Exhibit 4.10
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CONFORMED COPY
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8 March 2002
Scottish Power UK plc
First Aqua Limited
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AGREEMENT
for the sale and purchase of the issued share
capital of Aspen 4 Limited
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THIS SALE AND PURCHASE AGREEMENT is made on 8 March 2002
Between:
(1) SCOTTISH POWER UK plc, a company registered in Scotland whose registered
office is at 0 Xxxxxxxx Xxxx, Xxxxxxx, X0 0XX (the vendor); and
(2) FIRST AQUA LIMITED, a company incorporated under the laws of England and
Wales whose registered office is at 000 Xxxxxxxxxx Xxxxxx, Xxxxxx XXxX 0XX
(xxx Purchaser).
Whereas:
(A) Aspen 4 Limited (the Company) is a private company limited by shares
incorporated in Scotland. Further details of the Company are set out in Part 1
of Schedule 2.
(B) The companies of which details are set out in Part 2 of Schedule 2 (the
Subsidiaries) are subsidiaries of the Company.
(C) The Vendor has agreed to sell all of the issued shares in the capital of
the Company (the Shares) to the Purchaser for the consideration and upon the
terms set out in this Agreement.
(D) The Vendor has further agreed to assign, or procure the assignment of, the
Intra Group Debt (as defined in Schedule 1) to the Purchaser for the
consideration and upon the terms set out in this Agreement.
(E) The Purchaser has agreed to procure at Completion the repayment of the
Aspen 4 Amount (as defined in Schedule 1).
(F) The Purchaser has at the date of this Agreement deposited not less than
(Pounds)20 million in escrow against any claims the Vendor may bring under this
Agreement.
It Is Agreed as follows:
DEFINITIONS AND INTERPRETATION
1.1 Words and expressions used in this Agreement shall have the meanings set
out in Schedule 1, unless the context requires otherwise.
1.2 The Schedules comprise schedules to this Agreement and form part of this
Agreement.
SALE OF THE SHARES AND INTRA GROUP DEBT
2.1 The Vendor agrees to sell, or procure the sale of, and the Purchaser agrees
to purchase, the Shares, on terms that the same covenants shall be deemed to be
given by the Vendor on Completion in relation to the Shares as are implied under
Part I of the Law of Property (Miscellaneous Provisions) Xxx 0000 where a
disposition is
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expressed to be made with full title guarantee. The Shares shall be sold free
from all Encumbrances, together with all rights attaching to them.
2.2 The total price payable by the Purchaser to the Vendor for the Shares shall
be the sum of (Pounds)2,050,000,000, less the aggregate of the Net Financial
Debt Amount and the Aspen 4 Amount, subject to any adjustments made in
accordance with clause 7 (the Share Purchase Price).
2.3 The Vendor agrees to assign, or procure the assignment of, and the
Purchaser agrees to take an assignment of, the Intra Group Debt as at the
Completion Date free from all Encumbrances. The Vendor agrees to procure that,
as at the Completion Date, each intra group indebtedness forming part of the
Intra Group Debt shall be evidenced by the issue of a document or documents in
the form of Schedule 12 (such document or documents to be held in escrow until
Completion in accordance with clause 5.2) but for the avoidance of doubt in each
case on the same commercial terms as the relevant existing intra-group
indebtedness.
2.4 The total price payable by the Purchaser to the Vendor for the Intra Group
Debt shall be the amount of such debt as at the Completion Date as shown in the
Net Debt Statement (the Debt Purchase Price).
2.5 If any payment is made by the Vendor to the Purchaser, whether pursuant to
a claim made by the Purchaser (including, without limitation, any Claim) or
otherwise under this Agreement (but excluding any payment under clause 7.2), the
payment shall so far as possible be made by way of reduction of the Share
Purchase Price and the Share Purchase Price shall accordingly be deemed to have
been reduced by the amount of such payment.
2.6 The Purchaser agrees to procure repayment of the Aspen 4 Amount on
Completion and the Vendor agrees to such repayment.
CONDITIONS TO COMPLETION AND COOPERATION
Conditions to Completion
3.1 Completion of the sale and purchase of the Shares shall take place in
accordance with and subject to clause 5 and simultaneously with it becoming
certain that on or prior to the Initial Termination Date, the events set out in
clauses 3.1 (a) and 3.1 (b) will not occur provided at that time the event
referred to in clause 3.1 (c) is not subsisting:
(a) the Resolution is not passed by the shareholders of Scottish Power plc;
(b) to the extent that the arrangements contemplated by this Agreement (the
Merger) constitute a concentration with a Community dimension within the
scope of Council Regulation (EEC) 4064/89 (as amended by Council Regulation
(EC) 1310/97) (the Regulation) either:
(i) the Commission does not adopt:
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(aa) a decision under Article 6(l)(a) of the Regulation that the
Merger is not within the scope of the Regulation; or
(bb) a decision under Article 6(l)(b) (or having been deemed to have
made a decision under Article l0(6)) of the Regulation declaring
the Merger to be compatible with the common market, with or
without any conditions, obligations, undertakings or
modifications attached to the decision; or
(ii) in the event that a request under Article 9(2) of the Regulation has
been made by a Member State, the Commission does not adopt:
(aa) a decision under Article 9(3)(b) of the Regulation (or having
been deemed under Article 9(5) of the Regulation to have adopted
such a decision) to refer the Merger in whole or part to the OFT;
and
(bb) if such decision is of a type referred to in clause 3.1
(b)(ii)(aa) above relates to part only of the Merger, a decision
referred to in sub-clause (i)(bb) above in respect of the part of
the Merger not so referred to the OFT;
(c) the Finance Conditions are not satisfied in accordance with their terms.
Facility Agreements
3.2 To enable it to perform its obligations under clause 5, the Purchaser shall
use its best endeavours to satisfy the Finance Condition relating to illegality.
3.3 The Purchaser warrants and undertakes that it has disclosed to the Vendor
in writing prior to the date of this Agreement full details of the conditions
and termination rights under the Facility Agreements and any other term of or
connected with the Facility Agreements which may impact the ability of the
Purchaser to draw down in full thereunder in order to comply with its
obligations under clauses 5.6 and 5.7. The Purchaser shall not prior to the
earlier of(i) the actual receipt in cash by the Vendor of the amounts referred
to in clause 5.6 and (ii) termination of this Agreement in accordance with its
terms, agree any variation to the terms of the Facility Agreements to the extent
such variations could affect the Purchaser's ability to complete the transaction
contemplated by this Agreement or to comply with clauses 5.6 and 5.7.
ECMR
3.4 The Purchaser shall prepare a notification in accordance with Commission
Regulation (EC) No. 447/98, which it will submit to the Commission in final form
as soon as possible after the execution of this Agreement and in any event
submit to the Commission a substantially complete draft notification within 7
days of the date of this Agreement.
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3.5 The Purchaser undertakes to use its reasonable endeavours to ensure that
the events in clause 3.1(b) do not occur.
3.6 If it becomes reasonably apparent that the Commission will only adopt a
decision of the kind referred to in any of clauses 3.l(b)(i)(aa) or (bb) or
3.l(b)(ii)(aa) or (bb) subject to conditions, obligations, undertakings and/or
modifications (each a Relevant Stipulation) which may include, for the avoidance
of doubt, any Relevant Stipulation that relates in any manner whatsoever to (i)
any undertaking or business, activities or assets of any undertaking that is
controlled (for the purposes of Article 3(3) and 3(4) of the Regulation) by the
Purchaser or any member of the Purchaser's Group at any time before the
Commission adopts or is deemed to have adopted a decision under Articles 6(l)(b)
or 9(3) of the Regulation as the case may be, or (ii) to any undertaking or
business, activities or assets of the Company:
(a) without prejudice to sub-clause 3.6(b) below, the Purchaser shall offer,
accept and agree to any such Relevant Stipulation (which shall not, without
the prior written approval of the Vendor, include any amendment, variation
or modification of the terms of this Agreement in such a way as to affect
adversely the value to the Vendor of the transactions contemplated by this
Agreement) as may be necessary to obtain approval for the Merger as rapidly
as possible by avoiding a decision by the Commission to open proceedings
under Article 6(l)(c) of the Regulation;
(b) to the extent that any Relevant Stipulation relates to the business, assets
or activities of any member of the Retained Group, the Purchaser shall not
offer, accept or agree to such Relevant Stipulation without the prior
written approval of the Vendor.
Co-operation by the Vendor in respect of the ECMR
3.7 The Vendor shall and shall procure that its advisers and each Group Company
shall co-operate with the Purchaser in providing to the Purchaser upon request
such assistance as is reasonably necessary and it is reasonably able to provide
and to provide to the Commission upon request such information as is reasonably
necessary and it is reasonably able to provide to ensure that:
(a) the Merger is validly and promptly notified to the Commission under the
ECMR and Commission Regulation No. 447/98; and
(b) any request for information from the Commission is fulfilled promptly and
in any event in accordance with any relevant time limit, and that, where
practicable, it provides copies of any proposed communication with the
Commission in relation to the Merger to the Purchaser and that (acting
reasonably) it takes due consideration of any reasonable comments that the
Purchaser or its advisers may have in relation to such proposed
communication, provided that the Vendor shall not be required to provide
the Purchaser with any confidential information or business secrets
relating to the Retained Group.
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Confidentiality
3.8 The Vendor shall procure that:
(a) all members of the Retained Group and (until Completion) each Group Company
shall, subject to clause 26.3 (insofar as such clause applies to the
Vendor), keep confidential any information supplied pursuant to clauses
3.4, 3.6 and 3.11, and which is confidential to any of the Purchaser or any
direct or indirect investor in or financier of the Purchaser;
(b) as soon as reasonably practicable following the earlier of (i) Completion
and (ii) the termination of this Agreement, all members of the Retained
Group (and, in the case of termination of this Agreement, each Group
Company) destroy and procure the destruction by their respective advisers
of all documents (whether in paper, electronic (other than from back-up
systems) or any other form) provided by or on behalf of the Purchaser to
the Vendor, any member of the Retained Group (and, in the case of
termination of this Agreement, each Group Company) and their respective
advisers pursuant to clauses 3.4, 3.6 and 3.11.
3.9 [Intentionally left blank].
Shareholder Resolution
3.10 The Vendor undertakes to the Purchaser to procure that Scottish Power plc
will post a circular to its shareholders on or before 30 March 2002 convening an
extraordinary general meeting of Scottish Power plc to be held on or before
16 April 2002 for the purpose of considering a resolution for the sale of the
Company in the agreed form (the Resolution) and that, unless in the reasonable
opinion of the board of Scottish Power plc it is not consistent with its
fiduciary duties to do so, the board of Scottish Power plc will:
(a) include in such circular their recommendation that the shareholders of
Scottish Power plc vote in favour of the Resolution and a statement that
they consider the transaction to be in the best interests of the
shareholders of Scottish Power plc as a whole; and
(b) procure that the Resolution is put to such meeting with its recommendation.
Communications with Regulatory Authorities
3.11 The Purchaser shall notify the Vendor sufficiently in advance (for the
purposes referred to below in this clause) of any notification, submission,
response or other communication (in each case whether in writing or otherwise)
(excluding communications of an administrative nature) which it proposes to make
or submit to any Regulatory Authority. Further, the Purchaser shall at the same
time provide the Vendor with copies thereof and any supporting documentation or
information reasonably requested by the Vendor, provided that the Purchaser
shall not be required to provide the Vendor with any confidential information or
business secrets. The Purchaser undertakes to take due consideration of any
reasonable comments which
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the Vendor may have in relation to any such notification, submission,
communication or response to a request for further information prior to making
the relevant notification, submission, communication or response (as the case
may be) provided that these have been communicated by the Vendor to the
Purchaser in a timely fashion. The Purchaser further agrees to keep the Vendor
informed as to the material progress of any such notification, submission,
communication or response (as the case may be) (excluding communications of an
administrative nature) made to any Regulatory Authority. The Purchaser shall
inform the Vendor in a timely fashion of all meetings between the Purchaser and
any Regulatory Authority. Where requested by the Vendor, the Purchaser shall
permit (and the Purchaser undertakes to the Vendor to procure that JVCo and any
shareholder of JVCo shall permit) the Vendor and/or its advisors to attend all
such meetings provided that the Vendor may be excluded from such parts of such
meetings where business secrets or confidential information of the Purchaser,
JVCo or any shareholder of JVCo are discussed. Where the context allows, the
Purchaser shall mean for the purpose of this clause 3.11, the Purchaser, JVCo
and any shareholder of JVCo.
3.12 The Vendor shall notify the Purchaser sufficiently in advance of any
notification, submission, response or communication (in each case whether in
writing or otherwise) (excluding communications of an administrative nature)
which any member of the Retained Group or, if prior to Completion, any Group
Company proposes to make or submit to any Regulatory Authority in relation to
the transactions contemplated by this Agreement or, to the extent reasonably
practicable, in relation to the Group or any part of its business. Further, the
Vendor shall at the same time provide the Purchaser with copies thereof and any
supporting documentation or information reasonably requested by the Purchaser,
provided that the Vendor shall not be required to provide to the Purchaser any
confidential information or business secrets. The Vendor undertakes to take, and
shall procure that the relevant member of the Retained Group or Group Company
takes, due consideration of any reasonable comments which the Purchaser may have
in relation to any such notification, submission, communication or response (as
the case may be) provided that these have been communicated by the Purchaser to
the Vendor in a timely manner. The Vendor further agrees to keep the Purchaser
informed as to the material progress of any such notification, submission,
communication or response (as the case may be) made to any Regulatory Authority.
PRE-COMPLETION UNDERTAKINGS
4.1 Pending Completion and subject to clauses 4.2 and 4.3, the Vendor shall
procure that, without, in the case of clauses 4.1(a) and (h), the prior written
consent of the Purchaser:
(a) save as expressly referred to in the Budget:
(i) each Group Company shall carry on its business in the ordinary
course and shall only make payments in the ordinary course;
(ii) each Group Company shall take all reasonable steps to preserve
and protect its assets including, without limitation, the
goodwill of its business;
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(iii) save pursuant to arrangements the existence and material terms
of which are summarised in the Disclosure Letter, no new
transactions shall be entered into by any Group Company with any
member of the Retained Group and all new transactions between
each Group Company and any other person shall be on arm's length
terms;
(b) subject to the terms of the Confidentiality Agreement, the Purchaser's
Representatives shall be allowed, upon 24 hours' written notice to the
Vendor and during normal business hours, reasonable access to the books and
records of each Group Company and reasonable access to the sites owned,
used or occupied by any Group Company and reasonable access to the
management of each Group Company and the Vendor shall promptly upon request
supply or procure the supply of any information and copies of any books and
records in each case reasonably required by the Purchaser relating to any
Group Company and its business and affairs (save in each case to the extent
they relate to the capital restructuring announced by Scottish Power plc on
7 November 2001 or the preparations therefor), in each case for the purpose
only of monitoring the management of the business of the Group or procuring
compliance with clauses 3.6, 3.7, 3.11, 3.12 and 4.6 or obtaining
information required by the Purchaser's Group to put insurances in place on
Completion;
(c) no dividend or other distribution (within the meaning of section 209 of the
Taxes Act) shall be declared, paid or made by any Group Company;
(d) save as provided in clause 2.3, no share or loan capital shall be allotted,
issued, redeemed or repurchased or agreed to be allotted, issued, redeemed
or repurchased by any Group Company and no Encumbrances shall be created or
agreed to be created over the shares in the capital of any Group Company;
(e) Southern Water Services Limited shall in all material respects carry on its
business functions as a water and sewerage undertaking in accordance with
its Instrument of Appointment and the Water Industry Act 1991 (as amended)
and, save as disclosed in the Disclosure Letter (at Exhibit Document
Numbers AD.304, AD.306 and AD.373), will not agree with the DGWS to any
modification of the terms of such Instrument of Appointment without the
prior written consent of the Purchaser;
(f) all insurance policies normally kept in force for the benefit of the Group
Companies shall be maintained;
(g) no Group Company shall resolve to be voluntarily wound up;
(h) each Group Company shall use its reasonable endeavours to operate the
business of the Group in all material respects in accordance with the
Forecast until 31 March 2002 and thereafter in accordance with the Budget;
(i) all management fees to members of the Retained Group shall be paid in an
amount and manner consistent with the terms of the Instrument of
Appointment and the requirements of the DGWS (to the extent such fees are
subject to the same) and, subject thereto, in the ordinary course
consistent with
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each Group Company's practice in the period of 12 months prior to entering
into this Agreement (excluding exceptional items); and
(j) subject to the Purchaser and the Purchaser's Group providing the Vendor
with sufficient information, each Group Company shall comply with any
binding obligations it may have to inform and consult employees, trade
unions and any employee representative body pursuant to any information or
consultation agreement or arrangement with its employees, their
representatives or any trade union prior to Completion in connection with
the transaction contemplated under this Agreement.
4.2 Pending Completion and without prejudice to clause 4.1, the Vendor shall
(i) ensure that the Company for itself and on behalf of the other Group
Companies consults fully with the Purchaser in relation to any matters which
will or may reasonably be expected to have a material adverse effect on the
Group and (ii) subject to clauses 4.4 and 4.6 procure that, without the prior
written consent of the Purchaser, no Group Company shall:
(a) save as expressly referred to in the Budget and other than in the ordinary
course of business:
(i) enter into any Material Contract;
(ii) enter into any other agreement, contract, arrangement,
transaction or commitment (whether or not legally binding) (or
make a bid or offer which may lead to such a contract or
commitment) which, save as contemplated in the Capital Programme,
either (x) has a value or involves expenditure in excess of
(Pounds)2,000,000 or (Pounds)10,000,000 in aggregate or (y)
involves an obligation of a material nature or which may result
in any material change in the nature or scope of the operations
of the Group (Arrangements, provided that where this term is used
outside this clause 4.2(a)(ii) it shall exclude Arrangements
which are only Arrangements by virtue of aggregation); or
(iii) exercise any material discretion or grant any material waiver or
material consent or material approval under or agree to any
material variation or material extension of any existing Material
Contract or any Arrangement,
nor fail to take such steps as are reasonable and appropriate from time to
time in the circumstances to enforce and preserve the rights and interests
under any such Material Contracts or Arrangements to which such Group
Company is a party;
(b) agree to any termination of any existing Material Contract or Arrangement
to which that Group Company is a party (whether entered into before or
after the date of this Agreement) provided that this shall not apply to
expiry by the effluxion of time;
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(c) other than any arrangement and related liabilities which will be discharged
at or before Completion, grant any loans or other financial facilities or
credit arrangements (other than trade credit in the ordinary course) to or,
save in the ordinary course of business, any guarantees or indemnities for
the benefit of any person other than a Group Company;
(d) agree or effect any variation of any of the terms of the SWSF Bonds or,
subject to clause 4.4(c), the EIB Loans;
(e) acquire or agree to acquire, or dispose of or agree to dispose of, or
create any Encumbrance or agree to create any Encumbrance over, all or any
substantial part of the business or assets of any company, other than in
the ordinary course of business and in each case involving consideration,
expenditure or the assumption of liabilities in excess of (Pounds)l million
in any one event or (Pounds)10 million in aggregate, nor acquire or dispose
of or create any Encumbrance over any business, company, assets or stock
other than on arms' length terms;
(f) remove from any Property any equipment, plant and machinery, computer
hardware, spares or other moveable items owned by any Group Company other
than in the ordinary course of business;
(g) save as disclosed in the Disclosure Letter (generally against warranties
11.4, 11.11, 11.12 and 11.16), dismiss any Employee (other than for a
reason set out in sections 98(1) or (2) of the Employment Rights Xxx 0000
provided that the dismissal does not fall within Regulation 8(1) of the
Transfer of Undertakings (Protection of Employment) Regulations 1981) or
solicit any Employee to be engaged or continue to be engaged by the Vendor
before or after Completion;
(h) engage or appoint any additional employees (other than the individuals
listed in Schedule 11 (Employees)) other than (i) in the ordinary course of
business or (ii) to replace or substitute any Employee who leaves or
retires from any of the Group Companies;
(i) save for bona fide adjustments in remuneration in the ordinary course and
in a manner consistent with past practice of the Group, vary any contract
of employment of any Senior Employee nor make any change in terms of
employment, including pension commitments, by any Group Company (other than
those required by law) which would increase the total staff costs of the
Group by more than 3 per cent. per annum and in respect of any Senior
Employee, save as disclosed in the Disclosure Letter (at Exhibit Document
Number AD.177 and generally against warranty 11.9) (and save for the
retention or bonus arrangements agreed for the purposes of the transactions
contemplated by the Transaction Documents, provided that full details of
such retention or bonus arrangements are provided to the Purchaser prior to
the date of this Agreement), by more than 10 per cent. per annum;
(j) save as disclosed in the Disclosure Letter (at Exhibit Document Number
AD.177 and generally against warranty 11.1(b)) (and save for the retention
or bonus arrangements agreed for the purposes of the transactions
contemplated by the Transaction Documents, provided that full details of
such retention or
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bonus arrangements are provided to the Purchaser prior to the date of this
Agreement), adopt any new employee share scheme, bonus scheme or other
incentive or benefit scheme in respect of any Employees or, except in the
ordinary course of business and in a manner consistent with past practice,
vary or terminate any such scheme which has been adopted as at the date of
this Agreement;
(k) except in the ordinary course of business and in a manner consistent with
past practice and except in respect of the Scottish Power plc Employee
Share Ownership Plan, grant further share options or awards to any Relevant
Employee under any of the Schemes or participate in any grant under any
share incentive, share option or other incentive implemented by the
Retained Group;
(l) fail to manage the rights and liabilities under the Construction Contracts
and the Material Contracts in accordance in all material respects with the
RPO Standard;
(m) except in the ordinary course of business and in all material respects in
accordance with the RPO Standard (unless in any case a material adverse
effect on the Group would or would be likely to result, in which case this
exception shall not apply) seek, agree to or acquiesce in (i) the variation
of any of the licences (including for the avoidance of doubt and without
limitation Environmental Licences), permissions, authorisations or consents
required for the carrying on of its business as presently carried on or
(ii) the creation of any new such licence, permission, authorisation or
consent;
(n) in the case of any dormant Group Company shown in Schedule 2, carry on any
business or incur any new obligation or liability;
(o) in the case of the Specified Subsidiaries, carry out any activities other
than those currently carried on in the ordinary course;
(p) materially amend any insurance contract, fail to notify any insurance claim
in excess of [***] (having become aware of the same) in accordance with the
provisions of the relevant policy or apply any proceeds of any insurance
policy received by the Vendor or any Group Company insofar as they relate
to the repair and/or restoration of any physical loss and/or damage to any
assets caused during the period between the date of this Agreement and
Completion other than to the repair and/or restoration of any physical loss
and/or damage to such assets or if such repairs have been carried out to
reimburse the costs of such repairs;
(q) make any change to its accounting practices, bases or policies (save as may
be required to comply with any changes to applicable generally accepted
accounting principles and standards) or make any alteration to its
memorandum or articles of association, or make any material alteration to
any shareholder or joint venture agreement or other similar agreements
relating to it or its constitution or management or restricting the scope
of its activities;
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(r) enter into any joint venture, partnership or arrangement for the sharing of
profits or assets, liabilities or losses;
(s) acquire or agree to acquire any share or other interest in any new or
existing company, partnership or other venture or create any branch or
place of business in any jurisdiction;
(t) incur any additional borrowings or other indebtedness otherwise than in the
ordinary course of business, nor, where in the ordinary course of business,
incur any additional borrowings or other indebtedness, the terms of which
contain penalties which would apply in the event the Purchaser wishes to
repay or restructure such borrowings or indebtedness after Completion;
(u) commence (save to the extent required to preserve the rights of any Group
Company), compromise or discontinue (otherwise than in relation to the
[***] Claim) any material legal or arbitration proceedings in a way which
could reasonably be expected to have a material adverse effect on the
Group;
(v) notwithstanding any other provision of clause 4.1 or this clause 4.2,
create any Encumbrance or lease over, or dispose of, any of the Properties
or, in each case otherwise than in the ordinary course of business, create
any licence, tenancy, easement or other third party right over any of the
Properties; or
(w) enter into any agreement or obligation to do anything prohibited by any of
the foregoing sub-paragraphs of this clause 4.2.
4.3 Pending Completion, each of the K3 Contracts shall be operated (including
in respect of any alterations or variations thereto) by the relevant Group
Company at all times and in all material respects in accordance with the RPO
Standard and each relevant Group Company shall use its reasonable endeavours to
ensure that each such K3 Contract shall be operated at all times and in all
material respects in a manner:
(a) consistent with achieving the efficiency targets relating to the K3
Contracts set out in the Budget; and
(b) which will not cause or result in any expenditure under the K3 Contracts
that would not be allowable for the purposes of determining the Regulatory
Capital Value at the next regulatory price review following the date of
this Agreement.
4.4 Notwithstanding clauses 4.1, 4.2 and 4.3, a Group Company or, in the case
of clause 4.4(c) below, the Vendor shall, without the Purchaser's prior written
consent, be entitled (but not obliged) to:
(a) carry out and complete the Disposal Scheme on arm's length terms so long as
(i) any disposa1s are not to the Vendor or parties connected with it and
(ii) all proceeds are retained within the relevant Group Company;
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(b) tender for or enter into the contracts and agreements in relation to the
schemes set out in Schedule 7 consistent with the terms of the K3
Contracts;
(c) repay, prepay or novate, and pay any prepayment or cancellation fees in
respect of and, thereafter, cancel the EIB Loans and obtain any waiver in
respect thereof; and
(d) repay or prepay any Intra Group Debt;
provided that the Vendor shall nonetheless be obliged to consult the Purchaser
and keep it informed in reasonable detail of all material developments in
relation to any of the foregoing.
4.5 Pending the earlier of:
(a) Completion; and
(b) termination of this Agreement,
the Vendor shall not and shall procure that Southern Water Services Limited
shall not effect the capital restructuring announced by Scottish Power plc on
7 November 2001 and shall not and shall procure that no Group Company shall
effect any other Refinancing Proposal. For the avoidance of doubt, all external
costs and expenses (excluding VAT, but only to the extent that such VAT is
considered to be recoverable) incurred by any Group Company in relation to the
capital restructuring announced on 7 November 2001 shall be for the account of
the Vendor and shall, to the extent due and outstanding as at the Completion
Date, be included in the calculation of Third Party Debt; provided that to the
extent that VAT on any such costs and expenses (whether or not outstanding at
Completion) which was considered to be recoverable is not recoverable or that
any such costs and expenses (whether or not outstanding at Completion) are not
deductible for corporation tax purposes, in either case within three years after
the Completion Date, the Purchaser shall be entitled to claim from the Vendor
the amount of such irrecoverable VAT or the amount of corporation tax that would
not have arisen had such costs and expenses been deductible for corporation tax
purposes (as the case may be) and the Vendor shall pay such amount within 10
Business Days of presentation by the Purchaser to the Vendor of an auditor's
certificate together with reasonable supporting information in respect thereof;
but provided further that the Purchaser shall (and shall procure that each
member of the Purchaser's Group shall) use all reasonable endeavours after
Completion to recover such VAT and to procure that such costs and expenses are
deductible for corporation tax purposes in each case within three years after
Completion.
4.6 Prior to Completion, the Vendor shall procure that Southern Water plc
transfers all the issued shares in ScottishPower Group Money Purchase Pension
Scheme Limited to the Vendor or such other member of the Retained Group as the
Vendor may specify.
4.7 Pending Completion, the Purchaser shall not and shall procure that no
member of the Purchaser's Group shall, without the prior written consent of the
Vendor (such
Page 12
consent not to be unreasonably withheld) enter into any commitment (whether or
not legally binding and whether conditional or unconditional) relating to any
acquisition or proposal for the acquisition by the Purchaser or any member of
the Purchaser's Group of any water and/or sewerage undertaker or the whole or
any material part of its assets and undertakings which in any case could
reasonably be expected to adversely affect Completion or the receipt by the
Vendor in cash of the amounts referred to in clause 5.6(or make any announcement
or public statement, or any statement to any Regulatory Authority, indicating an
intention to do so).
4.8 Pending Completion, the Vendor shall not and shall procure that no member
of the Retained Group or the Group shall, without the prior written consent of
the Purchaser, (such consent not to be unreasonably withheld) enter into any
commitment (whether or not legally binding and whether conditional or
unconditional) relating to any acquisition or proposal for the acquisition by
the Vendor or any member of the Retained Group or the Group of any water and/or
sewerage undertaker or the whole or any material part of its assets and
undertakings which in any case could reasonably be expected to adversely affect
Completion (or make any announcement or public statement, or any statement to
any Regulatory Authority, indicating an intention to do so).
4.9 Prior to Completion, the Vendor shall use its reasonable endeavours to
procure that:
(a) the individuals listed in Part A of Schedule 11 (Employees) agree to
transfer to the employment of Southern Water plc on the same terms and
conditions of employment as they are employed by the Vendor (or any other
member of the Retained Group) at the date of this Agreement; and
(b) the individuals listed in Part B of Schedule 11 (Employees) are offered
employment by Southern Water plc on the same terms and conditions of
employment as they are employed by the Vendor (or any other member of the
Retained Group) at the date of this Agreement;
and the Purchaser shall use its reasonable endeavours to co-operate with the
Vendor in persuading such individuals to agree to such change of employer.
4.10 To the extent that any of the individuals to which clause 4.9(a) and (b)
refers does not accept employment with Southern Water plc as described in clause
4.9 by Completion, the Vendor (or other member of the Retained Group employing
such individual) shall terminate the employment of such individual and the
Purchaser shall procure that Southern Water plc shall make an offer of
employment with effect from Completion to such individual on the same terms and
conditions of employment as they are employed by the Vendor (or any other member
of the Retained Group) at the date of this Agreement (including as to pensions)
and with (as far as possible) continuity of employment preserved to the same
extent as would apply if the Transfer of Undertakings (Protection of Employment)
Regulations 1981 applied to the sale of the Group and those individuals.
Page 13
COMPLETION
5.1(a) Completion shall take place simultaneously with it becoming certain that
neither of the events set out in clauses 3.1(a) and (b) shall occur on
or prior to the Initial Termination Date (the time at which it becomes so
certain being the Relevant Time), unless:
(i) prior to the Relevant Time or, if a Vendor Termination Notice has
been served prior to the Relevant Time, the date on which
Completion would otherwise occur under clause 5.1(c)(i), a
Purchaser Termination Notice (as defined in the Escrow Deed) has
been served in accordance with the terms of the Escrow Deed; or
(ii) prior to the Relevant Time a Vendor Termination Notice has been
served within the period allowed in clause 8.8 and a valid
Dispute Notice has not yet been served in accordance with clause
8.9 or a valid Dispute Notice has been served in accordance with
clause 8.9 and is pending determination by the Expert in
accordance with clause 8.9;
and further provided that no Blocking Order shall have been made (and not
revoked or varied so as to permit Completion to take place and the Vendor
to be paid in cash the amounts referred to in clause 5.6).
(b) In the event that a Blocking Order is made prior to the Relevant Time or,
if a Vendor Termination Notice has been served prior to the Relevant
Time, the date on which Completion would otherwise occur in accordance
with clause 5.1(c)(i), the Purchaser shall use all reasonable endeavours
to take such steps or provide such undertakings as would result in the
Blocking Order being revoked or varied so as to permit Completion to take
place and the Vendor to be paid in cash the amounts referred to in clause
5.6 PROVIDED THAT such reasonable endeavours shall not require the
Purchaser to make or procure to be made any alteration or variation to
the terms of the arrangements relating to, or terms of, the preference
shares to be issued in the capital of JVCo (including, without
limitation, the terms of the put and call options entered into in respect
of such preference shares) provided that fair summaries of such
arrangements have been disclosed to the Vendor in writing prior to the
date of this Agreement. If a Blocking Order has not been revoked or
varied so as to permit Completion to take place and the Vendor to be paid
the amounts referred to in clause 5.6 prior to the Initial Termination
Date, the Vendor may elect by written notice to the Purchaser before the
Initial Termination Date (with a copy to the Escrow Agent in accordance
with the Escrow Deed) to extend this Agreement to the Final Termination
Date and such reasonable endeavours obligation relating to the Blocking
Order referred to above shall apply until the Final Termination Date.
(c) In the event that:
(i) a Vendor Termination Notice was served prior to the Relevant Time
(or, if Completion has not previously taken place, after the
Relevant Time), Completion shall take place simultaneously upon
the Expert
Page 14
determining in accordance with the relevant provisions of clause
8.9 that such Vendor Termination Notice is not valid or the
Purchaser and the Vendor agreeing that such Vendor Termination
Notice is not valid unless at that time the circumstance in
clause 5.l(c)(ii) is subsisting or a subsequent Vendor
Termination Notice has been served and is outstanding; or
(ii) a Blocking Order has been made prior to the Relevant Time or, if
a Vendor Termination Notice was served prior to the Relevant
Time (or, if Completion has not previously taken place, after
the Relevant Time), the date on which Completion would otherwise
occur in accordance with clause 5.1 (c)(i), Completion shall
take place simultaneously with the Secretary of State ordering
or announcing a revocation or variation of or to such Blocking
Order which would permit Completion to take place and the Vendor
to be paid the amounts referred to in clause 5.6 unless at that
time the circumstance in clause 5.1(c)(i) is subsisting,
provided in each case that Completion shall not be capable of occurring
after the Initial Termination Date or, if an election is made under
clause 5.1(b), the Final Termination Date.
(d) In the event that:
(i) a Blocking Order is made prior to the Relevant Time or, if a
Vendor Termination Notice has been served prior to the Relevant
Time (or, if Completion has not previously taken place, after
the Relevant Time), the date on which Completion would otherwise
occur in accordance with clause 5.1 (c)(i) and such Blocking
Order is not revoked or varied prior to the Initial Termination
Date (or, if an election is made under clause 5.1 (b), revoked
or varied prior to the Final Termination Date) so as to permit
Completion to take place and the Vendor to be paid the amounts
referred to in clause 5.6; or
(ii) clause 5.1 (a)(i) applies;
(iii) clause 5.l(a)(ii) applies and the Purchaser has not served a
valid Dispute Notice within the time specified in clause 8.9 or
a valid Dispute Notice has been served within such time and it
has been determined or agreed in accordance with clause 8.9 that
such Vendor Termination Notice is valid or such Vendor
Termination Notice is deemed to be valid under clause 8.11; or
(iv) it becomes certain on or prior to the Initial Termination Date
that either of the events set out in clause 3.1 (a) and (b)
shall occur prior to the Initial Termination Date;
this Agreement shall automatically terminate with immediate effect (save
as provided in clause 28).
Page 15
(e) If a Purchaser Termination Notice has been served under clause 3.1 of the
Escrow Deed prior to the time at which Completion would otherwise occur
under this clause 5.1, the event referred to in clause 3.1(c) shall for the
purposes of this Agreement be conclusively deemed to be subsisting (without
prejudice to any claim the Vendor may have under clause 3.1 of the Escrow
Deed). If a Purchaser Termination Notice has not been served prior to
Completion, the event referred to in clause 3.1(c) shall be conclusively
deemed to be not subsisting.
5.2 In order to facilitate Completion, upon signature of this Agreement:
(a) the Vendor and the Purchaser shall execute and deliver to the Escrow Agent
the Escrow Deed;
(b) the Vendor shall execute or procure that the relevant Group Company
executes all such documents as are referred to in clauses 5.4 and 5.5 and
deliver the same to the Escrow Agent;
(c) the Purchaser shall execute all such documents as are referred to in clause
5.6(d) and deliver the same to the Escrow Agent;
(d) the Purchaser shall procure that the Letters of Credit are delivered to the
Escrow Agent,
on the basis that all documents so delivered to the Escrow Agent shall be held
in, and released from, escrow in accordance with the Escrow Deed.
5.3 In accordance with the terms of the Escrow Deed, at Completion:
(a) the documents referred to in clause 5.2 above shall be delivered and/or
issued and become effective and legally binding on the relevant parties at
Completion (with the exception of the Assignments of Intra Group Debt which
shall become effective immediately thereafter) without the requirement for
any further act to be done by any person and shall (except for the Letters
of Credit, which shall be dated the date hereof) be dated the Completion
Date by the Escrow Agent in accordance with the Escrow Deed; and
(b) the release from escrow at Completion of the Letters of Credit shall
subject to clause 3.2, satisfy the obligations of the Purchaser under
clauses 5.6(a), (b) and (c) below.
5.4 The Vendor shall deliver (or cause to be delivered) to the Purchaser:
(a) duly executed transfers into the name of the Purchaser or its nominee in
respect of all of the Shares, together with the relative share
certificates;
(b) share certificates in respect of all of the issued shares in the capital of
each other Group Company, together with duly executed transfers into the
name of the Purchaser or its nominee in respect of any shares in such Group
Companies not held in the name of a Group Company;
Page 16
(c) a letter from PwC to the Company confirming that they will resign as the
auditors of each Group Company on the earlier of (a) the date on which they
deliver their audit opinion in respect of the accounts for the year to 31
March 2002 of each Group Company whose accounts are required to be audited
and the consolidation thereof, and (b) 30 June 2002.
(d) a letter of resignation in the agreed form duly executed as a deed by each
of the Resigning Directors;
(e) a letter of resignation in the agreed form duly executed as a deed by the
secretary of any Group Company who is to resign with effect from Completion
(as notified by the Purchaser to the Vendor in writing prior to the date of
this Agreement);
(f) documents substantially in the form set out in Schedule 12 in respect of
all intra group indebtedness comprising the Intra Group Debt referred to in
clause 2.3 (the Intra Group Debentures);
(g) assignments in the agreed form of all intra group indebtedness comprising
the Intra Group Debt executed by the Vendor in each case as a deed together
with the relevant notices and acknowledgements required to be delivered
thereunder executed by the relevant Group Companies (Assignments of Intra
Group Debt);
(h) the Transitional Services Agreement executed by the Vendor and Southern
Water Services Limited;
(i) an assignment in the agreed form to a Group Company (as specified by the
Purchaser) from and on behalf of the Vendor and each and every member of
the Retained Group of all their rights, title and interest in:
(i) the SOUTHERN WATER and SOUTHERN WATER SERVICES trade marks
(whether registered or unregistered) (the Marks); and
(ii) any other trade marks, service marks, trading names, get-ups or
logos incorporating either or both of the Marks, whether
registered or unregistered (with the exception of the
UK-registered device and word xxxx "SOUTHERN WATER A
SCOTTISHPOWER COMPANY" registration no. 2188028)
together with all associated goodwill and reputation;
(j) appropriate documentation and executed UK Trade Xxxx Forms (Forms TM22 and
Authorisation of Agent) in the agreed form to enable the Purchaser to file
and record the surrender of the Vendor's trademark registration no. 2188028
for the device and word xxxx "SOUTHERN WATER A SCOTTISHPOWER COMPANY", and
a written undertaking to do all such acts or things and take all necessary
steps to assist the relevant Group Company in any application made at any
Trade Xxxx Registry or equivalent for registration of the marks referred to
in paragraph (i) above; and
Page 17
(k) a power of attorney in the agreed form in relation to the voting rights of
the Shares after Completion executed by the Vendor; and
(1) the Company Car Leasing Agreement executed by the Vendor and Southern Water
Services Limited.
5.5 The Vendor shall procure that on or before the date of this Agreement the
resolutions of the board of directors of each Group Company are passed
(conditional upon Completion having occurred) by which:
(a) in the case of the Company, the registration (subject to their being duly
stamped) of the transfers in respect of the Shares referred to in clause
5.5(a) is approved;
(b) the resignations of the Resigning Directors and the secretary (if
applicable) of such Group Company are accepted, Xxxxxxx Xxxxxx and Xxxxxx
Derwent (in the case of the Company) are appointed as directors of such
Group Company and Xxxxx Xxxx is appointed as secretary of such Group
Company;
(c) where relevant, the execution of and performance of obligations under any
documents to be executed by such Group Company pursuant to this Agreement
is authorised; and
(d) to the extent requested by the Purchaser, revoking all existing authorities
to bankers in respect of the operation of its bank accounts and giving
authority in favour of such persons as the Purchaser may nominate to
operate such accounts.
5.6 The Purchaser shall:
(a) pay, or cause to be paid, to the Vendor an amount equal to the Initial
Share Purchase Price on account of the Share Purchase Price;
(b) pay, or cause to be paid, to the Vendor, an amount equal to the Estimated
Intra Group Debt on account of the Debt Purchase Price;
(c) procure the repayment to the Vendor by or on behalf of the Company of the
Aspen 4 Amount; and
(d) deliver to the Vendor Assignments of Intra Group Debt executed by the
Purchaser in each case as a deed.
5.7 If Completion shall have taken place in accordance with clause 5.1(a) and
the Vendor has not received payment in cash for value equal to the full amount
of such Letters of Credit within 10 Business Days, then to the extent the Vendor
has not received such payment the Purchaser shall, as soon as possible (and in
any event within 2 Business Days) thereafter, pay or cause to be paid to the
Vendor the amounts referred to in clause 5.6 including, without limitation, by
exercising and enforcing its rights under the Facility Agreements to draw down
the funds available to it thereunder and paying the relevant amount to the
Vendor SAVE to the extent that, but then only
Page 18
for so long as, any such payment under the Letters of Credit or under this
clause 5.7 or the exercising or enforcing of such rights is prohibited by a
Blocking Order, but in such event the Purchaser shall use all reasonable
endeavours to take such steps or provide such undertakings as are described in
clause 5.1(b) (subject always to the proviso thereto) as would result in the
Blocking Order being revoked or varied so as to permit the Vendor to be paid the
amounts referred to in clause 5.6. The Vendor shall not be entitled to make any
demand with respect to the Letters of Credit to the extent that the Vendor has
otherwise received the amounts referred to in clause 5.6 and, to that extent,
upon any revocation or variation of the Blocking Order which permits the same,
the Letters of Credit shall be released to their respective issues.
5.8 If and to the extent that any Intra Group Debt arising during the period
from the date of this Agreement to Completion has not been provided for in the
Intra Group Debentures or Assignments of Intra Group Debt delivered to the
Escrow Agent pursuant to clause 5.2, as soon as practicable after Completion and
in respect of such Intra Group Debt:
(a) the Vendor shall deliver (or cause to be delivered) to the Purchaser
documents in the form set out in Schedule 12 and assignments in the same
form as the Assignments of Intra Group Debt together with the relevant
notices and acknowledgements required to be delivered thereunder; and
(b) the Purchaser shall deliver to the Vendor the assignments referred to in
(a) above counter-signed by the Purchaser.
5.9 With effect from Completion:
(a) the Vendor shall procure that the Resigning Directors shall, to the extent
permitted by law, waive all of their rights to take any action or make any
claim against the Company or any other Group Company of which they were
directors at any time prior to Completion without compensation being
payable;
(b) the Vendor shall procure that each member of the Retained Group shall, to
the extent permitted by law, waive all of their rights to take any action
or make any claim against any Resigning Director for which any Group
Company would be directly or indirectly liable;
(c) the Purchaser shall, and shall procure that the Company and any other Group
Company of which the Resigning Directors were directors at any time prior
to Completion and any other member of the Purchaser's Group shall, to the
extent permitted by law, waive all of its rights to take any action or make
any claim against the Resigning Directors in respect of any act or thing
done by them as directors or officers of the Company or any other such
Group Company;
(d) the Vendor shall procure that the Resigning Directors together with those
other directors of the Group Companies who have retired during the Vendor's
ownership of such companies shall be insured, and the Purchaser shall
procure that other past directors shall continue to be insured, on no less
favourable
Page 19
terms than under the directors and officers insurance policy of the
Company or of any other Group Company of which they were directors at
any time prior to Completion for a period of six years after Completion.
5.10 The Resigning Directors may enforce the terms of clauses 5.9(c) and (d)
under the Contracts (Rights of Third Parties) Xxx 0000.
5.11(a) Subject to Clause 5.11(b), the Vendor shall use reasonable endeavours
from the date hereof until Completion to obtain the licences, permits, consents
and approvals necessary for it to provide from Completion the Vendor Services
(as defined in the Transitional Services Agreement).
(b) If the Vendor is required from the date hereof until Completion to pay a
fee or to incur any other cost or expense in relation to obtaining a licence,
permit, consent or approval necessary to provide the Vendor Services to the
Group which is incremental to that which would have been borne by the Vendor in
providing the same or similar services to other members of the Retained Group,
having used all reasonable endeavours to avoid incurring any such fee, cost or
expense, the Vendor shall notify as soon as reasonably practicable the Company
and, if the Purchaser wishes the relevant Vendor Service to be provided in
accordance with the Transitional Services Agreement, the Purchaser shall pay
such fee, cost or expense.
5.12 As soon as practicable after Completion, the Vendor shall deliver (or
cause to be delivered) to the Purchaser (or as it may direct) the certificates
of incorporation, common seal, share register and share certificate book (with
any unissued share certificates) and all minute books and other statutory
registers (which shall be written-up to but not including Completion) of the
Company and of each other Group Company.
5.13 The Vendor shall use reasonable endeavours from the date hereof to
obtain at the expense of the Purchaser such consent as may be necessary to
novate, assign or transfer to the Purchaser, or relevant member of the Group,
with effect from Completion that part of the Fuel Agreement that Southern Water
Services Limited received the benefit, and had the burden of, prior to the date
hereof (Company Fuel Service).
5.14 Subject to clause 5.16(c), from Completion the Purchaser shall:
(a) procure that the relevant Group Company performs all the Vendor's
obligations from the date of Completion in respect of the Company Fuel
Service in accordance with the terms of the Fuel Agreement; and
(b) indemnify, and keep indemnified, the Vendor against each loss, liability
and costs which the Vendor incurs as a result of the relevant Group
Company's performance of or default under the Vendor's obligations under
the Company Fuel Service from the date of Completion (as referred to in
clause 5.14(a)) to the extent that the loss, liability or cost is
attributable to the relevant Group Company's act or omission from the
date of Completion (including, without limitation, each loss, liability
and cost incurred as a result of defending or setting a claim alleging
such liability).
Page 20
5.15 The Vendor shall indemnify, and keep indemnified, the Purchaser (for
itself and on behalf of each relevant Group Company) against each loss,
liability and cost which the Purchaser, or relevant Group Company, incurs as a
result of the Vendor's performance of its obligations under the Fuel Agreement
to the extent that the loss, liability or cost is attributable to the Vendor's
act or omission whether before or after Completion (including, without
limitation, each loss, liability and cost incurred as a result of defending or
settling a claim alleging such a liability).
5.16 To the extent that the consent referred to in clause 5.13 has not been
obtained prior to Completion:
(a) the Vendor shall continue to use reasonable endeavours to obtain such
consent at the expense of the Purchaser;
(b) the Vendor shall declare itself trustee for the Purchaser, or relevant
Group Company, in respect of the Company Fuel Service and the Vendor
shall act under the direction of the Purchaser and as its agent in all
matters relating to the Company Fuel Service; and
(c) the Vendor shall, at the Purchaser's sole cost, do each act and thing
reasonably requested of it by the Purchaser to enable performance of the
Company Fuel Service and to provide for the Purchaser, or relevant Group
Company, the benefits of the Company Fuel Service (including, without
limitation, enforcement of a right of the Vendor against the other party
to the Fuel Agreement arising out of its termination by the other party
or otherwise); and
(d) the Purchaser shall provide, or procure the provision of, any
information or guarantees as are required in order to obtain such
consent, unless the Purchaser notifies the Vendor in writing that it is
released and discharged from its obligations under clauses 15.13 to
15.16.
5.17 The Purchaser shall, from the date of Completion, procure that the Group
Companies perform any and all of their obligations under the Fuel Agreement to
the extent that the novation, assignment or transfer of the Fuel Agreement has
not been completed.
5.18 No effect shall be given to clause 5.16, if there is a material risk
that the Fuel Agreement would be treated as repudiated by the third party, or if
the Vendor would be in breach of its obligations to any third party under the
Fuel Agreement. If any necessary consent is not obtained within 6 months after
Completion or is refused and the procedure set out in clause 5.16 does not
enable the full benefit of Company Fuel Service to be enjoyed by the Purchaser,
or the relevant Group Company after Completion, the parties shall, at the
Purchaser's sole cost, use reasonable endeavours to achieve an alternative
solution pursuant to which the Purchaser, or the relevant Group Company, shall
both receive the full benefits of the Company Fuel Service and assume the
associated obligations.
5.19 The Vendor shall use reasonable endeavours from the date hereof until
Completion to assist the Purchaser, at the expense of the Purchaser, and as the
Purchaser reasonably requires in procuring that any agreement to which the
Purchaser
Page 21
or any Group Company is a party which allows for a third party to terminate such
agreement on a change of the control of the Group Company is not terminated on
the sale of the Shares.
NET DEBT STATEMENT
6.1 The Vendor and the Purchaser shall use all reasonable endeavours to
procure that a Net Debt Statement is prepared in accordance with the provisions
of this clause 6. The Net Debt Statement shall be prepared on the basis of the
accounting policies and procedures set out in Schedule 8.
6.2 The Vendor shall at its cost arrange for a draft Net Debt Statement (the
Draft Net Debt Statement) to be prepared by the Vendor in consultation with the
Vendor's Accountants and delivered to the Purchaser together with such
supporting information as may reasonably be required by the Purchaser (with a
copy to the Purchaser's Accountants) within 20 Business Days of Completion. The
Vendor shall instruct the Vendor's Accountants to report that in their opinion
the Draft Net Debt Statement has been drawn up in accordance with Schedule 8 of
this Agreement.
6.3 The Purchaser shall notify the Vendor within 20 Business Days of receipt
of the Draft Net Debt Statement whether or not it accepts it for the purposes of
this Agreement.
6.4 If the Purchaser notifies the Vendor within the period specified in clause
6.3 that it does not accept the Draft Net Debt Statement:
(a) it shall set out in such notice its reasons for such non-acceptance
(together with such supporting information as may be reasonably necessary
to support the reasons stated) and specify the adjustments which, in its
opinion, should be made to the Draft Net Debt Statement in order to comply
with the requirements of this Agreement; and
(b) the parties shall (in conjunction with the Purchaser's Accountants and the
Vendor's Accountants) meet and discuss the objections of the Vendor and
use all reasonable endeavours to reach agreement upon the adjustments (if
any) required to be made to the Draft Net Debt Statement within 20
Business Days following receipt of the notice referred to in clause 6.3.
6.5 If the Purchaser is satisfied with the Draft Net Debt Statement (either as
originally submitted or after adjustments agreed between the Purchaser and the
Vendor) or if the Purchaser fails to notify the Vendor of its non-acceptance of
the Draft Net Debt Statement within the 20 Business Day period referred to in
clause 6.3, then the Draft Net Debt Statement (incorporating any agreed
adjustments) shall constitute the Net Debt Statement for the purposes of this
Agreement.
6.6 If the Purchaser and the Vendor do not reach agreement within 20 Business
Days of the Purchaser's notice of non-acceptance under clause 6.4, then the
matters in dispute shall be referred, on the application of either party, for
determination by an independent firm of internationally recognised chartered
accountants (the Accounting Expert) to be agreed upon by the Vendor and the
Purchaser or, failing agreement
Page 22
within 20 Business Days, to be selected by the President for the time being of
the Institute of Chartered Accountants in England and Wales.
6.7 The following terms of reference shall apply for the appointment of the
Accounting Expert:
(a) the Purchaser or the Purchaser's Accountants and the Vendor or the
Vendor's Accountants shall each promptly (and in any event within 20
Business Days) of a relevant appointment submit a written statement on the
matters in dispute (together with the relevant documents) to the
Accounting Expert for determination;
(b) at the same time as the Purchaser (or the Purchaser's Accountants) and the
Vendor (or the Vendor's Accountants) submit their respective written
statements on the matters in dispute to the Accounting Expert for
determination, each shall deliver to the other a copy of their submissions
(with all relevant supporting documents);
(c) following delivery of their respective submissions, the Purchaser and the
Vendor shall have the opportunity to comment once only (provided that
nothing in this paragraph (c) shall prevent the parties from responding to
any requests from the Accounting Expert under clause 6.8) on the other
party's submissions by written comment delivered to the Accounting Expert
not later than 20 Business Days (the Last Comments Date) after the written
statement was first submitted to the Accounting Expert and copied to the
other party pursuant to clause 6.7(b);
(d) in giving its determination (which shall be in writing), the Accounting
Expert shall state what adjustments (if any) are necessary to the Draft
Net Debt Statement in respect of the matters in dispute in order to comply
with the requirements of this Agreement;
(e) the Accounting Expert shall act as an expert (and not as an arbitrator) in
making any such determination which shall be final and binding on the
parties in the absence of manifest error (when the relevant part of their
determination shall be void and the matter shall be resubmitted to the
Accounting Expert by either party for determination as soon as reasonably
practicable);
(f) the charges and expenses of any such determination by the Accounting
Expert shall be borne between the Vendor and the Purchaser equally;
(g) the Accounting Expert shall be engaged jointly by the parties on the terms
set out in this clause 6 and otherwise on such terms as shall be agreed;
provided that neither party shall unreasonably (having regard, inter alia,
to the provisions of this clause 6) refuse its agreement to terms proposed
by the Accounting Expert or by the other party. If the terms of engagement
of the Accounting Expert have not been settled within 45 days of their
identity having been determined (or such longer period as the parties may
agree) then, unless one party is unreasonably refusing to its agreement to
those terms, that expert shall be deemed never to have become the
Accounting Expert and a
Page 23
new Accounting Expert shall be selected in accordance with the provisions
of this Agreement.
6.8 The Accounting Expert shall be instructed to reach its determination
within 20 Business Days of the Last Comments Date or as soon thereafter as is
reasonably possible: The Purchaser and the Vendor shall promptly give the
Accounting Expert such co-operation and information as the Accounting Expert may
reasonably request for the purposes of reaching its determination.
6.9 If the Vendor and the Purchaser reach (or pursuant to clause 6.5 are
deemed to reach) agreement on the Draft Net Debt Statement or the Draft Net Debt
Statement is finally determined at any stage in the procedures set out in this
clause 6:
(a) the Draft Net Debt Statement as so agreed or determined shall be the Net
Debt Statement for the purposes of this Agreement and shall be final and
binding on the parties; and
(b) the Net Financial Debt Amount shall be as set out in the Net Debt
Statement.
6.10 The Purchaser shall use all reasonable endeavours to ensure that, in the
period following delivery of the Draft Net Debt Statement to the Vendor and
until the Net Debt Statement is agreed or determined in accordance with this
clause 6, the Vendor's Accountants are provided with such access to the
employees, accounts, working papers and other financial information of the
relevant Group Company as is reasonably necessary for the purposes of this
clause 6. Each party shall similarly use all reasonable endeavours during the
same period to ensure that the Purchaser's Accountants and the Vendor's
Accountants each have such access to all employees, relevant working and other
papers of the other as is reasonably necessary for the purposes of this clause
6.
6.11 Except to the extent that the parties agree otherwise, the Accounting
Expert shall determine its own procedure but:
(a) apart from procedural matters and as otherwise set out in this Agreement
shall determine only:
(i) whether any of the arguments for an alteration to the Draft
Net Debt Statement put forward in the Vendor's notice of
non-acceptance under clause 6.4 is correct in whole or in
part; and
(ii) if so, what alterations should be made to the Draft Net Debt
Statement in order to correct the relevant inaccuracy in it;
and
(b) for the avoidance of doubt, the Accounting Expert shall not be entitled to
determine the scope of its own jurisdiction.
6.12 The parties shall co-operate with the Accounting Expert and comply with
its reasonable requests made in connection with the carrying out of its duties
under this Agreement.
Page 24
6.13 Subject to clause 6.14, nothing in this clause 6 shall entitle a party or
the Accounting Expert access to any information or document which is protected
by legal professional privilege or which has been prepared by the other party or
its accountants and other professional advisers with a view to assessing the
merits of any claim or argument.
6.14 A party shall not be entitled by reason of clause 6.13 to refuse to supply
such part or parts of documents as contain only the facts on which the relevant
claim or argument is based.
6.15 Each party and the Accounting Expert shall, and shall procure that its
accountants and other advisers shall, keep all information and documents
provided to them pursuant to this clause 6 confidential and shall not use the
same for any purpose, except for disclosure or use in connection with the
preparation of the Net Debt Statement, the proceedings of the Accounting Expert
or another matter arising out of this Agreement or in defending any claim or
argument or alleged claim or argument relating to this Agreement or its subject
matter.
PURCHASE PRICE AND INTRA GROUP DEBT ADJUSTMENTS
7.1 If the Net Financial Debt Amount as at the Completion Date, as determined
in accordance with clause 6, is:
(a) less than the Estimated Net Financial Debt Amount, then the Purchaser
shall pay to the Vendor an amount equal to the difference; or
(b) more than the Estimated Net Financial Debt Amount, then the Vendor shall
pay to the Purchaser an amount equal to the difference.
7.2 If the value of the Intra Group Debt as at the Completion Date (as
computed for the purposes of determining the Net Financial Debt Amount as at the
Completion Date in accordance with clause 6) is:
(a) less than the Estimated Intra Group Debt, then the Vendor shall pay to the
Purchaser an amount equal to the difference; or
(b) more than the Estimated Intra Group Debt, then the Purchaser shall pay to
the Vendor an amount equal to the difference.
7.3 Any payment due under clause 7.1 or 7.2 shall be made in cash in pounds
sterling within 5 Business Days of the agreement or determination of the Net
Debt Statement in accordance with clause 6, in the case of payment by the
Purchaser under clause 7.1 or under clause 7.2 to the Vendor's Account and, in
the case of payment by the Vendor under clause 7.1 or clause 7.2, to the
Purchaser's Account, together with an amount equal to interest on the amount of
such payment at the Agreed Rate (accrued daily) for the period from the
Completion Date to the date of payment. Any payment under this clause shall
constitute an adjustment to the price payable by the Purchaser for the Shares,
save insofar as it is made under clause 7.2 in which case it shall constitute an
adjustment to the price payable by the Purchaser for the Intra Group Debt.
Page 25
7.4 After all payments have been made under clauses 5.6(b) and (c), 7.1 and
7.2, the Vendor shall procure that all amounts accrued or due in respect of the
period to Completion from any Group Company to any member of the Retained Group
(excluding any Intra Group Trading Debt but including management fees) shall be
waived save to the extent taken into account in the Net Debt Statement and shall
procure that no sums will remain owing at Completion from the Retained Group to
any Group Company (other than in respect of Intra Group Trading Debt).
7.5 In the event that the Relevant Interest Rate at the close of business on
the Completion Date exceeds 5.41 per cent. by more than 20 basis points., the
Vendor shall pay to the Purchaser an amount equal to (Pounds)1.6 million in
respect of each basis point of such excess over 20 basis points (and a pro rata
amount for each part basis point of such excess) and any such payment shall be
and shall be deemed to be a reduction in the purchase price for the Shares. Such
payment shall be made within 5 Business Days of Completion.
7.6 In the event that the Relevant Interest Rate at the close of business on
the Completion Date is less than 5.41 per cent. by more than 20 basis points.,
the Purchaser shall pay to the Vendor an amount equal to (Pounds)l.6 million in
respect of each basis point of such shortfall over 20 basis points (and a pro
rata amount for each part basis point of such shortfall) and any such payment
shall be and shall be deemed to be an increase in the purchase price for the
Shares. Such payment shall be made within 5 Business Days of Completion.
7.7 Any amounts due and payable from one party to the other under clauses 7.1,
7.2, 7.5 and 7.6 shall be set-off on a pound for pound basis against any amounts
due and payable to that first party from the other party under such clauses.
7.8 As set out in Schedule 8, the Net Debt Statement shall include an amount
being a calculation of the estimate of the anticipated reasonable external costs
and expenses of redemption of the SWSF Bonds (including Spens formula payments
and accrued interest up to, but not in respect of any time after, the Completion
Date but (i) excluding the principal amount of the SWSF Bonds, (ii) excluding
VAT in respect of such costs and expenses, but only to the extent that such VAT
is considered to be recoverable and (iii) to the extent that such costs or
expenses are considered to be deductible for corporation tax purposes, net of
corporation tax that has been or will be saved in respect of such costs and
expenses) (Anticipated Bond Redemption Costs) provided that:
(a) to the extent that VAT on such costs and expenses which was considered to
be recoverable but is not recoverable or that such costs and expenses
which were considered to be deductible but are not deductible for
corporation tax purposes, in either case within three years after the date
of redemption of the SWSF Bonds, the Purchaser shall be entitled to claim
from the Vendor an amount equal to the amount of such irrecoverable VAT or
to the amount of corporation tax that would not have arisen had such costs
and expenses been deductible for corporation tax purposes (as the case may
be); and
(b) to the extent that VAT on such costs and expenses which was considered to
be irrecoverable but is recoverable or that such costs and expenses which
were
Page 26
considered to be not deductible but are deductible for corporation tax
purposes, in either case within three years after the date of redemption
of the SWSF Bonds, the Vendor shall be entitled to claim from the
Purchaser an amount equal to the amount of such recoverable VAT or to the
amount of corporation tax saved as a result of such costs and expenses
being deductible for corporation tax purposes (as the case may be),
but provided further that the Purchaser shall (and shall procure that each
relevant member of the Purchaser's Group shall) use all reasonable endeavours
after Completion to recover such VAT and to procure that such costs and expenses
are deductible for corporation tax purposes within 3 years after the date of
redemption of the SWSF Bonds.
Subject to the SWSF Bonds being redeemed prior to the first anniversary of the
Completion Date, to the extent that the reasonable actual costs and expenses of
redemption (including Spens formula payments and accrued interest up to, but not
in respect of any time after, the Completion Date) of the SWSF Bonds are more or
less than the Anticipated Bond Redemption Costs net of VAT and any corporation
tax saving then the Vendor shall pay to the Purchaser (in the case of such costs
being more than such estimate) or the Purchaser shall pay to the Vendor (in the
case of such costs being less than such estimate) an amount equal to the
difference between the actual costs and expenses of redemption and the
Anticipated Bond Redemption Costs net of VAT and any corporation tax saving. If
the SWSF Bonds are not redeemed prior to the first anniversary of the Completion
Date, the Purchaser shall pay to the Vendor an amount equal to the Anticipated
Bond Redemption Costs net of VAT and any corporation tax saving. Such payments
shall be made in cash in pounds sterling within 5 Business Days of notification
of such actual costs by the Purchaser to the Vendor (such notification to be
made as soon as reasonably possible after redemption of the SWSF Bonds) (or, in
the event that the SWSF Bonds are not redeemed prior to the first anniversary of
the Completion Date, on the first anniversary of the Completion Date, as
relevant) to either the Purchaser's Account or the Vendor's Account as the case
may be.
VENDOR WARRANTIES
8.1 The Vendor warrants to the Purchaser in the terms of the Vendor Warranties
and acknowledges that the Purchaser is entering into this Agreement in reliance
upon each of the Vendor Warranties which will be given as at the date of this
Agreement and (in the case of the Repeated Warranties) as at Completion and for
which purposes where there is any express or implied reference in a warranty
(including in a definition used in a warranty) to the date of this Agreement,
that reference is to be construed as a reference to both the date of this
Agreement and to the Completion Date (and, in respect of any Repeated Warranty
qualified by awareness, such warranty shall be deemed to be given by reference
to the Vendor's awareness (as defined in Schedule 1) at Completion regardless of
whether or not any further enquiry is actually made before Completion, it being
acknowledged that the Vendor is not under an obligation to make such enquiry)
and subject to:
Page 27
(a) any matter fairly disclosed in the Disclosure Letter (including the
attachments listed in the schedule thereto);
(b) the limitations and qualifications set out in clause 9;
(c) those matters of which the Purchaser is deemed to have full knowledge
pursuant to clause 8.4; and
(d) any matters disclosed in the Purchaser Due Diligence Reports.
8.2 The Purchaser shall have no right to claim under the Warranties in
relation to circumstances arising from actions by or on the part of any member
of the Retained Group or any Group Company after the date of this Agreement to
the extent such actions are expressly permitted or expressly required under
clauses 4.1 or 4.2.
8.3 Any matter fairly disclosed in the Disclosure Letter (including the
attachments listed in the schedule thereto) is, subject to the fair disclosure
requirement, to be treated as a disclosure in respect of each and every Vendor
Warranty and not solely in respect of any particular Vendor Warranty.
8.4 Without prejudice to the generality of clause 8.1, the Purchaser shall be
deemed to have full knowledge of:
(a) all matters fairly disclosed in correspondence, replies to enquiries,
documents and other information in each case listed in Schedule 3 to the
Disclosure Letter;
(b) any information which would be fairly disclosed upon an inspection
(whether or not made) of the microfiche files which may be inspected by
the public maintained by the Registrar of Companies in England and Wales
in respect of any of the Subsidiaries as at the date two Business Days
prior to signing of this Agreement;
(c) any information which would be fairly disclosed upon an inspection or
search (whether or not made) conducted using the name of any of the
Subsidiaries or any of the Group IPR of any register (electronic or
otherwise) which may be inspected by the public and maintained by, the UK
Trade Marks Registry or the Patent Office, the Data Protection Register or
the domain name search facility at "Xxxxxx.xxx" as at the second Business
Day prior to the date of this Agreement;
(d) any matter fairly disclosed or provided for in this Agreement, the
Transitional Services Agreement or the Company Car Leasing Agreement;
(e) any matter which would be fairly disclosed by an inspection (whether or
not made) of the minute books and board papers of each of Southern Water
plc and Southern Water Services Limited and the minutes and committee
papers of the Southern Water Management Team (formerly known as the Chief
Executive's Committee) and the Investment Committee of Southern Water
Services Limited, in each case as listed in Schedule 4 to the Disclosure
Letter
Page 28
provided that in the case of the board papers and committee papers
referred to above which are dated prior to January 1998 and after the date
of the Vendor's acquisition of the Group, the Vendor agrees that these are
only deemed disclosed in respect of the Environmental Warranties and they
shall not be deemed disclosed against any other Vendor Warranty;
(f) any document or information published by OFWAT or the OFT on their
respective websites and which would be available on the relevant website
two Business Days prior to the date of this Agreement.
8.5 The Vendor shall prior to Completion promptly disclose in writing to the
Purchaser any matter or thing which becomes actually known to the Vendor after
the date hereof and before Completion which is inconsistent with any of the
Vendor Warranties or which is a breach of clause 4.
8.6 The Vendor undertakes to and for the benefit of the Purchaser that it
shall not (and shall procure that no member of the Retained Group shall) make or
pursue any claim or action howsoever arising against the Company, any of the
Subsidiaries or any of their directors or the Employees in respect of any loss
or liability which the Vendor or any member of the Retained Group may incur
pursuant to this Agreement (or any other document referred to herein) or
otherwise in connection with the sale of the Shares to the Purchaser or the
preparation of the Disclosure Letter. This clause 8.6 shall not prevent the
Vendor or any member of the Retained Group making or pursuing any claim or
action in relation to fraud or dishonesty.
8.7 The Vendor agrees to indemnify the Purchaser and each member of the
Purchaser's Group in terms set out in paragraph 24 of Schedule 5 (Pensions
Indemnity) and Schedule 9 [***].
8.8 If on or prior to Completion:
(a) as a result of a matter outside the Vendor's reasonable control, a fact or
circumstance has arisen between the date of this Agreement and Completion
which would cause a Termination Repeated Warranty to be untrue when
repeated as at Completion in accordance with clause 8.1; and
(b) the liability of the Vendor with respect to a Claim or Claims in respect
of such fact or circumstance would exceed [***] (disregarding for this
purpose the limitations set out in clause 9 other than those contained in
clauses 9.5 and 9.6) in aggregate (a Vendor Termination Event),
(but not otherwise) the Vendor may by written notice to the Purchaser give
notice of its intention to terminate this Agreement (a Vendor Termination
Notice).
8.9 In the event that the Vendor serves a Vendor Termination Notice under
clause 8.8 and the Purchaser serves notice (a Dispute Notice) on the Vendor
within 5 Business Days of the service of the Vendor Termination Notice stating
that the Purchaser disputes the fact that a Vendor Termination Event has
occurred, the parties shall within 2 Business Days refer the matter to the
Expert with instructions to the Expert (acting as expert and not arbitrator) to
determine whether the Vendor
Page 29
Termination Event has occurred and to deliver notice of such to the Vendor and
the Purchaser within 3 Business Days of the matter being referred to him. Such
determination of the Expert shall be final and binding (save in the event of
manifest error) as to whether the Vendor has served a valid Vendor Termination
Notice but, for the avoidance of doubt, shall be without prejudice to the
determination by a Court as to the liability for and the quantum of any Claim.
The Purchaser and the Vendor shall promptly give the Expert such cooperation and
information as the Expert may reasonably request for the purposes of reaching
his determination. In the event that the Expert determines that no Vendor
Termination Event has occurred and, accordingly, that the Vendor Termination
Notice is not valid, the Vendor Termination Notice shall lapse forthwith and
clause 5.1(c)(i) shall apply. In the event that the Expert determines that a
Vendor Termination Event has occurred and accordingly that the Vendor
Termination Notice is valid, the provisions of clause 5.1 (d) shall apply.
8.10 For the purposes of clause 8.9, the parties shall endeavour to agree within
10 Business Days of the date of this Agreement upon the appointment of a Queen's
Counsel, mutually acceptable to each of them, to act as an expert for the
purposes of determining the matters referred to in clause 8.9. Failing agreement
as to such appointment within 10 Business Days of the date of this Agreement, at
any time thereafter either party may refer such appointment to the Chairman for
the time being of Bar Council who shall be requested to appoint a Queen's
Counsel, with appropriate experience, within 5 Business Days of such reference.
Such Queen's Counsel so appointed by agreement of the parties or by the Chairman
of the Bar Council shall be the "Expert" for the purposes of clause 8.9. The
costs of any determination by the Expert shall be borne by the parties equally
unless the Expert determines otherwise.
8.11 In the event that the Vendor serves a Vendor Termination Notice and the
Purchaser does not serve a Dispute Notice in accordance with clause 8.9 within
the time specified therein (and unless clause 8.12 applies), the Vendor
Termination Notice shall be conclusively deemed to be valid and the provisions
of clause 5.1(d) shall apply.
8.12 If a Vendor Termination Notice is served in circumstances where it would
not be possible for the Dispute Notice procedure set out in clause 8.9 to be
completed before the Initial Termination Date (or the Final Termination Date if
the Vendor has made an election under clause 5.1 (b)) and Completion does not
take place as a result notwithstanding any provision to the contrary in clause
28, the Purchaser shall be entitled to bring a claim after termination against
the Vendor for breach of clause 8.8 of this Agreement if the Purchaser disputes
the validity of such Vendor Termination Notice by written notice to the Vendor
within one month after the termination of this Agreement. The Vendor shall only
be liable for damages if a court determines that its Vendor Termination Notice
was not valid and Completion did not take place as a result. The Purchaser's
liability with respect to any such claim shall not exceed
8.13 For the avoidance of doubt, notwithstanding the Vendor's termination right
under clause 8.8, Completion shall not prevent the Purchaser from bringing any
Claim against the Vendor in accordance with, and subject to, the terms of this
Agreement.
Page 30
8.14 Subject to the terms of this clause 8, the Vendor may serve more than one
Vendor Termination Notice.
LIMITATIONS ON CLAIMS
9.1 The provisions of this clause 9 shall operate to limit or reduce the
liability of the Vendor in respect of Claims.
9.2 The Vendor shall not be liable for any Claim unless it shall have received
from the Purchaser written notice containing details of the Claim, including
(where applicable) the Purchaser's estimate of the amount thereof:
(a) in the case of a Claim in respect of any of the Environmental Warranties or
the Property Warranties, on or before the date which is five years from the
date of Completion;
(b) in the case of a Claim in respect of any of the Tax Warranties or pursuant
to the Tax Covenant, on or before the date which is seven years from the
date of Completion; and
(c) in the case of any other Claim, on or before the date which is two years
from the date of Completion.
9.3 Any Claim shall (if it has not been previously satisfied, settled or
withdrawn) be deemed to have been withdrawn unless legal proceedings in respect
of it have been commenced by both being issued and served:
(a) within nine months of notification to the Vendor pursuant to clause 9.2,
provided that in the event that any claim is made (i) against a third party
under clause 9.10, then such period shall be extended to expire at the end
of 30 days following final judgment or settlement of such claim) or (ii)
with respect to a Claim or Claims relating to one or more Construction
Contracts in circumstances where clause 9.34 applies, then such period
shall be extended to expire at the end of 90 days from determination of the
aggregate outturn spend on all Construction Contracts under the Capital
Programme; or
(b) in the case of a Claim which is contingent only or otherwise not capable of
being quantified, within twelve months of that Claim ceasing to be
contingent or becoming capable of being quantified and in any event within
12 months of the last date for notification to the Vendor pursuant to
clause 9.2.
9.4 The Vendor shall be entitled to require the Purchaser or any Group Company
at the expense of the Vendor to take all such steps or proceedings as the Vendor
acting reasonably may consider necessary in order to mitigate any Claim for
which the Vendor (subject to the limitations contained in this clause 9) accepts
liability (but not necessarily quantum) and the Purchaser shall procure that any
Group Company shall act in accordance with any such reasonable requirements,
subject to the Purchaser and/or any Group Company being fully indemnified on
demand to its/their reasonable satisfaction by the Vendor in respect of all
costs and expenses or other liabilities incurred (excluding, for the avoidance
of doubt, the Claim itself) in taking
Page 31
such action (provided that, to the extent the Purchaser knows that it will incur
any of the same and any consultation shall be reasonably practicable, it shall
consult with the Vendor in advance and have regard to the Vendor's reasonable
views and provided that the Purchaser shall be released from any obligation to
take any steps, proceedings or effect any mitigation under this clause 9.4 or
otherwise in so far as the Vendor indicates to the Purchaser on a timely basis
that it should not take any such steps or proceedings or effect any mitigation).
Without prejudice to the Purchaser's common law duty of mitigation neither the
Purchaser nor any Group Company shall be required by virtue of this clause 9.4
to take any action which could reasonably be expected materially to damage its
goodwill or relationships with any Regulatory Authority.
For the purpose of enabling the Vendor to remedy a breach or to mitigate or
otherwise determine the amount of any Claim or to decide what steps or
proceedings should be taken in order to mitigate any Claim, the Purchaser shall:
(a) (whether before or after Completion) give notice to the Vendor promptly
and in any event within no more than 15 Business Days of the Purchaser
or (after Completion) the directors of Southern Water Services Limited
or the Company or any executive or investment committee thereof (or any
substitute thereof) becoming actually aware of any breach or
circumstances giving or likely to give rise to a breach of any of the
Vendor Warranties or other term of this Agreement;
(b) after Completion, make or procure to be made available to the Vendor or
its duly authorised representatives all relevant books of account,
records and correspondence of the relevant Group Company and permit the
Vendor to ascertain or extract any relevant information therefrom
subject to the Vendor and all those acting for it undertaking to treat
all relevant information in strict confidence; provided that nothing in
this clause 9.4(b) shall oblige the Purchaser to make available to the
Vendor or its duly authorised representatives any information or
document which is protected by legal privilege or which has been
prepared by the Purchaser or its accountants and other professional
advisers with a view to assessing the merits of any claim or dispute
against the Vendor.
9.5(a) Save in respect of any Claim arising under clauses 4.1(a), (c), (d),
(e), (f), (g) and (i) and clause 4.2 (other than clause 4.2(o)), the
Vendor shall have no liability in respect of any Claim unless the
liability of the Vendor as finally determined in respect of such Claim
exceeds [***] in which case the Vendor shall only be liable for the
excess.
(b) For the avoidance of doubt, amounts for which the Vendor has no
liability, or by which the Vendor's liability is reduced, as a
consequence of the operation of this clause 9 shall not be capable of
constituting a Claim or increasing the amount thereof for the purpose of
this clause 9.5 PROVIDED THAT (other than in relation to Claims under
Environmental Warranties, in respect of which clause 9.5(c) below shall
apply) the Vendor agrees and acknowledges that the value of any Claims
arising from or as a result of the same or related matters
Page 32
or circumstances, or related losses, or, to the extent that they can
properly be regarded as a class or series of breaches of a particular
warranty, similar matters or circumstances attributable to a common
cause, may be aggregated and treated as a single Claim for the purposes
of this clause 9.5.
(c) For the purposes of calculating whether the financial thresholds in
clause 9.5(a) or 9.6 have been reached in relation to a Claim under the
Environmental Warranties, in the event that there are a series of
breaches of a particular statement comprised within the Environmental
Warranties each breach of which individually concerns both the same
subject matter and the same location, then the Vendor agrees that in
such event but only in such event the losses resulting from such
breaches may be aggregated. For the avoidance of doubt: (i) only
breaches which individually amount to a Material Environmental Effect
may be aggregated under the provisions of this clause 9.5(c); and (ii)
this clause 9.5(c) shall not exclude the aggregation of a series of
losses resulting from a single breach or a series of breaches of a
particular statement comprised within the Environmental Warranties
provided that where there are a series of such breaches each breach in
that series concerns both the same subject matter and the same location.
9.6 Save in respect of any Claim arising under clauses 4.1(a), (c), (d),
(e), (f), (g) and (i) and clause 4.2 (other than clause 4.2(o)), no liability
shall attach to the Vendor in respect of any Claim unless the aggregate amount
of the liability of the Vendor to the Purchaser in respect of all Claims shall
exceed [***] in which event the Vendor shall be liable (subject always to the
other provisions of this clause 9) only for the excess over [***] For the
avoidance of any doubt, save as provided in clause 9.5(c) above in relation to
the Environmental Warranties, amounts for which the Vendor has no liability, or
by which the Vendor's liability is reduced, as a consequence of the operation of
this clause 9 shall not be capable of being aggregated as a Claim or part
thereof with other Claims for the purposes of this clause 9.6.
9.7 (a) Save as provided in clause 9.7(b) and (c), the total aggregate
liability of the Vendor in respect of all Claims and all other claims under or
in connection with this Agreement or any Transaction Document shall not exceed
[***]
(b) Clause 9.7 (a) shall not apply in respect of any Claims pursuant to
paragraph 2.1 (a)(v) or 2.7 of the Tax Covenant.
(c) Save to the extent recovered under clause [***] 9.7(b), any Claims under
clause 11.8 shall be limited to the amount equal to less the Third Party Debt
Amount. The amount referred to in clause 9.7(a) shall be decreased by the
aggregate amount of any claims paid under clause 11.8.
9.8 The Vendor shall not be liable for any Claim in respect of any matter to
the extent that:
(a) allowance, provision or reserve has been made for such matter in the
Consolidated SW plc Accounts save to the extent superseded by the
December 2001 Consolidated SW plc Accounts (in which case the allowance,
provision
Page 33
or reserve contained in the December 2001 Consolidated SW plc Accounts
shall prevail); or
(b) such Claim arises or, such Claim otherwise having arisen, is increased
as a result of any change made after Completion in any accounting or
taxation policies or practice of any Group Company, the Purchaser or any
other member of the Purchaser's Group save to the extent that any such
change is required to bring the accounting or taxation policies or
practice of that company into line with generally accepted accounting or
taxation practice (as the case may be) as at the Completion Date; or
(c) such matter has been taken into account in the Net Debt Statement or the
Purchaser has been compensated in respect of that matter by an
adjustment to the price pursuant to clause 7 (Purchase Price
Adjustments) and where a matter arises prior to the determination of the
Net Debt Statement and may be so taken into account or so compensated,
payment of any Claim relating to that matter (or any part thereof which
shall not have been so taken into account or so compensated) shall be
deferred until after the determination of the Net Debt Statement;
(d) such Claim is attributable to works procured under any Construction
Contract prior to the Completion Date but carried out after the
Completion Date if and to the extent only that the Purchaser and each
relevant Group Company has not taken all reasonable steps after the
Completion Date consistent with the way in which the Group's business is
operated as at the date of this Agreement and with the RPO Standard to
minimise the costs and liabilities to the Group under such Construction
Contract in respect of the matter giving rise to the Claim; or
(e) the relevant loss or liability resulting from the matter giving rise to
the Claim has been discharged by a payment that has already been made
prior to Completion by any Group Company in respect of the subject
matter of such Claim.
9.9 In calculating the liability of the Vendor in respect of any Claim, any
depletion in the assets of any Group Company or increase in its liabilities by
virtue of the subject matter of such Claim shall be reduced by any amount
recovered in respect of any debt written off (or 50% of such amount in the case
of debts of Coastal Wastewater Consultants Limited) in the SW plc Accounts, the
Consolidated SW plc Accounts or any previous accounts of Southern Water plc or
the Group (excluding the Company) save to the extent it has been written back in
any subsequent accounts of Southern Water plc or the Group (excluding the
Company) prior to Completion.
9.10 Where a Group Company or the Purchaser is entitled (whether by reason of
insurance or payment discount or otherwise) to recover from some other person
any liability, loss or damage the subject of a Claim against the Vendor or for
which a Claim could be made (and whether before or after the Vendor has made
payment hereunder) (other than a Claim in respect of tax in respect of which
paragraph 11 of Schedule 6 shall apply) the Purchaser shall promptly notify the
Vendor and provide such information as it may reasonably require relating to
such liability, loss or
Page 34
damage and the steps taken or to be taken by the Purchaser or the Group Company
in connection with it and, if so required by the Vendor and at the Vendor's cost
and expense and on the Vendor providing indemnities satisfactory to the
Purchaser (acting reasonably) in respect of all costs and expenses to be
incurred, the Purchaser shall, and shall procure that any Group Company shall,
before seeking to recover any amount from the Vendor under this Agreement, first
but without prejudice to any right to make any Claim against the Vendor and the
Vendor's liability in respect of such Claim, take such reasonable steps (whether
by way of a claim against its insurers or otherwise) including, but without
limitation, proceedings as the Vendor may reasonably require to enforce such
recovery provided that (without prejudice to the Purchaser's common law duty to
mitigate) neither the Purchaser nor any Group Company shall be required by
virtue of this clause 9.10 to take any action which could reasonably be expected
materially to damage its goodwill or relationship with any Regulatory Authority
and shall keep the Vendor informed of the progress of any action taken and
thereafter any Claim against the Vendor shall be limited (in addition to the
limitations on the liability of the Vendor referred to in this clause) to the
amount by which the loss or damage suffered by the Purchaser or the relevant
Group Company as a result of such breach shall exceed the amount so recovered.
9.11 If the Vendor pays to the Purchaser an amount in discharge of a Claim
(other than a Claim in respect of tax in respect of which paragraph 11 of
Schedule 6 shall apply) and the Purchaser or any Group Company subsequently
recovers (whether by payment, discount, credit, relief, allowance by the DGWS
with respect to Regulatory Capital Value (provided specifically and identifiably
referable to the subject matter of the Claim) or otherwise) from a third party a
sum which is referable to the circumstances giving rise to the Claim, the
Purchaser shall (or, as appropriate, shall procure that such Group Company
shall) forthwith repay to the Vendor:
(a) an amount equal to the sum recovered from the third party (or, in
respect of any allowance by the DGWS with respect to Regulatory Capital
Value, the sum equal to the discounted cash flow value of such allowance
as initially determined by the auditors or, if such initial
determination is disputed by the Vendor, by an independent firm of
accountants experienced in the UK water industry) less any reasonable
out-of-pocket costs and expenses incurred by the Purchaser or the Group
Company in recovering the same and not otherwise indemnified or paid by
the Vendor (provided that any amount retained by the Purchaser against
any indemnification obligations shall to the same extent discharge such
indemnification obligations); or
(b) if the figure resulting under paragraph (a) above is greater than the
amount paid by the Vendor to the Purchaser or the Group Company in
respect of such Claim, such lesser amount as shall have been so paid by
the Vendor;
so as to leave the Purchaser (taking into account the amounts received from the
third party and from the Vendor and those payable to the Vendor under this
clause) in no better or worse position than it would have been in (subject
always to the other provisions of clause 9.11) had the Claim not arisen.
Page 35
9.12 If any Claim shall arise by reason of some liability which at the time
that the Claim is notified to the Vendor is contingent only, the Vendor shall
not be under any obligation to make any payment to the Purchaser thereunder
until such time as such contingent liability ceases to be so contingent save as
otherwise expressly provided in clause 9.32(b).
9.13 The Vendor shall not be liable in respect of any Claim to the extent
that the Vendor can demonstrate that the amount of such Claim would have been
recovered from insurers had the Purchaser procured and maintained policies of
insurance for the benefit of Group Companies the benefits of which were no less
favourable than those existing at the date hereof.
9.14 Upon any Claim being made, the Purchaser shall, and shall co-operate to
procure that each Group Company shall, make available to accountants and others
appointed by the Vendor upon reasonable notice during normal business hours such
relevant records and information as the Vendor reasonably requests in connection
with such Claim (including the position under the provisions contained in clause
9.8) and the Purchaser shall, and shall co-operate to procure that each Group
Company shall, use all reasonable endeavours to procure that the auditors (both
past and then current) of the Group make available to the Vendor and to
accountants and others appointed by the Vendor their audit working papers in
respect of audit of any Group Company's accounts for any relevant accounting
period in connection with the Claim subject to the Vendor agreeing to procure
that any such information be kept confidential and that such information will
not be used other than for the purposes of this clause 9.
9.15 The Vendor shall not be liable in respect of any Claim to the extent
that such Claim would not have arisen but for a voluntary act, omission or
transaction carried out after the date hereof by the Purchaser or its directors,
employees or agents or, after Completion, by a Group Company or its directors,
employees or agents which the Purchaser or Group Company (as the case may be)
knew or ought reasonably to have known would give rise to a Claim otherwise than
any act, omission or transaction in the ordinary and usual course of business or
required by law or regulation and other than any act, omission or transaction
which arises as a result of any breach of Warranty or undertaking by the Vendor
under this Agreement (provided that such act, omission or transaction is not
inconsistent with the Purchaser's common law duty to mitigate).
9.16 The Vendor shall not be liable in respect of any Claim to the extent
that such Claim is attributable to, or such Claim otherwise having arisen, is
increased as a result of any legislation not in force or binding at the date
hereof or to any change of law (or the interpretation thereof) or administrative
practice (including but not limited to extra-statutory concessions of the Inland
Revenue) which takes effect retroactively.
9.17 Subject to clause 16, the Vendor Warranties and the Tax Covenant shall
be actionable only by the Purchaser and no other party shall be entitled to make
any claim or take any action whatsoever against the Vendor under or arising out
of or in connection with the Vendor Warranties and the Tax Covenant.
Page 36
9.18 A breach of this Agreement which is capable of remedy shall not entitle
the Purchaser to compensation unless the Vendor is given written notice (the
Purchaser's Remedy Notice) of such breach and, if the Vendor elects by written
notice to the Purchaser (the Vendor Remedy Notice) to step in and remedy the
circumstances which gave rise to the Claim, within 30 Business Days after the
date on which the Purchaser's Remedy Notice is served on the Vendor:
(a) the Vendor has not remedied such breach to the reasonable satisfaction
of the Purchaser; or
(b) the parties have not agreed a remediation plan which is in the course of
being implemented to the reasonable satisfaction of the Purchaser. The
parties shall co-operate in good faith and use their reasonable
endeavours to agree a reasonable remediation plan as soon as reasonably
practicable and in any event within 15 Business Days after the Vendor
Remedy Notice. The Vendor shall pay to the Purchaser all reasonable out
of pocket costs and expenses suffered by the Purchaser and/or any Group
Company in agreeing, and all reasonable costs and expenses (including
out of pocket expenses) suffered by the Purchaser and/or any Group
Company in implementing, any such agreed remediation plan.
To the extent that circumstances which gave rise to the Claim have been remedied
at the cost of the Vendor, the related loss shall be disregarded for the
purposes of the aggregate amount referred to in clause 9.6 and the aggregation
provisions of clause 9.5.
9.19 The Purchaser hereby agrees for itself and on behalf of each Group
Company with the Vendor that in respect of any Claim where the Vendor may be
liable to the Purchaser under the Vendor Warranties and which may also give rise
to a liability under the Tax Covenant the Vendor shall not be obliged to meet
any such liability more than once and any recovery by the Purchaser in respect
of any such Claim under the Vendor Warranties shall be deemed to be a recovery
by all the relevant parties under the Tax Covenant and any recovery by any party
under the Tax Covenant shall be deemed to be a recovery by the Purchaser under
this Agreement for breach of the Vendor Warranties (as the case may be) in each
case to the extent only of the actual recovery made and a recovery by the
Purchaser or any Group Company shall be deemed to be a recovery by each of them.
9.20 The Purchaser shall have no right to injunction or specific performance
for any breach under clause 4 of this Agreement.
9.21 Subject to clauses 5.1(d) and 8.9, neither the Vendor nor the Purchaser
shall be entitled to rescind or terminate this Agreement in any circumstances
whatsoever, other than in respect of fraudulent misrepresentation.
9.22 The Purchaser shall not be entitled to recover more than once under this
Agreement and the other Transaction Documents in respect of the same loss
arising from the same matter or circumstance (whatever the measure of loss).
Page 37
9.23 Neither the Vendor nor any member of the Retained Group nor any of their
respective employees, officers and directors shall be liable for any claim
(without prejudice to the Purchaser's right to bring a Claim against the Vendor
under this Agreement) whether in contract, tort or otherwise in respect of loss
or damage suffered by any Group Company as a result of services rendered prior
to Completion to any Group Company by any of the same (including, but not
limited to, the Vendor's legal treasury, tax or insurance departments) and save
for any claims in respect of fraud or dishonesty.
9.24 Clauses 9.3, 9.4, 9.5, 9.6, 9.8, 9.9, 9.10, 9.11, 9.12, 9.13, 9.14,
9.15, 9.16 and 9.18 shall not apply to any Claim made pursuant to the Tax
Covenant (in which circumstances the relevant provisions of Schedule 6 shall
apply) and clauses 9.6, 9.8, 9.9, 9.10, 9.11, 9.12, 9.13, 9.14, 9.15 and 9.16
shall not apply to any Claim made in respect of a breach of any of the Tax
Warranties (in which circumstances the relevant provisions of Schedule 6 shall
apply).
9.25 The only warranties which shall apply in respect of real estate are
those contained in paragraphs 7.1(b) (Group's Assets), 7.3 (Fixed Assets), 7.4
(Health & Safety), 13 (Insurance), 15 (Property) and 18 (Environment) of
Schedule 3. For the avoidance of doubt, to the extent that the Material
Contracts or the Construction Contracts pertain to real estate the Purchaser
shall not be precluded from making a Claim under the warranties contained in
paragraphs 8 and 15 of Schedule 3.
9.26 The only warranties which shall apply in respect of Environmental
Matters are the Environmental Warranties and those contained in paragraphs 8.9
(Government Grants) and 13 (other than paragraph 13.4(b)) (Insurance) of
Schedule 3.
9.27 The only warranties which shall apply in respect of any Construction
Contract are those contained in paragraphs 5 (Accounts), 6 (Position since
Accounts Date), 7.4 (Health and Safety), 8.1, 8.3, 8.7, 8.8, 8.10 to 8.12
(Contracts), 8.14 to 8.19 (Construction Contracts), 9.1, 9.3(b) to (d)
(Litigation and Regulatory Matters), 12.11 and 12.12 (VAT) and 13 (Insurance) of
Schedule 3.
9.28 The only warranties which will apply in respect of directors and
employees are those contained in paragraphs 7.4 (Health and Safety), 11
(Directors and Employees), 12 (Tax), 13 (Insurance), 14 (Pensions), and 17
(Intellectual Property) of Schedule 3.
9.29 The only warranties which shall apply in respect of pensions are those
contained in paragraphs 11 (Directors and Employees) and 14 (Pensions) of
Schedule 3.
9.30 Save as otherwise expressly provided, nothing in this clause 9 shall in
any way restrict or limit the general obligation at law of the Purchaser to
mitigate (including where relevant by seeking any interim determination of
Regulatory Capital Value from the DGWS in respect thereof) any loss or damage
which it may suffer in consequence of any breach by the Vendor of the terms of
this Agreement but so that all costs of mitigation shall, for the avoidance of
doubt, be paid by the Vendor to the Purchaser if and to the extent required by
law.
Page 38
9.31 Without prejudice to the provisions of the remainder of this clause 9,
the Vendor shall not be liable in respect of any Claim in respect of a breach of
any of the Environmental Warranties and the warranties contained in paragraphs
8.9 and 13 of Schedule 3 (excluding the warranty in 13.4(b)) to the extent that
a claim relates to any Environmental Matter to the extent that the Claim results
from or is increased by any of the following:
(a) the giving or submission of any information to any Competent Authority
or third party by the Purchaser or any member of the Purchaser's Group
or, after Completion, any Group Company or any of their respective
employees, officers, directors, contractors or agents on their behalf (a
Relevant Person) of any information other than where it is given or
submitted by the Relevant Person:
(i) in response to or in compliance with a legal requirement or
obligation which necessitates disclosure under Environmental Law
or Environmental Licences;
(ii) with the prior consent of the Vendor (such consent not to be
unreasonably withheld or delayed);
(iii) to any Competent Authority or third party after Completion in
circumstances where information concerning the same specific
circumstance and subject matter was given or submitted to that
Competent Authority or third party with respect to the relevant
location or property prior to Completion; or
(iv) in an Emergency provided that the Purchaser or Group Company had
used its reasonable endeavours to obtain the Vendor's consent
prior to disclosing (such consent not to be unreasonably withheld
or delayed) and to the extent that it was reasonable to do so in
the circumstances;
(b) the undertaking of any inspections, investigations, audits or sampling
in relation to Hazardous Materials at, on or under any Property by a
Relevant Person after Completion (except where required under
Environmental Law or Environmental Licences or by a Regulatory
Authority's demand or in connection with development that is allowed
under sub-clause (i) and (ii) of clause 9.31(c) or in the case of an
Emergency and provided in each case that the undertaking of such
inspections, investigations, audits or sampling was necessary in the
circumstances);
(c) the partial or total cessation of operations or the change of use of any
Property or the undertaking of any Development (including
decommissioning, demolition, removal, alteration or construction of any
plant, equipment, building or structure or any part thereof) at any
Property by a Relevant Person after Completion excluding:
(i) any minor changes to the use of any ancillary buildings or
equipment, which are necessary or practicable in order to
continue operating the same business as at Completion;
Page 39
(ii) any development specifically required to be undertaken at a
particular Property in compliance with a specific requirement
under Environmental Law or an Environmental Licence in force at
Completion:
but including any change or development which leads to the requirement to
apply for an Environmental Licence. For the avoidance of doubt the
Purchaser is not precluded from making any Claim where any change in
operations or use or the undertaking of any Development reveals the
presence of contamination where a failure to remove, treat or xxxxx such
contamination would more than likely result in a requirement being lawfully
imposed by a Regulatory Authority properly exercising its powers under
Environmental Law or where it is reasonable to expect such a requirement
would be imposed were any Regulatory Authority aware of the full facts and
circumstances of the contamination. Provided always that such a Claim can
only be made (i) if and to the extent that the requirement by a Regulatory
Authority aforesaid would, but for the Development in question, have arisen
and been recoverable during the relevant warranty period; and (ii) no Claim
shall include any sums with respect to any delay or other disruption to the
works subject to the Development including (but not limited to) site costs,
supervision, contract price variation due to delay or disruption or
otherwise;
(d) the carrying out of any works or the failure to carry out any works
(including maintenance works) by a Relevant Person at any Property after
Completion where the carrying out of such works or the failure to carry out
such works is otherwise than in accordance with the standards of a person
exercising that degree of skill, diligence, prudence and foresight which
would reasonably and ordinarily be expected from either a skilled and
experienced operator in respect of the conduct and management of a business
of the nature of the business of the Group Companies or, where such works
relate or would have related to services supplied by a person who is not
related to the business of the Group Companies, a skilled and experienced
contractor, supplier, specialist or agent as the case may be;
(e) other than with the consent of the Vendor, the sale or disposal of all or
any part of the Properties after Completion or any change in control in
relation to the Company or any Group Company which owns or occupies all or
any part of any Property after Completion, and for the avoidance of doubt
where a transfer of Property after Completion or change of control in
relation to the Company or Group Company which owns or occupies all or any
part of any Property is a transfer to or change of control within the Group
or Purchaser's Group (an Intra-Group Transfer; and the term Transferor
refers to the transferor of the Property or the person in control prior to
the Intra-Group Transfer as the case may be) then where and to the extent
only that, the Transferor would have had the Claim but for the Intra-Group
Transfer then, to that extent, the Claim shall not be considered to have
resulted from or been increased by any transfer of Property after
Completion or change of control in relation to the Company or Group Company
which owns or occupies all or any part of any Property;
Page 40
(f) any changes in law, including Environmental Law, after the date of this
Agreement;
(g) the failure of a Relevant Person to take all reasonable steps to minimise
and mitigate any losses for which a claim may be made in respect of a
breach of any of the Environmental Warranties (which for the avoidance of
doubt does not require the Purchaser or Group Company to incur material
cost or liability);
(h) a Relevant Person (or any person acting on a specific request of the
Purchaser or Group Company) provoking a third party to commence proceedings
for the sole purpose of satisfying the trigger condition set out in clause
9.32;
(i) any negligent or reckless act or omission of a Relevant Person where the
Person knew or ought reasonably to have known that such an act or omission
would result in or increase the amount of a Claim;
(j) the costs of carrying out any works resulting from a Claim under the
Environmental Warranties being higher than that necessary to satisfy the
minimum standards required under Environmental Law provided that the
Purchaser may only incur those costs that are reasonable to achieve such
standards;
(k) any development or change of use for a use that is more environmentally
sensitive than that carried out at Completion; or
(l) any loss of profits, loss of sales, loss of production, business
interruption, reduction in value of any asset or shares or any other
indirect or consequential loss or damage and incurred or suffered by the
Purchaser or any member of the Purchaser's Group and for the avoidance of
doubt this clause shall not preclude such losses of the types described
above in this sub-clause 9.31(l) from constituting losses where they are
recovered by a third party against the Purchaser or member of the
Purchaser's Group in any Environmental Proceedings but only to the extent
that such Environmental Proceedings are finally determined (either by final
and binding judicial order or other settlement) including determination of
any appeals.
9.32 The Vendor shall not be liable in respect of any Claim under the warranties
in paragraphs 18.1, 18.2, 18.8 and 18.9 of Schedule 3 unless:
(a) a criminal, civil, judicial, administrative or regulatory proceedings suit
or action is brought or taken or expressly threatened in writing by a
Regulatory Authority or other third party in respect of the relevant
subject matter of the particular warranty under which the Claim is made; or
(b) it is reasonable to expect that a Regulatory Authority would more than
likely take action in the period during which a Claim may be notified in
accordance with 9.2 were it aware of the full facts and circumstances that
might reasonably be expected to give rise to a Claim.
Page 41
9.33 Notwithstanding any other provision of this Agreement, for the avoidance of
doubt in calculating or determining the extent or measure of any loss or damage
suffered by the Purchaser in respect of a Claim, no account shall be taken of
the earnings of any Group Company or any multiple thereof.
9.34 Notwithstanding any other provision of this Agreement, to the extent that
any Claim arises from the outturn spend on a Construction Contract exceeding
the budgeted expenditure for such Construction Contract shown in the Capital
Programme then the Purchaser shall not be entitled to effect a recovery with
respect to such a Claim unless or until the aggregate outturn spend on all
Construction Contracts exceeds by more than the aggregate budgeted expenditure
shown on the Capital Programme provided that this clause 9.34 shall not prevent
the Purchaser from notifying any such Claim prior to the determination of the
aggregate outturn spend on all Construction Contracts and the provisions of
9.3(a)(ii) shall apply to any such Claim.
9.35 The Environmental Warranties shall not apply to any loss or liability to
the extent that such loss or liability is provided for in the Slindon Indemnity.
PURCHASER WARRANTIES
10.1 The Purchaser represents and warrants to the Vendor in the terms of the
Purchaser Warranties.
10.2 The Purchaser acknowledges that the Vendor has entered into this Agreement
in reliance on the Purchaser Warranties.
POST COMPLETION UNDERTAKINGS
11.1 Following Completion, the Purchaser undertakes (on behalf of each and every
member of the Purchaser's Group) to the Vendor:
(a) without prejudice to the temporary use of marks, designs, names or logo and
signage provided for under clauses 11.1(b) and 11.1(c), to procure that no
member of the Purchaser's Group shall at any time after Completion,
represent or hold itself out as being part of the Retained Group;
(b) to procure that the Group Companies shall cease in any manner to:
(A) use or display the words "ScottishPower" or the "powermark
diamond" device xxxx (registration number 1447663) or the
strapline containing either of the same or any confusingly
similar xxxx, design, name or logo:
(i) from 1 month after the Completion Date, on all stationery and
other printed material used by any Group Company;
(ii) from 6 months after the Completion Date, on all Property and any
land and buildings comprising or on such Property;
Page 42
(iii) from 3 months after the Completion Date, on all cars and other
vehicles used in the business of any Group Company;
(iv) from 2 weeks after the Completion Date, on the website of any Group
Company; and
(B) with respect to the use by any Group Company of any of the Group's
trading names from time to time (including, but not limited to,
"Southern Water" and "Southern Water Services") use the existing
font or any font which is the same as or confusingly similar to it
at any time after the first to occur of (i) a change of control of
the Purchaser or any sale of the Company by the Purchaser and (ii)
the expiry of a period of 12 months from the Completion Date; and
(c) to procure that as soon as reasonably practicable, and in any event within
one month after Completion, change the name of any relevant Group Company
so as to omit the words "ScottishPower" or "Aspen" or any confusingly
similar words, names or logos and that all necessary registrations in
connection with the change of name are made.
11.2 Following Completion, the Vendor undertakes (on behalf of each and every
member of the Retained Group) to the Purchaser:
(a) to procure that no member of the Retained Group shall, save as permitted
under clause 11.2(b), at any time after Completion, represent or hold
itself out as being an owner of any Group Company or otherwise connected as
a member of the same group of companies; and
(b) to procure that each member of the Retained Group shall cease in any manner
to:
(A) use or display any of the Group's names from time to time
(including, but not limited to, the words "Southern Water" or
"Southern Water Services"):
(i) from 1 month after the Completion Date, on all stationery and
other printed material used by any member of the Retained Group;
(ii) from 6 months after the Completion Date, on all property and any
land and buildings comprising or on such property;
(iii) from 3 months after the Completion Date, on all cars and other
vehicles used in the business of any member of the Retained
Group;
(iv) from 2 weeks after the Completion Date, on the website of any
member of the Retained Group; and
(B) from 1 month after the Completion Date, retain, copy or make use of
any customer list of any Group Company or any database including
such information in whatever medium it is stored except to the
extent
Page 43
that any list or data concerning customers or former customers of a
Group Company has prior to the date of this Agreement been absorbed in
databases of any member of the Retained Group and save as required for
the purposes of the Transitional Services Agreement.
11.3 Following Completion, the Vendor shall ensure that any pre-existing rights
held by the Employees at Completion in any of the Schemes are treated in
accordance with the rules of those Schemes.
11.4 The parties agree that the burden (and to the extent that there is any, the
benefit) of any settlement arrangement or judgment in respect of the [XXX] Claim
shall inure to and be the responsibility of the Vendor. The Purchaser undertakes
to procure that the Company shall provide all reasonable advice and cooperation
with respect to the conduct of the [XXX] Claim and any settlement proceedings in
relation thereto (which conduct and proceedings shall be at the direction of the
Vendor) and shall procure that any proceeds from the [XXX] Claim shall be
assigned to the Vendor (or as it may direct). The Vendor shall indemnify the
Purchaser and each Group Company against any liabilities to the defendant or any
third party by reference to or in the proceedings relating to the [XXX] Claim,
together with any third party costs or expenses incurred by the Purchaser or any
Group Company in connection with the [XXX] Claim at the direction of the Vendor.
11.5 The Vendor shall not (and shall procure that each other member of the
Retained Group shall not) within a period of twelve months after Completion,
directly or indirectly, solicit or endeavour to entice away from any Group
Company any Senior Employee, except with the prior written consent of the
Purchaser.
11.6 It is agreed in relation to the Schemes and any share award or share
option granted under the Schemes that:
(a) to the extent that the Vendor has the ability to withhold a sufficient
number of Shares when any such share award is released or any such share
option is exercised and is able to sell such shares, the Vendor shall pay
from the sale proceeds to the Inland Revenue Collector of Taxes an amount
equal (to the extent possible up to the value of such sale proceeds) to any
liability on any member of the Purchaser's Group to account for any
employees' national insurance contributions or income tax liability arising
after the date of Completion in respect of any such share award or share
option which was granted before the date of Completion to any Relevant
Employee;
(b) the Vendor will pay to the Purchaser an amount equal to any interest or
penalties which any member of the Purchaser's Group is required to pay as a
result of a failure by the Vendor to pay any amount referred to in clause
11.6(a), within 10 Business Days of the liability to interest or penalties
arising or if shorter 5 Business Days before the date such liability is
payable by the Purchaser;
(c) the Vendor will provide the Purchaser with all information reasonably
required by the Purchaser relating to the calculation of any amount payable
Page 44
under clause 11.6(a) within 10 Business Days of the payment having
been made; and
(d) neither the Vendor nor any member of the Retained Group shall be
liable to pay any secondary (employer's) national insurance
contributions which arise after the date of Completion in respect of
any such share award or such share option, whether upon the exercise
or release of such share award or such share option or otherwise.
11.7 To the extent that the EIB Loans have not been repaid or prepaid or
novated to, a person other than a Group Company prior to Completion, no
later than 5 Business Days following Completion, the Vendor shall procure
that the EIB Loans are repaid in full. The Vendor agrees to indemnify the
Purchaser on demand (for itself and on behalf of each member of the
Purchaser's Group) for and against any and all losses, liabilities, costs
or expenses which any member of the Purchaser's Group may suffer or incur
after Completion in connection with the EIB Loans.
11.8 The Vendor agrees to indemnify and keep indemnified the Purchaser
(for itself and on behalf of each member of the Purchaser's Group) on an
after tax basis from and against any and all losses, liabilities, costs or
expenses which the Purchaser or any member of the Purchaser's Group may
suffer or incur (other than in respect of any liabilities for tax in which
case the relevant provisions of the Tax Covenant shall apply) arising out
of or in connection with:
(a) the Reorganisation; and
(b) any activities of the Company prior to Completion including, without
limitation, failure to comply with applicable law or regulation,
save to the extent such losses, liabilities costs or expenses would not
have arisen but for a voluntary act, omission or transaction carried out
after the date hereof by the Purchaser or its directors, employees or
agents or, after Completion, by a Group Company or its directors, employees
or agents in each case which the Purchaser or Group Company (as the case
may be) knew or ought reasonably to have known would give rise to such
losses, liabilities, costs or expenses and other than any act, omission or
transaction in the ordinary and usual course of business or required by law
or regulation.
11.9 The Vendor shall indemnify the Purchaser (for itself and on behalf of
each member of the Purchaser's Group) against any liability to make payment
or confer benefits under the bonus and other arrangements (full particulars
of which (in the form of copy letters executed by the relevant Directors)
have been delivered to the Purchaser prior to the date of this Agreement)
to the extent that such liability is in excess of the higher of an
employee's entitlement to payment of benefits or bonuses pursuant to (i)
his contract of service as at the date of this Agreement or (ii) the
arrangements effected by the Purchaser (or on behalf of the Purchaser) with
effect from the Completion Date.
11.10 The Purchaser shall indemnify the Vendor (for itself and on behalf of
each member of the Retained Group) against any liability to make payments
or confer
Page 45
benefits under the retention and incentivisation arrangements put in place by
the Purchaser for directors (full particulars of which (in the form of copy
letters executed by the relevant directors) have been delivered to the Vendor
prior to the date of this Agreement).
11.11 The Purchaser shall, following Completion, procure that no Group Company
dismisses PricewaterhouseCoopers as auditors of any Group Company prior to 30
June 2002 (other than for cause). The Purchaser shall procure that each Group
Company shall provide to the Retained Group and the Vendor's Accountants in a
form consistent with the audit for the year to 31 March 2001 such financial
information relating to the year to 31 March 2002 as Scottish Power plc or the
Vendor may reasonably require for the purposes of preparing the Net Debt
Statement in accordance with clause 6 and preparing the consolidated accounts of
Scottish Power plc and shall use reasonable endeavours to provide such
information in a timely manner consistent with the preparation of Scottish Power
plc's consolidated accounts for the year to 31 March 2002 in accordance with its
legal and regulatory requirements and its usual reporting dates.
INSURANCE
12.1 Where insurance cover under the Vendor Group Policies and Third Party
Insurance Policies is provided on an "incidents occurring" basis, the Vendor
shall procure that, with respect to incidents occurring prior to (but excluding)
Completion, each Group Company is named and endorsed on each of such Vendor
Group Policies and Third Party Insurance Policies as a separate named insured.
12.2 The Vendor acknowledges that in respect of claims made under policies
falling within clause 12.1 above against a Group Company following Completion in
relation to any incidents occurring prior to Completion, each Group Company will
have direct access to insurers under the Vendor Group Policies and Third Party
Insurance Policies.
12.3 In respect of any claim whether on an "incidents occurring" or "claims
made" basis under any Vendor Group Policy or Third Party Insurance Policy which
is made prior to Completion, the Vendor shall promptly notify the Purchaser in
writing of the claim and make and pursue any such claim under the relevant
policy at the Group's cost as the Purchaser shall reasonably request. The Vendor
shall:
(i) keep the Purchaser informed on a regular basis of the progress of
any such claim;
(ii) following Completion at the Group's cost take all such action,
institute such proceedings and provide such information as the
Purchaser may reasonably request in respect of the handling of such
claim against the insurer;
(iii) promptly on receipt pay to the relevant Group Company all proceeds
recovered from insurers in respect of such claim without any
set-off or counterclaim or other deduction,
Page 46
save to the extent that a Group Company is able to pursue any claim directly and
receive the proceeds of any such claim directly.
12.4 The Purchaser undertakes that, if it or any Group Company receives returns
of premiums originally paid by a member of the Retained Group from insurers
under either the Vendor Group Policies or Third Party Insurance Policies as a
result of the sale by the Vendor of all of the issued shares of the Company to
the Purchaser, it will promptly upon receipt of such returns of insurance
premiums pay these amounts in full to the member of the Retained Group entitled
to it.
PENSIONS
13. The provisions of Schedule 5 shall apply in respect of pensions applicable
to the Employees.
ENTIRE AGREEMENT
14.1 This Agreement and the other Transaction Documents set out the entire
agreement and understanding between the parties to this Agreement and those
documents in respect of the transactions contemplated by this Agreement.
14.2 It is agreed that:
(a) the parties have not entered into this Agreement in reliance upon any
representation, warranty or undertaking of any other party or any of its
Connected Persons except as set out in this Agreement or any of the other
Transaction Documents;
(b) the Purchaser may claim in contract for breach of a Vendor Warranty under
this Agreement and the Vendor may claim in contract for breach of a
Purchaser Warranty under this Agreement but each party shall have no claim
or remedy under this Agreement in respect of misrepresentation (whether
negligent or otherwise, and whether made prior to, and/or in, this
Agreement) or untrue statement made by the other party or its Connected
Persons;
(c) this clause shall not exclude any liability for, or remedy in respect of,
fraudulent misrepresentation; and
(d) save as expressly set out in this Agreement or any other Transaction
Documents, no party or Connected Person shall owe any duty of care to any
other party or Connected Person.
14.3 Each party contracts in clause 14.2 on its own behalf and as agent for each
of its Connected Persons. Each Connected Person which contracts through the
agency of a party may enforce clause 14.2 directly against each other party and
Connected Person.
14.4 The Vendor and the Purchaser acknowledge and agree that (without prejudice
to any Intra Group Trading Debt) all existing contractual or other arrangements
for the management or other provision of services between the Retained Group and
the
Page 47
Group Companies will terminate on Completion save as provided in the Transaction
Documents.
VARIATION
15. No variation of this Agreement (or of any of the documents referred to in
this Agreement) shall be valid unless it is expressed to constitute a variation
of this Agreement and is in writing and signed by or on behalf of each of the
parties to it.
ASSIGNMENT
16.1 Neither party shall nor shall it purport to assign, transfer, charge or
otherwise deal with all or any of its rights or obligations under this Agreement
nor grant, declare, create or dispose of any right or interest in this Agreement
without the prior written consent of the other party provided that either party
(an Assignor) may assign or transfer in whole or in part all or any of its
rights under this Agreement to any other member of the Retained Group (in the
case of the Vendor) or the Purchaser's Group (in the case of the Purchaser) (in
each case, a Permitted Assignee).
16.2 Notwithstanding any other provision of this Agreement (including, without
limitation, clause 16.1), the Purchaser may create security (whether by way of
assignment by way of security, charge or otherwise) over all or any of its
rights under this Agreement in favour of any person in connection with any debt
or equity financing or refinancing (whether direct or indirect) provided to the
Purchaser or any member of the Purchaser's Group relating to the purchase of the
Shares and all matters supplemental or ancillary thereto and no provision of
this Agreement shall in any way restrict or prohibit the enforcement of any such
security.
16.3 If the benefit of the whole or any part of this Agreement is assigned by an
Assignor to any Permitted Assignee in accordance with clause 16.1 (but not, for
the avoidance of doubt, in accordance with clause 16.2), where any such
Permitted Assignee will cease to be a member of the Retained Group or the
Purchaser's Group (as the case may be) the Assignor shall procure that, before
it so ceases, the Permitted Assignee shall assign that benefit to the Assignor
or to another continuing member of the Retained Group or the Purchaser's Group
(as the case may be).
16.4 The parties acknowledge and agree that if an Assignor assigns the benefit
of this Agreement in whole or in part to any Permitted Assignee or any other
person with the prior written consent of the other party in accordance with
clause 16.1 (but not, for the avoidance of doubt, in accordance with clause
16.2), the liabilities of the other party under this Agreement to the Permitted
Assignee or such person shall be no greater than such liabilities would have
been had the assignment not occurred.
16.5 Immediately after any assignment in accordance with clause 16.1 or 16.3,
the Assignor will give written notice of the assignment to the other party
containing details of the assignment including the identity of the assignor and
assignee.
16.6 Any purported assignment in contravention of this clause 16 shall be void.
Page 48
TAX COVENANT
17. The provisions of Schedule 6 shall have effect on and from Completion.
ANNOUNCEMENTS
18. Except as required by law or by any recognised stock exchange or
governmental department or agency or other regulatory or supervisory body or
Competent Authority having jurisdiction to whose rules the party making the
announcement or disclosure is subject, whether or not having the force of law
(but, if not having the force of law, compliance with which is in accordance
with general practice of persons subject thereto), no announcement or circular
or disclosure in connection with the existence or subject matter of this
Agreement or any of the Transaction Documents shall be made or issued by or on
behalf of the Vendor or the Retained Group or the Purchaser or the Purchaser's
Group (save for the Announcements and save in respect of the issue of bonds or
other securities in connection with the financing or refinancing of the
transaction contemplated by this Agreement or in connection with a sale of any
member of the Purchaser's Group) without the prior written approval of the other
party to this Agreement (such approval not to be unreasonably withheld or
delayed).
COSTS
19.1 Subject to clause 19.2, each of the parties shall pay its own legal and
other advisers' costs incurred in connection with the negotiation, preparation
and implementation of this Agreement.
19.2 The Vendor shall pay the legal and other advisers' costs incurred by any of
the Group Companies in connection with the negotiation, preparation and
implementation of this Agreement.
19.3 The Purchaser shall bear all stamp duty or stamp duty reserve tax (or
similar or equivalent transfer taxes) payable in relation to the Transaction
Documents.
SEVERABILITY
20. If any provision of this Agreement is held to be invalid or unenforceable,
then such provision shall (so far as it is invalid or unenforceable disregarding
any period of invalidity or unenforceability during which the Purchaser is under
a reasonable endeavours obligation to remove the cause thereof pursuant to
clause 5.1(b)) be given no effect and shall be deemed not to be included in
this Agreement but without invalidating any of the remaining provisions of this
Agreement.
FURTHER ASSURANCE
21.1 The Vendor agrees to perform (or procure the performance of) all further
acts and things, and execute and deliver (or procure the execution and delivery
of) such further documents, as may be required by law or as the Purchaser may
reasonably require, whether on or after Completion, to implement or give effect
to this Agreement and the transaction contemplated by it and for the purpose of
vesting in
Page 49
the Purchaser the full benefit of the assets, rights and benefits to be
transferred to the Purchaser under this Agreement.
21.2 The Vendor shall, if so requested by the Purchaser, after Completion
instruct any of the Vendor's employees, consultants or advisers (if any) who
possess the requisite knowledge to make any statutory declarations or statements
reasonably required in connection with proving title to or rights over any of
the Properties and use their reasonable endeavours to assist the Purchaser and
any member of the Purchaser's Group in that regard.
COUNTERPARTS
22. This Agreement may be executed in any number of counterparts and by the
parties to it on separate counterparts, each of which is an original but all of
which together constitute one and the same instrument.
NOTICES
23.1 Any notice or other communication to be given by one party to the other
under or in connection with this Agreement shall be in writing and signed by or
on behalf of the party giving it. It shall be served by sending it by fax to the
number set out in clause 23.2, or delivering it by hand, or sending it by
pre-paid recorded delivery, special delivery or registered post, to the address
set out in clause 23.2 and in each case marked for the attention of the relevant
party set out in clause 23.2 (or as otherwise notified from time to time in
accordance with the provisions of this clause 23). Any notice so served by hand,
fax or post shall be deemed to have been duly given:
(a) in the case of delivery by hand, when delivered;
(b) in the case of fax, at the time of transmission;
(c) in the case of prepaid recorded delivery, special delivery or registered
post, at l0 am on the second Business Day following the date of posting,
provided that in each case where delivery by hand or by fax occurs after 6 pm on
a Business Day or on a day which is not a Business Day, service shall be deemed
to occur at 9 am on the next following Business Day. References to time in this
clause are to local time in the country of the addressee.
23.2 The addresses and fax numbers of the parties for the purpose of clause 23.1
are as follows:
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Vendor:
Address: 0 Xxxxxxxx Xxxx
Xxxxxxx X0 0XX
Xxxxxxxx
Fax: 0141 248 8300
For the attention of: The Company Secretary
With a copy to: Xxxxx Xxxxxxx, Group Legal Director
Fax: 0141 636 4568
And: Freshfields Bruckhaus Xxxxxxxx
00 Xxxxx Xxxxxx
Xxxxxx XX0X 0XX
(Xxx: MPN-J)
Fax: 020 7832 7001
Purchaser:
Address: 000 Xxxxxxxxxx Xxxxxx
Xxxxxx XX0X 0XX
(Xxx: MRL)
Fax: 020 7600 5555
For the attention of: The Directors
c/o Clifford Chance Secretaries Limited
With a copy to: Xxxxxxxx Chance LLP
000 Xxxxxxxxxx Xxxxxx
Xxxxxx XX0X 0XX
(Xxx: MRL)
Fax: 020 7600 5555
23.3 A party may notify the other party to this Agreement of a change to its
name, relevant addressee, address or fax number for the purposes of this clause
23, provided that such notice shall only be effective on:
Page 51
(a) the date specified in the notice as the date on which the change is to take
place; or
(b) if no date is specified or the date specified is less than five Business
Days after the date on which notice is given, the date following five Business
Days after notice of any change has been given.
NO RIGHTS UNDER CONTRACTS (RIGHTS OF THIRD PARTIES) XXX 0000
24.1 The Resigning Directors shall have the right under the Contracts (Rights of
Third Parties) Xxx 0000 pursuant to clause 5.10 to enforce clauses 5.9(c) and
(d) (but no other clauses).
24.2 Subject to clause 16 and clause 24.1, a person who is not a party to this
Agreement shall have no right under the Contracts (Rights of Third Parties) Xxx
0000 to enforce any of its terms.
SET-OFF
25. Without the prior written consent of the other, no party may deduct and set
off against any amounts of whatsoever nature which are due and payable by it
under or in connection with this Agreement or any other of the Transaction
Documents, any amounts due and payable by the other party to it under or in
connection with this Agreement, any other of the Transaction Documents or any
other agreement.
CONFIDENTIALITY
26.1 Subject to clauses 18 and 26.3, the Vendor shall procure that each member
of the Retained Group:
(a) shall treat as strictly confidential:
(i) the provisions of the Transaction Documents and the process of
their negotiation;
(ii) all information about the Purchaser and any member of the
Purchaser's Group obtained or received by it as a result of
negotiating, entering into or performing its obligations under
this Agreement or the performance by the other parties of their
obligations under this Agreement (including, for the avoidance of
doubt, information received under clause 3.11); and
(iii) all information used in or otherwise relating to the Group's
business, customers or financial or other affairs,
together, the Purchaser Confidential Information; and
(b) shall not, except with the prior written consent of the Purchaser (which
shall not be unreasonably withheld or delayed), publish or otherwise
disclose to any person any Purchaser Confidential Information.
Page 52
26.2 Subject to clauses 18 and 26.3, the Purchaser shall procure that each
member of the Purchaser's Group:
(a) shall treat as strictly confidential:
(i) the provisions of the Transaction Documents and the process of
their negotiation; and
(ii) all information about the Vendor and any member of the Retained
Group obtained or received by it as a result of negotiating,
entering into or performing its obligations under this Agreement
or the performance by the other parties of their obligations
under this Agreement (including, for the avoidance of doubt,
information received under clause 3.12),
together, the Vendor Confidential Information; and
(b) shall not, except with the prior written consent of the Vendor (which shall
not be unreasonably withheld or delayed), publish or otherwise disclose to
any person any Vendor Confidential Information.
26.3 Clauses 26.1, 26.2 and 3.8 shall not apply if and to the extent that the
Vendor or the Purchaser (as appropriate) can demonstrate that:
(a) such disclosure is required by law or by any securities exchange or
regulatory or governmental or antitrust body having jurisdiction over it
(including but not limited to the London Stock Exchange, the Financial
Services Authority, the Panel on Take-overs and Mergers and the Serious
Fraud Office) and whether or not the requirement has the force of law; or
(b) the Purchaser Confidential Information or the Vendor Confidential
Information (together, the Confidential Information) concerned was lawfully
in its possession (as evidenced by written records) prior to its being
obtained or received as described in clauses 26.1 (a)(ii) or 26.2(a)(ii);
or
(c) the Confidential Information concerned has come into the public domain
other than through its fault or the fault of any person to whom such
Confidential Information has been disclosed in accordance with clauses
26.1(b) or 26.2(b); or
(d) such disclosure is made to any Regulatory Authority for the purposes of
clauses 3.1 to 3.12 inclusive; or
(e) subject to the Confidentiality Agreement, such disclosure is made by the
Purchaser to:
(i) the Purchaser's Group;
(ii) the Group;
(iii) the Purchaser's Representatives;
Page 53
(iv) any party providing financing or refinancing directly or
indirectly by means of debt or equity to any member of the
Purchaser's Group in connection with the transaction to which
this Agreement relates or underwriting or arranging the same or
providing monoline commitment or trustee services or rating
services in relation to the same or any other person to whom it
is necessary or desirable to disclose Confidential Information in
connection with the raising or implementation of financing or
refinancing; or
(v) any person entering into an option or arrangement (details of
which have been disclosed in writing to the Vendor prior to the
date of this Agreement) to acquire shares in any member of the
Purchaser's Group or any officers, employees or professional
advisers of such person or any member of such person's group; and
(f) the Confidential Information is at any time after the date of this
Agreement lawfully acquired on a non-confidential basis from a third party
who, as far as the Vendor or Purchaser (as the case may be) is aware, does
not owe the other party or any of its Connected Persons an obligation of
confidence in relation to it.
26.4 The restrictions contained in this clause 26 shall survive Completion or
termination of this Agreement for any reason and shall continue for a period of
four years.
26.5 Forthwith upon any termination of this Agreement, howsoever caused, each
party shall discontinue all use of any Confidential Information received from
any other party and shall, upon the request of such other party within 15 days
of termination and at its expense, surrender and deliver to such other party or
destroy (including by expunging information from any systems, other than back-up
systems) all such Confidential Information received from such other party
including any and all copies and extracts thereof and shall execute and deliver
to such other party a certificate signed by a duly authorised officer of the
first party certifying compliance with this clause 26.5.
AGREEMENT SURVIVES COMPLETION
27. The Purchaser Warranties, the Vendor Warranties and all other provisions of
this Agreement, insofar as the same shall not have been performed at Completion,
shall remain in full force and effect at Completion.
CONSEQUENCES OF TERMINATION
28.1 If this Agreement is terminated in accordance with its terms:
(a) Clause 1 (Definitions and Interpretation), Clause 8 (Vendor Warranties),
Clause 14 (Entire Agreement), Clause 15 (Variation), Clause 16
(Assignment), Clause 18 (Announcements), Clause 19 (Costs), Clause 20
(Severability), Clause 23 (Notices), Clause 24 (No Rights....). Clause 26
Page 54
(Confidentiality), Clause 28 (Consequences of Termination) and Clause 29
(Governing Law and Jurisdiction) shall survive termination of this
Agreement;
(b) the parties' further rights and obligations (including, but not limited to,
the Purchaser's obligation to acquire the Shares) will cease immediately on
such termination, although, subject to clause 28.2, termination will not
affect the parties' accrued rights and obligations at the date of
termination, including without limitation, under clause 8.12.
28.2 If this Agreement is terminated in accordance with its terms
(a) the Vendor shall have no liability in respect of any breaches of clause 4,
any breach of any warranty given under under this Agreement or any breach
of any indemnity given under this Agreement;
(b) the Purchaser shall have no liability for any breach of the Purchaser
Warranties or under any indemnity given under this Agreement
and the Vendor and/or Purchaser shall irrevocably waive any and all claims in
respect of the foregoing.
GOVERNING LAW AND JURISDICTION
29.1 This Agreement and the relationship between the parties shall be governed
by, and interpreted in accordance with, English law.
29.2 The parties agree that the courts of England are to have exclusive
jurisdiction to settle any disputes (including claims for set-off and
counterclaims) which may arise in connection with the creation, validity,
effect, interpretation or performance of, or the legal relationships established
by, this Agreement or otherwise arising in connection with this Agreement, and
for such purposes irrevocably submit to the jurisdiction of the English courts.
TIME OF THE ESSENCE
30. Time shall be of the essence of this Agreement, both as regards the times,
dates and periods mentioned herein and as to any times, dates and periods which
may, by agreement in writing between or on behalf of the parties, be substituted
for them.
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SCHEDULE 1
Interpretation
Definitions
1.1 In this Agreement, the following expressions shall have the following
meanings:
Accounting Expert has the meaning ascribed to it in clause 6.6;
Accounts Date means 31 March 2001;
Agreed Rate means 150 basis points over Three Month LIBOR;
Announcements means the announcement to be made by each of the parties
concerning the transaction contemplated by this Agreement on or after the date
of this Agreement, in each case in the agreed form;
Anticipated Bond Redemption Costs is defined in clause 7.8;
Aspen 4 Amount means the debt of (Pounds)1,050,000,000 owed by the Company to
the Vendor arising and remaining outstanding as at Completion pursuant to the
Reorganisation;
Assignments of Intra Group Debt has the meaning ascribed to it in clause 5.4(g);
Blocking Order means an order pursuant to section 74 of the Fair Trading Act
1973 precluding the doing of things which in the opinion of the Secretary of
State might prejudice a relevant Competition Commission reference or impede the
taking of any action under the Fair Trading Act 1973 which may be warranted by
the Competition Commission's report on such a reference and which are required
to be done to facilitate or effect Completion or the actual receipt by the
Vendor of the cash amounts referred to in clause 5.6;
the meaning ascribed to it in clause 5.1(a);
Budget means the budget for the Group for the financial year ending 31 March
2003, a copy of each of which is annexed to the Disclosure Letter at document
AD371;
Business Day means any day which is not a Saturday, Sunday or a bank or public
holiday in England and Wales;
Capital Programme means the Capital Programme of Southern Water Services Limited
from 2000 to 2005 dated May 2001 annexed to the Disclosure Letter at document
SINV2.1.1;
Claim means any claim by the Purchaser:
(i) in respect of any breach of a Vendor Warranty;
Page 56
(ii) under the Tax Covenant; or
(iii) in respect of any breach of clause 4 by the Vendor;
provided that (without prejudice to the proviso to clause 9.5(b) and clause
9.5(c)), for the avoidance of doubt, for the purposes of clauses 9.5 and 9.6 no
Claim may relate to or result from more than one unrelated matter or
circumstance but subject thereto may relate to a breach of one or more Vendor
Warranties or a series of events arising from the same matter or circumstances;
Commission means the Commission of the European Communities;
Companies Act means the Companies Xxx 0000, as amended from time to time;
Company means Aspen 4 Limited;
Company Car Leasing Agreement means the company car leasing agreement to be
entered into at Completion in the agreed form;
Competent Authority means any legislative, judicial, regulatory or
administrative body or agency (or any subdivision of any of them) of the United
Kingdom or the European Union, any relevant stock exchange on which the shares
or other securities of any member of the Retained Group or the Purchaser's Group
are from time to time listed, or any supranational body which has rulemaking
power or whose directives, decisions, instructions, rulings, laws or regulations
are directly enforceable against the Vendor or the Purchaser;
Completion means completion of the sale and purchase of the Shares in accordance
with clause 5.1;
Completion Date means the date on which Completion occurs;
Confidential Information has the meaning ascribed to it in clause 26.3(b);
Confidentiality Agreement means the confidentiality agreement dated 14 February
2002 between the Vendor and Citibank, N.A.;
Connected Person means (a) a party's officers, employees, group undertakings,
agents and advisers; (b) officers, employees, agents and advisers of a party's
group undertakings; and (c) officers, employees and partners of any such agent
or adviser or of any group undertaking of such agent or adviser;
Consolidated SW plc Accounts means:
(a) the unaudited consolidated balance sheet of Southern Water plc and its
subsidiary undertakings as at the Accounts Date; and
(b) the unaudited consolidated profit and loss account of Southern Water plc
and its subsidiary undertakings in respect of the financial year ended on
the Accounts Date,
Page 57
in each case as extracted from the Hyperion Consolidation Reporting Package;
Construction Contracts means any contract or arrangement for the procurement of
construction in relation to civil engineering works and/or the supply,
installation and commission of any mechanical, electrical and electronic plant
and equipment in each case in relation to any project in the Capital Programme
(excluding repair and maintenance services, renewals and works of a minor
nature) which has been entered into by any Group Company and under which
currently (as at the date of this Agreement or as at Completion) any work
remains to be carried out, any sum to be paid or any claim to be settled,
including without limitation the K3 Contracts;
Debt Purchase Price has the meaning ascribed to it in clause 2.4;
December 2001 Consolidated SW plc Accounts means:
(a) the unaudited consolidated balance sheet of Southern Water plc and its
subsidiary undertakings as at 31 December 2001; and
(b) the unaudited consolidated profit and loss account of Southern Water plc
and its subsidiary undertakings in respect of the period from 1 April 2001
to 31 December 2001,
in each case as extracted from the Hyperion Consolidation Reporting Package;
December 2001 SWS Accounts means the unaudited accounts of Southern Water
Services Limited prepared in respect of the period from the Accounts Date to 31
December 2001 attached to the Disclosure Letter at Exhibit Document AD.293;
Development means in relation to any Property any development as defined by
section 55 of the Town and Country Planning Xxx 0000 and regulations made
thereunder now or in future in force;
DGFT means the Director General of Fair Trading;
DGWS means the Director General of Water Services;
Disclosure Letter means the letter in the agreed form from the Vendor to the
Purchaser executed and delivered immediately before the signing of this
Agreement;
Disposal Scheme means the property disposal programme by any relevant Group
Company, details of which are set out in the documents annexed to the Disclosure
Letter at document AD262;
Dispute Notice has the meaning ascribed to it in clause 8.9;
Draft Net Debt Statement has the meaning ascribed to it in clause 6.2;
ECMR means Council Regulation (EEC) 4064/89 (as amended by Council Regulation
(EC) 1310/97);
EIB means European Investment Bank;
Page 58
EIB Loans means:
(a) the Southern Water Project III - B FI No 1.8556 Finance Contract between
EIB, the Vendor (formerly Scottish Power plc) and Southern Water Services
Limited dated 12 March 1996 and 18 March 1996, amended and restated with
effect from 26 January 1998 by a Deed of Novation dated 26 January 1998 and
2 February 1998 between EIB, the Vendor (formerly Scottish Power plc),
Southern Water plc and Southern Water Services Limited;
(b) the Southern Water Project III - A FI No 1.7007 Finance Contract between
EIB, the Vendor (formerly Scottish Power plc) and Southern Water Services
Limited dated 8 December 1993 amended and restated with effect from 26
January 1998 by a Deed of Novation dated 26 January 1998 and 2 February
1998 between EIB, the Vendor (formerly Scottish Power plc), Southern Water
plc and Southern Water Services Limited;
(c) the Southern Water Project II - B FI No 1.600 Finance Contract between EIB,
the Vendor (formerly Scottish Power plc) and Southern Water Services
Limited dated 10 June 1992 and 15 June 1992 amended and restated with
effect from 26 January 1998 by a Deed of Novation dated 26 January 1998 and
2 February 1998 between EIB, the Vendor (formerly Scottish Power plc),
Southern Water plc and Southern Water Services Limited;
(d) the Southern Water Project II - A FI No 1.5512 Finance Contract between
EIB, the Vendor (formerly Scottish Power plc) and Southern Water Services
Limited dated 30 October 1991 and 4 November 1991 amended and restated
with effect from 26 January 1998 by a Deed of Novation dated 26 January
1998 and 2 February 1998 between EIB, the Vendor (formerly Scottish Power
plc), Southern Water plc and Southern Water Services Limited;
(e) the Southern Water Project - B FI No 1.5168A Finance Contract between EIB,
the Vendor (formerly Scottish Power plc) and Southern Water Services
Limited dated 11 April 1991 and 15 April 1991 amended and restated with
effect from 26 January 1998 by a Deed of Novation dated 26 January 1998 and
2 February 1998 between EIB, the Vendor (formerly Scottish Power plc),
Southern Water plc and Southern Water Services Limited;
(f) the Southern Water Project - A FI No 1.4780 Finance Contract between EIB,
the Vendor (formerly Scottish Power plc) and Southern Water Services
Limited dated 11 September 1990 amended and restated with effect from 26
January 1998 by a Deed of Novation dated 26 January 1998 and 2 February
1998 between EIB, the Vendor (formerly Scottish Power plc), Southern Water
plc and Southern Water Services Limited;
(g) Parent Company Guarantee and Indemnity from Scottish Power plc in respect
of the payment obligations of the Vendor (formerly Scottish Power plc) and
the non-financial obligations of Southern Water Services Limited under the
amended and restated loans referred to in paragraphs (a) - (f) above; and
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(h) Waiver and Amendment Letter relating to the amended and restated loans and
the parent company guarantee referred to in paragraphs (a) -(g) above entered
into between EIB, Scottish Power plc, Scottish Power UK plc and Southern Water
Services Limited dated 5 March 2002;
Emergency (for the purposes only of the Environmental Warranties) means:
(a) a fire, explosion, act of God, flood or other sudden catastrophic event or
any other circumstance or state of affairs where in each case immediate
action is necessary in order to avert an imminent risk of significant
danger or harm to the Environment; or
(b) any circumstance involving significant damage or harm to the Environment in
respect of which a failure to take immediate and urgent action would
materially increase, exacerbate or cause losses or contamination and in
either case would result in a material breach of Environmental Law by the
Purchaser or any member of the Purchaser's Group;
Employees means all persons employed by a Group Company as at the date of this
Agreement and such of the individuals listed in Schedule 11 (Employees) as
accept employment with a Group Company by Completion;
Employer means any Group Company that employs Employees as at the date of this
Agreement or, in respect of the individuals listed in Schedule 11 (Employees),
employs any such individuals at Completion;
Encumbrance means any claim, charge, mortgage, security, lien, option, equity,
power of sale, hypothecation or other third party rights, retention of title,
right of preemption, right of first refusal or security interest of any kind;
Environment means air, water (including surface and groundwater) and land and
any living organisms or systems supported by those media;
Environmental Law means all or any applicable European Community, national or
local legislation, subordinate legislation, statutory notices or statutory
guidance, or common law which relates to Environmental Matters (except
legislation, subordinate legislation, statutory notices or statutory guidance,
or common law relating to town and country planning or health and safety) and is
in force and binding at or prior to the date of this Agreement;
Environmental Licences means material authorisations, permits and consents
required and necessary under Environmental Laws for the operation of the
business of the Group Company as carried on at the date of this Agreement;
Environmental Matters means the pollution or protection of the Environment and
human health (except town and country planning and worker or occupational health
and safety), nature conservation, the discharge or abstraction of water, the
creation of any noise or vibration, radiation, or the production, disposal,
release, use, storage, spillage, deposit, escape, discharge, leak, emission,
recovery, transport of or radiation
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from any Hazardous Material or Waste or sewage sludge and, in the case of sewage
sludge, limited to its effect or potential effect on the Environment;
Environmental Warranties means the Vendor Warranties contained in paragraph 18
of Schedule 3;
Escrow Agent has the meaning ascribed to it in the Escrow Deed;
Escrow Deed means the deed to be signed on or before the date of this Agreement
between the Vendor, the Purchaser, Citibank, N.A., The Royal Bank of Scotland
plc, National Westminster Bank plc and the Escrow Agent, relating to Completion;
Estimated Intra Group Debt means the estimated amount of the Intra Group Debt at
Completion, being (Pounds)776,500,000;
Estimated Net Financial Debt Amount means the estimated Net Financial Debt
Amount at Completion, being (Pounds)882,800,000;
Expert means the person appointed as such in accordance with clause 8.10;
Facility Agreements means:
(a) the (Pounds)1,900,000,000 term, revolving and capex facilities agreement
dated on or about the date of this Agreement and made between JVCo as
parent, original guarantor, The Royal Bank of Scotland plc as arranger,
agent and security trustee and the banks referred to therein; and
(b) the preference share subscription agreement dated on or about the date of
this Agreement between JVCo and the Preference Share Investor (as defined
therein);
Final Termination Date means 14 June 2002;
Finance Conditions means the conditions to funds drawdown in the Facility
Agreements in the agreed form;
Forecast means the full year forecast for the year ending 31 March 2002
contained in the finance director's report to the February 2002 Southern Water
plc Board;
Fuel Agreement means the agreement between Shell UK Limited and the Vendor dated
1 August 1999;
Government Grant has the meaning ascribed to it in paragraph 8.9 of Schedule 3;
Group means the Company and the Subsidiaries (other than ScottishPower Group
Money Purchase Pension Scheme Limited);
Group Company means any one of the Company or the Subsidiaries (other than
ScottishPower Group Money Purchase Pension Scheme Limited);
Group IPR means the registered Intellectual Property Rights owned by the Group;
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group undertaking shall be construed in accordance with section 259 of the
Companies Act;
Hardware means computer equipment used by a Group Company immediately prior to
Completion including parts of computer equipment such as firmware, screens,
terminals, keyboards, cabling and other peripheral electronic equipment, but
excluding software;
Hazardous Material means any pollutant or any hazardous, toxic, radioactive,
noxious, corrosive or caustic substance or any other natural or artificial
substance (in each case whether in solid, liquid or gaseous form) which alone or
in combination with others is capable of causing significant harm to human
health or significant harm to or pollution of the Environment;
holding company shall be construed in accordance with sections 736 and 736A of
the Companies Act;
Hyperion Consolidation Reporting Package means, together, profit and loss
accounts, balance sheet and cashflow and other supporting data in relation to
the Group used in the preparation of the consolidated group accounts of Scottish
Power plc from time to time;
Information Technology Systems means material computer systems, communication
systems, software, Hardware and data owned, used or licensed to any Group
Company;
Initial Share Purchase Price means an amount equal to (Pounds)2,050,000,000 less
(i) the Estimated Net Financial Debt Amount and (ii) the Aspen 4 Amount;
Initial Termination Date means 15 May 2002;
Instrument of Appointment means the Instrument of Appointment by the Secretary
of State for the Environment of Southern Water Services Limited as a water and
sewerage undertaker under sections 11 and 14 of the Water Xxx 0000 (now sections
6, 7, 11 and 12 of the Water Industry Act 1991) as from time to time prior to
the date of this Agreement (as disclosed under Exhibit Document Number AD 375
and as further amended as set out under Exhibit Document Number AD 373) or, with
the consent of the Purchaser in accordance with clause 4.1(e), prior to
Completion modified by the DGWS under sections 11 to 17 of the Water Industry
Xxx 0000;
Intellectual Property Rights means patents, trade marks, service marks, logos,
get-up, and rights protecting goodwill and reputation, trade or business names,
internet domain names, rights in designs, copyright (including rights in
computer software and topography rights), utility models, rights in know-how
(including secret formulae, processes and all other proprietary confidential
knowledge, information and data), database rights and other intellectual
property rights, in each case whether registered or unregistered and including
applications for registration, and all rights or forms of protection having
equivalent or similar effect anywhere in the world;
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Intellectual Property Licences means all material agreements between a Group
Company and third parties which relate to Intellectual Property Rights owned or
used by the Group Companies and which are listed in the Disclosure Letter at
Exhibits Document Number AD.347;
Intra Group Debentures is defined in clause 5.4(f);
Intra Group Debt means:
(a) the amount of all interest-bearing or non interest bearing loans or debt
securities and all interest-bearing or non interest bearing finance leases
or equivalent accrued or due from, and all accrued but unpaid interest on
such debt and all accrued but unpaid dividends payable by members of the
Group to members of the Retained Group;
(b) all amounts owed by any member of the Group to any member of the Retained
Group in respect of the Vendor's group payment arrangement in respect of
corporation tax (Group Payment Tax Debt); and
(c) any trading debt due from any member of the Group to any member of the
Retained Group which is past its due date at Completion (other than in
accordance with the Group's normal payment practices and policies in the
last 12 months);
including, for the avoidance of doubt, any intra group indebtedness attributable
to the EIB Loans or management fees, but excluding (i) any taxes or amounts in
respect of tax (other than as taken into account in paragraph (b) above), (ii)
Intra Group Trading Debt, (iii) the Intra Group Tax Debt and (iv) the Aspen 4
Amount;
Intra Group Tax Debt means all amounts owing between members of the Group and
members of the Retained Group at Completion in respect of tax other than any
Group Payment Tax Debt;
Intra Group Trading Debt means the amount of all debts accrued or due between
members of the Group and members of the Retained Group at Completion in respect
of trading activities save for any amount past its due date included in Intra
Group Debt;
JVCo means First Aqua (JVCo) Limited, a company incorporated in the Cayman
Islands with registered number 112330 and registered office at XX Xxx 000,
Xxxxxx Xxxxx, Xxxxx Church Street, Georgetown, Grand Cayman, Cayman Islands,
British West Indies;
K3 Contracts means (1) the contract between Southern Water Services Limited and
the Black & Xxxxxx/Costain/ Xxxxxxxx Xxxxx Consortia dated 8 November 2001
relating to, inter alia, those schemes listed in parts 1 to 3 of Schedule 7 and
(2) the contract between Southern Water Services Limited and the Xxxxxxxx
Construction/ Xxxxx & Root Services Consortia dated 8 November 2001 relating to,
inter alia, those schemes listed in parts 4 to 6 of Schedule 7, signed copies of
which are annexed as
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exhibit AD 315 to the Disclosure Letter together with the technical
specifications thereto annexed as Exhibit AD 374;
K3 Periodic Review means the last periodic review for the regulatory pricing
period 2000-2005;
Last Comments Date is defined in clause 6.7(c);
Letters of credit means the letters of credit from the lenders to the Purchaser
in the agreed form;
Management Accounts means the management accounts of Southern Water Services
Limited in respect of each financial month from the Accounts Date to the end of
the January 2002 financial month, true copies of which are annexed to the
Disclosure Letter at document AD 370;
Material Contract means any contract or other commitment to which any Group
Company is party which is material in the context of the business of the Group
taken as a whole and under which there is currently (as at the date of this
Agreement or as at Completion) any material obligation or liability outstanding
and which shall include without limitation those contracts or commitments
described in Schedule 10 or, in the case of the Construction Contracts, those
and only those listed in Schedule 10 or referred to in paragraph 8.1(a) of
Schedule 3 but which shall not include Intra Group Debt, the EIB Loans or the
SWSF Bonds;
Material Environmental Effect means a liability of or cost to the operation of
the business of the Group and which in respect of each individual circumstance
might amount to a breach of the Environmental Warranties in paragraphs 18.1,
18.2, 18.3, 18.4 or 18.7 of Schedule 3 and which exceeds or is likely to exceed
(Pounds)300,000 over and above any amount budgeted or provided for in respect of
the subject matter;
Material Properties means those Properties shown edged red for the purpose of
identification only and named on the plans referred to in Schedule 3 paragraph
15.15;
Merger has the meaning ascribed to it in clause 3.1(b);
Net Debt Statement means the statement of the Net Financial Debt Amount as at
Completion with supporting notes, to be prepared in accordance with clause 6 and
Schedule 8;
Net Financial Debt Amount means the total amount of:
(a) the Intra Group Debt;
(b) the Third Party Debt;
(c) external dividends declared but unpaid (other than dividends due to a Group
Company or a member of the Retained Group); and
(d) the Tax Amount;
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less:
cash (in hand and in the bank) held by the Group at Completion as specified in
the Group's QSP financial ledger as at the Completion Date,
in each case, as extracted from the Hyperion Consolidation Reporting Package for
the Group (excluding the Company) drawn up as at the Completion Date, save to
the extent otherwise specifically directed in this Agreement;
No Termination Repeated Warranties means the Vendor Warranties contained in the
paragraphs of Schedule 3 which are listed in Part B of Schedule 13;
Non Repeated Warranties means the Vendor Warranties contained in the paragraphs
of Schedule 3 which are listed in Part A of Schedule 13;
OFT means the Office of Fair Trading;
OFWAT means the Office of Water Services;
Properties means all or any part or parts of the properties owned, leased,
controlled, occupied or used by any Group Company and Property shall be
construed accordingly;
Property Warranties means the Vendor Warranties contained in paragraph 15 of
Schedule 3;
Purchaser's Account means the account of the Purchaser as shall be notified in
writing by the Purchaser to the Vendor from time to time;
Purchaser's Accountants means Ernst & Young, Compass House, 00 Xxxxxxxxx Xxxx,
Xxxxxxxxx XX0 0XX;
Purchaser Confidential Information has the meaning ascribed to it in clause
26.1(a);
Purchaser Due Diligence Reports means the respective due diligence reports
provided to the Purchaser or any member of the Purchaser's Group by Xxxxxxxx
Chance LLP (dated 6 March 2002), Xxxxxxx & Xxxxxxx (dated 7 March 2002), AON
(dated 6 March 0000), Xxxxx & Young (dated 4 March 2002), XX Xxxxxx (dated 5
March 2002) and Xxxxxxx X Xxxxxx (dated 4 March 2002);
Purchaser's Group means the Purchaser, any holding company from time to time of
the Purchaser, any subsidiary from time to time of the Purchaser or of any
holding company and, after Completion, shall include the Group Companies for so
long as they remain subsidiaries of the Purchaser or of any holding company of
the Purchaser;
Purchaser's Representatives means any directors, employees or professional
advisers of the Purchaser and/or any member of the Purchaser's Group;
Purchaser Termination Notice is defined in the Escrow Deed;
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Purchaser Warranties means the representations and warranties on the part of the
Purchaser set out in Schedule 4;
Refinancing Proposal means any proposal to securitise any assets of, or
otherwise refinance and/or extract cash from, the Group;
Regulation has the meaning ascribed to it in clause 3.1(b);
Regulatory Authority means each of the Commission, the DGFT, the OFT, the DGWS,
OFWAT, the Competition Commission, the Secretary of State, the Department for
Trade and Industry, the Department for the Environment, Food and Rural Affairs,
the Environment Agency, the Drinking Water Inspectorate or any other
governmental department or regulatory authority;
Regulatory Capital Value means the value of the capital base of Southern Water
Services Limited as determined by the DGWS at a final determination or interim
determination from time to time for the purposes of setting price limits for
Southern Water Services Limited for a regulatory pricing period;
Relevant Employee means any past or present employee of any Group Company;
Relevant Interest Rate means a rate of interest equal to the mean of the bid and
offer swap rates for pounds sterling denominated fixed/floating interest rate
swap transactions with a term equal to 20 years which appear on Reuters page
ICAP2 (or such other page as may replace that page on that service for the
purpose of displaying rates or prices comparable to the Relevant Interest Rate)
under the heading GBP Swaps at 11.00 a.m. (London time) on the date of
Completion provided that if the Relevant Interest Rate cannot be determined as
aforesaid, then the Relevant Interest Rate shall be the arithmetic mean of the
bid and offer swap rates (mid rates) quoted by five major dealers active in the
pounds sterling interest rate swap market in London, selected by the Purchaser,
as applying at approximately 11.00 a.m. (London time) on the date of Completion
for a pounds sterling interest rate swap where payments on the fixed leg are
made semi-annually and the floating leg is Six Month LIBOR with semi-annual
payments, where interest is calculated on an Act/365 basis for the fixed leg and
Act/365 basis for the floating leg and the swap has a term equal to 20 years. If
five London dealers provide quotations as requested, the Relevant Interest Rate
will be calculated by eliminating the highest mid rate (or, in the event of
equality, one of the highest) and the lowest mid rate (or, in the event of
equality, one of the lowest) and taking the arithmetic mean of the dealers'
remaining quotations. If at least three, but fewer than five, London dealers
provide mid rates, the Relevant Interest Rate will be the arithmetic mean of the
quotations. If fewer than three quotations are provided as requested, the
Relevant Interest Rate shall be agreed between the Purchaser and the Vendor;
Relevant Person has the meaning ascribed to it in clause 9.31(a);
Relevant Time is defined in clause 5.1;
Reorganisation means the intra group reorganisation effected by the Vendor prior
to the date of this Agreement whereby the Vendor transferred its shares in
Southern
Page 66
Water plc to the Company in consideration of (Pounds) 1,225,000,000 of debt left
outstanding on inter-company account and the subsequent capitalisation of part
of such debt, details of which are annexed to the Disclosure Letter at Exhibit
Document Nos A.D.316, A.D.317, A.D.318 and A.D.319 and S.A.D.l;
Resigning Directors means Rupert Xxxxx Xxxxxxx and Xxxxxx Xxxxxx Xxxxxx and any
other director of any Group Company who resigns or is required (as notified by
the Purchaser to the Vendor prior to the date of this Agreement) to resign
before or with effect from Completion and, for the purposes of clause 5.9 only,
shall include Xxx Xxxxx XxxXxxxxx Xxxxxxx;
Repeated Warranties means the Termination Repeated Warranties and the No
Termination Repeated Warranties;
Resolution has the meaning ascribed to it in clause 3.10;
Retained Group means the Vendor, any holding company from time to time of the
Vendor and any subsidiary from time to time of the Vendor or of any such holding
company (but excluding any Group Company);
RPO Standard means the exercise of the degree of skill and prudence of an
experienced operator in the UK engaged in the same type of undertaking under the
same or similar circumstances having regard to the nature of the asset or
contract concerned and the current regulatory regime for the UK water and
sewerage industry and the levels of regulatory allowances from time to time and
on the assumption that such operator wished to operate its undertaking as a
going concern;
Schemes means the Scottish Power Deferred Share Plan, the Scottish Power
Executive Share Option Plans, the Scottish Power plc Employee Share Ownership
Plan, the Scottish Power Long Term Incentive Plans, the Scottish Power Sharesave
Schemes and the Southern Water Sharesave Scheme;
Scottish Power Deferred Share Plan means the deferred share plan established by
Scottish Power plc on 25 April 2000;
Scottish Power Executive Share Option Plan 2001 means the executive share option
plan established by Scottish Power plc on 27 July 2001;
Scottish Power Executive Share Option Plans means the executive share option
scheme established by Scottish Power plc on 3 May 1991 and the Scottish Power
Executive Share Option Plan 2001;
Scottish Power Long Term Incentive Plans means the long term incentive plan
established by Scottish Power plc on 8 August 1996 and the long term incentive
plan established by Scottish Power plc on 28 July 2000;
Scottish Power plc Employee Share Ownership Plan means the employee share
ownership plan established by Scottish Power plc under a trust deed date 24
October 2000;
Page 67
Scottish Power Sharesave Schemes means the sharesave schemes established by
Scottish Power plc or a subsidiary of Scottish Power plc on 24 April 1991, 29
April 1999 and 28 July 2000;
Secretary of State means the Secretary of State for Trade and Industry;
Senior Employee means any Employee of an Employer whose basic annual salary is
(Pounds)50,000 or more;
Share Purchase Price is defined in clause 2.2;
Shares has the meaning ascribed to it in Recital (C);
Xxxxx-Xxxxxxx Claim means the High Court proceedings brought by Southern Water
Services Limited against (1) Xxxxx-Xxxxxxx Limited and (2) Simon Group plc and
the arbitration proceedings between Southern Water Services Limited and
Xxxxx-Xxxxxxx Limited and, in each case, including the subject matter thereof
(particulars of which are set out in the Disclosure Letter);
Six Month LIBOR means for the purpose of determining the Relevant Interest Rate
the percentage rate per annum equal to the offered quotation which appears in
the page of the TeleRate Screen which displays the British Bankers Association
Interest Settlement Rate for sterling for the period of six months as of 11.00
am on the day three Business Days prior to the due date for payment of the
relevant sum (or, if no quotation is displayed, the arithmetic mean (rounded
upwards to four decimal places) of the rates at which each of The Royal Bank of
Scotland plc, Barclays Bank Plc and HSBC Bank plc were offering to prime banks
in the London interbank market deposits in sterling and for a six month period
as of 11.00 am on the day three Business Days prior to the due date for payment
of the relevant sum);
Southern Water Sharesave Scheme means the sharesave scheme established by the
Company on 19 October 1989;
Specified Subsidiaries means Southern Water Services Finance plc, Southern Water
Pension Trustees Limited, Southern Water Executive Pension Scheme Trustees
Limited, Bowsprit Holdings Limited, Bowsprit Property Development Limited, Monk
Xxxxxxx Limited, Xxxxxx Plant Haulage Limited and Xxxxx Xxxxxxx & Sons Limited;
Subsidiaries has the meaning ascribed to it in Recital (B);
subsidiary and subsidiaries shall be construed in accordance with sections 736
and 736A of the Companies Act;
subsidiary undertaking shall be construed in accordance with section 258 of the
Companies Act;
SW plc Accounts means:
(a) the audited balance sheet of Southern Water plc as at the Accounts Date;
and
Page 68
(b) the audited profit and loss account of Southern Water plc in respect of the
financial year ended on the Accounts Date,
together with any notes, reports, statements or documents permitted or required
by the Companies Act to be made thereon or annexed or attached thereto;
SWS Limited Accounts means:
(a) the audited balance sheet of Southern Water Services Limited as at the
Accounts Date; and
(b) the audited profit and loss account of Southern Water Services Limited in
respect of the financial year ended on the Accounts Date,
together with any notes, reports, statements or documents permitted or required
by the Companies Act to be made thereon or annexed or attached thereto;
SWSF Bonds means the (Pounds)100 million variable rate bonds issued by Southern
Water Services Finance plc and guaranteed by Southern Water Services Limited, as
amended and supplemented from time to time as disclosed to the Purchaser as
document numbers L.2.1, L.2.2, L.2.3, L.2.4, SL.1.3.18.1.5 and AD.143 of the
Disclosure Letter;
tax and tax authority have the meanings ascribed to them in Schedule 6;
Tax Amount is the aggregate of:
(a) all presently due but unpaid taxes calculated by reference to all company
tax returns of each Group Company which have been submitted or which any
Group Company or member of the Retained Group intends to submit as at
Completion (if any) (which for the avoidance of doubt excludes any amounts
paid or discharged by or on behalf of any Group Company before Completion)
for all accounting periods of each Group Company up to and including the
accounting period ending 31 March 2001; and
(b) an estimate of the tax payable by each Group Company from 1 April 2001 up
to and including Completion, and taking into account any relief (as defined
in Schedule 6 of this Agreement) available to any Group Company, in respect
of that period (computed in accordance with the principles set out in
Schedule 8) less any amounts paid or discharged by or on behalf of any
Group Company before Completion in respect of that period (whether under
the Vendor's group payment arrangement or otherwise),
and for the avoidance of doubt, the amounts of tax in (a) and (b) above shall
not include any amounts in respect of deferred tax;
Tax Covenant means the covenant relating to tax set out in Schedule 6;
Tax Warranties means those Warranties set out in paragraph 12 of Schedule 3;
Taxes Act means the Income and Corporation Taxes Xxx 0000;
Page 69
Termination Repeated Warranties means the Vendor Warranties contained in the
paragraphs of Schedule 3 which are listed in Part C of Schedule 13;
Third Party Debt means:
(a) the book value of all interest-bearing or non interest-bearing loans or
debt securities (including, for the avoidance of doubt, the SWSF Bonds) and
all interest-bearing or non interest bearing finance leases or equivalent
of the Group, factored receivables (if any), bank overdrafts (as shown in
the Group QSP financial ledger as at the Completion Date), accrued but
unpaid interest in respect of all such debt and the Anticipated Bond
Redemption Costs as set out in Schedule 8 (excluding any accrued interest
included in the Anticipated Bond Redemption Amount);
(b) any trading debt past its contractual due date at Completion (otherwise
than in accordance with the Group's normal payment practices and policies
in the last 12 months); and
(c) external costs and expenses incurred in connection with the capital
restructuring referred to in clause 4.5 to the extent incurred by the Group
and unpaid as at the Completion Date;
but excluding (i) any taxes or amounts in respect of tax, (ii) Intra Group Debt,
(iii) Intra Group Trading Debt, (iv) Intra Group Tax Debt, (v) the Aspen 4
Amount, (vi) any other trading indebtedness not included in (b) above and (vii)
the EIB Loans, in each case at Completion;
Third Party Insurance Policies means the policies of insurance between any
member of the Retained Group and third party insurers, brief details of which
are set out in or attached to the Disclosure Letter;
Three Month LIBOR means for the purposes of determining the Agreed Rate, the
percentage rate per annum equal to the offered quotation which appears on the
page of the TeleRate Screen which displays the British Bankers Association
Interest Settlement Rate for sterling for the period of three months as of 11.00
am on the day three Business Days prior to the due date for payment of the
relevant sum (or, if no quotation is displayed, the arithmetic mean (rounded
upwards to four decimal places) of the rates at which each of The Royal Bank of
Scotland plc, Barclays Bank plc and HSBC Bank plc were offering to prime banks
in the London interbank market deposits in sterling and for a three month period
as of 11.00 am on the day three Business Days prior to the due date for payment
of the relevant sum);
Transaction Documents means this Agreement, the Disclosure Letter, the
Confidentiality Agreement, the Transitional Services Agreement and such other
agreements to be entered into pursuant to, or expressly contemplated by, this
Agreement, each as amended, varied, supplemented or modified from time to time;
Transitional Services Agreement means the transitional services agreement to be
entered into at Completion in the agreed form;
Page 70
undertaking shall be construed in accordance with section 259 of the Companies
Act;
vendor's Account means the account of the Vendor number 00733493 with The Royal
Bank of Scotland plc (sort code 83-07-06) or such other account as shall be
notified in writing by the Vendor to the Purchaser from time to time;
Vendor's Accountants means PricewaterhouseCoopers, Kintyre House, 000 Xxxx
Xxxxxx Xxxxxx, Xxxxxxx X0 0XX;
Vendor Confidential Information has the meaning ascribed to it in clause
26.2(a);
Vendor Group Policies means the policies of insurance between Scottish Power
Insurance Limited and any member of the Retained Group, brief details of which
are set out in or attached to the Disclosure Letter;
Vendor's Material Pension Scheme means each of:
(a) the Southern Water Pension Scheme, governed by a definitive trust deed
dated May 1996, as amended from time to time;
(b) the Southern Water Executive Pension Scheme, governed by a definitive trust
deed dated 24 June 1991, as amended from time to time;
(c) the ScottishPower group Final Salary LifePlan, governed by a definitive
trust deed dated 21 and 27 December 2000, as amended from time to time; and
(d) the Money Purchase Scheme (as defined in Schedule 5);
Vendor's Pension Scheme means each of:
(a) the Vendor's Material Pension Schemes; and
(b) the Manweb Group of the Electricity Supply Pension Scheme established by a
resolution dated 1 April 1983, as amended; and
(c) the Scottish Power Pension Scheme governed by rules adopted on 1 April
1995, as amended;
Vendor's Solicitors means Freshfields Bruckhaus Xxxxxxxx, 00 Xxxxx Xxxxxx,
Xxxxxx XX0X 0XX;
Vendor Termination Notice has the meaning ascribed to it in Clause 8.11;
Vendor Warranties means the representations and warranties on the part of the
Vendor set out in Schedule 3, being the Non Repeated Warranties, the No
Termination Repeated Warranties and the Termination Repeated Warranties; and
Waste means any substance or object which falls within the categories set out in
Part II of Schedule 4 of the Waste Management Licensing Regulations 1994 and
which the producer or the person in possession of it discards, or intends or is
required to discard.
1.2 In this Agreement, unless the context otherwise requires:
Page 71
(a) references to persons shall include individuals, bodies corporate (wherever
incorporated), unincorporated associations and partnerships;
(b) the headings are inserted for convenience only and shall not affect the
construction of this Agreement;
(c) the singular includes the plural and vice versa and references to one
gender include all genders;
(d) any reference to an enactment or statutory provision is a reference to it
as it may have been, or may from time to time be, amended, modified,
consolidated or re-enacted and includes all instruments or orders made
under such enactment or statutory provision;
(e) any references to clauses and schedules are to clauses of, and to the
schedules to, this Agreement. The schedules comprise schedules to this
Agreement and form part of this Agreement;
(f) any reference to a document in the agreed form is to the form of the
relevant document agreed between the parties and for the purpose of
identification initialled by each of them or on their behalf (in each case
with such amendments as may be agreed by or on behalf of the Vendor and the
Purchaser);
(g) references to any English legal term for any action, remedy, method of
judicial proceeding, legal document, legal status, court, official or any
other legal concept shall, in respect of any jurisdiction other than
England, be deemed to include the legal concept which most nearly
approximates in that jurisdiction to the English legal term;
(h) any reference to business hours means the hours between 9 am and 5:30 pm on
any Business Day;
(i) any reference to the awareness or knowledge of the Vendor in this Agreement
(including in respect of any Vendor Warranty) means (and is limited to) (i)
all matters of which any director of Southern Water plc or Southern Water
Services Limited or any other Group Company (but excluding the Company) has
actual knowledge (but provided always that in the case of Xxxxx Xxxxxxx he
shall not be required to disclose, nor will the Vendor be liable to the
extent he does not disclose, any matter or circumstance which is the
subject of legal professional privilege) and (ii) all matters of which
Xxxxxx Xxxxxx Xxxxxx has actual knowledge or ought reasonably to have
actual knowledge having made reasonable enquiry (but no other or further
enquiries) of each of Xxxx Xxxx Xxxxxxxxxx (Finance, Intellectual Property
and Information Technology), Barrie Xxxxxx Xxxxxxxx (Regulatory), Stuart
Derwent (overall business management (including Health and Safety), Xxxxxxx
Xxxxxxxxx (Insurance), Xxxx Xxxxxxx (Pensions and Human Resources), Xxxxxx
Xxxxx (Operations) Xxxxxxx Xxxxx Xxxxx (Project Delivery), Xxxxx Xxxx
(having made reasonable enquiry of Xxxxxx Xxxxxxxx) (Property), Xxxx Xxxxxx
(Environment), Xxxxxxx Xxxx (Tax) and Xxxxx Xxxx Xxxxxxxxxxx (Customer
Service and Billing,
Page 72
including the Intellectual Property and Information Technology relating
thereto) each with respect only to those areas of the business of the Group
for which that person is stated to be responsible as aforesaid (and each
not being required to make any other or further enquiries) save for, in the
case of environmental matters, having procured that Xxxx Xxxxxx make
enquiry (but no other or further enquiries) of Nev Xxxxx, Xxxxx Xxxxxxx,
Xxxxxxx Xxxxx and Xxxxxxx Xxxxxxx) but with none of them being required to
make any further or other enquiry. For the avoidance of doubt but without
prejudice to their actual knowledge (which shall in the case of Xxxxxx
Xxxxxx Xxxxxx include any actual knowledge he would be deemed to have
having made the enquiries referred to above), neither Xxxxxx Xxxxxx Xxxxxx
nor any of the persons referred to above shall be deemed to have actual
knowledge of any of (neither shall they be required by this Agreement to
seek out, review and/or verify the contents of) any matters contained in
any documents in the Data Room, whether or not prepared by consultants or
advisers of the Retained Group or the Group;
(j) any express reference to the consent of the Purchaser or to the consent
of the Vendor being required or similar expression shall be deemed to
include a statement that such consent may not be unreasonably withheld or
delayed and that no such consent shall be required in circumstances where
an emergency situation (involving any danger or threat to health, safety,
property or the environment) at any of the Properties or in respect of any
contracts or licences requires the relevant action to be taken immediately.
For the purposes of the application of this sub-paragraph 1.2(j) to clause
9.31(a)(iv) of this Agreement, the term emergency where it appears in this
sub-paragraph shall be taken to mean Emergency as defined in paragraph 1.1
of this Schedule 1; and for the purposes of the application of this
sub-paragraph 1.2(j) to paragraph 3.1.4.1 of the Slindon Indemnity
(contained in Schedule 9), the term emergency where it appears in this
sub-paragraph shall be taken to mean Emergency as defined in the Slindon
Indemnity; and the words (involving any danger or threat to health, safety,
property or the environment) where they appear above in this sub-paragraph
1.2(j) shall not apply to the aforesaid respective definitions of
Emergency; and
(k) if a period of time is specified and dates from, after or before, a given
day or the day of an act or event, it is to be calculated exclusive of that
day.
(l) in determining reasonableness or materiality for the purposes of this
Agreement, for the avoidance of doubt, any impact or potential impact on
any post-Completion direct or indirect disposal of all or a substantial
part of the assets or shares of any member of the Purchaser's Group shall
be disregarded.
1.3 The principles of construction known as the contra proferentum rule shall
not be applied to the interpretation of this Agreement.
1.4 For the avoidance of doubt, the inclusion of a reference to a specific
Disclosure Document in Schedule 3 shall not imply or infer that reference to a
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specific Disclosure Document is required in order for disclosure of any
Disclosure Document to be fair.
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