<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 28, 2000
REGISTRATION STATEMENT NO. 333-32336
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------
AMENDMENT NO. 2
TO
FORM F-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------------
INDEPENDENT ENERGY HOLDINGS PLC
(Exact name of Registrant as specified in the charter)
------------------------------
<TABLE>
<S> <C> <C>
ENGLAND AND WALES 4911 NOT APPLICABLE
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
corporation or organization) Classification Code Number) Identification Number)
</TABLE>
------------------------------
RADCLIFFE HOUSE
BLENHEIM COURT
SOLIHULL, WEST MIDLANDS B91 2AA
UNITED KINGDOM
011-44-121-705-1111
(Address, including zip code, and telephone number, including area code of
Registrant's principal executive offices)
------------------------------
CT CORPORATION SYSTEM
1633 BROADWAY
NEW YORK, NY 10019
(212) 664-1666
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
Copies of communications to:
<TABLE>
<S> <C>
RICHARD J. WILKIE KEITH L. KEARNEY
AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P. DAVIS POLK & WARDWELL
711 LOUISIANA, SUITE 1900 -- SOUTH TOWER 99 GRESHAM STREET
HOUSTON, TEXAS 77002 LONDON EC2V 7NG
(713) 220-5800 UNITED KINGDOM
011-44-171-418-1300
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
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, 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 made pursuant to Rule 434,
please check the following box: [ ]
------------------------------
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 THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS.
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following are estimated expenses, other than underwriting commissions,
expected to be incurred by Independent Energy in connection with the issuance
and distribution of the securities registered under this Registration Statement.
TO BE PAID BY REGISTRANT
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $ 67,035
NASD fees and expenses...................................... 25,892
Printing and engraving expenses............................. 200,000
Legal fees and expenses..................................... 200,000
Accounting fees and expenses................................ 100,000
Stamp duty expenses......................................... 1,300,000
Miscellaneous............................................... 3,007,073
----------
Total............................................. $4,900,000
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Except as hereinafter set forth, there is no provision of Independent
Energy's Memorandum and Articles of Association or any contract, arrangement or
statute under which any director or officer of Independent Energy is insured or
indemnified in any manner against any liability that he may incur in his
capacity as such.
The Memorandum and Articles of Association of Independent Energy provide
that, subject to the provisions of the Companies Act 1985, but without prejudice
to any indemnity to which a director or officer might otherwise be entitled,
every director or officer of Independent Energy shall be indemnified out of the
assets of Independent Energy against any liability, loss or expenditure incurred
by him in defending any proceedings, whether civil or criminal, which relate to
anything done or omitted to be done or alleged to have been done or omitted to
be done by him as an officer or auditor of Independent Energy and in which
judgment is given in his favor or in which he is acquitted, or incurred in
connection with any application in which relief is granted to him by the court
from liability in respect of any such act or omission or from liability to pay
any amount in respect of any such act or omission or from liability to pay any
amount in respect of shares acquired by a nominee of Independent Energy.
Section 310 of the Companies Act 1985 (as amended by the Companies Act
1989) provides as follows:
"310. Provisions Exempting Officers and Auditors from Liability
This section applies to any provision, whether contained in a
company's articles or in any contract with the Company or otherwise, for
exempting any officer of the Company or any person (whether an officer or
not) employed by the Company as auditor from, or indemnifying him against
any liability which by virtue of any rule of law would otherwise attach to
him in respect of any negligence, default, breach of duty or breach of
trust of which he may be guilty in relation to the Company.
I. Except as provided by the following subsection, any such
provision is void.
II. This section does not prevent a company--
A. from purchasing and maintaining for any such officer or
auditor insurance against any such liability, or
II-1
<PAGE> 3
B. from indemnifying any such officer or auditor against any
liability incurred by him--
1. in defending any proceedings (whether civil or criminal)
in which judgment is given in his favor or he is acquitted, or
2. in connection with any application under Section 144(3)
or (4) (acquisition of shares by innocent nominee) or Section 727
(general power to grant relief in case of honest and reasonable
conduct) in which relief is granted to him by the court."
The Underwriters will each agree, severally, to indemnify Independent
Energy's directors, Independent Energy's officers who sign the Registration
Statement and Independent Energy's authorized representative in the U.S. from
and against certain liabilities based on information relating to such
Underwriter furnished in writing by such Underwriter expressly for use herein.
Independent Energy has obtained directors' and officers' insurance
coverage, which, subject to policy terms and limitations, includes coverage to
reimburse Independent Energy for amounts that it may be required or permitted by
law to pay directors or officers of Independent Energy.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<C> <S>
1- Form of Underwriting Agreement.
3** Memorandum and Articles of Association, as amended, of
Independent Energy.
4.1** Form of Deposit Agreement among Independent Energy Holdings
PLC, The Bank of New York, as Depositary, and the holders
from time to time of American Depositary Receipts evidencing
American Depositary Shares representing Ordinary Shares.
4.2** Form of American Depositary Receipt evidencing American
Depositary Shares representing Ordinary Shares (included in
Exhibit 4.1).
5- Opinion of Masons as to the legality of the Ordinary Shares.
8.1- Opinion of Masons as to U.K. tax matters relative to the
Ordinary Shares (included in the Prospectus relating to the
Ordinary Shares under "Taxation" with a confirmation
included in Exhibit 5).
8.2- Opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P. as to
U.S. tax matters relative to the Ordinary Shares (included
in the Prospectus relating to the Ordinary Shares under
"Taxation" with a confirmation included in this Exhibit).
10.1** Accession Agreement to the Pooling an Settlement Agreement.
10.2** Carried Interest Agreement between Independent Energy UK
Limited and Altwood Petroleum Limited dated May 21, 1996.
10.3** Hive-up Agreement dated May 14, 1996 between Eukan Energy
Limited and Independent Energy UK Limited.
10.4** Hive-up Agreement dated May 14, 1996 between Elswick
Petroleum Limited and Independent Energy UK Limited.
10.5** Second Tier License to Supply Electricity for Independent
Energy UK Limited dated March 7, 1996.
10.6** Loan Note Instrument dated June 30, 1997 by Independent
Energy Holdings PLC with respect to L1,400,000 10% unsecured
Notes due 2002.
10.7** Warrant Instrument dated June 30, 1997 by Independent Energy
Holdings PLC with respect to 140,000 Warrants to purchase
ordinary shares.
10.8** Credit Agreement dated September 5, 1997 between Independent
Energy Holdings PLC, Independent Energy UK Limited Barclays
Bank PLC and several lenders (incorporated by reference to
Registration Statement No. 333-56223).
</TABLE>
II-2
<PAGE> 4
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<C> <S>
10.9*** Letter Agreement regarding Amendment to Credit Agreement
dated June 4, 1998 between Independent Energy Holdings PLC,
Independent Energy UK Limited, Barclays Bank PLC and several
lenders (incorporated by reference to Registration Statement
No. 333-56223).
10.10*** Letter of Variation dated July 15, 1998 between Independent
Energy Holdings PLC, Independent Energy UK Limited and
Barclays Bank PLC (incorporated by reference to Registration
Statement No. 333-56223).
10.11** Master Equipment Lease Agreement dated April 19, 1996
between Machinery Acceptance Corporation and Independent
Energy UK Limited (incorporated by reference to Registration
Statement No. 333-56223).
10.12*** Master Finance Lease Agreement dated June 17, 1997 between
Debis Financial Services Limited and Independent Energy UK
Limited (incorporated by reference to Registration Statement
No. 333-56223).
10.13*** Lease Master Agreement dated October 30, 1997 between ING
Lease (UK) Limited and Independent Energy UK Limited
(incorporated by reference to Registration Statement No.
333-56223).
10.14*** Agreement, dated July 8, 1999, for a Revolving Advance and
Letter of Credit Facility between Independent Energy UK
Limited, Independent Energy Holdings PLC, Barclays Capital,
Barclays Bank PLC and the financial institutions party
thereto.
10.15*** License Farmout Agreement, dated January 11, 1999, between
Independent Energy UK Limited, ISO (U.K.) Limited, Archean
Energy (U.K.) Limited and Altwood Petroleum Limited.
10.16*** License Buy-in Agreement, dated February 23, 1999, between
Independent Energy UK Limited and Vulcan Energy Limited.
10.17+ Agreement dated October 22, 1999 for the sale and purchase
of the stock of York Gas Limited between York Waterworks
Enterprises Limited, Independent Energy Holdings PLC and
Kelda Group PLC.
10.18+ Marketing Agreement dated December 24, 1999 between
Independent Energy UK Limited, Independent Energy Holdings
PLC, Future Network Services Limited and Future Integrated
Telephony PLC
10.19+ Deed of Variation dated February 2, 2000 between Independent
Energy UK Limited, Independent Energy Holdings PLC, Future
Network Services Limited and Future Integrated Telephony
PLC.
10.20+ Supplemental Security Agreement, dated 6th March 2000,
relating to a Security Agreement, dated 21st October 1999,
between Independent Energy UK Limited and Barclays Bank PLC,
as agent.
10.21+ Letter Agreement, dated 6th March 2000, relating to the
facility letter dated 21st October 1999, between Independent
Energy UK Limited, Independent Energy Holdings PLC and
Barclays Bank PLC.
10.22+ Letter Agreement, dated 6th March 2000, relating to the
Revolving Advance and Letter of Credit Facility dated 8th
July 1999, between Independent Energy UK Limited,
Independent Energy Holdings PLC and Barclays Bank PLC, as
agent.
10.23- Letter Agreement, dated 6th March 2000, relating to the
Revolving Advance and Letter of Credit Facility dated 8th
July 1999, between Barclays Bank PLC, Donaldson, Lufkin &
Jenrette, Inc., Independent Energy UK Limited and
Independent Energy Holdings PLC.
21- List of Subsidiaries
23.1- Consent of Masons (included in Exhibit 5).
</TABLE>
II-3
<PAGE> 5
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<C> <S>
23.2- Consent of Akin, Gump, Strauss, Hauer & Feld, L.L.P.
(included in Exhibit 8.2).
23.3+ Consent of Pannell Kerr Forster.
23.4+ Consent of Gaffney, Cline & Associates Ltd.
24+ Powers of Attorney (included on the signature pages hereof)
99*** Reserve Report of Gaffney, Cline & Associates Ltd., dated
August 10, 1999.
</TABLE>
- ------------------------------
* Incorporated by reference from the Registration Statement on Form 20-F
(File No. 0-23451) filed by Independent Energy with the Commission.
** Incorporated by reference from the Registration Statement on Form F-1 (File
No. 333-56223) filed by Independent Energy with the Commission.
*** Incorporated by reference from the Registration Statement on Form F-3 (File
No. 333-85719) filed by Independent Energy with the Commission.
+ To be filed
- - Filed herewith
+ Previously filed
II-4
<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 2 to the Registration Statement to be signed
on its behalf by the undersigned thereunto duly authorized on March 28, 2000.
INDEPENDENT ENERGY HOLDINGS PLC
(Registrant)
By: /s/ JOHN L. SULLEY
----------------------------------
John L. Sulley
Chief Executive Officer
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<C> <S> <C>
/s/ JOHN L. SULLEY Chief Executive Officer and March 28, 2000
- ----------------------------------------------------- Director (Principal Executive
John L. Sulley Officer)
* Executive Director--Finance March 28, 2000
- ----------------------------------------------------- (Principal Financial and
Ian Stewart Accounting Officer)
* Executive Director--Operations March 28, 2000
- -----------------------------------------------------
Robert E. Jones
* Non-executive Chairman March 28, 2000
- -----------------------------------------------------
Herbert L. Oakes
* Non-executive Director March 28, 2000
- -----------------------------------------------------
Burt H. Keenan
* Non-executive Director and March 28, 2000
- ----------------------------------------------------- Authorized Representative in the
Jerry W. Jarrell United States
* Non-executive Director March 28, 2000
- -----------------------------------------------------
David O. May
* /s/ JOHN L. SULLEY
- -----------------------------------------------------
John L. Sulley
Attorney-in-Fact
</TABLE>
II-5
<PAGE> 7
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<C> <S>
1- Form of Underwriting Agreement.
3** Memorandum and Articles of Association, as amended, of
Independent Energy.
4.1** Form of Deposit Agreement among Independent Energy Holdings
PLC, The Bank of New York, as Depositary, and the holders
from time to time of American Depositary Receipts evidencing
American Depositary Shares representing Ordinary Shares.
4.2** Form of American Depositary Receipt evidencing American
Depositary Shares representing Ordinary Shares (included in
Exhibit 4.1).
5- Opinion of Masons as to the legality of the Ordinary Shares.
8.1- Opinion of Masons as to U.K. tax matters relative to the
Ordinary Shares (included in the Prospectus relating to the
Ordinary Shares under "Taxation" with a confirmation
included in Exhibit 5).
8.2- Opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P. as to
U.S. tax matters relative to the Ordinary Shares (included
in the Prospectus relating to the Ordinary Shares under
"Taxation" with a confirmation included in this Exhibit).
10.1** Accession Agreement to the Pooling an Settlement Agreement.
10.2** Carried Interest Agreement between Independent Energy UK
Limited and Altwood Petroleum Limited dated May 21, 1996.
10.3** Hive-up Agreement dated May 14, 1996 between Eukan Energy
Limited and Independent Energy UK Limited.
10.4** Hive-up Agreement dated May 14, 1996 between Elswick
Petroleum Limited and Independent Energy UK Limited.
10.5** Second Tier License to Supply Electricity for Independent
Energy UK Limited dated March 7, 1996.
10.6** Loan Note Instrument dated June 30, 1997 by Independent
Energy Holdings PLC with respect to L1,400,000 10% unsecured
Notes due 2002.
10.7** Warrant Instrument dated June 30, 1997 by Independent Energy
Holdings PLC with respect to 140,000 Warrants to purchase
ordinary shares.
10.8** Credit Agreement dated September 5, 1997 between Independent
Energy Holdings PLC, Independent Energy UK Limited Barclays
Bank PLC and several lenders (incorporated by reference to
Registration Statement No. 333-56223).
10.9*** Letter Agreement regarding Amendment to Credit Agreement
dated June 4, 1998 between Independent Energy Holdings PLC,
Independent Energy UK Limited, Barclays Bank PLC and several
lenders (incorporated by reference to Registration Statement
No. 333-56223).
10.10*** Letter of Variation dated July 15, 1998 between Independent
Energy Holdings PLC, Independent Energy UK Limited and
Barclays Bank PLC (incorporated by reference to Registration
Statement No. 333-56223).
10.11** Master Equipment Lease Agreement dated April 19, 1996
between Machinery Acceptance Corporation and Independent
Energy UK Limited (incorporated by reference to Registration
Statement No. 333-56223).
10.12*** Master Finance Lease Agreement dated June 17, 1997 between
Debis Financial Services Limited and Independent Energy UK
Limited (incorporated by reference to Registration Statement
No. 333-56223).
</TABLE>
<PAGE> 8
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<C> <S>
10.13*** Lease Master Agreement dated October 30, 1997 between ING
Lease (UK) Limited and Independent Energy UK Limited
(incorporated by reference to Registration Statement No.
333-56223).
10.14*** Agreement, dated July 8, 1999, for a Revolving Advance and
Letter of Credit Facility between Independent Energy UK
Limited, Independent Energy Holdings PLC, Barclays Capital,
Barclays Bank PLC and the financial institutions party
thereto.
10.15*** License Farmout Agreement, dated January 11, 1999, between
Independent Energy UK Limited, ISO (U.K.) Limited, Archean
Energy (U.K.) Limited and Altwood Petroleum Limited.
10.16*** License Buy-in Agreement, dated February 23, 1999, between
Independent Energy UK Limited and Vulcan Energy Limited.
10.17+ Agreement dated October 22, 1999 for the sale and purchase
of the stock of York Gas Limited between York Waterworks
Enterprises Limited, Independent Energy Holdings PLC and
Kelda Group PLC.
10.18+ Marketing Agreement dated December 24, 1999 between
Independent Energy UK Limited, Independent Energy Holdings
PLC, Future Network Services Limited and Future Integrated
Telephony PLC
10.19+ Deed of Variation dated February 2, 2000 between Independent
Energy UK Limited, Independent Energy Holdings PLC, Future
Network Services Limited and Future Integrated Telephony
PLC.
10.20+ Supplemental Security Agreement, dated 6th March 2000,
relating to a Security Agreement, dated 21st October 1999,
between Independent Energy UK Limited and Barclays Bank PLC,
as agent.
10.21+ Letter Agreement, dated 6th March 2000, relating to the
facility letter dated 21st October 1999, between Independent
Energy UK Limited, Independent Energy Holdings PLC and
Barclays Bank PLC.
10.22+ Letter Agreement, dated 6th March 2000, relating to the
Revolving Advance and Letter of Credit Facility dated 8th
July 1999, between Independent Energy UK Limited,
Independent Energy Holdings PLC and Barclays Bank PLC, as
agent.
10.23- Letter Agreement, dated 6th March 2000, relating to the
Revolving Advance and Letter of Credit Facility dated 8th
July 1999, between Barclays Bank PLC, Donaldson, Lufkin &
Jenrette, Inc., Independent Energy UK Limited and
Independent Energy Holdings PLC.
21- List of Subsidiaries
23.1- Consent of Masons (included in Exhibit 5).
23.2- Consent of Akin, Gump, Strauss, Hauer & Feld, L.L.P.
(included in Exhibit 8.2).
23.3+ Consent of Pannell Kerr Forster.
23.4+ Consent of Gaffney, Cline & Associates Ltd.
24+ Powers of Attorney (included on the signature pages hereof)
99*** Reserve Report of Gaffney, Cline & Associates Ltd., dated
August 10, 1999.
</TABLE>
- ------------------------------
* Incorporated by reference from the Registration Statement on Form 20-F
(File No. 0-23451) filed by Independent Energy with the Commission.
** Incorporated by reference from the Registration Statement on Form F-1 (File
No. 333-56223) filed by Independent Energy with the Commission.
*** Incorporated by reference from the Registration Statement on Form F-3 (File
No. 333-85719) filed by Independent Energy with the Commission.
<PAGE> 9
+ To be filed
- - Filed herewith
+ Previously filed
<PAGE> 1
EXHIBIT 1
4,070,000 AMERICAN DEPOSITARY SHARES
EACH REPRESENTING ONE ORDINARY SHARE
INDEPENDENT ENERGY HOLDINGS PLC
UNDERWRITING AGREEMENT
March o, 2000
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
PRUDENTIAL SECURITIES
INCORPORATED
JOHNSON RICE & COMPANY L.L.C.
As representatives of the several Underwriters
named in Schedule I hereto
c/o Donaldson, Lufkin & Jenrette Securities
Corporation
277 Park Avenue
New York, New York 10172
Dear Sirs:
Independent Energy Holdings PLC, an English public limited company (the
"COMPANY"), proposes to issue and sell to the several underwriters named in
Schedule I hereto (the "UNDERWRITERS"), and certain stockholders of the Company
named in Schedule II hereto (the "SELLING STOCKHOLDERS") severally propose to
sell to the several Underwriters, an aggregate of 4,070,000 ordinary shares,
nominal value 1 p per share ("ORDINARY SHARES"), of the Company, of which
3,200,000 shares are to be issued and sold by the Company and 870,000 shares are
to be sold by the Selling Stockholders, each Selling Stockholder selling the
amount set forth opposite such Selling Stockholder's name in Schedule II hereto.
It is understood that the 4,070,000 Ordinary Shares will be deposited by the
Company and the Selling Stockholders with The Bank of New York, as depositary
(the "DEPOSITARY"), if requested by the Underwriters. Upon deposit of the
Ordinary Shares, and upon appropriate instructions, the Depositary proposes to
issue up to 4,070,000 American Depositary Receipts ("FIRM ADRS") evidencing
American Depositary Shares which represent the 4,070,000 Ordinary Shares, to
the several
<PAGE> 2
Underwriters. The 4,070,000 American Depositary Shares are hereinafter called
the "FIRM ADSS" and the 4,070,000 Ordinary Shares underlying the Firm ADSs are
referred to herein as "FIRM SHARES".
The Company and Burt H. Keenan, a Selling Stockholder, also severally
propose to sell to the several Underwriters not more than an additional 610,500
Ordinary Shares (the "ADDITIONAL SHARES"), if requested by the Underwriters as
provided in Section 2 hereof. It is understood that the Additional Shares will
be deposited by the Company and Burt H. Keenan with the Depositary. Upon deposit
of the Additional Shares with the Depositary, and upon appropriate instructions,
the Depositary proposes to issue up to 610,500 additional ADRs (the "ADDITIONAL
ADRS," and together with the Firm ADRs, the "ADRS") evidencing not more than an
additional 610,500 American Depositary Shares (the "ADDITIONAL ADSS") to the
Underwriters. The Firm ADSs and the Additional ADSs are hereinafter referred to
collectively as the "ADSS". The Firm Shares and the Additional Shares are
hereinafter referred to as the "SHARES". The Company and the Selling
Stockholders are hereinafter sometimes referred to collectively as the
"SELLERS." It is understood that the Shares may be sold in the form of Ordinary
Shares in the United Kingdom or ADRs evidencing ADSs. Unless the context
requires otherwise, references to ADSs shall include any Shares sold in the form
of Ordinary Shares.
The ADRs are issuable in accordance with a Deposit Agreement dated as
of April 17, 1998 (the "DEPOSIT AGREEMENT") among the Company, the Depositary
and all holders from time to time of the ADRs. The ADRs will be issued by the
Depositary to the Underwriters upon deposit of the Shares underlying the ADSs
with the Depositary. Unless the context otherwise requires, references herein to
the ADSs shall include the ADRs evidencing the ADSs.
SECTION 1. Registration Statement and Prospectus. The Company has
prepared and filed with the Securities and Exchange Commission (the
"COMMISSION") in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder
(collectively, the "ACT"), a registration statement on Form F-3, including a
prospectus, relating to the ADSs. The registration statement, as amended at the
time it became effective, including the information (if any) deemed to be part
of the registration statement at the time of effectiveness pursuant to Rule 430A
under the Act, is hereinafter referred to as the "REGISTRATION STATEMENT"; and
the prospectus in the form first used to confirm sales of ADSs is hereinafter
referred to as the "PROSPECTUS" (including, in the case of all references to the
Registration Statement and the Prospectus, documents incorporated therein by
reference). If the Company has filed or is required pursuant to the terms hereof
to file a registration statement pursuant to Rule 462(b) under the Act
registering additional
2
<PAGE> 3
Ordinary Shares (a "RULE 462(b) REGISTRATION STATEMENT"), then, unless otherwise
specified, any reference herein to the term "Registration Statement" shall be
deemed to include such Rule 462(b) Registration Statement. The Company has also
filed with the Commission in accordance with the provisions of the Act a
registration statement on Form F-6, as amended (the "ADS REGISTRATION
STATEMENT") relating to the ADSs. Unless the context otherwise requires, any
reference herein to the "REGISTRATION STATEMENT" shall include the ADS
Registration Statement.
SECTION 2. Agreements to Sell and Purchase and Lock-Up Agreements. On
the basis of the representations and warranties contained in this Agreement, and
subject to its terms and conditions, (i) the Company agrees to issue and sell
3,200,000 Firm Shares to the several Underwriters and if requested by the
Underwriters, to deposit such 3,200,000 Firm Shares with the Depositary, (ii)
each Selling Stockholder agrees, severally and not jointly, to sell the number
of Firm Shares set forth opposite such Selling Stockholder's name in Schedule II
hereto to the several Underwriters and deposit, if requested, such Firm Shares
with the Depositary, so that, in each case under foregoing clauses (i) and (ii),
the Depositary, upon appropriate instructions, may issue ADRs evidencing the
Firm ADSs to the Underwriters, and (iii) each Underwriter agrees, severally and
not jointly, to purchase from each Seller the number of Firm Shares (subject to
such adjustments to eliminate fractional shares as you may determine) that bears
the same proportion to the total number of Firm Shares to be sold by such Seller
as the number of Firm Shares set forth opposite the name of such Underwriter in
Schedules I hereto bears to the total number of Firm Shares. In the case of
Shares to be sold in the form of ADSs, the Underwriters agree to purchase such
ADSs at a price per ADS of $o (the "PURCHASE PRICE"). In the case of Shares to
be sold in the form of Ordinary Shares, the Underwriters agree, to procure
subscribers for such Ordinary Shares and failing that, to severally subscribe
and pay for Ordinary Shares at the Purchase Price per Ordinary Share in UK Pound
Sterling equal to (pound)o.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company and Burt H.
Keenan agree to sell the Additional Shares and the Underwriters shall have the
right to purchase, severally and not jointly, up to 535,500 Additional Shares
from the Company and up to 75,000 Additional Shares from Burt H. Keenan to the
extent set forth in Schedule II, in each case at the Purchase Price. In
addition, the Company and Burt H. Keenan agree that if so requested by the
Underwriters, to deposit such Additional Shares with the Depositary so that the
Depositary, upon appropriate instructions, may issue ADRs evidencing the
Additional ADSs to the Underwriters and the Underwriters shall have the right to
purchase, severally and not jointly, the Additional Shares, in the form of
Ordinary Shares (on the basis set
3
<PAGE> 4
forth above) or ADRs evidencing ADSs, from the Company and Burt H. Keenan at the
Purchase Price. Additional Shares may be purchased solely for the purpose of
covering over-allotments made in connection with the offering of the Firm
Shares. The Underwriters may exercise their right to purchase Additional Shares
in whole or in part from time to time by giving written notice thereof to the
Company and Burt H. Keenan within 30 days after the date of this Agreement. You
shall give any such notice on behalf of the Underwriters and such notice shall
specify the aggregate number of Additional Shares to be purchased pursuant to
such exercise and the date for payment and delivery thereof, which date shall be
a business day (i) no earlier than two business days after such notice has been
given (and, in any event, no earlier than the Closing Date (as hereinafter
defined)) and (ii) no later than ten business days after such notice has been
given. If any Additional Shares are to be purchased, each Underwriter, severally
and not jointly, agrees to purchase from the Company and Burt H. Keenan the
number of Additional Shares (subject to such adjustments to eliminate fractional
shares as you may determine) which bears the same proportion to the total number
of Additional Shares to be purchased as the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule I bears to the total number of
Firm Shares. Any election to purchase Additional Shares shall be allocated among
the Company and Burt H. Keenan in proportion to the maximum number of Additional
Shares to be sold by each of the Company and Burt H. Keenan as set forth herein.
Each Seller hereby agrees not to (i) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase, or otherwise transfer
or dispose of, directly or indirectly, any Ordinary Shares, ADSs or ADRs or any
securities convertible into or exercisable or exchangeable for Ordinary Shares,
ADSs or ADRs or (ii) enter into any swap or other arrangement that transfers all
or a portion of the economic consequences associated with the ownership of any
Ordinary Shares, ADSs or ADRs (regardless of whether any of the transactions
described in clause (i) or (ii) is to be settled by the delivery of Ordinary
shares, ADSs or ADRs, or such other securities, in cash or otherwise), except to
the Underwriters pursuant to this Agreement, for a period of 90 days after the
date of the Prospectus without the prior written consent of Donaldson, Lufkin &
Jenrette Securities Corporation. Notwithstanding the foregoing, during such
period the Company may issue Ordinary Shares upon the exercise of an option or
warrant or the conversion of a security outstanding on the date hereof and may
grant stock options to purchase Ordinary Shares to employees and consultants of
the Company and its subsidiaries; provided, however, that such options do not
vest within 90 days after the date of the Prospectus. The Company also agrees
not to file any registration statement with respect to any shares of Ordinary
Shares, ADSs or ADRs or any securities convertible into or exercisable or
exchangeable for Ordinary Shares, ADSs or ADRs for a period of 90 days after the
date of the
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Prospectus without the prior written consent of Donaldson, Lufkin & Jenrette
Securities Corporation; provided, however, that the Company may file and cause
to become effective under the Act one or more registration statements on Form S-
8 or similar form available for use by foreign private issuers relating to the
offer, sale and delivery of Ordinary Shares pursuant to stock options or other
employee benefit plans. In addition, each Selling Stockholder agrees that, for a
period of 90 days after the date of the Prospectus without the prior written
consent of Donaldson, Lufkin & Jenrette Securities Corporation, it will not make
any demand for, or exercise any right with respect to, the registration of any
shares of Ordinary Shares, ADSs or ADRs or any securities convertible into or
exercisable or exchangeable for Ordinary Shares, ADSs or ADRs. The Company
shall, prior to or concurrently with the execution of this Agreement, deliver an
agreement executed by each of the directors and officers of the Company who is
not a Selling Stockholder to the effect that such person will not, during the
period commencing on the date such person signs such agreement and ending 90
days after the date of the Prospectus, without the prior written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, (A) engage in any of the
transactions described in the first sentence of this paragraph or (B) make any
demand for, or exercise any right with respect to, the registration of any
shares of Ordinary Shares, ADSs or ADRs or any securities convertible into or
exercisable or exchangeable for Ordinary Shares, ADSs or ADRs.
SECTION 3. Terms of Public Offering. The Sellers are advised by you
that the Underwriters propose (i) to make a public offering of their respective
portions of the ADSs and Shares, as the case may be, as soon after the execution
and delivery of this Agreement as in your judgment is advisable and (ii)
initially to offer the ADSs and Shares, as the case may be, upon the terms set
forth in the Prospectus.
SECTION 4. Delivery and Payment. Payment for the ADSs shall be made by
Donaldson, Lufkin & Jenrette Securities Corporation on behalf of the several
Underwriters in U.S. dollars (in the case of Shares to be sold in the form of
Ordinary Shares, in UK Pound Sterling) to the Sellers (such payment being
received by the Sellers in satisfaction for the purchase price of the Shares) by
wire transfer in same day funds on the Closing Date or the applicable Option
Closing Date, as the case may be, against, in the case of Shares being sold in
the form of Ordinary Shares, delivery of such Shares as directed by the
Underwriters, and the Company procuring that the relevant number of Shares to be
sold in the form of Ordinary Shares to be issued in uncertificated form are
credited by the registrar of the Shares to a CREST stock account of Donaldson,
Lufkin & Jenrette Securities Corporation notified to the Company by Donaldson,
Lufkin & Jenrette Securities Corporation who will hold such Shares on behalf of
the subscribers of such Shares, in the proportions or otherwise as directed by
Donaldson, Lufkin & Jenrette
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<PAGE> 6
Securities Corporation and the Company procuring that such registrar shall
register the relevant holders of such Shares in the register of members of the
Company, and, in the case of Shares being sold in the form of ADSs, deposit of
the Ordinary Shares underlying such ADSs with the London office of The Bank of
New York, as custodian for the Depositary (the "CUSTODIAN"), instruction by the
Custodian to the Depositary to issue such ADSs and delivery of ADRs evidencing
all such ADSs. The ADRs shall be in definitive form and shall be in such names
and in such denominations as Donaldson, Lufkin & Jenrette Securities Corporation
shall request not later than two business days prior to the Closing Date or the
applicable Option Closing Date (as defined below), with any transfer or other
taxes and stamp duty or stamp duty reserve tax payable in connection with the
sale of the Shares or deposit by the Company of the Shares with the Depositary
or the Custodian against the issuance of ADRs evidencing ADSs duly paid. The
certificates for the ADRs will be made available for inspection and packaging
not later than 8:00 A.M., New York City time, on the business day prior to the
Closing Date or the applicable Option Closing Date, as the case may be. The time
and date of delivery of the ADSs and Ordinary Shares shall be on or before 8:00
A.M., New York City time, on March o, 2000 or such other time on the same or
such other date as Donaldson, Lufkin & Jenrette Securities Corporation and the
Company shall agree in writing. The time and date of delivery and payment for
the ADSs and Ordinary Shares are hereinafter referred to as the "CLOSING DATE."
The time and date of delivery and payment for any Additional Shares to be
purchased by the Underwriters shall be 8:00 A.M., New York City time, on the
date specified in the applicable exercise notice given to you pursuant to
Section 2 hereof or such other time on the same or such other date as Donaldson,
Lufkin & Jenrette Securities Corporation and the Company shall agree in writing.
The time and date of delivery and payment for any Additional Shares are
hereinafter referred to as an "OPTION CLOSING DATE".
The documents to be delivered on the Closing Date or any Option Closing
Date on behalf of the parties hereto pursuant to Section 9 of this Agreement
shall be delivered at the offices of Davis Polk & Wardwell, 450 Lexington
Avenue, New York, New York 10017.
SECTION 5. Agreements of the Company. The Company agrees with you:
(a) To advise you promptly and, if requested by you, to
confirm such advice in writing, (i) of any request by the Commission
for amendments to the Registration Statement or the ADS Registration
Statement or amendments or supplements to the Prospectus or for
additional information, (ii) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement
or the ADS Registration Statement or of the suspension of qualification
of the
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<PAGE> 7
ADSs for offering or sale in any jurisdiction, or the initiation of any
proceeding for such purposes, (iii) when any amendment to the
Registration Statement or the ADS Registration Statement becomes
effective, (iv) if the Company is required to file a Rule 462(b)
Registration Statement after the effectiveness of this Agreement, when
the Rule 462(b) Registration Statement has become effective and (v) of
the happening of any event during the period referred to in Section
5(d) below which makes any statement of a material fact made in the
Registration Statement or the ADS Registration Statement or the
Prospectus untrue or which requires any additions to or changes in the
Registration Statement or the ADS Registration Statement or the
Prospectus in order to make the statements therein not misleading. If
at any time the Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, the Company will use its
best efforts to obtain the withdrawal or lifting of such order at the
earliest possible time.
(b) To furnish to you four signed copies of the Registration
Statement and the ADS Registration Statement as first filed with the
Commission and of each amendment to it, including all exhibits and four
conformed copies of the documents incorporated by reference thereto,
and to furnish to you and each Underwriter designated by you such
number of conformed copies of the Registration Statement as so filed
and of each amendment to it, without exhibits, as you may reasonably
request.
(c) To prepare the Prospectus, the form and substance of which
shall be satisfactory to you, and to file the Prospectus in such form
with the Commission within the applicable period specified in Rule
424(b) under the Act; during the period specified in Section 5(d)
below, not to file any further amendment to the Registration Statement
and the ADS Registration Statement and not to make any amendment or
supplement to the Prospectus of which you shall not previously have
been advised or to which you shall reasonably object after being so
advised; and, during such period, to prepare and file with the
Commission, promptly upon your reasonable request, any amendment to the
Registration Statement and the ADS Registration Statement or amendment
or supplement to the Prospectus which may be necessary or advisable in
connection with the distribution of the ADSs by you, and to use its
best efforts to cause any such amendment to the Registration Statement
and the ADS Registration Statement to become promptly effective.
(d) Promptly after the execution of this Agreement and from
time to time thereafter for such period as in the opinion of counsel
for the Underwriters a prospectus is required by law to be delivered in
connection
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<PAGE> 8
with sales by an Underwriter or a dealer, to furnish in New York City
to each Underwriter and any dealer as many copies of the Prospectus
(and of any amendment or supplement to the Prospectus) as such
Underwriter or dealer may reasonably request.
(e) If during the period specified in Section 5(d), any event
shall occur or condition shall exist as a result of which, in the
opinion of counsel for the Underwriters, it becomes necessary to amend
or supplement the Prospectus in order to make the statements therein,
in the light of the circumstances when the Prospectus is delivered to a
purchaser, not misleading, or if, in the opinion of counsel for the
Underwriters, it is necessary to amend or supplement the Prospectus to
comply with applicable law, forthwith to prepare and file with the
Commission an appropriate amendment or supplement to the Prospectus so
that the statements in the Prospectus, as so amended or supplemented,
will not in the light of the circumstances when it is so delivered, be
misleading, or so that the Prospectus will comply with applicable law,
and to furnish to each Underwriter and to any dealer as many copies
thereof as such Underwriter or dealer may reasonably request.
(f) Prior to any public offering of the ADSs, to cooperate
with you and counsel for the Underwriters in connection with the
registration or qualification of the ADSs for offer and sale by the
several Underwriters and by dealers under the state securities or Blue
Sky laws of such jurisdictions as you may request, to continue such
registration or qualification in effect so long as required for
distribution of the ADSs and to file such consents to service of
process or other documents as may be necessary in order to effect such
registration or qualification; provided, however, that the Company
shall not be required in connection therewith to qualify as a foreign
corporation in any jurisdiction in which it is not now so qualified or
to take any action that would subject it to general consent to service
of process or taxation other than as to matters and transactions
relating to the Prospectus, the Registration Statement, the ADS
Registration Statement, any preliminary prospectus or the offering or
sale of the ADSs, in any jurisdiction in which it is not now so
subject.
(g) To mail and make generally available to its stockholders
as soon as practicable an earnings statement covering the twelve-month
period beginning after the effective date of the Registration Statement
that shall satisfy the provisions of Section 11(a) of the Act, and to
advise you in writing when such statement has been so made available.
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<PAGE> 9
(h) Prior to the Closing Date or the Option Closing Date, as
the case may be, to make Ordinary Shares available to the Depositary in
accordance with the provisions of the Deposit Agreement, and otherwise
to comply with the Deposit Agreement so that ADRs evidencing ADSs will
be executed (and, if applicable, countersigned) and issued by the
Depositary against receipt of such Ordinary Shares and delivered to the
Underwriters at such Closing Date.
(i) During the period of three years after the date of this
Agreement, to furnish to you as soon as available copies of all reports
or other communications furnished to the record holders of Ordinary
Shares or furnished to or filed with the Commission or any national
securities exchange on which any class of securities of the Company is
listed and such other publicly available information concerning the
Company and its subsidiaries as you may reasonably request.
(j) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or
cause to be paid all expenses incident to the performance of the
Sellers' obligations under this Agreement, including: (i) the fees,
disbursements and expenses of the Company's counsel, the Company's
accountants and any Selling Stockholder's counsel (in addition to the
Company's counsel) in connection with the registration and delivery of
the Shares and the ADSs under the Act and all other fees and expenses
in connection with the preparation, printing, filing and distribution
of the Registration Statement (including financial statements and
exhibits), the ADS Registration Statement, any preliminary prospectus,
the Prospectus and all amendments and supplements to any of the
foregoing, including the mailing and delivering of copies thereof to
the Underwriters and dealers in the quantities specified herein, (ii)
all costs and expenses related to the transfer and delivery of the ADSs
and Ordinary Shares to the Underwriters, including any transfer or
other taxes payable thereon, (iii) all costs of printing or producing
this Agreement and any other agreements or documents in connection with
the offering, purchase, sale or delivery of the ADSs and Ordinary
Shares, (iv) all expenses, if any, in connection with the registration
or qualification of the Shares and the ADSs for offer and sale under
the securities or Blue Sky laws of the several states and all costs of
printing or producing any Preliminary and Supplemental Blue Sky
Memoranda in connection therewith (including the filing fees and fees
and disbursements of counsel for the Underwriters in connection with
such registration or qualification and memoranda relating thereto), (v)
the filing fees and disbursements of counsel for the Underwriters in
connection with the review and clearance of the offering of the ADSs
and Ordinary Shares
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<PAGE> 10
by the National Association of Securities Dealers, Inc., (vi) all costs
and expenses incident to the supplemental listing of the ADSs on the
Nasdaq National Market and the supplemental listing of the Ordinary
Shares on the London Stock Exchange ("LSE"), (vii) the cost of printing
certificates if any representing Ordinary Shares and ADR certificates
representing the ADSs, (viii) the costs and charges if any of
depositing Ordinary Shares under the Deposit Agreement against issuance
of ADRs evidencing the ADSs, (ix) the fees and expenses (including fees
and disbursements of counsel), if any, of the Depositary and any
custodian appointed under the Deposit Agreement, (x) the cost and
charges of any transfer agent or registrar, (xi) all stamp duty or
stamp duty reserve tax arising as a result of sale of the Shares or
deposit of the Shares with the Depositary, (xii) the costs and expenses
of the Company relating to investor presentations on any "road show"
undertaken in connection with the marketing of the offering of the ADSs
and Ordinary Shares, and (xiii) all other costs and expenses incident
to the performance of the obligations of the Company and the Selling
Stockholders hereunder for which provision is not otherwise made in
this Section 5(j). The provisions of this section shall not supercede
or otherwise affect any agreement that the Company and the Selling
Stockholders may otherwise have for allocation of such expenses among
themselves. Except as expressly otherwise provided in this Section 5 or
in Section 8 of this Agreement, the Underwriters shall pay all of their
own costs, expenses, fees and taxes incurred in connection with the
offer, sale and delivery of the ADSs and Ordinary Shares, including the
costs and expenses of the Underwriters relating to investor
presentations on the "road show" described in the preceding sentence,
the fees and expenses of their counsel and any advertising expenses
incurred by them; provided, however, that the cost of any aircraft
chartered in connection with the "road show" shall be paid one-half by
the Company and one-half by the Underwriters.
(k) To use its best efforts to list for quotation, subject to
notice of issuance, the ADSs on the Nasdaq National Market and to
maintain the listing of the ADSs on the Nasdaq National Market for a
period of three years after the date of this Agreement.
(l) To use its best efforts to list for quotation, subject to
notice of issuance, the Ordinary Shares on the LSE and to maintain the
listing of the Ordinary Shares on the LSE for a period of three years
after the date of this Agreement.
(m) To use its best efforts to do and perform all things
required or necessary to be done and performed under this Agreement by
the Company
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prior to the Closing Date or any Option Closing Date, as the case may
be, and to satisfy all conditions precedent to the delivery of the
ADSs.
(n) To designate CT Corporation System, New York, New York, a
Delaware corporation, as the Company's authorized agent for service of
process, upon which process may be served in any action, suit or
proceeding which may be instituted in any state or federal court in the
State of New York by the Underwriters or person controlling the
Underwriters asserting a claim for indemnification or contribution
under or pursuant to Section 8 hereof, and the Company will accept the
jurisdiction of such court in such action, and waive, to the fullest
extent permitted by applicable law, any defense based upon lack of
personal jurisdiction or venue. A copy of any such process shall be
sent or given to the Company at the address for notices specified in
Section 12 hereof.
(o) To use the proceeds from the offering in a manner
consistent with the terms of the agreement dated March 6, 2000 among
Barclays Bank PLC, Independent Energy UK Limited, Independent Energy
Holdings PLC and Donaldson, Lufkin & Jenrette, Inc.
SECTION 6. Representations and Warranties of the Company. The Company
represents and warrants to each Underwriter that:
(a) Each of the Registration Statement and the ADS
Registration Statement has become effective and no stop order
suspending the effectiveness of the Registration Statement or the ADS
Registration Statement is in effect, and no proceedings for such
purpose are pending before or, to the knowledge of the Company,
threatened by the Commission.
(b) (i) Each document filed or to be filed pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
incorporated by reference in the Prospectus complied or will comply
when so filed in all material respects with the Exchange Act and the
applicable rules and regulations thereunder, (ii) each of the
Registration Statement and the ADS Registration Statement, when it
became effective, did not contain and, as amended, if applicable, will
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, (iii) each of the Registration
Statement, the ADS Registration Statement and the Prospectus comply as
to form and, as amended or supplemented, if applicable, will comply as
to form in all material respects with the Act and (iv) the Prospectus
does not contain and, as amended or supplemented, if
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<PAGE> 12
applicable, will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, except that the representations and warranties set forth in
this paragraph do not apply to statements or omissions in the
Registration Statement, the ADS Registration Statement or the
Prospectus based upon information relating to any Underwriter furnished
to the Company in writing by such Underwriter through you expressly for
use therein.
(c) Each preliminary prospectus filed as part of the
registration statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the Act, complied when so
filed in all material respects with the Act, and did not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, except that the representations and warranties set
forth in this paragraph do not apply to statements or omissions in any
preliminary prospectus based upon information relating to any
Underwriter furnished to the Company in writing by such Underwriter
through you expressly for use therein.
(d) Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a limited company under the
laws of England and Wales, with the corporate power and authority to
carry on its business and to own, lease and operate its properties as
described in the Prospectus and each is duly qualified as a foreign
corporation authorized to do business and is in good standing in each
jurisdiction in which the nature of its business or its ownership or
leasing of property requires such qualification, except where the
failure to be so qualified would not have a material adverse effect on
the business, prospects, financial condition or results of operations
of the Company and its subsidiaries, taken as a whole.
(e) The authorized share capital of the Company conforms as to
legal matters in all material respects to the description thereof set
forth in the Registration Statement and the Prospectus, and all of the
issued and outstanding shares of capital stock of the Company
(including the Shares to be sold by the Selling Stockholders) have been
duly authorized and validly issued, and are fully-paid and not subject
to calls for further funds and are not subject to any pre-emptive or
similar rights; and, except as described in the Prospectus, there are
no outstanding rights (including, without limitation, preemptive
rights), warrants or options to acquire, or instruments convertible
into or exchangeable for, any shares of capital stock or other equity
interest in the Company or any of its subsidiaries, or
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<PAGE> 13
any contract, commitment, agreement, understanding or arrangement of
any kind relating to the issuance of any capital stock of the Company
or any such subsidiary, any such convertible or exchangeable securities
or any such rights, warrants or option.
(f) All of the outstanding shares of capital stock of each of
the Company's subsidiaries have been authorized and validly issued and
are fully paid and not subject to calls for further funds, and are
owned by the Company, directly or indirectly through one or more
subsidiaries, free and clear of any security interest, claim, lien,
encumbrance or adverse interest of any nature, except for security
existing pursuant to the Company's outstanding credit facility with
Barclays Bank PLC.
(g) The Shares to be sold by the Company have been duly
authorized, and, when delivered to and paid for by the Underwriters in
accordance with the terms of this Agreement, will be duly issued and
fully paid and not subject to calls for further funds and will conform
in all material respects to the descriptions thereof in the Prospectus,
and the issuance of such Shares is not subject to any preemptive or
similar right that has not been duly and validly waived.
(h) Upon the deposit of the Shares to be sold by the Company
with the Custodian pursuant to the Deposit Agreement against issuance
of the ADRs evidencing the ADSs, all right, title and interest in such
Shares, subject to the Deposit Agreement, will be transferred to the
Depositary free and clear of all liens, encumbrances or claims.
(i) Upon the sale and delivery of the Shares to be sold by the
Company and payment therefor against deposit thereof with the Custodian
and delivery of ADRs evidencing all such ADSs by the Depositary as
contemplated by this Agreement and in accordance with the terms of the
Deposit Agreement, good and valid title to the ADSs representing such
Shares, free and clear of all liens, encumbrances or claims, will be
transferred to the Underwriters and the ADSs to be delivered hereunder
will be freely transferable to or for the account of the several
Underwriters; upon delivery by the Depositary of the ADRs evidencing
the ADSs against deposit of the Shares in accordance with the Deposit
Agreement, the ADSs will be duly and validly issued; the ADSs and the
ADRs conform as to legal matters in all material respects to the
description thereof set forth in the Registration Statement and the
Prospectus.
(j) Neither the Company nor any of its subsidiaries is in
violation of its respective Memorandum or Articles of Association or in
default in
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<PAGE> 14
the performance of any obligation, agreement, covenant or condition
contained in any indenture, loan agreement, mortgage, lease or other
agreement or instrument that is material to the Company and its
subsidiaries, taken as a whole, to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries or their respective property is bound.
(k) The execution, delivery and performance of this Agreement
and the Deposit Agreement by the Company, the compliance by the Company
with all the provisions hereof and of the Deposit Agreement and the
consummation of the transactions contemplated hereby and thereby will
not (i) require any consent, approval, authorization or other order of,
or qualification with, any court or governmental body or agency (except
orders of the Commission declaring the Registration Statement and the
ADS Registration Statement effective under the Act and such as may be
required under the securities or Blue Sky laws of the various states),
(ii) conflict with or constitute a breach of any of the terms or
provisions of, or a default under, the Memorandum or Articles of
Association of the Company or any of its subsidiaries or any indenture,
loan agreement, mortgage, lease or other agreement or instrument that
is material to the Company and its subsidiaries, taken as a whole, to
which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries or their respective property is
bound, (iii) violate or conflict with any applicable law or any rule,
regulation, judgment, order or decree of any court or any governmental
body or agency having jurisdiction over the Company, any of its
subsidiaries or their respective property or (iv) result in the
suspension, termination or revocation of any Authorization (as defined
below) of the Company or any of its subsidiaries or any other
impairment of the rights of the holder of any such Authorization.
(l) The information underlying the estimates of the net proved
reserves of natural gas of the Company and the present value of the
future net cash flows therefrom, which was supplied by the Company to
Gaffney, Cline & Associates, independent petroleum consultants, for
purposes of preparing the reserve reports and estimates of the Company
described in the Prospectus, was supplied in accordance with customary
industry practices; Gaffney, Cline & Associates were, as of the date of
the reserve report, and are, as of the date hereof, independent
petroleum consultants with respect to the Company; other than as set
forth or contemplated in the Prospectus, the Company is not aware of
any facts or circumstances that would result in a material adverse
change in the reserves or the present value of future net cash flows
therefrom as described in the Prospectus and as reflected in the
reserve report.
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(m) There are no legal or governmental proceedings pending or,
to the knowledge of the Company, threatened to which the Company or any
of its subsidiaries is or could be a party or to which any of their
respective property is or could be subject that are required to be
described in the Registration Statement, the ADS Registration Statement
or the Prospectus and are not so described; nor are there any statutes,
regulations, contracts or other documents that are required to be
described in the Registration Statement, the ADS Registration Statement
or the Prospectus or to be filed as exhibits to the Registration
Statement that are not so described or filed as required.
(n) Neither the Company nor any of its subsidiaries has
violated any foreign, federal, state or local law or regulation
relating to the environment or hazardous or toxic substances or wastes,
pollutants or contaminants ("ENVIRONMENTAL LAWS"), the protection of
human health and safety, or the U.S. Foreign Corrupt Practices Act, as
amended (the "FCPA") or the rules and regulations promulgated
thereunder, except for such violations which, singly or in the
aggregate, would not have a material adverse effect on the business,
prospects, financial condition or results of operation of the Company
and its subsidiaries, taken as a whole.
(o) Each of the Company and its subsidiaries has such permits,
licenses, consents, exemptions, franchises, authorizations and other
approvals (each, an "AUTHORIZATION") of, and has made all filings with
and notices to, all governmental or regulatory authorities and
self-regulatory organizations and all courts and other tribunals, as
are necessary to own, lease, license and operate its respective
properties and to conduct its business, except where the failure to
have any such Authorization or to make any such filing or notice would
not, singly or in the aggregate, have a material adverse effect on the
business, prospects, financial condition or results of operations of
the Company and its subsidiaries, taken as a whole. Each such
Authorization is valid and in full force and effect and each of the
Company and its subsidiaries is in compliance with all the terms and
conditions thereof and with the rules and regulations of the
authorities and governing bodies having jurisdiction with respect
thereto; and no event has occurred (including, without limitation, the
receipt of any notice from any authority or governing body) which
allows or, after notice or lapse of time or both, would allow,
revocation, suspension or termination of any such Authorization or
results or, after notice or lapse of time or both, would result in any
other impairment of the rights of the holder of any such Authorization;
and such Authorizations contain no restrictions that are burdensome to
the Company or any of its subsidiaries; except where such
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<PAGE> 16
failure to be valid and in full force and effect or to be in
compliance, the occurrence of any such event or the presence of any
such restriction would not, singly or in the aggregate, have a material
adverse effect on the business, prospects, financial condition or
results of operations of the Company and its subsidiaries, taken as a
whole.
(p) There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or
operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or any Authorization, any related
constraints on operating activities and any potential liabilities to
third parties) which would, singly or in the aggregate, have a material
adverse effect on the business, prospects, financial condition or
results of operations of the Company and its subsidiaries, taken as a
whole.
(q) This Agreement has been duly authorized, executed and
delivered by the Company.
(r) The Deposit Agreement has been duly authorized, executed
and delivered by the Company, and constitutes a valid and legally
binding agreement of the Company, enforceable in accordance with its
terms, subject, as to enforcement, to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to
general equity principles.
(s) Pannell Kerr Forster, chartered accountants, are
independent public accountants with respect to the Company and its
subsidiaries as required by the Act.
(t) The consolidated financial statements included in the
Registration Statement and the Prospectus (and any amendment or
supplement thereto), together with related schedules and notes, present
fairly the consolidated financial position, results of operations and
changes in financial position of the Company and its subsidiaries on
the basis stated therein at the respective dates or for the respective
periods to which they apply; such statements and related schedules and
notes have been prepared in accordance with generally accepted
accounting principles in the U.K. consistently applied and reconciled
to the generally accepted accounting principles in the United States;
the supporting schedules, if any, included in the Registration
Statement present fairly in accordance with generally accepted
accounting principles the information required to be stated therein;
and the other financial and statistical information and data set forth
in the Registration Statement and the Prospectus (and any amendment or
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<PAGE> 17
supplement thereto) are, in all material respects, accurately presented
and prepared.
(u) The Company is not and, after immediately giving effect to
the offering and sale of the ADSs and the application of the proceeds
thereof as described in the Prospectus, will not be, an "investment
company" as such term is defined in the Investment Company Act of 1940,
as amended.
(v) There are no contracts, agreements or understandings
between the Company and any person granting such person the right to
require the Company to file a registration statement under the Act with
respect to any securities of the Company or to require the Company to
include such securities with the Shares and ADSs registered pursuant to
the Registration Statement.
(w) Since the respective dates as of which information is
given in the Prospectus (exclusive of any amendments or supplements
thereto subsequent to the date of this Agreement), (i) there has not
occurred any material adverse change or any development involving a
prospective material adverse change in the condition, financial or
otherwise, or the results of operations, business, management or
operations of the Company and its subsidiaries, taken as a whole, (ii)
there has not been any material adverse change or any development
involving a prospective material adverse change in the capital stock or
in the long-term debt of the Company or any of its subsidiaries and
(iii) neither the Company nor any of its subsidiaries has incurred any
material liability or obligation, direct or contingent, except for
contracts entered into in the ordinary course of business.
(x) The Company has filed a supplemental application to list
the ADSs on the Nasdaq National Market and a supplemental application
to list the Ordinary Shares on the LSE.
(y) The form of certificate for the Shares conforms to the
requirements of U.K. law and the Memorandum and Articles of Association
of the Company and the ADSs and the ADRs conform to the requirements of
the Deposit Agreement and the Nasdaq National Market.
(z) Other than as set forth or contemplated in the Prospectus,
no ad valorem stamp duty, stamp duty reserve tax or issue, documentary,
certification or other similar tax imposed by any government department
or other taxing authority of or in the U.K. is payable in connection
with (A)
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<PAGE> 18
the deposit with the Depositary or the Custodian of the Shares to be
sold by the Company against the issuance of the ADRs evidencing ADSs in
accordance with the Deposit Agreement, (B) the issue of the ADRs
evidencing ADSs by the Depositary to or for the respective accounts of
the Underwriters, in accordance with the terms of this Agreement or (C)
the sale by the Underwriters of the Shares (in the form of Ordinary
Shares or ADSs) to the initial purchasers thereof, in accordance with
the terms of this Agreement and in the manner contemplated in the
Prospectus.
(aa) Each certificate signed by any officer of the Company and
delivered to the Underwriters or counsel for the Underwriters shall be
deemed to be a representation and warranty by the Company to the
Underwriters as to the matters covered thereby.
(bb) The Company and each of its subsidiaries maintains a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with UK GAAP and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management's
general or specific authorization and (iv) the recorded accountability
for assets is compared with the existing assets at reasonable intervals
and appropriate action is taken with respect to any differences.
(cc) Neither the Company nor any of its subsidiaries nor any
person acting on its or their behalf has taken, directly or indirectly,
any action which caused or resulted, or was designed or might
reasonably be expected to cause or result in, the stabilization or
manipulation of the price of the Ordinary Shares to facilitate the sale
or resale of the Shares or ADSs.
SECTION 7. Representations and Warranties of the Selling Stockholders.
Each Selling Stockholder represents and warrants to each Underwriter that:
(a) Such Selling Stockholder is the lawful owner of the Shares
to be sold by such Selling Stockholder pursuant to this Agreement and
has, and on the Closing Date will have, good and clear title to such
Shares, free of all restrictions on transfer, liens, encumbrances,
security interests, equities and claims whatsoever;
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<PAGE> 19
(b) The Shares to be sold by such Selling Stockholder have
been duly authorized and, are validly issued, fully paid and not
subject to calls for further funds;
(c) Such Selling Stockholder has, and on the Closing Date will
have, full legal right and power, and all authorization and approval
required by law (including without limitation any spousal consent
necessary), to enter into this Agreement, the Custody Agreement signed
by such Selling Stockholder and The Bank of New York, as Custodian,
relating to the deposit of the Shares to be sold by such Selling
Stockholder (the "CUSTODY AGREEMENT") and the Power of Attorney of such
Selling Stockholder appointing certain individuals as such Selling
Stockholder's attorneys-in-fact (the "ATTORNEYS") to the extent set
forth therein, relating to the transactions contemplated hereby and by
the Registration Statement and the Custody Agreement (the "POWER OF
ATTORNEY") and to sell, assign, transfer and deliver the Shares to be
sold by such Selling Stockholder in the manner provided herein and
therein.
(d) This Agreement has been duly executed and delivered and,
in the case of non-individual Selling Stockholders, duly authorized, by
or on behalf of each such Selling Stockholder.
(e) The Custody Agreement of such Selling Stockholder has been
duly executed and delivered and, in the case of non-individual Selling
Stockholders, duly authorized, by each such Selling Stockholder and is
a valid and binding agreement of such Selling Stockholder, enforceable
in accordance with its terms.
(f) The Power of Attorney of such Selling Stockholder has been
duly executed and delivered and, in the case of non-individual Selling
Stockholders, duly authorized, by each such Selling Stockholder and is
a valid and binding instrument of such Selling Stockholder, enforceable
in accordance with its terms, and, pursuant to such Power of Attorney,
such Selling Stockholder has, among other things, authorized the
Attorneys, or any one of them, to execute and deliver on such Selling
Stockholder's behalf this Agreement and any other document that they,
or any one of them, may deem necessary or desirable in connection with
the transactions contemplated hereby and thereby and to deliver the
Shares to be sold by such Selling Stockholder pursuant to this
Agreement.
(g) Upon the deposit of the Shares to be sold by each of the
Selling Stockholders with the Custodian pursuant to the Deposit
Agreement against issuance of the ADRs evidencing the ADSs, all right,
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<PAGE> 20
title and interest in such Shares, subject to the Deposit Agreement,
will be transferred to the Depositary free and clear of all liens,
encumbrances or claims.
(h) Upon the sale and delivery of the Shares to be sold by
each of the Selling Stockholders and payment therefor against deposit
thereof with the Custodian and delivery of ADRs evidencing all such
ADSs by the Depositary as contemplated by this Agreement and in
accordance with the terms of the Deposit Agreement, good and valid
title to the ADSs representing such Shares, free and clear of all
liens, encumbrances or claims, will be transferred to the Underwriters
and the ADSs to be delivered by each of the Selling Stockholders will
be freely transferable to or for the account of the several
Underwriters.
(i) Upon the sale and delivery of the Shares to be sold by
each of the Selling Stockholders in the form of Ordinary Shares and
payment therefor as contemplated by this Agreement, good and valid
title to the Shares, free and clear of all liens, encumbrances or
claims, will be transferred to the Underwriters and the Shares to be
delivered by each of the Selling Stockholders will be freely
transferable to or for the account of the several Underwriters.
(j) The execution, delivery and performance of this Agreement
and the Custody Agreement and Power of Attorney of such Selling
Stockholder by or on behalf of such Selling Stockholder, the compliance
by such Selling Stockholder with all the provisions hereof and thereof
and the consummation of the transactions contemplated hereby and
thereby will not (i) require any consent, including any spousal
consent, approval, authorization or other order of, or qualification
with, any court or governmental body or agency (except such as may be
required under the securities or Blue Sky laws of the various states),
(ii) conflict with or constitute a breach of any of the terms or
provisions of, or a default under, the organizational documents of such
Selling Stockholder, if such Selling Stockholder is not an individual,
or any indenture, loan agreement, mortgage, lease or other agreement or
instrument to which such Selling Stockholder is a party or by which
such Selling Stockholder or any property of such Selling Stockholder is
bound or (iii) violate or conflict with any applicable law or any rule,
regulation, judgment, order or decree of any court or any governmental
body or agency having jurisdiction over such Selling Stockholder or any
property of such Selling Stockholder.
(k) The information in the Registration Statement under the
caption "Principal and Selling Stockholders" which specifically relates
to
20
<PAGE> 21
such Selling Stockholder does not, and will not on the Closing Date,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.
(l) At any time during the period described in Section 5(d),
if there is any change in the information referred to in Section 7(j),
such Selling Stockholder will immediately notify you of such change.
(m) Each certificate signed by or on behalf of such Selling
Stockholder and delivered to the Underwriters or counsel for the
Underwriters shall be deemed to be a representation and warranty by
such Selling Stockholder to the Underwriters as to the matters covered
thereby.
(n) Other than as set forth or contemplated in the Prospectus,
no ad valorem stamp duty, stamp duty reserve tax or issue, documentary,
certification or other similar tax imposed by any government department
or other taxing authority of or in the U.K. is payable in connection
with (A) the deposit with the Depositary or the Custodian of the Shares
to be sold by each of the Selling Stockholders against the issuance of
the ADRs evidencing ADSs in accordance with the Deposit Agreement, (B)
the issue of the ADRs evidencing ADSs by the Depositary to or for the
respective accounts of the Underwriters, in accordance with the terms
of this Agreement or (C) the sale by the Underwriters of the Shares (in
the form of Ordinary Shares or ADSs) to the initial purchasers thereof,
in accordance with the terms of this Agreement and in the manner
contemplated in the Prospectus.
(o) Neither the Selling Stockholders nor any person acting on
its or their behalf has taken, directly or indirectly, any action which
caused or resulted, or was designed or might reasonably be expected to
cause or result in, the stabilization or manipulation of the price of
the Ordinary Shares to facilitate the sale or resale of the Shares or
ADSs, except in the case of Donaldson, Lufkin & Jenrette International
("DLJ INTERNATIONAL") as may be permitted under the applicable US
securities laws.
SECTION 8. Indemnification. (a) The Sellers, jointly and severally,
agree to indemnify and hold harmless each Underwriter, its directors, its
officers and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT"), from and against any and all losses,
claims, damages, liabilities and judgments (including, without limitation, any
legal or other expenses
21
<PAGE> 22
incurred in connection with investigating or defending any matter, including any
action, that could give rise to any such losses, claims, damages, liabilities or
judgments) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement (or any amendment
thereto), the Prospectus (or any amendment or supplement thereto) or any
preliminary prospectus, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages, liabilities or judgments are caused by any such untrue statement or
omission or alleged untrue statement or omission based upon information relating
to any Underwriter furnished in writing to the Company by such Underwriter
through you expressly for use therein; provided, however, that the foregoing
indemnity agreement with respect to any preliminary prospectus shall not inure
to the benefit of any Underwriter who failed to deliver a Prospectus (as then
amended or supplemented, provided by the Company to the several Underwriters in
the requisite quantity and on a timely basis to permit proper delivery on or
prior to the Closing Date) to the person asserting any losses, claims, damages
and liabilities and judgments caused by any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus, or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading, if
such material misstatement or omission or alleged material misstatement or
omission was cured in such Prospectus and such Prospectus was required by law to
be delivered at or prior to the written confirmation of sale to such person.
Notwithstanding the foregoing, the aggregate liability of any Selling
Stockholder pursuant to this Section 8(a) shall be limited to an amount equal to
the total proceeds (before deducting underwriting discounts and commissions and
expenses) received by such Selling Stockholder from the Underwriters for the
sale of the ADSs sold by such Selling Stockholder hereunder.
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement, each person, if any, who controls the Company within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, each Selling
Stockholder and each person, if any, who controls such Selling Stockholder
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act to
the same extent as the foregoing indemnity from the Sellers to such Underwriter
but only with reference to information relating to such Underwriter furnished in
writing to the Company by such Underwriter through you expressly for use in the
Registration Statement (or any amendment thereto), the Prospectus (or any
amendment or supplement thereto) or any preliminary prospectus.
(c) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the
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<PAGE> 23
"INDEMNIFIED PARTY"), the indemnified party shall promptly notify the person
against whom such indemnity may be sought (the "INDEMNIFYING PARTY") in writing
and the indemnifying party shall assume the defense of such action, including
the employment of counsel reasonably satisfactory to the indemnified party and
the payment of all fees and expenses of such counsel, as incurred (except that
in the case of any action in respect of which indemnity may be sought pursuant
to both Sections 8(a) and 8(b), the Underwriter shall not be required to assume
the defense of such action pursuant to this Section 8(c), but may employ
separate counsel and participate in the defense thereof, but the fees and
expenses of such counsel, except as provided below, shall be at the expense of
such Underwriter). Any indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of the indemnified party
unless (i) the employment of such counsel shall have been specifically
authorized in writing by the indemnifying party, (ii) the indemnifying party
shall have failed to assume the defense of such action or employ counsel
reasonably satisfactory to the indemnified party or (iii) the named parties to
any such action (including any impleaded parties) include both the indemnified
party and the indemnifying party, and the indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party (in which case the indemnifying party shall not have the
right to assume the defense of such action on behalf of the indemnified party).
In any such case, the indemnifying party shall not, in connection with any one
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for (i) the reasonable fees and expenses of more than one separate firm
of attorneys (in addition to any local counsel) for all Underwriters, their
officers and directors and all persons, if any, who control any Underwriter
within the meaning of either Section 15 of the Act or Section 20 of the Exchange
Act, (ii) the fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) for the Company, its directors, its officers who
sign the Registration Statement and all persons, if any, who control the Company
within the meaning of either such Section and (iii) the fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) for
all Selling Stockholders and all persons, if any, who control any Selling
Stockholder within the meaning of either such Section, and all such fees and
expenses shall be reimbursed as they are incurred. In the case of any such
separate firm for the Underwriters, their officers and directors and such
control persons of any Underwriters, such firm shall be designated in writing by
Donaldson, Lufkin & Jenrette Securities Corporation. In the case of any such
separate firm for the Company and such directors, officers and control persons
of the Company, such firm shall be designated in writing by the Company. In the
case of any such separate firm for the Selling Stockholders and such control
persons of any Selling
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<PAGE> 24
Stockholders, such firm shall be designated in writing by the Attorneys. The
indemnifying party shall indemnify and hold harmless the indemnified party from
and against any and all losses, claims, damages, liabilities and judgments by
reason of any settlement of any action (i) effected with its written consent or
(ii) effected without its written consent if the settlement is entered into more
than twenty business days after the indemnifying party shall have received a
request from the indemnified party for reimbursement for the fees and expenses
of counsel (in any case where such fees and expenses are at the expense of the
indemnifying party) and, prior to the date of such settlement, the indemnifying
party shall have failed to comply with such reimbursement request. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement or compromise of, or consent to the entry of
judgment with respect to, any pending or threatened action in respect of which
the indemnified party is or could have been a party and indemnity or
contribution may be or could have been sought hereunder by the indemnified
party, unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability on claims that
are or could have been the subject matter of such action and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of the indemnified party.
(d) To the extent the indemnification provided for in this Section 8
is unavailable to an indemnified party or insufficient in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Sellers on the one hand and the Underwriters on the other hand from the offering
of the ADSs or (ii) if the allocation provided by clause 8(d)(i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause 8(d)(i) above but also the
relative fault of the Sellers on the one hand and the Underwriters on the other
hand in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative benefits received by the Sellers on the
one hand and the Underwriters on the other hand shall be deemed to be in the
same proportion as the total net proceeds from the offering (after deducting
underwriting discounts and commissions but before deducting expenses) received
by the Sellers, and the total underwriting discounts and commissions received by
the Underwriters, bear to the total price to the public of the ADSs, in each
case as set forth in the table on the cover page of the Prospectus. The relative
fault of the Sellers on the one hand and the Underwriters on the other hand
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a
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<PAGE> 25
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Selling Stockholders on
the one hand or the Underwriters on the other hand and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Sellers and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 8(d) were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses incurred by such indemnified party in
connection with investigating or defending any matter, including any action,
that could have given rise to such losses, claims, damages, liabilities or
judgments. Notwithstanding the provisions of this Section 8, no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the ADSs underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 8(d) are several in proportion to the respective number
of ADSs purchased by each of the Underwriters hereunder and not joint.
(e) The remedies provided for in this Section 8 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
SECTION 9. Conditions of Underwriters' Obligations. The several
obligations of the Underwriters to purchase the ADSs under this Agreement are
subject to the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Company
contained in this Agreement shall be true and correct on the Closing
Date with the same force and effect as if made on and as of the Closing
Date.
(b) The Registration Statement shall have become effective not
later than 5:00 P.M., New York City time, on the date of this Agreement
or at such later date and time as you may approve; and no stop order
suspending the effectiveness of the Registration Statement shall have
been
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<PAGE> 26
issued and no proceedings for that purpose shall have been commenced or
shall be pending before or contemplated by the Commission.
(c) You shall have received on the Closing Date a certificate
dated the Closing Date, signed by Mr. Herbert L. Oakes, Jr. and Mr.
John Sulley, in their capacities as the Non-Executive Chairman and
Chief Executive Officer of the Company, confirming the matters set
forth in Sections 6(u), 6(w), 9(a) and 9(b) and that the Company has
complied with all of the agreements and satisfied all of the conditions
herein contained and required to be complied with or satisfied by the
Company on or prior to the Closing Date.
(d) Since the respective dates as of which information is
given in the Prospectus other than as set forth in the Prospectus
(exclusive of any amendments or supplements thereto subsequent to the
date of this Agreement), (i) there shall not have occurred any change
or any development involving a prospective change in the condition,
financial or otherwise, or the earnings, business, management or
operations of the Company and its subsidiaries, taken as a whole, (ii)
there shall not have been any change or any development involving a
prospective change in the capital stock or in the long-term debt of the
Company or any of its subsidiaries and (iii) neither the Company nor
any of its subsidiaries shall have incurred any liability or
obligation, direct or contingent, the effect of which, in any such case
described in clause 9(d)(i), 9(d)(ii) or 9(d)(iii), in your judgment,
is material and adverse and, in your judgment, makes it impracticable
to market the ADSs and the Ordinary Shares on the terms and in the
manner contemplated in the Prospectus.
(e) All the representations and warranties of each Selling
Stockholder contained in this Agreement shall be true and correct on
the Closing Date with the same force and effect as if made on and as of
the Closing Date and you shall have received on the Closing Date a
certificate dated the Closing Date from each Selling Stockholder to
such effect and to the effect that such Selling Stockholder has
complied with all of the agreements and satisfied all of the conditions
herein contained and required to be complied with or satisfied by such
Selling Stockholder on or prior to the Closing Date.
(f) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Underwriters), dated the
Closing Date, of Masons, English counsel for the Company, to the effect
that:
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(i) each of the Company and its subsidiaries has been
duly incorporated and is validly existing as a public limited
company, in the case of the Company, and a limited company, in
the case of its subsidiaries, under the laws of England and
Wales and has the power under its Memorandum and Articles of
Association to carry on its business and to own, lease and
operate its properties as described in the Prospectus;
(ii) all the issued shares of the Company (including
the shares to be sold by the Selling Stockholders) have been
duly authorized and validly issued and are fully paid and not
subject to calls for further funds, or subject to any
preemptive or similar rights under the Company's Memorandum or
Articles of Association or English law, and no partner of
Masons has any actual knowledge of any agreement or contract
entered into by the Company which may subject the issued
shares to any such preemptive or similar rights;
(iii) the Shares to be sold by the Company have been
duly authorized, and, when delivered to and paid for by the
Underwriters, in accordance with the terms of this Agreement,
will be duly issued and fully paid and not subject to calls
for further funds and will conform to the description thereof
in the Prospectus; and the issuance of such Shares is not
subject to any preemptive or similar right that has not been
duly and validly waived;
(iv) upon the deposit of the Shares to be sold by the
Company with the Custodian and the registration in the
register of members of the Company of the Shares underlying
the ADSs (not including the Shares to be sold by the Selling
Stockholders which are addressed in a separate opinion) in the
name of the Custodian pursuant to the Deposit Agreement, all
legal right, title and interest in such Shares, subject to the
Deposit Agreement, will vest in the Custodian, free and clear
of all equitable liens, encumbrances or claims;
(v) all of the issued shares of each of the Company's
subsidiaries have been duly authorized and validly issued and
are fully paid, and are owned by the Company, free and clear
of any security interest, claim, lien, encumbrance or adverse
interest of a security nature which are registrable as charges
pursuant to the English Companies Act of 1985, other than
security in favor of Barclays Bank plc granted by the Company
or its subsidiaries over its assets;
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(vi) this Agreement has been duly authorized,
executed and delivered by the Company;
(vii) the Deposit Agreement has been duly authorized,
executed and delivered by the Company and constitutes a valid
and binding agreement of the Company enforceable in accordance
with its terms except as (i) the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally, (ii) the availability of
equitable remedies may be limited by equitable principles of
general applicability and (iii) claims may be barred by
relevant limitations relating to effluxion of time or may be
subject to defenses of set off or counterclaim;
(viii) the authorized share capital of the Company
conforms as to legal matters to the description thereof
contained in the Prospectus;
(ix) the statements identified in the attached
extracted sections from (A) the Prospectus under the captions
"Description of Share Capital" and "Taxation" and certain
other sections and (B) Item 14 of Part II of the Registration
Statement, in each case insofar as such statements are of
English law or the Memorandum and Articles of Association of
the Company, are accurate;
(x) no partner of Masons has actual knowledge of the
Company or any of its subsidiaries being in violation of its
respective Memorandum or Articles of Association, except that
such counsel expresses no opinion with respect to Article 107
of the Articles of Association of the Company and, Masons has
received a certificate from the Company, attached hereto as
Exhibit A, stating that neither the Company nor any of its
subsidiaries is in default in the performance of any agreement
that is filed as an exhibit to the Registration Statement;
(xi) the execution, delivery and performance of this
Agreement and the Deposit Agreement by the Company, the
compliance by the Company with all the provisions hereof and
of the Deposit Agreement and the consummation of the
transactions contemplated hereby and thereby will not (A)
require any consent, approval, authorization or other order
of, or qualification with, any U.K. court or governmental body
or agency, (B) conflict with or constitute a breach of any of
the terms or provisions of, or a default
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under, the Memorandum or Articles of Association of the
Company or any of its subsidiaries or any agreement that is
filed as an exhibit to the Registration Statement, or (C)
violate or conflict with any applicable law affecting the
Company, any of its subsidiaries or their respective property;
(xii) no partner of Masons has actual knowledge of
any legal or governmental proceedings pending or threatened to
which the Company or any of its subsidiaries is or could be a
party or to which any of their respective property is or could
be subject which, if determined adversely to the Company or
any such subsidiary could individually or in the aggregate be
expected to have a material adverse effect on the Company and
its subsidiaries, taken as a whole;
(xiii) in order to ensure the legality, validity,
enforceability or admissibility in evidence of this Agreement
and the Deposit Agreement in England, it is not necessary that
any document be filed, recorded or enrolled with any public
authority, governmental agency or governmental department of
England;
(xiv) the Company has the power to submit and has
taken all necessary corporate action to submit, to the
non-exclusive jurisdiction of any United States Federal or
state court in the County of New York, State of New York and
to appoint CT Corporation System as the authorized agent of
the Company, in each case with respect to legal proceedings in
the United States; and there is no provision of English law
which would render service of process invalid with respect to
legal proceedings in the United States;
(xv) the Company can sue and be sued under its own
name in England and Wales;
(xvi) under the laws of England and under current
practice of courts in England, (A) the Underwriters would be
permitted to commence proceedings against the Company in
English courts based on actions under this Agreement, (B) the
Depositary would be permitted to commence proceedings against
the Company in English courts based on actions under the
Deposit Agreement, (C) the owners of ADSs issued under the
Deposit Agreement would be permitted to commence proceedings
against the Company in English courts based on actions under
the Deposit Agreement and
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<PAGE> 30
(D) such courts in England would accept jurisdiction over any
such action or proceedings, subject to any application being
made by the Company to stay proceedings on the grounds of
forum non-conveniens;
(xvii) under the laws of England, the choice of the
law of the State of New York as the law expressed to govern
this Agreement and the Deposit Agreement is valid and binding
on the Company and the courts of England will give effect to
each such choice of law upon proof of the relevant provisions
of such foreign laws, subject, however, to the qualification
that foreign laws will not be applied to the extent contrary
to English public policy; any judgment obtained in a New York
court arising out of or based upon this Agreement that is for
a definite sum of money, is given on the merits and is
recognized as final and conclusive would be enforceable
against the Company in the courts of England, provided that:
(A) the judgment was not obtained by fraud, (B) recognition or
enforcement of the judgment is not contrary to English public
policy or in breach of the rules of natural justice, and is
not contrary to the provisions of the Protection of Trading
Interests Act 1980, (C) the judgment does not cover matters
which relate to issues raised in proceedings in England or
which have previously been determined by an English court, and
(D) the judgment does not determine the proprietary or
possessory rights in immovable property situated outside the
State of New York.
(xviii) except as may be described in the Prospectus
under the heading "Taxation", under the laws of England, cash
dividends and other distributions declared and payable in
English sterling may be converted into any other convertible
currency in England and may be transferred from England, and
all such dividends made to holders of the ADSs who are
non-residents of England may be made without the necessity of
obtaining any consents, approvals, authorizations, orders or
clearances from or registering with any English governmental
agency or body or any stock exchange authority;
(xix) other than as set forth or contemplated in the
Prospectus, no ad valorem stamp duty, stamp duty reserve tax
or issue, documentary, certification or other similar tax
imposed by any government department or other taxing authority
of or in the U.K. is payable in connection with (A) the
deposit with the Depositary or the Custodian of the Shares
against the issuance of
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<PAGE> 31
the ADRs evidencing ADSs in accordance with the Deposit
Agreement, (B) the issue of the ADRs evidencing ADSs by the
Depositary to or for the account of the Underwriters in
accordance with the terms of this Agreement or (C) the sale by
the Underwriters of the Shares (in the form of Ordinary Shares
or ADSs) to the initial purchasers thereof in accordance with
the terms of this Agreement and in the manner contemplated in
the Prospectus.
In giving such opinion, such counsel will state that it has not
investigated the laws of any jurisdiction other than England and the European
Union as it applies in the U.K. as they stand and have been interpreted in
published case law of the courts in England and of the European Union as of the
date of such opinion, and that it does not express or imply an opinion on the
laws of any other jurisdiction.
(g) The Underwriters shall have received on the Closing Date
an opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P., U.S. counsel
for the Company, dated the Closing Date, substantially in the form
attached hereto as Exhibit A.
(h) You shall have received an opinion on the Closing Date,
dated the Closing Date, of Akin, Gump, Strauss, Hauer & Feld, L.L.P.,
U.S. counsel for the Selling Stockholders to the effect set forth
below:
(i) this Agreement has been duly executed and
delivered and, in the case of non-individual Selling
Stockholders, duly authorized, by or on behalf of each such
Selling Stockholder;
(ii) pursuant to the Custody Agreement between each
Selling Stockholder and the Custodian, the Custodian's nominee
is the record holder, on behalf of each Selling Stockholder,
of the Shares to be sold by such Selling Stockholder pursuant
to this Agreement;
(iii) each Selling Stockholder, who is resident in
the U.S., has the legal right, to enter into this Agreement
and the Custody Agreement and the Power of Attorney of each
such Selling Stockholder and to sell, assign, transfer and
deliver the Shares to be sold by each such Selling Stockholder
in the manner provided herein and therein;
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<PAGE> 32
(iv) the Custody Agreement of each of the Selling
Stockholders has been duly executed and delivered and, in the
case of non-individual Selling Stockholders, duly authorized,
by each such Selling Stockholder and is a valid and binding
agreement of each such Selling Stockholder, enforceable in
accordance with its terms except as (i) the enforceability
thereof may be limited by bankruptcy, insolvency or similar
laws affecting creditors' rights generally, and (ii) the
availability of equitable remedies may be limited by equitable
principles of general applicability;
(v) the Power of Attorney of each of the Selling
Stockholders has been duly executed and delivered and, in the
case of non-individual Selling Stockholders, duly authorized,
by each such Selling Stockholder and is a valid and binding
instrument of each such Selling Stockholder, enforceable in
accordance with its terms except as (i) the enforceability
thereof may be limited by bankruptcy, insolvency or similar
laws affecting creditors' rights generally, and (ii) the
availability of equitable remedies may be limited by equitable
principles of general applicability, and, pursuant to such
Power of Attorney, each such Selling Stockholder has, among
other things, authorized the Attorneys, or any one of them, to
execute and deliver on such Selling Stockholder's behalf this
Agreement and any other document they, or any one of them, may
deem necessary or desirable in connection with the
transactions contemplated hereby and thereby and to deliver
the Shares to be sold by such Selling Stockholder pursuant to
this Agreement;
(vi) upon deposit of the Shares to be sold by the
Selling Stockholders with the Depositary pursuant to the
Deposit Agreement, and compliance with the terms of the
Deposit Agreement by the Depositary, any action based on an
adverse claim to such Shares, whether framed in conversion,
replevin, constructive trust, equitable lien or other theory,
may not be asserted successfully against the Depositary with
respect to any Shares to which the Depositary acquires a
security entitlement;
(vii) upon the sale and delivery of the Shares to be
sold by each of the Selling Stockholders in the form of
Ordinary Shares and against payment therefor by the
Underwriters as contemplated by this Agreement, under the
United States federal law and the laws of the State of New
York, any action based on an adverse claim to such Shares,
whether framed in conversion, replevin, constructive trust,
equitable lien or other theory, may not be asserted
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<PAGE> 33
successfully against either Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJ SECURITIES CORP.") or Donaldson,
Lufkin & Jenrette International ("DLJ INTERNATIONAL") with
respect to any Shares to which either DLJ Securities Corp. or
DLJ International acquires a security entitlement;
(viii) the execution, delivery and performance of
this Agreement and the Custody Agreement and Power of Attorney
of each Selling Stockholder by such Selling Stockholder, the
compliance by such Selling Stockholder with all the provisions
hereof and thereof and the consummation of the transactions
contemplated hereby and thereby will not (A) require any
consent, including any spousal consent, approval,
authorization or other order of, or qualification with, any
court or governmental body or agency of the United States
federal government or the government of the State of New York
(except such as may be required under the securities or Blue
Sky laws of the various states), (B) conflict with or
constitute a breach of any of the terms or provisions of, or a
default under, the organizational documents of such Selling
Stockholder, if such Selling Stockholder is not an individual,
any indenture, loan agreement, mortgage, lease or other
agreement or instrument to which such Selling Stockholder is a
party or by which any property of such Selling Stockholder is
bound or (C) violate or conflict with any United States
federal law or the laws of the State of New York, or to such
counsel's knowledge, any statute, or order, rule or regulation
of any court or any governmental body or agency of the United
States federal government or the government of the State of
New York having jurisdiction over the Company; and
(ix) Under the laws of the State of New York relating
to submission of personal jurisdiction, each Selling
Stockholder who is not a resident of the United States,
pursuant to Section 11 of the Agreement, has validly and
irrevocably submitted to the personal jurisdiction of any
state or federal court in the County of New York, the State of
New York, in any action arising out of or based upon the
Agreement or the transactions contemplated thereby, has
validly and irrevocably waived any objection to the venue of a
proceeding in any such court and any immunity to jurisdiction
of any such court, to which it may be or become entitled, and
has validly and irrevocably appointed CT Corporation System as
its authorized agent for the purposes described in Section 11
of the Agreement.
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<PAGE> 34
With respect to Section 9(h) above, Akin, Gump, Strauss, Hauer & Feld,
L.L.P., may rely upon an opinion or opinions of counsel for any Selling
Stockholders; provided that (A) each such counsel for the Selling Stockholders
is satisfactory to your counsel, (B) a copy of each opinion so relied upon is
delivered to you and is in form and substance satisfactory to your counsel and
(C) Akin, Gump, Strauss, Hauer & Feld, L.L.P., shall state in their opinions
that they are justified in relying on each such other opinion.
(i) You shall have received an opinion on the Closing Date,
dated the Closing Date, of Masons, English counsel for the Selling
Stockholders to the effect set forth below:
(i) Assuming the Underwriters are bona fide
purchasers for value and the Underwriters (and any nominees
therefor) are without notice (actual or constructive) of any
prior equitable or legal interest and that the relationship of
the Custodian to the Underwriters is that of nominee for
purposes of holding its Shares, subject to the terms of this
Agreement, upon the deposit of the Shares to be sold by the
Selling Stockholders with the Custodian together with the
transfer form duly signed and stamped and the registration in
the register of members of the Company of such Shares
underlying the ADSs in the name of the Custodian pursuant to
the Deposit Agreement, all legal right, title and interest in
such Shares will vest in the Custodian, free and clear of all
equitable liens, encumbrances or claims;
(ii) Assuming the Underwriters are bona fide
purchasers for value and the Underwriters (and any nominees
therefor) are without notice (actual or constructive) of any
prior equitable or legal interest, subject to the terms of
this Agreement, upon the sale and delivery of the Shares (in
the form of certificates or through CREST) to be sold by the
Selling Stockholders in the form of Ordinary Shares, and the
transfer form duly signed and stamped and the registration of
the Underwriters (or their nominees) in the register of
members of the Company, all legal right, title and interest in
such Shares will be transferred to the Underwriters, free and
clear of all equitable liens, encumbrances or claims;
(iii) each Selling Stockholder who is a resident of
the United Kingdom has the power to submit and has taken all
necessary corporate action to submit, to the non-exclusive
jurisdiction of any United States Federal or state court in
the
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<PAGE> 35
County of New York, State of New York and to appoint CT
Corporation System as the authorized agent of such Selling
Stockholder, in each case with respect to legal proceedings in
the United States; and there is no provision of English law
which would render service of process invalid with respect to
legal proceedings in the United States;
(iv) each Selling Stockholder, who is resident in the
United Kingdom, has the legal right, to enter into this
Agreement and the Custody Agreement and the Power of Attorney
of each such Selling Stockholder and to sell, assign, transfer
and deliver the Shares to be sold by each such Selling
Stockholder in the manner provided herein and therein;
(v) under the laws of England and under current
practice of courts in England, (A) the Underwriters would be
permitted to commence proceedings against each Selling
Stockholder who is a resident of the United Kingdom in English
courts based on actions under this Agreement and (B) such
courts in England would accept jurisdiction over any such
action or proceedings, subject to any application being made
by any such Selling Stockholder to stay proceedings on the
grounds of forum non-conveniens;
(vi) under the laws of England, the choice of the law
of the State of New York as the law expressed to govern this
Agreement, the Custody Agreement and the Power of Attorney of
each Selling Stockholder is valid and binding on each Selling
Stockholder and the courts of England will give effect to each
such choice of law upon proof of the relevant provisions of
such foreign laws, subject, however, to the qualification that
foreign laws will not be applied to the extent contrary to
English public policy; any judgment obtained in a New York
court arising out of or based upon this Agreement that is for
a definite sum of money, is given on the merits and is
recognized as final and conclusive would be enforceable
against each such Selling Stockholder in the courts of
England, provided that: (A) the judgment was not obtained by
fraud, (B) recognition or enforcement of the judgment is not
contrary to English public policy or in breach of the rules of
natural justice, and is not contrary to the provisions of the
Protection of Trading Interests Act 1980, (C) the judgment
does not cover matters which relate to issues raised in
proceedings in England or which have previously been
determined by an English court, and (D) the judgment does not
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<PAGE> 36
determine the proprietary or possessory rights in immovable
property situated outside the State of New York.
(j) You shall have received on the Closing Date an opinion,
dated the Closing Date, of Davis Polk & Wardwell, counsel for the
Underwriters, in such form as is reasonably satisfactory to you.
(k) Emmet, Marvin & Martin, LLP, counsel for the Depositary
and the Custodian, shall have furnished to you their written opinion,
dated such Closing Date, in form and substance satisfactory to you,
substantially to the effect that:
(i) The Deposit Agreement has been duly authorized,
executed and delivered by the Depositary and, assuming due
authorization, execution and delivery by the Company and
further assuming that the Deposit Agreement is a valid and
binding agreement of the Company, constitutes a valid and
legally binding obligation of the Depositary;
(ii) The Custody Agreement of each Selling
Stockholder has been duly authorized, executed and delivered
by the Custodian and, assuming due authorization, execution
and delivery by each Selling Stockholder and further assuming
that each Custody Agreement is a valid and binding agreement
of the relevant Selling Stockholder, constitutes a valid and
legally binding obligation of the Custodian;
(iii) Upon the issuance by the Depositary of ADRs
evidencing ADSs against the deposit of the Shares in
accordance with the provisions of the Deposit Agreement
(assuming such Ordinary Shares were, at the time of such
deposit, (a) duly authorized and validly issued, fully paid
and non-assessable and (b) registered in compliance with the
Act), such ADRs will be duly and validly issued and will
entitle the holders thereof to the rights specified therein
and in the Deposit Agreement; and
(iv) The ADS Registration Statement has been filed on
Form F-6 and has been declared effective under the Act and, to
the best of such counsel's knowledge, no stop order suspending
the effectiveness of the ADS Registration Statement or any
part thereof has been issued and no proceedings for that
purpose have been instituted or are pending or contemplated
under the Act, and the ADS Registration Statement, and each
amendment as of their
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<PAGE> 37
respective effective dates, complied as to form and in all
material respects with the requirements of the Act and the
rules and regulations thereunder.
(l) You shall have received, on each of the date hereof and
the Closing Date, a letter dated the date hereof or the Closing Date,
as the case may be, in form and substance satisfactory to you, from
Pannell Kerr Forster, chartered public accountants, containing the
information and statements of the type ordinarily included in
accountants' "comfort letters" to Underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectus.
(m) The Company shall have delivered to you the agreements
specified in Section 2 hereof which agreements shall be in full force
and effect on the Closing Date.
(n) The ADSs shall have been duly listed for quotation,
subject to notice of issuance, on the Nasdaq National Market and the
Ordinary Shares shall have been duly listed for quotation, subject to
notice of issuance, on the LSE.
(o) The Depositary shall have furnished or caused to be
furnished to you on the Closing Date evidence satisfactory to you
evidencing the deposit with it of the Ordinary Shares being so
deposited against issuance of ADRs evidencing the ADSs at the Closing
Date, and the execution, countersignature (if applicable), issuance and
delivery of ADRs evidencing such ADSs pursuant to the Deposit
Agreement.
(p) The Company and the Selling Stockholders shall not have
failed on or prior to the Closing Date to perform or comply with any of
the agreements herein contained and required to be performed or
complied with by the Company or the Selling Stockholders on or prior to
the Closing Date.
(q) Any preemptive or other such rights granted to the
Company's shareholders shall be duly and validly waived by such
shareholders in accordance with all applicable law in order to complete
the offering, sale and delivery of the ADSs contemplated hereby.
(r) You shall have received on the Closing Date, a certificate
of each Selling Stockholder who is not a U.S. Person (as defined under
applicable U.S. federal tax legislation) to the effect that such
Selling
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Stockholder is not a U.S. Person, which certificate may be in the form
of a properly completed and executed United States Treasury Department
Form W-8 (or other applicable form or statement specified by Treasury
Department regulations in lieu thereof).
The several obligations of the Underwriters to purchase any Additional
Shares hereunder are subject to the delivery to you on the applicable Option
Closing Date of such documents as you may reasonably request with respect to the
good standing of the Company, the due authorization and issuance of such
Additional Shares and other matters related to the issuance of such Additional
ADSs.
SECTION 10. Effectiveness of Agreement and Termination. This
Agreement shall become effective upon the execution and delivery of this
Agreement by the parties hereto.
This Agreement may be terminated at any time on or prior to the Closing
Date by you by written notice to the Sellers if any of the following has
occurred: (i) any outbreak or escalation of hostilities or other national or
international calamity or crisis or change in economic conditions or in the
financial markets of the United States or elsewhere that, in your judgment, is
material and adverse and, in your judgment, makes it impracticable to market the
ADSs on the terms and in the manner contemplated in the Prospectus, (ii) the
suspension or material limitation of trading in securities or other instruments
on the New York Stock Exchange, the American Stock Exchange, the Chicago Board
of Options Exchange, the Chicago Mercantile Exchange, the Chicago Board of Trade
or the Nasdaq National Market, the London Stock Exchange or limitation on prices
for securities or other instruments on any such exchange or trading system,
(iii) the suspension of trading of any securities of the Company on any exchange
or in the over-the-counter market or trading system, (iv) the enactment,
publication, decree or other promulgation of any federal or state statute,
regulation, rule or order of any court or other governmental authority which in
your opinion materially and adversely affects, or will materially and adversely
affect, the business, prospects, financial condition or results of operations of
the Company and its subsidiaries, taken as a whole, (v) the declaration of a
banking moratorium by either federal or New York State or English authorities or
(vi) the taking of any action by any federal, state or local government or
agency in respect of its monetary or fiscal affairs which in your opinion has a
material adverse effect on the financial markets in the United States or the
U.K.
If on the Closing Date or on an Option Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase the
Firm ADSs or Additional ADSs, as the case may be, which it has or they have
agreed to
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purchase hereunder on such date and the aggregate number of Firm ADSs or
Additional ADSs, as the case may be, which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not more than one-tenth
of the total number of Firm ADSs or Additional ADSs, as the case may be, to be
purchased on such date by all Underwriters, each non-defaulting Underwriter
shall be obligated severally, in the proportion which the number of Firm ADSs
set forth opposite its name in Schedule I bears to the total number of Firm ADSs
which all the non-defaulting Underwriters have agreed to purchase, or in such
other proportion as you may specify, to purchase the Firm ADSs or Additional
ADSs, as the case may be, which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase on such date; provided that in no event
shall the number of Firm ADSs or Additional ADSs, as the case may be, which any
Underwriter has agreed to purchase pursuant to Section 2 hereof be increased
pursuant to this Section 10 by an amount in excess of one-ninth of such number
of Firm ADSs or Additional ADSs, as the case may be, without the written consent
of such Underwriter. If on the Closing Date any Underwriter or Underwriters
shall fail or refuse to purchase Firm ADSs and the aggregate number of Firm ADSs
with respect to which such default occurs is more than one-tenth of the
aggregate number of Firm ADSs to be purchased by all Underwriters and
arrangements satisfactory to you, the Company and the Selling Stockholders for
purchase of such Firm ADSs are not made within 48 hours after such default, this
Agreement will terminate without liability on the part of any non-defaulting
Underwriter, the Company or the Selling Stockholders. In any such case which
does not result in termination of this Agreement, either you or the Sellers
shall have the right to postpone the Closing Date, but in no event for longer
than seven days, in order that the required changes, if any, in the Registration
Statement and the Prospectus or any other documents or arrangements may be
effected. If, on an Option Closing Date, any Underwriter or Underwriters shall
fail or refuse to purchase Additional ADSs and the aggregate number of
Additional ADSs with respect to which such default occurs is more than one-tenth
of the aggregate number of Additional ADSs to be purchased on such date, the
non-defaulting Underwriters shall have the option to (i) terminate their
obligation hereunder to purchase such Additional ADSs or (ii) purchase not less
than the number of Additional ADSs that such non- defaulting Underwriters would
have been obligated to purchase on such date in the absence of such default. Any
action taken under this paragraph shall not relieve any defaulting Underwriter
from liability in respect of any default of any such Underwriter under this
Agreement.
SECTION 11. Agreements of the Selling Stockholders. Each Selling
Stockholder agrees with you and the Company:
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<PAGE> 40
(a) To pay or to cause to be paid all transfer taxes payable
in connection with the transfer of the Shares to be sold by such
Selling Stockholder to the Underwriters.
(b) To do and perform all things to be done and performed by
such Selling Stockholder under this Agreement prior to the Closing Date
and to satisfy all conditions precedent to the delivery of the Shares
to be sold by such Selling Stockholder pursuant to this Agreement.
(c) Each Selling Stockholder hereby designates CT Corporation
Systems, New York, New York, a Delaware corporation, as its authorized
agent, upon which process may be served in any action which may be
instituted in any state or federal court in the State of New York by
any Underwriter, any director or officer of any Underwriter or any
person controlling any Underwriter asserting a claim for
indemnification or contribution under or pursuant to Section 8 hereof,
and each Selling Stockholder will accept the jurisdiction of such court
in such action, and waives, to the fullest extent permitted by
applicable law, any defense based upon lack of personal jurisdiction or
venue. A copy of any such process shall be sent or given to such
Selling Stockholder, at the address for notices specified in Section 12
hereof.
SECTION 12. Miscellaneous. Notices given pursuant to any provision of
this Agreement shall be addressed as follows: (i) if to the Company, to
Independent Energy Holdings plc, Radcliffe House, Blenheim Court, Solihull, West
Midlands B91 2AA, United Kingdom, (ii) if to any Selling Stockholders (other
than DLJ International), c/o Independent Energy Holdings plc, Radcliffe House,
Blenheim Court, Solihull, West Midlands B91 2AA, United Kingdom and (iii) if to
any Underwriter or to DLJ International, c/o Donaldson, Lufkin & Jenrette
Securities Corporation, 277 Park Avenue, New York, New York 10172, Attention:
Syndicate Department, or in any case to such other address as the person to be
notified may have requested in writing.
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company, the Selling Stockholders and the
several Underwriters set forth in or made pursuant to this Agreement shall
remain operative and in full force and effect, and will survive delivery of and
payment for the ADS, regardless of (i) any investigation, or statement as to the
results thereof, made by or on behalf of any Underwriter, the officers or
directors of any Underwriter, any person controlling any Underwriter, the
Company, the officers or directors of the Company, any person controlling the
Company, any Selling Stockholder or any person controlling such Selling
Stockholder, (ii) acceptance of the ADS and payment for them hereunder and (iii)
termination of this Agreement.
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If for any reason the Shares or the ADSs are not delivered by or on
behalf of any Seller as provided herein (other than the failure to deliver
Shares by Donaldson, Lufkin & Jenrette International or as a result of any
termination of this Agreement pursuant to Section 10), the Company agrees,
subject to the subrogation of the Underwriters' rights against such defaulting
Seller, to reimburse the several Underwriters for all out-of-pocket expenses
(including the reasonable fees and disbursements of counsel) incurred by them.
Notwithstanding any termination of this Agreement, the Company shall be liable
for all expenses which it has agreed to pay pursuant to Section 5(j) hereof. The
Company also agrees, subject to the subrogation of the Underwriters' rights
against such defaulting Seller, to reimburse the several Underwriters, their
directors and officers and any persons controlling any of the Underwriters for
any and all fees and expenses (including, without limitation, the reasonable
fees and disbursements of counsel) incurred by them in connection with enforcing
their rights hereunder (including, without limitation, pursuant to Section 8
hereof).
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company, the Selling
Stockholders, the Underwriters, the Underwriters' directors and officers, any
controlling persons referred to herein, the Company's directors and the
Company's officers who sign the Registration Statement and their respective
successors and assigns, all as and to the extent provided in this Agreement, and
no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include a purchaser of
any of the Shares from any of the several Underwriters merely because of such
purchase.
Each party to this Agreement hereby irrevocably agrees that any legal
suit, action or proceeding brought by any Underwriter or by any person
controlling any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Securities Exchange Act of 1934, as amended,
arising out of or based upon this Agreement or the transactions contemplated
hereby may be instituted in any state or federal court in the County of New
York, the State of New York, United States of America, and irrevocably waives,
to the fullest extent permitted by law, any objection which such party may now
or hereafter have to the laying of the venue in such courts of any such suit,
action or proceeding, and irrevocably submits to the non-exclusive jurisdiction
of any such court in any such suit, action or proceeding. Each party waives any
immunity to jurisdiction to which such party may otherwise be entitled or become
entitled (including immunity to pre-judgment attachment and execution) in any
legal suit, action or proceeding against such party arising out of this
Agreement or the transactions contemplated hereby which is instituted in any
state or federal court in the County of New York, the State of New York, United
States of America, or in any foreign court. To the extent permitted by law, each
party hereby waives any objection to the
41
<PAGE> 42
enforcement by any competent foreign court of any judgment validly obtained in
any such proceeding. Each party hereby designates and appoints CT Corporation
System, 1633 Broadway, New York, NY 10019 as the authorized agent of such party
(the "AUTHORIZED AGENT") to accept and acknowledge on behalf of such party
service of any and all process which may be served in any such suit, action or
proceeding in any such court. Such appointments shall be irrevocable subject to
the appointment of a successor agent in the United States on terms substantially
similar to those contained in this Section 11 as reasonably satisfactory to DLJ.
Each party agrees that service of process upon the Authorized Agent of such
party at such address (or such other address in the United States as the parties
may designate by written notice to the Representatives) and written notice of
such service to such party shall be deemed in every respect effective service of
process upon such party. Each party represents and warrants that the Authorized
Agent of such party has agreed to act as said agent for service of process and
agrees to take all action that may be necessary to continue such appointment (or
the appointment of a successor agent in the United States). Notwithstanding the
foregoing, any action arising out of or based on this Agreement or the
transactions contemplated hereby may be instituted by any Underwriter or by any
person controlling any Underwriter within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act in any competent foreign
court.
Each Underwriter has undertaken to the Company that it (i) has not
offered or sold and prior to the date six months after their date of issue will
not offer or sell any ADSs to persons in the U.K. 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 do not constitute an offer to the public in the
U.K. within the meaning of the Public Offers of Securities Regulations 1995;
(ii) it has complied with and will comply with all applicable provisions of the
Financial Services Act 1986 with respect to anything done by it in relation to
the ADSs offered hereby in, from or otherwise involving the U.K.; and (iii) it
has only issued or passed on and will only issue or pass on in the U.K. any
document received by it in connection with the offering to a person who is of a
kind described in Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1996 or is a person to whom the document may
otherwise lawfully be issued or passed on.
This Agreement shall be governed and construed in accordance with the
laws of the State of New York.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
42
<PAGE> 43
Please confirm that the foregoing correctly sets forth the agreement
among the Company, the Selling Stockholders and the several Underwriters.
Very truly yours,
INDEPENDENT ENERGY HOLDINGS PLC
By:
-------------------------------------
Name:
Title:
<PAGE> 44
THE SELLING STOCKHOLDERS NAMED IN SCHEDULE II
HERETO, ACTING SEVERALLY
By:
-----------------------------------------
Attorney-in-fact
<PAGE> 45
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
JOHNSON RICE & COMPANY L.L.C.
PRUDENTIAL SECURITIES
INCORPORATED
Acting severally on behalf of themselves and the
several Underwriters named in Schedule I
hereto
By: DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By:
---------------------------------------
Name:
Title:
<PAGE> 46
SCHEDULE I
<TABLE>
<CAPTION>
NUMBER OF FIRM SHARES
UNDERWRITERS TO BE PURCHASED
- ------------ -----------------------
<S> <C>
Donaldson, Lufkin & Jenrette Securities o
Corporation
Prudential Securities Incorporated o
Johnson Rice & Company L.L.C. o
--------------
Total 4,070,000
</TABLE>
<PAGE> 47
SCHEDULE II
SELLING STOCKHOLDERS
<TABLE>
<CAPTION>
NUMBER OF FIRM NUMBER OF ADDITIONAL
NAME SHARES BEING SOLD SHARES BEING SOLD
- ---- ----------------- --------------------
<S> <C> <C>
Burt H. Keenan 500,000 75,000
Robert E. Jones 60,000 --
John L. Sulley 60,000 --
Donaldson, Lufkin & Jenrette International 250,000 --
------------ -----------
Total 870,000 75,000
</TABLE>
<PAGE> 1
EXHIBIT 5
[Letterhead of Masons Solicitors]
29 September 1999
Independent Energy Holdings PLC
Radcliffe House
Blenheim Court
Solihull, West Midlands B91 2AA
Dear Sirs:
We have acted as solicitors in England to Independent Energy Holdings
PLC (the "Company") and the selling shareholders and have been requested by such
parties to give this opinion in connection with the Registration Statement on
Form F-3 filed with the United States Securities and Exchange Commission by the
Company for the purposes of registering under the United States Securities Act
of 1933 (the "Securities Act") Ordinary Shares of 1p each. For the purposes of
this opinion, words and phrases used but not defined herein shall have the same
meaning as those contained in the Prospectus. We are of the opinion that the
Ordinary Shares to be offered and sold by the Company, once allotted and issued
by the Company and fully paid for by the Underwriters, will be duly authorized
and validly issued and fully paid and will not be subject to calls for further
funds.
We hereby confirm, in all material respects, the statements in the
Prospectus under the heading "Taxation" (in respect only of UK taxation), in
each case so far as such statements constitute summaries of the legal matters,
documents or proceedings referred to therein, fairly represent the information
called for with respect to such legal matters, documents and proceedings and
fairly summarize the matters referred to therein.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to us under the captions
"Enforcement of Liabilities" and "Legal Matters" contained in the Prospectus.
Yours truly,
/s/ MASON SOLICITORS
--------------------
Masons Solicitors
<PAGE> 1
EXHIBIT 8.2
March 24, 2000
Independent Energy Holdings PLC
Radcliffe House
Blenheim Court
Solihull, West Midlands B91 2AA
United Kingdom
Dear Sirs:
We are acting as United States counsel to Independent Energy Holdings
PLC (the "Company") and the selling shareholders in connection with the
Registration Statement on Form F-3 (the "Registration Statement") filed with the
United States Securities and Exchange Commission by the Company for the purpose
of registering under the United States Securities Act of 1933, as amended (the
"Act"), certain of the Company's Ordinary Shares, nominal value 1p per share, in
connection with an offering by the Company of American Depositary Shares.
We hereby confirm, in all material respects, our advice with respect to
United States federal tax laws contained in the Prospectus included in the
Registration Statement under the caption "Taxation."
We hereby consent to the use of our name under the caption "Taxation"
and "Legal Matters" in the Prospectus included in the Registration Statement and
to the filing, as an exhibit to the Registration Statement, of this letter. In
giving such consent we do not admit that we come within the category of persons
whose consent is required under Section 7 of the Act.
Very truly yours,
/s/ AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.
----------------------------------------------
AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.
<PAGE> 1
Private & Confidential
DATED 22ND OCTOBER 1999
YORK WATERWORKS ENTERPRISES LIMITED (1)
INDEPENDENT ENERGY HOLDINGS PLC (2)
AND
KELDA GROUP PLC (3)
AGREEMENT
FOR THE SALE AND PURCHASE OF THE
ENTIRE ISSUED SHARE CAPITAL OF
YORK GAS LIMITED
[ADDLESHAW BOOTH & CO. LOGO]
ADDLESHAW BOOTH & CO.
<PAGE> 2
CONTENTS
<TABLE>
<CAPTION>
CLAUSE HEADING PAGE
<S> <C> <C>
1 Definitions 1
2 Sale and purchase 3
3 Consideration 3
4 Completion 4
5 Warranties 6
6 Non-competition and confidentiality 7
7 Taxation 8
8 Employees 8
9 Further assurance 8
10 Costs 9
11 Period to Completion 9
12 General 10
13 Interpretation provisions 12
14 Proper law 13
15 Notices 13
SCHEDULE
1 The Company 14
2 Warranties 15
3 Property 21
Part 1 - Description of Property 21
4 Provisions for the protection of the Seller 22
5 Taxation 26
Part 1 - General 26
Part 2 - Tax Covenant 36
Part 3 - Taxation Warranties 38
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
6 Preparation of Completion Accounts and determination of
Net Assets Value 43
Part 1 - Principles for preparation of Completion Accounts 43
Part 2 - Procedure for preparation of Completion Accounts
and determination of Net Assets Value 46
7 Intellectual Property 49
AGREED FORM DOCUMENTS
1 THE SHARED SERVICES AGREEMENT
2 THE SECONDMENT AGREEMENTS
3 THE LEASE OF THE PROPERTY
</TABLE>
<PAGE> 4
THIS AGREEMENT is made on 22nd October 1999 BETWEEN:
(1) YORK WATERWORKS ENTERPRISES LIMITED (company number 3050705) whose
registered office is at 2 The Embankment, Sovereign Street, Leeds, LS1
4BG ("THE SELLER"),
(2) INDEPENDENT ENERGY HOLDINGS PLC (registered in England and Wales under
number 3033606) whose registered office is at Radcliffe House, Blenheim
Court, Solihull B91 2AA("THE BUYER"), and
(3) KELDA GROUP PLC (Company number 2366627) whose registered office is at
2 The Embankment, Sovereign Street, Leeds, LS1 4BC ("KELDA").
IT IS HEREBY AGREED as follows:
1 DEFINITIONS
1.1 In this Agreement the following definitions apply, unless the context
requires otherwise:
"ACCOUNTS" means the audited accounts of the Company for the financial
year ended on the Accounts Date;
"ACCOUNTS DATE" means 31st March 1999;
"AFFILIATE" means in relation to any person, any holding company or
subsidiary of that person or any subsidiary of such holding company and
"holding company" and "subsidiary" shall have the meaning given to them
in section 736 of the Companies Act 1985;
"AUDITED ACCOUNTS" means the audited accounts of the Company for the
period from 1st April 1999 midnight on 31st October 1999 to be prepared
by the Company pursuant to clause 3.3 and Schedule 6;
"AUDITORS" means Messrs Ernst & Young, the auditors of the Company
immediately prior to Completion;
"BUSINESS DAY" means a day (excluding a Saturday, Sunday or public
holiday) on which clearing banks are open for business in the City of
London;
"COMPANY" means York Gas Limited, a company registered in England and
Wales under number 3061131, particulars of which are set out in
schedule 1;
"COMPLETION" means completion of the sale and purchase of the Shares
pursuant to this Agreement in accordance with its provisions;
"COMPLETION ACCOUNTS" means the balance sheet of the Company as at
Completion on 1st November 1999 to be prepared in accordance with
clause 3.3;
"COMPLETION DATE" means 1st November 1999;
"DESIGNATED ACCOUNT" means the bank account at the National Westminster
Bank plc, Leeds City office; Account Number 86690469; Sort Code: 60 60
05; and Account Name: Kelda Group plc;
"DISCLOSURE LETTER" means the letter dated the same day as this
Agreement written by the Seller to the Buyer qualifying the Warranties;
<PAGE> 5
"DOMESTIC CUSTOMERS" means those persons who have signed the York Gas
domestic gas supply agreement and have not delivered to the Company
notice of termination of that agreement;
"DUE DILIGENCE MATERIALS" means the Information Memorandum, the
preliminary due diligence pack, the files called "York Gas Limited Due
Diligence pack" volumes 1-5 and the documents sent to the Buyer on
23rd, 28th and 29th September 1999 all as they appear in the bundle of
documents attached to the Disclosure Letter;
"GAS SUPPLIER LICENCE" means a licence granted pursuant to section
7A(1) of the Gas Act 1986 (as amended);
"INDUSTRIAL AND COMMERCIAL CUSTOMERS" means those persons who have
signed the York Gas commercial gas supply agreement and have not
delivered to the Company notice of termination of that agreement;
"INFORMATION MEMORANDUM" means the document with the name "York Gas
Limited Information Memorandum" a copy of which appears in the Due
Diligence Materials;
"INTELLECTUAL PROPERTY" means patents (including supplementary
protection certificates), trade marks, service marks, registered
designs, utility models, design rights, topography rights, copyrights,
inventions, trade secrets and other confidential information, know-how,
business or trade names, get-up, and all other intellectual property
and neighbouring rights and rights of a similar or corresponding
character in any part of the world (whether or not the same are
registered or capable of registration) and all applications and rights
to apply for or for the protection of any of the foregoing;
"INTELLECTUAL PROPERTY RIGHTS" means the Intellectual Property which is
listed in schedule 7;
"NET ASSETS VALUE" means a sum (whether positive or negative) equal to
the paid up share capital of the Company plus or minus (as the case may
be) the amounts standing to the credit or debit of the capital and
revenue reserves (including profit and loss account) of the Company at
the Completion Date, all as shown in the Completion Accounts;
"PERSON" includes a body corporate and an unincorporated body of
persons;
"PROPERTY" means the leasehold property specified in part 1 of schedule
3 and any part of it;
"PURCHASE PRICE" means the sum set out in clause 3.2 plus or minus any
adjustment to be made pursuant to clause 3.3;
"SHARES" means the 5,000 "A" Ordinary shares of Pound Sterling1 each
and the 5,000 "B" Ordinary shares of Pound Sterling1 each in the
Company together with all the shares to be issued pursuant to clause
4.5 being the whole of the issued share capital of the Company at
Completion;
"TAX COVENANT" means the covenant contained in part 2 of schedule 5;
"1988 TAXES ACT" means the Income and Corporation Taxes Act 1988; and
<PAGE> 6
"WARRANTIES" means the warranties referred to in clause 5 and set out
in schedule 2, part 2 of schedule 3 and part 3 of schedule 5.
1.2 A document expressed to be "in the Agreed Form" is a document whose
form has been agreed, and for identification purposes signed, by or on
behalf of the parties to this Agreement.
1.3 Words and phrases which are defined for the purposes of the Companies
Act 1985 shall, unless the context requires otherwise, bear the same
meanings in this Agreement.
1.4 A person shall be treated as "connected with" another person for the
purpose of this Agreement if he would be so treated under section 839
of the 1988 Taxes Act.
1.5 References in this Agreement to "TAX" and "TAXATION" shall be construed
in accordance with the Tax Covenant.
2 SALE AND PURCHASE
2.1 On and subject to the provisions of this Agreement the Seller shall
sell with full title guarantee the Shares and the Buyer shall purchase
the Shares on and with effect from Completion, in each case free from
any mortgage, charge, pledge, lien, equity, option, encumbrance or
other third party right or claim, and free from any outstanding
agreement or commitment to give or create any of the foregoing,
together with all rights and benefits attached or accruing to the
Shares on or after Completion (including without limitation the right
to receive all dividends and distributions declared, made or paid on or
after Completion).
2.2 The Seller hereby waives any rights of pre-emption conferred on him by
the Articles of Association of the Company or otherwise over any of the
Shares.
3 CONSIDERATION
3.1 The consideration for the sale of the Shares shall be the payment by
the Buyer to the Seller in accordance with the following provisions of
this clause 3 of the Purchase Price in cash.
3.2 The sum of Pound Sterling4,400,000 on account of the Purchase Price
shall be payable on Completion to the Designated Account by way of
electronic funds transfer for same day value.
3.3 Following Completion the Buyer shall prepare drafts of the Audited
Accounts and the Completion Accounts in accordance with schedule 6, and
following agreement or determination of the Net Asset Value in
accordance with that schedule, if the Net Asset Value is:
(a) an amount which is more than Pound Sterling839,000, the Buyer
shall pay to the Seller in accordance with clause 3.4 a sum
equal to the difference between the Net Assets Value and Pound
Sterling689,000;
(b) an amount which is less than Pound Sterling539,000, the Seller
shall pay to the Buyer in accordance with clause 3.4 a sum
equal to the difference between the Net Assets Value and Pound
Sterling689,000; or
<PAGE> 7
(c) equal to or between Pound Sterling839,000 and Pound
Sterling539,000, no payment or further payment from the Buyer
to the Seller, or from the Seller to the Buyer shall be made
pursuant to this clause 3.3.
3.4 Every sum payable under clause 3.3 shall be paid:
(a) within 5 business days after the date of agreement or
determination of the Net Asset Value by electronic funds
transfer for same day value:
(i) (where such sum is expressed to be payable to the
Seller) to the Designated Account; or
(ii) (where such sum is expressed to be payable to the
Buyer) to such account as is designated by the Buyer.
4 COMPLETION
4.1 Prior to Completion the accounting reference date shall be changed to
31st October 1999.
4.2 Completion shall take place at the offices of Addleshaw Booth & Co of
Sovereign House, PO Box 8, Sovereign Street, Leeds, LS1 1HQ on the
Completion Date.
4.3 At Completion the Seller shall deliver to the Buyer:
(a) the transfers of the Shares, duly executed by the registered
holders, in favour of the Buyer or its nominee, together with
the relevant share certificates;
(b) the common seal, certificate(s) of incorporation and statutory
books, written up to but excluding Completion, of the Company;
(c) letters of resignation (with effect from the end of the
relevant board meeting referred to in clause 4.4) under seal
in the Agreed Form from Rachel Victoria Jones, Jonson Cox,
Peter John Nicholson and John Peter O'Kane resigning from all
their offices within the Company;
(d) a copy of each bank mandate of the Company;
(e) the accounting records and all cheque books, paying in books
and unused cheques of the Company accompanied by bank
statements of all its bank accounts as at the close of
business on the date not more than 2 business days prior to
Completion;
(f) a copy of the resolutions of the directors of the Seller
(certified as true by its secretary or a director) authorising
the execution and delivery of, and performance of its
obligations under, this Agreement and the other documents to
be entered into by it in relation to this Agreement;
(h) the certificates of registration for all Intellectual Property
Rights which are registered together with evidence of all
renewals of such registrations
and shall use all reasonable endeavours to procure that the lease of
the Property in substantially the Agreed Form has been executed by the
parties thereto and duly stamped before Completion and shall deliver
unconditional receipts for rent and any service charges due in respect
of the Property.
<PAGE> 8
4.4 At Completion the Seller will procure that a meeting of the board of
directors of the Company and a meeting of its shareholders is held, at
which:
(a) the transfers of Shares are approved and, subject to stamping,
the entry of the transferee(s) in the relevant register of
members as holder(s) of such shares is approved;
(b) Ian Stewart and John Sulley are appointed directors and Ian
Stewart is appointed as secretary of the Company;
(c) all the Company's authorities and instructions to bankers
(including bank mandate forms) are modified or replaced, as
directed by the Buyer;
(d) the sending to the Registrar of Companies of a notice changing
the Company's registered office to that of the Buyer is
approved; and
(e) the actions required to be taken by the Company to effect
clause 4.5 and 4.6 are taken and approved.
4.5 Immediately prior to Completion the Seller shall procure that:
(a) the Company shall transfer a sum equal to the net aggregate
credit balance on all the Company's bank accounts to the
Seller in satisfaction of a capital sum equal to such amount
in respect of amounts owed by the Company to the Seller; or
(b) if there is a net aggregate debit balance on all of the
Company's bank accounts, the Seller shall transfer a sum equal
to any such net aggregate debit balance to a bank account of
the Company.
4.6 Any outstanding amounts due to the Seller from the Company after clause
4.4 is complied with shall be capitalised by the Seller and used to
fund the subscription by the Seller for "A" Ordinary Shares of Pound
Sterling1 each per share in the capital of the Company with a nominal
value equal to the amounts outstanding at that time following which
subscription all such outstanding amounts shall be completely
discharged.
4.7 The Seller hereby declares that so long as it remains the registered
holder of any of the shares after Completion it will:
(a) hold the Shares and the dividends and other distribution of
profits or surplus or other assets declared, paid or made in
respect of them now or after the date hereof and all rights
arising out of or in connection with them in trust for the
Buyer and its successors in title; and
(b) deal with and dispose of the Shares and all such dividends,
distributions and rights as are described in sub-clause (a)
only as the Buyer or any such successor may direct.
4.7 Within 14 business days following Completion, the Buyer shall procure
the unconditional release (and deliver to the Seller the original
document effecting such release) of all obligations under the first
demand without proof or conditions Bond (the "BOND") dated 8th October
1997 given by York Waterworks Limited in favour of Ofgem and shall, if
so required by Ofgem as a condition of such release, enter into any
bond or other security arrangement in the form and in respect of the
principal sum required by Ofgem. The Buyer shall
<PAGE> 9
indemnify the Seller (as trustee for York Waterworks Limited) against
all costs, claims and liabilities of York Waterworks under the Bond
arising by reason of a claim under such Bond after Completion.
4.8 At Completion, the Seller and the Company shall enter into the Shared
Services Agreement and the Secondment Agreements each in the Agreed
Form.
4.9 The Seller confirms that Peter John Nicholson and Steven Bradley have
both agreed to enter into the Secondment Agreements each in the Agreed
Form.
5 WARRANTIES
5.1 The Seller warrants to the Buyer (for itself and as trustee for its
permitted successors in title) in the terms of the Warranties as at the
date of this Agreement. The Seller acknowledges that the Buyer is
entering into this Agreement on the basis of and in reliance upon the
accuracy of each Warranty. Liability under any Warranty shall not be
confined to breaches discovered before Completion nor in any way be
modified or discharged by Completion.
5.2 The Buyer shall not have any claim under the Warranties in respect of
any matter which is fairly disclosed in or deemed disclosed by the
Disclosure Letter or by the Due Diligence Materials.
5.3 Each Warranty which is, or could be, set out in a separate clause shall
be construed independently of the others and, save as expressly
provided otherwise, shall not be limited or curtailed as a result of
any other provision of this Agreement.
5.4 Where a statement in this Agreement is qualified by the expression "so
far as the Seller is aware" or any similar expression the Seller shall
be deemed to have the knowledge of all employees of the Seller and its
subsidiaries other than the Company and in addition the Seller is
deemed to have the knowledge it would have acquired after reasonable
diligent enquiry of Peter Nicholson but shall not be deemed to have
further knowledge of any other person.
5.5 Neither any failure to exercise, or delay in exercising, any right or
remedy of the Buyer in relation to this Agreement or Completion, shall
operate as a waiver of any such right or remedy and a single or partial
exercise of such a right or remedy shall not preclude any other
exercise by the Buyer of that or any other right or remedy.
5.6 All claims by the Buyer for damages or compensation in respect of any
claim by the Buyer or the Company against the Seller under this
Agreement shall be subject to the provisions for the protection of the
Seller in schedule 4.
6 NON-COMPETITION AND CONFIDENTIALITY
6.1 The Seller covenants with the Buyer (for itself and as trustee for the
Company and its permitted successors in title) that (always subject to
Clause 6.2) it will not directly or indirectly in any capacity within
Great Britain within 12 months after the Completion Date apply for a
gas licence to supply gas under the Gas Act 1986 or be interested in an
undertaking which has an existing licence to supply gas under the Gas
Act 1986.
6.2 Clause 6.1 shall not prevent the Seller from having an interest in
securities which are traded on a recognised public market if that
interest does not
<PAGE> 10
constitute a notifiable interest for the purpose of section 199(2)
Companies Act 1985 or purchasing any company or business which includes
a business which carries out operations of the type specified in clause
6.1 provided they do not comprise the majority of such company's or
business's operations.
6.3 If the undertakings in clauses 6.1 or 6.5 would be void unless
modified, they shall be modified to the extent necessary to make them
enforceable.
6.4 The Seller covenants with the Buyer that it shall not for a period of 2
years after the Completion Date (except under the authority of the
court or other legal or regulatory obligation) divulge to any other
person or use otherwise than for the benefit of the Company, any secret
or confidential information relating to the businesses of the Company,
including its customers, processes and dealing terms, which was
obtained by it from its ownership of shares in the Company or position
in the Company.
6.5 Kelda covenants with the Buyer (for itself and as trustee for the
Company and its permitted successors in title) that it will not and
will procure that no subsidiary of Kelda will during the period of 2
years from the Completion Date enter into an agreement with any person
who is a Domestic Customer or Industrial and Commercial Customer of the
Company at the Completion Date for the supply of electricity by Kelda
or any such subsidiary or solicit any such person in connection with
such an agreement provided that this covenant shall not apply to sales
of electricity generated by Yorkshire Windpower Limited or sales of
electricity generated by any generating facility in which Kelda or any
subsidiary of Kelda has become interested in or will become interested
in the future.
6.6 Kelda covenants with the Buyer (for itself and as trustee for the
Company and its permitted successors in title) that it will not and
will procure that no subsidiary of Kelda will during the period of 2
years from the Completion Date enter into an agreement with any person
who is a Domestic Customer or Industrial and Commercial Customer of the
Company at the Completion Date for the supply of gas by Kelda or any
such subsidiary or solicit any such person in connection with such an
agreement.
7 TAXATION
7.1 The provisions of schedule 5 shall have effect.
8 EMPLOYEES
8.1 The Buyer undertakes to the Seller and to Kelda that it will not, and
will procure that the Company will not, dismiss or transfer to a
location outside the City of York any of the permanent employees of the
Company at the Completion Date during the period of 6 months starting
on the Completion Date and that during such period it will procure that
the Company maintains such employees in their current posts on the same
terms (save for any increase in salary and variations to pension
arrangements which are necessary as a result of completion of this
Agreement) as applied to them at the Completion Date. The Buyer further
undertakes that if following such period (but before the expiry of 9
months from the Completion Date) the Company wishes to terminate the
post of such an employee at the Property it will, or will procure that
the Company will, offer alternative employment on at least as
beneficial terms to such employee.
<PAGE> 11
8.2 The Buyer accepts that a monetary claim would not be an adequate remedy
for breach of clause 8.1 and that the Seller is entitled to an order
for specific performance of the Buyer's obligations under clause 8.1.
8.3 Notwithstanding clauses 8.1 and 8.2, nothing in this Agreement shall
prevent the Company from exercising any rights or remedies available to
it arising from any employee's breach of the terms and/or conditions of
his/her employment.
9 FURTHER ASSURANCE
9.1 The Seller shall, at the request and expense of the Buyer, execute and
deliver all such instruments and any further document, including a
power of attorney in favour of the Buyer or its nominee, and perform
any further act which may be required by the Buyer to effectually vest
title to the Shares in the Buyer.
9.2 Save as (but only to the extent) expressly required by law or by the
London Stock Exchange or by the relevant national or supra-national
regulatory, governmental or quasi-governmental authority, all
announcements or circulars by, or on behalf of the parties hereto and
relating to the terms of this Agreement or any document entered into
pursuant to it shall be in terms to be agreed between the parties in
advance of issue and the terms of this Agreement and of the documents
entered into pursuant to it shall otherwise be kept confidential by the
parties.
9.3 Subject always to use of the Intellectual Property Rights by the Buyer
and/or the Company, the Buyer shall not at any time following
Completion represent or allow representations to be made that it, any
associated company of the Buyer or the Company is in any way connected
to the Seller or Kelda or any subsidiary thereof.
10 COSTS
10.1 Each party shall pay its own costs and expenses in relation to the
negotiation, preparation, execution and implementation of this
Agreement and the documents referred to herein.
11 PERIOD TO COMPLETION
11.1 The Seller undertakes with the Buyer that from the date of this
Agreement to the Completion (both dates inclusive) it will procure that
the business of the Company will be carried on in the normal and
ordinary course and will procure that the Company will not (without the
prior written consent of the Buyer) other than as provided for in this
Agreement:
(a) enter into any material transaction, contract or arrangement
material for the purpose of this clause 11.1(a) being a
transaction contract or arrangement for a principal amount
which exceeds or could exceed Pound Sterling10,000;
(b) enter into any lease, hire purchase or other agreement or
arrangement for payment on deferred terms;
(c) grant a lease, licence or third party right in respect of any
of the Properties or otherwise transfer or dispose of any of
its interests in any of the Properties;
<PAGE> 12
(d) make any loan;
(e) dispose of or grant any option or right of pre-emption in
respect of any part of its assets (except in the ordinary
course of trading);
(f) borrow any money or make any payment out of or drawings on its
bank accounts (except routine payments in the ordinary course
of trading);
(g) incur any expenditure exceeding Pound Sterling5,000 on capital
account; or
(h) declare, make or pay any dividend or other distribution; or
(i) grant, issue or redeem any mortgage, charge, debenture or
other security or give any guarantee or indemnity; or
(j) vary any class rights attaching to any shares, create or allot
or issue any shares, grant any option over any shares or
uncalled capital or issue any securities convertible into
shares;
(k) capitalise any amount standing to the credit of any reserve or
redeem or repurchase any shares or otherwise reorganise its
share capital save as expressly envisaged in clause 4.5;
(l) admit any person (other than a party to this Agreement),
whether by subscription, transfer or transmission, as a
member;
(m) acquire or (enter into any agreement to acquire) the shares of
any other company or the whole or any part of the undertaking
of any company or person;
(n) enter into any joint venture, partnership or European Economic
grouping;
(o) enter into any contract or commitment or any transaction
otherwise than at arms length and for full value;
(p) make any appointment of or engage any additional director or
any employee;
(q) enter into any negotiations relating to or agree any change in
the terms and conditions upon which it employs its employees
(including, without limitation, relating to increases in
remuneration or the payment of bonuses or benefits);
(r) incur, agree or pay any management charge, charge in the
nature of a management charge or bonus save for the management
charge of Pound Sterling5,000 payable to York Waterworks
Limited in respect of the month of October 1999; or
(s) enter into any transaction, commitment or agreement with, or
make any payment to, the Seller not provided for in this
Agreement;
(t) appoint new auditors.
11.2 The Seller shall procure that pending Completion:
(a) the Buyer and all persons authorised by it are given promptly
on request all such facilities and information regarding the
business, assets, liabilities and affairs of the Company and
all such access to books and records or the Company as the
Buyer may reasonably require;
<PAGE> 13
(b) the Buyer is provided with copies of all board papers and
management reports and accounts relating to the Company
together with such other information as the Buyer may
reasonably require;
(c) no material decision concerning the business, assets or
affairs of the Company is taken without the prior written
consent of the Buyer;
(d) a representative of the Buyer is entitled to attend and speak
at all the board and management meetings of the Company.
11.3 The Seller shall not and shall procure the Company shall not take any
action pending Completion which would have placed the Seller in breach
of the Warranties had they been repeated at Completion.
12 GENERAL
12.1 In the event that the Seller shall not have procured the execution by
the parties thereto and the stamping of the lease of the Property
substantially in the Agreed Form before Completion the Seller and Kelda
shall until the earlier of such execution and stamping or the expiry of
6 months from Completion:
(a) use reasonable endeavours to procure that the Company may
continue to occupy the Property as licensee;
(b) jointly and severally indemnify and keep indemnified the Buyer
and the Company against all losses liabilities costs and
expenses arising by reason of claims made by the landlord or
the relevant owners of the Property by reason of the
occupation of the Property by the Company following Completion
other than payment of rent and other outgoings payable under
the terms of the lease and always subject to the Company
observing the terms of the lease as if it were the tenant
named thereunder;
(c) jointly and severally indemnify and keep indemnified the Buyer
and the Company against all reasonable costs expenses and
liabilities incurred or suffered in relocating the business of
the Company to alternative premises to include without
limitation legal, agents and other professional fees in the
event that the Company shall be required to vacate the
Property but always excluding rental payments and any
increased rental payments.
12.2 The Seller and Kelda jointly and severally agree to indemnify and keep
indemnified the Buyer and the Company against all costs claims losses
expenses and liabilities arising by reason of:
12.2.1 any claim by Regency Marketing (UK) Limited for payment of their
invoice No 000149 dated 7th October 1999 for Pound Sterling409,163.49
plus Pound Sterling71,603.61 Value Added Tax, or any claim arising
therefrom;
12.2.2 any claims against the Company for payments due to any agent or sales
representatives of the Company in respect of domestic gas customers or
alleged potential gas customers who had been referred to the Company by
such agents or sales representatives prior to Completion, or for
compensation or other payments due for breach or termination of
agreements with such agents or representatives
<PAGE> 14
prior to Completion, save to the extent that such amounts have been
provided for in the Completion Accounts;
in each case a "Claim"
PROVIDED THAT:
(a) The Buyer will not, and will procure that the Company does
not, make any admission or enter into any correspondence,
discussions or negotiations with any person or company
whatsoever in relation to any Claim (without the express prior
written consent of the Seller), nor take any action which the
Buyer or the Company should reasonably have known could
prejudice any defence to that Claim.
(b) The Buyer will not, and will procure that the Company will
not, compromise or settle any Claim without the consent of the
Seller.
(c) The Buyer and the Company will promptly notify the Seller of
any communication received in relation to any Claim.
(d) The Buyer and the Company shall procure that the Company shall
take such action to appeal, protest against, mitigate, reduce,
avoid, dispute, resist, compromise or accept any Claim as the
Seller may by written notice reasonably request provided that
Kelda and the Seller shall indemnify the Buyer and the Company
against any liabilities which they may incur as a result of
taking such actions.
(e) The Buyer and the Company will permit the Seller to have
conduct of each Claim subject to the Buyer and the Company
being secured and indemnified to their reasonable
satisfaction.
(f) The Buyer will make available, and procure that the Company
shall make available to the Seller all information and
documentation and reasonable assistance required by the Seller
(at the Company's cost) in connection with each Claim.
(g) The Buyer will provide, and will procure that the Company
provides, access to any of its employees, secondees (including
Peter Nicholson) and consultants who may have documents
information or evidence which may have a bearing on the Claim
and to permit the Seller to obtain witness statements from
such persons, and to require them to attend any meetings or
hearing in connection with the Claim and provide contact
details of any former employees who may have documents,
information or evidence which may have a bearing on the Claim.
(h) In the case of a Claim under Clause 12.2.2, Kelda and the
Seller shall have been notified in writing of such Claim prior
to 31st March 2000.
(i) The aggregate liability of Kelda and the Seller in respect of
any Claim under Clause 12.2.2 shall be limited to Pound
Sterling100,000.
(j) The provisions of paragraphs 1.1(b) (provided that the
reference therein to 30 business days after the date on which
proceedings referred to in clause 8 of this schedule are
concluded adversely against the Company shall be deemed to be
a reference to 30 days after conclusion of the conduct of the
Claim by the Seller (if any) pursuant to sub-clause (e)
<PAGE> 15
above), 4.1(b), 4.1(d) (with the exclusion of the reference to
any note in the Accounts or the Completion Accounts), 5.1(a),
6.1, 7.1, 8 and 9 of schedule 4 in respect of a claim for
breach of Warranty and/or the Tax Covenant shall apply mutatis
mutandis to any claim under the indemnity given in this clause
12.2.
12.2.3 The Buyer will use its best endeavours to, and will procure that the
Company will use its best endeavours to, retain all documents and
records pertaining to any entitlement to commission by any agent or
sales representative until the later of 31st March 2000 and the final
determination of any Claim.
12.3 The Seller and Kelda shall use reasonable endeavours to procure that on
Completion the Company is released from all guarantees and indemnities
given by it in respect of obligations or liabilities of the Seller
and/or any company within the group of companies of which the Seller
forms part and/or any associate or person connected with the Seller
(including for avoidance of doubt the banking cross-guarantees).
12.4 The Seller and Kelda agree that pending such release to indemnify and
keep indemnified the Buyer and the Company against all actions,
proceedings, losses, costs, claims, damages, liabilities, and expenses
which the Buyer or the Company may suffer or incur in respect of any
claim made under any guarantee or indemnity referred to in clause 12.3.
13 INTERPRETATION PROVISIONS
13.1 References to any enactment, statute or statutory provision shall
include any subordinate legislation made under it, any provision which
it has superseded or re-enacted (whether with or without modification),
and any provision superseding it or re-enacting it (whether with or
without modification) provided that this provision shall not operate to
increase the Seller's liability under this Agreement above that which
applies as a result of any such legislation in force at the date of
this Agreement.
13.2 References to a clause, schedule, part, section or paragraph are to a
clause in this Agreement, a schedule to this Agreement or a section,
part or paragraph of such a schedule respectively.
13.3 The headings in this Agreement shall not affect its construction or
interpretation.
13.4 This Agreement shall be binding upon, and enure for the benefit of, the
parties' successors in title but rights arising in connection with this
Agreement (including the benefit of the Warranties) are not assignable
other than to a party's Affiliates always provided that where such
assignment occurs, the aggregate liability of the non-assigning party
to the assignee and assignor shall be no greater than it would have
been to the assigning party if the assigning party had not assigned its
rights.
13.5 This Agreement and the documents entered into pursuant to it set out
the entire agreement between the parties and supersedes all prior
agreements,
<PAGE> 16
understandings and arrangements between them, and representations by
them, whether oral or written, which relate to the subject matter of
this Agreement.
13.6 No variation of any provision of this Agreement shall be effective
unless it is in writing, refers specifically to this Agreement and is
duly executed by each party.
13.7 Time shall be of the essence of this Agreement, both as regards any
time, date or period mentioned in this Agreement and as to any agreed
time, date or period substituted for it.
13.8 This Agreement may be executed in 2 or more counterparts, each of which
shall constitute an original but which when taken together, shall
constitute 1 instrument,
13.9 In this Agreement the words and phrases "other", "including" and "in
particular" shall not limit the generality of any preceding words or be
construed as being limited to the same class as the preceding words
where a wider construction is possible.
14 PROPER LAW
14.1 This Agreement shall be governed by, and construed in accordance with,
English law. The courts of England are to have exclusive jurisdiction
to settle any dispute which may arise out of or in connection with this
Agreement.
15 NOTICES
15.1 Any notice in connection with this Agreement shall be in writing and
delivered personally or sent by first class air mail pre-paid post to
the relevant party at their registered office or such other address as
the recipient may have previously notified to the sender in accordance
with this clause or by telex or facsimile transmission to the then
current telex or facsimile number of the recipient. Proof of posting or
despatch shall be deemed to be proof of receipt:
(a) in the case of a letter, on the business day after posting,
and
(b) in the case of a telex or facsimile transmission, at the time
of despatch.
This Agreement is entered into on the date specified above.
<PAGE> 17
SCHEDULE 1
The Company
1 AUTHORISED SHARE CAPITAL
1.1 Pound Sterling10,000 divided into 5,000 "A" Ordinary shares of Pound
Sterling1 each and 5,000 "B" Ordinary shares of Pound Sterling1 each.
2 NAMES OF DIRECTORS
2.1 Jonson Cox
Peter John Nicholson
John Peter O'Kane
3 NAME OF SECRETARY
3.1 Rachel Victoria Jones.
4 REGISTERED OFFICE
4.1 2 The Embankment, Sovereign Street, Leeds, LS1 4BQ.
5 ACCOUNTING REFERENCE DATE
5.1 31st March.
<PAGE> 18
SCHEDULE 2
Warranties
1. CAPACITY OF THE SELLER
1.1 The Seller has the requisite power and authority to enter into and
perform this Agreement.
1.2 The execution and delivery of, and the performance by the Seller of its
obligations under, this Agreement does not require the consent of any
other person and will not result in a breach of or default under any
agreement or instrument to which any Seller is a party or any
commitment or court order by which the Seller is bound.
1.3 None of the Shares has been the subject of a transfer at an undervalue
(within the meaning of sections 238 or 339 Insolvency Act 1986) within
the period of 5 years prior to the date of this Agreement.
2. ACCURACY OF INFORMATION
2.1 The information in schedule 1 is accurate.
3. CONSTITUTIONAL MATTERS
3.1 The Shares comprise the whole of the issued share capital of the
Company.
3.2 All the issued shares of the Company are fully paid. The Company has
not claimed or exercised a lien over any share.
3.3 There is no outstanding agreement or commitment (including any
pre-emption and conversion rights) which may require the allotment or
issue of, or may give to any person a right (whenever exercisable and
whether unconditional or not) to call for the allotment or issue of,
any share in the Company.
3.4 There is no shadow director of the Company.
3.5 Copies of the memorandum and articles of association of the Company
(having attached thereto copies of all such resolutions as are required
to be attached thereto) are attached to the Disclosure Letter.
4. SUBSIDIARIES AND ASSOCIATED COMPANIES
4.1 The Company:
(a) has no legal or beneficial interest in the share capital of or
other investment in any other person (whether incorporated in
the United Kingdom or elsewhere) and has not agreed to acquire
any such shares or investments; and
(b) does not hold and has not agreed to any investment or other
interest in any partnership, joint venture, consortium or
other unincorporated association or arrangement for sharing
profits or receivables and has no branch, agency, place of
business or establishment outside the United Kingdom.
<PAGE> 19
5. THE ACCOUNTS
5.1 The Accounts:
(a) comply with the requirements of the Companies Act 1985 and
1989 and with accounting principles and practices generally
accepted in the United Kingdom at the relevant time,
(b) give a true and fair view of the financial position and state
of affairs of the Company as at the Accounts Date and of the
profit or loss of the Company for the financial year ended on
the Accounts Date.
5.2 The bases and policies of accounting adopted for the purpose of
preparing the Accounts are the same as those adopted in preparing the
audited accounts of the Company for the 2 preceding financial years.
5.3 All the accounting records and VAT records of the Company are in its
possession and give a reasonably accurate view of the trading
transactions and the financial position of the Company.
6. EVENTS SINCE THE ACCOUNTS DATE
6.1 Since the Accounts Date:
(a) the business of the Company has been carried on in the
ordinary and normal course, and
(b) the Company has not declared, made or paid any distribution
within the meaning of the 1988 Taxes Act.
7. FINANCE AND CAPITAL COMMITMENTS
7.1 There is no debt of the Company for a sum exceeding Pound
Sterling20,000 and which has been outstanding for a period of more than
60 days since the invoice date.
7.2 Since the Accounts Date, the Company has not made or agreed to incur
any item of capital expenditure exceeding Pound Sterling10,000 or
disposed or agreed to dispose of any capital asset with a book value in
excess of Pound Sterling10,000.
7.3 No guarantee, indemnity, suretyship obligation or security has been
given or agreed to be given by, or for the benefit of, the Company.
7.4 The Company has not factored any of its debts, or engaged in any other
financing which need not be shown in its audited accounts.
7.5 The Company has not received any material government grant.
8. CONTRACTS
8.1 So far as the Seller is aware, there is no ground on which any material
contract of the Company could be avoided, prematurely determined or
declared to be invalid and the Company has not received notice
indicating that such a claim is foreseeable.
8.2 Copies of all material contracts (including all amendments or
variations thereto) to which the Company is a party are attached to the
Disclosure Letter.
8.3 At the date of this Agreement:
<PAGE> 20
(a) the number of Industrial and Commercial Customers currently
taking gas is not less than 700; and
(b) the number of current Domestic Customers currently taking gas
confirmed on supply points is not less than 37,000 and there
are not less than 5,000 Domestic Customers who are not yet
confirmed as supply points which have not been rejected by
Transco or not yet objected to by any other gas supplier.
8.4 So far as the Seller is aware, the Company has not agreed to acquire or
dispose of any material assets or assumed or incurred or agreed to
assume or incur any material expenditure or material liabilities
(including contingent liabilities) following Completion.
8.5 The Company has not entered into any agreement with Kelda or any
subsidiary of Kelda otherwise than by way of bargain at arms length.
8.6 The Company has not entered into any contracts for the purchase of gas
save as contained in the Disclosure Bundle and in the case of the
purchase of gas for the supply to Industrial and Commercial Customers
has only contracted to acquire gas under the arrangements with Aquila
Energy Limited described in clause 8.7.
8.7 The gas prices charged by Aquila Energy in respect of Industrial and
Commercial Customers is fixed for the duration of that customer's
contract and provided that there are no significant changes in the
transportation charges levied by TRANSCO and that Industrial and
Commercial Customers consume gas in accordance with the estimated
annual quantity for that customer's site set by TRANSCO, the prices
charged to each such customer should result in a gross profit for the
Company.
9. TRADING AND TRADING PRACTICES
9.1 Save for any warranty implied by law or contained in its standard terms
of sale (copies of which are attached to the Disclosure Letter), the
Company has not given any warranty or guarantee, or made any
representation, in respect of goods or services supplied or agreed to
be supplied by it.
9.2 So far as the Seller is aware, the Company has not received
notification of any claim that it is under a liability to replace or
remedy defects to any goods which have been sold by it or to make good
any errors or omission to services which have been supplied by it.
10. OWNERSHIP AND CONDITION OF ASSETS
10.1 Having regard to their age, all of the plant and machinery used by the
Company in connection with its business is in reasonably good repair
and condition, fair wear and tear excepted, and has been serviced and
maintained and complies with compulsory safety regulations.
10.2 The Company is the absolute owner of and is in actual possession of all
the material assets used in the course of its business with full right
and power to sell the same in each case with full title guarantee. No
person has the right to call for any payment in respect of any of those
assets and the Company has not created or agreed to create any charge,
debenture, mortgage, pledge, lien, assignment or
<PAGE> 21
other form of encumbrance or security interest over any part of its
undertaking or assets.
11. EMPLOYEES
11.1 The Disclosure Letter contains materially accurate details of the
identities, dates of appointment to office or commencement of
continuous employment, emoluments, notice periods and other terms of
employment of each officer and employee of the Company including
benefits provided by custom or practice.
11.2 Since the Accounts Date no change has been made in the terms of
engagement of any officer or employee of the Company and so far as the
Seller is aware none is expected within 6 months of the date of this
Agreement.
11.3 The Company is not a party to any consultancy agreement.
11.4 There is no existing, pending or, so far as the Seller is aware,
threatened dispute between the Company and any material number or
category of its employees and so far as the Seller is aware there are
no circumstances which are likely to give rise to any such dispute
provided that it is acknowledged that the Seller has no knowledge of
employees' intentions following the change of control of the Company
contemplated by this Agreement
11.5 Save as set out in the Disclosure Letter there are no agreements,
arrangements or practices for the provision of pension or lump sum
benefits on or in anticipation of the retirement or death of any person
to which the Company is a party.
12. INTELLECTUAL PROPERTY
12.1 The Company is the sole and absolute legal and beneficial owner of the
Intellectual Property Rights.
12.2 All the Intellectual Property Rights are valid, subsisting and
enforceable and so far as the Seller is aware no claims have been made
challenging their use or such validity, subsistence or enforceability
and so far as the Seller is aware no grounds exist which might support
any such claims.
12.3 So far as the Seller is aware, there is and has been no infringement or
threatened infringement of any of the Intellectual Property Rights by
any third party or of any third party Intellectual Property by the
Company and no claim concerning such infringement has been made or
considered by the Seller.
12.4 Save as disclosed in the Disclosure Letter there are no subsisting or
proposed licences or other arrangements from or with third parties
("THIRD PARTY ARRANGEMENTS") nor are any Third Party Arrangements
required for the exercise of any of the Intellectual Property Rights or
for the use or disclosure of any of the subject matter thereof.
12.5 All current advertising and marketing materials ("THE MATERIALS") used
or proposed to be used directly by the Company itself complies with the
Company's Gas Supplier Licence and all relevant Codes of Practice and
so far as the Seller is aware the Materials used or proposed to be used
in connection with the Company's business by persons other than the
Company comply with the Company's Gas Supplier Licence and all relevant
Codes of Practice.
<PAGE> 22
12.6 The Company is registered under the Data Protection Act 1984 and so far
as the Seller is aware has complied with the this legislation.
13. COMPETITION
13.1 So far as the Seller is aware, the Company is not, nor has at any
material time been, a party to, or otherwise bound by, any agreement,
practice, concerted practice or obligation which is in contravention of
any anti-trust or similar legislation anywhere where the Company has
assets or carries on or intends to carry on business.
14. LITIGATION AND DISPUTES
14.1 Apart from the collection of debts in the ordinary course of the
business, there are no proceedings (that is to say, civil, criminal and
arbitration proceedings and administrative proceedings of a litigious
nature which involve the Company, or any of its employees or agents in
relation to a matter for which the Company may have a liability) which:
(a) are current,
(b) are being contemplated by the Company, or
(c) so far as the Seller is aware, are pending, threatened or
expected to be brought against the Company or its agents or
employees,
and so far as the Seller is aware, there is no circumstance (including
without limitation any allegation made to Ofgem as to any breach or
purported breach of the Company's Gas Supplier Licence) which may give
rise to any proceedings.
15. INSOLVENCY
15.1 No administrative receiver, receiver, manager or receiver and manager
has been appointed of the whole or any part of the assets or
undertaking of the Company and so far as the Seller is aware no such
appointment has been threatened.
15.2 So far as the Seller is aware, no order has been made or petition
presented or threatened or resolution passed for the winding up of the
Company or for an administrator to be appointed in respect of the
Company.
15.3 The Company is not insolvent nor has it stopped payment of its debts
within the meaning of section 123 Insolvency Act 1986.
15.4 No distress, execution or other process has been levied or so are as
the Seller is aware threatened in respect of any asset of the Company.
15.5 So far as the Seller is aware, there is no unfulfilled or unsatisfied
judgment or court order outstanding against the Company.
15.6 So far as the Seller is aware, no proposal has been made for a
voluntary arrangement in relation to the Company to be implemented
under section 1 Insolvency Act 1986.
16. INSURANCE
16.1 Particulars of all insurance policies maintained by the Company and
currently in force are contained in the Disclosure Letter.
<PAGE> 23
16.2 The Company has in place at Completion all insurances required by law
to be effected by it.
16.3 So far as the Seller is aware all the insurance policies in which the
Company has an interest are in full force and effect, all premiums have
been paid on time and there is no fact or circumstance which might lead
to any liability under those policies being avoided by the insurers or
the premiums being increased.
16.4 No claim is outstanding under any insurance policy in which the Company
has an interest.
17. LEGAL AND REGULATORY REQUIREMENTS
17.1 So far as the Seller is aware:
(a) the Company is conducting, and has at all material times
conducted, its business in accordance with all applicable laws
and regulations of Great Britain and has no liability for any
unlawful act committed by any other person;
(b) no licence, consent or authority is necessary to enable the
Company to carry on its business effectively in the places and
manner in which it is carried on which the Company has not
obtained; and
(c) all returns, particulars and other documents required to be
filed with the Registrar of Companies in respect of the
Company have been properly filed.
<PAGE> 24
SCHEDULE 3
Property
Part 1 - Description of Property
The Basement and Ground floors of "Club Chambers" Museum Street in the City of
York.
Part 2 - Warranties relating to Property
1. The Property comprises all the freehold and leasehold land and premises
owned occupied or used by the Company. The particulars of the Property
set out in part 1 of this schedule 3 are true and accurate.
2. So far as the Seller is aware, no notices affecting the Property have
been served by any person or body or local or other competent authority
which have not been complied with or are outstanding and so far as the
Seller is aware there are no circumstances known which are likely to
result in any such notice being served.
3. There are no outstanding claims, notices or recommendations under the
provisions of the Factories Act 1961, the Offices Shops and Railway
Premises Act 1963, the Fire Precautions Act 1971 relating to the
Property.
4. All payments of rent and other sums due to the landlord under the lease
have been duly paid on time and so far as the Seller is aware all
covenants and provisions of the lease have been duly observed and there
are no outstanding notices from the landlord concerning breach of
covenant, rent review, determination of term, state of repair of the
Property or otherwise.
5. The Company has no accrued or contingent liabilities whether as
original lessee or guarantor or surety or by virtue of any indemnity or
otherwise under or in connection with any property formerly occupied by
it or in which it owned or held any interest or in connection with
which it acted as surety.
<PAGE> 25
SCHEDULE 4
Provisions for the protection of the Seller
1 TIME LIMITS
1.1 Notwithstanding anything to the contrary in this Agreement, the Seller
shall have no liability for any claim made against it under this
Agreement (including in relation to the Warranties or the Tax
Covenant):
(a) unless written notification of the claim giving reasonable
particulars of the grounds on which it is based and, so far as
is reasonably practicable, details of the amount of the claim
is given to it within 1 year after the Completion Date (other
than in the case of claims in respect of Tax, where such
notification must be given within 6 years after the Completion
Date); and
(b) if the Buyer or the Company does not issue proceedings in
respect of any claim within 6 months after notification of the
claim or, if later and if applicable, within 30 business days
after the date on which proceedings referred to in clause 8 of
this schedule are concluded adversely against the Company.
2 FINANCIAL LIMITS
2.1 Notwithstanding anything to the contrary in this Agreement, the Seller
shall have no liability for any claim made against it in relation to
the Warranties or the Tax Covenant:
(a) where the liability of the Seller in respect of that matter is
less than Pound Sterling2,000;
(b) unless and to the extent that, subject to the other provisions
of this clause, the aggregate of the liability of the Seller
under the Warranties and under the Tax Covenant exceeds Pound
Sterling150,000 and, once such level has been reached, the
Buyer and the Company shall be entitled, subject as above, to
claim for the full amount and not just the excess; or
(c) which would cause the aggregate liability of the Seller under
this Agreement and the Tax Covenant to exceed the Purchase
Price.
2.2 The limitations on the liability of the Seller set out in this
paragraph 2 shall not apply to any claim made in relation to the
Warranties or the Tax Covenant if the claim arises as a result of fraud
on the part of the Seller or where it is proved that the Seller
intentionally withheld any material disclosure relating to such claim,
in each case on or prior to Completion.
3 NO RESCISSION
3.1 The Buyer shall have no right to rescind or treat this Agreement as
repudiated, whether before or after Completion, for breach of any of
the Warranties or under the provisions of the Misrepresentation Act
1967 or for any other reason and the Buyer's sole remedy for a claim
under this Agreement or the Tax Covenant shall be a monetary claim.
<PAGE> 26
4 EXCLUSIONS
4.1 The liability of the Seller in relation to the Warranties and the Tax
Covenant shall not apply in
respect of:
(a) any matter expressly provided for in this Agreement;
(b) any matter or thing done or omitted to be done prior to
Completion at the written request of, or with the written
approval of, the Buyer;
(c) a claim which would not have arisen but for some voluntary act
or omission (which the Buyer knew or ought reasonably to have
known would give rise to such a claim) undertaken by the Buyer
or any other member of the group of companies of which the
Buyer is a member, for the time being, including the Company,
(the "BUYER'S GROUP"), or any of their respective officers,
agents or successors in title on or after Completion; and
(d) any matter or thing for which a specific provision or reserve
or note was made in the Accounts or the Completion Accounts.
5 CREDITS
5.1 Any liability of the Seller under the Warranties and under the Tax
Covenant shall be reduced by an amount equal to:
(a) the amount of or by which any Taxation for which any of the
Buyer's Group is accountable is extinguished or reduced as a
result of the claim giving rise to the liability; and
(b) the amount by which any provision for Taxation not being a
provision for deferred Taxation, bad or doubtful debts or
contingent or other liabilities contained in the Accounts
proves after Completion to have been excessive, except by
reason of a reduction in Tax rates.
6 TAXATION AND CHANGES IN LAW
6.1 No liability shall attach to the Seller for any claim in relation to
the Warranties or the Tax Covenant to the extent that:
(a) such claim arises as a consequence of a change in any law,
rule or regulation (or their interpretation) or administrative
practice of any government, governmental department, agency or
regulatory body taking effect after the date of this
Agreement;
(b) such claim arises as a result of a change of accounting or
Taxation policy or practice by the Buyer or the Company
introduced on or after the Completion Date; or
(c) such claim arises as a result of any increase in the rates of
Taxation made after the date of this Agreement.
7 INSURANCE
7.1 The Seller shall not have any liability under this Agreement or the Tax
Covenant in respect of any claim to the extent that it has been
recovered under any policy of insurance effected by the Company or the
Buyer.
<PAGE> 27
8 THIRD PARTY CLAIMS
8.1 Where any member of the Buyer's Group is entitled to recover any amount
from some other person, including any amount in respect of Taxation, in
respect of any matter giving rise to a breach of the Warranties or a
claim under the Tax Covenant, it shall first take steps (including the
commencement and prosecution of proceedings in circumstances where the
Seller and the Buyer consider that there is a reasonable chance of
recovery) to enforce such recovery before taking steps against the
Seller. If the Seller pays to any member of the Buyer's Group an amount
in respect of a claim under the Warranties or under the Tax Covenant
and subsequently any member of the Buyer's Group recovers from a third
party a sum which is referable to that payment then the Buyer shall
forthwith procure the repayment to the Seller of so much of the amount
recovered from the third party less costs of recovery and tax payable
in respect of the amount recovered as does not exceed the sum so paid
to the Buyer's Group. The Buyer shall use and shall procure that each
other member of the Buyer's Group uses all reasonable endeavours to
enforce any right to recover any such sum.
8.2 If grounds for any claim against the Seller arise in relation to this
Agreement or the Tax Covenant as a result of, or in connection with, a
claim by, or alleged liability to, a third party (a "THIRD PARTY
CLAIM"), the third party claim shall not be compromised or settled
without the consent of the Seller, not to be unreasonably withheld. If
requested promptly in writing by the Seller and, subject to its being
indemnified to its reasonable satisfaction by the Seller against all
costs and liabilities which may be incurred by the Seller as a result,
the Buyer shall:
(a) take, and shall procure that the Company takes, all such
action as the Seller may reasonably request to avoid, dispute,
resist, appeal or compromise the third party claim; and
(b) make available, and procure that the Company shall make
available, to the Seller on request all information and
reasonable assistance which is relevant for that purpose. The
Seller shall not use or disclose any such information for any
other purpose.
9 MITIGATION
9.1 The provisions of this schedule 4 are without prejudice to the
obligations of the Buyer and the Company to mitigate any loss or
liability which might give rise to a claim under this Agreement or the
Tax Covenant.
10 ACCESS TO INFORMATION
10.1 If any claim under this Agreement or the Tax Covenant is notified, and
without prejudice to its validity, the Buyer shall procure that the
Company allows the Seller and their professional advisers to
investigate the basis for that claim. For such purpose the Buyer shall
procure that the Company gives such reasonable access to any relevant
documents or other information in the possession of the Company. The
Seller shall pay the reasonable costs and expenses of the Buyer and/or
the Company in providing or procuring such assistance.
<PAGE> 28
11 WARRANTIES AND TAX COVENANT
11.1 Where a claim may be made under the Warranties or the Tax Covenant in
respect of the same subject matter the claim shall be made and pursued
under the Warranties before a claim is made under the Tax Covenant for
the same matter save in circumstances where the time period for
bringing claims under the Warranties in accordance with paragraph
1.1(a) of this schedule has expired.
11.2 A claim brought under the Tax Covenant shall be reduced by the amount
recovered under a claim for breach of the Warranties in respect of the
same matter, and vice versa.
12 NO OTHER WARRANTIES
12.1 The Buyer acknowledges that it does not enter into this Agreement in
reliance on any warranty, representation, covenant or indemnity by or
on behalf of the Seller which is not embodied in this Agreement or the
Tax Covenant.
13 EFFECT ON CONSIDERATION
13.1 Any amounts payable by the Seller to the Company or the Buyer under
this Agreement or the Tax Covenant shall constitute a reduction of the
consideration received by it under this Agreement.
<PAGE> 29
SCHEDULE 5
Taxation
Part 1 - General
1 INTERPRETATION
1.1 In this schedule (unless the context otherwise requires):
"ACTUAL TAXATION LIABILITY" means a liability to make an actual payment
of Taxation whether or not such Taxation is also or alternatively
chargeable against or attributable to any other person;
"CAA" means the Capital Allowances Act 1990;
"CLAIM" means any assessment, notice, demand or other document issued
or action taken by or on behalf of any Taxation Authority or any form
of return, computation or self-assessment required by law from which it
appears that the Company is subject to or is sought to be made subject
to, or will or might become subject to, any Taxation Liability or that
a breach of any Taxation Warranty has occurred;
"DEEMED TAXATION LIABILITY" means:
(a) the setting off of a Post-Completion Relief against an Actual
Taxation Liability of the Company in respect of which the
Seller would have been liable under paragraph 1.1(a) of part 2
or (as the case may be) against income, profits or gains which
would have given rise to such an Actual Taxation Liability (a
"SET OFF LIABILITY"), in which event the amount of the Set Off
Liability is the amount of the earliest Actual Taxation
Liability of the Company to arise which would not have arisen
or could have been avoided by the use of that Post-Completion
Relief but for that setting off;
(b) the unavailability of a right to repayment of Taxation treated
as an asset in the Completion Accounts in consequence of an
Event occurring on or before Completion in which event the
amount of the Deemed Taxation Liability is the amount of
Taxation which would have been repaid but for such
unavailability (an "UNAVAILABLE REPAYMENT LIABILITY");
"EVENT" means any event, omission, occurrence, transaction, or act
whatsoever;
"FA" means Finance Act;
"GROUP RELIEF" has the meaning given to that expression by section 402
ICTA;
"ICTA" means the Income and Corporation Taxes Act 1988;
"IHTA" means the Inheritance Tax Act 1984;
"INDEPENDENT EXPERT" means a member of the Chartered Institute of
Taxation or the Institute of Chartered Accountants in England and Wales
independent of the parties who has had a specialised Taxation practice
for at least ten years and who shall be appointed by agreement between
the relevant parties or (failing such agreement and upon the first
application made by any such party) by the President of the Chartered
Institute of Taxation or the Institute of Chartered Accountants in
England and Wales;
<PAGE> 30
"POST-COMPLETION RELIEF" means any Relief which arises in consequence
of or by reference to an Event occurring or deemed to occur after
Completion and not in consequence of or by reference to any Event
occurring or deemed to occur on or before Completion (but shall not
include any Relief referred to in paragraph 4.2);
"RELIEF" means any loss, allowance, exemption, set-off, deduction,
credit or other relief from any Taxation or in the computation of
income, profits or gains for the purpose of any Taxation and any right
to a repayment of Taxation;
"TAXATION" means:
(a) any form of tax, and any levy, duty, impost, deduction, or
withholding in the nature of tax whenever created or imposed
and whether of the United Kingdom, or elsewhere but not
including uniform business rates, water rates, community
charge, council tax or stamp duty or any tax, charge, rate or
duty similar to, corresponding with, replacing or replaced by
any of them; and
(b) all charges, surcharges, interest, penalties and fines
relating to any Taxation falling within paragraph (a) of this
definition;
"TAXATION AUTHORITY" means any authority or person, whether of the
United Kingdom or elsewhere, competent to impose, assess or collect any
Taxation Liability;
"TAXATION LIABILITY" means any Actual Taxation Liability, any Deemed
Taxation Liability and any costs, fees and expenses falling within
paragraph 1.1(d) of part 2;
"TAX REFUND" means a tax refund relating to an accounting period within
the meaning of section 102 FA 1989;
"TCGA" means the Taxation of Chargeable Gains Act 1992;
"VATA" means the Value Added Tax Act 1994; and
"SELLER'S RELIEF" means any Relief which is or becomes available to the
Company in respect of an accounting period of the Company ended prior
to Completion, other than a Post-Completion Relief;
1.2 In this schedule (unless the context otherwise requires):
(a) references to persons include an individual, corporation,
partnership, unincorporated association, or body of persons
and any state or any agency thereof;
(b) references to parts are references to parts of this schedule
and reference in any part to a paragraph shall, unless
otherwise stated, be to the paragraph of that part.
<PAGE> 31
1.3 Any payments made pursuant to this schedule or for breach of any
Warranty shall, so far as possible, be treated as an adjustment to the
consideration paid by the Buyer for the Shares under this Agreement.
2 EXCLUSIONS AND LIMITATIONS
2.1 The Seller shall not be liable for breach of any Taxation Warranty in
respect of any Taxation Liability (or where the loss, liability or
damage arising in consequence of a breach of any Taxation Warranty is
any Taxation Liability) or under part 2 in respect of any Taxation
Liability to the extent that:
(a) specific provision or reserve for it is made in the Completion
Accounts or payment or discharge of it is taken into account
therein;
(b) any Seller's Relief is or becomes available (or is made
available) to the Company to mitigate the Taxation Liability
or breach;
(c) In relation to a breach of Tax Warranties only (and not so as
to apply to a claim under part 2 of this schedule) it arises
in consequence of any fact or matter which was disclosed or
expressed to be disclosed in the Disclosure Letter or which
was in the public domain at Completion.
(d) it arises in consequence of, or would have been reduced or
eliminated but for:
(i) any act or omission of the Company after Completion
otherwise than in the ordinary course of the business
of the Company as carried on at Completion and
otherwise than pursuant to a legally binding
obligation of the Company in existence at Completion;
(ii) the Company ceasing to carry on any trade or business
after Completion or effecting a major change after
Completion in the nature or conduct of any trade or
businesses carried on by it, the Company changing the
date to which it makes up its accounts or changing
any of its accounting policies, bases or practices
(including, without limitation, the treatment of
timing differences and the bases on which the Company
values its assets) in either case after Completion
other than in order to comply with generally accepted
accounting principles;
(iii) the failure by the Company after Completion to make
any claim, election, surrender or disclaimer or to
give any notice or consent or to do any other thing,
the making, giving or doing of which was permitted by
law and which is taken in account:
(A) in computing and so reducing any provision
which appears in the Completion Accounts (or
eliminating any provision which would
otherwise have appeared in the Completion
Accounts); or
(B) in computing any right to repayment of
Taxation which appears in the Completion
Accounts;
and which in each case was disclosed in sufficient
detail and time by the Seller to the Buyer to enable
the same reasonably to be made, given or done, or the
withdrawal or amendment by the
<PAGE> 32
Company after Completion of any such claim, election,
surrender, disclaimer, notice or consent made by the
Company prior to Completion;
(iv) any claim, election, surrender, disclaimer, notice or
consent made by the Company after Completion, the
making or doing of which was not taken into account:
(A) in computing and so reducing any provision
which appears in the Completion Accounts (or
eliminating any provision which, would
otherwise have appeared in the Completion
Accounts); or
(B) in computing any right to repayment of
Taxation which appears in the Completion
Accounts.
(v) any failure by the Buyer or the Company to comply
with its obligations under paragraph 5 ("APPEALS AND
CONDUCT OF CLAIMS") or paragraph 7 ("TAXATION
COMPUTATIONS") to the extent (but only to the extent)
that such failure by the Buyer results in an increase
in Taxation Liability;
(vi) any legislation or any change in the rate of any
Taxation or any imposition of Taxation or change in
the published practice of, or published concession
operated by, any Taxation Authority in each case
coming into effect after Completion;
(vii) the earning, receipt or accrual for any Taxation
purpose of any income, profit or gain prior to
Completion which is not recognised in the Completion
Accounts but would have been had all the relevant
facts been known;
(viii) the rate or average rate of any Taxation for any
period which is applicable to the Company increasing
as a result of the sale and purchase of the Company
under the Agreement, including the Company ceasing to
be subject to corporation tax at the small companies'
rate (or qualifying for relief under section 13(2)
ICTA) and becoming subject to corporation tax at the
rate applicable to companies generally;
<PAGE> 33
(e) the Buyer has recovered damages or any other amount under this
Agreement (whether for breach of warranty, under this schedule
or otherwise) in respect of the same loss, liability, damage
or Event or the Buyer or the Company have otherwise obtained
reimbursement or restitution from the Seller.
3 MITIGATION OF LIABILITY
3.1 The Seller may, in particular but without limitation, by notice in
writing to the Buyer avoid or reduce any liability which the Seller
would, apart from this paragraph 3.1, have under part 2 or for breach
of any Taxation Warranty by surrendering or procuring the surrender to
the Company of Group Relief, advance corporation tax or a Tax Refund
(without the Buyer or the Company being liable to make any payment in
consideration for such surrender) and the liability of the Sellers
under part 2 or for breach of any Taxation Warranty shall be satisfied
or avoided to the extent of the amount of Taxation which could be
satisfied or avoided as a result of such surrender. The Buyer shall
procure that the Company takes all such steps, including (without
limitation) making and giving all such claims and consents as the
Seller may reasonably request to effect any such surrender.
4 OVER-PROVISIONS AND RELIEFS
4.1 The Buyer shall at the request of the Seller require the auditors for
the time being of the Company ("the Auditors") to determine as experts
and not as arbitrators (and at the expense of the Seller) whether:
(a) any provision for Taxation, the surrender of a Tax Refund or
the surrender of advance corporation tax in the Completion
Accounts has proved to be an over-provision and if so its
amount;
(b) any right to a repayment of Taxation treated as an asset in
the Completion Accounts has proved to be understated and if so
its amount or, where no right to repayment of Taxation was
treated as an asset in the Completion Accounts, whether any
such amount should have been treated as an asset in the
Completion Accounts and if so the amount; or
(c) any Actual Taxation Liability which arises or would otherwise
have arisen (other than one which would otherwise have given
rise to a corresponding liability of the Seller under
paragraph 1 of part 2) is avoided or reduced or any repayment
of an amount of Taxation is obtained in either case by the use
of a Seller's Relief, and, if so, the amount of Taxation so
saved or the amount of that repayment; and
if the Auditors determine that there has proved to be any such
over-provision, understatement or amount, the amount of such
over-provision, understatement or amount (as the case may be) shall be
dealt with in accordance with paragraph 4.3.
4.2 The Buyer shall at the request of the Seller require the Auditors to
determine as experts and not as arbitrators and (at the expense of the
Seller) whether any Taxation Liability (or the Event giving rise to
such Taxation Liability or the discharge of it) which has resulted in
any sum having been paid or becoming payable by the Seller under part 2
or for breach of any Taxation Warranty has
<PAGE> 34
given rise to a Relief (or would give rise to a Relief assuming that
all reasonable steps are taken to obtain such Relief) which would not
otherwise have arisen, and:
(a) a liability of the Company or any member of the Buyer's group
to make an actual payment or increased payment of Taxation has
been satisfied or avoided in whole or in part by the use of
that Relief; or
(b) a right to a repayment of Taxation has arisen as a result of
the use of that Relief;
and, if the Auditors so determine, the amount by which that liability
has been or could have been satisfied or avoided or an amount equal to
the amount of that repayment (as the case may be) shall be dealt with
in accordance with paragraph 4.3.
4.3 Where it is provided under paragraph 4.1 or 4.2 that any amount is to
be dealt with in accordance with this paragraph 4.3:
(a) the amount shall first be set off against any payment then due
from the Seller under part 2 or be taken into account in
assessing any loss for breach of any Warranty or set off
against any payment due under part 2 as the case may be;
(b) to the extent there is an excess, the remainder of that excess
shall be carried forward and set off against any future
payment which becomes due from the Seller under part 2 or for
breach of any Warranty.
4.4 Where such determination by the Auditors as is mentioned in paragraph
4.1 or 4.2 has been made, the Seller or the Buyer may request the
Auditors to review such determination (at the expense of the person
making the request) in the light of all relevant circumstances,
including any facts which have become known only since such
determination, and to determine whether such determination remains
correct or whether, in the light of those circumstances, the amount
that was the subject of such determination should be amended.
<PAGE> 35
4.5 If the Auditors determine under paragraph 4.4 that an amount previously
determined should be amended, that amended amount shall be substituted
for the purposes of paragraph 4.1 or 4.2, as the case may be, in place
of the amount originally determined and such adjusting payment (if any)
as may be required by virtue of such substitution shall forthwith be
made by the Seller to the Buyer or, as the case may be, by the Buyer to
the Seller.
5 APPEALS AND CONDUCT OF CLAIMS
5.1 If the Buyer or the Company (or any of their officers, employees,
servants or agents) becomes aware of a Claim, the Buyer shall or shall
procure that the Company shall as soon as reasonably practicable give
written notice of the Claim to the Seller and, in any event, where a
statutory or other time limit is applicable for responding to or
appealing against the Claim or to any assessment, notice, demand or
other document issued (or deemed to be issued) or action taken which
constitutes the Claim, the Buyer shall give written notice of the Claim
to the Seller at least 14 days prior to the expiry of such time limit.
Such written notice shall include to the extent it is reasonable to do
so an estimate of the Seller's liability under this schedule in respect
of such Claim and such details of the Claim as are then available to
the Buyer or the Company.
5.2 The Buyer shall, and shall procure that the Company shall, take such
action to appeal, protest against, mitigate, reduce, avoid, dispute,
resist or compromise the Claim and make available such documents,
information and assistance in connection with the Claim as the Seller
may by written notice request provided the Seller shall indemnify the
Buyer and the Company against all reasonable costs and expenses which
the Buyer or the Company incurs as a result of taking such action or
providing such information and assistance.
5.3 The Seller may elect to have any action referred to in paragraph 5.2
conducted by professional advisers acting in the name of the Company
but reporting to the Seller in which event the provisions of paragraph
5.4 shall apply. Such appointment shall be subject to the prior written
approval of the Buyer, such approval not to be unreasonably withheld or
delayed.
5.4 The Seller hereby undertakes to the Buyer to
(a) keep the Buyer informed of all matters relating to the action
and deliver to the Buyer copies of all material correspondence
relating to the action;
(b) obtain the prior written approval of the Buyer (not to be
unreasonably withheld or delayed) to the content and sending
of written communications and to the content of material oral
communications relating to the action to a Taxation Authority;
and
(c) obtain the prior written approval of the Buyer (not to be
unreasonably withheld or delayed) to:
(i) the settlement or compromise of the Claim which is
the subject of the action; and
(ii) the agreement of any matter in the conduct of the
action which is likely to affect the amount of the
Claim.
<PAGE> 36
5.5 The Buyer shall not be obliged to procure that the Company take any
action under this clause which involves contesting any matter beyond
the first appellate body (excluding the Taxation Authority which has or
shall have made the Claim in question and the General and Special
Commissioners) unless the Seller furnishes the Buyer with the written
opinion of Counsel of at least five years call who is experienced in
the subject matter of the Claim to the effect that an appeal in respect
of the matter in question is on the balance of probabilities likely to
be won.
5.6 If at any time the Seller has not exercised the election referred to in
paragraph 5.3 but requests that the Buyer take, or procure that the
Company take, any action referred to in paragraph 5.2, the provisions
of paragraph 5.4 shall apply as if references to "the Seller" are
references to "the Buyer" and reference to "the Buyer" are references
to "the Seller".
5.7 The Buyer shall not be obliged to take any action or cause the Company
to take any action under this clause 5 which will in the opinion of the
Buyer prejudice the business of the Company, the Buyer or a member of
the Group of companies as the Buyer.
6 DISPUTES
6.1 In the event of any dispute under paragraphs 3, 4, 5, or 7 of this
schedule, such dispute shall if the parties so agree be determined by
the Independent Expert (acting as expert and not as arbitrator) and in
the absence of manifest error his determination shall be conclusive and
binding on the parties. The proper charges and disbursements of the
Independent Expert shall be paid and borne on each occasion by the
parties concerned in such proportions as the Independent Expert may in
his absolute discretion consider fair and reasonable.
6.2 If either party is dissatisfied with any determination of the Auditors,
the matter shall be referred to the Independent Expert for
determination in accordance with the provisions of paragraph 6.1.
7 TAXATION COMPUTATIONS
7.1 Subject to complying with the provisions of paragraphs 7.2 and 7.3
below, the Seller or its duly authorised agents shall have the right,
at the cost and expense of the Seller, to prepare the corporation tax
returns of the Company for all accounting periods, ending on or prior
to Completion to the extent that the same shall not have been prepared
before the date hereof. The Seller or its duly authorised agents shall
have the right, at the cost and expense of the Seller, to prepare all
documentation and deal with all matters (including correspondence)
relating to the corporation tax returns of the Company for all
accounting periods ending on or prior to Completion.
7.2 The Seller's rights under paragraph 7.1 are subject to the Seller
informing the Buyer and the Company of its intention to exercise such
rights prior to Completion.
7.3 In the event that the Seller exercises its rights under paragraph 7.1
the Seller shall:
<PAGE> 37
(a) keep the Buyer and its duly authorised agents and the Company
informed of all material matters relating to the submission,
negotiation and agreement of such corporation tax returns and
computations;
(b) ensure that no such computations or returns nor any
correspondence pertaining to the negotiations or agreement of
such computations or returns which it proposes to send shall
be transmitted to any Taxation Authority without first being
submitted to the Buyer and the Company or their duly
authorised agents for their comments and for the Buyer's
approval and shall only finally be submitted or transmitted on
the receipt of the written approval of the Buyer or its duly
authorised agent, such approval not to be unreasonably
withheld or delayed.
7.4 The Buyer shall procure that the Company shall cause the returns
mentioned in paragraph 7.3 (and all claims, elections, disclaimers,
surrenders and consents assumed to be made or given therein) to be
authorised, signed and submitted to the appropriate Taxation Authority
and generally do all such things as may be necessary to give effect to
such returns, claims, elections, disclaimers, surrenders or consents
provided that neither the Buyer nor the Company can be required to do
anything which is illegal or unlawful or which does not accord with
standard accounting practice.
7.5 The Buyer shall (if requested in writing by the Seller) procure that
the Company promptly makes or gives such returns, claims, elections,
disclaimers, surrenders and consents in relation to Taxation which it
was assumed would be made or given in computing any provision which
appears in the Completion Accounts (or in eliminating any provision
which would have so appeared) or which relate to any Seller's Relief
and generally does all such things as may be necessary to give effect
to such returns, claims, elections, surrenders or consents.
7.6 If at any time the Seller has not exercised its right pursuant to
paragraph 7.3, the provisions of paragraph 7.3 shall apply as if
reference to "the Seller" are references to "the Buyer", as if
references to "the Buyer" are references to "the Seller" and as if the
words "and the Company" in paragraphs 7.3(a) and 7.3(b) are deleted.
7.7 The Buyer acknowledges that trading losses and other amounts eligible
for surrender by Group Relief by the Company to members of its group
arising in its accounting periods ending on or before Completion are to
be surrendered for no payment to the Seller or other members of its
group nominated by the Seller for the purpose of Group Relief to the
extent allowed by sections 402-413 ICTA 1988. To the extent that any
correspondence concerning or computation implying the date when
arrangements for the transfer of the Company to the Buyer came into
existence or the amount of the trading losses available for the purpose
of Group Relief shall be sent by the Buyer or any person acting on its
behalf to any Taxation Authority, where such correspondence or
computation is requested by a Taxation Authority, such correspondence
or computation shall also be copied to the Seller.
7.8 The Buyer shall procure that the Company keeps the Seller fully
informed of its Taxation affairs in respect of the accounting period of
the Company last ending prior to Completion and shall promptly provide
the Seller with copies of all
<PAGE> 38
relevant documents and shall not submit any correspondence or submit or
agree any return or computation for such period to any Taxation
Authority without giving the Seller a reasonable opportunity to make
representations thereon and without the written consent of the Seller
(such consent not to be unreasonably withheld or delayed).
7.9 The Buyer shall provide, and shall procure that the Company provides,
the Seller at the expense of the Seller reasonable access to such
documents, reasonable information and reasonable assistance (including,
without limitation, access to books, accounts, records and personnel)
as the Seller may reasonably require on giving reasonable notice (and
in all circumstances it shall be reasonable on the Seller giving the
Buyer seven days notice) in connection with its conduct of the
Company's Taxation affairs pursuant to this paragraph 7.
8 MISCELLANEOUS
8.1 In assessing any damages payable by the Seller for breach of any
Taxation Warranty, the value of the Company shall not be taken as
exceeding the Consideration.
8.2 Nothing in this Agreement shall in any way diminish the Buyer's or the
Company's common law obligation to mitigate its loss.
8.3 If any potential claim for breach of any Taxation Warranty arises in
consequence of a liability of the Company which is contingent only, the
Seller shall not be liable in respect of the claim until such time as
the contingent liability ceases to be contingent and becomes actual
provided always notification of a contingent claim shall be sufficient
for the purposes of paragraph 1 schedule 4.
8.4 The liability of the Seller to the Buyer under part 2 or for breach of
any Taxation Warranty shall cease and any subsisting claim shall be
withdrawn upon the Company ceasing to be controlled whether directly or
indirectly by the Buyer or any Affiliate of the Buyer.
9 BUYER'S COVENANT
9.1 The Buyer covenants with the Seller to pay to the Seller an amount
equal to any Actual Taxation Liability of the Seller or of any company
which is under the control of the Seller at any time after Completion
(and any reasonable costs and expenses incurred by the Seller or the
company in relation to such Actual Taxation Liability or in making any
claim under this paragraph 9.1), where such Actual Taxation Liability
arises as a result of the failure by the Company to discharge after
Completion an Actual Taxation Liability for which the Company is
primarily liable and which is not within part 2.
<PAGE> 39
9.2 If the Buyer becomes liable to make a payment under paragraph 9.1, the
Buyer shall pay such amount in cleared immediately available funds on
or before the later of the date 2 business days before that Actual
Taxation Liability is finally due and payable and the date 5 business
days after the date of written demand on the Buyer by the Seller.
<PAGE> 40
Part 2 - Tax Covenant
1 COVENANT BY THE SELLER
1.1 Subject to the provisions of part 1 and of schedule 4, the Seller
hereby covenants with the Buyer to pay to the Buyer an amount equal to:
(a) any Actual Taxation Liability of the Company arising as a
result of;
(i) an Event occurring on or before Completion including
the combined results of two or more events the first
of which was outside the ordinary course of business
and took place on or before Completion or which was
deemed for the purposes of Taxation to have taken
place before Completion and the second event which
was inside the ordinary and usual course of the
Company's business as carried on at Completion and
took place after Completion; or
(ii) any income, profits or gains earned, accrued or
received on or before or in respect of any period
ended on or before the date of Completion;
(b) any Deemed Taxation Liability;
(c) any Actual Taxation Liability in respect of inheritance tax
which:
(i) is at Completion a charge on, or gives rise to a
power to sell, mortgage or charge, any of the shares
or assets of the Company; or
(ii) after Completion becomes a charge on, or gives rise
to a power to sell, mortgage or charge, any of the
shares or assets of the Company being an Actual
Taxation Liability arising as a result of the death
of any person within seven years after a transfer of
value (or a deemed transfer of value) if a charge on
or power to sell, mortgage or charge any such shares
or assets could, if the death had occurred
immediately before Completion and the inheritance tax
payable as a result thereof had not been paid, have
existed at Completion; or
(iii) arises as a result of a transfer of value occurring
or being deemed to occur on or before Completion
(whether or not in conjunction with the death of any
person whenever occurring) which increased or
decreased the value of the estate of the Company;
(d) any costs, fees and expenses reasonably incurred by the Buyer
or the Company as a result of any Actual Taxation Liability
within paragraph 1.1(a) or (c) or any Deemed Taxation
Liability within paragraph 1.1(b) or in successfully taking
any action under this part 2.
1.2 With regard to VAT:
<PAGE> 41
(a) The Seller covenants with the Buyer that if the Seller is in
breach of the Warranty set out in paragraph 7.2 of Part 3 the
Seller shall pay to the Buyer an amount equal to any liability
of the Company to account for VAT on actual supplies, self
supplies, importations or acquisitions made for VAT purposes
by other members of the group (not being the Company) before
the date of cancellation of group registration
(b) The deeming provisions of Section 43(1)(b) and (c) VATA shall
be disregarded for all periods and (in addition) those of
Section 43(1)(a) shall be disregarded for all periods after
Completion in determining what supplies, self supplies,
importations or acquisitions have been made or are deemed to
have been made by or to any person for the purposes of (a)
above.
2 PAYMENT
2.1 If the Seller is or becomes liable to make a payment under this part 2
in respect of:
(a) an Actual Taxation Liability, the Seller shall pay such amount
in cleared funds on or before the date 5 business days after
the date of written notice from the Buyer to the Seller of the
amount which the Seller is required to pay and requesting
payment or, if later, the business day before the date on
which the Actual Taxation Liability in question is due for
payment;
(b) a Deemed Taxation Liability, the Seller shall pay such amount
in cleared funds 5 business days after the date of written
notice from the Buyer to the Seller of the amount which the
Seller is required to pay and requesting payment, and:
(i) in the case of a Set Off Liability, the date on which
the Actual Taxation Liability referred to in the
definition of that term would otherwise have become
due for payment;
(ii) in the case of an Unavailable Repayment Liability,
the date on which the repayment of Taxation would
have been made but for that unavailability;
(c) any amount within paragraph 1.1(d) the Buyer will notify the
Seller in writing of such amount specifying details of the
services for which those costs, fees and expenses were
incurred and the circumstances in which they were obtained and
the Seller shall pay such amount on or before the date 5
business days after the date of such notice.
<PAGE> 42
2.2 Sums not paid by the Seller on the dates specified in paragraphs 2.1
and 2.2 shall bear interest (which shall accrue from day to day after,
as well as before, judgment at 2% above the base rate from time to time
of Lloyds Bank plc) from the date following the specified date up to
and including the day of actual payment of such sums.
3 TAX ON PAYMENTS BY SELLER
3.1 The Seller shall be entitled to deduct or withhold from any payment
made under this part 2 or for breach of any Warranty any deduction or
withholding (whether in respect of Taxation or otherwise) required by
law provided always that the provisions of paragraph 3.2 of this part 2
shall operate.
3.2 If any amount paid to the Buyer under this part 2 is subject to
Taxation (whether by deduction or withholding or otherwise), the Seller
covenants to pay to the Buyer such further sum as will ensure that the
Buyer receives and retains a net amount (after taking into account such
Taxation) equal to the full amount which it would have received and
retained had the payment in question not been subject to Taxation,
provided that the Seller shall not be obliged to pay such additional
amount if the payment received by the Buyer is subject to Taxation as a
result of a voluntary act of the Buyer or the Company occurring after
Completion which causes the payment to fall outside the scope of the
Inland Revenue's Extra Statutory Concession D33 or otherwise become
subject to Taxation.
Part 3 - Taxation Warranties
1. COMPLIANCE
1.1 There is no dispute between the Company and any Taxation Authority, the
Company is not the subject of an investigation, audit or review by any
Taxation Authority and as far as the Seller is aware there are no facts
which are likely to give rise to any such dispute, investigation, audit
or review.
1.2 The Company is not liable to pay any penalty, fine, surcharge, interest
or similar amount in relation to Taxation and as far as the Seller is
aware there are no facts which are likely to cause it to become liable
to pay any such penalty, fine, surcharge, interest or similar amount.
1.3 Within the last 6 years, the Company has duly and punctually complied
with all its obligations to deduct Taxation from payments made by it
and to account for such Taxation to any Taxation Authority.
2. CLOSE COMPANIES
2.1 The Company is not and has never been a close company within the terms
of section 414 ICTA.
<PAGE> 43
3. DISTRIBUTIONS AND PAYMENTS
3.1 No distribution (within the meaning of sections 209 and 210 ICTA) has
been made by the Company during the 6 years ended on the Accounts Date
(except as provided in the Accounts).
3.2 The Company has not made or received any exempt distribution within the
meaning of section 213 ICTA, and has at no time been a relevant company
in relation to an exempt distribution for the purposes of that section
or concerned in an exempt distribution for the purposes of section 214
ICTA.
3.3 The Company has not at any time received a capital distribution to
which section 189 TCGA could apply.
3.4 The Company has not paid, and has not elected that any dividend it has
paid or declared be treated as, a foreign income divided as described
in Chapter VA Part VI ICTA.
3.5 The Company has not on or after 6th April 1965:
(a) repaid, redeemed or purchased or agreed to repay, redeem or
purchase any of its share capital; or
(b) capitalised or agreed to capitalise in the form of shares or
debentures, any profits or reserves of any class or
description, or otherwise issued or agreed to issue share
capital otherwise than for new consideration (as defined in
section 254 ICTA).
4. GROUP TRANSACTIONS
4.1 The Company is not liable to make any payment for any Group Relief, a
Tax Refund or advance corporation tax surrendered or to be surrendered
to it and there are no amounts due or which may become due to the
Company in respect of the surrender of any Group Relief, a Tax Refund
or advance corporation tax. The Company is not liable to surrender any
Group Relief, a Tax Refund or advance corporation tax under those
provisions. There are no arrangements whereby the Company may become
liable to repay any sums paid to it for the surrender of any Group
Relief, a Tax Refund or advance corporation tax.
4.2 The Company has not within the last 6 years:
(a) acquired any capital asset from any company which at the time
of the acquisition was a member of the same group of companies
as defined in section 170 TCGA;
(b) joined in the making of any election pursuant to section 247
ICTA or paid any dividend without paying ACT or made any
payment without deduction of income tax in circumstances such
that ACT ought to have been paid or income tax ought to have
been deducted as mentioned in section 247(6) ICTA;
<PAGE> 44
(c) been the subject of or otherwise involved in any agreements as
are referred to in section 240(11) or 410 ICTA;
(d) acquired an asset as trading stock from a member of the same
group where the asset did not form part of the trading stock
of any trade carried on by the other member, as mentioned in
section 173(1) TCGA, or disposed of an asset which formed part
of the trading stock of any trade carried on by the Company to
another member of the same group which acquired the asset
otherwise than as trading stock of a trade carried on by the
other member, as mentioned in section 173(2) TCGA; and
(e) been, and there are no circumstances by virtue of which the
Company could be, assessed or charged to corporation tax by
virtue of the provisions of section 178(9), 179(11), 190 or
191 TCGA and is not entitled to recover or liable to have
recovered from it any sums pursuant to any of those sections.
5. RESIDENCE AND OFFSHORE INTERESTS
5.1 The Company is and has at all times been resident in the United Kingdom
for Tax purposes and is not and has not been treated as resident or as
having a branch or permanent establishment in any other jurisdiction
for any Taxation purpose (including under any double taxation treaty or
agreement).
5.2 The Company is not liable for any Taxation as the agent or Tax
representative of any other person or business and does not constitute
a permanent establishment of any other person, business or enterprise
for any Taxation purposes.
5.3 The Company does not and has at no time owned a beneficial interest in
the capital of a company which is resident outside the United Kingdom
and which would be a close company if it were resident in the United
Kingdom, in circumstances such that a chargeable gain accruing to that
other company could be appointed to the Company under section 13 TCGA.
6. NON-ARM'S LENGTH TRANSACTIONS
6.1 There is no outstanding Inland Revenue charge (as defined in section
237 IHTA) over any asset of the Company or over any of the Shares and
there are no circumstances in which such a charge could arise.
6.2 There are in existence no circumstances by virtue of which any such
power as is mentioned in section 212 IHTA could be exercised in
relation to any asset of the Company or to any of the Sale Shares or by
virtue of which any such power could be exercised but for the
provisions of section 204(6) IHTA.
6.3 The Company has not been a party to associated operations in relation
to a transfer of value within the meaning of section 268 IHTA.
6.4 The Company has not received any asset by way of gift as mentioned in
section 282 TCGA.
<PAGE> 45
6.5 No expenditure incurred by the Company on the acquisition of any shares
is liable to be reduced under the provisions of section 125 TCGA.
7. VAT
7.1 The Company is duly registered for the purposes of VATA. Such
registration is not subject to any conditions imposed by or agreed with
the Commissioners of Customs and Excise. Within the last 3 years, the
Company has complied in all material respects with VATA and all orders,
provisions, directions or other conditions made or imposed thereunder
or under any other law relating to VAT.
7.2 The Company is not a member of a group for the purpose of section 43
VATA.
7.3 The Company has not within the two years ending on the date of this
Agreement been served with any penalty liability notice under section
64 VATA or any surcharge liability notice under section 59 VATA or been
issued with any written warning under section 76(2) VATA.
7.4 The Company has not registered, and is not required to register, for
VAT purposes (or for the purposes of any similar tax on added value or
turnover) in any country other than the United Kingdom.
8. STAMP DUTY AND STAMP DUTY RESERVE TAX
8.1 All documents which confer any right or title upon the Company to which
the Company was a party as a purchaser, lessee or assignee and which
attract stamp or transfer duty in the United Kingdom have been duly
stamped.
8.2 The Company has not been party to any transaction whereby the Company
is or could become liable to or to account for stamp duty reserve tax.
9. CAPITAL ALLOWANCES
The aggregate book value of each of the assets of the Company,
exclusive of any value attributable to an asset in excess of its cost,
on which an entitlement to Industrial Building Allowances or other
allowances in respect of capital expenditure has arisen under the CAA,
in or adopted for the purposes of the Accounts, does not exceed the
aggregate residue of expenditure or written down value attributable to
such assets for the purposes of that Act, and the aggregate book value
(exclusive of any value attributable to an asset in excess of its cost)
of plant and machinery allocated to a pool of plant and machinery on
which an entitlement to capital allowances has arisen under Part II CAA
does not exceed the written-down value of the qualifying expenditure in
respect of each such pool under that Act.
10. CHARGEABLE GAINS
The book value in or adopted for the purposes of the Accounts as the
value of each of the assets of the Company on the disposal of which a
chargeable gain or allowable loss could arise does not exceed the
amount deductible under s 38
<PAGE> 46
TCGA plus an indexation allowance computed as though each asset were
disposed of on the date of signing of this Agreement.
11. TAX CLEARANCES
The Disclosure Letter contains details of all transactions, schemes or
arrangements in respect of which the Company has been a party or has
otherwise been involved in respect of which a statutory clearance
application was made, together with copies of all relevant applications
for clearances and copies of all clearances obtained pursuant thereto,
all such clearances having been obtained on the basis of full and
accurate disclosure of all material facts and considerations relating
thereto, and all such transactions, schemes or arrangements have been
implemented strictly in accordance with the terms of such clearances.
<PAGE> 47
SCHEDULE 6
Preparation of Completion Accounts and determination of Net Assets Value
Part 1 - Principles for preparation of Completion Accounts
1.1 The draft Audited Accounts shall be prepared in the same format as the
Accounts and in accordance with the accounting, principles, bases and
practises used in preparation of the Accounts and subject thereto and
in accordance with UK GAAP.
The Buyer shall procure that the Company shall employ Messrs Ernst &
Young as its auditors in relation to the preparation of the Audited
Accounts.
1.2 The draft Completion Accounts shall be prepared:
(a) in the same format as the Accounts;
(b) in accordance with the accounting principles, policies, bases
and practices used in the preparation of the Accounts; and
(c) notwithstanding the provisions of clauses 1.2(a) and 1.2(b),
in accordance with the specific matters mentioned in paragraph
1.3.
1.3 The following accounting principles, policies, bases and practices
shall be used in the preparation of the Completion Accounts:
(a) There shall be no provision for deferred taxation;
(b) The Completion Accounts shall be prepared on the basis that
the period from (and including) the opening of business on the
day following the Accounts Date to (and including) the
Completion Date were an accounting reference period of the
Company;
(c) There shall be no provision or accrual for the cost of future
pension contributions;
(d) Accrual shall be made for unbilled domestic accounts
calculated using the following method:
The number of unbilled days shall be the number of days
between the date the customer was last billed and the
Completion Date or where the customer has yet to be billed the
date when the customer first commenced taking gas and the
Completion Date. The number of unbilled days shall then be
applied to the annual quantity for the site which shall then
be profiled in accordance with an average domestic profile
covering all LDZ's. The relevant tariff for each payment type
shall then be applied to the quantities derived. To this shall
be added the standing charge for the days unbilled.
<PAGE> 48
In relation to industrial and commercial customers turnover in
the Completion Accounts will comprise the amount billed to
customers in respect of all periods up to 31 October 1999. The
Buyer will use reasonable endeavours to procure that the
Company shall bill customers in respect of gas consumed in
October 1999 in time for this to be included within the
Completion Accounts. If the Buyer has been unable to bill then
October 1999 turnover shall be based on the turnover for
September 1999 uplifted to take account of seasonal factors
using a profile which reflects the Company's customer base.
(e) Cost of sales shall comprise gas and transportation charges,
metering charges (including charges for failing to provide
OMR's) and risk management fees (all of which will be included
in the sums invoiced by Aquila Energy) plus Quantum charges,
any other sums levied by Aquila Energy and an allowance to
reflect the difference between the volume profiles
incorporated in the accrued sales figure and the Aquila
billing in accordance with the procedure used by the Company
since 1 April 1999 and up to completion set out below.
Because the customer base was predominantly in NE1 LDZ at 1st
April 1999, the adjustment made reflects the difference
between the York Gas average domestic profile applied in
determining the accrued sales and the NE1 profile. The
difference between these two profiles is used to calculate an
accrual or a pre-payment value to be added to the cost of gas
and transportation. The difference in kWh determined from the
comparison is applied to the prevailing rates for gas risk
management and the commodity element of the transportation
charge.
Where a reconciliation by difference invoice has not been
received for any period in respect of which the accounts have
been prepared, a provision shall be made of Pound
Sterling5,000 for each month where a reconciliation by
difference invoice has not been received.
Cost of sales for industrial and commercial customers shall
comprise the Aquila Energy invoices in respect of the quantity
of gas supplied up to Completion.
(f) Agents commission payable in respect of domestic contracts
shall be provided for in full in the month in which the
contract is received. A deduction to the commissions payable
shall be made to reflect any contract where commission has
been paid but the contract is subsequently cancelled or
objected to up to and including the date for which the
Completion Accounts are presented to the Seller provided
always that provisions exist in the relevant contract to
enable such monies to be recovered.
(g) Commission due to agents providing commercial contracts shall
be amortized over the period of the gas supply contract to
which they relate.
<PAGE> 49
(h) Apart from specific provisions for recognised bad and doubtful
debts, bad and doubtful debts shall be provided at the rate of
4.5% of domestic turnover including unbilled amounts and 1% of
the commercial turnover including unbilled amounts.
(i) Depreciation shall be provided on all tangible fixed assets so
as to provide for the cost less residual value of these assets
over their expected useful lives which are estimated as
follows:
Office equipment and Furniture 5 years
Computer Software and Hardware 5 years
Residual values of assets shall be those previously used in
the preparation of the Accounts.
(j) No provision shall be made in respect of the claim for
commissions made against the Company by Regency Marketing
Limited which is referred to in the Disclosure Letter in the
disclosure against clause 14 of schedule 2 of this Agreement.
<PAGE> 50
Part 2 - Procedure for preparation of Completion Accounts and determination of
Net Assets Value
2.1 The Buyer shall procure that as soon as practicable following the
Completion Date, and in any event not later than 60 days after that
date, a draft of the Completion Accounts ("THE DRAFT COMPLETION
Accounts") and a draft of the Audited Accounts ("THE DRAFT AUDITED
ACCOUNTS") shall be prepared by the Company in accordance with part 1
of this Schedule and delivered to the Seller.
2.2 As soon as practicable after delivery of the draft Completion Accounts
and draft Audited Accounts to the Seller and in any event not later
than the later of 30 days after such delivery and 14 days after the
date on which the Buyer has complied in full with all requests for
access, information or assistance made by the Seller under paragraph
2.7 ("THE REVIEW PERIOD"), the Seller shall review the draft Completion
Accounts and draft Audited Accounts and notify the Buyer of what
adjustments (if any) need to be made to them in order for them to
comply with part 1 of this Schedule.
2.3 If the Seller and the Buyer are unable to agree within 30 days of the
notification by the Seller under paragraph 2.2 on
(a) whether adjustments need to be made to the draft Completion
Accounts and draft Audited Accounts;
(b) the adjustments to be made thereto; or
(c) the amount of the Net Assets Value
then such matter or matters (but no other matters) shall thereupon be
referred to in the case of the draft Completion Accounts or the draft
Audited Accounts such firm of independent chartered accountants as the
Sellers and the Buyer may agree within 14 days of a request by either
of them to the other or, failing such agreement within such time, as
the President for the time being of the Institute of Chartered
Accountants in England and Wales may nominate on the application of the
Sellers or the Buyer.
("THE INDEPENDENT ACCOUNTANTS").
2.4 The matters referred to the Independent Accountants shall be referred
for determination on the following basis:
(a) the Independent Accountants shall be instructed to notify the
Sellers and the Buyer of their determination of any such
matter within 30 days of such referral;
(b) the Independent Accountant shall be instructed to specify what
adjustments should be made to the draft Audited Accounts and
draft Completion Accounts in order for them to comply with
part 1 of this schedule;
<PAGE> 51
(c) the Seller and the Buyer shall be entitled to make written
submissions to the Independent Accountants, but subject
thereto the Independent Accountants shall have power to
determine the procedure to be followed in relation to their
determination;
(d) in making such submissions the Seller and the Buyer shall
state their respective best estimates of monetary amounts of
the matters referred for determination;
(e) in making their determination the Independent Accountants
shall act as experts and not as arbitrators, their decision as
to any matter referred to them for determination shall in the
absence of manifest error be final and binding in all respects
on the parties and shall not be subject to question on any
ground whatsoever; and
(f) the fees and expenses of the Independent Accountants shall be
borne and paid as the Independent Accountants shall direct
save that the fees and expenses of Messrs Ernst & Young in
relation to the Audited Accounts shall be borne by the Seller.
2.5 Following any agreement between the Sellers and the Buyer under
paragraph 2.3 or any determination by the Independent Accountants in
accordance with paragraph 2.4, the Buyer shall procure that the Company
shall incorporate into and reflect in the draft Completion Accounts or
draft Audited Accounts in the manner specified by the Independent
Accountants or agreed between the Buyer and Seller the matters agreed
between the Seller and the Buyer and/or determined by the Independent
Accountants and the Completion Accounts or draft Audited Accounts as
amended and the amount of the Net Assets Value stated therein shall be
the Completion Accounts, Audited Accounts and the Net Assets Value
respectively for all purposes of this Agreement, shall in the absence
of manifest error be final and binding on the parties.
2.6 Within four weeks of the Audited Accounts becoming final and binding in
accordance with paragraph 2.5 the Buyer shall procure that such
accounts are laid before and received and adopted at a general meeting
of the Company and filed with the Registrar of Companies as the Audited
Accounts of the Company for the relevant period.
2.7 Until the Net Assets Value shall have been agreed or determined the
Buyer shall:
(a) give or procure that the Seller and, if appointed, the
Independent Accountants are given access at all reasonable
times to all books and records which are or may be relevant to
the Completion Accounts which are in the possession or under
the control of the Company or the Buyer (as the case may be);
and
(b) generally provide the Seller and, if appointed, the
Independent Accountants with such other information and
assistance as it may reasonably require (including access to
and assistance at reasonable times to personnel employed by
the Company or the Buyer, as the case may be), in relation to
the review, agreement or determination of the Completion
Accounts and the determination of the Net Assets Value.
<PAGE> 52
SCHEDULE 7
Intellectual Property
- - York Gas trade marks registered as a series of two marks under number
2143342
- - Software licensed to the Company:
- Mview Licence
- Microsoft office
<PAGE> 53
Signed by )
for and on behalf of YORK )
WATERWORKS ENTERPRISES )
LIMITED
in the presence of: )
Witness
Signature
--------------------------------------------
Name
-------------------------------------------------
Address
----------------------------------------------
- -----------------------------------------------------
Signed by )
for and on behalf of INDEPENDENT )
ENERGY HOLDINGS PLC )
in the presence of: )
Witness
Signature
--------------------------------------------
Name
-------------------------------------------------
Address
----------------------------------------------
- -----------------------------------------------------
<PAGE> 54
Signed by )
for and on behalf of KELDA GROUP )
PLC in the presence of: )
Witness
Signature
--------------------------------------------
Name
-------------------------------------------------
Address
----------------------------------------------
- -----------------------------------------------------
<PAGE> 1
DATED 24TH DECEMBER, 1999
INDEPENDENT ENERGY UK LIMITED
AND
INDEPENDENT ENERGY HOLDINGS PLC
AND
FUTURE NETWORK SERVICES LIMITED
AND
FUTURE INTEGRATED TELEPHONY PLC
-----------------------------------
MARKETING AGREEMENT
CONFORMED COPY
------------------------------------
[MASONS SOLICITORS LOGO]
30 Aylesbury Street
London EC1R 0ER
Ref: G:CO_COMM\IEH\PROJECTGYM\GYMMARK3.DOC
<PAGE> 2
THIS AGREEMENT is made the 24th December, 1999
BETWEEN
1. INDEPENDENT ENERGY UK LIMITED whose registered office is at Radcliffe
House, Blenheim Court, Solihull, West Midlands B91 2AA ("IE");
2 FUTURE NETWORK SERVICES LIMITED whose registered office is at Future
House, Brandon Court, Progress Way, Leofric Business Park, Coventry,
West Midlands, CV3 2NT ("FNS");
3. FUTURE INTEGRATED TELEPHONY PLC whose registered office is at Future
House, Brandon Court, Progress Way, Leofric Business Park, Coventry,
West Midlands, CV3 2NT ("FIT");
4. INDEPENDENT ENERGY HOLDINGS PLC whose registered office is at Radcliffe
House, Blenheim Court, Solihull, West Midlands B91 2AA ("IEH")
WHEREAS
A FNS is a wholly owned subsidiary of FIT and is a reseller of switchless
telephone services, in relation to both landlines and mobile
telephones.
B IE is an independent supplier of both electricity and gas to domestic
and commercial customers in the United Kingdom.
C The parties have agreed to utilise their respective selling networks to
market the services provided by each of them to the others customers on
the terms of this Agreement.
D. Commissions will be paid by FNS as set out in the Marketing Plan in
respect of IE's Agents & Representatives. Commissions will be paid by
IE as set out in the Marketing Plan in respect of FNS's Agents &
Representatives.
NOW IT IS HEREBY AGREED as follows:
1 INTERPRETATION
1.1 In this Agreement, unless the context otherwise requires:
"AGENTS & REPRESENTATIVES" means the marketing
agents and representatives (including third
parties and employees) duly authorised by
that party from time to time to sell its
products and services and shall include any
such marketing agents and representatives
appointed by that party during the term of
this Agreement for so long as they are so
appointed
"APPROVED TERMS" means, in relation to a party, the
terms on which that party will supply its
Services to customers and which have been
approved by the other party. At the date of
this Agreement, the Approved Terms of the
parties are attached to the initial
Marketing Plan
1
<PAGE> 3
"BUNDLED SERVICES" means the Telecoms Services and
the Electricity & Gas Services and, subject
to Clauses 5.1 and 5.2, such other utility
services as either party may seek to
provide and which the parties agree in
writing to include as part of this
Agreement
"MARKETING PLAN" means the marketing plan (a copy of
the initial plan is annexed to this
Agreement) agreed between the parties from
time to time setting out the manner and
targets in respect of which each party
shall market the Services of the other
"SERVICES" means, in relation to FNS, the Telecoms
Services and, in relation to IE, the
Electricity and Gas Services and, in
relation to each party, such other Bundled
Services as that party seeks to provide
"TELECOMS SERVICES" means the fixed line, mobile and
internet connection services offered by FNS
together with freephone, lo-call numbers
and number portability
"ELECTRICITY & GAS SERVICES"means the non-domestic supply of electricity
and gas by IE
"FORCE MAJEURE" means, in relation to either
party, any circumstances beyond the
reasonable control of that party
(including, without limitation, any strike,
lock-out or other form of industrial
action)
"RESTRICTED INFORMATION" means any information of a
confidential nature which is disclosed by
one party to another pursuant to or in
connection with this Agreement (whether
orally or in writing, and whether or not
such information is expressly stated to be
confidential or marked as such)
1.2 Any reference in this Agreement to `writing' or cognate expressions
includes a reference to telex, cable, facsimile transmission or
comparable means of communication.
1.3 Any reference in this Agreement to any provision of a statute shall be
construed as a reference to that provision as amended, re-enacted or
extended at the relevant time.
1.4 The headings in this Agreement are for convenience only and shall not
affect its interpretation.
2 MARKETING BY THE AGENTS AND REPRESENTATIVES
2.1 FNS shall procure that during the term of this Agreement the Agents &
Representatives appointed by FNS shall market the Services of IE in
accordance with the terms set out in this Agreement and the Marketing
Plan.
2
<PAGE> 4
2.2 IE shall procure that during the term of this Agreement the Agents &
Representatives appointed by IE shall market the Services of FNS in
accordance with the terms set out in this Agreement and the Marketing
Plan.
3 MARKETING THE BUNDLED SERVICES
3.1 The Services of FNS marketed by the Agents & Representatives of IE
shall be marketed as part of the Bundled Services under the brand name
of Independent Energy.
3.2 The Services of IE marketed by the Agents & Representatives of FNS
shall be marketed as part of the Bundled Services but provided always
that such Services shall be marketed under the brand name of
Independent Energy. The Telecoms Services being marketed by FNS' Agents
& Representatives shall be marketed under the FNS brand name to its
customers.
3.3 Subject to Clause 3.5:
3.3.1 the Agents & Representatives of IE shall be entitled to enter
into agreements on Approved Terms on behalf of FNS for the
provision by FNS of the Services of FNS under the brand name
Independent Energy and FNS shall be wholly responsible for the
provision of such Services to any such customer;
3.3.2 the Agents & Representatives of FNS shall be entitled to enter
into agreements on Approved Terms on behalf of IE for the
provision by IE of IE's Services under the brand name
Independent Energy and IE shall be wholly responsible for the
provision of such Services to any such customer.
3.4 The Agents & Representatives of each party shall market the Bundled
Services to commercial and not domestic customers.
3.5 Any customer wishing to enter into an agreement on the Approved Terms
with either party in respect of Services shall be accepted by that
party subject, in the case of any customers whose billing in respect of
that Service can reasonably be expected to exceed (pound)500 per month,
to a credit rating report being available from Dun & Bradstreet (or
such other reputable credit rating agency as the parties shall agree in
writing from time to time) in respect of that customer which is
satisfactory to the party providing the relevant Service provided that
if no objection has been raised by the relevant party to the credit
status of the proposed customer within 10 days of application by that
customer for the relevant Service the party providing the relevant
Service shall be deemed to have accepted that customer.
3.6 In addition to marketing by their respective Agents & Representative
each of the parties shall (at its own cost and subject to the
constraints placed upon the respective parties by virtue of the Data
Protection Act 1998) make a written approach to each of its existing
customers offering the Services of the other on the same basis as set
out in this Clause 3 and shall offer such Services in any future direct
mail or telesales campaigns undertaken by any party during the term of
this Agreement.
3.7 The terms and conditions upon which the Services will be provided to
the customer will be in the form of the Approved Terms and any
alteration of the Approved Terms shall be subject to the prior written
consent of the other party (such consent not to be unreasonably
withheld, conditioned or delayed).
3
<PAGE> 5
3.8 The parties shall meet every 3 months during the term of this Agreement
(and at such other time(s) as either party may require on not less than
14 days' prior notice) in order to review the Marketing Plan. Each
party shall be given an opportunity to propose amendments to the
Marketing Plan and the other party shall not unreasonably withhold or
delay their consent to such amendments. Amendments to the Marketing
Plan shall take effect upon the written agreement of all the parties.
4 RESPONSIBILITIES FOR AGENT AND REPRESENTATIVES
4.1 FNS will be wholly responsible for payment of commissions to the IE
Agents & Representatives in respect of the marketing and provision of
the Services of FNS. IE shall not appoint any new third party Agents &
Representatives on commission terms or at a commission rate which is
more beneficial to such Agents & Representatives than that agreed with
its existing Agents & Representatives without the consent of FNS such
consent not to be unreasonably withheld, conditioned or delayed. If
either party shall change or add to its Agents & Representatives it
shall inform the other party of such change as soon as reasonably
practicable.
4.2 No party shall be responsible for any fixed costs relating to the
other's Agents & Representatives.
5 WARRANTIES
5.1 FIT and FNS hereby jointly and severally covenant with IE that during
the term of this Agreement and for a period of 5 years following
termination they will not (and they shall procure that none of their
subsidiaries (if any) shall) :
5.1.1 supply any other services other than the FNS Services through
the IE Agents and Representatives
5.1.2 utilise the data in respect of IE customers otherwise than for
the supply of the FNS Services to such customers
5.1.3 utilise the name Independent Energy in any manner whatsoever
save as envisaged in this Agreement
5.1.4 supply or be a party to any arrangements for or assist in
arrangements for the supply of gas or electricity to any party.
5.2 IE hereby covenants with FNS that during the term of this Agreement and
for a period of 5 years following termination it will not (and it shall
procure that none of its subsidiaries or subsidiaries of IEH (if any)
shall:
5.2.1 supply any other services other than its Services through the
FIT Agents and Representatives
5.2.2 utilise the FNS or FIT data in respect of customers otherwise
than for the supply of its Services to such customers
5.2.3 utilise the name Future Network Services or Future Integrated
Telephony in any manner whatsoever save as envisaged in this
Agreement.
4
<PAGE> 6
5.3 FNS hereby warrants that:
5.3.1 at all times during the course of this Agreement it will perform
the FNS Services to a level and a quality of service sufficient
to comply with the Marketing Plan
5.3.2 it will use all reasonable endeavours to meet business targets
and projections agreed in the Marketing Plan (but if such
business targets and projections are not achieved then IE will
have no claim against FNS by reason of such business targets and
projections not being achieved)
5.3.3 at the date of this Agreement it has obtained and holds all
necessary statutory, regulatory and other consents and
permissions required for carrying on the FNS Services and that
it will continue to do so following implementation of this
Agreement and the Marketing Plan and that such consents and
permissions obtained by FNS will also permit the marketing of
FNS Services by the Agents & Representatives of IE.
5.4 IE hereby warrants that:
5.4.1 at all times during the course of this Agreement it will perform
the IE Services to a level and a quality of service sufficient
to comply with the Marketing Plan
5.4.2 it will use all reasonable endeavours to meet business targets
and projections agreed in the Marketing Plan (but if such
business targets and projections are not achieved then FNS will
have no claim against IE by reason of such business targets and
projections not being achieved)
5.4.3 at the date of this Agreement it has obtained and holds all
necessary statutory, regulatory and other consents and
permissions required for carrying on the IE Services and that it
will continue to do so following implementation of this
Agreement and the Marketing Plan and that such consents and
permissions obtained by IE will also permit the marketing of IE
Services by the Agents & Representatives of FNS.
6 COMMISSION PAYMENTS
6.1 FNS shall pay commission as specified in the Marketing Plan in respect
of any line installed for a customer contracting with FNS as a result
of marketing by the Agents & Representatives of IE in accordance with
Clause 3.1 or by reason of any approach made by IE (or its Agents &
Representatives) on behalf of FNS in accordance with Clause 3.6. The
commission will consist of a fixed commission in respect of each line
connected for a customer contracting with FNS in such circumstances
plus variable commission consisting of a percentage of the amount
billed to each such customer for so long as that customer remains a
customer of FNS. The actual amounts of such commissions shall be
calculated in accordance with the provisions of the Marketing Plan.
6.2 IE shall pay commission as specified in the Marketing Plan in respect
of any customer contracting with IE as a result of marketing by the
Agents and Representatives of FNS in accordance with Clause 3.2 or by
reason of any approach made by FNS (or its Agents & Representatives) on
behalf of IE in accordance with Clause 3.6. The commission will consist
of a fixed commission payable in respect each meter installed for a
customer
5
<PAGE> 7
contracting with IE and a variable commission of a percentage of the
value of electricity and gas billed to each such customer for so
long as that customer remains a customer of IE. The actual amounts of
such commissions shall be calculated in accordance with the provisions
of the Marketing Plan.
6.3 The commission payable under Clauses 6.1 and 6.2 above shall be paid
6.3.1 in the case of the fixed commission on or before the 28th day of
the month following the month in which the customer contracted
with that party;
6.3.2 in the case of variable commission within 28 days of payment of
the bill to which the commission relates;
6.3.3 into the bank account designated from time to time by each party
for the receipt of all such commission payments;
and VAT (if payable) shall be payable on all such commission payments
in addition to the amount of the actual commission.
6.4 Each party will provide to the other all information reasonably
requested in relation to the provision of the Services provided by that
party, customers and usage data in respect of customers who have
contracted with the other party as a result of the activities to which
this Agreement relates and without prejudice to the generality of the
foregoing each party shall provide to the other weekly summary data of
numbers of lines connected/meters installed for customers, customers,
location and customer usage in respect of such customers. Either party
shall have the right to have all the figures and details provided by
the other audited by their auditors. All such costs of such an audit
shall be borne by the party requesting the audit.
6.5 Each party's terms of contract with customers shall provide for the
ability of that party to provide the other with all information
outlined in Clause 6.4.
7 SUBSCRIPTION FOR SHARES
7.1 Subject to the provisions of this Clause 7, on the 28th day of each
month in respect of the preceding calendar month IE will subscribe
without set off, deduction or counter claim for such number of ordinary
shares of 5 pence each in the capital of FIT ("Ordinary Shares") as is
equivalent to the connection costs for lines (as defined in Clause 7.3)
supplied to customers who through Agents & Representatives of IE enter
into agreements for the provision of Telecom Services by FNS on the
terms and conditions set out in this Agreement.
7.2 The number of Ordinary Shares IE shall in each month subscribe for
shall be calculated in accordance with the formula set out below:-
A x B
-----
Price
Where:-
6
<PAGE> 8
A = the number of lines supplied to customers falling within
Clause 7.3 whom the Agents & Representatives of IE procure to
enter into agreements for Telecom Services to be provided by FNS
during the preceding calendar month.
B = the average connection cost of each of such lines as set out
in the Marketing Plan from time to time.
Price = the five day average market price of FIT stock over the five
days prior to the date of this Agreement.
7.3 "Lines" for the purposes of calculating the subscription will be fixed
line, mobile and internet connection services installed in relation to
non-domestic customers who have signed agreements on or before the
first anniversary of this Agreement for the provision of Telecom
Services by FNS regardless of the duration of such contract or the
amount of service actually utilised.
7.4 The connection costs referred to in Clause 7.2 shall be as stated in the
Marketing Plan.
7.5 As soon as reasonably practicable following the entering into of this
Agreement, FIT shall seek such shareholder and other approvals ("the
Approvals") as are necessary for the implementation of this Agreement,
the creation of sufficient authorised but unissued Ordinary Shares as
are required to satisfy FIT's obligations under this Agreement and
appropriate authorities for the allotment and issue of such Ordinary
Shares pursuant to this Agreement.
7.6 Subject to Clause 7.9 during the period from the date of this Agreement
to the date the Approvals are obtained IE shall prepay to FIT without
set off deduction or counter claim on the 28th day of each month in
respect of the preceding calendar month an amount equal to AxB (as
defined in Clause 7.2) in respect of the subscription price for
Ordinary Shares.
7.7 Upon the obtaining of the Approvals IE will:-
7.7.1 subscribe for such number of Ordinary Shares for the period from
the start of this Agreement to the date the Approvals were
obtained as should otherwise have been allotted and issued and
the amount prepaid by IE to FIT will be applied by FIT in
satisfaction of the subscription price; and
7.7.2 thereafter subscribe for Ordinary Shares in accordance with this
Clause 7.
7.8 For the avoidance of doubt the maximum number of Ordinary Shares to be
allotted and issued under this Agreement shall be 2,500,000 and the
final allotment and issue of Ordinary Shares will be in respect of the
month to 31 December 2000.
7.9 In the event that the Company is unable to obtain the approvals
referred to in Clause 7.5 above before 20 February 2000 this Agreement
shall terminate and amount prepaid by IE to FIT that would otherwise
have been applied in satisfaction the allotment and issue of Ordinary
Shares will be repaid to IE by FIT. Payment to be made by 28 February
2000.
7.10 IE has agreed to enter into the obligations in Clause 7.11 to preserve
an orderly market in the FIT shares and to prevent disposals which
would have a material adverse effect on the price of an Ordinary Share
from time to time.
7
<PAGE> 9
7.11 IE undertakes to FIT that:-
7.11.1 it will not for the period of 12 months from the date of this
Agreement transfer or dispose of (whether through the market or
by private treaty or otherwise) any shares in the capital of the
FIT subscribed for by IE pursuant to this Agreement; and
7.11.2 following the 12 months period referred to in Clause 7.11.1
shall not transfer or dispose of Ordinary Shares otherwise than
through the nominated broker for the time being of FIT.
7.12 Notwithstanding the provisions of Clause 7.11 IE may transfer or
dispose of Ordinary Shares held by it if:
7.12.1 a third party offers to acquire the whole of the issued share
capital of FIT and such offer having become unconditional in all
respects (save as regards acceptances); or
7.12.2 this Agreement terminates as a result of a breach by FIT or FNS
subject only to the requirement to transfer or dispose of such shares
through the nominated broker for the time being of FIT.
8 GOODWILL
8.1 All rights to the Independent Energy name and goodwill will at all
times belong to and vest in IE and all rights in the FNS name and
goodwill will at all times belong to and vest in FNS.
9 DURATION AND TERMINATION
9.1 This Agreement shall come into force on the date hereof and, subject as
provided in Clauses 9.2, and 9.3, shall continue in force for a period
of 5 years and thereafter unless or until terminated by either party
giving to the other not less than 6 months' written notice expiring at
or at any time after the end of that period.
9.2 If at any time control (as defined in s.840 Income and Corporation
Taxes Act 1988) of any party is acquired by any person or group of
connected persons (as defined in s.839 of that Act) not having control
of that party at the date of this Agreement, that party shall forthwith
give written notice (a "Change of Control Notice") to the other
identifying that person or group of connected persons and the other
shall be entitled, by giving not less than 2 months' written notice to
the party giving the Change of Control Notice within 30 days after
receipt of the Change of Control Notice to terminate this Agreement.
9.3 Either party shall be entitled forthwith to terminate this Agreement
by written notice to the other if:
9.3.1 that other party commits any material breach of any of the
provisions of this Agreement and, in the case of a breach
capable of remedy, fails to remedy the same within 30 days after
receipt of a written notice giving full particulars of the
breach and requiring it to be remedied;
8
<PAGE> 10
9.3.2 an encumbrancer takes possession or a receiver is appointed over
any of the property or assets of that other party;
9.3.3 that other party makes any voluntary arrangement with its
creditors or becomes subject to an administration order;
9.3.4 that other party goes into liquidation (except for the purposes
of amalgamation or reconstruction and in such manner that the
company resulting therefrom effectively agrees to be bound by or
assume the obligations imposed on that other party under this
Agreement);
9.3.5 anything analogous to any of the foregoing under the law of any
jurisdiction occurs in relation to that other party;
9.3.6 that other party ceases, or threatens to cease, to carry on
business.
9.4 For the purposes of Clause 9.3.1, a breach shall be considered capable
of remedy if the party in breach can comply with the provision in
question in all respects other than as to the time of performance
(provided that time of performance is not of the essence).
9.5 Any waiver by either party of a breach of any provision of this
Agreement shall not be considered as a waiver of any subsequent breach
of the same or any other provision thereof.
9.6 The rights to terminate this Agreement given by Clause 9 shall be
without prejudice to any other right or remedy of either party in
respect of the breach concerned (if any) or any other breach.
9.7 On termination of this Agreement in accordance with its terms neither
FNS nor IE will make any claim against the other under or pursuant to
the Commercial Agents (Council Directive) Regulations 1993 or Council
Directive 86/653 provided always that this Clause 9.7 shall only take
effect to the extent that the parties can lawfully give effect to it.
10 CONSEQUENCES OF TERMINATION
10.1 Upon the termination of this Agreement for any reason each of the
parties shall continue to provide their respective Services to the
customers with whom they have contracted as a result of the activities
of the Agents & Representatives of the other party or otherwise as a
result of marketing activity undertaken by the other party in
accordance with this Agreement and the Marketing Plan.
10.2 Upon the termination of this Agreement for any reason
10.2.1 each of the parties shall immediately instruct their respective
Agents & Representatives to cease to promote, market, advertise
or solicit customers for the Services of the other;
10.2.2 the provisions of Clause 6 in respect of the payment of
commission shall continue in force in accordance with its terms;
10.2.3 Clause 11 (confidentiality) shall continue in force in
accordance with its terms.
9
<PAGE> 11
11 CONFIDENTIALITY
11.1 Except as provided by Clauses 11.2 and 11.3, each party shall at all
times during the continuance of this Agreement and after its
termination:
11.1.1 use its best endeavours to keep the other parties Restricted
Information confidential and accordingly not to disclose such
Restricted Information to any other person; and
11.1.2 not use the other parties Restricted Information for any purpose
other than the performance of its obligations under this
Agreement.
11.2 Any Restricted Information of a party may be disclosed by another party:
11.2.1 if required by any governmental or other authority or regulatory
body, or any relevant stock Exchange or by statute; or
11.2.2 to any employees of that party or the Agents & Representatives
of that party,
to such extent only as is necessary for the purposes contemplated by
this Agreement, or as is required by law and subject in each case to
the party disclosing such information using its best endeavours to
ensure that the person to whom it is disclosed keeps the same
confidential and does not use the same except for the purposes for
which the disclosure is made.
11.3 Any Restricted Information may be used by the party to who it was given
for any purpose, or disclosed by that party to any other person, to the
extent only that:
11.3.1 it is at the date hereof, or hereafter becomes, public knowledge
through no fault of that party (provided that in doing so it
shall not disclose any Restricted Information which is not
public knowledge); or
11.3.2 it can be shown by the party receiving the Restricted
Information to have been known to it prior to its being
disclosed by the other party.
12 FORCE MAJEURE
12.1 If either party is affected by Force Majeure it shall forthwith notify
the other party of the nature and extent thereof.
12.2 Neither party shall be deemed to be in breach of this Agreement, or
otherwise be liable to the other, by reason of any delay in
performance, or non-performance, of any of its obligations hereunder to
the extent that such delay or non-performance is due to any Force
Majeure of which it has notified the other party; and the time for
performance of that obligation shall be extended accordingly.
12.3 If the Force Majeure in question prevails for a continuous period in
excess of six months, the parties shall enter into bona fide
discussions with a view to alleviating its effects, or to agreeing upon
such alternative arrangements as may be fair and reasonable.
13 NATURE OF AGREEMENT
10
<PAGE> 12
13.1 Any party may assign this Agreement and the rights and obligations
thereunder to any other company which at the relevant time is its
holding company or subsidiary (as defined by s.736 Companies Act 1985)
or the subsidiary of any such holding company.
13.2 Subject as provided in Clause 13.1, this Agreement is personal to the
parties, which may not without the written consent of the others,
assign, mortgage, charge (otherwise than by floating charge) or dispose
of any of its rights hereunder, or sub-contract or otherwise delegate
any of its obligations hereunder.
13.3 No press release, announcement, or other public statement relating to
this Agreement or any of the matters set out herein shall be issued
without the written consent of both parties.
14 DISPUTE AND PROPER LAW
14.1 This Agreement shall be governed by and construed in all respects in
accordance with the Laws of England and Wales and each party hereby
submits to the non-exclusive jurisdiction of the English Courts.
15 NOTICES AND SERVICE
15.1 Any notice or other information required or authorised by this
Agreement to be given by either party to the other may be given by hand
or sent (by first class pre-paid post, telex, cable, facsimile
transmission or comparable means of communication) to the other party
at the address referred to in Clause 15.4.
15.2 Any notice or other information given by post pursuant to Clause 15.1
which is not returned to the sender as undelivered shall be deemed to
have been given on the second working day after the envelope containing
the same was so posted; and proof that the envelope containing any such
notice or information was properly addressed, pre-paid, registered and
posted, and that it has not been so returned to the sender, shall be
sufficient evidence that such notice or information has been duly
given.
15.3 Any notice or other information sent by telex, cable, facsimile
transmission or comparable means of communication shall be deemed to
have been duly sent on the date of transmission, provided that a
confirming copy thereof is sent by first class pre-paid post to the
other party at the address referred to in Clause 15.4 within 24 hours
after transmission.
15.4 Service of any legal proceedings concerning or arising out of this
Agreement shall be effected by causing the same to be delivered to the
Company Secretary of the party to be served at its principal place of
business or its registered office or to such other address as may from
time to time be notified in writing by the party concerned.
11
<PAGE> 13
16 PARENT COMPANY GUARANTEES
In consideration of FNS and FIT entering into this Agreement with IE,
IEH hereby guarantees to FNS and FIT as principal obligor the full and
due performance by IE of all IE's obligations under this Agreement
(including without limitation any obligation to pay damages or other
compensation for any breach of this Agreement). In consideration of IE
entering into this Agreement with FNS, FIT hereby guarantees to IE as
principal obligor the full and due performance by FNS of all FNS'
obligations under this Agreement (including without limitation any
obligation to pay damages or other compensation for any breach of this
Agreement).
AS WITNESS this Agreement has been executed the day and year first before
written.
SIGNED by )
For and on behalf of INDEPENDENT )
energy uk LIMITED in the )
presence of )
SIGNED by )
For and on behalf of INDEPENDENT )
ENERGY HOLDINGS PLC )
in the presence of )
SIGNED by )
For and on behalf of future )
NETWORK SERVICES LIMITED )
in the presence of )
SIGNED by )
For and on behalf of future )
Integrated telephony PLC )
in the presence of )
12
<PAGE> 1
DATED 2000
---------------------
INDEPENDENT ENERGY UK LIMITED
-AND-
INDEPENDENT ENERGY HOLDINGS PLC
-AND-
FUTURE NETWORK SERVICES LIMITED
-AND-
FUTURE INTEGRATED TELEPHONY PLC
--------------------------------
DEED OF VARIATION
--------------------------------
Eversheds
115 Colmore Row
Birmingham
B3 3AL
Tel: 0121 232 1000
Fax: 0121 232 1900
Ref: MDN/rse
<PAGE> 2
THIS DEED OF VARIATION is made on day of February 2000
BETWEEN:-
(1) INDEPENDENT ENERGY UK LIMITED whose registered office is at
Radcliffe House, Blenheim Court, Solihull, West Midlands, B91 2AA
("IE");
(2) FUTURE NETWORK SERVICES LIMITED whose registered office is at Future
House, Brandon Court, Progress Way, Leofric Business Park, Coventry,
West Midlands, CV3 2NT ("FNS");
(3) FUTURE INTEGRATED TELEPHONY PLC whose registered office is at Future
House, Brandon Court, Progress Way, Leofric Business Park, Coventry,
West Midlands, CV3 2NT ("FIT"); and
(4) INDEPENDENT ENERGY HOLDINGS PLC whose registered office is at
Radcliffe House, Blenheim Court, Solihull, West Midlands, B91 2AA
("IEH");
WHEREAS:-
(A) The parties hereto have entered into a marketing agreement dated 24
December 1999 ("the Agreement") the agreed conformed copy of which
is appended hereto.
(B) The parties hereto now wish to vary the terms of the Agreement as
set out in this deed.
NOW THIS DEED WITNESSES as follows:-
<PAGE> 3
1. THE AGREEMENT
1.1 Save as expressly varied and set out in this deed the terms
and conditions contained in the Agreement shall remain in full
force and effect between the parties.
1.2 The parties hereby agree that the Agreement shall be varied as
set out below, such variations to take effect as if contained
in the Agreement on the date it was originally entered into by
the parties to it.
2. VARIATION
2.1 By the deletion of clause 6.1 and the replacement of it by the
following new clause 6.1:-
"6.1 FNS shall pay commission as specified in the
Marketing Plan in respect of any customer
contracting with FNS as a result of marketing by
the Agents & Representatives of IE in accordance
with Clause 3.1 or by reason of any approach made
by IE (or its Agents & Representatives) on behalf
of FNS in accordance with Clause 3.6. The
commission will consist of a fixed commission in
respect of each customer contracting with FNS in
such circumstances plus variable commission
consisting of a percentage of the amount billed to
each such customer for so long as that customer
remains a customer of FNS. The actual amounts of
such commissions shall be calculated in accordance
with the provisions of the Marketing Plan";
2.2 By the deletion of clause 7.9 and the replacement of it by the
following new clause 7.9:-
"7.9 In the event that the Company is unable to obtain
the Approvals before 31 March 2000 this Agreement
shall terminate and the amount prepaid by IE to FIT
that would otherwise have been applied in
satisfaction of the allotment and issue of Ordinary
<PAGE> 4
Shares will be repaid to IE by FIT. Payment to be
made by 7 April 2000"; and
2.3 By the addition of the following words as a proviso to
Clause 7.12:-
"and nothing in this Clause 7 and Clause 13.2 shall
prohibit IE from giving security over the Ordinary
Shares held by it as part of the Independent Energy
Group's ordinary dealings with its financiers from
time to time".
3. HEADINGS
Headings used in this deed are for reference purposes only and shall
not be deemed to be part of this deed.
4. ENGLISH LAW
The formation, construction, performance, validity and all aspects
whatever of this deed shall be governed by English Law and the parties
hereby agree to submit to the non-exclusive jurisdiction of the English
Courts.
This document is executed as a deed on the date stated at the beginning of this
document.
EXECUTED AS A DEED
for and on behalf of
INDEPENDENT ENERGY UK LIMITED
acting by:-
Director
Director/Secretary
<PAGE> 5
EXECUTED AS A DEED
for and on behalf of
INDEPENDENT ENERGY HOLDINGS PLC
acting by:-
Director
Director/Secretary
EXECUTED AS A DEED
for and on behalf of
FUTURE NETWORK SERVICES LIMITED
acting by:-
Director
Director/Secretary
EXECUTED AS A DEED
for and on behalf of
FUTURE INTEGRATED TELEPHONY PLC
acting by:-
Director
Director/Secretary
<PAGE> 1
EXHIBIT 10.23
BARCLAYS
London Corporate Banking
PO Box 15162
50 Pall Mall
London SW1A 1QB
Tel 020 7441 4099
Fax 020 7441 4225
Donaldson, Lufkin & Jenrette, Inc.
277 Park Avenue
New York
NY10172
6th March, 2000
Dear Sirs,
We refer to:
(a) the Pound Sterling 80,000,000 credit agreement dated 8th July, 1999
between (among others) Independent Energy UK Limited (the "BORROWER")
and us as Ancillary Bank (the "CREDIT AGREEMENT"); and
(b) the letter of credit (in the attached form) that the Borrower has
requested us to issue today under the Ancillary Facility (the "POOL
LC").
Terms defined or used in the Credit Agreement have the same meaning in this
letter unless the context otherwise requires or they are otherwise defined in
this letter, and Clause 1.2 (Construction) of the Credit Agreement shall apply
to this letter as if it were set out in it with any references to (or including)
the Credit Agreement being references to this letter.
We (the "BANK"), you ("DLJ") and the Obligors, by our/their respective signature
or countersignature of this letter (or a copy of it), agree that:
1. REIMBURSEMENT
(a) Subject to paragraph (b) below, DLJ shall reimburse the Bank, within one
business day following written demand, for each and any amount demanded
of, or paid by, the Bank in accordance with the terms of the Pool LC;
provided, however, that in no event shall DLJ be required to reimburse
the Bank an amount in excess of Pound Sterling 60 million less all
amounts
1
<PAGE> 2
applied pursuant to clause 2(c)(ii) to cash collateralise the Pool LC.
Each reimbursement by DLJ shall be accompanied by a payment of interest
on the amount paid by DLJ for the period from the business day following
any demand thereof to but not including the date of payment by DLJ at
the rate specified in clause 4(c).
(b) DLJ shall not be obliged to make payment under paragraph (a) above if
and for so long as any of the following events is subsisting:
(i) a breach by the Bank of its obligations under paragraphs 2(b)-(d)
(inclusive) and 3(a) below;
(ii) a breach by the Bank of its obligations under paragraph 8(a)(iii)
below; and
(iii) a breach by the Bank of its obligations under paragraph 8 below
which has given rise to:
(A) a change to any Security Document (other than a change
that is not adverse to the Ancillary Bank or DLJ);
(B) an increase in the maximum permitted principal
outstandings under the Finance Documents where the amount
of that increase exceeds:
(I) Pound Sterling 10,000,000 in aggregate for all of
the Finance Documents; or
(II) Pound Sterling 5,000,000 for the Ancillary Facility
Letter;
(C) any change in the scope or nature of the rights given by
the Finance Documents to the Ancillary Bank in its
capacity as such (and accordingly not given to each of the
Banks); or
(D) any amendment or waiver of the Ancillary Bank's rights
where that amendment or waiver is given after the Agent
has given any notice under Clause 21.18 (Acceleration etc)
of the Credit Agreement.
For the avoidance of doubt, any of the above events shall cease to be
"subsisting" for the purposes of the above if action is taken such that
DLJ is left or put in effectively no worse a position than it would have
been in if the relevant event had not occurred (such as the subsequent
payment of an amount that was not paid when due or the reversal of a
transaction or its effects), even if the breach in question is incapable
of being remedied because the due date for performance has passed.
2. SUBROGATION AND DEMAND
(a) Upon making a payment (and provided that all amounts then payable by DLJ
under this letter have been paid in full), DLJ shall automatically and
immediately be subrogated to all of the Bank's rights, claims and
securities arising or held in respect of the relevant
2
<PAGE> 3
payment or demand under the Pool LC, including without limitation the
Bank's rights and claims:
(i) under the Ancillary Facility Letter and the reimbursement and/or
counter-indemnity provisions contained therein and given by the
Borrower in respect of the Pool LC;
(ii) arising by way of counter-indemnity under the general law;
(iii) against the Guarantor under the Credit Agreement in respect of
the Borrower's obligations referred to in paragraph (i) above;
and
(iv) in respect of the Security Interests and other rights conferred
by the Security Documents.
For the avoidance of doubt, DLJ shall not have or be entitled to
exercise any such right of subrogation to the extent that doing so would
result in double-counting with any recovery under paragraph 3 below.
(b) The Bank shall make demand on the Borrower under the Ancillary Facility
for:
(i) reimbursement of any amount paid by the Bank under the Pool LC
(or repayment of any advance made by the Bank to fund any such
amount); and/or
(ii) payment of interest accrued and owing on any Such amount (or on
any advance made by the Bank to fund any Such amount),
immediately upon:
(A) DLJ requesting it to do so by written notice at any time when any
amount of a kind referred to in paragraphs (i) and (ii) above is
outstanding;
(B) the expiry or cancellation of the Pool LC;
(C) the termination of DLJ's obligations under paragraph 1, as set
forth in paragraph 9; and
(D) the date of receipt by the Bank of notice from DLJ or the
Borrower that the Borrower has received the proceeds of an equity
or subordinated debt issue of the Borrower to the Guarantor (the
"EQUITY PROCEEDS") which has been funded with the proceeds of any
equity issue by the Guarantor as contemplated in the Ancillary
Facility Letter; provided, however, that any demand under this
clause (D) shall not exceed the relevant Equity Proceeds.
The Borrower shall promptly give notice to the Bank as contemplated by
paragraph (D) above. For the avoidance of doubt, the terms of any
subordinated debt contemplated by
3
<PAGE> 4
paragraph (D) above shall provide that the holder of that subordinated
debt shall not be entitled to payment, and shall not seek to enforce any
right or commence any proceedings to recover any amount payable under
that debt, for as long as any Secured Liability remains outstanding.
(c) The Bank acknowledges, without prejudice to the Borrower's payment
obligations under paragraph 2(b) above, that the Borrower may, and the
Borrower undertakes that it will, pay the Equity Proceeds, within one
business day following receipt thereof, to the Bank who shall apply them
in the following manner:
(i) first, (to the extent Sufficient) in:
(A) reimbursement of any amount paid by the Bank under the
Pool LC (or repayment of any advance made by the Bank to
fund any such amount); and/or
(B) payment of interest accrued and owing on any such amount
(or on any advance made by the Bank to fund any such
amount); and
(ii) secondly, to cash collateralise the Pool LC up to the undrawn
face amount of the Pool LC, whereupon DLJ shall be irrevocably
released and discharged from its obligations to the Batik under
paragraph 1 above in a sum equal to the amount of such cash
collateralisation as contemplated by the proviso contained in
paragraph 1(a).
(d) The Bank, in its capacity as the Ancillary Bank, agrees that it shall,
to the extent requested by DLJ, instruct the Agent to (i) take all
actions permitted pursuant to Section 21 of the Facility Agreement and
(ii) (to the extent that the Agent is lawfully able to do so) enforce
the security conferred by the Security Agreement, in each case, upon the
written request of DLJ given at any time at or following a default by
the Borrower in its obligation to make payment to the Bank following a
demand pursuant to paragraph 2(b) above.
(e) Each of the Obligors acknowledges and agrees to paragraphs (a), (b), (c)
and (d) above, but has no rights under or in respect of this letter.
(f) Without prejudice to clause (d) above, the Bank shall, in its own name,
do all things reasonably required by DLJ in order to protect and enforce
any rights which it may have against the Obligors as a result of the
subrogation contemplated by paragraph (a) above, provided that:
(i) with respect to any action in respect of such subrogation, the
Batik is not obliged to take any action which might, in its
opinion, cause it to incur any liability without its first having
been indemnified to its satisfaction by DLJ; and
4
<PAGE> 5
(ii) nothing in this paragraph (f) shall impose any obligation oil the
Bank to take any action or to refrain from taking any action
where to do may reasonably be regarded as being materially
detrimental to the Bank.
3. RECOVERIES
(a) Subject to the following provisions of this paragraph (a) (and except to
the extent that payment under this paragraph would result in
double-counting with any recovery under paragraph 2 above), the Bank
shall within one business day following receipt thereof, pay to DLJ an
amount equal to each amount paid by any of the Obligors to the Bank in
or towards satisfaction of any amount owing to the Bank by way of:
(i) reimbursement of any amount paid by the Bank under the Pool LC
(or repayment of any advance made by the Bank to fund any such
amount); or
(ii) interest accrued on any such amount (or on any advance made by
the Bank to fund any such amount).
Each such payment shall be accompanied by a payment of interest on the
amount paid by the Bank for the period from the business day following
receipt thereof to but not including the date of payment by the Bank at
the rate specified in clause 4(c). The Bank shall not be obliged to make
payment under this paragraph (a) if and for so long as any breach of any
obligation under paragraphs 1, 4(a) or 4(c) is subsisting. For the
avoidance of doubt, any of the above events shall cease to be
"subsisting" for the purposes of the above if action is taken such that
the Bank is left or put in effectively no worse a position than it would
have been in if the relevant event had not occurred (such as the
subsequent payment of an amount that was not paid when due or the
reversal of a transaction or its effects), even if the breach in
question is incapable of being remedied because the due date for
performance has passed.
(b) The Bank's obligations under this letter are in addition to and are not
in any way prejudiced by any collateral or other security now or
subsequently held by DLJ or any Security Interest to which DLJ may be
entitled.
(c) Where any discharge of the Bank's obligations under this Clause 3 is
made in whole or in part or any arrangement is made on the faith of any
payment, security or other disposition which is avoided or must be
restored on insolvency, liquidation or otherwise in respect of the Bank,
without limitations the liability of the Bank under this letter shall
continue as if the discharge or arrangement had not occurred. DLJ may
concede or compromise any claim that any payment, security or other
disposition is liable to avoidance or restoration.
(d) The Bank need not exercise any set-offs or other rights or claims
available to it.
(e) If the Bank applies any amount in or towards satisfaction of an
Obligor's obligations under the Ancillary Facility Letter and the Bank
is, as a result of the application or any payment to the Bank giving
rise to the application, obliged by law to make any payment
5
<PAGE> 6
to any person, then DLJ shall, upon demand by the Bank, repay to the
Bank any amount paid to DLJ as a result of the application.
(f) If under any pro rata sharing, loss-sharing or similar clause in the
Finance Documents, the Bank, in its capacity as Ancillary Bank, is
obliged:
(i) to pay a sum received under the Ancillary Facility Letter to
other lenders or their agent under the Finance Documents; or
(ii) otherwise to share any receipts or recoveries by the Bank under
the Ancillary Facility Letter,
then the Bank shall not be deemed for the purposes of this letter to
have received any sum from an Obligor to the extent of that payment or
sharing.
(g) Subject to paragraphs 2(c) above and (h) below, if the Bank receives an
amount that may be applied in discharging amounts outstanding under the
Ancillary Facility Letter (excluding, for the avoidance of doubt, any
amount received by it in its capacity as a Bank under the Credit
Agreement) at a time when the aggregate amount (excluding any interest)
paid by DLJ under paragraph 1 above exceeds the aggregate amount
(excluding any interest) paid by the Bank under paragraph 3 above, the
Bank shall apply the amount received against amounts outstanding under
the Ancillary Facility Letter pro rata as between amounts owing as a
result of payments made by it made under the Pool LC and other principal
amounts outstanding under the Ancillary Facility Letter.
(h) Without limiting paragraph 2(c) above, the Bank shall apply any amount
paid to it by the Borrower at any time before the earliest of the Agent
giving any notice under Clause 21.18 (Acceleration etc) of the Credit
Agreement, the commencement of enforcement of any security conferred by
the Finance Documents and any demand being made on the Borrower under
the Ancillary Facility Agreement in:
(i) reimbursement of any amount paid by the Bank under the Pool LC
(or repayment of any advance made by the Bank to fund any such
amount); or
(ii) interest accrued on any such amount (or on any advance made by
the Bank to fund any such amount),
if and to the extent that:
(A) the relevant amount may be applied in discharging amounts
outstanding under the Ancillary Facility Letter and was not
received by the Bank in its capacity as a Bank under the Credit
Agreement; and
(B) the Borrower expressly requires it to be so applied by written
notice given not less than one day and not more than 5 days
before the time the amount is paid to the Bank.
6
<PAGE> 7
4. PAYMENTS
(a) All payments by DLJ shall be made to Such bank account as the Bank may
specify in the relevant demand, without deduction for tax or otherwise
and without set-off or counterclaim.
(b) All payments by the Bank shall be made to such bank account as DLJ may
specify in writing to the Bank prior to such payment, without deduction
for tax or otherwise and without set-off or counterclaim.
(c) If either party fails to pay any amount payable by it under this letter
when due, it shall forthwith on demand by the other party, pay interest
on the overdue amount from the due date up to the actual date of
payment, from day to day as well after as before judgment at a rate
calculated on a daily basis and determined by that other party to be 1%
per annum above the rate at which leading banks in the London Interbank
Market offer overnight deposits on each such date in an amount equal to
the overdue amount. Default interest will be compounded at the end of
each day.
5. NATURE OF OBLIGATIONS
(a) For the purposes of this letter, DLJ unconditionally and irrevocably:
(i) authorises and directs the Bank to pay any demand under and in
accordance with the Pool LC without requiring proof of the
Borrower's or DLJ's agreement that the amounts so demanded or
paid are or were due and notwithstanding that the Borrower and/or
DLJ may dispute the validity of any such request, demand or
payment;
(ii) confirms that the Bank deals in documents only and shall not be
concerned with the legality of the claim or any other underlying
transaction or any set-off, counterclaim or defence as between
the Borrower and the beneficiary of the Pool LC; and
(iii) agrees that the Bank need not have any regard to the sufficiency,
accuracy or genuineness of any such demand or any certificate or
statement in connection with any such demand or any incapacity of
or limitation upon the powers of any person signing or issuing
any such demand, certificate or statement which appears on its
face to be in order and the Bank may assume that any such demand,
certificate or statement which appears on its face to be in order
is correct and properly made.
(b) DLJ waives any right it may have of first requiring the Bank to proceed
or enforce any rights or security against, claim payment from, or file
any proof or claim in any insolvency proceedings of, any person before
claiming from DLJ under this letter.
7
<PAGE> 8
(c) Without limiting paragraph l(b) above, DLJ's obligations under this
letter shall not be affected by any act, omission, matter or thing
which, but for this provision, might reduce, release or prejudice any of
its obligations under this letter in whole or in part, including without
limitation and whether or not known to it:
(i) any time or waiver granted to or composition with the beneficiary
of the Pool LC, any Obligor, or any other person (unless the Bank
knowingly granted that time or waiver, or knowingly entered into
that composition, Without DLJ's consent);
(ii) the taking, variation, compromise, exchange, renewal or release
of, or refusal or neglect to perfect, take up or enforce, any
rights against, or security over assets of, any Obligor or other
person or any non-presentation or nonobservance of any formality
or other requirement in respect of any instrument or any failure
to realise the full value of any security;
(iii) any incapacity or lack of powers, authority or legal personality
of or dissolution or change in the members or status of the
beneficiary of the Pool LC, any Obligor or any other person;
(iv) any variation (however fundamental) or replacement of a Finance
Document;
(v) any unenforceability, illegality, invalidity or frustration of
ally obligation of any person under any Finance Document or any
other document or security (other than this letter), or any
failure of any Obligor to become bound by the terms of any
Finance Document; and
(vi) any postponement, discharge, reduction, non-provability or other
similar circumstance affecting any obligation of any Obligor
under a Finance Document resulting from any insolvency,
liquidation or dissolution proceedings or from any law,
regulation or order.
(d) DLJ's obligations under this letter are a continuing security and in
addition to and are not in any way prejudiced by any collateral or other
security now or subsequently held by the Bank or any Security Interest
to which the Bank may be entitled.
(e) Where any discharge (whether in respect of the obligations of any
Obligor or any security for those obligations or otherwise) is made in
whole or in part or any arrangement is made on the faith of any payment,
security or other disposition which is avoided or must be restored on
insolvency, liquidation or otherwise in respect of the Obligors without
limitation, the liability of DLJ under this letter share continue as if
the discharge or arrangement had not occurred. The Bank may concede or
compromise any claim that any payment, security or other disposition is
liable to avoidance or restoration.
8
<PAGE> 9
6. STATUS OF PARTICIPATION
(a) The Bank does not transfer or assign any rights or obligations under the
Finance Documents and DLJ will, subject to the provisions of paragraph 2
and 3 above, have no proprietary interest in the benefit of the Finance
Documents or in any monies received by the Bank under or in relation to
the Finance Documents.
(b) Nothing in this letter constitutes the Bank as agent, fiduciary or
trustee for DLJ.
(c) Without limiting its express obligations under this letter, the Bank
may, without responsibility to DLJ:
(i) exercise or refrain from exercising any or all of its rights,
powers and discretions arising under or in connection with the
Finance Documents;
(ii) perform any other acts under the Finance Documents as it in its
discretion sees fit.
(d) The Bank does not make any representation or warranty in relation to,
and is not responsible to DLJ for:
(i) the execution, genuineness, validity, enforceability or
sufficiency of any Finance Document or any other document;
(ii) the collectability of amounts payable under any Finance Document;
or
(iii) the accuracy of any statements (whether written or oral) made in
or in connection with any Finance Document.
(e) DLJ confirms that it:
(i) has made its own independent investigation and assessment of the
financial condition of each Obligor and its related entities in
connection with this letter and has not relied on any information
provided to it by the Bank in connection with this letter or any
Finance Document; and
(ii) will continue to make its own independent appraisal of the
creditworthiness of each Obligor and its related entities.
(f) Without prejudice to any liability the Bank may have for breach of this
letter, if any Obligor fails to perform any of its obligations under any
Finance Document, DLJ shall have no recourse to the Bank in respect of
that failure and by this letter the Bank notifies DLJ and DLJ
acknowledges that the Bank shall not be required to reimburse DLJ for,
or otherwise be responsible for, or assure DLJ against, any loss
suffered by DLJ as a result of this letter.
9
<PAGE> 10
7. MISCELLANEOUS
(a) Each of the Bank and DLJ represents and warrants to the other that:
(i) it has the power to enter into and perform, and has taken all
necessary action to authorise the entry into, performance and
delivery by it of this letter and the transactions contemplated
by this letter;
(ii) this letter constitutes its legal, valid and binding obligation
enforceable in accordance with its terms; and
(iii) all authorisations required or desirable to be obtained by it in
connection with the entry into, performance, validity and
enforceability of this letter and the transactions contemplated
by this letter have been obtained or effected and are in full
force and effect.
(b) The Bank represents and warrants to DLJ that the entry into and
performance of this letter and the amendments to the Finance Documents
made on the date of this letter, and the transactions contemplated by
them, have been approved by all required Finance Parties and do not
contravene the Finance Documents.
(c) Neither the Bank nor DLJ may assign, transfer, novate, encumber, or
dispose of all or any of its interest in, or its rights and/or
obligations under, this letter without the prior consent of the other.
(d) The respective rights of the Bank and DLJ under this letter may be
exercised as often as necessary, are cumulative and not exclusive of its
rights under the general law, and may be waived only in writing and
specifically, Delay in exercising or non-exercise of any such right is
not a waiver of that right.
(e) If a provision of this letter is or becomes illegal invalid or
unenforceable in any jurisdiction, that shall not affect the validity or
enforceability in that jurisdiction of any other provision of this
letter; or the validity or enforceability in other jurisdictions of that
or any other provision of this letter.
(f) All notices, demands and other communications under this letter must be
in writing and shall only be valid and effective if received at the
following respective addresses or fax numbers and marked for the
attention of the persons named below:
DLJ
Address: 277 Park Avenue
New York
NY10172
Fax: 001 212 892 7976
10
<PAGE> 11
Attention: Mattson Davis/Cameron Fleming
The Bank
Address: 5 North Colonnade
Canary Wharf
London E14 4BB
Fax: 0207 773 3313
Attention: Colin Bousfield/Ashley Jay
(g) This letter (and the agreement set out in it) may be amended only in
writing with the consent of both the Bank and DLJ.
8. AMENDMENT OF ANCILLARY FACILITY AGREEMENT
(a) Save for any amendments or waivers that have become effective on or
prior to the date of this letter:
(i) the Batik will not amend, waive, modify, terminate or otherwise
alter the Ancillary Facility Letter without DLJ's prior written
consent; and
(ii) the Bank will not consent to any amendment, waiver, modification,
termination or other alteration of any other Finance Document
that would be adverse to DLJ (taking into account DLJ's right of
subrogation pursuant to paragraph 2) without DLJ's prior written
consent (such consent not to be unreasonably withheld); and
(iii) the Bank will not approve the terms of any subordinated loan as
contemplated by paragraph 7 of the Ancillary Facility Letter
without DLJ's prior written consent.
DLJ shall respond promptly to any request made by the Bank in this
regard, and shall be deemed to have agreed with any decision or action
taken by the Bank in respect of any specific request sent to DLJ in
accordance with paragraph 7(f) above unless the Bank is notified in
writing that it does not agree to the request within 5 business days
after the date on which the request is received at the above address or
fax number.
(b) The Bank, DLJ and each Obligor all acknowledge and agree that neither
the Ancillary Facility Letter nor any of the other Finance Documents may
be amended, waived, modified, terminated or otherwise altered except in
writing in accordance with its terms (and paragraph (a) above shall be
construed accordingly). The Borrower undertakes that it will use all
reasonable endeavours to minimise the number of amendment or waiver
requests (if any) it makes whilst this letter is in force.
11
<PAGE> 12
9. TERMINATION.
(a) DLJ's obligations under paragraph 1 above shall terminate on the first
date following the earlier to occur of:
(i) the fifth business day after receipt by the Bank of written
notice (expressly referring to this paragraph 9) from DLJ that
the Bank has failed to pay an amount payable under paragraph 3(a)
above (provided that the Bank has in fact failed to pay such an
amount and does not pay it on or before that fifth business day);
and
(ii) close of business on 7th June, 2000.
(b) This letter shall terminate on the first date following the earliest of:
(i) the expiry or cancellation of the Pool LC;
(ii) close of business on 7th June, 2000; and
(iii) the date on which no further amount is capable of being demanded
under paragraph 1 above (taking into account the terms of the
proviso contained in that paragraph),
or, if later, the first date on which all amounts funded by DLJ pursuant
to Clause 1 have been paid in full.
(c) Any termination under paragraph (a) or (b) above shall be without
prejudice to the pre-existing rights and obligations of the Bank and
DLJ.
10. GOVERNING LAW
This letter is governed by English law.
11. JURISDICTION AND SERVICE OF PROCESS
(a) DLJ agrees, for the benefit of the Bank, that the courts of England have
jurisdiction to settle any disputes in connection with this letter and
accordingly submits to the Jurisdiction of the English courts.
(b) DLJ waives objection to the English Courts on grounds of inconvenient
forum or otherwise as regards proceedings in connection with this letter
and agrees that a judgment or order of an English court in connection
with this letter is conclusive and binding on it and may be enforced
against it in the courts of any other jurisdiction.
(c) Nothing in this letter limits the right of the Bank to bring proceedings
in connection with this letter in any other Court of competent
jurisdiction or concurrently in more than one jurisdiction.
12
<PAGE> 13
Yours faithfully,
...............................
For and on behalf of
BARCLAYS BANK PLC
We agree to the above
............................... ...............
For and on behalf of Date
DONALDSON, LUFKIN & JENRETTE, INC.
.................................................... ...............
For and on behalf of Date
INDEPENDENT ENERGY UK LIMITED
.................................................... ...............
For and on behalf of Date
INDEPENDENT ENERGY HOLDINGS PLC
13
<PAGE> 14
ATTACHMENT
To: Energy Pool Funds Administration Limited
Room 301
185 Park Street
London SE1 9DY
Date: 6th March 2000
Dear Sirs,
IRREVOCABLE STANDBY LETTER OF CREDIT NUMBER [ENDC ]
1. At the request of the Company (whose registered office is at Radcliffe
House, 6th Floor, Blenheim Court, Solihull, West Midlands, B91 2AA) the
Bank issue this irrevocable Standby Letter of Credit in your favour for
an aggregate amount of Pound Sterling60,000,000 (Sixty Million Pounds
Only).
2. In this Standby Letter of Credit all terms defined in Appendix 1 have
the meaning given to them in Appendix 1.
3. Upon the Bank receiving a written demand from you certifying that
either:
(a) the Company owes you, under or in respect of the Agreement, the
amount demanded and has failed to pay that amount to you when
due; or
(b) the claim is being made under section 15.5, section 16.2 or
section 21 of Schedule 11 to the Agreement,
the Bank will, within one Business Day, pay the amount demanded to the
account nominated by you in your demand.
4. The cumulative aggregate amount that may be demanded under this Standby
Letter of Credit shall not exceed the amount specified in paragraph 1
above.
5. No demand may be presented under this Standby Letter of Credit after
3.00 p.m. (London time) on 6th June 2000. All such demands shall be made
in writing (which shall not include fax, telex, cable or similar forms
of communication) and shall be effective upon actual receipt by [Pall
Mall ] at [ ] or such other office as the Bank may from time to time
notify to you in writing for this purpose.
6. Partial drawings and multiple drawings are allowed under this Standby
Letter of Credit.
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<PAGE> 15
7. This Standby Letter of Credit is irrevocable, is not transferable and
constitutes an obligation to make payments against documents. It is
subject to Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce publication No. 500 and
shall be governed by and construed in accordance with English law.
Yours faithfully,
....................
For and on behalf of
BARCLAYS BANK PLC
15
<PAGE> 16
APPENDIX 1
DEFINITIONS
"Bank" means Barclays Bank PLC.
"Business Day" means a day (other than a Saturday or a Sunday) on
which banks are open for business in London.
"Company" Independent Energy UK Limited.
"Agreement" Pooling and Settlement Agreement for the Electricity
Industry in England and Wales, dated 30th March, 1990.
16
<PAGE> 1
EXHIBIT 21
Direct and indirect subsidiaries of Independent Energy Holdings PLC
<TABLE>
<CAPTION>
Name Ownership
- ---- ---------
<S> <C>
Independent Energy UK Limited 100%
Independent Energy Generation Limited 100%
Independent Energy North Sea Limited 100%
Independent Energy Resources Limited 100%
Independent Energy Limited 100%
Independent Energy Services Limited 100%
Independent Energy Special Purposes Limited 100%
Independent Energy (Pye Bridge) Limited 100% owned by Independent
Energy Generation Limited
Haven Energy Limited 50% owned by Independent
Energy Generation Limited
</TABLE>
