Exhibit 10 (b)
CONFORMED COPY
AGREEMENT
DATED 23rd August, 2000
(pound)300,000,000
REVOLVING CREDIT FACILITY
FOR
TXU EUROPE LIMITED
ARRANGED BY
CHASE MANHATTAN plc
ALLEN & OVERY
London
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INDEX
CLAUSE PAGE
1. Interpretation.......................................................1
2. The Facility........................................................29
3. Purpose.............................................................29
4. Conditions Precedent................................................29
5. Drawdown............................................................30
6. Repayment...........................................................31
7. Prepayment and Cancellation.........................................32
8. Interest Periods....................................................33
9. Interest............................................................33
10. Optional Currencies.................................................35
11. Payments............................................................36
12. Taxes...............................................................37
13. Market Disruption...................................................38
14. Increased Costs.....................................................40
15. Illegality and Mitigation...........................................41
16. Representations and Warranties......................................42
17. Information Undertakings............................................45
18. General Undertakings................................................47
19. Events of Default...................................................56
20. The Agent and the Arranger..........................................61
21. Fees................................................................66
22. Expenses............................................................67
23. Stamp Duties........................................................67
24. Indemnities.........................................................67
25. Evidence and Calculations...........................................68
26. Amendments and Waivers..............................................69
27. Changes to the Parties..............................................71
28. Disclosure of Information...........................................74
29. Set-off.............................................................74
30. Pro rata Sharing....................................................75
31. Severability........................................................76
32. Counterparts........................................................76
33. Notices.............................................................76
34. Jurisdiction........................................................77
35. Governing Law.......................................................77
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SCHEDULES
1. Banks and Commitments...............................................79
2. Conditions Precedent Documents......................................80
3. Calculation of the Mandatory Cost...................................81
4. Form of Request.....................................................83
5. Form of Novation Certificate........................................84
6. Form of legal opinion of Allen & Overy..............................85
7. Part I Guarantee....................................................88
Part II Guarantor Accession Agreement...............................91
Part III To be delivered by a Guarantor.............................92
Signatories...............................................................94
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THIS AGREEMENT is dated 23rd August, 2000 and is made between:
(1) TXU EUROPE LIMITED (Registered No. 3505836) (the "COMPANY");
(2) CHASE MANHATTAN plc as arranger (in this capacity the "ARRANGER");
(3) THE FINANCIAL INSTITUTIONS listed in Schedule 1 as banks (the "BANKS"); and
(4) CHASE MANHATTAN INTERNATIONAL LIMITED as agent (in this capacity the
"AGENT").
IT IS AGREED as follows:
1. INTERPRETATION
1.1 DEFINITIONS
In this Agreement, unless the context otherwise requires:
"ACQUISITION"
means the acquisition by Bidco of the Target Shares;
"ACT"
means the Companies Act 1985;
"ADJUSTED SHARE CAPITAL AND RESERVES"
means the aggregate of the following items namely:
(a) the nominal amount of the share capital of Finco 2 for the time being
issued and paid up or credited as paid up excluding any Qualifying
Preference Shares issued by Finco 2;
(b) the amounts standing to the credit of the consolidated reserves of the
Group (including any share premium account and capital redemption
reserve),
(c) but adjusted, to the extent that the following items have not already
been added, deducted or excluded in arriving at the figures referred
to in (a) or (b) above:
(i) by deducting the amounts standing to the debit of the
consolidated reserves of the Group;
(ii) by deducting any amounts attributable to interests of non-Group
members in Subsidiaries of Finco 2;
(iii) by deducting any reserves set aside for deferred taxation;
(iv) by deducting the amount by which the net book value of any fixed
asset has been written up after 24th March, 1999 (or, in the case
of a person which has become or becomes a member of the Group
after that date, the date on which it became or becomes a member
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2
of the Group) by way of revaluation or on its transfer from one
member of the Group to another (but no such deduction shall be
made if the amount of this write up is supported by and does not
exceed the amount shown by an independent written valuation);
(v) by adding back (aa) to capital reserves, goodwill written off by
reason of the Acquisition and (bb) to cumulative revenue
reserves, any goodwill arising on the Acquisition and
subsequently amortised through the profit and loss account;
(vi) by adding back (aa) to capital reserves, goodwill written off by
reason of any other acquisition after 24th March, 1999 of all or
a majority of the equity share capital or business of another
person and (bb) to cumulative revenue reserves, any goodwill,
arising on any other such acquisition and subsequently amortised
through the profit and loss account; and
(vii) by adding back proceeds (up to a maximum aggregate amount of
US$500,000,000) from any issue of Equity-Credit Preferred
Securities,
but so that no amount to be added, deducted or excluded as a result of
any of the foregoing shall be added, deducted or excluded more than
once in the same calculation and, where the calculation is being made
as at the end of a Test Period or in the context of paragraph (d) of
the definition of Permitted Security Interest or in the context of
Clauses 18.1 (Financial ratios) or 18.17 (Project Finance
Subsidiaries), each such amount shall be determined by reference to
the most recent financial statements and compliance certificates
delivered hereunder as adjusted under the provisions of Clause 18.2
(Change of Accounting policies) and the terms of this definition or
any relevant Clause of this Agreement;
"ADVANCE"
means a Revolving Advance or a Term-out Advance;
"AFFILIATE"
means, in relation to any person, any Subsidiary of that person, any
holding company of that person and any other Subsidiary of that holding
company;
"AGENT"
means Chase Manhattan International Limited of 125 London Wall, London EC2Y
5AJ or such other person as may be appointed Agent for the Banks under
Clause 20 (The Agent and the Arranger);
"AGENT'S SPOT RATE OF EXCHANGE"
means the Agent's spot rate of exchange for the purchase of the relevant
Optional Currency in the London foreign exchange market with Sterling at or
about 11.00 a.m. on a particular day.
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3
"ANNIVERSARY"
means an anniversary of the Signing Date;
"APPLICABLE MARGIN"
means, at any time, 0.875% per annum or if at the date of this Agreement or
subsequently the most recent determination of the Leverage Ratio under
Clause 18.1 (Financial Ratios) shows that the Leverage Ratio is less than
65%, the rate per annum determined as follows:
LEVERAGE RATIO AND NOT LESS THAN: APPLICABLE MARGIN IS:
IS LESS THAN:
65% 60% 0.75%
60% 55% 0.625%
55% - 0.5%
provided that:
(a) any reduction or increase in the Applicable Margin shall have effect
five Business Days following the date of delivery of any set of
audited or management accounts for a Quarter under Clause 17.3(a)
(Annual audited financial statements) and 17.3(b) (Unaudited
management accounts), together with the financial covenant compliance
certificate by the Company referred to in Clause 17.3(c) (Compliance
with Financial Undertakings), until (but excluding) the effective date
for any subsequent change in the Applicable Margin in accordance with
this definition;
(b) during the continuance of any Default, any margin reduction under this
definition will not apply, and the Applicable Margin shall be 0.875%;
"APPROPRIATE ACCOUNTING PRINCIPLES" means:
(a) the accounting principles, policies, standards, practices and bases
(being generally accepted in the United Kingdom), as adopted in the
Original Group Accounts; or
(b) where any change has occurred and (if required) has been agreed under
Clause 18.2 (Change of Accounting policies), such accounting
principles, standards, practices and bases as have so occurred and (if
required) have been so agreed;
"AUDITORS"
means PricewaterhouseCoopers or such other internationally recognised firm
of chartered accountants as may be auditors to the Group for the time
being;
"BIDCO"
means TXU Acquisitions Limited (company no.3455523);
"BORROWED MONEY"
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4
means any present or future Indebtedness (whether by way of principal or
premium) for or in respect of:
(a) money borrowed or raised;
(b) any recourse arising from the discounting of receivables save for
recourse for disputed or ineligible debts or similar rights of
recourse typical in a securitisation transaction;
(c) liabilities under or in respect of any acceptance or acceptance credit
or documentary credit facility or standby credit facility, other than
(i) any such credit facility relating to the acquisition cost of
assets or services to the extent that the same involves deferral of
payment of any sum for one year or less and (ii) exposure under any
such credit issued to back completion or performance obligations
(including any obligation to lodge cash margin payments in case of a
specified decline in a Group Company's rating), except to the extent
that:
(i) such obligations are for the payment of Borrowed Monies, or for
the payment of liquidated damages the payment of which is
triggered by an event or circumstance which has (as of the
relevant date on which any calculation is made) already occurred,
and, in the case of a decline in rating, if the rating agency
concerned has reduced the relevant rating, the amount taken into
account will be the amount which has, or will, become payable by
reason of such decline; or
(ii) provision has been made in the accounts of the relevant Group
Company for an amount due under the underlying obligation or,
were the relevant Group Company to prepare accounts as of the
date on which a compliance certificate is issued to the Agent
under Clause 17.3 (Delivery of financial statements), such a
provision should be made in accordance with Appropriate
Accounting Principles;
(d) any notes, bonds, debentures, debenture stock, Advance stock or other
debt security offered, issued or distributed whether by way of public
offer, private placing, acquisition consideration or otherwise and
whether issued for cash or in whole or in part for a consideration
other than cash, other than any bond, note, debenture or other debt
security referred to in (f) below;
(e) any outstanding Qualifying Preference Shares in issue;
(f) any outstanding balance of the acquisition cost of assets or services
to the extent payable on deferred payment terms after the time of
acquisition or possession thereof by the person liable (but only to
the extent that the same:
(i) involves deferral of payment of any sum for more than one year;
(ii) is not a cost in respect of the expansion, development or renewal
of all or part of the "licensee's distribution system" (as
defined in the PES Licence); and
(iii)exceeds(pound)25,000,000 in respect of any transaction or series
of related transactions)
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5
whether or not any instalments for payment are evidenced by a bond,
note, debenture or other debt security issued by the obligor;
(g) any Finance Lease;
(h) any guarantee, indemnity or other legally binding assurance against
(or other legally binding arrangement intended to prevent or limit)
loss arising under any Borrowed Money of any person who is not a Group
Company;
(i) for the purpose of Clause 19.1(d) (Cross-default) only, any Derivative
Transaction (calculated at the mark-to-market value for close-out);
(j) any liability which has arisen under any transaction by virtue of
which:
(i) a capital sum is received by a person as consideration for the
sale or disposal (whether by outright alienation or the grant of
a lease or other interest or otherwise) of any assets; and
(ii) a third party making or funding the payment receives a guarantee,
indemnity or other legally binding assurance from a member of the
Group against (or other legally binding arrangement intended to
prevent or limit) loss as a result of the assets not generating
or being realised for a specific amount or an amount calculated
in an agreed manner;
(k) any amount raised under any other transaction having the commercial
effect of a borrowing and entered into primarily as a means of raising
finance;
(l) such part (if any) of the amounts made available to any person as a
result of any securitisation as, in accordance with the Appropriate
Accounting Principles, is or is to be treated as a creditor rather
than as a deduction from or reduction in debtors or other assets;
Provided that:
(i) Subordinated Debt shall be excluded;
(ii) Indebtedness of a member of the Group to another member of the
Group shall be excluded except that indebtedness of any member of
the Group to the Company shall (to the extent that any such
indebtedness would have fallen within the definition of Borrowed
Money if owed to a third party) be treated as Borrowed Money.
Where Borrowed Money is incurred by an SPV and on-lent indirectly
to Finco 2 by the Borrowed Money in question being on-lent by
such SPV to the Company and then being on-lent by the Company to
Finco 2, such Borrowed Money shall be counted only once in any
calculation of the Leverage Ratio or of any other financial
covenant referred to in Clause 18.1 (financial ratios);
(iii)Indebtedness of a member of the Group to a Relevant Person shall
(to the extent that any such Indebtedness would have fallen
within the definition of Borrowed Money if owed to a third party)
be treated as Borrowed Money;
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6
(iv) any interest, dividends, commissions, fees or other like
financing charges shall be included to the extent that they have
been capitalised and remain payable but have not been discharged;
(v) in respect of paragraph (d) (where the item concerned is a bond,
note, debenture, debenture stock, loan stock or other debt
security issued at a discount) and in respect of paragraph (e),
only the issue price of any such debt security or Qualifying
Preference Share falling thereunder, together with any applicable
discount required under the Appropriate Accounting Principles to
be recognised in the relevant person's most recently published
financial statements, shall be included;
(vi) in respect of paragraph (g), only the capitalised value
established in accordance with the Statement of Standard
Accounting Practice 21 (as supplemented, varied or replaced from
time to time) of a Finance Lease as shown in the relevant
person's most recently published financial statements (or as
would be shown in the next following financial statements, if
such Finance Lease was entered into in a period for which there
are not yet statements available) shall be included;
(vii)Indebtedness for or in respect of Project Finance Borrowings
shall be excluded;
(viii)adjustments shall be made to the exchange rate at which such
Borrowed Monies are converted into Sterling in order to take
account of the effect of any relevant currency swap; and
(ix) Indebtedness for or in relation to Equity-Credit Preferred
Securities up to US$500,000,000 shall be excluded from Borrowed
Money;
(and so that no amount shall be included or excluded more than once);
"BUSINESS DAY"
means a day (other than a Saturday or a Sunday) on which banks are open for
general business in London and:
(a) in relation to a transaction involving an Optional Currency (other
than Euros), the principal financial centre of the country of that
Optional Currency; and
(b) in relation to a transaction involving Euros in Frankfurt am Main,
Germany (or such other principal financial centre(s) of any
Participating Member State(s) as the Agent may from time to time
reasonably nominate for this purpose) and, being a day on which
payments in Euros are settled in the Trans-European Automated
Real-time Gross settlement Express Transfer (TARGET) system;
"CAPITALISATION"
means at any time the aggregate of Adjusted Share Capital and Reserves and
Consolidated Net Borrowings;
"CHANGE IN CONTROL"
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7
shall be deemed to have occurred if:
(a) any person or group of related persons (other than the Parent, any
Subsidiary of the Parent, or any pension, savings or other employee
benefit plan for the benefit of employees of the Parent and/or any
Subsidiary of the Parent) shall have acquired beneficial ownership of
more than 30% of the outstanding Voting Shares of the Parent (within
the meaning of section 13(d) or 14(d) of the Securities Exchange Act
of 1934 of the United States of America, as amended, and the
applicable rules and regulations thereunder); provided that a Change
in Control shall not be deemed to have occurred if such acquisition
has been approved, prior to the Parent Acquisition Date and the date
on which any tender offer for Voting Shares of the Parent was
commenced, by a majority of the Disinterested Directors of the Parent;
or
(b) during any period of 12 consecutive months, commencing on or after 2
March 1998, individuals who on the first day of such period were
directors of the Parent (together with any replacement or additional
directors who were nominated or elected by a majority of directors
then in office) cease to constitute a majority of the board of
directors of the Parent;
"COMMITMENT" means
(a) in relation to a Bank which is a Bank on the Signing Date, the amount
in Sterling set opposite its name in Schedule 1 and the amount of any
other Bank's Commitment acquired by it under Clause 27 (Changes to the
Parties); and
(b) in relation to a Bank which becomes a Bank after the Signing Date, the
amount of any other Bank's Commitment acquired by it under Clause 27
(Changes to the Parties),
to the extent not cancelled, transferred or reduced under this Agreement.
"COMMITMENT PERIOD"
means the period from the date of this Agreement up to and including the
Final Maturity Date;
"CONSOLIDATED NET BORROWINGS"
means, at any time, in respect of the Group, the aggregate of the Borrowed
Money of the Group, as shown in the then latest compliance certificate most
recently delivered to the Agent under Clause 17.3(c) (Compliance with
Financial Undertakings) (the "RELEVANT BALANCE SHEET"), less the aggregate
book value of:
(a) all Liquid Assets which are in, or are freely transferable to, the
United Kingdom and which are owned by Finco 2 or a wholly-owned member
of the Group or (in the case of the Liquid Assets of a member of the
Group which is a partly-owned member of the Group) the proportion of
the total amount for the time being of Liquid Assets held by such
member which corresponds to the proportion of the total nominal amount
of the issued equity share capital of such member which is
beneficially owned directly or indirectly by Finco 2 (exclusive of
Liquid Assets constituting or representing obligations of any member
or members of the Group); and
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8
(b) in the case of a partly-owned member of the Group, the proportion of
total amounts for the time being outstanding of Borrowed Money owing
by such partly owned member of the Group otherwise than to another
member of the Group which corresponds to the proportion of the total
nominal amount of the issued equity share capital of such partly owned
member of the Group not beneficially owned directly or indirectly by
Finco 2 (the "MINORITY PROPORTION"),
but adding the aggregate book value (as included in the relevant balance
sheet) of the Minority Proportion of the total amount, if any, for the time
being outstanding of Borrowed Money owing to a partly-owned member of the
Group by any other member of the Group;
"DEFAULT"
means any Event of Default or any event which with the giving of notice,
lapse of time, determination of materiality or fulfilment of any other
applicable condition (or any combination of the foregoing) would, if
unremedied, constitute an Event of Default;
"DERIVATIVES TRANSACTION"
means a contract, agreement or transaction which is:
(a) a rate swap, basis swap, forward rate transaction, equity (or equity
or other index) swap or option, bond option, interest rate option,
foreign exchange transaction, cap, collar or floor, currency swap,
currency option or any other similar transaction; and/or
(b) any combination of such transactions,
in each case, whether on-exchange or otherwise;
"DIRECTOR GENERAL"
means the person appointed from time to time by the Secretary of State to
hold office as the Director General of Electricity Supply (or any successor
to his functions) for the purposes of the Electricity Act;
"DISINTERESTED DIRECTOR"
shall mean any member of the Board of Directors of the Parent who:
(a) is not affiliated, directly or indirectly, with, or appointed by, a
person or group of related persons (other than the Parent, any
Subsidiary of the Parent, or any pension, savings or other employee
benefit plan for the benefit of employees of the Parent and/or any
Subsidiary of the Parent) acquiring the beneficial ownership of more
than 30% of the outstanding Voting Shares of the Parent (within the
meaning of section 13(d) or 14(d) of the Securities Exchange Act of
1934 of the United States of America, as amended, and the applicable
rules and regulations thereunder); and
(b) either was a member of the board of directors of the Parent prior to
the Parent Acquisition Date or was recommended for election by a
majority of the Disinterested Directors in office prior to the Parent
Acquisition Date;
"DISTRIBUTION BUSINESS"
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9
means the business of REC, or any successor undertaking to that business
within the Group, in or ancillary to the distribution (whether for its own
account or that of any other party) of electricity through the Group's
distribution system and includes any business of providing connections to
the Group's distribution system;
"DOUBLE TAXATION TREATY"
means any convention or agreement between the government of the United
Kingdom and any other government for the avoidance of double taxation and
the prevention of fiscal evasion with respect to taxes on income and
capital gains;
"DRAWDOWN DATE"
means the date on which an advance of an Advance is, or is to be, made;
"EBITDA"
means, in respect of any Test Period, the total operating profit of the
Group for continuing operations, acquisitions (as a component of continuing
operations) and discontinued operations (excluding any share of
consolidated profits or losses which is attributable to Project Finance
Subsidiaries or to a business the assets or cash flow of which constitute
security for Project Finance Borrowings as contemplated in paragraphs
(c)(i) and (c)(ii) of the definition of Project Finance Borrowings) and
including dividends received in cash by members of the Group from Project
Finance Subsidiaries (or any other company not being a member of the
Group), in each case before taking into account:
(a) interest payable and interest receivable;
(b) amounts provided for depreciation and amortisation of goodwill;
(c) exceptional items;
(d) Taxes (other than VAT);
(e) the deduction of any costs relating to the Acquisition; and
(f) the deduction of costs (not exceeding an aggregate amount of
(pound)25,000,000) related to any other acquisition after the date of
this Agreement of all or a majority of the equity share capital or
business of another person;
for that Test Period (calculated on a consolidated basis disregarding any
portion of any item taken into account in that calculation which is
attributable to any minority interests in Subsidiaries, but for this
purpose treating Finco 2 as a wholly-owned Subsidiary of the Company) all
as determined by reference to the most recent financial statements and
compliance certificates delivered under Clause 17.3 (Delivery of Financial
Statements), as adjusted under Clause 18.2 (Change of Accounting policies);
"ELECTRICITY ACT"
means the Electricity Act 1989 and, unless the context otherwise requires,
all subordinate legislation made under that Act and all other laws,
regulations or requirements of any relevant authority (in so far as such
regulations have the force of law) relating to the transmission,
distribution or supply of electricity in force in the United Kingdom;
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10
"EQUITY-CREDIT PREFERRED SECURITIES"
shall mean securities, however denominated:
(i) issued by the Company or any of the Company's Subsidiaries;
(ii) that are not subject to mandatory redemption or the underlying
securities, if any, of which are not subject to mandatory redemption
(save upon acceleration after the occurrence of an event of default
thereunder);
(iii) that are perpetual or mature no less than 30 years from the date of
issuance;
(iv) the indebtedness incurred by any member of the Group in connection
with which, including any guarantee, is subordinate in right of
payment to the unsecured and unsubordinated indebtedness of the issuer
of such indebtedness or guarantee; and
(v) the terms of which permit the deferral of the payment of interest or
distributions thereon to a date occurring after the Final Maturity
Date or, if a Term-out Advance is drawn, the second Anniversary;
and where the proceeds of such securities are on-lent or on-invested into
the Group or otherwise represented or underlain by one or a series of
underlying inter-company loans, debentures or other securities, references
to Equity Credit-Preferred Securities shall where the context admits
include such loans, debentures or other securities;
"EURO"
means the single currency of Participating Member States;
"EURIBOR"
means, in relation to any Advance or unpaid sum denominated in Euros, the
percentage rate per annum determined by the Agent to be equal to:
(a) the rate which appears on the page of the Telerate Screen which
displays for spot value the EURIBOR rate sponsored by the Banking
Federation of the European Union for deposits in Euros (currently page
"248") for the specified period; or
(b) if such page or such service shall cease to be available or relevant,
such other page or such other service for the purpose of displaying
the EURIBOR rate for Euros as the Agent, after consultation with the
Banks and the Company, shall select; or
(c) if no rate can be determined under (b) above, the arithmetic mean
(rounded upwards, if not already such a multiple, to four decimal
places) of the rates (as notified to the Agent) at which each of the
Reference Banks was offering to prime banks in the European inter-bank
market deposits in Euro and for the specified period,
at or about 11.00 a.m. on the applicable Rate Fixing Date for the offering
of deposits in Euro for a period comparable to its Interest Period.
"EVENT OF DEFAULT"
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11
means any of the events or circumstances described in Clause 19.1 (Events
of Default);
"EXCESS EQUITY FUNDING"
means the amount owing by Bidco to the Parent under the note issued by
Bidco to the Parent in consideration of the issue of the Parent's shares,
which shares constituted a portion of the consideration for the Target
Shares acquired by Bidco in connection with the Acquisition.
"FACILITY"
means the facility to draw cash advances (including Term-out Advances)
referred to in Clause 2.1;
"FACILITY OFFICE"
means the office(s) notified by a Bank to the Agent:
(a) on or before the date it becomes a Bank; or
(b) by not less than five Business Days' notice,
as the office(s) through which it will perform all or any of its
obligations under this Agreement;
"FEE LETTER"
means the fee letter(s) referred to in Clause 21 (Fees);
"FINAL MATURITY DATE"
means the date falling 364 days from the Signing Date;
"FINANCE DOCUMENTS"
means this Agreement, a Novation Certificate, each Request, a Guarantor
Accession Agreement and the Fee Letter(s) or any other document designated
as such by the Agent and the Company;
"FINANCE LEASE"
means any lease under which a member of the Group is the lessee which is or
should be treated as a finance or capital lease under the Appropriate
Accounting Principles (and includes any hire purchase contract or other
arrangement which is or should be similarly treated);
"FINANCE PARTIES"
means the Agent, the Arranger and the Banks and (as the context requires)
"FINANCE PARTY" means any one of them;
"FINANCE PERIOD"
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12
means the period from the Signing Date until the date on which the Agent
acting reasonably confirms that none of the Obligors and none of the
Finance Parties has any actual or contingent liabilities or obligations
under any of the Finance Documents;
"FINANCIAL DEFINITIONS"
means the definitions of Adjusted Share Capital and Reserves,
Capitalisation, Consolidated Net Borrowings, EBITDA, Leverage Ratio, Net
Interest Costs and Test Period;
"FINCO 2"
means TXU Finance (No. 2) Limited (company number 3514100);
"GAS FRAMEWORK AGREEMENT"
means the agreement dated 1st March, 1996 between British Gas Transco and
Eastern Natural Gas (Retail) Limited;
"GENERATION BUSINESS"
means the business of the Group in or ancillary to the generation of
electricity (whether for its own account or that of any other party);
"GENERATION LICENCE"
means each of those licences granted by the Secretary of State under
section 6(1) of the Electricity Act authorising the relevant licensee to
carry on Generation Business and any activities ancillary thereto, or any
replacement licence or licences granted from time to time to any member of
the Group (or, if more than one, the most recent such replacement);
"GOVERNMENT ENTITY"
means and includes (whether having a distinct legal personality or not) any
supra-national, national or local government authority, regulatory body,
central bank, board, commission, department, division, organ,
instrumentality, court or agency and any association, organisation or
institution of which any of the foregoing is a member or to whose
jurisdiction any of the foregoing is subject or in whose activities any of
the foregoing is a participant;
"GROUP"
means the Company and all its Subsidiaries for the time being (except
Project Finance Subsidiaries) save that, where the reference to the Group
is used in respect of the Financial Definitions used in calculating the
Leverage Ratio, Group shall mean the Company's Subsidiaries (except Project
Finance Subsidiaries) and shall not include the Company itself, and in
either case "MEMBER OF THE GROUP" or "GROUP COMPANY" means any one of them;
"GUARANTEE"
means the guarantee set out in Part I of Schedule 7 (Guarantee) given by a
Guarantor;
"GUARANTOR"
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13
means any member of the Group which accedes to this Agreement as a
Guarantor under Clause 27.6 (Guarantors);
"GUARANTOR ACCESSION AGREEMENT"
means a deed in the form of Part II of Schedule 7 with such amendments as
the Agent may approve or reasonably require;
"INDEBTEDNESS"
means any obligation of a person for the payment or repayment of money,
whether as principal or as surety and whether present or future, actual or
contingent;
"INFORMATION MEMORANDUM"
means the Information Memorandum dated July, 2000 and prepared by the
Company in connection with this Agreement;
"INTEREST PERIOD"
means each period for the calculation of interest ascertained in accordance
with Clause 8 (Interest Periods);
"LEVERAGE RATIO"
means, at any relevant date, the percentage which Consolidated Net
Borrowings is of Capitalisation of the Group;
"LIBOR"
means:
(a) the rate per annum which appears on page 3750 or page 3740 (as
appropriate) on the Telerate Screen; or
(b) if no such rate appears on the Telerate Screen, the arithmetic mean
(rounded to four decimal places) of the rates, as supplied to the
Agent at its request, quoted by the Reference Banks to leading banks
in the London interbank market,
at or about 11.00 a.m. on the applicable Rate Fixing Day for the offering
of deposits in the currency of the relevant Advance for a period comparable
to its Interest Period.
"LICENCES"
means those licences granted by the Secretary of State:
(a) under the Electricity Act to the REC or any other Principal Subsidiary
authorising each relevant licensee to carry on the Distribution
Business, the Supply Business, a Second-Tier Supply Business or (or
part of) the Generation Business and any activities ancillary thereto;
(b) under section 7 of the Gas Act 1986 to a Principal Subsidiary ; or
<PAGE>
14
(c) being a replacement licence or licences, from time to time to REC or
any other Principal Subsidiary (or, if more than one, the most recent
such replacement),
as amended and/or extended from time to time;
"LICENSEES"
means REC and any such other Principal Subsidiary as, at any time, is the
licensee under a Licence and "LICENSEE" means any one of them;
"LIQUID ASSETS"
means as at any date, the aggregate (calculated on a consolidated basis)
of:
(a) cash at bank and in hand in a jurisdiction where (if not the United
Kingdom) such amounts are freely transferable out of that jurisdiction
and convertible into currencies dealt in on the London foreign
exchange market;
(b) short term deposits (the term of which has twelve months or less
remaining maturity) and money at call, with a recognised financial
institution;
(c) certificates of deposit, from a recognised financial institution,
which are negotiable or, if not, the term of which has twelve months
or less remaining to maturity;
(d) gilts or Treasuries or similar securities issued by or guaranteed by
the Government of any of the United Kingdom, the United States or any
Participating Member States;
(e) deposits made with the Commissioners of Inland Revenue in respect of
which certificates of tax deposit have been issued by Her Majesty's
Treasury;
(f) Sterling bills of exchange eligible for rediscount at the Bank of
England;
(g) any other negotiable money market instrument with a maximum remaining
maturity of 12 months or less excluding commercial paper issued by any
person other than a state entity or a person with a credit rating of
AAA from Standard & Poor's or equivalent or a short term credit rating
of A1 or equivalent;
(h) any obligation owing to a Group Company in respect of a securities
repurchase agreement by a counterparty which is rated AAA or
equivalent or has a short term credit rating of A1 or equivalent, or
in the absence of such a rating, where such obligation is backed by a
margin deposit substantially sufficient to make up for any shortfall
as between the mark-to-market price of the underlying securities and
the amount owing;
provided that:
(i) where Liquid Assets are deposited subject to restrictions in
order that they are held as security for a liability or can be
offset against a liability, such Liquid Assets shall be taken
into account only to the extent that such liability is taken into
account under Consolidated Net Borrowings; and
(ii) when the aggregate amount of Liquid Assets required to be taken
into account for the purposes of this definition on any
particular day is being ascertained, any such Liquid Assets
<PAGE>
15
denominated or repayable or in respect of which monies are
payable in a currency other than Sterling shall be converted for
the purposes of calculating the Sterling equivalent at the rate
of exchange prevailing on that day in London by taking the
Agent's Spot Rate of Exchange as of 11.00 am on such date for the
purchase of such currency with Sterling;
"MAJORITY BANKS"
means, subject to Clause 26.4 (Notice to Majority Banks), at any relevant
time, Banks:
(a) the aggregate of whose Commitments exceeds 66(2)/3 per cent. of the
Total Commitments; or
(b) (if no principal amounts are outstanding under this Agreement) the
aggregate of whose Commitments exceeds 66(2)/3 per cent. of the Total
Commitments but so that if at such time the Total Commitments have
been reduced to zero references to a Bank's Commitment shall be
construed as amongst the Finance Parties (and not so as to give any
rights to any other person) as a reference to that Bank's Commitment
immediately prior to such reduction to zero;
"MANDATORY COST"
means, in relation to any period:
(a) a percentage calculated for such period at an annual rate determined
in accordance with Schedule 3 (Calculation of the Mandatory Cost); and
(b) in respect of any Bank, the percentage rate per annum notified by that
Bank to the Company and the Agent as its cost of complying with the
minimum reserve requirements of the European Central Bank;
"MATERIAL ADVERSE EFFECT" is a reference to:
(a) something having a material adverse effect on the ability of any
Obligor to perform its payment or Financial Covenant obligations under
any of the Finance Documents; or
(b) something (other than the Reservations) which results in any of the
Finance Documents not being legal, valid and binding on, or
enforceable in accordance with their terms against, any of the
Obligors in a manner and to an extent reasonably considered by the
Majority Banks to be materially adverse to the interests of the Banks;
"MATURITY DATE"
means:
(a) in relation to a Revolving Advance, the last day of the Interest
Period for that Revolving Advance; and
(b) in relation to a Term-out Advance, the date specified as such in the
Request for that Term-out Advance;
<PAGE>
16
"MONTH" or "MONTHS"
means a period beginning in one calendar month and ending in the relevant
later calendar month on the day numerically corresponding to the day of the
calendar month in which it started, provided that (a) if the period started
on the last Business Day in a calendar month or if there is no such
numerically corresponding day, it shall end on the last Business Day in
such later calendar month and (b) if such numerically corresponding day is
not a Business Day, the period shall end on the next following Business Day
in such later calendar month but if there is no such Business Day it shall
end on the preceding Business Day and "MONTHLY" shall be construed
accordingly;
"MULTI-OPTION FACILITIES AGREEMENT"
means (pound)1,275,000,000 credit facilities agreement (as amended)
originally dated 24th March, 1999 between the Company and others.
"NET INTEREST COSTS"
means, in respect of any period, the aggregate of
(a) the amounts accruing during such period (whether or not paid or
payable within such period) in respect of interest, guarantee and
other ancillary facility fees, letter of credit commission and
fronting fees and commitment fees incurred by the Group (disregarding
any portion attributable to any minority interests in Subsidiaries,
other than the minority interest in Finco 2) charged and amortised
under FRS4, including the interest equivalent element of Finance
Leases (but excluding any of the foregoing that are attributable to
Equity-Credit Preferred Securities); and
(b) the amounts actually paid by any member of the Group (disregarding any
portion attributable to any minority interests in Subsidiaries, other
than the minority interest in Finco 2) during such period by way of:
(A) interest or distributions in respect of Equity-Credit Preferred
Securities and
(B) dividends or other distributions in respect of any shares of any
member of the Group (other than equity share capital)
beneficially owned by any person other than a member of the Group
(to the extent paid in respect of that period),
adjusted in each case by:
(i) excluding interest, fees or commission or the interest equivalent
element of Finance Leases accrued by or to members of the Group from
or to other members of the Group;
(ii) deducting credit interest accrued during such period which would be
shown as interest receivable in the relevant accounts delivered under
Clause 17.3 (Delivery of Financial Statements), as adjusted under
Clause 18.2 (Change of Accounting policies);
(iii) excluding any nominal imputed interest charge that arises only as a
result of an accounting procedure;
<PAGE>
17
(iv) adding amounts payable, and deducting amounts receivable, under
interest rate hedging transactions entered into by the Group from time
to time; and
(v) deducting the amount of income accrued to any member of the Group in
respect of the actual or prospective repurchase by the counterparty of
securities under any such securities repurchase agreement as is
referred to in paragraph (h) of the definition of Liquid Assets
established by reference to the increase in price as between the
original sale and the repurchase;
"NOVATION CERTIFICATE"
means a certificate substantially in the terms of Schedule 5 (Form of
Novation Certificate);
"OBLIGOR"
means the Company and any Guarantor;
"OPTIONAL CURRENCY"
means any currency (other than Sterling) which is freely transferable and
freely convertible into Sterling and deposits of which are readily
available in the London interbank market;
"ORIGINAL FACILITIES AGREEMENT"
means the agreement dated 2 March 1998 (as subsequently re-stated) made
between certain joint lead arrangers, the Agent, a certain issuing bank,
the Company and others providing for facilities of (pound)3,625,000,000 for
the purposes of the Acquisition;
"ORIGINAL GROUP ACCOUNTS"
means the audited consolidated accounts of the Company for the year ended
31st March, 1998;
"ORIGINAL STERLING AMOUNT"
in relation to an Advance, means:
(a) if that Advance is denominated in Sterling, the amount of that
Advance; or
(b) if that Advance is denominated in an Optional Currency, the equivalent
in Sterling of the amount of that Advance at the Agent's Spot Rate of
Exchange three Business Days before its Drawdown Date.
"PARENT"
means TXU Corp. whose principal place of business is at 1601 Bryan Street,
Dallas, Texas, 75201;
"PARENT ACQUISITION DATE"
shall mean the date as of which a person or group of related persons first
acquires more than 30% of the outstanding Voting Shares of the Parent
(within the meaning of section 13(d) or 14(d) of the Securities Exchange
<PAGE>
18
Act of 1934 of the United States of America, as amended, and the applicable
rules and regulations thereunder);
"PARTICIPATING MEMBER STATE"
means a member state of the European Communities that adopts the Euro as
its lawful currency under the legislation of the European Union for
European Monetary Union;
"PARTY"
means a party to this Agreement;
"PERMITTED SECURITY INTEREST"
means any of the following, namely a Security Interest;
(a) subsisting at the date of this Agreement and notified in writing to
the Agent on or prior to that date or securing the amounts outstanding
under the Original Facilities Agreement, or arising whether before, on
or after the Signing Date by operation of law in the ordinary course
of business;
(b) over goods and/or documents of title thereto arising in the ordinary
course of letter of credit transactions;
(c) arising by way of retention of title to goods by the supplier of those
goods arising in the ordinary course of business;
(d) created after the date of this Agreement provided that the
Indebtedness secured thereby, when aggregated with any other
Indebtedness secured by any subsisting Security Interest permitted by
(and only by) this paragraph (d) whether or not such Indebtedness is
in respect of any member of the Group, does not at any time exceed an
amount equal to 15 per cent. of Adjusted Share Capital and Reserves;
(e) created after the date of this Agreement securing Borrowed Money which
is refinanced by a Project Finance Borrowing within six months of the
date of such Security Interest's creation, provided that:
(i) at any one time Borrowed Money permitted to be secured under this
Clause (e) shall not exceed (pound)200,000,000, or its equivalent
in any other currency; and
(ii) the Company shall have notified the Agent on or before the
creation of such Security Interest that the related Borrowed
Money is intended to be temporary bridging finance pending
refinancing by a Project Finance Borrowing;
(f) existing on or created after the date of this Agreement (i) to secure
a Project Finance Borrowing and/or (ii) over an asset and/or the
shares of a Project Finance Subsidiary;
(g) over or affecting any asset acquired by a member of the Group after
the date of this Agreement and subject to which such asset is
acquired, provided that:
<PAGE>
19
(i) such Security Interest was not created at the request of any
member of the Group in contemplation of the acquisition of such
asset by a member of the Group; and
(ii) the amount thereby secured (or the amount of the facility,
drawings under which are or would be thereby secured) has not
been increased at the request of any member of the Group in
contemplation of, or since the date of, the acquisition of such
asset by a member of the Group; or
(h) over or affecting any assets of any company which became or becomes a
member of the Group after the date of this Agreement, where such
Security Interest is created prior to the date on which such company
became or becomes a member of the Group provided that:
(i) such Security Interest was not created at the request of any
member of the Group in contemplation of such company becoming a
member of the Group; and
(ii) the amount thereby secured (or the amount of the facility,
drawings under which are or would be thereby secured) has not
been increased at the request of any member of the Group in
contemplation of, or since the date of, such company becoming a
member of the Group; or
(i) created after the date of this Agreement with the prior written
consent of the Agent (acting in accordance with the instructions of
the Majority Banks) provided that the amount thereby secured (or the
amount of the facility, drawings under which are or would be thereby
secured) has not been increased beyond the amount so consented to; or
(j) any order of a court affecting any asset or assets of a member of the
Group to the extent that such order is discharged within 28 days after
it is made and the consequences thereof would not constitute an Event
of Default; or
(k) created or arising to secure any Indebtedness incurred and applied in
or towards the refinancing of any Indebtedness secured by a Permitted
Security Interest as permitted by paragraphs (a), (g), (h), (i) or (m)
of this definition but only to the extent that:
(i) the amount of the Indebtedness secured by such Security Interest
(or, if higher, the amount of the facility, drawings under which
are or would be thereby secured) does not exceed the amount
secured by such Permitted Security Interest at the date of the
refinancing; and
(ii) the amount secured by such Permitted Security Interest is thereby
reduced by an amount equal to the amount secured by such Security
Interest; and
(iii)the assets on which the Indebtedness secured by the Security
Interest referred to in sub-paragraph (i) of this paragraph (k)
are substantially the same as (or only some of) the assets on
which the refinanced Indebtedness was secured by the Permitted
Security Interest referred to in sub-paragraph (ii);
<PAGE>
20
(l) consisting of a contractual right (in personam and not in rem)
restricting the payment of:
(i) cash deposits made by way of support of counter-indemnity
obligations of a member of the Group in respect of guarantees
given or analogous contingent liabilities incurred by the holder
of such cash deposits for the account of a member of the Group;
and/or
(ii) credit balances on bank accounts as part of general Group banking
arrangements having as their intention or effect the netting of
exposure of the bank to members of the Group; or
(m) over any asset acquired by a member of the Group after the date of
this Agreement as security for Indebtedness incurred to finance or
refinance (within six months of the acquisition) all or part of the
consideration for the acquisition of that asset, provided that the
Indebtedness secured by Security Interests under this paragraph (m)
and, to the extent it refinances Indebtedness secured under this
paragraph (m) or paragraph (k), shall not exceed(pound)1,000,000 in
aggregate at any time; or
(n) arising under the terms of Derivatives Transactions or as a result of
trading of shares or other securities where such Security Interest
arises under the rules of the relevant exchange or clearing system;
(o) arising as a result of the Company or any of its Subsidiaries, or
Subsidiary Undertakings acting as a paying agent in respect of any
Equity-Credit Preferred Securities;
"PES LICENCE"
means the licence granted to REC by the Secretary of State under Section 6
of the Electricity Act authorising REC to distribute and/or supply
electricity within an authorised area to the public, or any additional or
replacement licence(s) for the supply and/or distribution of electricity
granted from time to time to any member of the Group (or, if more than one
replacement, the most recent such replacement), each as amended or modified
from time to time;
"POOLING AND SETTLEMENT AGREEMENT"
means the pooling and settlement agreement dated 30th March, 1990 made
between REC and the National Grid Company Plc and others setting out the
rules and procedures for the operation of an electricity trading pool and
of a settlement system in England and Wales and any agreement replacing
such pooling and settlement agreement from time to time;
"PRINCIPAL SUBSIDIARY"
means:
(a) any member of the Group whose unconsolidated net assets or pre-tax
profit at the date of, or for, any period ending after the date of
this Agreement, equals or exceeds 10 per cent of the net assets or
pre-tax profit of the Group at that time or for that period, and,
during any financial year, such other members of the Group as may be
named in the notification provided to the Agent by the Company under
Clause 17.3(b)(i) (Unaudited management accounts), and for the purpose
of the above:
<PAGE>
21
(i) the net assets or pre-tax profit of the Group shall be
ascertained by reference to the latest audited consolidated
accounts of the Group; and
(ii) the net assets or pre-tax profit of any such member shall be
ascertained by reference to the latest audited accounts of that
Subsidiary;
for the purposes of the above, "NET ASSETS" in respect of the Group or
any such member means the fixed assets and current assets of the Group
or that member (as the case may be) but excluding investments in any
Subsidiary and any loan to another member of the Group; or
(b) a member of the Group to which has been transferred (whether by one
transaction or a series of transactions, related or not) the whole or
a material part of the business, undertaking or assets of a Subsidiary
which immediately prior to those transactions was a Principal
Subsidiary provided that it shall not continue by operation of this
paragraph (b) to be a Principal Subsidiary after the delivery to the
Agent of the accounts referred to in (a) above covering the period in
which the transfer occurred, if:
(i) the transferor was and continues to be a Principal Subsidiary by
virtue of paragraph (a) above or was a Principal Subsidiary only
by virtue of paragraph (c) below; and
(ii) where the transferor was a Licensee, it continues to be a
Licensee; or
(c) any member of the Group which is a holding company, directly or
indirectly, of a Principal Subsidiary;
"PROJECT"
means any project or investment (these terms being treated as including a
series of related projects or investments and any modifications thereto or
developments or expansions of such projects or investments);
"PROJECT FINANCE BORROWINGS"
means, at any date, any Indebtedness to finance or refinance, or in respect
of the financing or refinancing of, a Project:
(a) which is or has been incurred by a single purpose company (whether or
not a Subsidiary of the Company) whose principal assets and business
are, at such date, constituted by such Project and whose liabilities
in respect of such Indebtedness are, at such date, not directly or
indirectly the subject of a guarantee, indemnity or other form of
assurance, undertaking or support (having substantially similar effect
to a guarantee or indemnity) from any member of the Group except as
expressly referred to in paragraph (c) below (a "PROJECT FINANCE
SUBSIDIARY"); or
(b) which is or has been incurred by a Subsidiary of the Company in its
capacity as a partner in, and whose only material asset is its
interest in, a single purpose partnership where the partnership's
principal assets and business are, at that date, constituted by such
Project and where the liabilities of such Subsidiary in respect of
such Indebtedness are not, at that date, directly or indirectly the
subject of a guarantee, indemnity or other form of assurance,
<PAGE>
22
undertaking or support (having substantially similar effect to a
guarantee or indemnity) from any member of the Group except as
expressly referred to in paragraph (c) below (also a "PROJECT FINANCE
SUBSIDIARY"); or
(c) in respect of which the person or persons to whom such Indebtedness is
or may be owed by the obligor in respect of such Indebtedness (whether
or not a Subsidiary of the Company) have no recourse whatsoever to any
member of the Group (whether or not the obligor) for the repayment of
or payment of any sum relating to such Indebtedness other than:
(i) recourse to such obligor for amounts limited to the aggregate
cash flow or net cash flow received or receivable by it (other
than historic cash flow or historic net cash flow) from such
Project; and/or
(ii) recourse to such obligor for the purpose only of enabling amounts
to be claimed in respect of such Indebtedness in an enforcement
of any Security Interest given by such obligor over the assets
comprised in such Project (or, where such obligor is a single
purpose company or a Subsidiary of the Company as described in
sub-Clause (b), given by any shareholder or the like in the
obligor over its shares or the like in the capital of the
obligor) to secure such Indebtedness or any recourse referred to
in (iii) below, Provided that (A) the extent of such recourse to
such obligor (or its shareholder or the like) is limited solely
to the amount of any recoveries made on such enforcement, and (B)
such person or persons are not entitled, by virtue of any right
or claim arising out of or in connection with such Indebtedness,
to commence proceedings for the winding up or dissolution of the
obligor (or its shareholder or the like) or to appoint or procure
the appointment of any administrator, receiver, administrative
receiver, trustee or similar person or official in respect of the
obligor (or its shareholder or the like) or any of its assets
(save for the assets the subject of such Security Interest);
and/or
(iii)recourse to such obligor generally, or directly or indirectly to
a member of the Group, under any form of assurance, undertaking
or support, which recourse is limited to a claim for damages
(other than liquidated damages and damages required to be
calculated in a specified way) for breach of an obligation (not
being a payment obligation or an obligation to procure payment by
another or an obligation to comply or procure compliance by
another with any financial ratios or other tests of financial
condition) by the person against whom such recourse is available.
(d) For the purpose of each of paragraphs (a), (b) and (c) of this
definition:
(i) an off-take agreement entered into between a Group Company and a
Project Finance Subsidiary, or an obligor in respect of Project
Finance Borrowing described in paragraph (c), which is on arms
length terms shall not of itself be deemed to be a guarantee,
indemnity or other form of assurance, undertaking or support or
to involve liability or recourse; and
(ii) any right of recourse against a member of the Group as a result
of its shareholding in an unlimited company, partnership or
similar entity will be deemed to be a guarantee, indemnity or
<PAGE>
23
other form of assurance, undertaking or support (having
substantially similar effect to a guarantee or indemnity);
"PROJECT FINANCE SUBSIDIARY"
has the meaning set out in paragraph (a) or (b) of the definition of
Project Finance Borrowing and also means any Subsidiary of any such person;
"QUALIFYING BANK"
means:
a person which:
(a) is a bank within the meaning of Section 840A of the Income and
Corporation Taxes Act 1988; and
(b) is or will (on becoming a Bank) be beneficially entitled to any
interest paid and to be paid to it (as a Bank) under this Agreement;
and
(c) is within the charge to United Kingdom corporation tax as respects
such interest,
except that, if Section 349 or Section 840A of the Income and
Corporation Taxes Act 1988 is repealed, modified, extended or
re-enacted, the Agent may at any time and from time to time (after
consultation with the Company and the Banks) amend this definition of
Qualifying Bank in such manner as it may determine (acting reasonably)
to be appropriate by giving notice of the amended definition to the
Company and the Banks so as, so far as practicable, to put the Banks
in the same position as they would otherwise have been in; or
(d) a Treaty Lender;
"QUALIFYING PREFERENCE SHARES"
means on any date preference shares of any member of the Group expressed
(whether by law, agreement or otherwise) to be redeemable at the option of
the issuer, any other person or otherwise on or before the Final Maturity
Date or, if a Term-out Advance is drawn, the second Anniversary;
"QUARTER"
means each three-month period ending on the last day in March, June,
September and December in each year;
"RATE FIXING DAY"
means:
(a) the Drawdown Date for an Advance denominated in Sterling (or, in the
case of a Term-out Advance, the first day of each applicable Interest
Period); or
<PAGE>
24
(b) the second Business Day before the Drawdown Date for an Advance
denominated in an Optional Currency (or such other day as is generally
treated as the rate fixing day by market practice in the London
interbank market);
"REC"
means Eastern Electricity plc (Company No. 2366906 or any successor as the
Licensee in respect of the Distribution Business);
"REFERENCE BANKS"
means The Chase Manhattan Bank and any two other banks selected by the
Agent with the consent of the Company (which is not to be unreasonably
withheld), or if any of them ceases to so act, such other bank or banks as
shall be selected by the Agent in accordance with Clause 27.4 (Reference
Banks);
"RELEVANT COMPANY"
means any of the Obligors, Finco 2, Bidco, The Energy Group Limited
(company no. 3613919) and the Principal Subsidiaries;
"RELEVANT PERSON"
means the Parent and any Affiliate or Associated Company of the Parent
which is neither the Company nor a member of the Group nor a Project
Finance Subsidiary;
"RESERVATIONS"
means (a) the principle that equitable remedies may be granted or refused
at the discretion of the court, (b) the limitation on enforcement by laws
of general application relating to insolvency, liquidation, reorganisation,
court schemes or administration, and (c) the time barring of claims under
the Limitation Act 1980;
"REQUEST"
means a request by the Company for an Advance substantially in the form of
Schedule 4;
"REVOLVING ADVANCE"
means the principal amount of each borrowing by the Company under this
Agreement (other than a Term-out Advance) or the principal amount
outstanding of that borrowing;
"SECOND-TIER SUPPLY BUSINESS"
has the same meaning as in the PES Licence;
"SECRETARY OF STATE"
means the Secretary of State for Trade and Industry from time to time or
his/her successor or such other person as may for the time being be
fulfilling the functions of the Secretary of State under the Electricity
Act or the Gas Acts;
"SECURITY INTEREST"
<PAGE>
25
means any mortgage, pledge, lien, charge, assignment by way of security,
deposit of cash subject to contractual restrictions on re-drawing,
arrangement for retention of title, hypothecation or security interest, or
any other agreement or arrangement having the effect of conferring security
or a security interest;
"SIGNING DATE"
means the date of this Agreement.
"SPV"
means any company or other entity directly or indirectly wholly-owned by
the Company, incorporated or otherwise established, and used, solely for
the purpose of issuing one or more capital market instruments or other
securities for the purpose of raising finance on behalf of the Group, and,
if applicable, carrying out all functions falling to be carried out by it
under a securitisation or other financing arrangement for which it was
established;
"STERLING" and "(POUND)"
mean the lawful currency for the time being of the United Kingdom and in
respect of all payments to be made under this Agreement in Sterling mean
immediately available, freely transferable cleared funds;
"SUBORDINATED DEBT"
means Indebtedness incurred on terms which to the reasonable satisfaction
of the Agent:
(a) prohibit repayment or prepayment of any principal amounts (including
capitalised interest) during the Finance Period;
(b) prohibit the holder of that Indebtedness from exercising any rights or
remedies which it might otherwise have to recover such Indebtedness
during the Finance Period; and
(c) provide that in the event of insolvency, dissolution, liquidation or
other insolvency proceedings such Indebtedness shall be effectively
subordinated in right of payment to all liabilities of the Obligors
under the Finance Documents;
"SUBSIDIARY"
means:
(a) a subsidiary within the meaning of section 736 of the Act; and
(b) where the context requires or admits, and without limitation for the
purposes of the definitions of "AFFILIATE", "EQUITY CREDIT PREFERRED
SECURITIES" and "GROUP" and Clauses 17.2 (Preparation of Financial
Statements), 18.1 (Financial Ratios), 18.2 (Change of Accounting
policies), a subsidiary undertaking within the meaning of section 258
of the Act (a "SUBSIDIARY UNDERTAKING");
"SUBSTITUTE"
has the meaning given to that term in Clause 13.3 (Substitute basis);
<PAGE>
26
"SUPPLY BUSINESS"
means, in the case of a Licensee under the PES Licence, its authorised
business as a public electricity supplier in the authorised area as such
terms are used in its PES Licence from time to time;
"TARGET"
means the company formerly known as The Energy Group PLC (company no.
3257256) and subsequently re-named as Energy Holdings (No.3) Limited;
"TARGET SHARES"
means the issued and to be issued shares in the capital of the Target;
"TAXES"
includes all present and future taxes, levies, imposts, duties, fees or
charges of whatever nature including without limitation any interest or
penalties payable in connection with any failure or delay in paying any of
the same and "TAXATION" shall be construed accordingly;
"TERM-OUT ADVANCE"
means the principal amount of each borrowing by the Company drawn under
Clause 6.1(b) (Repayment) or the principal amount outstanding of that
borrowing;
"TEST PERIOD" means:
(a) each twelve-month period ending on the last day of each Quarter; and
(b) each accounting reference period (as defined in Part VIII of the
Companies Act 1985) of the Company or, where it applies to the
Leverage Ratio, Finco 2, ending on 31st December in each year;
"TOTAL COMMITMENTS"
means the aggregate for the time being of the Commitments, being
(pound)300,000,000 at the Signing Date;
"TREATY LENDER"
means a person which (a) is resident (as such term is defined in the
appropriate double taxation treaty) in a country with which the United
Kingdom has a double taxation treaty giving residents of that country
complete exemption from the imposition of any withholding or deduction for
or on account of United Kingdom Taxes on interest; and (b) does not carry
on business in the United Kingdom through a permanent establishment with
which the Indebtedness under this Agreement in respect of which the
interest is paid is effectively connected;
"VOTING SHARES"
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27
means outstanding shares of capital stock of any class of the Parent
entitled to vote in the election of directors, excluding shares entitled so
to vote only upon the happening of some contingency.
1.2 HEADINGS
Clause headings and the table of contents are inserted for convenience of
reference only and shall be ignored in the interpretation of this
Agreement.
1.3 CONSTRUCTION OF CERTAIN TERMS
In this Agreement, unless the context otherwise requires:
(a) references to Clauses and Schedules are to be construed as references
to the clauses of, and schedules to, this Agreement and references to
this Agreement include its schedules;
(b) references to (or to any specified provision of) this Agreement or any
other document shall be construed as references to this Agreement
(including any Guarantor Accession Agreement and Novation
Certificate), that provision or that document as in force for the time
being and as from time to time amended, novated or supplemented in
accordance with its terms, or, as the case may be, with the agreement
of the relevant parties and (where such consent is, by the terms of
this Agreement or the relevant document, required to be obtained as a
condition to such amendment being permitted) the prior written consent
of the Agent;
(c) references to a "REGULATION" include any present or future regulation,
rule, directive, requirement, request or guideline (whether or not
having the force of law) of any Government Entity;
(d) references to an "AUTHORISATION" mean and include any consent,
authorisation, licence, approval and permit;
(e) words importing the plural shall include the singular and vice versa;
(f) references to a time of day are to London time;
(g) references to a "PERSON" includes any individual, firm, company,
corporation, government, state or agency of a state or any
unincorporated body of persons, undertaking (within the meaning of
Section 259(1) of the Act) or other joint venture, organisation or
association (whether or not having separate legal personality) or any
two or more of the foregoing;
(h) references to "ASSETS" include all or part of any business,
undertaking, real property, personal property, shareholdings, assets,
revenues, uncalled capital and any rights (whether actual or
contingent, present or future) to receive, or require delivery of, any
of the foregoing;
(i) references to the "EQUIVALENT" of an amount specified in a particular
currency (the "SPECIFIED CURRENCY AMOUNT") shall be construed as a
reference to the amount of the other relevant currency which can be
purchased with the specified currency amount at the Agent's Spot Rate
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28
of Exchange on the day on which the calculation falls to be made for
spot delivery, as conclusively determined by the Agent;
(j) references to any enactment shall be deemed to include references to
such enactment as re-enacted, amended or extended;
(k) references to documents being in the "AGREED FORM" mean documents
initialled on behalf of the Agent and the Arranger and on behalf of
the Obligors, or if there is no such document, the form reasonably
required by the Agent;
(l) references to "VAT" are to be construed as including references to any
similar Tax;
(m) "INCLUDING" and "IN PARTICULAR" shall not be construed restrictively
but shall mean "including, without prejudice to the generality of the
foregoing" and "in particular, but without prejudice to the generality
of the foregoing" respectively;
(n) references to documents being "CERTIFIED COPIES" mean copies certified
as being true, complete and up-to-date copies as of a date no earlier
than the date of this Agreement by an officer of the Company who is at
such time duly authorised to execute or certify such documents on
behalf of the Company;
(o) "ARMS LENGTH TERMS" means on terms which are no more or less
favourable to the other party to the relevant transaction than could
reasonably be expected to be obtained in a comparable transaction with
a person unconnected with the Group;
(p) references to "HOLDING COMPANY", save as otherwise defined, shall bear
the same meaning as in section 736 of the Act, as if extended to
bodies corporate wherever incorporated;
(q) a Default is "OUTSTANDING" if it has not been remedied or waived;
(r) any provision of this Agreement stated to have effect on, after, or as
from, 1 January 1999 will, to the extent that the provision relates to
any currency of a state which is not a Participating Member State on 1
January 1999, have effect in relation to that currency on the date on
which it becomes a Participating Member State;
(s) unless the context requires otherwise, expressions defined in the Act
shall have the same meanings in this Agreement, except that the
expression "COMPANY" shall include a body corporate established
outside Great Britain;
(t) "ASSOCIATED COMPANY" shall have the meaning given to it in the
Appropriate Accounting Principles;
(u) references to a "WHOLLY-OWNED" or "PARTLY-OWNED" member of the Group
or Subsidiary of the Company shall be construed: (i) to refer to
Subsidiaries whether directly or indirectly owned by the Company; and
(ii) on the assumption that the Company owns 100% of Finco 2; and
(v) for the avoidance of doubt, neither a lease nor a Finance Lease
entered into on arm's length terms shall be regarded as an agreement
or arrangement having the effect of conferring security or a security
interest.
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29
(w) (i) Unless expressly provided to the contrary in a Finance
Document, a person who is not a party to a Finance Document may
not enforce its terms under the Contracts (Rights of Third
Parties) Act 1999; and
(ii) Notwithstanding any term of any Finance Document, the consent of
any third party is not required for any variation (including any
release or compromise of any liability under) or termination of
that Finance Document.
2. THE FACILITY
2.1 FACILITY
(a) Subject to the terms of this Agreement, the Banks agree to make available
to the Company a 364 day multi-currency revolving credit facility, with an
option to draw Term-out Advances, under which they will make cash advances
during the Commitment Period to the Company.
(b) The aggregate Original Sterling Amount of all outstanding Advances shall
not exceed the Total Commitments.
(c) No Bank is obliged to lend if it would cause the Original Sterling Amount
of its participation in the Advances to exceed its Commitment.
2.2 NATURE OF A FINANCE PARTY'S RIGHTS AND OBLIGATIONS
(a) The obligations of a Finance Party under the Finance Documents are several.
Failure of a Finance Party to carry out those obligations does not relieve
any other Party of its obligations under the Finance Documents. No Finance
Party is responsible for the obligations of any other Finance Party under
the Finance Documents.
(b) The rights of a Finance Party under the Finance Documents are divided
rights. A Finance Party may, except as otherwise stated in the Finance
Documents, separately enforce those rights.
3. PURPOSE
The Company shall apply each Advance towards the general corporate purposes
of the Group (including future acquisitions). Without affecting the
obligations of any Obligor in any way, no Finance Party is bound to monitor
or verify the application of any Advance.
4. CONDITIONS PRECEDENT
4.1 DOCUMENTARY CONDITIONS PRECEDENT
The Company may not deliver the first Request until the Agent has notified
the Company and the Banks that it has received all of the documents set out
in Schedule 2 in form and substance satisfactory to the Agent.
4.2 FURTHER CONDITIONS PRECEDENT
The obligations of each Bank to participate in an Advance are subject to
the further conditions precedent that:
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30
(a) on both the date of the Request and the Drawdown Date for that
Advance:
(i) the representations and warranties in Clause 16 (Representations
and Warranties) to be repeated on those dates are correct and
will be correct immediately after the Advance is made; and
(ii) no Default is outstanding or would result from the making of the
Advance, but this Clause 4.2(a)(ii) shall not prevent the
rollover of an existing Advance for a period of up to one month
at any time when no Event of Default has occurred and is
outstanding; and
(b) the making of the Advance would not cause Clause 2.1 (Facility) to be
contravened.
5. DRAWDOWN
5.1 COMMITMENT PERIOD
The Company may borrow an Advance during the Commitment Period if the Agent
receives, not later than 11.00 a.m. two Business Days (in the case of an
Advance to be denominated in Sterling) or three Business Days (in any other
case) before the proposed Drawdown Date, a duly completed Request. Each
Request is irrevocable.
5.2 COMPLETION OF REQUESTS
A Request will not be regarded as having been duly completed unless:
(a) the Drawdown Date is a Business Day falling before the Final Maturity
Date;
(b) if the currency selected is Sterling, the amount of the Advance is:
(i) a minimum of(pound)10,000,000 and an integral multiple of
(pound)5,000,000; or
(ii) the balance of the undrawn Total Commitments; or
(iii) such other amount as the Agent may agree;
(c) if the currency selected is an Optional Currency, the amount of the
Advance is:
(i) an integral multiple of 1,000,000 of the largest currency unit of
that Optional Currency but at least the equivalent of
(pound)5,000,000; or
(ii) the balance of the undrawn Total Commitments; or
(iii) such other amount as the Agent may agree;
(d) the amount selected under paragraph (b) or (c) above does not cause
Clause 2.1 (Facility) to be contravened;
(e) the currency selected is Sterling or, in the case of a Revolving
Advance, complies with Clause 10 (Optional Currencies);
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31
(f) the Interest Period selected complies with Clause 8 (Interest Periods)
and (i) in the case of a Revolving Advance does not extend beyond the
Final Maturity Date or (ii) in the case of a Term-out Advance does not
extend beyond the second Anniversary; and
(g) the payment instructions comply with Clause 11 (Payments).
Each Request must specify one Advance only, but the Company may, subject to
the other terms of this Agreement, deliver more than one Request on any one
day. Unless otherwise agreed by the Agent, no more than ten Advances may be
outstanding at any time and no more than one Advance may be made in any
period of five consecutive Business Days.
5.3 ADVANCES
(a) The Agent shall promptly notify each Bank of the details of the requested
Advance and the amount of its participation in the Advance.
(b) Subject to the terms of this Agreement, each Bank shall make its
participation in the Advance available to the Agent for the Company in the
currency in which it is to be borrowed, on the relevant Drawdown Date.
(c) The amount of each Bank's participation in the Advance will be the
proportion of the Advance which its Commitment bears to the Total
Commitments on the proposed Drawdown Date.
6. REPAYMENT
6.1 REPAYMENT
(a) The Company shall repay each Advance in full on its Maturity Date to the
Agent for the relevant Bank(s).
(b) At any time prior to the Final Maturity Date, the Company may, by delivery
of a duly completed Request to the Agent under Clause 5 (Drawdown) (who
shall send a copy of the same to the Banks), elect to draw up to five cash
advances under the Facility ("TERM-OUT ADVANCES") with a Maturity Date
after the Final Maturity Date, but no later than the second Anniversary. No
Term-out Advance, once repaid or prepaid, may be reborrowed.
(c) No Advance, other than a Term-out Advance, may be outstanding after the
Final Maturity Date. No Term-out Advance may be outstanding after the date
falling on the second Anniversary.
6.2 RE-BORROWING
Subject to the other terms of this Agreement, any amounts repaid under
Clause 6.1 may be re-borrowed.
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7. PREPAYMENT AND CANCELLATION
7.1 AUTOMATIC CANCELLATION
The Commitment of each Bank shall be automatically cancelled at close of
business in London on the Final Maturity Date.
7.2 VOLUNTARY CANCELLATION
(a) The Company may, by giving not less than ten Business Days' prior notice
(or such shorter period as the Majority Banks may agree) to the Agent,
cancel the unutilised portion of the Total Commitments in whole or in part
(but, if in part, in a minimum of (pound)10,000,000 and an integral
multiple of (pound)5,000,000).
(b) Any cancellation in part shall be applied against the Commitment of each
Bank pro rata.
7.3 VOLUNTARY PREPAYMENT
The Company may, on giving not less than five Business Days' prior notice
to the Agent specifying the amount and date for prepayment, prepay an
Advance without penalty (subject to Clause 24.2 (Other indemnities)) in
whole or in part, provided that any prepayment in part must be in a minimum
principal amount of (pound)10,000,000 and an integral multiple of
(pound)5,000,000 (or its equivalent).
7.4 ADDITIONAL RIGHT OF PREPAYMENT AND CANCELLATION
If:
(a) any Obligor is required to pay to a Bank any additional amounts under
Clause 12 (Taxes); or
(b) the Company is required to pay to a Bank any amount under Clause 14
(Increased costs),
then, without prejudice to the obligations of any Obligor under those
Clauses, the Company may, whilst the circumstances giving rise to the
requirement continue, serve a notice of prepayment and cancellation on that
Bank through the Agent. On the date falling five Business Days after the
date of service of the notice:
(a) the Company shall prepay that Bank's participation in any Advances;
and
(b) the Commitment of that Bank shall be cancelled.
7.5 MISCELLANEOUS PROVISIONS
(a) Any notice of prepayment and/or cancellation under this Agreement is
irrevocable. The Agent shall notify the Banks promptly of receipt of any
such notice.
(b) All prepayments under this Agreement shall be made together with accrued
interest on the amount prepaid and, subject to Clause 24.2 (Other
indemnities) without premium or penalty.
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33
(c) Without prejudice to the right of the Company to re-borrow under Clause 6.2
(Re-borrowing), no amount prepaid under this Agreement may subsequently be
re-borrowed.
(d) No amount of the Total Commitments cancelled under this Agreement may
subsequently be reinstated.
8. INTEREST PERIODS
8.1 GENERAL
(a) Each Revolving Advance has one Interest Period only.
(b) The life of each Term-out Advance is divided into successive Interest
Periods.
8.2 SELECTION
(a) The Company may select an Interest Period for an Advance in the relevant
Request. Each Interest Period for a Revolving Advance and the first
Interest Period for a Term-out Advance will commence on its Drawdown Date.
(b) Each subsequent Interest Period for a Term-out Advance will be the period
selected by the Company by notice to the Agent received not later than
11.00 a.m. on the Business Day before the end of the then current Interest
Period
(c) Subject to the following provisions of this Clause 8, each Interest Period
will be one, two, three or six months or any other period agreed by the
Company and the Majority Banks.
8.3 NON-BUSINESS DAYS
If an Interest Period would otherwise end on a day which is not a Business
Day, that Interest Period shall instead end on the next Business Day in
that calendar month (if there is one) or the preceding Business Day (if
there is not).
8.4 NO OVERRUNNING OF THE FINAL MATURITY DATE OR SECOND ANNIVERSARY
(a) If an Interest Period for a Revolving Advance would otherwise overrun the
Final Maturity Date, it shall be shortened so that it ends on the Final
Maturity Date.
(b) If an Interest Period for a Term-out Advance would otherwise overrun the
second Anniversary, it shall be shortened so that it ends on the second
Anniversary.
8.5 NOTIFICATION
The Agent shall notify each relevant Party of the duration of each Interest
Period promptly after ascertaining its duration.
9. INTEREST
9.1 INTEREST RATE
The rate of interest on each Advance for each of its Interest Periods is
the rate per annum determined by the Agent to be the aggregate of the
applicable:
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(a) Applicable Margin;
(b) (ii) LIBOR (in the case of an Advance denominated in a currency other
than Euros);
(ii) EURIBOR (in the case of an Advance denominated in Euros); and
(c) Mandatory Cost.
9.2 DUE DATES
Except as otherwise provided in this Agreement, accrued interest on each
Advance is payable by the Company:
(a) in the case of a Revolving Advance, on its Maturity Date; and
(b) in the case of a Term-out Advance, on the last day of each Interest
Period applicable to that Term-out Advance,
and also, in the case of any Advance with an Interest Period longer than
six months, at six monthly intervals after the Drawdown Date (or, if
different, the first day of the relevant Interest Period) for so long as
the Interest Period is outstanding.
9.3 DEFAULT INTEREST
(a) If an Obligor fails to pay any amount payable by it under the Finance
Documents, it shall forthwith on demand by the Agent pay interest on the
overdue amount from the due date up to the date of actual payment, as well
after as before judgment, at a rate (the "DEFAULT RATE") determined by the
Agent to be one per cent. per annum above:
(i) subject to sub-paragraph (ii) below, the rate which would have been
payable if the overdue amount had, during the period of non-payment,
constituted an Advance in the currency of the overdue amount for such
successive Interest Periods of such duration as the Agent may
determine (each a "DESIGNATED INTEREST PERIOD"); or
(ii) for the first Designated Interest Period in respect of any overdue
amount of principal, the rate on the overdue amount under Clause 9.1
(Interest rate) immediately before the due date.
(b) The default rate will be determined by the Agent on each Business Day or
the first day of, or two Business Days before the first day of, the
relevant Designated Interest Period, as appropriate.
(c) If the Agent determines that deposits in the currency of the overdue amount
are not at the relevant time being made available by the Reference Banks to
leading banks in the London interbank market, the default rate will be
determined by reference to the cost of funds to the Agent from whatever
sources it selects.
(d) Default interest will be compounded at the end of each Designated Interest
Period.
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35
9.4 NOTIFICATION OF RATES OF INTEREST
The Agent shall promptly notify each relevant Party of the determination of
a rate of interest under this Agreement.
10. OPTIONAL CURRENCIES
10.1 SELECTION
(a) The Company shall select the currency of a Revolving Advance in the
relevant Request.
(b) The currency of each Revolving Advance must be Sterling or an Optional
Currency.
(c) The Company may not choose a currency if as a result the Advances would be
denominated at any one time in more than four Optional Currencies.
(d) The Agent shall notify each Bank of the currency and the Original Sterling
Amount of each Revolving Advance and the applicable Agent's Spot Rate of
Exchange promptly after they are ascertained.
10.2 REVOCATION OF CURRENCY
If before 9.30 a.m. on any Rate Fixing Day, the Agent receives notice from
a Bank that:
(a) it is impracticable for the Bank to fund its participation in the
relevant Revolving Advance in the relevant Optional Currency during
its Interest Period in the ordinary course of business in the London
interbank market; and/or
(b) the use of the proposed Optional Currency might contravene any law or
regulation,
the Agent shall give notice to the Company and to the Banks to that effect
before 11.00 a.m. on that day. In this event:
(i) the Company and the Banks may agree that the drawdown will not be
made; or
(ii) in the absence of agreement:
(1) that Bank's participation in the Revolving Advance (or, if more
than one Bank is similarly affected, those Bank's participations
in the Revolving Advance) shall be treated as a separate
Revolving Advance denominated in Sterling during the relevant
Interest Period; and
(2) in the definition of "LIBOR" (insofar as it applies to that
Revolving Advance) in Clause 1.1 (Definitions):
(A) there shall be substituted for the time "11.00 a.m." the
time "1.00 p.m."; and
(B) paragraph (b) of that definition shall apply
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36
11. PAYMENTS
11.1 PLACE
All payments by an Obligor or a Bank under this Agreement shall be made to
the Agent to its account at such office or bank in the principal financial
centre of the country of the relevant currency (or in the case of Euros,
the financial centre of such of the Participating Member States or London)
as it may notify to that Obligor or Bank for this purpose. Notwithstanding
the above, all payments by the Company to the Arranger under Clauses 21
(Fees) and 22 (Expenses) shall be made direct to the Arranger in the manner
agreed by the Arranger and the Company.
11.2 FUNDS
Payments under the Finance Documents to the Agent shall be made for value
on the due date at such times and in such funds as the Agent may specify to
the Party concerned as being customary at the time for the settlement of
transactions in the relevant currency in the place for payment.
11.3 DISTRIBUTION
(a) Each payment received by the Agent under the Finance Documents for another
Party shall, subject to paragraphs (b) and (c) below, be made available by
the Agent to that Party by payment (on the date and in the currency and
funds of receipt) to its account with such bank in the principal financial
centre of the country of the relevant currency (or in the case of Euros,
the financial centre of such of the Participating Member States or London)
as it may notify to the Agent for this purpose by not less than five
Business Days' prior notice.
(b) The Agent may apply any amount received by it for an Obligor in or towards
payment (on the date and in the currency and funds of receipt) of any
amount due from an Obligor under this Agreement or in or towards the
purchase of any amount of any currency to be so applied.
(c) Where a sum is to be paid under this Agreement to the Agent for the account
of another Party, the Agent is not obliged to pay that sum to that Party
until it has established that it has actually received that sum. The Agent
may, however, assume that the sum has been paid to it in accordance with
this Agreement and, in reliance on that assumption, make available to that
Party a corresponding amount. If the sum has not been made available but
the Agent has paid a corresponding amount to another Party, that Party
shall forthwith on demand refund the corresponding amount to the Agent
together with interest on that amount from the date of payment to the date
of receipt, calculated at a rate determined by the Agent to reflect its
cost of funds.
11.4 CURRENCY
(a) A repayment or prepayment of an Advance or any part of an Advance is
payable in the currency in which the Advance is denominated on its due
date.
(b) Interest is payable in the currency in which the relevant amount in respect
of which it is payable is denominated.
(c) Amounts payable in respect of costs, expenses, taxes and the like are
payable in the currency in which they are incurred.
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37
(d) Any other amount payable under the Finance Documents is, except as
otherwise provided in this Agreement, payable in Sterling.
11.5 SET-OFF AND COUNTERCLAIM
All payments made by an Obligor under the Finance Documents shall be made
without set-off or counterclaim.
11.6 NON-BUSINESS DAYS
(a) If a payment under the Finance Documents is due on a day which is not a
Business Day, the due date for that payment shall instead be the next
Business Day in the same calendar month (if there is one) or the preceding
Business Day (if there is not).
(b) During any extension of the due date for payment of any principal under
this Agreement interest is payable on the principal at the rate payable on
the original due date.
11.7 PARTIAL PAYMENTS
(a) If the Agent receives a payment insufficient to discharge all the amounts
then due and payable by an Obligor under the Finance Documents, the Agent
shall apply that payment towards the obligations of the Obligors under this
Agreement in the following order:
(i) FIRST, in or towards payment pro rata of any unpaid fees, costs and
expenses of the Agent under the Finance Documents;
(ii) SECONDLY, in or towards payment pro rata of any accrued interest due
but unpaid under this Agreement;
(iii) THIRDLY, in or towards payment pro rata of any principal due but
unpaid under this Agreement; and
(iv) FOURTHLY, in or towards payment pro rata of any other sum due but
unpaid under the Finance Documents.
(b) The Agent shall, if so directed by all the Banks, vary the order set out in
sub-paragraphs (a)(ii) to (iv) above.
(c) Paragraphs (a) and (b) above will override any appropriation made by an
Obligor.
12. TAXES
12.1 GROSS-UP
All payments by an Obligor under the Finance Documents shall be made
without any deduction and free and clear of and without any deduction for
or on account of any Taxes, except to the extent that the Obligor is
required by law to make payment subject to any Taxes. Subject to Clause
12.4, if any Tax or amounts in respect of Tax must be deducted, or any
other deductions must be made, from any amounts payable or paid by an
Obligor, or paid or payable by the Agent to a Bank, under the Finance
Documents, the Obligor shall pay such additional amounts as may be
necessary to ensure that the relevant Bank receives a net amount equal to
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the full amount which it would have received had payment not been made
subject to Tax or any other deduction.
12.2 TAX RECEIPTS
All taxes required by law to be deducted or withheld by an Obligor from any
amounts paid or payable under the Finance Documents shall be paid by the
relevant Obligor when due and the Obligor shall, within 15 days of the
payment being made, deliver to the Agent for the relevant Bank evidence
satisfactory to that Bank (including all relevant tax receipts) that the
payment has been duly remitted to the appropriate authority.
12.3 TAX CREDITS
If:
(a) an Obligor makes a payment under Clause 12.1 (a "TAX PAYMENT") in
respect of any fund paid to a Bank under this Agreement; and
(b) that Bank determines in its absolute discretion that it has obtained a
refund of tax or obtained a credit against tax (a "TAX CREDIT") which
the Bank in its absolute discretion is able to identify as
attributable to that Tax Payment,
then, if in its absolute discretion it decides that it can do so without
adverse consequences for that Bank, that Bank shall reimburse that Obligor
such amount as the Bank in its absolute discretion determines to be such
proportion of that Tax Credit as will leave that Bank (after that
reimbursement) in no better or worse position than it would have been if no
Tax Payment had been required. The Bank shall have an absolute discretion
as to whether to claim any Tax Credit and, if it does claim, the extent,
order and manner in which it does so, and whether any amount is due from it
under this Clause 12.3, and if so, what amount and when. The Bank shall not
be obliged to disclose any information regarding its tax affairs and
computation.
12.4 QUALIFYING BANKS
(a) Subject to paragraph (b) below, if a Bank is not or ceases to be a
Qualifying Bank, no Obligor will be liable to pay to that Bank under Clause
12.1 any amount in respect of taxes levied or imposed by the U.K. or any
taxing authority of or in the U.K. in excess of the amount it would have
been obliged to pay if that Bank had been or had not ceased to be a
Qualifying Bank.
(b) Paragraph (a) above does not apply if a Bank ceases to be a Qualifying Bank
as a result of the introduction of, change in, or any change in the
interpretation, administration or application of, any law or regulation or
any practice or concession of the U.K. Inland Revenue occurring after the
date of this Agreement.
13. MARKET DISRUPTION
13.1 ABSENCE OF QUOTATIONS
If LIBOR is to be determined by reference to the Reference Banks but a
Reference Bank does not supply an offered rate by 11.30 a.m. on the Rate
Fixing Day, the applicable LIBOR shall, subject to Clause 13.2 (Market
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disruption) below, be determined on the basis of the quotations of the
remaining Reference Banks.
13.2 MARKET DISRUPTION
If:
(a) LIBOR is to be determined by reference to the Reference Banks but no,
or only one, Reference Bank supplies a rate by 11.30 a.m. on the Rate
Fixing Day or the Agent otherwise determines that adequate and fair
means do not exist for ascertaining LIBOR; or
(b) the Agent receives notification from Banks whose participations in an
Advance exceed 35 per cent. of that Advance that, in their opinion:
(1) matching deposits may not be available to them in the London
interbank market in the ordinary course of business to fund their
participations in that Advance for the relevant Interest Period;
or
(2) the cost to them of matching deposits in the London interbank
market would be in excess of LIBOR for the relevant Interest
Period,
the Agent shall promptly notify the Company and the relevant Banks of the
fact and that this Clause 13 is in operation.
13.3 SUBSTITUTE BASIS
(a) After any notification under Clause 13.2 (Market disruption) the Company
and the Agent may agree that the relevant Advance shall not be made or, in
the absence of such agreement that the Interest Periods of the Advance
should be one month and, in the case of an event or circumstance referred
to in Clause 13.2(b), the Advance shall be made or confirmed (as
applicable) in Sterling and the rate of interest on each Bank's share in
the affected Advance for the relevant Interest Period will be the aggregate
of the applicable:
(i) Applicable Margin; and
(ii) rate notified to the Agent by that Bank as soon as practicable to be
that which expresses as a percentage rate per annum the cost to that
Bank of funding its share in that Advance from whatever source it may
reasonably select.
(b) Within three Business Days of receipt of the notification in paragraph (a)
above, the Company and the Agent shall enter into negotiations for a period
of not more than 30 days with a view to agreeing a substitute basis for
determining the rate of interest and/or funding applicable to that and (to
the extent required) any future Advance. Any substitute basis agreed shall
be, with the prior consent of all the Banks, binding on all the Parties.
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40
14. INCREASED COSTS
14.1 INCREASED COSTS
(a) Subject to Clause 14.2 (Exceptions), the Company shall forthwith on demand
by a Finance Party pay that Finance Party the amount of any increased cost
incurred by it or any of its Affiliates as a result of:
(i) the introduction of, or any change in, or any change in the
interpretation or application of, any law or regulation (in each case
occurring after the date of this Agreement); or
(ii) compliance with any regulation made after the date of this Agreement,
(including any law or regulation relating to taxation, change in currency
of a country, or reserve asset, special deposit, cash ratio, liquidity or
capital adequacy requirements or any other form of banking or monetary
control).
(b) In this Agreement "INCREASED COST" means:
(i) an additional cost incurred by a Finance Party or any of its
Affiliates as a result of it having entered into, or performing,
maintaining or funding its obligations under, any Finance Document; or
(ii) that portion of an additional cost incurred by a Finance Party or any
of its Affiliates in making, funding or maintaining all or any
Advances comprised in a class of Advances formed by or including that
Finance Party's participations in the Advances made or to be made
under this Agreement as is attributable to that Finance Party's
making, funding or maintaining those participations; or
(iii) a reduction in any amount payable to a Finance Party or any of its
Affiliates or the effective return to a Finance Party or any of its
Affiliates under this Agreement or (to the extent that it is
attributable to this Agreement) on its capital; or
(iv) the amount of any payment made by a Finance Party or any of its
Affiliates, or the amount of interest or other return foregone by a
Finance Party or any of its Affiliates, calculated by reference to any
amount received or receivable by a Finance Party or any of its
Affiliates from any other Party under this Agreement.
14.2 EXCEPTIONS
Clause 14.1 (Increased costs) does not apply to any increased cost:
(a) compensated for under any other Clause, or which would have been but
for an exception to that Clause;
(b) attributable to a Finance Party or its Affiliate wilfully failing to
comply with any law or regulation;
(c) attributable to any change in the rate of, or change in the basis of
calculating, tax on the overall net income of a Bank (or the overall
net income of a division or branch of the Bank) imposed in the
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41
jurisdiction in which its principal office or Facility Office is
situate.
15. ILLEGALITY AND MITIGATION
15.1 ILLEGALITY
If it is or becomes unlawful in any jurisdiction for a Bank to give effect
to any of its obligations as contemplated by this Agreement or to fund or
maintain its participation in any Advance, then:
(a) the Bank may notify the Company through the Agent accordingly; and
(b) (i) the Company shall forthwith or, if later, by the latest date the
relevant law allows, prepay the participations of that Bank in
all Advances; and
(ii) the Commitment of that Bank shall forthwith be cancelled.
15.2 MITIGATION
Notwithstanding the provisions of Clauses 12 (Taxes), 14 (Increased Costs)
and 15.1 (Illegality), if in relation to a Bank or (as the case may be) the
Agent circumstances arise which would result in:
(a) any deduction, withholding or payment of the nature referred to in
Clause 12 (Taxes); or
(b) any increased cost of the nature referred to in Clause 14 (Increased
Costs); or
(c) a notification under Clause 15.1 (Illegality),
then without in any way limiting, reducing or otherwise qualifying the
rights of such Bank or the Agent, such Bank shall promptly upon becoming
aware of the same notify the Agent thereof (whereupon the Agent shall
promptly notify the Company) and such Bank shall use reasonable endeavours
to transfer its participation in the Facility and its rights under this
Agreement and under the Finance Documents to another financial institution
or Facility Office not affected by the circumstances having the results set
out in (a), (b) or (c) above and shall otherwise take such reasonable steps
as may be open to it to mitigate the effects of such circumstances provided
that such Bank shall not be under any obligation to take any such action
if, in its good faith opinion, to do so would or would be likely to have a
material adverse effect upon its business, operations or financial
condition or would involve it in any unlawful activity or any activity that
is contrary to its policies or any request, guidance or directive of any
competent authority (whether or not having the force of law) or (unless
indemnified to its satisfaction) would involve it in any significant
expense or Tax disadvantage.
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42
16. REPRESENTATIONS AND WARRANTIES
16.1 REPRESENTATIONS AND WARRANTIES
Each Obligor for itself makes the representations and warranties set out in
this Clause 16 to each Finance Party.
16.2 STATUS
(a) It and each Principal Subsidiary is duly incorporated under the laws of the
jurisdiction of its incorporation and has power and is able lawfully to own
its respective property and assets and carry on its respective businesses.
(b) It has power and is able lawfully to execute and deliver each Finance
Document and to exercise its respective rights and perform its respective
obligations under this Agreement and the transactions contemplated hereby
and all corporate or other action required to be taken by it in order to
authorise the execution and delivery by it of each Finance Document and the
performance by it of its respective obligations has been duly taken.
16.3 LEGAL VALIDITY
The Finance Documents to which it is a party constitute its legal, valid
and binding obligations.
16.4 NON-CONTRAVENTION
The execution and delivery by it of the Finance Documents to which it is a
party and the performance by it of its obligations under the Finance
Documents will not:
(a) contravene any provision of any law, statute (including the
Electricity Act), decree, rule, regulation or code of practice to
which it or any of its assets or revenues is subject, or of any order,
judgement, injunction, decree, resolution, determination or award of
any court or any judicial, administrative or Governmental Entity or
organisation having applicability to it or any of its assets or
revenues; or
(b) result in any breach of any of the terms, covenants, conditions or
provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, bond, agreement or other instrument or obligation to
which it is a party or by which it or any of its assets or revenues
may be bound or affected; or
(c) violate any provision of its constitutive documents.
16.5 NO DEFAULT
No Default has occurred which is continuing.
16.6 CONSENTS
All consents, approvals, authorisations, exemptions, registrations and
filings and all acts, conditions and things required to be obtained, done,
fulfilled and performed in order to:
(a) enable it to enter into and exercise its rights and perform its
obligations under each Finance Document to which it is party; and
(b) make the Finance Documents legal, valid and binding and admissible in
evidence in England and Wales,
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43
have been obtained and are in full force and effect or have been done,
fulfilled or performed (as the case may be).
16.7 ACCOUNTS
The Original Group Accounts, and thereafter, the most recent consolidated
audited financial statements of the Group, were prepared in accordance with
the Appropriate Accounting Principles and consistently applied from one
period to the next (except as shown in those financial statements) and give
a true and fair view of the financial condition of the Group, as at the
date as of which the same were prepared.
16.8 NO MATERIAL ADVERSE EFFECT
Since 31 March 1998 there has been no change in the business, assets or
financial condition of itself, or the Group taken as a whole, having a
Material Adverse Effect.
16.9 LITIGATION
No action or proceeding of or before any court, administrative tribunal,
government body or regulatory authority (including, without limitation, the
Competition Commission or the Office of Electricity Regulation) has been
commenced, or (to the best of its knowledge) is threatened against any
member of the Group which, in each case, has a Material Adverse Effect.
16.10 INDEBTEDNESS
Its Indebtedness under the Finance Documents to which it is a party will
rank at least pari passu with all its other unsubordinated and unsecured
Indebtedness with the exception of that which is preferred by operation of
law.
16.11 NO BREACH
No member of the Group is in breach of or default under any agreement to
which it is party or which is binding on it or any of its assets to an
extent or in a manner which has a Material Adverse Effect.
16.12 NO SECURITY INTEREST
No Security Interest exists over all or any of the present or future
revenues or assets of any member of the Group, save for Permitted Security
Interests.
16.13 NO OBLIGATION TO CREATE SECURITY INTEREST
The execution of the Finance Documents and the exercise of its rights and
performance of its obligations thereunder will not result in the existence
of nor oblige it to create any Security Interest over all or any of its
present and future revenues or assets.
16.14 LICENCES
Each Licensee has been duly licensed to conduct its business as presently
conducted, no notice has been given to revoke any Licence and no
modification of or amendment to any of the terms of any Licence has been
made or proposed by the Secretary of State or any other person having a
right to do so which has a Material Adverse Effect.
16.15 NO CONTRAVENTION OF LICENCES
No Licensee is in contravention of any term or condition of its Licence(s)
or any requirement of the Electricity Act or any regulations made
thereunder or any other statutory requirement or any final order or
<PAGE>
44
confirmed provisional order made under the Electricity Act or any
undertaking given by it to the Director General or the Secretary of State
in relation to the conduct of its business as a generator or Public
Electricity Supplier (as detailed in the Electricity Act), which
contravention and/or any consequence thereof has a Material Adverse Effect.
16.16 ELECTRICITY SUPPLY
REC or the relevant Licensee has been duly licensed by the Secretary of
State as the Public Electricity Supplier (as defined in the Electricity
Act) to supply electricity to any premises in the area designated in the
PES Licence and is duly licensed to conduct its business as presently
conducted and the PES Licence is in full force and effect and neither the
Director General nor the Secretary of State has given notice to it to
revoke the PES Licence except in circumstances where a replacement Licence
for the distribution and/or supply of electricity is or is to be granted to
any other member of the Group.
16.17 NO MODIFICATION OF PES LICENCE
No modification or amendment of any of the terms of the PES Licence has
been made or proposed by way of consideration with interested parties by
the Director General or the Secretary of State under Section 11, 14 or 15
of the Electricity Act or in accordance with the conditions set out in the
PES Licence or otherwise which has a Material Adverse Effect.
16.18 NO VARIATION OF AUTHORISED AREA
No variation of the authorised area in respect of which the PES Licence has
been granted has been made under Section 6(1)(c) of the Electricity Act
which has a Material Adverse Effect.
16.19 ENVIRONMENTAL LAW
There has been no non-compliance by any member of the Group with any
applicable environmental or safety law applicable to it which has a
Material Adverse Effect.
16.20 INFORMATION MEMORANDUM
(a) The factual information relating to the Group contained in the Information
Memorandum was true in all material respects as at its date;
(b) the Information Memorandum did not omit as at its date any information
which is necessary to make the statements therein not misleading in a
material respect;
(c) as at the date of this Agreement, nothing has occurred since the date of
the Information Memorandum which renders the information contained in it
untrue or misleading in any material respect; and
(d) the opinions expressed in the Information Memorandum are honestly held and
have been provided in good faith and after reasonable enquiry.
16.21 NO DISPUTE
There is no dispute subsisting between any Obligor and any other party to
any of the Finance Documents and no material amendments have been made to
any of the Finance Documents without the consent of the Agent.
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45
16.22 WHOLLY-OWNED SUBSIDIARY
Each of REC, TXU Europe Group plc and each Guarantor, if any, is a
wholly-owned subsidiary of Finco 2.
16.23 TIMES FOR MAKING REPRESENTATIONS AND WARRANTIES The representations and
warranties set out in this Clause 16:
(a) are made by each Obligor on the Signing Date; and
(b) are deemed to be repeated by each Obligor on the date of delivery of
each Request, each Drawdown Date and the first day of each Interest
Period with reference to the facts and circumstances then existing
(other than in the case of any representation and warranty as to the
Group's audited financial statements where such representation and
warranty shall be read and construed as referring to the Group's then
most recent audited financial statements, including notes to such
statements) save that the following representations shall not be
repeated: Clauses 16.5 (No default), 16.8 (No Material Adverse
Effect), 16.9 (Litigation), 16.12 (No Security Interest,) 16.13 (No
obligation to create Security Interest), and 16.20 (Information
Memorandum) 16.21 (No dispute).
16.24 OBLIGORS' ACKNOWLEDGEMENT
Each of the Obligors acknowledges that the Finance Parties are relying on
the representations and warranties but not on any other information
contradictory to them or varying them of which the Finance Parties or any
of them or their respective agents or advisers may have actual or
constructive knowledge.
17. INFORMATION UNDERTAKINGS
17.1 UNDERTAKINGS
Each of the Obligors (for itself) or as applicable the specified Obligor
gives the undertakings in this Clause 17 and Clause 18 (General
Undertakings) to each Finance Party (such undertakings to remain in force
throughout the Finance Period).
17.2 PREPARATION OF FINANCIAL STATEMENTS
The Company will:
(A) ANNUAL AUDITED FINANCIAL STATEMENTS: beginning with the financial year
ending 31st December 1998, prepare financial statements (which shall
in any event include a balance sheet, profit and loss account,
statement of total recognised gains and losses, cash flow statement,
and notes to such statements) in respect of:
(i) itself and consolidated financial statements in respect of the
Group; and
(ii) consolidated financial statements of Finco 2;
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46
in accordance with the Appropriate Accounting Principles
(consistently applied) in respect of each financial year and cause
the same to be reported on by the Auditors; and
(B) QUARTERLY FINANCIAL STATEMENTS: prepare:
(i) unaudited consolidated financial statements (which shall in any
event include a balance sheet, profit and loss account and cash
flow statement) of the Group; and
(ii) consolidated financial statements (which shall in any event
include a balance sheet, profit and loss account and cash flow
statement) of Finco 2 (together with (aa) a pro forma
consolidation of the balance sheet of Finco 2 with the balance
sheets of those Subsidiaries of the Company which are not Finco 2
or its Subsidiaries and (bb) a notification setting out any
changes in the identity of the Principal Subsidiaries (or, if
there are no changes, so stating),
in respect of each Quarter in each financial year (on a cumulative
basis for each financial year) in accordance with the Appropriate
Accounting Principles (consistently applied) in a form reasonably
agreed with the Agent.
17.3 DELIVERY OF FINANCIAL STATEMENTS
The Company will deliver, or will procure delivery, to the Agent sufficient
copies for all the Banks of each of the following documents:
(A) ANNUAL AUDITED FINANCIAL STATEMENTS: (i) within fifteen days of issue
thereof to the shareholders of the Company and Finco 2, but in any
event not later than 180 days after the end of the financial year to
which they relate, the audited financial statements referred to in
Clause 17.2(a) (Annual audited financial statements) for each
financial year together, in each case, with the report of the Auditors
thereon, the notes thereto, the directors' report thereon and the
certificate referred to in Clause 17.3(c) (Compliance with Financial
Undertakings) and (ii), in respect of the Parent, its annual accounts
most recently filed with the US Securities and Exchange Commission;
(B) UNAUDITED MANAGEMENT ACCOUNTS: (i) within 60 days after the end of
each Quarter in each financial year, the financial statements and
notification referred to in Clause 17.2(b) (Quarterly financial
statements)) in respect of such Quarter prepared in accordance with
the requirements of Clause 17.2(b) (Quarterly financial statements)
together with (in relation to the Quarter ending December 1998 and
thereafter) the certificate referred to in Clause 17.3(c) (Compliance
with Financial Undertakings) and, (ii) in the case of the Parent, its
quarterly accounts most recently filed with the US Securities and
Exchange Commission from time to time;
(C) COMPLIANCE WITH FINANCIAL UNDERTAKINGS: with each set of accounts
delivered by it under Clauses 17.3(a) (Annual audited financial
statements) and (b) (Unaudited management accounts) above the Company
will deliver to the Agent a certificate signed by a director of the
Company:
(i) confirming compliance or otherwise with the financial
undertakings in Clause 18.1 (Financial ratios) as at the end of
the relevant Test Period; and
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47
(ii) setting out in reasonable detail and in a form satisfactory to
the Agent the computations (including for the purpose of the
Leverage Ratio a detailed statement of the calculation of
Adjusted Share Capital and Reserves and Consolidated Net
Borrowings) necessary to demonstrate such compliance or
otherwise.
The Agent may from time to time request a further director's
certificate setting out in reasonable detail the calculation of the
Leverage Ratio (including a detailed statement of the calculation of
Adjusted Share Capital and Reserves and Consolidated Net Borrowings)
if the Agent is requested to do so by the Majority Banks or if, acting
reasonably, the Agent determines that the amount of Adjusted Share
Capital and Reserves and Consolidated Net Borrowings may have changed
materially since the date as at which the last compliance certificate
was prepared. The Company shall provide such a certificate within ten
Business Days of any such request.
(D) PES REGULATORY ACCOUNTS: as soon as practicable after their issue to
the relevant Government Entity or regulator, all accounts and other
financial statements or financial information required under any law
or regulation to be provided to any Government Entity, industry
regulator or similar body or person and which are thereby placed in
the public domain;
(E) REPORTS AND NOTICES TO SHAREHOLDERS AND CREDITORS: as soon as
practicable after the issue thereof every report, circular, notice or
like document issued by the Company, Finco 2 and/or Bidco to its
shareholders or creditors generally and every notice convening a
meeting of its shareholders or any class of its shareholders; and
(F) FURTHER INFORMATION: promptly upon request, such further information
concerning the financial position of the Group (or any member of it)
as the Agent shall reasonably require.
17.4 NOTICE OF DEFAULT
Each Obligor will inform the Agent promptly upon becoming aware of the
occurrence of any material Default or any actual Event of Default and, upon
receipt of a request to that effect from the Agent, confirm to the Agent
and the Banks that, save as previously notified to the Agent or as notified
in such confirmation, no Default has occurred which is continuing.
17.5 NOTICE OF LITIGATION
Each Obligor will, upon becoming aware that the same is threatened or
pending and in any case promptly after the commencement thereof, give to
the Agent notice in writing of any litigation, alternative dispute
resolution, arbitration or administrative proceedings or any dispute
affecting any member of the Group or any of their respective assets, rights
or revenues which if determined against it could reasonably be expected to
result in a liability (including costs) of more than (pound)10,000,000 or
otherwise have a Material Adverse Effect.
18. GENERAL UNDERTAKINGS
18.1 FINANCIAL RATIOS
The Company will procure that, throughout the Finance Period:
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48
(a) for each Test Period, the ratio of EBITDA to Net Interest Costs is not
less than 2:1;
(b) at all times the Leverage Ratio is not more than 70% although the
Leverage Ratio shall be tested only by reference to the compliance
certificate provided quarterly with the unaudited management accounts
unless the Agent shall at any time exercise the right to request a
further certificate in accordance with Clause 17.3(c) (Compliance with
Financial Undertakings).
18.2 CHANGE OF ACCOUNTING POLICIES
(a) The Company and the Agent hereby undertake that, in the event that:
(i) there is, or the Company intends to make, a change in the manner in
which the financial statements in Clause 17.2 (Preparation of
financial statements) are prepared or in the accounting principles or
standards applied in the preparation of those financial statements
(including without limitation a change from UK GAAP to US GAAP); and
(ii) such change affects the amounts utilised for the purposes of
determining whether or not an Obligor has complied with the covenants
contained in Clause 18.1 (Financial ratios);
they will either (aa) renegotiate each of the covenants affected by such
change with a view to putting in place covenants that fairly reflect that
change or, (bb) where the change in the manner in which the financial
statements are prepared is a change from the accounting principles at the
Signing Date to US GAAP, the Company shall, if requested by the Agent,
supply to the Agent: (A) a description of any change necessary for those
financial statements to reflect the accounting principles at the Signing
Date; and (B) sufficient information to enable the Finance Parties to
determine whether Clause 18.1 (Financial ratios) has been complied with and
make an accurate comparison between the financial position shown by the set
of financial statements prepared on the changed basis and the most recent
financial statements delivered to the Agent under this Agreement.
(b) If negotiations referred to in paragraph (a) (aa) above are not concluded
to the reasonable satisfaction of the Agent within a period of 30 days from
the commencement of such negotiations the Company agrees that it will
procure (at the expense of the Company) that the Auditors provide financial
statements reflecting the Appropriate Accounting Principles, and any
reference in this Agreement to financial statements under this Agreement
shall be construed as a reference to such financial statements as adjusted
to reflect the Appropriate Accounting Principles.
(c) If the ratio of EBITDA to Net Interest Costs under Clause 18.1(a) above is
less than 2:1 due to the payment or proper accrual of any exceptional,
special or windfall tax or levy, then, notwithstanding the provisions of
Clause 19 (Events of Default), no Event of Default shall occur as a result
thereof except:
(i) the Company and the Agent (acting in accordance with the
instructions of the Majority Banks) shall consult for a period
not exceeding 30 days with a view to agreeing a revised basis for
calculation of the ratio or a revised ratio; and
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49
(ii) the failure to agree a basis for such calculation or a revised
ratio by the end of that 30-day period shall constitute an Event
of Default under Clause 19.1(b) (Breach of other obligations)
which, for the purposes of that Clause, shall not be capable of
remedy.
18.3 AUTHORISATIONS
Each Obligor shall obtain and comply with and do all that is necessary to
maintain in full force and effect all consents, authorisations, approvals
and licences required by law or regulation to enable it to enter into and
perform its obligations under the Finance Documents to which it is a party
or to ensure their legality, validity or admissibility in evidence.
18.4 DISPOSALS
(a) No Obligor shall, and the Company will procure that no other member of the
Group will, (either in a single transaction or in a series of transactions,
whether related or not) sell, convey, transfer or otherwise dispose of:
(i) any shares in Finco 2, Bidco, The Energy Group Limited or any
Principal Subsidiary;
(ii) any loans to or other claims on any Principal Subsidiary;
(iii) the whole or a substantial part of the undertaking or assets of (i)
the Distribution Business or (ii) the Generation Business as a whole;
or
(iv) any other significant assets.
(b) The restrictions will not apply:
(i) with respect to paragraph (a)(iii) above, to (A) the expenditure or
application of cash, or (B) any disposal in the ordinary course of
business (including by way of securitisation) or (C) any disposal
where the net book value of the assets disposed of, when aggregated
with the net book value of any other assets forming part of the
Distribution Business or (as the case may be) the Generation Business
disposed of otherwise than in the ordinary course of operating the
respective businesses in the same financial year of the Group, does
not exceed 10 per cent. of the Adjusted Share Capital and Reserves at
the end of the previous financial year;
(ii) to a disposal made by any member of the Group to another member of the
Group; or
(iii) with respect to paragraph (a)(iv) above, to any disposal on arm's
length terms (including by way of securitisation); or
(iv) to any sale, conveyance, transfer or other disposal with respect to
the King's Lynn generating facility which otherwise would infringe
sub-Clause (iii) above provided none of the parties to any such
transaction is a Relevant Person or Project Finance Subsidiary.
18.5 NEGATIVE PLEDGE
No Obligor shall, and the Company will procure that none of its
Subsidiaries shall:
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50
(a) create or permit to subsist any Security Interests (other than
Permitted Security Interests) upon the whole or any part of its
present or future revenues or assets; or
(b) sell, transfer or otherwise dispose of any of its assets on terms
whereby it is or may be leased to or re-acquired by a member of the
Group or any of its Associated Companies; or
(c) sell, transfer or otherwise dispose of any of its receivables on
recourse terms (save for recourse for disputed or ineligible debts or
similar rights of recourse) except for the discounting of bills or
notes in the ordinary course of trading,
in circumstances where the transaction is entered into primarily as a
method of raising finance or of financing the acquisition of an asset,
unless the aggregate disposal proceeds of all such transactions during any
Accounting Reference Period is less than (pound)50,000,000, provided that
the restriction in Clause 18.5(b) above shall not apply to any sale,
transfer or other disposal and leaseback or re-acquisition with respect to
the King's Lynn generating facility for so long as none of the parties to
any such transaction is a Relevant Person or Project Finance Subsidiary.
18.6 PARI PASSU INDEBTEDNESS
Each Obligor shall ensure that its Indebtedness under the Finance Documents
to which it is a party will rank at least pari passu with all its other
unsubordinated and unsecured Indebtedness with the exception of that
preferred by operation of law.
18.7 GUARANTEES AND DISTRIBUTIONS
No Obligor shall, and the Company will procure that none of its
Subsidiaries shall:
(a) give any guarantee, indemnity or other legally binding assurance
against loss to any person (other than a member of the Group) in
respect of the obligations of any Relevant Person other than any
guarantee issued by the Company or an SPV in connection with
Equity-Credit Preferred Securities
(b) enter into any transaction under which (or do anything as a result of
or by which) cash or other assets are transferred by or from it to any
Relevant Person;
provided that this Clause 18.7 shall not prohibit:
(i) provided that no Default is outstanding or would result from the
dividend, distribution or provision, the declaration, payment or
making of any lawful dividends or other distributions or the
provision of loans, deposits or other credit but excluding
guarantees or indemnities entered into in favour of or in respect
of the indebtedness of any Relevant Person or distributions as a
result of any reduction in share capital; or
(ii) anything done under a transaction entered into on terms no more
onerous to the relevant member of the Group than a transaction
entered into on an arm's length basis on normal commercial terms.
18.8 LICENSEES
(a) In so far as is necessary to prevent a Material Adverse Effect, each
Obligor shall take, and procure that each Licensee takes, all appropriate
steps efficiently to perform and discharge its duties and functions in
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51
accordance with the provisions of the Electricity Act, the terms and
conditions of the relevant Licence, the provisions of any final order or
confirmed provisional order made under the Electricity Act and all
undertakings (if any) given by a Licensee to the Director General and/or
the Secretary of State in respect of the matters referred to in Section
25(5) of the Electricity Act.
(b) The Company shall promptly inform the Agent of any material undertaking
given by any member of the Group to the Director General and/or the
Secretary of State.
(c) The Company shall, forthwith upon receipt of the same, deliver to the Agent
in sufficient copies for the Banks, copies of all notices or orders served
on any member of the Group by the Director General or the Secretary of
State in exercise of the powers conferred on him by the Electricity Act and
keep the Agent informed of any references to the Competition Commission or
the exercise or purported exercise by the Secretary of State or the
Director General of the powers conferred on him by the Fair Trading Act
1973, the Competition Act 1980 and/or Section 12 of the Electricity Act.
(d) The Company shall procure that the relevant Licensee will not consent to
any revocation of the PES Licence (except where a public electricity supply
licence is granted to a member of the Group in its place) or to any
material modification or amendment to or restriction in the terms and
conditions of the PES Licence if such revocation, modification, amendment
or restriction ought to have a Material Adverse Effect.
(e) The Company shall ensure at all times that the Licensee under the PES
Licence has sufficient working capital to finance the performance and
discharge of its duties as a Public Electricity Supplier in accordance with
the provisions of the Electricity Act and the terms and conditions of the
PES Licence.
18.9 NO OUTSTANDING LOANS
The Company shall procure that (except for investments constituting Liquid
Assets) no Licensee will have outstanding at any one time any loans to
(other than deposits with, or investments in debt instruments of, any
institution authorised under the Banking Act 1987, or the Building
Societies Act 1986 or any European Authorised Institution as defined in the
Banking Act 1987) or investments in any person other than a member of the
Group in excess of an aggregate of (pound)5 million.
18.10 ENVIRONMENTAL AND SAFETY LAWS
Each Obligor shall, and the Company shall procure that each other member of
the Group will, comply with any environmental or safety laws applicable to
it where failure to do so has a Material Adverse Effect.
18.11 INSURANCE
Each Obligor shall, and the Company shall procure that each member of the
Group will have insurance and maintain insurance in respect of property
damage, third party liability and such other risks in respect of its
business and assets is in accordance with good industry practice.
18.12 GENERATION BUSINESS
The Company shall procure that any Licensee from time to time licensed to
carry on the whole or part of the Generation Business will not consent to
any revocation of the relevant Generation Licence (except where a
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52
Generation Licence is granted to a member of the Group in its place or the
same arises in respect of a disposal permitted under Clause 18.4
(Disposals)) or to any material modification or amendment to or restriction
in the terms and conditions of such Generation Licence if such revocation,
modification, amendment or restriction might reasonably be expected to have
a Material Adverse Effect.
18.13 BUSINESS OF REC
Each Obligor shall procure that the REC will not enter into or engage in
any business or activity other than the Supply Business, a Second-Tier
Supply Business or the Distribution Business or the business of a holding
company of the company carrying on any such business, other than any
business or activity the aggregate turnover of which does not in any
financial year exceed five per cent. of the aggregate turnover of the
Supply Business, the Second-Tier Supply Businesses and the Distribution
Business (excluding the turnover on transactions which the Supply Business,
any of the Second-Tier Supply Businesses and/or the Distribution Business
made with each other) in the immediately preceding financial year.
18.14 CHANGE IN BUSINESS
No Obligor shall, and the Company will procure that no other member of the
Group shall, carry on any business other than those which are usual for
energy companies and electricity companies (including, without limitation,
electricity distribution, supply and generation and energy trading and
business activities related to the gas, telecommunications and water
industries) in Europe or the business of a holding company of any company
carrying on any such business. Provided that the limitation of business
activities contained in this Clause 18.14 will not apply to any other
business activities carried on by members of the Group as long as such
other business activities do not in aggregate account for more than 10% of
the consolidated gross assets or consolidated gross revenues of the Group
(as calculated in accordance with the Appropriate Accounting Principles).
18.15 FUNCTIONS OF THE COMPANY
(a) The Company shall not carry on any business other than being the holding
company of the Group (and any Project Finance Subsidiaries) and anything
ancillary to any of the other matters described in this Clause 18.15.
(b) The Company shall not own any material assets other than (i) any Liquid
Assets held by it from time to time, (ii) its shareholding in Finco 2, (ii)
its direct or indirect interest in all persons ("EQUITY SPVS") issuing or
guaranteeing Equity-Credit Preferred Securities and all intermediate
undertakings through which it holds its interest in Equity SPVs, (iii) its
direct or indirect interest in all SPVs and all intermediate undertakings
through which it holds its interest in SPVs (provided always that, in
respect of (ii) and (iii) above each such intermediate undertaking's sole
purpose is to hold directly or indirectly an interest in an SPV or an
Equity SPV and, if applicable, act as a conduit as between the SPV or
Equity SPV and the Company for any sums lent or arising or investments made
in connection with the SPVs and Equity SPVs, issue or issues of capital
market instruments or other securities), and (iv) Indebtedness due to the
Company.
(c) The Company shall not incur any liabilities (whether or not in connection
with Borrowed Money) other than:
(i) as a result of borrowing under this Agreement or the Multi-option
Facilities Agreement or liabilities otherwise incurred in connection
with this Agreement, the Multi-option Facilities Agreement or the
Original Facilities Agreement, or as a result of borrowing (subject,
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53
in the case of any proposed Borrowed Money from Finco 2 or Bidco, to
Clause 18.18 (Indebtedness of Finco 2 to the Company) and of Bidco to
Finco 2)) from other members of the Group or other persons (provided
that each amount borrowed other than borrowings not
exceeding(pound)30,000,000, is on-lent to Finco 2), or liabilities
incurred in connection with the Acquisition; or
(ii) incurred as a result of the Company's existence and administrative
operation in accordance with the terms of this Agreement, including,
without limitation, audit and legal fees, taxation and other expenses
incurred by it in acting as contemplated by this Agreement; or
(iii) under any guarantee, indemnity or similar instrument in respect of
Borrowed Money incurred by: (aa) a member of the Group which is, and
for so long as such guarantee, indemnity or similar instrument is
outstanding, remains, a holding company of the REC, or (bb) an SPV; or
(iv) under any guarantee, undertaking, performance bond or similar
instrument or obligation, not being in respect of Borrowed Money, in
respect of the liabilities and/or obligations of members of the Group;
or
(v) under any guarantee given by the Company in replacement of, or in
respect of the same obligations as are guaranteed under, certain
guarantees given by Energy Holdings (No. 3) Limited (formerly The
Energy Group PLC) on or prior to 22 October 1998 in respect of the
obligations of former direct and indirect Subsidiaries of Energy
Holdings (No. 3) Limited.
(vi) under any guarantee of or in connection with any Equity-Credit
Preferred Securities.
18.16 DERIVATIVE TRANSACTIONS
No Obligor shall, and the Company will procure that no other member of the
Group shall, enter into any Derivatives Transaction other than:
(a) in connection with the management of foreign currency or interest rate
exposures likely to be incurred in the conduct of the Group's business
or that of any Project Finance Subsidiary, and/or
(b) any contracts where the exposure is principally related to the future
generation, availability, supply, distribution or pricing of fuel,
power or energy, or other energy-related risks.
18.17 PROJECT FINANCE SUBSIDIARIES
All transactions and arrangements between the Group on the one hand and
Project Finance Subsidiaries (or members of the Group who incur Project
Finance Borrowings falling within paragraph (c) of the definition of
Project Finance Borrowings but only in connection with the Project to
which such Project Finance Borrowing directly relates) on the other shall
be (a) on arm's length terms, and (b) to the extent that they involve
liability of, or recourse to the Group in respect of Indebtedness to
finance or refinance, or in respect of the financing or refinancing of, a
Project, such liability or recourse shall be limited to the degree of
recourse described in paragraph (c) of the definition of "Project Finance
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54
Borrowings" unless the Company shall promptly on the occurrence of such
liability or right of recourse notify the Agent that the relevant Project
Finance Borrowing which is the subject of such liability or right of
recourse shall have ceased or shall thereupon cease to be a Project
Finance Borrowing, attaching a detailed re-calculation of the Leverage
Ratio showing the effect of such re-designation.
18.18 INDEBTEDNESS OF FINCO 2 TO THE COMPANY
The Company will procure that:
(a) Finco 2 will not repay, forgive or novate nor shall the Company accept
the repayment or novation of amounts outstanding from Finco 2 to the
Company if and to the extent that such repayment, novation or
forgiveness of any indebtedness from time to time due from Finco 2 to
the Company (after application of the proceeds of such repayment,
forgiveness or novation by the Company) would result (and shall ensure
that it does not subsequently result) in the net amount owing
(including any accrued interest) by Finco 2 to the Company falling
short of the aggregate of the Advances and all other Borrowed Money of
the Company by more than(pound)30,000,000 (without double counting
where Borrowed Money guaranteed by the Company is also lent to it)
(including in each case any accrued interest) unless the Company shall
immediately repay an equivalent amount of the Advances (but only to
the extent that the Company has not immediately repaid an equivalent
amount under the Multi-option Facilities Agreement).
(b) If no amount is due, owing or incurred by the Company under the
Facility none of the restrictions in this Clause 18.18 shall apply
until and unless the Company shall draw any Advance and for so long as
any such Advance is outstanding.
(c) Any amount which purports to be lent from Finco 2 to the Company shall
for the purpose of this Clause be deemed to be applied in repayment of
any existing indebtedness due from Finco 2 to the Company at the
relevant time and the provisions of this Clause shall therefore apply
to the lending of any such amount exactly as if it had been a
repayment of debt.
(d) Any amount lent down by the Company to Finco 2 which represents the
on-lending of Borrowed Monies incurred or guaranteed by the Company
(the "Connected Borrowing") shall bear a rate of interest at least
equal to that applicable to the Connected Borrowing from time to time.
(e) The Company shall procure that each loan owing from The Energy Group
Limited to Energy Group Overseas B.V. ("EGO B.V."), which originally
came into being as a result of the on lending through the Group of the
proceeds of the issuance by EGO B.V. of $500,000,000 aggregate
principal amount of unsecured debt securities ("Yankee Bonds") in
October 1997 carries a rate of interest at least equal to that of the
respective series of the Yankee Bonds and is not discharged, novated
or assigned in any way which would either:
(i) cause the ultimate obligor to be a company which is not a holding
company of the REC; or
(ii) cause the ultimate beneficiary of the series of related
indebtedness to be a person other than the Group Company which is
the obligor under the Yankee Bonds.
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55
18.19 RANKING OF BOND ISSUER
(a) Where the Company issues a guarantee of the obligations of an SPV in
respect of a raising of Borrowed Money by that SPV the amount raised by
such SPV shall be on-lent to the Company on terms that the obligations of
the Company in respect of repayment of that loan are expressly subordinated
to the claims of all other unsecured and unsubordinated creditors of the
Company in the event of the insolvency of the Company or such loan is made
on such terms as are, in the opinion of the Agent (acting reasonably),
effective to provide that the creditors of the SPV under the relevant
capital market instrument will not (after taking account of the possibility
of the SPV making an intra-group claim against the Company, in addition to
the claim of the creditors of such SPV under the Company's guarantee)
become entitled to a claim against the Company that ranks better than pari
passu with the claims of the Finance Parties under the Finance Documents on
a liquidation of the Company.
(b) Where the SPV is an unlimited company (or any other entity whose immediate
owner would have unlimited liability for that entity's liabilities and
obligations), the Company shall hold its interest in the SPV indirectly, by
virtue of the Company being the holder of the issued share capital of one
or more private limited companies (or any other entities whose immediate
owner would have limited liability (by reference only to unpaid share
capital or a similar concept) for that entity's liabilities or obligations)
which is the direct or indirect owner of such SPV.
(c) The Company shall ensure that no Group Company other than the Company or
any holding company of the relevant SPV shall:
(i) transfer cash or assets to an SPV or holding company of an SPV; or
(ii) give any guarantee, indemnity or other assurance for the obligations
of an SPV or holding company of an SPV, unless the Facility shall
simultaneously be equally and rateably secured by a guarantee from the
same Group Company.
(d) The Company shall not and shall ensure that no holding company of the
relevant SPV shall:
(i) transfer cash or assets to an SPV or holding company of an SPV save
only to the extent required to service interest, principal and/or
premium payable under capital markets instruments issued by the SPV or
as the Company may be required to pay under the terms of any loan
between the SPV and the Company made under Clause 18.19(a) above or as
may be required initially to capitalise an SPV in accordance with
professional advice received or to meet liabilities of such SPV
arising from its existence and administration operation in accordance
with the terms of this Agreement including audit and legal fees,
taxation and other expenses incurred by it; or
(ii) give any guarantee, indemnity or other assurance for the Borrowed
Money of an SPV or holding company of an SPV, unless the Facility
shall simultaneously be equally and rateably secured by a guarantee
from the same Group Company (save for any guarantee given by the
Company under Clause 18.19(a)above)
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56
18.20 ADDITIONAL GUARANTORS
The Company shall ensure that, if after the signing of this Agreement, any
member of the Group or any Relevant Person gives any guarantee of any
Indebtedness of an Obligor in respect of Borrowed Money, that person shall
simultaneously become a Guarantor under this Agreement in accordance with
Clause 27.6 (Guarantors).
18.21 EQUITY-CREDITPREFERRED SECURITIES
Nothing in this Agreement shall prevent, and this Agreement shall not be
breached by, the issuance of Equity-CreditPreferred Securities or the
incurring by any member of the Group of guarantees thereof complying with
paragraph (iv) of the definition thereof.
18.22 RESTRICTIONS RELATED TO EXCESS EQUITY FUNDING
Any Borrowed Money which is raised with a view to repaying, or is used to
repay, all or part of the Excess Equity Funding, or which is raised to
refinance any Indebtedness which was incurred for that purpose or so used,
shall rank pari passu with the Facility, and shall be raised by the Company
or by an SPV guaranteed by the Company, and not by any other member of the
Group.
19. EVENTS OF DEFAULT
19.1 EVENTS OF DEFAULT
Each of the events set out below is an Event of Default (whether or not
caused by any reason whatsoever outside the control of any Relevant Company
(or any other person)) namely if:
(A) NON-PAYMENT: any Obligor fails to pay any sum due from it under any of
the Finance Documents on its due date in the manner stipulated in the
relevant Finance Document (or within three Business Days of the due
date if the delay is caused by technical difficulties or
administrative error in the transfer of funds); or
(B) BREACH OF OTHER OBLIGATIONS: any Obligor commits any breach of or
omits to observe any of the obligations or undertakings expressed to
be assumed by it under any of the Finance Documents (other than any
such obligations referred to in Clause 19.1(a) (Non-payment) and in
respect of any such breach or omission which, in the reasonable
opinion of the Majority Banks, is capable of remedy, such action as
shall remedy the same to the reasonable satisfaction of the Majority
Banks shall not have been taken within 21 days of the relevant Obligor
becoming aware of such default; or
(C) MISREPRESENTATION: any representation, warranty or statement made or
deemed to be made or repeated by or on behalf of any Obligor in, or in
connection with, any of the Finance Documents or in any notice,
accounts, certificate or statement referred to in or delivered under
any of the Finance Documents is or proves to have been incorrect or
misleading and if capable of being remedied, in the reasonable opinion
of the Majority Banks, is not remedied to the reasonable satisfaction
of the Majority Banks 21 days after the date on which the relevant
Group Company becomes aware of such misrepresentation; or
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(D) CROSS-DEFAULT:
(i) any Borrowed Money of a member of the Group is not paid when due
or within any originally stated applicable grace period; or
(ii) (by reason of an event of default or default howsoever described)
any Borrowed Money of a member of the Group is declared or
becomes capable of being declared to be or otherwise becomes due
and payable prior to its specified maturity; or
(iii)any Borrowed Money of a member of the Group which is repayable on
demand is not repaid on demand being made,
in circumstances where, in all or any of the above paragraphs, the
Borrowed Money amounts in aggregate at any one time to more than
(pound)20,000,000 or, if higher, an amount of 2% of Adjusted Share
Capital and Reserves or its equivalent in other currencies, unless the
alleged default is being disputed in good faith and the Company has
shown to the Agent's satisfaction (acting reasonably) that it has
adequate cash resources to pay that Borrowed Money and its other debts
as they fall due; or
(E) LEGAL PROCESS: (without prejudice to any other provision of this
Agreement) any final judgment or order in an amount exceeding
(pound)2,000,000 (or its equivalent in other currencies) made against
any Relevant Company is not stayed or complied with or paid within 28
days (or in the case of payments, when due (if later)) or a creditor
attaches or takes possession of, or a distress, execution,
sequestration or other process is levied or enforced upon or sued out
against, any part of the undertakings, assets, rights or revenues of
any Relevant Company with a book value or market value in excess
of(pound)2,000,000 and is not discharged or stayed within 14 days; or
(F) INSOLVENCY: any Relevant Company:
(i) is deemed unable to pay its debts in accordance with Section
123(1)(a), (b) or (e) or (2) of the Insolvency Act 1986 unless,
in the case of Section 123(1)(a) only, a statutory notice has
been withdrawn, stayed or dismissed within 14 days; or
(ii) is unable generally to pay its debts as they fall due; or
(G) ADMINISTRATION:
(i) any meeting of the directors of any Relevant Company is convened
for the purpose of considering any resolution to present an
application for an administration order; or
(ii) a petition for an administration order in relation to any
Relevant Company is presented to the court or an administration
order is sought of the court on the basis of an undertaking to
subsequently present a petition which, if in either case it is
being contested by the Relevant Company in good faith with
appropriate proceedings diligently pursued, is not discharged
within 21 days; or
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(iii)any Relevant Company passes a resolution to present an
application for an administration order; or
(iv) an administration order is made in relation to any Relevant
Company; or
(H) COMPOSITIONS ETC: any steps are taken, or negotiations commenced, by
any Relevant Company or by its creditors generally with a view to
proposing any kind of composition, scheme of arrangement, compromise
or arrangement, in each case involving such company and its creditors
generally; or
(I) APPOINTMENT OF RECEIVERS AND MANAGERS:
(i) any administrative or other receiver or any manager is appointed
of any Relevant Company or any material part of its assets and/or
undertaking; or
(ii) the directors of any Relevant Company request any person to
appoint such a receiver or manager; or
(iii)any other steps are taken to enforce any Security Interest over
all or any material part of the assets and/or undertakings of any
Relevant Company; or
(J) WINDING UP:
(i) any meeting of any Relevant Company is convened for the purpose
of considering any resolution for (or to petition for) its
winding up; or
(ii) any Relevant Company passes such a resolution; or
(iii)any person presents any petition for the winding up of any
Relevant Company (not being a petition which the Company can
demonstrate to the satisfaction of the Agent is frivolous
vexatious or an abuse of the process of the court) which is not
dismissed or discharged within 14 days of service thereof; or
(iv) an order for the winding up of any Relevant Company is made, not
(in any case) being a winding-up of a Subsidiary of the Company
involving an amalgamation or reorganisation on a solvent basis
which has been approved in advance by the Agent (acting
reasonably); or
(K) DISSOLUTION: any corporate, legal or administrative proceedings are
commenced by any person (including, without limitation, the Registrar
of Companies) with a view to the dissolution of any Relevant Company,
not being a dissolution involving an amalgamation or reorganisation on
a solvent basis which has been approved in advance by the Agent
(acting reasonably); or
(L) ANALOGOUS PROCEEDINGS: there occurs, in relation to any Relevant
Company, in any country or territory in which it carries on business
or to the jurisdiction of whose courts any part of its assets is
subject, any event which, in the reasonable opinion of the Majority
Banks, appears in that country or territory corresponds with, or has
an effect equivalent to, any of those mentioned in Clauses 19.1(e)
(Legal process) to (j) (Dissolution) (inclusive) or any Relevant
Company otherwise becomes subject, in any such country or territory,
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59
to a legal procedure under of any law relating to insolvency,
bankruptcy or liquidation; or
(M) CESSATION OF BUSINESS: other than in relation to a disposal permitted
under this Agreement, any Relevant Company suspends or ceases or
threatens to suspend or cease to carry on its business unless another
member of the Group carries on such business in its place; or
(N) CHANGE OF CONTROL:
(i) Bidco ceases to be a wholly-owned subsidiary (as that term is
used in section 736 of the Act) of Finco 2; or
(ii) Finco 2 ceases to be a wholly-owned direct or indirect Subsidiary
of the Parent (other than as permitted by paragraph (iii) below)
and at least a 90% owned direct subsidiary of the Company; or
(iii)less than 50% plus one share of the equity share capital of the
Company is held by the Parent (directly or indirectly) at any
time; or
(iv) The Energy Group Limited (company no. 3613919) ceases to be a
wholly-owned Subsidiary of Bidco; or
(v) REC or any other Licensee ceases to be a wholly-owned Subsidiary
of the Company; or
(vi) there is a Change in Control of the Parent; or
(O) DISTRIBUTION BUSINESS/GENERATION BUSINESS:
(i) the Group ceases, or threatens to cease, to carry on the
Distribution Business or the Generation Business as a whole;
(ii) all or a majority of the issued shares of any Licensee or any
other Relevant Company or the whole or any material part of the
assets or revenues of (aa) the Distribution Business or (bb) the
Generation Business (taken as a whole) are seized, nationalised,
expropriated or compulsorily acquired by or under the authority
of a Government Entity;
(iii)any change is made in the statutory or regulatory requirements
applicable to the Distribution Business or the Generation
Business or any new statutory or regulatory requirements are
imposed on it which would be reasonably likely to have a Material
Adverse Effect; or
(P) LICENCES:
(i) the Secretary of State or any other person with the ability to do
so gives notice in writing of the revocation of a Licence for any
reason or a Licence ceases to be in full force and effect in any
material respect except where a similar licence is or licences
are granted to a member of the Group in its place;
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(ii) without prejudice to paragraph (i) above, any legislation
(whether primary or subordinate) with regard to the creditors of
Licensees or the ability of Licensees to raise finance under a
Licence or with regard to generators or electricity or public
electricity suppliers generally is enacted and that enactment
would be reasonably likely to have a Material Adverse Effect;
(iii)any amendment is made to the terms and conditions of a Licence
and the amendment would be reasonably likely to have a Material
Adverse Effect; or
(Q) ELECTRICITY ACT:
(i) any of the provisions of the Electricity Act (or any subordinate
legislation) detailing the rights, powers, authorities,
obligations and duties of the Secretary of State or the Director
General, or the manner in or time at which they are to be
exercised, are repealed, amended or introduced in a manner which
would be reasonably likely (in the opinion of the Majority Banks)
to have a Material Adverse Effect; or
(ii) the relevant licensee fails to comply with a final order (within
the meaning of section 25 of the Electricity Act) or with a
provisional order (within the meaning of that section) which has
been confirmed under that section and in either case which has
not been revoked under that section or the validity of which has
not been questioned under section 27 of the Electricity Act, if
such failure to comply would be reasonably likely to have a
Material Adverse Effect; or
(R) POOLING AND SETTLEMENT AGREEMENT: REC or any other member of the Group
ceases to be a party to the Pooling and Settlement Agreement, or any
notice requiring REC or any other member of the Group to cease to be a
party to the Pooling and Settlement Agreement is given to such company
under the relevant clauses of the Pooling and Settlement Agreement,
except where another member of the Group becomes a party to that
agreement in its place or such cessor occurs or such notice is given
in the context of a general disbandment of the Pooling and Settlement
Agreement; or
(S) GAS FRAMEWORK AGREEMENT: the relevant member of the Group ceases to be
a party to the Gas Framework Agreement where this would be reasonably
likely to lead to a Material Adverse Effect, except where another
member of the Group becomes a party to that agreement in its place;
(T) FINANCE DOCUMENTS: any Finance Document is not or ceases to be legal,
valid and binding on or (subject to the Reservations) enforceable
against any Obligor or is alleged by the Company or any other Obligor
to be ineffective for any reason; or
(U) UNLAWFULNESS: it becomes unlawful at any time for any Obligor to
perform all or any of its material obligations under any of the
Finance Documents; or
(V) MATERIAL ADVERSE EFFECT: at any time after the date of this Agreement
there is a change in the financial condition of an Obligor which has a
Material Adverse Effect.
19.2 ACCELERATION
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61
The Agent may, and, if so requested by the Majority Banks, shall, without
prejudice to any other rights of the Finance Parties after the happening of
an Event of Default, and so long as the same is outstanding, by notice to
the Company:
(a) declare that the obligation of each Bank to make its Commitments
available shall be terminated, whereupon the Total Commitments shall
be reduced to zero forthwith; and/or
(b) declare that the Advances and all interest and fees accrued and all
other sums payable under the Finance Documents have become due and
payable or have become due and payable on demand, whereupon the same
shall immediately or in accordance with the terms of such notice,
become due and payable or become obligations payable on demand: and/or
(c) declare that the Guarantees (or any of them) have become enforceable
(in whole or in part).
On or at any time after the making of any such declaration, the Agent shall
be entitled, to the exclusion of the Obligors, to select the duration of
Interest Periods.
20. THE AGENT AND THE ARRANGER
20.1 APPOINTMENT AND DUTIES OF THE AGENT
(a) Each Finance Party (other than the Agent) irrevocably appoints the Agent to
act as its agent under and in connection with the Finance Documents.
(b) Each Party appointing the Agent irrevocably authorises the Agent on its
behalf to:
(i) perform the duties and to exercise the rights, powers and discretions
that are specifically delegated to it under or in connection with the
Finance Documents, together with any other incidental rights, powers
and discretions; and
(ii) execute each Finance Document expressed to be executed by the Agent on
that Party's behalf.
(c) The Agent shall have only those duties which are expressly specified in the
Finance Documents. Those duties are solely of a mechanical and
administrative nature.
20.2 ROLE OF THE ARRANGER
Except as otherwise provided in the Finance Documents, the Arranger has no
obligations of any kind to any other Party under or in connection with any
Finance Document.
20.3 RELATIONSHIP
The relationship between the Agent and the other Finance Parties is that of
agent and principal only. Nothing in this Agreement constitutes the Agent
as trustee or fiduciary for any other Party or any other person and the
Agent need not hold in trust any moneys paid to it for a Party or be liable
to account for interest on those moneys.
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20.4 MAJORITY BANKS' INSTRUCTIONS
(a) The Agent will be fully protected if it acts in accordance with the
instructions of the Majority Banks in connection with the exercise of any
right, power or discretion or any matter not expressly provided for in the
Finance Documents. Any such instructions given by the Majority Banks will
be binding on all the Banks. In the absence of such instructions the Agent
may act as it considers to be in the best interests of all the Banks.
(b) The Agent is not authorised to act on behalf of a Bank (without first
obtaining that Bank's consent) in any legal or arbitration proceedings
relating to any Finance Document.
20.5 DELEGATION
The Agent may act under the Finance Documents through its personnel and
agents.
20.6 RESPONSIBILITY FOR DOCUMENTATION
Neither the Agent nor the Arranger is responsible to any other Party for:-
(a) the execution, genuineness, validity, enforceability or sufficiency of
any Finance Document or any other document;
(b) the collectability of amounts payable under any Finance Document; or
(c) the accuracy of any statements (whether written or oral) made in or in
connection with any Finance Document (including the Information
Memorandum).
20.7 DEFAULT
(a) The Agent is not obliged to monitor or enquire as to whether or not a
Default has occurred. The Agent will not be deemed to have knowledge of the
occurrence of a Default. However, if the Agent receives notice from a Party
referring to this Agreement, describing the Default and stating that the
event is a Default, it shall promptly notify the Banks.
(b) The Agent may require the receipt of security satisfactory to it whether by
way of payment in advance or otherwise, against any liability or loss which
it will or may incur in taking any proceedings or action arising out of or
in connection with any Finance Document before it commences these
proceedings or takes that action.
20.8 EXONERATION
(a) Without limiting paragraph (b) below, the Agent will not be liable to any
other Party for any action taken or not taken by it under or in connection
with any Finance Document, unless directly caused by its gross negligence
or wilful misconduct.
(b) No Party may take any proceedings against any officer, employee or agent of
the Agent in respect of any claim it might have against the Agent or in
respect of any act or omission of any kind (including gross negligence or
wilful misconduct) by that officer, employee or agent in relation to any
Finance Document. Any officer, employee or agent of the Agent may rely on
this sub-clause and enforce its terms under the Contracts (Rights of Third
Parties) Act 1999.
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20.9 RELIANCE
The Agent may:-
(a) rely on any notice or document believed by it to be genuine and
correct and to have been signed by, or with the authority of, the
proper person;
(b) rely on any statement made by a director or employee of any person
regarding any matters which may reasonably be assumed to be within his
knowledge or within his power to verify; and
(c) engage, pay for and rely on legal or other professional advisers
selected by it (including those in the Agent's employment and those
representing a Party other than the Agent).
20.10 CREDIT APPROVAL AND APPRAISAL
Without affecting the responsibility of any Obligor for information
supplied by it or on its behalf in connection with any Finance Document,
each Bank confirms that it:-
(a) has made its own independent investigation and assessment of the
financial condition and affairs of each Obligor and its related
entities in connection with its participation in this Agreement and
has not relied exclusively on any information provided to it by the
Agent or the Arranger in connection with any Finance Document; and
(b) will continue to make its own independent appraisal of the
creditworthiness of each Obligor and its related entities while any
amount is or may be outstanding under the Finance Documents or any
Commitment is in force.
20.11 INFORMATION
(a) The Agent shall promptly forward to the person concerned the original or a
copy of any document which is delivered to the Agent by a Party for that
person.
(b) The Agent shall promptly supply a Bank with a copy of each document
received by the Agent under Clause 4 (Conditions precedent) upon the
request and at the expense of that Bank.
(c) Except where this Agreement specifically provides otherwise, the Agent is
not obliged to review or check the accuracy or completeness of any document
it forwards to another Party.
(d) Except as provided above, the Agent has no duty:-
(i) either initially or on a continuing basis to provide any Bank with any
credit or other information concerning the financial condition or
affairs of the Company or any related entity of any Obligor whether
coming into its possession or that of any of its related entities
before, on or after the date of this Agreement; or
(ii) unless specifically requested to do so by a Bank in accordance with a
Finance Document, to request any certificates or other documents from
any Obligor.
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20.12 THE AGENT AND THE ARRANGER INDIVIDUALLY
(a) If it is also a Bank, each of the Agent and the Arranger has the same
rights and powers under this Agreement as any other Bank and may exercise
those rights and powers as though it were not the Agent or the Arranger.
(b) Each of the Agent and Arranger may:-
(i) carry on any business with an Obligor or its related entities;
(ii) act as agent or trustee for, or in relation to any financing
involving, an Obligor or its related entities; and
(iii) retain any profits or remuneration in connection with its activities
under this Agreement or in relation to any of the foregoing.
(c) In acting as the Agent, the agency division of the Agent will be treated as
a separate entity from its other divisions and departments. Any information
acquired by the Agent which, in its opinion, is acquired by it otherwise
than in its capacity as the Agent may be treated as confidential by the
Agent and will not be deemed to be information possessed by the Agent in
its capacity as such.
(d) Each Obligor irrevocably authorises the Agent to disclose to the other
Finance Parties any information which in its opinion is received by it in
its capacity as the Agent.
(e) The Agent may deduct from any amount received by it for the Banks pro rata
any unpaid fees, costs and expenses of the Agent incurred by it in
connection with the Finance Documents.
20.13 INDEMNITIES
(a) Without limiting the liability of any Obligor under the Finance Documents,
each Bank shall forthwith on demand indemnify the Agent for that Bank's
proportion of any liability or loss incurred by the Agent in any way
relating to or arising out of its acting as the Agent, except to the extent
that the liability or loss arises directly from the Agent's gross
negligence or wilful misconduct.
(b) A Bank's proportion of the liability or loss set out in paragraph (a) above
is the proportion which its participation in the Advances (if any) bears to
the Original Sterling Amount of all the Advances on the date of the demand.
However, if there are no Advances outstanding on the date of demand, then
the proportion will be the proportion which its Commitment bears to the
Total Commitments at the date of demand or, if the Total Commitments have
been cancelled, bore to the Total Commitments immediately before being
cancelled.
20.14 COMPLIANCE
(a) The Agent may refrain from doing anything which might, in its opinion,
constitute a breach of any law or regulation or be otherwise actionable at
the suit of any person, and may do anything which, in its opinion, is
necessary or desirable to comply with any law or regulation of any
jurisdiction.
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(b) Without limiting paragraph (a) above, the Agent need not disclose any
information relating to any Obligor or any of its related entities if the
disclosure might, in the opinion of the Agent, constitute a breach of any
law or regulation or any duty of secrecy or confidentiality or be otherwise
actionable at the suit of any person.
20.15 RESIGNATION OF AGENT
(a) Notwithstanding its irrevocable appointment, the Agent may resign by giving
notice to the Banks and the Company, in which case the Agent may forthwith
appoint one of its Affiliates as successor Agent or, failing that, the
Majority Banks may appoint a successor Agent.
(b) If the appointment of a successor Agent is to be made by the Majority Banks
but they have not, within 30 days after notice of resignation, appointed a
successor Agent which accepts the appointment, the retiring Agent may
appoint a successor Agent.
(c) The resignation of the retiring Agent and the appointment of any successor
Agent will both become effective only upon the successor Agent notifying
all the Parties that it accepts the appointment. On giving the
notification, the successor Agent will succeed to the position of the
retiring Agent and the term "AGENT" will mean the successor Agent.
(d) The retiring Agent shall, at its own cost, make available to the successor
Agent such documents and records and provide such assistance as the
successor Agent may reasonably request for the purposes of performing its
functions as the Agent under this Agreement.
(e) Upon its resignation becoming effective, this Clause 20 shall continue to
benefit the retiring Agent in respect of any action taken or not taken by
it under or in connection with the Finance Documents while it was the
Agent, and, subject to paragraph (d) above, it shall have no further
obligation under any Finance Document.
(f) The Majority Banks may, by notice to the Agent, require it to resign in
accordance with paragraph (a) above. In this event, the Agent shall resign
in accordance with paragraph (a) above but it shall not be entitled to
appoint one of its Affiliates as successor Agent.
20.16 BANKS
(a) The Agent may treat each Bank as a Bank, entitled to payments under this
Agreement and as acting through its Facility Office(s) until it has
received not less than five Business Days' prior notice from the Bank to
the contrary.
(b) The Agent may at any time, and shall if required to do so by the Majority
Banks, convene a meeting of the Banks.
20.17 EXTRAORDINARY MANAGEMENT TIME AND RESOURCES
The Company shall forthwith on demand pay the Agent for the cost of
utilising its management time or other resources in connection with:
(a) any amendment, waiver, consent or suspension of rights (or any
proposal for any of the foregoing) requested by or on behalf of the
Company and relating to a Finance Document or a document referred to
in any Finance Document; or
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(b) the occurrence of a Default; or
(c) the enforcement of, or the preservation of any rights under, any
Finance Document.
Any amount payable to the Agent under this Clause will be calculated on the
basis of such reasonable daily or hourly rates as the Agent may notify to
the Company, and is in addition to any fee paid or payable to the Agent
under Clause 21 (Fees).
21. FEES
21.1 ARRANGEMENT FEE
The Company shall pay on the date of this Agreement to the Arranger an
arrangement fee in the amount agreed in the relevant Fee Letter. This fee
shall be distributed by the Arranger among the Banks in accordance with the
arrangements agreed by the Arranger with the Banks prior to the date of
this Agreement.
21.2 AGENT'S FEE
The Company shall pay to the Agent for its own account an agency fee in the
amount and at the times agreed in the relevant Fee Letter.
21.3 COMMITMENT FEE
(a) The Company shall pay to the Agent for each Bank a commitment fee in
Sterling computed at the rate of 50 per cent. of the Applicable Margin on
the undrawn, uncancelled amount of that Bank's Commitment during the
Commitment Period. For this purpose, Advances are taken at their Original
Sterling Amount.
(b) Accrued commitment fee is payable quarterly in arrear. Accrued commitment
fee shall also be payable to the Agent for the relevant Bank(s) on the
cancelled amount of its Commitment at the time the cancellation comes into
effect.
21.4 TERM OUT FEE
The Company shall pay to the Agent a term-out fee, for distribution to each
Bank pro rata to the proportion its participation in Term-out Advances
bears to the aggregate principal amount of all Term-out Advances
outstanding at that time. In respect of each Term-out Advance drawn under
Clause 6.1 (Repayment) a Term-out fee will be calculated at the rate of
0.05% flat on the principal amount of that Term-out Advance, and is payable
on the Drawdown Date for that Term-out Advance.
21.5 VAT
Any fee referred to in this Clause 21 is exclusive of any value added tax
or any other tax which might be chargeable in connection with that fee. If
any value added tax or other tax is so chargeable, it shall be paid by the
Company at the same time as it pays the relevant fee.
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22. EXPENSES
22.1 INITIAL AND SPECIAL COSTS
The Company shall within three Business Days of demand pay the Agent and
the Arranger the amount of all reasonable costs and expenses (including
legal fees) incurred by either of them in connection with:
(a) the negotiation, preparation, printing and execution of:
(i) this Agreement and any other documents referred to in this
Agreement;
(ii) any other Finance Document (other than a Novation Certificate)
executed after the date of this Agreement; and
(b) any amendment, waiver, consent or suspension of rights (or any
proposal for any of the foregoing) requested by or on behalf of an
Obligor or, in the case of Clause 26.7 (Change of currency), the
Agent, and relating to a Finance Document or a document referred to in
any Finance Document.
22.2 ENFORCEMENT COSTS
The Company shall forthwith on demand pay to each Finance Party the amount
of all costs and expenses (including legal fees) incurred by it in
connection with the enforcement of, or the preservation of any rights
under, any Finance Document.
23. STAMP DUTIES
The Company shall pay and forthwith on demand indemnify each Finance Party
against any liability it incurs in respect of any stamp, registration and
similar tax which is or becomes payable in connection with the entry into,
performance or enforcement of any Finance Document.
24. INDEMNITIES
24.1 CURRENCY INDEMNITY
(a) If a Finance Party receives an amount in respect of an Obligor's liability
under the Finance Documents or if that liability is converted into a claim,
proof, judgment or order in a currency other than the currency (the
"CONTRACTUAL CURRENCY") in which the amount is expressed to be payable
under the relevant Finance Document:
(i) that Obligor shall indemnify that Finance Party as an independent
obligation against any loss or liability arising out of or as a result
of the conversion;
(ii) if the amount received by that Finance Party, when converted into the
contractual currency at a market rate in the usual course of its
business, is less than the amount owed in the contractual currency,
the Obligor shall forthwith on demand pay to that Finance Party an
amount in the contractual currency equal to the deficit; and
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(iii) the Obligor shall forthwith on demand pay to the Finance Party
concerned on demand any exchange costs and taxes payable in connection
with any such conversion.
(b) Each Obligor waives any right it may have in any jurisdiction to pay any
amount under the Finance Documents in a currency other than that in which
it is expressed to be payable.
24.2 OTHER INDEMNITIES
The Company shall forthwith on demand indemnify each Finance Party against
any loss or liability which that Finance Party incurs as a consequence of:
(a) the occurrence of any Default;
(b) a change in currency of a country or the operation of Clause 19.2
(Acceleration) or Clause 30 (Pro rata Sharing);
(c) any payment of principal or an overdue amount being received from any
source otherwise than on the last day of a relevant Interest Period or
Designated Interest Period (as defined in Clause 9.3 (Default
interest)) relative to the amount so received; or
(d) an Advance (or part of an Advance) not being prepaid in accordance
with a notice of prepayment or (other than by reason of negligence or
default by that Finance Party) an Advance not being made after the
Company has delivered a Request.
The Company's liability in each case includes any loss of Applicable Margin
or other loss or expense on account of funds borrowed, contracted for or
utilised to fund any amount payable under any Finance Document, any amount
repaid or prepaid or any Advance.
25. EVIDENCE AND CALCULATIONS
25.1 ACCOUNTS
Accounts maintained by a Finance Party in connection with this Agreement
are prima facie evidence of the matters to which they relate.
25.2 CERTIFICATES AND DETERMINATIONS
Any certification or determination by a Finance Party of a rate or amount
under the Finance Documents is, in the absence of manifest error,
conclusive evidence of the matters to which it relates.
25.3 CALCULATIONS
Interest (including any applicable Mandatory Cost) and the fee payable
under Clause 21.3 (Commitment fee) accrue from day to day and are
calculated on the basis of the actual number of days elapsed and a year of
365 days, or, in the case of interest payable on an amount denominated in
an Optional Currency or where market practice otherwise dictates, 360 days.
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26. AMENDMENTS AND WAIVERS
26.1 PROCEDURE
(a) Subject to Clause 26.2 (Exceptions), any term of the Finance Documents may
be amended or waived with the agreement of the Company and the Majority
Banks. The Agent may effect, on behalf of any Finance Party, an amendment
or waiver permitted under this Clause.
(b) The Agent shall promptly notify the other Parties of any amendment or
waiver effected under paragraph (a) above, and any such amendment or waiver
shall be binding on all the Parties.
26.2 EXCEPTIONS
(a) Except with the prior written consent of all the Banks, the Agent shall not
have authority on behalf of the Banks to agree with any Obligor any
amendment or waiver which relates to:-
(i) the definition of "MAJORITY BANKS" in Clause 1.1 (Definitions);
(ii) an extension of the date for, or a decrease in an amount or a change
in the currency of, any payment to a Bank under the Finance Documents
(including the Applicable Margin and any fee payable under Clause 21.3
(Commitment fee));
(iii) an increase in any Bank's Commitment;
(iv) the incorporation of additional obligors and/or drawers otherwise than
in accordance with Clause 27.6 (Guarantors);
(v) the incorporation of additional borrowers;
(vi) a term of a Finance Document which expressly requires the consent of
all Banks; or
(vii) Clause 2.2 (Nature of a Finance Party's rights and obligations),
Clause 27.2 (Transfers by Banks), Clause 30 (Pro rata sharing) or this
Clause 26,
(b) An amendment or waiver which relates to the rights and/or obligations of
the Agent may not be effected without the agreement of the Agent.
26.3 MEANING OF MAJORITY BANKS
Where any of the Finance Documents provides for any matter to be determined
by reference to the opinion of, or to be subject to the consent or request
of, the Majority Banks or for any action to be taken on the instructions of
the Majority Banks, such opinion, consent, request or instructions shall
(as between the Banks) only be regarded as having been validly given or
issued by the Majority Banks if all the Banks shall have received prior
notice of the matter on which such opinion, consent, request or
instructions are required to be obtained and the relevant majority of Banks
shall have given or issued such opinion, consent, request or instructions,
but so that (as between the Obligors and the Finance Parties) the Obligors
shall each be entitled (and bound) to assume that such notice shall have
been duly received by each Bank and that the relevant majority shall have
been obtained to constitute Majority Banks when notified to this effect by
the Agent whether or not this is the case.
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26.4 NOTICE TO MAJORITY BANKS
If, within 10 Business Days of the Agent despatching to each Bank a notice
requesting instructions (or confirmation of instructions) from the Banks or
the agreement of the Banks to any amendment, modification, waiver,
variation or excuse of performance for the purposes of, or in relation to,
any of the Finance Documents, the Agent has not received a reply
specifically giving or confirming or refusing to give or confirm the
relevant instructions or, as the case may be, approving or refusing to
approve the proposed amendment, modification, waiver, variation or excuse
of performance, then (subject to Clause 26.6 (Late responses)) the Agent
shall treat any Bank which has not so responded as having indicated a
desire to be bound by the wishes of 66 2/3 per cent. of those Banks
(measured in terms of the relevant participations in outstanding Advances
or, if none, the relevant Commitments of those Banks) which have so
responded. Any Bank which notifies the Agent of a wish or intention to
abstain on any particular issue shall be treated as if it had not
responded.
26.5 MEANING OF ALL BANKS
(a) Where this Agreement or any other Finance Document provides for any
matter to be determined by reference to the opinion of, or to be
subject to the consent of or request of, all of the Banks or the Banks
acting unanimously or for any action to be taken on the instruction of
all the Banks, such opinion, consent, request or instructions shall
(as between the Banks) only be regarded as having been validly given
or issued by all the Banks (or the Banks acting unanimously) if all
the Banks shall have received prior notice (the "AGENT'S NOTICE") of
such matter containing a request for written instructions from such
Bank to be received by the Agent within ten Business Days of the
receipt (or the deemed receipt pursuant to Clause 33.2 (Addresses for
notices)) of the Agent's Notice. Before the expiry of such deadline,
the Agent will use reasonable endeavours to contact any Bank which has
not responded to the Agent's Notice in order to obtain a response from
such Bank.
(b) If, in respect of a Bank, the Agent:
(i) shall not have received written instructions in respect of such
matter from such Bank; and
(ii) the Agent shall have received written instructions in respect of
such matter from at least five other Banks,
in each case within such time period (and subject to Clause 26.6 (Late
responses)), such Bank shall be deemed to have irrevocably renounced
and waived its right to make any such determination, approval, consent
or provide instructions to the Agent in respect of such matter; shall
not have any rights, recourse or remedy against the Agent in respect
of such matter; and shall be bound (as shall each of the Obligors) by
the determination, approval, consent or instructions of the other
Banks in respect of such matter. This clause 26.5(b) shall not apply
in so far as it would create any obligation on a Bank to provide an
increased Commitment without such Bank having expressed such increased
Commitment in writing.
(c) Clauses 26.3 (Meaning of Majority Banks) and 26.4 (Notice to Majority
Banks) shall not apply in relation to those matters which are to be
decided by all the Banks.
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26.6 LATE RESPONSES
In any case where a Bank fails to respond within the time limit set down
under Clauses 26.4 (Notice to Majority Banks) or 26.5 (Meaning of all
Banks), such Bank's response, if it responds before any determination or
instruction is acted upon or communicated to any Obligor, will be taken
into account as if it had been received within the time limit provided that
the Agent has received actual notice of such response before any such
action or communication.
26.7 CHANGE OF CURRENCY
If a change in any currency of a country occurs (including where there is
more than one currency or currency unit recognised at the same time as the
lawful currency of a country), this Agreement will be amended to the extent
the Agent (acting reasonably and after consultation with the Company)
determines is necessary to reflect the change.
26.8 WAIVERS AND REMEDIES CUMULATIVE
The rights of each Finance Party under the Finance Documents:
(a) may be exercised as often as necessary;
(b) are cumulative and not exclusive of its rights under the general law;
and
(c) 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.
27. CHANGES TO THE PARTIES
27.1 TRANSFERS BY OBLIGORS
No Obligor may assign, transfer, novate or dispose of any of, or any
interest in, its rights and/or obligations under the Finance Documents.
27.2 TRANSFERS BY BANKS
(a) A Bank (the "EXISTING BANK") may, subject to paragraph (b) below, at any
time assign, transfer or novate in whole or in part any of its Commitment
and/or any of its rights and/or obligations under this Agreement to another
bank or financial institution (the "NEW BANK").
(b) (i) A transfer of part of a Commitment must be in a minimum amount of at
least (pound)5,000,000 and must not result in the transferring Bank
having a commitment after the transfer of less than (pound)5,000,000;
and
(ii) the prior consent of the Company is required for any such assignment,
transfer or novation, unless, the New Bank is another Bank or an
Affiliate of a Bank. However, the prior consent of the Company must
not be unreasonably withheld or delayed and will be deemed to have
been given if, within five Business Days of receipt by the Company of
an application for consent, it has not been expressly refused.
(c) A transfer of obligations will be effective only if either:
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(i) the obligations are novated in accordance with Clause 27.3 (Procedure
for novations); or
(ii) the New Bank confirms to the Agent and the Company that it undertakes
to be bound by the terms of this Agreement as a Bank in form and
substance satisfactory to the Agent. On the transfer becoming
effective in this manner the Existing Bank shall be relieved of its
obligations under this Agreement to the extent that they are
transferred to the New Bank.
(d) Nothing in this Agreement restricts the ability of a Bank to sub-contract
an obligation if that Bank remains liable under this Agreement for that
obligation.
(e) On each occasion an Existing Bank assigns, transfers or novates any of its
Commitment and/or any of its rights and/or obligations under this
Agreement, the New Bank shall, on the date the assignment, transfer and/or
novation takes effect, pay to the Agent for its own account a fee of
(pound)750.
(f) An Existing Bank is not responsible to a New Bank 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.
(g) Each New Bank confirms to the Existing Bank and the other Finance Parties
that it:
(i) has made its own independent investigation and assessment of the
financial condition and affairs of each Obligor and its related
entities in connection with its participation in this Agreement and
has not relied exclusively on any information provided to it by the
Existing Bank in connection with any Finance Document; and
(ii) will continue to make its own independent appraisal of the
creditworthiness of each Obligor and its related entities while any
amount is or may be outstanding under this Agreement or any Commitment
is in force.
(h) Nothing in any Finance Document obliges an Existing Bank to:
(i) accept a re-transfer from a New Bank of any of the rights and/or
obligations assigned, transferred or novated under this Clause; or
(ii) support any losses incurred by the New Bank by reason of the
non-performance by any Obligor of its obligations under this Agreement
or otherwise.
(i) Any reference in this Agreement to a Bank includes a New Bank, but excludes
a Bank if no amount is or may be owed to or by that Bank under this
Agreement and its Commitment has been cancelled or reduced to nil.
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27.3 PROCEDURE FOR NOVATIONS
(a) A novation is effected if:
(i) the Existing Bank and the New Bank deliver to the Agent a duly
completed certificate, substantially in the form of Schedule 5 (a
"NOVATION CERTIFICATE"); and
(ii) the Agent executes it.
(b) Each Party (other than the Existing Bank and the New Bank) irrevocably
authorises the Agent to execute any duly completed Novation Certificate on
its behalf.
(c) To the extent that they are expressed to be the subject of the novation in
the Novation Certificate:
(i) the Existing Bank and the other Parties (the "EXISTING PARTIES") will
be released from their obligations to each other (the "DISCHARGED
OBLIGATIONS");
(ii) the New Bank and the existing Parties will assume obligations towards
each other which differ from the discharged obligations only insofar
as they are owed to or assumed by the New Bank instead of the Existing
Bank;
(iii) the rights of the Existing Bank against the existing Parties and vice
versa (the "DISCHARGED RIGHTS") will be cancelled; and
(iv) the New Bank and the existing Parties will acquire rights against each
other which differ from the discharged rights only insofar as they are
exercisable by or against the New Bank instead of the Existing Bank,
all on the date of execution of the Novation Certificate by the Agent or,
if later, the date specified in the Novation Certificate.
27.4 REFERENCE BANKS
If a Reference Bank (or, if a Reference Bank is not a Bank, the Bank of
which it is an Affiliate) ceases to be a Bank, the Agent shall (in
consultation with the Company) appoint another Bank or an Affiliate of a
Bank to replace that Reference Bank.
27.5 NO INCREASED COSTS
If at the time of any assignment, transfer or novation by any Bank under
Clause 27.2 or any change of a Bank's Facility office, circumstances exist
or are reasonably foreseeable which would oblige the Company to pay to the
New Bank (or, in the case of a change of Facility office, the relevant
Bank) under Clause 12 (Taxes) or 14 (Increased Costs) any amount in excess
of the amount which it would have been obliged to pay to that Bank under
the relevant Clause in the absence of that assignment, transfer or novation
or change of Facility office, the Company shall not be obliged to pay that
excess.
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27.6 GUARANTORS
(a) (i) Subject to paragraph (b) below, the Company shall procure that each
member of the Group which provides a guarantee for any Indebtedness of the
Company after the date of this Agreement becomes a Guarantor within 14 days
of it providing such guarantee by delivering to the Agent a Guarantor
Accession Agreement, duly executed by that member of the Group.
(ii) Upon execution and delivery of a Guarantor Accession Agreement, the
relevant member of the Group will become a Guarantor.
(iii) The Company shall procure that, at the same time as a Guarantor
Accession Agreement is delivered to the Agent, there is also delivered
to the Agent all those other documents listed in Part III of Schedule
7, in each case in form and substance satisfactory to the Agent.
(b) If the Company demonstrates to the satisfaction of the Agent that it is
illegal for the Company to comply with its obligations under paragraph (a)
above, the Company shall only be obliged so to comply within 14 days after
it becomes legal to do so.
(c) The execution of a Guarantor Accession Agreement constitutes confirmation
by the relevant member of the Group that the representations and warranties
set out in Clause 16 (Representations and warranties) to be made by it on
the date of the Guarantor Accession Agreement are correct, as if made with
reference to the facts and circumstances then existing.
27.7 REGISTER
The Agent shall keep a register of all the Parties and shall supply any
other Party (at that Party's expense) with a copy of the register on
request.
28. DISCLOSURE OF INFORMATION
A Bank may disclose to one of its Affiliates or any person with whom it is
proposing to enter, or has entered into, any kind of transfer,
participation or other agreement in relation to this Agreement:
(a) a copy of any Finance Document; and
(b) any information which that Bank has acquired under or in connection
with any Finance Document.
29. SET-OFF
A Finance Party may, at any time after a Default has occurred and is
outstanding, set off any matured obligation owed by an Obligor under the
Finance Documents (to the extent beneficially owned by that Finance Party)
against any obligation (whether or not matured) owed by that Finance Party
to that Obligor, regardless of the place of payment, booking branch or
currency of either obligation. If the obligations are in different
currencies, the Finance Party may convert either obligation at a market
rate of exchange in its usual course of business for the purpose of the
set-off. If either obligation is unliquidated or unascertained, the Finance
Party may set off in an amount estimated by it in good faith to be the
amount of that obligation.
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30. PRO RATA SHARING
30.1 REDISTRIBUTION
If any amount owing by an Obligor under the Finance Documents to a Finance
Party (the "RECOVERING FINANCE PARTY") is discharged by payment, set-off or
any other manner other than through the Agent in accordance with Clause 11
(Payments) (a "RECOVERY"), then:
(a) the recovering Finance Party shall, within three Business Days, notify
details of the recovery to the Agent;
(b) the Agent shall determine whether the recovery is in excess of the
amount which the recovering Finance Party would have received had the
recovery been received by the Agent and distributed in accordance with
Clause 11 (Payments);
(c) subject to Clause 30.3 (Exceptions), the recovering Finance Party
shall, within three Business Days of demand by the Agent, pay to the
Agent an amount (the "REDISTRIBUTION") equal to the excess;
(d) the Agent shall treat the redistribution as if it were a payment by an
Obligor under Clause 11 (Payments) and shall pay the redistribution to
the Finance Parties (other than the recovering Finance Party) in
accordance with Clause 11.7 (Partial payments); and
(e) after payment of the full redistribution, the recovering Finance Party
will be subrogated to the portion of the claims paid under paragraph
(d) above, and that Obligor will owe the recovering Finance Party a
debt which is equal to the redistribution, immediately payable and of
the type originally discharged.
30.2 REVERSAL OF REDISTRIBUTION
If under Clause 30.1 (Redistribution):
(a) a recovering Finance Party must subsequently return a recovery, or an
amount measured by reference to a recovery, to an Obligor; and
(b) the recovering Finance Party has paid a redistribution in relation to
that recovery,
each Finance Party shall, within three Business Days of demand by the
recovering Finance Party through the Agent, reimburse the recovering
Finance Party all or the appropriate portion of the redistribution paid to
that Finance Party together with interest on the amount to be returned to
the recovering Finance Party for a period whilst it held the
re-distribution. Thereupon the subrogation in Clause 30.1(e)
(Redistribution) will operate in reverse to the extent of the
reimbursement.
30.3 EXCEPTIONS
(a) A recovering Finance Party need not pay a redistribution to the extent that
it would not, after the payment, have a valid claim against the Obligor in
the amount of the redistribution under Clause 30.1(e) (Redistribution).
<PAGE>
76
(b) A recovering Finance Party is not obliged to share with any other Finance
Party any amount which the recovering Finance Party has received or
recovered as a result of taking legal proceedings, if the other Finance
Party had an opportunity to participate in those legal proceedings but did
not do so or did not take separate legal proceedings.
31. SEVERABILITY
If a provision of any Finance Document is or becomes illegal, invalid or
unenforceable in any jurisdiction, that shall not affect:
(a) the legality, validity or enforceability in that jurisdiction of any
other provision of the Finance Documents; or
(b) the legality, validity or enforceability in other jurisdictions of
that or any other provision of the Finance Documents.
32. COUNTERPARTS
Each Finance Document may be executed in any number of counterparts, and
this has the same effect as if the signatures on the counterparts were on a
single copy of the Finance Document.
33. NOTICES
33.1 GIVING OF NOTICES
All notices or other communications under or in connection with this
Agreement shall be given in writing and, unless otherwise stated, may be
made by letter, telex or facsimile. Any such notice will be deemed to be
given as follows:
(a) if by letter, when delivered personally or on actual receipt;
(b) if by telex, when despatched, but only if, at the time of
transmission, the correct answerback appears at the start and at the
end of the sender's copy of the notice; and
(c) if by facsimile, when received in legible form.
However, a notice given in accordance with the above but received on a
non-working day or after business hours in the place of receipt will only
be deemed to be given on the next working day in that place.
33.2 ADDRESSES FOR NOTICES
(a) The address, telex number and facsimile number of each Party (other than
the Company and the Agent) for all notices under or in connection with this
Agreement are:
(i) those notified by that Party for this purpose to the Agent on or
before it becomes a Party; or
(ii) any others notified by that Party for this purpose to the Agent by not
less than five Business Days' notice.
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77
(b) The address and facsimile number of the Company are:
TXU Europe Limited
Wherstead Park
Wherstead
Ipswich
Suffolk
Telefax: +44 147 355 5002
Attention: Group Finance Director
or such other as the Company may notify to the other Parties by not less
than five Business Days' notice.
(c) The address and facsimile number of the Agent are:
Chase Manhattan International Ltd
Trinity Tower
9 Thomas More Street
London E1 9YT
Telefax: +44 207 777 2360
Attention: Stephen Clarke
or such other as the Agent may notify to the other Parties by not less than
five Business Days' notice.
(d) All notices from or to an Obligor shall be sent through the Agent.
(e) The Agent shall, promptly upon request from any Party, give to that Party
the address, telex number or facsimile number of any other Party applicable
at the time for the purposes of this Clause.
34. JURISDICTION
(a) The English courts have jurisdiction to settle any dispute in connection
with any Finance Document.
(b) The English courts are the most appropriate and convenient courts to settle
any such dispute.
(c) This Clause is for the benefit of the Finance Parties only. To the extent
allowed by law, the Finance Parties may take:
(i) proceedings in any other court; and
(ii) concurrent proceedings in any number of jurisdictions.
35. Governing LawThis Agreement is governed by English law.
<PAGE>
78
This Agreement has been entered into on the date stated at the beginning of this
Agreement.
<PAGE>
79
SCHEDULE 1
BANKS AND COMMITMENTS
BANKS COMMITMENTS
(pound)
Banca Monte dei Paschi di Siena SpA, London Branch 15,000,000
Bank of America, N.A. 15,000,000
The Bank of New York 15,000,000
The Bank of Nova Scotia 15,000,000
The Bank of Tokyo-Mitsubishi, Ltd. 15,000,000
Barclays Bank PLC 15,000,000
Bayerische Landesbank Girozentrale, London Branch 15,000,000
BNP Paribas 15,000,000
The Chase Manhattan Bank 15,000,000
Citibank, N.A. 15,000,000
Commerzbank Aktiengesellschaft, London Branch 15,000,000
Credit Lyonnais 15,000,000
The Dai-ichi Kangyo Bank, Limited 15,000,000
Deutsche Bank AG London 15,000,000
Fleet National Bank 15,000,000
National Australia Bank Limited (ACN 004044937) 15,000,000
Societe Generale, London Branch 15,000,000
The Toronto-Dominion Bank 15,000,000
UBS AG, London Branch 15,000,000
Westdeutsche Landesbank Girozentrale 15,000,000
-----------
Total Commitments (pound)300,000,000
------------
<PAGE>
80
SCHEDULE 2
CONDITIONS PRECEDENT DOCUMENTS
1. A copy of the memorandum and articles of association and certificate of
incorporation of the Company.
2. A copy of a resolution of the board of directors of the Company:-
(a) approving the terms of, and the transactions contemplated by, this
Agreement executed by the Company and resolving that it execute this
Agreement and the Fee Letter;
(b) authorising a specified person or persons to execute this Agreement
and the Fee Letter on its behalf; and
(c) authorising a specified person or persons, on its behalf, to sign
and/or despatch all documents and notices to be signed and/or
despatched by it under or in connection with this Agreement.
3. A specimen of the signature of each person authorised by the resolution
referred to in paragraph 2 above.
4. A certificate of a director of the Company confirming that the borrowing of
the Total Commitments in full would not cause any borrowing limit binding
on the Company to be exceeded.
5. A certificate of an authorised signatory of the Company certifying that
each copy document specified in this Schedule 2 is correct, complete and in
full force and effect as at a date no earlier than the date of this
Agreement.
6. Evidence satisfactory to the Agent that the total commitments under the
(pound)250,000,000 multicurrency facility dated 21st May, 1998 between
(among others) Eastern Electricity plc and Chase Manhattan International
Limited as facility agent have been reduced to (pound)150,000,000.
7. Evidence satisfactory to the Agent that all amounts of principal under the
Excess Equity Funding have been repaid in full.
8. Evidence that the Company has paid, or has made arrangements satisfactory
to the Agent for the payment of, all fees referred to under Clauses 21.1
(Arrangement fee) and 21.2 (Agent's fee).
9. A copy of any other authorisation or other document, opinion or assurance
which the Agent considers to be necessary or desirable in connection with
the entry into and performance of, and the transactions contemplated by,
any Finance Document or for the validity and enforceability of any Finance
Document.
10. A legal opinion of Allen & Overy, legal advisers to the Arranger and the
Agent, substantially in the form of Schedule 6, addressed to the Finance
Parties.
<PAGE>
81
SCHEDULE 3
CALCULATION OF THE MANDATORY COST
(a) The Mandatory Cost for an Advance for its Interest Period is the rate
determined by the Agent to be equal to the arithmetic mean (rounded upward,
if necessary, to four decimal places) of the respective rates notified by
each of the Reference Banks to the Agent and calculated in accordance with
the following formulae:
in relation to an Advance denominated in Sterling:
BY + S(Y-Z) + F x 0.01 % per annum
----------------------
100-(B + S)
in relation to any other Advance:
F x 0.01 % per annum
--------
300
where on the day of application of a formula:
B is the percentage of the Reference Bank's eligible liabilities (in
excess of any stated minimum) which the Bank of England requires the
Reference Bank to hold on a non-interest-bearing deposit account in
accordance with its cash ratio requirements;
Y is LIBOR at or about 11.00 a.m. on that day for the Interest Period;
S is the percentage of the Reference Bank's eligible liabilities which
the Bank of England requires the Reference Bank to place as a special
deposit;
Z is the interest rate per annum allowed by the Bank of England on
special deposits; and
F is the charge payable by the Reference Bank to the Financial Services
Authority under paragraph 2.02 or 2.03 (as appropriate) of the Fees
Regulations (but where for this purpose, the figure in paragraph 2.02b
and 2.03b will be deemed to be zero) expressed in pounds per (pound)1
million of the fee base of the Reference Bank.
(b) For the purposes of this Schedule 3:
(i) "ELIGIBLE LIABILITIES" and "SPECIAL DEPOSITS" have the meanings given
to them at the time of application of the formula by the Bank of
England; and
(ii) "FEE BASE" has the meaning given to it in the Fees Regulations;
(iii) "FEES REGULATIONS" means the Banking Supervision (Fees) Regulations
2000 and/or any other regulations governing the payment of fees for
banking supervision.
(c) In the application of the formula, B, Y, S and Z are included in the
formula as figures and not as percentages, e.g. if B = 0.5% and Y = 15%, BY
is calculated as 0.5 x 15.
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82
(d) If a Reference Bank does not supply a rate to the Agent, the applicable
Mandatory Cost will be determined on the basis of the rate(s) supplied by
the remaining Reference Banks.
(e) (i) The formula is applied on the first day of the Interest Period of the
Advance.
(ii) Each rate calculated in accordance with the formula is, if necessary,
rounded to four decimal places.
(f) If the Agent determines that a change in circumstances has rendered, or
will render, the formula inappropriate, the Agent (after consultation with
the Banks) shall notify the Company of the manner in which the Mandatory
Cost will subsequently be calculated. The manner of calculation so notified
by the Agent shall, in the absence of manifest error, be binding on all the
Parties.
<PAGE>
83
SCHEDULE 4
FORM OF REQUEST
To: CHASE MANHATTAN INTERNATIONAL LTD as Agent
From: TXU EUROPE LIMITED
Date: [ ]
TXU EUROPE LIMITED - (POUND)300,000,000 REVOLVING CREDIT AGREEMENT DATED 23RD
AUGUST, 2000
1. We wish to borrow an Advance as follows:
(a) Drawdown Date: [ ]
(b) Amount: [ ]
(c) Interest Period: [ ]
(d) Maturity Date: [ ] (for Term-out Advances only)
(e) Payment instructions: [ ].
2. We confirm that each condition specified in Clause 4.2 (Further conditions
precedent) is satisfied on the date of this Request.
By:
TXU EUROPE LIMITED
Authorised Signatory
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85
SCHEDULE 5
FORM OF NOVATION CERTIFICATE
To: CHASE MANHATTAN INTERNATIONAL LTD as Agent
From: [THE EXISTING BANK] and [THE NEW BANK] Date: [ ]
TXU EUROPE LIMITED - (POUND)300,000,000 REVOLVING CREDIT AGREEMENT DATED 23RD
AUGUST, 2000
We refer to Clause 27.3 (Procedure for novations).
1. We [ ] (the "EXISTING BANK") and [ ] (the "NEW BANK")
agree to the Existing Bank and the New Bank novating all the Existing
Bank's Commitment (or part) rights and obligations referred to in the
Schedule in accordance with Clause 27.3 (Procedure for novations).
2. The specified date for the purposes of Clause 27.3(c) (Procedure for
novations) is [date of novation].
3. The Facility Office and address for notices of the New Bank for the
purposes of Clause 33.2 (Addresses for notices) are set out in the
Schedule.
4. This Novation Certificate is governed by English law.
THE SCHEDULE
COMMITMENT/RIGHTS AND OBLIGATIONS TO BE NOVATED
[Insert relevant details]
[NEW BANK]
[Facility Office Address for notices]
[Existing Bank] [New Bank] CHASE MANHATTAN
INTERNATIONAL LTD
By: By: By:
Date: Date: Date:
<PAGE>
85
SCHEDULE 6
FORM OF LEGAL OPINION OF ALLEN & OVERY
To: The Finance Parties named as
original parties to the Agreement
(as defined below)
[DATE]
Dear Sirs,
TXU EUROPE LIMITED (THE "COMPANY") - (POUND)300,000,000 CREDIT AGREEMENT
DATED 23RD AUGUST, 2000 (THE "CREDIT AGREEMENT")
We have received instructions from and participated in discussions with Chase
Manhattan plc as arranger in connection with the Credit Agreement.
Terms defined in the Credit Agreement have the same meaning in this opinion.
For the purposes of this opinion we have examined the following documents:-
(a) a signed copy of the Credit Agreement;
(b) a certified copy of the memorandum and articles of association and
certificate of incorporation of the Company; and
(c) certified copies of the minutes of meetings of the respective boards of
directors of the Company held on [ ].
On [ ], we carried out a search of the Company at the Companies
Registry. On [ ] we made a telephone search of the Company at the
winding-up petitions at the Companies court.
The above are the only documents or records we have examined and the only
searches and enquiries we have carried out for the purpose of this opinion.
We assume that:-
(i) the Company is not unable to pay its debts within the meaning of section
123 of the Insolvency Act, 1986 at the time it enters into the Credit
Agreement and will not as a consequence of the Credit Agreement, be unable
to pay its debts within the meaning of that section;
(ii) no step has been taken to wind up the Company or appoint a receiver in
respect of it or any of its assets although the searches of the Companies
Registry referred to above give no indication that any winding-up order or
appointment of a receiver has been made;
(iii) all signatures and documents are genuine;
<PAGE>
86
(iv) all documents are and remain up-to-date;
(v) the correct procedure was carried out at the board meetings referred to in
paragraph (c) above, for example, there was a quorum, all relevant
interests of directors were declared and the resolutions were duly passed
at each of the meetings; and
(vi) any restrictions in the Company's Articles of Association would not be
contravened by entry into and performance by the Company of the Credit
Agreement;
(vii) the Credit Agreement has been duly executed on behalf of the Company by
the persons authorised by the resolutions passed at the meetings referred
to in paragraph (c) above; and
(viii) the Credit Agreement is a legally binding, valid and enforceable
obligation of each Finance Party.
Subject to the qualifications set out below and to any matters not disclosed to
us, it is our opinion that, so far as the present laws of England are
concerned:-
(1) STATUS: The Company is a company incorporated with limited liability under
the laws of England and is not in liquidation.
(2) POWERS AND AUTHORITY: The Company has the corporate power to enter into and
perform the Credit Agreement and has taken all necessary corporate action
to authorise the execution, delivery and performance of the Credit
Agreement.
(3) LEGAL VALIDITY: The Credit Agreement constitutes a legally binding, valid
and enforceable obligation of the Company.
(4) NON-CONFLICT: The execution, delivery and performance by the Company of
each of the Credit Agreement will not violate any provision of (i) any
existing English law applicable to companies generally, or (ii) the
memorandum or articles of association of the Company.
(5) CONSENTS: No authorisations of governmental, judicial or public bodies or
authorities in England are required by the Company in connection with the
performance, validity or enforceability of the Credit Agreement.
(6) TAXES: All payments due from the Company under the Credit Agreement may be
made without deduction of any United Kingdom taxes, if, in the case of any
interest, the person that made the Advance to which the interest relates
was, at the time of making the Advance, a "bank" as defined in section 840A
of the Income and Corporation Taxes Act 1988 and the person beneficially
entitled to the interest is within the charge to United Kingdom corporation
tax as respects that interest at the time the interest is paid.
(7) REGISTRATION REQUIREMENTS: It is not necessary or advisable to file,
register or record the Credit Agreement in any public place or elsewhere in
England.
(8) STAMP DUTIES: No stamp, registration or similar tax or charge is payable in
England in respect of the Credit Agreement.
This opinion is subject to the following qualifications:-
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87
(i) This opinion is subject to all insolvency and other laws affecting the
rights of creditors or secured creditors generally.
(ii) No opinion is expressed on matters of fact.
(iii) We assume that no foreign law affects the conclusions stated above.
(v) The term "ENFORCEABLE" means that a document is of a type and form enforced
by the English courts. It does not mean that each obligation will be
enforced in accordance with its terms. Certain rights and obligations of
the Company may be qualified by the non-conclusively of certificates,
doctrines of good faith and fair conduct, the availability of equitable
remedies and other matters, but in our view these qualifications would not
defeat your legitimate expectations in any material respect.
This opinion is given for your sole benefit and may not be relied upon by or
disclosed to any other person.
Yours faithfully
<PAGE>
88
SCHEDULE 7
PART I
GUARANTEE
1. GUARANTEE
Each Guarantor irrevocably, unconditionally, jointly and severally:
(a) as principal obligor, guarantees to each Finance Party prompt
performance by the Company of all its obligations under the Finance
Documents;
(b) undertakes with each Finance Party that whenever the Company does not
pay any amount when due under or in connection with any Finance
Document, that Guarantor shall forthwith on demand by the Agent pay
that amount as if that Guarantor instead of the Company were expressed
to be the principal obligor; and
(c) indemnifies each Finance Party on demand against any loss or liability
suffered by it if any obligation guaranteed by that Guarantor is or
becomes unenforceable, invalid or illegal.
2. CONTINUING GUARANTEE
This guarantee is a continuing guarantee and will extend to the ultimate
balance of all sums payable by the Company under the Finance Documents,
regardless of any intermediate payment or discharge in whole or in part.
3. REINSTATEMENT
(a) 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 without limitation, the liability of each
Guarantor under this Part I of Schedule 7 shall continue as if the
discharge or arrangement had not occurred.
(b) Each Finance Party may concede or compromise any claim that any payment,
security or other disposition is liable to avoidance or restoration.
4. WAIVER OF DEFENCES
The obligations of each Guarantor under this Part I of Schedule 7 will not
be affected by any act, omission, matter or thing which, but for this
provision, would reduce, release or prejudice any of its obligations under
this Part I of Schedule 7 or prejudice or diminish those obligations in
whole or in part, including (whether or not known to it or any Finance
Party):
(a) any time or waiver granted to, or composition with, the Company or
other person;
(b) the release of any other Obligor or any person under the terms of any
composition or arrangement with any creditors of any member of the
Group;
<PAGE>
89
(c) 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, the Company or other person or any
non-presentation or non-observance of any formality or other
requirement in respect of any instrument or any failure to realise the
full value of any security;
(d) any incapacity or lack of powers, authority or legal personality of or
dissolution or change in the members or status of the Company or any
other person;
(e) any variation (however fundamental) or replacement of a Finance
Document or any other document or security so that references to that
Finance Document in this Part I of Schedule 7 shall include each
variation or replacement;
(f) any unenforceability, illegality or invalidity of any obligation of
any person under any Finance Document or any other document or
security, to the intent that each Guarantor's obligations under this
Part I of Schedule 7 shall remain in full force and its guarantee be
construed accordingly, as if there were no unenforceability,
illegality or invalidity;
(g) any postponement, discharge, reduction, non-provability or other
similar circumstance affecting any obligation of the Company under a
Finance Document resulting from any insolvency, liquidation or
dissolution proceedings or from any law, regulation or order so that
each such obligation shall for the purposes of the Guarantor's
obligations under this Part I of Schedule 7 shall be construed as if
there were no such circumstance.
5. IMMEDIATE RECOURSE
Each Guarantor waives any right it may have of first requiring any Finance
Party (or any trustee or agent on its behalf) to proceed against or enforce
any other rights or security or claim payment from any person before
claiming from that Guarantor under this Part I of Schedule 7.
6. APPROPRIATIONS
Until all amounts which may be or become payable by the Obligors under or
in connection with the Finance Documents have been irrevocably paid in
full, each Finance Party (or any trustee or agent on its behalf) may:
(a) refrain from applying or enforcing any other moneys, security or
rights held or received by that Finance Party (or any trustee or agent
on its behalf) in respect of those amounts, or apply and enforce the
same in such manner and order as it sees fit (whether against those
amounts or otherwise) and no Guarantor shall be entitled to the
benefit of the same; and
(b) hold in a suspense account any moneys received from any Guarantor or
on account of any Guarantor's liability under this Part I of Schedule
7, without liability to pay interest on those moneys.
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90
7. NON-COMPETITION
Until all amounts which may be or become payable by the Obligors under or
in connection with the Finance Documents have been irrevocably paid in
full, no Guarantor shall, after a claim has been made or by virtue of any
payment or performance by it under this Part I of Schedule 7.
(a) be subrogated to any rights, security or moneys held, received or
receivable by any Finance Party (or any trustee or agent on its
behalf) or be entitled to any right of contribution or indemnity in
respect of any payment made or moneys received on account of that
Guarantor's liability under this Part I of Schedule 7;
(b) claim, rank, prove or vote as a creditor of any Obligor or its estate
in competition with any Finance Party (or any trustee or agent on its
behalf); or
(c) receive, claim or have the benefit of any payment, distribution or
security from or on account of any Obligor, or exercise any right of
set-off as against any Obligor,
unless the Agent otherwise directs. Each Guarantor shall hold in trust for
and forthwith pay or transfer to the Agent for the Finance Parties any
payment or distribution or benefit of security received by it contrary to
this Part I of Schedule 7 or as directed by the Agent.
8. ADDITIONAL SECURITY
This guarantee is in addition to and is not in any way prejudiced by any
other security now or hereafter held by any Finance Party.
<PAGE>
91
SCHEDULE 7
PART II
GUARANTOR ACCESSION AGREEMENT
To: CHASE MANHATTAN BANK INTERNATIONAL LTD as Agent
From: [PROPOSED GUARANTOR]
Date: [ ]
TXU EUROPE - (POUND)300,000,000 CREDIT AGREEMENT DATED 23RD AUGUST, 2000
(THE "CREDIT AGREEMENT")
We refer to Clause 27.6 (Guarantors).
We, [name of company] of [Registered Office] (Registered no. [ ]) agree to
become a Guarantor and to be bound by the terms of the Credit Agreement
(including the Guarantee) as a Guarantor in accordance with Clause 27.6
(Guarantors).
Our address for notices for the purposes of Clause 33.2 (Addresses for notices)
is:-
[
]
This Guarantor Accession Agreement is entered into by way of deed and is
governed by English law.
*[THE COMMON SEAL of )
[PROPOSED GUARANTOR] )
was affixed to this deed in )
the presence of:- )
Director
Director/Secretary]
[EXECUTED as a deed by )
[PROPOSED GUARANTOR] ) Director
acting by [NAME OF DIRECTOR] )
and [NAME OF DIRECTOR/SECRETARY] ) Director/Secretary]
------------------------
* Note: Substitute execution clause for foreign companies where appropriate.
<PAGE>
92
SCHEDULE 7
PART III
TO BE DELIVERED BY A GUARANTOR
1. A Guarantor Accession Agreement, duly executed by the Guarantor.
2. A copy of the memorandum and articles of association and certificate of
incorporation of the Guarantor.
3. A copy of a resolution of the board of directors of the Guarantor:-
(i) approving the terms of, and the transactions contemplated by, the
Guarantor Accession Agreement and resolving that it execute the
Guarantor Accession Agreement;
(ii) authorising a specified person or persons to execute the Guarantor
Accession Agreement; and
(iii) authorising a specified person or persons, on its behalf, to sign
and/or despatch all documents to be signed and/or despatched by it
under or in connection with this Agreement.
4. A copy of a resolution, signed by all the holders of the issued or allotted
shares in the Guarantor, approving the terms of, and the transactions
contemplated by, the Guarantor Accession Agreement.
5. A copy of a resolution of the Board of Directors of each corporate
shareholder in the Guarantor:-
(i) approving the terms of the resolution referred to in paragraph 4
above; and
(ii) authorising a specified person or persons to sign the resolution on
its behalf.
6. A certificate of a director of the Guarantor certifying that the borrowing
of the Total Commitments in full would not cause any borrowing limit
binding on it to be exceeded.
7. A copy of any other authorisation or other document, opinion or assurance
which the Agent considers to be necessary or desirable in connection with
the entry into and performance of, and the transactions contemplated by,
the Guarantor Accession Agreement or for the validity and enforceability of
any Finance Document.
8. A specimen of the signature of each person authorised by the resolutions
referred to in paragraphs 3 and 5 above.
9. If available, a copy of the latest audited accounts of the Guarantor.
<PAGE>
93
10. A certificate of an authorised signatory of the Guarantor certifying that
each copy document specified in Part III of this Schedule 7 is correct,
complete and in full force and effect as at a date no earlier than the date
of the Guarantor Accession Agreement.
11. A legal opinion of Allen & Overy, legal advisers to the Arranger and the
Agent, addressed to the Finance Parties.
<PAGE>
94
SIGNATORIES
COMPANY
TXU EUROPE LIMITED
By: H.C. GOODBOURN
ARRANGER
CHASE MANHATTAN plc
By: KATHRYN JEPSON
BANKS
BANCA MONTE DEI PASCHI DI SIENA SPA, LONDON BRANCH
By: GIORGIO GUANO, COLIN HARBOUR
BANK OF AMERICA, N.A.
By: C. G. COUCHMAN
THE BANK OF NEW YORK
By: NATHAN S. HOWARD
THE BANK OF NOVA SCOTIA
By: BEVERLEY ROBERTS
THE BANK OF TOKYO-MITSUBISHI, LTD.
By: DAVID DALLISON
BARCLAYS BANK PLC
By: JONATHAN PUGHE
<PAGE>
95
BAYERISCHE LANDESBANK GIROZENTRALE, LONDON BRANCH
By: KATHRYN JEPSON
BNP PARIBAS
By: KATHRYN JEPSON
THE CHASE MANHATTAN BANK
By: KATHRYN JEPSON
CITIBANK, N.A.
By: ROBERT A WELFORD
COMMERZBANK AKTIENGESELLSCHAFT, LONDON BRANCH
By: R. S. SULLIVAN
CREDIT LYONNAIS
By: KATHRYN JEPSON
THE DAI-ICHI KANGYO BANK, LIMITED
By: COLIN VITTERY
DEUTSCHE BANK AG LONDON
By: MICHAEL STARMER-SMITH
FLEET NATIONAL BANK
By: ROBERT S. WHITE
NATIONAL AUSTRALIA BANK LIMITED (ACN 004044937)
By: RICHARD J. MOORE
<PAGE>
96
SOCIETE GENERALE, LONDON BRANCH
By: KATHRYN JEPSON
THE TORONTO-DOMINION BANK
By: KATHRYN JEPSON
UBS AG, LONDON BRANCH
By: KATHRYN JEPSON
WESTDEUTSCHE LANDESBANK GIROZENTRALE
By: T. SAI LOUIE
AGENT
CHASE MANHATTAN INTERNATIONAL LIMITED
By: KATHRYN JEPSON
