EXHIBIT 2(d)
CONFORMED COPY
SUPPLEMENTAL AGREEMENT
DATED 12th March, 1999
relating to a
(pound)2,600,000,000
REVOLVING CREDIT AGREEMENT
dated 24th June, 1996
for
SCOTTISH POWER PLC
with
THE ROYAL BANK OF SCOTLAND PLC
as Agent
▇▇▇▇▇ & ▇▇▇▇▇
London
INDEX
Clause Page
1. Interpretation ....................................................... 1
2. Conditions precedent ................................................. 2
3. Amendments to the Credit Agreement ................................... 2
4. Approval ............................................................. 9
5. Representations and warranties ....................................... 9
6. Expenses ............................................................. 9
7. Fees ................................................................. 9
8. Miscellaneous ........................................................ 10
9. Governing law ........................................................ 10
Schedule
1. Part 1 - Conditions precedent to the Approval Date ................... 11
Part 2 - Conditions precedent to be provided in respect of Holdco
on the Guarantee Date ................................................ 13
2. Calculation of the Mandatory Cost .................................... 14
3. Form of Guarantee .................................................... 16
Signatories ................................................................. 31
THIS SUPPLEMENTAL AGREEMENT is dated 12th March, 1999 and made between:-
(1) SCOTTISH POWER PLC (to be renamed "Scottish Power UK plc" on the Scheme
Date) (Registered No: SC11712OP) (the "Company"); and
(2) THE ROYAL BANK OF SCOTLAND PLC as agent acting on behalf of the Finance
Parties (as defined in the Credit Agreement referred to below) (the
"Agent").
BACKGROUND:-
(A) This Supplemental Agreement is supplemental to a credit agreement dated
24th June, 1996 as amended by a letter dated 29th January, 1998, between,
amongst others, the Company and the Agent (the "Credit Agreement") whereby
the Banks (as defined therein) agreed to provide a loan facility of up to
(pound)2,600,000,000 to the Company.
(B) The Majority Banks have approved the terms of this Supplemental Agreement
and provided their consent to the Agent to enter into this Supplemental
Agreement on their behalf.
(C) The parties to this Supplemental Agreement have agreed to amend the Credit
Agreement on the terms set out below in accordance with clause 23
(Amendments and waivers) of the Credit Agreement.
IT IS AGREED as follows:-
1. INTERPRETATION
1.1 Definitions
In this Supplemental Agreement, unless the contrary intention appears, a
term or expression defined in the Credit Agreement has the same meaning in
this Supplemental Agreement and in addition:
"Approval Date"
means the date upon which the Agent has issued the notification referred
to in Clause 2 (Conditions precedent).
"Guarantee"
means a guarantee executed or to be executed by Holdco in favour of the
Agent on behalf of the Finance Parties substantially in the form of
Schedule 3.
"Guarantee Date"
means the date (falling on or after the Scheme Date) upon which Holdco
gives any guarantee, Security Interest, indemnity or enters into any other
similar arrangement in respect of any of the obligations of any of its
Subsidiaries in the Ring Fenced Group.
2
"Holdco"
means New Scottish Power plc (to be renamed "Scottish Power plc" on the
Scheme Date) (Registered No. SC193794) which shall, following the Scheme
Date, be the Holding Company of the Company.
"Holdco Group"
means at any time Holdco and its Subsidiaries at that time.
"Obligor"
means the Company and, on or after the Guarantee Date, the Company or
Holdco.
"Ring Fenced Group"
means Holdco and any Affiliate of Holdco that is not also a member of the
Group.
"Scheme"
means the proposed scheme of arrangement pursuant to which (amongst other
things) the Company will become a Subsidiary of Holdco.
"Scheme Date"
means the date on which the Scheme becomes effective.
1.2 Construction
(a) In this Supplemental Agreement, unless the contrary intention appears, the
provisions of clause 1.2 (Construction) of the Credit Agreement will apply
with all necessary modifications as if they were set out in full.
(b) References in the Credit Agreement to "this Agreement", "hereof",
"hereunder" and expressions of similar import shall be deemed to be
references to the Credit Agreement (as amended by this Supplemental
Agreement) and to this Supplemental Agreement.
2. CONDITIONS PRECEDENT
The approval of the Scheme set out in Clause 4 (Approval) is subject to
receipt by the Agent of all the documents and other matters set out in
Part 1 of Schedule 1 in form and substance satisfactory to it and the
Agent shall notify the Company and the Banks when it has received those
documents and other matters.
3. AMENDMENTS TO THE CREDIT AGREEMENT
3.1 Amendments
With effect on and from the date of this Supplemental Agreement the Credit
Agreement shall be amended by:
(a) in clause 1.1 (Definitions):
3
(i) inserting the following definitions in alphabetical order:
(A) ""Consolidated EBITDA"
means in respect of any financial year of the Group, the
consolidated profits of the Group before:
(i) Net Interest Payable;
(ii) tax;
(iii) depreciation;
(iv) amortisation (including, for the avoidance of
doubt, of goodwill); and
(v) extraordinary and exceptional items,
but adjusted by deducting any amount attributable to
minority interests.";
(B) ""Guarantee"
means a guarantee executed or to be executed by Holdco
substantially in the form of Schedule 3 to the
Supplemental Agreement.";
(C) ""Guarantee Date"
means the date (falling on or after the Scheme Date)
upon which Holdco guarantees any of the obligations of
any of its Subsidiaries in the Ring Fenced Group";
(D) ""Holdco"
means New Scottish Power plc (to be renamed "Scottish
Power plc" on the Scheme Date) (Registered No.
SC193794) which shall, following the Scheme Date, be the
Holding Company of the Company";
(E) ""Holdco Group"
means at any time Holdco and its Subsidiaries at that
time";
(F) ""Obligor"
means the Company and, on or after the Guarantee Date,
the Company or Holdco.";
4
(G) ""Relevant Group"
means:
(a) in the case of the Company, the Group; or
(b) in the case of Holdco, the Holdco Group;"
(H) ""Ring Fenced Group"
means Holdco and any Affiliate of Holdco that is not
also a member of the Group.";
(I) ""Scheme"
means the scheme of arrangement pursuant to which
(amongst other things) Holdco is to acquire all of the
share capital of the Company.";
(J) ""Scheme Date"
means the date on which the Scheme becomes effective.";
(K) ""Supplemental Agreement"
means an agreement dated 12th March, 1999 between the
Agent and the Company amending certain provisions of
this Agreement.";
(ii) deleting:
(A) the definition of "MLA Cost" and replacing it with:
""Mandatory Cost"
means the cost imputed to the Banks of compliance with
the regulations of the Bank of England and the Financial
Services Authority or other reserve or mandatory liquid
assets costs or special deposit costs during the Term of
a Loan expressed as a rate per annum and determined in
accordance with Schedule 3.
(B) the definition of "Margin" and replacing it with:
"Margin"
means on and from the date of the Supplemental
Agreement, 0.45 per cent. per annum.";
(iii) inserting ", the Guarantee" in the definition of "Finance
Document" after the words "a Novation Certificate" and before
the words "or any other document";
5
(b) replacing each reference to "MLA Cost" in the Credit Agreement by a
reference to "Mandatory Cost";
(c) in clause 1.2(c)(i) (Construction), inserting "Consolidated EBITDA"
after "Borrowings" in the first line;
(d) inserting the following clause after clause 2.3 (Nature of a Finance
Party's rights and obligations):
"2.4 Change of currency
If a change in the currency of the United Kingdom occurs, this
Agreement will be amended to the extent the Agent (acting
reasonably and in consultation with the Company) specifies to
be necessary to reflect the change in currency and to put the
Banks in the same position, so far as possible, that they
would have been in if no change in currency had occurred.";
(e) deleting clause 5.2(e) (Completion of Requests) and replacing ";
and" in clause 5.2(d) with a full stop;
(f) deleting clause 8.2(a), (b) and (c) (Calculation of Margin), moving
the existing clause 8.2(d) to be inserted as a clause 15.20 under
the heading of "Certificates" and renumbering clauses 8.3 to 8.5
accordingly;
(g) deleting clause 14.9 (Accounts) and inserting the following in its
place:
"14.9 Accounts
The audited consolidated accounts of the Relevant Group most
recently delivered to the Agent (which in respect of the
Company only, at the date of this Agreement, are the Original
Group Accounts):
(a) have been prepared in accordance with accounting
principles and practices generally accepted in the
United Kingdom consistently applied; and
(b) fairly represent the consolidated financial condition of
the Relevant Group as at the date to which they were
drawn up.
(h) deleting clause 15.2 (Financial information) and inserting the
following in its place:
"15.2 Financial information
The Company shall supply, and procure that Holdco will supply,
to the Agent in sufficient copies for all the Banks:
(a) as soon as the same are available (and in any event
within 180 days from the end of each of its financial
years) the audited financial statements and the audited
consolidated accounts of the Relevant Group for that
financial year;
6
(b) as soon as the same are available (and in any event
within 90 days of the end of the first half-year of each
of its financial years) the unaudited consolidated
accounts of the Relevant Group for that half-year;
(c) (in respect of the Company only), together with the
accounts specified in:
(i) paragraph (a) above, a certificate signed by one
of its senior officers on its behalf setting out
in reasonable detail computations establishing
compliance with Clause 15.16 (Financial covenants)
as at the date to which those accounts were drawn
up;
(ii) paragraph (b) above, a certificate signed by one
of its senior officers on its behalf setting out
in reasonable detail computations establishing
compliance with Clause 15.16 (a) (Financial
covenants) as at the date to which those accounts
were drawn up; and
(d) as soon as the same are available (and in any event
within 90 days from the end of the period for which
they are produced) the quarterly unaudited consolidated
accounts of the Relevant Group.
(i) deleting clause 15.16(a) (Financial covenants) and inserting the
following in its place:
"The Company shall procure that, as at the last day of each period
of twelve months ending on the last day of each financial year and
each financial half-year of the Company, the ratio of Total
Consolidated Net Borrowings to Consolidated EBITDA does not exceed
4.0:1.";
(j) inserting the following clauses after clause 15.17 (Restriction on
Borrowings of Subsidiaries):
"15.18 Distributions
(a) Subject to paragraph (b) and Clause 15.19(a) (Lending and
guarantees) below, the Company shall not make any loans,
provide any form of credit, or pay or make any dividends or
distributions in respect of any class of equity or preference
shares in cash or in kind (a "Distribution") to any member of
the Ring Fenced Group.
(b) Notwithstanding paragraph (a) above and subject to Clause
15.19(b) to (e) (inclusive) (Lending and guarantees) below,
the Company may make the following Distributions to Holdco:
(i) prior to completion of the acquisition by Holdco of the
shares in PacifiCorp (pursuant to the merger announced
on 7th December, 1998), Distributions in an amount not
exceeding the aggregate of:
7
(A) (pound)500,000,000 made on terms that the proceeds
of any such Distribution may only be used by
Holdco for the sole purposes of financing a share
buy-back of its shares in an equivalent amount;
and
(B) payment of any initial establishment expenses
incurred by it in connection with its acquisition
of the shares in PacifiCorp; and
(ii) in any six-month period Distributions in an aggregate
amount not exceeding an amount equal to the consolidated
post-taxation profits of the Company for that six month
period and, after the Scheme Date, Distributions in an
aggregate amount not exceeding an amount equal to the
lower of:
(A) 100 per cent. of dividends on ordinary share
capital made in respect of that six month period
by Holdco to its shareholders; and
(B) the consolidated post-taxation profits of the
Company for that six-month period.
15.19 Lending and guarantees
The Company shall not, and shall procure that no member of the
Group shall:
(a) subject to clause 15.18(b) (Distributions), make any
loans or provide any form of credit to members of the
Ring Fenced Group;
(b) give any guarantee or indemnity to or for the benefit of
members of the Ring Fenced Group or for the benefit of
any person in respect of any obligation or enter into
any document under which any member of the Group assumes
the liability of members of the Ring Fenced Group;
(c) either in a single transaction or in a series of
transactions, whether related or not and whether
voluntarily or involuntarily, sell, transfer, grant or
lease or otherwise dispose of all or any part of its
assets to members of the Ring Fenced Group;
(d) create or permit to subsist any Security Interest on any
of its assets in respect of any indebtedness owed by
members of the Ring Fenced Group;
(e) enter into any agreement with members of the Ring Fenced
Group unless it is on arm's length terms in the ordinary
course of business.";
(k) in clause 16.1 (Events of Default), deleting "16.16 (Change of
control of Target and Appointee)" and inserting "16.18
(Enforceability)" in its place;
8
(l) deleting all references to "the Company" in clauses 16.2
(Non-payment) to 16.14(a) (Revocation and Modification of Licences
or Appointment etc.) and 16.15 (Cessation of business) (inclusive)
and replacing them with references to "an Obligor";
(m) deleting clause 16.16 (Change of control of Target and Appointee)
and inserting the following in its place:
"16.16 Change of control of Target, Appointee or the Company
(a) The Target is not or ceases to be a Subsidiary of the Company;
or
(b) the Appointee is not or at any time ceases to be a wholly
owned Subsidiary of the Target; or
(c) at any time after the Scheme Date, the Company ceases to be a
Subsidiary of Holdco";
(n) inserting the following new clauses and renumbering the existing
clause 16.17 to 16.19:
"16.17 Guarantee
On the Guarantee Date, Holdco does not execute the Guarantee or the
documents set out in part 2 of schedule 1 of the Supplemental
Agreement are either not provided or are not in form or substance
satisfactory to the Agent (acting reasonably) on the Guarantee
Date";
"16.18 Enforceability
On or after the Guarantee Date the Guarantee is not, or is alleged
by Holdco not to be, binding on or enforceable against Holdco";
(o) deleting all references to "16.16 (Change of control of Target and
Appointee)" and replacing them with:
"16.16 (Change of control of Target, Appointee or the Company)";
(p) replacing all references to "Clause 16.17 (Acceleration)" with
references to "Clause 16.19 (Acceleration)";
(q) in clause 18.2(a) (Commitment fee):
(i) deleting the words "the lower of (a) 0.125 per cent. per annum
and (b) one half of the applicable Margin from time to time,"
and inserting "0.20 per cent. per annum" in its place; and
(ii) deleting "this Agreement" (in the last line) and inserting
"the Supplemental Agreement" in its place;
(r) in the last line of clause 21.2(c) (Other indemnities) deleting
"Clause 8.4" and replacing it with "Clause 8.3"; and
9
(s) replacing schedule 3 to the Credit Agreement with Schedule 2 to this
Supplemental Agreement.
3.2 Commitments
On the date of this Supplemental Agreement:
(a) the Total Commitments shall be reduced to (pound)2,000,000,000;
(b) the Commitment of each Bank shall be reduced proportionately; and
(c) as a result of the amendments in sub paragraphs (a) and (b) above,
the automatic reduction of the Total Commitments contemplated by
clause 7.2 (Interim reduction) of the Credit Agreement shall be
deemed to have occurred.
4. APPROVAL
On and from the Approval Date, the Agent on behalf of the Majority Banks
confirms that for the purposes of clause 16.8 (Compositions etc.) of the
Credit Agreement the Majority Banks have approved the Scheme.
5. REPRESENTATIONS AND WARRANTIES
The Company makes the representations and warranties set out in clauses
14.2 (Status) to 14.10 (Litigation) of the Credit Agreement to the Finance
Parties on the date of this Supplemental Agreement, the Approval Date and
on the Guarantee Date.
6. EXPENSES
The Company shall forthwith on demand pay to the Agent the amount of all
reasonable and proper out-of-pocket costs and expenses (including legal
fees) incurred by it in connection with the negotiation, preparation,
printing and execution of this Supplemental Agreement.
7. FEES
7.1 Amendment fee
The Company shall pay to the Agent an amendment fee of (pound)1,500,000
(which is equal to 0.075 per cent. of the Total Commitments as reduced by
this Supplemental Agreement) on the date of this Supplemental Agreement
which the Agent shall distribute to the Banks in the manner agreed between
the Agent and the Banks.
7.2 Additional amendment fee
The Company shall pay to the Agent for the account of each Bank which has
provided approval in writing to the Agent of the amendments set out in the
letter from the Company to the Agent dated 5th February, 1999 by 3.00 p.m.
on 25th February, 1999, a further fee in an amount equal to 0.025 per
cent. of that Bank's Commitment (as reduced by this Supplemental
Agreement). Such fee shall be payable on the date of this Supplemental
Agreement.
10
7.3 Arrangement fee
The Company shall pay to the Agent, on the date of this Supplemental
Agreement, an additional fee for arranging the amendments contemplated by
this Supplemental Agreement in the amount set out in a letter between the
Company and the Agent dated on or about the date of this Supplemental
Agreement.
7.4 VAT
Any fee referred to in this Clause 7 is exclusive of any value added tax
or any other tax which might be chargeable in connection with that fee. If
any value added tax or other tax is so chargeable, it shall be paid by the
Company at the same time as it pays the relevant fee.
8. MISCELLANEOUS
(a) The provisions of clauses 9 (Payments), 10 (Taxes), 20 (Stamp duties) and
28 (Severability) to 32 (Jurisdiction) (both inclusive) of the Credit
Agreement shall apply to this Supplemental Agreement as if set out in this
Supplemental Agreement, but as if references in those clauses to the
Credit Agreement were references to this Supplemental Agreement.
(b) This Supplemental Agreement is a Finance Document.
(c) Except insofar as amended or supplemented by this Supplemental Agreement,
the Credit Agreement will remain in full force and effect.
9. GOVERNING LAW
This Supplemental Agreement is governed by English law.
This Supplemental Agreement has been entered into on the date stated at the
beginning of this Supplemental Agreement.
11
SCHEDULE 1
PART 1
CONDITIONS PRECEDENT TO THE APPROVAL DATE
Authorisations
1. Certificates signed by an authorised signatory of the Company certifying:
(a) that there has been no change to its memorandum and articles of
association, certificate of incorporation and certificate of
incorporation on change of name (if any) since the date these
documents were delivered in accordance with clause 4.1 (Documentary
conditions precedent) of the Credit Agreement, or if there has been
any change, giving details of the same;
(b) the specimen signatures of its authorised signatories; and
(c) that the documents delivered under Part 1 of this Schedule 1 are
correct, complete and in full force and effect.
2. A copy of a resolution of the board of directors of the Company
authorising the entry into, execution and performance of this Supplemental
Agreement and authorising specified persons to execute the Supplemental
Agreement and related documents on its behalf.
3. A copy of the memorandum and articles of association and a certificate of
incorporation of Holdco.
Legal Opinion
4. A legal opinion of ▇▇▇▇▇ & ▇▇▇▇▇, English legal advisers to the Agent,
addressed to the Finance Parties.
5. A legal opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Spens, legal advisers to the Agent in
Scotland, addressed to the Finance Parties.
Scheme
6. A copy of the circular sent to shareholders of the Company setting out
details of the Scheme.
7. A copy of the interlocutor of the Court sanctioning the Scheme under
section 425 of the Companies ▇▇▇ ▇▇▇▇ (the "Act") and confirming that in
accordance with section 137 of the Act, the reduction of capital proposed
under the Scheme has been delivered to the Registrar of Companies for
registration and that the order and relevant minute have been registered
by him.
Miscellaneous
8. A copy of any other authorisation or other document, opinion or assurance
which the Agent considers to be necessary in connection with the entry
into and performance of, and the
12
transactions contemplated by, this Supplemental Agreement or for the validity
and enforceability of any Finance Document.
13
PART 2
DOCUMENTS TO BE PROVIDED IN RESPECT OF HOLDCO
ON THE GUARANTEE DATE
Authorisations
1. A copy of a resolution of the board of directors of Holdco:
(a) approving the terms of, and the transactions contemplated by, the
Guarantee and resolving that it executes the Guarantee;
(b) authorising a specified person or persons to execute the Guarantee
on its behalf; and
(c) authorising a specified person or persons, on its behalf, to sign
and/or despatch all other documents and notices to be signed and/or
despatched by it under or in connection with the Guarantee.
2. A certificate of an authorised signatory of Holdco certifying:
(a) that there has been no change to its memorandum and articles of
association or certificate of incorporation since the date that
these documents were delivered in accordance with Clause 2
(Conditions precedent) of the Supplemental Agreement, or if there
has been any change giving details of the same;
(b) that each copy document specified in Part 2 of this Schedule 1 is
correct, complete and in full force and effect as at a date no
earlier than the date of the Guarantee; and
(c) the identity and specimen signatures of the directors and secretary
of Holdco.
3. A certificate of a director of Holdco certifying that the execution of the
Guarantee will not result in any breach of any restriction binding on
Holdco.
Legal Opinions
4. A legal opinion of ▇▇▇▇▇ & ▇▇▇▇▇, legal advisers to the Agent, addressed
to the Finance Parties.
5. A legal opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Spens, legal advisers to the Agent in
Scotland, addressed to the Finance Parties.
Miscellaneous
6. The Guarantee duly executed by Holdco.
7. A pro forma balance sheet of Holdco.
8. A copy of any other authorisation or other document, opinion or assurance
which the Agent considers to be necessary in connection with the entry
into and performance of the transactions contemplated by, the Guarantee or
for the validity and enforceability of the Guarantee.
14
SCHEDULE 2
CALCULATION OF THE MANDATORY COST
(a) The Mandatory Cost for each Loan for each period in respect of which
interest is payable is the rate determined by the Agent to be equal to the
rate notified by the Agent and calculated in accordance with the following
formulae:
BY + S(Y-Z) + F x 0.01 % per annum = Mandatory Cost
----------------------
100-(B + S)
where on the day of application of the formula:
B is the percentage of the Agent's eligible liabilities which the Bank
of England requires the Agent to hold on a non-interest-bearing
deposit account in accordance with its cash ratio requirements;
Y is the rate at which Sterling deposits are offered by the Agent to
leading banks in the London interbank market at or about 11.00 a.m.
on that day for the relevant period;
S is the percentage of the Agent's eligible liabilities which the Bank
of England requires the Agent to place as a special deposit;
Z is the interest rate per annum allowed by the Bank of England on
special deposits; and
F is the charge payable by the Agent to the Financial Services
Authority under paragraph 2.02 or 2.03 (as appropriate) of the Fees
Regulations (but where for this purpose, the figure in paragraph
2.02b and 2.03b will be deemed to be zero) expressed in pounds per
(pound)1 million of the fee base of the Agent.
(b) For the purposes of this Schedule 2:
(i) "eligible liabilities" and "special deposits" have the meanings
given to them at the time of application of the formula by the Bank
of England;
(ii) "fee base" has the meaning given to it in the Fees Regulations;
(iii) "Fees Regulations" means:
(A) prior to 31st March, 1999, the Banking Supervision (Fees)
Regulations 1998; and
(B) on and after 31st March, 1999, any regulations governing the
payment of fees for banking supervision; and
(iv) "relevant period" in relation to each Term, means:
(A) if it is three months or less, that Term; or
15
(B) if it is more than three months, three months.
(c) In the application of the formula, B, Y, S and Z are included in the
formula as figures and not as percentages, e.g. if B=0.5% and Y=15%, BY is
calculated as 0.5 x 15.
(d) (i) The formula is applied on the first day of each relevant period
comprised in the relevant Term.
(ii) Each rate calculated in accordance with the formula is, if
necessary, rounded upward to the nearest four decimal places.
(e) If the Agent determines (after consultation with the Banks) that a change
in circumstances has rendered, or will render, the formula inappropriate,
the Agent shall notify the Company of the manner in which the Mandatory
Cost will subsequently be calculated. The manner of calculation so
notified by the Agent shall, in the absence of manifest error, be binding
on all the parties to this Agreement.
16
SCHEDULE 3
FORM OF GUARANTEE
DATED [ ]
RELATING TO A
(pound)2,600,000,000
REVOLVING CREDIT FACILITY
as amended by a
SUPPLEMENTAL AGREEMENT
dated 12th March, 1999
for
SCOTTISH POWER PLC
GUARANTEED BY
[HOLDCO]
IN FAVOUR OF
THE ROYAL BANK OF SCOTLAND PLC
as Agent
------------------------------------
GUARANTEE
------------------------------------
▇▇▇▇▇ & ▇▇▇▇▇
London
17
INDEX
Clause Page No.
1. Interpretation ....................................................... 18
2. Guarantee ............................................................ 18
3. Default interest ..................................................... 21
4. Payments ............................................................. 21
5. Taxes ................................................................ 22
6. Representations and warranties ....................................... 23
7. Undertakings ......................................................... 24
8. Currency indemnity ................................................... 26
9. Evidence and calculations and expenses ............................... 26
10. Waivers and remedies cumulative ...................................... 26
11. Changes to the parties ............................................... 27
12. Disclosure of information ............................................ 27
13. Set-off .............................................................. 27
14. Severability ......................................................... 28
15. Counterparts ......................................................... 28
16. Notices .............................................................. 28
17. Jurisdiction ......................................................... 29
18. Governing law ........................................................ 29
Signatories ................................................................. 30
18
THIS GUARANTEE is dated [ ] between:
(1) [HOLDCO] (Registered No. SC193794) ("Holdco"); and
(2) THE ROYAL BANK OF SCOTLAND PLC as agent acting on behalf of the Finance
Parties (the "Agent").
BACKGROUND
On and subject to the terms of a credit agreement dated 24th June, 1996, as
amended by a letter dated 29th January, 1998, between, amongst others, Scottish
Power plc (the "Company") and the Agent (the "Credit Agreement") (as amended by
a supplemental agreement dated 12th March, 1999 between the Company and the
Agent (the "Supplemental Agreement")) the Banks (as defined therein) agreed to
make the Facility available to the Company.
IT IS AGREED as follows:
1. INTERPRETATION
(a) Capitalised terms defined in the Credit Agreement have, unless expressly
defined in this Guarantee, the same meaning in this Guarantee.
(b) The provisions of clause 1.2 of the Credit Agreement apply to this
Guarantee as though they were set out in full in this Guarantee except
that references to the Credit Agreement are to be construed as references
to this Guarantee.
2. GUARANTEE
2.1 Guarantee
In consideration of the Finance Parties, at any time making or continuing
advances under the Credit Agreement or for other sufficient consideration
(receipt of which Holdco acknowledges), Holdco irrevocably and
unconditionally:
(a) as principal obligor guarantees to each Finance Party prompt
performance by the Company of all its obligations under the Finance
Documents;
(b) undertakes with each Finance Party that, whenever the Company does
not pay any amount when due under or in connection with any Finance
Document, Holdco shall forthwith on demand by the Agent pay that
amount as if it instead of the Company were expressed to be the
principal obligor; and
(c) indemnifies each Finance Party on demand against any loss or
liability suffered by such Finance Party if any obligation of the
Company guaranteed by Holdco is or becomes unenforceable, invalid or
illegal.
2.2 Continuing guarantee
This Guarantee is a continuing guarantee, will extend to the ultimate
balance of all sums payable by the Company under the Finance Documents and
shall not be discharged by any intermediate payment or discharge in whole
or in part.
19
2.3 Reinstatement
(a) Where any discharge (whether in respect of the obligations of the Company
or any security for those obligations or otherwise) is made in whole or
in part or any arrangement is made on the faith of any payment, security
or other disposition which is avoided or must be restored on insolvency,
liquidation or otherwise without limitation, the liability of Holdco under
this Guarantee shall continue as if the discharge or arrangement had not
occurred.
(b) Each Finance Party may concede or compromise any claim that any payment,
security or other disposition is liable to avoidance or restoration.
2.4 Waiver of defences
The obligations of Holdco under this Guarantee will not be affected by any
act, omission, matter or thing which, but for this provision, would
reduce, release or prejudice any of its obligations under this Guarantee
or prejudice or diminish those obligations in whole or in part, including
(whether or not known to it or any Finance Party):
(a) any time or waiver granted to, or composition with, the Company or
other person;
(b) the taking, variation, compromise, exchange, renewal or release of,
or refusal or neglect to perfect, take up or enforce, any rights
against, or security over assets of, the Company or other person or
any non-presentation or non-observance of any formality or other
requirement in respect of any instrument or any failure to realise
the full value of any security;
(c) any incapacity or lack of powers, authority or legal personality of
or dissolution or change in the members or status of the Company or
any other person;
(d) any variation (however fundamental) or replacement of a Finance
Document or any other document or security so that references to
that Finance Document in this Guarantee shall include each variation
or replacement;
(e) any unenforceability, illegality or invalidity of any obligation of
any person under any Finance Document or any other document or
security, to the intent that the obligations of Holdco under this
Guarantee shall remain in full force and its guarantee be construed
accordingly, as if there were no unenforceability, illegality or
invalidity;
(f) any postponement, discharge, reduction, non-provability or other
similar circumstance affecting any obligation of any Obligor under a
Finance Document resulting from any insolvency, liquidation or
dissolution proceedings or from any law, regulation or order so that
each such obligation shall for the purposes of the obligations of
Holdco under this Guarantee be construed as if there were no such
circumstance; or
(g) the release of the Company or any other person under the terms of
any composition or arrangement with any creditor of any member of
the Group.
20
2.5 Immediate recourse
Holdco waives any right it may have of first requiring any Finance Party
(or any trustee or agent on its behalf) to proceed against or enforce any
other rights or security or claim payment from any person before claiming
from it under this Guarantee.
2.6 Appropriations
Until all amounts which may be or become payable by the Obligors under or
in connection with the Finance Documents have been irrevocably paid in
full, each Finance Party (or any trustee or agent on its behalf) may:
(a) refrain from applying or enforcing any other moneys, security or
rights held or received by that Finance Party (or any trustee or
agent on its behalf) in respect of those amounts, or apply and
enforce the same in such manner and order as it sees fit (whether
against those amounts or otherwise) and Holdco shall not be entitled
to the benefit of the same; and
(b) hold in a suspense account bearing interest at a commercial rate any
moneys received from Holdco or on account of the liability of Holdco
under this Guarantee.
2.7 Non-competition
Until all amounts which may be or become payable by the Obligors under or
in connection with the Finance Documents have been irrevocably paid in
full, Holdco shall not, after a claim has been made or by virtue of any
payment or performance by it under this Guarantee:
(a) be subrogated to any rights, security or moneys held, received or
receivable by any Finance Party (or any trustee or agent on its
behalf) or be entitled to any right of contribution or indemnity in
respect of any payment made or moneys received on account of
Holdco's liability under this Guarantee;
(b) claim, rank, prove or vote as a creditor of the Company or its
estate in competition with any Finance Party (or any trustee or
agent on its behalf) unless otherwise required by law; or
(c) receive, claim or have the benefit of any payment, distribution or
security from or on account of the Company, or exercise any right of
set-off as against the Company.
Holdco shall hold in trust for and forthwith pay or transfer to the Agent
for the Finance Parties any payment or distribution or benefit of
security received by it contrary to this Clause 2.7 (Non-competition) or
if required by law as contemplated by paragraph (b) above or as directed
by the Agent.
2.8 Additional security
This Guarantee is in addition to and is not in any way prejudiced by any
other security now or subsequently held by any Finance Party.
21
3. DEFAULT INTEREST
(a) If Holdco fails to pay any amount payable by it under this Guarantee, it
shall forthwith on demand by the Agent pay interest on the overdue amount
from the due date up to the date of actual payment, as well as before
judgment, at a rate (the "default rate") determined by the Agent to be one
per cent. per annum above the higher of:
(i) the rate payable on the overdue amount under clause 8.1 (Interest
rate) of the Credit Agreement immediately before the due date (if of
principal); and
(ii) the rate which would have been payable if the overdue amount had,
during the period of non-payment, constituted a Loan in Sterling for
such successive Terms of such duration as the Agent may determine
(each a "Designated Term").
(b) The default rate will be determined by the Agent on each Business Day or
the first day of the relevant Designated Term, as appropriate.
(c) If the Agent determines that deposits in Sterling are not at the relevant
time being made available by the Reference Banks to leading banks in the
London interbank market, the default rate will be determined by reference
to the cost of funds to the Agent from whatever sources it reasonably
selects, after consultation with the Reference Banks.
(d) Default interest will be compounded monthly (where paragraph (a)(i)
applies) and at the end of each Designated Term (in each other case).
(e) The Agent shall promptly notify Holdco of the determination of a rate of
interest under this Guarantee.
4. PAYMENTS
4.1 Place
All payments by Holdco under this Guarantee shall be made to the Agent at
its account at such office or bank as it may notify to Holdco for this
purpose.
4.2 Funds
Payments under this Guarantee to the Agent shall be made in Sterling for
value on the due date.
4.3 Currency
All amounts payable under this Guarantee are payable in Sterling.
4.4 Set-off and counterclaim
All payments made by Holdco under this Guarantee shall be made without
set-off or counterclaim.
22
4.5 Non-Business Days
(a) If a payment under this Guarantee is due on a day which is not a Business
Day, the due date for that payment shall instead be the next Business Day
in the same calendar month (if there is one) or the preceding Business Day
(if there is not).
(b) During any extension of the due date for payment of any principal under
this Guarantee interest is payable on that principal at the rate payable
on the original due date.
4.6 Partial payments
If the Agent receives a payment insufficient to discharge all the amounts
then due and payable by Holdco under this Guarantee, the Agent shall apply
that payment towards the obligations of Holdco under this Guarantee in
such order as the Agent, in its absolute discretion, considers
appropriate, and that application shall override any application made by
Holdco.
5. TAXES
5.1 Gross-up
All payments by Holdco under this Guarantee shall be made free and clear
of and without deduction for or on account of any taxes levied or imposed
by or on behalf of the United Kingdom or any taxing authority thereof,
except to the extent that Holdco is required by law to make payment
subject to any taxes. If any tax or amounts in respect of tax must be
deducted, or any other deductions must be made, from any amounts payable
or paid by Holdco, or paid or payable by the Agent to a Bank under the
Finance Documents, Holdco shall pay such additional amounts as may be
necessary to ensure that the relevant Bank receives a net amount equal to
the full amount which it would have received had payment not been made
subject to tax.
5.2 Tax receipts
All taxes required by law to be deducted or withheld by Holdco from any
amounts paid or payable under this Guarantee shall be paid by Holdco when
due and Holdco shall, within 30 days of the payment being made, deliver to
the Agent for the relevant Bank an original or certified copy of an
official receipt or such other evidence, if any, as is then customary,
evidencing that such deduction or withholding has been made and has been
accounted for to the appropriate authorities.
5.3 Qualifying Bank
If, otherwise than as a result of the introduction of, change in, or any
change in the interpretation, administration or application of, any law or
regulation or any practice or concession of the United Kingdom Inland
Revenue occurring after the date of this Guarantee, a Bank is not or
ceases to be a Qualifying Bank, Holdco will not be liable to pay to that
Bank under Clause 5.1 (Gross-up) any amount in respect of taxes levied or
imposed by the United Kingdom or any taxing authority of or in the United
Kingdom in excess of the amount it would have been obliged to pay if that
Bank had been, or had not ceased to be a Qualifying Bank.
23
5.4 Tax Credits
If:
(a) Holdco makes a payment under Clause 5.1 (Gross-up) (a "Tax Payment")
in respect of a payment to any Bank under this Guarantee; and
(b) that Bank determines that it has obtained a refund of tax or
obtained and used a credit against, or relief or remission or
repayment of tax on its overall net income (a "Tax Credit") which in
that Bank's opinion is reasonably determined to be attributable to
that Tax Payment,
then, if in its absolute discretion it can do so without any adverse
consequences for that Bank, that Bank shall reimburse Holdco such amount
as it reasonably determines to be such proportion of that Tax Credit as
will leave it (after that reimbursement) in no better or worse position
than it would have been in if no Tax Payment had been required. A Bank
shall have an absolute discretion as to whether to claim any Tax Credit
(and, if it does claim, the extent, order and manner in which it does so)
and whether any amount is due from it under this Clause 5.4 (Tax Credits)
(and, if so, what amount and when). A Bank shall not be obliged to
disclose any information regarding its tax affairs and computations.
6. REPRESENTATIONS AND WARRANTIES
6.1 Representations and warranties
Holdco makes the representations and warranties set out in this Clause 6
(Representations and warranties) to each Finance Party.
6.2 Status
(a) It is a limited liability company, duly incorporated and validly existing
under the laws of the jurisdiction of its incorporation; and
(b) it has the power to own its assets and carry on its business, as it is
being conducted.
6.3 Powers and authority
It has the power to enter into, perform and deliver, and has taken all
necessary action to authorise the entry into, performance and delivery of,
this Guarantee and the transactions contemplated by this Guarantee.
6.4 Legal validity
This Guarantee constitutes, or when executed in accordance with its terms
will constitute, its legal, valid and binding obligation enforceable in
accordance with its terms.
6.5 Non-conflict
The entry into and performance by it of, and the transactions contemplated
by, this Guarantee does not and will not:
(a) conflict with any law or regulation or judicial or official order;
or
24
(b) conflict with its constitutional documents; or
(c) conflict with any document which is binding upon it or any of its
assets.
6.6 Authorisations
So far as Holdco is aware (after due enquiry), all authorisations required
or desirable in connection with the entry into, performance, validity and
enforceability of, and the transactions contemplated by, this Guarantee
have been obtained or effected (as appropriate) and are in full force and
effect.
6.7 Litigation
No litigation, arbitration or administrative proceedings are current or,
to its knowledge, pending or threatened, which might, if adversely
determined, be likely to have a material adverse effect on its ability to
perform its obligations under this Guarantee.
6.8 Ownership
It holds 100 per cent. of the issued share capital of the Company.
6.9 Times for making representations and warranties
The representations and warranties set out in this Clause 6
(Representations and warranties):
(a) are made on the date of this Guarantee; and
(b) are deemed to be repeated by Holdco on the date of each Request and
each Drawdown Date with reference to the facts and circumstances
then existing.
7. UNDERTAKINGS
7.1 Duration
The undertakings in this Clause 7 (Undertakings) shall remain in force
from the date of this Guarantee for so long as any amount is or may be
outstanding under the Credit Agreement or any Commitment is in force, or,
if earlier, until the maximum amount payable by Holdco under this
Guarantee has been paid.
7.2 Financial information
(a) Holdco shall supply to the Agent in sufficient copies for all the Banks:
(i) as soon as the same are available (and in any event within 180 days
of the end of each of its financial years), its audited financial
statements and the audited consolidated accounts of the Holdco Group
for that financial year;
(ii) as soon as the same are available (and in any event within 90 days
of the end of the first half year of each of its financial years)
the unaudited consolidated accounts of the Holdco Group for that
half year; and
25
(iii) as soon as the same are available (and in any event within 90 days
from the end of the period for which they are produced) the
quarterly unaudited consolidated accounts of the Holdco Group.
(b) Holdco shall ensure that the financial statements delivered by it under
this Clause 7 (Undertakings) are prepared on a consistent basis and in
accordance with accounting principles generally accepted in the relevant
jurisdiction and consistently applied.
7.3 Information - Miscellaneous
Holdco shall supply to the Agent:
(a) all documents despatched by it to its shareholders (or any class of
them) or its creditors generally at the same time as they are
despatched;
(b) promptly upon becoming aware of them, details of any litigation,
arbitration or administrative proceedings which are current,
threatened or pending, and which might, if adversely determined,
have a material adverse effect on its ability to perform its
obligations under this Guarantee; and
(c) promptly, such further information in its possession or control
regarding its financial condition and operations as the Agent may
reasonably request.
7.4 Notification of Default
Holdco shall notify the Agent of any Default (and the steps, if any, being
taken to remedy it) promptly upon becoming aware of it.
7.5 Authorisations
Holdco shall promptly:
(a) obtain, maintain and comply with the terms of; and
(b) if requested, supply certified copies to the Agent of,
any authorisation required under any law or regulation to enable it to
perform its obligations under, or for the validity or enforceability of,
this Guarantee.
7.6 Pari passu ranking
Holdco shall procure that its obligations under this Guarantee do and will
rank at least pari passu with all its other present and future unsecured
obligations, except for taxes, national insurance contributions, employee
remuneration and benefits and any other obligations which are mandatorily
preferred by law applying to companies generally.
7.7 Mergers and acquisitions
Holdco shall not, without the prior written consent of the Agent enter
into any amalgamation, demerger, merger or reconstruction.
26
7.8 Negative Pledge
Holdco will not create or permit to subsist any Security Interest on any
of its assets.
8. CURRENCY INDEMNITY
(a) If a Finance Party receives an amount in respect of Holdco's liability
under the Finance Documents or if that liability is converted into a
claim, proof, judgment or order in a currency other than the currency (the
"contractual currency") in which the amount is expressed to be payable
under the relevant Finance Document:
(i) Holdco shall indemnify that Finance Party as an independent
obligation against any loss or liability arising out of or as a
result of the conversion;
(ii) if the amount received by that Finance Party, when converted into
the contractual currency at a market rate in the usual course of its
business, is less than the amount owed in the contractual currency,
Holdco shall forthwith on demand pay to that Finance Party an amount
in the contractual currency equal to the deficit; and
(iii) Holdco shall pay to the Finance Party concerned on demand any
exchange costs and taxes payable in connection with any such
conversion.
(b) Holdco waives any right it may have in any jurisdiction to pay any amount
under the Finance Documents in a currency other than that in which it is
expressed to be payable.
9. EVIDENCE AND CALCULATIONS AND EXPENSES
9.1 Accounts
Accounts maintained by the Agent in connection with this Guarantee are
prima facie evidence of the matters to which they relate.
9.2 Certificates and determinations
Any certification or determination by the Agent of a rate or amount under
this Guarantee is, in the absence of manifest error, conclusive evidence
of the matters to which it relates.
9.3 Calculations
Interest accrues from day to day and is calculated on the basis of the
actual number of days elapsed and a year of 365 days.
9.4 Enforcement Costs
Subject to Clause 2.1(b) (Guarantee), Holdco shall forthwith on demand pay
(or procure payment) to the Agent the amount of all costs and expenses
(including legal fees) incurred by it in connection with the enforcement
of or the preservation of any rights under this Guarantee.
10. WAIVERS AND REMEDIES CUMULATIVE
The rights of each Finance Party under this Guarantee:
27
(a) may be exercised as often as necessary;
(b) are cumulative and not exclusive of its rights under the general
law; and
(c) may be waived only in writing and specifically.
Delay in exercising or non-exercise of any such right is not a waiver of
that right.
11. CHANGES TO THE PARTIES
11.1 Transfers by Holdco
Holdco may not assign, transfer, novate or dispose of any of, or any
interest in, its rights and/or obligations under this Guarantee.
11.2 Transfers by the Banks
A Bank may assign or transfer all or any part of its rights and/or
obligations under this Guarantee to another bank or financial institution
to which it has transferred any part of its rights and obligations under
the Credit Agreement.
12. DISCLOSURE OF INFORMATION
A Bank may disclose to its professional advisers, any of its Affiliates
or, subject (other than if a Default is outstanding) to the Company's
prior written consent (which shall not be unreasonably withheld or
delayed), any person with whom it is proposing to enter, or has entered
into, any kind of transfer, participation or other agreement in relation
to this Guarantee:
(a) a copy of this Guarantee; and
(b) any information which that Bank has acquired under or in connection
with this Guarantee or any Finance Document,
provided that any such person to whom the disclosure is made has agreed in
writing to keep that information confidential.
13. SET-OFF
A Finance Party may set off any matured obligation owed by Holdco under
this Guarantee (to the extent beneficially owned by that Finance Party)
against any obligation (whether or not matured) owed by that Finance Party
to Holdco, regardless of the place of payment, booking branch or currency
of either obligation. If the obligations are in different currencies, the
Finance Party may convert either obligation at a market rate of exchange
in its usual course of business for the purpose of the set-off. If either
obligation is unliquidated or unascertained, the Finance Party may set off
in an amount estimated by it in good faith to be the amount of that
obligation.
28
14. SEVERABILITY
If a provision of this Guarantee is or becomes illegal, invalid or
unenforceable in any jurisdiction, that shall not affect:
(a) the validity or enforceability in that jurisdiction of any other
provision of this Guarantee; or
(b) the validity or enforceability in other jurisdictions of that or any
other provision of this Guarantee.
15. COUNTERPARTS
This Guarantee may be executed in any number of counterparts, and this has
the same effect as if the signatures on the counterparts were on a single
copy of this Guarantee.
16. NOTICES
16.1 Giving of notices
All notices or other communications under or in connection with this
Guarantee shall be given in writing or by facsimile. Any such notice will
be deemed to be given as follows:
(a) if in writing, when delivered; and
(b) if by facsimile, when received.
However, a notice given in accordance with the above but received on a
non-working day or after business hours in the place of receipt will only
be deemed to be given on the next working day in that place.
16.2 Addresses for notices
(a) Holdco's address and facsimile number for notices as at the date of this
Guarantee is:
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇ ▇▇▇
Facsimile no: 0141 566 4742
or such other as Holdco may notify to the Agent by not less than 5
Business Days' notice.
(b) The Agent's address and facsimile number for notices as at the date of
this Guarantee is:
The Royal Bank of Scotland plc
Loans Administration
Corporate Banking Office
▇-▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
Facsimile no: 0171 220 7370
29
or such other as the Agent may notify to Holdco by not less than 5
Business Days' notice.
17. JURISDICTION
(a) Holdco irrevocably agrees, for the benefit of the Agent and the Banks,
that the courts of England shall have jurisdiction to hear and determine
any suit, action or proceeding, and to settle any disputes, which may
arise out of or in connection with this Guarantee and, for such purposes,
irrevocably submits to the jurisdiction of such courts.
(b) Holdco irrevocably waives any objection which it might now or hereafter
have to the courts referred to in paragraph (a) above being nominated as
the forum to hear and determine any suit, action or proceeding, and to
settle any disputes, which may arise out of or in connection with this
Guarantee and agrees not to claim that any such court is not a convenient
or appropriate forum.
(c) The submission to the jurisdiction of the courts referred to in paragraph
(a) above shall not (and shall not be construed so as to) limit the right
of the Agent or the Banks to take proceedings in any other court of
competent jurisdiction nor shall the taking of proceedings in any one or
more jurisdictions preclude the taking of proceedings in any other
jurisdiction, whether concurrently or not.
18. GOVERNING LAW
This Guarantee is governed by English law.
This Guarantee has been entered into as a deed on the date stated at the
beginning of this Guarantee.
30
SIGNATORIES TO THE GUARANTEE
Holdco
The common seal of )
[ ] )
was affixed to this deed in )
the presence of:
------------------------------------
director
------------------------------------
director / secretary
Agent
THE ROYAL BANK OF SCOTLAND PLC
By:
31
SIGNATORIES TO THE SUPPLEMENTAL AGREEMENT
Company
SCOTTISH POWER PLC
By: A.J.M. COATS
Agent
THE ROYAL BANK OF SCOTLAND PLC
By: J.H.M. HARE