL LEVY
All the RECs are subject to an obligation to obtain a specified amount of
generating capacity from non-fossil fuel sources (the "NFFOs"). Because
electricity generated from non-fossil fuel plants is generally more expensive
than electricity from fossil fuel plants, a levy system (the "Fossil Fuel
Levy") has been instituted to reimburse the generators and the RECs for the
extra costs involved. The Regulator sets the amount of the Fossil Fuel Levy
annually. The current Fossil Fuel Levy is 10% of the value of sales of
electricity generated from fossil fuel sources. However, the Regulator stated
on June 11, 1996 that he expected to announce a reduction to 3.7% for the
period November 1, 1996 to March 31, 1997.
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REGULATION UNDER THE ELECTRICITY ACT 1989
THE REGULATOR
The principal legislation governing the structure and regulation of the
electricity industry in Great Britain is the Electricity Act. The Electricity
Act established the industry structure described above so as to enable
privatization to take place. The Electricity Act also created the
institutional framework under which the industry is currently regulated,
including the office of the Regulator, who is appointed by the Secretary of
State. The present Regulator, Professor Stephen Littlechild, was appointed for
a five year term commencing September 1, 1989 and has since been reappointed
for a further five year term.
The Regulator's functions under the Electricity Act include granting
licenses to generate, transmit or supply electricity (a function which he
exercises under a general authority from the Secretary of State); proposing
modifications to licenses, and making license modification references to the
MMC; enforcing compliance with license conditions; advising the Secretary of
State in respect of the setting of each NFFO; calculating the Fossil Fuel Levy
rate and collecting the levy; determining certain disputes between electricity
licensees and customers; and setting standards of performance for electricity
licensees.
The Regulator exercises concurrently with the Director General of Fair
Trading certain functions relating to monopoly situations under the Fair
Trading Act 1973 and certain functions relating to courses of conduct which
have, or are intended or likely to have, the effect of restricting, distorting
or preventing competition in the generation, transmission or supply of
electricity under the Competition Act 1980.
The Electricity Act requires the Regulator and the Secretary of State to
exercise their functions in the manner each considers is best calculated: to
secure that all reasonable demands for electricity are satisfied; to secure
that license holders are able to finance their licensed activities; and to
promote competition in the generation and supply of electricity.
Subject to these duties, the Secretary of State and the Regulator are
required to exercise their functions in the manner which each considers is
best calculated: to protect the interests of consumers of electricity supplied
by licensed suppliers in respect of price, continuity of supply, and the
quality of electricity supply services; to promote efficiency and economy on
the part of licensed electricity suppliers and the efficient use of
electricity supplied to consumers; to promote research and development by
persons authorized by license to generate, transmit or supply electricity; to
protect the public from the dangers arising from the generation, transmission
or supply of electricity; and to secure the establishment of machinery for
promoting the health and safety of workers in the electricity industry. The
Secretary of State and the Regulator also have a duty to take into account the
effect on the physical environment of activities connected with the
generation, transmission or supply of electricity.
In performing their duties to protect the interests of consumers in respect
of prices and other terms of supply, the Secretary of State and the Regulator
have a duty to take into account in particular the interests of consumers in
rural areas. In performing their duties to protect the interests of consumers
in respect of the quality of electricity supply services, they have a duty to
take into account in particular the interests of those who are disabled or of
pensionable age.
LICENSES
Generation Licenses
Unless covered by an exemption, all electricity generators operating a power
station in Great Britain are required to have a generation license. There are
currently 41 generation license holders in Great Britain. The conditions
attached to a generation license in England and Wales require the holder,
among other things, to comply with a grid code, be a member of the Pool and
submit relevant generating sets for central dispatch. The conditions attached
to generation licenses in Scotland require the holder, among other things, to
comply with a
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grid code. Failure to comply with any of the generation license conditions may
subject the licensee to a variety of sanctions, including enforcement orders
by the Regulator, or license revocation if an enforcement order is not
complied with.
PES Licenses
Each of the RECs, Scottish Power and Hydro-Electric has a PES license for
its franchise area and is required, under the Electricity Act, to supply
electricity upon request to any premises in that area, except in specified
circumstances. Each PES is also required not to discriminate between its own
supply business and other users of its distribution system. PESs are subject
to separate price controls on the amounts they may charge for the supply of
electricity to Franchise Supply Customers and in respect of distribution
charges. The PES licenses also require the licensee to procure electricity at
the best price reasonably obtainable having regard to the sources available.
The Regulator has stated that he intends to publish shortly further
information relating to the RECs' performance in relation to their
distribution and supply price controls and that this will include information
about the generation costs which they pass through to Franchise Supply
Customers under the Supply Price Control Formula. The Regulator has also
stated that it is his intention to review the supply price controls applicable
to PESs with a view to proposing possible new controls to take effect on April
1, 1998 when the present franchise supply market will be opened to
competition, and that he may issue a consultation paper on this matter in
August or September 1996.
In England and Wales, each PES license limits the extent of the generation
capacity in which the relevant REC may hold an interest without the prior
consent of the Regulator ("own-generation limits"). These own-generation
limits, expressed in megawatts, currently restrict the participation of a REC
in generation to a level of approximately 15% of the total electricity
consumption in that REC's franchise area. In the case of SWEB, the own-
generation limit is fixed at 400 MW.
The Regulator has stated that it would be reasonable to consider a REC's
request to increase its own-generation limit on condition that it accepted
explicit restrictions on the contracts it signed with its supply business, and
that at a minimum the REC would be prohibited from passing additional own-
generation contracts into its franchise supply market. He considers that an
increase in own-generation limits subject to such restrictions could allow a
REC to contribute more fully to the development of competition in generation
without the allegation that it was exploiting its captive market and local
monopoly position. In June 1996, the Regulator stated that he had indicated to
Eastern Group plc, in the context of its acquisition of 6,000 MW of generating
capacity from National Power and PowerGen, that he would be favorably inclined
to relax the own-generation limits subject to the Regulator and Eastern Group
plc agreeing to license modifications as set out in a consultation paper which
he had published in August 1995.
Second Tier Supply Licenses
Other than a PES in its franchise area and subject to certain other
exceptions, a supplier of electricity to premises in Great Britain must
possess a second tier supply license. Subject to the restrictions described in
"Electricity Supply" above, second tier licensees may compete for the supply
of electricity with one another and with the PES for the relevant area. There
are currently 39 second tier supply license holders for England and Wales and
24 for Scotland.
Transmission Licenses
In England and Wales, NGC is the only transmission license holder. The
transmission license imposes on NGC the obligation to operate the merit order
system for the central dispatch of generating sets and gives NGC
responsibility for the economic purchasing of ancillary services from
generators and suppliers. The transmission
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license requires NGC to offer terms on a non-discriminatory basis for the
carrying out of works for connection to, and use of, the transmission system
and for use of the interconnections.
Modifications to Licenses
Subject to a power of veto by the Secretary of State, the Regulator may
modify license conditions with the agreement of the license holder. He must
first publish the proposed modifications and consider representations or
objections made. Following the acquisition of SWEB by the Company, SWEB's PES
license was modified, by agreement, to take into account the fact that the PES
license was now held by a subsidiary company. In particular, the license was
modified to provide that, with few exceptions, the only business activities
which SWEB is permitted to undertake directly are its franchise and second
tier supply businesses and its distribution business. The license now also
requires SWEB to ensure that it has sufficient management and financial
resources and facilities to conduct its supply and distribution businesses and
to comply with its statutory and license obligations. The directors of SWEB
are required to give annual certificates to the Regulator to that effect.
Further, the consent of the Regulator is required for SWEB to create security
over its assets, to incur indebtedness or to give guarantees, unless the
transaction is on normal commercial and arm's length terms and for a
"permitted purpose" (which refers to the supply, distribution or generation
business, or any business conducted by SWEB or its affiliates or related
undertakings (subsidiaries) prior to the take-over). The consent of the
Regulator is also required before SWEB may transfer assets or make loans to
affiliates or related undertakings (subsidiaries). However, various matters,
such as payment of dividends out of distributable reserves, repayments of
capital, and payments on normal commercial and arm's length terms for goods,
services or assets supplied, do not require the consent of the Regulator.
These provisions are subject to an overriding provision in the PES license
which prevents any REC from disposing of (which would include creating a
security interest in) distribution assets.
If the Regulator fails to agree modifications with a license holder, he may
refer a matter relating to generation, transmission or supply of electricity
under a license to the MMC. If the MMC finds that the matter referred to it
has, or may be expected to have, specified effects adverse to the public
interest which could be remedied or prevented by a license modification, the
Regulator is required to make modifications that appear to him requisite for
the purpose of remedying or preventing the adverse effects identified by the
MMC. Modifications to license conditions may also be made by the Secretary of
State as a consequence of monopoly, merger or other competition references
under general UK competition law.
Term and Revocation of Licenses
SWEB's PES license shall continue until at least 2025 unless revoked. Under
ordinary circumstances, the license may not be revoked except on 25 year's
prior notice, which notice may not be given until 2000. Otherwise, the
Secretary of State may revoke a PES license by not less than 30 days' notice
in writing to the licensee in certain specified circumstances including any
failure to comply with a final order of the Regulator requiring the license
holder to comply with its license conditions or requirements.
46
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
directors and executive officers of the Company as of June 30, 1996:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- ------------------------------------------------
<S> <C> <C>
Richard J. Pershing..... 49 Director, Chief Executive Officer
C. B. (Mike) Harreld.... 52 Director, Chief Financial and Accounting Officer
Thomas G. Boren......... 47 Director
Alan W. Harrelson....... 48 Director
Gale E. Klappa.......... 45 Director
C. Philip Saunders...... 44 Director
Charles W. Whitney...... 49 Director
Accentacross Limited.... Director
Mighteager Limited...... Director
</TABLE>
RICHARD J. PERSHING has been a Director of the Company since June 1995 and
Chief Executive Officer since July 1996. From February 1994 to the present,
Mr. Pershing has served as Senior Vice President and International Executive
Officer of Southern Electric, a wholly-owned subsidiary of Southern. From June
1992 to February 1994, he served as Vice President of International Business
Development at Southern Electric. From January 1991 to June 1992, he served as
Vice President of Human Resources at Georgia Power Company ("Georgia Power"),
also a subsidiary of Southern.
C.B. (MIKE) HARRELD has been a Director of the Company since September 1995
and Chief Financial and Accounting Officer of the Company since July 1996. He
has also been the Finance Director of SWEB since September 1995. From February
1986 to August 1995, he served as Vice President, Comptroller and Chief
Accounting Officer of Georgia Power. Prior to joining Georgia Power in 1982,
Mr. Harreld spent 13 years with Arthur Andersen in Atlanta and Missouri. He
graduated from the University of Kentucky in 1966 (BS Commerce with Honors)
and from the University of Missouri in 1967 (MA Accounting with Honors).
THOMAS G. BOREN has been a Director of the Company since July 1995 and
President and Chief Executive Officer of Southern Electric since February
1992. From May 1989 to February 1992, Mr. Boren served as Senior Vice
President of Administration at Georgia Power. From 1981 to May 1989, he held
positions with Georgia Power in power supply, finance and accounting. Mr.
Boren holds a B.S. degree in Industrial Management from the Georgia Institute
of Technology and an M.B.A. degree from Georgia State University.
ALAN W. HARRELSON has been a Director of the Company since September 1995.
From January 1994 to September 1995 Mr. Harrelson served as General Manager,
Northern Region Power Delivery of Georgia Power. From June 1991 to December
1993, he served as Network Underground Manager, Power Delivery of Georgia
Power. Mr. Harrelson holds a bachelor's degree in Industrial Engineering from
Georgia Institute of Technology, 1971, and a Juris Doctor--Atlanta Law School,
1981.
GALE E. KLAPPA has been a Director of the Company since September 1995. From
February 1992 to September 1995 he served as Senior Vice President of
Marketing for Georgia Power. From May 1991 to February 1992, Mr. Klappa served
as Vice President of Southern Company Services, Inc. He graduated cum laude
from the University of Wisconsin-Milwaukee in 1972 with a bachelor's degree in
Mass Communications.
C. PHILIP SAUNDERS has been a Director and Commercial Marketing Director of
the Company since September 1995. From February 1994 to September 1995, he
served as Western Region and Power Marketing Director for US business
development at Southern Electric. From May 1992 to February 1994, Mr. Saunders
was Assistant to the Senior Vice President of Marketing at Georgia Power. He
graduated from Auburn University in 1974 with a bachelor's degree in
Electrical Engineering.
47
<PAGE>
CHARLES W. WHITNEY has been a Director of the Company since July 1995. From
November 1995 to the present, Mr. Whitney has served as Vice President of SEI
Holdings, Inc., also a subsidiary of Southern. From June 1994 to November
1995, he served as Vice President of Southern Electric. From January 1991 to
June 1994, he served as Vice President of Georgia Power.
ACCENTACROSS LIMITED ("ACCENTACROSS") has been a Director of the Company
since July 1996. Robert D. Fagan represents Accentacross at meetings of the
Directors of the Company. Robert D. Fagan has represented Accentacross at
meetings of the Directors of the Company since July 1996. From November 1995
to the present, Mr. Fagan has served as President of PMDC. From April 1989 to
November 1994, he served as Vice President and General Manager of Mission
Energy Company ("Mission Energy"). Mr. Fagan is also currently a Director of
PMDC.
MIGHTEAGER LIMITED ("MIGHTEAGER") has been a Director of the Company since
July 1996. Roger L. Peterson represents Mighteager at meetings of the
Directors of the Company. Roger L. Peterson has represented Mighteager at
meetings of the Directors of the Company since July 1996. From January 1995 to
the present, Mr. Peterson has served as Vice President of PMDC. From October
1986 to December 1994, Mr. Peterson served as Vice President of Mission
Energy.
DIRECTOR AND OFFICER COMPENSATION
Accentacross and Mighteager (the "PMDC Directors") do not receive
compensation for their services as Directors of the Company. The other
officers and directors listed above (such officers and directors, with the
exception of the PMDC Directors, each a "Southern Company system Officer or
Director," as applicable) have received, and will continue to receive,
compensation in respect of services performed by such persons in their
capacities as Southern Company system Officers or Directors of the Company
from Southern Electric, their primary employer and an affiliate of the
Company. The Company is charged by Southern Electric for the time spent by
those Southern Company system Officers and Directors who do not devote their
full time to the affairs of the Company and for a portion of the overhead
costs associated with each such Southern Company system Officer and Director.
The salaries of all Southern Company system Officers and Directors are paid by
Southern Electric, and Southern Electric is reimbursed by the Company, in
accordance with a services agreement between the Company and Southern
Electric. The Southern Company system Officers and Directors receive no cash
or non-cash compensation as a result of these arrangements beyond that which
they would otherwise receive from Southern Electric for the services performed
by them for Southern Electric.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company is charged by Southern Electric for the time spent by those
Southern Company system Officers and Directors who do not devote their full
time to the affairs of the Company and for a portion of the overhead costs
associated with each such Southern Company system Officer and Director. The
salaries of all Southern Company system Officers and Directors are paid by
Southern Electric, and Southern Electric is reimbursed by the Company, in
accordance with a services agreement between the Company and Southern
Electric. The Southern Company system Officers and Directors receive no cash
or non-cash compensation as a result of these arrangements beyond that which
they would otherwise receive from Southern Electric for the services performed
by them for Southern Electric.
48
<PAGE>
SECURITY OWNERSHIP
All of the shares of the Company are owned by Holdings. The following table
sets forth, as of July 1, 1996, certain information regarding beneficial
ownership of Holdings' common stock held by each person known by the Company
to own beneficially more than 10% of Holding's outstanding common stock.
<TABLE>
<CAPTION>
NAME AND ADDRESS CLASS OF SHARES NUMBER OF SHARES PERCENT OF CLASS
---------------- --------------- ---------------- ----------------
<S> <C> <C> <C>
The Southern Company......... A Ordinary 150,000(1) 100%
64 Perimeter Center East
Atlanta, Georgia 30346
PP&L Resources, Inc.......... B Ordinary 50,000(2) 100%
11350 Random Hills Road
Suite 800
Fairfax, Virginia 22030
</TABLE>
- --------
(1) Such shares are owned by Southern Electric International-Europe Inc., an
indirect wholly-owned subsidiary of The Southern Company.
(2) Such shares are owned by PMDC UK, an indirect wholly-owned subsidiary of
PP&L Resources, Inc.
The A Ordinary shares and the B Ordinary shares have the same voting rights,
and the only material difference between the A Ordinary shares and the B
Ordinary shares is that the holders of the B Ordinary shares are entitled to a
smaller proportion of dividends paid in respect of earnings during calendar
year ending December 31, 1996 than the holders of the A Ordinary shares.
The following table shows the number of shares of the common stock of
Southern owned by the directors and executive officers of the Company as of
July 1, 1996. It is based on information furnished to the Company by the
directors and executive officers of the Company. The shares owned by all
directors and executive officers as a group constitute less than one percent
of the total number of shares of the respective classes outstanding as of July
1, 1996.
<TABLE>
<CAPTION>
NUMBER OF SHARES
TITLE OF SECURITY BENEFICIALLY OWNED (1) (2)
--------------------------- --------------------------
<S> <C> <C>
Carson B. Harreld....... The Southern Company common 2,975
Alan W. Harrelson....... The Southern Company common 13,330
Gale E. Klappa.......... The Southern Company common 24,857
C. Philip Saunders...... The Southern Company common 7,879
Charles W. Whitney...... The Southern Company common 7,015
Thomas G. Boren......... The Southern Company common 17,325
Richard J. Pershing..... The Southern Company common 18,791
Directors and Executive
Officers of the Company
as a group (9 persons)
(3).................... The Southern Company common 92,692
</TABLE>
- --------
(1) "Beneficial ownership" means the sole or shared power to vote, or to
direct the voting of, a security and/or investment power with respect to a
security.
(2) The shares shown include shares of common stock which certain directors
and executive officers have the right to acquire beneficial ownership
within 60 days pursuant to The Southern Company Executive Stock Plan as
follows: Mr. Klappa, 8,544 shares; Mr. Boren, 6,737 shares; and all
directors and executive officers of the Company as a group, 15,281 shares.
(3) The two corporate directors, Accentacross Limited and Mighteager Limited,
do not own any equity securities of the Company or any of its parents or
subsidiaries.
49
<PAGE>
DESCRIPTION OF THE SENIOR NOTES
The Senior Notes are to be issued under and governed by an Indenture, to be
dated as of , 1996 (the "Indenture"), between the Company and Bankers Trust
Company, as trustee (the "Trustee"), a copy of which is filed as an exhibit to
the Registration Statement. The following summaries of certain provisions of
the Indenture do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, all the provisions of the
Indenture. Copies of the Indenture are available for inspection during normal
business hours at the principal office of the Company and at the office of the
Trustee in the City of New York. The Holders are entitled to the benefits of,
are bound by, and are deemed to have notice of, all the provisions of the
Indenture. Wherever particular sections or defined terms of the Indenture are
referred to, such sections or defined terms are incorporated herein by
reference.
GENERAL
The Indenture does not limit the aggregate principal amount of the debt
securities that may be issued thereunder and provides that debt securities may
be issued from time to time in one or more series. The Senior Notes will
mature on , 2006 and will be limited to US$235,000,000 in aggregate
principal amount. Each Senior Note will bear interest at the rate per annum
shown on the cover page of this Prospectus from , 1996 or from the most
recent interest payment date to which interest has been paid or provided for.
Interest on the Senior Notes will be payable semiannually on and
of each year, commencing on , 1996 until the principal amount has been
paid or made available for payment. Interest on the Senior Notes will be
computed on the basis of a 360-day year of twelve 30-day months.
The principal of and interest on the Senior Notes will be payable in U.S.
dollars or in such other coin or currency of the United States of America as
at the time of payment is legal tender for the payment of public and private
debts.
Application has been made to list the Senior Notes on the Luxembourg Stock
Exchange.
The Senior Notes will be direct, unsecured and unsubordinated obligations of
the Company ranking pari passu with all other unsecured and unsubordinated
obligations of the Company (except those obligations preferred by operation of
law). The Senior Notes will effectively rank junior to any secured
indebtedness of the Company to the extent of the assets securing such
indebtedness and to any indebtedness of the Company's subsidiaries to the
extent of the assets of such subsidiaries. Substantially all of the Company's
consolidated assets other than the stock of SWEB are currently held by the
Company's subsidiaries. The Indenture contains no restrictions on the amount
of additional indebtedness which may be incurred by the Company or its
subsidiaries; however, the Indenture contains certain restrictions on the
ability of the Company and its Significant Subsidiaries to incur secured
indebtedness. See "--Covenants--Limitation on Liens." The ability of the
Company to pay principal and interest on the Senior Notes is, to a large
extent, dependent upon the payment to it of distributions, dividends, interest
or other amounts by SWEB. While the Company does not intend to pay principal
of the Senior Notes out of such amounts, but rather intends to refinance such
principal, its ability to do so will also be, to a large extent, dependent
upon the payment to it of such amounts by SWEB.
DESCRIPTION OF THE BOOK-ENTRY SYSTEM
GENERAL
The Senior Notes will be issued only as a Global Note in bearer form and
will be payable only in US dollars. Title to such Global Note will pass by
delivery. The Global Note will be deposited on issue with Bankers Trust
Company, as book-entry depositary (the "Book-Entry Depositary"), which will
hold the Global Note for the benefit of DTC and its Participants pursuant to
the terms of the deposit agreement (the "Deposit Agreement") dated as of
,1996 among the Company, the Book-Entry Depositary and the holders and
beneficial owners from time to time of interests in the Book-Entry Interest.
Pursuant to the Deposit Agreement and an agreement
50
<PAGE>
between DTC and the Book-Entry Depositary (the "DTC Agreement"), the Book-
Entry Depositary will issue one or more certificateless depositary interests
(the "Book-Entry Interest"), which together will represent a 100% interest in
the underlying Global Note. Such Book-Entry Interest will be issued to DTC,
which will operate a book-entry system for interests in the Book-Entry
Interest. Unless and until the Global Note is exchanged in whole for
Definitive Registered Notes (as defined below), the Book-Entry Interest held
by DTC may not be transferred except as a whole by DTC to a nominee of DTC or
by a nominee of DTC to DTC or another nominee of DTC or by DTC or any such
nominee to a successor of DTC or a nominee of such successor.
Ownership of interests in the Book-Entry Interest will be limited to
persons, including depositaries for Euroclear and Cedel Bank, that have
accounts with DTC ("Participants") or persons that hold interests through
Participants ("Indirect Participants"). Upon the issuance by the Book-Entry
Depositary of the Book-Entry Interest to DTC, DTC will credit, on its book-
entry registration and transfer system, the Participants' accounts with the
respective interests owned by such Participants. Ownership of interests in the
Book-Entry Interest will be shown on, and the transfer of such interests in
the Book-Entry Interest will be effected only through, records maintained by
DTC (with respect to interests of Participants) and on the records of
Participants (with respect to interests of Indirect Participants). The laws of
some states may require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such limits and such laws may
impair the ability of such purchasers to own, transfer or pledge interests in
the Book-Entry Interest.
So long as the Book-Entry Depositary, or its nominee, is the Holder of the
Global Note, the Book-Entry Depositary or such nominee, as the case may be,
will be considered the sole Holder of such Global Note (and the Senior Notes)
for all purposes under the Indenture. Except as set forth below under "--
Definitive Senior Notes," Participants or Indirect Participants will not be
entitled to have Senior Notes registered in their names, will not receive or
be entitled to receive physical delivery of Senior Notes in definitive bearer
or registered form and will not be considered the owners or Holders thereof
under the Indenture or the Deposit Agreement. Accordingly, each person owning
a Book-Entry Note must rely on the procedures of the Book-Entry Depositary and
DTC and, if such person is not a Participant in DTC, on the procedures of the
Participant through which such person owns its interest, to exercise any
rights and obligations of a Holder under the Indenture or the Deposit
Agreement. See "--Action by Holders of Senior Notes."
In addition to a Paying Agent in the Borough of Manhattan, The City of New
York, the Company will, so long as the Senior Notes are listed on the
Luxembourg Stock Exchange and the rules of such Exchange so require, maintain
a Paying Agent in Luxembourg.
INFORMATION REGARDING DTC, THE EUROCLEAR AND CEDEL BANK
DTC
DTC has advised the Company as follows: DTC is a limited-purpose trust
company organized under the New York Banking Law, a "banking organization"
within the meaning of the New York Banking Law, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the New York
Uniform Commercial Code, and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). DTC holds securities that its Participants deposit with
DTC. DTC also facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in Participants' accounts, thereby
eliminating the need for physical movement of securities certificates.
Participants include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations. DTC is owned by a
number of its Participants and by the New York Stock Exchange Inc. and the
American Stock Exchange Inc. and the National Association of Securities
Dealers, Inc. Access to the DTC system is also available to others such as
securities brokers and dealers, banks and trust companies that clear through
or maintain a custodial relationship with a Participant, either directly or
indirectly. The rules applicable to DTC and its Participants are on file with
the Securities and Exchange Commission (the "Commission").
51
<PAGE>
Euroclear and Cedel Bank
Euroclear and Cedel Bank each hold securities for their account holders and
facilitate the clearance and settlement of securities transactions by
electronic book-entry transfer between their respective account holders,
thereby eliminating the need for physical movements of certificates and any
risk from lack of simultaneous transfers of securities.
Euroclear and Cedel Bank provide various services including safekeeping,
administration, clearance and settlement of internationally traded securities
and securities lending and borrowing. Euroclear and Cedel Bank also deal with
domestic securities markets in several countries through established
depositary and custodial relationships. Euroclear and Cedel Bank have
established an electronic bridge between their two systems across which their
respective account holders may settle trades with each other.
Account holders in Euroclear and Cedel Bank are world-wide financial
institutions, including underwriters, securities brokers and dealers, banks,
trust companies and clearing corporations. Indirect access to Euroclear and
Cedel Bank is available to other institutions that clear through or maintain a
custodial relationship with an account holder of either system.
Account holders' overall contractual relations with Euroclear and Cedel Bank
are governed by the respective rules and operating procedures of Euroclear and
Cedel Bank and any applicable laws. Euroclear and Cedel Bank act under such
rules and operating procedures only on behalf of their respective account
holders and have no record of or relationship with persons holding through
their respective account holders.
The Company understands that under existing industry practices, if either
the Company or the Trustee requests any action of owners of interests in the
Book-Entry Interest or if an owner of an interest in the Book-Entry Interest
desires to give or take any action that a Holder is entitled to give or take
under the Indenture, DTC would authorize the Participants owning the interests
in the Book-Entry Interest to give or take such action, and such Participants
would authorize Indirect Participants to give or take such action or would
otherwise act upon the instructions of such Indirect Participants.
PAYMENTS ON THE SENIOR NOTES
Payments of any amounts in respect of the Global Note will be made through a
Paying Agent to the Book-Entry Depositary, as the Holder thereof. The Book-
Entry Depositary will pay an amount equal to each such payment to DTC, which
will distribute such payments to its Participants.
DTC, upon receipt of any such payment from the Book-Entry Depositary, will
immediately credit Participants' accounts with payments in amounts
proportionate to their respective ownership of interests in the Book-Entry
Interest as shown on the records of DTC. The Company expects that payments by
Participants to owners of interests in the Book-Entry Interest held through
such Participants will be governed by standing customer instructions and
customary practices and will be the responsibility of such Participants.
Neither the Company nor any agent of the Company will have any
responsibility or liability for any aspect relating to payments made or to be
made by the Book-Entry Depositary to DTC in respect of the Senior Notes or the
Book-Entry Interests. None of the Company, the Trustee, the Book-Entry
Depositary or any agent of any of the foregoing will have any responsibility
or liability for any aspect relating to payments made or to be made by DTC on
account of a Participant's or Indirect Participant's ownership of an interest
in the Book-Entry Interest or for maintaining, supervising or reviewing any
records relating to a Participant's or Indirect Participant's interests in the
Book-Entry Interest.
If any Definitive Registered Note has been issued, the interest payable on
such Definitive Registered Note other than at maturity will be paid to the
holder in whose name such Definitive Registered Note is registered at the
close of business on the or (whether or not a Business Day), as the
case may be, immediately preceding the due date for such payment (each a
"Record Date"). The principal of a Definitive Registered Note
52
<PAGE>
will be payable to the person in whose name such Definitive Registered Note is
registered at the close of business on the immediately preceding Record Date
upon surrendering such Definitive Registered Note. Interest payable at
maturity will be payable to the person to whom principal is payable.
If any Definitive Registered Notes have been issued, payments of interest on
such Definitive Registered Notes to be paid other than at maturity will be
made by check to the person entitled thereto at such person's address
appearing on the Security Register. Payments of any interest on the Definitive
Registered Notes may also be made, in the case of a Holder of at least
US$1,000,000 aggregate principal amount of Senior Notes, by wire transfer to a
US Dollar account maintained by the payee with a bank in the United States;
provided that such Holder elects payment by wire transfer by giving written
notice to the Trustee or a Paying Agent to such effect designating such
account no later than 15 days immediately preceding the relevant due date for
payment (or such other date as the Trustee may accept in its discretion).
Any monies paid by the Company to the Trustee or any Paying Agent, or held
by the Company in trust, for the payment of the principal of or any interest
or Additional Amounts on any Senior Notes and remaining unclaimed at the end
of two years after such principal, interest or Additional Amounts become due
and payable will be repaid to the Company, or released from the trust, upon
its written request, and upon such repayment or release all liability of the
Company, the Trustee and such Paying Agent with respect thereto will cease.
If the due date for payment of principal or any interest installment or any
Additional Amount in respect of any Senior Note is not a Business Day, the
Holder thereof will not be entitled to payment of the amount due until the
next succeeding Business Day and will not be entitled to any further interest
or other payment in respect of any such delay.
All payments to the Book-Entry Depositary in respect of the Global Note,
and all payments to the Holders of the Definitive Registered Notes, if issued,
will be made without deduction or withholding for any UK taxes or other
governmental charges, or if any such deduction or withholding is required to
be made under the provisions of any applicable UK law or regulation, except as
described under "--Additional Amounts," such Additional Amounts will be paid
as may be necessary in order that the net amounts received by any Holder of
the Global Note or of any Definitive Registered Note, after such deduction or
withholding, will equal the net amounts that such Holder would have otherwise
received in respect of the Global Note or of such Definitive Registered Note
absent such deduction or withholding.
REDEMPTION
In the event the Global Note (or a portion thereof) is redeemed, the Book-
Entry Depositary will deliver all amounts received by it in respect of the
redemption of the Global Note to DTC and surrender the Global Note to the
Trustee for cancellation. The redemption price payable in connection with the
redemption of interests in the Book-Entry Interest will be equal to the amount
received by the Book-Entry Depositary in connection with the redemption of the
Global Note (or a portion thereof). For any redemptions of the Global Note in
part, selection of interests in the Book-Entry Interest to be redeemed will be
made by DTC on a pro rata basis (or on such other basis as DTC deems fair and
appropriate); provided that no interest in the Book-Entry Interest of $1,000
principal amount or less shall be redeemed in part. Once redeemed in part, a
new Global Note in the principal amount equal to the unredeemed portion
thereof will be issued and delivered to the Book-Entry Depositary.
TRANSFERS
All transfers of interests in the Book-Entry Interest will be recorded in
accordance with the book-entry system maintained by DTC, pursuant to customary
procedures established by DTC and its Participants. See "--General."
53
<PAGE>
ACTION BY HOLDERS OF SENIOR NOTES
The Company understands that under existing industry practices, if it
requests any action of Holders of Senior Notes or if an owner of an interest
in the Book-Entry Interest desires to give or take any action that a Holder is
entitled to give or take under the Indenture or the owner of an interest in
the Book-Entry Interest is entitled to give or take under the Deposit
Agreement, DTC would authorize the Participants owning the relevant interest
in the Book-Entry Interest to give or take such action, and such Participants
would authorize Indirect Participants to give or take such action or would
otherwise act upon the instructions of owners of interests in the Book-Entry
Interest holding through them.
As soon as practicable after receipt by the Book-Entry Depositary of notice
of any solicitation of consents or request for a waiver or other action by the
Holders of Senior Notes, the Book-Entry Depositary will mail to DTC a notice
containing (a) such information as is contained in such notice, (b) a
statement that at the close of business on a specified record date DTC will be
entitled to instruct the Book-Entry Depositary as to the consent, waiver or
other action, if any, pertaining to the Senior Notes and (c) a statement as to
the manner in which such instructions may be given. Upon the written request
of DTC, the Book-Entry Depositary shall endeavor insofar as practicable to
take such action regarding the requested consent, waiver or other action in
respect of the Senior Notes in accordance with any instructions set forth in
such request. DTC is expected to follow the procedures described above with
respect to soliciting instructions from its Participants. The Book-Entry
Depositary will not exercise any discretion in the granting of consents or
waivers or the taking of any other action relating to the Deposit Agreement,
the DTC Agreement or the Indenture.
REPORTS AND NOTICES
So long as the Senior Notes are listed on the Luxembourg Stock Exchange and
the rules of the Luxembourg Stock Exchange so require, notices to Holders of
the Senior Notes will, in addition to being sent to the Book-Entry Depositary,
also be published in a leading newspaper having general circulation in
Luxembourg (which is expected to be the Luxemburger Wort). The Book-Entry
Depositary will immediately send to DTC a copy of any notices, reports and
other communications received by it relating to the Company or the Senior
Notes. In the case of Definitive Registered Notes, all notices regarding the
Senior Notes will be mailed to Holders by first-class mail at their respective
addresses as they appear on the registration books of the Registrar.
ACTION BY BOOK-ENTRY DEPOSITARY
Upon the occurrence of an Event of Default with respect to the Senior Notes
or in connection with any other right of the Holder of the Global Note under
the Indenture, if requested in writing by DTC, the Book-Entry Depositary will
take such action as shall be requested in such notice, provided that the Book-
Entry Depositary has been offered reasonable security or indemnity against the
costs, expenses and liabilities that might be incurred by it in compliance
with such request by DTC.
AMENDMENT AND TERMINATION
The Deposit Agreement may be amended by agreement between the Company and
the Book-Entry Depositary, and the consent of DTC shall not be required in
connection with any amendment to the Deposit Agreement (i) to cure any formal
defect, omission, inconsistency or ambiguity in such Deposit Agreement, (ii)
to add to the covenants and agreements of the Company or the Book-Entry
Depositary, (iii) to effect the assignment of the Book-Entry Depositary's
rights and duties to a qualified successor, (iv) to comply with the US
Securities Act of 1933, as amended (the "Securities Act"), the Exchange Act or
the US Investment Company Act of 1940, as amended, or any other applicable
securities laws, (v) to modify the Deposit Agreement in connection with an
amendment to the Indenture that does not require the consent of the Holders of
Senior Notes or (vi) to modify, alter, amend or supplement the Deposit
Agreement in any other respect not inconsistent with such agreement which, in
the opinion of counsel acceptable to the Company, is not materially adverse to
DTC or the beneficial owners of the Book-Entry Interest. No amendment which
materially adversely affects any holder
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or beneficial owner of an interest in the Book-Entry Interest may be made to
the Deposit Agreement without the consent of such holder or beneficial owner.
If Definitive Registered Notes are issued by the Company in exchange for the
entire Global Note, the Book-Entry Depositary, as Holder of the Global Note,
will surrender the Global Note against receipt of the Definitive Registered
Notes and distribute the Definitive Registered Notes to the persons and in the
amounts as specified by DTC, whereupon the Deposit Agreement will terminate
with respect to the Senior Notes. The Deposit Agreement may also be terminated
upon the resignation of the Book-Entry Depositary if no successor has been
appointed within 120 days as set forth under "--Resignation of Book-Entry
Depositary" below. Any Definitive Registered Notes will be issued, if at all,
in accordance with the provisions described under "--Definitive Senior Notes"
below.
RESIGNATION OF BOOK-ENTRY DEPOSITARY
The Book-Entry Depositary may at any time resign as Book-Entry Depositary.
If a successor depositary meeting the requirements specified in the Deposit
Agreement has agreed to enter into arrangements with the same effect as the
Deposit Agreement, the Book-Entry Depositary shall deliver the Global Note to
that successor. If no such successor has so agreed within 120 days, the terms
of the Deposit Agreement will oblige the Book-Entry Depositary to request the
Company to issue Definitive Registered Notes. On receipt of such Definitive
Registered Notes, the Book-Entry Depositary will surrender the Global Note and
distribute such Definitive Registered Notes in accordance with the directions
of DTC. The Deposit Agreement will then terminate with respect to the Senior
Notes.
OBLIGATION OF BOOK-ENTRY DEPOSITARY
The Book-Entry Depositary will assume no obligation or liability under the
Deposit Agreement or the DTC Agreement other than to act in good faith without
negligence or wilful misconduct in the performance of its duties thereunder.
SETTLEMENT
Initial settlement for the Senior Notes and settlement of any secondary
market trades in the Senior Notes will be made in same-day funds. Interests in
the Book-Entry Interest will settle in DTC's Same-Day Funds Settlement System.
DEFINITIVE SENIOR NOTES
Owners of interests in the Book-Entry Interest will be entitled to request
and receive definitive Senior Notes in registered form ("Definitive Registered
Notes") in respect of such interest if (a) DTC notifies the Company and the
Book-Entry Depositary that it is unwilling to or unable to continue to hold
the Book-Entry Interest or if at any time it ceases to be a "clearing agency"
registered under the Exchange Act and, in either case, a successor is not
appointed by the Company within 120 days or (b) an Event of Default has
occurred and is continuing with respect to the Senior Notes. In addition,
Definitive Registered Notes shall be issued if at any time (x) the Book-Entry
Depositary notifies the Company that it is unwilling or unable to continue as
Book-Entry Depositary with respect to the Global Note and no successor Book-
Entry Depositary is appointed within 120 days or (y) the Company in its sole
discretion determines that Definitive Registered Notes shall be issued.
Definitive Registered Notes so issued will be issued in denominations of
$1,000 or integral multiples thereof and will be issued in registered form
only, without coupons. Such Definitive Registered Notes shall be registered in
the name or names of such person or person as the Book-Entry Depositary shall
notify the Trustee based on the instructions of DTC. It is expected that such
instructions may be based upon directions received by DTC from its
Participants with respect to ownership of beneficial interests in the Book-
Entry Interest.
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PARTICIPANTS AND INDIRECT PARTICIPANTS SHOULD BE AWARE THAT, UNDER CURRENT
UK TAX, LAW, UPON THE ISSUANCE TO SUCH PARTICIPANTS AND INDIRECT PARTICIPANTS
OF DEFINITIVE REGISTERED NOTES, SUCH PARTICIPANTS AND INDIRECT PARTICIPANTS,
AS HOLDERS OF DEFINITIVE REGISTERED NOTES WILL BECOME SUBJECT TO UK INCOME TAX
(CURRENTLY AT THE RATE OF 20%) TO BE WITHHELD ON ANY PAYMENTS OF INTEREST ON
THE SENIOR NOTES AS SET FORTH UNDER "CERTAIN INCOME TAX CONSIDERATIONS--UK
INCOME TAX CONSIDERATIONS." IF SUCH DEFINITIVE REGISTERED NOTES ARE ISSUED
PURSUANT TO THE REQUEST OF A PARTICIPANT OR INDIRECT PARTICIPANT FOLLOWING AN
EVENT OF DEFAULT, THE COMPANY WILL NOT BE OBLIGATED TO PAY ANY ADDITIONAL
AMOUNTS WITH RESPECT TO SUCH DEFINITIVE REGISTERED NOTES.
TRANSFER AND EXCHANGE OF DEFINITIVE SENIOR NOTES
In the event that Definitive Registered Notes are in issue, a Holder may
transfer or exchange the Definitive Registered Notes in accordance with the
Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents, and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company is not required to transfer or
exchange any Senior Notes selected for redemption or for a period of 15 days
before a selection of Senior Notes to be redeemed. Upon the issuance of
Definitive Registered Notes, Holders will be able to transfer and exchange
Definitive Registered Notes at the offices of the Paying and Transfer Agents;
provided that all transfers and exchanges must be effected in accordance with
the terms of the Indenture and, among other things, be recorded in the
Register maintained by the Registrar.
COVENANTS
Except as otherwise set forth under "--Defeasance," below, for so long as
any Senior Notes remain outstanding or any amount remains unpaid on any of the
Senior Notes, the Company will comply with the terms of the covenants set
forth below.
PAYMENT OF PRINCIPAL AND INTEREST
The Company will duly and punctually pay the principal of and interest and
Additional Amounts, if any, on the Senior Notes in accordance with the terms
of the Senior Notes and the Indenture.
MAINTENANCE OF OFFICE OR AGENCY
The Company will maintain (i) in the Borough of Manhattan, The City of New
York, an office or agency of a Paying Agent where the Senior Notes may be paid
and notices and demands to or upon the Company in respect of the Senior Notes
and the Indenture may be served and, if Definitive Registered Notes have been
issued, an office or agency of a Transfer Agent where Senior Notes may be
surrendered for registration of transfer and exchange, and (ii) an office or
agency of a Paying Agent where the Senior Notes may be paid in Luxembourg so
long as the Senior Notes are listed on the Luxembourg Stock Exchange and the
rules of such Exchange so require. The Company will give prompt written notice
to the Trustee of the location, and any change in the location, of any such
office or agency. If at any time the Company shall fail to maintain any
required office or agency or shall fail to furnish the Trustee with the
address thereof, all presentations, surrenders, notices and demands may be
served at the office of the Trustee.
FURTHER ASSURANCES
The Company and the Trustee will execute and deliver all such documents,
instruments and agreements and do or cause to be done all such other acts and
things as may be reasonably required to enable the Trustee to
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exercise and enforce its rights under the Indenture and under the documents,
instruments and agreements required under the Indenture and to carry out the
intent of the Indenture.
COMPLIANCE CERTIFICATES
The Company will deliver to the Trustee within 120 days after the end of
each fiscal year of the Company a certificate from the principal executive,
financial or accounting officer of the Company, stating that in the course of
the performance by each signer of his duties as an officer of the Company he
would normally have knowledge of any default by the Company in the performance
and observance of any of the covenants contained in the Indenture, stating
whether or not he has knowledge of any such default without regard to any
period of grace or requirement of notice and, if so, specifying each such
default of which such signer has knowledge and the nature thereof.
CONSOLIDATION, MERGER, CONVEYANCE, SALE OR LEASE
Nothing contained in the Indenture shall prevent the Company from
consolidating with or merging into another corporation or conveying,
transferring or leasing its properties and assets substantially as an entirety
to any person, provided that (a) the successor entity assumes the Company's
applicable obligations on the Senior Notes and (b) immediately after giving
effect to such transaction no Event of Default, and no event which, after
notice or lapse of time or both, would become an Event of Default, shall have
happened and be continuing.
LIMITATION ON LIENS
Nothing contained in the Indenture in any way restricts or prevents the
Company or any subsidiary of the Company from incurring any indebtedness;
provided that neither the Company nor any Significant Subsidiary (as defined
below) shall issue, assume or guarantee any notes, bonds, debentures or other
similar evidences of indebtedness, in each case for money borrowed ("Debt"),
secured by a mortgage, lien, pledge, security interest or other encumbrance
("Lien") upon any property or assets (other than cash) without effectively
providing that the outstanding Senior Notes (together with, if the Company so
determines, any other indebtedness or obligation then existing or thereafter
created ranking equally with the Senior Notes) shall be secured equally and
ratably with (or prior to) such Debt so long as such Debt shall be so secured;
provided, however, that the term Lien shall not mean any easements, rights-of-
way, restrictions and other similar encumbrances and encumbrances consisting
of zoning restrictions, leases, subleases, licenses, sublicenses, restrictions
on the use of property or defects in the title thereto. The foregoing
restriction or Liens will not, however, apply to:
(a) Liens in existence on the date of original issue of the Senior Notes;
(b) (i) any Lien created or arising over any property which is acquired,
constructed or created by the Company or any of its Significant
Subsidiaries, but only if (A) such Lien secures only principal amounts (not
exceeding the cost of such acquisition, construction or creation) raised
for the purposes of such acquisition, construction or creation, together
with any costs, expenses, interest and fees incurred in relation thereto or
a guarantee given in respect thereof, (B) such Lien is created or arises on
or before 90 days after the completion of such acquisition, construction or
creation and (C) such Lien is confined solely to the property so acquired,
constructed or created; or (ii) any Lien to secure indebtedness for
borrowed money incurred in connection with a specifically identifiable
project where the Lien relates to a property (including, without
limitation, shares or other rights of ownership in the entity(ies) which
own such property or project) involved in such project and acquired by the
Company or a Significant Subsidiary after the date of original issue of the
Senior Notes and the recourse of the creditors in respect of such
indebtedness is limited to any or all of such project and property
(including as aforesaid);
(c) any Lien securing amounts not more than 90 days overdue or otherwise
being contested in good faith;
(d) (i) rights of financial institutions to offset credit balances in
connection with the operation of cash management programs established for
the benefit of the Company and/or a Significant Subsidiary or in
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connection with the issuance of letters of credit for the benefit of the
Company and/or a Significant Subsidiary; (ii) any Lien securing
indebtedness of the Company and/or a Significant Subsidiary for borrowed
money incurred in connection with the financing of accounts receivable;
(iii) any Lien incurred or deposits made in the ordinary course of
business, including, but not limited to, (A) any mechanics', materialmen's,
carriers', workmen's, vendors' or other like Liens and (B) any Liens
securing amounts in connection with workers' compensation, unemployment
insurance and other types of social security; (iv) any Lien upon specific
items of inventory or other goods and proceeds of the Company and/or a
Significant Subsidiary securing obligations of the Company and/or a
Significant Subsidiary in respect of bankers' acceptances issued or created
for the account of such person to facilitate the purchase, shipment or
storage of such inventory or other goods; (v) any Lien incurred or deposits
made securing the performance of tenders, bids, leases, trade contracts
(other than for borrowed money), statutory obligations, surety bonds,
appeal bonds, government contracts, performance bonds, return-of-money
bonds and other obligations of like nature incurred in the ordinary course
of business; (iv) any Lien created by the Company or a Significant
Subsidiary under or in connection with or arising out of any pooling and
settlement agreements or pooling and settlement arrangements of the
electricity industry or any transactions or arrangements entered into in
connection with the hedging or management of risks relating to the
electricity industry; (vii) any Lien constituted by a right of set off or
right over a margin call account or any form of cash or cash collateral or
any similar arrangement for obligations incurred in respect of the hedging
or management of risks under transactions involving any currency or
interest rate swap, cap or collar arrangements, forward exchange
transaction, option, warrant, forward rate agreement, futures contract or
other derivative instrument of any kind; (viii) any Lien arising out of
title retention or like provisions in connection with the purchase of goods
and equipment in the ordinary course of business; and (ix) any Lien
securing reimbursement obligations under letters of credit, guaranties and
other forms of credit enhancement given in connection with the purchase of
goods and equipment in the ordinary course of business;
(e) Liens in favor of the Company or a Significant Subsidiary;
(f) (i) Liens on any property or assets acquired from a corporation which
is merged with or into the Company or a Significant Subsidiary, or any
Liens on the property or assets of any corporation or other entity existing
at the time such corporation or other entity becomes a subsidiary of the
Company and, in either such case, is not created in anticipation of any
such transaction (unless such Lien was created to secure or provide for the
payment of any part of the purchase price of such corporation); (ii) any
Lien on any property or assets existing at the time of acquisition thereof
and which is not created in anticipation of such acquisition (unless such
Lien was created to secure or provide for the payment of any part of the
purchase price of such property or assets); and (iii) any Lien created or
outstanding on or over any asset of any company which becomes a Significant
Subsidiary on or after the date of the issuance of the Senior Notes where
such Lien is created prior to the date on which such company becomes a
Significant Subsidiary;
(g) Liens required by any contract or statute in order to permit the
Company or a Significant Subsidiary to perform any contract or subcontract
made by it with or at the request of a governmental entity or any
department, agency or instrumentality thereof, or to secure partial,
progress, advance or any other payments by the Company or a Significant
Subsidiary to such governmental unit pursuant to the provisions of any
contract or statute; (ii) any Lien securing industrial revenue, development
or similar bonds issued by or for the benefit of the Company or a
Significant Subsidiary, provided that such industrial revenue, development
or similar bonds are nonrecourse to the Company and/or such Significant
Subsidiary; and (iii) any Lien securing taxes or assessments or other
applicable governmental charges or levies;
(h) (i) any Lien which arises pursuant to any order of attachment,
distraint or similar legal process arising in connection with court
proceedings and any Lien which secures the reimbursement obligation for any
bond obtained in connection with an appeal taken in any court proceeding,
so long as the execution or other enforcement of such Lien arising pursuant
to such legal process is effectively stayed and the claims secured thereby
are being contested in good faith and, if appropriate, by appropriate legal
proceedings, or any Lien in favor of a plaintiff or defendant in any action
before a court or tribunal as security for costs
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and/or expenses; or (ii) any Lien arising by operation of law or by order
of a court or tribunal or any Lien arising by an agreement of similar
effect, including, without limitation, judgment Liens; or
(i) any extension, renewal or replacement (or successive extensions,
renewals or replacements), as a whole or in part, or any Liens referred to
in the foregoing clauses, for amounts not exceeding the principal amount of
the Debt secured by the Lien so extended, renewed or replaced, provided
that such extension, renewal or replacement Lien is limited to all or a
part of the same property, shares and/or stock of the Company and/or a
subsidiary of the Company that secured the Lien extended, renewed or
replaced (plus improvements on such property).
Notwithstanding the foregoing, the Company and/or a Significant
Subsidiary may create or permit to subsist Liens over any property, shares
and/or stock so long as the aggregate amount of Debt secured by all such
Liens (excluding therefrom the amount of Debt secured by Liens set forth in
clauses (a) through (i), inclusive, above) does not exceed 10% of the
consolidated net tangible assets of the Company and its subsidiaries on a
consolidated basis.
"Significant Subsidiary" means, at any particular time, any subsidiary of
the Company whose gross assets or gross revenues (having regard to the
Company's direct and/or indirect beneficial interest in the shares, or the
like, of that subsidiary) represent at least 25% of the consolidated gross
assets or, as the case may be, consolidated gross revenues of the Company
and its subsidiaries on a consolidated basis.
Consolidated net tangible assets is defined in the Indenture as the total
of all assets (including revaluations thereof as a result of commercial
appraisals, price level restatement or otherwise) appearing on a
consolidated balance sheet of the Company and the Significant Subsidiaries,
net of applicable reserves and deductions, but excluding goodwill, trade
names, trademarks, patents, unamortized debt discount and all other like
intangible assets (which term shall not be construed to include such
revaluations), less the aggregate of the current liabilities of the Company
and the Significant Subsidiaries appearing on such balance sheet.
LIMITATION ON SALE AND LEASE-BACK TRANSACTIONS
The Indenture provides that, so long as any of the Senior Notes remain
outstanding, neither the Company nor any Significant Subsidiary shall enter
into any arrangement with any person providing for the leasing by the Company
or a Significant Subsidiary of any assets which have been or are to be sold or
transferred by the Company or such Significant Subsidiary to such person (a
"Sale and Lease-Back Transaction") unless: (i) such transaction involves a
lease for a temporary period not to exceed three years; (ii) such transaction
is between the Company or a Significant Subsidiary and an affiliate of the
Company; (iii) the Company would be entitled to incur indebtedness secured by
a Lien on the assets or property involved in such transaction at least equal
in amount to the attributable debt with respect to such Sale and Lease-Back
Transaction, without equally and ratably securing the Senior Notes, pursuant
to "--Limitation on Liens" above, other than pursuant to the penultimate
paragraph thereof; (iv) such transaction is entered into within 60 days after
the initial acquisition by the Company of the assets or property subject to
such transaction; (v) after giving effect thereto, the aggregate amount of all
attributable debt with respect to all such Sale and Lease-Back Transactions
does not exceed 10% of consolidated net tangible assets of the Company and its
subsidiaries on a consolidated basis; or (vi) the Company or a Significant
Subsidiary within the 12 months preceding the sale or transfer or the 12
months following the sale or transfer, regardless of whether such sale or
transfer may have been made by the Company or such Significant Subsidiary, as
the case may be, applies, in the case of a sale or transfer for cash, an
amount equal to the net proceeds thereof and, in the case of a sale or
transfer otherwise than for cash, an amount equal to the fair value of the
assets so leased at the time of entering into such arrangement (as determined
by the Board of Directors of the Company or such Significant Subsidiary, as
the case may be), (a) to the retirement of indebtedness for money borrowed,
incurred or assumed by the Company or a Significant Subsidiary, as the case
may be, which by its terms matures at, or is extendible or renewable at the
option of the obligor to, a date more than 12 months after the date of
incurring, assuming or guaranteeing such debt or (b) to investment in any
assets of the Company or a Significant Subsidiary, as the case may be.
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MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the Holders of a majority in aggregate in principal amount
of the outstanding Senior Notes, to modify the Indenture or any supplemental
indenture or the rights of the Holders of the Senior Notes; provided that no
such modification shall without the consent of each Holder of Senior Notes (a)
change the stated maturity upon which the principal of or the interest on the
Senior Notes is due and payable, (b) reduce the principal amount thereof or
the rate of interest thereon, (c) change any obligation of the Company to pay
Additional Amounts, (d) change any place of payment or the currency in which
the Senior Notes or the interest thereon is payable, (e) impair the right to
institute suit for the enforcement of any such payment on or after the stated
maturity thereof (or, in the case of redemption, on or after the redemption
date), (f) reduce the percentage in principal amount of the outstanding Senior
Notes, the consent of whose Holders is required for any waiver of compliance
with certain provisions of the Indenture or certain defaults thereunder and
their consequences provided for in the Indenture, (g) reduce the requirements
contained in the Indenture for quorum or voting or (h) modify certain
provisions of the Indenture. The Indenture provides that Senior Notes owned by
the Company or any of its Affiliates shall be deemed not to be outstanding
for, among other purposes, consenting to any such modification.
The Indenture also contains provisions permitting the Company and the
Trustee to amend the Indenture in certain circumstances without the consent of
the Holders of any Senior Notes to cure any ambiguity, to correct or
supplement any provision therein which may be defective or inconsistent with
any other provision therein, to evidence the merger of the Company or the
replacement of the Trustee and to make any other changes that do not
materially adversely affect the rights of any Holders of Senior Notes.
EVENTS OF DEFAULT
An Event of Default with respect to the Senior Notes is defined in the
Indenture as being: (a) default for 30 days in payment of any interest or any
Additional Amounts on the Global Note or the Definitive Registered Notes; (b)
default in payment of principal of the Global Note or the Definitive
Registered Notes; (c) material default in the performance, or material breach,
of any covenant or obligation of the Company in the Indenture and continuance
of such material default or breach for a period of 60 days after written
notice is given to the Company by the Trustee or to the Company and the
Trustee by the Holders of at least 25% in aggregate principal amount of the
Senior Notes; (d) default in the payment of the principal of any bond,
debenture, note or other evidence of indebtedness, in each case for money
borrowed, or in the payment of principal under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any indebtedness for money borrowed, of the Company or any
Significant Subsidiary which default for payment of principal is in an
aggregate principal amount exceeding US$50,000,000 (or its equivalent in any
other currency or currencies) when such indebtedness becomes due and payable
(whether at maturity, upon redemption or acceleration or otherwise), if such
default shall continue unremedied or unwaived for more than 30 Business Days
and the time for payment of such amount has not been expressly extended; and
(e) the failure of the Company or a Significant Subsidiary generally to pay
its debts as they become due, or the admission in writing of its inability to
pay its debts generally, or the making of a general assignment for the benefit
of its creditors, or the institution of any proceeding by or against the
Company or a Significant Subsidiary (other than any such proceeding brought
against the Company or a Significant Subsidiary that is dismissed within 180
days from the commencement thereof) seeking to adjudicate it bankrupt or
insolvent, or seeking liquidation (other than a solvent liquidation), winding
up, reorganization, arrangement, adjustment, protection, relief or composition
of it or its debts under any law relating to bankruptcy, insolvency,
reorganization, moratorium or relief of debtors, or seeking the entry of an
order for relief or appointment of an administrator, receiver, trustee,
intervenor or other similar official for it or for any substantial part of its
property, or the taking of any action by the Company or a Significant
Subsidiary to authorize any of the actions set forth in this subparagraph (e).
If an Event of Default with respect to the Senior Notes shall occur and be
continuing, either the Trustee or the Holders of at least 25% in aggregate
principal amount of the Senior Notes may declare the principal amount of the
Senior Notes, and any interest accrued thereon, to be due and payable
immediately. At any time after such
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declaration of acceleration has been made, but before a judgment or decree for
payment of money has been obtained, if all Events of Default have been cured
(other than the non-payment of principal of the Senior Notes which has become
due solely by reason of such declaration of acceleration) then such
declaration of acceleration shall be automatically annulled and rescinded.
No holder of the Senior Notes shall have any right to institute any
proceeding, judicial or otherwise, with respect to the Indenture, or for the
appointment of a receiver or trustee, or for any other remedy thereunder,
unless (a) such holder has previously given written notice to the Trustee of a
continuing Event of Default with respect to the Senior Notes and (b) the
Holders of not less than 25% in principal amount of the Senior Notes shall
have made written request to the Trustee to institute proceedings in respect
of such Event of Default in its own name as Trustee.
ADDITIONAL AMOUNTS
All payments of principal and interest in respect of the Global Note and the
Definitive Registered Notes shall be made free and clear of, and without
withholding or deduction for or on account of, any present or future taxes,
duties, assessments or governmental charges of whatever nature imposed,
levied, collected, withheld or assessed by or within the UK or by or within
any political subdivision thereof or any authority therein or thereof having
power to tax ("UK Taxes"), unless such withholding or deduction is required by
law. In the event of any such withholding or deduction the Company shall pay
to the relevant Holder of the Global Note or to the relevant Holders of the
Definitive Registered Notes, as the case may be, such additional amounts
("Additional Amounts") as will result in the payment to each such Holder of
the amount that would otherwise have been receivable by such Holder in the
absence of such withholding or deduction, except that no such Additional
Amounts shall be payable:
(a) to, or to a Person on behalf of, a Holder who is liable for such UK
Taxes in respect of the Senior Notes by reason of such Holder having some
connection with the UK other than the mere holding of a Senior Note or the
receipt of principal and interest in respect thereof;
(b) to, or to a Person on behalf of, a Holder who presents a Senior Note
(where presentation is required) for payment more than 30 days after the
Relevant Date (as defined below) except to the extent that such Holder
would have been entitled to such Additional Amounts on presenting such
Senior Note for payment on the last day of such period of 30 days;
(c) to, or to a Person on behalf of, a Holder who presents a Senior Note
(where presentation is required) in the United Kingdom;
(d) to, or to a Person on behalf of, a Holder who would not be liable or
subject to the withholding or deduction by making a declaration of non-
residence or similar claim for exemption to the relevant tax authority; or
(e) to, or to a Person on behalf of, a Holder who requests a Definitive
Registered Note following an Event of Default.
"Relevant Date" means whichever is the later of (i) the date on which such
payment first becomes due and (ii) if the full amount payable has not been
received in The City of New York by the Book-Entry Depositary or the Trustee
on or prior to such due date, the date on which, the full amount having been
so received, notice to that effect shall have been given to the Holders in
accordance with the Indenture.
OPTIONAL REDEMPTION
The Senior Notes will be redeemable in whole or in part, at the option of
the Company at any time, at a redemption price equal to the greater of (i)
100% of the principal amount of the Senior Notes being redeemed or (ii) the
sum of the present values of the remaining scheduled payments of principal of
and interest on the Senior Notes being redeemed discounted to the date of
redemption on a semi-annual basis (assuming a 360-day year
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consisting of twelve 30-day months) at a discount rate equal to the Treasury
Yield plus basis points, plus, for (i) or (ii) above, whichever is
applicable, accrued interest on the Senior Notes to the date of redemption.
"Treasury Yield" means, with respect to any redemption date, the rate per
annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed
as a percentage of its principal amount) equal to the Comparable Treasury
Price for such redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable
to the remaining term of such Senior Notes to be redeemed that would be
utilized, at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining term of the Senior Notes.
"Comparable Treasury Price" means, with respect to any redemption date, (i)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
business day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal
Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for US
Government Securities" or (ii) if such release (or any successor release) is
not published or does not contain such prices on such business day, the
Reference Treasury Dealer Quotation for such redemption date.
"Independent Investment Banker" means an independent investment banking
institution of national standing appointed by the Company and reasonably
acceptable to the Trustee.
"Reference Treasury Dealer Quotation" means, with respect to the Reference
Treasury Dealer and any redemption date, the average, as determined by the
Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount and quoted in
writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the
third business day preceding such redemption date).
"Reference Treasury Dealer" means a primary US Government securities dealer
in New York City (a "Primary Treasury Dealer") appointed by the Company and
reasonably acceptable to the Trustee.
Notice of redemption shall be given by first-class mail, postage prepaid,
mailed not less than 15 days nor more than 30 days prior to the date fixed for
redemption.
If fewer than all the Senior Notes are to be redeemed, selection of Senior
Notes for redemption will be made by the Trustee in any manner the Trustee
deems fair and appropriate and that complies with applicable legal and
securities exchange requirements.
Unless the Company defaults in payment of the redemption price, from and
after the redemption date, the Senior Notes or portions thereof called for
redemption will cease to bear interest, and the holders thereof will have no
right in respect to such Senior Notes except the right to receive the
redemption price thereof.
OPTIONAL TAX REDEMPTION
If (a) the Company satisfies the Trustee prior to the giving of a notice as
provided below that it has or will become obliged to pay Additional Amounts as
a result of either (x) any change in, or amendment to, the laws or regulations
of the UK or any political subdivision or any authority or agency thereof or
therein having power to tax or levy duties, or any change in the application
or interpretation of such laws or regulations, which change or amendment
becomes effective on or after the date of this Prospectus or (y) the issuance
of Definitive Registered Notes pursuant to clause (a) or clause (x) of "--
Definitive Senior Notes" above, and (b) such obligation cannot be avoided by
the Company taking reasonable measures available to it, the Company may, at
its option, on giving not more than 30 nor less than 15 days' notice to the
Holders, redeem all, but not some only, of the Senior Notes,
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in each case at their principal amount, together with accrued and unpaid
interest, provided that no such notice of redemption shall be given earlier
than 90 days prior to the earliest date on which the Company would be obliged
to pay such Additional Amounts were a payment in respect of the Senior Notes
then due. Prior to the publication of any notice of redemption pursuant to
this paragraph, the Company shall deliver to the Trustee a certificate signed
by a director of the Company stating that the obligation referred to in (a)
above cannot be avoided by the Company taking reasonable measures available to
it, and the Trustee shall accept such certificate as sufficient evidence of
the satisfaction of the condition precedent set out in (b) above, in which
event it shall be conclusive and binding on the Holders.
In the event the Global Note is redeemed in whole or in part pursuant to
this provision or "Optional Redemption" above, the Book-Entry Depositary will
redeem, from the amount received by it in respect of the redemption of the
Global Note, an equal amount of the Book-Entry Interest issued to DTC. The
redemption price payable in connection with the redemption of Book-Entry
Interest will be equal to the amount received by the Book-Entry Depositary in
connection with the redemption of the Global Note.
DEFEASANCE
The Company, at its option, (a) will be discharged from any and all
obligations in respect of the Senior Notes (except in each case for certain
obligations, including to register the transfer or exchange of Senior Notes,
replace stolen, lost or mutilated Senior Notes, maintain paying agencies and
hold moneys for payment in trust) or (b) need not comply with certain
covenants of the Indenture described under "Limitation on Consolidation,
Merger, Conveyance, Sale or Lease", "Limitation on Liens" and "Limitation on
Sale and Lease-Back Transactions" in each case, if the Company irrevocably
deposits with the Trustee, in trust, (i) money or (ii) in certain cases, (A)
U.S. government obligations which through the payment of interest and
principal in respect thereof in accordance with their terms will provide money
in an amount, or (B) a combination thereof, in each case sufficient to pay and
discharge the principal and interest on the outstanding Senior Notes on the
dates such payments are due in accordance with the terms of the Senior Notes
(or if the Company has designated a redemption date pursuant to the final
sentence of this paragraph, to and including the redemption date so designated
by the Company), and no Event of Default or event which with notice or lapse
of time would become an Event of Default (including by reason of such deposit)
with respect to the Senior Notes shall have occurred and be continuing on the
date of such deposit. To exercise any such option, the Company is required to
deliver to the Trustee (x) an opinion of counsel (who may be counsel to the
Company) to the effect that the Holders will not recognize income, gain or
loss for federal income tax purposes as a result of such deposit, defeasance
and discharge, which in the case of (a) must be based on a change in law or a
ruling by the U.S. Internal Revenue Service, and (y) an Officers' Certificate
as to compliance with all conditions precedent provided for in the Indenture
relating to the satisfaction and discharge of the Senior Notes. If the Company
has deposited or caused to be deposited money or U.S. government obligations
to pay or discharge the principal of and interest, if any, on the outstanding
Senior Notes to and including the redemption date on which all of the
outstanding Senior Notes are to be redeemed, such redemption date shall be
irrevocably designated by a board resolution delivered to the Trustee on or
prior to the date of deposit of such money or U.S. government obligations, and
such board resolution shall be accompanied by an irrevocable request that the
Trustee give notice of such redemption in the name and at the expense of the
Company not less than 15 nor more than 30 days prior to such redemption date
in accordance with the Indenture.
GOVERNING LAW; SUBMISSION TO JURISDICTION
The Indenture and the Senior Notes will be governed by, and construed in
accordance with, the laws of the State of New York.
Any suit, action or proceeding against the Company or its properties, assets
or revenues with respect to the Indenture or a Senior Note may be brought in
the Supreme Court of the State of New York, County of New York or in the
United States District Court for the Southern District of New York. The
Company has submitted to the non-exclusive jurisdiction of such courts for the
purposes of any such proceeding and has irrevocably waived, to the fullest
extent it may effectively do so, any objection to the laying of venue of any
such proceeding in any such court and the defense of an inconvenient forum.
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CERTAIN INCOME TAX CONSIDERATIONS
THIS SUMMARY IS OF A GENERAL NATURE AND IS INCLUDED HEREIN SOLELY FOR
INFORMATIONAL PURPOSES. IT IS NOT INTENDED TO BE, NOR SHOULD IT BE CONSTRUED
TO BE, LEGAL OR TAX ADVICE. NO REPRESENTATION WITH RESPECT TO THE CONSEQUENCES
TO ANY PARTICULAR PURCHASER OF THE BOOK-ENTRY INTEREST IS MADE. PROSPECTIVE
PURCHASERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THEIR
PARTICULAR CIRCUMSTANCES AND THE EFFECTS OF STATE, LOCAL OR FOREIGN LAWS,
INCLUDING UK TAX LAWS TO WHICH THEY MAY BE SUBJECT.
UK INCOME TAX CONSIDERATIONS
The comments below are of a general nature based on current UK law and
Inland Revenue practice. They relate only to the position of persons who are
the absolute beneficial owners of their Senior Notes and related interest and
may not apply to certain classes of persons such as dealers. Any holders of
Senior Notes who are in doubt as to their tax position should consult their
professional advisers.
PAYMENTS ON THE SENIOR NOTES
For UK tax purposes, while the Senior Notes remain represented by the Global
Note in bearer form and continue to be listed on the Luxembourg Stock Exchange
or some other stock exchange recognized by the UK Inland Revenue, payments of
interest (whether on the Global Note to the Book-Entry Depositary or the Book-
Entry Interest to DTC) may be made without withholding or deduction for or on
account of UK income tax for so long as the Company's paying agent and the
Book-Entry Depositary, if different, are outside the UK.
In other cases, and in particular if Definitive Registered Notes are issued,
interest will be paid after deduction of UK income tax (currently at the lower
rate of 20%). A US holder will normally be eligible to recover in full any UK
tax withheld from payments of interest to which such holder is beneficially
entitled by making a claim under the US/UK Double Tax Treaty on the
appropriate form. Alternatively, a claim may be made by a US holder in advance
of a payment of interest. If the claim is accepted by the Inland Revenue, they
will authorize subsequent payments to that US holder to be made without
withholding of UK income tax. Claims for repayment must be made within six
years of the end of the UK year of assessment (generally April 5 in each year)
to which the interest relates and must be accompanied by the original
statement provided by the Company when the interest payment was made showing
the amount of UK income tax deducted. Because a claim is not considered until
the UK tax authorities receive the appropriate form from the Internal Revenue
Service, forms should be sent to the Internal Revenue Service, in the case of
an advance claim, well before the relevant interest payment date or, in the
case of a claim for the repayment of the tax, well before the end of the
appropriate limitation period.
Holders in other jurisdictions may be entitled to a refund of any UK income
tax deducted or withheld or to make a claim for interest on the Senior Notes
to be paid without, or subject to a reduced rate of, deduction or withholding
under the provisions of an applicable double tax treaty.
Refund of all or part of any UK income tax deducted or withheld may,
depending on individual circumstances, be available to a holder of Senior
Notes who is resident in the UK or who carries on a trade, profession or
vocation in the UK through a branch or agency to which the Senior Notes are
attributable, or who is a Commonwealth citizen or otherwise entitled to a UK
personal allowance.
Holders should be aware that under current UK tax law upon the issuance of
Definitive Registered Notes such holders may become subject to UK withholding
tax on any payments of interest with respect to such Senior Notes. However,
such holders will be entitled to the payment of Additional Amounts in respect
of the tax withheld, except as set forth under "Description of the Senior
Notes--Additional Amounts," and subject to the
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right of the Company in certain circumstances to redeem the Senior Notes
early. See "Description of the Senior Notes--Optional Tax Redemption."
Interest on the Senior Notes constitutes UK source income for tax purposes
and, as such, may be subject to UK income tax by direct assessment even where
paid without deduction or withholding.
However, interest from a UK source received by persons not regarded as
resident in the UK for tax purposes will normally be limited to the tax, if
any, deducted at source on payment of such interest. This will not apply if
interest is received by a Holder who is not resident for tax purposes in the
UK if that Holder carries on a trade, profession or vocation in the UK through
a UK branch or agency in connection with which the interest is received or to
which the Senior Notes are attributable. There are exemptions for interest
received by certain categories of agent (such as some brokers and investment
managers).
UK CORPORATION TAXPAYERS
In general Holders which are within the charge to UK corporation tax will be
charged to tax on all returns on and fluctuations in value of the Senior Notes
broadly in accordance with their statutory accounting treatment. Such Holders
will generally be charged to tax in each accounting period by reference to
interest and discount accrued in that period.
Any gains or losses on Senior Notes held by UK resident corporate Holders or
certain other Holders who are within the charge to UK corporation tax, which
are attributable to fluctuations in the value of US dollars relative to, in
most cases sterling, will, subject to reliefs and exclusions contained in the
relevant legislation, be included in the calculation of such Holders' taxable
income on an accruals basis for each accounting period during which the Senior
Notes are held. Any gain or loss arising on a disposal (including redemption)
of such Senior Notes would be outside the scope of UK taxation of chargeable
gains.
OTHER UK TAX PAYERS
Taxation of Chargeable Gains
A disposal of Senior Notes by an individual Holder who is resident or
ordinarily resident in the UK, or who carries on a trade, profession or
vocation in the UK through a branch or agency to which the Senior Notes are
attributable, may give rise to a chargeable gain or allowable loss for the
purposes of the UK taxation of chargeable gains.
Accrued Income Scheme
On a disposal of Senior Notes by a Holder, any interest which has accrued
since the last interest payment date may be chargeable to tax as income if
that Holder is resident or ordinarily resident in the UK or carries on a trade
in the UK through a branch or agency to which the Senior Notes are
attributable.
Taxation of discount
Based on the Company's understanding of the Inland Revenue's practice in
this area, it is considered that the Senior Notes will not be treated as
constituting "relevant discounted securities" for the purposes of Schedule 13
of the Finance Act 1996. Therefore, individual Holders who are within the
scope of UK income tax as described above should not be liable to UK income
tax on gains made on sales or other disposals (including redemption) of the
Senior Notes.
UK STAMP DUTY AND STAMP DUTY RESERVE TAX
No UK Stamp Duty or Stamp Duty Reserve Tax is payable on the issue or
transfer by delivery of a Senior Note or on its redemption.
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US FEDERAL INCOME TAX CONSIDERATIONS
The following summary describes the material US federal income tax
consequences of the acquisition, ownership and disposition of Senior Notes to
initial purchasers who are US citizens or residents, corporations,
partnerships or other entities created or organized in or under the laws of
the US or any state thereof, or an estate or trust, the income of which is
subject to US federal income taxation regardless of its source, and who are
residents in the US and not resident in the UK for purposes of the current
double taxation convention between the US and the UK ("US Holders") and who
hold their beneficial interests in the Senior Notes as capital assets. The
discussion is based upon the provisions of the US Internal Revenue Code of
1986, as amended (the "Code"), regulations, rulings and judicial decisions now
in effect, all of which are subject to change, possibly with retroactive
effect. The summary does not discuss all aspects of US federal income taxation
that may be relevant to particular investors in light of their particular
investment circumstances, nor does it discuss any aspects of state, local or
foreign tax laws or any estate or gift tax considerations. The summary does
not deal with non-US persons or with certain classes of US persons subject to
special treatment under the US federal income tax laws (for example, dealers
in securities, banks, life insurance companies or tax-exempt organizations).
In addition, because the tax consequences may differ depending on individual
circumstances, each prospective purchaser of the Senior Notes is strongly
urged to consult his own tax advisor with respect to his particular tax
situation.
PAYMENTS OF INTEREST
Except as set forth below, interest on the Senior Notes generally will be
taxable to a US Holder as ordinary income from US sources at the time it is
received or accrued in accordance with the US Holder's method of accounting
for US federal income tax purposes. In addition, if any Additional Amounts are
paid, such payment will be taxable as ordinary income in accordance with such
US Holder's method of accounting. Thus, a US Holder will be required to report
income in an amount greater than the cash it receives in respect of payments
on its Senior Notes. However, a US Holder, subject to certain limitations, may
be eligible to claim as a credit or deduction for purposes of computing its US
federal income tax liability UK Taxes withheld (if any). For that purpose,
interest income and the Additional Amounts will generally be treated as
foreign source passive income (or, in the case of certain US Holders,
financial services income). The rules relating to foreign tax credits are
extremely complex, and US Holders should consult with their own tax advisors
with regard to the availability of a foreign tax credit and the application of
the foreign tax credit to their particular situation.
SALE OR OTHER TAXABLE DISPOSITION OF THE SENIOR NOTES
A US Holder's tax basis in the Senior Notes will, in general, be the US
Holder's cost therefor. A US Holder will recognize gain or loss on the sale,
exchange, redemption or other taxable disposition of the Senior Notes, equal
to the difference (if any) between the amount realized upon the sale, exchange
or retirement (converted into US dollars if any foreign currency is received)
and the adjusted tax basis of the Senior Notes. Such gain or loss will be
capital gain or loss and will be long-term capital gain or loss if, at the
time of sale, exchange or retirement, the Senior Notes have been held for more
than one year. Under current law, net capital gains are, in certain
circumstances, taxed at lower rates than ordinary income. The deductibility of
capital losses is subject to limitations. If the US dollar is not the
functional currency of the US Holder, such Holder may recognize ordinary gain
or loss due to the currency exchange fluctuation.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Under the Code, a US Holder may be subject, under certain circumstances, to
US backup withholding at a 31% rate with respect to payments by the Company or
any of its paying agents of interest or the gross proceeds of dispositions
thereof. This withholding only applies if the US Holder fails to furnish a
correct social security or other taxpayer identification number to the
Company, fails to report interest income in full or fails to certify to the
Company that such US Holder has provided a correct taxpayer identification
number and that such US Holder is not subject to withholding, the Company is
required to withhold a 31% federal backup withholding tax
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on certain amounts paid to the US Holder. Special rules may apply with respect
to the payment of the proceeds from the sale of the Senior Notes to or through
foreign offices of certain brokers.
The backup withholding tax is not an additional tax and may be credited
against a US Holder's regular US federal income tax liability or refunded by
the IRS where applicable.
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UNDERWRITING
Upon the terms and conditions set forth in the Underwriting Agreement, dated
the date hereof, each Underwriter named below has severally agreed to
purchase, and the Company has agreed to sell to such Underwriters, the
principal amount of the Senior Notes set forth opposite the name of such
Underwriter.
<TABLE>
<CAPTION>
NAME PRINCIPAL AMOUNT OF THE SENIOR NOTES
---- ------------------------------------
<S> <C>
Lehman Brothers Inc................... US$
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.........................
J.P. Morgan Securities Inc............
--------------
Total............................. US$235,000,000
==============
</TABLE>
In the Underwriting Agreement, the Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all of the Senior Notes
being sold pursuant to the Underwriting Agreement if any of the Senior Notes
being sold pursuant to the Underwriting Agreement are purchased.
The Underwriters have advised the Company that the Underwriters propose to
offer the Senior Notes to the public initially at the public offering price
set forth on the cover page of this Prospectus and to selected dealers at such
price less a concession of not more than % of the principal amount of the
Senior Notes. The Underwriters may allow, and such dealers may reallow, a
concession not in excess of % of the principal amount of the Senior Notes
to certain other dealers. After the initial offering, the offering price and
other selling terms may be changed by the Underwriters.
The Senior Notes represent a new issue of securities. If the Senior Notes
are traded after their initial issuance, they may trade at a discount from
their initial public offering price depending upon prevailing interest rates,
the market for similar securities and other factors. In addition, no assurance
can be given that a holder of Senior Notes will be able to sell such Senior
Notes in the future or that such sale will be at a price equal to or higher
than the initial public offering price of such Senior Notes.
Although the Underwriters have informed the Company that they currently
intend to make a market in the Senior Notes, they are not obligated to do so,
and any such market-making may be discontinued at any time without notice.
There can be no assurance as to the development or liquidity of any market for
the Senior Notes or interests in the Book-Entry Interest. If an active public
market does not develop, the market price and liquidity of the Senior Notes or
interests in the Book-Entry Interest may be adversely affected.
The Company has agreed to indemnify the Underwriters and its controlling
persons against certain liabilities, including liabilities under the
Securities Act.
It is possible that more than 10% of the net proceeds of the Offering will
be paid to one or more entities who are affiliated with Underwriters in the
Offering. See "Use of Proceeds." Therefore, the Offering is being conducted
pursuant to Article III, Section 44(c)(8) of the National Association of
Securities Dealers, Inc. Rules of Fair Practice.
Each of the Underwriters has severally represented and agreed in the
Underwriting Agreement that (i) it has not offered or sold, and prior to the
date six months after the date of issue of the Senior Notes will not offer or
sell, any Senior Notes to persons in the UK except to persons whose ordinary
activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their businesses or
otherwise in circumstances which have not resulted in and will not result in
an offer to the public in the UK within the meaning of the Public Offers of
Securities Regulations 1995; (ii) it has complied and will comply with all
applicable provisions of the Financial Services Act 1986 (the "FSA") with
respect to anything done by it in relation to the Senior Notes in, from or
otherwise involving the UK; (iii) it has only issued or passed on and will
only issue or pass on in the UK any document received by it in connection with
the issue of the Senior Notes to a person who is of a kind described in
Article 11(3) of the Financial Services Act 1986
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(Investment Advertisements) (Exemptions) Order 1996 or is a person to whom
such document may otherwise lawfully be issued or passed on; and (iv) it has
not issued or caused to be issued and will not issue or cause to be issued in
the UK any advertisement inviting persons to subscribe or purchase the Senior
Notes or containing information calculated to lead directly or indirectly to
persons subscribing or purchasing the Senior Notes except to persons (a) who
are authorized under the FSA or (b) whose ordinary business involves the
acquisition and disposal of property of the same kind as the Senior Notes, and
has not advised or procured and will not advise or procure any person (except
as aforesaid) in the UK to subscribe or purchase the Senior Notes.
LEGAL MATTERS
Certain legal matters relating to the Senior Notes will be passed upon for
the Company by Troutman Sanders LLP, Atlanta, Georgia and for the Underwriters
by Shearman & Sterling, New York, New York. Certain legal matters relating to
English law will be passed upon for the Company by Allen & Overy, London,
England.
Troutman Sanders, LLP and Shearman & Sterling will rely, without independent
investigation, upon Allen & Overy with respect to matters relating to English
law.
EXPERTS
The consolidated financial statements of Southern Investments UK plc
(Successor Company) as of March 31, 1996 and for the period from September 18,
1995 to March 31, 1996, and the consolidated financial statements of South
Western Electricity plc (Predecessor Company) for the period from April 1,
1995 to September 17, 1995, included in this Registration Statement have been
audited by Arthur Andersen, Independent Public Accountants, as indicated in
their reports with respect thereto, and are included herein in reliance upon
the authority of said firm as experts in giving said reports.
The consolidated financial statements of South Western Electricity plc
(Predecessor Company) at March 31, 1995 and for the years ended March 31, 1995
and 1994, appearing in this Prospectus and Registration Statement have been
audited by Ernst & Young, Chartered Accountants, independent auditors, as set
forth in their reports thereon appearing elsewhere herein and in the
Registration Statement, and are included in reliance upon such reports given
upon the authority of such firm as experts in accounting and auditing.
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-1 under the Securities Act, with respect to the Senior Notes offered hereby.
This Prospectus omits certain information contained in the Registration
Statement, and reference is made to the Registration Statement and the
exhibits and schedules thereto for further information with respect to the
Company and the Senior Notes offered hereby. Statements contained herein
concerning the provisions of any documents are not necessarily complete, and
in each instance reference is made to the copy of such document filed as an
exhibit to the Registration Statement. Each such statement is qualified in its
entirety by such reference. The Registration Statement, including exhibits and
schedules filed therewith, may be inspected without charge at the public
reference facilities maintained by the Commission at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the regional
offices of the Commission located at Room 1228, 75 Park Place, New York, New
York 10007 and Northwestern Atrium Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. Copies of such materials may be obtained from
the Public Reference Section of the Commission, Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and its public reference
facilities in New York, New York and Chicago, Illinois, at prescribed rates.
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Upon completion of the Offering, the Company will be subject to the
informational reporting requirements of the Exchange Act and, in accordance
therewith, will file reports and other information with the Commission. In
accordance with the Indenture, the Company will also provide such information
to the Trustee and the registered holders of the Senior Notes.
LUXEMBOURG STOCK EXCHANGE AND OTHER INFORMATION
The issue of the Senior Notes was authorized pursuant to a resolution of the
Board of Directors of the Company dated July 26, 1996.
The legal notice relating to the issue of the Senior Notes and the
Memorandum and Articles of Association of the Company will be registered prior
to the listing with the Chief Registrar of the District Court in Luxembourg
(Greffier en Chef du Tribunal d'Arrondissement de et--Luxembourg), where such
documents are available for inspection and where copies thereof can be
obtained upon request.
The financial information in respect of the Company and the Predecessor
Company set forth in "Summary Financial Information," "Selected Financial
Data," "Capitalization" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" herein does not constitute statutory
accounts under Section 240 of the Companies Act 1985. Statutory accounts for
the fiscal year to which such financial information relates have been, and for
fiscal year 1996 will be, delivered to the Registrar of Companies in England
and Wales. The auditors of the Company and the Predecessor Company have made a
report under Section 235 of the Companies Act 1985 on the statutory accounts
for each such fiscal year which was not qualified within the meaning of
Section 262 of the Companies Act 1985 and did not contain a statement made
under Section 237(2) or 237(5) of that Act.
Copies of the Indenture, the Deposit Agreement, the DTC Agreement, the
Memorandum and Articles of Association of the Company and the most recent
publicly available annual report of the Company will be available for
inspection, for so long as the Senior Notes are outstanding and are listed on
the Luxembourg Stock Exchange, during usual business hours on any weekday
(except Saturdays and public holidays) at the specified offices of the Paying
Agents and at the office of the listing agent, Banque Generale du Luxembourg
S.A., in Luxembourg.
Save as disclosed herein, there has been no significant change in the
financial or trading position of the Company since March 31, 1996, the end of
the last financial period of the Company.
There are no legal or arbitration proceedings (including any such
proceedings which are pending or, to the best of the Company's knowledge and
belief, threatened) involving the Company which may have, or have had during
the period since incorporation, a significant effect on the financial position
of the Company.
The objects of the Company are set out in clause 4 of its Memorandum of
Association.
The addresses of the paying agents in respect of the Senior Notes are .
The address of Arthur Andersen, Independent Public Accountants, who have
audited the accounts of the Company for the period from the date of its
incorporation to March 31, 1996 is Broad Quay House, Broad Quay, Bristol BS1
4DJ, England.
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ANNEX
GLOSSARY
Accentacross: Accentacross Limited, a Director of the Company.
Additional Amounts: Amounts that the Company may be required to pay such
that the holder of the Global Note will receive such amounts as would have
been received without withholding or deduction for or on account of any
present or future taxes, duties, assessments of governmental charges of
whatever nature imposed, levied, collected, withheld or assessed by or within
the UK or by or within any political subdivision thereof or any authority
therein or thereof having power to tax, unless such withholding or deduction
is required by law.
Book-Entry Depositary: Bankers Trust Company.
Book-Entry Interest: Certificateless depositary interest to be issued by the
Book-Entry Depositary to DTC.
CAGR: Compound annual growth rate.
Calendar Year: A year ended December 31.
Cedel Bank: Cedel Bank, societe anonyme.
CFDs: Contracts for differences.
Code: The US Internal Revenue Code of 1986, as amended.
Commission: The Securities and Exchange Commission.
Company: Southern Investments UK plc.
Comparable Treasury Issue: In the case of the Senior Notes, the United
States Treasury security selected by an Independent Investment Banker as
having a maturity comparable to the remaining term of such Senior Notes to be
redeemed that would be utilized, at the time of selection and in accordance
with customary financial practice, in pricing new issues of corporate debt
securities of comparable maturity to the remaining term of the Senior Notes.
Comparable Treasury Price: With respect to any redemption date, (i) the
average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
business day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal
Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for US
Government Securities" or (ii) if such release (or any successor release) is
not published or does not contain such prices on such business day, the
Reference Treasury Dealer Quotation for such redemption date.
DCR: Duff & Phelps Credit Rating Company.
Debt: Money borrowed as evidenced by the issuance, assumption or guarantee
of any notes, bonds, debentures or other similar evidences of indebtedness.
Deposit Agreement: The deposit agreement among the Company, the Book-Entry
Depositary and the holders and beneficial owners from time to time of
interests in the Book-Entry Interest.
Definitive Registered Notes: Definitive Senior Notes in registered form.
Distribution Price Control Formula: A formula of P+RPI-Xd where P reflects
the previous maximum average price per unit of electricity distributed, RPI
reflects the percentage change in the Retail Price Index between the previous
year and the current year and the Xd factor is established by the Regulator
following review.
A-1
<PAGE>
DTC: The Depositary Trust Company.
DTC Agreement: The agreement between DTC and the Book-Entry Depositary
pursuant to which the Book-Entry Depositary will issue one or more
certificateless depositary interests and pursuant to which the DTC will
operate a book-entry system for interests in the Book-Entry Interest.
Electricity Act: The Electricity Act 1989.
EMFs: Electromagnetic fields.
Euroclear: The Euroclear System.
Exchange Act: The US Securities Exchange Act of 1934, as amended.
Fiscal Year: A year ended March 31.
Fossil Fuel Levy: A levy system instituted to reimburse the generators and
the RECs for the extra costs involved in generating electricity from non-
fossil fuel plants as compared to generating electricity from fossil fuel
plants.
Franchise Area: SWEB's service area as determined by its PES license.
Franchise Supply Customers: Customers with demand of not more than 100kW.
FSA: The Financial Services Act 1986.
Georgia Power: Georgia Power Company, a subsidiary of Southern.
Global Note: The global Senior Note representing the Senior Notes.
Holdings: Southern Investments UK Holdings Limited, the direct parent
company of the Company.
Indenture: The Indenture between the Company and Bankers Trust Company.
Independent Investment Banker: An independent investment banking institution
of national standing appointed by the Company and reasonably acceptable to the
Trustee.
Indirect Participants: Persons that hold interests in the Book-Entry
Interest through persons that have accounts with DTC.
Lien: Debt secured by a mortgage, lien, pledge, security interest or other
encumbrance on any property or assets (other than cash).
Mighteager: Mighteager Limited, a Director of the Company.
Mission Energy: Mission Energy Company.
MMC: The UK Monopolies and Mergers Commission.
Moody's: Moody's Investors Service, Inc.
NFFOs: Non-fossil fuel sources of generating capacity.
NGC: The National Grid Company plc, which is wholly-owned by NGG.
A-2
<PAGE>
NGG: The National Grid Group plc.
Non-Franchise Supply Customers: Customers with demand greater than 100kW.
Own-generation limits: The limit imposed by the PES license on the extent of
generation capacity in which a REC may hold an interest.
Participants: Persons that have accounts with DTC.
PES license: A Public Electricity Supply license.
PESs: The public electricity (or first tier) suppliers.
PMDC: Power Markets Development Company, a shareholder in Holdings and a
subsidiary of PP&L Resources.
PMDC Directors: Accentacross and Mighteager.
Pool: The wholesale trading market for electricity in England and Wales.
Pooling and Settlement Agreement: The agreement which governs the
constitution and operation of the Pool and the calculation of payments to and
from generators and suppliers.
PP&L Resources: PP&L Resources, Inc., the parent of PMDC.
Predecessor Company: South Western Electricity plc prior to its acquisition
by the Company.
Primary Treasury Dealer: A primary US Government securities dealer in New
York City.
Pro Forma Fiscal Year 1996: Unaudited pro forma information for the fiscal
year ended March 31, 1996.
PSB: NGG's pumped storage electricity generation business.
RECs: The 12 regional electricity companies in England and Wales licensed to
distribute, supply and, to a limited extent, generate electricity.
Reference Treasury Dealer: A primary US Government securities dealer in New
York City appointed by the Company and reasonably acceptable to the Trustee.
Reference Treasury Dealer Quotation: With respect to the Reference Treasury
Dealer and any redemption date, the average, as determined by the Trustee, of
the bid and asked prices for the Comparable Treasury Issue expressed in each
case as a percentage of its principal amount and quoted in writing to the
Trustee by such Reference Treasury Dealer at 5:00 p.m. on the third business
day preceding such redemption date.
Regulator: The UK Director General of Electricity Supply.
Relevant Date: Whichever is the later of (i) the date on which a payment on
the Senior Notes first becomes due and (ii) if the full amount payable has not
been received in The City of New York by the Book-Entry Depositary or the
Trustee on or prior to such due date, the date on which, the full amount
having been so received, notice to that effect shall have been given to the
Holders in accordance with the Indenture.
Sale and Lease-Back: The leasing by the Company or a Significant Subsidiary
of any assets from a person which have been or are to be sold or transferred
by the Company to such person.
Securities Act: The US Securities Act of 1933, as amended.
Secretary of State: The UK Secretary of State for Trade and Industry.
A-3
<PAGE>
Senior Notes: Direct, unsecured and unsubordinated obligations of the
Company ranking pari passu with all other unsecured and unsubordinated
obligations of the Company in the aggregate principal amount of $235,000,000.
SFAS: US GAAP Statement of Financial Accounting Standards.
Significant Subsidiary: Any subsidiary of the Company whose gross assets or
gross revenues (having regard to the Company's direct and/or indirect
beneficial interest in the shares, or the like, of that subsidiary) represent
at least 25% of the consolidated gross assets or gross revenues of the Company
and all of its subsidiaries taken together.
Southern: The Southern Company, the ultimate parent company of the Company.
Southern Company system: Southern and its subsidiaries.
Southern Electric: Southern Electric International, Inc., an affiliate of
the Company and a wholly-owned subsidiary of Southern.
S&P: Standard & Poors.
Successor Company: Southern Investments UK plc and its subsidiaries.
Supply Price Control Formula: P+RPI-Xs+Y where P reflects the maximum
average price per unit of electricity supplied, RPI reflects the percentage
change in the Retail Price Index between the previous year and the current
year, the Xs factor is established by the Regulator following review and the Y
term is a pass through of certain costs.
SWEB: South Western Electricity plc, a subsidiary of the Company.
Treasury Yield: With respect to any redemption date, the rate per annum
equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed
as a percentage of its principal amount) equal to the Comparable Treasury
Price for such redemption date.
Trustee: Bankers Trust Company.
UK: The United Kingdom.
UK GAAP: Accounting principles generally accepted in the United Kingdom.
UK Taxes: Any taxes, duties, assessments or any present or future taxes,
duties, assessments or governmental charges of whatever nature imposed,
levied, collected, withheld or assessed by or within the UK or by or within
any political subdivision thereof or any authority therein or thereof having
power to tax.
US: The United States of America.
US GAAP: Accounting principles generally accepted in the United States of
America.
US Holders: US citizens or residents, corporations, partnerships or other
entities created or organized in or under the laws of the US or any state
thereof, or an estate or trust, the income of which is subject to US federal
income taxation regardless of its source, and who are residents in the US and
not resident in the UK for purposes of the current double taxation convention
between the US and the UK and who hold their beneficial interests in the
Senior Notes as capital assets.
A-4
<PAGE>
INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SOUTHERN INVESTMENTS UK PLC AND SUBSIDIARIES (SUCCESSOR COMPANY)
Report of Independent Public Accountants................................... F-2
Financial Statements
Consolidated Balance Sheet as of March 31, 1996.......................... F-3
Consolidated Statement of Income for the Period From September 18, 1995
to March 31, 1996....................................................... F-4
Consolidated Statement of Changes in Stockholder's Equity for the Period
From September 18, 1995 to March 31, 1996............................... F-5
Consolidated Statement of Cash Flows for the Period From September 18,
1995 to March 31, 1996.................................................. F-6
Notes to the Consolidated Financial Statements............................. F-7
SOUTH WESTERN ELECTRICITY PLC (PREDECESSOR COMPANY)
Reports of Independent Auditors and Independent Public Accountants......... F-17
Financial Statements
Consolidated Profit and Loss Accounts for the Years Ended March 31, 1994
and 1995 and for the Period From April 1, 1995 to September 17, 1995.... F-19
Consolidated Balance Sheet as of March 31, 1995.......................... F-20
Consolidated Statements of Changes in Shareholders' Equity for the Years
Ended March 31, 1994 and 1995 and for the Period From April 1, 1995 to
September 17, 1995...................................................... F-21
Consolidated Statements of Cash Flows for the Years Ended March 31, 1994
and 1995 and the Period From April 1, 1995 to September 17, 1995........ F-22
Notes to the Consolidated Statements of Cash Flows for the Years Ended
March 31, 1994 and 1995 and for the Period From April 1, 1995 to Septem-
ber 17, 1995............................................................ F-23
Notes to the Consolidated Financial Statements............................. F-24
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
Southern Investments UK plc:
We have audited the accompanying consolidated balance sheet of SOUTHERN
INVESTMENTS UK plc AND SUBSIDIARIES (Successor Company) as of March 31, 1996
and the related consolidated statements of income, changes in stockholder's
equity, and cash flows for the period from September 18, 1995 to March 31,
1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Southern Investments UK
plc and subsidiaries as of March 31, 1996 and the results of their operations
and their cash flows for the period from September 18, 1995 to March 31, 1996
in conformity with accounting principles generally accepted in the United
States.
ARTHUR ANDERSEN
Bristol, England
July 25, 1996
F-2
<PAGE>
SOUTHERN INVESTMENTS UK PLC AND SUBSIDIARIES
(SUCCESSOR COMPANY)
CONSOLIDATED BALANCE SHEET
MARCH 31, 1996
(IN MILLIONS)
<TABLE>
<CAPTION>
MARCH 31, MARCH 31,
1996 1996
--------- ---------
(Pounds) U.S. $
<S> <C> <C>
ASSETS
PROPERTY, PLANT, AND EQUIPMENT (Note 9):................... 1,227 1,873
Less accumulated depreciation............................ 20 31
----- -----
Property, plant, and equipment, net...................... 1,207 1,842
----- -----
OTHER ASSETS:
Investments.............................................. 22 34
Prepaid pension cost..................................... 95 145
Goodwill, net of accumulated amortization of (Pounds)2
($3).................................................... 173 263
----- -----
Total other assets................................... 290 442
----- -----
CURRENT ASSETS:
Cash and cash equivalents................................ 20 31
Investments.............................................. 26 40
Receivables:
Customer accounts, less provision for uncollectibles of
(Pounds)17 ($26)...................................... 95 145
Other.................................................. 20 31
----- -----
Receivables, net......................................... 115 176
Materials and supplies................................... 3 4
Prepaid expenses......................................... 25 38
----- -----
Total current assets................................. 189 289
----- -----
Total assets......................................... 1,686 2,573
===== =====
STOCKHOLDER'S EQUITY AND LIABILITIES
STOCKHOLDER'S EQUITY (Note 12):
Share capital, (Pounds)1 par value; 500,400,587 shares
authorized, issued, and outstanding..................... 500 763
Accumulated deficit...................................... (132) (201)
----- -----
Total stockholder's equity........................... 368 562
----- -----
CURRENT LIABILITIES:
Debt (Note 10)........................................... 650 992
Accounts payable......................................... 45 69
Accrued income taxes..................................... 19 29
Unearned revenue......................................... 10 15
Other.................................................... 114 174
----- -----
Total current liabilities............................ 838 1,279
----- -----
DEFERRED CREDITS AND OTHER LIABILITIES:
Deferred income taxes (Note 6)........................... 352 537
Provision for loss contracts (Note 4).................... 62 94
Other.................................................... 66 101
----- -----
Total long-term liabilities.......................... 480 732
----- -----
Total stockholder's equity and liabilities........... 1,686 2,573
===== =====
</TABLE>
The accompanying notes are an integral part of this consolidated balance sheet.
F-3
<PAGE>
SOUTHERN INVESTMENTS UK PLC AND SUBSIDIARIES
(SUCCESSOR COMPANY)
CONSOLIDATED STATEMENT OF INCOME
FOR THE PERIOD FROM SEPTEMBER 18, 1995 TO MARCH 31, 1996
(IN MILLIONS)
<TABLE>
<CAPTION>
(Pounds) U.S. $
-------- ------
<S> <C> <C>
OPERATING REVENUES............................................ 481 734
COST OF SALES................................................. 318 485
--- ---
GROSS MARGIN.................................................. 163 249
--- ---
OPERATING EXPENSES:
Maintenance................................................. 21 32
Depreciation and amortization............................... 22 34
Selling, general, and administrative........................ 34 52
--- ---
Total operating expenses.................................. 77 118
--- ---
Operating income.......................................... 86 131
--- ---
OTHER INCOME (EXPENSE):
Interest income............................................. 7 11
Interest expense............................................ (28) (43)
Gain on sale of investments (Note 11)....................... 14 21
Other, net.................................................. 2 4
--- ---
Total other expense....................................... (5) (7)
--- ---
NET INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES..... 81 124
PROVISION FOR INCOME TAXES.................................... 28 43
--- ---
NET INCOME BEFORE EXTRAORDINARY ITEM.......................... 53 81
EXTRAORDINARY GAIN ON EARLY EXTINGUISHMENT OF DEBT, net of in-
come tax effect of (Pounds)3 ($5) (Note 10).................. 6 9
--- ---
NET INCOME.................................................... 59 90
=== ===
</TABLE>
The accompanying notes are an integral part of this consolidated financial
statement.
F-4
<PAGE>
SOUTHERN INVESTMENTS UK PLC AND SUBSIDIARIES
(SUCCESSOR COMPANY)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
FOR THE PERIOD FROM SEPTEMBER 18, 1995 TO MARCH 31, 1996
(IN MILLIONS)
<TABLE>
<CAPTION>
SHARE ACCUMULATED
CAPITAL DEFICIT TOTAL TOTAL
(Pounds) (Pounds) (Pounds) U.S. $
-------- ----------- -------- ------
<S> <C> <C> <C> <C>
BALANCE, September 18, 1995............... 0 0 0 0
Net income.............................. 0 59 59 90
Dividends (Note 12)..................... 0 (191) (191) (291)
Conversion of advances to equity (Note
12).................................... 315 0 315 481
Equity contribution (Note 12)........... 185 0 185 282
--- ---- ---- ----
BALANCE, March 31, 1996................... 500 (132) 368 562
=== ==== ==== ====
</TABLE>
The accompanying notes are an integral part of this consolidated financial
statement.
F-5
<PAGE>
SOUTHERN INVESTMENTS UK PLC AND SUBSIDIARIES
(SUCCESSOR COMPANY)
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM SEPTEMBER 18, 1995 TO MARCH 31, 1996
(IN MILLIONS)
<TABLE>
<CAPTION>
(Pounds) U.S. $
-------- ------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.................................................. 59 90
------ ------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization............................. 22 34
Gain on sale of investments............................... (14) (21)
Gain on early extinguishment of debt...................... (9) (14)
Changes in assets and liabilities:
Receivables, net........................................ 6 9
Accounts payable........................................ (52) (79)
Accrued income taxes.................................... 5 7
Other, net................................................ (5) (8)
------ ------
Total adjustments..................................... (47) (72)
------ ------
Net cash provided by operating activities............. 12 18
------ ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures........................................ (37) (56)
Dividends received from, and disposal of, investments....... 270 412
------ ------
Net cash provided by investing activities............. 233 356
------ ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments to former shareholders............................. (748) (1,142)
Capital contribution received (Note 12)..................... 185 282
Payments of dividends (Note 12)............................. (191) (291)
Payment of preacquisition dividends......................... (75) (114)
Proceeds from issuance of notes............................. 650 992
Proceeds from issuance of bonds............................. 597 911
Repayment of bonds.......................................... (696) (1,062)
------ ------
Net cash used in financing activities................. (278) (424)
------ ------
NET DECREASE IN CASH AND CASH EQUIVALENTS..................... (33) (50)
CASH AND CASH EQUIVALENTS, beginning of period................ 53 81
------ ------
CASH AND CASH EQUIVALENTS, end of period...................... 20 31
====== ======
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash paid for interest...................................... 21 32
====== ======
Cash paid for income taxes.................................. 26 40
====== ======
Business acquisitions:
Fair value of assets acquired............................. 1,940 2,961
Less cash paid for common stock......................... (1,023) (1,561)
Less noncash consideration issued....................... (40) (61)
------ ------
Liabilities assumed......................................... 877 1,339
====== ======
</TABLE>
The accompanying notes are an integral part of this consolidated financial
statement.
F-6
<PAGE>
SOUTHERN INVESTMENTS UK PLC AND SUBSIDIARIES
(SUCCESSOR COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
The company is a wholly-owned subsidiary of Southern Investments UK Holdings
Limited ("Holdings"), which is wholly-owned indirectly by the Southern Company
("Southern") (see Note 13). The Company was incorporated as a public limited
company under the laws of England and Wales on June 23, 1995 as a vehicle for
the acquisition of South Western Electricity plc ("SWEB"), one of the 12
regional electricity companies ("RECs") in England and Wales licensed to
distribute, supply, and to a limited extent generate electricity. On September
18, 1995, the Company gained effective control of SWEB, having acquired 84% of
its shares (the "Acquisition"). Accordingly, the Company has designated
September 18, 1995 as the effective date of the Acquisition. Given that SWEB
represents substantially all of the current operations of the Company, SWEB is
considered the Predecessor Company. All references in the financial statements
to the Successor Company represent the Company and to the Predecessor Company
represent South Western Electricity plc and its subsidiaries. See Note 7 for a
further discussion of the Acquisition.
SWEB is one of the twelve RECs in England and Wales licensed to supply,
distribute, and, to a limited extent, generate electricity. The RECs were
created as a result of the privatization of the UK electricity industry in
1990 after the state owned low voltage distribution networks were allocated to
the then existing twelve regional boards. SWEB's main business, the
distribution and supply of electricity to customers in the southwest of
England, is regulated under the terms of SWEB's Public Electricity Supply
license by the Office of Electricity Regulation ("OFFER").
SWEB operates primarily in its Franchise Area in southwest England. SWEB's
Franchise Area covers approximately 5,560 square miles running from Bristol
and Bath in the northeast, 188 miles southwest along the peninsular to Land's
End and 28 miles beyond to the Isles of Scilly, and has a resident population
of approximately 2.8 million.
Basis of Presentation
The financial statements of the Company are presented in conformity with
accounting principles generally accepted in the United States. Generally
accepted accounting principles in the United States differ in certain respects
from those in the United Kingdom; accordingly, the consolidated financial
statements of the Company are not comparable with those of SWEB.
The consolidated financial statements include the accounts of the Company
and its wholly-owned and majority-owned subsidiaries and have been prepared
from records maintained by SWEB in the United Kingdom. Investments in
companies in which the Company's ownership interests range from 20% to 50% and
the Company exercises significant influence over operating and financial
policies are accounted for using the equity method. Other investments are
accounted for using the cost method. All significant intercompany accounts and
transactions have been eliminated.
These financial statements are presented in pounds sterling ((Pounds)) and
in U.S. dollars ($ or U.S. $), solely for the convenience of the reader, at
the exchange rate of (Pounds)1 = U.S. $1.5262, the noon buying rate in New
York City for cable transfers in pounds sterling as certified for customs
purposes by the Federal Reserve Bank of New York on March 29, 1996. No
representation is made that the pounds sterling amounts have been, could have
been, or could be converted into U.S. dollars at that or any other rate of
exchange.
F-7
<PAGE>
SOUTHERN INVESTMENTS UK PLC AND SUBSIDIARIES
(SUCCESSOR COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Revenue Recognition
SWEB records revenue net of Value-Added Tax and accrues revenues for
services provided but unbilled at the end of each reporting period. SWEB
purchases power primarily from a market for the bulk trading of electricity
(the "Pool").
The Company has a diversified base of customers. No single customer or
industry comprises 10% or more of revenues.
Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity
of three months or less to be cash equivalents.
Property, Plant, and Equipment
Property, plant, and equipment are recorded at fair market value as adjusted
at the acquisition date (Note 7) in accordance with Accounting Principles
Board Opinion ("APB") No. 16, "Accounting for Business Combinations." Items
capitalized subsequent to the Acquisition are recorded at original cost, which
includes materials, labor, appropriate administrative and general costs, and
the estimated cost of funds used during construction. The cost of maintenance,
repairs, and replacement of minor items of property is charged to maintenance
expense.
Depreciation of the recorded cost of depreciable utility plant in service is
provided by using primarily composite straight-line rates (Note 9), which
approximate 2.5% per year.
Information Technology Consultancy and Development Costs
Significant information technology ("IT") consultancy and development costs
are capitalized when tangible benefits accrue and are amortized over their
estimated useful economic life from the date of first use. Other IT
consultancy and development costs are charged to income in the period in which
they are incurred.
Goodwill
The Company amortizes costs in excess of fair value of net assets of the
business acquired using the straight-line method over a period of 40 years.
Recoverability (performed on the basis of cash flow analysis) is reviewed
annually or sooner if events or changes in circumstances indicate that the
carrying amount may exceed fair value. Goodwill shown in the accompanying
consolidated financial statements relates to the acquisition of SWEB (Note 7).
Investments
The Company accounts for its current investments in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 115, "Accounting for
Investments for Certain Debt and Equity Securities." These
F-8
<PAGE>
SOUTHERN INVESTMENTS UK PLC AND SUBSIDIARIES
(SUCCESSOR COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
investments represent investments in debt securities, which management
classifies as trading securities in accordance with SFAS No. 115. The
unrealized holding loss on investments was immaterial for the period
presented. The Company's long-term investments consist of investments
accounted for using the cost method.
Income Taxes
SFAS No. 109, "Accounting for Income Taxes," requires the asset and
liability approach for financial accounting and reporting for deferred income
taxes. The Company uses the liability method of accounting for deferred income
taxes and provides deferred income taxes for all significant income tax
temporary differences.
Unearned Revenue
Unearned revenue primarily represents the liability for payments received
from customers in connection with the assessment of a value-added tax ("VAT")
on electricity sales, which was imposed by the UK government effective April
1, 1994. As part of the adoption of the tax, customers were allowed to prepay
their bills and avoid the VAT on the element of the future electricity
consumption which was prepaid. Revenues are recognized as electricity is
supplied to these customers.
Financial Instruments
The Company uses financial instruments primarily to mitigate the risk of
exposure to volatility in electricity prices and fluctuations in interest
rates. Such instruments are accounted for as hedges, and accordingly, gains
and losses are deferred and recognized over the period of the related hedged
item (Note 8).
In accordance with SFAS No. 107, "Disclosure About Fair Value of Financial
Instruments," the Company's carrying amount of financial instruments at March
31, 1996 approximated fair value.
New Accounting Standards
In March 1995, the Financial Accounting Standards Board issued SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to Be Disposed Of." SFAS No. 121 provides guidance on when to assess and how
to measure impairment of long-lived assets, certain identifiable intangibles,
and goodwill related to those assets to be held and used, and for long-lived
assets and certain intangibles to be disposed of. The Company adopted SFAS No.
121 on January 1, 1996, with no material effect on its financial position or
results of operations.
2. RETIREMENT BENEFITS
Pension Plans
SWEB has two pension plans, a defined benefit plan and a defined
contribution plan.
The defined contribution plan was established in the year ended March 31,
1994. The assets of the defined contribution plan are held and administered by
an independent trustee. Contributions to the plan by SWEB on behalf of its
employees were (Pounds)0.1 million ($0.2 million) for the period from
September 18, 1995 through March 31, 1996.
SWEB participates in the Electricity Supply Pension Scheme, which provides
pension and other related defined benefits, based on final pensionable pay, to
substantially all employees throughout the Electricity Supply
F-9
<PAGE>
SOUTHERN INVESTMENTS UK PLC AND SUBSIDIARIES
(SUCCESSOR COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Industry in the United Kingdom. Contributions to the plan by SWEB on behalf of
its employees were (Pounds)4.8 million ($7.3 million) for the period from
September 18, 1995 through March 31, 1996.
In accordance with SFAS No. 87, as of the date of the Acquisition, the
assignment of the fair value to individual assets acquired and liabilities
assumed includes the plan assets in excess of the projected benefit
obligation. SWEB uses the "entry age normal method with a frozen initial
liability" actuarial method for funding purposes. Amounts funded to the
pension trust(s) are primarily invested in equity and fixed-income securities.
SFAS No. 87 requires use of the "projected unit credit" actuarial method for
financial reporting purposes.
The following table shows the actuarial results and assumptions for pension
benefits as computed under SFAS No. 87 (in millions):
<TABLE>
<CAPTION>
MARCH 31, MARCH 31,
1996 1996
--------- ---------
(Pounds)M $
<S> <C> <C>
Actuarial present value of benefit obligation:
Vested benefits...................................... (488) (745)
Nonvested benefits................................... 0 0
---- ----
Accumulated benefit obligation......................... (488) (745)
Effect of future increases in compensation............. (37) (56)
---- ----
Projected benefit obligation........................... (525) (801)
Less:
Fair value of plan assets............................ 642 980
Unrecognized net gain................................ (22) (34)
---- ----
Prepaid asset recognized in the consolidated balance
sheets................................................ 95 145
==== ====
</TABLE>
The weighted average rates assumed in the actuarial calculations were as
follows at March 31, 1996:
<TABLE>
<S> <C>
Discount rate.......................................................... 8.75%
Annual salary rate increase............................................ 6.00
Long-term rate of return on plan assets................................ 9.50
</TABLE>
The components of the plan's net pension income during the period from
September 18, 1995 to March 31, 1996 are shown below (in millions):
<TABLE>
<CAPTION>
(Pounds) $
-------- ---
<S> <C> <C>
Benefits earned during the period.............................. 2 3
Interest cost on projected benefit obligation.................. 22 33
Actual return on plan assets................................... (50) (76)
Net amortization and deferral.................................. 22 34
--- ---
Net pension income............................................. (4) (6)
=== ===
</TABLE>
3. REGULATORY MATTERS
OFFER controls the revenues generated by SWEB in its distribution and supply
businesses by applying a price control formula, P + RPI - X (where X is
currently 3% for distribution and 2% for supply), where P is the price level
at the beginning of each new regulatory period, RPI is the change in the
Retail Price Index and X is an adjustment factor determined by OFFER.
F-10
<PAGE>
SOUTHERN INVESTMENTS UK PLC AND SUBSIDIARIES
(SUCCESSOR COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
In the distribution business, the Distribution Price Control Formula
("DPCR") is set for a five-year period, subject to more frequent adjustments
as determined necessary by the Director General of Electricity Supply (the
"Regulator"). At each review, the Regulator can require a one-time price
reduction. An initial review by the Regulator of allowable income in the
distribution business led to a reduction of the price level by 14% for SWEB
starting April 1, 1995, followed by efficiency factors of X = 3% for each year
until March 2000. On July 6, 1995, the Regulator announced the result of a
further distribution price review which was precipitated by certain market
events in the UK electric utility industry. For SWEB, such announcement meant
a further real reduction of 11% in allowable distribution income for the
period from April 1, 1996 to March 31, 2000 before an allowed increase for
inflation.
In the supply business, which is progressively being opened to competition,
price regulation still applies to the market for customers with a demand of
not more than 100kW. The calculation of the maximum supply charge is based on
a Supply Price Control Formula, similar to the DPCR and is set for a four-year
period. In 1993, OFFER announced the supply franchise market (i.e. with demand
of not more than 100kW) income entitlement for the four-year period ending
March 1998. A relatively small efficiency factor of X = 2% was applied to SWEB
and is being offset by an allowance for both unit and customer growth. The
nonfranchise markets (above 1MW) were opened to full competition during
privatization in 1990; the nonfranchise markets (above 100kW and not more than
1MW) were opened to full competition starting in April 1994.
4. COMMITMENTS AND CONTINGENCIES
Power Purchase Agreements
SWEB has entered into a contract relating to the purchase of 200 megawatts
of capacity from a 7.69%-owned related party, Teesside Power Limited
("Teesside"), for a period of 15 years beginning April 1, 1993. The contract
with Teesside involves purchases which were above market rates at the
acquisition date. Accordingly, the Company recognized a (Pounds)60 million
($92 million) accrual at the acquisition date for the cost of this contract.
The Company has additional contracts with unaffiliated parties relating to
the purchase of electricity, which expire by March 31, 1998, and contracts
relating to the purchase of (Pounds)10 million ($15 million) of gas which
expire by September 30, 1998, the terms of which are immaterial with respect
to quantity and price, both annually and in the aggregate.
Operating Leases
SWEB has commitments under operating leases with various terms and
expiration dates. Expenses associated with these commitments totaled (Pounds)3
million ($5 million) for the period from September 18, 1995 to March 31, 1996.
At March 31, 1996, estimated minimum rental commitments for noncancelable
operating leases were as follows:
<TABLE>
<CAPTION>
AMOUNT
----------------
((Pounds)M) ($M)
----------- ----
<S> <C> <C>
Fiscal year:
1997..................................................... 2 3
1998..................................................... 2 3
1999..................................................... 2 3
2000..................................................... 1 2
2001..................................................... 1 2
Thereafter............................................... 10 15
--- ---
Total minimum payments................................. 18 28
=== ===
</TABLE>
F-11
<PAGE>
SOUTHERN INVESTMENTS UK PLC AND SUBSIDIARIES
(SUCCESSOR COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Labor Subject to Collective Bargaining Agreements
Substantially all of SWEB's employees are subject to one of five collective
bargaining agreements. Such agreements are ongoing in nature, and SWEB's
employee participation level is consistent with that of the electric utility
industry in Great Britain.
5. SEGMENT REPORTING
The Company is primarily engaged in two electric industry segments:
distribution, which involves the transmission of electricity across its
network and its transfer and delivery to its customers, and supply, which
involves bulk purchase of electricity from the Pool and arranging for its sale
and transfer to its customers. Information about the Company's operations in
these individual segments during the period from September 18, 1995 through
March 31, 1996 and as of March 31, 1996 is detailed below (in millions):
<TABLE>
<CAPTION>
DISTRIBUTION SUPPLY OTHER ELIMINATIONS CONSOLIDATED
-------------- ------------ --------------- ------------- ------------
(Pounds) $ (Pounds) $ (Pounds) $ (Pounds) $ (Pounds) $
-------- ----- -------- --- -------- ------ -------- ---- -------- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Operating revenues...... 147 224 450 687 33 50 (149) (227) 481 734
Operating income........ 72 110 13 20 1 2 0 0 86 131
Depreciation and amorti-
zation................. 16 24 1 2 5 8 0 0 22 34
Net assets employed at
period-end............. 1,147 1,751 (58) (89) (721) (1,100) 0 0 368 562
Capital expenditures.... 32 48 1 2 4 6 0 0 37 56
</TABLE>
Included in "Other" above are insignificant operating subsidiaries of SWEB,
as well as corporate activities and net assets not allocated to specific
segments (i.e., dividends, taxes, investments, and financing).
6. INCOME TAXES
Details of the income tax provision for the period from September 18, 1995
to March 31, 1996 (including the amount related to the extraordinary gain in
the accompanying consolidated statement of operations) are as follows (in
millions):
<TABLE>
<CAPTION>
(Pounds) $
-------- ---
<S> <C> <C>
Provision for income taxes:
Currently payable.......................................... 12 18
Deferred................................................... 19 30
--- ---
Total provision.......................................... 31 48
=== ===
</TABLE>
F-12
<PAGE>
SOUTHERN INVESTMENTS UK PLC AND SUBSIDIARIES
(SUCCESSOR COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The tax effects of temporary differences between the carrying amounts of
assets and liabilities in the financial statements and their respective tax
bases, which give rise to deferred tax assets and liabilities, are as follows
(in millions):
<TABLE>
<CAPTION>
MARCH 31,
1996
------------
(Pounds) $
-------- ---
<S> <C> <C>
Deferred tax liabilities:
Property basis differences.................................. 341 520
Pensions.................................................... 32 49
--- ---
Total..................................................... 373 569
--- ---
Deferred tax assets:
Acquisition related accruals................................ 21 32
Other....................................................... 0 0
--- ---
Total..................................................... 21 32
--- ---
Net deferred tax liabilities.................................. 352 537
Portion included in current liabilities, net.................. 0 0
--- ---
Accumulated deferred income taxes in the consolidated balance
sheets....................................................... 352 537
=== ===
</TABLE>
A reconciliation of the UK statutory rate to the effective income tax rate
for the period from September 18, 1995 to March 31, 1996 is as follows:
<TABLE>
<S> <C>
UK statutory rate........................................................ 33%
Nondeductible amortization of goodwill................................... 1
---
Effective income tax rate................................................ 34%
===
</TABLE>
7. ACQUISITION
On September 18, 1995, the Company acquired SWEB for (Pounds)1.063 billion.
The Acquisition was accounted for using the purchase method of accounting in
accordance with APB No. 16, "Accounting for Business Combinations." The
purchase price of SWEB has been allocated to the underlying assets and
liabilities based on estimated fair values at the acquisition date. Such
estimates may be revised at a later date. The acquisition cost exceeded the
fair market value of net assets acquired by (Pounds)175 million ($267 million)
and is considered goodwill. The operating results of SWEB have been included
in the Company's financial statements from the effective date of the
Acquisition.
The net purchase price of (Pounds)1.063 billion was allocated as follows (in
millions):
<TABLE>
<CAPTION>
(Pounds) $
-------- -----
<S> <C> <C>
Property, plant, and equipment............................... 1,190 1,816
Current assets............................................... 317 484
Investments.................................................. 258 395
Goodwill..................................................... 175 266
Current liabilities.......................................... (244) (372)
Other liabilities............................................ (633) (966)
----- -----
Purchase price............................................... 1,063 1,623
===== =====
</TABLE>
F-13
<PAGE>
SOUTHERN INVESTMENTS UK PLC AND SUBSIDIARIES
(SUCCESSOR COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The Company recognized certain liabilities in connection with the
Acquisition, including a plan to increase the ongoing severance program and
costs to exit its electrical contracting and servicing business lines. A
program of staff reductions is being effected which, when completed is
expected to reduce the number of staff in the main electricity business by 21%
compared to that at the date of acquisition by the Company. The Company
recorded this provision related to exiting these businesses in accordance with
EITF Consensus No. 95-3, "Recognition of Liabilities in Connection With a
Purchase Business Combination." During the period, the Company sold South
Western Electricity (Connect) Limited to its existing management and SWEB
Servicing Limited to an unaffiliated party. The activity in these categories
is as follows (in millions):
<TABLE>
<CAPTION>
BUSINESS
SEVERANCE DISPOSALS
------------ ------------
(Pounds) $ (Pounds) $
-------- --- -------- ---
<S> <C> <C> <C> <C>
Balance at Acquisition............................. 26 40 11 17
Utilized......................................... (2) (3) (5) (8)
--- --- --- ---
Balance at March 31, 1996........................ 24 37 6 9
=== === === ===
</TABLE>
8. FINANCIAL INSTRUMENTS
SWEB utilizes contracts for differences ("CFDs") to mitigate its exposure to
volatility in the prices of electricity purchased through the Pool. Such
contracts allow the Company to effectively convert the majority of its
anticipated Pool purchases from market prices to fixed prices. CFDs are in
place to hedge a portion of electricity purchases on approximately 33,000 GWh
through the year 2008. Accordingly, the gains and losses on such contracts are
deferred and recognized as electricity is purchased. It is not possible to
estimate the fair value of these contracts at present as the contract prices
are based on future events, the effect of which currently are not estimable.
Interest rate swaps are used by the Company to hedge its exposure to
fluctuations in interest rates by allowing the Company to effectively convert
its outstanding variable-rate debt into fixed rates. At March 31, 1996,
sterling interest rate swaps expiring February 8, 2006 with notional amounts
totaling (Pounds)250 million ($382 million), resulted in an unrealized gain of
(Pounds)11 million ($17 million).
The fair value of the swaps is estimated using pricing models which provide
the present value of the difference between the contracted swap rates and
market interest rates over the remaining life of the swaps and represent the
amounts the bank would pay to terminate the swaps at March 31, 1996. Should
the Company terminate the swaps, the gain or loss on termination would be
deferred and amortized to interest expense over the period of the related
debt.
The Company is exposed to losses in the event of nonperformance by
counterparties to both its CFDs and interest rate swaps. To manage this credit
risk, the Company selects counterparties based on their credit ratings, limits
its exposure to any one counterparty under defined guidelines, and monitors
the market position of the programs and its relative market position with each
counterparty.
F-14
<PAGE>
SOUTHERN INVESTMENTS UK PLC AND SUBSIDIARIES
(SUCCESSOR COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
9. PROPERTY, PLANT, AND EQUIPMENT
The Company records book depreciation expense on a straight-line basis,
using the following estimated useful lives:
<TABLE>
<CAPTION>
YEARS
-------
<S> <C>
Distribution network assets.......................................... 40
Generation assets.................................................... 15
Buildings............................................................ 40
Fixtures and equipment............................................... 3 to 20
Vehicles and mobile plant............................................ 4 to 10
</TABLE>
Property, plant, and equipment consisted of the following (in millions):
<TABLE>
<CAPTION>
MARCH 31, MARCH 31,
1996 1996
--------- ---------
(Pounds) $
<S> <C> <C>
Generation............................................... 2 3
Distribution............................................. 1,123 1,714
Nonnetwork land and buildings............................ 41 63
Fixtures and equipment................................... 48 73
Vehicles and mobile plant................................ 13 20
----- -----
1,227 1,873
Accumulated depreciation................................. (20) (31)
----- -----
Property, plant, and equipment, net...................... 1,207 1,842
===== =====
</TABLE>
At March 31, 1996, nonnetwork land and buildings include approximately
(Pounds) 2 million ($3 million) of property and equipment held for sale.
Management believes that the carrying amount of these assets approximates
their net realizable value. There is an arrangement in place whereby HM
Government is entitled to a share in the profits realized by the Company on
certain property disposals made up to March 2000. Full provision for such
clawback liabilities is made as soon as the sale is recognized.
10. DEBT
Short-term debt at March 31, 1996 consists of the following (in millions):
<TABLE>
<CAPTION>
(Pounds) $
-------- ---
<S> <C> <C>
Borrowings under term loan facility............................. 325 496
Borrowings under revolving credit facility...................... 160 244
Short-term notes--banks......................................... 138 211
Loan notes to former shareholders............................... 27 41
--- ---
650 992
=== ===
</TABLE>
At March 31, 1996, the Company had in place a (Pounds)325 million ($496
million) term loan facility with certain banks. Interest is payable monthly
based on an interest rate of LIBOR plus 0.23%, which was 6.355% at March 31,
1996. Outstanding borrowings are due February 5, 1997.
SWEB has in place a (Pounds)275 million ($420 million) revolving credit
facility with certain banks, under which (Pounds)160 million ($244 million)
had been drawn at an interest rate of 6.46% (LIBOR plus 0.58%) at March 31,
1996. Each revolving advance may have a term of up to six months, and this
facility expires February 6, 1999.
F-15
<PAGE>
SOUTHERN INVESTMENTS UK PLC AND SUBSIDIARIES
(SUCCESSOR COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Short-term notes represent borrowings by SWEB from banks which have
maturities of 90 days or less from March 31, 1996. Interest rates on
outstanding borrowings were between 6.06% and 6.19% at March 31, 1996.
In lieu of cash payments to former shareholders of SWEB for their shares,
the Company offered loan notes at the time of acquisition; the notes are
redeemable at the option of the note holders between June 30, 1996 and
December 31, 2002. Accordingly, these notes are classified as current
liabilities in the accompanying balance sheet.
During the period, the Company extinguished certain debt due to the UK
government, resulting in an extraordinary gain of (Pounds)6 million ($9
million), net of taxes of (Pounds)3 million ($5 million). Also on October 6,
1995, the Company issued (Pounds)597 million ($911 million) of Secured
Floating Rate Bonds to finance the acquisition of SWEB which were redeemed on
February 8, 1996.
11. SALE OF INVESTMENTS
On December 11, 1995, the Company and the other eleven RECs which jointly
owned The National Grid Holding plc ("NGH") sold their shares of NGH in a
public offering on the London Stock Exchange. The Company received proceeds
relating to the sale of its shares of (Pounds)201 million ($307 million),
which resulted in a pretax gain of (Pounds)14 million ($21 million).
The offering of NGH was conditional on the prior demerger of NGH's Pumped
Storage Business ("PSB") which was completed in November 1995. The Company's
estimated share of the proceeds from the sale of the PSB on December 21, 1995
was (Pounds)39 million ($60 million). No gain or loss was recognized on this
sale.
12. STOCKHOLDER'S EQUITY
As discussed in Note 7, the Company obtained effective control of SWEB on
September 18, 1995. During October 1995, (Pounds)315 million ($481 million) of
advances from the parent of the Company were converted to share capital, an
equity contribution of (Pounds)185 million ($282 million) was received from
the parent of the Company, and financing was obtained to facilitate the
payment of the former shareholders. These transactions are reflected in the
accompanying consolidated statements of changes in stockholder's equity and
cash flows.
Dividends in the amount of (Pounds)191 million ($291 million) were declared
and paid by the Company during the period ending March 31, 1996 as proceeds
from the sale of the Company's shares in NGH (Note 11) provided cash in
addition to that provided from operations during the period.
13. SUBSEQUENT EVENT
On July 1, 1996, PP&L Resources, Inc. indirectly purchased a 25% share of
the Company's parent, Southern Investments UK Holdings Limited, for
(Pounds)121.5 million ($185 million).
F-16
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors of South Western Electricity plc:
We have audited the accompanying consolidated balance sheet of SOUTH WESTERN
ELECTRICITY PLC AND SUBSIDIARIES (Predecessor Company) as of March 31, 1995
and the related consolidated profit and loss accounts and changes in
shareholders' equity and cash flows for the years ended March 31, 1995 and
1994. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with United Kingdom auditing standards
which do not differ in any significant respect from United States generally
accepted auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of South Western
Electricity plc as of March 31, 1995, and the consolidated results of its
operations and its cash flows for the years ended March 31, 1995 and 1994 in
conformity with accounting principles generally accepted in the United Kingdom
which differ in certain respects from those followed in the United States (see
Notes to the Consolidated Financial Statements).
ERNST & YOUNG
Chartered Accountants
Bristol, England
June 19, 1995
except for Note 21--Differences
between United Kingdom and
United States generally
accepted accounting principles
as to which the date is July 25, 1996
F-17
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
South Western Electricity plc:
We have audited the accompanying consolidated profit and loss account and
statements of changes in shareholders' equity and statement of cash flows for
the period from April 1, 1995 to September 17, 1995 of SOUTH WESTERN
ELECTRICITY PLC AND SUBSIDIARIES (Predecessor Company or Group). These
financial statements are the responsibility of the Group's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with United Kingdom generally accepted
auditing standards, which are substantially in accordance with United States
generally accepted auditing standards. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated results of operations and cash
flows of South Western Electricity plc and subsidiaries for the period from
April 1, 1995 to September 17, 1995 in conformity with generally accepted
United Kingdom accounting principles.
Accounting practices used by the Group in preparing the accompanying
financial statements conform with generally accepted accounting principles in
the United Kingdom, but do not conform with accounting principles generally
accepted in the United States. A description of these differences and a
complete reconciliation of consolidated net income and shareholders' equity to
United States generally accepted accounting principles is set out in Note 21
to the consolidated financial statements.
ARTHUR ANDERSEN
Bristol, England
July 25, 1996
F-18
<PAGE>
SOUTH WESTERN ELECTRICITY PLC
(PREDECESSOR COMPANY)
CONSOLIDATED PROFIT AND LOSS ACCOUNTS
FOR THE YEARS ENDED MARCH 31, 1994 AND 1995
AND FOR THE PERIOD FROM APRIL 1, 1995 TO SEPTEMBER 17, 1995
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED MARCH 31, APRIL 1, 1995 TO
------------------------ SEPTEMBER 17,
1994 1995 1995
---------- ---------- ----------------
(Pounds)M (Pounds)M (Pounds)M
<S> <C> <C> <C>
TURNOVER (Note 3):
Continuing operations.......... 827.0 797.8 309.9
Discontinued operations........ 72.6 77.1 8.8
---------- ---------- ------
899.6 874.9 318.7
OPERATING COSTS (Note 4)......... (791.0) (755.4) (286.9)
---------- ---------- ------
OPERATING PROFIT (Note 3):
Continuing operations.......... 106.5 118.2 31.8
Discontinued operations........ 2.1 1.3 0
---------- ---------- ------
108.6 119.5 31.8
Exceptional item--discontinued
operations (Note 3)........... 0.0 (20.0) 0.0
Income from interests in asso-
ciated undertakings (Note 3).. 0.9 1.2 0.1
Income from fixed asset invest-
ments (Note 3)................ 14.4 15.3 1.3
---------- ---------- ------
PROFIT ON ORDINARY ACTIVITIES BE-
FORE INTEREST AND TAX (Note 3).. 123.9 116.0 33.2
INTEREST (Note 5)................ (7.1) (4.5) (3.5)
---------- ---------- ------
PROFIT ON ORDINARY ACTIVITIES BE-
FORE TAX........................ 116.8 111.5 29.7
TAX ON PROFIT ON ORDINARY ACTIVI-
TIES (Note 6)................... (23.9) (25.6) (7.4)
---------- ---------- ------
PROFIT FOR THE FINANCIAL PERIOD.. 92.9 85.9 22.3
DIVIDEND......................... (28.9) (32.2) (52.3)
---------- ---------- ------
RETAINED PROFIT (DEFICIT) FOR THE
PERIOD.......................... 64.0 53.7 (30.0)
========== ========== ======
</TABLE>
There are no recognized gains and losses other than the profits for each
financial period, and accordingly, no statements of recognized gains and
losses are presented.
A summary of the significant adjustments to profit for the financial period
that would have been required had United States generally accepted accounting
principles been applied instead of those generally accepted in the United
Kingdom is set forth in Note 21 of Notes to the Consolidated Financial
Statements.
The accompanying notes are an integral part of these consolidated profit and
loss accounts.
F-19
<PAGE>
SOUTH WESTERN ELECTRICITY PLC
(PREDECESSOR COMPANY)
CONSOLIDATED BALANCE SHEET
MARCH 31, 1995
<TABLE>
<CAPTION>
MARCH 31,
1995
---------
(Pounds)M
<S> <C>
FIXED ASSETS:
Tangible assets (Note 11)........................................... 540.7
Investments (Note 12)............................................... 74.3
------
615.0
------
CURRENT ASSETS:
Stocks (Note 13).................................................... 18.5
Debtors (Note 14)................................................... 187.2
Investments (Note 15)............................................... 43.8
Cash at bank and in hand............................................ 4.1
------
253.6
CREDITORS:
Amounts falling due within one year (Note 16)....................... (242.7)
------
NET CURRENT ASSETS.................................................... 10.9
------
Total assets less current liabilities............................. 625.9
CREDITORS:
Amounts falling due after more than one year (Note 16).............. (94.9)
PROVISIONS FOR LIABILITIES AND CHARGES (NOTE 17)...................... (37.1)
------
493.9
MINORITY INTEREST (ALL EQUITY)........................................ (0.1)
------
NET ASSETS............................................................ 493.8
======
CAPITAL AND RESERVES:
Called-up share capital............................................. 55.5
Share premium account............................................... 0.5
Revaluation reserve................................................. 49.1
Capital redemption reserve.......................................... 6.2
Profit and loss account............................................. 382.5
------
SHAREHOLDERS' FUNDS (ALL EQUITY)...................................... 493.8
======
</TABLE>
A summary of the significant adjustments to shareholders' equity that would
be required had United States generally accepted accounting principles been
applied instead of those generally accepted in the United Kingdom is set forth
in Note 21 of Notes to the Consolidated Financial Statements.
The accompanying notes are an integral part of this consolidated balance sheet.
F-20
<PAGE>
SOUTH WESTERN ELECTRICITY PLC
(PREDECESSOR COMPANY)
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED MARCH 31, 1994 AND 1995
AND FOR THE PERIOD FROM APRIL 1, 1995 TO SEPTEMBER 17, 1995
(IN MILLIONS)
<TABLE>
<CAPTION>
SHARE CAPITAL RETAINED EARNINGS AND OTHER RESERVES
------------------ ----------------------------------------
ORDINARY
NUMBER OF SHARES SHARE CAPITAL TOTAL
ORDINARY OF 50P PREMIUM REDEMPTION REVALUATION RETAINED SHAREHOLDERS'
SHARES EACH ACCOUNT RESERVE RESERVE EARNINGS EQUITY
--------- -------- -------- ---------- ----------- -------- -------------
(Pounds) (Pounds) (Pounds) (Pounds) (Pounds) (Pounds)
<S> <C> <C> <C> <C> <C> <C> <C>
APRIL 1, 1993........... 123.2 61.6 0.2 0.0 49.1 367.9 478.8
Issue of share capital.. 0.1 0.0 0.1 0.0 0.0 0.0 0.1
Retained profit......... 0.0 0.0 0.0 0.0 0.0 64.0 64.0
----- ---- --- --- ---- ------ ------
MARCH 31, 1994.......... 123.3 61.6 0.3 0.0 49.1 431.9 542.9
Repurchase of own
shares................. (12.3) (6.2) 0.0 6.2 0.0 (103.1) (103.1)
Issue of share capital.. 0.1 0.1 0.2 0.0 0.0 0.0 0.3
Retained profit......... 0.0 0.0 0.0 0.0 0.0 53.7 53.7
----- ---- --- --- ---- ------ ------
MARCH 31, 1995.......... 111.1 55.5 0.5 6.2 49.1 382.5 493.8
Issue of share capital.. 2.9 1.5 3.6 0.0 0.0 0.0 5.1
Retained loss........... 0.0 0.0 0.0 0.0 0.0 (30.0) (30.0)
----- ---- --- --- ---- ------ ------
SEPTEMBER 17, 1995...... 114.0 57.0 4.1 6.2 49.1 352.5 468.9
===== ==== === === ==== ====== ======
</TABLE>
Under the authority of a special resolution passed at the 1994 Annual
General Meeting, the Company purchased 12.3m of its own shares during the year
ended March 31, 1995 which were subsequently canceled. The total consideration
was (Pounds)103.1m.
176,526 ordinary shares were issued during the year ended March 31, 1995
under South Western Electricity's Sharesave Scheme to employees who had left
the Group (hereinafter defined). The shares were fully paid up at an exercise
price of (Pounds)1.75 per ordinary share. The average market price of SWEB's
shares was (Pounds)7.14 for the year ended March 31, 1995.
One special rights redeemable preference share, held by the Secretary of
State, was redeemed at par on March 30, 1995 in accordance with the Company's
Articles of Association.
The revaluation reserve is in respect of SWEB's investment in The National
Grid Group plc. The share premium account arises on the issue of shares under
share option schemes. The capital redemption reserve arises on SWEB's purchase
of its own shares.
The Group's share of accumulated reserves of associated undertakings was
(Pounds)1.5m at March 31, 1995.
Authorized share capital of the Company as of April 1, 1993, March 31, 1994
and 1995, and September 17, 1995 was (Pounds)100 million, comprising 200
million ordinary shares at 50 pence each.
The Share premium account, capital redemption reserve, and revaluation
reserve are not distributable.
The accompanying notes are an integral part of this consolidated statement of
changes in shareholders' equity.
F-21
<PAGE>
SOUTH WESTERN ELECTRICITY PLC
(PREDECESSOR COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR YEARS ENDED MARCH 31, 1994 AND 1995
AND FOR THE PERIOD FROM APRIL 1, 1995 TO SEPTEMBER 17, 1995
<TABLE>
<CAPTION>
YEAR ENDED PERIOD FROM
MARCH 31 APRIL 1, 1995 TO
------------------- SEPTEMBER 17,
1994 1995 1995
--------- --------- ----------------
(Pounds)M (Pounds)M (Pounds)M
<S> <C> <C> <C>
NET CASH INFLOW FROM OPERATING ACTIVITIES
(Note A)................................. 245.0 124.2 70.1
----- ------ -----
RETURNS ON INVESTMENTS AND SERVICING OF
FINANCE:
Interest received....................... 2.7 6.4 1.8
Interest paid........................... (10.4) (10.5) (5.3)
Dividends received...................... 8.5 12.3 1.4
Dividends paid.......................... (26.0) (30.0) 0.0
----- ------ -----
Net cash outflow from returns on
investments and servicing of
finance.............................. (25.2) (21.8) (2.1)
----- ------ -----
TAX:
Corporation tax paid.................... (10.5) (32.7) (6.4)
----- ------ -----
INVESTING ACTIVITIES--LONG-TERM:
Payments to acquire tangible fixed as-
sets................................... (60.9) (67.7) (21.6)
Receipts from sales of tangible fixed
assets................................. 0.8 0.7 5.1
Loans to associated undertakings........ 0.0 0.0 (2.8)
Payments to acquire fixed asset invest-
ments.................................. (0.1) (4.6) (0.4)
----- ------ -----
Net cash outflow from long-term in-
vesting activities................... (60.2) (71.6) (19.7)
----- ------ -----
NET CASH INFLOW/(OUTFLOW) BEFORE SHORT-
TERM INVESTMENT AND FINANCING............ 149.1 (1.9) 41.9
----- ------ -----
INVESTING ACTIVITIES--SHORT-TERM:
Purchase of current investments--other
than cash equivalents.................. (52.4) (61.8) (28.4)
Sale of current investments--other than
cash equivalents....................... 37.7 66.5 26.1
----- ------ -----
Net cash (outflow)/inflow from short-
term investing activities............ (14.7) 4.7 (2.3)
----- ------ -----
NET CASH OUTFLOW FROM INVESTING ACTIVI-
TIES..................................... (74.9) (66.9) (22.0)
----- ------ -----
NET CASH INFLOW BEFORE FINANCING.......... 134.4 2.8 39.6
----- ------ -----
FINANCING:
Issue of ordinary share capital......... 0.1 0.3 5.1
Purchase of own shares.................. 0.0 (103.1) 0.0
----- ------ -----
Net cash inflow/(outflow) from financ-
ing.................................. 0.1 (102.8) 5.1
----- ------ -----
INCREASE/(DECREASE) IN CASH AND CASH
EQUIVALENTS (Note B)..................... 134.5 (100.0) 44.7
===== ====== =====
</TABLE>
A summary of the significant adjustments to the Consolidated Statements of
Cash Flows that would be required had United States Generally Accepted
Accounting Principles been applied instead of those generally accepted in the
United Kingdom is set forth in Note 21 of Notes to the Consolidated Financial
Statements.
The accompanying notes are an integral part of these consolidated statements.
F-22
<PAGE>
SOUTH WESTERN ELECTRICITY PLC
(PREDECESSOR COMPANY)
NOTES TO THE CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MARCH 31, 1994 AND 1995
AND FOR THE PERIOD FROM APRIL 1, 1995 TO SEPTEMBER 17, 1995
A. RECONCILIATION OF OPERATING PROFIT TO CASH FLOWS
Reconciliation of operating profit to net cash inflow from operating
activities:
<TABLE>
<CAPTION>
YEAR ENDED PERIOD FROM
------------------- APRIL 1, 1995 TO
MARCH 31, MARCH 31, SEPTEMBER 17,
1994 1995 1995
--------- --------- ----------------
(Pounds)M (Pounds)M (Pounds)M
<S> <C> <C> <C>
OPERATING PROFIT.......................... 108.6 119.5 31.8
Depreciation............................ 29.6 31.9 13.9
Loss on sale of tangible fixed assets... 0.2 1.1 1.2
(Increase)/decrease in operating
stocks................................. (1.9) (3.3) 11.9
Decrease/(increase) in operating debt-
ors.................................... 27.7 (7.9) 40.8
(Decrease)/increase in operating
creditors, excluding customer
prepayments below...................... (1.4) 14.2 (17.3)
Increase/(decrease) in operating provi-
sions.................................. 25.2 0.7 (4.7)
----- ----- -----
NET CASH INFLOW FROM ORDINARY ACTIVITIES.. 188.0 156.2 77.6
Customer receipts ahead of VAT on fuel--
received/(utilized).................... 57.0 (32.0) (7.5)
----- ----- -----
NET CASH INFLOW FROM OPERATING ACTIVI-
TIES..................................... 245.0 124.2 70.1
===== ===== =====
</TABLE>
The above movements relate solely to operating activities. The balance sheet
headings include other items shown separately in the statement of cash flows.
The 1995 exceptional item appears after operating profit and so has been
excluded from the above operating analysis.
B. CASH AND CASH EQUIVALENTS
Analysis of balances shown in the consolidated balance sheet and changes
during the current period and previous year:
<TABLE>
<CAPTION>
MARCH 31, CHANGE MARCH 31, CHANGE MARCH 31, CHANGE SEPTEMBER 17,
1993 IN YEAR 1994 IN YEAR 1995 IN PERIOD 1995
--------- --------- --------- --------- --------- --------- -------------
(Pounds)M (Pounds)M (Pounds)M (Pounds)M (Pounds)M (Pounds)M (Pounds)M
<S> <C> <C> <C> <C> <C> <C> <C>
Cash at bank and in
hand................... 5.3 (2.4) 2.9 1.2 4.1 (2.7) 1.4
Short-term deposits..... -- 100.2 100.2 (77.0) 23.2 24.3 47.5
Short-term borrowings... (37.1) 36.7 (0.4) (24.2) (24.6) 23.1 (1.5)
----- ----- ----- ------ ----- ---- ----
(31.8) 134.5 102.7 (100.0) 2.7 44.7 47.4
===== ===== ===== ====== ===== ==== ====
</TABLE>
F-23
<PAGE>
SOUTH WESTERN ELECTRICITY PLC
(PREDECESSOR COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES
Basis of Preparation
The financial statements have been prepared using historical cost accounting
principles, modified to include the revaluation of certain fixed asset
investments and to comply with all applicable UK accounting standards.
These financial statements are the result of the consolidation of the
financial statements of South Western Electricity plc (Predecessor Company)
and its subsidiary undertakings ("SWEB" or the "Group") drawn up to March 31
in each year and September 17, 1995. On September 18, 1995 the agreed bid by
Southern Investments UK plc ("SIUK") for the group was declared wholly
unconditional (the "Acquisition") (Note 22).
These financial statements do not comprise "statutory accounts" within the
meaning of Section 240 of the Companies Act 1985. Statutory accounts for the
period ended March 31, 1996 will be delivered to the Registrar of Companies
for England and Wales in due course, and statutory accounts for the years
ended March 31, 1995 and 1994 have been so delivered. The auditors' reports on
such accounts were unqualified.
Turnover
Turnover is stated net of value-added tax. The value of electricity and gas
sold during the year/period includes an estimate of the sales value of units
supplied to customers between the date of the last meter reading and the
year/period end. Remaining sales relate to the invoice value of other goods
and services provided. Charges in respect of retail sales made on credit are
apportioned in the trading accounts over the period of the sales agreements.
Price Regulation
Where there is an overrecovery of supply or distribution business revenues
against the regulated maximum allowable amount, revenues are deferred
equivalent to the overrecovered amount. The deferred amount is deducted from
turnover and included within creditors. Where there is an underrecovery, no
income is taken into account in respect of any potential future recovery until
such income is billed.
Tangible Fixed Assets
Tangible fixed assets are stated at cost, less amounts provided to write off
the cost, less anticipated residual value of the assets over their useful
economic lives, which are as follows:
<TABLE>
<CAPTION>
YEARS
---------------------------------
<S> <C>
Distribution network assets................ 40
Generation assets.......................... 15-40
Buildings:
Freehold................................. Up to 60
Leasehold................................ Lower of lease period or 60 years
Fixtures and equipment..................... Up to 20
Vehicles and mobile plant.................. Up to 10
</TABLE>
F-24
<PAGE>
SOUTH WESTERN ELECTRICITY PLC
(PREDECESSOR COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Depreciation on distribution network assets is charged at 3% for 20 years
followed by 2% for the remaining 20 years. Other assets are depreciated on a
straight-line basis. Consumers' contributions and capital grants toward
distribution network assets are credited to the profit and loss account over
the life of the distribution network assets to which they relate. The
unamortized amount of such contributions and grants is shown as a deduction
from fixed assets.
Leases
Rents for operating leases are charged to the profit and loss account in
equal annual amounts over the period of the lease.
Pension Costs
The Group operates two pension schemes. Contributions to the defined
contribution pension scheme are charged to the profit and loss account as they
become payable in accordance with the rules of the scheme. Contributions to
the defined benefit pension scheme are charged to the profit and loss account
so as to spread the cost of pensions over employees' working lives with the
Group. The capital cost of ex gratia and supplementary pensions is charged to
the profit and loss account in the accounting period in which they are granted
(Note 9).
Research and Development
Expenditure on research and development is written off to the profit and
loss account in the year in which it is incurred.
IT Consultancy and Development Costs
Significant IT consultancy and development costs are capitalized when
tangible benefits accrue and are amortized over their estimated useful
economic lives from the date of first use. Other IT consultancy and
development costs are charged to the profit and loss account in the period in
which they are incurred. Through March 31, 1995, IT consultancy and
development costs were charged to the profit and loss account in the year in
which they were incurred.
The policy has been changed as the Group has embarked on a significant
program of investment and will be incurring significant development costs
which are fundamental to the future performance of the business and which will
benefit the business for a number of years. The Directors are of the opinion
that in relation to the planned development costs to be incurred in the
future, the previous policy of writing off such costs to the profit and loss
account would not give a fair reflection of the period over which the benefits
will accrue. The effect of this change has not resulted in the capitalization
of costs as at September 17, 1995 as no tangible benefits were believed to
have accrued from current development work at that date and the costs related
to earlier development work would have been fully amortized.
Tax
Corporation tax payable is provided on taxable profits at the current rate
of corporation tax.
The taxable profits of some Group companies are reduced because they are
able to utilize tax losses from consortia in which the Group has invested. The
extent to which the benefit of losses surrendered from consortia is required
to be paid for is shown in the "consortium tax creditor" (Note 16).
Deferred tax is calculated using the liability method. Deferred tax is
provided on timing differences, which are expected to reverse without being
replaced at the rates of tax likely to be in force at the time of reversal.
Deferred tax is not provided on timing differences which, in the opinion of
the directors, are not expected to
F-25
<PAGE>
SOUTH WESTERN ELECTRICITY PLC
(PREDECESSOR COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
reverse without being replaced. The amount of all deferred tax, including that
which has not been provided, is shown in Note 18 to the financial statements.
Property
Properties surplus to operational requirements are stated at the lower of
cost and net realizable value. Profits are taken when properties are sold.
Sales are accounted for when there is an unconditional exchange of contracts.
There is an arrangement in place whereby HM Government is entitled to a
share in the profits realized by the Group on certain property disposals made
up to March 2000. Full provision for such clawback liabilities is made as soon
as the sale is recognized.
Investments
Investment income is included in the financial statements of the year in
respect of which it is receivable. Fixed asset investments are stated at cost,
less provisions for permanent diminution in value with the exception of the
investment in The National Grid Holding plc, which is stated at the Group's
share of the net asset value at March 31, 1990. Current asset investments are
valued at the lower of cost and net realizable value.
Stocks and Work In Progress
Stocks are valued at the lower of cost and net realizable value. The
valuation of work in progress is based on the cost of labor, plus appropriate
overheads and the cost of materials, less foreseeable losses; progress
invoices are deducted in arriving at the amounts stated. A prudent estimate of
profits attributable to work completed on continuing contracts is recognized
once the outcome can be assessed with reasonable certainty.
2. PRICE REGULATION
At March 31, 1995, the electricity supply business had a cumulative
overrecovery (i.e., higher than the regulated maximum allowable) of
(Pounds)6.0m (excluding (Pounds)0.4m notional interest) and a provision has
been made in the accounts for this amount as a reduction of reported income.
At March 31, 1994, the overrecovery had been (Pounds)5.4m (excluding notional
interest of (Pounds)0.4m). At March 31, 1995, the electricity distribution
business had a cumulative underrecovery (i.e., lower than the regulated
maximum allowable, of (Pounds)6.1m (excluding (Pounds)0.4m notional interest);
at March 31, 1994, income had exactly matched entitlement.
F-26
<PAGE>
SOUTH WESTERN ELECTRICITY PLC
(PREDECESSOR COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
3. SEGMENTAL ANALYSIS
Distribution involves the delivery of electricity across the Group's
network. Supply sells electricity to customers and negotiates terms for the
bulk purchase of electricity. Retailing relates to the sale and servicing of
electrical appliances. Other activities broadly fall within the two categories
of energy-related businesses (such as Western Gas and Generation) and utility
related (such as telecommunications).
<TABLE>
<CAPTION>
TURNOVER PROFIT BEFORE INTEREST AND TAX NET ASSETS
------------------------------------ ------------------------------------ -----------------
YEAR ENDED PERIOD FROM YEAR ENDED PERIOD FROM
------------------- APRIL 1, 1995 TO ------------------- APRIL 1, 1995 TO
MARCH 31, MARCH 31, SEPTEMBER 17, MARCH 31, MARCH 31, SEPTEMBER 17, MARCH 31,
1994 1995 1995 1994 1995 1995 1995
--------- --------- ---------------- --------- --------- ---------------- ---------
(Pounds)M (Pounds)M (Pounds)M (Pounds)M (Pounds)M (Pounds)M (Pounds)M
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Electricity distribu-
tion................... 249.8 274.0 105.1 76.6 95.7 37.2 457.0
Electricity supply...... 757.1 724.8 276.0 10.9 15.3 1.8 (8.9)
Electricity supply--
prior year
underrecovery of
regulated income....... 14.5 -- -- 14.5 -- -- --
Less intra business
sales--electricity use
of system.............. (229.7) (227.9) (87.4) -- -- -- --
Retailing--discontin-
ued.................... 72.6 77.1 8.8 2.1 1.3 -- 34.8
Retailing--continuing... 6.4 5.3 0.8 (1.6) -- (0.7) 0.2
Other activities........ 77.8 83.6 29.9 10.1 8.5 2.8 73.3
Less intra Group sales.. (48.9) (62.0) (14.5) -- (1.3) (0.6) --
Restructuring costs..... (4.0) -- -- --
Corporate activities--
bid defense............ -- -- (8.7) --
----- ----- ----
Operating profit........ 108.6 119.5 31.8 --
Exceptional item--
discontinued
operations............. -- (20.0) -- --
Associated undertak-
ings................... 0.9 1.2 0.1 3.3
Income from, and net as-
sets relating to, fixed
asset investments:
The National Grid Hold-
ing plc............... 11.9 12.7 -- 49.1
Teesside Power Limit-
ed.................... 2.5 2.6 1.3 16.7
Eurobell (South West)
Limited............... -- -- -- 4.3
Unallocated items....... (136.0)
------ ------ ----- ----- ----- ---- ------
899.6 874.9 318.7 123.9 116.0 33.2 493.8
====== ====== ===== ===== ===== ==== ======
</TABLE>
Turnover is all in respect of sales to customers in the United Kingdom.
Prior year income in respect of supply relates to recovery of regulatory
entitlement in respect of previous periods.
Turnover and costs are allocated directly to the activity to which they
relate wherever possible; however, because of the integrated nature of the
Company's activities it is necessary to apportion or recharge certain costs
between activities.
The nonoperating exceptional item in the year ended March 31, 1995 relates
to the costs (including provisions) associated with the withdrawal from the
electrical retailing business, and includes severance costs and the write down
of asset values. The restructuring costs in 1994 relate mainly to severance
costs associated with the appliance servicing activity.
Unallocated items include dividends, tax, investments, and financing which
are not apportioned to separate activities.
F-27
<PAGE>
SOUTH WESTERN ELECTRICITY PLC
(PREDECESSOR COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
4. OPERATING COSTS
The Directors consider that the nature of the business is such that the
analysis of expenses shown below is more informative than that set out in the
formats in the Companies Act 1985.
<TABLE>
<CAPTION>
YEAR ENDED PERIOD FROM
------------------- APRIL 1, 1995 TO
MARCH 31, MARCH 31, SEPTEMBER 17,
1994 1995 1995
--------- --------- ----------------
(Pounds)M (Pounds)M (Pounds)M
<S> <C> <C> <C>
Cost of sales:
Continuing operations............... 520.5 497.2 195.6
Discontinued operations............. 49.5 53.4 6.0
----- ----- -----
570.0 550.6 201.6
Employee costs (Note 8):
Continuing operations............... 67.0 61.2 24.8
Discontinued operations............. 10.7 10.0 --
Severance costs (exceptional) (Note
8)................................... 18.1 7.6 2.0
Materials and purchase of services:
Continuing operations............... 61.3 57.1 28.5
Discontinued operations............. 7.6 9.2 2.5
External IT consultancy and develop-
ment................................. 12.2 11.8 5.5
Rates (property taxes):
Continuing operations............... 13.1 13.7 6.6
Discontinued operations............. 1.2 1.2 0.3
Depreciation (net of profit or loss on
disposal):
Continuing operations............... 28.3 31.1 15.1
Discontinued operations............. 1.5 1.9 --
----- ----- -----
Operating costs....................... 791.0 755.4 286.9
Materials and purchase of services in-
clude the following:
Operating lease rentals:
Plant, machinery and equipment.... 0.5 0.6 0.4
Other assets...................... 5.2 5.5 2.2
Research and development............ 1.0 0.8 0.4
Auditors' remuneration:
Audit fees and expenses........... 0.2 0.2 0.0
Other fees and expenses........... 0.1 0.2 0.1
</TABLE>
The costs attributable to discontinued operations relate to the withdrawal
from the electrical retailing business in the year ended March 31, 1995.
F-28
<PAGE>
SOUTH WESTERN ELECTRICITY PLC
(PREDECESSOR COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
5. INTEREST
<TABLE>
<CAPTION>
YEAR ENDED PERIOD FROM
------------------- APRIL 1, 1995 TO
MARCH 31, MARCH 31, SEPTEMBER 17,
1994 1995 1995
--------- --------- ----------------
(Pounds)M (Pounds)M (Pounds)M
<S> <C> <C> <C>
Interest payable and similar charges:
On borrowings totally repayable
within five years.................. 0.9 1.1 0.5
On HM Treasury bonds................ 9.9 9.9 4.6
Interest (receivable) payable on pen-
sion liabilities..................... (0.6) 0.3 0.2
Other interest receivable............. (3.1) (6.8) (1.8)
---- ---- ----
7.1 4.5 3.5
==== ==== ====
</TABLE>
6. TAX ON PROFIT ON ORDINARY ACTIVITIES
<TABLE>
<CAPTION>
YEAR ENDED PERIOD FROM
------------------- APRIL 1, 1995 TO
MARCH 31, MARCH 31, SEPTEMBER 17,
1994 1995 1995
--------- --------- ----------------
(Pounds)M (Pounds)M (Pounds)M
<S> <C> <C> <C>
Payable in the United Kingdom:
Corporation tax at 33%.............. 24.7 32.8 3.1
Tax on investment income............ 2.5 2.5 0.0
Deferred tax (Note 18).............. 13.3 (7.7) 4.3
Adjustment to current tax in respect
of prior periods................... (17.0) (2.4) 0.0
Share of tax of associated undertak-
ings............................... 0.4 0.4 0.0
----- ---- ---
23.9 25.6 7.4
===== ==== ===
</TABLE>
The effective tax rate on the profit for the years ended March 31, 1994 and
1995 and the period from April 1, 1995 to September 17, 1995 was 20%, 23%, and
25%, respectively.
The deferred tax credit in the year ended March 31, 1995 relates principally
to the closure of SWEB Retail and to redundancy provisions.
7. DIVIDEND
<TABLE>
<CAPTION>
YEAR ENDED PERIOD FROM
------------------- APRIL 1, 1995 TO
MARCH 31, MARCH 31, SEPTEMBER 17,
1994 1995 1995
--------- --------- ----------------
(Pounds)M (Pounds)M (Pounds)M
<S> <C> <C> <C>
Interim declared (1994: 7.0p; 1995:
8.7p; and period ended September 17,
1995: Nil).......................... 8.6 10.2 0.0
Adjustment in respect of interim div-
idend on repurchased shares......... 0.0 (0.5) 0.0
Final dividend proposed (1994: 16.5p;
1995: 20.3p; and period ended Sep-
tember 17, 1995: Nil)............... 20.3 22.5 0.0
Special dividend (period ended Sep-
tember 17, 1995: 65.0p)............. 0.0 0.0 52.3
---- ---- ----
28.9 32.2 52.3
==== ==== ====
</TABLE>
F-29
<PAGE>
SOUTH WESTERN ELECTRICITY PLC
(PREDECESSOR COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The special dividend of (Pounds)52.3 million declared by the Directors
related to the bid defense waged by the Predecessor Company.
8. EMPLOYEE COSTS AND NUMBERS (INCLUDING DIRECTORS)
<TABLE>
<CAPTION>
YEAR ENDED PERIOD FROM
------------------- APRIL 1, 1995 TO
MARCH 31, MARCH 31, SEPTEMBER 17,
1994 1995 1995
--------- --------- ----------------
(Pounds)M (Pounds)M (Pounds)M
<S> <C> <C> <C>
Employee costs:
Total employee costs during the pe-
riod amounted to:
Wages and salaries................ 93.1 87.7 33.6
Social Security costs............. 8.0 7.3 2.9
Pension costs (including severance
arrangements).................... 8.6 14.8 3.7
Other severance costs............. 15.8 10.4 1.4
----- ----- ----
125.5 120.2 41.6
===== ===== ====
Employee costs were allocated to:
Operating costs (Note 4):
Cost of sales..................... 8.1 12.3 4.4
Other operating costs............. 77.7 71.2 24.8
Severance costs................... 18.1 7.6 2.0
Non-operating exceptional item...... 0.0 8.5 1.5
Capital expenditure................. 21.6 20.6 8.9
----- ----- ----
125.5 120.2 41.6
===== ===== ====
</TABLE>
The average number of employees during each period was as follows:
<TABLE>
<CAPTION>
HEAD COUNT
------------------------------------
YEAR ENDED PERIOD FROM
------------------- APRIL 1, 1995 TO
MARCH 31, MARCH 31, SEPTEMBER 17,
1994 1995 1995
--------- --------- ----------------
<S> <C> <C> <C>
Electricity supply and distribution... 3,516 3,223 3,040
Retailing and servicing............... 1,012 924 460
Other activities:
Contracting......................... 548 560 552
Other............................... 324 298 302
----- ----- -----
5,400 5,005 4,354
===== ===== =====
</TABLE>
As of September 17, 1995, the total number of employees was 4,030.
F-30
<PAGE>
SOUTH WESTERN ELECTRICITY PLC
(PREDECESSOR COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
FULL-TIME EQUIVALENT
------------------------------------
YEAR ENDED PERIOD FROM
------------------- APRIL 1, 1995 TO
MARCH 31, MARCH 31, SEPTEMBER 17,
1994 1995 1995
--------- --------- ----------------
(Pounds)M (Pounds)M (Pounds)M
<S> <C> <C> <C>
Electricity supply and distribution... 3,377 3,103 2,951
Retailing and servicing............... 806 719 378
Other activities:
Contracting......................... 543 555 547
Other............................... 303 279 283
----- ----- -----
5,029 4,656 4,159
===== ===== =====
</TABLE>
9. PENSION COMMITMENTS
The Group operates two schemes, one based on defined contributions and a
second based on defined benefits.
a. The defined contribution scheme was established during 1993-1994. The
cost, which represents contributions payable by the Group, amounted to
(Pounds)22,000, (Pounds)89,000 and (Pounds)53,000 for the years ended
March 31, 1994 and 1995 and the period from April 1, 1995 to September
17, 1995, respectively. The assets of the scheme are held separately
from those of the Group in an independently administered fund.
b. The Electricity Supply Pension Scheme provides pension and other related
defined benefits based on final pensionable pay to employees throughout
the Electricity Supply industry. The assets of the Scheme are held in a
separate trustee administered fund.
Actuarial valuations of the Group's share of the Scheme were carried out by
Bacon & Woodrow, consulting actuaries, as at March 31, 1992 and 1995. The
attained age method was used for the valuations. The principal actuarial
assumptions adopted for the 1992 valuation were that the investment return
would average 9.5% per annum, equity dividend growth would average 5% per
annum, salary increases (exclusive of merit awards) would average 7.5% per
annum, pension increases would average 5.5% per annum, and that inflation
would average 5.5% per annum. The principal actuarial assumptions adopted
for the 1995 valuation were that the investment return would exceed salary
increases (exclusive of merit awards) by 2.5%, and exceed future pension
increases by 4% per annum.
The valuations showed that the actuarial value of the assets of the Group's
share of the Scheme as at March 31, 1992 and 1995 represented 105.2% and
109.9%, respectively, of the actuarial value of the accrued benefits. After
allowing for benefit improvements granted as a result of the valuation,
provision made from the surplus to cover anticipated short-term early
retirement costs, and in the case of the 1995 valuation, a suspension for
three years from April 1, 1996 of the payment of contributions to the
Scheme by the Group, the actuarial value of the assets is at the same level
as the actuarial value of the accrued benefits. The accrued benefits
include all benefits for pensioners and other former members as well as
benefits based on service completed to date for active members, allowing
for future salary rises.
The total market value of the Group's share of the assets of the Scheme at
March 31, 1992 and 1995 was (Pounds)480.2m and (Pounds)549.7m,
respectively.
Contributions payable by the Group were (Pounds)9.6m, (Pounds)9.8m, and
(Pounds)3.3m for the years ended March 31, 1994 and 1995 and the period
from April 1, 1995 to September 17, 1995, respectively.
F-31
<PAGE>
SOUTH WESTERN ELECTRICITY PLC
(PREDECESSOR COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
c. The March 31, 1992 actuarial valuation did not allow for the possible
additional liabilities which may have arisen as a result of the European
Court of Justice's decision of May 17, 1990 in the case of Barber versus
Guardian Royal Exchange, which related to the equal treatment of men and
women under occupational pension schemes. The ruling was not specific as
to whether equalization should be retrospective before May 1990.
Although the legal position had been clarified, the precise cost to the
Group could not be ascertained until the next formal Scheme valuation.
The provision amounted to (Pounds)5.2m at March 31, 1995, based on
advice from actuaries Bacon & Woodrow that a provision at the rate of
0.7% of pensionable salaries should be provided. Following the
completion in February 1996 of the March 31, 1995 actuarial valuation,
the provision was released.
10. DIRECTORS' EMOLUMENTS AND INTERESTS
Directors' Emoluments
The information set out below for the years ended March 31, 1994 and 1995 is
as published in the Predecessor Company's statutory accounts for the year
ended March 31, 1995, that for the period ended September 17, 1995 is derived
from the predecessor company's statutory accounts for the year ended March 31,
1996.
Prior to the Acquisition, remuneration of the executive directors comprised
four elements:
a. A basic salary together with benefits-in-kind;
b. A performance-related bonus which rewards the directors based on
improvements in earnings per share and specific performance within those
functions for which the directors are individually responsible including
the achievement of customer service quality improvements
c. Long-term incentives, which consist of share option schemes to encourage
directors to enhance share values
d. A contribution to the Electricity Supply Pension Scheme
The terms and conditions of employment of the executive directors were
determined by the Executive Remuneration Committee which consisted solely of
nonexecutive directors. The Committee took into account independent expert
advice on equivalent market salaries. During the year ended March 31, 1995,
the Committee reviewed the executive Directors' Service Agreements. As a
consequence the four executive directors had Agreements which, from June 1,
1995, provided for the Company to terminate the Agreement by giving the
director two years notice in writing (previously three years). The director
could have terminated the Agreement by giving the Company six months notice in
writing.
Fees paid to nonexecutive directors reflected the knowledge and experience
which they brought to the Group.
F-32
<PAGE>
SOUTH WESTERN ELECTRICITY PLC
(PREDECESSOR COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The remuneration of the directors was as follows:
<TABLE>
<CAPTION>
BASIC SALARY OR FEES BENEFITS BONUSES TOTAL
----------------------- ----------------------- ----------------------- -----------------------
MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1994 1995 1994 1995 1994 1995 1994 1995
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
(Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Executive Directors:
J. A. G. Bonner....... 100 103 10 11 23 24 133 138
M. J. Carson.......... 97 101 16 5 21 22 134 128
A. W. Nicol........... 86 0 6 0 0 0 92 0
J. J. Seed............ 163 177 11 11 39 44 213 232
J. E. Sellers......... 95 98 8 8 21 21 124 127
Nonexecutive Directors:
C. M. Fisher.......... 22 22 0 0 0 0 22 22
J. O. Gough........... 22 22 0 0 0 0 22 22
A. P. Hichens......... 22 22 0 0 0 0 22 22
M. E. Warren.......... 80 100 8 12 0 0 88 112
A. E. Isaac........... 0 0 0 0 0 0 0 0
--- --- --- --- --- --- --- ---
687 645 59 47 104 111 850 803
=== === === === === === === ===
</TABLE>
Pension contributions to the Electricity Supply Pension Scheme in respect of
the directors amounted to (Pounds)76,000 and (Pounds)68,000 for the years
ended March 31, 1994 and 1995, respectively. Of these amounts (Pounds)23,000
and (Pounds)25,000 were paid in respect of J. J. Seed as Chief Executive and
highest paid director for the respective periods.
Two Chairmen served during the year to March 31, 1994, the nonexecutive
Chairman, M. E. Warren, succeeding the previous executive Chairman, A. W.
Nicol, on August 9, 1993. A. W. Nicol resigned as a director on August 31,
1993; as executive Chairman, he received (Pounds)79,000 in remuneration and
(Pounds)10,000 was paid on his behalf to the Electricity Supply Pension
Scheme. During the year to March 31, 1994, M. E. Warren as nonexecutive
Chairman received remuneration of (Pounds)71,000. Being nonexecutive, M. E.
Warren did not receive a performance related element of salary nor was he
entitled to any pension benefits. In addition to the amounts disclosed above,
charges of (Pounds)142,559 were incurred in the year to March 31, 1994 in
connection with the retirement of A. W. Nicol mainly by way of a contribution
to the Electricity Supply Pension Scheme which was made in accordance with its
early retirement rules applicable to all members of the Scheme.
For the period ended September 17, 1995, the number of directors (including
the Chairman) who received fees and other emoluments (excluding pension
contributions) within the following ranges was:
<TABLE>
<CAPTION>
NUMBER
------
<S> <C>
(Pounds)5,001 to (Pounds)10,000....................................... 3
(Pounds)50,001 to (Pounds)55,000...................................... 4
(Pounds)85,001 to (Pounds)90,000...................................... 1
</TABLE>
For the period ended September 17, 1995, the Chairmen received
(Pounds)54,100 and the Chief Executive, who was also the highest paid
director, received (Pounds)88,500.
F-33
<PAGE>
SOUTH WESTERN ELECTRICITY PLC
(PREDECESSOR COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Of the directors who were in post on September 17, 1995, the Chairman and
executive directors resigned on September 21, 1995 and the remaining
nonexecutive directors on December 31, 1995. Compensation totaling
(Pounds)1,615,000 was paid in respect of termination of service contracts, and
(Pounds)716,000 was paid to the Electricity Supply Pension Scheme in
accordance with its early retirement rules. These sums are in addition to
remuneration shown above.
Directors' Interests
The beneficial interests of the directors and their families in the shares
of the Predecessor Company at April 1, 1994 and March 31, 1995 are detailed
below. There were no changes between March 31, 1995 and June 19, 1995 other
than for J. A. G. Bonner whose notifiable interests stood at 21,741 ordinary
shares following a matched sale and repurchase of shares through the SWEB PEP
on April 4, 1995.
<TABLE>
<CAPTION>
APRIL 1, MARCH 31,
1994 1995
ORDINARY SHARES NUMBER NUMBER
--------------- -------- ---------
<S> <C> <C>
M. E. Warren.............................................. 5,000 5,000
J. J. Seed................................................ 9,978 27,404
J. A. G. Bonner........................................... 16,768 21,768
M. J. Carson.............................................. 16,589 21,589
C. M. Fisher.............................................. 4,695 4,695
J. O. Gough............................................... 250 250
A. P. Hichens............................................. 22,000 22,000
A. E. Isaac............................................... 0 0
J. E. Sellers............................................. 15,000 21,000
</TABLE>
<TABLE>
<CAPTION>
NUMBER AT NUMBER NUMBER NUMBER AT EXERCISE NORMAL
APRIL 1, GRANTED EXERCISED MARCH 31, PRICE PERIOD
SHARE OPTIONS 1994 IN YEAR IN YEAR 1995 (Pounds) OF EXERCISE
------------- --------- ------- --------- --------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
J. J. Seed....... 2,528* 0 0 2,528* 1.750 1996
17,460 0 17,460 0 3.150 0
12,168 0 0 12,168 4.520 1996-2003
0 31,529 0 31,529 7.485 1997-2004
------ ------ ------ ------
32,156 31,529 17,460 46,225
====== ====== ====== ======
J. A. G. Bonner.. 2,528* 0 0 2,528* 1.750 1996
13,333 0 13,333 0 3.150
9,292 0 0 9,292 4.520 1996-2003
6,060 0 0 6,060 6.930 1997-2004
0 13,760 0 13,760 7.485 1997-2004
0 5,026 0 5,026 8.355 1998-2005
------ ------ ------ ------
31,213 18,786 13,333 36,666
====== ====== ====== ======
M. J. Carson..... 13,333 0 13,333 0 3.150
9,292 0 0 9,292 4.520 1996-2003
6,060 0 0 6,060 6.930 1997-2004
0 13,493 0 13,493 7.485 1997-2004
0 5,026 0 5,026 8.355 1998-2005
------ ------ ------ ------
28,685 18,519 13,333 33,871
====== ====== ====== ======
</TABLE>
F-34
<PAGE>
SOUTH WESTERN ELECTRICITY PLC
(PREDECESSOR COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
NUMBER AT NUMBER NUMBER NUMBER AT EXERCISE NORMAL
APRIL 1, GRANTED EXERCISED MARCH 31, PRICE PERIOD
SHARE OPTIONS 1994 IN YEAR IN YEAR 1995 (Pounds) OF EXERCISE
------------- --------- ------- --------- --------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
J. E. Sellers.... 2,528* 0 0 2,528* 1.750 1996
13,333 0 6,000 7,333 3.150 1995-2002
9,292 0 0 9,292 4.520 1996-2003
6,060 0 0 6,060 6.930 1997-2004
0 13,092 0 13,092 7.485 1997-2004
0 5,026 0 5,026 8.355 1998-2005
------ ------ ----- ------
31,213 18,118 6,000 43,331
====== ====== ===== ======
</TABLE>
The options above were under the terms of the Executive Share Option
Schemes, except as marked * which are under the terms of the Sharesave Scheme.
All options exercised during the year ended March 31, 1995 were exercised on
the same day, when the marked price was (Pounds)8.11. The market price at
March 31, 1995 was (Pounds)6.27.
11. TANGIBLE FIXED ASSETS
<TABLE>
<CAPTION>
NONNETWORK VEHICLES DEDUCT:
DISTRIBUTION LAND & FIXTURES & & MOBILE CONSUMERS'
GROUP GENERATION NETWORK BUILDINGS EQUIPMENT PLANT CONTRIBUTIONS TOTAL
----- ---------- ------------ ---------- ---------- --------- ------------- ---------
(Pounds)M (Pounds)M (Pounds)M (Pounds)M (Pounds)M (Pounds)M (Pounds)M
<S> <C> <C> <C> <C> <C> <C> <C>
Cost:
At April 1, 1993...... 1.9 694.8 46.1 78.2 21.6 (125.4) 717.2
Additions........... 0.1 57.5 0.8 14.2 2.6 (10.3) 64.9
Disposals........... 0.0 (2.2) (1.0) (1.4) (0.8) 0.0 (5.4)
--- ----- ---- ----- ---- ------ -----
At March 31, 1994..... 2.0 750.1 45.9 91.0 23.4 (135.7) 776.7
Additions........... 0.0 58.1 0.2 19.5 2.1 (10.8) 69.1
Disposals........... 0.0 (4.4) 0.0 (9.5) (2.0) 0.0 (15.9)
--- ----- ---- ----- ---- ------ -----
At March 31, 1995..... 2.0 803.8 46.1 101.0 23.5 (146.5) 829.9
Additions........... 0.3 23.8 0.1 2.3 0.1 (5.0) 21.6
Disposals........... 0.0 (1.9) (5.9) (7.5) (2.3) 0.0 (17.6)
--- ----- ---- ----- ---- ------ -----
At September 17,
1995................. 2.3 825.7 40.3 95.8 21.3 (151.5) 833.9
--- ----- ---- ----- ---- ------ -----
Depreciation:
At April 1, 1993...... 1.2 210.2 6.8 44.4 8.4 (29.7) 241.3
Charge for the
year............... 0.0 19.3 1.0 11.0 2.6 (3.7) 30.2
Disposals........... 0.0 (2.2) (0.2) (1.4) (0.6) 0.0 (4.4)
--- ----- ---- ----- ---- ------ -----
At March 31, 1994..... 1.2 227.3 7.6 54.0 10.4 (33.4) 267.1
Charge for the
year............... 0.1 20.8 0.7 12.1 2.7 (3.9) 32.5
Disposals........... 0.0 (2.4) 0.0 (6.3) (1.7) 0.0 (10.4)
--- ----- ---- ----- ---- ------ -----
At March 31, 1995..... 1.3 245.7 8.3 59.8 11.4 (37.3) 289.2
Charge for the peri-
od................. 0.1 11.3 0.3 4.9 0.8 (2.3) 15.1
Disposals........... 0.0 (1.9) (1.8) (7.1) (1.7) 0.0 (12.5)
--- ----- ---- ----- ---- ------ -----
At September 17,
1995................. 1.4 255.1 6.8 57.6 10.5 (39.6) 291.8
--- ----- ---- ----- ---- ------ -----
Net book values:
At March 31, 1993..... 0.7 484.6 39.3 33.8 13.2 (95.7) 475.9
--- ----- ---- ----- ---- ------ -----
At March 31, 1994..... 0.8 522.8 38.3 37.0 13.0 (102.3) 509.6
--- ----- ---- ----- ---- ------ -----
At March 31, 1995..... 0.7 558.1 37.8 41.2 12.1 (109.2) 540.7
--- ----- ---- ----- ---- ------ -----
At September 17,
1995................. 0.9 570.6 33.5 38.2 10.8 (111.9) 542.1
--- ----- ---- ----- ---- ------ -----
</TABLE>
F-35
<PAGE>
SOUTH WESTERN ELECTRICITY PLC
(PREDECESSOR COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The net book value of land and buildings comprises:
<TABLE>
<CAPTION>
NONNETWORK NETWORK
LAND LAND
AND AND
BUILDINGS BUILDINGS
---------- ---------
MARCH 31, MARCH 31,
1995 1995
---------- ---------
(Pounds)M (Pounds)M
<S> <C> <C>
Freehold................................................ 33.5 32.1
Long leasehold.......................................... 0.3 0.0
Short leasehold......................................... 4.0 0.0
---- ----
37.8 32.1
==== ====
</TABLE>
Included within the Group's fixed assets are assets in the course of
construction amounting to (Pounds)3.4m at March 31, 1995 and land at a cost of
(Pounds)11.2m at March 31, 1995.
12. FIXED ASSET INVESTMENTS
<TABLE>
<CAPTION>
ASSOCIATED UNLISTED
UNDERTAKINGS INVESTMENTS TOTAL
------------ ----------- ---------
(Pounds)M (Pounds)M (Pounds)M
<S> <C> <C> <C>
Balance, April 1, 1993.................. 2.0 66.3 68.3
Additions............................. 0.0 0.1 0.1
Share of profit retained by associated
undertakings......................... 0.5 0.0 0.5
--- ---- ----
Balance, March 31, 1994................. 2.5 66.4 68.9
Additions............................. 0.0 4.6 4.6
Share of profit retained by associated
undertakings......................... 0.8 0.0 0.8
--- ---- ----
Balance, March 31, 1995................. 3.3 71.0 74.3
Additions............................. 0.0 0.4 0.4
Share of profit retained by associated
undertakings......................... 0.1 0.0 0.1
--- ---- ----
Balance, September 17, 1995............. 3.4 71.4 74.8
=== ==== ====
</TABLE>
13. STOCKS AND WORK IN PROGRESS
<TABLE>
<CAPTION>
MARCH 31,
1995
---------
(Pounds)M
<S> <C>
Raw materials and consumables...................................... 3.6
Work in progress................................................... 0.9
Goods for resale................................................... 14.0
----
18.5
====
</TABLE>
F-36
<PAGE>
SOUTH WESTERN ELECTRICITY PLC
(PREDECESSOR COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
14. DEBTORS
<TABLE>
<CAPTION>
MARCH 31,
1995
---------
(Pounds)M
<S> <C>
Amounts falling due within one year:
Trade debtors.................................................... 41.9
Unbilled consumption............................................. 55.9
Credit sales installments not yet due............................ 14.8
Pensions prepayment.............................................. 2.0
Advance corporation tax recoverable.............................. 33.0
Amounts recoverable on long-term contracts....................... 1.7
Dividends receivable............................................. 6.8
Other debtors.................................................... 6.6
Prepayments and accrued income................................... 7.2
-----
169.9
Amounts falling due after more than one year:
Credit sales installments not yet due............................ 17.2
Other debtors.................................................... 0.1
-----
Total debtors.................................................. 187.2
=====
</TABLE>
15. CURRENT ASSET INVESTMENTS
<TABLE>
<CAPTION>
MARCH 31,
1995
---------
(Pounds)M
<S> <C>
Listed:
UK government securities......................................... 14.6
Fixed income investments:
UK............................................................. 0.0
Overseas....................................................... 1.8
Own shares....................................................... 3.7
----
20.1
Unlisted:
Short-term loan to associated undertakings....................... 0.0
Short-term deposits.............................................. 23.2
Tax certificate of deposit....................................... 0.5
----
43.8
====
</TABLE>
Own shares are held by South Western Electricity Share Scheme Trustees
(Guernsey) Limited (Note 19) and have a market value of (Pounds)3.9m at March
31, 1995. In accordance with the requirements of Financial Reporting Standard
5, "Reporting the Substance of Transactions," the Predecessor Company has
recognized the assets and liabilities of the Trust as assets and liabilities
of the Predecessor Company and revalued the shares to the lower of cost and
net realizable value.
F-37
<PAGE>
SOUTH WESTERN ELECTRICITY PLC
(PREDECESSOR COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
16. CREDITORS
<TABLE>
<CAPTION>
MARCH 31,
1995
---------
(Pounds)M
<S> <C>
Amounts falling due within one year:
Bank loans and overdrafts........................................ 24.6
Amounts owing for purchase of electricity........................ 35.9
Overrecovery on regulated income................................. 6.4
Other trade creditors............................................ 26.8
Corporation tax.................................................. 25.0
Advance corporation tax payable.................................. 17.8
Taxation and Social Security..................................... 8.5
Payments received on account..................................... 8.9
Dividends proposed............................................... 22.5
Other creditors.................................................. 23.2
Accruals and deferred income..................................... 18.1
Customer receipts ahead of VAT on fuel........................... 25.0
-----
242.7
=====
Amounts falling due after more than one year:
Repayable between one and two years:
Long-term loan................................................. 4.0
Repayable between two and five years:
Long-term loan................................................. 0.5
Repayable in five years or more:
HM Treasury bonds.............................................. 80.0
Consortium tax creditor........................................ 10.3
Other creditor................................................. 0.1
-----
94.9
=====
</TABLE>
On October 22, 1990, the Predecessor Company issued (Pounds)80.0m 12.365%
bonds to HM Treasury which are due for repayment at par in 2008; these were
redeemed on February 9, 1996 at a premium of (Pounds)18.1m. No interest is
payable on other items.
17. PROVISIONS FOR LIABILITIES AND CHARGES
<TABLE>
<CAPTION>
PENSIONS OTHER TOTAL
--------- --------- ---------
(Pounds)M (Pounds)M (Pounds)M
<S> <C> <C> <C>
Balance at April 1, 1993....................... 9.0 7.0 16.0
Arising during the year...................... (4.6) 36.7 32.1
Utilized during the year..................... 0.0 (8.4) (8.4)
---- ---- ----
Balance at March 31, 1994...................... 4.4 35.3 39.7
Arising during the year...................... 1.3 2.6 3.9
Utilized during the year..................... 0.0 (6.5) (6.5)
---- ---- ----
Balance at March 31, 1995...................... 5.7 31.4 37.1
Arising during the year...................... 0.2 0.4 0.6
Utilized during the year..................... 0.0 (1.0) (1.0)
---- ---- ----
Balance at September 17, 1995.................. 5.9 30.8 36.7
==== ==== ====
</TABLE>
F-38
<PAGE>
SOUTH WESTERN ELECTRICITY PLC
(PREDECESSOR COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Other provisions relate principally to deferred tax (Note 18),
reorganization costs, including severance, insurance claims, and accrued
holiday entitlement.
18. DEFERRED TAX
In calculating the amount of profits subject to tax, UK tax legislation
requires that certain adjustments are made to the profits as shown in these
financial statements. The major element of such adjustments arises because the
rates at which assets are depreciated for tax purposes differ from the rates
at which they are depreciated in the financial statements. In circumstances
where the tax depreciation is greater than the amount of depreciation in the
financial statements, part of the Group's tax liability is deferred.
Deferred tax has been provided at 33% to the extent that the Directors have
concluded that it is probable that a liability will crystallize, taking into
account a prudent view of future capital expenditure and average asset lives.
<TABLE>
<CAPTION>
MARCH 31,
1995
---------
(Pounds)M
<S> <C>
Deferred tax provided on capital allowances in excess of depre-
ciation........................................................ 13.3
Deferred tax in respect of other timing differences............. (7.7)
-----
5.6
=====
The amounts of unprovided deferred tax are as follows:
Capital allowances in excess of depreciation.................. 122.7
Other timing differences...................................... (2.1)
-----
120.6
=====
</TABLE>
19. SHARE OPTIONS
At March 31, 1995, outstanding options granted under share option schemes
were as follows:
<TABLE>
<CAPTION>
NORMAL
YEAR OPTIONS PRICE DATES OF
SCHEME GRANTED OUTSTANDING (Pounds) EXERCISE
------ ------- ----------- -------- ---------
<S> <C> <C> <C> <C>
Sharesave........................... 1990 3,485,279 1.750 1996
Executive directors and senior em-
ployees............................ 1991 6,000 3.160 1994-2001
1992 7,333 3.150 1995-2002
1992 11,306 3.980 1995-2002
1992 12,352 4.250 1995-2002
1993 47,344 4.520 1996-2003
1993 8,088 6.800 1996-2003
1994 22,941 6.930 1997-2004
1994 42,173 6.900 1997-2004
1994 388,868 7.485 1997-2004
1994 12,699 8.545 1997-2004
1995 27,728 8.355 1998-2005
</TABLE>
F-39
<PAGE>
SOUTH WESTERN ELECTRICITY PLC
(PREDECESSOR COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
An Employee Share Ownership Trust was established in 1991, the object of
which is to purchase shares in SWEB on the open market which will be used to
satisfy, in part, share option schemes. This Trust held 622,282 shares at
March 31, 1995.
1,077,712 ordinary shares of SWEB at March 31, 1995 were held in a separate
trust on behalf of employees who were beneficially entitled to the shares
under special arrangements made at the time of the offer for sale in November
1990.
On October 16, 1995, the options outstanding under the Sharesave Scheme were
canceled and compensation was paid to Sharesave Scheme members.
20. CAPITAL AND OTHER COMMITMENTS
There are annual commitments under operating leases for equipment and
vehicles which expire:
<TABLE>
<CAPTION>
MARCH 31,
1995
---------
(Pounds)M
<S> <C>
Within one year.................................................... 1.2
In the second to fifth year, inclusive............................. 0.8
---
2.0
===
</TABLE>
There are annual commitments under operating leases for land and buildings
which expire as follows:
<TABLE>
<CAPTION>
MARCH 31,
1995
---------
(Pounds)M
<S> <C>
Within one year.................................................... 0.3
In the second to fifth year, inclusive............................. 0.0
In more than five years............................................ 3.5
---
3.8
===
</TABLE>
In common with normal commercial practice, the Group has commitments to pay
rentals for leasehold land and buildings through to the end of the lease term.
This obligation potentially continues to the end of the lease, whether or not
the lease is assigned to a third party. If a lease has been assigned to a
third party, then the original lessee is ultimately responsible for any
default in the rent payment. However, no material liability is anticipated.
The Group has entered into a contract relating to 200 megawatts of the
Teesside Power Limited capacity for a period of 15 years from April 1, 1993.
It also has contracts with National Power plc and PowerGen plc relating to the
purchase price of electricity, which expire on March 31, 1998.
The Group was committed to provide a shareholder loan of up to (Pounds)11.0m
to Eurobell (South West) Limited at rates of interest favorable to the Group.
No drawings against this facility had been made at March 31, 1995.
F-40
<PAGE>
SOUTH WESTERN ELECTRICITY PLC
(PREDECESSOR COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
21. DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES
The accompanying consolidated financial statements are prepared in
accordance with generally accepted accounting principles in the United Kingdom
("UK GAAP"), which differ in certain material respects from United States
generally accepted accounting principles ("U.S. GAAP"). Significant
differences between UK GAAP and U.S. GAAP applicable to SWEB are as follows.
PENSION COSTS
Under UK GAAP, the expected cost of pensions (i) may be calculated by the
use of any actuarial methodology whose assumptions reflect the long-term
nature of the assets and liabilities involved and (ii) is charged to the
profit and loss account so as to spread the cost over the expected service
lives of employees. U.S. GAAP Statement of Financial Accounting Standards
("SFAS") No. 87, "Employers' Accounting for Pensions," also requires provision
for employee pension benefit arrangements over the service lives of the
employees but requires use of a specific actuarial methodology, the projected
unit credit method, which is different from the attained age methodology used
by the Company for UK GAAP purposes. As discussed in Note 9, the Company
operates both a defined benefit and a defined contribution pension scheme to
which the provisions of SFAS No. 87 apply.
Actuarial present values of the Company's benefit obligation under U.S. GAAP
were as follows:
<TABLE>
<CAPTION>
MARCH 31,
1995
---------
(Pounds)M
<S> <C>
Vested benefits.................................................... (442.7)
Nonvested benefits................................................. 0.0
------
Accumulated benefit obligation..................................... (442.7)
Effect of future increases in compensation......................... (33.3)
------
Projected benefit obligation....................................... (476.0)
------
Less:
Fair value of plan assets......................................... 546.9
Unrecognized net transition asset(a).............................. (62.2)
Unrecognized net gain............................................. 53.2
------
537.9
------
Net pension asset.................................................. 61.9
======
</TABLE>
- --------
(a) It was not feasible to adopt SFAS No. 87 on the effective date of the
standard. Accordingly, the unrecognized net transition asset at the date
of initial application of SFAS No. 87, April 1, 1994, is being amortized
over 15 years, beginning April 1, 1989, in accordance with the
interpretations of the staff of the Securities and Exchange Commission.
The amount of the unrecognized net transition asset credited to equity on
April 1, 1994 was (Pounds)34.6 million.
F-41
<PAGE>
SOUTH WESTERN ELECTRICITY PLC
(PREDECESSOR COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Weighted average assumptions used in developing the projected obligation
were as follows:
<TABLE>
<CAPTION>
MARCH 31,
1995
---------
<S> <C>
Discount rate...................................................... 8.75%
Annual salary rate increase........................................ 6.00
Long-term rate of return on assets................................. 9.50
</TABLE>
Components of net periodic pension cost were as follows:
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED APRIL 1,1995 TO
MARCH 31, SEPTEMBER 17,
1995 1995
---------- ---------------
(Pounds)M (Pounds)M
<S> <C> <C>
Net service cost................................ 5.5 2.9
Interest cost................................... 36.7 20.1
Actual return on plan assets.................... 0.2 (69.3)
Net amortization and deferral................... (59.9) 40.3
----- -----
Total pension income under U.S. GAAP............ (17.5) (6.0)
Total pension expense under UK GAAP (Note 8).... 14.8 3.7
----- -----
UK GAAP/U.S. GAAP difference (additional U.S.
income)........................................ (32.3) (9.7)
===== =====
</TABLE>
Income Taxes
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. The significant
components of the net deferred income tax liabilities (on a UK GAAP basis) are
described in Note 18.
The adjustments related to deferred taxes included below in the
reconciliations of consolidated net profit and shareholders' equity under UK
GAAP to U.S. GAAP reflect that under UK GAAP, deferred tax is provided only
for timing differences expected to crystallise in the foreseeable future,
whereas U.S. GAAP requires deferred taxation be provided in full. As UK GAAP
also requires the use of a liability method to calculate deferred taxes, no
material adjustments related to differences in methodology exist.
Dividends and Irrecoverable ACT
Under UK GAAP, any final dividends proposed after the end of an accounting
period and any related advanced corporation tax written off during the
accounting period are deducted in arriving at retained profit for that period
when the Directors specifically relate the dividends to such period. Under
U.S. GAAP, dividends and the related tax implications are not recorded until
formally approved.
Revaluation Reserve
Under UK GAAP, SWEB's investment in the National Grid Group plc was valued
at its share of the net asset value as at March 31, 1990 of (Pounds)49.1
million, with a corresponding credit to equity. Under U.S. GAAP, this
investment would have been recorded at cost, which was nil.
F-42
<PAGE>
SOUTH WESTERN ELECTRICITY PLC
(PREDECESSOR COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Exceptional Items
As detailed in Note 3, in the year ended March 31, 1995, the Company
recorded a (Pounds)20 million nonoperating exceptional item under UK GAAP
relating to the sale of the retailing business. Under U.S. GAAP, such items
would have been accounted for as a discontinued operation in accordance with
Accounting Principles Board Opinion No. 30. As such, (Pounds)12.1 million of
the exceptional item recorded during fiscal year 1995 under UK GAAP,
associated with costs relating to withdrawal from the discontinued operation
including related severance costs, would have been included in determining the
gain or loss on sale of the discontinued operation under U.S. GAAP. Under U.S.
GAAP, the remaining (Pounds)7.9 million of the exceptional item relating to
the write-down of asset values would have been included in the determination
of operating income.
Cash Flow Statements
The cash flow statements included in the consolidated financial statements
have been prepared in conformity with the UK Financial Reporting Standard No.
1. The principal differences between this statement and the cash flows
presented in accordance with U.S. Statement of Financial Accounting Standards
No. 95, "Cash Flow Statements" ("SFAS No. 95") are as follows.
Under U.S. GAAP, cash and cash equivalents would not include bank overdrafts
and borrowings with original maturities of less than three months. Under UK
GAAP, cash flows are presented separately for operating activities, returns on
investments and servicing of finance, taxation, investing activities, and
financing activities. U.S. GAAP, however, requires only three categories of
cash flow activity to be reported: operating, investing, and financing. Cash
flows from taxation and returns on investments and servicing of finance shown
under U.S. GAAP would, with the exception of dividends paid, be included as
operating activities under U.S. GAAP. The payment of dividends would be
included as a financing activity under U.S. GAAP. Under U.S. GAAP, capitalized
interest is treated as part of the cost of the asset to which it relates and
is thus included as part of investing cash flows; under UK GAAP all interest
is treated as part of returns on investments and servicing of finance.
Categories of cash flow activity under U.S. GAAP can be summarized as
follows (in millions):
<TABLE>
<CAPTION>
YEAR PERIOD FROM
ENDED APRIL 1, 1995 TO
MARCH 31, SEPTEMBER 17,
1995 1995
--------- ----------------
(Pounds) (Pounds)
<S> <C> <C>
Cash flows provided by operating activities..... 99.7 61.6
Cash flows used in investing activities......... (66.9) (22.0)
Cash flows used in financing activities......... (108.6) (18.0)
------ -----
(Decrease) increase in cash and cash equiva-
lents.......................................... (75.8) 21.6
Cash and cash equivalents at beginning of peri-
od............................................. 103.1 27.3
------ -----
Cash and cash equivalents at end of period...... 27.3 48.9
====== =====
</TABLE>
F-43
<PAGE>
SOUTH WESTERN ELECTRICITY PLC
(PREDECESSOR COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Reconciliation of Net Profit and Shareholders' Equity
The following is a summary of material adjustments to the Company's net
profit and shareholders' equity which would have been required if U.S. GAAP
had been applied instead of UK GAAP (in millions):
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED APRIL 1,1995 TO
MARCH 31, SEPTEMBER 17,
1995 1995
---------- ---------------
(Pounds) (Pounds)
<S> <C> <C>
Net profit for the financial period under UK
GAAP.......................................... 85.9 22.3
U.S. GAAP adjustments:
Pension income, net of tax................... 21.6 6.5
Deferred taxation............................ (8.5) (3.0)
---- ----
Net income under U.S. GAAP..................... 99.0 25.8
==== ====
</TABLE>
<TABLE>
<CAPTION>
MARCH 31,
1995
---------
(Pounds)
<S> <C>
Shareholders' equity under UK GAAP................................. 493.8
U.S. GAAP adjustments:
Pension costs, net of tax........................................ 44.8
Revaluation reserve.............................................. (49.1)
Deferred taxation................................................ (120.6)
Dividends........................................................ 22.5
------
Shareholders' equity under U.S. GAAP............................... 391.4
======
</TABLE>
22. SUBSEQUENT EVENTS
On September 18, 1995, SIUK's agreed bid for the group was declared wholly
unconditional, as a result, the group's immediate parent undertaking is SIUK.
SIUK is a wholly-owned subsidiary of Southern Investments UK Holdings Limited
("Holdings"), which was itself wholly-owned indirectly by The Southern
Company.
On July 1, 1996, PP&L Resources, Inc. indirectly purchased a 25% share of
Holdings for (Pounds)121.5 million ($185 million).
F-44
<PAGE>
UNAUDITED SELECTED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The unaudited pro forma consolidated statement of income for the year ended
March 31, 1996 reflects the historical results of Southern Investments UK plc
for the period from September 18, 1995 to March 31, 1996 and of South Western
Electricity plc for the period from April 1, 1995 to September 17, 1995,
adjusted to show the results for the year ended March 31, 1996, as if the
purchase business combination had occurred on April 1, 1995. The pro forma
adjustments relate to the allocation of fair values of assets acquired and
liabilities assumed, as well as reflect the predecessor period in U.S. GAAP.
The pro forma consolidated information does not consider the (Pounds)9
million of bid defense costs incurred during the predecessor period.
This information is prepared for illustrative purposes only and, because of
its nature, cannot give a complete picture of the Company's results of
operations had the transactions been consummated on the date assumed and does
not project the Company's financial position or results of operations for any
future date or period. The unaudited pro forma consolidated statement of
income should be read in conjunction with the consolidated financial
statements of Southern Investments UK plc and the related notes thereto.
Unaudited amounts have been prepared based upon the consolidated financial
statements of the Company, which have been prepared in accordance with U.S.
GAAP.
F-45
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDED MARCH
31, 1996
The following unaudited pro forma statement of income is based upon the
consolidated statement of income for the period from September 18, 1995 to
March 31, 1996 of the Successor Company and the statement of income of the
Predecessor Company for the period from April 1, 1995 to September 17, 1995,
adjusted to reflect the items described in notes (1) to (5) below as if the
purchase business combination had occurred at the beginning of the period.
<TABLE>
<CAPTION>
IN MILLIONS
---------------------------------------------------------------------------------------
SUCCESSOR PREDECESSOR
PERIOD PERIOD PRO FORMA
SEPTEMBER 18, APRIL 1, FOR THE
1995 TO 1995 TO YEAR ENDED
MARCH 31, SEPTEMBER 17, MARCH 31,
1996 1995 1996
U.S. GAAP UK GAAP ADJUSTMENTS U.S. GAAP
------------- ------------- -------------------------------------------- --------------
(1) (2) (3) (4) (5) U.S.
(Pounds) (Pounds) (Pounds) (Pounds) (Pounds) (Pounds) (Pounds) (Pounds) $
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Operating revenues...... 481 319 (20) -- -- -- -- 780 1,190
Cost of sales........... 318 202 (15) -- -- -- -- 505 770
--- --- --- --- --- --- --- --- -----
Gross margin............ 163 117 (5) -- -- -- -- 275 420
--- --- --- --- --- --- --- --- -----
Operating expenses:
Maintenance............ 21 18 -- -- -- -- -- 39 60
Depreciation and amor-
tization.............. 22 15 -- 3 2 -- -- 42 64
Selling, general, and
administrative........ 34 52 (17) -- -- -- -- 69 105
--- --- --- --- --- --- --- --- -----
Total operating ex-
penses................ 77 85 (17) 3 2 -- -- 150 229
--- --- --- --- --- --- --- --- -----
Operating income....... 86 32 12 (3) (2) -- -- 125 191
--- --- --- --- --- --- --- --- -----
Other income (expense):
Interest income........ 7 1 -- -- -- -- -- 8 12
Interest expense....... (28) (6) -- -- -- (1) (32) (67) (102)
Gain on sale of invest-
ments................. 14 -- -- -- -- -- -- 14 21
Other, net............. 2 3 -- -- -- -- -- 5 8
--- --- --- --- --- --- --- --- -----
Total other expense.... (5) (2) -- -- -- (1) (32) (40) (61)
--- --- --- --- --- --- --- --- -----
Net income from
continuing operations
before income taxes.... 81 30 12 (3) (2) (1) (32) 85 130
Provision for income
taxes.................. 28 8 6 -- -- -- (11) 31 47
--- --- --- --- --- --- --- --- -----
Net income before ex-
traordinary item....... 53 22 6 (3) (2) (1) (21) 54 83
Extraordinary gain on
early extinguishment of
debt, net of income tax
effect of (Pounds)3
million................ 6 -- -- -- -- -- -- 6 9
Discontinued operations,
net.................... -- -- (2) -- -- -- -- (2) (3)
--- --- --- --- --- --- --- --- -----
Net income.............. 59 22 4 (3) (2) (1) (21) 58 89
=== === === === === === === === =====
</TABLE>
- --------
(1) Reflect the adjustments required to state the Predecessor period in
accordance with U.S. GAAP.
(2) Depreciation expense which would have been recorded based on the valuation
of property, plant, and equipment recorded in connection with the purchase
business combination, as if such combination had occurred on April 1,
1995.
(3) Amortization of goodwill recorded in connection with the purchase business
combination as if the combination had occurred on April 1, 1995.
(4) Reflect the fair value of long-term debt obligations and associated
interest expense recorded in connection with the purchase business
combination as if the combination had occurred on April 1, 1995.
(5) Reflect the interest expense recorded in connection with the purchase
business combination as if the combination had occurred on April 1, 1995
and been 100% financed with short-term borrowings at an interest rate of
6% per year.
F-46
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO PERSON IS AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPEC-
TUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY
ANY SECURITY OTHER THAN THE SENIOR NOTES OFFERED HEREBY, NOR DOES IT CONSTITUTE
AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OF-
FERED HEREBY TO ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE
SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE
DATE HEREOF.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Summary.................................................................. 5
Risk Factors............................................................. 13
The Company.............................................................. 16
Use of Proceeds.......................................................... 19
Capitalization........................................................... 19
Exchange Rates........................................................... 19
Selected Financial Data.................................................. 20
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 24
Business................................................................. 32
The Electric Utility Industry in Great Britain........................... 40
Management............................................................... 47
Certain Relationships and Related Transactions........................... 48
Security Ownership....................................................... 49
Description of the Senior Notes.......................................... 50
Certain Income Tax Considerations........................................ 64
Underwriting............................................................. 68
Legal Matters............................................................ 69
Experts.................................................................. 69
Available Information.................................................... 69
Luxembourg Stock Exchange and Other Information.......................... 70
Glossary................................................................. A-1
Index to Financial Statements............................................ F-1
</TABLE>
------------------
UNTIL , 1996 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS EF-
FECTING TRANSACTIONS IN THE SENIOR NOTES, WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO
THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS
AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$235,000,000
SOUTHERN INVESTMENTS UK PLC
% SENIOR NOTES DUE 2006
------------------
PROSPECTUS
, 1996
------------------
LEHMAN BROTHERS
MERRILL LYNCH & CO.
J.P.MORGAN & CO.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable in connection with the sale
and distribution of the securities being registered.
<TABLE>
<CAPTION>
ITEM
-------
<S> <C>
SEC registration fee............................................. $81,035
Blue Sky fees and expenses....................................... +
Printing and engraving expenses.................................. +
Legal fees and expenses.......................................... +
Accountants fees and expenses.................................... +
Trustee and Book-Entry Depositary fees and expenses.............. +
Miscellaneous.................................................... +
-------
Total.......................................................... $ +
=======
</TABLE>
--------
+ To be completed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under UK law there is a general rule that any provision (whether contained
in a company's articles or in any other arrangement with the company)
exempting an officer of the company from, or indemnifying him against, any
liability for negligence or other breach of duty in relation to the company is
void (this would include liability for fraud or dishonesty). As an exception
to this rule, a company may indemnify an officer against a liability incurred
by him in defending any proceedings in which judgment is given in his favor or
in which he is acquitted. A company may also give an indemnity where, in any
proceedings against a director, the court relieves him from liability for
negligence or breach of duty where he has acted honestly and reasonably and
ought fairly to be excused from liability. An indemnity is permitted where a
director acts within his powers and is not guilty of negligence or other
breach of duty. A company is also permitted to purchase insurance against any
such liability.
Southern has an insurance policy covering the liabilities and expenses of
Southern and its direct and indirect subsidiaries which might arise in
connection with their lawful indemnification of their directors and officers
for certain of their liabilities and expenses and also covering their officers
and directors against certain other liabilities and expenses.
The Bylaws of Southern Electric provide that no present or future director
or officer of Southern Electric shall be liable for any act, omission, step,
or conduct taken or had in good faith, which is required, authorized, or
approved by any order or orders issued pursuant to the Public Utility Holding
Company Act of 1935, the Federal Power Act, or any federal or state statute or
municipal ordinance regulating Southern Electric or its parent by reason of
their being holding or investment companies, public utility companies, public
utility holding companies, or subsidiaries of public utility holding
companies. In the event that the foregoing provisions are found not to
constitute a valid defense on the grounds of not being applicable to the
particular class of plaintiff, each such director and officer is required to
be reimbursed under such Bylaws for, or indemnified against, all expenses and
liabilities incurred by him or imposed on him, in connection with, or arising
out of, any such action, suit, or proceeding based on any act, omission, step,
or conduct taken or had in good faith as in such provisions described.
II-1
<PAGE>
The Bylaws of Southern Electric further provide that each person who is or
was a director of Southern Electric or officer or employee of Southern
Electric holding one or more positions of management through and inclusive of
Project managers and Business Development Managers (but not positions below
the level of such managers) (such positions being hereinafter referred to as
"Management Positions") and who was or is a party or was or is threatened to
be made a party to any threatened, pending or completed claim, action, suit or
proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that he is or was serving at the request of Southern
Electric as a director, alternate director, officer, employee, agent or
trustee of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, shall be indemnified by Southern Electric as
a matter of right against any and all expenses (including attorneys' fees)
actually and reasonably incurred by him and against any and all claims,
judgments, fines, penalties, liabilities and amounts paid in settlement
actually incurred by him in defense of such claim, action, suit or proceeding,
including appeals, to the full extent permitted by applicable law. Expenses
(including attorneys' fees) incurred by a director of Southern Electric or
officer or employee of Southern Electric holding one or more Management
Positions with respect to the defense of any such claim, action, suit or
proceeding may be advanced by Southern Electric prior to the final disposition
of such claim, action, suit or proceeding, as authorized by the board of
directors in the specific case, upon receipt of an undertaking by or on behalf
of such person to repay such amount unless it shall ultimately be determined
that such person is entitled to be indemnified by Southern Electric under such
provisions or otherwise.
The Articles of Association of the Company provide that, without prejudice
to the provisions of Regulation 118 of Table A of the Companies Acts 1985 to
1989 under UK law, the directors shall have power to purchase and maintain
insurance for or for the benefit of any persons who are or were at any time
directors, officers, or employees or auditors of the Company, or of any other
company which is its holding company or parent undertaking or in which the
Company or such holding company or parent undertaking or any of the
predecessors of the Company or of such holding company or parent undertaking
has any interest whether direct or indirect or which is in any way allied to
or associated with the Company, or of any subsidiary undertaking of the
Company or of any such other company, or who are or were at any time trustees
of any pension fund in which any employees of the Company or of any such other
company or subsidiary undertaking are interested, including (without prejudice
to the generality of the foregoing) insurance against any liability incurred
by such persons in respect of any act or omission in the actual or purported
execution and/or discharge of their duties and/or in the exercise or purported
exercise of their powers and/or otherwise in relation to their duties, powers
or offices in relation to the Company or any such other company, subsidiary
undertaking or pension fund. For the purposes of this Regulation "holding
company" "parent undertaking" and "subsidiary undertaking" shall have the same
meanings as in the Companies Acts 1985 to 1989.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Upon its incorporation on June 23, 1995, the Company issued two ordinary
shares at (Pounds)1 each to its two corporate incorporators, both of which
were incorporated in England and Wales. On July 4, 1995 the Company issued
49,998 ordinary shares at an aggregate price of (Pounds)49,998 to Holdings,
formerly Premier American Investments plc, at which time Holdings also
acquired the 2 shares held by the incorporators. On October 6, 1995 the
Company issued to Holdings an additional 500,350,587 ordinary shares at an
aggregate price of (Pounds)500,350,587, one of which is held by a UK resident
individual as nominee for Holdings.
During the period July 13, 1995 to August 24, 1995 the Company issued a
series of bonds underwritten by Swiss Bank Corporation (acting through its
division, SBC Warburg), Chemical Investment Bank Limited, IBJ International
plc, National Westminster Bank plc and The Toronto-Dominion Bank with an
aggregate offering price of (Pounds)627,070,000 and underwriting discounts and
commissions in the amount of (Pounds)6,270,700.
All such issuances and sales were exempt from registration requirements of
the Securities Act, by reason of the fact that such securities were offered
and sold outside the United States to persons who were not citizens of the
United States or in transactions which were exempt from registration pursuant
to Regulation S of the Securities Act.
II-2
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement among the Company and the Underwrit-
ers.*
3.1 Memorandum of Association of the Company.
3.2 Articles of Association of the Company.
4.1 Form of Trust Indenture between the Trustee and the Company.
4.2 Form of First Supplemental Indenture between the Trustee and the Com-
pany.
5.1 Opinion of Shearman & Sterling regarding the legality of the securi-
ties being registered.*
8.1 Opinion of Troutman Sanders LLP regarding taxation.*
8.2 Opinion of Allen & Overy regarding taxation.*
10.1 SWEB Public Electricity Supply License dated January 31, 1996.
10.2 Modifications of License Conditions dated March 31, 1994, March 30,
1994, June 30, 1993, June 15, 1992, and April 22, 1992.
10.3 Pooling and Settlement Agreement as amended and restated at December
2, 1994 between SWEB, Energy Settlements and Information Services (as
Settlement System Administrator), Energy Pool Funds Administration
Limited (as Pool Funds Administrator), The National Grid Company plc
(as Grid Operator and Ancillary Services Provider), SWEB and Other
Parties.
10.4 Master Connection and Use of System Agreement dated as of March 30,
1990 among The National Grid Company plc and its users (including
SWEB).
10.5 Form of Supplemental Agreement between The National Grid Company plc
and SWEB.
10.6 Master Agreement dated as of October 25, 1995 among The National Grid
Holding plc, The National Grid Company plc, SWEB and the other RECs.
10.7 Memorandum of Understanding between The National Grid Group plc, SWEB
and each of the RECs, dated November 17, 1995.
10.8 Form of SWEB Use of Distribution System Agreement.
10.9 Form of Agreement for the Connection of an Exit Point.
10.10 Services Agreement dated as of January 1, 1996 between Southern Elec-
tric International, Inc. and the Company.
10.11 Services Agreement dated as of January 1, 1996 between Southern Elec-
tric International, Inc. and SWEB.
10.12 Services Agreement dated as of January 1, 1996 between SWEB and South-
ern Investments UK Holdings Limited.
10.13 Services Agreement dated as of January 1, 1996 between the Company and
SWEB.
12.1 Statements re: Computation of Ratio of Earnings to Fixed Charges.
21.1 List of Subsidiaries of the Company.
23.1 Consent of Arthur Andersen.
23.2 Consent of Ernst & Young.
23.3 Consent of Arthur Andersen.
23.4 Consent of Shearman & Sterling (included in Exhibit 5.1).*
23.5 Consent of Troutman Sanders LLP (included in Exhibit 8.1).*
23.6 Consent of Allen & Overy (included in Exhibit 8.2).*
24.1 Resolution and Powers of Attorney.
25.1 Statement of Eligibility of Trustee.*
27.1 Financial Data Schedule.*
99.1 The (Pounds)600 million Revolving Credit and Term Loan Agreement dated
January 12, 1996, among Southern Investments UK plc and South Western
Electricity plc as borrowers, J.P. Morgan Securities Ltd. as arranger
and Morgan Guaranty Trust Company as Agent and the banks named there-
in.
</TABLE>
- --------
* To be filed by amendment.
II-3
<PAGE>
(B) FINANCIAL STATEMENT SCHEDULES
The following financial statement schedule of Company is filed as part of
this Registration Statement: Schedule II--Valuation and Qualifying Accounts
and Reserves.
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted as to directors, officers, and controlling persons of the
Registrant pursuant to the provisions described in Item 14 or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer, or controlling
person of the Registrant in the successful defense of any action, suit, or
proceeding) is asserted by such director, officer, or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned Registrant undertakes that: (1) for purposes of determining
any liability under the Securities Act, the information omitted from the form
of prospectus as filed as part of the registration statement in reliance upon
Rule 430A and contained in the form of prospectus filed by the Registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be
deemed to be part of the registration statement as of the time it was declared
effective, and (2) for the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT,
SOUTHERN INVESTMENTS UK PLC, A PUBLIC LIMITED COMPANY DULY ORGANIZED AND
EXISTING UNDER THE LAWS OF ENGLAND AND WALES, HAS DULY CAUSED THIS REGISTRATION
STATEMENT ON FORM S-1 TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO
DULY AUTHORIZED, IN ATLANTA, GEORGIA ON THE 26TH DAY OF JULY 1996.
SOUTHERN INVESTMENTS UK PLC
By: *
----------------------------------
RICHARD J. PERSHING
DIRECTOR AND CHIEF EXECUTIVE
OFFICER
*By: /s/ Edwin Adams
--------------------------------
EDWIN ADAMS
ATTORNEY-IN-FACT
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS ON JULY 26, 1996 IN THE
CAPACITIES INDICATED:
SIGNATURE TITLE
* Chairman and Chief Executive
- ------------------------------------- Officer
RICHARD J. PERSHING
* Chief Financial and
- ------------------------------------- Accounting Officer
C.B. HARRELD
* Director
- -------------------------------------
THOMAS G. BOREN
* Director
- -------------------------------------
ALAN W. HARRELSON
* Director
- -------------------------------------
GALE E. KLAPPA
* Director
- -------------------------------------
C. PHILIP SAUNDERS
* Director
- -------------------------------------
CHARLES W. WHITNEY
II-5
<PAGE>
SIGNATURE TITLE
ACCENTACROSS LIMITED
* Director
By: _________________________________
ROBERT D. FAGAN
MIGHTEAGER LIMITED
* Director
By: _________________________________
ROBERT D. FAGAN
/s/ Edwin Adams
*By: ________________________________
EDWIN ADAMS
ATTORNEY-IN-FACT
II-6
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS AS TO SCHEDULES
To the Board of Directors of Southern Investments UK plc:
We have audited in accordance with generally accepted auditing standards, the
financial statements of SOUTHERN INVESTMENTS UK PLC AND SUBSIDIARIES
(Successor Company) included in this registration statement and have issued
our report thereon dated July 25, 1996. Our audit was made for the purpose of
forming an opinion on the basic financial statements taken as a whole. The
schedules listed in the index above are the responsibility of the company's
management and are presented for purposes of complying with the Securities and
Exchange Commission's rules and are not part of the basic financial
statements. These schedules have been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion,
fairly state in all material respects the financial data required to be set
forth therein in relation to the basic financial statements taken as a whole.
Arthur Andersen
Bristol, England
July 25, 1996
S-1
<PAGE>
SOUTH WESTERN ELECTRICITY PLC
(PREDECESSOR COMPANY)
REPORT OF INDEPENDENT AUDITORS
ON SCHEDULE
To THE BOARD OF DIRECTORS
South Western Electricity plc
We have audited the consolidated financial statements of South Western
Electricity plc (Predecessor Company) as of March 31, 1995 and for the years
ended March 31, 1995 and 1994, and have issued our report thereon dated June
19, 1995, except for Note 21--Differences between United Kingdom and United
States generally accepted accounting principles, as to which the date is July
19, 1996, (included elsewhere in this Registration Statement). Our audits also
included the financial statement schedule listed in Item 16(b). This schedule
is the responsibility of the company's management. Our responsibility is to
express an opinion based on our audits.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the financial statements taken as a whole, presents
fairly in all material respects the information set forth therein.
ERNST & YOUNG
Chartered Accountants
Bristol, England
June 19, 1995
S-2
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS AS TO SCHEDULES
To the Board of Directors of South Western Electricity plc:
We have audited in accordance with generally accepted auditing standards, the
financial statements of SOUTH WESTERN ELECTRICITY PLC AND SUBSIDIARIES
(Predecessor Company) included in this registration statement and have issued
our report thereon dated July 25, 1996. Our audit was made for the purpose of
forming an opinion on those statements taken as a whole. The schedules listed
in the index above are the responsibility of the company's management and are
presented for purposes of complying with the Securities and Exchange
Commission's rules and are not part of the basic financial statements. These
schedules have been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, fairly state in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
Arthur Andersen
Bristol, England
July 25,1996
S-3
<PAGE>
SOUTHWESTERN ELECTRICITY PLC
(PREDECESSOR COMPANY)
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR YEARS ENDED MARCH 31, 1994 AND 1995
AND FOR THE PERIOD FROM APRIL 1, 1995 TO SEPTEMBER 17, 1995
(IN MILLIONS (Pounds))
<TABLE>
<CAPTION>
ADDITIONS
-----------------
CHARGED
BALANCE AT TO COSTS CHARGED BALANCE AT
BEGINNING OF AND TO OTHER END OF
PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
------------ -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Provision for Uncollecti-
ble Accounts:
Year Ended March 31,
1994................... 14 6 (7) 13
=== === === === ===
Year Ended March 31,
1995................... 13 7 (8) 12
=== === === === ===
Period from April 1,
1995 to September 17,
1995................... 12 2 (3) 11
=== === === === ===
</TABLE>
SOUTHERN INVESTMENTS UK PLC AND SUBSIDIARIES
(SUCCESSOR COMPANY)
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
AND FOR THE PERIOD FROM SEPTEMBER 18, 1995 TO MARCH 31, 1996
(IN MILLIONS (Pounds))
<TABLE>
<CAPTION>
ADDITIONS
-----------------
CHARGED
BALANCE AT TO COSTS CHARGED BALANCE AT
BEGINNING OF AND TO OTHER END OF
PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
------------ -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Provision for Uncollectible
Accounts:
Period from September 18,
1995 to March 31, 1996.. 15(1) 3 (1) 17
=== === === === ===
</TABLE>
- --------
(1) Includes an additional (Pounds)4 million of provision created resulting
from the application of purchase accounting at the acquisition.
S-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
------- ----------- ----
<C> <S> <C>
1.1 Form of Underwriting Agreement among the Company and the Under-
writers.*
3.1 Memorandum of Association of the Company.
3.2 Articles of Association of the Company.
4.1 Form of Trust Indenture between the Trustee and the Company.
4.2 Form of First Supplemental Indenture between the Trustee and
the Company.
5.1 Opinion of Shearman & Sterling regarding the legality of the
securities being registered.*
8.1 Opinion of Troutman Sanders LLP regarding taxation.*
8.2 Opinion of Allen & Overy regarding taxation.*
10.1 SWEB Public Electricity Supply License dated January 31, 1996.
10.2 Modifications of License Conditions dated March 31, 1994, March
30, 1994, June 30, 1993, June 15, 1992, and April 22, 1992.
10.3 Pooling and Settlement Agreement as amended and restated at De-
cember 2, 1994 between SWEB, Energy Settlements and Information
Services (as Settlement System Administrator), Energy Pool
Funds Administration Limited (as Pool Funds Administrator), The
National Grid Company plc (as Grid Operator and Ancillary Serv-
ices Provider), SWEB and Other Parties.
10.4 Master Connection and Use of System Agreement dated as of March
30, 1990 among The National Grid Company plc and its users (in-
cluding SWEB).
10.5 Form of Supplemental Agreement between The National Grid Com-
pany plc and SWEB.
10.6 Master Agreement dated as of October 25, 1995 among The Na-
tional Grid Holding plc, The National Grid Company plc, SWEB
and the other RECs.
10.7 Memorandum of Understanding between The National Grid Group
plc, SWEB and each of the RECs, dated November 17, 1995.
10.8 Form of SWEB Use of Distribution System Agreement.
10.9 Form of Agreement for the Connection of an Exit Point.
10.10 Services Agreement dated as of January 1, 1996 between Southern
Electric International, Inc. and the Company.
10.11 Services Agreement dated as of January 1, 1996 between Southern
Electric International, Inc. and SWEB.
10.12 Services Agreement dated as of January 1, 1996 between SWEB and
Southern Investments UK Holdings Limited.
10.13 Services Agreement dated as of January 1, 1996 between the Com-
pany and SWEB.
12.1 Statements re: Computation of Ratio of Earnings to Fixed
Charges.
21.1 List of Subsidiaries of the Company.
23.1 Consent of Arthur Andersen.
23.2 Consent of Ernst & Young.
23.3 Consent of Arthur Andersen.
23.4 Consent of Shearman & Sterling (included in Exhibit 5.1).*
23.5 Consent of Troutman Sanders LLP (included in Exhibit 8.1).*
23.6 Consent of Allen & Overy (included in Exhibit 8.2).*
24.1 Resolution and Powers of Attorney.
25.1 Statement of Eligibility of Trustee.*
27.1 Financial Data Schedule.*
99.1 The (Pounds)600 million Revolving Credit and Term Loan Agree-
ment dated January 12, 1996, among Southern Investments UK plc
and South Western Electricity plc as borrowers, J.P. Morgan Se-
curities Ltd. as arranger and Morgan Guaranty Trust Company as
Agent and the banks named therein.
</TABLE>
- --------
* To be filed by amendment.
Exhibit 3.1
THE COMPANIES ACTS 1985 TO 1989
PUBLIC COMPANY LIMITED BY SHARES
MEMORANDUM OF ASSOCIATION
of
SOUTHERN INVESTMENTS UK PUBLIC LIMITED COMPANY
1. The Company's name is "NORMANDY INVESTMENTS PUBLIC LIMITED
COMPANY".*
2. The Company is to be a public company.
3. The Company's registered office is to be situated in
England.
4. The Company's objects are:
(1) To carry on the business of general merchants, importers,
exporters, manufacturers, dealers, traders, brokers and
factors of every kind, whether by mail order or otherwise,
both wholesale or retail, in every description of property,
goods and merchandise.
(2) To import, export, buy, sell, exchange, barter,
distribute, trade, contract or otherwise deal in and
* The Company was incorporated as Normandy Investments Public Limited
Company. On 28th June 1995 the Company changed its name to Southern
Company Investments UK Public Limited Company and on 30th June 1995 it
changed its name back to Normandy Investments Public Limited Company,
and on 4th July 1995 it changed its name to Premier American
Investments Public Limited Company, and to the above on 11.7.95
<PAGE>
turn to account goods, materials, commodities, produce and
merchandise of every class and description in a prepared,
manufactured, semi-manufactured or raw state and to
manufacture, construct, assemble, design, refine, develop,
alter, convert, refit, repair, treat, render marketable,
process or otherwise produce materials, fuels, chemicals,
substances and industrial, commercial and consumer products of
all kinds.
(3) To carry on the business of dealing in real and personal
property and to purchase, take on lease or in exchange, or
otherwise acquire, hold, sell, take and grant options on,
improve, develop, construct, exploit, maintain, broke and
underwrite transactions in relation to any land, buildings or
personal property wherever situate, and rights and interests
therein.
(4) To act and carry on the business of a holding company and all
matters incidental thereto including but without limitation,
to coordinate the policy and administration of and manage any
corporate body or business or group of corporate bodies or
businesses in which the company is a member or participant or
which is controlled by or associated with the Company in any
manner, to assist financially, subsidize or enter into
subvention and other agreements with any such body or
business, and to provide for any such body or business
administrative, executive, managerial, secretarial and
accountancy services, staff, premises, social or welfare
services and facilities of any kind, to act as secretaries,
directors, registrars, managers and agents thereof and to do
anything which will or may promote the efficiency and
profitability of any such corporate body or business or group
of corporate bodies or businesses.
(5) To manage, farm or let (whether furnished or unfurnished) any
land or buildings or any part thereof or any rights or
interests therein for any period and at such rent and on such
conditions as the directors see fit, to lay out roads and
gardens and recreation grounds; to pull down, alter and
improve land or buildings; to plant, drain or otherwise
improve land or any part thereof; and to build, install or
improve electric, gas, water and other fittings.
(6) To carry on business as property developers, builders and
decorators, joiners, plumbers, carpenters, engineers,
electricians, sanitary engineers and merchants of any kind.
2
<PAGE>
(6) To carry on business as property developers, builders and
decorators, joiners, plumbers, carpenters, engineers,
electricians, sanitary engineers and merchants of any kind.
(7) To carry on business as consultants, advisers and/or managers
in relation to any land or buildings whether freehold or
leasehold or any other property, whether real or personal,
wherever situate, or any rights or interest therein.
(8) To acquire, hold deal and invest in, upon such terms and in
such manner as the directors see fit, the shares, stocks,
debentures, debenture stock, annuities, warrants, bonds,
units, obligations and securities or any interest therein of
any person, company, fund or trust, or acquire, hold, write,
grant or otherwise dispose of any option to acquire or dispose
of any of the foregoing or any other options, futures or
contracts for differences (whether related to securities,
commodities or otherwise).
(9) To acquire, upon such terms and in such manner as the
directors see fit, the whole or any part of the undertaking,
property and assets, or any interest therein, and to undertake
the whole or any of the liabilities or obligations of, and to
acquire and carry on the business of, any person or company.
(10) To sell, exchange, mortgage, charge, lease or grant licenses,
easements, options and other rights over, or in any other
manner deal with, or dispose of, the whole or any part of the
undertaking, property and assets (present and future) of the
Company (including, without limitation to the generality of
the foregoing, all or any shares, stocks, debentures,
debenture stock, annuities, warrants, bonds, units,
obligations and securities of the Company) for any
consideration and in particular, but without prejudice to the
generality of the foregoing, for shares, stock, debentures,
debenture stock or other securities of any company.
(11) To provide services of all descriptions and to undertake and
execute agency or commission work of all kinds and to act
generally as agents, factors, brokers, managers, consultants
and advisers for the sale and purchase of every description of
property, goods and merchandise and the provision of every
type of service.
(12) To manufacture, process, import, export, deal in and
store any goods and other things, and to carry on the
business of manufacturers, processors, importers,
3
<PAGE>
exporters and storers of and dealers in any goods and
other things.
(13) To apply for, register, purchase, or by any other means obtain
or seek to obtain, upon such terms and in such manner as the
directors see fit, any patent rights, licenses, secret
processes, trade marks, designs, brevets d'invention, or other
industrial or business rights, protections or concessions, to
use, a Iter, grant licenses, options, interests or privileges
in respect of, manufacture under, expend money in
experimenting upon and improving and otherwise deal in the
same, and to carry on the business of an inventor, designer or
research organization.
(14) To advertise, market and sell the products and services of the
Company and to carry on the business of advertisers and
advertising agents and of a marketing or selling organization
and of a supplier, wholesaler, retailer, merchant or dealer of
any kind.
(15) To borrow and raise money and to secure or discharge any debt,
liability or obligation, whether of the Company or any other
person, upon such terms and in such manner as the Company sees
fit, and in particular, but without prejudice to the
generality of the foregoing, by mortgaging or charging or
providing any other security over the whole or any part of the
undertaking, property and assets (whether present or future),
and uncalled capital of the Company or by the creation and
issue of any securities of the Company.
(16) To lend money, give credit or provide any other form of credit
or financial accommodation to any person, and to carry on the
business of a banking, finance or insurance Company.
(17) To enter into guarantees, contracts of indemnity and
suretyships of all kinds, whether or not the company shall
receive any consideration n respect of, or derive any
commercial benefit from the same, on such terms and in such
manner as the directors see fit, and in particular but without
prejudice to the generality of the foregoing, to guarantee,
underwrite, support or secure, as aforesaid, and whether by
personal obligation or by mortgaging or charging or providing
any other security over the whole or any part of the
undertaking, property or assets (whether present or future)
and uncalled capital of the Company or by the creation and
issue of any securities of the Company, the performance of any
obligations or commitments or satisfaction of any liabilities
of any person or
4
<PAGE>
company including, but without prejudice to the generality of
the foregoing, any company which is for the time being a
subsidiary or holding company or a subsidiary undertaking or
parent undertaking of the Company or another subsidiary of a
holding company of the Company or another subsidiary
undertaking of a parent undertaking of the Company or is
otherwise associated with the Company.
(18) To draw, make, accept, issue, execute, endorse, discount and
deal in bills of exchange, promissory notes, bills of lading,
debentures, warrants and other instruments and securities,
whether negotiable or otherwise.
(19) To promote any other company for the purpose of acquiring the
whole or any part of the business or property or undertaking
or any of the liabilities of the Company, or of undertaking
any business or operations which may appear likely to assist
or benefit the Company or to enhance the value of any property
or business of the Company, and to place or guarantee the
placing of, underwrite, subscribe for, or otherwise acquire
all or any part of the shares or securities of any such
company as aforesaid.
(20) To remunerate any person, firm or company rendering services
to the Company either by cash payment or so far as permitted
by law by the allotment to him or them of shares or other
securities of the Company credited as paid up in full or in
part or otherwise as may be thought expedient.
(21) To act in a fiduciary capacity of any sort including (but
without prejudice to the generality of the foregoing) to
undertake the duties of a trustee of trust deeds or other
instruments constituting debentures, debenture stock, bonds
and other securities, or of wills and settlements, and of an
executor or administrator of estates, or to act as and
undertake the duties of a nominee, a custodian trustee, a
trustee of a unit trust, a trustee for charitable or other
institutions, a trustee for pension, benevolent or other-
funds, and as a manager or director of business or companies
whether limited or unlimited, and generally to undertake all
and any duties normally undertaken by a trust corporation and
either with or without remuneration.
(22) To establish and maintain or procure the establishment
and maintenance of any contributory or non-contributory
pension or superannuation funds and to give or procure
5
<PAGE>
the giving of donations, gratuities, pensions, allowances and
emoluments to any persons who are or were at any time
directors or officers of or in the service or employment of
the Company or of any company which is a subsidiary or holding
company of the Company or a subsidiary of another subsidiary
of a holding company of the Company or otherwise associated
with the Company and to the wives, widows, families and
defendants of any such persons, and to make payments for or
towards the insurance of such persons and generally to make
such provision for the well-being of any of the aforementioned
persons as the directors see fit and, without prejudice to the
generality of the foregoing, to establish, subsidize or
subscribe money to any associations, societies, trusts, clubs
and institutions as the directors see fit.
(23) To establish and maintain or procure the establishment and
maintenance of all forms of employee share option and share
incentive schemes and such other option, incentive or bonus
schemes (whether or not involving shares or securities in or
of the Company) on such terms as the directors see fit.
(24) To make payment for any charitable, benevolent, public,
national, educational, general or useful purpose.
(25) To purchase and maintain insurance for or for the benefit of
any persons who are or were at any time directors, officers or
employees or auditors of the Company, or of any other company
which is its holding company or parent undertaking or in which
the Company or such holding company or parent undertaking or
any of the predecessors of the Company or of such holding
company or parent undertaking has any interest whether direct
or indirect or which is in any way allied to or associated
with the Company, or of any subsidiary undertaking of the
Company or of any such other company, or who are or were at
any time trustees of any pension fund in which any employees
of the Company or of any such other company or subsidiary
undertaking are interested, including (without prejudice to
the generality of the foregoing) insurance against any
liability incurred by such persons in respect of any act or
omission in the actual or purported execution and/or discharge
of their duties and/or in the exercise or purported exercise
of their powers and/or otherwise in relation to their duties,
powers or offices in relation to the Company or any such other
company, subsidiary under-taking or pension fund and to such
extent as may be permitted by law otherwise to indemnify or to
exempt any such person against or from
6
<PAGE>
any such liability; for the purposes of this clause "holding
company" "parent undertaking" and "subsidiary undertaking"
shall have the same meanings as in the Companies Acts 1985 to
1989.
(26) To provide technical, cultural, artistic, educational,
entertainment or business facilities or services and to carry
on any business involving any such provision.
(27) Upon such terms and in such manner as the directors see fit,
to enter into any arrangements with any government, authority,
person or company to obtain from the same any decrees, orders,
instruments, legislation, rights, charters, privileges,
franchises and concessions and to carry out, give effect to,
exercise and comply with the same.
(28) To amalgamate or enter into any partnership, int venture,
profit sharing arrangement or cooperative or other arrangement
for the pursuit of mutual interests with any person or
company.
(29) To issue and allot securities of the Company for cash or in
payment or part payment for any real or personal property or
interest therein, purchased or otherwise acquired by the
Company or any services rendered to the Company or as security
for any obligation or amount (even if less than the nominal
amount of such securities) or for any other purpose.
(30) To accept any shares, stock, debentures, debenture stock or
other securities of any other company in payment or part
payment for any services rendered or for any sale made to or
debt owing from any such company.
(31) To invest the moneys of the Company in any investments, and to
hold, sell or otherwise deal with such investments, and to
carry on the business of an investment company.
(32) To pay all costs, charges and expenses preliminary or
incidental to the formation, promotion, establishment and
incorporation of the Company and the issue of its capital,
including brokerage and commissions for obtaining applications
for, or taking, placing or underwriting or procuring the
underwriting of shares, debentures or other securities of the
Company.
(33) To procure the registration, incorporation or
recognition of the Company in or under the laws of any
place or country in the world.
7
<PAGE>
(34) To distribute any of the property or assets of the
Company amongst its creditors and members in specie or
kind.
(35) To cease carrying on any business or activity of the Company
or any part of any such business or activity, and to procure
the winding up or dissolution of the Company.
(36) To do all or any of the things or matters mentioned above in
any part of the world, on any terms and in any manner as the
directors see fit, and whether as principal, agent,
contractor, trustee or otherwise and either alone or in
conjunction with others and by or through agents, trustees,
sub-contractors or otherwise,
(37) To do all such other things as in the opinion of the directors
may be carried on in connection with or ancillary to any or
all of the above objects or which is capable of being carried
on for the benefit of the Company.
It is hereby declared that:
(a) the word "company" in this Clause, except where used in
reference to this Company, shall include any
partnership or other body, or association of persons,
whether incorporated or not and whether domiciled or
resident in the United Kingdom or elsewhere; and
(b) each and every object specified in the different
paragraphs of this Clause shall not, except where the
context expressly so requires, be in any way limited or
restricted by reference to or inference from any other
object specified in any such paragraph or from the
terms of any other paragraph or the name of the
Company, but may be carried out in as full and ample a
manner and shall be construed in as wide a sense as if
each object and each of the said paragraphs defined the
objects of a separate, distinct and independent
company.
5. The liability of the members is limited.
8
<PAGE>
6. The Company's share capital is f50,000 divided into 50,000
ordinary shares of f1 each.*
We, the subscribers to this memorandum of association, wish to be formed into a
company pursuant to this memorandum; and we agree to take the number of shares
shown opposite our respective names.
Names and Addresses Number of shares
of Subscribers taken by each
Subscriber
1. Judith Wilson 1
For and on behalf of Gray's
Inn Nominees Limited
Five Chancery Lane
London EC4A IBU
2. Judith Wilson 1
For and on behalf of
DH&B Nominees Limited
Five Chancery Lane
London EC4A IBU ____
Total shares taken 2
----
Dated 23rd June 1995
Witness to the above signatures,
Christine Holloway
5 Chancery Lane
London
EC4A IBU
* The authorized share capital was increased on 4.10.95 by f500,350,587
to f500,400,587 divided into 500,400,587 ordinary shares of f1 each.
9
Exhibit 3.2
THE COMPANIES ACTS 1985 TO 1989
PUBLIC COMPANY LIMITED BY SHARES
ARTICLES OF ASSOCIATION
of
SOUTHERN INVESTMENTS UK PUBLIC LIMITED COMPANY
PRELIMINARY
1. In these Articles "the Act" means the Companies Acts 1985 to 1989 (as
amended or re-enacted at the date hereof and "Table A" means Table A as
prescribed in the Companies (Tables A to F) Regulations 1985 (as
amended at the date hereof).
2. The regulations contained in Table A, save as excluded or varied by or
inconsistent with these Articles shall apply to the Company and
together with these Articles shall constitute the regulations of the
Company.
SHARE CAPITAL
3. The Company is a public company (within the meaning of the
Act).
4. The authorized share capital of the Company at the date of
adoption of these Articles is f50,000 divided into 50,000
Ordinary Shares of f1 each.*
* The authorized share capital was increased on 4.10.95 by E500,350,587
to E500,400,587 divided into 500,400,587 ordinary shares of f1 each.
<PAGE>
5. The Directors are generally and unconditionally authorized
during the period of five years from the date of adoption of
these Articles to offer, allot, grant options over or
otherwise dispose of relevant securities (as defined in
Section 80(2) of the Act) of the Company up to the maximum
nominal amount of the authorized but unissued share capital
of the Company at the date of these Articles to such persons
at such times and on such terms and conditions as they think
fit and to make any offer or agreement of the kind referred
to in Section 80(7) of the Act provided that no shares shall
be issued at a discount. Section 89(1) of the Act shall not
apply to the Company.
6. Subject to and in accordance with the provisions of the Act
and otherwise on such terms as the Company may by special
resolution determine:
(a) any share in the capital of the Company may be issued
on terms that it is to be, or at the option of the
Company or the holder thereof is liable to be,
redeemed;
(b) the Company may purchase any of its own shares
(including any redeemable shares);
and the Directors shall be empowered respectively to redeem or purchase
any such shares on such terms as the Company may by special resolution
determine.
7. The Company shall have a first and paramount lien on every
share (whether or not it is a fully paid share) for all
monies (whether presently payable or not) called or payable
at a fixed time in respect of that share and the Company
shall also have a first and paramount lien on all shares
(whether or not they are fully paid shares) standing
registered in the name of any person indebted or under
liability to the Company for all monies presently payable by
him or his estate to the Company, whether he shall be the
sole registered holder thereof or shall be one of two or
more joint holders, but the Directors may at any time
declare any share to be wholly or in part exempt from the
provisions of this Article. The Company's lien, if any, on
a share shall extend to all dividends payable thereon.
Regulation 8 of Table A shall not apply to the Company.
8.1 No instrument of transfer of a share need be executed by or on behalf
of the transferee and Regulation 23 of Table A shall be modified
accordingly.
8.2 The Directors may, in their absolute discretion and without assigning
any reason therefor, decline to register any transfer of any share,
whether or not it is a fully paid
2
<PAGE>
share. Regulation 24 of Table A shall not apply to the
Company.
GENERAL MEETINGS
9. Regulation 37 of Table A shall be amended by the
substitution of the word "six" for the word "eight".
10. At the end of the first sentence of Regulation 40 of Table A
the following words shall be added "at the time when the
meeting proceeds to business". Regulation 41 of Table A
shall be amended by deleting the words "or if during a
meeting such a quorum ceases to be present" and by adding at
the end the words "and if at the adjourned meeting a quorum
is not present within fifteen minutes from the time
appointed for the meeting, the Member or Members present
shall be a quorum.
DIRECTORS
11. Unless and until the Company in General Meeting shall
otherwise determine, the number of Directors shall be not
less than two.
12. Any Director who by request performs special services or goes or
resides abroad for any purposes of the Company may receive such
remuneration (in addition to that otherwise provided for) by way of
salary, commission, percentage of profits or otherwise as the Directors
may determine.
13. The Directors are authorized to sanction the exercise of the
power conferred on the Company by Section 719(1) of the Act
and to exercise that power.
14. The words "approved by resolution of the directors and"
shall be deleted from Regulation 65 of Table A.
15. In Regulation 70 of Table A the words "ordinary resolution"
shall be substituted for the words "special resolution".
16. The words "or such person or persons as the Directors may
think fit" shall be added at the end of the first sentence
of Regulation 72 of Table A.
17. At any time and from time to time the holder or holders of a
majority in nominal value of such part of the issued share
capital of the Company as confers the right for the time
being to attend and vote at General Meetings of the Company
may by memorandum in writing signed by or on behalf of him
or them and left at or sent to the registered office of the
Company appoint any person to be a Director or remove a
Director from office.
3
<PAGE>
17.2 The Directors shall have power at any time and from time to time to
appoint any person to be a Director either to fill a casual vacancy or
as an addition to the existing Directors. Any Director so appointed
shall (subject to the other provisions of these Articles) hold office
until he is removed pursuant to this Article.
17.3 Regulations 73 to 80 (inclusive) of Table A shall not apply
to the Company.
18. Regulation 81 of Table A shall be amended as follows:
(a) the words "he is, or may be, in the opinion of the other
Directors, of unsound mind or suffering from mental disorder"
shall be substituted for paragraph (c).
EXECUTIVE DIRECTORS
19. The Directors may from time to time appoint one or more of
their body to executive office (including but without
limitation that of Managing Director, Manager or any other
salaried office) for such period and on such terms as they
shall think fit, and subject to the terms of any agreement
entered into in any particular case, may revoke such
appointment. The appointment of a Director so appointed
shall (subject to the terms of any such agreement as
aforesaid) be automatically determined ipso facto if he
cease from any cause to be a Director. A Managing Director,
Manager or other executive officer as aforesaid shall
receive such remuneration, (by way of salary, commission,
participation In profits or otherwise howsoever) as the
Directors may determine. Regulation 84 of Table A shall not
apply to the Company.
GRATUITIES AND PENSIONS
20. The Directors may provide benefits whether by payment of
gratuities or pensions or by insurance or otherwise, to or
to any person in respect of any Director or employee or
former Director or employee who may hold or may have held
any executive or other office or employment under the
Company or any body corporate which is or has been a
subsidiary or holding company of the Company or any other
subsidiary of a holding company of the Company or a
predecessor in business of the Company or of any such other
company and for the purpose of providing any such benefits
may contribute to any scheme or fund and may make payments
towards insurances or trusts for the purchase or provision
4
<PAGE>
of any such benefit in respect of such persons. Regulation
87 of Table A shall not apply to the Company.
PROCEEDINGS OF DIRECTORS
21.1 Any Director for the time being absent from the United Kingdom may
supply to the Company an address and/or telex or facsimile transmission
number whether or not within the United Kingdom to which notices of
meetings of the Directors may be sent and shall then be entitled to
receive at such address or number notice of such meetings. Regulation
88 of Table A shall be modified accordingly.
21.2 A meeting of the Directors may be validly held notwithstanding that all
of the Directors are not present at the same place and at the same time
provided that:
(a) a quorum of the Directors at the time of the meeting
are in direct communication with each other whether by
way of telephone, audio-visual link or other form of
telecommunication, and
(b) a quorum of the Directors entitled to attend a meeting
of the Directors agree to the holding of the meeting in
the manner described herein.
DIRECTORS' INTERESTS
22. A Director may vote in regard to any contract or arrangement
in which he is interested or upon any matter arising
thereout and if he shall so vote his vote shall be counted
and he shall be reckoned in ascertaining whether there is
present a quorum at any meeting at which any such contract
or arrangement is considered. A Director may act by himself
or his firm in any professional capacity for the Company and
he or his firm may be entitled to remuneration for
professional services as if he were not a Director, provided
that nothing herein contained shall authorize a Director or
his firm to act as auditor to the Company. Regulations 94
to 98 (inclusive) of Table A shall not apply to the Company.
DIVIDENDS
23. If the share capital of the Company is divided into different classes
the Directors may pay interim dividends on shares carrying deferred or
non-preferred rights notwithstanding that at the time of payment any
preferential dividend is in arrear and Regulation 103 of Table A shall
be modified accordingly.
5
<PAGE>
SEAL
24.1 The Company may have for use in any territory, district or place
elsewhere than in the United Kingdom an official seal which shall in
all respects comply with the requirements of Section 39(1) of the Act.
References in these Articles and Table A to the seal of the Company
shall include references to such official seal and any official seal
adopted by the Company under Section 40 of the Act.
24.2 At the end of Regulation 101 of Table A shall be added the
words:
"(a) Any instrument signed by one Director and the Secretary or by
two Directors and expressed to be executed by the Company
shall have the same effect as if executed under the Seal.
(b) No instrument shall be signed pursuant to Regulation 101(a)
which makes it clear on its face that it is intended by the
person or persons making it to have effect as a deed without
the authority of the Directors or of a committee authorized by
the Directors in that behalf".
NOTICES
25.1 Notice of every General Meeting of the Company shall be given by letter
telex or facsimile transmission and shall be given to every Member of
the Company, subject in the case of members whose registered addresses
are outside the United Kingdom to their having given the Company an
address telex or facsimile number accordingly. Regulation 112 of Table
A shall be modified accordingly.
25.2 There shall be substituted for the last sentence of Regulation 115 of
Table A, the words "A notice shall be deemed to be given, if posted by
prepaid first-class mall, when the envelope containing the same is
posted, if posted by any other class of pre-paid mail, at the
expiration of 48 hours from such time and if sent by telex or facsimile
transmission, when despatched."
BORROWING POWERS
26. The directors may exercise all the powers of the Company to
borrow or raise money, and to mortgage or charge its
undertaking, property and uncalled capital, or any part
6
<PAGE>
thereof, and, subject to the provisions of the Act, to issue
debentures, debenture stock, and other securities whether outright or
as security for any debt, liability or obligation of the Company or of
any third party (including any member).
INDEMNITY INSURANCE
27. Without prejudice to the provisions of Regulation 118 of
Table A the Directors shall have power to purchase and
maintain insurance for or for the benefit of any persons who
are or were at any time directors, officers, or employees or
auditors of the Company, or of any other company which is
its holding company or parent undertaking or in which the
Company or such holding company or parent undertaking or any
of the predecessors of the Company or of such holding
company or parent under-taking has any interest whether
direct or indirect or which is in any way allied to or
associated with the Company, or of any subsidiary
undertaking of the Company or of any such other company, or
who are or were at any time trustees of any pension fund in
which any employees of the Company or of any such other
company or subsidiary undertaking are interested, including
(without prejudice to the generality of the foregoing)
insurance against any liability incurred by such persons in
respect of any act or omission in the actual or purported
execution and/or discharge of their duties and/or in the
exercise or purported exercise of their powers and/or
otherwise in relation to their duties, powers or offices in
relation to the Company or any such other company,
subsidiary undertaking or pension fund. For the purposes of
this Regulation "holding company" "parent undertaking" and
"subsidiary undertaking" shall have the same meanings as in
the Companies Acts 1985 to 1989.
7
<PAGE>
Names and Addresses
description of
subscribers of the
memorandum of association
Judith Wilson
For and on behalf of
Gray's Inn Nominees Limited,
Five Chancery Lane,
London EC4A IBU
Judith Wilson For and on behalf of DH&B Nominees Limited, DH&B Chancery Lane
London EC4A IBU
Dated 23rd June 1995
Witness to the above signatures,
Christine Holloway
5 Chancery Lane
London
EC4A IBU
8
Exhibit 4.1
===========================================
SOUTHERN INVESTMENTS UK PLC
and
_____________________________, Trustee
INDENTURE
Dated as of ______ , 1996
Debt Securities
===========================================
<PAGE>
Reconciliation and tie between Trust Indenture Act of 1993 and
Indenture, dated as of January , 1996
Trust Indenture Act Section Indenture Section
ss. 310(a)(1)..............................................609
(a)(2)............................................609
(a)(3)............................................Not Applicable
(a)(4)............................................Not Applicable
(b)...............................................608
610
ss. 311(a) 613(a)
(b)...............................................613(b)
(b)(2)............................................703(a)(2)
703(b)
ss. 312(a).................................................701
702(a)
(b)...............................................702(b)
(c)...............................................702(c)
ss. 313(a).................................................703(a)
(b)(1)............................................Not Applicable
(b)(2)............................................703(b)
(c)...............................................703(a), 703(b)
(d)...............................................703(c)
ss. 314(a).................................................704
(a)(4)............................................704
(b)...............................................Not Applicable
(c)(1)............................................102
(c)(2)............................................102
(c)(3)............................................Not Applicable
(d)...............................................Not Applicable
(e)...............................................102
ss. 315(a).................................................601(a)
(b)...............................................602
703(a)(6)
(c)...............................................601(b)
(d)...............................................601(c)
(d)(1)............................................601(a)(1)
(d)(2)............................................601(c)(2)
(d)(3)............................................601(c)(3)
(e)...............................................514
ss. 316(a)(1)(A)...........................................502
512
(a)...............................................513
(a)(2)............................................Not Applicable
(b)...............................................508
(c)...............................................105
ss. 317(a)(1)..............................................503
(a)(3)............................................504
(b)...............................................103
ss. 318(a).................................................107
NOTE:This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE>
TABLE OF CONTENTS*
Page
RECITALS OF THE COMPANY................................................... 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION............ 1
SECTION 101. Definitions..................................... 1
Act............................................................ 2
Additional Amounts............................................. 2
Affiliate...................................................... 2
Authenticating Agent........................................... 2
Board of Directors............................................. 2
Board Resolution............................................... 2
Business Day................................................... 2
Commission..................................................... 2
Company........................................................ 2
Company Request" or "Company Order............................. 2
Consolidated Net Tangible Assets............................... 3
Corporate Trust Office......................................... 3
Corporation.................................................... 3
Debt........................................................... 3
Default........................................................ 3
Defaulted Interest............................................. 3
Depositary..................................................... 3
Discharged..................................................... 3
Event of Default............................................... 3
Excess Additional Amounts...................................... 4
Global Security................................................ 4
Holder......................................................... 4
Indenture...................................................... 4
Interest....................................................... 4
Interest Payment Date.......................................... 4
Lien........................................................... 4
- --------
*NOTE: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
i
<PAGE>
Maturity....................................................... 4
Officers' Certificate.......................................... 4
Opinion of Counsel............................................. 4
Original Issue Discount Security............................... 4
Outstanding.................................................... 4
Paying Agent................................................... 5
Person......................................................... 5
Place of Payment............................................... 5
Predecessor Security........................................... 6
Redemption Date................................................ 6
Redemption Price............................................... 6
Regular Record Date............................................ 6
Responsible Officer............................................ 6
Securities..................................................... 6
Security Register" and "Security Registrar..................... 6
Significant Subsidiary......................................... 6
Special Record Date............................................ 6
Stated Maturity................................................ 7
Subsidiary..................................................... 7
Trustee........................................................ 7
Trust Indenture Act............................................ 7
"United Kingdom................................................ 7
United Kingdom Taxes........................................... 7
United States.................................................. 7
U.S. Government Obligations.................................... 7
Voting Stock................................................... 7
SECTION 102. Form of Documents Delivered to Trustee............. 8
--------------------------------------
SECTION 103. Acts of Holders.................................... 8
---------------
SECTION 104. Notices, Etc., to Trustee and Company.............. 10
-------------------------------------
SECTION 105. Notice to Holders; Waiver.......................... 11
-------------------------
SECTION 106. Conflict with Trust Indenture Act.................. 11
---------------------------------
SECTION 107. Effect of Headings and Table of Contents........... 11
----------------------------------------
SECTION 108. Successors and Assigns............................. 12
----------------------
SECTION 109. Separability Clause................................ 12
-------------------
SECTION 110. Benefits of Indenture.............................. 12
---------------------
ii
<PAGE>
SECTION 111. Governing Law...................................... 12
-------------
SECTION 112. Legal Holidays..................................... 12
--------------
ARTICLE TWO
SECURITY FORMS...................................................... 12
SECTION 201. Forms Generally.................................... 12
---------------
SECTION 202. Form of Face of Security........................... 13
------------------------
SECTION 203. Form of Reverse of Security........................ 16
---------------------------
SECTION 204. Form of Trustee's Certificate of Authentication.... 21
-----------------------------------------------
ARTICLE THREE
THE SECURITIES..................................................... 21
SECTION 301. Amount Unlimited; Issuable in Series............... 21
------------------------------------
SECTION 302. Denominations...................................... 23
-------------
SECTION 303. Execution, Authentication, Delivery and Dating..... 23
----------------------------------------------
SECTION 304. Temporary Securities............................... 25
--------------------
SECTION 305. Registration, Registration of Transfer and Exchange 25
---------------------------------------------------
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities... 26
------------------------------------------------
SECTION 307. Payment of Interest; Interest Rights Reserved...... 27
---------------------------------------------
SECTION 308. Additional Amounts................................. 28
------------------
SECTION 309. Persons Deemed Owners.............................. 30
---------------------
SECTION 310. Cancellation....................................... 30
------------
SECTION 311. Computation of Interest............................ 30
-----------------------
SECTION 312. Global Securities.................................. 30
-----------------
iii
<PAGE>
ARTICLE FOUR
SATISFACTION AND DISCHARGE..........................................32
SECTION 401. Satisfaction and Discharge of Indenture............ 32
---------------------------------------
SECTION 402. Application of Trust Money......................... 33
--------------------------
SECTION 403. Satisfaction, Discharge and Defeasance of
Securities of any Series........................... 34
ARTICLE FIVE
REMEDIES........................................................... 36
SECTION 501. Events of Default.................................. 36
-----------------
SECTION 502. Acceleration of Maturity; Rescission and Annulment. 38
--------------------------------------------------
SECTION 503. Collection of Indebtedness and Suits for
Enforcement by Trustee............................. 38
SECTION 504. Trustee May File Proofs of Claim................... 39
--------------------------------
SECTION 505. Trustee May Enforce Claims Without Possession of
Securities......................................... 40
SECTION 506. Application of Money Collected..................... 40
------------------------------
SECTION 507. Limitation on Suits................................ 41
-------------------
SECTION 508. Unconditional Right of Holders to Receive
Principal, Premium and Interest.................... 42
SECTION 509. Restoration of Rights and Remedies................. 42
----------------------------------
SECTION 510. Rights and Remedies Cumulative..................... 42
------------------------------
SECTION 511. Delay or Omission Not Waiver....................... 42
----------------------------
SECTION 512. Control by Holders................................. 43
------------------
SECTION 513. Waiver of Past Defaults............................ 43
-----------------------
iv
<PAGE>
ARTICLE SIX
THE TRUSTEE........................................................ 44
SECTION 601. Certain Duties and Responsibilities................ 44
-----------------------------------
SECTION 602. Notice of Defaults................................. 45
------------------
SECTION 603. Certain Rights of Trustee.......................... 45
-------------------------
SECTION 604. Not Responsible for Recitals or Issuance of
Securities......................................... 46
SECTION 605. May Hold Securities................................ 46
-------------------
SECTION 606. Money Held in Trust................................ 46
-------------------
SECTION 607. Compensation and Reimbursement..................... 47
------------------------------
SECTION 608. Disqualification; Conflicting Interests............ 47
---------------------------------------
SECTION 609. Corporate Trustee Required; Eligibility............ 47
---------------------------------------
SECTION 610. Resignation and Removal; Appointment of Successor
Trustee............................................ 48
SECTION 611. Acceptance of Appointment by Successor............. 49
--------------------------------------
SECTION 612. Merger, Conversion, Consolidation or Succession to
Business........................................... 50
SECTION 613. Preferential Collecting of Claims Against Company.. 50
-------------------------------------------------
SECTION 614. Authenticating Agents.............................. 54
---------------------
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY.................. 56
SECTION 701. Company to Furnish Trustee Names and Addresses of
Holders............................................ 56
SECTION 702. Preservation of Information; Communications
to Holders......................................... 56
SECTION 703. Reports by Trustee................................. 58
------------------
v
<PAGE>
SECTION 704. Reports by Company................................. 59
------------------
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, SALE OR LEASE................... 60
SECTION 801. Company May Consolidate Etc., Only on Certain
Terms.............................................. 60
SECTION 802. Successor Corporation to be Substituted............ 60
---------------------------------------
ARTICLE NINE
SUPPLEMENTAL INDENTURES............................................ 60
SECTION 901. Supplemental Indentures without Consent of Holders. 60
--------------------------------------------------
SECTION 902. Supplemental Indentures with Consent of Holders.... 62
-----------------------------------------------
SECTION 903. Execution of Supplemental Indentures............... 63
------------------------------------
SECTION 904. Effect of Supplemental Indentures.................. 63
---------------------------------
SECTION 905. Conformity with Trust Indenture Act................ 63
-----------------------------------
SECTION 906. Reference in Securities to Supplemental Indentures. 64
--------------------------------------------------
ARTICLE TEN
COVENANTS.......................................................... 64
SECTION 1001. Payment of Principal, Premium and Interest......... 64
------------------------------------------
SECTION 1002. Maintenance of Office or Agency.................... 64
-------------------------------
SECTION 1003. Money for Securities Payments to Be Held in Trust.. 65
-------------------------------------------------
SECTION 1004. Limitation on Liens............................... 66
-------------------
SECTION 1005. Limitation on Sale and Lease-Back.................. 69
---------------------------------
SECTION 1006. Statement by Officers as to Default................ 70
-----------------------------------
SECTION 1007. Performance of Certain Obligations................. 71
----------------------------------
vi
<PAGE>
SECTION 1008. Modification or Waiver of Certain Covenants........ 72
-------------------------------------------
SECTION 1009. Further Assurances................................. 72
------------------
ARTICLE ELEVEN
REDEMPTION OF SECURITIES........................................... 72
SECTION 1101. Applicability of Article........................... 72
------------------------
SECTION 1102. Election to Redeem; Notice to Trustee.............. 72
-------------------------------------
SECTION 1103. Selection by Trustee of Securities to Be Redeemed.. 73
-------------------------------------------------
SECTION 1104. Notice of Redemption............................... 73
--------------------
SECTION 1105. Deposit of Redemption Price........................ 74
---------------------------
SECTION 1106. Securities Payable on Redemption Date.............. 74
-------------------------------------
SECTION 1107. Securities Redeemed in Part........................ 75
---------------------------
SECTION 1108. Optional Redemption in the Event of Change
in United Kingdom Tax Treatment.................... 75
ARTICLE TWELVE
SINKING FUNDS...................................................... 76
SECTION 1201. Applicability of Article........................... 76
------------------------
SECTION 1202. Satisfaction of Sinking Fund Payments
with Securities.................................... 76
SECTION 1203. Redemption of Securities for Sinking Fund.......... 76
-----------------------------------------
ARTICLE THIRTEEN
MISCELLANEOUS...................................................... 77
SECTION 1301. Consent to Jurisdiction; Appointment of
Agent to Accept Service of Process................. 77
SECTION 1302. Counterparts....................................... 79
vii
<PAGE>
ARTICLE FOUR
Miscellaneous.................................................... 3
viii
<PAGE>
INDENTURE, dated as of ________ __, 1996, between SOUTHERN
INVESTMENTS UK PLC, a company duly organized and existing under the laws of
England and Wales (the "Company"), having its principal office at 31 Curzon
Street, London W1Y7 AE and ____________________, a national banking association,
duly organized and existing under the laws of the United States of America, as
trustee (the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of
this Indenture to provide for the issuance from time to time of certain of its
unsecured debentures, notes or other evidences of indebtedness (herein called
the "Securities"), to be issued in one or more series as provided in this
Indenture.
All things necessary to make this Indenture a valid agreement
of the Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of
the Securities by the Holders thereof, it is mutually covenanted and agreed, for
the equal and proportionate benefit of all Holders of the Securities or of
series thereof, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. Definitions.
For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the
singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles in the [United Kingdom,] and, except as otherwise
herein expressly provided, the term "generally accepted accounting
principles", with respect to any computation required or permitted
hereunder shall mean such accounting principles as are generally
accepted in the [United Kingdom] at the date of such computation; and
<PAGE>
(4) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to
any particular Article, Section or other subdivision.
Certain terms, used principally in Article Six, are defined in
that Article.
"Act," when used with respect to any Holder, has the meaning
specified in Section 104.
"Additional Amounts" has the meaning specified in Section 308.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control", when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling", and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" means any Person authorized to
authenticate and deliver Securities on behalf of the Trustee pursuant to Section
614.
"Board of Directors" means either the board of directors of
the Company or any duly authorized committee of that Board.
"Board Resolution" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Company to have been duly adopted
by the Board of Directors and to be in full force and effect on the date of such
certification.
"Business Day", when used with respect to any Place of
Payment, means each day which is not a Saturday, a Sunday or a day on which
banking institutions in that Place of Payment are authorized or obligated by law
to remain closed.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Securities Exchange Act of
1934, or, if at any time after the execution of this instrument such Commission
is not existing and performing the duties now assigned to it under the Trust
Indenture Act, then the body performing such duties at such time.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor corporation shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor corporation.
"Company Request" or "Company Order" means a written request
or order signed in the name of the Company by [its Chairman of the Board or its
General Manager and by its Deputy General manager, its Chief Financial and
Administrative Officer or its General Counsel,] and delivered to the Trustee.
2
<PAGE>
"Consolidated Net Tangible Assets" shall mean the total of all
assets (including revaluations thereof as a result of commercial appraisals,
price level restatement or otherwise) appearing on a consolidated balance sheet
of the Company and its Subsidiaries, net of applicable reserves and deductions,
but excluding goodwill, trade names, trademarks, patents, unamortized debt
discount and all other like intangible assets (which term shall not be construed
to include such revaluations), less the aggregate of the current liabilities of
the Company and its Subsidiaries appearing on such balance sheet.
"Corporate Trust Office" means the principal office of the
Trustee in the City of New York, at which at any particular time its corporate
trust business shall be administered, which at the date hereof is
________________________________________.
"Corporation" includes corporations, associations, companies
and business trusts.
"Debt" has the meaning specified in Section 1004.
"Default" for purposes of Section 601 of this Indenture is
defined to mean an "Event of Default" as specified in Section 501 hereof, and
for purposes of Section 310(b) of the Trust Indenture Act, "default" shall mean
an "Event of Default" as specified in Section 501 hereof but exclusive of any
period of grace or requirement of notice.
"Defaulted Interest" has the meaning specified in Section 307.
"Depositary" means, with respect to the Securities of any
series issuable or issued in whole or in part in the form of one or more Global
Securities, the Person designated as Depositary by the Company pursuant to
Section 301, which must be a clearing agency registered under the Securities
Exchange Act of 1934, as amended, and, if so provided pursuant to Section 301
with respect to the Securities of a series, any successor to such Person. If at
any time there is more than one such Person, "Depositary" shall mean, with
respect to any series of Securities, the qualifying entity which has been
appointed with respect to the Securities of that series.
"Discharged" means, with respect to the Securities of any
series, the discharge of the entire indebtedness represented by, and obligations
of the Company under, the Securities of such series and the satisfaction of all
the obligations of the Company under the Indenture relating to the Securities of
such series, except (A) the rights of Holders of the Securities of such series
to receive, from the trust fund described in Section 403 hereof, payment of the
principal of and interest and premium, if any, on the Securities of such series
when such payments are due, (B) the Company's obligations with respect to the
Securities of such series with respect to registration, transfer, exchange and
maintenance of a Place of Payment and (C) the rights, powers, trusts, duties,
protections and immunities of the Trustee under this Indenture.
"Event of Default" has the meaning specified in Section 501.
"Excess Additional Amounts" has the meaning specified in
Section 1105.
3
<PAGE>
"Global Security" means a Security evidencing all or part of a
series of Securities, issued to the Depositary for such series or its nominee
and registered in the name of such Depositary or nominee.
"Holder" means a Person in whose name a Security is registered
in the Security Register.
"Indenture" means this instrument as originally executed or as
it may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof
and shall include the terms of particular series of Securities established as
contemplated by Section 301.
"Interest", when used with respect to an Original Issue
Discount security which by its terms bears interest only after Maturity, means
interest payable after Maturity.
"Interest Payment Date", when used with respect to any
Security, means the Stated Maturity of an installment of interest on such
Security.
"Lien" means any mortgage, pledge, lien, security interest or
other encumbrance; provided however, that the term "Lien" shall not mean any
easements, rights-of-way, restrictions and other similar encumbrances and
encumbrances consisting of zoning restrictions, property or defects in title
thereto.
"Maturity", when used with respect to any Security, means the
date an which the principal of such Security or an installment of principal
becomes due and payable as therein or herein provided, whether at the Stated
Maturity or by declaration of acceleration, call for redemption or otherwise.
"Officers' Certificate" means a certificate signed by [the
Chairman of the Board or the General Manager, and by the Deputy General Manager,
the Chief Financial and Administrative officer or the Chief Legal Counsel, of
the Company,] and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who
may be an employee of or regular counsel for the Company, or may be other
counsel reasonably acceptable to the Trustee.
"Original Issue Discount Security" means any Security which
provides for an amount less than the principal amount thereof to be due and
payable upon a declaration of acceleration of the Maturity thereof pursuant to
Section 502.
"Outstanding", when used with respect to Securities, means, as
of the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
4
<PAGE>
(i) Securities theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Securities, or portions thereof, for whose payment or
redemption money or U.S. Governmental Obligations in the necessary
amount has been theretofore deposited with the Trustee or any Paying
Agent (other than the Company) in trust or set aside and segregated in
trust by the Company (if the Company shall act as its own Paying Agent)
for the Holders of such Securities; provided that, if such Securities
are to be redeemed, notice of such redemption has been duly given
pursuant to this Indenture or provision therefor satisfactory to the
Trustee has been made; and
(iii) Securities which have been paid pursuant to Section 306
or in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this indenture, other than any
such Securities in respect of which there shall have been presented to
the Trustee proof satisfactory to it that such Securities are held by a
bona fide purchaser in whose hands such Securities are valid
obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, (a) the principal
amount of an Original Issue Discount Security that shall be deemed to be
outstanding for such purposes shall be the amount of the principal thereof that
would be due and payable as of the date of such determination upon a declaration
of acceleration of the Maturity thereof pursuant to Section 502, and (b)
Securities owned by the Company or any other obligor upon the Securities or any
Affiliate of the Company or of such other obligor shall be disregarded and
deemed not to be outstanding, except that in determining whether the Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Securities which the Trustee knows to
be so owned shall be so disregarded. Securities so owned as described in (b)
above which have been pledged in good faith may be regarded as Outstanding if
the pledgee certifies to the Trustee the pledgee's right so to act with respect
to such Securities and that the pledgee is not the Company or any other obligor
upon the Securities or any Affiliate of the company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to
pay the principal of (and premium, if any) or interest on any securities on
behalf of the Company.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Place of Payment", when used with respect to the Securities
of any series, means the place or places where the principal of (and premium, if
any) and interest, if any, on the Securities of that series are payable as
specified in or as contemplated by Section 301.
"Predecessor Security" of any particular Security means every
previous Security
5
<PAGE>
evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purpose of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen security.
"Redemption Date", when used with respect to any Security to
be redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Security to
be redeemed, means the price at which it is to be redeemed pursuant to this
Indenture, exclusive of accrued and unpaid interest.
"Regular Record Date" for the interest payable on any Interest
Payment Date on the Securities of any series means the date specified for that
purpose as contemplated by Section 301.
"Relevant Date" means whichever is the later of (i) the date
on which such payment first becomes due and (ii) if the full amount payable has
not been received in The City of New York by the Trustee on or prior to such due
date, the date on which, the full amount having been so received, notice to that
effect shall have been given to the Holder in accordance with this Indenture.
"Responsible Officer", when used with respect to the Trustee,
means any vice president, the secretary, the treasurer, any trust officer, any
corporate trust officer, or any other officer or assistant officer of the
Trustee, which in each case is assigned to its Corporate Trust Department, and
also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.
"Securities" has the meaning stated in the first recital of
this Indenture and more particularly means any Securities authenticated and
delivered under this Indenture.
"Security Register" and "Security Registrar" have the
respective meanings specified in Section 305.
"Significant Subsidiary" means at any particular time, any
Subsidiary whose gross assets or gross revenues (having regard to the Company's
direct and/or indirect beneficial interest in the shares, or the like, of that
Subsidiary) represent at least 25% of the consolidated gross assets or, as the
case may be, consolidated gross revenues of the Company and all of its
Subsidiaries taken together.
"Special Record Date" for the payment of any Defaulted
Interest means a date fixed by the Trustee pursuant to Section 307.
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"Stated Maturity", when used with respect to any Security or
any installment of principal thereof or interest thereon, means the date
specified in such Security as the fixed date on which the principal of such
Security or such installment of principal or interest is due and payable.
"Subsidiary" means a corporation more than 50% of the
outstanding Voting Stock of which is owned, directly or indirectly, by the
Company or by one or more other Subsidiaries, or by the Company and one or more
other Subsidiaries. For the purposes of this definition, "voting stock" means
stock which ordinarily has voting power for the election of directors, whether
at all times or only so long as no senior class of stock has such voting power
by reason of any contingency.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean or include each Person who is then a Trustee hereunder, and
if at any time there is more than one such Person, "Trustee" as used with
respect to the Securities of any series shall mean the Trustee with respect to
Securities of that series.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as
in force at the date as of which this instrument was executed, except as
provided in Section 905.
["United Kingdom" means __________________, its territories,
its possessions and other areas subject to its jurisdiction.]
"United Kingdom Taxes" has the meaning specified in
Section 308.
"United States" means the United States of America (including
the States and the District of Columbia), its territories, its possessions and
other areas subject to its jurisdiction.
"U.S. Government Obligations" means direct obligations of the
United States for the payment of which its full faith and credit is pledged, or
obligations of a person controlled or supervised by and acting as an agency or
instrumentality of the United States and the payment of which is unconditionally
guaranteed by the United States, and shall also include a depository receipt
issued by a bank or trust company as custodian with respect to any such U.S.
Government Obligation or a specific payment of interest on or principal of any
such U.S. Government Obligation held by such custodian for the account of a
holder of a depository receipt; provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the custodian in
respect of the U.S. Government obligation or the specific payment of interest on
or principal of the U.S. Government Obligation evidenced by such depository
receipt.
"Voting Stock" of any corporation means stock of the class or
classes having
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general voting power under ordinary circumstances to elect at least a majority
of the board of directors of a corporation (irrespective of whether or not at
the time stock of any other class or classes shall have or might have voting
power by reason of the happening of any contingency).
SECTION 102. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an [officer] of the Company may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such [officer] knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or opinion of Counsel may
be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an [officer] or [officers] of the Company
stating that the information with respect to such factual matters is in the
possession of the Company, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.
SECTION 103. Acts of Holders.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in Person or by agent duly
appointed in writing, and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 601) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section 103.
Without limiting the generality of the foregoing, unless
otherwise established in or pursuant to a Board Resolution or set forth or
determined in an Officers' Certificate, or
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established in one or more indentures supplemental hereto, pursuant to Section
301, a Holder, including a Depositary that is a Holder of a Global Security, may
make, give or take, by a proxy, or proxies, duly appointed in writing, any
request, demand, authorization, direction, notice, consent, waiver or other
action provided in this Indenture to be made, given or taken by Holders, and a
Depositary that is a Holder of a Global Security may provide its proxy or
proxies to the beneficial owners of interests in any such Global Security
through such Depositary's standing instructions and customary practices.
(b) The fact and date of the execution by any Person of any
such instrument, writing or proxy may be proved by the affidavit of a witness of
such execution or by a certificate of a notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
individual signing such instrument, writing or proxy acknowledged to him the
execution thereof.
Where such execution is by a signer acting in a capacity other than his
individual capacity, such certificate or affidavit shall also constitute
sufficient proof of his authority. The fact and date of the execution of any
such instrument, writing or proxy, or the authority of the Person executing the
same, may also be proved in any other manner which the Trustee deems sufficient.
(c) The ownership of Securities shall be proved by the
Security Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Security shall bind every
future Holder of the same Security and the Holder of every Security issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done, omitted or suffered to be done by the Trustee or
the Company in reliance thereon, whether or not notation of such action is made
upon such Security.
(e) The Company may set any day as the record date for the
purpose of determining the Holders of Outstanding Securities of any series
entitled to make any request or demand, or give any authorization, direction,
notice, consent or waiver, or take any other action, provided or permitted by
this Indenture to be made, given or taken by Holders of Securities of such
series.
With regard to any record date set pursuant to this
subsection, the Holders of Outstanding Securities of the relevant series on such
record date (or their duly appointed agents), and only such Persons, shall be
entitled to take relevant action, whether or not such Holders remain Holders
after such record date. With regard to any action that may be taken hereunder
only by Holders of a requisite principal amount of Outstanding Securities of any
series (or their duly appointed agents) and for which a record date is set
pursuant to this subsection, the Company may, at its option, set an expiration
date after which no such action purported to be taken by any Holder shall be
effective hereunder unless taken on or prior to such expiration date by Holders
of the requisite principal amount of Outstanding Securities of such series on
such
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record date (or their duly appointed agents).
On or prior to any expiration date set pursuant to this subsection, the
Company may, on one or more occasions at its option, extend such expiration date
to any later date. Nothing in this subsection shall prevent any Holder (or any
duly appointed agent thereof) from taking, at any time, any action contrary to
or different from, any action previously taken, or purported to have been taken,
hereunder by such Holder, in which event the Company may set a record date in
respect thereof pursuant to this subsection. Notwithstanding the foregoing or
the Trust Indenture Act, the Company shall not set a record date for, and the
provisions of this paragraph shall not apply with respect to, any action to be
taken by Holders pursuant to Section 501, 502 or 512.
Upon receipt by the Trustee of notice of any default described
in Section 501, any declaration of acceleration, or any rescission and annulment
of any such declaration, pursuant to Section 502 or of any direction in
accordance with Section 512, a record date shall automatically and without any
other action by any Person be set for the purpose of determining the Holders of
outstanding Securities of the series entitled to join in such notice,
declaration, or rescission and annulment, or direction, as the case may be,
which record date shall be the close of business on the day the Trustee receives
such notice, declaration, rescission and annulment or direction, as the case may
be. The Holders of Outstanding Securities of such series on such record date (or
their duly appointed agent), and only such Persons, shall be entitled to join in
such notice, declaration, rescission and annulment, or direction, as the case
may be, whether or not such Holders remain Holders after such record date;
provided that, unless such notice, declaration, rescission and annulment, or
direction, as the case may be, shall have become effective by virtue of Holders
of the requisite principal amount of outstanding Securities of such series on
such record date (or their duly appointed agents) having joined therein on or
prior to the 90th day after such record date, such notice of default,
declaration, or rescission and annulment or direction given or made by the
Holders, as the case may be, shall automatically and without any action by any
Person be canceled and of no further effect. Nothing in this paragraph shall
prevent a Holder (or a duly appointed agent thereof) from giving, before or
after the expiration of such 90-day period, a notice of default, a declaration
of acceleration, a rescission and annulment of a declaration of acceleration or
a direction in accordance with Section 512, contrary to or different from, or,
after the expiration of such period, identical to, a previously given notice,
declaration, rescission and annulment, or direction, as the case may be, that
has been canceled pursuant to the proviso to the preceding sentence, in which
event a new record date in respect thereof shall be set pursuant to this
paragraph.
SECTION 104. Notices, Etc., to Trustee and Company.
Any request, demand, authorization, direction, notice,
consent, waiver or Act of Holders or other document provided or permitted by
this Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be
sufficient for every
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purpose hereunder if made, given, furnished or filed in writing to or
with the Trustee at its Corporate Trust Office, or
(2) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage
prepaid, to the Company addressed to it at the address of its principal
office specified in the first paragraph of this instrument or at any
other address previously furnished in writing to the Trustee by the
Company.
SECTION 105. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any
event, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid, to
each Holder affected by such event, at his address as it appears in the Security
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. In any case where notice to
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders. Where this Indenture
provides for notice in any manner, such notice may be waived in writing by the
Person entitled to receive such notice, either before or after the event, and
such waiver shall be the equivalent of such notice. Waivers of notice by Holders
shall be filed with the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or
by reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made at the direction of the Company in
a manner reasonably calculated, to the extent practicable under the
circumstances, to provide prompt notice shall constitute a sufficient
notification for every purpose hereunder.
SECTION 106. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with
any provision of the Trust Indenture Act or another provision which is required
or deemed to be included in this Indenture by any of the provisions of the Trust
Indenture Act, the provision or requirement of the Trust Indenture Act shall
control. If any provision of this Indenture modifies or excludes any provision
of the Trust Indenture Act that may be so modified or excluded, such provision
of the Trust Indenture Act shall be deemed to apply to this Indenture as so
modified or excluded, as the case may be.
SECTION 107. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the construction hereof.
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SECTION 108. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
SECTION 109. Separability Clause.
In case any provision in this Indenture or in the Securities
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
SECTION 110. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder and the Holders, any benefit or any legal or equitable right, remedy
or claim under this Indenture.
SECTION 111. Governing Law.
This Indenture and the Securities shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 112. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date
or Stated Maturity of any Security shall not be a Business Day at any Place of
Payment, then (notwithstanding any other provision of this Indenture or of the
Securities) payment of interest, if any, or principal (and premium, if any) need
not be made at such Place of Payment on such date, but may be made on the next
succeeding Business Day at such Place of Payment with the same force and effect
as if made on the Interest Payment Date or Redemption Date, or at the Stated
Maturity, and no interest shall accrue for the period from and after such
Interest Payment Date, Redemption Date or Stated Maturity, as the case may be.
ARTICLE TWO
SECURITY FORMS
SECTION 201. Forms Generally.
The Securities of each series shall be in substantially the
form set forth in this Article, or in such other form as shall be established by
or pursuant to a Board Resolution or in one or more indentures supplemental
hereto, in each case with such appropriate insertions, omissions, substitutions
and other variations as are required or permitted by this Indenture, and
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may have such letters, numbers or other marks of identification and such legends
or endorsements placed thereon as may be required to comply with the rules of
any securities exchange or as may, consistently herewith, be determined by the
officer or officers executing such Securities, as evidenced by the officer's or
officers', execution of the Securities. If the form of Securities of any series
is established by action taken pursuant to a Board Resolution, a copy of an
appropriate record of such action shall be certified by an authorized officer of
the Company and delivered to the Trustee at or prior to the delivery of the
Company Order contemplated by Section 303 for the authentication and delivery of
such securities.
The Trustee's certificates of authentication shall be in
substantially the form set forth in this Article.
The definitive Securities shall be printed, lithographed or
engraved on steel engraved borders or may be produced in any other manner, all
as determined by the [officer or officers] executing such Securities, as
evidenced by the [officer's or officers'], execution of such Securities.
SECTION 202. Form of Face of Security.
[If the Security is to be a Global Security, insert - This
Security is a Global Security within the meaning of the Indenture hereinafter
referred to and is registered in the name of a Depositary or a nominee of a
Depositary. This Security is exchangeable for Securities registered in the name
of a person other than the Depositary or its nominee only in the limited
circumstances described in the Indenture, and no transfer of this security
(other than a transfer of this Security as a whole by the Depositary to a
nominee of the Depositary or by a nominee of the Depositary to the Depositary or
another nominee of the Depositary) may be registered except in limited
circumstances.
Unless this Global Security is presented by an authorized
representative of The Depositary Trust Company, a New York corporation ("DTC"),
to the issuer or its agent for registration of transfer, exchange or payment,
and any definitive Security is issued in the name of Cede & Co. or in such other
name as is requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the registered owner
hereof, Cede & Co., has an interest herein.]
SOUTHERN INVESTMENTS UK PLC
[Title of the Security]
No. $
SOUTHERN INVESTMENTS UK PLC, a company duly organized and
existing under the laws of England and Wales (herein called the "Company", which
term includes any
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successor corporation under the indenture hereinafter referred to), for value
received, hereby promises to pay to , or registered assigns, the principal sum
of Dollars on , and to pay interest thereon from , or from the most recent
Interest Payment Date to which interest has been paid or duly provided for,
semi-annually on and in each year, commencing , at the rate per annum provided
in the title hereof, until the principal hereof is paid or made available for
payment. The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the or (whether or not a Business Day), as the case may
be, immediately preceding such Interest Payment Date. Any such interest not so
punctually paid or duly provided for will forthwith cease to be payable to the
Holder on such Regular Record Date and may either be paid to the Person in whose
name this Security (or one or more Predecessor Securities) is registered at the
close of business on a Special Record Date for the payment of such Defaulted
Interest to be fixed by the Trustee, notice whereof shall be given to Holders of
Securities of this series not less than 10 days prior to such Special Record
Date, or be paid at any time in any other lawful manner not inconsistent with
the requirements of any securities exchange on which the Securities of this
series may be listed, and upon such notice as may be required by such exchange,
all as more fully provided in said Indenture.
[If the Security is not to bear interest prior to Maturity, insert -- The
principal of this Security shall not bear interest except in the case of a
default in payment of principal upon acceleration, upon redemption or at Stated
Maturity and in such case the overdue principal of this Security shall bear
interest at the rate of [yield to maturity] % per annum (to the extent that the
payment of such interest shall be legally enforceable), which shall accrue from
the date of such default in payment to the date payment of such principal has
been made or duly provided for. Interest on any overdue principal shall be
payable on demand. Any such interest on any overdue principal that is not so
paid on demand shall bear interest at the rate of [yield to maturity]% per annum
(to the extent that the payment of such interest shall be legally enforceable),
which shall accrue from the date of such demand for payment to the date payment
of such interest has been made or duly provided for, and such interest shall
also be payable on demand.]
Payment of the principal of (and premium, if any) and
interest, if any, on this Security will be made at the office or agency of the
Company maintained for that purpose in _______________ in such coin or currency
of the United States of America as at the time of payment is legal tender for
the payment of public and private debts; [If this Security is not a Global
Security, insert -- provided, however, that at the option of the Company payment
of interest may be made by check mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register] [If this Security
is a Global Security, insert applicable manner of payment].
All payments of principal and interest (including payments of
discount and premium, if any) in respect of this Security shall be made free and
clear of, and without
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withholding or deduction for or on account of any present or future taxes,
duties, assessments or governmental charges of whatever nature imposed, levied,
collected, withheld or assessed by or within the United Kingdom or by or within
any political subdivision thereof or any authority therein or thereof having
power to tax ("United Kingdom Taxes"), unless such withholding or deduction is
required by law. In the event of any such withholding or deduction the Company
shall pay to the Holder such additional amounts ("Additional Amounts") as will
result in the payment to such Holder of the amount that would otherwise have
been receivable by such Holder in the absence of such withholding or deduction,
except that no such Additional Amounts shall be payable:
(a) to or on behalf of a Holder who is liable for such United
Kingdom Taxes in respect of this Security by reason of such Holder
having some connection with the United Kingdom other than the mere
holding of this security or the receipt of principal and interest
(including payments of discount and premium, if any) in respect
thereof; or
(b) to or on behalf of a Holder who presents this Security
(where presentation is required) for payment more than 30 days after
the Relevant Date except to the extent that the Holder would have been
entitled to such Additional Amounts on presenting this Security for
payments on the last day of such period of 30 days.
References to principal, interest, discount or premium in
respect of this Security shall be deemed also to refer to any Additional Amounts
which may be payable as set forth in the Indenture or in this Security.
The Company shall furnish to the Trustee the official receipts
(or a certified copy of the official receipts) evidencing payment of United
Kingdom Taxes. Copies of such receipts shall be made available by the Trustee to
the Holder of this Security upon request.
Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof by manual signature,
this Security shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed under its corporate seal.
Date:
[Seal] SOUTHERN INVESTMENTS UK PLC
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By_____________________________________
[Title]
SECTION 203. Form of Reverse of Security.
SOUTHERN INVESTMENTS UK PLC
[Title of the Security]
This Security is one of a duly authorized issue of securities
of the Company (herein called the "Securities"), issued and to be issued in one
or more series under an Indenture, dated as of ________________ (herein called
the "Indenture"), between the Company and ____________________________, as
trustee (herein called the "Trustee", which term includes any successor trustee
under the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Trustee and the
Holders of the Securities and of the terms upon which the Securities are, and
are to be, authenticated and delivered. This Security is one of the series
designated on the face hereof limited in aggregate principal amount to
$___________].
[If applicable, insert - - This security is not subject to
redemption prior to maturity.] [If applicable, insert -- The Securities of this
series are subject to redemption upon not less than 30 or more than 60 days'
notice by mail to the Holders of such Securities at their addresses in the
Security Register for such series.] [If applicable, insert -- (1) on
_______________ in any year commencing with the year ____ and ending with the
year ______ through operation of the sinking fund for this series at a
Redemption Price equal to look of the principal amount, and (2)] at any time [on
or after ____________, 19__), as a whole or in part, at the election of the
Company, at the following Redemption Prices (expressed as percentages of the
principal amount):
If redeemed (on or before ____________ _____% and if redeemed)
during the 12-month period beginning ______________, of the years indicated:
Redemption Redemption
--------------- ----------------
Year Price Year Price
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and thereafter at a Redemption Price equal to ____% of the principal amount,
together in the case of any such redemption [if applicable, insert -- (whether
through operation of the sinking fund or otherwise)] with accrued and unpaid
interest to the Redemption Date, but interest installments whose Stated Maturity
is on or prior to such Redemption Date will be payable to the Holders of such
Securities, or one or more Predecessor Securities, of record at the close of
business on the relevant Record Dates referred to on the face hereof, all as
provided in the Indenture.]
[If applicable, insert -- The Securities of this series are subject to
redemption upon not less than 30 or more than 60 days' notice by mail to the
Holders of such Securities at their addresses in the Security Register for such
series, (1) on _______________ in any year commencing with the year ______ and
ending with the year _______ through operation of the sinking fund for this
series at the Redemption Prices for redemption through operation of the sinking
fund (expressed as percentages of the principal amount) set forth in the table
below, and (2) at any time [on or after __________________], as a whole or in
part, at the election of the Company, at the Redemption Prices for redemption
otherwise than through operation of the sinking fund (expressed as percentages
of the principal amount) set forth in the table below:
If redeemed during the 12-month period beginning __________ of
the years indicated:
Redemption Price
For Redemption Redemption Price For
Through Operation Redemption Otherwise
of the Than Through Operation
Year Sinking Fund of the Sinking Fund
and thereafter at a Redemption Price equal to ____% of the principal amount,
together in the case of any such redemption (whether through operation of the
sinking fund or otherwise) with accrued and unpaid interest to the Redemption
Date, but interest installments whose Stated Maturity is on or prior to such
Redemption Date will be payable to the Holders of such Securities, or one or
more Predecessor Securities, of record at the close of business on the relevant
Record Dates referred to on the face hereof, all as provided in the Indenture.]
[If applicable, insert -- Notwithstanding the foregoing, the Company
may not, prior to ____________, redeem any Securities of this series as
contemplated by [Clause (2) of] the preceding paragraph as a part of, or in
anticipation of, any refunding operation by the
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application, directly or indirectly, of moneys borrowed having an interest cost
to the Company (calculated in accordance with generally accepted financial
practice) of less than ___% per annum.]
[The sinking fund for this series provides for the redemption
on ___________ in each year beginning with the year ______ and ending with the
year _____ of [not less than] ______________ [("mandatory sinking fund") and, at
the option of the Company, not more than _____________] aggregate principal
amount of Securities of this series. [Securities of this series acquired or
redeemed by the Company otherwise than through [mandatory] sinking fund payments
may be credited against subsequent [mandatory] sinking fund payments otherwise
required to be made in the order in which they become due.]]
[In the event of redemption of this security in part only, a
new Security or Securities of this series and of like tenor for the unredeemed
portion hereof will be issued in the name of the Holder hereof upon the
cancellation hereof.]
The Indenture contains provisions for defeasance of (a) the
entire indebtedness of this security and (b) certain restrictive covenants upon
compliance by the Company with certain conditions set forth therein.
If an Event of Default with respect to Securities shall occur
and be continuing, the principal of the Securities may be declared due and
payable in the manner and with the effect provided in the Indenture.
[If the Security is an Original Issue Discount Security,
insert -- If an Event of Default with respect to Securities of this series shall
occur and be continuing, an amount of principal of the Securities of this series
(the "Acceleration Amount") may be declared due and payable in the manner and
with the effect provided in the Indenture. In case of a declaration of
acceleration on or before ________________ in any year, the Acceleration Amount
per ____________ principal amount at Stated Maturity of the Securities shall be
equal to the amount set forth in respect of such date below:
Acceleration
Amount
per _______
principal amount
Date of declaration at Stated Maturity
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and in case of a declaration of acceleration on any other date, the Acceleration
Amount shall be equal to the Acceleration Amount as of the immediately preceding
date set forth in the table above, plus accrued original issue discount
(computed in accordance with the method used for calculating the amount of
original issue discount that accrues for Federal income tax purposes) from such
next preceding date to the date of declaration at the yield to maturity. For the
purpose of this computation the yield to maturity is ____%. Upon payment (i) of
the Acceleration Amount so declared due-and payable and (ii) of interest on any
overdue principal and overdue interest (in each case to the extent that the
payment of such interest shall be legally enforceable), all of the Company's
obligations in respect of the payment of the principal of and interest, if any,
on the Securities of this series shall terminate.]
The Bonds are subject to redemption on an Interest Payment Date upon
not less than 15 nor more than 30 days' notice to the Bondholders at a price
equal to the outstanding principal amount thereof, if (a) the Company satisfies
the Trustee prior to the giving of such notice that it has or will become
obliged to pay additional amounts (such that the net amounts received by the
Bondholders after deductions or withholdings required by law equal the amounts
which would have been receivable by them had no such deduction or withholding
been required) as a result of any change in, or amendment to, the laws or
regulations of the United Kingdom or any political subdivision or any authority
or agency thereof or therein having power to tax or levy duties, or any change
in the application or interpretation of such laws or regulations, which change
or amendment becomes effective on or after the [date of the Underwriting
Agreement], and (b) such obligation cannot be avoided by the Company taking
reasonable measures available to it, subject, as provided in the Indenture, to
the delivery by the Company of a certificate signed by a director of the Issuer
stating that the obligation referred to in (a) above cannot be avoided by the
Issuer taking reasonable measures available to it.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the Securities of
each series to be affected under the Indenture at any time by the Company and
the Trustee with the consent of the Holders of a majority in aggregate principal
amount of the Securities at the time Outstanding of all series to the affected
(voting as a class). The Indenture also contains provisions permitting the
Holders of specified percentages in principal amount of the Securities of each
series at the time Outstanding, on behalf of the Holders of all Securities of
such series, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Security shall be conclusive
and binding upon such Holder and upon all future Holders of this Security and of
any Security issued upon the registration of transfer hereof or in exchange
therefor or in lieu hereof, whether or not notation of such consent or waiver is
made upon this security.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of (and
premium, if any) and interest, if any, on this Security at the times, place and
rate, and in the coin or currency, herein prescribed.
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[If this Security is a Global Security, insert -- This
Security shall be exchangeable for Securities registered in the names of Persons
other than the Depositary with respect to such series or its nominee only as
provided in this paragraph. This Security shall be so exchangeable if (x) the
Depositary notifies the Company that it is unwilling or unable to continue as
Depositary for such series or at any time ceases to be a clearing agency
registered as such under the Securities Exchange Act of 1934, (y) the Company
executes and delivers to the Trustee an Officers' Certificate providing that
this Security shall be so exchangeable or (z) there shall have occurred and be
continuing an Event of Default with respect to the Securities of such series.
Securities so issued in exchange for this Security shall be of the same series,
having the same interest rate, if any, and maturity and having the same terms as
this Security, in authorized denominations and in the aggregate having the same
principal amount as this Security and registered in such names as the Depositary
for such Global Security shall direct.]
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of [if this Security is a Global
Security, insert -- a Security of the series of which this Security is a part]
[If this Security is not a Global Security, insert -- this Security] is
registrable in the Security Register, upon surrender of this Security for
registration of transfer at the office or agency of the Company in any place
where the principal of (and premium, if any) and interest, if any, on this
Security are payable, duly endorsed by, or accompanied by a written instrument
of transfer in form satisfactory to the Company and the Security Registrar duly
executed by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Securities of this series and of like tenor, of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.
The Securities of [If this Security is a Global Security
insert -- the series of which this Security is a part] [If this security is not
a Global Security, insert -- this series] are issuable only in registered form
without coupons in denominations of $__________ and any integral multiple
thereof. As provided in the Indenture and subject to certain limitations therein
set forth, Securities of this series are exchangeable for a like aggregate
principal amount of Securities of this series and of like tenor of a different
authorized denomination as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
This Security shall be governed by and construed in accordance
with the laws of the State of New York.
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All terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
SECTION 204. Form of Trustee's Certificate of Authentication.
This is one of the securities of the series designated herein
and referred to in the within-mentioned Indenture.
------------------------------
as Trustee
By:___________________________
Authorized Officer
ARTICLE THREE
THE SECURITIES
SECTION 301. Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There
shall be established in or pursuant to a Board Resolution, and, subject to
Section 303, set forth or determined in the manner provided, in an Officers'
Certificate, or established in one or more indentures supplemental hereto, prior
to the issuance of Securities of any series:
(1) the title of the Securities of the series (which
shall distinguish the Securities of the series from all other
Securities);
(2) any limit upon the aggregate principal amount of the
Securities of the series which may be authenticated and delivered under
this Indenture (except for securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other
Securities of the series pursuant to Sections 304, 305, 306, 906, or
1104 and except for any Securities which, pursuant to Section 303, are
deemed never to have been authenticated and delivered hereunder);
(3) the Person to whom any interest on a Security of the
series shall be payable, if other than the Person in whose name the
Security (or one or more Predecessor Securities) is registered at the
close of business on the regular Record
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Date for such interest;
(4) the date or dates on which the principal of the
Securities of the series is payable;
(5) the rate or rates at which the Securities of the series
shall bear interest, if any, the date or dates from which such interest
shall accrue, the Interest Payment Dates on which such interest shall
be payable and the Regular Record Date for the interest payable on any
Interest Payment Date;
(6) the place or places, if any, in addition to or in the
place of the office of the Trustee in _____________, New York, where
the principal of (and premium, if any) and interest, if any, on
Securities of the series shall be payable and where such Securities may
be registered or transferred;
(7) the period or periods within which, the price or prices at
which and the terms and conditions upon which Securities of the series
may be redeemed, in whole or in part, at the option of the Company;
(8) the obligation, if any, of the Company to redeem, repay or
purchase Securities of the series pursuant to any sinking fund or
analogous provisions or at the option of a Holder thereof, and the
period or periods within which, the price or prices at which and the
terms and conditions upon which Securities of the series shall be
redeemed, repaid or purchased, in whole or in part, pursuant to such
obligation;
(9) if other than denominations of $1,000 and any
integral multiple thereof, the denominations in which Securities of the
series shall be issuable;
(10) if other than the principal amount thereof, the portion
of the principal amount of Securities of the series which shall be
payable upon declaration of acceleration of the Maturity thereof
pursuant to Section 502;
(11) if other than such coin or currency of the United States
of America as at the time of payment is legal tender for payment of
public or private debts, the coin or currency, including composite
currencies such as the European Currency Unit, in which payment of the
principal of (and premium, if any) and interest, if any, on the
Securities of the series shall be payable;
(12) if the principal of (and premium, if any) or interest, if
any, on the Securities of the series are to be payable, at the election
of the Company or a Holder thereof, in a coin or currency other than
that in which the Securities are stated to be payable, the period or
periods within which, and the terms and conditions upon which, such
election may be made;
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<PAGE>
(13) if the amount of payments of principal of (and premium,
if any) or interest, if any, on the Securities of the series may be
determined with reference to an index based on a coin or currency other
than that in which the securities are stated to be payable, the manner
in which such amounts shall be determined;
(14) any provisions permitted by this Indenture relating to
Events of Default or covenants of the Company with respect to such
series of Securities;
(15) if the Securities of the series shall be issued in whole
or in part in the form of one or more Global securities, (i) whether
beneficial owners of interests in any such Global Security may exchange
such interests for Securities of such series of like tenor and of
authorized form and denomination and the circumstances under which any
such changes may occur, if other than in the manner provided in Section
305 and (ii) the Depositary for such Global Security or Securities; and
(16) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture).
All Securities of any one series shall be substantially
identical except as to denomination and except as may otherwise be provided in
or pursuant to the Board Resolution referred to above and set forth in the
Officers' Certificate referred to above or in any such indenture supplemental
hereto.
If any of the terms of the series, including the form of
Security of such series, are established by action taken pursuant to a Board
Resolution, a copy of an appropriate record of such action shall be certified by
the Secretary or an Assistant Secretary or other [authorized officer] of the
Company, and delivered to the Trustee at or prior to the delivery of the Company
Order contemplated by Section 303 for the authentication and delivery of such
series of Securities.
SECTION 302. Denominations.
The Securities of each series shall be issuable in registered
form without coupons, except as otherwise expressly provided in a supplemental
indenture hereto, in such denominations as shall be specified as contemplated by
Section 301. In the absence of any such provisions with respect to the
Securities of any series, the Securities of such series shall be issuable in
denominations of $1,000 and any integral multiple thereof.
SECTION 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by
[its Chairman of the Board, its General Manager, or its Chief Financial and
Administrative Officer] under its company seal reproduced thereon, and which
need not be attested. The Securities of any series shall be executed by such
additional officer, if any, as shall be specified pursuant to
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<PAGE>
Section 301. The signature of any of these officers on the Securities may be
manual or facsimile.
Securities bearing the manual or facsimile signature of any
individual who was at any time the proper [officer] of the Company shall bind
the Company, notwithstanding that such individual has ceased to hold such office
prior to the authentication and delivery of such Securities or did not hold such
office at the date of authentication of such Securities.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities of any series
executed by the Company to the Trustee for authentication, together with a
Company Order for the authentication and delivery of such Securities, and the
Trustee in accordance with the Company Order shall authenticate and deliver such
Securities. If the form or terms of the Securities of the series have been
established in or pursuant to one or more Board Resolutions as permitted by
Sections 201 and 301, in authenticating such Securities, and accepting the
additional responsibilities under this Indenture in relation to such Securities,
the Trustee shall be entitled to receive, and (subject to Section 601) shall be
fully protected in relying upon, an opinion of Counsel stating,
(a) if the form of such Securities has been established by or
pursuant to Board Resolution as permitted by Section 201, that such
form has been established in conformity with the provisions of this
Indenture;
(b) if the terms of such Securities have been established by
or pursuant to Board Resolution as permitted by Section 301, that such
terms have been established in conformity with the provisions of this
Indenture; and
(c) that such Securities, when authenticated and delivered by
the Trustee and issued by the Company in the manner and subject to any
conditions specified in such opinion of Counsel, will constitute valid
and legally binding obligations of the Company, enforceable in
accordance with their terms, subject to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or
affecting the enforcement of creditors' rights and to general
principles of equity.
Notwithstanding the provisions of Section 301 and of the
preceding paragraph, if all Securities of a series are not to be originally
issued at one time, it shall not be necessary to deliver the Officers'
Certificate otherwise required pursuant to Section 301 or the Company Order and
Opinion of Counsel otherwise required pursuant to such preceding paragraph at or
prior to the time of authentication of each Security of such series if such
documents are delivered at or prior to the time of authentication upon original
issuance of the first Security of such series to be issued.
Each Security shall be dated the date of its authentication.
24
<PAGE>
No Security shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there appears on such
Security a certificate of authentication substantially in the form provided for
herein executed by the Trustee by manual signature, and such certificate upon
any Security shall be conclusive evidence, and the only evidence, that such
Security has been duly authenticated and delivered hereunder and is entitled to
the benefits of this Indenture. Notwithstanding the foregoing, if any Security
shall have been authenticated and delivered hereunder but never issued and sold
by the Company, and the Company shall deliver such Security to the Trustee for
cancellation as provided in Section 310 together with a written statement (which
need not be accompanied by an Opinion of Counsel) stating that such Security has
never been issued and sold by the Company, for all purposes of this Indenture
such Security shall be deemed never to have been authenticated and delivered
hereunder and shall never be entitled to the benefits of this Indenture.
SECTION 304. Temporary Securities.
Pending the preparation of definitive Securities of any
series, the Company may execute, and upon Company Order the Trustee shall
authenticate and deliver, temporary Securities which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the [officer or officers] executing such Securities may
determine, as evidenced by their execution of such Securities.
If temporary Securities of any series are issued, the Company
will cause definitive Securities of that series to be prepared without
unreasonable delay. After the preparation of definitive Securities of such
series, the temporary Securities of such series shall be exchangeable for
definitive Securities of such series upon surrender of the temporary securities
of such series at the office or agency of the Company in a Place of Payment for
that series, without charge to the Holder. Upon surrender for cancellation of
any one or more temporary Securities of any series the Company shall execute and
the Trustee shall authenticate and deliver in exchange therefor a like principal
amount of definitive Securities of the same series and of like tenor of
authorized denominations. Until so exchanged the temporary Securities of any
series shall in all respects be entitled to the same benefits under this
Indenture as definitive Securities of such series.
SECTION 305. Registration, Registration of Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust
Office of the Trustee a register (the register maintained in such office and in
any other office or agency of the Company in a Place of Payment being herein
sometimes collectively referred to as the "Security Register") in which, subject
to such reasonable regulations as it may prescribe, the Company shall provide
for the registration of Securities and of transfers of Securities. The Trustee
is hereby appointed "Security Registrar" for the purpose of registering
Securities and
25
<PAGE>
transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security of
any series at the office or agency in a Place of Payment for that series, the
Company shall execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Securities of
the same series, of any authorized denominations and of a like aggregate
principal amount and tenor.
At the option of the Holder, any Security or Securities of any
series, other than a Global Security, may be exchanged for other securities of
the same series, of any authorized denominations and of a like aggregate
principal amount and tenor, upon surrender of the Securities to be exchanged at
such office or agency. Whenever any Securities are so surrendered for exchange,
the Company shall execute, and the Trustee shall authenticate and deliver, the
Securities which the Holder making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or
exchange of Securities shall be the valid obligations of the Company, evidencing
the same debt, and entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company or the Trustee) be
duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made to the Holder for any
registration of transfer or exchange of Securities, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer or exchange of
Securities, other than exchanges pursuant to Sections 304, 906 or 1107 not
involving any transfer.
The Company shall not be required (i) to issue, register the
transfer of or exchange Securities of any series during a period beginning at
the opening of business 15 days before the day of the mailing of a notice of
redemption under Section 1103 and ending at the close of business on the day of
such mailing, or (ii) to register the transfer of or exchange any Security so
selected for redemption in whole or in part, except the unredeemed portion of
any Security being redeemed in part.
The provisions of this Section 305 are, with respect to any
Global Security, subject to Section 312 thereof.
26
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SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, the
Company shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security of the same series and of like tenor and principal
amount and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any Security
and (ii) such Security or indemnity as may be required by them to save each of
them and any agent of either of them harmless, then, in the absence of notice to
the Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and upon its request the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen
Security, a new Security of the same series and of like tenor and principal
amount and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security
has become or is about to become due and payable, the Company in its discretion
may, instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section 306,
the Company may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security of any series issued pursuant to this
Section 306 in lieu of any destroyed, lost or stolen Security shall constitute
an original additional contractual obligation of the Company, whether or not the
destroyed, lost or stolen Security shall be at any time enforceable by anyone,
and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Securities of that series duly issued
hereunder.
The provisions of this Section 306 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 307. Payment of Interest; Interest Rights Reserved.
Interest on any Security which is payable, and is punctually
paid or duly provided for, on any Interest Payment Date shall be paid to the
Person in whose name that Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest.
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Any interest on any Security of any series which is payable
but is not punctually paid or duly provided for, on any Interest Payment Date
(herein called "Defaulted Interest") shall forthwith cease to be payable to the
Holder on the relevant Regular Record Date by virtue of having been such Holder,
and such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities of such series
(or their respective Predecessor Securities) are registered at the
close of business on a Special Record Date for the payment of such
Defaulted Interest, which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of Defaulted
Interest proposed to be paid on each Security of such series and the
date of the proposed payment, and at the same time the Company shall
deposit with the Trustee an amount of money equal to the aggregate
amount proposed to be paid in respect of such Defaulted Interest or
shall make arrangements satisfactory to the Trustee for such deposit
prior to the date of the proposed payment, such money when deposited to
be held in trust for the benefit of the Persons entitled to such
Defaulted Interest as in this clause provided. Thereupon the Trustee
shall fix a Special Record Date for the payment of such Defaulted
Interest which shall be not more than 15 days and not less than 10 days
prior to the date of the proposed payment and not less than 10 days
after the receipt by the Trustee of the notice of the proposed payment.
The Trustee shall promptly notify the Company of such Special Record
Date and, in the name and at the expense of the Company, shall cause
notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor to be mailed, first-class postage prepaid,
to each Holder of Securities of such series at his address as it
appears in the Security Register, not less than 10 days prior to such
Special Record Date. Notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor having been so mailed,
such Defaulted Interest shall be paid to the Persons in whose names the
Securities of such series (or their respective Predecessor Securities)
are registered at the close of business on such Special Record Date and
shall no longer be payable pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted Interest on
the Securities of any series in any other lawful manner not
inconsistent with the requirements of any securities exchange on which
such Securities may be listed, and upon such notice as may be required
by such exchange.
Subject to the foregoing provisions of this Section 307, each
Security delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security, shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.
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SECTION 308. Additional Amounts.
If the Securities of a particular series provide for payment
of Additional Amounts, all payments of principal and interest (including
payments of discount and premium, if any) in respect of the Securities shall be
made free and clear of, and without withholding or deduction for or on account
of any present or future taxes, duties, assessments or governmental charges of
whatever nature imposed, levied, collected, withheld or assessed by or within
the United Kingdom or by or within any political subdivision thereof or any
authority therein or thereof having power to tax ("United Kingdom Taxes"),
unless such withholding or deduction is required by law. In that event the
Company shall pay to the Holder such additional amounts ("Additional Amounts")
as will result in the payment to such Holder of the amount that would otherwise
have been receivable by such Holder in the absence of such withholding or
deduction, except that no such Additional Amounts shall be payable:
(a) to or on behalf of a Holder who is liable for such United
Kingdom Taxes in respect of Securities by reason of such Holder having
some connection with the United Kingdom other than the mere holding of
a Security or the receipt of principal and interest (including payments
of discount and premium, if any) in respect thereof; or
(b) to or on behalf of a Holder who presents a Security (where
presentation is required) for payment more than 30 days after the
Relevant Date except to the extent that such Holder would have been
entitled to such Additional Amounts on presenting such Security for
payment on the last day of such period of 30 days.
Reference to principal, interest, discount or premium in
respect of the Securities shall be deemed also to refer to any Additional
Amounts which may be payable as set forth in this Indenture or in the
Securities.
At least 10 Business Days prior to the first Interest Payment
Date (and at least 10 Business Days prior to each succeeding Interest Payment
Date if there has been any change with respect to the matters set forth in the
below-mentioned Directors' Certificate) the Company will furnish to the Trustee
and the Paying Agents a Directors' Certificate instructing the Trustee and the
Paying Agents whether payments of principal of or interest on the Securities due
on such Interest Payment Date shall be without deduction or withholding for or
on account of any United Kingdom Taxes. If any such deduction or withholding
shall be required, prior to such Interest Payment Date the Company will furnish
the Trustee and the Paying Agents with an Directors' Certificate which specifies
the amount, if any, required to be withheld on such payment to Holders and
certifies that the Company shall pay such withholding or deduction. The Company
covenants to indemnify the Trustee for, and to hold the Trustee harmless
against, any loss, liability or expense reasonably incurred without negligence,
willful misconduct or bad faith on their part, arising out of or in connection
with actions taken or omitted by the Trustee in reliance on any Directors'
Certificate furnished
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pursuant to this paragraph. Any Directors' Certificate required by this Section
308 to be provided to the Trustee and any Paying Agent shall be deemed to be
duly provided if telecopied to the Trustee and such Paying Agent.
The Company shall furnish to the Trustee the official receipts
(or a certified copy of the official receipts) evidencing payment of United
Kingdom Taxes. Copies of such receipts shall be made available to the Holders of
the Securities upon request.
SECTION 309. Persons Deemed Owners.
Prior to due presentment of a Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name such security is registered as the owner of
such Security for the purpose of receiving payment of principal of (and premium,
if any) and (subject to Section 307) interest, if any, on such Security and for
all other purposes whatsoever, whether or not such Security be overdue, and
neither the Company, the Trustee nor any agent of the Company or the Trustee
shall be affected by notice to the contrary. All such payments so made to any
such person, or upon such person's order, shall be valid, and, to the extent of
the sums so paid, effectual to satisfy and discharge the liability for monies
payable upon any such Security.
No holder of any beneficial interest in any Global Security
held on its behalf by a Depositary shall have any rights under this Indenture
with respect to such Global Security, and such Depositary may be treated by the
Company, the Trustee, and any agent of the Company or the Trustee as the owner
of such Global Security for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall impair, as between a Depositary and such holders
of beneficial interests, the operation of customary practices governing the
exercise of the rights of the Depositary as holder of any Security.
SECTION 310. Cancellation
All Securities surrendered for payment, redemption,
registration of transfer or exchange or for credit against any sinking fund
payment shall, if surrendered to any Person other than the Trustee, be delivered
to the Trustee and shall be promptly canceled by it. The Company may at any time
deliver to the Trustee for cancellation any Securities previously authenticated
and delivered hereunder which the Company may have acquired in any manner
whatsoever, and all Securities so delivered shall be promptly canceled by the
Trustee. No Securities shall be authenticated in lieu of or in exchange for any
Securities canceled as provided in this Section 310, except as expressly
permitted by this Indenture. All canceled Securities held by the Trustee shall
be disposed of as directed by a Company Order.
SECTION 311. Computation of Interest.
Except as otherwise specified as contemplated by Section 301
for Securities of any series, interest, if any, on the Securities of each series
shall be computed on the basis of
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a 360-day year of twelve 30-day months.
SECTION 312. Global Securities.
If the Company shall establish pursuant to Section 301 that
the Securities of a particular series are to be issued in the form of a Global
Security, then the Company shall execute and the Trustee shall, in accordance
with Section 303, authenticate and deliver, a Global Security or Securities
which (i) shall represent, and shall be denominated in an aggregate amount equal
to the aggregate principal amount of, all of the Outstanding Securities of such
series, (ii) shall be registered in the name of the Depositary or its nominee,
(iii) shall be delivered by the Trustee to the Depositary or pursuant to the
Depositary's instruction and (iv) shall bear a legend substantially to the
following effect:
"This Security is a Global Security within the meaning of the
Indenture hereinafter referred to and is registered in the name of a
Depositary or a nominee of a Depositary. This Security is exchangeable
for Securities registered in the name of a person other than the
Depositary or its nominee only in the limited circumstances described
in the Indenture, and no transfer of this Security (other than a
transfer of this Security as a whole by the Depositary to a nominee of
the Depositary or by a nominee of the Depositary to the Depositary or
another nominee of the Depositary) may be registered except in limited
circumstances.
Unless this Global Security is presented by an
authorized representative of the Depositary to the Company or its agent
for registration of transfer, exchange or payment, and any definitive
Security is issued in the name of [Cede & Co.] or in such other name as
is requested by an authorized representative of the Depositary (and any
payment is made to [Cede & Co.] or to such other entity as is requested
by an authorized representative of the Depositary), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL in as much as the registered owner hereof, [Cede & Co.],
has an interest herein."
Notwithstanding the provisions of Section 305, the Global
Security of a series may be transferred, in whole but not in part and in the
manner provided in Section 305, only to another nominee of the Depositary for
such series, or to a successor Depositary for such series selected or approved
by the Company or to a nominee of such successor Depositary.
If at any time the Depositary for a series of Securities
notifies the Company that it is unwilling or unable to continue as Depositary
for such series or if at any time the Depositary for such series shall no longer
be registered or in good standing under the Exchange Act, or other applicable
statute or regulation, and a successor Depositary for such series is not
appointed by the Company within 90 days after the Company receives such notice
or becomes aware of such condition, as the case may be, this Section 312 shall
no longer be applicable to the Securities of such series, and the Company will
execute, and
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subject to section 305, the Trustee will authenticate and deliver Securities of
such series in definitive registered form without coupons, in authorized
denominations, and in an aggregate principal amount equal to the principal
amount of the Global Securities of such series in exchange for such Global
Securities. In addition, the Company may at any time determine that the
Securities of any series shall no longer be represented by Global Securities and
that the provisions of this Section 312 shall no longer apply to the Securities
of such series. In such event the Company will execute, and, subject to Section
305, the Trustee, upon receipt of an Officers' Certificate evidencing such
determination by the Company, will authenticate and deliver Securities of such
series in definitive registered form without coupons, in authorized
denominations, and in an aggregate principal amount equal to the principal
amount of the Global Securities of such series in exchange for such Global
Securities. Upon the exchange of the Global Securities for such Securities in
definitive registered form without coupons, in authorized denominations, the
Global Securities shall be canceled by the Trustee. Such Securities in
definitive registered form issued in exchange for the Global Securities pursuant
to this Section 312, shall be registered in such names and in such authorized
denominations as the Depositary, pursuant to the instructions from its direct or
indirect participants or otherwise, shall instruct the Trustee. The Trustee
shall deliver Securities to the Depositary for delivery to the persons in whose
names such Securities are so registered.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of
further effect (except as to any surviving rights of registration of transfer or
exchange of Securities herein expressly provided for), and the Trustee shall
execute proper instruments acknowledging satisfaction and discharge of this
Indenture, when
(1) either (A) all Securities theretofore authenticated and
delivered (other than (i) Securities which have been destroyed, lost or
stolen and which have been replaced or paid as provided in Section 306
and (ii) Securities for whose payment money has theretofore been
deposited in trust or segregated and held in trust by the Company and
thereafter repaid to the Company or discharged from such trust, as
provided in Section 1003) have been delivered to the Trustee for
cancellation; or
(B) all such Securities not theretofore delivered to the
Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated
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Maturity within one year, or
(iii) are to be called for redemption within one year
under arrangements for the giving of notice of redemption by
the Trustee in the name, and at the expense, of the Company,
or
(iv) are deemed paid and discharged pursuant to
Section 403, as applicable.
and the Company, in the case of (i) , (ii) , (iii) or (iv) above, has
deposited or caused to be deposited with the Trustee as trust funds in
trust for the purpose an amount of (a) money in the currency or units
of currency in which such Securities are payable, or (b) U.S.
Government Obligations (denominated in the same currency or units of
currency in which such Securities are payable) which through the
payment of interest and principal in respect thereof in accordance with
their terms will provide not later than one day before the Stated
Maturity or Redemption Date, as the case may be, money in an amount, or
(c) a combination of money or U.S. Government obligations as provided
in (d) above, in each case, sufficient to pay and discharge the entire
indebtedness on such Securities not theretofore delivered to the
Trustee for cancellation, for principal (and premium, if any) and
interest, if any, to the date of such deposit (in the case of
Securities which have become due and payable) or to the Stated Maturity
or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other
sums payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Company to the Trustee under Section 607, the
obligations of the Trustee to any Authenticating Agent under Section 614 and, if
money shall have been deposited with the Trustee pursuant to subclause (B) of
clause (1) of this Section 401 or if money or U.S. Government Obligations shall
have been deposited with or received by the Trustee pursuant to Section 403, the
obligations of the Trustee under Section 402 and the last paragraph of Section
1003 shall survive.
SECTION 402. Application of Trust Money.
(a) Subject to the provisions of the last paragraph of Section
1003, all money or U.S. Government Obligations deposited with the Trustee
pursuant to Sections 401, 403 or 1007 and all money received by the Trustee in
respect of U.S. Government Obligations deposited with the Trustee pursuant to
Sections 401, 403 or 1007, shall be held
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in trust and applied by it, in accordance with the provisions of the Securities
and this Indenture, to the payment, to the persons entitled thereto, of the
principal of (and premium, if any) and interest, if any, on the Securities for
whose payment such money has been deposited with or received by the Trustee or
to make mandatory sinking fund payments or analogous payments as provided by
Sections 401, 403 or 1007.
(b) The Company shall pay and shall indemnify the Trustee
against any tax, fee or other charge imposed on or assessed against U.S.
Government Obligations deposited pursuant to Sections 401, 403 or 1007 or the
interest and principal received in respect of such obligations other than any
payable by or on behalf of Holders.
(c) The Trustee shall deliver or pay to the Company from time
to time upon Company Request any U.S. Government Obligations or money held by it
as provided in Sections 401, 403 or 1010 which, in the opinion of a nationally
recognized firm of independent certified public accountants expressed in a
written certification thereof delivered to the Trustee, are then in excess of
the amount thereof which then would have been required to be deposited for the
purpose for which such U.S. Government Obligations or money was deposited or
received. This provision shall not authorize the sale by the Trustee of any U.S.
Government Obligations held under this Indenture.
SECTION 403 Satisfaction, Discharge and Defeasance of Securities of any Series.
The Company shall be deemed to have paid and Discharged the
entire indebtedness on all the Outstanding Securities of any series on the 91st
day after the date of the deposit referred to in subparagraph (e) hereof, and
the provisions of this Indenture, as it relates to such Outstanding Securities
of such series, shall no longer be in effect (and the Trustee shall at Company
Request execute proper instruments acknowledging the same), except as to:
(a) the rights of Holders of Securities of such series to
receive, from the trust funds described in subparagraph (e) hereof, (i)
payment of the principal of (and premium, if any) and each installment
of principal of (and premium, if any) or interest, if any, on the
Outstanding Securities of such series on the Stated Maturity of such
principal or installment of principal or interest to and including the
Redemption Date irrevocably designated by the Company pursuant to
subparagraph (i) hereof and (ii) the benefit of any mandatory sinking
fund payments applicable to the Securities of such series on the day of
which such payments are due and payable in accordance with the terms of
this Indenture and the Securities of such series;
(b) the Company's obligations with respect to such Securities
of such series under Sections 305, 306, 1002 and 1003 and, if the
Company shall have irrevocably designated a Redemption Date pursuant to
subparagraph (i) hereof, Sections 1101, 1104 and 1106 as they apply to
such Redemption Date;
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(c) the Company's obligations with respect to the Trustee
under Section 607; and
(d) the rights, powers, trust and immunities of the Trustee
hereunder and the duties of the Trustee under Section 402 and, if the
Company shall have irrevocably designated a Redemption Date pursuant to
subparagraph (i) hereof, Article Eleven and the duty of the Trustee to
authenticate Securities of such series on registration of transfer or
exchange;
provided that, the following conditions shall have been satisfied:
(e) the Company has deposited or caused to be irrevocably
deposited (except as provided in Section 402(c) and the last paragraph
of Section 1003) with the Trustee as trust funds in trust, specifically
pledged as security for, and dedicated solely to, the benefit of the
Holders of the Securities of such series, (i) money, in the currency or
units of currency in which such Securities are payable, in an amount,
or (ii) U.S. Government Obligations (denominated in the same currency
or units of currency in which such Securities are payable) which
through the payment, of interest and principal in respect thereof in
accordance with their terms will provide not later than one day before
the due date of any payment referred to in clause (x) or (y) of this
subparagraph (e) money in an amount or (iii) a combination of money and
U.S. Government Obligations, in each case sufficient, in the opinion of
a nationally recognized firm of independent certified public
accountants expressed in a written certification thereof delivered to
the Trustee, to pay and discharge, and which the Trustee shall be
instructed to apply to pay and discharge, (x) the principal of (and
premium, if any) and each installment of principal (and premium, if
any) and interest, if any, on the Outstanding Securities of such series
on the Stated Maturity of such Principal or installment of principal or
interest or to and including the Redemption Date irrevocably designated
by the Company pursuant to subparagraph (i) hereof and (y) any
mandatory sinking fund payments applicable to the Securities of such
series on the day on which such payments are due and payable in
accordance with the terms of this Indenture and of the Securities of
such series;
(f) the Company has delivered to the Trustee an Opinion
of Counsel to the effect that such provision would not cause any
Outstanding Securities of such series then listed on any U.S. national
securities exchange to be delisted as a result thereof;
(g) no Event of Default or event which with notice or lapse of
time would become an Event of Default (including by reason of such
deposit) with respect to the Securities of such series shall have
occurred and be continuing on the date of such deposit or during the
period ending on the 91st day after such date;
(h) the Company has delivered to the Trustee an Opinion
of Counsel to the effect that Holders of the Securities will not
recognize income, gain or loss for federal income
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tax purposes as a result of the deposit, defeasance and discharge;
(i) if the Company has deposited or caused to be deposited
money or U.S. Government Obligations to pay, or discharge the principal
of (and premium, if any) and interest, if any, on the Outstanding
Securities of a series to and including a Redemption Date on which all
of the outstanding Securities of such series are to be redeemed, such
Redemption Date shall be irrevocably designated by a Board Resolution
delivered to the Trustee on or prior to the date of deposit of such
money or U.S. Government Obligations, and such Board Resolution shall
be accompanied by an irrevocable Company Request that the Trustee give
notice of such redemption in the name and at the expense of the Company
not less than 15 nor more than 30 days prior to such Redemption Date in
accordance with Section 1104; and
(j) the Company has delivered to the Trustee an Officers'
Certificate stating that all conditions precedent herein provided for
relating to the satisfaction and discharge of the Securities have been
complied with.
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default.
"Event of Default", wherever used herein with respect to
Securities of any series, means any one of the following events:
(1) default in the payment of any interest upon any Security
of that series when it becomes due and payable and continuance of such
default for a period of 30 days; or
(2) default in the payment of the principal of (or
premium, if any, on) any Security of that series at its Maturity; or
(3) default in the payment of any sinking fund installment,
when and as due by the terms of a Security of that series and
continuance of such default for a period of 15 days; or
(4) default in the performance, or breach, of any covenant or
obligation of the Company in this Indenture (other than a covenant a
default in whose performance or whose breach is elsewhere in this
Section 501 specifically dealt with or which has expressly been
included in this Indenture solely for the benefit of a series of
Securities other than that series) and continuance of such default or
breach for a period of 60 days after there has been given, by
registered or certified mail, to the Company by
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the Trustee or to the Company and the Trustee by the Holders of at
least 25% in aggregate principal amount of the Outstanding Securities
of that series a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a "Notice
of Default" hereunder; or
(5) if this event shall be made to constitute an Event of
Default with respect to the Securities of a particular series, a
default in the payment of the principal of under any bond, debenture,
note or other evidence of indebtedness for money borrowed by the
Company or any Significant Subsidiary, or in the payment of principal
under any lien, mortgage, indenture or instrument under which there may
be issued or by which there may be secured or evidenced any
indebtedness for money borrowed by the Company (including this
Indenture) or any Significant Subsidiary, in an aggregate principal
amount exceeding $30,000,000 (or its equivalent in any other currency
or currencies) when such indebtedness becomes due and payable (whether
at maturity, upon redemption or acceleration or otherwise) if such
default shall continue for more than 30 Business Days and the time for
payment of such amount has not been expressly extended; provided,
however, that, subject to the provisions of Sections 601 and 602, the
Trustee shall not be deemed to have knowledge of such default unless
either (A) a Responsible Officer of the Trustee shall have actual
knowledge of such default or (B) the Trustee shall have received
written notice thereof from the Company, from any Holder, from the
holder of any such indebtedness or from the trustee under any such
lien, mortgage, indenture or other instrument; and provided, further,
that if such default under such indenture or instrument shall be
remedied or cured by the Company or such Significant Subsidiary or
waived by the holders of such indebtedness, then the Event of Default
hereunder by reason thereof shall be deemed likewise to have been
remedied, cured or waived without further action upon the part of the
Trustee or any of the Holders; or
(6) The failure of the Company generally to pay its debts as
they become due, or the admission in writing of its inability to pay
its debts generally, or the making of a general assignment for the
benefit of its creditors, or the institution of any proceeding by or
against the Company (other than any such proceeding brought against the
Company that is not dismissed within 90 days from the commencement
thereof) seeking to adjudicate it a bankrupt or insolvent, or seeking
[liquidation, winding up,] [reorganization,] arrangement, adjustment,
protection, relief or composition of it or its debt under any law
relating to bankruptcy, insolvency, [reorganization,] moratorium or
relief of debtors, or seeking the entry of an order for relief or
appointment of an administrator, receiver, trustee, intervenor or other
similar official for it or for any substantial part of its Property, or
the taking of any action by the Company to authorize any of the actions
set forth in this subparagraph (6); or
(7) Any other Event of Default provided in the supplemental
indenture or provided in or pursuant to the Board Resolution under
which such series of Securities is issued or in the form of Security
for such series.
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None of the events described in (4), (5) or (6) above shall
constitute an Event of Default unless such event has a material adverse effect
on the Company's ability to pay the principal of or interest on the Securities
when due.
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default with respect to Securities of any
series at the time Outstanding occurs and is continuing, then in every such case
the Trustee or the Holders of not less than 25% in aggregate principal amount of
the Outstanding Securities of that series may declare the principal amount (or,
if any of the Securities of that series are Original Issue Discount Securities,
such portion of the principal amount of such Securities as may be specified in
the terms thereof) of all of the Securities of that series to be due and payable
immediately, by a notice in writing to the Company (and to the Trustee if given
by Holders), and upon any such declaration such principal amount (or specified
amount) shall become immediately due and payable.
At any time after such declaration of acceleration with respect to
Securities of any series has been made, but before a judgment or decree for
payment of money has been obtained by the Trustee as hereinafter in this Article
provided, if all Events of Default with resect to Securities of that series have
been cured or waived (other than the non-payment of principal of the Securities
which has become due solely by reason of such declaration of acceleration) then
such declaration of acceleration and its consequences shall be automatically
annulled and rescinded.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
For all purposes under this Indenture, if a portion of the
principal of any Original Issue Discount Securities shall have been accelerated
and declared due and payable pursuant to the provisions hereof, then, from and
after such declaration, unless such declaration has been rescinded and annulled,
the principal amount of such Original Issue Discount Securities shall be deemed,
for all purposes hereunder, to be such portion of the principal thereof as shall
be due and payable as a result of such acceleration, and payment of such portion
of the principal thereof as shall be due and payable as a result of such
acceleration, together with interest, if any, thereon and all other amounts
owing thereunder, shall constitute payment in full of such Original Issue
Discount Securities.
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee.
The Company covenants that if
(1) default is made in the payment of any interest on any
Security of a series when such interest becomes due and payable and
such default continues for a period of 30 days, or
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(2) default is made in the payment of the principal of (or
premium, if any, on) any Security of a series at the Maturity thereof,
the Company will, upon written demand of the Trustee, pay to it, for the benefit
of the Holders of such Securities of such series, the whole amount then due and
payable on such Securities of such series for principal (and premium, if any)
and interest, if any, and, to the extent that payment of such interest shall be
legally enforceable, interest on any overdue principal (and premium, if any) and
an any overdue interest, at the rate or rates prescribed therefor in such
Securities of such series, and, in addition thereto, such further amount as
shall be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
If the Company fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express trust, may
institute a judicial proceeding for the collection of the sums so due and
unpaid, may prosecute such proceeding to judgment or final decree and may
enforce the same against the Company or any other obligor upon such Securities
and collect the moneys adjudged or decreed to be payable in the manner provided
by law out of the property of the Company or any other obligor upon such
Securities, wherever situated.
If any Event of Default with respect to Securities of any
series occurs and is continuing, the Trustee may in its discretion proceed to
protect and enforce its rights and the rights of the Holders of Securities of
such series by such appropriate judicial proceedings as the Trustee shall deem
most effectual to protect and enforce any such rights.
SECTION 504. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency,
[liquidation,] bankruptcy, [reorganization,] arrangement, adjustment,
composition or other judicial proceeding relative to the Company or any other
obligor upon the Securities or the property of the company or of such other
obligor or their creditors, the Trustee (irrespective of whether the principal
of the Securities shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall have made
any demand on the Company for the payment of overdue principal or interest)
shall be entitled and empowered, by intervention in such proceeding or
otherwise,
(i) to file and prove a claim for the whole amount of
principal (and premium, if any) and interest owing and unpaid in
respect of the Securities and to file such other papers or documents as
may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and
of the Holders allowed in such judicial proceeding, and
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(ii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 607.
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.
SECTION 505. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust, and any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
SECTION 506. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article
shall be applied in the following order with respect to the Securities of any
series, at the date or dates fixed by the Trustee and, in case of the
distribution of such money on account of principal (or premium, if any) or
interest, upon presentation of the Securities and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under
Section 607;
SECOND: In case the principal and premium, if any, of the
Securities of such series in respect of which moneys have been
collected shall not have become and be then due and payable, to the
payment of interest, if any, on the Securities of such a series in
default in the order of the maturity of the installments of such
interest, with interest (to the extent that such interest has been
collected by the Trustee and to the extent permitted by law) upon the
overdue installments of interest at the rate prescribed therefor in
such Securities, such payments to be made ratably to the Persons
entitled thereto, without discrimination or preference;
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THIRD: In case the principal or premium, if any, of the
Securities of such series in respect of which moneys have been
collected shall have become and shall be then due and payable, to the
payment of the whole amount then owing and unpaid upon all the
Securities of such series for principal and premium, if any, and
interest, if any, with interest upon the overdue principal and premium,
if any, and (to the extent that such interest has been collected by the
Trustee and to the extent permitted by law) upon overdue installments
of interest at the rate prescribed therefor in the Securities of such
series; and in case such moneys shall be insufficient to pay in full
the whole amount so due and unpaid upon the Securities of such series,
then to the payment of such principal and any premium and interest,
without preference or priority of principal over interest, or of
interest over principal or premium, or of any installment of interest
over any other installment of interest, or of any Security of such
series over any other Security of such series, ratably to the aggregate
of such principal and any premium and accrued and unpaid interest; and
FOURTH: To the payment of the remainder, if any, to the
Company or any other Person lawfully entitled thereto.
SECTION 507. Limitation on Suits.
No Holder of any Security of any series shall have any right
to institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless
(1) such Holder has previously given written notice to
the Trustee of a continuing Event of Default with respect to the
Securities of that series;
(2) the Holders of not less than 25% in principal amount of
the Outstanding Securities of that series shall have made written
request to the Trustee to institute proceedings in respect of such
Event of Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee
indemnity satisfactory to the Trustee against the costs, expenses and
liabilities to be incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of a
majority in principal amount of the outstanding Securities of that
series;
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it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
ouch Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all such
Holders.
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and
Interest.
Subject to Section 507, the Holder of any Security shall have
the right, which is absolute and unconditional, to receive payment of the
principal of (and premium, if any) and (subject to Section 307) interest, if
any, on such Security on the Stated Maturity or Maturities expressed in such
Security (or, in the case of redemption, on the Redemption Date) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.
SECTION 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder, and,
thereafter all rights and remedies of the Company, the Trustee and the Holders
shall continue as though no such proceeding had been instituted.
SECTION 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities in the last
paragraph of Section 306, no right or remedy herein conferred upon or reserved
to the Trustee or to the Holders is intended to be exclusive of any other right
or remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
SECTION 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any
Securities to exercise any right or remedy accruing upon any Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein. Every right and remedy given by this
Article or by law to the Trustee or to the Holders may
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be exercised from time to time, and as often as may be deemed expedient by the
Trustee or by the Holders, as the case may be.
SECTION 512. Control by Holders.
The Holders of a majority in principal amount of the Outstanding
Securities of any series shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, with respect to the
Securities of such series, provided that
(1) such direction shall not be in conflict with any rule
of law or with this Indenture,
(2) the Trustee may take any other action deemed proper
by the Trustee which is not inconsistent with such direction, and
(3) the Trustee shall not determine that the action so
directed would be prejudicial to Holders not taking part in such
action.
SECTION 513. Waiver of Past Defaults.
The Holders of not less than a majority in aggregate principal
amount of the Outstanding Securities of any series may on behalf of the Holders
of all the Securities of such series waive any past default hereunder with
respect to such series and its consequences, except a default
(1) in the payment of the principal of (or premium, if
any) or interest, if any, on any Security of such series, or
(2) in respect of a covenant or provision hereof which under
Article Nine cannot be modified or amended without the consent of the
Holder of each Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
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ARTICLE SIX
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities.
(a) Except during the continuance of a default with
respect to the Securities of any series,
(1) the Trustee undertakes to perform, such duties and only
such duties as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, and to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture; but in the case of any such certificates or opinions
which by any provision hereof are specifically required to be furnished
to the Trustee, the Trustee shall examine the same to determine whether
or not they conform to the requirements of this Indenture.
(b) In case a default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by
this Indenture, and use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
(c) No provision of this Indenture shall be construed to
relieve the Trustee from liability for its own negligent action, its
own negligent failure to act, or its own wilful misconduct, except that
(1) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless the Trustee was
negligent in ascertaining the pertinent facts; and
(2) no provision of this Indenture shall require the Trustee
to spend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if repayment of such funds or
adequate indemnity against such risk or liability satisfactory to the
Trustee has not been assured to it.
(d) Whether or not therein expressly so provided, every
provision of this Indenture relating to the conduct or affecting the
liability of or affording protection to the Trustee shall be subject to
the provisions of this Section 601.
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SECTION 602. Notice of Defaults.
Within 90 days after the occurrence of any default hereunder
with respect to the Securities of any series, the trustee shall transmit by mail
to all Holders of Securities of such series, as their names and addresses appear
in the Security Register, notice of such default hereunder known to the Trustee,
unless such default shall have been cured or waived; provided, however, that,
except in the case of a default in the payment of the principal of (or premium,
if any) or interest, if any, on any Security of such series or in the payment of
any sinking fund installment with respect to Securities of such series, the
Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee or a trust committee of directors or
Responsible Officers of the Trustee in good faith determine that the withholding
of such notice is in the interest of the Holders of Securities of such series;
and provided, further, that in the case of any default of the character
specified in [Section 501(4)] with respect to Securities of such series, no such
notice to Holders shall be given until at least 30 days after the occurrence
thereof. For the purpose of this Section 602, the term "default" means any event
which is, or after notice or lapse of time or both would become, an Event of
Default with respect to Securities of such series.
SECTION 603. Certain Rights of Trustee.
Subject to the provisions of Section 601:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(b) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order or as
otherwise expressly provided herein and any resolution of the Board of Directors
may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith on
its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel, and the written
advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon;
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(e) the Trustee shall be under no obligation to expend or risk
its own funds or to exercise, at the request or direction of any of the Holders,
any of the rights or powers vested in it by this Indenture pursuant to this
Indenture, unless such Holders shall have offered to the Trustee security or
indemnity satisfactory to the Trustee against the costs, expenses and
liabilities which might be incurred by it in compliance with such request or
direction;
(f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document, but
the Trustee, in its discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit, and, if the Trustee shall
determine to make such further inquiry or investigation, it shall be entitled
upon reasonable prior request and during normal business hours to examine the
books, records and premises of the Company, personally or by agent or attorney;
and
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys, but the Trustee shall be responsible for any misconduct or
negligence on the part of any agent or attorney appointed by it hereunder.
SECTION 604. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except
the Trustee's certificates of authentication, shall be taken as the statements
of the Company, and neither the Trustee nor any Authenticating Agent assumes any
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Indenture or of the Securities. Neither the
Trustee nor any Authenticating Agent shall be accountable for the use or
application by the Company of Securities or the proceeds thereof.
SECTION 605. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any
Security Registrar or any other agent of the Company, in its individual or any
other capacity, may become the owner or pledgee of Securities and, subject to
Sections 608 and 613, may otherwise deal with the Company with the same rights
it would have if it were not Trustee, Authenticating Agent, Paying Agent,
Security Registrar or such other agent.
SECTION 606. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law. The Trustee
shall be under no liability for interest on any money received by it hereunder
except as otherwise agreed with the Company.
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SECTION 607. Compensation and Reimbursement.
The Company agrees
(1) to pay to the Trustee from time to time such compensation
as is agreed upon in writing;
(2) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the
reasonable compensation and the expenses and disbursements of its
agents and counsel, which compensation, expenses and disbursements
shall be set forth in sufficient written detail to the satisfaction of
the Company), except any such expense, disbursement or advance as may
be attributable to its or their negligence or bad faith; and
(3) to indemnify the Trustee for, and to hold it harmless
against, any loss, liability or expense incurred without negligence,
bad faith, or willful misconduct on its part, arising out of or in
connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses of defending itself against
any claim or liability in connection with the exercise or performance
of any of its powers or duties hereunder.
SECTION 608. Disqualification; Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest
within the meaning of the Trust Indenture Act, the Trustee shall either
eliminate such interest or resign, to the extent and in the manner provided by,
and subject to the provisions of, the Trust Indenture Act and this Indenture.
SECTION 609. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be
eligible to act as trustee under the Trust Indenture Act and which shall have a
combined capital and surplus of at least $50,000,000. If the Trustee does not
have an office in The City of New York, the Trustee may appoint an agent in The
City of New York reasonably acceptable to the Company to conduct any activities
which the Trustee may be required under this Indenture to conduct in The City of
New York. If the Trustee does not have an of office in The City of New York or
has not appointed an agent in The City of New York, the Trustee shall be a
participant in the Depository Trust Company and FAST distribution systems. If
such corporation publishes reports of condition at least annually, pursuant to
law or to the requirements of a United States federal, state, territorial or
District of Columbia supervising or examining authority, then for the purposes
of this Section 609, the combined capital and surplus of such corporation shall
be deemed to be its combined capital and surplus as set
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forth in its most recent report of condition so published. If at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section 609, the Trustee shall resign immediately in the manner and with the
effect hereinafter specified in this Article.
SECTION 610. Resignation and Removal; Appointment of Successor Trustee.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor Trustee in
accordance with the applicable requirements of Section 611.
(b) The Trustee may resign at any time with respect to the
Securities of one or more series by giving written notice thereof to the
Company. If the instrument of acceptance by a successor Trustee required by
Section 611 shall not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee with
respect to the Securities of such series.
(c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in principal amount
of the Outstanding Securities of such series, delivered to the Trustee and to
the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with section 310(b) of
the Trust Indenture Act pursuant to Section 608 with respect to any
series of Securities after written request therefor by the Company or
by any Holder who has been a bona fide Holder of a Security for at
least six months, or
(2) the Trustee shall cease to be eligible under Section 609
and shall fail to resign after written request therefor by the Company
or by any such Holder, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee with respect to all Securities, or (ii) subject to Section 514, any
Holder who has been a bona fide Holder of a Security for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the removal of the Trustee with respect to all
Securities and the appointment of a successor Trustee or Trustees.
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(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Trustee for
any cause, with respect to the Securities of one or more series, the Company, by
a Board Resolution, shall promptly appoint a successor Trustee or Trustees with
respect to the Securities of that or those series (it being understood that any
such successor Trustee may be appointed with respect to the Securities of one or
more or all of such series and that at any time there shall be only one Trustee
with respect to the Securities of any particular series) and shall comply with
the applicable requirements of Section 611. If no successor Trustee with respect
to the Securities of any series shall have been so appointed by the Company and
accepted appointment in the manner required by Section 611, any Holder who has
been a bona fide Holder of a Security of such series for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the appointment of a successor Trustee with
respect to the Securities of such series.
(f) The Company shall give notice of each resignation and each
removal of the Trustee with respect to the Securities of any series and each
appointment of a successor Trustee with respect to the Securities of any series
by mailing written notice of such event by first-class mail, postage prepaid, to
all Holders of Securities of such series as their names and addresses appear in
the Security Register. Each notice shall include the name of the successor
Trustee with respect to the Securities of such series and the address of its
Corporate Trust Office.
SECTION 611. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor
Trustee with respect to all Securities, every such successor Trustee so
appointed shall execute, acknowledge and deliver to the Company and to the
retiring Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Trustee shall become effective and such
successor Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the retiring Trustee;
but, on the request of the Company or the successor Trustee, such retiring
Trustee shall, upon payment of its charges, execute and deliver an instrument
transferring to such successor Trustee all the rights, powers and trusts of the
retiring Trustee and shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor
Trustee with respect to the Securities of one or more (but not all) series, the
Company, the retiring Trustee and each successor Trustee with respect to the
Securities of one or more series shall execute and deliver an indenture
supplemental hereto wherein each successor Trustee shall accept such appointment
and which (1) shall contain such provisions as shall be necessary or desirable
to transfer and confirm to, and to vest in, each successor Trustee all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates, (2) if the retiring Trustee is not retiring with respect to all
Securities, shall contain such provisions as shall be deemed
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necessary or desirable to confirm that all the rights, powers, trusts and duties
of the retiring Trustee with respect to the Securities of that or those series
as to which the retiring Trustee is not retiring shall continue to be vested in
the retiring Trustee, and (3) shall add to or change any of the provisions of
this Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, it being
understood that nothing herein or in such supplemental indenture shall
constitute such Trustees co-trustees of the same trust and that each such
Trustee shall be trustee of a trust or trusts hereunder separate and apart from
any trust or trusts hereunder administered by any other such Trustee; and upon
the execution and delivery of such supplemental indenture the resignation or
removal of the retiring Trustee shall become effective to the extent provided
therein and each such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee with respect to the Securities of that or those series
to which the appointment of such successor Trustee relates; but on request of
the company or any successor trustee, such retiring Trustee shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder with respect to the Securities of that or those
series to which the appointment of such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company
shall execute any and all instruments for more fully and certainly vesting in
and confirming to such successor Trustee all such rights, powers and trusts
referred to in paragraph (a) or (b) of this Section 611, as the case may be.
(d) No successor Trustee shall accept its appointment unless
at the time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.
SECTION 612. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to all or substantially all the corporate
trust business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities.
SECTION 613. Preferential Collecting of Claims Against Company.
(a) Subject to Subsection (b) of this Section 613, if the
Trustee shall be or shall become a creditor, directly or indirectly, secured
or unsecured, of the Company within
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three months prior to a default, as defined in Subsection (c) of this Section
613, or subsequent to such a default, then, unless and until such default shall
be cured, the Trustee shall set apart and hold in a special account for the
benefit of the Trustee individually, the Holders of the Securities and the
holders of other indenture securities, as defined in Subsection (c) of this
Section 613:
(1) an amount equal to any and all reductions in the amount
due and owing upon any claim as such creditor in respect of principal
or interest effected after the beginning of such three months' period
and valid as against the Company and its other creditors, except any
such reduction resulting from the receipt or disposition of any
property described in paragraph (2) of this Subsection, or from the
exercise of any right of set-off which the Trustee could have exercised
if a petition in bankruptcy had been applied by or against the Company
upon the date of such default; and
(2) all property received by the Trustee in respect of any
claims as such creditor, either as security therefor, or in
satisfaction or composition thereof, or otherwise, after the beginning
of such three months' period, or an amount equal to the proceeds of any
such property, if disposed of, subject, however, to the rights, if any,
of the Company and its other creditors in such property or such
proceeds.
Nothing herein contained, however, shall affect the right of
the Trustee:
(A) to retain for its own account (i) payments made on account
of any such claim by any Person (other than the Company) who is liable
thereon, and (ii) the proceeds of the bona fide sale of any such claim
by the Trustee to a third Person, and (iii) distributions made in cash,
securities or other property in respect of claims filed against the
Company in bankruptcy or receivership or in proceedings for
reorganization pursuant to the Federal Bankruptcy Act or applicable
State law;
(B) to realize, for its own account, upon any property held by
it as security for any such claim, if such property was so held prior
to the beginning of such three months' period;
(C) to realize, for its own account, but only to extent of the
claim hereinafter mentioned, upon any property held by it as security
for any such claim, if such claim was created after the beginning of
such three months' period and such property was received as security
therefor simultaneously with the creation thereof, and if the Trustee
shall sustain the burden of proving that at the time such property was
so received the Trustee had no reasonable cause to believe that a
default, as defined in Subsection (c) of this Section 613, would occur
within three months; or
(D) to receive payment on any claim referred to in paragraph
(B) or (C) , against the release of any property held as security for
such claim as provided in paragraph (B) or (C) , as the case may be, to
the extent of the fair value of such
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property.
For the purposes of paragraphs (B), (C) and (D), property
substituted after the beginning of such three months' period for property held
as security at the time of such substitution shall, to the extent of the fair
value of the property released, have the same status as the property released,
and, to the extent that any claim referred to in any of such paragraphs is
created in renewal of or in substitution for or for the purpose of repaying or
refunding any pre-existing claim of the Trustee as such creditor, such claim
shall have the same status as such pre-existing claim.
If the Trustee shall be required to account for the funds and
property held in such special account and the proceeds thereof shall be
apportioned among the Trustee, the Holders and the holders of other indenture
securities in such manner that the Trustee, the Holders and the holders of other
indenture securities realize, as a result of payments from such special account
and payments of dividends on claims filed against the Company in bankruptcy or
receivership or in proceedings for reorganization pursuant to the Federal
Bankruptcy Act or applicable State law, the same percentage of their respective
claims, figured before crediting to the claim of the Trustee anything on account
of the receipt by it from the Company of the funds and property in such special
account and before crediting to the respective claims of the Trustee and the
Holders and the holders of other indenture securities dividends on claims filed
against the Company in bankruptcy or receivership or in proceedings for
reorganization pursuant to the Federal Bankruptcy Act or applicable State law,
but after crediting thereon receipts on account of the indebtedness represented
by their respective claims from all sources other than from such dividends and
from the funds and property so held in such special account. As used in this
paragraph, with respect to any claim, the term "dividends" shall include any
distribution with respect to such claim, in bankruptcy or receivership or
proceedings for reorganization pursuant to the Federal Bankruptcy Act or
applicable State law, whether such distribution is made in cash, securities or
other property, but shall not include any such distribution with respect to the
secured portion, if any, of such claim. The court in which such bankruptcy,
receivership or proceedings for reorganization is pending shall have
jurisdiction (i) to apportion among the Trustee, the Holders and the holders of
other indenture securities, in accordance with the provisions of this paragraph,
the funds and property held in such special account and proceeds thereof, or
(ii) in lieu of such apportionment, in whole or in part, to give to the
provisions of this paragraph due consideration in determining the fairness of
the distributions to be made to the Trustee and the Holders and the holders of
other indenture securities with respect to their respective claims, in which
event it shall not be necessary to liquidate or to appraise the value of any
securities or other property held in such special account or as security for any
such claim, or to make a specific allocation of such distributions as between
the secured and unsecured portions of such claims, or otherwise to apply the
provisions of this paragraph as a mathematical formula.
Any Trustee which has resigned or been removed after the
beginning of such three months' period shall be subject to the provisions of
this Subsection as though such
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resignation or removal had not occurred. If any Trustee has resigned or been
removed prior to the beginning of such three months' period, it shall be subject
to the provisions of this Subsection if and only if the following conditions
exist:
(i) the receipt of property or reduction of claim, which would
have given rise to the obligation to account, if such Trustee had
continued as Trustee, occurred after the beginning of such three
months' period; and
(ii) such receipt of property or reduction of claim occurred
within three months after such resignation or removal.
(b) There shall be excluded from the operation of Subsection
(a) of this Section 613 a creditor relationship arising from:
(1) the ownership or acquisition of securities issued under
any indenture, or any security or securities having a maturity of one
year or more at the time of acquisition by the Trustee;
(2) advances authorized by a receivership or bankruptcy court
of competent jurisdiction or by this Indenture, for the purpose of
preserving any property which shall at any time be subject to the lien
of this Indenture or of discharging tax liens or other prior liens or
encumbrances thereon, if notice of such advances and of the
circumstances surrounding the making thereof is given to the Holders at
the time and in the manner provided in this Indenture;
(3) disbursements made in the ordinary course of business in
the capacity of trustee under an indenture, transfer agent, registrar,
custodian, paying agent, fiscal agent or depository, or other similar
capacity;
(4) an indebtedness created as a result of services rendered
or premises rented; or an indebtedness created as a result of goods or
securities sold in a cash transaction, as defined in Subsection (c) of
this Section 613;
(5) the ownership of stock or of other securities of a
corporation organized under the provisions of Section 25 (a) of the
Federal Reserve Act, as amended, which is directly or indirectly a
creditor of the Company; and
(6) the acquisition, ownership, acceptance or negotiation of
any drafts, bills of exchange, acceptances or obligations which fall
within the classification of self-liquidating paper, as defined in
Subsection (c) of this Section 613.
(c) For the purposes of this Section 613 only:
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(1) the term "default" means any failure to make
payment in full of the principal of or interest on any of the
Securities or upon the other indenture securities when and as
such principal or interest becomes due and payable;
(2) the term "other indenture securities" means
securities upon which the Company is an obligor (as defined in
the Trust Indenture Act) outstanding under any other indenture
(i) under which the Trustee is also trustee, (ii) which
contains provisions substantially similar to the provisions of
this Section 613, and (iii) under which a default exists at
the time of the apportionment of the funds and property held
in such special account;
(3) the term "cash transaction" means any transaction
in which full payment for goods or securities sold is made
within seven days after delivery of the goods or securities in
currency or in checks or other orders drawn upon banks or
bankers and payable upon demand;
(4) the term "self-liquidating paper" means any
draft, bill of exchange, acceptance or obligation which is
made, drawn, negotiated or incurred by the Company for the
purpose of financing the purchase, processing, manufacturing,
shipment, storage or sale of goods, wares or merchandise and
which is secured by documents evidencing title to, possession
of, or a lien upon, the goods, wares or merchandise or the
receivables or proceeds arising from the sale of the goods,
wares or merchandise previously constituting the security,
provided the security is received by the Trustee
simultaneously with the creation of the creditor relationship
with the Company arising from the making, drawing, negotiating
or incurring of the draft, bill of exchange, acceptance or
obligation;
(5) the term "Company" means any obligor upon the
Securities; and
(6) the term "Federal Bankruptcy Act" means the
Bankruptcy Code or Title 11 of the United States
Code.
SECTION 614. Authenticating Agents.
From time to time the Trustee, with the prior written approval
of the Company, may appoint one or more Authenticating Agents with respect to
one or more series of Securities with power to act on the Trustee's behalf and
subject to its direction in the authentication and delivery of Securities of
such series or in connection with transfers and exchanges under Sections 304,
305, 306, and 1104 as fully to all intents and purposes as though the
Authenticating Agent had been expressly authorized by those Sections of this
Indenture to authenticate and deliver Securities of such series. For all
purposes of this Indenture, the authentication and delivery of Securities by an
Authenticating Agent pursuant to this Section 614 shall be deemed to be
authentication and delivery of such Securities "by
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the Trustee". Each such Authenticating Agent shall be acceptable to the Company
and shall at all times be a corporation organized and doing business under the
laws of the United States, any State thereof or the District of Columbia,
authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus of at least $50,000,000 and subject to supervision or
examination by Federal, State or District of Columbia authority. If such
corporation publishes reports of condition at leant annually pursuant to law or
the requirements of such authority, then for the purposes of this Section 614
the combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time an Authenticating Agent shall cease to be eligible
in accordance with the provisions of this Section 614, such Authenticating Agent
shall resign immediately in the manner and with the effect specified in this
Section 614.
Any corporation into which any Authenticating Agent may be
merged or with which it may be consolidated, or any corporation resulting from,
any merger or consolidation or to which any Authenticating Agent shall be a
party, or any corporation succeeding to the corporate trust business of any
Authenticating Agent, shall be the successor of the Authenticating Agent
hereunder, if such successor corporation is otherwise eligible under this
Section 614, without the execution or filing of any paper or any further act on
the part of the parties hereto or the Authenticating Agent or such successor
corporation.
An Authenticating Agent may resign at any time by giving
written notice of resignation to the Trustees and to the Company. The Trustee
may at any time terminate the agency of any Authenticating Agent by giving
written notice of termination to such Authenticating Agent and to the Company.
Upon receiving such a notice of resignation or upon such a termination, or in
case at any time any Authenticating Agent shall cease to be eligible under this
Section 614, the Trustee may appoint a successor Authenticating Agent with the
prior written approval of the Company and shall mail notice of such appointment
to all Holders of Securities of the series with respect to which such
Authenticating Agent will serve, as the names and addresses of such Holders
appear on the Security Register. Any successor Authenticating Agent, upon
acceptance of its appointment hereunder, shall become vested with all the
rights, powers and duties of its predecessor hereunder, with like effect as if
originally named as an Authenticating Agent. No successor Authenticating Agent
shall be appointed unless eligible under the provisions of this Section 614.
The Trustee agrees to pay to each Authenticating Agent from
time to time reasonable compensation for its services under this Section 614 as
may be agreed in a separate writing among the Company, the Trustee and such
Authenticating Agent, and the Trustee shall be entitled to be reimbursed for
such payments pursuant to Section 607.
If an appointment with respect to one or more series of
Securities is made pursuant to this Section 614, the Securities of such series
may have endorsed thereon, in addition to the Trustee's certificate of
authentication, an alternate certificate of authentication in the following
form:
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This is one of the Securities of the series designated herein
referred to in the within mentioned Indenture.
[NAME OF TRUSTEE],
As Trustee
As Authenticating Agent
Authorized Officer
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the
Trustee with respect to the Securities of each series
(a) semi-annually, not later than 15 days after each Regular
Record Date, or, in the case of any series of Securities on which
semi-annual interest is not payable, not more than 15 days after such
semi-annual dates as may be specified by the Trustee, a list, in such
form as the Trustee may reasonably require, of the names and addresses
of the Holders as of such Regular Record Date or semi-annual date, as
the case may be, and
(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request, a
list of similar form and content as of a date not more than 15 days
prior to the time such list is furnished;
provided, however, that if and so long as the Trustee is Security Registrar for
any series of Securities, no such list shall be required to be furnished with
respect to any such series.
SECTION 702. Preservation of Information; Communications to Holders.
(a) The Trustee shall preserve, in as current a form as
is reasonably practicable, the names and addresses of Holders contained in the
most recent list furnished to
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the Trustee as provided in Section 701 and the names and addresses of Holders
received by the Trustee in its capacity as Security Registrar. The Trustee may
destroy any list furnished to it as provided in Section 701 upon receipt of a
new list so furnished.
(b) If three or more Holders (herein referred to as
"applicants") apply in writing to the Trustee, and furnish to the Trustee
reasonable proof that each such applicant has owned a Security for a period of
at least six months preceding the date of such application, and such application
states that the applicants desire to communicate with other Holders with respect
to their rights under this Indenture or under the Securities and is accompanied
by a copy of the form of proxy or other communication which such applicants
propose to transmit, then the Trustee shall, within five business days after the
receipt of such application, at its election, either
(i) afford such applicants access to the information
preserved at the time by the Trustee in accordance with Section 702(a),
or
(ii) inform such applicants as to the approximate number of
Holders whose names and addresses appear in the information preserved
at the time by the Trustee in accordance with Section 702(a), and as to
the approximate cost of mailing to such Holders the form of proxy or
other communication, if any, specified in such application.
If the Trustee shall elect not to afford such applicants
access to such information, the Trustee shall, upon the written request of such
applicants, mail to each Holder whose name and address appear in the information
preserved at the time by the Trustee in accordance with Section 702(a) a copy of
the form of proxy or other communication which is specified in such request,
with reasonable promptness after a tender to the Trustee of the material to be
mailed and of payment, or provision for the payment, of the reasonable expenses
of mailing, unless within five days after such tender the Trustee shall mail to
such applicants and file with the Commission, together with a copy of the
material to be mailed, a written statement to the effect that, in the opinion of
the Trustee, such mailing would be contrary to the beat interest of the Holders
or would be in violation of applicable law. Such written statement shall specify
the basis of such opinion. If the Commission, after opportunity for a hearing
upon the objections specified in the written statement so filed, shall enter an
order refusing to sustain any of such objections or if, after the entry of an
order sustaining one or more of such objections, the Commission shall find,
after notice and opportunity for hearing, that all the objections so sustained
have been met and shall enter an order so declaring, the Trustee shall mail
copies of such material to all such Holders with reasonable promptness after the
entry of such order and the renewal of such tender; otherwise the Trustee shall
be relieved of any obligation or duty to such applicants respecting their
application.
(c) Every Holder of Securities, by receiving and holding the
same, agrees with the Company and the Trustee that neither the Company nor the
Trustee nor any agent of
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either of them shall be held accountable, by reason of the disclosure of any
such information as to the names and addresses of the Holders in accordance with
Section 702(b), regardless of the source from which such information was
derived, and that the Trustee shall not be held accountable by reason of mailing
any material pursuant to a request made under Section 702(b).
SECTION 703. Reports by Trustee.
(a) Within 60 days after the first [__________] which occurs
not less than 60 days following the first date of issuance of Securities of any
series under this Indenture and within 60 days after [______] in every year
thereafter, the Trustee shall transmit by mail to all Holders, as their names
and addresses appear in the Security Register, a brief report dated as of such
[________] with respect to any of the following events which may have occurred
within the previous 12 months (but if no such event has occurred within such
period no report need be transmitted):
(1) any change to its eligibility under Section 609 and its
qualifications under Section 608;
(2) the creation of or any material change to a relationship
specified in Section 608;
(3) the character and amount of any advances (and if the
Trustee elects so to state, the circumstances surrounding the making
thereof) made by the Trustee (as such) which remain unpaid on the date
of such report, and for the reimbursement of which it claims or may
claim a lien or charge, prior to that of the Securities, on any
property or funds held or collected by it as Trustee, except that the
Trustee shall not be required (but may elect) to report such advances
if such advances so remaining unpaid aggregate not more than [1/2 of
1%] of the principal amount of the Securities Outstanding on the date
of such report;
(4) any change to the amount, interest rate and maturity date
of all other indebtedness owing by the Company (or by any other obligor
on the Securities) to the Trustee in its individual capacity, on the
date of such report, with a brief description of any property held as
collateral security therefor, except an indebtedness based upon a
creditor relationship arising in any manner described in Sections
613(b)(2), (3), (4) or (6);
(5) any change to the property and funds, if any, physically
in the possession of the Trustee as such on the date of such report;
(6) any additional issue of Securities which the Trustee has
not previously reported; and
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(7) any action taken by the Trustee in the performance of its
duties hereunder which it has not previously reported and which in its
opinion materially affects the Securities, except action in respect of
a default, notice of which has been or is to be withheld by the Trustee
in accordance with Section 602.
(b) The Trustee shall transmit by mail to all Holders, as
their names and addresses appear in the Security Register, a brief report with
respect to the character and amount of any advances (and if the Trustee elects
so to state, the circumstances surrounding the making thereof) made by the
Trustee (as such) since the date of the last report transmitted pursuant to
Subsection (a) of this Section 703 (or if no such report has yet been so
transmitted, since the date of execution of this instrument) for the
reimbursement of which it claims or may claim a lien or charge, prior to that of
the Securities, on property or funds held or collected by it as Trustee and
which it has not previously reported pursuant to this Subsection, except that
the Trustee shall not be required (but may elect) to report such advances if
such advances remaining unpaid at any time aggregate 10% or less of the
principal amount of the securities outstanding at such time, such report to be
transmitted within 90 days after such time.
(c) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each U.S. stock exchange
upon which any Securities are listed, with the Commission and with the Company.
The Company will notify the Trustee when any Securities are listed on any U.S.
stock exchange.
SECTION 704. Reports by Company.
The Company shall:
(1) file with the Trustee, within 15 days after the company is
required to file the same with the Commission, copies of the annual
reports and of the information, documents and other reports (or copies
of such portions of any of the foregoing as the Commission may from
time to time by rules and regulations prescribe) which the Company may
be required to file with the Commission pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934; or, if the
Company is not required to file information, documents or reports
pursuant to either of said Sections and one or more series of the
Securities is listed on a U.S. national securities exchange, then it
shall file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission,
such of the supplementary and periodic information, documents and
reports which may be required pursuant to Section 13 of the Securities
Exchange Act of 1934 in respect of a security listed and registered on
a U.S. national securities exchange as may be prescribed from time to
time in such rules and regulations;
(2) file with the Trustee and the Commission, in accordance
with rules and regulations prescribed from time to time by the
Commission, such additional
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information, documents and reports with respect to compliance by the
Company with the conditions and covenants of this Indenture as way be
required from time to time by such rules and regulations; and
(3) transmit by mail to all Holders, as their names and
addresses appear in the Security Register, within 30 days after the
filing thereof with the Trustee, such summaries of any information,
documents and reports required to be filed by the Company pursuant to
paragraphs (1) and (2) of this Section 704 as may be required by rules
and regulations prescribed from time to time by the Commission.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, SALE OR LEASE
SECTION 801. Company May Consolidate Etc., Only on Certain Terms.
Nothing contained in this Indenture shall prevent the Company from
consolidating with or merging into another corporation or conveying,
transferring or leasing its properties and assets substantially as an entirety
to any person, provided that (a) the successor entity assumes the applicable
Company's obligations on the Securities and (b) immediately after giving effect
to such transaction no Event of Default and no event which, after notice or
lapse of time or both, would become an Event of Default, shall have happened and
be continuing.
SECTION 802. Successor Corporation to be Substituted.
Upon any consolidation by the Company with or merger by the
Company into any other corporation or any conveyance, transfer or lease of the
properties and assets of the Company substantially as an entirety in accordance
with Section 801, the successor corporation formed by such consolidation or into
which the Company is merged or to which such conveyance, transfer or lease is
made shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Indenture with the same effect as if such
successor corporation had been named as the Company herein, and thereafter the
predecessor corporation shall be relieved of all obligations and covenants under
this Indenture and the Securities.
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ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures without Consent of Holders.
Without the consent of any Holders, the Company and the
Trustee, at any time and from time to time, may enter into one or more
indentures supplemental hereto, in form satisfactory to the Trustee, for any of
the following purposes:
(1) to evidence the succession of another corporation to the
Company and the assumption by any such successor of the covenants of
the Company herein and in the Securities;
(2) to add to the covenants of the Company for the benefit of
the Holders of all or any series of Securities (and if such covenants
are to be for the benefit of less than all series of Securities,
stating that such covenants are expressly being included solely for the
benefit of such series) or to surrender any right or power herein
conferred upon the Company;
(3) to add any additional Events of Default (and if such
Events of Default are to be for the benefit of less than all series of
Securities, stating that such Events of Default are expressly being
included solely for the benefit of such series);
(4) to add to or change any of the provisions of this
Indenture to such extent as shall be necessary to permit or facilitate
the issuance of securities in bearer form, registrable or not
registrable as to principal, and with or without interest coupons, or
to facilitate the issuance of Securities in uncertificated form, or to
permit or facilitate the issuance of extendible Securities;
(5) to change or eliminate any of the provisions of this
Indenture, provided that any such change or elimination shall become
effective only as to the Securities of any series created by such
supplemental indenture and Securities of any series subsequently
created to which such change or elimination is made applicable by the
subsequent supplemental indenture creating such series;
(6) to secure the Securities;
(7) to establish the form or terms of Securities of any
series as permitted by Sections 201 and 301;
(8) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one
or more series and to add to or change any of the provisions of this
Indenture as shall be necessary to provide for
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or facilitate the administration of the trusts hereunder by more than
one Trustee, pursuant to the requirements of Section 611(b);
(9) to provide for any rights of the Holders of Securities of
any series to require the repurchase of Securities of such series by
the Company;
(10) to cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture, provided such action shall not
materially and adversely affect the interests of the Holders of
Securities of any series; or
(11) to modify, alter, amend or supplement this Indenture in
any other respect which is not materially adverse to Holders, which
does not involve a change described in clauses (1), (2) or (3) of
Section 902 hereof and which, in the judgment of the Trustee, is not to
the prejudice of the Trustee, or in order to provide for the duties,
responsibilities and compensation of the Trustee as a transfer agent in
the event one registered Security of any series is issued in the
aggregate principal amount of all outstanding Securities of such series
in which Holders will hold an interest.
SECTION 902. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of a majority in aggregate
principal amount of the outstanding Securities of all series affected by such
supplemental indenture (voting as one class), by Act of said Holders delivered
to the Company and the Trustee, the Company, when authorized by or pursuant to a
Board Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this indenture or of
modifying in any manner the rights of the Holders of Securities of such series
under this Indenture; provided, however, that no such supplemental indenture
shall, without the consent of the Holder of each Outstanding Security affected
thereby,
(1) change the Stated Maturity of the principal of, or any
installment of principal of or interest, if any, on, any Security, or
reduce the principal amount thereof or the rate of interest thereon
(including Additional Amounts) or any premium payable upon the
redemption thereof, or reduce the amount of the principal of an
original Issue Discount Security that would be due and payable upon a
declaration of acceleration of the maturity thereof pursuant to Section
502, or change any Place of Payment where, or the coin or currency in
which, any Security or any premium or the interest thereon is payable,
or impair the right to institute suit for the enforcement of any such
payment on or after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date), or
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(2) reduce the percentage in principal amount of the
outstanding Securities of any series, the consent of whose Holders is
required for any such supplemental indenture, or the consent of whose
Holders is required for any waiver of compliance with certain
provisions of this Indenture or certain defaults hereunder and their
consequences provided for in this Indenture, or
(3) modify any of the provisions of this Section 902 or
Section 513, except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or waived
without the consent of the Holder of each Outstanding Security affected
thereby, provided, however, that this clause shall not be deemed to
require the consent of any Holder with respect to changes in the
references to "the Trustee" and concomitant changes in this Section
902, or the deletion of this proviso, in accordance with the
requirements of Sections 611(b) and 901(8).
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such covenant
or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders under this
Section 902 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.
SECTION 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by,
any supplemental indenture permitted by this Article or the modifications
thereby of the trusts created by this Indenture, the Trustee shall be entitled
to receive, and (subject to Section 601) shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture. The Trustee may, but
shall not be obligated to, enter into any such supplemental indenture which
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise.
SECTION 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this
Article, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes; and
every Holder of Securities theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
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SECTION 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article
shall, if so required by the Trust Indenture Act, conform to the requirements of
the Trust Indenture Act as then in effect.
SECTION 906. Reference in Securities to Supplemental Indentures.
Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article may, and shall
if required by the Trustee, bear a notation in form approved by the Trustee as
to any matter provided for in such supplemental indenture. If the Company shall
so determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee and the Company, to any such supplemental indenture may
be prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Securities of such series.
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of each
series of Securities that it will duly and punctually pay the principal of (and
premium, if any) and interest, if any, on the Securities of that series in
accordance with the terms of the Securities and this Indenture.
SECTION 1002. Maintenance of Office or Agency.
The Company will maintain in each Place of Payment for any
series of Securities an office or agency where Securities of that series way be
presented or surrendered for payment, where Securities of that series may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Company in respect of the securities of that series and
this Indenture may be served. The Company will give prompt written notice to the
Trustee of the location, and any change in the location, of such office or
agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee, and, in such event, the Trustee shall act
as the Company's agent to receive all such presentations, surrenders, notices
and demands.
The Company may also from time to time designate one or more
other offices or agencies where the Securities of one or more series may be
presented or surrendered for
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any or all such purposes and may from, time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in each
Place of Payment for Securities of any series for such purposes. The Company
will give prompt written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other office or agency.
SECTION 1003. Money for Securities Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent
with respect to any series of Securities, it will, on or before each due date of
the principal of (and premium, if any) or interest, if any, on any of the
Securities of that series, segregate and hold in trust for the benefit of the
Persons entitled thereto a sum sufficient to pay the principal (and premium, if
any) or interest, if any, so becoming due until such sums shall be paid to such
Persons or otherwise disposed of as herein provided and will promptly notify the
Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for
any series of Securities, it will, no later than 10:00 a.m., New York Time, on
or prior to each due date of the principal of (and premium, if any) or interest,
if any, on any Securities of that series, deposit with a Paying Agent a sum in
immediately available funds sufficient to pay the principal and premium, if any)
or interest so becoming due, such sum to be held in trust for the benefit of the
Persons entitled to such principal, premium or interest.
The Company will cause each Paying Agent for any series of
Securities other than the Trustee to execute and deliver to the Trustee an
instrument in which such Paying Agent shall agree with the Trustee, subject to
the provisions of this Section 1003, that such Paying Agent will:
(1) hold all sums held by it for the payment of the principal
of (and premium, if any) or interest, if any, on Securities of that
series in trust for the benefit of the Persons entitled thereto until
such sums shall be paid to such Persons or otherwise disposed of as
herein provided;
(2) give the Trustee notice of any default by the Company (or
any other obligor upon the Securities of that series) in the making of
any payment of principal (and premium, if any) or interest, if any, on
the Securities of that series; and
(3) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to the Trustee
all sums so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct
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any Paying Agent to pay, to the Trustee all sums held in trust by the Company or
such Paying Agent, such sums to be held by the Trustee upon the same trusts as
those upon which such sums were held by the Company or such Paying Agent; and,
upon such payment by the Company or by any Paying Agent to the Trustee, the
Company or such Paying Agent, as the case may be, shall be released from all
further liability with respect to such money.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of (and
premium, if any) or interest, if any, on any Security of any series and
remaining unclaimed for two years after such principal (and premium, if any) or
interest has become due and payable shall be paid to the Company on Company
Request, or (if then held by the Company) shall be discharged from such trust;
and the Holder of such Security shall thereafter, as an unsecured general
creditor, look only to the Company for payment thereof, and all liability of the
Trustee or such Paying Agent with respect to such trust money, and all liability
of the Company as trustee thereof, shall thereupon cease.
SECTION 1004. Limitation on Liens.
Nothing in this Indenture or in the Securities shall in any
way restrict or prevent the Company or any Subsidiary from incurring any
indebtedness; provided that if this covenant shall be made applicable to the
Securities of a particular series, the Company covenants and agrees that neither
it nor any Significant Subsidiary will issue, assume or guarantee any notes,
bonds, debentures or other similar evidences of indebtedness for money borrowed
("Debt") secured by a Lien upon any property or assets (other than cash) without
effectively providing that the outstanding Securities to which this section
shall have been made applicable (together with, if the Company so determines,
any other indebtedness or obligation then existing or thereafter created ranking
equally with the Securities) shall be secured equally and ratably with (or prior
to) such Debt so long as such Debt shall be so secured; provided, however, that
for the purpose of providing such equal and ratable security, the principal
amount of Outstanding Securities of any series of Original Issue Discount
Securities shall be such portion of the principal amount as may be specified in
the terms of that series. The foregoing restrictions on liens shall not apply
to:
(a) any Lien created or arising over any property which is acquired,
constructed or created by the Company or any of its Significant
Subsidiaries, but only if (i) such Lien secures only principal amounts
(not exceeding the cost of such acquisition, construction or creation)
raised for the purposes of such acquisition, construction or creation,
together with any costs, expenses, interest and fees incurred in
relation thereto or a guarantee given in respect thereof, (ii) such
Lien is created or arises on or before 90 days after the completion of
such acquisition, construction or creation and (iii) such Lien is
confined solely to the property so acquired, constructed or created;
(b) Liens in existence on the date of original issue of the Securities
to which this
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restriction is made applicable;
(c) any Lien to secure indebtedness for borrowed money incurred in
connection with a specifically identifiable project where the Lien
relates to a property (including, without limitation, shares or other
rights of ownership in the entity(ies) which own such property or
project) involved in such project and acquired by the Company or a
Significant Subsidiary after the date of original issue of the
Securities and the recourse of the creditors in respect of such
indebtedness is limited to such project and property;
(d) any Lien securing amounts not more than 90 days overdue or
otherwise being contested in good faith;
(e) judgment Liens not giving rise to an Event of Default;
(f) any Lien arising by operation of law or by order of a court or
tribunal (other than judgment Liens giving rise to an Event of Default)
or any Lien arising by an agreement of similar effect;
(g) rights of financial institutions to offset credit balances in
connection with the operation of cash management programs established
for the benefit of the Company and/or a Significant Subsidiary or in
connection with the issuance of letters of credit for the benefit of
the Company and/or a Significant Subsidiary;
(h) any Lien securing indebtedness of the Company and/or a
Significant Subsidiary for borrowed money incurred in connection with
the financing of accounts receivable;
(i) any Lien incurred or deposits made in the ordinary course of
business, including, but not limited to, (i) any mechanics',
materialmen's, carriers', workmen's, vendors' or other like Liens and
(ii) any Liens securing amounts in connection with workers'
compensation, unemployment insurance and other types of social
security;
(j) any Lien upon specific items of inventory or other goods and
proceeds of the Company and/or a Significant Subsidiary securing
obligations of the Company and/or a Significant Subsidiary in respect
of bankers' acceptances issued or created for the account of such
person to facilitate the purchase, shipment or storage of such
inventory or other goods;
(k) any Lien incurred or deposits made securing the performance of
tenders, bids, leases, trade contracts (other than for borrowed money),
statutory obligations, surety bonds, appeal bonds, government
contracts, performance bonds, return-of-money bonds and other
obligations of like nature incurred in the ordinary course of business;
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(l) any Lien on any property of the Company or a Significant Subsidiary
in favor of the Federal Government of the United States or the
government of any State thereof, or the government of the United
Kingdom, or the European Union, or any instrumentality of any of them,
securing the obligations of the Company or a Significant Subsidiary
pursuant to any contract or payments owed to such entity pursuant to
applicable laws, rules, regulations or statutes;
(m) any Lien securing taxes or assessments or other applicable
governmental charges or levies;
(n) any Lien securing industrial revenue, development or similar bonds
issued by or for the benefit of the Company or a Significant
Subsidiary, provided that such industrial revenue, development or
similar bonds are nonrecourse to the Company and/or such Significant
Subsidiary;
(o) Liens in favor of the Company or a Significant Subsidiary;
(p) Liens on any property or assets acquired from a corporation which
is merged with or into the Company or a Significant Subsidiary, or any
Liens on the property or assets of any corporation or other entity
existing at the time such corporation or other entity becomes a
subsidiary and, in either such case, is not created in anticipation of
any such transaction (unless such Lien was created to secure or provide
for the payment of any part of the purchase price of such corporation);
(q) Liens required by any contract or statute in order to permit the
Company or a Significant Subsidiary to perform any contract or
subcontract made by it with or at the request of a governmental entity
or any department, agency or instrumentality thereof, or to secure
partial, progress, advance or any other payments to the Company or a
Significant Subsidiary by such governmental unit pursuant to the
provisions of any contract or statute;
(r) any Lien on any property or assets existing at the time of
acquisition thereof and which is not created in anticipation of such
acquisition (unless such Lien was created to secure or provide for the
payment of any part of the purchase price of such property or assets);
(s) any Lien created by the Company or a Significant Subsidiary under
or in connection with or arising out of any pooling and settlement
agreements or pooling and settlement arrangements of the electricity
industry or any transactions or arrangements entered into in connection
with the hedging or management of risks relating to the electricity
industry;
(t) any Lien created or outstanding on or over any asset of any company
which becomes a Significant Subsidiary on or after the date of the
issuance of the Securities
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where such Lien is created prior to the date on which such company
becomes a Significant Subsidiary;
(u) any Lien constituted by a right of set off or right over a margin
call account or any form of cash or cash collateral or any similar
arrangement for obligations incurred in respect of the hedging or
management of risks under transactions involving any currency or
interest rate swap, cap or collar arrangements, forward exchange
transaction, option, warrant, forward rate agreement, futures contract
or other derivative instrument of any kind;
(v) any Lien arising out of title retention or like provisions in
connection with the purchase of goods and equipment in the ordinary
course of business;
(w) any Lien securing reimbursement obligations under letters of
credit, guaranties and other forms of credit enhancement given in
connection with the purchase of goods and equipment in the ordinary
course of business;
(x) any Lien which arises pursuant to any order of attachment,
distraint or similar legal process arising in connection with court
proceedings and any Lien which secures the reimbursement obligation for
any bond obtained in connection with an appeal taken in any court
proceeding, so long as the execution or other enforcement of such Lien
arising pursuant to such legal process is effectively stayed and the
claims secured thereby are being contested in good faith and, if
appropriate, by appropriate legal proceedings, or any Lien in favor of
a plaintiff or defendant in any action before a court or tribunal as
security for costs and/or expenses; or
(y) any extension, renewal or replacement (or successive extensions,
renewals or replacements), as a whole or in part, or any Liens referred
to in the foregoing clauses, for amounts not exceeding the principal
amount of the borrowed money secured by the Lien so extended, renewed
or replaced, provided that such extension, renewal or replacement Lien
is limited to all or a part of the same property, shares or stock of
the Company and/or a Significant Subsidiary that secured the Lien
extended, renewed or replaced (plus improvements on such property).
Notwithstanding the foregoing, the Company and/or a Significant
Subsidiary may create or permit to subsist Liens over any property,
shares or stock so long as the aggregate amount of indebtedness for
borrowed money secured by all such Liens (excluding therefrom the
amount of indebtedness secured by Liens set forth in clauses (a)
through (y), inclusive, above) does not exceed 10% of the consolidated
net tangible assets of the Company and/or such Significant Subsidiary.
SECTION 1005. Limitation on Sale and Lease-Back.
If this covenant shall be made applicable to the Securities of
a particular
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Series, the Company covenants and agrees that so long as any Securities or such
series remains outstanding neither it nor any Subsidiary will enter into any
arrangement with any person (other than the Company or a significant
Subsidiary), or to which any such person is a party, providing for the leasing
to the Company or a significant Subsidiary for a period of more than three years
of any property or assets which has been or is to be sold or transferred by the
Company or such Subsidiary to such person or to any other person (other than the
Company or a Subsidiary) to which funds have been or are to be advanced by such
person on the security of the leased property or assets (in this Article Ten
called "Sale and Lease-Back Transaction") unless either;
(i) such transaction involves a lease for a temporary period not to
exceed three years; (ii) such transaction is between the Company or a
Significant Subsidiary and an affiliate of the Company; (iii) the
Company would be entitled to incur indebtedness secured by a Lien on
the assets or property involved in such transaction at least equal in
amount to the attributable debt with respect to such Sale and
Lease-Back Transaction, without equally and ratably securing the
Securities, pursuant to the limitation on Liens described above; (iv)
such transaction is entered into within 60 days after the initial
acquisition by the Company of the assets or property subject to such
transaction; (v) after giving effect thereto, the aggregate amount of
all attributable debt with respect to all such Sale and Lease-Back
Transactions does not exceed 10% of consolidated net tangible assets;
or (vi) the Company within the twelve months preceding the sale or
transfer or the twelve months following the sale or transfer,
regardless of whether such sale or transfer may have been made by the
Company, applies in the case of a sale or transfer for cash, an amount
equal to the net proceeds thereof and, in the case of a sale or
transfer otherwise than for cash, an amount equal to the fair value of
the assets so leased at the time of entering into such arrangement (as
determined by the Board of Directors of the Company), (a) to the
retirement of indebtedness for money borrowed, incurred or assumed by
the Company which by its terms matures at, or is extendible or
renewable at the option of the obligor to, a date more than twelve
months after the date of incurring, assuming or guaranteeing such debt
or (b) to investment in any assets of the Company. Consolidated net
tangible assets is defined in the Indenture as the total of all assets
(including revaluations thereof as a result of commercial appraisals,
price level restatement or otherwise) appearing on a consolidated
balance sheet of the Company and the Significant Subsidiary, net of
applicable reserves and deductions, but excluding goodwill, trade
names, trademarks, patents, unamortized debt discount and all other
like intangible assets (which term shall not be construed to include
such revaluations), less the aggregate of the current liabilities of
the Company and such Significant Subsidiary appearing on such balance
sheet.
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SECTION 1006. Statement by Officers as to Default.
The Company will deliver to the Trustee within 120 days after
the end of each fiscal year of the Company a certificate from the principal,
executive, financial or accounting officer of the Company, stating that in the
course of the performance by each signer of his duties as an officer of the
Company he would normally have knowledge of any default by the Company in the
performance and observance of any of the covenants contained in Sections 1001 to
1008, stating whether or not he has knowledge of any such default without regard
to any period of grace or requirement of notice and, if so, specifying each such
default of which such signer has knowledge and the nature thereof.
SECTION 1007. Performance of Certain Obligations.
The Company, at its option, (a) will be discharged from any
and all obligations in respect of the Securities (except in each case for [to
come]; or (b) omit to comply with any term, provision or condition set forth in
Sections 801, 1004 and 1005 with respect to the Securities of any series,
provided that the following conditions shall have been satisfied:
(1) The Company has deposited or caused to be irrevocably
deposited (except as provided in Section [607] [402(c)] and the last
paragraph of Section 1003) with the Trustee (specifying that each
deposit is pursuant to this Section 1007) as trust funds in trust,
specifically pledged as security for, and dedicated solely to, the
benefit of the Holders of the Securities of such series, (i) money or
(ii) U.S. government obligations which through the payment of interest
and principal in respect thereof in accordance with their terms will
provide money in an amount, or (iii) a combination thereof, in each
case, sufficient to pay and discharge the principal and interest on the
outstanding Securities on the dates such payments are due in accordance
with the terms of the Securities, (or if the Company has designated a
redemption date pursuant to the final sentence of this paragraph, to
and including the redemption date so designated by the Company), and no
Event of Default or event which with notice or lapse of time would
become an Event of Default (including by reason of such deposit) with
respect to the Securities shall have occurred and be continuing on the
date of such deposit. To exercise any such option, the Company is
required to deliver to the Trustee (x) an Opinion of Counsel to the
effect that the holders will not recognize income, gain or loss for
federal income tax purposes as a result of such deposit, defeasance and
discharge of certain obligations, which in the case of (a) must be
based on a change in law or a ruling by the U.S. Internal Revenue
Service and (y) an Officers' Certificate as to compliance with all
conditions precedent provided for in the Indenture relating to the
satisfaction and discharge of the Securities. If the Company has
deposited or caused to be deposited money or U.S. government
obligations to pay or discharge the principal of (and premium, if any)
and interest, if any, on the outstanding Securities to and including a
redemption date on which all of the outstanding Securities are to be
redeemed, such redemption date shall be irrevocably
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designated by a board resolution delivered to the Trustee on or prior
to the date of deposit of such money or U.S. government obligations,
and such board resolutions shall be accompanied by an irrevocable
request that the Trustee give notice of such redemption in the name and
at the expense of the Company not less than 15 nor more than 30 days
prior to such redemption date in accordance with the Indenture.
SECTION 1008. Modification or Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with
any term, provision or condition set forth in Sections 801, 1004, and 1005 with
respect to the Securities of any series if before the time for such compliance
the Holders of at least a majority in aggregate principal amount of the
Outstanding Securities of such series shall, by Act of such Holders, either
modify the covenant or waive such compliance in such instance or generally waive
compliance with such term, provision or condition, provided that no such
modification shall without the consent of the holders (a) change the stated
maturity upon which the principal of or the interest on the Securities is due
and payable, or reduce the principal amount thereof or the rate of interest
thereon (including Additional Amounts, as defined below) or any premium payable
upon the redemption thereof, or change any place of payment or the currency in
which, the Securities or any premium or the interest thereon is payable, or
impair the right to institute suit for the enforcement of any such payment on or
after the stated maturity thereof (or, in the case of redemption, on or after
redemption date) or (b) reduce the percentage in principal amount of the
outstanding Securities, the consent of whose Holders is required for any waiver
of compliance with certain provisions of this Indenture or certain defaults
hereunder and their consequences provided for in the Indenture. The Securities
owned by the Company or any of its affiliates shall be deemed not to be
outstanding for, among other purposes, consenting to any such modification.
SECTION 1009. Further Assurances.
The Company and the Trustee shall execute and deliver all such
other documents, instruments and agreements and do all such other acts and
things as may be reasonably required to enable the Trustee to exercise and
enforce its rights under this Indenture and under the documents, instruments and
agreements required under this Indenture and to carry out the intent of this
Indenture.
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ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Applicability of Article.
Securities of any series which are redeemable before their
Stated Maturity shall be redeemable in accordance with their terms and (except
as otherwise specified as contemplated by Section 301 for Securities of any
series) in accordance with this Article Eleven.
SECTION 1102. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be
authorized by a Board of Directors resolution and evidenced by an Officers'
Certificate. In case of any redemption at the election of the Company of less
than all the Securities of any series, the Company shall, at least [30] days
prior to the Redemption Date fixed by the Company (unless a shorter notice shall
be satisfactory to the Trustee), notify the Trustee of such Redemption Date and
of the principal amount of Securities of such series to be redeemed. In the case
of any redemption of Securities prior to the expiration of any restriction on
such redemption provided in the terms of such Securities or elsewhere in this
Indenture, or pursuant to an election by the Company which is subject to a
condition specified in the terms of such Securities or elsewhere in this
Indenture, the Company shall furnish the Trustee with an Officers' Certificate
evidencing compliance with such restriction or condition.
SECTION 1103. Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities of any series are to be
redeemed, the particular securities to be redeemed shall be selected not more
than 60 days prior to the Redemption Date by the Trustee, from the Outstanding
Securities of such series not previously called for redemption, by such method
as the Trustee shall deem fair and appropriate and which may provide for the
selection for redemption of portions equal to the minimum authorized
denomination for Securities of that series (or any integral multiple thereof) of
the principal amount of Securities of such series of a denomination larger than
the minimum authorized denomination for Securities of that series.
Securities shall be excluded from eligibility for selection
for redemption if they are identified by registration and certificate number in
a written statement signed by an authorized officer of the Company and delivered
to the Security Registrar at least [30] days prior to the Redemption Date as
being owned of record and beneficially by, and not pledged or hypothecated by
either (a) the Company or (b) an entity specifically identified in such written
statement which is an Affiliate of the Company.
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The Trustee shall promptly notify the Company in writing of
the Securities selected for redemption and, in the case of any Securities
selected for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of Securities
shall relate, in the case of any Securities redeemed or to be redeemed only in
part, to the portion of the principal amount of such Securities which has been
or is to be redeemed.
SECTION 1104. Notice of Redemption.
Notice of redemption shall be given by first-class mail,
postage prepaid, mailed not less than 15 nor more than 30 days prior to the
Redemption Date, to each Holder of Securities to be redeemed, at his address
appearing in the Security Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all the Outstanding Securities of any series
are to be redeemed, the identification (and, in the case of partial
redemption, the principal amounts) of the particular Securities to be
redeemed,
(4) that on the Redemption Date the Redemption Price will
become due and payable upon each such Security to be redeemed and, if
applicable, that interest thereon will cease to accrue on and after
said date,
(5) the place or places where such Securities are to be
surrendered for payment of the Redemption Price, and
(6) that the redemption is for a sinking fund, if such is the
case.
Notice of redemption of Securities to be redeemed at the
election of the Company shall be given by the Company or, at the Company's
request, by the Trustee in the name and at the expense of the Company.
SECTION 1105. Deposit of Redemption Price.
On or prior to any Redemption Date, the company shall deposit
with the Trustee or with a Paying Agent (or, if the Company is acting as its own
Paying Agent, segregate and hold in trust as provided in Section 1003) an amount
of money sufficient to pay the Redemption Price of, and (except if the
Redemption Date shall be an Interest
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Payment Date) accrued interest on, all the Securities which are to be redeemed
on that date (to the extent that such amounts are not already on deposit at such
time in accordance with the provisions of Sections 401, 403 or 1007).
SECTION 1106. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the
Securities so to be redeemed shall, on the Redemption Date, become due and
payable at the Redemption Price therein specified, and from and after such date
(unless the Company shall default in the payment of the Redemption Price and
accrued and unpaid interest) such securities shall cease to bear interest. Upon
surrender of any such Security for redemption in accordance with said notice,
such Security shall be paid by the Company at the Redemption Price, together
with accrued and unpaid interest to the Redemption Date; provided, however, that
installments of interest whose Stated Maturity is on or prior to the Redemption
Date shall be payable to the Holders of such Securities, or one or more
Predecessor Securities, registered as such at the close of business on the
relevant Record Dates according to their terms and the provisions of Section
307.
If any Security called for redemption shall not be so paid
upon surrender thereof for redemption, the principal (and premium, if any)
shall, until paid, bear interest from the Redemption Date at the rate prescribed
therefor in the Security.
SECTION 1107. Securities Redeemed in Part.
Any Security (including any Global Security) which is to be
redeemed only in part shall be surrendered at a Place of Payment therefor (with,
if the Company or the Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Company and the Trustee duly
executed by, the Holder thereof or his attorney duly authorized in writing), and
the Company shall execute, and the Trustee shall authenticate and deliver to the
Holder of such Security without service charge, a new Security or Securities of
the same series, of any authorized denomination as requested by such Holder, in
aggregate principal amount equal to and in exchange for the unredeemed portion
of the principal of the security so surrendered; provided, that if a Global
Security is so surrendered, the new Global Security shall be in a denomination
equal to the unredeemed portion of the principal of the Global Security so
surrendered.
SECTION 1108. Optional Redemption in the Event of Change in United Kingdom Tax
Treatment.
The Securities of any series may be redeemed at the election
of the Company, as a whole, but not in part, by the giving of notice as provided
in Section 1104, at a price equal to the outstanding principal amount thereof,
together with Additional Amounts, if any, and accrued interest, if any, to the
Redemption Date, if, as a result of any change in, or amendment to, the laws (or
any regulations or rulings promulgated thereunder) of the United
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Kingdom or any political subdivision or taxing authority thereof or therein, or
any change in the application, administration or interpretation of such laws,
regulations or rulings in such jurisdiction, the Company has or will become
obligated to pay Additional Amounts on the Securities of such series if such
change or amendment is announced on or after the date hereof and such obligation
cannot be avoided by the Company taking reasonable measures available to it;
provided, however, that no such notice of redemption shall be given earlier than
90 days prior to the earliest date on which the Company would be obligated to
pay such Additional Amounts, were a payment in respect of the Securities then
due. Prior to the giving of notice of redemption of such Securities pursuant to
this Indenture, the Company will deliver to the Trustee an Officers' Certificate
stating that the obligation to pay such Additional Amounts cannot be avoided by
the Company taking reasonable measures available to it, and the Trustee shall
accept such certificate as sufficient evidence of such condition, and such
certificate shall be conclusive and binding on the Holders of such series.
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. Applicability of Article.
The provisions of this Article shall be applicable to any
sinking fund for the retirement of Securities of a series except as otherwise
specified as contemplated by Section 301 for Securities of such series.
The minimum amount of any sinking fund payment provided for by
the terms of Securities of any series is herein referred to as a "mandatory
sinking fund payment", and any payment in excess of such minimum amount provided
for by the terms of Securities of any series is herein referred to as an
"optional sinking fund payment". If provided for by the terms of Securities of
any series, the cash amount of any sinking fund payment may be subject to
reduction as provided in Section 1202. Each sinking fund payment shall be
applied to the redemption of Securities of any series as provided for by the
terms of Securities of such series.
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities.
In lieu of making all or any part of any mandatory sinking
fund payment with respect to any series of Securities in cash, the Company may
at its option (a) deliver to the Trustee Securities of such series theretofore
purchased or otherwise acquired (except upon redemption pursuant to the
mandatory sinking fund) by the Company or receive credit for Securities of such
series (not previously so credited) theretofore purchased or otherwise acquired
(except as aforesaid) by the Company and delivered to the Trustee for
cancellation pursuant to Section 310, (b) receive credit for optional sinking
fund payments (not previously so credited) made pursuant to this Section 1202,
or (c) receive credit for Securities of such
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series (not previously so credited) redeemed by the Company through any optional
redemption provision contained in the terms of such series. Securities so
delivered or credited shall be received or credited by the Trustee at the
sinking fund Redemption Price specified in such Securities.
SECTION 1203. Redemption of Securities for Sinking Fund.
Not less than 30 days prior to each sinking fund payment date
for any series of Securities, the Company will deliver to the Trustee an
Officers' Certificate specifying (a) the amount of the next ensuing sinking fund
payment for that series pursuant to the terms of that series, (b) whether or not
the Company intends to exercise its right, if any, to make an optional sinking
fund payment with respect to such series on the next ensuing sinking fund
payment date and, if so, the amount of such optional sinking fund payment, and
(c) the portion thereof, if any, which is to be satisfied by payment of cash and
the portion thereof, if any, which is to be satisfied by delivering and
crediting Securities of that series pursuant to Section 1202, and will also
deliver to the Trustee any Securities to be so delivered. Such written statement
shall be irrevocable and upon its receipt by the Trustee the Company shall
become unconditionally obligated to make all the cash payments or payments
therein referred to, if any, on or before the next succeeding sinking fund
payment date. Failure of the Company, on or before any such 30th day, to deliver
such written statement and Securities specified in this paragraph, if any, shall
not constitute a default but shall constitute, on and as of such date, the
irrevocable election of the Company (i) that the mandatory sinking fund payment
for such series due on the next succeeding sinking fund payment date shall be
paid entirely in cash without the option to deliver or credit Securities of such
series in respect therefor and (ii) that the Company will make no optional
sinking fund payment with respect to such series as provided in this Section
1203.
Not less than [30] days before each such sinking fund payment
date the Trustee shall select the Securities to be redeemed upon such sinking
fund payment date in the manner specified in Section 1103 and cause notice of
the redemption thereof to be given in the name of and at the expense of the
Company in the manner provided in Section 1104. Such notice having been duly
given, the redemption of such Securities shall be made upon the terms and in the
manner stated in Sections 1105, 1106 and 1107.
The Trustee shall not redeem or cause to be redeemed any
Security of a series with sinking fund moneys or mail any notice of redemption
of Securities of such series by operation of the sinking fund during the
continuance of a default in payment of interest with respect to Securities of
that series or an Event of Default with respect to the Securities of that series
except that, where the mailing of notice of redemption of any Securities shall
theretofore have been made, the Trustee shall redeem or cause to be redeemed
such Securities, provided that it shall have received from the Company a sum
sufficient for such redemption. Except as aforesaid, any moneys in the sinking
fund for such series at the time when any such default or Event of Default,
shall occur, and any moneys thereafter paid into the sinking fund, shall, during
the continuance of such default or Event of Default, be
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deemed to have been collected under Article Five and held for the payment of all
such Securities. In case such Event of Default shall have been waived as
provided in Section 513 or the default or Event of Default cured on or before
the 30th day preceding the sinking fund payment date, such moneys shall
thereafter be applied on the next succeeding sinking fund payment date in
accordance with this Section 1203 to the redemption of such Securities.
ARTICLE THIRTEEN
MISCELLANEOUS
SECTION 1301.Consent to Jurisdiction; Appointment of Agent to Accept Service of
Process.
(a) The Company irrevocably consents and agrees, for the
benefit of the Holders from time to time of the Securities and the Trustee, that
any legal action, suit or proceeding against it with respect to its obligations,
liabilities or any other matter arising out of or in connection with this
Indenture or the Securities may be brought in the Supreme Court of New York, New
York County or the United States District Court for the Southern District of New
York and any appellate court from either thereof and, until amounts due and to
become due in respect of the Securities have been paid, hereby irrevocably
consents and submits to the nonexclusive jurisdiction of each such court in
personam, generally and unconditionally with respect to any action, suit or
proceeding for itself and in respect of its properties, assets and revenues.
(b) The Company has irrevocably designated, appointed, and
empowered [CT Corporation,] as its designee, appointee and agent to receive,
accept and acknowledge for and on its behalf, and its properties, assets and
revenues, service of any and all legal process, summons, notices and documents
which may be served in any action, suit or proceeding brought against the
Company in any United States or State court. If for any reason such designee,
appointee and agent hereunder shall cease to be available to act as such, the
Company agrees to designate a new designee, appointee and agent in the Borough
of Manhattan, The City of New York on the terms and for the purposes of this
Section 1301 satisfactory to the Trustee. The Company further hereby irrevocably
consents and agrees to the service of any and all legal process, summons,
notices and documents in any action, suit or proceeding against the Company by
serving a copy thereof upon the relevant agent for service of process referred
to in this Section 1301 (whether or not the appointment of such agent shall for
any reason prove to be ineffective or such agent shall accept or acknowledge
such service) or by mailing copies thereof by registered or certified air mail,
postage prepaid, to the Company at its address specified in or designated
pursuant to this Indenture. The Company agrees that the failure of any such
designee, appointee and agent to give any notice of such service to it shall not
impair or affect in any way the validity of such service or any judgment
rendered in any action or proceeding based thereon. Nothing herein shall in any
way be deemed to limit the ability of the holders of the Securities and the
Trustee, to
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serve any such legal process, summons, notices and documents in any other manner
permitted by applicable law or to obtain jurisdiction over the Company or bring
actions, suits or proceedings against the Company in such other jurisdictions,
and in such manner, as may be permitted by applicable law. The Company
irrevocably and unconditionally waives, to the fullest extent permitted by law,
any objection which it may now or hereafter have to the laying of venue of any
of the aforesaid actions, suits or proceedings arising out of or in connection
with this Indenture brought in the Supreme Court of New York, New York County or
the United States District Court for the Southern District of New York and any
appellate court from either thereof and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum.
If for the purpose of obtaining judgment in any court it is
necessary to convert a sum due hereunder to the holder of any Security from U.S.
dollars into another currency, the Company has agreed, and each holder by
holding such Security will be deemed to have agreed, to the fullest extent that
they may effectively do so, that the rate of exchange used shall be that at
which in accordance with normal banking procedures such Holder could purchase
U.S. dollars with such other currency in The City of New York on the Business
Day preceding the day on which final judgment is given.
The obligation of the Company in respect of any sum payable by
it to the holder of a Security shall, notwithstanding any judgment in a currency
(the "judgment currency") other than U.S. dollars, be discharged only to the
extent that on the Business Day following receipt by the Holder of such security
of any sum, adjudged to be so due in the judgment currency, the Holder of such
Security may in accordance with normal banking procedures purchase U.S. dollars
with the judgment currency; if the amount of U.S. dollars so purchased is less
than the sum originally due to the holder of such Security in the judgment
currency (determined in the manner set forth in the preceding paragraph), the
Company agrees, as a separate obligation and notwithstanding any such judgment,
to indemnify the Holder of such Security against such loss, and if the amount of
the U.S. dollars so purchased exceeds the sum originally due to the Holder of
such Security, such Holder agrees to remit to the Company such excess, provided
that such Holder shall have no obligation to remit any such excess as long as
the Company shall have failed to pay such Holder any obligations due and payable
under such Security, in which case such excess may be applied to such
obligations of the Company under such Security in accordance with the terms
thereof.
SECTION 1302. Counterparts.
This instrument may be executed in any number of Counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed and their respective company and corporate seals to be hereunto
affixed and attested, all as of the day and year first above written.
[Seal] SOUTHERN INVESTMENTS UK PUBLIC LIMITED
COMPANY
By______________________________
Attest:
- ------------------------------
[Seal] _______________________________________
By______________________________
Attest:
- ------------------------------
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STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the _____ day of ________, 1996, before me personally came
_____________, to me known, who, being by me duly sworn, did depose and say that
he is a of Southern Investments UK plc, one of the corporations described in and
which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.
------------------------------
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the _____ day of ________, 1996, before me personally came
____________________, to me known, who, being by me duly sworn, did depose and
say that he is a ____________________ of __________________________, one of the
corporations described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation, and that he signed his name thereto by like
authority.
------------------------------
81
Exhibit 4.2
SOUTHERN INVESTMENTS UK PLC
and
------------------------------------
as Trustee
_____% Notes Due 2006
First Supplemental Indenture
Dated as of ________ _____, 1996
<PAGE>
FIRST SUPPLEMENTAL INDENTURE, dated as of January __, 1996 (herein
called the "First Supplemental Indenture"), between Southern Investments UK plc,
a corporation duly organized and existing under the laws of England (hereinafter
called the "Company") and ____________________, as Trustee under the Original
Indenture referred to below (hereinafter called the "Trustee").
WITNESSETH:
WHEREAS, the Company has heretofore executed and delivered to the
Trustee an indenture dated as of ___________ __, 1996 (hereinafter called the
"Original Indenture"), to provide for the issuance from time to time of its
unsecured debentures, notes or other evidences of indebtedness (herein called
the "Securities"), the form and terms of which are to be established as set
forth in Sections 201 and 301 of the Original Indenture;
WHEREAS, Section 901 of the Original Indenture provides, among other
things, that the Company and the Trustee may enter into indentures supplemental
to the Original Indenture for, among other things, the purpose of establishing
the form and terms of the Securities of any series as permitted in Sections 201
and 301 of the Original Indenture and of appointing an Authenticating Agent with
respect to the Securities of any series;
WHEREAS, the Company desires to create a series of the Securities in an
aggregate principal amount of ______________ to be designated the "___% Bonds
Due 2006" (the "Bonds"), and all action on the part of the Company necessary to
authorize the issuance of the Bonds under the Original Indenture and this First
Supplemental Indenture has been duly taken; and
WHEREAS, all acts and things necessary to make the Bonds, when executed
by the Company and authenticated and delivered by the Trustee as in the
Indenture provided, the valid and binding obligations of the Company and to
constitute these presents a valid and binding supplemental indenture and
agreement according to its terms, have been done and performed;
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:
That in consideration of the premises and of the acceptance and
purchase of the Bonds by the holders thereof and of the acceptance of this trust
by the Trustee, the Company covenants and agrees with the Trustee, for the equal
benefit of holders of the Bonds, as follows:
<PAGE>
ARTICLE ONE
Definitions
The use of the terms and expressions herein is in accordance with the
definitions, uses and constructions contained in the Original Indenture and the
form of Bond attached hereto as Exhibit A.
ARTICLE TWO
Terms and Issuance of ___% Bonds Due 2006
Section 201. Issue of Bonds. A series of Securities which shall be
designated the "____% Bonds Due 2006" shall be executed, authenticated and
delivered in accordance with the provisions of, and shall in all respects be
subject to, the terms, conditions and covenants of the Original Indenture and
this First Supplemental Indenture (including the form of Note set forth in
Exhibit A hereto). The aggregate principal amount of the Bonds which may be
authenticated and delivered under the First Supplemental Indenture shall not,
except as permitted by the provisions of the Original Indenture, exceed
___________.
Section 202. Form of Bonds; Incorporation of Terms. The form of the Bonds
shall be substantially in the form of Exhibit A attached hereto, the terms of
which are herein incorporated by reference and which are part of this First
Supplemental Indenture.
Section 203. Limitation on Liens. The covenant provided by Section 1007 of
the Original Indenture shall be applicable to the Bonds.
Section 204. Limitation on Sale and Lease-Back Transactions. The covenant
provided by Section 1008 of the Original Indenture shall be applicable to the
Bonds.
Section 205. Additional Amounts. The terms provided by Section 308 of the
Original Indenture shall be applicable to the Bonds.
Section 206. Event of Default. The event specified in Section 501(5) of the
Original Indenture shall constitute an Event of Default with respect to the
Bonds.
Section 207. Place of Payment. The Place of Payment in respect of the Bonds
will be in The City of New York, initially the corporate trust office of
_____________ which, at the date hereof, is located at
_____________________________________.
2
<PAGE>
ARTICLE THREE
Authenticating Agent
Section 301. Authenticating Agent. ____________________________, a national
banking association duly organized and existing under the laws of the United
States, is hereby appointed Authenticating Agent with respect to the Bonds.
ARTICLE FOUR
Miscellaneous
Section 401. Execution as Supplemental Indenture. This First Supplemental
Indenture is executed and shall be construed as an indenture supplemental to the
Original Indenture and, as provided in the Original Indenture, this First
Supplemental Indenture forms a part thereof.
Section 402. Conflict with Trust Indenture Act. If any provision hereof
limits, qualifies or conflicts with another provision hereof which is required
to be included in this First Supplemental Indenture by any of the provisions of
the Trust Indenture Act, such required provision shall control.
Section 403. Effect of Headings. The Article and Section headings herein
are for convenience only and shall not affect the construction hereof.
Section 404. Successors and Assigns. All covenants and agreements in this
First Supplemental Indenture by the Company shall bind its successors and
assigns, whether so expressed or not.
Section 405. Separability Clause. In case any provision in this First
Supplemental Indenture or in the Bonds shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
Section 406. Benefits of First Supplemental Indenture. Nothing in this
First Supplemental Indenture or in the Bonds, express or implied, shall give to
any person, other than the parties hereto and their successors hereunder and the
Holders, any benefit or any legal or equitable right, remedy or claim under this
First Supplemental Indenture.
Section 407. Execution and Counterparts. This First Supplemental Indenture
may be executed in any number of counterparts, each of which shall be deemed to
be an original, but all such counterparts shall together constitute but one and
the same instrument.
IN WITNESS WHEREOF, the parties hereof have caused this First Supplemental
3
<PAGE>
Indenture to be duly executed and their respective company and corporate seals
to be hereunto affixed and attested, all as of the day and year first above
written.
SOUTHERN INVESTMENTS UK PLC
By
-----------------------------------------
AS TRUSTEE
By
Attest:
- ------------------------
4
<PAGE>
STATE OF NEW YORK)
:ss
COUNTY OF NEW YORK)
On this ___ day of ________, 1996, before me personally came
___________________, to me known, who, being by me duly sworn, did depose and
say that he is a ________________________ of Southern Investments UK plc, one of
the companies described in and which executed the foregoing instrument; and that
he signed his name thereto by like authority.
STATE OF NEW YORK)
:ss
COUNTY OF NEW YORK)
On this ___ day of _____________, 1996, before me personally came
___________________, to me known, who, being by me duly sworn, did depose and
say that he/she is a ________________________ of ___________________________,
one of the companies described in and which executed the foregoing instrument;
that he/she knows the seal of said company; that the seal affixed to said
instrument is such company seal; that it was so affixed by authority of the
Board of Directors of said company, and that he/she signed his/her name thereto
by like authority.
5
<PAGE>
EXHIBIT A
[FORM OF FACE OF SECURITY]
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE OF A DEPOSITARY. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED
IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS
SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY THE DEPOSITARY TO
A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY
OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED
CIRCUMSTANCES.
UNLESS THIS GLOBAL SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITARY TRUST COMPANY, A NEW YORK CORPORATION ("DTC")
TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY DEFINITIVE SECURITY IS ISSUED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL IN AS MUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOUTHERN INVESTMENTS UK PLC
__% Bonds Due 2006
No. ______________ $_______________
SOUTHERN INVESTMENTS UK PLC, a company duly organized and existing
under the laws of the England and Wales (herein called the "Company", which term
includes any successor corporation under the Indenture hereinafter referred to),
for value received, hereby promises to pay to _________________________________,
or registered assigns, the principal sum of ________________ Dollars on
______________________________, and to pay interest thereon from
_________________, or from the most recent Interest Payment Date to which
interest has been paid or duly provided for, semi-annually on ___________ and
____________ in each year, commencing ____________, 199[6], at the rate per
annum provided in the title hereof, until the principal hereof is paid or made
available for payment. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in such Indenture,
be paid to the Person in whose name this Security (or one or more Predecessor
6
<PAGE>
Securities) is registered at the close of business on the Regular Record Date
for such interest, which shall be the ____________ or _________________ (whether
or not a Business Day), as the case may be, immediately preceding such Interest
Payment Date. Any such interest not so punctually paid or duly provided for will
forthwith cease to be payable to the Holder on such Regular Record Date and may
either be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Securities of this series
not less than 10 days prior to such Special Record Date, or be paid at any time
in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities of this series may be listed, and
upon such notice as may be required by such exchange, all as more fully provided
in said Indenture.
Payment of the principal of (and premium, if any) and interest, if any,
on this Security will be made at the office or agency of the Company maintained
for that purpose in Brooklyn, New York, in such coin or currency of the United
States of America as at the time of payment is legal tender for the payment of
public and private debt.
All payments of principal and interest (including payments of discount
and premium, if any) in respect of this Security shall be made free and clear
of, and without withholding or deduction for or on account of any present or
future taxes, duties, assessments or governmental charges of whatever nature
imposed, levied, collected, withheld or assessed by or within the United Kingdom
or by or within any political subdivision thereof or any authority therein or
thereof having power to tax ("United Kingdom Taxes"), unless such withholding or
deduction is required by law. In the event of any such withholding or deduction,
the Company shall pay to the Holder such additional amounts ("Additional
Amounts") as will result in the payment to such Holder of the amount that would
otherwise have been receivable by such Holder in the absence of such withholding
or deduction, except that no such Additional Amounts shall be payable:
(a) to or on behalf of a Holder who is liable for such United
Kingdom Taxes in respect of this Security by reason of such Holder
having some connection with the United Kingdom other than the mere
holding of this Security or the receipt of principal and interest
(including payments of discount and premium, if any) in respect
thereof; or
(b) to or on behalf of a Holder who presents this Security
(where presentation is required) for payment more than 30 days after
the Relevant Date except to the extent that the Holder would have been
entitled to such Additional Amounts on presenting this Security for
payments on the last day of such period of 30 days.
"Relevant Date" means whichever is the later of (i) the date
on which such payment first becomes due and (ii) if the full amount payable has
not been received in The City of New York by the Trustee on or prior to such due
date, the date on which, the full amount having been so received, notice to that
effect shall have been given to the Holder in accordance with this Indenture.
7
<PAGE>
References to principal, interest, discount or premium in
respect of this Security shall be deemed also to refer to any Additional Amounts
which may be payable as set forth in the Indenture or in this Security.
The Company shall furnish to the Trustee the official receipts
(or a certified copy of the official receipts) evidencing payment of United
Kingdom Taxes. Copies of such receipts shall be made available to the Holder of
this Security upon request.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS
SECURITY SET FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL
PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.
Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof by manual signature,
this Security shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed under its company seal.
Dated:
[Seal] SOUTHERN INVESTMENTS UK PLC
By
[Title]
8
<PAGE>
[Form of Reverse of Security]
SOUTHERN INVESTMENTS UK PLC
___% Bonds Due 2006
This Security is one of a duly authorized issue of securities
of the Company (herein called the "Securities"), issued and to be issued in one
or more series under an Indenture, dated as of ________ __, 1996 (herein called
the "Indenture"), between the Company and _______________, as trustee (herein
called the "Trustee", which term includes any successor trustee under the
Indenture), to which Indenture and all indentures supplemental hereto reference
is hereby made for a statement of the respective rights, limitations of rights,
duties and immunities thereunder of the Company, the Trustee and the Holders of
the Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered. This Security is one of the series designated on
the face hereof, limited in aggregate principal amount to
- ----------------.
The Indenture contains provisions for defeasance of (a) the
entire indebtedness of this Security and (b) certain restrictive covenants upon
compliance by the Company with certain conditions set forth therein.
If an Event of Default with respect to Securities of this
series shall occur and be continuing, the principal of the Securities of this
series may be declared due and payable in the manner and with the effect
provided in the Indenture.
The Securities are subject to redemption upon not less than 15
nor more than 30 days' notice by first-class mail, at a price equal to the
outstanding principal amount thereof, together with any Additional Amounts and
accrued interest to the Redemption Date, if, as a result of any change in, or
amendment to, the laws (or any regulations or rulings promulgated thereunder) of
England or any political subdivision or taxing authority thereof or therein, or
any change in the application, administration or interpretation of such laws,
regulations or rulings in such jurisdiction, the Company has or will become
obligated to pay Additional Amounts hereon (and such obligation cannot be
avoided by the Company taking reasonable measures available to it), subject, as
provided in the Indenture, to the delivery by the Company of an Officers'
Certificate to the effect that such obligation to pay Additional Amounts cannot
be avoided by the Company taking reasonable measures available to it.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the Securities of
each series to be affected under the Indenture at any time by the Company and
the Trustee with the consent of the Holders of not less than a majority in
principal amount of the Securities at the time Outstanding of all series to be
affected (voting as a class).
9
<PAGE>
The Indenture also contains provisions permitting the Holders of specified
percentages in principal amount of the securities of each series at the time
Outstanding, on behalf of the Holders of all Securities of such series, to waive
compliance by the Company with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Security shall be conclusive and binding upon such
Holder and upon all future Holders of this Security and of any Security issued
upon the registration of transfer hereof or in exchange herefor or in lieu
hereof, whether or not notation of such consent or waiver is made upon this
Security.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of (and
premium, if any) and interest, if any, on this Security at the times, place and
rate, and in the coin or currency, herein prescribed.
This Security shall be exchangeable for Securities registered
in the names of Persons other than the Depositary with respect to such series or
its nominee only as provided in this paragraph. This Security shall be so
exchangeable if (a) the Depositary notifies the Company that it is unwilling or
unable to continue as Depositary for such series or at any time ceases to be a
clearing agency registered as such under the Securities Exchange Act of 1934 or
(b) the Company executes and delivers to the Trustee an Officers' Certificate
providing that this Security shall be so exchangeable. Securities so issued in
exchange for this Security shall be of the same series, having the same interest
rate, if any, and maturity and having the same terms as this Security, in
authorized denominations and in the aggregate having the same principal amount
as this Security and registered in such names as the Depositary for such Global
Security shall direct.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of a Security of the series of which
this Security is a part is registrable in the Security Register, upon surrender
of this Security for registration of transfer at the office or agency of the
Company in any place where the principal of (and premium, if any) and interest,
if any, on this Security are payable, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Securities of this series
and of like tenor, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
The Securities of the series of which this Security is a part
are issuable only in registered form without coupons in denominations of $1,000
and any integral multiple thereof. As provided in the Indenture and subject to
certain limitations therein set forth, Securities of this series are
exchangeable for a like aggregate principal amount of Securities of this series
and of like tenor of a different authorized denomination, as requested by the
Holder surrendering the same.
No service charge shall be made for any such registration of
transfer or exchange,
10
<PAGE>
but the Company may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
This Security shall be governed by and construed in accordance
with the laws of the State of New York.
All terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
11
Exhibit 10.1
PUBLIC ELECTRICITY SUPPLY LICENSE
- for -
South Western Electricity plc
<PAGE>
NOTE
The licenseholder is subject to the
environmental obligations set out in
Schedule 9 (Preservation of Amenity
and Fisheries) of the Electricity Act 1989
<PAGE>
TABLE OF CONTENTS
Page
PART I: TERMS OF THE LICENSE
PART II: THE CONDITIONS
1. Interpretation 2
2. Separate accounts for Separate Businesses. 18
3. Charge restriction conditions: definitions. 23
3A. Initial restriction of distribution charges. 33
3B. Initial restriction of supply charges. 39
3C. Supplementary restrictions on supply charges to regulated
customers. 46
3D. Restriction of distribution charges and of supply charges:
adjustments 49
3E. Information to be provided to the Director in connection
with the charge restriction conditions.
51
3F. Allowances in respect of security costs. 58
3G. Duration of charge restriction conditions. 62
4. Prohibition of cross-subsidies and of discrimination.
65
5. Obligation on economic purchasing. 67
6. Restriction of own-generation capacity. 70
7. Tariffs. 77
8. Basis of charges for top-up and standby supplies or sales of
electricity, use of system and connection to the system:
requirements for transparency.
78
8A. Non-discrimination in the provision of top-up or standby
supplies or sales of electricity, use of system and connection
to the system. 84
i
<PAGE>
8B. Requirement to offer terms. 87
8C. Functions of the Director. 92
9. Distribution system planning standard and quality of
service. 94
10. Generation security standard. 95
11. Distribution Code 100
12. Restriction of use of certain information
104
13. Compliance with the Grid Code. 108
14. Security arrangements. 109
15. Pooling and Settlement Agreement. 110
16. Conditions of supply affecting tariff customers' statutory
rights. 111
17. Licensee's apparatus on tariff customers' side of meter. 113
18. Code of practice on payment of bills.
114
19. Methods for dealing with tariff customers in default.
116
20. Provision of services for persons who are of pensionable
age or disabled.
118
21. Standards of performance. 120
22. Efficient use of electricity. 121
23. Complaint handling procedure. 123
24. Relations with relevant consumers' committee.
125
25. Health and safety of employees. 126
26. Requirement to enter certain agreements.
127
27. Disposal of relevant assets. 128
ii
<PAGE>
28. Provision of information to the Director.
131
29. Payment of fees. 134
SCHEDULE 1: Description of authorized area. 137
SCHEDULE 2: Terms as to revocation. 140
SCHEDULE 3: Supplementary provisions of the charge restriction
conditions. 143
PART A Principles for attribution of the fossil fuel levy
and of payments in lieu thereof, transmission
connection point charges, remote transmission asset
rentals and distribution losses.
143
PART B EHV premises. 146
PART C Excluded services. 147
PART D Regulated distribution unit categories.
151
PART E Calculation of factor in respect of distribution
losses.
153
PART F Electricity purchase costs. 157
iii
<PAGE>
PART I: TERMS OF THE LICENSE
1. The Secretary of State, in exercise of the powers conferred by Section
6(1)(c), Section 6(6) and Section 7 of the Electricity Act 1989
(hereinafter referred to as the "Act") hereby licenses South Western
Electricity plc (registered in England under number 2366894) as public
electricity supplier to supply electricity to any premises in the
authorized area designated in Schedule 1 below during the period
specified in paragraph 3 below, subject to the Conditions set out in
Part II and Schedule 3 below (hereinafter referred to as the
"Conditions").
2. The Conditions are subject to modification or amendment in accordance with
their terms of with Sections 11, 14 or 15 of the Act. This license is further
subject to the terms as to revocation specified in Schedule 2.
3. This license shall come into force on the transfer date appointed under
Section 65 of the Act and unless revoked in accordance with the
provisions of Schedule 2 shall continue until determined by not less
than 25 years' notice in writing given by the Secretary of State to the
licensee, such notice not to be served earlier than a date being 10
years after the license comes into force.
JOHN WAKEHAM
26th March, 1990 Secretary of State for Energy
1
<PAGE>
PART II: THE CONDITIONS
Condition 1: Interpretation
1. Unless the contrary intention appears, words and expressions used in
the Conditions shall be construed as if they were in an Act of
Parliament and the Interpretation Act 1978 applied to them and
references to an enactment shall include any statutory modification or
re-enactment thereof after the date when this license comes into force.
2. Any word or expression defined for the purposes of any provision of
Part I of the Act shall, unless the contrary intention appears, have
the same meaning when used in the Conditions.
3. In the Conditions unless the context otherwise requires:
"affiliate" in relation to the licensee means any
holding company or subsidiary of the
licensee or any subsidiary of a holding
company of the licensee, in each case
within the meaning of Sections 736, 736A
and 736B of the Companies Act 1985 as
substituted by Section 144 of the Companies
Act 1989 and if that section is not in force
at the date of grant of this license as if
such section were in force at such date.
"Auditors" means the licensee's
auditors for the
time being holding
office in accordance
with the
requirements of the
Companies Act 1985.
2
<PAGE>
"authorized" in relation to any
business or activity
means authorized by
license granted
under Section 6 or
exemption granted
under Section 5 of
the Act.
"authorized area" means the area from time to time comprised
in Schedule 1 to this license.
"authorized electricity operator" means any person (other than the licensee)
who is authorized to generate, transmit or
supply electricity and for the purpose of
Conditions 8A to 8C inclusive shall include
any person who has made application to be
so authorized which application has not
been refused and any person transferring
electricity to or from England and Wales
across an interconnector or who has made
application for use of interconnector which
has not been refused.
3
<PAGE>
"connection charges" means charges made or levied or to be
made or levied for the carrying out
(whether before of after the date on which
the license comes into force) of works and
provision and installation of electrical
plant, electric lines and ancillary meters in
constructing or modifying entry and exit
points on the licensee's distribution system
together with charges in respect of
maintenance and repair of such items in so
far as not otherwise recoverable as use of
system charges and in respect of
disconnection and the removal of electrical
plant, electric lines and ancillary meters
following disconnection, all as more fully
described in paragraphs 4 and 7 of
Condition 8, whether or not such charges
are annualized.
"customer" means any person
supplied or entitled
to be supplied with
electricity by the
licensee or, as the
case may be, by an
affiliate or related
undertaking of the
licensee but shall
not include any
authorized
electricity operator
in its capacity as
such.
4
<PAGE>
"declared net capacity" means in relation to generation plant, the
highest generation of electricity, at the main
alternator terminals, which can be
maintained for an indefinite period of time
without causing damage to the plant less so
much of that capacity as is consumed by the
plant.
"designated" in relation to any agreement or arrangement
or code or proposal therefor means
designated by the Secretary of State or on
his behalf by such means as he may
consider appropriate whether for the
purposes of any Condition of this license or
otherwise, but so that an agreement or
arrangement or code or proposal therefor so
designated may at the discretion of the
Secretary of State cease to be designated if
amended or modified in any material
respect.
"Distribution Business" means the business of the licensee or any
affiliate or related undertaking in or
ancillary to the distribution (whether for its
own account or that of third parties) of
electricity through the licensee's distri-
bution system and shall include any business
in providing connections to the licensee's
distribution system.
5
<PAGE>
"Distribution Code" means the
Distribution Code
required to be drawn
up pursuant to
Condition 11, as
from time to time
revised with the
approval of the
Director.
"electricity purchase contract" shall include any
contract or
arrangement under
which provision is
made for the making
or receipt of
payments by
reference to the
difference between
(a) an amount specified or ascertainable
under the terms of such contract or
arrangement; and
(b) the price at which electricity is sold or
purchased under the Pooling and Settlement
Agreement or any component of either of
such prices;
and
"electricity sale contract" shall by construed accordingly.
6
<PAGE>
"equivalent megawatt" in circumstances where demand is only
measured in mega volt amperes means mega
volt amperes converted into mega watts
using for this purpose a power factor of 0.9
mega watts per mega volt ampere of such
other factor as may with the approval of the
Director be taken as being appropriate
having regard to electrical characteristics of
the supply, and cognate expressions shall be
construed accordingly.
"financial year" bears the meaning given to it at paragraph 1
of Condition 2.
"Fuel Security Code" means
the document of that
title designated as
such by the
Secretary of State
as from time to time
amended.
"Generation Business" means the business (if any) in the
generation of electricity being a business
involving own-generation sets or in which
there is an accountable interest in generation
sets, as defined for the purposes of
Condition 6.
"generation set" means any plant
of apparatus for the
production of
electricity and
shall where
appropriate include
a generating station
comprising more than
one generation set.
7
<PAGE>
"Grid Code" means the Grid
Code required to be
drawn up by the
Transmission Company
and approved by the
Director as from
time to time revised
with the approval of
the Director.
"grid supply point" means
any point where
electricity is
delivered to the
licensee's
distribution system
from the
transmission system.
"interconnectors" means the electric
lines and electrical
plant and meters
owned or operated by
the Transmission
Company solely for
the transfer of
electricity to or
from the
transmission system
into or out of
England
and Wales.
"licensee" means South Western Electricity plc
(registered in England under number
2366894) and (where the context so
requires) shall include any Area Board in
respect of which the licensee is the
successor company.
8
<PAGE>
"licensee's distribution system" means the system of electric lines situated
wholly or partly within the authorized area
owned or operated by the licensee for
distribution of electricity between the grid
supply points or generation sets or other
entry points and the points where it is
delivered to customers or authorized
electricity operators, and includes any
remote transmission assets owned by the
Transmission Company operated by the
licensee and any electrical plant and meters
owned or operated by the licensee in
connection with the distribution of
electricity and references to the distribution
of electricity and references to the
distribution system of any authorized
electricity operator shall be construed
accordingly.
"megawatt" or "MW" includes an equivalent megawatt.
"1 MW customer" means
any customer other
than an over 1 MW
customer in its
capacity as such.
"1 MW premises" means any premises other than over 1 MW
premises.
"over 1 MW customer" means a customer supplied at over 1 MW
premises, but shall not include such
customer insofar as supplied at 1 MW
premises.
9
<PAGE>
"over 1 MW premises" means premises supplied by the licensee at
which the average of the maximum monthly
demands in the three months of highest
maximum demand in any period of twelve
consecutive months commencing on or after
January 1989 exceeds one megawatt or one
equivalent megawatt.
"Pooling and Settlement Agreement"means the agreement of that title approved
(or to be approved) by the Secretary of
State or by the Director as from time to
time amended with the approval of the
Director (where so required pursuant to its
terms) and shall where the context permits
include the Initial Settlement Agreement
approved (or to be approved) by the
Secretary of State (as from time to time
amended with the consent of the Secretary
of State).
"related undertaking" in relation to the licensee means any
undertaking in which the licensee has a
participating interest as defined by Section
22 of the Companies Act 1989 and if that
section is not in force at the date of grant
of this license as if such section were in
force at such date.
10
<PAGE>
"relevant consumers' committee" means the
committee appointed
by the Director
under Section 2 of
the Act for the area
for which this
licensee is the
public electricity
supplier.
"relevant premises" means any premises of or occupied by the
licensee open to customers in the normal
course of the licensee's business.
"remote transmission assets" means any electric lines, electrical plant or
meters owned by the Transmission
Company which (a) are embedded in the
distribution system of the licensee or any
authorized electricity operator other than the
Transmission Company and are not directly
connected by lines or plant owned by the
Transmission Company to a sub-station
owned by the Transmission Company and
(b) are by agreement between the
Transmission Company and the licensee or
such authorized electricity operator operated
under the direction and control of the
licensee or such authorized electricity
operator.
11
<PAGE>
"Retail Price Index" means
the general index of
retail prices
published by the
Department of
Employment each
month in respect of
all items or:
(a) if the index for
any month in any
year shall not have
been published on or
before the last day
of the third month
after such month,
such index for such
month or months as
the Director may
after consultation
with the licensee
determine to be
appropriate in the
circumstances; or
(b) if there is a
material change in
the basis of the
index, such other
index as the
Director may after
consultation with
the licensee
determine to be
appropriate in the
circumstances.
"Second-Tier Supply Business" means the authorized
business (if any) of
the licensee or any
affiliate or related
undertaking as a
private electricity
supplier.
12
<PAGE>
"Separate Business" means each of the Distribution, Supply,
Second-Tier Supply and Generation
Businesses taken separately from one
another and from any other business of the
licensee, but so that where all or any part of
such business is carried on by an affiliate or
related undertaking of the licensee such part
of the business as is carried on by that
affiliate or related undertaking shall be
consolidated with any other such business of
the licensee (and of any other affiliate or
related undertaking) so as to form a single
Separate Business.
13
<PAGE>
"standby" means the periodic or intermittent supply or
sale of electricity:
(a) to an authorized
electricity operator
to make good any
shortfall in the
availability of
electricity to that
operator for the
purposes of its
supply of
electricity to
persons seeking such
supply; or
(b) to a customer of
the licensee to make
good any shortfall
between the
customer's total
supply requirements
and that met either
by its own
generation or by
electricity supplied
by an authorized
electricity operator
other than the
licensee
such standby supply
or sale being
provided at such
entry or exit point
on the licensee's
distribution system
as the operator or
customer may
request.
"Supply Business" means the
authorized business
of the licensee as
public electricity
supplier in the
authorized area, but
shall not include
any activities
forming part of the
Distribution
Business.
14
<PAGE>
"top-up" means the supply or sale of electricity on a
continuing or regular basis:
(a) to an authorized
electricity operator
to make good any
shortfall in the
availability of
electricity
(including, where
that operator is
using the licensee's
distribution system,
to make good any
distribution losses
on that system) to
that operator for
the purposes of its
supply of
electricity to
persons seeking such
supply; or
(b) to a customer of
the licensee to make
good any shortfall
between the
customer's total
supply requirements
and that met either
by its own
generation or by
electricity supplied
by an authorized
electricity operator
other than licensee
such top-up supply
or sale being
provided at such
entry or exit point
on the licensee's
distribution system
as the operator or
customer may
request.
"transfer date" means such
date as may be
appointed by the
Secretary of State
by order under
Section 65 of the
Act.
15
<PAGE>
"Transmission Company" means The
National Grid
Company plc or any
other holder for the
time being of a
license to transmit
electricity in
England and Wales
under Section
6(1)(b) of the Act.
"transmission system" means the system consisting (wholly or
mainly) of high voltage electric lines owned
or operated by the Transmission Company
and used for the transmission of electricity
from one generating station to a sub-station
or to another generating station, or between
sub-stations or to any interconnector, and
includes any electrical plant and meters
owned or operated by the Transmission
Company in connection with the
transmission of electricity but shall not
include any remote transmission assets.
"undertaking" bears the meaning ascribed to that
expression by Section 259 of the Companies
Act 1985 as substituted by Section 22 of the
Companies Act 1989 and if that section is
not in force at the date of grant of this
license as if such section were in force at
such date.
"use of system" means use of the licensee's distribution
system for the transport of electricity by the
licensee or any authorized electricity
operator.
16
<PAGE>
"use of system charges" means charges made or levied or to be
made or levied by the licensee for the
provision of services as part of the
Distribution Business to any authorized
electricity operator or to the licensee for
the purposes of its Supply Business as more
fully described at paragraph 3 of Condition
8 and at paragraph C2 of Part C of
Schedule 3 to this license, but shall not
include connection charges.
4. Any reference to a numbered Condition (with or without a suffix letter)
or Schedule is a reference to the Condition (with or without a suffix
letter) or Schedule bearing that number in this license, and any
reference to a numbered paragraph (with or without a prefix or a suffix
letter) is a reference to the paragraph bearing that number (with or
without a prefix or a suffix letter) in the Condition or Schedule in
which the reference occurs.
5. In construing the Conditions, the heading or title of any Condition or
paragraph shall be disregarded.
6. Where, in the Conditions, any obligation of the licensee is required to
be performed within a specified time limit that obligation shall be
deemed to continue after that time limit if the licensee fails to
comply with that obligation within that time limit.
7. The provisions of Section 109 of the Act shall apply for the purposes
of the delivery or service of any documents, directions or notices to
be delivered or served pursuant to any Condition, and directions issued
by the Director pursuant to any Condition shall be delivered or served
as aforesaid.
17
<PAGE>
Condition 2: Separate accounts for Separate Businesses
1. The first financial year of the licensee shall run from 1st April 1990
to 31st March 1991, and thereafter each financial year of the licensee
shall run from 1st April to the following 31st March.
2. The remaining paragraphs of this Condition apply for the purpose of
ensuring that the licensee (and any affiliate or related undertaking)
maintains accounting and reporting agreements which enable separate
accounts to be prepared for each Separate Business and showing the
financial affairs of each such Separate Business.
3. The licensee shall in respect of each Separate Business:
(a) keep or cause to be kept for the period referred to in Section 222(5)(b) of
the Companies Act 1985 and in the manner referred to in that section such
accounting records in respect of each Separate Business as would by Section 221
of the Companies Act 1985 be required to be kept in respect of each business if
it were carried on by a separate company, so that the revenues, costs, assets,
liabilities, reserves and provisions of , or reasonably attributable to, each
Separate Business are separately identifiable in the books of the licensee (and
any affiliate or related undertaking) from those of any other business; and
(b) prepare on a consistent basis from such accounting records in respect of:
(i) the financial year commencing on 1st April 1990 and each subsequent
financial year, accounting statements comprising a profit and loss account, a
balance sheet and a statement of source and application of funds, together with
notes thereto, and showing separately in respect of each Separate Business and
in appropriate detail the amounts of any revenue, cost, asset, liability,
reserve or provision which has been either:
(A) charged from or to any other business (whether or not a Separate
Business) together with a description of the basis of that charge; or
18
<PAGE>
(B) determined by apportionment or allocation between any Separate
Business and any other business (whether or not a Separate Business) together
with a description of the basis of the apportionment or allocation; and
(ii) the first six months of the financial year commencing on 1st April
1990 and of each subsequent financial year, an interim profit and loss account;
and
(c) procure, in respect of the accounting statements prepared in accordance with
this Condition in respect of a financial year, a report by the Auditors and
addressed to the Director stating whether in their opinion those statements have
been properly prepared in accordance with this Condition and give a true and
fair view of the revenues, costs, assets, liabilities, reserves, and provisions
of, or reasonably attributable to, the Separate Business to which the statements
relate; and
(d) deliver to the Director a copy of the account referred to in sub-paragraph
(b)(ii) above, the Auditors' report referred to in sub-paragraph (c) above and
the accounting statements referred to in sub-paragraph (b)(i) above as soon as
reasonably practicable, and in any event not later than three months after the
end of the period to which it relates in the case of the account referred to in
sub-paragraph (b)(ii) and six months after the end of the financial year to
which they relate in the case of the accounting statements and Auditors' report
referred to in sub-paragraphs (b)(i) and (c) above.
4. (a) Unless the Director so specifies in directions issued for the
purposes of this Condition or with his prior written approval the
licensee shall not in relation to the accounting statements in respect
of a financial year change the bases of charge or apportionment or
allocation referred to in sub-paragraph (b)(i) of paragraph 3 from
those applied in respect of the previous financial year.
(b) Where, in relation to the accounting statements in respect of a
financial year, the licensee has changed such bases of charge or
apportionment or allocation from those adopted
19
<PAGE>
for the immediately preceding financial year, the licensee shall, if so
directed in directions issued by the Director, in addition to preparing
accounting statements on those bases which it has adopted, prepare such
accounting statements on the bases which applied in respect of the
immediately preceding financial year.
5. Accounting statements in respect of a financial year prepared under
sub-paragraph (b)(i) of paragraph 3 shall, so far as reasonably
practicable and unless otherwise approved by the Director having regard
to the purposes of this Condition:
(a) have the same content and format (in relation to each Separate Business) as
the annual accounts of the licensee prepared under Section 226 and, where
appropriate, Section 227 of the Companies Act 1985 and conform to the best
commercial accounting practices including Statements of Accounting Practice
issued by the member bodies of the Consultative Committee of Accounting Bodies
currently in force; and
(b) state the accounting policies adopted; and
(c) (with the exception of the part of such statement which shows separately the
amounts charged, apportioned or allocated and describes the bases of charge or
apportionment or allocation respectively and with the exception of the
accounting statements relating to the Second-Tier Supply Business), be published
with the annual accounts of the licensee.
6. Unless the accounting statements prepared under sub-paragraph (b)(i) of
paragraph 3 are prepared on the current cost basis as provided by the
alternative accounting rules, the licensee shall, unless otherwise
agreed by the Director, in addition to preparing those accounting
statements under that paragraph, prepare accounting statements for each
Separate Business covering the same period, which shall comprise and
show separately:
20
<PAGE>
(a) a profit and loss account, a balance sheet and a statement of source and
application of funds, together with notes thereto, which shall:
(i) include in respect of current cost assets amounts determined on the
current cost basis as provided by the alternative accounting rules; and
(ii) show or disclose the information and other matters required by the
alternative accounting rules to be shown or disclosed in accounts where the
amounts included in respect of assets covered by any items shown in those
accounts have been determined on any basis mentioned in paragraph 31 of Section
C of Part II of Schedule 4 to the Companies Act 1985;
(b) in respect of each Separate Business the adjusted amount of any such
provision for depreciation as is referred to in paragraph 32(2) of Section C of
Part II of Schedule 4 to the Companies Act 1985 and the items shown in the
profit and loss account of the Separate Business for the relevant period which
are affected by the determination of amounts on the current cost basis as
provided by the alternative accounting rules, including the profit (or loss)
before taxation; and
(c) such other current cost information as is referred to in the Handbook as
the Director may reasonably require and shall deliver the same, together with an
Auditors' report prepared in relation to the current cost basis accounting
statements in the form referred to in sub-paragraph (c) of paragraph 3, to the
Director within the same time limit referred to in sub-paragraph (d) of
paragraph 3, and shall (with the exception of the part of such statement which
shows separately the amounts charged, apportioned or allocated and describes the
bases of charge or apportionment or allocation respectively and with the
exception of the accounting statements relating to the Second-Tier Supply
Business) publish the same with the annual accounts of the licensee.
21
<PAGE>
7. References in this Condition to costs or liabilities of, or reasonably
attributable to, any Separate Business shall be construed as excluding
taxation, capital liabilities which do not relate principally to a
particular Separate Business, and interest thereon; and references to
any profit and loss account shall be construed accordingly.
8. Without prejudice to paragraph 1 of Condition 1, references in this
Condition to sections of the Companies Act 1985 are references to those
provisions as amended, substituted or inserted by the relevant
provisions of the Companies Act 1989 and if such provision of the
Companies Act 1989 are not in force at the date of grant of this
license shall be construed as if such provisions were in force at such
date.
9. For the purposes of paragraph 6:
"alternative accounting rules" means the rules set out in Section C of Part
II of Schedule 4 to the Companies Act 1985
"current cost assets" means
assets of any
description
mentioned in
paragraph 31 of
Section C of Part II
of Schedule 4 to the
Companies Act 1985.
"the Handbook" means the handbook issued by the
Accounting Standards Committee of the
Consultative Committee of Accounting
Bodies (CCAB Limited) or any successor
body entitled "Accounting for the effects of
changing prices: a Handbook" in its current
edition for the time being or in the event
that no such handbook shall be in issue such
guidance or publication as may be issued in
replacement or substitution therefor.
22
<PAGE>
Condition 3: Charge restriction conditions: definitions
1. In this Condition and in Conditions 3A to 3G and Schedule 3 to this
license:
"attributed" means when used in relation to the fossil
fuel levy or payments in lieu thereof or
transmission connection point charges or
remote transmission asset rental or
distribution losses, attributed in accordance
with the principles set out in Part A of
Schedule 3.
"average charge per unit distributed"
means the distribution
revenue in the relevant year
divided by the regulated
quantity distributed in that
year.
"average charge per regulated means the supply revenue to the extent it is
unit supplied" derived from supplies to regulated
customers in the relevant year divided by
the regulated quantity supplied in that year.
"average specified rate" means the
average of the daily base
rates of Barclays Bank plc
current from time to time
during which the calculation
fall to be made.
"charge restriction conditions"
means Conditions 3 to 3G
inclusive together with
Schedule 3 to this license,
as from time to time
modified or replaced in
accordance therewith or
pursuant to Sections 11, 14,
or 15 of the Act.
23
<PAGE>
"distribution losses" means units
unaccounted for on the
licensee's distribution
system, measured as being
the difference between the
units metered on entry into
the system and the units
metered on leaving the
system.
"distribution revenue" means the revenue
(measured on an accrual
basis) derived by the
licensee from the provision
of distribution services in
the relevant year, after
deduction of:
(i) an amount equal to such
part of the total amount
payable in that relevant
year to the Transmission
Company (measured on an
accruals basis) in
connection point charges and
remote transmission asset
rentals and which would
otherwise be included in
distribution revenue by
reason of being recovered in
that relevant year by the
licensee in its use of
system charges, as falls to
be attributed to the
regulated quantity
distributed in that relevant
year; and
(ii) value added tax (if
any) and any other taxed
based directly on the
amounts so derived.
24
<PAGE>
"distribution services" means all services
provided by the licensee as
part of its Distribution
Business other than excluded
services.
"EHV premises" means those
premises to which units are
delivered by the licensee
which fall to be treated as
EHV premises in accordance
with Part B of Schedule 3.
"EHV units" means units distributed by the licensee
which are delivered or deemed to be
delivered to EHV premises.
"electricity purchase costs" means the
licensee's purchase costs of
electricity calculated in
accordance with the
principles in Part F of
Schedule 3.
"excluded services" means those services provided by the
licensee which in accordance with the
principles set out in Part C of Schedule 3
fall to be treated as excluded services.
"HV units" means units (other
than EHV units) distributed
by the licensee which are
delivered to premises
connected to the licensee's
distribution system at a
voltage at or higher than
1000 volts.
25
<PAGE>
"interconnector charges" means charges levied by the Interconnectors
Business of the Transmission Company and
payable by the Supply or Second-Tier
Supply Business of the licensee in respect of
use of interconnector for the transfer of
electricity into England and Wales.
"LV units" mean units
distributed by the licensee
which are delivered to the
premises connected to the
licensee's distribution
system at a voltage less
than 1000 volts.
"LV1 units" means LV units which are distributed by the
licensee outside night-time periods to
domestic premises or small non-domestic
premises where the appropriate use of
system charges apply different rates in
night-time periods as opposed to other times
of day, for the avoidance of doubt including
the use of system charges under the tariffs
specified in paragraph D2 of Part D of
Schedule 3.
26
<PAGE>
"LV2 units" means LV units which
are distributed by the
licensee to domestic
premises or small
non-domestic premises:
(a) during night-time
periods, where the
appropriate use of system
charges apply different
rates in night-time periods
as opposed to other times of
the day; or
(b) where the appropriate
use of system charges are
incorporated into tariffs
which restrict availability
of supply to specified
off-peak periods,
for the avoidance of doubt
including the use of system
charges under the tariffs
specified in paragraph D3 of
Part D of Schedule 3.
"LV3 units" means LV units other
than LV1 and LV2 units, for
the avoidance of doubt
including units distributed
under the tariffs specified
in paragraph D4 of Part D of
Schedule 3.
"maximum average charge per means the charge calculated in accordance
unit distributed" with the formula in paragraph 1 of
Condition 3A.
"maximum average charge per means the charge calculated in accordance
regulated unit supplied" with the formula in paragraph 1 of
Condition 3C.
27
<PAGE>
"maximum average charge per means the charge calculated in accordance
unit supplied" with the formula in paragraph 1 of
Condition 3B.
"metered" means, in relation to any quantity
distributed or supplied, as measured by a
meter installed for such purpose or (where
no such meter is installed or it is not
reasonably practicable to measure the
quantity by such meter) as otherwise
reasonably calculated.
"OM units" means units supplied
by the licensee in relevant
year t which are supplied to
premises which in the
calendar year ending in
relevant year t-1 were over
1 MW premises.
"quantity supplied" means the
aggregate quantity of units
supplied by the licensee in
the relevant year metered at
the points of supply
(whether or not in the
authorized area of the
licensee).
"regulated customer" means a 1 MW customer.
"regulated distribution unit
category" means as the case may be HV
units or LV1 units or LV2
units or LV3 units.
28
<PAGE>
"regulated quantity means the aggregate quantity of units
distributed" distributed (both for the Supply Business of
the licensee and on behalf of third parties
under use of system) by the licensee
through the licensee's distribution system in
relevant year t metered at exit points on
leaving the licensee' distribution system but
excluding for this purpose:
(a) units distributed for the purpose of
supply to premises outside the licensee's
authorized area; and
(b) EHV units.
"regulated quantity supplied" means the
aggregate quantity of units
supplied by the licensee to
regulated customers in the
relevant year metered at the
points of supply.
"relevant year" means a financial year commencing on or
after 1st April 1990.
"relevant year t" means the relevant year for the purposes of
which any calculation falls to be made;
"relevant year t-1" means the relevant year
preceding relevant year t or, in respect of
the period prior to 1st April 1990, the
period of 12 calendar months commencing
on 1st April 1989; and similar expressions
shall be construed accordingly.
29
<PAGE>
"remote transmission asset means any rent or other periodic payment
rental" payable by the Distribution Business of the
licensee to the Transmission Company in
respect of remote transmission assets
forming part of the licensee's distribution
system.
"supply" includes supply outside the
authorized area, standby and
top-up supply and sale and
any other sales of
electricity by the licensee
to persons other than
customers; and "supplied"
and similar expressions
shall be construed
accordingly.
"supply charges" means all charges (including charges for the
provision of distribution services and
standing charges) made by the licensee in
respect of electricity supplied by the
licensee other than charges for the provision
of excluded services by the licensee.
30
<PAGE>
"supply revenue" means the revenue
(measured on an accruals
basis) derived by the
licensee from supply charges
after deduction of:
(i) an amount equal to that
part of the total amount
payable to the licensee to
the Transmission Company
(measured on an accruals
basis) in respect of
transmission connection
point charges and remote
transmission asset rentals
in that relevant year which
is charged by the
Distribution Business to the
Supply Business and
Second-Tier Supply Business
of the licensee; and
(ii) value added tax (if
any) and any other taxes
based directly on the
amounts so derived.
"supply unit category" means as the case may be OM units or UM
units.
"transmissions charges" means charges levied by the Transmission
Company payable by the Supply or the
Second-Tier Supply Business of the licensee
in respect of the transmission of electricity,
but for the avoidance of doubt shall exclude
transmission connection point charges and
remote transmission asset rentals.
31
<PAGE>
"transmission connection means charges levied by the Transmission
point charges" Company as connection charges by direct
reference to the number of
nature of the connections
between the licensee's
distribution system and the
transmission system and
payable by the Distribution
Business of the licensee.
"UM units" means units supplied by the licensee in
relevant year t which are not OM units.
"unit" means a kilowatt hour.
32
<PAGE>
Condition 3A: Initial restriction of distribution charges
Basic formula
1. Without prejudice to Condition 3F the licensee shall in setting its
charges for the provision of distribution services use its best
endeavors to ensure that in any relevant year the average charge per
unit distributed shall not exceed the maximum average charge per unit
distributed calculated in accordance with the following formula:
FORMULA
where:
Mdt means the maximum
average charge per
unit distributed in
relevant year t.
RPIt means the percentage change (whether of a
positive or a negative value) in the Retail
Price Index between that published or
determined with respect to October in
relevant year t and that published or
determined wit respect to October in
relevant year t-1.
Xd means 2.25.
Pdt-1 means that amount
per unit distributed
in relevant year t-1
which is derived
from the formula at
paragraph 2 of this
Condition.
33
<PAGE>
At means a factor in
respect of
distribution losses
in relevant year t
which is derived
from the formula at
paragraph 3 of this
Condition.
Kdt means the correction factor per unit
(whether of a positive or a negative value)
to be applied to the average charge per unit
distributed in relevant year t which (other
than in the first relevant year and subject to
paragraph 4 of Condition 3D) is derived
from the following formula:
FORMULA
where:
Rdt-1 means the
distribution revenue
in relevant year
t-1.
Dt-1 means the regulated
quantity distributed
in relevant year
t-1.
Dt means the regulated
quantity distributed
in relevant year t.
Mdt-1 means maximum
average charge per
unit distributed in
relevant year t-1.
34
<PAGE>
It means that interest rate in relevant year t
which is equal to, where Kdt (taking no
account of I for this purpose) has a positive
value, the average specified rate plus 4, or
where Kdt (taking no account of I for this
purpose) has a negative value, the average
specified rate.
2. Formula for Pdt-1 as used in paragraph 1
For the purposes of paragraph 1, the term Pdt-1 (being an amount per
unit distributed) shall be calculated in accordance with the following
formula:
Pdt-1 = [SIGMA] (Pdit-1-Wdit)
i
where:
[SIGMA] means the summation across all regulated
i distribution unit categories.
Pdit-1 means in respect of
each regulated
distribution unit
category i the
amount for that
regulated
distribution unit
category which is
derived from the
following formula:
Pdit-1 = Pdit-2[1 + RPIt-1 + Xd ]
100
35
<PAGE>
but in relation to
the first relevant
year and the next
succeeding relevant
year, Pdit-1 (for
the first relevant
year) and Pdit-2
(for the next
succeeding relevant
year) shall have in
respect of each
regulated
distribution unit
category set out
below in column one
the value equal to
that amount set
opposite that
category in column 2
1 2
regulated
distribution opening value
unit category (p)
HV 0.5072
LV1 2.3889
LV2 0.6679
LV3 1.8707
Wdit means in respect of
each regulated
distribution unit
category i the
weighting which is
derived from the
following formula:
Wdit = Dit
Dt
where:
Dit means that number of
units in regulated
distribution unit
category i
distributed in
relevant year t.
Dt means the regulated
distribution unit
category i
distributed in
relevant year t.
3. Formula for At as used in paragraph 1
For the purposes of paragraph 1, the term At (being a factor in respect
of distribution losses in relevant year t) shall be calculated in
accordance with the following formula:
At = Dt + ALt
Dt + Lt
36
<PAGE>
where:
Dt means the
regulated quantity
distributed in
relevant year t.
ALt means an amount
(in units)
representing
allowed
distribution
losses in relevant
year t, being the
allowed percentage
of the adjusted
units distributed
(calculated as
provided in
paragraph E5 of
Part E of Schedule
3) where:
(i) in respect of the first
relevant year t, the allowed
percentage shall be the
initial relevant loss
percentage calculated as
provided in paragraphs E6
to E8 of Part E of Schedule
3; and
(ii) in respect of each
subsequent relevant year t,
the allowed percentage shall
equal that percentage which
the aggregate of adjusted
distribution losses
(calculated as provided in
paragraphs E2 to E5 of Part
E of Schedule 3) over the
preceding relevant years
(commencing with the
twelve-month period from
1st April, 1989) bears to the
aggregate of adjusted units
distributed (calculated as
aforesaid) over the
corresponding relevant
years, save that for this
purpose adjusted distribution
losses in respect of the
twelve-month period from
1st April, 1989 shall be
derived by applying the
37
<PAGE>
initial loss percentage to the
adjusted units distributed in
that period.
Lt means in respect
of relevant year
t, adjusted grid
supply point
purchases less
adjusted units
distributed
(calculated as
provided in
paragraphs E2 to
E5 of Part E of
Schedule 3).
38
<PAGE>
Condition 3B: Initial restriction of supply charges
Basic Formula
1. Without prejudice to Condition 3F the licensee shall in setting its
supply charges use its best endeavors to ensure that in any relevant
year the average charge per unit supplied shall not exceed the maximum
average charge per unit supplied calculated in accordance with the
following formula:
Mst = [ 1+ RPIt - Xs ] Pst-1 + Yt - Kst
----
100
where:
Mst means the maximum
average charge per
unit supplied in
relevant year t.
RPIt means the percentage change (whether of a
positive or a negative value) in the Retail
Price Index between the index published or
determined in respect to October in
relevant year t and the index published or
determined with respect to October in
relevant year t-1.
Xs means zero.
Pst-1 means that amount
in relevant year
t-1 which is
derived from the
formulas at
paragraph 2 of
this Condition.
Yt means the allowed
cost, in pence per
unit supplied in
relevant year t,
as calculated in
accordance with
the formula at
paragraph 3 of
this Condition.
Kst means the
correction factor
per unit (whether
of a positive or
negative value) to
be applied to the
average charge per
unit supplied in
relevant year t
which (other
39
<PAGE>
than in the first
relevant year and
subject to
paragraph 4 of
Condition 3D) is
derived from the
following formula.
Kst = Rst-1 - (Qt-1 .Mst-1) (I+ It)
Qt 100
where:
Rst-1 means the supply
revenue in
relevant year t-1.
Qt-1 means the quantity
supplied in
relevant year t-1.
Qt means the quantity supplied in relevant
year t.
Mst-1 means the maximum
average charge per
unit supplied in
relevant year t-1.
It means that interest rate in relevant year t
which is equal to, where Kst (taking no
account of I for this purpose) has a
positive value (and, in the case of the
second relevant year only, the average
charge per unit supplied in the first
relevant year exceeds the maximum
average charge per unit supplied in the
first relevant year by more than 2 per
cent.), the average specified rate plus 2 or
where Kst (taking into account of I for this
purpose) has a negative value (or, in the
case of the second relevant year only, the
average charge per unit supplied in the
first relevant year does not exceed the
maximum average charge per unit supplied
in the first relevant year by more than 2
per cent.), the average specified rate.
40
<PAGE>
Formula for Pst-1 as used in paragraph 1
2. For the purpose of paragraph 1, the term Pst-1 (being an amount per
unit supplied) shall be calculated in accordance with the following
formula:
Pst-1 = [SIGMA] (Psit-1 .Wsit)
where:
[SIGMA] means the summation across all
i supply unit categories.
Psit-1 mean in respect of
each supply unit
category i the
amount for that
supply unit
category which is
derived from the
following formula:
Psit-1 = Psit-2 [ 1 + RPIt-1 - Xs ]
100
but in relation to
the first relevant
year and the next
succeeding
relevant year,
Psit-1 (for the
first relevant
year) and Psit-2
(for the next
succeeding
relevant year)
shall have in
respect of each
supply unit
category set out
below in column
one the value
equal to that
amount set
opposite that
category in column
two
1 2
- -
supply unit Opening
category value (p)
OM 0.0321
UM 0.3481
41
<PAGE>
Wsit means in respect
of each supply
unit category i
the weighting
which is derived
from the following
formula:
Wsit = Qsit
Qst
where:
Qsit means the number
of units in supply
unit category i
supplied in
relevant year t.
Qst means the quantity supplied in relevant
year t.
42
<PAGE>
Formula for Yt as used in paragraph 1
3. For the purpose of paragraph 1, the term Yt (being the allowed cost,
in pence per unit supplied in relevant year t) shall be calculated
in accordance with the following formula:
Yt = Et + Ft + Tt + Ut + St
where:
Et means the
licensee's average
electricity
purchase costs in
pence per unit
supplied in
relevant year t,
as calculated in
accordance with
the principles set
out in Part F of
Schedule 3.
Ft means the fossil
fuel levy per unit
in relevant year
t, being an amount
in pence per unit
derived by:
(a) aggregating
the
amounts
payable
(measured
on an
accruals
basis) by
the
licensee
in
respect
of the
fossil
fuel levy
pursuant
to
Regulations
made
under
Section
33 of the
Act in
respect
of
relevant
year t;
and
(b) dividing the resulting amount by
the quantity supplied in relevant
year t.
Tt means the allowed
transmission cost
per unit in
relevant year t,
derived by:
(a) aggregating those charges:
(i) paid by the licensee to the
Transmission Company as
transmission charges in
relevant year t after adding
any amounts received in
relevant year t in respect of
43
<PAGE>
any under or over payment
in the preceding relevant
year t-1; and
(ii) payable (measured on an
accruals basis) by the
licensee to the
Interconnectors Business of
the Transmission Company
as interconnector charges in
relevant year t; and
(b) dividing the resulting amount by
the quantity supplied in relevant
year t.
Ut means the allowed
distribution cost
per unit in
relevant year t,
derived by:
(a) aggregating the amounts payable
(measured on an accruals basis) in
relevant year t by the licensee in
respect of distribution services to
the Distribution Business of the
licensee and (in respect of similar
services, whether or not the same
are excluded services for the
purposes of the relevant third
party's license) to the distribution
business of any third party but
excluding the amount referred to in
sub-paragraph (i) of the definition
of "supply revenue" in paragraph 1
of Condition 3; and
(b) dividing the resulting amount by
the quantity supplied in relevant
year t.
St means the allowed
settlement system
cost per unit in
relevant year t
derived by:
(a) aggregating those charges payable
(measured on an accruals basis) by
44
<PAGE>
the
licensee
to the
settlements
system
administrator
and to
the pool
funds
administrator
in their
capacities
as such
under the
Pooling
and
Settlement
Agreement
in
respect
of
relevant
year t;
and
(b) dividing the resulting amount by
the quantity supplied in relevant
year t.
45
<PAGE>
Condition 3C: Supplementary restrictions on supply charges to regulated
customers
1. Without prejudice to Condition 3B and 3F and save as provided in
paragraph 3 of this Condition, in each of the first three relevant
years the licensee shall in setting its supply charges to regulated
customers use its best endeavors to ensure that the average charge per
regulated unit supplied shall not exceed the maximum average charge per
regulated unit supplied calculated in accordance with the following
formula:
Mpt = [ 1+ RPIt ] Ppt-1 + Fpt
100
where:
Mpt means the maximum
average charge per
regulated unit
supplied in
relevant year t.
RPIt means the percentage change ( whether of
a positive or a negative value) in the Retail
Price Index between that published or
determined with respect to October in
relevant year t and that published or
determined with respect to October in
relevant year t-1.
Ppt-1 means that amount
per unit supplied
to regulated
customers in
relevant year t-1
which is derived
from the following
formula:
Ppt-1 = Pp-2 [ 1+ RPIt-1 ]
100
but in relation to
the first relevant
year and the next
succeeding
relevant year,
Ppt-1 (for the
first relevant
year) and Ppt-2
(for the
46
<PAGE>
next succeeding relevant year) shall have a
value equal to 5.6443p.
Fpt means the fossil
fuel levy per unit
supplied to
regulated
customers in
relevant year t,
being an amount in
pence per unit
derived by:
(a) aggregating the amounts payable
(measured on an accruals basis) by
the licensee:
(i) in respect of the fossil fuel
levy pursuant to Regulations
made under Section 33 of
the Act in respect of
relevant year t; and
(ii)
in
lieu
of
the
fossil
fuel
levy
on
purchases
of
electricity
other
than
leviable
electricity,
as
calculated
in
accordance
with
paragraph
A3
of
Schedule
3
in
respect
of
relevant
y
ear
t;
and
(b)
attributing
a share
of those
amounts
to
quantities
supplied
in
relevant
year t to
such
regulated
customers
in
accordance
with the
principles
set out
in Part A
of
Schedule
3; and
(c) dividing the resulting amount by
the quantity supplied to such
regulated customers in relevant
year t.
2. As soon as practicable and in any event within 28 days of this license
entering into force the licensee shall deliver to the Director a
statement showing the bases and assumptions on which the licensee is
able to fulfill the obligation set out in paragraph 1 of this
Condition.
47
<PAGE>
3. The licensee shall not be in breach of its obligation under paragraph 1
of this Condition where:
(a) in any relevant year the average charge per unit supplied to
regulated customers exceeds the maximum average charge per
regulated unit supplied by reason of the licensee having
suffered an increase in its allowed cost per unit supplied
(calculated in accordance with the formula at paragraph 3 of
Condition 3B but so that for the purposes of such calculation
no amount taken into account in calculation of the term Fpt
under paragraph 1 of this Condition 3C shall be taken into
account under this sub-paragraph) which:
(i) results from circumstances that are unavoidable and
different from those envisaged in the bases or assumptions
contained in the statement referred to in paragraph 2 above;
and
(ii) whose effect would otherwise be materially and adversely to
affect the profits or losses of the licensee's Supply
Business; and
(b) the licensee has complied with its obligations under Condition
3E in relation to any increase in its tariff supply charges to
regulated customers consequent upon such increase in its
allowed cost per unit supplied.
48
<PAGE>
Condition 3D: Restriction of distribution charges and of supply charges:
adjustments
1. The following paragraphs shall have effect separately in relation to
distribution charges regulated under Condition 3A and supply charges
regulated under Condition 3B.
2. If, in respect of any relevant year, the average chart per unit exceeds
the maximum average charge per unit by more than the permitted one-year
percentage, the licensee shall furnish an explanation to the Director
and in the next following relevant year the licensee shall not effect
any increase in charges unless it has demonstrated to the reasonable
satisfaction of the Director that the average charge per unit would not
be likely to exceed the maximum average charge per unit in that next
following relevant year.
3. If, in respect of any two successive relevant years, the sum of the
amounts by which the average charge per unit has exceeded the maximum
average charge per unit is more than the permitted two-year percentage,
then in the next following relevant year the licensee shall, if
required by the Director, adjust its charges such that the average
charge per unit would not be likely, in the judgment of the Director,
to exceed the maximum average charge per unit in that next following
relevant year.
4. If, in respect of two successive relevant years, the average charge per
unit is less than 90 percent of the maximum average charge per unit,
the Director, after consultation with the licensee, may direct that:
(a) in calculating Kdt for the purposes of paragraph 1 of
Condition 3A in respect of the next following year, there
shall be substituted for Rdt-1 in the formula at paragraph 1
of Condition 3A such figure as the Director may specify being
not less than Rdt-1 and not more than 0.90 (Dt-1.Mdt-1); or
49
<PAGE>
(b) in calculating Kst for the purposes of paragraph 1 of
Condition 3B in respect of the next following relevant year,
there shall be substituted for Rst-1 in the formula at
paragraph 1 of Condition 3B such figure as the Director may
specify being not less than Rst-1 and not more than
0.90(Qt-1.Mst-1).
5. In this Condition:
"per unit" means per unit distributed or supplied, as the
context requires.
"permitted one-year means 3 per cent of the maximum
percentage" average charge per unit distributed or 4 per cent
of the maximum average charge per unit supplied,
as the context requires.
"permitted two-year means 4 percent of the maximum
percentage" average charge per unit distributed in the second
of the relevant years or 5
percent of the maximum
average charge per unit
supplied in the second of
the relevant years, as the
context requires.
50
<PAGE>
Condition 3E: Information to be provided to the Director in connection
with the charge restriction conditions
1. Where the licensee is intending to make any change in:
(a) charges for provision of distribution services regulated under
Condition 3A; or
(b) supply charges regulated under Condition 3B; or
(c) tariff supply charges to regulated customers regulated under
Condition 3C
the licensee shall not later than the time referred to in paragraph 2
below provide the Director with:
(i) a written forecast of the maximum average charge per unit
distributed or supplied or the maximum average charge per
regulated unit supplied, together in each case with its
components, in respect of the relevant year t in which such
change is to take effect and in respect of the next following
relevant year t+1; and
(ii) a written estimate of the maximum average charge per unit
distributed or supplied or the maximum average charge per
regulated unit supplied, together in each case with its
components, in respect of the relevant year t-1 immediately
preceding the relevant year in which the change is to take
effect unless a statement complying with paragraph 8 in
respect of relevant year t-1 has been furnished to the
Director before the publication of the proposed change.
51
<PAGE>
2. The relevant time referred to in paragraph 1 shall:
(a) in respect of changes in charges for distribution services
regulated under Condition 3A and supply charges regulated
under Condition 3B, be the date of publication of such
changes; and
(b) during the first three relevant years in respect of changes in
tariff supply charges to regulated customers regulated under
Condition 3C, be a date not less than 28 days prior to the
publication of such changes.
3. If within three months of the commencement of any relevant year t the
licensee has not made any such change in charges as is referred to in
paragraph 1, the licensee shall provide the Director with a written
forecast of the maximum average charge per unit distributed or supplied
or of the maximum average charge per regulated unit supplied in respect
of relevant year t.
4. The Director may issue directions providing that any forecast or
estimate provided in accordance with paragraphs 1 or 3 shall be
accompanied by such information as regards the assumptions underlying
the forecast or estimate as may be necessary to enable the Director to
be satisfied that the forecast or estimate has been properly prepared
on a consistent basis.
5. If at any time during the first three relevant years the licensee shall
increase its tariff supply charges to regulated customers regulated
under Condition 3C such that the average charge per regulated unit
supplied exceeds or is likely to exceed the maximum average charge per
unit supplied, the notice to be provided under paragraph 1 shall
contain details of the licensee's allowed cost per unit supplied
(calculated in accordance with the formula at paragraph 3 of Condition
3B), a full explanation of the unavoidable and different circumstances
surrounding the increase of such cost over that envisaged in the
statement of bases and assumptions referred to in paragraph 2 of
52
<PAGE>
Condition 3C and an analysis showing the material and adverse effect of
such increase on the profits or losses of the licensee's Supply
Business.
6. If at any time during the two relevant years following the expiry of
the first three relevant years the licensee shall change its supply
charges regulated under Condition 3B, the notice to be provided under
paragraph 1 shall separately identify changes in tariffs for supply to
regulated customers which were previously regulated under Condition 3C
and shall either:
(a) confirm that the average increase in tariffs to such regulated
customers in relevant year t over those prevailing in relevant
year t-1 shall not exceed the average increase in charges to
persons supplied by the licensee other than regulated
customers in relevant year t over those prevailing in relevant
year t- 1; or
(b) in the event that such confirmation is not available, shall
contain full details of the reasons underlying the relatively
greater average increase in tariffs to such regulated
customers.
7. Not later than six weeks after the commencement of any relevant year t,
the licensee shall send to the Director a statement as to:
(a) whether or not the provisions of Condition 3D are likely to be
applicable in consequence of the average charge or unit
distributed or supplied (as the case may be) in the preceding
relevant year t-1 or the two preceding relevant years t-1 and
t-2; and
(b) its best estimate as to the relevant correction factor Kdt or
Kst (as the case may be) to be applied in calculating the
maximum average charge per unit distributed or supplied (as
the case may be) in respect of relevant year t.
53
<PAGE>
8. Not later than three months after the end of a relevant year the
licensee shall send the Director a statement, in respect of that
relevant year, showing the specified items referred to in paragraph 10.
9. The statement referred to in the preceding paragraph shall be:
(a) accompanied by a report from the Auditors that in their
opinion such statement (i) fairly presents each of the
specified items referred to in paragraph 10 in accordance with
the requirements of the charge restriction conditions and (ii)
the amounts shown in respect of each of those specified items
are in accordance with the licensee's accounting records which
have been maintained in respect of each of the relevant
Separate Businesses in accordance with Condition 2; and
(b) certified by a director of the licensee on behalf of the
licensee that to the best of his knowledge, information and
belief having made all reasonable inquiries:
(i) there is no amount included in its calculations under
Condition 3A and Schedule 3 which represents other
than:
(aa) bona fide consideration for the provision of
distribution services in the course of its Distribution
Business; or
(bb) an amount permitted under the charge restriction
conditions to be so included;
(ii) there is no amount included in its calculations under
Condition 3B and Schedule 3 which represents other
than:
(aa) bona fide consideration for electricity supplied; or
54
<PAGE>
(bb) an amount permitted under the charge restriction
conditions to be so included;
(iii) (in respect of the first three relevant years) there
is no amount included in its calculations under
Condition 3C and Schedule 3 which represents other
than:
(aa) bona fide consideration for electricity supplied to
regulated customers; or
(bb) an amount permitted under the charge restriction
condition to be so included;
(iv) there is no amount included in its calculations of
allowed security costs under Condition 3F which
represents other than an amount permitted under the
charge restriction conditions to be so included;
(v) no service has been treated as an excluded service
which was not properly so treated and no amount
included in the revenues in respect thereof
represents other than bona fide consideration for the
provision of the excluded service to which it
related; and
(vi) all amounts which should properly be taken into
account for the purposes of the charge restriction
conditions have been taken into account.
10. The specified items to be contained in the statement referred to in
paragraph 8 shall be the following:
(a) the regulated quantity distributed;
55
<PAGE>
(b) the quantity distributed in each regulated distribution unit category;
(c) the average charge per unit distributed;
(d) the quantity supplied;
(e) the quantity supplied in each supply unit category;
(f) the average charge per unit supplied;
(g) in respect of the first three relevant years, the average charge per
regulated unit supplied;
(h) the regulated quantity supplied;
(i) the factor in respect of distribution losses, calculated as provided
under paragraph 3 of Condition 3A;
(j) the licensee's average electricity purchase costs calculated as
provided under paragraph 3 of Condition 3B;
(k) the fossil fuel levy per unit, calculated as provided under paragraph
3 of Condition 3B;
(l) the allowed transmission cost per unit, calculated as provided under
paragraph 3 of Condition 3B;
(m) the allowed distribution cost per unit, calculated as provided under
paragraph 3 of Condition 3B;
(n) the allowed settlement system cost per unit, calculated as provided
under paragraph 3 of Condition 3B;
(o) the fossil fuel levy per unit supplied to regulated customers,
calculated as provided under Condition 3C;
(p) the statements and information referred to in paragraph A6, B2, C8,
D1, E10 and F7 of Schedule 3;
(q) the information referred to at paragraph 8 of Condition 3F.
11. Where the Director issues directions in accordance with paragraph 9 of
Condition 3F or paragraphs A7 or B3 or C9 or D5 or E11 or F8 of
Schedule 3 then such directions shall not have effect from a date
earlier than the commencement of the relevant year to which the
statement last furnished to the Director pursuant to paragraph 8 prior
to
56
<PAGE>
the issue of the directions related, unless such statement (or the
accompanying report or certificate under paragraph 9) or any statement,
report or certificate in respect of an earlier relevant year was
incorrect or was misleading in any material respect.
12. Where the Director issues such directions as are referred to in the
preceding paragraph the Director may require the licensee to provide a
revised statement in respect of such of the specified items as may be
affected by the directions, and the licensee shall comply with such
request.
57
<PAGE>
Condition 3F: Allowances in respect of security costs
1. At any time during a security period, the licensee may give notice in
writing to the Director suspending, with effect from the date of
receipt of the notice by the Director, application of such of the
charge restriction conditions as may be specified in the notice for the
unexpired term of the security period.
2. At any time during a security period, the Director may (having regard
to his duties under the Act) by means of directions:
(a) suspend or modify for the unexpired term of the security period
the charge restriction conditions or any part or parts thereof;
or
(b) introduce for the unexpired term of the security period new
charge restriction conditions
in either case, so as to make such provision as in the opinion or
estimation of the Director is requisite or appropriate:
(i) to enable the licensee to recover by means of increased
charges an amount estimated as being equal to the licensee's
allowed security costs during such period;
(ii) to ensure that such part of the amount referred to in
sub-paragraph (i) above as is estimated as being equal to the
allowed security costs incurred by the licensee as costs in
its Distribution Business are recovered by means of
appropriate equitable increases on the charges made by the
licensees in its Distribution Business; and
58
<PAGE>
(iii) to ensure that such part of the amount referred to in
sub-paragraph (i) above as is estimated as being equal to the
allowed security costs incurred by the licensee as costs in
its Supply Business and its Second-Tier Supply Business
respectively are recovered by appropriate equitable increases
in the charges made by the licensee in those Businesses
and the licensee shall comply with the terms of any directions so
issued.
3. At any time following a security period, the Director may (following
such consultation with the licensee and others as the Director may
consider appropriate) issue directions suspending or modifying the
charge restriction conditions or any part or parts thereof or replacing
such directions as may have been made during the security period and
introducing such new charge restriction conditions as in the opinion of
the Director are appropriate in all the circumstances (including at the
Director's discretion an appropriate adjustment having regard to any
profit gained or foregone by the licensee during the security period),
and the licensee shall comply with any direction so issued.
4. At any time during three months after the issue of directions by the
Director under paragraph 3, the licensee may serve on the Director a
disapplication request in respect of such of the charge restriction
conditions or any part or parts thereof as are specified in the
request.
5. If within three months of the receipt by the Director of the
disapplication request referred to in paragraph 4, the Director has
either not agreed in writing to such disapplication request or has not
made a reference to the Monopolies Commission under Section 12 of the
Act relating to the modification of the charge restriction conditions,
the licensee may deliver one month's written notice to the Director
terminating the application of the charge restriction conditions (or
any part or parts thereof) as were specified in the disapplication
request.
59
<PAGE>
6. Subject to paragraphs 7 and 9, the licensee shall in any relevant year
be entitled to recover an aggregate amount equal to its allowed
security costs in that year or (insofar as not previously recovered)
any previous year, by means of appropriate equitable increases on the
charges made by the licensee in each of its Distribution, Supply and
Second-Tier Businesses.
7. Paragraph 6 shall not apply in so far s such allowed security costs.
(a) were otherwise recovered by the licensee; or
(b) were taken into account by the Director in setting charge
restriction conditions by means of directions issued under
paragraph 3 above.
8. The licensee shall following the end of each relevant year provide to
the Director, as being one of the specified times to be contained in
the statement referred to at paragraph 8 of Condition 3E, details in
respect of that relevant year of:
(a) the amount of the licensee's allowed security costs; and
(b) the aggregate amounts charged under paragraph 6 of an account of
the licensee's allowed security costs; and
(c) the bases and calculations underlying the increases in charges
made by the licensee in its Distribution, Supply and Second-Tier
Business under paragraph 6.
9. Where the Director is satisfied that the licensee has recovered amounts
in excess of the allowed security costs, the Directory may issue
directions requiring the licensee to take such steps as may be
specified to reimburse customers of or purchasers from the
60
<PAGE>
Distribution, Supply and Second-Tier Supply Business (sa the case may
be) for the excess amounts charged to them, and the licensee shall
comply with any directions so issued provided that if the excess
amounts relate to allowed security costs paid to any authorised
electricity operator, the licensee shall not be obliged to make any
such reimbursement unless and until it has recovered such costs from
the relevant authorised electricity operator.
10. No amounts charged by the licensee under this Condition (whether or not
subsequently required to be reimbursed) shall be taken into account for
the purpose of applying the charge restriction provisions of Conditions
3A and 3B and 3C.
11. In this Condition:
"allowed security cost" shall have the meaning ascribed to
that term in the Fuel Security Code.
61
<PAGE>
"security period" means a period commencing on the
date on which any direction issued
by the Secretary of State under
Section 34(4)(b) of the Act enters
effect and terminating on the date
(being not earlier than the date such
direction, as varied, is revoked or
expires) as the Director, after
consultation with such persons
(including without limitation, license
holders liable to be principally
affected) sa he shall consider
appropriate, may with the consent of
the Secretary of State by notice to all
license holders determine after
having regard to the views of such
persons.
Condition 3G: Duration of charge restriction conditions
1. Save insofar as concerns Condition 3C which shall cease to have effect
on 31st March, 1993, the charge restriction conditions shall apply so
long as this licence continues in force but shall cease to have effect
(in whole or in part, as the case may be) if the licensee delivers to
the Directors a disapplication request made in accordance with
paragraph 2 and:
(a) the Director agrees in writing to the disapplication request;
or
62
<PAGE>
(b) their application (in whole or in part) is terminated by
notice given by the licensee in accordance with either
paragraph 4 or paragraph 5.
2. A disapplication request pursuant to this Condition 3G shall (a) be in
writing addressed to the Director, (b) specify the charge restriction
conditions (or any part or parts thereof) to which the request relates
and (c) state the date from which the licensee wishes the Director to
agree that the specified charge restriction conditions shall cease to
have effect.
3. Save where the Director otherwise agrees, no disapplication following
delivery of a disapplication request pursuant to this Condition 3G
shall have effect earlier than that date which is the later of:
(a) a date being not less than 18 months after delivery of the
disapplication request; and either
(b) in the case of distribution charges regulated under Condition 3A,
31st March, 1995; or
(c) in the case of supply charges regulated under Condition 3B, 31st
March, 1994.
4. If the Director has not made a reference to the Monopolies Commission
under Section 12 of the Act relating to the modification of the charge
restriction conditions before the beginning of the period of 12 months
which will end with the disapplication date, the licensee may deliver
written notice to the Director terminating the application of such of
the charge restriction conditions (or any part or parts thereof) s are
specified in the disapplication request with effect from the
disapplication date or a later date.
5. If the Monopolies Commission makes a report on a reference made by the
Director relating to the modification of the charge restriction
conditions (or any part or parts
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thereof) specified in the disapplication request and such report does
not include a conclusion that the cessation of such charge restriction
conditions, in whole or in part, operates or may be expected to operate
against the public interest, the licensee may within 30 days after the
publication of the report by the Director in accordance with Section 13
of the Act deliver to him written notice terminating the application of
such charge restriction conditions with effect from the disapplication
date or later.
6. A disapplication request or notice served under this Condition may be
served in respect of a specified geographic area.
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Condition 4: Prohibitions of cross-subsidies and of discrimination.
1. The licensee shall procure that no Separate Business gives any
cross-subsidy to, or receives any cross-subsidy from, any other
business of the licensee or an affiliate or related undertaking of the
licensee (whether or not a Separate Business). For the purpose of this
paragraph, those parts of the Supply Business and of the Second-Tier
Supply Business consisting in the supply of electricity to over 1 MW
customers and in the supply of electricity to 1 MW customers shall each
be treated as a Separate Business.
2. The licensee shall not, and shall procure that any affiliate or related
undertaking of the licensee shall not, supply or offer to supply
electricity to any 1 MW customer or group of 1 MW customers at prices
or on other terms affecting the financial value of the supply which
differ from those on which it supplies or offers to supply electricity
to any other 1 MW customer or group of 1 MW customers except in so far
as such differences reasonably reflect differences in the costs
associated with such supply.
3. The licensee shall not, and shall procure that any affiliate or related
undertaking of the licensee shall not, supply or sell or offer to
supply or sell electricity (including under any electricity sale
contract) to any one relevant purchaser or person seeking to become a
relevant purchaser on terms as to price which are materially more or
less favorable than those on which it supplies or sells or offers to
supply or sell electricity (including under any electricity sale
contract) to comparable relevant purchasers. For these purposes, due
regard shall be had to the circumstances of supply or sale to such
purchasers including (without limitation) volumes, load factors,
conditions of interruptibility, location of premises being supplied and
date and duration of the agreement.
4. For the purposes of paragraph 3:
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"relevant purchaser" means any
purchaser of electricity
from the licensee or any
affiliate or related
undertaking of the licensee
other than a 1MW customer.
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Condition 5: Obligations on economic purchasing
1. Subject to paragraph 6, the provisions of paragraph 2 shall apply
separately in relation to purchases of electricity from the following
sources:
(a) qualifying renewable generation;
(b) qualifying non-fossil generation; and
(c) generation from any source other than as referred to in
sub-paragraphs (a) and (b) above.
2. In respect of each category referred to in paragraph 1 above, and
subject to paragraph 4 below, the licensee shall:
(a) itself purchase;
(b) procure any affiliate of the licensee to purchase; and
(c) in so far as it is able through the exercise of voting rights or
otherwise to do so, procure any related undertaking of the
licensee or any defined undertaking to purchase electricity at
the best effective price reasonably obtainable having regard to
the sources available.
3. In determining the effective price at which electricity is purchased by
the licensee or any affiliate or related undertaking of the licensee or
any defined undertaking, regard shall be had to any payments made or
received or to be made or received for the grant of or pursuant to any
electricity purchase contract.
4. In the discharge of its obligations under paragraph 2 above, the
licensee may additionally have regard to any considerations liable to
affect its ability and that of any affiliate of the licensee to
discharge its obligations under this Condition in the
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future, including the future security, reliability and diversity of
sources of electricity available for purchase.
5. In this Condition (and subject to paragraph 6) references to qualifying
renewable generation and to qualifying non-fossil general shall refer
to generation from capacity of that description which:
(i) has been contracted by the licensee or any defined undertaking
under an arrangement certified by the Secretary of State under
Section 32(7) of the Act which was entered into prior to the
date this licence enters force; or
(ii) is available to be contracted under arrangements to be
produced to the Director in satisfaction of an obligation
imposed on the licensee by Order made under Section 32 of the
Act after this licence enters force.
6. Notwithstanding that generation may previously have been contracted as
being qualifying renewable generation or qualifying non-fossil
generation (as the case may be), it shall cease to be so treated to the
extent that:
(a) the licensee (or any affiliate or related undertaking of the
licensee or any defined undertaking) enjoys contractual freedom
to vary or discontinue its obligation to purchase such
generation; and
(b) capacity from which qualifying renewable or non-fossil generation
(as the case may be) is otherwise contracted by the licensee or
any affiliate or related undertaking of the licensee or any
defined undertaking is equal to or exceeds the aggregate capacity
specified in any Orders previously made under Section 32 of the
Act and continuing in force, as being required to be available to
the licensee at that time or in respect of any future period
covered by such Orders.
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7. Paragraphs 2, 3 and 4 of this Condition shall apply mutatis mutandis
where the licensee exercises a discretion or (by agreement or
otherwise) varies the terms of an existing contract (whether or not
entered into prior to the date of entry into force of this licence) in
such a manner as to alter the effective price under such contract.
8. In this Condition:
"defined undertaking" means Non-Fossil Purchasing
Agency Limited or other entity
through which the licensee enters
into qualifying arrangements within
the meaning of Section 33 of the
Act.
"purchase" includes
the
acquisition
of
electricity
from
sources
failing
to be
treated
as
own-generation
for the
purpose
of
electricity
under
electricity
purchase
contracts.
"qualifying
non-fossil
generation"
shall
include
generation
from
renewable
sources
which
for the
time
being
has not
been
contracted
as being
qualifying
renewable
generation.
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<PAGE>
Condition 6: Restriction on own-generation capacity
1. The licensee shall procure that, with effect from the transfer date,
the Generation Business of the licensee is held as a Separate Business
by or through a wholly-owned subsidiary of the licensee.
2. Save with the prior written consent of the Director or in the
circumstances described in paragraph 3 below, the licensee shall at all
times ensure that the sum of the amounts in megawatts (calculated as
provided under paragraphs 4 and 5 below) represented by the declared
net capacity of the licensee's own-generation sets and the appropriate
share of the declared net capacity of generation sets in which the
licensee has an accountable interest shall not exceed 400 megawatts.
3. Where the licensee is in breach of paragraph 2 by reason of the
acquisition of own- generation sets or an accountable interest in other
generation sets in consequence of the occurrence of a specified event
affecting the operator or any third party, the licensee shall forthwith
notify the Director for the purpose of obtaining such consent as is
specified in paragraph 2.
4. For the purpose of calculating the limit under paragraph 2 and subject
to paragraph 5, there shall be attributed to the licensee:
(a) the whole of the declared net capacity represented by
own-generation sets; and
(b) the appropriate share (namely the share representing the
licensee's economic interest therein) of the declared net
capacity of generation sets in which it has an accountable
interest, ascertained in such manner as the licensee with the
approval of the Director may determine.
5. Where the Director is satisfied that by virtue of the licensee's
economic interest (ascertained in such manner as the Director may
determine) therein:
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(a) generation sets in which the licensee has only an accountable
interest should more properly be treated as own-generation sets;
or
(b) own-generation sets should more properly be treated as sets in
which the licensee only has an accountable interest; or
(c) own-generation sets, or generation sets in which the licensee has
an accountable interest, should not be treated as falling in
either category; or
(d) generation sets not declared as sets in which the licensee has an
accountable interest, should be treated as generation sets in
which the licensee has an accountable interest
the Director may issue directions to that effect.
6. For the purpose of this Condition and subject to paragraphs 5 and 9,
the licensee shall have an accountable interest in a generation set in
circumstances where (such generation set not being an own-generation
set of the licensee):
(a) the operator is a related undertaking of the licensee or any
affiliate of the licensee; or
(b) the licensee or any affiliate of the licensee is in partnership
with or is party to any arrangement for sharing profits or
cost-savings or any joint venture with the operator or with any
third party with regard to the operator; or
(c) the licensee or any affiliate of the licensee has (directly or
indirectly):
(i) any beneficial shareholding interest in the operator;
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<PAGE>
(ii) any beneficial underlying interest in the generation set; or
(iii)provided or agreed to provide finance to the operator
otherwise than on arm's length terms; or
(iv) provided or agreed to provide, or has determined or is
responsible for determining the price (or other terms
affecting the financial value) of, the fuel used in the
generation sets
and is entitled under a contract of not less than 5 years' duration:
(aa) to a share of the declared net capacity of the
generation set; or
(bb) to a share of the declared net capacity of a generation
set being the own-generation set of another authorised
electricity operator or in which such authorised
electricity operator has an accountable interest, under
arrangements for the exchange of capacity entitlement
or supplies of electricity representing such
entitlement between the licensee or its affiliates and
such authorised electricity operator.
7. Paragraph 6 shall be applied in relation to the calculation of an
accountable interest in generation sets of any other authorised
electricity operator as if the references therein to the licensee were
replaced by references to such authorised electricity operator.
8. References in paragraph 6 to contracts giving entitlements to a share
of declared net capacity shall include electricity sale or purchase
contracts where rights under such contract are exercisable by reference
to an identified generation set or to amounts generated at such set.
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<PAGE>
9. The licensee shall not be deemed to have an accountable interest in a
generation set where:
(a) such generation set is owned and operated by The National Grid
Company plc or a wholly-owned subsidiary thereof under a
license granted pursuant to Section 6 of the Act; or
(b) the licensee's interest arises wholly under the terms of the
Pooling and Settlement Agreement or (other than as provided in
paragraph 8) under any electricity purchase or sale contract;
or
(c) the licensee's interest arises solely by virtue of
arrangements for the sharing with the operator of any
generation set of the risks associated with changes in the
price of fuel used by the generation set during the term of
any such contract as is referr3ed to in paragraph 6 or 8
above.
10. The license shall, on each such occasion as it provides to the Director
separate accounts for the Generation Business pursuant to paragraph
3(b)(i) of Condition 2 and at any other time upon request of the
Director, provide to the Director a statement:
(a) confirming compliance with paragraphs 1, 2 and 3 above as at the
date of the statement and throughout the period since the last
such statement; and
(b) identifying (in such detail and with such supporting documents or
information as the Director may require) the amount of capacity
in megawatts represented by the declared net capacity of
own-generation sets attributable to the licensee and the
appropriate share of the licensee in the declared net capacity of
generation sets in which the licensee has an accountable
interest, as at the date of the statement.
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<PAGE>
11. Where the Director is satisfied that the basis of calculation used by
the licensee is not in conformity with paragraphs 4 and 5 above, the
Director may issue directions specifying an alternative basis of
calculation, and the basis of calculation by the licensee shall be
adjusted accordingly with effect from the date of issue of the
directors or such other date as may be specified in the directions.
12. In this Condition:
"operator" means,
in
relation
to any
generation
set, the
authorised
electricity
operator
or any
person
for the
time
being
responsible
(under
contract
or
otherwise)
for the
generation
or sale
of
electricity
from
such
plant.
"own-generation set" means any generation set the
majority beneficial ownership of
which is vested in the licensee or an
affiliate of the licensee or in respect
of which the licensee or an affiliate
of the licensee is the operator and
references to own-generation sets of
another authorised electricity
operator shall be construed as if the
references herein to the licensee
were replaced by references to that
authorised electricity operator.
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<PAGE>
"specified event" means any such event as is described
in paragraph (1)(f) of Schedule 2 to
this licence but for this purpose as if
references to the licensee were
replaced by references to the
operator or third party in question.
"underlying interest"
in
relation
to any
generation
set
means
any
interest
arising
by
reason
of the
licensee
or
affiliate
or any
related
undertaking
of the
licensee
or
affiliate
(where
alone or
with
others):
(a) holding or being entitled to
acquire an interest in the land
on which the generation set,
or any part thereof, is built;
(b) being in partnership with or
party to any arrangement for
sharing of profits or cost-
savings or any jo8int venture
with any person holding or
entitled to acquire an interest
in the land on which the
generation set, or any part
thereof, is built;
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<PAGE>
(c) owning any electrical plant
situated on or operated as a
unit with the generation set
(and for such purpose, any
electrical plant or equipment
to the possession of which the
licensee, affiliate or related
undertaking is entitled under
any agreement for hire, hire
purchase, conditional sale or
loan shall be deemed to be
owned by such person)
provided always that such
electrical plan shall not be
deemed to be operated as a
unit with any generation set
by reason only of connections
with any other system for the
transmission or distribution of
electricity; or
(d) having obtained any consent
under Section 36 of the Act
required for the construction
or extension of the generation
set or any part thereof.
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<PAGE>
Condition 7: Tariffs
1. The licensee shall ensure that any tariffs fixed under Section 18 of
the Act shall be so framed as separately to identify:
(a) the use of system element in the licensee's charges; and
(b) the charges in respect of the supply of electricity to tariff
customers.
2. The licensee shall provide to the Director copies of the tariffs from
time to time fixed by the licensee pursuant to Section 18 of the Act no
later than publication thereof.
32. Where the Director considers that by reason of the complexity of any
such tariffs fixed by the licensee, simplified explanatory statements
are required or expedient for the understanding of tariff customers,
the Director may direct the licensee to draw up such explanatory
statements and thereafter to publish them with the tariffs to which
they relate.
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<PAGE>
Condition 8: Basis of charges for top-up and standby supplies or sales
of electricity, use of system and connection to the system:
requirements for transparency
1. The licensee shall as soon as practicable and in any event within 28 days
after this licence has come into force prepare statements in a form
approved by the Director setting out the basis upon which the charges for
the provision of top-up and standby supplies or sales of electricity (as
part of the Supply or Second-=Tier Supply Business), for use of system and
for connection to the licensee's distribution system (in each case, as part
of the Distribution Business) will be made, in all cases in such form and
with such detail as shall be necessary to enable any person to make a
reasonable estimate of the charges to which he would become liable for the
provision of such services, and (without prejudice to the foregoing)
including the information set out in paragraphs 2 to 4 below.
2. The statement referred to in paragraph 1 shall in respect of the provision
of top-up and standby supplies or sales or el3ectricity set out the methods
by which and the principles on which the charges for the provision of each
of top-up supplies or sales and standby supplies or sales will be made.
3. The statement referred to in paragraph 1 shall in respect of use of system
include:
(a) a schedule of charges for transport of electricity under use of
system;
(b) a schedule of adjustment factors to be made in respect of distribution
losses, in the form of additional supplies required to cover those
distribution losses;
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<PAGE>
(c) the methods by which and the principles on which the charges (if any)
for availability or distribution capacity on the licensee's
distribution system will be made;
(d) a schedule of charges in respect of meter reading, accounting and
administrative services; and
(e) a schedule of the charges (if any) which may be made for the provision
and installation of any meters or electrical plant at entry or exit
points, the provision and installation of which is ancillary to the
grant of use of system, and for the maintenance of meters or
electrical plant.
4. The statement referred to in paragraph 1 shall in respect of connections to
the licensee's distribution system include:
(a) a schedule listing those items (including the carrying out of works
and the provision and installation of electric lines or electrical
plant of meters) of significant cost liable to be required for the
purpose of connection (at entry or exit points) to the licensee's
distribution system for which connection charges may be made or levied
and including (where practicable) indicative charges for each such
item and (in other cases) an explanation of the methods by which and
the principles on which such charges will be calculated;
(b) the methods by which and the principles on which any charges will be
made in respect of extension or reinforcement of the licensee's
distribution system rendered (in the licensee's discretion) necessary
or appropriate by virtue of providing connection to or use of system
to any person seeking connection;
(c) the methods by which and the principles on which connection charges
will be made in circumstances where the electric lines or electrical
plant to be installed
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<PAGE>
are (at the licensee's discretion) of greater size or capacity than
that required for use of system by the person seeking connection;
(d) the methods by which and the principles on which any charges
(including any capitalized charge) will be made for maintenance and
repair required of electric lines, electrical plant or meters provided
and installed for maki0ng a connection to the licensee's distribution
system;
(e) the methods by which and principles on which any charges will be made
for the provision of special metering or telemetry or date processing
equipment by the licensee for the purposes of enabling any person
which is party to the Pooling and Settlement Agreement to comply with
its obligations in respect of metering thereunder, or for the
performance by the licensee of any service in relation thereto; and
(f) the methods by which and principles on which any charges will be made
for disconnection from the licensee's distribution system and the
removal of electrical plant, electric lines and ancillary meters
following disconnection.
5. The basis on which charges for the provision of top-up and standby supplies
or sales of electricity shall be set shall reflect the costs directly
incurred in the provision thereof, together with a reasonable rate of
return on the capital represented by such costs.
6. Use of system charges for those items referred to in paragraph 3 shall be
determined on the same basis as is applied by the licensee when determining
the use of system element of tariffs fixed pursuant to Section 18 of the
Act and Condition 7.
7. Connection charges for those items referred to in paragraph 4 shall be set
at a level which will enable the licensee to recover:
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<PAGE>
(a) the appropriate proportion of the costs directly or indirectly
incurred in carrying out any works, the extension or reinforcement of
the licensee's distribution system or the provision and installation,
maintenance and repair or (as the case may be) removal following
disconnection of any electric lines, electrical plant or meter;s and
(b) a reasonable rate of return on the capital represented by such costs.
8. If so requested and subject to paragraph 9 and 14 below, the licensee
shall, as soon as practicable and in any event within 28 days (or where the
Director so approves such longer period as the licensee may reasonably
require having regard to the nature and complexity of the request) after
the date referred to in paragraph 15 below give or send to any person
making such request a statement showing present and future circuit
capacity, forecast power lines and loading on the part or parts of the
licensee's distribution system specified in the request and fault levels
for each distribution node covered by the request and containing:
(a) such further information as shall be reasonably necessary to enable
such person to identify and evaluate the opportunities available when
connecting to and making use of the part or parts of the licensee's
distribution system specified in the request; and
(b) if so requested, a commentary prepared by the licensee indicating the
licensee's views as to the suitability of the part or parts of the
licensee's distribution system specified in the request for new
connections and transport of further quantifies of electricity.
9. The licensee shall include in every statement given or sent under paragraph
8 above the information required by that paragraph except that the licensee
may:
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<PAGE>
(a) with the prior consent of the Director omit from any such statement
any details as to circuit capacity, power flows, loading or other
information, disclosure of which would, in the view of the Director,
seriously and prejudicially affect the commercial interests of the
licensee or any third party; and
(b) omit information the disclosure of which would place the licensee in
breach of Condition 12.
10. The licensee may periodically revise the information set out in and, with
the approval of the Director, alter the form of the statements prepared in
accordance with paragraph 1 and shall, at least once in every year this
licence is in force, revise such statements in order that the information
set out in the statements shall continue to be accurate in all material
respects.
11. The licensee shall send a copy of the statement prepared in accordance with
paragraph 1, and of each revision of such statements in accordance with
paragraph 10, to the Director.
12. The licensee shall give or send a copy of the statement prepared in
accordance with paragraph 1, or (as the case may be) of the latest revision
of such statements in accordance with paragraph 10, to any person who
requests a copy of such statement or statements.
13. The licensee may make a charge for any statement given or set pursuant to
paragraph 12 of an amount which shall not exceed the amount specified in
directions issued by the Director for the purposes of this Condition based
on the Director's estimate of the licensee's reasonable costs of providing
such a statement.
14. The licensee may within 10 days after receipt of the request provide an
estimate of its reasonable costs in the preparation of any statement
referred to in paragraph 8, and its
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<PAGE>
obligation to provide such statement shall be conditional on the person
requesting such statement agreeing to pay the amount estimated or such
other amount as the Director may, upon application of the licensee or the
person requesting such statement, direct.
15. For the purposes of paragraph 8 above, the date referred to shall be the
latest of:
(a) the date of receipt of the request referred to in paragraph 8; or
(b) the date on which the licensee receives agreement from the person
making the request to pay the amount estimated or such amount is
determined by the Director (as the case may be) under paragraph 14
above.
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<PAGE>
Condition 8A: Non-discrimination in the provision of top-up or standby
supplies or sales or electricity, use of system and connection to the
system
1. In the provision of top-up or standby supplies or sales of electricity
or in the carrying out of works for the purpose of connection to the
licensee's distribution system, the licensee shall not discriminate:
(a) between any persons or class or classes of persons; or
(b) as between the licensee (in the provision of connections by
the licensee as part of its Distribution Business to itself
for the purpose of its Supply or Second- Tier Supply Business)
and any person or class or classes of persons.
2. In the provision of use of system the licensee shall not discriminate:
(a) between any authorised electricity operators or class or classes
thereof; or
(b) as between the licensee (in the provision of use of system by the
licensee as part of its Distribution Business to itself for the
purpose of its Supply or Second-Tier Supply Business) and any
authorised electricity operator or class or classes thereof.
3. Without prejudice to paragraphs 1 or 2, the licensee shall not:
(a) make charges for the provision of top-up or standby supplies or
sales of electricity to any person or class or classes of
persons; or
(b) make charges for use of system to any authorised electricity
operator or class or classes thereof which differ from the
charges for such provision:
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<PAGE>
(i) (in the case of top-up or standby supplies or sales of
electricity) to any other person or class or classes of
person; or
(ii) (in the case of use of system):
(aa) to any other authorised electricity operator or to any
class or classes thereof; or
(bb) to the licensee (in the provision of use of system by
the licensee as part of its Distribution Business to
itself for the purposes of its Supply or Second-=Tier
Supply Business)
which differ from the charges for such provision:
(i) (in the case of top-up or standby supplies or sales of
electricity) to any other person or class or classes of
person; or
(ii) (in the case of use of system):
(aa) to any other authorised electricity operator or to any
class or classes thereof; or
(bb) to the licensee (in the provision of use of system by
the licensee as part of its Distribution Business to
itself for the purposes of its Supply or Second-Tier
Supply Business)
except in so far as such differences reasonably reflect differences in
the costs associated with such provision.
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<PAGE>
4. The licensee shall not in setting its charges for provision of top-up
or standby supplies or sales of electricity or charges for use of
system restrict, distort or prevent competition in the generation,
distribution or supply of electricity.
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<PAGE>
Condition 8B: Requirement to offer terms
1. On application made by any authorised electricity operator the licensee
shall (subject to paragraph 6) offer to enter into an agreement for use of
system:
(a) to accept into the licensee's distribution system at such entry point
or points and in such quantifies as may be specified in the
application, electricity to be provided by or on behalf of such
authorised electricity operator; and/or
(b) to distribute such quantities of electricity as are referred to in
sub-paragraph (a) above (less any distribution losses) at such exit
point or points on the licensee's distribution system and to such
person or persons as the authorised electricity operator may specify;
and
(c) specifying the use of system charges to be paid by the authorised
electricity operator, such charges (unless manifestly inappropriate)
to be referable to the statement referred to at paragraphs 1 and 3 of
Condition 8 or any revision thereof, and to be in conformity with the
requirements of paragraph 6 of Condition 8; and
(d) containing such further terms as are or may be appropriate for the
purposes of the agreement.
2. On application made by any person, the licensee shall (subject to paragraph
6) offer to enter into an agreement for connection to the licensee's
distribution system or for modification to an existing connection and such
offer shall make detailed provision regarding:
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<PAGE>
(a) the carrying out of works (if any) required to connect the licensee's
distribution system to any other system for the transmission or
distribution of electricity, and for the obtaining of any consents
necessary for such purpose;
(b) the carrying out of works (if any) in connection with the extension or
reinforcement of the licensee's distribution system rendered (in the
licensee's discretion) appropriate or necessary by reason of making
the connection or modification to an existing connection and for the
obtaining of any consents necessary for such purpose;
(c) the installation of appropriate meters (if any) required to enable the
licensee to measure electricity being accepted into the licensee's
distribution system at the specified entry point or points or leaving
such system at the specified exit point or points;
(d) the installation of such switchgear or other apparatus (if any) as may
be required for the interruption of supply where the person seeking
connection or modification of an existing connection does not require
the provision by the licensee of top-up or standby supplies or sales
of electricity;
(e) the installation of special metering, telemetry or data processing (if
any) for the purpose of enabling any person which is party to the
Pooling and Settlement Agreement to comply with its obligation in
respect to metering or the performance by the licensee of any service
in relation to such metering thereunder;
(f) the date by which any works required to permit access to the
licensee's distribution system (including for this purpose any works
to reinforce or
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<PAGE>
extend the licensee's distribution system) shall be completed (time
being of the essence unless otherwise agreed by the person seeking
connection);
(g) the connection charges to be paid to the licensee, such charges
(unless manifestly inappropriate):
(i) to be presented in such a way as to be referable to the statement
referred to in paragraphs 1 and 4 of Condition 8 or any revision
thereof; and (ii) to be set in conformity with the requirements
of paragraph 7 of Condition 8 and (where relevant) of paragraph
4; and
(h) containing such further terms as are or may be appropriate for the
purpose of the agreement.
3. The licensee shall (subject to paragraph 6) offer to enter into an
agreement with any person who requested the same to provide top-up or
standby supplies op sales of electricity, such offer to make provision for
the charges to be made in respect of top- up or standby supplies or sales
of electricity, such charges:
(a) to be presented in such a way as to be referable to the statement
referred to in paragraph 2 of Condition 8 or any revision thereof; and
(b) to be set in conformity with the requirements of paragraph 5 of
Condition 8.
4. For the purpose of determining an appropriate proportion of the costs
directly or indirectly incurred in carrying out works under an agreement
for making a connection or modification to an existing connection, the
licensee shall have regard to:
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(a) the benefit (if any) to be obtained or likely in the future to be
obtained by the licensee or any other person as a result of the
carrying out of such works whether by reason of the reinforcement or
extension of the licensee's distribution system or the provision of
additional entry or exit points on such system or otherwise; and
(b) the ability or likely future ability of the licensee to recoup a
proportion of such costs from third parties.
5. The licensee shall offer terms for agreements in accordance with
paragraphs 1 to 3 above as soon as practicable and (save where the
Director consents to a longer period) in any event not more than the
period specified in paragraph 7 below after receipt by the licensee
from:
(a) in the case of paragraph 1, an authorised electricity operator;
and
(b) in the case of paragraphs 2 and 3, any person of an application
containing all such information as the licensee may reasonably
require for the purpose of formulating the terms of the offer.
6. The licensee shall not be obliged pursuant to this Condition to offer to
enter or to enter into any agreement if:
(a) to do so would be likely to involve the licensee:
(i) in breach of its duties under Section 9 of the Act;
(ii) in breach of the Electricity Supply Regulations 1988 or of
any regulations made under Section 29 of the Act or of any
other enactment
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relating to safety or standards applicable in respect to the
Distribution Business;
(iii) in breach of the Grid Code or the Distribution Code; or
(iv) in breach of the Conditions; or
(b) the person making the application does not undertake to be bound,
in so far as applicable, by the terms of the Distribution Code or
the Grid Code from time to time in force; or
(c) in the case of persons making application for use of system under
paragraph 1, such person ceases to be an authorised electricity
operator.
7. For the purpose of paragraph 5, the period specified shall be:
(a) in the case of persons seeking use of system or top-up or standby
supplies or sales of electricity only, 28 days; and
(b) in the case of persons seeking connection or a modification to an
existing connection or use of system or top-up or standby
supplies or sales of electricity in conjunction with connection,
three months.
8. The licensee shall within 28 days following receipt of a request from
any person, give or send to such person such information in the
possession of the licensee as may be reasonably required by such person
for the purpose of completing paragraph 87 of Part 1 and paragraphs
2(v) and (vi) of Part 2 of Schedule 2 of The Electricity (Application
for Licences and Extensions of Licences) Regulations 1990 or such
provisions to like effect contained in any further regulations then in
force made pursuant to Se3ctions 6(3), 60 and 64(1) of the Act.
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Condition 8C: Functions of the Director
1. If, after a period which appears to the Director to be reasonable for the
purpose, the licensee has failed to enter into an agreement with (as the
case may be) any authorised electricity operator or any person entitled or
claiming to be entitled thereto pursuant to a request under Condit8on 8B,
the Director may, pursuant to Section 7(3)(c) of the Act and on the
application of such authorised electricity operator or such person or the
licensee, settle any terms of the agreement in dispute between the licensee
and that authorised electricity operator or that person in such manner as
appears to the Director to be reasonable having (in so far as relevant)
regard in particular to the following considerations:
(a) that such authorised electricity operator or such person should pay to
the licensee:
(i) in the case of the provision of top-up or standby supplies or
sales of electricity, such sum as is determined in accordance
with paragraph 5 of Condition 8;
(ii) in the case of provision of use of system, the use of system
charges determined in accordance with paragraph 6 of Condition 8;
and
(iii)in the case of provision of a connection or a modification to an
existing connection to the system, the whole or an appropriate
proportion (as determined in accordance with paragraph 4 of
Condition 8B) of the costs referred to in sub-paragraph (a) of
paragraph 7 of Condition 8, together with a reasonable rate of
return on the capital represented by such costs;
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(b) that the performance by the licensee of its obligations under the
agreement should not cause it to be in breach of those provisions
referr3ed to at paragraph 6 of Condition 8B;
(c) that any methods by which the licensee's distribution system is
connected to any other system for the transmission or distribution of
electricity accord (in so far as applicable to the licensee) with the
Distribution Code and with the Grid Code; and
(d) that the terms and conditions of the agreement so settled by the
Director and of any other agreements entered into by the licensee
pursuant to a request under Condition 8B should be, so far as
circumstances allow, in as similar a form as is practicable.
2. In so far as any authorised electricity operator or any person entitled
or claiming to be entitled to an offer under Condition 8B wishes to
proceed on the basis of the agreement as settled by the Director, the
licensee shall forthwith enter into and implement such agreement in
accordance with its terms.
3. If the licensee proposes to vary the contractual terms of any agreement
for connection to the licensee's distribution system or for use of
system entered into pursuant to Condition 8B or this Condition in any
manner provided for under such agreement, the Director may, at the
request of the licensee or other party to such agreement, settle any
dispute relating to such variation in such manner as appears to the
Director to be reasonable.
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Condition 9: Distribution system planning standard and quality of
service
1. The licensee shall plan and develop the licensee's distribution system
in accordance with a standard not less than that set out in Engineering
Recommendation P.2/5 (October 1978 revision) of the Electricity Council
Chief Engineers' Conference in so far as applicable to it or such other
standard of planning as the licensee may, following consultation (where
appropriate) with the Transmission Company and any other authorised
electricity operator liable to be materially affected thereby and with
the approval of the Director, adopt from time to time.
2. The licensee shall within 3 months after this licence enters into force
draw up and submit to the Director for his approval a statement setting
out criteria by which the quality of performance of the licensee in
maintaining distribution system security and availability and quality
of service may be measured.
3. The licensee shall within 2 months after the end of each financial year
submit to the Director a report providing details of the performance of
the licensee during the previous financial year against the criteria
referred to in paragraph 2.
4. The Director may (following consultation with the licensee and, where
appropriate, with the Transmission Company and any other authorised
electricity operator liable to be materially affected thereby) issue
directions relieving the licensee of its obligation under paragraph 1
in respect of such parts of the licensee's distribution system and to
such extent as may be specified in the directions.
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Condition 10: Generation security standard
1. The licensee shall make arrangements sufficient to meet the generation
security standard.
2. The duty imposed by paragraph 1 shall be discharged either by the
licensee's complying with the provisions of paragraph 3 below or by the
making by the licensee of such other arrangements as may have been
previously approved in writing for the purpose by the Director.
3. The licensee may discharge the duty imposed by paragraph 1 by:
(a) for so long as the relevant condition is set, purchasing as a
pool member under the terms of the Pooling and Settlement
Agreement quantities of electricity which are at all times
sufficient to meet the demands of all qualifying customers of
the licensee; and
(b) for so long as the relevant condition is set, and save by
reason of planned maintenance undertaken on the licensee's
distribution system or in circumstances of force majeure
affecting either the licensee's distribution system or the
quantities of electricity delivered into that system, not:
(i) making voltage reductions outside statutory limits; or
(ii) interrupting or reducing supplies to any qualifying
customer otherwise than as instructed pursuant to the
Grid Code by the Transmission Company or in accordance
with the Distribution Code.
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The relevant condition referred to in paragraph 3 is that there should
at any relevant time be electricity available to be purchased under the
terms of the Pooling and Settlement Agreement at a price less than the
ceiling price.
5. The licensee shall upon request by the Director provide to the Director
such information as the Director may require for the purpose of
monitoring compliance with this Condition and to enable the Director
(having regard to his statutory duties) to review the operation of the
generation security standard.
6. The provisions of this Condition are without prejudice to the duties of
the licensee under the Electricity Supply Regulations 1988.
7. In this Condition:
"ceiling price" means such price as would be equal
to the Pool Selling Price in
circumstances where the
corresponding Pool Purchase Price
was an amount equal to the Value of
Lost Load.
"generation security standard" means such standard of generation
security as will ensure that:
(a) the supply of electricity to
qualifying customers will not
be discontinued in more than
9 years in any 100 years; and
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(b)
the
voltage
or
frequency
of
electricity
supplied
to
qualifying
customers
will
not
be
reduc4ed
below
usual
operational
limits
in
more
than
30
years
in
any
100
years
by
reason
of
insufficiency
of
electricity
generation
available
for the
purpose
of
supply
by the
licensee
to its
qualifying
customers
at times
of
annual
system
peak
demand.
"Pool Purchase Price" and shall each have the meaning from
Pool Selling Price" time to time ascribed to them in
Schedule
9 to the
Pooling
and
Settlement
Agreement.
"qualifying customer"
means
any
purchaser
from the
licensee
entitled
and
requiring
at any
time to
be
supplied
by the
licensee
at
premises
within
the
authorised
area of
the
licensee
but
shall
exclude:
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(a) a contract purchaser under
an interruptible contract or a
contract containing load
management terms to the
extent that supplies to that
purchaser may be interrupted
or reduced in accordance with
the terms of that contract; and
(b)
a
tariff
customer
on
special
tariffs
which
restrict
supplies
to
particular
time
periods
to
the
extent
that
supplies
to
that
customer
may
be
interrupted
or
reduced
in
accordance
with
such
tariff.
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"Value of Lost Load" means in respect of the first financial
year, the sum of(pound)2 per Kwh and, in
respect of each succeeding financial
year, the sum which corresponds to
(pound)2 per Kwh as adjusted to reflect the
percentage change in the Retail Price
Index between the index published
or determined in respect to the
December prior to the start of that
financial year and the index
published or determined for
December 1989.
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Condition 11: Distribution Code
1. The licensee shall in consultation with authorized electricity
operators liable to be materially affected thereby prepare and at all
times have in force and shall implement and (subject to paragraph 10 of
this Condition) comply with a Distribution Code.
(a) covering all material technical aspects relating to
connections to and the operation and use of the licensee's
distribution system or (in so far as relevant to the operation
and use of the licensee's distribution system) the operation
of electric lines and electrical plant connected to the
licensee's distribution system or the distribution system of
any authorised electricity operator and (without prejudice to
the foregoing) making express provision as to the matters
referred to in paragraph 5 below; and
(b) which is designed so as:
(i) to permit the development, maintenance and operation of an
efficient, co-ordinated and economical system for the
distribution of electricity; and
(ii) to facilitate competition in the generation and supply of
electricity.
2. The Distribution Code in force at the date this licence enterer force
shall be sent to the Director for his approval. Thereafter the licensee
shall (in consultation with authorised electricity operations liable to
be materially affected thereby) periodically review (including upon the
request of the Director) the Distribution Code and its implementation.
Following any such review, the licensees shall send to the Director:
(a) a report on the outcome of such review; and
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(b) any proposed revisions to the Distribution Code from time to
time as the licenses (having regard to the outcome of such
review) reasonably thinks fit for the achievement of the
objectives referred to in sub-paragraph (b) of paragraph 1;
and
(c) any written representations or objections from authorised
electricity operators (including any proposals by such
operators for revisions to the Distribution Code not accepted
by the licenses in the course of the review) arising during
the consultation process and subsequently maintained.
3. Revisions to the Distribution Code proposed by the licensees and sent to
the Director pursuant to paragraph 2 shall require to be approved by the
Director.
4. Having regard to any written representations or objections referred to
in sub-paragraph (c) of paragraph 2, and following such further
consultation (if any) as the Director may consider appropriate, the
Director may issue directions requiring the licensee to revise the
Distribution Code in such manner as may be specified in the directions,
and the licensee shall forthwith comply with any such directions.
5. The Distribution Code shall include:
(a) a distribution planning and connection code containing:
(i) connection conditions specifying the technical,
design and operational criteria to be complied with
by any person connected or seeking connection with
the licensee's distribution system; and
(ii) planning conditions specifying the technical and
design criteria and procedures to be applied by the
licenses in the planning and development of the
licensee's distribution system and to be taken into
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account by persons connected or seeking connection
with the licensee's distribution system in the
planning and development of their own plant and
systems; and
(b) a distribution operating code specifying the conditions under
which the licensee shall operate the licensee's distribution
system and under which persons shall operate their plant
and/or distribution system in relation to the licensee's
distribution system, in so far as necessary to protect the
security and quality of supply and safe operation of the
licensee's distribution system under both normal and abnormal
operating conditions.
6. The licensee shall give or send a copy of the Distribution Code (as
from time to time revised) to the Director.
7. The licensee shall (subject to paragraph 8) give or send a copy of the
Distribution Code (as from time to time revised) to any person
requesting the same.
8. The licensee may make a charge for any copy of the Distribution Code
(as from time to time revised) given or sent pursuant to paragraph 7 of
an amount which will not exceed any amount specified for the time being
for the purposes of this Condition in directions issued by the
Director.
9. In preparing, implementing and complying with the Distribution Code
(including in respect of the scheduling of maintenance of the
licensee's distribution system), the licensee shall not unduly
discriminate against or unduly prefer:
(a) any one or any group of persons; or
(b) the licensee in the conduct of any business other than the
Distribution Business
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in favour of or as against any one other or any other group of persons.
10. The Director may (following consultation with the licensees) issue
directions relieving the licensee of the obligations under the
Distribution Code in respect of such parts of the licensee's
distribution system and to such extent as may be specified in the
directions.
11. Compliance with this Condition shall not require the licensee to impose
any contractual obligation on tariff customers to comply with the
Distribution Code (as from time to time revised).
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<PAGE>
Condition 12: Restriction on use of certain information
1. Where any person is required, pursuant to the provisions of the
Distribution Code to provide information to the licensee or any affiliate
or related undertaking of the licensee for the purposes of the Distribution
Business such person providing the information may, by notice in writing
given to the licensee or such affiliate or related undertaking not later
than the time at which such information is provided or by the endorsement
on the information of words indicating the confidential nature of such
information, specify such information as confidential information for the
purposes of this Condition and the provisions of this Condition shall apply
to that information.
2. Where the licensee or any affiliate or related undertaking of the licensee
receives confidential information in accordance with paragraph 1, the
licensee shall (and shall procure that such affiliate or related
undertaking shall):
(a) not use the confidential information for any purpose other than that
for which it was provided;
(b) without prejudice to sub-paragraph (a), not use the confidential
information in a manner which may obtain for the licensee or any
affiliate or related undertaking of the licensee any commercial
advantage in the operation of the Supply Business or of the
Second-Tier Supply Business;
(c) not authorize access to nor disclose any confidential information
other than:
(i) to such of the employees of the licensee or any affiliate or
related undertaking of the licensee (as the case may be) as
require to be informed thereof for the effective operation of the
Distribution Business;
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<PAGE>
(ii) to such agents, consultants and contractors as require to be
informed thereof for the effective operation of the Distribution
Business;
(iii) to the Director;
(iv) (with the prior approval of the person providing the confidential
information) to the Transmission Company; or
(v) information which the licensee or any affiliate or related
undertaking of the licensee (as the case may be) is required or
permitted to make disclosure of:
(aa) in compliance with the duties of the licensee or any
affiliate or related undertaking of the licensee (as the
case may be) under the Act or any other requirement of a
Competent Authority; (bb) in compliance with the conditions
of any licence issued under the Act or any document referred
to in any such licence with which the licensee or any
affiliate or related undertaking of the licensee (as the
case may be) is required by virtue of the Act or such
licence to comply; (cc) in compliance with any other
requirement of law; (dd) in response to a requirement of any
Stock Exchange or regulatory authority or the Panel on
Take-overs and Mergers; or (ee) pursuant to the arbitration
rules for the Electricity Supply Industry Arbitration
Association or pursuant to any judicial or other arbitral
process or tribunal of competent jurisdiction; and
(d) take all reasonable steps to ensure that any such person as is
referred to in sub-paragraph (c)(i) and (c)(ii) above to whom the
licensee or any affiliate or related undertaking of the licensee (as
the case may be) discloses confidential
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<PAGE>
information does not use that confidential information for any purpose
other than that for which it was provided and does not disclosure that
confidential information otherwise than in accordance with the
provisions of this Condition.
3. In this Condition:
"Competent Authority" means the Secretary of State, the Director
and any local or national agency, authority,
department, inspectorate, minister, ministry,
official or public or statutory person (whether
autonomous or not) of, or of the government
of, the United Kingdom or the European
Community.
"confidential information" means all information provided by any person
pursuant to the provisions of the Distribution
Code which is specified as confidential by
such person as provided in paragraph 1, but
shall exclude all information that is in or
enterer into the public domain otherwise than
as a consequence of unauthorized disclosure
by the licensee or any affiliate or related
undertaking of the licensee (or by any person
to whom the same is disclosed or suffered to
be disclosed by the licensee or such affiliate
or related undertaking.
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<PAGE>
"Electricity Supply Industry means the unincorporated members' club of
Arbitration Association" that name formed inter alia to promote the
efficient and
economic operation
of the procedure
for the resolution
of disputes within
the electricity
supply industry by
means of
arbitration or
otherwise in
accordance with
its arbitration
rules.
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<PAGE>
Condition 13: Compliance with the Grid Code
1. The licensee shall comply with the provisions of the Grid Code in so far as
applicable to it.
2. The Director may (following consultation with the Transmission Company)
issue directions relieving the licensee of its obligation under paragraph 1
in respect of such parts of the Grid Code and to such extent as may be
specified in those directions.
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<PAGE>
Condition 14: Security arrangements
1. The licensee shall comply with the provisions of the Fuel Security Code
and such provisions shall have effect as if they were set out in this
licence.
109
<PAGE>
Condition 15: Pooling and Settlement Agreement
1. The licensee shall be a pool member under, and comply with the provisions
of, the Pooling and Settlement Agreement.
110
<PAGE>
Condition 16: Conditions of supply affecting tariff customers'
statutory rights
1. The licensee shall not include in or send with any notice given under
Section 16(3) of the Act, or any form provided to tariff customers or
prospective tariff customers for use in giving notice under Section
16(2) of the Act, or any notice sent subsequently, an invitation to
agree to anything which, by virtue of the Act, amy only be done or (as
the case may be) not done.
(a) with the agreement of that person; or
(b) in any case where that person withholds his agreement or makes
that agreement subject to terms and conditions to which the
licensee objects, with the approval or consent or by order of
the Secretary of State
unless the form and terms of such invitation have first been submitted
to and approved by the Director.
2. Nothing in paragraph 1 shall prevent the licensee from:
(a) requiring a customer or prospective customer to enter into a
special agreement where this is permitted under Section 22 of the
Act;
(b) including in any such notice any provision or condition which the
licensee is required or permitted to include in such notice by
virtue of Section 16(4) of the Act; or
(c) including any such notice concerning the provision of a supply to
premises:
(i) not previously supplied by the licensee; or
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<PAGE>
(ii) where any change is required in the location of any electric
line, electrical plant or electric meter
an invitation to any customer or prospective customer to agree
to any provision or condition concerning the installation or
location of any or all of an electric line, electrical plant
or an electric meter
in any such case without having submitted the form and terms of such
agreement or notice to the Director.
3. The licensee shall include in any form provided to tariff customers or
prospective tariff customers for use in giving notice under Section
16(2) of the Act a prominent statement of the right of such customer to
apply to the Director for the determination of any dispute arising out
of the proposed terms of supply.
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Condition 17: Licensee's apparatus on tariff customers' side of meter
1. This Condition applies where the licensee installs a second meter or
other apparatus for the purpose of ascertaining or regulating the
amount of electricity supplied, the period of supply, or any other
quantity or time connected with the supply on the customer's side of
the meter or meters registering the quantity of the supply to a tariff
customer.
2. Any second meter or other apparatus installed by the licensee in the
position and for a purpose described in paragraph 1 shall be such that
the power consumed by it, when aggregated with the power consumed by
any other meter or apparatus installed by the licensee in the like
position and for a like purpose in relation to the tariff customer,
does not exceed 10 watts except where otherwise agreed with the tariff
customer.
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Condition 18: Code of practice on payment of bills
1. The licensee shall within three months after this licence has come into
force prepare and submit to the Director for his approval a Code of
Practice concerning the payment of electricity bills by customers
occupying domestic premises, and including appropriate guidance for the
assistance of such customers who may have difficulty in paying such
bills.
2. The licensee shall, whenever requested to do so by the Director, review
the Code prepared in accordance with paragraph 1, and the manner in
which it has been operated, with a view to determining whether any
modification should be made to it or to the manner of its operation.
3. In preparing the Code, and in carrying out any review (including in
accordance with paragraph 2), the licensee shall consult the relevant
customers' committee and shall have regard to any representations made
by it about the Code or the manner in which it is likely to be or (as
the case may be) has been operated.
4. The licensee shall submit any revision of the Code which, after
consulting the relevant consumers' committee in accordance with
paragraph 3, it wishes to make to the Director for his approval.
5. The licensee shall:
(a) send a copy of the Code and of any revision of it (in such case,
in the form approved by the Director) to the Director and the
relevant consumers' committee;
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(b) draw to the attention of customers occupying domestic premises
the existence of the Code and each substantive revision of it and
how they may inspect or obtain a copy of the Code in its latest
form;
(c) make a copy of the Code (as from time to time revised) available
for inspection by members of the public at each of the relevant
premises during normal working hours); and
(d) give or send free of charge a copy of the Code (as from time to
time revised) to any person who requests it.
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Condition 19: Methods for dealing with tariff customers in default
1. The licensee shall within three months after this licence has come into
force, after consultation with the relevant consumers' committee,
prepare and submit to the Director for his approval methods for dealing
with tariff customers who, through misfortune or inability to cope with
electricity supplied for domestic use on credit terms, incur
obligations to pay for electricity so supplied which they find
difficulty in discharging including, in particular, methods for:
(a) distinguishing such tariff customers from others in default;
(b) detecting failure by such tariff customers to comply with
arrangements entered into for paying by installments charges for
electricity supplied;
(c) making such arrangements so as to take into account the tariff
customer's ability to comply with them;
(d) ascertaining, with the assistance of other persons or
organisations, the ability of tariff customers to comply with
such arrangements;
(e) providing for such a tariff customer who has failed to comply
with such arrangements a prepayment meter where safe and
practical to do so; and
(f) calibrating any prepayment meter so provided so as to take into
account the tariff customer's ability to pay any of the charges
due from the customer under such arrangements in addition to the
other charges lawfully being recovered through the prepayment
meter.
2. The licensee shall not make any substantial change in the methods adopted
under this Condition without the consent of the Director.
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3. The licensee shall furnish the Director with such information as to such
methods as he may from time to time direct.
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Condition 20: Provision of services for persons who are of pensionable
age or disabled
1. The licensee shall make arrangements for persons occupying domestic
premises who are of State pensionable age or disabled by which special
services in the following respects can be made available where
appropriate:
(a) providing where practicable special contracts and adapters for
electrical appliances and meters (including pre-payment meters)
and repositioning meters;
(b) providing special means of identifying officers authorised by the
licensee; and
(c) giving advice on the use of electricity.
2. The licensee shall within three months after the date on which this
licence has come into force prepare and submit to the Director for this
approval a Code of Practice describing the special services available
and any charges made or to be made.
3. The licensee shall whenever requested to do so by the Director review
the Code prepared in accordance with paragraph 2, and the manner in
which it has been operated, with a view to determining whether any
modification should be made to it or to the manner of its operation.
4. In preparing the Code, and in carrying out any review (including in
accordance with paragraph 3), the licensee shall consult the relevant
consumers' committee and shall have regard to any representations made
by it about the Code or the manner in which it is likely to be or (as
the case may be) has been operated.
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5. The licensee shall submit any revision of the Code which, after
consulting the relevant consumers' committee in accordance with
paragraph 4, it wishes to make to the Director for his approval.
6. The licensee shall:
(a) send a copy of the Code and of any revision of it (in each case,
in the form approved by the Director) to the Director and the
relevant consumers' committee;
(b) make a copy of the Code (as from time to time revised) available
for inspection by members of the public at each of the relevant
premises during normal working hours; and
(c) give or send free of charge a copy of the Code (as from time to
time revised) to any person who requests it.
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Condition 21: Standards of performance
1. The licensee shall conduct its Supply and Distribution Business in the
manner which it reasonably considers to be best calculated to achieve
any standards of overall performance or standards of performance in
connection with the promotion of the efficient use of electricity by
customers, as may be determined by the Director pursuant to Sections 40
and 41 respectively of the Act.
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Condition 22: Efficient use of electricity
1. The licensee shall within three months after this licence has come into
force, after consultation with the relevant consumers' committee,
prepare and submit to the Director for his approval a Code of Practice
setting out the ways in which the licensee will make available to
customers such guidance on the efficient use of electricity as will, in
the opinion of the licensee, enable them to make informed judgments on
measures to improve the efficiency with which they use the electricity
supplied to them. Such Code of Practice shall include, but shall not be
limited to:
(a) the preparation and making available free of charge to any
customer who requests it of a statement, in a form approved by
the Director, setting out information and advice for the guidance
of customers in the efficient use of electricity supplied to
them;
(b) the creation and maintenance within the licensee's organisation
of sources from which customers may obtain further information
about the efficient use of electricity supplied to them,
including the maintenance of a telephone information service;
(c) the preparation and making available free of charge to any
customer who requests it of a statement or statements of sources
(to the extent that the licensee is aware of the same) outside
the licensee's organisation from which customers may obtain
additional information or assistance about measures to improve
the efficiency with which they use the electricity supplied to
them, such statement or statements to include basic information
which is publicly available on financial assistance towards the
costs of such measures available from Central or Local Government
or through bodies in receipt of financial support from Government
in connection with measures to promote the efficiency of energy
use.
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2. Where the Director (who may have regard to the need for economy,
efficiency and effectiveness before giving directions under this
paragraph) gives directions to do so, the licensee shall:
(a) review and prepare a revision of the Code of Practice;
(b) take steps to bring to the attention of customers information on
the efficient use of electricity supplied to them; and
(c) send to each customer a copy of any information published by the
Director pursuant to Section 48 of the Act
in such manner and at such times as will comply with those directions.
3. The licensee shall:
(a) make a copy of any Code of Practice prepared in accordance
with paragraph 1, and of any revision of such Code prepared in
accordance with paragraph 2 (in each case, in the form
approved by the Director) to the Director and the relevant
consumers' committee;
(b) make a copy of such Code (as from time to time revised)
available for inspection by members of the public at each of
the relevant premises during normal working hours; and
(c) give or send free of charge a copy of such Code (as from time
to time revised) to any person who requests it.
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Condition 23: Complaint handling procedure
1. The licensee shall within three months after this licence has come into
force establish a procedure for handling complaints from customers
about the manner in which the licensee conducts its Supply and
Distribution Businesses.
2. The licensee shall, whenever requested to do so by the Director, revise
the procedure established in accordance with paragraph 1, and the
manner in which that procedure has been operated, with a view to
determining whether any modification should be made to it or to the
manner of its operation.
3. in establishing a procedure in accordance with paragraph 1, and in
carrying out any review (including in accordance with paragraph 2), the
licensee shall consult the relevant consumers' committee and shall have
regard to any representations made by it above the procedure or the
manner in which it is likely to be or (as the case may be) has been
operated.
4. Any procedure established in accordance with this Condition shall
specify the periods within which it is intended that different
descriptions of complaint should be processed and resolved.
5. The licensee shall submit the procedure established in accordance with
paragraph 1, and any revision of it which (after consultation with the
relevant consumers' committee in accordance with paragraph 3) is
proposed to be made, to the Director for his approval.
6. The licensee shall:
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(a) send a copy of the procedure and any revision of it (in each
case, after it has been approved by the Director) to the Director
and the relevant consumers' committee.
(b) make a copy of the procedure (as from time to time revised)
available for inspection by members of the public at each of the
relevant premises during normal working hours; and
(c) give or send free of charge a copy of the procedure (as from tim
to time revised) to any person who requests it.
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Condition 24: Relations with relevant consumers' committee
1. The licensee shall meet with the relevant consumers' committee whenever
requested to do so by that committee, up to a maximum of six times in
every year during the period of this licence.
2. Without prejudice to paragraph 1, the licensee shall meet the relevant
consumers' committee at least once in every year during the period of
this licence.
3. In at least one meeting with the relevant consumers' committee in every
year during the period of this licence, the licensee shall be
represented by one or more directors of the licensee.
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Condition 25: Health and safety of employees
1. It shall be the duty of the licensee to act together with other
licensees to consult with appropriate representatives of the employees
for the purpose of establishing and maintaining an appropriate
machinery or forum for the joint consideration of matters of mutual
concern in respect of the health and safety of persons employed by
those licensees.
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Condition 26: Requirement to enter certain agreements
1. If any proposed agreement relating to the generation, transmission or
supply of electricity has (following consultation with the licensee)
been designated by the Secretary of State for the purposes of this
Condition, the Secretary of State may at any time prior to 1st October,
1990, require the licensee:
(a) to offer to enter into such proposed agreement; and
(b) upon that offer being accepted, forthwith to enter into such
agreement.
2. In this Condition, "agreement" shall include any arrangement whether or
not in writing and whether or not intended to be legally enforceable,
and "proposed agreement" shall be construed accordingly.
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Condition 27: Disposal of relevant assets
1. The licensee shall not dispose of or relinquish operational control over
any relevant asset otherwise than in accordance with the following
paragraphs of this Condition.
2. Save as provided in paragraph 3, the licensee shall give to the Director
not less than two months' prior written notice of its intention to dispose
of or relinquish operational control over any relevant asset, together with
such further information as the Director may request relating to such asset
or the circumstances of such intended disposal or relinquishment of control
or to the intentions in regard thereto of the person proposing to acquire
such asset or operational control over such asset.
3. Notwithstanding paragraphs 1 and 2, the licensee may dispose of or
relinquish operational control over any relevant asset:
(a) where:
(i) the Director has issued directions for the purposes of this
Condition containing a general consent (whether or not
subject to conditions) to:
(aa) transactions of a specified description; or
(bb) the disposal of or relinquishment of operational
control over relevant assets of a specified
description; and
(ii) the transaction or the relevant assets are of a description
to which such directions apply and the disposal or
relinquishment is in accordance with any conditions to which
the consent is subject;
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(b) under such contracts or agreements, or contracts or agreements of
such a description, as may have been designated, by the Secretary
of State for the purposes of this Condition before the coming
into force of this licence and to the extent so designated;
(c) where the disposal or relinquishment of operational control in
question is required by or under any enactment or subordinate
legislation.
4. Notwithstanding paragraph 1, the licensee may dispose of or relinquish
operational control over any relevant asset as is specified in any
notice given under paragraph 2 in circumstances where:
(a) the Director confirms in writing that he consents to such
disposal or relinquishment (which consent may be made subject
to the acceptance by the licensee or any third party in favour
of whom the relevant asset is proposed to be disposed or
operational control is proposed to be relinquished of such
conditions as the Director may specify); or
(b) the Director does not inform the licensee in writing of any
objection to such disposal or relinquishment of control within
the notice period referred to in paragraph 2.
5. In this Condition:
"disposal" includes any sale,
gift, lease,
licence, loan,
mortgage, charge
or the grant of
any other
encumbrance or the
permitting of any
encumbrance to
subsist or any
other disposition
to a third party,
and "dispose"
shall be construed
accordingly
"relevant asset" means any asset for the time being forming
part of the licensee's distribution system, any
control centre for use in conjunction
therewith and any legal or beneficial interest
in land upon which any of the foregoing is
situate.
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Condition 28: Provision of information to the Director
1. Subject to paragraphs 3 and 4, the licensee shall furnish to the
Director, in such manner and at such times as the Director may require,
such information and shall procure and furnish to him such reports, as
the Director may consider necessary in the light of the Conditions or
as he may require for the purpose of performing:
(a) the functions assigned to him by or under the Act; and
(b) any functions transferred to him under the Act.
2. Without prejudice to the generality of paragraph 1, the Director may
call for the furnishing of accounting information which is more
extensive than or differs from that required to be prepared and
supplied to the Director under Condition 2.
3. Without prejudice to the generality of paragraph 1, within 3 months of
the end of each calendar year, the licensee shall furnish to the
Director details of annual demand in kilowatt hours attributable to
supplies to premises (other than excluded premises) in the authorised
area in that preceding calendar year.
4. The licensee may not be required by the Director to furnish his under
this Condition with information for the purpose of the exercise of his
functions under Section 48 of the Act.
5. The licensee may not be required by the Director to furnish his under
this Condition with any information in relation to an enforcement
matter which the licensee could not be compelled to produce or give
under Section 28(3) of the Act.
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6. The power of the Director to call for information under paragraph 1 is
in addition to the power of the Director to call for information under
or pursuant to any other Condition.
7. In paragraphs 1 to 6, "information" shall include any documents,
accounts, estimates, returns or reports (whether or not prepared
specifically at the request of the Director) of any description
specified by the Director.
8. The licensee shall, if so requested by the Director, give reasoned
comments on the accuracy and text of any information and advice (so far
as relating to the Supply and Distribution Businesses) which the
Director proposes to publish pursuant to Section 48 of the Act:
9. For the purposes of this Condition:
"excluded premises" means premises within the authorised area:
(i) which
immediately
prior to
the grant
of this
licence
were
supplied
with
electricity
by the
CEGB
pursuant
to
authorisation
granted
under
Section
2(6) of
the
Electricity
Act 1957;
or
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(ii) which were at the relevant time
occupied by any person holding a
licence granted under Section 6 of the
Act (or any predecessor of such
person) for the purpose of carrying on
his licensed activities (or, in the case
of any predecessor, activities
comparable to his licensed activities).
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Condition 29: Payment of fees
1. The licensee shall, at the times stated hereunder, pay to the Secretary of
State fees of the amount specified in, or determined under, the following
paragraphs of this Condition.
2. Within 30 days after the grant of this licence but, in any event, before
1st May 1990, the licensee shall pay to the Secretary of State an initial
fee of (pound)240,000.
3. In respect of the year beginning 1st April 1990 the licensee shall pay to
the Secretary of State a further fee which is the aggregate of the
following amounts:
(a) (pound)475,000; and
(b) the difference, if any, between:
(i) the initial fee referred to in paragraph 2 above; and
(ii) the proportion of the Director's total costs in the period prior
to 1st April 1990 which the Director determines that the licensee
should pay in accordance with a method which has been previously
disclosed in writing to the licensee
and the fee shall be paid by the licensee to the Secretary of State
within one month of the Director giving notice to the licensee of its
amount if that notice is given within six months of 1st April 1990.
4. In respect of the year beginning on 1st April in 1991 and in each
subsequent year, the licensee shall pay to the Secretary of State a fee
which is the aggregate of the following amounts:
(a) an amount which is a proportion as determined by the Director of the
amount estimated by the Director, according to a method which has
previously been
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disclosed in writing to the licenses, as likely to be his costs during
the coming year in the exercise of his general functions under the Act
in relation to the holders of licences granted by the Secretary of
State under Section 6(1) and 6(2) of the Act;
(b) the amount (or where the consumers' committee in question is the
relevant consumers' committee for more than one public electricity
supplier, the amount which is a proportion as determined by the
Director, according to a method which has previously been disclosed in
writing to the licensee, of such amount) estimated by the Director
(having regard to any statement under paragraph 8(2) of Schedule 2 to
the Act) as being likely to be the costs during the coming year of the
relevant consumers' committee in the exercise of the functions
assigned to it by or under the Act and any other such functions as it
has been or may be required to exercise by the Director;
(c) an amount which is a proportion as determined by the Director, of the
amount estimated by the Director (in consultation with the Monopolies
Commission) as having been incurred in the calendar year immediately
preceding the 1st April in question by the Monopolies Commission in
connection with references made to it under Section 12 of the Act with
respect to this licence or any other licence issued under Section
6(1)(c) of the Act; and
(d) the difference (being a positive or a negative amount, if any,
between:
(i) the amount of the fee paid by the licensee in respect of the year
immediately preceding the 1st April in question; and (ii) the
amount which that fee would have been in respect of that year had
the amounts comprised therein been calculated by reference to:
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(aa) in the case of sub-paragraph (a) above (or, where that year
commenced on 1st April, 1990 the amount attributable to the
matters referred to in that sub-paragraph), the total costs
of the Director and the proportion thereof actually
attributable to the licensee; and
(bb) in the case of sub-paragraph (b) above (or where that year
commenced in 1st April, 1990 the amount attributable to the
matters referred to in that sub-paragraph), the total costs
of the consumers' committee and where appropriate, the
proportion thereof actually attributable to the licensee
such total costs being apportioned in each case as determined by the
Director according to a method previously disclosed in writing to the
licensee
and the fee shall be paid by the licensee to the Secretary of State within one
month of the Director giving notice to the licensee of its amount if that notice
is given within six months of the beginning of the year in respect of which the
fee is payable.
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SCHEDULE 1
Description of authorised area
The authorized area shall comprise that area which is outlined on the
attached map and shall additionally include those premises listed in List B (the
"Excluded Premises").
A: ADDITIONAL PREMISES
Address Grid Ref.
Pond Farm ST 7290 5459
Faulkland
Bath
Avon
BA# 5UP
B: EXCLUDED PREMISES
None
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[Map of portion of England exhibiting authorised area referred to in Schedule 1]
137
<PAGE>
[Map of portion of England exhibiting authorised area referred to in Schedule 1
based upon the Ordnance Survey map with the permission of the Controller of Her
Majesty's Stationery Office. Crown Copyright.]
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<PAGE>
SCHEDULE 2
Terms as to revocation
1. The Secretary of State may at any time revoke this license by not less than
30 days' notice in writing to the licensee:
(a) if the licensee agrees in writing with the Secretary of State that
this licence should be revoked:
(b) if any amount payable under condition 29 is unpaid 30 days after it
has become due and remains unpaid for a period of 14 days after the
Secretary of State has given the licensee notice that the payment is
overdue. Provided that no such notice shall be given earlier than the
sixteenth day after the day on which the amount payable became due;
(c) if the licensee fails to comply with a final order (within the meaning
of Section 25 of the Act) or with a provisional order (within the
meaning of that section) which has been confirmed under that section
and (in either case) such failure is not rectified to the satisfaction
of the Secretary of State within 3 months after the Secretary of State
has given notice of such failure to the licensee. Provided that no
such notice shall be given by the Secretary of State before the
expiration of the period within which an application under Section 27
of the Act could be made questioning the validity of the final or
provision order or before the proceedings relating to any such
application are finally determined;
(d) if the licensee fails to comply with any order made by the Secretary
of State under Section 56, 73, 74 or 89 of the Fair Trading Act 1973
or under Section 10(2)(a) of the Competition Act 1980;
(e) if the licensee ceases to carry on its business as a public
electricity supplier;
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(f) if the licensee:
(i) is unable to pay its debts (within the meaning of Section 123(1)
or (2) of the insolvency Act 1986, but subject to paragraph 2 of
this Schedule) or has any voluntary arrangement proposed in
relation to it under Section 1 of that Act or enters into any
scheme of arrangement (other than for the purpose of
reconstruction or amalgamation upon terms and within such period
as may previously have been approved in writing by the Secretary
of State); (ii) has a receiver (which expression shall include an
administrative receiver within the meaning of Section 29 of the
Insolvency Act 1986) of the whole or any material part of its
assets or undertaking appointed; (iii) has an administration
order under Section 8 of the Insolvency Act 1986 made in relation
to it; (iv) passes any resolution for winding-up other than a
resolution previously approved in writing by the Secretary of
State; or (v) becomes subject to an order by the High Court for
winding-up; or (g) if the licensee is convicted of having
committed an offence under Section 59 of the Act in making its
application for this licence.
2. (a) for the purposes of paragraph 1(f)(i) of this Schedule Section
123(1)(a) of the Insolvency Act 1986 shall have effect as if for
"(pound)2350,000" or such higher figure as the Director may from time to
time determine by notice in writing to the Secretary of State and the
licensee.
(b) The licensee shall not be deemed to be unable to pay its debts
for the purposes of paragraph 1(f)(i) of this Schedule if any
such demand as is mentioned in Section 123(1)(a) of the
Insolvency act 1986 is being contested in good faith by the
licensee with recourse to all appropriate measures and
procedures or if any such demand is satisfied before the
expiration of such period as may be
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<PAGE>
stated in any notice given by the Secretary of State under
paragraph 1 of this Schedule.
3. The provisions of Section 109 of the Act shall apply for the purposes of
the service of any notice under this Schedule.
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<PAGE>
SCHEDULE 3
Supplementary provision of the charge restriction conditions
PART A
Principles for attribution of the fossil fuel levy
and of payments in lieu thereof, transmission connection point
charges, remote transmission asset rentals and distribution losses
General Principles
A1. Where for the purposes of the charge restriction conditions, a share of
costs borne by the licensee requires to be attributed to any part of the
market, the licensee shall make that attribution on a basis which ensures
that no more than a fair proportion of those costs, reflecting the costs
incurred by the licensee in supplying that part of the market, are so
attributed.
A2. The following paragraphs of this Part of Schedule 3 are without prejudice
to paragraph A1.
Fossil Fuel Levy and payments in lieu thereof
A3. The fossil fuel levy requiring to be attributed to supplies to regulated
customers for the purposes of Condition 3C shall be attributed on the basis
of the amount of the levy incorporated in the prices actually charged or to
be charged by the licensee on supplies to such customers in the relevant
year in respect of which the attribution fails to be made. Amounts in lieu
of the fossil fuel levy in respect of purchases of electricity other than
leviable electricity requiring to be calculated and then attributed to
supplies to regulated customers in any relevant year for the purposes of
Condition 3C shall:
(a) be calculated as being such amounts as correspond to the lesser of:
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<PAGE>
(i) the premium actually payable (measured on accruals basis) by the
licensee during the relevant year on purchases of electricity
other than leviable electricity as representing the benefit to
the licensee of being able to treat such electricity as being
other than leviable electricity for the purposes of Section 33 of
the Act and Regulations thereunder; and
(ii) the additional amount that would have been payable (measured on
an accruals basis) by the licensee in respect of the fossil fuel
levy pursuant to Regulations made under Section 33 of the Act had
such electricity been leviable electricity; and
(b) be attributed to supplies to regulated customers pro rata to the
amount which the quantify supplied to regulated customers bears to the
total quantity supplied (in each case in the relevant year in respect
of which the attribution fails to be made) or on such other basis of
attribution as the licensee shall previously have agreed with the
director.
Transmission connection point charges and remote transmission asset
rentals
A4. The transmission connection point charges and remote transmission asset
rentals requiring to be attributed between the regulated quantity
distributed and other quantities distributed shall be attributed in
proportion to the transmission connection point and remote transmission
asset capacity required for the purpose of distributing those quantities.
Distribution losses
A5. Where an amount (in units) in respect of distribution losses requires to be
calculated and attributed in respect of ehv units and units distributed by
the licensee for the purpose of supply to premises outside the licensee's
authorised area, such calculation
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<PAGE>
and attribution shall be made consistently with the principles underlying
the schedule of adjustment factors referred to at sub-paragraph (b) of
paragraph 3 of condition 8.
Information to be provided by licensee
A6. The licensee shall following the end of each relevant year furnish to the
Director, as being one of the specified items to be included in the
statement referred to at paragraph 8 of Condition 3E, a statement
confirming that the calculation of amounts in lieu of the fossil fuel levy
and the attribution of the fossil fuel levy, amounts in lieu thereof, the
transmission connection point charges, the remote transmission asset
rentals and of distribution losses was made in accordance with the
provisions of this Part of Schedule 3, accompanied (where appropriate) by
an explanation of any changes in the basis of calculation or attribution
(as the case may be) since the issue by the licensee of the last such
statement.
A7. Where the Director is satisfied that the basis of calculation or
attribution (as the case may be) used by the licensee is not in conformity
with paragraph A1, the Director may issue directions specifying an
alternative basis of calculation or attribution, and the basis of
calculation or attribution by the licensee (as the case may be) shall be
adjusted accordingly with effect from the date of issue of the directions
or (subject to paragraph 11 of Condition 3E) such other date as may be
specified in those directions.
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PART B
EHV premises
B1. EHV premises shall comprise:
(a) in relation to premises connected to the licensee's
distribution system as at the date this licence enters into
force, those premises specified in the list of EHV premises
notified in writing to the Director by the licensee within
twenty-eight days after this licence enters into force; and
(b) in relation to premises connected to the licensee's
distribution system which are either first connected or
(having been previously connected) have had their connections
materially altered following the date this licence enters into
force, means premises connected to the licensee's distribution
system at a voltage at or higher than 22 kilovolts or at a
sub-station with a primary voltage of 66 kilovolts or above.
B2. the licensee shall following the end of each relevant year furnish to the
Director, as being one of the specified items to be included in the
statement referred to at paragraph 8 of Condition 3E, a statement listing
any changes in the premises failing to be treated as EHV premises.
B3. Where the Director is satisfied that any premises treated by the licensee
as EHV premises should not in conformity with sub-paragraph B1(b) above be
so treated, the Director may issue directions to that effect, and such
premises shall cease to be treated as EHV premises from the date of issue
of the directions or (subject to paragraph 11 of Condition 3E) such other
date as may be specified in those directions.
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PART C
Excluded services
Distribution Business
C1. There may be treated as excluded services provided by the licensee in its
Distribution Business such services in respect of which charges are made
which:
(a) do not fall within paragraph C2 of the this Part; and
(b) may (subject to paragraph C9) be determined by the licensee as
falling under one of the principles set out in paragraphs C3
to C6 of this Part.
C2. No service provided by the licensee as part of its Distribution Business
shall be treated as an excluded service in so far as it consists of the
provision of services remunerated under the use of system charges in
accordance with paragraph 3 of Condition 8 including (without prejudice to
the foregoing):
(i) (subject to paragraph C3 of this Part) the transport of
electricity;
(ii) the carrying out of works for the installation of electric
lines or electrical plant (not otherwise payable in the form
of connection charges); (iii) the carrying out of works or
the provision of maintenance or repair or other services for
the purpose of enabling the licensee to comply with
Conditions 9, 11 and 13, the Electricity supply Regulations
1988 or any regulations made under Section 29 of the Act or
any other enactment relating to safety or standards
applicable in respect of the Distribution Business; and (iv)
(subject to paragraph C5 of this Part) the provision,
installation and maintenance of any meters, switchgear or
other electrical plant (not being part of connection
charges).
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C3. The licensee may treat as being an excluded service for the purposes of its
Distribution Business the transport of:
(a) units of electricity not consumed in the licensee's authorised area;
or
(b) EHV units.
C4. Charges of the type described in paragraph 4 of Condition 8 and borne in
accordance with the principles set out in paragraph 7 of Condition 8 by any
person as connection charges, and charges in respect of the statements
referred to in paragraph 8 of Condition 8, may each be treated as excluded
services for the purposes of the Distribution Business.
C5. A service provided by the licensee as part of its Distribution Business may
be treated as an excluded service in so far as it consists in the provision
of services (including metering, electric lines or electrical plant) for
the specific benefit of any third party requesting the same and not made
available by the licensee as a normal part of its Distribution Business
remunerated by use of system charges including (without prejudice to the
foregoing):
(i) special metering (including "time of day" metering) to facilitate
energy saving programs for the benefit of customers requesting
the same;
(ii) charges for moving mains, services or meters forming part of the
licensee's distribution system to accommodate extension,
re-design or re-development of any premises on which the same are
located or to which they are connected; and
(iii)the provision of electric lines and electrical plant (a) insofar
as the same are required for the specific purpose of enabling the
provision of top-up or standby
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<PAGE>
supplies or sales of electricity or (b) to provide a higher
degree of security than is required for the purposes of
complying with Condition 9.
C6. There may be treated as an excluded service for the purposes of the
Distribution Business, charges for the relocation of electric lines or
electrical plant and the carrying out of works associated therewith
pursuant to a statutory obligation (other than under Section 9(1) or
Section 16 of the Act) imposed on the licensee.
Supply and Second-Tier Supply Business
C7. Subject to paragraph C9, a service provided by the licensee as part of its
Supply Business or Second-Tier Supply Business may be treated as an
excluded service in so far as it consists of the provision of services for
the specific benefit of customers requesting the same and not made
available by the licensee as a normal part of such Business.
Information to be provided to the Director
C8. The licensee shall following the end of each relevant year furnish to the
Director, as being one of the specified items to be included in the
statement referred to at paragraph 8 of Condition 3E, details specifying
separately the nature of all services provided as part of its Distribution
Business or supply business or Second-Tier Supply Business by the licensee
and treated as excluded services by the licensee during the course of such
year and stating the revenues derived by the licensee in respect of each
such service so treated.
C9. Where the Director is satisfied that in light of the principles set out in
paragraph C2 to C7 inclusive any service treated by the licensee as an
excluded service should not be so treated, the Director shall issue
directions to that effect, and the service or services specified in the
directions shall cease to be treated as excluded services from
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<PAGE>
the date of issue of the directions or (subject to paragraph 11 of
Condition 3E0 such other date as may be specified in the directions.
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<PAGE>
PART D
Regulated distribution unit categories
D1. The licensee shall following the end of each relevant year furnish to the
Director, as being one of the specified items to be included in the
statement referred to at paragraph 8 of Condition 3E, details specifying
separately those use of system charges in respect of which the licensee has
during the course of such year treated the units distributed as falling
within the definition of each of LVI units and LV2 units and LV3 units
respectively.
D2. The definition of LVI units includes units distributed under the following
tariffs:
E7DT/90 Economy 7 Tariff (day units)
WMT/LA/90 Domestic Day/Night (Limited Application)
The White Meter Tariff (day units)
E7BT/90 economy 7 block Tariff (day units) E7DNT/90 Economy 7
Day and Night Tariff (all non-night units) E7FT/90 Economy 7
Farm Tariff (day units) FDNT/90 Farm Day/Night (Limited
Application) Tariff (day units)
D3. The definition of LV2 units includes units distributed under the
following tariffs:
E7DT/90 Economy 7 Tariff (day units)
WMT/LA/90 Domestic Day/Night - The White Meter Tariff (night
units)
OP7T/LA/90 The Off Peak (7 hr) (Limited Application) Tariff\
OPT/N/LA/90 Off Peak Night Only (Limited Application) Tariff
OPT/LA/90 Off-Peak (Limited Application) Tariff
E7BT/90 Economy 7 Block Tariff (night units)
E7DNT/90 Economy 7 Day & Night Tariff (night units)
E7FT/90 Economy 7 Farm Tariff (night units)
FDNT/90 Farm Day/Night (Limited Application) Tariff (night
units)
Tariff Codes 201-214 Assorted Non-standard off peak tariffs
D4. The definition of LV3 units includes units distributed under the following
tariffs:
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DT/90 Domestic Tariff
BT/90 Block Tariff
FRT/LA/90 Farm Tariff
FRT/LA/90 Flat Rate (Limited Application) tariff
FT/90 Farm Tariff
AFT/LA/90 Alternative Farm (Limited Application) Tariff
NT/90 Day and Night (Limited Application) Tariff
MSTA/90 Supply Tariff A (Scales B and C)
MNT/LA/90 Demand Day/Night (Limited Application) Tariff
(Scales B and C)
Public Lighting terms
LV STOD terms
All other LV tariffs and variants of tariffs not
included in LV(1) and LV(2)
D5. Notwithstanding the provisions of paragraphs D2 to D4 above, where the
Director is satisfied that a tariff or tariffs in respect of which the
licensee has treated the units distributed as falling within one of the
categories in paragraphs D2 to D4 above should not be so treated, the
Director shall issue directions to that effect and the tariff or tariffs
specified in the directions shall cease to be so treated from the date of
issue of the directions or (subject to paragraph 11 of Condition 3E) such
other date as may be specified in the directions and shall with effect from
such date be treated in such manner as may be specified in the directions.
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PART E
Calculation of factor in respect of distribution losses
E1. For the purpose of calculation of the term At (being a factor in respect of
distribution losses), the term ALt and Lt as used in paragraph 3 of
Condition 3A shall each be determined using the consistent methodological
basis set out in paragraphs E2 to E5 below.
Consistent methodological basis for determination of ALt and Lt
E2. Adjusted distribution losses shall be determined as being the difference
between adjusted grid supply point purchases and adjusted units
distributed.
E3. Units metered on entry to the licensee's distribution system shall be
adjusted to obtain adjusted grid supply point purchases by:
(a) excluding that number of units which is equal to the sum of:
(i) EHV units; and
(ii) units distributed by the licensee for the purpose of supply
to premises outside the licensee's authorised area; and
(iii)an amount in respect of distribution losses between the
grid supply point and the exit point attributable to the
units referred to in (i) and (ii) above, as determined in
accordance with paragraph A5 in Part A of Schedule 3; and
(b) including an amount (in units) to represent the effect of
units entering the licensee's distribution system otherwise
than at grid supply points, being the difference between the
number of units so entering and the number of units that would
have been required to have entered at grid supply points in
their
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absence (such latter number of units being calculated
consistently with the principles underlying the schedule of
adjustment factors in respect of distribution losses referred
to at sub-paragraph (b) of paragraph 3 of Condition 8).
E4. For so long as units are metered on entry to the licensee's distribution
system at bulk supply points instead of at grid supply points, such units
shall be calculated by:
(i) applying the procedures in paragraph E3 as if all references to units
metered at grid supply points were to units metered at bulk supply
points; and
(ii) grossing-up units metered at the bulk supply points by the relevant
grid supply point conversion factor being either:
(a) 0.5 per cent. of the units metered at the bulk supply points; or
(b) such other factor to take account of losses occurring between the
grid supply points and the bulk supply points as the licensee may
with the prior approval of the Director determine to be
appropriate.
E5. Adjusted units distributed shall be obtained by:
(a) calculating all units distributed by the licensee metered at exit
points on leaving the licensee's distribution system; and
(b) deducting therefrom EHV units and units distributed for the purpose of
supply to premises outside the licensee's authorised area; and
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<PAGE>
(c) adding thereto an amount equal to the units consumed on the licensee's
premises in the authorised area (insofar as not otherwise taken into
account in determining units distributed under sub-paragraph (a)
above).
Initial relevant loss percentage in the term ALt
E6. In the first relevant year, the initial relevant loss percentage in the
term ALt shall (consistently with the methodology set out in paragraphs E2
to E5 above) be determined as being:
adjusted GSP purchase units less adjusted units distributed
adjusted units distributed
where adjusted GSP purchase units are calculated as provided in
paragraph E7 and adjusted units distributed are calculated as provided
in paragraph E8.
E7. Adjusted GSP purchase units shall be calculated in accordance with the
procedures successively described in the following sub-paragraphs:
(a) the actual losses in each of relevant years t-1, t-2 and t-3 (the
"historic losses") shall be calculated as the difference in each of
those years between units purchased at entry points to the licensee's
distribution system and units sold;
(b) the historic loss percentage shall be calculated as the proportion
(expressed as a percentage) which the aggregate historic losses were
of the aggregate units purchased at entry points to the licensee's
distribution system, in each case over the three relevant years t-1 to
t-3;
(c) the total number of units sold in relevant year t-1 shall be grossed
up by the historic loss percentage ("BSP purchase units); and
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<PAGE>
(d) the figure for BSP purchase units resulting from sub-paragraph (c)
shall be adjusted to obtain adjusted GSP purchase units in accordance
with the provisions of paragraph E3 and E4 above.
E8. Adjusted units distributed shall be calculated by applying the methodology
of paragraph E5 in respect of those units referred to in sub-paragraph (a)
to (c) of paragraph E5 in relevant year t-1.
Information to be provided to the Director
E9. The licensee shall within three months after the entry into force of this
licence furnish to the Director a statement showing the initial relevant
loss percentage and the underlying calculations.
E10. The licensee shall, following the end of each relevant year, furnish to the
Director, as being one of the specified items to be included in the
statement referred to at paragraph 8 of Condition 3E, a statement showing
adjusted distribution losses for that relevant year, accompanied by the
underlying calculations and (where appropriate) an explanation of any
changes in the basis of calculation or estimation thereof.
E11. Where the Director is satisfied that any statement or underlying
calculation provided has not been drawn up in conformity with paragraphs E2
to E8 above, the Director may issue directions, and the statement or
underlying calculation shall be adjusted with effect from the date of issue
of the directions or (subject to paragraph 11 of Condition 3E) such other
date as may be specified in the directions.
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<PAGE>
PART F
Electricity purchase costs
F1. For the purposes of the term Et in paragraph 3 of Condition 3B, the
licensee's electricity purchase costs shall, subject to paragraph F8 of
this Part of Schedule 3, comprise:
(a) costs payable (measured on an accruals basis) by the licensee in
respect of the establishment, management and administration of
Non-Fossil Purchasing Agency Limited pursuant to the terms of a
shareholders' or agency agreement to be dated 30th March, 1990; and
(b) amounts becoming payable (measured on an accruals basis) by the
licensee pursuant to qualifying arrangements (as defined by Section 33
of the Act), together with finance costs (if any) incurred by the
licensee in funding the amounts so becoming payable in the period
prior to the receipt by the licensee of the amounts referred to below,
net of amounts receivable (measured on an accruals basis) by the
licensee in respect of:
(i) the re-sale by the licensee of any of the electricity the subject
of such qualifying arrangements; and
(ii) payments made to the licensee pursuant to Regulations made under
Section 33(1) of the Act; and
for this purpose "re-sale" shall be deemed to include delivery
of the electricity by the seller thereof to the pool
established pursuant to the Pooling and Settlement Agreement
or to another person at the direction of the licensee; and
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<PAGE>
(c) amounts becoming payable (measured on an accruals basis) by the
licensee under the terms of the Pooling and Settlement Agreement in
respect of the purchase by the licensee of electricity under the terms
of such agreement; and
(d) the net amount (whether being a positive or a negative amount) payable
or receivable (as the case may be, and in either case measured on an
accruals basis) by the licensee in respect of electricity purchase or
sale contracts, as determined in accordance with paragraphs F2 to F6
below; and
(e) the net amount payable (measured on an accruals basis) in respect of
purchases of electricity otherwise than under the terms of the Pooling
and Settlement Agreement; and
(f) the net amount payable (measured on an accruals basis) under output
contracts for the entitlement to electricity other than leviable
electricity accepted as such by the Director for the purposes of
Section 33 of the Act and any Regulations made thereunder
but so that no amount may be taken into account more than once for the
purposes of sub-paragraphs (a) to (f).
F2. For the purposes this Part of Schedule 3 (and save as provided in paragraph
F3), payments or receipts under any electricity purchase or sale contract
shall include all amounts payable or receivable for the grant of or
pursuant to the terms of such contract.
F3. Notwithstanding paragraph F2, contracts or arrangements the principal
purpose of which is to enable the licensee to hedge currency exchange risks
shall not be treated as electricity purchase or sale contracts.
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<PAGE>
F4. Subject to paragraph F6, any fixed or lump sum payments payable or
receivable under electricity purchase or sale contracts which span two or
more relevant years shall be time apportioned to the periods of such
contract falling within each relevant year.
F5. Subject to paragraph F6, on the sale or other disposition by the licensee
of any electricity purchase or sale contract or its rights and obligations
thereunder, amounts receivable in respect of such sale or disposition shall
(net of any amounts otherwise failing to be apportioned to a subsequent
relevant year in accordance with paragraph F4) be taken from account as a
receipt at the time it accrues due to the licensee.
F6. Insofar as either:
(a) the treatment of amounts payable or receivable under electricity
purchase or sale contracts does not fail to be specified in the
preceding paragraphs of this Part; or
(b) the treatment of such amounts is in the opinion of the licensee and
its Auditors contrary to best accounting practice,
the license shall notify the Director of the manner in which it
proposes to treat such amounts, such notifications to be accompanied by
an opinion from the auditors confirming that the treatment proposed is
in accordance with best accounting practice, and (save where the
Director issues directions that such amounts should be treated in
another manner specified in those directions) the licensee shall
thereafter treat such amounts in the manner notified.
F7. The licensee shall following the end of each relevant year furnish to the
Director, as being one of the specified items to be included in the
statement referred to at paragraph 8 of Condition 3E, a statement:
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(i) specifying the number and nature of contracts failing to be treated by
the licensee as electricity purchase or sale contracts in that
relevant year;
(ii) specifying the aggregate amounts payable and the aggregate amounts
receivable by the licensee under such contracts during that relevant
year;
(iii)confirming that the amounts treated as payable or receivable in
respect of such contracts in the relevant year were computed in
accordance with the preceding paragraphs of this Part
and, where appropriate, accompanied by an explanation of any changes in
the treatment of any contract or arrangement as being an electricity
purchase or sale contract or in the treatment of amounts payable or
receivable under any electricity purchase or sale contract.
F8. Where the Director is satisfied that:
(i) any contract or arrangement treated as an electricity purchase or sale
contract should not be so treated, or any contract or arrangement not
so treated should be so treated; or
(ii) the basis on which amounts payable or receivable under an electricity
purchase or sale contract are not apportioned in conformity with the
preceding paragraphs of this Part,
the Director may issue directors requiring an alternative basis of
treatment of such contract or arrangement or of the apportionment of
amounts payable or receivable under such electricity purchase or sale
contract (as the case may be), and the basis of such treatment or
apportionment by the licensee shall be adjusted accordingly with
159
<PAGE>
effect from the date of issue of such directions or (subject to
paragraph 11 of Condition 3E) such other date as may be specified in
the directions.
160
Exhibit 10.2
[Letterhead of Office of Electricity Regulation]
The Company Secretary
South Western Electricity plc
800 Park Avenue
Aztec West
Almondsbury
Bristol
BS12 4SE
MODIFICATION OF LICENSE
Whereas -
(1) South Western Electricity plc ("the licensee") has been granted a license
("the license") under Section 6 (2) of the Electricity Act 1989 ("the act")
to supply electricity to premises in England and Wales specified or of a
description specified in the license subject to the Conditions contained in
the license;
(2) In accordance with Section 11 (2) of the Act the Director General of
Electricity Supply ("Director") gave notice of his intention to make
modifications to the license through the insertion of two additional
conditions (13 and 14) by advertising the modifications in the London
Gazette and the Financial Times, requiring any objections or
representations to the modifications to be made to him on or before 21
March 1994;
(3) The Director has considered the representations or objections which were
duly made and not withdrawn;
(4) In accordance with Section 11 (4) of the Act the Director gave notice of
his intention to make the modifications to the Secretary of State and has
not received a direction not to make the modification;
(5) The licensee has given his consent to the modifications, set out in the
Schedule attached which the Director proposed to the license.
Now in accordance with the powers contained in Section 11 (1) of the Act and
with the consent of the licensee the Director hereby modified the license in the
manner specified in the Schedule attached with effect from 1 April 1994.
/s/Dr E Marshall
Dr E Marshall
Authorised on behalf of
The Director General of Electricity Supply 31 March 1994
-1-
<PAGE>
SCHEDULE
After Condition 12 insert
"Condition 13: Compulsory acquisition of land etc
1. All the powers and rights conferred by or under the provisions of Schedule
3 of the Act (compulsory acquisition of land etc.) shall have effect in
relation to the licensee to the extent that they are required for the
installation, maintenance, removal or replacement of the licensee's system
or any part thereof which are necessary to enable the licensee to supply
electricity to the premises specified in Schedule 1 to this license.
2. Paragraph 1 shall cease to have effect on 1 April 1997 or such later date
as the Director may from time to time direct.
-2-
<PAGE>
Condition 14: Powers to carry out street works etc.
1. The powers and rights conferred by or under the provisions of Schedule
4 to the Act (powers to carry out street works etc.) shall have effect
and may, subject to paragraph 2 below, be exercised by carrying out
works in relation to, or in pursuance of, the installation, inspection,
maintenance, adjustment, repair, alternation, replacement and removal
of: (a) electric lines which are necessary to enable the licensee to
supply electricity to
premises specified in Schedule 1 below;
(b) electrical plant associated with such lines; and
(c) any structures for housing or covering such lines or plant.
2. Works which are under, over, in, or, along or across any street, which
for the purposes of the Highways Act of 1980, constitutes a highway or
part of a highway maintainable at the public expense, may be undertaken
in pursuance of paragraph 1 above subject to the following conditions:
(a) that such works shall not be carried out except with the
consent, which shall not unreasonably be withheld, of the
highway authority and in accordance with such reasonable
conditions as may be attached to such consent;
-3-
<PAGE>
(b) that any question as to whether or not a consent of highway
authority is unreasonably withheld, or as to the
reasonableness of conditions attached to such consent, shall
be determined by a single arbitrator to be appointed:-
(i) by agreement between the licensee and the highway authority;
or
(ii) in default of such agreement, by the Director on the
application of either party.
3. Paragraph 1 shall cease to have effect on 1 April 1997 or such later date
as the Director may from time to time direct."
-4-
<PAGE>
[Letterhead of Office of Electricity Regulation]
Mr R Westlake
Resources and External Affairs Director
South Western Electricity plc
800 Park Avenue
Aztec West, Almondsbury
Bristol
BS12 4SE
Dear Mr. Westlake
MODIFICATION OF LICENSE CONDITION
Whereas -
(1) South Western Electricity plc ("the licensee") has been granted a license
("the license") under Section 6(2) of the Electricity Act 1989 ("the Act")
to supply electricity to premises in England and Wales specified or of a
description specified in the license subject to the conditions contained in
the license;
(2) In accordance with Section 11 (2) of the Act the Director gave notice of
his intention to make modifications to Condition 2 of the license by
advertising the modifications in the London Gazette the Edinburgh Gazette
the Financial Times and the Scotsman requiring any objections or
representations to the modifications to be made to him on or before 27
March 1992;
(3) The Director has considered the representations or objections which were
duly made and not withdrawn;
(4) The licensee has given his consent to the modifications, set out in the
Schedule attached which the Director General of Electricity Supply ("the
Director") proposed to Condition 2 of the license.
Now in accordance with the powers contained in Section 11(1) of the Act and with
the consent of the licensee the Director hereby modified Condition 2 of the
license in the manner specified in the Schedule attached with effect from 23rd
April 1992.
/s/Dr Eileen Marshall
Dr Eileen Marshall
Authorised on behalf of
The Director General of Electricity Supply 22 April 1992
- ------------------------------------------
-1-
<PAGE>
Schedule
Condition 2 of each license which has been granted under section 6(2)(a) of the
Act (other than the license granted to London Electricity plc) shall be modified
by the addition of the following two paragraphs after paragraph 7 -
7A. For the purpose of this Condition occupation of any premises by an
affiliate of a person shall be deemed to be occupation by that person.
7B. (1) In this paragraph -
"customer B" means the customer for the time being of the
licensee in respect of premises A;
"permitted quantity" means 10 per cent of the quantity of
electricity supplied by the licensee to customer B in respect
of premises A in the relevant year;
"premises A" means a site or building which, if in the
occupation of a single customer, would be capable of being
single premises; and
"relevant year" means the period of 12 months commencing on
the date upon which the licensee starts to supply premises A
and (if such supply is provided for a continuous period
exceeding 12 months) each anniversary of that date until such
supply shall cease.
(2) Where during a relevant year -
(i) premises A are occupied by more than one person;
(ii) customer B supplies the other person or persons who
are in occupation of premiss A or supplies one or
more of such persons who supply the other occupiers;
(iii) each of the persons referred to in subparagraph (ii)
who provides a supply is exempt by or under an Order
under section 5 of the Act from the requirement to
hold a license to supply; and
(iv) customer B does not supply an aggregate quantity of
electricity to such other occupiers in any relevant
year which may reasonably be expected to exceed or
actually exceeds the permitted quantity.
the occupation of premises A by the persons other than customer B shall be
deemed to be occupation by customer B.
-2-
<PAGE>
(3) The licensee shall, at the request of the public electricity
supplier in whose authorized area premises A are situated,
provide not more than once in any period of 3 months in a
relevant year, evidence to the supplier that the licensee
reasonably believes that the aggregate quantity of electricity
expected to be supplied by customer B during the relevant year
will not exceed the permitted quantity including, where at the
date of such request any such supply has been provided during the
relevant year, evidence as to the quantity so supplied.
(4) Where customer B has supplied a quantity of electricity to such
other occupiers which in aggregate exceeds the permitted
quantity, the licensee shall pay to the public electricity
supplier in whose authorized area premises A are situated a sum
calculated by multiplying the number of units by which the actual
supply to such other occupiers exceeds the permitted quantity by
5 per cent of the standard tariff price per unit charged by that
public electricity supplier for customers of the type or types of
such other occupiers (but excluding any standing charge or other
charge no fixed solely by reference to the number of units
consumed) or in the absence of agreement as to the appropriate
tariff such rate as may be determined by the Director at the
request of the licensee or the public electricity supplier.
(5) For the purposes of this paragraph there shall be disregarded -
(i) the quantity of electricity supplied by customer B to an
occupier of premises A who has a relevant demand above the
franchise limit;
(ii) the quantity of electricity supplied to customer B equal to
the quantity supplied by customer B in accordance with
subparagraph (i); and
(iii)the occupation by the occupier (other than customer B)
referred to in subparagraph (i).
(6) To the extent that, disregarding sub-paragraph (2), the licensee
would have been permitted to provide a supply to customer B's
premises under this Condition, the provisions of this paragraph
shall not apply.
-3-
<PAGE>
[Letterhead of Office of Electricity Regulation]
The Regulation Manager
South Western Electricity plc
800 Park Avenue
Aztec West
Almondsbury
BRISTOL
BS12 4SE
MODIFICATION OF LICENSE CONDITION
Whereas -
(1) South Western Electricity plc ("the licensee") has been granted a license
("the license") under Section 6(2) of the Electricity Act 1989 ("the Act")
to supply electricity to premises in Scotland specified or of a description
specified in the license subject to the Conditions contained in the
license;
(2) In accordance with Section 11 (2) of the Act the Director gave notice of
his intention to make modifications to Condition 2 of the license by
advertising the modifications in the London Gazette the Edinburgh Gazette
the Financial Times and the Scotsman requiring any objections or
representations to the modifications to be made to him on or before 27
March 1992;
(3) The Director has considered the representations or objections which were
duly made and not withdrawn;
(4) The licensee has given his consent to the modifications, set out in the
Schedule attached which the Director General of Electricity Supply ("the
Director") proposed to Condition 2 of the license.
Now in accordance with the powers contained in Section 11(1) of the Act and with
the consent of the licensee the Director hereby modified Condition 2 of the
license in the manner specified in the Schedule attached with effect from 16
June 1992.
/s/ Robert Irvine
ROBERT IRVINE
Authorised on behalf of
The Director General of Electricity Supply 15 June 1992
- ------------------------------------------
-1-
<PAGE>
Schedule
Condition 2 of each license which has been granted under section 6(2)(a) of the
Act (other than the license granted to London Electricity plc) shall be modified
by the addition of the following 2 paragraphs after paragraph 7 -
7A. For the purpose of this Condition occupation of any premises by an
affiliate of a person shall be deemed to be occupation by that person.
7B. (1) In this paragraph -
"customer B" means the customer for the time being of the
licensee in respect of premises A;
"permitted quantity" means 10 per cent of the quantity of
electricity supplied by the licensee to customer B in respect
of premises A in the relevant year;
"premises A" means a site or building which, if in the
occupation of a single customer, would be capable of being
single premises; and
"relevant year" means the period of 12 months commencing on
the date upon which the licensee starts to supply premises A
and (if such supply is provided for a continuous period
exceeding 12 months) each anniversary of that date until such
supply shall cease.
(2) Where during a relevant year -
(i) premises A are occupied by more than one person;
(ii) customer B supplies the other person or persons who
are in occupation of premises A or supplies one or
more of such persons who supply the other occupiers;
(iii) each of the persons referred to in subparagraph (ii)
who provides a supply is exempt by or under an Order
under Section 5 of the Act from the requirement to
hold a license to supply; and
(iv) customer B does not supply an aggregate quantity of
electricity to such other occupiers in any relevant
year which may reasonably be expected to exceed or
actually exceeds the permitted quantity.
the occupation of premises A by the persons other than
customer B shall be deemed to be occupation by customer B.
-2-
<PAGE>
(3) The licensee shall, at the request of the public electricity
supplier in whose authorised area premises A are situated,
provide not more than once in any period of 3 months in a
relevant year, evidence to the supplier that the licensee
reasonably believes that the aggregate quantity of electricity
expected to be supplied by customer B during the relevant year
will not exceed the permitted quantity including, where at the
date of such request any such supply has been provided during the
relevant year, evidence as to the quantity so supplied.
(4) Where customer B has supplied a quantity of electricity to such
other occupiers which in aggregate exceeds the permitted
quantity, the licensee shall pay to the public electricity
supplier in whose authorised area premises A are situated a sum
calculated by multiplying the number of units by which the actual
supply to such other occupiers exceeds the permitted quantity by
5 per cent of the standard tariff price per unit charged by that
public electricity supplier for customers of the type or types of
such other occupiers (but excluding any standing charge or other
charge not fixed solely by reference to the number of units
consumed) or in the absence of agreement as to the appropriate
tariff such rate as may be determined by the Director at the
request of the licensee or the public electricity supplier.
(5) For the purposes of this paragraph there shall be disregarded -
(i) the quantity of electricity supplied by customer B to an
occupier of premises A who has a relevant demand above the
franchise limit;
(ii) the quantity of electricity supplied to customer B equal to
the quantity supplied by customer B in accordance with
subparagraph (i); and
(iii)the occupation by the occupier (other than customer B)
referred to in subparagraph (i).
(6) To the extent that, disregarding subparagraph (2), the licensee
would have been permitted to provide a supply to customer B's
premises under this Condition, the provisions of this paragraph
shall not apply.
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<PAGE>
[Letterhead of Office of Electricity Regulation]
R G Westlake Esq
Regulation Manager
South Western Electricity plc
800 Park Avenue
Aztec West
Almondsbury 30 June 1993
BRISTOL BS12 4SE
MODIFICATION OF LICENSE
Whereas:
(1) South Western Electricity plc ("the licensee") has been granted a
license ("the license") under Section 6(2) of the Electricity Act
1989 ("the Act") to supply electricity to premises in Scotland
specified or of a description specified in the license subject to
the conditions contained in the license;
(2) In accordance with Section 11(2) of the Act the Director General
of Electricity Supply ("the Director") gave notice of his
intention to make modifications to conditions in the license
relating to the compulsory acquisition of land, etc. and powers
to carry out street works etc, by advertising the modifications
in the Edinburgh Gazette and the Scotsman, requiring any
objections or representations to the modifications to be made to
him on or before 23 June 1993;
(3) The Director has considered the representations or objections
which were duly made and not withdrawn;
(4) In accordance with Section 11(4) of the Act the Director gave
notice of his intention to make the modifications to the
Secretary of State and has not received a direction not to make
the modifications; and
(5) The licensee has given his consent to the modifications, set out
in the Schedule attached which the Director proposed to the
license.
Now in accordance with the powers contained in Section 11(1) of the Act
and with the consent of the licensee the Director hereby modified the
license in the manner specified in the Schedule attached with effect
from 30 June 1993.
/s/ C Peter Carter
C PETER CARTER
Authorised on behalf of
The Director General of Electricity Supply 15 June 1992
-1-
<PAGE>
SCHEDULE
1. The following shall be inserted in Substitution for the existing Paragraph
2 of Condition 13:
"Paragraph 1 shall cease to have effect on 31 March 1997 or such later date as
the Director may from time to time direct."
2. The following shall be inserted in Substitution for the existing Paragraph
4 of Condition 14:
"Paragraph 1 shall cease to have effect on 31 March 1997 or such later date as
the Director may from time to time direct."
-2-
<PAGE>
[Letterhead of Office of Electricity Regulation]
Company Secretary
South Western Electricity plc
800 Park Avenue
Aztec West
Almondsbury
Bristol
BS12 4SE
MODIFICATIONS OF LICENSE CONDITION
Whereas -
(1) South Western Electricity plc ("the licensee") has been granted a license
("the license") under Section 6(1)(c) of the Electricity Act 1989 ("the
Act") to supply electricity to any premises in the authorized area
designated in Schedule 1 of the license subject to the Conditions contained
in the license;
(2) In accordance with Section 11 (2) of the Act the Director General of
Electricity Supply ("the Director") gave notice of his intention to make
modifications to Condition I (Interpretation), Condition 3, 3B, 3C, 3D, 3E,
3F and 3G and Schedule 3 Parts A, C and F (Charge Restrictions) and
Condition 4 (Prohibition of cross subsidies and discrimination) of the
license by advertising the modifications in the London Gazette and the
Financial Times requiring any objections or representations to the
modifications to be made to him on or before 26 March 1994;
(3) The Director has considered the representations or objections which were
duly made and not withdrawn:
(4) In accordance with Section 11 (4) of the Act the Director gave notice of
his intention to make the modifications to the Secretary of State and has
not received a direction not to make the modification;
(5) The licensee has given his consent to the modifications, set out in the
Schedule attached, which the Director proposed to the license.
Now in accordance with the powers contained in Section 11(1) of the Act and with
the consent of the licensee the Director hereby modifies the license in the
manner specified in the Schedule attached with effect from 1 April 1994.
/s/ G R Horton
G R Horton
Authorized on behalf of
The Director General of Electricity Supply 30 March 1994
- ------------------------------------------ -------------
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<PAGE>
Schedule
The following modifications shall apply for the purposes of a relevant year
commencing on or after 1 April 1994.
1. The following definitions shall be deleted from Condition 1 of the license:
"1 MW customer" "1 MW premises" "over 1 MW customer" "over 1 MW
premises"
Following the definition of "megawatt" or "MW" there shall be inserted
the following definitions:
"0.1 MW customer" means any customer other than an over 0.1 MW customer in
its capacity as such.
"0.1 MW premises" means any premises other than over 0.1 MW premises.
"over 0.1 MW customer" means a customer supplied at over 0.1 MW premises, but
shall not include such customer insofar as supplied at
0.1 MW premises.
"over 0.1 MW premises" means premises supplied by the licensee at which the
average of the maximum monthly demands in the three
months of highest maximum demand in any period of twelve
consecutive months commencing on or after January 1993
exceeds one tenth of a megawatt.
2. The attached shall be inserted in substitution for the existing Condition
3, 3B, 3C, 3D, 3E, 3F, 3G and Schedule 3 Part A, Part C and Part F.
3. In Condition 4 for the phrase "IMW" there shall be substituted "0.1 MW"
where ever the same occurs.
-2-
<PAGE>
Condition 3: Charge restriction conditions: definitions
1. In this Condition and in Conditions 3A to 3G and Schedule 3 to this
license:
"attributed" means when used in relation to the fossil fuel levy or
payments in lieu thereof or transmission connection
point charges or remote transmission asset rentals or
distribution losses or transmission costs or allowed
distribution costs, or in relation to attributing
electricity purchase or sale contracts and electricity
purchase costs to regulated customers and other
customers, attributed in accordance with the principles
set out in Part A of Schedule 3 and attribute,
attributed, attributable and attribution shall be
construed accordingly.
"average charge per unit means the distribution revenue in the relevant year
distributed" divided by the regulated quantity distributed in that
year.
"average charge per unit means the supply revenue in the year divided by the
supplied" quantity supplied in that year.
"average charge per means the regulated supply revenue in the relevant
regulated unit supplied" year divided by the regulated quantity supplied in that
year.
"average specified rate" means the average of the daily based rates of Barclays
Bank plc current from time to time during the period
in respect of which the calculation falls to be made.
"charge restriction means Conditions 3 to 3G inclusive together with
conditions" Schedule 3 to this license, as from time to time
modified or replaced in accordance therewith or
pursuant to Sections 11, 14 or 15 of the Act.
"distribution losses" means units unaccounted for on the licensee's
distribution system, measured as being the difference
between the units metered on entry into the system
and the united metered on leaving the system.
-3-
<PAGE>
"distribution revenue" means the revenue (measured on an accruals basis)
derived by the licensee from the provision of
distribution services in the relevant year, after
deduction of:
(i) an amount equal to such part of the total amount
payable in that relevant year to the Transmission
Company (measured on an accruals basis) in respect of
transmission connection point charges and remote
transmission asset rentals and which would otherwise be
included in distribution revenue by reason of being
recovered in that relevant year by the licensee in its
use of system charges, as falls to be attributed to the
regulated quantity distributed in that relevant year;
and
(ii) value added tax (if any) and any other taxes based
directly on the amounts so derived.
"distribution services" means
all services
provided by the
licensee as part
of its
Distribution
Business other
than excluded
services.
"EHV premises" means those premises to which units are delivered by
the licensee which fall to be treated as EHV premises
in accordance with Part B of Schedule 3.
"electricity purchase means the licensee's purchase costs of electricity
costs" calculated in accordance with the principles in Part F
of Schedule 3.
"excluded services" means those services provided by the licensee which
in accordance with the principles set out in Part C of
Schedule 3 fall to be treated as excluded services.
"fifth relevant year" means the relevant year commencing 1st April 1994.
"HV units" means units (other than EHV units) distributed by
the licensee which are delivered to premises connected
to the licensee's distribution system at a voltage at
or higher than 1000 volts.
-4-
<PAGE>
"interconnector charges" means charges levied by the Interconnectors Business
of the Transmission Company and payable by the
Supply or Second-Tier Supply Business of the licensee
in respect of use of interconnector for the transfer of
electricity into England and Wales.
"LV units" means units distributed by the licensee which are
delivered to premises connected to the licensee's
distribution system at a voltage less than 1000 volts.
""LV1 units" means LV units which are distributed by the licensee
outside night-tine periods to domestic premises or
small non-domestic premises where the appropriate
use of system charges apply different rates in night-
time periods as opposed to other times of day, for the
avoidance of doubt including the use of system
charges under the tariffs specified in paragraph D2
of Part D of Schedule 3.
"LV2 units" means LV units which are distributed by the licensee
to domestic premises or small non-domestic premises:
(a) during night-time periods, where the appropriate use of
system charges apply different rates in night-time periods
as opposed to other times of the day; or
(b) where the appropriate use of system charges are incorporated
into tariffs which restrict availability of supply to
specified off-peak periods.
for the avoidance of doubt including the use of system
charges under the tariffs specified in paragraph D3 of
Part D of Schedule 3.
"LV3 units" means LV units other than LV1 and LV2 units, for
the avoidance of doubt including units distributed
under the tariffs specified in paragraph D4 of Part D
of Schedule 3.
"maximum average means the charge calculated in accordance with the
charge per unit formula in paragraph 1 of Condition 3A.
distributed"
-5-
<PAGE>
"maximum average means the charge calculate din accordance with the
charge per regulated unit formula in paragraph 1 of Condition 3B.
supplied"
"metered" means, in relation to any quantity distributed or
supplied as measured by a meter installed for such
purpose of (where no such meter is installed or it is
not reasonably practicable to measure the quantity by
such meter) as otherwise reasonably calculated.
"quantity supplied" means the aggregate quantity of units supplied by the
licensee in the relevant year metered at the points of
supply (whether or not in the authorized area of the
licensee).
"regulated customer" means a person other than the licensee who in the
calendar year ending in relevant year t-1 was supplied
at 0.1 MW premises.
"regulated distribution means as the case may be HV units or LV1 units or
unit category" LV2 units or LV3 units.
"regulated quantity means the aggregate quantity of units distributed (both
distributed" for the Supply Business of the licensee and on behalf
of third parties under use of system) by the licensee
through the licensee's distribution system in relevant
yeart metered at exit points on leaving the licensee's
distribution system but excluding for this purpose:
(a) units distributed for the purpose of supply to premises
outside the licensee's authorized area; and
(b) EHV units.
"regulated quantity means the aggregate quantity of units supplied by the
supplied" licensee to regulated customers in the relevant year
metered at the points of supply.
"regulated supply means that part of the supply revenue (measured on an
revenue" accruals basis) derived by the licensee from supplies
to regulated customers.
"regulated unit supplied" means a unit supplied by the licensee to a regulated
customer.
"relevant year" means a financial year commencing on or after 1st
April 1990.
-6-
<PAGE>
"relevant year t" means that relevant year for the purposes of which any
calculation falls to be made; "relevant year t-1" means
the relevant year preceding relevant year t or, in
respect of the period prior to 1st April 1990, the
period of 12 calendar months commencing on 1st
April 1989; and similar expressions shall be construed
accordingly.
"remote transmission means any rent or other periodic payment payable by
asset rental" the Distribution Business of the licensee to the
Transmission Company in respect of remote
transmission assets forming part of the licensee's
distribution system.
"supply" includes supply outside the authorized area, standby
and top-up supply and sale and any other sales of
electricity by the licensee to persons other than
customers; and "supplied" and similar expressions
shall be construed accordingly.
"supply charges" means all charges (including charges for the provision
of distribution services and standing charges) made by
the licensee in respect of electricity supplied by the
license other than charges for the provision of
excluded services by the licensee.
"supply revenue" means the revenue (measured on an accruals basis)
derived by the licensee from supply charges after
deduction of value added tax (if any) and any other taxes
based directly on the amounts so derived.
"transmission charges" means charges levied by the Transmission Company
payable by the Supply or the Second-Tier Supply
Business of the licensee in respect of the transmission
of electricity, but for the avoidance of doubt shall
exclude transmission connection point charges and
remote transmission asset rentals.
"transmission connection means charges levied by the Transmission Company
point charges" as connection charges by direct reference to the
number or nature of the connections between the
Licensee's distribution system and the transmission
system and payable by the Distribution Business of the
license.
"unit" means a kilowatt hour.
-7-
<PAGE>
Condition 3B: Restriction of supply charges
Basic Formula
1. Without prejudice to Condition 3F the licensee shall in setting its
supply charges use its best endeavors to ensure that in any relevant
year the average charge per regulated unit supplied shall not exceed
the maximum average charge per regulated unit supplied calculated in
accordance with the following formula:
MSt = PSt + Yt - KSt
where:
MSt means the maximum average charge per regulated unit
supplied in relevant year t.
PSt means that amount in relevant year t which is derived
from the following formula.
Pst = (PF + PC. CC + PQ.QC) PIC
Qt
Where:
PF means (pound)10,484,201
PC means (pound)16.61
C1 means a notional figure representing the number of regulated
customers (for the purpose of this defined term C1 only) defined,
for each relevant year, as the figure in the table below.
Relevant year beginning:
1 April 1994 1,293,410
-8-
<PAGE>
1 April 1995 1,307,578
1 April 1996 1,321,355
1 April 1997 1,334,929
PQ means 0.0969p
Qt means the regulated quantity supplied in relevant year t.
PIt is derived from the following formula
PIt = ( 1 + RPIt - Xs ) PIt-1
------------------
100
where, for the relevant year beginning 1 April 1994, PIt-1 equals 1
RPIt means the percentage change(where of a positive or a negative
value)in the arithmetic average of the Retail Price Index numbers published
or determined with respect to each of the six months July to December
(inclusive) in relevant year t-1 and the arithmetic average of the
Retail Price Index numbers published or determined with respect to the
same months in relevant year t-2. XS means 2. Yt means the allowed
costs, in pence per regulated unit supplied in relevant year t, as
calculated in accordance with the formula at paragraph 2 of this
Condition. KSt means the correction factor per regulated unit (whether
of a positive or negative value) to be applied to the average charge
per regulated unit supplied in relevant
-9-
<PAGE>
year t which (subject to paragraph 4 of condition 3D) is
derived from the following formula.
Kst = (RST-1 - (Qt-1 . Mst-1 ) (1 + It )
------------------------ -----
Qt 100
Provided that:
(a) notwithstanding the above, the value for Kst for the
fifth relevant year shall, subject to sub-paragraph (b)
below, be the value notified by the licensee to the
Director no later than three months after the
commencement of the fifth relevant year. Such
notification shall be accompanied by a statement
showing how the value for Kst is derived, together with
its reasons for the basis adopted in calculating such
value; and
(b) unless the Director objects in writing to the licensee
to such value within 3 months of receipt of the
aforementioned notification (giving reasons for such
objection) such value shall be the value as notified to
the Director. Where the Director has served a notice of
objection on the licensee, the licensee shall, no later
than 14 days after receipt of such notice, notify the
director, by a further statement served on the Director
in accordance with sub-paragraph (a) of the proposed
value for Kst for the fifth relevant year. Where:
RSt-1means the regulated supply revenue in relevant year t-1.
Qt-1 means the regulated quantity supplied in relevant year
t-1. Qt means the regulated quantity supplied in relevant
year t. MSt-1 means the maximum average charge per regulated
unit supplied in relevant year t-1. It means that interest
rate in relevant year t which is equal to, where KSt (taking
no account of I for this purpose) has a positive value, the
average
-10-
<PAGE>
specified rate plus 2 or where KSt (taking no account
of I for this purpose) has a negative value the
average specified rate.
Formula for Yt as used in paragraph 1
2. For the purpose of paragraph 1, the term Yt (being the allowed cost, in
pence per regulated unit supplied in relevant year t) shall be calculated
in accordance with the following formula:
Yt = Et + Ft + Tt + Ut Where: Et means the licensee's average electricity
purchase costs in pence per regulated unit supplied in relevant year t, as
calculated in accordance with the principles set out in Part F of Schedule
3 and attributed to regulated customers. Ft means the fossil fuel levy or
an amount in lieu thereof per regulated unit supplied in relevant year t,
being an amount in pence per regulated unit supplied derived by:
(a) aggregating the amounts payable (measured on an accruals basis) by the
licensee:
(i) in respect of the fossil fuel levy pursuant to Regulations made
under Section 33 of the Act in respect of relevant year t; and
(ii) in lieu of the fossil fuel levy on purchases of electricity other
than leviable electricity, as calculated in accordance with
paragraph A3 of Schedule 3 in respect of relevant year t; and
-11-
<PAGE>
(b) attributing a share of those amounts to quantities supplied in
relevant year t to such regulated customers in accordance with the
principles set out in Part A of Schedule 3; and
(c) dividing the resulting amount by the regulated quantity supplied in
relevant year t. TI means the allowed transmission cost per regulated
unit supplied in relevant year t, derived by:
(a) aggregating those charges:
(i) paid by the licensee to the Transmission Company as
transmission charges attributed to regulated customers in
relevant year t after adding any amounts paid or deducting
any amounts received in relevant year t in respect of any
under or over payment in the preceding relevant year t-1;
and
(ii) payable (measured on an accruals basis) by the licensee to
the Interconnectors Business of the Transmission Company as
interconnector charges attributed to regulated customers in
relevant year t; and (b) dividing the resulting amount by
the regulated quantity supplied in relevant year t.
Ut means the allowed distribution cost per regulated unit supplied in relevant
year t, derived by:
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<PAGE>
(a) aggregating the amounts payable (measured on an accruals basis)
in relevant year t by the licensee in respect of distribution
services attributed to regulated customers to the Distribution
Business of the license and (in respect of similar services,
whether or not the same are excluded services for the purposes of
any license held by the relevant third-party) to the distribution
business of any third party; and
(b) dividing the resulting amount by the regulated quantity supplied
in relevant year t.
but so that no amount may be taken into account more than once for the
purpose of any calculation of the component parts of the formula.
-13-
<PAGE>
Condition 3C: [No longer used]
-14-
<PAGE>
Condition 3D: Restriction of distribution charges and of supply charges:
adjustments
1. The following paragraphs shall have effect separately in relation to
distribution charges regulated under Condition 3A and supply charges
regulated under Condition 3B.
2. If, in respect of any relevant year, the average charge per unit
exceeds the maximum average charge per unit by more than the permitted
on-year percentage, the licensee shall furnish an explanation to the
Director and in the next following relevant year the licensee shall not
effect any increase in charges unless it has demonstrated to the
reasonable satisfaction of the Director that the average charge per
unit would not be likely to exceed the maximum average charge per unit
in that next following relevant year.
3. If, in respect of any two successive relevant years, the sum of the
amounts by which the average charge per unit has exceeded the maximum
average charge per unit is more than the permitted two-year percentage,
then in the next following relevant year the licensee shall, if
required by the Director, adjust its charges such that the average
charge per unit would not be likely, in the judgment of the Director,
to exceed the maximum average charge per unit in that next following
relevant year.
4. If, in respect of two successive relevant years, the average charge per
unit is less than 90 per cent of the maximum average charge per unit,
the Director, after consultation with the licensee, may direct that:
(a) in calculating Kdt for the purposes of paragraph 1 of
Condition 3A in respect of the next following relevant year,
there shall be substituted for Rdt-1 in the formula at
paragraph 1 of Condition 3A such figure as the Director may
specify being not less than Rdt-1 and not more than 0.90
(Dt-1.Mdt-1); or
(b) in calculating Kst for the purposes of paragraph 1 of
Condition 3B in respect of the next following relevant year,
there shall be substituted for Rst-1 in the formula at
paragraph 1 of Condition 3B such figure as the Director may
specify being not less than Rst-1 and not more than 0.90
(Qt-1.MSt-1).
5. In this Condition:
"per unit" means per unit distributed in a
relevant year or per regulated unit
supplied in the fifth relevant year or
any subsequent relevant year, as the
context requires.
"permitted one-year means 3 per cent of the maximum average charge per unit
percentage" distributed or 4 per cent of the maximum average charge per
regulated unit supplied, as the context requires.
-15-
<PAGE>
"permitted two-year means 4 per cent of the maximum average charge per unit
percentage" distributed in the second of the relevant years or 5 per
cent of the maximum average charge per regulated unit
supplied in the second of the relevant years, as the
context requires.
Provided that, in respect of each of the above definitions, where the
relevant year referred to is one of the first four relevant years it
shall have effect as if the word "regulated" was omitted and shall be
construed in accordance with the charge restrictions conditions in
force during that year.
-16-
<PAGE>
Condition 3E: Information to be provided to the Director in connection with the
charge restriction conditions
1. Where the licensee is intending to make any change in:
(a) charges for provision of distribution services regulated under
Condition 3A; or
(b) tariff supply charges regulated under Condition 3B
the licensee shall (unless otherwise agreed by the Director) not later
than the date of publication of such changes provide the Director with:
(i) a written forecast of the maximum average charge per unit
distributed or the maximum average charge per regulated unit
supplied, together in each case with its components, in respect
of the relevant year t in which such change is to take effect and
in respect of the next following relevant year t+1; and
(ii) a written estimate of the maximum average charge per unit
distributed or the maximum average charge per regulated unit
supplied, together in each case with its components, in respect
of the relevant year t-1 immediately preceding the relevant year
in which the change is to take effect unless a statement
complying with paragraph 8 in respect of relevant year t-1 has
been furnished to the Director before the publication of the
proposed change.
2. (a) No later than 1st April in each relevant year, the licensee shall send
to the Director a statement of principles in accordance with which the
licensee intends to attribute, together with a statement of the licensee's
provisional attribution of, electricity purchase or sale contracts to
regulated customers and to other customers.
(b) Where, at any time during a relevant year, the licensee intends to
change the principles of attribution or any provisional attribution
specified in the statement under sub-paragraph (a) or a previous
statement under this sub-paragraph (b) or to purchase or sell an
electricity purchase or sale contract, the change or the provisional
attribution in relation to the purchases or sale shall be specified in
a written statement signed by a person authorized to sign a statement
by the Directors of the licensee which statement shall not provide for
a retrospective change of principals or for any re-attribution of
payment already made or any payment where the even giving rise to that
payment has already occurred (whether or not it is then due).
3. If within three months of the commencement of any relevant year t the
licensee has not made any such change in charges as is referred to in
paragraph 1, the licensee shall provide the Director with a written
forecast of the maximum average charge per regulated unit supplied in
respect of relevant year t.
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<PAGE>
4. The Director may issue directions providing that any forecast or estimate
provided in accordance with paragraphs 1 or 3 shall be accompanied by such
information as regards the assumptions underlying the forecast or estimate
as may be necessary to enable the Director to be satisfied that the
forecast or estimate has been properly prepared on a consistent basis.
5. [No longer used]
6. [No longer used]
7. Subject as provided in (b) below, not later than six weeks after the
commencement of any relevant year t, the licensee shall send to the
Director a statement as to:
(a) whether or not the provisions of condition 3D are likely to be
applicable in consequence of the average charge per unit
distributed or regulated unit supplied (as the case may be) in
the preceding relevant year t-1 or the two preceding relevant
years t-1 and t-2; and
(b) its best estimate as to the relevant correction factor Kdt or
(other than in the fifth relevant year) Kst (as the case may
be) to be applied in calculating the maximum average charge
per unit distributed or regulated unit supplied (as the case
may be) in respect of relevant year t.
8. Not later than three months after the end of a relevant year the licensee
shall send the Director a statement, in respect of that relevant year,
showing the specified items referred to in paragraph 10.
9. The statement referred to in the preceding paragraph shall be:
(a) accompanied by a report from the Auditors that in their
opinion (i) such statement fairly presents each of the
specified items referred to in paragraph 10 in accordance with
the requirements of the charge restriction conditions and (ii)
the amounts shown in respect of each of those specified items
are in accordance with the licensee's accounting records which
have been maintained in respect of each of the relevant
Separate Businesses in accordance with Condition 2; and
(b) certified by a director of the licensee on behalf of the
licensee that to the best of his knowledge, information and
belief having made all reasonable enquiries:
(i) there is no amount included in its calculations under
Conditions 3A and Schedule 3 which represents other than:
(aa) bona fide consideration for the provision of
distribution services in the course of its Distribution
Business; or
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<PAGE>
(bb) an amount permitted under the charge restriction
conditions to be so included;
(ii) there is no amount included in its calculations under
Condition 3B and Schedule 3 which represents other than:
(aa) bona fide consideration for electricity supplied to
regulated customers; or
(bb) an amount permitted under the charge restriction
conditions to be so included;
(iii)there is no amount included in its calculations of allowed
security costs under Condition 3F which represents other
than an amount permitted under the charge restriction
conditions to be so included;
(iv) no service has been treated as an excluded service which was
not properly so treated and no amount included in the
revenues in respect thereof represents other than bona fide
consideration for the provision of the excluded service to
which it relates;
(v) all amounts which should properly be taken into account for
the purposes of the charge restriction conditions have been
taken into account; and
(vi) there is no amount included in its calculations under
Condition 3B and Schedule 3 in respect of electricity
purchase or sale costs which does not result from an
attribution or method of attribution contained in the
statement under either paragraph 2 (a) or (b).
10. The specified items to be contained in the statement referred to in
paragraph 8 shall be the following:
(a) the regulated quantity distributed;
(b) the quantity distributed in each regulated distribution unit category;
(c) the average charge per unit distributed;
(d) the quantity supplied;
(e) the average charge per unit supplied;
(f) the average charge per regulated unit supplied;
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<PAGE>
(g) the regulated quantity supplied;
(h) the factor in respect of distribution losses, calculated as provided
under paragraph 3 of Condition 3A;
(i) the licensee's average electricity purchase costs per regulated unit
supplied calculated as provided under paragraph 2 of Conditions 3B;
(j) the fossil fuel levy per regulated unit supplied, calculated as
provided under paragraph 2 of Condition 3B;
(k) the allowed transmission cost per regulated unit supplied, calculated
as provided under paragraph 2 of Condition 3B;
(l) the allowed distribution cost per regulated unit supplied, calculated
as provided under paragraph 2 of Condition 3B;
(m) the statements and information referred to in paragraphs A6, B2, C8,
D1, E10 and F7 of Schedule 3;
(n) the information referred to at paragraph 8 of Condition 3F.
Provided that the statement to be provided in the fifth relevant year
in respect of the immediately preceding relevant year shall contain the
information required by Paragraph 10 of Condition 3E in the License in
the form in force on 31 March 1994.
11. Where the Director issues directions in accordance with paragraph 9 of
Condition 3F or paragraphs A7 or B3 or C9 or D5 or E11 or F8 of
Schedule 3 then such directions shall not have effect from a date
earlier than the commencement of the relevant year to which the
statement last furnished to the Director pursuant to paragraph 8 prior
to the issue of the directions related, unless such statement (or the
accompanying report or certificate under paragraph 9) or any statement,
report or certificate in respect of an earlier relevant year was
incorrect or was misleading in any material respect.
12. Where the Director issues such directions as are referred to in the
preceding paragraph, the Director may require the licensee to provide a
revised statement in respect of such of the specified items as may be
affected by the directions, and the licensee shall comply with such
request.
-20-
<PAGE>
Condition 3F: Allowances in respect of security costs
1. At any time during a security period, the licensee may give notice in
writing to the Director suspending, with effect from the date of receipt of
the notice by the Director, application of such of the charge restriction
conditions as may be specified in the notice for the unexpired term of the
security period.
2. At any time during a security period, the Director may (having regard to
his duties under the Act) by means of directions:
(a) suspend or modify for the unexpired term of the security period the
charge restriction conditions or any part or parts thereof; or
(b) introduce for the unexpired term of the security period new charge
restriction conditions
in either case, so as to make such provision as in the opinion or
estimation of the Director is requisite or appropriate:
(i) to enable the licensee to recover by means of increased charges
an amount estimated as being equal to the licensee's allowed
security costs during such period;
(ii) to ensure that such part of the amount referred to in
sub-paragraph (i) above as is estimated as being equal to the
allowed security costs incurred by the licensee as costs in its
Distribution Business are recovered by means of appropriate
equitable increases on the charges made by the licensee in its
Distribution Business; and
(iii)to ensure that such part of the amount referred to in
sub-paragraph (i) above as is estimated as being equal to the
allowed security costs incurred by the licensee as costs in its
Supply Business and its Second-Tier Supply Business respectively
are recovered by appropriate equitable increases in the charges
made by the licensee in those Businesses and the licensee shall
comply with the terms of any directions so issued.
3. At any time following a security period, the Director may (following such
consultation with the licensee and others as the Director may consider
appropriate) issue directions suspending or modifying the charge
restriction conditions or any part or parts thereof or replacing such
directions as may have been made during the security period and introducing
such new charge restriction conditions as in the opinion of the Director
are appropriate in all the circumstances (including at the Director's
discretion an appropriate adjustment having regard to any profit gained or
foregone by the licensee during the security period), and the licensee
shall comply with any directions so issued.
-21-
<PAGE>
4. At any time within three months after the issue of directions by the
Director under paragraph 3, the licensee may serve on the Director a
disapplication request in respect of such of the charge restriction
conditions or any part or parts thereof as are specified in the request.
5. If within three months of the receipt by the Director of the disapplication
request referred to in paragraph 4, the Director has either not agreed in
writing to such disapplication request or has not made a reference to the
Monopolies Commission under Section 12 of the Act relating to the
modification of the charge restriction conditions, the licensee may deliver
one month's written notice to the Director terminating the application of
the charge restriction conditions (or any part or parts thereof) as were
specified in the disapplication request.
6. Subject to paragraphs 7 and 9, the licensee shall in any relevant year be
entitled to recover an aggregate amount equal to its allowed security costs
in that year or (insofar as not previously recovered) any previous year, by
means of appropriate equitable increases on the charges made by the
licensee in each of its Distribution, Supply and Second-Tier Supply
Businesses.
7. Paragraph 6 shall not apply in so far as such allowed security costs:
(a) were otherwise recovered by the licensee; or
(b) were taken into account by the Director in setting charge restriction
conditions by means of directions issued under paragraph 3 above.
8. The licensee shall following the end of each relevant year provide to the
Director, as being one of the specified items to be contained in the
statement referred to at paragraph 8 of Condition 3E, details in respect of
that relevant year of:
(a) the amount of the licensee's allowed security costs; and
(b) the aggregate amounts charged under paragraph 6 on account of the
licensee's allowed security costs; and
(c) the bases and calculations underlying the increases in charges made by
the licensee in its Distribution, Supply and Second-Tier Supply
Businesses under paragraph 6.
9. Where the Director is satisfied that the licensee has recovered amounts in
excess of the allowed security costs, the Director may issue directions
requiring the licensee to take such steps as may be specified to reimburse
customers of or purchasers from the Distribution, Supply and Second-Tier
Supply Business (as the case may be) for the excess amounts charged to
them, and the licensee shall comply with any directions so issued provided
that if the excess amounts relate to allowed security costs paid to any
authorized electricity
-22-
<PAGE>
operator, the licensee shall not be obliged to make any such
reimbursement unless and until it has recovered such costs from the
relevant authorized electricity operator.
10. No amounts charged by the licensee under this Condition (whether or not
subsequently required to be reimbursed) shall be taken into account for
the purpose of applying the charge restriction provisions of Conditions
3A and 3B.
11. In this Condition:
"allowed security cost" shall have the meaning ascribed to that term in the
Fuel Security Code.
"security period" means a period commencing on the date on which
any direction issued by the Secretary of State under
Section 34(4)(b) of the Act enters effect and
terminating on the date (being not earlier than the
date such direction, as varied, is revoked or expires)
as the Director, after consultation with such persons
(including without limitation, license holders liable to
be principally affected) as he shall consider
appropriate, may with the consent of the Secretary of
State by notice to all license holders determine after
having regard to the views of such persons.
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<PAGE>
Conditions 3G: Duration of charge restriction conditions
1. The charge restriction conditions shall apply so long as this license
continues in force but shall cease to have effect (in whole or in part,
as the case may be) if the licensee delivers to the Director a
disapplication request made in accordance with paragraph 2 and:
(a) the Director agrees in writing to the disapplication request; or
(b) their application (in whole or in part) is terminated by notice given
by the licensee in accordance with either paragraph 4 or paragraph 5.
2. A disapplication request pursuant to this Condition 3G shall (a) be in
writing addressed to the Director, (b) specify the charge restriction
conditions (or any part or parts thereof) to which the request relates
and (c) state the date from which the licensee wishes the Director to
agree that the specified charge restriction conditions shall cease to
have effect.
3. Save where the Director otherwise agrees, no disapplication following
delivery of a disapplication request pursuant to this Condition 3G shall
have effect earlier than that date which is the later of:
(a) a date being not less than 18 months after delivery of the
disapplication request; and either
(b) in the case of distribution charges regulated under Condition 3A,
31st March, 1995; or
(c) in the case of supply charges regulated under Conditions 3B, 31st
March, 1998.
4. If the Director has not made a reference to the Monopolies Commission under
Section 12 of the Act relating to the modification of the charge
restriction conditions before the beginning of the period of 12 months
which will end with the disapplication date, the licensee may deliver
written notice to the Director terminating the application of such of the
charge restriction conditions (or any part or parts thereof) as are
specified in the disapplication request with effect from the disapplication
date or a later date.
5. If the Monopolies Commission makes a report on a reference made by the
Director relating to the modification of the charge restriction conditions
(or any part or parts thereof) specified in the disapplication request and
such report does not include a conclusion that the cessation of such charge
restriction conditions, in whole or in part, operates or may be expected to
operate against the public interest, the licensee may within 30 days after
the publication of the report by the Director in accordance with Section 13
of the Act deliver to him written notice terminating the application of
such charge restriction conditions with effect from the disapplication date
or later.
-24-
<PAGE>
6. A disapplication request or notice served under this Condition may be
served in respect of a specified geographic area.
-25-
<PAGE>
SCHEDULE 3
Supplementary provisions of the charge restriction conditions
PART A
Principles for Attribution
General Principles
A1. Where for the purposes of the charge restriction conditions, a share of
costs borne by the licensee requires to be attributed to any part of
the market, the license shall make that attribution on a basis which
ensures that no more than a fair proportions of those costs, reflecting
the costs incurred by the licensee in supplying that part of the
market, are so attributed.
A2. The following paragraphs of this Part of Schedule 3 are without
prejudice to paragraph A1.
Fossil Fuel Levy and payments in lieu thereof
A3. The fossil fuel levy requiring to be attributed to supplies to
regulated customers shall be attributed on the basis of the amount of
the levy incorporated in the prices actually charged or to be charged
by the licensee on supplies to such customers in the relevant year in
respect of which the attribution falls to be made. Amounts in lieu of
the fossil fuel levy in respect of purchases of electricity other than
leviable electricity requiring to be calculated and then attributed to
supplies to regulated customers in any relevant year for the purposes
of Condition 3B shall:
(a) be calculated as being such amounts as correspond to the lesser
of:
(i) the premium actually payable (measure on accruals basis) by
the licensee during the relevant year on purchases of
electricity other than leviable electricity as representing
the benefit to the licensee of being able to treat such
electricity as being other than leviable for the purposes of
Section 33 of the Act and Regulations thereunder; and
(ii) the additional amount that would have been payable (measured
on an accruals basis) by the licensee in respect of the
fossil fuel levy pursuant to Regulations made under Section
33 of the Act had such electricity been leviable
electricity; and
(b) be attributed to supplies to regulated customers pro rata to the
amount which the quantity supplied to regulated customers bears
to the total quantity supplied (in each case in the relevant year
in respect of which the attribution falls to be made)
-26-
<PAGE>
or on the basis of the amount referred to in paragraph (a)
incorporated in the prices actually charged or to be charged
by the licensee on supplies to such customers in the relevant
year in respect of which the attribution falls to be made or
on such other basis of attribution as the licensee shall
previously have agreed with the Director.
Transmission connection point charges and remote transmission asset rentals
A4. The transmission connection point charges and remote transmission asset
rentals requiring to be attributed between the regulated quantity
distributed and other quantities distributed shall be attributed in
proportion to the transmission connection point and remote transmission
asset capacity required for the purpose of distributing those quantities.
Distribution losses
A5. Where an amount (in units) in respect of distribution losses requires to be
calculated and attributed in respect of EHV units and units distributed by
the licensee for the purpose of supply to premises outside the licensee's
authorized area, such calculation and attribution shall be made
consistently with the principles underlying the schedule of adjustment
factors referred to at sub-paragraph (b) of paragraph 3 of Condition 8.
Information to be provided by licensee
A6. The licensee shall following the end of each relevant year furnish to the
Director, as being one of the specified items to be included in the
statement referred to at paragraph 8 of Condition 3E, a statement of the
actual attribution of electricity purchase costs between regulated and
other customers and reconciling the attribution with any statements made in
respect of the relevant year under paragraph 2 of Condition 3E, and a
statement confirming that the calculation of amounts in lieu of the fossil
fuel levy and the attribution of the fossil fuel levy, amounts in lieu
thereof, the transmission connection pint charges, the remote transmission
asset rentals and of distribution losses was made in accordance with the
provisions of this Part of Schedule 3, accompanied (where appropriate) by
(i) a statement of the total amounts attributed to regulated and other
customers; and
(ii) an explanation of any changes in the principles of attribution or
their application (as the case may be) since the issue of the
statement under paragraph 2(a) of Condition 3E; and
(iii)copies of statements prepared under paragraph 2(b) of Condition 3E
and an explanation of the basis therefore.
A7. Where the Director is satisfied that the basis of calculation or
attribution (as the case may be) used by the licensee is not in conformity
with paragraph A1, the Director may issue
-27-
<PAGE>
directions specifying an alternative basis of calculation or
attribution by the licensee (as the case may be) shall be adjusted
accordingly with effect from the date of issue of the directions or
(subject to paragraph 11 of Condition 3E) such other date as may be
specified in those directions.
-28-
<PAGE>
PART C
Excluded services
Distribution Business
C1. There may be treated as excluded services provided by the licensee in
its Distribution Business such services in respect of which charges are
made which:
(a) do no fall within paragraph C2 of this Part; and
(b) may (subject to paragraph C9) be determined by the licensee as
falling under one of the principles set out in paragraphs C3
to C6 of this Part.
C2. No services provided by the licensee as part of its Distribution
Business shall be treated as an excluded service in so far as it
consists of the provision of services remunerated under the use of
system charges in accordance with paragraph 3 of Condition 8 including
(without prejudice to the foregoing):
(i) (subject to paragraph C3 of this Part) the transport of
electricity;
(ii) the carrying out of works for the installation of electric lines
or electrical plant (not otherwise payable in the form of
connection charges);
(iii)the carrying out of works or the provision of maintenance or
repair or other services for the purpose of enabling the licensee
to comply with Conditions 9, 11 and 13, the Electricity Supply
Regulations of 1988 or any regulations made under Section 29 of
the Act or any other enactment relating to safety or standards
applicable in respect of the Distribution Business; and
(iv) (subject to paragraph C5 of this Part) the provision,
installation and maintenance of any meters, switchgear or other
electrical plant (not being part of connection charges).
C3. The licensee may treat as being an excluded service for the purposes of
its Distribution Business the transport of:
(a) units of electricity not consumed in the licensee's authorized
area; or
(b) EHV units.
C4. Charges of the type described in paragraph 4 of Condition 8 and borne
in accordance with the principles set out in paragraph 7 of Condition 8
by any person as connection charges,
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<PAGE>
and charges in respect of the statements referred to in paragraph 8 of
Condition 8, may each be treated as excluded services for the purposes
of the Distribution Business.
C5. A service provided by the licensee as part of its Distribution Business
may be treated as an excluded service in so far as it consists in the
provision of services (including metering, electric lines or electrical
plant) for the specific benefit of any third party requesting the same
and not made available by the licensee as a normal part of its
Distribution Business remunerated by use of system charges including
(without prejudice to the foregoing):
(i) special metering (including "time of day" metering) to facilitate
energy saving programs for the benefit of customers requesting
the same;
(ii) charges for moving mains, services or meters forming part of the
licensee's distribution system to accommodate extension,
re-design or re-development of any premises on which the same are
located or to which they are connected;
(iii)the provision of electric lines and electrical plant (a) insofar
as the same are required for the specific purpose of enabling the
provision of top-up or standby supplies or sales of electricity
or (b) to provide a higher degree of security than is required
for the purposes of complying with Condition 9; and
(iv) the amount by which charges for the provision of prepayment
meters to customers exceed charges for the provision of standard
meters for such customers.
C6. There may be treated as an excluded service for the purposes of the
Distribution Business, charges for the relocation of electric lines or
electrical plant and the carrying out of works associated therewith
pursuant to a statutory obligation (other than under Section 9(1) or
Section 16 of the Act) imposed on the licensee.
Supply Business
C7. Subject to paragraph C9, a service provided by the licensee as part of
its Supply Business may be treated as an excluded service in so far as
it consists of the provision of services for the specific benefit of
customers requesting the same and not made available by the licensee as
a normal part of such Business. For the avoidance of doubt, the
provision of facilities for prepayment may not be treated as an
excluded service except the provision of prepayment meters as an
excluded service by the distributions business.
-30-
<PAGE>
Information to be provided to the Director
C8. The licensee shall following the end of each relevant year furnish to
the Director, as being one of the specified items to be included in the
statement referred to at paragraph 8 of Condition 3E, details
specifying separately the nature of all services provided as part of
its Distribution Business or Supply Business by the licensee and
treated as excluded services by the licensee during the course of such
year and stating the revenues derived by the licensee in respect of
each such service so treated.
C9. Where the Director is satisfied that in light of the principles set out
in paragraphs C2 to C7 inclusive any service treated by the licensee as
an excluded service should not be so treated, the Director shall issue
directions to that effect, and the service or services specified in the
directions shall cease to be treated as excluded services from the date
of issue of the directions or (subject to paragraph 11 of Condition 3E)
such other date as may be specified in the directions.
-31-
<PAGE>
PART F
Electricity purchase costs
F1. For the purposes of the term Et in paragraph 2 of Condition 3B, the
licensee's electricity purchase costs shall, subject to paragraph F8 of
this Part of Schedule 3, comprise:
(a) costs payable (measured on an accruals basis) by the licensee
in respect of the establishment, management and administration
of Non-Fossil Purchasing Agency Limited pursuant to the terms
of a shareholders' or agency agreement dated 30th March, 1990;
and
(b) amounts becoming payable (measured on an accruals basis) by
the licensee pursuant t qualifying arrangements (as defined by
Section 33 of the Act), together with finance costs (if any)
incurred by the licensee in funding the amounts so becoming
payable in the period prior to the receipt by the licensee of
the amounts referred to below, net of any amounts receivable
(measured on n accruals basis) by the licensee in respect of:
(i) the re-sale by the licensee of any of the electricity the
subject of such qualifying arrangements; and
(ii) payments made to the licensee pursuant to Regulations made
under Section 33(1) of the Act, and
for this purpose "re-sale" shall be deemed to include delivery of the
electricity by the seller thereof to the pool established pursuant to
the Pooling and Settlement Agreement or to another person at the
direction of the licensee; and
(c) amounts becoming payable (measured on an accruals basis) by
the licensee under the terms of the Pooling and Settlement
Agreement in respect of the purchase by the licensee of
electricity under the terms of such agreement; and
(d) the net amount (whether being a positive or a negative amount)
payable or receivable (as the case may be, and in either case
measured on an accruals basis) by the licensee in respect of
electricity purchase or sale contracts, as determined in
accordance with paragraphs F2 to F6 below; and
(e) the net amount payable (measured on an accruals basis) in
respect of purchases of electricity otherwise than under the
terms of the Pooling and Settlement Agreement.
but so that no amount may be taken into account more than once for the
purposes of sub-paragraphs (a) to (e).
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<PAGE>
F2. For the purposes of this Part of Schedule 3 (and same as provided in
paragraph F3), payments or receipts under any electricity purchase or
sale contract shall include all amounts payable or receivable for the
grant of or pursuant to the terms of such contract.
F3. Notwithstanding paragraph F2, contracts or arrangements the principal
purpose of which is to enable the licensee to hedge currency exchange
risks shall not be treated as electricity purchase or sale contracts.
F4. Subject to paragraph F6, any fixed or lump sum payments payable or
receivable under electricity purchase or sale contracts which span two
or more relevant years shall be time apportioned to the periods of such
contract falling within each relevant year.
F5. Subject to paragraph F6, on the sale or other disposition by the
licensee of any electricity purchase or sale contract or its rights and
obligations thereunder, amounts receivable in respect of such sale or
dispositions shall (net of any amounts otherwise falling to be
apportioned to a subsequent relevant year in accordance with paragraph
F4) be taken into account as a receipt at the time it accrues due to
the licensee.
F6. Insofar as either:
(a) the treatment of amounts payable or receivable under electricity
purchase or sale contracts does not fall to be specified in the
preceding paragraphs of this Part; or
(b) the treatment of such amounts is in the opinion of the licensee and
its Auditors contrary to best accounting practice,
the licensee shall notify the Director of the manner in which it
proposes to treat such amounts, such notification to be accompanied by
an opinion from the Auditors confirming that the treatment proposed is
in accordance with best accounting practice, and (save where the
Director issues directions that such amounts should be treated in
another manner specified in those directions) the licensee shall
thereafter treat such amounts in the manner notified.
F7. The licensee shall following the end of each relevant year furnish to
the Director, as being one of the specified items to be included in the
statement referred to at paragraph 8 of Conditions 3E, a statement:
(i) specifying the number and nature of contracts falling to be treated by
the licensee as electricity purchase or sale contracts in that
relevant year;
(ii) specifying the aggregate amounts payable and the aggregate amounts
receivable by the licensee under such contracts during that relevant
year;
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<PAGE>
(iii)confirming that the amounts treated as payable or receivable in
respect of such contracts in the relevant year were computed in
accordance with the preceding paragraphs of this Part
and, where appropriate, accompanied by an explanation of any changes in
the treatment of any contract or arrangement as being an electricity
purchase or sale contract or in the treatment of amounts payable or
receivable under any electricity purchase or sale contract.
F8. Where the Director is satisfied that:
(i) any contract or arrangement treated as an electricity purchase or sale
contract should not be so treated, or any contract or arrangement not
so treated should be so treated; or
(ii) the basis on which amounts payable or receivable under an electricity
purchase or sale contract are not apportioned in conformity with the
preceding paragraphs of this Part,
the Director may issue directions requiring an alternative basis of
treatment of such contract or arrangement or of the apportionment of
amounts payable or receivable under such electricity purchase or sale
contract (as the case may be), and the basis of such treatment or
apportionment by the licensee shall be adjusted accordingly with effect
from the date of issue of such direction or (subject to paragraph 11 of
Condition 3E) such other date as may be specified in the directions.
-34-
Exhibit 10.3
Dated 30th March, 1990
THE GENERATORS
named herein
- and -
THE SUPPLIERS
named herein
- and -
ENERGY SETTLEMENTS AND INFORMATION SERVICES
as Settlement System Administrator
- and -
ENERGY POOL FUNDS
ADMINISTRATION LIMITED
as Pool Funds Administrator
- and -
THE NATIONAL GRID COMPANY plc
as Grid Operator and Ancillary Services Provider
- and -
SCOTTISH POWER plc
and
ELECTRICITE DE FRANCE, SERVICE NATIONAL
as Externally
Interconnected Parties
- and -
THE OTHER PARTIES
named herein
POOLING AND SETTLEMENT
AGREEMENT
for the Electricity Industry in
England and Wales
(as amended and restated at 2 December 1994)
<PAGE>
Main Text Schedules 1 - 8 and 10 - 21
<PAGE>
Page
CONTENTS
PART I: PRELIMINARY 3
1. Definitions and Interpretation 3
2. The Effective Date 30
3. Additional Parties 30
PART II: OBJECTS, REVIEW AND PRIORITY 35
4. Objects and Purpose of the Agreement 35
5. Transitional Arrangements and Reviews 35
6. Entrenched Provisions, Inconsistencies and Conflicts 45
PART III: POOL MEMBERSHIP AND GENERAL MEETINGS 51
7. Introduction 51
8. Pool Membership 52
9. General Meetings 59
10. Proceedings at General Meetings 63
11. Voting 65
12. Proxies 71
13. Matters reserved to the General Meeting: Class Rights 73
PART IV: THE EXECUTIVE COMMITTEE 78
14. Establishment of the Executive Committee 78
15. Membership of the Executive Committee 79
16. Pool Chairman 84
17. Chief Executive, Secretarial and Secretary 86
18. Proceedings of the Executive Committee 89
19. Conduct of Executive Committee Meetings 91
20. Delegation 92
21. Vacation of Office by Committee Members 94
22. Voting 95
23. Committee Members' Responsibilities and Protections 98
24. Powers of the Executive Committee 101
PART V: LIMITATION OF LIABILITY 106
25. Limitation of Liability 106
i
<PAGE>
Page
PART VI: THE SETTLEMENT SYSTEM ADMINISTRATOR 108
26. Appointment 108
27. Resignation and Removal 108
28. Transfer of Responsibilities and Assets 111
PART VII: THE SETTLEMENT SYSTEM ADMINISTRATOR'S
RESPONSIBILITIES 115
29. Responsibilities 115
30. Insurance Responsibilities 119
31. Performance of Duties 121
[SUBSTITUTE PAGE TO COME]
PART XV: METERING 173
60. Metering 173
PART XVI: POOL CIVIL EMERGENCIES 197
61. Pool Civil Emergencies 197
PART XVII: TRADING SITE 208
62. Trading Site 208
PART XVIII: THE POOL FUNDS ADMINISTRATOR, BILLING
AND SETTLEMENT 209
63. The Pool Funds Administrator 209
64. Procedures Manual 213
65. Billing and Settlement 214
PART XIX: DEFAULT, TERM AND TERMINATION 215
66. Default 215
67. Term and Termination 220
ii
<PAGE>
Page
PART XX: CONFIDENTIALITY 222
68. Definitions and Interpretation 222
69. Confidentiality for NGC and its Subsidiaries 223
70. Confidentiality other than for NGC and its Subsidiaries 228
71. Release of Information 229
PART XXI: THE PARTICIPATION OF NGC 232
72. The Participation of NGC 232
73. Intra-Company Contracts 232
PART XXII: MISCELLANEOUS 234
74. Force Majeure 234
75. Notices 235
76. Assignment 236
77. Counterparts 236
78. Waivers; Remedies Not Cumulative 236
79 Severance of Terms 237
80. Entire Agreement 237
81. Language 237
82. Restrictive Trade Practices Act 1976 238
83. Arbitration 238
84. Jurisdiction 239
85. Governing Law 240
86. The Settlement System Administrator's Contract 240
SCHEDULES 242
1. Part I The Generators 242
Part II The Suppliers 244
Part A: Public Electricity Suppliers 244
Part B: Second Tier Suppliers 245
Part C: Others 247
2. The Other Parties 248
3. Form of Accession Agreement 250
iii
<PAGE>
Page
4. The Accounting Procedure 252
Part A: Preliminary 254
Part B: The Provision of Financial Information 261
Part C: The Settlement System Administrator's 267
Charges
Part D: Allocation of Charges 275
Part E: [Not Used] 279
Part F: Pro-forma Budget 280
Part G: Pro-forma Statement of Costs 286
Part H: Pro-forma Statement of Charges 288
5. Form of Admission Application 289
6. Form of Pool Membership Application 292
7. Form of Escrow Agreement 295
8. The Hardware and Software 302
Part A: The Hardware 302
Part B: Developed Software 303
Part C: Licensed Software 303
9. The Pool Rules 304
Preamble 308
Part I: Definitions and Interpretation 312
Part II: Data Input to Settlement 322
Part III: Computation of Payments in Settlement 359
Part IV: Interconnectors 472
Part V: Special Provisions 484
Part VI: Settlement Runs 501
Appendix 1: Part I: Definitions 516
Part II: List of Acronyms 626
Appendix 2: Procedures for running GOAL 635
Appendix 3: Forms and Terms to be used when 673
entering Despatch Instructions into PORTHOLE
Appendix 4: Reporting Requirements 674
Appendix 5: Variables established by reference to PORTHOLE 691
Appendix 6: Procedures for the Aggregation of Metered Data 693
Appendix 7: Short-Term Modifications 715
10. Form of Resignation Notice 810
11. Billing and Settlement 812
Part 1: Preliminary 813
Part 2: Establishment of Systems 819
Part 3: Security Cover and Credit Monitoring 831
Part 4: Billing and Paying Procedures 836
iv
<PAGE>
Page
Annex 1: Form of Advice Note 859
Annex 2: Form of Confirmation Notice 860
Annex 3: Part 1: Form of Settlement Account Designation 861
Part 2: Form of Change of Settlement Account 862
Annex 4: Form of Letter of Credit 863
12. Transitional Arrangements 864
13. Contributory Shares 872
14. Membership of the Executive Committee: Public 874
Electricity Suppliers and Independent Suppliers
15. The Pool Funds Administrator's Contract 880
Annex 1: PFA Budget for the 1992 PFA Accounting Period 910
Annex 2: Pro-Forma Statement of Charges 911
Annex 3: Pro-Forma Statement of Costs and Fees 912
Annex 4: Existing Funds Transfer Software 913
Part A: Beneficially Owned 913
Part B: Licensed 914
Annex 5: Escrow Arrangements 915
16. Matters requiring consent of the Settlement System Administrator 917
17. Trading Sites 919
Part A: General 919
Part B: Procedures 919
Part C: Trading Site Applications 922
Part D: Additional Provisions 923
18. The Ancillary Services Accounting Procedure 924
Annex: Part 1: ASP Budget for the First Accounting
Period 931
Part 2: Pro-Forma Statement of Costs 932
Part 3: Pro-Forma Statement of Charges 933
19. Objective and Scope of the Scheduling and Despatch Review 934
20. Accountable Interest 936
21. Meter Operator Schedule 939
ANNEX: Issue C Pool Rules
JEH0046.93D
JEH0047.93T
JEH0048.93T
JEH0049.93D
v
<PAGE>
THIS AGREEMENT is made on 30th March, 1990 (as amended and restated pursuant to
a Supplemental Deed dated 22nd April, 1994)
BETWEEN:
(1) THE PERSONS whose names, registered numbers and registered or principal
offices are set out in Part I of Schedule 1;
(2) THE PERSONS whose names, registered numbers and registered or principal
offices are set out in Part II of Schedule 1;
(3) NGC SETTLEMENTS LIMITED (registered number 2444282) whose registered
office is situated at Fairham House, Green Lane, Clifton, Nottingham
NG11 9LN as Settlement System Administrator;
(4) ENERGY POOL FUNDS ADMINISTRATION LIMITED (registered number
2444187) whose registered office is situate at 185 Park Street, London
SE1 9DY as Pool Funds Administrator;
(5) THE NATIONAL GRID COMPANY plc (registered number 2366977) whose
registered office is situate at National Grid House, Kirby Corner Road,
Coventry CV4 8JY as Grid Operator and Ancillary Services Provider;
(6) SCOTTISH POWER plc (registered number 117120) whose principal office is
situate at 1 Atlantic Quay, Glasgow G2 8SP, Scotland as an Externally
interconnected Party;
(7) ELECTRICITE DE FRANCE, SERVICE NATIONAL whose principal office is
situate at 3 Rue de Messine, 75008 Paris, France as an Externally
Interconnected Party; and
(8) THE OTHER PARTIES whose names, registered numbers and registered or
principal offices are set out in Schedule 2.
WHEREAS:
(A) it is a Condition of the NGC Transmission License that, subject to its
removal or resignation as Settlement System Administrator hereunder,
NGC shall implement, maintain and operate a settlement system which
will provide (inter alia) for the calculation of any payments which
become due to or owing by Authorized Electricity Operators in respect
of sales and purchases of electricity under the terms of this Agreement
and such License further provides that NGC may comply with its said
obligations by participating in this Agreement in the manner provided
in such License
1
<PAGE>
(B) it is a Condition of the Generation License granted to each of the
Founder Generators in England and Wales requiring such a License that
the licensee shall be a party to and a pool member under, and shall
comply with the provisions of, this Agreement insofar as the same shall
apply to it in its capacity as a party to this Agreement and/or as a
pool member being a generator of electricity as the case may be;
(C) it is a Condition of the PES License granted to each of the Founder
Suppliers whose names are set out in Part A of Part II of Schedule 1
that the licensee shall be a pool member under, and comply with the
provisions of, this Agreement;
(D) it is a Condition of the Second Tier Supply License granted to each of
the Founder Suppliers whose names are set out in Part B of Part II of
Schedule 1 that the licensee shall be a pool member under, and comply
with the provisions of, this Agreement insofar as the same shall apply
to it in its capacity as a private electricity supplier (as that
expression is defined in section 17(1) of the Act);
(E) this Agreement sets out, inter alia, the rules and procedures for the
operation of an electricity trading pool and for the operation of a
settlement system (including the calculation of payments due) and in
compliance with the conditions of their respective Licenses those
parties subject to such conditions have agreed to become parties hereto
with the intent that this Agreement shall be and shall remain approved
by the Director; and
(F) in relation to this Agreement each of the Secretary of State and the
Director enjoys the rights, powers and authorities conferred upon him
inter alia by the Act and the Licenses.
NOW IT IS HEREBY AGREED as set out on the following pages of this Agreement.
2
<PAGE>
PART I
PRELIMINARY
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions: in this Agreement (including the Recitals and the
Schedules), except where the context otherwise requires:
"Accession Agreement" means an accession agreement in or substantially
in the form set out in Schedule 3 or in such other form (to which the
Settlement System Administrator has no reasonable objection) as the
Executive Committee may for the time being and from time to time
approve;
"Accountable Interest" has the meaning given that expression in
Schedule 20;
"Accounting Date" means, in relation to any Accounting Period, the last
day of such Accounting Period;
"Accounting Period" means each successive period of 12 months beginning
on 1st April in each year or of such other length and/or beginning on
such other date as may be determined in accordance with the terms
hereof, provided that the first such period shall begin on and include
31st March, 1990 and shall end on and include 31st March, 1991;
"Accounting Procedure" means the accounting procedure set out in
Schedule 4, as amended, varied or substituted from time to time in
accordance with the terms hereof;
"Act" means the Electricity Act 1989;
"Active Energy" means the electrical energy produced, flowing or
supplied by an electric circuit during a time interval, and being the
integral with respect to time o the instantaneous power, measured in
units of watt-hours or standard multiples thereof, that is:
1000Wh = 1kWh
1000kWh = 1MWh
1000MWh = 1GWh
1000GWh = 1TWh;
"Active Power" means the product of voltage and the in-phase component
of alternating current measured in units of watts and standard
multiples thereof, that is:
1000 Watts = 1kW
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1000kW = 1MW
1000MW = 1GW
1000GW = 1TW;
"Admission Application" means an application in or substantially in the
form set out in Schedule 5 or in such other form as the Executive
Committee may for the time being and from time to time approve;
"Agreed Procedure" means each of the agreed procedures specified in the
Agreed Procedures Index and which is agreed to be treated as an Agreed
procedure for the purposes of this Agreement either:
(a) by the Executive Committee and the Settlement System
Administrator and (where the agreed procedure imposes
obligations on the Grid Operator) the Grid Operator; or
(b) where such agreed procedure concerns the duties and
responsibilities of the Pool Funds Administrator, by the
Executive Committee and the Pool Funds Administrator
as the same
(i) may be amended or substituted from time to time by the
Executive Committee with the prior written consent of the
Settlement System Administrator and (where such Agreed
Procedure imposes obligations on the Grid Operator) the Grid
Operator (in each case, such consent not to be unreasonably
withheld or delayed); or
(ii) shall be amended or substituted from time to time by the
Executive Committee at the request of the Settlement System
Administrator and with the prior written consent of the
Executive Committee and (where such Agreed Procedure imposes
obligations on the Grid Operator) the Grid Operator (in each
case, such consent not to be unreasonably withheld or
delayed); or
Provided that the reference to the Grid Operator in this definition
shall be construed as if it were a reference to such term prior to the
creation of Meter Operator Parties and the associated amendments to
this Agreement, but this shall be without limitation to any right to
agree any adoption, amendment or substitution under this definition;
"Agreed Procedures Index" means an index of agreed procedures agreed to
be treated as Agreed Procedures in accordance with and for the purposes
of this Agreement;
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"Agreement" means this Agreement (including the Schedules), as amended,
varied, supplemented, modified or suspended from time to time in
accordance with the terms hereof;
"Ancillary Service" means a System Ancillary Service and/or a
Commercial Ancillary Service, as the case may be;
"Ancillary Services Agreement" means an agreement between a User and
the Ancillary Services Provider for the payment by the Ancillary
Services Provider to that User in respect of the provision by such User
of Ancillary Services;
"Ancillary Services Business" means the business relating to Ancillary
Services carried on by the Ancillary Services Provider;
"Ancillary Services Provider" mans the person who for the time being
and from time to time is required by the terms of a Transmission
License to contract for Ancillary Services;
"Apparatus" means all equipment in which electrical conductors are used
or supported or of which they may form a part;
"Approved Recommendation" has the meaning given that expression in
Clause 5.8;
"ASP Accounting Procedure" means the accounting procedure set out in
Schedule 18, as amended, varied or substituted from time to time in
accordance with the terms hereof;
"Authorized Electricity Operator" means any person who is authorized
under the Act to generate, transmit or supply electricity and shall
include any person transferring electricity to or from England and
Wales across an interconnector (as such term is used in the NGC
Transmission License), other than the Grid Operator in its capacity as
operator of the NGC Transmission System;
"Banking System" has the meaning given that expression in Section 1.1
of Schedule 11;
"Billing System" has the meaning given that expression in Section 1.1
of Schedule 11;
"BPS Goal" has the meaning given that expression in Appendix 2 of
Schedule 9;
"British Grid Systems Agreement" means the agreement of that name made
or to be made between NGC, Scottish Hydro-Electric PLC and Scottish
Power plc inter alia regulated the relationship between their
respective grid systems;
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<PAGE>
"Budget" has the meaning given that expression in Part A of Schedule 4;
"Bulk Supply Point" means any or (as the context may require) a
particular point of supply where Metering Equipment for the purposes of
the Bulk Supply Tariff is or would have been located and, in the event
of any dispute as to location, as determined in accordance with
Clause 83;
"Bulk Supply Tariff" means the basis of payment for Active Energy as
levied by the Generating Board prior to the Effective Date;
"Central Despatch" means the process of Scheduling and issuing direct
instructions by the Grid Operator referred to in paragraph 1 of
Condition 7 of the NGC Transmission License and "Centrally Despatched"
shall be construed accordingly;
"Change Management Policies" means the policies, procedures and
guidelines for the co-ordination by the Settlement System Administrator
of the implementation of changes to the Settlement System entitled
respectively "Change Management Policy", "Settlement Change
Co-ordinator Operating Procedures" and "Change Management
Implementation Guidelines" in the form initialled for the purposes of
identification as at 29th November, 1991 by or on behalf of the
Executive Committee and the Settlement System Administrator, as the
same have been or may be amended from time to time in accordance with
the terms of the Initial Settlement Agreement or this Agreement;
"Chief Executive" has the meaning given that expression in Clause
17.1.1;
"Code of Practice" means each of the codes of practice in relation to
any Metering Equipment or any part or class thereof which are specified
in the Synopsis of Metering Codes, as the same may be amended or
substituted from time to time by the Executive Committee with the
agreement or approval of:
(i) in the case of any Code of Practice in respect of Metering
Equipment in respect of which it is the Operator, the Grid
Operator;
(ii) in the case of any Code of Practice in respect of Metering
Equipment relating to Reactive Energy, the Ancillary Services
Provider;
(iii) in the case of any change to any Code of Practice prior to lst
April, 1994 in respect of standards of accuracy of Metering
Equipment required for Second Tier Customers up to (and
including) 1MW, the Suppliers in separate general meeting; and
(iv) in the case of any change to any Code of Practice prior to lst
April, 1998 in respect of standards of accuracy of Metering
Equipment required for Second Tier Customers up to (and
including) 100kW, the Suppliers in separate general meeting,
6
<PAGE>
(provided that, prior to the date on which the transitional
arrangements regarding metering of Reactive Power at Grid Supply Points
are brought into effect (the "RP Date") in the case of a Code of
Practice or part thereof which relates to Reactive Power metering at
Grid Entry Points, such Code or part thereof may only be amended or
substituted by agreement between the Ancillary Services Provider and
all Committee Members), and any other code of practice which is agreed
from time to time to be treated as a Code of Practice for the purposes
of this Agreement by the Executive Committee (or, where appropriate,
prior to the RP Date all Committee Members) and, where appropriate, the
Grid Operator and/or the Ancillary Services Provider and/or the
Suppliers;
"Commercial Ancillary Services" means Ancillary Services, other than
System Ancillary Services, utilized by the Grid Operator in operating
the Total System if a User has agreed to provide them under a
Supplemental Agreement with payment being dealt with under an Ancillary
Services Agreement or, in the case of Externally Interconnected Parties
or External Pool Members, under any other agreement;
"Commissioned" means, in relation to any Plant or Apparatus connected
to the NGC Transmission System or to any External Interconnection or
any Distribution System, commissioned for the purposes of the
Connection Agreement relating to such Plant or Apparatus;
"Committee Member" means a member of the Executive Committee;
"Communications Equipment" means, in respect of any Metering Equipment,
the terminating equipment (which may include a modem) necessary to
convert data from such Metering Equipment into a state for transmission
to the Settlement System Administrator across the communications link
provided pursuant to Clause 60.6.3(a), but it shall not include an
Outstation;
"Competent Authority" means the Secretary of State, the Director and
any local or national agency, authority, department, inspectorate,
minister, ministry, official or public or statutory person (whether
autonomous or not) of, or of the government of, the United Kingdom or
the European Community;
"Computer Systems" means all and any computer systems used by the
Settlement System Administrator and required in connection with the
operation of the Settlement System;
"Connection Agreements" means the Master Connection and Use of System
Agreement, the Supplemental Agreements, the Supplier's Connection
Agreements, the Supplier's Use of System Agreements and the
Interconnection Agreements, and "Connection Agreement" means any or (as
the context may require) a particular one of them;
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<PAGE>
"Connection Point" means a Grid Supply Point or Grid Entry Point, as
the case may be;
"Consumer Metered Demand" has the meaning given that expression in Part
I of Appendix 1 to Schedule 9;
"Contributory Share" means, in relation to any Pool Member, the
Contributory Share for the time being and from time to time of such
Pool Member calculated in accordance with Schedule 13;
"Control" has the meaning set out in section 840 of the Income and
Corporation Taxes Act 1988 and "Controlled" shall be construed
accordingly;
"Custodian" has the meaning given that expression in Clause 45.1;
"Customer" means a person to whom electrical power is provided (whether
or not he is the provider of such electrical power);
"De-energization" means the movement of any isolator, breaker or switch
or the removal of any fuse whereby no electricity can flow to or from
the relevant User System through the User's Plant or Apparatus
connected to such User System and, in relations to any External Pool
Member, the termination of such External Pool Member's rights to use
any relevant External Interconnection;
"Default Calling Creditor" means any Pool Creditor, the Settlement
System Administrator and the Pool Funds Administrator;
"Default Interest Rate" has the meaning given the expression in Section
1.1 of Schedule 11;
"Defaulting Pool Member" has the meaning given that expression in
Clause 66.3.1;
"Despatch" means the issue by the Grid Operator of instructions for
Generating Plant and/or Generation Trading Blocks to achieve specific
Active Power (and, in relation to Generating Plant, Reactive Power or
target voltage) levels within their Generation Scheduling and Despatch
Parameters or Generation Trading Block Scheduling and Despatch
Parameters, as the case may be, and by stated times;
"Development Policies" means the policies, procedures and practices for
the development of the Computer Systems in the forms initialled for the
purpose of identification as at 29th November, 1991 by or on behalf of
the Executive Committee and the Settlement System Administrator, as the
same have been or may be amended from time to time in accordance with
the terms of the Initial Settlement Agreement or this Agreement;
8
<PAGE>
"Directive" includes any present or future directive, requirement,
instruction, direction or rule of any Competent Authority (but only, if
not having the force of law, if compliance with the Directive is in
accordance with the general practice of persons to whom the Directive
is addressed) and includes any modification, extension or replacement
thereof then in force;
"Director" means the Director General of Electricity Supply appointed
for the time being pursuant to section 1 of the Act;
"Distribution Code" means the Distribution Code required to be drawn up
by each Public Electricity Supplier and approved by the Director, as
from time to time revised with the approval of the Director;
"Distribution System" means the system consisting (wholly or mainly) of
electric lines owned or operated by a Public Electricity Supplier and
used for the distribution of electricity from Grid Supply Points or
Generating Units or other entry points to the point of delivery to
Customers or other Users and includes any Remote Transmission Assets
(as defined in the Grid Code) operated by such Public Electricity
Supplier and any Plant and Apparatus and meters owned or operated by
such Public Electricity Supplier in connection with the distribution of
electricity, but does not include any part of the NGC Transmission
System;
"EdF Documents" means any agreement for the time being and from time to
time made between NGC and Electricite de France, Service National
relating to the use or operation of relevant External Interconnection;
"Effective Date" means 2400 hours on 30th March, 1990;
"Effective Date of Termination" shall mean 2400 hours on 31st March,
1993;
"Electricity" means Active Energy and Reactive Energy;
"Electricity Arbitration Association" means the unincorporated members'
club of that name formed inter alia to promote the efficient and
economic operation of the procedure for the resolution of disputes
within the electricity supply industry by means of arbitration or
otherwise in accordance with its arbitration rules;
9
<PAGE>
"Embedded" means having a direct connection to a Distribution System or
the System of any other User to which Customers and/or Power Stations
are connected, such connection being either a direct connection or a
connection via a busbar of another User or of NGC (but with no other
connection to the NGC Transmission System);
"Embedded Non-Franchise Site" means:
(i) a Site which is Embedded and which is at the point of
connection to a Second Tier Customer; or
(ii) a Site which is Embedded in respect of which there is
a Potential Operator where the customer to which that
Site is at a point of connection is eligible to
receive supplies from a Second Tier Supplier in the
period between 1st April, 1994 and 31st March, 1998;
"Equipment Owner" means, in relation to a Metering System, the person
which is the owner of that Metering System;
"Escrow Agreement" has the meaning given that expression in Clause
45.1;
"Event of Default" means any event declared as such pursuant to Clause
66.1.1 or 66.2.1, as the case may be;
"Executive Committee" means the committee established pursuant to
Clause 14.1;
"Export" means, in respect of any Party, a flow of electricity from the
Plant or Apparatus of such Party to the Plant or Apparatus of another
Party and, in relation to any Party which is an External Pool Member,
the External Interconnection in respect of which that Party has the
right to deliver or take electricity to or from the NGC Transmission
System shall be treated as the Plant or Apparatus of such Party and the
verb "Export" and its respective tenses shall be construed accordingly;
"External Interconnection" means Apparatus for the transmission of
electricity to or from the NGC Transmission System into or out of an
External System;
"Externally Interconnected Party" means a person operating an External
System which is connected to the NGC Transmission System by an External
Interconnection (which person may or may not also be an External Pool
Member);
10
<PAGE>
"External Pool Member" means a Party supplying electricity to or taking
electricity from the NGC Transmission System through an External
Interconnection and which has been or (where appropriate) is to be
admitted as a Pool Member in the capacity of a Generator and/or a
Supplier;
"External System" means, in relation to an Externally Interconnected
Party, the transmission or distribution system which it owns or
operates and any Apparatus or Plant which connects that system to the
External Interconnection and which is owned or operated by such
Externally Interconnected Party;
"Final Metering Scheme" means a national metering scheme to be
installed in accordance with the relevant Codes of Practice and to come
into effect on the FMS Date;
"First Quarter" means, in respect of any year, the months of January,
February and March;
"FMS Codes of Practice" means the Codes of Practice B, C, E, J, K1 and
K2 and, to the extent that they relate to Metering Equipment the date
derived from which was not used as Settlement Metering Data immediately
prior to the FMS Date, F and G, and Codes of Practice 1, 2, 3, 4 and 5;
"FMS Date" means 1st April, 1993;
"FMS Metering Equipment" means Metering Equipment comprising a Metering
System at or in relation to the commercial boundary in accordance with
paragraph 7.1.2 of Schedule 21 in relation to the requirements to be
met from the FMS Date;
"FMS Trading Date" means 10th January, 1994;
"Following Quarter" means, in respect of any Quarter Day or Quarter,
the period of three months immediately following such Quarter Day or
Quarter;
"Force Majeure" means, in relation to any Party, any event or
circumstance which is beyond the reasonable control of such Party and
which results in or causes the failure of that Party to perform any of
its obligations under this Agreement including act of God, strike,
lockout or other industrial disturbance, act of the public enemy, war
declared or undeclared, threat of war, terrorist act, blockade,
revolution, riot, insurrection, civil commotion, public demonstration,
sabotage, act of vandalism, lightning, fire, storm, flood, earthquake,
accumulation of snow or ice, lack of water arising from weather or
environmental problems, explosion, fault or failure of Plant and
Apparatus (which could not have been prevented by Good Industry
Practice), governmental restraint, Act of Parliament, other
11
<PAGE>
legislation, by-law and Directive (not being any order, regulation or
direction under section 32, 33, 34 or 35 of the Act) provided that lack
of funds shall not be interpreted as a cause beyond the reasonable
control of that Party. For the avoidance of doubt, Force Majeure shall
not apply in respect of the Settlement System Administrator where and
to the extent that the Settlement System Administrator can perform its
obligations under this Agreement by using the back-up arrangements
referred to in Clause 29.2 or by acting in accordance with Clause 52 or
Section 31 of Schedule 9;
"Founder Generators" means the parties to this Agreement of the first
part at 30th March, 1990;
"Founder Suppliers" means the parties to this Agreement of the second
part at 30th March, 1990;
"Fourth Quarter" means, in respect of any year, the months of October,
November and December;
"Fuel Security Code" means the document of that title designated as
such by the Secretary of State, as from time to time amended;
"Funds Transfer Agreement" has the meaning given that expression in
Section 1.1 of Schedule 11;
"Funds Transfer Business" has the meaning given that expression in
Section 1.1 of Schedule 11;
"Funds Transfer Hardware" has the meaning given that expression in
Section 1.1 of Schedule 15;
"Funds Transfer Software" has the meaning given that expression in
Section 1.1 of Schedule 15;
"Funds Transfer System" has the meaning given that expression in
Section 1.1 of Schedule 11;
"The Generating Board" has the meaning given that expression in the
Act;
"Generating Plant" means a Power Station subject to Central Despatch;
"Generating Unit" means any Apparatus which produces electricity and,
in respect of an External Pool Member, means a Generation Trading
Block;
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<PAGE>
"Generation License" means a license granted or to be granted under
section 6(1)(a) of the Act;
"Generation Scheduling and Despatch Parameters" means those parameters
listed in Appendix A1 to SDC1;
"Generation Trading Block" means a notional Centrally Despatched
Generating Unit of an External Pool Member treated as such for the
purposes of the Grid Code;
"Generation Trading Block Scheduling and Despatch Parameters" means
those parameters listed in Appendix A1 to SDC1 relating to Generation
Trading Blocks;
"Generator" means:
(i) a person who generates electricity under license or exemption
under the Act; or
(ii) a person who is an External Pool Member who delivers
electricity or on whose behalf electricity is delivered to the
NGC Transmission System; or
(iii) a person who is acting as the agent for any such person who is
referred to in paragraph (i) or (ii) above,
and, in any such case, for the time being party to this Agreement, and:
(a) who is a Founder Generator; or
(b) who was admitted as a Party in the capacity of a Generator; or
(c) who, in accordance with Clause 3.10, has changed capacity(ies) such that it
participates as a Party in the capacity of a Generator,
and, where the expression is used in Part III or Part IV, who is also
or (where appropriate) is to become a Pool Member;
"Generic Dispensation" shall have the meaning ascribed thereto in paragraph
14.1(b) of Schedule 21;
"Genset Metered Generation" has the meaning given that expression in Part I of
Appendix 1 to Schedule 9;
"Gigawatt" means 10000MW;
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<PAGE>
"GOALPOST" has the meaning given that expression in the Pool Rules;
"Good Industry Practice" means, in relation to any undertaking and any
circumstances, the exercise of that degree of skill, diligence,
prudence and foresight which would reasonably and ordinarily be
expected from a skilled and experienced operator engaged in the same
type of undertaking under the same or similar circumstances;
"Grid Code" means the Grid Code drawn up pursuant to the Transmission
License, as from time to time revised in accordance with the
Transmission License;
"Grid Code Review Panel" has the meaning given that expression in the
Grid Code;
"Grid Entry Point" means the point at which a Power Station which is
not Embedded connects to the NGC Transmission System;
"Grid Operator" means the person who for the time being and from time
to time is required by the terms of a License, inter alia, to implement
the Grid Code;
"Grid Supply Point" means the point of supply from the NGC Transmission
System to Public Electricity Suppliers or to other Users with User
Systems with Customers connected to them or Non-Embedded Customers;
"GW" means Gigawatt;
"GWh" means Gigawatt-hour;
"Hardware" means at any time the computer equipment and accessories
specified in Schedule 8 or such other computer equipment and
accessories used by the Settlement System Administrator on or in
connection with which the Software Functions or is intended to function
at such time (other than the Second Tier Hardware);
"Host PES" means, in respect of a Metering System, either:
(i) the Public Electricity Supplier to whose Distribution System
such Metering System is connected; or
(ii) where such Metering System is connected directly to the NGC
Transmission System, the Public Electricity Supplier whose
Consumer Metered Demand determined in accordance with the Pool
Rules is calculated by the Settlement System Administrator
using data from such Metering System;
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<PAGE>
"Import" means, in respect of any Party, a flow of electricity to the
Plant or Apparatus of such Party from the Plant or Apparatus of another
Party and, in relations to any Party which is an External Pool Member,
the External Interconnection in respect of which it has the right to
deliver or take electricity to or from the NGC Transmission System
shall be treated as the Plant or Apparatus of such Party and the verb
"Import" and its respective tenses shall be construed accordingly;
"Independent Generators" means Generators other than:
(i) the Founder Generators;
(ii) any Generator which is an External Pool Member; and
(iii) any Generator which is an affiliate or related undertaking of
(a) any person referred to in paragraph (i) or (ii) above, (b)
any person referred to in paragraph (i) of the definition of
Independent Suppliers, or (c) any Public Electricity Supplier;
"Independent Suppliers" means Suppliers other than:
(i) Eastern Electricity plc, East Midlands Electricity plc, London
Electricity plc, Manweb plc, Midlands Electricity plc,
Northern Electric plc, NORWEB plc, SEEBOARD plc, Southern
Electric plc, South Wales Electricity plc, South Western
Electricity plc, Yorkshire Electricity Group plc, National
Power plc, PowerGen plc, Nuclear Electric plc, British Nuclear
Fuels plc, The National Grid Company plc (Pumped Storage
Business Division), Electricite de France, Service National,
Scottish Power plc and Scottish Hydro-Electric plc;
(ii) Public Electricity Suppliers;
(iii) any Supplier which is an External Pool Member; and
(iv) any Supplier which is an affiliate or related undertaking of
any person referred to in paragraph (i), (ii) or (iii) above;
"Information Systems" has the meaning given that expression in Section
1.1 of Schedule 11;
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<PAGE>
"Initial Period" means the period from the date of this Agreement until
the end of the Accounting Period in which the Executive Committee
reaches the conclusion set out in Clause 5.4.2 or, if earlier, the date
of termination thereof determined in accordance with the provisions of
Clause 5.4.5;
"Initial Settlement Agreement" means the agreement of even date
herewith made between the Parties as at such date modifying and
suspending the provisions of this Agreement for an initial period and
setting out inter alia the rules and procedures for the operation of
the electricity trading pool referred to in Recital (E) and for the
operation of a settlement system and the procedures for the development
of the phases and pool rules during such initial period, as amended,
varied, supplemented, modified or suspended from time to time;
"Interconnection Agreement" means an agreement between NGC and an
Externally Interconnected Party and/or an External Pool Member relating
to an External Interconnection and/or an agreement under which an
External Pool Member can use an External Interconnection;
"kVAr" means kilovoltamperes reactive;
"Kw" means kilowatt;
"Kwh" means kilowatt-hour;
"Licenses" means all Generation Licenses, PES Licenses, Second Tier
Supply Licenses and Transmission Licenses and "License" means any or
(as the context may require) a particular one of them;
"Localized Implementation Errors" means errors the correction of which:
(i) requires no amendment to or variation of the Specification or
the design or functionality of the Software; and
(ii) does not alter the numerical outputs from the Software;
"LOLP" means the computer program developed by Energy Management
Associates Inc. for the National Grid Division of the Generating Board
pursuant to agreements with reference PCC/GB/J6638 and PCC/GB/J6881, as
such program is amended from time to time in accordance with this
Agreement;
"Lost Opportunity Costs" means, in relation to any Generator, the
profit foregone by such Generator in respect of a Generating Unit
during a period when it is out of service for the purposes of
maintenance, repair, modification, renewal or replacement needed to
comply with a proposal made by such Generator to restore the Generating
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<PAGE>
Unit's Reactive Power capability to that required by the Grid Code or,
where relevant, the applicable Supplemental Agreement, whichever
capability is lower provided that:
(i) the period when it is taken out of service is:
(a) outside the period identified for the Generating Unit
concerned pursuant to Section OC2 of the Grid Code as
at the time when the failure to have Reactive Power
capability was notified or determined; and
(b) approved by the Grid Operator; and
(ii) the Generator gives credit for any savings in loss of profit
by carrying out other repair work at the same time as that
required for the purposes of Reactive Power;
"Main Site" means those sites specified in paragraphs (i), (ii) and (v)
of the definition of Site;
"Majority Default Calling Creditors" means:
(i) in respect of each calendar quarter other than the first, any
single or group of Default Calling Creditors to whom, in
respect of the aggregate of (a) all Notified Payments payable
on the last five Business Days of the immediately preceding
calendar quarter and (b) all sums due to the Settlement System
Administrator, the Pool Funds Administrator and the Ancillary
Services Provider and outstanding under this Agreement on the
last Business Day of such immediately preceding calendar
quarter, more than 50 percent of the total amount of all such
Notified Payments and such other sums were due; and
(ii) in respect of the first calendar quarter, all Pool Members
other than the Defaulting Pool Member;
"Master Connection and Use of System Agreement" means the agreement
envisaged in Condition 10B of the NGC Transmission License;
"Meter" means a device for measuring Active Energy and/or Reactive
Energy;
"Meter Operator Party" means each person admitted in the capacity as
such and for the time being and from time to time party to Schedule 21
in accordance with the provisions thereof, and shall include any
successor(s) in title to, or permitted assign(s) of, such person;
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"Meter Operator Party Accession Agreement" means an accession agreement
in or substantially in the form set out in Annex 3 to Schedule 21 or in
such other form (to which the Settlement System Administrator has no
reasonable objection) as the Executive Committee may for the time being
and from time to time approve;
"Meter Operator Party Admission Application" means an application in or
substantially in the form set out in Annex 1 to Schedule 21 or in such
other form as the Executive Committee may for the time being and from
time to time approve;
"Meter Operator Party Resignation Notice" means an application in or
substantially in the form set out in Annex 2 to Schedule 21 or in such
other form as the Executive Committee may for the time being and from
time to time approve;
"Metering Equipment" means Meters, measurement transformers (voltage,
current or combination units), metering protection equipment including
alarms, circuitry, their associated Communications Equipment and
Outstations, and wiring which are part of the Active Energy and/or
Reactive Energy measuring and transmitting equipment at or relating to
a Site;
"Metering System" means all or that part of the Metering Equipment at
or relating to a site linked to a single Outstation at or relating to a
Site linked to a single Outstation at or relating to that Site and
includes, for the avoidance of doubt, such Outstation. Without
prejudice to the generality of the foregoing, a set of non-exhaustive
diagrammatic representations of Metering Systems is contained in Annex
5 to Schedule 21;
"MVAr" means megavar;
"MVArh" means megavar-hours;
"MW" means megawatt;
"MWh" means megawatt-hours;
"New Software" means the Software, the development of which is
initiated after the Effective Date of Termination;
"NGC" means the National Grid Company plc (registered number 2366977)
whose registered office is situate at National Grid House, Kirby Corner
Road, Coventry CV4 8JY;
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"NGC Pumped Storage" means the pumped storage business division of NGC
or any permitted successor to which such business may be transferred in
accordance with its Generation License;
"NGC Site" means a site owned (or occupied pursuant to a lease, license
or other agreement) by NGC at which there is a Connection Point and,
for the avoidance of doubt, a site owned by a User but occupied by NGC
as aforesaid is an NGC Site;
"NGC Transmission License" means the Transmission License granted or to
be granted to NGC;
"NGC Transmission System" means the system consisting (wholly or
mainly) of high voltage electric lines owned or operated by NGC and
used for the transmission of electricity from one Power Station to a
sub-station or to another Power Station or between sub-stations or to
or from any External Interconnection and includes any Plant and
Apparatus and meters owned or operated by NGC in connection with the
transmission of electricity but does not include any Remote
Transmission Assets (as defined in the Grid Code);
"Non-Embedded Customer" means any Customer, other than a PES, receiving
electricity direct from the NGC Transmission System irrespective of
from whom it is supplied;
"Notified Payment" has the meaning given that expression in Section 1.1
of Schedule 11;
"Operator" means, in relation to any Metering System:
(i) used to measure the supply to a Second Tier Customer, the
Meter Operator Party who is appointed as such by the Second
Tier Customer or by the Registrant (with the consent of that
Second Tier Customer) and who agrees to act as Operator in
relation to such Metering System; or
(ii) not within (i) above or (iii) to (v) below, the Meter Operator
Party who is appointed as such by the Registrant of such
Metering System and who agrees to act as Operator in relation
to such Metering System; or
(iii) where new Metering Equipment is to be added to an existing
Metering System, the Operator of such existing Metering
System; or
(iv) the Meter Operator Party which continues as the Operator in
accordance with the transitional arrangements set out in
paragraph 23 of Schedule 21; or
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(v) the Party who is deemed to be the Operator and Meter Operator
Party in respect thereof in accordance with the terms of
Clause 60.4.4;
"Outstation" means equipment which receives and stores data from a
Meter(s) for the purpose, inter alia, of transfer of that metering data
to the Settlement System Administrator and which may perform some
processing before such transfer. This equipment may be in one or more
separate units or may be integral with the Meter;
"Party" means each person for the time being and from time to time
party to this Agreement acting in a capacity, or deemed to be acting in
a capacity, other than that of Operator or Meter Operator Party, and
shall include any successor(s) in title to, or permitted assign(s) of,
such person;
"Period Metered Demand" has the meaning given that expression in Part
of Appendix 1 to Schedule 9;
"PES License" means a license granted or to be granted under section
6(1)(c) of the Act;
"PFA Accounting Procedure" means the procedure for the recovery of
certain moneys set out in Section 20 of Schedule 15;
"Plant" means fixed and moveable items used in the generation and/or
supply and/or transmission of electricity, other than Apparatus;
"Pool Auditor" means the firm of accountants appointed for the time
being and from time to time pursuant to Clause 47.1;
"Pool Banker" has the meaning given that expression in Section 1.1 of
Schedule 11;
"Pool Chairman" has the meaning given that expression in Clause 16.1;
"Pool Creditor" has the meaning given that expression in Section 1.1 of
Schedule 11;
"Pool Funds Administrator" means the person for the time being and from
time to time appointed pursuant to Schedule 15 to act as Pool Funds
Administrator;
"Pool Member" means each of the Founder Generators and Founder
Suppliers and any other person who is admitted to pool membership in
accordance with Clause 8.2, in each case until it shall have resigned
from pool membership or otherwise ceased to be a member in accordance
with this Agreement be a member in accordance with this Agreement, and
"Pool Membership" shall be construed accordingly;
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"Pool Membership Application" means an application in or substantially
in the form set out in Schedule 6 or in such other form as the
Executive Committee may for the time being and from time to time
approve;
"Pool Rules" means the rules referred to in Clause 7.4 and set out in
Schedule 9, as amended, varied or substituted from time to time in
accordance with the terms hereof;
"PORTHOLE" means the database which allows the transfer of operational
information from the Grid Operator to the Settlement System
Administrator;
"Potential Operator" means a Meter Operator Party which is appointed as
the operator pursuant to an agreement or arrangement:
(i) in respect of a Metering System or Metering Equipment at a
Site or Sites but which is not yet registered as Operator in
respect of that Metering System; or
(ii) in respect of Metering Equipment where such Metering Equipment
has not been registered as comprising a Metering System;
"RP Date" has the meaning given to that expression in the definition of
Code of Practice;
"Power Station" means an installation comprising one or more Generating
Units (even where sited separately), other than an External
Interconnection, owned and/or controlled by the same Generator, which
may reasonably be considered as being managed as one Power Station;
"Project Manager" has the meaning given that expression in Clause 5.13;
"Public Electricity Supplier" or "PES" means a person for the time
being party to this Agreement who is a public electricity supplier (as
that expression is defined in the Act) and, in relation to Clauses 15.4
and 15.5 and Schedule 14, means a person for the time being party to
this Agreement who is a public electricity supplier in England and
Wales;
"Quarter" means the period of three calendar months ending on a Quarter
Day;
"Quarter Day" means 31st March, 30th June, 30th September and 31st
December;
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"Reactive Energy" means the integral with respect to time of the
Reactive Power;
"Reactive Power" means the product of voltage and current and the sine
of the phase angle between them measured in units of voltamperes
reactive and standard multiples thereof, that is:
1000VAr = 1kVAr
1000kVAr= 1MVAr;
"Register" means the register to be maintained by the Settlement System
Administrator pursuant to Clause 60.5;
"Registered Capacity" has the meaning given that expression in the Grid
Code;
"Registrant" means, in relation to a Metering System at or in relation
to any site which is:
(i) a Grid Entry Point,
the Pool Member which operates Generating Plant at such Site; or
(ii) a Grid Supply Point or Bulk Supply Point,
the Pool Member whose System is directly connected to the NGC
Transmission System at or in Relation to such Grid Supply Point or Bulk
Supply Point; or
(iii)the point of connection of a Customer of a Supplier and the NGC
Transmission System,
the Supplier which is the supplier to that Customer; or
(iv) the point of connection of a Generator which is Embedded or of
a Second Tier Supplier or of a Second Tier Customer to a
Distribution System,
the Party which is such Generator which is Embedded or such Second Tier
Supplier or the Second Tier Supplier in respect of such Second Tier
Customer, as the case may be; or
(v) the point of connection of two or more Distribution Systems,
22
<PAGE>
the Authorized Electricity Operator of one of such Distribution Systems
which is nominated in accordance with the provisions of this Agreement;
or
(vi) the point of connection of an External Interconnection to the
NGC Transmission System or a Distribution System,
The Externally Interconnected Party;
"Resignation Notice" means a resignation notice in or substantially in
the form set out in Schedule 10;
"Schedule Day" has the meaning given that expression in Part I of
Appendix 1 to Schedule 9;
"Scheduling" means the process of compiling and issuing a Generation
Schedule (as that expression is defined in the Grid Code), as set out
in SDCI;
"Scheduling and Despatch Code" or "SDC" means that portion of the Grid
Code which is identified as such in the Grid Code;
"Scheme" means the scheme set out in Clause 53 and, separately, each
further scheme implemented pursuant to Clause 56.2;
"Scheme Admission Application" means an application form setting out
the Scheme Admission Conditions and requiring such information as the
Executive Committee may consider necessary to enable it to consider the
application, in such form as the Executive Committee may from time to
time determine;
"Scheme Admission Conditions" means the conditions set out in Clause
54;
"Scheme Genset" means a Centrally Despatched Generating Unit which is
admitted to a Scheme under Clause 53.3;
"Scheme Planned Availability" or "SPA" has the meaning given that
expression Clause 55;
"Scheme Year" means, in respect of each Scheme Genset, each successive
period of twelve months, the first such period commencing on 1st April,
1990;
"Second Quarter" means, in respect of any year, the months of April,
May and June;
"Second Tier Agent" means an agent appointed pursuant to Clause 60.16.1
acting where the provisions of Clause 60.16 are applicable or, as the
case may be, appointed pursuant to Clause 60.27.1 acting where the
provisions of Clause 60.17 are applicable;
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<PAGE>
"Second Tier Computer Systems" means all and any computer systems used
by any Second Tier Agent in connection with the operation of the Second
Tier Data Collection System operated by such Second Tier Agent;
"Second Tier Customer" means a person who is supplied with or sold
electricity by a Second Tier Supplier;
"Second Tier Data Collection System" means those parts of the
Settlement System which relate to the obligations of the Settlement
System Administrator under this Agreement in relation to collecting,
estimating and aggregating data as may be required for the proper
functioning of Settlement from Metering Systems at the point of
connection between the Distribution System of a Public Electricity
Supplier and:
(i) a Second Tier Customer;
(ii) the System of an Authorized Electricity Operator other than
the Public Electricity Supplier;
(iii) an Embedded Generator not subject to Central Despatch; and
(iv) the Distribution System of another Public Electricity
Supplier,
and providing such data to the Settlement System Administrator;
"Second Tier Hardware" means at any time the computer equipment and
accessories used by any Second Tier Agent on or in connection with
which the Second Tier Software functions or is intended to function at
such time;
"Second Tier Software" means at any time the computer programs and
codes and associated documents and materials which are used by any
Second Tier Agent in connection with the operation of the Second Tier
Data Collection System operated by such Second Tier Agent;
"Second Tier Specification" means at any time the computer
specifications developed to give effect to the collection, estimation
and aggregation of data for the purposes set out in Clause 60.16.3 and
such other matters as may be agreed between the Settlement System
Administrator and the relevant Second Tier Agent;
"Second Tier Supplier" means a person for the time being party to this
Agreement who is the holder of a Second Tier Supply License;
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<PAGE>
"Second Tier Supply License" means a license granted or to be granted
under section 6(2)(a) of the Act;
"Secretary" means the person for the time being and from time to time
holding office as secretary of the Executive Committee;
"Secretary of State" has the meaning given that expression in the Act;
"Security Cover" has the meaning given that expression in Section 1.1
of Schedule 11;
"Security Period" has the meaning given that expression in the Fuel
Security Code;
"Settlement" means the operation of the Settlement System under this
Agreement;
"Settlement Account" has the meaning given that expression in Section
1.1 of Schedule 11;
"Settlement Day" has the meaning given that expression in Part I of
Appendix 1 to Schedule 9;
"Settlement GOAL" has the meaning given that expression in Appendix 2
to Schedule 9;
"Settlement Metering Data" shall mean Metered Data as defined in, and
used in accordance with Section 3 of Schedule 9 and relevant metered
data in accordance with Appendix 6 to Schedule 9 of this Agreement,
which is used for the purposes of Settlement;
"Settlement Period" has the meaning given that expression in Part I of
Appendix 1 to Schedule 9;
"Settlement System" means those assets, systems and procedures for the
calculation in accordance with the Pool Rules of payments which become
due thereunder, as modified from time to time;
"Settlement System Administrator" means the person appointed for the
time being pursuant to Clause 26 or any replacement thereof from time
to time appointed pursuant to Part VI;
"Settlements Business" means the business of the Settlement System
Administrator in operating the Settlement System under this Agreement;
"Site" means:
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<PAGE>
(i) a Grid Entry Point;
(ii) a Grid Supply Point or Bulk Supply Point;
(iii) the point of connection of a Generator which is Embedded or of
a Second Tier Supplier or of a Second Tier Customer to a
Distribution System or the NGC Transmission System;
(iv) the point of connection of two Distribution Systems; or
(v) the point of connection of an External Interconnection to the
NGC Transmission System;
"Small Generator" means any Independent Generator with Generating Units
the aggregate Registered Capacity of which does not exceed 100MW;
"Software" means at any time the computer programs codes and associated
documents and materials which are at such time used by or on behalf of
the Settlement System Administrator and required in the operation of
the Settlement System;
"Specification" means at any time the computer specification(s) giving
effect to the Pool Rules and such other matters as may be agreed
between the Executive Committee and the Settlement System Administrator
at the time;
"Statement of Costs" has the meaning given that expression in Section
1.1 of Part A of Schedule 4;
"Supplemental Agreement" means any agreement entered or to be entered
into between NGC and any User party to the Master Connection and Use of
System Agreement and expressed to be supplemental thereto;
"Supplier" means a person for the time being party to this Agreement:
(i) who is a Founder Supplier; or
(ii) who was admitted as a Party in the capacity of a Supplier; or
(iii) who, in accordance with Clause 3.10, has changed capacity(ies)
such that it participates as a Party in the capacity of a
Supplier,
and, where the expression is used in Part III, Part IV or Part XI or
Schedule 14 or 18, who is also or (where appropriate) is to become a
Pool Member;
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<PAGE>
"Supplier's Connection Agreement" means the agreement for connection to
any User System envisaged in Condition 8B of a PES License and
Condition 3 of a Second Tier Supply License;
"Supplier's Use of System Agreement" means the agreement for use of
system envisaged in Condition 8B of a PES License and Condition 3 of a
Second Tier Supply License;
"Synopsis of Metering Codes" means a synopsis maintained and updated as
necessary by the Executive Committee listing each Code of Practice
approved as such from time to time in accordance with this Agreement;
"System" means any User System or the NGC Transmission System, as the
case may be;
"System Ancillary Services" means Ancillary Services which are required
for System reasons and which must be provided by Users (but in some
cases only if a User has agreed to provide the same under a
Supplemental Agreement);
"Tariff" means the tariff approved by the Director and published by the
Executive Committee on or before 31st March in each year (beginning
with 31st March, 1994) and providing for amounts payable to Operators
or Potential Operators of certain Sites in respect of the provision and
maintenance of Communications Equipment;
"Third Quarter" means, in respect of any year, the months of July,
August and September;
"Total System" means the NGC Transmission System and all User Systems
in England and Wales;
"Total Votes" means, in relation to a Pool Member, the number of votes
to which such Pool Member is entitled pursuant to Clause 11.7;
"Trading Site" shall be determined in accordance with Schedule 17;
"Transmission License" means a license granted or to be granted under
section 6(1)(b) of the Act, the authorized area of which is England and
Wales or any part of either thereof;
"TW" means terrawatt;
"TWh" means terrawatt-hours;
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<PAGE>
"Undertaking" has the meaning given that expression by section 259 of
the Companies Act 1985 as substituted by section 22 of the Companies
Act 1989 and, if that latter section is not in force at the date of
this Agreement, as if such latter section were in force at such date;
"User" means a term utilized in various sections of the Grid Code to
refer to a person using the NGC Transmission System and includes an
Externally Interconnected Party, all as more particularly identified in
each section of the Grid Code concerned;
"User Site" means a site owned (or occupied pursuant to a lease,
license or other agreement) by a User in which there is a Connection
Point;
"User System" means:
(i) other than in relation to an External Pool Member or an Externally
Interconnected Party, any system owned or operated by a User
comprising Generating Units and/or Distribution Systems (and/or
other systems consisting, wholly or mainly, of electric lines
which are owned or operated by a person other than a PES) and
Plant and/or Apparatus connecting Generation Units,
Distribution Systems (and/or other systems consisting, wholly or
mainly, of electric lines which are owned or operated by a person
other than a PES) or Non-Embedded Customers to the NGC
Transmission System or (except in the case of Non-Embedded
Customers) to the relevant other User System, as the case may be,
including any Remote Transmission Assets (as defined in the Grid
Code) operated by such User or other person and any Plant and/or
Apparatus and meters owned or operated by the User or other person
in connection with the distribution of electricity, but does not
include any part of the NGC Transmission Systems; and
(ii) in relation to an External Pool Member or an Externally
Interconnected Party, the External System connected to the
relevant External Interconnection; "Value For Money Audit" has the
meaning given that expression in Part A of Schedule 4;
"VAr" means voltamperes reactive;
"Votes Calculation Period" means:
(i) in relation to the First Quarter in any year, the Third
Quarter in the immediately preceding year;
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<PAGE>
(ii) in relation to the Second Quarter in any year, the Fourth
Quarter in the immediately preceding year;
(iii) in relation to the Third Quarter in any year, the First
Quarter of the same year; and
(iv) in relation to the Fourth Quarter in any year, the Second
Quarter in the same year;
"Weighted Votes" means, in relation to a Pool Member, the number of
votes to which such Pool Member is entitled pursuant to Clause 11.2;
"Wh" means watt-hours; and
"Working Day" has the meaning given that expression in the Act.
1.2 Construction of Certain References: in this Agreement, except where
the context otherwise requires, any reference to:
1.2.1 an Act of parliament of any Part or section or other
provision of, or Schedule to, an Act of Parliament
shall be construed, at the particular time, as
including a reference to any modification extension
or reenactment thereof then in force and to all
instruments, orders or regulations then in force and
made under or deriving validity from the relevant Act
of Parliament;
1.2.2 another agreement or any deed or other instrument
shall be construed as a reference to that other
agreement, deed or other instrument as the same may
have been, or may from time to time be, amended,
varied, supplemented or novated;
1.2.3 an "affiliate" means, in relation to any person, any
holding company or subsidiary of such person or any
subsidiary of a holding company of such person, in
each case within the meaning of sections 736, 736A
and 736B of the Companies Act 1985 as substituted by
section 144 of the Companies Act 1989 and, if that
latter section is not in force at the date of this
Agreement, as if such latter section were in force at
such date;
1.2.4 a "Business Day" means any week day (other than a
Saturday) on open for domestic business in the City
of London;
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<PAGE>
1.2.5 a "day" means a period of 24 hours (or such other
number of hours as may be relevant in the case of
changes for daylight saving) ending at 12:00
midnight;
1.2.6 a "holding company" means, in relation to any person,
a holding company of such person within the meaning
given that expression in Clause 1.2.3;
1.2.7 a "month" means a calendar month;
1.2.8 a "person" includes any individual, partnership,
firm, company, corporation, joint venture, trust,
association, organization or other entity, in each
case whether or not having separate legal
personality;
1.2.9 a "related undertaking" means, in relation to any
person, any undertaking in which such person has a
participating interest as defined by section 260(1)
of the Companies Act 1985 as substituted by section
22 of the Companies Act 1989 and, if that latter
section is not in force at the date of this
Agreement, as if such latter section were in force at
such date;
1.2.10 a "subsidiary" means, in relation to any person, a subsidiary
of such person within the meaning given that expression in
Clause 1.2.3; and
1.2.11 a "year" means a calendar year.
For all purposes of this Agreement no Party shall be an associate or a
related undertaking of any other Party only by reason of all or any of
the share capital of any Party being owned directly or indirectly by
the Secretary of State.
1.3 Interpretation:
1.3.1 in this Agreement:
(a) references to the masculine shall include the
feminine and references in the singular shall
include references in the plural and vice versa;
(b) references to the word "include" or "including" are
to be construed without limitation;
(c) references to time are to London time;
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<PAGE>
(d) except where the context otherwise requires,
references to a particular Part, Clause,
sub-clause, paragraph, sub-paragraph or
Schedule shall be a reference to that Part,
Clause, sub-clause, paragraph, sub-paragraph
or Schedule in or to this Agreement;
(e) except where the context otherwise requires,
references in a Schedule to a particular
Section, sub-section, Annex or Appendix
shall abe a reference to that Section,
sub-section, Annex or Appendix in or to that
Schedule; and
(f) the table of contents, the headings to each
of the Parts, Clauses, sub-clauses,
paragraphs, sub-paragraphs, Schedules,
Sections, sub-sections, Annexes and
Appendices are inserted for convenience only
and shall be ignored in construing this
Agreement.
1.3.2 With respect to Part XV of and Schedule 21 to this
Agreement (but not elsewhere or otherwise):
(a) in the event that any person is required to give or
is entitled to withhold its consent or approval to
terms and conditions of this Agreement or an Agreed
Procedure or Code of Practice or to any other act,
matter or thing under or referred to in this
Agreement or has agreed to revise such terms and
conditions or an Agreed Procedure or Code of
Practice or any dispensation therefrom, such person
shall act in good faith and be reasonable in giving
or withholding of such consent or approval or in
imposing conditions to such consent or approval or
in agreeing revised terms and conditions of Part XV
of or Schedule 21 to this Agreement or any Agreed
Procedure or Code of Practice; and
(b) where any person is required to perform any
act or give any consent or notification or
do any other thing, it shall, in the absence
of any specified time limit, perform, give
or do or (as the case may be) notify its
withholding of its consent or approval to
the same as soon as is reasonably
practicable in all the circumstances.
1.4 Agreed Procedures and Codes of Practice: each of the Parties
undertakes to comply with the Agreed Procedures and the Codes of
Practice insofar as applicable to such Party. The Executive Committee
shall provide copies of the Agreed Procedures and Codes of Practice to
a Party upon request.
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1.5 Obligation on Generators with respect to Availability Declarations: in
respect of each of its Centrally Despatched Generating Units a
Generator shall submit an Availability Declaration or a re-declared
Availability Declaration to ensure that its Genset Offered Availability
and Genset Re-Offered Availability do not exceed at any time the
maximum Gross/Net generation which it, acting as a prudent operator
using Good Industry Practice, would reasonably expect to achieve if
such Centrally Despatched Generating Unit were to be despatched at that
level. In this Clause 1.5 capitalized terms not defined in Clause 1.1
shall have the respective meanings given to them in the Pool Rules.
2. THE EFFECTIVE DATE
Commencement: the rights and obligations of each of the Parties under
this Agreement shall commence on the Effective Date.
3. ADDITIONAL PARTIES
3.1 General: subject to the following provisions of this Clause 3, the
Parties shall admit as an additional party to this Agreement any person
(the "New Party") (not, for the avoidance of doubt, being a successor
Settlement System Administrator, Pool Funds Administrator, Grid
Operator or Ancillary Services Provider, to which the provisions of
Clause 3.11, 3.12, 3.13 or, as the case may be, 3.14 apply) who applies
to be admitted, in the capacity or, as the case may be, capacities
requested by the New Party.
3.2 Admission Application: a New Party wishing to be admitted as an
additional party to this Agreement shall complete an Admission
Application and shall deliver it to the Executive Committee together
with the fee (which shall be non-refundable) and other documents
(if any) therein specified.
3.3 Executive Committee response:
3.3.1 upon receipt of any Admission Application duly
completed the Executive Committee shall notify (for
information only) all Parties and the Director of
such receipt and of the name of the New Party.
3.3.2 Within 60 days after receipt of a duly completed
Admission Application from a New Party the Executive
Committee shall notify the New Party and the Director
either:
(a) that the New Party shall be admitted as a
Party, in which event the provisions of
Clause 3.6 shall apply; or
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(b) that the Executive Committee requires the
New Party to produce evidence satisfactory
to the Executive Committee ("Additional
Evidence") demonstrating the New Party's
fulfillment of the admission conditions
relevant to it set out in its Admission
Application, in which event the provisions
of Clause 3.4 shall apply.
If the Executive Committee shall fail so to notify
the New Party and the Director, the New Party may
within 28 days after the expiry of the said 60 day
period refer the matter to the Director pursuant to
Clause 3.5, in which event the provisions of that
Clause shall apply.
3.4 Additional Evidence: within 28 days (or such longer period as the
Executive Committee in its absolute discretion may allow) after the
Executive Committee has given notice pursuant to Clause 3.3.2(b) the
New Party shall:
3.4.1 provide the Executive Committee with the Additional
Evidence, in which event the Provisions of Clause 3.6
shall apply; or
3.4.2 refer the matter to the Director pursuant to Clause
3.5, in which event the provisions of that Clause
shall apply,
failing which the New Party's application for admission shall lapse and
be of no effect and the New Party shall not be, and shall not be
entitled to be, admitted as a Party consequent upon such application
(but without prejudice to any new application for admission it may make
thereafter).
3.5 Reference to the Director:
3.5.1 if:
(a) any dispute shall arise between the
Executive Committee and a New Party over
whether the New Party has fulfilled the
admission conditions relevant to it; or
(b) the Executive Committee shall have failed to
notify the New Party as provided in Clause
3.3 within the 60 day period therein
specified,
the issue of whether the New Party has fulfilled the
admission conditions relevant to it may be referred
by way of written application of the New Party,
copies to the Executive Committee, to the Director
for determination. The determination of the Director,
which shall be made within 28 days after receipt of
the said written application and shall be to the
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effect set out in paragraph (a) or (b) of Clause
3.5.2, shall be final and binding for all purposes.
The Director shall publish reasons supporting his
determination.
3.5.2 (a) If the determination is to the effect
that the New Party has fulfilled the said
admission conditions, the New Party shall be
admitted and the provisions of Clause 3.6
shall apply.
(b) If the determination is to the effect that
the New Party has not fulfilled the said
admission conditions, the New Party's
application for admission shall lapse and be
of no effect and the New Party shall not be,
and shall not be entitled to be, admitted as
a Party consequent upon such application
(but without prejudice to any new
application it may make thereafter).
3.6 Admission: if:
3.6.1 the Executive Committee shall notify the New Party
and the Director as provided in Clause 3.3.2(a); or
3.6.2 following a request for Additional Information
pursuant to Clause 3.3.2(b), the New Party provides
the same within the period specified in Clause 3.4;
or
3.6.3 the New Party is to be admitted as a Party pursuant
to Clause 3.5,
the Executive Committee shall forthwith prepare or cause to be prepared
an Accession Agreement. Subject to the Executive Committee making all
notifications and filings (if any) required of it for regulatory
purposes and obtaining all regulatory consents and approvals (if any)
required to be obtained by it, the Executive Committee shall instruct
the Chief Executive or another person authorized by the Executive
Committee for the purpose to prepare an Accession Agreement and to sign
and deliver the Accession Agreement on behalf of all Parties other than
the New Party and the New Party shall also execute and deliver the
Accession Agreement and, on and subject to the terms and conditions of
the Accession Agreement, the New Party shall become a Party for all
purposes of this Agreement with effect from the date specified in such
Accession Agreement (and, if no such date is so specified, the date of
such Accession Agreement). The New Party shall pay all costs and
expenses associated with the preparation, execution and delivery of its
Accession Agreement. Each Party hereby authorizes and instructs the
Chief Executive and each person authorized for the purpose by the
Executive Committee to sign on its behalf Accession Agreements and
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<PAGE>
undertakes not to withdraw, qualify or revoke such authority and
instruction at any time. The Executive Committee shall promptly notify
all Parties and the Director of the execution and delivery of each
Accession Agreement.
3.7 Additional Agreements: upon and as a condition of admission as a
Party,a New Party shall execute and deliver such further agreements and
documents and shall do all such other acts, matters and things as the
Executive Committee may reasonably require.
3.8 Application fees: all fees received by the Executive Committee in
respect of any application by a New Party to become a Party shall be
used to defray the costs and expenses of the Executive Committee and
shall be paid to such account as the Executive Committee may direct.
The application fee shall be (pound)250 or such other amount as the
Executive Committee may, with the prior approval of the Director, from
time to time prescribe.
3.9 Compliance: each Party shall procure that for so long as it is a Party
it shall at all times satisfy or otherwise comply with the admission
conditions set out in its Admission Application applicable to it
(and/or such further or other conditions as the Executive Committee may
from time to time reasonably specify) and upon request from time to
time shall promptly provide the Executive Committee with evidence
reasonably satisfactory to the Executive Committee of such satisfaction
and compliance.
3.10 Change of capacities:
3.10.1 any Founder Generator, any Founder Supplier, any Externally
Interconnected Party and any Party admitted as an additional
party to this Agreement pursuant to this Clause 3 may, upon
application to the Executive Committee and satisfaction of
such conditions (if any) as the Executive Committee may
reasonably require, change the capacity(ies) in which it
participates as a Party.
3.10.2 If upon receipt of any Admission Application the Executive
Committee shall consider that the New Party should either:
(a) not be admitted as a Party in the capacity
in which it has applied so to be admitted
but should be admitted in another capacity;
or
(b) be admitted both in the capacity in which it
has applied so to be admitted and in another
capacity,
then the Executive Committee shall within the period
specified in Clause 3.3.2 notify the New Party and
the Director accordingly and shall specify what, if
any, additional evidence the Executive Committee
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requires the New Party to produce to demonstrate its
fulfillment of the admission conditions relevant to
its admission in such other capacity(ies). The
provisions of Clauses 3.4, 3.5 and 3.6 shall apply
mutatis mutandis but as if the references therein to
Additional Evidence were read and construed as
references to the said additional evidence.
3.11 Successor Settlement System Administrator: any successor Settlement
System Administrator requiring to be admitted as a Party in that
capacity shall, upon application to the Executive Committee, be so
admitted by any of Accession Agreement modified insofar as is necessary
to take account of the capacity in which such successor is to be
admitted. The provisions of Clause 3.6 shall apply mutatis mutandis to
any such admission.
3.12 Successor Pool Funds Administrator: any successor Pool Funds
Administrator appointed in accordance with the provisions of Schedule
15 shall be admitted as a Party in that capacity at such time and on
such terms and conditions as the Executive Committee may reasonably
require.
3.13 Successor Grid Operator: any successor Grid Operator requiring to be
admitted as a Party in that capacity shall, upon application to the
Executive Committee, be so admitted by way of Accession Agreement
modified insofar as is necessary to take account of the capacity in
which such successor is to be admitted. The provisions of Clause 3.6
shall apply mutatis mutandis to any such admission.
3.14 Successor Ancillary Services Provider: any successor Ancillary Services
Provider requiring to be admitted as a Party in that capacity shall,
upon application to the Executive Committee, be so admitted by way of
Accession Agreement modified insofar as is necessary to take account of
the capacity in which such successor is to be admitted. The provisions
of Clause 3.6 shall apply mutatis mutandis to any such admission.
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PART II
OBJECTS, REVIEW AND PRIORITY
4. OBJECTS AND PURPOSE OF THE AGREEMENT
4.1 Principal objects and purpose: the principal objects and purpose of
this Agreement are:
4.1.1 to provide a set of rules which, when implemented,
will quantify:
(a) the financial obligations owed by certain
Pool members to other Pool Members in
respect of the former Pool Members'
purchases of electricity produced or
delivered by such other Pool Members; and
(b) the financial obligations owed by certain
Pool Members to the Ancillary Services
Provider in respect of the purchase of
Ancillary Services;
4.1.2 to establish, maintain and operate efficiently
computer and other systems (whether or not computer
related) which will implement the rules referred to
in Clause 4.1.1; and
4.1.3 by following the procedures for amending this
Agreement set out or referred to herein, to keep
under review and promote the implementation,
administration and development of the systems
referred to in Clause 4.1.2 in a way which takes into
account, and balances, the respective interests of
actual and potential generators and suppliers of
electricity and of consumers of electricity and
providers of Ancillary Services.
4.2 Interpretation: in the construction and interpretation of this
Agreement due regard shall be had to the principal objects and purpose
set out in Clause 4.1.
4.3 Exercise of rights: in exercising its rights under this Agreement, each
Party shall exercise and enforce such rights and perform its
obligations in good faith having due regard both to its own legitimate
commercial interests and the principal objects and purpose set out in
Clause 4.1.
5. TRANSITIONAL ARRANGEMENTS AND REVIEWS
5.1 [Not used]
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Transitional Arrangements
5.2 Transitional Arrangements: the Parties acknowledge and agree that the
arrangements described or referred to in the first column of Schedule
12 ("Transitional Arrangements") have been designed as transitional
arrangements only. The Parties undertake with each other to use all
reasonable endeavors (including, where appropriate, through their
representation on the Executive Committee) to give effect to the
principle (the "New Principle") set opposite the relevant Transitional
Arrangement in the second column of Schedule 12 by the date set
opposite such Transitional Arrangement in the third column of that
Schedule. Clauses 5.9 to 5.14 (inclusive) shall have effect in relation
to all Transitional Arrangements.
Regular Reviews
5.3 Conduct of reviews: within a period (the "Review Period") of six months
beginning on each of the dates referred to in Clause 5.5 (the "Review
Dates") the Executive Committee shall review in consultation with the
Settlement System Administrator and the Pool Auditor the operation in
practice of this Agreement and the Settlement System to assess whether
the principal objects and purpose set out in Clause 4.1 are being or
could be better achieved. In carrying out each such review the
Executive Committee shall give due consideration to any matter referred
to it by any Party, the Pool Auditor, the Director or the Secretary of
State. Clauses 5.4 to 5.15 (inclusive) shall have effect in relation to
the reviews described in this Clause 5.3, and such reviews shall be in
addition to the reviews associated with the Transitional Arrangements.
5.4 Initial Period reviews:
5.4.1 in addition to the matters set out in Clause 5.3, as
part of its review beginning on the date falling 24
months after the Effective Date the Effective
Committee shall consider whether or not the Initial
Period shall terminate with effect from the end of
the then current Accounting Period in which the
relevant Review Period ends taking into account the
following:
(a) whether material changes to the nature or
level of service which the Settlement System
Administrator is required to provide under
this Agreement in the operation of the
Settlement System have been proposed by the
Executive Committee or the Pool Members in
general meeting which have been accepted or
are in the process of being implemented or
are under discussion and likely to be
accepted and implemented;
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(b) whether anticipated costs to be incurred by
the Settlement System Administrator in
running the Settlement System are materially
in excess of actual costs for the
immediately preceding Accounting Period due,
directly or indirectly, to circumstances
beyond the control of the Settlement System
Administrator; and
(c) any other relevant considerations.
5.4.2 The Executive Committee shall notify the Settlement
System Administrator of the result of such
considerations as are referred to the in Clause
5.4.1. In the absence of written representations to
the contrary from the Settlement System Administrator
to the Executive Committee to the effect that it
is inequitable to conclude that the Initial Period
should terminate (having regard to the consequences
of such termination as set out in Schedule 4), such
representations to be made within three months after
the date of such notification, the Executive
Committee may conclude that the Initial Period shall
terminate, but may not otherwise come to such
conclusion unless it has complied with Clause 5.4.3.
5.4.3 Where written representations have been made by the
Settlement System Administrator pursuant to Clause
5.4.2, the Executive Committee and the Settlement
System Administrator shall negotiate in good faith
with a view to agreeing whether the Initial Period
should terminate. If the matter is not resolved by
agreement between the Settlement System Administrator
and the Executive Committee within one month (or
such other period as the Settlement System
Administrator and the Executive Committee may agree)
after the Settlement System Administrator has made
such written representations, the same shall be
referred to arbitration in accordance with Clause 83.
The costs of any such reference shall be borne in
accordance with the Accounting Procedure.
5.4.4 If for any reason the Executive Committee does not
in the course of any review referred in Clause 5.3
reach the conclusion that the Initial Period should
terminate or it is resolved pursuant to Clause 5.4.3
that the Initial Period should not terminate, the
Executive Committee shall be obliged to have regard
to the same considerations in each subsequent
review to be carried out pursuant to Clause 5.3 and
the provisions of Clauses 5.4.2 and 5.4.3 shall apply
in relation thereto.
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5.4.5 The Settlement System Administrator may, upon not
less than two months' notice to the Executive
Committee prior to any Review Date, determine that
the Initial Period should terminate at the end of the
then current Accounting Period whereupon the Initial
Period shall so terminate.
5.5 Review Dates: the Review Dates are:
5.5.1 those dates falling 12 and 24 months after the
Effective Date;
5.5.2 those dates falling on the last day of each
successive period of two years, the first such period
beginning on 30th March, 1992; and
5.5.3 such other date(s) as the Pool Members in general
meeting may from time to time determine.
5.6 Reports: promptly (and in any event within one month) after the end of
each Review Period the Executive Committee shall prepare or cause to be
prepared a written report of its review containing such matters as are
referred to in Clause 5.7 and a copy of such report shall be sent to
each Party, the Pool Auditor, the Director and the Secretary of State.
If at the time of issue of such report no such conclusion or resolution
as is referred to in Clause 5.4.2 or (as the case may be) 5.4.3 has
been reached, the Executive Committee shall notify each Party, the Pool
Auditor, the Director and the Secretary of State accordingly.
5.7 Content of reports: each report referred to in Clause 5.6 shall set out:
5.7.1 the scope of the review conducted;
5.7.2 the matters reviewed and the investigations and
enquiries made;
5.7.3 the findings of such review;
5.7.4 the recommendations (if any) as to the changes to be
made to this Agreement and the Settlement System so
as to achieve or better to achieve the principal
objects and purpose set out in Clause 4.1;
5.7.5 the effect which any such recommendation referred to
in Clause 5.7.4 would, if implemented, have on the
role of the Pool Auditor under this Agreement and any
comments of the Pool Auditor thereon;
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5.7.6 the financial effects (if any) which any such
recommendation referred to in Clause 5.7.4 would, if
implemented, have on Pool Members;
5.7.7 in the case of the report for the review beginning on
the second Review Date and (if appropriate) each
subsequent Review Date, whether the
Executive Committee has concluded as set out in
Clause 5.4.2, whether it has been resolved pursuant
to Clause 5.4.3 that the Initial Period should
terminate or (as the case may be) whether the
Executive Committee has received notice under Clause
5.4.5; and
5.7.8 such other matters as the Executive Committee shall
consider appropriate.
If any Committee Member shall disagree with any of the recommendations
made in any such report, such report shall set out the reasons for such
disagreement and any alternative proposals of such Committee Member.
5.8 General Meeting approval: within two months after the end of each
Review Period the Executive Committee shall convene an extraordinary
general meeting of Pool Members to consider and, if thought fit,
approve (in whole or in part) the recommendations (the
"Recommendations") made in the report referred to in Clause 5.6. If any
Recommendation is so approved (an "Approved Recommendation") then,
subject to Clause 13.5, the provisions of Clauses 5.9 to 5.14
(inclusive) shall have effect in relation thereto. If any
Recommendation is not so approved, no further action shall be taken in
respect thereof arising from such report.
Works Programme
5.9 Works Programme: in respect of each Transitional Arrangement and each
Approved Recommendation the Executive Committee shall:
5.9.1 in the case of a Transitional Arrangement, by the date set
opposite such Transitional Arrangement in the fourth column
of Schedule 12; and
5.9.2 in the case of an Approved Recommendation, by the date
stipulated by the Pool Members in general meeting or (if no
date is stipulated) within a reasonable time,
prepare (or cause to be prepared) in consultation with the Pool Auditor
a programme (the "Works Programme", which expression shall include any
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associated documentation hereinafter referred to in this Clause 5.9)
which programme shall (unless otherwise resolved b the Executive
Committee after consultation with those Parties not being Pool Members
who might reasonably be expected to be affected by the Works Programme)
include:
(a) a detailed timetable for the implementation of the New
Principle or (as the case may be) the Approved Recommendation,
including (where appropriate) a series of milestone and/or
target dates for the achievement of specified parts of such
programme;
(b) a full explanation of how such New Principle or approved
Recommendation is to be implemented, including a detailed
analysis of such New Principle or Approved Recommendation and
the objectives which it is intended to achieve, the work
involved, the resources required and the amendments likely to
be required to this Agreement, the Specification and to any
other relevant agreement or document and of any changes
required to be made to the Software or the Hardware; and
(c) an estimate of the cost of such implementation supported by a
breakdown of such costs and a detailed commentary on each
element thereof together with proposals for the recovery of
such cost,
and (unless otherwise resolved by the Executive Committee after
consultation with those Parties not being Pool Members who might
reasonably be expected to be affected by the Works Programme) shall be
supported by:
(i) any draft legal documentation required to give effect to the
amendments referred to in paragraph (b) above; and
(ii) the outline form of agreement appointing the Project Manager
as project manager for the implementation of the Works
Programme (which form shall, where the Settlement System
Administrator is or, in the Executive Committee's opinion, is
likely to be the Project Manager or here the Works Programme
involves changes to the Specification or the Software, be
prepared in consultation with the Settlement System
Administrator).
5.10 Review: the Executive Committee shall arrange for a copy of each Works
Programme to be sent to each Party, the Pool Auditor and the Director
for review under cover of a letter setting a deadline for receipt of
comments on such Works Programme (being no earlier than one month and
no later than two months after the date of despatch of copies of the
Works Programme for comment) and indicating to whom such comments
should be addressed. Within such time as is reasonable after the
deadline set for receipt of comments, but, in any event, within two
months thereafter, the Executive Committee shall revise (or cause to be
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revised) the Works Programme to take into account (so far as it
considers desirable) the comments received from the Parties, the Pool
Auditor and the Director.
5.11 General Meeting referral: as soon as a Works Programme has been revised
as provided in Clause 5.10 (or, if the Executive Committee considers no
such revision desirable, within one month after the deadline set under
Clause 5.10 for receipt of comments on such Works Programme), the
Executive Committee shall convene an extraordinary general meeting of
Pool Members to consider and, if thought fit, approve such Work
Programme (with or without amendment).
5.12 Approval of the Works Programme:
5.12.1 a Works Programme shall not be given effect to unless and
until approved by the Pool Members in general meeting.
Additionally, if a Works Programme or any part thereof shall
involve a matter requiring the approval of Generators or
Suppliers in separate general meeting under Clause 13.2
(a "Class Issue"), then such Works Programme shall not be
given effect to unless and until approved by the relevant
class of Pool Members. If a Works Programme shall not be duly
approved (with or without amendment), then the Executive
Committee shall revise (or cause to be revised) the same to
take account of the wishes of the Pool Members in general
meeting and/or (as the case may be) in separate general
meeting and thereafter such revised Works Programme shall be
re-submitted to the Pool Members in general meeting and, if
such revised Works Programme or any part thereof shall involve
a Class Issue, to the relevant Pool Members in separate
general meeting, in each case for approval (with or without
amendment). This revision and re-submission procedure shall
be repeated as often as may be required until such time as the
Pool Members in general meeting and, as necessary, in separate
general meetings approve the Works Programme.
5.12.2 Notwithstanding the provisions of Clause 5.12.1, the Executive
Committee and each Party shall be entitled at any time prior
to the approval of a Works Programme by the Pool Members in
general meeting and (where required under Clause 5.12.1) by
the relevant class of Pool Members in separate general meeting
to apply to the Director requesting that the implementation
of the New Principle or (as the case may be) the Approved
Recommendation should not proceed or should not proceed in the
manner set out by such Works Programme and, in such event,
effect shall not be given to the Works Programme pending
the determination of the Director and then (subject as
provided in Clause 5.14) only to the extent (if at all) that
the Director in his absolute discretion shall approve.
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5.13 Implementation: the implementation of all Works Programmes shall be
project managed by the Settlement System Administrator or (if the
Settlement System Administrator is unable or unwilling so to project
manage) such other person as the Executive Committee shall nominate
(the "Project Manager") upon and subject to such terms and conditions
as are agreed by the Executive Committee with the Project Manager and
the cost thereof recovered in accordance with the terms of the relevant
Works Programme. Cost overruns, liquidated damages and all other
financing costs, incentives and penalties shall be financed, levied
and/or paid at the times and in the manner provided for in such Works
Programme. The Executive Committee shall require the Project Manager to
prepare and submit to the Executive Committee no less frequently than
quarterly a written report giving a detailed commentary on the progress
of implementing each Work Programme, including a comparison of actual
progress made against the timetable set by such Works Programme and of
actual costs incurred against budgeted costs.
5.14 Pool Auditor's approval: at the completion of the work required by each
Works Programme but prior to effect being given to the New Principle or
(as the case may be) the Approved Recommendation the Executive
Committee shall request the Pool Auditor to issue an opinion in form
and content satisfactory to the Executive Committee confirming to all
Parties and the Director that the Pool Auditor has inspected and tested
the arrangements giving effect to the new Principle or (as the case may
be) the Approved Recommendation and is satisfied (without qualification
or reservation) that such arrangements do give effect to the New
Principle or Approved Recommendation in the manner required by the
Works Programme. The Executive Committee shall use all reasonable
endeavors to make (or procure to be made) such modifications to such
arrangements as are necessary to enable the Pool Auditor to give its
opinion without qualification or reservation, and the costs of any such
modification shall be recovered in accordance with the relevant Works
Programme. If the Pool Auditor's opinion can be given only with
qualification or reservation, the Executive Committee shall convene an
extraordinary general meeting of Pool Members and, where required under
Clause 5.12.1, a separate general meeting of Generators and/or (as the
case may be) Suppliers to consider and, if thought fit, approve such
arrangements in the knowledge that the Pool Auditor's opinion can be
given only with qualification or reservation. Subject to the provisions
of Clause 6, each of the Parties undertakes with each of the other
Parties promptly following the issue of the Pool Auditor's opinion
(but, where such opinion has a qualification or reservation, only after
approval as aforesaid by the Pool Members in general meeting and, where
required under Clause 5.12.1, by the relevant class of Pool Members in
separate general meeting) to execute and deliver any amending agreement
or other documents and to take such other action as may reasonably be
required of it to give effect to such arrangements, in any such case at
its own cost and expense.
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5.15 Secretary of State's approval: in respect of the Secretary of State's
decision as set out in his letter of 11th December, 1991 to the Chief
Executive concerning the selling of the output of plant by Generators
with on-site demand under this Agreement:
5.15.1 each of the Parties undertakes with each of the other Parties
forthwith to take all such steps (including as to the
execution of any document) as may be required to give full
force and effect to the decision of the Secretary of State.
Each of the Parties shall take all such steps at its own costs
and expense except that the Settlement System Administrator,
the Pool Funds Administrator and the Ancillary Services
Provider shall be entitled to recover any such costs and
expenses in accordance with the terms of this Agreement; and
5.15.2 each of the Parties acknowledges and agrees that damages would
not be an adequate remedy for any failure by it to give in
accordance with Clause 5.15.1 full force and effect to the
decision of the Secretary of State pursuant to this Clause
5.15 and that, accordingly, each of the other Parties and the
Director shall be entitled to the remedies of injunction,
specific performance and other equitable relief for any
threatened or actual such failure and that no proof of special
damages shall be necessary for enforcement.
5.16 Director's modifications:
5.16.1 Where the Monopolies and Mergers Commission has issued a
report on a reference under section 12 of the Act which:
(a) includes conclusions to the effect that any
of the matters specified in the reference
operate, or may be expected to operate,
against the public interest;
(b) specifies effects adverse to the public
interest which those matters have or may be
expected to have;
(c) includes conclusions to the effect that
those effects could be remedied or prevented
by modifications of the conditions of any
License and such modifications would require
a change to the Pooling and Settlement
Agreement; and
(d) specifies modifications by which those
effects could be remedied or prevented,
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the Director may, subject to the following provisions
of this Clause, require such modifications to this
Agreement as are requisite for the purpose of
remedying or preventing the adverse effect specified
in the report.
5.16.2 Before requiring modifications to be made pursuant to this
Clause, the Director shall have regard to the modifications
specified in the report. Further, the Director shall not, and
shall not be entitled to, require a modification to be made to
this Agreement which modification could not have been achieved
lawfully through a modification of one or more Licenses
consequent upon the report (but as if, for this purpose, only
those Parties who are holders of Licenses were parties to this
Agreement).
5.16.3 Before requiring modifications to be made pursuant to this
Clause, the Director shall give notice:
(a) stating that he proposes to make the
modifications and setting out their effect;
(b) stating the reasons why he proposes to make
the modifications; and
(c) specifying the period (not being less than
28 days from the date of publication of the
notice) within which representations or
objections with respect to the proposed
modifications may be made,
and shall consider any representations or objections
from any person which are duly made and not
withdrawn.
5.16.4 A notice under Clause 5.16.3 shall be given:
(a) by publishing the notice in such manner as
the Director considers appropriate for the
purpose of bringing the matters to which the
notice relates to the attention of persons
likely to be affected by the making o the
modifications; and
(b) by serving a copy of the notice on each
Party, the Executive Committee and the Pool
Auditor.
5.16.5 After considering any representations or objections which are
duly made and not withdrawn pursuant to Clause 5.16.3, the
Director may by notice published as provided in Clause
5.16.4(a) and served on those referred to in Clause 5.16.4(b)
specify the modifications to this Agreement which he requires
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to be made and the date upon which such modifications are to
take effect and each of the Parties undertakes with each other
of the Parties promptly to take all such steps as may be
necessary to give full force and effect to the modifications
so required.
6. ENTRENCHED PROVISIONS, INCONSISTENCIES AND CONFLICTS
Entrenched Provisions
6.1 Secretary of State's consent: the Parties acknowledge and agree that,
notwithstanding any other provision of this Agreement, no amendment to
or variation of any of the matters dealt with in any of the following
provisions of this Agreement shall take effect without the prior
written consent of the Secretary of State:
6.1.1 Clause 5.15, Part XIV and Section 28 of Schedule 9;
and
6.1. this Clause 6.1.
6.2 Director's consent: the Parties acknowledge and agree that,
notwithstanding any other provision of this Agreement, no amendment to
or variation of any of the matters dealt with in any of the following
provisions of this Agreement shall take effect without the prior
written consent of the Director:
6.2.1 (a) Clauses 3.5, 4, 5.12.2, 5.15, 5.16,
6.11, 11, 13, 15.6, 27.5, 27.7, 53.6, 67.3,
67.4, 83, 84 and 85 and Section 8 of
Schedule 14 and Section 7 of Schedule 20;
(b) paragraphs 1.4, 2.2.3, 3.3, 3.4, 3.7, 4.4.1, 6.4,
6.5, 17.3 and 22.5 of Schedule 21;
6.2.2 without prejudice to Clause 6.2.3, the Pool Rules or
any of them, other than an amendment or variation
which:
(a) involves only a change of a technical nature
in the systems, rules and procedures contemplated by
this Agreement; and
(b) will not increase the liability or decrease
the rights of any Party under this Agreement
beyond what may reasonably be regarded as de
minimis in relation to such Party,
but in any event including Section 22 thereof;
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6.2.3 any provision of this Agreement which requires or
permits any matter to be referred to the Director for
approval, consent, direction or decision or confers
any rights or benefits upon the Director; and
6.2.4 the Clause 6.2.
6.3 Settlement System Administrator's consent: the Parties acknowledge and
agree that, notwithstanding any other provision of this Agreement,
insofar as directly affects in any material respect the rights,
benefits duties responsibilities, liabilities and/or obligations of the
Settlement System Administration no amendment to or variation of any of
the matters dealt with in any of the following provisions of this
Agreement shall take effect:
6.3.1 without the prior written consent of the Settlement
System Administrator:
(a) the definitions in Clause 1.1 of "Agreed
Procedure", "Code of Practice", "Force
Majeure" and "Good Industry Practice";
(b) Clauses 6.9, 7.3, 7.6, 9.5, 10.9, 10.10,
19.4, 27, 28, 32, 33, 34.1, 34.2, 35.3,
35.4, 35.6, 36.2, 37, 39, 42.4, 42.5, 66,
68, 69, 72, 74 and 78.2;
(c) Sections 1.6 (and its application to any
other Section of Schedule 9), 1.7 and 3 of
Schedule 9: and
(d) this Clause 6.3;
6.3.2 without the prior written consent of the Settlement
System Administrator (such consent not to be
unreasonably withheld or delay):
(a) Clauses 18.1.2, 18.1.4, 19.5, 29, 30, 31,40
to 48 (inclusive), 60, 70, 71.1, 71.2 (but
only insofar as directly concerns the fees
and charges referred to therein), 71.5 and
71.6;
(b) Part XXII (other than Clauses 74 and 78.2);
(c) paragraphs 4 to 16 (inclusive), 18, 19, 21
and 22 of Schedule 21;
(d) Section 30 of, and Appendix 4 to, Schedule
9; and
(e) Section 2(b) of Part C to Schedule 17.
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6.4 Pool Funds Administrator's consent: the prior written consent of the
Pool Funds Administrator may be needed to certain amendments to or
variations of this Agreement, as provided in Schedule 15.
6.5 Grid Operator's consent: the Parties acknowledge and agree that,
notwithstanding any other provision of this Agreement, insofar as
directly affects in any material respect the rights, benefits, duties,
responsibilities, liabilities and/or obligations of the Grid Operator,
no amendment to or variation of any of the matters dealt with in any of
the following provisions shall take effect:
6.5.1 without the prior written consent of the Grid Operator:
(a) Clauses 6.9, 7.3, 7.6, 9.5, 10.9, 10.10,
19.4, 25, 37.3, 47 to 50 (inclusive), 66,
68, 69, 72, 74 and 78.2;
(b) sub-section 3.1 of Appendix 2 to Schedule 9; and
(c) this Clause 6.5; and
6.5.2 without the prior written consent of the Grid Operator
(such consent not to be unreasonable withheld or delayed),
any other provision of this Agreement,
Provided that the references to Parties and to the Grid Operator in
this Clause 6.5 shall be construed as if they were references to such
terms prior to the creation of Meter Operator Parties and the
associated amendments to this Agreement, but this shall be without
limitation to any right of the Grid Operator to consent to any
amendment or variation to this Agreement under this Clause 6.5.
6.6 Ancillary Services Provider's consent: the Parties acknowledge and
agree that, notwithstanding any other provision of this Agreement,
insofar as directly affects in any material respect the rights,
benefits, duties, responsibilities, liabilities and/or obligations of
the Ancillary Services Provider, no amendment to or variation of any of
the following provisions shall take effect:
6.6.1 without the prior written consent of the Ancillary Services
Provider:
(a) Clauses 6.9, 7.3, 7.6, 9.5, 10.9, 10.10, 19.4, 25,
52.3, 66, 68, 69, 72, 74 and 78.2;
(b) Part XI and the provisions expressly incorporated
therein by reference;
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(c) Sections 1.8, 23, 24.8 and 28 of Schedule 9; and
(d) this Clause 6.6; and
6.6.2 without the prior written consent of the Ancillary
Services Provider (such consent not to be
unreasonably withheld or delayed), any other
provision of this Agreement.
6.7 Amendments generally: without prejudice to the rights, powers and
privileges of the Secretary of State and the Director under the Act or
any License or otherwise howsoever:
6.7.1 subject to:
(a) any consent of a particular person(s) required to be
obtained under the foregoing provisions of this
Clause 6 being obtained; and
(b) the requirements of Clauses 6.7.2 and 13.2; and
save where otherwise expressly provided in this
Agreement, any amendment to or variation of this
Agreement shall be effective if approved by the Pool
Members in general meeting pursuant to Clause 13.1
or 13.2 and all Parties agree promptly to execute
and deliver all agreements and other documentation
and to do all such other acts, matters and things
as may be necessary to give effect to such amendment
or variation; and
6.7.2 where any change is proposed to this Agreement which,
if made:
(a) would introduce provisions dealing with
matters not then dealt with in or expressly
contemplated by this Agreement; and
(b) would in any material respect directly
affect the rights, benefits, duties,
responsibilities, liabilities and/or
obligations under this Agreement of the
Settlement System Administrator, the Grid
Operator, the ancillary Services Provider
and/or any Externally
Interconnected Party,
such change shall not be made without the prior
written consent of the relevant one(s) of them (in
each case such consent not to be unreasonably
withheld or delayed) Provided that the reference to
the Grid Operator in this Clause 6.7.2 shall be
construed as if it was a reference to such term prior
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to the creation of Meter Operator Parties and the
associated amendments to this Agreement, but this
shall be without limitation to any right to consent
to any amendment or variation of this Agreement under
this Clause 6.7.2.
Inconsistencies and Conflicts
6.8 Internal inconsistencies and conflicts: in the event of any
inconsistency or conflict:
6.8.1 the Pool Rules shall prevail over the other
provisions of this Agreement (except Clause 4);
6.8.2 the provisions of this Agreement shall prevail over
the Specification; and
6.8.3 the Specification shall prevail over the Software,
and the Parties shall use all reasonable endeavors promptly to secure
the elimination of such inconsistency or conflict.
6.9 External inconsistencies and conflicts:
6.9.1 each of the Parties hereby acknowledges and agrees
the desirability of achieving and maintaining
consistency and absence of conflict between the
provisions of this Agreement and the Grid Code but
recognizes that, due principally to the different
functions and objectives of this Agreement and the
Grid Code, the fact that there may be Parties who
are not bound by the Grid Code and the difference
procedures in this Agreement and the Grid Code for
review of their respective terms, it will not in all
circumstances be possible to avoid inconsistency or
conflict.
6.9.2 Where at the Effective Date there is an inconsistency
or conflict between the provisions of this Agreement
and the Grid Code the Executive Committee shall first
consider the matter and make recommendations and
thereafter the Parties shall negotiate in good faith
to eliminate such inconsistency and/or conflict
having regard to the different functions and
objectives o the Grid Code and this Agreement.
6.9.3 Each of the Parties shall use its reasonable
endeavors to ensure that where any change to this
Agreement is proposed to be made which may reasonably
be expected to require a change to the Grid Code
(or vice versa) such change is brought by the
Executive Committee to the attention of the Grid Code
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Review Panel in good time to enable it to consider what corresponding change, if
any, should be made to the Grid Code or (as the case may be) this
Agreement. In any such consideration, the Parties acknowledge and agree
that it would be desirable in the event of any inconsistency or conflict
between the provisions of this Agreement and the Grid Code if regard were
had by the Grid Code Review Panel to the principles set out in Clause
6.9.4.
6.9.4 The principles referred to in Clause 6.9.3 are that:
(a) where by reason of any inconsistency or
conflict the security, quality of supply
and/or safe operation of the NGC
Transmission System under both normal
and/or abnormal operating conditions would
necessarily be compromised and/or the
Grid Operator would necessarily be in breach
of its obligations under the Act or
its Transmission License, the provisions of
this Agreement should be made to conform
(to the extent of such inconsistency or
conflict) to those of the Gird Code; and
(b) in any other case, where by reason of such
inconsistency or conflict there is or is
likely to be a material financial effect on
any class of Pool Members or on all or a
significant number of Pool Members, the
provisions of the Grid Code should be made
to conform (to the extent of such
inconsistency or conflict) to those of this
Agreement.
6.9.5The Parties acknowledge that changes to the Grid Code are required to be
approved by the Director.
6.9.6 Where there is any conflict or inconsistency between
the Grid Code and the Pool Rules, no Party shall be
liable hereunder or under the Grid Code as a result
of complying with its obligations under this
Agreement or under the Grid Code.
6.10 Breaches of the Pool Rules: if at any time any Party believes that
there has been a breach of the Pool Rules, such Party shall promptly
report the same in writing to the Executive Committee.
6.11 Director's requests: the Executive Committee shall:
(i) give due and prompt consideration to any matter referred to it
in writing by the Director;
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(ii) advise the Director in writing of any decision or action of
the Executive Committee in relation to such matter;
(iii) provide the Director in writing with an explanation in
reasonable detail of the reasons for such decision or action;
and
(iv) if reasonably requested by the Director (having regard, in
particular, to the resources available to the Executive
Committee), in relation to any proposal by the Director for a
change to any provision of this Agreement provide or procure
the provision of advice and assistance to the Director as soon
as reasonably practicable as to the implications of the change
and the actions necessary to implement it (including any
relevant feasibility study).
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PART III
POOL MEMBERSHIP AND GENERAL MEETINGS
7. INTRODUCTION
7.1 Obligations contractually binding: each Pool Member acknowledges and
agrees that it is bound to each other Pool Member as a matter of
contract and will comply with its obligations under this Agreement.
7.2 Externally Interconnected Parties: each Externally Interconnected Party
acknowledges and agrees that it is bound to each Pool Member as a mater
of contract and undertakes to comply with the Pool Rules so far as they
may be applicable to it and each Pool Member acknowledges and agrees
that it is bound to each Externally Interconnected Party as a matter of
contract and will comply with its obligations under this Agreement.
7.3 Parties not Pool Members: the Settlement System Administrator, the Pool
Funds Administrator, the Grid Operator and the Ancillary Services
Provider shall not be Pool Members and not be bound as against other
Pool Members or the Executive Committee except as expressly provided
for in this Agreement, the Escrow Agreement and the Funds Transfer
Agreement in their respective roles as Settlement System Administrator,
Pool Funds Administrator, Grid Operator and Ancillary Services
Provider.
7.4 Pool Rules:
7.4.1 the Pool Rules as at lst April, 1993 are set out in
Schedule 9. The Settlement System calculations shall
be carried out on the basis of the Settlement System
and the Pool Rules. The Annex to this Agreement
contains modified Pool Rules to which the Executive
Committee shall have regard when considering changes
to the Pool Rules pursuant to Clause 38.
7.4.2 The Pool Rules shall be developed under the control
of the Executive Committee. The Executive Committee
shall approve all changes to the Pool Rules and no
change shall be made to the Pool Rules without the
prior approval of the Executive Committee.
7.5 Pool Members obligations:
7.5.1 save as otherwise expressly provided in this
Agreement, the obligations of each Pool Member under
this Agreement are several and a Pool Member shall
not be responsible for the obligations or liabilities
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of any other Pool Member. The failure of any Pool
Member to carry out all or any of its obligations
under this Agreement shall not relieve any other Pool
Member of all or any of its obligations hereunder.
7.5.2 In respect of those obligations of a Pool Member
(the "Indemnifying Pool member") under this Agreement
which are expressed to be several, the Indemnifying
Pool Member shall indemnify and keep indemnified each
other Pool member from and against all losses, costs
(including legal costs) and expenses which such other
Pool Member may suffer or incur as a result of being
held liable by operation of law (or contesting any
such liability) for the performance or
non-performance of all or any of such obligations of
the Indemnifying Pool Member.
7.6 Information: in respect of all data and other information which a Pool
Member or an Externally Interconnected Party (not being a Pool Member)
is required to notify to the Settlement System Administrator under or
pursuant to this Agreement (other than (i) Metered Data (as defined in
paragraph 3.1.2 of Schedule 9) and (ii) pursuant to paragraph 2.3.2 of
Schedule 9, the relevant Pool member or (as the case may be) Externally
Interconnected Party shall use all reasonable endeavors to ensure that
all such data and other information is complete and accurate in all
material respects.
8. POOL MEMBERSHIP
8.1 Initial Pool Members: the initial Pool Members shall be the Founder
Generators and the Founder Suppliers.
8.2 Additional Pool Members:
8.2.1 subject to the following provisions of this Clause
8.2 and to the fulfillment by the Party concerned of
the conditions set out or referred to in Clause 8.3
(the "Pool Membership Conditions"), any Party shall,
upon application to the Executive Committee, be
admitted as a Pool Member.
8.2.2 For the purposes of this Clause 8, "Party" shall
include any person who is applying to be admitted as
a Party pursuant to Clause 3 contemporaneously with
being admitted as a Pool Member but shall exclude the
Settlement System Administrator, the Pool Funds
Administrator, the Grid Operator and the ancillary
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Services Provider.
8.2.3 Subject to Clause 8.2.4, the admission of a Party as
a Pool Member shall take effect on the date (the
"Admission Date") specified by the Executive
Committee (with the prior agreement of the Settlement
System Administrator) in a notice given by the
Executive Committee to the relevant Party no later
than 28 days after the Satisfaction Date, provided
that the Admission Date shall be a date falling no
earlier than the Satisfaction Date and (unless
otherwise agreed by the Executive Committee, the
Settlement System Administrator and such party) no
later than 90 days after the Satisfaction Date. In
default of such notification being given by the
Executive Committee within the said 28 days, the
admission shall take effect on the day falling 35
days after the Satisfaction Date. For the purposes of
this Clause, the "Satisfaction Date" shall be the day
on which the last of the Pool Membership Conditions
required to be fulfilled by such party shall have
been fulfilled by it.
8.2.4 No person shall be admitted as a Pool Member unless
prior to or contemporaneously with such admission it
shall have been or (as the case may be) shall be
admitted as a Party.
8.2.5 Prior to a Party's admission as a Pool member the
Executive Committee shall, where appropriate,
determine and notify the relevant party of the amount
of Security Cover (if any) to be provided by such
Party.
8.3 Pool Membership Conditions:
8.3.1 where a person has been admitted as a Party pursuant
to Clause 3 otherwise than contemporaneously with
being admitted as a Pool Member pursuant to Clause 8,
the Pool Membership Conditions applicable to it shall
(unless otherwise determined by the Director upon
the application of such person or the Executive
Committee) be those that would have been applicable
to it if it had applied to be admitted as a Pool
Member at the date of its admission as a Party and,
subject as aforesaid, such person shall not be
required to fulfill any further or other Pool
Membership Conditions introduced after such date
unless the applicant notifies the Executive Committee
in writing prior to or contemporaneously with its
application for admission as a Pool Member that it
wishes such further or other conditions to apply, in
which case the Pool Membership Conditions applicable
to it shall (subject as aforesaid) be those
applicable on the date of its application for
admission as a Pool Member.
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8.3.2 The Pool Membership Conditions required to be
fulfilled by a Party prior to its admission as a Pool
member are:
(a) the due completion by the Party and the
delivery to the Executive Committee of a
Pool Membership Application;
(b) in respect of any Metering System required
to be taken into account for the purposes of
Settlement and which relates to the Party,
the provision of evidence reasonably
satisfactory to the Executive Committee
that:
(i) there is a Registrant and an
Operator for such Metering System;
(ii) such Registrant has provided to the
Settlement System Administrator the
information required for standing
data purposes as required by this
Agreement or the relevant Agreed
Procedure; and
(iii) such Metering System conforms with
the requirements of Part XV, all
relevant Agreed Procedures and all
Codes of Practice and is compatible
with the Settlement System;
(c) the Party has entered into and has in full
force and effect all appropriate Connection
Agreements or, if the Party is applying to
be admitted as an External Pool Member, that
all appropriate Connection Agreements with
the relevant Externally Interconnected Party
in relation to the relevant Interconnection
are in full force and effect;
(d) the provision of such information as the
Executive Committee may reasonably require
to enable the Executive Committee to
ascertain whether any of the provisions of
Clause 11.4 are applicable to that Party, to
determine whether that Party is an
Independent Generator, Small Generator and/
or Independent Supplier and to calculate the
initial Weighted Votes and Points of that
Party as a Pool Member under Clause 11.3
and Schedule 13 respectively;
(e) the provision of such information as the
Executive Committee may reasonably require:
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(i) to enable the Executive Committee to
ascertain whether (and, if so, on
what basis) that Party is entitled
to take the benefit of any exception
in Clause 8.5 claimed by it; and
(ii) to assist the Executive Committee in
making any determination under
Clause 8.5 relevant to that Party;
(f) if the Party is a Generator (other than an
External Pool Member), the provision of
evidence reasonably satisfactory to the
Executive Committee that the Party operates
or has under its control one or more
Generating Units, which Generating Unit(s)
has (have) provided electricity to the Total
system or will be capable of so providing
electricity within such period as the
Executive Committee may specify; and
(g) if the Party is an External Pool Member, the
provision of evidence reasonably
satisfactory to the Executive Committee that
the Party has the right to use one or more
Generation Trading Blocks and/or the right
to take electricity across an External
Interconnection under an Interconnection
Agreement then in full force and effect.
8.4 Compliance: each Pool Member shall procure that for so long as it is a
Pool Member it shall at all times satisfy or otherwise comply with
those Pool Membership Conditions (whether set out in this Agreement or
in its Pool Membership Application) applicable to it (and/or such
further or other conditions as the Executive Committee may from time to
time reasonably specify). Each Pool Member shall upon request from time
to time promptly provide the Executive Committee with such information
as the Executive Committee may reasonably require (i) to enable the
Executive Committee to ascertain whether (and, if so, on what basis)
that Pool Member is entitled to take the benefit of any exception in
Clause 8.5 claimed by it, and (ii) to assist the Executive Committee in
making any determination under Clause 8.5 relevant to that Party, and
further with evidence reasonably satisfactory to the Executive
Committee of such satisfaction and compliance.
8.5 Restrictions applicable to Pool Members:
8.5.1 at each of its Sites, or where any such Site forms part of a
Trading Site, such Trading Site, each Generator shall sell its
entire Exports of electricity to Pool Members pursuant to this
Agreement except:-
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(a) for its Exports of electricity from any generating
station in respect of which (but for other generating
stations owned or operated by it) it would not be
required to hold a Generation Licence, being Exports
at any Site, or as the case may be, Trading Site for
which the Generator is not required to complete a
Supplemental Agreement to the Master Connection and
Use of System Agreement.
Provided that the Generator has given the Executive Committee
either on the Effective Date or not less than 10 Business Days
before that Site, or as the case may be, Trading Site is
withdrawn from the requirements of this provision written
notice that the circumstances described in sub-paragraph (a)
apply: or
(b) for the output of electricity from any of its
Generating Units in circumstances which the Executive
Committee resolves by a vote passed by 80 per cent.
or more of the votes of all Committee Members (after
consultation with the Director) are exceptional.
8.5.2 In respect of all its requirements for electricity which a
Supplier wishes to purchase from Pool Members, the Supplier
shall purchase the same pursuant to this Agreement, provided
that nothing in this Agreement shall prevent or restrict the
purchase by a Supplier otherwise than pursuant to this
Agreement:-
(a) in circumstances where the Supplier is acting
otherwise than in its capacity as a consumer, of all
or part of that output of electricity from any
Generating Unit which is not required to be sold to
Pool members pursuant to Clause 8.5.1 or of
electricity which has been purchased by an External
Pool Member at its associated External
Interconnection as an export from the NGC
Transmission System pursuant to this Agreement;
(b) in circumstances where the Supplier is acting in its
capacity as a consumer:-
(i) of electricity from any Supplier which has
purchased that electricity pursuant to this
Agreement; or
(ii) of such output of electricity as is referred to
in paragraph (a) above; or
(c) in circumstances where the Supplier is a Supplier
holding a PES Licence and is acting in its capacity
as a PES, of electricity from any Supplier which is a
Supplier holding a PES Licence, which operates a
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Distribution System directly connected to the
Distribution System operated by the Supplier first
mentioned in this paragraph (c) and which has
purchased that electricity pursuant to this
Agreement; or
(d) in circumstances which the Executive Committee
resolves by a vote passed by 80 per cent or more of
the votes of all Committee Members (after
consultation with the Director) are exceptional,
from any person.
For the purposes of this Clause 8.5.2 a "consumer" means a
person who purchases electricity from a Supplier for its own
consumption at premises owned or occupied by that person.
8.6 Restrictions applicable to non-Pool Members: save as otherwise
expressly provided, a Party which is not a Pool Member shall not be
entitled to any of the rights and benefits accorded to Pool Members
under this Agreement.
8.7 Resignation: subject as provided in Clause 8.8:-
8.7.1 a Party (other than the Settlement System Administrator, the
Pool Funds Administrator, the Grid Operator, the Ancillary
Services Provider and each Externally Interconnected Party)
shall be entitled at any time to resign as a Party by
delivering a Resignation Notice to the Secretary; and
8.7.2 such resignation shall take effect 28 days after receipt of
the Resignation Notice by the Secretary.
Promptly after receipt of a duly completed Resignation Notice from a
Party, the Secretary shall notify (for information only) all of the
other Parties, the Executive Committee and the Director of such receipt
and of the name of the Party wishing to resign.
8.8 Restrictions on resignation: a Party may not resign as a Party (and
any Resignation Notice delivered pursuant to Clause 8.7.1 shall lapse
and be of no effect) unless:-
8.8.1 as at the date its resignation would otherwise become
effective all sums due from such Party to the Executive
committee or any other Party under (a) this Agreement, (b) the
Funds Transfer Agreement or (c) any agreement entered into
pursuant to this Agreement (whether by or on behalf of such
Party) and notified for the purposes of this Clause 8.8 by the
Executive Committee to such Party prior to the date of its
resignation, have been paid in full; and
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8.8.2 it would not be a breach of any Licence condition applicable
to such Party so to resign.
8.9 Release as a Party: without prejudice to Clause 66.7 and its accrued
rights and liabilities and its rights and liabilities which may accrue
in relation to the period during which it was a Party under this
Agreement, the funds Transfer Agreement or any agreement referred to in
Clause 8.8.1(c), upon a Party's resignation becoming effective in
accordance with Clause 8.7:-
8.9.1 such Party (if it is a Pool Member) shall cease automatically
to be a Pool Member;
8.9.2 such Party shall be automatically released and discharged from
all its obligations and liabilities under this Agreement, the
Funds Transfer Agreement and any agreement referred to in
Clause 8.8.1(c); and
8.9.3 each of the other Parties shall be automatically released and
discharged from its obligations and liabilities to such Party
under this Agreement, the Funds Transfer Agreement and any
agreement referred to in Clause 8.8.1(c).
Each Party shall promptly at its own cost and expense execute and
deliver all agreements and other documentation and do all such other
acts, matters and things as may be necessary to confirm such cessation,
release and discharge.
8.10 Withdrawal as a Party: if a Party (the "Withdrawing Party") shall apply
on three occasions to be admitted as a Pool Member pursuant to this
Clause 8 and on each such occasion it is not so admitted by reason of
its failure to fulfil the relevant Pool Membership conditions then with
effect from the date the Withdrawing Party is deemed to receive
notification from the Executive Committee pursuant to Clause 75 that it
has failed for the third time to fulfil such conditions, without
prejudice to Clause 66.7 and its accrued rights and liabilities, and
its rights and liabilities which may accrue in relation to the period
during which it was a Party, under any agreement entered into pursuant
to this Agreement (whether by or on behalf of the Withdrawing Party)
and notified to it for the purposes of this Clause 8.10 by the
Executive Committee prior to the date of its cessation as a Party:-
8.10.1 the Withdrawing Party shall automatically cease to be a Party
and shall be automatically released and discharged from all
its obligations and liabilities under this Agreement and any
such agreement;
8.10.2 each of the other Parties shall be automatically released and
discharged from its obligations and liabilities to the
Withdrawing Party under this Agreement and any such agreement;
and
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8.10.3 each Party shall promptly, at the cost and expense of the
Withdrawing Party, execute and deliver all agreements and
other documentation and do all such other acts, matters and
things as may be necessary to confirm such cessation, release
and discharge.
8.11 External Pool Members: a person who has been admitted as an External
Pool Member shall immediately cease to be a Pool Member (such
cessation to be without prejudice to Clause 66.7) upon either:-
8.11.1 all of its rights under an Interconnection Agreement to use
the relevant External Interconnection(s) for taking or
delivering electricity from or to the NGC Transmission System
having permanently ceased; or
8.11.2 the relevant External Interconnection(s) permanently ceasing
to be connected to the NGC Transmission System.
8.12 Change of capacities: any Pool Member may, upon application to the
Executive Committee and satisfaction of those of the Pool Membership
conditions relevant to its new capacity and such other conditions (if
any) as the Executive Committee may reasonably require, change the
capacity(ies) in which it participates as a Pool Member.
9. GENERAL MEETINGS
9.1 Annual general meeting: once in, and no later than 31st March of, each
year Pool Members shall hold a general meeting as their annual general
meeting in addition to any other meetings of Pool Members in that year,
and notices calling such general meeting shall specify it as the annual
general meeting. At each annual general meeting the Pool Members shall
be required to consider and, where appropriate, resolve upon the
following, namely:-
9.1.1 a report prepared by the Executive Committee on the Settlement
System and its operation during the immediately preceding
year, which report shall include:-
(a) a review of the operation of the Settlement System,
the Accounting Procedure, the accounting procedure
set out in Schedule 15 and the Funds Transfer System
during the immediately preceding year;
(b) a report on the progress of all Works Programmes then
current and of all changes to the operation of the
Settlement System, the Accounting Procedure, the
accounting procedure set out in Schedule 15, the
Funds Transfer System, all revisions to this
Agreement and all enhancements, improvements and
modifications of or to the Specification, the
Hardware or the Software, in each case which have
been undertaken pursuant to this Agreement;
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(c) a review of performance over the immediately
preceding year against the business plan referred to
in Clause 9.1.6; and
(d) such other information or matters as the Executive
Committee shall consider appropriate (including any
proposed revision to this Agreement);
9.1.2 a report prepared by the Pool Auditor on the Settlement System
and its operation during the immediately preceding year, which
report shall include:-
(a) a summary of the audits, reviews, tests and/or checks
referred to in Part IX carried out by the Pool
Auditor during such immediately preceding year;
(b) any recommendation which the Pool Auditor wishes to
make regarding the operation of the Settlement
System, the Accounting Procedure, the accounting
procedure set out in Schedule 15, the ASP Accounting
Procedure and the Funds Transfer System; and
(c) such other information or matters which the Executive
Committee may reasonably require or the Pool Auditor
shall consider appropriate;
9.1.3 all Budgets and reports prepared by the Settlement System
Administrator under Schedule 4 since the date of the
immediately preceding annual general meeting;
9.1.4 the appointment of Committee Members pursuant to Clause 15
(where appropriate, in separate class meetings of Pool
Members);"
9.1.5 such matters as any Pool Member present in person may wish to
raise at such meeting, notice of which has been given to the
Secretary no later than seven days before the date of such
meeting, it being acknowledged and agreed that failure by a
Pool Member so to notify shall not prejudice the right of any
Pool Member to ask questions at such meeting on any matter
then before such meeting;
9.1.6 a business plan prepared by the Executive Committee for the
then current year and the next following four years (or such
shorter period as the Pool Members in general meeting shall
from time to time determine) on the Settlement System and the
Funds Transfer System and their operation and in relation to
all other matters which are the subject of this Agreement;
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9.1.7 the election of the Pool Chairman pursuant to Clause 16; and
9.1.8 such other matters as the Executive Committee sees fit to
propose and of which notice has been given in accordance with
Clause 9.4.1.
9.2 General meetings: all general meetings of Pool Members other than
annual general meetings shall be extraordinary general meetings.
9.3 Calling meetings: all general meetings of Pool Members shall be called
by 14 days' notice in writing at the least, provided that a general
meeting of Pool Members shall, notwithstanding that it is called by
shorter notice, be deemed to have been duly called if it is so agreed
by a majority in number of the Pool Members having a right to
attend and vote at such meeting, being a majority in number together
holding not less than 95 per cent of the Total Votes.
9.4 Convening meetings:
9.4.1 an annual general meeting shall be convened by the Secretary
on the instructions of the Executive Committee and any notice
convening such a meeting shall set out or append details of
any such matters as are referred to in Clause 9.1.8 and shall
be accompanied by a copy of the reports referred to in
Clauses 9.1.1 to 9.1.3 (inclusive) and of the business plan
referred to in Clause 9.1.6. The Secretary shall use its
reasonable endeavours to notify the Pool Chairman and Pool
Members in advance of the relevant annual general meeting of
any such matters referred to in Clause 9.1.8 of which the
Secretary has received notice in accordance with that Clause.
9.4.2 Extraordinary general meetings shall be convened:-
(a) by the Secretary on the instructions of the Executive
Committee or of any one or more Committee Members
pursuant to Clause 13.4; or
(b) by the Executive Committee, forthwith upon receipt of
a Pool Members' requisition being a requisition of
Pool Members holding together at the date of the
deposit of the requisition not less than two
per cent of the Total Votes of all Pool Members; or
(c) by the Secretary on the instructions of the Pool
Chairman.
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9.4.3 A Pool Members' requisition shall state the objects of the
meeting and must be signed by or on behalf of the
requisitionists and deposited at the office of the Secretary,
and may consist of several documents in like form each signed
by one or more requisitionists. If the Executive Committee
does not within 21 days from the date of the deposit of the
requisition proceed duly to convene an extraordinary general
meeting for a date not later than two months after the
said date of deposit, the requisitionists may themselves
convene a meeting, but any meeting so convened shall not be
held after the expiration of three months from such date. A
meeting convened under this Clause 9.4 by requisitionists
shall be convened in the same manner, as nearly as possible,
as that in which meetings are to be convened by the Executive
Committee.
9.5 Notice of general meetings: any notice convening any general meeting of
Pool Member shall be exclusive of the day on which it is served or
deemed to be served and of the day for which it is given, and shall
specify the place, the day and the hour of the meeting and the general
nature of the business of such meeting and shall be given to all
Parties, all Committee Members, the Pool Chairman, the Chief Executive
(if any), the Pool Auditor and the Director. The accidental omission to
give notice of a meeting to, or the non-receipt of notice of a meeting
by, any person entitled to receive notice shall not invalidate the
proceedings at that meeting. In every such notice there shall appear
with reasonable prominence a statement that a Pool Member entitled to
attend and vote is entitled to appoint a proxy to attend, speak and
(subject to Clause 12.1) vote in its place and that a proxy need not
also be a Pool Member.
9.6 Quarterly meetings:
9.6.1 The Secretary shall, on the instructions of the Executive
Committee, convene meetings of Pool Members not less
frequently than once in each Quarter to discuss reports
prepared by the Executive Committee pursuant to Clause 24.2.16
and any other matter of interest which is the subject of this
Agreement. Unless the Executive Committee otherwise
determines, no such meeting shall be convened for the Quarter
in which any annual general meeting is to take place.
9.6.2 The provisions of Clauses 9.3 and 9.5 shall apply, mutatis
mutandis, for the purposes of the notice and the calling of
quarterly meetings pursuant to Clause 9.6.1 as if such
meetings were general meetings of Pool Members and the
provisions of Clause 10.9 shall also apply mutatis mutandis.
Nothing in this Agreement shall prevent a quarterly meeting
being convened also as an extraordinary general meeting.
10. PROCEEDINGS AT GENERAL MEETINGS
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10.1 General: save as provided in Clause 12.8 and Part IV, all business of
Pool Members shall be transacted at general meetings of Pool Members,
the proceedings for the conduct of which are set out in this Clause 10.
10.2 Quorum: no business shall be transacted at any general meeting of Pool
Members unless a quorum of Pool Members is present at the time when the
meeting proceeds to business. Save as herein otherwise provided, a
quorum shall be Pool Members present in person representing:-
10.2.1 50 per cent. or more of the aggregate number of Weighted Votes
to which all Generators are entitled under Clause 11.2.1; and
10.2.2 50 per cent. or more of the aggregate number of Weighted Votes
to which all Suppliers are entitled under Clause 11.2.2
10.3 Lack of quorum: if within half an hour from the time appointed for the
general meeting a quorum is not present, the meeting shall stand
adjourned to the same day in the next week, at the same time and place
or to such other day and at such other time and place as the Executive
Committee may determine and, if at the adjourned meeting a quorum is
not present within half an hour from the time appointed for the
meeting, the Pool member(s) present shall be a quorum.
10.4 Chairman: the Pool Chairman shall preside as chairman at every general
meeting and separate general meeting of Pool Members (other than one
convened to consider his removal) or, if there is no Pool Chairman or
if he shall not be present within 15 minutes after the time appointed
for the holding of the meeting or is unwilling to act or if the
relevant meeting has been convened to consider the removal of the Pool
Chairman, the Chief Executive (if any) shall preside as chairman or, if
the Chief Executive shall not be present or is unwilling to act or if
the relevant meeting has been convened to consider the removal of the
Chief Executive, the Pool Members present shall choose one of their
number to be chairman of the meeting.
10.5 Adjournments: the chairman of the meeting may, with the consent of any
general meeting of Pool Members at which a quorum is present (and shall
if so directed by the meeting) adjourn the meeting from time to time
and from place to place, but no business shall be transacted at any
adjourned meeting other than the business left unfinished at the
meeting from which the adjournment took place. When a meeting is
adjourned for 30 days or more, notice of the adjourned meeting shall be
given as in the case of an original meeting. Save as aforesaid, it
shall not be necessary to give any notice of an adjournment or of the
business to be transacted at an adjourned meeting.
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10.6 Demand for a pool: at any general meeting of Pool Members a resolution
put to the vote of the meeting shall be decided on a show of hands
unless a poll is (before or on the declaration of the result of the
show of hands) demanded:-
10.6.1 by the chairman of the meeting; or
10.6.2 by at least two Pool Members present in person or by proxy; or
10.6.3 by any Pool Member present in person or by proxy and holding
not less than two per cent of the Total Votes of all Pool
Members.
Unless a poll be so demanded a declaration by the chairman of the
meeting that a resolution has on a show of hands between carried or
carried unanimously, or by a particular majority, or lost and an entry
to that effect in the book containing minutes of the proceedings of
general meetings shall be conclusive evidence of the fact without proof
of the number or proportion of the votes recorded in favour of or
against such resolution. The demand for a poll may be withdrawn.
10.7 Timing of poll: except as hereinafter provided in this Clause 10.7, if
a poll is duly demanded it shall be taken in such manner as the
chairman of the meeting directs, and the result of the poll shall be
deemed to be the resolution of the meeting at which the poll was
demanded. A poll demanded on the election of the chairman of the
meeting or on a question of adjournment shall be taken forthwith. A
poll demanded on any other question shall be taken at such time as the
chairman of the meeting directs, and any business other than that upon
which a poll has been demanded may be proceeded with pending the taking
of the poll.
10.8 No casting vote: in the case of an equality of votes, whether on a show
of hands or on a poll, the chairman of the meeting at which the show of
hands takes place or at which the poll is demanded, shall not be
entitled to a second or casting vote.
10.9 Representation of non-Pool Members: each of the Chief Executive
(if any) or his duly appointed representative, the Settlement System
Administrator, the Pool Funds Administrator, the Grid Operator and the
Ancillary Services Provider shall be obliged to attend, and each other
Party, each Committee Member, the Pool Auditor and the Director (or
its or his duly appointed representative) shall have the right to
attend, at each general meeting of Pool Members, and each of them shall
have the right to speak (but not to vote) thereat.
10.10 Minutes: the Secretary shall prepare minutes of all general meetings of
Pool Members and shall circulate copies thereof to all Parties, each
Committee Member, the Pool Chairman, the Chief Executive (if any), the
Pool Auditor and the Director as soon as practicable (and in any event
within ten working days) after the relevant meeting has been held.
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11. VOTING
11.1 Membership Votes: each Pool Member shall be entitled to one vote by
reason of its Pool Membership (its "Membership Vote"),,
11.2 Weighted Votes: subject as provided in Clauses 11.3 and 11.4, in
respect of any Quarter:-
11.2.1 each Pool Member which is a Generator shall be entitled in
that capacity to one vote for each GWh of Genset Metered
Generation of all Generating Units of such Pool Member for all
Settlement Periods falling in the Votes Calculation Period
relative to such Quarter, as determined from the final run of
Settlement (as referred to in paragraph D(3) of the Preamble
to Schedule 9) for each such Settlement Period; and
11.2.2 each Pool Member which is a Supplier shall be entitled in that
capacity to such number of votes as is equal to the total GWh
of Consumer Metered Demand taken by that Pool Member in all
Settlement Periods falling in the Votes Calculation Period
relative to such Quarter, as determined from the final run of
Settlement (as referred to in paragraph D(3) of the Preamble
to Schedule 9) for each such Settlement Period,
11.3 Calculation of Weighted Votes: subject as provided in Clause 11.4:-
11.3.1 New Pool Members:
(a) until the third Quarter Day next falling
after the date of its admission as a Pool
Member, any Party who is admitted as a Pool
Member pursuant to Clause 8.2 shall have
that number of Weighted Votes as fall to be
determined in accordance with the following
provisions of this Clause 11.3.1.
Thereafter, such Pool Member's Weighted
Votes shall be calculated in accordance with
Clause 11.2;
(b) until the third Quarter Day next falling
after the date of admission of the relevant
Pool member as a Pool Member such Pool
Member shall have that number of Weighted
Votes as are accorded to it upon its
admission as a Pool Member by the
Executive Committee (which the Executive
Committee shall do prior to the date of such
admission) who shall have regard to the
factors listed in paragraph (c), (d) and/or
(as the case may be) (e) below or as are
determined by the Director in accordance
with Clause 11.5;
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(c) the factors referred to in paragraph (b)
shall i the case of such Generator:-
(i) the Registered Capacity of all
Generating Units of such Generator;
(ii) the Executive Committee's assessment
of the likely availability of all
such Generating Units for the period
from the date of admission of such
Pool Member as a Pool Member to the
third Quarter Day next falling after
such date, having regard to the
registered Generation Scheduling and
Despatch Parameters or (as the case
may be) Generation Trading Block
Scheduling and Despatch Parameters
for such Generating Units;
(iii) the Executive Committee's assessment
of the likely output of all such
Generating Units during such period
having regard to the output of
Generating Units which in the
Executive Committee's opinion most
nearly correspond to such
Generating Units; and
(iv) the Executive Committee's assessment
of the likely daily station load
associated with the Power Stations
of which such Generating Units form
part during such period.
(d) the factors referred to in paragraph (b)
above shall in the case of a Supplier be the
total GWh which would be supplied by the
relevant Supplier in the period from the
date of admission of such Pool Member as a
Pool Member to the third Quarter Day
next falling after such date on the basis of
its Customers' metered demand or, where such
metered information is not available, the
load profiles of its Customers used for the
purposes of estimating the consumption of
Second Tier Customers; and
(e) the factors referred to in paragraph (b)
above shall in the case of an External Pool
Member be whichever one or more of those
factors referred to in paragraph (c) above
and those referred to in paragraph (d)
above as the Executive Committee considers
to be most readily applicable to the
Generating Units (if any) of such Pool
Member and to the level of demand for Active
Energy of that Pool Member across the
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relevant External Interconnection but as if
the references to Customers in paragraph (d)
were references to that Pool Member's own
requirements:
11.3.2 Calculation: on or prior to each Quarter Day the Executive
Committee shall, on the basis of information to be supplied
by the Settlement System Administrator, calculate the number
of Weighted Votes to which each Pool Member whose Weighted
Votes are to be calculated in accordance with Clause 11.2 is
entitled in its capacity as a Generator or a Supplier for the
Following Quarter, and shall notify each Pool Member and the
Director in writing of the number of Weighted Votes of all
Pool Members in their respective capacities (whether
calculated in accordance with Clause 11.2 or 11.3.1). Subject
to Clause 11.5, the determination of the Executive Committee
as to the number of Weighted votes of each Pool Member shall
(in the absence of manifest error) be final and binding for
all purposes of this Agreement;
11.3.3 Attribution: if a Pool Member shall receive one Weighted
Vote or no Weighted Votes by reason of the calculations
under Clause 11.2 or the foregoing provisions of this Clause
11.2 or the foregoing provisions of this Clause 11.3, such
Pool Member shall nevertheless be accorded two Weighted
Votes;
11.3.4 Rounding: in calculating Weighted Votes in accordance with the
provisions of Clause 11.2 and this clause 11.3, the total GWh
for each Generator or (as the case may be) Supplier shall be
rounded up or down (0.5 being rounded upwards) to the nearest
whole number; and
11.3.5 Information: the information to be supplied by the Settlement
system Administrator referred to in Clause 11.3.2 is:-
(a) in respect of each Generator, the number of GWh
of the Genset Metered Generation for that
Generator for each of the Settlement periods
referred to in Clause 11.2.1; and
(b) in respect of each Supplier, the number of
GWh of the Consumer Metered Demand for that
Supplier for each of the Settlement Periods
referred to in Clause 11.2.2.
11.4 Restrictions on Weighted Votes:
11.4.1 Generators: at no time shall the aggregate number of Weighted
Votes to which Central Power Limited (together with its
affiliates and related undertakings) shall be entitled in its
capacity as a Generator under the foregoing provisions of this
Clause 11 exceed 10 per cent. of the aggregate number of
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Weighted Votes to which all Generators are entitled under the
foregoing provisions of this Clause 11 and the number of
Weighted Votes of Central Power Limited in such capacity
shall, if necessary, be limited accordingly;
11.4.2 Suppliers: at no time shall the aggregate number of Weighted
Votes to which both National Power PLC and PowerGen plc
(together with their respective affiliates and related
undertakings) are entitled in their capacity as Suppliers
under the foregoing provisions of this Clause 11 exceed 10
per cent of the aggregate number of Weighted Votes to which
all Suppliers are entitled under the foregoing provisions of
this Clause 11 and the aggregate number of Weighted votes to
which both such companies ar entitled in that capacity shall
be limited accordingly and the number of weighted votes of
each such company in its capacity as a Supplier shall, if
necessary, be pro rata reduced; and
11.4.3 Cap on Weighted Votes:
(a) at no time shall the aggregate number of
Weighted Votes to which a Generator and its
affiliates and related undertakings which
are also Generators are entitled in their
capacity as Generators under the foregoing
provisions of this Clause 11 exceed 44 per
cent of the aggregate number of Weighted
Votes to which all Generators are entitled
under the foregoing provisions of this
Clause 11 (after taking account of any
limitation required under Clause 11.4.1)
and the aggregate number of Weighted Votes
to which such Generator and all such
affiliates and related undertakings are
entitled in that capacity shall be limited
accordingly and the number of Weighted Votes
of such Generator and all such affiliates
and related undertakings in their capacity
as Generators shall, if necessary, be pro
rata reduced.
(b) At no time shall the aggregate number of
Weighted Votes to which a Supplier and its
affiliates and related undertakings which
are also Suppliers are entitled in their
capacity as Suppliers under the foregoing
provisions of this Clause 11 exceed 44
percent of the aggregate number of Weighted
Votes to which all Suppliers are entitled
under the foregoing provisions of this
Clause 11 (after taking account of any
limitation required under clause 11.4.2)
and the aggregate number of Weighted Votes
to which such undertakings are entitled in
that capacity shall be limited accordingly
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and the number of Weighted Votes of each
Supplier and all such affiliates and related
undertakings in their capacity as Suppliers
shall, if necessary, be pro rata reduced.
(c) If any limitation or reduction pursuant to
paragraph (a) or (b) above would otherwise
result in a Generator or (as the case may
be) a Supplier being accorded other than a
whole number of Weighted Votes, the Weighted
Votes actually accorded to such person shall
be rounded down to the nearest whole number.
11.4.4 Interim arrangement: the Parties acknowledge that the
application of Clauses 11.4.1 and 11.4.2 has been limited to
named companies pending resolution of how (if at all)
restrictions on Weighted Votes should apply to Generators with
second tier supply businesses and to Suppliers with an
interest in a generation business. The Parties agree to use
all reasonable endeavours to reach an agreed resolution to
this issue and to amend this Agreement to give effect thereto
no later than 31st March, 1994 (or such later date as the
Executive Committee may decide).
11.5 Reference to the Director: if any person as is referred to in clause
11.3.1(a) shall dispute the calculation of or the number of Weighted
Votes accorded to it in accordance with Clause 11.3.1, such person may
refer such dispute to the Director for determination, whose
determination as to the calculation of or the number of Weighted Votes
to which such person shall be entitled shall be final and binding for
all purposes of this Agreement.
11.6 Alteration of Weighted Votes: the Director may at any time by notice to
the Executive Committee alter the calculation of Weighted Votes set out
in clauses 11.2.1 and 11.2.2 and/or the restrictions on Weighted Votes
set out in Clause 11.4 if in his opinion such alteration is required to
achieve fair representation for all Pool Members.
11.7 Total Votes: each Pool Member shall be entitled to that
number of votes ("Total Votes") calculated in accordance
with the following formulae:
TV = X + Y
where:
X = A x B
2 x C
Y = A x D
2 x E
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and where:
TV = the number of Total Votes (rounded up or down, 0.5 being rounded up)
to which such Pool Member
A = the greater of C and E and, where C is equal to E, 0
B = the number of Weighted Votes for the time being of
all Pool Members which are Generators, in their
capacity as such (ignoring those Generators whose
voting rights have been suspended pursuant to this
Agreement)
C = the number of Weighted Votes for the time being of all Pool Members
which are Generators, in their capacity as such (ignoring those
Generators whose voting rights have been suspended pursuant to this
Agreement)
D = the number of Weighted Votes for the time being of such Pool Member
in its capacity as a Supplier
E = the number of Weighted Votes for the time being of all Pool Members
which are Suppliers, in their capacity as such (ignoring those
Suppliers whose voting rights have been suspended pursuant to this
Agreement).
11.8 Calculation of Total Votes: on or prior to:
11.8.1 each Quarter Day;
11.8.2 each date upon which a New Party is admitted as a Pool Member;
11.8.3 each date upon which a Pool Member's voting rights have been
suspended or reinstated pursuant to this Agreement; and
11.8.4 each date upon which a Pool Member ceases to be a Party,
the Executive Committee shall calculate for the Following Quarter or
(as the case may be) the remainder of the then current Quarter the
number of Total Votes to which each Pool Member is for the time being
entitled, and shall notify each Pool Member and the Director in writing
if the number of Total Votes of each of the Pool Members. The
determination of the Executive Committee as to the number of Total
Votes of each Pool Member shall (in the absence of manifest error) be
final and binding for all purposes of this Agreement.
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11.9 Records: the Executive Committee shall maintain, and retain for a
period of not less than eight years, a register recording the Weighted
Votes (as a Generator and as a Supplier) and Total Votes of each Pool
Member, which register shall be open for inspection by any Party at the
office of the Secretary during normal business hours.
11.10 Voting on a show of hands: on a show of hands every Pool Member
present in person shall have only its Membership Vote.
11.11 Voting on a poll: on a poll every Pool Member shall have only its
Total Votes. On a poll votes may be given either personally or by
proxy.
11.12 Objections: no objection shall be raised to the qualification of any
voter except at the meeting or adjourned meeting at which the vote
objected to is given or tendered, and every vote not disallowed at
such meeting shall be valid for all purposes. Any such
objection made in due time shall be referred to the chairman of the
meeting whose decision shall be final and conclusive.
12. PROXIES
12.1 Authority: any Pool Member entitled to attend and vote at any general
meeting of Pool Members shall be entitled to appoint another person
(whether a Pool Member or not) as its proxy to attend, speak and vote
in its place, save that a proxy shall not be entitled to vote except on
a poll.
12.2 Authentication of proxy: the instrument appointing a proxy shall be in
writing either under seal or under the had of an officer or attorney
duly authorised. A proxy need not be a Pool Member.
12.3 Deposit of proxy: the instrument appointing a proxy and the power of
attorney or other authority, if any, under which it is signed or
certified copy of that power or authority shall be deposited at the
office of the Secretary or at such other place within the United
Kingdom as is specified for that purpose in the notice convening the
relevant general meeting of Pool Members, not less than 48 hours before
the time for holding the meeting or adjourned meeting, at which the
person named in the insturment proposes to vote, or, in the case of a
poll, not less than 24 hours before the time appointed for the taking
of the poll, and in default the instrument of proxy shall not be
treated as valid.
12.4 Form of proxy (1): an instrument appointing a proxy shall be in the
following form or a form as near thereto as circumstances admit:
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"POOLING AND SETTLEMENT AGREEMENT FOR THE ELECTRICITY
INDUSTRY IN ENGLAND AND WALES dated 30th March, 1990
We, of , being a Pool Member (as defined in the above-mentioned
Agreement), hereby appoint of , or failing him, of , as our
proxy to vote for us on our behalf at the [annual or
extraordinary, as the case may be] general meeting of Pool
Members, to be held on the day of 19 , and at any
adjournment thereof.
Signed this day of 19 ."
12.5 Form of proxy (2): where it is desired to afford Pool Members an
opportunity of voting for or against a resolution the instrument
appointing a proxy shall be in the following form or a form as near
thereto as circumstances admit:
"POOLING AND SETTLEMENT AGREEMENT FOR THE ELECTRICITY
INDUSTRY IN ENGLAND AND WALES dated 30th March, 1990
We, of , being a Pool Member (as defined in the above-mentioned
Agreement), hereby appoint of , or failing him, of , as our
proxy to vote for us on our behalf at the [annual or
extraordinary, as the case may be] general meeting of Pool
Members, to be held on the day of 19 , and at any
adjournment thereof.
Signed this day of 19 .
this form is to be used *in favour of the resolution.
against
Unless otherwise instructed, the proxy will vote as he thinks fit.
*Strike out whichever is not desired."
12.6 Authority to demand a poll: the instrument appointing a proxy shall be
deemed to confer authority to demand or join in demanding a poll.
12.7 Proxy valid: a vote given in accordance with the terms of an instrument
of proxy shall be valid notwithstanding the previous revocation of the
proxy or of the authority under which the proxy was executed, provided
that no intimation in writing of such revocation shall have been
received by the Secretary at his office before the commencement of the
meeting of adjourned meeting at which the proxy is used.
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12.8 Resolution in writing: a resolution in writing signed by all the Pool
Members for the time being entitled to receive notice of and to attend
and vote at general meetings of Pool Members (or by their duly
authorised representatives) shall be as valid and effective as if the
same had been passed at a general meeting of Pool Members duly convened
and held and may consist of several instruments in like form and
executed by or on behalf of one or more Pool Members.
12.9 Corporations acting be representives at meetings: any company,
corporation, partnership, firm joint venture, trust, association or
other organisation which is a Pool Member may be resolution of its
directors or other governing body authorise such person as it thinks
fit to act as its representative at any general meeting of Pool
Members, and references in this Agreement to a Pool Member acting in
person (howsoever expressed) shall be deemed to include Pool Members
acting by their duly authorised representatives.
13. MATTERS RESERVED TO THE GENERAL MEETING: CLASS RIGHTS
13.1 Matters reserved generally:
13.1.1 as between the Pool Members each of the matters referred to
in Clause 13.1.2 shall require the prior approval of Pool
Members in general meeting before effect is given to same,
such approval to be (subject as provided in Clause 27.3) by
resolution of Pool Members passed by not less than 65 percent
of the Membership Votes of such Pool Members as (being
entitled to do so) vote in person or by proxy at a general
meeting of Pool Members of which notice specifying the
intention to propose the resolution has been duly given.
13.1.2 The matters referred to in Clause 13.1.1 are:
(a) the removal of the Settlement System Adminstrator;
(b) the appointment and removal of the Pool Auditor;
(c) any amendment to or variation of this
Agreement (other than any amendment or
variation referred to in Clause 13.2.1,
13.2.2 or 13.2.3 or any amendment of or
variation to Schedule 9 (including any
amendment thereto made pursuant to Clause
56.2) or to Schedule 15);
(d) the approval pursuant to Clause 5.8 of any
Recommendation and pursuant to Clause 5.11 of any
Works Programme and any
approval pursuant to clause 5.14;
(e) the appointment and removal of the Pool Chairman;
and
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(f) such other matters (not being matters
referred to in clause 9.1.8) which are
otherwise designated under this Agreement
for reference to the Pool Members in general
meeting.
13.2 Matters reserved to particular classes of Pool Members:
13.2.1 as between the Pool Members any amendment to or variation of
this clause 13.2 shall require the prior approval of the
Generators in separate general meeting.
13.2.2 As between the Pool Members each of the following matters
shall require the prior approval of the Suppliers in separate
general meeting:
(a) any change prior to 1st April, 1994 to the
standards of accuracy of Metering Equipment
required for Second Tier Customers up to (and
including) 1MW;
(b) any change prior to 1st April, 1998 to the
standards of accuracy of Metering Equipment
required for Second Tier Customers up to (and
including) 100kW;
(c) any amendment to or variation of Part XI and/or
Schedule 18; and
(d) any amendment to or variation of this Clause 13.2.
13.2.3 As between the Pool Members any amendment to or variation of
Clause 10.2, 10.6, 13.4, 13.5, 15.2, 15.3, 15.4, 15.5, 15.8,
16.2, 19.2, 22 or 83, Schedule 14 or this Clause 13.2 shall
require the approval both of the Generators in separate
general meeting and of the Suppliers in separate general
meeting.
13.2.4 To every separate general meeting referred to in this Clause
13.2 the provisions of this Part III relating to general
meetings of Pool Members (other than Clause 10.9, save in
respect of the attendance by the Pool auditor or the Director
or its or his duly appointed representative) shall apply
mutatis mutandis but so that:
(a) in the case of the Generators, the necessary
quorum shall be two Pool Members of that class;
(b) in the case of the Suppliers, the necessary
quorum shall be eight Pool Members of that class;
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(c) the reference in clause 10.6.3 to Total Votes
shall be substituted by a reference to Weighted
Votes; and
(d) notice of any such separate general meeting need
be given only to those entitled to attend the
same,
and any resolution put to any such separate general
meeting shall, to be passed, require (in the case of
the Generators) 75 percent and (in the case of the
Suppliers) a simple majority of the total Membership
Votes or (as the case may be) Weighted Votes of such
Pool Members as (being entitled to do so) vote in
person or by proxy at such separate general meeting
of which notice specifying the intention to propose
the resolution has been duly given.
13.3 Provisions cumulative: the provisions of Clauses 13.1 and 13.2 are
cumulative and not exclusive one of the other.
13.4 Executive Committee's referral: in the event of receipt by the
Secretary from one or move of the Committee Members of a request that
any matter resolved upon a poll by the Executive Committee (or upon
which it has been unable or has refused to resolve other than where the
taking of a vote has ben deferred pursuant to Clause 22.1) be remitted
to the Pool Members in general meeting, such request having been
received no later than five working days after the date on which the
results of such poll were notified to Committee Members (exclusive of
the date on which notice was given) (or, as the case may be, the date
of its failure or refusal so to resolve), the matter the subject of the
relevant resolution shall be remitted to the Pool Members in general
meeting and, pending the decision of Pool Members in general meeting,
such resolution shall not have effect. The provisions of this Clause
13.4 are subject to the provisions of Clause 61.9.
13.5 Dissentient Pool Member's right of appeal:
13.51. any Pool Member who:
(a) voted against a resolution passed or in favour of
a resolution not passed by Pool Members in general
meeting; or
(b) voted against a resolution passed or in favour of
a resolution not passed by Generators or (as the
case may be) Suppliers in separate general
meeting; or
(c) is directly affected by Pool Creditors
passing or failing to pass a resolution of
Pool Creditors (but only where such
resolution does not concern the enforcement
or non-enforcement of any payment
obligation),
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and each Externally Interconnected Party (not being a
Pool Member) (each such Pool Member a "Dissentient
Pool Member", which expression shall include each
such Externally Interconnected Party) shall be
entitled within ten working days after the date of
such resolution to apply in writing to the Director
seeking a ruling that the relevant resolution shall
or shall not have effect on the grounds that either:
(i) the interests of a group of Pool Members
(including the Dissentient Pool Member) or
of the Dissentient Pool Member under this
Agreement have been, are or will be unfairly
prejudiced by the passing of or the failure to
pass such resolution; or
(ii) such resolution will breach, or will cause
the dissentient Pool Member to be in breach
of, one or more provisions of this Agreement
or of its License or of the Act.
Any such application shall give detailed reasons and
evidence in support and shall be copied to the
Executive Committee. The Dissentient Pool Member
shall be entitled to mark all or any part of such
application as confidential and the Executive
Committee shall give such weight as its sees fit to
such marking in the copying of such application to
those persons to whom it is obliged to copy such
application. The Executive Committee shall promptly
notify all other Pool Members, each Externally
Interconnected Party (not being a Pool Member), the
Pool Chairman, the Settlement System Administrator
and the Pool Funds Administrator of receipt of such
application. At the same time as the Executive
Committee shall notify all such other Pool Members,
each Externally Interconnected Party (not being a
Pool Member), the Pool Chairman, the Settlement
System Administrator and the Pool Funds Administrator
of such receipt, the Executive Committee shall send
each of them a copy of the relevant application
(amended, if appropriate, to take account of any such
marking where the Executive Committee shall have seen
fit so to do). The Executive Committee, each Pool
Member, each Externally Interconnected Party (not
being a Pool Member), the Pool Chairman, the
Settlement System Administrator and (if invited by
the Director) the Pool Auditor shall each be entitled
to make representations to the Director. If the Pool
Auditor shall be so invited to make any such
representations, the Executive Committee will provide
it with a copy of the relevant application (amended,
if appropriate, as aforesaid).
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13.5.2 Any determination of the Director in respect of any such
application as is referred to in Clause 13.5.1 shall be final
and binding. Pending any determination of the Director in
respect of any such application, the relevant resolution
(if passed) shall not have effect provided that, if the
Director shall decline to accept a reference or to make a
determination (in either case, for whatsoever reason), such
resolution shall take effect from the date that the Director
notifies the Executive Committee that he declines to accept
the reference or to make the determination.
13.5.3 The Parties acknowledge and agree that the satisfaction of
either of the grounds referred to in Clause 13.5.1(i) or (ii)
shall not of itself entitle the Dissentient Pool Member to a
determination by the Director in its favour.
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PART IV
THE EXECUTIVE COMMITTEE
14. ESTABLISHMENT OF THE EXECUTIVE COMMITTEE
14.1 Establishment: the Pool Members hereby establish the Executive
Committee upon the terms and subject to the conditions of this
Agreement.
14.2 1993/4 Committee Members:
14.2.1 at 1st December, 1993 the Committee Members for the Generators
are:
(a) Roger Witcomg, deemed appointed by National Power PLC
pursuant to Clause 15.2.4(a);
(b) Graham Thomas, deemed appointed by PowerGen plc pursuant
to Clause 15.2.4(a);
(c) Andrew Clements, deemed appropriate by Nuclear electric
plc pursuant to Clause 15.2.4(a);
(d) Roger Booth, deemed appointed pursuant to
Clause 15.2.4(b) by those Generators who
were Pool Members as at 1st april, 1993
(other than National Power PLC, PowerGen
plc, Nuclear Electric plc and Small
Generators but including Central Power
Limited); and
(e) David Porter, deemed appointed by Small
Generators who were Pool members as at 1st
April, 1993 (other than Central Power
Limited) pursuant to Clause 15.2.4(c).
14.2.2 at 1st December, 1993 the Committee Members for the Suppliers
are:
(a) Graham Fowler, appointed for Group A;
(b) Michael Mackey, appointed for Group B;
(c) Malcolm Chandler, appointed for Group C;
(d) Jim Keohane, appointed for Group D; and
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(e) Edwyn Cumberland, deemed appointed by those
Independent Suppliers who were Pool Members
as at 1st April, 1993 pursuant to Section 6
of Schedule 14.
14.3 Deemed appointments: those Committee Members who according to Clause
14.2 were deemed appointed shall be treated for allpurposes of this
Agreement as having been duly appointed in accordance with the
provisions of this Part IV by the persons who are stated in that Clause
to have made the relevant appointment. In the case of any deemed
appointment by Generators of a Committee Member the provisions of
Clauses 15.3.1(c) and 15.3.2(b) shall not apply to any removal of such
Committee Member or (as the case may be) appointment of a substitute
Committee Member.
15. MEMBERSHIP OF THE EXECUTIVE COMMITTEE
15.1 Membership: Committee Members shall be appointed and removed
in accordance with the following provisions of this Clause
15.
15.2 Right to appoint (Generators):
15.2.1 subject to Clauses 15.6, 15.7 and 15.8, Generators shall
together have the right to appoint not more than five
Committee Members, such appointments to be made in accordance
with the following provisions of this Clause 15.2.
15.2.2 No later than seven days before each annual general meeting of
Pool Members or, failing election at such meeting, seven days
before an extraordinary general meeting convened for such
purpose each Generator shall be entitled, by notice to the
Executive Committee, to propose one person (a "Nominee") to be
a Committee Member. Any such proposal to be valid shall be
accompanied by a written statement from the Nominee stating
that he is aware of the proposal and would be prepared to
serve as a Committee Member is elected. As soon as practicable
after such seventh day (and in any event before the date of
the annual general meeting or, as the case may be,
extraordinary general meeting) the Executive Committee shall
circulate (or cause to be circulated) to all Generators a list
of all the names of the Nominees and of the Generators who
proposed them. Such list shall also be circulated at the
annual general meeting or, as the case may be, extraordinary
general meeting to all Generators present in person or by
proxy.
15.2.3 The term of office of Committee members appointed by
Generators shall be from 1st April in the year of appointment
to 31st March in the next following year provided that, if the
meeting at which any such Committee Member is appointed is
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held after 1st April, his term of office shall commence from
the time of his appointment. A Committee Member whose term of
office has expired or is to expire shall be eligible for
re-election.
15.2.4 At each annual general meeting or extraordinary general
meeting of Pool Members resolutions shall be put to the
Generators for the election by them of Committee Members from
the list of Nominees referred to in Clause 15.2.2. The
election shall be conducted in such manner as shall give
effect to the following:
(a) on the first round of voting:
(i) each Generator (other than Central
Power Limited) shall be entitled to
vote;
(ii) each Generator shall have its
Weighted Votes (disregarding for
this purpose the restrictions
imposed by Clause 11.4.3(a)); and
(iii) the votes of a Generator and of all
its affiliates and related
undertakings which are also
Generators may only be cast in favor
of one Nominee.
and at the conclusion of the first round the
three Nominees with the highest number of
Weighted Votes cast in their favor shall be
elected Committee Members;
(b) on the second round of voting:
(i) each Generator (not being (A)
Central Power Limited, (B) a
Generator which voted in favour of
one of the three Nominees referred
to in paragraph (a) above or (C) an
affiliate or related undertaking of
such Generator) shall be entitled to
vote; and
(ii) each Generator shall have its
Weighted Votes (disregarding for
this purpose the restrictions
imposed by Clause 11.4.3(a)),
and at the conclusion of the second round
the Nominee with the highest number of
Weighted Votes cast in its favour shall be
elected a Committee Member;
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(c) on the third round of voting, each Small
Generator which did not vote in the first or
the second round of voting shall be entitled
to vote and at the conclusion of the third
round the Nominee with the highest number of
votes cast in its favour shall be elected a
Committee member; and
(d) if in any round of voting there is a tie
between two or more Nominees as to who
should be elected a Committee Member, that
round of voting shall be reheld and, in the
event of another tie, the matter shall be
resolved:
(i) in the case of a tie at any reheld
first or second round of voting, by
lot held in such manner as the
chairman of the meeting shall
decide; and
(ii) in the case of a tie at any reheld
third round of voting, by the
casting vote of the Small Generator
holding the largest number of
Weighted Votes (disregarding for
this purpose the restrictions
imposed by Clause 11.4.3(a)) and
entitled to vote in such third
round.
15.3 Right to remove (Generators):
15.3.1 a Committee Member appointed by Generators or any class of
Generators may be removed at any time by written notice of
removal given to that Committee Member (copied to the
Executive Committee) by or on behalf of that number of those
Generators who:
(a) voted in favour of his appointment;
(b) are Pool Members at such time; and
(c) (disregarding for this purpose the
restrictions imposed by Clause 11.4.3(a))
hold more Weighted Votes than the difference
between:
(i) the number of Weighted Votes cast in
favour of that Committee Member; and
(ii) the number of Weighted Votes cast in
favour of the candidate, in that
round of voting, who received the
next highest number of Weighted
Votes after the Committee Member
being removed (or, if there was no
such candidate, zero).
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15.3.2 If a Committee Member appointed by Generators is removed or
his office is vacated pursuant to Clause 21, a separate
general meeting of Generators shall be convened for the
purpose of appointing a substitute Committee Member. To such
separate general meeting the provisions of Clause 15.2 shall
apply mutatis mutandis but so that only those Generators
which:
(a) are within the class of Generators entitled
to vote in respect of the appointment of the
first-mentioned Committee Member; and
(b) did not (when that first-amended Committee
Member was appointed) by reason of
exercising their rights under Clause 15.2 to
vote for another candidate disenfranchise
themselves from voting in respect of the
appointment of the first-mentioned Committee
Member (unless the candidate in whose favour
those votes were cast was not appointed),
shall be entitled to vote on the appointment of his
successor (and then in accordance with the relevant
paragraph of Clause 15.2.4). Until such successor is
appointed the remaining Committee Members appointed
(or deemed appointed) by Generators shall be entitled
to nominate a successor.
15.4 Right to appoint (Suppliers): subject to Clause 15.6, 15.7 and 15.8,
Suppliers shall together have the right to appoint not more than five
Committee Members, such appointments to be made in accordance with the
provisions of Schedule 14.
15.5 Right to remove (Suppliers): a Committee Member appointed (or deemed
appointed) by Suppliers or any class of Suppliers may be removed in
accordance with the provisions of Schedule 14.
15.6 Director's right to appoint: if at any time there shall be no Small
Generators, the Parties acknowledge and agree that the Director shall
have the right to appoint one person to be a Committee Member to
represent the interests of all Small Generators and to remove from
office any person so appointed by him. The foregoing provisions of this
Clause 15.6 shall apply mutatis mutandis if at any time there shall be
no Independent Suppliers.
15.7 Qualifications on right to appoint:
15.7.1 no person appointed a Committee Member by the Generators (or
any of them) may for the duration of his appointment be
appointed a Committee Member by the Suppliers (or any of them)
and vice versa.
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15.7.2 No person other than an individual shall be appointed a
Committee Member or his alternate.
15.7.3 No person for the time being appointed as Pool Chairman shall
be appointed a Committee Member or his alternate and no person
for the time being appointed a Committee Member or his
alternate shall be appointed as Pool Chairman.
15.7.4 No person for the time being appointed as Chief Executive
shall be appointed a Committee Member or his alternate and no
person for the time being appointed a Committee Member or his
alternate shall be appointed as Chief Executive.
15.8 Number: the maximum number of Committee Members shall not at any tim
exceed ten.
15.9 Alternates:
15.9.1 each Committee Members shall have the power to appoint any
person (who may be an existing Committee Member) to be his
alternate and may at his discretion remove an alternate
Committee Member so appointed. Any appointment or removal of
an alternate Committee Member shall be effected by notice in
writing executed by the appointor and delivered to the
Secretary who shall forthwith notify all other Committee
Members of such appointment. If his appointor so requests,
an alternate Committee Member shall be entitled to receive
notice of all meetings of the Executive Committee or of
sub-committees or sub-groups of which his appointor is a
member and to receive a voting paper on a poll instead of the
appointor. He shall also be entitled to attend, speak and
vote as a Committee Member at any such meeting at which the
Committee Member appointing him is not personally present and
at the meeting to exercise and discharge all the functions,
powers and duties of his appointor as a Committee Member
and for the purposes of the proceedings at the meeting the
provisions of this Part IV shall apply as if he were a
Committee Member. He shall also be entitled to demand a poll
(whether at or after the meeting) pursuant to Clause 22.3, to
carry out consultations with Pool Members contemplated by
Clause 22.9 insofar as his appointor shall be unable to
do so, to act on the instructions of Pool Members duly given
to his appointor and to complete his appointor's voting paper
on a poll on to behalf of his appointor.
15.9.2 Except on a poll, every person acting as an alternate
Committee Member shall have one vote for each Committee Member
for whom he acts as alternate, in addition to his own vote if
he is also a Committee Member. On a poll, an alternate
Committee Member shall be entitled (if his appointor and by
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completion of the appointor's separate voting paper) all of
the votes which his appointor is entitled to cast, in addition
to any votes which the alternate is entitled to cast in his
own capacity if he is also a Committee Member. Execution by an
alternate Committee Member of any resolution in writing of the
Executive Committee shall, unless the notice of his
appointment provides to the contrary, be as effective as
execution by his appointor.
15.9.3 An alternate Committee Member shall ipso facto cease to be an
alternate Committee Member if his appointor ceases for any
reason to be a Committee Member.
15.9.4 References in this Agreement to a Committee Member shall,
unless the context otherwise requires, include his duly
appointed alternate.
16. POOL CHAIRMAN
16.1 Pool Chairman: there shall at all times be a Chairman of the pooling
and settlement arrangements for the electricity industry in England and
Wales established by this Agreement (the "Pool Chairman").
16.2 Appointments, removal and resignation:
16.2.1 (a) The election of the Pool Chairman shall take
place at each annual general meeting of Pool
Members or, failing election at such meeting, at
an extraordinary general meeting of Pool Members
convened for such purpose.
(b) The right to nominate a person to stand for
election as Pool Chairman shall alternate
from year to year between the Committee
Members appointed by Suppliers and the
Committee Members appointed (or deemed
appointed) by Generators.
(c) The procedures for selecting a nominee for
the purposes of paragraph (b) shall be as
agreed between the relevant Committee
Members (having regard to their
responsibilities under Clause 23.2) or,
failing agreement, by simple majority vote
of such Committee Members.
(d) Nominations made pursuant to paragraph (a)
shall be delivered in writing to the
Secretary no later than 21 days prior to the
relevant annual general meeting or (as the
case may be) extraordinary general meeting.
Any such nomination to be valid
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shall be accompanied by a written statement
from the nominee stating that he is aware of
the proposal and would be prepared to serve
as Pool Chairman if elected.
(e) The term of office of the Pool Chairman
shall be from 1st April in the year of his
election to 31st March in the next following
year provided that:
(i) if the meeting at which he is
elected is held after 1st April, his
term of office shall commence from
such date as the Pool Members in
general meeting shall resolve (being
no later than the date of such
meeting); and
(ii) his term of office shall expire
before 31st March is he resigns or
is unable for whatever reason to
continue to act or if a successor
Pool Chairman is elected with a term
of office which Pool Members in
general meeting resolve is to
commence before that date.
(f) If at any time the Pool Chairman shall
resign or be unable for whatever reason to
continue or act, those Committee Members who
were entitled to nominate a candidate for
election at the immediately preceding annual
general meeting shall forthwith do so and
the Executive Committee shall procure that a
general meeting is convened to consider the
election of such candidate as Pool Chairman.
16.3 Functions:
16.3.1 the Pool Chairman shall have and carry out only such duties
and responsibilities and exercise such powers as are expressly
provided in this Agreement. The Pool Chairman shall exercise
all duties, responsibilities and powers impartially.
16.3.2 the Pool Chairman shall liaise with the Chief Executive (if
any) on a frequent and regular basis and on behalf of Pool
Members shall generally monitor the performance by the
Executive Committee of its powers, duties and responsibilities
under this Agreement. The Pool Chairman in his capacity as
Pool Chairman shall have no voting rights under this
Agreement.
16.4 Expenses: the Pool Chairman shall be paid his reasonable travelling,
hotel and incidental expenses of attending and returning from meetings
of the Executive Committee or any sub-committee thereof and any general
meetings and separate
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general meetings of Pool Members and all costs and expenses properly
and reasonably incurred by him in the performance of his duties and
responsibilities under this Agreement. All such costs and expenses
shall be recovered in accordance with the PFA Accounting Procedure.
16.5 Indemnity: the Pool Chairman shall be indemnified and kept indemnified
jointly and severally by those Pool Members for the time being entitled
to appoint and remove the Pool Chairman pursuant to Clause 16.2 (and,
as between the relevant Pool Members, rateably in the proportion which
their respective Contributory Shares bear one to the other at the time
of receipt of the request for indemnification) from and against any and
all costs (including legal costs), charges, expenses, damages or other
liabilities property incurred or suffered by him in relation to his
office as Pool Chairman or the due exercise by him of his powers,
duties and responsibilities as Pool Chairman and all claims, demands or
proceedings arising out of or in connection with the same except any
such costs, charges, expenses, damages or other liabilities which are
suffered or incurred or occasioned by the wilful default or bad faith
of, or breach of duty or trust by, the Pool Chairman. Such Pool Members
shall, upon request, provide the Pool Chairman with a written deed of
indemnity to that effect.
17. CHIEF EXECUTIVE, SECRETARIAT AND SECRETARY
17.1 Chief Executive:
17.1.1 Subject to Clause 15.7.4, a chief executive of the Executive
Committee (the "Chief Executive") shall be appointed and be
subject to removal and replacement by resolution of the
Executive Committee passed by 70 percent or more of the votes
of all Committee Members (after consultation with the Pool
Chairman). The Chief Executive shall be appointed on such
terms and conditions as they see fit.
17.1.2 The Chief Executive shall undertake such duties and
responsibilities and exercise such powers in relation to the
Executive Committee and its activities as the Executive
Committee may from time to time assign to or vest in him.
17.1.3 The Chief Executive shall have the right and shall be obliged
to attend all meetings of the Executive Committee and all
meetings of the Pool Members in general meeting. The Chief
Executive in his capacity as Chief Executive shall have no
voting rights under this Agreement. If for any reason the
Chief Executive is unable to attend any such meeting, he shall
nominate a representative to attend in his place.
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17.1.4 The Executive Committee shall make arrangements for the
remuneration of the Chief Executive and the payment of his
costs and expenses and the same shall be recovered in
accordance with the PFA Accounting Procedure or as otherwise
directed by the Executive Committee from time to time.
17.2 Secretariat:
17.2.1 the Executive Committee may from time to time appoint and
remove, or make arrangements for the appointment and removal
of, such personnel as the Executive Committee requires to
assist the Executive Committee, any sub-committee of the
Executive Committee, the chairman of the Executive Committee
or any such sub-committee, the Pool Chairman, the Chief
Executive or the Secretary in the proper performance of its
or his duties and responsibilities, in each such case
upon such terms and conditions as the Executive Committee
sees fit.
17.2.2 Any personnel referred to in Clause 17.2.1 shall undertake
such duties and responsibilities and exercise such powers as
the Executive Committee may from time to time assign to or
vest in him, it or them
17.2.3 The Executive Committee shall make arrangements for the
remuneration of such personnel as are referred to in clause
17.2.1 and the payment of their costs and expenses and the
same shall be recovered in accordance with the PFA Accounting
Procedure or as otherwise directed by the Executive Committee
from time to time.
17.3 Secretary:
17.3.1 the Executive Committee may from time to time appoint and
remove, or make arrangements for the appointment and removal
of, the Secretary on such terms and conditions as it sees fit.
17.3.2 The Secretary in his capacity as Secretary shall have no
voting rights under this Agreement.
17.3.3 The Secretary shall have and carry out only such duties and
responsibilities as are expressly provided in this Agreement
and such other reasonable secretarial and administrative
duties and responsibilities as may from time to time be
delegated to it by the Executive Committee. If at any time
there is no Secretary, the responsibilities and duties of the
Secretary under this Agreement shall become those of the Chief
Executive or, if there shall be no Chief Executive, the
Executive Committee until such time as a Secretary is
appointed pursuant to Clause 17.3.1 or a Chief Executive is
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appointed pursuant to Clause 17.1.1 (and notices to the
Secretary under this Agreement shall be re-addressed
accordingly).
17.3.4 The Secretary shall be entitled to receive such remuneration
(if any) as the Executive Committee may from time to time
approve, such remuneration to be paid to it at such times and
in such manner as the Executive Committee shall from time to
time direct and to be recovered in accordance with the PFA
Accounting Procedure or as otherwise directed by the Executive
Committee from time to time. Further, the Secretary shall be
paid its reasonable travelling, hotel and incidental expenses
of attending and returning from meetings of the Executive
Committee or any sub-committee thereof and any general
meetings and separate general meetings of Pool Members and all
costs and expenses properly and reasonably incurred by it in
the performance of its duties and responsibilities under this
Agreement. All such costs and expenses shall be recovered in
accordance with the PFA Accounting Procedure or as otherwise
directed by the Executive Committee from time to time.
17.4 Indemnity:
17.4.1 all Pool Members shall jointly and severally indemnify and
keep indemnified the Chief Executive, the personnel referred
to in Clause 17.2.1, the Executive Committee or any sub-group
established by any such sub-committee (other than a Committee
Member, without prejudice to Clause 23.3.4) (and, as between
the Pool Members, according to their respective Contributory
Shares at the time of receipt of the request for
indemnification) from and against any and all costs
(including legal costs), charges, expenses, damages or other
liabilities properly incurred or suffered by the Chief
Executive in relation to his office as Chief Executive or
(as the case may be) the Secretary in relation to its office as
Secretary or the due exercise by the Chief Executive, the said
personnel, the Secretary or (as the case may be) any such
member of his, their or its powers, duties and
responsibilities under this Agreement and all claims, demands
or proceedings arising out of or in connection with the same
except any such costs, charges, expenses, damages or other
liabilities which are suffered or incurred or occasioned by
the wilful default or bad faith of, or breach of obligation
by, the Chief Executive, such personnel, the Secretary or
(as the case may be) any such member.
17.4.2 The Pool Members undertake to enter into an indemnity in
favour of any employer of the Chief Executive, any personnel
referred to in Clause 17.2.1, the Secretary or (as the case
may be) any such member of any sub-committee of the Executive
Committee or of any sub-group
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established by any such sub-committee as is referred to in
Clause 17.4.1 under which they shall jointly and severally
indemnify and keep indemnified any such employer in respect of
all acts and omissions of the Chief Executive, such personnel,
the Secretary or (as the case may be) any such member in the
performance of his, their or its rights, powers, duties and
responsibilities under this Agreement (and, as between the
Pool Members, according to their respective Contributory
Shares at the time of receipt of the request for
indemnification under the relevant indemnity).
18. PROCEEDINGS OF THE EXECUTIVE COMMITTEE
18.1 Meetings:
18.1.1 until the second anniversary of the Effective Date meetings of
the Executive Committee (other than special meetings referred
to in Clause 18.1.3) shall be held at least once every month
and thereafter at least quarterly (or, in either case at such
shorter regular intervals as may be agreed from time to time
by the Executive Committee) at such time and place in any
jurisdiction in which any Pool Member is incorporated or
has its principal place of business as may be agreed from time
to time by the Executive Committee (or, in default of
agreement, as stipulated by the Pool Chairman).
18.1.2 Meetings of the Executive Secretary shall be convened by the
Secretary upon giving to the Committee Members, the Pool
Chairman, the Chief Executive (if any), the Settlement System
Administrator, the Director and the Pool Auditor and (where
matters the subject of the agenda referred to in Clause
18.1.4 concern directly the functions, duties or
responsibilities of any Externally Interconnected Party(not
being a Pool Member), the Pool Funds Administrator, the Grid
Operator and/or the Ancillary Services Provider) the relevant
one(s) of them at least five working days' notice of the
place, the day and the hour of the relevant meeting.
18.1.3 Special meetings of the Executive Committee shall be convened
upon the request of any Committee Member, the Pool Chairman or
the Chief Executive. Such request shall be made in writing to
the Secretary and shall state the matters to be considered at
that special meeting. Upon receipt of such request the
Secretary shall convene in accordance with Clause 18.1.2
without delay such special meeting for a date occurring
as soon as practicable thereafter but not less than five nor
more than ten working days after receipt of such request. If
the Secretary shall fail so to convene a special meeting the
Committee member which made such request, the Pool Chairman or
(as the case may be) the Chief Executive may himself convent
a special meeting, but any meeting so convened shall not be
held after the expiration of two months from the date of such
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request. A special meeting convened under this Clause 18.1.3
by a Committee Member, the Pool Chairman or the Chief
Executive shall be convened in the same manner, as nearly as
possible, as that in which meetings of the Executive Committee
are to be convened by the Secretary pursuant to Clause 18.1.2.
18.1.4 Any notice given under Clause 18.1.2 shall be exclusive of the
day on which it is served or deemed to be served and of the
day for which it is given and shall be accompanied by an
agenda of the matters to be considered at the relevant meeting
together with any supporting documents or papers then
available to the Secretary, Any Committee Member may advise
additional matters which he wishes to be considered at such
meeting by notice to all other Committee Members, the Pool
Chairman, the Chief Executive (if any), the Secretary, the
Settlement System Administrator, the Director and the Pool
Auditor and (where such additional matters concern directly
the functions, duties or responsibilities of any Externally
Interconnected Party (not being a Pool Member), the Pool Funds
Administrator, the Grid Operator and/or the Ancillary Services
Provider) the relevant one(s) of them given no later than
three working days before the date of such meeting. Only
matters identified in such agenda or so advised shall be
discussed or resolved upon at such meeting. The accidental
omission to give notice of a meeting or accompanying agenda or
supporting documents or papers to, or the non-receipt of
notice of a meeting or accompanying agenda or supporting
documents or papers by, any person entitled to receive notice
shall not invalidate the proceedings at that meeting.
18.1.5 For any meeting of the Executive Committee, the periods and
methods of notice referred to in the foregoing provisions of
this Clause 18 may be waived prospectively or retrospectively
with the consent in writing of all such persons as are
entitled to attend the relevant meeting.
18.1.6 The Secretary shall prepare minutes of all meetings of the
Executive Committee and shall provide copies thereof to all
such persons as were entitled to attend the relevant meeting
as soon as practicable (and in any event within ten working
days) after the relevant meeting has been held. Each person
who attended such meeting shall notify his approval or
disapproval of the minutes thereof to the Secretary no later
than ten working days after receipt thereof and, if he fails
to do so, he or it shall be deemed to have approved the same.
The Secretary shall record any such disapproval in the
minutes unless the same shall have been withdrawn or the
minutes amended with the agreement of the Executive
Committee. The Secretary shall provide copies of
minutes of meetings of the Executive Committee to any other
Party within a reasonable time after request therefor provided
that the said time for approving or disapproving the same has
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expired. Further, the Secretary shall provide copies of such
minutes to such persons as the Executive Committee may from
time to time direct within a reasonable time after receipt of
such direction.
19. CONDUCT OF EXECUTIVE COMMITTEE MEETINGS
19.1 General: Chairman:
19.1.1 subject as provided in Clauses 13, 18, and 22 and this Clause
19, the Executive Committee may meet for the transaction of
business, and adjourn and otherwise regulate its meetings, as
it shall see fit.
19.1.2 The Pool Chairman shall preside as chairman at every meeting
of the Executive Committee provided that:
(a) if the Pool Chairman is unable to attend any
meeting, he shall nominate another
individual to preside as chairman at that
meeting in his place. Such individual shall
be a director or senior executive of one of
the Pool Members entitled under Clause
16.2.1 to appoint the next successor Pool
Chairman, but shall not be a Committee
member or an alternate for any Committee
Member; and
(b) if there is no Pool Chairman or the Pool
Chairman or his duly appointed nominee shall
not be present within 15 minutes after the
time appointed for the holding of the
meeting or the Pool Chairman is unwilling to
act, the Committee Members present may
appoint one of their number to be chairman
of the meeting.
19.1.3 The chairman of the meeting in his capacity as chairman shall
not have any vote at meetings of the Executive Committee.
19.2 Quorum:no business shall be transacted at a meeting of the Executive
Committee unless a quorum is present at the time the meeting proceeds
to business. Three Committee Members appointed pursuant to Clause 15.2
and three Committee Members appointed pursuant to Clause 15.4 present
in person or by their respective alternates shall constitute a quorum.
19.3 Lack of quorum: if within half an hour from the time appointed for
holding any meeting of the Executive Committee, a quorum is not
present, the meeting shall be adjourned to the same day in the next
week at the same time and place and if at the adjourned meeting a
quorum is not present within half an hour from the time appointed for
holding the meeting, those present shall constitute a quorum.
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19.4 Representation of non-Committee Members: each of the Settlement System
Administrator, the Pool Chairman, the Director and the Pool Auditor
(or its or his duly appointed representative) shall have the right to
attend and speak (but not to vote) at meetings of the Executive
Committee. Each Externally Interconnected Party (not being a Pool
Member) and each of the Pool Funds Administrator, the Grid
Operator and the Ancillary Services Provider (or its duly appointed
representative) shall be entitled to attend and speak (but not vote) at
meetings of the Executive Committee only where matters directly
concerning its functions, duties or responsibilities have been
identified or advised as provided in Clause 18.1.4 or if so requested
by the Executive Committee. The Chief Executive (or his duly appointed
representative) shall have the right to attend and speak (but not vote)
at meetings of the Executive Committee and shall be obliged so to
attend.
19.5 Written resolutions: a resolution in writing, executed by or on behalf
of each Committee Member, shall be as valid and effectual as if it had
been passed at a meeting of the Executive Committee duly convened and
held and may consist of several instruments in like form and executed
by or on behalf of one or more of such Committee Members. Any proposed
resolution in writing shall be circulated to all those persons who
would have been entitled to attend a meeting of the Executive Committee
at which such resolution could properly have been passed.
19.6 Default in appointment: all acts done by any meeting of the Committee
Members or of a sub-committee of the Executive Committee shall,
notwithstanding that it be afterwards discovered that there was some
defect in the appointment of such Committee Member, be as valid as if
such person had been duly appointed.
20. DELEGATION
20.1 Sub-Committees: the Executive Committee may establish sub-committees.
Each sub-committee:
20.1.1 shall be composed of such persons (whether or not Committee
Members) and shall discharge such rights, powers, duties and
responsibilities as from time to time the Executive Committee
considers desirable to delegate to it; and
20.1.2 in the exercise of its rights and powers and the performance
of its duties and responsibilities delegated to it by the
Executive Committee shall at all times conduct itself and its
affairs in a manner which it considers best designed to give
effect to the principal objects and purpose set out in Clause
4.1.2 and to promote, and not obstruct, the fair and efficient
operation of the procedures referred to in Clause 4.1.3 so
that the objectives set out in Clause 4.1.3 are thereby
achieved; and
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20.1.3 shall be given written terms of reference and, unless
otherwise varied by the Executive Committee, the provisions of
Clauses 18 and 19 shall apply mutatis mutandis to meetings of
such sub-committee and the provisions of Clauses 19.4, 23.3.1,
23.2.2, and 23.3.3 shall apply mutatis mutandis in relation to
any such sub-committee and the members thereof; and
20.1.4 may establish sub-groups to assist in the discharge of the
rights, powers, duties and responsibilities of such
sub-committee, each of which sub-groups shall be given written
terms of reference and, unless otherwise varied by the
Executive Committee or any sub-committee acting on the
authority of the Executive Committee, the provisions of
Clauses 18 and 19 shall apply mutatis mutandis to meetings of
such sub-groups and the provisions of Clauses 23.3.1, 23.3.2,
and 23.3.3 shall apply mutatis mutandis in relation to each
such sub-group and the members thereof.
20.2 Nominees: upon written request of the Executive Committee each Pool
Member and the Settlement System Administrator shall:
20.2.1 nominate one or more persons knowledgeable in the matters
referred to, or the subject of consideration by, the relevant
sub-committee to attend at meetings of, and otherwise
participate as a member of, any sub-committee established by
the Executive Committee; and
20.2.2 procure that such nominee(s) shall so attend and participate
at such time or times as the Executive Committee os such
sub-committee may require,
provided that a Pool Member shall not be required in any period of 12
months to make available nominees for more than 60 days in aggregate.
Save as provided by Clause 25.3 no payment shall be made in respect of
any such attendance or participation.
20.3 Member's responsibilities: to the extent not inconsistent with the
provisions of Clauses 20.1.1, 20.1.2 and 20.1.3 a member of any
sub-committee established by the Executive Committee shall be free to
represent the interests of the person or persons which nominated him
to that sub-committee but each such person acknowledges and agrees
the subordination of those interests to the responsibilities of such
sub-committee under Clause 20.1.2.
20.4 Chief Executive: the Executive Committee may from time to time
delegate all or any of its rights, powers, duties and responsibilities
under this Agreement to the Chief Executive upon such terms and
conditions as the Executive Committee thinks fit.
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20.5 Effect of decisions: resolutions of sub-committees shall not have
binding effect (a) unless and then only to the extent that the
Executive Committee shall have delegated the relevant decision-making
powers to the sub-committee, or (b) unless approved by resolution of
the Executive Committee (and then subject to Clause 13). Meetings of
such sub-committee shall, so far as possible, be arranged so that
minutes of such meetings can be circulated to each Committee Member in
sufficient time for consideration before the next following regular
meeting of the Executive Committee. Resolutions of sub-groups shall not
have binding effect. The Executive Committee shall remain at all times
responsible for the actions of all its sub-committees and sub-groups.
20.6 Other delegation: subject to any direction to the contrary by Pool
Members in general meeting but without prejudice to the Executive
Committee's rights under Clauses 20.1 and 20.4, the Executive Committee
may from time to time delegate in any particular case all or any of its
rights, powers, duties and responsibilities under this Agreement,
including any decision-making powers and the conduct of any review or
consultation and the preparation and submission of any report required
of it under this Agreement, to such person or persons as it thinks fit
and on such terms and conditions as it thinks fit and shall require
that, in the performance of the delegated duties, such person or
persons shall conform to any regulations that may be imposed on it or
them by the Executive Committee.
21. VACATION OF OFFICE BY COMMITTEE MEMBERS
The office of a Committee Member shall be vacated if:
21.1 he resigns his office by notice delivered to the Secretary; or
21.2 he becomes bankrupt or compounds with his creditors generally;
or
21.3 he becomes of unsound mind or a patient for any purpose of any
statute relating to mental health; or
21.4 he and his alternate fail to attend more than three
consecutive meetings of the Executive Committee; or
21.5 he is removed from office pursuant to Clause 15.3, 15.5 or
(as the case may be) 15.6.
22. VOTING
22.1 Voting: the chairman of the relevant meeting of the Executive Committee
and any Committee Member may demand that any question or matter arising
at a meeting of the Executive Committee be put to a vote of Committee
Members. Any vote so demanded shall be taken forthwith or at such other
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time as such chairman directs not being later than the date of the next
meeting of the Executive Committee. Any demand for a vote may, before
the vote is taken, be withdrawn.
22.2 Simple majority: subject as provided in Clauses 22.3 to 22.11, any
question or matter arising at a meeting of the Executive Committee
shall be decided by a simple majority of the votes cast at the meeting
by Committee Members. On any such question or matter each Committee
Member shall be entitled to one vote. In the event of an equality of
votes on any resolution put to the Executive Committee, the matter the
subject of the relevant resolution shall be remitted to the Committee
Members for decision on a poll.
22.3 Demand for a poll: in respect of any matter or question which is put
to a vote of Committee Members a poll may be demanded (before or after
the simple majority vote) either:
22.3.1 at the meeting at which the simple majority vote takes place,
by the chairman of the meeting or by any Committee Member; or
22.3.2 by no later than five working days after such meeting, by
notice in writing to the Secretary by any Committee Member
(whether or not present at the relevant meeting).
22.4 Effect of decision: a decision duly made at a meeting of the Executive
Committee shall (unless otherwise determined by the Executive Committee
or otherwise provided by the terms of the decision) have immediate
effect, unless a poll be duly demanded in accordance with Clause 22.3,
in which case, pending the outcome of the vote on a poll, the decision
shall cease to or shall not have effect.
22.5 Conduct of a poll: the Secretary shall without delay following the
demand for, or the remittance of a matter for decision on, a poll
dispatch to each Committee Member a voting paper in such form as shall
be agreed by the chairman of the Executive Committee meeting at which
the matter in question was considered or (failing him) the Chief
Executive but which shall in any event set out the full text of the
resolution in respect of which the poll is required (which shall be the
same as the resolution which was put to a simple majority vote), shall
provide for each Committee Member to cast votes for or against the
resolution and shall specify the date by which votes must be lodged
by Committee Members. The Secretary shall at the same time give
notice to all Parties that a poll has been demanded and shall specify
in such notice the resolution on which the poll has been called
(if applicable), the identity of the person (or persons) who has
demanded the poll and the date by which votes must be lodged by the
Committee Members. The accidental omission to issue a voting paper or
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to give notice of a poll, or the non-receipt of a voting paper or such
a notice by, any person entitled to receive the voting paper or
(as the case may be) the notice shall not invalidate the conduct of
the poll or the result thereof.
22.6 Votes on a poll: on a vote on a poll:
22.6.1 the Committee Members shall in aggregate be entitled to a
number of votes equal to the number of votes which the Pool
Members would have been entitled to cast on a poll at a
general meeting if such meeting had taken place on the day of
the Executive Committee meeting at which the matter in
question was considered;
22.6.2 the Committee Members appointed (or deemed appointed) by
Generators shall be entitled to cast votes on the following
basis:
(a) each Committee Member nominated by a single
Generator (which for this purpose shall
include affiliates and related undertakings
of a Generator which are also Generators)
and elected on the first round of voting
shall cast the number of votes respectively
attributable to that Generator and to its
affiliates and related undertakings (in each
case, whether as Generators of Suppliers)
in accordance with the written instructions
of that Generator and of each relevant
affiliate and undertaking;
(b) the Committee Members not falling within (a)
above shall have the votes attributable to
all other Generators (not being those
referred to in paragraph (a) above or their
affiliates and related undertakings) and
shall cast such votes in accordance with the
individual written instructions of each such
Generator, but so that no Generator shall be
entitled to instruct that the votes
attributable to it be cast more than once;
22.6.3 the Committee Members appointed by the Suppliers shall be
entitled to cast votes on the following basis:
(a) the Committee Members appointed (or deemed
appointed) by Groups A, B, C and D shall
each cast the votes attributable to the
members of the relevant Group in accordance
with the written instructions of the
individual Suppliers which are members of
that Group;
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(b) the Committee Member appointed on behalf of
the Independent Suppliers shall cast the
votes attributable to the Independent
Suppliers in accordance with the individual
written instructions of each such Supplier;
22.6.4 in the absence of any written instructions from any Generator
or Supplier, a Committee Member shall not be entitled to cast
any votes on behalf of that Generator or Supplier;
22.6.5 a Generator or Supplier may instruct the relevant Committee
Member to abstain from casting any or a specified number of
votes on its behalf;
22.6.6 the votes cast by a Committee Member shall not be valid
unless:
(a) the relevant voting paper shall have been
received by the Secretary on or before the
date falling 14 working days after the date
on which the voting papers were despatched
to Committee Members and the votes cast in
such voting paper accord with the written
instructions referred to in paragraph (b)
below;
(b) accompanied by a copy of the written
instructions given by or on behalf of the
Generator(s) or Supplier(s) whose votes the
Committee Member is entitled to cast;
(c) the Committee Member in other respects shall
have complied with the procedures for votes
on a poll (if any) from time to time
established by the Executive Committee;
22.6.7 any Generator or Supplier on whose instructions a Committee
Member is required to act in accordance with the foregoing
provisions shall be entitled to make arrangements with any
other Generator or Supplier on whose instructions that same
Committee Member is required to act for the requisite written
instructions to be given on its behalf by that other Generator
or Supplier. Details of any such arrangement shall promptly be
given to the Secretary.
22.7 65 per cent. majority: a resolution on a poll shall be decided by a
majority of not less than 65 per cent. of the votes duly cast. The
Secretary shall as soon as reasonably practicable after the expiry of
the 14 working day period for return of voting papers referred to in
Clause 22.6.6(a) ascertain the results of the poll in consultation with
the Pool Chairman or (failing him) the Chief Executive and the Chief
Executive or (failing him) the Secretary shall as soon as practicable
thereafter notify all Parties and all other persons entitled or
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required to attend general meetings of Pool Members of the outcome of
the poll. The result of the poll shall be deemed to be the resolution
of the meeting at which or after which the poll was demanded.
22.8 Withdrawal of demand: any demand for a poll may be withdrawn by the
person who made it at any time provided that notice of withdrawal is
received by the Secretary by no later than the seventh day following
the date of the Executive Committee meeting at which the simple
majority vote took place. The Secretary shall as soon as reasonably
practicable notify all Parties and other persons entitled or required
to attend general meetings of Pool Members of receipt of any such
notice of withdrawal.
22.9 Responsibilities of Committee Members: the Committee Members shall
consult the Pool Members whose votes they are entitled to cast as soon
as reasonably practicable following the demand for a poll and shall be
required to cast, or to refrain from casting, the votes of such Pool
Members in accordance with their individual instructions. The
provisions of Clauses 23.1 and 23.2 shall not apply in respect of any
vote conducted on a poll.
22.10 Referral to general meetings: the provisions of this Clause 22 are
subject to the requirements of referral to the Pool Members in general
meeting described in Clause 13.4.
22.11 Civil emergencies: the provisions of this Clause 22 are subject to the
provisions of Clause 61.9.
23. COMMITTEE MEMBERS' RESPONSIBILITIES AND PROTECTIONS
23.1 Executive Committee's responsibilities: in the exercise of its powers
and the performance of its duties and responsibilities under this
Agreement the Executive Committee shall at all times conduct itself and
its affairs in a manner which it considers best designed to give effect
to the principal objects and purpose set out in Clause 4.1.2 and to
promote, and not obstruct, the fair and efficient operation of the
procedures referred to in Clause 4.1.3 so that the objectives set out
in Clause 4.1.3 are thereby achieved. To the extent not inconsistent
with the responsibilities of the Executive Committee under this Clause
23.1 a Committee Member shall be free to give effect to his
responsibilities under Clause 23.2 but each of the Pool Members whom
such Committee Member represents acknowledges and agrees the
subordination of such Committee Member's responsibilities under Clause
23.2 to the responsibilities of the Executive Committee under this
Clause 23.1
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23.2 Committee Members' responsibilities: in the exercise of his powers and
the performance of his duties and responsibilities as a Committee
Member under this Agreement a Committee Member shall represent:
23.2.1 where he is appointed on the first round of voting under
Clause 15.2.4, the interests of the Pool Member who cst the
most number of votes in favour of his appointment;
23.2.2 where he is appointed on the second or third round of voting
under Clause 15.2.4 or where he is appointed pursuant to
Section 6 of Schedule 14, the interests of all Pool Members
who were entitled to vote on his appointment, (and, for the
purposes of this Clause, until the annual general meeting of
Pool Members in 1995 Central Power shall be deemed to be a
Pool Member who was entitled to vote on the appointment of the
Committee Member appointed on the second round of voting), but
so that he shall not incur personal liability as against one
or more such Pool Members if, acting bona fide, he acts in a
way which gives effect to the interests of one or more other
such Pool Members; and
23.2.3 where he is appointed by Groups A, B, C or D pursuant to
Schedule 14, the interests of all PES Members (as defined in
Schedule 14).
23.3 Protections:
23.3.1 the Executive Committee, each Committee Member, the Pool
Chairman, the Chief Executive (if any) and the Secretary shall
be entitled to rely upon any communication or document
reasonably believed by it or him to be genuine and correct and
to have been communicated or signed by the person by whom it
purports to be communicated or signed and shall not be liable
to any of the Parties for any of the consequences of such
reliance.
23.3.2 The Executive Committee, each Committee Member, the Pool
Chairman, the Chief Executive (if any) and the Secretary may
in relation to any act, matter or thing contemplated by this
Agreement act on the opinion or advice of, or any information
from, any lawyer, banker, valuer, broker, accountant or any
other specialist or professional adviser given within the
field of expertise usually ascribed to persons of such
description or the specialist field of expertise for which he
has been retained and duly instructed so to act by the
Executive Committee, and shall not be liable for the
consequences of so acting. The appointment of any such
adviser to the Executive Committee shall be approved by the
Executive Committee before any such cost is charged to the
PFA Accounting Procedure.
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23.3.3 In the event of any conflict or inconsistency, any directions
and instructions of the Director (which the Director's
entitled under his statutory or regulatory powers to issue or
give) shall prevail over the duties and responsibilities of
the Executive Committee or the Secretary under this Agreement
and no liability whatsoever shall attach to the Executive
Committee or any Committee Member or the Pool Chairman
or the Chief Executive (if any) or the Secretary (as the case
may be) as a result of due compliance by it or him with any
such directions and instructions.
23.3.4 Each Committee Member shall be indemnified and kept
indemnified by that Pool Member or jointly and severally by
those Pool Members whom he represents as provided in Clause
23.2 (and, if more than one, as between the relevant Pool
Members rateably in the proportion which their respective
Contributory Shares bear one to the other at the time of
receipt of the request for indemnification) from and against
any and all costs (including legal costs), charges, expenses,
damages or other liabilities properly incurred or suffered by
him in relation to the Executive Committee or his office as
Committee Member or the due exercise by him or his powers,
duties and responsibilities as a Committee Member and all
claims, demands or proceedings arising out of or in connection
with the same except any such costs and expenses referred to
in Clause 23.4 which have been recovered in accordance with
the PFA Accounting Procedure and any such costs, charges,
expenses, damages or other liabilities which are suffered or
incurred or occasioned by the wilful default or bad faith of,
or breach of duty or trust by, such Committee Member. The
Pool Member or (as the case may be) Pool Members whom he
represents as aforesaid shall, upon request, provide the
relevant Committee Member with a written deed of indemnity to
that effect.
23.4 Committee Members' costs and expenses: each committee Member and each
member of any sub-committee or sub-group of the Executive Committee may
be paid his reasonable travelling, hotel and incidental expenses of
attending and returning from meetings of the Executive Committee or any
such sub-committee or sub-group and shall be paid all expenses properly
and reasonably incurred by him in the conduct of the business of the
Executive Committee or the relevant sub-committee or sub-group or in
the discharge of his duties as a Committee Member or (as the case may
be) a member of the relevant sub-committee or sub-group. All such
expenses shall be recovered in accordance with the PFA Accounting
procedure.
23.5 Committee's costs and expenses: the Executive Committee and each of its
sub-committees and sub-groups shall be entitled to recover all its
costs and expenses reasonably incurred in accordance with the PFA
Accounting Procedure. For this purpose, the costs and expenses of the
Executive Committee shall include the reasonably incurred costs of any
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business accommodation and services required by the Executive
Committee, the Chief Executive, the Secretary or the personnel referred
to in Clause 17.2.1 and the reasonably incurred costs and expenses of
any consultant or adviser retained by the Executive Committee or any
such person in the proper performance of its or his duties and
responsibilities.
24. POWERS OF THE EXECUTIVE COMMITTEE
24.1 General power: subject as otherwise provided in this Agreement, the
Executive Committee shall, as between itself and the Pool Members in
general meeting, exercise overall supervision of the Settlement System
and its operations.
24.2 Specific powers: subject as otherwise provided in this Agreement, the
powers, duties nd responsibilities of the Executive Committee shall,
as between itself and the Pool Members in general meeting, include:-
24.2.1 the specific powers, duties and responsibilities set out in
the Pool Rules;
24.2.2 monitoring on a regular basis the Settlement System
Administrator in its operation of the Settlement System
(including deciding whether to propose to the Pool Members in
general meeting for their approval the removal of the
Settlement System Administrator);
24.2.3 the power to appoint and remove the Pool Funds Administrator
and to carry out the other functions ascribed to it in
Schedules 11 and 15 and to enter into on behalf of Pool
Members any agreement or arrangement with the Pool funds
Administrator (or successor Pool Funds Administrator) in
substitution for that set out in Schedule 15;
24.2.4 monitoring on a regular basis each of the Grid Operator and
the Ancillary Services Provider in the performance of its
obligations under this Agreement;
24.2.5 considering applications by New Parties to be admitted as
parties to this Agreement under Clause 3 and of Parties to be
admitted as Pool Members under Clause 8;
24.2.6 considering, amending, substituting, approving and
disapproving all Agreed Procedures and Codes of Practice
(including commissioning reviews thereof by the Pool Auditor
in accordance with Clause 47.1.5 or by other technical
experts);
24.2.7 where provided in Schedule 4, considering, revising, approving
or disapproving all budgets and authorities for capital
expenditure prepared and submitted to it by the Settlement
System Administrator in accordance with the Accounting
Procedure;
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24.2.8 commissioning and review Value For Money Audits in accordance
with the Accounting Procedure;
24.2.9 the specific powers, duties and responsibilities set out in
Schedule 15;
24.2.10 appointing and removing the Pool Auditor, and
instructing the Pool Auditor to conduct audits,
reviews, tests and checks and the monitoring and
review thereof, all in accordance with Part IX;
24.2.11 opening, maintaining and closing bank accounts for
its own purposes and crediting and debiting sums
thereto;
24.2.12 controlling the development of the Software and/or
the Specification, considering, revising and
approving or disapproving changes to the Software
and/or the Specification, and considering, revising
and approving or disapproving all proposals to change
the Hardware;
24.2.13 controlling the development of the Pool Rules and
considering and approving or disapproving amendments
to the Pool Rules;
24.2.14 commissioning independent reviews of the Scheme and
its operation in accordance with Part XIII;
24.2.15 conducting reviews, preparing Works Programmes and
implementing Transitional Arrangements, all in
accordance with Clause 5;
24.2.16 preparing the reports referred to in Clause 9.1.1 and
the business plan referred to in Clause 9.1.6 and
preparing and despatching regular quarterly reports
to the Parties (with a copy to the Director) in
relation to all matters which are the subject of this
Agreement and in such reports reviewing performance
over the immediately preceding Quarter against the
business plan referred to in Clause 9.1.6;p
24.2.17 considering any representation from any Pool Member
in relation to any regular quarterly report prepared
pursuant to Clause 24.2.16 above or otherwise
relating to any matter which is the subject of this
Agreement;
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24.2.18 overseeing the standards of Metering Equipment and
the Codes of Practice, agreeing in accordance with
paragraph 14 of Schedule 21 dispensations therefrom
and reviewing the need for new standards for
Metering Equipment and, where it considers such new
standards are required, adopting such standards in
accordance with the requirements for adoption of
Codes of Practice (as contained in the definition of
Code of Practice) and in accordance with the
provisions of Schedule 21;
24.2.19 dealing promptly and efficiently with any dispute
referred to it concerning Settlement or its operation
(including with respect to data);
24.2.20 convening in accordance with Clause 9.4 general
meetings of Pool Members or classes of Pool Members
and convening in accordance with Clause 9.6 quarterly
meetings of Pool Members;
24.2.21 appointing, remunerating and removing the Chief
Executive in accordance with Clause 17.1 and, where
permitted by the terms of this Agreement, giving
directions and instructions to the Chief Executive
(if any), the Settlement System Administrator, the
Pool Funds Administrator, the Grid Operator, the
Ancillary Services Provider, Externally
Interconnected Parties (not being Pool Members) and
other persons to carry into effect the decisions of
the Executive Committee or Pool Members in general
meeting or separate general meeting;
24.2.22 if requested by the Director, conveying any direction
or request of the Director to the Settlement System
Administrator, the Pool Funds Administrator, the Grid
Operator, the Ancillary Services Provider or
any other Party or the Pool Auditor;
24.2.23 appointing, remunerating and removing in accordance
with the Grid Code one or more persons to represent
the Executive Committee on the Grid Code Review
Panel;
24.2.24 appointing, remunerating and removing lawyers,
bankers, valuers, brokers, accountants and other
professional and specialist advisers to assist the
Executive Committee or any of its sub-committees in
the performance of its duties and responsibilities
under this Agreement;
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24.2.25 subject to any applicable confidentiality provisions,
monitoring any litigation, arbitration or other
proceedings affecting or which may affect the
Settlement System;
24.2.26 subject to any applicable confidentiality provisions,
advising Pool Members, Externally Interconnected
Parties (not being Pool Members), the Settlement
System Administrator, the Pool Funds Administrator,
the Grid Operator and the Ancillary Services Provider
of decisions of the Executive Committee applicable to
them or the relevant one(s) of them and liaising with
all such persons on an ongoing and regular basis;
24.2.27 advising each of the Pool Auditor and the Director of
decisions of the Executive Committee and of Pool
Members in general meeting or separate general
meeting and liaising with each of the Pool Auditor
and the Director on an ongoing and regular basis;
24.2.28 investigating any complaints made by any Pool Member
concerning the Settlement System, the Funds Transfer
System (or any part or aspect of any thereof), the
Settlement System Administrator, the Pool Funds
Administrator, the Grid Operator, the Ancillary
Services Provider, the Pool Auditor, the Pool Banker
or the Custodian;
24.2.29 approving the Pool Banker and giving instructions
for, or consenting to, the removal of the same;
24.2.30 reviewing and approving or disapproving the
Procedures Manual in accordance with Clause 64;
24.2.31 considering and dealing with any other matter
relating to the Settlement System, the Funds Transfer
System (or any part or aspect of any thereof) or its
or their operation referred to the Executive
Committee by the Pool Members in general meeting or
separate general meeting, any Pool Member, the Pool
Chairman, the Pool Auditor or the Director and any
other matter which is otherwise designated under this
Agreement for reference to it; and
24.2.32 determining the amount of the Second Tier Suppliers'
System Charge for the purpose of Section 6.3 of Part
C of Schedule 4.
24.3 Exclusion of general meeting powers: Pool Members in general meeting
shall have no powers in relation to the matters expressly reserved
under this Agreement to the Executive Committee except to the extent
that such matters are remitted to the Pool Members in general meeting
under Clause 13.4.
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PART V
LIMITATION OF LIABILITY
25. LIMITATION OF LIABILITY
25.1 Limitation of liability: subject to Clause 25.2 and save where any
provision of this Agreement provides for an indemnity, each Party
agrees and acknowledges that no Party (excluding for this purpose the
Settlement System Administrator) (the "Party Liable") or any of its
officers, employees or agents shall be liable to any of the other
Parties for loss arising from any breach of this Agreement other than
for loss directly resulting from such breach and which at the date of
this Agreement was reasonably foreseeable as not unlikely to occur in
the ordinary course of events from such breach in respect of:-
25.1.1 physical damage to the property of any of the other Parties or
its or their respective officers, employees or agents; and/or
25.1.2 the liability of any such other Party to any other person for
loss in respect of physical damage to the property of any
other person.
25.2 Death and personal injury: nothing in this Agreement shall exclude or
limit the liability of the Party Liable for death or personal injury
resulting from the negligence of the Party Liable or any of its
officers, employees or agents and the Party Liable shall indemnify and
keep indemnified each of the other Parties, its officers, employees or
agents from and against all such and any loss or liability which any
such other Party may suffer or incur by reason of any claim on account
of death or personal injury resulting from the negligence of the Party
Liable or any of its officers, employees or agents.
25.3 Exclusion of certain types of loss: subject to Clause 25.2 and save
where any provision of this Agreement provides for an indemnity,
neither the Party Liable nor any of its officers, employees or agents
shall in any circumstances whatsoever be liable to any of the other
Parties for:-
25.3.1 any loss of profit, loss of revenue, loss of use, loss of
contract or loss of goodwill; or
25.3.2 any indirect or consequential loss; or
25.3.3 loss resulting from the liability of any other Party to any
other person howsoever and whensoever arising save as provided
in Clauses 25.1.2 and 25.2.
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25.4 Trust: each Party acknowledges and agrees that each of the other
Parties holds the benefit of Clauses 25.1, 25.2 and 25.3 for itself
and as trustee and agent for its officers, employees and agents.
25.2 Survival: each of Clauses 25.1, 25.2, 25.3 and 25.4 shall:-
25.5.1 be construed as a separate and severable contract term, and if
one or more of such Clauses is held to be invalid, unlawful or
otherwise unenforceable the other or others of such Clauses
shall remain in full force and effect and shall continue to
bind the Parties; and
25.5.2 survive termination of this Agreement.
25.6 Saving: for the avoidance of doubt, nothing in this Part V shall
prevent or restrict any Party enforcing any obligation (including
suing for a debt) owed to it under or pursuant to this Agreement.
25.7 Full negotiation: each Party acknowledges and agrees that the foregoing
provisions of this Part V have been the subject of discussion and
negotiation and are fair and reasonable having regard to the
circumstances as at the date of this Agreement.
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PART VI
THE SETTLEMENT SYSTEM ADMINISTRATOR
26. APPOINTMENT
NGC Settlements Limited is hereby appointed by each Pool Member and
agrees to act as the initial Settlement System Administrator on and
subject to the terms and conditions of this Agreement.
27. RESIGNATION AND REMOVAL
27.1 Resignation: subject:-
27.1.1 to the Settlement System Administrator having demonstrated to
the satisfaction of the Director good cause for its
resignation; and
27.1.2 as provided in Clauses 27.5 and 27.6,
the Settlement System Administrator may at any time on or after the
third anniversary of the Effective Date resign as Settlement System
Administrator having given to the Secretary (who shall forthwith notify
all Pool Members) and the Director not less than 12 months' notice in
writing of its intention so to do.
27.2 Good cause for resignation: examples of good cause for the purposes of
Clause 27.1.1 may include the following:-
27.2.1 a failure on the part of the Settlement System Administrator
(all relevant circumstances being taken into account) to
achieve a reasonable rate of return from the Settlements
Business (not being a failure occasioned by the Settlement
System Administrator's own default, negligence or inefficient
management); and
27.2.2 a failure on the part of the Settlement System Administrator
to receive all or a not insignificant part of its budgeted
income in any Accounting Period, not being:-
(a) a failure which could have been avoided by
proper and efficient debt collection or
could adequately be cured by a provision for
bad debts in the then current or next
succeeding Budget; or
(b) a failure which is remedied within a
reasonable time (and in any event within 120
days) after the Settlement System
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Administrator has given the defaulting Pool
Member(s) and the Executive Committee notice
of such failure and requiring the same to be
remedied.
For the avoidance of doubt, the Parties hereby
acknowledge and agree that an application by the
Settlement System Administrator to the Director to
resign shall not, of itself, constitute good cause.
27.3 Removal: subject:-
27.3.1 to good cause for the removal of the Settlement System
Administrator having been demonstrated to the satisfaction of
the Director; and
27.3.2 as provided in Clauses 27.5 and 27.6.
the Settlement System Administrator may at any time on or after the
third anniversary of the Effective Date be removed as Settlement System
Administrator by:-
(a) resolution of the Pool Members in general meeting
passed by Pool Members holding not less than 80 per
cent. of the Total Votes of Pool Members who are
entitled to vote in person or by proxy at a general
meeting of Pool Members or deemed effective pursuant
to Clause 13.5; and
(b) the giving by the Executive Committee to the
Settlement System Administrator after such resolution
has been passed or deemed effective (which the
Executive Committee shall promptly do) of not less
than 6 months' notice in writing of such removal (or
such other period as the Director may determine in
response to the application made to him for the
purposes of Clause 27.3.1).
27.4 Good cause for removal: examples of good cause for the purposes of
Clause 27.3.1 may include the following:-
27.4.1 the failure by the Settlement System Administrator in any
persistent, material respect or in any single, major respect
to perform or comply with any of the obligations expressed to
be assumed by it under this Agreement and such default (if
capable of remedy) is not remedied within a reasonable period
of time after the Executive Committee has given notice to the
Settlement System Administrator of the occurrence thereof and
requiring the same to be remedied;
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27.4.2 the revocation or determination or cessation in force for any
reason whatsoever of the Condition of the Transmission Licence
applicable to the Settlement System Administrator requiring
the Settlement System Administrator to implement, maintain
and operate a settlement system; and
27.4.3 the Settlement System Administrator:-
(a) is unable to pay its debts (within the
meaning of section 123(1) or (2) of the
Insolvency Act 1986, but subject as
hereinafter provided in this Clause 27.4.3)
or if any voluntary agreement is proposed
in relation to it under section 1 of that
Act or enters into any scheme of arrangement
(other than for the purpose of
reconstruction or amalgamation upon terms
and within such period as may previously
have been approved in writing by the
Executive Committee);
(b) has a receiver (which expression shall
include an administrative receiver within
the meaning of section 29 of the Insolvency
Act of 1986) of the whole or any material
part of its assets or undertaking appointed;
(c) has an administration order under section 8
of the Insolvency Act of 1986 made in
relation to it;
(d) passes any resolution for winding-up other
than a resolution previously approved in
writing by the Executive Committee; or
(e) becomes subject to an order by the High
Court for winding-up.
For the purposes of paragraph (a) above section
123(1)(a) of the Insolvency Act of 1986 shall have
effect as if for "(pound)250,000" and, further, the
Settlement System Administrator shall not be deemed
to be unable to pay its debts for the purposes of
paragraph (a) above if any such demand as is
mentioned in the said section is being contested in
good faith by the Settlement System Administrator
with recourse to all appropriate measures and
procedures.
For the avoidance of doubt, the Parties hereby acknowledge and agree
that a resolution of Pool Members in general meeting to remove the
Settlement Administrator shall not, of itself, constitute good cause.
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27.5 Referral to the Director: the Parties agree that the Settlement System
Administrator shall not be entitled to resign under Clause 27.1 and
shall not be removed under Clause 27.3 unless the Director shall have
notified the Settlement System Administrator and the Executive
Committee (which shall promptly notify all the other Parties)
that he is satisfied that good cause has been demonstrated for
such resignation or removal.
27.6 Appointment of successor: any resignation by or removal of the
Settlement System Administrator pursuant to Clause 27.1 or 27.3 shall
not take effect until a successor Settlement System Administrator shall
have been appointed and shall have accepted such appointment and the
Settlement System Administrator shall continue to perform and discharge
its duties and responsibilities under this Agreement until such
appointment and acceptance. Subject as provided in Clause 27.7:-
27.6.1 during the period of notice of resignation provided in Clause
27.1 the Executive Committee shall have the right to appoint a
successor but, if none is so appointed, the Settlement System
Administrator shall have the right to appoint a successor; and
27.6.2 upon removal of the Settlement System Administrator under
Clause 27.3 the Executive Committee shall have the right to
appoint a successor.
27.7 Approval of the Director: the Parties undertake with each other that no
successor Settlement System Administrator shall be appointed without
the written approval of the Director first having been obtained.
27.8 Discharge: if a successor to the Settlement System Administrator is
appointed under the provisions of Clause 27.6 and accepts such
appointment, the retiring or removed Settlement System Administrator
shall (save as provided in Clause 28 and save as regards any rights and
liabilities accrued as at the date of retirement or removal) be
discharged from any further obligation and shall have no further rights
under this Agreement but shall remain entitled to the benefit of the
provisions of Clauses 32 and 33 and any other provision of this
Agreement providing for an indemnity in favour of the Settlement System
Administrator, and its successor and (save as provided in this Clause
27.8) each of the other Parties shall have the same rights and
obligations amongst themselves as they would have had if such successor
had been a party to this Agreement in place of the retiring or removed
Settlement System Administrator.
28. TRANSFER OF RESPONSIBILITIES AND ASSETS
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28.1 Transfer of responsibilities and assets: upon a successor Settlement
System Administrator being appointed under Clause 27.6 and accepting
such appointment the retiring or removed Settlement System
Administrator shall:-
28.1.1 transfer to such successor all copies of all Software
belonging to the Settlement System Administrator together with
all rights therein vested in the Settlement System
Administrators;
28.1.2 use all reasonable endeavours to novate, or procure the
novation of, any licence or other agreement to use and/or
maintain the Software to such successor;
28.1.3 when no longer reasonably required by the Settlement System
Administrator to perform its duties and responsibilities under
this Agreement, transfer to such successor all Hardware
belonging to the Settlement System Administrator and required
by such successor to carry out such successor's duties and
responsibilities under this Agreement and necessary for the
proper functioning of the Settlement System;
28.1.4 make over to such successor all such records, manuals and data
and other information in the ownership or under the control o
the settlement System Administrator and relating to the
operation, and necessary for the proper functioning, of the
Settlement System, provided that, until such time as no
longer reasonably required by the Settlement System
Administrator for its operation hereunder of the
Settlement System, the Settlement System Administrator may
retain copies of all such records, manuals, data or other
information solely for that purpose;
28.1.5 provide such training and systems support as such successor
may reasonably require and for such period as such successor
may reasonably require to enable such successor to carry out
its duties and responsibilities under this Agreement; and
28.1.6 without prejudice to the foregoing provisions of this Clause
28, transfer or otherwise make available to such successor all
assets (excluding freehold and leasehold property), equipment,
facilities, rights, know-how and transitional assistance which
it possesses and which is necessary for such successor to have
to operate the Settlement System in accordance with this
Agreement and which is not otherwise readily obtainable by
such successor,
in each case on such reasonable terms (other than as to consideration)
as may be agreed between the Settlement System Administrator, such
successor and the Executive Committee (and, in default of agreement,
the dispute shall be referred to arbitration in accordance with Clause
83) and in consideration of the payment of such sums as are referred to
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in Clause 28.2. The Settlement System Administrator further agrees, in
consideration of the payment of such sums as are referred too in Clause
28.2, to co-operate with any such successor and the Executive Committee
so that the transfer of duties, responsibilities, assets and know-how
to such successor is carried out causing as little disruption to the
operation of the Settlement System and inconvenience to the Parties as
is practicable in all the circumstances.
28.2 Costs of transfer:
28.2.1 the consideration referred to in Clause 28.1 is:
(a) in respect of all Software, Hardware,
records, manuals, data and other information
referred to in Clauses 28.1.1, 28.1.3 and
28.1.4, the net book value of the same at
the date of transfer (which net book value
shall not be written up without the prior
written consent of the Executive Committee,
such consent not to be unreasonably withheld
or delayed); and
(b) in respect of the training and systems
support referred to in Clause 28.1.5, the
co-operation referred to in the last
sentence of Clause 28.1 and such other
matters as are within Clause 28.1.6 but not
paragraph (a) above, such reasonable amount
as may be agreed between the Settlement
System Administrator, the successor and the
Executive Committee (and, in default of
agreement, the dispute shall be referred to
arbitration in accordance with Clause 83).
28.2.2 Where, during its appointment under this Agreement as
Settlement System Administrator, the Settlement System
Administrator has at the request of the Executive Committee
purchased assets for use solely for the purposes of the
Settlements Business (not being assets transferred or
to be transferred pursuant to Clause 28.1) the Pool Members
shall use all reasonable endeavours to procure that the
successor to the Settlement System Administrator shall acquire
from the Settlement System Administrator at the Settlement
System Administrator's request all or any of such assets on
such reasonable terms (other than as to consideration) as may
be agreed between the Settlement System Administrator, such
successor and the Executive Committee (and, in default of
agreement, the dispute shall be referred to arbitration in
accordance with Clause 83) and at their respective net book
values at the date of acquisition by such successor (which net
book values shall not be written up without the prior written
consent of the Executive Committee, such consent not to be
unreasonably withheld or delayed).
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28.2.3 (a) With respect to the removal of the Settlement
System Administrator, if in giving notice pursuant to
Clause 27.5 the Director shall state that in his
opinion the removal of the Settlement System
Administrator is not occasioned in any
material respect by fault, negligence or inefficient
management on the part of the Settlement System
Administrator, the Settlement System administrator's
costs and expenses of, or directly associated with,
its removal (including any redundancy or relocation
costs or expenses and any costs and expenses arising
from the vacation or surrender of any premises or
disposal or its own redeployment of any plant or
equipment used in the Settlements Business) (the
"Unwinding Costs") shall be borne as to 50 per cent.
by the Settlement System Administrator and as to 50
per cent. by the Pool Members (and as between the
Pool Members according to their respective
Contributory Shares at the date of removal).
(b) With respect to the resignation of the Settlement System
Administrator, if in giving notice pursuant to Clause
27.5 the Director shall state that in his opinion good
cause has been demonstrated on the basis of the grounds
set out in Clause 27.2.1 or 27.2.2, the Unwinding Costs
of the Settlement System Administrator shall be borne
exclusively by the Pool Members (and as between the Pool
Members according to their respective Contributory Shares
at the date of resignation).
(c) In any other case, the Settlement System Administrator
shall bear all its Unwinding Costs.
28.2.4 Any payment made by all or any of the Pool Members to the
Settlement System Administrator under this Clause 28 shall be
without prejudice to any rights and remedies which the Pool
Members (or any of them) may have against the Settlement
System Administrator arising under this Agreement.
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PART VII
THE SETTLEMENT SYSTEM ADMINISTRATOR'S RESPONSIBILITIES
29. RESPONSIBILITIES
Responsibilities: the Settlement System Administrator shall have the
following general duties, responsibilities and obligations under this
Agreement:-
29.1 The Settlement System: on and subject to the terms and conditions of
this Agreement, compliance with its obligations under this Agreement
in respect of the day-to-day operation of the Settlement System;
29.2 Back-up arrangements: In accordance with such requirements as the
Executive Committee may from time to time notify to it, the maintenance
at one or more sites separate from the site(s) (the "Primary Site")
where the day-to-day operation of the Settlement system is carried out
of up-to-date copies of the software, appropriate computer hardware,
other facilities, records and data such that, upon any breakdown in the
operation of the settlement System at the Primary Site, the day-to-day
operation thereof can be transferred and run from the separate site or
sites at such levels and to such standards of performance as the
Executive committee may from time to time so notify, provided that the
Settlement System Administrator shall not be obliged to take any action
in this regard until the date falling six months after the Effective
date;
29.3 Budgets: compliance with its obligations under Schedule 4;
29.4 Metering: compliance with its obligations under Part XV and
Schedule 21;
29.5 Works Programmes: subject to the availability of resources,
co-operation in the preparation, finalisation and implementation of
all Works Programmes in respect of which the Settlement System
Administrator is not appointed Project Manager;
29.6 Recommendations: at the request of the Executive Committee or of its
own initiative, the recommendation to the Executive Committee of
changes to this Agreement, the Settlement System, the Pool Rules, the
Specification, the Hardware, the Software, the Agreed Procedures and
the Codes of Practice (or any part or aspect of any thereof);
29.7 Instructions: subject as provided in Clause 31.3, the implementation of
all directions and instructions advised to it under this Agreement by
the Executive Committee;
29.8 Records:
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29.8.1 the maintenance of such records, data and other information as
the Pool Auditor may from time to time (after consultation
with the Executive Committee) by notice in reasonable detail
to the Settlement System Administrator require for the
purposes of Part IX or as may otherwise be reasonably
necessary to enable the Settlement System Administrator to
comply promptly and fully with all its obligations under this
Agreement and to facilitate the operation of the Fuel
Security Code; and
29.8.2 the retention in machine readable form for a period of not
less then eight years (or such longer period as the
Executive Committee may from time to time reasonably
require) and in electronic or hard copy form (which for
these purposes shall include microfiche) for a period of not
less than one year of the records, data and other
information referred to in Clause 29.8.1 (such records, data
and other information to include, to the extent not already
included, that specified in Appendix 4 to Schedule 9);
provided that this obligation shall cease to apply to the Settlement System
Administrator which has resigned or been removed to the extent
that it has complied with its obligations under Clause 28.1;
29.9 Provision of information (1): subject to any statutory or Licence
obligations, the provision to the Executive Committee upon request of
reports, data and other information concerning the Settlement System
(other than information which is exclusively confidential to and the
property of the Settlement System Administrator) required by the
Executive Committee and which the Settlement System Administrator is
required to retain under Clause 29.8. Each of the Parties agrees to the
release of all such reports, data and other information in the
circumstances described in this Clause 29.9;
29.10 Provisions of information (s): the provision to the Pool Auditor upon
request of reports, data and other information concerning the
Settlement System required by the Pool Auditor and which the
Settlement System Administrator is required to retain under Clause
29.8. Each of the Parties agrees to the release of all such reports,
data and other information in the circumstances described in this
Clause 29.10;
29.11 Provision of information (3): the provision to each Pool Member and
the Ancillary Services Provider upon request of a certified copy of
such records, data and other information concerning amounts payable
by or to such Pool Member and the Ancillary Services Provider as such
Pool Member may reasonably request for the purpose of establishing
the amounts which are owed to or by such Pool Member in accordance
with this Agreement, and in any event such information as any Pool
Member may request from the Settlement System Administrator in order
to establish or prove a claim to any amounts due or claimed to be
due. The Settlement System Administrator shall provide such
information forthwith upon request or (if so
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required by the Settlement System Administrator) upon delivery of a
certificate from the Pool Member's counsel certifying that such
information is required for such purpose. Each of the Parties agrees
to the release of all such records, data and other information in the
circumstances described in this Clause 29.11;
29.12 Pool Rules: those specific duties and responsibilities ascribed to it
in the Pool Rules:
29.13 Operation of the Settlement System: the operation of the software in
accordance with the Pool rules and the proper employment of the
Hardware in the carrying out of its duties and responsibilities and the
performance of its obligations in respect of its operation of the
Settlement System;
29.14 Arrangements with the Grid Operator and Ancillary Services Provider:
each of the Settlement System Administrator, the Grid Operator and
the Ancillary Services Provider shall make and maintain arrangements
with each other whereby such data and other information as may be
collected or received by any of them or necessary for the purposes of
the Settlement System, the Ancillary Services Business or (as the
case may be and subject to Clause 69) the operation of the NGC
Transmission System or the performance by the Grid Operator of its
obligations under the NGC Transmission Licence shall be provided to
such other(s) to the extent necessary to enable such other(s) to
perform its or their respective obligations under this agreement, the
Grid Code, any Ancillary Services Agreement and/or the NGC
Transmission Licence. Each of the Parties agrees to the release of
all such data and other information in the circumstances described in
this Clause 29.14;
29.15 Arrangements with the Pool Funds Administrator: the Settlement System
Administrator and the Pool Funds Administrator shall make and maintain
arrangements with each other whereby:-
(a) sufficient data and other information is provided by the
Settlement System Administrator to the Pool Funds
Administrator as to enable the Pool Funds Administrator to
perform its obligations under this Agreement and the Funds
Transfer Agreement; and
(b) sufficient data and other information is provided by the Pool
Funds Administrator to the Settlement System Administrator as
to enable the Settlement System Administrator to perform its
obligations under this Agreement.
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Each of the Parties agrees to the release of all such data and other
information in the circumstances described in this Clause 29.15;
29.16 Notification of arrangements: the provision, upon request, to the
Executive Committee of full details of its arrangements for the time
being in effect with each of the Grid Operator, the Pool Funds
Administrator and the Ancillary Services Provider Preferred to in
Clause 29.15 or (as the case may be) 29.15;
29.17 Provision of information (4): the provision to each Pool Member of a
report of the running of the Settlement System for each Settlement
Day. Such report may be provided to each Pool Member by electronic
means via data communication links or in such other manner as is
agreed between the Settlement System Administrator and the relevant
Pool Member.
29.18 Estimates: without prejudice to its obligations under Section 17.8 of
Schedule 11, where the Settlement System Administrator is unable for
whatever reason to provide the Pool Funds Administrator with the
actual information required in respect of each Settlement Day for
each Pool Member and the Ancillary Services Provider, the provision
to the Pool Funds Administrator of its best estimates of that
information by the same time as it was required to provide the actual
information. The Settlement System Administrator shall promptly
notify the Pool Funds Administrator, the Ancillary Services Provider,
each Pool Member, each Externally Interconnected Party (not being a
Pool Member), the Executive Committee, the Pool Auditor and the
Director that the information so provided has been provided on an
estimated, and not actual, basis;
29.19 Provisional determinations: where a provisional determination of any
dispute is required for the purposes of any run of Settlement (as
referred to in paragraph D of the Preamble to Section 9) the same
shall be made by the Settlement System Administrator in accordance
with the relevant Agreed Procedure or, if there is no such Agreed
Procedure, on such basis as the Settlement System Administrator shall
reasonably consider to be appropriate in all the circumstances. If
the Settlement System Administrator shall make any such provisional
determination, it shall promptly notify the Executive Committee in
writing of the same and shall give such details thereof as the
Executive Committee may from time to time request;
29.20 Other: subject to Clause 31.3, generally the carrying out of all such
technical, operative, executive, administrative and advisory services
in connection with the operation of the Settlement System as from
time to time may reasonably be required by the Executive Committee;
29.21 Availability testing: the giving of instructions to the Grid Operator
to conduct Availability Tests (as defined in paragraph 19.1.1 of
Schedule 9), which the Grid Operator undertakes to conduct, all in
accordance with Section 19 of that Schedule.
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30. INSURANCE RESPONSIBILITIES
30.1 Insurance requirements: subject to the availability in the insurance
market of such insurances, the Settlement System Administrator shall
effect and maintain in full force and effect with first class
insurers the following insurances:-
30.1.1 insurance with respect to (a) physical loss or damage to
each of the Hardware (including Second Tier Hardware) and
Software (including Second Tier Software) and (b)
corruption of the Software (including Second Tier
Software) and related computer data, in each case in an
amount equivalent to its replacement cost, except, with
effect from 1st April, 1994, insofar as concerns any
Second Tier Hardware and Second Tier Software owned and/
or operated by any particular Second Tier Agent where
such Second Tier Agent has agreed with the Settlement
System Administrator substantially to the effect, inter
alia, that:
(i) the Second Tier Agent will effect and
maintain in full force and effect with
first class insurers insurance with respect
to (a) physical loss or damage to each of
such Second Tier Hardware and Second Tier
Software and (b) corruption of such Second
Tier Software and related computer data, in
each case in an amount equivalent to its
correction cost;
(ii) the Second Tier Agent shall promptly on
request provide to the Settlement System
Administrator an insurance broker's
certificate having a form and content as
specified in Clause 30.4 and evidence that
the Second Tier Agent has paid the relevant
premiums; and
(iii) if the Second Tier Agent has not so insured
and paid the relevant premiums the
Settlement System Administrator shall, on
behalf of the Second Tier Agent, take out
such insurance and pay such premiums and
recover the cost of the same from the
Second Tier Agent; and
provided that, in the case of (iii) above, where:
(a) the Settlement System Administrator
is aware that the Second Tier Agent
has not so insured in accordance
with (i) above; and
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(b) a period of fourteen days since the
Settlement System Administrator
first became aware that the Second
Tier Agent had not insured in
accordance with (i) above, has
elapsed, during which period the
Second Tier Agent has not so insured
in accordance with (i) above.
the Settlement System Administrator shall so take out
such insurances in the name of such Second Tier Agent
unless, after having sought, to the extent that it is
able, such information from the Second Tier Agent as
is necessary for the purposes of obtaining such
insurances, it has failed to obtain such information;
and
30.1.2 professional indemnity insurance as Settlement System
Administrator in an amount of not less than
"(pound)20,000,000" any one claim and
"(pound)20,000,000" all claims in any one year (or
such other amount as may from time to time be
reasonably required by the Executive Committee after
consultation with the Settlement System
Administrator).
30.2 Costs: all premiums and other sums of money payable in respect of all
insurances effected or to be effected pursuant to Clause 30.1 where
borne by the Settlement System Administrator shall be recovered in
accordance with the Accounting Procedure.
30.3 Application of proceeds: the Settlement System Administrator shall
use all reasonable endeavors:
(i) in the case of insurance where its Second Tier Agent is the
insured, to procure that such Second Tier Agent makes and
collects claims promptly; and
(ii) in the case of insurances where its Second Tier Agent is the
insured, to procure that such Second Tier Agent makes and
collects claims promptly,
and shall apply and, as appropriate, shall procure that its Second
Tier Agent applies, all moneys so received by it in respect of the
insurances referred to in Clause 30.1 in or towards making good the
loss and fully repairing the damage or (as the case may be)
satisfying the relevant liability in respect of which such moneys
were receivable or reimbursing the cost of the same.
30.4 Information requirements: the Settlement System Administrator shall
promptly supply the Executive Committee upon request from time to
time with an insurance broker's certificate in form and content
reasonably satisfactory to the Executive Committee confirming that
cover has been effected, whether by it or its Second Tier Agent, in
respect of the insurances referred to in Clause 30.1 and giving
reasonable details of the terms and conditions of such insurance.
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31. PERFORMANCE OF DUTIES
31.1 Independent contractor: in carrying out its duties and
responsibilities under this Agreement and otherwise in acting as
Settlement System Administrator hereunder, the Settlement System
Administrator shall act as an independent contractor and (unless
expressly authorised to the contrary) shall neither act nor hold
itself out nor be held out as acting as agent for any of the other
Parties.
31.2 Delegation:
31.2.1 subject as provided in Clauses 31.2.2 and 31.2.3 the
Settlement System Administrator may delegate the performance
of all or any of its duties and responsibilities under this
Agreement to agents or contractors.
31.2.2 The Settlement system Administrator shall be entitled to
delegate the performance of all or any of its duties and
responsibilities under this Agreement (not being duties or
responsibilities which are in respect of any significant
matter, unless the prior written approval of the Executive
Committee under Clause 31.2.3 has been given).
31.2.3 In giving any such approval as is referred to in Clause
31.2.2 the Executive Committee shall specify the particular
duties and responsibilities which may be delegated and to
whom and for what period. On receipt of such approval the
Settlement System Administrator may delegate its duties and
responsibilities only to the extent of the terms of such
approval.
31.2.4 As between the Settlement System Administrator and the other
parties, no delegation pursuant to this Clause 31.2 or
pursuant to Clause 60.15 nor the terms or conditions of any
contract pursuant to which any such delegation is effected
shall relieve the Settlement System Administrator of any of
its duties or responsibilities under this Agreement. The
Settlement System Administrator shall at all times properly
supervise the performance of all such delegates.
31.3 Compliance with Executive Committee's instructions:
31.3.1 subject to the other provisions of this Clause 31, the
Settlement System Administrator shall at all times observe
and comply with all directions and instructions of the
Executive Committee or the Chief Executive which fulfil the
criteria set out in Clause 31.3.2.
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31.3.2 A direction or instruction of the Executive Committee or the
Chief Executive shall:-
(a) be clear and unequivocal (and a direction
or instruction shall be deemed such until
such time as the Settlement System
Administrator requests any necessary
clarification);
(b) have due regard to the resources of the
Settlement System Administrator available
to give effect to such direction or
instruction (and the Settlement System
Administrator shall promptly provide the
Executive Committee or the Chief Executive
upon request from time to time with full
details of such available resources);
(c) not increase the duties, responsibilities or liabilities of
the Settlement System Administrator beyond those
contemplated under this Agreement without proper
compensation: for this purpose, without limitation, (a)
compensation for increased duties and responsibilities shall
be proper if the costs are included in the Budget or, as
appropriate, the Statement of Costs with a margin in
accordance with the Accounting Procedure or such higher
margin as may be appropriate to the level of such increased
duties or responsibilities, and (b) compensation for
increased liabilities shall be proper if an indemnity is
given to the Settlement System Administrator which is
reasonably satisfactory to it or other compensation
reasonably satisfactory to the Settlement System
Administrator is provided to it; and
(d) not conflict with the terms of this
Agreement.
31.3.3 The Settlement System Administrator shall be entitled to rely upon any
direction or instruction of the Executive Committee or the Chief
Executive (if any) if the same is signed by way of authority in
accordance with Clause 31.6 on behalf of two or more Committee
Members or on behalf of the Chief Executive and shall not be obliged
to comply with any direction or instruction of any sub-committee of the
Executive Committee or any delegate of the Executive Committee other
than the Chief Executive (unless such direction or instruction is shown
as having been ratified by the Executive Committee).
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31.3.4 The Settlement System Administrator shall be entitled to
rely upon any communication or document reasonably believed
by it to be genuine and correct and to have been
communicated or signed by the person by whom it purports to
be communicated or signed and shall not be liable to any of
the Parties for any of the consequences of such reliance.
31.4 Compliance with the Director's directions: no liability whatsoever
shall attach to the Settlement System Administrator as a result of
due compliance by it with any directions and instructions of the
Director, provided that in complying with such directions and
instructions the Settlement System Administrator is at all times
acting in good faith.
31.5 Prior approval: where by the terms of this Agreement the Settlement
System Administrator is required to obtain the prior directions,
instructions, approval or consent of the Executive Committee or the
Chief Executive, the Settlement System Administrator shall have no
authority to, and shall not, act unless the requisite directions,
instructions, approval or consent have first been obtained.
Notwithstanding the foregoing sentence, nothing in this Agreement
shall prevent the Executive Committee from ratifying any act of the
Settlement System Administrator.
31.6 Express authority: all directions and instructions of the Executive
Committee or the Chief Executive to the Settlement System
Administrator shall, as between the Settlement System Administrator
and the Pool Members, be deemed to have the express authority of, and
shall be binding without reservation upon, all Pool Members.
31.7 Authority of Pool Members: the Settlement System Administrator shall
not be bound to act in accordance with the directions or instructions
of the Pool Members unless the Pool Members act through the Executive
Committee.
31.8 General Meetings: the Settlement System Administrator shall not be
obliged to take any steps to ascertain whether any resolution of Pool
Members in general meeting or of any class of Pool Members in
separate general meeting which it is advised by the Executive
Committee or the Chief Executive as having been passed was in fact
passed or passed by the requisite majority and until the Settlement
System Administrator shall have express written notice to the
contrary from the Executive Committee or the Chief Executive it shall
be entitled to assume that the relevant resolution was passed or (as
the case may be) the relevant requisite majority was obtained.
31.9 Exceptions: notwithstanding the foregoing provisions of this Clause
31, in the performance of its duties and responsibilities under this
Agreement the Settlement System Administrator shall not be bound to
act in accordance with the directions or instructions of the
Executive Committee or the Chief Executive if:-
31.9.1 to do so would cause the Settlement System Administrator to breach
any of its obligations under the Act or its Transmission Licence; or
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31.9.2 the Settlement System Administrator has reasonable grounds
for believing that it would so breach any of such
obligations and has consulted the Director and:-
(a) the Director has indicated that,
notwithstanding any such actual or
potential breach, the Director would not be
minded to enforce compliance with those
obligations and the Settlement System
Administrator has received an indemnity
reasonably satisfactory to it in respect of
its acting in accordance with such
directions and instructions.
In any such event the Settlement System Administrator shall promptly
notify the Executive Committee.
31.10 Reference to the Director: if at any time the Settlement System
Administrator has a concern which is properly and reasonably found
that, in acting in accordance with any direction or instruction of
the Executive Committee or the Chief Executive, it will breach one or
more of its obligations under the Act or its Transmission Licence,
then, if having discussed the matter with the Executive Committee the
matter remains unresolved, the Settlement System Administrator shall
either comply with such direction or instruction or by notice in
writing refer the same to the Director, such notice to set out in
full the directions or instructions given to the Settlement System
Administrator and the grounds for such concern and to be copied to
the Executive Committee. Pending any guidance from the Director in
response to any such reference and, provided that the Director shall
not express any view that such reference is misconceived, vexatious
or in respect of an improperly or unreasonably founded concern, the
Settlement System Administrator shall not be liable to any of the
other Parties for refusing to act in accordance with the relevant
direction or instruction. If the Director shall express such a view,
the Settlement system Administrator shall be so liable.
32. STANDARD OF CARE AND LIMITATION OF LIABILITY
32.1 Standard of care: in the exercise of its duties and responsibilities
under this Agreement the Settlement System Administrator shall
exercise that degree of care, diligence, skill and judgement which
would ordinarily be expected of a reasonably prudent operator of the
Settlement System taking into account the circumstances actually
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known to the Settlement System Administrator, its officers and
employees at the relevant time or which ought to have been known to
it or them had it or they made such enquiries as were reasonable in
the circumstances. In particular, but without prejudice to the
generality of the foregoing, in the absence of directions and
instructions given to it by the Executive Committee under this
Agreement and having due regard to the constraints imposed on the
Settlement System Administrator by the Accounting Procedure and the
resources available to it, the Settlement System
Administrator shall at all times conduct itself in a manner
calculated to achieve the principal objects and purpose of this
Agreement set out in Clauses 4.1.2 and 4.1.3.
32.2 Limitation of liability: subject to Clauses 32.3 and 39.7 and save
where any provision of this Agreement provides for an indemnity, each
Party agrees and acknowledges that neither the Settlement System
Administrator nor any of its officers, employees or agents shall be
liable to any of the other Parties for loss arising from any breach
of this Agreement other than for loss directly resulting from such
breach and which at the date of this Agreement was reasonably
forseeable as not unlikely to occur in the ordinary course of events
from such breach in respect of:-
32.2.1 physical damage to the property of any of the other Parties
or its or their respective officers, employees or agents;
and/or
3.2.2 the liability of any such other Party to any other person
for loss in respect of physical damage to the property of
any other person.
32.3 Death and personal injury: nothing in this Agreement shall exclude or
limit the liability of the Settlement System Administrator for death
or personal injury resulting from the negligence of the Settlement
System Administrator or any of its officers, employees or agents and
the Settlement System Administrator shall indemnify and keep
indemnified each of the other Parties, its officers, employees or
agents from and against all such and any loss or liability which any
such other Party may suffer or incur by reason of any claim on
account of death or personal injury resulting from the negligence of
the Settlement System Administrator or any of its officers, employees
or agents.
32.4 Exclusion of certain types of loss: subject to Clauses 32.3 and 39.7
and save where any provision of this Agreement provides for an
indemnity, neither the Settlement System Administrator nor any of its
officers, employees or agents shall in any circumstances whatsoever
be liable to any of the other Parties for:-
32.4.1 any loss of profit, loss of revenue, loss of use, loss of
contract or loss of goodwill; or
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32.4.2 any indirect or consequential loss; or
32.4.3 loss resulting from the liability of any other Party to any
other person howsoever and whensoever arising save as
provided in Clauses 32.2.2 and 32.3
32.5 Trust: each Party acknowledges and agrees that each of the other
Parties holds the benefit of Clauses 32.2, 32.3 and 32.4 for itself
and as trustee and agent for its officers, employees and agents.
32.6 Survival: each of Clauses 32.2, 32.3, 32.4 and 32.5 shall:-
32.6.1 be construed as a separate and severable contract term, and
if one or more of such Clauses is held to be invalid,
unlawful or otherwise unenforceable the other or others of
such Clauses shall remain in full force and effect and shall
continue to bind the Parties; and
32.6.2 survive termination of this Agreement.
32.7 Saving: for the avoidance of doubt, nothing in this Clause 32 shall
prevent or restrict any Party enforcing any obligation (including
suing for a debt) owed to it under or pursuant to this Agreement.
32.8 Full negotiation: each party acknowledges and agrees that the
foregoing provisions of this Clause 32 have been the subject of
discussion and negotiation and are fair and reasonable having regard
to the circumstances as at the date of this Agreement.
33. INDEMNITY
33.1 Definition: in this Clause 33 "Losses" means all losses,
costs, damages, expenses, liabilities and claims suffered or
incurred by the Settlement System Administrator, its
officers, employees or agents, including the costs of
management time incurred.
33.2 Indemnity (1); each Pool Member (or, in the case of any
agreement entered into for or on behalf of any class of Pool
Members, each Pool Member of that class) shall (but only in
respect of its Contributory Share at the time of receipt of
the request for indemnification) severally indemnify and
keep indemnified the Settlement System Administrator, its
officers, employees and agents against all Losses arising
directly or indirectly as a result of the Settlement System
Administrator, with the approval of Pool Members in general
meeting or (as appropriate) of any class of Pool Members in
separate General Meeting, entering into any agreement as
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agent for, or otherwise on behalf of, the Pool Members
and/or any class of Pool Members and/or the Executive
Committee (other than any Losses recoverable under the
Accounting Procedure or arising from the wilful default,bad
faith or negligence of, or breach of its obligations under
this Agreement by, the Settlement System Administrator, its
officers, employees or agents). For the purposes of this
Clause 33.2 the Pool Members in general meeting shall be
deemed to have approved the Escrow Agreement and each
Accession Agreement executed prior to 1st October, 1991 and
the relevant class of Pool Members which are parties thereto
shall be deemed to have approved each deed of indemnity
entered into in favour of a Pool Chairman where his period
of appointment began on or before 1st April, 1993.
33.3 [Not used].
33.4 Litigation: the Settlement System Administrator shall not be obliged
to engage in any litigation or arbitration proceedings on behalf of
the Pool members or any of them or the Executive Committee but, if it
does agree to become engaged in any such proceedings, it shall be
entitled, inter alia, to an indemnity in its favour in form and
content satisfactory to it.
34. COSTS, FEES AND EXPENSES
34.1 Schedule 4: the provisions of Schedule 4 shall have effect.
34.2 Fees:
34.2.1 each Party which is not a Pool Member (other than the
Settlement System Administrator, the Pool Funds
Administrator, the Grid Operator and the Ancillary Services
provider) shall pay the Settlement System Administrator a
fee in respect of the provision to such Party of all data
and other information which is required by the terms and
conditions of this Agreement to be made available to it by
the Settlement System Administrator save where there is a
specific provision in this Agreement for payment in respect
of such data or other information. Such fee shall be an
amount (exclusive of Untied Kingdom Value Added Tax)
determined by the Executive Committee in consultation
with the Settlement System Administrator to be the aggregate
of (a) the cost to the Settlement System Administrator of
providing all such data and other information or (as the
case may be) such of it as is requested by such Party, (b)
the Permitted margin and (c) such additional amount
(if any) as the Executive Committee shall from time to time
determine. Such fee shall be payable quarterly in arrears
within 15 days after the issue by the Settlement System
Administrator of an invoice therefor or within such other
period as may be agreed from time to time by the relevant
Party and the Settlement System Administrator. All such
payments shall be made in sterling in cleared funds in full
without set-off or counter-claim, withholding or deduction
of any kind whatsoever but without prejudice to any other
remedy. In the event of any dispute regarding payment of
such fees, no Party may withhold payment of any invoiced
amount but may refer such dispute regarding payment of such
fees, no Party may withhold payment of any invoiced amount
but may
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refer such dispute to arbitration in accordance with Clause
83 following payment. The provisions of Section 2.3 of Part
C of Schedule 4 shall apply mutatis mutandis to any amount
due to the Settlement System Administrator pursuant to this
Clause 34.2.1 which is not received on the due date.
34.2.2 For the purposes of this Clause 34.2 "Permitted Margin"
means in respect of any amount (the "Base Amount"), such
amount as, when added to the Base Amount, is equal to x per
cent. of the sum of such amount and the Base Amount, where x
is equal to the mid-range figure for the Net Martin of the
Settlements Business referred to in Section 8.1 of Part C of
Schedule 4.
34.2.3 A Party may at any time by notice in writing to the
Settlement System Administrator elect not to be provided
with all or some of the data and other information to which
it is entitled from the Settlement System Administrator
under this Agreement and amy change such election at any
time upon further written notice to the Settlement System
Administrator.
34.3 Charges: the Executive Committee shall be entitled to require that a
fee or other charge (not exceeding (pound)500 per dispute or such
other sum as the Pool Members in general meeting may from time to
time approve) be levied on and paid by a Party in respect of any
dispute concerning Settlement or its operation (including with
respect to data) referred by such Party for determination to the
Executive Committee or any sub-committee thereof. Such fee or other
charge shall be levied, paid and collected in such manner and at such
time as the Executive Committee shall direct and the relevant Party
hereby undertakes to pay any such fee or other charge so levied. Any
such fee or other charge shall at the option of the Executive
Committee (i) be refunded in whole or in part to the Party which paid
the same, or (ii) be applied against the administration costs of
whatsoever nature of the Executive Committee or the relevant
sub-committee and the surplus, if any, after payment in full of all
such costs shall be applied against the charges of the Settlement
System Administrator recoverable from all Pool Members under Part C
of Schedule 4.
34.4 Externally Interconnected Parties' costs:
34.4.1 an Externally Interconnected Party shall be entitled to
recover in accordance with this Clause 34.4 its costs and
expenses reasonably incurred in acting in accordance with
this Agreement as the Externally Interconnected Party for
its Corresponding External Pool Members (as defined in the
Pool Rules).
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34.4.2 Not later than 30 days after the beginning of each
Accounting Period (commencing with the Accounting Period
beginning in 1992) each Externally Interconnected Party
shall submit in writing to the Executive Committee for
approval (such approval not to be unreasonably withheld)
reasonable details of the costs and expenses anticipated as
likely to be incurred by it in its capacity as an Externally
Interconnected Party in that Accounting period and
(commencing with the Accounting period beginning in 1993)
of the actual costs and expenses so incurred by it in the
immediately preceding Accounting Period. If approved by the
Executive Committee, all such costs and expenses shall be
recovered by an Externally Interconnected Party from
its Corresponding External Pool Members in accordance with
Clause 34.4.3. If not so approved, the Externally
Interconnected Party shall revise and resubmit to the
Executive Committee the said details as often as may be
required in order to obtain such approval.
10.4.3 Each Corresponding External Pool Member shall reimburse its
Externally Interconnected Party its due proportion of all
its Externally Interconnected Party's approved costs and
expenses within 28 days after receipt of an invoice from its
Externally Interconnected Party. The Externally
Interconnected Party shall issue invoices in respect of each
Quarter on or after the Quarter Day relating thereto.
Invoices shall be based on approved anticipated costs and
expenses for the relevant Accounting Period and the first
invoice for each Accounting Period (commencing with the
Accounting Period beginning in 1993) shall include any
correction that may be necessary on account on the
approved actual costs and expenses being different from the
approved anticipated costs and expenses for the immediately
preceding Accounting Period.
34.4.4 For the purposes of this Clause 34.4 a Corresponding
External Pool Member's due proportion of its Externally
Interconnected Party's approved costs and expenses for each
Quarter shall be calculated as follows:-
(a) the aggregate of the Externally Interconnected
Party's approved costs and expenses shall be divided
by two;
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(b) as to one half of such approved costs and
expenses, the Corresponding External Pool
Member's due proportion shall be the
proportion which the sum of (i) the number
of its Generation Trading Blocks and (ii)
one (representing the notional Consumer
referred to in paragraph 26.5.2(d) of the
Pool Rules) bears to the sum of (a) the
total number of the Generation Trading Blocks of all
Corresponding External Pool Members the
Externally Interconnected Party of which is
the same as that for the Corresponding
External Pool Member in question and (b)
the number of all such Corresponding
External Pool Member shall for this purpose
be allocated at least one Generation
Trading Block; and
(c) as to the other half of such approved costs and
expenses, the Corresponding External Pool Member's
due proportion shall be the proportion which its
Gross Traded Energy for the Quarter in question
bears to the aggregate of the Gross Traded
Energy for that Quarter of all Corresponding
External Pool Members the Externally Interconnected
Party of which is the same as that for the
Corresponding External Pool Member in
question, and for this purpose "Gross Traded Energy"
in respect of any Quarter and any Corresponding
External Pool member shall be the aggregate amount
of Active Energy (measured in kWh) bought and sold
pursuant to this Agreement by such Corresponding
External Pool member in its capacity as such in that
Quarter.
34.4.5 The foregoing provisions of this Clause may be amended or
varied in respect of an Externally Interconnected Party and
its Corresponding External Pool Members (or any of them) by
prior written agreement of that Externally Interconnected
Party, all its Corresponding External Pool Members and the
Executive Committee.
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PART VIII
THE SETTLEMENT SYSTEM AND COMPUTER OPERATIONS
35. DEVELOPMENT OF THE SETTLEMENT SYSTEM
35.1 Development: the Settlement System shall be developed under the
overall control of the Executive Committee. All developments of and
changes to the Computer Systems shall be made in accordance with the
terms of the Development Policies.
35.2 Delegation: save as provided by the Development Policies, the
Executive Committee shall be entitled to delegate all or any of its
rights, powers and duties under Clause 35.1 and the Development
Policies to such person(s) and on such terms and conditions as from
time to time it may see fit.
33.3 Development Policies:
35.3.1 (a) The matters addressed by the Development
Policies are set out in the list of contents
in the Development Policies. These general
headings define the scope of the Development
Policies.
(b) The scope of the Development Policies may be amended
at any time and from time to time by written agreement
of the Executive Committee and the Settlement System
Administrator.
(c) Any amendment to any of the matters addressed by the
Development Policies or any addition or substitution
to the Development Policies which does not extend or
restrict (other than in a way or to an extent which
can reasonably be regarded as de minimis) the scope
of the Development Policies may be made at any time
and from time to time, and shall be effective if so
made, by the Executive Committee after consultation
with the Settlement System Administrator unless
such matter is one covered by the headings in Schedule
16 in which event such amendment, addition or
substitution may be made and shall be effective only
by written agreement of the Executive Committee and
the Settlement System Administrator.
35.3.2 Without prejudice to Clause 35.3.1(c), Schedule 16 may be
changed at any time and from time to time by written
agreement of the Executive Committee and the Settlement
System Administrator.
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35.3.3 Each of the Parties undertakes to comply with (and the Pool
members undertake to ensure that the Executive Committee
complies with) the Development Policies.
35.3.4 In carrying out any development of the Settlement System the
omission of any step generally comprising the life cycle of
any project under the Development Policies or the omission,
substitution or modification of any standard, method or
procedure specified in the Development Policies shall be
taken into account in determining the liability of the
Settlement System Administrator under Clause 39, save where
such step, standard, method or procedure is omitted,
substituted or modified by the Settlement System
Administrator, its employees, officers or agents without the
consent of the Executive Committee or any authorised
delegate of the Executive Committee.
35.4 Project Management:
35.4.1 in accordance with the following provisions of this Clause
35.4, the Settlement System Administrator shall have the
right and, at the request of the Executive Committee, the
obligation:-
(i) to procure the project management; and
(ii) to contract for all developments,
of the Settlement system or any stage or module
thereof. In connection with any such project
management or contracting for any such development
the Settlement system Administrator shall enter into
agreements with persons (other than the Settlement
System Administrator or any of its employees) on such
terms as the Executive Committee may reasonably
require.
35.4.2 The project manager of any development of the Settlement
System or any stage or module thereof shall be as agreed
between the Executive Committee and the Settlement System
Administrator taking into account inter alia such matters as
cost-effectiveness, quality and the competitive terms of
such project manager.
35.4.3 The functional and technical direction of any project
manager of a development of the Settlement System or any
stage or module thereof shall be given by the Executive
Committee or any sub-committee or sub-group thereof
established to monitor the particular development of the
Settlement System or any stage or module thereof for which
such person is appointed as a project manager, provided that
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the management of the use of the Settlement System
Administrator's computing and human resources by any project
manager so appointed shall remain with the Settlement System
Administrator. The Settlement System Administrator shall be
obliged and have the right to attend any meeting of such
sub-committee or sub-group.
35.4.4 The Executive Committee or the particular sub-committee or
sub-group in respect of any development of the Settlement
System shall take into account all reasonable comments of
the Settlement System Administrator in relation to the
specification, design, testing and implementation
requirements of any development of the Settlement System
where such comments relate to the operational compatibility
or consistency with the Settlement System or the ability of
the Settlement System Administrator to comply with this
Agreement, the Act or NGC's Transmission Licence.
35.4.5 Where a person (other than the Settlement System
Administrator or any of its employees) is chosen to project
manage a development of the Settlement System or any stage
or module thereof, the Settlement System Administrator shall
co-operate with such project manager to the extent necessary
to enable such project manager properly to manage such
development.
35.5 Provision of data and information: each Party shall ensure that all
data and information necessary to enable any testing of the
Settlement System or any development thereof or change thereto
required under the Development Policies and which is permitted to be
released by the Settlement System Administrator under the Pool Rules
or as otherwise expressly provided herein is supplied to the
Executive Committee or as it may direct and to the Settlement System
Administrator, and each party shall use all reasonable endeavours to
co-operate with and support any such testing.
35.6 Provision of data and information to authorised persons: the Parties
shall provide or ensure that the Settlement System Administrator
provides all data and information required under Clause 35.5 to such
persons as may from time to time be authorised by the Executive
Committee to receive the same provided that such persons shall have
executed a confidentiality undertaking in such form as the Executive
Committee may from time to time determine. If the Settlement System
Administrator is not permitted or required to release any data and
information by reason only of the confidential nature of such data
and information it shall and may provide representative data to the
extent required for such testing.
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35.7 Inconsistencies and conflicts: in the event of any inconsistency or
conflict between the provisions of this Agreement and the provisions
of the Development Policies, the provisions of this Agreement shall
prevail.
36. CHANGE MANAGEMENT
36.1 Change Management Policies: in order to ensure that developments of
and changes to the Settlement System are brought into effect in an
ordered and controlled manner, each of the Parties undertakes to
comply with the Change Management Policies.
36.2 Amendments: the Change Management Policies may be amended at any time
and from time to time by the Executive Committee after consultation
with the Settlement System Administrator.
37. SOFTWARE
37.1 Acceptance of Software: the Settlement System Administrator shall not
after the Effective Date accept any software unless and until
instructed to do so by the Executive Committee and, to the extent
that any lack of any such instruction causes the Settlement System
Administrator to suffer or incur a loss under any contract
relating thereto (not being a loss occasioned by its own fault), it
shall be entitled to recover the same in accordance with the
Accounting procedure, provided always that the Settlement System
Administrator has notified the Executive Committee in writing
of the nature and amount of any such potential loss in good time
prior to the loss arising.
37.2 Warranties: without prejudice to Clauses 39 and 44, nothing
in this Agreement shall imply or impose any requirement on
the Settlement System Administrator to give any warranty
with respect to any Software.
38.3 No liability: each Party acknowledges that neither NGC nor NGC
Settlements Limited shall have any liability in respect of any
software developed before the
Effective Date.
38. CHANGES TO THE POOL RULES
39.1 The Settlement System Administrator's obligations: the Settlement
System Administrator shall have the obligations and responsibilities
set out in this Clause 39 in respect of the New Software and its
related Specifications and the written procedures used by the
Settlement System Administrator in connection with the operation of
the Settlement System (the "Operation Procedures").
39.2 Future developments (1): in respect of:
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39.2.1 each Works Programme involving a change to the Specification
or the Software for which the Settlement System
Administrator is appointed Project Manager or which is
developed by or on behalf of the Settlement System
Administrator; or
39.2.2 all changes to the Software or the Specification (other than
those referred to in Clause 39.2.1 or 39.3).
the Settlement System Administrator shall ensure that, subject to
Clause 39.4, upon the implementation of such change the New Software
which is the result of such change (excluding Settlement GOAL,
GOALPOST, LOLP and Second Tier Software and any Software the
development of which has been project managed by a person other than
the Settlement System Administrator) is consistent in all material
respects with, and will in its operation give effect in all material
respects to, and the Operational Procedures are appropriate to give
effect in all material respects to, the Specification relating to
such New Software (other than those parts relating to Settlement
GOAL, GOALPOST, LOLP and Second Tier Software and any Software the
development of which has been project managed by a person other than
the Settlement System Administrator.)
39.3 Future developments (2); in respect of each Works Programme or
development specified in accordance with the Development Policies
involving a change to the Specification or the Software for which the
Settlement System Administrator is not appointed Project Manager and
which is not developed by or on behalf of the Settlement System
Administrator, the Settlement System Administrator shall ensure that,
subject to Clause 39.5, upon the implementation of such change the
New Software which is the result of such change (excluding Settlement
GOAL, GOALPOST, LOLP and Second Tier Software and any Software the
development of which has been project managed by a person other than
the Settlement System Administrator) is consistent in all material
respects with, and will in its operation give effect in all material
respects to, and the Operational Procedures are appropriate to give
effect in all material respects to, the Specification relating to
such new Software (other than those parts relating to Settlement
GOAL, GOALPOST, LOLP and Second Tier Software and any Software the
development of which has been project managed by a person other than
the Settlement System Administrator).
39.4 Relief from liability (1): the Settlement System Administrator shall
be relieved from liability under Clause 39.2 if (but only to the
extent that):-
39.4.1 in good time (having regard to the time elapsed from the
date upon which work on the relevant change is initiated by
the Executive Committee to the date such change is
implemented and taking into account, where appropriate, that
testing of the New Software by or on behalf of the
Settlement System Administrator may have taken place
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only after delivery thereof to the Settlement System
Administrator) before such implementation the Settlement
System Administrator has notified the Executive Committee in
writing on Specified Grounds of inconsistencies between the
New Software and/or its Operational Procedures and the
Specification or operational failures in the Settlement
System which will arise by reason of such implementation,
which inconsistencies or operational failures remain
unresolved at the time of such implementation; and
39.4.2 any other such inconsistency could not reasonably have been
expected to have been discovered by a project manager
engaged to give effect to such change and acting in
accordance with Good Industry Practice (taking into account
the actual time given for such development and the testing
of any relevant software).
39.5 Relieve from liability (2): the Settlement System Administrator shall
be relived from liability under Clause 39.3 if (but only to the
extent that):-
39.5.1 in good time (having regard to the time elapsed from the
date upon which work on the relevant change is initiated by
the Executive Committee to the date such change is
implemented and taking into account, where appropriate, that
testing of the New Software by or on behalf of the
Settlement System Administrator may have taken place
only after delivery thereof to the Settlement System
Administrator) before such change the Settlement system
Administrator has notified the Executive Committee in
writing on Specified Grounds of inconsistencies between the
New Software and/or its Operational procedures and its
Specification or operational failures in the Settlement
System which will arise by reason of such implementation,
which inconsistencies or operational failures remain
unresolved at the time of such implementation; and
39.5.2 any other such inconsistency could not reasonably have been
expected to have been discovered by the Settlement System
Administrator having regard to its actual knowledge of the
detail of such change and the development works in relation
thereto, its involvement generally in the development of the
related Specification and the New Software and its actual
knowledge of the Settlement System and the effect of such
change thereon.
39.6 Specified Grounds: in this Clause 39 "Specified Grounds" means
grounds reasonably held by the Settlement System Administrator for
believing that at the time of the implementation of any such change
as is referred to in Clause 39.2 or 39.3, there will be an
inconsistency between the New Software (excluding Settlement GOAL,
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GOALPOST, LOLP and Second Tier Software and any Software the
development of which has been project managed by a person other than
the Settlement System Administrator) and/or its Operational
procedures and its Specification (other than those parts relating to
Settlement GOAL, GOALPOST, and Second Tier Software and any Software
the development of which has been project managed by a person other
than the Settlement System Administrator) or operational failures in
the Settlement System which will arise by reason of such introduction
or implementation, which grounds (and the reasons therefor) are
fairly disclosed to the Executive Committee (taking into account the
actual time given for the relevant development and the testing of any
relevant software). In the event of any dispute between the Executive
Committee and the Settlement System Administrator as to whether a
matter has been fairly disclosed the same shall be referred promptly
(and in any event within one month after the dispute has arisen) to
arbitration in accordance with Clause 83. if the decision of the
arbitrator(s) is that the matter has not been fairly disclosed, the
relevant disclosure shall be ignored for the purpose of establishing
a Specified Ground.
39.7 Liability for breach: the Settlement System Administrator's liability
for breach of any of its obligations under the foregoing provisions
of this Clause 39 shall be subject to the limitations set out in
Clause 32 save that the Settlement System Administrator shall also be
liable to the extent (if any) agreed in writing with the Executive
Committee in relation to each development relating to New Software
(and shall not charge or recharge that liability to Pool Members).
39.8 Claims limitation: the Settlement System Administrator shall not be
liable in respect of any breach of this Clause 39 unless:-
(i) a breach in respect of the New Software is notified to the
Executive Committee or the Executive Committee becomes aware
of such breach within 12 months after the date upon which
such New Software is accepted by or on behalf of the
Executive Committee; and
(ii) details of any claim to be made in respect of such breach
are given to the Settlement System Administrator within 3
months after the Executive Committee is notified or
otherwise becomes aware of such breach.
40. OPERATION OF THE COMPUTER SYSTEM
40.1 Data input and validation:
40.1.1 the Settlement System Administrator undertakes to the other
Parties promptly and properly to input such data and other
information as it may receive pursuant to the terms of this
Agreement.
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40.1.2 The Settlement System Administrator shall review and
validate data and other information in accordance with the
Agreed Procedures to establish the completeness thereof and
to identify any inconsistencies therein.
40.2 Procedures: the Settlement System Administrator shall:-
40.2.1 promptly report internally in accordance with its management
procedures and to the Executive Committee any deviation from
pre-specified norms in the Computer Systems (which
pre-specified norms shall be those for the time being and
from time to time agreed between the Settlement System
Administrator and the Executive Committee and, in default of
agreement, as reasonably specified by the Executive
Committee), shall promptly investigate any such deviation to
determine whether the Hardware and/or the Software is (are)
functioning correctly and in accordance with the
Specification and shall promptly report the findings of any
such investigation to the Executive Committee. Any
such deviation shall be corrected in accordance with Clause
40.2.5 or (as the case may be) 35.1;
40.2.2 ensure that prompt attention and response is given by the
Settlement System Administrator to all reasonable enquiries
of Pool Members concerning unexpected results arising from
the operation of the Computer Systems and to all
notifications by Pool Members to it of suspected defects in
the Software or the Hardware or its operation;
40.2.3 in addition to its obligations under Clause 39, ensure that
any defects in the Software or inconsistencies between it
and the Specification of which the Settlement System
Administrator is or is made aware (including in the course
of development work) are reported promptly to the Executive
Committee;
40.2.4 conduct such programmes of tests as may be agreed for the
time being and from time to time by it with the Executive
Committee (and, in default of agreement, as reasonably
specified by the Executive Committee) in order to verify the
conformity of the Software with the Specification;
40.2.5 review on a regular basis (and not less frequently than once
in every six months) the Computer Systems for the purposes
of identifying and isolating, and in the course of
operating, testing and maintaining the Computer Systems
shall maintain for a period of not less than eight years (or
such longer period as the Executive Committee may from
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time to time reasonably require) records of, Localised
Implementation Errors and shall following:-
(a) notification of such Localised Implementation Errors
to the Executive Committee;
(b) a release of a suitable correction, which the
Settlement System Administrator shall prepare; and
(c) a report from the Pool Auditor confirming
that, in its opinion, by implementing such
release, a suitable correction will be made
in accordance with the Specification,
correct them; and
40.2.6 on a regular basis (and not less frequently than once in every six
months, beginning at the Effective Date of Termination or at such
longer regular intervals as the Executive Committee may from time to
time notify the Settlement System Administrator) review the Computer
Systems and report to the Executive Committee any deviations from the
pre-specified norms referred to in Clause 40.2.1 (not being Localised
Implementation Errors). Any such deviation shall be corrected in
accordance with Clause 35.1.
41. NOTIFICATION OF DEFECTS BY POOL MEMBERS
Each Pool Member undertakes to the Settlement System Administrator
and each other Pool Member promptly to notify the Settlement System
Administrator and the Executive Committee in writing of any defects
of which it is or becomes aware in the Software or its operation and
to provide such further information as may reasonably be required by
the Settlement System Administrator to identify, isolate and correct
such defect.
42. TESTING AND ACCESS
42.1 Tests requested by the Executive Committee:
42.1.1 the Settlement System Administrator shall, upon receipt of
not less than ten working days' notice from the Executive
Committee and subject to availability of computer time and
other necessary resources, arrange for such tests of the
Hardware and Software to be performed by the Settlement
System Administrator as are from time to time reasonably
required by the Executive Committee.
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42.1.2 The Executive Committee shall be entitled to nominate the
Pool Auditor or any other person to whom the Settlement
System Administrator has no reasonable objection to attend
at and monitor any test under Clause 42.1.1 and the
Settlement System Administrator shall give the Pool Auditor
or (as the case may be) such other person reasonable access
to the Hardware and the Software for the purpose of
attending at and monitoring any such test.
42.1.3 The costs of any test under Clause 42.1.1 shall be borne in
accordance with the Accounting Procedure.
42.2 Tests requested by Pool Members:
42.2.1 the Settlement System Administrator shall upon being given
reasonable notice by a Pool Member conduct tests on
information or data sets provided by such Pool member by
running the Software subject to the availability of computer
time and other resources and at such cost and on such terms
as the Settlement System Administrator may reasonably
determine.
42.2.2 The costs of any test under Clause 42.2.1 shall be borne by
the Pool member which requested the same.
42.3 Tests requested by the Pool Auditor:
42.3.1 the Settlement System Administrator shall, upon receipt of
not less than ten working days' notice from the Pool Auditor
and subject to availability of computer time, arrange for
such tests of the Hardware and Software to be performed as
are from time to time reasonably required by the Pool
Auditor for the performance of its functions under
Part IX. The Settlement System Administrator shall, if so
required by the Pool Auditor, permit the Pool Auditor to
carry out such tests provided that the person or persons
allocated to carry out such tests by the Pool Auditor is or
are suitably qualified in the operation of computers and
computer systems to carry out such tests and, in any
other case, the Settlement System Administrator shall carry
out such tests.
42.3.2 The Settlement System Administrator shall give the Pool
Auditor reasonable access to the Hardware and the Software
for the purpose of monitoring any test under Clause 42.3.1.
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42.4 Access to Listings: the Settlement System Administrator shall afford
each Pool Member reasonable access in a secure environment to enable
it visually to examine either in hard copy form or by electronic
display all of the then current operation versions of source code
listings relevant to the running of Settlement and of Settlement
GOAL and GOALPOST software provided that no Pool Member shall be
entitled to make any notes relating to such examination which may be
taken outside of such secure environment. The Settlement System
Administrator shall report all such examinations to the Executive
Committee.
42.5 Load Modules: subject to any licence restrictions imposed on the
Settlement System Administrator by any relevant software supplies
(and the Settlement System Administrator shall use all reasonable
endeavours to ensure that there are no such restrictions), the
Settlement System Administrator shall against payment of a reasonable
charge therefor:-
42.5.1 make available to any Pool Member upon request run time
copies (modified, where appropriate, to meet the
requirements of the Pool Auditor) of the then current
operational load modules and associated operating
documentation of any Software in the forms run by or on
behalf of the Settlement System Administrator or in such
other form as may be reasonably requested by the Pool
member; and
42.5.2 provide reasonable assistance to any Pool Member upon
request in the understanding and use of such load modules
and associated operating documentation. If the Settlement
System Administrator does not have adequate resources to
provide such assistance, it will promptly notify the
Executive Committee of such fact specifying what duties and
responsibilities under this Agreement it could not perform
if it were to provide the assistance requested. The
Executive Committee will then notify the Settlement System
Administrator whether it wishes it to provide such
assistance or to perform such duties and responsibilities
instead and the Settlement System Administrator shall
comply with the notification received.
In operating such load modules, a Pool Member shall not make copies
of such load modules available to any other person and shall use its
best endeavours to keep any information about the operation of such
load modules restricted on a "need-too-know" basis amongst its staff.
43. CHANGES TO THE HARDWARE
43.1 Changes to the Hardware: changes in Hardware (not being changes
occasioned by the use of the Settlement System Administrator's
back-up facilities or changes which do not affect the functioning of
the Settlement System) shall be made by the Settlement System
Administrator only with the prior approval of the Executive
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Committee (which may take the form of a general approval of specified
categories of changes).
43.2 Implementation: the Settlement System Administrator shall be
responsible for giving effect to any changes approved as provided in
Clause 43.1. For this purpose the Settlement System Administrator
shall consult the Executive Committee as to the manner in which any
such change shall be implemented and shall provide the Executive
Committee with such documents, information and other data as it may
reasonably request in connection with such implementation.
43.3 Costs: the costs of and associated with implementing any such change
approved as provided in Clause 43.1 shall be borne in accordance with
the Accounting Procedure.
44. PROPRIETARY RIGHTS
44.1 Definitions: in this Clause 44:-
"Developed Software" means those computer programs and codes
described in Part B of Schedule 8 and all copyright and other
intellectual property rights therein and all documents and materials
forming part thereof or relating thereto;
"Future Developed Software" means those computer programs and codes
comprising software and all copyright and other intellectual property
rights therein which after the date of this Agreement are
specifically developed at the request of the Settlement System
Administrator for the purposes of the running of the Settlement
System;
"Future Licensed Software" means those computer programs and codes
which after the date of this Agreement are to be licensed to the
Settlement System Administrator for the purposes of the running of
the Settlement System; and
"Licensed Software" means those computer programs and codes described
in Part C of Schedule 8, Settlement GOAL and GOALPOST.
44.2 As at the Effective Date: the Settlement System Administrator
represents, warrants and undertakes to the other Parties as a
continuing obligation that:-
44.2.1 the Settlement System Administrator has,
and for so long as it remains the
Settlement System Administrator will have,
unencumbered and freely transferable title
to Developed Software;
44.2.2 the Licensed Software is, and for so long as the
Settlement System Administrator remains as such will
remain, the subject
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of a non-exclusive licence in favour of the
Settlement System Administrator transferable to its
successor Settlement System Administrator; and
44.2.3 where any such Licensed Software is
transferable with the consent of the
licensor, the Settlement System
Administrator shall use all reasonable
endeavors to obtain consent to assign such
Licensed Software to its successor
Settlement System Administrator, as son as
is reasonably practicable.
44.3 Following the Effective Date: the Settlement System Administrator
represents,warrants and undertakes to the other Parties as a
continuing obligation that:-
44.3.1 save and to the extent notified to the Executive Committee
prior to the Settlement System Administrator entering into
any agreement for the production of Future Developed
Software, the Settlement System Administrator, for so long
as it remains as such, will have unencumbered and freely
transferable title to all Future Developed
Software;
44.3.2 Future Licensed Software will be, and for
so long as the Settlement System
Administrator remains as such will remain,
the subject of a non-exclusive licence in
favour of the Settlement System
Administrator transferable to its successor
Settlement System Administrator;
44.3.3 where any Future Licensed Software is
transferable with the consent of the licensor,
the Settlement System Administrator shall use all
reasonable endeavours to obtain consent to assign
such Future Licensed Software to its successor
Settlement System Administrator and will notify
the Executive Committee if it cannot obtain such
consent prior to entering into any agreement for
such Future Licensed Software; and
44.3.4 the Settlement System Administrator shall use all
reasonable endeavours to obtain unencumbered and freely
transferable title to any Future Developed Software and,
having notified the Executive Committee pursuant to Clause
44.3.1, shall not enter into any such agreement without the
consent of the Executive Committee, such consent not to be
unreasonably withheld or delayed.
44.4 Listing and Updating: the Settlement System Administrator undertakes
to establish and maintain a list of all Software and a list of all
Specifications of Developed
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Software and Future Developed Software and to make copies of such
lists available to Pool Members on reasonable request.
44.5 Restrictions on use: subject to Clauses 42.4, 42.5 and 45 and the
requirements of the Pool Auditor, the Settlement System Administrator
may not, without the prior written consent of the Executive Committee
(such consent not to be unreasonably withheld or delayed) grant to
any person (other than a successor Settlement System Administrator)
any right or title to, or give that person a copy of or permit that
person to use, Developed Software or Future Developed Software or
otherwise derive any benefit or profit therefrom (other than by
itself using such Software for the purposes of the Settlement System
or in the actual production or development of the same).
45. ESCROW ARRANGEMENTS
45.1 Escrow Agreement: no later than eight months after the Effective Date
(or such longer period as the Executive Committee may from time to
time approve) the Settlement System Administrator (for itself and on
behalf of the Pool Members acting though the executive Committee)
shall enter into and deliver an escrow agreement (the "Escrow
Agreement") in or substantially in the form set out in Schedule 7 or
in such other reasonable form as the Executive Committee after
consultation with the Settlement System Administrator may direct with
a reputable software escrow agent (the "Custodian") shall use all
reasonable endeavours to procure the Custodian to enter into and
deliver the Escrow Agreement. Forthwith upon entering into the
Escrow Agreement the Settlement System Administrator shall
deposit with the Custodian to the extent then in existence (and, if
not in existence, as soon after it becomes such):-
45.1.1 a copy of the source code and load (machine executable)
modules relating to all Developed Software and Future
Developed Software together with all job control language
and licensed software system tables, each in a machine
readable form and the source code and job control language
in a hard copy form; and
45.1.2 a copy of all related manuals and other associated
documentation, including:-
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(a) any user requirement documents, together with all
associated authorised change requests;
(b) any functional specification documents
associated with those documents described
in paragraph (a) above, together with all
authorised change requests associated with
the relevant functional specification;
(c) to the extent available to the Settlement
System Administrator, any design
specification documents associated with
those documents described in paragraphs (a)
and (b) above, together with the relevant
design specification;
(d) any program and/or user guides prepared to
assist in the day-t-day operation and
future development of the computer programs
(including records of test cases together
with the associated test input and output
data used for validation purposes);
(e) any relevant test strategy schedules and
acceptance schedules as specified for functional
and operational end to end testing;
(f) any relevant test acceptance certificates
and reports for all tests recording
comments and observations made on the
appropriate tests where such tests are
commissioned by the Settlement System
Administrator;
(g) any relevant client acceptance certificates
and reports for all tests recording
comments and observations made on the
appropriate tests where such tests are
commissioned by the Settlement System
Administrator;
(h) any relevant compilation or detailed operating
procedures required in connection with any of the
relevant paragraphs in this Clause 45.1.2;
(i) all Software licenses for Licensed Software and
Future Licensed Software; and
(j) a list detailing all versions of Licensed
Software and Future Licensed Software
(including operating systems and compilers)
used in creating each version of the object
code detailing the version numbers used and
any program temporary fixes or equivalent
mode,
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(together the "Material").
If, after consultation with the Settlement System
Administrator, the Executive committee shall so request:-
(A) the Settlement System Administrator shall use its
reasonable endeavours (which may include the payment
of a fee or further fee recoverable through
the Accounting Procedure) to procure that any
licence for any Licensed Software or Future Licensed
software is on terms or amended terms that permit the
deposit of such Licensed Software or Future Licensed
Software with a reputable software escrow agent
approved by the Executive Committee on the terms of
an escrow agreement approved by the Executive
Committee and NGC (in the case of NGC such approval
not to be unreasonably withheld).
45.2 Updating: the Settlement System Administrator shall ensure that the
Material deposited with the Custodian is kept fully up-to-date and
reflects all Modifications (as defined in the Escrow Agreement) and
shall deposit a copy of all Modifications with the Custodian as soon
as the same are available, all in accordance with the terms and
subject to the conditions of the Escrow Agreement.
45.3 Notification to Executive Committee: the Settlement System
Administrator shall notify the Executive Committee promptly of the
delivery of each Modification to the Custodian.
45.4 Amendments: any amendment to or variation of the Escrow Agreement
shall be made in accordance with its terms provided that the
Settlement System Administrator shall not make or agree to any such
amendment or variation without the prior written consent of the
Executive Committee.
46. MAINTENANCE ARRANGEMENTS
The Settlement System Administrator shall ensure that at all times it
has in full force and effect proper arrangements for the maintenance
of (and the prompt rectification of defects in) the Hardware and
Software and, upon reasonable request of the Executive Committee,
shall supply evidence reasonably satisfactory to the Executive
Committee of the existence and nature of such arrangements. The costs
of all such maintenance arrangements (not being costs relating to the
rectification of defects under the terms of any warranty cover in
relation to the Computer Systems) shall be borne in accordance with
the Accounting Procedure.
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PART IX
THE POOL AUDITOR AND SCHEDULING AND DESPATCH REVIEWS
47. THE POOL AUDITOR AND SCHEDULING AND DESPATCH REVIEWS
47.1 Appointment and removal: the Executive Committee shall (after
consultation with the Settlement System Administrator) from time to
time appoint a firm of accountants of internationally recognised
standing to carry out:-
47.1.1 audits of the calculations and allocations performed by the
Settlement System, such audits to be carried out annually;
47.1.2 audits of the Funds Transfer System, such audits to be
carried out annually;
47.1.3 tests and/or checks on new items or versions of Software;
47.1.4 reviews of Agreed Procedures and Codes of Practice, as
required from time to time by the Executive Committee; and
47.1.5 audits, reviews, tests and/or checks of such other matters
as are otherwise designated under this Agreement for
reference to it and, where not so designated, such other
audits, reviews, tests and/or checks as the Executive
Committee may from time to time reasonably require (having
regard, in particular, to the disruptive effect of the same
on the business and operations of the Parties),
and to assist, upon request of the Executive Committee, in the
preparation of Works Programmes pursuant to Clause 5.9.
The Executive Committee shall have the right at any time and from
time to time (after consultation with the Settlement System
Administrator) to remove from office as Pool Auditor any firm of
accountants so appointed by it, but the Executive Committee shall
ensure that there shall at all times be a Pool Auditor.
47.2 Scheduling and Despatch Review:
47.2.1 the Grid Operator shall (after consultation with the
Executive Committee) decide upon the appointment from time
to time of such firm of accounts of internationally
recognised standing as the Executive Committee shall approve
(such approval not to be unreasonably withheld or delayed)
to carry out reviews ("Scheduling and Despatch Reviews" of
the Scheduling and Despatch processes under the Grid
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Code, such reviews to be carried out, until the first
anniversary of the effective date, at such time or times as
shall be agreed between the Grid Operator and the Executive
Committee and, thereafter, annually. The objective and scope
of each such review is set out in Schedule 19.
47.2.2 The Grid Operator shall have the right at any time and from
time to time (after consultation with the Executive
Committee) to decide upon the removal from office of the
firm of accountants so appointed by it with the consent of
the Executive Committee (such consent not to be unreasonably
withheld or delayed).
47.2.3 The auditor carrying out the Scheduling and Despatch Review
shall report to the Grid Operator.
47.3 Scope of work:
47.3.1 the terms of engagement and scope of the work to be carried
out by the Pool Auditor shall be in accordance with the
terms of this Agreement and as determined from time to time
by the Executive Committee (after consultation with the
Pool Auditor and, where appropriate, the Settlement System
Administrator or the Pool Funds Administrator) and
the Pool Auditor shall report to the Executive Committee.
the Executive Committee shall, upon request, provide each
Pool Member, the Director, any Party which has applied
pursuant to Clause 8.2 to become a Pool Member and (as
appropriate) the Settlement System Administrator of the Pool
Funds Administrator with a copy of such terms of engagement.
47.3.2 Any opinion or report of the auditor carrying out the
Scheduling and Despatch Review shall be addressed to the
Grid Operator (for its own benefit) and a copy thereof shall
be sent to the Executive Committee and to each Pool Member,
the Director, the Settlement System Administrator and the
Pool Funds Administrator (each of whom shall be entitled to
rely on it).
47.3 Notification of disputes: upon written request of the Pool Auditor
or, where the dispute relates to Scheduling and Despatch, the auditor
carrying out the Scheduling and Despatch Review, a Party shall
promptly provide the Pool Auditor or (as the case may be) the auditor
carrying out the Scheduling and Despatch Review with a written
statement of all disputes under or in connection with this Agreement
or any Ancillary Services agreement which are then outstanding and
which involve such Party or which the relevant Party believes may
arise and are likely to involve such Party, and (subject to any
supervening obligations of confidentiality binding on such Party)
such statement shall include reasonable details of each such dispute.
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48. AUDIT INSTRUCTIONS
48.1 Frequency:
48.1.1 audits, tests, reviews and checks pursuant to Clause 47.1
shall be carried out at such time or times as the Executive
Committee shall determine (after consultation with the Pool
Auditor and, where appropriate, the Settlement System
Administrator or the Pool Funds Administrator) and any such
audit, test, review or check shall relate to such period(s)
as the Executive Committee and the Pool Auditor shall agree.
48.1.2 The review pursuant to Clause 47.2 shall be carried out at
such time or times as the Grid Operator shall determine and
the Executive Committee shall approve (such approval not to
be unreasonably withheld or delayed).
48.1.3 In good time before each annual general meeting of Pool
Members:-
(a) the Executive Committee shall instruct the Pool
Auditor to prepare the report referred to in clause
9.1.2; and
(b) the Grid Operator shall instruct the auditor carrying
out the Scheduling and Despatch Review to prepare the
report referred to in Clause 47.2.3.
48.2 Opinions and reports: any opinion or report of the Pool Auditor
required by the Executive Committee for the benefit of all Pool
Members and to such other person(s) as the Executive Committee may
direct and a copy thereof shall be sent by the Executive Committee to
each Pool Member and the Director and, if requested and the Executive
Committee approves, the Settlement System Administrator and the Pool
Funds Administrator (and the Settlement System Administrator and the
Pool Funds Administrator shall be entitled to rely upon the same in
any legal proceedings (including arbitration)).
48.3 Concerns and recommendations:
48.3.1 in instructing the Pool Auditor in respect of any of the
matters referred to in Clause 47.1 the Executive Committee
shall require the Pool Auditor:-
(a) forthwith to report any material concerns with
respect to matters the subject of the relevant
audit, test, review and/or check; and
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(b) to make such recommendations as to changes in the
procedures, controls and/or audit coverage as the
Pool Auditor considers appropriate.
Upon receipt of any such report or recommendation the
Executive Committee shall, after consultation with
the Settlement System Administrator or (in the case
of the review referred to in Clause 47.1.2) the Pool
Funds Administrator, prepare and sand or cause to be
prepared and sent a report to Pool Members, the Pool
Auditor and the Director and the Settlement System
Administrator or (as the case may be) the Pool Funds
Administrator enclosing a copy of the Pool Auditor's
report of recommendation. The Executive Committee
shall instruct the Settlement System Administrator to
carry out such corrective action as the Pool Members
in general meeting may approve or (where such
approval is not required by the terms of this
Agreement) as the Executive Committee may resolve
consequent upon receipt of the Executive Committee's
report (which the Settlement System Administrator and
the Pool Funds Administrator undertake promptly to
do).
48.3.2 In instructing the auditor in respect of the scheduling and
Despatch review the Grid Operator shall require the auditor
to make the reports and recommendations referred to in
Clauses 48.3.1(a) and (b). Upon receipt of a copy of any
such report or recommendation the Executive committee shall,
after consultation with the Settlement System Administrator
and the Grid Operator, prepare or send or cause to be
prepared and sent a report to Pool Members, the auditor
carrying out the Scheduling and Despatch review and the
Settlement System Administrator enclosing a copy of the
report or recommendation. The Executive Committee may
instruction the Grid Operator to carry out such corrective
action as may be reasonable and practicable in all the
circumstances and which is consistent with the grid Code
which Pool Members in general meeting shall approve.
48.4 Access:
48.4.1 the Settlement System Administrator shall permit the Pool
Auditor unrestricted access to the Settlement System, the
Hardware and Software and all data used, information held
and records kept by the Settlement System Administrator or
its agents in operating the Settlement System and shall make
available members of its staff to explain the operation of
the Settlement System and such other issues as the Pool
Auditor considers relevant.
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48.4.2 To the extent that the Pool Auditor reasonably requires in
order to be satisfied that the Pool Funds Administrator is
complying with its obligations under this Agreement and the
Agreed Procedures, the Pool Funds Administrator shall
permit the Pool Auditor unrestricted access to its operation
of the Funds Transfer System, the Funds Transfer Hardware
and the Funds Transfer Software and all data used,
information held and records kept by the Pool Funds
Administrator or its agents in the conduct of that operation
and shall make available members of its staff to explain
such operation and such other issues as the Pool Auditor
considers relevant.
48.4.3 The Grid Operator shall permit the auditor carrying out the
Scheduling and Despatch Review unrestricted access to that
part of its business as relates to Scheduling and Despatch
and the operation of BPS GOAL and all data used, information
held and records kept by the Grid Operator in the conduct of
such business and shall make available members of its staff
to explain such operations and such other issues as the
auditor considers relevant.
48.5 Costs:
48.5.1 the costs of any audit, test, review or check pursuant to
Clause 47.1.1, 47.1.3, 47.1.4 or 47.1.5 and any corrective
action on the part of the Settlement System Administrator
pursuant to Clause 48.3.1 shall be as agreed between the
Pool Auditor and the Executive committee (after consultation
with the Settlement System Administrator) and shall be borne
in accordance with the Accounting procedure.
48.5.2 The costs of any review pursuant to Clause 47.1.2 and any
corrective action on the part of the Pool Funds
Administrator pursuant to Clause 48.3.1 shall be as agreed
between the Pool Auditor and the Executive Committee (after
consultation with the Pool Funds Administrator) and shall be
borne by the Pool Funds Administrator and recovered by it in
accordance with the accounting procedure set out in Schedule
15.
48.5.3 The costs of any review pursuant to Clause 47.2 and any
corrective action on the part of the Grid Operator pursuant
to Clause 48.3.2 shall be borne by the Grid Operator.
48.6 Conflict: the Executive Committee shall require the Pool Auditor and
the auditor carrying out the Scheduling and Despatch Review to
disclose to the Executive Committee the existence and nature of all
audit assignments with any Party.
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48.7 Own auditors' review: each Pool Member may request of the Executive
Committee that its own external auditors be permitted to liaise with
the Pool Auditor and the auditor carrying out the Scheduling and
Despatch Review in accordance with normal professional standards,
including provision of access to working papers. The Executive
Committee shall take such steps as may reasonably be required of it
to ensure that each of the Pool Auditor and the auditor carrying out
the Scheduling and Despatch Review co-operates accordingly (subject
to Clause 48.9).
48.8 Pool Auditor's rights: the Pool Auditor shall be entitled to attend
and speak at meetings of the Executive Committee and at general
meetings and separate general meetings of Pool Members. The Pool
Auditor shall be entitled to resign upon giving prior notice to the
Executive Committee (the period of such notice (if any) to be as set
out in the terms of its appointment). Should the Pool Auditor resign,
be removed from office or not be reappointed the Pool Auditor shall
have the right to communicate directly with Pool Members if it
believes there are matters which should be brought to their
attention.
48.9 Confidentiality:
48.9.1 the Pool Auditor shall as a condition precedent to its
appointment execute a confidentiality undertaking in favour
of each of the Settlement System Administrator, the Pool
Funds Administrator, the Grid Operator and the Ancillary
Services Provider and the Executive Committee on behalf of
all Pool members in such form as may be reasonably required
from time to time by the Executive Committee.
48.9.2 The auditor carrying out the Scheduling and Despatch Review
shall as a condition precedent to its appointment execute a
confidentiality undertaking in such form as may be
reasonably required from time to time by the Grid Operator
and which shall be approved by the Executive Committee (such
approval not to be unreasonably withheld or delayed).
48.9.3 If requested by the Settlement System Administrator, the
Pool funds Administrator, the Grid Operator or the Ancillary
Services provider, the auditor carrying out the Scheduling
and Despatch Review shall execute a confidentiality
undertaking in favour of the relevant one of them in such
form as the Executive Committee may from time to time
approve (such approval not to be unreasonably withheld or
delayed).
48.10 Scheduling and Despatch Auditor: the auditor appointed to
carry out the Scheduling and Despatch Review shall be
entitled to attend and speak at meetings of the Executive
Committee and at general meetings and separate general
meetings of Pool Members where matters relating to
Scheduling and
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Despatch are to be discussed or considered. The auditor
shall be entitled to resign upon giving prior notice to the
Grid Operator (who shall send a copy forthwith to the
Executive Committee) (the period of such notice, if any, to
be as set out in the terms of its appointment). Should the
auditor resign, be removed from office or not be reappointed
it shall have the right to communicate directly with Pool
members if it believes that there are matters which should
be brought to their attention.
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PART X
THE GRID OPERATOR'S RESPONSIBILITIES
49. RESPONSIBILITIES
The Grid Operator shall have the following duties, responsibilities
and obligations under this Agreement:-
49.1 PORTHOLE: ensuring that, insofar as relevant to the
operation of the Settlement System and the Pool Rules,
PORTHOLE will in its operation comply with its user and
functional specifications;
49.2 Services: making available to any successor Settlement
System Administrator those services necessary for the proper
functioning of the Settlement System which the Grid Operator
made available to the incumbent Settlement System
Administrator at any time in the twelve month period prior
to the resignation or removal of such incumbent Settlement
System Administrator, in any such case upon such terms as
may be agreed between the Grid Operator, such successor
Settlement system Administrator and the Executive Committee;
and
49.3 Generally: such other duties, responsibilities and
obligations as are set out in this Agreement.
50. STANDARD OF CARE
50.1 Standard of Care: the standard of care applicable to the Grid
Operator in the exercise of its duties and responsibilities pursuant
to this Agreement shall be as set out in Clause 32.1 in respect of
the Settlement System Administrator mutatis mutandis except that the
final sentence in Clause 32.1 shall not apply.
50.2 Miscellaneous: the provisions of Clauses 31.3.3, 31.3.4,
31.4, 31.5 and 31.6 to 31.10 (inclusive) shall apply in
respect of the Grid Operator mutatis mutandis.
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PART XI
ANCILLARY SERVICES AND THE
ANCILLARY SERVICES PROVIDER
51. ANCILLARY SERVICES
51.1 Obligations: the obligations of the Ancillary Services Provider and
the Grid Operator pursuant to this Clause 51 shall be owed to each
and every Supplier.
51.2 Obligations of Ancillary Services Provider: the Ancillary Services
Provider shall:-
51.2.1 implement, maintain and operate all such systems as are
necessary to enable it properly to carry on the Ancillary
Services Business in accordance with the Transmission
Licence;
51.2.2 operate the Ancillary Services Business in an efficient and
economic manner;
51.2.3 maintain such records, data and other information as the
Pool Auditor may from time to time by notice in reasonable
detail to the Ancillary Services Provider reasonably require
for the purposes of this Part XI or as may otherwise be
reasonably necessary to enable the Ancillary Services
Provider to comply promptly and fully with its obligations
under this Agreement;
51.2.4 retain in electronic or machine readable form for a period
of not less than eight years (or such longer period as the
Pool Auditor may from time to time reasonably require),
copies of all records, data and information referred to in
Clause 51.2.3 in respect of the Ancillary Services;
51.2.5 provide to the Settlement System Administrator who shall
promptly provide the same to each Supplier monthly and
annual statements giving aggregate payment details
separately in respect of each of the following items:-
(a) Reactive Energy;
(b) frequency control;
(c) Black Start Capability (as defined in the Grid
Code);
(d) lost opportunity costs;
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(e) supplies of Ancillary Services to Externally
Interconnected Parties;
(f) adjustments for disputes which have been settled
or otherwise determined; and
(g) the Ancillary Services Provider's business
charges,
together with a statement of the sum of all such items
and each of the Parties agrees to such information
being so provided;
51.2.6 not transfer or seek to transfer any of its duties or
responsibilities as Ancillary Services Provider save to
NGC's successor as Grid Operator where NGC is removed as
Grid Operator (but not further or otherwise);
51.2.7 upon a successor Grid Operator being appointed (so far as it
is able), transfer to such successor all data, records,
other information, assets, equipment, facilities, rights
and know-how which it has (excluding freehold and leasehold
real property) and which are necessary to carry out the
duties and responsibilities of the Ancillary Services
Provider and which are not otherwise readily obtainable by
such successor including all original and copy material
relating to the same and, in consideration for such
transfer, the Suppliers shall jointly and severally
pay to the Ancillary Services Provider a reasonable sum to
reflect the costs of, and the costs of transferring, such
material, such sum to be determined pursuant to Clause 83
in default of agreement between the Suppliers and Ancillary
Services Provider; and
51.2.8 ensure that all agreements or arrangements for the provision
of Ancillary Services to Externally Interconnected Parties
are on the best commercial terms reasonably available.
51.3 Obligations of Suppliers: each Supplier shall pay the Ancillary Services
Provider the amount allocated to such Supplier for Ancillary Services in
any Settlement Period for Ancillary Services in accordance with this
Agreement.
51.4 Obligation of Grid Operator: the Grid Operator shall enforce the Master
Connection and Use of System Agreement and each Supplemental Agreement
(insofar as it concerns the provision of Ancillary Services) in accordance
with their respective terms in all circumstances in which it is reasonable
to do so having regard to its obligations under the Act, the Transmission
Licence and the Grid Code.
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51.5 Audit of Ancillary Services:
51.5.1 the Suppliers may require the Pool Auditor to carry out
audits, tests, checks or reviews in relation to the
operation by the Ancillary Services Provider of the
Ancillary Services Business as Suppliers may from time to
time reasonably require (having regard, in particular, to
the disruptive effect of the same on the business and
operations of the Ancillary Services Provider). The terms of
engagement for any such audit, test, check or review shall
be made available to the Ancillary Services Provider.
51.5.2 The Suppliers shall not require more than two audits, tests,
checks and reviews pursuant to Clause 51.5.1 in any
Accounting Period.
51.5.3 On instructing the Pool Auditor pursuant to Clause 51.5.1, the
Supplier(s) concerned may require the Pool Auditor:-
(a) forthwith to report any material concerns with respect to
matters the subject of the relevant audit, test, check or
review; and
(b) to make such recommendation as to changes in the procedures,
controls and/or audit coverage of the Ancillary Services
Business as the Pool Auditor considers appropriate.
51.5.4 The Ancillary Services Provider shall permit the Pool Auditor
such access to its Ancillary Services' operations and all
records, documents, data and other information (other than
Excluded Information) held by the Ancillary Services Provider in
the conduct of such operations in each case as the Pool Auditor
may reasonably require and shall make available members of its
staff to explain such operations and such other issues as the
Pool Auditor considers relevant. The Pool Auditor shall not
disclose and shall not be obliged to disclose to any Supplier
details of prices paid to each Generator by the Ancillary
Services Provider.
51.5.2 The Suppliers shall not require more than two audits, tests,
checks and reviews pursuant to Clause 51.5.1 in any Accounting
period.
51.5.3 On instructing the Pool Auditor pursuant to Clause 51.5.1, the
Supplier(s) concerned may require the Pool Auditor:-
(a) forthwith to report any material concerns with respect to
matters the subject of the relevant audit, test, check or
review; and
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(b) to make such recommendation as to changes in the procedures,
controls and/or audit coverage of the Ancillary Services
Business as the Pool Auditor considers appropriate.
51.5.4 The Ancillary Services Provider shall permit the Pool
Auditor such access to its Ancillary Services' operations
and all records, documents, data and other information other
than Excluded Information) held by the Ancillary Services
Provider in the conduct of such operations in each case as
the Pool Auditor may reasonably require and shall make
available members of its staff to explain such operations
and such other issues as the Pool Auditor considers
relevant. The Pool Auditor shall not disclose and shall not
be obliged to disclose to any Supplier details of prices
paid to each Generator by the Ancillary Services Provider.
In this Clause 51.5 "Excluded Information" means all
records, documents, data and other information
provided in the course of the discussions or
negotiations with any person with whom the Ancillary
Services Provider contracts or considers contracting
for the provision of Ancillary Services other than as
stated in any Ancillary Services Agreement whether
such discussions or negotiations take place before
contracting or as part of any price review during the
term of any Ancillary Services Agreement.
51.5.5 The Pool Auditor shall report to the Suppliers and a copy
of any report by the Pool Auditor relating to an audit,
test, check or review pursuant to Clause 51.5.1 shall be
provided to the Ancillary Services Provider. The Pool
Auditor shall owe a duty of confidentiality to the Ancillary
Services Provider save to the extent necessary to carryout
the particular audit, test, check or review provided that
any matter or thing set out in any report to the Suppliers
shall not be subject to any such obligation and provided
always that nothing in this Clause 51.5.5 shall prevent the
disclosure of any information pursuant to Clause 69. The
Ancillary Services Provider shall be entitled to rely on any
such report in any legal proceedings (including
arbitration).
51.5.6 if the Suppliers so resolve, the Ancillary Services provider
shall promptly implement any recommendations made by the
Pool Auditor in a report relating to an audit, test, check
or review pursuant to Clause 51.5.1 and, in the event of any
dispute, such dispute shall be referred to arbitration in
accordance with Clause 83.
51.5.7 The cost of any audit, test, check or review pursuant to Clause
51.5.1 shall be borne by the requisitioning Supplier(s). The
costs of implementing any recommendations pursuant to Clause
51.5.6 may be
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recovered by the Ancillary Services Provider in accordance with
the ASP Accounting Procedure.
51.6 Basis of Payment: the Ancillary Services Provider shall calculate the
total amount payable under Ancillary Services Agreements in respect
of each Settlement Day together with any amendments to calculations
made for previous Settlement Days based upon information derived from
the Grid Operator and the Settlement System Administrator. The
charges to Suppliers for Ancillary Services shall comprise the costs
so calculated together with the charges of the Ancillary Services
provider calculated in accordance with Schedule 18. The Ancillary
Services Provider shall notify a provisional sum to the Settlement
System Administrator within three working days after receipt of such
information from the Grid Operator and the Settlement System
Administrator so as to be despatched by the Settlement System
Administrator to Suppliers in accordance with the relevant Agreed
Procedure to enable the Settlement System Administrator to apportion
this sum to the sale of Active Energy according to the Pool Rules.
The Ancillary Services Provider shall notify a final sum to the
Settlement System Administrator by such time as will enable the
Settlement System Administrator to take into account the final
Settlement Run for each Settlement Day. Any unresolved amount shall
be included in the final Settlement Run on an interim basis pending
resolution. Thereafter it may be included (together with any errors
or omissions subsequently arising) in any appropriate Settlement run.
51.7 Lost opportunity costs:
51.7.1 subject to Clause 51.6, where the Ancillary Services
Provider pays any Generator an amount in respect of lost
opportunity costs the Ancillary Services Provider shall use
reasonable endeavours to include any such amounts in its
Ancillary Service charge to Suppliers in the Settlement Day
on which it arises or as soon as possible thereafter.
51.7.2 As soon as the Ancillary Services Provider is notified by
any Generator that any obligation to pay lost opportunity
costs may arise it shall consult the Suppliers and, without
prejudice to the Ancillary Services Provider's right to
recover such lost opportunity costs from Suppliers, if
requested by the Suppliers shall recover such lost
opportunity costs over such a period as may be agreed
between the Ancillary Services Provider and the Suppliers
and, in default of agreement, over such period as the
Ancillary Services Provider considers to be reasonable.
51.8 Standard of Care: the standard of care applicable to the Ancillary
Services Provider in the exercise of its duties and responsibilities
pursuant to this Agreement shall be as set out in Clause 32.1 in
respect of the Settlement System Administrator mutatis mutandis
except that the final sentence in Clause 32.1 shall not apply.
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51.9 Independent Contractor: the Ancillary Services Provider shall act as an
independent contractor in carrying out its duties pursuant to this
Agreement and Clause 31.1 in respect of the Settlement System
Administrator shall apply mutatis mutandis.
51.10 Miscellaneous: the provisions of Clauses 31.3.3, 31.3.4, 31.4,
31.5 and 31.6 to 31.10 (inclusive) shall apply in respect of the
Ancillary Services Provider mutatis mutandis.
51.11 Suppliers' Resolutions: where any matter is reserved under this Part
XI or Schedule 18 for the Suppliers to resolve, that matter shall be
decided upon by the majority vote of the Suppliers' representatives on
the Executive Committee.
51A. UPLIFT MANAGEMENT INCENTIVE SCHEME
51A.1 Notwithstanding any other provision of this Agreement, the provisions
of this Clause shall govern the right and obligations of the Parties
in relation to UMIS.
51A.2 Nothing in this Clause shall prejudice or affect in any way the
rights of the parties and the Executive Committee to establish
arrangements for the management of the difference between Pool
Selling Price and Pool Purchase Price subject to Clauses 51A.5 and
51A.3. The parties and the Executive Committee acknowledge that in
the period until 24.00 hours on the 31st March, 1995 the relevant
arrangements shall be UMIS.
51A.3 Neither this Clause 51A (other than Clauses 51A.5 or 51A.7) or UMIS
nor any amendment, variation or replacement of either of them may
become effective except with the prior written agreement of the
suppliers and the Grid Operator (acting through its agent the
Ancillary Services Provider).
51A.4 The Parties agree:
(a) to be bound by the terms, conditions and other provisions of
UMIS;
(b) that the Grid Operator and each Consumer (as defined in
the Pool Rules) shall make such payments as are
required and determined by the provisions of UMIS; and
(c) that from the date UMIS takes effect the following
changes to this Agreement shall take effect.
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(i) in Clause 51.6 the words "in respect of
Ancillary Services and UMIS" shall be
inserted after the words "provisional sum";
(ii) in paragraphs 1, 5.4, 5.14 and 17.6 of
Schedule 11 references to the Ancillary
Services Provider shall be deemed to be
references to itself and as agent for the
Grid Operator;
(iii) in line 7 of paragraph 2.1 of Schedule 11
the words "and UMIS" shall be inserted
after the words "Ancillary
Services";
(iv) in paragraph 5.14 of Schedule 11 the words
"or in respect of UMIS" shall be inserted
after the words "Ancillary Services" in
line 5 and the words "or in respect of UMIS
for the relevant Payment Date" shall be
inserted after the words "that same day" in
line 9; and
(v) in Part 4 of Schedule 11 references to
information in respect of Ancillary
Services shall be deemed to include
information in respect of UMIS for the
relevant Payment Date.
51A.5 The Suppliers and the Grid Operator may request the Parties and the
Executive Committee promptly (and in any event before the date UMIS
is to take effect) to execute and do all such acts, matters and things
(including effecting amendments to the Pool Rules) as may be necessary
to give effect to UMIS. The Parties and the Executive Committee shall
not refuse any such request on the grounds of any objections to any
values specified in Annex 1 or the provisions of Annex 2 of Appendix 8
to the Pool Rules as agreed from time to time between the suppliers
and the Grid Operator.
51A.6 In this Part XI, in Schedule 9 and in Schedule 11:
(i) "UMIS" means the amendment and/or additions to the Pool
Rules to implement an uplift management incentive scheme to
provide an incentive for the Grid Operator to minimise
certain elements of the difference between the Pool Selling
Price and Pool Purchase Price (other than payments in
respect of the Daily Pool Payment and/or the Genset
Availability Payment) and to provide for payments and
repayments associated therewith between the Grid Operator
(acting through its agent the Ancillary Services Provider)
and Consumers (as defined in the Pool Rules) i the form
agreed pursuant to Clause 51A.3 as the same may be amended
from time to time in accordance with the terms of that
Clause.
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(ii) whenever the agreement of the Suppliers is required it shall
be given by a resolution of the Suppliers in a separate
class meeting.
51A.7 The provisions of this Clause, UMIS and any addition to or amendment
of any other provisions of this Agreement effected pursuant to this
Clause shall terminate at 24.00 hours on 31st March, 1995 except for
any provision, addition or amendment which is required to continue
beyond that date to give effect to the operation of UMIS in respect of
any period before that date. Nothing in this Clause shall prejudice or
affect in any way whether and if so by what means all or any of the
elements comprising the difference between Pool Selling Price and Pool
Purchase Price are managed or otherwise dealt with after 24.00 hours
on 31st March, 1995. This Clause 51A.7 may not be amended without the
prior written consent of all Parties.
51A.8 Termination or expiry of the provisions of this Clause, UMIS and/or
any addition to or amendment of any other provision of this Agreement
effected pursuant to this Clause shall not prejudice any Consumer's
(as defined in the Pool Rules) or the Grid Operator's (acting through
its agent the Ancillary Services Provider) accrued rights and
liabilities under UMIS at the date of such termination or expiry,
which accrued rights shall include, for the avoidance of doubt, the
ability to adjust sums calculated under UMIS in respect of disputes
arising after such termination or expiry.
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PART XII
STATEMENT RE-RUNS
52. SETTLEMENT RERUNS
52.1 Re-runs: the Parties acknowledge and agree that there may be occasions
following any final run of Settlement (as referred to in paragraph D(3) of
the Preamble to Schedule 9) when it is necessary in respect of a Settlement
Day (or part thereof) to re-determine the trades of electricity pursuant to
this Agreement and the provision of Ancillary Services (whether to take
account of oversight or error, malfunction of the Settlement System
operation in accordance with Grid Operator Despatch instructions issued
under emergency circumstances, award of an arbitrator(s) pursuant to Clause
83, court order or otherwise howsoever). The Executive Committee, in
consultation with the Settlement System Administrator, the Pool Funds
Administrator and the Pool Auditor and, where appropriate, the Ancillary
Services Provider, shall decide how such re-determination is to be
effected, the re-allocation of moneys and the period of time over which any
such reallocation is to take place, any such decision to take account and
give effect, as nearly as practicable, to the principles and procedures set
out in this Agreement (and, where relevant, the award of the said
arbitrator(s) or court order). In particular, but without prejudice to the
generality of the foregoing, the Executive Committee may require following
any relevant final run of Settlement (and, shall take due notice of any
request from the Ancillary Services Provider to this effect) the Settlement
System Administrator to re-run, and the Settlement System Administrator
shall re-run, Settlement in respect of any Settlement Day (or relevant part
thereof) using the software and data originally used in respect of such
Settlement Day (or relevant part thereof) but subject to such changes,
amendments or additional inputs as may be required by the Executive
Committee, the Ancillary Services Provider, such arbitrator(s) or court or
(as the case may be) any other relevant Party. Any such re-run shall
hereafter in this Clause 52 be referred to as a "Re-run".
52.2 Timing: the Settlement System Administrator shall arrange for any Re-run to
be carried out as soon as is reasonably practicxable following request by
the Executive Committee subject to the availability of computer time,
compatible software, appropriate data and other resources.
52.3 Ancillary Services Provider: the Ancillary Services Provider shall have the
right to incorporate any delayed or disputed amount in respect of the
provision of Ancillary Services into Settlement without requiring a Re-run.
52.4 Notification: the Executive Committee shall promptly notify each Party, the
Pool Auditor and the Director of each occasion on which it requries the
Settlement System Administrator to carry out any Re-run, the reasons for
such requirement, the
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timing thereof and the period to be covered thereby and shall provide each
Party with such information about any Re-run as is relevant to such
Party and shall provide the Pool Auditor and the Director with full
details of any Re-run.
52.5 Proviso: the foregoing provisions of this Clause 52 are
subject to the proviso that no Re-run shall be carried
out, and neither the Executive Committee nor any Party
shall be entitled to requrie that a Re-run be carried
out, in respect of a Settlement Day or any part thereof
after the first anniversary of such Settlement Day, but
so that this proviso shall not restrict the right of
any Party to claim or recover any moneys properly due
and owing to it under this Agreement.
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PART XIII
RISK MANAGEMENT SCHEME
53. APPLICATION
53.1 Request: the Executive Committee shall send any Pool Member a Scheme
Admission Application within 28 days after receipt of a request for the
same from that Pool Member.
53.2 Scheme Admission Application: any Pool Member may apply to the Executive
Committee to have any Centrally Despatched Generating Unit admitted to the
Scheme by completing and submitting to the Executive Committee a duly
completed Scheme Admission Application not less than 40 days before the
proposed date of admission to the Scheme of that Centrally Despatched
generating Unit.
53.3 Admission: the Executive committee shall admit any Centrally Despatched
Generating Unit to the Scheme in respect of which all Scheme Admission
Condition are met.
53.4 Notification (1): if the executive committee determines that, in respect of
any Centrally Despatched Generating Unit, the Scheme Admission Conditions
have been met it shall forthwith and in any event within 40 days after
receipt of the Scheme Admission Application notify the relevant Pool Member
and the Settlement system Administrator accordingly.
53.5 Notification (2): if the Executive Committee determines that, in respect of
any Centrally Despatched Generating Unit, the Scheme Admission Conditions
have not been met it shall forthwith and in any event within 40 days after
receipt of the Scheme Admission Application notify the relevant Pool Member
of the reasons why the Scheme Admission conditions have not been met.
53.6 Reference to the Director: in the event of any dispute between the
Executive Committee and the relevant Pool Member over whether such Pool
Member has fulfilled the Scheme Admission conditions the same may be
referred by the Executive committee or the relevant Pool Member to the
Director for determination, whose determination shall be final and binding
for all purposes.
54. SCHEME ADMISSION CONDITIONS
The Scheme Admission Conditions are that:-
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54.1 no person has an Accountable Interest in the Centrally Despatched
Generating Unit which is the subject of the Scheme Admission Application
which, when added to the Accountable Interests of that person in other
Generating Units(whether situate with England and Wales or elsewhere),
exceeds in aggregate 1500MW;
54.2 the Pool Member does not have an Accountable Interest
(excluding any Accountable Interest of less than 10MW)
in more than four Generating Units (whether situate
within england and Wales or elsewhere). For the
avoidance of doubt a combined cycle module shall be
deemed for these purposes a single Generating Unit;
54.3 the Centrally Despatched Generating Unit which is the subject
of the Scheme Admission Application has not at the date of the
Scheme Admission Application been Commissioned;
54.4 the Centrally Despatched Generating Unit shall be admitted for
seven calendar years from the date of its admission to the
Scheme specified in the Scheme Admission Application; and
54.5 the Pool Member shall specify in the Scheme Admission
Application the proposed Scheme Planned Availability for each
Settlement Period in the proposed first Scheme Year for the
Centrally Despatched Generating Unit.
55. RIGHTS AND OBLIGATIONS OF POOL MEMBERS
55.1 Notification of unavailability: in respect of each Scheme Year for
each Scheme Genset (other than the first) the Pool Member shall not
later than 28 days before the start of that Scheme Year for each
Scheme Genset notify the Executive Committee of all Settlement
periods in that Scheme Year during which the Scheme Genset is
intended to be unavailable.
55.2 Scheme Planned availability: all settlement Periods in that Scheme
Year other than those notified under clause 55.1 shall together
constitute the Scheme Planned Availability in respect of that Scheme
Genset for that Scheme Year.
55.3 Failure to notify: if the Pool Member fails to notify the Executive
Committee in accordance with Clause 55.1 of the Scheme Planned
Availability in respect of that Scheme Genset for the following
Scheme Year, the Scheme Planned Availability shall be deemed to be
the same as the Scheme Planned Availability for the current Scheme
Year.
55.4 No amendment: the Scheme Planned Availability for any Scheme Year
notified in accordance with Clause 55.1 or deemed in accordance with
Clause 55.3 may not be amended.
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55.5 Payment rights: the Pool Member shall make or be entitled to receive
payments in respect of each Scheme Genset as determined in accordance
with Section 27 of Schedule 9 notwithstanding the expiry of the
period referred to in Clause 50.4.
55.6 No withdrawal: the Pool Member may not withdraw any Scheme Genset
from the Scheme during any period referred to in Clause 50.4
applicable to that Scheme Genset.
55.7 Actual planned availability: in respect of each Scheme Genset, the
Pool member shall use all reasonable endeavours to ensure that the
Scheme Planned Availability for each Scheme Year is the actual
planned availability of such Scheme Genset.
56. REVIEW
56.1 Review: within two months after the end of the third Scheme Year in
respect of which the first Scheme Genset has been admitted to the
Scheme and each subsequent anniversary of that date the Executive
Committee shall (with the consent of the Director) appoint an
independent firm of accountants of internationally recognised
standing to review the Scheme to establish whether or not any element
of the Scheme (or the Scheme taken as a whole) gives rise to a
systematic imbalance which is likely to prevent the payments to the
Scheme balancing payments from the Scheme and to submit to the
Executive committee and the director a report setting out details of
any such imbalance and his findings and recommendations for amending
the Scheme designed to correct any such imbalance.
56.2 Amendments: the Executive Committee may make such amendments to the
provisions of Section 27 of Schedule 9 as are required to implement
the recommendations referred to in Clause 56.1. Any such amendments
shall apply in respect of any Scheme Admission Application received
after the date such amendments become effective and shall constitute
a new Scheme.
56.3 Existing rights and obligations continue: any Pool Member shall
remain entitled to the benefits and subject to the obligations of the
Scheme with respect to any Scheme Genset in effect at the time of
admission of that Scheme Genset to the Scheme.
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PART XIV
FUEL SECURITY
57. DEFINITIONS
Definitions: in this Part XIV:-
"Fuel Security Interest" in relation to a particular Payment
Instruction, means the interest (if any) accruing on the Fuel
Security Payment or Fuel Security Reimbursement specified in that
Payment Instruction pursuant to Sub-clause 2.08 of Part 5 of the Fuel
Security code:
"Fuel Security Ledger" means any ledger required to be maintained by
the Pool Funds Administrator in accordance with Clause 59;
"Fuel Security Payment" means the amount specified in a Payment
Instruction which a Generator is entitled to recover from those
persons specified in that Payment Instruction (excluding Fuel
Security Interest, if any, in relation thereto);
"Payment Instruction" means an instruction which has been duly
authorised and delivered by a Generator to whom the Fuel Security
Code applies to the Pool Funds Administrator in the form, and in the
manner, specified in the Fuel Security Code.
58. PAYMENT INSTRUCTIONS
58.1 Effect of a Payment Instruction: following delivery of a Payment
Instruction to the Pool Funds Administrator:-
58.1.1 any Fuel Security Payment specified in that Payment
Instruction (together with any Fuel Security Interest
in relation thereto) shall be treated as an amount
which is due to that Generator from those persons
specified in that Payment Instruction and which is
payable on the basis provided in that Payment
Instruction; and
58.1.2 any Fuel Security Reimbursement specified in that
Payment Instruction (together with any Fuel Security
Interest in relation thereto) shall be treated as an
amount which is due from that Generator to those
persons specified in that Payment Instruction and
which is payable on the basis provided in that
Payment Instruction; and
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58.1.3 subject to Clauses 58.2 and 58.3, the Pool funds
Administrator shall arrange for such Fuel Security
Payment or such Fuel Security Reimbursement (together
with any Fuel Security Interest in relation
thereto) to be paid to or, as the case may be, paid
by that Generator by or, as the case may be, to those
persons specified in that Payment Instruction in
accordance with the provisions of such Payment
Instruction; and
58.1.4 such Payment Instruction (including any calculation,
determination or other matter stated or specified
therein) shall, save in the case of fraud, be
conclusive and binding upon all Parties.
58.2 Clarification: if the Pool Funds Administrator considers either that
the basis of payment of a Fuel Security Payment or a Fuel Security
Reimbursement provided for in a Payment Instruction is unclear,
contradictory or incomplete or that it is impossible to implement in
full the basis of payment provided for in a Payment Instruction, then
the Pool Funds Administrator must, promptly on becoming aware of the
same, notify the Director in reasonable detail of the same and, until
that matter is clarified, the Pool Funds Administrator shall only be
obliged to implement the payment specified in that Payment
Instruction to the extent that without clarification such
implementation is possible.
58.3 Failure to specify or clarify: if a Payment Instruction fails to
specify the basis upon which the Fuel Security Payment or a Fuel
Security Reimbursement specified in that Payment Instruction must be
paid or if the Director fails to clarify any matter notified to it in
accordance with Clause 58.2 within ten Business Days of such
notification then the Pool Funds Administrator shall arrange for the
relevant payment to be made on such basis as the Executive Committee
shall, with the written approval of the director, determine to be
appropriate.
59. RECORD KEEPING AND PAYMENTS
59.1 Fuel Security Ledgers:
59.2.1 following delivery of a Payment Instruction to the Pool Funds
Administrator, the Pools Funds Administrator shall, if he has
not already done so, open and thereafter maintain a Fuel
Security Ledger in the name of that Generator and shall record
therein all amounts (together with any Fuel Security Interest
in relation thereto) due to and from that Generator that are
specified in Payment Instructions and shall also record
therein all transactions arranged by the Pool Funds
Administrator for payments to be made to and from that
Generator in accordance with the provisions of Payment
Instructions.
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59.2.2 The Pool Funds Administrator shall from the time that a Fuel
Security Ledger is opened until it records a nil balance
provide to each Generator and to each Supplier on the last
Business Day of each calendar month a statement reflecting all
entries recorded in the Fuel Security Ledger of that
Generator over the course of the previous month.
59.2.3 The Fuel Security Ledger of a Generator shall, except as
required by Clause 59.2.2 or Part IX, be kept confidential in
accordance with Part XX.
59.2.4 Each monthly statement provided under Clause 59.2.2 shall, save
in the case of manifest error, be deemed prima facie evidence
of the contents of that part of the Fuel Security Ledger to
which it relates.
59.2.5 Each Party shall promptly review each monthly statement provided
to it under Clause 59.2.2 and shal (without prejudice to any of
its rights under this Agreement) where practicable within ten
Business Days after receiving each such statement notify the Pool
Funds Administrator of any inaccuracies in such statement of
which it is aware.
59.2.6 If the Pool Funds Administrator at any time receives from a
Generator or any Supplier a notice disputing the accuracy of the
Fuel Security Ledger of that Generator, the Pool funds
Administrator shall consult with the Party giving the notice and
use all reasonable endeavours to rectify any inaccuracy. In the
event that any inaccuracy in a Fuel Security Ledger of a
Generator is rectified, the Pool funds Administrator shall advise
that Generator and the Suppliers of the inaccuracy that was
rectified.
59.2 Fuel Security Payments: following delivery to the Pool Funds Administrator
of a Payment Instruction specifying a Fuel Security Payment, the Pool funds
Administrator shall enter in the fuel Security Ledger of that Generator as
a credit (a) the amount of the Fuel Security Payment, and (b) thereafter,
any Fuel Security Interest in relation thereto.
59.3 Fuel Security Reimbursements: following delivery to the Pool Funds
Administrator of a Payment Instruction specifying a Fuel Security
Reimbursement, the Pool funds Administrator shall enter in the Fuel
Security Ledger of that Generator as a debit (a) the amount of the Fuel
Security Reimbursement, and (b) thereafter, any Fuel Security Interest in
relation thereto.
59.4 Other Entries: any amount paid to or, as the case may be, paid by a
Generator in accordance with the provisions of a Payment Instruction shall
be entered as a debit or, as the case may be, a credit in the Fuel Security
Ledger of that Generator.
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59.5 Set off: the Pool Funds Administrator shall, unless it reasonably believes
that it would be unlawful to do so, from time to time where possible set
off any amounts shown as credits in the Fuel Security Ledger of a Generator
against any amounts shown as debits in the Fuel Security Ledger of that
Generator in the order in which they were entered. Any balance shown in the
Fuel Security Ledger of a Generator shall, if it is a credit, be paid to
or, if it is a debit, be paid by that Generator to the extent that it
relates to a Payment Instruction on the basis provided for in that Payment
Instruction. The entitlements and liabilities of a Generator (and the
corresponding liabilities and entitlements of the respective debtors and
creditors of that Generator) shall, to the extent that they have been set
off as aforesaid, be deemed satisfied and extinguished.
59.6 Schedule 11: all payments made to or by any Generator in accordance with
the provisions of a Payment Instruction shall, subject to any contrary
instruction contained i the provisions of a Payment Instruction, be
effected by the Pool funds Administrator through the Banking System and the
Billing System established in accordance with Schedule 11.
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PART XV
METERING
60.1 METERING
60.1 Introduction: the rights and obligations of each Party to this
Agreement which enable the accurate measurement of Energy traded for
the purposes of this Agreement by appropriate metering installations
are as set out in this Part XV and also in Schedule 21, and the
provisions of Schedule 21 shall have effect and apply in the same
manner as the remaining provisions of this Agreement apply with
respect to each such Party.
60.2 General
60.2.1 for the purposes of this Agreement the quantities
of Active Energy and Reactive Energy Exported or
Imported by Parties shall be measured and recorded
through Metering Equipment installed, operated and
maintained and otherwise provided for as set out in
this Part XV and in Schedule 21. Each Generating Unit
(excluding for this purpose Generation Trading Blocks)
which is subject to Central Despatch shall
have separate Metering Equipment.
60.2.2 Each Party is required to register or procure that
there is registered with the Settlement system
Administrator the Metering System at each site where
such Party Exports or Imports electricity except
where such electricity is not sold or purchased in
accordance with the Pool Rules.
60.3 Registrants:
60.3.1 a Metering System shall have a Registrant and
Operator before the Settlement System Administrator
is required to take such Metering system into account
for the purposes of Settlement.
60.3.2 Each Metering System (and the identifies of its
respective Registrant and Operator) which the
Settlement System Administrator shall take into
account for the purposes of Settlement shall be as
set out, for the time being and from time to time, in
the Register.
60.3.3 A Registrant's role in relation to a Metering System
under this Agreement shall continue until:-
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(i) such Registrant ceases to be a party or another Party
complying with the definition of Registrant accepts
such role as Registrant in accordance with the
provisions of this Agreement by service of a duly
completed notice in the form prescribed by the relevant
Agreed Procedure (but without prejudice to any accrued
liabilities of the previous Registrant); or
(ii) the Plant or Apparatus of the Registrant,
in respect of such Metering System, ceases
to be connected at the relevant site (as
indicated in the notification to the
Settlement system Administrator in the form
prescribed by the relevant Agreed
Procedure); or
(iii) in the case of a Registrant of a Metering
System which is at the point of connection
between a Public Electricity Supplier's
Distribution System and a Second Tier
Customer, the Registrant ceases to act as
Second Tier Supplier in relation to the
same at such point of connection.
60.3.4 The Settlement System Administrator shall inform the
relevant Host PES of:-
(i) the identity of any new Registrant; and
(ii) any change in the identity of any existing
Registrant.
of a Metering System in respect of which that Public
Electricity is Host PES, after such change is
notified to the Settlement system Administrator in
accordance with the terms of this Agreement.
60.3.5 there must always be one and, at any point in time, no more
than one Registrant for each Metering System which is
registered with the Settlement System Administration.
60.3.6 Any notice of a new, or of a change in an existing,
Registrant, Equipment Owner Operator, Second Tier customer or
Host PES or any Form of Acknowledgement required under this
Part XV or Schedule 21 shall be in such form and given to such
person at such time(s) and accompanied by payment of such fees
(if any) as is prescribed by the relevant Agreed Procedures.
60.3.7 If a Metering System ceases to have a Registrant who is not
replaced as Registrant in relation to the relevant Metering
Equipment, the Settlement System Administrator shall not be
obliged to take the relevant Metering System into account for
the purposes of Settlement.
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60.3.8 A Registrant may not resign or retire as Registrant except in
accordance with Clause 60.3.3.
60.3.9 The Registrant in respect of any Metering System shall provide
to the Settlement System Administrator such information as may
be required by the relevant Agreed Procedures.
60.3.10 The Settlement System Administrator shall not enter
on the Register a Registrant in respect of which
evidence of consent of the Equipment Owner has not
been provided in accordance with the relevant Agreed
Procedure.
60.3.11 Where a Metering System at the point of connection of
two or more Distribution Systems is to be registered
with the Settlement System Administrator, all
interested Parties shall agree upon and nominate the
Registrant by means of a duly completed nomination to
the Settlement System Administrator in the form
prescribed by the relevant Agreed Procedure.
60.4 Operators:
60.4.1 there must always be one and, at any point in time, no more
than one Operator for each Metering System which is registered
with the Settlement System Administrator. A replacement
Operator of such Metering System may be appointed from time to
time in accordance with the provisions of this Part XV,
Schedule 21 and the relevant Agreed Procedure.
60.4.2 Any notice of a new Operator or of a change in Operator
(including upon resignation, removal or cessation in
accordance with the provisions of Schedule 21) or any form of
Acknowledgement required under this Part XV or Schedule 21
shall be in such form and given to such person at such time(s)
and accompanied by payment of such fees (if any) as is
prescribed by the relevant Agreed Procedures. Where any Meter
Operator Party has not acknowledged its appointment as Operator
the Settlement system Administrator shall notify the Registrant
in accordance with the relevant Agreed Procedure.
60.4.3 The Registrant in respect of a Metering System shall ensure
that there is appointed from time to time an Operator, which
is a Meter Operator Party, in accordance with, and for the
purposes of, Schedule 21 as Operator in respect of that
Metering System.
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60.4.4 If a person which is an Operator in respect of any
Metering System ceases to be an Operator in respect
thereof for whatever reason (including upon removal or
resignation) or ceases to be a meter Operator Party
(including upon removal or resignation) and there has
not been appointed, at that time, a replacement
Operator in respect of the relevant Metering System(s)
in accordance with the provisions of this Part XV and
Schedule 21, such person's responsibilities as Operator
of such Metering Equipment shall upon such cessation be
assumed by the Registrant in respect of such Metering
Equipment who shall be deemed to be the Operator
therefor (notwithstanding that it shall not be
registered as such by the Settlement System
Administrator) in accordance with the provisions of
this Clause (the "deemed ------ Operator"). --------
60.4.5 As soon as any Registrant has reasonable grounds to believe
that an Operator of any Metering system in respect of which it
is the Registrant has ceased to act as Operator therefor in
accordance with substantially all of its responsibilities as
set out in Schedule 21 it shall remove such Operator in
respect of such Metering System in accordance with paragraph
6.1 of Schedule 21.
60.4.6 If the Settlement System Administrator has reasonable grounds
to believe that an Operator of any Metering System has ceased
to act as Operator therefor in accordance with substantially
all of its responsibilities as set out in Schedule 21 the
Settlement System Administrator shall notify the Registrant in
accordance with the relevant Agreed Procedure.
60.4.7 Any Registrant which is deemed to be the Operator of a
Metering System pursuant to the provisions of Clause 60.4.4
shall, subject to Clauses 60.4.8 and 60.4.9, continue to act
as the Operator in respect of any Metering System to which
that Clause applies, or shall appoint an agent or contractor
which shall continue to act as the Operator in respect of
such Metering System, for a period of 10 Business Days (which
shall commence at the time of the cessation referred to in
Clause 60.4.4) or, if a new Operator is registered in
respect of that Metering System prior to the expiry of that
period, for a period pending on the date of such registration.
60.4.8 If a Registrant to which Clause 60.4.7 applies does not act as
Operator in accordance with the provisions thereof or does not
appoint an agent or contractor who shall act as Operator, or if
the 10 Business Day period referred to in Clause 60.4.7 shall
expire without a replacement Operator being registered with the
Settlement System Administrator in
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respect of that Metering System in accordance with paragraph 4
of Schedule 21, that Registrant shall:
(i) undertake to cease forthwith to supply or
to generate electricity for the purposes of
the sale or acquisition of electricity
pursuant to this Agreement at the site
where such supply or generation is
measured, recorded and communicated to the
Settlement System Administrator by that
Metering System; and
(ii) notify the Settlement System Administrator
in accordance with the relevant Agreed
Procedure of that fact.
60.4.9 During the period in which a Registrant is the deemed Operator
in accordance with this Clause it shall be required (save only
as expressly provided to the contrary in this Agreement) to
comply with the requirements of this Part XV and Schedule 21
as Operator provided that, but without prejudice to any
liability to pay for Active or Reactive Energy traded by it,
such Registrant as deemed Operator:
(i) shall not be required to be registered as
Operator with the Settlement System
Administrator nor to comply with the
prescribed conditions for registration as
Operator from time to time in accordance
with the provisions of Schedule 21; and
(ii) shall not at any time when it is the deemed
Operator be required to incur significant
capital expenditure in the fulfillment of
obligations contained in this Part XV or
Schedule 21 where:
(a) the Metering Equipment shall have
become defective, inaccurate or in
want of repair (the "defective
Metering Equipment") as a direct
consequence of the act or omission
of any previous Operator;
(b) the Registrant shall upon becoming
aware of the same have taken all
steps to cease forthwith to supply
or to generate electricity for the
purposes of the sale or
acquisition of electricity pursuant
to this Agreement at or in relation
to the site where such supply or
generation is measured, recorded and
communicated to the Settlement
System Administrator by the
defective Metering Equipment; and
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(c) the Registrant shall have notified
the Settlement System Administrator
in accordance with the relevant
Agreed Procedure of the fact that
the supply or generation has ceased.
Where (x) the Settlement System
Administrator proposes to exercise its
right under paragraph 18 of Schedule 21 to
replace, renew or repair the defective
Metering Equipment (the "remedial work");
(y) the exercise of such right would result
in the incurring of significant capital
expenditure; and (z) the Register indicates
that such Registrant is acting as deemed
Operator, the Settlement System
Administrator shall notify the Registrant
before undertaking such remedial work and
shall give such Registrant the opportunity
to comply with (ii) (b) and (c) above
before commencing such remedial work.
60.5 Maintenance of Register and documents:
60.5.1 the Settlement System Administrator shall keep a
register recording:
(i) each Metering System which is accepted for the purposes
of the Settlement System;
(ii) the respective identities in respect of each such
Metering System of:
(a) the Registrant;
(b) the Operator;
(c) the Equipment Owner;
(d) the Host PES (where applicable);
(e) any Second Tier Customer in respect
of a supply to which that Metering
System is being used; and
(f) any agent which may be appointed
from time to time by the Settlement
System Administrator for the purpose
of data collection or, where
appropriate, of any Second Tier
Agent in respect of such Metering
System or, where the Settlement
System Administrator does not
appoint or have currently appointed
such agent or Second Tier Agent in
respect of a Metering System, a note
to this effect;
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(iii)loss adjustment details whether by meter biasing or by
software;
(iv) whether the Metering Equipment comprising a Metering System
is the subject of a dispensation agreed in accordance with
paragraph 14 of Schedule 21; and
(v) the relevant Code(s) of Practice in respect of such Metering
System.
60.5.2 For the purposes of this Agreement, the Settlement System
Administrator shall refer only to the Register to identify the
Registrant, Operator, Equipment Owner, Host PES, Second Tier
Customer, agent or Second Tier Agent referred to in Clause
60.5.1 relating to each Metering System and shall not be
obliged to acknowledge or be bound by any other agreement or
arrangement entered into by any Registrant, Operator,
Equipment Owner, Host PES or Second Tier Customer.
60.5.3 The Settlement System Administrator shall keep the Register up
to date, noting changes to Registrants, Operators, Equipment
Owners, Host PESs, Second Tier Customers, Metering Equipment,
dispensations and any Site disconnections as notified to it
pursuant to this Agreement and any changes to any agent or
Second Tier Agent. The Settlement System Administrator shall
also record in the Register any other information regarding
each Metering System as may be reasonably required by the
Executive Committee.
60.6 Communication lines and central collector stations:
60.6.1 the Settlement System Administrator shall collect (or procure
the collection of) and estimate data relating to quantities of
Active and Reactive Power Imported or Exported by any Party as
may be required for the proper functioning of Settlement in
accordance with the provisions of this Clause 60.6.
60.6.2 The Settlement System Administrator shall collect or procure
the collection of all such data referred to in Clause 60.6.1
as is available from Outstations either by means of remote
interrogation or by means of manual on-site interrogation.
60.6.3 (a) For the purposes of remote interrogation the
Settlement System Administrator shall enter into,
manage and monitor contracts or other arrangements to
provide for the maintenance of all communication
links by which information is passed from
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Outstations to the Settlement System Administrator or
its agent.
(b) In the event of any fault or failure of any
communication link or any error or omission
in such data or all necessary data not
being available from Outstations the
Settlement System Administrator shall
collect or procure the collection of such
data by manual on-site interrogation in
accordance with the relevant Agreed
Procedures.
60.6.4 The Settlement System Administrator shall be responsible for
the installation and maintenance of central collector
stations.
60.6.5 The Settlement System Administrator shall collect or procure
the collection of data for the purposes of the Settlement
System from Embedded Generators, Second Tier Suppliers, Second
Tier Customers and inter-Distribution System connections in
accordance with the
relevant Agreed Procedures.
60.6.6 The obligation to maintain communications links in respect of
Metering Equipment shall not apply where and with effect from
the date on which a person receiving a supply of or generating
electricity recorded by such Metering Equipment ceases to be a
Second Tier Customer, a Generator or a PES.
60.7 Class rights:
60.7.1 the levels of accuracy for Metering Equipment at points of
connection of Second Tier Customers taking up to (and
including) 100kW of demand and at new points of connection
between two or more Distribution Systems were not set as at
1st April, 1993 and shall be specified by the Executive
Committee subject to the consent of any relevant class of Pool
Members.
60.7.2 Any change to the standards of accuracy of Metering Equipment
required for Second Tier Customers up to (and including) 1MW
before 31st March, 1994 or up to (and including) 100kW before
31st March, 1998 shall be a change to the class rights of
Suppliers.
60.8 Sealing: Metering Equipment shall be as secure as is practicable
in all the circumstances and for this purpose:
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(a) all Metering Equipment shall comply with the relevant Agreed
Procedure; and
(b) the Executive Committee and the Settlement System Administrator
shall regularly review Agreed Procedures for security
arrangements in relation to Metering Equipment.
60.9 Discrepancies between meter advance and half hourly value totals: the
Parties acknowledge that, in transmitting metered data, impulses
representing quantities of electricity may be lost between the relevant
Meter and the Outstations giving rise to inaccuracies in half hourly
values notwithstanding that the Metering Equipment is complying with
the standards required by this Agreement. In such circumstances any
differences between electricity flows recorded on meters and the total
of the half hourly values recorded in the Settlement System will be
noted at the time that the Meter is inspected and read by the
Settlement System Administrator pursuant to paragraph 10 of Schedule 21
and will be dealt with as provided in the relevant Agreed Procedure. In
any other circumstances where the Metering Equipment is not complying
with the standards required by this Agreement such difference will be
dealt with in accordance with paragraph 11 of Schedule 21.
60.10 Meter Failure:
60.10.1 if at any time any Metering Equipment ceases to
function or is found to be outside the prescribed
limits of accuracy referred to in paragraph 7.3.1 of
Schedule 21 for whatever reason then, except in those
circumstances referred to in Clause 60.10.2:
(a) in the case of Metering Equipment ceasing to function,
during the period from the date of such cessation; or
(b) in any other case, during the period from the time when
such inaccuracy first occurred or, if such time is
unknown, from the midnight preceding the day during
which the disputed reading occurred.
until, in either such case, the date of adjustment,
replacement, repair or renewal of such Metering
Equipment under paragraph 8.4 of Schedule 21, the meter
readings shall be deemed to be those calculated
pursuant to the relevant Agreed Procedure.
60.10.2 If at any time a voltage transformer fuse on a
circuit supplying a Meter fails with the result that
the Metering Equipment is outside the prescribed
limits of accuracy referred to in paragraph 7.3.1 of
Schedule 21, the meter readings from the time the
failure is deemed to have
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occurred until the voltage transformer circuit is
again restored to the Meter shall be deemed to be
those calculated pursuant to the relevant Agreed
Procedure. A failure shall be deemed to have occurred
at the point in time provided for in the relevant
Agreed Procedure.
60.11 Disputes:
60.11.1 any dispute regarding the accuracy of data recorded or
transmitted by Metering Equipment in respect of any
Settlement Day which is to be used for the purposes of
Settlement and where the purpose of the resolution of such
dispute is solely to affect payments arising from a
Settlement Run shall, if there is a relevant Agreed
Procedure, be dealt with in accordance with such Agreed
Procedure. If, having exhausted such Agreed Procedure any
Party is not satisfied with the outcome, such Party may
refer the matter to the Executive Committee. If there shall
be no relevant Agreed Procedure, such dispute shall be
referred to the Executive Committee. If,in either case, any
Party is not satisfied with the decision of the Executive
Committee, the matter may be referred by such Party to
arbitration in accordance with Clause 83.
60.11.2 Any dispute regarding Metering Equipment (other than a dispute
referred to in Clause 60.11.1) shall be referred to the Executive
Committee. If any Party is not satisfied with the decision of the
Executive Committee, the matter may be referred by such Party to
arbitration in accordance with Clause 83.
60.11.3 It is hereby expressly acknowledged and agreed by the
Parties that the resolution of any dispute referred to in
Clause 60.11.1 or 60.11.2 shall in all cases be without
prejudice to the bringing or pursuing of any claim, by or
against, or the resolving of any issue between any one or
more of such Parties or any other Party arising out of the
same facts or circumstances, or facts or circumstances
incidental to the facts and circumstances giving rise to
such dispute, or upon the basis of which such dispute has
been resolved, in favor of, or against, a Meter Operator
Party or Meter Operator Parties.
60.11.4 Upon the request of any Party which is a party to a dispute
referred to in Clause 60.11.1 or 60.11.2 any relevant data
derived from Metering Equipment may be submitted by the
Settlement System Administrator to the body then having
jurisdiction in respect of the relevant dispute for the purposes
of resoling such dispute.
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60.12 Information:
60.12.1 if a Pool Member or Party intends to make or provide or
make a significant alteration to a connection to the NGC
Transmission System or to a Distribution System which
connection is of 100MW or more in capacity and which may
require a new Metering System to be registered into the
Settlement System or a significant change to a Metering
System to be registered into the Settlement System, the Pool
Member or Party shall inform the Settlement System
Administrator as soon as possible and, in any event, not
later than three months prior to the date on which the Pool
Member or Party expects to make or provide the connection or
change. Such information will be regarded as confidential to
the Pool Member or Party providing it, and will be used by
the Settlement System Administrator only for the purpose of
preparing the Settlement System to take account of the
Metering System when it is registered.
60.12.2 Any information regarding or data acquired by the
Settlement System Administrator or its agent from Metering
Equipment at any Site which is a point of connection to a
Distribution System shall, and may, be passed by the
Settlement System Administrator or its agent to the operator
of the relevant Distribution System. The said operator of
the relevant Distribution System may only use the same for
the purposes of the operation of the Distribution System and
the calculation of charges for use of and connection to the
Distribution System.
60.13 Ownership of Metering Data, access, use and use of
Communications Equipment:
60.13.1 the Registrant of any Metering System shall own the data
acquired therefrom provided that (and each Registrant hereby
expressly agrees and acknowledges that) a Second Tier
Customer of that Registrant in respect of which such data is
generated shall be entitled at all times without charge by
the Registrant to access, obtain and use such data and
provided further that:
(i) such access, obtaining or use, or
the method of such access, obtaining
or use, does not interfere with the
operation of Settlement;
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(ii) nothing in this Clause 60.13.1 shall
require the Registrant actively to provide
such data to such Second Tier Customer or
so to provide such data free of charge; and
(iii) such access shall not be by using any
communications link used by the Settlement
System Administrator for the purposes of
Clause 60.6 without the prior written
consent of the Settlement System
Administrator.
60.13.2 The Settlement System Administrator is hereby authorized to
use all data which is owned by the Registrant pursuant to Clause
60.13.1 as may be permitted pursuant to this Agreement, and the
Settlement System Administrator may only release such data to
others to the extent set out in this Agreement. It is hereby
expressly agreed that the Settlement System Administrator is
permitted to and shall against request and payment of a
reasonable charge therefor release to a Second Tier Customer such
data relating to it as is referred to in Claque 60.13.1.
60.13.3 Communications Equipment need not be dedicated exclusively to
the provision of data to the Settlement System Administrator for
the purposes of Settlement provided that any other use shall not
interfere at any time with the operation of Settlement and
subject also to the relevant provisions (if any) in the Tariff.
60.14 Ancillary Services: until the RP Date, the Ancillary Services
Provider shall be entitled at its own cost and expense (which
shall not be charged or recharged to Pool Members) to prepare
and submit to the Suppliers in separate class meeting a works
program relating to the method of recovery from Pool Members
for the supply of Reactive Energy by reference to the actual
amount of Reactive Energy consumed by Pool Members as measured
by MVAr Metering Equipment at each relevant Site, and, if
approved by the Suppliers in separate class meeting, such
works program shall be deemed to be an approved Works Program
for all purposes of this Agreement and the provisions of
Clauses 5.13 and 5.14 shall apply mutatis mutandis.
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60.15 Appointment by Agents by Settlement System Administrator:
notwithstanding the provisions of Clause 31.2.2 the Settlement System
Administrator may appoint one or more agents to perform any or all
of its obligations under this Part XV and Schedule 21.
60.16 Appointment of Second Tier Agents by Settlement System Administrator
from the Effective Date:
60.16.1 from the Effective Date, each of the Public Electricity
Suppliers who are Founder Suppliers shall be appointed a
non- exclusive agent by the Settlement System Administrator
for the purpose of carrying out the obligations of the
Settlement System Administrator under or in connection
with this Part XV and Schedule 21 in relation to such
Metering Systems at the point of connection between such
Public Electricity Supplier's Distribution System and:
(i) a Second Tier Customer;
(ii) the System of an Authorized Electricity Operator other than
the Public Electricity Supplier;
(iii) an Embedded Generator not subject to Central Dispatch; and
(iv) the Distribution System of another Public Electricity
Supplier,
as the Settlement System Administrator may
direct. The appointment of each such Second
Tier Agent shall continue unless and until
terminated by either such Second Tier Agent
or the Settlement System Administrator
giving to the other no less than 12 months'
notice in writing to expire on or after the
fourth anniversary of the date of this
Agreement. The provisions of Clauses
60.16.1 to 60.16.20 and Clause 60.18 shall
apply in respect of such Second Tier Agents
for so long as they continue to be
appointed as Second Tier Agents pursuant to
the provisions of Clause 60.16.1. For the
avoidance of doubt the provisions of Clause
60.16.15 shall continue to apply to such
Second Tier Agents after 31st March 1994.
60.16.2 Notwithstanding the provisions of Clause 60.16.1 the
Settlement System Administrator may remove a Second Tier
Agent at any time without notice if it fails in any
persistent and material respect to perform its obligations
hereunder, provided that the Settlement System Administrator
shall have given written notice to the Second Tier Agent
specifying in reasonable detail the nature of the breach and
requiring the Second Tier Agent within 28 days after notice
of such breach (or within any longer period agreed between
the Settlement System Administrator and the Second Tier
Agent) and that at the expiry of such period the
breach remains unremedied.
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60.16.3 A Second Tier Agent shall collect, aggregate, adjust and
transmit metering data in accordance with the provisions of
the relevant Agreed Procedure and the Pool Rules. The
costs of any agency appointment made pursuant to this Part
XV or Schedule 21 shall be treated as Bought-In Supplies
(as defined in Schedule 4) and accordingly a cost beyond the
control of the Settlement System Administrator.
60.16.4 Each Second Tier Agent shall operate such agency business in
an efficient and economic manner. It shall maintain such
records, data and other information as the Pool Auditor may
from time to time by notice and in reasonable detail to the
Second Tier Agent reasonably require for the purposes of this
Clause 60.16 or as may otherwise be reasonably necessary to
enable the Settlement System Administrator to comply with its
obligations under this Agreement which are referred to in
Clause 60.16.1.
60.16.5 The Settlement System Administrator may require the Pool
Auditor to carry out audits, reviews, tests or checks in
relation to each Second Tier Agent as the Settlement System
Administrator may from time to time reasonably require
(having regard, in particular, to the disruptive effect of
the same on the business and operations of the Second Tier
Agent). The terms of engagement of any such audit, reviews,
tests or checks shall be made available to the Second Tier
Agent. No more than two audits, reviews, tests or checks may
be made in any one Accounting Period.
60.16.6 In instructing the Pool Auditor pursuant to
Clause 60.16.5 the Settlement System
Administrator may require the Pool Auditor:
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(a) forthwith to report any material concerns with respect
to matters the subject of the relevant audit, review,
tests or check; or
(b) make such recommendations as to
changes in the procedures, controls
and/or audit coverage of the agency
business as the Pool Auditor
considers appropriate.
60.16.7 Any Second Tier Agent shall permit the Pool
Auditor such access to its agency
operations and all records, data and
information held by the Second Tier Agent
in the conduct of such agency operations as the Pool
Auditor may reasonably require and shall make
available members of its staff to explain
such operations and such other issues as
the Pool Auditor considers relevant.
60.16.8 The Pool Auditor shall report to the Settlement System
Administrator and a copy of any report by the Pool Auditor
relating to any audit, review, tests or check made pursuant
to Clause 60.16.5 shall be provided to the Settlement
System Administrator. The Pool Auditor shall owe a duty of
confidentiality to the Second Tier Agent provided that
nothing in this Clause 60.16.8 shall prevent the
disclosure of such report to the Settlement System
Administrator.
60.16.9 If the Settlement System Administrator so requires, the
Second Tier Agent shall promptly implement any
recommendation made by the Pool Auditor in a report relating
to any audit, review, test or check pursuant to Clause
60.16.5 subject to a right of appeal.
60.16.10 The costs of any audit, test, review or check pursuant to
Clause 60.16.5 shall be borne by the Settlement System
Administrator which may recover the same through the
Accounting Procedure. The cost of implementing any
recommendations pursuant to Clause 60.16.9 may be
recovered by the Second Tier Agent through its agency
charges.
60.16.11 In the performance of its duties and obligations under
this Clause 60.16 a Second Tier Agent shall at all times be
acting as the agent of the Settlement System Administrator
and the Settlement System Administrator shall indemnify each
Second Tier Agent and its officers, employees and agents
against all Losses (as defined in Clause 33.1) arising
whether directly or indirectly as a result of the Second
Tier Agent entering into any agreement as agent for, or
otherwise on behalf of, the Settlement System Administrator
other than any Losses recoverable through its charges as
agent or arising from the willful default, bad faith or
negligence of, or breach of its obligations under this
Agreement by, the Second Tier Agent, its officers, employees
and agents.
60.16.12 Each Second Tier Agent acknowledges the responsibilities of
the Settlement System Administrator under this Agreement
and the standard of care set out therein and under the NGC
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Transmission License and the Act. In the
collection, aggregation and adjustment of
data and information required pursuant to
this Clause 60.16 to each Second Tier Agent
shall act in accordance with such
directions and instructions of the
Settlement System Administrator as are
required to fulfill its obligations under
this Agreement in accordance with the
standard of care set out in Clause 32.1,
and in any event, without prejudice to the
generality of the foregoing, in the absence
of directions and instructions given to it
by the Settlement System Administrator each
Second Tier Agent shall, in its role as
agent under this Clause 60.16, at all times
conduct itself in a manner best calculated
to achieve the principal objects and
purpose of this Agreement set out in
Clauses 4.1.2 and 4.1.3.
60.16.13 Each Second Tier Agent shall:
(a) maintain such back-up arrangements
in relation to its Second Tier Data
Collection System as the Settlement
System Administrator may reasonably
require in order for it to comply
with its obligations under Clause
29.2;
(b) implement all directions and
instructions in relation to its
Second Tier Data Collection System
as shall be advised to the
Settlement System Administrator
under this Agreement by the
Executive Committee and with which
the Settlement System Administrator
is obliged to comply;
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(c) provide upon request such reports,
data and other information
concerning the Second Tier Data
Collection System as the Settlement
System Administrator may reasonably
require to comply with its
obligations under this Agreement;
(d) operate the Second Tier Software in
accordance with the Pool Rules and
properly employ the Second Tier
Hardware in carrying out its duties
and responsibilities and performing
its obligations in respect of the
operation of its Second Tier
Collection System;
(e) provide the Settlement System
Administrator with its best
estimates of information within the
timescales provided by this
Agreement for the purposes of Clause
29.18;
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(f) generally carry out all such
technical operative, executive,
administrative and advisory services
in connection with the operation of
its Second Tier Data Collection
System as from time to time may
reasonably be required by the
Settlement System Administrator;
(g) subject to the availability in the insurance market
of such insurances, effect and maintain in full force
and effect with first class insurers insurance in
relation to the Second Tier Hardware, the Second Tier
Software, its Second Tier Data Collection System
and its duties as agent hereunder so as to permit the
Settlement System Administrator to comply with the
requirements of Clause 30;
(h) take such other action as may
reasonably be required by the
Settlement System Administrator in
relation to its Second Tier Data
Collection System in order to permit
the Settlement System Administrator
to comply with its obligations under
this Agreement;
(i) not delegate the performance of all
or any of its duties and
responsibilities hereunder to agents
or other contractors without the
prior written consent of the
Settlement System Administrator; and
(j) reimburse the Settlement System
Administrator any costs, losses or
expenses suffered by the Settlement
System Administrator (which are not
recoverable under the Accounting
Procedure) due to claims made
against the Settlement System
Administrator to the extent the same
are due to any breach by such Second
Tier Agent of its obligations under
this Clause 60.
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60.16.14 (i) Where at any time there is any material inconsistency
between the Second Tier Software, the written
procedures used by the relevant Second Tier Agent
in connection with the operation of the Second
Tier Data Collection System (the "Second Tier
Operational Procedures") and the Second
Tier Specification such Second Tier Agent shall
promptly correct the same (so as to ensure that the
Second Tier Software and the Second Tier
Operational Procedures are consistent in all material
respects with the Second Tier Specification) and may
the Settlement System Administrator.
(ii) Each Second Tier Agent undertakes to the Settlement
System Administrator promptly and properly to input
data and other information as it may receive pursuant
to the terms of this appointment into its Second Tier
Computer Systems. Each Second Tier Agent shall review
and validate data and other information in accordance
with the relevant Agreed Procedures to establish the
completeness thereof and to identify any
inconsistencies therein.
60.16.15 Each Second Tier Agent hereby acknowledges and agrees that
the Settlement System Administrator is required pursuant to
Clauses 68 and 69 to keep certain information confidential
and hereby undertakes to the Settlement System Administrator
not to disclose information obtained by the Second Tier
Agent in such capacity so as to cause a breach by the
Settlement System Administrator of its obligations pursuant
to Clauses 68 or 69. Each Second Tier Agent shall reimburse
the Settlement System Administrator the costs of any breach
of such confidentiality obligations by the Settlement System
Administrator caused by such Second Tier Agent.
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60.16.16 Upon the removal or resignation of any Second Tier Agent,
the retiring or removed Second Tie Agent shall make over
to the Settlement System Administrator or its nominee all
such records, manuals and data and other information in the
ownership or under the control of the Second Tier Agent and
relating to the operation, and necessary for the proper
functioning, of the Second Tier Data Collection System.
60.16.17 Upon the removal or resignation of any Second Tier
Agent, all Second Tier Agents as at the Effective Date
shall, if requested by the Settlement System Administrator,
grant a license of the Second Tier Software to the
Settlement System Administrator or to such of its agents as
the Settlement System Administrator may direct upon terms
which are reasonable in all the circumstances and shall use
all reasonable endeavors to make available to the Settlement
System Administrator or any such agent any license or other
agreement to use or maintain the Second Tier Software where
necessary for the proper functioning of the Second Tier Data
Collection System. Any 190 failure to agree such terms shall
be referred to arbitration pursuant to the provisions of
Clause 83.
60.16.18 Following the FMS Date, the Settlement
System Administrator may direct that some
or all of the Metering Systems referred to
in Clause 60.16.1 which, as at the
Effective Date, provide data and
information directly to the Settlement
System Administrator shall thenceforth
provide data to a specified Second Tier
Agent or Second Tier Agents (if any).
60.16.19 Each Second Tier Agent shall be entitled to recover from
the Settlement System Administrator all costs properly
incurred in acting as Second Tier Agent in accordance with
this Clause 60.16. In addition, each Second Tier Agent may
recover a reasonable annual management agency fee as may be
agreed between it and the Settlement System Administrator
(and, in default of agreement, the dispute shall be referred
to arbitration in accordance with Clause 83). During the
first four years of its appointment each Second Tier Agent
shall recover its capital expenditure properly incurred for
the purposes of its Second Tier Data Collection System
spread equally over such four year period at a real discount
rate of 8 percent. Each Second Tier Agent shall recover the
costs to which it is entitled under this Clause 60.16.19
from the Settlement System Administrator on a monthly basis.
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0.16.20 Upon the resignation or removal of any Second Tier Agent,
the relevant Second Tier Agent shall be entitled to recover
from the Settlement System Administrator such costs as are
detailed in Clause 60.16.19 and which that Second Tier Agent
has not recovered prior to the date of such resignation or
removal. The costs which such Second Tier Agent is entitled
to recover shall be any accrued management agency fee
referred to in Clause 60.16.19 together with the net book
value of the capital assets or parts of assets the subject
of the capital expenditure referred to in Clause 60.16.19
(which net book value shall not be written up without the
consent of the Executive Committee, such consent not be to
unreasonably withheld or delayed). Such Second Tier Agent
shall make a balancing payment to the Settlement System
Administrator in an amount equal to the net realizable
market value of such capital assets or parts of assets at
the date of the resignation or the removal of the Second
Tier Agent. The costs to or receipts by the Settlement
System Administrator as a result of such resignation or
removal shall be charged or credited to Pool Members which
are Registrants of Metering Systems at Second Tier Sites as
appropriate. Any dispute relating to the amount of any
payment to be made pursuant to this Clause 60.16.20 shall be
referred to arbitration pursuant to the provisions of Clause
83.
60.17 Appointment of Second Tier Agents by Settlement System
Administrator with effect from 31st March 1994:
60.17.1 if, for the purposes of Clause 60.15, the
Settlement System Administrator appoints whether
in addition to or substitution for those agents
appointed pursuant to Clause 60.16 one or more
agents for the purpose of carrying out the
obligations of the Settlement System
Administrator under or in connection with this
Part XV or Schedule 21 in relation to
Metering Systems at or referable to points of
connection relating to Second Tier Customers
as the Settlement System Administrator may
direct, then the provisions of Clauses 60.17.1
to 60.17.10 and Clause 60.18 shall, inter alia,
apply to such arrangements.
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60.17.2 The Settlement System Administrator shall, prior
to appointing any Second Tier Agent pursuant to
Clause 60.17.1, consult with the Executive
Committee as to the appropriateness of the
appointment of such Second Tier Agent and the
terms upon which, if appropriate, such
agent is to be appointed and shall have due
regard to the wishes expressed pursuant to this
Clause 60.17.2 by the Executive Committee.
60.17.3 The Settlement System Administrator may
require the Pool Auditor to carry out audits,
reviews, tests or checks in relation to each or
any Second Tier Agent as the Settlement System
Administrator may from time to time reasonably
require. No more than two audits, reviews, tests
or checks may be made by the Pool Auditor in any
one Accounting Period.
60.17.4 In instructing the Pool Auditor pursuant to
Clause 60.17.3 the Settlement System
Administrator may require the Pool Auditor:
(a) forthwith to report any material concerns
with respect to matters the subject of the
relevant audit, review, test or check; or
(b) make such recommendations as to
changes in the procedures, controls
and/or audit coverage of the agency
business as the Pool Auditor
considers appropriate.
60.17.5 The Settlement System Administrator shall use
reasonable endeavors to procure that each Second
Tier Agent shall permit the Pool Auditor such
access to its agency operations and all records,
data and information held by the Second Tier
Agent in the conduct of such agency operations
as the Pool Auditor may reasonably require and
shall make available members of its staff
to explain such operations and such other issues
as the Pool Auditor considers relevant.
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60.17.6 The Pool Auditor shall report to the
Settlement System Administrator and a copy
of any report by the Pool Auditor relating
to any audit, review, test or check made
pursuant to Clause 60.17.3 shall be
provided to the Settlement System
Administrator and to the Executive
Committee.
60.17.7 The costs of any audit, test, review or
check pursuant to Clause 60.17.3 shall be
borne by the Settlement System
Administrator which may recover the same
through the Accounting Procedure.
60.17.8 The Settlement System Administrator shall use
reasonable endeavors to procure that each Second
Tier Agent shall promptly and properly input
data and other information as it may receive
pursuant to the terms of its appointment into its
Second Tier Computer Systems and shall review
and validate data and other information in
accordance with the relevant Agreed Procedures
to establish the completeness thereof and to
identify any inconsistencies therein.
60.17.9 The Settlement System Administrator shall use
reasonable endeavors to procure that each Second
Tier Agent shall keep secure and confidential
and not disclose, during the period of its
appointment or following its resignation or
removal, information, data and documentation
obtained by the Second Tier Agent in such
capacity as to cause a breach by the Settlement
System Administrator of its bligations pursuant
to Clauses 68 or 69 of this Agreement. 60.17.10
The Settlement System Administrator shall use
reasonable endeavors to procure that upon the
reasonable request of the Settlement System
Administrator and in any event upon the removal
or resignation of any Second Tier Agent, such
Second Tier Agent shall make over to the
Settlement System Administrator or its nominee
all such records, manuals and data and other
information in the ownership or under the
control of the Second Tier Agent and
relating to the operation, and necessary
for the proper functioning, of the Second
Tier Data Collection System.
60.18 Review:
(a) as soon as practicable after the third anniversary of
the date of this Agreement the Executive Committee, in
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consultation with the Settlement System Administrator
and the Director, shall carry out a full review of the
Second Tier Data Collection System and, in consultation
with the Director, shall seek to agree with the
Settlement System Administrator (the agreement of the
Settlement System Administrator not to be unreasonably
withheld or delayed) the manner by which the costs of
the Second Tier Data Collection System should be
recovered, in the Accounting Periods commencing on or
after 1st April, 1994.
(b) if, and to the extent, deemed necessary by the
Executive Committee in consultation with the Settlement
System Administrator and the Director, the Executive
Committee shall conduct a further review of the Second
Tier Data Collection System and, in consultation with
the Director, shall seek to agree with the Settlement
System Administrator (the agreement of the Settlement
System Administrator not to be unreasonably withheld or
delayed), the manner by which the Second Tier Data
Collection System should operate, and by which the
costs of the same should be recovered, in the
Accounting Periods commencing on or after 1st April,
1996 such review to commence in due time to enable
implementation of any changes to the Second Tier Data
Collection System on that date.
(c) The Executive Committee, in consultation with the
Settlement System Administrator and the Director, shall
carry out a further full review of the Second Tier Data
Collection System and, in consultation with the
Director, shall seek to agree with the Settlement
system Administrator (the agreement of the Settlement
System Administrator not to be unreasonably withheld or
delayed), the manner by which the Second Tier Data
Collection System should operate, and by which the
costs of the same should be recovered, in the
Accounting Periods commencing on or after 1st April,
1998 such review to commence in due time to
enable implementation of any changes to the Second
Tier Data Collection System on that date.
(d) In the event of an agreement within (a), () or, as the
case may be, (c) above, the provisions of this
Agreement relating to the Second Tier Data Collection
System shall be amended accordingly and, in the event
of any failure to agree, the matter shall be referred
to arbitration pursuant to the provisions of Clause 83.
If such agreement has not been reached or a
determination has not been made or a settlement not
been reached under any such arbitration prior to:
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(i) in the case of (a) above, the fourth anniversary of the
date of this Agreement;
(ii) in the case of (b) above (where applicable) by 1st April,
1996; and
(iii) in the case of (c) above by 1st April, 1998,
the Settlement System Administrator shall, between
such date and the date on which agreement is reached
or (if applicable) a determination or settlement
under such arbitration is made or reached, recover
the costs, expenses and charges of the Second Tier
Data Collection System in accordance with the
provisions of Section 1.3.4 of Part D of Schedule 4.
60.19 Software for FMS:
The Settlement System Administrator shall develop and
implement appropriate computer software for the purposes of
collecting and aggregating data following the FMS Date.
60.20 Second Tier Unmetered Supplies:
60.20.1 Notwithstanding any of the other provisions of this
Agreement, including Clause 60 (other than the
provisions of this Clause 60.20) and Schedule 21,the
provisions of this Clause 60.20 and any Second Tier
Unmetered Supplies Procedures shall, to the extent
they are supplemental to or conflict with any other
provisions of this Agreement, govern the rights and
obligations of the Parties (including each Operator
and each Meter Operator Party) in relation to
Second Tier Unmetered Supplies.
60.20.2 Neither this Clause 60.20 (save for the requirements
set out in this Clause 60.20.2 for the bringing into
effect of this Clause 60.20) nor the Second Tier
Unmetered Supplies Procedures nor any amendment,
variation or replacement of either of them may become
effective:
(i) unless and until the Chief Executive shall have given
each Public Electricity Supplier, each Second Tier
Supplier, the Director (who may consult with such
persons as he considers appropriate) and the Settlement
System Administrator not less than 14 days' notice that
this Clause 60.20 (or any amendment, variation or
replacement thereof) and/or the Second Tier Unmetered
Supplies Procedures are to become effective, stating
the date on which the same are proposed to become
effective and having attached thereto a coy of any
proposed Second Tier Unmetered Supplies Procedures; and
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(ii) so long as none of the recipients of the notice
referred to in Clause 60.20.2(i) shall have given a
counternotice to the Chief Executive before the date on
which this Clause 60.20 and/or the Second Tier
Unmetered Supplies Procedures are to become effective
stating, on reasonable grounds, an objection to this
Clause 60.20 or the Second Tier Unmetered Supplies
Procedures becoming effective on the proposed date or
at all,
in the event that a counternotice shall have
been given in accordance with Clause 60.20.2(ii) the
Chief Executive shall, as soon as is reasonably
practicable, notify the persons referred to in Clause
60.20.2(i) of that fact.
60.20.3 Nothing in this Clause 60.20 shall permit the adoption,
in the Second Tier Unmetered Supplies Procedures or
otherwise, of standards of accuracy of data for Second
Tier Unmetered Supplies different from those which
apply generally under this Agreement other than during
the transitional period expiring on 31st March, 1995.
60.20.4 Except where the context otherwise requires, in this
Clause 60.20:
"Second Tier Unmetered Supplies" means
unmetered street lighting and related
supplies of a type which as at the date
this Clause 60.20 becomes effective are
permitted to be made by a Second Tier
Supplier;
"Second Tier Unmetered Supplies Procedures"
means the procedures in respect of Second
Tier Unmetered Supplies in the form agreed
between all Public Electricity Suppliers
and the Director (who may consult with such
persons as he considers appropriate) as the
same may be amended, varied or replaced
from time to time with the agreement of
such persons.
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60.20.5 The Executive Committee may determine that Agreed
Procedures are necessary to implement this Clause
60.20 or the Second Tier Unmetered Supplies Procedures
and in such case nothing in this Clause 60.20 or the
Second Tier Unmetered Supplies Procedures shall
prejudice such determination or the adoption or
implementation of such Agreed Procedures, provided
that any such Agreed Procedure shall not include
matters which would occur on the Second Tier
Customer's side of the outstation.
60.20.6 The Parties accept that modifications to
the Settlement System Administrator's
rights and obligations under this Agreement
may be required under the Second Tier
Unmetered Supplies Procedures or otherwise
before this Clause 60.20 can become
effective.
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PART XVI
POOL CIVIL EMERGENCIES
61.1 DEFINITIONS
Definitions: in this Part XVI:
"Civil Emergency Pool Credit Facility" shall mean a credit
facility to be arranged by and for the use of Supplies upon
terms and conditions to be set out in Schedule 11 to this
Agreement:
"PoolCivil Emergency" shall have the meaning ascribed to it
in Clause 61.2.1;
"Pool Civil Emergency Period" shall mean a period initiated by
the Executive Committee after the occurrence of a Pool Civil
Emergency Event which shall commence, and terminate, in
accordance with this Part;
"Pool Rules Civil Emergency Condition" shall mean, in respect
of any Schedule Day, that both:
(i) UMT 0.1 (as determined in accordance with paragraph
32.1(a) of Schedule 9); and
(ii) RAPT 3 * CAPT (as determined in accordance with
paragraph 32.1(b) of Schedule 9);
"Pool Rules Civil Emergency Period" shall mean a period which
commences, and terminates, and in which Section 32.2 of
Schedule 9 is in force, in accordance with this Part; and
"Relevant Time" in relation to any event, means the time which
falls two hours prior to the first time at which an
Availability Declaration must be submitted pursuant to Section
6.1 of Schedule 9 on the first Settlement Day which commences
at least 24 hours after the occurrence of such event.
61.2 APPLICATION AND STATEMENT OF INTENT
61.2.1 General Statement of Intended Application: it is intended that
this Part shall apply where there is in existence an event, or
series of events which does or do not generally occur as part
of normal market operating conditions and which affect(s) the
operation of the market for the generation, transmission
and/or supply of electricity in England and
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Wales and which, as a result, cause(s) or is or are likely to
cause materially changed pool prices to arise and continue (a
"Pool Civil Emergency"). The following conditions set out in
this Part are intended to reflect the circumstances in which
it is envisaged that it would likely be the case that such
event or events shall have so occurred.
61.2.2 Interrelationship with Act: the Act and the Energy Act 1976
contain legislation conferring wide powers upon the Secretary
of State to regulate the generation, transmission and/or
supply of electricity in an emergency. It is intended that the
provisions of this Part shall coexist in application with such
legislation.
61.3 CONDITIONS FOR EXISTENCE OF A POOL CIVIL EMERGENCY
61.3.1 Determination of a Pool Civil Emergency: a Pool Civil
Emergency shall exist upon any resolution to that
effect passed by the Executive Committee in
accordance with the provisions of this Part
whereafter, subject to the following provisions of
this Part, a Pool Civil Emergency Period shall
commence.
61.3.2 Conditions: the Executive Committee shall resolve
that a Pool Civil Emergency exists only if it has
formed the opinion that a Pool Civil Emergency Event
has occurred. A Pool Civil Emergency Event shall
occur whenever:
(a) materially changed pool prices exist or are
likely to exist and, in either case, are
likely to continue; and
(b) such materially changed pool prices are the
direct result of any one or more of the
following:
(i) a major failure affecting the operation
of the NGC Transmission System;
(ii) a major operational failure of one or more
Distribution Systems; or
(iii) an inability of any Generator to generate or
the loss of generating plant availability of
any Generator; and
(c) the event within (i), (ii), or as the cas
may be, (iii) of (b) above has itself
resulted from any one or more of the
following:
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(i) any action taken by or on behalf of Her
Majesty's Government pursuant to and
in accordance with the emergency provisions
set out in Sections 1 to 4 of the Energy
Act 1976 or Section 96 of the Act;
(ii) any act, order, regulation, direction or
directive, legislation or restraint of
Parliament or any governmental authority, or
agent or instrument of the foregoing;
(iii) any act of public enemy or terrorist, act of
war or hostilities (whether declared or
undeclared), threat of war or hostilities,
blockade, revolution, riot, insurrection,
civil commotion or unrest or demonstration;
(iv) any strike, lock-out or other industrial
action;
(v) any act of sabotage or vandalism;
(vi) lightning, earthquake, hurricane, storm,
fire, flood, drought, accumulation of snow or
ice, or any other extreme weather or
environmental condition; or
(vii)any other event provided that in such a case any
resolution of the Executive Committee determining that
a Pool Civil Emergency exists must be carried by a
majority of not less than 75 percent of the total votes
of all Committee Members entitled to vote at a meeting
of the Executive Committee whether or not present.
61.4 CONDITIONS FOR EXISTENCE OF A POOL RULES CIVIL
EMERGENCY PERIOD
Pool Rules Civil Emergency Period: a Pool Rules Civil
Emergency Period shall, subject to the following
provisions of this Part, commence as part of a Pool
Civil Emergency Period whenever (i) a Pool Civil
Emergency Period is current and (ii) the Pool Rules Civil
Emergency Condition is satisfied and (iii) Section 28 of
Schedule 9 hereof is not in effect.
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61.5 PROCEDURE FOR INITIATION OF A POOL CIVIL EMERGENCY PERIOD
AND COMMENCEMENT OF A POOL RULES CIVIL EMERGENCY PERIOD
61.5.1 Right to requisition:
(a) Each Pool Member, the Settlement
System Administrator, the Grid
Operator, the Director and the
Secretary of State shall have the
several right to have convened a
special meeting of the Executive
Committee for it to consider whether
a Pool Civil Emergency exists (and
accordingly whether a Pool Civil
Emergency Period is to commence).
(b) To requisition a meeting of the
Executive Committee the relevant
Party, the Director or, as the case
may be, the Secretary of State shall
notify in writing:
(i) in the case of a Pool Member, its appointed
Committee Member, the Pool Chairman or the
Chief Executive; and
(ii) in the case of the Settlement System Administrator, the
Grid Operator, the Director or the Secretary of State,
the Pool Chairman or the Chief Executive, that it
wishes such a meeting to be convened giving as full an
explanation as it is able of the event or events which
it believes constitute(s) the relevant Pool Civil
Emergency Event.
(c) Upon receipt of a written requisition in accordance with (b), the
relevant Committee Member, the Pool Chairman or, as the case may be,
the Chief Executive shall convene a special meeting of the Executive
Committee in accordance with Clause 18 to take place within 48 hours
after receipt of such requisition, and the provisions relating to
notice periods in Clause 18 shall be varied for the purposes of this
Part accordingly.
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61.5.2 Initiation by the Executive Committee:
Pool Civil Emergency Period: if the
Executive Committee shall resolve that a
Pool Civil Emergency exists then, subject
to the right of veto in Clause 61.5.7 being
exercised, a Pool Civil Emergency Period
shall commence upon the expiry of the time
limit for the exercise of such veto and
shall continue until terminated in
accordance with Clause 61.7.
61.5.3 Pool Rules Civil Emergency Period:
(a) Commencement: a Pool Rules Civil
Emergency Period shall, subject to
the right of veto in (b) below and
in Clause 61.5.7 being exercised,
commence in accordance with Clause
61.4 at the expiry of the period for
the exercise of the Executive
Committee's veto in (b) below and
shall continue until terminated in
accordance with the provisions of
Clause 61.7.
(b) Executive Committee's Right of Veto: the Executive Committee shall
have the right to veto the commencement of a Pool Rules Civil
Emergency Period by the passing of a resolution to that effect carried
by a majority of not less than 65 percent of the total votes of all
Committee Members entitled to vote at such meeting whether or not
present, provided that the Executive Committee shall only be able to
exercise such right of veto prior to the Relevant Time relative to the
time at which the Secretary receives a notification given by the
Settlement System Administrator pursuant to Clause 61.5.4.
(c) Effect of Veto: where the Executive Committee exercises its right of
veto in accordance with (b) above, the relevant Pool Rules Civil
Emergency Period shall not commence.
61.5.4 Settlement System Administrator's Notification: the
Settlement System Administrator shall notify
forthwith by telephone (and confirm in writing as
soon as is practicable thereafter to) the Chief
Executive, Pool Chairman, Secretary, Director and
Secretary of State whenever it becomes aware that the
Pool Rules Civil Emergency Condition is satisfied.
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61.5.5 Reasons: the Executive Committee shall give reasons
for the passing of any resolution pursuant to this
Clause or the exercising of any right of veto
conferred on it by this Clause, to be notified to the
relevant parties by the Secretary in accordance with
Clause 61.5.6.
61.5.6 Notification (1): the Secretary shall notify in accordance with
Clause 75 all Parties, the Director and the Secretary of State:
(a) of the result of any vote taken on a resolution of the Executive
Committee pursuant to this Part, giving reasons in outline explaining
such result, immediately following the conclusion of the meeting at
which the vote was taken; such notification may be given by telephone
or by facsimile transmission. An outline statement of reasons shall be
circulated by the Secretary to the same persons as soon as is
reasonably practicable thereafter; and
(b) where there has been no exercise
within the time limit provided
therefor of a right of veto pursuant
to either Clause 61.5.3 by the
Executive Committee or Clause 61.5.7
by the Director or the Secretary of
State, notify all Parties, the
Director and the Secretary of State
immediately of the commencement of a
Pool Rules Civil Emergency Period.
61.5.7 Right of Veto:
(a) Right of Veto: the Director and the Secretary of State shall each
have a several right to veto the commencement of any Pool Civil
Emergency Period or, as the case may be, Pool Rules Civil
Emergency Period by giving written notice of an exercise of such
right of veto addressed to the Executive Committee, the Pool
Chairman and the Chief Executive within the time periods
specified below. To be validly given, such notice shall specify
in sufficient detail (in the case of a Pool Civil Emergency
Period) the relevant resolution of the Executive Committee or (in
the case of a Pool Rules Civil Emergency Period) the relevant
notification of the Settlement System Administrator, in respect
of which the right of veto is being exercised.
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(b) Effect of veto: where the Director
or the Secretary of State exercises
his veto in accordance with this
Clause 61.5.7, the relevant Pool
Civil Emergency Period or, as the
case may be, Pool Rules Civil
Emergency Period shall not commence.
(c) Time Limits: any veto given by, or
on behalf of, either
of the Director or Secretary of
State must be received by
or on behalf of the Executive
Committee:
(i) in respect of a resolution
initiating a Pool Civil
Emergency Period, before
the expiry of a period of
48 hours commencing upon
the receipt by the Director
or, as appropriate, the
Secretary of State, of the
notification of the result
of the vote upon the
relevant resolution; or
(ii) in the case of a veto in
respect of the commencement
of a Pool Rules Civil
Emergency Period, before
the expiry of the time for
the exercise of the
Executive Committee's right
of veto pursuant to 61.5.3.
For the avoidance of doubt, such veto may
be given at any time before the
commencement of such period.
(d) Reasons: the Director shall upon
exercising a right of veto conferred
by this Clause give reasons to the
Executive Committee supporting the
exercise of that right and the
Parties would expect the Secretary
of State also to give reasons upon
any exercise of his right of veto
conferred by this Clause.
(e) Notification (2): upon receipt by or
on behalf of the Executive Committee
of a notice of exercise of veto
pursuant to this Clause, the
Secretary, on behalf of the
Executive Committee, shall as soon
as is possible thereafter give
notice in accordance with Clause 75
of the exercise of such veto.
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61.6 EFFECT OF POOL AND POOL RULES CIVIL EMERGENCY
PERIODS
61.6.1 Effect of a Pool Civil Emergency Period:
(a) Upon a determination that a Pool
Civil Emergency exists in accordance
with 61.2.1 above:
(i) Suppliers shall be entitled
during the Pool Civil
Emergency Period, for the
purposes of payments to be
made by them pursuant to
this Agreement during such
period, to utilize the
Civil Emergency Pool Credit
Facility; and
(ii) Section 32.1 and 32.2 of the Pool Rules shall enter into force
and effect.
(b) The Pool Members expressly
acknowledge the fact that during the
currency of any Pool Civil Emergency
Period Suppliers shall be entitled
to operate credit facilities in
accordance with and subject to any
conditions of their respective
Licenses (where relevant).
61.6.2 Effect of a Pool Rules Civil Emergency Period: upon
the commencement of a Pool Rules Civil Emergency
Period in accordance with Clause 61.5.3(a), the
provisions of Section 32.2 of Schedule 9 shall enter
into full force and effect and shall continue in full
force and effect until such time as that Pool Rules
Civil Emergency Period is terminated in accordance
with Clause 61.7.
61.7 TERMINATION OF A POOL CIVIL EMERGENCY PERIOD
61.7.1 Director's determination of end of Pool Civil
Emergency Period: a Pool Civil Emergency Period and,
where applicable, any concurrent Pool Rules Civil
Emergency Period, shall terminate upon any
determination of the Director to that effect.
61.7.2 Consultation: the Director shall only determine that
a Pool Civil Emergency Period and, where applicable,
any concurrent Pool Rules Civil Emergency Period
shall terminate after having fully consulted and
taken into consideration the views of all relevant
Parties and after having obtained the approval of
the Secretary of State.
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61.7.3 Notification (3): the Director shall notify in
writing the Secretary, the Pool Chairman and the
Chief Executive as soon as is possible of any
determination made pursuant to this Clause 61.7
giving reasons for any determination so made and the
Secretary shall immediately notify all Parties of
such determination upon receipt.
61.7.4 Confirmation: the Director shall confirm to the
Executive Committee upon any determination pursuant
to this Clause 61.7 that a Pool Civil Emergency
Period shall terminate, that he has taken full
account of all relevant matters, the views of such
relevant Parties and has obtained the approval of the
Secretary of State.
61.7.5 Termination of a Pool Rules Civil Emergency Period
within a
continuing Pool Civil Emergency Period:
(a) The Executive Committee may, by resolution carried by
a majority of not less than 65 percent of the total votes
of all Committee Members whether or not present,
terminate any current Pool Rules Civil Emergency Period
whenever it considers, in its absolute discretion, that the
continued application of the modified Pool Rules as set
out in Section 32.3 of Schedule 9 to be, in the
circumstances, no longer appropriate.
(b) The relevant Pool Rules Civil
Emergency Period shall terminate
following the passing of that
resolution at the Relevant Time
relative to the time at which that
resolution is passed.
(c) The Secretary, on behalf of the
Executive Committee, shall as soon
as is possible after the passing of
such resolution give notice to all
Parties, the Director and the
Secretary of State in accordance
with Clause 75 that the relevant
Pool Rules Civil Emergency Period is
to so terminate.
(d) Whenever Section 28 of Schedule 9
enters into force and effect, in
accordance with this Agreement, any
Pool Rules Civil Emergency Period
then current shall terminate at the
time that such Section so enters
into
force and effect.
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61.7.6 Effect of Termination:
(a) Pool Civil Emergency Period: upon
the termination of any Pool Civil
Emergency Period the Civil Emergency
Pool Credit Facility shall forthwith
cease to be utilized and, where
there is a concurrent Pool Rules
Civil Emergency Period, the
provisions of Section 32 of Schedule
9, shall forthwith cease to be
effective.
(b) Pool Rules Civil Emergency Period
within a current and continuing Pool
Civil Emergency Period: upon the
termination of any Pool Rules Civil
Emergency Period within a current
and continuing Pool Civil Emergency
Period the provisions of Section
32.3 of Schedule 9 shall forthwith
cease to be effective.
61.8 REFERENCE TO DIRECTOR
61.8.1 Reference to the Director: if any dispute shall arise
between
the Executive Committee and any Pool Member:
(a) as to whether the Executive
Committee ought to have concluded
that the conditions for the
initiation of a Pool Civil Emergency
Period in accordance with Clause
61.3.2 were satisfied either as a
matter of fact or such that there
was a Pool Civil Emergency within
the spirit of the statement of
intent set out at Clause 61.2.1; or
(b) as to whether the Executive
Committee ought or ought not to have
exercised its right of veto pursuant
to Clause 61.5.3(b) in respect of
the commencement of a Pool Rules
Civil Emergency Period; or
(c) as to whether a Pool Rules Civil
Emergency Period within a current
and continuing Pool Civil Emergency
Period ought or ought not to have
been terminated by the Executive
Committee in accordance with Clause
61.7.5 above,
the dispute may be referred by notice of
the dispute given in writing by the
relevant Pool Member to the Director and as
if such Pool Member were exercising a
Dissentient Pool Member's right of appeal
pursuant to Clause 13.5. The Director shall
determine the matter within 60 days of
receipt of
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such referral. Notice of any such referral
shall be given to the Executive Committee
at the same time that the dispute is so
referred.
61.8.2 Content and Effect of Determination:
(a) If the Director shall determine in
accordance with 61.8.1 that a Pool
Civil Emergency Period or Pool Rules
Civil Emergency Period should
commence, or a s the case may be,
resume, then:-
(i) in the case of a Pool Civil
Emergency Period, upon such
determination having been
notified to the Secretary
in accordance with 61.8.3,
a Pool Civil Emergency
Period shall commence or,
as the case may be, resume;
and
(ii) in the case of a Pool Civil
Emergency Period, such
period shall commence at
the Relevant Time relative
to the time at which such
determination has been
notified to the Secretary
in accordance with 61.8.3;
or
(b) If the Director shall determine in
accordance with 61.8.1 that a
continuing Pool Civil Emergency
Period or Pool Rules Civil Emergency
Period should terminate, then:-
(i) in the case of a
Pool Civil
Emergency Period,
upon such
determination
having been
notified to the
Secretary in
accordance with
61.8.3, the then
current Pool Civil
Emergency Period
shall terminate;
and
(ii) in the case of a
Pool Rules Civil
Emergency Period,
the then current
such period shall
terminate at the
Relevant Time
relative to the
time at which such
determination has
been notified to
the Secretary in
accordance with
61.8.3.
61.8.3 Notification (4): the Director shall notify in
writing the
Secretary, the Pool Chairman and the Chief Executive
as soon
as is possible of any determination made pursuant
to this
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Clause 61.8 giving reasons for any determination so
made and the Secretary shall immediately notify all
Parties of such determination upon receipt.
61.9 MODIFICATION OF PROCEDURES
Modification of Procedures: neither the procedures for a poll set out
in Clause 22 nor the provisions of Clause 13.4 shall apply to any
resolution of the Executive Committee referred to in this Part XVI, and
there shall be no right of referral of the matter the subject of such
resolution to the Pool Members in general meeting.
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PART XVII
TRADING SITE
62. TRADING SITE
Trading Site: the provisions of Schedule 17 shall have effect.
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PART XVII
THE POOL FUNDS ADMINISTRATOR, BILLING AND SETTLEMENT
63. THE POOL FUNDS ADMINISTRATOR
63.1 Responsibilities: the Pool Funds Administrator shall have the
following duties,
responsibilities and obligations, namely:-
63.1.1 to comply with all the obligations set out in this Agreement
and the Agreed Procedures in respect of the establishment,
maintenance and operation of the Funds Transfer System and to
carry out its obligations under the Funds Transfer Agreement;
63.1.2 to keep under review and to make recommendations to the
Executive Committee on its own initiative or whenever
requested by the Executive Committee concerning:-
(a) any change to the Funds Transfer System
(or any part or aspect thereof);
(b) the appointment of a new Pool Banker;
(c) any change to Schedule 11 or 15; and
(d) any change to the Funds Transfer Agreement,
which the Pool Funds Administrator may consider
desirable. In making such recommendations, the Pool
Funds Administrator shall have regard to, and shall
provide details of, the cost of implementing such
changes (which cost would be charged or recharged to
Pool Members) and shall recommend whether, in light
of those costs, certain parties or categories of
party to the Agreement should be exempted from such
changes or whether special provisions for such
parties or categories of party should be adopted;
63.1.3 (a) to maintain such records, data and other information
as the Pool Auditor may, after
consultation with the Executive
Committee, from time to time by notice in writing
and in reasonable detail to the Pool
Funds Administrator, require for
the purposes of Part IX,or as may otherwise be
reasonably necessary to enable the Pool Funds
Administrator to comply
promptly and fully with all its obligations under
this Agreement, the Agreed Procedures
or the Funds Transfer
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Agreement, in either such case in such form as the
Pool Auditor may from time to time by notice to the
Pool Funds Administrator require or (in the absence
of such notification) in such form as a reasonably
prudent operator of the Funds Transfer System would
adopt; and
(b) to maintain such records, data and other
information as H.M.
Customs and Excise may from time to time
require of the Pool
Funds Administrator;
63.1.4 to retain in machine readable form or hard copy form for a
period of not less than eight years (or such longer period as
any applicable law may require) and in any event in hard copy
form (which for these purposes shall include microfiche) for a
period of not less than one year copies of the records, data
and other information received and processed by the Pool Funds
Administrator in connection with its performance of the
Services including:-
(a) (to the extent relevant for the
performance of the Services)
Settlement Runs and Settlement Re-runs;
(b) Advice Notes and Confirmation Notices;
(c) bank statements in respect of the Pool
Accounts;
(d) Pool Ledger Accounts;
(e) Payments Calendars;
(f) a record of all Default Interest Rates and
Reserve Interest Rates calculated from time
to time (including the period to which each
interest rate relates);
(g) details of Security Cover supplied and to
be supplied by each Supplier; and
(h) correspondence between the Pool Funds
Administrator, on the one hand, and the
Executive Committee, the Pool Chairman, the
Chief Executive, any Pool Member, the Pool
Banker, any Collection Bank, the Settlement
System Administrator, the Ancillary
Services Provider, the Director, the Pool
Auditor, the Grid Operator and any other
relevant bank of institution, on the other
hand;
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63.1.5 to provide to the Executive Committee and the Chief Executive
upon request records, data and other information concerning the
Funds Transfer System (and any part thereof) (unless disclosure
would breach any duty of confidentiality imposed on the Pool
Funds Administrator) and which the Pool Funds Administrator is
required to retain under paragraph 63.1.3 or 63.1.4 (and each of
the Parties agrees to the release of all such records, data and
other information in the circumstances and manner described in
this paragraph 63.1.5);
63.1.6 to provide to the Pool Auditor upon request records, data and
other information concerning the Funds Transfer System (and
any part thereof) and which the Pool Funds Administrator is
required to maintain and retain under paragraph 63.1.3 or
63.1.4 (and each of the Parties agrees to the release of all
such records, data and other information in the circumstances
and manner described in this paragraph 63.1.6);
63.1.7 subject to the provisions of Part XX, to provide a certified
copy of such records, data and other information concerning the
Funds Transfer System (and any part thereof) and amounts payable
by or to any Pool Member or the Ancillary Services Provider as
the relevant Pool Member or (as the case may be) the Ancillary
Services Provider may reasonably request for the purpose of
establishing the amounts which are owed to or by such Pool Member
or the Ancillary Services Provider in accordance with this
Agreement, and in any event such information as any Pool Member
or the Ancillary Services Provider may request from the Pool
Funds Administrator in order to establish or prove a claim to any
amounts due or claimed to be due. The Pool Funds Administrator
shall forthwith upon such request provide such information upon
delivery (if so required by the Pool Funds Administrator) of a
certificate from the counsel of such Pool Member or the Ancillary
Services Provider certifying that, in such counsel's opinion,
such information is required for such purpose;
63.1.8 to issue Advice Notes and Confirmation Notices within the times
and containing the details required by Schedule 11;
63.1.9 upon request, promptly to supply on its own behalf and on
behalf of Pool Members and the Ancillary Services Provider
(with a copy to the Pool Member concerned and the Ancillary
Services Provider) any information (including copies of
documents) to H.M. Customs and Excise, and to co-operate in
any investigation by H.M. Customs and Excise or H.M. Inspector
of Taxes relating to the Funds Transfer System (or any part or
aspect thereof);
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63.1.10 in respect of each calendar quarter, to issue to all Pool
Members, the Executive Committee, the Chief Executive, the
Settlement System Administrator and the Ancillary Services
Provider no later than the fifth Business Day after each calendar
quarter a statement enabling the identification of who may
constitute Majority Default Calling Creditors during that
calendar quarter (and the Parties hereby agree to such disclosure
being made);
63.1.11 except in respect of moneys received on account of the PFA
Operating Costs, the PFA Handling Charge, the Annual Fee or Bank
Charges in accordance with the accounting procedure set out in
Schedule 15 or the consideration received pursuant to sub-section
5.1 or 5.2 of that Schedule, to pay all moneys received by it
from a Pool Member or the Ancillary Services Provider in
accordance with Schedule 11 into a pool Account to be held in
trust in accordance with the provisions of Schedule 11; and
63.1.12 to comply with all its other obligations under this Agreement
(including Schedules 11 and 15) and the Agreed Procedures,
and expression defined in Schedules 11 and 15 shall have the same
respective meanings when used in this Clause 63.1.
63.2 Standard of care: in the exercise of its duties and responsibilities
under this Agreement and the agreed Procedures the Pool Funds
Administrator shall exercise that degree of care, diligence, skill and
judgment which would ordinarily be expected of a reasonably prudent
operator of the Funds Transfer System taking into account the
circumstances actually known to the Pool Funds Administrator, its
officers and employees at the relevant time or which ought to have been
known to it or them had it or they made such inquiries as were
reasonable in the circumstances. In particular, but without prejudice
to the generality of the foregoing, in the absence of directions and
instructions given to it by the Executive Committee under this
Agreement and having due regard to the resources available to it, the
Pool Funds Administrator shall at all times conduct itself in a manner
calculated to achieve the principal objects and purpose of this
Agreement set out in Clauses 4.1.2 and 4.1.3.
63.3 UK value added tax indemnity:
63.3.1 Indemnity (1): without prejudice to paragraph 63.3.2 all Pool
Members shall jointly and severally indemnify and keep
indemnified the Pool Funds Administrator, its officers,
employees and agents (and, as between the Pool Members,
according to their respective Contributory Shares at the time
of receipt of the request for indemnification, calculated on
the basis that the points allocated to the Pool Member in
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default are disregarded) against any liability which the Pool
Funds Administrator may incur as a result of the failure of
any Pool Member or the Ancillary Services Provider (as the
case may be) properly to account to H.M. Customs and Excise
for all amounts of United Kingdom Value Added Tax payable or
receivable by it in respect of any supplies of electricity or
Ancillary Services.
63.3.2 Indemnity (2): if any Pool Member or the Ancillary Services
Provider shall fail properly to account for any amount of
United Kingdom Value Added Tax payable or receivable by it,
that person shall indemnify and keep indemnified each Pool
Member (on an after tax basis, but taking account of any tax
relief available to the relevant Pool Member) against any
liability which such Pool Member shall incur pursuant to
paragraph 63.2.1.
63.4 Schedule 15:
63.4.1 subject to the rights of each of the Parties under this
Agreement, all Parties hereby agree promptly to execute and
deliver all agreements and other documentation necessary to
give effect to any act, matter or thing done by the Executive
Committee in accordance with Schedule 15 (including the
removal of the incumbent Pool Funds Administrator and the
appointment of a successor in accordance with the terms
thereof).
63.4.2. Schedule 15 provides that certain matters may be referred by the
Executive Committee to arbitration pursuant to Clause 83. In making
any such reference or in alleging that any such reference is being
made pursuant to Clause 83 the Executive Committee shall act (and is
hereby irrevocably authorized by each of the Pool Members to act) as
the sole and exclusive representative of all the Pool Members and the
Pool Funds Administrator hereby agrees that the Executive Committee
shall have the authority so to act.
63.4 Schedule 15:
63.4.1 subject to the rights of each of the Parties under this
Agreement, all Parties hereby agree promptly to documentation
necessary to give effect to any act, accordance with Schedule
15 (including the removal of the incumbent Pool Funds
Administrator and the appointment of a successor in accordance
with the terms thereof).
63.4.2 Schedule 15 provides that certain matters may be referred by
the Executive Committee to arbitration pursuant to Clause 83.
In making any such reference or in alleging that any such
reference is being made
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pursuant to Clause 83 the Executive Committee shall act (and
is hereby irrevocably authorized by each of the Pool Member to
act) as the sole and exclusive representative of all the Pool
Members and the Pool Funds Administrator hereby agrees that
the Executive Committee shall have the authority so to act.
64. PROCEDURES MANUAL
64.1 Preparation: within 28 days after the Effective Date (or such longer
period as the Executive Committee may approve) the Pool Funds
Administrator shall prepare, or cause to be prepared, a Procedures
Manual which is shall submit to the Executive Committee for its review.
The Executive Committee shall give its comments on the Procedures
Manual to the Pool Funds Administrator within 28 days after receipt
thereof and the Pool Funds Administrator shall revise, or cause to be
revised, the Procedures Manual to the satisfaction of the Executive
Committee within 21 days after receipt of such comments (or such longer
period as the Executive Committee may approve). Promptly thereafter the
Pool Funds Administrator shall provide the Executive Committee with
sufficient copies of the revised Procedures Manual for distribution by
the Executive Committee to all Parties, the Pool Auditor, the Pool
Banker and the Director.
64.2 Amendments: where from time to time any amendments to the Procedures
Manual are necessary to reflect changes in the systems and/or
procedures associated with the Funds Transfer System, the procedure set
out in Clause 64.1 shall apply mutatis mutandis.
64.3 Costs: the costs of producing, revising and amending the Procedures
Manual shall be borne by the Pool Funds Administrator and recovered by
it in accordance with the provisions of Schedule 11 as part of its
charges.
65. BILLING AND SETTLEMENT
The provisions of Schedule 11 shall have effect.
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PART XIX
DEFAULT, TERM AND TERMINATION
66. DEFAULT
66.1 Default (1): at any time after the occurrence of any of the events
referred to in Clause 66.3.1, 66.3.2 or 66.3.3 and so long as such
event continues unremedies or unwaived by Majority Default Calling
Creditors:-
66.1.1 Majority Default Calling Creditors may, upon reaching a bona fide
conclusion that the reason for the failure by the Defaulting Pool
Member under Clause 66.3.1, 66.3.2 or 66.3.3 is other than
administrative or banking error (having taken into account the
representations, if any, of the Defaulting Pool Member made within 24
hours after request therefor is made to the Defaulting Pool Member on
behalf of the Majority Default Calling Creditors, which request
Majority Default Calling Creditors shall be obliged to make), by
notice to the Defaulting Pool Member (copied to the Executive
Committee and the Director) declare such even an Event of Default;
66.1.2 at the same time as Majority Default Calling Creditors declare such
an Event of Default or at any time thereafter, Majority Default
Calling Creditors may by notice to the Executive Committee (copied to
the Defaulting Pool Member and the Director) require the Executive
Committee to suspend (which the Executive Committee shall forthwith
do) all voting rights of the Defaulting Pool Member under this
Agreement for a specified period (being not more than 90 days) and,
upon the Executive Committee giving notice to such effect to the
Defaulting Pool Member (copied to the Director), such voting rights
(but not any other rights or any liabilities or obligations of the
Defaulting Pool Member) shall be suspended for such period; and
66.1.3 where:-
(a) the Defaulting Pool Member is a Public Electricity Supplier, no
earlier than 28 days after the date of the notice referred to in
Clause 66.1.1.; and
(b) in any other case, at the same time as Majority Default Calling
Creditors declare such an Event of Default or at any time thereafter,
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Majority Default Calling Creditors may by notice to
Defaulting Pool Member (copied to the Executive
Committee, the Settlement System Administrator, the
Grid Operator, the Pool Funds Administrator the
Ancillary Services Provider and the Director) require
the Defaulting Pool Member to cease to be a Party
with effect from the date of its De-energisation and
until such date all voting rights of the Defaulting
Pool Member under this Agreement (but not any other
rights or any liabilities or obligations of the
Defaulting Pool Member) shall be automatically
suspended.
For the avoidance of doubt, Majority Default Calling Creditors
shall be at liberty to give notice under Clause 66.1.2 and,
upon expiry of the specified period referred to therein and
subject as provided in the foregoing provisions of this Clause
66.1, to give notice under Clause 66.1.3.
66.2 Default (2): at any time after the occurrence of any of the events
referred to in Clause 66.3 (other than (a) any of the events referred
to in Clause 66.3.1, 66.3.2 and 66.3.3 and (b) in the case where the
Defaulting Pool Member is unable to pay its debts as referred to in
Clause 66.3.6(a), unless any of the other events referred to in Clause
66.3 has occurred and is continuing) and so long as such event
continues unremedied or unwaived by the Pool Members in general meeting
the Executive Committee may (and shall if so directed by the Pool
Members in general meeting):-
66.2.1 by notice to the Defaulting Pool Member (copied to the
Director) declare such event and Event of Default and suspend
all voting rights of the Defaulting Pool Member under this
Agreement for a specified period (being not more than 90 days)
whereupon such voting rights (but not any other rights or any
liabilities or obligations of the Defaulting Pool Member)
shall be suspended for such period; and
66.2.2 upon the expiry of such period by notice to the Defaulting Pool
Member (copied to the Settlement System Administrator, the Grid
Operator, the Pool Funds Administrator, the Ancillary Services
Provider and the Director) require the Defaulting Pool Member to cease
to be a party to this Agreement with effect from the date of its
De-energisation and until such date all voting rights of the
Defaulting Pool Member under this Agreement (but not any other rights
or any liabilities or obligations of the Defaulting Pool Member) shall
be automatically suspended.
66.3 Events of Default: the event referred to in the foregoing provisions
of this Clause 66 are:-
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66.3.1 the Pool Member in question (the "Defaulting Pool Member")
shall fail to provide or maintain or renew in accordance with
Schedule 11 the requisite amount of Security Cover determined
pursuant to that Schedule; or
66.3.2 the Defaulting Pool Member shall fail to pay in the manner
provided in this Agreement any sum payable by it to any Pool
Creditor within three Business Days after its due date; or
66.3.3 the Defaulting Pool Member shall fail to pay in the manner
provided in this Agreement any sum payable by it hereunder to
the Settlement System Administrator or the Pool Funds
Administrator within 28 days after the Settlement System
Administrator or (as the case may be) the Pool Funds
Administrator has given notice to it (copied to the Executive
Committee and the Director) that payment has not been received
and requiring such default to be remedied; or
66.3.4 the Defaulting Pool Member shall fail to pay in the manner
provided in this Agreement any sum payable by it hereunder to
the Executive Committee within 28 days after the Executive
Committee has given notice to it (copied to the Director) that
payment has not been received and requiring such default to be
remedied; or
66.3.5 the Defaulting Pool Member shall fail in any material respect
to perform or comply with any of its other obligations under
this Agreement and such default (if it is capable of remedy)
is not remedied within a reasonable period of time (not
exceeding 90 days) after the Executive Committee has given
notice to the Defaulting Pool Member (copied to the Director)
of the occurrence thereof and requiring the same to be
remedied; or
66.3.6 the Defaulting Pool Member:-
(a) is unable to pay its debts (within the meaning of section 123(1) or
(2) of the Insolvency Act 1986, but subject as hereinafter provided in
this Clause 66.3.5) or if any voluntary agreement is proposed in
relation to it under section 1 of that Act or enters into any scheme
of arrangement (other than for the purpose of reconstruction or
amalgamation upon terms and within such period as may previously have
been approved in writing by the Executive Committee);
(b) has a receiver (which expression shall include an administrative
receiver within the meaning of section 29 of the
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Insolvency Act 1986) of the whole or any material part of its assets or
undertaking appointed;
(c) has an administration order under section 8 of the Insolvency Act 1986
made in relation to it;
(d) passes any resolution for winding-up other than a resolution
previously approved in writing by the Executive Committee; or
(e) becomes subject to an order by the High Court for winding-up.
For the purposes of paragraph (a) above section
123(1)(a) of the Insolvency Act 1986 shall have
effect as if the "(pound)750" there was substituted
(pound)10,000 and, further, the Defaulting Pool
Member shall not be deemed to be unable to pay its
debts for the purposes of paragraph (a) above it any
such demand as is mentioned in the said section is
being contested in good faith by the Defaulting Pool
Member with recourse to all appropriate measures and
procedures; or
66.3.7 the License (if any) granted to the Defaulting Pool Member is
determined or revoked or otherwise ceases to be in force for
any reason whatsoever,
in any such case for whatever reason and whether reason and whether or
not within the control of the Defaulting Pool Member.
66.4 De-energisation:
66.4.1 if the Majority Default Calling Creditors shall give notice to a
Defaulting Pool Member under Clause 66.1.3 or the Executive Committee
shall give notice to a Defaulting Pool Member under Clause 66.2.2 the
Defaulting Pool Member shall forthwith, and in compliance with the
instructions of the Grid Operator or (in the case of any connection to
a User whose System it is (the "Relevant User"), take all
------------- such action as may be necessary to give effect to the
relevant De- energisation.
66.4.2 If the Defaulting Pool Member shall fail to take such action
as is referred to in Clause 66.4.1 within 48 hours after the
date of any such notice referred to therein, the Grid Operator
and/or, as the case may be, the Relevant User undertakes to
each of the other Parties and the Executive Committee to use
reasonable endeavors to effect or (as the case may be) give
instructions to effect such De-energisation as quickly
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as practicable having regard to all the circumstances
affecting such De-energisation (including any operational
difficulties and relevant License duties).
66.4.3 Each Pool Member hereby irrevocably and unconditionally
consents to its De-energisation by the Grid Operator and/or,
as the case may be, the Relevant User in the circumstances set
out in Clause 66.4.2.
66.5 Sharing of risk: where an Event of Default is declared under Clause
66.1.1 or 66.2.1 in respect of a Defaulting Pool Member which is a
Public Electricity Supplier, then for the period beginning on the date
of the notice declaring such Event of Default until the earlier of:-
66.5.1 the date falling 28 days thereafter; and
66.5.2 the date on which the Event of Default has been remedied or
waived by Majority Default Calling Creditors or (as the case
may be) the Pool Members in general meeting,
(but not further or otherwise) each Pool Member (other than the
Defaulting Pool Member) shall be severally liable for its Contributory
Share (calculated on the basis that the Points allocated to the
Defaulting Pool Member and Ancillary Services during each complete
Settlement Day falling within such period and which are not paid on the
due date therefor by the Defaulting Pool Member. The Defaulting Pool
Member shall indemnify and keep indemnified each Pool Member on demand
against all sums properly paid by such Pool Member pursuant to this
Clause 66.5 together with interest thereon from the date of payment by
such Pool Member to the date of its reimbursement (as well after as
before judgment) at the Default Interest Rate.
66.6 Indemnity on De-energisation: where under Clause 66.4 the Grid
Operator and/or the Relevant User is required to effect or (as the
case may be) give instructions to effect a De-energisation the
Defaulting Pool Member, failing which, each Pool Member (but, in the
case of each Pool Member, only in respect of its Contributory Share at
the time of receipt of the request for indemnification, calculated on
the basis that the Points allocated to the Defaulting Pool Member are
disregarded) shall indemnify and keep indemnified the Grid Operator
and/or the Relevant User (as the case may be) on demand against any
and all liability, loss or damage which it may suffer or incur by
reason of effecting or giving instructions to effect such
De-energisation.
66.7 Accrued rights and liabilities:
66.7.1 the suspension of a person as a Pool Member and the cessation
of a person as a Pool Member and/or a Party for whatever
reason shall not prejudice its accrued rights and liabilities
under this Agreement as at
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the date of its suspension or (as the case may be) cessation
or its rights and liabilities under this Agreement which may
accrue in relation to the period during which it was not so
suspended or (as the case may be) it was a Party or any of its
obligations under this Agreement which are expressed to
continue notwithstanding such suspension or cessation.
66.7.2 Without prejudice to the generality of Clause 66.7.1, a
Defaulting Pool Member shall be liable for all sums (including
United Kingdom Value Added Tax) which it is required under
this Agreement to pay in respect of electricity taken by it
and Ancillary Services pending its De-energisation pursuant to
Clause 66.4.
67. TERM AND TERMINATION
67.1 Term: this Agreement shall have no fixed duration.
67.2 Suspension of Pool Member's voting rights: a Pool Member's voting
rights shall be suspended only in the circumstances and to the extent
specified in Clauses 66.1.2 and 66.2.1.
67.3 Termination as a Party: a Pool Member shall cease to be a Party only:-
67.3.1 in the circumstances and to the extent specified in Clauses 8.7 to
8.10 (inclusive);
67.3.2 in the circumstances and to the extent specified in Clauses 66.1.3
and 66.2.2; or
67.3.3 if, by unanimous resolution of all Committee Members, the
Executive Committee shall so reasonably determine and the
prior written consent of the Director shall have been
obtained.
67.4 Termination of the Agreement:
67.4.1 this Agreement may be terminated if a resolution of Pool
Members in general meeting is unanimously carried by those
Pool Members present in person or by proxy at the relevant
general meeting and the prior written consent of the Director
has been obtained.
67.4.2 The termination shall take effect from whichever is the later
in time of the date of the resolution referred to in Clause
67.4.1 and the consent in writing of the Director referred to
in that Clause.
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67.5 Clause exhaustive: the Pool Members agree that the foregoing provisions
of this Clause 67, when read with the Clauses referred to herein and
Clause 8.11, are exhaustive of the rights of suspension of a Pool
Member's voting rights, of termination of Pool Membership, of cessation
as a Party and of termination of this Agreement.
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PART XX
CONFIDENTIALITY
66. DEFINITIONS AND INTERPRETATION
66.1 Definitions: in this Part XX, except where the context otherwise
requires:-
"Authorised Recipient" means, in relation to any Protected Information,
any Business Person who, before the Protected Information had been
divulged to him by NGC or any subsidiary of NGC, had been informed of
the nature and effect of Clause 69 and who requires access to such
Protected Information for the proper performance of his duties as a
Business Person in the course of Permitted Activities;
"Business Person" means any person who is a Main Business Person or a
Corporate Functions Person, and "Business Personnel" shall be construed
accordingly;
"Confidential Information" means all data and other information
supplied to the Obligor or any nominee of the Obligor appointed
pursuant to paragraph 10 of Appendix 4 of Schedule 9 by another Party
under the provisions of this Agreement, and shall include copies of the
load modules referred to in Clause 42.5;
"Corporate Functions Person" means any person who:-
(a) is a director of NGC; or
(b) is an employee of NGC or any of its subsidiaries carrying out any
administrative, finance or other corporate services of any kind which
in part relate to the Main Business; or
(c) is engaged as an agent of or an adviser to or performs work in
relation to or services for the Main Business;
"Generation Business" has the same meaning as in the NGC Transmission
License;
"Main Business" means any business of NGC or any of its subsidiaries as
at the Effective Date or which it is required to carry on under the NGC
Transmission License, other than the Generation Business;
"Main Business Person" means any employee of NGC or any director or
employee of its subsidiaries who is engaged solely in the Main
Business, and "Main Business Personnel" shall be construed accordingly;
"Obligor" has the meaning given that expression in Clause 70.1;
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"Permitted Activities" means activities carried on for the purposes of the
Main Business; and
"Protected Information" means any information relating to the affairs
of a Party which is furnished to Business Personnel pursuant to this
Agreement unless, prior to such information being furnished, such Party
has informed the recipient thereof by notice in writing or by
endorsement on such information that the said information is not to be
regarded as Protected Information.
68.2 Interpretation: for the avoidance of doubt, data and other information
which any Party is permitted or obliged to divulge or publish to any
other Party pursuant to this Agreement shall not necessarily be
regarded as being in the public domain by reason of being so divulged
or published.
69. CONFIDENTIALITY FOR NGC AND ITS SUBSIDIARIES
69.1 Protection of Protected Information: NGC and its subsidiaries in each
of their capacities in this Agreement shall secure that Protected
Information is not:-
69.1.1 divulged by Business Personnel to any person unless that person is
an Authorised Recipient;
69.1.2 used by Business Personnel for the purposes of obtaining for NGC or
any of its subsidiaries or for any other person:-
(a) any electricity license; or
(b) any right to purchase or otherwise acquire, or to distribute,
electricity (including rights under any electricity purchase contract,
as defined in the NGC Transmission License); or
(c) any contract or arrangement for the supply of electricity to Customers
or Suppliers; or
(d) any contract for the use of any electrical lines or electrical plant
belonging to or under the control of a Supplier; or
(e) control of any body corporate which, whether directly or indirectly,
has the benefit of any such license, contract or arrangement; and
69.1.3 used by Business Personnel for the purpose of carrying on any activities
other than Permitted Activities
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except with the prior consent in writing of the Party to whose affairs
such Protected Information relates.
69.2 Exceptions: nothing in this Clause 69 shall apply:-
69.2.1 to any Protected Information which, before it is furnished to
Business Personnel, is in the public domain; or
69.2.2 to any Protected Information which, after it is furnished to
Business Personnel:-
(a) is acquired by NGC or any subsidiary of NGC in circumstances
in which this Clause 69 does not apply; or
(b) is acquired by NGC or any subsidiary of NGC in circumstances
in which this Clause 69 does apply and thereafter ceases to
be subject to the restrictions imposed by this Clause 69; or
(c) enters the public domain,
and in any such case otherwise than as a result of (i) a
breach by NGC or any subsidiary of NGC of its
obligations in this Clause 69 or (ii) a breach by the
person who disclosed that Protected Information of that
person's confidentiality obligation and NGC or any of
its subsidiaries is aware of such breach; or
69.2.3 to the disclosure of any Protected Information to any person
if NGC or any subsidiary of NGC is required or expressly
permitted to make such disclosure to such person:-
(a) in compliance with the duties of NGC or any subsidiary
of NGC under the Act or any other requirement of a
Competent Authority; or
(b) in compliance with the conditions of the NGC
Transmission License or any document referred to in the
NGC Transmission License with which NGC or any
subsidiary of NGC is required by virtue of the Act or
the NGC Transmission License to comply; or
(c) in compliance with any other requirement of law; or
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(d) in response to a requirement of any stock exchange or
regulatory authority or the Panel on Take-overs and
Mergers; or
(e) pursuant to the arbitration rules for the Electricity
Arbitration Association or pursuant to any judicial or
other arbitral process or tribunal having jurisdiction
in relation to NGC or its subsidiaries; or
69.2.4 to any Protected Information to the extent that NGC
or any of its subsidiaries is expressly permitted or
required to disclose that information under the terms
of any agreement or arrangement (including this
Agreement, the Grid Code, the Distribution Codes and
the Fuel Security Code) with the Party to whose
affairs such Protected Information relates; or
69.2.5 to any Protected Information but only to the extent
that it has been properly provided to NGC or any
subsidiary of NGC by the Settlement System
Administrator pursuant to any provision of the Pool
Rules.
69.3 Use of information by NGC: NGC and each of its subsidiaries may use al and
any information or data supplied to or acquired by it from or in relation
to the Parties in performing Permitted Activities including, for the
following purposes:-
69.3.1 the operation and planning of the NGC Transmission System;
69.3.2 the calculation of charges and preparation of offers of terms
for connection to or use of the NGC Transmission Systems;
69.3.3 the operation and planning of the Ancillary Services Business
and the calculation of charges therefor;
69.3.4 the operation of the Settlements Business;
69.3.5 the provision of information under the British Grid Systems
Agreement and the EdF Documents,
and may pass the same to subsidiaries of NGC which carry out such
activities and the Parties agree to provide all information to NGC and
its subsidiaries for such purposes.
69.4 Restrictions on Business Personnel: NGC undertakes to each of the
other Parties that, having regard to the activities in which any
business person is engaged and the nature
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and effective life of the Protected Information divulged to him by
virtue of such activities, neither NGC nor any of its subsidiaries
shall unreasonably continue (taking into account any industrial
relations concerns reasonably held by it) to divulge Protected
Information or permit Protected Information to be divulged by any
subsidiary of NGC to any Business Person:-
69.4.1 who has notified NGC or the relevant subsidiary of his
intention to become engaged as an employee or agent of any
other person (either than of NGC or any subsidiary thereof)
who is:-
(a) authorised by license or exemption to generate, transmit or
supply electricity; or
(b) an electricity broker or who is known to be engaged in the
writing of electricity purchase contracts (as hereinbefore
defined); or
(c) known to be retained as a consultant to any such person who is
referred to in paragraph (a) or (b) above; or
69.4.2 who is to be transferred to the Generation Business,
save where NGC or such subsidiary could not, in all the circumstances,
reasonably be expected to refrain from divulging to such Business
Person Protected Information which is required for the proper
performance of his duties.
69.5 Identification of Protected Information: without prejudice to the other
provisions of this Clause 69, NGC shall procure that any additional
copies made of the Protected Information, whether in hard copy or
computerised form, will clearly identify the Protected Information as
protected.
69.5 Identification of Protected Information: without prejudice to the other
provisions of this Clause 69, NGC shall procure that any additional
copies made of the Protected Information, whether in hard copy or
computerised form, will clearly identify the Protected Information as
protected.
69.6 Corporate Functions Person: NGC undertakes to use all reasonable
endeavours to procure that no employee is a Corporate Functions
Person unless the same is necessary for the proper performance of
his duties.
69.7 Charge restriction condition variable: without prejudice to Clause
69.3, NGC and each of its subsidiaries may use and pass to each other
all and any Period Metered Demand data supplied to or acquired by it
and all and any information and data supplied to it pursuant to Section
OC6 of the Grid Code for the purposes of Demand
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Control (as defined in the Grid Code), but in each case only for the
purposes of its estimation and calculation from time to time of the
variable "system maximum ACS demand" (as defined in Condition 4 of the
NGC Transmission License).
69.8 Ancillary Services: NGC shall secure that Protected Information which
is subject to the provisions of Clause 69.1 and which relates to the
cost of Reactive Power provided by each individual Generator is not
divulged to any Business Person engaged in the provision of static
compensation for use by the Grid Operator.
69.9 Metering data - Distribution System: any information regarding, or data
acquired by the Settlement Administrator or its agent from, Metering
Equipment at Sites which are a point of connection to a Distribution
System shall and may be passed by the Settlement System Administrator
or his agent to the operator of the relevant Distribution System. The
said operator of the relevant Distribution System may use the same only
for the purposes of the operation of such Distribution System and the
calculation of charges for use of and connection to such Distribution
System.
69.10 Metering data - Qualifying Arrangements: the Settlement System
Administrator and the Grid Operator shall and may pass any relevant
information and data relating to the Genset Metered Generation
(including, for the avoidance of doubt, all relevant Metered Data, as
defined in paragraph 3.1.2 of Schedule 9) of any of the Generating
Units which are the subject of qualifying arrangements (as defined in
section 33 of the Act) to such persons as may be specified from time to
time pursuant to such qualifying arrangements.
70. CONFIDENTIALITY OTHER THAN FOR NGC AND ITS SUBSIDIARIES
70.1 General obligation: each party (other than NGC and its subsidiaries)
(the "Obligor") hereby undertakes with each other Party (including NGC
and its subsidiaries that it shall preserve the confidentiality of, and
not directly or indirectly reveal, report, publish, disclose or
transfer or use for its own purposes Confidential Information except:-
70.1.1 in the circumstances set out in Clause 70.2; or
70.1.2 to the extent otherwise expressly permitted by this Agreement;
or
70.1.3 with the prior consent in writing of the Party to whose affairs
such Confidential Information relates; or
70.1.4 to the extent that it has been properly provided to the
Obligor by the Settlement System Administrator pursuant to any
provision of the Pool Rules.
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70.2 Exceptions: the circumstances referred to in Clause 70.1.1 are:-
70.2.1 where the Confidential Information, before it is furnished to
the Obligor, is in the public domain; or
70.2.2 where the Confidential Information, after it is furnished to
the Obligor:-
(a) is acquired by the Obligor in circumstances in which this Clause
70 does not apply; or
(b) is acquired by the Obligor in circumstances in which this Clause
70 does apply and thereafter ceases to be subject to the
restrictions imposed by this Clause 70; or
(c) enters the public domain,
and in any such case otherwise than as a result of
(i) a breach by the Obligor of its obligations in
this Clause 70 or (ii) a breach by the person who
disclosed that Confidential Information of that
person's confidentiality obligation and the Obligor
is aware of such breach; or
70.2.3 if the Obligor is required or permitted to make disclosure of
the Confidential Information to any person:-
(a) in compliance with the duties of the Obligor under the Act or any
other requirement of a Competent Authority; or
(b) in compliance with the conditions of any Licence or any document
referred to in any Licence with which the Obligor is required to
comply; or
(c) in compliance with any other requirement of law; or
(d) in response to a requirement of any stock exchange or regulatory
authority or the Panel on Take-overs and Mergers; or
(e) pursuant to the arbitration rules for the Electricity Arbitration
Association or pursuant to any judicial or other arbitral process
or tribunal having jurisdiction in relation to the Obligor; or
70.2.4 to the employees, directors, agents, consultants and
professional advisers of the Obligor, in each case on the
basis set out in Clause 70.3.
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70.3 Internal procedures: with effect from the date of this Agreement the
Obligor shall adopt procedures within its organisation for ensuring the
confidentiality of all Confidential Information which it is obliged to
preserved as confidential under Clause 70.1 These procedures are:-
70.3.1 the Confidential Information will be disseminated within the
Obligor only on a "need to know" basis;
70.3.2 employees, directors, agents, consultants and professional
advisers of the Obligor in receipt of Confidentiality
Information will be made fully aware of the Obligor's
obligations of confidence in relation thereto; and
70.3.3 any copies of the Confidential Information, whether in hard
copy or computerised form, will clearly identify the
Confidential Information as confidential.
71. RELEASE OF INFORMATION
71.1 Notwithstanding any foregoing provisions of this Part XX, the Parties
agree that each of them shall be at liberty to provide copies of this
Agreement and the Initial Settlement Agreement and any supplemental
agreement to both or either thereof to any third party, and each of the
Parties consents to disclosure by any other Party of the fact that it
is a party to this Agreement and the Initial Settlement Agreement and,
where such is the case, a Pool Member.
71.1.1 The following provisions of this Clause are designed to
facilitate the release of certain data and other information
to persons who are not Parties. Such provisions are without
prejudice to any Party's rights to disclose or use data or
information pursuant to the other provisions of this Agreement
or otherwise.
71.1.2 At the request of the Executive Committee or any person who is
not a Party and against payment by or on behalf of the person to
whom the data or other information is to be released of a fee or
charge therefor calculated mutatis mutandis on the basis set out
in Clause 34.2, the Settlement System Administrator shall provide
to such person(s) as the Executive Committee may nominate or (as
the case may be) to the person requesting the same, data and
other information received by the Settlement System Administrator
in or derived from the operation of the Settlement System
provided that:-
(a) the Pool Rules specify that such data or other information may be
so released; or
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(b) the Party to whose affairs such data or
other information relates has given its
prior consent in writing to such
disclosure.
71.1.3 Upon request by the Executive Committee, the Settlement System
Administrator shall notify the Executive Committee in writing
of any request received by it from any person under Clause
71.1.2 and of the name of such person and shall give details
of the data and other information provided.
71.1.4 Each of the parties agrees to the release of data and other
information in the circumstances described in Clause 71.1.2.
71.2 The Parties acknowledge that, for the Executive Committee and each of
its sub-committees properly to carry out its duties and
responsibilities under this Agreement, the Executive Committee may
decide or be obliged to keep confidential to it (and may instruct its
sub-committees to keep confidential) matters, reports, data and other
information produced by or for, made available to or held by, the
Executive Committee or the relevant sub-committee and, in any such
case, Committee Members shall neither disclose the same to the Pool
Member(s) which they represent nor be required by such Pool Member(s)
so to disclose. Each of the Parties agrees to respect the position of
the Executive Committee, its sub-committees and the Committee Members
accordingly.
71.3 Each of the Parties other than the Settlement System Administrator, the
Grid Operator, the Ancillary Services Provider and the Pool Funds
Administrator agrees, subject to any relevant confidentiality
restriction binding on it, to provide the Executive committee, the
Chief Executive and the personnel referred to in Clause 17.2.1 with all
data and other information reasonably requested by the Executive
Committee and necessary for the Executive Committee, the Chief
Executive or (as the case may be) such personnel properly to carry out
its or his duties and responsibilities under this Agreement. The Grid
Operator and the Ancillary Services Provider each agree, subject to any
relevant confidentiality restriction binding on it, to provide the
Executive Committee, the Chief Executive and the personnel referred to
in Clause 17.2.1 with such data and other information relating to its
duties, responsibilities or obligations under this Agreement which the
Executive Committee shall reasonably request and which is necessary for
the Executive Committee, the Chief Executive or (as the case may be)
such personnel to carry out its or his duties and responsibilities
under this Agreement.
71.4 Each party acknowledges and agrees that no Party shall be in breach of
any obligation of confidentiality owed by it pursuant to this Agreement
in reporting under Clause 6.10 any breach of the Pool Rules or its
belief that any such breach has occurred.
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71.5 Notwithstanding any other provision of this Agreement, the provisions
of this Part XX shall continue to bind a person after its cessation as
a Party for whatever reason.
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PART XXI
THE PARTICIPATION OF NGC
72. THE PARTICIPATION OF NGC
72.1 As Grid Operator: for so long as NGC is the Grid Operator, references
in this Agreement to the Grid Operator shall be read and construed as
references to NGC acting in its capacity as Grid Operator, and all
rights, benefits, duties, responsibilities, liabilities and obligations
under this Agreement with regard to the Grid Operator shall be those of
NGC acting in that capacity.
72.2 As Ancillary Services Provider: for so long as NGC is the Ancillary
Services Provider, references in this Agreement to the Ancillary
Services Provider shall be read and construed as references to NGC
acting in its capacity as Ancillary Services Provider, and all rights,
benefits, duties, responsibilities, liabilities and obligations under
this Agreement with regard to the ancillary services Provider shall be
shoe of NGC acting in that capacity. The Ancillary Services Provider
shall have the benefit of the obligations and undertakings entered into
by the Settlement System Administrator and Pool Funds Administrator in
this Agreement.
72.3 As Pumped Storage Business: references in this Agreement to NGC Pumped
Storage shall be read and construed as references to the pumped storage
business division of NGC, and all rights, benefits, responsibilities,
liabilities and obligations of NGC Pumped Storage under this Agreement
shall be those of NGC acting in that capacity.
72.4 As Pool Member: the Parties acknowledge that, save in its capacity as NGC
Pumped Storage, NGC is not in any of its capacities under this Agreement a
Pool Member.
72.5 Wholly-owned subsidiary: NGC shall procure that so long as NGC
Settlements Limited is appointed Settlement System Administrator it
shall at all times remain a wholly-owned subsidiary of, and wholly
controlled by, NGC.
73. INTRA-COMPANY CONTRACTS
73.1 Intra-company contracts (1): NGC acknowledges and agrees that where, as
Ancillary Services Provider, it enters into an Ancillary Services
Agreement with NGC Pumped Storage for the purchase of Ancillary
Services NGC shall, in each of those capacities, comply with the terms
and conditions as if for the purpose the Ancillary Services Provider
and NGC Pumped Storage were separate legal entities.
73.2 Intra-company contracts (2): NGC acknowledges and agrees that where, as
Grid Operator, it enters into the Master Connection and Use of System
Agreement and/or any Supplemental Agreement with NGC Pumped Storage NGC
shall, in each of those
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capacities, comply with the terms and conditions as if for the purpose
the Grid Operator and NGC Pumped Storage were separate legal entities.
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PART XXII
MISCELLANEOUS
74. FORCE MAJEURE
74.1 Force Majeure: where the Settlement System Administrator, the Grid
operator, the Pool Funds Administrator or the Ancillary Services Provider
(the "Non-Performing Party") is unable to carry out all or any of its
obligations under this Agreement by reason of Force Majeure:-
74.1.15 this Agreement shall remain in effect; but
74.1.2 (a) the Non-Preforming Party's relevant obligations;
(b) the obligations of each of the other parties owed to the Non- Performing
Party under this Agreement; and
(c) any other obligations (not being payment
obligations) of such other Parties under
this Agreement owed inter se which the
relevant Party is unable to carry out
directly as a result of the suspension of
the Non-Performing Party's obligations.
shall be suspended for a period qual to the Force Majeure provided that:-
(i) the suspension of performance is of no greater scope and of no longer
duration than is required by the Force Majeure;
(ii) no obligations of any Party are excused as a result of the Force Majeure;
and
(iii) in respect of the suspension of the Non-Performing Party's obligations:-
(A) the Non-Performing Party gives the
Executive Committee (which shall
promptly inform the other Parties,
the Pool Auditor and the Director)
prompt notice describing the
circumstance of Force Majeure,
including the nature of the
occurrence and its expected
duration, and continues to furnish
daily reports with respect thereto
during the period of Force Majeure;
and
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(B) the Non-Performing Party uses all
reasonable efforts to remedy its
inability to perform.
74.2 Discussions: as soon as is practicable after the occurrence of the
Force Majeure the Non-Performing Party shall discuss with the Executive
Committee how best to continue its operations and give effect to its
obligations so far as possible in accordance with this Agreement.
75. NOTICES
75.1 Addresses: save as otherwise expressly provided in this Agreement, any
notice or other communication to be given by one Party to another
under, or in connection with the matters contemplated by, this
Agreement shall be addressed to the recipient and sent to the address,
telex number or facsimile number of such other Party given in this
Agreement for the purpose and marked for the attention of the person so
given or to such other address, telex number and/or facsimile number
and/or marked for such other attention as such other Party may from
time to time specify by notice given in accordance with this Clause 75
to the Party giving the relevant notice or other communication to it.
75.2 Executive Committee: any notice or other communication to be given to
the Executive Committee under, or in connection with the matters
contemplated by, this Agreement shall be sent to the Secretary at the
address, telex number or facsimile number given in this Agreement for
the purpose or to such other address, telex number or facsimile number
as the Secretary may from time to time specify by notice given in
accordance with this Clause 75 to the Parties.
75.2 Deemed receipt: save as otherwise expressly provided in this Agreement,
any notice or other communication to be given by any Party to any other
Party under, or in connection with the matters contemplated by, this
Agreement shall be in writing and shall be given by letter delivered by
hand or sent by first class prepaid post (airmail if overseas) or telex
or facsimile, and shall be deemed to have been received:-
75.3.1 in the case of delivery by hand, when delivered; or
75.3.2 in the case of first class prepaid post, on the second day
following the day of posting or (if sent airmail overseas or
from overseas) on the fifth day following the day of posting;
or
75.3.3 in the case of telex, on the transmission of the automatic
answer-back of the addressee (where such transmission occurs
before 1700 hours on the day of transmission) and in any other
case on the day following the day of transmission; or
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75,3,4 in the case of facsimile, on acknowledgement by the
addressee's facsimile receiving equipment (where such
acknowledgement occurs before 1700 hours on the day of
acknowledgement) and in any other case on the day following
the day of acknowledgement.
76. ASSIGNMENT
A Party shall not assign and/or transfer and shall not purport to
assign and/or transfer any of its rights and/or obligations under this
Agreement provided that any Party may assign by way of security only
all or any of its rights over receivables arising under this Agreement.
77. COUNTERPARTS
This Agreement may be executed in any number of counterparts and by the
different Parties on separate counterparts, each of which when executed
and delivered shall together constitute but one and the same
instrument.
78. WAIVERS; REMEDIES NOT CUMULATIVE
Waivers: no delay by or omission of any Party in exercising any right,
power, privilege or remedy under this Agreement shall operate to impair
such right, power, privilege or remedy or be construed as a waiver
thereof. Any single or partial exercise of any such right, power,
privilege or remedy shall not preclude any other or further exercise
thereof or the exercise of any other right, power, privilege or remedy.
78.2 Remedies not cumulative: the rights and remedies provided by this
Agreement to the Parties are exclusive and not cumulative and exclude
and are in place of all substantive (but not procedural) rights or
remedies express or implied and provided by common law or stature in
respect of the subject matter of this Agreement (other than any such
rights or remedies provided under section 58 of the Act or any
directions (if any) issued thereunder), including without limitation
any rights any Party may possess in tort which shall include actions
brought in negligence and/or nuisance. Accordingly, each of the Parties
hereby waivers to the fullest extent possible all such rights and
remedies provided by common law or statute, and releases a Party which
is liable to another (or others), its officer, employees and agents to
the same extent from all duties, liabilities, responsibilities or
obligations provided by common law or statute in respect of the mattes
dealt with in this Agreement and undertakes not to enforce any of the
same except as expressly provided herein.
78.3 Director's and Secretary of State's rights: for the avoidance of doubt, the
Parties acknowledge and agree that nothing in this Agreement shall exclude
or restrict or otherwise prejudice or affect any of the rights, powers,
privileges, remedies, duties
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and obligations of the Secretary of State or the Director under the Act or any
Licence or otherwise howsoever.
79. SEVERANCE OF TERMS
If for any reason whatever any provision of this Agreement is or
becomes invalid, illegal or unenforceable, or is declared by any court
of competent jurisdiction or any other Competent Authority to be
invalid, illegal or unenforceable or if such Competent Authority:-
79.1 refuses, of formally indicates an intention to refuse, authorisation
of, or exemption to, any of the provisions of or refusal either way of
outright refusal or by way of requiring the amendment or deletion of
any provision of this Agreement and/or the giving of undertakings or
the acceptance of conditions as to future conduct before such
authorisation or exemption can be granted); or
79.2 formally indicates that to continue to operate any provision of this
Agreement may expose the Parties to sanctions under any law, order,
enactment or regulation, or requests any Party to give undertakings or
to accept conditions as to future conduct in order that such Party may
not be subject to such sanctions
80. ENTIRE AGREEMENT
This Agreement contains or expressly refers to the entire agreement
between the Parties with respect to the subject matter hereof and
expressly excludes any warranty, condition or other taking implied at
law or by custom and supersedes all previous agreements and
understandings between the Parties with respect thereto and each of the
Parties acknowledges and confirms that it does not enter into this
Agreement in reliance on any representation, warranty or other
undertaking not fully reflected in the terms of this Agreement,
81. LANGUAGE
Each notice, instrument, certificate or other document to be given by
one Party to another hereunder shall be in the English language.
82. RESTRICTIVE TRADE PRACTICES ACT 1976
If after the commencement of section 100 of the Act (the "RTP Section")
this Agreement is subject to registration under the Restrictive Trade
Practices Act 1976 then NGC undertakes, no earlier than five months but
no later than six months after the commencement of the RTP Section, to
furnish to the Director General of Fair Trading particulars of this
Agreement and of any agreement of which it forms part. Before
furnishing such particulars NGC will consult with the Founder
Generators and
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<PAGE>
the Founder Suppliers as to the nature of the particulars to be so
furnished and will consult with the Founder Generators and Founder
Suppliers regularly regarding the progress of discussions with the
Director General of Fair Trading in regard to the agreement(s) so
furnished.
83. ARBITRATION
83.1 Referral to arbitration: save where expressly stated in this Agreement
to the contract and subject to any contrary provision of the Act or any
Licence or the rights, powers, duties and obligations of the Director
or the Secretary of State under the Act, any Licence or otherwise
howsoever, any dispute or difference of whatever nature howsoever
arising under, out of or in connection with this Agreement between any
one or more parties shall be and is hereby referred to arbitration
pursuant to the arbitration rules of the Electricity Arbitration
Association in force from time to time.
83.2 Proper law: whatever the nationality, residence or domicile of any
Party and wherever the dispute or difference or any part thereof arose
the law of England shall be the proper law of any reference to
arbitration hereunder and in particular (but not so as to derogate from
the generality of the foregoing) the provisions of the Arbitration Acts
1950 (notwithstanding anything in section 34 thereof) to 1979 shall
apply to any such arbitration wherever the same or any part of it shall
be conducted.
83.3 Third Party Claims (1): subject always to Clause 83.6, if any tariff
customer (as defined in section 22(4) of the Act) brings any legal
proceedings in any court (as defined in the Rules of the Supreme Court
1965 and in the County Courts Act 1984) against one or more persons,
any of which is a Party (the "Defendant Contracting Party"), and the
Defendant Contracting Party wishes to made a Third Party Claim (as
defined in Clause 83.5) against any other Party (a "Contracting Party")
which would but for this Clause 83.3 have been a dispute or difference
referred to arbitration by virtue of Clause 83.1 then, notwithstanding
the provisions of Clause 83.1 which shall not apply and in lieu of
arbitration, the court in which the legal proceedings have been
commenced shall hear and completely determine and adjudicate upon the
legal proceedings and the Third Party Claim not only between the tariff
customer and the Defendant Contracting Party but also between either or
both of them and any other Contracting Party whether by way of third
party proceedings (pursuant to the Rules of the Supreme Court 1965 or
the County Court Rules 1981) or otherwise as may be ordered by the
court
83.4 Third Party Claims (2): where a Defendant Contracting Party makes a
Third Party Claim against any Contracting Party and such Contracting
Party wishes to make a Third Party Claim against a further Contracting
Party the provisions of Clause 83.3 shall apply mutatis mutandis as if
such Contracting Party had been the Defendant Contracting Party and
similarly in relation to any such further Contracting Party.
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83.5 Third Party Claims (3): for the purposes of this Clause 83 "Third
Party Claim" shall ----------------- mean:-
83.5.1 any claim by a Defendant Contracting Party against a
Contracting Party (whether or not already a party to the legal
proceedings) for any contribution or indemnity; or
83.5.2 any claim by a Defendant Contracting Party against such a
Contracting Party for any relief or remedy relating to or
connected with the subject matter of the legal proceedings and
substantially the same as some relief or remedy claimed by the
tariff customer; or
83.5.3 any requirement by a Defendant Contracting Party that any
question or issue relating to or connected with the subject
matter of the legal proceedings should be determined not only
as between the tariff customer and the defendant Contracting
Party but also as between either or both of them and a
Contracting Party (whether or not already a party to the legal
proceedings).
83.6 Limitation: Clause 83.3 shall apply only if at the time the legal
proceedings are commenced no arbitration has been commenced between the
Defendant Contracting Party and another Contracting Party raising or
involving the same or substantially the same issues as would be raised
by or involved in the Third Party Claim. The tribunal in any
arbitration which has been commenced prior to the commencement of legal
proceedings shall determine the question, in the event of dispute,
whether the issues raised or involved are the same or substantially the
same.
84. JURISDICTION
84.1 Submission to jurisdiction: subject and without prejudice to Clauses 83
and 84.4, all the Parties irrevocably agree that the courts of England
are to have exclusive jurisdiction to settle any disputes which may
arise out of or in connection with this Agreement and that accordingly
any suit, action or proceeding (together in this Clause 84 referred to
as "Proceedings") arising out of or in connection with this Agreement
may be brought in such courts.
84.2 Waiver: each Party irrevocably waives any objection which it may have
now or hereafter to the laying of the venue of any Proceedings in any
such court as if referred to in this Clause and any claim that any such
Proceedings have been brought in an inconvenient forum and further
irrevocably agrees that a judgment in any Proceedings brought in the
English courts shall be conclusive and binding upon such Party and may
be enforced in the courts of any other jurisdiction.
241
<PAGE>
84.3 Agent for service of process: each Party which is not incorporated in
any part of England or Wales agrees that if it does not have, or shall
cease to have, a place of business in England or Wales it will promptly
and hereby does appoint the Settlement System Administrator (or such
other person as shall be acceptable to the Executive Committee)
irrevocably to accept service of process on its behalf in any
Proceedings in England.
84.4 Arbitration: for the avoidance of doubt nothing contained in the foregoing
provisions of this Clause 84 shall be taken as permitting a Party to
commence Proceeding to be referred to arbitration.
85. GOVERNING LAW
This Agreement shall be governed by, and construed in all respects in
accordance with, English law.
86. THE SETTLEMENT SYSTEM ADMINISTRATOR'S CONTRACT
86.1 The Parties anticipate that this Agreement will be amended by a
Supplemental Agreement to provide for revised terms and conditions upon
and subject to which the Settlement System Administrator will
administer and render services connected with the administration of the
Settlement System (the "Revised Terms") and it is expected that these
revised terms and conditions will be contained in a separate Schedule
to (but nevertheless will form part of) this Agreement. At the date at
which this Clause 86 takes effect negotiations are continuing on the
Revised Terms.
86.2 Notwithstanding the fact that the Revised Terms do not exist at the
date at which this Clause 86 takes effect, the Parties are keen to
establish as soon as possible the terms of understanding reached
between the Parties as to the revised terms and conditions to be
contained in the Revised Terms. Accordingly, a letter of intent (the
"Letter of Intent") is in the course of preparation which, and subject
to the Executive Committee by unanimous resolution approving the Letter
of Intent and the Settlement System Administrator acknowledging the
same will revise in part the billing and financial reporting
arrangements associated with the provision of services by the
Settlement System Administrator described in Clause 86.1 from 1st
April, 1994.
86.3 With a view to finalisation of the Revised Terms an agreement is also
in the course of preparation which will give detailed effect to those
revised terms and conditions (the "Framework Agreement") and subject to
the Executive Committee first approving (with or without amendment) the
Framework Agreement by unanimous resolution and the Settlement System
Administrator executing and delivering the same, each of the Parties
agrees that, it shall be bound by the Framework Agreement until the
Framework End Date as if it were part of this Agreement provided that:-
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(i) if the Framework Agreement shall expressly suspend provisions
of this Agreement which relate to the performance of services
by the Settlement System Administrator or other rights,
obligations, responsibilities and/or duties of the Settlement
System Administrator under this Agreement, those provisions
shall be suspended for the period ending no later than the
Framework End Date specified in the Framework Agreement;
(ii) subject as provided in (i) above, in the event of any
inconsistency or conflict between the provisions of the
Framework Agreement and this Agreement, the provisions of this
Agreement shall prevail; and
(iii) the expiry or termination of the Framework Agreement shall be
without prejudice to the accrued rights and liabilities of
each Party thereunder.
86.4 The Framework End Date shall be 31st March, 1995 or such other date,
being no later than 31st March, 1996, as the Executive Committee and
the Settlement System Administrator may agree,
IN WITNESS whereof this Agreement has been duly executed the day and year first
above written
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<PAGE>
SCHEDULE 1
PART I
The Generators
Registered Registered or
Name Number Principal Office
National Power PLC 2366963 Windmill Hill Business
Park
Whitehill Way
Swindon
Wiltshire SN5 6PB
PowerGen plc 2366970
53 New Broad Street
London EC2M 1JJ
Nuclear Electric plc 2264251 Barnett Way
Barnwood
Gloucester GL4 7RS
The National Grid 2366977 National Grid House
Company plc Kirby Corner Road
(Pumped Storage Coventry CV4 8JY
Business Division)
Electricite de France, - Department Relations avec
Service National L'Etranger
Echanges d'Energie
2 Rue Louis Murat
5 eme etage
75384 Paris
Cedex 08
Scottish Power plc 117120 1 Atlantic Quay
Glasgow G2 8SP
Scotland
Scottish Hydro-Electric PLC 117119 16 Rothsay Terrace
Edinburgh EH3 7SE
Scotland
244
<PAGE>
Registered Registered or
Name Number Principal Office
British Nuclear Fuels plc 1002607 Risley
Warrington
Lancashire WA3 6AS
Central Power Limited 2251099 Mucklow Hill Halesowen
West Midlands B62 8BP
Lakeland Power Limited 2355290 Roosecote Power Station
Roosecote Marsh
Barrow-in-Furness
Cumbria LA13 OPR
245
<PAGE>
PART II
The Suppliers
Part A
Public Electricity Suppliers
Registered Registered or
Name Number Principal Office
Fibropower Limited 2234141 38 Clarendon Road
London W11 3AD
Teesside Power 246040 34 Park Street
London W1Y 3LE
CeltPower 2656561 13 Charles II Street
Limited Phoenix Parkway
Corby
Nothampshire
NN17 1QT
Peterborough Power 2353599 Storeys Bar Road
Limited Peterborough
PE1 5NT
Regional Power Generators 2352390 Whetherby Road
Limited Scarcroft
Leeds
LS14 3HS
Fibrogen Limited 2547498 38 Clarendon Road
London W11 3AD
Elm Energy & Recycling (UK) 2516685 Sparklemore House
Limited Biddings Lane
Bilston
Wolverhampton
West Midlands
WV14 9NN
South East London 2489384 8 Headfort Place
246
<PAGE>
Registered Registered or
Name Number Principal Office
Combined Heat London SW1X 7DH
and Power Limited
Keadby Generation 2729513 P.O. Box 3
Limited Lowgate House
Lowgate
Hull
HU1 1JJ
Eukan Energy 7716139 3rd Floor
33 Queen Street
Maidenhead
Berkshire
SL6 1NB
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<PAGE>
PART II
The Suppliers
Part A
Public Electricity Suppliers
Registered Registered or
Name Number Principal Office
Eastern Electricity plc 2366906 Wherstead Park
Wherstead
Ipswich
Suffolk
1P9 2AQ
East Midlands 2366923 398 Coppice Road
Electricity plc P.O. Box 4
Arnold
Nottingham
NG5 7HX
London Electricity plc 2366852 Templar House
81 - 87 High Holborn
London WC1V 6NU
Manweb plc 2366937 Sealand Road
Chester
CH1 4LR
Midlands Electricity 2366928 Mucklow Hill
Halesowen
West Midlands
B62 8BP
Northern Electric plc 2366942 Carliol House
Market Street
Newcastle upon Tyne
NE1 6NE
NORWEB plc 2366949 Talbot Road
Manchester
248
<PAGE>
Registered Registered or
Name Number Principal Office
M16 0HQ
SEEBOARD plc 2366867 Grand Avenue
Hove
East Sussex
BN3 2LS
Southern Electric plc 2366879 Littlewick Green
Maidenhead
Berkshire
SL6 3QB
South Wales Electricity plc 2366985 Newport Road
St. Mellons
Cardiff
CF34 9XW
South Western Electricity 2366894 800 Park Avenue
plc Aztec West
Almondsbury
Bristol
BS12 4SE
Yorkshire Electricity 2366995 Wetherby Road
Group plc Scarcroft
Leeds
LS14 3HS
Part B
Second Tier Suppliers
Registered Registered or
Name Number Principal Office
National Power PLC 2366963 Windmill Hill
Business Park
Whitehill Way
Swindon
Wiltshire SN5 6PB
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<PAGE>
Registered Registered or
Name Number Principal Office
PowerGen plc 2366970 53 New Broad Street
London EC2M 1JJ
Nuclear Electric plc 2264251 Barnett Way
Barnwood
Gloucester GL4 7RS
SEEBOARD plc 2366867
Grand Avenue
Hove
East Sussex
BN3 2LS
British Nuclear Fuels plc 1002607 Risley
Warrington
Lancashire WA3 6AS
Joseph Crosfield & Sons 48745 Bank Quay
Limited P.O. Box 26
Warrington
Cheshire
WA4 1AB
UML Limited 661900 P.O, Box 115
Port Sunlight
Wirral
Merseyside
L62 4ZG
Slough Electricity Supplies 2474514 234 Bath Road
Ltd Slough
SL1 4EE
Shell Power Limited 2559630 Shell-Mex House
Strand
London
WC2R 0DX
Energy Supply Contracts 172268 P.O. Box 178
One Melford Court
The Havens
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<PAGE>
Registered Registered or
Name Number Principal Office
Ransomes Europark
Ipswich
Suffolk IP3 9SZ
IMPKEMIX Energy Limited 2076043 The Heath
Runcorn
Cheshire WA7 4QT
CITIGEN Limited 2427823 22 St. Andrew Street
London EC4A 3AN
Marc Rich & Co. AG 3-12738 Baarerstrasse 37
CH6304 Zug
Switzerland
Accord Energy 2869629 152 Grovesnor Road
Limited London SW1V 3LJ
Eukan Energy
7716139 3rd Floor
Limited 33 Queen Street
Maidenhead
Berkshire
SL6 1NB
Elswick Petroleum 2749711 3rd Floor
33 Queen Street
Maidenhead
Berkshire
SL6 1NB
Altwood Petroleum 2728156 Chenier House
Limited Altwood Close
Maidenhead
Berkshire
SL6 4PP
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<PAGE>
Part C
Others
Registered Registered or
Name Number Principal Office
Electricite de France, - 3 Rue de Messine
Service National 75008 Paris
France
Scottish Power plc 117120
1 Atlantic Quay
Glasgow G2 8SP
Scotland
Scottish Hydro-Electric PLC 117119 16 Rothsay Terrace
Edinburgh EH3 7SE
Scotland
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SCHEDULE 2
The Other Parties
Registered Registered or
Name Number Principal Office
Barking Power Limited 2354681 Devonshire House
Mayfair Place
London W1X 5FH
Keadby Power 2548042 P.O. Box 3
Limited Lowgate House
Lowgate
Hull
HU1 1JJ
Hydro Electric 2487475 Royex House
Energy Limited Aldermanbury Square
London EC2V 7LD
Medway Power 2537903 Boston House
Limited The Little Green
Richmond Twp 1QE
Derwent Cogeneration 2650621 66 Buckingham Gate
Limited London SW1E 6AU
South East London 2489384 8 Headfort Place
Combined Heat and London SW1X 7DH
Power Limited
Cabah Energy 2759706 109 Strand
Limited London WC2E 1JN
Keadby Generation 2729513 P.O. Box 3
Limited Lowgate House
Lowgate
Hull
HU1 1JJ
Kingsnorth Power 2656343 190 Strand
Limited London Wc2R 1JN
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Fellside Heat and 2614535 Risley
Power Limited Warrington
Cheshire
Schlumberger 534821 1 Kingsway
Industries Limited london WC2B 6XH
Humber Power Limited 2571241 18 Savile Row
Limited London W1X 1AE
Eastern Generation 2529347 Wherstead Park
Services Limited Wherstead
Ipswich
Suffolk
IP9 2AQ
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SCHEDULE 3
Form of Accession Agreement
THIS SUPPLEMENTAL AGREEMENT is made on [ ]
BETWEEN:-
(1) [ ], a company incorporated [with
limited liability] under the laws of [ ]
[(registered number [ ])] and having its
[registered] [principal] office at [ ]
(the "New Party"); and
(2) [ ] (the "Nominee") on behalf of all
the parties to the Pooling and Settlement Agreement referred to
below.
WHEREAS:-
(a) by an agreement dated 30th march, 1990 made between the Founder
Generators named therein (1), the Founder Suppliers named therein (2),
NGC Settlements Limited as Settlement System Administrator (3),
Energy Pool Funds Administration Limited as Pool Funds Administrator
(45), The National Grid Company plc as Grid Operator and Ancillary
Services Provider (5), and Scottish Power plc and
Electricite de France, Service national as Externally Interconnected
Parties (6) (as amended, varied, supplemented, modified or suspended,
the "Pooling and Settlement Agreement") the parties thereto agreed
to give effect to and be bound by certain rules and procedures for the
operation of an electricity trading pool and the operation of a
settlement system; and
(b) the New Party has requested that it be admitted as a Party pursuant to
Clause 3 of the Pooling and Settlement Agreement and each of the
Parties hereby agrees to such admission.
NOW IT IS HEREBY AGREED as follows:-
1. Unless the context otherwise requires, word and expressions defined in
the Pooling and Settlement Agreement shall bear the same meanings
respectively when used herein.
2. The Nominee (acting on behalf of each of the Parties) hereby admits the
New Party as an additional Party under the Pooling and Settlement
Agreement on the terms and conditions hereof and with effect from
[insert effective date of admission].
3. The New Party hereby accepts its admission as a Party and undertakes
with the Nominee (acting on behalf of each of the Parties)
to perform and to be bound by
<PAGE>
the terms and conditions of the Pooling and Settlement Agreement as a
Party as from the [insert effective date of admission].
4. For all purposes in connection with the Pooling and Settlement
Agreement the New Party shall as from the [insert effective date of
admission] be treated as if it had been a signatory of the Pooling and
Settlement Agreement as a [[Generator]/[Supplier]/[Externally
Interconnected Party]]*, and as if this Agreement were part of the
Pooling and Settlement Agreement, and the rights and obligations of the
Parties shall be construed accordingly.
5. This Agreement and the Pooling Agreement and Settlement Agreement shall
be read and construed as one document and references in the Pooling and
Settlement Agreement to the Pooling and Settlement Agreement (howsoever
expressed) shall be read and construed as references to the Pooling and
Settlement Agreement and this Agreement.
6. This Agreement shall be governed by and construed in all respects in
accordance with English law and the provisions of Clauses 83 and 84 of
the Pooling and Settlement Agreement shall apply hereto mutatis
mutandis.
AS WITNESS the hands of the duly authorised representatives of the parties
hereto the day and year first above written
[New Party]
By:
Notice details (Clause 75 of the Pooling and Settlement Agreement)
Address:
Telex number:
Facsimile number:
Attention:
[Nominee]
(for and on behalf of each of the parties to the Pooling and Settlement
Agreement)
By:
* Delete/complete as appropriate
<PAGE>
Note: this form will require adaptation in the circumstances described in
Clauses 3.11 to 31.14 inclusive.
<PAGE>
SCHEDULE 4
The Accounting Procedure
PART A
PRELIMINARY
1. Definitions and Interpretation
PART B
THE PROVISION OF FINANCIAL INFORMATION
1. Budgets, Statements of Costs and Statements of Charges
2. Review and Audits
3. Auditors' opinion
4. Accounting Period
PART C
THE SETTLEMENT SYSTEM ADMINISTRATOR'S CHARGES
1. General
2. The Initial Period
3. Post-Initial Period
4. Corporate Overhead Charges and Purchases
5. Miscellaneous Charges and Fuel Security Costs
6. Second Tier System Changes
7. Allocation of Charges
8. Adjustment to Margin
9. Capital Expenditure
<PAGE>
PART D
ALLOCATION OF CHARGES
1. The settlement System Administrator's Charges
PART E
[NOT USED]
PART F
PRO-FORMA BUDGET
PART G
PRO-FORMA STATEMENT OF COSTS
PART H
PRO-FORMA STATEMENT OF CHARGES
<PAGE>
PART A
Preliminary
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions: in this Schedule, unless the context otherwise requires,
the words and expressions set out in this Section 1.1 shall
bear the meanings respectively set out herein:-
"1993/1994 Accounting Period" has the meaning given to that expression
i Section 6,1 of part C;
"Bought-in Supplies" means goods or services supplied to or acquired by
the Settlement System Administrator for the running of the Settlements
Business including, for the avoidance of doubt, goods or services
supplied by or acquired from any affiliate of the Settlement System
Administrator;
"Budget" means any budget prepared by the Settlement System
Administrator pursuant to Section 1.1 of Part B;
"Capital Charge" means, in respect of any Accounting Period or part
thereof, a sum equal to interest on the Capital Employed during such
period calculated at a rate of 2.5 per cent. per annum below the Base
Rate from time to time of National Westminster bank PLC during such
period;
"Capital Employed" means, in respect of any Accounting Period, the
Fixed Assets plus the Current Assets less the Current Liabilities;
"Capital Expenditure" means, in respect of any Accounting Period,
expenditure by the Settlement System Administrator on fixed assets
required for the purposes of the Settlements Business including assets
acquired on lease which are required by generally accepted accounting
principles to be capitalised;
"Cost base" means, in respect of any Accounting Period, the average
value of the current assets of the Settlement System Administrator
employed in the Settlements Business during such period determined by
the following formula:-
a+b
2
where "a"= the closing balance for current assets of the
Settlement System Administrator employed in the
Settlements Business for the Accounting Period
immediately prior to such period; and
<PAGE>
"b"= the closing balance for current assets of
the Settlement System Administrator employed
in the Settlements Business for such period
as set out in the audited accounts of the
Settlements Business
provided that in the case of the first Accounting Period "a" shall
equal the balance for current assets of the Settlement System
Administrator employed in the Settlements business as at 1st June, 1990
a reported upon by the auditors of the Settlement System Administrator
in its opining to Pool Members issued pursuant to Section 3 of Part B;
"Current Liabilities" means, in respect of any Accounting Period, the
average value of the current liabilities of the Settlement System
Administrator incurred in the Settlements Business during such period
determined by the following formula:-
a+b
2
where "a"= the closing balance for current liabilities of
the Settlement System Administrator incurred in the
Settlements Business for the Accounting Period
immediately prior to such period; and
"b"= the closing balance for current liabilities
of the Settlement System Administrator
incurred in the Settlements Business for
such period as set out in the audited
accounts of the Settlements Business
provided that in the case of the first Accounting Period "a: shall
equal the balance for current liabilities of the Settlement System
Administrator employed in the Settlements Business as at 1st June, 1990
as reported upon by the auditors of the Settlement System Administrator
in its opinion to Pool Members issued pursuant to Section 3 of Part B;
"Depreciation" means, in respect of any Accounting Period, the
aggregate value of all depreciation on assets owned or employed by the
Settlement System Administrator in the Settlements Business, such
assets being depreciated in accordance with the accounting policies of
the Settlement System Administrator for such period as stated in the
audited accounts of the Settlement System Administrator for such period
and treated as depreciation in accordance with the terms of this
Agreement;
"Efficiencies" means, in respect of any Accounting Period in the Post
Initial Period, the amount (if any) by which the Cost Base in such
Accounting Period is less than the Cost Base in the immediately
preceding Accounting Period (the "First Period") after adjustments on a
pound for pound basis to any difference
<PAGE>
between such two Cost Bases to offset movements from the Cost Base in
the First Period due to the Rate of Inflation, Value For Money Audit
Adjustments, Required Adjustments and any other matters beyond the
control of the Settlement System Administrator and changes in the
accounting principles or practices of the Settlement System
Administrator made during the Accounting Period in question;
"Fixed Assets" means, in respect of any Accounting Period, the average
value of the fixed assets of the Settlement System Administrator
employed in the Settlements Business during such period determined by
the following formula:_
a+b
2
where "a"= the closing balance for fixed assets of the
Settlement System Administrator employed in the
Settlements Business for the Accounting Period
immediately prior to such period; and
"b"= the closing balance for fixed assets of the
Settlement System Administrator employed in
the Settlements Business for such period as
set out in the audited accounts of the
Settlements Business
provided that in the case of the first Accounting Period "a: shall
equal the balance for fixed assets of the Settlement System
Administrator employed in the Settlements Business as at 1st June, 1990
as reported upon by the auditors of the Settlement System Administrator
in its opinion to Pool Members issued pursuant to Section 3 of Part B;
"Handling Charge" means, in respect of any amount, 2 per cent. of such
amount;
"individual Limit means, in respect of any Accounting Period during the
Initial Period, such amount as, when added to the Total Operating Costs
in such Accounting Period, is equal to 6 per cent. of the sum of such
amount and such Total Operating Costs and, in respect of any Accounting
Period during the Post- Initial Period, such amount as when added to
the Revenue Base in such accounting Period is equal to 6 per cent. of
the sum of such amount and such Revenue Base;
"Non-Second Tier System" means a metering system at premises eligible
for supply under a Second Tier Supply Licence in the authorized area of
a Supplier holding a PES Licence but not being a Metering System in
respect of which a Second Tier Supplier is the Registrant;
<PAGE>
"Overall Limit" means, in respect of Capital Expenditure in any
Accounting Period, (pound)250,000, as the same may b increased from the
Effective Date by the Rate of Inflation;
"Post-Initial Period" means the period commencing on the day following
the last day of the Accounting Period at the end of
which the Initial Period ends;
"Rate of Inflation" means, in respect of any Accounting Period, the
average percentage increase in earnings for service industries during
such period determined by reference to the service industries indicator
in the Average Earnings Index for All Employees In Main Industrial
Sectors currently published by HMSO in the Employment Gazette or in the
event such index is no longer published in such form or by HMSO, any
replacement or alternative index therefor which is appropriate in the
circumstances;
"Required Adjustment" means the aggregate cost of all adjustments taken
into account by the Settlement System Administrator during any
Accounting Period in order to give effect to any increase in revenue
expenditure required to be made by the Settlement System Administrator
arising from changes to be made to the Settlement System, the Hardware
or Software or in any other respect, in any such case as agreed from
time to time by the Executive Committee with the Settlement System
Administrator (and, in default of agreement, the dispute shall be
referred to arbitration in accordance with Clause 83);
"Revenue Base" means, in respect of any Accounting Period:-
(i) the Cost Base for the immediately preceding Accounting Period
as identified by the Statement of Costs for the immediately
preceding Accounting Period submitted pursuant to Section 1.4
of Part B; plus
(ii) Value For Money Audit Adjustments made during such Accounting
Period; plus
(iii)Required Adjustments made during such Accounting Period; plus
(iv) Depreciation in such Accounting Period; Plus
(v) Efficiencies which are permitted to be included in any
Statement of Costs pursuant to Section 3.6 of Part C; plus
(vi) a sum equal to that percentage which is the Rate of Inflation
for such Accounting Period of the aggregate of the amounts
referred to in (i) to (iii) (inclusive) of this definition;
plus
(vii)any other costs or expenses which are beyond the control of the
Settlement System Administrator, in any such case as agreed from time
to time by the
<PAGE>
Executive Committee with the Settlement System Administrator (and, in
default of agreement, the dispute shall be referred to arbitration in
accordance with Clause 83);
"Second Tier System" means any Metering System from which the
Settlement System Administrator or any Second Tier Agent is required to
collect, aggregate, adjust or transmit date for the purposes of a
supply pursuant to a Second Tier Supply Licence;
"Second Tier Suppliers' System Charge" means the amount determined by
the Executive Committee for the purposes of Section 6.3 of Part C;
"Specified Area" means an area of the Settlements Business in respect
of which a Value For Money Audit may be performed, being any one of the
following:-
(i) data acquisition - Generators,
(ii) data acquisition - Suppliers,
(iii) production computer facilities,
(iv) standby computer facilities,
(v) Settlement System development,
(vi) client interface - electronic mail/reporting,
(vii) support activities, that is, any other activities not
referred to above,
and any category of expenditure included in the most recent Budget or
Statement of Costs;
"Statement of Charges" means the statement of charges required to be
submitted by the Settlement System Administrator pursuant to Section
1.11 of Part B in the form or substantially in the form set out in Part
H or such other form as the Executive Committee and the Settlement
System Administrator may agree showing the total charges to be made by
the Settlement System Administrator on all Pool Members in accordance
with Part C;
"Statement of Costs" means the statement of costs required to be
submitted by the Settlement System Administrator pursuant to Section 1
of Part B setting out the actual and accrued expenditure incurred by
the Settlement System Administrator in any period which shall be
substantially in the form set out Part G or such other form as the
Executive Committee and the Settlement System Administrator may agree;
<PAGE>
"Supplier's System Charge" means the amount determined by the Executive
Committee in accordance with the provisions of Section 6.4 of Part C;
"Total Operating Costs" means, in respect of any Accounting Period or
part thereof:-
(i) the total expenditure properly incurred or accrued by or on
behalf of the Settlement System Administrator in operating the
Settlements Business in such period or part thereof (other
than those referred to in (ii) and (iii) below); plus
(ii) all Depreciation in such period on all assets owned or
employed by the Settlement System Administrator in the
Settlements Business; plus
(iii)all other expenditure properly incurred or accrued during such period
which, under this Schedule, is permitted to be included in any
Statement of Costs or required to be dealt with in accordance with the
Accounting Procedure;
"Total Second Tier System Charges" means, in respect of any Specified
Accounting Period (as defined in Section 6.1 of Part C), the aggregate
of the costs, expenses and charges incurred by all Second Tier Agents
in respect of the relevant Specified Accounting Period and relating to
the collection, aggregation. adjustment and transmission of data from
Second Tier Systems of when the collection, aggregation, adjustment and
the transmission of data from Second Tier Systems is performed by the
Settlement System Administrator the costs, expenses and charges
directly incurred by the Settlement System Administrator (including,
for the avoidance of doubt, the costs described in Clause 60.16.10 and
Clause 60.17.7) plus the deficit (if any) or (as the case may be) less
the surplus (if any) in the amount of Total Second Tier System Charges
recovered for the immediately preceding Specified Accounting Period
carried forward in accordance with the provisions of Section 6.6 of
Part C;
"Total Sum Due" means, in respect of any Accounting Period, the total
aggregate amount chargeable by the Settlement System Administrator in
accordance with Section 2.1 or 3.2 of Part C;
"Value For Money Audit" means an independent appraisal of the
performance of management in seeking to secure economy, efficiency and
effectiveness in the use of resources at its disposal (but not any
appraisal of policy objectives) carried out in accordance with the most
recently published auditing guideline on value for money audits
published by the Institute of Chartered Accountants in England and
Wales; and
"Value For Money Audit Adjustments" means the aggregate value of all
changes in the Cost Base required to be taken into account by the
Settlement System
<PAGE>
Administrator during any Accounting Period in order to give effect to
the conclusions resulting from a Value For Money Audit commissioned
pursuant to Section 2.2.2 of Part B, if necessary, as resolved pursuant
to Section 2.2.7 of Part B.
1.2 Interpretation: in this Schedule, except where the context otherwise
requires, references to a particular Appendix, Part, Section,
sub-section, paragraph or sub- paragraph shall be a reference to that
Appendix or Part of this Schedule or, as the case may be, that Section,
sub-section, paragraph or sub-paragraph of the relevant Part.
PART B
The Provision of Financial Information
1. BUDGETS, STATEMENTS OF COSTS AND STATEMENTS OF CHARGES
Budgets
1.1 Budgets: not earlier than six nor later than three months prior to the
first day of each Accounting Period (other than the first) the
Settlement System Administrator shall prepare and submit to the
Executive Committee a Budget for such Accounting Period. Such Budget
shall be indicative only but prepared on a best estimate basis.
1.2 Contents of Budgets: each Budget (other than the first) shall compare
each item or category of budgeted expenditure shown therein with the
forecast expenditure in respect of such item or category for the r
remainder of the then current Accounting Period and report any salient
differences between any such item or category for the remainder
of the then current Accounting Period and report any salient
differences between and such forecast expenditures and the budgeted
expenditure in respect of each such item or category and the
budgeted expenditure in respect of each such item
or category in the immediately preceding Budget.
1.3 Form of Budgets: each Budget shall be substantially in the form of that
set out in Part F (or in such other form as the Settlement System
Administrator and the Executive Committee may from time to time agree.
Statement of Costs
1.4 Statements of Costs: no later than one month following the date in any
Accounting Period of the publication of the audited accounts for the
Settlements Business for the previous Accounting Period, the Settlement
System Administrator shall prepare and submit to the Executive
Committee and all Pool Members a Statement of Costs for such previous
Accounting Period. The audited accounts of the Settlement System
Administrator and the auditors' management letter, to the
<PAGE>
extent it related to the economy, efficiency and effectiveness of the
Settlement System Administrator in carrying out its duties, shall
accompany each Statement of Costs for each entire Accounting Period.
1.5 Form of Statement of Costs: the Statement of Costs for any Accounting
Period shall attribute actual and accrued expenditure for such period
against, inter alia, each of the categories and sub-categories set out
in the corresponding Budget for such Accounting Period.
1.6 Accompanying Report: each Budget and Statement of Costs for an entire
Accounting Period submitted to the Executive Committee and, in the
case of the Statement of Costs, Pool Members pursuant to Section 1.1
or 1.4 shall be supported by a written report of the Settlement
System Administrator commenting in reasonable detail upon the matters
comprised in the categories of expenditure ncluded in such Budget
i or Statement of Costs drawing attention to and giving reasons
for any unusual commitment or item of expenditure proposed to be
incurred or which had been incurred and, in the case of a Statement of
Costs, explaining the difference (if material) between:-
1.6.1 the amount set against each item or category therein; and
1.6.2 the amount set against each corresponding item or category in
the immediately preceding Budget.
1.7 Quarterly Statement of Costs: the Settlement System Administrator
shall, during the Initial Period, issue Statements of Costs on a
quarterly basis to Pool Members and the Executive Committee. Each
such quarterly Statement of Costs shall include a forecast of
commitments and expenditure in respect of each item or
category for the entire current Accounting Period based (where
appropriate) on actual and accrued commitments and expenditure already
incurred in such Accounting Period.
1.8 Basis of preparation: all Statements of Costs other than a Statement
of Costs in respect of an entire Accounting Period shall be unaudited
but prepared on a best estimates basis.
1.9 Six-monthly Statement of Costs: the Settlement System Administrator
may and shall, if so requested by the Executive Committee, during
the Post-Initial Period, issue to Pool Members a Statement of Costs
every six months. A Statement of Costs for six months of any
Accounting Period shall attach a forecast of commitments
and expenditure in respect of each item or category for the entire
current Accounting Period based (where appropriate) on actual and
accrued commitments and expenditure already incurred in such
Accounting Period.
1.10 Accounting Practices: each Budget and Statement of Costs shall be
prepared on the basis of the accounting principles and practices
used to draw up the most
<PAGE>
recent audited accounts of the Settlement System Administrator and
consistently applied. If any Statement of Costs for an entire
Accounting Period is not prepared on such basis, the Settlement System
Administrator shall prepare and submit to the Executive Committee and
all Pool Members a pro-forma set of audited accounts of the Settlement
System Administrator for such entire Accounting Period which is
prepared on the basis of the accounting principles and practices used
to prepare the relevant Statement of Costs. Any changes in the
accounting principles and practices or their method of application used
to prepare audited accounts of the Settlement System Administrator
shall be noted in the next following Budget or Statement of Costs, as
the case may be.
1.11 Statement of Charges: a Statement of Charges shall accompany each
Statement of Costs.
1.12 Bad debts: the total cost of any bad debts of the Settlement System
Administrator arising in any Accounting Period may be taken into
account by the Settlement System Administrator in its Statement of
Costs for such Accounting Period or any subsequent Accounting Period
and accordingly recovered as part of Total Operating Costs or Revenue
Base for any such Accounting Period.
2. REVIEWS AND AUDITS
2.1 Review: at the written request of the Executive Committee, the
Settlement System Administrator shall review with the Executive
Committee the Budget for the forthcoming Accounting Period or any
Statement of Costs. The Settlement System Administrator will, if
requested by the Executive Committee, submit a revised Budget,
following any such review taking into account changes requested by the
Executive Committee.
2.2 Audits:
2.2.1 the Settlement System Administrator shall, upon written
request of the Executive Committee, review with the Executive
Committee, any Specified Area with a view to agreeing whether
the Specified Area represents value for money to Pool Members
in terms of economy, efficiency and effectiveness in the use
of the resources available to the operation of the Settlement
System by the Settlement System Administrator.
2.2.2 If, in respect of any Specified Area which is the subject of
review pursuant to Section 2.2.1, agreement on any of the
matters referred to in Section 2.2.1 cannot be reached
between the Settlement System Administrator and
the Executive Committee within three months after the
Executive Committee having first made a request in
respect of such Specified Area pursuant to Section 2.2.1
(or such longer period as the Settlement System
Administrator and the Executive Committee may agree), the
Executive Committee may require an independent firm of
Chartered Accountants of
<PAGE>
international repute (which may be the Pool Auditor - but not
the same person or persons within such firm) to conduct a
Value For Money Audit in respect of the Specified Area and to
report in writing to the Executive Committee and the
Settlement System Administrator. The terms of engagement
(including the objectives and scope of the work to be
performed and the form of report to be issued) for any such
Value For Money Audit shall be set by the Executive Committee
in accordance with this Schedule and in consultation with the
Settlement System Administrator. The firm conducting any Value
For Money Audit shall be required to owe a duty of
confidentiality to the Settlement System Administrator except
to the extent necessary to conduct such Value For Money Audit
provided that nothing in this Section 2.2.2 shall prevent,
restrict or qualify the disclosure to Pool Members or the
Executive Committee in such report of such information as
ought reasonably to be disclosed.
2.2.3 The Executive Committee shall not be entitled to require a
Value for Money Audit unless and until:-
(a) the Executive Committee shall have given the
Settlement System Administrator at least one
month's notice of its intention to
commission such Value For Money Audit and
the scope thereof; and
(b) the Settlement System Administrator shall
within that period either:-
(i) have failed to prepare and submit to
the Executive Committee detailed
proposals for the implementation of
a cost-efficiency programme in
respect of the Specified Area
proposed to be the subject of such
Value For Money Audit; or
(ii) have submitted such detailed
proposals or notified the
Executive Committee that no such
cost-efficiency programme
is appropriate, and the Executive
Committee shall have notified the
Settlement System
Administrator that it rejects such
detailed proposals or
(as the case may be) the Settlement
System Administrator's
notification that a cost-efficiency
programme is not appropriate.
2.2.4 No more than two Value For Money Audits shall be performed in
any Accounting Period. No more than one Value For Money Audit
shall be performed in respect of the same Specified Are in any
period of three consecutive Accounting Periods. A Value For
Money Audit may only be
<PAGE>
performed in respect of a Specified Area and may not be
performed on the Settlements Business on a general basis or in
respect of Bought-in Supplies.
2.2.5 The Settlement System Administrator shall be given the
opportunity to examine and comment on the report in respect of
any Value For Money Audit before it is submitted in final
form. Such final form shall, if the auditor commission to
carry out the Value For Money Audit shall think fit, take into
consideration the comments of the Settlement System
Administrator and otherwise include an indication of the
response and proposed action of the Settlement System
Administrator.
2.2.6 Upon agreement being reach as described in Section 2.2.1 or
upon receipt of a report pursuant to Section 2.2.2, the
Settlement System Administrator shall (if so required by and
in consultation with the Executive Committee) give effect to
such agreement or (as the case may be) the conclusions, if
any, set out in such report as soon as is reasonably
practicable following the date of such agreement or report.
2.2.7 If the Settlement System Administrator shall in good faith
consider the conclusions in any report referred to in Section
2.2.2 to be incorrect or inaccurate or any recommended
remedial action impractical or inappropriate the same shall be
referred for resolution to arbitration in accordance with
Clause 83.
2.3 Access: for the purposes of any such report as if referred to in
Section 2.2.2 the Settlement System Administrator shall permit
the relevant auditor access to its company books, accounts and
vouchers and the relevant auditor shall be entitled
to require from the Settlement System Administrator's officers such
information and explanations as are necessary for the
performance of the Value For Money Audit (but, for the avoidance of
doubt, the auditor shall not have access to any data used,
information held or records kept in relation to any Pool Member
without such Pool Member's prior written consent).
3. AUDITORS' OPINION
The Statement of Costs in respect of an entire Accounting Period to be
sent to the Executive Committee pursuant to Section 1.4 shall be
accompanied by a report from the auditors of the Settlement System
Administrator, considering whether, in such auditors' opinion:-
(a) the Statement of Costs is in agreement with the underlying
books and records of the Settlement System
Administrator; and
(b) Total Operating Costs and Depreciation have been properly
extracted from the audited financial statements.
<PAGE>
Such auditors' report shall also contain such other matters as the
Executive Committee may agree with the auditors of the Settlement
System Administrator.
4. ACCOUNTING PERIOD
The first Accounting Period shall run from (and including) 31st March,
1990 to (and including) 31st March, 1991. Thereafter, unless agreed by
the Settlement System Administrator and the Executive Committee each
Accounting Period shall be for a period of 12 months. In the event that
the Settlement System Administrator wishes to change its accounting
reference date it shall give due notice thereof to the Executive
Committee which shall agree to enter into an amending agreement to this
Agreement in order to give effect to the same at the cost and expenses
of the Settlement System Administrator.
<PAGE>
PART C
The Settlement System Administrator's Charges
1. GENERAL
The Settlement System Administrator shall be entitled to recover from
all Pool Members the charges set out in this Part C in respect of its
operation of the Settlement System.
2. THE INITIAL PERIOD
2.1 Initial Period - Annual Charges: in respect of each Accounting Period
which begins during the Initial Period, the Settlement
System Administrator shall be entitled to recover from Pool Members
annual charges equal to the aggregate of the following amounts:-
2.1.1 Total Operating Costs as identified by the Statement of Costs
of such period submitted pursuant to Section 1.4 of Part B;
2.1.2 the Margin; and
2.1.3 the Capital Charge.
2.2 Recovery of Charges: the due proportion (determined in accordance
with Section 2.4) of the annual changes of the Settlement System
Administrator referred to in Section 2.1 payable by each Pool
Member for each Accounting Period in the Section 2.1 payable by each
Pool Initial Period shall be recovered by monthly payments in advance
from each Pool Member or, where the Settlement System Administrator
and the Pool Member otherwise agree, semi-annually in advance
(calculated on a best estimate and reasonable basis to be one twelfth
or, as the case may be, one half of the annual charges payable by
such Pool Member by reference to the most recent Statement
of Costs). Except for the first month or, as the case may be, other
period the Settlement System Administrator shall advise each Pool
Member of such amount by invoice despatched to each Pool Member
approximately 15 days prior to the first day of each month or other
period. Such invoice shall be paid no later than
the first day of such month or such other period. In the case of the
first month or, as the case may be, other period, each Pool Member
shall pay the amount advised in the relevant invoice within 15 days
after the invoice date. Each Pool Member shall pay all amounts due
hereunder in sterling in cleared funds in full without set off or
counterclaim, withholding or deduction of any kind whatsoever
but without prejudice to any other remedy. All charges are exclusive
of United Kingdom Value Added Tax which shall be added to such
charges, if applicable. In the event of any dispute regarding charges
in any month, no Pool Member may withhold payment of any
invoiced amount but may refer such dispute to
arbitration in accordance with Clause 83 following payment.
<PAGE>
2.3 Interest on non-payment: if any amount due to the Settlement System
Administrator is not received on the due date the Pool Member required
to pay such amount shall pay interest on the Settlement
System Administrator on such amount from and including the
date of default to the date of actual payment (as well after as
before judgment) at the rate which is 4 per cent. per annum above
the Base Rate from time to time during each period of default of
National Westminster Bank PLC.
2.4 Payment of Charges: during the Initial Period each Pool Member shall
pay its due proportion of the Settlement System Administrator's charges
for each Accounting Period determined in accordance with Part D.
2.5 Amount of Charges: the amount of each such payment during the Initial
Period shall be estimated initially by reference to the Budget
and thereafter adjusted as required by this Part C.
The Settlement System Administrator shall adjust the
amount of each such payment by reference to the most recent Statement
of Costs (whether quarterly or otherwise) and so as to
take into account Total Operating Costs, the Margin thereon and
the Capital Charge during the previous quarter and anticipated costs
in respect of the same during the current quarter and shall
recover from, or as appropriate, credit to each Pool Member its due
proportion of the difference between actual and anticipated
Total Operating Costs, the Margin thereon and the Capital
Charge and payments received in respect of such costs,
margin and charges in each case for the previous and the current
quarter. Such recovery or credit shall take place by reference
to an adjustment to each Pool Member's charges for the current quarter.
3. POST-INITIAL PERIOD
3.1 Post-Initial Period - Annual Charges: in respect of each Accounting
Period which begins after the Initial Period, the Settlement
System Administrator shall be
entitled to recover the charges set out in Section 3.2.
3.2 Amount of Charges: the charges referred to in Section 3.1 shall be
the aggregate
of:-
3.2.1 the Revenue Base and the Margin for the relevant Accounting
Period (as identified by the Statement of Costs for such
Accounting Period to be submitted pursuant to Section 1.4 of
Part B); and
3.2.2 the Capital Charge for such Accounting Period.
3.3 Recovery of Charges: annual charges for the Post-Initial Period shall
be recovered mutatis mutandis for Pool Members, in accordance with
Section 2.2 with the substitution of the reference to "Section 2.1" by
"Section 3.2".
<PAGE>
3.4 Interest on non-payment: the provisions of Section 2.3 shall apply to
any amount due to the Settlement System Administrator which is not
received on the due date.
3.5 Adjustment of Charges: the Settlement System Administrator may adjust
(either up or down) its charges in any Accounting Period during the
Post-Initial Period within one month following the publication of a
Statement of Costs. Such adjustment may only take into account:-
3.5.1 the Revenue Base, the Margin and Capital Employed for the
immediately preceding Accounting Period; and
3.5.2 the Settlement System Administrator's best estimate of its
charges for the current Accounting Period taking into account
the Cost Base for the immediately preceding Accounting Period.
That part of the adjustment referred to in Section 3.5.1 shall be made
only in respect of the charges applicable to persons who were Pool
Members during the immediately preceding Accounting Period and shall
take into account changes in Pool Membership during such preceding
Accounting Period.
3.6 Sharing of Efficiency: the Settlement System Administrator shall be
entitled to the benefit of all Efficiencies and, accordingly, to
charge Pool Members the amount of all Efficiencies by including them
in Budgets and Statements of Costs during the Post-Initial Period
in the following manner. The amount of any Efficiency
arising in any Accounting Period shall be identified in the Statement
of Costs for such Accounting Period submitted pursuant to Section
1.4 of Part B and shall be taken into account in the Statement
of Costs for the two successive Accounting Periods thereafter.
Accordingly, the amount of any Efficiency may be included in
any Statement of Costs for the two Accounting Periods following that
in which the Efficiency is identified. In the Statement
of Costs for the third consecutive Accounting Period and all following
Accounting Periods thereafter the amount of such Efficiency
shall be eliminated.
4. CORPORATE OVERHEAD CHARGES AND PURCHASES
4.1 Corporate Overhead Charges: the Settlement System Administrator may
take into account in any Budget or Statement of Costs
(and consequently its charges to Pool Members)
all corporate overhead charges payable by the Settlement System
Administrator to its immediate holding company of any other affiliate
which is solely a property holding company provided
such corporate overhead charges are reasonable and in due
proportion to the corporate overhead charges payable by
other affiliates of the Settlement System Administrator or divisions
of such affiliates as reported upon by the auditors of the Settlement
System Administrator.
<PAGE>
4.2 Goods of Services: purchases of goods or services from affiliates of
the Settlement System Administrator shall be on arm's length terms and
included in Total Operating Costs or Revenue Base. If requested by the
Executive Committee, the Settlement System Administrator shall procure
its auditors to confirm that such purchases have been contracted and
paid for on an open market value basis.
5. MISCELLANEOUS CHARGES AND FUEL SECURITY COSTS
5.1 Accounting Procedure: for the purposes of this Agreement, all costs,
expenses and other amounts required by this Agreement
(or any other agreement or document executed or prepared pursuant
to this Agreement and for this purpose approved
by the Executive Committee) to be dealt with "in accordance with the
Accounting Period" shall be deemed to be a cost
and expense of the operation of the Settlement System and shall
be recovered by the Settlement System Administrator
as part of Total Operating Costs or Revenue Base save that, where the
same are treated as Revenue Base, they shall be
regarded as costs beyond the control of the Settlement System
Administrator which may recover the same in full from
Pool Members who shall be obliged to pay the actual amount of such
costs and expenses.
5.2 Fuel Security: except to the extent recoverable under any other
provision of this Schedule, any additional costs necessarily
incurred by the Settlement System Administrator in running
the Settlements Business during a Security Period shall
be regarded as beyond the control of the Settlement System
Administrator, which may recover the same in full from Pool
Members provided such costs have been
verified as additional costs by the auditors of the Settlement System
Administrator. Pool Members shall be obliged to pay the actual amount
of such costs and expenses.
5.3 No Liability to finance: the Settlement System Administrator shall
not be required to finance the Electricity Arbitration
Association or the Executive Committee.
6. SECOND TIER SYSTEM CHARGES
6.1 The provisions set out in this Section 6 of Part C and Section 1.3.3
of Part D of this Schedule (prior to their amendment and
restatement with effect from midnight on 31st March, 1994)
and the definitions of "Second Tier Site" (now
"Second Tier System") and "Total Second Tier System Charges" (prior to
their amendment and restatement with effect from
midnight on 31st March, 1994) shall continue to apply but only in
respect of the Accounting Period beginning on 1st
April, 1993. The following provisions of this Section 6 (as amended
and restated with effect from midnight on 31st March, 1994)
shall apply in respect of each of the Accounting Periods beginning
on 1st April, 1994, 1st April, 1995, 1st April,
1996 and 1st April, 1997 (each a "Specified Accounting Period").
---------------------------
<PAGE>
6.2 In respect of each of the Specified Accounting Periods the Settlement
System Administrator shall be entitled to recover as part of Total
Operating Costs or Revenue Base the Total Second Tier System Charges
for the Specified
Accounting Period.
6.3 Subject to Section 6.6, the Second Tier Suppliers' System Charge for a
Specified Accounting Period shall be determined by the Executive
Committee as the amount per annum to be charged to each Second Tier
Supplier in respect of each Second Tier System supplied by such
Supplier.
6.4 Subject to Section 6.6, the Suppliers' System Charge for a Specified
Accounting Period shall be determined by the Executive Committee as the
amount per annum to be charged to each Supplier (other than a Second
Tier Supplier) in respect of each Non-Second Tier System in that
Supplier's authorized area.
6.5 The second tier system charge payable by a Supplier in respect of each
calendar month in a Specified Accounting Period (the "Supplier's Second
Tier Charge") shall be calculated as follows:-
6.5.1 in respect of each Second Tier Supplier, in accordance with
the following formula:-
Second Tier Suppliers' System Charge x NOSP
12
where NOSP is the total number of Second Tier Systems supplied
by such Supplier at the beginning of the relevant calendar
month;
6.5.2 in respect of each Supplier (other than a Second Tier
Supplier), in accordance with the following formula:-
Suppliers' System Charge x NMS
12
where NMS is the total number of Non-Second Tier Systems in
that Supplier's authorized area as at the beginning of that
month;
6.5.3 for these purposes, the numbers of Second Tier Systems and of
Non-Second Tier Systems as at the beginning
of each calendar month shall be as notified to
the Settlement System Administrator (who shall then notify
the Director) by the relevant Suppliers (the first such
notifications to be made no later than 1st May, 1994
and the Settlement System Administrator
being entitled, in the absence of any notification to the
contrary, to rely on the last such notification
and other information in its possession) and, in
the event of any dispute between the Parties, shall be as
determined by the Director (whose determination
shall be final and binding); and
<PAGE>
6.5.4 only those Second Tier Systems in respect of which data
collection costs are incurred by Second Tier Agents or the
Settlement System Administrator shall be used in determining
the number of Second Tier Systems.
6.6 If in respect of any Specified Accounting Period (other than the one
beginning on 1st April, 1997) the aggregate of all
second tier system charges payable pursuant
to Sections 6.5.1 and 6.5.2 and received by the Settlement System
Administrator is less than or (as the case may be) more than
the Total Second Tier System less than or (as the case may be) more
than Period the deficit or (as the case may be)
the surplus shall be carried forward to the immediately succeeding
Specified Accounting Period and shall be included
in the calculation of the Total Second Tier System Charges therefor,
and in making any determination pursuant to
Section 6.3 or 6.4 the Executive Committee shall use its reasonable
endeavors to ensure that the aggregate of all second
tier system charges payable pursuant to Sections 6.5.1 and 6.5.2 in
respect of that immediately succeeding Specified
Accounting Period will equal the anticipated Total Second Tier System
Charges therefor. There shall be no carry forward
of any such deficit or surplus arising in respect of
the Specified Accounting Period beginning on 1st April, 1997.
7. ALLOCATION OF CHARGES
7.1 Allocation: the Settlement System Administrator shall allocate its
charges amongst Pool Member in accordance with Part D.
7.2 New and Former Pool Members: any Pool Member which is a Pool Member
for part only of any Accounting Period shall pay charges
on an interim basis of such amount as the Executive Committee
estimates to be reasonable for such Accounting Period on the basis
of the allocation of charges set out in Part D. Adjustments to charges
on all Pool Members as a result of existing Pool Members
leaving or new Pool Members joining will be made following, and shall
be set out in, the Statement of Charges published
for the relevant Accounting Period pursuant to Section 1.11 of Part B
whereupon the Pool Members and/or former Pool Members
shall be required to pay such additional amount or be entitled to
such reimbursement as may be determined in accordance with this
Agreement by an adjustment to charges in the then
current Accounting Period.
8. ADJUSTMENT TO MARGIN
The Parties acknowledge and agree that the Margin has been determined
by the Parties based upon:-
8.1 the Net Margin of the Settlement Business falling within the
range 15 to 20 per cent.; and
8.2 the Return on Capital Employed of the Settlements Business
falling within the range 15 to 20 per cent.; and
<PAGE>
8.3 the accounts of the Settlement System Administrator being
prepared on the basis of the Historic Cost Convention.
For these purposes "Net Margin" means profit before interest and tax
divided by turnover and "Return on Capital Employed" means profit
before interest and tax divided by capital employed.
In the event that either of the factors in Section 8.1 and 8.2 should
fall outside its respective range or the factor in Section 8.3 should
change, the Executive Committee and the Settlement System Administrator
agree to meet to discuss the basis of the Margin and, if necessary, to
agree in good faith a revised Margin based upon the requirements of the
Settlements Business at such time. The Director shall be invited to
attend any such meeting.
During the Initial Period the Net Margin should not be taken into
account in determining whether the Margin should be adjusted.
9. CAPITAL EXPENDITURE
9.1 Capital Expenditure (1): the following provisions apply to Capital
Expenditure by the Settlement System Administrator in respect of the
Settlements Business:-
9.1.1 save as provided below, Capital Expenditure by the Settlement
System Administrator which may be recovered by Depreciation
charged to Pool Members shall require the prior approval of
the Executive Committee, such approval to take into account an
appropriate sharing of the Efficiencies arising from such
Capital Expenditure;
9.1.2 Capital Expenditure which may be recovered by Depreciation
charged to Pool Members specified in any Budget shall be
regarded as approved by the Executive Committee unless the
Executive Committee notifies the Settlement System
Administrator to the contrary within one month after receipt
of such Budget;
9.1.3 in any Accounting Period the Settlement System Administrator
may incur Capital Expenditure which may
be recovered by Depreciation charged to Pool Members
without the need to consult or obtain the approval of the
Executive Committee up to a maximum of the Individual Limit
for each item of Capital Expenditure and a maximum
of the Overall Limit for all items of Capital Expenditure
and in the event of the Settlement System Administrator
incurring such Capital Expenditure, it shall notify the
Executive Committee as soon as practicable thereafter;
9.1.4 the Settlement System Administrator shall be entitled to incur
Capital Expenditure which may be recovered by Depreciation
changed to Pool
<PAGE>
Members of the any amount without the need to obtain the
approval of the Executive Committee,
in circumstances where:-
(a) the Settlement System Administrator would be in
breach of its duty under the NGC Transmission License
to implement, maintain and operate a Settlement
System unless such Capital Expenditure were incurred;
and
(b) it has not reached agreement with the Executive
Committee on such Capital Expenditure within
a reasonable period of time.
9.2 Capital Expenditure (2): Capital Expenditure not falling within
Section 9.1.1 to 9.1.4 may not be charged as Depreciation
to Pool Members.
<PAGE>
PART D
Allocation of Charges
1. THE SETTLEMENT SYSTEM ADMINISTRATOR'S CHARGES
1.1 Total Sum Due: in respect of each Accounting Period, the Total Sum
Due shall be allocated amongst Pool Members in accordance
with the following provisions of this Part D.
1.2 Payment of Total Sum Due: each Pool Member shall be obliged to pay the
amount allocated to it in accordance with this Part D. The total
aggregate amount allocated to all Pool Members in respect of any
Accounting Period shall equal the Total Sum Due in respect of such
Accounting Period.
1.3 Allocation of Total Sum Due: the Total Sum Due in respect of each
Accounting Period shall be allocated amongst Pool Members
in the following manner:-
1.3.1 first, in order to recover discrete costs referable to each
Pool Member during such Accounting Period:-
(a) the costs, as reasonably determined by the Settlement
System Administrator, associated with any change to
the Software necessitated by such Pool Member's
request for data from Settlement additional to that
which is generally provided to other Pool Members
of the same class or for reporting of data in a
format different from that in which data is
generally provided to other Pool
Members of the same class (which costs shall, in the
first Accounting Period that they are
charged to such Pool Member, have added
to them a single lump sum payment for maintenance
equal to 40 per cent. of the costs of such
change, as reasonably determined by the Settlement
System Administrator) shall be allocated to such
Pool Member; and
(b) the costs for the use by such Pool Member of
electronic mail, the provision and maintenance of
communication links from Outstations and any other
services procured or provided by the Settlement
System Administrator which are directly referable to
such Pool Member shall, as far as practicable, be
allocated to such Pool Member;
1.32. secondly:-
(a) each Generator shall pay 500 (or such other
amount as the Executive Committee and the
Settlement System Administrator may
<PAGE>
agree) for each of its Generating Units in respect
of which standing data has been submitted;
(b) each Pool Member shall pay 750 (or such other
amount as the Executive Committee and the
Settlement System Administrator may
agree) for each metering System in respect of which
it is the Registrant;
(c) subject as provided in paragraphs (d) to (h)
inclusive below, each Pool Member shall pay
an annual membership fee as follows:-
Category Fee
(A) A Supplier with a maximum demand at any time during
such Accounting Period (as reasonably determined by
the Executive Committee) of less than 200MW or a
Generator with aggregate Registered Capacity of less
than 50MW (other than a Supplier or Generator
referred to in (B) below)
(pound)9,000
(B) A Supplier with a maximum demand at any
time during such Accounting Period (as
reasonably determined by the Executive
Committee) of less than 200MW or a
Generator with aggregate Registered Capacity
of less than 50MW, in either case which
requires to have delivered to it only its own
trading information
(pound)2,500
(ii) A Supplier with a maximum demand at any time during
such Accounting Period (as reasonably determined by
the Executive Committee) of 200MW or more up to (but
excluding) 2000MW or a Generator with aggregate
Registered Capacity of 50MW or more up to (but
excluding) 1000MW
(pound)20,000
(iii) Large
A Supplier with a maximum demand at any time during
such Accounting Period (as reasonably determined by
the
<PAGE>
Executive Committee) of 2000MW or more or a Generator
with aggregate Registered Capacity of 1000MW or more
(pound)45,000
(d) any Pool Member which is both a Generator and a
Supplier shall pay only one annual
membership fee, being that fee
which is the greater of its annual membership fee as
a Generator and its annual membership
fee as a Supplier (and, if both are the same amount,
such Pool Member shall pay
only its annual membership fee as a Generator): such
fee shall continue to be payable regardless
of any change during the relevant Accounting
Period in the capacity(ies) in which
such Pool Member participates as a Pool Member;
(e) unless otherwise resolved by the Executive Committee
with respect to the relevant Pool Member, a Pool
Member with no demand or generation shall not pay any
membership fee and, if the Executive Committee shall
so resolve, shall pay only that annual membership fee
referable to a Pool Member falling within the
relevant sub-category of paragraph (c)(i) above;
(f) if, in its reasonable opinion, the Executive
Committee considers:-
(i) any Pool Member (not being a Pool Member
referred to in paragraph (e) above) to be
insignificant in terms of generation or
demand, it may waive the membership fee for
such Pool Member until further notice; and
(ii) it inequitable or otherwise inappropriate to
levy the full amount of the annual
membership fee that would otherwise be
payable by any Pool Member, it may waive all
or part of such fee on such terms and for
such period(s) as it reasonably sees fit;
(g) (i) any Pool Member falling within
sub-category (B) of paragraph (c)(i) above
which wishes to receive data by electronic
mail shall be required to pay an additional
membership fee of (pound)800;
(ii) any Pool Member which wishes to receive
data by courier shall be required to pay
an additional membership fee of
(pound)1,000;
<PAGE>
(h) the Executive Committee may from time to time amend
the categories of membership and the fees (with the
consent of the Settlement System Administrator, such
consent not to be unreasonably withheld or delayed);
(i) the annual charges referred to in this Section 1.3.2
shall be adjusted in relation to each Pool Member,
Generator or Supplier, as the case may be, by
reference to the number of days during each
Accounting Period for which such Party was a Pool
Member and (where appropriate) the number of
Generating Units or Metering Systems allocated to it
during such period;
1.3.3 thirdly, in respect of a Specified Accounting Period (as
defined in Section 6.1 of Part C), each Pool Member which is a
Supplier shall pay its Supplier's Second Tier Charge in
respect of each calendar month in such Accounting Period; and
1.3.4 fourthly, 100 per cent. of the balance of the Total Sum Due
during any Accounting Period not recovered pursuant to
Sections 1.3.1 or 1.3.2 shall be allocated amongst all Pool
Members during each Quarter of such Accounting Period by
reference to the Total Sum Due attributed to such Quarter by
the Settlement System Administrator and Contributory Shares
of each Pool Member during such Quarter.
1.4 Prima facie evidence: the Settlement System Administrator's
determination of the allocation of all costs during any
Accounting Period shall, in the absence of
manifest error, be prima facie evidence thereof.
1.5 Contributory Shares: the Settlement System Administrator shall advise
each Pool Member of its Contributory Share and how
such Contributory Share is calculated n the Statement
i of Charges sent to such Pool Member.
<PAGE>
PART E
[Not Used]
<PAGE>
PART E
Pro-forma Budget
Estimated Proposed Variance Schedule
Out-turn Budget
Production
Development
Capitalized
Second Tier
Chief Executive
Arbitration Association
Administration Costs
Depreciation & Asset
Write Off
Total Cost
Capital
<PAGE>
SCHEDULE 1
Forecast Budget Variance Reference in
Out-turn Supporting
Commentary
Staff Costs
Software Maintenance
Hardware Maintenance
NGC Recharges
Computer Consumables
Communication Links
Professional Indemnity
Consultancy
External Auditor
Other
Sundry Income
Total Production Costs
Capital
<PAGE>
SCHEDULE 2
Forecast Budget Variance Reference in
Supporting
Commentary
Staff Costs
Hardware Maintenance
Computer Consumables
Property Costs
Consultancy
Other Costs
Capitalized Costs
Total Development Costs
TOTAL RULES
<PAGE>
SCHEDULE 3
Forecast Budget Variance Reference in
Supporting
Commentary
Eastern Electricity Board
plc
East Midland plc
London Electricity plc
MANWEB plc
Midlands Electricity plc
Northern Electricity
NORWEB plc
SEEBOARD plc
South Wales Electricity
plc
South Western Electricity
plc
Yorkshire Electricity
Total Second Tier Costs
TOTAL RULES
<PAGE>
SCHEDULE 4
Forecast Budget Variance
Staff Costs
Accommodation
Office Services
Professional Services
Consultancy
Income ( (
) )
Total Chief Executive's
Executive Committee
Expenses
Consultancy
Sub-Committees
Expenses
Consultancy
Total Committee Costs
Total Pool Executive Costs
<PAGE>
SCHEDULE 5
Forecast Budget Variance Reference in
Supporting
Commentary
Staff Costs
Property Costs
Building Maintenance
Other Services
Consultancy Costs
Insurance & Legal Costs
Corporate Overheads
Total Administration Costs TOTAL RULES
<PAGE>
PART G
Pro-forma Statement of Costs
Budget for previous Actual Out-turn
Accounting Period for previous
Accounting Period
1. Revenue
(a) Process Costs Internal
Computer Maintenance
Software Maintenance
Process Consumables
Communication Links
Other
(b) Process Costs External (NGC recharges)
CDCS
Porthole
Metering Collection etc.
SMP & LOLP Broadcast
SID Operation
Consultancy
(c) Process Costs External
Insurance
SMP & LOLP Broadcast
SID Operation
Consultancy
(d) Business Costs Internal
Salaries Process
Salaries Development
Property
Insurance
Consultancy
Other
<PAGE>
Budget for previous Actual Out-turn
Accounting Period for previous
Accounting Period
(e) Business Costs External
Corporate Overhead
Other
(f) Other Payments
Depreciation
Interest
(g) Other Revenue Costs
External Auditor
Contingency Provision
Other
2. Capital
(a) Schemes
as approved
(b) Global
(as approved in excess of (pound)250,000 and other)
3. Executive Committee Costs
Disputes Procedure
Executive Expenses
4. Revenue Base
5. Capital Employed
6. Capital Charge
7. Handling Charge
8. Efficiencies
<PAGE>
Budget for previous Actual Out-turn
Accounting Period for previous
Accounting Period
9. Margin
<PAGE>
PART H
Pro-forma Statement of Costs
- ------------------------------------------------------------------------
Name Contributory Period to which Amount
Share charges relate
- ------------------------------------------------------------------------
- ---------------------------------------------------------------------------
<PAGE>
SCHEDULE 5
Form of Admission Application
The Executive Committee for the
Pooling and Settlement System in England and Wales
[Date]
Dear Sir,
1. We [insert full legal name and address of registered/principal office of
applicant] refer to the Pooling and Settlement Agreement for the electricity
industry in England and Wales dated 30th March, 1990 (as amended, varied,
supplemented, modified or suspended, the "Pooling and Settlement Agreement").
2. Unless the context otherwise requires, words and expressions defined in the
Pooling and Settlement Agreement shall bear the same meanings respectively when
used herein.
3. We hereby apply to be admitted as an additional party to the Pooling
and Settlement Agreement pursuant to Clause 3 thereof. We wish to participate
as a [[Generator]/[Supplier]/[Externally Interconnected Party]]*.
4. We confirm that:-
(A)** (i) we have been granted and have in full force and
effect a Generation License or we have made and have
current an application for such a license; or
(ii) we are exempted from the obligation to hold a
Generation License by reason of an
exemption under section 5 of the Act; or
(iii) we have entered into an Interconnection Agreement
under which we will, subject to becoming a Pool
Member, have the right (whether alone or together
with others) then or at any time in the future to use
all or any part of an External Interconnection for
the delivery of electricity to the NGC Transmission
System; or
(iv) we are acting as the agent for a person generating or
proposing to generate electricity on terms whereby we
have the exclusive right to all the output of those
Generating Unit(s) of such person and in respect of
which we have been appointed agent;
<PAGE>
(B) (i) we have been granted and have in full force and
effect a PES License or a Second Tier Supply License
or we have made and have current an application for
such a license; or
(ii) we are exempted from the obligation to hold a PES
License or (as the case may be) a Second Tier Supply
License by reason of an exemption under section 5 of
the Act; or
(iii) we have entered into an Interconnection Agreement
under which we will, subject to alone or together
with others) then or at any time in the future to use
all or any part of an External Interconnection for
the taking of electricity from the NGC Transmission
System;
(C) (i) we are [or [ ] (being our agent and a person
which the Executive Committee has confirmed in
writing to us is acceptable to the Executive
Committee, a copy of which confirmation is acceptable
to the Executive Committee, a copy of which
confirmation is enclosed) is]* registered for United
Kingdom Value Added Tax purposes;
(ii) we have [or our agent has]* so arranged matters that
any payment receivable by us under or pursuant to the
Pooling and Settlement Agreement will constitute for
United Kingdom Value Added Tax purposes the
consideration for a taxable supply made in the United
Kingdom by us [or our agent]* as a taxable person in
the United Kingdom in the course of furtherance of a
business;
(iii) we have [or our agent has]* so arranged matters that
any payment required to be made by us under or
pursuant to the Pooling and Settlement Agreement will
constitute for United Kingdom Value Added Tax
purposes the consideration for a taxable supply made
in the United Kingdom to us [or our agent]*; and
(iv) in any case where any electricity has been or will be
generated or produced by us outside the United
Kingdom, we have [or our agent has]* so arranged
matters that any import thereof for the purposes of
or otherwise in connection with the Pooling and
Settlement Agreement will constitute for United
Kingdom Value Added Tax purposes an importation or
acquisition of goods solely by us [or our agent]* and
so not by any other Party.
(D) as a Party we shall accede to the Initial Settlement Agreement
in accordance with its terms.
5. We hereby represent and warrant to the Executive Committee (for itself
and on behalf of all the Parties) that:-
<PAGE>
(A) we are duly organized and validly existing under the laws of
the jurisdiction of our organization or incorporation;
(B) We have the power to execute and deliver our Accession
Agreement and any other documentation relating to that other
agreements as are required thereby and to perform our
obligations hereunder or thereunder and we have taken all
necessary action to authorize such execution, delivery and
performance; and
(C) such execution, delivery and performance do not violate or
conflict with any law applicable to us, any provision of our
constitutional documents, any order or judgment of any court
or other agency of government applicable to us or any of our
assets or any contractual restriction on or affecting us or
any of our assets.
We confirm that these representations and warranties will also be true
and correct in all material respects at the date of our admission as a New
Party.
6. We enclose the application fee of (pound)[ ].****
7. We accept and agree to be bound by the terms of Clause 3 of the
Pooling and Settlement Agreement.
Yours faithfully,
duly authorized for and on behalf of
[insert full legal name of the New Party]
* Complete/delete as appropriate.
** Include paragraph (A) if applying to be admitted as a Generator.
*** Include paragraph (B) if applying to be admitted as a Supplier.
**** Insert current application fee prescribed by the Executive Committee.
<PAGE>
SCHEDULE 6
Form of Pool Membership Application
The Executive Committee for the
Pooling and Settlement System in England and Wales.
[Date]
Dear Sir,
1. We [insert full legal name and address of registered/principal office of
applicant] refer to the Pooling and Settlement Agreement for the electricity
industry in England and Wales dated 30th March, 1990 (as amended, varied,
supplemented, modified or suspended, the "Pooling and Settlement Agreement").
2. Unless the context otherwise requires, words and expressions defined in the
Pooling and Settlement Agreement shall bear the same meanings respectively when
used herein.
3. We hereby apply to be admitted as a Pool Member pursuant to Clause 8.2
of the Pooling and Settlement Agreement.
We wish to participate as a [[Generator]/[Supplier]/[and an External Pool
Member]]*.
4. We confirm that:-
(A)**
(i) we have been granted and have in full force and
effect a Generation License; or
(ii) we are exempted from the obligation to hold a PES
License (as the case may be) a Second Tier Supply
License by reason of an exemption under section 5 of
the Act; or
(iii) we have entered into an Interconnection Agreement
under which we will, subject to becoming a Pool
Member, have the right (whether alone or together
with others) then or at any time in the future to use
all or any part of an External Interconnection for
the taking of electricity from the NGC Transmission
System;
(iv) we are acting as the agent for a person generating
or proposing to generate electricity on terms
whereby we have the exclusive right to
<PAGE>
all the output of those Generating Unit(s) of such
person and in respect of which we have
been appointed agent;
(B)*** (i) we have been granted and have in full force and effect a PES
License or a Second Tire Supply License; or
(ii) we are exempted from the obligation to hold a PES license or
(as the case may be) a Second Tier Supply License by reason of
an exemption under section 5 of the Act; or
(iii) we have entered into an Interconnection Agreement under which
we will, subject to become a Pool Member, have the right
(whether alone or together with others) then or at any
External Interconnection for the taking of electricity from
the NCG Transmission System;
(C) with effect form the date of our admission as a Pool Member, we will
accede as a party to the Funds Transfer Agreement and to the Deed to
Indemnity in favor (inter alia) of the Chief Executive in accordance
with their respective terms;
(D) on or before our admission as a Pool Member, we will open a Settlement
Account and comply with all other applicable requirements of Schedule
11 to the Pooling and Settlement Account;
(E) (i) we are [or [ ] (being our agent and a person which the
Executive Committee has confirmed in writing to us is
acceptable to the Executive Committee, a copy of which
confirmation is enclosed) is]* registered for United Kingdom
Value Added Tax purposes;
(ii) we have [or our agent has]* so arranged matters that any
payment receivable by us under or pursuant to the Pooling and
Settlement Agreement will constitute for a taxable supply made
in the United Kingdom by us [or our agent]* as a taxable
person in the United Kingdom in the course of furtherance of a
business;
(iii) we have [or our agent has]* so arranged matters that any
payment required to be made by us under or pursuant to the
Pooling and Settlement Agreement will constitute for United
Kingdom Value Added Tax purposes for consideration for a
taxable supply made in the United Kingdom to us [or our
agent]*; and
(iv) in any case where any electricity has been or will be
generated or produced by us outside the United Kingdom, we
have [or our agent has]* so arranged matters that any import
thereof for the purposes of or otherwise in connection with
the Pooling and Settlement Agreement will constitute for
United Kingdom Value Added Tax purposes an importation or
<PAGE>
acquisition of goods solely by us [or our agent]* and so not
by any other Party;
(F)****
Option 1
We have entered into and have in full force and effect (or, prior to
our admission as a Pool Member, will enter into and have in full force
and effect) all appropriate Connection Agreement;
-or-
Option 2
all appropriate Connection Agreement with [ ], being the relevant
Externally Interconnected Party, in relation to [ ], being the relevant
External Interconnection, are in full force and effect.
5. We enclose:-
[insert details of evidence in support of fulfillment of the other Pool
Membership Conditions set out in Clause 8.3 of the Pooling and
Settlement Agreement].
Yours faithfully,
duly authorized for and on behalf of
[insert full legal name of the applicant]
* Complete/delete as appropriate.
** Include paragraph (A) if applying to be admitted as a Generator.
*** Include paragraph (B) if applying to be admitted as a Supplier.
**** Include Option 2 if applying to be admitted as an External Pool Member.
Otherwise include Option 1.
<PAGE>
SCHEDULE 7
Form of Escrow Agreement
THIS AGREEMENT is made on [ ], 1990
BETWEEN:-
(1) NGC SETTLEMENTS LIMITED (registered number 2444282) whose registered
office is situate at National Grid House, Sumner Street, London SEI 9JU
for itself and on behalf of the Pool Member (as defined in the Pooling
and Settlement Agreement hereinafter referred to) acting through the
Executive Committee (as hereinafter defined) (the "Settlement System
Administrator" which expression shall include the Settlement System
Administrator's successors in title); and
(2) [ ]LIMITED (registered number
[ ]) whose registered office is situated at
[ ] (the "Custodian").
WHEREAS:-
(A) by a Pooling and Settlement Agreement (the "Pooling and Settlement
Agreement") details of which are set out in Schedule A the Settlement
System Administrator has agreed to act as Settlement System
Administrator and operate a settlements system requiring the use of
certain computer package(s) comprising computer programs and related
systems;
(B) certain technical information and documentation describing or otherwise
relating to the said computer programs and related systems is required
for the understanding, maintaining, modifying and correcting of the
said computer programs and related systems; and
(C) the Settlement System Administrator acknowledges that in certain
circumstances the Executive Committee may require possession of the
said technical information and documentation, up-to-date and in good
order
NOW IT IS HEREBY AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 In this Agreement:-
"Director" means the Director General of Electricity Supply;
"Executive Committee" means the Executive Committee established under
the Pooling and Settlement Agreement and "Committee Member" means a
member of the Executive Committee;
<PAGE>
"Material" means the source code and load (machine executable) modules
and the technical information manuals and other documentation described
in Schedule B;
"Modification" means the technical information and documents relating
to all moifications, updates and changes to the Material; and
"Receptacle" means the receptacle to contain a copy of the Material
pursuant to Clause 3.1
1.2 Unless the context otherwise requires, words and expression defined in
the Pooling and Settlement Agreement shall bear the same meanings
respectively when used herein.
2. DEPOSIT
2.1 Forthwith upon execution and delivery of this Agreement, the Settlement
System Administrator will deposit and the Custodian will accept as
custodian for the Pool Members (acting through the Executive Committee)
a copy of the Material.
2.2 The Custodian will place the copy of the Material in the Receptacle.
2.3 The Custodian shall bear no obligation or responsibility to any person
to determine the existence, relevance, completeness, accuracy or any
other or any other aspect of the Material and/or Modifications. The
Custodian shall have no responsibility to determine that whatever is
deposited or accepted by it for deposit is or is not Material and/or
Modifications.
3. MODIFICATIONS
3.1 The Settlement System Administrator will ensure that the Material is
kept fully up-to-date and reflects all Modifications and will deposit a
copy of all Modifications with the Custodian as soon as the same is
available.
34.2 The Settlement System Administrator will advise the Executive Committee
of all Modifications and will confirm in writing that a copy of all
Modifications has been delivered to the Custodian and the Custodian
shall as soon as possible confirm receipt thereof in writing to the
Executive Committee.
4. RELEASE TO THE EXECUTIVE COMMITTEE
4.1 The Custodian shall forthwith release to the Executive Committee (or
a person nominated by the Executive Committee) the
copy(ies) of the Material and/or all the Modifications:-
<PAGE>
4.1.1 upon the written request of the Executive Committee if the
Settlement System Administrator has resigned or has been
removed as Settlement System Administrator under the Pooling
and Settlement Agreement; or
4.1.2 at any time, upon the written request of the Director.
4.2 Any written request of the Executive Committee referred to in Clause
4.1.1 shall be in the form of a statutory declaration by one or more
Committee Members setting out the grounds on which release is sought
and exhibiting such documentation in support thereof as the Custodian
shall reasonably require.
4.3 When any dispute shall arise as to the occurrence of the event set out
in Clause 4.1.1, such dispute will be referred at the instance of
either the Settlement System Administrator, the Custodian or the
Executive Committee to the Director whose decision shall be final and
binding.
5. CONFIDENTIALITY
The Settlement System Administrator will pay the Custodian's fees as
detailed in Schedule C as amended from time to time by written
agreement between the parties.
7. TERMINATION
7.1 This Agreement shall terminate upon the release of the copy of the
Material and copies of all Modification in accordance with Clause 4.1.
7.2 This Agreement may be terminated by the Custodian by giving not less
than 90 days' written notice to both the Executive Committee and the
Settlement System Administrator.
7.3 The Settlement System Administrator may not terminate this Agreement
without the consent of the Executive Committee first being given in
writing. In the event of such consent being given, this Agreement may
be terminated by the Settlement System Administrator giving not less
than 90 days' written notice to the Custodian.
7.4 Upon termination under the provisions of Clause 7.2 or 7.3 the
Custodian will deliver the copy(ies) of the Material and all the
Modifications to the Settlement System Administrator (unless jointly
instructed to the contrary by the Settlement System Administrator and
the Executive Committee).
7.5 Termination of the Agreement for whatever reason will not relieve the
Custodian from the obligations of confidentiality contained in Clause
5.
8. TESTS
<PAGE>
The Executive Committee shall be entitled to require the Custodian to
carry out such tests which in the opinion of the Custodian would
reasonably establish that the Material and Modification contain true
and accurate versions of the source codes. Any reasonable charges and
expenses incurred by the Custodian will be paid by the Settlement
System Administrator.
9. NOTICES
9.1 Any notice or other communication to be given by one party to the
other party under, or in connection with the matters contemplated
by, this Agreement shall be addressed to the recipient
and sent to the address, telex number of facsimile
number of such other party given in this Agreement for the purpose
and marked for the attention of the person so given
or to such other address, telex number and/or facsimile number
and/or marked for such other attention as such other
party may from time to time specify by notice given in accordance
with this Clause to the party giving the relevant
notice or other communication to it.
9.2 Any notice or other communication to be given to the Executive
Committee under, or in connection with the matters contemplated by,
this Agreement shall be sent to the Secretary at such address, telex
number or facsimile number as the Secretary may from time to time
specify by notify given in accordance with this Clause to the parties.
9.3 Any notice or other communications to be given by one party to the
other party under, or in connection with the matters contemplated by,
this Agreement shall be in writing and shall be given letter delivered
by hand or sent by first class prepaid post (airmail if overseas) or
telex or facsimile, and shall be deemed to have been received:-
9.3.1 in the case of delivery by hand, when delivered; or
9.3.2 in the case of first class prepaid post, on the second day
following the day of posting or (if sent airmail overseas or
from overseas) on the first day following the day of posting;
or
9.3.3 in the case of telex, on the transmission of the automatic
answer-back of the addressee (where such transmission occurs
before 1700 hours on the day of transmission) and in any other
case on the day following the day of transmission; or
9.3.4 in the case of facsimile, on acknowledgement by the address's
facsimile receiving equipment (where such acknowledgement
occurs before 1700 hours on the day of acknowledgement) and in
any other case on the day following the day of
acknowledgement.
10. GOVERNING LAW
<PAGE>
This Agreement shall be governed by, and construed in all respects in
accordance with, English law.
<PAGE>
SCHEDULE A
Details of the Pooling and Settlement Agreement
Pooling and Settlement Agreement dated 30th March, 1990 made between the Founder
Generators named therein (1), the Founder Suppliers named therein (2), NGC
Settlements Limited as Settlement Systems Administrator (3), Energy Pool Funds
Administration Limited as Pooling Funds Administrator (4), The National Grid
Company plc as Grid Operator and Ancillary Services Provider (5) and Scottish
Power plc and Electricite de France, Service National as Externally
Interconnected Parties (6).
SCHEDULE B
The Material
SCHEDULE C
The Custodian's Fees
1. Initial fee
2. Receptacle fee
3. Annual fee
4. Release fee
<PAGE>
IN WITNESS whereof this Agreement has been duly executed the day and year fist
above written
As Settlement System Administrator (for itself and on behalf of the Pool Members
acting through the Executive Committee)
THE COMMON SEAL OF )
NCG SETTLEMENTS )
LIMITED was hereunto )
affixed in the )
presence of:- )
Director
Director/Secretary
Address:
Telex No:
Facsimile No:
Attention:
As Custodian
[ ]
Address:
Telex No:
Facsimile No:
Attention:
By:
<PAGE>
SCHEDULE 8
The Hardware and Software
Part A
The Hardware
AT NATIONAL GRID HOUSE
3 X 8830 VAX Processors
2 x HSC20 Disk Controllers
3 X LPS40 Printers
11 X RA90 Disk Drives
1 x TA79 Magnetic Tape Drives
1 X TB79 Magnetic Tape Drives
2 X RU20 Optical Disk Drives
7 X DEMSA Routers
1 X Decnet Monitor
16 X VT340 Terminals
5 X DEC Terminal Servers
6 X PS2 IBM PCs
12 X Quatro Modems
1 X IBM Comms Gear
1 X 3100 Processors
AT FAIRHAM HOUSE
3 X 6000-420 VAX Processors
2 X HSC70 Disk Controllers
3 X LPS40 Printers
11 X RA90 Disk Drives
1 X TA79 Magnetic Tape Drives
1 X TB79 Magnetic Tape Drives
2 X RU20 Optical Disk Drives
7 X DEMSA Routers
1 X Decnet Monitor
24 X VT340 Terminals
5 X DEC200 Terminal Servers
6 X PS2 IBM PCs
8 X Quatro Modems
1 X IBM Comms Gear
1 X 3100 Processors
<PAGE>
Part B
Developed Software
SD-Scicon Settlement Application Software
Landis and Gyr Software
Central Data Collection Systems
LOLP Software
Part C
Limited Software
ORACLE
Digital VMS Operating System
Landis and Gyr Software
LOLP Software
LOLP Software
<PAGE>
SCHEDULE 9
THE POOL RULES
SEE SEPARATELY
PRINTED VOLUME
<PAGE>
SCHEDULE 10
THE POOL RULES
The Secretary of the Executive Committee for the Pooling and Settlement System
in England and Wales
(copied to:
(A) Settlement System Administrator; and
(B) the Pool Funds Administrator).
[Date]
Dear Sir,
We [insert full legal name and address of registered/principal office of
applicant] refer to the Pooling and Settlement Agreement for the electricity
industry in England and Wales dated 30th March, 1990 as amended, varied,
supplemented, modified or suspended, (the "Pooling and Settlement Agreement").
Unless the context otherwise requires, words and expressions defined in the
Pooling and Settlement Agreement shall bear the same meanings respectively when
used herein.
We hereby give notice pursuant to Clause 8.7 of the Pooling and Settlement
Agreement that we are resigning as a Party with effect form the date falling 28
days after receipt by you of this Resignation Notice.
We confirm that, in giving this notice of resignation, we are not and will not
be in breach of any of the restrictions on resignation set our in Clause 8.8 of
the Pooling and Settlement Agreement.
We [enclose]/[confirm that we have already provided]* such notices if any) as
are required to be given by us pursuant to the provisions of Part XV of the
Pooling and Settlement Agreement.
810
<PAGE>
We acknowledge that our resignation as a Party is without prejudice to our
accrued rights and liabilities and any rights and liabilities which may accrue
to us in relation to the period during which we were a Party under the Pooling
and Settlement Agreement, the Funds Transfer Agreement or any agreement referred
to in Clause 8.8.1(c) of the Pooling and Settlement Agreement.
Yours faithfully,
duly authorized for and on behalf of
[insert full legal name of Party]
*Complete/delete as appropriate
811
<PAGE>
SCHEDULE 11
Billing and Settlement
PART 1
PRELIMINARY
1. Definitions and Interpretation
PART 2
ESTABLISHMENT OF SYSTEMS
2. Payments Calendar
3. Information Systems
4. Banking System
5. Establishment of Trusts
6. Pool Ledger Accounts
[Sections 7 to 14 (inclusive) not used]
PART 3
SECURITY COVER AND CREDIT MONITORING
15. Security Cover
16. Credit Monitoring
PART 4
BILLING AND PAYMENT PROCEDURES
17. Receipt and Verification of Information
18. Advice Notes
19. Payment Procedure
812
<PAGE>
20. Alternative Payment Procedure
21. Payment Default
22. Confirmation Notices
23. Payment Errors
24. Enforcement of Claims
25. Credit Facility: Payment Defaults
26. Credit Facility: General
Annex 1 - Form of Advice Note
Annex 2 - Form of Confirmation Notice
Annex 3 Part 1 - Form of Settlement Account Designation
Part 2 - Form of Change of Settlement Account
Annex 4 - Form of Letter of Credit
813
<PAGE>
SCHEDULE 11
Billing and Settlement
PART 1
PRELIMINARY
1. DEFINITION AND INTERPRETATION
1.1 Definitions: in this Schedule, except where the context otherwise
requires:-
"Advice Note" means a statement substantially in the form and
containing the information set out in Annex 1 (or in such other form or
containing such further information as may from time to time be
specified by the Executive Committee) issued in the name of the Pool
Funds Administrator to a Pool Member or the Ancillary Services
Provider;
"Approved Credit Rating" means, in relation to a Pool Member, a
short-term debt rating of not less than Al by Standard and Poor's
Corporation or a rating of not less than P1 by Moody's Investors
Service or an equivalent rating from any other reputable credit rating
agency approved by the Executive Committee;
"Banking System" means the banking system described in Section 4, for
the transfer of funds from Pool Debtors to Pool Creditors in accordance
with this Schedule, as amended or replaced from time to time in
accordance with the provisions of the Agreement;
"Billing System" means the systems and procedures described in Sections
18 and 22 for the issuing of Advice Notes and Confirmation Notices by
the Pool Funds Administrator to Pool Members and the Ancillary Services
Provider, as amended or replaced from time to time in accordance with
the provisions of the Agreement;
"CHAPS" means the Clearing House Automated Payments System;
"Collection Account" means an account denominated in sterling
maintained by the Pool Funds Administrator at a Town Clearing branch of
a Settlement Bank, and designated from time to time as a Collection
Account in accordance with Section 4;
"Collection Account" means an account denominated in sterling
maintained by the Pool Funds Administrator at a Town Clearing branch of
a Settlement Bank, and
814
<PAGE>
designated from time to time as a Collection Account in accordance
with Section 4;
"Confirmation Notice" means a statement substantially in the form and
containing the information set out in Annex 2 (or in such other form or
containing such further information as may from time to time be
specified by the Executive Committee) issued in the name of the Pool
Funds Administrator to a Pool Member of the Ancillary Services
Provider;
"Credit Facility" means the credit facility in a principal amount of up
to (pound)20,000,000 provided to the Pool Funds Administrator by
Barclays Bank PLC (acting through its branch at 54 Lombard Street,
London EC3 9EX) with effect from 1st January, 1993 as from time to time
extended, renewed or modified and any other facility provided to the
Pool Funds Administrator by Barclays Bank PLC or any other bank
(approved by the Executive Committee) whether in substitution for or in
addition to the same in any such case or terms approved by the
Executive Committee;
"Default Interest Rate" means:-
(i) a rate per annum determined by the Pool Funds Administrator
to be equal to the aggregate of:-
(a) 4 per cent, per annum; and
(b) the Pool Banker's base lending rate from time to
time;
(ii) such other rate as the Executive Committee may from time to
time determine;
"Facility Bank" means Barclays Bank PLC (acting through its branch at
54 Lombard Street, London EC3 PEX) or such other bank as may from time
to time provided a Credit Facility;
"Funds Transfer Agreement" means the agreement of that name dated 30th
March, 1990 and made between Energy Pool Funds Administration Limited,
Barclays Bank PLC, the Pool Members named therein and The National Grid
Company plc as Ancillary Services Provider, as amended, varied,
supplemented, modified or suspended from time to time in accordance
with the terms hereof and thereof;
"Funds Transfer Business" means the business of the Pool Funds
Administrator in operating the Funds Transfer System and providing the
Services;
815
<PAGE>
"Funds Transfer Hardware" has the meaning ascribed to it in
Schedule 15;
"Funds Transfer Software" has the meaning ascribed to it in
Schedule 15;
"Funds Transfer System" means the Banking System, the Billing System
and the Information Systems;
"Information Systems" means the information systems described in
Section 3 for the transfer of information to be given by or to the Pool
Funds Administrator in connection with the Funds Transfer Administrator
in connection with the Funds Transfer Business, as amended or replaced
from time to time in accordance with the provisions of the Agreement;
"Letter of credit" means an unconditional irrevocable standby letter of
credit substantially in the form set out in Annex 4 (or such other form
as the Executive Committee may approve) issued for the account of a
Supplier in sterling in favor of the Pool Funds Administrator as
trustee on the trusts set out in Section 5 by any United Kingdom
clearing bank or any other bank which has a long term debt rating of
not less than single A by Standard and Poor's Corporation or by Moody's
Investors Service, or such other bank as the Executive Committee may
approve, and which shall be available for payment at a Town Clearing
branch of the issuing bank;
"Notification Date" means, in respect of any Settlement Day, the day
specified in the Payments Calendar as the day on which the Settlement
Run shall be required to be delivered by the Settlement System
Administrator to the Pool Funds Administrator for that Settlement Day;
"Notified Payment" means a payment notified in accordance with Section
18 by the Pool Funds Administrator to a Pool Member or the Ancillary
Services Provider as being a payment required to be cleared through the
Pool Clearing Account;
"Notified Payments System" means the system to be established by
Section 19 for the settling of Notified Payments, as amended or
replaced from time to time in accordance with the provisions of the
Agreement;
"Payment Date" means, in relation to any Settlement Day, the date fixed
in accordance with Section 2 upon which Notified Payments in respect of
supplies of electricity and the provision of Ancillary Services must be
settled in accordance with this Schedule;
816
<PAGE>
"Payment Calendar" means the calendar prepared and issued in accordance
with Section 2 showing a Notification Date and a Payment Date in
respect of each Settlement Day;
"Pool Accounts" means the Pool Clearing Account, the Pool Borrowing
Account, the Pool Reserve Account and the Collection Accounts and such
other accounts as may be established in accordance with sub-section
4.2;
"Pool Banker" means Barclays Bank PLC or such other person nominated
form time to time by the Executive Committee as Pool Banker and
appointed as Pool Banker;
"Pool Borrowing Account" means the account of that title in the name of
the Pool Funds Administrator with the Facility Bank which may from time
to time be opened in respect of the Credit Facility;
"Pool Clearing Account" means the account in the name of the Pool Funds
Administrator (holding as trustee on the trusts set out in Section 5)
with the Pool Banker to which Notified Payments are required to be
transferred for allocation to Pool Creditors in accordance with their
respective entitlements;
"Pool Creditor" means each Pool Member and the Ancillary Services
Provider to whom moneys are payable pursuant to the terms of this
Schedule other than a Supplier in respect of (i) amounts owning to it
by another Supplier pursuant to the operation of sub-section 21.1;
"Pool Debt" means, in respect of a Pool Member or the Ancillary
Services Provider, the aggregate amount payable by such Pool Member or
the Ancillary Services Provider pursuant to the terms of this Schedule;
"Pool Debtor" means each Pool Member the Ancillary Services Provider,
but in either case only where it is required to make payment under this
Schedule;
"Pool Ledger Accounts" means the accounting records required to be
maintained by the Pool Funds Administrator in accordance with Section 6
for the recording of transactions settled in accordance with this
Schedule;
"Pool Reserve Account" means the account established pursuant to
sub-section 4.2 for the purpose of holding a cash deposit which may be
used in or towards clearing the Pool Clearing Account in accordance
with Section 21;
"Pool Reserve Assets" has the meaning given that expression in
sub-section 5.12;
817
<PAGE>
"Reserve Interest Rate" means the rate of interest payable from time to
time by the Pool Banker on amounts standing to the credit of the Pool
Reserve Account;
"Security Amount" means, in respect of a Supplier, the aggregate of
available amounts of each outstanding Letter of Credit plus the
principal amount (if any) of cash that such Supplier has paid to the
credit of the Pool Reserve Account (and which has not been repaid to
such Supplier) and less the amount of all outstanding loans deemed to
be made under paragraphs 21.1.3 or 21.1.5 of this Schedule to such
Supplier; for the purposes of this definition, in relation to a Letter
of Credit, "available amount" means the face amount thereof less (i)
payment already made thereunder and (ii) claims made thereunder but not
yet paid;
"Security Cover" means, in respect of each Supplier, the aggregate
amount for the time being which it shall be required by the Executive
Committee to provide and maintain by way of security in accordance with
Part 3;
"Services" means the services and responsibilities to be supplied or
discharged by the Pool Funds Administrator pursuant
to the Agreement;
"Settlement Account" means, in relation to a Pool Member or the
Ancillary Services Provider, an account maintained at a Settlement Bank
and designated in accordance with sub-section 4.4;
"Settlement Account Designation" means a notice substantially in the
form set our in Part 1 of Annex 3 or in such other forms as may be
specified by the Executive Committee, completed and signed by a Pool
Member of the Ancillary Services Provider designating a Settlement
Account for the purposes of this Schedule;
"Settlement Bank" means a bank which:-
(a) has its head office or a branch situated in the United
Kingdom and which holds sterling denominated
accounts such office or branch;
(b) is a settlement member of the Clearing House Automated Payment
Systems ("CHAPS") or is a CHAPS participant by virtue of an
agency agreement with a settlement member; and
(c) is either:-
(i) a European institution under the Banking
Coordination (Second
Council Directive) Regulations 1992; or
(ii) an authorized institution under the Banking Act
1987;
818
<PAGE>
"Settlement Bank Mandate" means any mandate referred to in sub-section
4.7 to be given by the Pool Funds Administrator in favor of a
Settlement Bank or, as the context may require, a particular one of
them in such form(s) as the Executive Committee may approve, such
approval not to be unreasonably withheld, such mandate being given for
the purpose of establishing and maintaining a Collection Account;
"Settlement Re-run" means any re-run of Settlement in accordance with
Part XII of the Agreement;
"Settlement Bank Mandate"means any mandate referred to in sub-
section 4.7 to be given by the Pool Funds
Administrator in favor of a Settlement Bank
or, as the context may require, a particular one of
them in such form(s) as the Executive Committee may approve, such
approval not to be unreasonably withheld, such mandate being given
for the purpose of establishing and maintaining a Collection Account;
"Settlement Re-run" means any re-run of Settlement in accordance with
Part XII of the Agreement;
"Settlement Run" means, in respect of transactions occurring on the
relevant Settlement Day for which payments are to be settled pursuant
to this Schedule, the data which the Settlement System Administrator is
required to deliver from time to time to the Pool Funds Administrator
pursuant to Section 17 in respect of such transactions; and
"Shortfall" has the meaning given that expression in sub-section 5.7
1.2 Interpretation: in this Schedule, except where the context otherwise
requires, references to a particular Annex, Part, Section,
sub-section, paragraph or sub-paragraph shall be a reference
to that Annex to or part of this Schedule or, as the
case may be, that Section, sub-section, paragraph or sub-paragraph in
this paragraph shall be a reference exclusive or inclusive
of United Kingdom Value Added Tax shall mean that
that amount is exclusive or inclusive (as the case may be)
of a sum equal to such amount, if any, of United Kingdom
Value Added Tax as is properly chargeable on the supply to which the
first-mentioned amount is attributable as
being all or part of the consideration for that
supply.
819
<PAGE>
PART 2
ESTABLISHMENT OF SYSTEMS
2. PAYMENTS CALENDAR
2.1 Preparation: no later than 31st January in each year the Pool Funds
Administrator and the Settlement System Administrator shall agree on a
Payments Calendar showing for the period from 1st April in that year
to 31st March in the next succeeding year (both dates inclusive)
the Payment Dates on which payments pursuant to the Agreement in
respect of supplies of electricity and the provision of
Ancillary Services on each Settlement Day are required to be
settled and showing the Notification Dates on which the Settlement Run
in respect of such supplies shall be delivered
by the Settlement System Administrator to the Pool Funds Administrator.
2.2 Principles: each Payments Calendar shall give effect to the following
principles:
2.2.1 the Settlement Run shall be required to be delivered by the
Settlement System Administrator to the Pool Funds
Administrator no later than the 24th day after the Settlement
Day to which the Settlement Run relates (or, if such day is
not a Business Day, the next succeeding day which is a
Business Day);
2.2.2 the Payment Date shall not fall earlier than two clear
Business Days after the day on which the Settlement Run is
required to be delivered by the Settlement System
Administrator to the Pool Funds Administrator;
2.2.3 expressed as an average over the entire period covered by the
Payments Calendar, the Payment Date shall fall, as near as
practicable, 28.0 days after the Settlement Day to which it
relates; and
2.2.4 each Payment Date shall fall as close as is reasonably
practicable to the 28th day after the Settlement Day to which
it relates,
2.3 Form: the Payments Calendar shall be in such form as the Executive
Committee shall from time to time prescribe.
2.4 Default: if the Pool Funds Administrator and the Settlement System
Administrator shall fail to agree a Payments Calendar for any period by
the date stated in sub-section 2.1 or the Payments Calendar prepared by
them does not give effect to the principles set out in sub-section 2.2,
the Executive Committee shall prepare or cause to be prepared a
Payments Calendar for that period giving
820
<PAGE>
effect to the said principles and that shall be the Payments Calendar
for use for that period.
2.5 Distribution: any Payments Calendar prepared pursuant to this Section 2
shall e distributed promptly to each Pool Member, the Ancillary
Services Provider, the Pool Banker, the Pool Auditor and the Director
and (if prepared by the Pool Funds Administrator and the Settlement
System Administrator) the Executive Committee and (if prepared by or
for the Executive Committee) the Pool Funds Administrator and the
Settlement System Administrator.
3. INFORMATION SYSTEMS
3.1 Provision of information: unless otherwise required by the Executive
Committee, all written information to be given by or to the Pool Funds
Administrator in connection with the Banking System and the Billing
System shall be provided in the following manner:
3.1.1 for information flowing between the Pool Funds Administrator,
the Settlement System Administrator and the Ancillary Services
Provider by electronic mail as designated from time to time by
the recipient in a written notice to the sender of the
information or if such electronic mail systems are not
operational by the Effective Date, then until such systems are
operational, by such means as such parties shall agree;
3.1.2 for information flowing between the Pool Funds Administrator
and the Pool Banker, in the manner prescribed in the Funds
Transfer Agreement or in such other manner as may be agreed
between the Pool Funds Administrator and the Pool Banker;
3.1.3 for information flowing between the Pool Funds Administrator
and a Settlement Bank, in the manner prescribed in the
relevant Settlement Bank Mandate or in such manner as may be
agreed between the Pool funds Administrator and the Settlement
Bank;
3.1.4 for information flowing between the Pool Funds Administrator
and any Pool Member who has installed an electronic mail
transfer system compatible with the Pool Funds Administrator's
electronic mail transfer system, by electronic mail as
designated from time to time by the recipient in a written
notice to the sender of the information;
3.1.5 for information flowing between the Pool Funds Administrator
and any other Pool Member, by facsimile transmission and
addressed for the attention of the Authorized Person (as
defined in sub-section 3.3) for such Pool Member and sent to
them latest facsimile number of such Authorized
821
<PAGE>
Person notified to the Pool Funds Administrator pursuant to
sub-section 3.3 provided that, if at the relevant time there
is no Authorized Person for such Pool Member, such information
shall be sent by facsimile transmission and addressed for the
attention of the company secretary of such Pool Member and
sent to the facsimile number of its registered or principal
office.
3.2 Communications Equipment: each Party undertakes to exercise
reasonable skill and care to ensure that its communications
equipment at all times adequate to transmit and receive
information in connection with the Banking System and the
Billing System. In the case of any breakdown, failure or
non-availability of the communications or other equipment,
each Party affected shall use all reasonable efforts to
agree promptly on the use and implementation of alternative, effective
and secure means of communication (and, in default of agreement,
notices or other communication shall be by letter
delivered or sent in accordance with Clause 75).
3.3 Authorized persons: upon written request of the Pool Funds
Administrative each Pool Member shall (and may of the its own accord)
provide the Pool Funds Administrator in writing with the name of,
and communication details for, one or more individuals ("Authorized
Persons") who are authorized (and, until it receives
written notice to the contrary, the Pool Funds Administrator shall be
entitled to assume that they are authorized) to take action on
behalf of such Pool Member in respect of all communications and
other dealings under this Schedule between the
Pool Funds Administrator and such Pool Member. Each Pool Member shall
promptly advise the Pool Funds Administrator in writing of any change
of any such individual or his communication details.
The Pool Funds Administrator shall notify all Pool Members and the
Executive Committee of the names and communication details of all
Authorized Persons and of any change in any such
individual or his communication details.
822
<PAGE>
4. BANKING SYSTEM
4.1 Funds Transfer Agreement: on the Effective Date the Pool Funds
Administrator, the Pool Banker, each Pool Member and the Ancillary
Services Provider (in each case as at such date) entered
into the Funds Transfer Agreement.
4.2 Establishment of Accounts: the Pool Funds Administrator shall
establish and operate in accordance with the Agreement and
Funds Transfer Agreement a Pool Clearing Account to and from which all
payments calculated in accordance with this Schedule are to be
made, a Pool Reserve Account from which any debit balances on the
Pool Clearing Account at the close of banking business on each
Business Day shall be settled or reduced in accordance with this
Schedule, a Collection Account at each bank at which, from
time to time, any Pool Member or the Ancillary.
4.3 Rights and obligations under Funds Transfer Agreement: the Pool Funds
Administrator is authorized by the Pool Members and the Ancillary
Services Provider to exercise the rights granted to it under, and
shall perform its obligations pursuant to, the Funds Transfer
Agreement except that it shall not remove the Pool Banker without the
prior written consent of the Executive Committee; and that at the
request of the Executive Committee it Transfer Agreement.
Subject to the agreement of the Pool Banker, the Parties agree
promptly to give effect to any amendment to the Funds Transfer
Agreement as may be required by the Executive Committee.
4.4 Settlement Account: each Pool Member and the Ancillary Services
Provider shall deliver to the Pool funds Administrator, in
the case of a Pool Member, not later than the later of the
Effective Date and 10 Business Days (or such lesser number
of Business Member, by notice to such Pool Member and the Pool Funds
Administrator specify) before it is admitted as a Pool Member and, in
the case of the Ancillary Services Provider, not later
than the later of the Effective Date and the date of its
admission as a Party a duly completed and signed Settlement
Account Designation providing details of the Settlement Account to
which the Pool Funds Administrator is instructed to
make payments to such person and, if such person wishes to designate
a second account as its Settlement Account from which payments
due from such person are to be transferred in accordance with
this Schedule, providing details of such other account.
4.5 Further information: each Pool Member and the Ancillary Services
Provider shall also supply to the Pool Funds Administrator and the
Executive Committee such information or (as the case may be) further
information concerning its Settlement Account as shall be reasonably
requested by the Executive Committee or the Pool Funds Administrator.
823
<PAGE>
4.6 Change of Settlement Account: each Pool Member and the Ancillary
Services Provider may, in consultation with the Pool Funds
Administrator and the Pool Banker, change its
Settlement Account at any time by delivering to the Pool
Funds Administrator and the Pool Banker a duly completed and signed
notice substantially in the form set out in Part 2
of Annex 3 (or in such other form as may from time to time
be specified by the Executive Committee) specifying the
effective date of the change (which shall be no less than 10 Business
Days after the notice is received by the Pool Funds Administrator
and the Pool Banker a duly completed and signed notice
substantially in the form set out in Part 2 of Annex 3 (or in such
other form as may from time to time be specified by the
Executive Committee) specifying the effective date of the change
(which shall be no less than 10 Business Days after the notice is
received by the Pool Funds Administrator).
4.7 Maintenance of Settlement Account and Settlement Bank Mandate: each
Pool Member and the Ancillary Services Provider shall, unless otherwise
agreed by the Executive Committee, at all times maintain a Settlement
Account and the Pool Funds Administrator shall enter into and maintain
a Settlement Bank Mandate with each of the relevant Settlement Banks.
4.8 Details of Accounts: the Pool Funds Administrator shall supply full
details to each Pool Member and the Ancillary Services Provider of the
Pool Clearing Account, the Pool Reserve Account and any relevant
Collection Account and, for so long as it is maintained, the Pool
Borrowing Account and shall supply the Executive Committee with full
details of all Pool Accounts and Settlement Accounts.
5. ESTABLISHMENT OF TRUSTS
5.1 Trusts: the Pool Funds Administrator shall hold all moneys deposited
with or paid to it (other than Pool Reserve Assets) and such
rights as may from time to time be vested in it
with regard to payment by Pool Members (apart from fees owed or
paid to it for its services in accordance with Schedule 15 and any
amounts payable to it pursuant to that Schedule upon
its removal as Pool Funds Administrator or the expiry or
termination of its appointment as such) by and from each Pool
Debtor or with regard to the provision of Security Cover by each
Pool Member, including:-
5.1.1 subject as provided in sub-section 5.2, all moneys from time
to time standing to the credit of each Pool Account other than
the Pool Reserve Account and the Pool Borrowing Account;
5.1.2 all rights of the Pool Funds Administrator to call for
payment or Security Cover;
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5.1.3 the Letters of Credit and all rights to, and (subject to
sub-section 15.5) moneys representing, any proceeds therefrom
other than proceeds repayable by loan in accordance with
paragraphs 5.12.5 and 5.16; and
5.1.4 any interest received or receivable in respect of a Pool Debt
or a Pool Account (other than interest on the Pool Reserve
Account),
on trust for Pool Creditors in accordance with their respective individual
entitlement as they arise in accordance with the Agreement. Upon termination of
the said trust any residual balance after satisfaction of the entitlement of all
Pool Creditors shall be held for Suppliers in accordance with their respective
individual entitlement as they arise in accordance with the Agreement.
5.2 Trusts in respect of the Credit Facility: the Pool Funds
Administrator shall hold all moneys from time to time standing
to the credit of the Pool Clearing Account on trust first
for the Facility Bank to the extent that there is an aggregate amount
outstanding under the Credit Facility but on terms that no funds shall
be withdrawn in favor of the Facility Bank under
the terms of the Credit Facility or in accordance with this Schedule
and on terms that the Pool Funds Administrator Members and other
Parties in accordance with the other provisions of this
Schedule.
5.3 Rights of Pool Creditors other than the Ancillary Services Provide: the
respective rights of Pool Creditors other than the Ancillary Services
Provider to the assets held by the Pool Funds Administrator on the
trusts set out in sub-section 5.1 shall be determined in accordance
with the Agreement and in accordance with the following principles:
5.3.1. the extent of each Pool Creditor's individual rights shall
be deemed to consist of the aggregate of the claims
(to the extent not paid or otherwise satisfied of such Pool
Creditor in respect of each Settlement Period; and
5.3.2 the assets referred to in sub-section 5.1 shall be deemed to
consist of a series of funds, each fund representing the
rights or moneys owed, paid, held or otherwise attributable to
each Settlement Period. The Pool Funds Administrator shall not
be obliged to segregate moneys into separate funds.
5.4 Rights of Ancillary Services Provider: the rights of the Ancillary
Services Provider to assets held on trust shall be determined in
accordance with Section 23 of Schedule 9.
5.5 Trusts in respect of Pool Reserve Assets: the Pool Funds
Administrator shall stand possessed of the Pool Reserve Assets on the
following trusts, that is to say:-
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5.5.1 at any time when no amounts owed by Pool Debtors are overdue,
on trust to repay (subject to and in accordance with the
provision of sub-section 5.8 and 5.9) to each Supplier such
Supplier's respective share (determined in accordance with
sub-section 5.13) of the Pool Reserve Assets; and
5.5.2 with automatic effect as soon as any amount owed by a Pool
Debtor becomes overdue, to hold an amount of the moneys
credited from time to time to the Pool Reserve Account equal
to the Shortfall or the amount held in the Pool Reserve
Account attribute to such Pool Debtor (whichever is less) on
the trusts set out in sub-section 5.1 and the balance (if any)
shall be held on the trusts set out in paragraph 5.5.1.
5.6 Overdue amounts: in respect of a Pool Debtor and for the purposes of
sub-section 5.5, an amount shall be deemed to become
overdue at the time at which the Pool Funds Administrator
becomes aware that such Pool Debtor has not made or will
not make by 12.30 hours payment in full to the credit of the
Collection Account of such Pool Debtor of such an amount as it
is required on such day to make and, for as long as the Credit
Facility remains unconditionally available, the Pool
Funds Administrator considers in good faith that the amount in
default is not likely to be remedied on the
next Business Day and the amount overdue shall be
the amount of the Shortfall.
5.7 Shortfall: the term "Shortfall", as used in this Section 5 means the
amount from
----------
time to time of Notified Payments which have become overdue by
application of the rule set out in sub-section 5.6 and which
have not subsequently been paid (whether by remittance from a Pool
Debtor, payment out of the extent that the Pool Reserve Account or a
call under a Letter of Credit). To the extent that the
Pool Funds Administrator is unable to determine the precise amount a
Shortfall, it shall be deemed to be such amount as
the Pool Funds Administrator and the Pool Banker shall agree,
or failing agreement, the entire amount of the Notified
Payment.
5.8 Supplier's rights to funds: each Supplier remitting funds for credit
to the Pool Reserve Account agrees that
the following terms shall apply. None of the remittances shall be
repayable full amounts actually or contingently owed by it to
any Pool Creditor, the Settlement System Administrator or the Pool
Funds Administrator. Furthermore, if and to
the extent that, at any time when an amount would be repayable
to a Supplier pursuant to this sub-section 5.8, all or any part
of the Supplier's interest in the Pool Reserve Assets is represented
by a loan to a Pool Member deemed to be made
in accordance with paragraph 21.1.3 or 21.1.5 the
Supplier's rights as against the Pool Funds Administrator to receive a
payment of its share in the Pool Reserve Assets (or the relevant
portion of such share) shall be conditional on repayment
in full of the relevant loan.
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5.9 Funds not to be withdrawn: each Supplier undertakes not to seek
withdrawal of any funds of which it may be entitled except in the
circumstances permitted by sub-section 5.10 or 16.7. The Pool Funds
Administrator shall be entitled to disregard any purported notice of
withdrawal not complying with this sub-section 5.9.
5.10 Suppliers' rights to withdraw funds: notwithstanding sub-sections 5.8
and 5.9, if a Supplier is not in default in respect
of any amount owed to a Pool Creditor:-
5.10.1 the Pool Funds Administrator shall transfer to the relevant
Supplier quarterly its share of interest credited to the Pool
Reserve Account; and
5.10.2 the Pool Funds Administrator shall transfer to such Supplier
with a reasonable time after such Supplier's written request
therefor an amount of cash which exceeds the amount which such
Supplier is required to maintain in the Pool Reserve Account
from time to time in accordance with Section 16.
5.11 Waiver of Supplier's rights: each Supplier waives any right it might
otherwise have to set off against any obligation owed to the Pool Funds
Administrator, the Pool Banker, any Pool Member or the Ancillary
Services Provider any claims Supplier may have to or in respect of the
Pool Reserve Assets.
5.12 Pool Reserve Assets: "Pool Reserve Assets" means the aggregate of:-
5.12.1 amounts form time to time credited to the Pool Reserve
Account;
5.12.2 amounts which any Supplier is from time to time obliged to pay
to the Pool Funds Administrator for credit to the Pool Reserve
Account and claims in respect of such amounts;
5.12.3 interest accrued and accruing on the Pool Reserve Account;
5.12.4 any amounts credited to the Pool Reserve Account pursuant to
paragraph 15.4.3; and
5.12.5 any loans deemed to be made from any amounts credited to the
Pool Reserve Account pursuant to paragraph 21.1.3 or 21.1.5.
5.13 Suppliers' rights and interests in the Pool Reserve Account: at any
time when it is necessary to determine the respective rights and
interests of Suppliers in and to funds standing to the credit of the
Pool Reserve Account, such rights shall be determined in accordance
with the following rules:-
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5.13.1 any amount withdrawn from the Pool Reserve Account following
the occurrence of a Shortfall which the Pool Funds
Administrator has determined to be attributable to a
particular Supplier (the "Relevant Supplier") (irrespective of
the existence or otherwise of actual fault on the part of the
Relevant Supplier) shall in the first instance reduce pro
tanto the Relevant Supplier's interest in the Pool Reserve
Assets;
5.13.2 if, in any circumstances described in paragraph 5.13.1, the
Shortfall exceeds the Relevant Supplier's interest in the Pool
Reserve Account, then any excess required to be withdrawn from
the Pool Reserve Account shall reduce the respective interests
of Suppliers other than the Relevant Supplier in proportion to
their respective interests in the Pool Reserve Account prior
to the withdrawal;
5.13.3 any proceeds of a Letter of Credit which are to be credited to
the Pool Reserve Account pursuant to sub-section 5.16, and any
amounts paid by a Relevant Supplier to make up a payment out
of the Pool Reserve Account, shall be applied in priority in
or towards reinstating (rateably among themselves) the
respective interests of Suppliers other than the Relevant
Supplier in the Pool Reserve Account;
5.13.4 subject to the rules set out in paragraphs 5.13.1 to 5.13.3
(inclusive), the respective rights of each Supplier in and to
funds standing to the credit of the Pool Reserve Account shall
be to receive (subject to sub-sections 5.8 and 5.9) an amount
equal to the aggregate amounts remitted by the Supplier to the
Pool Reserve Account and not subsequently withdrawn together
with a proportionate share of any interest from time to time
credited to the Pool Reserve Account;
5.13.5 in the absence of a Shortfall, any amounts credited to the
Pool Reserve Account following a call under a Letter of Credit
pursuant to sub-section 15.5 shall be considered as an
interest in the Pool Reserve Assets of the relevant Supplier
in respect of the relevant Letter of Credit.
5.14 Overpayments to be held on trust: if and to the extent that payments
under this Schedule actually made on any day by the Pool
Funds Administrator to Pool Members or the Ancillary Services Provider
in respect of supplies of electricity under the Agreement or
the provision of Ancillary Services do not correspond
exactly with their respective payment entitlement established in
accordance with the Agreement in relation to supplies of
electricity or the provision of Ancillary Services in
respect of that same day, then the person receiving any overpayment
shall receive and be deemed to hold the amount of such overpayment
on trust for the Pool Member or rateably for the Pool
Members or, as the case may be, for the Ancillary Services Provider
which, in respect of that same day was (were)
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underpaid and, on the written instruction of the Pool Funds
Administrator, shall account in accordance with sub-section 23.2 to the
Pool Funds Administrator accordingly for redistribution of the moneys.
5.15 Reimbursement of overpayments: subject to sub-section 5.8 and 5.14, all
payments under this Schedule shall be made on the basis that a Pool
Member shall only be entitled to claim reimbursement of an overpayment
made by it (whether to the Pool Funds Administrator or (through the
Pool Funds Administrator) to another Pool Member or the Ancillary
Services Provider) if, any then only to the extent that:-
(a) the aggregate amounts paid by the Pool Member in respect of
the relevant Payment Date
exceed
(b) the total amounts payable to that Pool Member to Pool
Creditors in respect of that Payment Date together with all
amounts (if any) overdue by that Pool Member in respect of
periods prior to the relevant Payment Date.
5.16 Repayment of loans: notwithstanding their rights pursuant to
sub-section 5.1 in and to Letters of Credit and the proceeds
thereof, Pool Creditors agree that if:-
5.16.1 a payment is received under a Letter of Credit after a sum has
been withdrawn from the Pool Reserve Account to make good (in
whole or in part) a discrepancy between amounts owed and
amounts received by the due time on a particular Payment Date;
and
5.16.2 the aggregate of the amounts paid out of the Pool Reserve
Account and paid under the Letter of Credit exceeds the
amounts owed in respect of the relevant Payment Date.
then any excess paid under the Letter of Credit over the amount then
remaining unpaid in respect of the relevant Payment Date appropriate,
any such credit shall pro tanto constitute repayment of any loans
deemed to be made pursuant to paragraphs 21.1.3 or 21.1.5.
5.17 No claim for breach of trust: provided that the Pool Funds
Administrative carries out its duties under the Agreement, no Pool
Member shall have any claim against the Pool Funds Administrator for
breach of trust or fiduciary duty arising solely out of any discrepancy
between payments actually made in respect of any day and the
entitlement of Pool Members to receive payments in respect of that same
day.
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6. POOL LEDGER ACCOUNTS
6.1 Maintenance of Pool Ledger Accounts: the Pool Funds Administrator shall
maintain ledger accounts showing all amounts payable and receivable by
each Pool Member and the Ancillary Services Provider according to
calculations made and notifications issued by the Pool Funds
Administration pursuant to this Schedule.
6.2 Ledger extracts: each Pool Member and the Ancillary Services Provider
shall be entitled to receive a quarterly extract of the ledger account
which is relevant to it showing all amounts debited and credited to its
account provided that, if a Pool Member or the Ancillary Services
Provider so requests of the Pool Funds Administrator, it shall be
entitled to receive a monthly extract of such ledger account.
6.3 Certified copy extracts: without prejudice to the generality of the
general duties and responsibilities of the Pool Funds
Administrator set out in Schedule 15, in the
event of any enforcement proceedings being brought by a Pool Creditor
against a non-paying Pool Member, the Pool Funds
Administrator shall forthwith upon request being made to it
a the cost of the requesting Pool Creditor provide a certified copy
of an extract of the ledger accounts sufficient to establish the
details of each transaction in respect of which
the Pool Creditor has a claim against the non-paying Pool Member.
6.4 Confidentiality: the ledger accounts maintained by the Pool Funds
Administrator shall be kept confidential in accordance with Part XVIII
of the Agreement from Committee Members and from all Pool Members
(except as required pursuant to Clause 63.1.5 or 63.1.6 or sub-section
6.2 or 6.3) but the Pool Funds Administrator shall disclose such ledger
accounts to the Pool Auditor for the purpose of any audit requested to
be conducted pursuant to Part IX of the Agreement.
6.5 Information: any extract of a ledger account of any other records, data
or information provided pursuant to Clause 63.1.5 or 63.1.6 or
sub-section 6.2 (collectively referred to in this Section 6 as the
"information") shall, save in the case of manifest error, be deemed
prima facie evidence of its contents.
6.6 Review of extracts: each Pool Member and the Ancillary Services
Provider shall promptly review all extracts of ledger accounts sent to
it and shall without prejudice to any of its rights under the
Agreement) where practicable within 10 Business Days after receiving
such information notify the Pool Funds Administrator of any errors in
such account of which it is aware.
6.7 Dispute of accuracy: if the Pool Funds Administrator at any time
receives a notice disputing the accuracy of any ledger account,
records, data or information, it shall
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consult with the Pool Member who gave the notice or (as the case may
be) the Ancillary Services Provider and both shall use all reasonable
endeavors to agree the information. Promptly after agreement is
reached, the Pool Funds Administrator shall, if necessary, issue
corrected information and notifications under the provisions of
sub-section 17.8.
[Sections 7 to 14 (inclusive) not used]
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PART 3
SECURITY COVER AND CREDIT MONITORING
15. SECURITY COVER
15.1 Provision of Security Cover: each Supplier shall provide Security
Cover from time to time in accordance with the
following provisions: -
15.1.1 each Supplier (with the exception of any entity of or
wholly-owned or Controlled by the United
Kingdom Government) shall:-
(a) deliver to the Pool Funds Administrator evidence
reasonably satisfactory to the
Executive Committee that:-
(i) it presently holds an Approved
Credit Rating; or
(ii) it has provided and is not in
default under alternative or
additional security as may be
approved from time to time by
unanimous decision of all Committee
Members (Committee Members being
under no obligation to approve any
such security), or
(b) comply with the provisions of paragraph 15.1.3;
15.1.2 in addition to the provisions of paragraph 15.1.1 but subject
as provided in Sections 21.12 and 25, each Supplier (including
any entity of or wholly-owned or Controlled by the United
Kingdom Government shall:-
(a) not later than the date of its admission as a Pool
Member, deliver to the Pool Funds Administrator a
Letter of Credit (available for an initial period of
not less than 12 months) in such amount as shall be
notified by the Executive Committee in accordance
with Section 16; and
(b) not later than the date of its admission as a Pool
Member, deliver to the Pool Funds Administrator cash
for credit to the Pool Reserve Account in such amount
as shall be notified by the Executive Committee in
accordance with Section 16;
15.1.3 each Supplier mentioned in paragraph 15.1.1 to which paragraph
(b) of paragraph 15.1.1 applies shall immediately be required
(in addition to its obligation, if any, under paragraph
15.1.2) to deliver to the Pool Funds Administrator a Letter of
Credit (available for an initial period of not less
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than 12 months) or cash for credit to the Pool Reserve Account
in such amount and in such proportions as shall be notified by
the Executive Committee in accordance with Section 16.
15.2 Letters of Credit: for the avoidance of doubt nothing in sub-section
15.1 or 15.6 shall prevent any Supplier from delivering a single Letter
of Credit in respect of its obligations under paragraphs 15.1.2 and
15.1.3.
15.3 Cash deposit: any cash amount delivered to the Pool Funds Administrator
for credit to the Pool Reserve Account shall be held on the terms set
out in Section 5. Amounts standing to the credit of the Pool Reserve
Account shall bear interest at the Reserve Interest Rate.
15.4 Maintenance of Security Cover: each Supplier shall be required to
provide and at all times thereafter maintain a Security Amount equal
to or more than the Security Cover applicable to it in such aggregate
amount as shall be set from time to time in accordance with this
Part 3. Immediately upon any reduction occurring
in the Security Amount provided by any Supplier or any Letter of
Credit being for any reason drawn down (and including the deemed
making of any loan to that Supplier under the provisions of paragraph
21.1.3 or 21.1.5) the Supplier will procure that new Letters of
Credit are issued or existing Letters of Credit are
reinstated (to the satisfaction of the Pool Funds Administrator) to
their full value or cash is placed to the credit of the Pool Reserve
Account in an amount required to restore the Security Amount to an
amount at least equal to the Security Cover applicable to the
Supplier, and in such proportions of Letters of Credit and cash
as this Part 3 requires. Not later than 10 Business Days before any
outstanding Letter of Credit is due to expire, the
Supplier providing such Letter of Credit shall procure to the
satisfaction of the Pool Funds Administrator that is required
Security Amount will be available for a further period not less than
12 months which may be done in one of the following ways:
15.4.1 (subject to the issuing bank continuing to have the credit
rating referred to in sub-section 15.6) provide the Pool Funds
Administrator with confirmation from the issuing bank that the
validity of the Letter of Credit has been extended for a
period of not less than 12 months on the same terms and
otherwise for such amount as is required by this Part 3; or
15.4.2 provide the Pool Funds Administrator with a new Letter of
Credit issued by an issuing bank with the credit rating
required by this Schedule for an amount at least equal to the
required Security Amount applicable to it (less its balance on
the Pool Reserve Account) which Letter of Credit shall be
available for a period of not less than 12 months; or
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15.4. procure such transfer to the Pool Funds Administration for
credit to the Pool Reserve Account as shall ensure that the
credit balance applicable to it standing to the credit of the
Pool Reserve Account shall be at lest equal to the required
Security Amount.
15.5 Failure to supply Security Cover: if a Supplier fails at any time to
provide Security Cover to the satisfaction of the Pool Funds
Administrator in accordance with the provisions of this
Section 15, the Pool Funds Administrator may at any time while
such default continues, and if at such time any Letter of Credit
forming part of the Security Cover is due to expire within nine
Business Days it shall immediately, and without notice to such
Supplier, demand payment of the entire amount of any
outstanding Letter of Credit and shall credit the proceeds of the
Letter of Credit to the Pool Reserve Account to be held on the
terms and on the trusts set out in Section 5.
15.6 Substitute Letter of Credit: if the bank issuing any Suppler's Letter
of Credit ceases to have the credit rating as is set out in sub-section
1.1 under "Letter of Credit", such Supplier shall forthwith procure the
issue of a substitute Letter of Credit by a bank that has such credit
rating.
16. CREDIT MONITORING
16.1 Determination of Security Cover: the amount of Security Cover which
each Supplier shall be required to maintain and, in respect
of the amounts of Security Cover to be provided under paragraph 15.1.2
(so long as applicable and paragraph 15.1.3 the proportions as between
cash and Letter of Credit that may be permitted, shall be determined
from time to time by the Executive Committee in
consultation with the Pool funds Administrator in accordance with this
Section 16 and on the basis of the criteria set out
in sub-section 16.2, and shall be notified to
such Supplier and to the Pool Funds Administrator.
16.2 Criteria for provision of Security Cover:
16.2.1 in respect of each Supplier to which paragraph (b) of
paragraph 15.1.1 applies, the amount of Security Cover
required to be provided by such Supplier in addition
to the amounts referred to in paragraph 15.1.2 (so long
as applicable) shall be provided by Letter of Credit in an
amount to be assessed by the Executive Committee
in consultation with the Pool Funds Administrator as
the aggregate amounts payable pursuant to the
Agreement by the relevant Supplier in respect of purchases
of, or as the case may be, prospective purchase of
electricity (including Ancillary Services) made by the
relevant Supplier over a 28 day period, as
determined by the Executive Committee provided that with
the approval of
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the Executive Committee, all or part of the required
Security Cover may be provided in cash credited to
the Pool Reserve Account; and
16.2.2 in respect of all Suppliers, the amounts required to be
provided by each Supplier which are referred to in paragraph
15.1.2 (so long as applicable) shall (subject as provided in
sub-section 21.12 and Section 25) be initially
as to a minimum of 20 per cent in cash and the remainder by
way of Letter of Credit; and thereafter as revised by the
Executive Committee. Such amounts shall be assessed by the
Executive Committee in consultation with
the Pool Funds Administrator to cover banking error and to
minimize reductions of payments to Pool Creditors.
16.3 Six monthly variation: in respect of paragraph 16.2.1 and 16.2.2, the
Executive Committee shall calculate two amounts for the two six-month
periods commencing 1st april and 1st October in each year and shall
advise the Pool Funds Administrator and the relevant Suppliers
accordingly. Such six monthly variation shall not apply to paragraph
16.2.2 where Section 25 is applicable.
16.4 Review of Security Cover: the Pool Funds Administrator shall keep under
review the Security Amounts relating to each Supplier and shall
promptly advise the Executive Committee and the relevant Supplier
whenever the Security Cover maintained by such Supplier is
significantly more or less than the amount required to be maintained
pursuant to this Part 3.
16.5 Increase or Decrease of Security Cover: if, after considering the
recommendations of the Pool Funds Administrator and any
representations which may be made by the relevant Supplier,
the Executive Committee determines that a Supplier's Security cover
should be increased or decreased, it shall so notify the Supplier, the
Pool Funds Administrator and the Director. If the Executive Committee
determines that such Security cover should be decreased, the Supplier
consents and the Director so approve, that reduction shall take place.
The Pool Funds Administrator shall consent to an appropriate reduction
in the available amount of outstanding Letter of Credit and/or shall
repay to the Supplier such part of the deposit held in the Pool
Reserve Account for the account of such Supplier (together with all
accrued interest on the part to be repaid) sufficient to reduce
the Supplier's Security Amount to the level of Security Cover
applicable to it. If the Executive Committee determines that the
Supplier's Security Cover should be increased, the relevant Supplier
shall, within five Business Days of notice as
aforesaid, procure an additional or replacement Letter of Credit or
transfer to the Pool Funds Administrator a cash deposit for
credit to the Pool Reserve Account in an amount sufficient to increase
its Security Amount so as to be at least equal
to the level of Security Cover applicable to it.
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16.6 Notification in respect of Security Cover: the Pool Funds
Administrator shall notify the Executive Committee, the Settlement
System Administrator and the Director promptly if:
16.6.1 a Supplier fails to provide, extend or renew a Letter of
Credit which it is required to maintain pursuant
to Section 15; or
16.6.2 the Pool Funds Administrator shall make a call under any
such Letter of Credit; or
16.6.3 the Pool Funds Administrator becomes aware that a Supplier (a)
shall cease to retain an Approved Credit Rating, or (b) shall
be placed on credit watch by the relevant credit rating agency
(or becomes subject to an equivalent procedure) which in any
case casts doubt on the Supplier retaining an Approved Credit
Rating, or (c) shall be in default under the additional or
alternative security referred to in paragraph 15.1.1; or
16.6.4 the Security Amount in relation to any Supplier is at any time
less than the level of its required Security Cover for the
time being; or
16.6.5 the Pool Funds Administrator becomes aware that any bank that
has issued a Letter of Credit which has not expired ceases to
have the credit rating required by this Schedule.
16.7 Release from Security Cover Obligations: upon a Supplier ceasing to be
a Pool Member and provided that all amounts owed by the Supplier have
been duly and finally paid and that it is not otherwise in default in
any respect under the Agreement, the Supplier shall be released form
the obligation to maintain Security Cover and the Pool Funds
Administrator shall consent to the revocation of any outstanding Letter
of Credit.
16.8 No liability for amount of Security Cover: any recommendations made
by the Pool Funds Administrator pursuant to this Section 16 shall be
given in good faith. Any instructions given by the Executive
Committee in respect of the amount of Security Cover to be maintained
by a Supplier, if given in good faith, shall insofar as applicable in
terms of this Services Provider and neither the Pool Funds
Administrator nor any Committee Member shall incur any liability by
reason of a Supplier's Security Cover proving to be
inadequate or excessive.
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PART 4
BILLING AND PAYMENT PROCEDURES
17. RECEIPT AND VERIFICATION OF INFORMATION
17.1 Receipt of Information from Settlement System Administrator: not
later than 12.00 hours on the Notification Date the Pool Funds
Administrator shall require of, and take all steps available to
it to procure from, the Settlement System Administrator, and
the Settlement System Administrator shall use its best
endeavours to provide to the Pool Funds Administrator, the
information referred to in sub-sections 17.2 to 17.5
(inclusive) concerning supplies of electricity and
the provision of Ancillary Services in respect of each Settlement
Day.
17.2 Information for each Settlement Day: the information required in
respect of each Settlement Day is as follows:-
17.2.1 the Settlement Day:
17.2.2 the corresponding Payment Date;
17.2.3 the Settlement Run identification number;
17.2.4 the total amount owing in accordance with the Agreement
(exclusive of United Kingdom Value Added Tax) in respect
of electricity supplied and Ancillary Services provided
during each Settlement Day; and
17.2.5 the total amount owing (exclusive of United Kingdom Value
Added Tax) in respect of Ancillary Services provided
during each Settlement Day.
17.3 Information - taking of electricity: the information
required in respect of each Pool Member taking
electricity in each Settlement Day
is as follows:-
17.3.1 the Pool Member's identification number;
17.3.2 the Pool Member's name; and
17.3.3 the total amount owing in accordance with the Agreement
(exclusive of United Kingdom Value Added Tax) in respect
of electricity taken by such Pool Member during each
Settlement Day including the amount owing in respect of
Ancillary Services attributable to the amount of
electricity purchased by such Pool Member.
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17.4 Information - provision of electricity: the information required
in respect of each Pool Member providing electricity during
each Settlement Day is as follows:-
17.4.1 the Pool Member's identification number;
17.4.2 the Pool Member's name; and
17.4.3 the total amount owing in accordance with this Agreement
(exclusive of United Kingdom Value Added Tax) in respect
of electricity provided by such Pool Member during each
Settlement Day.
17.5 Information - Ancillary Services Provider: the information required
in relation to the Ancillary Services Provider in respect of each
Settlement Day is the total amount receivable in accordance with the
Agreement by the Ancillary Services Provider (exclusive of United
Kingdom Value Added Tax) for the provision of Ancillary Services
during each Settlement Day.
17.6 Verification of Information: upon receipt of the information
supplied by the Settlement System Administrator, the Pool
Funds Administrator shall verify whether, on the basis of such
information, the sum of the amounts shown to be receivable by
each Pool Member in respect of its sales of electricity plus the
amount shown to be payable to the Ancillary Services on the relevant
Settlement Day is equal to the sum of the amounts shown
to be payable by each Pool Member in respect of its purchase of
electricity on the same Settlement Day.
17.7 Deemed Verification: unless the Pool Funds Administrator shall, by
close of business on the Notification Date, otherwise inform the
Settlement System Administrator, each Pool Member and the Ancillary
Services Provider to the contrary before the Payment Date, the
information provided by the Settlement System Administrator shall be
deemed to be verified.
17.8 Rectification of Errors: if the Pool Funds Administrator determines
that the information provided by the Settlement System
Administrator cannot be verified in accordance with
sub-section 17.6, it shall as soon as possible notify the
Settlement System Administrator, each Pool Member and the Ancillary
Services Provider accordingly and require the Settlement
System Administrator to correct any errors and obtain the Pool
Funds Administrator's verification of the corrected information as
quickly as possible. As soon as the Pool Funds Administrator
verifies that the information provided by the Settlement System
Administrator can be verified in accordance with sub-section 17.6,
the Pool Funds Administrator shall notify the Settlement
System Administrator, each Pool Member and the Ancillary Services
Provider of the verified information required to be given pursuant
to sub-section 17.6. The settlement System Administrator
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shall use its best endeavours to provide such corrected information
as may be necessary for the Pool Funds Administrator to issue
verification.
17.9 Amounts in Advice Notes; Adjustments:
17.9.1 the amounts to be incorporated in the Advice Notes in
accordance with sub-section 18.1 (and in all cases
together with United Kingdom Value Added Tax thereon)
shall be:-
(a) if verification has been made in accordance
with sub-section 17.6, the full
amounts so verified;
(b) to the extent verification can reasonably
be made in circumstances where all the
information cannot be fully
verified as described in sub-section 17.6,
those amounts which are shown against the
name of each Pool Debtor in such
information as is received under the
provisions of sub-section 17.1
(whether or not such information is an
estimate only) and such amounts will
be shared amongst the relevant Pool
Creditors in the proportion which the
amount shown as due to each of them in such
information as aforesaid bears to the
amounts which are so shown as due to all of
them; and
(c) to the extent that for any reason whatever
the amounts to be paid cannot be verified
at all (including, but not limited to,
application of Force Majeure and failure
to provide information on the part of
the Settlement System Administrator)
of the appropriate calculations to permit
payment in accordance with sub-paragraph
(b) above cannot properly be made,
the same as the amounts calculated as
being payable by and to Pool Members and
to the Ancillary Services Provided
in respect of the last same day of the week
in respect of which payments were verified
under sub-section 17.6 (provided
that any Pool Member who was not at that
earlier time a Pool Member, or vice versa,
shall be ignored and such adjustment
made as the Pool Funds Administrator
considers appropriate).
17.9.2 in the event that payments are made in the circumstances
set out in paragraph 17.9.1(b) or (c), the Settlement
System Administrator in conjunction with the Pool Funds
Administrator shall, as soon as actual verification an
thereafter be made, make such adjustments as may be
necessary (and, where relevant, apply interest at the
Reserve Interest Rate or at such rate as shall be set
from time to time by the Executive
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Committee) to account for any differences between
payments made and actual verified payment information.
17.10 Postponed Payment Date: if for any reason beyond the reasonable
control of the Pool Funds Administrator it is not possible,
after application of sub-section 17.9, for the Pool Funds
Administrator to determine by the close of business on
the Notification Date the amounts to be incorporated in the Advice
Notes, the Pool Funds Administrator shall inform the
Settlement System Administrator, each Pool Member and the Ancillary
Services Provider that the Payment Date shall be postponed
so the Pool Funds Administrator verifies the information
provided by the Settlement System Administrator pursuant to
sub-section 17.6 (any such Payment Date
being the "Postponed Payment Date" and a reference to
----------------------
a Payment Date in this Schedules shall where applicable include a
reference to a Postponed Payment Date). On the Postponed
Payment Date, each Pool Member who took electricity on the
Settlement Day to which the Postponed Payment Date applies shall
pay interest on all such amounts for each day from and
including the originally scheduled Payment Date to (but excluding)
the Postponed Payment Date at such rate as shall be set
from time to time by the Executive Committee or, in the
absence of such rate, at the Reserve Interest Rate and all
Pool Members who supplied electricity and the Ancillary Services
Provider on such Settlement Day shall be entitled to receive in
addition to the amounts that they are entitled to receive in
respect of such supplies, interest on such amounts for each day
during the same period and at the same rate. Interest shall accrue
from day to day and shall be calculated by the Pool Funds
Administrator on a 365 day year basis.
17.11 Further notification: where instructed by the Executive Committee,
or where there is an award by a Court of competent
jurisdiction or an arbitrator, or a decision of the Pool Auditor or
where rendered appropriate by Clause 52, the Pool Funds
Administrator shall issue further or other notification to the Pool
Members and the Ancillary Services Provided in accordance with the
provisions of this Section 17; and the Business Day
which falls five Business Days after the date of such notification
or earlier if practicable shall be a Payment Date.
17.12 Payment by Pool Debtor: without prejudice to its obligations in
respect of supplies of electricity in accordance with the
provisions of the Agreement, each Pool Debtor shall without
defense, set-off or counterclaim (but without prejudice
to any other rights or remedies available to such Pool Debtor) make
payment on the relevant Payment Date of the full amount
(including United Kingdom Value Added Tax) so notified
as being payable by it for the account of those pool
members and, as the case may be, the Ancillary Services Provider
so notified as being entitled to receive payments.
Payment shall be made in accordance with the terms of this Schedule.
For the avoidance of doubt no payment made shall
be treated as being paid on account or subject to any condition or
reservation,
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notwithstanding the provisions for the making of subsequent adjusting
payments provided in this Schedule. The provisions of sub-section
5.14 shall apply to any payment insofar as it is or may constitute an
overpayment.
17.13 Liability several: save as otherwise expressly provided, the
liability of each Pool Member for amounts payable by it pursuant to
this Schedule is several and no Pool Member shall be liable for the
default of any other Pool Member.
18. ADVICE NOTES
18.1 Despatch of Advice Notes: not later than 17.00 hours on the relevant
Notification Date (and, if this is not practicable, in good time (as
that expression is explained in more detail in the relevant Agreed
Procedure) to enable Pool Members and the Ancillary Services Provider
to give all necessary instructions for payments to be effected on the
relevant Payment Date) the Pool Funds Administrator shall:-
18.1.1 despatch to Pool Members and the Ancillary Services
Provider Advice Notes showing amounts (inclusive of
United Kingdom Value Added Tax) which, according to its
calculations, are to be paid by or to each Pool Member
and the Ancillary Services Provider on each Payment Date
in respect of supplies of electricity and the provision
of Ancillary Services during each Settlement Day to which
that Notification Date relates;
18.1.2 notify each Settlement Bank of amounts payable by the
Pool Members or the Ancillary Services Provider
maintaining a Settlement Account at the relevant
Settlement Bank; and
18.1.3 notify the Pool Banker of the amount to be remitted to
the Pool Clearing Account by each Settlement Bank.
18.2 Method of despatch: all Advice Notes shall be despatched by the
means established in accordance with paragraphs 3.1.1
and 3.1.5, or by such other means as the
Executive Committee may reasonably direct.
18.3 Content of Advice Notes: all Advice Notes will include an
appropriate indication if payment is being made under
the provisions of paragraph 17.9.1(b), 17.9.1(c)
or 17.9.2.
18.4 Interest: where interest is payable by or to any Pool Member or the
Ancillary Services Provider pursuant to this Schedule, the Pool Funds
Administrator shall, at the same time as it despatches the Advice
Notes, despatch to each Pool Member and the Ancillary Services
Provider who is required to pay interest and to each Pool Member and
the Ancillary Services Provider who is entitled to
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receive interest a statement showing the amount of interest payable
or receivable by it, the rate of interest applicable thereto and the
amount (if any) of tax to be withheld.
19. PAYMENT PROCEDURE
19.1 Instructions for payment: each Pool Member and the Ancillary
Services Provider shall, in respect of each Payment Date on
which it is under an obligation to make a payment under this
Schedule, make such arrangements as will ensure
that such payment is credited to the relevant Collection Account
in sufficient time to allow such Settlement Bank to make
irrevocable arrangements to remit to the Pool Clearing Account
by 12.30 hours the amount payable by that Pool
Member or (as the case may be) the Ancillary Services Provider in
respect of that Payment Date. Each Pool Member and the
Ancillary Services Provider shall ensure all remittances by its bank
to the relevant Collection Account shall
be remittances for value on the relevant Payment Date.
19.2 Pool Funds Administrator's responsibilities:
19.2.1 As soon as practicable and in any event not later than
13.00 hours on each Payment Date the Pool Funds
Administrator shall take such action as is required to
ensure that all amounts required to be credited to each
Collection Account on such Payment Date have been so
credited (or if not so credited, the reason therefor
established).
19.2.2 As soon as practicable and in any event not later than
13.30 hours on each Payment Date the Pool Funds
Administrator shall take such action as is required to
ensure that all amounts credited to each Collection
Account on such Payment Date in accordance with
subsection 19.1 have been remitted to the Pool Clearing
Account.
19.3 Non-payment by Pool Member: if a Pool Member becomes aware that a
payment for which it is responsible will not be credited to the
relevant Collection Account by 12.30 hours on the relevant Payment
Date, it will immediately notify the Pool Funds Administrator, giving
all details available to the Pool Member. The Pool Funds
Administrator shall, as soon as it becomes aware that payment will
not be remitted, use its best endeavours to establish the cause of
non-payment.
19.4 Excess payments: if by 12.30 hours on any Payment Date the Pool Funds
Administrator is advised by a Settlement Bank that the Settlement
Bank will be making a payment in excess of the amount notified to the
Pool Member pursuant to sub-section 18.1 in respect of that Payment
Date, or if the Pool Banker notifies the Pool Funds Administrator by
13.30 hours that amounts greater than the amounts notified to the
Pool Banker pursuant to paragraph
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18.1.3 have been credited to the Pool Clearing Account, the Pool
Funds Administrator shall use its best endeavours to ascertain the
nature of the excess payment, to calculate the entitlement to such
payment and to instruct the Pool Banker by 13.30 hours that day to
credit the appropriate Settlement Account(s) with the amount
determined by the Pool Funds Administrator as falling due to each
Pool Creditor in accordance with this Schedule provided that, where
an External Pool Member makes a payment in excess of the amount owing
by it on any Payment Date and the reason for such overpayment is the
difficulty in remitting funds on a future Payment Date because of the
mismatch of bank and public holidays between countries, the Pool
Funds Administrator shall instruct the Pool Banker to credit the Pool
Reserve Account with the amount of the excess. Any Pool Member who
instructs its bank to make a payment in excess of the amount owing by
that Pool Member on any Payment Date shall simultaneously with giving
such instructions advise the Pool Funds Administrator in writing of
the amount of the excess payment providing a description of what the
Pool Member considers the excess payment relates to.
19.5 Payment to Pool Creditors: the Pool Funds Administrator shall,
prior to 14.30 hours on each day, calculate the amounts available
for distribution to Pool Creditors on that day. As soon as
practicable and not later than 14.30 hours on that day the Pool
Funds Administrator shall give irrevocable instructions to the
Pool Banker to remit from the Pool Clearing Account to the relevant
Settlement Accounts maintained by the Pool Creditors
the aggregate of amounts determined by the Pool Funds Administrator
to be available for payment to Pool Creditors and, if required,
to transfer amounts from the Pool Reserve Account or the Pool
Borrowing Account to the Pool Clearing Account or vice versa.
19.6 Making good the Pool Reserve Account: if the Pool Reserve Account is
debited or credited in or towards clearing the Pool Clearing Account,
the Pool Funds Administrator shall as soon as possible thereafter
take the necessary steps, including making any calculations or taking
any action in accordance with Section 21, to reverse the debit or
credit to the Pool Reverse Account and/or to make a call under a
Letter of Credit.
19.7 Prohibition on transfers: the Pool Funds Administrator shall not at
any time instruct the Pool Banker to transfer any sum from a Pool
Account to another account (not being a Pool Account) unless that
account is a Settlement Account.
19.8 Application of payments: where payments in respect of more than one
Settlement Day are required to be settled on a Payment Date, payments
in respect of the longest outstanding Settlement Day shall be, and be
deemed to be, settled first.
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19.9 Bank contacts: upon written request of the Pool Funds Administrator each
Pool Member and the Ancillary Services Provider shall provide the Pool Funds
Administrator in writing with the name of, and communication details for, one or
more individuals at the branch of its Settlement Bank from which payments or
payment instructions required to be made or given by it pursuant to this
Schedule originate (the "Local Branch") who is (are) familiar with the payment
procedures set out in this Section 19 applicable to such Pool Member or (as the
case may be) the Ancillary Services Provider, and shall promptly advise the Pool
Funds Administrator in writing of any change of any such individual or his
communication details. Each Pool Member and the Ancillary Services Provider
hereby authorizes the Pool Funds Administrator to contact any such individual to
enquire in respect of any Payment Date whether and in respect of what amount
instructions have been given for the remittance of any payment required to be
made by such Pool Member or (as the case may be) the Ancillary Services Provider
under this Schedule and/or whether such payment has been remitted or otherwise
made as provided for in this Schedule, and undertakes not to withdraw, qualify
or revoke such authority at any time. Each Pool Member and the Ancillary
Services Provider shall instruct its Local Branch to co-operate with the Pool
Funds Administrator accordingly and to provide the Pool Funds Administrator with
all such information as is necessary to answer such enquiries. The Pool Funds
Administrator shall comply with all reasonable security arrangements imposed by
the relevant Pool Member or the Ancillary Services Provider or any Local Branch.
20. ALTERNATIVE PAYMENT PROCEDURE
20.1 Alternative Payment procedure: without prejudice to other
obligations in the Agreement not substituted by the provisions
of this Section 20, the provisions set out in this Section
20 shall apply:-
20.1.1 if, on the Effective Date, it has not been possible to
establish the Notified Payments System (in which case
they shall continue to apply until the Notified Payments
System is established, or until such other time as the
Executive Committee may determine); or
20.1.2 if, for any reason, it is not possible to apply the
procedures contemplated by the Notified Payments System
and for so long as it is not possible to apply
such procedures.
20.2 Pool Debtor to effect remittance: each Pool Debtor shall, in respect
of each Payment Date on which it is under an obligation to make a
payment under the Agreement, give instructions to its bank, which it
undertakes not to qualify, withdraw or revoke, to effect remittance
to the Pool Clearing Account of the amount payable by that Pool
Member to be received on that Payment Date.
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20.3 Receipt of remittance: any remittance must be received by the Pool
Banker in the Pool Clearing Account no later than 12.30 hours
on the Payment Date unless arrangements have been made between the
Pool Banker and the relevant Pool Member which shall be notified
to the Pool Funds Administrator and which are satisfactory to
the Pool Banker such that funds will be received for value on that
Payment Date. The Pool Members shall ensure that instructions are
given to their banks in sufficient time to ensure that
their respective banks comply with this time limit.
20.4 Method of remittance: the Parties acknowledge and agree that when
practicable to give effect to sub-section 20.3 a Pool Debtor
shall cause remittances to be effected through CHAPS but,
where not practicable or where the amount payable is less than
the minimum individual amount then processed through
CHAPS, the Pool Member shall ensure by whatever means at its
disposal that remittance for value on the relevant Payment
Date is made for credit to the Pool Clearing Account not later
than 12.30 hours.
20.5 Notification of non-payment: the Parties acknowledge and agree that
if a Pool Debtor becomes aware that a payment for which it is
responsible will not be remitted to the Pool Banker by 12.30 hours on
the relevant day, and where satisfactory arrangements, as referred to
in sub-section 20.3 have not been made, it shall immediately notify
the Pool Funds Administrator, giving all details available to that
Pool Debtor.
20.6 Payment default: if the Pool Funds Administrator determines at any
time after 12.30 hours on any day that a remittance which should have
been credited on that day to the Pool Clearing Account has not been
made (or that the credit has not been received) (in whole or in part)
and where satisfactory arrangements, as referred to in sub-section
20.3, have not been made, the provisions of Section 21 shall apply
mutatis mutandis.
20.7 Late payment: if, after the Pool Funds Administrator shall, prior to
14.30 hours on each day, calculate the amounts available for
distribution to Pool Creditors on that day (including amounts
resulting from the application of sub-section 20.6). Not later than
14.30 hours on that day the Pool Funds Administrator shall give
instructions to the Pool Banker, which it undertakes not to qualify,
withdraw or revoke, to make same day value remittances to the Pool
Creditors.
20.9 Construction: where the provisions of this Section 20 apply
references in Sections 5 and 18 and sub-section 21.1 to "Settlement
Bank" and "Collection Account" shall be construed as references to
"bank" and "Pool Clearing Account" respectively.
21. PAYMENT DEFAULT
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21.1 Payment default: subject as provided by sub-section 21.12, if, by
12.30 hours on a Payment Date, the Pool Funds Administrator
has been notified by a Settlement Bank or it otherwise has
reason to believe that a Settlement Bank will not remit
to the Pool Clearing Account all or any part (the "amount in
default") of any
-----------------
amount which has been notified by the Pool Funds Administrator as
being payable by a Pool Debtor (the "non-paying
Pool Debtor") on the relevant
----------------------
Payment Date in sufficient time to ensure that such amount can be
cleared through the Pool Clearing Account not later than
the close of banking business on such Payment Date,
the Pool Funds Administrator shall act in accordance
with the following provisions (or whichever of them shall apply) in
the order in which they appear until the Pool Funds Administrator
is satisfied that the Pool Clearing Account will clear not later
than the close of business on the relevant
Payment Date:-
21.1.1 if the Pool Funds Administrator has been able to identify
the non-paying Pool Debtor in sufficient time to apply
this paragraph 21.1.1 and to the extent that the
non-payment Pool Debtor is entitled to receive payment
from any Pool Debtor pursuant to this Schedule on the
relevant Payment Date, then the Pool Funds Administrator
shall (unless it reasonably believes that such set-off
shall be unlawful) set off the amount of such entitlement
against the amount in default;
21.1.2 if the Pool Funds Administrator has been able to identify
the non-paying Pool Debtor in sufficient time to apply
this paragraph 21.1.2, the Pool Funds Administrator shall
debit the Pool Reserve Account and credit the Pool
Clearing Account with a sum not exceeding the amount of
funds standing to the credit of the non-paying Pool
Debtor in the Pool Reserve Account;
21.1.3 subject to sub-section 21.2, the Pool Funds
Administrator shall debit the Pool Reserve Account and
credit the Pool Clearing Account with a
sum not exceeding the amount of funds then standing to
the credit of the Poll Reserve Account to the extent
that they represent Security Cover provided in
accordance with paragraph 15.1.2, the transfer of
such amount as is not attributable to the funds standing
to the credit of the non-paying Pool Debtor by each
Supplier rateably according to its share of the funds
standing to the credit of the Pool Reserve Account
to the extent that they represent Security Cover
provided in accordance with paragraph 15.1.2, at the time
immediately prior to the transfer, such loans to be
repayable on demand and to carry interest at the
Reserve Interest Rate and in any case repayable not
later than two Business Days after they arise after
which, to the extent that any such loans remain
outstanding, such loans shall carry interest at the
Default Interest Rate (which interest
shall be credited to the relevant
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<PAGE>
Supplier's Pool Ledger Account). Each Supplier hereby
irrevocably authorizes the Pool Funds Administrator to
advance, collect in and enforce payment of such loans for
its account and on its behalf and each Pool Member hereby
irrevocably consents to the making of such loans to the
extent that such Pool Member has a share in the Pool
Reserve Account;
21.1.4 if the Pool Funds Administrator has been able to
identify the non-paying Pool Debtor in sufficient time
to apply this paragraph 21.1.4 and provided that the
Pool Funds Administrator is satisfied that the
proceeds of a call under the Letter of Credit will be
paid into the Pool Clearing Account in sufficient
time to ensure that it will clear not later
than the close of business on the relevant Payment Date,
the Pool Funds Administrator shall make a
call under the Letter of Credit supplied by the
non-paying Pool Debtor in a sum not exceeding the
available amount of all such Letter of Credit, and the
Pool Funds Administrator shall cause the proceeds
of such call or calls to be paid
into the Pool Clearing Account;
21.1.5 subject to sub-section 21.2 and provided that the Pool
Funds Administrator is satisfied that the proceeds
of a call under a Letter of Credit will be paid into the
Pool Clearing Account in sufficient time to
ensure that it will clear not later than the close of
business on the relevant Payment Date, the Pool Funds
Administrator shall make a call under one or more
Letters of Credit supplied by Pool Members
(other than the non-paying Pool Debtor) in a total sum
not exceeding the total available amount of all such
Letters of Credit to the extent that such amount
represents Security Cover provided in accordance
with paragraph 15.1.2, and the Pool Funds Administrator
shall cause the proceeds of such call or calls to be
paid into the Pool Clearing Account. The transfer of such
proceeds into the Pool Clearing Account shall be
deemed to give rise to a series of loans to the non-
paying Pool Debtor by each Supplier whose Letter of
Credit was called rateably according to the amounts
called under their respective Letter of Credit,
such loans to be repayable on demand and to carry
interest at the Reserve Interest Rate and in any case
repayable not later than two Business Days after they
arise after which, to the extent that any
such loans remain outstanding, such loans shall carry
interest at the Default Interest Rate (which
interest shall be credited to the relevant
Supplier's Pool Ledger Account). Each Supplier hereby
irrevocably authorizes the Pool Funds Administrator
to advance, collect in and enforce payment of such loans
for its account and on its behalf and each Pool Member
hereby irrevocably consents to the making of such
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loans to the extent that such Pool Member has a share in
the Pool Reserve Account;
21.1.6 if and to the extent that, notwithstanding application
of the foregoing measures, it is not possible to
clear the Pool Clearing Account by any
of the foregoing means, the Pool Funds Administrator
shall reduce payments to all Pool Creditors
in proportion to the amounts payable to
them on the relevant Payment Date by an aggregate amount
equal to the amount necessary to clear
the Pool Clearing Account and shall
account for such reduction in the Pool Ledger Accounts
as amounts due and owing by the non-paying Pool Debtor
to each Pool Creditor whose payments were reduced.
21.2 Amounts in default likely to be remedied: the Pool Funds
Administrator shall not apply paragraph 21.1.3 or 21.1.5 unless it
considers in good faith that the amount in default is likely to be
remedied by the non-paying Pool Debtor no later than the next
Business Day and in such a case the Pool Funds Administrator shall
only apply paragraphs 21.1.2 and 21.1.4 to the extent of any amounts
provided by way of Security Cover pursuant to paragraph 15.1.2.
21.3 Loans part of Pool Reserve Assets: any loans arising pursuant to
paragraph 21.1.3 or 21.1.5 shall be deemed to constitute part of the
Pool Reserve Assets and all repayments of such loans, together with
interest thereon, shall be paid into the Pool Reserve Account for the
account of each Supplier who is deemed to have made such loan.
21.4 Repayment of loans: if any loans to a non-paying Pool Debtor
arising pursuant to paragraph 21.1.3 or 21.1.5 shall not have
been repaid in full (together with interest at the rate or rates
specified therein) by 12.00 hours on the next
Business Day after such loan is deemed to have arisen, the Pool Funds
Administrator shall make a call under the Letter of Credit (if any)
which shall been supplied by the non-paying Pool
Debtor and which remains outstanding in an amount not exceeding the
amount necessary to repay such loans and all an amount not
exceeding the in full and, if the proceeds of any Letter of
Credit are insufficient to repay all outstanding loans to the
relevant non-paying Pool Debtor, such proceeds shall be
applied towards repayment of each such
outstanding loan rateably.
21.5 Reduction of payments to Pool Creditors: if, after the date that any
loans to a non-paying Pool Debtor arise pursuant to paragraph 21.1.3
or 21.1.5, the Pool Funds Administrator shall reasonably be of the
opinion that the non-paying Pool Debtor will not repay forthwith all
of such loans and all accrued interest in full or the loans have not
been repaid with all interest within two Business Days after they
arose (whichever occurs first), the Pool Funds Administrator shall
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reduce payments to all Pool Creditors in proportion to the amounts
payable to them on the Payment Date to which the default relates and
any succeeding Payment Dates as may be required by an aggregate
amount necessary to restore the balance in the Pool Reserve Account
to the sum for the time being required under this Schedule to be
deposited by the Pool Members other than the non-paying Pool Debtor,
to the intent that all loans arising under paragraphs 21.1.3 and
21.1.5 and remaining undischarged after application of the non-paying
Pool Debtor's Letter of Credit are discharged in full together with
interest thereon at the Reserve Interest Rate.
21.6 Obligation to make calls: if and whenever the Pool Funds
Administrator has not applied the provisions of paragraph 21.1.4,
and has reduced payments to Pool Creditors in accordance with
paragraph 21.1.6, it shall, on the relevant Payment
Date or so soon thereafter as the non-paying Pool Debtor has been
identified (but, in any event, not later than
the close of business on the Business Day following such Payment
Date) make a call under the Letter of Credit supplied
by the non-paying Pool Debtor in a sum sufficient to cover the
reduction made under paragraph 21.1.6 (but not
exceeding the available amount of all such
Letters of Credit) and the Pool Funds Administrator shall cause
the proceeds of
such call to be paid forthwith into the Pool Reserve Account. On
the next Business Day following receipt of such proceeds,
the Pool Funds Administrator shall pay such amounts as have been
credited to the Pool Reserve Account to the Pool Creditors
whose payments were reduced in full or (as the case may be)
in proportion to their respective entitlement including interest on
such amounts at the Reserve Interest Rate.
21.7 Indemnification by non-paying Pool Debtor: the non-paying Pool
Debtor shall indemnify and keep indemnified each Pool Member
whose Letter of Credit is called under paragraph 21.1.5 and/or who
is deemed to have made loans under paragraph 21.1.3
or 21.1.5 on demand against all costs, expenses and losses
(including the costs of management time) suffered or incurred by
such Pool Member arising from its Letter of Credit being
so called (including the costs of reinstating the same) or such
loans being deemed to have been made to the
extent that such Pool Member is not compensated under this Section
21. This indemnity shall be in addition to or without
prejudice to the liability of the non-paying Pool Debtor
to repay the loan, together with accrued interest, which
arises pursuant to paragraph 21.1.5. The Pool Creditors, in
proportion to the amounts payable to them on the Payment Date
to which a default relates in respect of which the Pool Funds
Administrator has operated sub-section 21.5,
and any succeeding Payment Dates as may be required, shall
indemnify and keep indemnified each Pool Member as is referred
to in the earlier provisions of this sub-section 21.7 to
the extent of any failure by the non-paying Pool Debtor to
fulfill its obligations under this sub-section 21.7.
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21.8 Notification of Pool Creditors: the Pool Funds Administrator shall
use all reasonable endeavours promptly to notify
the relevant Pool Creditors whenever it makes any such
reduction as is referred to in paragraph 21.1.6.
21.9 Default Interest: save as otherwise provided in the Agreement
(including where an express rate of interest is provided),
if any amount payable by any Pool Debtor pursuant to this
Schedule is not given value for the due date by close of
banking business on the due date the Pool Debtor shall on written
demand by the Pool Funds Administrator pay
to the Pool Funds Administrator, for the account of the person
or persons entitled to receive the amount in default,
interest on such amount from the due date up to the day of actual
receipt by the
Pool Funds Administrator (as well after as before judgment) at the
Default Interest Rate.
21.10 Application of payments: any amount received by the Pool Funds
Administrator from a non-paying Pool Debtor for the credit of any
Pool Account shall be applied by the Pool Funds Administrator in or
towards payment of amounts payable by the non-paying Pool Debtor to
Pool Creditors on each successive Payment Date in respect of which
there is an outstanding default (with the longest outstanding default
being settled first).
21.11 Clearing of Pool Clearing Account: all amounts standing to the
credit of the Pool Clearing Account at the close of business
on any Payment Date shall be transferred to the Pool Reserve
Account so that the balance in the Pool Clearing
Account shall at the end of such day be nil.
21.12 Credit Facility: if and for so long as the Credit Facility remains
unconditionally available, the provision of this
Section 21 shall apply with the modifications
provided by Section 25.
22. CONFIRMATION NOTICES
22.1 Despatch of Confirmation Notices: within two Business Days after each
Payment Date the Pool Funds Administrator shall issue a Confirmation
Notice to each Pool Member and the Ancillary Services Provider in
respect of the corresponding Payment Date setting out the information
required in sub-sections 22.2, 22.3, and 22.4.
22.2 Information - taking of electricity: the information required on a
Confirmation Notice in respect of each Pool Member
taking electricity on each Settlement Day is as follows:-
22.2.1 the Pool Member's identification number;
850
<PAGE>
22.2.2 the Pool Member's name;
22.2.3 the total amount (inclusive of United Kingdom Value Added
Tax) received in the Pool Clearing Account on the
relevant Payment Date by the Pool Funds Administrator in
respect of electricity taken by such Pool Member during
the Settlement Day and Ancillary Services attributable
thereto;
22.2.4 the amount received in the Pool Clearing Account on the
relevant Payment Date by the Pool Funds Administrator in
respect of electricity taken by such Pool Member during
the Settlement Day and Ancillary Services attributable
thereto, exclusive of United Kingdom Value Added Tax; and
22.2.5 the amount of United Kingdom Value Added Tax received in
the Pool Clearing Account on the Payment Day by the Pool
Funds Administrator in respect of electricity taken by
such Pool Member during the Settlement Day and Ancillary
Services attributable thereto.
22.3 Information - supplies of electricity: the information required on
a Confirmation Notice in respect of each Pool Member
supplying electricity on each Settlement
Day shall include:-
22.3.1 the Pool Member's identification number;
22.3.2 the Pool Member's name;
22.3.3 the Settlement Run identification number;
22.3.4 the total amount (inclusive of United Kingdom Value Added
Tax) paid out of the Pool Clearing Account on the
relevant Payment Date by the Pool Funds Administrator in
respect of electricity supplied by such Pool Member
during the Settlement Day;
22.3.5 the amount paid out and the date on which such amount is
paid out of the Pool Clearing Account on the relevant
Payment Date by the Pool Funds Administrator in respect
of electricity supplied by such Pool Member during the
Settlement Day exclusive of United Kingdom Value Added
Tax and the Settlement Run identification number; and
22.3.6 the amount of United Kingdom Value Added Tax paid out of
the Pool Clearing Account on the relevant Payment Date by
the Pool Funds Administrator in respect of electricity
supplied by such Pool Member during the Settlement Day.
851
<PAGE>
22.4 Information - Ancillary Services Provider: the information
required on a Confirmation Notice in respect of
the Ancillary Services Provider is as follows:-
22.4.1 the total amount receivable by the Ancillary Services
Provider (exclusive of United Kingdom Value Added Tax)
for the provision of Ancillary Services during the
Settlement Day;
22.4.2 the total amount receivable by the Ancillary Services
Provider (inclusive of United Kingdom Value Added Tax)
for the provision of Ancillary Services during the
Settlement Day; and
22.4.3 the total amount of United Kingdom Value Added Tax
receivable by the Ancillary Services Provider for the
provision of Ancillary Services during the Settlement
Day.
22.5 Interest: where interest has been paid to any Pool Member or the
Ancillary Services Provider, the Pool Funds Administrator
shall promptly after such payment provide to each Pool
Member and the Ancillary Services Provider a statement showing
the amount of interest paid or received, the rate of interest
applicable thereto and the amount (if any) of tax withheld. If
applicable, the Pool Funds Administrator shall provide
to the relevant Pool Member or the Ancillary Services
Provider an appropriate tax deduction certificate in respect of
any withholding tax.
23. PAYMENT ERRORS
23.1 Overpayments: if for any reason whatsoever (including the
negligence of the Pool Banker or the Pool Funds
Administrator) a Pool Creditor receives on any
Payment Date a payment in excess of the amount disclosed in the
Pool Ledger Account as calculated as being
payable to it (an "overpayment" (including but
-----------
not limited to the proceeds of any loan made or deemed to be made in
accordance with Section 21 or Section 25 to any non-paying Pool
Debtor which becomes insolvent before such advance is
repaid) the provisions of sub-section
5.15 apply, and the Pool Creditor shall forthwith notify the Pool
Funds Administrator of the amount of the
overpayment and shall forthwith pay the overpayment into a Pool
Account specified by the Pool Funds Administrator.
23.2 Repayment of overpayment (1): if prior to a Pool Creditor notifying
the Pool Funds Administrator of the overpayment,
the Pool Funds Administrator receives
notice (from the Pool Banker or otherwise) of the overpayment, the
Pool Funds Administrator shall forthwith require (by written
notice) that the recipient of the overpayment pay the
overpayment to a Pool Account specified by the Pool
Funds Administrator and any Pool Creditor who receives such notice
shall forthwith pay the amount to
an account specified by the Pool Funds
852
<PAGE>
Administrator. If the overpayment is repaid within two Business Days
of receiving the notice, the overpayment (or any part not paid) shall
bear interest at the Reserve Interest Rate of at such rate as shall
be set from time to time by the Executive Committee from the date the
overpayment was received up to the date that value is given in a Pool
Account by the Pool Funds Administrator (as well after as before
judgment). Any overpayment (or part thereof) not repaid within two
Business Days after demand therefor in accordance with this Section
23 shall bear interest at the Default Interest Rate from the expiry
of that period and shall be recoverable in accordance with Section
24. The Pool Funds Administrator shall account to those entitled to
payment by reason of an overpayment.
23.3 Repayment of overpayment (2): upon receipt of the overpayment
(including any interest) the Pool Funds Administrator shall
(forthwith upon entitlement to it being ascertained) pay the amount
received to the Pool Member or the Ancillary Services Provider who
should have received the payment on the Payment Date.
23.4 Underpayments: if for any reason whatsoever (including the
negligence of the Pool Banker or the Pool Funds
Administrator) a Pool Creditor does not receive
on the relevant Payment Date the full amount disclosed as owing to
it pursuant to the Pool Ledger Account
(an "underpayment") that Pool Creditor shall
------------
forthwith notify the Pool Funds Administrator of the amount of the
underpayment, and the Pool Funds Administrator after consultation
with the Pool Banker shall use all reasonable endeavours
to identify such person as shall have received any
corresponding overpayment and promptly to correct the
underpayment. If, by reason of negligence, the Pool Funds
Administrator holds or has under its control amounts which
it ought properly to have paid to Pool Members, such Pool Members
shall be entitled to interest on such amounts at the Default
Interest Rate and for such period as the Pool Funds Administrator
improperly holds or has such amounts under its control.
24. ENFORCEMENT OF CLAIMS
24.1 Notification of amount in default: without prejudice to the
provisions of Section 21, if a Pool Member shall fail
to pay any amount payable pursuant to this Schedule on the due
date, the Pool Funds Administrator shall notify the
Director, the Executive Committee and each Pool Creditor to whom
the amount in default is owed pursuant to
this Agreement of the name of the non-paying
Pool Debtor, the aggregate amount in default and the amount owed to
each Pool Creditor.
24.2 Duties of Pool Funds Administrator: except as otherwise expressly
provided in this Schedule, the Pool Funds Administrator
shall not be required to ascertain or enquire as to the
performance or observance by any Pool Member or the
853
<PAGE>
Ancillary Services Provider of its obligations under the Agreement
and shall have no duty to inform the Executive Committee or any Pool
Member or the Ancillary Services Provider of any default, other than
a failure to pay as may come to its attention.
24.3 Notice before action: each Pool Creditor shall give notice to the
Pool Funds Administrator before instituting any action or proceedings
in any court to enforce payments due to it pursuant to this Schedule.
Upon receipt of any notice under this sub-section 24.3, the Pool
Funds Administrator will as soon as practicable notify the Executive
Committee, all Pool Members, the Settlement System Administrator, the
Ancillary Services Provider and the Director.
24.4 Proceedings to Recover Overdue Amounts: without prejudice to the
right of any Pool Member to bring such proceedings as
it sees fit in connection with matters related to the
Agreement, the Pool Funds Administrator shall, if instructed to do
so by the Executive Committee, bring proceedings against a Pool
Member (on behalf of those Pool Members who have
indicated their willingness to the Executive Committee for the
Pool Funds Administrator first so to act) for the
recovery of any amounts due by that Pool Member pursuant to this
Schedule so long as the Pool Funds Administrator has
first reached agreement with the Executive Committee and the
Pool Members as to appropriate remuneration, is
indemnified to its reasonable satisfaction or, if it so requires,
provided that it shall have received such security as
it may reasonably request against all costs, claims, expenses
(including legal fees) and liabilities which it will or may sustain
or incur in complying with such instructions. Save as provided in
the foregoing provisions of this sub-section 24.4,
the Pool Funds Administrator shall not be obliged to bring
any such proceedings.
25. CREDIT FACILITY: PAYMENT DEFAULTS
25.1 Purpose of Credit Facility: It is acknowledged that the Credit
Facility provides an alternative to the Security Cover referred to in
paragraph 15.1.2 and the Pool Funds Administrator will use the Credit
Facility to cover banking error and payment error and to minimize
reductions of payments to Pool Creditors unless it consider in good
faith that an amount in default is not likely to be remedied by the
non-paying Pool Debtor no later than the next Business Day.
25.2 Modification of other provisions of this Schedule: if and so long as
the Credit Facility is unconditionally available to the Pool Funds
Administrator (whether or not there remains any amount undrawn),
paragraphs 15.1.2, 21.1.3 and 21.1.5 shall be of no effect and the
remaining provisions of this Schedule shall be implemented on the
basis that the following sub-sections apply.
854
<PAGE>
25.3 Payment default: the Pool Funds Administrator shall operate the
Credit Facility on the following basis:-
25.3.1 the Credit Facility may be drawn down by the Pool Funds
Administrator if, by 12.30 hours on any Payment Date,
there is an amount in default unless the Pool funds
Administrator considers in good faith that the amount in
default is not likely to be remedied by the non-paying
Pool Debtor no later than the next Business Day;
25.3.2 if paragraph 25.3.1 applies such that the Credit
Facility may be drawn down, the Pool Funds
Administrator will first act in accordance with
paragraph 21.1.1, will then draw on the Credit Facility
for an amount not exceeding the available
amount under the Credit Facility (after
allowing for any repayment to be made to the Facility
Bank under sub-section 25.6) and,
if it is not possible to clear the Pool Clearing
Account by either or both of those means, it will then
act in accordance with paragraph 21.1.6;
25.3.3 if paragraph 25.3.1 does not apply, then the Pool funds
Administrator will act in accordance first with paragraph
21.1.1, then with paragraph 21.1.2, then with paragraph
21.1.4 and only then with paragraph 21.1.6.
25.4 Amounts in default: each non-paying Pool Debtor will be responsible
in relation to any amount in default in accordance
with the following paragraphs:-
25.4.1 each non-paying Pool Debtor will be responsible for the
repayment of all amounts of principal drawn down
under the Credit Facility in respect of any amount
in default relating to that Pool Debtor as if the
Pool Funds Administrator had made a loan to such Pool
Debtor of the relevant amount and the amounts
so payable are to be paid to, or otherwise made
available for credit to, the Pool Clearing Account as
soon as possible, but in any event no later than two
Business Days after the relevant Payment Date;
25.4.2 each non-paying Pool Debtor will be responsible also
for interest (determined in accordance
with paragraph 25.4.4) on all amounts of principal
drawn down under the Credit Facility in respect of any
amount in default relating to that Pool Debtor as if
the Pool Funds Administrator had made a loan
to such Pool Debtor of the relevant
amount and the amount so payable by way of interest is
to be paid to, or otherwise made available for
credit to, the Pool Clearing Account
by no later than the day notified by the Pool Funds
Administrator to such Pool Debtor for payment
thereof (being the date which is 2 Business Days prior
to the date on which interest is payable under the
855
<PAGE>
Credit Facility by the Pool Funds Administrator to the
Facility Bank for the month in which the principal amount
in question was outstanding);
25.4.3 each non-paying Pool Debtor will further be responsible
for its proportionate share (determined
in accordance with paragraph 25.4.5) of any
additional sum payable to the Facility Bank pursuant to
the terms of the Credit Facility as if the
Pool Funds Administrator had made a loan to such Pool
Debtor of the relevant amount and the amount so payable
is to be paid to, or otherwise made available for
credit to, the Pool Clearing Account forthwith on
notification thereof by the Pool Funds
Administrator to the Pool Debtor in question;
25.4.4 for the purposes of paragraph 25.4.2, interest is to be
calculated using the effective daily rate of interest
reasonably determined by the Pool Funds Administrator on
the basis of the aggregate interest (including any
compound interest) payable under the Credit Facility in
relation to any particular day;
25.4.5 for the purposes of paragraph 25.4.3, the proportionate
share for a particular non-paying Pool Debtor is the
amount (if any) which the Pool Funds Administrator
reasonably determines (after consultation with the
Facility Bank) as being the amount of any additional sum
payable in accordance with the terms of the Credit
Facility attributable to drawings under the Credit
Facility made in respect of that Pool Debtor.
25.5 Application of payments: on the Relevant Date the Pool Funds
Administrator shall, if the amount in question has
not been received in full from the non-paying Pool Debtor:-
25.5.1 first debit the Pool Reserve Account and credit the Pool
Clearing Account with a sum not exceeding the amount of
funds (if any) standing to the credit of the non-paying
Pool Debtor in the Pool Reserve Account;
25.5.2 if that sum is insufficient to repay in full the amount
in question, the Pool Funds Administrator shall call the
Letter of Credit (if any) provided by the non-paying Pool
Debtor (for an amount not exceeding the available amount)
and pay or cause the proceeds thereof to be paid into the
Pool Clearing Account; and
25.5.3 if the amount credited to the Pool Clearing Account
after following the foregoing procedure is insufficient,
reduce payments to all Pool
856
<PAGE>
Creditors in proportion to the amounts payable to them
on the Payment Date to which the default relates,
so that, in any case, the Pool Funds Administrator has available to
it on the Pool Clearing Account sufficient funds to comply with
paragraph 25.6. For the purposes of this paragraph, the "Relevant
Date" is whichever of the following is applicable:-
(a) in relation to any principal amount for which a
non-paying Pool Debtor is responsible under paragraph
25.4.1, the last date specified for payment under
paragraph 25.4.1;
(b) in relation to any principal amount as referred to in
sub-paragraph (a), the first date (if earlier than the
date referred to in sub-paragraph (a)) on which the Pool
Funds Administrator is reasonably of the opinion that the
non-paying Pool Debtor will not repay forthwith all of
the amounts of principal in question;
(c) in relation to payment of interest under paragraph
25.4.2, the last date for payment thereof; and
(d) in relation to an additional amount under paragraph
25.4.3 the last date for payment of this amount.
25.6 Payments to Facility Bank: to the extent of any payment by the
non-paying Pool Debtor and/or if any of the circumstances described
in sub-section 25.5 occur, the Pool Funds Administrator will
forthwith repay to the Facility Bank by credit to the Pool Borrowing
Account, if applicable, an amount equal, in the former case, to the
amount so paid and, in the latter case, to the amount which should
have been paid by the non-paying Pool Debtor.
25.7 Reduction in payments to Pool Creditors: a reduction in payments as
contemplated by paragraphs 25.5.3 will also apply in the event of
any amounts drawn down under the Credit Facility
being required to be repaid in accordance with the terms of the
Credit Facility and the Pool Funds Administrator shall
account for such reduction in the Pool Ledger Accounts as amounts
due and owing by the non-paying Pool Debtor
to each Pool Creditor whose payments
were reduced.
25.8 Enforcement of Claims and other provisions: Sub-sections 21.7, 21.8,
21.9, 21.10 and Section 24 shall have effect in relation to amounts
due from a non-paying Pool Debtor which arise under the foregoing
sub-sections.
857
<PAGE>
25.9 Unavailability of Credit Facility: if at any time the Credit
Facility ceases to be unconditionally available and
paragraph 15.1.2 shall thereupon have been effective, the whole oR
any part of the Security Cover thereby required to be
provided by each Supplier may be provided by a credit to the Pool
Reserve Account, unless otherwise determined by
the Executive Committee. The Executive Committee shall from time
to time assess (in consultation with the Pool Funds
Administrator) and determine the amount of Security Cover which
would be required pursuant to paragraph 15.1.2 as if that paragraph
were in effect and such assessment and determination
shall apply for the purposes of paragraph 16.2.2
if paragraph 15.1.2 becomes applicable, pending any revised
assessment by the Executive Committee.
25.10 Interpretation: terms and expressions used in this Section 25
shall, unless the context otherwise requires, have
the same meanings as are given to them for the
purposes of Clause 21.
26. CREDIT FACILITY: GENERAL
26.1 Notifications to the Executive Committee: the Pool Funds
Administrator shall notify the Executive
Committee forthwith:-
26.1.1 on it becoming aware of any circumstances which might
lead to an event under the Credit Facility as a result of
which the Credit Facility might cease to be available;
and
26.1.2 upon receipt of a written demand from the Facility Bank
pursuant to the terms of the Credit Facility as a result
of which the Facility ceases to be available; and
26.1.3 in the event that the Facility Bank requires any
additional amount to be paid under the Credit Facility by
reason of any increased costs to the Facility Bank or any
changes in circumstances.
26.2 Notifications to Suppliers: the Pool Funds Administrator shall notify
the Suppliers as soon as reasonably practicable after receipt by it
of a notice from the Facility Bank that an additional amount will or
may be payable by the Pool Funds Administrator to the Facility Bank
under the terms of the Credit Facility.
26.3 Amendment and Cancellation:
26.3.1 the Pool Funds Administrator shall not:-
858
<PAGE>
(a) amend or supplement, or agree to any
amendment or supplement to, the
terms of the Credit Facility without the
approval of the Executive Committee; or
(b) cancel the Credit Facility unless either the
approval of the Executive Committee has been
obtained of paragraph 26.3.2 applies.
26.3.2 The Pool Funds Administrator shall cancel the Credit
Facility in full at any time if a resolution to that
effect is passed (on a simple majority vote) by the
Suppliers in separate general meeting or if all Suppliers
have requested such cancellation.
26.4 Extension and Renewal: the Pool Funds Administrator shall negotiate
with the Facility Bank an extension or renewal of the Credit
Facility on the instructions of the Executive Committee and, in the
absence or such instructions, shall begin
negotiations with the Facility Bank no later than ten weeks before
the Credit Facility is due to terminate in accordance with
its terms, with a view to the extension or renewal of
the Credit Facility on substantially the same terms for a
further year and, in any event, to keep the Executive Committee in
agreeing any extension or renewal of the Credit
Facility and the Executive Committee shall be responsible for
deciding whether or not to renew or extend the Credit Facility
and, if so, on what terms and for what period.
26.5 Fees not attributable to a particular Supplier: any fees (and any
additional amounts payable under the terms of the Credit
Facility to the Pool Funds Administrator shall be recharged
to the Suppliers, in accordance with their respective Supplier
Contributory Shares (to be calculated on the basis of those
current on the date on which the relevant fee (or the relevant
portion thereof) or additional amount is payable
by the Pool Funds Administrator under the Credit Facility).
26.6 No additional charge: the Pool Funds Administrator shall not make
any additional charge for arranging, participating
in or administering the Credit Facility.
859
<PAGE>
ANNEX 1
Form of Advice Note
ADVICE NOTE
DATE: Energy Pool Funds Administration Ltd.
Room 157.2
185 Park Street
London SE1 9DY
TELEPHONE: (071) 620 9456
FAX NO: (071) 401 2799
NAME:
ADDRESS:
ADVICE NOTE:
PAYMENT DATE:
FAX NO.:
THIS IS NOT A TAX INVOICE
Advice Note issued in accordance with the Pooling and Settlement Agreement for
the Electricity Industry in England and Wales dated 30th March 1990 as amended,
varied or supplemented from time to time.
=========================================================================
SETTLEMENT RUN/ DESCRIPTION Amount Amount
DATE TYPE payable payable
exc VAT inc VAT
- -------------------------------------------------------------------------
===========================================================================
DO NOT NET YOUR PAYABLES TO YOUR RECEIVABLES
A wholly owned subsidiary of the National Grid Company plc. Regd. in
England No. 2444187 VAT No 547 8630 11
860
<PAGE>
ANNEX 2
Form of Confirmation Notice
CONFIRMATION NOTICE
DATE: Energy Pool Funds Administration Ltd.
TELEPHONE: Room 157.2
FAX NO: 185 Park Street
TELEX: London SE1 9DY
NAME:
ADDRESS:
CONFIRMATION NO:
PAYMENT DATE:
FAX NO:
Confirmation notice issued in accordance with the Pooling and Settlement
Agreement for the Electricity Industry in England and Wales dated 30th March
1990 as amended, varied or supplemented from time to time.
THIS IS A TAX INVOICE
<TABLE>
<CAPTION>
=============================================================================================
<S> <C> <C> <C> <C> <C> <C>
PAYMENT SETTLEMENT DESCRIPTION AMOUNT VAT VAT AMOUNT
DATE DATE PAID RATE PAID PAID
EXC VAT INC VAT
- ---------------------------------------------------------------------------------------------
=============================================================================
A wholly owned subsidiary of The National Grid Company plc. Regd. in England No
2444187 VAT No 547 8630 11
</TABLE>
861
<PAGE>
ANNEX 3
Part 1
Form of Settlement Account Designation
To: Energy Pool Funds Administration Limited
as Pool Funds Administrator
and
Barclays Bank PLC
54 Lombard Street Branch
as Pool Banker
Date:
Settlement Account Designation
1. [Insert name of Pool Member/Ancillary Service Provider] hereby
designates the following account as its Settlement Account to which
you are instructed to remit all amounts which are payable to us
through the Pool Clearing Account in accordance with Schedule 11 to
the Pooling and Settlement Agreement for the Electricity Industry in
England and Wales dated 30th March, 1990, as amended, varied or
supplemented from time to time (the "Agreement").
Name of Bank Branch Address Sorting Code Name of Account Account No.
2. We hereby designate the following account as our Settlement Account
from which all payments due from us in accordance with Schedule 11 to
the Agreement will be remitted.
Name of Bank Branch Address Sorting Code Name of Account Account No.
Signed by .........................
Position ..........................
For and on behalf of
[Name of Pool Member/Ancillary Services Provider]
862
<PAGE>
ANNEX 3
Part 2
Form of Change of Settlement Account
To: Energy Pool Funds Administration Limited as
Pool Funds Administrator
and
Barclays Bank PLC
54 Lombard Street Branch
as Pool Banker
In accordance with sub-section 4.6 of Schedule 11 to the Pooling and Settlement
Agreement [insert name] hereby gives you notice that, with effect from [insert
date] (or 10 Business Days after you receive this notice, whichever is later),
our new Settlement Account [from which payments due from the undersigned/to
which payments due to the undersigned]* will be paid shall be
Name of Bank Branch Address Sorting Code Name of Account Account No.
Yours sincerely,
[ ]
for and on behalf of
[Name of Pool Member/Ancillary Services Provider]
- ----------------------------------------------------------
*Please complete as appropriate
863
<PAGE>
ANNEX 4
Form of Letter of Credit
To: Energy Pool Funds Administration Limited
as Pool Funds Administrator
At the request of [Supplier] we have opened in your favour our irrevocable
Letter of Credit Number ( ) for (pound)[ ] (amount in words).
This Letter of Credit is available against your sight drafts accompanied by a
signed statement either that the applicant has failed to pay to you the amount
you are claiming under the terms of the Pooling and Settlement Agreement for the
electricity industry in England and Wales dated 30th March, 1990 (the
"Agreement") or that the claim is being made under sub-section 15.5 or Section
21 of Schedule 11 to the Agreement. Payments under this Letter of Credit shall
be effected immediately to [insert relevant account details].
Partial drawings are allowed hereunder.
Claims under this Letter of Credit shall be made at the counters of [insert
details of the Town Clearing branch of the issuing bank].
This Letter of Credit expires on [ ].
We waive any right to set off against any amount payable hereunder any claims we
may have against you.
Any demand hereunder must comply with all the above requirements [and signatures
thereon must be confirmed by yours Bankers].
This Letter of Credit is subject to Uniform customs and practice for Documentary
Credits (1983 Revision) International Chamber of Commerce.
We undertake that drafts and documents drawn under and in strict conformity with
the terms of this credit will be honoured upon presentation.
This Letter of Credit shall be governed by and construed in accordance with
English law.
For and on behalf of [ ] Bank [Plc]
864
<PAGE>
SCHEDULE 12
Transitional Arrangements
<TABLE>
<CAPTION>
Date for Submission
Transitional New Principle date for of Works Programme
Arrangement Implementation
GOAL
<S> <C> <C> <C> <C>
(1) Use of GOAL (i) An April 1997 April 1993
programme for auditable (GOAL Replacement
Scheduling and calculation Phase 1)
Settlement route for
purposes scheduling
(ii) April 1997 April 1993
Assessment for (GOAL Replacement
development or Phase 1)
replacement of
GOAL
(2) [Not used]
(3) [Not used]
865
<PAGE>
(4) Ancillary Service (i) Review the Reactive Power Reactive Power:
costs charged by arrangements April 1994 December 1993
NGC as a lump sum for the payment
per day to generators Other services: Other services:
for ancillary April 1996 December 1995
services.
Where
appropriate,
recommend and,
if agreed,
implement
changes to the
level of
aggregation by
payment type
and by time
period, and the
method of Reactive Power: Reactive Power
calculating April 1995 December 1994
payment.
Review the Other services: Other services:
requirement for April 1996 December 1995
the Ancillary
Services
Provider to
contract for
particular
ancillary
services.
(ii) Review
the
arrangements
866
<PAGE>
(5) Scheduling, Review
Despatch and arrangements to
Settlement cater :or:
No special (i) energy January 1998 April 1996
treatment constrained (GOAL Replacement
plant; Phase 2)
(ii) plant January 1998 April 1996
with cost (GOAL Replacement
structures that Phase 2)
cannot
adequately be
expressed as a
Willans line
(6) [Not used]
(7) Dynamic Treatment of April 1998 April 1996
Parameters changes in
generator
dynamic
parameters
during the day
(8) Offer Prices Review
submitted daily frequency at
which revised
offer prices
can be used in
Scheduling,
Despatch and
Settlement
e.g.:
867
<PAGE>
(i) submitted April 1997 August 1995
for each
scheduling
period (control
phase);
(ii) submitted April 1997 April 1995
at any time for
opportunity
trading on
despatch
timescales
(9) Out-of-merit Review demand
costs shared forecasts
entered by NGC into Settlement,
based on information supplied by
customers, against actual demand
figures. Review and, if agreed,
implement changes in the:
(i) [Not
used];
868
<PAGE>
(ii) July 1995 July 1994
allocation of
out-of-merit
costs
associated with
deviations from
forecast; and
(iii) July 1995 July 1994
incentives and
penalties
associated with
demand forecast
accuracy
(10) Three stage Introduction of October 1995 October 1994
settlement additional
process stage(s), in
(unconstrained particular, the
schedule, transmission
despatch and constrained
out-turn) schedule, to
allow further
disaggregation
of difference
between
unconstrained
schedule costs
and out-turn
costs. (Could
be a phased
implementation)
869
<PAGE>
(11) Sharing cost
across all demand
for:
(A) Transmission Cost of out-of- April 1995 October 1994
constraints merit
generation
required only
to support
stability of a
local network
to be charged
to the owner of
such network
(B) Transmission Review and, if July 1996 October 1994
losses agreed,
implement
changes in the
arrangements
for allocating
the costs of
transmission
losses on the
supergrid, e.g.
to reflect:
(i)
electrical
location of
generation and
demand; and/or
870
<PAGE>
(ii)
contractual
arrangements
between
Generators,
Suppliers and
NGC; and/or
(iii)
incentives for
investment in
supergrid
facilities
(12) Metering data (i) [Not
collection by used]
Settlement Day
(0000 hours to
2400 hours)
(ii) Review December 1999 December 1997
change to
collecting
metering data
by variable
scheduling day
(see (13)(A))
and implement
if agreed
(13) Schedule Day
parameters
871
<PAGE>
(A) Schedule Day Review the December 1999 December 1997
start and finish introduction of
(0500 hours to varying length
0500 hours) Schedule Days
based upon the
shape of the
demand curve or
other factors
and implement
if and as
agreed
(B) Settlement Period Review the use December 1999 December 1997
duration set at of shorter
0.5 hours scheduling
periods and
implement if
agreed
872
</TABLE>
<PAGE>
SCHEDULE 13
Contributory Shares
1. Contributory Share: the Contributory Share of a Pool Member shall be
calculated in accordance with the following provisions of this
Schedule.
2. Points: subject as provided in Section 3, in respect of each
Quarter:-
2.1 each Pool Member which is a Generator shall receive in
that capacity one point (a "Point") for each MWh
of Genset Metered Generation of all Generating
Units of such Pool Member for all Settlement Periods
falling in the Votes Calculation Period relative to such
Quarter, as determined from the final run
of Settlement (as referred to in paragraph D(3)
of the Preamble to Schedule 9) for each such
Settlement Period; and
2.2 each Pool Member which is a Supplier shall receive in
that capacity such number of points (each
a "Point") as is equal to the total MWh of
Consumer Metered Demand taken by that Pool Member in all
Settlement Periods falling in the Votes Calculation
Period relative to such Quarter, as determined from
the final run of Settlement (as referred to in
paragraph D(3) of the Preamble to Schedule 9) for each
such Settlement Period.
3. New Pool Members: until the third Quarter Day next falling after the
date of its admission as a Pool Member, any Party which is admitted
as a Pool Member pursuant to Clause 8.2 shall receive that number of
Points as is equal to one thousand times the number of Weighted Votes
to which such Pool Member would have been entitled under Clause
11.3.1(b) had:-
3.1 the provisions of Clause 11.3.3 been ignored; and
3.2 any applicable restrictions under Clause 11.4 been
ignored;
as determined by the Executive Committee. Thereafter, such Pool
Member's Points shall be calculated in accordance with paragraph 2.
4. Calculation of Points: on or prior to each Quarter Day the Executive
Committee shall, on the basis of information to be supplied by the
Settlement System Administrator as referred to in Clause 11.3.5,
calculate for the Following Quarter the number of Points which each
Pool Member whose Points are to be calculated in accordance with
paragraph 2 shall receive, and shall notify each Pool Member and the
Director in writing of the number of Points received by all
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Pool Members (whether calculated in accordance with paragraph 2 or
3). The determination of the Executive Committee as to the number of
Points of each Pool Member shall (in the absence of manifest error)
be final and binding for all purposes of this Agreement.
5. Contributor Shares: the Contributory Share of a Pool Member shall be
calculated in accordance with the following formula:-
CS = X + Y
Where:-
X = A
2 x B
Y = C
2 x D
and where:-
CS = the Contributory Share of such Pool Member, expressed as
a percentage
A = the number of Points for the time being of such Pool
Member in its capacity as a Generator
B = the number of Points for the time being of such Pool
Members which are Generators, in their
capacity as such
C = the number of Points for the time being of such Pool
Member in its capacity as a Supplier
D = the number of Points for the time being of all Pool
Members which are Suppliers, in their capacity as such.
6. Calculation of Contributory Shares: on or prior to:-
6.1 each Quarter Day;
6.2 each date upon which a New Party is admitted as a Pool
Member; and
6.3 each date upon which a Pool Member ceases to be a Party,
874
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the Executive Committee shall calculate for the Following Quarter or
(as the case may be) the remainder of the then current Quarter the
Contributory Share for the time being of each Pool Member, and shall
notify each Pool Member and the Director in writing of the
Contributory Share of each of the Pool Members. The determination of
the Executive Committee as to the Contributory Share of each Pool
Member shall (in the absence of manifest error) be final and binding
for all purposes of this Agreement.
7. Records: the provisions of Clause 11.9 shall apply mutatis mutandis
in respect of each Pool Member's Points and
Contributory Share.
875
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SCHEDULE 14
Membership of the Executive Committee:
Public Electricity Suppliers and Independent Suppliers
1. Definitions: in this Schedule the following expressions have the
following meanings:-
"Appointment Date" means the first day in any Appointment Period;
"Appointment Period" means either a Preliminary Period or a period
of four years, as the case may require;
"Appointor" means a PES having for the time being a right to appoint
a PES Committee Member;
"Group" means Group A, B, C, or D, as the case may be;
"PES Member" means any Pool Member which is a Public Electricity
Supplier; and
"Preliminary Period" means the period commencing on the Effective
Date and ending on the following dates:-
(a) in the case of the Appointor is Group A, 31st March, 1991;
(b) in the case of the Appointor in Group B, 31st March, 1992;
(c) in the case of the Appointor in Group C, 31st March, 1993; and
(d) in the case of the Appointor in Group D, 31st March, 1994.
2. Appointment - Public Electricity Suppliers:
2.1 subject to Sections 2 to 5 and Section 8, the PES Members shall
together have the right to appoint not more than four members of the
Executive Committee (the "PES Committee Members").
2.2 The PES Members shall for the purposes of Sections 2 to 5 and
Section 8 be arranged into Groups as follows:-
Group A: 1 SEEBOARD plc
2 Southern Electric plc
3 London Electricity plc
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Group B: 1 Midlands Electricity plc
2 South Wales plc
3 Eastern Electricity plc
Group C: 1 Yorkshire Electricity Group plc
2 Northern Electric plc
3 NORWEB plc
Group D: 1 South Western Electricity plc
2 East Midlands Electricity plc
3 Manweb plc
2.3 In respect of the Preliminary Period appropriate to each Group, the
first-named PES Member shall be entitled to appoint a PES Committee
Member and in respect of each subsequent Appointment Period the
entitlement to appoint shall pass to the second- named PES Member and
so on through each Group, in constant rotation.
2.4 No later than seven days before the end of an Appointment Period, the
Appointor of each Group next entitled to appoint a PES Committee
Member shall give notice in accordance with Section 2.7 of its
intention to appoint a PES Committee Member for the next Appointment
Period.
2.5 If a notice if given pursuant to Section 2.4, the person specified in
the notice shall hold office as a PES Committee member commencing on
the Appointment Date in place of the person previously appointed.
2.6 If no notice is given pursuant to Section 2.4, the PES Member next
following in the relevant Group shall be entitled to make an
appointment for the relevant Appointment Period.
2.7 Any notice required to be given pursuant to Sections 2 to 5 shall
specify the name of the person to be appointed and shall be given to
the Secretary of the Executive Committee and to all PES Members.
3. Removal and Replacement - Public Electricity Suppliers:
3.1 a PES Committee Member shall cease to hold office if:-
(a) the office is vacated pursuant to Clause 21; or
(b) he is removed from office by his Appointor at any time
during the Appointment Period; or
(c) his Appointor ceases to be a Pool Member or Party for
whatever reason; or
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(d) another person is appointed as the PES Committee Member pursuant to
Section 2.4; or
(e) if the office is required to be vacated pursuant to Section 5.2.
3.2 If at any time there are less than four PES Committee Members then the
following persons shall have the right to appoint a PES Committee Member by
giving notice in accordance with Section 2.7:-
(a) the Appointor in the appropriate Group which is not for the time being
represented;
(b) if an appointment is not made within three days of the right becoming
exercisable, the PES Member next following in the relevant Group shall
be entitled to appoint a PES Committee Member, and so on; and
(c) if by the end of nine days after the right to appoint under paragraph
(a) above has become exercisable no such appointment has been made,
then any PES Member shall have the right to call a meeting of PES
Members for the purpose of making the appointment.
To any meeting of PES Members called pursuant to Section 3.2(c) the
provisions of Clauses 10.3 to 10.5, 10.8, 11.12 and 12 shall apply
mutatis mutandis but so that:-
(i) the required notice period shall be seven days and shall be given to
all PES Members;
(ii) a meeting called by shorter notice shall be deemed to have been duly
called if it is agreed by at least two-thirds in number of the PES
Members having a right to attend and vote at such meeting;
(iii) the necessary quorum shall be two;
(iv) each PES Member shall have one vote;
(v) any PES Member shall be entitled at the meeting to nominate any person
to be appointed;
(vi) an appointment shall be duly made by resolution of a simple majority
of PES Members present and voting at such meeting;
(vii)any such resolution shall be decided on a show of hands and proxies
shall be entitled to vote on a show of hands; and
<PAGE>
(viii) in the event of a tie, the matter shall be decided by the PES Member
present (in person or by proxy) with the highest number of Weighted
Votes.
Any person appointed pursuant to Section 3.2(c) shall be subject to
removal and replacement by a meeting of PES Members called for that
purpose, and the provisions of Section 3.2(c) shall apply mutatis
mutandi to any such meeting.
3.3 If at any time there are less than four PES Committee Members, then until
such time as the appropriate appointment has been made in accordance with
Section 3.2, any PES Member shall be entitled to make an emergency
appointment by notice given in accordance with Section 2.7, and the person
so appointed shall hold office as a PES Committee Member until such time as
an appointment is made pursuant to Section 3.2 or until the next
Appointment Date (whichever is the earlier). In the event that more than
one PES Member exercises its right to make an emergency appointment
pursuant to this Section 3.3, the person duly appointed as the PES
Committee Member pursuant to this Section 3.3 shall be the person named in
the first notice received by the Secretary and for this purpose the
decision of the Secretary as to which notice was received first shall be
conclusive and binding on the PES Members.
3.4 Subject to Section 3.1 any person appointed as a PES Committee Member
pursuant to Section 3.2 shall hold office until the next Appointment Date.
3.5 Any notice duly given pursuant to Sections 3.2(a) or (b) or 3.3 shall be
effective to appoint the PES Committee Member with effect at the beginning
of the relevant Appointment Period.
4. New PES Members:
4.1 any New Party who is or becomes a PES Member (the "New PES Member") shall,
subject to Section 4.2 below, on such admission be allotted to a Group as
follows:-
(a) if one Group has less PES Members that any other Group, to that Group;
or
(b) if all Groups have the same number of PES Members, to Group A; or
(c) (in any other case), as the New PES Member shall be notice to all PES
Members elect.
4.2 A New PES Member shall be entitled to appoint a PES Committee Member on the
Appointment Date falling 10 years after the date of admission as a PES
Member or such other Appointment Date as the PES Members in the appropriate
Group may agree, in either case in preference to any other PES Member
entitled as at that date to appoint the PES Committee Member, in which case
the rights
<PAGE>
of other PES Members in that Group to appoint shall accordingly be delayed
by one Appointment Period.
5. Limitations on the Right to Appoint - Public Electricity Suppliers:
5.1 the right to appoint a PES Committee Member shall at all times be limited
to the appointment of one PES Committee Member in each Appointment Period.
5.2 If, at any time, two or more Appointors are affiliated with each other then
such Appointors shall procure that the aggregate member of PES Committee
Members appointed by them shall be reduced accordingly, by removing such
PES Member or Members from Groups A to D in descending order starting with
Group A, until only one such PES Member remains out of all those which are
affiliated to each other.
6. Right to Appoint - Independent Suppliers:
6.1 Independent Suppliers shall together have the right to appoint one
Committee Member.
6.2 No later than seven days before each annual general meeting of Pool Members
or, failing election at such meeting, seven days before an extraordinary
general meeting convened for such purpose each Independent Supplier shall
be entitled, by notice to the Executive Committee, to propose one person (a
"Nominee") to be a Committee Member. Any such proposal to be valid shall be
accompanied by a written statement from the Nominee stating that he is
aware of the proposal and would be prepared to serve as a Committee Member
if elected. As soon as practicable after such seventh day (and in any event
before the date of the annual general meeting or, as the case may be,
extraordinary general meeting) the Executive Committee shall circulate (or
cause to be circulated) to all Independent Suppliers a list of all the
names of the Nominees and of the Independent Suppliers who proposed them
Such list shall also be circulated at the annual general meeting or, as the
case may be, extraordinary general meeting to all Independent Suppliers
present in person or by proxy.
6.3 The term of office of Committee Members appointed by Independent Suppliers
shall be from 1st April in the year of appointment to 31st March in the
next following year provided that, if the meeting at which such Committee
Member is appointed is held after 1st April, his term of office shall
commence from the time of his appointment. A Committee Member whose term of
office has expired or is to expire shall be eligible for re-election.
6.4 In the event that there is more than one Nominee, at each annual general
meeting of Pool Members or (as the case may be) extraordinary general
meeting convened for the purpose a resolution shall be put to the
Independent Suppliers for the election by them of one Committee Member form
the list of Nominees
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referred to in Section 6.2. The Nominee with the highest number of Weighted
Votes cast in his favour shall be elected as a Committee Member.
7. Right to Remove - Independent Suppliers:
7.1 a Committee Member appointed by the Independent Suppliers may be removed at
any time by resolution of the Independent Suppliers who are Pool Members at
such time.
7.2 If a Committee Member appointed by the Independent Suppliers is removed or
his office is vacated pursuant to Clause 21, a separate general meeting of
Independent Suppliers shall be convened for the purpose of appointing a
substitute Committee Member. To such separate general meeting the
provisions of Section 6.2 shall apply mutatis mutandis.
7.3 To any meeting of Independent Suppliers called pursuant to this Section 7,
the provisions of Clauses 9.3, 9.5, 10.2 to 10.5, 10.8, 11.12 and 12 shall
apply mutatis mutandis but so that:-
(a) the necessary quorum shall be fifty per cent in number of all
independent Suppliers;
(b) a meeting called by shorter notice shall be deemed to have been duly
called if it is agreed by at least two-thirds in number of Independent
Suppliers having a right to attend and vote at such meeting;
(c) appointments and removals shall be decided by the highest number of
Weighted Votes cast in favour; and
(d) each Independent Supplier shall be entitled at the meeting to nominate
any person to be appointed.
7.4 In the event that there is only one Independent Supplier, that Independent
Supplier shall have the right to appoint and remove the Committee Member.
8. Disputes - Public Electricity Suppliers and Independent Suppliers: any
dispute as to whether a person has been duly appointed or removed as a
Committee Member under this Schedule and any dispute as to entitlement to
appoint a Committee Member hereunder shall be decided upon by the Director,
whose decision shall be final, conclusive and binding upon all Public
Electricity Suppliers and Independent Supplier who have the right to
appoint Committee Members under this Schedule.
<PAGE>
SCHEDULE 15
The Pool Funds Administrator's Contract
Contents
Page
1. Definitions and Interpretation
2. Appointment
3. Expiry of Term and Removal
4. Appointment of a Successor
5. Transfer of Responsibilities and Assets
6. Specific Duties and Responsibilities
7. Funds Transfer Software
8. Annual Fee
9. PFA Budgets and Notices of Annual Fee
10. Statement of costs and Fees
11. Auditor's Opinion
12. PFA Accounting Period
14. The Pool Funds Aministrator's Charges
15. Amount
16. Bank Charges
17. Allocation of Charges
18. Adjustment
19. Additional Compensation
Annex 1 PFA Budget for the 1992 PFA Accounting Period
Annex 2 Pro-forma Statement of Charges
Annex 3 Pro-forma Statement of Costs and Fees
Annex 4 Existing Funds Transfer Software
Annex 5 Escrow Agreements
<PAGE>
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions: in this Schedule, except where the context otherwise requires:
"Active Trading Pool Member" means a Pool Member which buys and/or sells
electricity pursuant to this Agreement on a regular basis or which is an
Externally Interconnected Party:
"Active Trading Pool Member Identities" means at any time the sum of:
(i) one; and
(ii) the aggregate number of Pool Member identities which at that time have
been accorded to all Active Trading Pool Members by the Settlement
System Administrator for the purposes of its operation of the
Settlement System provided that (unless EPFAL and the Executive
Committee shall otherwise agree in writing) for the purposes of this
definition a Pool Member shall have no more that one Pool Member
identity in each of the following categories applicable to it,
namely:-
(a) category 1: a Pool Member which generates electricity;
(b) category 2: a Pool Member which generates electricity and which
is also a Consumer (as defined in the Pool Rules);
(c) category 3: a Pool Member which supplies electricIty within the
meaning of section 4 of the Act; and
(d) category 4: an Externally Interconnected Party;
and accordingly may not have more than four Pool Member identities:
"Annual Fee" has the meaning ascribed to it in Section 8;
"Bank Charges" has the meaning ascribed to it in Section 16;
"Base Sum" has the meaning ascribed to in paragraph 8.2.1:
"Consultants" means an independent firm of chartered accountants or
management consultants of international repute selected by the
Executive Committee in consultation with EPFAL;
"EPFAL" means Energy Pool Funds Administration Limited (registered)
number 2444187) whose registered office is situate at 185 Park Street,
London SEI 9DY;
<PAGE>
"Funds Transfer Hardware" means all the computer equipment and
accessories whether existing or coming into existence in the future
which are used at any time by EPFAL in connection with the Funds
Transfer Business;
"Funds Transfer Software" means all the computer programs and codes
(both source code and object code) and all documents and materials
relating thereto or developed therefrom (including those documents and
materials on which the programs and codes are embodied and all user
documentation) and whether existing or coming into existence in the
future which are used at any time by EPFAL in connection with the
Funds Transfer Business, including (as at the date hereof) the
software listed in Annex 4;
"Notice of Annual Fee" means any notice of the Annual Fee prepared by
EPFAL pursuant to Section 9:
"PFA Accounting Period" means each successive period of 12 months
beginning on 1st April in each year or of such other length and/or
beginning on such other date as may be agreed in writing between EPFAL
and the Executive Committee;
"PFA Budget" means any budget prepared by EPFAL pursuant to Section 9
and, in the case of the PFA Accounting Period beginning in 1992, the
budget set out in Annex 1;
"PFA Commencement Date" means 1st April, 1992;
"PFA Handling Charge" means, in respect of any amount, five per cent
of such amount;
"PFA Operating Costs" means, in respect of any PFA Accounting Period
or part thereof, the total expenditure properly incurred or accrued by
EPFAL in such PFA Accounting Period or (as the case may be) the
relevant part thereof in respect of:
(i) the costs of effecting and maintaining insurance in accordance
with the requirements of sub-section 6.2:
(ii) the costs of any tests of Funds Transfer Hardware and Funds
Transfer Software under sub-section 6.1;
(iii)audit fees for the Funds Transfer Business and the costs and
expenses of the Pool Auditor under sub-section 6.1;
(iv) bank administration charges levied by the Pool Banker on EPFAL in
respect of the operation of the Pool Banker Accounts (as defined
in the Funds Transfer Agreement) (and excluding, for the
avoidance of doubt, Bank Charges and any interest charges);
<PAGE>
(v) the fees and expenses of the PFA Custodian (as defined in Annex
5) incurred in respect of the updating of all historical data
referred to in paragraph 1.1.3 of Annex 5; and
(vi) the costs of the maintenance arrangements referred to in
sub-section 7.7;
together with the total amount of EPFAL'S bad debts recognised in such
PFA Accounting Period and arising from a Pool Member's failure to pay
its due proportion of EPFAL's charges determined in accordance with
Section 17; as conclusively certified in the event of any dispute by
the auditors for the time being of EPFAL, at the cost and expense of
EPFAL;
"Quality of Service Review" means a review of the manner and standard
of performance (both overall and on a day-to-day basis) by EPFAL of
those of its obligations under the Agreement (including this Schedule)
and the Agreed Procedures, the performance of which is called into
question by reason of the notification received by the Executive
Committee under sub-section 11.1;
"Retail Price Index" means the general index of retail prices
published by the Central Statistical Office each month in respect of
all items provided that if:
(i) the index for any month in any year shall not have been published
on or before the last day of the third month after such month; or
(ii) there is a material change in the basis of the index,
the Executive Committee and EPFAL shall agree a substitute index for
such month or (as the case may be) a substitute index (and, in default
of agreement, the matter shall be referred to arbitration pursuant to
Clause 83);
"Statement of Charges" means the statement of charges required to be
submitted by EPFAL pursuant to sub-section 10.7 substantially in the
form set out in Annex 2 (or in such other form as EPFAL and the
Executive Committee may from time to time agree in writing) showing
the total charges to be made by EPFAL on all Pool Members in
accordance with Section 15 and 16;
"Statement of Costs and Fees" means any statement of costs and fees
required to be submitted by EPFAL pursuant to Section 10 which shall
be substantially in the form set out in Annex 3 or in such other form
as EPFAL and the Executive Committee may from time to time agree in
writing; and
"Total Sum Due" means, in respect of any PFA Accounting Period, the
total aggregate amount chargeable by EPFAL for that PFA Accounting
Period in accordance with Sections 15 and 16.
<PAGE>
1.2 Incorporation by reference: in this Schedule, the following definition,
namely:
"Funds Transfer Agreement";
"Funds Transfer Business";
"Letter of Credit";
"Pool Account"; and
"Pool Banker"
shall have the meanings respectively ascribed to them in Schedule II.
1.3 Interpretation: in this Schedule, except where the context otherwise
requires, references to a particular Annes, section, sub-section,
paragraphs or sub-paragraph shall be a reference to that Annex to this
Schedule or, as the case may be, that Section, sub-section, paragraph or
sub-paragraph in this Schedule.
1.4 Pool Funds Administrator's consent: the Parties acknowledge and agree that,
notwithstanding any other provision of the Agreement, insofar as directly
affects in any material respect the rights, benefits, duties,
responsibilities, liabilities and/or obligations of the Pool Funds
Administrator, no amendment to or variation of any of the matters dealt
with in any of the following provisions of the Agreement shall take effect:
1.4.1 without the prior written consent of EPFAL (but only for so long as
it is the Pool Funds Administrator):
(a) Clauses 7.3, 9.5, 10.9, 19.4, 25, 66, 68, 69, 74 and 78.2 of the
Agreement; and
(b) this sub-section 1.4; and
1.4.2 without the prior written consent of EPFAL (but only for so long as
it is the Pool Funds Administrator), such consent not to be
unreasonably withheld or delayed:
(a) Clauses 18.1.2, 70, 71.5 and 71.6 of the Agreement; and
(b) Part XVI (other than Clause 63.1), Part XX (other than Clauses 74
and 78.2) of and Schedule 11 to the Agreement; and
(c) this Schedule.
2. APPOINTMENT
2.1 Continuation of Appointment: on 30th March, 1990 EPFAL was appointed by
each Pool Member and the Ancillary Services Provider and agreed to act as
the
<PAGE>
Pool Funds Administrator. This Schedule sets out the terms and conditions
on and subject to which EPFAL shall continue and agrees to continue to act
as the Pool Funds Administrator for the period referred to in sub-section
2.2 (as such period may be extended or further extended in accordance with
the terms of this Schedule).
2.2 Term: EFPAL's appointment as the Pool Funds Administrator on and subject to
the terms and conditions set out in this Schedule shall be deemed to have
commenced on the PFA Commencement Date and, subject as hereinafter provided
in this Schedule, shall end on 31st March, 1995 (the period from the PFA
Commencement Date to 31st March, 1995 being the "Current Term").
2.3 Extension of term: EPFAL's appointment as the Pool Funds Administrator may
be extended beyond the expiry of the Current Term or (as the case may be)
any extended or further extended term either:
2.3.1 if it successfully tenders pursuant to sub-section 4.3 for
continuation of its appointment and then on and subjected to the terms
and conditions of the tender; or
2.3.2 if at any time prior to that expiry EFPAL and the Executive Committee
so agree in writing and then on and subject to such terms and
conditions as are so agreed.
2.4 Wholly-owned subsidiary: NGC shall procure that, so long as EPFAL acts or
is obliged to act as the Pool Funds Administrator, EPFAL at all times
remains a wholly-owned subsidiary of NGC.
2.5 Independent Contractor: in carrying out its duties and responsibilities and
otherwise in acting as the Pool Funds Administrator under the Agreement,
EPFAL shall act as an independent contractor and (unless expressly
authorised to the contrary) shall neither act nor hold itself out nor be
held out as acting as agent for any of the other Parties.
2.6 Restrictions on business: for so long as EPFAL is the Pool Funds
Administrator EPFAL undertakes to each Party and the Executive Committee
that it shall not render to any other Party any billing service or any
other service of any nature whatsoever which is likely to give rise to a
conflict of interest in the performance by EPFAL of its duties and
responsibilities as the Pool Funds Administrator under the Agreement. EPFAL
further undertakes that if it carries on any business other than that of
Pool Funds Administrator it shall maintain separate accounts and records in
respect of any other business. EPFAL acknowledges and agrees that this
undertaking has been the subject of discussion and negotiation and is fair
and reasonable having regard to the revision of the terms and conditions of
EPFAL's appointment as the Pool Administrator with effect from the PFA
Commencement Date.
<PAGE>
3. EXPIRY OF TERM AND REMOVAL
3.1 Expiry of term: if on expiry of the Current Term (or, if EPFAL'S term of
appointment has been extended or further extended in accordance with
paragraphs 2.3.1 or 2.3.2, expiry of that extended or further extended
term) the term of EPFAL'S appointment as the Pool Funds Administrator has
not been or will not be extended or (as the case may be) further extended
in accordance with paragraph 2.3.1 or 2.3.2, EPFAL shall, at the request of
the Executive Committee, continue to serve as the Pool Funds Administrator
for such additional period not exceeding in accordance with paragraph 2.3.1
or 2.3.2, expiry of that extended or further extended term) as the
Executive Committee may request in order to provide an opportunity for a
successor to be appointed. The Executive Committee shall make such a
request as soon as possible after becoming aware of the above circumstances
but in any event no later than three months (or such other period as EPFAL
and the Executive Committee may form time to time agree in writing) before
the date of expiry of the Current Term or (as the case may be) the extended
or further extended term.
3.2 Removal by Executive Committee: the Executive Committee may at any time
remove EPFAL as the Pool Funds Administrator forthwith or after such period
of notice as it thinks fit if:
3.2.1 EPFAL shall have committed a material breach of any of its obligations
as the Pool Funds Administrator under the Agreement or the Agreed
Procedures (other than a technical breach of trust covered by the
provisions contained in Section 5.16 of Schedule 11) and, if such
breach is capable of remedy, shall have failed to remedy such breach
within:
(a) three Business Days (in the case of a failure to make payment
(other than where any Pool Member or the Ancillary Services
Provider is in default which results in EPFAL'S inability to make
such payment) or a failure to call a Letter of Credit when
required);
(b) 14 days (in the case of any breach of its undertaking in sub-
section 2.6:) or
(c) 15 Business Days (in the case of any other default),
in any such case after it shall have received written notice from the
Executive Committee specifying the breach and requiring it to be
remedied; or
3.2.2 EPFAL;
<PAGE>
(i) is unable to pay its debts (within the meaning of section 123(1)
or (2) of the insolvency Act 1986, but subject as hereinafter
provided in this paragraph 3.2.2) or if any voluntary agreement is
proposed in relation to it under section 1 of the Act enters into
any scheme of arrangement other than for the purpose of
reconstruction or amalgamation upon terms and within such period
as may previously have been approved in writing by the Executive
Committee); or
(ii) has an administration order under section 8 of the Insolvency Act
1986 made in relation to it; or
(iv) passes any resolution for winding-up other than a resolution
previously approved in writing by the Executive Committee; or
(v) becomes subject to an order by the High court for winding- up.
For the purposes of sub-paragraphs (i) above section 123(1) of the
Insolvency Act 1986 shall have effect as if for "(pound)750" there was
substituted "(pound)150,000" and, further, EPFAL shall not be deemed
to be unable to pay its debts for the purposes of sub-paragraph (i)
above if any such demand as is mentioned in the said section is being
contested in good faith by EPFAL with recourse to all appropriate
measures and procedures.
3.3 Acknowledgement: EPFAL acknowledges and agrees that, for the purposes of
paragraph 3.2.1, any breach by it of its undertaking in sub-section 2.6
shall be deemed to be a material breach of its obligations under the
Agreement.
3.4 Removal as a Party:
3.4.1 upon the expiry or termination for whatever reason of EPFAL as the
Pool Funds Administrator each of the Parties shall promptly at its own
cost and expense execute and deliver all agreements and other
documentation and do all such other acts, matters and things as may be
necessary to effect (without prejudice to paragraph 3.4.2) EPFAL's
release as the Pool Funds Administrator and (if appropriate) as a
Party.
3.4.2 The expiry or termination for whatever reason of EPFAL's appointment
as the Pool Funds Administrator shall be without prejudice to any
accrued rights and liabilities of the Parties (including EPFAL as the
Pool Funds Administrator) under the Agreement.
4. APPOINTMENT OF A SUCCESSOR
<PAGE>
4.1 Right to appoint: the Executive Committee shall have the right to appoint
any successor Pool Funds Administrator. In making any such appointment the
Executive Committee shall take account of the views (if any) expressed by
any Pool Member or Ancillary Services Provider. The appointment of a
successor Pool Funds Administrator shall take effect upon the removal of,
as the case may be, expiry of the term of appointment EPFAL as the Pool
Funds Administrator.
4.2 Appointment following removal: if EPFAL, is removed pursuant to sub-section
3.2 the Executive Committee may appoint a successor without being obliged
to carry out or complete the process set out in sub-section 4.3, such
appointment to be on and subject to such terms and conditions as the
Executive Committee sees fit.
4.3 Tender process:
4.3.1 the Executive Committee shall invite tenders for appointment as
successor Pool Funds Administrator:
(a) not later than one year before the expiry of the Current Term
(or, if EPFAL's term of appointment has been extended or further
extended in accordance with paragraph 2.3.2, not later than a
date agreed between EPFAL and the Executive Committee and falling
before the expiry of that extended or further extended term); and
(b) if EPFAL's term of appointment has been extended or further in
accordance with paragraph 2.3.1 or EPFAL has been requested to
continue to serve as the Pool Funds Administrator pursuant to
sub-section 3.1, not later than six months (or such other period
as EPFAL and the Executive Committee may agree in writing) before
the expiry of that extended or further extended term.
4.3.2 The persons invited to tender and the terms and conditions of that
invitation, of the tender procedure and of the appointment shall be
determined by the Executive Committee provided that the tender process
shall be completed and the Executive Committee shall have made its
decision as to the successor (or shall have decided not to appoint a
successor from those persons who submitted tenders) no later than the
date falling three months before the expiry of the Current Term or (as
the case may be) the extended or further extended term. The Executive
Committee shall not be bound to appoint the successor Pool Funds
Administrator from any of those persons who have submitted tenders.
The Executive Committee shall use its reasonable endeavors to ensure
that in the tender process the Executive committee shall use its
reasonable endeavors to ensure that in the tender process the
Executive Committee does not
<PAGE>
discriminate unfairly between those eligible to tender or the tenders
received.
5. TRANSFER OF RESPONSIBILITIES AND ASSETS
5.1 Transfer of responsibilities and assets: upon a successor Pool Funds
Administrator being appointed under Section 4 and accepting such
appointment, EPFAL shall, at the request of such successor:
5.1.1 (a) at EPFAL'S option:
(i) fully and effectively assign, transfer and deliver to such
successor all Funds Transfer Software (and copies thereof)
beneficially owned by EPFAL together with all rights, title
and interest therein or thereunder vested in EPFAL; or
(ii) irrevocably license such successor to use all Funds Transfer
Software beneficially owned by EPFAL, which licence shall be
on terms enabling such successor to grant sub-licences and
permitting the benefit of such licence to be assigned to any
further successor Pool Funds Administrator and shall include
an undertaking by EPFAL promptly to provide such access to
source and object code and other documents and materials
thereto relating to the operation of the Funds Transfer
System as each such successor may reasonably require for the
purpose of maintaining and enhancing all Funds Transfer
Software; and
(b) use its best endeavors to assign or novate or procure that
assignment or novation of any licence on other agreement to use
any Funds Transfer Software which is not beneficially owned by
EPFAL or to such successor and/or to maintain any Funds Transfer
Software;
(c) deliver to the successor Pool Funds Administrator two copies of
the Funds Transfer Software and any associated documentation at
the request of the Executive Committee for use by the successor
Pool Fund Administrator;
5.1.2 make over to such successor all such records, manuals, data and other
information which EPFAL is required to retain pursuant to Clause
63.1.3 of the Agreement provided that EPFAL shall be entitled to
retain copies of such of those manuals as have been prepared by EPFAL
at its own cost and expenses (and not recharged to Pool Members
pursuant to the Agreement);
<PAGE>
5.1.3 use all reasonable endeavors to novate or procure the novation of the
Funds Transfer Agreement and any banking facility or financial
accommodation made available to EPFAL as Pool Funds Administrator by
the Pool Banker and to transfer all Letters of Credit to such
successor and cause to be transferred to such successor to hold in its
capacity as Pool Funds Administrator all balances standing to the
credit of any Pool Account;
5.1.4 provide such training, assistance and systems support as such
successor may reasonably require and for such period as such successor
may reasonably require (not exceeding three months from the date of
its removal or expiry of its term as the Pool Funds Administrator) to
enable such successor to carry out its duties and responsibilities as
successor Pool Funds Administrator;
5.1.5 use all reasonable endeavors to transfer or otherwise make available
to such successor such of the freehold and leasehold property as is
owned or occupied by EPFAL and is used by it in its capacity as the
Pool Funds Administrator; and
5.1.6 transfer or otherwise make available to such successor all other
assets, equipment (excluding computer hardware), facilities, rights,
know-how and transitional assistance which it possesses and which is
necessary or desirable for such successor to have in order to enable
such successor efficiently to operate the in accordance with the
Agreement and the Agreed Procedures with effect on and from the time
of the removal of EPFAL or expiry of EPFAL's term as the Pool Funds
Administrator (unless such removal is without notice in which case so
soon thereafter as is reasonably practicable),
and in any such case on such reasonable terms as may be agreed between
EPFAL and its successor as Pool Funds Administrator (but only, in the
case of such successor, after it has itself obtained the written
consent of the Executive Committee to such terms) within one month
after the commencement of negotiations (or such longer period as
EPFAL, such successor and the Executive Committee may agree in
writing) and, in default of agreement of terms, the dispute shall be
referred to arbitration in accordance with Clause 83.
5.2 Co-operation: EPFAL further agrees, in consideration of the payment of such
amount as may be agreed between EPFAL and its successors as Pool Funds
Administrator (but only, in the case of such successor, after it has itself
obtained the written consent of the Executive Committee to such terms)
within the period referred to in the final paragraph of sub-section 5.1
(and, in default of agreement of terms, the dispute shall be referred to
arbitration in accordance with Clause 83), to co-operate with any such
successor and the Executive Committee so that the transfer of duties,
responsibilities, assets and know-how to the operation of the
<PAGE>
Funds Transfer System and as little inconvenience to the Parties as is
practicable in all the circumstances.
5.3 PFA Unwinding Costs: without prejudice to Section 18, EPFAL's costs and
expenses of, or directly associated with, its removal or the expiry or
termination for whatever reason of its appointment as the Pool Funds
Administrator (including any redundancy or relocation costs and expenses
and any costs and expenses arising from the vacation or surrender of any
premises or disposal or its own re-deployment of any plant or equipment
used in the Funds Transfer Business) shall be borne exclusively by EPFAL
(and shall not be recharged to Pool Members).
5.4 Without prejudice to rights: any payment made by all or any of the Pool
Members to EPFAL under this Section 5 shall be without prejudice to any
rights and remedies which the Pool Members (or any of them) may have
against EPFAL in its capacity as the Pool Funds Administrator arising under
the Agreement.
5.5 Reference to Arbitration: if any matter is referred to arbitration pursuant
to this Section 5, EPFAL shall not by virtue of the reference to such
arbitration be entitled to delay in the handing over of the Funds Transfer
Software and any records, manuals, data or other information referred to in
sub-section 5.1 and EPFAL shall not be entitled to withhold any training,
assistance and system support but shall continue to co-operate with the
Executive Committee and the successor Pool Funds Administrator including
carrying out its obligations set out in sub-sections 5.1 and 5.2 and
accordingly EPFAL shall not be entitled to withhold or delay the carrying
out of its obligations.
6. SPECIFIC DUTIES AND RESPONSIBILITIES
6.1 Test of the Funds Transfer Hardware and Software:
6.1.1 EPFAL shall, upon receipt of not less than ten working days' notice
from the Pool Auditor and subject to availability of computer time,
arrange for such tests of the Funds Transfer Hardware and the Funds
Transfer Software as are from time to time reasonably required by the
Pool Auditor (either on its own initiative or on the instructions of
the Executive Committee) for the performance of its functions under
Part IX of the Agreement. EPFAL shall, if so required by the Pool
Auditor, permit the Pool Auditor to carry out such tests provided that
the person or persons allocated to carry out such tests by the Pool
Auditor is or are suitably qualified in the operation of computers and
computer systems to carry out such test and, in any other case, EPFAL
shall carry out such test.
6.1.2 EPFAL shall give the Pool Auditor reasonable access to the Funds
Transfer Hardware and the Funds Transfer Software for the purpose of
carrying out and monitoring any test under paragraph 6.1.1.
<PAGE>
6.1.3 The costs of any test under paragraph 6.1.1 shall be borne by EPFAL
and recovered by it as part of the DPA Operating Costs in accordance
with this Schedule.
6.2 Insurance:
6.2.1 subject to the availability in the insurance market of such
insurances, EPFAL shall effect and maintain in full force and effect
with first class insurers the following insurance:-
(a) professional indemnity insurance as Pool Funds Administrator in
an amount of not less than (pound)60,000,000 any one claims and
(pound)60,000,000 all claims in any one year (or such other
amount as may from time to time be reasonably required by the
Executive Committee after consultation with EPFAL); and
(b) employee fidelity insurance in an amount of(pound)60,000,000.
6.2.2 All premia and other sums of money payable in respect of all
insurances effected or to be effected pursuant to paragraph 6.2.1
shall be borne by EPFAL and recovered by it as part of the PFA
Operating Costs in accordance with this Schedule.
6.2.3 EPFAL shall use all reasonable endeavors to make and collect claims
promptly and shall apply all moneys received by it in respect of the
insurance referred to in paragraph 6.2.1 in or towards making good the
loss and fully repairing the damage or (as the case may be) satisfying
the relevant liability in respect of which such moneys were receivable
or reimbursing the cost of the same.
6.2.4 EPFAL shall promptly supply the Executive Committee upon request from
time to time with an insurance broker's certificate in form and
content reasonably satisfactory to the Executive Committee confirming
that cover has been effected in respect of the insurances referred to
in paragraph 6.2.1 and giving reasonable details of the terms and
conditions of such insurances.
6.3 Instructions: without prejudice to Section 19, EPFAL shall comply with all
instructions and directions issued by the Executive Committee to EPFAL in
its capacity as the Pool Funds Administrator unless such compliance would
cause EPFAL to be in breach of any of its other obligations as the Pool
Funds Administrator under the Agreement or the Agreed Procedures.
6.4 Changes: EPFAL in its capacity as the Pool Funds Administrator shall not
make any change in its operation of the Funds Transfer System (or any party
or aspect
<PAGE>
thereof) which in its reasonable opinion is or may (either alone or
together with any other change(s) be material without the prior written
consent of the Executive Committee. If EPFAL wishes to make any such
change, it shall promptly notify the Executive Committee. If EPFAL wishes
to make any such change, it shall promptly notify the Executive Committee
in writing giving reasonable details of the proposed change.
6.5 General: EPFAL shall have such other duties, responsibilities, obligations
and liabilities as are attributed to it in the Agreement and the Agreed
Procedures.
7. FUNDS TRANSFER SOFTWARE
7.1 Representations and warranties: EPFAL hereby represent and warrants to each
of the Pool Members and the Executive Committee that:-
7.1.1 the Funds Transfer Software referred to in Annex 4 (in this Section,
"Existing Funds Transfer Software") is all the Funds Transfer Software
used by EPFAL in connections with the Funds Transfer Business as at
31st March, 1992;
7.1.2 it is the sole beneficial owner of the Existing Funds Transfer
Software referred to in Part A of Annex 4;
7.1.3 it is the license of the Existing Funds Transfer Software referred to
in Part B of Annex 4 and that the details of the licenses set out in
Part B of Annex 4 are correct;
7.1.4 the Existing Funds Transfer Software is freely transferable to any
successor Pool Funds Administrator pursuant to Section 5;
7.1.5 the use of the Existing Funds Transfer Software in connection with
the Funds Transfer Business does not infringe the rights of any other
person and EPFAL is not in breach of any of the terms of the licenses
referred to in Part B of Annex t; and
7.1.6 it has not received any claim or notice challenging its title to, or
its right to use, the Existing Funds Transfer Software.
7.2 Future Funds Transfer Software: as from the PFA Commencement Date EPFAL
shall use its best endeavors to ensure it shall be the sole beneficial
owner of all Funds Transfer Software used or to be used in the Funds
Transfer Business after 31st March, 1992 (in this Section, "Future Funds
Transfer Software"). In the event that EPFAL is unable to ensure that it
will be sole beneficial owner of such Future Funds Transfer Software it
shall use its best endeavors to ensure that it shall be the exclusive
license thereof in relation to the Funds Transfer Business or any similar
or related businesses on terms which enable it to grant sub-licenses
<PAGE>
and the benefit of such license to be assigned to any successors Pool Funds
Administrator.
7.3 Notification: EPFAL undertakes to notify the Executive Committee forthwith
in writing in the event that:-
7.3.1 it is unable to ensure that it is the owner of, or license on the
terms set out in sub-section 7.2 under, Future Funds Transfer
Software; or
7.3.2 it receives any claim or notice of any alleged infringement of the
rights of any other person by its use of any Funds Transfer Software
or challenging its title to, or its right to use, any Funds Transfer
Software; or
7.3.3 it is or becomes aware of any infringement by any third party of its
rights in any Funds Transfer Software,
and to consult with the Executive Committee as to any steps to be
taken in respect of any such situation.
7.4 Infringement: EPFAL hereby further represents and warrants to and
undertakes with each of the Pool Members and the Executive Committee that
the use of any Future Funds Transfer Software in connection with the Funds
Transfer Business will not infringe the rights of any other person and that
it shall not breach any of the terms of any licenses under Future Funds
Transfer Software.
7.5 Restrictions: EPFAL shall not, without the prior written consent of the
Executive Committee (not be to unreasonably withheld or delayed), grant to
any person (other than a successor Pool Funds Administrator) any right,
title or interest to, in or under any Funds Transfer Software or give to
such person a copy of, or permit such person to use, Funds Transfer
Software or otherwise derive any benefit or profit therefrom (other than by
itself using such Funds Transfer Software for the purpose of the Funds
Transfer Business).
7.6 Indemnity: EPFAL hereby agrees fully and effectively to indemnify and keep
indemnified each of the Pool Members and the Executive Committee from and
against any and all loss, liability, damages, costs and expenses which it
may suffer or incur arising out of or resulting from any breach by the Pool
Funds Administrator of any of the terms, representations, warranties and
undertakings contained in this Section 7 and Annex 5.
7.7 Maintenance: EPFAL shall ensure that at all times it has in full force and
effect proper arrangements for the maintenance of (and the prompt
rectification of defects in) the Funds Transfer Hardware and the Funds
Transfer Software and, upon the reasonable request of the Executive
Committee, shall supply evidence reasonably satisfactory to the Executive
Committee of the existence and nature of such arrangements. The costs of
all such maintenance arrangements shall be
<PAGE>
borne by EPFAL and recovered by it as part of the PFA Operating Costs in
accordance with this Schedule.
7.8 Escrow arrangements: EPFAL shall comply with the provisions of Annex 5
which relate to escrow arrangements for the Funds Transfer Software and
gives the warranties therein stated.
8. ANNUAL FEE
8.1 General: in consideration of the carrying out by EPFAL of its duties and
responsibilities as the Pool Funds Administrator as set out in the
Agreement and the Agreed Procedures (other than in respect of those matters
for which EPFAL is or will e compensated through the recovery of the PFA
Operating Costs in accordance with this Schedule) EPFAL shall be paid an
annual fee as the Pool Funds Administrator (the "Annual Fee") calculated in
accordance with the following provisions of this Section 8.
8.2 Calculation of fee:
8.2.1 in respect of the PFA Accounting Period beginning on the PFA
Commencement Date the Annual Fee for that PFA Accounting Period shall
be (pound)1,250,000 (the "Base Sum").
8.2.2 In respect of each PFA Accounting Period beginning on an anniversary
of the PFA Commencement Date the Annual Fee (expressed in pounds
sterling) for that PFA Accounting Period shall be calculated in
accordance with the following formula:-
(a) ABS = Base Sum * (1+(RPIP/100))
where RPIP = the percentage change (whether of a positive or
negative value) in the Retail Price Index between that published
in, or (as the case may be) the substitute index for, the third
month before the PFA Commencement Date and that published in, or
the substitute index for, the third month before the anniversary
from which the adjusted Annual Fee is to take effect:
(b) ATPB = Base Sum * (I/100)
where I = the value set out in column 2 below opposite the number
of Active Trading Pool Member Identities set out in column 1
below as at the beginning of the third month before the
anniversary from which the adjusted Annual Fee is to take
effect:-
<PAGE>
Column 1 Column 2
---------- --------
Number of Active Trading Value
Pool Member Identities
0 to 60 0
61 to 70 5
71 to 80 10
81 to 90 20
91 to 100 25
101 to 110 30
111 to 120 35
121 to 130 45
131 to 140 50
141 to 150 55
(c) Annual Fee = ABS + ATPM.
8.2.3 If during any PFA Accounting Period beginning on an anniversary of
the PFA Commencement Date the number of Active Trading Pool Member
Identities shall change such that, were the Annual Fee for that PFA
Accounting Period to be recalculated, it would yield a different
result from that originally calculated for that PFA Accounting Period
(or, as the case may be, from that most recently recalculated for that
PFA Accounting Period pursuant to this paragraph 8.2.3) EPFAL shall
promptly recalculate the Annual Fee and notify the Executive Committee
in writing of the amount thereof. Such notification shall be
accompanied by a statement showing in reasonable detail the
calculation of such amount. Subject to paragraph 8.3.2(b), such
recalculated Annual Fee shall take effect for the period from the date
falling one month after the receipt by the Executive Committee of such
notification until the end of the then current PFA Accounting Period
(or until further recalculated under this paragraph 8.2.3).
8.3 Review of fee:
8.3.1 if at any time the total number of Active Trading Pool Member
Identities shall exceed 150 EPFAL may request the Executive Committee
to review the basis of calculation and/or the amount of the Annual
Fee. Upon receipt of such request the Executive Committee and EPFAL
shall negotiate in good faith for a period not exceeding three months
(or such longer period as EPFAL and the Executive Committee may agree
in writing) with a view to agreeing a revised basis of calculation
and/or amount of the Annual Fee.
<PAGE>
8.3.2 (a) If EPFAL and the Executive Committee shall agree a revised
basis of calculation and/or amount of the Annual Fee, such
revisions shall take effect in accordance with the terms of that
agreement.
(b) If at the end of the negotiation period referred to in paragraph
8.3.1 EPFAL and the Executive Committee shall not have agreed a
revised basis of calculation and/or amount of the Annual Fee or
if the Executive Committee shall dispute any calculation of the
Annual Fee made by EPFAL and notified to the Executive Committee
may refer the dispute to arbitration pursuant to Clause 83.
Pending the award of the arbitrator(s) the Annual Fee current as
at the date of EPFAL's calculation or recalculation shall
continue in force.
9. PFA BUDGETS AND NOTICES OF ANNUAL FEE
9.1 PFA Budgets: not earlier than three nor later than two months prior to the
first day of each PFA Accounting Period EPFAL shall prepare and submit to
the Executive Committee a PFA Budget for such PFA Accounting Period. Such
PFA Budget shall be indicative only but shall be prepared on a best
estimates basis. The PFA Budget for the PFA Accounting Period beginning in
1992 is set out in Annex 1.
9.2 Content of PFA Budgets: each PFA Budget (other than the PFA Budget for the
PFA Accounting Period beginning in 1992) shall compare each item or
category of budgeted expenditure shown therein with the forecast
expenditure in respect of such item or category for the remainder of the
then current PFA Accounting Period and report any salient differences
between any such forecast expenditure and the budgeted expenditure in
respect of each such item or category in the immediately preceding PFA
Budget.
9.3 Form of PFA Budgets: each PFA Budget shall be substantially in the form of
that set out in Annex 1 (or in such other form as EPFAL and the Executive
Committee may from time to time agree in writing).
9.4 Notice of Annual Fee: each PFA Budget (other than the PFA Budget for the
PFA Accounting Period beginning in 1992) shall be accompanied by a Notice
of Annual Fee prepared by EPFAL stating the Annual Fee for the PFA
Accounting Period to which such PFA Budget relates and setting out in
reasonable detail the calculation of the Annual Fee. Subject to paragraphs
8.2.3 and 8.3.2, the Annual Fee so stated shall take effect for such PFA
Accounting Period.
10. STATEMENT OF COSTS AND FEES
<PAGE>
10.1 Statement of Costs and Fees: no later than one month following the date in
any PFA Accounting Period of the publication of the audited accounts for
the Funds Transfer Business for the previous PFA Accounting Period, EPFAL
shall prepare and submit to the Executive Committee and all Pool Members a
Statement of Costs and Fees for such previous PFA Accounting Period. The
audited accounts of EPFAL, the instruction letter from EPFAL to its
auditors giving instructions for the auditing of those accounts and the
auditors' management letter (to the extent that it relates to the economy,
efficiency, effectiveness and quality of service of EPFAL in carrying out
its duties and responsibilities as the Pool Funds Administrator) shall
accompany each Statement of Costs and Fees for each entire PFA Accounting
Period.
10.2 Form of Statement of Costs and Fees: the Statement of Costs and Fees for
any PFA Accounting Period:-
10.2.1 in relation to the PFA Operating Costs, shall attribute actual and
accrued expenditure for such period against, inter alia, each of the
categories and sub-categories set out in the corresponding PFA Budget
for such PFA Accounting Period; and
10.2.2 in relation to the Annual Fee, shall state the Annual Fee and any
revisions thereto for such PFA Accounting Period and shall set out in
reasonable detail the calculation thereof.
10.3 Accompanying Report: each PFA Budget and Statement of costs and Fees for an
entire PFA Accounting Period submitted to the Executive Committee and, in
the case of the Statement of Costs and Fees Pool Members pursuant to
sub-section 9.1 or 10.1 shall be supported by a written report of EPFAL
commenting in reasonable detail upon the matters comprised in the
categories of expenditures included in such PFA Budget or Statement of
Costs and Fees.
10.4 Tender Costs:
10.4.1 if, during any PFA Accounting Period, the Pool Funds Administrator
reasonably believes that any of the category of services within the
definition of PFA Operating Costs are likely to exceed the amount of
that expenditure for that category or sub- category or other items of
cost provided for in the PFA Budget by more than 5%, the Pool Funds
Administrator shall notify the Executive Committee accordingly and
explain the reasons for the increase. The Executive Committee may
required the Pool Fund Administrator to invite tenders for any of the
categories or sub- categories or items of cost which are so exceeded,
in accordance with sub-section 10.4.3.
<PAGE>
10.4.2 If the Executive Committee consider that the amount budgeted for any
category or sub-category or other item of cost in the PFA Budget in
unreasonable then the Executive Committee may require the Pool Funds
Administrator to invite tenders for any of the categories or
sub-categories or other items of cost in the PFA Budget in accordance
with sub-section 10.4.3.
10.4.3 Within seven Business Day after receipt of a notice given pursuant
to paragraph 10.4.1 the Executive Committee shall notify the Pool
Funds Administrator in writing whether it wishes the Pool Funds
Administrator to seek a further tender for the service in question. If
the Executive Committee so notifies the Pool Funds Administrator that
it requires a further tender to be sought, the Pool Funds
Administrator shall obtain a further tender and shall give the
Executive Committee reasonable details of that further tender and at
the same time shall notify the Executive Committee of which tender it
has chosen to accept together (if applicable) with reasons as to why
it has not chosen the lowest price tender.
10.4.4 If the Executive Committee fails to notify the Pool Funds
Administrator within the time period referred to in paragraph 10.4.2
or notifies the Pool Funds Administrator that it does not wish it to
seek a further tender, the Pools Funds Administrator may accept the
original tender.
10.5 Basis of preparation: all Statement of Costs and Fees other than a
Statement of Costs and Fees in respect of an entire PFA Accounting Period
shall be unaudited but prepared on a best estimates basis. The Statement of
Costs and Fees in respect of an entire PFA Accounting Period shall be
audited by EPFAL's auditors.
10.6 Accounting Practices: each PFA Budget and Statement of Costs and Fees shall
be prepared on the basis of the accounting principles and practices used to
draw up the most recent audited accounts of EPFAL and consistently applied.
If any Statement of Costs and Fees for an entire PFA Accounting Period is
not prepared on such basis, EPFAL shall prepare and submit to the Executive
Committee and all Pool Members a pro-forma set of its audited accounts for
such entire PFA Accounting Period which is prepared on the basis of the
accounting principles and practices or their method of application used to
prepare EPFAL's audited accounts shall be noted in the next following PFA
Budget or Statement of Costs and Fees, as the case may be.
10.7 Statement of Charges: a Statement of Charges shall accompany each Statement
of Costs and Fees.
11. QUALITY OF SERVICE REVIEW
<PAGE>
11.1 Complaints: if the Executive Committee shall receive from any Pool Member
written notification of a breach or an alleged breach of the Agreement or
an Agreed Procedure involving EPFAL in its capacity as the Pool Funds
Administrator it shall promptly notify EPFAL of receipt and shall send a
copy of such notification to EPFAL.
11.2 Report: within one month after receipt from the Executive Committee of any
such notification as is referred to in sub-section 11.1 EPFAL shall prepare
and submit to the Executive Committee a written report explaining in
reasonable detail the circumstances which gave rise to, and the causes of,
the breach (or, if it asserts that there has not been a breach, the reasons
in support of that assertion), any remedial action taken by it and the
consequences of such action.
11.3 Quality of Service Review: promptly after receipt of EPFAL'S written report
referred to in sub-section 11.2 (or, if EPFAL shall fail to submit a report
within the period referred to in that sub-section, promptly after expiry of
that period) the Executive Committee shall determine whether it wishes to
commission a Quality of Service Review. In making such determination the
Executive Committee shall take into account the nature and seriousness of
the notified breach (or alleged breach) and the said written report (if
any). The Executive Committee shall notify EPFAL in writing of any such
determination.
11.4 Consultants: if the Executive Committee shall determine to commission a
Quality of Service Review, it shall instruct the Consultants to conduct
such review and to report in writing (a "Review Report") to the Executive
Committee and EPFAL.
11.5 Terms of engagement: the terms of engagement of the Consultants (including
the objectives and scope of the work to be performed and the form of report
to be issued) in respect of any Quality of Service Review shall (subject to
sub-section 11.10) be determined by the Executive Committee in consultation
with EPFAL.
11.6 Review Report: EPFAL shall be given the opportunity to examine and comment
on any factual details contained in any Review Report before it is
submitted in final form. Such final form shall, if the Consultants
commissioned to carry out the Quality of Service Review shall think fit,
take into consideration the comments of EPFAL on any factual details
contained in the Review Report and include an indication of the response
and proposed action of EPFAL. A copy of the final form of the Review Report
shall be sent to EPFAL and may be distributed by the Executive Committee to
Pool Members and the Director.
11.7 Implementation: upon receipt of a Review Report, EPFAL shall (if so
required by and in consultation with the Executive Committee) give effect
to such recommendations, if any, as are set out in such report as soon as
is reasonably practicable following the date of receipt by EPFAL of such
report.
<PAGE>
11.8 Arbitration: if EPFAL shall in good faith consider the recommendations
in any Review Report to be impractical or inappropriate, the same shall
be referred for resolution to arbitration in accordance with Clause 83.
11.9 Access: for the purposes of any Review Report, EPFAL shall permit the
Consultants access to the Funds Transfer Hardware, the Funds Transfer
Software and all data used by EPFAL in the operation of the Funds
Transfer System and to such of its company books, accounts and vouchers
as related to any of the items or categories of expenditure which make
up the PFA Operating Costs and as are necessary for the performance of
the Quality of Service Review. The Consultants shall also be entitled to
require from EPFAL's officers, employees or agents such information and
explanations as are necessary to the performance of the Quality of
Service Review (but, for the avoidance of doubt, the Consultants shall
not have access to any data used, information held or records kept in
relation to any Pool Member without such Pool Member's prior written
consent).
11.10 Confidentiality: the terms of engagement of the Consultants commissioned
to carry out the Quality of Service Review shall include a written
obligation of the Consultants and signed on their behalf in favour of
EPFAL to keep confidential information made available by EPFAL to the
Consultants or tow which the Consultants have access for the purposes of
the Quality of Service Review save that the Consultants shall be
entitled to disclose any such information:-
11.10.1 in the Review Report to the extent that the Consultants
reasonably consider appropriate (after consultation with EPFAL)
for the purposes of that report; or
11.10.2 with the prior written consent of EPFAL; or
11.10.3 in compliance with any requirement of law or pursuant to the
arbitration rules of the Electricity Arbitration Association or
pursuant to any judicial or other arbitral process or tribunal
having jurisdiction.
11.11 Additional rights : the provisions of this section 11 are in addition to
(and not in substitution for) and shall not prejudice any other rights
which the Executive Committee or any Pool Member may have in respect of
any such breach as is referred to in sub-section 11.1.
12. AUDITORS' OPINION
The Statement of Costs and Fees in respect of an entire PFA Accounting
Period to be sent to the Executive Committee and all Pool Members
pursuant to subsection 10.1 shall be accompanied by a report from
EPFAL's auditors considering whether in such auditors' opinion:-
<PAGE>
(a) the Statement of Costs and Fees is in agreement with EPFAL's
underlying books and records;
(b) PFA Operating Costs have been properly extracted from EPFAL's
audited financial statements; and
(c) the calculations in respect of the Annual Fee are in accordance
with the formula set out in sub-section 8.2, and are correct and
in agreement with EPFAL's underlying books and records.
13. PFA ACCOUNTING PERIOD
Each PFA Accounting Period shall be for a period of twelve months unless
otherwise agreed in writing by EPFAL and the Executive Committee. If
EPFAL wishes to change its accounting reference date it shall give due
notice thereof to the Executive Committee which shall agree to enter
into an amending agreement to the Agreement in order to give effect to
the same at EPFAL's cost and expense.
14. THE POOL FUNDS ADMINISTRATOR'S CHARGES
EPFAL shall be entitled to recover from all Pool Members the charges set
out in Sections 15 and 16 in respect of its operation of the Funds
Transfer Business but, subject to Section 19, shall not be entitled to
recover any other charges.
15. AMOUNT
15.1 Annual Charges: in respect of each PFA Accounting Period, EPFAL shall be
entitled to recover from Pool Members annual charges equal to the
aggregate of the following amounts:-
15.1.1 PFA Operating Costs for the relevant PFA Accounting Period (as
identified by the Statement of Costs and Fees for such period
submitted pursuant to Section 10);
15.1.2 the PFA Handling Charge, calculated on the total amount of the
PFA Operating Costs;
15.1.3 the Annual Fee for such PFA Accounting Periods; and
15.1.4 the Bank Charges.
15.2 Recovery of Charges:
15.2.1 the due proportion (determined in accordance with sub-section
15.4) of EPFAL's annual charges referred to in sub-section 15.1
<PAGE>
payable by each Pool Member for each PFA Accounting Period shall
be recovered by monthly payments in advance from each Pool
Member or, where EPFAL and the Pool Member otherwise agree,
semi-annually in advance (calculated on a best estimates and
reasonable basis to be one twelfth or, as the case may be, one
half of the annual charges payable by such Pool Member by
reference to the most recent PFA Budget).
15.2.2 EPFAL shall advise each Pool Member of such amount by invoice
despatched to each Pool Member approximately 15 days prior to
the first day of each month or, as the case may be, other
period. Such invoice shall be paid no later than the first day
of such month or such other period. Each Pool Member shall pay
the amount advised in the relevant invoice within 15 days after
the invoice date.
15.2.3 Each Pool Member shall pay all amounts due hereunder in sterling
in cleared funds in full without set off or counterclaim,
withholding or deduction of any kind whatsoever but without
prejudice to any other remedy. All charges are exclusive of
United Kingdom Value Added Tax which shall be added to such
charges, if applicable.
15.2.4 In the event of any dispute regarding charges in any month or
period, no Pool Member may withhold payment of any invoiced
amount but may refer such dispute to arbitration in accordance
with Clause 83.
15.3 Interest on non-payment: if any amount due to EPFAL, in its capacity as
the Pool Funds Administrator is not received on the due date the Pool
Member required to pay such amount shall pay interest to EPFAL on such
amount from and including the date of default to the date of actual
payment (as well after as before judgment) at the rate which is 4 per
cent. per annum above the Base Rate from time to time of National
Westminster Bank PLC during each period of default.
15.4 Payment of Charges: each Pool Member shall pay its due proportion of
EPFAL'S charges for each PFA Accounting Period determined in accordance
with Section 17.
15.5 Amount of Charges: the amount of each such payment shall be estimated
initially by reference to the PFA Budget. EPFAL shall adjust the amount
of each such payment by reference to the most recent Statement of Costs
and Fees and so as to take into account PFA Operating Costs, the PFA
Handling Charge, the Annual Fee and the Bank Charges during the previous
PFA Accounting Period and anticipated costs in respect of the same
during the current PFA Accounting Period and shall recover from or, as
appropriate, credit to each Pool Member its due proportion of the
<PAGE>
difference between actual and anticipated PFA Operating Costs, the PFA
Handling Charge, the Annual Fee and the Bank Charges and payments
received in respect of such costs, fees and charges in each case for the
previous and the current PFA Accounting Period. Such recovery or credit
shall take place by reference to an adjustment to each Pool Member's
charges for the current PFA Accounting Period.
15.6 New and Former Pool Members: any Pool Member which is a Pool Member for
part only of any PFA Accounting Period shall pay charges on an interim
basis of such amount as the Executive Committee estimates to be
reasonable for such PFA Accounting Period on the basis of the allocation
of charges set out in Section 17. Adjustments to charges on all Pool
Members as a result of existing Pool Members leaving or new Pool Members
joining will be made following, and shall be set out in, the Statement
of charges submitted for the relevant PFA Accounting Period pursuant to
sub-section 10.7 whereupon the Pool Members and/or former Pool Members
shall be required to pay such additional amount or be entitled to such
reimbursement as may be determined in accordance with the Agreement by
and adjustment to charges in the then current PFA Accounting Period.
16. BANK CHARGES
Bank Charges: EPFAL in its capacity as the Pool Funds Administrator
shall collect from Pool Members the amounts they are obliged to pay by
way of bank transaction charges towards the costs of the Pool Banker and
all Settlement Banks ("Bank Charges") and shall account for the same to
the Pool Banker and such Settlement Banks.
17. ALLOCATION OF CHARGES
17.1 Total Sum Due: in respect of each PFA Accounting Period, the Total Sum
Due shall be allocated amongst Pool Members in accordance with the
following provisions of this Section 17.
17.2 Payment of Total Sum Due: each Pool Member shall be obliged to pay the
amount allocated to it in accordance with this sub-section. The total
aggregate amount allocated to all Pool Members in respect of any PFA
Accounting Period shall equal the Total Sum Due in respect of such PFA
Accounting Period.
17.3 Allocation of Total Sum Due: the Total Sum Due in respect of each PFA
Accounting Period shall be allocated amongst Pool Members in the
following manner:-
17.3.1 first, in order to recover the discrete costs referable to each
Pool Member during any PFA Accounting Period, the costs incurred
by EPFAL, in its capacity as the Pool Funds Administrator in
complying with a request of such Pool Member made pursuant to
<PAGE>
Clause 63.1.7 or sub-section 6.3 of Schedule which are directly
referable to such Pool Member shall, as far as possible, be
allocated to such Pool Member; and
17.3.2 secondly, 100 per cent. of the balance of the Total Sum Due
during any PFA Accounting Period not recovered pursuant to
paragraph 17.3.1 shall be allocated amongst all Pool Members
during such PFA Accounting Period according to their respective
Contributory Shares for such PFA Accounting Period.
17.4 Prima facie evidence: EPFAL's determination of the allocation of all
costs during any PFA Accounting period shall, in the absence of manifest
error, be prima facie evidence thereof.
18. ADJUSTMENT
If the Executive Committee requests EPFAL to continue to serve as the
Pool Funds Administrator pursuant to sub-section 3.1 to allow a
successor to be appointed, EPFAL and the Executive Committee shall
negotiate in good faith for a period not exceeding six weeks (or such
longer period as EPFAL and the Executive Committee) may agree in
writing) with a view to agreeing a revision in the amount of the Base
Sum to be used in the calculation of the Annual Fee for the duration of
the additional period referred to in sub-section 3.1. If EPFAL and the
Executive Committee shall agree to revise the amount of the Base Sum,
such revision (and any consequential revision in the Annual Fee) shall
take effect in accordance with the terms of that agreement. If no
agreement is reached within the said negotiation period the Executive
Committee or EPFAL may refer the dispute to arbitration pursuant to
Clause 83. Pending any such agreement being reached or any such dispute
being resolved by arbitration, EPFAL shall continue to serve as the Pool
Funds Administrator for the additional period referred to in sub-section
3.1.
19. ADDITIONAL COMPENSATION
19.1 General: a direction or instruction of the Executive Committee to EPFAL
in its capacity as the Pool Funds Administrator shall not materially
increase the duties, responsibilities or liabilities of EPFAL as the
Pool Funds Administrator beyond those detailed in the Agreement as at
the PFA Commencement Date and as detailed in the Agreed Procedures
without proper compensation.
19.2 Compensation: if the Executive Committee gives a direction or
instruction to EPFAL in its capacity as the Pool Funds Administrator
which materially increases the duties, responsibilities or liabilities
of EPFAL as the Pool Funds Administrator beyond those detailed in the
Agreement as at the PFA Commencement Date and a detailed in the Agreed
Procedures, then (subject to sub-section 19.3):-
<PAGE>
19.2.1 EPFAL shall carry out that direction or instruction unless it
has reasonable grounds for refusing so to do in which event it
shall forthwith notify the Executive Committee in writing of its
refusal and its reasons therefor (and, for this purpose, an
increase in the duties, responsibilities or liabilities of EPFAL
in its capacity as the Pool Funds Administrator shall not of
itself constitute reasonable grounds);
19.2.2 EPFAL and the Executive Committee shall negotiate in good faith
for a period not exceeding one month (or such longer period as
EPFAL and the Executive Committee may agree in writing) with a
view to agreeing an appropriate increase in the Base Sum to
reflect such increase in EPFAL's duties, responsibilities and
liabilities as the Pool Funds Administrator;
19.2.3 if EPFAL and the Executive Committee shall agree an increase in
the Base Sum, such increase shall take effect in accordance with
the terms of that agreement; and
19.2.4 if there shall be any dispute as to whether that direction or
instruction does or did materially increase the duties,
responsibilities or liabilities of EPFAL, as the Pool Funds
Administrator or whether EPFAL has reasonable grounds for
refusing to carry out that direction or instruction or if no
agreement is reached under paragraph 19.2.9, EPFAL or the
Executive Committee may refer to the dispute to arbitration in
accordance with Clause 83.
19.3 Reservation: the performance by EPFAL of any direction or instruction of
the Executive Committee shall not prevent EPFAL from later claiming that
such direction or instruction materially increased its duties,
responsibilities or liabilities as the Pool Funds Administrator provided
always that EPFAL shall not be entitled so to claim unless it gave
written notice to the Executive Committee promptly (and in any event
within seven days) after first becoming aware that such direction or
instruction materially increased or was likely materially to increase
such duties, responsibilities or liabilities, such notice to contain
detailed reasons in support of why there has been or is likely to be
such an increase.
20. RECOVERY OF POOL ADMINISTRATION COSTS
20.1 Applicability: the provisions of this Section 20 shall apply to:-
20.1.1 the costs and expenses (within the extended meaning of that
expression in Clause 23.5 of the Agreement) of the Executive
Committee, its sub-committees and sub-groups;
<PAGE>
20.1.2 the costs and expenses of Committee Members and members of the
sub-committees and sub-groups of the Executive Committee;
20.1.3 the costs and expenses of the Pool Chairman;
20.1.4 the remuneration, costs and expenses of the personnel referred
to in Clause 17.2.1 of the Agreement;
20.1.5 the remuneration, costs and expenses of the Secretary;
20.1.6 the costs and expenses of the Pool Auditor;
20.1.7 the overhead costs of the Electricity Arbitration Association;
20.1.8 all such other costs, expenses and other amounts which are
required by the Agreement (or any other agreement or document
executed or prepared pursuant to the Agreement and for this
purpose approved by the Executive Committee) to be dealt with
"in accordance with Section 20 of Schedule 15"; and
20.1.9 any bad debts which are to be treated as Pool Administration
Costs pursuant to sub-section 20.7,
(together "Pool Administration Costs").
20.2 Approval: the Executive Committee (or its delegate) shall approve all
Pool Administration Costs in advance of submitting the same to EPFAL for
payment.
20.3 Payment: upon receipt of an invoice or other statement relating to Pool
Administration Costs which as been approved by or on behalf of the
Executive Committee in accordance with sub-section 20.2, EPFAL shall pay
the amount stated in such invoice or other statement (together with
Value Added Tax thereon, if applicable) to such person or persons as the
Executive Committee (or its delegate) shall direct.
20.4 Recovery:
20.4.1 EPFAL shall collect from Pool Members the amounts which they are
obliged to pay towards the Pool Administration Costs and Pool
Members shall be obliged to pay in accordance with sub-section
20.6 their respective proportionate share of the Pool
Administration Costs (together with Value Added Tax thereon, if
applicable) against receipt of an invoice or other statement
therefor issued by EPFAL and otherwise in accordance with
paragraph 20.5.1;
<PAGE>
20.4.2 EPFAL shall collect from the Grid Operator, and the Grid
Operator shall be obliged to pay against receipt of an invoice
or other statement therefor issued by EPFAL and otherwise in
accordance with paragraph 20.5.2 10 per cent. of the annual
overhead costs of the Electricity Arbitration Association
(together with Value Added Tax thereon, if applicable).
20.5 Collection procedure:
20.5.1 EPFAL shall arrange for collection from Pool Members of their
respective proportionate share of the Pool Administration Costs
in such manner as may be agreed by EPFAL with the Executive
Committee from time to time (which may include collection in
advance) and Pool Members shall comply with such collection
procedures and, in particular, shall make payment within the
time period prescribed by such procedures. The provisions of
paragraphs 15.2.3, 15.2.4 and sub-section 15.3 shall in any
event apply mutatis mutandis in respect of all payments required
to be made by Pool Members pursuant to this Section 20.
20.5.2 The Grid Operator shall may payment of the amount referred to in
paragraph 20.4.2 within 15 days after receipt of the invoice or
other statement therefor.
20.6 Proportionate Share: Pool Members shall contribute towards the Pool
Administration Costs referable to a Quarter in the proportions which
their respective Contributory Shares bear to each other during such
Quarter.
20.7 Bad Debts: If in any PFA Accounting Period the Executive Committee
recognises bad debts arising from a Pool Member's failure to pay its due
proportion of Pool Administration Costs, the aggregate amount of those
bad debts shall be carried forward to the immediately succeeding PFA
Accounting Period and shall form part of the Pool Administration Costs
for that PFA Accounting Period (spread evenly so far as practicable over
the four Quarters thereof).
<PAGE>
ANNEX 1
PFA Budget for the 1992 PFA Accounting Period
Category/Item Budgeted Cost
(pound)000
- ------------- -------------
Insurance costs 200
Funds Transfer Hardware and Funds Transfer 75
Software testing and maintenance costs
Audit fees 75
Bank administration charges 100
Bad debt allowance 0
---
Total Sum Due 450
===
<PAGE>
ANNEX 2
Pro-forma Statement of Charges
- ------------------------------------------------------------------------------
Name Contributory Share Period to which Amount
charges relate
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<PAGE>
ANNEX 3
Pro-forma Statement of Costs and Fees
(A)
PFA Operating Costs
Budgeted Cost for Actual Out-Turn
previous PFA for previous PFA
Accounting Period Accounting Period
----------------- -----------------
Insurance costs
Funds Transfer Hardware and
Funds Transfer Software
testing and maintenance costs
Audit fees
Bank administration
charges
Bad debt allowance
Total Sum Due
- -----------------------------------------------------------------------------
(B)
Annual Fee
Annual
Fee(initial): the Annual Fee for the [19 ] PFA Account Period was(pound)[ ].
Annual
Fee (revisions): the Annual Fee for the [19 ] PFA Accounting Period was
revised as from [ ] to(pound)[ ] [and as from
[ ] to (pound)[ ]].
Calculation of
Annual Fee
(initial and
revisions):
<PAGE>
ANNEX 4
Existing Funds Transfer Software
Part A
Beneficially Owned
Pool Funds Transfer System (PFTS) PHASE 1
System Administration - User Guide (2/5/90)
Clerical Procedures (3/5/90)
Self Study Training Module (4/7/90)
Billing Sub-Project - Test Specification v.1.0 (29/3/90), v.1.1 (3/4/90) Test
Plan - Issue 1.1 (3/4/90) System Testing Log (4/4/90) Quality Assurance Plan
(16/5/90) Test Data (2/4/90) Test Schedules (3/4/90) Implementation Paper -
Security Controls (22/3/90)
Pool Funds Transfer System (PFTS) PHASE 1.1
Test Plan Issue 1.0 (18/6/90)
Summary Test Report (13/7/90)
Pool Funds Transfer System (PFTS) PHASE 2.0
Documentation EPFAL PFTS Phase II User Manual Version 1
" " " DBA Guide "
Physical Design Documentation (volumes 1-4) (22/6/90)
Functional Specification - Appendices (April 1990)
Addendum to the Detailed Physical Design (May 1991)
<PAGE>
Part B
Licensed
VMS, unless otherwise stated)
VAX System
VMS Sun Account 3.5.14 purchased 1/7/90. Licence No. 002505
Documentation - Standard Reference/Installation/Getting started and Tutorial
manuals.
VMS v.5.4 issued 1/5/90. Licence pack LP594621 s/no. 01440169.
PCSA/Decnet v.4 End User Node issued 1/5/90. Licence pack LP594624 s/no.
0440172.
Lotus 123 v.2.2 Server Version purchased 1/91. - upgraded to v.3.1 + 18/9/91.
Note a VMS version.
Oracle RDBMS v.6 purchased 16/5/91 with full set of delivered documentation.
PC based Novell Network
Novell Advanced Network 286 v.2.15 Rec C purchased 3/90 via 3rd party. Full set
Netware documentation - Reference Installation/Guides etc.
Sun Account v.3.5.3 purchased via 3rd party 3/90. Full set documentation -
Reference/Installation/getting started and Tutorials.
Lotus 123 v.3.1 Server purchased 18/9/91. Upgrade from v.2.2 purchased 1/91.
<PAGE>
ANNEX 5
Escrow Arrangements
1.1 EPFAL Escrow Agreement
No later than 1st February, 1993 (or such later date as EPFAL and the
Executive Committee may agree in writing) EPFAL in its capacity as the
Pool Fund Administrator (for itself and on behalf of the Pool Members
acting through the Executive Committee) shall enter into and deliver an
escrow agreement (the "PF Escrow Agreement") in the form to be agreed
between EPFAL and the Executive Committee with a reputable escrow agent
to be agreed between EPFAL and the Executive Committee with a reputable
escrow agent to be agreed between EPFAL and the Executive Committee
(the "PFA Custodian"). Forthwith upon entering into the PFA Escrow
Agreement EPFAL shall deposit with the PFA Custodian to the extent then
in existence (and, if not in existence, as soon as possible after it
comes into existence):-
1.1.1 a copy of the source code and load (machine executable)
modules relating to all Funds Transfer Software beneficially
owned by it together with all job control language and
licensed software system tables, each in a machine readable
form and the source code and job control language in a hard
copy form;
1.1.2 a copy of all related manuals and other associated
documentation, including:-
(a) any user requirement documents, together
with all associated authorised change
requests;
(b) any functional specification documents
associated with those documents described in
sub-paragraph (a) above, together with all
authorised change requests associated with
the relevant functional specification;
(c) to the extent available to EPFAL, any design
specification documents associated with
those documents described in sub-paragraphs
(a) and (b) above, together with all
authorised change requests associated with
the relevant design specification;
(d) any program and/or user guides prepared to
assist in the day-to-day operation and
future development of the computer programs
(including records of test cases together
with the associated test input and output
data used for validation purposes);;
<PAGE>
(e) any relevant test strategy schedules and
acceptance test schedules as specified
for functional and operational end to
end testing;
(f) any relevant test acceptance certificates
and reports for all tests recording comments
and observations made on the appropriate
tests where such tests commissioned by
EPFAL;
(g) any relevant client acceptance certificates
and Pool Auditor's reports, together with
any reports recording such clients' and the
Pool Auditor's observations and comments on
the tests;
(h) any relevant compilation or detailed
operating procedures required in
connection with any of the relevant
paragraphs in this paragraph 1.1.2;
(i) all software licences for Funds Transfer
Software licensed to EPFAL; and
(j) a list detailing all versions of Funds
Transfer Software licenced to EPFAL
(including operating systems and compilers)
used in creating such versions of the object
code detailing the version numbers used and
any program temporary fixes or equivalent
modes;
1.1.3 a copy of all historical data (including all transaction,
reference and audit data and changes to standing data)
relating to the operations of EPFAL in its capacity as Pool
Funds Administrator;
1.1.4 all the material referred to in sub-clauses 1.1.1 to 1.1.3
above is hereafter together referred to in this Annex 5 as the
"PFA Material".
1.2 Licensed Funds Transfer Software
If, after consultation with EPFAL, the Executive Committee shall so
request, EPFAL shall use its reasonable endeavors to procure that the
owner of any Funds Transfer Software shall permit the deposit of such
Funds Transfer Software licensed to EPFAL with the PFA Custodian or
other reputable escrow agent on the terms of the Escrow Agreement or
similar agreement approved by the Executive Committee.
1.3 Updating
EPFAL shall ensure that the PFA Material deposited with the PFA
Custodian is kept fully up-to-date and reflects all Modifications (as
defined in the PFA Escrow Agreement) and shall deposit a copy of all
Modifications with the PFA Custodian
<PAGE>
as soon as the same are available, all in accordance with the terms of
and subject to the conditions of the PFA Escrow Agreement. EPFAL shall
notify the Executive Committee promptly of the delivery of each
Modification to the PFA Custodian.
<PAGE>
SCHEDULE 16
Matters requiring consent of
the Settlement System Administrator
The Settlement System Administrator's membership of, and the procedures and
powers of, the Project Board
Terms of reference of Project Managers
Approval of project documents
Quality standards (including design, coding, testing, implementation and
documentation)
Role of Pool Auditor in systems development
Components of project life cycle
Ownership and warranties on development
Housekeeping
The Settlement System Administrator's responsibilities and rights
Use of the Settlement System Administrator's resources
Implementability of systems - technical compatibility with existing system
- use of the Settlement System
Administrator's facilities for testing
- parallel operation
- migration into production
- configuration control
- implementation planning
Operability of systems - operational feasibility
- operational support requirements
- operational testing
- interface design
- performance
- security
- auditability
- reliability
Maintainability of systems - design integrity
- design documentation
<PAGE>
- adherence to design and coding
standards
- reliability
- configuration control
SCHEDULE 17
Trading Sites
Part A
General
1. Introduction: a site shall be identified as a Trading Site for the
purposes of this Agreement in accordance with the following provisions
of this Schedule.
2. Application: a Party may apply to the Executive Committee for a site
to be treated as a Trading Site by sending to the Executive Committee
a written application in the form prescribed by the relevant Agreed
Procedure (in this Schedule, a "Trading Site Application") stating the
class of application and containing the other information and
supported by the documents and other matters referred to in Part C and
signed by or on behalf of the Generator concerned and the Supplier
concerned where there exists a Supplier in respect of that site
(together in this Schedule, the "Applicants").
3. Decision: the Executive Committee shall consider any Trading Site
application within 45 days after receipt in accordance with the
procedures set out in Part B and (subject to paragraph 5 of Part B)
shall within that period make a determination as to whether the site the
subject of such application (in this Schedule, the "Nominated Site")
shall be treated as a Trading Site and shall promptly notify the
Applicants and the Settlement System Administrator of its determination.
Part B
Procedures
1. Classes: every Trading Site Application shall state whether it is a
Class 1, Class 2, Class 3 or Class 4 application and the Executive
Committee shall consider a Trading Site Application by reference to the
provisions set out in this Part B for the stated class (or, in the case
of paragraph 5, as provided therein).
2. Class 1: if the Trading Site Application shall state that it is a Class
1 application then the Executive Committee shall determine from the
Trading Site Application
<PAGE>
and supporting documentation and other matters (and any further
evidence provided in accordance with paragraph 6) if the Nominated Site
is a Power Station which is or is to be electrically configured in the
same manner as is prescribed in one of the line diagrams contained in
the relevant Agreed Procedure and fulfills all the conditions specified
in such Agreed Procedure applicable to a Class 1 application, in which
event the Nominated Site shall be treated as a Trading Site.
3. Class 2: if the Trading Site Application shall state that it is a Class
2 application then the Executive Committee shall determine from the
Trading Site Application and supporting documentation and other matters
(and any further evidence provided in accordance with paragraph 6) if
the generation and demand at the Nominated Site are electrically
connected solely by Dedicated Assets, in which event the Nominated Site
shall be treated as a Trading Site.
In this paragraph, "Dedicated Assets" means assets and equipment which
are used solely to connect electrically (a) the location at which the
generation originates with (b) the location at which the demand is
taken (and no other), and additionally satisfy one of the diagrammatic
representations of Dedicated Assets contained in the relevant Agreed
Procedure.
4. Class 3: if the Trading Site Application shall state that it is a Class
3 application then the Executive committee shall determine from the
Trading Site Application and supporting documentation and other matters
(and any further evidence provided in accordance with paragraph 6) if
the generation and demand at the Nominated Site are electrically
connected by Contiguous Assets, in which event the Nominated Site shall
be treated as a Trading Site.
In this paragraph:-
(a) "Contiguous Assets" means those Specified Assets and Equipment at
a location which connect by one continuous electrical connection
the location at which the generation originates with the location
at which the demand is taken, which Specified Assets and
Equipment are all owned by the Applicants and/or are Specified
Assets and Equipment in respect of which a contribution is or
will be made by the Applicants to the provision and installation
or maintenance and repair costs thereof or where such Specified
Assets and Equipment are already provided and installed, the
maintenance and repair costs thereof; and
(b) "Specified Assets and Equipment" means assets and equipment
identified and quoted in the Connection Agreement of either
Applicant where such assets and equipment include assets and
equipment identified and quoted in the Connection Agreements
relating to both Applicants which form part of the continuous
electrical connection for the purposes of (a) above.
<PAGE>
5. Class 4:
5.1 if the Trading Site Application shall state that it is a Class
4 application or if the Executive Committee shall determine
that the Nominated Site the subject of a Class 1, Class 2 or
Class 3 Trading Site Application does not satisfy the
conditions specified in paragraph 2, 3 or (as the case may be)
4, the Executive Committee shall determine from the Trading
Site Application and supporting documentation and other
matters (and any further evidence provided in accordance with
paragraph 6) if the Nominated Site shall be treated as a
Trading Site having regard to the criteria set out in
paragraph 5.2.
5.2 The criteria referred to in paragraph 5.1 are:-
(a) whether special circumstances existed before 30th
March, 1990 which demonstrate to the reasonable
satisfaction of the Executive Committee that the
generation and demand were treated as being on a
Trading site;
(b) whether special circumstances existed before 11th
December, 1991 which demonstrate to the reasonable
satisfaction of the Executive Committee that the
generation and demand should have been treated as on
a Trading Site;
(c) whether, although not satisfying the conditions
applicable to a Class 1, Class 2 or Class 3 Trading
Site Application, if, to the reasonable satisfaction
of the Executive Committee, the Trading Site
Application demonstrates sufficient similarities with
sites which would satisfy those conditions such that
it would be unreasonable not to treat the Nominated
Site as a Trading Site;
(d) whether there are any other facts or evidence in
support of the Trading Site Application which in the
reasonable opinion of the Executive Committee
demonstrate that the Nominated Site ought to be
treated as a Trading Site.
6. Further evidence: the Executive Committee may request an Applicant to
produce such further evidence as the Executive committee may reasonably
require in support of its Trading Site Application before the Executive
Committee makes any determination as to whether the Nominated Site is
to be treated as a Trading Site, and the Executive Committee shall not
be bound to make any determination on the issue of whether the
Nominated Site is a Trading site pending receipt of such further
evidence.
7. Majorities: any determination of the Executive Committee in favour of
treating a Nominated Site as a Trading site shall require a simple
majority of the votes cast
<PAGE>
by Committee Members at the relevant meeting provided that in the case
of a Trading Site Application which falls to be considered under
paragraph 5 the necessary majority shall be 75 per cent of all the
votes cast by Committee Members.
8. Effect of determination: if the Executive Committee shall determine
pursuant to paragraph 2, 3, 4 or (as the case may be) 5 that a
Nominated Site is a Trading Site all metered values of all meters
associated with the Nominated Site and identified in the Trading Site
Application shall be aggregated in accordance with the provisions of
sub-section 3.3 of, and paragraph 2F of Appendix 6 to, Schedule 9.
Part C
Trading Site Applications
1. Every Trading site Application shall contain the following
information:-
(a) the name and address of the Applicants;
(b) full description of the Nominated Site;
(c) a full description of the Metering Systems (if any) located or
to be located at the Nominated Site and of their location
together with a full description of the points at which all
electricity flows relative to the Nominated Site are to be
measured;
(d) such other information as may be specified in the relevant
Agreed Procedure; and
(e) such other information as the Applicants shall consider
relevant to their application.
2. Every Trading Site Application shall be accompanied by the following
documents and other matters:-
(a) line diagrams showing the electrical connections and energy
flows at the Nominated Site and the location of Metering
Systems (if any) and evidence demonstrating that the assets
and equipment electrically connecting the generation and
demand are capable of transmitting or distributing the
quantity of electricity to be transmitted or distributed to
the Nominated Site;
(b) confirmation from the Settlement System Administrator, having
duly notified the Grid Operator, that it is satisfied that the
metering arrangements at the Nominated Site are compatible
with the operation of Settlement;
<PAGE>
(c) in the case of a Class 2 or Class 3 Trading Site Application,
other evidence demonstrating the existence of Dedicated Assets
or (as the case may be) Contiguous Assets (including any
connection Agreements or relevant parts thereof).
Part D
Additional Provisions
1. (a) the Settlement System Administrator, the Grid Operator and
each Public Electricity Supplier shall co-operate with the
Applicants (insofar as is reasonable) to enable them to
prepare and deliver a Trading Site Application by making
available (upon reasonable notice) line diagrams relevant to
the Nominated Site.
(b) the Settlement System Administrator and the Grid Operator
shall review the Metering systems relative to the Nominated
site for the purposes of issuing confirmations required by the
Executive Committee and where such confirmations are
considered appropriate by the Settlement System Administrator
and the Grid Operator, shall issue the requisite confirmation.
(c) In relation to (a) and (b), the reasonable costs and expenses
of the Settlement System Administrator, the Grid Operator and
each relevant Public Electricity Supplier shall be borne by
the Applicants.
2. A Nominated Site which the Executive committee resolves should be
treated as a Trading site (or is otherwise to be so treated) shall
cease to be treated as a Trading Site if the Executive Committee
reasonably determines that the site no longer fulfils the conditions
upon which the approval for it being so treated was based. The
Generator Applicant shall forthwith notify the Executive Committee if
the site no longer fulfils such conditions.
<PAGE>
SCHEDULE 18
The Ancillary Services Accounting Procedure
1.DEFINITIONS AND INTERPRETATION
1.1 Definitions: in this Schedule, unless the context otherwise required,
the words and expressions set out in this Section 1.1 shall bear the
meanings respectively set out herein:-
"ASP Budget" means any budget prepared by the Ancillary Services
Provider pursuant to Section 2.1;
"Audit Adjustments" means the aggregate value of all changes in the
Cost Base required to be taken into account by the Ancillary Services
Provider during any Accounting Period in order to give effect to the
conclusions resulting from an audit commissioned pursuant to Clause
5.15;
"Capital Expenditure" means, in respect to any Accounting Period,
expenditure by the Ancillary Services Provider on fixed assets required
for the purposes acquired on lease which are required by generally
accepted accounting principles to be capitalised;
"Cost Base" means, in respect of any Accounting Period, Total Operating
Costs for such period less Depreciation during such period;
"Depreciation System", in respect of any Accounting Period, the
aggregate value of all depreciation on assets owned or employed by the
Ancillary Services Provider in the Ancillary Services Business, such
assets being depreciated in accordance with the accounting policies of
the Ancillary Services Provider for such period as stated in the
audited accounts of the Ancillary Services Provider for such period and
treated as depreciation in accordance with the terms of the Agreement.
"Efficiencies" means, in respect to any Accounting Period, the amount
(if any) by which the Cost Base in such Accounting Period is less than
the Cost Base in the immediately preceding Accounting Period (the
"First Period") after adjustments on a pound for pound basis to any
difference between such two Cost Bases to offset movements from the
Cost Base in the First Period due to the Rate of Inflation, Audit
Adjustments and any other matters beyond the control of the Ancillary
Services Provider and changes in the accounting principles or practices
of the Ancillary Services Provider made during the Accounting Period in
question;
"Executive" means those members of the Executive Committee representing
Suppliers;
<PAGE>
"Individual Limit" means, in respect to Capital Expenditure in any
Accounting Period, (pound)25,000, as the same may be increased from the
Effective Date by the Rate of Inflation.
"Martin" means:-
(i) in respect of each of the first three Accounting Periods, such
amount as when added to the Total Operating Costs (excluding for
this purpose any payments made by the Ancillary Services
Provider for Ancillary Services, and the price of any goods and
services referred to in Section 6.2 if the price exceeds the
aggregate cost of supplying such goods and services actually
incurred by the relevant affiliate of, or other division of, the
company of which the Ancillary Services Provider is a division)9
in the relevant Accounting Period is equal to 10 per cent. of
the sum of such amount and such Total Operating Costs; and
(ii) thereafter, such margin as may be agreed upon between the
Executive and the Ancillary Services Provider (or, in default of
agreement, such margin as is reasonable in all the circumstances
as determined pursuant to Clause 83);
"Overall Limit" means, in respect of Capital Expenditure in any
Accounting Period, (pound)100,000, as the same may be increased from
the Effective Date by the Rate of Inflation;
"Statement of Charges" means the statement of charges required to be
submitted by the Ancillary Services Provider pursuant to Section 2.8 in
the form or substantially in the form set out in Part 3 of the Annex or
such other form as the Executive and the Ancillary Services Provider
may agree showing the total charges to be made by the Ancillary
Services Provider on all Suppliers in accordance with this Schedule;
"Statement of Costs" means the statement of costs required to be
submitted by the Ancillary Services Provider pursuant to Section 2.4
setting out the actual and accrued expenditure incurred by the
Ancillary Services provider in any period which shall be substantially
in the form set out in Part 2 of the Annex or such other form as the
Executive and the Ancillary Services Provider may agree; and
"Total Operating Costs" means, in respect of any Accounting Period or
part thereof:-
(i) the total expenditure properly incurred or accrued by or on
behalf of the Ancillary Services Provider in operating the
Ancillary Services Business in such period or part thereof
(other than that referred to in (ii) and (iii) below; plus
<PAGE>
(ii) all Depreciation in such period on all assets owned and employed
by the Ancillary Services Provider in the Ancillary Services
Business; plus
(iii) all other expenditure properly incurred or accrued during such
period which, under this Schedule, is permitted to be included
in any Statement or Costs; plus.
(iv) Efficiencies which are permitted to be included in any Statement
of Costs pursuant to Section 5.4.
1.2 Interpretation:
1.2.1 in this Schedule, except where the context otherwise
requires, references to a particular Section,
sub-section or paragraph or to the Annex shall be a
reference to that Section sub-section or paragraph
of, or the Annex to, this Schedule.
1.2.2 In this Schedule the expression "Rate of Inflation"
shall have the meaning assigned to it in Schedule 4.
2. ASP BUDGETS, STATEMENTS OF COSTS AND STATEMENTS OF CHARGES
Budget
2.1 ASP Budgets: not earlier than six nor later than three months prior to
the first day of each Accounting Period (other than the first) the
Ancillary Services Provider shall prepare and submit to the Suppliers
an ASP Budget for such Accounting Period. Such ASP Budget shall be
indicative only but prepared on a best estimates basis. The ASP Budget
for the first Accounting Period shall be that set out in Part 1 of the
Annex.
2.2 Contents of ASP Budgets: each ASP Budget (other than the first) shall
compare each item or category of budgeted expenditure shown therein
with the forecast expenditure in respect of such item or category for
the remainder of the then current Accounting Period and report any
salient differences between any such forecast expenditure and the
budgeted expenditure in respect of each such item or category in the
immediately preceding ASP Budget.
2.3 Form of ASP Budgets: each ASP Budget shall be substantially in the form
of that set out in Part 1 of the Annex ( or in such other form as the
Ancillary Services Provider and the Executive may from time to time
agree).
2.4 Statement of Costs: no later than one month following the date in any
Accounting Period of the publication of the audited accounts of the
Ancillary Services Business for the previous Accounting Period, the
Ancillary Services Provider shall prepare and submit to each Supplier a
Statement of Costs for such previous Accounting Period. The audited
accounts of the Ancillary Services Provider and the auditors'
management letter, to the extent it relates to the economy, efficiency
and effectiveness of the Ancillary Services Provider in
<PAGE>
carrying out its duties, shall accompany each Statement of Costs for
each entire Accounting Period.
2.5 Form of Statement of Costs: the Statement of Costs for any Accounting
Period shall attribute actual expenditure for such period against,
inter alia, each of the categories and sub-categories set out in the
corresponding ASP Budget for such Accounting Period.
2.6 Accompanying Report: each ASP Budget And Statement of Costs for an
entire Accounting Period submitted to the Suppliers pursuant to Section
2.1 or 2.4 shall be supported by a written report of the Ancillary
Services Provider commenting in reasonable detail upon the matters
comprised in the categories of expenditure included in such ASP Budget
or Statement of Costs drawing attention to and giving reasons for any
unusual commitment or item of expenditure proposed to be incurred or
which has been incurred and, in the case of a Statement of Costs,
explaining the difference (if material) between:-
2.6.1 the amount set against each item or category therein; and
2.6.2 the amount set against each corresponding item or category in
the immediately preceding ASP Budget.
2.7 Accounting Practices: each ASP Budget and Statement of Costs shall be
prepared on the basis of the accounting principles and practices used
to draw up the most recent audited accounts of the Ancillary Services
Provider and consistently applied. If any Statement of Costs for an
entire Accounting Period which is not prepared on such basis, the
Ancillary Accounting Period which is prepared on the basis of the
accounting principles and practices used to prepare the relevant
Statement of Costs. Any changes in the accounting principles and
practices or their method of application used ton prepare applied
accounts of the Ancillary Services Provider shall be noted in the next
following ASP Budget or Statement of Costs, as the case may be.
2.9 Statement of Charges: a Statement of Charges shall accompany each
Statement of Costs.
2.9 Bad debts: the total cost of any bad debts of the Ancillary Services
Provider arising in any Accounting Period may be taken into account by
the Ancillary Services Provider in its Statement of Costs for such
Accounting Period or any subsequent Accounting Period and accordingly
recovered as part of Total Operating Costs for any such Accounting
Period.
3. AUDITORS' OPINION
<PAGE>
The statement of Costs to be sent to the Suppliers pursuant to Section
2.4 shall be accompanied by a report from the auditors of the Ancillary
Services Provider considering whether in such auditors' opinion:
3.1 the Statement of Costs is in agreement with the underlying books
and records of the Ancillary Services Provider considering
whether in such auditors' opinion: -
3.2 Total Operating Costs and Depreciation have been properly
extracted from the audited financial statements.
Such auditors' report shall also contain such other matters as the
Executive may agree with the auditors of the Ancillary Services
Provider.
4. ACCOUNTING PERIOD
The first Accounting Period shall run from (and including) 31st March,
1990 to (and including) 31st March, 1991. Thereafter unless agreed by
their Ancillary Services Provider and the Executive each Accounting
Period shall be for a period of twelve months. In the event that the
Ancillary Services Provider wishes to change its accounting reference
date it shall give due notice thereof to the Executive which shall
agree to enter into an amending agreement to give effect to the same at
the cost and expense of the Ancillary Services Provider.
5. ANCILLARY SERVICES PROVIDER'S CHARGES
5.1 Ancillary Services Provider's charges: in respect of each Accounting
Period, the Ancillary Services Provider shall be entitled to recover
from Suppliers in addition to the cost of Ancillary Services the
aggregate of:
5.1.1 Total Operating Costs for the relevant Accounting Period (as
identified by the Statement of Costs for such Accounting
Period to be submitted pursuant to Section 2.4); and
5.1.2 the Margin
5.2 Recovery of Charges: the Ancillary Services Provider's charges in
respect of any Accounting Period shall be recovered from the Suppliers
on a daily basis in accordance with the Pool Rules and by reference to
the allocation provided therein by:
5.2.1 estimating a daily amount necessary to recover the charge by
reference to the ASP Budget and, where appropriate and under-
or over-recovery in respect of any previous Accounting Period;
and Ancillary
5.2.2 adjusting that amount by reference to any subsequent Statement
of Costs
<PAGE>
5.3 Revision of Estimates: if the Ancillary Services Provider reasonably
believes that the amount which will be recovered under Section 5.2 is
likely to be 10 per cent more or less than the amount to which it is
entitled under Section 5.1 it shall, with the consent of the Executive
(such consent not to be unreasonably withheld or delayed), revise as
appropriate the estimate made in accordance with Section 5.2
5.4 Sharing of Efficiency: the Ancillary Services Provider shall be entitled
to the benefit of all Efficiencies and, accordingly, to charge Suppliers
the amount of all Efficiencies by including them in ASP Budgets and
Statements of Cost in the following manner. The amount of any Efficiency
arising in any Accounting Period shall be identified in the Statement of
costs of such Accounting Period submitted pursuant to Section 2.4 and
shall be taken into account in the Statement of Costs for the two
successive Accounting Periods thereafter. Accordingly, the amount of any
Efficiency may be included in any Statement of Costs for the two
Accounting Periods following that in which the Efficiency is identified.
In the Statement of Costs for the third consecutive Accounting Period
and all following Accounting Periods thereafter the amount of such
Efficiency shall be eliminated.
6. CORPORATE OVERHEAD CHARGES AND PURCHASES
6.1 Corporate Overhead Charges: the Ancillary Services Business any take
into account in any ASP Budget or Statement of Costs (and consequently
its charges to Suppliers) all corporate overhead charges payable by the
Ancillary Services Provider to its immediate holding company or any
other division of the company of which it is a division provided such
corporate overhead charges payable to by other affiliates of the
Ancillary Services Provider is a division as reported upon by the
auditors of the Ancillary Services Provider.
6.2 Goods or services: purchases of goods or services from affiliates of the
Ancillary Services Provider shall be on arm's length terms.
7. FUEL SECURITY
Except to the extent recoverable under any other provision of this
Schedule, any additional costs necessarily incurred by the Ancillary
Services Provider in running the ancillary Services Business during a
Security Period shall be regarded as beyond the control of the Ancillary
Services Provider which may recover the same in full from Suppliers
provided such costs have been verified as additional costs by the
auditors of the Ancillary Services Provider. Suppliers shall be obliged
to pay the actual amount of such cost and expenses.
8. CAPITAL EXPENDITURE
<PAGE>
8.1 Capital Expenditure (1): the following provisions apply to Capital
Expenditure by the Ancillary Services Provider in respect of the
Ancillary Services Business:-
8.1.1 save as provided below, Capital Expenditure by the Ancillary
Services Provider which may be recovered by Depreciation charged
to Suppliers shall require the prior approval of the Executive
in writing, such approval to take into account an appropriate
sharing of the deficiencies arising from such Capital
Expenditure;
8.1.2 Capital Expenditure which may be recovered by Depreciation
charged to Suppliers specified in any ASP Budget shall be
regarded as approved by the Executive unless the Executive
notifies the Ancillary Services Provider to the contrary within
one month after receipt of such ASP Budget:
8.1.3 in any Accounting Period the Ancillary Services Provider may
incur Capital Expenditure which may be recovered by Depreciation
charged to Suppliers without the need to consult or obtain the
approval of the Suppliers up to a maximum of the Individual
Limit for each item of Capital Expenditure and a maximum of the
Overall Limit for all items of Capital Expenditure and, in the
event of the Ancillary Services Provider incurring such Capital
Expenditure, it shall notify the Executive as soon as
practicable thereafter; and
8.1.4 the Ancillary Services Provider shall be entitled to incur
Capital Expenditure which may be recovered by Depreciation
charged to Suppliers of any amount without the need to obtain
the approval of the Executive in circumstances whereas
(a) the Ancillary Services Provider would be in breach of
its duties under NGC Transmission License unless such
Capital Expenditure were incurred; and
(b) it has not reached agreement with the Executive on such
Capital Expenditure within a reasonable period of time.
8.2 Capital Expenditure (2): Capital Expenditure not failing within Section
8.1 may not be charged as Depreciation to Suppliers.
<PAGE>
ANNEX
Part 1
ASP Budget for the First Accounting Period
Purchases of Ancillary Services 85.00
Local Overheads 0.81
NGC Corporate Management Charge 0.48
NGC System Operations Charge 0.25
NGC Settlement Systems Charge 0.25
-----
86.79
=====
<PAGE>
Part 2
Pro-forma Statement of Costs
Purchases of Ancillary Services
LocAl Overheads
NGC Corporate Management Charge
NGC System Operations Charge
NGC Settlement Systems Charge
<PAGE>
Part 3
Pro-forma Statement of Charges
=============================================================================
Name Contributory Period to which Amount
Share charges relate
- -----------------------------------------------------------------------------
=============================================================================
<PAGE>
Part 2
Pro-forma Statement of Costs
Purchases of Ancillary Services
Local Overheads
NGC Corporate Management Charge
NGC System Operations Charge
NGC Settlement Systems Charge
<PAGE>
SCHEDULE 19
Objective and Scope of
the Scheduling and Despatch Review
1. Objective: the objective of the Scheduling and Despatch Review will be
to establish that:
1.1 scheduling and despatch is carried out in accordance with the
Scheduling and Despatch Code; and
1.2 information is entered into PORTHOLE in accordance with the Pool
Rules.
2. Scope: the scope of the review will be to:-
2.1 review internal scheduling and despatch operating procedures for
consistency with Scheduling and Despatch Code;
2.2 review the internal checks that the Grid Operator has
established to ensure that the operation of scheduling and
despatch has been carried out in accordance with the procedures
referred to in Section 2.1;
2.3 perform compliance testing of the operation of the internal
checks referred to in Section 2.2;
2.4 review the operation procedures in relation to the use of the
BPS GOAL, program, including: -
(a) controls over the input of data and the output of data
to establish that they are appropriate to ensure and
adequate level of control; and
(b) procedures for the retention of records of the nature
and extent of And reasons for any manual adjustments to
BPS GOAL, output or where BPS GOAL, is run using
non-standard parameters, for consistency with the
Scheduling and Despatch Code;
2.5 perform compliance testing of the operating procedures referred
to in Section 2.4;
<PAGE>
2.6 review the operating procedures referred to in Sections 2.1, 2.2
and 2,.4 to establish that there is no bias in favor of or
against any particular Pool Member on the part of the Grid
operator;
2.7 review the operating procedures relating to the recording of
despatch instructions, availability declarations, generation
offer prices and the application of reason codes and the entry
of data into PORTHOLE for consistency with the Pool Rules;
2.8 perform compliance testing of the operating procedures referred
to in Section 2.7;
2.9 review the operation procedures referred to in Section 2.1 to
establish that in the call for the delivery of Ancillary
Services by the Grid Operator there is no bias favor of or
against any particular Pool Member on the part of the Grid
Operator.
2.10 review the call for the delivery or Ancillary Services;
2.11 compare the generation schedule forecast demand with actual
demand and
2.12 review the generation schedule forecast demand for consistency
with Section OC1 of the Grid Code.
<PAGE>
SCHEDULE 20
Accountable Interest
1. Definitions: in this schedule
"Generating Unit" means any Generating Unit whether or not situate in
England or Wales;
"Operator" means, in relation to any Generating Unit, the Authorized
Electricity Operator or any other person for the time being responsible
(under contract or otherwise) for the generation or sale of electricity
form such unit;
"Underlying Interest" means, relation to any Generating Unit, any
interest arising by reason of the person or affiliate or any related
undertaking of the person or affiliate (where alone or with others):-
(a) holding or being entitled to acquire an interest in the land on
which the Generating Unit, or any part thereof is built;
(b) being in partnership with or party to any arrangement for
sharing or profits or cost-savings or any joint venture with any
person holding or entitled to acquire an interest in the land of
which the Generating Unit, or any part thereof, is built:
(c) owning any electrical plant situated on or operated as a unit
with the Generating Unit (and for such purpose any electrical
plant or equipment to the possession of which the person,
affiliate or related undertaking is entitled under any agreement
for hire, hire purchase, conditional sale or loan shall be
deemed to be owned by such person) provided always that such
electrical plant shall not be deemed to be operated as a unit
with any Generating Unit by reason only of connections with any
other system for the transmission or distribution of
electricity; or
(d) having obtained any consent under section 36 of the Act required
for the construction or extension of the Generating Unit or any
part thereof.
2. Accountable Interests: the rules for determining whether or not any
person has an Accountable Interest in any Generating Unit and, if so,
the MW in respect of which that person shall be treated as having such
an Accountable Interest shall, subject to the following sections of this
Schedule, be ascertained in such manner as the Executive Committee with
the approval of the Director may determine the appropriate share (namely
the share representing that person's economic interest therein) in the
declared net capacity of any Generating Unit.
<PAGE>
3. Net capacity: there shall be attributed to the person the whole of the
declared net capacity represented by any Own Generating Unit.
4. Determination of Accountable Interest: for the purposes of this Schedule
and subject to Section 5, the person shall have an Accountable Interest
in a Generating Unit (not being an Own Generating Unit) in circumstances
where; -
4.1 the Operator is a related undertaking of the person or any affiliate of
the person; or
4.2 the person or any affiliate of the person is in partnership with or is
party to any arrangement for sharing profits or cost-savings or any
joint venture with the Operator or with any third party with regard to
the Operator; or
4.3 the person or any affiliate of the person has (directly or indirectly):
-
(a) any beneficial shareholding interest in the Operator; or
(b) any beneficial Underlying Interest in the Generating Unit; or
(c) provided or agreed to provide finance to the Operator otherwise
than on arm's length terms; or
(d) provided or agreed to provide, or has determined or is
responsible for determining the price ( or other terms affecting
the financial value) of, the fuel used in the Generating Unit.
5. No Accountable Interest: the person shall not be deemed to have an
Accountable Interest in a Generating Unit where; -
5.1 such Generating Unit is owned and operated by NGC under a license
granted pursuant to section 6 of the Act; or
5.2 the persons's interest arises wholly under the terms of the Agreement or
under any electricity purchase or sale contract; or
5.3 the person's interest arises solely by virtue of arrangements for the
sharing with the Operator or any Generating Unit of the risks associated
with changes in the price of fuel used by the Generating Unit during the
term of any contract for the provision of electricity from the
Generating Unit to the person.
6. Amount of Capacity: the Pool Member submitting an Admission Application
shall provide to the Executive Committee and the Director a statement
identifying (in such detail and with such supporting documents or
information as the Executive Committee or the Director may require) the
amount of capacity in MW represented by the Registered Capacity of
Generating Units in which any person who has an Accountable Interest in
the Generating Unit which is the subject of the Admission Application,
including the Pool Member, has an Accountable Interest, as at the date
of the statement.
7. Alternative Basis of Calculations: where the Executive Committee or the
Director is satisfied that the basis of calculation used by the Pool
Member is not in conformity with this Schedule, the Executive Committee
or the Director may issue directions specifying an alternative basis of
calculation, and the basis of calculation provided by the Pool Member
shall be adjusted accordingly with effect from the date of issue of the
directions or such other date as may be specified in the directions.
<PAGE>
SCHEDULE 21
METER OPERATOR SCHEDULE
PART 1
PRELIMINARY
1. INTRODUCTION
1.1 Definitions and constructions: the Parties and Meter Operator Parties
expressly Agree and acknowledge that the words and expressions listed
below, and which are used for the purposes of this Schedule, shall not
be capable of amendment without the consent of Meter Operator Parties,
but that any word or expression which is not so listed in this Schedule
but is a definition for the purposes of this Agreement and is used
primarily for parts of this Agreement other than this Schedule shall,
subject to paragraph 2.2.3 and without prejudice to paragraph 2.5, be
capable of being amended without such consent notwithstanding that it
may also be used in this Schedule: -
Active Surgery;
Active Power;
Agreed Procedure;
Agreed Procedures Index;
Code of Practice;
Communications Equipment;
Embedded Non-Franchise Site;
Equipment Owner;
Exports;
FMS Codes of Practice;
FMS Date;
FMS Trading Date;
Force Majeure;
Generic Dispensations;
Good Industry Practice;
Host PES;
Imports;
Invitee;
License Restricted Party;
Meter
Metering Equipment;
Metering System;
Meter Operator Party Accession Agreement;
Meter Operator Party Resignation Notice;
<PAGE>
MNA Metering Equipment;
New Meter Operator Party;
Operator;
Outstation;
Potential Operator;
Reactive Energy;
Reactive Power;
Register;
Registrant;
Second Tier Customer;
Substantial Part;
Synopsis of Metering Codes;
Tariff; and
Third Parties.
1.2 Interpretation: wherever a reference is made in this Schedule to a
Meter Operator Party or to an Operator, such reference shall be to a
Meter Operator Party in its capacity as such Meter Operator Party or,
where the context so requires, to an Operator in its capacity as
Operator, but shall not refer to the person which is that Meter
Operator Party or Operator in, and shall be in all cases without
prejudice to, any other capacity in which such person may be party to
this Agreement.
1.3 Agreed Procedures and Codes of Practice:
1.3.1 each of the Parties and each of the Meter Operator Parties
undertakes to comply with the Agreed Procedures and the Codes
of Practice insofar as applicable to it.
1.3.2 The Settlement System Administrator shall retain copies of all
Agreed Procedures and Codes of Practice and of any other
documentation referred to in such Agreed Procedures or Codes
of Practice and shall provide a copy of all or any thereof to
any Party or Meter Operator Party on request and may make a
reasonable charge for such provision.
1.4 Agreed Procedures and Codes of Practice: Referral to the Director:
1.4.1 without prejudice to paragraph 1.3.3, where any Meter Operator
Party considers that any change proposed to be made to any
Agreed Procedure or to any Code of Practice would have a
material adverse effect on its rights ad liabilities as a
registered Operator or as a Potential Operator as set out in
this Schedule ( the "proposed change"), it shall have the
right in the prescribed time limits to refer the matter in
writing to the Director (such referral to be copied to the
Executive Committee) who shall
<PAGE>
determine, taking into account the views expressed by the
Executive Committee and any Parties referred to below in this
paragraph, whether such proposed change has such a material
adverse effect. The Director's determination shall be final
and binding for all purposes.
1.4.2 For the purposes of enabling any Meter Operator Party to
appeal to the Director against a proposed change to any Agreed
Procedure or Code of Practice in accordance with paragraph
1.4.1, the Executive Committee shall give all Parties, Meter
Operator Parties and the Director notice of the proposed
changes at least fourteen clear days prior to the
implementation of such proposed change in accordance with the
provisions of this Agreement.
1.4.3 If an appeal to the Director against a proposed change to any
Agreed Procedure or Code of Practice is made within 14 days
after notification by the Executive Committee pursuant to
paragraph 1.4.4,. If no appeal is made within the said 14
days, the change shall come into effect on the expiry of that
period (or such later date as the Executive Committee may
determine)
1.4.4 The Director shall within 28 days of receipt or a referral (
or within such extended period as the Director shall have
notified to the Executive Committee within that 28 day period
as being necessary to enable him to reach a considered
determination) pursuant to paragraph 1.4.1 make the
determination referred to therein giving supporting reasons
and: -
(i) if the determination of the Director is that the
proposed change does not have a material adverse effect
upon the rights and liabilities as set out in Schedule
21 of the appellant Meter Operator Party as registered
Operator or as Potential Operator then the proposed
change shall come into effect in accordance with the
provisions of this Agreement; and
(ii) if the determination of the Director is that the
proposed change does have a material adverse effect upon
the rights and liabilities as set out in Schedule 21 of
the Appellant Meter Operator Party as registered
Operator or as Potential Operator, the Director may
require that the proposed change not come into effect
(in which case such proposed change shall not come into
effect) or require that modifications be made to the
proposed change to obviate or mitigate such material
adverse effect. In the latter case the Executive
Committee and each Party whose consent is required to
the relevant amendment to that Agreed Procedure or as
the case may be, Code of Practice, shall take all
reasonable steps to implement any decision of the
Director (for which reasons shall be given) requiring
changes to be made to such Agreed Procedure or Code of
Practice with the purposes of obviAting or, where the
Director considers appropriate, mitigating such material
adverse effect on such Meter Operator Party.
<PAGE>
2. AMENDMENTS AND MODIFICATIONS
2.1 Obligations: the Parties and Meter Operator Parties expressly
acknowledge and agree that each Meter Operator Party is bound only to
the extent of the obligations which are expressly set out or referred to
in this Schedule (including those provisions incorporated herein by
reference in paragraph 24) and not by any other provision of this
Agreement. Each Meter Operator Party agrees to comply with the
provisions of this Agreement incorporated herein by reference in
paragraph 24) or are definitions listed in paragraph 1.1.
2.2. Consent:
2.2.1 the consent or agreement of any Meter Operator Party shall not
be required to any modification, abrogation, amendment or
suspension of any provision of this Agreement incorporated
herein by reference in paragraph 24 shall be deemed to be not
set out in this Schedule) or which is not a definition listed in
paragraph 1.1. Each Meter Operator Party hereby irrevocably
waives any rights which it might be considered or held to have
to consent or agree to any such modification, abrogation,
amendment or suspension.
2.2.2 Where under paragraph 2.2.1 a Meter Operator Party would
otherwise have a right to consent or agree to a modification,
abrogation, amendment or suspension of a provision of this
Agreement then consent or agreement shall not be required in
circumstances where the consent or agreement of any Party (not
being the Settlement System Administrator, the Grid Operator,
the Ancillary Services Provider or the Pool Funds Administrator)
is also not required under this Agreement to such modification,
abrogation, amendment or suspension
2.2.3 A meter Operator Party whose consent or approval need not by
virtue of this paragraph 2 be sought or obtained to any
modification, abrogation, amendment or suspension of any
provision of this Agreement may refer the matter to the Director
as if it were a referral under and in accordance with paragraph
1.4 (and such that the provisions of that paragraph shall apply
mutatis mutandis to such referral) provided that in reaching any
determination as to whether the proposed change shall come into
effect the Director shall consider the nature of the changes
upon Meter Operators Parties as a class and shall not have locus
standi to consider any perceived or actual prejudice as an
individual Meter Operator Party.
<PAGE>
2.3 Authorisation to amend: without prejudice to paragraphs 2.1 and 2.2,
each Meter Operator Party hereby unconditionally and irrevocably
authorises and instructs the Chief Executive and each person authorised
for the purpose by the Executive Committee to sign on its behalf
amending agreements to this Agreement, to execute any agreement which
modifies, abrogates, amends or suspends any provision of this Agreement
in circumstances where such Meter Operator Party's consent or approval
is not required, and undertakes not to withdraw, qualify or revoke such
authority and instruction at any time.
2.4 Notification: the Executive Committee shall notify each Meter Operator
Party of all amendments, modifications, abrogations and suspensions
which are made to this Agreement for which the consent or agreement of
such Meter Operator Party is not required.
2.5 Further rights: the Executive Committee shall from time to time
consider any representations which Meter Operator Parties may make to
the effect that there are provisions set out in the Agreement but not
in this Schedule 21 and, accordingly, in respect of which Meter
Operator Parties are not conferred with rights by virtue of this
paragraph 2, which are operating in a manner which is having a material
effect on the rights and liabilities of such Meter Operator Parties as
set out herein. The Executive Committee shall consider whether, and the
extent to which (if at all), such provisions should be recommended for
incorporation into this Schedule 21.
<PAGE>
PART 2
ADMISSION, RESIGNATION AND REMOVAL
3. ADMISSION
3.1 General: subject to the following provisions of this paragraph 3, the
Parties and the Meter Operator Parties shall admit as an additional
party for the purposes of this Schedule only, on the terms set out in
paragraph 2, any person (the "New Meter Operator Party") who applies to
be admitted in the capacity of Meter Operator Party.
3.2 Procedure for admission: Admission Application: a New Meter Operator
Party wishing to be admitted as an additional party for the purposes
only of this Schedule, on the terms set out in paragraph 2 hereof,
shall complete a Meter Operator Party Admission Application and shall
deliver it to the Executive Committee together with the fee (which
shall be non-refundable).
3.3 Procedure for admission as Meter Operator Party: Executive Committee
response:
3.3.1 upon receipt of any Meter Operator Party Admission Application
duly completed the Executive Committee shall notify all
Parties, Meter Operator Parties and the Director of such
receipt and of the name of the New Meter Operator Party.
3.3.2 Any Pool Member may be written notice to the Executive
Committee, stating the grounds for the objection, object to
the admission of any person in respect of which a Meter
Operator Party Admission Application has been received by the
Executive Committee and where any such notice of objections is
received the Executive Committee:
(i) in the case of an application which the Executive
Committee considers, taking into account any objections
made pursuant to this paragraph, to be frivolous or
vexatious, may reject such application and such
rejection shall on that application be final and binding
and there shall not be conferred upon the relevant New
Meter Operator Party, by virtue of such rejection, any
further right of appeal to the Director in respect
thereof; or
(ii) in the case of an application which the Executive
Committee does not consider, taking into account any
objections made pursuant to this paragraph, to be
frivolous or vexatious, shall refer the matter to the
Director for determination and the provision of
paragraph 3.4 shall apply to such determination.
<PAGE>
Any objection to be effective must be received by the
Executive Committee within 7 days of notification by the
Executive Committee of the relevant Meter Operator Party
Admission Application in accordance with paragraph 3.3.1
(the "objection period"), and the Executive Committee
shall disregard any notice of objection which is
received outside the prescribed period. Any notice of
objection shall be copied by the Executive Committee
upon its receipt to all Parties, Meter Operator Parties
and the Director.
3.3.3 Within 7 days of the expiry of the objection period (the
"consideration period") the Executive Committee shall notify
the New Meter Operator Party and the Director either:
(a) that the New Meter Operator Party shall be
admitted as a Meter Operator Party, in which
even the provisions of paragraph 3.5 shall
apply; or
(b) that the Executive Committee has received an
objection, or objections, to the admission
of that New Meter Operator Party and, on the
basis thereof, considers the application to
be frivolous or vexatious and for that
reason is rejecting the application without
further right of appeal; or
(c) that the Executive Committee has received an
objection, or objections, to the admission
of that New Meter Operator Party in
accordance with paragraph 3.3.2 and has
referred the matter to the Director in
accordance with paragraph 3.4.
If the Executive Committee shall fail so to notify
the New Meter Operator Party and the Director, the
New Meter Operator Party may within 7 days after the
expiry of the consideration period refer the matter
to the Director pursuant to paragraph 3.4, in which
event the provisions of that paragraph shall apply.
3.4 Procedure for application: Reference to the Director:
3.4.1 if:
(a) a notice of objection or notices of
objection to the admission of the New Meter
Operator Party as a Meter Operator Party
within the objection period has (or have)
been received and the Executive Committee
has not notified the New Meter Operator
Party that it is rejecting its application
on the basis that those objections
demonstrate that the relevant application is
frivolous or vexatious; or
<PAGE>
(b) the Executive Committee shall have
failed to notify the New Meter Operator
Party as provided in paragraph 3.3.3
within the consideration period,
the matter may be referred by way of written
application of the New Meter Operator Party, copied
to the Executive Committee, to the Director for
determination. The determination of the Director,
which shall be made within 28 days after receipt of
the said written application and shall be to the
effect that the New Meter Operator Party should or
should not be admitted as a Meter Operator Party for
the purposes of this Schedule, shall be final and
binding for all purposes. The Director shall publish
reasons supporting his determination.
3.4.2 (a) If the determination is to the effect that the
New Meter Operator Party should be admitted as a
Meter Operator Party, the New Meter Operator
Party shall be admitted and the provisions of
paragraph 3.5 shall apply.
(b) If the determination is to the effect that the New
Meter Operator Party should not be admitted as a
Meter Operator Party, the New Meter Operator Party's
application for admission shall lapse and be of no
effect and the New Meter Operator Party shall not be,
and shall not be entitled to be, admitted as a Meter
Operator Party consequent upon such application (but
without prejudice to any new application it may make
thereafter).
3.5 Admission: if:
3.5.1 the Executive Committee shall notify the New Meter Operator
Party and the Director as provided in paragraph 3.3.3(a); or
3.5.2 the New Meter Operator Party is to be admitted as a Meter
Operator Party pursuant to paragraph 3.4,
the Executive Committee shall forthwith prepare or cause to be prepared
a Meter Operator Party Accession Agreement. Subject to the Executive
Committee making all notifications and filings (if any) required of it
for regulatory purposes and obtaining all regulatory consents and
approvals (if any) required to be obtained by it, the Executive
Committee shall instruct the Chief Executive or another person
authorised by the Executive Committee for the purpose to prepare a
Meter Operator Party Accession Agreement and to sign and deliver the
Meter Operator Party Accession Agreement and to sign and deliver the
Meter Operator Party Accession Agreement on behalf of all Parties and
Meter Operator Parties other than the New Meter Operator Party and the
New Meter Operator Party shall also execute and deliver the Meter
Operator Party Accession Agreement and, on and subject to the Terms and
conditions of the Meter Operator Party
<PAGE>
Accession Agreement, the New Meter Operator Party shall become a Meter
Operator Party on the terms set out in paragraph 2, for the purposes of
this Schedule, with effect from the date specified in such Meter
Operator Party Accession Agreement (and, if no such date is so
specified, the date of such Meter Operator Party Accession Agreement).
The New Meter Operator Party shall pay all costs and expenses
associated with the preparation, execution and delivery of its Meter
Operator Party Accession Agreement. Each Party and Meter Operator Party
hereby authorises and instructs the Chief Executive and each person
authorised for the purpose by the Chief Executive to sign on its behalf
Meter Operator Party Accession Agreements and undertakes not to
withdraw, qualify or revoke such authority and instruction at any time.
The Executive Committee shall promptly notify all Parties and Meter
Operator Parties and the Director of the execution and delivery of each
Meter Operator Party Accession Agreement.
3.6 Additional Agreements: upon and as a condition of admission as a Meter
Operator Party, a New Meter Operator Party shall execute and deliver
such further agreements and documents and shall do all such other acts,
matters and things as the Executive Committee may reasonably require.
3.7 Application fees: all fees received by the Executive Committee in
respect of any application by a New Meter Operator Party to become a
Meter Operator Party shall be sued to defray the costs and expenses of
the Executive Committee and shall be paid to such account as the
Executive Committee may direct. The application fee shall be (pound)250
or such other amount as the Executive Committee may, with the prior
approval of the Director, from time to time prescribe.
3.8 Acknowledgement that provisions not exhaustive of being Operator: the
compliance by any person with the provisions of this paragraph 3 with
regard to its admission as a Meter Operator Party shall not of itself
mean that all things have been done and agreements or arrangements have
been entered into with other Parties and persons such that the duly
admitted Meter Operator Party is entitled or enabled to comply as an
operational, physical or legal matter with its obligations, or to enjoy
its rights, as an Operator under this Schedule and the provisions of
this Schedule shall always be without prejudice to the rights or
obligations of such Meter Operator Party under any other agreement or
arrangement with such other Parties or persons.
3.9 Compliance: each Meter Operator Party shall procure that for so long as
it is a Meter Operator Party it shall at all times satisfy or otherwise
comply with the admission conditions set out in its Meter Operator
Party Admission Application applicable to it (and/or such further or
other conditions as the Executive Committee may from time to time
reasonably specify) and upon request from time to time shall promptly
provide the Executive Committee with evidence reasonably satisfactory
to the Executive Committee of such satisfaction and compliance.
<PAGE>
3.10 Change of capacities:
3.10.1 any Meter Operator Party admitted as an additional party
pursuant to this paragraph 3 may apply, whether in
substitution for or in addition to being a Meter Operator
Party, to become a Party to this Agreement in accordance with
Clause 3 of this Agreement and, if appropriate, a Pool Member
in accordance with Clause 8 of this Agreement. Such Meter
Operator Party shall only be entitled to become a Party and,
as the case may be, Pool Member in accordance with those
provisions of this Agreement.
3.10.2 Subject to the transitional arrangements set out in paragraph
23, any Party to this Agreement may, upon application to the
Executive Committee and satisfaction of such conditions (if
any) as the Executive Committee may reasonably require,
whether in substitution for or in addition to being a Party,
become a Meter Operator Party for the purposes of and on the
terms set out in this Schedule.
4. REGISTRATION OF OPERATORS
4.1 Registration: subject to Clause 60.4, the identity of the Operator for
each Metering System which the Settlement System Settlement and which
shall be the Operator for all purposes of this Schedule shall be as
notified to the Settlement System Administration in accordance with
this Schedule and as recorded b it, for the time being and from time to
time, in the Register.
4.2 Who can be Operator: the operator of any Metering System proposed to be
registered with the Settlement System Administrator or the new operator
of any Metering System already so registered shall be either:-
4.2.1 the Meter operator Party specified as such in a notice served
by it upon the Settlement System Administrator in accordance
with the relevant Agreed Procedure and which has acknowledged
its appointment therein; or
4.2.2 where no Meter Operator Party is specified pursuant to
paragraph 4.2.1 or such Meter Operator Party has not
acknowledged its appointment, the Registrant deemed to be
Operator pursuant to Clause 60.4.4 in accordance with the
provisions thereof.
4.3 Consents: subject to Clause 60.4.9, no person shall be the Operator of a
Metering System without the prior written consent of:-
(i) the person (if not the Operator or Registrant in respect
thereof) which is at that time the Equipment Owner; and
<PAGE>
(ii) in the case of a Metering system to be operated in respect of
supplies to a Second Tier Customer, and if different from the
Equipment Owner, that Second Tier Customer.
The Registrant in respect of that Metering System shall provide
evidence of such consent to the Executive Committee and to the
Settlement System Administrator at the time of the registration of that
Meter Operator Party as Operator in respect of such Metering System.
The Settlement System Administrator shall not register as an Operator
in respect of such Metering System any person in respect of which
evidence of consent of the Equipment Owner., and where applicable and
where different, the relevant Second Tier Customer, is required but has
not been so provided. Where no such evidence or insufficient evidence
is provided the Settlement System Administrator shall notify the
relevant Meter Operator Party accordingly.
4.4 Power to prescribe new registration conditions:
4.4.1 the Executive Committee shall have the power to
prescribe, from time to time, such further conditions to
be imposed upon the registration of any Meter Operator
Party as an Operator under this Schedule as it shall
consider appropriate with the consent of the Meter
Operator Parties. In the case of a Meter Operator Party,
such consent shall not be unreasonably withheld or
delayed and notification of such consent or refusal to
consent shall be made to the Executive Committee within
7 days of its consent being requested. If any Meter
Operator Party refuses to consent or does not consent
within the prescribed 7 day period, the Director shall
determine whether such consent was unreasonably
withheld.
4.4.2 The conditions to be imposed pursuant to paragraph 4.4.1 shall
be as specified from time time in an Agreed Procedure and each
Operator shall be required, upon the bringing into effect of
new or revised conditions, to demonstrate to the satisfaction
of the Executive Committee in accordance with the provisions
of such Agreed Procedure, the ability to comply with the
standards laid down therein.
4.4.3 Any Operator which is not able to demonstrate compliance with
such revised standards in accordance with paragraph 4.4.2
shall at the time specified in that Agreed Procedure ceases to
be a Meter Operator Party for the purposes hereof, but such
cessation shall be without prejudice to any right to make a
future application to become a Meter Operator Party or
Operator in accordance with the provisions of this Schedule.
<PAGE>
5. RESIGNATION
5.1 Resignation as Meter Operator Party: subject as provided in paragraph
5.2.:-
5.1.1 a Meter Operator Party shall be entitled at any time to resign
as a Meter Operator Party by delivering a Meter Operator Party
Resignation Notice to the Secretary; and
5.1.2 such resignation shall take effect 28 days after receipt of
the Meter Operator Party Resignation Notice by the Secretary.
Promptly after receipt of a duly completed Meter Operator Party
Resignation Notice from a Meter Operator Party, the Secretary shall
notify (for information only) all of the other Parties, of such receipt
and of the name of the Meter Operator Party wishing to resign.
5.2 Restrictions on resignation: a Meter Operator Party may not resign as a
Meter Operator Party (and any Meter Operator Party Resignation Notice
delivered pursuant to paragraph 5.1.1 shall lapse and be of no effect)
unless:-
(i) as at the date its resignation would otherwise become effective
all sums due from such Meter Operator Party to the Executive
Committee or any other Party or Meter Operator Party under this
Agreement or any agreement entered into pursuant to and in
accordance with this Agreement (whether by or on behalf of such
Meter Operator Party) and notified for the purposes of this
paragraph 5.2 by the Executive Committee to such Meter Operator
Party prior to the date of its resignation have been paid in
full; and
(ii) the Meter Operator Party is not registered as the Operator in
respect of any Metering System.
5.3 Resignation as an Operator:
5.3.1 an Operator shall be entitled at any time to resign as
Operator of a Metering System by service of a duly completed
notice in the form prescribed by the relevant Agreed Procedure
upon the Settlement System Administrator.
5.3.2 Such resignation shall take effect (unless otherwise agreed
with the Settlement System Administrator) on the date
specified therein which shall be no earlier than the date
specified in the relevant Agreed Procedure.
5.3.3 The Settlement System Administrator shall notify the relevant
Registrant and, where applicable, host PES of receipt by it of
a notice pursuant to this paragraph 5.3 within one working day
following such receipt.
<PAGE>
5.4 Release as a Meter Operator Party: without prejudice to Clause 66.7 as
incorporated into this Schedule by paragraph 24 hereof and its accrued
rights and liabilities and its rights and liabilities which may accrue
in relation to the period during which it was a Meter Operator Party
under this Schedule pursuant to paragraph 2 hereof or to any agreement
referred to in paragraph 5.2, upon a Meter Operator Party's resignation
becoming effective in accordance with paragraph 5.1:-
5.4.1 such Meter Operator Party shall be automatically released and
discharged from all its obligations and liabilities in its
capacity as Meter Operator Party under this Schedule and any
agreement referred to in paragraph 5.2; and
5.4.2 each of the other Parties and Meter Operator Parties shall be
automatically released and discharged from its obligations and
liabilities to such Meter Operator Party in its capacity as
Meter Operator Party under this Schedule and any agreement
referred to in paragraph 5.2.
Each Meter Operator Party shall promptly at its own cost and expense
execute and deliver all agreements and other documentation and do all
such other acts, matters and things as may be necessary to confirm such
cessation, release and discharge.
6. REMOVAL AND CESSATION
6.1 Removal as Operator by Registrant: without prejudice to any rights
under any other agreement between any Operator and any other person
(which the Settlement System Administrator shall not be obliged to take
into account or acknowledge for the purposes of this Agreement) and
without prejudice to its accrued rights and liabilities and its rights
and liabilities which may accrue in relation to the period during which
it was Operator pursuant to this Schedule, the Registrant of any
Metering System may remove the Operator of such Metering System upon
service of a duly completed notice in the form prescribed by the
relevant Agreed Procedure to be served upon the Settlement System
Administrator (with a copy to be served upon the relevant Second Tier
Customer (if any) and such notice to take effect (unless otherwise
agreed with the Settlement System Administrator) on the date specified
in the relevant Agreed Procedure. The Settlement System Administrator
shall notify the relevant Operator and, where applicable, Host PES of
the receipt by it of a notice pursuant to this paragraph 6.1 following
such receipt.
6.2 Removal as Operator or Meter Operator Party for cause: subject.-
6.2.1 to good cause for the removal of a Meter Operator Party as (i)
Operator in respect of one or more, but not all, Metering
Systems in respect of which it is the Operator, or (i) as Meter
Operator Party in respect of which it is the Operator, having
been demonstrated to the satisfaction of the Executive
Committee; and
<PAGE>
6.2.2 as provided in paragraphs 6.3 and 6.4,
an Operator (where removal is in respect of one or more, but not all,
such Metering Systems) or, as the case may be, a Meter Operator Party
(where removal is in respect of all such Metering Systems), may at any
time be removed by:-
(a) resolution of the Executive Committee passed by a
majority of not less than 75% of the total votes of
all Committee Members which may be exercised whether
or not any such Committee Member is present in
accordance with the provisions of this Agreement; and
(b) the giving by the Executive Committee to the Operator
or, as the case may be, Meter Operator Party after
such resolution has been passed or deemed effective
(which the Executive Committee shall promptly do) of
not less than 28 days' notice in writing of such
removal.
6.3 Good cause for removal: good cause for the purposes of paragraph 6.2.1
may include the following:-
6.3.1 the failure by the Operator or Meter Operator Party as
Operator in any persistent, material respect or in any single,
major respect to perform or comply with any of the obligations
expressed to be assumed by it under this Schedule and such
default (if capable of remedy) is not remedied within a
reasonable period of time after the Executive Committee has
given notice to that Operator or, as the case may be, Meter
Operator Party of the occurrence thereof and requiring the
same to be remedied; and
6.3.2 in the case of removal as a Meter Operator Party, where a Meter
Operator Party:-
(a) is unable to pay its debts (within the
meaning of section 123(1) or (2) of the
Insolvency Act 1986) or has any voluntary
agreement proposed in relation to it under
section 1 of that Act or enters into any
scheme arrangement (other than for the
purpose of reconstruction or amalgamation
upon terms and within such period as may
previously have been approved in writing by
the Executive Committee);
(b) has a receiver (which expression shall
include an administrative receiver
within the meaning of section 29 of the
Insolvency Act 1986) of the whole or any
material part of its assets or
undertaking appointed;
<PAGE>
(c) has an administration order under section 8 of
the Insolvency Act 1986 made in relation to it;
(d) passes any resolution for winding-up other than
a resolution previously approved in writing by
the Executive Committee; or
(e) becomes subject to an order by the High Court
for winding- up.
For the purposes of paragraph (a) above the Meter
Operator Party shall not be deemed to be unable to pay
its debts if any such demand as is mentioned in the said
section is being contested in good faith by the Meter
Operator Party with recourse to all appropriate measures
and procedures.
For the avoidance of doubt, the Parties and Meter Operator Parties
hereby acknowledge and agree that a resolution of the Executive
Committee to remove the Operator as Operator or a Meter Operator Party
as Meter Operator Party shall not, of itself, constitute good cause.
6.4 Referral to the Director: an Operator or, as the case may be, a Meter
Operator Party may in writing the 28 day period referral to in
paragraph 6.2(b) refer a decision of the Executive Committee to remove
it for cause pursuant to paragraph 6.2 to the Director. Where such
referral is made in accordance with this paragraph 6.4, the removal of
such meter Operator Party as Operator or, as the case may be, Meter
Operator Party for cause shall not become effective until such time as
the Director determines, in accordance with paragraph 6.5, that good
cause exists for such removal.
6.5 Determination by Director: the Director, upon any referral being made
pursuant to paragraph 6.4, shall determine whether there is good cause
within the meaning of this paragraph 6 of the removal of such Meter
Operator Party as Operator or, as the case may be, as Meter Operator
Party, within 28 days of the receipt of the written referral of the
decision of the Executive Committee. Any decision of the Director that
there is, or is not, good cause for removal shall be final and binding
on the Parties and Meter Operator Parties. Where the Director
determined that there is not good cause for the removal of a Meter
Operator Party, the relevant decision of the Executive Committee shall
lapse and cease to be effective and such Meter Operator Party shall not
be removed as Operator or, as the case may be, Meter Operator Party by
virtue of the passing of that resolution.
<PAGE>
6.6 Notification of removal: within 7 days of any Operator or Meter Operator
Party being removed for cause in accordance with the provisions of this
paragraph 6, the Secretary shall notify all Parties, Meter Operator
Parties, relevant Second Tier Customers and the Director in accordance
with the provisions of this Agreement of the identify of the relevant
Operator or, as the case may be, Meter Operator Party and of the fact of
its removal.
6.7 Right to representation: any Party or Meter Operator Party against whom
the Executive Committee is considering exercising powers pursuant to
this paragraph 6 shall have the right to representation at any meeting
of the Executive Committee which considers the exercise of such powers.
6.8 Cessation as Operator: an Operator of any Metering System shall cease to
be the Operator therefor when the Plant or Apparatus in respect of such
Metering Equipment ceases to be connected at the relevant Site.
6.9 Cessation as Meter Operator Party: without prejudice to any rights under
any other agreement between an Operator and any other person (which the
Settlement System Administrator shall not be obliged to take into
account or acknowledge for the purposes of this Agreement) and without
prejudice to its accrued rights and liabilities and its rights and
liabilities which may accrue in relation to the period during which it
was a Meter Operator Party under this Schedule, an Operator shall cease
to be a Meter Operator Party where it has not been registered by the
Settlement System Administrator (save in the case of manifest error or
bad faith on the part of the Settlement System Administrator) as an
Operator in respect of any Metering System registered with the
Settlement System Administrator for any consecutive period of fifteen
months.
6.10 Termination of Rights and Obligations under this Agreement: a Meter
Operator Party shall only cease to be party to this Agreement in the
capacity as a Meter Operator Party in the circumstances and to the
extent specified in either paragraph 4, 5 or 6.
6.11 Rights and liabilities as Party: where any Party which is also a Meter
Operator Party resigns as, is removed as, or ceases to be, a Meter
Operator Party for the purposes of, and in accordance with, this
Schedule, such resignations, removal or cessation shall be without
prejudice to all past, present and future accrued and accruing rights
and liabilities of the Party as Party in any capacity whatsoever other
than as Meter Operator Party.
6.12 Paragraph exhaustive: the Parties and Meter Operator Parties agree that
the foregoing provisions of this paragraph 6, when read with the
provisions referred to in this paragraph, are exhaustive of cessation as
a Meter Operator Party and of cessation of rights and liabilities as a
Meter Operator Party.
<PAGE>
PART 3
METER OPERATOR'S RESPONSIBILITIES
7. OBLIGATION TO ENSURE COMPLIANT METERING EQUIPMENT
7.1 General Obligation and Commercial Boundary:
7.1.1 there must always be one and, at any point in time, no more than
one Operator for each Metering System which is registered with
the Settlement System Administrator.
7.1.2 Each Operator shall ensure there is installed a Metering System
complying with the provisions of this Schedule and Part XV of
this Agreement which meets the required levels of accuracy at
the commercial boundary at each Site for which it is the
Operator and which is as close as reasonably practicable to that
commercial boundary taking into account relevant financial
considerations. The Parties and Meter Operator Parties
acknowledge and agree that Metering Equipment at Power Stations
either existing or under construction at the Effective Date
might not be situated at the commercial boundary. In such cases,
loss adjustment factors may be applied after the Effective Date
subject to the it being demonstrated to the reasonable
satisfaction of the Settlement System Administrator that such
loss adjustment factors have been correctly derived.
7.1.3 To the extent that the required levels of accuracy referred to
in paragraph 7.1.2 depend upon associated current and voltage
transforms which are not in the ownership or control of the
relevant Operator, the relevant Equipment Owner agrees to take
reasonable steps to assist the Operator in complying with its
obligations under paragraph 7.1.2 by the maintenance and repair
of such current and voltage transformers in accordance with the
provisions of this Schedule provided that this paragraph 7.1.3
shall be without prejudice to any right to charge for the same
and provided further that an Equipment Owner shall not be
required by this paragraph 7.1.3 to take steps which would cause
it to be in breach of its obligations under its License, its
Nuclear Site License (as defined in paragraph 21.9(a), the Grid
Code or any Distribution Code.
7.2 Description of Metering Equipment:
7.2.1 Metering Equipment and its component parts shall comply, as a
minimum, with the requirements referred to or set out in any
relevant Code of Practice or shall be the subject of, and comply
with, a dispensation agreed in accordance with paragraph 14.
<PAGE>
7.2.2 Metering Equipment comprising a Metering System shall use such
communication protocols selected, with the approval of the
Settlement System Administrator, as appropriate for that
Metering Equipment from a list of communication protocols
approved and maintained from time to time by the Settlement
System Administrator.
7.3 Accuracy of Metering Equipment:
7.3.1 the Metering Equipment comprising any Metering System shall be
accurate within prescribed limits for such Metering Equipment
referred to or set out in the relevant Code of Practice except
only in the case where such Metering Equipment is the subject
of, and complies with, a dispensation relevant to those
prescribed limits agreed in accordance with paragraph 14.
7.3.2 The accuracy limits referred to in the relevant Code of Practice
shall be applied after adjustments have been made to Metering
Equipment to compensate for any errors due to measuring
transformers and connections thereto. Beyond the ranges
specified in the relevant Code of Practice and power factors
other than unity or zero (as the case may be) limits of accuracy
will depend on the characteristics of the individual meters and
measuring transformers specified for the Metering Equipment.
Such levels of accuracy will, in the event of any uncertainty or
dispute, be specified by the Executive Committee.
7.4 Calibration of Metering Equipment: each Operator shall ensure that all
Metering Equipment which is registered with the Settlement System
Administrator pursuant to this Agreement and for which it is Operator
pursuant to this Schedule shall be calibrated in order to meet the
accuracy requirements referred to in paragraph 7.3.1 and otherwise in
accordance with the relevant Code of Practice or, where appropriate, any
relevant dispensation agreed in accordance with paragraph 14. Subject to
paragraph 21, the Settlement System Administrator and the Pool Auditor
shall be granted access to all such Metering Equipment and any other
Plant or Apparatus on any Site in order to inspect the basis of any
adjustments made to Metering Equipment.
8. MAINTENANCE OF METERING EQUIPMENT
8.1 Proper order: each Operator shall at its own cost and expense (but
without prejudice to its right to charge any other person for such
service pursuant to another agreement or arrangement) keep in good
working order, repair and condition all Metering Equipment in respect of
which it is the Operator to the extent necessary to allow the correct
registration, recording and transmission of the requisite details of the
quantity of Active Energy and/or Reactive Energy measured by the
relevant Meter.
8.2 Inspection and Testing:
<PAGE>
8.2.1 no less frequently than such period as may be specified in the
relevant Code of Practice each Operator shall carry out a
routine test of the accuracy of all Metering Equipment in
respect of which it is the Operator. The Operator shall also
carry out a test of the accuracy of all Metering Equipment in
respect of which it is the Operator and which replaces defective
or inaccurate Metering Equipment as soon as is reasonably
practicable after its installation. Such Operator will give the
Settlement System Administrator and the Registrant at least 15
days' prior written notice of the date, time, place and nature
of every such test and the Settlement System Administrator and
Host PES and the Registrant shall have the right to attend such
test should it so require. Any such test as envisaged in this
paragraph 8.2.1 shall comply with the relevant Code of Practice.
8.2.2 If either:-
(a) the Settlement System Administrator has
reason to believe that the Metering
Equipment which an Operator is required to
maintain for the purposes of this Schedule
is not performing within the prescribed
limits of accuracy referred to in paragraph
7.3.1; or
(b) such Operator or any other Party or Meter
Operator Party has reason to believe there
is any such failure to so perform, then, in
the case of (b), such Operator, such other
Party or such Meter Operator Party shall
notify the Settlement System Administrator,
the Registrant of the relevant Metering
System and the Host PES (if any) and, in any
case, the Settlement System Administrator:-
(i) shall (if so requested by any Party or
Meter Operator Party) and (in any other
case) may, without giving notice to the
relevant Operator or Registrant, inspect
such Metering Equipment and make such
tests as the Settlement System
Administrator shall deem necessary to
determine its accuracy; or
(ii) in any other circumstances require the
relevant Operator promptly to test the
accuracy of the same but in any event
within 24 hours of receiving
notification of such requirement
pursuant to this paragraph 8.2.2,
whereupon the relevant Operator shall
carry out such test. Such test shall
comply with the relevant Code of
Practice and shall take place in the
presence of the Settlement System
Administrator, if it so requires.
<PAGE>
Further, if an Operator has reason to believe
that the Metering Equipment in respect of which
it is the Operator is incorrectly recording data
for any reason, it shall notify the Settlement
System Administrator, the Registrant in respect
of the relevant Metering System and the Host PES
(if any.
8.2.3 Recovery of costs for non-routine testing (1): subject to
paragraph 8.3.4, the costs of any such test referred to in this
paragraph 8.2 shall be borne by the Operator responsible for the
maintenance of the relevant Metering Equipment (but without
prejudice to its right to charge any other person for such
service pursuant to another agreement or arrangement), save that
the Settlement System Administrator shall bear the costs of its
nominee's attendance thereat (subject to its right to recover
the same through its charges).
8.2.4 Recovery of costs for non-routine testing (2): where any
Metering Equipment passes all inspections and tests required
pursuant to paragraph 8.2.2 or the test is in respect of
Metering Equipment where the Operator is the deemed Operator
pursuant to Clause 60.4.4, the costs of such inspections and
test shall, in the case of paragraph (a) of that paragraph, be
borne by the Settlement System Administrator (subject to its
right to recover the same through its charges) and, in the case
of paragraph 8.2.2(i) where a test is required by another Party
or Meter Operator Party, be borne by such other Party or Meter
Operator Party which shall reimburse the relevant Operator its
costs on demand.
8.3 Sealing: Metering Equipment shall be as secure as is practicable in all
the circumstances and for this purpose:-
(a) all Metering Equipment shall comply with the relevant Agreed
Procedure; and
(b) the Executive Committee and the Settlement System Administrator
shall regularly review Agreed Procedures for security
arrangements in relation to Metering Equipment.
8.4 Defective Metering Equipment: it at any time any Metering Equipment or
any party thereof is destroyed or damaged or otherwise ceases to
function, or is found to be outside the prescribed limits of accuracy
referred to in paragraph 7.3.1, the Operator therefor shall, subject to
compliance with its obligations under paragraph 8.3, promptly adjust,
renew or repair the same or replace any defective component so as to
ensure that the relevant Metering Equipment is back in service and
operating within the prescribed limits of accuracy as quickly as is
reasonably practicable in all the circumstances.
9. MAINTENANCE OF RECORDS AND PROVISION OF INFORMATION
<PAGE>
9.1 Information:
9.1.1 an Operator shall inform the Settlement System Administrator
of all relevant information relating to the Metering Equipment
in respect of which it is the Operator, including any new or
substituted Metering Equipment, and as may be require the
relevant Agreed Procedure.
9.1.2 All Meter Operator Parties shall give to the Settlement System
Administrator all such information regarding Metering
Equipment as the Settlement Systems Administrator shall
reasonably require for the proper functioning of the
Settlement System including information regarding the dates
and time periods for installation of new Metering Equipment
and the dates and periods when Metering Equipment is out of
service.
9.2 Records: each Operator shall maintain a record in relation to each
Metering System for which it is the Operator detailing all relevant
matters as may be required by the relevant Code of Practice relating to
the calibration of the Metering Equipment comprising each such Metering
System including the dates and results of any tests, readings,
adjustment or inspections carried out and the dates on which any seal
was applied or broken, the reason for any seal being broken and the
persons attending any such tests, readings, inspections or sealings.
Such records shall also include any other details as may be reasonably
required by the Settlement System Administrator. Each Operator shall
pass such records or copies of the same to its successor as Operator in
relation to any Metering Equipment. Any such records shall be complete
and accurate and retained for the life of the relevant item of Metering
Equipment. The Registrant in respect of any Metering Equipment shall be
entitled to receive copies of all such records free of charge.
PART 4
RIGHTS AND RESPONSIBILITIES RELATING TO
THE SETTLEMENT SYSTEM ADMINISTRATOR
10. INSPECTIONS AND READINGS
10.1 Inspections: the Settlement System Administrator shall procure that all
Metering Equipment comprising any Metering System which is registered
with it for the purpose of the Settlement System is inspected and read
by it or on its behalf not less than once in every three months for
general and reconciliation purposes and shall give the Registrant and
Operator notice thereof in accordance with the relevant Agreed
Procedure.
10.2 Written reports: the Settlement System Administrator and the Operator
shall keep written reports of all such inspections and readings as are
referred to in paragraph 10.1 in accordance with Clause 29.8 and the
Settlement System Administrator shall provide copies in accordance with
the relevant Agreed Procedure of such written reports to each Registrant
whose Consumer Metered Demand determined in accordance with the Pool
Rules is calculated by the Settlement System Administrator using data
from such Metering System.
<PAGE>
11. DATA COLLECTION
11.1 Collection, Retrieval, Validation and Estimation of Data: the
Settlement System Administrator will notify the relevant Registrant,
Operator and Host PES where, as determined by the relevant Agreed
Procedure, it has reasonable grounds to believe or has established that
data required from any Metering Equipment for the functioning of the
Settlement System in accordance with this Agreement is incomplete,
inaccurate or has relevant Metering Equipment and data which the
Settlement System Administrator believes or has established is
incomplete, inaccurate or has not been received. The Settlement System
Administrator shall investigate and remedy the defect in accordance
with the relevant Agreed Procedure taking into account the following
priorities in the following order:-
(a) the need to obtain accurate data;
(b) the need to apply verification procedures;
(c) the need to produce edited or substitute date where it is
incorrect or unavailable.
subject always to the obligations set out in Clause 40.1.2.
11.2 Corrected, completed or received data: once the Settlement System
Administrator has remedied the defect identified in accordance with
paragraph 11.1, it will notify the relevant Registrant, Operator and
Host PES:-
(a) in the case of data which it has established was inaccurate, of
the validated data; and
(b) in the case of date which it has established is incomplete or
which has not been received, of the edited or substitute data,
in each case established according to the relevant Agreed Procedure.
12. POLICING BY THE SETTLEMENT SYSTEM ADMINISTRATOR
Policing: the Settlement System Administrator shall make or shall
procure arrangements for spot visits to metering sites by suitably
qualified inspectors in order to monitor compliance by Registrants and
Operators of their obligations under Part XV of this Agreement and this
Schedule, the appropriate Code of Practice and the Agreed Procedures.
the sites chosen for, and the conduct of, such policing shall be
determined by the Settlement System Administrator. The extent of
policing shall be in accordance with instructions given to the
Settlement System Administrator from time to time by the Executive
Committee subject to the provisions of Clause 31.3.2.
<PAGE>
PART 5
CODES OF PRACTICE AND DISPENSATIONS
13. CODES OF PRACTICE
13.1 Relevant Code of Practice: subject to paragraph 13.2 and subject to the
transitional arrangements described in paragraph 13.4, the relevant
Code of Practice in respect of Metering Equipment shall be determined
by reference to the version of the Code of Practice which is expressed
to be applicable to that Metering Equipment at the time that the
Metering System comprised therein is registered with the Settlement
System Administrator for the first time, and such Metering Equipment
shall only be required, save as provided in paragraph 13.2, to comply
with such Code of Practice, and not with any Code of Practice which in
any respect later amends, modifies or supersedes such Code of Practice,
and references to the relevant Code of Practice in Part XV of this
Agreement and this Schedule shall be construed accordingly.
13.2 Saving: notwithstanding the provisions of paragraph 13.1:
(a) without prejudice to sub-paragraphs (b) and (c) below, FMS
Metering Equipment which is installed, or in the course of being
installed, on the FMS Date, shall only be required to comply
with the applicable FMS Code of Practice with which it would
have been required to comply were this paragraph 13 not in
effect;
(b) where any material change is made to the Metering Equipment
comprising a Metering System, details of the changes made shall
be given immediately by the Operator in respect of that Metering
System to the Settlement System Administrator (with a copy to
the Registrant of that Metering System) who shall note the same
on the Register pursuant to Clause 60.5. The noting of that
change on the Register shall be deemed (but no other entry made
on the Register shall be deemed) to constitute a registration of
that Metering System comprised in that Metering Equipment for
the purposes of paragraph 13.1, and the Code of Practice current
at the time of that deemed new registration shall, from that
time, be the relevant Code of Practice in respect of that
Metering Equipment;
<PAGE>
(c) in sub-paragraph (b) above, the term "material change" shall
mean a change to the Metering Equipment other than:-
(i) a change by way of repair, modification or
replacement of any component which is not in the
judgment of the Operator, acting as a reasonable
Operator in all the circumstances, a substantial part
of the Metering Equipment (a "Substantial Part"); and
(ii) a change to another part or other parts of the
Metering Equipment, each of which is not of itself
(and where taken together with other such changes,
these changes together are not) a Substantial Part
(determined as in (i) above) of the Metering
Equipment, necessitated in the judgment of the
Operator, acting as a reasonable Operator in all the
circumstances, by any change under (i) above,
in each case even where an enhanced or equivalent component is
used for the repair, modification or replacement rather than
an identical component; and
(d) Metering Equipment shall at all times comply with the latest
version of the Code(s) of Practice which contains the
requirements for the calibration, testing and commissioning of
Metering Equipment.
13.3 Record of Codes of Practice: the Executive Committee shall records in
the Synopsis of Metering Codes each Code of Practice and the date at
which that Code becomes effective as the relevant Code of Practice in
respect of Metering Equipment comprising a Metering System registered
or, in accordance with paragraph 13.2(b), re-registered at that date or
thereafter.
13.4 FMS Codes of Practice: on or after the FMS Trading Date and in relation
to any period on or after this date any relevant Code of Practice for
the purposes of this Agreement shall be an FMS Code of Practice.
14. DISPENSATIONS
14.1 Dispensations:
(a) if for financial reasons of practicality a Metering System or
Metering Equipment does not comply with some or all of the
requirements of the relevant Code of Practice or the
requirements in relation to the commercial boundary of paragraph
7.1.2, the Registrant or potential Registrant of such Metering
System or, as the case may be, Operator or Potential Operator of
such Metering Equipment with the consent of such Registrant or,
in the case of Potential Operators only, such potential
Registrant, may make an application to the Executive Committee
for a dispensation from such requirements. The Executive
Committee shall
<PAGE>
consider and agree, on such conditions (if any) as it shall deem
fit, or dismiss such application in accordance with the relevant
Agreed Procedure and this paragraph 14.
(b) The Executive Committee shall have the right to agree from time
to time, in accordance with the relevant Agreed Procedure,
dispensations from the requirements referred to in sub-paragraph
(a), on such conditions (if any) as it shall deem fit, attaching
generally to any item of Metering Equipment ("Generic
Dispensations"). Generic Dispensations may be agreed upon the
application of a Party or Meter Operator Party or be initiated
by the Executive Committee at its discretion.
(c) Before agreeing any dispensation (including any Generic
Dispensation), the Executive Committee shall be obliged to seek
and to obtain:-
(i) in the case of a dispensation from a Code of
Practice, the approval and agreement of those
Parties whose approval and agreement is required in
accordance with the definition of Code of Practice
in respect of an amendment to or substitution of
the Code(s) of Practice from which a dispensation
is sought;
(ii) the prior written consent (not to be unreasonably
withheld or delayed) of the Settlement System
Administrator where applicable in accordance with
Clause 6.3;
(iii) in the case of a dispensation from the requirements
of paragraph 7.1.2 relating to the commercial
boundary, the prior written consent (not to be
unreasonably withheld or delayed) of the Grid
Operator where applicable in accordance with Clause
6.5; and
(iv) in the case of a dispensation from the requirements
of paragraph 7.1.2 relating to the commercial
boundary, the prior written consent (not to be
unreasonably withheld or delayed) of the Ancillary
Services Provider where applicable in accordance
with Clause 6.6.
Where, in accordance with (i) above, the amendment of the
relevant Code of Practice would require the approval of the
Suppliers in separate general meeting such approval shall be
deemed to be given by a resolution of the Executive Committee
to agree the relevant dispensation, save where any
representative of any Supplier elects, upon that resolution,
to refer the matter to a separate general meeting of Suppliers
in which case, such meeting shall be convened and held in
accordance with the provisions of Clause 13.2, and shall
determine by resolution whether or not the approval and
agreement of Suppliers to that dispensation be given in
accordance with this paragraph 14.1.
<PAGE>
14.2 Records of dispensations: the Executive Committee shall maintain, in
accordance with the relevant Agreed Procedure, an up-to-date record of
all dispensations agreed pursuant to this paragraph 14. The Executive
Committee shall provide a duplicate copy of any such record to the
Settlement System Administrator and shall provide the Settlement System
Administrator with details of all amendments made to such records as
soon as reasonably possible after the making of such amendment.
14.3 Existing dispensations: the Parties acknowledge that, prior to 1st
April 1993, dispensations (within the meaning of this paragraph 14)
were agreed by the Executive Committee as if this paragraph 14 were at
such time in full force and effect and agree that the record identified
as such as at 1st April, 1993 further agree that such dispensation
shall be deemed, with effect from the date at which they were agreed,
to have been effectively agreed in accordance with the provisions of
this paragraph 14 (as formerly incorporated into this Agreement as
Clause 60.10) as in force as at 1st April, 1993. This paragraph 14
shall be without prejudice to any claim an Operator or person acting as
Operator:-
(i) may have as at 31st March, 1993 against a Supplier arising out
of any Agreement between such Operator (or such person acting
as Operator) and such Supplier or out of any representation;
or
(ii) may have against a Supplier arising out of facts an
circumstances in existence prior to or as at 31st March, 1993,
which relates to the installation by such Operator or such person
acting as Operator of any Metering System installed or being installed
as at the FMS Date or the installation of which was commenced prior to
the FMS Date, and which relates to a Metering System which, by virtue
of a dispensation granted pursuant to this paragraph 14, is not
required by that Supplier.
14.4 Appeals: any dispensation from the requirements of a Code of Practice
or from the requirements relating to the commercial boundary of
paragraph 7.1.2 agreed in accordance with this paragraph 14 shall be
capable of being appealed in accordance with the provisions of
paragraph 19.1, provided that no dispensation shall be considered to be
agreed in accordance with this paragraph upon any appeal being granted
where the approval and agreement of the relevant Parties as referred to
in paragraph 14.1(c) has not been obtained.
PART 6
FURTHER RIGHTS OF OPERATORS
15. OWNERSHIP AND USE OF DATA
<PAGE>
15.1 Ownership of data: the Registrant of any Metering System shall own the
data acquired therefrom provided that (and each Registrant hereby
expressly agrees and acknowledges that) a Second Tier Customer of that
Registrant in respect of which such data is generated shall be entitled
at all times without charge by the Registrant to access, obtain and use
such data and provided further that:-
(i) such access, obtaining or use, or the method of
such access, obtaining or use, does not interfere
with the operation of Settlement;
(ii) nothing in this paragraph 15.1 shall require the
Registrant actively to provide such data to such
Second Tier Customer or so to provide such data
free of charge; or
(iii) such access shall not be by using any
communications link used by the Settlement System
Administrator for the purposes of Clause 60.6
without the prior written consent of the Settlement
System Administrator.
15.2 Use of data: the Settlement System Administrator is hereby authorised
to use all data which is owned by the Registrant pursuant to paragraph
15.1 as may be permitted pursuant to this Agreement, and the Settlement
System Administrator may only release such data to others to the extent
set out in this Agreement. It is hereby expressly agreed that the
Settlement System Administrator is permitted to and shall against
request and payment of a reasonably charge therefor release to a Second
Tier Customer such data relating to it as is referred to in paragraph
15.1.
15.3 Communications Equipment use: Communications Equipment need not be
dedicated exclusively to the provisions of data to the Settlement
System Administrator for the purposes of Settlement provided that any
other use shall not interfere at any time with the operation of
Settlement and subject also to the relevant provisions (if any) in the
Tariff.
16. CHANGES OF SUPPLIERS
16.1 Change of Supplier: where notice is served on the Settlement System
Administrator in the form prescribed by the relevant Agreed Procedure
by a proposed Registrant of an existing Site which is the point of
supply of a Second Tier Supplier or Second Tier Customer, the proposed
Registrant and the Operator or proposed Operator (where the existing
Operator is to be replaced shall confirm that the Metering System
required for the purposes of this Schedule and Part XV of this
Agreement will be installed and operational at the Site by the date
specified in the notice as that on which the notice will take effect.
If the necessary Metering System will not be so installed and
operational by such date and a Second Tier Agent has been directed to
collect, aggregate, adjust and transmit the ate from such Metering
System, the Registrant and the Operator
<PAGE>
shall, unless otherwise agreed between them and the relevant Host PES
in respect of the relevant Metering System or, where there is no such
Host PES, the Executive Committee, comply with the provisions of
paragraph 16.2.
16.2 Procedure: where this paragraph 16.2 has effect pursuant to the
provisions of paragraph 16.1:-
(i) the Registrant and the relevant Host PES in respect of the
relevant Metering System, or where there is no such relevant
Host PES, the Executive Committee, shall agree forty eight
half-hourly values for each day from the expiry of the notice
until the relevant Metering System is installed and operational
and the Operator in respect of that Metering System shall give
all reasonable assistance to the Registrant and Host PES to
enable them to reach such an agreement;
(ii) the Registrant shall inform the Settlement System Administrator
of the forty eight half-hourly values for each such day within 7
days of the day to which they relate. The Settlement System
Administrator shall take such values into account for the
purpose of Settlement and the Registrant and the relevant Host
PES in respect of such Metering System shall be bound to accept
such values for the purposes of the Pool Rules until the
relevant Metering System is installed, operational an
registered; and
(iii) as soon as practicable after the Operator has installed the
Metering System at the relevant Site, the Operator shall notify
the Settlement System Administrator, the Registrant therefor and
the relevant Host PES in respect of such Metering System or,
where there is not such relevant Host PES, the Executive
Committee, in writing. As soon as reasonably practicable
thereafter, the Settlement System Administrator shall commence
using the data collected from that Metering System for the
purposes of Settlement and shall inform the Registrant, the
Operator and the relevant Host PES in respect of such Metering
System and, where there is no such relevant Host PES, the
Executive Committee, of the date on which it commenced doing so.
17. ATTENDANCE AT MEETINGS AND RIGHTS OF REPRESENTATION
17.1 Attendance at Pool Members meetings:
17.1.1 any notice convening any general meeting of Pool Members
including any adjournment thereof in accordance with Clause 9.5
shall be additionally given to all Meter Operator Parties and be
given in accordance with the provisions of that Clause. The
accidental omission to give notice of a meeting to any Meter
Operator Party entitled to receive notice shall not invalidate
the proceedings at that meeting.
<PAGE>
17.1.2 Each Meter Operator Party (or its duly appointed representative)
shall have the right to attend at each general meeting of Pool
Members and shall have the right to speak (but not to vote)
thereat.
17.1.3 The Secretary shall circulate any minutes circulated in
accordance with Clause 10.10 additionally to Meter Operator
Parties in accordance with the provisions thereof.
17.2 Attendance at meetings of the Executive Committee, and sub-committees
and sub- groups of the Executive Committee:
17.2.1 one representative for all Meter Operator Parties selected in
accordance with paragraph 17.3 (a "Meter Operator Party
Representative") shall be entitled to attend and speak (but not
to vote) at meetings of the Executive Committee or at meetings of
any sub-committee or sub-group of the Executive Committee on
behalf of all Meter Operator Parties and shall be entitled to
appoint from time to time alternates and delegates to assist him
in those functions, where matters directly concerning the
functions, duties or responsibilities of Operators, individually
or collectively, have been identified or advised in the agenda
for that meeting to be circulated pursuant to Clause 18.1.4 or,
as the case may be, Clause 20.1.
17.2.2 Notice of meetings of the Executive Committee or meetings of any
sub- committees or sub-group at which the relevant Meter
Operator Party Representative is entitled to attend shall be
given to him, together with all prescribed accompanying
documentation and agendas, in accordance with Clause 18.1, as
the case may be, Clause 20.1. The Meter Operator Party
Representative shall as soon as is reasonably practicable copy
such notice together with such accompanying documentation to all
Meter Operator Parties.
17.2.3 The relevant Meter Operator Party Representative shall be
entitled to receive copies of all minutes of meetings which he
was entitled to attend and which the Secretary is required to
circulate in accordance with Clause 18.1.6 or, as the case may
be, Clause 20.1 in accordance with the provisions thereof. Such
Meter Operator Party Representative, if he attended the relevant
meeting, shall notify his approval or disapproval of the minutes
to the Secretary no later than ten working days after receipt
thereof and, if he fails to do so, he shall be deemed to have
approved the same.
17.3 Appointment of representative for Meter Operators Parties: the Director
shall nominate from time to time a representative who shall represent
the collective and individual interests of Meter Operator parties under
this Agreement. Such
<PAGE>
representative shall be drawn from those Meter Operator Parties which
are not represented at the Executive Committee in any other capacity
pursuant to the provisions of this Agreement.
17.4 Class representation: the Executive Committee or any sub-committee or
sub-group thereof shall be entitled to assume that any Meter Operator
Party Representative represents the interests of Meter Operator Parties
as a class and, where appropriate, represents any affected specific
individual interests and, in considering matters or exercising its
powers or discretion under this Agreement, the Executive Committee or
any sub-committee or sub-group thereof shall not be obliged to seek,
nor to take account of, the views, comments or consent or otherwise of
any other Meter Operator Party.
PART 7
FAILURE TO COMPLY AND DISPUTES
18. FAILURE TO COMPLY WITH OBLIGATIONS
Defective Metering Equipment: subject to the provisions of Clause
60.4.9, in the event that an Operator cannot or does not comply with
its obligations to repair, adjust or replace or renew any defective
component pursuant to paragraph 8.4, the Settlement System
Administrator shall have the right to carry out or procure there is
carried out such repair, adjustment, replacement or renewal and to
recover its own costs, expenses and profit thereon from such Operator
forthwith on demand or, where the Settlement System Administrator,
having taken reasonable steps to recover such costs, expenses and
profit from the relevant Operator is unable so to recover within a
reasonable period of time, from the Registrant in respect of that
Operator subject thereto forthwith on demand (such profit to be mutatis
mutandis, based on the principles set out in the Accounting Procedure).
19. DISPUTES
19.1 Disputes which may involve a Meter Operator Party: any dispute
regarding Metering Equipment (other than a dispute referred to in
Clause 60.11.1 or one arising out of any decision made pursuant to
paragraph 6.2, which in the latter case shall be determined in
accordance with the provisions of that paragraph) shall be referred to
the Executive Committee. If any Party or Meter Operator Party is not
satisfied with the decision of the Executive Committee, the matter may
be referred by such Party or Meter Operator Party to arbitration in
accordance with Clause 83 of this Agreement as incorporated into this
Schedule by paragraph 24.
19.2 Tests to determine disputes: any testing of Metering Equipment required
to settle any dispute (including a dispute under Clause 60.11.1) will,
prima facie, be carried
<PAGE>
out by the relevant Operator on the relevant Metering Equipment mounted
in its operational position in the presence of the Settlement System
Administrator acting on behalf of the Executive Committee and in the
presence of the Host PES. All testing will be carried out in accordance
with the relevant dispensation agreed in accordance with this Schedule.
The test performance of any Metering Equipment shall be compared with
calibrated test equipment by one of the following methods:-
(a) injecting into the measuring circuits (i.e., excluding the
primary current and voltage transformers) and comparing the
readings or records over such period as may be required by the
relevant dispensation agreed in accordance with the Schedule
to ensure a reliable comparison; or
(b) where practicable, operating the calibrated test equipment
from the same primary current and voltage transformers as the
Metering Equipment under operating conditions. The readings or
recordings of the Metering Equipment and the calibrated test
equipment shall be compared over such period as may be
required by the relevant Code of Practice or, where
applicable, any relevant dispensation agreed in accordance
with this Schedule; or
(c) in exceptional circumstances, such other method as may be
specified by the Settlement System Administrator.
19.3 Laboratory tests: Metering Equipment which fails any test whilst in its
operational position shall be tested under laboratory conditions in
accordance with the relevant Code of Practice.
19.4 Witnesses: No more than two persons representing all interested Parties
or Meter Operator Parties nominated by the Executive Committee
(including the Host PES) in addition to the Settlement Systems
Administrator will be entitled to witness tests taken as a result of a
dispute, including tests confirming the calibration of test equipment,
or inspect evidence of valid calibration, or valid calibration
certificates, as appropriate.
19.5 Saving: It is hereby expressly acknowledged and agreed by the Parties
that the resolution of any dispute referred to in Clause 60.11.1 shall
in all cases be without prejudice to the bringing or pursuing of any
claim, by or against, or the resolving of any issue between any one or
more of such Parties or any other Party arising out of the same facts
or circumstances, or facts or circumstances incidental to the facts and
circumstances giving rise to such dispute or upon the basis of which
such dispute has been resolved, in favor of, or against, a Meter
Operator Party or Meter Operator Parties.
19.6 Release of data: Upon the request of any Party or Meter Operator Party
which is a party to a dispute referred to in paragraph 19.1 any relevant
data derived from any Metering System may be submitted by the Settlement
System Administrator to the body then having jurisdiction in respect of
the relevant dispute for the purposes of resolving such dispute.
<PAGE>
PART 8
LIMITATION OF LIABILITY
20. LIMITATION OF LIABILITY
20.1 Limitation of liability: Subject to paragraph 20.2 and save where any
provision of this Agreement provides for an indemnity, each Party and
each Meter Operator Party agrees and acknowledges that no Party nor
Meter Operator Party (excluding for this purpose the Settlement System
Administrator) (in this paragraph 20, the "Party Liable") or any of its
officers, employees or agents shall be liable to any of the other
Parties or Meter Operator Parties for loss arising from any breach of
this Schedule or of this Agreement other than for loss directly
resulting from such breach and which at the date of this Agreement was
reasonably foreseeable as not unlikely to occur in the ordinary course
of events from such breach in respect of:
20.1.1 physical damage to the property of any of the other Parties or
Meter Operator Parties or its or their respective officers,
employees or agents; and/or
20.1.2 the liability of any such other Party or Meter Operator Party
to any other person for loss in respect of physical damage to
the property or any other person.
20.2 Death and personal injury: Nothing in this Schedule or this Agreement
shall exclude or limit the liability of the Party Liable for death or
personal injury resulting from the negligence of the Party Liable or
any of its officers, employees or agents and the Party Liable shall
indemnify and keep indemnified each of the other Parties or Meter
Operator Parties, its officers, employees or agents from and against
all such and any loss or liability which any such other Party or Meter
Operator Party may suffer or incur by reason of any claim on account of
death or personal injury resulting from the negligence of the Party
Liable or any of its officers, employees or agents.
20.3 Exclusion of certain types of loss: Subject to paragraph 20.2 and save
where any provision of this Agreement provides for an indemnity,
neither the Party Liable nor any of its officers, employees or agents
shall in any circumstances whatsoever be liable to any of the other
Parties or Meter Operator Parties for:
20.3.1 any loss of profit, loss of revenue, loss of use, loss of
contract or loss of goodwill; or
<PAGE>
20.3.2 any indirect or consequential loss; or
20.3.3 loss resulting from the liability of any other Party or Meter
Operator Party to any other person howsoever and whensoever
arising save as provided in paragraphs 20.1.2 and 20.2.
20.4 Trust: Each Party and each Meter Operator Party acknowledges and agrees
that each of the other Parties and Meter Operator Parties holds the
benefit of Clauses 20.1, 20.2 and 20.3 of this Schedule for itself and
as trustee and agent for its officers, employees and agents.
20.5 Survival: Each of paragraphs 20.1, 20.2, 20.3 and 20.4 shall:
20.5.1 be constructed as a separate and severable contract term, and
if one or more of such paragraphs is held to be invalid,
unlawful or otherwise unenforceable the other or others of
such paragraphs shall remain in full force and effect and
shall continue to bind the Parties and the Meter Operator
Parties; and
20.5.2 survive the termination of this Agreement.
20.6 Saving: For the avoidance of doubt, nothing in this Part 8 shall
prevent or restrict any Party or Meter Operator Party enforcing any
obligations (including suing for a debt) owed to it under or pursuant
to this Schedule or this Agreement.
20.7 Full negotiation: Each Party and each Meter Operator Party acknowledges
and agrees that the foregoing provisions of this Part 8 have been the
subject of discussion and negotiation and are fair and reasonable
having regard to the circumstances as at the date this Schedule came
into effect.
PART 9
ACCESS
21. ACCESS
21.1 Access to Party's and Meter Operator Party's property: Each Party and
Meter Operator Party hereby agrees to grant to any Invitee and, in the
case of a Meter Operator Party, the Registrant of the Metering System
in respect of the Metering System of which it is Operator, and, in the
case of a Registrant of a Metering System, the Meter Operator Party
which is the Operator in respect of that Metering System:
(a) full right during the currency of this Agreement to enter upon
and through and remain upon, or do any other act contemplated by
this Schedule 21which would otherwise constitute a trespass
upon, any part of such Party's or, as the case may be, Meter
Operator Party's, property; and
<PAGE>
(b) in the case of the Operator or the Settlement System
Administrator, full right to remove any part of Metering
Equipment forming part of such property to a laboratory or
test house in accordance with the provisions of this Schedule,
provided always that such access rights conferred by or pursuant to
this paragraph shall be granted only to the extent necessary for the
purposes of this Schedule and shall be subject to the other provisions
of this paragraph 21.
21.2 Invitees: An Invitee for the purposes of this paragraph 21 shall
comprise any one or more of the following:
(i) the Settlement System Administrator acting through any
reasonably nominated employees, agent or contractors;
(ii) the Executive Committee acting through any reasonably nominated
persons;
(iii) the Equipment Owner for the purposes only of fulfilling its
obligations under paragraph 7.1.3;
(iv) the Pool Auditor acting through any partner or employee;
(v) the auditor carrying out the Scheduling and Despatch Review
acting through any partner or employee; and
(vi) the Ancillary Service Provider acting through any reasonably
nominated employees, agents or contractors.
21.3 Access to property of Second Tier Customers and Third Parties: The
registrant of a Metering System and the Meter Operator Party which is
the Operator or Potential Operator of that Metering System hereby
jointly and severally agree to use all reasonable endeavors to, and to
cooperate with each other for the purpose of procuring for the benefit
of each Invitee and for each other:
(a) full right to enter upon and through and remain upon, or do
any other act contemplated by this Schedule which would
otherwise constitute a trespass upon, any part of the
property:
(i) of the Second Tier Customer in respect of which that
Registrant is the Supplier; and
<PAGE>
(ii) of any other person which is not a party to this
Agreement (the "Third Party") but the exercise of
whose rights would prevent, in relation to such
Second Tier Customer, the Registrant, the Meter
Operator Party or any Invitee from performing its
obligations under this Schedule or this Agreement and
the existence of whose rights is known to, or ought
reasonably be know to, the Registrant, or as the case
may be the Meter Operator Party; and
(b) in the case of the Operator or the Settlement System
Administrator, full right to remove all or any part of
Metering Equipment forming part of such property to a
laboratory or test house in accordance with the provisions of
this Schedule,
provided always that such access rights conferred by or pursuant to
this paragraph shall be granted only to the extent necessary for the
purposes of this Schedule and shall be subject to the other provisions
of this paragraph 21.
21.4 Failure to procure access: If, after having used all such reasonable
endeavors to procure access rights in accordance with this paragraph 21
in respect of a Second Tier Customer or Third Party referred to in
paragraph 21.3, a Registrant and/or Meter Operator Party have been
unable to procure any such rights the Registrant:
(i) hereby undertakes not to make any future supplies to such
Second Tier Customer at the Site in respect of which such
access rights are required until such access rights have been
obtained and if supplying such Second Tier Customer at such
Site to cease forthwith to supply such Second Tier Customer at
that Site; and
(ii) shall notify the Settlement System Administrator in accordance
with the relevant Agreed Procedure of that fact.
The Settlement System Administrator shall be entitled to assume that
the consents of any Third Parties shall have been obtained in
accordance with the provisions of this paragraph until such time as it
is fixed with notice to the contrary.
21.5 Right of access: The right of access provided for in paragraphs 21.1
and 21.3 shall include the right to bring on to such Meter Operator
Party's, Party's, Second Tier Customer's or Third Party's property such
vehicles, plant, machinery and maintenance or other materials as shall
be reasonably necessary for the purposes of this Schedule.
21.6 Authorisation: Each Meter Operator Party or, as the case may be, Party
shall ensure that any particular authorisation or clearance which is
required to be given to ensure access to any Invitee, Registrant or
Meter Operator Party in accordance with this paragraph is available on
arrival.
<PAGE>
21.7 Safety: Subject to the right of the Settlement System Administrator to
inspect without notice pursuant to paragraph 8.2.2, each Meter Operator
Party or, as the case may be, Party shall procure that all reasonable
arrangements and provisions are made and/or revised from time to time
as and when necessary or desirable to facilitate the safe exercise of
any necessary or desirable to facilitate the safe exercise of any right
of access granted pursuant to paragraph 16.1 or 16.3 with the minimum
of disruption, disturbance and inconvenience. Such arrangements and
provisions may, to the extent that the same are reasonable, limit or
restrict the exercise of such right of access and/or provide for any
Meter Operator Party or Party to make directions or regulations from
time to time in relation to a specified matter. Matters to be covered
by such arrangements and/or provisions include:
(i) the identification of any relevant Metering Equipment;
(ii) the particular access routes applicable to the land in question
having particular regard for the weight and size limits on those
routes;
(iii) any limitations on times of exercise of the right of access;
(iv) any requirements as to prior notification and as to authorisation
or security clearance of individuals exercising such right of
access and procedures for obtaining the same;
(v) the means of communication to the Meter Operator Party or, as
the case may be, Party (and all employees and/or contractors who
may be authorised from time to time to exercise such right of
access) of any relevant directions or regulations made by the
Meter Operator Party or, as the case may be, Party; and
(vi) the identification of and arrangements applicable to personnel
exercising the right of access granted by paragraphs 21.1 or
21.3.
Each Party or Meter Operator Party shall (and shall procure that all
persons exercising any right of access on behalf of such Party or Meter
Operator Party) observe and perform any such arrangements and all
provisions (or directions or regulations issued pursuant thereto) made
from time to time.
21.8 Damage: Each Party or Meter Operator Party shall procure that all
reasonable steps are taken in the exercise of any right of access by or
on behalf of such Party or Meter Operator Party to:
(a) avoid or minimise damage in relation to any Meter Operator
Party's, Party's, Second Tier Customer's or other Third Party's
property; and
<PAGE>
(b) cause as little disturbance and inconvenience as possible to any
Meter Operator Party, Party, Second Tier Customer or other Third
Party or other occupier of such Meter Operator Party's, Party's,
Second Tier Customer's or other Third Party's property,
and shall make good any damage caused to such property in the course of
exercise of such rights as soon as may be practicable. Subject to this,
all such rights of access shall be exercisable free of any charge or
payment of any kind.
21.9 License Restricted Parties:
(a) this paragraph 21.9 shall apply to any area owned or occupied by
any Party, Meter Operator Party or any subsidiary of such Party
or Meter Operator Party, Second Tier Customer or Third Party
(each a "Licence Restricted Party") which is the holder of or
subject to a licence granted under the Nuclear Installations Act
1965 (a "Nuclear Site Licence") or subject to restrictions in
relation to a Nuclear Site Licence, where such area is subject to
that Nuclear Site Licence but, in respect of Energy Settlements
and Information Services Limited, this paragraph 21.9 shall apply
subject to the provisions of any other agreement between the
Licence Restricted Party and NGC (or any of its subsidiaries)
imposing restrictions on NGC's (or any of its subsidiaries')
right of access to any areas owned by the Licence Restricted
Party subject to (or subject to restrictions in relation to) a
Nuclear Site Licence.
(b) This paragraph 21.9 shall take precedence over any contrary
provisions of this Schedule.
(c) No Party or Meter Operator Party shall enter or attempt to enter
or permit or suffer any person to enter or attempt to enter any
area owned or occupied by the Licence Restricted Party to which
a Nuclear Site Licence applies except strictly in accordance
with the provisions, restrictions and conditions of the Nuclear
Site Licence.
(d) The Licence Restricted Party shall be entitled to take
reasonable action of any kind whatsoever relating to or
affecting access to its property as it considers on reasonable
grounds to be necessary in order to enable the Licence
Restricted Party to comply with the provisions, restrictions and
conditions of a Nuclear Site Licence or avert or minimise any
reasonably anticipated breaches thereof.
21.10 Denial of access: The Settlement System Administrator shall not incur
any liability under this Schedule or this Agreement in the event it
cannot perform any of its duties hereunder due to access to Metering
Equipment being denied to it save that the Settlement System
Administrator shall inform the Executive Committee thereafter.
<PAGE>
PART 10
COMMUNICATIONS EQUIPMENT
22. COMMUNICATIONS EQUIPMENT
22.1 Compatibility: Communications Equipment at any City (which whenever
used in this paragraph 22 shall include all Qualifying Sites determined
in accordance with the first Tariff published at or after the date the
ninth supplemental deed to this Agreement comes into effect) must be
compatible with the communications link to such Site provided by the
Settlement System Administrator pursuant to Clause 60.6.3(a). Prior to
the installation of Communications Equipment at any Site the Operator
or Potential Operator shall consult with the Settlement System
Administrator to ensure that such Communications Equipment will be
compatible with such communication link. The Operator or Potential
Operator shall notify the Settlement System Administrator of any use to
which the Communications Equipment is put other than in connection with
Settlement.
22.2 General principle: Subject to the requirement of the Settlement System
Administrator to collect data in accordance with Clause 60.6.1 and
subject to the provisions of paragraph 22.1, the Settlement System
Administrator shall use all reasonable endeavors to ensure that the
communications link provided by it to any Embedded Non-Franchise Site
pursuant to Clause 60.6.3(a) is of the type requested by the Operator
or Potential Operator.
22.3 Tariff payments: The Settlement System Administrator shall pay from
time to time to each Operator or Potential Operator of a Metering
System at a Site an amount (if any) determined in accordance with the
Tariff and payable in respect of Communications Equipment installed and
maintained at such Site by such Operator or Potential Operator for the
purposes of this Agreement.
22.4 Refunds: Where an Operator is removed, resigns or otherwise ceases to
be Operator at any Site it shall pay to the Settlement System
Administrator such amount (if any) as is set out in the Tariff by way
of reimbursement of amounts paid to it pursuant to paragraph 22.3.
22.5 Additional payments: If an Operator or Potential Operator can
demonstrate to the reasonable satisfaction of the Settlement System
Administrator that any relevant payment to be made pursuant to this
paragraph 22 and in accordance with the Tariff in respect of any
particular Site as is described in the Tariff does not reflect the cost
to such Operator or Potential Operator of installing and maintaining
Communications Equipment at such Site in an efficient and economic
manner then the Settlement System Administrator may negotiate an
additional payment to such Operator or Potential Operator in respect of
Communications Equipment at such Site provided that the Operator or
<PAGE>
Potential Operator shall be entitled to receive such additional payment
only if and to the extent that the economic and efficient installation
and maintenance of the Communications Equipment at that Site is in fact
effected. If the Operator or Potential Operator and the Settlement
System Administrator fail to agree on the amount of an additional
payment, the Operator or Potential Operator may refer the matter to the
Executive Committee which shall determine the same. The relevant Meter
Operator Party may refer an such decision of the Executive Committee to
the Director and for the purposes thereof shall be deemed to be
exercising a Dissentient Pool Member's right of appeal pursuant to and
in accordance with Clause 13.5. The Settlement System Administrator
shall send the Executive Committee on request a written report giving
reasonable details of any such additional payments made or proposed to
be made.
22.6 Bought-in supplies: Payments which are made to Operators or Potential
Operators in respect of the installation and maintenance of
Communications Equipment (whether or not pursuant to or in addition to
the Tariff) and payments for communications links shall be treated as
"Bought-in Supplies" (as defined in Schedule 4) and accordingly a cost
beyond the control of the Settlement System Administrator.
22.7 Recovery of costs: All costs and expenses relating to the payment
arrangements referred to in this Schedule for the installation and
maintenance of Communications Equipment, the Tariff or otherwise,
including payments which are made to Operators or Potential Operators
for the installation and maintenance of Communications Equipment,
payments for communications links, management time and expenses of the
Settlement System Administrator and the cost of funds borrowed to
finance such costs, expenses and payments, may be recovered in full by
the Settlement System Administrator in accordance with the Accounting
Procedure.
22.8 No agency: No agency relationship (whether express or implied) shall
be, or be deemed to be, created between any Operator or Potential
Operator and the Settlement System Administrator or any other person as
a result of the payments to be made pursuant to this paragraph 22.
22.9 Potential Operators: There shall at any point in time be no more than
one Potential Operator in respect of each Metering System or Metering
Equipment.
PART 11
TRANSITIONAL ARRANGEMENTS
23. TRANSITIONAL ARRANGEMENTS
<PAGE>
23.1 Transitional Arrangements: With effect from the date this Schedule came
into effect (the"NSD date") each Party which is an Operator or a
Potential Operator shall be deemed to be a Meter Operator Party (in
addition to continuing as a Party in any other capacity) and to have
complied with all the requirements of or referred to in this Schedule
21 relating to admission as a Meter Operator Party and as an Operator.
Such Parties are more particularly described in Annex 4 hereto. The
Parties acknowledge and confirm that the deemed admission of an
existing Party as a Meter Operator Party shall not affect that Party's
rights and obligations under any agreement or arrangement relating to
being an Operator entered into or existing between the Parties or any
of them prior to such deemed admission, and that accordingly such
agreement or arrangement shall continue notwithstanding the change and
any reference to that Party being an Operator under this Agreement
shall be construed as being an Operator as a Meter Operator Party.
23.2 Saving: Notwithstanding paragraph 23.1, each Party to which this Part
11 applies, expressly acknowledges and agrees that, notwithstanding any
deemed satisfaction of the conditions which are required to be
fulfilled as at the NSD Date in accordance with this Schedule for the
purposes of admission as a Meter Operator Party and as Operator it
shall be subject (but only with prospective effect; that is to say to
the effect that any conditions which apply as at the NSD Date are
deemed to be fulfilled and need not then be fulfilled as a continuing
obligation) to the continuing and further conditions for registration
as an Operator from time to time and to the provisions of paragraph
4.4, and that it shall be subject to the provisions for the
resignation, removal and cessation as Operator in respect of any
Metering System, or as Meter Operator Party, as the case may be, in
accordance with the provisions of this Schedule as at the date hereof
and from time to time, and after any such resignation, removal or
cessation as a Meter Operator Party it shall be subject in full to the
procedures for admission as a Meter Operator Party and Operator as may
be set out from time to time in this Schedule.
PART 12
INCORPORATION OF OTHER PROVISIONS OF THIS AGREEMENT
24. INCORPORATION BY REFERENCE
Incorporation by reference: The provisions of Clauses 1.2, 1.3, 8.6,
31, 32, 33.4, 34.1, 34.2, 34.3, 37.3, 48.4.4, 66.7, 68, 69, 70, 71, 74,
75, 76, 77, 78, 79, 80, 81, 82, 83, 84 and 85 of the Pooling and
Settlement Agreement shall be deemed to be incorporated into this
Schedule 21 mutatis mutandis as if each reference therein to the word
"Party" were a reference to the words "Party and Meter Operating Party"
and to the word "Parties" were to the words "Parties and Meter Operator
Parties."
<PAGE>
PART 13
SECOND TIER UNMETERED SUPPLIES
25. SECOND TIER UNMETERED SUPPLIES
Notwithstanding any of the other provisions of this Schedule, the
provisions of Clause 60.20 and any Second Tier Unmetered Supplies
Procedures shall, to the extent they are supplemental to or conflict
with any other provisions of this Schedule, govern the rights and
obligations of the Parties (including each Operator and each Meter
Operator Party) in relation to Second Tier Unmetered Supplies.
<PAGE>
ANNEX 1
Form of Meter Operator Party Admission Application
The Executive Committee for the
Pooling and Settlement System in England and Wales
[copy to: the Settlement System Administrator]
[Date]
Dear Sir,
1. We [insert full legal name and address of registered/principal office of
applicant] refer to Schedule 21 to the Pooling and Settlement Agreement for the
electricity industry in England and Wales dated 30th March, 1990 (as amended,
varied, supplemented, modified or suspended, the "Pooling and Settlement
Agreement").
2. Unless the context otherwise requires, words and expressions defined in the
Pooling and Settlement Agreement for the purposes of Schedule 21 to the Pooling
and Settlement Agreement shall bear the same meanings respectively when used
herein.
3. We hereby apply to be admitted as an additional party in accordance with, and
for the purposes only of, Schedule 21 to the Pooling and Settlement Agreement
pursuant to paragraph 3 and subject to the terms set out in paragraph 2 thereof.
We wish to participate thereunder in the capacity of a Meter Operator Party.
4. We hereby represent and warrant to the Executive Committee (for itself and on
behalf of all the Parties and Meter Operator Parties) that:
(A) we are duly organised and validly existing under the
laws of the jurisdiction of our organisation or
incorporation;
(B) we have the power to execute and deliver our Meter Operator
Party Accession Agreement and any other documentation relating
to that Agreement and any other documentation relating to that
Agreement or the Pooling and Settlement Agreement and such
other agreements as are required thereby and to perform our
obligations hereunder or thereunder and we have taken all
necessary action to authorise such execution, delivery and
performance; and
(C) such execution, delivery and performance do not violate
or conflict with any law applicable to us, any provision
of our constitutional documents, any order or judgment
of any court or other agency of government applicable to
us or any of our assets or any contractual restriction
on or affecting us or any of our assets.
<PAGE>
We confirm that these representations and warranties will also be true
and correct in all material respects at the date of our admission as a New Meter
Operator Party.
5. We enclose the application fee of (pound)[ ].
6. We accept and agree to be bound by the terms of paragraph 3 of Schedule 21 to
the Pooling and Settlement Agreement.
Yours faithfully,
------------------------------------
duly authorised for and on behalf of [insert full
legal name of the New Meter Operator Party]
*Insert current application fee prescribed by the Executive Committee.
<PAGE>
ANNEX 2
Form of Meter Operator Party Resignation Notice
The Secretary of the Executive Committee for the
Pooling and Settlement System in England and Wales
(copied to: the Settlement System Administrator).
[Date]
Dear Sir,
We [insert full legal name and address of registered/principal office of
applicant] refer to Schedule 21 to the Pooling and Settlement Agreement for the
electricity industry in England and Wales dated 30th March, 1990 (as amended,
varied, supplemented, modified or suspended, the "Pooling and Settlement
Agreement").
Unless the context otherwise requires, words and expressions defined in the
Pooling and Settlement Agreement for the purposes of Schedule 21 to the Pooling
and Settlement Agreement shall bear the same meanings respectively when used
herein.
We hereby give notice pursuant to paragraph 5.1 of Schedule 21 to the Pooling
and Settlement Agreement that we are resigning as a Meter Operator Party with
effect from the date falling 28 days after receipt by you of this Meter Operator
Party Resignation Notice.
We confirm that in giving this notice of resignation, we are not and will not be
in breach of the restriction on resignation set out in paragraph 5.2 of Schedule
21 to the Pooling and Settlement Agreement.
We acknowledge that our resignation as a Meter Operator Party is without
prejudice to our accrued rights and liabilities and any rights and liabilities
which may accrue to us in relation to the period during which we were a Meter
Operator Party under Schedule 21 to the Pooling and Settlement Agreement or any
agreement referred to in paragraph 5.2 of Schedule 21 to the Pooling and
Settlement Agreement.
<PAGE>
We further expressly acknowledge and confirm that our resignation as a Meter
Operator Party pursuant to Schedule 21 to the Pooling and Settlement Agreement
is without prejudice to our past, present and future accrued or accruing rights
and liabilities as a Party to the Pooling and Settlement Agreement in any
capacity whatsoever other than that of Meter Operator Party.
Yours faithfully,
------------------------------------
duly authorised for and on behalf of [insert full
legal name of Meter Operator Party]
<PAGE>
ANNEX 3
Form of Meter Operator Party Accession Agreement
THIS SUPPLEMENTAL AGREEMENT is made on [ ] BETWEEN:
(1) [ ], a company incorporated [with limited liability] under the laws of [ ]
[(registered number [ ])] and having its [registered] [principal] office at [ ]
(the "New Meter Operator Party"); and
(2) [ ] (the "Nominee") on behalf of all the parties to the Pooling and
Settlement Agreement referred to below.
WHEREAS:
(A) by Agreement dated 30th March, 1990 made between the Founder Generators
named therein (1), the Founder Suppliers named therein (2), Energy
Settlements and Information Services Limited (formerly NGC Settlements
Limited) as Settlement System Administrator (3), Energy Pool Funds
Administration Limited as Pool Funds Administrator (4), The National
Grid Company plc as Grid Operator and Ancillary Services Provider (5),
and Scottish Power plc and Electricite' de France, Service National as
Externally Interconnected Parties (6) (as amended, varied, supplemented,
modified or suspended, the "Pooling and Settlement Agreement") the
parties thereto agreed to give effect to and be bound by certain rules
and procedures for the operation of an electricity trading pool and the
operation of a settlement system;
(B) by paragraph 2 of Schedule 21 to the Pooling Settlement Agreement
additional parties may be admitted to that Agreement for the purposes
of, and only to be bound by and conferred rights in accordance with,
Schedule 21 thereto in the capacity of Meter Operator Party; and
(C) the New Meter Operator Party has requested that it be admitted as a
Meter Operator Party pursuant to paragraph 3 of Schedule 21 to the
Pooling and Settlement Agreement and each of the Parties and Meter
Operator Parties hereby agrees to such admission.
NOW IT IS HEREBY AGREES as follows:
1. Unless the context otherwise requires, words and expressions defined in
the Pooling and Settlement Agreement used for the purposes of Schedule
21 to the Pooling and Settlement Agreement shall bear the same meanings
respectively when used herein.
2. The Nominee (acting on behalf of each of the Parties and Meter Operator
Parties) hereby admits the New Meter Operator Party as an additional
Meter Operator Party under Schedule 21 to the Pooling and Settlement
Agreement on the terms and conditions hereof and with effect from
[insert effective date of admission].
<PAGE>
3. The New Meter Operator Party hereby accepts its admission as a Meter
Operator Party and undertakes with the Nominee (acting on behalf of each
of the Parties and Meter Operator Parties) to perform and to be bound by
the terms and conditions of Schedule 21 to the Pooling and Settlement
Agreement as a Meter Operator Party as from the [insert effective date
of admission].
4. For all purposes in connection with the Pooling and Settlement Agreement
the New Meter Operator Party shall as from the [insert effective date of
admission] be treated including for the purposes of paragraph 2 of
Schedule 21 to the Pooling and Settlement Agreement as if it had been a
signatory of the Pooling and Settlement Agreement as a Meter Operator
Party and as if this Agreement were part of the Pooling and Settlement
Agreement, and the rights and obligations of the Parties and Meter
Operator Parties shall be construed accordingly.
5. The New Meter Operator Party, the Parties and the Meter Operator Parties
expressly acknowledge and confirm that, pursuant to paragraph 2.1 of
Schedule 21 to the Pooling and Settlement Agreement with effect from
[insert effective date of admission] the New Meter Operator Party shall
only be bound by, and conferred rights in accordance with, Schedule 21
to the Pooling and Settlement Agreement in the sole capacity of Meter
Operator Party.
6. The New Meter Operator Party expressly consents to be bound by the
provisions of paragraphs 2.2 and 2.3 of Schedule 21 to the Pooling and
Settlement Agreement.
7. This Agreement and the Pooling and Settlement Agreement shall be read
and construed as one document and references in the Pooling and
Settlement Agreement to the Pooling and Settlement Agreement (howsoever
expressed) shall be read and construed as references to the Pooling and
Settlement Agreement and this Agreement.
8. This Agreement shall be governed by and construed in all respects in
accordance with English law and the provisions of Clauses 83 and 84 of
the Pooling and Settlement Agreement as incorporated into Schedule 21
thereto by paragraph 24 thereof shall apply hereto mutatis mutandis.
AS WITNESS the hands of the duly authorised representatives of the parties
hereto the date and year first above written.
[New Meter Operator Party]
By:
Notice details (Clause 75 of the Pooling and Settlement Agreement as
incorporated into Schedule 21 thereto by paragraph 24 thereof)
Address:
Telex number:
Facsimile number:
Attention:
[Nominee]
(for and on behalf of each of the parties (including Meter Operator Parties) to
the Pooling and Settlement Agreement)
By:
<PAGE>
ANNEX 4
List of Existing Meter Operator Parties
Qualifying under the Transitional Arrangements
Derwent Cogeneration Limited
Eastern Electricity plc
Elm Energy & Recycling (UK) Limited
Humber Power Limited
Joseph Crosfield & Sons, Limited
London Electricity plc
Manweb plc
Marc Rich & Co. AG
Medway Power Limited
Meter Operators Limited
Midlands Electricity plc
The National Grid Company plc
National Power PLC
Northern Electric plc
NORWEB plc
Nuclear Electric plc
PowerGen plc
Schlumberger Industries Limited
Scottish Hydro-electric PLC
SEEBOARD plc
Southern Electric plc
South Wales Electricity plc
South Western Electricity plc
Teesside Power
Limited Yorkshire Electricity Group plc
<PAGE>
ANNEX 5
Non-Exhaustive Diagrammatic Representations of
Metering Systems
Examples of the configuration of Metering Systems for the purposes of this
Agreement are set out as to 7(b) below.
<PAGE>
METERING SYSTEM CONFIGURATION
Example 1 Code of Practice Three installation
Single customer
Single premises
Single feeder
[Diagram of the configuration described above]
1 x Metering System
<PAGE>
METERING SYSTEM CONFIGURATION
Example 2 (a) Code of Practice Three installation
Single customer
Single premises
Multiple feeders (no physical separation)
[Diagram of the configuration described above]
1 x Metering System
<PAGE>
METERING SYSTEM CONFIGURATION
Example 2(b) Code of Practice Three installation
Single customer
Single premises
Multiple feeders (at different physical locations on the site)
[Diagram of the configuration described above]
2 x Metering System
<PAGE>
METERING SYSTEM CONFIGURATION
Example 3 Code of Practice Three installation with two Code of
Practice Five meters Single customer Single premises Single
feeder
[Diagram of the configuration described above]
<PAGE>
1 x Metering System
<PAGE>
METERING SYSTEM CONFIGURATION
Example 4 Code of Practice Three installation with two Code of
Practice Five meters per feeder Single customer Single
premises Multiple feeders (no physical separation)
[Diagram of the configuration described above]
1 x Metering System
<PAGE>
METERING SYSTEM CONFIGURATION
Example 5 Code of Practice Five installation
Single customer
Single premises
Single feeder
[Diagram of the configuration described above]
1 x Metering System
<PAGE>
METERING SYSTEM CONFIGURATION
Example 6(a) Code of Practice Five installation
Single customer
Single premises
Multiple feeders (no physical separation)
[Diagram of the configuration described above]
1 x Metering System
<PAGE>
METERING SYSTEM CONFIGURATION
Example 6(b) Code of Practice Five installation
Single customer
Single premises
Multiple feeders (at different physical locations on the site)
[Diagram of the configuration described above]
2 x Metering System
<PAGE>
METERING SYSTEM CONFIGURATION
Example 7(a) Code of Practice Five installation
Two customer
Single or adjacent premises
[Diagram of the configuration described above]
2 x Metering System
<PAGE>
METERING SYSTEM CONFIGURATION
Example 7(b) Code of Practice Five installation
Two customer
Single or adjacent premises
Multiple feeders (at different physical locations on the site)
[Diagram of the configuration described above]
2 x Metering System
<PAGE>
ANNEX 6
List of Existing Meter Operator Parties
Derwent Cogeneration Limited
Eastern Electricity plc
East Midlands Electricity plc
Elm Energy & Recycling (UK) Limited
Humber Power Limited
Joseph Crosfield & Sons, Limited
London Electricity plc
Manweb plc
Mare Rich & Co. AG
Medway Power Limited
Meter Operators Limited
Midlands Electricity plc
The National Grid Company plc
National Power PLC
Northern Electric plc
NORWEB plc
Nuclear Electric plc
PowerGen plc
Schlumberger Industries Limited
Scottish Hydro-Electric PLC
SEEBOARD plc
Southern Electric plc
South Wales Electricity plc
South Western Electricity plc
Teesside Power Limited
Yorkshire Electricity Group plc
Control Devices and Services Limited
E Squared Limited
Northern Energy Services Limited
Slough Electricity Supplies Limited
Scottish Power Limited
Powermet Limited
Keadby Generation Limited
Mission Energy Services Limited
Exhibit 10.4
THE NATIONAL GRID COMPANY PLC
------------------------------------------
CONNECTION AND USE OF SYSTEM DOCUMENTATION
------------------------------------------
<PAGE>
CONTENTS
Page
Master Agreement 1-48
Schedule 1 - NGC/Users' Details 49-51
Schedule 2 - Definitions 52-87
Schedule 3 - Accession Agreement 88-89
Exhibit 1 - Supplemental Agreement Type 1 1-40
Exhibit 2 - Supplemental Agreement Type 2 1-61
Exhibit 3 - Supplemental Agreement Type 3 1-34
Exhibit 4 - Supplemental Agreement Type 4 1-36
Exhibit 5 - Supplemental Agreement Type 5 1-28
Exhibit 6 - Supplemental Agreement Type 6 1-28
Exhibit 7 - Connection Application 1-6
Exhibit 8 - Connection Offer 1-8
Exhibit 9 - Use of System Application (Generators) 1-7
Exhibit 10 - Use of System Application (Suppliers) 1-10
Exhibit 11 - Modification Application 1-5
Exhibit 12 - Modification Offer
Exhibit 13 - Modification Notification
Exhibit 14 - Ancillary Services Agreement
Exhibit 15 - Interface Agreement Type 1
Exhibit 16 - Interface Agreement Type 2
Exhibit 17 - Interface Agreement Type 3
<PAGE>
DATED 30TH MARCH 1990
THE NATIONAL GRID COMPANY PLC (1)
and
OTHERS (2)
--------------------------------------
MASTER
CONNECTION AND USE OF SYSTEM AGREEMENT
--------------------------------------
<PAGE>
MASTER AGREEMENT
CONTENTS
Clause Title Page
1 Interpretation and Construction 2
2 Supplemental Agreements 4
3 Ancillary Services 7
4 Interface Agreement 8
5 Nuclear Installations 9
6 Principles of Ownership 10
7 Metering 12
8 NGC Obligations 13
9 Compliance with the Grid Code/Distribution
Code 13
10 Modifications 15
11 New Connection sites 17
12 General Provisions concerning
Modifications and New Connection Sites 17
13 Additional Parties 19
14 Payment 20
15 Limitation of Liability 22
16 Duration and Termination 25
17 Events of Default/Deenergisation 26
18 Transfer and Subcontracting 28
19 Confidentiality 30
20 Intellectual Property 38
21 Force Majeure 38
22 Waiver 39
23 Notices 40
24 Counterparts 41
25 Variations 41
26 Dispute Resolution 43
27 Jurisdiction 45
28 Governing Law 46
29 Severance of Terms 46
30 Language 46
<PAGE>
THIS MASTER AGREEMENT is made the 30th day of March 1990 and becomes effective
on the 31st day of March 1990
BETWEEN:
(1) THE NATIONAL GRID COMPANY PLC a company registered in
England with number 2366977 whose registered office is at
National Grid House, Sumner Street, London SEI 9JU ("NGC",
which expression shall include its successors and/or
permitted assigns) and whose address, telex and facsimile
numbers for notices are set out in Schedule 1; and
(2) THE PERSONS whose names, registered numbers, registered
offices, and addresses, telex and facsimile numbers for
notices are set out in Schedule 1 (each a "User", which
expression shall include its successors and/or permitted
assigns)
WHEREAS:
This Master Agreement has the following principal purposes:
(i) to establish contractual framework between NGC and all
Users pursuant to which Supplemental Agreements will
from time to time be made which will provide for,
amongst other things:
(a) connection of a User's Equipment at a Connection
Site to the NGC Transmission System;
(b) the use by a User of the NGC Transmission System
in connection with the generation and/or
transmission of electricity;
(c) the payment to NGC of Connection Charges and/or
Use of System Charges; and
(ii) to provide for the enforcement of the Grid Code.
1
<PAGE>
NOW IT IS HEREBY AGREED AS FOLLOWS:
1. INTERPRETATION AND CONSTRUCTION
1.1 In this Agreement and in each Supplemental Agreement the words and
expressions defined in Schedule 2 shall, unless the subject matter or
context otherwise requires or is inconsistent therewith, apply.
1.2 In the event of any inconsistency between the provisions of any
Supplemental Agreement and this Agreement, the provisions of the
Supplemental Agreement shall prevail in relation to the Connection
Site which is the subject thereof to the extent that the rights and
obligations of Users not party to that Supplemental Agreement are not
affected.
1.3.1 If in order to comply with any obligation in this Agreement or any
Supplemental Agreement any Party is under a duty to obtain the consent
or approval (including any statutory licence or permission) ("the
Consent") of a third party (or the consent of another Party to this
Agreement) such obligation shall be deemed to be subject to the
obtaining of such Consent which the Party requiring the consent shall
use its reasonable endeavors to obtain including (if there are
reasonable grounds therefor) pursuing any appeal in order to obtain
such Consent.
1.3.2 If such Consent is required from any Party to this Agreement then such
Party shall grant such Consent unless it is unable to do so or it
would be unlawful for it to do so provided that such grant by such
Party may be made subject to such reasonable conditions as such Party
shall reasonably determine.
2
<PAGE>
1.3.3 For the avoidance of doubt if the Party who is under a duty to obtain
such Consent fails to obtain such Consent having complied with this
Clause 1.3 the obligation on that Party (in relation to which such
Consent is required) shall cease.
1.4 In this Agreement:
(i) unless the context otherwise requires all references to a particular
Clause, Sub-Clause, paragraph, Schedule or Exhibit shall be a
reference to that Clause, Sub- Clause, paragraph, Schedule or Exhibit
in or to this Agreement and all references to a particular Appendix
shall be a reference to that Appendix to a Supplemental Agreement;
(ii) a table of Contents and headings are inserted for convenience only and
shall be ignored in construing this Agreement or a Supplemental
Agreement, as the case may be;
(iii) references to the words "include" or "including" are to be construed
without limitation to the generality of the preceding words;
(iv) unless the context otherwise requires any reference to an Act of
Parliament or any Part or Section or other provision of or Schedule to
an Act of Parliament shall be construed, at the particular time, as
including a reference to any modification, extension or re- enactment
thereof then in force and to all instruments, orders or regulations
then in force and made under or deriving validity from the relevant
Act of Parliament; and
3
<PAGE>
(v) references to the masculine shall include the feminine and references
in the singular shall include the plural and vice versa and words
denoting persons shall include any individual, partnership, firm,
company, corporation, joint venture, trust, association, organisation
or other entity, in each case whether or not having separate legal
personality.
2. SUPPLEMENTAL AGREEMENTS
2.1 Exhibits 1 to 6 to this Master Agreement contain the forms
of agreements contemplated to be entered into pursuant to
this Clause, being:
Exhibit 1
Supplemental Agreement "Type 1", in respect of Connection
Sites of Users which are in existence and Commissioned at
the Transfer Date;
Exhibit 2
Supplemental Agreement "Type 2", in respect of New
Connection Sites of Users which have not been Commissioned
at the Transfer Date;
Exhibit 3
Supplemental Agreement "Type 3", for Generators with
Embedded Generating Plant or with Embedded Small dependent
Generating Plant and who are acting in that capacity and who
are passing power onto a Distribution System through a
connection with a Distribution System Commissioned at the
Transfer Date;
Exhibit 4
Supplemental Agreement "Type 4", for Generators with
Embedded Generating Plant or with Embedded Small Independent
4
<PAGE>
Generating Plant and who are acting in that capacity and who
are passing power on to a Distribution System through a
connection with a distribution System which has not been
Commissioned at the Transfer Date;
Exhibit 5
Supplemental Agreement "Type 5", for Second Tier Suppliers acting in that
capacity taking Energy through any Grid supply Point and through a
Distribution system owned or operated by any other persons; and
Exhibit 6
Supplemental Agreement "Type 6:, for Generators with Minor
Independent Generating Plant which is Embedded and who are
acting in that capacity and who are Pool members.
2.2 The Supplemental Agreements which are to be entered into
between NGC and Users who are parties to this Master
Agreement as at the Transfer Date, and which are in respect
of Connection Sites existing as at the Transfer Date, shall
be in or substantially in the relevant exhibited form of
Supplemental Agreement.
2.3 Any Supplemental Agreements which are entered into between NGC and Users
who are parties to this Master Agreement as at the Transfer Date, but in
respect of New Connection Sites, shall be in or substantially in the
relevant exhibited form of Supplemental Agreement unless the parties
thereto agree otherwise.
2.4 All other Supplemental Agreements shall be in such form as may be agreed
between NGC and each User.
5
<PAGE>
2.5 Obligations of Users who own or operate Distribution Systems
2.5.1 Any User who owns or operates a Distribution
System shall not Energise the connection between
any Generating Plant or Small Independent
Generating Plant or Minor Independent Generating
Plant and its Distribution System nor permit the
use of its Distribution System by the same until
the person owning or operating the plant has where
required completed the Use of System Application
(Generators) and has entered into a Supplemental
Agreement in the appropriate form (if any) with
NGC and (if such person is not already a party to
this Master Agreement) has where required entered
into an Accession Agreement with NGC pursuant to
Clause 13.
2.5.2 Any User who owns or operates a Distribution
System shall not Energise the connection between
any Customer of another Authorised Electricity
Operator connected to such Distribution System if
the Demand (Active Power) being supplied to such
Customer is being purchased by such Authorised
Electricity Operator pursuant to the Pooling and
Settlement Agreement unless such Authorised
Electricity Operator has first completed the Use
of System Application (Suppliers) and has entered
into a Supplemental Agreement in the appropriate
form with NGC and has notified NGC of the details
relevant to such Customer to be notified to NGC
pursuant to such Supplemental Agreement and (if
the Authorised Electricity Operator is not already
a party to this Agreement) has entered into an
Accession Agreement with NGC pursuant to Clause 13.
6
<PAGE>
2.5.3 NGC shall notify the relevant owner or operator of
the Distribution System in writing as soon as the
conditions set out in Sub-Clause 2.5.1 and Sub-
Clause 2.5.2 have been satisfied in any particular
case together with, if appropriate, a copy of
Appendix A of Supplemental Agreement Type 5. NGC
undertakes to each Party that, for so long as it
is the case, NGC shall from time to time forthwith
upon receipt of any written request from that
Party to do so, confirm in writing to any person
specified in such request that that Party is a
party to this Agreement and any Supplemental
Agreement specified in such request.
2.5.4 Each owner or operator of a Distribution System
shall Deenergise the connection equipment of any
such User the subject of Sub-Clause 2.5.1 or
Customer the subject of Sub-Clause 2.5.2 as soon
as reasonably practicable following the
instruction of NGC in accordance with the terms of
this Agreement. NGC shall reimburse such owner or
operator any expense incurred in relation to such
act of Deenergisation, if any, and shall indemnify
such owner or operator against any liability, loss
or damage suffered by it as a result of such
Deenergisation. Details of any circumstances
likely to lead to such a Deenergisation shall be
notified promptly by NGC to the said owner or
7
<PAGE>
operator. The owner or operator of a Distribution
System shall promptly notify NGC when the
connection equipment of any User or Customer the
subject of Sub-Clauses 2.5.1 or 2.5.2 is
Deenergised or Disconnected from its Distribution
System or ceases to use its Distribution System as
the case may be following the instruction of NGC
in accordance with the terms of this Agreement.
2.6 Each and every Supplemental Agreement entered into by a User
and in force from time to time will constitute separate
agreement governed by the terms of this Master Agreement and
will be read and construed accordingly. For the avoidance
of doubt no User shall enjoy any rights nor incur any
obligations against any other User pursuant to the terms of
any Supplemental Agreement.
2.7 Each and every User connected to or using the NGC
Transmission System shall be a Pool Member except for Non-
Embedded Customers being supplied by a Pool Member.
3. ANCILLARY SERVICES
3.1 NGC and each User agree that any Ancillary Services
agreement in respect of any Ancillary Services to be
provided by the User at or from a Connection Site or New
Connection Site or a Site where an Embedded User is
connected to a Distribution System shall be in a form to be
agreed between them but based substantially on the form set
out in Exhibit 14.
8
<PAGE>
4. INTERFACE AGREEMENT
4.1 NGC and each User undertake to enter into an Interface
Agreement with each other in a form to be agreed between
them but based substantially on the forms set out in
Exhibits 15, 16 and 17 as appropriate in relation to
Connection Site(s) and New Connection Site(s) where
Interface Agreements) is/are required pursuant to the
applicable Supplemental Agreement or otherwise.
5. NUCLEAR INSTALLATIONS
5.1 Save as provided in Sub-Clause 5.2 below notwithstanding
anything to the contrary contained in this Agreement (but
subject to the following provision), in circumstances
affecting a generator or nuclear electricity (a "Nuclear
Generator") in which:
(a) a breach of any of the matters specified in
Sub-Clause 5.4 below may be reasonably anticipated; and
(b) there is no defense (other than that provided for under
this Sub-Clause) available to the Nuclear Generator in
respect of the breach referred to in Sub-Clause 5.1(a);
the Nuclear Generator shall be entitled to take any acting
or refrain from taking any action which is reasonably
necessary in order to avert the breach referred to in Sub-
Clause 5.1(a) and each and every provision of this Agreement
shall be read and construed subject to this Clause, Provided
that the Nuclear Generator shall:
(i) make reasonable efforts to verify the factors that it
takes into account in its assessment of the
circumstances and anticipated breach referred to above;
and
9
<PAGE>
(ii) use its best endeavors to comply with the relevant
provision in a manner which will not cause the Nuclear
Generator to breach any of the matters specified in
Sub-Clause 5.4 below.
5.2 Sub-Clauses 5.1 and 5.3 shall not apply in relation to the provisions of
SDC1, SDC2 and SDC3 of the Grid Code which will apply with full force and
effect notwithstanding the occurrence of the circumstances referred to in
Sub-Clause 5.1(a) (including those provisions specified in Sub-Clause 5.4
which relate to Safety of Personnel and Plant).
5.3 Save as provided in Sub-Clause 5.2 above notwithstanding anything this
Agreement, the Nuclear Generator shall be entitled upon giving reasonable
notice to all affected Parties to require any Party to take any reasonable
and proper action whatsoever to the extent necessary in order to comply
with (or avert an anticipated breach of) any of the matters specified in
Sub-Clause 5.4 below.
5.4 The matters referred to in Sub-Clauses 5.1 and 5.3 above are any covenant,
agreement, restriction, stipulation, instruction, provision, condition or
notice contained, or referred to, in a licence for the time being in force,
granted in accordance with the Notice Installation Act 1965 (or legislation
amending, replacing or modifying the same) or any consent, or approval
issued, or to take effect from time to time under such licence, any
emergency arrangements, operating rules or other matters from time to time,
under such licence, any emergency arrangements, operating rules or other
matters from time to time approved by the relevant authority under, or
pursuant to, any such agreements, restrictions, stipulations, instructions,
provisions, conditions or notices.
10
<PAGE>
5.5 The Nuclear Generator shall indemnify and keep indemnified
any Party for any loss, damage, costs and expenses incurred
by that Party as a consequence of any action of that Party
pursuant to Sub-Clause 5.3 (to the extent that the action
was not required by any licence or agreement binding on that
Party).
5.6 Notwithstanding the fact that any action or inaction allowed by Clause 5.1
above does not constitute a breach of this Agreement or an Event of Default
under Clause 17 below, the Nuclear Generator shall be liable to the other
Parties to this Agreement for any loss, claims, costs, liabilities and
expenses arising from such action or inaction to the extent only that such
loss, claims, costs, liabilities and expenses (had it arisen as a result of
a breach of this Agreement) would not have been limited or excluded under
the provisions of Clause 15 below.
6. PRINCIPLES OF OWNERSHIP
6.1 Ownership - electrical boundaries
Subject to the Transfer Scheme or any contrary agreement in
this Agreement, any Supplemental Agreement or elsewhere the
division of ownership of Plant and Apparatus shall be at the
electrical boundary, such boundary to be determined in
accordance with the following principles:
11
<PAGE>
(i) In relation to Plant and Apparatus located between the NGC
Transmission System and a Power Station, the electrical boundary is at
the busbar clamp on the busbar side of the busbar isolators on
Generators and Power Station transformer circuits;
(ii) save as specified in Clause 6.1(iii) below, in relation to Plant and
Apparatus located between the NGC Transmission System and a
Distribution System, the electrical boundary is at the busbar clamp in
the busbar side of the Distribution System voltage busbar selector
isolator(s) of the NGC Transmission System circuit or, if a
conventional busbar does not exist, an equivalent isolator. If no
isolator exists an agreed bolted connection at or adjacent to the tee
point shall be deemed to be an isolator for these purposes;
(iii) in relation to Plant and Apparatus located between the NGC
Transmission System and a Distribution System and owned by NGC but
designed for a voltage of 132KV or below, the electrical boundary is
at the busbar clamp on the busbar side of the busbar selector isolator
on the Distribution System circuit or, if a conventional busbar does
not exist, an equivalent isolator. If no isolator exists, an agreed
bolted connection at or adjacent to the tee point shall be deemed to
be an isolator for these purposes; and
(iv) in the case of a metal clad switchgear bay the electrical boundary
will be the equivalent of those specified in this Clause 6.1 save
that:
(a) for rack out switchgear, the electrical boundary
will be at the busbar shutters;
12
<PAGE>
(b) for SF6 switchgear, the electrical boundary will
be at the gas zone separators on the busbar side
of the busbar selection devices.
6.2 If a User wants to use transformers of specialised design for unusual load
characteristics at the electrical boundary, NGC shall own such transformers
but the User shall pay NGC for the proper and reasonable additional cost
thereof as identified by NGC in the Offer covering such transformers. In
this Sub-Clause 6.2 "unusual load characteristics" means loads which have
characteristics which are significantly different from those of the normal
range of domestic, commercial and industrial loads (including loads which
vary considerably in duration or magnitude).
6.3 For the avoidance of doubt nothing in this Clause 6 shall
effect any transfer of ownership in any Plant or Apparatus.
7. METERING
7.1 Each User consents to NGC having access to and copies of all meter readings
taken from Energy Metering Equipment pursuant to the Pooling and Settlement
Agreement in any Financial Year for the purposes of calculating Connection
Charges and Use of System Charges due from Users or for the purpose of
operating the NGC Transmission System. Such access and copies shall be
obtained from the Settlement System Administrator appointed under the
Pooling and Settlement Agreement from time to time provided always that if
the Settlement System Administrator fails to provide such access and copies
at NGC's request the User shall supply any such meter readings in the
possession of the User direct to NGC.
13
<PAGE>
7.2 The relationship between the Parties hereto with respect to Energy Metering
Equipment shall be regulated by Part XV of the Pooling and Settlement
Agreement.
7.3 In respect of Operational Metering Equipment owned by the Party and in
respect of which access and rights to deal with such Operational Metering
Equipment are not set down in any other document the Parties shall grant
each other such access and the rights as are reasonably necessary to enable
them to perform their obligations under this Agreement and the Grid Code
upon presentation of a suitable indemnity and the Parties shall take such
action as may be necessary to regularise the position forthwith thereafter.
8. NGC OBLIGATIONS
8.1 NGC agrees with each User to make available, plan, develop,
operate and maintain the NGC Transmission System in
accordance with the NGC Transmission Licence and with the
Grid Code subject to any Derogations from time to time.
9. COMPLIANCE WITH THE GRID CODE/DISTRIBUTION CODE
9.1 Subject to Sub-Clause 9.3 each Party agrees with each other Party to be
bound by and to comply in all respects with the provisions of the Grid Code
in so far as applicable to that Party.
9.2 Subject to Sub-Clause 9.3 each Party agrees with each other
Party to be bound by and to comply in all respects with the
provisions of the relevant Distribution Code(s) in so far as
applicable to that Party except as may be otherwise provided
in any agreement for connection to a Distribution System.
14
<PAGE>
9.3 Neither NGC nor a User need comply with the Grid Code or any relevant
Distribution Code(s) to the extent (if any) that:
(i) either the Director has issued directions relieving NGC
or that User from the obligation under its respective
licence to comply with the Licence Standards, the Grid
code or any relevant Distribution Code(s) in respect of
such parts of the Grid Code or any relevant
Distribution Code(s) respectively as may be specified
in those directions or to the extent that NGC and a
User which does not have a Licence under the Act can
and have so agreed in any Supplemental Agreement in
relation to any Connection Site or New Connection Site
and/or Derogated Plant; or
(ii) (in the case of a User) the Grid Code relates to the
provision by that User of any Ancillary Services unless
there is an Ancillary Services Agreement in force
between that User and NGC for the payment by NGC for
such Ancillary Services; or
(iii) (in the case of NGC) the Grid Code imposes any obligation on NGC to
make available Additional Scheduling Data (as defined in the Grid
code) before 31st December 1990.
9.4 In this Sub-Clause 9.4 the following expressions shall bear
the following meanings:
"Required Standard" In relation to an item of Derogated
Plant, the respective standard required
of that item (which shall not exceed
that required by the Grid code or the
Licence Standards, as the case may be)
as specified in or pursuant to the
relevant Derogation;
15
<PAGE>
"Back Stop Date" in relation to an item of Derogated
Plant, the date by which it is to attain
its Required Standard, as specified in
or pursuant to the relevant Derogation.
Each User undertakes to NGC and NGC undertakes to each User
to use all reasonable endeavours to carry out such works as
are necessary to ensure that each item of Derogated Plant
owned or operated by that User or NGC (as appropriate) is
brought up to the Required Standard applicable to it no
later than the Back stop Date applicable to it.
9.5 The terms and provisions of the Fuel Security Code shall
prevail to the extent that they are inconsistent with the
Grid code or any Distribution code and the Parties'
obligations under this Agreement shall be construed
accordingly.
10. MODIFICATIONS
10.1 No modification may be made by or on behalf of a User or NGC
otherwise than in accordance with the provisions of this
Clause 10.
10.2 Modifications Proposed by Users
10.2.1 If a User wishes to make a Modification it shall
complete and submit to NGC a Modification
Application and comply with the terms thereof.
10.2.2 NGC shall make the Modification Offer to that User
as soon as practicable and (save where the
16
<PAGE>
Director consents to a longer period) any event not more than 3
months after receipt by NGC of the Modification Application. the
Modification Offer shall include details of any variation NGC
proposes to make to the Supplemental Agreement which applies to
the Connection Site in question. During such period NGC and the
User concerned shall discuss in good faith the implications of
the proposed Modifications.
10.2.3 The Modification Offer shall remain open for
acceptance for 3 months from the date of its
receipt by that User unless either that User or
NGC makes an application to the Director under
Condition 10C of the NGC Transmission Licence, in
which event the Modification Offer shall remain
open for acceptance by that User until the date 14
days after any determination by the Director
pursuant to such application.
10.2.4 If the Modification Offer is accepted by that User
the Supplemental Agreement relating to the
Connection Site in question shall be varied to
reflect the terms of the Modification Offer and
the Modification shall proceed according to the
terms of the Supplemental Agreement as so varied.
10.3 Modifications proposed by NGC
10.3.1 If NGC wishes to make a Modification to the NGC Transmission
System, NGC shall complete and submit to each User a Modification
Notification and shall complete and submit to each User a Modification
Notification and shall advise each User of any works which NGC
reasonably believes that User may have to carry out as a result.
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10.3.2 Any User which considers that it shall be required
to make a Modification (an "Affected User
Modification") as a result of the Modification
proposed by NGC (an "Affected User") may as soon
as practicable after receipt of the Modification
Notification and (save where the Director consents
to a longer period) within the period stated
therein (which shall be sufficient to enable the
User to assess the implications of the proposed
Modification and in any event shall not be less
than 3 months) may make an application to the
Director under Condition 10C of the Transmission
Licence.
10.3.3 As soon as practicable after the receipt of the
Modification Notification or, if an application to
the Director has been made, the determination by
the Director, and in any event within two months
thereof, each Affected User shall complete and
submit a Modification Application to NGC and
comply with the terms thereof. No fee shall be
payable by any User to NGC in respect of any such
Modification Application.
10.3.4 Once a Modification Application has been made by a
User pursuant to Sub-Clause 10.3.2 the provisions
of Sub-Clauses 10.2.2, 10,2.3 and 10.2.4 shall
thereafter apply.
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11. NEW CONNECTION SITES
11.1 If a User wishes to connect a New Connection Site it shall
complete and submit to NGC a Connection Application and
comply with the terms thereof.
11.2 Without prejudice to Condition 10B4 of the NGC Transmission Licence NGC
shall make a Connection Offer to that User as soon as practicable after
receipt of the Connection Application and (save where the Director consents
to a longer period) in any event not more than 3 months after receipt by
NGC of the Connection Application.
11.3 The Connection Offer shall remain open for acceptance for 3 months from its
receipt by that User unless either that User or NGC makes an application to
the Director under Condition 10C of the NGC Transmission Licence, in which
event the Connection Offer shall remain open for acceptance until the date
14 days after any determination by the Director pursuant to such
application.
11.4 If the Connection Offer is accepted by that User the connection shall
proceed according to the terms of the Supplemental Agreement entered into
consequent upon acceptance of the Offer.
12. GENERAL PROVISIONS CONCERNING MODIFICATIONS AND NEW
CONNECTION SITES
12.1 Subject to the payment of its Reasonable Charges, if any, as
provided for in this Sub-Clause NGC undertakes to each User
to provide all advice and assistance reasonably requested by
that User to enable that User adequately to assess the
implications (including the feasibility) of making a
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Modification to the User's Equipment or the Users System
(whether such Modification is to be made at the request of
NGC or of the User) or of constructing a New Connection Site
(including adequately assessing the feasibility of making
any Connection Application or considering the terms of any
Connection Offer). If the proposed Modification by the User
is or may be required as a result of a Modification proposed
by NGC then NGC shall provide such advice and assistance
free of charge. If the proposed Modification is or may be
proposed by the User or if the advice and assistance is in
respect of a New connection Site NGC may charge the User
Reasonable charges for such advice and assistance. The
provisions of such advice and assistance shall be subject to
any confidentiality obligations binding on NGC and that
User.
12.2 When giving such advice and assistance NGC shall comply with Good Industry
Practice.
12.3 NGC shall have no obligation to compensate any User (the
"First User") for the cost or expense of any Modification
required to be made by any User as a result of any NGC
Modification under Sub-Clause 10.3.1. Where such NGC
Modification is made as a result of the construction of a
New Connection Site or a Modification for another User (the
"Other User"), the Other User shall compensate the First
User for the reasonable and proper cost and expense of any
Modifications required to be made by the First User as a
result of that NGC Modification. Such compensation shall be
paid to the First User by the Other User within thirty days
of production to the Other User of a receipted invoice
(together with a detailed breakdown of such reasonable costs
and expenses) for the expenditure which has been incurred by
the First User.
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12.4 Modification Offers and Connection Offers conditional Upon other
Modification Offers and Connection Offers If at the time of making any
Offer or Modification Offer or Connection Offer to a User ("the Second
Offer") there is an outstanding Modification Offer(s) or Connection
Offer(s) to another User(s) ("the First Offer") which if accepted would
affect the terms of the Second Offer NGC shall at the time of making the
Second Offer.
(i) inform the recipient(s) of both the First Offer(s) and
Second Offer(s) in writing that there is another Offer
outstanding which might affect them; and
(ii) be entitled to make the First Offer(s) and Second
Offer(s) conditional upon other outstanding Offers not
having been or being accepted; and
(iii) be entitled to vary the terms of either Offer if the other Offer is
accepted first on the same procedures as those set out in Clauses
10.2.2 to 10.2.4 or 11.2 to 11.4 inclusive as the case may be.
13. ADDITIONAL PARTIES
13.1 The Parties shall admit as an additional party to this Master Agreement any
person who accepts a Connection Offer from NGC or any new Embedded User
(the "New Party") and who is not at the time already a Party. Such
admission shall take effect by way of Accession Agreement prepared by NGC
at the expense and cost of the New Party and to be executed by NGC for
itself and on behalf of all other Parties. Upon execution of the Accession
Agreement by NGC and the New Party and subject to the terms and conditions
of that Accession Agreement, the New Party shall become a Party for all
purposes of this Agreement.
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13.2 Each Party hereby authorises and instructs NGC to sign any such Accession
Agreement on its behalf and undertakes not to withdraw, qualify or revoke
any such authority or instruction at any time.
13.3 NGC shall promptly notify all Parties in writing that the New Party has
become a Party.
14. PAYMENT
14.1 NGC will invoice Users for Connection Charges and/or Use of System Charges
due under each Supplemental Agreement in the following manner:
(i) in the case of recurrent monthly charges other than the
Energy related charges identified in Appendix D to the
relevant Supplemental Agreement NGC shall despatch an
invoice on or before the 15th day of the month for the
charges due in relation to that month;
(ii) in the case of the Energy related recurrent monthly
charges identified in Appendix D to the relaxant
Supplemental Agreement NGC shall despatch an invoice on
or before the 1st day of a month covering the charge
due in relation to the period expiring on the 15th day
of the preceding month and commencing on the 16th day
of the month before that;
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(iii) unless otherwise specified in this Agreement where
charges are payable other than monthly NGC shall
despatch an invoice not less than 30 days prior to
the due date for payment specified in the relevant
Appendix to the Supplemental Agreement.
14.2 Payment
Users shall pay NGC Connection Charges and/or Use of System
Charges due under each Supplemental Agreement in the
following manner:
(i) in the case of recurrent monthly charges on the 15th
day of the month in which NGC's invoice therefor was
despatched (if despatched on the first day of that
month) or, in all other cases, on the 15th day of the
month following the month in which NGC's invoice
therefor was despatched unless, in any such case, the
said date is not a Business Day in which case payment
shall be made on the next business Day;
(ii) unless otherwise specified in this Agreement where
charges are payable other than monthly within 30 days
of the date of NGC's invoice therefor.
14.3 All payments hereunder shall be made by the variable direct debit method or
such other form of bankers automated payment as shall be approved by NGC to
the account number, bank and branch specified by NGC in Schedule 1 or in
the case of sums payable to a User the account number, bank and branch of
the User set out in Schedule 1 (or such other account and/or bank as NGC or
a User may from time to time notify in writing to the other).
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14.4 If any Party fails to pay on the due date any amount properly due under
this Agreement such Party shall pay to the Party to whom such amount is due
interest on such overdue amount from and including the date of such failure
to (but excluding) the date of actual payment (as well after as before
judgement) at the rate of 4% over Barclays Bank PLC base rate for the time
being and from time to time interest shall accrue from day to day.
14.5 All sums payable by one Party to the other pursuant to this Agreement
whether of charges, interest or otherwise shall (except to the extent
otherwise required by law) be paid in full, free and clear of and without
deduction set off or deferment in respect of such sums the subject of any
disputes or claims whatsoever save for sums the subject of a final award or
judgement (after exhaustion of all appeals if this opportunity is taken) or
which by agreement between NGC and those Parties may be so deducted or
set-off.
14.6 All amounts specified hereunder or under any Supplemental Agreement shall
be exclusive of any Value Added Tax or other similar tax.
14.7 If upon the request of any User the Director determines that the NGC
Connection Charges and/or Use of System Charges payable by that User
(including any variations thereof) have not been calculated strictly in
accordance with the terms of the statements prepared for the purposes of
Condition 10 of the NGC Transmission Licence (setting out the basis upon
which the charges for use of system and for connection to the NGC
Transmission System will be made) NGC shall pay to such User an amount in
respect of each charging period equal to the amount (if any) by which the
User has been overcharged as a result, together with interest thereon from
the date upon which such charges were paid until the date of payment of
such interest. Such interest shall accrue from day to day at the rate
specified in Sub-Clause 14.4.
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15. LIMITATION OF LIABILITY
15.1 Subject to Sub-Clauses 15.5, 2.5.4 and 5.5 and any
liquidated damages provisions of any supplemental Agreement
and the payment adjustment provisions of the relevant
Ancillary Services Agreement and save where any provision of
this Agreement provides for an indemnity each Party agrees
and acknowledges that no Party (the "Party Liable") nor any
of its officers, employees or agents shall be liable to any
of the other Parties for loss arising from any breach of
this Agreement other than for loss directly resulting from
such breach and which at the date hereof was reasonably
foreseeable as not unlikely to occur in the ordinary course
of events from such breach in respect of:
15.1.1 physical damage to the property of any of the
other Parties, or its or their respective
officers, employees or agents; and/or
15.1.2 the liability of any such other Party to any other
person for loss in respect of physical damage to
the property of any other person.
15.2 Nothing in this Agreement shall exclude or limit the
liability of the Party Liable for death or personal injury
resulting from the negligence of the Party Liable or any of
its officers, employees or agents and the Party Liable shall
indemnify and keep indemnified each of the other Parties,
its officers, employees or agents, from and against all such
and any loss or liability which any such other Party may
suffer or incur by reason of any claim on account of death
or personal injury resulting from the negligence of the
Party Liable or any of its officers employees or agents.
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15.3 Subject to Sub-Clauses 15.5, 2.5.4 and 5.5 and any
liquidated damages provision of any Supplemental Agreement
and save where any provision of this Agreement provides for
an indemnity, neither the Party Liable nor any of its
officers, employees or agents shall in any circumstances
whatsoever be liable to any of the other Parties for:
15.3.1 any loss of profit, loss of revenue, loss of use,
loss of contract or loss of goodwill; or
15.3.2 any indirect or consequential loss; or
15.3.3 loss resulting from the liability of any other
Party to any other person howsoever and whensoever
arising save as provided in Sub-Clauses 15.1.2 and
15.2.
15.4 The rights and remedies provided by this Agreement to the
Parties are exclusive and not cumulative and exclude and are
in place of all substantive (but not procedural) rights or
remedies express or implied and provided by common law or
statute in respect of the subject matter of this Agreement,
including without limitation any rights any Party may
possess in tort which shall include actions brought in
negligence and/or nuisance. Accordingly, each of the
Parties hereby waives to the fullest extent possible all
such rights and remedies provided by common law or statute,
and releases a Party which is liable to another (or others),
its officers, employees and agents to the same extent from
all duties, liabilities, responsibilities or obligations
provided by common law or statute in respect of the matters
dealt with in this Agreement and undertakes not to enforce
any of the same except as expressly provided herein.
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15.5 Save as otherwise expressly provided in this Agreement, this Clause 15
insofar as it excludes or limits liability shall override any other
provision in this Agreement provided that nothing in this Clause 15 shall
exclude or restrict or otherwise prejudice or affect any of:
15.5.1 the rights, powers, duties and obligations of any
Party which are conferred or created by the Act,
the Licence or the Regulations; or
15.5.2 the rights, powers, duties and obligations of the
Director or the Secretary of State under the Act,
any Licence or otherwise howsoever.
15.6 Each of the Sub-Clauses of this Clause 15 shall:
15.6.1 be construed as a separate and severable contract
term, and if one or more of such Sub-Clauses is
held to be invalid, unlawful or otherwise
unenforceable the other or others of such Sub-
Clauses shall remain in full force and effect and
shall continue to bind the Parties; and
15.6.2 survive termination of this Agreement.
15.7 Each Party acknowledges and agrees that each of the other
Parties holds the benefit of Sub-Clauses 15.1 and 15.2 and
15.3 above for itself and as trustee and agent for its
officers, employees and agents.
15.8 Each Party acknowledges and agrees that the provisions of
this Clause 15 have been the subject of discussion and
negotiation and are fair and reasonable having regard to the
circumstances as at the date hereof.
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15.9 For the avoidance of doubt, nothing in this Clause 15 shall
prevent or restrict any Party enforcing any obligation
(including suing for a debt) owned to it under or pursuant
to this Agreement.
16. DURATION AND TERMINATION
16.1 This Agreement shall continue in relation to each User until
terminated in accordance with this Clause 16 or pursuant to
Clause 17.
16.2 A User shall automatically cease to be a Party to this
Agreement upon termination of all Supplemental Agreements
entered into by that User.
16.3 Termination or expiry of a particular Supplemental Agreement
shall not of itself, cause the relevant User to cease to be
a Party to this Agreement.
16.4 Termination or a person ceasing to be a Party to this
Agreement shall not affect any rights or obligations of any
Party which may have accrued to the date of termination or
expiry and shall not affect any continuing obligations of
any Party under this Agreement.
16.5 Following termination of this Agreement Clause 19 shall
remain in full force and effect.
17. EVENTS OF DEFAULT/DEENERGISATION
17.1 It shall be an event of default if:
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(i) a User shall fail to pay (other than by inadvertent
error in funds transmission which is discovered by NGC,
notified to that User and corrected within 2 business
Days thereafter) any amount properly due or owing from
that User to NGC pursuant to this Agreement and such
failure continues unremedied for 7 business Days after
the due date for payment; or
(ii) in respect of a User:
(a) an order of the High Court is made or in effective
resolution passed for its insolvent winding up or
dissolution; or
(b) a receiver (which expression shall include an
administrative receiver within the meaning of
Section 29 Insolvency Act 1986) of the whole or
any material part of its assets or undertaking is
appointed; or
(c) an administration order under Section 8 of the
Insolvency Act 1986 is made or if a voluntary
arrangement is proposed under Section 1 of that
Act; or
(d) a User enters into any scheme of arrangement
(other than for the purpose of reconstruction or
amalgamation upon terms and within such period as
may previously have been approved in writing by
the Director); or
(e) any of the events referred to in (a) to (d) above has occurred
and is continuing and a User is unable to pay its debts within
the meaning of Section 123(1) or (2) of the Insolvency Act 1986
save that such sections shall have effect as if for (Pounds)750
there was inserted (Pounds)250,000 and a User shall not be deemed
to be unable to pay its debts if any demand for payment is being
contested in good faith by that User with recourse to all
appropriate measures and procedures)
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and in any such case within 28 days of this appointment the
liquidator, receiver, administrative receiver, administrator, nominee
or other similar officer has not provided to NGC a guarantee of future
performance by the User of this Agreement and all Supplemental
Agreements to which the User is a party in such form and amount as NGC
may reasonably require.
17.2 Provided that at the time the failure specified in Sub- Clause 17.1(i) is
still continuing or the circumstances referred to in Sub-Clause 17.1(ii)
still exist NGC may having given 48 hours notice of an event of default
Deenergise all of the User's Equipment which is the subject of a
Supplemental Agreement with that User or may as appropriate instruct the
operator of a Distribution System to Deenergise such User's Equipment
provided that prior to Deenergisation the User may refer the matter to the
Disputes Resolution Procedure.
17.3 If notice is given to a User in accordance with Clause 60.1.3 or 60.2.3 of
Part XVII of the Pooling and Settlement Agreement and that User shall fail
to take such action as is referred to in Clause 60.4.1 of Part XVII of the
Pooling and Settlement Agreement within 48 hours after the date of any such
notice referred to therein, NGC may Deenergise the User's Equipment.
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17.4 If the event of default under Sub-clause 17.2 or 17.3 is
still continuing six months after the later of
Deenergisation and the conclusion of the Disputes Resolution
Procedure in favour of NGC, NGC may Disconnect all that
User's Equipment at each Connection Site where the User's
Equipment is connected and:
(i) NGC and that User shall remove any of the User's
Equipment and NGC Assets on the other Party's land
within 6 months or such longer period as may be agreed
between the Parties concerned;
(ii) that the User shall pay to NGC forthwith all
Termination Amounts; and
(iii) that the User shall cease to be a Party to this
Agreement.
18. TRANSFER AND SUBCONTRACTING
18.1 The rights, powers, duties and obligations of a User under
this Agreement or any supplemental Agreement are personal to
that User and that User may not assign or transfer the
benefit or burden of this Agreement save in the following
circumstances:
(i) upon the disposal by that User of the whole of its
business or undertaking it shall have the right to
transfer its rights and obligations under this
Agreement and all relevant Supplemental Agreements to
the purchaser thereof on condition that the purchaser
if not already a User enters into an Accession
Agreement with NGC under Clause 13 and confirms to NGC
in writing either that all of the technical or related
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conditions, data, information, operational issues or other matters
specified in or pursuant to the relevant Supplemental Agreement(s) or
Grid code by the User seeking the transfer will remain unchanged or,
if any such matters are to be changed, the purchaser first notifies
NGC in writing of such changes which NGC will consider promptly and in
any event within 28 days of receiving notice of such change and until
such consideration is complete the transfer shall not be effective. If
having considered such changes NGC in its reasonable opinion does not
consider the proposed changes reasonably satisfactory to NGC it shall
consult with the User seeking to undertake such transfer and pending
the outcome thereof to NGC's reasonable satisfaction the transfer
shall not be effective provided always that the User may refer any
dispute to the Disputes Resolution Procedure. such transfer shall
become effective once the changes are reasonably satisfactory to NGC
or have been determined to be so under the Disputes Resolution
Procedure;
(ii) Upon the disposal by a User of part of its business undertaking
comprising User's Equipment at one or more Connection Sites that User
shall have the right to transfer its rights and obligations under all
relevant Supplemental Agreements to the purchaser thereof on condition
that the purchaser (if not already a User) enters into an Accession
Agreement with NGC under Clause 13 and confirms to NGC in writing
either that all of the technical or related conditions, data,
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information, operational issues or other matters specified in or
pursuant to the relevant Supplemental Agreement(s) or Grid Code by the
User seeking the transfer will remain unchanged or, if any such
matters are to be changed, the purchaser first notifies NGC in writing
of such changes which NGC will consider promptly and in any event
within 28 days of receiving notice of such change and until such
consideration is complete the assignment shall not be effective. If
having considered such changes NGC in its reasonable opinion does not
consider the proposed changes reasonably satisfactory to NGC it shall
consult with the User seeking to undertake such transfer and pending
the outcome thereof to NGC's reasonable satisfaction the transfer
shall not be effective provided always that the User may refer any
dispute to the Disputes Resolution Procedure. Such transfer shall
become effective once the changes are reasonably satisfactory to NGC
or have been determined to be so under the Disputes Resolution
Procedure;
(iii) a User may assign or charge its benefit under this Agreement and any
Supplemental agreements in whole or in part by way of security.
18.2 Each Party shall have the right to sub-contract or delegate the performance
of any of its obligations or duties arising under this Agreement or any
Supplemental Agreement including activities envisaged by the Grid Code
without the prior consent of any other Party. The sub-contracting by a
Party of the performance of any obligations or duties under this Agreement
or any supplemental Agreement or of any activities envisaged by the Grid
Code shall not relieve that party from liability for performance of such
obligation or duty.
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19. CONFIDENTIALITY
Confidentiality for NGC and its subsidiaries
19.1 NGC and its subsidiaries in each of their capacities in this
Agreement shall secure that Protected Information is not:
19.1.1 divulged by Business Personnel to any person
unless that person is an Authorised Recipient;
19.1.2 used by business Personnel for the purposes of
obtaining for NGC or any of its subsidiaries or
for any other person:
(a) any electricity licence; or
(b) any right to purchase or otherwise acquire,
or to distribute electricity (including
rights under any electricity purchase
contract, as defined in the NGC Transmission
Licence); or
(c) any contract or arrangement for the supply of
electricity to Customers or Suppliers; or
(d) any contract for the use of any electrical lines or
electrical plant belonging to or under the control of a
Supplier; or
(e) control of any body corporate which, whether
directly or indirectly, has the benefit of
any such licence, contract or arrangement;
and
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19.1.3 used by Business Personnel for the purchase of
carrying any activities other than Permitted
Activities
except with the prior consent in writing of the Party to
whose affairs such Protected Information relates.
19.2 Nothing in Sub-Clause 19.1 shall apply:
19.2.1 to any Protected Information which, before it is
furnished to business Personnel is in the public
domain; or
19.2.2 to any Protected Information which, after it is
furnished to Business Personnel:
(a) is acquired by NGC or any subsidiary of NGC
in circumstances in which Sub-Clause 19.1
does not apply; or
(b) is acquired by NGC or any subsidiary of NGC
in circumstances in which Sub-clause 10.1
does apply and thereafter ceases to be
subject to the restrictions imposed by such
Sub-Clause; or
(c) enters the public domain,
and in any such case otherwise than as a result of
a breach by NGC or any subsidiary of NGC of its
obligations in Sub-Clause 19.1, or a breach by the
person's confidentiality obligation and NGC or any
of its subsidiaries is aware of such breach; or
19.2.3 to the disclosure of any Protected Information to
any person if NGC or any subsidiary of NGC is
required or expressly permitted to make such
disclosure to such person:
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(a) in compliance with the duties of NGC or any
subsidiary under the Act or any other
requirement of a Competent Authority; or
(b) in compliance with the conditions of the
Transmission License or any document referred
to in the Transmission License with which NGC
or any subsidiary of NGC is required by
virtue of the Act or the NGC Transmission
License to comply; or
(c) in compliance with any other requirement of
law; or
(d) in response to a requirement of any stock
exchange or regulatory authority or the Panel
on Take-overs and Mergers; or
(e) pursuant to the Arbitration rules for the
Electricity Supply Industry Arbitration
Association or pursuant to any judicial or
other arbitral process or tribunal having
jurisdiction in relation to NGC or any of its
Subsidiaries; or
(f) in compliance with the requirements of
Section 35 of the Act and with the provisions
of the Fuel Security Code; or
19.2.4 to any Protected Information to the extent that
NGC or any of its subsidiaries is expressly
permitted or required to disclose that information
under the terms of any agreement or arrangement
(including this Agreement, the Grid Code, the
Distribution codes and the Fuel Security Code)
with the Party to whose affairs such Protected
Information relates.
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19.3 NGC and each of its subsidiaries may use all and any
information or data supplied to or acquired by it, from or
in relation to the other Parties in performing Permitted
Activities including for the following purposes:
19.3.1 the operation and planning of the NGC Transmission
system;
19.3.2 the calculation of charges and preparation of
offers of terms for connection to or use of the
NGC Transmission System;
19.3.3 the operation and planning of the Ancillary
Services Business and the calculation of charges
therefor;
19.3.4 the operation of the Settlements Business;
19.3.5 the provision of information under the British
Grid systems Agreement and the EdF Documents;
and may pass the same to subsidiaries of NGC which carry out
such activities and the Parties hereto agree to provide all
information to NGC and its subsidiaries for such purposes.
19.4 NGC undertakes to each of the other Parties that, having
regard to the activities in which any Business Person is
engaged and the nature and effective life of the Protected
Information divulged to him by virtue of such activities,
neither NGC nor any of its subsidiaries shall unreasonably
continue (taking into account any industrial relations
concerns reasonably held by it) to divulge Protected
Information or permit Protected Information to be divulged
by any subsidiary of NGC to any business Person:
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19.4.1 who has notified NGC or the relevant subsidiary of
his intention to become engaged as an employee or
agent of any other person (other than of NGC or
any subsidiary thereof) who is:
(a) authorized by license or exemption to
generate, transmit or supply electricity; or
(b) an electricity broker or is known to be
engaged in the writing of electricity
purchase contracts (as defined in the NGC
Transmission License); or
(c) know to be retained as a consultant to any
such person who is referred to in (a) or (b)
above; or
19.4.2 who is to be transferred to the Generation
Business, save where NGC or such subsidiary could
not, in all the circumstances, reasonably be
expected to refrain from divulging to such
Business Person Protected Information which is
required for the proper performance of his duties.
19.5 Without prejudice to the other provisions of this Clause 19 NGC shall
procure that any additional copies made of the Protected Information
whether in hard copy or computerized form, will clearly identify the
Protected Information as protected.
19.6 NGC undertakes to use all reasonable endeavors to procure that no employee
is a Corporate Functions Person unless the same is necessary for the proper
performance of his duties.
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19.7 Without prejudice to Clause 19.3, NGC and each of its subsidiaries may use
and pass to each other all and any Period Metered Demand data supplied to
or acquired by it and all and any information and data supplied to it
pursuant to Section OC6 of the Grid Code for the purposes of Demand Control
(as defined in the Grid Code), but in each case only for the purposes of
its estimation and calculation from time to time of the variable "system
maximum ACS demand" (as defined in Condition 4 of the NGC Transmission
License).
19.8 NGC shall secure that Protected Information which is subject to the
provisions of Clause 19.1 and which relates to the cost of Reactive Power
provided by each individual Generator is not divulged to any Business
Person engaged in the provision of static compensation for use by the Grid
Operator (as defined in the Pooling and Settlement Agreement).
19.9 Any information regarding, or data acquired by the Settlement System
Administrator or its agent from the Energy Metering Equipment at Sites
which are a point of connection to a Distribution System shall and may be
passed by the Settlement System Administrator or his agent to operator of
the relevant Distribution System. The said operator of the relevant
Distribution System and the calculation of charges for use of and
connection to the Distribution System.
Confidentiality other than for NGC and its subsidiaries
19.10 Each User hereby undertakes with each other User and with NGC and its
subsidiaries that it shall preserve the confidentiality of, and not
directly or indirectly reveal, report, publish, disclose or transfer
or use for its own purposes Confidential Information except in the
circumstances set out in Sub-Clause 19.11 or to the extent otherwise
expressly permitted by this Agreement or with the prior consent in
writing of the Party to whose affairs such Confidential Information
relates.
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19.11 The circumstances referred to in Sub-clause 19.10 are:
19.11.1 where the Confidential Information, before it is
furnished to the User, is in the public domain; or
19.11.2 where the Confidential Information, after it is
furnished to the User:
(a) is acquired by the User in circumstances in
which Sub-Clause 19.10 does not apply; or
(b) is acquired by the User in circumstances in
which Sub-Clause 19.10 does apply and
thereafter ceases to be subject to the
restrictions imposed by Sub-Clause 19.10; or
(c) enters the public domain,
and in any such case otherwise than as a result of
a breach by the User of its obligations in Sub-
clause 19.10 or a breach by the person who is
disclosed that Confidential Information of that
person's confidentiality obligation and the User
is aware of such breach; or
19.11.3 if the User is required or permitted to make
disclosure of the Confidential Information to any
person:
(a) in compliance with the duties of the User
under the Act or any other requirement of a
Competent Authority; or
(b) in compliance with the conditions of any
License or any document referred to in any
License with which the User is required to
comply; or
40
<PAGE>
(c) in compliance with any other requirement of
law; or
(d) in response to a requirement of any stock
exchange or regulatory authority or the Panel
on Take-overs and Mergers; or
(e) pursuant to the Arbitration Rules for the
Electricity Supply Industry Arbitration
Association or pursuant to any judicial or
other arbitral process or tribunal having
jurisdiction in relation to the Users; or
19.11.4 where Confidential Information is furnished by the
User to the employees, directors, agents,
consultants and professional advisors of the User,
in each case on the basis set out in Sub-clause
19.12.
19.12 With effect from the date of this Agreement the User shall adopt
procedures within its organization for ensuring the confidentiality of
all Confidential Information which it is obliged to preserve as
confidential under Clause 19.10. These procedures are:
19.12.1 the Confidential Information will be disseminated
within the User only on a "need to know" basis;
19.12.2 employees, directors, agents, consultants and
professional advisers of the User in receipt of
Confidential Information will be made fully aware
of the User's obligations of confidence in
relation thereto; and
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<PAGE>
19.12.3 any copies of the Confidential Information,
whether in hard copy or computerized form, will
clearly identify the Confidential Information as
confidential.
19.13 For the avoidance of doubt, data and other information
which any Party is permitted or obliged to divulge or
publish to any other Party pursuant to this Agreement
shall not necessarily be regarded as being in the
public domain by reason of being so divulged or
published.
19.14 Notwithstanding any other provision of this Agreement,
the provisions of this Clause 19 shall continue to bind
a person after its cessation as a Party for whatever
reason.
20. INTELLECTUAL PROPERTY
All Intellectual Property relating to the subject matter of this Agreement
conceived, originated, devised, developed or created by a Party, its
officers, employees, agents or consultants during the currency of this
Agreement or any Supplemental Agreement shall vest in such Party as sole
beneficial owner thereof save where the Parties agree in writing otherwise.
21. FORCE MAJEURE
If any Party (the "Non-Performing Party") shall be unable to carry out any
of its obligations under this Agreement due to a circumstance of Force
Majeure this Master Agreement and the relevant Supplemental Agreement shall
remain in effect but:
42
<PAGE>
(a) the Non-Performing Party's relevant obligations;
(b) the obligations of each of the other Parties owed to
the Non-Performing Party under this Agreement and/or
the relevant Supplemental Agreement as the case may be;
and
(c) any other obligations of such other Parties under this
Agreement owed between themselves which the relevant
Party is unable to carry out directly as a result of
the suspension of the Non-Performing Party's
obligations
shall be suspended for a period equal to the circumstance of
Force Majeure provided that:
(i) the suspension of performance is of no greater scope
and of no longer duration than is required by the Force
Majeure;
(ii) no obligations of any Party that arose before the Force
Majeure causing the suspension of performance are
excused as a result of the Force Majeure;
(iii) the Non-Performing Party gives the other Parties prompt notice
describing the circumstance of Force Majeure, including the nature of
the occurrence and its expected duration, and continues to furnish
regular reports with respect thereto during the period of Force
Majeure;
(iv) the Non-Performing Party uses all reasonable efforts to
remedy its inability to perform; and
(v) as soon as practicable after the event which
constitutes Force Majeure the Parties shall discuss how
best to continue their operations so far as possible in
accordance with this Agreement, any Supplemental
Agreement and the Grid Code.
43
<PAGE>
22. WAIVER
No delay by or omission of any Party in exercising any right, power,
privilege or remedy under this Master Agreement or any Supplemental
Agreement or the Grid Code shall operate to impair such right, power,
privilege or remedy or be construed as a waiver thereof. Any single or
partial exercise of any such right, power, privilege or remedy shall not
preclude any other or future exercise thereof or the exercise of any other
right, power, privilege or remedy.
23. NOTICES
23.1 Save as otherwise expressly provided in this Agreement, any notice or other
communication to be given by one Party to another under, or in connection
with the matters contemplated by, this Agreement shall be addressed to the
recipient and sent to the address, telex number or facsimile number of such
other Party set out in schedule 1 to this Agreement for the purpose and
marked for the attention of the company secretary or to such other address,
telex number and/or facsimile number and/or marked for such other attention
as such other Party may from time to time specify by notice given in
accordance with this Clause 23 to the Party giving the relevant notice or
other communication to it.
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<PAGE>
23.2 Save as otherwise expressly provided in this Agreement, any notice or other
communication to be given by any Party to any other Party under, or in
connection with the matters contemplated by, this Agreement shall be in
writing and shall be given by letter delivered by hand or sent by first
class prepaid post (airmail if overseas) or telex or facsimile, and shall
be deemed to have been received:
23.2.1 in the case of delivery by hand, when delivered;
or
23.2.2 in the case of first class prepaid post, on the
second day following the day of posting or (if
sent airmail from overseas) on the fifth day
following the day of posting; or
23.2.3 in the case of telex, on the transmission of the
automatic answering-back of the address (where
such transmission occurs before 1700 hours on the
day of transmission) and in any other case on the
day following the day of transmission; or
23.2.4 in the case of facsimile, on acknowledgement by
the addressee's facsimile receiving equipment
(where such acknowledgement occurs before 1700
hours on the day of acknowledgement) and in any
other case on the day following the day of
acknowledgement.
24. COUNTERPARTS
This Agreement and any Supplemental Agreement may be
executed in any number of counterparts and by the different
Parties on separate counterparts, each of which when
executed and delivered shall constitute an original, but all
the counterparts shall together constitute but one and the
same instrument.
45
<PAGE>
25. VARIATIONS
25.1 No variations to this Master Agreement shall be effective
unless made in writing and signed by or on behalf of all the
Parties. The Parties shall effect any amendment required to
be made to this Master Agreement by the Director as a result
of a change in the Transmission License or an order or
direction made pursuant to the Act or a License or as a
result of settling the terms of any Supplemental Agreement
and each Party hereby authorises and instructs NGC to make
any such amendment on its behalf and undertakes not to
withdraw, qualify or revoke such authority or instruction at
any time.
25.2 NGC and each User acknowledges that, because there has been
insufficient time to discuss and agree the details of the
Appendices to each Supplemental Agreement, those details may
be inaccurate. Accordingly,
(a) each User and NGC undertake to discuss in good faith the correct
identification of the details of each part of Appendix F of each
Supplemental Agreement entered into between NGC and the User with a
view to amending the same as necessary to reflect the correct
position. To the extent that agreement on the correct position cannot
be reached within 12 months after the date of that Supplemental
Agreement the matter shall be referred to arbitration for
determination in accordance with Clause 26 of this Agreement and such
details shall be amended accordingly following such agreement or
determination (as the case may be); and
46
<PAGE>
(b) in relation to Appendix A of each Supplemental Agreement, NGC
undertakes to establish a new asset register, specifying all Plant and
Apparatus owned by NGC which is necessary to connect each User's
Equipment to the NGC Transmission System at each Connection Site,
during the course of the Financial Year ending 31st March 1991 in
accordance with paragraph 2.2 of Appendix E to such Supplemental
Agreement. Such new asset register shall, provided that NGC has
complied with such paragraph 2.2, take effect from 1st April 1991.
Following the establishment of such new asset register, each such
Appendix A and any provisions of the relevant Supplemental Agreement
which refer to it shall, to the extent appropriate, be amended
accordingly.
26. DISPUTE RESOLUTION
26.1 Save where expressly stated in this Agreement to the
contrary and subject to any contrary provision of the Act,
any License, or the Regulations, or the rights, powers,
duties and obligations of the Director or the Secretary of
State under the Act, any License or otherwise howsoever, any
dispute or difference of whatever nature howsoever arising
under out of or in connection with this Agreement between
any one or more Parties hereto shall be and is hereby
referred to arbitration pursuant to the arbitration rules of
the Electricity Supply Industry Arbitration Association in
force from time to time.
47
<PAGE>
26.2 Whatever the nationality, residence or domicile of any Party
to this Agreement and wherever the dispute or difference or
any part thereof arose the law of England shall be the
proper law of any reference to arbitration hereunder and in
particular (but not so a to derogate from the generality of
the foregoing) the provisions of the Arbitration Acts 1950
(notwithstanding anything in section 34 thereof) to 1979
shall apply to any such arbitration wherever the same or any
part of it shall be conducted.
26.3 Subject always to Sub-Clause 26.6 below, if any tariff customer (as defined
in Section 22(4) of the Electricity Act 1989) brings any legal proceedings
in any court (as defined in the Rules of the Supreme Court 1965 and in the
County Courts Act 1984) against one or more persons, any of which is a
Party to this Agreement (the "Defendant Party"), and the Defendant Party,
and the Defendant Party wishes to make a Third Party Claim (as defined in
Sub-Clause 26.5 below) against any other Party to this Agreement ("the
Other Party") which would but for this Sub-Clause have been a dispute or
difference referred to arbitration by virtue of Sub-Clause 26.1 above which
shall not apply and in lieu of arbitration, the court in which the legal
proceedings have been commenced shall hear and completely determine and
adjudicate upon the legal proceedings and the Third Party Claim not only
between the tariff customer and the Defendant Party but also between either
or both of them and any Other Party whether by way of third party
proceedings (pursuant to the Rules of the Supreme Court 1965 or the County
Court Rules 1881) or otherwise as may be ordered by the court.
48
<PAGE>
26.4 Where a Defendant Party makes a Third Party Claim against
any Other Party and such Other Party wishes to make a Third
Party Claim against a further Party the provisions of Sub-
Clause 26.3 above shall apply mutatis mutandis as if such
Party had been the Defendant Party and similarly in relation to any such
further Party.
26.5 For the purposes of this Clause 26 "Third Party Claim" shall
mean:-
(a) any claim by a Defendant Party against any other Party
(whether or not already a party to the legal
proceedings) for any contribution or indemnity, or
(b) any claim by a Defendant Party against such an Other
Party for any relief or remedy relating to or connected
with the subject matter of the legal proceedings and
substantially the same as some relief or remedy claimed
by the tariff customer, or
(c) any requirement by a Defendant Party that any question
or issue relating to or connected with the subject
matter of the legal proceedings should be determined
not only as between the tariff customer and the
Defendant Party but also as between either or both of
them and an Other Party (whether or not already a party
to the legal proceedings).
26.6 Sub-Clause 26.3 above shall apply only if at the time the
legal proceedings are commenced no arbitration has been
commenced between the Defendant Party and an Other Party
raising or involving the same or substantially the same
issues as would be raised by or involved in the Third Party
Claim. The tribunal in any arbitration which has been
commenced prior to the commencement of legal proceedings
shall determine the question in the event of dispute,
whether the issues raised or involved are the same or
substantially the same.
49
<PAGE>
27. JURISDICTION
27.1 Subject and without prejudice to Clause 26 and to Sub-Clause
27.4 below, all the Parties irrevocably agree that the
courts of England are to have exclusive jurisdiction to
settle any disputes which may arise out of or in connection
with this Agreement including the Grid Code and any
Supplemental Agreement and that accordingly any suit, action
or proceeding (together in this Clause 27 referred to as
"Proceedings") arising out of or in connection with this
Agreement and any Supplemental Agreement may be brought in such courts.
27.2 Each Party irrevocably waives any objection which it may have now or
hereafter to the laying of the venue of any Proceedings in any such court
as is referred to in this Clause 27 and any claim that any such Proceedings
have been brought in an inconvenient forum and further irrevocably agrees
that judgment in any Proceedings brought in the English courts shall be
conclusive and binding upon such Party and may enforced in the courts of
any other jurisdiction.
27.3 Each Party which is not incorporated in any part of England and Wales
agrees that if it does not have, or shall cease to have, a place of
business in England and Wales it will promptly appoint, and shall at all
times maintain, a person in England and Wales irrevocably to accept service
of process on its behalf in any Proceedings in England.
50
<PAGE>
27.4 For the avoidance of doubt nothing contained in Sub-Clause
27.1 to 27.3 above shall be taken as permitting a Party to
commence Proceedings in the courts where this Agreement
otherwise provides for Proceedings to be referred to
arbitration.
28. GOVERNING LAW
This Agreement and each Supplemental Agreement shall be
governed by and construed in all respects in accordance with
English law.
29. SEVERANCE OF TERMS
If any provision of this Agreement or any Supplemental
Agreement is or becomes or is declared invalid,
unenforceable or illegal by the courts of any competent
jurisdiction to which it is subject or by order of any other
Competent Authority such invalidity, unenforceability or
illegality shall not prejudice or affect the remaining
provisions of this Agreement or any Supplemental Agreement
which shall continue in full force and effect
notwithstanding such invalidity, unenforceability or
illegality.
30. LANGUAGE
Each notice, instrument, certificate or other document to be
given by one Party to another under this Agreement shall be
in the English language.
51
<PAGE>
IN WITNESS WHEREOF the hands of the duly authorized
representatives of the Parties the date first above written.
THE NATURAL GRID COMPANY PLC
By
/s/ E. Clefueux
NATIONAL POWER PLC
By
/s/
POWERGEN PLC
By
/s/ R. Melville
NUCLEAR ELECTRIC PLC
By
/s/ E. Clefueux
THE NATIONAL GRID COMPANY PLC
(PUMPED STORAGE DIVISION)
By
/s/
BRITISH NUCLEAR FUELS PLC
By
/s/
UNITED KINGDOM ATOMIC ENERGY AUTHORITY
By
/s/ Richard Pechover
CENTRAL POWER LTD
By
/s/
EASTERN ELECTRICITY PLC
By
/s/ W E Watson
52
<PAGE>
EAST MIDLANDS ELECTRICITY PLC
By
/s/ P J Champ
LONDON ELECTRICITY PLC
By
/s/
MANWEB PLC
By
/s/
MIDLANDS ELECTRICITY PLC
By
/s/
NORTHERN ELECTRIC PLC
By
/s/
53
<PAGE>
NORWEB PLC
By
/s/
SEEBOARD PLC
By
/s/ E M Wide
SOUTHERN ELECTRIC PLC
By
/s/
SOUTH WALES ELECTRICITY PLC
By
/s/
SOUTH WESTERN ELECTRICITY PLC
By
/s/ M J Carson
YORKSHIRE ELECTRICITY GROUP PLC
By
/s/
54
<PAGE>
SCHEDULE 1
NGC/USERS
NAME NOTICES BANK DETAILS
(and registered number) (address as registered
(and registered office) office unless otherwise
stated)
(telex number)
(fax number)
THE NATIONAL GRID COMPANY PLC TELEX: 25815
2366977 FAX: 01-620 8547
National Grid House
Summer Street
London SEI 9JU
NATIONAL POWER PLC TELEX: 883141
2366963 FAX: 01-634 5811
Sudbury House
15 Newgate Street
London EC1A 7AU
POWERGEN PLC TELEX: 881 1400
2366970 FAX: 01-826 2890
53 New Broad Street
London EC2M 1JJ
NUCLEAR ELECTRIC PLC TELEX: 883141
2264251 FAX: 01-634 7282
Barnett Way Sudbury House
Barnwood 15 Newgate Street
Gloucester GL4 7RS London EC1A 7AU
THE NATIONAL GRID COMPANY PLC
(PUMPED STORAGE DIVISION)
(details as above)
BRITISH NUCLEAR FUELS PLC TELEX: 627581
1002607 FAX: 0925 822711
Warrington Road
Risley
Warrington
Cheshire WA3 6AS
UNITED KINGDOM ATOMIC ENERGY TELEX: 22565
AUTHORITY FAX: 01 930 8403
11 Charles II Street, AEA Technology
London SW1Y 4QP Winfrith
Dorchester
Dorset DT2 8DH
55
<PAGE>
CENTRAL POWER LIMITED TELEX: 338 092
2251099 FAX: 021 423 1907
Mucklow Hill
Halesowen
West Midlands B62 8BP
EASTERN ELECTRICITY PLC TELEX: 98123
2366906 FAX: 0473 601036
P O Box 40
Wherstead
Ipswich IP9 2AQ
EAST MIDLANDS ELECTRICITY PLC TELEX: 37424
2366923 FAX: 0602 209789
P O Box 4
North P D O
398 Coppice Road
Arnold
Nottingham NG5 7HX
LONDON ELECTRICITY PLC TELEX: 885342
2366852 FAX: 01-242 2815
Templar House
81-87 High Holborn
London WC1V 6NU
MANWEB PLC TELEX: 61277
2366937 FAX: 0244 377269
Sealand Road
Chester CH1 4LR
MIDLANDS ELECTRICITY PLC TELEX: 338092
2366928 FAX: 021 422331
Mucklow Hill
Halesowen
West Midlands B62 8BP
NORTHERN ELECTRIC PLC TELEX: 53324
2366942 FAX: 091 235 2109
Carliol House
Newcastle-Upon-
Tyne NE99 1SE
NORWEB PLC TELEX: 6695971
2366949 FAX: 061 875 7360
Talbot Road
Manchester M16 0HQ
SEEBOARD PLC TELEX: 87230
2366867 FAX: 0273 21705
Grand Avenue
Hove
East Sussex BN3 2LS
56
<PAGE>
SOUTHERN ELECTRIC PLC TELEX: 848282
2366879 FAX: 0628 87124
South Electricity House
Littlewick Green
Maidenhead
Berks. SL6 3QB
SOUTH WALES ELECTRICITY PLC TELEX: 498331
2366985 FAX: 0222 777759
St Mellons
Cardiff CF3 9XW
SOUTH WESTERN ELECTRICITY PLC TELEX:
2366894 FAX: 0454 616369
800 Park Avenue
Aztec West
Almondsbury
Avon BS12 4SE
YORKSHIRE ELECTRICITY TELEX: 55128
GROUP PLC FAX: 0532 892123
2366996
Scarcroft
Leeds LS14 3HS
57
<PAGE>
SCHEDULE 2
DEFINITIONS
"Accession Agreement" an agreement in or substantially in
the form set out in Schedule 3.
"the Act" the Electricity Act 1989.
"Active Power" the product of voltage and the in-phase
component of alternating current
measured in units of watts and standard
multiples thereof i.e.
1000 watts = 1kW
1000 kW = 1MW
1000 MW = 1GW
1000 GW = 1TW.
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<PAGE>
"Affiliate" in relation to NGC means any
holding company or subsidiary of
NGC or any subsidiary of a holding
company of NGC, in each case within
the meaning of Section 736, 736A
and 736B of the Companies Act 1985
as substituted by Section 144 of
the Companies Act 1989 and if that
section is not in force at the date
of this Agreement as if such latter
section were in force at such date.
"Agency Business" any business of NGC or any
Affiliate or Related Undertaking in
the purchase or other acquisition
or sale or other disposal of
electricity as agent for any other
Authorised Electricity Operator.
"this Agreement" this Agreement including the
Schedules and any Supplemental
Agreements and the Appendices
thereto as the same may be amended,
extended, supplemented, novated or
modified in accordance with the
terms hereof from time to time
provided that each Supplemental
Agreement shall constitute an
agreement separate from each other
Supplemental Agreement.
"Agreed Ancillary Services" Commercial Ancillary Services and
Part 2 System Ancillary Services.
"Ancillary Service" a System Ancillary Service and/or a
Commercial Ancillary Service as the
case may be.
"Ancillary Services Business" the business of NGC or any
Affiliate or Related Undertaking as
operator of NGC's Transmission
System in the acquisition and/or
sale (other than as part of the
Generation Business) of Ancillary
Services.
59
<PAGE>
"Annual Average Cold Spell a particular combination of weather
(ACS) Conditions" elements which gives rise to a level
of peak Demand within an NGC Financial
Year which has a 50% chance of being
exceeded as a result of weather
variation alone.
"Apparatus" all equipment in which electrical
conductors are used, supported or
of which they may form a part.
"Authorized Electricity any person (other than NGC in its
Operator" capacity as operator of the NGC
Transmission System) who is
authorised to generate, transmit
or supply electricity and for the
purposes of Condition 10A to 10C
inclusive of the Transmission Licence
shall include any person who has made
application to be so authorised which
application has not been refused
and any person transferring electricity
to or from England and Wales across an
interconnector or who has made
application for use of interconnector
which has not been refused.
"Authorised Recipient" in relation to any Protected
Information, means any Business
Person who, before the Protected
Information had been divulged to
him by NGC or any Subsidiary of
HGC, had been informed of the
nature and effect of Sub-Clause
19.1 of the Master Agreement and
who requires access to such
Protected Information for the
proper performance of his duties as
a Business Person in the course of
Permitted Activities.
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<PAGE>
"Black Start Capability" as defined in the Grid Code.
"Business Day" any week-day other than a Saturday on
which banks are open for domestic
business in the City of London.
"Business Person" any person who is a Main Business
Person or a Corporate Functions
Person and "Business Personnel" shall be
construed accordingly.
"Central Despatch" the process of Scheduling and
issuing direct instructions by NGC
referred to in paragraph 1 of
Condition 7 of the Transmission
Licence.
"Charging Rules" the provisions of Appendix E to the
Supplemental Agreements.
"Commercial Ancillary Services" Ancillary Services, other than
System Ancillary Services,
utilised by NGC in operating
the Total System if a User has
agreed to provide them under a
Supplemental Agreement with
payment being dealt with under
an Ancillary Services
Agreement or in the case of
Externally Interconnected
Parties or External Pool
Members (as defined in the
Grid Code) under any other
agreement. A non-exhaustive
list of commercial Ancillary
Services is set out below:-
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<PAGE>
- Frequency Control by means of a
Pumped Storage Unit Spinning in Air
- Frequency Control by means of
adjustment to a Pumped Storage Unit
Pumping Programme
- Frequency Control by means of
Demand reduction
- Reactive Power supplied by means of
synchronous or static compensators
- Hot Standby
In addition, there is also the Ancillary
Service of cancelled start which arises
as part of the ordinary operational
instruction of Generating Units and
therefore needs to separate capability
description.
Defined terms used in this definition are
defined in the Grid Code.
"Commissioned" in respect of Plant and Apparatus
commissioned before the Transfer Date
means Plant and Apparatus recognised as
having been commissioned according to
the commissioning procedures current at
the time of commissioning and in respect
of Plant and Apparatus commissioned
after the Transfer Date means Plant
and/or Apparatus certified by the
Independent Engineer as having been
commissioned in accordance with the
relevant Commissioning Programme.
"Competent Authority" the Secretary of State, the
Director and any local or national
agency, authority, department,
inspectorate, minister, ministry,
official or public or statutory
person (whether autonomous or not)
of, or of the government of, the
United Kingdom or the European
Community.
62
<PAGE>
"Confidential Information" all data and other information
supplied to a User by another
Party under the provisions of this
Agreement.
"Connection Application" an application for a New Connection
Site in the form or substantially
in the form set out in Exhibit 7.
"Connection Charges" charges made or levied or to be
made or levied for the carrying out
(whether before or after the date
on which the NGC Transmission
Licence comes into force) of works
and provision and installation of
electrical plant, electric lines
and ancillary meters in
constructing entry and exit points
on NGC's Transmission System,
together with charges in respect of
maintenance and repair of such
items in so far as not otherwise
recoverable as Use of System
Charges, all as more fully
described in the Transmission
Licence, whether or not such
charges are annualised.
"Connection Conditions" or "CC" that portion of the Grid Code
which is identified as the
Connection Conditions.
"Connection Offer" an offer for a New Connection Site
in the form or substantially in the
form set out in Exhibit 8 including
any revision or extension of such
offer.
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<PAGE>
"Connection Site" each location more particularly
described in the relevant
Supplemental Agreement at which a
User's Equipment and the NGC Assets
required to connect that User to
the NGC Transmission System are
situated. If two or more Users own
or operate Plant and Apparatus
which is connected at any
particular location that location
shall constitute two (or the
appropriate number of) Connection
Sites.
"Connection Site Demand Capability" the capability of a Connection
Site to take power to the
maximum level forecast by the
User from time to time and
forming part of the Forecast
Data supplied to NGC pursuant
to the Grid Code together with
such margin as NGC shall in
its reasonable opinion
consider necessary having
regard to NGC's duties under
its Transmission Licence.
"Control Telephony" as defined in the Grid Code.
"Corporate Functions Person" any person who is:-
(a) a director of NGC; or
(b) an employee of NGC or any of its
Subsidiaries carrying out any
administrative, finance or other
corporate services of any kind
which in part relate to the Main
Business; or
(c) engaged as an agent of or adviser to
or performs work in relation to or
services for the Main Business.
64
<PAGE>
"Customer" A person to whom electrical power
is provided (whether or not he is
the provider of such electrical
power) other than power to meet
Station Demand of that person.
"Data Registration Code" the portion of the Grid Code which
or "DRC" is identified as the
Data Registration Code.
"Decommission" cessation of use by a User of that
User's Equipment at any given Connection
Site for a continuous period exceeding
12 months pursuant to the relevant
Supplemental Agreement.
"Deenergisation" or the movement of any isolator,
breaker or switch or the
"Deenergise(d)" removal of any fuse whereby no
Electricity can flow to or from the
relevant System through the User's
Equipment.
"Demand" the demand of MW and MVA of electricity
(i.e. both Active Power and Reactive
Power), unless otherwise stated.
"Derogation" a direction issued by the Director
relieving a Party from the
obligation under its Licence to
comply with such parts of the Grid
Code or any Distribution Code or in
the case of NGC the Transmission
Licence as may be specified in such
direction and "Derogated" shall be
construed accordingly.
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<PAGE>
"Derogated Plant" shall mean Plant or Apparatus which
is the subject of a Derogation.
"Despatch" the issue by NGC of instructions
for Generating Plant to achieve
specific Active Power and Reactive
Power Levels or target voltage
levels within Generation Scheduling
and Despatch Parameters and by
stated times.
"Detailed Planning Data" detailed additional data which NGC
requires under the PC in support of
Standard Planning Data.
"Directive" includes any present or future
directive, requirement,
instruction, direction or rule of
any Competent Authority, (but only,
if not having the force of law, if
compliance with the Directive is in
accordance with the general
practice of persons to whom the
Directive is addressed) and
includes any modification,
extension or replacement thereof
then in force;
"Director" the Director General of Electricity
Supply appointed for the time being
pursuant to Section 1 of the Act;
"Disconnection" permanent physical disconnection of
a User's Equipment at any given
Connection Site which permits
removal thereof from the Connection
Site or removal of all NGC's Assets
therefrom (as the case may be).
"Disputes Resolution Procedure" arbitration pursuant to the
arbitration rules of the
Electricity Supply Industry
Arbitration Association in force
from time to time.
66
<PAGE>
"Distribution Code(s)" the Distribution Code(s) drawn up
by Public Electricity Suppliers
pursuant to the terms of their
respective Licence(s) as from time
to time revised in accordance with
those Licences.
"Distribution System" the system consisting (wholly or
mainly) of electric lines owned or
operated by any Authorised
Electricity Operator and used for
the distribution of electricity
from Grid Supply Points or
generation sets or other entry
points to the point of delivery to
Customers or Authorised Electricity
Operators, and includes any Remote
Transmission Assets operated by
such Authorised Electricity
Operator and any electrical plant
and meters owned or operated by the
Authorised Electricity Operator in
connection with the distribution of
electricity, but shall not include
any part of NGC's Transmission
System.
"Earthing" as defined in the Grid Code.
"the EdF Documents" as defined in the Pooling and Settlement
Agreement.
"Electricity" Active Energy and Reactive Energy
(in each case as defined in the
Pooling and Settlement Agreement)
67
<PAGE>
"Embedded" a direct connection to a
Distribution System or the System
of any other User to which
Customers and/or Power Stations are
connected.
"Energisation" or "Energise(d)" the movement of any isolator,
breaker or switch or the
insertion of any fuse so as to
enable Energy to flow from and
to the relevant System through
the User's Equipment.
"Energy" the electrical energy produced, flowing
or supplied by an electric circuit
during a time interval, being the
integral with respect to time of the
power, measured in units of watt-hours
or standard multiples thereof i.e.
1000 Wh = 1kWh
1000 kWh = 1MWh
1000 MWh = 1GWh
1000 GWh = 1TWh
"Energy Metering Equipment" has the meaning given to the phrase
"Metering Equipment" in the Pooling
and Settlement Agreement.
"Energy Metering System" has the meaning given to the phrase
"Metering System" in the Pooling
and Settlement Agreement.
"Estimated Demand" the forecast Demand (Active Power) data
filed with NGC pursuant to paragraph 12
of the Charging Rules.
"Executive Committee" the committee established pursuant
to Clause 14.1 of the Pooling and
Settlement Agreement.
"Financial Year" the period of 12 months ending on
31st March in each calendar year.
68
<PAGE>
"FMS Date" has the meaning given in the
Pooling and Settlement Agreement.
"Force Majeure" in relation to any Party any evnt
or circumstance which is beyond the
reasonable control of such Party
and which results in or causes the
failure of that Party to perform
any of its obligations under this
Agreement including act of God,
strike, lckout or other industrial
disturbance, act of the public
eemy, war declared or undeclared,
threat of war, terroist act,
blockade, revolution, riot,
insurrection, civil commotion,
public demonstration, sabotage, act
of vandalism, lightning, fire,
storm, flood, earthquake,
accumulation of snow or ice, lack
of water arising from weather or
environmental problems, explosion,
falut or failure of Plant and
Apparatus (which could not have
been prevnted by Good Industry
Practice), governmental restraing,
Act of Parliament, other
legislation, bye law and Directive
(not being any order, regulation or
direction unde Section 32, 33, 34
and 35 of the Act) provided that
lack of funds shall not be
interpreted as a cause beyond the
reasonable control of that Party.
"Fuel Security Code" the document of that title
designated as such by the Secretary
of State as from time to time
amended.
69
<PAGE>
"Generation Business" the authorized business of NGC or
any Affiliate or Related
Undertaking in the generation of
electricity or the provision of
Ancillary Services, in each case
from pumped storage and from the
Kielder hydro-electric generating
station.
"Generation License" the license granted to a Geneator
pursuant to Section 6(1)(a) of the
Act.
"Generating Plant" a Power Station subject to Central
Dispatch.
"Generating Unit" unless otherwise provided in the
Grid Code any Apparatus which produces
electricity.
"Generator" a person who generates electricity
under license or exemption under
the Act.
"Good Industry Practice" in relation to any undertaking and
any circumstances, the exercise of
that degree of skill, diligence,
prudence and foresight which would
reasonably and ordinarily be
exected from a skilled and
experienced operator engaged in the
same type of undertaking under the
same or similar circumstances.
"Grid Code" the Grid Code drawn up pursuant to
the Transmission Licensee, as from
time to time revised in accordance
with the Transmission License.
"Grid Supply Point" a point of delivery from the NGC
Transmission System to a
Distribution System or a Non-
Embedded Customer.
70
<PAGE>
"Gross Asset Value" the value calculated by NGC in
accordance with recognised
accounting principles and
procedures as published by NGC from
time to time.
"High Voltage" a voltage exceeding 650 volts.
"Independent Generating Plant" a Power Station not subject to
Central Dispatch.
"Intellectual Property" patents, trade marks, service
marks, rights in designs, trade
names, copyrights and topography
rights (whether or not any of the
same are registered and including
applications for registration of
any of the same) and rights under
licenses and consents in relation
to any of the same and all rights
or forms of protection of a similar
nature or having equivalent or
similar effect to any of the same
which may subsist anywhere in the
world.
"Interconnectors" the electric lines and electrical
plant and meters owned or operated
by NGC solely for the transfer of
electricity to or from the NGC
Transmission System into or out of
England and Wales.
"Interconnectors Business" the business of NGC or any
Affiliate or Related
Undertaking in the operation
of any interconnector.
71
<PAGE>
"Isolation" as defined in the Grid Code.
"License" any license granted pursuant to Section
6 of the Act.
"License Standards" the standards to be met by NGC
under Condition 12 of the
Transmission License.
"Local Safety Instructions" as defined in the Grid Code.
"Main Business" any business of NGC or any of its
Subsidiaries as at the Transfer
Date or which it is required to
carry on under the Transmission
License, other than the Generating
Business.
"Main Business Person" any employee of NGC or any directo
or employee of its Subsidiaries who
is engaged solely in the Main
Business and "Main Business
Personnel" shall be construed
accordingly.
"Master Agreement" the Agreement to which this is
Schedule 2, excluding any
Supplemental Agreements.
"Material Effect" an effect causing a Party to effect
any works or to alter the manner of
operation of its Plant and/or
Apparatus at the Connection Site or
the site of connection which in
either case involves that Party in
expenditure of more than (Pounds)10,000.
"Maximum Export Capacity" the maximum amount of power to be
passed into the NGC Transmission
System at the Connection Site as
notified by the User to NGC as part
of the Registered Data from time to
time.
72
<PAGE>
"Minor Independent Generating Plant" Any Independent Generating
Plant with a Registered
Capacity of less than 50 mW.
"Modification" any actual or proposed replacement,
renovation, modification, alteration, or
construction by or on behalf of a User
or NGC to either that Party's Plant or
Apparatus or the manner of its operation
which has or may have a Material Effect
on another Party at a particular
Connection Site.
"Modification Application" an application in the form or
substantially in the form set
out in Exhibit 11.
"Modification Notification" a notification in theform or
substantially in the form set
out in Exhibit 13.
"Modification Offer" an offer in the fom or
substantially in the form set out
in Exhibit 12, including any
revision or extension of such
offer.
"Natural Demand" the Demand (Active Power) which is
necessary to meet the needs of
Customers excluding that Demand
(Active Power) met by Embedded
Generating Units which is to be
paid for otherwise than pursuant to
the Pooling and Settlement
Agreement.
"Net Asset Value" the Gross Asset Value of the NGC
Asset in question less depreciation
over the Replacement Period
calculated in accordance with
recognised accounting principles
and procedures.
73
<PAGE>
"New Connection Site" a proposed Connection Site in
relation to which there is no
Supplement Agreement in force
between the Parties.
"NGC Assets" the Plant and Apparatus owned by NGC
necessary to connect the User's
Equipment to the NGC Transmission System
at any particular Connection Site in
respect of which NGC charges Connection
Charges (if any) as listed or identified
in Appendix A to the Supplemental
Agreement relating to each such Connection
Site.
"NGC Engineering Charges" Reasonable Charges for time spent
by NGC engineers and other staff in
relation to NGC Transmission System
development and related services as
published from time to time by NGC.
"NGC Transmission System" the sysem consisting (wholly or
mainly) of high voltage electric
lines owned or opeated by NGC and
used for the transmission of
electricity from one Power Station
to a sub-station or to another
Power Station or between sub-
stations or to or from any External
Interconnection and includes any
Pant and Apparatus and meters owned
or operated by NGC in connection
with the transmission of
electricity but does not include
any Remote Transmission Assets.
"Non-embedded Customer" a Customer except for a PES
receiving electricity direct from
the NGC Transmission System
irrespective of from whom it is
supplied.
74
<PAGE>
"Operating Code" or "OC" the portion of the Grid Code which
is identified as the Operating
Code.
"Operation Diagrams" as defined in the Grid Code.
"Operational" in relation to a Connection Site means
that the same has been Commissioned
(which for the avoidance of doubt does
not necessarily include commissioning of
Generating Units connected at the
Connection Site) and that the User can
use such User's Equipment to undertake
those acts and things capable of being
undertaken by Pool Members.
"Operational Effect" any effect on the operation of
any System which causes that
System to operate (or be at a
materially increased risk of
operating) differently to the
way in which it would have
normally operated in the
absence of that effect.
"Operational Intertripping" the automatic tripping of
circuit-breakers to prevent
abnormal system conditions
occurring, such as over
voltage, overload, system
instability etc. after the
tripping of other circuit
breakers following power
system faul(s) which includes
System to Generating Plant and
System to Demand intertripping
schemes.
75
<PAGE>
"Operational Metering Equipment" meters, instrument
transformers (both voltage and
current), transducers,
metering protection equipment
incuding alarms circuitry and
their associated outstations
as may be necessary for the
purpose of CC.6.5.5 of the
Grid Code and the
corresponding provision of the
relevant Distribution Code.
"Operator" has the meaning defined in the
Pooling and Settlement Agreement.
"Part 1 System Ancillary Services" Ancillary Services which are
required for System reasons
and which must be provided by
Users in accordance with the
Connection Conditions. An
exhaustive list of Part 1
System Ancillary Services is
included in the Grid Code (in
that part of CC8.1 headed Part
1) namely:-
- Reactive Power supplied otherwise
than by means of synchronous or
statis compensators
- Frequency Control by means of
Frequency Sensitive Generation.
"Part 2 System Ancillary Services" Ancillary Services which are
requied for System reasons and
which must be provided by a
User if the User has agreed
to provide them under a
Supplemental Agreement. A
non-exhaustive list of Part 2
System Ancillary Services is
included in the Grid Code (in
that part of CC8.1 headed Part
2) namely:-
- Black Start Capability.
76
<PAGE>
"Party" each person for the time being and from
time to time party to the Master
Agreement and any successor(s) in title
to, or permitted assign(s) of, such
person;
"Payment Date" a date for payment of NGC Connection
Charges and/or Use of System Charges,
determined in accordance with Sub-Clause
14.2 of the Master Agreement.
"Permitted Activities" activities carried on for the
purposes of the Main Business.
"PES Supply Business Demand" the Demand (Active Power) of any
PES which is attributable to each Grid
Supply Point.
"Planning Code" or PC that portion of the Grod Code which
is identified as the Planning Code.
"Plant" fixed and moveable items used in the
generation and/or supply and/or
transmission of electricity other than
Apparatus.
"Pool Member" any person who is admitted to membership
in accordance with the Pooling and
Settlement Agreement.
"Pooling and Settlement Agreement" the agreement of that title for the
time being approved (or to be
approved) by the Secretary of State
or by the Director as from time to
time amended and, where the context
so permits, includes the agreement
known as the Initial Settlement
Agreement of even date with the
above agreement, and made between
the parties to the above agreement
as at such date.
77
<PAGE>
"Power Station" An installation comprising one or
more Generating Units (even where
sited separately) owned and/or
controlled by the same Generator,
which may reasonably be considered
as being managed as one Power
Station.
"Protected Information" any information relating to the
affairs of a Party which is
furnished to Business Personnel
pursuant to this Agreement or
pursuant to a direction under
section 34 of the Act or pursuant
to the provisions of the Fuel
Security Code unless, prior to such
information being furnished, such
Party has informed the recipient
thereof by notice in writing or by
endorsement on such information,
that the said information is not to
be regarded as Protected
Information.
"Public Electricity Supplier" or "PES" a holder of a Public
Electricity Supply License.
"Public Electricy Supply License" a license issued under Section
6(a)(c) of the Act.
"Reasonable Charges" reasonable cost reflective charges
comparable to charges for similar
services obtainable in the open
market.
78
<PAGE>
"Registered Capacity" the normal full load capacity of a
Generating Unit as declared by the
Generator, less the MW cosumed by
the Generating Unit through the
Generating Unit's unit transformer when
producing the same.
"Registered Data" those items of Standard Planning
Data and Detailed Planning Data
which upon connection become fixed
(subject to any subsequent
changes).
"Registrant" has the meaning define in the
Pooling and Settlement Agreement.
"Regulations" the Electricity Supply Regulations 1988
or any amendment or reenactment thereof.
"Related Undertaking" in relation to NGC means any
undertaking in which NGC has a
participating interest as defined
by Section 260(1) of the Companies
Act 1985 as substituted by Section
22 of the Companies Act 1989 and if
that latter section is in force at
the date of this Agreement as if
such latter section were in force
at such date.
"Remote Transmission Assets" any Plant and Apparatus or meters
owned by NGC which (a) are embedded
in a Distribution System or a User
System and which are not directly
connected by Plant and/or Apparatus
owned by NGC to a sub-station owned
by NGC and (b) are by agreement
between NGC and (b) are by
agreement between NGC and such PES
or User under the direction and
control of such PES or User.
79
<PAGE>
"Replacement Period" in relation to an NGC Asset, the
period commencing on the date on
which such NGC Asset is or was
originally Commissioned, after
which it is assumed for accounting
purposes such NGC Asset will need
to be replaced, which shall be 40
years unless otherwise agreed
between the Parties to a
Supplemental Agreement and recorded
in the relevant Supplemental
Agreement.
"Safety Coordinator(s)" a person or persons nominated by
NGC and each User to be responsible
for the co-ordination of Safety
Precautions (as defined in the Grid
Code) at each Connection Point when
work and/or testing is to be
carried out on a system which
necessitates the provision of
Safety Precautions on HV Apparatus,
pursuant to OC8.
"Safety Rules" the rules of NGC or a User that seek to
ensure that persons working on Plant
and/or Apparatus to which the rules
apply are safeguarged from hazards
arising from the System.
"Scheduling" the process of compiling and
issuing a Generation Schedule (as
that expression is defined in the
Grid Code) as set out in SDC1.
"SDC or Scheduling and Despatch Code" that portion of the Grid Code
which specifies the Scheduling
and Despatch process.
80
<PAGE>
"Second Tier Supplier" or "STS" a holder of a Second Tier
Supply License.
"Second Tier Supply License" a licence granted under Section
6(2)(a) of the Act.
"Separate Business" each of the Transmission,
Settlements, Generation,
Interconnectors and Ancillary
Services Businesses taken
separately from one another and
from any other business of NGC, but
so that where all or any part of
such business is carried out by an
Affiliate or Related Undertaking of
NGC such part of the business as is
carried out by that Affiliate or
Related Undertaking shall be
consolidated with any other such
business of NGC (and of any other
Affiliate or Ralted Underaking) so
as to form a single Separate
Business.
"Settlements Business" means the business of NGC or any
Affiliate or Related Undertaking as
settlement system administrator
under the Pooling and Settlement
Agreement.
"Site Common Drawings" as defined in the Grid Code
"Site Responsibility Schedule" a schedule containing the
information and prepared on
the basis of the provisions
set out in Appendix 1 of the
CC.
"Small Independent Generating Plant" any Independent Generating
Plant with a Registered
Capacity of 50 MW or more.
81
<PAGE>
"Station Demand" in respect of any generating
station and Generator, means that
consumption of electricity
(excluding any supply to any
Customer of the relevant Generator
who is neither such Generator nor a
member of a qualifying group of
which such Generator is a part)
from the NGC Transmission System or
a Distribution System at premises
on the same site as such generating
station, with premises being
treated as on the same site as each
other if they are:
(i) the same premises;
(ii) immediately adjoining each other;
or
(iii) separated from each other only
by road, railway or
watercourse or by other
premises (other than a pipe-
line, electric line or similar
structure) occupied by the
consumer in question or by any
other person who together with
that consumer forms a
qualifying group; and for the
purpose of this definition
"generating station" and
"qualifying group" shall have
the meanings given those
expressions when used in the
Electricy (Class Exemptions
from the Requirement for a
License) Order 1990.
82
<PAGE>
"STS Demand" the Demand (Active Power) of any
STS which is atributable to each
Grid Supply Point.
"Supplemental Agreement" has the meaning set out in
Clause 2 of the Master
Agreement.
"Supplier" a Public Electricity Supplier
or Second Tier Supplier.
"System" any User System or the NGC
Transmission System as the case may
be.
"Termination Amount" in relation to a Connection
Site, the amount calculated in
accordance with paragrah 4 of
the Charging Rules.
"Total System" the NGC Transmission System and all
User Systems in England and Wales.
"Transfer Date" 2400 hours on 30th March 1990.
"Transfer Scheme" the transfer scheme made by
Central Electricity Generating
Board established under
Section 66 of the Act or by
the Secretary of State under
Section 69 of the act.
"Transmission Business" the authorised business of NGC
or any Affiliate or Related
Undertaking in the planning,
development, construction and
maintenance of the NGC
Transmission System (whether
or not pursuant to directions
of the Secretary of State made
under Section 34 or 35 of the
Act) and the opeation of such
system for the transmission of
electricity, including any
business in providing
connections to the NGC
Transmission System but shall
not include (i) any other
Separate Business or (ii) any
other business (not being a
Separate Business) of NGC or
any Affiliate or Related
Undertaking in the provision
of services to or on ehalf of
any one or more persons.
83
<PAGE>
"Transmission License" the license granted to NGC
under Section 6(1)(b) of the
Act.
"Undertaking" bears the meaning ascribed to that
expression by Section 259 of the
Companies Act 1985 as substituted
by Section 22 of the Companies Act
1989 and if that latter section is
not in force at that date of this
Agreement as if such latter section
were in force at such date.
"Use of System" use of NGC's Transmission
System for the transport of
electricity by any Authorised
Electricity Operator.
"Use of System Application" an application for a
Supplemental Agreement Type 5
or Type 6 in the form or
substantially in the form set
out in Exhibit 9 or 10 as
appropriate.
"Use of System Charges" charges made or levied or to
be made or levied by NGC for
the provision of services as
part of the Transmission
Business to any Authorised
Electricity Operator as more
fully described at paragraph 2
of Condition 10 and paragraph
2 of Schedule 3 to the
Transmission License and in
the Supplemental Agreements
but shall not include
Connection Charges.
84
<PAGE>
"User's License" a User's license to carry on
its business granted pursuant
to Section 6 of the Act.
"User's Equipment" the Plant and Apparatus owned
by a User (ascertained in the
absence of agreement to the
contrary byreference to the
rules set out in Clause 6 of
the Master Agreement) which
either is connected to the NGC
Assets forming part of the NGC
Transmission System at any
particular Connection Site or
which that User wishes so to
connect.
"User System" any system owned or operated by a
User comprising Generating Units
and/or Distribution Systems (and/or
other systems consisting (wholly or
mainly) of electric lines which are
owned or operated by a person other
tha a PES) and Plant and/or
Apparatus connecting Generating
Units, Distribution Systems (and/or
other systems consisting (wholly or
mainly) of electric lines which are
owned or operated by a person other
than a PES) or Non-Embedded
Customers to the NGC Transmission
System or (except in the case of
Non-Embedded Customers) to the
relevant other User System, as the
case may be, including any Remote
Transmission Assets operated by
such User or other person and any
Plant and/or Apparatus and meters
owned or operated by such User or
other person in connection with the
distribution of electricity but
does not include any part of the
NGC Transmission System.
85
<PAGE>
SCHEDULE 3
THIS ACCESSION AGREEMENT is made on [ ] between:-
1. [ ], a company incorporated [with limited liability] under
the laws of [ ] [(registered number)] and having its
[registered office] at [ ] (the "New Party"); and
2. The National Grid Company PLC ("NGC") on its own behalf and on behalf of
all the other parties to the Master Agreement referred to below.
WHEREAS:-
By an agreement (the "Master Connection and Use of System Agreement") dated
[ ], 1990 made between the Parties named therein and NGC the parties
thereto agreed to give effect to and be bound by certain rules and
procedures for etablishing a contractual framework between the Parties
pursuant to which Supplemental Agreements will from time to time be made
for the connection of Plant and Apparatus to the NGC Transmission System,
the use by Parties of the MGC Transmission System and the payment of
charges to NGC.
IT IS HEREBY AGREED AS FOLLOWS:-
1. Unless the context otherwise requires, words and expressions defined in the
Master Agreement shall bear the same meanings respectively when used
herein.
2. NGC (acting on its own behalf and on behalf of each of the other Parties)
hereby admits the New Party as an additional Party under the Master
Agreement on the terms and conditions hereof.
3. The New Party hereby accepts its admission as a Party and undertakes with
NGC (acting on its own behalf and on behalf of each of the other Parties)
to perform and to be bound by the terms and conditions of the Master
Agreement as a Party as from the date hereof.
4. For all purposes in connection with the Master Agreement the New Party
shall as from the date hereof be treated as if it has been a signatory of
the Master Agreement, and as if this Agreement were part of the Master
Agreement, and the rights and obligations of the Party shall be contrued
accordingly.
5. This Agreement and the Master Agreement shall be read and construed as one
document and references in the Master Agreement to the Master Agreement
(howsoever expressed) whould be read and construed as references to the
Master Agreement and this Agreement.
6. This Agreement shall be governed by and contrued in all respects in
accordance with English law and the provisions of Clause 27 of the Master
Agreement shall apply hereto mutatuis mutandis.
86
<PAGE>
AS WITNESS the hands of the duly authorised representatives of the parties
hereto the day and year first above written.
[New Party]
By:
Registered Number:
Registered Office:
Address for Notices (if different from Registered Office):
Telex No:
Attention:
Bank Details:
The National Grid Company PLC (for itself and on behalf of each of the Parties
to the Master Agreement).
By:
87
Exhibit 10.5
DATED
THE NATIONAL GRID COMPANY PLC
and
SOUTH WESTERN ELECTRICITY PLC
---------------------------------------------
SUPPLEMENTAL AGREEMENT TYPE 1
---------------------------------------------
REF: A/SWE/90/14-1EX
<PAGE>
TABLE OF CONTENTS
1. DEFINITIONS, INTERPRETATION AND CONSTRUCTION...................... 1
2. BEING OPERATIONAL/CONNECTION/ENERGISATION......................... 1
3. THE CONNECTION SITE AND NGC ASSETS................................ 3
4. CONNECTION CHARGES................................................ 4
5. USE OF SYSTEM CHARGES............................................. 4
6. CHARGING RULES.................................................... 4
7. ANCILLARY SERVICES................................................ 4
8. GRID CODE NON-COMPLIANCE.......................................... 4
9. SPECIAL AUTOMATIC FACILITIES...................................... 4
10. PROTECTION AND CONTROL RELAY SETTINGS/FAULT CLEARANCE
TIMES............................................................. 5
11. SAFETY RULES...................................................... 5
12. OTHER SITE SPECIFIC TECHNICAL CONDITIONS.......................... 5
13. METERING.......................................................... 6
14. JOINT SYSTEM INCIDENTS............................................ 6
15. TERM.............................................................. 6
16. EMERGENCY DEENERGISATION.......................................... 6
18. NOTICE TO DECOMMISSION OR DISCONNECT.............................. 10
19. DISCONNECTION..................................................... 10
20. DECOMMISSIONING................................................... 10
21. MASTER AGREEMENT.................................................. 11
<PAGE>
THIS SUPPLEMENTAL AGREEMENT is made the ___ day of ___________ 199_ and becomes
effective on the ____ day of _____________, 199_.
BETWEEN,
(1) THE NATIONAL GRID COMPANY PLC, a company registered in England with
number 2366977 whose registered office is at National Grid House,
Sumner Street, London SEI 9JU ("NGC", which expression shall include
its successors and/or permitted assigns); and
(2) SOUTH WESTERN ELECTRICITY PLC, a company registered in England with
number 2366894 whose registered office is at 800, Park Avenue, Aztec
West, Almondsbury, Avon BS12 4SE (the "User", which expression shall
include its successors and/or permitted assigns)
WHEREAS
(A) NGC and User are parties to a Master Connection and Use of System
Agreement dated the ____ of _______, 199_ ("Master Agreement").
(B) This Supplemental Agreement is entered into pursuant to the terms of
the Master Agreement and shall be read as being governed by them.
NOW, IT IS HEREBY AGREED as follows:-
1. DEFINITIONS, INTERPRETATION AND CONSTRUCTION
1.1 General
Unless the subject matter or context otherwise requires or is
inconsistent with, terms and expressions defined in Schedule 2 to the
Master Agreement have the same meanings, interpretations or
constructions in this Supplemental Agreement.
2. BEING OPERATIONAL/CONNECTION/ENERGISATION
2.1 Right to remain connected:
Subject to the other terms and conditions of this Supplemental
Agreement and the Grid Code, the User shall have the right for the
User's Equipment to remain connected to the NGC Transmission System at
the Connection Site for the duration of this Supplemental Agreement.
<PAGE>
2.2 Right to be and Remain Energised Operational;
Subject to the other provisions of this Agreement and the Grid Code,
the User shall have the right for the User's Equipment at the
Connection Site to be and remain Energised and Operational for the
duration of this Supplemental Agreement.
2.3 Obligation to remain connected
Without prejudice to its rights to make Modifications to the User's
Equipment pursuant to the Master Agreement and subject to the
provisions of sub-clause 16.2 and the other provisions of this
Agreement and the Grid Code the User shall keep the User's Equipment at
the Connection Site connected to the NGC Transmission System until
Decommissioning or Disconnection is permitted pursuant to this
Supplemental Agreement.
2.4 Registered Capacity
The User if a Generator shall not operate its Users Equipment such that
any of it exceeds its Registered Capacity save as expressly permitted
or instructed pursuant to the Grid Code or the Fuel Security Code or as
may be necessary or expedient in accordance with Good Industry
Practice.
2.5 Data
Data of a technical or operational nature collected recorded or
otherwise generated pursuant to this Supplement Agreement shall be
deemed data lodged pursuant to the Grid Code to the extent that the
Grid Code makes provision therefor.
2.6 Subject to the other provisions of this Agreement and the Grid Code,
NGC shall use all reasonable endeavours to maintain the NGC Assets at
the Connection Site in the condition necessary to render the same fit
for the purpose of passing power up to the Maximum Export Capacity
and/or the Connection Site Demand Capability as appropriate between the
User's Equipment and the NGC Transmission System.
2.7 Subject to the other provisions of this Agreement and the Grid Code,
NGC shall accept into the NGC Transmission System at the Connection
Site power generated by the User up the User up to the Maximum Export
Capacity except to the extent (if any) that NGC is prevented from doing
so by transmission constraints which could not be avoided by the
exercise of Good Industry Practice by NGC.
<PAGE>
2.8 Subject to the other provisions of this Agreement and the Grid Code,
NGC shall transport a supply of power to the Connection Site through
the NGC Transmission System up to the Connection Site Demand Capability
except to the extent (if any) that NGC is prevented from doing so by
transmission constraints or by insufficiency of generation which, in
either case, could not have been avoided by the exercise of Good
Industry Practice by NGC.
2.9 Subject to the provision of the Grid Code each Party shall be entitled
to plan and execute outages of parts of its System or Plant or
Apparatus at any time and from time to time.
2.10 Provision of Data
The majority of the data required under the Grid Code has been supplied
by the User prior to the Transfer Date. However, in respect of the
following data required under the Planning Code of the Grid Code it is
agreed that the User need only supply it under the Grid Code within one
year of the Transfer Date, unless NGC requests it in writing before the
expiry of that period, in which case the User from whom the data is
requested must supply it within 6 weeks of receiving that request,
except in the case of the data referred to in PCA 5.3.1(g) which need
only be supplied within 3 months of receiving this request. The data to
which this Sub-Clause applied is that referred to in the following
paragraphs of the Planning Code:-
PCA 2.3
PCA 4.3.7
PCA 4.3.9
PCA 5.2.1
PCA 5.3.1(g)
NGC shall also be able to request a User in writing at any time to supply to NGC
any data under the Planning Code which it should have supplied to NGC prior to
the Transfer Data, but which it did not supply, and the User must supply that
data upon that request.
3. THE CONNECTION SITE AND NGC ASSETS
The Connection Site and NGC Assets to which this Supplemental Agreement
relates are more particularly described in Appendix A.
<PAGE>
4. CONNECTION CHARGES
Subject to the provisions of Clause 6 of this Supplemental Agreement
the User shall with effect from the commencement of this Supplemental
Agreement pay the Connection Charges set out in Appendix B which are
calculated by reference to the NGC Assets specified in Appendix A in
accordance with the provisions of Appendix B.
5. USE OF SYSTEM CHARGES
Subject to the provisions of Clause 6 of this Supplemental Agreement
the User shall with effect from the commencement of this Supplemental
Agreement pay to NGC the Use of System Charges set out in Appendix D in
accordance with the provisions of Appendix E.
6. CHARGING RULES
The provisions of the Charging Rules set out in Appendix E to the
Supplemental Agreement shall apply.
7. ANCILLARY SERVICES
The User shall provide the Agreed Ancillary Services set out in
Appendix F1 in accordance with the Grid Code.
8. GRID CODE NON-COMPLIANCE
(Clause deleted)
9. SPECIAL AUTOMATIC FACILITIES
NGC and the User shall operate respectively the NGC Transmission System
and the User System in accordance with the schemes set out in Appendix
F3.
<PAGE>
10. PROTECTION AND CONTROL RELAY SETTINGS/FAULT CLEARANCE TIMES
NGC and the User shall record the respective protection and control
relay settings and fault clearance times to be operated by each of them
in documents in the format set out in Appendix F4 and shall operate
them accordingly.
11. SAFETY RULES
11.1 Safety Rules:
NGC and the User will each supply to the other a copy of their Safety
Rules current from time to time except where already supplied under
another Supplemental Agreement (save that this exception shall not
apply to site specific Safety Rules) and also a copy of the Local
Safety Instructions applicable at the Connection Site from time to time
except where supplied under another Supplemental Agreement.
11.2 Decommissioning:
Decommissioning of Plant and/or Apparatus at the Connection Site will
be undertaken in accordance with the procedures of the Safety Rules of
whichever of NGC or the User applied with the Plant and/or Apparatus
concerned was in commission.
12. OTHER SITE SPECIFIC TECHNICAL CONDITIONS
12.1 Initial Obligation:
The User shall ensure that on the Transfer Date the User's Equipment
complies with the site specific technical conditions set out in
Appendix F5.
12.2 The User shall use all reasonable endeavours to ensure during the
period of this Supplemental Agreement that the User's Equipment shall
continue to comply with the site specific technical conditions set out
in Appendix F5.
12.3 If the User or NGC wishes to modify, alter or otherwise change the site
specific technical conditions or the manner of their operation:- (i)
under Appendix F4 it may do so upon obtaining the agreement of the
other Party such agreement not to be unreasonably withheld.
(ii) under Appendix F1, F3, F5 or F6 this shall be deemed to be a
Modification for the purposes of the Master
Agreement.
12.4 Where on or immediately prior to the Transfer Date the User's Equipment
has any of the following technical attributes or facilities:-
(i) circuit breaker fail protection
<PAGE>
(ii) pole slipping protection
(iii) fault disconnection facilities
(iv) automatic switching equipment
(v) control arrangements
(vi) voltage and current signals for system monitoring (vii) control
telephony (viii) operational metering the User shall use all reasonable
endeavours to ensure that during the period of this Supplemental
Agreement the User's Equipment retains such technical attributes or
facilities provided always that if the User wishes to modify, alter or
otherwise change the same or their operation it may do so by following
the procedures relating to a Modification in accordance with the Master
Agreement.
13. METERING
The provisions of Appendix F6 shall have effect.
14. JOINT SYSTEM INCIDENTS
Each Party confirms to the other that its Senior Management
Representatives whose names have been nominated and notified to the
other pursuant to OC9 are fully authorized to make binding decisions on
its behalf for the purposes of OC9.
15. TERM
Subject to the provisions for earlier termination set out herein and in
Clause 17 of the Master Agreement, this Supplemental Agreement shall
continue until the User's Equipment is Disconnected from the NGC
Transmission System at the Connection Site in accordance with Clause 17
or 19 hereof.
16. EMERGENCY DEENERGISATION
16.1 Emergency Deenergisation by NGC:
If, in the reasonable opinion of NGC, the condition or manner or
operation of the NGC Transmission System or the User's System poses an
immediate threat of injury or
<PAGE>
material damage to any person or to the Total System or to any User's
System or to the NGC Transmission System NGC shall have the right to
Deenergise the User's Equipment it is necessary or expedient to do so
to avoid the occurrence of such injury or damage.
16.2 Emergency Deenergisation by a User;
If, in the reasonable opinion of the User, the condition or manner of
operation of the NGC Transmission System, the Total System or any
User's System, poses an immediate threat of injury or material damage
to any person or to the User's System, the User shall have the right to
Deenergise the User's Equipment if it is necessary or expedient to do
so to avoid the occurrence of such injury or damage.
16.3 Reenergisation:
NGC or, as the case may be, the User shall Reenergise the User's
Equipment at the Connection Site as quickly as practicable after the
circumstances leading to any Deenergisation under this Clause 16 have
ceased to exist.
17. DEENERGISATION AND DISCONNECTION
17.1 If the User shall be in breach of any of the provisions of this
Supplemental Agreement or of the provisions of the Master Agreement
enforcing the provisions of the Grid code (but subject always to
Sub-Clauses 9.3 and 9.4 of the Master Agreement) and such breach causes
or can reasonably be expected to cause material adverse effect on the
business or condition of NGC or other Users or the NGC Transmission
System or Users systems then NGC may:-
a. where the breach is capable of remedy, give written notice to the
User specifying in reasonable detail the nature of the breach and
requiring the User to remedy the breach within 28 days after
receipt of such notice or within any longer period agreed between
NGC and the User, the agreement of NGC not to be unreasonably
withheld or delayed; or
b. where the breach is incapable of remedy, give written notice to
the User specifying in reasonable detail the nature of the breach
and the reasons why the breach is incapable of remedy and
requiring the User within 5 Business Days after receipt of such
notice to undertake to NGC not to repeat the breach.
<PAGE>
17.2 Grid code Procedures
Whenever NGC serves a notice on the User pursuant to Sub-Clause 17.1,
NGC and the User shall discuss in good faith and without delay the
nature of the breach and each shall use all appropriate procedures
available to it under the Grid Code (including testing rights and the
procedures set out in OC5 (Testing and Monitoring)) in an attempt to
establish as quickly as reasonably practicable a mutually acceptable
way of ensuring future compliance by the User with the relevant
provision of the Grid Code.
17.3 De-Energisation
17.3.1 If:-
(a) the User fails to comply with the terms of any valid notice
served on it by NGC in accordance with Sub-Clause 17.1(i) or
is in breach of any undertaking given in accordance with
Sub-Clause 17.1(ii) and such breach causes or can be
reasonably expected to cause a material adverse effect on the
business or condition of NGC or other Users of the NGC
Transmission System or User systems; or
(b) five Business Days have lapsed since the date of any valid
notice served on the User in accordance with Sub-Clause
17.2(ii) and no undertaking is given by the User in accordance
with Sub-Clause 17.2(ii);
NGC may, provided NGC has first complied with OCS Monitoring and
Testing if appropriate De-Energise the User's Equipment upon the expiry
of at least 48 hours prior written notice to the User, provided that at
the time of expiry of such notice the breach concerned remains
unremedied and that neither Party has referred the master to the
Dispute Resolution Procedure set out in Clause 27 of the Master
Agreement. In such event NGC may de-Energise forthwith following
completion of the Dispute Resolution Procedure and final determination
of the dispute in NGC's favour.
17.3.2 If the User falls to comply with the Grid code and the Director makes a
final order or a confirmed provisional order as set out in Sections 25
and 26 of the Act against the User in respect of such non-compliance
which order the User breaches NGC may De-energise the Users Equipment
upon the expiry of at least 48 hours prior written notice to the User
provided that at the time of expiry of the notice the User continues to
fail to comply with the order.
<PAGE>
17.4 NGC Transmission Licence
if a breach of the nature referred to in sub-Clause 17.1 continues to
the extent that it places or seriously threatens to place in the
immediate future NGC in breach of the NGC Transmission Licence, NGC may
De-Energise the User's Equipment upon the expiry of at least 12 hours
prior written notice to the User, provided that at the time of expiry
of such notice the breach concerned remains unremedied.
17.5 Re-Energisation Disputes
If, following any De-Energisation pursuant to this Clauses 17, the User
applies to NGC for the User's Equipment to Re-Energised and is refused
or is offered terms which the User does not accept, this shall be
recognised as a dispute over the terms for connection and use of system
which the User may refer to the Director for determination under the
NGC Transmission Licence. If the User accepts any terms offered by NGC
or settled by the Director pursuant to any such reference, NGC shall
Re-Energise the User's Equipment forthwith after any request from the
User for NGC to do so.
17.6 Event of Default
If the breach which led to any De-Energisation pursuant to this Clause
17 remains unremedied at the expiry of at least 6 months after the date
of such De-Energisation, NGC may declare by notice in writing to the
User that such breach has become an event of default provided that:-
(a) all disputes arising out of the subject-matter of this Clause 17
which are referred
to the Dispute Resolution Procedure have then been finally determined
in favour of NGC; and
(b) any reference to the Director pursuant to sub-clause 17.5 has
then been finally determined in favour of NGC or any terms
settled by the Director pursuant to such application have not
been accepted by the User.
17.7 Disconnection
Once NGC has given a valid notice of an event of default pursuant to
Bus-Clause 17.6 NGC may given notice of termination to that User
whereupon this Supplemental Agreement shall terminate and: (i) NGC
shall Disconnect all the User's Equipment at the Connection Site and
NGC and the User concerned shall by arrangement between them remove
<PAGE>
any of the Users Equipment and NGC Assets on
the other Party's land within 6 months of
the date of termination or such longer
period as may be agreed between the Parties;
and
(ii) that User shall be obliged to pay to NGC forthwith the Termination
Amounts applicable to the Connection site.
18. NOTICE TO DECOMMISSION OR DISCONNECT
Without prejudice to Sub-clause 16.2, the User shall give to NGC not
less than 6 months written notice of any intention of the User either
to Decommission the User's Equipment or to Disconnect the User's
Equipment.
19. DISCONNECTION
If notice to disconnect is given by the User under Clause 18 the User
may upon expiry of the period specified in such notice and not before
Disconnect the User' Equipment. At the expiry of such period this
Supplemental Agreements shall terminate. The User shall pay to NGC all
Termination Amounts applicable to the Connection Site within 28 days
after termination of this Agreement. Within 6 months of the date of
such termination or such longer period as may be agreed between the
Parties the Parities shall by arrangement with each other remove any of
the User's Equipment and NGC Assets on the other Party's land.
20. DECOMMISSIONING
If notice to Decommission is given by the User under Clause 18 the User
may upon expiry of the period specified in such notice and not before,
Decommission the User's Equipment. This Supplemental Agreement shall
not terminate and:- (i) until the end of the Financial Year in which
the Decommissioning takes place all
Connection Charges and Use of System Charges payable
by the User under this Supplemental Agreement shall
continue to be payable in full; and
(ii) following the end of the Financial Year in which the
Decommissioning takes place the Use of System Charges payable by
the User under this
<PAGE>
Supplemental Agreement shall no longer be payable by
the User but the Connection Charges so payable shall
continue to be payable.
If and when the User wishes to recommission it shall give NGC not less
than 3 months written notice unless a shorter period if agreed between
the User and NGC
21. MASTER AGREEMENT
The provisions of Clauses 18 to 24 and 26. to 30 inclusive of the
Master Agreement shall apply to this Supplemental Agreement as if set
out in full herein.
22. VARIATIONS
Not variation to this Supplemental Agreement shall be effective unless
made in writing and signed by or on behalf of both NGC and the User.
NGC and the User shall effect any amendment required to be made to this
Supplemental Agreement by the Director as a result of a change in the
Transmission Licence or an order or directions made pursuant to the Act
or a Licence or as a result of settling any of the terms hereof and the
User hereby authorises and instructs NGC to make any such amendment on
its behalf and undertakes not to withdraw, qualify or revoke such
authority or instruction at any time.
IN WITNESS WHEREOF the hands of the duly authorised representatives of the
parties hereto at the date first above written
THE NATIONAL GRID COMPANY PLC )
By )
SOUTH WESTERN ELECTRICITY PLC )
by )
Exhbit 10.6
25 OCTOBER 1995
EASTERN GROUP plc
EASTERN MIDLANDS ELECTRICITY plc
LONDON ELECTRICITY plc
MANWEB plc
MIDLANDS ELECTRICITY plc
NORTHERN ELECTRIC plc
NORWEB plc
SEEBOARD plc
SOUTHERN ELECTRIC plc
SOUTH WALES ELECTRICITY plc
SOUTH WESTERN ELECTRICITY plc
YORKSHIRE ELECTRICITY GROUP plc
THE NATIONAL GRID HOLDING plc
THE NATIONAL GRID COMPANY plc
-------------------------------------------------------------------
MASTER AGREEMENT
--------------------------------------------------------------------
Herbert Smith
Exchange House
Primrose Street
London
EC2A 2HS
Ref:223/C267/30438764
<PAGE>
CONTENTS
CLAUSE PAGE
1. Definitions and Interpretation 4
2. Conditions 6
3. NGH EGM 6
4. NGC Written Resolutions 7
5. The Memorandum of Understanding 7
6. PSB Demerger 7
7. The Special Dividends 7
8. The Rights Issue 8
9. Application for Listing 9
10. The REC Review Committee 10
11. Publication of REC Circulars 10
12. The Specie Dividends 11
13. Flotation not effective 11
14. Customer Discount 12
15. Other Undertakings by the RECs 12
16. Cost Sharing 13
17. Waiver 13
18. Announcements 13
19. NGC Option Schemes 14
20. Variations 14
21. Good Faith 15
22. Force Majeure 15
23. Notices 16
24. RTPA 18
25. Governing Law and Jurisdiction 18
SCHEDULES
I. The Memorandum of Understanding
II. The Timetable
III. The NGG Memorandum and Articles
IV. The NGH EGM Circular and The NGH EGM Notice
V. The NGC Written Resolutions
VI. The Listing Particulars
VII. The Summary Particulars
VIII. The Eights Issue Circular
IX. The NGH announcement and the pro forma REC announcement
X. The Customer Discount
XI. Pro-forma notice of extraordinary general meeting for REC circulars
XII. Procedure and formula for option adjustments
XIII. Distributing RECs
XIV. NGC contribution to advisers' fees
XV. Pumped storage asset acquisition agreement
2
<PAGE>
THIS MASTER AGREEMENT is made on 25 October 1995
BETWEEN
A. Each of:
EASTERN GROUP plc whose registered office is Wherstead Park, PO Box 40,
Wherstead, Ipswich, Suffolk IP9 2AQ
EAST MIDLANDS ELECTRICITY plc whose registered office is 398 Coppice
Road, Arnold, Nottingham NG5 7HX
LONDON ELECTRICITY plc whose registered office is Templar House, 81-87
High Holborn, London WC1V 6NU
MANWEB plc whose registered office is Sealand Road, Chester CH1 4LR
MIDLANDS ELECTRICITY plc whose registered office is Mucklow Hill,
Halesowen, West Midlands, B62 8BP
NORTHERN ELECTRIC plc whose registered office is Carliol House, Market
Street, Newcastle Upon Tyne NE1 6NE
NORWEB plc whose registered office is Talbot Road, Manchester, M16 OHQ
SEEBOARD plc whose registered office is Forest Gate, Brighton Road,
Crawley, West Sussex, RH11 9BH
SOUTHERN ELECTRIC plc whose registered office is Southern Electric
House, Westacott Way, Littlewick Green, Maidenhead, Berkshire SL6 3QB
SOUTH WALES ELECTRICITY plc whose registered office is Newport Road,
St. Mellons, Cardiff CF3 9XW
SOUTH WESTERN ELECTRICITY plc whose registered office is 800 Park
Avenue, Aztec West, Almondsbury, Bristol BS12 4SE
YORKSHIRE ELECTRICITY GROUP plc whose registered office is Wetherby
Road, Scarcroft, Leeds LS14 3HS
(collectively the "RECS" and each a "REC")
AND
3
<PAGE>
B. THE NATIONAL GRID HOLDING plc whose registered office is 185 Park
Street, London SE1 9DU ("NGH")
AND
C. THE NATIONAL GRIB COMPANY plc whose registered office is Kirby Corner
Road, Coventry CV4 8JY ("NGC")
WHEREAS
A. The parties have agreed the terms on which a listing of NGH on the
London Stock Exchange will be sought.
B. Prior to such listing, certain changes to the capital structure of NGH
will be effected.
C. Prior to such listing the PSB Demerger (as defined below) will be
effected.
THE PARTIES HEREBY AGREE as follows:
1. Definitions and Interpretation
1.1 In this Agreement, unless the context otherwise requires, the following
words and expressions bear the meanings respectively set out below:
the "Act" the Companies Act 1985 (as amended piror to the
date hereof).
the "Announcement" means the public announcement to be made by
NGH and NGC in the form set out in Scheduke IX.
the "Customer Discount" means the reduction in future electricity charges
by the RECs to Eligible Customers (as defined in
Schedule X) on the basis set out in Schedule X.
"Distributing RECs" means the RECs listed in Schedule XIII.
the "Flotation" means the admission of the ordinary shares of NGH
(issued and to be issued) to the official list of
the London Stock Exchange and, where the context
so allows, shall mean such admission becoming
effective in accordance with the Listing Rules of
the London Stock Exchange.
4
<PAGE>
"Kleinwort Benson" means Kleinwort Benson Limited, sponsor to the
Flotation.
the "Listing Particulars" means the document of record to be issued in
connection with the Flotation pursuant to the
Listing Rules of the London Stock Exchange, proof
15:17.10.95 of which is set out in Schedule VI.
"The London Stock Exchange" means the International Stock Exchange of the
United Kingdon and the Republic of Ireland Limited
the "Long Stop Date" means 31 January 1996.
"Memorandum of Understanding" means the document
to be entered into following the NGH
EGM, in the form set out in Schedule
I (or such other form as shall be
agreed between the parties).
"NGC Board" means the board of directors of NGC from time to
time.
"NGC Interim Dividend" means an
interim dividend of
(pound)70 million to be
paid by NGC to NGH on 4
December 1995.
NGC Special Dividend" means an
interim dividend of
(pound)1,111 million to be
paid by NGC to NGH on 4
December 1995.
"NGC Written Resolutions means the resolutions in writing of NGC, in the
form set out in Schedule V.
the "NGG Memorandum means the Memorandum of Association
and NGG Articles" and Articles of Association of NGH respectively,
which will be adopted upon Flotation, in the form
set out in Schedule III.
"NGH Board" means the board of directors
of NGH from time to time or, where
the context so permits, a duly
authorised committee thereof.
"NGH EGM" means the extraordinary general meeting of NGH to
be convened by the NGH EGM Notice.
"NGH EGM Circular" means the document to be circulated to NGH
shareholders in the form set out in Schedule IV.
5
<PAGE>
"NGH EGM Notice" means the notice to
convene the NGH EGM which is to form
part of the NGH EGM Circular.
"NGH Interim Dividend" means an
interim dividend of
(pound)70 million to be
paid by NGH to its ordinary
shareholders on the
register on 21 November
1995.
"NGH Rights Dividend" means an
interim dividend of
(pound)66 million (assuming
that the rights offer of
the NGH Rights Shares is
fully taken-up) to be paid
by NGH to the persons who
are issued the NGH Rights
Shares.
"NGH Rights Shares" means new
ordinary shares of 10p each
in NGH carrying the
exclusive right to receive
the NGH Rights Dividend to
be offered by way of rights
on the basis set out in the
Rights Issue Circular.
"NGH Second Dividend" means a
second interim dividend of
(pound)172.5 million to be
paid by NGH to the persons
who are issued the Special
Bonus Shares immediately
following payment of the
NGH Special Dividend.
"NGH Special Dividend" means an
interim dividend of
(pound)872.5 million to be
paid by NGH to the persons
who are issued the Special
Bonus Shares.
"PSB Demerger" has the meaning ascribed to it in the proof of the
NGH EGM Circular set out in Schedule IV.
"REC Circular" means the
circular which will be
posted by each of the
Distributing RECs to its
own shareholders on 22
November 1995 contianing a
notice of extraordinary
general meeting
the "REC Oversight Committee" means the committee to be established pursuant to
Clause 3 of the Memorandum of Understanding.
the "REC Review Committee" means the committee described in Clause 10.
the "Rights Issue Circular" means the
document (including an application
form) which, together with the
Listing Particulars, will be posted
to NGH shareholders on 22 November
1995, proof 2 of which is set out in
Schedule VIII.
6
<PAGE>
the "Special Bonus Issue" has the meaning ascribed to it in the proof of the
NGH EGM Circular set out in Schedule IV.
the "Special Bonus Shares" have the
meaning ascribed to them in the
proof of the NGH EGM Circular set
out in Schedule IV.
the "Special Shareholder" means
the holder of the special
rights redeemable
preference share of
(pound)1 in each of NGH and
NGC.
the "Summary Particulars" means the document to be published by NGH, proof
10 of which is set out in Schedule VII.
the "Timetable" means the timetable set out in Schedule II.
1.2 Unless the context otherwise requires:
(A) any reference in this Agreement to a Clause, Sub-clause or
Schedule is to a clause, sub-clause or schedule, as the case
may be, of or to this agreement;
(B) this Agreement includes the Schedules; and
(C) the singular shall be deemed to include the plural and vice versa.
1.3 The headings in this Agreement are for ease of reference only and shall
not afect the construction of this Agreement.
2. Conditions
This Agreement is conditional upon, and shall not be effective until
(a) the Special Shareholder gives (or, subject to each of the
parties to this Agreement being satisfied with the form
thereof, indicates that he will give) his unconditional prior
written consent to the passing of the NGC Written Resolutions
and the resolutions set out in the NGH EGM Notice;
(b) the Special Shareholder issues, (or subject to each of the
parties to this Agreement being satisfied with the form
thereof, indicates that he will issue) a notice to NGC
requiring NGC to redeem the special rights redeemable
preference share of (pound)1 in NGC conditionally upon
Flotation.
7
<PAGE>
3. NGH EGM
3.1 NGH shall convene the NGH EGM for 11 a.m. on 17 November 1995 by means
of despatching the NGH EGM Circular.
3.2 Each REC undertakes to each of the other RECs and to NGC and NGH to
vote in favour of each of the resolutions to be set out in the NGH EGM
Notice. The NGG Memorandum and NGG Articles referred to in resolution 9
thereof shall be in the form set out in Schedule III.
3.3 Each REC and NGH agrees that it will not seek to amend any of the
resolutions to be set out in the NGH EGM Notice without the prior
written consent of NGC and of the Special Shareholder.
4. NGC Written Resolutions
Each of NGH and Midlands Electricity plc undertake to the other RECs
and to NGC to sign the NGC Written Resolutions prior to the NGH EGM.
5. The Memorandum of Understanding
5.1 NGH will, conditionally upon the resolutions set out in the NGH EGM
Notice and the NGC Written Resolutions having been passed (without
amendment), execute the Memorandum of Understanding as soon as
practicable following the NGH EGM and prior to the publication of the
Listing Particulars.
5.2 Each of the RECs will execute the Memorandum of Understanding as soon
as practicable following the NGH EGM and prior to the publication of
the Listing Particulars.
5.3 On or prior to the execution of the Memorandum of Understanding, NGC
will procure that each member of the NGC Board who is to join the NGH
Board will confirm in writing that, if the Flotation does not become
effective before the Long Stop Date, he will resign without
compensation from the NGH Board on request by the REC Oversight
Committee.
6. PSB Demerger
6.1 Each of the parties undertakes to each of the other parties,
conditionally upon the resolutions set out in the NGH EGM Notice and
the NGC Written Resolutions having been passed (without amendment) and
subject to Sub-clauses 6.4 and 22.3, to take all
8
<PAGE>
steps within its power to ensure that the PSB Demerger is effected
prior to Flotation in accordance with the procedure set out in Appendix
I of the NGH EGM Circular.
6.2 The RECs' share of the NGH divident forming part of the PSB Demerger
shall be paid inside the existing consortium elections made by NGH and
each of the RECs.
6.3 Without limitation to the generality of its obligations under
Sub-clause 6.1 and conditionally as set out in that Sub-clause, NGC
undertakes to NGH and to the RECs to enter into an agreement for the
sale of its pumped storage business to First Hydro Limited in the form
set out in Schedule XV, subject only to such ademdments as are made
pursuant to Sub-clause 6.4 and to such other final amendments as may be
agreed between NGC and each of the RECs.
6.4 It is acknowledged and agreed by all the parties that the PSB Demerger
is to be effected so as to ensure that NGC shall continue to be able to
fulfil its duties under the North Wales Hydro-Electric Power Acts of
1955 and 1973 and that First Hydro will contract to perform these on
NGC's behalf and that NGC and NGH will agree the necessary
documentation and/or amendments to the agreement referred to in
Subclause 6.3 by 7 November 1995 to give effect to the above
acknowledgement and agreement.
7. The Special Dividends
7.1 NGC undertakes to each of the RECs and to NGH, conditionally upon the
resolutions set out in the NGH EGM Notice and the NGC Written
Resolutions having been passed (without amendment) and subject to
Sub-clause 22.3:
(a) to file interim accounts complying with section 272 of the Act
which interim accounts shall show profits available for
distribution of not less than (pound)1759 million (including
special reserves) or, if such accounts provide for payment of
one or more of the dividend forming part of the PSB Demerger,
the NGC Interim Dividend and the NGC Special Dividend, shall
show profits available for distribution of not less than
(pound)1759 million (including special reserves) less the
amounts provided in respect of such dividends; and
(b) to pay the NGC Interim Dividend and the NGC Special Dividend.
7.2 NGH undertakes to each of the RECs, conditionally upon the passing
(without amendment) at the NGH EGM of all of the resolutions set out in
the NGH EGM Notice and subject to Sub-clause 22.3:
(a) to effect the Special Bonus Issue;
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<PAGE>
(b) to file interim accounts complying with section 272 of the Act
which interim accounts shall provide for one or more of the
dividend forming part of the PSB Demerger, the NGH Interim
Dividend, the NGH Special Dividend, the NGH Second Dividend
and the NGH Rights Dividend or, to the extent not so provided,
show that NGH has profits available for distribution at lease
equal to the amount of the dividends to be paid prior to
payment thereof;
(c) to give notice to the Inland Revenue (pursuant to section
247(3) of the Income and Corporation Taxes Act 1988),
following payment of the relevant dividends, that all but the
RECs' share of the dividend forming part of the PSB Demerger,
the NGH Rights Dividend and of the NGH Second Dividend will be
paid outside the existing consortium elections made by NGH and
each of the RECs;
(d) to pay the NGH Interim Dividend on 4 December 1995;
(e) to pay the NGH Special Dividend on 4 December 1995;
(f) to pay the NGH Second Dividend immediately following payment
of the NGH Special Dividend on 4 December 1995; and
(g) to pay the NGH Rights Dividend on 7 December 1995.
7.3 On request by a REC, NGH will pay that REC's share of the NGH Interim
Dividend, the NGH Special Dividend, the NGH Second Dividend and the NGH
Rights Dividend by CHAPS automated transfer to such REC bank account as
may be notified by the REC in such request.
8. The Rights Issue
8.1 NGH undertakes to each of the RECs conditionally upon all of the
resolutions set out in the NGH EGM Notice having been passed (without
amendment) at the NGH EGM and subject to Sub-clause 22.3:
(a) to effect a rights issue on the basis of one new ordinary
share of NGH for every 19 existing ordinary shares held on 21
November 1995 at(pound)2.04 per new share and that of such new
ordinary shares to be offered to any shareholder, 44.6 per
cent. will be NGH Rights Shares and 55.4 per cent. will be new
ordinary shares which do not carry an entitlement to the NGH
Rights Dividend ("Ordinary Shares")(save that the allocation
of Ordinary Shares and NGH Rights Shares amongst the RECs
shall be as set out in the NGH EGM Notice), in the manner
set out in the Rights Issue Circular;
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(b) to post the Rights Issue Circular and the Listing Particulars
to each of the shareholders of NGH on 22 November 1995;
(c) to procure that each REC which complies with its obligations
under clause 8.3 shall have the interest for which it shall
have subscribed pursuant to the Rights Issue entered on the
register of members of NGH on or before 7 December 1995.
8.2 Any changes to the proof of the Rights Issue Circular set out in
Schedule VIII which are material to the RECs (or any thereof) shall
require the prior approval of each of the RECs. Any other changes shall
require the prior approval (not to be unreasonably witheld or delayed)
of each of the RECs or of Herbert Smith acting on behalf of all the
RECs. Subject thereto, the final version of the Rights Issue Circular
shall be in the form approved by the NGH Board.
8.3 Each REC undertakes to NGH and to NGC, conditionally upon receipt by it
of its entitlement under the NGH Interim Dividend, the NGH Special
Dividend and the NGH Second Dividend, tht it will take up its full
entitlement to the rights for which it may subscribe under the terms of
the Rights Issue Circular and will make payment, in cleared funds, to
NGH in accordance with the procedure set out in the application form
attached to the Rights Issue Circular on or before 5 December 1995.
8.4 NGH undertakes to NGC to subscribe for new ordinary shares in NGC for a
subscription price equal to the proceeds of the rights issue
contemplated in this Clause 8 as soon as practicable following receipt
by NGH of the proceeds of the rights issue.
8.5 Each REC shall accept for its own tax purposes that Section 29 of the
Taxation of Chargeable Gains Act 1992 shall apply on a basis consistent
with that assumed for the calculation of the NGH Rights Dividend
payable to each REC.
9. Application for Listing
9.1 NGH undertakes to each of the RECs, conditionally upon all of the
resolutions set out in the NGH EGM Notice having been passed (without
amendment) at the NGH EGM and subject to Sub-clause 22.3:
(a) to use all reasonable endeavours to effect the Flotation in
accordance with the Timetable;
(b) to use all reasonable endeavours to publish the Listing
Particulars and the Summary Particulars on 22 November 1995;
(c) that the Listing Particulars will contain a declaration that
the directors of NGH accept responsibility for the information
contained in the Listing Particulars and
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that to the best of their knowledge and belief (having taken
all reasonable care to ensure that such is the case) the
information contained in the Listing Particulars is in
accordance with the facts and does not omit anything likely to
effect the import of such information.
(d) that the Summary Particulars will contain a statement that the
directors of NGH are satisfied that the Summary Particulars
contain a fair summary of the key information set out in the
Listing Particulars; and
(e) not, without the prior approval of each of the RECs (which,
in the case of the description referred to in (ii) below,
shall not be unreasonably withheld or delayed) to make any
material alteration or addition to (i) those sections of the
Listing Particulars or Summary Particulars which repeat or
restate information relating to the RECs or to the dividend
policy or dividend forecasts of NGH which is contained in the
Announcement or (ii) the description of the prospects of NGH
and its subsidiaries set out in the proof of the Listing
Particulars forming Schedule VI.
9.2 NGH additionally undertakes to each of the RECs that it will:
(a) notify the REC Review Committee of any other proposed
alteration to the Listing Particulars or the Summary
Particulars which may materially affect the content or import
of any part of either document (other than any such alteration
which has been approved under Sub-clause 9.1(d));
(b) consider any comments made by the REC Review Committee or any REC
relating to any such proposed alteration; and
(c) in the event that NGH is required to publish supplementary
listing particulars, so far as practicable consult with the
REC Review Committee regrding their contents and consider any
comments made by it.
9.3 NGC undertakes to provide all reasonable co-operation and assistance to
NGH in relation to its obligations under Sub-clauses 9.1 and 9.2.
10. The REC Review Committee.
10.1 The REC Review Committee shall consist of not less than three members,
each appointed by the unanimous agreement of the RECs. The first
members of the REC Review Committee shall be B. Townsend (Midlands), E.
Anstee (Eastern), A. Coleman (Yorkshire) and J. Tebbs (East Midlands).
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10.2 A member of the REC Review Committee may be removed from the REC Review
Committee only upon his resignation, by notice from the REC by which he
is (or was) employed in the event of such employment terminating or
notice of termination having been given or by the unanimous agreement
of the RECs. In such event a new member of the REC Review Committee
shall be appointed by the unanimous agreement of the RECs. Any changes
to the members of the REC Review Committee shall be notified to NGH and
NGC as soon as practicable following such change.
10.3 Comments to be submitted by the REC Review Committee pursuant to
Sub-clause 9.2(b) on any proposed alteration to the Listing Particulars
or Summary Particulars or pursuant to Sub-clause 9.2(c) on any
supplementary listing particulars shall be signed by or on behalf of a
majority of the members of the REC Review Committee and shall be
returned to NGH within 2 business days of notificatio to Kleinwort
Benson of the relevant proposals or, if earlier, prior to the deadline
for printing the relvant document. If no comments have been given
within the applicable time limit, NGH can proceed as though the
relevant document was approved by the REC Review Committee without
comment.
11. Publication of REC Circulars
11.1 Each Distributing REC undertakes to each of the other RECs and to NGH
and NGC conditionally upon:
(i) the passing of all the resolutions set out in the NGH
EGM Notice at the NGH EGM;
(ii) the publication by NGH of the Listing Particulars and
the Summary Particulars as contemplated in Clause 9;
and
(iii)not having been subject to a public takeover which has
become or been declared wholly unconditional prior to
the date on which it would otherwise have posted its
REC Circular in accordance with this Agreement;
(a) to post its REC Circular to its shareholders on 22 November 1995;
and
(b) to convene an extraordinary general meeting for 10 a.m. on 8
December 1995.
11.2 Each Distributing REC undertakes to NGH and NGC that the resolution
shall be in substantially the form set out in Schedule XI provided that
the proportion of 25 per cent. in paragraph (i) thereof shall be
reduced to such lower percentage as may be agreed by NGH with the
London Stock Exchange as permissble in the context of the Flotation.
The final form of each such resolution shall be approved by the Board
of the relevant Distributing REC.
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11.3 Each Distributing REC confirms that its board of directors has resolved
or will resolve (conditionally upon there having been no relevant
material change of circumstances between the date hereof and the date
of publication of the REC Circular) to recommend its shareholders to
vote in favour of the resolution to be proposed at such extraordinary
general meeting and that the REC Circular will contain a statement to
this effect.
11.4 Each Distributing REC shall give NGC the opportunity to review prior to
despatch those sections of its Circular which contain information
relating to NGH, NGC or the Flotation and will consider any comments
made thereon by NGC.
11.5 If a REC which is not a Distributing REC (and which does not fall
within Sub-clause 11.1(iii) above) determines to declare and pay a
specie dividend of some or all of its holding of shares in NGH to be
effective on Flotation, the provisions of Sub-clauses 11.2 and 11.4
shall apply as it were named in this Agreement as a Distributing REC.
For the avoidance of doubt the foregoing provisions of this Sub-Clause
11.5 shall not apply to a REC which has been subject to a public
takeover which has become or been declared wholly unconditional prior
to the date of this Agreement.
12. The Specie Dividends
Each Distributing REC undertakes to the other parties, conditionally
upon the resolution to be proposed at its extraordinary general meeting
having been passed and having become unconditional in accordance with
its terms, that it will declare and pay a specie dividend with the
effect that not less than the proportion of its holding of shares in
NGH on Flotation set opposite its name in Schedule XIV is distributed
to its shareholders.
13. Flotation not effective
In the event that the Flotation does not become effective before the
Long Stop Date:
(a) NGH undertakes to the RECs to convene an extraordinary general
meeting to take place within 25 days of the Long Stop Date at
which an ordinary resolution will be proposed which will
provide that the directors of NGH shall cease to be its
directors and a new NGH Board shall be appointed, consisting
of 12 persons, each of whom shall have been nominated by a
different REC; and
(b) each of the RECs undertakes to notify NGH within 5 days of the
Long Stop Date of the identity of the person nominated by it
to be a director of NGH and to vote in favour of the
resolutions referred to in Sub-clause 13(a).
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14. Customer Discount
Subject to Flotation becoming effective and to receipt of its share of
the NGH Interim Dividend, the NGH Special Dividend, the NGH Second
Dividend and the NGH Rights Dividend, each of the RECs undertakes to
each of the other RECs that it will grant the Customer Discount in the
manner set out in Schedule X; provided that nothing in this Clause 14
shall prevent a REC from granting the Customer Discount to customers
who are not Eligible Customers (as defined in Schedule X) as well as to
Eligible Customers..If Flotation has not become effective by 31st
December 1995, the Record Date for the purposes of Schedule X shall be
4 February 1996.
15. Other undertakings by the RECs
15.1 Each of the RECs undertakes to NGH that, save for any permitted
disposal, it has not made any decision to sell all or any part of its
holding of shares in NGH (where the context so allows, as increased by
the matters provided for in the NGH EGM Circular and the Rights Issue
Circular) on or prior to Flotation and that it will not make any such
decision prior to Flotation (or until the date on which it becomes
clear that Flotation cannot occur by the Long Stop Date). For the
avoidance of doubt, there shall be no breach of this undertaking solely
by reason of the provisions in the NGG Articles to be adopted on
Flotation.
15.2 For the purposes of Sub-clause 15.1, a permitted disposal shall be:-
(a) a dividend in specie of shares in NGH by a REC to its
shareholders becoming effective on or after Flotation;
(b) disposals forming part of arrangements to compensate holders of
options in the REC for the loss of value consequent upon any such
dividend in specie as is contemplated in Clause 12;
(c) the disposal of any aggregated fractional entitlements following
any such dividend in specie as is contemplated in Clause 12;
(d) intra-group transfers or sales (including, without limitation, a
dividend in specie) on or after Flotation;
(e) a disposal by Manweb plc (or any transferee thereof under (d)
above) pursuant to the undertaking to dispose of such shares
given by Scottish Power plc to the Secretary of State.
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<PAGE>
15.3 Each of the RECs confirms to NGH, NGC and to the other RECs that the
section headed "Intentions of the RECs" in the Announcement contains a
correct statement of its intentions as at the date of this Agreement
with regard to its shareholding in NGH.
Each of the RECs undertakes to inform Kleinwort Benson (on behalf of
NGH and NGC) as soon as is reasonably practicable of any change in this
intention prior to the date on which the Flotation becomes effective.
15.4 Each of the RECs and NGH undertake to each other and to NGC that they
will not withdraw or revoke the existing consortium elections so long
as the same remain relevant to the payment of dividends by NGH
contemplated in this Agreement.
16. Cost Sharing
16.1 Save as otherwise set out in this Agreement
16.2 NGC undertakes to the RECs to pay to Eastern Group plc (on behalf of
the RECs) or to the adviser concerned the proportion (as set out in
column 2 of Schedule XIV opposite the name of the relevant adviser set
out in column 1 of that Schedule) of the fees (including disbursements
and value added tax) of each of the advisers to the RECs whose names
are set out in column 1 of Schedule XIV arising in relation to, or in
preparation for, or in contemplation of or incidental to, the Flotation
and the matters contemplated by this Agreement.
16.3 Eastern Group plc shall provide to NGC copies of the relevant invoices
in relation to the fees to be shared pursuant to Sub-clause 16.2. NGC's
obligation to make payments in respect of Ernst & Young's fees is
subject to having first received evidence reasonably satisfactory to it
that such costs have been properly incurred.
17. Waiver
Each REC hereby releases and discharges each other REC and the
directors and employees of such RECs from any and all actions,
proceedings, claims, demands or other liabilities whatsoever in
relation to liabilities arising in connection with or out of the
preparation and approval of the Listing Particulars and Summary
Particulars.
18. Announcements
18.1 NGH undertakes to issue an announcement in the form set out in Schedule
IX as soon as practicable following the signature by all parties of
this Agreement. NGC shall be
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<PAGE>
entitled to issue an announcement in substantially similar terms to
comply with its obligations under the rules of the London Stock
Exchange.
18.2 Each of the Distributing RECs undertakes to NGH and to the other
Distributing RECs that any announcement it makes following the
signature of this Agreement shall, insofar as it relates to the
Flotation or to the other matters provided for in this Agreement, be
based on the pro forma REC announcement set out in Schedule IX.
18.3 If any Distributing REC intends to make an announcement following the
signature of this Agreement which, insofar as it relates to NGH, NGC,
the Flotation or to the other matters provided for in this Agreement,
differs in any significant respect from such pro forma, or if any REC
which is not a Distributing REC intends to make such an announcement,
it shall consult with Kleinwort Benson prior to the making of such
announcement.
18.4 Each party will use all reasonable endeavours not to issue any further
public announcements or other public statement or advertisement prior
to Flotation which contains information relating to NGH or NGC which is
material to the Flotation or which may be relevant to effecting
Flotation within the Timetable without first having consulted Kleinwort
Benson.
18.5 In relation to any consultation with Kleinwort Benson pursuant to
Sub-clauses 18.3 and 18.4, the party obliged to so consult shall,
unless it shall consider that to do so would put it in breach of any
statutory or regulatory requirement binding upon it or a member of its
parent company's group, or in breach of the requirements of the London
Stock Exchange or of the City Code on Takeovers and Mergers, comply
with all reasonable requests from Kleinwort Benson in relation to the
contents, timing or distribution of such announcement, statement or
advertisement.
19. NGC Option Schemes
NGH undertakes to the RECs that it will seek to agree with the Inland
Revenue that the Adjustments to be made to subsisting options granted
under the NGC savings related share option scheme and the NGC executive
share option scheme will be calculated on the basis set out in Schedule
XII. No adjustments will be made on terms that would be materially more
advantageous to the optionholders than the terms contemplated in
Schedule XII without the prior approval of the NGH Board (if approved
prior to the NGH EGM) or of the REC Oversight Committee (if approved
after the NGH EGM).
20. Variations
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20.1 Save as set out in Sub-clauses 20.2, 20.3 and 20.4, variations to this
Agreement shall not be effected save by means of an instrument executed
on behalf of all the parties.
20.2 Alterations to the Timetable may be effected by notice from Kleinwort
Benson provided that no such alteration has the effect of altering the
process described in Appendix II of the NGH EGM Circular or of causing
the Flotation to take place after the Long Stop Date. In the event of
any such alteration to the Timetable dates specified elsewhere in this
Agreement shall be deemed to be amended to conform to such alteration.
20.3 Each of the RECs and NGH authorises Herbert Smith to consent on their
behalf to minor changes or corrections to any of the documents of which
drafts or proofs are set out in the Schedules.
20.4 The parties recognise that all cash dividends referred to in this
Agreement will be declared as an amount per share which will be
calculated, so far as is practicable, so as to result in the total
dividend paid being equal to the total amount for such dividend
specified in this Agreement. Any minor variation between the actual
total dividend paid and the total specified in this Agreement as a
result of rounding or as a result of calculating such amount per share
shall not constitute a variation of this Agreement for the purposes of
Sub-clause 20.1.
21. Good Faith
Each of the parties undertakes to each of the other parties to act in
good faith and to take all reasonable steps to ensure a successful
Flotation in accordance with the Timetable.
22. Force Majeure
22.1 If at any time prior to the publication of the Listing Particulars, NGC
becomes aware of any event or change in circumstances (which was not
known to the NGC Board at the date hereof) which is so significant that
it would, notwithstanding compliance by NGC with its obligations
pursuant to Clause 21, prevent it from fulfilling or make it unlawful
to fulfil any of its obligations under this Agreement, it shall
forthwith notify the other parties of such circumstance. If no
variation to this Agreement (having regard to Clause 21) is agreed
pursuant to Sub-clause 20.1 within 5 business days of such notification
NGC may terminate this Agreement (subject to Sub-clause 22.5 by notice
to the other parties without further liability whatsoever to those
parties.
22.2 If at any time prior to the date on which the extraordinary general
meetings of the Distributing RECs are to be held (as contemplated in
Sub-clause 11.1(b)) there shall be announced by the Government, Inland
Revenue, Office of Electricity Regulation or some other competent
authority an actual or proposed change in the legislative, regulatory
or
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<PAGE>
taxation treatment of the RECs generally (an "Adverse Announcement"),
which change may result in a significant adverse financial consequence
for the RECs, RECs together holding a majority in number of the NGH
shares may terminate this Agreement (subject to Sub-clause 22.5) by
notice to the other parties within 10 business days of the Adverse
Announcement without further liability whatsoever to those parties.
Upon an Adverse Announcement NGC and NGH shall be entitled to defer
performance of any of their respective obligations under this Agreement
until they are satisfied that this Agreement will not be terminated as
a result of such Adverse Announcement.
22.3 The obligations of NGC under Sub-clauses 6 and 7.1 and the obligations
of NGH under Sub-clauses 6, 7.2, 8.1 and 9.1(a) and (b) (each such
obligation being "Relevant Obligation") shall be conditional upon each
of the RECs having complied in all respects material to the Flotation
with the obligations undertaken by it under this Agreement (insofar as
the same fall to be performed under the terms of this Agreement prior
to the time of performance of the Relevant Obligation). If such
condition is not fulfilled at the time otherwise provided for
performance by NGC or NGH of a Relevant Obligation, NGC or NGH (as the
case may be) shall be entitled without prejudice to any other rights it
may have whether under this Agreement or otherwise to waive the
condition or (if such default is capable of rectification without
having a material adverse effect on the Flotation) to require the REC
in default to rectify such default and, pending such rectification, to
defer performance of the Relevant Obligation. If such default is not
rectified within 3 business days of notification or, if earlier, by
21st January, 1996, or if the default is incapable of rectification
without a material adverse effect on Flotation, NGC or NGH (as the case
may be) may forthwith terminate this Agreement (subject to Sub-clause
22.5) by notice to the other parties without further liability
whatsoever to those parties.
22.4 In the event that the Agreement is terminated pursuant to Sub-clauses
22.1, 22.2 or 22.3 the Flotation shall not proceed and the parties
shall use all reasonable endeavours to agree the form of each
announcement to be issued in respect of such termination. If the
Agreement is terminated pursuant to Sub-clause 22.2, NGH undertakes to
the RECs to withdraw forthwith any application for listing which may
have been made.
22.5 The termination of this Agreement under Sub-clauses 22.1, 22.2 or 22.3
shall be without prejudice to the provisions of Clause 13 (Flotation
not effective), Clause 16 (Cost Sharing) and Sub-clause 22.4, which
shall continue to have effect and to any liability for antecedent
breaches.
22.6 In Sub-clause 22.1, references to NGC shall include references to NGH
with effect from the date on which the appointment of the NGC Board to
the NGH Board becomes effective.
23. Notices
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23.1 Any notice required to be given under this Agreement may be served
personally or by prepaid registered or recorded delivery letter or by
telex or facsimile addressed to the relevant party at its address
stated on the first page of this Agreement and marked for the attention
of the person described alongside that party below or at the relevant
number set out below or at such other address or number as it may have
notified to the other for this purpose:
Facsimile No.
EASTERN GROUP plc
For the attention of
The Company Secretary 01473 553002
EAST MIDLANDS ELECTRICITY plc
For the attention of
The Company Secretary 0115 967 0459
LONDON ELECTRICITY plc
For the attention of
The Company Secretary 0171 331 3424
MANWEB plc
For the attention of
Ian Russell 0141 6364578
MIDLANDS ELECTRICITY plc
For the attention of
The Company Secretary 0121 423 1907
NORTHERN ELECTRIC plc
For the attention of
Valerie Giles 0191 210 2409
NORWEB plc
For the attention of
Peter Rothwell 0161 875 7211
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SEEBOARD plc
For the attention of
The Company Secretary 01293 657 325
SOUTHERN ELECTRIC plc
For the attention of
The Company Secretary 01628 584 408
SOUTH WALES ELECTRICITY plc
For the attention of
The Company Secretary 01222 773 880
SOUTH WESTERN ELECTRICITY plc
For the attention of
The Company Secretary 01454 617 702
YORKSHIRE ELECTRICITY GROUP plc
For the attention of
Roger Dickinson 0113 289 5926
THE NATIONAL GRID HOLDING plc
For the attention)Notices given before
of Hugh Hamilton )Memorandum of Understanding 0121 423 1907
For the attention)Notices given after
of David Jones )Memorandum of Understanding 01203 423026
)takes effect
THE NATIONAL GRID COMPANY plc
For the attention of
David Jones 01203 423026
23.2 Any notice so given by letter shall be deemed to have been served 48
hours after the same shall have been posted and any notice given by
facsimile shall be deemed to have been served upon receipt of a
facsimile receipt form indicating satisfactory receipt by the receiving
machine, and in proving such service it shall be sufficient to prove,
in the case
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of a letter, it was properly addressed, and in the case of a facsimile
by producing the relevant facsimile receipt form.
23.3 Any notification to the REC Review Committee under Clause 9 shall be
sent to Kleinwort Benson Limited, P O Box 560, 20 Fenchurch Street,
London EC3P 3DB (fax no. 0171 929 2676) for the attention of Andrew
Smith-Maxell/Rita Theil.
24. RTPA
To the extent that any provision of this Agreement, or of any other
arrangement of which it forms part, is a restriction or information
provision for the purposes of the Restrictive Trade Practices Act 1976
("RTPA") by virtue of which this Agreement or any such agreement is
registrable under the RTPA, no such restriction or provision shall take
effect until the day after particulars of this Agreement or, as the
case may be, that arrangement, have been furnished to the Director
General of Fair Trading in accordance with the RTPA.
25. Governing Law and Jurisdiction
This Agreement shall be governed by, and construed in accordance with,
English law and the High Court of Justice in England shall have
exclusive jurisdiction in relation to any claim, dispute or difference
concerning this Agreement.
THIS AGREEMENT has been signed by the duly authorised representatives of the
parties the day and year first before written.
Signed by JOHN DEVANEY )
for and on behalf of ) /s/ John Devaney
EASTERN GROUP plc )
Signed by ROBERT DAVIES )
for and on behalf of ) /s/ Robert Davies
EAST MIDLANDS ELECTRICITY plc )
Signed by ALAN TOWERS )
for and on behalf of ) /s/ Alan Towers
LONDON ELECTRICITY plc )
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Signed by IAN RUSSELL )
for and on behalf of ) /s/ Ian Russell
MANWEB plc )
Signed by PETER CHAPMAN )
for and on behalf of ) /s/ Peter Chapman
MIDLANDS ELECTRICITY plc )
Signed by JOHN EDWARDS )
for and on behalf of ) /s/ John Edwards
NORTHERN ELECTRIC plc )
Signed by KENNETH HARVEY )
for and on behalf of ) /s/ Kenneth Harvey
NORWEB plc )
Signed by MICHAEL PAVIA )
for and on behalf of ) /s/ Michael Pavia
SEEBOARD plc )
Signed by HENRY CASLEY )
for and on behalf of ) /s/ Henry Casley
SOUTHERN ELECTRIC plc )
Signed by WYNFORD EVANS )
for and on behalf of ) /s/ Wynford Evans
SOUTH WALES ELECTRICITY plc )
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Signed by JOHN SEED )
for and on behalf of ) /s/ John Seed
SOUTH WESTERN ELECTRICITY plc )
Signed by ROGER DICKINSON )
for and on behalf of ) /s/ Roger Dickinson
YORKSHIRE ELECTRICITY GROUP plc )
Signed by K. G. HARVEY )
for and on behalf of ) /s/ K.G. Harvey
THE NATIONAL GRID HOLDING plc )
Signed by D. H. JONES )
for and on behalf of ) /s/ D.H. Jones
THE NATIONAL GRID COMPANY plc )
24
Exhibit 10.7
17TH NOVEMBER 1995
THE NATIONAL GRID COMPANY plc
EASTERN GROUP plc
EASTERN MIDLANDS ELECTRICITY plc
LONDON ELECTRICITY plc
MANWEB plc
MIDLANDS ELECTRICITY plc
NORTHERN ELECTRIC plc
NORWEB plc
SEEBOARD plc
SOUTHERN ELECTRIC plc
SOUTH WALES ELECTRICITY plc
SOUTH WESTERN ELECTRICITY plc
YORKSHIRE ELECTRICITY GROUP plc
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MEMORANDUM OF UNDERSTANDING
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Herbert Smith
Exchange House
Primrose Street
London C2A 2HS
Ref:223/C267/30438764
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THIS MEMORANDUM OF UNDERSTANDING is made the 17th day of 1995
BETWEEN
A The National Grid Group plc (formerly The National Grid Holding plc)
("NGG") whose registered office is at Kirby Corner Road, Coventry CV4 8JY
AND
B Each of:
Eastern Group plc whose registered office is Wherstead Park, PO Box 40,
Wherstead, Ipswich, Suffolk IP9 2AQ
East Midlands Electricity plc whose registered office is 398 Coppice Road,
Arnold, Nottingham NG5 7HX
London Electricity plc whose registered office is Templar House, 81-87 High
Holborn, London WC1V 6NU
Manweb plc whose registered office is Sealand Road, Chester
CH1 4LR
Midlands Electricity plc whose registered office is Mucklow Hill,
Halesowen, West Midlands, B62 8BP
Northern Electric plc whose registered office is Carliol
House, Market Street, Newcastle Upon Tyne NE1 6NE
NORWEB plc whose registered office is Talbot Road,
Manchester, M16 OHQ
SEEBOARD plc whose registered office is Forest Gate, Brighton Road,
Crawley, West Sussex, RH11 9BH
Southern Electric plc whose registered office is Southern
Electric House, Westacott Way, Littlewick Green, Maidenhead,
Berkshire SL6 3QB
South Wales Electricity plc whose registered office is
Newport Road, St. Mellons, Cardiff CF3 9XW
South Western Electricity plc whose registered office is 800
Park Avenue, Aztec West, Almondsbury, Bristol BS12 4SE
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Yorkshire Electricity Group plc whose registered office is Wetherby Road,
Scarcroft, Leeds LS14 3HS
(collectively the "RECS" and each a "REC")
WHEREAS
Following certain changes made at the NGH EGM to the Articles of
Association of NGG and, effective upon execution of this Agreement, to the
board of directors of NGG, the parties have agreed that the relationship
between RECs (being the principal shareholders of NGG) and NGG should be
regulated in the period prior to Flotation.
NOW IT IS AGREED as follows:
1. Definitions and Interpretation
1.1 In this Agreement, unless the context otherwise requires, the following
words and expressions bear the meanings respectively set out below:
the "EGMs" means the NGH EGM and the
passing of the NGC Written
Resolutions
"NGC" means The National Grid Company
plc.
the "Master Agreement" means the agreement of
that name dated 25th October 1995 between
each of the RECs, NGG and NGC.
the "REC Oversight means the committee established pursuant to
Committee" Clause 3.
the "Relevant Period" means the period commencing
with the execution of this Agreement and
terminating upon the earlier of the Flotation
or the Termination Date.
"Termination Date" means the date on which directors of
NGC cease to be directors of NGG and
representatives of the RECs are appointed in
their place.
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1.2 Unless the context otherwise requires:
(a) any reference in this Agreement to a Clause, Sub-clause
or Schedule is to a clause, sub-clause or schedule, as
the case may be, of or to this Agreement;
(b) Capitalised terms which are not defined in Clause 1.1
shall have the meanings ascribed to them in the Master
Agreement; and
(c) the singular shall be deemed to include the plural and
vice versa.
1.3 The headings in this Agreement are for ease of reference only and shall not
affect the construction of this Agreement.
2. The Relevant Period
2.1 Save as set out in Clause 2.2 below, during the Relevant
Period:
(a) NGG will not engage in any activity outside the
ordinary course of its business;
(b) no material contracts or commitments will be entered
into by NGG unless such contracts or commitments are
conditional on Flotation;
(c) NGG shall procure that no matters relating to NGC (or its
subsidiaries) which prior to the EGMs would have required either
consultation with or the approval of the NGG Board pursuant to the
Articles of Association of either NGG pr NGC which were in force prior
to the EGMs, will be carries out by NGC (or such subsidiaries);
without the prior approval of the REC Oversight Committee or, in the case
of matters falling within paragraph (c) above which would have required
consultation only with the NGG Board, consultation with the REC Oversight
Committee.
(i) The REC Oversight Committee shall not unreasonably delay in giving or
withholding its approval in any case.
(ii) In relation to any proposal or matter concerning the carrying on of
the National Grid Business (as defined in the articles of association
of NGC in the form in force prior to the EGMs) which requires the
approval of the REC Oversight Committee, such committee shall not be
entitled to withhold approval unless it has reasonable grounds for
believing that implementation is likely adversely to affect the
financial viability of NGC and/or NGG and if the REC Oversight
Committee does withhold approval it shall provide NGC and NGG with a
written statement giving details of the grounds for such belief; and
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(iii) In relation to any business or proposed business of NGC or NGG or
any subsidiary undertakings, other than National Grid Business,
the RED Oversight Committee shall be entitled to give or withhold
approval to such plans in whole or in part on any grounds it
shall think fit.
(iv) No consent of the REC Oversight Committee shall be required to the
planning and implementation of any Business Plan (as defined in the
articles of association of NGC in the form in force prior to the EGMs)
except as provided in this Agreement.
2.2 The following matters may be carried out by NGG or NGC during the Relevant
Period without prior consultation with or the prior approval of the REC
Oversight Committee:
(a) matters expressly referred to in the Master Agreement
or otherwise necessary to effect Flotation;
(b) matters expressed to be, or who sse effect is,
conditional on Flotation;
(c) arrangements for a low cost dealing facility for shareholders of NGG
after Flotation provided that such arrangements will be conditional
upon Flotation becoming effective and shall release NGG from all
obligations in respect thereof in the event that the Flotation does
not become effective; and
(d) arrangements for the establishment of an ADR programmme in respect of
NGG shares provided that such arrangements will be conditional upon
Flotation becoming effective and shall release NGG from all
obligations in respect thereof in the event that the Flotation does
not become effective.
3. The REC Oversight Committee
3.1 The REC Oversight Committee shall consist of up to 12 persons, each
appointed by a different REC and at the date hereof shall consist of the
members of the NGH Board at the date of the NGH EGM.
3.2 The Chairman of the REC Oversight Committee shall be Mr. K.
Harvey or, failing him, that person appointed to the
Committee by NORWEB plc.
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3.3 Any consultation with or request for the approval of the REC Oversight
Committee pursuant to Clause 2.1 or pursuant to any provisions of the
Master Agreement which expressly contemplate approval by the REC Oversight
Committee shall be made by notice in writing to all members of the REC
Oversight Committee in accordance with Clause 6.
3.4 On receipt of such consultation or request the Chairman of the REC
Oversight Committee shall call a meeting of the committee by notice to all
its members and to the Chairman of NGG in accordance with Clause 6
specifying the date, time and place of such meeting which shall be within 7
days of receipt of the consultation or request for approval provided that
if Kleinwort Benson informs the Chairman that it is necessary for a shorter
notice period to apply such meeting shall be called as soon as s
practicable thereafter.
3.5 A meeting of the REC Oversight Committee will be quorate if 2 members are
present in person, on the telephone or by other telecommunication facility
or by duly authorized representative. The Chairman of NGG or his
representative shall be entitled to be present and to speak at the meeting,
but not to vote.
3.6 Such meeting shall, by the votes of a majority of the committee members so
present, decide whether the approval is granted and shall give notice to
NGG in accordance with Clause 6 of its decision within one business day of
the close of the meeting. The Chairman shall not have a second or casting
vote. In the event of an equality of votes approval shall not be given.
3.7 If no meeting of the REC Oversight Committee is held following a valid
request for approval within the time limit in Clause 3.4, or notice to NGG
of its decision pursuant to Clause 3.6 is served pursuant to Clause 6.2 NGC
shall be entitled to proceed as though such approval had been given.
4. Termination
This Agreement shall terminate (without prejudice to any liability for any
liability for antecedent breach) on the earlier of the Flotation or the
Termination Date.
5. Variations
Variations to this Agreement shall not be effected save by means of an
instrument executed on behalf of all the parties save that alteration to
the Timetable made pursuant to Clause 20.2 of the Master Agreement shall
have the effect of altering any relevant date specified herein to conform
to the Timetable as so altered.
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6. Notices
6.1 Any notice required to be given under this Agreement may be served
personally or by prepaid registered or recorded delivery letter or by
facsimile addressed to the relevant party at its address stated on the
first page of this Agreement and marked for the attention of the person
described alongside that party below or at the relevant number set out
below or at such other address or number as it may have notified to the
other for this purpose:
Party Facsimile No.
THE NATIONAL GRID GROUP plc
for the attention of The Company Secretary
EASTERN GROUP plc 01473 553002
for the attention of The Company Secretary
EAST MIDLANDS ELECTRICITY plc 0115 967 0459
for the attention of The Company Secretary
LONDON ELECTRICITY plc 0171 331 3424
for the attention of The Company Secretary
MANWEB plc 0141 6364578
for the attention of Ian Russell
MIDLANDS ELECTRICITY plc 0121 423 1907
for the attention of The Company Secretary
NORTHERN ELECTRIC plc 0191 210 2409
for the attention of Valerie Giles
NORWEB plc 0161 875 7211
for the attention of Peter Rothwell
SEEBOARD plc 01293 657 325
for the attention of The Company Secretary
SOUTHERN ELECTRIC plc 01628 584 408
for the attention of The Company Secretary
SOUTH WALES ELECTRICITY plc 01222 723 880
for the attention of The Company Secretary
SOUTH WESTERN ELECTRICITY plc 01454 617702
for the attention of The Company Secretary
YORKSHIRE ELECTRICITY GROUP plc 0113 289 5926
for the attention of Roger Dickinson
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6.2 Save in respect of a notice calling a meeting of the REC Oversight
Committee which shall, in addition to the following provisions of this
clause, only to be deemed to have been duly served upon production of
evidence that such notice was acknowledged by its recipient any notice so
given by letter shall be deemed to have been served 48 hours after the same
shall have been posted and any notice given by facsimile shall be deemed to
have been served upon receipt of a facsimile receipt form indicating
satisfactory receipt by the receiving machine, and in proving such service
it shall be sufficient to prove, in the case of a letter, it was properly
addressed, and in the case of a facsimile, by producing the relevant
facsimile receipt form.
7. Governing Law and Jurisdiction
This Agreement shall be governed by, and construed in accordance with,
English law and the High Court of Justice in England shall have exclusive
jurisdiction in relation to any claim, dispute or difference concerning
this Agreement.
THIS AGREEMENT has been signed by or on behalf of each of the parties the day
and year first before written.
Signed by )
for and on behalf of THE NATIONAL
GRID GROUP plc
Signed by for and on behalf of )
EASTERN GROUP plc )
Signed by for and on behalf of )
EAST MIDLANDS ELECTRICITY plc )
Signed by for and on behalf of )
LONDON ELECTRICITY plc )
Signed by for and on behalf of )
MANWEB plc )
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Signed by for and on behalf of )
MIDLANDS ELECTRICITY plc )
Signed by for and on behalf of )
NORTHERN ELECTRIC plc )
Signed by for and on behalf of )
NORWEB plc )
Signed by for and on behalf of )
SEEBOARD plc )
Signed by for and on behalf of )
SOUTHERN ELECTRIC plc )
Signed by for and on behalf of )
SOUTH WALES ELECTRICITY plc )
Signed by for and on behalf of ) /s/John Junior Seed
SOUTH WESTERN ELECTRICITY plc )
Signed by for and on behalf of )
YORKSHIRE ELECTRICITY GROUP plc )
9
Exhibit 10.8
SOUTH WESTERN ELECTRICITY plc
USE OF DISTRIBUTION SYSTEM AGREEMENT
GENERAL CONDITIONS - INDEX
Clause Title
1 Definitions
2 Conditions Precedent
3 Use of Distribution System and Term
4 Payment of Charges
5 Limitation of Liability
6 De-energisation
7 Compliance with Distribution Code
8 Metering Equipment
9 Assignment and Sub-Contracting
10 Events of Default
11 Force Majeure
12 Confidentiality
13 Non-Waiver
14 Entire Agreement
15 Disputes Resolution
16 Governing Law
17 Jurisdiction
18 Savings Clause
19 Notices
20 Variations
Schedule
1 List of Exit Points and Specifications
2 Charges for the Use of the Distribution System
3 Charges for acting as Operator of Energy Metering Equipment
4 Addresses for Service of Notices
5 Meters
6 Application for Use of Electricity Distribution System
<PAGE>
THIS AGREEMENT is made the _____ day of _____________________ 1993
BETWEEN
(1) SOUTH WESTERN ELECTRICITY plc
of 800, Park Avenue, Aztec West, Almondsbury, Bristol BS12 4SE ("the
PES" which expression shall include its successors and/or permitted
assigns);
and
(2) of
("the User" which expression shall include its successors and/or
permitted assigns)
WHEREAS:-
A. The PES is the holder of a Public Electricity Supply Licence under the
Electricity Act 1989.
B. The User holds a Second Tier Licence under the Electricity Act 1989.
C. The User wishes to transport the supply to the Exit Points through the
Distribution System.
D. The PES and the User agree that this Agreement will have effect from
1st April 1993.
NOW IT IS HEREBY AGREED as follows:-
1. DEFINITIONS
1.1 In this Agreement except where the context otherwise requires the
following expressions shall have the meanings set opposite them:-
"Act" the Electricity Act 1989.
"Apparatus" all equipment in which electrical conductors are used,
supported or of which they may form part.
"Company's Equipment" the switchgear, metering or other equipment,
lines or other parts of the Distribution System or any other property
or rights of the Company related to the Distribution System, including
any sub-station.
"Competent Authority" includes the Secretary of State, the Director,
and any local or national agency, authority, department, inspectorate,
minister, ministry, official public or statutory person (whether
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autonomous or not) of, or of the government of, the United Kingdom or
of the European Community.
"Confidential Information" all data and other information supplied to
the Obligor by the other Party under the provisions of this Agreement.
"Connection Agreement" an agreement between the Company and the User or
any Customer relating to the connection through which the Supply is to
be delivered at an Exit Point.
"Customer" each person party to a subsisting contract with the User for
a supply of electricity by the User through the Distribution System
from time to time.
"Customer's Installation" any structures, equipment, lines, appliances
or devices used or to be used by any Customer and connected or to be
connected to the Distribution System through any Exit Point.
"De-Energise" the movement of any switch or the removal of any fuse or
the taking of any other step whereby no electrical current can flow
from the Distribution System through the Company's Equipment to the
Customer's Installation or User's Installation at the Exit Point.
"Directive" includes any present or future directive, requirement,
instruction, direction or rule of any Competent Authority (but only, if
no having the force of law, if compliance with the Directive is in
accordance with the general practice of persons to whom the Directive
is addressed) and includes any modification, extension or replacement
thereof then in force.
"Director" the Director-General of Electricity Supply appointed for the
time being pursuant to the Act.
"Distribution Code" the distribution code referred to in the Licence.
"Distribution System" the Company's system for the distribution of
electricity as defined in the Licence.
"Energise" the movement of any switch or the insertion of any fuse or
the taking of any other step so as to enable an electrical current to
flow from the Distribution System through the Company's equipment to
the Customer's Installation or User's Installation at the Exit Point.
"Energy Metering Equipment" shall have the meaning given to the phrase
"Metering Equipment" in the Pooling and Settlement Agreement.
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"Exit Point" each point of connection at which the Supply may flow
between the Distribution System and the Customer's or User's
Installation or the distribution system of another person as set out in
Schedule 1 or notified to the Company pursuant to Clause 3.
"Force Majeure" any event or circumstance which is beyond the
reasonable control of either Party and which results in or causes the
failure of that Party to perform any of its obligations under this
Agreement including, but not limited to, act of God, strike, lockout or
other industrial disturbance, act of the public enemy, war declared or
undeclared, threat of war, terrorist act, blockade, revolution, riot,
insurrection, civil commotion, public demonstration, sabotage, act of
vandalism, lighting, fire, storm, flood, earthquake, accumulation of
snow or ice, lack of water arising from weather or environmental
problems, explosion, fault or failure of Plant and Apparatus which
could not have been prevented by Good Industry Practice, governmental
restraint, Act of Parliament, other legislation, bye-law and Directive
(not being any order, regulation or directive under Section 32, 33, 34
or 35 of the Act) or the failure of any generator or NGC to supply the
Company with electricity or any deficiency in such supply to the extent
that such failure or deficiency or the consequences thereof could not
have been prevented by Good Industry Practice by the Company. Provided
that lack of funds shall not be interpreted as a cause beyond the
reasonable control of that Party.
"Good Industry Practice" the exercise of that degree of skill,
diligence, prudence and foresight which would reasonably and ordinarily
be expected from a skilled and experienced operator engaged in the same
type of undertaking under the same or similar circumstances.
"Grid Code" the Grid Code referred to in NGC's transmission licence.
"Grid Supply Point" a point of delivery from NGC's transmission system
to the Distribution System.
"GSP" a Grid Supply Point.
"kVA" kilovoltamperes.
"kW" kilowatt.
"KWh" kilowatt hours.
"Licence" The Company's public electricity supply licence granted under
Section 6(1)(c) of the Act.
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"Master Connection and Use of System Agreement" the agreement of that
name dated 30th March 1990 and the Supplemental Agreements thereto made
between NGC and others governing connection to and use of NGC's
transmission system.
"Maximum Capacity" means in respect of each Exit Point the amount of
electricity expressed in kVA specified in Schedule 1.
"NGC" The National Grid Company PLC.
"Obligor" as defined in Clause 12.
"Operator" the person who is the operator of Energy Metering Equipment
as more fully defined in the Pooling and Settlement Agreement.
"Party" each person for the time being and from time to time party to
this Agreement and any successor(s) in title to, or permitted assign(s)
of, such person.
"Plant" fixed and moveable items other than Apparatus.
"Pooling and Settlement Agreement" the agreement of that title for the
time being approved (or to be approved) by the Secretary of State or by
the Director as from time to time amended with the approval of the
Director and shall where the context permits include the Initial
Settlement Agreement approved (or the be approved) by the Secretary of
State (as from time to time amended with the consent of the Secretary
of State.
"Premises" any premises of the User or any Customer in or in relation
to which any of the Company's Equipment is to be installed or is for
the time being situate.
"Regulations" the Electricity Supply Regulations 1988.
"Supply" the supply of electricity to be provided or sold by the User
to Customers through the Distribution System having, in relation to
each Exit Point, the characteristics of the supply of electricity
specified in the relevant Connection Agreement.
"Use of Distribution System" use of the Distribution System or the
distribution system of any third party (but not, for the avoidance of
doubt, use of NGC's transmission system) for the passing of electricity
into the Distribution System in such quantities as are agreed pursuant
to this Agreement and for the transportation of such quantities of
electricity by the Company through the Distribution System to the Exit
Points.
"Use of System Metering Equipment" metering equipment suitable to
provide the Company with such data as it requires for use of system or
operational purposes (including for calculating the charges payable by
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the User for Use of Distribution System).
"User's Installation" means structures, equipment, lines, appliances or
devices connected or to be connected to the Distribution System through
any Exit Point used or to be used by the User in connection with this
Agreement or for the supply of electricity by the User to Customers.
1.2 In this Agreement any reference to:
"a Clause" is a reference to a clause hereof;
"a charging period" is a reference to the period specified in
Schedule 1 (or if no period is specified a calendar month);
"a Schedule" is, subject to any contrary indication, a reference to a
schedule hereto;
the word "including' is to be construed without limitation.
1.3 Any reference in this Agreement to a statute, statutory instrument,
regulation or order shall be construed as a reference to such statute,
statutory instrument, regulation or order as amended or re-enacted from
time to time.
1.4 Any reference in this Agreement to another agreement or any deed or
other instrument shall be construed as a reference to that other
agreement, deed or other instrument as the same may have been or may
from time to time be, amended, varied, supplemented or novated.
1.5 Any reference in this Agreement to the masculine shall include the
feminine and any reference to the singular shall include the plural and
vice versa in each case.
1.6 Clause headings are for ease of reference only.
2. CONDITIONS PRECEDENT
2.1 The obligations of the company under this Agreement are subject to the
delivery by the User to the Company of each of the following in form
and substance reasonably satisfactory to the Company:-
(A) written confirmation from NGC that the User has entered into
the Master Connection and Use of System Agreement and any
necessary Supplemental Agreement pursuant thereto or that the
User is not required by NGC to enter into any such
Agreement(s);
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(B) evidence that the User is a party to, and a pool member under,
the Pooling and Settlement Agreement;
(C) evidence that the User is the holder of a current private
electricity supply licence granted pursuant to section 6(2)(a)
of the Act, or is exempted from holding such a licence
pursuant to section 5 of the Act.
2.2 The obligation of the Company to deliver a Supply to a particular Exit
Point is in each case subject to:-
(A) the User being authorised by a current private electricity
supply licence granted pursuant to section 6(2)(a) of the Act
or by an exemption granted pursuant to section 5 of the Act to
supply electricity to the premises to be supplied with
electricity through the Exit Point;
(B) there being a subsisting Connection Agreement in respect of
that Exit Point and the completion of all construction works
agreed to be carried out pursuant to that Connection
Agreement; and
(C) the Company receiving confirmation that the User has given
notice of that Exit Point to NGC pursuant to the Master
Connection and Use of System Agreement.
3. USE OF DISTRIBUTION SYSTEM AND TERM
3.1 Subject to the terms of this Agreement the Company shall transport the
Supply to the Exit Points through the Distribution System in accordance
with the requirements of the respective Customers up to the Maximum
Capacity for each Exit Point subject to such variations, if any, as may
be permitted by the Regulations. This Agreement shall continue until
terminated by either Party by giving not less than 28 days prior notice
save that the Company shall not be entitled to serve notice for so long
as it is required to offer terms for Use of Distribution System
pursuant to the Licence.
3.2 The User shall give 28 days' notice to the Company of any additional
Exit Point through which it desires to provide the Supply to a Customer
by completing and sending to the Company its application to supply at a
new Exit Point in the form or substantially in the form set out in
Schedule 6. Subject to the provisions of Clause 8, on the expiry of
such notice period, the User shall be permitted (subject to the terms
of this Agreement) to distribute the Supply through the Distribution
System to that new Exit Point.
3.3 The User shall give reasonable prior notice to the Company from time to
time of any modified requirements or other material variations in the
details applicable to each Exit Point from those contained in
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Schedule 1 or furnished to the Company pursuant to Clause 3.2. The
Company reserves the right to require any necessary amendments to the
relevant Connection Agreement and the charges payable thereunder on
receiving notice of modified requirements or other material variations
in the details applicable to an Exit Point to the extent that such
requirements or variations require any Modification to the Company's
Equipment or the Distribution System and the implementation of any such
modification and of any modified requirements of any Customer or User
shall be conditional upon the coming into force of such amended
Connection Agreement and upon the completion and commissioning of any
works required thereunder. The User will in December of each year
during the currency of this Agreement provide a comprehensive updated
list containing the then current details applicable to each Exit Point.
The Company shall not be liable to the User for any defect in the
Supply to any Exit Point to the extent to which it is attributable to
incorrect information concerning that Exit Point furnished by the User
provided that the Company has acted in accordance with Good Industry
Practice in relation thereto.
3.4 The User may by giving to the Company at least 28 days' written notice
delete any Exit Points from the list of Exit Points covered by this
Agreement with effect from the date and time specified in that notice.
3.5 The Company shall promptly allocate each Exit Point to a Grid Supply
Point for the purpose of the Master Connection and Use of System
Agreement on a reasonable basis and shall notify the User of such
allocation forthwith. The Company shall be entitled to re-allocate any
Exit Point to a different Grid Supply Point for such purpose at any
time or times during the term of this Agreement, provided that any such
reallocation must be on a reasonable basis for a period of not less
than 12 months starting on the 1st April in any year, and must be
notified to the User (together with details of the technical reasons
for such re-allocation) not later than 30th September prior to such 1st
April. The User shall notify any such allocation ore re-allocation to
NGC forthwith.
Provided that in respect of each Exit Point -
(a) through which a supply is provided to EHV premises;
(b) the GSP to which that Exit Point is allocated is
other than the GSP to which it was first allocated
under this clause ("the original GSP"); and
(c) the original GSP is still in use and has not been
materially reduced in capacity,
the charges payable under Clause 4 shall not exceed the charges which
would be payable if the Exit Point was still allocated to the original
GSP and any NGC charge allocated accordingly.
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4. PAYMENT OF CHARGES
4.1 The User shall during this Agreement pay to the Company charges in
respect of the Use of Distribution System specified in Schedule 1. Such
charges are and will be calculated in accordance with the Company's
statement of use of system charges for the time being in force issued
pursuant to Condition 8 of the Licence. The Company may vary such use
of system charges in accordance with the Licence at any time by giving
at least 28 days' written notice to the User.
4.2 As soon as practicable after the end of each charging period, the
Company shall deliver to the User an account showing the charges
payable in respect of that charging period which shall be of sufficient
detail to distinguish clearly the portion of such charges attributable
to each Exit Point.
4.3 The User shall pay each account in full within 14 days of the same
being rendered. If any amount remains unpaid after the due date
thereof, the Company shall (in addition to any other remedies) be
entitled to charge interest on the amount unpaid at the annual rate of
4% over the base lending rate of Lloyds Bank PLC.
4.4 All amounts mentioned herein as payable by the User are exclusive of
Value Added Tax (if any) and the Company may ad to such amount Value
Added Tax at the rate applicable thereto from time to time.
4.5 If at any time electricity is delivered to any Exit Point after the
User has ceased to be a pool member under the Pooling and Settlement
Agreement and before this Agreement is terminated, then (unless the
User is a party to a separate contract for top-up and standby sales
made between the Company and the User), the User shall pay to the
Company upon demand such sum as the Company shall determine (calculated
in accordance with the Company's statement of top-up and standby
charges for the time being in force issued pursuant to Condition 8 of
the Licence) as the price of a top-up or stanby sale of electricity of
a quantity equal to the quantity of electricity so delivered.
4.6 If upon the request of the User the Director determines that the use of
system charges (or top-up or standby charges) (including any variations
thereof) payable by the User under this Agreement have not been
calculated strictly in accordance with the terms of the Company's
statement of use of system charges (or as the case may be statement of
top-up and standby supply charges) issued pursuant to Condition 8 of
the Licence, the Company shall pay to the User an amount in respect of
each charging period equal to the amount, if any, by which the User has
been overcharged during such charging period as a result together with
interest thereon from the date on which such charges were paid until
the date of payment of such interest. Such interest shall accrued from
day to day at the rate specified in Clause 4.3.
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5. LIMITATION OF LIABILITY
5.1 Neither Party shall be liable for any failure of or defect in the
Supply or other breach of this Agreement directly or indirectly caused
by a circumstance of Force Majeure.
5.2 Subject to Clauses 5.6 and 6.2 and save as provided in this Clause 5.2
and Clause 5.3 and save where any provisions of this Agreement provides
for an indemnity neither Party (the "Party Liable") nor any of its
officers, employees or agents shall be liable to the other Party for
loss arising from any breach of this Agreement other than for loss
directly resulting from such breach and which at the date hereof was
reasonably foreseeable as likely to occur in the ordinary course of
events from such breach in respect of:-
(A) physical damage to the property of the other Party, its
officers, employees or agents; and/or
(B) the liability of such other Party to any Customer for loss in
respect of physical damage to the property of that Customer.
Provided that:
(i) in respect of liability under Clause 5.2(A) above the
liability of either Party in respect of claims for such loss
or damage shall not exceed the sum of (pound)1,000,000 (one
million pounds) per incident or series or related incidents;
and
(ii) in respect of liability under Clause 5.2(B) above the
liability of either Party in respect of claims for such loss
or damage shall not exceed the sum of (pound)1,000,000 (one
million pounds) in respect of each such Customer per incident
or series of related incidents.
Provided further that the Company shall be entitled to deduct from any
such sums as aforesaid payable by way of compensation for loss or
damage under this Agreement, any sums payable by the Company under any
Connection Agreement in respect of such loss or damage suffered by the
User or any Customer under such Connection Agreement or any of their
respective officers, employees or agents.
5.3 Nothing in this Agreement shall exclude or limit the liability of the
Party Liable for death or personal injury resulting from the negligence
of the Party Liable or any of its officers, employees or agents and the
Party Liable shall indemnify and keep indemnified the other Party, its
officers, employees or agents, from and against all such and any loss
or liability which such other Party may suffer or incur by reason of
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any claim on account of death or personal injury resulting from the
negligence of the Party Liable or any of its officers, employees or
agents.
5.4 Subject to Clauses 5.6 and 6.2 and save where any provision of this
Agreement provides for an indemnity neither Party, nor any of its
officers, employees or agents shall in any circumstances whatsoever be
liable to the other Party for:-
(A) any loss of profit, loss of revenue, loss of use, loss of
contract or loss of goodwill; or
(B) any indirect or consequential loss; or
(C) loss resulting from the liability of such other Party to any
other person howsoever and whensoever arising save as provided
in Clauses 5.2 (B) and 5.2.
5.5 The rights and remedies provided by this Agreement to the Parties are
exclusive and not cumulative and exclude and are in place of all
substantive (but not procedural) rights or remedies express or implied
and provided by common law or statute in respect of the subject matter
of this Agreement, including without limitation any rights either Party
may possess in tort which shall include without limitation actions
brought in negligence and/or nuisance. Accordingly, each of the Parties
hereby waives to the fullest extent possible all such rights and
remedies provided by common law or statute, and releases the Party
Liable, its officers, employees and agents to the same extent from all
duties, liabilities, responsibilities or obligations provided by common
law or statute in respect of the matters dealt with in this Agreement
and undertakes not to enforce any of the same except as expressly
provided herein.
5.6 Save as otherwise expressly provided in this Agreement, this Clause 5
insofar as it excludes or limits liability shall override any other
provision in this Agreement provided that nothing in this Clause 5
shall exclude or restrict or otherwise prejudice or affect any of:-
(A) the rights, powers, duties and obligations of either Party
which are conferred or created by the Act, any licence granted
pursuant to the Act or the Regulations; or
(B) the rights, powers, duties and obligations of the Director or
the Secretary of State under the Act, any such licence or
otherwise howsoever.
5.7 Each of the sub-clauses of this Clause 5 shall:-
(A) be construed as a separate and severable contract term, and if
one or more of such sub-clauses is held to be invalid,
unlawful or otherwise unenforceable the other or others of
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such sub-clauses shall remain in full force and effect and
shall continue to bind the Parties; ;and
(B) survive termination of this Agreement.
5.8 Each Party hereby acknowledges and agrees that the other Party holds
the benefit of Clauses 5.2 and 5.3 and 5.4 above for itself and as
trustee and agent for its officers, employees and agents.
5.9 Each Party hereby acknowledges and agrees that the provisions of this
Clause 5 have been the subject of discussion and negotiation and are
fair and reasonable having regard to the circumstances as at the date
hereof.
5.10 For the avoidance of doubt, nothing in this Clause 5 shall prevent or
restrict either Party enforcing any obligation (including suing for a
debt) owed to it under or pursuant to this Agreement.
6. DE-ENERGISATION
6.1 The Company shall be entitled to De-Energise any Exit Point at any time
where instructed to do so by NGC pursuant to the terms of the Master
Connection and Use of System Agreement or where required to do so
pursuant to Part XVII of the Pooling and Settlement Agreement.
6.2 The Company shall as soon as reasonably practicable De-Energise any
Exit Point where instructed to do so by the User and shall promptly
notify the User of the date and time at which such De-Energisation was
effected. The User shall reimburse the Company any expense incurred in
relation to such De-Energisation, if any, and shall indemnify the
Company against any costs, liability, loss or damage suffered by the
Company as a result of such De-Energisation provided that the Company
has acted in accordance with Good Industry Practice in connection
therewith.
6.3 Where the Company fails to De-Energise any Exit Point following an
instruction from the User under Clause 6.2, the Company shall indemnify
the User against any cost, loss or damage suffered by the User as a
result of such failure to De-Energise unless the Company considers that
it is not reasonably practicable to effect such De-Energisation and
notifies the User thereof not more than 3 business days after receiving
the User's instruction under Clause 6.2, provided that if the User
disagree with the Company and refers the dispute to arbitration in
accordance with the provisions of Clause 15 and the dispute is resolved
in favour of the User the indemnity set out in this Clause 6.3 shall
apply.
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6.4 The Company shall be entitled to De-Energise any Exit Point at any time
where permitted to do so pursuant to the terms of the Connection
Agreement which relates to the relevant Exit Point.
6.5 The Company shall be entitled to De-Energise any Exit Point at any time
if and to the extent that the Company in its reasonable discretion
considers it necessary to do so whether to avoid danger or to avoid
interference with the regularity or efficiency of any distribution of
supplies for the time being given by the Company to any person or to
enable the Company to inspect or effect alterations, maintenance,
repairs or additions to any part of the Distribution System or in case
of emergency affecting or liable to affect the proper working of the
Distribution System or NGC's transmission system or any other system
through which the Company receives a supply of electricity directly or
indirectly.
6.6 (A) Where the Company De-Energises any Exit Point pursuant to
Clause 6.1, it shall:-
(1) inform the User thereof as soon as reasonably
practical thereafter;
(2) re-Energise the relevant Exit Point as soon as
reasonably practicable after it is permitted to do so
by NGC; and
(3) at all times act in accordance with Good Industry
Practice;
and the User shall pay to the Company on demand any costs
incurred by the Company as a result of such De-Energisation
and re-Energisation.
(B) Where the Company De-Energises any Exit Point pursuant to
Clause 6.2, it shall:-
(1) re-Energise the relevant Exit Point as soon as
reasonably practicable after being required to do so
by the User; and
(2) at all times act in accordance with Good Industry
Practice;
and the User shall pay to the Company on demand any costs
incurred by the Company as a result of such re-Energisation.
(C) Where the Company De-Energise any Exit Point pursuant to
Clauses 6.4 or 6.5, it shall:-
(1) except where in the reasonable opinion of the Company
the Exit Point should be De-Energised forthwith by
reason of any accident or other emergency or to
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<PAGE>
avoid failure or serious interference with other
supplies, give the User 48 hours' notice of its
intention to De-Energise;
(2) re-Energise the relevant Exit Point as soon as
reasonable practicable; and
(3) at all times act in accordance with Good Industry
Practice.
6.7 Subject to the provisions of the Distribution Code, the Company shall
be entitled to plan and execute outages of the Distribution System at
any time and from time to time.
6.8 The Company shall be entitled to De-Energise any Exit Point:-
(A) in respect of which the User has given notice pursuant to
Clause 3.4, at any time on or after the expiry of such notice;
(B) in respect of which the User has ceased to be the Registrant
pursuant to the Pooling and Settlement Agreement; or
(C) in respect of which the conditions set out in Clause 2.2 cease
to be satisfied.
and the User shall pay to the Company on demand any costs incurred by
the Company as a result of such De-Energisation and any subsequent
re-Energisation at the request of the User.
7. COMPLIANCE WITH DISTRIBUTION CODE
7.1 The Parties undertake to each other to comply with the Distribution
Code.
7.2 In the event of any conflict between this Agreement and the
Distribution Code the Distribution Code shall prevail.
8. METERING EQUIPMENT
8.1 In respect of the Energy Metering equipment at each Exit Point, the
User acting as Registrant (as defined in the Pooling and Settlement
Agreement) shall either:-
(A) notify the Company that the User or such other party to the
Pooling and Settlement Agreement as the User may direct will
perform the function of Operator in respect of that Energy
Metering Equipment pursuant to the Pooling and Settlement
Agreement; or
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<PAGE>
(B) notify the Company that the User wishes to appoint the Company
to perform the function of Operator in respect of that Energy
Metering Equipment pursuant to the Pooling and Settlement
Agreement.
8.2 In the case of Clause 8.1(A), the User or such other party to the
Pooling and Settlement Agreement as the User has so directed shall be
responsible for installing or procuring the installation of Energy
Metering Equipment at the relevant Exit Point complying with the terms
of the Pooling and Settlement Agreement, and the User shall not be
permitted by the Company to pass the Supply through the relevant Exit
Point until the necessary Energy Metering Equipment has been installed
and registered in accordance with the terms of the Pooling and
Settlement Agreement. The Company shall co-operate with the User in
relation to the installation of Energy Metering Equipment by the User,
and shall provide such advice and assistance as may reasonably be
requested by the User in relation thereto.
8.3 In the case of Clause 8.1(B), the Company shall be responsible for
installing or procuring the installation of Energy Metering Equipment a
the relevant Exit Point complying with the terms of the Pooling and
Settlement Agreement. Where the Exit Point is a new Site at which
Construction works remain to be carried out pursuant to the terms of
the relevant Connection Agreement, the Company shall install Energy
Metering Equipment as a part of those construction works, and the User
shall be permitted to pass a Supply through the Exit Point on the
relevant Connection Agreement. Where the Exit Point is an existing
site, the Company shall use all reasonable endeavours to do so within
28 days of receipt of the User's notice under Clause 8.1(B). The User
shall not be permitted by the Company to pass the Supply through the
relevant Exit Point until the earliest of:-
(A) the date on which the necessary Energy Metering Equipment has
been installed and registered in accordance with the terms of
the Pooling and Settlement Agreement;
(B) the date which is 29 days after the receipt by the Company of
the User's notice under Clause 8.1(B); or
(C) such other date as the Parties may agree in writing.
Where Energy Metering Equipment has not been installed within 28 days
of receipt of the User's notice under Clause 8.1(B), the Parties shall,
in the absence of contrary agreement, follow the procedures set out in
Clause 56.19.16 of Part XV of the Pooling and Settlement Agreement.
8.4 Where the Company agrees to be the Operator of Energy Metering
Equipment at any Exit Point pursuant to this Agreement and the Pooling
and Settlement Agreement the User shall pay to the Company the amounts
set out in Schedule 1.
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<PAGE>
8.5 Where the Company agrees to be the Operator of Energy Metering
Equipment at any Exit Point:-
(A) the User shall ensure that its employees, agents and invitees
will not interfere with such Energy Metering Equipment or the
immediate connections to such Energy Metering Equipment
without the prior written consent of the Company, except to
the extent that emergency action has to be taken to protect
the health and safety of persons or to prevent serious damage
to property proximate to the Energy Metering Equipment;
(B) the User shall procure that the employees, agents,
sub-contractors and invitees of the Company shall at all
reasonable times have safe and unobstructed access to the
Energy Metering Equipment. The Company agrees to procure that
any individuals to who access is given pursuant to this Clause
8.5(B) shall comply with all reasonable directions given by
the User or the relevant Customer and its appropriately
authorised employees and agents as to general safety and site
security arrangements.
8.6 Where the Company is the Operator of Energy Metering Equipment at any
Exit Point pursuant to this Agreement and the Pooling and Settlement
Agreement, the User may appoint as a new Operator in relation to any or
all such Exit Points the User or such person as the User may direct
(providing that such person must be a party to the Pooling and
Settlement Agreement) by following the necessary procedure set out in
the Pooling and Settlement Agreement.
8.7 The User agrees that the Settlement System Administrator (as defined in
the Pooling and Settlement Agreement) or his authorised agent may
release to the Company such data from the Energy Metering Equipment a
teach Exit Point as the Company may reasonably require for the
operation and planning of the Distribution System. Where such data is
released to the Company, it shall be subject to the Company's
obligations of confidentiality under Clause 12.
8.8 The Company shall be entitled to install Use of System Metering
Equipment at the Exit Point in addition to any Energy Metering
Equipment, but if it exercises this right it shall make no additional
charge to the User in respect of such Use of System Metering Equipment;
the User shall comply with the provisions of Clause 8.5(A) and 8.5(B)
in respect thereof.
8.9 Where the Company exercises its right to install Use of System Metering
Equipment the provisions set out in Schedule 5 shall apply.
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<PAGE>
9. ASSIGNMENT AND SUB-CONTRACTING
9.1 (A) Subject to Clause 9.1(B) below, the User shall not assign
its benefit or burden under this Agreement without the prior
written consent of the Company, such consent not to be
unreasonably withheld.
(B) The User may assign or charge its benefit under this Agreement
in whole or in part by way of security.
9.2 Either Party shall have the right to sub-contract or delegate the
performance of any of its obligations or duties arising under this
Agreement including activities envisaged by the Distribution Code
without the prior consent of the other. The cub-contracting by the
Company or the User of the performance of any obligations or duties
under this Agreement or of any activities envisaged by the Distribution
Code shall not relieve the Company or the User (as the case may be)
from liability for performance of such obligation or duty.
10. EVENTS OF DEFAULT
10.1 In the event that:-
(A) the User shall fail to pay (other than by inadvertent error in
funds transmission which is discovered by the Company,
notified to the User and corrected within two business days
thereafter) any amount properly due or owing from it pursuant
to the terms of this Agreement and such default is unremedied
at the expiry of the period of 7 business days immediately
following receipt by the User of written notice from the
Company of such non-payment; or
(B) the User shall fail in any material respect to perform or
comply with any of the obligations expressed to be assumed by
it under this Agreement and (if it is capable of remedy) it is
not remedied to the reasonable satisfaction of the Company
within 30 days of receiving written notice from the Company of
the occurrence thereof and requiring the same to be remedied;
or
(C) (1) an order of the High Court is made or an effective
resolution passed for the insolvent winding up or
dissolution of the User; or
(2) a receiver (which expression shall include an
administrative receiver within the meaning of Section
29 of the Insolvency Act 1986) of the whole or any
material part of the assets or undertaking of the
User is appointed; or
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<PAGE>
(3) ad administration order under Section 8 of the
Insolvency Act 1986 is made or if a voluntary
arrangement is proposed under Section 1 of that Act
in respect of the User; or
(4) the User enters into any scheme of arrangement (other
than for the purpose of reconstruction or
amalgamation upon terms and within such period as may
previously have been approved in writing by the
Director); or
(5) the User is unable to pay its debts (within the
meaning of Section 123(1) or (2) of the Insolvency
Act 1986 save that such sections shall have effect as
if for (pound)750 there was inserted (pound)10,000
and the User shall not be deemed to be unable to pay
its debts if any demand for payment is being
contended in good faith by the User with recourse to
all appropriate measures and procedures)
and in any such case within 28 days of his appointment the
liquidator, received, administrative receiver, administrator,
nominee or other similar officer has not provided to the
Company a guarantee of future performance by the User of this
Agreement in such form and amount as the Company may
reasonably require:
(D) the User ceases to be:
(1) a party to the Pooling and Settlement Agreement and a
pool member thereunder; and
(2) a party to the Master Connection and Use of System
Agreement (unless the Company was notified pursuant
to Clause 2.2(A) that the User was not required to
enter into such Agreement); and
(3) the holder of a current private electricity supply
licence granted pursuant to section 6(2)(a) of the
Act or exempted from holding such a licence pursuant
to section 5 of the Act;
such event shall become an event of default when the Company declares
by notice in writing to the User that such event has become an event of
default provided that at that time the event of default continues
unremedied.
10.2 Once the Company has given notice of an event of default pursuant to
Clause 10.1 this Agreement shall terminate and, without prejudice to
the other rights and remedies of the Company, the Company shall
terminate the Use of Distribution System by the User. The User shall
pay to the Company on demand any costs incurred, including the costs of
De-Energising the Exit Points.
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<PAGE>
11. FORCE MAJEURE
If either Party shall be unable to carry out any of its obligations
under this Agreement due to a circumstance of Force Majeure this
Agreement shall remain in effect but save as otherwise provided herein
both Parties' obligations shall be suspended without liability for a
period equal to the circumstance of Force Majeure provided that:
(A) the non-performing Party gives the other Party prompt notice
describing the circumstance of Force Majeure, including he
nature of the occurrence and its expected duration and, where
reasonably practicable, continues to furnish regular reports
with respect thereto during the period of Force Majeure;
(B) the suspension of performance is of no greater scope and of no
longer duration than is required by the Force Majeure;
(C) no obligations of either Party that accrued before the Force
Majeure causing the suspension of performance are excused as a
result of the Force Majeure;
(D) the non-performing Party uses all reasonable efforts to remedy
its inability to perform as quickly as possible.
12. CONFIDENTIALITY
12.1 Each Party (the "Obligor") hereby undertakes with the other Party that
is shall preserve the confidentiality of, and not directly or
indirectly reveal, report, publish, disclose, transfer or use for its
own purposes Confidential Information except:-
(A) in the circumstances set out in Clause 12.2; or
(B) to the extent otherwise expressly permitted by this Agreement;
or
(C) with the prior consent in writing of the other Party.
12.2 The circumstances referred to in Clause 12.1 are:-
(A) where the Confidential Information, before it is furnished to
the Obligor, is in the public domain; or
(B) where the Confidential Information, after it is furnished to
the Obligor:-
(1) is acquired by the Obligor in circumstances in which
this Clause 12 does not apply; or
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<PAGE>
(2) is acquired by the Obligor in circumstances in which
this Clause 12 does apply and thereafter ceases to be
subject to the restrictions imposed by this Clause
12; or
(3) enters the public domain,
and in any case otherwise than as a result of (a) a breach by
the Obligor of its obligations in this Clause 12 or (b) a
breach by the person who disclosed that Confidential
Information of that person's confidentiality obligation and
the Obligor is aware of such breach; or
(C) if the Obligor is required or permitted to make disclosure of
the Confidential Information to any person:-
(1) in compliance with the duties of the Obligor under
the act or any other requirement of a Competent
Authority; or
(2) in compliance with the conditions of any licence
issued under the Act or any document referred to in
any such licence with which the Obligor is required
to comply; or
(3) in compliance with any other requirement of law; or
(4) in response to a requirement of any stock exchange or
regulatory authority or the Panel on Take-overs and
Mergers; or
(5) pursuant to the arbitration rules for the Electricity
Supply Industry Arbitration Association or pursuant
to any judicial or other arbitral process or tribunal
having jurisdiction in relation to the Obligor; or
(D) to the employees, directors, agents, consultants and
professional advisers of the Obligor, in each case on the
basis set out in Clause 12.3.
12.3 With effect from the date of this Agreement the Obligor shall adopt
procedures within its organization for ensuring the confidentiality of
all Confidential Information which it is obliged to preserve as
confidential under Clause 12.1. These procedures are:-
(A) the Confidential Information will be disseminated within the
Obligor only on a "need to know" basis;
(B) employees, directors, agents, consultants and professional
advisers of the Obligors in receipt of Confidential
Information will be made fully aware of the Obligor's
obligations of confidence in relation thereto; and
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<PAGE>
(C) any copies of the Confidential Information, whether in hard
copy or computerised form, will clearly identify the
Confidential Information as confidential.
13. NON-WAIVER
13.1 None of the provisions of this Agreement shall be considered waived by
either Party except when such waiver is given in writing.
13.2 No delay by or omission of either Party in exercising any right, power,
privilege or remedy under this Agreement or the Distribution Code shall
operate to impair such right, power, privilege or remedy or be
construed as a waiver thereof. Any single or partial exercise of any
such right, power, privilege or remedy shall not preclude any other
future exercise thereof or the exercise of any other right, power,
privilege or remedy.
14. ENTIRE AGREEMENT
This Agreement, including the Schedules, shall constitute the entire
agreement between the Parties with respect to its subject matter and
supersedes all previous agreements and understandings between the
Parties with respect thereto and each of the Parties acknowledges and
confirms that it does not enter into this Agreement in reliance on any
representation or warranty or other undertaking not fully reflected in
the terms of this Agreement, and no amendment, modification or
substitution hereto shall be effective unless executed in writing by
both Parties.
15. DISPUTES RESOLUTION
15.1 Save where expressly stated in this Agreement to the contrary and
subject to any contrary provisions of the Act, any licence issued
pursuant to the Act or the Regulations or the rights, powers, duties
and obligations of the Director or the Secretary of State under the
Act, any such licence or otherwise howsoever, any dispute or difference
of whatever nature howsoever arising under out of or in connection with
this Agreement between the Parties shall be and is hereby referred to
arbitration pursuant to the arbitration rules of the Electricity
Arbitration Association in force from time to time.
15.2 Whatever the nationality residence or domicile of either Party and
Wherever the dispute or difference or any part thereof arose the law of
England shall be the proper law of any reference to arbitration
hereunder and in particular (but not so as to derogate from the
generality of the foregoing) the provisions of the Arbitration Acts
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<PAGE>
1950 (notwithstanding anything in Section 34 thereof) to 1979 shall
apply to any such arbitration wherever the same or any part of it shall
be conducted.
15.3 Subject always to Clause 15.5, if any tariff customer (as defined in
Section 22(4) of the Act) brings any legal proceedings in any court (as
defined in the Rules of the Supreme Court 1965 and in the County Courts
Act 1984) against one or ore parties, any of which is a Party (the
"defendant Party") and the defendant Party wishes to make a third party
claim (as defined in Clause 15.4) against the other Party which would
but for this Clause 15.3 have been a dispute or difference referred to
arbitration by virtue of Clause 15.1 then, notwithstanding the
provisions of Clause 15.1 which shall not apply and in lieu of
arbitration, the court in which the legal proceedings have been
commenced shall hear and completely determine and adjudicate upon the
legal proceedings and the third party claim not only between the tariff
customer and the defendant Party but also between either or both of
them and the other Party whether by way of third party proceedings
(pursuant to the Rules of the Supreme Court 1965 or the County Court
Rules 1981) or otherwise as may be ordered by the court.
15.4 For the purpose of this Clause 15 "third party claim" shall mean:-
(A) any claim by a defendant Party against the other Party
(whether or not already a party to the legal proceedings) for
any contribution or indemnity; or
(B) any claim by a defendant Party against the other Party for any
relief or remedy relating to or connected with the subject
matter of the legal proceedings and substantially the same as
some relief or remedy claimed by the tariff customer; or
(C) any requirement by a defendant Party that any question or
issue relating to or connected with the subject matter of the
legal proceedings should be determined not only as between the
tariff customer and the defendant Party but also as between
either or both of them and the other Party (whether or not
already a party to the legal proceedings).
15.5 Clause 15.3 shall apply only if at the time the legal proceedings are
commenced no arbitration has been commenced between the defendant Party
and the other Party raising or involving the same or substantially the
same issues as would be raised by or involved in the third party claim.
The tribunal in any arbitration which has been commenced prior to the
commencement of legal proceedings shall determine the question, in the
event of dispute, whether the issues raised or involved are the same or
substantially the same.
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16. GOVERNING LAW
This Agreement shall be governed by and construed in all respect in
accordance with the law of England and Wales.
17. JURISDICTION
17.1 Subject to Clause 15 and to Clause 17.4, both Parties irrevocably agree
that the courts of England are to have exclusive jurisdiction to settle
any disputes which may arise out of or in connection with this
Agreement including the Distribution Code and that accordingly any
suit, action or proceeding (together in this Clause 17 referred to as
"Proceedings") arising out of or in connection with this Agreement may
be brought in such courts.
17.2 Each Party irrevocably waives any objection which it may have now or
hereafter to the laying of the venue of any Proceedings in an;y such
court as is referred to in this Clause 17 and any claim that any such
Proceedings have been brought in an inconvenient forum and further
irrevocably agrees that judgement in any Proceedings brought in the
English courts shall be conclusive and binding upon such Party and may
be enforced in the courts of any other jurisdiction.
17.3 Each Party which is not incorporated in any part of England and Wales
agrees that if it does not have, or shall cease to have, a place of
business in England and Wales it will promptly appoint and shall at all
times maintain a person in England and Wales to accept service of
process on its behalf in any Proceedings in England.
17.4 For the avoidance of doubt nothing contained in Clauses 17.1 to 17.3
above shall be taken as permitting a Party to commence Proceedings in
the courts where this Agreement otherwise provides for Proceedings to
be referred to arbitration.
18. SAVINGS CLAUSE
If any provision of this Agreement is or becomes or is declared
invalid, unenforceable or illegal by the courts of any jurisdiction to
which it is subject or by order of the Commission of the European
Communities or by order of the Secretary of State such invalidity,
unenforceability or illegality shall not prejudice or affect the
remaining provisions of this Agreement which shall continue in full
force and effect notwithstanding such invalidity, unenforceability or
illegality.
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19. NOTICES
19.2 Any notice, demand, certificate or other communication required to be
given or sent under this Agreement shall be in writing and either
delivered personally or by first class post, telex or facsimile.
19.2 The required address, telex or facsimile number for a Party for the
purposes of this Clause shall be the address, telex or facsimile number
specified for such purpose in Schedule 4.
19.3 A notice or other form of communication shall be deemed to have been
served as follows:-
(A) if given or delivered personally at the time when given or
delivered;
(B) if sent by pre-paid first class post at the expiration of
forty-eight hours after the document was delivered into the
custody of the postal authorities;
(C) if sent by telex on receipt of the appropriate answerback;
(D) if sent by facsimile, on receipt of confirmation from the
addressee that it has been received.
In proving such service it shall be sufficient to prove that personal
delivery was made or that the envelope containing the notice was
properly addressed as set out above and delivered into the custody of
the postal authorities as a pre-paid first class letter as the case may
be.
20. VARIATIONS
20.1 No variations to this Agreement shall be effective unless made in
writing and signed by or on behalf of both Parties. The Company and the
User shall effect any amendment required to be made to this Agreement
by the Director as a result of a change in the License or an order made
pursuant to the Act or as a result of settling any of the terms hereof
and the User hereby authorises and instructs the Company to make any
such amendment on its behalf and undertakes not to withdraw, qualify or
revoke such authority or instruction at any time.
20.2 Either Party shall at any time be entitled to propose variations to
this Agreement by notice in writing to the User. The Company and the
User shall negotiate in good faith the terms of any such variation, but
if a variation to the Agreement has not been agreed and put into effect
within one month after it has been proposed by the Company, either
Party shall be entitled to refer the matter to the Director, pursuant
to
UOS 14.05.93
24
<PAGE>
Condition 8C of the Licence, as if the variation were a new agreement
as referred to in that condition. The Parties shall give effect to the
determination of the Director and shall enter into any agreement
supplemental to this Agreement as shall be necessary to give effect to
any variation agreed or so determined.
IN WITNESS whereof the hands of the duly authorised representatives of the
parties hereto the date first above written
___________________________________ for User
_______________________________ for Company
UOS 14.05.93
25
<PAGE>
SCHEDULE 5
Meters
Where the Company exercises its right to install Use of System Metering
Equipment the following provisions shall apply.
1. The Use of System Metering Equipment shall be provided, installed and
maintained by the Company and shall, insofar as the same is used for
calculating the charges payable by the User for Use of Distribution
System be capable of operating within the accuracy limits specified
below ("the agreed accuracy limits"), namely:-
(A) where the Maximum Capacity of the Exit Point is 10 megawatts
(or equivalent megawatts, as defined in the License) or less:
+/- 2 per cent;
(B) where the Maximum Capacity of the Exit Point is greater than
10 megawatts (or equivalent megawatts, as so defined) : +/- 1
per cent.
2. For the avoidance of doubt, the Use of System Metering Equipment need
not be certified under paragraph 5 of the Schedule 7 to the Act.
3. Unless the accuracy of the Use of System Metering Equipment is disputed
by notice in writing ("dispute notice") given by either Party to the
other Use of System Metering equipment shall be deemed to be accurate.
If a dispute notice is given:-
(A) Unless otherwise agreed, the Use of System Metering Equipment
shall as soon as practicable be examined and tested by [a
meter examiner in accordance with Schedule 7 to the Act.]
(B) if on such test:-
(1) it shall be found that the inaccuracy of the
registration of the Use of System Metering Equipment
at normal loads exceeds the agreed accuracy limits,
suitable adjustment shall be made in the accounts
rendered by the Company and the Use of System
Metering Equipment or part thereof found to be
inaccurate shall be recalibrated or replaced and the
cost of such test and recalibration or replacement
shall be paid by the Company;
(2) the Use of System Metering Equipment is found to be
accurate within the said limits, the Use of System
Metering Equipment shall be deemed to be accurate and
the cost of moving, testing and replacing the Use of
System Metering Equipment or any part thereof shall
be paid by the Party which served the dispute notice.
UOS 14.05.93
26
<PAGE>
4. If it is discovered that any meter reading has been
inaccurate or omitted or the translation of such a
reading into charges has been incorrect, then the
Company shall forthwith issues a correcting invoice
or credit note (as the case may be) on the basis of
the correct data, which shall be taken into account
in the next account issued pursuant to Clause 4.2 of
this Agreement.
5. If (having made reasonable efforts to do so) the
Company's representative cannot gain access to read
the Use of System Metering Equipment the quantity of
electricity consumed will be estimated on a
reasonable basis by the Company and the charges
payable under this Agreement shall be based on the
estimated amounts, subject to any adjustment which
may be necessary following the next actual reading.
6. If electricity be supplied and be not registered in
whole or in part by the Use of System Metering
Equipment for any period the User shall pay in
respect of such period charges based so far as can be
reasonably ascertained on what the charges would have
been had the Use of System Metering Equipment fully
registered.
7. The Company shall make available to the User at
reasonable intervals such data from the Use of System
Metering Equipment as the User may reasonably
require.
UOS 14.05.93 27
<PAGE>
Exhibit 10.9
AGREEMENT for the CONNECTION of an EXIT POINT
Dated: 1995
BETWEEN (1) SOUTH WESTERN ELECTRICITY plc
Whose registered office is at 800
Park Avenue, Aztec West,
Almondsbury, Bristol BS12 4SE ("We
Us", "Our" as the context requires)
AND (2) C. Shippam Ltd.
whose registered office is at
East Walls,
Chichester,
West Sussex
for itself and as registered affiliates listed in Schedule 1
("You", "Your" as the context requires)
It is agreed that We will connect Your electrical installation to Our
Distribution System and You will accept the connection subject to the Contract
Terms and Schedules which are incorporated into this agreement. However while
You are a Tariff customer, the Public Electricity Supply Code, and Schedule 6 of
the Electricity Act 1989, shall take precedence over the Contract Terms.
For the purpose of these conditions:
SCHEDULE 1 GENERAL
Commencement Date: 1st October 1995
Period of Notice: 28 days
Termination Date: 30th September 2035
Premises: C Shippman, Ltd.
Poultry Processing Division,
Station Yard,
Crediton,
Devon, EX17 3PP
Accommodation: Substation. (As specified on the attached Drawing No.
31-5557-S1)
Exit Point: The outgoing terminals of Our metering equipment.
Notices Our Address Your Address
Address 800, Park Avenue, Poultry Processing Division,
Aztec West, Station Yard,
Almondsbury, Credition,
Bristol, BS12 4SE Devon, EX17 3PP
Fax No. 01454 616675 01363 775909
<PAGE>
Schedule 2 - Characteristics of Supply:
-------------------------
Phase: Three
Current: Alternating
Voltage: 230/400 Volts
Frequency: 50 Hertz
Maximum Capacity: 750 kVA
Design Short-Circuit 25 kA
Rating:
SCHEDULE 3 - Terms for Connection
--------------------
S3.1 To pay Us a connection charge of(pound)4,236.33 excluding value
added tax.
S3.2 The Maximum Capacity stated in Schedule 2 has been requested by
You and Agreed by Us. The Maximum Capacity will be fixed
30/11/2000 unless increased by agreement between You and Us, in
which case the increased Maximum Capacity will be fixed for a
period of five years from the date of increase.
SCHEDULE 4 - Generators
- ---------- ----------
We consent to the following generators to be directly or indirectly connected to
Our Distribution System.
S4.1 Plant capable of operating in parallel with Our Distributing System:
None
S4.2 Plant not capable of operating in parallel with Our Distribution System:
None
Signed by............................................... for You
........................................................Position
..........................................................for Us
Head of Connection Policy
<PAGE>
SOUTHWESTERN ELECTRICITY plc
ELECTRICITY CONNECTION AGREEMENT
INDEX of CONTRACT TERMS
Clause Page
Schedules
1. Connection 2
2. Your Right to an Electricity Connection 2
3. Payment of Connection Charge 3
4. Limitation of Demand 3
5. Distribution Code 3
6. Plant and Apparatus 3
7. Accommodation and Rights of Access 4
8. Your Installation and Equipment 4
9. Power Factor and Phase Balance 5
10. Modifications 5
11. Metering Equipment 5
12. Assignment 6
13. Events of Default and Termination 6
14. Force Majeure 7
15. Limitation of Liability 7
16. Variation, Waiver and Savings 8
17. Arbitration 8
18. Miscellaneous Provisions 9
19. Definitions 10
20. Appendix (where required) 13
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<PAGE>
ELECTRICITY CONNECTION AGREEMENT - CONTRACT TERMS
1. CONNECTION
This agreement contains the terms upon which Your Installation shall be
connected to the Distribution System at the Exit Point with effect from
the date of this agreement, and shall replace any earlier agreements or
arrangements between Us and You for the Exit Point and Your Installation.
2. YOUR RIGHT TO AN ELECTRICITY CONNECTION
2.1 You have the right for Your Installation to be Connected
and to remain Connected to the Distribution System at the
Exit Point subject to the terms of this agreement.
2.2 The right to be Connected does not include the right to be
Energised. Under the terms of this agreement, You have the
right for the Exit Point to be Energised provided that
reasonable evidence is given to Us that an Authorised
Electricity Operator agrees to supply electricity to You
and agrees terms with Us for use of Our Distribution
System. If the Operator is not a pool member under the
Pooling and Settlement Agreement an agreement is required
with Us for any necessary top-up or standby electricity
supply.
2.3 We shall De-Energise the Exit Point as soon as We
reasonably can after being instructed to do so by You or
by the Authorised Electricity Operator and shall act with
Good Industry Practice when carrying out the work. Where
the instruction has been given by an Authorised
Electricity Operator, We will give You notice of Our
intention to De-Energise, and any grounds stated in the
instruction unless Force Majeure prevents Us from doing
so.
2.4 We may De-Energise the Exit Point immediately where:
We are instructed to do so by NGC or We are required to do
so under Part XVII (Seventeen) of the Pooling and
Settlement Agreement or where We are required to do so by
the Act or where We are authorised to do so under the
Regulations or the conditions referred to in Clause 2.2
are no longer satisfied or We can do so under the terms of
this agreement and shall at all times act with Good
Industry Practice in carrying out De- Energisation. If We
are notified of circumstances in which We may be
instructed or required to act or We become aware of
circumstances in which We may wish to act We shall
immediately inform You.
2.5 If at any time when You do not have the right for the Exit
Point to be Energised and You take a supply of electricity
through the Exit Point, You shall pay Us on demand such
sum as We require for the supply of electricity calculated
under Section 2 of Our current published charges for
top-up and standby electricity, together with other
reasonable and proper costs which We have incurred.
2.6 We shall be entitled to De-energise the Distribution
System and Our Equipment from time to time provided that:
(a) We comply with the requirements of the
Distribution Code; and
(b) We give You a minimum of 2 days' written notice of
Our intention to De-energise the Exit Point unless
Force Majeure prevents Us from doing so; or the
Exit Point
Page - 2 -
<PAGE>
has to be De-energised immediately because of
accident or other emergency, or to avoid failure
of, or serious interference with, other
electricity supplies.
(c) We re-Energise the Exit Point as quickly as
reasonably possible.
2.7 When the Exit Point is Energised under this Agreement, the
characteristics of the supply of electricity delivered at
the Exit Point shall be as specified in Schedule 2,
subject to the variations permitted by the Regulations.
2.8 It the Exit Point is temporarily De-Energised or
Disconnected at Your request, You shall pay to Us on
demand any reasonable and proper costs incurred by Us as a
result of The De-Energisation or Disconnection and any
subsequent re-Energisation or re-Connection.
3. PAYMENT OF CONNECTION CHARGE
3.1 You agree to pay to Us in advance any connection charge
specified in Schedule 3 or any subsequent charge for a
modification. The connection charge is calculated in
accordance with Our statement of connection charges for
the time being in force.
3.2 You agree to pay Us the charge due and payable under any
Previous Agreement specified in Schedule 1.
3.3 You agree to pay each account in full within 14 days of
the date of the invoice.
3.4 All amounts mentioned in this agreement as payable are
exclusive of Value Added Tax and We may add to such
amounts, and You agree to pay, Value Added Tax at the rate
which applies from time to time.
3.5 It at Your request the Director decides that the
connection charge payable under this agreement has not
been calculated correctly under Our statement of
connection charges, We shall pay to You the amount by
which You have been overcharged together with
interest on that amount from the date on which such charge
was paid until the date of payment of such interest.
Interest shall accrue from day to day at the rate
equivalent to Lloyds Bank Minimum Lending Rate.
4. LIMITATION OF DEMAND
4.1 You agree not to take at any time more electricity through
the Exit Point than the Maximum Capacity. If You do take
more than the Maximum Capacity, We may give You written
notice setting out details and request You to remedy the
situation. If You have not remedied the situation within
three days of receipt of the written notice, We reserve
the right to De-energise the Exit Point until such time as
You are able to satisfy Us that the Maximum Capacity will
not be exceeded when the connection is renewed or
arrangements have been made for a Modification.
4.2 Where the Maximum Capacity is exceeded You shall pay to Us
the reasonable additional costs incurred by Us as a
result, including the costs of De-energising the Exit
Point under clause 4.1 and any later re-Energisation.
5. DISTRIBUTION CODE
Page - 3 -
<PAGE>
5.1 We and You agree to comply with all relevant provisions of
the Distribution Code. A copy of the Distribution Code is
available from Us on request.
5.2 In the event of any conflict between this Agreement and
the Distribution Code, the Distribution Code shall apply.
6. PLANT AND APPARATUS
6.1 Each Party shall ensure that its agents, employees and
guests will not interfere in any way with any of the Plant
or Apparatus of the other without the consent of the other
except where emergency action has to be taken to protect
the health and safety of persons or protect the
Distribution System, in which case interference in order
to protect the health and safety of such persons or to
protect the Distribution System shall be allowed.
6.2 You agree at all times to take all necessary precautions
to protect Our Equipment on the Premises from damage and
for that purpose shall comply with any reasonable
requirements from time to time made by Us.
6.3 We consent to a Registered Meter Operator connecting
meter(s) to the Point of Final Connection and removing and
replacing the Metering Potential Fuses.
6.4 If You are in breach of Clauses 6.1 or 6.2 and as a result
any part of Our Equipment is lost or damaged, You agree to
pay to Us the full amount of any loss, damage and expenses
sustained by Us as a result, unless the loss or damage was
caused by fair wear and tear, Force Majeure, or by the act
or default of Us or Our employees, agents or
subcontractors.
7. ACCOMMODATION AND RIGHTS OF ACCESS
7.1 You agree to the arrangements with Us for the
Accommodation and rights of access set out in this Clause.
7.1.1 Provide, without cost to Us, the Accommodation specified
in Schedule 1, on the Premises to Our requirements for Our
Equipment, together where separately located accommodation
for Our metering equipment, cable termination and
ancillary equipment.
7.1.2 Unless we already have a lease of the Accommodation, grant
or arrange for the grant of a lease of the Accommodation
to Us within twenty eight days of the date of our written
request and at Our cost. The form of the lease required
shall be substantially as set out in the Appendix. We
will be responsible for Your reasonable legal costs and
for the costs of preparing and producing the lease. If
You are a leasehold owner, the length of Your lease to Us
will either be for ninety nine years or the length of Your
leasehold ownership if this period is less than ninety
nine years.
7.1.3 Acknowledge that Our equipment laid, installed or fixed in
the Premises shall remain in Our ownership and shall not
be deemed to pass to a third party on a transfer of the
Premises.
7.1.4 Provide, without cost to Us, a dual switch socket outlet,
a luminaire and space heating to a minimum standard so as
to give frost protection in the switchroom together with a
240 volt electricity supply.
Page - 4 -
<PAGE>
7.1.5 Keep in good order repair and condition without cost to Us
all parts of the Accommodation including the interior
surfaces and/or boundary fences and/or cladding which
enclose the Accommodation.
7.1.6. Permit such employees or agents of Ours as are reasonably
necessary to enter the Premises to carry out connection or
modification works or to operate, read meters, inspect or
test the Metering Installation, work on Our Equipment or
Your Installation or lawfully disconnect or de-energise
the Exit Point or for any other purpose required for the
operation of the Distribution System and shall be given
safe and unobstructed access.
7.2 The rights of access specified in paragraphs 5, 6, 7 and 8
of Schedule 6 to the Act shall apply to this agreement.
Any individuals to whom access is given under this Clause
shall comply with all reasonable directions given by Us or
You and Your authorised employees and agents as to general
safety and site security requirements.
8. YOUR INSTALLATION AND EQUIPMENT
8.1 Except where clear written representations are given to
You by Us, We give no warranty, about the adequacy, safety
or other characteristics of Your Installation.
8.2 You understand that We may use switchgear with
auto-reclosing facilities, that Your Installation should
be designed so as not to suffer damage through the
operation of these facilities and that We accept no
liability for such damage to the extent such damage is
attributable to Your failure adequately to design Your
Installation.
8.3 If You take a supply of electricity from the Distribution
System for the operation of any equipment which during the
normal operation of the Distribution System adversely
affects voltage regulation or the supply of electricity to
You or others or in our reasonable opinion is likely so to
do, You shall at Your own expense remedy the condition in
a manner considered adequate in Our reasonable opinion and
if the condition is not remedied within a reasonable time
of Us giving notice to You, We may immediately De-energise
the Exit Point until the condition has been remedied and
You pay to Us the full costs, losses and expenses caused
to Us.
8.4 You agree not to connect any electricity generating plant
to the Distribution System directly or indirectly without
Our previous written consent, which will not be
unreasonably delayed or withheld. Consent has been granted
for the generators (if any) specified in Schedule 4. Where
You possess an emergency back-up electricity generation
facility not included in Schedule 4, You may utilise such
facility at such times as a supply of electricity is not
available from the Distribution System provided that You
first isolate Your generating plant from the Distribution
system by De-Energising the Exit Point.
9. POWER FACTOR AND PHASE BALANCE
9.1 Where required by Us, You agree to maintain at Your cost
the power factor of any supply of electricity at not less
than 0.95 leading and 0.8 lagging.
9.2 Where a supply of electricity is provided in two or more
phases, You shall ensure as far as it is reasonably
practicable that the demand is at all time balanced
between the phases.
10. MODIFICATIONS
Page - 5 -
<PAGE>
10.1 Where You wish to make a Modification You agree to
complete and submit to Us Our form of Application for a
Modification and comply with its terms.
10.2 We shall make a Modification Offer to You as soon as
reasonably practicable. The Modification Offer shall
include the details of any proposed variations We require
to this Agreement and its Schedules.
10.3 We shall have no obligation to compensate You for the cost
and expense of any Modification required to be made by You
as a result of any Modification by Us.
10.4 You have the right of appeal to the Director General of
Electricity Supply if You and We cannot agree terms for a
Modification. The address of the Director General is The
Off ice of Electricity Regulation, Hagley House, Hagley
Road, Edgbaston, Birmingham B168QG.
11. METERING EQUIPMENT
11.1 Schedule 7 of the Act permits You to provide Your own
Metering Installation subject to Our consent, such consent
not to be unreasonably withheld. Such consent may be
withheld if the Registered Meter Operator is You or Your
Affiliate.
11.2 You must employ either Us or another Registered Meter
Operator as Your agent to install, maintain and/or remove
Your Metering Installation.
11.3 The Act requires You to keep the Metering Installation in
good order for correctly registering the supply of
electricity. If the Metering Installation is not kept in
good order then We may De-Energise or Disconnect the Exit
Point.
11.4 You agree to indemnity Us for any loss or damage arising
from any defect in the Metering Installation unless We act
negligently as the Registered Meter Operator at the time
of the occurrence of the loss or damage.
11.5 The requirements for accuracy of electricity meters are
set out in the Meter Certification Regulations (1 990
Statutory Instrument 792) for meter's certified under the
procedure prescribed by the Regulations. For meters which
are connected to the settlement system for electricity
supply, more stringent accuracy standards are imposed by
Code of Practice Five (issue 2, Version 1.03). Copies of
Code of Practice Five are available from the Electricity
Pool of England and Wales whose address is Second Floor,
15 Bloomsbury Square, London WC1A2LP.
11.6 We do not give any warranty, express or implied or accept
any responsibility, as to the adequacy, safety or other
characteristics of the Metering Installation unless We are
the Registered Meter Operator.
11.7 You agree to require the Registered Meter Operator to
provide Us such information and assistance as We may
reasonably require to enable Us to exercise Our rights and
perform its obligations as operator of the Distribution
System and, if applicable, the supplier of electricity.
12. ASSIGNMENT
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<PAGE>
12.1 This agreement shall not be assigned to another person by
You without Our previous written consent, such consent not
to be unreasonably withheld. If you leave the Premises, We
will offer a new connection agreement to the next owner or
occupier of the Premises.
13. EVENTS OF DEFAULT AND TERMINATION
13.1 This agreement shall continue until terminated under this
Clause.
13.2 This agreement shall continue in force until the
termination date specified in Schedule 1 unless terminated
at an earlier date by either You giving not less than 28
days notice in writing or by Us under Clause 13.5.
13.3 Your Installation may be De-Energised if You--
do not pay any valid account for charges within one
calendar month of the date on which it was billed; (you
having been sent one intermediate reminder); or
breach the Contract and do not remedy the breach within a
reasonable time after having received written notice of
default; or
You have in Our reasonable belief made unauthorised use of
electricity or committed theft of electricity; or
are adjudicated bankrupt; or become subject to an
administration order, proposal for a voluntary
arrangement, receivership or liquidation; or
You are unable to pay Your debts (within the meaning of
the Insolvency Act 1986) or make a proposal for a
voluntary arrangement under Part I of that Act.
13.4 Once We have given notice of an event of default under
Clause 13.3 this agreement shall terminate and, without
prejudice to Our other rights and remedies, We may
Disconnect the Exit Point.
13.5 If the Exit Point is De-Energised for a continuous period
of three months We may give You twenty-eight days notice
in writing to terminate this agreement.
13.6 Upon termination of the Agreement You shall allow Us to
enter Your Premises in order to remove Our Equipment and
shall pay Us all sums then due and payable or accrued
under this agreement and any reasonable costs incurred by
Us in Disconnecting the Exit Point and removing Our
Equipment.
13.7 If You have not already granted Us a Lease of the
Accommodation and give notice to terminate this Agreement
We shall be entitled to take a lease from You of the
Accommodation with all reasonably necessary ancillary
rights on such reasonable terms as may then be agreed or,
failing agreement, on terms decided by an arbitrator
appointed under the Dispute Resolution procedure in Clause
17.
14. FORCE MAJEURE
If either Party shall be unable to carry out any of its obligations under
this Agreement due to Force Majeure this Agreement shall remain in effect
but except as otherwise provided in this Agreement both
Page - 7 -
<PAGE>
Parties' obligations other than any obligation as to payment of charges
shall be suspended without liability for a period equal to the Force
Majeure event provided that:
(a) the suspension of performance is no greater and of no
longer duration than is required by the Force Majeure;
(b) no obligations of either Party that arose before the Force
Majeure causing the suspension of performance are excused
as a result of the Force Majeure; and
(c) the non-performing Party uses all reasonable efforts to
remedy its inability to perform.
15. LIMITATION OF LIABILITY
15.1 Neither We or You shall be liable to the other for any
breach of this Agreement directly or indirectly caused by
Force Majeure.
15.2 Neither Party (the 'Party Liable') nor any of its
officers, employees or agents shall be liable to the other
Party for loss arising from any breach of this Agreement
other than for loss directly resulting from such breach
and which at the date of this Agreement was reasonably
foreseeable as likely to result in the ordinary course of
events from such breach and which resulted from physical
damage to the property of the other Party, its officers,
employees or agents Provided That the liability of either
Party in respect of claims for such loss or damage shall
not exceed the sum of El,000,000 (one million pounds) per
incident or series of related incidents.
15.3 Nothing in this agreement shall exclude or limit the
liability of the Party Liable for death or personal injury
resulting from the negligence of the Party Liable, or any
of its officers, employees or agents and the Party Liable
shall indemnity and keep indemnified the other Party, its
officers, employees or agents from and against all such
and any loss or liability which such other Party may
suffer or incur by reason of any claim on account of death
or personal injury resulting from the negligence of the
Party Liable, or any of its officers, employees or agents.
15.4 Subject to Clause 15.6 neither Party, nor any of its
officers, employees or agents shall in any circumstances
whatsoever be liable to the other Party for any loss of
profit, loss of revenue, loss of use, loss of contract or
loss of goodwill or any indirect or consequential loss or
loss resulting from the liability of such other Party to
any other person however and whenever arising except under
Clause 15.3.
15.5 The rights and remedies provided by this agreement to the
Parties are exclusive and not cumulative and exclude and
are in place of all rights or remedies provided by common
law or statute, including any rights either Party may
possess in tort which shall include actions brought in
negligence and/or nuisance.
15.6 Clause 15 shall override any other provision of this
agreement so far as it excludes or limits liability,
provided that nothing in this Clause shall exclude or
restrict or otherwise prejudice any of the rights, powers,
duties and obligations of either Party which are conferred
or created by the Act, the Licence, or the Regulations or
the rights, powers, duties and obligations of the Director
or the Secretary of State under the Act, the Licence or
otherwise.
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<PAGE>
16. VARIATION, WAIVER AND SAVINGS
16.1 No variations to this agreement shall be effective unless
made in writing and signed by or on behalf of You and Us.
However, each Party shall effect any amendment required to
be made to this agreement by the Director as a result of a
change in the Licence or an order made under the Act or as
a result of settling any of the terms of this agreement
and You authorise and instruct Us to make any such
amendment on Your behalf and undertake not to withdraw or
qualify such authority or instruction at any time during
the period of this agreement.
16.2 Either We or You shall at any time be entitled to propose
variations to this Agreement by notice in writing to the
other Party. We and You shall negotiate in good faith the
terms of any such variation, but if a variation to the
Agreement has not been agreed and put into effect within
one month after it has been proposed, either Party shall
be entitled to refer the matter to the Director, as if the
variation were a new agreement as referred to in that
condition. We and You shall give effect to the decision of
the Director and shall enter into any agreement
supplemental to this Agreement as shall be necessary to
give effect to any variation agreed or so decided.
16.3 None of the provisions of this Agreement shall be
considered waived by either Party unless the waiver is
given in writing.
16.4 No delay by or omission of either Party in exercising any
right, power, privilege or remedy under this Agreement or
the Distribution Code shall reduce such right, power,
privilege or remedy or be construed as a waiver.
16.5 It any provision of this Agreement is or becomes or is
declared invalid, unenforceable or illegal by the courts
of any jurisdiction to which it is subject or by order of
the Commission of the European Communities or by order of
the Secretary of State such invalidity, unenforceability
or illegality shall not prejudice or affect the remaining
provisions of this Agreement which shall continue in full
force and effect notwithstanding such invalidity,
unenforceability or illegality.
17. ARBITRATION
17.1 Any dispute or difference arising in connection with this
Agreement between You and Us shall be referred to
arbitration under the arbitration rules of the Electricity
Arbitration Association in force from time to time except
where expressly stated in this Agreement to the contrary,
and subject to any contrary provision of the Act, any
licence issued under the Act or the Regulations.
17.2 Whatever the nationality residence or domicile of either
Party and wherever the dispute or difference arose the law
of England and Wales shall be the proper law of any
reference to arbitration and in particular the provisions
of the Arbitration Acts 1950 to 1979 shall apply to any
such arbitration wherever it shall be conducted.
17.3 Subject to Clause 17.5, if any third party brings any
legal proceedings in any court against any Party, (the
'defendant Party') and the defendant Party wishes to make
a third party claim (as defined in Clause 17-4) against
the other Party which would but for this Clause 17.3 have
been a dispute or difference referred to arbitration under
Clause 17.1 then the provisions of Clause 17.1 shall not
apply and instead of arbitration, the court in which the
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legal proceedings have been commenced shall hear and
completely adjudicate upon the legal Proceedings and the
third party claim not only between the third party and the
defendant Party but also between either or both of them
and the other Party whether by way of third party
proceedings or otherwise as may be ordered by the court.
17.4 For the purpose of this Clause 'third party claim' shall
mean:-
(a) any claim by a defendant Party against the other
Party (whether or not already a party to the legal
proceedings) for any contribution or indemnity, or
(b) any claim by a defendant Party against the other
Party for any relief or remedy connected with the
subject matter of the legal proceedings and
substantially the same as some relief or remedy
claimed by the third party, or
(c) any requirement by a defendant Party that any
question or issue connected with the subject
matter of the legal proceedings should be
determined not only as between the third party and
the defendant Party but also as between either or
both of them and the other Party (whether or not
already a party to the legal proceedings).
17.5 Clause 17.3 above shall apply only if at the time the
legal proceedings are commenced no arbitration has been
commenced between the defendant Party and the other Party
raising or involving the same or substantially the same
issues as would be raised by or involved in the third
party claim. The tribunal in any arbitration which has
been commenced prior to the commencement of legal
proceedings shall decide the question, in the event of
dispute, whether the issues raised or involved are the
same or substantially the same.
18. MISCELLANEOUS PROVISIONS
18.1 This Agreement, including the Schedules, shall constitute
the entire agreement between the Parties concerning its
subject matter and replaces all previous agreements and
understandings between the Parties with respect thereto
and each of the Parties acknowledges and confirms that it
does not enter into this Agreement in reliance on any
representation or warranty or other undertaking not fully
reflected in the terms of this Agreement, and no
amendment, modification or substitution hereto shall be
effective unless in writing and signed by both Parties.
18.2 This Agreement shall be governed by the law of England and
Wales.
18.3 Any notice given under this Contract shall be properly
given if sent by first class letter post, by hand, or by
facsimile transmission to:-
(a) Us - at Our Registered Office; or
(b) You - at Your Registered Office or at the Premises.
18.4 Any notice sent by first class post will be deemed to have
been given two days after it was sent and a notice
delivered during normal office hours by hand, or facsimile
will be deemed to have been served upon actual delivery of
transmission.
18.5 Any reference in this agreement to a statute, statutory
instrument, regulation or order shall be a reference to
such statute, statutory instrument, regulation or order as
amended or re-
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<PAGE>
enacted. Similarly, any reference in this agreement to
another agreement or any deed or other instrument shall be
a reference to that other agreement, deed or other
instrument as amended.
19. DEFINITIONS
19.1 In this agreement the following expressions shall have the
meanings set next to them:-
"Accommodation" the accommodation specified in Clause 7 and Schedule 1.
"Act" The Electricity Act 1989;
"Affiliate" of any person, is a reference to any holding company or
subsidiary or any subsidiary of a holding company of such person; in each
case, within the definition of the Companies Acts 1985 and 1989;
"Application for a Modification" Our standard Form of Application for a
Modification;
"Apparatus" all equipment in which electrical conductors are used
supported or of which they may form part;
"Appendix" the form of draft lease of the Accommodation (where required)
attached at the end of this agreement.
"Authorised Electricity Operator" a person who is the holder of a licence
to supply electricity under the Electricity Act 1989 or exempted from
holding such a licence under that Act;
"Competent Authority" includes the Secretary of State, the Director and
any local or national agency, authority, department, inspectorate,
minister, ministry, official or public or statutory person of, or of the
government of, the United Kingdom or of the European Economic Community;
"Connect(ed)" the installation of the Connection Equipment in such a way
that subject to Energisation You may receive a supply of electricity over
the Distribution System;
"Connection Equipment" that part of Our Equipment which has been or is to
be provided and installed by Us to provide a connection at the Exit Point
listed in Schedule 1 and where applicable is illustrated on the drawing
attached to this agreement;
"De-energise/De-onergisation" the movement of any switch or the removal
of any fuse or the taking of any other step where no electrical current
can flow from the Distribution System through the Connection Equipment to
Your Installation at the Exit Point;
"Design Short-Circuit Rating" the design short-circuit rating of the
Distribution System at the Exit Point;
"Directive" includes any present or future directive, requirement,
instruction, direction or rule of any Competent Authority and includes
any modification, extension or replacement then in force;
"Director" the Director General of Electricity Supply appointed for the
time being under the Act; whose address is: The Office of Electricity
Regulation, Hagley House, Hagley Road, Edgbaston, Birmingham. B168QG.
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"Disconnection" the electrical separation of all or any of the Connection
Equipment;
"Distribution Code" Our distribution code referred to in the Licence;
"Distribution System" Our system for the distribution of electricity as
defined in the Licence;
"Energisation" the movement of any switch or the insertion of any fuse or
the taking of any other step to enable an electrical current to flow from
the Distribution System through the Connection Equipment to Your
Installation at the Exit Point;
"Exit Point" the point of connection at which a supply of electricity may
flow between the Distribution System and Your Installation upon
Energisation;
"Force Majeure" any event or circumstance which is beyond the reasonable
control of either Us or You (whichever applies) and which results in or
causes the failure of either Us or You to perform any of the relevant
obligations under this agreement;
"Good Industry Practice" the exercise of that degree of skill, diligence,
prudence and foresight which would reasonably and ordinarily be expected
from a skilled operator engaged in the same type of undertaking under the
same or similar circumstances;
"kVA" kilovoltamperes;
"kW" kilowatts;
"Licence" Our public electricity supply licence granted under the Act;
"Master Connection and Use of System Agreement" the agreement of that
name dated 30th March 1990 and the Supplemental Agreements and made
between NGC and others governing connection to and use of NGC's
transmission system;
"Material Effect" an effect causing either Us or You to carry out any
works or to alter the manner of operation of Our Equipment or Your
Installation (as the case may be) which in either case involves the
expenditure of more than (pound)1,000;
"Maximum Capacity" the amount of electricity expressed in kVA to flow
through the Exit Point as specified in Schedule 2;
"Metering Installation" any structures, equipment, lines, appliances or
devices (not being Our Equipment) used or to be used by the Registered
Meter Operator for the purpose of providing metering at the Point of
Final Connection;
"Metering Potential Fuses" the fuses which control the voltage supply to
the Point of Final Connection;
"Modification" any replacement, renovation, modification, alteration or
construction by or on behalf of a Party to either that Party's Plant or
Apparatus or the manner of its operation at the Exit Point which has or
will have a Material Erect on the other Party at the Exit Point;
"Modification Notification" the Company's standard form of Modification
Notification which applies from time to time;
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<PAGE>
"Modification Offer" an offer by Us to You made under Clause 10 of terms
for connection concerning a proposed Modification at or affecting the
Exit Point including any revision or extension of such offer;
"NGC" The National Grid Company PLC;
"Our" belonging to South Western Electricity plc
"Our Equipment" Our switchgear, metering or other equipment, lines,
cables or other parts of the Distribution System or Our other property or
rights;
"Our Premises" any land or buildings of Ours in which any of Your
Installation is to be installed;
"Party" each person for the time being and from time to time party to
this agreement and any successor(s) in title to, or permitted assign(s)
of, such person;
"Plant" fixed and movable items other than Apparatus;
"Point of Final Connection" the point of interface between Our Equipment
and the Metering Installation;
"Pooling and Settlement Agreement" the agreement of that title for the
time being approved by the Secretary of State or by the Director;
"Promises" Your land or buildings in which Our Equipment is to be
installed or is for the time being placed, including the premises
specified in Schedule 1;
"Registered Meter Operator" a company holding a valid Registration
Certificate issued by the Registration Authority;
"Regulations" the Electricity Supply Regulations 1988;
"Schedules" the Schedules attached at the front of this agreement.
"Tariff Customer" a person who requires a supply of electricity under
Section 16(1) of the Act and is supplied by Us as a public electricity
supplier otherwise than under a special agreement.
"Us"or"We" South Western Electricity plc., as the context requires.
"You" or "Your as the context requires, the legally independent person or
company which is the second party to this agreement and which takes an
electricity connection from South Western Electricity plc.
"Your Installation" any structures, equipment, lines, appliances or
devices (not being Our Equipment) used by You and connected or to be
connected to the Distribution System;
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<PAGE>
SOUTH WESTERN ELECTRICITY plc
APPENDIX TO ELECTRICITY CONNECTION AGREEMENT - CONTRACT TERMS
Draft Lease for Substation
Substation site:
Customer's name:
Customers address:
THIS LEASE is made (date to be completed):
BETWEEN (1) The Customer and (2) SOUTH WESTERN ELECTRICITY plc whose registered
office is situated at 800 Park Avenue Aztec West Almondsbury Bristol BS124SE
(SWEB)
Meanings of particular words or phrases:
"Customer's Premises" the land/building edged red upon the
attached plan and situated at
(to be completed)........................
"Substation Site" the accommodation provided by the
Customer whether outdoors (consisting of a
plinth upon which SWEB installs its
substation equipment) or indoors
(consisting of part or the whole of a
building) situated upon the Customers
Premises in which SWEB installs its
substation equipment
"Varied Substation Site" the alternative
accommodation provided by the Customer
whether outdoors (consisting of a plinth
upon which SWEB installs its substation
equipment) or indoors (consisting of part
or the whole of a building) situated upon
the Customer's Premises in which SWEB
installs its substation equipment
"Substation Variation
Notice" A Notice sent by the Customer to SWEB by
Recorded Delivery Post addressed to SWEB's
Company Secretary at SWEB's registered off
ice accompanied by drawings showing the
position of the Customer's new buildings
approved by the appropriate Planning
Authority with a date when the Customer
will start work on the new buildings
"Substation Access" the most convenient route between the
Substation Site (or the Varied
Substation Site) and the nearest public
highway
"Access Rights" rights enabling SWEB to have access with
its vehicles and equipment to the
Substation Site (or the Varied Substation
Site)
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<PAGE>
TOGETHER with rights for electricity
cables enabling the substation to be
connected to SWEB's electricity
distribution network
"Premium" the sum of 5 pence
"Rent" the annual payment of one peppercorn (if
demanded) payable on the 1st April
annually
"Term" 99 years commencing 1st April 1994
Customer Leaving Notice" a Notice sent by the Customer to
SWEB by Recorded Delivery Post addressed to SWEB's
Company Secretary at SWEB's registered office
advising of the Customer's intention to leave the
Customer's Premises INCLUDING details of the
person who will take over the Customer's Premises
when the Customer leaves
2. IN CONSIDERATION of the Premium paid by SWEB to the Customer and SWEB (a)
performing its obligations set out below and (b) paying the Rent the
Customer LETS to SWEB for the period of the Term the Substation Site (or
if the Customer redevelops the Customer's Premises the Varied Substation
Site) TOGETHER (where the entrance to the Substation Site (or the Varied
Substation Site) is not immediately on to a public highway) with all
necessary Access Rights over and under the Substation Access
3. SWEB's OBLIGATIONS
(a) to pay the Rent
(b) to maintain its substation equipment at all times making
good any damage which may arise because of the presence of
the substation or the exercise of the Access Rights
(c) except for any transfer to a public electricity supply
licence holder carrying on in succession to SWEB not to
part with possession of the Substation Site (or the Varied
Substation Site)
(d) to indemnity the Customer against all outgoings affecting
the Substation Site (or the Varied Substation Site)
arising out of SWEB's use of the Substation Site (or the
Varied Substation Site)
4. CUSTOMER'S OBLIGATIONS
(a) not to interfere in any way with SWEB's use of the
Substation Site (or the Varied Substation Site) or Access
Rights
(b) to maintain where applicable the building in which SWEB
places the substation equipment to the satisfaction of
SWEB and when SWEB notifies the Customer of
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any repair necessary then the Customer will make good the
damage as soon as practicable
(c) where the Customer has an entrance to the Customers
Premises locked outside of normal working hours and SWEB
cannot have access to its equipment without using such
entrance then the Customer will EITHER install within the
entrance gate a double locking device capable of
accommodating a padlock for use solely by SWEB OR ensure
such entrance will be opened immediately upon a reasonable
request being made by SWEB
(d) where the Customer decides to leave the Customer's
Premises for any reason it will before doing so give to
SWEB the Customer Leaving Notice at least 28 days before
leaving
5. MUTUAL DECLARATION
(a) If SWEB does not (1) pay the Rent upon the due date when
demanded by the Customer and it is in arrear for 28 days
and/or (2) observe its obligations then the Customer shall
be entitled EITHER to sue SWEB for breach of its
obligations OR cancel this Lease and SWEB shall
immediately then leave the Substation Site (or the Varied
Substation Site)
(b) When SWEB leaves the Substation Site (or the Varied
Substation Site) it will remove all its equipment making
good any damage it causes and ensure any redundant
electricity cables upon the Customer's Premises are left
in a safe condition
(c) If the Substation Site and/or any electricity cables
prevent or interfere with any redevelopment of the
Customer's Premises then the Customer shall send a
Substation Variation Notice to SWEB and SWEB will at the
Customer's expense remove its substation from the
Substation Site and erect a new substation in the Varied
Substation Site and it necessary protect or relay
electricity cables and for the remainder of the term of
the Lease the Varied Substation Site shall apply
6. CERTIFICATE OF VALUE
IT IS HEREBY CERTIFIED that the transaction hereby effected does not form
part of a larger transaction or of a series of transactions in respect of
which the amount or value or the aggregate amount or value of the
consideration exceeds (pound)60000
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Exhibit 10.10
SERVICES AGREEMENT
THIS SERVICES AGREEMENT (the "Agreement") is effective as of January 1,
1996 (the "Effective Date"), between Southern Electric International, Inc., a
Delaware corporation ("Contractor"), and Southern Investments UK plc, a United
Kingdom corporation ("Client"). Contractor and Client shall sometimes be
referred to herein collectively as the "Parties" and individually as a "Party."
W I T N E S S E T H :
WHEREAS, Client desires to retain Contractor to perform certain
services from time to time; and
WHEREAS, Contractor is willing to provide such services in accordance
with the terms hereof;
NOW THEREFORE, in consideration of the premises and their mutual
covenants set forth herein, Client and Contractor hereby agree as follows:
Section 1. Provision of Services. Subject to the terms and conditions
set forth in this Agreement, Client hereby retains Contractor to provide such
services as Client and Contractor shall agree to from time to time (the
"Services"), which Services may include, but shall not be limited to, the
following: engineering consulting, construction management, operational
assistance, maintenance services, general administration and executive
management, assistance in obtaining financing, project development services,
human resources management, accounting services, budgeting services, financial
planning, cash management, legal services, insurance services and related
services and assistance.
Section 2. Independent Contractor.
(a) Contractor, in the performance of this Agreement, will
be acting in its own separate capacity and not as an agent, employee, partner,
joint venturer or associate of Client. It is expressly understood and agreed
that Contractor is an independent contractor of Client in all manners and
respects and that Contractor is not authorized to bind Client to any liability
or obligation or to represent that it has any such authority.
(b) Except as set forth in Section 7(a)(ii) below, Contractor
shall be solely responsible for all taxes imposed on Contractor as a result of
the transactions contemplated by this Agreement.
<PAGE>
Section 3. Subcontracts. Contractor may in its sole discretion
subcontract other persons or entities, to perform any or all of the Services on
such terms and conditions as Contractor determines to be necessary, advisable or
appropriate under the circumstances of the subcontract.
Section 4. Access to Properties and Records. Contractor and its
subcontractors shall at all times have access to any and all real and personal
property of Client, and to any and all books and records of Client, as, when, at
such times and places and on such terms and conditions as Contractor or any of
its subcontractors determines necessary, advisable or appropriate for or in
connection with the provision of any or all of the Services. Contractor agrees
that in exercising the foregoing right it will not unreasonably interfere with
the safe and efficient operation of Client's facilities.
Section 5. Standard of Conduct. Contractor will use its reasonable best
efforts to conform the Services provided by or on behalf of it to Client with
"Good Business Practices" (as hereinafter defined). "Good Business Practices"
means the practices, methods and acts, as changed from time to time, that are
commonly used in the independent electric power production industry to perform
or fulfill the activities comprised by Services or any practices, methods or
acts, which in the exercise of reasonable judgement in light of the facts known
at the time, that could have been expected to accomplish the desired result at a
reasonable cost consistent with good business practices, reliability, safety and
expedition; provided, however, that Good Business Practices is not intended to
be limited to optimum practices, methods or acts to the exclusion of all others,
but rather to be a range of possible practices, methods or acts taken or engaged
in by entities that operate and maintain power plants in the electric power
production industry. Whether any particular practice, method or act complies
with Good Business Practices is to be judged in light of the facts known at the
time that the particular practice, method or act was taken or engaged in.
Section 6. Cooperation with Contractor. Client shall cooperate with
Contractor and its subcontractors as and when reasonably requested in their
performance and fulfillment of the Services.
Section 7. Invoicing and Compensation.
(a)(i) As full and complete compensation for the
Services rendered pursuant to this Agreement, Client shall pay to
Contractor, and Contractor shall accept, a fee (the "Fee") equal
to one hundred and five percent of the cost to the Contractor for
the performance by Contractor of the Services. In addition, Client
shall reimburse Contractor for all "Incidental Expenses"
(as hereinafter defined) and "Third Party Expenses" (as
hereinafter defined) incurred in connection with the performance
of the Services. For purposes of this Agreement, "Incidental
Expenses" shall mean all reasonable incidental expenses, including
expenses for travel (business class air travel), meals, lodging,
required business entertainment, telephone, shipping and
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<PAGE>
similar items incurred by Contractor in connection with its
performance of the Services hereunder and in furtherance of
the business of Client or its affiliates. For purposes of this
Agreement, "Third Party Expenses" shall mean amounts billed to
Contractor by third parties for services performed by such
third parties to or on behalf of Contractor in connection with
the performance of the Services, and shall include, without
limitation, amounts billed to Contractor by third parties for
the performance of legal or accounting services.
(ii) Any withholding tax imposed by the United
Kingdom or any political subdivision thereof shall be paid by
Client and the amount due from Client to Contractor pursuant to
subsection (a)(i) above shall be increased such that Contractor
shall be entitled to receive an amount equal to the sum of the
Fee, the Incidental Expenses and the Third Party Expenses as
though no withholding tax was imposed.
(b) Unless otherwise agreed by the Parties, Contractor shall
submit monthly invoices to Client setting forth the Fee for all Services
rendered pursuant to this Agreement and the Incidental Expenses and Third Party
Expenses incurred in connection therewith, and Client shall pay each such
invoice within sixty (60) days after its receipt thereof, provided that any
extraordinary Incidental Expenses and Third Party Expenses incurred by
Contractor shall be paid by Client within thirty (30) days after its receipt of
an invoice therefore. As a condition of Client's obligation to make payments
with respect to such invoice, each invoice shall set forth a reasonably detailed
description of the nature of the Services, Incidental Expenses and Third Party
Expenses. All amounts paid under this Agreement shall be payable in United
States Dollars.
(c) Any amounts which are due and owing by Client to
Contractor under this Section 7 but which are not paid to Contractor within the
required time period, shall accrue interest at the prime commercial lending rate
announced from time to time by The Chase Manhattan Bank, N.A., at its principal
office, presently located at 1 Chase Manhattan Plaza, New York, New York, United
States 10081, on the date on which payment was due, plus two (2) percentage
points. Interest at the rate defined above shall be computed monthly and
pro-rated daily from the time such obligation arises.
Section 8. Disposition of Information.
(a) "Confidential Information" of a person or entity means
valuable, non-public, competitively sensitive data and information relating to
such person or entity or such person's or entity's business, other than "Trade
Secrets" (as hereinafter defined) of such person or entity.
(b) "Trade Secrets" of a person or entity means information
or data of or about such entity, including without limitation technical or
non-technical data, formulas, patterns, compilations, programs, devices,
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<PAGE>
methods, techniques, drawings, processes, financial data, financial plans,
products plans, or lists of actual or potential customers, that:
(i) derive economic value, actual or potential, from
not being generally known to, and not being readily
ascertainable by proper means by, other persons who can obtain
economic value from their disclosure or use; and
(ii) are the subject of efforts that are reasonable
under the circumstances to maintain their secrecy.
To the extent that the foregoing definition is inconsistent with a definition of
"trade secret" mandated under applicable law, the latter definition shall govern
for purposes of interpreting the Parties' obligations under this Agreement.
(c) Each Party acknowledges and agrees that any unauthorized
disclosure or use of any of the Trade Secrets or Confidential Information of
another Party would be wrongful and would likely result in immediate and
irreparable injury to such other Party. Except as required in order to perform
its obligations under this Agreement, each Party agrees that it will not,
without the express prior written consent of another Party, redistribute,
market, publish, disclose or divulge to any other person or entity, or use or
modify for use, directly or indirectly in any way for any person or entity:
(i) any Confidential Information of such other Party
during the pendency of this Agreement and for a period of two
(2) years after the date of expiration or termination hereof;
and
(ii) any Trade Secrets of such other Party at any
time (during or after the pendency of this Agreement)
during which such information or data shall continue to
constitute a "trade secret" under applicable law.
Each Party agrees to cooperate with any reasonable confidentiality requirements
of another Party. Each Party shall immediately notify the other Party of any
unauthorized disclosure or use of any Trade Secrets or Confidential Information
of such other Party of which the first Party becomes aware.
(d) Client also agrees that, if any intellectual property
is developed by or on behalf of Client with the assistance of or input from
Contractor or any person or entity providing any Services, then Contractor and
its affiliates shall have an irrevocable license to use without charge any and
all such intellectual property and any and all patents, patent applications,
trademarks, service marks, copyrights or other property rights deriving
therefrom. Client agrees to execute such assignments, transfers, applications
and other documents and instruments as Contractor may reasonably request in
connection with the implementation of any such license.
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<PAGE>
Section 9. Foreign Corrupt Practices Act. Each Party understands that
affiliates of Contractor and Client are subject to the provisions of United
States Public Law 95-213, the Foreign Corrupt Practices Act of 1977 and any
amendments thereto (the "FCPA"), and agrees not to make any payment to any
official, any political party or official thereof or any candidate for political
office, or any other person, that is contrary to the prohibitions set forth in
the FCPA and otherwise to meet and comply with the standards of conduct required
thereby with respect to its undertakings under this Agreement. Each Party
represents that it is familiar with the nature and significance of such
prohibitions and standards of conduct.
Section 10. Uncontrollable Circumstances. If Contractor or any of its
subcontractors is rendered wholly or partially unable to perform or is delayed
in performing its obligations under this Agreement because of an "Uncontrollable
Circumstance" (as hereinafter defined), Contractor and its subcontractors will
be excused from whatever performance is affected by the Uncontrollable
Circumstance to the extent and for the time so affected. "Uncontrollable
Circumstances" means any event or set of circumstances that is beyond the
reasonable control of Contractor and its subcontractors and that wholly or
partially prevents Contractor or any of its subcontractors from performing its
obligations hereunder.
Section 11. Limitations on Liability.
(a) Contractor and its subcontractors shall have no
liability to Client for any loss, damage or expense suffered by Client or for
any damage to any real or personal property of Client, arising out of or
resulting from any action or failure to act taken by Contractor or any of its
subcontractors, or any employee, officer, director, agent or other
representative thereof, if Contractor's or a subcontractor's, employee's,
officer's, director's, agent's or other representative's action or failure to
act conformed to the standard of conduct set forth in Section 5 hereof.
(b) Notwithstanding any other provision of this Agreement,
Contractor's total liability to Client and all third parties for all acts and
omissions of or alleged against Contractor or any of its subcontractors or any
employee, director, officer or other representative in any calendar year,
including without limitation liability arising out of contract, tort (including
without limitation negligence, gross negligence and intentional misconduct),
strict liability or any other cause or form of action whatsoever, shall not
exceed fifty percent (50%) of the total compensation paid to Contractor under
any provision of this Agreement.
(c) Notwithstanding any other provision of this Agreement,
any subcontractor's total liability to Contractor, Client and all third parties
for all acts and omissions of or alleged against such subcontractor or any of
its employees, officers, directors, agents or other representatives in any
calendar year, including without limitation liability arising out of contract,
tort (including without limitation negligence, gross negligence and intentional
misconduct), strict liability or any other cause or form of action whatsoever,
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<PAGE>
shall not exceed fifty percent (50%) of the total compensation paid to such
subcontractor by Contractor under any provision of this Agreement for such
calendar year.
(d) Client hereby indemnifies and holds Contractor, its
subcontractors and their employees, officers, directors, agents and other
representatives harmless from and against any and all claims for personal
injury, death or property damage which was due to or arose out of the presence
of any person at any facilities or at any real or personal property of Client,
while acting for or on behalf of or in connection with the performance or
fulfillment of any Services, regardless of fault.
(e) Notwithstanding any other provision of this Agreement,
no Party nor any of its subcontractors shall be liable to any other person or
entity for indirect, incidental or consequential damages under, arising out of,
due to or in connection with any action of or failure to act taken by or on
behalf of such Party or subcontractor or its performance or nonperformance of
this Agreement or any of its obligations herein.
(f) Contractor, on behalf of itself and its subcontractors,
hereby disclaims any and all warranties of or concerning any Services performed
by it or on its behalf or any materials, goods or equipment provided or used in
connection therewith, whether express, implied or statutory, including without
limitation warranties of merchantability and fitness for a particular purpose.
Section 12. Term and Termination. Unless sooner terminated in
accordance with the provisions of this Agreement, the term of this Agreement
shall commence as of the Effective Date and shall continue for an initial term
of one (1) year (the "Initial Term"). At the end of the Initial Term and each
subsequent "Renewal Term" (as hereinafter defined), as the case may be, the term
of this Agreement shall be automatically renewed for a period of one (1) year(a
"Renewal Term") unless either party hereto delivers a written termination notice
to the other party at least thirty (30) days prior to the end of the Initial
Term or the then current Renewal Term, as the case may be.
Section 13. Specific Enforcement.
(a) Each Party acknowledges and agrees that its
covenants in Sections 8 and 9 (the "Special Covenants") are reasonable as to
time and scope. Each Party further acknowledges that any breach or threatened
breach of a Special Covenant by any Party is reasonably likely to result in
irreparable injury to the other Parties, and therefore, in addition to all
remedies provided at law or in equity, each Party agrees that the other Parties
shall be entitled to a temporary restraining order and a permanent injunction to
prevent a breach or contemplated breach of the Special Covenant. If another
Party seeks an injunction, each Party waives any requirement that such other
Party post a bond or any other security.
(b) The existence of any claim, demand, action or cause of
action of the defending Party against the claiming Party, whether predicated
upon this Agreement or
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otherwise, shall not constitute a defense to the enforcement by the claiming
Party of any of the defending Party's obligations under Sections 8 and 9. The
running of the applicable time period of any Special Covenant shall be tolled
during the continuation of any breach by a Party of the Special Covenant and
during the pendency of any litigation involving a good faith claim that a Party
has breached the Special Covenant.
Section 14. Arbitration.
(a) Except for the matters provided for in Section 13 where
a claiming Party reasonably believes time is of the essence in seeking a
temporary restraining order to prevent a breach or contemplated breach of the
Special Covenant, any and all disputes arising out of or in connection with the
negotiation, execution, interpretation, performance or nonperformance of this
Agreement (which cannot be resolved by good faith negotiations between or among
the disputants) shall be solely and finally settled by a panel of three (3)
arbitrators in accordance with the International Chamber of Commerce's ("ICC")
Rules of Conciliation and Arbitration ("ICC Rules"); provided, however, that to
the extent that the ICC Rules conflict with the provisions of this Section 14,
the provisions of this Section 14 shall control. Each Party agrees that the
award of the arbitrators shall be the sole and exclusive remedy between or among
them regarding any and all claims, counterclaims, issues and accountings
presented to the arbitrators, irrespective of the magnitude thereof.
(b) All of the arbitrators shall be fluent in English and
familiar with the power generating activity.
(c) All arbitration proceedings shall be conducted pursuant
to the ICC Rules in the English language in New York City.
(d) Any monetary award of the arbitrators shall be made and
payable in New York City in freely available United States dollars free of any
tax and reductions. Any such monetary award shall include interest from the date
of any breach or any violation of this Agreement. The arbitrators shall fix an
appropriate rate of interest from the date of the breach or other violation to
the date when the award is paid in full.
(e) Any decision or award of the arbitral tribunal shall be
final and binding upon the Parties to the arbitration proceeding. Each Party
hereby waives to the extent permitted by law any rights to appeal or to review
of such award by any court or tribunal. Each Party agrees that the arbitral
award may be enforced against the Parties to the arbitration proceeding or their
assets wherever they may be found and that a judgment on the arbitration award
may be entered in any court having jurisdiction over the parties or their
assets.
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Section 15. Governing Law and Language.
(a) This Agreement and the rights of the Parties hereunder
shall be governed by and interpreted in accordance with the Law of Georgia,
notwithstanding the fact that one or more Parties to this Agreement may be or
become a resident of another state or country.
(b) This Agreement shall be executed in the English
language. Any translation into any other language that may be prepared by or on
behalf of any one or more of the Parties shall be for reference purposes only,
shall in no way be binding upon the Parties and shall have no legal force or
effect or otherwise impair or affect the rights and obligations of the Parties
as set forth in this Agreement.
Section 16. No Other Relationship. Nothing contained in this Agreement
shall be construed as creating a corporation, partnership, association, joint
stock company, business trust, joint venture, organized group of persons,
whether incorporated or not, involving any Party, nor is anything contained in
this Agreement to be construed as creating or requiring any fiduciary
relationship between or among any Party.
Section 17. No Third Party Beneficiaries. This Agreement shall inure
solely to the benefit of the Parties, and their respective successors, assigns
and subcontractors, and none of the provisions of this Agreement shall inure to
the benefit of any other persons or entities.
Section 18. Successors and Assignability. This Agreement shall be
binding upon and inure to the benefit of each of the Parties and their
respective legal representatives, and their respective successors, assigns and
subcontractors; provided, however, that except as otherwise provided for in
Section 3, no Party may assign any rights or delegate any duties under this
Agreement, in whole or in part, without the prior written consent of the other
Party.
Section 19. Severability. If any provision of this Agreement shall be
determined by any court of competent jurisdiction to be invalid or
unenforceable, the remainder of the Agreement other than that portion determined
to be invalid or unenforceable shall not be affected thereby, and each valid
provision hereof shall be enforced to the fullest extent permitted by law.
Section 20. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original hereof but all of which
together shall constitute one and the same instrument. Delivery of execution
pages hereof by facsimile shall constitute valid delivery of this Agreement.
Section 21. Modification. This Agreement cannot be changed or terminated
orally, and no waiver of compliance with any provision or condition hereof and
no consent
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provided for herein shall be effective unless evidenced by an instrument in
writing duly executed by the Party hereto sought to be charged with such waiver
or consent. No waiver of any term or provision hereof shall be construed as a
further or continuing waiver of such term or provision or any other term or
provision.
Section 22. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given upon delivery,
if delivered in person or facsimile (and in the latter case, if the day of
receipt is a business day or if not on the next succeeding business day, and if
a written confirmation is immediately sent by reputable international overnight
courier), or on the fourth business day after sending, if sent by reputable
international overnight courier service, to the address set forth on the
signature page hereof or to such other address as the recipient may have
notified the sender pursuant to this Section 22.
Section 23. Entire Agreement. This Agreement constitutes the Parties'
entire agreement as to the subject matter hereof.
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
day and year first above written.
"Client"
Southern Investments UK plc
By: /s/ Mark Ogle
Title: Secretary
31 Curzon Street
London W1Y 7AE
England
Attn: President & CEO
Fax No.: 011-44-171-711-3957
"Contractor"
Southern Electric International, Inc.
By: /s/James A. Ward
Title: Vice President and Controller
Southern Electric International, Inc.
900 Ashwood Parkway, Suite 500
Atlanta, Georgia 30338 USA
Attn: Controller
Fax No.: (770) 379-7001
10
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Exhibit 10.11
SERVICES AGREEMENT
THIS SERVICES AGREEMENT (the "Agreement") is effective as of January 1,
1996 (the "Effective Date"), between Southern Electric International, Inc., a
Delaware corporation ("Southern Electric"), and South Western Electricity plc, a
United Kingdom corporation ("SWEB"). Southern Electric and SWEB shall sometimes
be referred to herein collectively as the "Parties" and individually as a
"Party."
W I T N E S S E T H :
WHEREAS, SWEB desires to retain Southern Electric to perform certain
services from time to time; and
WHEREAS, Southern Electric is willing to provide such services in
accordance with the terms hereof;
WHEREAS, Southern Electric desires to retain SWEB to perform certain
services from time to time;
WHEREAS, SWEB is willing to provide such services in accordance with
the terms hereof; and
NOW THEREFORE, in consideration of the premises and their mutual
covenants set forth herein, Southern Electric and SWEB hereby agree as follows:
Section 1. Provision of Services. Subject to the terms and conditions
set forth in this Agreement, SWEB hereby retains Southern Electric to provide
such services as SWEB and Southern Electric shall agree to from time to time.
Also subject to the terms and conditions set forth in this Agreement, Southern
Electric hereby retains SWEB to provide such services as Southern Electric and
SWEB shall agree to from time to time. In each case, the services agreed upon to
be provided by one Party to the other shall be referred to as the "Services."
The Services may include, but shall not be limited to, the following:
engineering consulting, construction management, operational assistance,
maintenance services, general administration and executive management,
assistance in obtaining financing, project development services, human resources
management, accounting services, budgeting services, financial planning, cash
management, legal services, insurance services and related services and
assistance. In situations where a Party performs the Services, that Party is
referred to herein as the "Contractor" and the Party receiving the benefit of
the Services is then referred to as the "Client."
<PAGE>
Section 2. Independent Contractor.
(a) Contractor, in the performance of this
Agreement, will be acting in its own separate capacity and not as an agent,
employee, partner, joint venturer or associate of Client. It is expressly
understood and agreed that Contractor is an independent contractor of Client
in all manners and respects and that Contractor is not authorized to bind Client
to any liability or obligation or to represent that it has any such authority.
(b) Except as set forth in Section 7(a)(ii)
below, Contractor shall be solely responsible for all taxes imposed on
Contractor as a result of the transactions contemplated by this Agreement.
Section 3. Subcontracts. Contractor may in its sole discretion
subcontract other persons or entities, to perform any or all of the Services on
such terms and conditions as Contractor determines to be necessary, advisable or
appropriate under the circumstances of the subcontract.
Section 4. Access to Properties and Records. Southern Electric as
Contractor and its subcontractors shall at all times have access to any and all
real and personal property of SWEB as Client, and to any and all books and
records of Client, as, when, at such times and places and on such terms and
conditions as Southern Electric as Contractor or any of its subcontractors
determines necessary, advisable or appropriate for or in connection with the
provision of any or all of the Services. Southern Electric as Contractor agrees
that in exercising the foregoing right it will not unreasonably interfere with
the safe and efficient operation of SWEB as Client's facilities. SWEB as
Contractor shall have access to such real and personal property of Southern
Electric as Client as Southern Electric determines is necessary.
Section 5. Standard of Conduct. Contractor will use its reasonable best
efforts to conform the Services provided by or on behalf of it to Client with
"Good Business Practices" (as hereinafter defined). "Good Business Practices"
means the practices, methods and acts, as changed from time to time, that are
commonly used in the independent electric power production industry to perform
or fulfill the activities comprised by Services or any practices, methods or
acts, which in the exercise of reasonable judgement in light of the facts known
at the time, that could have been expected to accomplish the desired result at a
reasonable cost consistent with good business practices, reliability, safety and
expedition; provided, however, that Good Business Practices is not intended to
be limited to optimum practices, methods or acts to the exclusion of all others,
but rather to be a range of possible practices, methods or acts taken or engaged
in by entities that operate and maintain power plants in the electric power
production industry. Whether any particular practice, method or act complies
with Good Business Practices is to be judged in light of the facts known at the
time that the particular practice, method or act was taken or engaged in.
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Section 6. Cooperation with Contractor. Client shall cooperate
with Contractor and its subcontractors as and when reasonably requested in their
performance and fulfillment of the Services.
Section 7. Invoicing and Compensation.
(a)(i) As full and complete compensation for
the Services rendered pursuant to this Agreement, Client shall
pay to Contractor, and Contractor shall accept, a fee (the
"Fee") equal to one hundred and five percent of the cost to
the Contractor for the performance by Contractor of the
Services. In addition, Client shall reimburse Contractor for
all "Incidental Expenses" (as hereinafter defined) and "Third
Party Expenses" (as hereinafter defined) incurred in
connection with the performance of the Services. For purposes
of this Agreement, "Incidental Expenses" shall mean all
reasonable incidental expenses, including expenses for travel
(business class air travel), meals, lodging, required business
entertainment, telephone, shipping and similar items incurred
by Contractor in connection with its performance of the
Services hereunder and in furtherance of the business of
Client or its affiliates. For purposes of this Agreement,
"Third Party Expenses" shall mean amounts billed to Contractor
by third parties for services performed by such third parties
to or on behalf of Contractor in connection with the
performance of the Services, and shall include, without
limitation, amounts billed to Contractor by third parties for
the performance of legal or accounting services.
(ii) Any withholding tax imposed by the
United Kingdom or the United States of America or any
political subdivision of either shall be paid by Client and
the amount due from Client to Contractor pursuant to
subsection (a)(i) above shall be increased such that
Contractor shall be entitled to receive an amount equal to the
sum of the Fee, the Incidental Expenses and the Third Party
Expenses as though no withholding tax was imposed.
(b) Unless otherwise agreed by the Parties,
Contractor shall submit monthly invoices to Client setting forth the Fee for all
Services rendered pursuant to this Agreement and the Incidental Expenses and
Third Party Expenses incurred in connection therewith, and Client shall pay each
such invoice within sixty (60) days after its receipt thereof, provided that any
extraordinary Incidental Expenses and Third Party Expenses incurred by
Contractor shall be paid by Client within thirty (30) days after its receipt of
an invoice therefore. As a condition of Client's obligation to make payments
with respect to such invoice, each invoice shall set forth a reasonably detailed
description of the nature of the Services, Incidental Expenses and Third Party
Expenses. All amounts paid under this Agreement shall be payable in United
States Dollars.
(c) Any amounts which are due and owing by
Client to Contractor under this Section 7 but which are not paid to Contractor
within the required time period,
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shall accrue interest at the prime commercial lending rate announced from time
to time by The Chase Manhattan Bank, N.A., at its principal office, presently
located at 1 Chase Manhattan Plaza, New York, New York, United States 10081, on
the date on which payment was due, plus two (2) percentage points. Interest at
the rate defined above shall be computed monthly and pro-rated daily from the
time such obligation arises.
Section 8. Disposition of Information.
(a) "Confidential Information" of a person or entity
means valuable, non-public, competitively sensitive data and information
relating to such person or entity or such person's or entity's business, other
than "Trade Secrets" (as hereinafter defined) of such person or entity.
(b) "Trade Secrets" of a person or entity means
information or data of or about such entity, including without limitation
technical or non-technical data, formulas, patterns, compilations, programs,
devices, methods, techniques, drawings, processes, financial data, financial
plans, products plans, or lists of actual or potential customers, that:
(i) derive economic value, actual or
potential, from not being generally known to, and not being
readily ascertainable by proper means by, other persons who
can obtain economic value from their disclosure or use; and
(ii) are the subject of efforts that are
reasonable under the circumstances to maintain their secrecy.
To the extent that the foregoing definition is inconsistent with a definition of
"trade secret" mandated under applicable law, the latter definition shall govern
for purposes of interpreting the Parties' obligations under this Agreement.
(c) Each Party acknowledges and agrees that any
unauthorized disclosure or use of any of the Trade Secrets or Confidential
Information of another Party would be wrongful and would likely result in
immediate and irreparable injury to such other Party. Except as required in
order to perform its obligations under this Agreement, each Party agrees that it
will not, without the express prior written consent of another Party,
redistribute, market, publish, disclose or divulge to any other person or
entity, or use or modify for use, directly or indirectly in any way for any
person or entity:
(i) any Confidential Information of such
other Party during the pendency of this Agreement and for a
period of two (2) years after the date of expiration or
termination hereof; and
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(ii) any Trade Secrets of such other Party
at any time (during or after the pendency of this Agreement)
during which such information or data shall continue to
constitute a "trade secret" under applicable law.
Each Party agrees to cooperate with any reasonable confidentiality requirements
of another Party. Each Party shall immediately notify the other Party of any
unauthorized disclosure or use of any Trade Secrets or Confidential Information
of such other Party of which the first Party becomes aware.
(d) Client also agrees that, if any intellectual
property is developed by or on behalf of Client with the assistance of or input
from Contractor or any person or entity providing any Services, then Contractor
and its affiliates shall have an irrevocable license to use without charge any
and all such intellectual property and any and all patents, patent applications,
trademarks, service marks, copyrights or other property rights deriving
therefrom. Client agrees to execute such assignments, transfers, applications
and other documents and instruments as Contractor may reasonably request in
connection with the implementation of any such license.
Section 9. Foreign Corrupt Practices Act. Each Party understands that
Southern Electric of Southern Electric and SWEB are subject to the provisions of
United States Public Law 95-213, the Foreign Corrupt Practices Act of 1977 and
any amendments thereto (the "FCPA"), and agrees not to make any payment to any
official, any political party or official thereof or any candidate for political
office, or any other person, that is contrary to the prohibitions set forth in
the FCPA and otherwise to meet and comply with the standards of conduct required
thereby with respect to its undertakings under this Agreement. Each Party
represents that it is familiar with the nature and significance of such
prohibitions and standards of conduct.
Section 10. Uncontrollable Circumstances. If Contractor or any of its
subcontractors is rendered wholly or partially unable to perform or is delayed
in performing its obligations under this Agreement because of an "Uncontrollable
Circumstance" (as hereinafter defined), Contractor and its subcontractors will
be excused from whatever performance is affected by the Uncontrollable
Circumstance to the extent and for the time so affected. "Uncontrollable
Circumstances" means any event or set of circumstances that is beyond the
reasonable control of Contractor and its subcontractors and that wholly or
partially prevents Contractor or any of its subcontractors from performing its
obligations hereunder.
Section 11. Limitations on Liability.
(a) Contractor and its subcontractors shall have
no liability to Client for any loss, damage or expense suffered by Client or for
any damage to any real or personal property of Client, arising out of or
resulting from any action or failure to act taken by Contractor or any of its
subcontractors, or any employee, officer, director, agent or other
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representative thereof, if Contractor's or a subcontractor's, employee's,
officer's, director's, agent's or other representative's action or failure to
act conformed to the standard of conduct set forth in Section 5 hereof.
(b) Notwithstanding any other provision of this
Agreement, Contractor's total liability to Client and all third parties for all
acts and omissions of or alleged against Contractor or any of its subcontractors
or any employee, director, officer or other representative in any calendar year,
including without limitation liability arising out of contract, tort (including
without limitation negligence, gross negligence and intentional misconduct),
strict liability or any other cause or form of action whatsoever, shall not
exceed fifty percent (50%) of the total compensation paid to Contractor under
any provision of this Agreement.
(c) Notwithstanding any other provision of this
Agreement, any subcontractor's total liability to Contractor, Client and all
third parties for all acts and omissions of or alleged against such
subcontractor or any of its employees, officers, directors, agents or other
representatives in any calendar year, including without limitation liability
arising out of contract, tort (including without limitation negligence, gross
negligence and intentional misconduct), strict liability or any other cause or
form of action whatsoever, shall not exceed fifty percent (50%) of the total
compensation paid to such subcontractor by Contractor under any provision of
this Agreement for such calendar year.
(d) Client hereby indemnifies and holds
Contractor, its subcontractors and their employees, officers, directors, agents
and other representatives harmless from and against any and all claims for
personal injury, death or property damage which was due to or arose out of the
presence of any person at any facilities or at any real or personal property of
Client, while acting for or on behalf of or in connection with the performance
or fulfillment of any Services, regardless of fault.
(e) Notwithstanding any other provision of this
Agreement, no Party nor any of its subcontractors shall be liable to any other
person or entity for indirect, incidental or consequential damages under,
arising out of, due to or in connection with any action of or failure to act
taken by or on behalf of such Party or subcontractor or its performance or
nonperformance of this Agreement or any of its obligations herein.
(f) Contractor, on behalf of itself and its
subcontractors, hereby disclaims any and all warranties of or concerning any
Services performed by it or on its behalf or any materials, goods or equipment
provided or used in connection therewith, whether express, implied or statutory,
including without limitation warranties of merchantability and fitness for a
particular purpose.
Section 12. Term and Termination. Unless sooner terminated in
accordance with the provisions of this Agreement, the term of this Agreement
shall commence as of the Effective Date and shall continue for an initial term
of one (1) year (the "Initial Term"). At
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the end of the Initial Term and each subsequent "Renewal Term" (as hereinafter
defined), as the case may be, the term of this Agreement shall be automatically
renewed for a period of one (1) year (a "Renewal Term") unless either party
hereto delivers a written termination notice to the other party at least thirty
(30) days prior to the end of the Initial Term or the then current Renewal Term,
as the case may be.
Section 13. Specific Enforcement.
(a) Each Party acknowledges and agrees that its covenants in
Sections 8 and 9 (the "Special Covenants") are reasonable as to time and scope.
Each Party further acknowledges that any breach or threatened breach of a
Special Covenant by any Party is reasonably likely to result in irreparable
injury to the other Parties, and therefore, in addition to all remedies provided
at law or in equity, each Party agrees that the other Parties shall be entitled
to a temporary restraining order and a permanent injunction to prevent a breach
or contemplated breach of the Special Covenant. If another Party seeks an
injunction, each Party waives any requirement that such other Party post a bond
or any other security.
(b) The existence of any claim, demand, action or cause of action
of the defending Party against the claiming Party, whether predicated upon this
Agreement or otherwise, shall not constitute a defense to the enforcement by the
claiming Party of any of the defending Party's obligations under Sections 8 and
9. The running of the applicable time period of any Special Covenant shall be
tolled during the continuation of any breach by a Party of the Special Covenant
and during the pendency of any litigation involving a good faith claim that a
Party has breached the Special Covenant.
Section 14. Arbitration.
(a) Except for the matters provided for in Section 13 where a
claiming Party reasonably believes time is of the essence in seeking a temporary
restraining order to prevent a breach or contemplated breach of the Special
Covenant, any and all disputes arising out of or in connection with the
negotiation, execution, interpretation, performance or nonperformance of this
Agreement (which cannot be resolved by good faith negotiations between or among
the disputants) shall be solely and finally settled by a panel of three (3)
arbitrators in accordance with the International Chamber of Commerce's ("ICC")
Rules of Conciliation and Arbitration ("ICC Rules"); provided, however, that to
the extent that the ICC Rules conflict with the provisions of this Section 14,
the provisions of this Section 14 shall control. Each Party agrees that the
award of the arbitrators shall be the sole and exclusive remedy between or among
them regarding any and all claims, counterclaims, issues and accountings
presented to the arbitrators, irrespective of the magnitude thereof.
(b) All of the arbitrators shall be fluent in English and familiar with
the power generating activity.
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(c) All arbitration proceedings shall be conducted pursuant to the
ICC Rules in the English language in New York City.
(d) Any monetary award of the arbitrators shall be made and
payable in New York City in freely available United States dollars free of any
tax and reductions. Any such monetary award shall include interest from the date
of any breach or any violation of this Agreement. The arbitrators shall fix an
appropriate rate of interest from the date of the breach or other violation to
the date when the award is paid in full.
(e) Any decision or award of the arbitral tribunal shall be final and
binding upon the Parties to the arbitration proceeding. Each Party hereby waives
to the extent permitted by law any rights to appeal or to review of such award
by any court or tribunal. Each Party agrees that the arbitral award may be
enforced against the Parties to the arbitration proceeding or their assets
wherever they may be found and that a judgment on the arbitration award may be
entered in any court having jurisdiction over the parties or their assets.
Section 15. Governing Law and Language.
(a) This Agreement and the rights of the Parties hereunder shall be
governed by and interpreted in accordance with the Law of Georgia,
notwithstanding the fact that one or more Parties to this Agreement may be or
become a resident of another state or country.
(b) This Agreement shall be executed in the English language. Any
translation into any other language that may be prepared by or on behalf of any
one or more of the Parties shall be for reference purposes only, shall in no way
be binding upon the Parties and shall have no legal force or effect or otherwise
impair or affect the rights and obligations of the Parties as set forth in this
Agreement.
Section 16. No Other Relationship. Nothing contained in this Agreement
shall be construed as creating a corporation, partnership, association, joint
stock company, business trust, joint venture, organized group of persons,
whether incorporated or not, involving any Party, nor is anything contained in
this Agreement to be construed as creating or requiring any fiduciary
relationship between or among any Party.
Section 17. No Third Party Beneficiaries. This Agreement shall inure
solely to the benefit of the Parties, and their respective successors, assigns
and subcontractors, and none of the provisions of this Agreement shall inure to
the benefit of any other persons or entities.
Section 18. Successors and Assignability. This Agreement shall
be binding upon and inure to the benefit of each of the Parties and their
respective legal representatives, and their respective successors, assigns and
subcontractors; provided, however, that except as
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otherwise provided for in Section 3, no Party may assign any rights or delegate
any duties under this Agreement, in whole or in part, without the prior written
consent of the other Party.
Section 19. Severability. If any provision of this Agreement shall be
determined by any court of competent jurisdiction to be invalid or
unenforceable, the remainder of the Agreement other than that portion determined
to be invalid or unenforceable shall not be affected thereby, and each valid
provision hereof shall be enforced to the fullest extent permitted by law.
Section 20. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original hereof but all of which
together shall constitute one and the same instrument. Delivery of execution
pages hereof by facsimile shall constitute valid delivery of this Agreement.
Section 21. Modification. This Agreement cannot be changed or
terminated orally, and no waiver of compliance with any provision or condition
hereof and no consent provided for herein shall be effective unless evidenced by
an instrument in writing duly executed by the Party hereto sought to be charged
with such waiver or consent. No waiver of any term or provision hereof shall be
construed as a further or continuing waiver of such term or provision or any
other term or provision.
Section 22. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given upon delivery,
if delivered in person or facsimile (and in the latter case, if the day of
receipt is a business day or if not on the next succeeding business day, and if
a written confirmation is immediately sent by reputable international overnight
courier), or on the fourth business day after sending, if sent by reputable
international overnight courier service, to the address set forth on the
signature page hereof or to such other address as the recipient may have
notified the sender pursuant to this Section 22.
Section 23. Entire Agreement. This Agreement constitutes the
Parties' entire agreement as to the subject matter hereof.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
day and year first above written.
South Western Electricity plc
By: /s/C.B. Harreld
Title: Secretary
800 Park Avenue
Aztec West
Almondsbury, Bristol
BS12 4SE
Attn: Executive Director Finance
Fax No.: 011-44-171-1454-617-912
Southern Electric International, Inc.
By: /s/James A. Ward
Title: Vice President and Controller
Southern Electric International, Inc.
900 Ashwood Parkway, Suite 500
Atlanta, Georgia 30338 USA
Attn: Controller
Fax No.: (770) 379-7001
10
Exhibit 10.12
SERVICES AGREEMENT
THIS SERVICES AGREEMENT (the "Agreement") is effective as of January 1,
1996 (the "Effective Date"), between Southern Investments UK Holdings Limited, a
United Kingdom corporation ("Holdings"), and South Western Electricity plc, a
United Kingdom corporation ("SWEB"). Holdings and SWEB shall sometimes be
referred to herein collectively as the "Parties" and individually as a "Party."
W I T N E S S E T H :
WHEREAS, SWEB desires to retain Holdings to perform certain services from
time to time; and
WHEREAS, Holdings is willing to provide such services in accordance with
the terms hereof;
WHEREAS, Holdings desires to retain SWEB to perform certain services from
time to time;
WHEREAS, SWEB is willing to provide such services in accordance with the
terms hereof; and
NOW THEREFORE, in consideration of the premises and their mutual covenants
set forth herein, Holdings and SWEB hereby agree as follows:
Section 1. Provision of Services. Subject to the terms and conditions
set forth in this Agreement, SWEB hereby retains Holdings to provide such
services as SWEB and Holdings shall agree to from time to time. Also subject to
the terms and conditions set forth in this Agreement, Holdings hereby retains
SWEB to provide such services as Holdings and SWEB shall agree to from time to
time. In each case, the services agreed upon to be provided by one Party to the
other shall be referred to as the "Services." The Services may include, but
shall not be limited to, the following: engineering consulting, construction
management, operational assistance, maintenance services, general administration
and executive management, assistance in obtaining financing, project development
services, human resources management, accounting services, budgeting services,
financial planning, cash management, legal services, insurance services and
related services and assistance. In situations where a Party performs the
Services, that Party is referred to herein as the "Contractor," and the Party
receiving the benefit of the Services is then referred to as the "Client."
<PAGE>
Section 2. Independent Contractor.
(a) Contractor, in the performance of this Agreement, will
be acting in its own separate capacity and not as an agent, employee, partner,
joint venturer or associate of Client. It is expressly understood and agreed
that Contractor is an independent contractor of Client in all manners and
respects and that Contractor is not authorized to bind Client to any liability
or obligation or to represent that it has any such authority.
(b) Except as set forth in Section 7(a)(ii) below,
Contractor shall be solely responsible for all taxes imposed on Contractor as a
result of the transactions contemplated by this Agreement.
Section 3. Subcontracts. Contractor may in its sole discretion
subcontract other persons or entities, to perform any or all of the Services on
such terms and conditions as Contractor determines to be necessary, advisable or
appropriate under the circumstances of the subcontract.
Section 4. Access to Properties and Records. Contractor and its
subcontractors shall at all times have access to any and all real and personal
property of Client, and to any and all books and records of Client, as, when, at
such times and places and on such terms and conditions as Contractor or any of
its subcontractors determines necessary, advisable or appropriate for or in
connection with the provision of any or all of the Services. Contractor agrees
that in exercising the foregoing right it will not unreasonably interfere with
the safe and efficient operation of Client's facilities.
Section 5. Standard of Conduct. Contractor will use its reasonable best
efforts to conform the Services provided by or on behalf of it to Client with
"Good Business Practices" (as hereinafter defined). "Good Business Practices"
means the practices, methods and acts, as changed from time to time, that are
commonly used in the independent electric power production industry to perform
or fulfill the activities comprised by Services or any practices, methods or
acts, which in the exercise of reasonable judgement in light of the facts known
at the time, that could have been expected to accomplish the desired result at a
reasonable cost consistent with good business practices, reliability, safety and
expedition; provided, however, that Good Business Practices is not intended to
be limited to optimum practices, methods or acts to the exclusion of all others,
but rather to be a range of possible practices, methods or acts taken or engaged
in by entities that operate and maintain power plants in the electric power
production industry. Whether any particular practice, method or act complies
with Good Business Practices is to be judged in light of the facts known at the
time that the particular practice, method or act was taken or engaged in.
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Section 6. Cooperation with Contractor. Client shall cooperate with
Contractor and its subcontractors as and when reasonably requested in their
performance and fulfillment of the Services.
Section 7. Invoicing and Compensation.
(a)(i) As full and complete compensation for the
services rendered pursuant to this Agreement, Client shall pay to
Contractor, and Contractor shall accept, a fee (the "Fee") equal
to one hundred and five percent of the cost to the Contractor for
the performance by Contractor of the Services. In addition, Client
shall reimburse Contractor for all "Incidental Expenses" (as
hereinafter defined) and "Third Party Expenses" (as hereinafter
defined) incurred in connection with the performance of the
Services. For purposes of this Agreement, "Incidental Expenses"
shall mean all reasonable incidental expenses, including expenses
for travel (business class air travel), meals, lodging, required
business entertainment, telephone, shipping and similar items
incurred by Contractor in connection with its performance of
the Services hereunder and in furtherance of the business of
Client or its affiliates. For purposes of this Agreement,
"Third Party Expenses" shall mean amounts billed to Contractor
by third parties for services performed by such third parties
to or on behalf of Contractor in connection with the
performance of the Services, and shall include, without
limitation, amounts billed to Contractor by third parties for
the performance of legal or accounting services.
(ii) Any withholding tax imposed by the United Kingdom
or the United States of America or any political subdivision of
either shall be paid by Client and the amount due from Client to
Contractor pursuant to subsection (a)(i) above shall be increased
such that Contractor shall be entitled to receive an amount equal
to the sum of the Fee, the Incidental Expenses and the Third Party
Expenses as though no withholding tax was imposed.
(b) Unless otherwise agreed by the Parties,
Contractor shall submit monthly invoices to Client setting forth the Fee for all
Services rendered pursuant to this Agreement and the Incidental Expenses and
Third Party Expenses incurred in connection therewith, and Client shall pay each
such invoice within sixty (60) days after its receipt thereof, provided that any
extraordinary Incidental Expenses and Third Party Expenses incurred by
Contractor shall be paid by Client within thirty (30) days after its receipt of
an invoice therefore. As a condition of Client's obligation to make payments
with respect to such invoice, each invoice shall set forth a reasonably detailed
description of the nature of the Services, Incidental Expenses and Third Party
Expenses. All amounts paid under this Agreement shall be payable in United
States Dollars.
(c) Any amounts which are due and owing by Client to
Contractor under this Section 7 but which are not paid to Contractor within the
required time period,
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shall accrue interest at the prime commercial lending rate announced from time
to time by The Chase Manhattan Bank, N.A., at its principal office, presently
located at 1 Chase Manhattan Plaza, New York, New York, United States 10081, on
the date on which payment was due, plus two (2) percentage points. Interest at
the rate defined above shall be computed monthly and pro-rated daily from the
time such obligation arises.
Section 8. Disposition of Information.
(a) "Confidential Information" of a person or entity means
valuable, non-public, competitively sensitive data and information relating to
such person or entity or such person's or entity's business, other than "Trade
Secrets" (as hereinafter defined) of such person or entity.
(b) "Trade Secrets" of a person or entity means information
or data of or about such entity, including without limitation technical or
non-technical data, formulas, patterns, compilations, programs, devices,
methods, techniques, drawings, processes, financial data, financial plans,
products plans, or lists of actual or potential customers, that:
(i) derive economic value, actual or potential, from
not being generally known to, and not being readily ascertainable
by proper means by, other persons who can obtain economic value
from their disclosure or use; and
(ii) are the subject of efforts that are reasonable
under the circumstances to maintain their secrecy.
To the extent that the foregoing definition is inconsistent with a definition of
"trade secret" mandated under applicable law, the latter definition shall govern
for purposes of interpreting the Parties' obligations under this Agreement.
(c) Each Party acknowledges and agrees that any unauthorized
disclosure or use of any of the Trade Secrets or Confidential Information of
another Party would be wrongful and would likely result in immediate and
irreparable injury to such other Party. Except as required in order to perform
its obligations under this Agreement, each Party agrees that it will not,
without the express prior written consent of another Party, redistribute,
market, publish, disclose or divulge to any other person or entity, or use or
modify for use, directly or indirectly in any way for any person or entity:
(i) any Confidential Information of such other
Party during the pendency of this Agreement and for a period
of two (2) years after the date of expiration or termination
hereof; and
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(ii) any Trade Secrets of such other Party at any
time (during or after the pendency of this Agreement) during
which such information or data shall continue to constitute
a "trade secret" under applicable law.
Each Party agrees to cooperate with any reasonable confidentiality requirements
of another Party. Each Party shall immediately notify the other Party of any
unauthorized disclosure or use of any Trade Secrets or Confidential Information
of such other Party of which the first Party becomes aware.
(d) Client also agrees that, if any intellectual property is
developed by or on behalf of Client with the assistance of or input from
Contractor or any person or entity providing any Services, then Contractor and
its affiliates shall have an irrevocable license to use without charge any and
all such intellectual property and any and all patents, patent applications,
trademarks, service marks, copyrights or other property rights deriving
therefrom. Client agrees to execute such assignments, transfers, applications
and other documents and instruments as Contractor may reasonably request in
connection with the implementation of any such license.
Section 9. Foreign Corrupt Practices Act. Each Party understands that
affiliates of Holdings and SWEB are subject to the provisions of United States
Public Law 95-213, the Foreign Corrupt Practices Act of 1977 and any amendments
thereto (the "FCPA"), and agrees not to make any payment to any official, any
political party or official thereof or any candidate for political office, or
any other person, that is contrary to the prohibitions set forth in the FCPA and
otherwise to meet and comply with the standards of conduct required thereby with
respect to its undertakings under this Agreement. Each Party represents that it
is familiar with the nature and significance of such prohibitions and standards
of conduct.
Section 10. Uncontrollable Circumstances. If Contractor or any of its
subcontractors is rendered wholly or partially unable to perform or is delayed
in performing its obligations under this Agreement because of an "Uncontrollable
Circumstance" (as hereinafter defined), Contractor and its subcontractors will
be excused from whatever performance is affected by the Uncontrollable
Circumstance to the extent and for the time so affected. "Uncontrollable
Circumstances" means any event or set of circumstances that is beyond the
reasonable control of Contractor and its subcontractors and that wholly or
partially prevents Contractor or any of its subcontractors from performing its
obligations hereunder.
Section 11. Limitations on Liability.
(a) Contractor and its subcontractors shall have no
liability to Client for any loss, damage or expense suffered by Client or for
any damage to any real or personal property of Client, arising out of or
resulting from any action or failure to act taken by Contractor or any of its
subcontractors, or any employee, officer, director, agent or other
representative thereof, if Contractor's or a subcontractor's, employee's,
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officer's, directors, agent's or other representative's action or failure to act
conformed to the standard of conduct set forth in Section 5 hereof.
(b) Notwithstanding any other provision of this Agreement,
Contractor's total liability to Client and all third parties for all acts and
omissions of or alleged against Contractor or any of its subcontractors or any
employee, director, officer or other representative in any calendar year,
including without limitation liability arising out of contract, tort (including
without limitation negligence, gross negligence and intentional misconduct),
strict liability or any other cause or form of action whatsoever, shall not
exceed fifty percent (50%) of the total compensation paid to Contractor under
any provision of this Agreement.
(c) Notwithstanding any other provision of this Agreement,
any subcontractor's total liability to Contractor, Client and all third parties
for all acts and omissions of or alleged against such subcontractor or any of
its employees, officers, directors, agents or other representatives in any
calendar year, including without limitation liability arising out of contract,
tort (including without limitation negligence, gross negligence and intentional
misconduct), strict liability or any other cause or form of action whatsoever,
shall not exceed fifty percent (50%) of the total compensation paid to such
subcontractor by Contractor under any provision of this Agreement for such
calendar year.
(d) Client hereby indemnifies and holds Contractor, its
subcontractors and their employees, officers, directors, agents and other
representatives harmless from and against any and all claims for personal
injury, death or property damage which was due to or arose out of the presence
of any person at any facilities or at any real or personal property of Client,
while acting for or on behalf of or in connection with the performance or
fulfillment of any Services, regardless of fault.
(e) Notwithstanding any other provision of this Agreement,
no Party nor any of its subcontractors shall be liable to any other person or
entity for indirect, incidental or consequential damages under, arising out of,
due to or in connection with any action of or failure to act taken by or on
behalf of such Party or subcontractor or its performance or nonperformance of
this Agreement or any of its obligations herein.
(f) Contractor, on behalf of itself and its subcontractors,
hereby disclaims any and all warranties of or concerning any Services performed
by it or on its behalf or any materials, goods or equipment provided or used in
connection therewith, whether express, implied or statutory, including without
limitation warranties of merchantability and fitness for a particular purpose.
Section 12. Term and Termination. Unless sooner terminated in
accordance with the provisions of this Agreement, the term of this Agreement
shall commence as of the Effective Date and shall continue for an initial term
of one (1) year (the "Initial Term"). At the end of the Initial Term and each
subsequent "Renewal Term" (as hereinafter defined), as
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the case may be, the term of this Agreement shall be automatically renewed for a
period of one (1) year (a "Renewal Term") unless either party hereto delivers a
written termination notice to the other party at least thirty (30) days prior to
the end of the Initial Term or the then current Renewal Term, as the case may
be.
Section 13. Specific Enforcement.
(a) Each Party acknowledges and agrees that its covenants in
Sections 8 and 9 (the "Special Covenants") are reasonable as to time and scope.
Each Party further acknowledges that any breach or threatened breach of a
Special Covenant by any Party is reasonably likely to result in irreparable
injury to the other Parties, and therefore, in addition to all remedies provided
at law or in equity, each Party agrees that the other Parties shall be entitled
to a temporary restraining order and a permanent injunction to prevent a breach
or contemplated breach of the Special Covenant. If another Party seeks an
injunction, each Party waives any requirement that such other Party post a bond
or any other security.
(b) The existence of any claim, demand, action or cause of
action of the defending Party against the claiming Party, whether predicated
upon this Agreement or otherwise, shall not constitute a defense to the
enforcement by the claiming Party of any of the defending Party's obligations
under Sections 8 and 9. The running of the applicable time period of any Special
Covenant shall be tolled during the continuation of any breach by a Party of the
Special Covenant and during the pendency of any litigation involving a good
faith claim that a Party has breached the Special Covenant.
Section 14. Arbitration.
(a) Except for the matters provided for in Section 13 where
a claiming Party reasonably believes time is of the essence in seeking a
temporary restraining order to prevent a breach or contemplated breach of the
Special Covenant, any and all disputes arising out of or in connection with the
negotiation, execution, interpretation, performance or nonperformance of this
Agreement (which cannot be resolved by good faith negotiations between or among
the disputants) shall be solely and finally settled by a panel of three (3)
arbitrators in accordance with the International Chamber of Commerce's ("ICC")
Rules of Conciliation and Arbitration ("ICC Rules"); provided, however, that to
the extent that the ICC Rules conflict with the provisions of this Section 14,
the provisions of this Section 14 shall control. Each Party agrees that the
award of the arbitrators shall be the sole and exclusive remedy between or among
them regarding any and all claims, counterclaims, issues and accountings
presented to the arbitrators, irrespective of the magnitude thereof.
(b) All of the arbitrators shall be fluent in English and
familiar with the power generating activity.
(c) All arbitration proceedings shall be conducted pursuant
to the ICC Rules in the English language in New York City.
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(d) Any monetary award of the arbitrators shall be made and
payable in New York City in freely available United States dollars free of any
tax and reductions. Any such monetary award shall include interest from the date
of any breach or any violation of this Agreement. The arbitrators shall fix an
appropriate rate of interest from the date of the breach or other violation to
the date when the award is paid in full.
(e) Any decision or award of the arbitral tribunal shall be
final and binding upon the Parties to the arbitration proceeding. Each Party
hereby waives to the extent permitted by law any rights to appeal or to review
of such award by any court or tribunal. Each Party agrees that the arbitral
award may be enforced against the Parties to the arbitration proceeding or their
assets wherever they may be found and that a judgment on the arbitration award
may be entered in any court having jurisdiction over the parties or their
assets.
Section 15. Governing Law and Language.
(a) This Agreement and the rights of the Parties hereunder
shall be governed by and interpreted in accordance with the Law of the United
Kingdom notwithstanding the fact that one or more Parties to this Agreement may
be or become a resident of another state or country.
(b) This Agreement shall be executed in the English
language. Any translation into any other language that may be prepared by or on
behalf of any one or more of the Parties shall be for reference purposes only,
shall in no way be binding upon the Parties and shall have no legal force or
effect or otherwise impair or affect the rights and obligations of the Parties
as set forth in this Agreement.
Section 16. No Other Relationship. Nothing contained in this Agreement
shall be construed as creating a corporation, partnership, association, joint
stock company, business trust, joint venture, organized group of persons,
whether incorporated or not, involving any Party, nor is anything contained in
this Agreement to be construed as creating or requiring any fiduciary
relationship between or among any Party.
Section 17. No Third Party Beneficiaries. This Agreement shall inure
solely to the benefit of the Parties, and their respective successors, assigns
and subcontractors, and none of the provisions of this Agreement shall inure to
the benefit of any other persons or entities.
Section 18. Successors and Assignability. This Agreement shall be
binding upon and inure to the benefit of each of the Parties and their
respective legal representatives, and their respective successors, assigns and
subcontractors; provided, however, that except as otherwise provided for in
Section 3, no Party may assign any rights or delegate any duties under this
Agreement, in whole or in part, without the prior written consent of the other
Party.
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Section 19. Severability. If any provision of this Agreement shall be
determined by any court of competent jurisdiction to be invalid or
unenforceable, the remainder of the Agreement other than that portion determined
to be invalid or unenforceable shall not be affected thereby, and each valid
provision hereof shall be enforced to the fullest extent permitted by law.
Section 20. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original hereof but all of which
together shall constitute one and the same instrument. Delivery of execution
pages hereof by facsimile shall constitute valid delivery of this Agreement.
Section 21. Modification. This Agreement cannot be changed or
terminated orally, and no waiver of compliance with any provision or condition
hereof and no consent provided for herein shall be effective unless evidenced by
an instrument in writing duly executed by the Party hereto sought to be charged
with such waiver or consent. No waiver of any term or provision hereof shall be
construed as a further or continuing waiver of such term or provision or any
other term or provision.
Section 22. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given upon delivery,
if delivered in person or facsimile (and in the latter case, if the day of
receipt is a business day or if not on the next succeeding business day, and if
a written confirmation is immediately sent by reputable international overnight
courier), or on the fourth business day after sending, if sent by reputable
international overnight courier service, to the address set forth on the
signature page hereof or to such other address as the recipient may have
notified the sender pursuant to this Section 22.
Section 23. Entire Agreement. This Agreement constitutes the Parties'
entire agreement as to the subject matter hereof.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
day and year first above written.
South Western Electricity plc
By: /s/ C. B. Harreld
Title: Finance Director
800 Park Avenue
Aztec West
Almondsbury, Bristol
BS12 4SE
Attn: Executive Director Finance
Fax No.: 011-44-1454-617-912
Southern Investments UK Holdings Limited
By: /s/ Mark Ogle
Title: Secretary
31 Curzon Street
London, W1Y 7AE
England
Attn: President & CEO
Fax No.: 011-44-171-711-3957
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Exhibit 10.13
SERVICES AGREEMENT
THIS SERVICES AGREEMENT (the "Agreement") is effective as of January 1,
1996 (the "Effective Date"), between South Western Electricity plc, a United
Kingdom corporation ("Contractor"), and Southern Investments UK plc, a United
Kingdom corporation ("Client"). Contractor and Client shall sometimes be
referred to herein collectively as the "Parties" and individually as a "Party."
W I T N E S S E T H :
WHEREAS, Client desires to retain Contractor to perform certain services
from time to time; and
WHEREAS, Contractor is willing to provide such services in accordance with
the terms hereof;
NOW THEREFORE, in consideration of the premises and their mutual covenants
set forth herein, Client and Contractor hereby agree as follows:
Section 1. Provision of Services. Subject to the terms and conditions
set forth in this Agreement, Client hereby retains Contractor to provide such
services as Client and Contractor shall agree to from time to time (the
"Services"), which Services may include, but shall not be limited to, the
following: engineering consulting, construction management, operational
assistance, maintenance services, general administration and executive
management, assistance in obtaining financing, project development services,
human resources management, accounting services, budgeting services, financial
planning, cash management, legal services, insurance services and related
services and assistance.
Section 2. Independent Contractor.
(a) Contractor, in the performance of this Agreement, will
be acting in its own separate capacity and not as an agent, employee, partner,
joint venturer or associate of Client. It is expressly understood and agreed
that Contractor is an independent contractor of Client in all manners and
respects and that Contractor is not authorized to bind Client to any liability
or obligation or to represent that it has any such authority.
(b) Except as set forth in Section 7(a)(ii) below,
Contractor shall be solely responsible for all taxes imposed on Contractor as a
result of the transactions contemplated by this Agreement.
<PAGE>
Section 3. Subcontracts. Contractor may in its sole discretion
subcontract other persons or entities, to perform any or all of the Services on
such terms and conditions as Contractor determines to be necessary, advisable or
appropriate under the circumstances of the subcontract.
Section 4. Access to Properties and Records. Contractor and its
subcontractors shall at all times have access to any and all real and personal
property of Client, and to any and all books and records of Client, as, when, at
such times and places and on such terms and conditions as Contractor or any of
its subcontractors determines necessary, advisable or appropriate for or in
connection with the provision of any or all of the Services. Contractor agrees
that in exercising the foregoing right it will not unreasonably interfere with
the safe and efficient operation of Client's facilities.
Section 5. Standard of Conduct. Contractor will use its reasonable best
efforts to conform the Services provided by or on behalf of it to Client with
"Good Business Practices" (as hereinafter defined). "Good Business Practices"
means the practices, methods and acts, as changed from time to time, that are
commonly used in the independent electric power production industry to perform
or fulfill the activities comprised by Services or any practices, methods or
acts, which in the exercise of reasonable judgement in light of the facts known
at the time, that could have been expected to accomplish the desired result at a
reasonable cost consistent with good business practices, reliability, safety and
expedition; provided, however, that Good Business Practices is not intended to
be limited to optimum practices, methods or acts to the exclusion of all others,
but rather to be a range of possible practices, methods or acts taken or engaged
in by entities that operate and maintain power plants in the electric power
production industry. Whether any particular practice, method or act complies
with Good Business Practices is to be judged in light of the facts known at the
time that the particular practice, method or act was taken or engaged in.
Section 6. Cooperation with Contractor. Client shall cooperate with
Contractor and its subcontractors as and when reasonably requested in their
performance and fulfillment of the Services.
Section 7. Invoicing and Compensation.
(a)(i) As full and complete compensation for
the Services rendered pursuant to this Agreement, Client shall
pay to Contractor, and Contractor shall accept, a fee (the
"Fee") equal to one hundred and five percent of the cost to
the Contractor for the performance by Contractor of the
Services. In addition, Client shall reimburse Contractor for
all "Incidental Expenses" (as hereinafter defined) and "Third
Party Expenses" (as hereinafter defined) incurred in
connection with the performance of the Services. For purposes
of this Agreement, "Incidental Expenses" shall mean all
reasonable incidental expenses, including expenses for travel
(business class air travel), meals, lodging, required business
entertainment, telephone, shipping and similar items incurred by
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Contractor in connection with its performance of the Services
hereunder and in furtherance of the business of Client or its
affiliates. For purposes of this Agreement,"Third Party Expenses"
shall mean amounts billed to Contractor by third parties for
services performed by such third parties to or on behalf of
Contractor in connection with the performance of the Services,
and shall include, without limitation, amounts billed to
Contractor by third parties for the performance of legal or
accounting services.
(ii) Any withholding tax imposed by the
United Kingdom or any political subdivision thereof shall be
paid by Client and the amount due from Client to Contractor
pursuant to subsection (a)(i) above shall be increased such
that Contractor shall be entitled to receive an amount equal
to the sum of the Fee, the Incidental Expenses and the Third
Party Expenses as though no withholding tax was imposed.
(b) Unless otherwise agreed by the Parties, Contractor
shall submit monthly invoices to Client setting forth the Fee for all Services
rendered pursuant to this Agreement and the Incidental Expenses and Third Party
Expenses incurred in connection therewith, and Client shall pay each such
invoice within sixty (60) days after its receipt thereof, provided that any
extraordinary Incidental Expenses and Third Party Expenses incurred by
Contractor shall be paid by Client within thirty (30) days after its receipt of
an invoice therefore. As a condition of Client's obligation to make payments
with respect to such invoice, each invoice shall set forth a reasonably detailed
description of the nature of the Services, Incidental Expenses and Third Party
Expenses. All amounts paid under this Agreement shall be payable in British
Pounds.
(c) Any amounts which are due and owing by Client to
Contractor under this Section 7 but which are not paid to Contractor within the
required time period, shall accrue interest at the prime commercial lending rate
announced from time to time by The Chase Manhattan Bank, N.A., at its principal
office, presently located at 1 Chase Manhattan Plaza, New York, New York, United
States 10081, on the date on which payment was due, plus two (2) percentage
points. Interest at the rate defined above shall be computed monthly and
pro-rated daily from the time such obligation arises.
Section 8. Disposition of Information.
(a) "Confidential Information" of a person or entity means
valuable, non-public, competitively sensitive data and information relating to
such person or entity or such person's or entity's business, other than "Trade
Secrets" (as hereinafter defined) of such person or entity.
(b) "Trade Secrets" of a person or entity means information
or data of or about such entity, including without limitation technical or
non-technical data, formulas,
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patterns, compilations, programs, devices, methods, techniques, drawings,
processes, financial data, financial plans, products plans, or lists of actual
or potential customers, that:
(i) derive economic value, actual or
potential, from not being generally known to, and not being
readily ascertainable by proper means by, other persons who
can obtain economic value from their disclosure or use; and
(ii) are the subject of efforts that are
reasonable under the circumstances to maintain their secrecy.
To the extent that the foregoing definition is inconsistent with a definition of
"trade secret" mandated under applicable law, the latter definition shall govern
for purposes of interpreting the Parties' obligations under this Agreement.
(c) Each Party acknowledges and agrees that any unauthorized
disclosure or use of any of the Trade Secrets or Confidential Information of
another Party would be wrongful and would likely result in immediate and
irreparable injury to such other Party. Except as required in order to perform
its obligations under this Agreement, each Party agrees that it will not,
without the express prior written consent of another Party, redistribute,
market, publish, disclose or divulge to any other person or entity, or use or
modify for use, directly or indirectly in any way for any person or entity:
(i) any Confidential Information of such
other Party during the pendency of this Agreement and for a
period of two (2) years after the date of expiration or
termination hereof; and
(ii) any Trade Secrets of such other Party
at any time (during or after the pendency of this Agreement)
during which such information or data shall continue to
constitute a "trade secret" under applicable law.
Each Party agrees to cooperate with any reasonable confidentiality requirements
of another Party. Each Party shall immediately notify the other Party of any
unauthorized disclosure or use of any Trade Secrets or Confidential Information
of such other Party of which the first Party becomes aware.
(d) Client also agrees that, if any intellectual property is
developed by or on behalf of Client with the assistance of or input from
Contractor or any person or entity providing any Services, then Contractor and
its affiliates shall have an irrevocable license to use without charge any and
all such intellectual property and any and all patents, patent applications,
trademarks, service marks, copyrights or other property rights deriving
therefrom. Client agrees to execute such assignments, transfers, applications
and other documents and instruments as Contractor may reasonably request in
connection with the implementation of any such license.
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Section 9. Foreign Corrupt Practices Act. Each Party understands that
affiliates of Contractor and Client are subject to the provisions of United
States Public Law 95-213, the Foreign Corrupt Practices Act of 1977 and any
amendments thereto (the "FCPA"), and agrees not to make any payment to any
official, any political party or official thereof or any candidate for political
office, or any other person, that is contrary to the prohibitions set forth in
the FCPA and otherwise to meet and comply with the standards of conduct required
thereby with respect to its undertakings under this Agreement. Each Party
represents that it is familiar with the nature and significance of such
prohibitions and standards of conduct.
Section 10. Uncontrollable Circumstances. If Contractor or any of its
subcontractors is rendered wholly or partially unable to perform or is delayed
in performing its obligations under this Agreement because of an "Uncontrollable
Circumstance" (as hereinafter defined), Contractor and its subcontractors will
be excused from whatever performance is affected by the Uncontrollable
Circumstance to the extent and for the time so affected. "Uncontrollable
Circumstances" means any event or set of circumstances that is beyond the
reasonable control of Contractor and its subcontractors and that wholly or
partially prevents Contractor or any of its subcontractors from performing its
obligations hereunder.
Section 11. Limitations on Liability.
(a) Contractor and its subcontractors shall have no
liability to Client for any loss, damage or expense suffered by Client or for
any damage to any real or personal property of Client, arising out of or
resulting from any action or failure to act taken by Contractor or any of its
subcontractors, or any employee, officer, director, agent or other
representative thereof, if Contractor's or a subcontractor's, employee's,
officer's, director's, agent's or other representative's action or failure to
act conformed to the standard of conduct set forth in Section 5 hereof.
(b) Notwithstanding any other provision of this Agreement,
Contractor's total liability to Client and all third parties for all acts and
omissions of or alleged against Contractor or any of its subcontractors or any
employee, director, officer or other representative in any calendar year,
including without limitation liability arising out of contract, tort (including
without limitation negligence, gross negligence and intentional misconduct),
strict liability or any other cause or form of action whatsoever, shall not
exceed fifty percent (50%) of the total compensation paid to Contractor under
any provision of this Agreement.
(c) Notwithstanding any other provision of this Agreement,
any subcontractor's total liability to Contractor, Client and all third parties
for all acts and omissions of or alleged against such subcontractor or any of
its employees, officers, directors, agents or other representatives in any
calendar year, including without limitation liability arising out of contract,
tort (including without limitation negligence, gross negligence and intentional
misconduct), strict liability or any other cause or form of action whatsoever,
5
<PAGE>
shall not exceed fifty percent (50%) of the total compensation paid to such
subcontractor by Contractor under any provision of this Agreement for such
calendar year.
(d) Client hereby indemnifies and holds Contractor, its
subcontractors and their employees, officers, directors, agents and other
representatives harmless from and against any and all claims for personal
injury, death or property damage which was due to or arose out of the presence
of any person at any facilities or at any real or personal property of Client,
while acting for or on behalf of or in connection with the performance or
fulfillment of any Services, regardless of fault.
(e) Notwithstanding any other provision of this Agreement,
no Party nor any of its subcontractors shall be liable to any other person or
entity for indirect, incidental or consequential damages under, arising out of,
due to or in connection with any action of or failure to act taken by or on
behalf of such Party or subcontractor or its performance or nonperformance of
this Agreement or any of its obligations herein.
(f) Contractor, on behalf of itself and its subcontractors,
hereby disclaims any and all warranties of or concerning any Services performed
by it or on its behalf or any materials, goods or equipment provided or used in
connection therewith, whether express, implied or statutory, including without
limitation warranties of merchantability and fitness for a particular purpose.
Section 12. Term and Termination. Unless sooner terminated in
accordance with the provisions of this Agreement, the term of this Agreement
shall commence as of the Effective Date and shall continue for an initial term
of one (1) year (the "Initial Term"). At the end of the Initial Term and each
subsequent "Renewal Term" (as hereinafter defined), as the case may be, the term
of this Agreement shall be automatically renewed for a period of one (1) year (a
"Renewal Term") unless either party hereto delivers a written termination notice
to the other party at least thirty (30) days prior to the end of the Initial
Term or the then current Renewal Term, as the case may be.
Section 13. Specific Enforcement.
(a) Each Party acknowledges and agrees that its covenants in
Sections 8 and 9 (the "Special Covenants") are reasonable as to time and scope.
Each Party further acknowledges that any breach or threatened breach of a
Special Covenant by any Party is reasonably likely to result in irreparable
injury to the other Parties, and therefore, in addition to all remedies provided
at law or in equity, each Party agrees that the other Parties shall be entitled
to a temporary restraining order and a permanent injunction to prevent a breach
or contemplated breach of the Special Covenant. If another Party seeks an
injunction, each Party waives any requirement that such other Party post a bond
or any other security.
(b) The existence of any claim, demand, action or cause of
action of the defending Party against the claiming Party, whether predicated
upon this Agreement or
6
<PAGE>
otherwise, shall not constitute a defense to the enforcement by the claiming
Party of any of the defending Party's obligations under Sections 8 and 9. The
running of the applicable time period of any Special Covenant shall be tolled
during the continuation of any breach by a Party of the Special Covenant and
during the pendency of any litigation involving a good faith claim that a Party
has breached the Special Covenant.
Section 14. Arbitration.
(a) Except for the matters provided for in Section 13 where
a claiming Party reasonably believes time is of the essence in seeking a
temporary restraining order to prevent a breach or contemplated breach of the
Special Covenant, any and all disputes arising out of or in connection with the
negotiation, execution, interpretation, performance or nonperformance of this
Agreement (which cannot be resolved by good faith negotiations between or among
the disputants) shall be solely and finally settled by a panel of three (3)
arbitrators in accordance with the International Chamber of Commerce's ("ICC")
Rules of Conciliation and Arbitration ("ICC Rules"); provided, however, that to
the extent that the ICC Rules conflict with the provisions of this Section 14,
the provisions of this Section 14 shall control. Each Party agrees that the
award of the arbitrators shall be the sole and exclusive remedy between or among
them regarding any and all claims, counterclaims, issues and accountings
presented to the arbitrators, irrespective of the magnitude thereof.
(b) All of the arbitrators shall be fluent in English and
familiar with the power generating activity.
(c) All arbitration proceedings shall be conducted pursuant
to the ICC Rules in the English language in New York City.
(d) Any monetary award of the arbitrators shall be made and
payable in New York City in freely available United States dollars free of any
tax and reductions. Any such monetary award shall include interest from the date
of any breach or any violation of this Agreement. The arbitrators shall fix an
appropriate rate of interest from the date of the breach or other violation to
the date when the award is paid in full.
(e) Any decision or award of the arbitral tribunal shall be
final and binding upon the Parties to the arbitration proceeding. Each Party
hereby waives to the extent permitted by law any rights to appeal or to review
of such award by any court or tribunal. Each Party agrees that the arbitral
award may be enforced against the Parties to the arbitration proceeding or their
assets wherever they may be found and that a judgment on the arbitration award
may be entered in any court having jurisdiction over the parties or their
assets.
7
<PAGE>
Section 15. Governing Law and Language.
(a) This Agreement and the rights of the Parties hereunder
shall be governed by and interpreted in accordance with the Law of the United
Kingdom, notwithstanding the fact that one or more Parties to this Agreement
may be or become a resident of another state or country.
(b) This Agreement shall be executed in the English
language. Any translation into any other language that may be prepared by or on
behalf of any one or more of the Parties shall be for reference purposes only,
shall in no way be binding upon the Parties and shall have no legal force or
effect or otherwise impair or affect the rights and obligations of the Parties
as set forth in this Agreement.
Section 16. No Other Relationship. Nothing contained in this Agreement
shall be construed as creating a corporation, partnership, association, joint
stock company, business trust, joint venture, organized group of persons,
whether incorporated or not, involving any Party, nor is anything contained in
this Agreement to be construed as creating or requiring any fiduciary
relationship between or among any Party.
Section 17. No Third Party Beneficiaries. This Agreement shall inure
solely to the benefit of the Parties, and their respective successors, assigns
and subcontractors, and none of the provisions of this Agreement shall inure to
the benefit of any other persons or entities.
Section 18. Successors and Assignability. This Agreement shall be
binding upon and inure to the benefit of each of the Parties and their
respective legal representatives, and their respective successors, assigns and
subcontractors; provided, however, that except as otherwise provided for in
Section 3, no Party may assign any rights or delegate any duties under this
Agreement, in whole or in part, without the prior written consent of the other
Party.
Section 19. Severability. If any provision of this Agreement shall be
determined by any court of competent jurisdiction to be invalid or
unenforceable, the remainder of the Agreement other than that portion determined
to be invalid or unenforceable shall not be affected thereby, and each valid
provision hereof shall be enforced to the fullest extent permitted by law.
Section 20. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original hereof but all of which
together shall constitute one and the same instrument. Delivery of execution
pages hereof by facsimile shall constitute valid delivery of this Agreement.
Section 21. Modification. This Agreement cannot be changed or terminated
orally, and no waiver of compliance with any provision or condition hereof and
no consent
8
<PAGE>
provided for herein shall be effective unless evidenced by an instrument in
writing duly executed by the Party hereto sought to be charged with such waiver
or consent. No waiver of any term or provision hereof shall be construed as a
further or continuing waiver of such term or provision or any other term or
provision.
Section 22. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given upon delivery,
if delivered in person or facsimile (and in the latter case, if the day of
receipt is a business day or if not on the next succeeding business day, and if
a written confirmation is immediately sent by reputable international overnight
courier), or on the fourth business day after sending, if sent by reputable
international overnight courier service, to the address set forth on the
signature page hereof or to such other address as the recipient may have
notified the sender pursuant to this Section 22.
Section 23. Entire Agreement. This Agreement constitutes the Parties'
entire agreement as to the subject matter hereof.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
9
<PAGE>
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
day and year first above written.
"Client"
Southern Investments UK plc
By: /s/ Mark Ogle
Title: Secretary
31 Curzon Street
London, W1Y 7AE
England
Attn: President & CEO
Fax No.: 011-44-171-711-3957
"Contractor"
South Western Electricity plc
By: /s/ C. B. Harreld
Title: Finance Director
800 Park Avenue
Aztec West
Aldmondsbury, Bristol
BS12 4SE
Attn: Executive Director Finance
Fax No.: 011-44-1454-617-912
10
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Exhibit 12.1
STATEMENT RE: COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(In Millions)
Predecessor Company Successor Company
-----------------------------------------------------------------------------------------
April 1, September 18, Pro Forma
1995 to 1995 Year Ended
Year Ended March 31, September 17, March 31, March 31,
1992 1993 1994 1995 1995 1996 1996
------ ------ ------ ------ ------ ------ -------
pounds pounds pounds pounds pounds pounds pounds
Fixed charges:
Interest expense on debt 15.7 13.6 10.8 11.3 5.3 28.0 67.0
==== ==== ==== ==== ==== ==== ====
Earnings:
Consolidated net income 62.3 77.7 92.9 85.9 22.3 59.0 58.0
Extraordinary loss (gain) 0.0 0.0 0.0 20.0 0.0 (6.0) (6.0)
Consolidated provision for
income taxes 20.7 23.4 23.9 25.6 7.4 28.0 31.0
Discontinued operations, net 0.0 0.0 (2.1) (1.3) 0.0 0.0 2.0
Fixed charges 15.7 13.6 10.8 11.3 5.3 28.0 67.0
---- ----- ----- ----- ----- ----- -----
98.7 114.7 125.5 141.5 35.0 109.0 152.0
==== ===== ===== ===== ==== ===== =====
Ratio of earnings to fixed charges 6.3 8.4 11.6 12.5 6.6 3.9 2.3
==== ===== ===== ===== ==== ===== =====
</TABLE>
Exhibit 21
LIST OF SUBSIDIARIES
Name of Subsidiary Jurisdiction of Incorporation
South Western Electricity plc England and Wales
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our reports
dated July 25, 1996 on the financial statements of SOUTHERN INVESTMENTS UK plc
AND SUBSIDIARIES (Successor Company) and the related financial statement
schedules included in this registration statement.
/s/Arthur Andersen
Arthur Andersen
Bristol, England
July 25, 1996
Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference of our firm under the caption "Experts" and to the
use of our reports dated June 19, 1996 except for Note 21 - Differences between
United Kingdom and United States generally accepted accounting principles, as to
which the date is July 25, 1996, with respect to the financial statements of
South Western Electricity plc (Predecessor Company) in the Registration
Statement (Form S-1) of Southern Investments UK plc for the registration of
$235,000,000 of its Senior Notes Due 2006.
/s/Ernest & Young
ERNST & YOUNG
Chartered Accountants
Bristol, England
July 25, 1996
Exhibit 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our reports
dated July 25, 1996 on the financial statements of SOUTH WESTERN ELECTRICITY plc
AND SUBSIDIARIES (Predecessor Company) and the related financial statement
schedules included in this registration statement.
/s/Arthur Andersen
Arthur Andersen
Bristol, England
July 25, 1996
Exhibit 24.1
July 26, 1996
Edwin Adams, Mark Ogle and Wayne Boston
Dear Sirs:
Southern Investments UK plc proposes to file registration statements
under the Securities Act of 1933, as amended, with the Securities and Exchange
Commission with respect to the issuance and sale of bonds of this Company,
pursuant to and in accordance with Form S-1 in amounts of up to $300,000,000
million.
Southern Investments UK plc and the undersigned directors and officers
of said Company, individually as a director and/or as an officer of the Company,
hereby make, constitute and appoint each of you our true and lawful Attorney for
each of us and in each of our names, places and steads to sign and cause to be
filed with the Securities and Exchange Commission in connection with each of the
foregoing such registration statements and appropriate amendment or amendments
(including post-effective amendments) thereto, each to be accompanied by a
prospectus and any appropriately amended or supplemented prospectus and any
necessary exhibits.
Yours very truly,
SOUTHERN INVESTMENTS UK plc
By /s/Richard J. Pershing
Richard J. Pershing
Director and Chief Executive Officer
<PAGE>
/s/Thomas G. Boren
Thomas G. Boren
/s/C. B. Harreld
C. B. Harreld
/s/Alan W. Harrelson
Alan W. Harrelson
/s/Gale E. Klappa
Gale E. Klappa
/s/Richard J. Pershing
Richard J. Pershing
/s/C. Philip Saunders
C. Philip Saunders
/s/Charles W. Whitney
Charles W. Whitney
Accentacross Limited
By:/s/Robert D. Fagan
Name: Robert D. Fagan
Title: Director
Mighteager Limited
By:/s/Robert D. Fagan
Name: Robert D. Fagan
Title: Director
<PAGE>
EXTRACT FROM UNANIMOUS WRITTEN CONSENT OF THE
BOARD OF DIRECTORS OF
SOUTHERN INVESTMENTS UK plc
Unanimous written consent of the Board of Directors Effective July 26, 1996
RESOLVED, that each Authorized Officer is hereby authorized, on behalf
of the Company, to execute and cause to be filed with the Securities and
Exchange Commission (the "Commission") a Registration Statement on Form S-1
(including the preliminary prospectus and exhibits thereto and such other
documents as may be required to be filed therewith, the "Registration
Statement") covering the registration of the Bonds.
RESOLVED FURTHER, that James A. Ward is hereby designated and appointed
as agent for service of process to receive communications and notices from the
Commission with respect to the Registration Statement.
RESOLVED FURTHER, that for the purpose of signing the Registration
Statement under the Securities Act of 1933, as amended, to be filed with the
Securities and Exchange Commission with respect to the registration of the
Bonds, the Company, the members of its Board of Directors, and its officers are
authorized to give their several powers of attorney to Mark R. Ogle, Edwin Adams
and Wayne Boston.
The undersigned officer of Southern Investments UK plc does hereby
certify that the foregoing is a true and correct copy of resolutions duly and
regularly adopted by unanimous written consent of the board of directors of
Southern Investments UK plc, effective July 26, 1996, and that said resolutions
have not since been rescinded but are still in full force and effect.
Dated July 26, 1996 /s/Richard J. Pershing
Richard J. Pershing
Exhibit 99.1
CONFORMED COPY
(pound)600,000,000 REVOLVING CREDIT AND TERM LOAN AGREEMENT
dated 12 January 1996
SOUTHERN INVESTMENTS UK PUBLIC LIMITED COMPANY
- and -
SOUTH WESTERN ELECTRICITY plc
as Borrowers
J.P. MORGAN SECURITIES LTD.
as Arranger
THE BANKS NAMED HEREIN
- and -
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
as Agent
LINKLATERS & PAINES
Barrington House
59-67 Gresham Street
London EC2V 7JA
Tel: 0171-606 7080
(Ref: KJT/NJP)
<PAGE>
C O N T E N T S
Clause Heading Page
SECTION I - INTRODUCTION
1 Interpretation 1
2 The Facilities 9
3 Conditions Precedent 10
SECTION II - REVOLVING FACILITY
4 Drawdown under Revolving Facility 11
5 Repayment of Revolving Advances 12
6 Interest on Revolving Advances 12
SECTION III - TERM FACILITY
7 Drawdown under Term Facility 14
8 Repayment of Term Advances 14
9 Interest on Term Advances 15
SECTION IV - PREPAYMENT AND CANCELLATION
10 Prepayment 16
11 Cancellation 16
SECTION V - FEES
12 Fees 18
SECTION VI - GENERAL PROVISIONS
13 Taxes 19
14 Illegality 20
15 Increased Costs 21
16 Change in Market Conditions 22
17 Mitigation and Substitution of Banks 23
18 Payments 24
SECTION VII - WARRANTIES, UNDERTAKINGS, DEFAULT, ETC
19 Representations and Warranties 27
20 Information 28
21 Undertakings 29
22 Events of Default 33
23 Default Interest 35
24 Indemnities 36
(i)
<PAGE>
Clause Heading Page
SECTION VIII - AGENT AND BANKS
25 The Agent 38
26 Set-Off/Pro Rata Sharing 41
SECTION IX - MISCELLANEOUS
27 Expenses and Stamp Duty 42
28 Calculations and Evidence 43
29 Novation 43
30 Remedies, Waivers, Amendments and Consents 45
31 Communications 45
32 Partial Invalidity 46
33 Nature of Rights and Obligations 46
34 Confidentiality 46
35 Counterparts 47
36 Governing Law 47
Clause Heading Page
1 Conditions Precedent 48
2 Opinion of English legal advisers to the Agent 49
3 Novation Notice 53
4 Notice requesting Advance 56
5 Associated Costs 57
(ii)
<PAGE>
THIS AGREEMENT is made on 1996 BETWEEN
(1) SOUTHERN INVESTMENTS UK PUBLIC LIMITED COMPANY ("Southern UK")
(2) SOUTH WESTERN ELECTRICITY plc ("SWEB")
(3) J.P.MORGAN SECURITIES LTD. as arranger (the "Arranger")
(4) THE BANKS AND FINANCIAL INSTITUTIONS shown on the signature pages of this
Agreement as having Revolving Commitments (the "Revolving Banks")
(5) THE BANKS AND FINANCIAL INSTITUTIONS shown on the signature pages of this
Agreement as having Term Commitments (the "Term Banks") and
(6) MORGAN GUARANTY TRUST COMPANY OF NEW YORK as agent for the Banks (the
"Agent").
Background
The Banks are willing to make available to SWEB a Sterling revolving credit
facility of up to (pound)275,000,000 and to make available to Southern UK a
Sterling term loan facility of up to (pound)325,000,000.
IT IS AGREED as follows:-
SECTION I - INTRODUCTION
1. INTERPRETATION
(A) Definitions: In this Agreement, except to the extent that the context
requires otherwise:-
"Act" means the Electricity Act 1989 and, unless the context otherwise
requires, all subordinate legislation made pursuant thereto;
"Advance" means, depending on the context, a Revolving Advance or a
Term Advance made or to be made by the Banks under this Agreement or,
as the case may be, the outstanding principal amount of any such
advance;
"Applicable Accounting Principles" means those accounting principles,
standards and practices generally accepted in the United Kingdom and
the accounting and reporting requirements of the Companies Act 1985, in
each case as in effect on 31st March, 1995;
"Associated Costs" means, in relation to any Term or Interest Period
(or part of a Term or Interest Period) relating to an Advance or
overdue sum, the percentage rate per annum determined in accordance
with Schedule 5;
"Available Commitment" means, in relation to a Bank, its Available
Revolving Commitment and/or, as the case may be, its Available Term
Commitment;
"Available Revolving Commitment" means, in relation to a Revolving
Bank, its Revolving Commitment less its Outstandings if any under the
Revolving Facility;
"Available Revolving Facility" means the total amount of the Available
Revolving Commitments;
"Available Term Commitment" means, in relation to a Term Bank, its Term
Commitment less its Outstandings if any under the Term Facility;
-1-
<PAGE>
"Available Term Facility" means the total amount of the Available Term
Commitments;
"Bank" means a Revolving Bank and/or a Term Bank, as the context may
require and any New Bank to which any of them has novated all or part
of its rights and/or obligations in accordance with Clause 29(C);
"Bonds" means any bonds forming part of Southern UK's Secured Floating
Rate Bonds due 2000;
"Borrower" means, in relation to the Revolving Facility, SWEB and, in
relation to the Term Facility, Southern UK;
"Business Day" means a day on which
(1)Sterling deposits may be dealt in on the London inter-bank
market and
(2)commercial banks are open in London;
"Commitment" means, in relation to a Bank and subject as provided in
this Agreement, its Revolving Commitment and/or, as the case may be,
its Term Commitment;
"Commitment Termination Date", in relation to the Term Facility, means
12 March, 1996;
"Debt Service" means at any time Net Interest Payable for the 12 months
ending on the date on which Debt Service falls to be calculated;
"Environmental Law" means all regulations and other laws concerning the
protection of human health or the environment;
"Event of Default" means a Revolving Event of Default or a Term Event
of Default;
"Facilities" means the Revolving Facility and the Term Facility;
"Facility Office" means, in relation to a Bank and a particular
Facility at any particular time, the office through which it is then
acting for the purpose of that Facility, which must at all times be in
the United Kingdom;
"Final Maturity Date" means 6 February, 1999;
"Group" means, at any particular time, Southern UK and all its
subsidiaries (and "member of the Group" shall be construed accordingly);
"Information Memorandum" means any information memorandum prepared by
the Arranger and agreed to by Southern UK and SWEB in writing in
connection with the syndication of this Agreement;
"Interest Payable" means, in relation to any period, all interest
payable and similar charges of the SWEB Group expressed in Sterling and
determined on a consolidated basis in accordance with Applicable
Accounting Principles;
"Interest Payment Date" means, in relation to a Term Advance, the last
day of an Interest Period in respect of that Term Advance;
"Interest Period" means a period by reference to which interest is
calculated on a Term Advance or an overdue sum;
-2-
<PAGE>
"Interest Receivable" means, in relation to any period, all interest
receivable and similar income of the SWEB Group expressed in Sterling
and determined on a consolidated basis in accordance with Applicable
Accounting Principles;
"Licence" means the public electricity supply licence granted to SWEB
by the Secretary of State for Energy under Section 6(1)(c) of the Act,
as modified and/or extended from time to time;
"Majority Banks" means the Banks whose aggregate Commitments together
exceed 50% of the total Commitments, (or, if there are no Commitments
at the relevant time, the Banks whose Outstandings together exceed 50%
of the total Outstandings);
"Majority Revolving Banks" means the Banks whose aggregate Revolving
Commitments together exceed 50% of the total Revolving Commitments (or
if there are no Revolving Commitments at the relevant time, the Banks
whose Outstandings under the Revolving Facility together exceed 50% of
the total Outstandings under the Revolving Facility);
"Majority Term Banks" means the Banks whose aggregate Term Commitments
together exceed 50% of the total Term Commitments (or if there are no
Term Commitments at the relevant time, the Banks whose Outstandings
under the Term Facility together exceed 50% of the total Outstandings
under the Term Facility);
"Margin" means:-
(1) in relation to any interest accruing under the Revolving
Facility 0.30%; and
(2) in relation to any interest accruing under the Term
Facility 0.20%;
"Material Subsidiary" means, at any particular time, a Subsidiary of
Southern UK whose gross assets or gross revenues (having regard to its
direct and/or indirect beneficial interest in the shares, or the like,
of that Subsidiary) represent at least 15% of the consolidated gross
assets or, as the case may be, gross revenues of the Group. For this
purpose:
(1) in the case of a company which itself has Subsidiaries,
the calculation shall be made by comparing the consolidated
gross assets or, as the case may be, gross revenues of it and
its Subsidiaries to those of the Group;
(2) assets or revenues which arise from transactions between
members of the Group and which would be eliminated in the
consolidated accounts of the Group shall be excluded;
(3) the gross assets or gross revenues of a Subsidiary shall
be calculated by reference to:
(a) the accounts of that Subsidiary used for the
purpose of the then latest consolidated accounts of
the Group delivered to the Agent under Clause 20(A)
or (B); or
(b) if the company became a Subsidiary after the
end of the financial period to which those
consolidated accounts relates, the then latest
accounts of that Subsidiary;
(4) the gross assets or gross revenues of the Group shall
be calculated by reference to the then latest consolidated
accounts (if
-3-
<PAGE>
any) of the Group included in the accounts delivered to the
Agent under Clause 20(A) or (B) (or, if non-consolidated
accounts are delivered pursuant to Clause 20 (A) or (B), by
reference to such unaudited pro forma financial statements as
the auditors of Southern UK may consider appropriate to
reflect the consolidated financial results or performance of
the Group necessary for the purposes of making a determination
of Material Subsidiaries), adjusted as appropriate to reflect
the gross assets or gross revenues of any company which has
become or ceased to be a Subsidiary after the end of the
financial period to which those accounts relate and adjusted
to reflect any transfer of Assets as described in (5) below;
and
(5) on a Material Subsidiary transferring all or
substantially all of its Assets to another Subsidiary, the
transferor shall cease to be a Material Subsidiary.
Except as provided in (5) above, once a company has become a Material
Subsidiary, it shall remain one until it has demonstrated that it has ceased to
fulfil the requirements of this definition in a certificate of the auditors of
Southern UK which shall, in the absence of manifest error be conclusive;
"Net Interest Payable" means, in relation to any period, Interest
Payable less Interest Receivable, in each case for that period;
"New Bank" means a bank or financial institution to which a Bank seeks
to novate (or, as the case may be, has novated) all or part of its
rights and/or obligations in accordance with Clause 29(C);
"Notice of Drawing" means a notice requesting an Advance substantially
in the form set out in Schedule 4;
"Novation Notice" means a notice substantially in the form set out in
Schedule 3;
"Outstandings" means, in relation to a Bank at any particular time, the
aggregate principal amount of its share of all (if any) Advances
outstanding at that time (and references to its Outstandings under a
particular Facility shall be construed accordingly);
"PBIT" means, in relation to any period, the consolidated profit on
ordinary activities (excluding exceptional items) of the SWEB Group
expressed in Sterling from continuing operations for that period before
tax plus Net Interest Payable for that period calculated in accordance
with Applicable Accounting Principles;
"Pooling and Settlement Agreement" means an agreement dated 30th March,
1990 made by SWEB with National Grid Holdings plc and others setting
out the rules and procedures for the operation of an electricity
trading pool and of a settlement system and, while the same has effect,
the "Initial Settlement Agreement" also dated 30th March, 1990 and made
between the same parties, as amended from time to time;
"PUHCA" means the Public Utility Holding Company Act of 1935, as
amended, of the United States of America; "Qualifying Lender" means a
Person entitled to receive payments of interest on each Advance free of
withholding or deduction for or on account of Tax under Section
349(3)(a) of the Income and Corporation Taxes Act 1988;
"Rate Fixing Day" means the first day of the relevant Term or Interest
Period;
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<PAGE>
"Reference Banks" means, subject to Clause 29(E), such London office of
Morgan Guaranty Trust Company of New York and (if Morgan Guaranty Trust
Company of New York ceases to be the sole Bank) two further banks
(which shall be Banks if available) as the Agent with the agreement of
Southern UK shall designate by notice to the Borrowers and the Banks,
as is from time to time designated by the relevant bank to the Agent
for this purpose;
"Repayment Date" means, in relation to a Revolving Advance, the last
day of its Term;
"Revolving Advance" means an advance made or to be made under the
Revolving Facility or, as the case may be, the outstanding principal
amount of any such advance;
"Revolving Commitment" means, in relation to a Revolving Bank and
subject as provided in this Agreement, the amount set opposite its name
under the heading "Revolving Commitments" on the signature pages of
this Agreement or the amount of any Revolving Commitment novated to it
in accordance with Clause 29(C); and the Revolving Commitment of any
Revolving Bank shall be reduced or, as the case may be, increased,
pursuant to any novation or assignment of a Revolving Commitment to or
by that Revolving Bank;
"Revolving Event of Default" means one of the events mentioned in
Clause 22;
"Revolving Facility" means the Sterling revolving credit facility
granted by the Revolving Banks to SWEB under this Agreement;
"Rollover Advance" means, at a particular time, one or more Advances:
(a) the proposed date of which is the same as the
Repayment Date of one or more existing Advances;
(b) where the aggregate principal amount of the Advances
is the same as or less than the aggregate principal amount of
those existing Advances; and
(c) all the proceeds (whether pursuant to Clause 18(D) or
otherwise) of which are to be used to refinance all or part of
those existing Advances;
"Sterling" and "(pound)" mean the lawful currency of the United
Kingdom;
"Subsidiary" means, in relation to any Person (its "holding company")
at any particular time, any other Person which is then a subsidiary as
defined in Section 736 of the Companies Act 1985 of that Person and,
for the purpose of Clauses 20(A), 20(B) and 21(B)(3) and the
definitions used in those Clauses and the definition of Material
Subsidiary, any Subsidiary Undertaking within the meaning of Section
258 of the Companies Act 1985;
"SWEB Group" means, at any particular time, SWEB and all its
Subsidiaries (and "member of the SWEB Group" shall be construed
accordingly);
"Term" means, in relation to a Revolving Advance, the period for which
it is to be or, as the case may be, has been made;
"Term Advance" means an advance made or to be made by the Term Banks
under the Term Facility or, as the case may be, the outstanding
principal amount of any such advance;
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"Term Commitment" means, in relation to a Term Bank and subject as
provided in this Agreement, the amount set opposite its name under the
heading "Term Commitments" on the signature pages of this Agreement or
the amount of any Term Commitment novated to it in accordance with
Clause 29(C); and the Term Commitment of any Term Bank shall be reduced
or, as the case may be, increased, pursuant to any novation or
assignment of a Term Commitment to or by that Term Bank;
"Term Event of Default" means one of the events mentioned in Clause 22
other than Clause 22(B) to the extent that such Clause relates to a
breach of Clause 21(B)(3);
"Term Facility" means the Sterling term loan facility granted by the
Term Banks to the Southern UK under this Agreement; and
"Term Repayment Date" means 5 February 1997.
(B) Construction of Certain References: Except to the extent that the
context requires otherwise, any reference in this Agreement to:-
an Act of Parliament or any Section of, Schedule to or other provision
of an Act of Parliament shall be construed, at any particular time, as
including a reference to any modification, extension or re-enactment
thereof then in force and all instruments, orders and regulations then
in force and made under or deriving validity from the relevant Act or
provision;
an "Agency" of a state includes any agency, authority, central bank,
department, government, legislature, minister, ministry, official or
public or statutory Person (whether autonomous or not) of, or of the
government of, that state; this "Agreement" includes
this "Agreement" as from time to time amended, supplemented or novated,
and any document which amends, supplements or novates this Agreement,
in accordance with Clause 29(C) or 30(B);
the "Assets" of any Person means all or any part of its business,
undertaking, property, assets, revenues (including any right to receive
revenues) and uncalled capital;
"Borrowed Money" means any Indebtedness (1) for or in respect of money
borrowed and liabilities in respect of acceptances, deposits,
discounting, factoring, finance leases, hire purchase, sale-and-lease
back and sale-and in any such case which are treated as "on-balance
sheet" liabilities in accordance with Applicable Accounting Principles,
(2) for the deferred purchase price of Assets or services (other than
Assets or services obtained on normal commercial terms), (3) in respect
of any currency or interest rate swap, cap or collar arrangement or
other derivative instrument of any kind or (4) in respect of any
guarantee in respect of any Indebtedness falling within (1) to (3)
above;
"Consent" means a consent, approval, authorisation, exemption, filing,
licence, order, permission, recording or registration (including
without limitation, any of the same required under PUHCA or (where the
context so admits) the Act) and references to obtaining Consents shall
be construed accordingly;
one Person being "Controlled" by another means that that other (whether
directly or indirectly and whether by the ownership of share capital,
the possession of voting power, contract or otherwise) has the power to
appoint and/or remove all or the majority of the members of the Board
of
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Directors or other governing body of that Person or otherwise controls
or has the power to control the affairs and policies of that Person;
"Directive" means any present or future directive, regulation, request,
requirement, rule or credit restraint programme of any Agency of any
state or of any self organisation (but, if not having the force of law,
only if compliance with the Directive is in accordance with the general
practice of Persons to whom the Directive is intended to apply);
"Indebtedness" means any obligation for the payment or repayment of
money (whether actual or contingent, as principal, surety or
otherwise);
something having a "Material Adverse Effect" on a Person is to it
having a material adverse effect on its ability to perform its payment
obligations under this Agreement;
any "obligation" of any Person under this Agreement or any other
agreement or document shall be construed as a reference to an
obligation expressed to be assumed by or imposed on it under this
Agreement or, as the case may be, that other agreement or document (and
"due", "owing", "payable" and "receivable" shall be similarly
construed);
a "Person" includes any individual, company, corporation, firm,
partnership, joint venture, association, organisation, trust, state or
Agency of a state (in each case, whether or not having separate legal
personality);
"Security" means any mortgage, pledge, lien, hypothecation, security
interest or other charge or encumbrance or retention of title
arrangement, right to retain possession or any other arrangement
providing a creditor with a prior right to an Asset, or its proceeds of
sale, over other unsecured, unsubordinated creditors in a liquidation
(and "secured" shall be construed accordingly);
"Tax(es)" means any present or future taxes, levies, imposts, duties,
charges, fees of whatever nature, and "Taxation" shall be construed
accordingly;
"Tax on Overall Net Income" of a Person shall be construed as a
reference to Tax (other than Tax deducted or withheld from any payment)
imposed on that Person by the jurisdiction in which its principal
office (and/or, in the case of a Bank, its Facility Office) is located
on (1) the net income, profits or gains of that Person worldwide or (2)
such of its net income, profits or gains as arise in or relate to that
jurisdiction;
a time of the day is to London time unless otherwise stated; and
the "Winding-up" of a Person also includes the administration,
dissolution or liquidation or other like process of that Person, any
composition or arrangement with creditors, amalgamation,
reconstruction, reorganisation or consolidation pursuant to Part XIII
of the Companies Act proposed or carried out in respect of that Person
or a company voluntary arrangement pursuant to the Insolvency Act 1986
carried out or proposed in respect of that Person.
Headings shall be ignored in construing this Agreement.
2. THE FACILITIES
(A) Revolving Facility: The Revolving Banks grant to SWEB a Sterling
revolving credit facility of up to (pound)275,000,000. Each Revolving Bank will
participate through its Facility Office in each Revolving Advance in the
proportion borne by
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its Available Revolving Commitment to the Available Revolving Facility when the
Agent receives the notice requesting that Revolving Advance (unless, between
then and the time for making that Revolving Advance, its Available Revolving
Commitment is reduced to zero, in which case the amount of that Revolving
Advance will be reduced accordingly).
(B) Term Facility: The Term Banks grant to Southern UK a Sterling term loan
facility of (pound)325,000,000. Each Term Bank will participate through its
Facility Office in the Term Advance in the proportion borne by its Term
Commitment to the Available Term Facility when the Agent receives the notice
requesting that Term Advance (unless, between then and the time for making that
Term Advance, its Term Commitment is reduced to zero, in which case the amount
of that Term Advance will be reduced accordingly).
(C) Calculation of Available Commitments/Facility: In order to calculate the
amount of each Revolving Bank's Available Revolving Commitment and/or the
Outstandings under the Revolving Facility of any or all of the Revolving Banks
in connection with a proposed Revolving Advance:-
(1) any amount due (or otherwise required by this Agreement to be
repaid or prepaid) on or before the proposed date of that Advance shall
be deemed to have been repaid or prepaid and
(2) if any other requests are outstanding for Advances to be made on or
before the proposed date of that Advance, all Advances to which those
requests relate shall be deemed to be outstanding.
(D) Removal of Southern UK: If at any time after the Commitment Termination Date
there are no Term Advances outstanding, then with effect from such time, but
without prejudice to any rights or obligations accrued or incurred prior
thereto, references herein to "Southern UK" (except in the definition of Bonds
and in Clauses 12(B) and 22(G)) shall be construed as references to "SWEB" and
references to "Borrower" and "relevant Borrower" shall be construed accordingly
and Clause 22(G)(1) shall cease to apply.
(E) Purpose:
(1) The first Term Advances and Revolving Advances requested shall be
in an aggregate amount not less than that necessary fully to redeem, or
provide funds for the redemption of, all Bonds which remain outstanding
such that any such Revolving Advances made to SWEB (to the extent
required to provide funds for that redemption) shall be applied in the
payment and/or repayment of a lawful dividend to, or of outstanding
Indebtedness of SWEB owed to, Southern UK which will apply that
dividend and/or repayment and those Term Advances (to the extent
required) in the redemption of all outstanding Bonds.
(2) SWEB shall use the entire proceeds of each Revolving Advance for
general corporate purposes and in compliance with the Licence.
(3) Southern UK shall use the entire proceeds of each Term Advance for
general corporate purposes.
(4) General corporate purposes shall include refinancing, the back-stop
of any commercial paper or similar facility or programme and the
payment or making of any dividend or distribution.
(5) No Agent or Bank need check the use of proceeds of any Advance.
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3. CONDITIONS PRECEDENT
The first request for an Advance to be made to a Borrower shall not be made
until the Agent has confirmed to it that the Agent has received documents in
relation to that Borrower complying with the requirements of Schedule 1. The
Agent shall give confirmation of receipt of such documents to the Borrower
promptly after receiving all those documents.
SECTION II - REVOLVING FACILITY
4. DRAWDOWN UNDER REVOLVING FACILITY
(A) Drawdown Conditions: Revolving Advances will be made by the Revolving
Banks to SWEB if, in addition to the requirements of Clause 3, the following
additional conditions are fulfilled:-
(1) Drawdown Request: Not later than 10.00 a.m. on the Business Day
before the proposed date of the relevant Revolving Advance (or, as the
case may be, such later time as may be acceptable to the Agent and the
Revolving Banks for the purpose of the relevant request), the Agent has
received from SWEB a Notice of Drawing specifying:-
(a) the proposed date of that Revolving Advance, which
must be a Business Day before the Final Maturity Date;
(b) its amount (which must be equal to or less than the
Available Revolving Facility and, if less, must be
(pound)5,000,000 or a higher multiple of (pound)1,000,000);
(c) its Term, which must be in accordance with Clause 6(A)
and, in the case of the first Revolving Advance, shall be 1
month or such other period as may be agreed between SWEB and
the Banks; and
(d) details of the bank and account to which SWEB wishes the
proceeds of that Revolving Advance to be made available by the
Agent.
(2) Representations etc. Correct: All representations and warranties in
Clauses 19(A) to (E) (except to the extent waived in accordance with
Clause 30(B)) have been complied with and would be correct in all
material respects if repeated on the proposed date of that Revolving
Advance by reference to the circumstances then existing.
(3) No Event of Default etc.: No Event of Default (and, except in the
case of a Rollover Advance, no event or circumstance which, if it
continued after the giving of any notice or the expiry of any grace
period would become an Event of Default) has occurred on or before that
date and is continuing other than any waived in accordance with Clause
30(B).
(B) Number of Revolving Advances: No more than 15 Revolving Advances may be
outstanding at any time.
(C) Notification of Drawdown Requests: The Agent shall promptly (and in any
event by 5.00 p.m. on the Business Day before the proposed date of the Advance)
notify each Revolving Bank of the proposed details of, and the amount of that
Revolving Bank's share of, each Revolving Advance.
5. REPAYMENT OF REVOLVING ADVANCES
(A) Repayment of Revolving Advances: SWEB shall repay any Revolving Advance
made to it on the Repayment Date of such Revolving Advance, together with all
unpaid interest accrued on that Revolving Advance. However, any amount repaid in
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respect of a Revolving Advance before the Final Maturity Date will remain
available for reborrowing on the terms and conditions of this Agreement.
(B) Final Maturity Date: If on the Final Maturity Date any Revolving Advance
made to SWEB remains outstanding, SWEB shall repay that Revolving Advance on
that date together with all unpaid accrued interest and fees and any other sum
then due under this Agreement.
6. INTEREST ON REVOLVING ADVANCES
(A) Term of Revolving Advances: Interest shall be calculated on each Revolving
Advance by reference to the Term of that Revolving Advance. The Term shall begin
on the proposed date of that Revolving Advance and shall be of 1, 2, 3 or 6
months' duration (or of less than 1 month ending on the Final Maturity Date) or
for a period of 1 to 7 days duration as selected by SWEB in the Notice of
Drawing requesting that Revolving Advance or such other period as may be agreed
between SWEB and the Banks, except that SWEB may not select a Term ending after
the Final Maturity Date.
(B) Normal Interest Rate for Revolving Advances: The rate of interest applicable
to a Revolving Advance for all or any part of its Term shall be the rate per
annum equal to the sum of (1) the Margin, (2) the Associated Costs for that Term
and (3) the offered rate which is quoted as of 11.00 a.m. on the proposed date
of that Advance on page 3750 of the Telerate Monitor (or such other page as may
replace page 3750 for the purpose of displaying London inter-bank Sterling
offered rates of leading reference banks) as being the interest rate offered in
the London inter-bank market for Sterling deposits for the same period as that
Term (or, if the periods are not the same, such period as the Agent reasonably
determines to be substantially the same), provided that:-
(1) if the offered rate so appearing is replaced by the corresponding
rates of more than one bank then this Clause 6(B) shall be applied with
any necessary consequential changes, to the arithmetic mean (rounded,
if necessary, to the nearest 5 decimal places) of the rates (being at
least two) which so appear, as reasonably determined by the Agent; and
(2) if for any other reason such offered rate does not so appear, or if
the relevant page is unavailable, or the Term is for a period for which
such offered rate is not so quoted, the relevant arithmetic mean
(rounded as mentioned above) shall be determined on the basis of the
respective rates (as quoted to the Agent at its request) at which each
Reference Bank is offered Sterling deposits for that Term in an amount
comparable to its share, if any, of that Advance (or, if none, to 10%
of that Advance) by prime banks in the London inter-bank market at or
about 11.00 a.m. on the proposed date of that Advance.
(C) Notification of Interest Rates: The Agent shall promptly notify SWEB and the
Revolving Banks of each rate of interest determined in accordance with Clause
6(B).
(D) Payment of Interest: On the Repayment Date of a Revolving Advance, SWEB
shall pay the unpaid interest accrued on the Revolving Advance at the rate
applicable for its Term.
SECTION III - TERM FACILITY
7. DRAWDOWN UNDER TERM FACILITY
(A) Drawdown Conditions: Term Advances will be made by the Term Banks to
Southern UK at its request if, in addition to the requirements of Clause 3, the
following additional conditions are fulfilled:-
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(1) Drawdown Request: Not later than 10.00 a.m. on the Business
Day before the proposed date of the relevant Term Advance (or, as the
case may be, such later time as may be acceptable to the Agent and the
Term Banks for the purpose of the relevant request), the Agent has
received from Southern UK a Notice of Drawing specifying:-
(a) the proposed date of that Term Advance, which must be a
Business Day on or before the Commitment Termination Date;
(b) its amount (which must be equal to or less than the
Available Term Facility and, if less, must be of
(pound)5,000,000 or a higher whole multiple of
(pound)1,000,000);
(c) the duration of the first Interest Period relating to that
Advance, which must be in accordance with Clause 9(A) and in
the case of the first Term Advance shall be 1 month or such
other period as may be agreed between Southern UK and the
Banks; and
(d) details of the bank (which must be in the City of London)
and account to which Southern UK wishes the proceeds of that
Term Advance to be made available by the Agent.
(2) Additional Requirements: The conditions set out in paragraphs (2)
and (3) of Clause 4(A) (but as if the references in those paragraphs to
a Revolving Advance and the proposed date of that Revolving Advance
were references to the Term Advance and the proposed date of the Term
Advance) are fulfilled.
(B) Notification of Drawdown Requests: The Agent shall promptly (and in any
event by 5.00 p.m. on the Business Day before the proposed date of the Advance)
notify each Term Bank of the proposed details of, and the amount of that Term
Bank's share of, each Term Advance.
(C) Reduction of Term Commitments: Any part of the Term Commitments then undrawn
shall be automatically cancelled at the end of the Commitment Termination Date.
On each date on which a repayment or prepayment is due to a Term Bank in respect
of all or part of a Term Advance, the amount of its Term Commitment shall be
correspondingly reduced.
8. REPAYMENT OF TERM ADVANCES
Southern UK shall repay the Term Advances then outstanding on the Term Repayment
Date.
9. INTEREST ON TERM ADVANCES
(A) Interest Periods: Interest shall be calculated on each Term Advance by
reference to successive Interest Periods. In the case of each Term Advance, its
first Interest Period shall begin on the proposed date of that Advance and each
subsequent one shall begin on the last day of the previous one. Each Interest
Period shall be of 1, 2, 3 or 6 months' duration (or of less than 1 month ending
on the Term Repayment Date), or for a period of 1 to 7 days duration as selected
by Southern UK in a notice received by the Agent not later than 10.00 a.m. on
the Business Day before the first day of that Interest Period or such other
period as may be agreed between Southern UK and the Banks, except that Southern
UK may not select an Interest Period ending after the Term Repayment Date.
Subject to the provision above, any Interest Period for which no such selection
notice is received by the Agent shall be of 3 months' duration.
(B) Normal Interest Rate for Term Advances: The rate of interest applicable
for all or any part of a particular Interest Period shall be the rate per annum
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equal to the sum of (1) the Margin, (2) the Associated Costs and (3) the offered
rate which is quoted as of 11 a.m. on the first day of that Interest Period on
page "3750" of the Telerate Monitor (or such other page as may replace page 3750
for the purpose of displaying London inter-bank Sterling offered rates of
leading reference banks) as being the interest rate offered in the London
inter-bank market for Sterling deposits for the same period as that Interest
Period (or, if the periods are not the same, such period as the Agent reasonably
determines to be substantially the same) but:-
(1) if the offered rate so appearing is replaced by the corresponding
rates of more than one bank then this Clause 9(B) shall be applied with
any necessary consequential change to the arithmetic mean (rounded, if
necessary, to the nearest 5 decimal places) of the rates (being at
least two) which so appear, as reasonably determined by the Agent; and
(2) if for any other reason such offered rate does not so appear, or if
the relevant page is unavailable, or the Term is for a period for which
such offered rate is not so quoted, the relevant arithmetic mean
(rounded as mentioned above) shall be determined on the basis of the
respective rates (as quoted to the Agent at its request) at which each
Reference Bank is offered Sterling deposits for that Term in an amount
comparable to its share, if any, of that Advance (or, if none, to 10%
of that Advance) by prime banks in the London inter-bank market at or
about 11.00 a.m. on the first day of that Interest Period.
(C) Notification of Interest Periods and Rates: The Agent shall promptly notify
(1) the Term Banks of the duration of each Interest Period and (2) Southern UK
and the Term Banks of each rate of interest determined in accordance with Clause
9(B).
(D) Payment of Interest: On the last day of each Interest Period, Southern UK
shall pay the unpaid interest accrued during that Interest Period on the Term
Advance to which it relates at the rate applicable for that Interest Period.
SECTION IV - PREPAYMENT AND CANCELLATION
10. PREPAYMENT
(A) Of All Banks: A Borrower may prepay any Advance made to it, or any part of
it which is (pound)5,000,000 or a higher whole multiple of (pound)1,000,000
(provided that the outstanding amount of such Advance shall not thereby be
reduced to less than (pound)5,000,000), without premium or penalty at any time
if it gives to the Agent not less than 3 days' notice of the Advance to be
prepaid and the date and amount of the prepayment. Any such prepayment must be
accompanied by accrued interest on the amount prepaid and any other sum
determined as payable under Clause 24(B) (whether or not then due pursuant to
the provisions of that Clause)or any other provision of this Agreement.
(B) Of Certain Banks: Without prejudice to the rights of the Borrowers under
Clause 17, if (1) a Borrower becomes or will on or before the Repayment Date of
a Revolving Advance made to it or the next Interest Payment Date in respect of a
Term Advance made to it become obliged to pay any Tax or other amount for the
account of any Bank under Clause 13(B) or 15 or the Agent gives a notification
on behalf of a Bank under Clause 16(C), and (2) that Borrower gives to that Bank
not less than 3 days' notice of the date of prepayment, that Borrower may prepay
all (but not part only) of that Bank's share of all Advances made to that
Borrower and outstanding without premium or penalty on the date of prepayment
specified in that notice. Any such prepayment must be accompanied by all unpaid
accrued interest on that Bank's Outstandings, all unpaid fees accrued to that
Bank and any other sum determined as payable to that Bank under Clause 24(B)
(whether or not then due pursuant to the provisions of that Clause) or any other
provision of this Agreement.
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(C) Miscellaneous: Any notice of prepayment given by the Borrower under this
Agreement will oblige the Borrower to prepay in accordance with that notice.
Except as expressly provided in this Agreement, a Borrower may not repay or
prepay all or any part of an Advance made to it and may not reborrow any amount
repaid or prepaid.
11. CANCELLATION
(A) Of All Banks: The Available Revolving Facility and/or the Available Term
Facility, or any part of either or both of them which is or each of which is
(pound)25,000,000 or a higher whole multiple of (pound)5,000,000, may be
cancelled by the relevant Borrower without premium or penalty at any time before
the Final Maturity Date, in the case of the Revolving Facility, or the
Commitment Termination Date, in the case of the Term Facility, by giving to the
Agent not less than 3 days' notice of the date and amount of the cancellation
and the Facility to which such cancellation applies. Any such partial
cancellation shall reduce each relevant Bank's relevant Commitment rateably.
(B) Of Certain Banks: If a Bank's share of all Advances are prepaid by a
Borrower pursuant to Clause 10(B), the relevant Bank's Commitments (if any)
shall be cancelled upon the making of that prepayment. In addition, without
prejudice to the rights of the Borrowers under Clause 17, if any event specified
in Clause 10(B)(1) occurs and there are no Advances outstanding owing to the
relevant Bank, the relevant Borrower may, for so long as there continue to be no
outstanding Advances, cancel all (but not part only) of that Bank's Revolving
Commitment and/or Term Commitment (as the case may be) without premium or
penalty at any time before the Final Maturity Date, in the case of the Revolving
Facility, or the Commitment Termination Date, in the case of the Term Facility,
by giving to that Bank not less than 3 days' notice of the date of the
cancellation.
(C) Cancellation Rights Limited: A Borrower may not cancel all or any part of
the Commitments except as expressly provided in this Agreement.
SECTION V - FEES
12. FEES
(A) Arrangement Fee: Southern UK and SWEB shall severally pay to the Arranger an
arrangement fee in respect of underwriting, arrangement and participation fees
in an amount as stated in a letter of today's date from the Arranger to Southern
UK and accepted by Southern UK.
(B) Agency Fee: SWEB, failing whom Southern UK, shall pay to the Agent for its
own account an agency fee as stated in a letter of today's date from the Agent
to Southern UK and accepted by Southern UK.
(C) Revolving Facility Commitment Fee: SWEB shall pay a commitment fee in
respect of the Revolving Facility at the rate of 0.15% per annum on the amount
of each Revolving Bank's Available Revolving Commitment from day to day during
the period beginning on the date of this Agreement and ending on the Final
Maturity Date. That fee shall be payable in arrear quarterly from the date of
this Agreement and on the Final Maturity Date or any earlier date on which that
Bank's Revolving Commitment first equals zero.
SECTION VI - GENERAL PROVISIONS
13. TAXES
(A) Payments to be free and clear: All sums payable by a Borrower under this
Agreement shall be paid (1) free of any restriction or condition, (2) free and
clear of and (except to the extent required by law) without any deduction or
withholding for or on account of any Tax imposed, levied, collected, withheld or
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assessed by or within the United Kingdom and (3) without deduction or
withholding (except to the extent required by law) on account of any other
amount, whether by way of set-off or otherwise.
(B) Grossing-up of Payments:
(1) If a Borrower or the Agent must at any time deduct or withhold any such Tax
or other amount from any sum payable by that Borrower under this Agreement, that
Borrower shall pay such additional amount as is necessary to ensure that the
Agent or, as the case may be, the Bank to which that sum is due receives on the
due date and retains (free from any liability other than Tax on its own Overall
Net Income) a net sum equal to what it would have received and so retained had
no such deduction or withholding been required or made. However, if:-
(a) on the due date of a payment of interest to a Bank on an Advance,
that Bank is not a Qualifying Lender; and
(b) as a result, a Borrower is required to deduct or withhold United
Kingdom income tax from that payment of interest,
that Borrower shall not be so required to pay an additional amount in respect of
that deduction or withholding unless it results from the introduction of or any
change in, or in the interpretation or application of, any relevant law or any
relevant practice of the Inland Revenue after this Agreement is entered into nor
any additional amount in respect of a period or periods ending more than 60 days
prior to the date on which such additional amount first falls to be paid.
(2) If a Borrower or the Agent or any Bank must at any time pay any such Tax or
other amount on, or calculated by reference to, any sum received or receivable
by the Agent or any Bank under this Agreement (except for a payment by the Agent
or such Bank of Tax on its own Overall Net Income), that Borrower shall pay or
procure the payment of that Tax or other amount before any interest or penalty
becomes payable or, if that Tax or other amount is payable and paid by the Agent
or such Bank, shall reimburse it within 15 days on demand for the amount paid by
it (other than any penalties resulting from a failure by the Agent or such Bank
to pay such Tax when due).
(3) Within 30 days after paying any sum from which it is required by law to make
any deduction or withholding, and within 30 days after the due date of payment
of any Tax or other amount which it is required by paragraph (2) above to pay, a
Borrower shall deliver to the Agent evidence satisfactory to the Agent or, as
the case may be, the relevant Bank of that deduction, withholding or payment and
(where remittance is required) of the remittance thereof to the relevant taxing
or other authority.
(4) As soon as a Borrower or, as the case may be, the Agent or any Bank is aware
that any such deduction, withholding or payment is required (or of any change in
any such requirement), it shall (in the case of a Borrower) notify the Agent and
(in the case of the Agent or any Bank) notify the relevant Borrower.
(C) Tax Warranty by Banks: Each Bank severally warrants to each Borrower that it
is a Qualifying Lender. That warranty will be deemed to be repeated by each Bank
on the due date of each payment of interest to that Bank on an Advance unless
that Bank is not able to make it on that date as a result of the introduction of
or any change in, or in the interpretation or application of, any relevant law
or any relevant practice of the Inland Revenue after this Agreement is entered
into. If at any time after this Agreement is entered into any Bank is aware that
it is, or will become, unable to make that warranty (for whatever reason), it
shall promptly notify each Borrower. (D) Refund of Tax Credits:
If:-
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(1) a Borrower makes a payment under Clause 13(B)(1) or (2) (a "Tax
Payment") in respect of a payment to a Bank under this Agreement; and
(2) that Bank has obtained a refund of Tax or obtained and used a
credit against Tax on its Overall Net Income (a "Tax Credit") which
that Bank is able to identify as attributable to that Tax Payment,
then, if in its discretion it can do so without any further adverse consequences
for that Bank, that Bank shall reimburse that Borrower such amount as that Bank
in its discretion determines to be such proportion of that Tax Credit as will
leave that Bank (after that reimbursement) in no better or worse position in
respect of its worldwide Tax liabilities than it would have been in if no Tax
Payment had been required. The relevant Bank shall take those steps that it
considers reasonable to seek and claim any Tax Credit. However, no Bank shall be
obliged to disclose any information regarding its Tax affairs and computations.
14. ILLEGALITY
If as a result of the introduction of or any change in, or in the general
interpretation or application of any law or Directive after the date of this
Agreement it shall have become unlawful or contrary to any such Directive for
any Bank to allow all or part of any of its Commitments to remain outstanding,
to make, fund or allow to remain outstanding all or part of its Outstandings
and/or to carry out all or any of its other obligations under this Agreement
such Bank may notify the relevant Borrower and the Agent thereof with reasonable
details (together with documentation in support) of the relevant event or
circumstance whereupon:-
(A) if that Bank has no Outstandings owed by the relevant Borrower its
relevant Commitment (if any) shall be suspended (and accordingly that
Bank's obligations as a consequence of such Commitment to make Advances
shall be suspended) and, 30 days following such notification, shall be
cancelled; or
(B) if that Bank has Outstanding owed by the relevant Borrower, the
relevant Borrower shall prepay that Bank's share of each Advance made
to that Borrower on the Repayment Date of that Advance or, as the case
may be, on the next Interest Payment Date in respect of that Advance or
within 3 Business Days of that notification (whichever is later) (or on
such earlier date, if any, as shall be necessary to comply with the
law, any Directive having the force of law or any Directive of any
central banking authority) together with unpaid accrued interest
thereon, all unpaid fees accrued to that Bank and any other sum
determined as payable to that Bank under Clause 24(B) (whether or not
then due pursuant to the provisions of that Clause) or any other
provision of this Agreement and the Revolving Commitment (in the case
of a prepayment of a Revolving Advance) or, as the case may be, the
Term Commitment (in the case of a prepayment of a Term Advance), if
any, of that Bank shall be suspended and on such date shall
automatically be cancelled,
unless, in either case, prior thereto the relevant Borrower shall have given
notice to that Bank pursuant to Clause 17(B).
15. INCREASED COSTS
If any Bank determines that, as a result of the introduction of or any change
in, or in the interpretation or application of, any law or Directive (being a
Directive which, if not having the force of law, is applicable to a class or
category of banks or financial institutions generally which comprises the
relevant Bank) after the date of this Agreement:-
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(A) it incurs a cost in maintaining all or any part of its Commitments
and/or in making, maintaining or funding all or any part of its share
of any Advance or any overdue sum; and/or
(B) any sum received or receivable by it under this Agreement or the
effective return to it under this Agreement or the overall return on
its capital is reduced (except on account of Tax on its Overall Net
Income); and/or
(C) it makes any payment (except on account of Tax on its Overall Net
Income) or forgoes any interest or other return on or calculated by
reference to the amount of any sum received or receivable by it under
this Agreement,
the relevant Borrower shall indemnify it against that cost, reduction, payment
or forgone interest or other return (except to the extent that it results from
any requirement, other than a capital adequacy requirement, referred to in
paragraph 3 of Schedule 5 or which is otherwise compensated by virtue of
Schedule 5 or a deduction or withholding of Tax) and, accordingly, shall from
time to time and within 15 days of demand (whenever made) pay to the Agent for
its own account or, as the case may be, for the account of that Bank the amount
certified by it in reasonable detail (together with documentation in support) to
be necessary so to indemnify it, provided that no Borrower will be liable to
indemnify any Bank pursuant to this Clause 15 in respect of any period or
periods ending prior to the date falling 60 days before the date such demand is
made.
Under this Clause 15, a Bank shall be entitled to claim indemnification not only
for a cost, reduction, payment or forgone interest or other return directly
attributable to this Agreement, its Commitments, its share of any Advance or any
overdue sum, but also for that proportion of any cost, reduction, payment or
forgone interest or other return which the Bank determines to be fairly
allocable to this Agreement, its Commitments, its share of any Advance or any
overdue sum in relation to any law or Directive applicable to that Bank or
affecting the conduct of that Bank's business or a type of business or the
manner in which or the extent to which that Bank allocates capital resources.
This Clause 15 shall not oblige a Borrower to compensate any Bank for any cost,
reduction, payment or forgone interest or other return which results from the
implementation, as contemplated on the signing of this Agreement, of the matters
set out in the July 1988 report of the Basle Committee on Banking Regulations
and Supervisory Practices entitled "International Convergence of Capital
Measurement and Capital Standards" or any relevant European Union directives on
capital measurement and standards, and solvency ratios, unless it results from
any change after the signing of this Agreement in, or in the interpretation or
application of, such matters as contemplated on the signing of this Agreement.
16. CHANGE IN MARKET CONDITIONS
(A) Triggering Events: If in relation to any Revolving Advance or, as the
case may be, any Interest Period in respect of a Term Advance:-
(1) no, or only one, Reference Bank supplies a quotation as and when
required by Clause 6(B) or, as the case may be, 9(B); or
(2) the Agent is notified by Banks to whom more than 50% of that
Advance is (or, if made, would be) owing by not later than 12.00 noon
on the first day of that Term or, as the case may be, any Interest
Period that such Banks are unable to obtain matching deposits in the
London inter-bank market at or about 11.00 am on the rate fixing day
for that Term or, as the case may be, that Interest Period in
sufficient amounts to fund their respective shares of such Advance
during that Term or, as the case may be,
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that Interest Period the Agent shall promptly notify the relevant
Borrower and the following provisions of this Clause shall apply.
(B) Negotiation: The Agent (on behalf of and after consultation with the
relevant Banks (in the case of paragraph (1)) or the affected Banks (in the case
of paragraph (2)) shall then negotiate with the relevant Borrower with a view to
agreeing an alternative basis for calculating the interest payable on the
relevant Advance for its Term or, as the case may be, the relevant Interest
Period. Any alternative basis agreed in writing by the Agent (on behalf of and
with the consent of all the relevant or, as the case may be, affected Banks) and
the relevant Borrower within 25 days of the Agent's notification of the event in
question shall take effect in accordance with its terms.
(C) Consequences in relation to Advances: If an alternative basis is not so
agreed, each such Bank's share of the relevant Advance shall during its Term or,
as the case may be, the relevant Interest Period bear interest at the rate per
annum equal to the sum of the Margin, the Associated Costs and the cost to it
(expressed as a rate per annum) of funding its share during its Term or, as the
case may be, that Interest Period by whatever means it reasonably determines to
be appropriate. Each such Bank shall certify that cost in reasonable detail to
the relevant Borrower as soon as practical after the end of that 25 day period
(but in any event at least 2 Business Days before the end of that Interest
Period).
(D) Unaffected Banks: Interest payable in respect of the Term or, as the case
may be, an Interest Period of an Advance to a Bank which has not notified the
Agent pursuant to Clause 16(A)(2) shall be calculated as provided in Clause 6 or
9, as the case may be.
17. MITIGATION AND SUBSTITUTION OF BANKS
(A) Mitigation: If any circumstances arise which result or any Bank becomes
aware of circumstances which might result, or would on the giving of notice (or
the like) result, in a Borrower having to make a payment to or for the account
of a Bank under Clause 13(B)(1) or (2), 14(B) or 15, or in a Bank's Commitment
or Commitments being cancelled under Clause 14(A) or in the event of a Bank
giving notice to the Agent pursuant to Clause 16(A)(2), then without in any way
limiting, reducing or otherwise qualifying any of the obligations of any
Borrower under Clauses 13 to 16 and without prejudice to Clause 17(B):-
(1) promptly after an officer of that Bank with responsibility for its
participation in the relevant Facility becomes aware of the relevant
circumstances and their results, that Bank shall notify the relevant
Borrower; and
(2) in consultation with each Borrower and the Agent, that Bank shall
take all such steps (if any) as it determines are reasonably open to it
and as are acceptable to each Borrower to mitigate the effect of those
circumstances (such as changing its Facility Office, restructuring its
participation in the relevant Facility and/or novating or assigning
some or all of its rights or obligations under this Agreement to
another Person acceptable to each Borrower and willing to take that
novation or assignment).
(B) Substitution: Notwithstanding Clause 17(A), if a Borrower is required to
make a payment to or for the account of a Bank under Clause 13(B)(1) or (2),
14(B) or 15, or a notice is given by a Bank pursuant to Clause 14(A) or Clause
16(A)(2), then the relevant Borrower, at its expense, at any time within 180
days after the occurence of the relevant event or circumstance, so long as no
Event of Default shall have occurred and be continuing, may by notice to such
Bank require it to novate its rights and obligations hereunder (including its
Commitments and Outstandings) in accordance with Clause 29 at, in the case of
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Outstandings, their principal amount plus accrued interest, to a bank or
financial institution specified by the relevant Borrower which is willing to
take such a novation as aforesaid, provided that:-
(1) such novation shall not conflict with or violate any law applicable
to or binding on such Bank; and
(2) that Borrower shall have paid to the Bank all amounts (other than
interest) accrued and owing hereunder.
Notwithstanding the above, a Borrower shall not be entitled to require a
novation under this Clause 17(B) with respect to any Bank if (i) the relevant
Bank shall have mitigated the effect of the relevant event or circumstance as
provided in Clause 17(A)(2) and the novation would have no greater or further
mitigating effect or (ii) the relevant event of circumstances are applicable to
all the Banks.
18. PAYMENTS
(A) Manner of Payments: On each date on which an Advance is to be made, each
Bank shall make its share of that Advance available to the Agent, and on each
date on which any sum is due from a Borrower it shall make that sum available to
the Agent, by payment in Sterling in immediately available cleared funds by not
later than 11.00 a.m., to the Agent's account CHAPS Code 16-55-80 or, as the
case may be, such other account of the Agent and/or with such other bank in the
City of London as the Agent shall have designated to it for that purpose.
(B) Disbursement to Borrower: The Agent shall make the amounts so received by it
from the Banks available to the relevant Borrower before close of business in
the City of London on that date by payment in the same funds as received by the
Agent to such account with such bank as that Borrower shall have specified in
the relevant Notice of Drawing. If any Bank makes its share of an Advance
available to the Agent later than required by Clause 18(A), the Agent shall
(without prejudice to any rights the relevant Borrower may have against such
Bank in respect thereof) make that share available to the relevant Borrower as
soon as practicable thereafter. Notwithstanding Clause 18(A) and this Clause
18(B), the Banks agree that funds in respect of the Advances to be made for the
purpose of Clause 2(E)(1) shall be made available as directed by the relevant
Borrower not later than 10.00 a.m. on the date of such Advances.
(C) Distribution to Banks: The Agent shall make available to each Bank before
close of business in the City of London on that date its pro rata share (if any)
of any sum so received by the Agent from a Borrower in the same funds as
received by the Agent to such account of that Bank with such bank in the City of
London as it shall have designated to the Agent for that purpose. If any sum is
received by the Agent from a Borrower later than required by Clause 18(A), the
Agent shall make each Bank's share (if any) available to it as soon as
practicable thereafter.
(D) Netting of Payments: Notwithstanding any other provision of this Agreement
if on any date an amount (the "first amount") is to be advanced by a Bank to a
Borrower under this Agreement and an amount (the "second amount") is due from
that Borrower to that Bank under this Agreement, that Bank shall apply the first
amount in or towards payment of the second amount. The relevant Bank shall
remain obliged to advance any excess (or, as the case may be, the relevant
Borrower shall remain obliged to pay any shortfall) in accordance with this
Clause 18. Nothing in this Clause 18(D) shall be effective to create a charge.
(E) Order of Distribution: If the amount received by the Agent from a Borrower
on any date is less than the total sum remaining and/or becoming due under this
Agreement from that Borrower on that date, the Agent shall apply that amount in
or towards payment of the following sums in the following order:-
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(1) first, any sum then due to the Agent in its capacity as such from
that Borrower;
(2) secondly, in or towards payment pro rata of any sums (other than
principal of or interest on the Advances) then due to the Banks (or any
of them) from that Borrower;
(4) thirdly, in or towards payment pro rata of any interest then due on
the Advances from that Borrower; and
(5) fourthly, in or towards payment pro rata of any principal then due
from that Borrower.
Any such applications shall override any purported appropriation by any Person.
For this purpose, the Agent may (if and to the extent necessary) convert one
currency into another.
(F) Refunding of Payments: The Agent shall not be obliged to (but may) make
available to any Person any sum which it is expecting to receive for the account
of that Person until it has been able to establish that it has received that
sum. If and to the extent that it does so but it transpires that it had not then
received the sum which it paid out:-
(1) the Person to whom the Agent made that sum available shall on
request refund it to the Agent; and
(2) that Person or (at the option of the Agent) the Person by whom that
sum should have been made available shall on request pay to the Agent
the amount (as certified by the Agent) which will indemnify the Agent
against any funding or other cost, loss, expense or liability sustained
or incurred by it as a result of paying out that sum before receiving
it.
The Agent may not request a Borrower to refund any sum made available to it by
the Agent except to the extent that the Agent has still not received that sum
from the Bank(s) in question by close of business in the place of payment on the
second Business Day after the date on which the Agent made that sum available to
that Borrower.
(G) Non-Business Days:
(1) If any Repayment Date, any Interest Payment Date or the Final Maturity Date
would otherwise fall on a non-Business Day, it shall instead fall on the next
Business Day in the same calendar month (if there is one) or the preceding
Business Day (if there is not).
(2) Any payment to be made by the Borrower on a day which is not a Repayment
Date or, as the case may be, an Interest Payment Date or the Final Maturity Date
and which would otherwise be due on a non-Business Day shall instead be due on
the next Business Day.
(3) Any Term and any Interest Period will end on the last day of a calendar
month if it is for a complete number of months and either:-
(a)it commenced on the last Business Day of a calendar month; or
(b)it commenced on a day for which there is no corresponding day in the
month in which it is due to end.
SECTION VII - WARRANTIES, UNDERTAKINGS, DEFAULT, ETC
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19. REPRESENTATIONS AND WARRANTIES
Each of Southern UK and SWEB severally represents and warrants to and for the
benefit of each of the Agent and the Banks (but only in relation to itself and
its Subsidiaries) as follows:-
(A) Status: It is a limited liability company incorporated under the
Companies Act 1985 in England and Wales.
(B) Powers: It has the power to enter into, exercise its rights and
perform and comply with its obligations under this Agreement.
(C) Authorisation and Consents: All action, conditions and things
required by the laws of England to be taken, fulfilled and done
(including the obtaining of any necessary Consents) in order:-
(1) to enable it lawfully to enter into, exercise its
rights and perform and comply with its obligations under this
Agreement;
(2) to ensure that those obligations are valid, legally
binding and enforceable;
(3) to ensure that those obligations rank and will at all
times rank in accordance with Clause 21(A); and
(4) to make this Agreement admissible in evidence in the
courts of England,
have been taken, fulfilled and done.
(D) Non-Violation of Laws etc.: Its entry into, exercise of its rights
and/or performance of or compliance with its obligations under this
Agreement do not and will not violate, or exceed any borrowing or other
power or restriction granted or imposed by:-
(i) any law to which it is subject and violation of which
has or is likely to have a Material Adverse Effect on it; or
(ii) its Memorandum or Articles of Association.
(E) Obligations Binding: Its obligations under this Agreement are
valid, binding and enforceable.
(F) Non-Violation of other Agreements: Its entry into, exercise of its
rights and/or performance of or compliance with its obligations under
this Agreement do not and will not violate, to an extent or in a manner
which has or is likely to have a Material Adverse Effect on it, any
agreement to which it is a party or which is binding on it.
(G) No Event of Default: No Event of Default has occurred and is
continuing, or will occur as a result of making any advance under the
Facilities, other than any which have been waived.
(H) No Material Adverse Change: Other than as disclosed in writing to
the Arranger prior to the date of this Agreement or in information
which has become generally available to the public, there has been no
material adverse change in its financial condition or operations since,
in the case of SWEB, 31 March, 1995 and, in the case of Southern UK, 23
June, 1995 (being its date of incorporation), nor in the respective
consolidated financial condition or operations of it and its
Subsidiaries since that date.
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(I) Litigation: So far as it is aware, no litigation, arbitration or
administrative proceeding is current, pending or threatened:-
(i) to restrain the entry into, exercise of any of its
rights under and/or performance or enforcement of or
compliance with any of its obligations under this Agreement;
or
(ii) which has or is likely to have a Material Adverse
Effect on it.
(J) Winding-up: No meeting has been convened for its winding-up and, so
far as it is aware, no petition, application or the like is outstanding
for its winding-up.
(K) Information: So far as it is aware, the information provided by it
to the Banks in connection with the Facilities was true and accurate in
all material respects at the date so provided.
(L) Repetition: Each of the representations and warranties in Clauses
19(A) to (E) will be correct and complied with in all material respects
on each date on which a Term Advance is made and on each date on which
a Revolving Advance is made as if repeated then by reference to the
then existing circumstances.
Each representation and warranty in Clauses 19(C) and (E) shall (where
applicable) be subject, as to matters of law only, to the qualifications in the
legal opinion delivered under Clause 3.
20. INFORMATION
Each of Southern UK and SWEB severally undertakes (but only in relation to
itself and its Subsidiaries) that, so long as any sum remains to be lent or
remains payable under this Agreement:-
(A) Audited Annual Accounts: As soon as available and in any event
within 180 days after the end of each of its financial years (beginning
with the accounting reference period ended on 31 December, 1995), it
will deliver to the Agent copies of its annual report and audited
consolidated accounts (unless it does not prepare consolidated
accounts, in which case it will deliver its non-consolidated accounts)
as at the end of and for that financial year, together with copies of
the related directors' and auditors' reports.
(B) Semi-Annual Information: As soon as available and in any event
within 90 days after the end of the first six months of each of its
financial years (beginning with the first to end after the date of this
Agreement), it will deliver to the Agent copies of the unaudited
consolidated accounts (unless it does not prepare consolidated
accounts, in which case it will deliver its non-consolidated accounts)
as at the end of and for that six month period. (C) Litigation: It will
promptly deliver to the Agent for distribution to the Banks a
description of any litigation, arbitration or administrative proceeding
which, if to its knowledge it had been current, pending or threatened
at the date of the Agreement, would have rendered the representation
and warranty in Clause 19(I) incorrect.
(D) Events of Default: It will promptly notify the Agent of the
occurrence of any Event of Default.
(E) Other Information: The Agent may from time to time request each
of Southern UK and SWEB to deliver to it such further information
relating to their respective assets, businesses and/or financial
conditions as may be
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reasonably necessary in order to enable the Banks to monitor the
compliance of the Borrowers with their respective obligations under
this Agreement or as may otherwise be material in the context of the
proper administration and maintenance of this Agreement by the Agent
and each of the Banks. Each of Southern UK and SWEB severally
undertakes (in relation to such information relating to itself and its
Subsidiaries) that it will deliver all information so requested to the
Agent as soon as reasonably practicable.
21. UNDERTAKINGS
(A) (1) Ranking of Obligations: Each of Southern UK and SWEB severally
undertakes (but only in relation to itself) that, so long as any sum remains to
be lent or remains payable under this Agreement, its payment obligations under
this Agreement rank and will at all times rank at least equally and rateably in
all respects with all its other unsecured Indebtedness except for such unsecured
Indebtedness as would be mandatorily preferred by law.
(B) Southern UK undertakes (but in relation to Clause 21(B)(3) only to the
Revolving Banks) that, so long as any sum remains to be lent or remains payable
under this Agreement:-
(1) Negative Pledge: It will not and will ensure that none of its
Material Subsidiaries will create after the date of this Agreement any
Security on or over their respective Assets to secure the payment of
Indebtedness in respect of Borrowed Money of any Person except for:-
(i) any Security created under or in connection with or
arising out of any pooling and settlement agreements
(including, but without limitation, the Pooling and Settlement
Agreement) or pooling and settlement arrangements of the
electricity supply industry or any transactions or
arrangements entered into in connection with the management of
risks relating thereto;
(ii) in respect of overdue amounts which have not been overdue
for more than 30 days and/or are being contested in good
faith, liens arising solely by operation of law or by order of
a court or tribunal (or by an agreement of similar effect)
and/or in the ordinary course of business or operations;
(iii) any Security created after the date of this Agreement
for the sole purpose of re-financing all or any part of either
Facility (at the option of Southern UK) provided that the
monies borrowed or raised on such Security shall, to that
extent, be applied in accordance with this Agreement in or
towards repayment of the relevant Facility;
(iv) any Security arising out of title retention provisions in
a supplier's standard conditions of supply of goods acquired
in the ordinary course of business or operations;
(v) any Security created on any Asset acquired after the date
of this Agreement for the sole purpose of financing or
re-financing that acquisition and securing a principal,
capital or nominal amount not exceeding the cost of that
acquisition;
(vi) any Security outstanding on or over any Asset acquired
after the date of this Agreement and in existence at the date
of such acquisition;
(vii) any Security created or outstanding on or over any Asset
of any company which becomes a Material Subsidiary of Southern
UK after
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the date of this Agreement where such Security is created
prior to the date on which such company becomes a Material
Subsidiary of Southern UK;
(viii) any Security created on any Asset to secure any
Indebtedness in respect of Borrowed Money incurred in
connection with the financing of any Asset or project in
respect of which the repayment of that Borrowed Money is to be
made from the revenues arising out of, or other proceeds of
realisation from, that Asset or project, with recourse to
those revenues and proceeds and other Assets used in
connection with, or forming the subject matter of, that Asset
or project but without recourse (or with such limited recourse
as the Majority Banks may from time to time agree) to any
other Assets of the Group;
(ix)any Security created or outstanding with the prior
approval of the Majority Banks; and
(x) any Security created or outstanding on or over Assets of
Southern UK or any of its Material Subsidiaries provided that
the aggregate outstanding principal or nominal amount secured
by all Security created or outstanding under this exception on
or over such Assets shall not at any time exceed
(pound)25,000,000 or its equivalent.
(2) Disposals:
(i) Southern UK will not, and will ensure that no other member
of the Group will, (whether by a single transaction or a
number of related or unrelated transactions and whether at one
time or over a period of time) sell, transfer or lease or
otherwise dispose of or cease to exercise control over all or
substantially all of its Assets (other than cash) or any part
of its Assets (other than cash) which is substantial in the
context of the consolidated total assets of the Group.
(ii) The following disposals shall not be taken into account
under Clause 21(B)(2)(i):-
(a) disposals in the ordinary course of business or
operations (including, without limitation, disposals
of subsidiaries or lines of business, provided that
this shall not include a disposal of the core
electricity distribution business);
(b) disposals on normal commercial terms of
obsolete assets or assets no longer required for the
purpose of the relevant Person's business or
operations;
(c) the realisation of investments acquired,
purchased or made by the temporary application of
funds not immediately required in the relevant
Person's business or operations;
(d) the exchange of Assets for other Assets of a
similar nature and value, or the sale of Assets on
normal commercial terms for cash which is payable in
full on the completion of the sale and is to be, and
is, applied in or towards the purchase of similar
Assets within 6 months;
(e) the disposal of Assets by one wholly-owned
Subsidiary of Southern UK to another or (if the
consideration for the disposal does not exceed a
normal commercial consideration) to Southern UK by
one of its Subsidiaries;
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(f) disposals of any National Grid shares on normal
commercial terms;
(g) disposals in connection with sale-and-leaseback
or sale and repurchase transactions or any other form
of "off balance sheet" financing, provided that the
aggregate book value (in the books of the disposing
party) of all Assets the subject of all such
disposals made during the period commencing on the
date of this Agreement and ending on the date when no
amount remains to be lent or remains payable under
this Agreement shall not exceed (pound)50,000,000;
and
(h) any disposal which the Majority Banks shall have
agreed shall not be taken into account.
(3) Financial Undertaking:
At the end of each, and of the first six months of each,
financial year of SWEB (commencing with the current financial
year) the ratio of PBIT to Debt Service for, in the case of
the first application of this paragraph, the six month period
ending on 30 June 1996 or any shorter period commencing on 1
January 1996 and ending on any accounting reference date
falling prior to 30 June 1996 and, in every other case, for
the twelve month period then ending will not be less than 2.0
to 1.
(4) Financial Statements: If any financial statement delivered or
to be delivered to the Agent under Clause 20(A) or (B) is not to be or,
as the case may be, has not been prepared in accordance with Applicable
Accounting Principles:-
(a) SWEB and the Agent (on behalf of and after consultation
with all the Banks) shall, on the request of the Agent or
SWEB, negotiate in good faith with a view to agreeing such
amendments to the above financial ratios and/or the
definitions of the terms used in them as are necessary to give
the Banks comparable protection to that contemplated at the
date of this Agreement.
(b) If amendments are agreed by SWEB and the Majority Banks
within 25 days, those amendments shall take effect in
accordance with the terms of that agreement.
(c) If such amendments are not so agreed within 25 days, SWEB
shall:-
(i)within 30 days after the end of that 25 day period
and
(ii)with all subsequent financial statements to be
delivered to the Agent under Clause 20(A) or (B)
deliver to the Agent details of all such adjustments as need
to be made to the relevant financial statements to bring it
into line with the Companies Act 1985 (as in effect on the
date of this Agreement) and Applicable Accounting Principles.
(C) Environmental and other Applicable Law: Southern UK will and will ensure
that its Material Subsidiaries will comply with all applicable Environmental Law
and other regulations, orders or other law applicable to the conduct of the
business of the supply or distribution of electricity, in each case, where
failure to do so would have a Material Adverse Effect.
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(D) Release of Security: Southern UK shall procure the release of the security
granted in respect of the Bonds upon or promptly following the redemption of all
the Bonds. Promptly following that release, Southern UK will deliver to the
Agent a copy of the document evidencing or effecting that release.
(E) Accounting Reference Period: SWEB shall use all reasonable endeavours to
procure formal confirmation within 30 days of the date of this Agreement (or
such longer period as the Majority Banks may agree) of approval by the Director
General of Electricity Supply to the financial year of SWEB ending each year on
31 December, failing which SWEB shall promptly take those steps necessary to
specify a new accounting reference date in compliance with the Licence.
22. EVENTS OF DEFAULT
The following are Events of Default:-
(A) Non-Payment: Either Borrower fails to pay any sum payable under
this Agreement when due and such failure continues for a period of 5
Business Days after notice of such failure has been given to it by the
Agent.
(B) Breach of Financial Undertakings or Certain Other Obligations:
Southern UK or SWEB does not perform or comply with its respective
obligations under Clause 21(B)(1),(2) or (3).
(C) Breach of Representation or Warranty:
(1) A Borrower does not perform or comply with any of its
other obligations under this Agreement in any material respect
or any representation or warranty by a Borrower in this
Agreement or in any document delivered under it is or proves
to have been incorrect when made or deemed repeated and, in
any such case, if capable of remedy, is not remedied within 45
days after notice has been given to the relevant Borrower by
the Agent requiring the same to be remedied.
(2) Any written representation or warranty contained in any
letter or notice from either Borrower included in the
Information Memorandum is untrue in any material respect at
the date thereof.
(D) Cross Default: Any other Indebtedness of a Borrower for Borrowed
Money becomes due and payable before its normal maturity (whether by
declaration or automatically) by reason of default on the part of that
Borrower or is not paid when due nor within any applicable grace
period, other than in circumstances where such default or liability to
pay is being contested in good faith and by appropriate proceedings.
However, (1) no Event of Default will occur under this Clause 22(D)
unless and until the aggregate amount of such Indebtedness in respect
of which one or more of the events mentioned above in this Clause 22(D)
has occurred exceeds (pound)20,000,000 or its equivalent and (2) no
Term Event of Default will occur under this Clause 22(D) solely as a
consequence of a breach by SWEB of Clause 21(B)(3).
(E) Insolvency: A Borrower is declared by a court of competent
jurisdiction to the insolvent or a winding-up order is made by a court
of competent jurisdiction in respect of a Borrower.
(F) Enforcement Proceedings: A distress, attachment, execution or other
legal process material in relation to the relevant Borrower's ability
to perform its payment obligations under this Agreement is levied,
enforced or sued out on or against the Assets of a Borrower and is not
discharged or stayed within 90 days.
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(G) Control: (1) SWEB ceases to be Controlled, directly or indirectly,
by Southern UK, (2) SWEB ceases to be Controlled, directly or
indirectly, by The Southern Company, a corporation organised under the
laws of the State of Delaware.
(H) Licence: Either (1) the Secretary of State gives notice in writing
of the unconditional revocation of the Licence in accordance with the
terms as to revocation set out in Schedule 2 to the Licence and that
notice is not withdrawn or being contested in good faith by appropriate
proceedings or (2) the Licence is revoked, in either case, other than
in circumstances which permit SWEB or another member of the Group to
carry on the distribution business of SWEB either without a licence as
a result of any change in the Act or with a new public electricity
supply licence issued under the Act.
(I) Pooling and Settlement Agreement: SWEB ceases to be a party to the
Pooling and Settlement Agreement other than in circumstances where SWEB
or another member of the Group is able to carry on the distribution
business of SWEB.
If at any time and for any reason (and whether within or beyond the control of
any party to this Agreement) any Revolving Event of Default has occurred and is
continuing, the Agent, if so instructed by the Majority Revolving Banks, shall
by notice to Southern UK declare:-
(1) the Revolving Commitments to be cancelled, whereupon they shall be
cancelled; and/or
(2) all Revolving Advances, all unpaid accrued interest or fees and any
other sum then payable under the Revolving Facility to be immediately
due and payable, whereupon they shall become so due and payable.
If at any time and for any reason (and whether within or beyond the control of
any party to this Agreement) any Term Event of Default has occurred and is
continuing, the Agent, if so instructed by the Majority Term Banks, shall by
notice to Southern UK declare:-
(1) the Term Commitments to be cancelled, whereupon they shall be
cancelled and/or
(2) all Term Advances, all unpaid accrued interest or fees and any
other sum then payable under the Term Facility to be immediately due
and payable, whereupon they shall become so due and payable.
23. DEFAULT INTEREST
(A) Interest on Overdue Sums: If a Borrower does not pay any sum payable under
this Agreement when due, it shall pay interest on the amount from time to time
outstanding in respect of that overdue sum for the period beginning on its due
date and ending on the date of its receipt by the Agent (both before and after
judgment) in accordance with this Clause 23. For the purpose of this Clause 23,
if any payment is received by the Agent on the due date, but after the time
required by Clause 18(A) and too late to be made available by the Agent on that
due date to the Person(s) entitled to it under Clause 18(E), that payment shall
be deemed to be received on the next Business Day (but the Agent will give
credit to the relevant Borrower for any interest earned by the Agent on the
relevant sum pending distribution to such Person(s)).
(B) Default Interest Periods and Rates: Interest under this Clause 23 shall be
calculated by reference to successive Interest Periods, each of which (other
than the first, which shall begin on the due date) shall begin on the last day
of the previous one. Each such Interest Period shall be of 3 months or such
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shorter period as the Agent may from time to time select and the rate of
interest applicable for all or any part of a particular Interest Period shall be
the rate per annum equal to the sum of 1% and the rate which would be applicable
to that overdue sum for (or, as the case may be, for that part of) that Interest
Period under Clause 9(B) if that overdue sum were a non Term Advance, except as
follows:-
(1) Subject to the following exceptions, until the third Business Day
after the Agent becomes aware of the relevant default, each Interest
Period relating to the relevant overdue sum shall be an "overnight"
period beginning on one Business Day and ending on the next and the
rate of interest for a particular "overnight" period shall be the rate
per annum equal to the sum of 1%, the Margin, the Associated Costs and
the arithmetic mean (rounded, if necessary, to the nearest 5 decimal
places) of the respective rates quoted by each Reference Bank to the
Agent on request as the rate at which it is offering "overnight"
deposits in the currency of that overdue sum for that period in amounts
comparable to that overdue sum.
(2) If the overdue sum is of principal of an Advance and becomes due
before the last day of its Term, in the case of a Revolving Advance, or
otherwise than on the last day of an Interest Period relating to that
Advance, in the case of a Term Advance, the first Interest Period
applicable to that overdue sum shall end on that last day and the rate
of interest applicable to that sum for that Interest Period shall be
the rate per annum equal to the sum of 1% and the rate applicable to it
immediately before it became due.
(3) If any event mentioned in Clause 16(A) occurs in relation to any
Interest Period applicable to an overdue sum, the rate of interest
payable on each Person's share of that sum for all or any part of that
Interest Period shall be the sum of 1%, the Margin, the Associated
Costs and the cost to that Person (as certified by it and expressed as
a rate per annum) of funding its share during that Interest Period by
whatever means it reasonably determines to be appropriate.
(4) Any Interest Period which would otherwise end on a non-Business Day
shall instead end on the next Business Day in the same calendar month
(if there is one) or the preceding Business Day (if there is not).
(C) Notification, Payment and Compounding of Default Interest: The Agent shall
promptly notify the relevant Borrower and the relevant Banks of each rate of
interest determined by it in accordance with this Clause 23. Interest accrued
under this Clause 23 shall be due on the last day of the relevant Interest
Period. If not paid when due, the interest shall be added to the overdue sum and
itself bear interest accordingly.
24. INDEMNITIES
(A) Miscellaneous Indemnities: A Borrower shall within 15 days of demand
indemnify the Agent and each Bank against any funding or other cost, loss,
expense or liability in an amount certified by it in reasonable detail (together
with documentation in support) sustained or incurred by it as a result of:-
(1) an Advance to be made to that Borrower not being made by reason of
non-fulfilment of any of the conditions in Clause 4(A) or 7(A) or not
being made by reason of that Borrower purporting to revoke a notice
requesting an Advance; or
(2) the receipt or recovery by any party (or the Agent on its behalf)
of all or any part of an Advance or overdue sum due from that Borrower
otherwise than on, in the case of a Revolving Advance, the Repayment
Date
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of that Advance or, in the case of a Term Advance or an overdue sum,
the last day of an Interest Period relating to that Term Advance or
that overdue sum, as the case may be.
(B) Broken Funding Costs: In the case of Clauses 24(A)(1) and (2) above, the
amount payable shall in any event include the amount (if any) by which:-
(1) the amount of interest which the relevant Person is able to obtain
by placing an amount equal to its share of the relevant Advance or
overdue sum on deposit in the London inter-bank market, for the
remainder of the relevant Term or Interest Period, as soon as
reasonably practicable after it becomes aware of the relevant event
referred to in Clause 24(A)(1) or (2)
is less than:-
(2) the amount of interest (other than in respect of Associated Costs
or, in the case of the application of Clause 14 only, Margin) which, in
accordance with the expressed terms of this Agreement, would otherwise
be payable to that Person on its share of that Advance for its Term or
Interest Period or (as the case may be) on the relevant amount so
received or recovered for the remainder of the relevant Term or
Interest Period.
(C) Indemnities Separate: Each of the indemnities in this Agreement constitutes
a separate and independent obligation from the other obligations in this
Agreement, shall give rise to a separate and independent cause of action, shall
apply irrespective of any indulgence granted by the Agent and/or any Bank and
shall continue in full force and effect despite any judgment, order, claim or
proof for a liquidated amount in respect of any sum due under this Agreement or
any other judgment or order.
SECTION VIII - AGENT AND BANKS
25. THE AGENT
(A) Appointment of Agent: Each Bank irrevocably appoints the Agent to act as its
agent for the purpose of this Agreement and authorises it to take such action
and exercise such rights, powers and discretions as are specifically delegated
to it by this Agreement and such other action, rights, powers and discretions as
are reasonably incidental. However, the Agent may not begin any legal action or
proceeding in the name of a Bank without its consent. The relationship between
the Agent and the Banks is of agent and principal only. The Agent shall not be a
trustee for any Bank, nor an agent or trustee for a Borrower, under or in
relation to this Agreement.
(B) Agent's Duties: The Agent shall:-
(1) promptly send to each Bank details of each communication received
by it from a Borrower under this Agreement, except that details of any
communication relating to a particular Bank shall be sent to that Bank
only;
(2) promptly send to each Bank a copy of any legal opinion delivered
under this Agreement and of any document or information received by it
under Distribution System Clause 20;
(3) subject to the other provisions of this Clause 25, act in
accordance with any instructions from the Majority Banks or, if so
instructed by the Majority Banks, refrain from exercising a right,
power or discretion vested in it under this Agreement; and
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(4) have only those duties, obligations and responsibilities, of a
solely mechanical and administrative nature, expressly specified in
this Agreement.
(C) Agent's Rights: The Agent may:-
(1) perform any of its duties, obligations and responsibilities under
this Agreement by or through its personnel or agents;
(2) refrain from exercising any right, power or discretion vested in it
under this Agreement until it has received instructions from the
Majority Banks as to whether (and, if it is to be, the way in which) it
is to be exercised and shall in all cases be fully protected when
acting, or (if so instructed) refraining from acting, in accordance
with instructions from the Majority Banks;
(3) treat (a) the Bank which makes available any share of an Advance as
the Person entitled to repayment of that share unless all or part of it
has been novated (or the Agent has received notice of assignment of all
or part of it) in accordance with Clause 29(C) and (b) the office set
out under a Bank's name at the end of this Agreement (or, as the case
may be, set out in the relevant Novation Notice or notice of
assignment) as its Facility Office in respect of the relevant Facility
unless the Agent has received from that Bank a notice of change of
Facility Office in respect of that Facility in accordance with Clause
29(D). The Agent may act on any such novation or notice until it is
superseded by a further novation or notice;
(4) refrain from doing anything (including, without limitation,
disclosing any document or information) which would or might in its
opinion be contrary to any law or Directive, be a breach of secrecy or
confidentiality or otherwise render it liable to any Person and may do
anything which is in its opinion necessary to comply with any law or
Directive;
(5) assume that no Event of Default has occurred unless an officer of
the Agent, while active on the account of a Borrower, acquires actual
knowledge to the contrary;
(6) refrain from taking any step (or further step) to protect or
enforce the rights of any Person under this Agreement until it has been
indemnified (or received confirmation that it will be so indemnified)
and/or secured to its satisfaction against any and all costs, losses,
expenses or liabilities (including legal fees) which it would or might
sustain or incur as a result;
(7)rely on any communication, certificate, legal opinion or other
document believed by it to be genuine;
(8)rely as to any matter of fact which might reasonably be expected to
be within the knowledge of a Borrower on a statement by or on behalf of
that Borrower;
(9)obtain and pay for such legal or other expert advice or services as
may to it seem necessary or desirable and rely on any such advice;
(10)retain for its own benefit and without liability to account any fee
or other sum receivable by it for its own account; and
(11)accept deposits from, lend money to, provide any advisory or other
services to or engage in any kind of banking or other business with any
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party to this Agreement or any subsidiary or associated company of any
party (and, in each case, may do so without liability to account).
(E) Exoneration of Agent: As between the Agent and the Banks, neither the
Agent nor any of its respective personnel or agents shall be:-
(1) responsible for the adequacy, accuracy, completeness or
reasonableness of any representation, warranty, statement, projection,
assumption or information in this Agreement or any notice or other
document delivered under or in connection with this Agreement;
(2) responsible for the execution, delivery, validity, legality,
adequacy, enforceability or admissibility in evidence of this Agreement
or any such notice or other document;
(3) obliged to enquire as to the occurrence or continuation of an Event
of Default; or
(4) liable for anything done or not done by it or any of them under or
in connection with this Agreement save in the case of its or their own
gross negligence or wilful misconduct.
(F) Agent as Lender: The Agent shall have the same rights and powers with
respect to its Commitments and share of the Advances (if any) as any other Bank
and may exercise those rights and powers as if it were not also acting as Agent.
(G) Non-Reliance on Agent: Each Bank confirms that it has itself been, and will
at all times continue to be, solely responsible for making its own independent
investigation and appraisal of the business, financial condition, prospects,
creditworthiness, status and affairs of a Borrower and its Subsidiaries and has
not relied, and will not at any time rely, on the Agent and/or any other Bank:-
(1) to provide it with any information relating to the business,
financial condition, prospects, creditworthiness, status or affairs of
a Borrower or any other Person, whether coming into its possession
before or after the making of any Advance (except, in the case of the
Agent, as stated in Clause 25(B)); or
(2) to check or enquire into the adequacy, accuracy, completeness or
reasonableness of any representation, warranty, statement, projection,
assumption or information at any time provided by or on behalf of a
Borrower or any other Person under or in connection with this Agreement
(whether or not that information has been or is at any time circulated
to it by the Agent; or
(3) to assess or keep under review the business, financial condition,
prospects, creditworthiness, status or affairs of a Borrower or any
other Person.
(H) Indemnity to Agent: To the extent that a Borrower does not do so on demand
or is not obliged to do so, each Bank shall on demand indemnify the Agent in the
proportion borne by its Outstandings to all the Outstandings at the relevant
time (or, if there are then no Outstandings, in the proportion borne by its
Commitment to the total Commitments) against any cost, expense or liability
mentioned in Clause 27 or sustained or incurred by the Agent in complying with
any instructions from the Majority Banks or otherwise sustained or incurred by
it in connection with this Agreement or its duties, obligations and
responsibilities under this Agreement except routine administrative costs and
expenses of the Agent or to the extent that they are sustained or incurred as a
result of the gross negligence or wilful misconduct of the Agent or any of its
personnel or agents.
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(I) Resignation of Agent: Notwithstanding the irrevocable appointments and
authorisation in Clauses 25(A) and (J), the Agent may resign at any time (after
consultation with Southern UK) if it gives at least 30 days' notice to Southern
UK and the Banks and the Agent may at any time be removed by the Majority Banks
by giving not less than 30 days' notice to the Agent and Southern UK. However,
no resignation or removal shall be effective until the successor has been
appointed and accepted its appointment in accordance with this Clause 25(I). The
Majority Banks may appoint a successor to the resigning or removed Agent
acceptable to Southern UK but, if the successor has not been so appointed and
accepted its appointment within 15 days after the date of the notice of
resignation or, as the case may be, removal, Southern UK may appoint a successor
Agent, which (if any Bank is willing to accept such appointment) must be a Bank,
failing which, must be a reputable and experienced bank with an office in
London. Any appointment of a successor must be in writing, signed by the
Person(s) appointing that successor and delivered to that successor. Any
acceptance of such appointment must be in writing, signed by the Person
appointed and delivered to the Person(s) appointing that successor. The other
parties to this Agreement shall be promptly informed of the acceptance by a
successor Agent. Upon the successor accepting its appointment, the resigning or,
as the case may be, removed Agent shall be automatically discharged from any
further obligation under this Agreement and its successor and each of the other
parties to this Agreement shall have the same rights and obligations among
themselves as they would have had if the successor had been the original Agent
party to this Agreement. The resigning or, as the case may be, removed Agent
shall provide its successor with (or with copies of) such records as its
successor requires to carry out its duties under this Agreement.
(J) Novation Notice: Each Borrower and Bank (except for a Bank voluntarily
seeking the relevant novation) irrevocably authorises the Agent to sign each
Novation Notice on their behalf.
26. SET-OFF/PRO RATA SHARING
(A) Set-Off: Each Borrower authorises any other party to this Agreement to apply
at any time after an Event of Default shall have occurred (and provided the same
is continuing) any credit balance (whether or not then due) to which it is at
any time beneficially entitled on any account at, any sum held to its order by
and/or any liability of, any office of that party in or towards satisfaction of
any sum then due from that Borrower to that party under this Agreement and
unpaid and, for that purpose, to convert one currency into another (but so that
nothing in this Clause 26(A) shall be effective to create a charge). No party
shall be obliged to exercise any of its rights under this Clause, which shall be
without prejudice and in addition to any right of set-off, combination of
accounts, lien or other right to which it is at any time otherwise entitled
(whether by operation of law, contract or otherwise).
(B) Pro Rata Sharing: If at any time the proportion received or recovered
(whether by direct payment, by exercise of any right of set-off, combination of
accounts or lien, or otherwise) by any Bank in respect of the total sum which
has become due to it from a Borrower under this Agreement before that time
exceeds the proportion received or recovered by the Bank(s) receiving or
recovering the smallest proportion (if any), then:-
(1) within 2 Business Days after receiving a request from the Agent,
that Bank shall pay to the Agent an amount equal to the excess;
(2) the Agent shall promptly distribute that payment as if it were made
by the relevant Borrower; and
(3) as between that Borrower and the Banks, that excess amount shall be
treated as having been paid to the Banks to which (and in the
proportions
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in which) it is distributed under (2) above, rather than as having been
paid to that Bank.
Within 2 Business Days after any Bank receives or recovers any such sum
otherwise than by payment through the Agent, that Bank shall notify the Agent of
the amount and currency so received or recovered, how it was received or
recovered and whether it represents principal, interest or other sums. If all or
part of any amount so received or recovered by that Bank has to be refunded by
it (with or without interest), each Bank to whom any part of that amount has
been distributed shall (within 2 Business Days after receiving a request from
that Bank) in turn pay to that Bank its proportionate share of the amount to be
refunded and of any interest required to be paid by that Bank on that amount in
respect of all or any part of the period from the date of the relevant
distribution to the date of that payment to that Bank.
Any amount received or recovered by a Bank under a novation, assignment, sub (or
the like) shall be ignored for the purpose of this Clause 26(B). Furthermore, a
Bank shall not be obliged to share any amount which it has received or recovered
as a result of taking legal proceedings with any other Bank which had an
opportunity to participate in those legal proceedings but did not do so and did
not take separate legal proceedings.
This Clause 26(B) shall apply, with any necessary modifications, to any amount
set-off under Clause 26(A) by any party to this Agreement in respect of any sum
due to any other party under this Agreement.
SECTION IX - MISCELLANEOUS
27. EXPENSES AND STAMP DUTY
Whether or not any Advance is made, Southern UK shall pay:-
(A) Initial Expenses: on demand, all costs and expenses (including
Taxes thereon and legal fees) incurred by the Agent in connection with
the preparation, negotiation, entry into or advertising of this
Agreement (up to such amount as provided in a letter of today's date
from Southern UK to the Agent) and/or any amendment of, supplement to
or waiver in respect of this Agreement;
(B) Enforcement Expenses: on demand, all costs and expenses (including
Taxes thereon and legal fees) properly incurred by the Agent or any
Bank in protecting or enforcing any rights under this Agreement and/or
any such amendment, supplement or waiver; and
(C) Stamp Duty: promptly, and in any event before any interest or
penalty becomes payable, any stamp, documentary, registration or
similar Tax payable in the United Kingdom in connection with the entry
into, registration, performance, enforcement or admissibility in
evidence of this Agreement and/or any such amendment, supplement or
waiver, and shall indemnify the Agent and the Banks against any
liability with respect to or resulting from any delay in paying or
omission to pay any such Tax.
28. CALCULATIONS AND EVIDENCE
(A) Basis of Calculation: All interest and fees shall accrue from day to day and
shall be calculated on the basis of a year of 365 days and the actual number of
days elapsed.
(B) Loan Accounts: The entries made in the accounts maintained by each Bank in
accordance with its usual practice shall be prima facie evidence of the
existence and amounts of the obligations of the relevant Borrower recorded in
them.
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(C) Certificates: Any certificate, determination, notification or the like of
the Agent or any Bank as to any sum claimed shall be supported by reasonable
documentation and shall set out the basis of computation of that sum in
reasonable detail.
29. NOVATION
(A) Benefit and Burden of this Agreement: This Agreement shall benefit and bind
the parties, any New Bank in respect of which a Novation Notice becomes
effective in accordance with Clause 29(C), their permitted assignees and their
respective successors. Any reference in this Agreement to any party shall be
construed accordingly.
(B) Borrowers: A Borrower may not assign or transfer all or part of its rights
or obligations under this Agreement.
(C) Banks: Any Bank may at any time novate all or part (being not less than
(pound)15,000,000) of its share of an Advance or all or part of its Commitments
to any Qualifying Lender with the prior consent of Southern UK (such consent not
to be unreasonably withheld), provided that no assignment of all or any part of
a Term Commitment or Revolving Commitment shall be made by a Bank unless
simultaneously herewith a pro rata amount of each of that Bank's outstanding
Term Advances or, as the case may be, Revolving Advances are also novated to the
relevant Person. Any such novation shall be made by delivering to the Agent a
duly completed and executed Novation Notice. On receipt of such a notice, the
Agent shall countersign it for and on behalf of itself and the other parties to
this Agreement and shall promptly notify the Borrower thereof. Subject to the
terms of that Novation Notice:-
(1) to the extent that in that Novation Notice the relevant Bank seeks
to novate its share of an Advance and/or its Commitments, the relevant
Borrower and that Bank shall each be released from further obligations
to each other and their respective rights against each other shall be
cancelled (such rights and obligations being referred to as "discharged
rights and obligations");
(2) the relevant Borrower and the relevant New Bank shall each assume
new obligations towards each other and/or acquire new rights against
each other which differ from the discharged rights and obligations only
insofar as that Borrower and that New Bank have assumed and acquired
the same in place of relevant Borrower and that Bank; and
(3) the New Bank and the other parties to this Agreement (other than
the Borrowers) shall acquire the same rights and assume the same
obligations between themselves as they would have acquired and assumed
had that New Bank been an original party to this Agreement as a Bank
with the rights and/or obligations acquired or assumed by it as a
result of that novation (and, to that extent, the original Bank and
those other parties shall each be released from further obligations to
each other).
Any Bank may at any time assign all or part (being not less than
(pound)15,000,000) of its Outstandings to any Qualifying Lender with the prior
consent of Southern UK (such consent not to be unreasonably withheld).
Each Novation Notice or notice of assignment sent to the Agent shall be
accompanied by a transfer fee payable to the Agent by the Bank seeking the
novation or, as the case may be, making the assignment. Until further notice,
that fee (which will be subject to review by the Agent from time to time) will
be (pound)750 for each novation or assignment.
(D) Facility Offices: The initial Facility Office of each Bank in relation to
a particular Facility is set under its name at the end of this Agreement. Any
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Bank may at any time with the consent of the Southern UK change its Facility
Office in relation to all or a specified part of its Commitments and/or
Outstandings by notifying the Agent of the fax number, telex number and address
of its new Facility Office. The Facility Office must be in the United Kingdom.
(E) Reference Banks:
(1) If a Reference Bank ceases to have a London office or novates or
assigns all its rights and obligations under this Agreement or if any
Commitments of any Reference Bank is cancelled under Clause 11(B) or if
its Outstandings are prepaid under Clause 10(B), 14 or 16, it shall be
replaced as a Reference Bank by such other Bank with an office in
London as the Agent (after consultation with Southern UK) shall
designate by notice to the Borrower and the Banks.
(2) If any Reference Bank does not supply any quotation required from
it for the purpose of this Agreement, the relevant arithmetic mean
(rounded, if necessary, to the nearest 5 decimal places) shall be
determined on the basis of the quotations supplied by the remaining
Reference Banks.
(F) Limitation on Certain Obligations of Borrower: If, at the time of any
novation or assignment by a Bank or of any change of Facility Office,
circumstances exist which would oblige a Borrower to pay to the New Bank or
assignee (or, in the case of a change of Facility Office, the relevant Bank)
under Clause 13, 14 or 15 any sum in excess of the sum (if any) which it would
have been obliged to pay to that Bank under the relevant Clause in the absence
of that novation, assignment or change, that Borrower shall not be obliged to
pay that excess.
30. REMEDIES, WAIVERS, AMENDMENTS AND CONSENTS
(A) No Implied Waivers, Remedies Cumulative: No failure on the part of the Agent
or any Bank to exercise, and no delay on its part in exercising, any right or
remedy under this Agreement will operate as a waiver thereof, nor will any
single or partial exercise of any right or remedy preclude any other or further
exercise thereof or the exercise of any other right or remedy. The rights and
remedies provided in this Agreement are cumulative and not exclusive of any
other rights or remedies (whether provided by law or otherwise).
(B) Amendments, Waivers and Consents: Any provision of this Agreement may be
amended or supplemented only if the Borrowers and the Majority Banks so agree in
writing and any Event of Default, provision or breach of any provision of this
Agreement may be waived before or after it occurs only if the Majority Banks so
agree in writing but:-
(1) an amendment, supplement or waiver which puts one or more Banks in
a better or worse position than one or more other Banks or changes or
relates to (a) the amount of either Facility or any Commitment or
Available Commitment of any Bank, (b) the Commitment Termination Date
or the Final Maturity Date, (c) the amount of the Advances, (d) the
amount or date of any repayment, (e) the length of Terms or Interest
Periods, (f) the rate or dates of payment of interest, (g) the amount
or date(s) of payment of any fee payable under Clause 12, (h) the
definition of "Majority Banks" or (i) this Clause 30(B), shall require
the agreement of all the Banks and (in the case of an amendment or
supplement) the Borrowers also; and
(2) an amendment, supplement or waiver which changes or relates to the
rights and/or obligations of the Agent shall require its agreement
also.
Any consent by the Agent or Bank or the Majority Banks under any provision of
this Agreement must also be in writing. Any such waiver or consent may be given
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subject to any conditions thought fit by the Person giving it and shall be
effective only in the instance and for the purpose for which it is given.
31. COMMUNICATIONS
(A) Addresses: Each communication under this Agreement shall be made by fax,
telex or otherwise in writing. Each communication or document to be delivered to
any party under this Agreement shall be sent to it at the fax number, telex
number or address, and marked for the attention, if any, from time to time
designated by it to the Agent (or, in the case of the Agent, by it to each other
party) for the purpose of this Agreement. The initial fax number, telex number,
address and marking (if any) so designated by each party are set out under its
name at the end of this Agreement. Any communication or document from or to a
Borrower shall be sent to, by or through the Agent.
(B) Deemed Delivery: Any communication from a Borrower shall be irrevocable, and
shall not be effective until received by the Agent. Any other communication to
any Person shall be deemed to be received by that Person (if sent by fax or
telex) by the next working day in the place to which it is sent or (in any other
case) when left at the address required by Clause 31(A) or within 2 such working
days after being put in the post (by airmail if to another country) postage
prepaid and addressed to it at that address. For this purpose, working days are
days other than Saturdays, Sundays and bank holidays.
32. PARTIAL INVALIDITY
The illegality, invalidity or unenforceability of any provision of this
Agreement under the law of any jurisdiction shall not affect its legality,
validity or enforceability under the law of any other jurisdiction nor the
legality, validity or enforceability of any other provision.
33. NATURE OF RIGHTS AND OBLIGATIONS
(A) Liability Several: The liability of the Banks is several. No party to this
Agreement shall be responsible for the obligations of any other party. The
failure of a Bank to perform its obligations shall not release any other party
from its obligations.
(B) Rights Several: The rights of the Banks are also several. The amount at any
time owing by a Borrower to any party under this Agreement shall be a separate
and independent debt from the amount owing to any other party.
(C) Borrowers: The rights and liabilities of the Borrowers are several. A
Borrower shall not be responsible for the obligations of the other Borrower. The
failure of a Borrower to perform its obligations shall not release any person
from its obligations to the other Borrower. The amount at any time owing by a
Borrower to any party under this Agreement shall be a separate and independent
debt from the amount owing by the other Borrower.
34. CONFIDENTIALITY
Each of the Arranger, the Agent and the Banks severally undertakes to each
Borrower that it will keep confidential and that it will not make use of for any
purposes other than the purposes of this Agreement, any documents relating to
the Agreement and all of the information distributed on behalf of either
Borrower or contained in, received or which may be received under or obtained in
the course of discussions relating to this Agreement or the Information
Memorandum, other than any such document or information which has become
generally available to the public otherwise than by disclosure by any of the
Arranger, the Agent or the relevant Bank or any of the persons described in
Clause 34(A) below, provided that each of the Arranger, the Agent or the
relevant Bank shall be entitled to make disclosure of the same:-
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(A) to its auditors, accountants and legal advisers and to any other
professional advisers appointed to act in connection with the
administration of this Agreement provided that such information is
disclosed only to such person if and to the extent necessary for his
activities and each such person will be informed of the confidential
nature of the information and the provisions of this Agreement;
(B) (whether or not the relevant novation, assignment or sub-
participation or other arrangement is made) to any actual or potential
New Bank, assignee, sub-participant or the like permitted pursuant to
this Agreement, provided that before any such disclosure such New Bank,
assignee, sub-participant or other Person expressly undertakes to the
Agent and each Borrower in writing to be bound by this Clause 34
irrespective of whether the relevant novation, assignment, sub-
participation or other arrangement shall proceed;
(C) to any other third party where the relevant Borrower has previously
agreed in writing that disclosure may be made to that third party;
(D) to any banking or other regulatory or examining authorities
(whether governmental or otherwise) where such disclosure is formally
requested by them and with whose requests the Arranger, the Agent or
the relevant Bank has to comply (or with whose requests banks in the
relevant jurisdiction are accustomed to complying);
(E) pursuant to subpoena or other legal process, or in connection with
any action, suit or proceeding relating to this Agreement; and
(F) pursuant to any law or regulation having the force of law,
and provided that in the case of disclosure in accordance with paragraphs (D) or
(E) above, the disclosing party shall notify Southern UK before making that
disclosure and in consultation with Southern UK take all reasonable steps to
seek to preserve the confidentiality of the information to be so disclosed.
35. COUNTERPARTS
This Agreement may be signed in any number of counterparts, all of which taken
together and when delivered to the Agent shall constitute one and the same
instrument. Any party may enter into this Agreement by signing any such
counterpart.
36. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the laws of
England.
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SCHEDULE 1
Conditions Precedent
1. Certified copies of the Certificate of Incorporation and the Memorandum and
Articles of Association of Southern UK.
2. Certified copies of the Certificate of Incorporation and the Memorandum and
Articles of Association of SWEB.
3. Certified copy of the resolution of a committee of the Board of Directors of
Southern UK approving the transactions and matters contemplated by this
Agreement, including the assumption of the rights and obligations of Southern UK
thereunder and authorising an authorised signatory to execute this Agreement
and/or sign all notices, certificates and other communications to be delivered
by that Borrower together with a certified copy of the resolution of the Board
of Directors of Southern UK appointing that committee.
4. Certified copy of the resolution of a committee of the Board of Directors of
SWEB approving the transactions and matters contemplated by this Agreement,
including the assumption of the rights and obligations of SWEB thereunder and
authorising a person or persons to execute this Agreement and/or sign all
notices, certificates and other communications to be delivered by that Borrower
together with a certified copy of the resolution of the Board of Directors of
SWEB appointing that committee.
5. A certified specimen of the signature of each person authorised to execute
this Agreement on behalf of Southern UK and/or sign all notices, certificates
and other communications to be delivered by that Borrower.
6. A certified specimen of the signature of each person authorised to execute
this Agreement on behalf of SWEB and/or sign all notices, certificates and other
communications to be delivered by that Borrower.
7. Legal opinion, dated on or after the date of this Agreement from Slaughter
and May, English legal advisers to the Agent, in the form set out in Schedule 2.
8. Certified copy of the redemption notice for the Bonds.
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SCHEDULE 2
Form of Legal Opinion of English legal advisers to the Agent
To: Morgan Guaranty Trust Company of New York,
60 Victoria Embankment,
London EC4Y 0JP
as Agent for the Banks
[ ] January, 1996
Dear Sirs,
We have acted as English legal advisers to Morgan Guaranty Trust
Company of New York (the "Agent") and J.P. Morgan Securities Ltd. (the
"Arranger") in connection with the (pound)600,000,000 Revolving Credit and Term
Loan Agreement dated [ ] January, 1996 (the "Agreement") between (1) Southern
Investments UK Public Limited Company, (2) South Western Electricity plc (each a
"Borrower" and together the "Borrowers"), (3) Morgan Guaranty Trust Company of
New York as Bank, (4) the Agent and (5) the Arranger.
Except where the context otherwise requires, terms and expressions
defined in the Agreement have the same meanings when used in this opinion.
For the purposes of this opinion we have examined the documents listed
in the Schedule to this Letter. We have not made any investigation of the laws
of any jurisdiction outside England.
We have assumed:-
1. the capacity, power and authority of each of the parties to the Agreement
(other than the Borrowers);
2. due execution and delivery of the Agreement by each of the parties thereto
and the genuineness of all signatures thereon;
3. that no law of any jurisdiction outside England would render such execution
or delivery illegal or ineffective and that, insofar as any obligation
under the Agreement is to be performed in, or is otherwise subject to, any
jurisdiction other than England, its performance will not be illegal or
ineffective by virtue of the law of that jurisdiction;
4. that the information disclosed by our search on [ ] January, 1996 at the
office of the Registrar of Companies in London and at the Central Registry
of Winding-up Petitions on [ ] January, 1996 in relation to each of the
Borrowers was then complete, up-to-date and accurate and has not since been
materially altered or added to, that our enquiries there did not fail to
disclose any information relevant for the purposes of this opinion and that
no petition for an administration order in respect of either Borrower has
been presented in any court in England or Wales;
5. the accuracy and completeness of the resolutions and authorisations as
referred to in the Schedule to this letter and that such resolutions were
duly passed at properly convened meetings of duly appointed directors of
each Borrower, that in each case a duly qualified quorum of such directors
voted in favour of approving the resolutions and that any provisions of the
Companies Act 1985 or the Articles of Assocation of the relevant Borrower
relating to the declaration of directors' interests or the power of
interested directors to vote were duly observed;
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6. that all documents submitted to us as copies conform to the originals; and
7. that the borrowing limit in the Articles of Assocation of South Western
Electricity plc will not be breached by its utilisation of the Revolving
Facility.
Based on and subject to the foregoing, and subject to the reservations
mentioned below and to any matters not disclosed to us we are of the opinion
that:-
(A) each of the Borrowers is a limited liability company incorporated
under the Companies Act 1985 of England and Wales;
(B) each of the Borrowers has the power to enter into, exercise its
rights and perform and comply with its obligations under the Agreement
and has authorised the execution, delivery and performance of the
Agreement;
(C)the Agreement constitutes the valid and binding obligations of each
of the Borrowers;
(D)the execution and delivery of the Agreement by each of the
Borrowers, the utilisation of the full amount of the Facilities
available to each of them and the performance by each of them of all
of the obligations expressed to be assumed by them respectively
thereunder in compliance with the terms thereof do not violate any
provision of such Borrowers' Memorandum and Articles of Association,
the Electricity Act 1989 or any other applicable statute, and no
authorisations, approvals, consents, licences, exemptions, filings,
registrations or other requirements of governmental, judicial and
public bodies and authorities of or in England are required in
connection with the entry into, performance, validity or
enforceability of the Agreement or the transactions contemplated
thereby; and
(E) no stamp or registration duties or similar taxes or charges
are payable in the United Kingdom in respect of the execution
or delivery of the Agreement.
This opinion is subject to the following qualifications:-
(i) we express no opinion as to any law other than English law;
thus, we express no opinion on European Community law as it
affects any jurisdiction other than England, nor do we express
any opinion as to any law of the United States of America or
any State thereof;
(ii) we express no opinion as to whether the equitable remedies of
specific performance or injunctive relief would be available
in respect of any obligation of either Borrower under the
Agreement;
(iii) insofar as any obligation under the Agreement is to performed
in any jurisdiction other than England, an English court may
have to have regard to the law of that jurisdiction in
relation to the manner of the performance and the steps that
are taken in the event of non-performance or defective
performance;
(iv) we express no opinion as to the validity or the binding effect
of the obligations set out in Clause 23 of the Agreement,
which provides for the payment of interest on overdue sums. An
English court would not give effect to such a provision if it
could be established that the amount expressed as being
payable under Clause 23 was in the nature of a penalty (that
is to say, a requirement for
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a stipulated sum to be paid irrespective of, or necessarily
greater than, the loss likely to be sustained);
(v) undertakings and indemnities contained in the Agreement may
not be enforceable before an English court insofar as they
purport to require payment or reimbursement of the costs of
any unsuccessful litigation brought before an English court;
and
(vi) the obligations of the Borrowers under the Agreement will be
subject to any law from time to time in force relating to
insolvency or liquidation or any other law or legal procedure
effecting generally the enforcement of creditors' rights.
This opinion is addressed to the Agent for its own benefit as Agent for
and on behalf of the Banks in connection with the Agreement. It may not be
relied upon by any person other than the Agent and the Banks or used for any
other purpose and, without our prior written consent, neither its contents nor
its existence may be disclosed to any other person.
Yours faithfully
Slaughter and May
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SCHEDULE
1. A signed copy of the Agreement.
2. Certified copies of the Certificates of Incorporation and Memorandum
and Articles of Association of each of the Borrowers.
3. Certified copies of resolutions of the Board of Directors of each of the
Borrowers dated 16 November 1995 and 8 January 1996 and of the Refinancing
Committee of each of the Borrowers dated 11 January 1996.
4. Microfiches in respect of each of the Borrowers obtained by us from
Companies Registry on [ ] January, 1996.
5. The Licence.
SCHEDULE 3
Novation Notice
To: [Insert name of Agent]
[Insert address of Agent]
Attention: [ ]
SOUTHERN INVESTMENTS UK PUBLIC LIMITED COMPANY
-and-
SOUTH WESTERN ELECTRICITY plc
(pound)600,000,000 Revolving Credit and Term Loan Agreement
Dated 12 January 1996
1. This Novation Notice relates to the above Agreement. Terms defined in the
Agreement have the same meaning in this Novation Notice.
2. The undersigned Existing Bank:-
(A) confirms that, to the extent details appear below under the heading
"Rights and/or Obligations to be Novated", those details accurately
summarise the rights and/or obligations which are to be novated and
which are, upon delivery of this Novation Notice to the Agent (but
subject to paragraph 3 below), cancelled and discharged in accordance
with Clause 29(C) of the Agreement;
(B) confirms that any consent required in accordance with Clause 29(C)
of the Agreement has been obtained to this novation; and
(C) gives notice to the undersigned New Bank that the Existing Bank is
under no obligation to repurchase all or any part of those rights
and/or obligations at any time nor to support any losses suffered by
the New Bank.
3. The undersigned New Bank agrees that it assumes and acquires new rights
and/or obligations in accordance with Clause 29(C) of the Agreement on
and with effect from [ ] 199[ ] [subject only to the Agent's having
received tested telex confirmation from [ ] that the sum of [ ] has
been credited to the Existing Bank's account with [ ] for value that
date].
4. The undersigned New Bank:-
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(A)confirms that, until further notice, its Facility Office and details
for communications are as set out below;
(B) agrees to perform and comply with the obligations expressed to be
imposed on it by Clause 29(C) of the Agreement as a result of this
Novation Notice taking effect;
(C) acknowledges and accepts paragraph 2(C) above;
(D) if not already a Bank, appoints the Agent to act as its agent as
provided in the Agreement and agrees to be bound by the Agreement
(including, but not limited to, Clause 25 and particularly, but not
limited to, Clauses 25(E), (G) and (H));
(E) confirms that it is a Qualifying Lender.
5. The above confirmations and agreements are given to and for the benefit of
and made with each of the other parties to the Agreement.
6. This Novation Notice shall be governed by and construed in accordance with
the laws of England.
Existing Bank New Bank
Name: Name:
By: By:
Authorised Signatory Authorised Signatory
Date: 199 Date: 199
Facility Office
Address: [must be in the United
Kingdom]
Fax No:
Telex No:
Attention:
Rights and/or Obligations to be Novated
1. Existing Bank's [Revolving/Term] Commitment to be novated: (pound)
2. Existing Bank's share(s) of [Revolving/Term] Advance(s) to be novated:
(pound)[ ]
Borrower: [ ]
Repayment Date/Interest Payment Date: [ ]
Agent
Agreed for and on behalf of itself as Agent and the other parties to the
Agreement
Name:
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By:
Authorised Signatory
Date: 199
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SCHEDULE 4
Notice requesting Advance
To: [Insert name of Agent]
[Insert address of Agent]
Attention: [Insert name of relevant Department or title of relevant officer]
SOUTHERN INVESTMENTS UK PUBLIC LIMITED COMPANY
- and -
SOUTH WESTERN ELECTRICITY plc
(pound)600,000,000 Revolving Credit and Term Loan Agreement
dated 12 January 1996
We refer to the above Agreement. Terms defined in that Agreement have
the same meaning in this notice.
We give you notice that we wish a [Revolving/Term] Advance to be made to
us as follows:-
Amount:
Date: 199 (or, if that is not a Business Day, the next
----
Business Day)
[Term/First Interest Period: months [or, if that election is
ineffective, months]]
The proceeds of the such Advance are to be made available to us by credit
to [our account/the account of in favour of ourselves] at
, ,
We confirm that all representations and warranties of the Borrower in Clauses
19(A) to (E) (except to the extent waived in accordance with Clause 30(B)) have
been complied with and would be correct in all First Chicago material respects
if repeated on the proposed date of the Advance by reference to the
circumstances then existing
Dated 199
[INSERT NAME OF BORROWER]
By:
Authorised signatory/ies
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SCHEDULE 5
Associated Costs
1. Until further notice, Associated Costs in relation to the Term (or any part
of the Term) of any Advance or any Interest Period (or part of an Interest
Period) relating to any Advance or overdue sum will be determined by the Agent
on the basis of calculations made by each Reference Bank as at 11.00 a.m. on the
first day of that Term or Interest Period and by reference to circumstances
existing as at that time, in accordance with the following formula:-
AB + C(B-D) + E(B-F)
100 - (A+E)
where:-
A = the minimum percentage of eligible liabilities which
authorised institutions are then required by the Bank of
England to hold in non-interest bearing balances with the Bank
of England;
B = the percentage rate per annum equal to the rate at which
that Reference Bank is offered 3 month Sterling deposits by
prime banks in the London inter-bank market at or about 11
a.m. on the date of calculation;
C = the average percentage of eligible liabilities which
authorised institutions are then required by the Bank of
England to maintain as secured deposits with members of the
London Discount Market Association ("LDMA") and/or with money
brokers or with gilt edged market markers recognised for this
purpose by the Bank of England;
D = the lower of B and the percentage rate per annum equal to
the rates offered to that Reference Bank by a member of the
LDMA at or about 11 a.m. on the date of calculation for the
placing of a 3 month Sterling deposit by that Reference Bank
with that member of the LDMA;
E = the minimum percentage of eligible liabilities which
authorised institutions are then required by the Bank of
England to place as special deposits with the Bank of England;
and
F = the lower of B and the percentage rate per annum at which
interest is then paid by the Bank of England on special
deposits.
For the purpose of this formula, each of those 6 percentages shall be expressed
as a number (not a percentage).
2. Each Reference Bank shall use reasonable endeavours to supply to the Agent on
request the percentage rate per annum so calculated by it on any date. If any
Reference Bank does not do so on request of the Agent, the Agent shall make the
relevant determination on the basis of the quotations supplied by the remaining
Reference Banks. If no, or only one, Reference Bank supplies a quotation, then
instead of Associated Costs being payable in respect of the relevant Term or
Interest Period (or part thereof) each Bank shall be entitled to claim
compensation under Clause 15.
3. On or before each date on which interest is payable on any Advance or overdue
sum in relation to any Term or Interest Period (or part of a Term or Interest
Period), the Agent shall determine the arithmetic mean of the percentage rates
per annum (or, as the case may be, the average of those arithmetic means,
weighted according to the number of days for which each arithmetic mean applies)
so calculated by the Reference Banks on the Associated Costs calculation date
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relating to that Term or Interest Period (or, as the case may be, part of that
Term or Interest Period) and, if the arithmetic mean or, as the case may be,
weighted average is not a whole multiple of 0.00001% shall round it to the
nearest 5 decimal places. The figure so determined shall be the Associated Costs
applicable for that Term or Interest Period or, as the case may be, the relevant
part of that Term or Interest Period.
4. In the event of the introduction of or any change in any present or future
reserve asset ratio, cash ratio, secured deposit, monetary control ratio,
special deposit, liquidity and/or similar requirement imposed from time to time
by the Bank of England and/or any other Agency of the United Kingdom (but
excluding capital adequacy requirements or any change in the minimum percentage
of eligible liabilities which authorised institutions are required to maintain
in reserve assets, cash ratio deposits, secured deposits or special deposits) or
any change in the interpretation or application of any such requirement, the
Agent may at any time give notice to the Borrowers and the Banks of (A) the
amendments determined by the Agent (after consultation with the Banks) to be
necessary to the above formula and/or date of calculation so as to (but only so
as to) restore the position in terms of overall return to that which prevailed
before such change occurred and (B) the date as from which the amended formula
and/or date(s) of calculation are to apply. As from the date notified until any
later date notified by the Agent under this paragraph 4, Associated Costs shall
be calculated in accordance with the formula and/or on the date(s) of
calculation so notified.
This Agreement has been entered into in London on the date stated at the
beginning. Southern UK
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SOUTHERN INVESTMENTS UK PUBLIC LIMITED COMPANY
800 Park Avenue
Aztec West
Almondsbury
Bristol
Fax No: 01454-617702
Attention: The Company Secretary
with a copy to it at:-
99 Gresham Street
London EC2V 7NA
Fax No: 0171-711 3957
Attention: Mark Ogle
By: CHARLES W. WHITNEY
SWEB
SOUTH WESTERN ELECTRICITY plc
800 Park Avenue
Aztec West
Almondsbury
Bristol
Fax No: 01454-617702
Attention: The Company Secretary
By: CHARLES W. WHITNEY
The Arranger
J.P. MORGAN SECURITIES LTD.
60 Victoria Embankment
London EC4Y 0JP
By: BERTHE LATREILLE
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The Banks Revolving Commitment Term
Commitment
MORGAN GUARANTY TRUST COMPANY (pound)275,000,000 (pound)325,000,000
OF NEW YORK
60 Victoria Embankment
London EC4Y 0JP
Fax No: 0171-325 8253
Attention: Barbara Ridpath
By: BARBARA A. RIDPATH
The Agent
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
60 Victoria Embankment
London EC4Y 0JP
Fax No: 0171-325 8114
Attention: Credit Operation - Roger Slade
By: BARBARA A. RIDPATH
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