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EXHIBIT 10.2
SUPPLEMENTAL AGREEMENT
DATED 25th February, 2000
(pound)425,000,000
CREDIT FACILITY
FOR
AZURIX EUROPE LTD.
ARRANGED BY
CHASE MANHATTAN PLC
and
WESTDEUTSCHE LANDESBANK GIROZENTRALE
with
WESTDEUTSCHE LANDESBANK GIROZENTRALE
AS FACILITY AGENT
CHASE MANHATTAN TRUSTEES LIMITED
AS SECURITY AGENT
--------------------------------------
relating to a credit agreement dated 10th May, 1999
[▇▇▇▇▇ & ▇▇▇▇▇ LOGO]
London
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THIS SUPPLEMENTAL AGREEMENT is dated 25th February, 2000 and made between:
(1) AZURIX EUROPE LTD. (Registered No. 3570749) (the "COMPANY");
(2) CHASE MANHATTAN PLC and WESTDEUTSCHE LANDESBANK GIROZENTRALE as arrangers
(in this capacity the "ARRANGERS");
(3) WESTDEUTSCHE LANDESBANK GIROZENTRALE as facility agent (in this capacity the
"FACILITY AGENT"); and
(4) CHASE MANHATTAN TRUSTEES LIMITED as security agent (in this capacity the
"SECURITY AGENT").
BACKGROUND:
(1) Pursuant to a credit agreement dated 10th May, 1999 (the "CREDIT AGREEMENT")
made between the Company and the Finance Parties, the Banks agreed to make
available to the Company a loan facility of up to an aggregate principal
amount of (pound)425,000,000 on the terms of the Credit Agreement.
(2) By this Supplemental Agreement the parties hereto wish to amend the terms of
the Credit Agreement.
(3) The Facility Agent confirms that, in accordance with Clause 26.1 of the
Credit Agreement, it has received the agreement of the Majority Banks to
effect the amendments in this Supplemental Agreement on behalf of the Banks.
NOW IT IS AGREED as follows:
1. DEFINITIONS
1.1 TERMS DEFINED
In this Supplemental Agreement:
"EFFECTIVE DATE"
has the meaning ascribed to such term in Clause 2 (Conditions precedent).
"RESTATED CREDIT AGREEMENT"
means the Credit Agreement as restated and amended in the form set out in
Schedule 2 to this Supplemental Agreement.
1.2 INTERPRETATION
(a) Unless the contrary intention appears, terms defined in the Restated Credit
Agreement shall have the same meanings when used in this Supplemental
Agreement.
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(b) The provisions of clause 1.2 (Construction) of the Restated Credit Agreement
shall also apply to this Supplemental Agreement as if set out in this
Supplemental Agreement but with all necessary modifications.
2. CONDITIONS PRECEDENT
The obligations of the Finance Parties under the Restated Credit Agreement
shall take effect on and after the date (the "EFFECTIVE DATE") on which the
Facility Agent notifies the Company that the Facility Agent has received all
of the documents set out in Schedule 1 in form and substance satisfactory to
the Facility Agent. The Facility Agent shall notify the Company promptly
upon receipt of such documents.
3. RESTATEMENT
The Credit Agreement will be amended and restated in the form set out in
Schedule 2 to this Supplemental Agreement on the Effective Date.
4. REPRESENTATIONS AND WARRANTIES
The Borrower makes the representations and warranties set out in clauses
17.2 (Status) to 17.9 (Litigation) inclusive (other than Clauses 17.2(c)
(Status), 17.6(a) (No default) and 17.7 (Authorisations)) of the Restated
Credit Agreement to each Finance Party as at the Effective Date, by
reference to the facts and circumstances then existing.
5. FEES AND EXPENSES
(a) The Company shall immediately on demand pay the Agents the amount of all
costs and expenses (together with value added tax or any similar tax
thereon) and including, without limitation, the fees and expenses of the
Agents' legal advisers, incurred by the Agents in connection with the
negotiation, preparation, printing and execution of this Supplemental
Agreement and the documents referred to in this Supplemental Agreement.
(b) The Company shall pay to the Facility Agent and to the Arrangers the fees in
the amounts and on the dates agreed in the supplementary fee letters.
6. MISCELLANEOUS
The provisions of clauses 12 (Payments), 23 (Stamp Duties), 26 (Amendments
and Waivers), 31 (Severability), 32 (Counterparts) and 33 (Notices) of the
Restated 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 Restated Credit Agreement were references to this
Supplemental Agreement.
7. CONTINUATION
(a) This Supplemental Agreement is supplemental to the Credit Agreement and,
except insofar as amended or supplemented hereby, the Credit Agreement will
remain in full force and effect.
(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 and restated by this
Supplemental Agreement.
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(c) The Facility Agent and the Company hereby designate this Supplemental
Agreement and each of the supplementary fee letters referred to in Clause
5(b) (Fees and expenses) as a Finance Document for the purposes of the
Credit Agreement.
8. GOVERNING LAW
This Supplemental Agreement shall be governed by and construed in accordance
with English law.
This Supplemental Agreement has been entered into on the date stated at the
beginning of this Supplemental Agreement.
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SCHEDULE 1
(TO THE SUPPLEMENTAL AGREEMENT)
CONDITIONS PRECEDENT DOCUMENTS
AUTHORISATIONS
(a) A copy of the memorandum and articles of association, certificate of
incorporation and certificate of incorporation on change of name (if any) of
the Company or a certificate of a director of the Company certifying that
there have been no changes to those constitutional documents supplied
pursuant to the Credit Agreement and that they remain up-to-date and in full
force and effect.
(b) A certificate of a director of the Company (including specimen signature
list).
(c) A copy of a resolution of the board of directors of the Company.
(d) A legal opinion of ▇▇▇▇▇ & ▇▇▇▇▇, legal advisers to the Banks, addressed to
the Banks.
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SCHEDULE 2
AGREEMENT
DATED 10th May, 1999
(as amended and restated on 25th February, 2000)
(pound)425,000,000
CREDIT FACILITY
FOR
AZURIX EUROPE LTD.
ARRANGED BY
CHASE MANHATTAN PLC
and
WESTDEUTSCHE LANDESBANK GIROZENTRALE
with
WESTDEUTSCHE LANDESBANK GIROZENTRALE
AS FACILITY AGENT
CHASE MANHATTAN TRUSTEES LIMITED
AS SECURITY AGENT
[▇▇▇▇▇ & ▇▇▇▇▇]
London
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INDEX
CLAUSE PAGE
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1. Interpretation.......................................................................................8
2. The Facility........................................................................................25
3. Purpose and availability............................................................................25
4. Conditions precedent................................................................................26
5. Loans...............................................................................................27
6. Repayment...........................................................................................28
7. Prepayment and Cancellation.........................................................................29
8. Interest Periods....................................................................................30
9. Interest............................................................................................31
10. Optional Currencies.................................................................................32
11. Debt Service Reserve Account........................................................................34
12. Payments............................................................................................35
13. Taxes...............................................................................................38
14. Market Disruption...................................................................................39
15. Increased Costs.....................................................................................41
16. Illegality..........................................................................................42
17. Representations and Warranties......................................................................42
18. Undertakings........................................................................................45
19. Default.............................................................................................59
20. The agents and the Arrangers........................................................................64
21. Fees................................................................................................69
22. Expenses............................................................................................69
23. Stamp duties........................................................................................70
24. Indemnities.........................................................................................70
25. Evidence and Calculations...........................................................................71
26. Amendments and Waivers..............................................................................71
27. Changes to the Parties..............................................................................72
28. Disclosure of Information...........................................................................75
29. Set-off.............................................................................................76
30. Pro rata sharing....................................................................................76
31. Severability........................................................................................77
32. Counterparts........................................................................................77
33. Notices.............................................................................................77
34. Governing law.......................................................................................79
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SCHEDULES
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1. Banks and Commitments...............................................................................80
2. Conditions Precedent Documents......................................................................82
3. Calculation of the Mandatory Costs..................................................................84
4. Form of Request 86
5. Novation Certificate................................................................................87
6. Form of Debenture 88
7. Form of Legal Opinion of ▇▇▇▇▇ & Overy.............................................................106
8. Form of Subordination Agreement for Wessex Loan....................................................110
9. Form of Inter-Company Loan.........................................................................122
Signatories.................................................................................................143
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THIS AGREEMENT is dated 10th May, 1999 (as amended and restated on 25th
February, 2000) between:-
(1) AZURIX EUROPE LTD. (Registered No. 3570749) (the "COMPANY");
(2) CHASE MANHATTAN PLC and WESTDEUTSCHE LANDESBANK GIROZENTRALE as
arrangers (in this capacity the "ARRANGERS");
(3) THE FINANCIAL INSTITUTIONS listed in Schedule 1 as banks (the "BANKS");
(4) WESTDEUTSCHE LANDESBANK GIROZENTRALE as facility agent (in this
capacity the "FACILITY AGENT"); and
(5) CHASE MANHATTAN TRUSTEES LIMITED as security agent (in this capacity
the "SECURITY AGENT").
IT IS AGREED as follows:-
1. INTERPRETATION
1.1 DEFINITIONS
In this Agreement:-
"ACCOUNTING DATE"
means the last day of each financial quarter of the Company and Wessex
Water.
"ACCOUNTING PERIOD"
means any period of approximately three months or one year ending on an
Accounting Date for which accounts are required to be prepared for the
purposes of this Agreement.
"ACQUISITIONS"
means investments in, or acquisitions of, water or wastewater related
assets or businesses (directly or indirectly) by or through an SPV.
"ACT"
means the Water ▇▇▇ ▇▇▇▇ as consolidated by the Water Industry Act 1991
and, unless the context otherwise requires, all subordinate legislation
made pursuant to it.
"ADJUSTED CAPITAL AND RESERVES"
has the meaning given to it in Clause 18.28 (Financial covenants).
"AEL GROUP"
means the Company and the Wessex Group.
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"AFFILIATE"
means a Subsidiary or a Holding Company of a person and any other
Subsidiary of that Holding Company.
"AGENT"
means the Facility Agent or the Security Agent.
"AGENT'S SPOT RATE OF EXCHANGE"
means the Facility Agent's spot rate of exchange for the purchase of
the relevant Optional Currency in the London foreign exchange market
with Sterling at or about 11.00 a.m. on a particular day.
"APPLICABLE ACCOUNTING PRINCIPLES"
means in relation to any member of the AEL Group accounting principles
and practices, which at the date of this Agreement are generally
accepted in the United Kingdom and approved by the Institute of
Chartered Accountants of England and Wales and which are consistent
with the accounting principles and practices applied in the preparation
of the audited consolidated accounts for the financial year ended 31st
December, 1998.
"APPOINTMENT"
means the appointment as a water and wastewater undertaker held by a
member of the AEL Group and issued pursuant to Sections 11 and 14 of
the Act, as modified or supplemented from time to time.
"APPOINTMENT HOLDER"
means at any time the member of the AEL Group which then holds the
Appointment.
"APPOINTMENT UNDERTAKING"
means any undertaking or assurance given by any member of the AEL Group
to the Director or the Secretary of State concerning the management
and/or ownership of and/or other matters concerning the Appointment
Holder.
"AUDITORS"
means any "Big Four" firm of accountants or any other firm (approved by
the Facility Agent) of independent public accountants of international
standing recognised and authorised by the Institute of Chartered
Accountants of England and Wales which is appointed by the Company to
audit the consolidated annual accounts of the Company and by Wessex
Water to audit the consolidated annual accounts of Wessex Water.
"AVAILABILITY PERIOD"
means the period from the date of this Agreement up to and including
the Final Repayment Date.
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"BORROWING"
means at any time the aggregate (without double counting) of the
following:
(a) the outstanding principal amount of any moneys borrowed and
any outstanding overdraft debit balance, including without
limitation any Parent Loan;
(b) the outstanding principal amount of any debenture, bond, note,
loan stock or other debt security;
(c) the outstanding principal amount of any acceptance under any
acceptance credit opened by a bank or other financial
institution;
(d) the outstanding principal amount of all moneys owing in
connection with the sale or discounting of receivables
(otherwise than on a non-recourse basis);
(e) the outstanding principal amount of any non-trade indebtedness
arising from any advance or deferred payment (where payment is
deferred for more than 180 days) agreements arranged primarily
as a method of raising finance or financing the acquisition of
an asset;
(f) the capitalised element of indebtedness (other than any
operating leases or rental arrangements not included on the
applicable balance sheet) in respect of a lease entered into
primarily as a method of raising finance or financing the
acquisition of the asset leased;
(g) any fixed or minimum premium payable as at any date on which
Borrowings are calculated on the repayment or redemption of
any instrument referred to in paragraph (b) above; and
(h) the outstanding principal amount of any indebtedness of any
person of a type referred to in paragraphs (a) - (g) above
which is the subject of a guarantee, indemnity or similar
assurance against financial loss,
but excluding, in the case of the Company, the Wessex Loan and any
other indebtedness owed between members of the AEL Group.
"BRISTOL WATER TRUST LOAN"
means the (pound)73,000,000 loan dated 29th September, 1998 between
Bristol Water Trust and the Company (formerly Enron Water (Europe)
PLC).
"BUSINESS DAY"
means a day (other than a Saturday or a Sunday) on which banks are open
for business in:
(a) London;
(b) in relation to a transaction involving Dollars, New York; and
(c) in relation to a transaction involving euros, such principal
financial centre(s) of any Participating Member State(s) as
the Facility Agent may nominate for this purpose.
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"CASH COLLATERAL ACCOUNT"
means an account of the Company held with the Security Agent (or an
Affiliate of the Security Agent) pursuant to Clause 7.5 (Mandatory
prepayment).
"CASH EQUIVALENTS"
means any debt security or banker's acceptance which is freely
transferable, or deposits with a bank (including the Debt Service
Reserve Account and any Cash Collateral Account), in each case with a
short term credit rating of at least A2 from Standard & Poor's and P2
from Moody's or a long term credit rating of at least A from Standard &
Poor's and A2 from Moody's. The value of Cash Equivalents shall be
determined by reference to, for debt securities and banker's
acceptances, the ▇▇▇▇-to-market value of those Cash Equivalents on the
basis that those Cash Equivalents are sold, transferred or assigned on
that date and, for deposits with a bank, the principal and accrued
interest of that deposit.
"COMMITMENT"
means:
(a) in relation to a Bank which is a Bank on the date of this
Agreement, the amount in Sterling set out opposite its name in
Schedule 1; and
(b) in relation to a Bank which becomes a Bank after the date of
this Agreement, the amount of Commitment acquired by it under
Clause 27 (Changes to the Parties),
to the extent not transferred, cancelled or reduced.
"CONSOLIDATED EBITDA"
has the meaning given to it in Clause 18.28 (Financial covenants).
"CONSOLIDATED NET INTEREST PAYABLE"
has the meaning given to it in Clause 18.28 (Financial covenants).
"CONSOLIDATED TOTAL BORROWINGS"
has the meaning given to it in Clause 18.28 (Financial covenants).
"CONSOLIDATED TOTAL INTEREST PAYABLE"
has the meaning given to it in Clause 18.28 (Financial covenants).
"DANGEROUS SUBSTANCE"
means any radioactive emissions, noise, any natural or artificial
substance (whether in the form of a solid, liquid, gas or vapour) the
generation, transportation, storage, treatment, use or disposal of
which (whether alone or in combination with any other substance)
including (without limitation) any controlled, special, hazardous,
toxic, radioactive or dangerous
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substance or waste, gives rise to a risk of causing harm to man or any
other living organism or damaging the Environment or public health or
welfare.
"DEBENTURE"
means a debenture executed by the Company in favour of the Security
Agent substantially in the form of Schedule 6.
"DEBT SERVICE RESERVE ACCOUNT"
has the meaning given to it in Clause 11 (Debt Service Reserve
Account).
"DEED OF RELEASE"
means the deed of release to be executed by National Westminster Bank
Plc in respect of the Security Interests relating to the Original
Facility Agreement.
"DEFAULT"
means an Event of Default or an event which, with the giving of notice,
expiry of any applicable grace period or determination of materiality
by the Majority Banks specified (in any such case) in Clause 19
(Default) (or any combination of the foregoing), would constitute an
Event of Default.
"DIRECTOR"
means the person appointed from time to time by the Secretary of State
to hold office as the Director General of Water Services for the
purpose of the Act.
"DOLLARS" or "U.S.$"
means the lawful currency for the time being of the United States of
America.
"DOUBLE TAXATION TREATY"
means any convention between the government of the United Kingdom and
any other government for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income and
capital gains.
"DRAWDOWN DATE"
means the date of the advance of a Loan.
"EMU"
means European Economic and Monetary Union as contemplated by the
Treaty establishing the European Community.
"EMU LEGISLATION"
means legislative measures of the European Council in relation to EMU.
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"ENVIRONMENT"
means any of the following media: the air (including, without
limitation, the air within buildings and the air within other natural
or man-made structures above or below ground), water (including,
without limitation, ground and surface water) and land (including,
without limitation, surface and sub-surface soil).
"ENVIRONMENTAL CLAIM"
means any claim by any person:
(a) in respect of any loss or liability suffered or incurred by
that person as a result of or in connection with any violation
of Environmental Law; or
(b) that arises as a result of or in connection with Environmental
Contamination and that could give rise to any remedy or
penalty (whether interim or final) that may be enforced or
assessed by private or public legal action or administrative
order or proceedings, including, without limitation, any such
claim arising from injury to persons, property or natural
resources.
"ENVIRONMENTAL CONTAMINATION"
means each of the following and their consequences:
(a) any release, emission, leakage or spillage of any Dangerous
Substance at or from any site owned, occupied or used by any
member of the AEL Group into any part of the Environment; or
(b) any accident, fire, explosion or sudden event at any site
owned, occupied or used by any member of the AEL Group which
is directly or indirectly caused by or attributable to any
Dangerous Substance; or
(c) any other pollution of the Environment.
"ENVIRONMENTAL LAW"
means all applicable laws (including, without limitation, common law),
regulations, directing codes of practice, circulars, guidance notices
and the like having legal effect (whether in the United Kingdom or
elsewhere) concerning pollution or the protection of human health, the
Environment, the conditions of the work place or the generation,
transportation, storage, treatment or disposal of Dangerous Substances.
"ENVIRONMENTAL LICENCE"
means any authorisation required by any Environmental Law.
"EURO" or "EURO SYMBOL"
means the single currency of the Participating Member States.
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"EURO UNIT"
means a currency unit of the euro as defined in EMU Legislation.
"EVENT OF DEFAULT"
means an event specified as such in Clause 19.1 (Events of Default).
"EXCEPTIONAL ITEMS"
has the meaning given to it in Clause 18.28 (Financial Covenants).
"EXTRAORDINARY ITEMS"
has the meaning given to it in Clause 18.28 (Financial Covenants).
"FACILITY"
means the facility referred to in Clause 2.1 (Facility).
"FACILITY OFFICE"
means the office notified by a Bank to the Facility Agent:-
(a) on or before the date it becomes a Bank; or
(b) by not less than 5 Business Days' notice,
as the office through which it will perform all or any of its
obligations under this Agreement.
"FEE LETTERS"
means the letter dated 24th March, 1999 between the Arrangers and the
Company, or the letter dated 23rd March, 1999 between the Company and
the Facility Agent or the letter dated 29th March, 1999 between the
Company and the Security Agent, setting out the amount of various fees
referred to in Clause 21 (Fees).
"FINAL REPAYMENT DATE"
means the third anniversary of the date of this Agreement.
"FINANCE DOCUMENT"
means:-
(a) this Agreement;
(b) a Fee Letter;
(c) the Debenture;
(d) a Novation Certificate;
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(e) the Subordination Agreement; or
(f) any other document designated as such by the Facility Agent
and the Company.
"FINANCE PARTY"
means an Arranger, a Bank or an Agent.
"FINANCIAL INDEBTEDNESS"
means (without double counting) any indebtedness in respect of:
(a) moneys borrowed;
(b) any debenture, bond, note, loan stock or other debt security;
(c) any acceptance credit;
(d) receivables sold or discounted (otherwise than on a
non-recourse basis);
(e) the acquisition cost of any asset to the extent payable before
or more than 180 days after the time of acquisition or
possession by the party liable where the advance or deferred
payment is arranged primarily as a method of raising finance
or financing the acquisition of that asset;
(f) any lease entered into primarily as a method of raising
finance or financing the acquisition of the asset leased;
(g) any currency swap or interest swap, cap or collar arrangement
or any other derivative instrument;
(h) any amount raised under any other transaction having the
commercial effect of a borrowing or raising of money; or
(i) any guarantee, indemnity or similar assurance against
financial loss of any person.
"HOLDING COMPANY"
has the meaning given to it in the definition of "Subsidiary" in this
Clause 1.1.
"INFORMATION MEMORANDUM"
means the Information Memorandum dated March, 1999 prepared by the
Company in connection with the Syndication, as updated by the Company
by letters dated 28th April, 1999 and 6th May, 1999 addressed to the
Arrangers.
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"INTER-COMPANY LOAN"
means a loan from the Company to an SPV for the purpose of being
applied in or towards financing directly or indirectly:
(a) an Acquisition or Acquisitions; or
(b) the general corporate purposes of any water or wastewater
related assets or businesses that are part of the Acquisition
or Acquisitions funded in whole or in part through that SPV;
or
(c) the repayment of Borrowings from the Parent or a Subsidiary of
the Parent incurred by that SPV, the proceeds of which were
used to repay a prior Inter-Company Loan by that SPV,
such loan being guaranteed by the Parent.
"INTEREST PERIOD"
means each period selected in accordance with Clause 8 (Interest
Periods).
"ISSUER CREDIT RATING"
means in relation to any person the credit rating of its unsecured and
unsubordinated long term debt.
"LIBOR"
means:
(a) the rate per annum which appears on Page 3750 on the Telerate
Screen; or
(b) if no such rate appears, the arithmetic mean (rounded upward
to four decimal places of one per cent.) of the relevant
offered rates which appear on the relevant page (if any) on
the Reuters Screen; or
(c) if no such rate appears on the Telerate Screen and one only or
no offered rate appears on the relevant page of the Reuters
Screen or there is no relevant page on the Reuters Screen, the
arithmetic mean (rounded upward to four decimal places) of the
rates, as supplied to the Facility Agent at its request,
quoted by the Reference Banks to leading banks in the London
interbank market,
in each case, at or about 11.00 a.m. on the applicable Rate Fixing Day
for the offering of deposits in the currency of the relevant Loan for a
period comparable to its Interest Period.
"LOAN"
means, subject to Clauses 8 (Interest Periods) and 10 (Optional
Currencies), the principal amount of each loan made or to be made by
the Banks under the Facility or the principal amount outstanding of
that loan.
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"Loan Notes"
means the(pound)70,506,836 notes that have been issued by the Company
to former shareholders of Wessex Water.
"MAJORITY BANKS"
means, at any time, Banks:-
(a) whose participations in all Loans then outstanding aggregate
more than 66 2/3 per cent. of all Loans then outstanding; or
(b) if there are no Loans then outstanding, whose Commitments then
aggregate more than 66 2/3 per cent. of the Total Commitments;
or
(c) if there are no Loans then outstanding and the Total
Commitments have been reduced to zero, whose Commitments
aggregated more than 66 2/3 per cent. of the Total Commitments
immediately before the reduction.
"MANDATORY COSTS"
means in relation to a Bank the cost imputed to that Bank of compliance
with:
(a) the cash ratio and special deposit requirements of the Bank of
England and/or the banking supervision or other costs imposed
by the Financial Services Authority, as determined in
accordance with Schedule 3; and
(b) any reserve asset requirements of the European Central Bank
incurred by that Bank.
"MARGIN"
means, in respect of a Loan:
(a) if the Loans outstanding at that time are less than 50 per
cent. of the Total Commitments as of the date of this
Agreement, 0.75 per cent. per annum; and
(b) if the Loans outstanding at that time are greater than or
equal to 50 per cent. of the Total Commitments as of the date
of this Agreement or if an Event of Default is outstanding,
one per cent. per annum,
in each case, as determined on the first day of the Interest Period for
that Loan.
"MATERIAL ADVERSE EFFECT"
means any event, occurrence or circumstance having, or being reasonably
likely to have, a material adverse effect on the ability of the Company
to perform and comply with:
(a) its payment obligations under any Finance Document; or
(b) its obligations under Clause 18.28 (Financial Covenants).
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"MATERIAL SUBSIDIARY"
means:
(a) Wessex Water;
(b) any member of the AEL Group (other than the Company and any
Project Finance Subsidiary):
(i) which is the Appointment Holder; or
(ii) whose pre-tax profits represent at least ten per
cent. of the consolidated pre-tax profits of the AEL
Group; or
(iii) the book value of whose gross assets represents at
least ten per cent. of the consolidated gross assets
of the AEL Group,
and for this purpose:
(A) in the case of a company which itself has
Subsidiaries, the calculation shall be made by using
the consolidated pre-tax profits or gross assets, as
the case may be, of it and its Subsidiaries;
(B) all calculations of consolidated pre-tax profits or
gross assets shall be made by reference to:
(1) the latest accounts of the relevant company
(or, as the case may be, a consolidation of
the accounts of it and its Subsidiaries)
used for the purpose of the then latest
unaudited quarterly or audited annual
consolidated accounts of the AEL Group
delivered to the Facility Agent under Clause
18.2 (Financial information); and
(2) those unaudited quarterly or, as the case
may be, audited annual consolidated accounts
of the AEL Group;
and shall be made in accordance with the Applicable
Accounting Principles; or
(c) any member of the AEL Group (other than the Company and any
Project Finance Subsidiary) which is not otherwise a Material
Subsidiary under this definition but to which any Material
Subsidiary transfers in any annual Accounting Period all or
substantially all of its assets; the Material Subsidiary from
which the assets were transferred shall cease to be a Material
Subsidiary unless and until it is shown to be a Material
Subsidiary under any other paragraph of this definition.
In the event of any dispute as to whether a Subsidiary is or is not at
any time a Material Subsidiary the question shall be referred to the
Auditors for determination according to the provisions of this
definition (acting as experts at the cost of the Company) and their
decision shall be conclusive and binding on the Parties in the absence
of manifest error.
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"MINIMUM DEBT SERVICE AMOUNT"
means on any date specified in paragraph (c) below the amount
determined by the Security Agent as being the interest payable under
the Facility for the following 12 month period (or, if shorter, the
period until the Final Repayment Date) and calculated on the following
basis:
(a) the Security Agent shall assume that the Loans are drawn in
full;
(b) the Security Agent shall determine interest on the basis of
LIBOR (for a period of 6 months) plus the Margin plus
Mandatory Costs;
(c) the calculation shall be made semi-annually, as at each
anniversary of the date of this Agreement and of the date
falling 6 months from the date of this Agreement.
"MOODY'S"
means ▇▇▇▇▇'▇ Investors Service, Inc.
"NOVATION CERTIFICATE"
has the meaning given to it in Clause 27.3 (Procedure for novations).
"OPTIONAL CURRENCY"
means Dollars or euros.
"ORIGINAL FACILITY AGREEMENT"
means the (pound)736,000,000 facility agreement (as amended) dated 18th
August, 1998 entered into by, amongst others, the Company.
"ORIGINAL STERLING AMOUNT"
in relation to a Loan or part of a Loan means:
(a) if that Loan (or such part) is denominated in Sterling, the
amount of that Loan; or
(b) if that Loan (or such part) is denominated in an Optional
Currency, the equivalent in Sterling of the amount of that
Loan (or such part) if it had first been drawn down and had
remained denominated in Sterling, calculated in accordance
with Clause 10.3 (Drawdowns).
"PARENT"
means Azurix Corp., a Delaware Corporation.
"PARENT LOAN"
means a loan from the Parent or any of its Subsidiaries to the Company.
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"PARTICIPATING MEMBER STATE"
means a member state of the European Union that adopts the euro as its
currency in accordance with EMU legislation.
"PARTY"
means a party to this Agreement.
"PERMITTED TRANSACTION"
means:
(a) a reconstruction, amalgamation, reorganisation, merger or
consolidation of the Company or a Material Subsidiary on terms
approved by the Majority Banks;
(b) a disposal of assets permitted by the terms of this Agreement;
or
(c) a solvent liquidation, dissolution or winding-up of a Material
Subsidiary (other than Wessex Water or the Appointment Holder)
which does not have a Material Adverse Effect.
"PROJECT FINANCE INDEBTEDNESS"
means any Borrowing which finances the acquisition, development,
ownership and/or operation of an asset:
(a) which is incurred by a Project Finance Subsidiary; or
(b) in respect of which the person or persons to whom the
Borrowing is or may be owed by the relevant debtor (whether or
not a member of the AEL Group) has or have no recourse
whatsoever to any member of the AEL Group (other than to a
Project Finance Subsidiary) for its repayment other than:
(i) recourse to the debtor for amounts limited to the
cash flow or net cash flow (other than historic cash
flow or historic net cash flow) from the asset;
and/or
(ii) recourse to the debtor for the purpose only of
enabling amounts to be claimed in respect of that
Borrowing in an enforcement of any Security Interest
given by the debtor over the asset or the income,
cash flow or other proceeds deriving from the asset
(or given by any shareholder or the like in the
debtor over its shares or like interest in the
capital of the debtor) to secure the Borrowing but
only if:
(A) the extent of the recourse to the debtor is
limited solely to the amount of any
recoveries made on any such enforcement; and
(B) that person or persons are not entitled, by
virtue of any right or claim arising out of
or in connection with that Borrowing, to
commence proceedings for the winding up or
dissolution of the debtor or to appoint or
procure the appointment of any receiver,
trustee or similar
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person or officer in respect of the debtor
or any of its assets (other than the assets
the subject of that Security Interest);
and/or
(iii) recourse to the debtor generally, or directly or
indirectly to a member of the AEL Group, under any
form of assurance, undertaking or support, which
recourse is limited to a claim for damages (other
than liquidated damages and damages required to be
calculated in a specified way) for breach of an
obligation (other than a payment obligation or an
obligation to procure payment by another or an
indemnity in respect thereof or any obligation to
comply or to procure compliance by another with any
financial ratios or other tests of financial
condition) by the person against whom such recourse
is available; and/or
(iv) recourse to any member of the AEL Group (being
recourse under a guarantee which is unsecured by that
member) which is only available until completion of
the construction phase of the relevant project.
"PROJECT FINANCE SUBSIDIARY"
means any Subsidiary of the Company (other than the Appointment
Holder):
(a) which is a company whose principal assets and business are
constituted by the ownership, acquisition, development and/or
operation of an asset whether directly or indirectly;
(b) none of whose Borrowings in respect of the financing of the
ownership, acquisition, development and/or operation of an
asset benefits from any recourse whatsoever to any member of
the AEL Group (other than the Subsidiary itself or another
Project Finance Subsidiary) in respect of its repayment,
except as expressly referred to in paragraph (b)(iii) of the
definition of Project Finance Indebtedness in this Clause 1.1
(Definitions); and
(c) which has been designated as such by the Company by notice to
the Facility Agent.
However, the Company may give notice to the Facility Agent at any time
that any Project Finance Subsidiary is no longer a Project Finance
Subsidiary, whereupon it shall cease to be a Project Finance
Subsidiary.
"QUALIFYING BANK"
means:-
(a) a bank as defined in Section 840A of the Income and
Corporation Taxes Act 1988 which, for the purposes of Sections
349 and 212 of the Income and Corporation Taxes ▇▇▇ ▇▇▇▇, is
within the charge to United Kingdom corporation tax as
regards, and beneficially entitled to, any interest received
by it under this Agreement, except that, if that Section is
repealed, modified, extended or re-enacted, the Facility Agent
may at any time and from time to time (acting reasonably)
amend this definition to reflect such repeal, modification,
extension or enactment by giving notice of the amended
definition to the Company; or
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(b) a person carrying on a bona fide banking business who is
resident (as such term is defined in the appropriate Double
Taxation Treaty) in a country with which the United Kingdom
has an appropriate Double Taxation Treaty giving residents of
that country full exemption from United Kingdom taxation on
interest and does not carry on business in the United Kingdom
through a permanent establishment with which the indebtedness
under this Agreement in respect of which the interest is paid
is effectively connected.
"RATE FIXING DAY"
means:
(a) the second Business Day before the first day of an Interest
Period for a Loan in an Optional Currency (or such other day
as is generally treated as the rate fixing day by market
practice in the London interbank market); or
(b) in the case of a Loan in Sterling, the first day of the
Interest Period for that Loan.
"REFERENCE BANKS"
means, subject to Clause 27.4 (Reference Banks), The Chase Manhattan
Bank, Westdeutsche Landesbank Girozentrale and The Royal Bank of
Scotland plc.
"REPAYMENT DATE"
means the last day of the Interest Period of a Loan.
"REQUEST"
means a request made by the Company for a Loan, substantially in the
form of Schedule 4.
"ROLLOVER LOAN"
means a Loan, the principal amount of which is less than or equal to an
outstanding Loan and whose Drawdown Date coincides with the Repayment
Date of that outstanding Loan.
"SECRETARY OF STATE"
means the Secretary of State as referred to in the Act.
"SECURITY ACCOUNT"
means the Debt Service Reserve Account or a Cash Collateral Account.
"SECURITY INTEREST"
means any mortgage, pledge, lien, charge, assignment, hypothecation or
security interest or any other agreement or arrangement having the
effect of conferring security.
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"SPV"
means a wholly-owned direct or indirect Subsidiary of the Parent (other
than a member of the AEL Group) incorporated in The Netherlands, the
Cayman Islands or any other jurisdiction acceptable to the Agents
(acting reasonably) where funds can be freely remitted and the Security
Interests in favour of the Security Agent over the relevant
Inter-Company Loans are not prejudiced and the purpose of that
Subsidiary is to invest in, own and/or finance directly or indirectly
the making of Acquisitions, to fund the general corporate purposes of
any water or wastewater related assets or businesses that are part of
the Acquisition or Acquisitions funded in whole or in part through that
SPVand to borrow Inter-Company Loans.
"STANDARD & POOR'S"
means Standard & Poor's Rating Group (or any of its successors).
"STERLING" or "(POUND)"
means the lawful currency for the time being of the United Kingdom.
"SUBORDINATION AGREEMENT"
means the subordination agreement entered into by the Facility Agent,
the Company and Wessex Water, in relation to the Wessex Loan,
substantially in the form of Schedule 8.
"SUBSIDIARY"
of a company or corporation (a "HOLDING COMPANY") means any company or
corporation:-
(a) which is controlled, directly or indirectly, by a Holding
Company; or
(b) more than half the issued share capital of which is
beneficially owned, directly or indirectly, by a Holding
Company; or
(c) which is a Subsidiary of another Subsidiary of a Holding
Company,
and, for these purposes, a company or corporation shall be treated as
being controlled by another if that Holding Company holds or controls
the majority of the voting rights relating to its shares or ownership
interests and/or controls the composition of its board of directors or
equivalent body. For the purpose of the use of the definition of
Subsidiary in the definition of SPV, a "company" includes any
association or partnership (whether or not having separate legal
personality).
"TOTAL COMMITMENTS"
means the aggregate of the Commitments, being(pound)425,000,000 at the
date of this Agreement.
"WESSEX GROUP"
means Wessex Water and its Subsidiaries.
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"WESSEX INTER-COMPANY RECEIVABLE"
has the meaning given to it in the Subordination Agreement.
"WESSEX LOAN"
means the (pound)90,000,000 loan dated 15th April, 1999 to the Company
from Wessex Water.
"WESSEX WATER"
means Wessex Water Limited (Registered no. 2366633).
1.2 CONSTRUCTION
(a) In this Agreement, unless the contrary intention appears, a reference
to:
(i) an order for or petition for "ADMINISTRATION" of any person
includes an order or petition for the special administration
of that person for the purposes of section 24 of the Act;
"ASSETS" includes properties, revenues and rights of every
description;
an "AUTHORISATION" includes an authorisation, consent,
approval, resolution, licence, exemption, filing, registration
and notarisation;
a "MONTH" is a reference to a period starting on one day in a
calendar month and ending on the numerically corresponding day
in the next calendar month, except that:
(1) if there is no numerically corresponding day in the
month in which that period ends, that period shall
end on the last Business Day in that calendar month;
or
(2) if an Interest Period commences on the last Business
Day of a calendar month, that Interest Period shall
end on the last Business Day in the calendar month in
which it is to end; and
a "REGULATION" includes any regulation, rule, official
directive, request or guideline (whether or not having the
force of law, but if not having the force of law being of a
type with which the person concerned is accustomed to comply)
of any governmental body, agency, department or regulatory,
self-regulatory or other authority or organisation;
(ii) a provision of a law is a reference to that provision as
amended or re-enacted;
(iii) a Clause or a Schedule is a reference to a clause of or a
schedule to this Agreement;
(iv) a person includes its successors and permitted assigns;
(v) a Finance Document or another document is a reference to that
Finance Document or that other document as amended, novated,
supplemented, replaced or renewed; and
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(vi) a time of day is a reference to London time.
(b) Unless the contrary intention appears, a term used in any other Finance
Document or in any notice given under or in connection with any Finance
Document has the same meaning in that Finance Document or notice as in
this Agreement.
(c) If either Standard & Poor's or Moody's cease to provide ratings of the
type contemplated by any Clause of this Agreement, the relevant rating
agency may be replaced by another rating agency acceptable to the
Company and the Facility Agent and references to Standard & Poor's or
Moody's, as the case may be, shall be construed as references to that
ratings agency.
(d) The index to and the headings in this Agreement are for convenience
only and are to be ignored in construing this Agreement.
2. THE FACILITY
2.1 FACILITY
Subject to the terms of this Agreement, the Banks irrevocably grant to
the Company a committed revolving credit facility under which, when
requested by the Company, the Banks shall make available to the Company
Loans up to an aggregate Original Sterling Amount not exceeding the
Total Commitments at that time. No Bank is obliged to lend if it would
cause the Original Sterling Amount of its participation in the Loan to
exceed its Commitment.
2.2 NATURE OF A FINANCE PARTY'S RIGHTS AND OBLIGATIONS
(a) The obligations of a Finance Party under the Finance Documents are
several. Failure of a Finance Party to carry out those obligations does
not relieve any other Party of its obligations under the Finance
Documents. No Finance Party is responsible for the obligations of any
other Finance Party under the Finance Documents.
(b) The rights of a Finance Party under the Finance Documents are divided
rights. A Finance Party may, except as otherwise stated in the Finance
Documents, separately enforce those rights.
2.3 CHANGE OF CURRENCY
If a change in any currency of a country occurs, this Agreement will be
amended to the extent the Facility Agent (acting reasonably) specifies
to be necessary to reflect the change in currency and to put the Banks
(and, if possible and practicable, the Company) in the same position,
so far as possible, that they would have been in if no change in
currency had occurred.
3. PURPOSE AND AVAILABILITY
(a) The Company shall apply each Loan made to it towards:-
(i) refinancing any outstanding Borrowings by the Company,
including any loan outstanding under the Original Facility
Agreement or any Parent Loan; and/or
(ii) refinancing the outstanding Loan Notes; and/or
(iii) making Inter-Company Loans up to a maximum aggregate amount
of(pound)240,000,000; and/or
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(iv) fees and expenses in connection with the Finance Documents.
(b) Without affecting the obligations of the Company in any way, no Finance
Party is bound to monitor or verify the application of any Loan.
4. CONDITIONS PRECEDENT
4.1 DOCUMENTARY CONDITIONS PRECEDENT
(a) The obligations of each Finance Party to the Company under this
Agreement are subject to the condition precedent that the Facility
Agent has notified the Company and the Banks that it has received all
of the documents set out in Schedule 2 and that the Arrangers and
Agents have received or are satisfied that they will receive all fees
which are then due and payable in connection with the Finance
Documents.
(b) The documents referred to in paragraph (a) above must be in a form
agreed by the Company and the Facility Agent prior to the date of this
Agreement or in form and substance satisfactory to the Facility Agent.
The Facility Agent shall promptly notify the Company and the Banks of
receipt of those documents.
4.2 FURTHER CONDITIONS PRECEDENT
The obligations of each Bank to participate in a Loan are subject to
the further conditions precedent that:-
(a) on both the date of the Request and the Drawdown Date:-
(i) the representations and warranties in Clause 17
(Representations and warranties) to be repeated on
those dates are correct in all material respects and
will be correct in all material respects immediately
after the Loan is made;
(ii) in the case of a Loan which is not a Rollover Loan,
no Default is outstanding or will result from the
Loan; and
(iii) in the case of a Rollover Loan, no Event of Default
is outstanding or will result from the Loan provided
that (without prejudice to the rights of the Finance
Parties under Clause 19.20 (Acceleration)) if:
(A) an Event of Default is outstanding:
(B) a waiver of that Event of Default has been
requested by the Company; and
(C) as at the last day of the Interest Period of
that Rollover Loan, sufficient Banks
required to approve or refuse that waiver
under Clause 26 (Amendments and waivers)
have not responded to that waiver request,
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the Loan shall be readvanced on that day but with an
Interest Period of a duration agreed by the Facility
Agent and the Company. If the duration of that
Interest Period cannot be agreed by the latest time
on which a Request can be delivered for that Loan
under Clause 5.1 (Receipt of Requests), the Facility
Agent shall stipulate the duration of that Interest
Period. In each case, the Facility Agent and the
Company shall act reasonably and have regard to the
nature of the Event of Default, any cure period and
the likely time period needed for the Banks to
respond to the waiver request;
(b) it would not cause the Loans to exceed the Total Commitments;
(c) it would not result in there being more than 20 Loans
outstanding at any time; and
(d) if the Loan is to finance an Inter-Company Loan, that
Inter-Company Loan shall be on terms such that the
Inter-Company Loan shall:
(i) mature on or before the Final Repayment Date;
(ii) be senior to all other Borrowings by the relevant SPV
(including any funding from the Parent or any of its
Subsidiaries) with any such other Borrowings being
subordinated to the Inter-Company Loan on
substantially the terms set out in Schedule 10
provided that (subject to those subordination
arrangements) the relevant SPV may repay a loan to it
from the Parent or one of its Subsidiaries to the
extent that the proceeds of that loan were used to
repay one or more prior Inter-Company Loans to that
SPV;
(iii) if practicable, bear interest at a rate equal to or
in excess of that Loan; and
(iv) be in substantially the form set out in Schedule 9,
with such amendments as the Facility Agent may agree.
provided that no Loan may be drawn to finance the initial
making of an Inter-Company Loan (other than an Inter-Company
Loan the proceeds of which would be used to repay a loan from
the Parent or one of its Subsidiaries to the extent that the
proceeds of that loan were used to repay one or more prior
Inter-Company Loans to the relevant SPV) if:
(a) the Issuer Credit Rating of the Company is less than
BBB - from Standard & Poor's and is less than Baa3
from ▇▇▇▇▇'▇: and
(b) the credit rating attributable to the Facility is
less than BBB - from Standard & Poor's and is less
than Baa3 from ▇▇▇▇▇'▇.
5. LOANS
5.1 RECEIPT OF REQUESTS
The Company may utilise the Facility if the Facility Agent receives:
(a) for a Loan in Sterling, not later than 10.00 a.m. on the
Business Day; or
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(b) for a Loan in an Optional Currency, not later than 3.30 p.m.
on the third Business Day,
in each case, before the Drawdown Date of the relevant Loan, a duly
completed Request.
5.2 COMPLETION OF REQUESTS FOR LOANS
A Request for a Loan will not be regarded as having been duly completed
unless:-
(a) it specifies the purpose for which the Loan is to be used;
(b) it specifies the currency in which the Loan is to be made, in
accordance with Clause 10 (Optional Currency).
(c) the Drawdown Date is a Business Day falling within the
Availability Period;
(d) the Original Sterling Amount of the Loan is a minimum
of(pound)10,000,000 or (if less) the balance of the undrawn
Total Commitments or any other amount agreed by the Facility
Agent;
(e) the Interest Period specified complies with Clause 8 (Interest
Periods); and
(f) the payment instructions comply with Clause 12 (Payments).
Each Request is irrevocable.
5.3 AMOUNT OF EACH BANK'S PARTICIPATION IN A LOAN
The amount of a Bank's participation in a Loan will be the proportion
of the Loan which its Commitment bears to the Total Commitments on the
proposed Drawdown Date.
5.4 NOTIFICATION OF THE BANKS
The Facility Agent shall promptly notify each Bank of the details of
the requested Loan and the amount of its participation in the Loan.
5.5 PAYMENT OF PROCEEDS
Subject to the terms of this Agreement, each Bank shall make its
participation in a Loan available to the Facility Agent for the Company
on the relevant Drawdown Date.
6. REPAYMENT
(a) The Company shall repay each Loan in full on its Repayment Date to the
Facility Agent for the Banks.
(b) Subject to the terms of this Agreement, any amounts repaid under
paragraph (a) above may subsequently be re-borrowed.
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7. PREPAYMENT AND CANCELLATION
7.1 AUTOMATIC CANCELLATION OF THE TOTAL COMMITMENTS
The Commitment of each Bank shall be automatically cancelled at close
of business on the last day of the Availability Period.
7.2 VOLUNTARY CANCELLATION AND PREPAYMENT
(a) The Company may, by giving not less than 5 Business Days' prior notice
to the Facility Agent, cancel the unutilised portion of the Total
Commitments in whole or in part (but, if in part, in a minimum amount
of (pound)10,000,000 and integral multiples of (pound)1,000,000). Any
cancellation in part shall be applied against the Commitment of each
Bank pro rata.
(b) The Company may, by giving not less than 5 Business Days' prior notice
to the Facility Agent, prepay any Loan in whole or in part (but, if in
part, in a minimum amount of (pound)10,000,000 and integral multiples
of (pound)1,000,000).
7.3 ADDITIONAL RIGHT OF PREPAYMENT AND CANCELLATION
If the Company is required to pay any amount to a Bank under Clause 13
(Taxes) or Clause 15 (Increased costs), the Company may, whilst the
circumstances giving rise to the requirement continue, serve a notice
of prepayment and cancellation on that Bank through the Facility Agent.
In this event:-
(a) on the date falling 5 Business Days after the date of service
of the notice the Company shall prepay that Bank's
participation in any Loans made to it together with all other
amounts payable by it to that Bank under this Agreement; and
(b) that Bank's Commitment shall be cancelled on the date of
service of the notice.
7.4 MITIGATION
If circumstances arise which would, or would on the giving of notice,
result in:
(a) any additional amounts becoming payable under Clause 13.1
(Gross-up); or
(b) any amount becoming payable under Clause 15.1 (Increased
costs); or
(c) any prepayment or cancellation under Clause 16 (Illegality),
then, without limiting the obligations of the Company under this
Agreement and without prejudice to the terms of Clauses 13.1
(Gross-up), 15.1 (Increased costs) and 16 (Illegality), each Bank
shall, in consultation with the Company, take such reasonable steps as
may be open to it to mitigate or remove the relevant circumstance,
including (without limitation) the transfer as specified in Clause 27.2
(Transfers by Banks) of its rights and obligations under this Agreement
to another bank or financial institution, unless to do so might (in the
reasonable opinion of the Bank) have a material adverse effect on its
business, operations or financial condition or be contrary to its
banking policies or be otherwise prejudicial to it.
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7.5 MANDATORY PREPAYMENT
(a) Any Loan borrowed for the purpose of making an Inter-Company Loan shall
be prepaid, subject to paragraph (c) below, by no later than the third
Business Day after repayment or prepayment by the relevant SPV of that
Inter-Company Loan in accordance with its terms, in an amount equal to
that repayment or prepayment.
(b) The Company shall prepay the Loans in the amount of any Parent Loan it
receives, subject to paragraph (c) below, by no later than the third
Business Day following that receipt.
(c) The Company's obligation to prepay any amount under paragraph (a) or
(b) above may be satisfied by payment of the amount expressed to be
payable into a Cash Collateral Account held by the Security Agent or
one of its Affiliates. On the Repayment Date for the relevant Loan or
such earlier date as notified by the Company to the Security Agent, the
Company shall pay the amount so credited to the Cash Collateral Account
to the Facility Agent in or towards repayment or prepayment of the
relevant Loan. The Company may not use that amount for any other
purpose.
7.6 MISCELLANEOUS PROVISIONS
(a) Any notice of prepayment and/or cancellation under this Agreement is
irrevocable. The Facility Agent shall notify the Banks promptly of
receipt of any such notice.
(b) All prepayments under this Agreement shall be made together with
accrued interest on the amount prepaid and with any amounts due under
Clauses 24.2 (a) (Other indemnities) and, in the case of prepayment of
all the Loans then outstanding, 24 (Indemnities).
(c) No prepayment or cancellation is permitted except in accordance with
the express terms of this Agreement.
(d) No amount of the Total Commitments cancelled under this Agreement may
subsequently be reinstated.
8. INTEREST PERIODS
8.1 INTEREST PERIODS
(a) Each Loan will have one Interest Period only.
(b) Interest Periods may, subject to the other provisions of this Clause 8,
be for an approved duration or an optional duration and:-
(i) "APPROVED DURATION" means a period of 1, 2, 3 or 6 months; and
(ii) "OPTIONAL DURATION" means any other period (other than an
approved duration) of up to 12 months.
8.2 SELECTION OF AN OPTIONAL DURATION
(a) Subject to Clause 4.2(a)(iii) (Further conditions precedent), if the
Company selects an Interest Period of an optional duration, it may also
select in the relevant Request an Interest
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Period of an approved duration to apply if the selection of an Interest
Period of an optional duration becomes ineffective in accordance with
paragraph (b) below.
(b) If:-
(i) the Company requests an Interest Period of an optional
duration; and
(ii) the Facility Agent receives notice from a Bank not later than
3.00 p.m. on the Business Day before the Rate Fixing Day that
it does not agree to the request,
the Interest Period for the proposed Loan shall be the alternative
period of an approved duration specified in the relevant Request or
notice or, in the absence of any alternative selection, 3 months.
(c) If the Facility Agent receives a notice from a Bank under paragraph (b)
above, it shall notify the Company and the Banks promptly of the new
Interest Period for the proposed Loan.
8.3 OVERRUNNING OF REPAYMENT DATES
If an Interest Period for a Loan would otherwise overrun the Final
Repayment Date, that Interest Period shall be shortened so that it ends
on the Final Repayment Date.
8.4 NOTIFICATION
The Facility Agent shall notify the Company and the Banks of the
duration of each Interest Period promptly after ascertaining its
duration.
9. INTEREST
9.1 INTEREST RATE
The rate of interest on each Loan for each of its Interest Periods is
the rate per annum determined by the Facility Agent to be the aggregate
of the applicable:-
(a) Margin;
(b) LIBOR; and
(c) Mandatory Costs.
9.2 DUE DATES
Except as otherwise provided in this Agreement, accrued interest on
each Loan is payable by the Company on the last day of each Interest
Period and also, in the case of a Loan with an Interest Period longer
than six months, on the date falling six months after the commencement
of that Interest Period.
9.3 DEFAULT INTEREST
(a) (i) If the Company fails to pay any amount payable by it under the
Finance Documents, it shall forthwith on demand by the
Facility Agent pay interest on the overdue
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amount from the due date up to the date of actual payment, as
well after as before judgement, at a rate (the "DEFAULT RATE")
determined by the Facility Agent to be 1 per cent. per annum
above, subject to sub-paragraph (ii) below, the rate which
would have been payable if the overdue amount had, during the
period of non-payment, constituted a Loan for such successive
Interest Periods of such duration as the Facility Agent may
reasonably determine having regard to the likely duration of
the default (each a "DESIGNATED INTEREST PERIOD").
(ii) If the overdue amount is a principal amount of a Loan and it
becomes due and payable prior to the last day of an Interest
Period for that Loan, then:-
(1) the first Designated Interest Period for that overdue
sum will be the unexpired portion of that Interest
Period; and
(2) the rate of interest on the overdue amount for that
first Designated Interest Period will be 1 per cent.
per annum above the rate on the overdue amount under
Clause 9.1 (Interest rate) immediately before the due
date.
After the expiry of the first Designated Interest Period for
that overdue amount, the rate on the overdue amount will be
calculated in accordance with sub-paragraph (i) above.
(b) The default rate will be determined on each Business Day or the first
day of the relevant Designated Interest Period, as appropriate.
(c) If the Facility Agent determines that deposits 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 Banks from whatever sources the
Banks may reasonably select, having due regard to the likely duration
of the default.
(d) Default interest will be compounded at the end of each Designated
Interest Period.
9.4 NOTIFICATION OF RATES OF INTEREST
The Facility Agent shall promptly notify each relevant Party of the
determination of a rate of interest under this Agreement.
10. OPTIONAL CURRENCIES
10.1 SELECTION
(a) The Company may select the currency of a Loan for an Interest Period in
the relevant Request.
(b) The currency of each Loan must be Sterling or an Optional Currency.
(c) If the Company fails to give a notice in respect of an outstanding Loan
in accordance with paragraph (a) above, that Loan will be denominated
in Sterling.
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10.2 REVOCATION OF CURRENCY
If before 9.30 a.m. on any Rate Fixing Day, the Facility Agent receives
notice from a Bank that:-
(a) it is impracticable for the Bank to fund its participation in
the Loan in the relevant Optional Currency during that
Interest Period in the ordinary course of business in the
London interbank market; and/or
(b) the use of the proposed Optional Currency could reasonably be
expected to contravene any law or regulation,
the Facility Agent shall give notice to the Company and to the Banks to
that effect before 11.00 a.m. on that day. In this event:-
(i) the Company and the Banks may agree that the drawdown will not
be made or will be made in Sterling; or
(ii) in the absence of agreement and in any other case:
(1) that Bank's participation in the Loan (or, if more
than one Bank is similarly affected, those Banks'
participations in the Loan) shall be treated as a
separate Loan denominated in Sterling during the
relevant Interest Period;
(2) in the definition of "LIBOR" (insofar as it applies
to that Loan) in Clause 1.1 (Definitions):
(A) there shall be substituted for the time
"11.00 a.m." the time "1.00 p.m."; and
(B) paragraph (c) shall apply.
10.3 DRAWDOWNS
If a Loan is to be drawn in an Optional Currency, the amount of each
Bank's participation in that Loan will be determined by converting into
that Optional Currency the Bank's participation in the Original
Sterling Amount of that Loan on the basis of the Agent's Spot Rate of
Exchange two Business Days before its Drawdown Date.
10.4 PREPAYMENTS AND REPAYMENTS
If a Loan is to be prepaid by reference to an Original Sterling Amount,
the Optional Currency amount to be repaid or prepaid shall be
determined by reference to the Agent's Spot Rate of Exchange used for
determining the Optional Currency amount of that Loan under this Clause
10 for the making of that Loan.
10.5 NOTIFICATION
The Facility Agent shall notify the Banks and the Company of Optional
Currency amounts (and the applicable Agent's Spot Rate of Exchange)
promptly after they are ascertained.
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11. DEBT SERVICE RESERVE ACCOUNT
11.1 DESIGNATION OF ACCOUNTS
The Company shall maintain a deposit account in the name of the Company
designated the "DEBT SERVICE RESERVE ACCOUNT" at the Security Agent (or
an Affiliate of the Security Agent).
11.2 DEBT SERVICE RESERVE ACCOUNT
(a) The Company shall, for so long as any amount in respect of principal,
interest or fees payable under the Finance Documents is outstanding or
any Commitment is in force, deposit into the Debt Service Reserve
Account:
(i) on the date of this Agreement, an amount of not less
than(pound)20,000,000; and
(ii) promptly (and in any event within two Business Days) on
receipt, all amounts received by the Company other than any
amount to be applied in accordance with Clause 7.5 (Mandatory
prepayment).
(b) The Company shall not withdraw any amount from the Debt Service Reserve
Account unless it is to be applied as follows:
(i) if it comprises amounts standing to the credit of the Debt
Service Reserve Account equal to or below the Minimum Debt
Service Amount:
(A) provided no Default is outstanding, it may be applied
only to fund an advance to Enron Corp. or any of its
Affiliates (including the Parent), provided that the
Company has the benefit of a guarantee or an on
demand letter of credit in each case, in form and
substance reasonably satisfactory to the Facility
Agent and the Security Agent (in each case from a
financial institution with an Issuer Credit Rating of
at least A from Standard & Poor's or A2 from ▇▇▇▇▇'▇)
in respect of the payment obligations under that
advance; and
(B) in or towards prepayment of all of the Loans or
repayment of the Loans on the Final Repayment Date;
(ii) if it comprises amounts standing to the credit of the Debt
Service Reserve Account above the Minimum Debt Service Amount,
it may be applied:
(A) in or towards repayment or prepayment of the Loans in
accordance with Clauses 6 (Repayment) or 7.2(b)
(Voluntary cancellation and prepayment);
(B) making Inter-Company Loans, provided that the Company
has the benefit of a guarantee from Enron Corp. or a
guarantee or an on demand letter of credit (in each
case from a financial institution with an Issuer
Credit Rating of at least A from Standard & Poor's or
A2 from ▇▇▇▇▇'▇) in respect of the payment
obligations under that Inter-Company Loan in each
case, in form and substance reasonably satisfactory
to the Facility Agent and the Security Agent (each
such guarantee (from Enron Corp. or otherwise) or
letter of credit or other credit enhancement being
"SUITABLE CREDIT ENHANCEMENT"); and
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(C) making advances to the Parent provided that, if the
Issuer Credit Rating of the Parent is less than BBB
from Standard & Poor's or Baa2 from ▇▇▇▇▇'▇, the
Company shall have the benefit of suitable credit
enhancement; and
(iii) provided the Company is in compliance with Clause 18.20
(Minimum Debt Service Amount) in or towards payment of
interest, taxes and operating expenses of the Company then due
and payable.
11.3 MISCELLANEOUS ACCOUNTS PROVISIONS
(a) The Company shall ensure that the Debt Service Reserve Account is not
overdrawn at any time.
(b) On the Final Repayment Date or on the Loans becoming immediately due
and payable under this Agreement, the monies standing to the credit of
the Debt Service Reserve Account may be applied by the Security Agent
in or towards repayment of the Loans and all other amounts due to the
Finance Parties under the Finance Documents.
(c) No Finance Party shall be responsible to the Company for any
non-payment of any liability of the Company which could be paid out of
moneys standing to the credit of the Debt Service Reserve Account.
(d) The Security Agent shall provide to the Facility Agent within five
Business Days of any request by the Facility Agent with the following
information in relation to any payment received in the Debt Service
Reserve Account:-
(i) date of payment/receipt;
(ii) payer; and
(iii) purpose of/for payment/receipt.
11.4 CHANGE OF BANK ACCOUNTS
(a) If the Security Agent so requests and the Company consents (such
consent not to be unreasonably withheld or delayed), the Debt Service
Reserve Account may be moved to another bank.
(b) A change of the Debt Service Reserve Account only becomes effective
upon the proposed new bank agreeing with the Security Agent and the
Company, in a manner satisfactory to the Security Agent, to fulfil the
role of the bank holding that account.
12. PAYMENTS
12.1 PLACE
All payments by the Company or a Bank under the Finance Documents shall
be made to the relevant Agent to its account at such office or bank:
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(a) in the principal financial centre of the country of the relevant
currency; or
(b) in the case of euros, in the principal financial centre of a
Participating Member State or London,
as that Agent has from time to time notified the Company and the Banks.
12.2 FUNDS
Payments under the Finance Documents to the relevant Agent shall be
made for value on the due date at such times and in such funds as that
Agent may specify to the Party concerned as being customary at the time
for the settlement of transactions in the relevant currency in the
place for payment.
12.3 DISTRIBUTION
(a) Each payment received by the relevant Agent under the Finance Documents
for another Party shall, subject to the paragraphs below, be made
available by that Agent to that Party by payment to its account with
such office or bank: -
(i) in the principal financial centre of the country of the
relevant currency; or
(ii) in the case of euros, in the principal financial centre of a
Participating Member State or London,
as that Party has from time to time notified the relevant Agent.
(b) An Agent may apply any amount received by it for the Company in respect
of the advance of a Loan in or towards payment (on the date and in the
currency and funds of receipt) of any amount due from the Company under
this Agreement in respect of the repayment of a Loan or in or towards
the purchase of any amount of any currency to be so applied.
(c) Where a sum is to be paid under the Finance Documents to an Agent for
the account of another Party, that Agent is not obliged to pay that sum
to that Party until it has established that it has actually received
that sum. That Agent may, however, assume that the sum has been paid to
it in accordance with this Agreement and, in reliance on that
assumption, make available to that Party a corresponding amount. If the
sum has not been made available but that Agent has paid a corresponding
amount to another Party, that Party shall forthwith on demand refund
the corresponding amount to that Agent together with interest on that
amount from the date of payment to the date of receipt, calculated at a
rate determined by that Agent to reflect its cost of funds.
12.4 CURRENCY
(a) A repayment or prepayment of a Loan or any part of a Loan is payable in
the currency in which the Loan is denominated.
(b) Interest is payable in the currency in which the relevant amount in
respect of which it is payable is denominated.
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(c) Amounts payable in respect of costs, expenses and taxes and the like
are payable in the currency in which they are incurred.
(d) Any other amount payable under the Finance Document is, except as
otherwise provided in this Agreement, payable in Sterling.
12.5 SET-OFF AND COUNTERCLAIM
All payments made by the Company under the Finance Documents shall be
made without set-off or counterclaim.
12.6 NON-BUSINESS DAYS
(a) If a payment under the Finance Documents is due on a day which is not a
Business Day, the due date for that payment shall instead be the next
Business Day in the same calendar month (if there is one) or the
preceding Business Day (if there is not).
(b) During any extension of the due date for payment of any principal under
the Finance Documents interest is payable on the principal at the rate
payable on the original due date.
12.7 PARTIAL PAYMENTS
(a) If the relevant Agent receives a payment insufficient to discharge all
the amounts then due and payable by the Company under the Finance
Documents, the relevant Agent shall apply that payment towards the
obligations of the Company under the Finance Documents in the following
order:-
(i) first, in or towards payment pro rata of any unpaid fees,
costs and expenses of the Agents under the Finance Documents;
(ii) secondly, in or towards payment pro rata of any accrued fees
due but unpaid under Clause 21.2 (Commitment fee);
(iii) thirdly, in or towards payment pro rata of any accrued
interest due but unpaid under this Agreement;
(iv) fourthly, in or towards payment pro rata of any principal due
but unpaid under this Agreement; and
(v) fifthly, in or towards payment pro rata of any other sum due
but unpaid under the Finance Documents.
(b) The Agents shall, if so directed by all the Banks, vary the order set
out in sub-paragraphs (a)(ii) to (v) above.
(c) Paragraphs (a) and (b) above shall override any appropriation made by
the Company.
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13. TAXES
13.1 GROSS-UP
All payments by the Company under the Finance Documents shall be made
without any deduction and free and clear of and without deduction for
or on account of any taxes or other deductions, except to the extent
that the Company 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 the
Company, or paid or payable by an Agent to a Bank, under the Finance
Documents, the Company 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 or other deduction.
13.2 TAX RECEIPTS
All taxes required by law to be deducted or withheld by the Company
from any amounts paid or payable under the Finance Documents shall be
paid by the Company when due and the Company shall, within 15 days of
the payment being made, deliver to the Facility Agent for the relevant
Bank evidence reasonably satisfactory to that Bank (including all
relevant tax receipts) that the payment has been duly remitted to the
appropriate authority.
13.3 REFUND OF TAX CREDITS
If:-
(a) the Company makes a payment under Clause 13.1 (Gross-up) (a
"TAX PAYMENT") in respect of a payment to a Bank under the
Finance Documents; and
(b) that Bank determines in good faith that it has obtained a
refund of tax or obtained and used a credit against tax on its
overall net income (a "TAX CREDIT") which that Bank is able to
identify in good faith as attributable to that Tax Payment,
then, if it determines, acting in good faith, that it can do so without
any other adverse consequences for the Bank, that Bank shall forthwith
reimburse the Company such amount as that Bank in its absolute
discretion determines to be such proportion of that Tax Credit as will
leave that Bank (after that reimbursement) in no better or worse
position in respect of its worldwide tax liabilities 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 13.3 (and, if so,
what amount and when). No Bank shall be obliged to disclose any
information regarding its tax affairs and computations.
13.4 QUALIFYING BANK
(a) Each Bank party to this Agreement on the date of this Agreement
represents that it is a Qualifying Bank on the date of this Agreement.
Any bank or financial institution which becomes a Bank after the date
of this Agreement pursuant to Clause 27.2 (Transfers by Banks) or
otherwise represents to the Company on the date it becomes a Party
that, as at that date, it is a Qualifying Bank.
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(b) 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, any Double Taxation Treaty or any practice or
concession of the United Kingdom Inland Revenue occurring after the
date a Bank becomes a Party, the Bank is not or ceases to be a
Qualifying Bank, the Company will not be liable to pay to that Bank
under Clause 13.1 (Gross-up) any amount in respect of taxes levied or
imposed by the U.K. or any taxing authority of or in the U.K. in excess
of the amount it would have been obliged to pay if that Bank had been
or had not ceased to be a Qualifying Bank.
(c) Any Bank which falls within paragraph (b) of the definition of
Qualifying Bank shall:
(i) promptly deliver to the Company a duly completed form from the
relevant tax authorities such that the Company may apply to
the Inland Revenue for a direction to the Company under the
Double Taxation Relief (Taxes on Income) (General) Regulations
1970 that the Company should not, on account of the relevant
Double Taxation Treaty, pay any interest due to the Bank under
the Finance Documents under deduction of U.K. tax. The Bank
concerned shall, upon the request of the Company, promptly and
duly (if it is able to do so) execute and deliver any and all
such further instruments and documents which are required for
the purpose of obtaining such a direction; or
(ii) use all reasonable endeavours to transfer its rights,
obligations and Commitments to a Qualifying Bank from which it
is not illegal for any member of the AEL Group or its
Affiliates to borrow within 90 days of the date of becoming
aware that the relevant Double Tax Treaty has ceased to apply
or no longer gives full exemption to that Bank from United
Kingdom taxation on interest, provided that the consent of the
Company shall not be required under Clause 27.2 (Transfers by
Banks) for such a transfer.
(d) The Company will not be liable to pay to a Bank under Clause 13.1
(Gross-up) any amount in respect of taxes levied or imposed by the U.K.
or any taxing authority of or in the U. K. which it would not have been
obliged to pay if that Bank had performed its obligations under
paragraph (c) above (whether or not then requested to do so pursuant to
that paragraph (c)).
(e) Each Bank shall notify the Company through the Facility Agent as soon
as it is aware that it ceases to be a Qualifying Bank.
14. MARKET DISRUPTION
(a) If LIBOR is to be determined by reference to the Reference Banks but a
Reference Bank does not supply an offered rate by 11.30 a.m. on a Rate
Fixing Day, the applicable LIBOR shall, subject to paragraph (b) below,
be determined on the basis of the quotations of the remaining Reference
Banks.
(b) If, in relation to any proposed Loan:-
(i) LIBOR is to be determined by reference to the Reference Banks
but no, or only one, Reference Bank supplies a rate for the
purposes of determining the applicable LIBOR or the Facility
Agent otherwise determines that adequate and fair means do not
exist for ascertaining the applicable LIBOR; or
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(ii) the Facility Agent receives notification from Banks whose
participations in a Loan exceed 50 per cent. of that Loan
that, in their opinion:-
(A) matching deposits may not be available to them in the
London interbank market in the ordinary course of
business to fund their participations in that Loan
for the relevant Interest Period; or
(B) the cost to them of matching deposits in the London
interbank market would be in excess of the relevant
LIBOR,
the Facility Agent shall promptly notify the Company and the relevant
Banks of the fact and that this Clause 14 is in operation.
(c) After any notification under paragraph (b) above:-
(i) unless the Company notifies the Facility Agent to the contrary
before close of business on the day it received the
notification under paragraph (b) above, the Loan shall still
be made but it shall have an Interest Period of one month and
the interest payable on that Loan shall be determined in
accordance with sub-paragraphs (ii) to (vi) below; and
(ii) promptly after receipt of the notification, the Company and
the Facility Agent shall enter into negotiations in good faith
for a period of not more than one month with a view to
agreeing a substitute basis for determining the rate of
interest and/or funding applicable to the Loan affected by the
notification;
(iii) any substitute basis agreed under sub-paragraph (ii) above
shall be, with the prior consent of all the Banks, binding on
all the Parties;
(iv) if no substitute basis is agreed under sub-paragraph (ii)
above, each Bank (through the Facility Agent) shall certify on
or before the last day of the Interest Period to which the
notification relates an alternative basis for maintaining its
participation in that Loan;
(v) any alternative basis referred to in sub-paragraph (iv) above
may include an alternative method of fixing the interest rate,
alternative Interest Periods or alternative Optional
Currencies or, as the case may be, Sterling but it must
reflect the cost to the Banks of funding their participations
in that Loan from whatever sources each relevant Bank may
reasonably select (each Bank's cost of funding being certified
by that Bank with a copy to the Facility Agent) plus the
applicable Margin and (if applicable) any Mandatory Costs; and
(vi) each alternative basis so certified shall be binding on the
Company and the certifying Bank and treated as part of this
Agreement.
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15. INCREASED COSTS
15.1 INCREASED COSTS
(a) Subject to Clause 15.2 (Exceptions), the Company shall forthwith on
demand by a Finance Party pay that Finance Party the amount of any
increased cost incurred by it or its Holding Company as a result of:
(i) the introduction of, or any change in, or any change in the
interpretation or application of, any law or regulation after
the date of this Agreement; or
(ii) compliance with any regulation made after the date of this
Agreement,
including any law or regulation relating to taxation, change in
currency of a country or reserve asset, special deposit, cash ratio,
liquidity or capital adequacy requirements or any other form of banking
or monetary control. Promptly after any Finance Party becomes aware of
any such increased cost, that Finance Party shall notify the Borrower
through the Facility Agent. Any demand shall give calculations in
reasonable detail of that increased cost and the basis for making the
demand, except that the Finance Party shall not be obliged to disclose
any information which it reasonably considers to be confidential.
(b) In this Agreement "INCREASED COST" means:-
(i) an additional cost incurred by a Finance Party or its Holding
Company as a result of the Finance Party having entered into,
or performing, maintaining or funding its obligations under,
the Finance Documents; or
(ii) that portion of an additional cost incurred by a Finance Party
or its Holding Company in the Finance Party making, funding or
maintaining all or any advances comprised in a class of
advances formed by or including the participations in the
Loans made or to be made under this Agreement as is
attributable to the Finance Party making, funding or
maintaining those participations; or
(iii) a reduction in any amount payable to a Finance Party or its
Holding Company or the effective return to a Finance Party
under this Agreement or on its capital or that of its Holding
Company; or
(iv) the amount of any payment made by a Finance Party or its
Holding Company, or the amount of interest or other return
foregone by a Finance Party or its Holding Company, calculated
by reference to any amount received or receivable by a Finance
Party from any other Party under the Finance Documents.
15.2 EXCEPTIONS
Clause 15.1 (Increased costs) does not apply to any increased cost:-
(a) compensated for by the payment of the Mandatory Costs;
(b) compensated for by the operation of Clause 13 (Taxes) or which
would have been compensated for but for the operation of
Clause 13.4(b) or (d) (Qualifying Bank) or compensated for by
the operation of any other term of this Agreement;
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(c) attributable to any change in the rate or the basis of
calculating tax on the overall net income of a Bank or its
Holding Company (or the overall net income of a division or
branch of the Bank or its Holding Company) imposed in the
jurisdiction in which its principal office or Facility Office
is situate;
(d) attributable to the negligence or wilful default of a Bank; or
(e) attributable to the period 90 days after the relevant Finance
Party becomes aware of the increased cost and prior to the
Company being notified of an increased cost, except to the
extent that the increased cost is applied retrospectively;
this is without prejudice to the right of a Finance Party to
claim for any subsequent increased cost.
16. ILLEGALITY
If it is or becomes unlawful or contrary to any regulation in any
applicable jurisdiction for a Bank to give effect to any of its
obligations as contemplated by this Agreement or to fund or maintain
its participation in any Loan, then:-
(a) the Bank shall promptly notify the Company through the
Facility Agent accordingly; and
(b) (i) the Company shall, by no later than the latest day
permitted by the relevant law or regulation, prepay
that Bank's participation in all Loans made to it
together with all other amounts payable by it to that
Bank under this Agreement; and
(ii) the Bank's Commitment shall be cancelled.
17. REPRESENTATIONS AND WARRANTIES
17.1 REPRESENTATIONS AND WARRANTIES
The Company makes the representations and warranties set out in this
Clause 17 (Representations and warranties) to each Finance Party.
17.2 STATUS
(a) It is a limited liability company, duly incorporated and validly
existing under the Companies ▇▇▇ ▇▇▇▇;
(b) it has the power to own its assets and carry on its business as it is
being conducted; and
(c) as at the date of this Agreement, the Parent is the beneficial owner of
all the issued shares in the Company.
17.3 POWERS AND AUTHORITY
It has the power to enter into and perform, and has taken all necessary
action to authorise the entry into, performance and delivery of, the
Finance Documents to which it is or will be a party and the
transactions contemplated by those Finance Documents.
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17.4 LEGAL VALIDITY
Each Finance Document to which it is or will be a party constitutes, or
when executed in accordance with its terms will constitute, its legal,
valid, binding and enforceable obligation.
17.5 NON-CONFLICT
The entry into and performance by it of, and the transactions
contemplated by, the Finance Documents do not and will not:-
(a) conflict with any law or regulation, judicial or official
order or, to a material extent, the Appointment or Appointment
Undertaking; or
(b) conflict with its memorandum or articles of association; or
(c) conflict to a material extent with any document which is
binding upon any member of the AEL Group or any asset of any
member of the AEL Group.
17.6 NO DEFAULT
(a) No Default is outstanding or will result from any Loan; and
(b) no other event is outstanding which constitutes a default under any
document which is binding on any member of the AEL Group or any asset
of any member of the AEL Group to an extent or in a manner which has a
Material Adverse Effect.
17.7 AUTHORISATIONS
Subject to due registration of the Debenture at Companies House under
section 395 of the Companies ▇▇▇ ▇▇▇▇ and the execution of the Deed of
Release, all authorisations required by the laws of England or the
terms of the Appointment or Appointment Undertaking in connection with
the entry into, performance, validity and enforceability of, and the
transactions contemplated by, the Finance Documents have been obtained
or effected (as appropriate) and are in full force and effect.
17.8 ACCOUNTS
The audited consolidated accounts of the AEL Group and the Wessex Group
most recently delivered to the Facility Agent under this Agreement:-
(a) have been prepared in accordance with relevant Applicable
Accounting Principles; and
(b) fairly represent the consolidated financial condition of the
AEL Group and the Wessex Group as at the date to which they
respectively were drawn up.
17.9 LITIGATION
No litigation, arbitration or administrative proceedings are current
or, to its knowledge, pending or threatened:-
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(a) to restrain entering into the Finance Documents, or to
restrain the exercise of any of its rights under the Finance
Documents or to restrain the performance or enforcement of or
compliance with any of its obligations under the Finance
Documents which are (in the reasonable opinion of the Facility
Agent) material; or
(b) which have a Material Adverse Effect.
17.10 INFORMATION MEMORANDUM
(a) All material factual information contained in the Information
Memorandum was true (or, in the case of information provided by any
person other than the Company or its advisers, was true to the best of
its knowledge and belief) in all material respects at the date (if any)
ascribed to it in the Information Memorandum or (if none) at the date
of the Information Memorandum;
(b) any expressions of opinion or intention and any forecasts and
projections contained in the Information Memorandum were arrived at
after careful consideration and were based on reasonable assumptions;
and
(c) as at the date of this Agreement, the Information Memorandum, taken as
a whole, was not misleading in any material respect and did not omit to
disclose any matter failure to disclose which would result in any
material information contained in the Information Memorandum being
misleading in any material respect in the context of the Finance
Documents.
17.11 ENVIRONMENTAL MATTERS
(a) Each member of the AEL Group has obtained all material Environmental
Licences required for the carrying on of its business as conducted and
is in compliance in all material respects with:
(i) the terms and conditions of those Environmental Licences; and
(ii) all other applicable Environmental Law,
which, in each case, if not obtained or complied with, has a Material
Adverse Effect and there are, to its knowledge, no circumstances which
may materially prevent or interfere with such compliance in the future;
(b) so far as the Company is aware after due enquiry, no Dangerous
Substance has been used, disposed of, generated, stored, transported,
dumped, released, deposited, buried or emitted at, on from or under any
site or premises (whether or not owned, leased, occupied or controlled
by any member of the AEL Group and including any offsite waste
management or disposal location utilised by any member of the AEL
Group) in circumstances where this has a Material Adverse Effect; and
(c) so far as the Company is aware after due enquiry, there is no
Environmental Claim (whether in respect of any site previously or
currently owned or occupied by any member of the AEL Group or
otherwise) pending or threatened, and there are no past or present
acts, omissions, events or circumstances that would be likely to form
the basis of any Environmental Claim (whether in respect of any site
previously or currently owned or occupied by any member of
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the AEL Group or otherwise), against it which, in each case, is
reasonably likely to be determined against it and which, if so
determined, has a Material Adverse Effect.
17.12 ASSETS
The Company is, subject to the release of Security Interests granted in
relation to the Original Facility Agreement, the beneficial owner of
all its assets free from any Security Interests (other than any
Security Interests permitted under Clause 18.9(b) (Negative pledge)).
17.13 APPOINTMENT
(a) The Appointment is in full force and effect;
(b) there exist no material breaches of the terms of the Appointment or
Appointment Undertakings; and
(c) there are no circumstances in existence which would entitle the
Director or the Secretary of State to seek to revoke the Appointment.
17.14 TIMES FOR MAKING REPRESENTATIONS AND WARRANTIES
The representations and warranties set out in this Clause 17
(Representations and warranties):-
(a) are made by the Company, unless it is expressly provided to
the contrary, on the date of this Agreement; and
(b) (with the exception of Clauses 17.2(c) (Status), 17.6(a) (No
default), 17.7 (Authorisations), 17.10 (Information
Memorandum), 17.11 (Environmental matters), 17.12 (Assets) and
17.13 (Appointment)) are deemed to be made by the Company on
the date of each Request and each Drawdown Date with reference
to the facts and circumstances then existing.
17.15 QUALIFICATIONS TO REPRESENTATIONS
(a) The representations and warranties contained in Clauses 17.4 (Legal
validity) and 17.7 (Authorisations) shall (where applicable) be
subject, as to matters of law only, to the qualifications in the legal
opinion referred to in Schedule 2.
(b) The Company shall promptly disclose to the Agent if any representation
and warranty to be made under this Clause 17 ceases to be correct as at
the date it is to be made. Any misrepresentation which has arisen or
which may arise and which has been disclosed to the Facility Agent may
be waived in accordance with Clause 26 (Amendments and waivers).
18. UNDERTAKINGS
18.1 DURATION
The undertakings in this Clause 18 (Undertakings) remain in force from
the date of this Agreement for so long as any amount in respect of
principal, interest or fees payable under the Finance Documents is or
may be outstanding or any Commitment is in force.
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18.2 FINANCIAL INFORMATION
The Company shall supply to the Facility Agent in sufficient copies for
all the Banks:-
(a) as soon as the same are available (and in any event within 120
days of the end of each of its financial years) the audited
consolidated accounts of the AEL Group and the Wessex Group
for that financial year;
(b) as soon as the same are available (and in any event within 60
days of the end of the first half-year of each of its
financial years and within 45 days of the end of each quarter
of each of its financial years) the unaudited consolidated
accounts of the AEL Group and the Wessex Group for that
half-year or that quarter, as the case may be;
(c) (i) together with the accounts of the AEL Group specified
in paragraph (a) above, a certificate signed by its
auditors setting out in reasonable detail
computations establishing compliance or
non-compliance with Clause 18.28 (Financial
covenants) as at the date to which those accounts
were drawn-up; and
(ii) together with the accounts of the AEL Group specified
in paragraph (b) above, a certificate signed by two
of its senior authorised officers on its behalf
setting out in reasonable detail computations
establishing compliance or non-compliance with Clause
18.28 (Financial covenants) as at the date to which
those accounts were drawn-up and specifying the
amounts of the Loans drawn for the purpose of making
Inter-Company Loans and repaying Parent Loans and the
amount of the Parent Loans then outstanding;
(d) within 5 Business Days of them being delivered to the Director
under Part F of Schedule 2 of the Appointment, the accounting
statements delivered to the Director by the Appointment
Holder.
18.3 INFORMATION - MISCELLANEOUS
The Company shall supply to the Facility Agent:-
(a) all documents despatched by it to its creditors (or any class
of them), at the same time as they are despatched;
(b) promptly upon becoming aware of them, details of any
litigation, arbitration or administrative proceedings against
any member of the AEL Group which are current, threatened or
pending, and which:
(i) if adversely determined, have a Material Adverse
Effect; or
(ii) would involve liability or potential liability
of(pound)10,000,000 (or its equivalent in other
currencies) or more on any member of the Group; or
(iii) involves the Director, the Secretary of State or the
Appointment or any Appointment Undertaking (other
than routine requests and enquiries or in connection
with any periodic or regular review);
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(c) all notices and other information relating to the shares in
Wessex Water charged under the Debenture;
(d) any Appointment Undertaking after the date of this Agreement
promptly after it is given; and
(e) promptly, such further information in the possession or
control of any member of the AEL Group regarding its financial
condition and operations as any Finance Party may reasonably
request and which the Company is able to provide without
breaching any legal obligation or regulation,
in sufficient copies for all of the Banks, if the Facility Agent so
requests.
18.4 NOTIFICATION OF DEFAULT
The Company shall notify the Facility Agent of any outstanding Event of
Default (and the steps, if any, being taken to remedy it) forthwith
upon an executive officer of the Company becoming aware of its
occurrence.
18.5 COMPLIANCE CERTIFICATES/ACCOUNTING MATTERS
(a) The Company shall supply to the Facility Agent:-
(i) together with the accounts of the AEL Group specified in
Clause 18.2(a) and (b) (Financial information); and
(ii) promptly at any other time, if the Facility Agent has
reasonable cause to believe a Default may have occurred and so
requests,
a certificate signed by two of its senior authorised officers on its
behalf certifying that no Event of Default is outstanding or, if an
Event of Default is outstanding, specifying the Event of Default and
the steps, if any, being taken to remedy it.
(b) If, at any time after the date of this Agreement, any material change
is made to the Applicable Accounting Principles, the Company shall
notify the Facility Agent of the change and, in the absence of any
agreement between the Company and the Facility Agent (acting on the
instructions of the Majority Banks) to the contrary, the Company shall
ensure that the Auditors provide a description of the change and the
adjustments which would be required to be made to the latest accounts
or financial statements of the AEL Group or the Wessex Group so that
those accounts or financial statements reflect the Applicable
Accounting Principles, and any reference to any financial statements or
accounts delivered under this Agreement shall be construed as a
reference to those accounts or financial statements as adjusted to
reflect the Applicable Accounting Principles.
18.6 AUTHORISATIONS
The Company shall promptly:-
(a) obtain, maintain and comply with the terms of; and
(b) supply certified copies to the Facility Agent of,
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any authorisation required under any law or regulation to enable it to
perform its obligations under, or for the validity or enforceability
(subject to the qualifications as to matters of law in the legal
opinions referred to in Schedule 2) of, any Finance Document.
18.7 ENVIRONMENTAL MATTERS
The Company shall procure that each member of the AEL Group will:
(a) obtain all requisite Environmental Licences and comply in all
material respects with:
(i) the terms and conditions of all Environmental
Licences applicable to it; and
(ii) all other applicable Environmental Laws,
in each case where failure to do so has a Material Adverse
Effect; and
(b) promptly upon receipt of the same, notify the Facility Agent
of any claim or notice served on it in respect of any alleged
breach of or corrective or remedial obligation or liability
under any Environmental Law which would, if substantiated,
have a Material Adverse Effect.
18.8 PARI PASSU RANKING
The Company shall procure that its payment obligations under the
Finance Documents do and will rank at least pari passu with all its
other present and future unsecured and unsubordinated obligations,
except for obligations which are mandatorily preferred by law applying
to companies generally, provided that the Wessex Loan shall be
subordinated to the Loans in accordance with the Subordination
Agreement.
18.9 NEGATIVE PLEDGE
(a) The Company shall not, and the Company shall procure that no other
member of the AEL Group will, create or permit to subsist any Security
Interest on any of its assets.
(b) Paragraph (a) does not apply to:
(i) any lien or right of set-off arising by operation of law (or
by an agreement having similar effect) in the ordinary course
of business; or
(ii) pledges of goods, the related documents of title and/or other
related documents arising or created in the ordinary course of
its business as security only for Financial Indebtedness to a
bank or financial institution directly relating to the goods
or documents on or over which that pledge exists; or
(iii) any Security Interest arising out of title retention or
conditional sale provisions in a supplier's standard
conditions of supply of goods acquired by any member of the
AEL Group in the ordinary course of its business;
(iv) any Security Interest existing on an asset at the time of the
acquisition of the asset by any member of the AEL Group after
the date of this Agreement, but only if:
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(A) the Security Interest was not created in
contemplation of the acquisition;
(B) the principal amount secured by the Security Interest
is not increased after the acquisition; and
(C) the Security Interest is discharged within 180 days
of the acquisition; or
(v) any Security Interest existing on the assets of a company at
the time it becomes a member of the AEL Group after the date
of this Agreement, but only if:
(A) the Security Interest was not created in
contemplation of the relevant company becoming a
member of the AEL Group;
(B) the principal amount secured by the Security Interest
is not increased after the relevant company becomes a
member of the AEL Group; and
(C) the Security Interest is discharged within 180 days
of the relevant company becoming a member of the AEL
Group; or
(vi) any Security Interest which:-
(A) constitutes a contractual right of any bank or
financial institution to apply any credit balance
maintained by any member of the AEL Group with that
bank or financial institution against any amount due
and payable to such bank or financial institution by
that or any other member of the AEL Group; and
(B) arises in connection with the relevant AEL Group
member's ordinary banking arrangements (including a
cash management scheme); or
(vii) any Security Interest created under the Debenture or with the
approval of the Majority Banks; or
(viii) any Security Interest created by a Project Finance Subsidiary,
or over the shares of a Project Finance Subsidiary, securing
Project Finance Indebtedness; or
(ix) any other Security Interest not falling within any of
paragraphs (i) to (viii) above so long as the aggregate
principal amount of outstanding indebtedness secured by all
the Security Interests permitted under this sub-paragraph (ix)
at any time, together with the aggregate principal amount of
all outstanding indebtedness permitted under Clause 18.10(b)
(Transactions similar to security) at that time, does not
exceed (pound)35,000,000 (or its equivalent in other
currencies).
18.10 TRANSACTIONS SIMILAR TO SECURITY
(a) Subject to paragraph (b) below, the Company shall not, and the Company
shall procure that no other member of the AEL Group will:-
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(i) other than in relation to a finance lease, sell, transfer or
otherwise dispose of any of its assets on terms whereby it is
or may be leased to or re-acquired or acquired by a member of
the AEL Group or any of its related entities; or
(ii) sell, transfer or otherwise dispose of any of its receivables
on recourse terms, except for the discounting of bills or
notes in the ordinary course of trading,
in circumstances where the transaction is entered into primarily as a
method of raising or of financing the acquisition of an asset.
(b) Any member of the AEL Group may enter into transactions otherwise
prohibited by sub-paragraph (a)(i) above so long as the aggregate
principal amount of outstanding indebtedness of the AEL Group in
respect of all those transactions at any time, together with the
aggregate principal amount of all outstanding secured indebtedness
permitted under Clause 18.9(b)(ix) (Negative pledge) at that time, does
not exceed (pound)35,000,000 (or its equivalent in other currencies).
18.11 DISPOSALS
(a) The Company shall not, and the Company shall procure that no other
member of the AEL Group will, 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 (all such transactions being
"DISPOSALS" for the purpose of this Clause 18.11).
(b) Paragraph (b) does not apply to the following disposals:-
(i) disposals made in the ordinary course of business of the
disposing entity or for the purposes of a finance lease; or
(ii) disposals of assets in exchange for other assets comparable or
superior as to type, value and quality; or
(iii) disposals of obsolete or surplus assets no longer required for
the purpose of the relevant person's business; or
(iv) the payment of cash as consideration for the acquisition of
any asset or services; or
(v) disposals by one member of the AEL Group to another member of
the AEL Group (other than a Project Finance Subsidiary), but
only if, in the case of a Subsidiary of the Company to whom
the assets are transferred, the Company owns directly or
indirectly at least a corresponding percentage of the
ownership interest in the transferee Subsidiary as in the
transferor Subsidiary; or
(vi) disposals of assets not falling within any other sub-paragraph
of this paragraph (b) to the extent that the aggregate value
of those assets disposed of since the date of this Agreement
is less than (pound)35,000,000 (or its equivalent in other
currencies); or
(vii) disposals of receivables, subsidiaries incorporated outside
the U.K. and partly owned subsidiaries and associated
undertakings on arm's length terms for full cash
consideration; or
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(viii) any other disposal approved by the Majority Banks; or
(ix) subject to Clause 18.15 (Distributions), payment of any lawful
dividend.
18.12 CHANGE OF BUSINESS
The Company shall procure that no substantial change is made to the
general nature or scope of the business of the Company or the AEL Group
from that carried on at the date of this Agreement or those which are
usual for water and wastewater companies in the United Kingdom as at
the date of this Agreement. An extension into ancillary businesses or
the making of Inter-Company Loans does not constitute a change in the
general nature or scope of the business of the Company or the AEL Group
for the purposes of this Clause 18.12.
18.13 HOLDING COMPANY AND SPVS
(a) The Company shall not carry on any business (other than the holding of
shares in, the making of loans to, and the provision of administrative
services to, members of the AEL Group and the making of Inter-Company
Loans) or acquire any assets other than cash, Cash Equivalents or
shares in (or loans to) members of the AEL Group or as otherwise
permitted by Clause 11.2 (Debt Service Reserve Account).
(b) The Company shall not make an Inter-Company Loan to an SPV if that SPV
carries on any business other than in connection with the relevant
Acquisitions or funding the general corporate purposes of any water or
wastewater related assets or businesses that are part of the
Acquisition or Acquisitions funded in whole or in part through that
SPV.
(c) The Company shall not, and shall procure that each member of the AEL
Group shall not enter into any transaction or dealing with an SPV
(other than the making of Inter-Company Loans) except for any
transaction or dealing which is on arm's length terms and is in the
ordinary course of business.
18.14 MERGERS AND ACQUISITIONS
(a) The Company shall not, and the Company shall procure that no other
member of the AEL Group will, enter into any amalgamation, demerger,
merger or reconstruction, except for any amalgamation, merger or
reconstruction between a member of the AEL Group (other than the
Company or the Appointment Holder) and any other member of the AEL
Group (other than the Company or the Appointment Holder).
(b) The Company shall not, and the Company shall procure that no other
member of the AEL Group will, acquire any assets or business or make
any investment if the assets, business or investment is substantial in
relation to the AEL Group, except for:
(i) acquisitions or investments made in the ordinary course of
business;
(ii) capital expenditure and any other expenditure, in either case
required to be carried out under the Appointment, any
Appointment Undertaking or any other applicable law or
regulation or reasonably required in the ordinary course of
business; and
(iii) other acquisitions or investments, the consideration for which
does not exceed (on a cumulative basis) (pound)10,000,000 (or
its equivalent in other currencies) but only if, in
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either case, no Default is then outstanding or will result
from the acquisition or investment,
provided that nothing in this Clause 18.14 shall prevent an Acquisition
or Permitted Transaction.
18.15 DISTRIBUTIONS
(a) The Company shall not declare, recommend, make or pay any dividend,
distribution or payment (including by way of redemption, repurchase,
defeasance, retirement, return or repayment) to any of its
shareholders.
(b) The Company shall procure that Wessex Water pays dividends in cash to
its shareholders in an amount equal to its maximum distributable
reserves when it has cash available to pay that dividend, provided that
the dividend to be declared for 1999 will be less than the maximum
distributable reserves by the amount of (pound)15,000,000 in respect of
a loan repayment which is to be made during that period and any
distributions made or to be made in respect of the Wessex Inter-Company
Receivable.
(c) The Company shall procure that the Appointment Holder pays to Wessex
Water the maximum dividends permissible by its then current dividend
policy.
18.16 LENDING AND BORROWING
(a) The Company will not incur any Borrowings other than:
(i) under the Facility;
(ii) the Loan Notes;
(iii) the Bristol Water Trust Loan; and
(iv) any Parent Loan, provided that such Parent Loan bears interest
at a rate no higher than the rate prevailing under this
Agreement.
(b) The Company shall not, and will procure that no member of the AEL Group
will, be the creditor in respect of any Borrowings, other than:
(i) any Borrowing entered into with the prior consent of the
Majority Banks; or
(ii) any Borrowing under paragraph (b) of the definition of
"Borrowings" where trade credit is extended by any member of
the AEL Group on normal commercial terms and in the ordinary
course of its business on substantially the same terms (or
terms more favourable to it) and in similar circumstances as
for trade credit extended prior to the date of this Agreement
by the Wessex Group; or
(iii) loans contemplated by Clause 11 (Debt Service Reserve Account)
or made by one member of the AEL Group to another member of
the AEL Group; or
(iv) Cash Equivalents; or
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(v) Inter-Company Loans; or
(vi) Borrowings not otherwise permitted under sub-paragraphs (i) to
(v) above in an aggregate amount for the AEL Group as a whole
at any time outstanding not exceeding (pound)10,000,000 (or
its equivalent in other currencies).
18.17 RATINGS
(a) The Company shall use reasonable endeavours to procure that it has, at
all times, an Issuer Credit Rating and the Appointment Holder has an
Issuer Credit Rating, in each case from Standard & Poor's and ▇▇▇▇▇'▇.
(b) The Company shall use reasonable endeavours to maintain an Issuer
Credit Rating of at least BBB and Baa2 from Standard & Poor's and
▇▇▇▇▇'▇ respectively.
18.18 INSURANCE
The Company shall procure that each member of the AEL Group will
maintain with underwriters or insurance companies of repute the
policies of insurance in relation to its business and assets which a
prudent person carrying on a similar business would be expected to
maintain (including policies to cover public and third party liability
and insurance against business interruption) and any such other
insurance as may be required pursuant to the terms of any Finance
Document.
18.19 CONSTITUTIONAL DOCUMENTS
The Company shall not, and the Company will procure that no other
member of the AEL Group will, without the prior consent of the Majority
Banks or except as required by law, amend or seek or agree to amend or
replace the memorandum or articles of association or other
constitutional documents or by-laws of any member of the AEL Group in
any way which would be likely materially and adversely to affect the
interests of the Banks under the Finance Documents.
18.20 MINIMUM DEBT SERVICE AMOUNT
The Company shall at all times after the date falling 6 months from the
date of this Agreement ensure that an amount equal to the Minimum Debt
Service Amount is maintained in the Debt Service Reserve Account. The
amount standing to the credit of the Debt Service Reserve Account (for
the purpose of establishing compliance with this Clause 18.20) shall be
the aggregate of:
(a) all cash and Cash Equivalents standing to the credit of the
Debt Service Reserve Account; and
(b) any cash or Cash Equivalents that have been withdrawn from the
Debt Service Reserve Account in accordance with Clause 11.2(b)
(Debt Service Reserve Account), if the Company has the benefit
of a guarantee or an on demand letter of credit (in each case
from a financial institution with an Issuer Credit Rating of
at least A from Standard & Poor's or A2 from ▇▇▇▇▇'▇).
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18.21 SHARE CAPITAL AND SUBSIDIARIES
(a) The Company shall ensure that Wessex Water shall not issue any further
shares or alter any rights attaching to its issued shares in existence
at the date of this Agreement unless those further shares are
contemporaneously charged, by way of fixed charge, to the Security
Agent on the terms of the Debenture.
(b) The Company shall not have any direct Subsidiaries other than Wessex
Water.
18.22 SECURITY PERFECTION
Subject to due registration under Section 395 of the Companies ▇▇▇
▇▇▇▇, the Company shall take all action required by the Security Agent
to perfect the Security Interests created by the Debenture over the
Security Assets (as defined in the Debenture) as soon as reasonably
practicable after the date of the Debenture except to the extent the
Security Agent and the Company agree otherwise.
18.23 COMPLIANCE WITH LAWS
Without prejudice to Clause 18.24 (Appointments and regulatory
matters), the Company shall, and the Company will procure that each
other member of the AEL Group will, comply in all material respects
with all applicable laws and regulations, whether domestic or foreign,
having jurisdiction over it or any of its assets, failure to comply
with which has a Material Adverse Effect.
18.24 APPOINTMENTS AND REGULATORY MATTERS
The Company shall:
(a) ensure that any Appointment Holder (or any other relevant
member of the AEL Group) complies in all material respects
with the terms of the Appointment and any Appointment
Undertaking where failure to comply has a Material Adverse
Effect;
(b) notify the Facility Agent promptly upon receipt by it or any
member of the AEL Group of any notice from the government, any
court or any regulatory authority or agency which is
reasonably likely to give rise to the revocation, termination,
material adverse amendment, suspension or withdrawal of the
Appointment unless, contemporaneously, that Appointment is to
be replaced, substituted or reissued on the same,
substantially the same or improved terms); and
(c) procure that each other member of the AEL Group will comply
with the requirements of all applicable rules, regulations,
orders and other requirements of the Secretary of State and
the Director under the Act or any other law applicable to the
conduct of the business of the supply of water and/or
wastewater services, where failure to comply has a Material
Adverse Effect.
18.25 APPOINTMENT UNDERTAKINGS
The Company will consult, where practicable, with the Banks with regard
to the terms of any Appointment Undertaking which it or any Appointment
Holder or any other member of the AEL Group may be required to give to
the Director or the Secretary of State and will not give
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and will procure that such person will not give any such Appointment
Undertaking without, where practicable, prior consultation with the
Banks.
18.26 BUSINESS CONSENTS
The Company will, and the Company will procure that each other member
of the Group will, obtain, promptly renew from time to time, and
maintain in full force and effect, and if so requested promptly furnish
certified copies to the Facility Agent of, all such material
authorisations as may be required under any applicable law or
regulation or under the Appointment or any Appointment Undertaking to
carry on its business as it is being conducted from time to time, where
failure to obtain, renew or maintain any such authorisation or
non-compliance with the terms of the same has a Material Adverse
Effect.
18.27 THE MILLENNIUM
The Company shall procure that:
(a) the occurrence of the year 2000 will not affect the capacity
of any computer systems software or other equipment owned or
used by any member of the AEL Group to perform any function
capable of being performed by that computer system, software
or other equipment prior to the year 2000, correctly,
efficiently and without interruption, to the extent that
failure so to perform would have a Material Adverse Effect;
and
(b) any reprogramming or other action necessary to comply with
this Clause 18.27 is completed no later than is necessary to
ensure compliance with paragraph (a) above.
18.28 FINANCIAL COVENANTS
(a) In this Clause 18.28:-
"ADJUSTED CAPITAL AND RESERVES"
means, in the case of the AEL Group or the Wessex Group as the case may
be, at any time the amount (including any share premium) for the time
being paid up or credited as paid up on the issued share capital of the
Company or Wessex Water, as appropriate, adjusted as follows:
(i) PLUS, in the case of the Company or, as the case may be,
Wessex Water, the outstanding amount of any indebtedness which
is subordinated to the Loans on substantially the same terms
as the Subordination Deed (other than indebtedness between
members of the AEL Group);
(ii) PLUS the amount standing to the credit (or, as the case may
be, MINUS the amount standing to the debit) of the capital and
revenue reserves of the AEL Group or the Wessex Group (as
appropriate);
(iii) PLUS any amount standing to the credit or MINUS any amount
standing to the debit of the consolidated profit and loss
account of the AEL Group or the Wessex Group (as appropriate);
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(iv) MINUS any distribution declared or made by the Company or any
of its Subsidiaries (other than to another member of the AEL
Group or the Wessex Group (as appropriate)) out of profits
included within reserves to the extent that those reserves
have not already been reduced on account of it;
(v) MINUS amounts attributable to the interests (if any) of
outside holders of issued share capital in any member of the
AEL Group (other than the Company) or in any member of the
Wessex Group (other than Wessex Water) (as appropriate),
and, for the purposes of the foregoing:
(A) no item shall be effectively deducted or added more than once,
all items shall be calculated on a consolidated basis and
(subject only as may be required in order to reflect the
express inclusion or exclusion of items as specified in this
definition) in accordance with the relevant Applicable
Accounting Principles; and
(B) where the calculation is being made as at the end of any
Accounting Period it shall be determined from the balance
sheet forming part of the relevant quarterly or annual
accounts for that Accounting Period.
"CONSOLIDATED EBITDA"
for any period means the operating profit of the AEL Group or, as
appropriate, the Wessex Group for such period:
(i) BEFORE DEDUCTING all depreciation and other amortisation;
(ii) BEFORE TAKING INTO ACCOUNT all Extraordinary Items (whether
positive or negative) but AFTER TAKING INTO ACCOUNT all
Exceptional Items (whether positive or negative);
(iii) BEFORE DEDUCTING tax;
(iv) BEFORE TAKING INTO ACCOUNT Consolidated Net Interest Payable
of the AEL Group or the Wessex Group (as appropriate) for such
period;
(v) (without double counting) AFTER DEDUCTING any profit, or
adding any loss, to book value arising in favour of the AEL
Group or the Wessex Group (as appropriate) on the sale, lease
or other disposal of any asset (other than on the sale of
trading stock) during such period and deducting any profit, or
adding any loss, arising on revaluation of any asset during
such period,
and, for the purposes of the foregoing, no item shall be effectively
deducted or credited more than once in this calculation, all items
shall be determined on a consolidated basis and (subject only as may be
required in order to reflect the express inclusion or exclusion of
items as specified in this definition) in accordance with the
Applicable Accounting Principles and as determined from the
consolidated accounts of the AEL Group or the Wessex Group (as
appropriate) for that annual Accounting Period or for the relevant
Accounting Periods falling within that period.
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"CONSOLIDATED NET INTEREST PAYABLE"
for any period and for either the AEL Group or the Wessex Group, as the
case may be, means Consolidated Total Interest Payable LESS any
interest or amounts in the nature of interest receivable during the
relevant period of the AEL Group or the Wessex Group (as appropriate)
determined on the same basis and manner as for Consolidated Total
Interest Payable (but excluding, in respect of the Company, any
interest earned or income receivable in respect of Inter-Company
Loans).
"CONSOLIDATED TOTAL BORROWINGS"
at any time means the aggregate at that time of the Borrowings of the
members of the AEL Group from sources external to the AEL Group or (as
applicable) Borrowings of the members of the Wessex Group from sources
external to the Wessex Group PLUS (to the extent not otherwise
included) the amount of any actual or contingent liability of any
member of the AEL Group or the Wessex Group (as appropriate):
(i) for Borrowings at that time of any person in which any member
of the AEL Group or the Wessex Group (as appropriate) has an
ownership interest; or
(ii) to provide funds by loan, subscription for share capital or
otherwise to any person in which any member of the AEL Group
or the Wessex Group (as appropriate) has an ownership
interest;
calculated on a consolidated basis and (subject only as may be required
in order to reflect the express inclusion or exclusion of items as
specified herein and/or in the definition of Borrowings in this Clause)
in accordance with the Applicable Accounting Principles and, where the
calculation is being made as at the end of any Accounting Period for
which a consolidated balance sheet of the AEL Group or the Wessex Group
(as appropriate) has been delivered to the Facility Agent, as shown in
that balance sheet.
"CONSOLIDATED TOTAL INTEREST PAYABLE"
for any period means the interest (and all amounts required by the
Applicable Accounting Principles to be accounted for as interest)
accrued on Borrowings of the AEL Group or on Borrowings of the Wessex
Group, as the case may be, (whether or not paid or capitalised during
or deferred for payment after such period) adjusted to take account of
any amount constituting interest receivable by any members of the AEL
Group or the Wessex Group (as appropriate) under interest rate and/or
currency hedging agreements or instruments under which all parties are
in compliance with their payment and other material obligations, all
determined on a consolidated basis and (subject only as may be required
in order to reflect the express inclusion or exclusion of items as
specified in this definition) in accordance with the Applicable
Accounting Principles and as shown in the consolidated accounts of the
AEL Group or the Wessex Group (as appropriate) for such annual
Accounting Period or for the Accounting Periods falling within such
period.
"CONSOLIDATED TOTAL NET BORROWINGS"
means at any time Consolidated Total Borrowings of the AEL Group less
the value of Cash Equivalents of the AEL Group at that time.
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"EXCEPTIONAL ITEMS"
has the meaning given to it in Financial Reporting Standard 3 issued by
the Accounting Standards Board (as in force at the date of this
Agreement), but shall exclude any items falling within the definition
of Extraordinary Items.
"EXTRAORDINARY ITEMS"
has the meaning given to it in Financial Reporting Standard 3 issued by
the Accounting Standards Board (as in force at the date of this
Agreement) but in addition shall include those items listed in
paragraph 20 thereof.
"NET ADVANCE INTEREST"
means, in respect of each period for which it is tested, the interest
payable on the Borrowings of the Company for that period LESS interest
or amounts in the nature of interest receivable during that period by
the Company (but excluding any interest earned or income receivable in
respect of Inter-Company Loans).
(b) (i) All the terms used in paragraph (a) above are to be calculated
in accordance with the Applicable Accounting Principles of the
AEL Group or the Wessex Group, as appropriate.
(ii) If there is a dispute as to any interpretation of or
computation for paragraph (a) above, the interpretation or
computation of the Auditors prevails.
(iii) For the avoidance of doubt, if a covenant under paragraph (c)
below is by reference to the AEL Group, the definitions used
in that covenant shall all refer to the AEL Group or if that
covenant is by reference to the Wessex Group, the definitions
used in that covenant shall refer to the Wessex Group.
(iv) For the purposes of calculating the ratio in sub-paragraph
(c)(iii) below, the effect of the Wessex Inter-Company
Receivable on the Adjusted Capital and Reserves of the Wessex
Group and the dishcarge of that Wessex Inter-Company
Receivable as a Permitted Payment in accordance with (and as
defined in) the Subordination Deed shall not be taken into
account.
(c) The Company shall procure that:-
(i) for the period and as of each date on which it is tested under
paragraph (f) below, the ratio of Consolidated EBITDA of the
Wessex Group to Consolidated Net Interest Payable of the
Wessex Group is no less than 2.5:1;
(ii) for the period and as of each date on which it is tested under
paragraph (f) below, the ratio of Consolidated EBITDA of the
AEL Group to Consolidated Net Interest Payable of the AEL
Group is no less than 2.25:1;
(iii) as of each date on which it is tested under paragraph (f)
below, the ratio of Consolidated Total Borrowings of the
Wessex Group shall not exceed 55 per cent. of Consolidated
Total Borrowings and Adjusted Capital and Reserves of the
Wessex Group;
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(iv) as of each date on which it is tested under paragraph (f)
below, the ratio of Consolidated Total Borrowings of the AEL
Group shall not exceed 50 per cent. of Consolidated Total
Borrowings and Adjusted Capital and Reserves of the AEL Group.
(d) The Company shall procure that, for the period and as of each date on
which it is to be tested under paragraph (f) below, the ratio of
dividends received in cash by the Company from Wessex Water to Net
Advance Interest shall be not less than 1.5:1.
(e) The Company shall procure that the Consolidated Total Net Borrowings of
the AEL Group shall not at any time exceed (pound)1,050,000,000.
(f) The Company shall ensure its Borrowings shall not at any time
exceed(pound)425,000,000.
(g) (i) The tests of the covenant set out in sub-paragraphs (c)(i) and
(ii) above shall be made on the following basis:
(A) the first test shall be made in respect of the first
quarterly Accounting Period, which commences on the
First Test Date;
(B) the second test shall be made on a cumulative basis
in respect of the two quarterly Accounting Periods
commencing on the First Test Date;
(C) the third test shall be made on a cumulative basis in
respect of the three quarterly Accounting Periods
commencing on the First Test Date; and
(D) each test of the covenant thereafter shall be made on
a quarterly basis and in respect of the four
consecutive quarterly Accounting Periods ending on
the expiry of the relevant quarterly Accounting
Period,
and for this purpose, the "First Test Date" is the first day
of the first financial quarter of the Company and Wessex Water
which commences after the date of this Agreement;
(ii) the tests of the covenants set out in sub-paragraphs (c)(iii)
and (iv) above, shall be made on a quarterly basis; and
(iii) the tests of the covenant set out in paragraph (d) above shall
be made on the Accounting Date as at the financial year end
and the financial half year end of the Company, by reference
to the previous four consecutive quarterly Accounting Periods
ending on that Accounting Date.
19. DEFAULT
19.1 EVENTS OF DEFAULT
Each of the events set out in Clauses 19.2 (Non-payment) to 19.19
(Material adverse change) (inclusive) is an Event of Default (whether
or not caused by any reason whatsoever outside the control of the
Company or any other person).
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19.2 NON-PAYMENT
The Company does not pay on the due date any amount payable by it under
the Finance Documents at the place at and in the currency in which it
is expressed to be payable and (if caused by technical or
administrative error) the non-payment continues unremedied for 3
Business Days from the receipt by it of notice of non-payment from the
relevant Agent.
19.3 BREACH OF OTHER OBLIGATIONS
(a) The Company fails to comply with any provision of Clauses 11 (Debt
Service Reserve Account), 18.8 (Pari passu ranking) to 18.12 (Change of
business) inclusive, 18.15 (Distributions) or Clause 18.28 (Financial
covenants); or
(b) the Company does not comply with any provision of the Finance Documents
(other than those referred to in Clause 19.2 (Non-payment) or paragraph
(a) above or Clause 18.17(b) (Ratings)) and, if that default is capable
of remedy, it is not remedied within 28 days of the earlier of a senior
officer of the Company becoming aware of the default and receipt by it
of a notice of default from the Facility Agent.
19.4 MISREPRESENTATION
A representation, warranty or statement made or repeated in or in
connection with any Finance Document or in any document delivered by or
on behalf of the Company under or in connection with any Finance
Document is incorrect in any material respect when made or deemed to be
made or repeated by reference to the facts and circumstances then
subsisting and, if the circumstances causing the misrepresentation are
capable of remedy within that period, that misrepresentation is not
remedied within 28 days of the earlier of the Company becoming aware of
the misrepresentation and receipt by it of notice from the Facility
Agent requiring remedy.
19.5 CROSS-DEFAULT
(a) Any Financial Indebtedness of a member of the AEL Group is not paid
when due or within any applicable grace period; or
(b) an event of default howsoever described occurs under any document
relating to Financial Indebtedness of a member of the AEL Group and any
creditor in respect of that Financial Indebtedness takes any action
whatsoever in connection with that event of default which might have
the effect of prejudicing any Finance Party or member of the AEL Group,
including (without limitation) any negotiation or compromise relating
to that Financial Indebtedness but excluding a waiver of that event of
default by that creditor on terms which are not prejudicial to any
Finance Party or member of the AEL Group; or
(c) any Financial Indebtedness of a member of the AEL Group becomes
prematurely due and payable or is placed on demand as a result of an
event of default (howsoever described) under the document relating to
that Financial Indebtedness; or
(d) any commitment for, or underwriting of, any Financial Indebtedness of a
member of the AEL Group is cancelled or suspended as a result of an
event of default (howsoever described) under the document relating to
that Financial Indebtedness,
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unless, in any such case or cases the aggregate amount of Financial
Indebtedness referred to in all or any of the above cases is less than
(pound)15,000,000 (or its equivalent in other currencies).
19.6 INSOLVENCY
(a) The Company or a Material Subsidiary is, or is deemed for the purposes
of any law (but for this purpose Section 123(1)(a) of the Insolvency
Act 1986 will take effect as if for "(pound)750" there was substituted
"(pound)5,000,000" and the relevant statutory demand has not been
withdrawn, discharged or stayed within 21 days) to be, unable to pay
its debts as they fall due or to be insolvent, or admits inability to
pay its debts as they fall due; or
(b) the Company or a Material Subsidiary suspends making payments on all or
any class of its debts or announces an intention to do so, or a
moratorium is declared in respect of all or any class of its
indebtedness; or
(c) the Company or a Material Subsidiary by reason of financial
difficulties, begins negotiations with one or more of its creditors
with a view to the readjustment or rescheduling of all or any class of
its indebtedness.
19.7 INSOLVENCY PROCEEDINGS
(a) Any step (including petition, proposal or convening a meeting) is taken
by the Company or a Material Subsidiary with a view to a composition,
assignment or arrangement with any creditors of the Company or a
Material Subsidiary; or
(b) a meeting of the Company or a Material Subsidiary is convened by the
Company or a Material Subsidiary for the purpose of considering any
resolution for (or to petition for) its winding-up or its
administration or any such resolution is passed; or
(c) any person presents a petition for the winding-up or for the
administration of the Company or a Material Subsidiary, and, in the
case of a petition for winding-up presented by a creditor, it is not
withdrawn, discharged or stayed within 21 days; or
(d) any order is made for the winding-up or administration of the Company
or a Material Subsidiary; or
(e) any other step (including petition, proposal or convening a meeting) is
taken with a view to the rehabilitation, administration, custodianship,
liquidation, winding-up or dissolution of the Company or a Material
Subsidiary or any other insolvency proceedings involving the Company or
a Material Subsidiary, and, in the case of any such step taken by a
creditor, it is not withdrawn, discharged or stayed within 21 days,
except for any which arises from a Permitted Transaction.
19.8 APPOINTMENT OF RECEIVERS AND MANAGERS
(a) Any liquidator, trustee in bankruptcy, judicial custodian, compulsory
manager, receiver, administrative receiver, administrator or the like
is appointed in respect of the Company or a Material Subsidiary or any
part of its assets, otherwise than in connection with a Permitted
Transaction; or
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(b) the directors of the Company or a Material Subsidiary request the
appointment of a liquidator, trustee in bankruptcy, judicial custodian,
compulsory manager, receiver, administrative receiver, administrator or
the like, otherwise than in connection with a Permitted Transaction; or
(c) any other step is taken to enforce any Security Interest over any part
of the assets of the Company or a Material Subsidiary and is not
withdrawn, discharged or stayed within 21 days.
19.9 CREDITORS' PROCESS
Any attachment, sequestration, distress or execution affects any assets
of the Company or a Material Subsidiary having an aggregate value of
(pound)15,000,000 (or its equivalent in other currencies) and is not
discharged within 14 days, unless:
(a) it is being contested in good faith with due diligence; and
(b) in the reasonable opinion of the Majority Banks, it does not
have a Material Adverse Effect.
19.10 ANALOGOUS PROCEEDINGS
There occurs, in relation to the Company or Material Subsidiary, any
event anywhere which, in the opinion of the Majority Banks, appears to
correspond with any of those mentioned in Clauses 19.6 (Insolvency) to
19.9 (Creditors' process) (inclusive).
19.11 CESSATION OF BUSINESS
The Company or a Material Subsidiary ceases, or threatens to cease, to
carry on all or a substantial part of its business, other than in
connection with a Permitted Transaction.
19.12 UNLAWFULNESS
It is or becomes unlawful for the Company or the Parent to perform any
of its material obligations under the Finance Documents to which it is
a party.
19.13 OWNERSHIP
(a) The Company ceases to be a wholly-owned Subsidiary of the Parent.
(b) The Appointment Holder or Wessex Water ceases to be a wholly-owned
(directly or indirectly) Subsidiary of the Company.
19.14 APPOINTMENT
(a) The Appointment is revoked or surrendered or ceases to be held by the
Appointment Holder or a wholly-owned Subsidiary of the Company, other
than in circumstances which permit the Company or one of its
wholly-owned Subsidiaries to carry on the water and wastewater business
of the Appointment Holder substantially as envisaged at the date of
this Agreement without the Appointment as a result of any change in the
Act; or
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(b) the Appointment or the rights and/or the obligations of the Appointment
Holder under the Appointment is materially modified in any manner
which, in the reasonable opinion of the Majority Banks, has a Material
Adverse Effect; or
(c) any person other than the Company or one of its wholly owned
Subsidiaries is authorised to be a water undertaker and/or wastewater
undertaker under the Act in the area covered by the Appointment at the
date of this Agreement in circumstances where this has a Material
Adverse Effect.
19.15 COMPLIANCE WITH THE ACT
(a) An order is made in respect of the Appointment Holder pursuant to
section 24 of the Act; or
(b) (i) any final enforcement order is made; or
(ii) any provisional enforcement order is confirmed with respect to
the Company or the Appointment Holder under the Act,
(other than where the Company demonstrates to the reasonable
satisfaction of the Majority Banks that the order is being contested in
good faith by the Appointment Holder pursuant to section 21 of the
Act), and, in each case, in circumstances which have a Material Adverse
Effect.
19.16 AMENDMENTS TO THE ACT
Any step is taken to reduce or qualify the obligations of the Secretary
of State or the Director insofar as they affect the creditors of the
Appointment Holder and/or the creditworthiness of the Appointment
Holder in circumstances which have a Material Adverse Effect.
19.17 EXPROPRIATION
The authority or ability of the Company or Wessex Water or the
Appointment Holder to conduct its business is wholly or substantially
curtailed by any expropriation or renationalisation by or on behalf of
any governmental authority.
19.18 SECURITY
Subject to the registration of the Debenture at Companies House under
Section 395 of the Companies ▇▇▇ ▇▇▇▇ and the execution of the Deed of
Release and subject to the qualifications as to matters of law in the
legal opinion referred to in Schedule 2, the Debenture or any
Subordination Agreement does not create legal, valid and binding
obligations on, or is repudiated by, a party to it (other than a
Finance Party) or for any reason it is alleged by a party to it (other
than a Finance Party) that it does not create such legal, valid and
binding obligations of that party.
19.19 MATERIAL ADVERSE CHANGE
Any event or series of events occurs which, in the reasonable opinion
of the Majority Banks, has a material adverse effect on the ability of
the Company to perform its payment obligations under the Finance
Documents.
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19.20 ACCELERATION
On and at any time after the occurrence of an Event of Default, whilst
it is continuing the Facility Agent may, and shall if so directed by
the Majority Banks, by notice to the Company:-
(a) cancel the Total Commitments; and/or
(b) demand that all or part of the Loans, together with accrued
interest, and all other amounts accrued under this Agreement
be immediately due and payable, whereupon they shall become
immediately due and payable; and/or
(c) demand that all or part of the Loans be payable on demand,
whereupon they shall immediately become payable on demand by
the Facility Agent (acting on the instructions of the Majority
Banks).
20. THE AGENTS AND THE ARRANGERS
20.1 APPOINTMENT AND DUTIES OF THE AGENTS
Each Finance Party (other than the Agents) irrevocably appoints each
Agent to act as its agent under and in connection with the Finance
Documents, and irrevocably authorises each Agent on its behalf to
perform the duties and to exercise the rights, powers and discretions
that are specifically delegated to it under or in connection with the
Finance Documents, together with any other incidental rights, powers
and discretions. The Agents shall have only those duties which are
expressly specified in the relevant Finance Documents. Those duties are
solely of a mechanical and administrative nature.
20.2 ROLE OF THE ARRANGERS
Except as otherwise provided in this Agreement, neither Arranger has
any obligations of any kind to any other Party under or in connection
with any Finance Document.
20.3 RELATIONSHIP
The relationship between each Agent and the other Finance Parties is
that of agent and principal only. Nothing in this Agreement constitutes
an Agent as trustee or fiduciary for any other Party or any other
person and an Agent need not hold in trust any moneys paid to it for a
Party or be liable to account for interest on those moneys.
20.4 MAJORITY BANKS' DIRECTIONS
Each Agent will be fully protected if it acts in accordance with the
instructions of the Majority Banks in connection with the exercise of
any right, power or discretion or any matter not expressly provided for
in the Finance Documents. Any such instructions given by the Majority
Banks will be binding on all the Banks. In the absence of such
instructions an Agent may act as it considers to be in the best
interests of all the Banks.
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20.5 DELEGATION
An Agent may act under the Finance Documents through its personnel and
agents.
20.6 RESPONSIBILITY FOR DOCUMENTATION
None of the Agents and the Arrangers is responsible to any other Party
for:-
(a) the execution, genuineness, validity, enforceability or
sufficiency of any Finance Document or any other document;
(b) the collectability of amounts payable under any Finance
Document; or
(c) the accuracy of any statements (whether written or oral) made
in or in connection with any Finance Document (including the
Information Memorandum).
20.7 DEFAULT
(a) Neither Agent is obliged to monitor or enquire as to whether or not a
Default has occurred. Neither Agent will be deemed to have knowledge of
the occurrence of a Default. However, if the Facility Agent receives
notice from a Party referring to this Agreement, describing the Default
and stating that the event is a Default, it shall promptly notify the
Banks and the Security Agent.
(b) An Agent may require from the Banks the receipt of security
satisfactory to it whether by way of payment in advance or otherwise,
against any liability or loss which it will or may incur in taking any
proceedings or action arising out of or in connection with any Finance
Document before it commences those proceedings or takes that action.
20.8 EXONERATION
(a) Without limiting paragraph (b) below, neither Agent will be liable to
any other Party for any action taken or not taken by it under or in
connection with any Finance Document, unless directly caused by its
gross negligence or wilful misconduct.
(b) No Party may take any proceedings against any officer, employee or
agent of an Agent in respect of any claim it might have against that
Agent or in respect of any act or omission of any kind (including
negligence or wilful misconduct) by that officer, employee or agent in
relation to any Finance Document.
20.9 RELIANCE
Each Agent may:-
(a) rely on any notice or document believed by it to be genuine
and correct and to have been signed by, or with the authority
of, the proper person;
(b) rely on any statement made by a director or employee of any
person regarding any matters which may reasonably be assumed
to be within his knowledge or within his power to verify; and
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(c) engage, pay for and rely on legal or other professional
advisers selected by it (including those in that Agent's
employment and those representing a Party other than that
Agent).
20.10 CREDIT APPROVAL AND APPRAISAL
Without affecting the responsibility of the Company for information
supplied by it or on its behalf in connection with any Finance
Document, each Bank confirms that it:-
(a) has made its own independent investigation and assessment of
the financial condition and affairs of the Company and its
related entities in connection with its participation in this
Agreement and has not relied exclusively on any information
provided to it by an Agent or an Arranger in connection with
any Finance Document; and
(b) will continue to make its own independent appraisal of the
creditworthiness of the Company and its related entities while
any amount is or may be outstanding under the Finance
Documents or any Commitment is in force.
20.11 INFORMATION
(a) Each Agent shall promptly forward to the person concerned the original
or a copy of any document which is delivered to that Agent by a Party
for that person.
(b) Each Agent shall promptly supply a Bank with a copy of each document
received by that Agent under Clause 4 (Conditions precedent) (other
than documents relating to fees) upon the request and at the expense of
that Bank.
(c) Except where this Agreement specifically provides otherwise, neither
Agent is obliged to review or check the accuracy or completeness of any
document it forwards to another Party.
(d) Except as provided above, neither Agent has any duty:-
(i) either initially or on a continuing basis to provide any Bank
with any credit or other information concerning the financial
condition or affairs of the Company or any related entity of
the Company whether coming into its possession or that of any
of its related entities before, on or after the date of this
Agreement; or
(ii) unless specifically requested to do so by a Bank in accordance
with this Agreement, to request any certificates or other
documents from the Company.
20.12 THE AGENTS AND THE ARRANGERS INDIVIDUALLY
(a) If it is also a Bank, each of the Agents and the Arrangers has the same
rights and powers under the Finance Documents as any other Bank and may
exercise those rights and powers as though it were not an Agent or an
Arranger.
(b) Each of the Agents and the Arrangers may:-
(i) carry on any business with the Company or its related
entities;
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(ii) act as agent or trustee for, or in relation to any financing
involving, the Company or its related entities; and
(iii) retain any profits or remuneration in connection with its
activities under this Agreement or in relation to any of the
foregoing.
(c) In acting as an Agent for the Banks, that Agent's agency division shall
be treated as a separate entity from any other of its divisions or
departments and, notwithstanding the foregoing provisions of this
Clause 20, if that Agent should act for any member of the AEL Group in
any capacity in relation to any other matter, any information given by
that member of the AEL Group to that Agent in such other capacity may
be treated as confidential by that Agent.
20.13 INDEMNITIES
(a) Without limiting the liability of the Company under the Finance
Documents, each Bank shall forthwith on demand indemnify each Agent for
its proportion of any liability or loss incurred by that Agent in any
way relating to or arising out of its acting as Agent, except to the
extent that the liability or loss arises directly from the Agent's
gross negligence or wilful misconduct.
(b) A Bank's proportion of the liability or loss set out in paragraph (a)
above is the proportion which its participation in the Loans (if any)
bear to all the Loans on the date of the demand. If, however, there are
no Loans outstanding on the date of demand, then the proportion will be
the proportion which its Commitment bears to the Total Commitments at
the date of demand or, if the Total Commitments have been cancelled,
bore to the Total Commitments immediately before being cancelled.
20.14 COMPLIANCE
(a) An Agent may refrain from doing anything which might, in its opinion,
constitute a breach of any law or regulation or be otherwise actionable
at the suit of any person, and may do anything which, in its opinion,
is necessary or desirable to comply with any law or regulation of any
jurisdiction.
(b) Without limiting paragraph (a) above, an Agent need not disclose any
information relating to the Company or any of its related entities if
the disclosure might, in the opinion of that Agent, constitute a breach
of any law or regulation or any duty of secrecy or confidentiality or
be otherwise actionable at the suit of any person.
20.15 RESIGNATION OF AGENTS
(a) Notwithstanding its irrevocable appointment, an Agent may resign by
giving notice to the Banks and the Company, in which case that Agent
may forthwith appoint one of its Affiliates as successor Agent or,
failing that, the Majority Banks may (after consultation with the
Company) appoint a successor Agent.
(b) If the appointment of a successor Agent is to be made by the Majority
Banks but they have not, within 30 days after notice of resignation,
appointed a successor Agent which accepts the appointment, the retiring
Agent may appoint a successor Agent.
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(c) The resignation of the retiring Agent and the appointment of any
successor Agent will both become effective only upon the successor
Agent notifying all the Parties that it accepts the appointment. On
giving the notification, the successor Agent will succeed to the
position of the retiring Agent and the term "FACILITY AGENT" or
"SECURITY AGENT" will mean the successor Agent (as appropriate).
(d) The retiring Agent shall, at its own cost, make available to the
successor Agent such documents and records and provide such assistance
as the successor Agent may reasonably request for the purposes of
performing its functions as the relevant Agent under this Agreement.
(e) Upon its resignation becoming effective, this Clause 20 (The Agents and
the Arrangers) shall continue to benefit the retiring Agent in respect
of any action taken or not taken by it under or in connection with the
Finance Documents while it was the relevant Agent, and, subject to
paragraph (d) above, it shall have no further obligation under any
Finance Document.
(f) If so instructed by the Majority Banks, an Agent shall resign in
accordance with paragraph (a) above. However, in this event that Agent
may not appoint a successor Agent.
20.16 BANKS
Each Agent may treat each Bank as a Bank, entitled to payments under
the Finance Documents and as acting through its Facility Office(s)
until it has received notice from the Bank to the contrary not less
than 5 Business Days prior to the relevant payment.
20.17 SECURITY AGENT AS TRUSTEE
(a) The Security Agent in its capacity as trustee or otherwise under the
Debenture:-
(i) is not liable for any failure, omission or defect in
perfecting or registering the security constituted or created
by any Finance Document;
(ii) may accept without enquiry such title as the Company may have
to any asset secured by the Debenture; and
(iii) is not under any obligation to hold any Finance Document or
any other document in connection with the Finance Documents or
the assets secured by any Finance Document (including title
deeds) in its own possession or to take any steps to protect
or preserve the same. The Security Agent may permit any member
of the Group to retain any Finance Document or other document
in its possession.
(b) Save as otherwise provided in the Finance Documents, all moneys which
under the trusts contained in the Finance Documents are received by an
Agent in its capacity as trustee or otherwise may be invested in the
name of or under the control of that Agent in any investment authorised
by English law for the investment by trustees of trust money or in any
other investments which may be selected by that Agent. Additionally,
the same may be placed on deposit in the name of or under the control
of that Agent at such bank or institution (including that Agent) and
upon such terms as that Agent may think fit.
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21. FEES
21.1 ARRANGEMENT AND UNDERWRITING FEE
The Company shall pay to each Arranger a fee in the amounts and on the
date agreed in the Fee Letters between the Company and the Arrangers.
21.2 COMMITMENT FEE
(a) The Company shall pay to the Agent for each Bank a commitment fee on
the undrawn, uncancelled amount of that Bank's Commitment during the
Availability Period at the rate of 0.375 per cent. per annum.
(b) Accrued commitment fee is payable quarterly in arrears. Accrued
commitment fee is also payable to the Facility Agent for the relevant
Bank(s) on the cancelled amount of its Commitment at the time the
cancellation takes effect.
21.3 AGENTS' FEES
(a) The Company shall pay to the Facility Agent for its own account a
facility agency fee in the amount and on the dates agreed in the Fee
Letter between the Company and the Facility Agent.
(b) The Company shall pay to the Security Agent for its own account a
security agency fee in the amount and on the dates agreed in the Fee
Letter between the Company and the Security Agent.
21.4 VAT
Any fee referred to in this Clause 21 (Fees) 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 on receipt of a valid value added tax or
other appropriate invoice or (if later) at the same time as it pays the
relevant fee.
22. EXPENSES
22.1 INITIAL AND SPECIAL COSTS
The Company shall promptly on demand pay to the Agents and the
Arrangers the amount of all reasonable costs and expenses (including
legal fees and any related irrecoverable value added tax) reasonably
incurred and properly documented by them in connection with:-
(a) the syndication, negotiation, preparation, printing and
execution of the Finance Documents and any other documents
referred to in the Finance Documents;
(b) the negotiation, preparation, printing and execution of any
other Finance Document (other than a Novation Certificate)
executed after the date of this Agreement; and
(c) any amendment, waiver, consent or suspension of rights (or any
proposal for any of the foregoing) requested by or on behalf
of the Company or, in the case of Clause 2.3 (Change of
currency), the Facility Agent and relating to a Finance
Document or a document referred to in any Finance Document.
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22.2 ENFORCEMENT COSTS
The Company shall forthwith on demand pay to each Finance Party the
amount of all costs and expenses (including, without limitation, legal
fees and any related irrecoverable value added tax) properly incurred
and properly documented by it in connection with the enforcement of, or
the preservation of any rights under, any Finance Document.
23. STAMP DUTIES
The Company shall pay and forthwith on demand indemnify each Finance
Party against any liability it incurs in respect of any stamp,
registration and similar tax which is or becomes payable in connection
with the entry into, performance or enforcement of any Finance Document
(other than a Novation Certificate or any other document executed under
Clause 27.2 (Transfers by Banks)).
24. INDEMNITIES
24.1 CURRENCY INDEMNITY
(a) If a Finance Party receives an amount in respect of the Company's
liability under the Finance Documents or if that liability is converted
into a claim, proof, judgement 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) the Company shall indemnify that Finance Party as an
independent obligation against any loss or liability arising
out of or as a result of the conversion;
(ii) if the amount received by that Finance Party, when converted
into the contractual currency at a market rate in the usual
course of its business, is less than the amount owed in the
contractual currency, the Company shall forthwith on demand
pay to that Finance Party an amount in the contractual
currency equal to the deficit; and
(iii) the Company shall pay to the Finance Party concerned on demand
any exchange costs and taxes payable in connection with any
such conversion.
(b) The Company waives any right it may have in any jurisdiction to pay any
amount under the Finance Documents in a currency other than that in
which it is expressed to be payable.
24.2 OTHER INDEMNITIES
(a) If:-
(i) any payment of principal or an overdue amount is received from
any source otherwise than on the last day of a relevant
Interest Period or Designated Interest Period (as defined in
Clause 9.3 (Default interest)) relative to the amount so
received; or
(ii) a Loan (or part of a Loan) is not prepaid in accordance with a
notice of prepayment or (other than by reason of negligence or
default by that Finance Party) a Loan is not made after the
Company has delivered a Request,
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the Company shall, upon demand by any Bank, pay to the Bank any amounts
required to compensate such Bank for any additional losses, costs or
expenses which it may reasonably incur as a result of sub-paragraph (i)
or (ii) above, including, without limitation, any loss (excluding loss
of anticipated profits), cost or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such
Bank to fund or maintain any amount payable under the Finance
Documents.
(b) The Company agrees, to the fullest extent permitted by law, to
indemnify and hold harmless each Finance Party and each of their
respective directors, officers, employees and agents from and against
any and all claims, damages, liabilities and expenses (including,
without limitation, reasonable fees and disbursements of counsel and
claims, damages, liabilities and expenses relating to environmental
matters) for which any of them may become liable or which may be
incurred by or asserted against such Finance Party or any such
director, officer, employee or agent (other than by an Agent or another
Bank) in each case in connection with or arising out of or by reason of
any investigation, litigation, or proceeding, arising out of, relating
to or in connection with any Finance Document or any transaction in
which any proceeds of all or any part of the Loans are applied
(excluding any such claim, damage, liability or expense attributable to
the negligence or wilful misconduct of such indemnified party).
25. EVIDENCE AND CALCULATIONS
25.1 ACCOUNTS
Accounts maintained by a Finance Party in connection with this
Agreement are prima facie evidence of the matters to which they relate.
25.2 CERTIFICATES AND DETERMINATIONS
Any certification or determination by a Finance Party of a rate or
amount under the Finance Documents is prima facie evidence of the
matters to which it relates. Any determination by a Finance Party of an
amount under a Finance Document shall contain a calculation of the
amount in reasonable detail.
25.3 CALCULATIONS
Interest (including any applicable Mandatory Costs) and the fee payable
under Clause 21.2 (Commitment fee) accrue from day to day and are
calculated on the basis of the actual number of days elapsed and a year
of 365 days or (for interest on Loans in euros or Dollars or if market
practice otherwise dictates) 360 days.
26. AMENDMENTS AND WAIVERS
26.1 PROCEDURE
(a) Subject to Clause 26.2 (Exceptions), any term of the Finance Documents
may be amended or waived with the agreement of the Company and the
Majority Banks. The Facility Agent may effect, on behalf of the Banks,
an amendment to which they or the Majority Banks have agreed.
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(b) The Facility Agent shall promptly notify the other Parties of any
amendment or waiver effected under paragraph (a) above, and any such
amendment or waiver shall be binding on all the Parties.
26.2 EXCEPTIONS
(a) An amendment or waiver which relates to:-
(i) the definition of "Majority Banks" in Clause 1.1
(Definitions);
(ii) an extension of the date for, or a decrease in an amount or a
change in the currency of, any payment (including the Margin
or any other amount of interest or any fee) under the Finance
Documents;
(iii) an increase in a Bank's Commitment;
(iv) a term of a Finance Document which expressly requires the
consent of each Bank; or
(v) Clause 30 (Pro rata sharing) or this Clause 26 (Amendments and
waivers),
may not be effected without the consent of each Bank.
(b) An amendment or waiver which relates to the rights and/or obligations
of an Agent may not be effected without the consent of that Agent.
26.3 WAIVERS AND REMEDIES CUMULATIVE
The rights of each Party under the Finance Documents:-
(a) may be exercised as often as necessary;
(b) are cumulative and not exclusive of its rights under the
general law; and
(c) may be waived only in writing and specifically.
Delay in exercising or non-exercise of any such right is not a waiver
of that right.
27. CHANGES TO THE PARTIES
27.1 TRANSFERS BY THE COMPANY
The Company may not assign, transfer, novate or dispose of any of, or
any interest in, its rights and/or obligations under this Agreement.
27.2 TRANSFERS BY BANKS
(a) A Bank (the "EXISTING BANK") may at any time assign, transfer or novate
any of its Commitment and/or rights and/or obligations in whole or in
part under this Agreement to a Qualifying Bank (the "NEW BANK"). The
prior consent of the Company is required for any such assignment,
transfer or novation, unless an Event of Default is outstanding or the
New Bank is another Bank or an Affiliate of a Bank. However, the prior
consent of the Company
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must not be unreasonably withheld or delayed and will be deemed to have
been given if, within 10 Business Days of receipt by the Company of an
application for consent, it has not been expressly refused.
(b) A transfer of obligations will be effective only if either:-
(i) the obligations are novated in accordance with Clause 27.3
(Procedure for novations); or
(ii) the New Bank confirms to the Facility Agent and the Company
that it undertakes to be bound by the terms of the Finance
Documents as a Bank in form and substance satisfactory to the
Agent. On the transfer becoming effective in this manner the
Existing Bank shall be relieved of its obligations under the
Finance Documents to the extent that they are transferred to
the New Bank.
(c) Nothing in this Agreement restricts the ability of a Bank to
sub-contract an obligation if that Bank remains liable under this
Agreement for that obligation.
(d) On each occasion an Existing Bank assigns, transfers or novates any of
its rights and/or obligations under this Agreement, the New Bank shall,
on the date the assignment, transfer and/or novation takes effect, pay
to the Facility Agent for its own account a fee of (pound)1,000.
(e) An Existing Bank is not responsible to a New Bank for:-
(i) the execution, genuineness, validity, enforceability or
sufficiency of any Finance Document or any other document;
(ii) the collectability of amounts payable under any Finance
Document; or
(iii) the accuracy of any statements (whether written or oral) made
in or in connection with any Finance Document.
(f) Each New Bank confirms to the Existing Bank and the other Finance
Parties that it:-
(i) has made its own independent investigation and assessment of
the financial condition and affairs of the Company and its
related entities in connection with its participation in this
Agreement and has not relied exclusively on any information
provided to it by the Existing Bank in connection with any
Finance Document; and
(ii) will continue to make its own independent appraisal of the
creditworthiness of the Company and its related entities while
any amount is or may be outstanding under this Agreement or
any Commitment is in force.
(g) Nothing in any Finance Document obliges an Existing Bank to:-
(i) accept a re-transfer from a New Bank of any of the rights
and/or obligations assigned, transferred or novated under this
Clause 27; or
(ii) support any losses incurred by the New Bank by reason of the
non-performance by the Company of its obligations under the
Finance Documents or otherwise.
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(h) Any reference in this Agreement to a Bank includes a New Bank, but
excludes a Bank if no amount is or may be owed to or by that Bank under
this Agreement and its Commitment has been cancelled or reduced to nil.
27.3 PROCEDURE FOR NOVATIONS
(a) A novation is effected if:-
(i) the Existing Bank and the New Bank deliver to the Facility
Agent a duly completed certificate, substantially in the form
of Schedule 5 (a "NOVATION CERTIFICATE"); and
(ii) the Facility Agent executes it.
(b) Each Party (other than the Existing Bank and the New Bank) irrevocably
authorises the Facility Agent to execute any duly completed Novation
Certificate on its behalf.
(c) To the extent that they are expressed to be the subject of the novation
in the Novation Certificate:-
(i) the Existing Bank and the other Parties (the "EXISTING
PARTIES") will be released from their obligations to each
other (the "DISCHARGED OBLIGATIONS");
(ii) the New Bank and the existing Parties will assume obligations
towards each other which differ from the discharged
obligations only insofar as they are owed to or assumed by the
New Bank instead of the Existing Bank;
(iii) the rights of the Existing Bank against the existing Parties
and vice versa (the "DISCHARGED RIGHTS") will be cancelled;
and
(iv) the New Bank and the existing Parties will acquire rights
against each other which differ from the discharged rights
only insofar as they are exercisable by or against the New
Bank instead of the Existing Bank,
all on the date of execution of the Novation Certificate by the
Facility Agent or, if later, the date specified in the Novation
Certificate.
27.4 REFERENCE BANKS
If a Reference Bank (or, if a Reference Bank is not a Bank, the Bank of
which it is an Affiliate) ceases to be one of the Banks, the Facility
Agent shall (in consultation with the Company) appoint another Bank or
an Affiliate of a Bank to replace that Reference Bank.
27.5 INCREASED COSTS ETC.
If:-
(a) a Bank assigns, transfers or novates any of its Commitment
and/or rights and/or obligations under the Finance Documents
or changes its Facility Office; and
(b) as a result of circumstances existing at the date the
assignment, transfer, novation or change occurs, the Company
would be obliged to make a payment to the New Bank
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or Bank acting through its new Facility Office under Clause 13
(Taxes) or Clause 15 (Increased costs),
then, notwithstanding the provisions of Clause 13 (Taxes) or Clause 15
(Increased costs), the relevant New Bank or Bank acting through its new
Facility Office is only entitled to receive payment under those Clauses
from the Company to the same extent as the relevant Existing Bank or
Bank acting through its previous Facility Office would have been if the
assignment, transfer, novation or change had not occurred.
27.6 REGISTER
The Facility Agent shall keep a register of all the Parties and shall
supply any other Party (at that Party's expense) with a copy of the
register on request.
28. DISCLOSURE OF INFORMATION
(a) A Finance Party may disclose to one of its Affiliates or any person (a
"PARTICIPANT") with whom it is proposing to enter, or has entered into,
any kind of transfer, participation or other agreement in relation to
this Agreement:-
(i) a copy of any Finance Document; and
(ii) any information which that Finance Party has acquired under or
in connection with any Finance Document,
so long as disclosure of confidential information under sub-paragraph
(ii) above may only be disclosed to a participant if the participant
has agreed in writing with the relevant Finance Party to keep the
information confidential on the same terms (with consequential changes)
as are set out in paragraph (b) below.
(b) Each Finance Party shall keep confidential and not, without the prior
consent of the Company, use any information (other than information
which is publicly available other than as a result of a breach of this
paragraph (b)) supplied by or on behalf of the Company under the
Finance Documents otherwise than in connection with the Finance
Documents. However, each Finance Party is entitled to disclose
information:
(i) in connection with any legal or arbitration proceedings
arising out of or in connection with a Finance Document; or
(ii) if required to do so by an order of a court of competent
jurisdiction whether under any procedure for discovering
documents or otherwise; or
(iii) pursuant to any law or regulation in accordance with which
that Bank is required or accustomed to act; or
(iv) to a governmental, banking, taxation or other regulatory
authority of any competent jurisdiction; or
(v) to its accountants or legal advisers or any other professional
advisers.
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29. SET-OFF
If an Event of Default is outstanding, a Finance Party may set off any
matured obligation owed by the Company under the Finance Documents (to
the extent beneficially owned by that Finance Party) against any
obligation (whether or not matured) owed by that Finance Party to the
Company, 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. Nothing in this Clause 29 will be
effective to create a charge.
30. PRO RATA SHARING
30.1 REDISTRIBUTION
If any amount owing by the Company under this Agreement to a Finance
Party (the "RECOVERING FINANCE PARTY") is discharged by payment,
set-off or any other manner other than through the relevant Agent in
accordance with Clause 12 (Payments) (a "RECOVERY"), then:-
(a) the recovering Finance Party shall, within 3 Business Days,
notify details of the recovery to the Facility Agent;
(b) the Facility Agent shall determine whether the recovery is in
excess of the amount which the recovering Finance Party would
have received had the recovery been received by the Facility
Agent and distributed in accordance with Clause 12 (Payments);
(c) subject to Clause 30.3 (Exceptions), the recovering Finance
Party shall, within 3 Business Days of demand by the Facility
Agent, pay to the Facility Agent an amount (the
"REDISTRIBUTION") equal to the excess;
(d) the Facility Agent shall treat the redistribution as if it
were a payment by the Company under Clause 12 (Payments) and
shall pay the redistribution to the Finance Parties (other
than the recovering Finance Party) in accordance with Clause
12.7 (Partial payments); and
(e) after payment of the full redistribution, the recovering
Finance Party will be subrogated to the portion of the claims
paid under paragraph (d) above, and the Company will owe the
recovering Finance Party a debt which is equal to the
redistribution, immediately payable and of the type originally
discharged.
30.2 REVERSAL OF REDISTRIBUTION
If under Clause 30.1 (Redistribution):-
(a) a recovering Finance Party must subsequently return a
recovery, or an amount measured by reference to a recovery, to
the Company; and
(b) the recovering Finance Party has paid a redistribution in
relation to that recovery,
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each Finance Party shall, within 3 Business Days of demand by the
recovering Finance Party through the Facility Agent, reimburse the
recovering Finance Party all or the appropriate portion of the
redistribution paid to that Finance Party. Thereupon, the subrogation
in Clause 30.1(e) (Redistribution) will operate in reverse to the
extent of the reimbursement.
30.3 EXCEPTIONS
(a) A recovering Finance Party need not pay a redistribution to the extent
that it would not, after the payment, have a valid claim against the
Company in the amount of the redistribution pursuant to Clause 30.1(e)
(Redistribution).
(b) A recovering Finance Party is not obliged to share with any other
Finance Party any amount which the recovering Finance Party has
received or recovered as a result of taking legal proceedings, if that
other Finance Party had an opportunity to participate in those legal
proceedings, but did not do so and did not take separate legal
proceedings.
31. SEVERABILITY
If a provision of any Finance Document is or becomes illegal, invalid
or unenforceable in any jurisdiction, that shall not affect:-
(a) the legality, validity or enforceability in that jurisdiction
of any other provision of the Finance Documents; or
(b) the legality, validity or enforceability in other
jurisdictions of that or any other provision of the Finance
Documents.
32. COUNTERPARTS
A Finance Document may be executed in any number of counterparts, and
this has the same effect as if the signatures on the counterparts were
on a single copy of the Finance Document.
33. NOTICES
33.1 GIVING OF NOTICES
All notices or other communications under or in connection with the
Finance Documents 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;
(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.
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33.2 ADDRESSES FOR NOTICES
(a) The address and facsimile number of each Party (other than the Agents)
for all notices under or in connection with the Finance Documents are:-
(i) that notified by that Party for this purpose to the Facility
Agent on or before it becomes a Party; or
(ii) any other notified by that Party for this purpose to the
Facility Agent by not less than five Business Days' notice.
(b) The address and facsimile number of the Facility Agent is:-
Westdeutsche Landesbank Girozentrale
▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
Facsimile No: 0171 374 8546
Attention: ▇▇▇▇ ▇▇▇▇▇▇/▇▇▇▇▇▇ ▇▇▇▇▇
The address and facsimile number of the Security Agent is:
CHASE MANHATTAN TRUSTEES LIMITED
Structured Finance
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇
Facsimile No: 0171 777 5460
Attention: Manager, CMFS
or such other as that Agent may notify to the other Parties by not less
than 5 Business Days' notice.
(c) The Facility Agent shall, promptly upon request from any Party, give to
that Party the address or facsimile number of any other Party
applicable at the time for the purposes of this Clause.
33.3 FACSIMILE NOTICES
The Company shall indemnify each Agent against any loss or liability
which that Agent incurs as a result of that Agent accepting and/or
acting upon any instructions under the Finance Documents received by
that Agent from the Company by facsimile and which may not have been
incurred if, at the time of receipt, that Agent had been given the
instructions other than by facsimile.
33.4 MANDATE LETTER
This Agreement supersedes paragraphs 6, 8, 9, 13 and 14 of the Mandate
Letter dated 24th March, 1999 (and the term sheet attached to it)
between the Company and the Arrangers, and these paragraphs shall be of
no further effect from the date of this Agreement.
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34. GOVERNING LAW
This Agreement is governed by English law.
This Agreement has been entered into on the date stated at the beginning of this
Agreement.
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SCHEDULE 1
BANKS AND COMMITMENTS
BANKS COMMITMENT
----- ----------
(POUND)
Westdeutsche Landesbank Girozentrale 30,000,000
The Chase Manhattan Bank 10,000,000
The Governor and Company of Bank of Scotland 22,500,000
Bayerische Landesbank Girozentrale 22,500,000
Dresdner Bank AG, London Branch 22,500,000
First Union National Bank, London Branch 22,500,000
Landesbank Hessen-Thuringen Girozentrale 22,500,000
ING Bank N.V., London Branch 22,500,000
KBC Bank N.V., London Branch 22,500,000
National Australia Bank Limited
(A.C.N. 004 044 937) 22,500,000
Paribas 22,500,000
The Royal Bank of Scotland plc 22,500,000
San Paolo IMI SpA. 22,500,000
The Norinchukin Bank, London Branch 15,000,000
----------
Bank of Montreal 13,750,000
DG Bank, Deutsche Genossenschaftsbank, London Branch 13,750,000
The Toronto-Dominion Bank 13,750,000
Credit Lyonnais 12,500,000
Argentaria, Caja Postal y Banco Hipotecario, S.A. 10,000,000
Banco ▇▇▇▇▇ & Acores S.A. 10,000,000
Banca Nazionale del Lavoro 10,000,000
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UniCredito Italiano SpA 10,000,000
Arab Bank plc 8,750,000
Artesia Banking Corporation N.V./S.A. 5,000,000
Banco Portugues do Atlantico 5,000,000
▇▇▇▇▇ ▇▇▇▇▇▇▇ 5,000,000
SBI European Bank 5,000,000
TOTAL COMMITMENTS (pound)425,000,000
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SCHEDULE 2
CONDITIONS PRECEDENT DOCUMENTS
1. A copy of the memorandum and articles of association and certificate of
incorporation of the Company and Wessex Water.
2. A copy of a resolution of the board of directors of the Company:-
(a) approving the terms of, and the transactions contemplated by,
this Agreement and resolving that it execute this Agreement,
the Debenture, the Subordination Deed and the Fee Letters and
all related documents;
(b) authorising a specified person or persons to execute this
Agreement and the Fee Letters and all related documents on its
behalf and the Debenture and the Subordination Deed as a deed;
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
this Agreement.
3. A copy of a resolution of the board of directors of Wessex Water:
(a) approving the terms of, and the transactions contemplated by,
the Subordination Deed and resolving that it execute the
Subordination Deed; and
(b) authorising specified persons to execute the Subordination
Deed as a deed.
4. A specimen of the signature of each person authorised by the
resolutions referred to in paragraphs 2 and 3 above.
5. Evidence that the Original Facility Agreement will be cancelled on or
before the first Drawdown Date, and that all amounts outstanding under
the Original Facility Agreement have been, or will on the first
Drawdown Date, be prepaid, together with the Deed of Release and an
escrow letter between ▇▇▇▇▇ & Overy and Linklaters & Alliance relating
to the Debenture and Deed of Release.
6. The Debenture, duly executed by the Company and the duly executed
Subordination Deed.
7. A certificate of an authorised signatory of the Company certifying that
each copy document specified in paragraphs 1, 2 and 3 of this Schedule
2 is correct, complete and in full force and effect as at a date no
earlier than the date of this Agreement.
8. A certificate of a director of the Company confirming that the
borrowing of the Total Commitments in full would not cause any
borrowing limit on it to be exceeded.
9. A legal opinion of ▇▇▇▇▇ & ▇▇▇▇▇, legal advisers to the Arrangers,
addressed to the Finance Parties, substantially in the form of Schedule
7.
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10. All share certificates and all other documents of title in relation to
the shares in Wessex Water together with share transfer forms executed
in blank or other documents required to enable the Security Agent or
its nominees to become registered as the owner of the same.
11. Duly executed notices of charge in the form of the relevant schedules
to the Debenture respectively in relation to the relevant agreements or
Security Accounts charged under the Debenture.
12. A copy, signed by two directors of Wessex Water, of the audited
consolidated accounts of Wessex Group as at 31st December, 1998.
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SCHEDULE 3
CALCULATION OF THE MANDATORY COSTS
(a) The Mandatory Costs for a Loan for its Interest Period(s) is the rate
calculated by the Facility Agent in accordance with the following
formula:
For a Loan in Sterling:
BY + S(Y-Z) + F x 0.01 % per annum = Mandatory Costs
----------------------
100-(B + S)
For a Loan in an Optional Currency:
F x 0.01% per annum = Mandatory Costs
----------
300
where on the day of application of the formula:
B is the percentage of the Facility Agent's eligible liabilities
(in excess of any stated minimum) which the Bank of England
requires the Facility Agent to hold on a non-interest-bearing
deposit account in accordance with its cash ratio
requirements;
Y is LIBOR for the relevant Interest Period of that Loan;
S is the percentage of the Facility Agent's eligible liabilities
which the Bank of England requires the Facility 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 Facility Agent to the Financial
Services Authority under the relevant paragraph of the Fees
Regulations expressed in pounds per (pound)1 million of the
fee base of the Facility Agent.
(b) For the purposes of this Schedule 3:
(i) "ELIGIBLE LIABILITIES" and "SPECIAL DEPOSITS" have the
meanings given to them at the time of application of the
formula by the Bank of England;
(ii) "FEE BASE" has the meaning given to it in the Fees
Regulations; and
(iii) "FEES REGULATIONS" means the Banking Supervision (Fees)
Regulations 1998 or any regulations governing the payment of
fees for banking supervision.
(c) In the application of the formula, B, Y, S and Z are included in the
formula as figures and not as percentages, e.g. if B = 0.5% and Y =
15%, BY is calculated as 0.5 x 15.
(d) (i) The formula is applied on the first day of the relevant
Interest Period.
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(ii) Each rate calculated in accordance with the formula is, if
necessary, rounded upward to the nearest four decimal places.
(e) If the Facility Agent determines that a change in circumstances has
rendered, or will render, the formula inappropriate, the Facility Agent
(after consultation with the Company) shall notify the Company of the
manner in which the Mandatory Costs will subsequently be calculated.
The manner of calculation so notified by the Facility Agent shall, in
the absence of manifest error, be binding on all the Parties.
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SCHEDULE 4
FORM OF REQUEST
To: WESTDEUTSCHE LANDESBANK GIROZENTRALE
From: AZURIX EUROPE LTD.
Date: [ ]
AZURIX EUROPE LTD. - (POUND)425,000,000 CREDIT AGREEMENT
DATED [ ], 1999
1. We wish to borrow a Loan as follows:-
(a) Drawdown Date: [ ]
(b) Purpose: [ ]
(c) Amount: [ ]
(d) Currency: [ ]
(e) Interest Period: [ ]
(f) Payment instructions: [ ].
2. We confirm that each condition specified in Clause 4.2 (Further
conditions precedent) is satisfied on the date of this Request.
By:
AZURIX EUROPE LTD.
Authorised Signatory
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SCHEDULE 5
NOVATION CERTIFICATE
To: WESTDEUTSCHE LANDESBANK GIROZENTRALE as Facility Agent
From: [THE EXISTING BANK] and [THE NEW BANK] Date: [ ]
AZURIX EUROPE LIMITED - (POUND)425,000,000 CREDIT AGREEMENT
DATED [ ] , 1999
We refer to Clause 27.3 (Procedure for novations).
1. We [ ] (the "EXISTING BANK") and [ ]
(the "NEW BANK") agree to the Existing Bank and the New Bank novating
all or part of the Existing Bank's Commitment and/or rights and
obligations referred to in the Schedule in accordance with Clause 27.3
(Procedure for novations).
2. The specified date for the purposes of Clause 27.3(c) is [date of
novation].
3. The Facility Office and address for notices of the New Bank for the
purposes of Clause 33.2 (Addresses for notices) are set out in the
Schedule.
4. This Novation Certificate is governed by English law.
THE SCHEDULE
COMMITMENT/RIGHTS AND OBLIGATIONS TO BE NOVATED
[Details of the Commitment/rights and obligations of the Existing Bank to be
novated].
[NEW BANK]
[Facility Office Address for notices]
[Existing Bank] [New Bank] WESTDEUTSCHE LANDESBANK
GIROZENTRALE
By: By: By:
Date: Date: Date:
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SCHEDULE 6
FORM OF DEBENTURE
DEBENTURE
DATED [ ], 1999
BETWEEN
AZURIX EUROPE LTD.
- and -
CHASE MANHATTAN TRUSTEES LIMITED
[▇▇▇▇▇ & ▇▇▇▇▇ LOGO]
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THIS DEED is dated [ ], 1999 between:
(1) AZURIX EUROPE LTD. (Registered number 3570749) (the "CHARGOR"); and
(2) CHASE MANHATTAN TRUSTEES LIMITED (the "SECURITY AGENT") as agent and
trustee for the Finance Parties (as defined in the Credit Agreement
defined below).
BACKGROUND:
(A) The Chargor enters into this Deed in connection with the Credit Agreement
(as defined below).
(B) It is intended that this document takes effect as a deed
notwithstanding the fact that a party may only execute this document
under hand.
IT IS AGREED as follows:
1. INTERPRETATION
1.1 DEFINITIONS
In this Deed:
"ACCOUNT BANK"
means a person with whom a Security Account is maintained under Clause
6 (Security Accounts).
"CREDIT AGREEMENT"
means the (pound)425,000,000 credit agreement dated [ ], 1999 between
(among others) the parties to this Deed.
"CREDIT ENHANCEMENT"
has the meaning given to it in Clause 2(a)(iv) (Fixed Security).
"RECEIVER"
means a receiver and manager or (if the Security Agent so specifies in
the relevant appointment) a receiver, in either case, appointed under
this Deed.
"RELATED RIGHTS"
means:
(a) any dividend or interest paid or payable in relation to any
Shares;
(b) any stocks, shares, securities, rights, moneys or property
accruing or offered at any time in relation to any Shares by
way of redemption, substitution, exchange, bonus or
preference, under option rights or otherwise; and
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(c) all dividends, interest or other income in respect of any such
asset as is referred to in paragraph (b) above.
"SECURED LIABILITIES"
means all present and future obligations and liabilities (whether
actual or contingent and whether owed jointly or severally or in any
other capacity whatsoever) of the Company to any Finance Party under
the Finance Documents except for any obligation which, if it were so
included, would result in this Deed contravening Section 151 of the
Companies ▇▇▇ ▇▇▇▇. The term "Finance Document" includes all amendments
and supplements.
"SECURITY ACCOUNT"
means the Debt Service Reserve or a Cash Collateral Account.
"SECURITY ASSETS"
means all assets of the Chargor the subject of any security created by
this Deed.
"SECURITY PERIOD"
means the period beginning on the date of this Deed and ending on the
date on which the Security Agent is satisfied (acting reasonably) that
all the Secured Liabilities have been unconditionally and irrevocably
paid and discharged in full.
"SHARES"
means any shares in Wessex Water from time to time held by the Chargor
or a nominee on its behalf.
1.2 CONSTRUCTION
(a) Capitalised terms defined in the Credit Agreement have, unless
expressly defined in this Deed, the same meaning in this Deed.
(b) The provisions of Clause 1.2 of the Credit Agreement apply to this Deed
as though they were set out in full in this Deed except that references
to the Credit Agreement are to be construed as references to this Deed.
(c) If the Security Agent (acting reasonably) considers that an amount paid
by the Company to a Finance Party under a Finance Document is capable
of being avoided or otherwise set aside on the liquidation or
administration of the Company or otherwise, then that amount shall not
be considered to have been irrevocably paid for the purposes of this
Deed.
(d) A reference in this Deed to any assets includes, unless the context
otherwise requires, present and future assets.
2. FIXED SECURITY
(a) The Chargor, as security for the payment of all the Secured
Liabilities, charges in favour of the Security Agent:-
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by way of first fixed charge:-
(i) its interest in all the Shares and their Related
Rights;
(ii) to the fullest extent permitted by law, all moneys
standing to the credit of the Security Accounts;
(iii) all of the Chargor's book and other debts (including
all Inter-Company Loans), the proceeds of the same
and all other moneys due and owing to the Chargor;
and
(iv) to the extent it is not assigned as expressed under
paragraph (b) below the benefit of any guarantee,
letter of credit or other credit enhancement granted
to the Company in respect of an Inter-Company Loan in
accordance with Clause 11.2 (Debt Service Reserve
Account) of the Credit Agreement (in each case,
"CREDIT ENHANCEMENT").
(b) The Chargor, as security for the payment of all the Secured
Liabilities, assigns to the Security Agent by way of security all of
the Inter-Company Loans and the benefit of any Credit Enhancement or
the benefit of any guarantee from the Parent of the Inter-Company
Loans.
(c) The mortgages and charges and assignments created by this Clause 2 are
made with full title guarantee.
3. FLOATING CHARGE
3.1 CREATION OF FLOATING CHARGE
(a) The Chargor, as security for the payment of all of the Secured
Liabilities, charges in favour of the Security Agent by way of a first
floating charge all its assets not otherwise effectively mortgaged,
charged or assigned by way of fixed mortgage or charge or assignment by
Clause 2 (Fixed security).
(b) The charges created by this Clause 3.1 are made with full title
guarantee.
3.2 CONVERSION
The Security Agent may by notice to the Chargor convert the floating
charge created by this Deed into a fixed charge as regards all or any
of the Chargor's assets specified in the notice if:
(a) an Event of Default is outstanding; or
(b) the Security Agent (acting reasonably) considers those assets
to be in danger of being seized or sold under any form of
distress, attachment, execution or other legal process or to
be otherwise in jeopardy.
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4. REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS AND WARRANTIES
The Chargor makes the representations and warranties set out in this
Clause 4 to each Finance Party.
4.2 SECURITY
Subject to the registration of this Deed under Section 395 of the
Companies ▇▇▇ ▇▇▇▇ and to the qualifications as to the matters of law
in the legal opinions referred to in Schedule 2 to the Credit
Agreement, this Deed creates those Security Interests it purports to
create and is not liable to be avoided or otherwise set aside on the
liquidation or administration of the Chargor or otherwise.
4.3 SHARES
The Shares are fully paid and the Chargor is the sole beneficial owner
of them, free from any Security Interest (other than created under this
Deed) or option.
4.4 TIMES FOR MAKING REPRESENTATIONS AND WARRANTIES
The representations and warranties set out in this Clause 4 are made on
the date of this Deed and are deemed to be repeated by the Chargor on
each date during the Security Period with reference to the facts and
circumstances then existing.
5. UNDERTAKINGS
5.1 DURATION
The undertakings in this Clause 5 remain in force throughout the
Security Period.
5.2 RESTRICTIONS ON DEALING
The Chargor shall not (except as permitted under the Credit
Agreement):-
(a) create or permit to subsist any Security Interest on any
Security Asset expressed to be subject to fixed security
pursuant to Clause 2 (Fixed Security) other than any Security
Interest created by this Deed; or
(b) sell, transfer, grant, or lease or otherwise dispose of any
Security Asset expressed to be subject to fixed security
pursuant to Clause 2, except for the disposal in the ordinary
course of trade of any such Security Asset subject to the
floating charge created under Clause 3.1 (Creation of floating
charge).
5.3 NOTICE TO BANK OPERATING AN ACCOUNT
The Chargor will give notice to the Account Bank (other than the
Security Agent) operating an account of the Chargor on the date of this
Deed or (if later) the date the account is opened, substantially in the
form of Schedule 1, and shall use its reasonable endeavours to procure
that the relevant bank acknowledges the notice substantially in the
form of Schedule 2.
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5.4 NOTICE TO PARENT AND SPV
The Chargor will give notice to the Parent and each SPV on the date of
each Inter-Company Loan, substantially in the form of Schedule 3, and
shall procure that the Parent or relevant SPV acknowledges that notice
substantially in the form of Schedule 4.
5.5 NOTICE TO PROVIDERS OF CREDIT ENHANCEMENT
The Chargor will give notice to any provider of Credit Enhancement on
the date of that Credit Enhancement substantially in the form of
Schedule 3 and shall use reasonable endeavours to procure that the
provider of that Credit Enhancement acknowledges that notice
substantially in the form of Schedule 4.
5.6 DEPOSIT OF SHARES
The Chargor shall:-
(a) deposit with the Security Agent, or as the Security Agent may
direct, all certificates, bearer instruments, and other
documents of title or evidence of ownership in relation to the
Shares and their Related Rights; and
(b) execute and deliver to the Security Agent all share transfers
in blank and other documents which may be requested by the
Security Agent in order to enable the Security Agent or its
nominees to be registered as the owner or otherwise obtain a
legal title to the Shares and their Related Rights.
6. SECURITY ACCOUNTS
6.1 ACCOUNTS
All Security Accounts must be maintained at a branch of the Account
Bank approved by the Security Agent. The initial Account Bank is the
Security Agent or one of its Affiliates.
6.2 CHANGE OF ACCOUNT BANK
In the event of a change of Account Bank in accordance with the Credit
Agreement, the amount (if any) standing to the credit of the Security
Account maintained with the old Account Bank shall be transferred to
the corresponding Security Account maintained with the new Account Bank
forthwith upon the appointment taking effect. The Chargor shall take
any action which the Security Agent may reasonably require to
facilitate such change of Account Bank and any transfer of credit
balances (including the execution of bank mandate forms).
6.3 INTEREST
Amounts standing to the credit of each Security Account shall bear
interest at a fair market rate agreed between the Company and the
Account Bank.
6.4 WITHDRAWALS
(a) The Chargor may only make withdrawals from a Security Account if that
withdrawal is expressly permitted by the Credit Agreement, unless the
security constituted by this Deed has become enforceable in which event
no withdrawals shall be made.
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(b) The Security Agent (or a Receiver) may when an Event of Default is
continuing (subject to the payment of any claims having priority to
this security) withdraw amounts standing to the credit of a Security
Account to meet an amount due and payable under the Finance Documents
when it is due and payable.
7. WHEN SECURITY BECOMES ENFORCEABLE
The security constituted by this Deed shall become immediately
enforceable upon the occurrence of an Event of Default and the power of
sale shall be immediately exerciseable upon and at any time after the
occurrence of any Event of Default. After the security constituted by
this Deed has become enforceable, the Security Agent may in its
absolute discretion enforce all or any part of the security in any
manner it sees fit or as the Majority Banks direct.
8. ENFORCEMENT OF SECURITY
8.1 GENERAL
For the purposes of all powers implied by statute, the Secured
Liabilities are deemed to have become due and payable on the date of
this Deed and section 103 and section 93 of the Law of Property ▇▇▇
▇▇▇▇ shall not apply to the security constituted by this Deed.
8.2 SHARES
After the security constituted by this Deed has become enforceable, the
Security Agent may on giving notice to the Chargor, exercise (in the
name of the Chargor and without any further consent or authority on the
part of the Chargor) any voting rights and any powers or rights which
may be exercised by the person or persons in whose name any Share and
its Related Rights are registered or who is the holder of any of them
or otherwise (including all the powers given to trustees by Section
10(3) and (4) of the Trustee Act, 1925 as amended by Section 9 of the
Trustee Investment Act, 1961 in respect of securities or property
subject to a trust). Until that time, the voting rights, powers and
other rights in respect of the Shares shall (if exercisable by the
Security Agent) be exercised in any manner which the Chargor may direct
in writing.
8.3 CONTINGENCIES
If the Security Agent enforces the security constituted by this Deed at
a time when no amounts are due under the Finance Documents but at a
time when amounts may or will become so due, the Security Agent (or the
Receiver) may pay the proceeds of any recoveries effected by it into a
Security Account.
8.4 NO LIABILITY AS MORTGAGEE IN POSSESSION
Neither the Security Agent nor any Receiver will be liable, by reason
of entering into possession of a Security Asset, to account as
mortgagee in possession or for any loss on
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realisation or for any default or omission for which a mortgagee in
possession might be liable.
8.5 SECURITY AGENT OF THE CHARGOR
Each Receiver is deemed to be the agent of the Chargor for all purposes
and accordingly is deemed to be in the same position as a Receiver duly
appointed by a mortgagee under the Law of Property ▇▇▇ ▇▇▇▇. The
Chargor alone shall be responsible for his contracts, engagements,
acts, omissions, defaults and losses and for liabilities incurred by
him and no Finance Party shall incur any liability (either to the
Chargor or to any other person) by reason of the Security Agent making
his appointment as a Receiver or for any other reason.
8.6 PROTECTION OF THIRD PARTIES
No person (including a purchaser) dealing with the Security Agent or a
Receiver or its or his agents will be concerned to enquire:-
(a) whether the Secured Liabilities have become payable; or
(b) whether any power which the Security Agent or the Receiver is
purporting to exercise has become exercisable; or
(c) whether any money remains due under the Finance Documents; or
(d) how any money paid to the Security Agent or to the Receiver is
to be applied.
8.7 REDEMPTION OF PRIOR MORTGAGES
At any time after the security constituted by this Deed has become
enforceable, the Security Agent may:-
(a) redeem any prior Security Interest against any Security Asset;
and/or
(b) procure the transfer of that Security Interest to itself;
and/or
(c) settle and pass the accounts of the prior mortgagee, chargee
or encumbrancer; any accounts so settled and passed shall be
conclusive and binding on the Chargor.
All principal moneys, interest, costs, charges and expenses of and
incidental to any such redemption and/or transfer properly incurred and
documented shall be paid by the Chargor to the Security Agent on
demand.
9. RECEIVER
9.1 APPOINTMENT OF RECEIVER
At any time after the security constituted by this Deed becomes
enforceable or, if the Chargor so requests the Security Agent in
writing, at any time, the Security Agent may without further notice
appoint under seal or in writing under its hand any one or more persons
to be a Receiver of all or any part of the Security Assets in like
manner in every respect as if the
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Security Agent had become entitled under the Law of Property ▇▇▇ ▇▇▇▇
to exercise the power of sale conferred under the Law of Property ▇▇▇
▇▇▇▇.
9.2 REMOVAL
The Security Agent may by writing under its hand (subject to any
requirement for an order of the court in the case of an administrative
receiver) remove any Receiver appointed by it and may, whenever it
deems it expedient, appoint a new Receiver in the place of any Receiver
whose appointment may for any reason have terminated.
9.3 REMUNERATION
The Security Agent may fix the remuneration of any Receiver appointed
by it.
9.4 RELATIONSHIP WITH SECURITY AGENT
To the fullest extent permitted by law, any right, power or discretion
conferred by this Deed (either expressly or impliedly) upon a Receiver
of the Security Assets may after the security created by this Deed
becomes enforceable be exercised by the Security Agent in relation to
any Security Asset without first appointing a Receiver or
notwithstanding the appointment of a Receiver.
10. POWERS OF RECEIVER
10.1 GENERAL
(a) Each Receiver has, and is entitled to exercise, all of the rights,
powers and discretions set out below in this Clause 10 in addition to
those conferred by the Law of Property ▇▇▇ ▇▇▇▇ on any receiver
appointed under the Law of Property ▇▇▇ ▇▇▇▇.
(b) If there is more than one Receiver holding office at the same time,
each Receiver may (unless the document appointing him states otherwise)
exercise all of the powers conferred on a Receiver under this Deed
individually and to the exclusion of any other Receivers.
(c) A Receiver who is an administrative receiver of the Chargor has all the
rights, powers and discretions of an administrative receiver under the
Insolvency ▇▇▇ ▇▇▇▇.
10.2 POSSESSION
A Receiver may take immediate possession of, get in and collect any
Security Assets.
10.3 CARRY ON BUSINESS
A Receiver may carry on the business of the Chargor as he thinks fit.
10.4 PROTECTION OF ASSETS
A Receiver may do all acts as he may think fit which the Chargor might
do in the ordinary conduct of its business as well for the protection
as for the improvement of the Security Assets.
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10.5 EMPLOYEES
A Receiver may appoint and discharge managers, officers, agents,
accountants, servants, workmen and others for the purposes of this Deed
upon such terms as to remuneration or otherwise as he may think proper
and discharge any such persons appointed by the Chargor.
10.6 BORROW MONEY
A Receiver may raise and borrow money either unsecured or on the
security of any Security Asset either in priority to the security
constituted by this Deed or otherwise and generally on any terms and
for whatever purpose which he thinks fit. No person lending that money
is concerned to enquire as to the propriety or purpose of the exercise
of that power or to check the application of any money so raised or
borrowed.
10.7 SALE OF ASSETS
A Receiver may sell, exchange, convert into money and realise any
Security Asset by public auction or private contract and generally in
any manner and on any terms which he thinks proper. The consideration
for any such transaction may consist of cash, debentures or other
obligations, shares, stock or other valuable consideration and any such
consideration may be payable in a lump sum or by instalments spread
over such period as he thinks fit.
10.8 COMPROMISE
A Receiver may settle, adjust, refer to arbitration, compromise and
arrange any claims, accounts, disputes, questions and demands with or
by any person who is or claims to be a creditor of the Chargor or
relating in any way to any Security Asset.
10.9 LEGAL ACTIONS
A Receiver may bring, prosecute, enforce, defend and abandon all
actions, suits and proceedings in relation to any Security Asset which
may seem to him to be expedient.
10.10 RECEIPTS
A Receiver may give valid receipts for all moneys and execute all
assurances and things which may be proper or desirable for realising
any Security Asset.
10.11 SUBSIDIARIES
A Receiver may form a Subsidiary of the Chargor and transfer to that
Subsidiary any Security Asset.
10.12 DELEGATION
A Receiver may delegate his powers in accordance with Clause 14
(Delegation).
10.13 OTHER POWERS
A Receiver may:-
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(a) do all other acts and things which he may consider desirable
or necessary for realising any Security Asset or incidental or
conducive to any of the rights, powers or discretions
conferred on a Receiver under or by virtue of this Deed; and
(b) exercise in relation to any Security Asset all the powers,
authorities and things which he would be capable of exercising
if he were the absolute beneficial owner of the same,
and may use the name of the Chargor for any of the above purposes.
11. SET OFF
The Security Agent may, at any time whilst an Event of Default is
continuing after this Deed has become enforceable, without notice to or
making demand on the Chargor and whether or not all or any of the
Secured Liabilities have matured:
(a) set off any of the Secured Liabilities against any liability
(whether or not matured) owed by the Security Agent to the
Chargor in respect of any moneys in the Security Accounts
regardless of the place of payment, booking branch or currency
of either obligation; and/or
(b) debit any account of the Chargor (whether sole or joint) with
the Security Agent at any of its offices anywhere (including
an account opened specially for that purpose) with all or any
part of the Secured Liabilities; and/or
(c) apply any moneys in a Security Account in or towards the
payment or discharge of the Secured Liabilities.
12. APPLICATION OF PROCEEDS
Any moneys received by the Security Agent or any Receiver after this
Deed has become enforceable shall be applied in the following order of
priority (but without prejudice to the right of any Finance Party to
recover any shortfall from the Chargor):
(a) in satisfaction of or provision for all costs and expenses
incurred by the Security Agent or any Receiver and of all
remuneration due to the Receiver under this Deed;
(b) in or towards payment of the Secured Liabilities or such part
of them as is then due and payable; and
(c) in payment of the surplus (if any) to the Chargor or other
person entitled to it.
13. EXPENSES AND INDEMNITY
The Chargor shall forthwith on demand pay all costs and expenses
(including legal fees) properly and (before any enforcement of the
security constituted by this Deed) reasonably incurred and, in each
case, properly documented in connection with this Deed by any Finance
Party, Receiver, attorney, manager, agent or other person appointed by
the Security Agent under this Deed, and keep each of them indemnified
against any failure or delay in paying the same.
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14. DELEGATION
The Security Agent and any Receiver may delegate by power of attorney
or in any other manner to any person any right, power or discretion
exercisable by them under this Deed. Any such delegation may be made
upon the terms (including power to sub-delegate) and subject to any
regulations which the Security Agent or that Receiver (as the case may
be) may think fit. Neither the Security Agent nor any Receiver will be
in any way liable or responsible to the Chargor for any loss or
liability arising from any act, default, omission or misconduct on the
part of any such delegate or sub-delegate.
15. FURTHER ASSURANCES
The Chargor shall, at its own expense, take whatever action the
Security Agent or a Receiver may reasonably require for:-
(a) perfecting or protecting the security intended to be created
by this Deed over any Security Asset;
(b) facilitating the realisation of any Security Asset, or the
exercise of any right, power or discretion exercisable, by the
Security Agent or any Receiver or any of its or their
delegates or sub-delegates in respect of any Security Asset,
including the execution of any transfer, conveyance, assignment or
assurance of any property whether to the Security Agent or to its
nominees, and the giving of any notice, order or direction and the
making of any registration, which, in any such case, the Security Agent
may think expedient but excluding, unless a notice under Clause 19.20
(Acceleration) of the Credit Agreement has been given, any action to
claim, demand or collect any book or other debts of the Chargor.
16. POWER OF ATTORNEY
The Chargor, by way of security, irrevocably and severally appoints the
Security Agent, each Receiver and any of their delegates or
sub-delegates to be its attorney to take any action which the Chargor
is obliged to take under this Deed, including under Clause 15 (Further
assurances). The Chargor ratifies and confirms whatever any attorney
does or purports to do pursuant to its appointment under this Clause.
17. MISCELLANEOUS
17.1 COVENANT TO PAY
The Chargor shall pay or discharge the Secured Liabilities in the
manner provided for in the Finance Documents.
17.2 CONTINUING SECURITY
The security constituted by this Deed is continuing and will extend to
the ultimate balance of all the Secured Liabilities, regardless of any
intermediate payment or discharge in whole or in part.
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17.3 ADDITIONAL SECURITY
The security constituted by this Deed is in addition to and is not in
any way prejudiced by any other security now or subsequently held by
any Finance Party for any Secured Liability.
17.4 TACKING
Each Bank shall perform its obligations under the Credit Agreement
(including any obligation to make available further advances).
17.5 NEW ACCOUNTS
If a Finance Party receives, or is deemed to be affected by, notice,
whether actual or constructive, of any subsequent charge or other
interest affecting any Security Asset and/or the proceeds of sale of
any Security Asset, the Finance Party may open a new account for the
Chargor. If the Finance Party does not open a new account, it shall
nevertheless be treated as if it had done so at the time when it
received or was deemed to have received notice. As from that time all
payments made to the Finance Party will be credited or be treated as
having been credited to the new account and will not operate to reduce
any amount for which this Deed is security.
17.6 TIME DEPOSITS
Without prejudice to any right of set-off any Finance Party may have
under any other Finance Document or otherwise, if any time deposit
matures on any account the Chargor has with any Finance Party at a time
within the Security Period when:
(a) this security has become enforceable; and
(b) no amount of the Secured Liabilities is due and payable,
that time deposit shall automatically be renewed for any further
maturity which that Finance Party considers appropriate.
18. RELEASE AND CONFIRMATION
(a) Upon the expiry of the Security Period (but not otherwise), the Finance
Parties shall, at the request and cost of the Chargor, take whatever
action is necessary to release the Security Assets from the security
constituted by this Deed including any re-assignment of security.
(b) The Security Agent shall act in accordance with the terms of the Credit
Agreement in issuing instructions to the Account Bank in accordance
with the notice to that Account Bank and shall give an appropriate
notice to each Account Bank on repayment in full of the Secured
Liabilities.
19. GOVERNING LAW
This Deed is governed by English law.
This Deed has been entered into as a deed on the date stated at the beginning of
this Deed.
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SCHEDULE 1
FORM OF NOTICE OF THE ACCOUNT BANK
To: [ ]
[ ], 199[ ]
Dear Sirs,
We give you notice that, by a Debenture dated [ ], 1999, AZURIX
EUROPE LTD. (the "COMPANY") charged (by way of a first fixed and floating
charge) to [Security Agent] (as agent and trustee) (the " SECURITY AGENT") all
moneys (including interest) from time to time standing to the credit of certain
bank accounts (the "ACCOUNTS") and the debt or debts represented thereby.
We irrevocably instruct and authorise you to until the Security Agent notifies
you otherwise:
(a) (i) disclose to the Security Agent on request to you by the
Security Agent any information relating to any Account
maintained with you; and
(ii) comply with the terms of any written notice or instructions
relating to the Security Document or moneys standing to the
credit of any Accounts maintained with you and the debts
represented by them, received by you from the Security Agent
and the Company,
without any reference to or further authority from us and without any
enquiry by you as to the justification for the disclosure or, as the
case may be, validity of the notice or instructions;
(b) hold all sums from time to time standing to the credit of the Accounts
maintained with you in accordance with the written instructions of the
Security Agent and the Company; and
(c) pay or release all or any part of the moneys standing to the credit of
the Accounts maintained with you in accordance with the written
instructions of the Security Agent.
We are not permitted to withdraw any amount from any of the Accounts maintained
with you except in accordance with the written instructions of the Security
Agent and the Company.
The instructions in this letter may not be revoked or amended without the prior
written consent of the Security Agent.
Would you please confirm your agreement to the above by sending the enclosed
acknowledgement to the Security Agent with a copy to ourselves.
Yours faithfully,
................................
(Authorised signatory)
AZURIX EUROPE LTD.
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SCHEDULE 2
FORM OF ACKNOWLEDGEMENT OF THE ACCOUNT BANK
To: CHASE MANHATTAN TRUSTEES LIMITED
For the attention of: [ ]
[relevant address applying under
Clause 33 (Notices) of the Credit Agreement]
[ ], 1999
Dear Sirs,
We confirm receipt from Azurix Europe Ltd. (the "COMPANY") of a notice dated
[ ] of a charge upon the terms of a Debenture dated [ ],
1999 of all moneys (including interest) from time to time standing to the credit
of certain bank accounts of the Company (the "ACCOUNTS") and the debt or debts
represented thereby.
We confirm that we:
(a) accept the instructions contained in the notice and undertake to comply
with the notice;
(b) have not received notice of the interest of any third party in any of
the Accounts maintained with us;
(c) have neither claimed or exercised nor will claim or exercise any
security interest, set-off, counter-claim or other right in respect of
any of the Accounts maintained with us, the moneys in those Accounts or
the debts represented by them; and
(d) shall not permit any amount to be withdrawn from any of the Accounts
maintained with us without your prior written consent other than in
respect of payments which you have confirmed to us may be paid by the
Company from the Accounts until you notify us otherwise.
The Accounts maintained with use are:
[SPECIFY ACCOUNTS AND ACCOUNT NUMBERS]
This letter is governed by English law.
Yours faithfully,
.................................
(Authorised Signatory)
[Account Bank]
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SCHEDULE 3
FORM OF NOTICE TO PARENT/SPV/CREDIT ENHANCEMENT PROVIDER
To: [ ]
Date: [ ]
Dear Sirs,
We hereby give you, [SPV/Azurix Corp./Credit Enhancement Provider] notice that,
by a Debenture dated [ , ], we assigned (by way of security) to
CHASE MANHATTAN TRUSTEES LIMITED (the "AGENT") all our rights under [Inter
Company Loan/guarantee/Credit Enhancement] between yourselves and ourselves (the
"AGREEMENT").
We irrevocably instruct and authorise you until the Agent notifies you
otherwise:
(a) to disclose to the Agent without any reference to or further authority
from us and without any inquiry by you as to the justification for such
disclosure, such information relating to the Agreement as the Agent
may, at any time and from time to time, request you to disclose to it;
(b) to pay any sum payable by you under the Agreement to our account with
the Agent at [ ], Sort Code [ ], Account No.
[ ]; and
(c) to accept the instructions of the Agent in relation to our rights under
the Agreement.
Would you please confirm your agreement to the above by sending the enclosed
acknowledgement to the Agent with a copy to ourselves.
This letter is governed by English law.
Yours faithfully,
..................................
(Authorised signatory)
AZURIX EUROPE LTD.
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SCHEDULE 4
FORM OF ACKNOWLEDGEMENT FROM PARENT/SPV/CREDIT ENHANCEMENT PROVIDER
To: CHASE MANHATTAN TRUSTEES LIMITED
[ ]
Dear Sirs,
We confirm receipt from Azurix Europe Ltd. (the "COMPANY") of a notice dated
[ ] of an assignment upon the terms of a Debenture dated
[ ] of all the Company's rights under the Agreement (as
defined in the Notice) and agree to the terms of that assignment.
This letter is governed by English law.
Yours faithfully,
..................................
(Authorised signatory)
[ ]
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SIGNATORIES TO THE DEBENTURE
EXECUTED as a deed )
by AZURIX EUROPE LTD. )
acting by )
Director
Director/Secretary
THE SECURITY AGENT
CHASE MANHATTAN TRUSTEES LIMITED
By:
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SCHEDULE 7
FORM OF LEGAL OPINIONS OF ▇▇▇▇▇ & ▇▇▇▇▇
To: The Finance Parties
(as defined in the
Credit Agreement defined below).
Dear Sirs,
AZURIX EUROPE LTD. (THE "COMPANY") -(POUND)425,000,000 CREDIT AGREEMENT
DATED [ ], 1999 (THE "CREDIT AGREEMENT")
We have received instructions from and participated in discussions with the
Arrangers in connection with the Credit Agreement.
Terms defined in the Credit Agreement have the same meaning in this opinion. The
Credit Agreement, the Subordination Deed and the Debenture (as defined below) is
each called an "AGREEMENT". "SECURITY ASSETS" has, in relation to the Debenture,
the meaning given to it in the Debenture
For the purposes of this opinion we have examined the following documents:-
(a) a signed copy of the Credit Agreement;
(b) an executed copy of the Debenture dated [ ], 1999
between the Company and the Security Agent (the "DEBENTURE");
(c) a certified copy of the memorandum and articles of association and
certificate of incorporation of the Company;
(d) a certified copy of the minutes of a meeting of the board of directors
of the Company dated [ ], 1999; and
(e) an executed copy of the Subordination Deed between Wessex Water Limited
("WESSEX"), the Company and the Facility Agent dated [ ], 1999.
On [ ], 1999, we carried out a search of the Company and Wessex at
the Companies Registry. On [ ], 1999 we made a telephone search of
the Company and Wessex at the winding-up petitions at the Companies court.
The above are the only documents or records we have examined, and the only
searches and enquiries we have carried out, for the purposes of this opinion.
We assume that:-
(i) each of Wessex and the Company is not unable to pay its debts within
the meaning of section 123 of the Insolvency Act, 1986 at the time it
enters into an Agreement and will not as a
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consequence of either Agreement be unable to pay its debts within the
meaning of that section;
(ii) no step has been taken to wind up the Company or Wessex or appoint a
receiver in respect of it or any of its assets, although the searches
referred to above give no indication that any winding-up order or
appointment of a receiver has been made;
(iii) all signatures and documents are genuine;
(iv) all documents are and remain up-to-date;
(v) the correct procedure was carried out at the board meeting referred to
in paragraph (d) above; for example, there was a valid quorum, all
relevant interests of directors were declared and the resolutions were
duly passed at the meeting; and
(vi) each Agreement is a legally binding, valid and enforceable obligation
of each party to it other than the Company and Wessex.
Subject to the qualifications set out below and to any matters not disclosed to
us, it is our opinion that, so far as the present laws of England are
concerned:-
(1) STATUS: Each of Wessex and the Company is a company incorporated with
limited liability under the laws of England and is not in liquidation.
(2) POWERS AND AUTHORITY: Each of Wessex and the Company has the corporate
power to enter into and perform the Agreements to which it is a party
and has taken all necessary corporate action to authorise the
execution, delivery and performance of the Agreements to which it is a
party.
(3) LEGAL VALIDITY: Each Agreement to which it is a party constitutes the
Company's and/or Wessex's legally binding, valid and enforceable
obligation.
(4) NON-CONFLICT: The execution, delivery and performance by the Company
and Wessex of each Agreement to which it is a party will not violate
any provision of (i) any existing English law applicable to companies
generally, or (ii) the memorandum or articles of association of the
Company and Wessex.
(5) CONSENTS: No authorizations of governmental, judicial or public bodies
or authorities in England are required by the Company or Wessex in
connection with the performance, validity or enforceability of an
Agreement to which it is a party.
(6) TAXES: All payments due from the Company under the Credit Agreement may
be made without deduction of any United Kingdom taxes, if, in the case
of any interest:
(a) the person which made the part of the Loan to which the
interest relates was, at the time of the making of the Loan, a
"bank" as defined in section 840A of the Income and
Corporation Taxes Act 1988 is beneficially entitled to that
interest and the recipient of the interest is within the
charge to United Kingdom corporation tax as regards that
interest; or
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(b) (i) the person that made the part of the Loan to which
the interest relates is a resident (as defined in the
appropriate Double Taxation treaty) in a country with
which the United Kingdom has a Double Taxation treaty
giving residents of that country exemption from
United Kingdom taxation on interest and does not
carry on business in the United Kingdom through a
permanent establishment with which its participation
in the Loan is effectively connected; and
(ii) the Company has received an appropriate exemption
notice (or similar document) from HM Inland Revenue.
(7) REGISTRATION REQUIREMENTS: Except for due registration of the Debenture
and the Subordination Deed, it is not necessary or advisable to file,
register or record either Agreement in any public place or elsewhere in
England.
(8) STAMP DUTIES: No stamp, registration or similar tax or charge is
payable in England in respect of either Agreement.
(9) SECURITY: Subject to due registration where required, the Debenture
creates security interests in the Security Assets concerned.
This opinion is subject to the following qualifications:-
(i) This opinion is subject to all insolvency and other laws affecting the
rights of creditors or secured creditors generally.
(ii) No opinion is expressed on matters of fact.
(iii) We assume that no foreign law affects the conclusions stated above.
(iv) No opinion is expressed as to:
(a) the title of the Company to any Security Asset; or
(b) the priority of any security created or to be created by the
Debenture; or
(c) the nature of the security created by the Debenture (whether
fixed or floating); or
(d) the marketability of, or rights of enforcement over, the
Security Assets.
These matters are too lengthy to cover in this letter.
(v) The term "enforceable" means that a document is of a type and form
enforced by the English courts. It does not mean that each obligation
will be enforced in accordance with its terms. Certain rights and
obligations may be qualified by the non-conclusivity of certificates,
doctrines of good faith and fair conduct, the availability of equitable
remedies and other matters, but in our view these qualifications would
not defeat your legitimate expectations in any material respect.
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This opinion is given for the sole benefit of the Finance Parties as at the date
of the Credit Agreement and may not be relied upon by or disclosed to any other
person.
Yours faithfully
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SCHEDULE 8
FORM OF SUBORDINATION AGREEMENT
FOR WESSEX LOAN
DATED [ ]
BETWEEN
AZURIX EUROPE LTD.
-and-
THE JUNIOR CREDITOR
(as defined in this Deed)
-and-
WESTDEUTSCHE LANDESBANK GIROZENTRALE
as Facility Agent
--------------------------------------------
SUBORDINATION AGREEMENT
relating to a(pound)425,000,000
credit agreement dated [ ] , 1999
between Azurix Europe Ltd. and others
---------------------------------------------
[▇▇▇▇▇ & ▇▇▇▇▇ LOGO]
London
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THIS SUBORDINATION AGREEMENT is dated [ ] between:
(1) WESSEX WATER LIMITED (Registered No. 2366633) (the "JUNIOR CREDITOR");
(2) AZURIX EUROPE LTD. (Registered No. 3570749) (the "COMPANY"); and
(3) WESTDEUTSCHE LANDESBANK GIROZENTRALE (the "FACILITY AGENT") as agent
and trustee for the Finance Parties.
BACKGROUND:
(A) By the Credit Agreement the Banks have agreed to make available a
credit facility of up to (pound)425,000,000 to the Company.
(B) The Junior Creditor has agreed to subordinate all the Junior Debt on
the terms of this Deed.
(C) It is intended that this document takes effect as a deed
notwithstanding the fact that a party may only execute this document
under hand.
1. INTERPRETATION
1.1 DEFINITIONS
In this Deed:
"CREDIT AGREEMENT"
means the agreement dated [ ], 1999 between (among others) the Company
and the Facility Agent for a credit facility of up to
(pound)425,000,000.
"JUNIOR DEBT"
means all present and future liabilities (actual or contingent) payable
or owing to the Junior Creditor by the Company under or in connection
with the Junior Finance Document together with:
(a) any permitted novation, deferral or extension of any of those
liabilities;
(b) any further advances which may be made by the Junior Creditor
to the Company under any agreement expressed to be
supplemental to the Junior Finance Document plus all interest,
fees and costs in connection therewith;
(c) any claim for damages or restitution in the event of
rescission of any of those liabilities or otherwise in
connection with the Junior Finance Document;
(d) any claim against the Company flowing from any recovery by the
Company of a payment or discharge in respect of those
liabilities on grounds of preference or otherwise;
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(e) any amounts (such as post-insolvency interest) which would be
included in any of the above for any discharge,
non-provability, unenforceability or non-allowability of the
same in any insolvency or other proceedings; and
(f) all sums payable or owing by the Company to the Junior
Creditor in respect of the Wessex Inter-Company Receivable.
"JUNIOR FINANCE DOCUMENTS"
means the Wessex Loan and all variations, replacements, novations of
and supplements thereto.
"MAJORITY BANKS"
has the meaning given to it in the Credit Agreement.
"PERMITTED PAYMENTS"
means any distribution by the Junior Creditor out of, and to the extent
of the aggregate of:
(a) the amount shown in the balance sheet of the Relevant Accounts
as Profit and Loss Account less(pound)34,900,000; and
(b) after the English High Court has approved finally the use of
this amount to make a distribution, (pound)90,300,000
comprised in the amount shown in the Relevant Accounts as
Capital Redemption Reserve,
if applied in discharge by set off against the Wessex Inter-Company
Receivable provided that no distribution in cash by the Junior Creditor
shall be applied in discharge against the Wessex Inter-Company
Receivable.
"PARTY"
means a party to this Deed.
"RELEVANT ACCOUNTS"
means the audited consolidated accounts of the Junior Creditor for the
financial year ended 31st December, 1998 delivered to the Agent
pursuant to clause 4.1 (Documentary conditions precedent) of the Credit
Agreement.
"SENIOR DEBT"
means all present and future liabilities (actual or contingent) payable
or owing by the Company to the Finance Parties under or in connection
with the Finance Documents together with:
(a) any refinancing, novation, refunding, deferral or extension of
any of those liabilities;
(b) any further advances which may be made by the Finance Parties
to the Company under any agreement expressed to be
supplemental to any Finance Document plus all interest, fees
and costs in connection therewith;
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(c) any claim for damages or restitution in the event of
rescission of any of those liabilities or otherwise in
connection with the Finance Documents;
(d) any claim against the Company flowing from any recovery by the
Company of a payment or discharge in respect of those
liabilities on grounds of preference or otherwise; and
(e) any amounts (such as post-insolvency interest) which would be
included in any of the above for any discharge,
non-provability, unenforceability or non-allowability of the
same in any insolvency or other proceedings.
"SENIOR LIABILITIES"
means all present and future obligations and liabilities (whether
actual or contingent and whether owned jointly or severally or in any
capacity whatsoever) of the Company to any Finance Party under each
Finance Document to which the Company is a party.
"WESSEX INTER-COMPANY RECEIVABLE"
means a receivable due to the Junior Creditor by the Company in the
amount of (pound)198,300,000 shown as such in the Relevant Accounts.
1.2 CONSTRUCTION
(a) Capitalised terms defined in the Credit Agreement have, unless
expressly defined in this Deed, the same meaning in this Deed.
(b) The provisions of Clause 1.2 of the Credit Agreement apply to this Deed
as though they were set out in full in this Deed except that references
to the Credit Agreement are to be construed as references to this Deed.
2. THE COMPANY'S UNDERTAKINGS
So long as any Senior Debt is outstanding and until the Senior
Liabilities have been irrevocably paid in full, the Company will not,
except as the Facility Agent (acting on the instructions of the
Majority Banks) has previously consented:
(a) subject to Clause 5 (Subordination on Insolvency), pay or
repay or purchase or acquire, any of the Junior Debt; or
(b) except for Permitted Payments, discharge any of the Junior
Debt by set-off; or
(c) create or permit to subsist security over any of its assets
for any of the Junior Debt; or
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(b) amend, vary, waive or release any term of the Junior Finance
Document (other than any procedural or administrative change
or any other change which can reasonably be expected not to
prejudice any Senior Debt or any Finance Party); or
(e) take or omit to take any action whereby the subordination
achieved by this Deed will be impaired.
3. JUNIOR CREDITOR'S UNDERTAKINGS
So long as any Senior Debt is outstanding and until the Senior
Liabilities have been irrevocably paid in full, except as permitted
under the Finance Documents or except as the Facility Agent (acting on
the instructions of the Majority Banks) has previously consented, the
Junior Creditor will:
(a) subject to Clause 5 (Subordination on Insolvency), not demand
or receive payment of any of the Junior Debt from the Company
or any other source or apply any money or assets in discharge
of any Junior Debt;
(b) except for Permitted Payments, not discharge any of the Junior
Debt by set-off;
(c) not permit to subsist or receive any security for any of the
Junior Debt;
(d) not permit to subsist or receive any guarantee, indemnity or
other assurance against loss in respect of any of the Junior
Debt;
(e) not amend, vary, waive or release any term of the Junior
Finance Document (other than any procedural or administrative
change or any other change which can reasonably be expected
not to prejudice any Senior Debt or any Finance Party);
(f) promptly notify the Facility Agent of any default or event of
default in respect of the Junior Debt;
(g) unless Clause 5 (Subordination on Insolvency) applies, not:
(i) declare any of the Junior Debt prematurely due and
payable;
(ii) enforce the Junior Debt by execution or otherwise; or
(iii) initiate or take any steps with a view to any
insolvency, reorganisation or dissolution proceedings
in respect of the Company;
(h) not take or omit to take any action whereby the subordination
achieved by this Deed may be impaired; and
(i) not refuse to register any holder of the shares in the Junior
Creditor as a shareholder.
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4. TURNOVER OF NON-PERMITTED RECOVERIES
4.1 NON-PERMITTED PAYMENT
If, other than as permitted under the Finance Documents (including
under Clauses 2(b) and 3(b) above):
(a) the Junior Creditor receives a payment or distribution in
respect of any of the Junior Debt from the Company or any
other source; or
(b) the Junior Creditor receives the proceeds of any enforcement
of any security or any guarantee, indemnity or other assurance
against financial loss for any Junior Debt; or
(c) the Company makes any payment or distribution to the Junior
Creditor on account of the purchase or other acquisition of
any of the Junior Debt,
the Junior Creditor will hold the same in trust for the Finance Parties
and pay and distribute it to the Facility Agent for application towards
the Senior Debt until the Senior Debt is irrevocably paid in full.
4.2 NON-PERMITTED SET-OFFS
If, other than as permitted under the Finance Documents (including
under Clauses 2(b) and 3(b) above), for any reason, any of the Junior
Debt is discharged by set-off, the Junior Creditor will promptly pay an
amount equal to the discharge to the Facility Agent for application
towards the Senior Debt until the Senior Debt is irrevocably paid in
full.
4.3 FAILURE OF TRUST
If, for any reason, a trust in favour of, or a holding of property for,
the Finance Parties under this Deed is invalid or unenforceable, the
Junior Creditor will pay and deliver to the Facility Agent an amount
equal to the payment, receipt or recovery which the Junior Creditor
would otherwise have been bound to hold on trust for or as property of
the Finance Parties.
5. SUBORDINATION ON INSOLVENCY
If any of the events set out in Clauses 19.6 (Insolvency) to 19.10
(Analogous proceedings) (inclusive) of the Credit Agreement occurs THEN
(a) the Junior Debt will be subordinate in right of payment to the
Senior Debt;
(b) the Facility Agent may, and is irrevocably authorised on
behalf of the Junior Creditor to, (i) claim, enforce and prove
for the Junior Debt, (ii) file claims and proofs, give
receipts and take all such proceedings and do all such things
as the Facility Agent reasonably sees fit to recover the
Junior Debt and (iii) receive all distributions on the Junior
Debt for application towards the Senior Debt;
(c) if and to the extent that the Facility Agent is not entitled
to do any of the foregoing, the Junior Creditor will do so in
good time as reasonably directed by the Facility Agent;
▇▇▇
▇▇▇
(▇) the Junior Creditor will hold all distributions in cash or in
kind received or receivable by it in respect of the Junior
Debt from the Company or from any other source in trust for
the Finance Parties and will (at the Junior Creditor's
expense) pay and transfer the same to the Facility Agent for
application towards the Senior Debt until the Senior Debt is
irrevocably paid in full; and
(e) the trustee in bankruptcy, liquidator, assignee or other
person distributing the assets of the Company or their
proceeds is directed to pay distributions on the Junior Debt
direct to the Facility Agent for application towards the
Senior Debt until the Senior Debt is irrevocably paid in full.
The Junior Creditor will give all such notices and do all such
things as the Facility Agent may reasonably direct to give
effect to this provision.
6. CONSENTS
The Junior Creditor will not have any remedy against the Company, the
Facility Agent or the Finance Parties by reason of any transaction
entered into between the Facility Agent and/or the Finance Parties and
the Company which violates any Junior Finance Document and the Junior
Creditor may not object to any such transaction by reason of any
provisions of the Junior Finance Documents.
7. REPRESENTATIONS AND WARRANTIES
The Junior Creditor represents and warrants to the Facility Agent and
each other Finance Party that this Deed:
(a) is within its powers and has been duly authorised by it;
(b) subject to qualifications on to matters of law in the legal
opinions delivered under the Credit Agreement, constitutes its
legal, valid, binding and enforceable obligations; and
(c) does not conflict with any law or regulation or its
constitutional documents or, to any material extent, any
document binding on it and that it has obtained all necessary
consents for its performance of this Deed.
8. PROTECTION OF SUBORDINATION
8.1 CONTINUING SUBORDINATION
The subordination provisions in this Deed constitute a continuing
subordination and benefit the ultimate balance of the Senior Debt
regardless of any intermediate payment or discharge of the Senior Debt
in whole or in part.
8.2 WAIVER OF DEFENCES
The subordination in this Deed and the obligations of the Junior
Creditor under this Deed will not be affected by any act, omission,
matter or thing which, but for this provision, would reduce, release or
prejudice the subordination or any of those obligations in whole or in
part, including without limitation:
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(a) any 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 in respect of the Senior Debt or
otherwise or any failure to realise the full value of any
security; or
(c) any unenforceability, illegality or invalidity of any
obligation of the Company or security in respect of the Senior
Debt or any other document or security.
8.3 IMMEDIATE RECOURSE
The Junior Creditor waives any right it may have of first requiring any
Finance Party (or the Facility Agent or any trustee or other agent on
its behalf) to proceed against or enforce any other rights or security
or claim payment from any person before claiming the benefit of this
Deed. The Facility Agent may refrain from applying or enforcing any
money, rights or security unless and until instructed by the Majority
Banks. The Majority Banks may give or refrain from giving instructions
to the Facility Agent to enforce or refrain from enforcing any security
as long as they see fit.
8.4 APPROPRIATIONS
Until the Senior Liabilities have been irrevocably paid in full, the
Facility Agent may:
(a) apply any moneys or property received under this Deed or from
the Company or from any other person against the Senior Debt
in accordance with the terms of the Credit Agreement;
(b) hold in an interest-bearing suspense account any moneys or
distributions received from the Junior Creditor under Clause 4
(Turnover of non-permitted recoveries) or Clause 5
(Subordination on insolvency) or on account of the liability
of the Junior Creditor under this Deed.
8.5 NON-COMPETITION
Until the Senior Liabilities have been irrevocably paid in full, the
Junior Creditor will not by virtue of any payment or performance by it
under this Deed or by virtue of the operation of Clauses 4 (Turnover of
non-permitted recoveries) or 5 (Subordination on insolvency):-
(a) be subrogated to any rights, security or moneys held, received
or receivable by any Finance Party (or the Facility Agent or
any trustee or other 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 the Junior
Creditor's liability under this Deed; or
(b) claim, rank, prove or vote as a creditor of the Company or
other person or their respective estates in competition with
any Finance Party (or the Facility Agent or any trustee or
other agent on its behalf); or
(c) receive, claim or have the benefit of any payment,
distribution or security from or on account of the Company or
other person.
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9. PRESERVATION OF JUNIOR DEBT
Notwithstanding any term of this Deed postponing, subordinating or
preventing the payment of any of the Junior Debt, the Junior Debt
concerned shall, solely as between the Company and the Junior Creditor,
remain owing or due and payable in accordance with the terms of the
Junior Finance Documents, and interest and default interest will accrue
on missed payments accordingly.
10. CHANGES TO THE PARTIES
10.1 SUCCESSORS AND ASSIGNS
This Deed is binding on the successors and assigns of the Parties.
10.2 THE COMPANY AND THE JUNIOR CREDITOR
Neither the Company nor the Junior Creditor may assign or transfer any
of their rights or obligations under this Deed without the consent of
the Majority Banks.
10.3 THE FACILITY AGENT AND THE FINANCE PARTIES
The Facility Agent and the other Finance Parties may assign or
otherwise dispose of all or any of their rights under this Deed in
accordance with the Credit Agreement to which they are respectively a
party.
11. MISCELLANEOUS
11.1 PERPETUITY
The perpetuity period for the trusts in this Deed is 80 years.
11.2 POWER OF ATTORNEY
By way of security for the obligations of the Junior Creditor under
this Deed, the Junior Creditor irrevocably appoints the Facility Agent
as its attorney to do anything which the Junior Creditor is required to
do by this Deed but has failed to do, having been given 10 Business
Days notice to rectify such non-compliance. The Facility Agent may
delegate this power subject to the approval of the Majority Banks.
12. INDEMNITY
(a) The Company will indemnify the Facility Agent and every attorney
appointed by it in respect of all liabilities and expenses reasonably
incurred by it or him in good faith in connection with the enforcement
or preservation of any rights in accordance with this Deed.
(b) The Facility Agent shall not be liable for any losses arising in
connection with the exercise or purported exercise of any of its
rights, powers and discretions in good faith under this Deed, unless
that liability arises as a result of the Facility Agent's negligence or
wilful default and in particular (but without limitation) the Facility
Agent in possession shall not be liable to account as mortgagee in
possession.
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13. WAIVERS, REMEDIES CUMULATIVE
The rights of the Facility Agent and the other Finance Parties under
this Deed:
(a) may be exercised as often as necessary;
(b) are cumulative and are not exclusive of their rights under the
general law; and
(c) may be waived only in writing and specifically and may be on
such terms as the Facility Agent or the Finance Parties see
fit.
14. SEVERABILITY
If a provision of this Deed 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 Deed; or
(b) the validity or enforceability in other jurisdictions of that
or any other provision of this Deed.
15. COUNTERPARTS
This Deed 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 Deed.
16. NOTICES
16.1 GIVING OF NOTICES
All notices or other communications under or in connection with this
Deed shall be given in writing and, unless otherwise stated, may be
made by letter or facsimile. Any such notice will be deemed to be given
as follows:
(a) if by letter, when delivered personally or on actual receipt;
and
(b) if by facsimile, when received in legible form.
However, a notice given in accordance with the above but received on a
non-working day or after business hours in the place of receipt will
only be deemed to be given on the next working day in that place.
16.2 ADDRESSES FOR NOTICES
(a) The address, and facsimile number of the Junior Creditor for all
notices under or in connection with this Deed are
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Fax:
Attention: [ ]
or such other as the Junior Creditor may notify to the other Parties by
not less than five Business Days' notice.
(b) The address, and facsimile number of the Company for all notices under
or in connection with this Deed are:
Fax:
Attention: [ ]
or such other as the Company may notify to the other Parties by not
less than five Business Days' notice.
(c) The address and facsimile number of the Facility Agent for all notices
under or in connection with this Deed are:
[
]
Facsimile No: [ ]
Attention: [ ]
or such other as the Facility Agent may notify to the other Parties by
not less than five Business Days' notice.
17. GOVERNING LAW
This Deed is governed by English law.
This Deed has been entered into on the date stated at the beginning of this
Deed.
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SIGNATORIES TO THE SUBORDINATION AGREEMENT
JUNIOR CREDITOR
EXECUTED as a deed by )
WESSEX WATER LIMITED )
acting by )
and )
Director
Director/Secretary:
COMPANY
EXECUTED as a deed by )
AZURIX EUROPE LTD. )
acting by )
and )
Director
Director/Secretary
FACILITY AGENT
WESTDEUTSCHE LANDESBANK GIROZENTRALE
By:
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SCHEDULE 9
FORM OF INTER-COMPANY LOAN
Dated [o]
[SPV]
AS BORROWER
AZURIX CORP.
AS GUARANTOR
and
AZURIX EUROPE LTD
AS LENDER
[EURO o]
LOAN AGREEMENT
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THIS LOAN AGREEMENT (this "AGREEMENT") is made on o between:
(1) [SPV], a [company]/[limited partnership]/[other] organised under the
laws of [ ] (Registered No.o) (the "BORROWER");
(2) AZURIX CORP., a company organised under the laws of Delaware (the
"GUARANTOR"); and
(3) AZURIX EUROPE LTD, a company incorporated in England and Wales,
(Registered No 3570749) (the "Lender").
1. DEFINITIONS AND INTERPRETATIONS
1.1 Capitalised terms used in this Agreement shall have the meanings
ascribed to them below, and, except to the extent defined otherwise
below, terms defined in the Credit Agreement shall have the same
meaning herein.
"BUSINESS DAY" means a day (other than a Saturday or a Sunday) on which
banks are open for business in [London].
"CLAUSE" means a clause of this Agreement.
"CREDIT AGREEMENT" means the agreement dated o 1999 between (among
others) the Lender and Chase Manhattan PLC and Westdeutsche Landesbank
Girozentrale, for a credit facility of up to (pound)425,000,000.
"DRAWDOWN DATE" has the meaning ascribed to such term in Clause 2.2.
"INTEREST PERIODS" means the Interest Periods (as defined in the Credit
Agreement) applicable to the Advances made under the Credit Agreement
to fund the Loan by the Lender under this Agreement.
"INTEREST RATE" means, in relation to any Interest Period, the rate per
annum equal to the sum of (a) LIBOR for that Interest Period and(b) o%
per annum.
"PRINCIPAL AMOUNT" has the meaning ascribed to such term in Clause 2.1.
"REPAYMENT DATE" has the meaning ascribed to such term in Clause 2.7.
["STERLING" AND "(POUND)"]/["DOLLARS" AND "$"]/["EURO" AND "EURO
SYMBOL"] means the lawful currency for the time being of [the United
Kingdom]/[the United States of America]/[the participating member
states in European monetary union].
Headings of Clauses are for ease of reference only and shall not affect
the interpretation of this Agreement.
2. PRINCIPAL AND INTEREST
2.1 Subject to and in accordance with the terms of this Agreement, the
Lender shall lend to the Borrower the sum [$/EURO SYMBOL/(pound)][o] or
such lesser sum as shall be specified by the Borrower to the Lender by
notice in writing to be received by the Lender before the Drawdown
Date, (such
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amount as reduced in accordance with this agreement, the "PRINCIPAL
AMOUNT") and the Borrower shall accept such sum and shall repay to the
Lender such sum and interest thereon in accordance with the terms of
this Agreement.
2.2 The Principal Amount shall be paid by the Lender to the Borrower on
[date] or on such other date as shall be specified by the Borrower to
the Lender by notice in writing. The date on which the Principal Amount
is paid by the Lender to the Borrower is hereinafter referred to as the
"DRAWDOWN DATE".
2.3 Interest shall accrue from day to day on the outstanding Principal
Amount during each Interest Period from (and including) the Drawdown
Date until the Repayment Date at the Interest Rate applicable to that
Interest Period on the basis of the actual number of days elapsed and a
[365] day year. Interest shall accrue only on the outstanding Principal
Amount and shall not accrue on any outstanding interest.
2.4 Accrued interest shall be payable by the Borrower to the Lender on the
Repayment Date.
2.5 The Principal Amount shall be repaid by the Borrower to the Lender on [
] or on such earlier date(s) as the Borrower shall in its absolute
discretion elect. The Principal Amount will be repaid by the Borrower
by way of a single payment or several payments, as the Borrower shall
in its absolute discretion elect.
2.6 2.6.1 If any of the following occurs:
(i) the Borrower incurs further financial indebtedness or
issues further equity for cash consideration with a
view to repaying the Principal Amount or
(ii) any of the assets ultimately financed by the
Principal Amount are sold for cash consideration, or
the subsidiary of the Borrower which owns such assets
is sold for cash consideration,
the Borrower or the Guarantor shall notify the Lender promptly
after becoming aware of the relevant event.
2.6.2 During the period beginning on the occurrence of that event
and ending 30 days after the date on which the Lender receives
that notification from the Borrower or the Guarantor the
Lender may serve on the Borrower a notice declaring that a
portion of the Principal Amount equal to:
(i) in the case of Clause 2.6.1 (i), the financial
indebtedness incurred or amount of cash consideration
received and
(ii) in the case of Clause 2.6.1 (ii), such amount of the
cash consideration received as is practical in all
the circumstances to be transferred to the Borrower
shall become due and payable 5 Business Days after the date of
such notice, whereupon they shall become so due and payable
(together, in the case of repayment of the whole Principal
Amount, with all other amounts outstanding under this
Agreement).
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2.7 The date when the Principal Amount is fully repaid by the Borrower to
the Lender, pursuant to Clause 2.5, 2.6 or 6 or otherwise, is referred
to herein as the "REPAYMENT DATE".
3. PAYMENTS AND CURRENCY
3.1 All payments hereunder shall be made by wire transfer to such bank
account as shall be specified by the party to receive the relevant
payment by notice in writing to be received by the other party before
the date when the relevant payment is to be made.
3.2 The currency of the loan and the currency in which the Principal Amount
and interest are calculated and the currency in which all payments by
the Borrower to the Lender shall be made shall be
[Sterling]/[Dollars]/[Euro].
3.3 All payments to be made by the Borrower hereunder shall be made in full
without any deduction or withholding (whether in respect of set-off,
counterclaim, duties, taxes, charges or otherwise howsoever) provided
that if the Borrower is required by law to make any such deduction or
withholding, it shall:
3.3.1 ensure that the deduction or withholding does not exceed the
minimum amount legally required;
3.3.2 pay to the relevant taxation or other authorities, as
appropriate, the full amount of the deduction or withholding;
and
3.3.3 furnish to the Lender within 30 days of such payment an
official receipt from such authorities for all amounts
deducted or withheld if such is available, or otherwise a
certificate of deduction or withholding if such is available,
or otherwise a certificate of deduction or equivalent evidence
of the relevant deduction or withholding.
3.4 If a payment hereunder 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).
3.5 Payments received by the Lender from the Borrower shall be applied
firstly against outstanding amounts of interest, and then against the
outstanding Principal Amount and then against any other amount
outstanding under this Agreement.
4. GUARANTEE
4.1 The Guarantor unconditionally and irrevocably guarantees that, if for
any reason the Borrower does not pay any sum payable by it under this
Agreement by the time, on the date and otherwise in the manner
specified in this Agreement (whether on the normal due date, on
acceleration or otherwise), the Guarantor will pay that sum before
close of business in [London] on that date.
4.2 As between the Guarantor and the Lender but without affecting the
Borrower's obligations, the Guarantor shall be liable under this Clause
4 as if it were the sole principal debtor and not merely a surety.
Accordingly, the Guarantor shall not be discharged, nor shall its
liability be affected, by anything which would not discharge it or
affect its liability if it were the sole principal debtor (including:
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4.2.1 any time, indulgence, concession, waiver or consent at any
time given to the Borrower or any other person
4.2.2 any amendment or supplement to any other Clause of this
Agreement or to any security or other guarantee
4.2.3 the making or absence of any demand on the Borrower or any
other person for payment
4.2.4 the enforcement or absence of enforcement of this Agreement or
of any security or other guarantee
4.2.5 the taking, existence or release of any security or other
guarantee
4.2.6 the bankruptcy or winding-up of the Borrower or any other
person, or any step being taken for any such bankruptcy or
winding-up or
4.2.7 the illegality, invalidity or unenforceability of, or any
defect in, any provision of this Agreement or any security or
other guarantee or any of the obligations of any of the
parties under or in connection with this Agreement or any
security or other guarantee).
4.3 The Guarantor's obligations under this Agreement are and will remain in
full force and effect by way of continuing security until no sum
remains to be lent under this Agreement and the Lender has irrevocably
received or recovered all sums payable under this Agreement.
Furthermore, those obligations of the Guarantor are additional to, and
not instead of, any security or other guarantee at any time existing in
favour of any person, whether from the Guarantor or otherwise, and may
be enforced without first having recourse to the Borrower, any other
person, any security or any other guarantee. The Guarantor irrevocably
waives all notices and demands of any kind.
4.4. So long as any sum remains to be lent or remains payable under this
Agreement:
4.4.1 any right of the Guarantor, by reason of the performance of
any of its obligations under this Clause 4, to be indemnified
by the Borrower, to prove in respect of any liability in the
bankruptcy or winding-up of the Borrower or to take the
benefit of or enforce any security or other Guarantee shall
(and shall only) be exercised and enforced in such manner and
on such terms as the Lender may require and
4.4.2 any amount received or recovered by the Guarantor (a) as a
result of any exercise of any such right or (b) in the
bankruptcy or winding-up of the Borrower shall be held in
trust for, and immediately paid to, the Lender.
4.5 The Guarantor shall on demand indemnify the Lender against any funding
or other cost, loss, expense or liability (including loss of margin)
sustained or incurred by the Lender as a result of it being required
for any reason (including any bankruptcy, insolvency, winding-up or
similar law of any jurisdiction) to refund all or part of any amount
received or recovered by it in respect of any sum payable by the
Borrower under this Agreement and shall in any event pay to the Lender
on demand the amount so refunded by it.
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4.6 For the purpose of enabling the Lender to maximise its recoveries in
actual or potential insolvency, any amount received or recovered by the
Lender (otherwise than as a result of a payment by the Lender) in
respect of any sum payable by the Borrower under this Agreement may be
placed by the recipient in an interest bearing suspense account. That
amount may be kept there (with any interest earned being credited to
that account) unless and until the recipient is satisfied that it is
not obliged to pay any further sum under this Agreement and that it has
irrevocably received or recovered its share of the Advances, all
interest accrued thereon and any other sums payable to it under this
Agreement.
4.7 As separate, independent and alternative stipulations, the Guarantor
unconditionally and irrevocably agrees:
4.7.1 that any sum which, although expressed to be payable by the
Borrower under this Agreement, is for any reason (whether or
not now existing and whether or not now known or becoming
known to any party to this Agreement) not recoverable from the
Guarantor on the basis of a guarantee shall nevertheless be
recoverable from it as if it were the sole principal debtor
and shall be paid by it to the Lender on demand and
4.7.2 as a primary obligation to indemnify the Lender against any
loss suffered by it as a result of any sum expressed to be
payable by the Borrower under this Agreement not being paid by
the time, on the date and otherwise in the manner specified in
this Agreement or any payment obligation of the Borrower under
this Agreement being or becoming void, voidable or
unenforceable for any reason (whether or not now existing and
whether or not now known or becoming known to any party to
this Agreement), the amount of that loss being the amount
expressed to be payable by the Borrower in respect of the
relevant sum.
5. REPRESENTATIONS AND WARRANTIES
5.1 Each of the Borrower and the Guarantor severally represents and
warrants to and for the benefit of the Lender that this Agreement:
5.1.1 is within its powers and has been duly authorised by it;
5.1.2 constitutes its legal, valid, binding and enforceable
obligations; and
5.1.3 does not conflict in any material respect with any law or
regulation or its constitutional documents or any document
binding on it and that it has obtained all necessary consents
for its performance of this Agreement.
6. DEFAULT
6.1 If any of the following occurs
6.1.1 the Borrower does not pay or otherwise satisfy on the due date
any amount payable by it under this Agreement and the
non-payment continues unremedied for 5 Business Days from the
receipt of it by notice of non-payment from the Lender;
6.1.2 the Borrower or the Guarantor is, or is deemed for the
purposes of any law (but for this purpose Section 123(l)(a) of
the Insolvency ▇▇▇ ▇▇▇▇ will take effect as if for
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(pound)750 there was substituted "(pound)5,000,000") to be,
unable to pay its debts as they fall due or to be insolvent,
or admits inability to pay its debts as they fall due;
6.1.3 any step (including petition, proposal or convening a meeting)
is taken, as a result of financial difficulties, with a view
to a composition, assignment or arrangement with any creditors
of the Borrower or Guarantor;
6.1.4 any person presents a petition for the bankruptcy or
winding-up or for the administration of the Borrower or
Guarantor, and, in the case of a petition for bankruptcy or
winding-up presented by a creditor, it is not withdrawn,
discharged or stayed within 21 days;
6.1.5 any order is made for the bankruptcy or winding-up or
administration of the Borrower or Guarantor;
6.1.6 any liquidator, trustee in bankruptcy, judicial custodian,
compulsory manager, receiver, administrative receiver,
administrator or the like is appointed in respect of the
Borrower or Guarantor or any part of their respective assets;
6.1.7 there occurs, in relation to the Borrower or Guarantor, any
event anywhere which, in the opinion of the Lender, appears to
correspond with any of those mentioned in sub-Clauses 6.1.2 to
6.1.6 inclusive;
6.1.8 it is or becomes unlawful for the Borrower or Guarantor to
perform any of its material obligations under this Agreement;
6.1.9 the guarantee of the Guarantor in Clause 4 is not (or is
claimed by the Borrower or Guarantor not to be) in full force
and effect;
6.1.10 the Borrower incurs any [Financial Indebtedness] [other than o
] which is not effectively subordinated to its payment
obligations under this Agreement;
6.1.11 the Agent validly gives notice to the Company pursuant to
Clause o [acceleration] of the Credit Agreement;
then the Lender may serve on the Borrower a notice declaring that any
and all of the obligations of the Lender hereunder shall be cancelled
whereupon the same shall be so cancelled forthwith and that all amounts
outstanding under this Agreement from the Borrower to the Lender shall
become immediately due and payable whereupon they shall become so due
and payable.
7. ILLEGALITY
7.1 If any change in or introduction of any applicable law, regulation or
treaty, or any change in the interpretation or application thereof,
shall make it unlawful hereunder for the Lender to make available or
fund or maintain the loan to be made under this Agreement, as the case
may require, the Lender shall give notice thereof to the Borrower,
whereupon the Borrower shall repay all amounts outstanding under this
Agreement together with accrued interest thereon and any other amounts
payable to the Lender hereunder within such period as may be permitted
by such law, regulation or treaty, or the change in the interpretation
or application thereof, or, if no such period is stated therein,
forthwith.
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7.2 If any of the provisions of this Agreement become invalid, illegal or
unenforceable in any respect under any applicable law, the validity,
legality and enforceability of the remaining provisions shall not in
any way be affected or impaired.
8. ASSIGNMENT AND TRANSFER
Neither party may assign or transfer (including, without limitation, by
way of novation) all or any of its rights or obligations under this
Agreement to any person without the prior written consent of the other
party, except for the assignment by way of security by the Lender of
its rights under this Agreement pursuant to the [Debenture].
9. MISCELLANEOUS
9.1 No failure to exercise and no delay in exercising, on the part of
either party, any right, power or privilege under this Agreement or any
other documents ancillary hereto shall operate as a waiver thereof, nor
shall single or partial exercise of any right, power or privilege
preclude any other or further exercise thereof, or the exercise of any
other right, power or privilege. No waiver by the Lender shall be
effective unless it is in writing.
9.2 All notices or other communications under or in connection with this
Agreement shall be given in writing and, unless otherwise stated, may
be made by letter or facsimile. Any such notice will be deemed to be
given as follows:
9.2.1 if by letter, when delivered personally or on actual receipt;
9.2.2 if by facsimile, when received in legible form.
However, a notice given in accordance with the above but received on a
non-working day or after business hours in the place of receipt will
only be deemed to be given on the next working day in that place.
9.3 The address and facsimile number of each party for all notices under or
in connection with this Agreement are:
9.3.1 that notified by that party for this purpose to the other
party on or before it becomes a party; or
9.3.2 any other notified by that party for this purpose to the other
party by not less than 5 Business Days' notice.
9.4 This Agreement may be executed in any number of counterparts and by the
parties to it on separate counterparts, each of which shall be an
original but all of which together shall constitute one and the same
instrument.
9.5 Any amendment or variation of this Agreement shall be in writing and
signed by each of the parties hereto.
9.6 This Agreement shall be governed by, and interpreted in accordance
with, English law.
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9.7 Each of the parties agrees that the courts of England are (subject to
Clause 9.8 below) to have non-exclusive jurisdiction to settle any
dispute (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 submits to the jurisdiction of the
English courts.
9.8 The agreement contained in Clause 9.7 above is included for the benefit
of the Lender. Accordingly, notwithstanding the exclusive agreement in
Clause 9.7 above the Lender shall retain the right to bring proceeding
in any other court which may have jurisdiction, and the Borrower
irrevocably submits to the jurisdiction of any such court in which the
Lender shall bring such proceedings.
IN WITNESS WHEREOF this Agreement has been executed by the parties hereto on the
date first stated above.
[SPV]
By:
AZURIX CORPORATION
By:
AZURIX EUROPE LTD
By:
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SCHEDULE 10
FORM OF SUBORDINATION AGREEMENT
FOR PARENT LOANS TO SPVS
DATED [ ]
BETWEEN
AZURIX EUROPE LTD.
-and-
THE JUNIOR CREDITOR
(as defined in this Deed)
-and-
[SPV]
as Senior Creditor
--------------------------------------------
SUBORDINATION AGREEMENT
---------------------------------------------
[▇▇▇▇▇ & ▇▇▇▇▇ LOGO]
London
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THIS SUBORDINATION AGREEMENT is dated [ ] between:
(1) [AZURIX CORP./[ ]] (the "JUNIOR CREDITOR");
(2) AZURIX EUROPE LTD. (Registered No. 3570749) ("THE SENIOR CREDITOR");
and
(3) [ ] ("SPV")
BACKGROUND:
(A) The Junior Creditor has agreed to subordinate all the Junior Debt on
the terms of this Deed.
(B) It is intended that this document takes effect as a deed
notwithstanding the fact that a party may only execute this document
under hand.
1. INTERPRETATION
1.1 DEFINITIONS
In this Deed:
"CREDIT AGREEMENT"
means the agreement dated [ ] between (among others)
SPV and the Senior Creditor for a credit facility of up to [(pound)].
"DEFAULT"
means any of the events under clause 6.1 of the Credit Agreement.
"JUNIOR DEBT"
means all present and future liabilities (actual or contingent) payable
or owing to the Junior Creditor by SPV together with:
(a) any permitted novation, deferral or extension of any of those
liabilities;
(b) any further advances which may be made by the Junior Creditor
to SPV under any agreement expressed to be supplemental to the
Junior Finance Documents plus all interest, fees and costs in
connection therewith;
(c) any claim for damages or restitution in the event of
rescission of any of those liabilities or otherwise in
connection with the Junior Finance Documents;
(d) any claim against SPV flowing from any recovery by SPV of a
payment or discharge in respect of those liabilities on
grounds of preference or otherwise; and
(e) any amounts (such as post-insolvency interest) which would be
included in any of the above for any discharge,
non-provability, unenforceability or non-allowability of the
same in any insolvency or other proceedings.
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"JUNIOR FINANCE DOCUMENTS"
means document evidencing any Junior Debt and all variations,
replacements, novations of and supplements thereto.
"PERMITTED PAYMENTS"
means any payment of interest or repayment of principal (if financed by
way of a loan under the Credit Agreement) in respect of the Junior
Debt, provided no Default is outstanding.
"PARTY"
means a party to this Deed.
"SENIOR DEBT"
means all present and future liabilities (actual or contingent) payable
or owing by SPV to the Senior Creditor under or in connection with the
Credit Agreement together with:
(a) any refinancing, novation, refunding, deferral or extension of
any of those liabilities;
(b) any further advances which may be made by the Senior Creditor
to SPV under any agreement expressed to be supplemental to the
Credit Agreement plus all interest, fees and costs in
connection therewith;
(c) any claim for damages or restitution in the event of
rescission of any of those liabilities or otherwise in
connection with the Credit Agreement;
(d) any claim against SPV flowing from any recovery by SPV of a
payment or discharge in respect of those liabilities on
grounds of preference or otherwise; and
(e) any amounts (such as post-insolvency interest) which would be
included in any of the above for any discharge,
non-provability, unenforceability or non-allowability of the
same in any insolvency or other proceedings.
"SENIOR LIABILITIES"
means all present and future obligations and liabilities (whether
actual or contingent and whether owned jointly or severally or in any
capacity whatsoever) of SPV to the Senior Creditor under the Senior
Credit Agreement.
1.2 CONSTRUCTION
(a) In this Deed, unless the contrary intention appears, a reference to:
"ASSETS" includes properties, revenues and rights of every description;
an "AUTHORISATION" includes an authorisation, consent, approval,
resolution, licence, exemption, filing, registration and notarisation;
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a "REGULATION" includes any regulation, rule, official directive,
request or guideline (whether or not having the force of law, but if
not having the force of law being of a type with which the person
concerned is accustomed to comply) of any governmental body, agency,
department or regulatory, self-regulatory or other authority or
organisation;
(ii) a provision of a law is a reference to that provision as
amended or re-enacted;
(iii) a Clause or a Schedule is a reference to a clause of or a
schedule to this Deed;
(iv) a person includes its successors and permitted assigns; and
(v) a document is a reference to that document as amended,
novated, supplemented, replaced or renewed.
(b) The index to and the headings in this Deed are for convenience only and
are to be ignored in construing this Deed.
2. SPV'S UNDERTAKINGS
So long as any Senior Debt is outstanding and until the Senior
Liabilities have been irrevocably paid in full, SPV will not, except as
the Senior Creditor has previously consented:
(a) subject to Clause 5 (Subordination on Insolvency) and except
for Permitted Payments, pay or repay or purchase or acquire,
any of the Junior Debt; or
(b) except for Permitted Payments, discharge any of the Junior
Debt by set-off; or
(c) create or permit to subsist security over any of its assets
for any of the Junior Debt; or
(d) take or omit to take any action whereby the subordination
achieved by this Deed will be impaired.
3. JUNIOR CREDITOR'S UNDERTAKINGS
So long as any Senior Debt is outstanding and until the Senior
Liabilities have been irrevocably paid in full, except as permitted
under the Credit Agreement or except as the Senior Creditor has
previously consented, the Junior Creditor will:
(a) subject to Clause 5 (Subordination on Insolvency) and except
for Permitted Payments, not demand or receive payment of any
of the Junior Debt from SPV or any other source or apply any
money or assets in discharge of any Junior Debt;
(b) except for Permitted Payments, not discharge any of the Junior
Debt by set-off;
(c) not permit to subsist or receive any security for any of the
Junior Debt;
(d) not permit to subsist or receive any guarantee, indemnity or
other assurance against loss in respect of any of the Junior
Debt;
(e) promptly notify the Senior Creditor of any default or event of
default (howsoever described) in respect of the Junior Debt;
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(f) unless Clause 5 (Subordination on Insolvency) applies, not:
(i) declare any of the Junior Debt prematurely due and
payable;
(ii) enforce the Junior Debt by execution or otherwise; or
(iii) initiate or take any steps with a view to any
insolvency, reorganisation or dissolution proceedings
in respect of SPV;
(g) not take or omit to take any action whereby the subordination
achieved by this Deed may be impaired;
4. TURNOVER OF NON-PERMITTED RECOVERIES
4.1 NON-PERMITTED PAYMENT
If, other than as permitted under the Credit Agreement (including under
Clauses 2(a) and (b) and 3(a) and (b) above):
(a) the Junior Creditor receives a payment or distribution in
respect of any of the Junior Debt from SPV or any other
source; or
(b) the Junior Creditor receives the proceeds of any enforcement
of any security or any guarantee, indemnity or other assurance
against financial loss for any Junior Debt; or
(c) SPV makes any payment or distribution to the Junior Creditor
on account of the purchase or other acquisition of any of the
Junior Debt,
the Junior Creditor will hold the same in trust for the Senior Creditor
and pay and distribute it to the Senior Creditor for application
towards the Senior Debt until the Senior Debt is irrevocably paid in
full.
4.2 NON-PERMITTED SET-OFFS
If, other than as permitted under the Credit Agreement (including under
Clauses 2(a) and (b) and 3(a) and (b) above), for any reason, any of
the Junior Debt is discharged by set-off, the Junior Creditor will
promptly pay an amount equal to the discharge to the Senior Creditor
for application towards the Senior Debt until the Senior Debt is
irrevocably paid in full.
4.3 FAILURE OF TRUST
If, for any reason, a trust in favour of, or a holding of property for,
the Senior Creditor under this Deed is invalid or unenforceable, the
Junior Creditor will pay and deliver to the Senior Creditor an amount
equal to the payment, receipt or recovery which the Junior Creditor
would otherwise have been bound to hold on trust for or as property of
the Senior Creditor.
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5. SUBORDINATION ON INSOLVENCY
If a Default is outstanding THEN
(a) the Junior Debt will be subordinate in right of payment to the
Senior Debt;
(b) the Senior Creditor may, and is irrevocably authorised on
behalf of the Junior Creditor to, (i) claim, enforce and prove
for the Junior Debt, (ii) file claims and proofs, give
receipts and take all such proceedings and do all such things
as the Senior Creditor reasonably sees fit to recover the
Junior Debt and (iii) receive all distributions on the Junior
Debt for application towards the Senior Debt;
(c) if and to the extent that the Senior Creditor is not entitled
to do any of the foregoing, the Junior Creditor will do so in
good time as reasonably directed by the Senior Creditor;
(d) the Junior Creditor will hold all distributions in cash or in
kind received or receivable by it in respect of the Junior
Debt from SPV or from any other source in trust for the Senior
Creditor and will (at the Junior Creditor's expense) pay and
transfer the same to the Senior Creditor for application
towards the Senior Debt until the Senior Debt is irrevocably
paid in full; and
(e) the trustee in bankruptcy, liquidator, assignee or other
person distributing the assets of SPV or their proceeds is
directed to pay distributions on the Junior Debt direct to the
Senior Creditor for application towards the Senior Debt until
the Senior Debt is irrevocably paid in full. The Junior
Creditor will give all such notices and do all such things as
the Senior Creditor may reasonably direct to give effect to
this provision.
6. CONSENTS
The Junior Creditor will not have any remedy against SPV or the Senior
Creditor by reason of any transaction entered into between the Senior
Creditor and SPV which violates any Junior Finance Document and the
Junior Creditor may not object to any such transaction by reason of any
provisions of the Junior Finance Documents.
7. REPRESENTATIONS AND WARRANTIES
The Junior Creditor represents and warrants to the Senior Creditor that
this Deed:
(a) is within its powers and has been duly authorised by it;
(b) constitutes its legal, valid, binding and enforceable
obligations; and
(c) does not conflict with any law or regulation or its
constitutional documents or, to any material extent, any
document binding on it and that it has obtained all necessary
consents for its performance of this Deed.
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8. PROTECTION OF SUBORDINATION
8.1 CONTINUING SUBORDINATION
The subordination provisions in this Deed constitute a continuing
subordination and benefit the ultimate balance of the Senior Debt
regardless of any intermediate payment or discharge of the Senior Debt
in whole or in part.
8.2 WAIVER OF DEFENCES
The subordination in this Deed and the obligations of the Junior
Creditor under this Deed will not be affected by any act, omission,
matter or thing which, but for this provision, would reduce, release or
prejudice the subordination or any of those obligations in whole or in
part, including without limitation:
(a) any waiver granted to, or composition with, SPV 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, SPV
or other person in respect of the Senior Debt or otherwise or
any failure to realise the full value of any security; or
(c) any unenforceability, illegality or invalidity of any
obligation of SPV or security in respect of the Senior Debt or
any other document or security.
8.3 IMMEDIATE RECOURSE
The Junior Creditor waives any right it may have of first requiring the
Senior Creditor or any trustee or other agent on its behalf to proceed
against or enforce any other rights or security or claim payment from
any person before claiming the benefit of this Deed. The Senior
Creditor may refrain from applying or enforcing any money, rights or
security as long as it sees fit.
8.4 APPROPRIATIONS
Until the Senior Liabilities have been irrevocably paid in full, the
Senior Creditor may:
(a) apply any moneys or property received under this Deed or from
SPV or from any other person against the Senior Debt in
accordance with the terms of the Credit Agreement;
(b) hold in an interest-bearing suspense account any moneys or
distributions received from the Junior Creditor under Clause 4
(Turnover of non-permitted recoveries) or Clause 5
(Subordination on insolvency) or on account of the liability
of the Junior Creditor under this Deed.
8.5 NON-COMPETITION
Until the Senior Liabilities have been irrevocably paid in full, the
Junior Creditor will not by virtue of any payment or performance by it
under this Deed or by virtue of the operation of Clauses 4 (Turnover of
non-permitted recoveries) or 5 (Subordination on insolvency):-
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(a) be subrogated to any rights, security or moneys held, received
or receivable by the Senior Creditor or any trustee or other
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 the Junior Creditor's liability
under this Deed; or
(b) claim, rank, prove or vote as a creditor of SPV or other
person or their respective estates in competition with the
Senior Creditor or any trustee or other agent on its behalf;
or
(c) receive, claim or have the benefit of any payment,
distribution or security from or on account of SPV or other
person.
9. PRESERVATION OF JUNIOR DEBT
Notwithstanding any term of this Deed postponing, subordinating or
preventing the payment of any of the Junior Debt, the Junior Debt
concerned shall, solely as between SPV and the Junior Creditor, remain
owing or due and payable in accordance with the terms of the Junior
Finance Documents, and interest and default interest will accrue on
missed payments accordingly.
10. CHANGES TO THE PARTIES
10.1 SUCCESSORS AND ASSIGNS
This Deed is binding on the successors and assigns of the Parties.
10.2 SPV AND THE JUNIOR CREDITOR
Neither SPV nor the Junior Creditor may assign or transfer any of their
rights or obligations under this Deed without the consent of the Senior
Creditor.
10.3 THE SENIOR CREDITOR
The Senior Creditor may assign or otherwise dispose of all or any of
their rights under this Deed in accordance with the Credit Agreement.
11. MISCELLANEOUS
11.1 PERPETUITY
The perpetuity period for the trusts in this Deed is 80 years.
11.2 POWER OF ATTORNEY
By way of security for the obligations of the Junior Creditor under
this Deed, the Junior Creditor irrevocably appoints the Senior Creditor
as its attorney to do anything which the Junior Creditor is required to
do by this Deed but has failed to do, having been given 10 Business
Days notice to rectify such non-compliance. The Senior Creditor may
delegate this power.
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12. INDEMNITY
(a) SPV will indemnify the Senior Creditor and every attorney appointed by
it in respect of all liabilities and expenses reasonably incurred by it
or him in good faith in connection with the enforcement or preservation
of any rights in accordance with this Deed.
(b) The Senior Creditor shall not be liable for any losses arising in
connection with the exercise or purported exercise of any of its
rights, powers and discretions in good faith under this Deed, unless
that liability arises as a result of the Senior Creditor's negligence
or wilful default and in particular (but without limitation) the Senior
Creditor in possession shall not be liable to account as mortgagee in
possession.
13. WAIVERS, REMEDIES CUMULATIVE
The rights of the Senior Creditor under this Deed:
(a) may be exercised as often as necessary;
(b) are cumulative and are not exclusive of their rights under the
general law; and
(c) may be waived only in writing and specifically and may be on
such terms as the Senior Creditor sees fit.
14. SEVERABILITY
If a provision of this Deed 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 Deed; or
(b) the validity or enforceability in other jurisdictions of that
or any other provision of this Deed.
15. COUNTERPARTS
This Deed 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 Deed.
16. NOTICES
16.1 GIVING OF NOTICES
All notices or other communications under or in connection with this
Deed shall be given in writing and, unless otherwise stated, may be
made by letter or facsimile. Any such notice will be deemed to be given
as follows:
(a) if by letter, when delivered personally or on actual receipt;
and
(b) if by facsimile, when received in legible form.
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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) The address and facsimile number of the Junior Creditor for all notices
under or in connection with this Deed are:
Fax:
Attention: [ ]
or such other as the Junior Creditor may notify to the other parties by
not less than five Business Days' notice.
(b) The address and facsimile number of SPV for all notices under or in
connection with this Deed are:
Fax:
Attention: [ ]
or such other as SPV may notify to the other parties by not less than
five Business Days' notice.
(c) The address and facsimile number of the Senior Creditor for all notices
under or in connection with this Deed are:
[
]
Facsimile No: [ ]
Attention: [ ]
or such other as the Senior Creditor may notify to the other parties by
not less than five Business Days' notice.
17. GOVERNING LAW
This Deed is governed by English law.
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18. JURISDICTION
(a) Each of the parties agrees that the courts of England are (subject to
paragraph (b) below) to have non-exclusive jurisdiction to settle any
dispute (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 Deed
or otherwise arising in connection with this Deed and for such purposes
irrevocably submits to the jurisdiction of the English courts.
(b) The agreement contained in paragraph (a) above is included for the
benefit of the Senior Creditor. Accordingly, notwithstanding the
exclusive agreement in paragraph (a) above the Senior Creditor shall
retain the right to bring proceeding in any other court which may have
jurisdiction, and the Borrower irrevocably submits to the jurisdiction
of any such court in which the Senior Creditor shall bring such
proceedings.
This Deed has been entered into on the date stated at the beginning of this
Deed.
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SIGNATORIES TO THE SUBORDINATION AGREEMENT
JUNIOR CREDITOR
EXECUTED as a deed by )
AZURIX CORP. )
acting by )
and )
Director
Director/Secretary:
SPV
EXECUTED as a deed by )
[ ] )
acting by )
and )
Director
Director/Secretary
SENIOR CREDITOR
AZURIX EUROPE LTD
By:
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SIGNATORIES TO SUPPLEMENTAL AGREEMENT
COMPANY
AZURIX EUROPE LTD.
By: /s/▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
ARRANGERS
CHASE MANHATTAN PLC
By: /s/
------------------------------
WESTDEUTSCHE LANDESBANK GIROZENTRALE
By: /s/
------------------------------
FACILITY AGENT (FOR ITSELF AND ON BEHALF OF THE BANKS)
WESTDEUTSCHE LANDESBANK GIROZENTRALE
By: /s/
------------------------------
SECURITY AGENT
CHASE MANHATTAN TRUSTEES LIMITED
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
