DATED 19 May 1998
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TU FINANCE (NO. 1) LIMITED
and certain of its Subsidiaries
(as Charging Companies)
- and -
CHASE MANHATTAN INTERNATIONAL LIMITED
(as Security Agent)
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GUARANTEE AND DEBENTURE
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LOVELL WHITE DURRANT
LONDON
A7/DCH/AJAP
INDEX
1. INTERPRETATION 1
2. COVENANT TO PAY 5
3. CHARGING CLAUSE 6
4. TITLE DOCUMENTS AND VOTING RIGHTS 9
5. COLLECTION OF RECEIVABLES 11
6. NEGATIVE PLEDGE AND OTHER RESTRICTIONS 11
7. FURTHER ASSURANCE 12
8. CONTINUING SECURITY 12
9. GENERAL COVENANTS 13
10. COVENANTS REGARDING SECURITIES 13
11. LEASES, POSSESSION OF LAND AND CONSOLIDATION OF MORTGAGES 14
12. POWERS OF SALE, LEASING AND ACCEPTING SURRENDERS 14
13. OPENING OF NEW ACCOUNTS 15
14. APPOINTMENT AND POWERS OF A RECEIVER 15
15. POWER OF ATTORNEY 18
16. ADJUSTMENT OF ACCOUNT 18
17. OTHER POWERS EXERCISABLE BY THE SECURITY AGENT 19
18. APPLICATION OF MONEY RECEIVED
BY THE SECURITY AGENT OR A RECEIVER 19
19. COSTS AND INTEREST ON OVERDUE AMOUNTS 20
20. SET-OFF 20
21. SECURITY AGENT AS TRUSTEE,
PERPETUITY PERIODS AND NO PARTNERSHIP 21
22. FORBEARANCE AND SEVERABILITY 21
23. VARIATIONS AND CONSENTS 22
24. AUTHORITY OF PRIMARY BORROWER 22
25. SERVICE OF DEMANDS AND NOTICES 22
26. COUNTERPARTS 23
27. ASSIGNMENT 23
28. SECURITY AGENT 23
29. JOINT AND SEPARATE LIABILITY 23
30. THE GIVING AND ACKNOWLEDGEMENT OF NOTICE OF ASSIGNMENT 23
31. GOVERNING LAW 23
THE FIRST SCHEDULE
Part A
The Charging Companies 24
Part B
The Security Agent 24
THE SECOND SCHEDULE
Terms of Guarantee 25
THE THIRD SCHEDULE
PART I
Form of Notice and Instructions to Receiving Banker 29
PART II
Form of Acknowledgement
and Undertaking by Receiving Banker 31
PART III
Form of control agreement to be executed by among others
the US Depositary for the Offer and Bidco 32
THIS GUARANTEE AND DEBENTURE made the 19th day of May 1998
BETWEEN:
(1) THE COMPANIES LISTED IN PART A OF THE FIRST SCHEDULE; and
(2) CHASE MANHATTAN INTERNATIONAL LIMITED as agent and trustee on behalf of the
Beneficiaries (as defined below).
WITNESSES as follows:
1. INTERPRETATION
1.1 In this Debenture words or expressions defined in the Facility Agreement
shall, unless otherwise defined below, bear the same meaning in this
Debenture and, in addition, in this Debenture, so far as the context
admits, the following expressions shall have the following meanings:
"Assets" all the present, future or contingent undertaking,
property, assets, rights and revenues of a
Charging Company whatever, and wherever situated
in the world, present and future, and includes
each or any of them;
"Beneficiaries" means collectively the Arrangers, the Facility
Agent, the Issuing Bank, the Security Agent and
the Banks, and (as regards sums owing in respect
of the Hedging Agreements) their respective
Affiliates;
"Bidco" TU Acquisitions PLC (registered number 3455523);
"Business Day" a day on which the banks generally are open for
business in the City of London and in New York
(excluding Saturdays and bank or public holidays);
"Charging Companies" the companies listed in Part A of the First
Schedule and (where the context permits) includes
each or any of them;
"Companies" means the Charging Companies and to the extent
that they become "Borrowers" under the Facility
Agreement, the Target and any Subsidiary from time
to time of the Target;
"Collection Account" has the meaning attributed to it by clause 5.1
(Collection of Receivables);
"this Debenture" this Guarantee and Debenture;
"Derivative Securities" include:
(a) allotments, rights, money or property
arising from the Securities by way of
conversion, exchange, redemption, bonus,
preference, option or otherwise;
(b) dividends, distributions, interest and
other income from the Securities; and
(c) stock, shares and securities offered in
addition to or substitution for the
Securities;
"Document" any transfer, renunciation, proxy, mandate, legal
or other charge, mortgage, assignment, deed or
other document in relation to the Securities;
"Facility Agreement" means the facilities agreement dated 2 March 1998
made between TU Finance (No. 1) Limited (1), TU
Finance (No. 2) Limited and TU Acquisitions PLC
(2), Chase Manhattan plc, Lehman Brothers
International and Merrill Lynch Capital
Corporation (as Joint Lead Arrangers) (3), The
Chase Manhattan Bank, Lehman Commercial Paper Inc
and Merrill Lynch Capital Corporation (as
Underwriters) (4), The Chase Manhattan Bank (as
Issuing Bank) (5), Chase Manhattan International
Limited (as Facility Agent) (6) and Chase
Manhattan International Limited (as Security
Agent) (7) as amended and restated by an agreement
dated 3 March 1998 and 21 April 1998 and which
expression shall include any further amendments,
supplements, accessions, variations or additions
to such agreement, however fundamental (including,
without limitation, changes to the facilities
provided or increases in their maximum amount);
"Facility Agent" shall have the meaning attributed to it in the
Facility Agreement;
"Floating Charge Assets" insofar only as concerns the floating charge
created by clause 3.1(n) (Charging Clause), Assets
for the time being comprised within such floating
charge;
"Guarantor" any Charging Company insofar only as it covenants
under clause 2.1(b) (Charging Clause) to pay or
discharge money due or owing from or liabilities
of other Companies to the Beneficiaries and
"Guarantors" and "Guarantee" shall be construed
accordingly;
"Hedging Agreements" the interest rate hedging agreements contemplated
by clause 10.2(f) of the Facility Agreement, but
only if and insofar as such agreements are entered
into with a Beneficiary;
"Holding Company" shall have the meaning given to that expression in
Section 736 of the Companies Act 1985 as if
extended to bodies corporate wheresoever
incorporated;
"indebtedness" includes any obligation in any currency, whether
incurred as principal debtor or surety, for the
payment or repayment of money, whether present or
future, actual or contingent;
"Land" includes freehold and leasehold land and (outside
England and Wales) immovable property and in each
case all buildings and structures upon and all
things affixed to Land (including trade and
tenant's fixtures);
"Offer Rights" means all rights of Bidco pursuant to the Offer
and the terms of any of the Offer Documents (and
its form of acceptance) including the right to
have the Target's Shares transferred to the name
of or held to the order of Bidco (or its nominee)
and all rights of Bidco over any agreement with
the Receiving Banker to the Offer and any brokers
which may purchase Target Shares on Bidco's
behalf;
"Primary Borrower" TU Finance (No. 1) Limited (registered number
3505836);
"Principal" any Company insofar only as it owes money or has
incurred liabilities to a Beneficiary except as a
Guarantor;
"Receivables" in relation to a Charging Company, all sums of
money receivable by such Charging Company now or
in the future consisting of or payable under or
derived from any of its Assets referred to in
clause 3.1(d), (f), (g), (h), (j), (k) and (l)
(Charging Clause);
"Receiver" means any receiver and manager or receivers and
managers appointed under clause 14.1 (Appointment
and Powers of Receiver) and (where the context
requires or permits) includes any substituted
receiver and manager or receivers and managers;
"Regulations" the Uncertificated Securities Regulations 1995;
"Receiving Banker" the UK Receiving Agent, as defined in the Offer
Documents;
"Relevant System" the meaning given to that term by the Regulations
and includes any other system or facility (in the
United Kingdom or elsewhere) providing for the
deposit of, and clearance of transactions in, the
Securities;
"Receiving Banker's an undertaking from the Receiving Banker in the
Undertaking" form or substantially in the form set out in Part
II of the Third Schedule;
"Secured Sums" means all money and liabilities covenanted and/or
guaranteed to be paid or discharged by the
Charging Companies to the Security Agent and the
Beneficiaries under clause 2.1 (Covenant to Pay);
"Securities" means, in relation to any Charging Company, all
stocks, shares, debentures and loan stocks issued
by any company or person and all other investments
(whether or not marketable) now or in the future
owned at law or in equity by such
Charging Company, including all interests in
investment funds and all Derivative Securities and
including all Securities owned by such Charging
Company in any other Charging Company, all Target
Shares and all rights and entitlements in respect
thereof owned by Bidco and all shares in Bidco
owned by a Charging Company and including all
rights, benefits and sums now or in the future
accruing to any Charging Company as a result of
any Securities being held in a Relevant System
(including such Charging Company's rights against
the operator of, or any participant in, the
Relevant System);
"Security Agent" Chase Manhattan International Limited acting as
security agent and trustee for the Beneficiaries
and includes any successor appointed by the
Beneficiaries pursuant to Clause 17.5 of the
Facility Agreement;
"Subsidiary" shall have the meaning given to that expression in
Section 736 of the Companies Act 1985 as if
extended to bodies corporate wheresoever
incorporated;
"Target" means The Energy Group PLC (company no. 3257256);
"Target Shares" means the issued and to be issued shares in the
capital of the Target (including the Target's
American Depositary Shares and any American
Depositary Receipts representing the Target's
American Depositary Shares) which are the subject
of the Offer;
"United Kingdom" means the United Kingdom of Great Britain and
and "UK" Northern Ireland;
"writing" includes telex, facsimile transmission and any
other mode of representing or reproducing words in
a legible and non-transitory form, except in
relation to any certificate, notice or other
document which is expressly required by this
Debenture to be signed, and "written" has a
corresponding meaning.
1.2 Interpretation: In this Debenture, unless the context otherwise requires:
(a) words denoting the singular number only shall include the plural
number also and vice versa;
(b) words denoting the masculine gender only shall also include the
feminine gender;
(c) words denoting persons only shall include corporations, partnerships
and unincorporated associations;
(d) references to clauses, paragraphs and Schedules are to be construed as
references to clauses, paragraphs and Schedules of this Debenture;
(e) references to any party shall, where relevant, be deemed to be
references to or to include, as appropriate, their respective
successors or permitted assigns;
(f) references in this Debenture to this Debenture or any other document
include references to this Debenture or such other document as varied,
supplemented, restated and/or replaced in any manner from time to time
and/or any document which varies, supplements, restates and/or
replaces it;
(g) references to "including" shall not be construed restrictively but
shall be construed as meaning "including, without prejudice to the
generality of the foregoing";
(h) references to moneys, obligations and liabilities due, owing or
incurred under the Finance Documents shall include moneys, obligations
and liabilities due, owing or incurred in respect of any extensions or
increases in the amount of the facilities provided for therein or the
obligations and liabilities imposed thereunder;
(i) expressions defined in the Companies Act 1985 shall have the same
meanings in this Debenture, except that the expression "company" shall
include a body corporate established outside Great Britain;
(j) any references to any statute or any section of any statute shall be
deemed to include reference to any statutory modification or
re-enactment of it for the time being in force;
(k) the limitation on liability conferred by Section 6(2) of the Law of
Property (Miscellaneous Provisions) Act 1994 shall not apply to the
covenants for title implied on the part of each Charging Company.
1.3 Headings: Headings in this Debenture are inserted for convenience and shall
not affect its interpretation.
2. COVENANT TO PAY
2.1 Covenant to Pay: Each Charging Company hereby:
(a) covenants that it will on demand in writing made to it by the Security
Agent or the relevant Beneficiary pay or discharge to the Security
Agent all money and liabilities now or in the future due, owing or
incurred to each Beneficiary by such Charging Company under the
Facility Agreement, the Hedging Agreements or this Debenture (at any
time after such money and liabilities have become due for payment or
discharge in accordance with the Facility Agreement, the Hedging
Agreements or this Debenture);
(b) covenants and guarantees that it will on demand in writing made to it
by the Security Agent or the relevant Beneficiary pay or discharge to
the Security Agent all money and liabilities now or in the future due,
owing or incurred to each Beneficiary by each other Company (except as
a Guarantor for the Charging Company giving this covenant) under the
Facility Agreement, the Hedging Agreements or this Debenture (at any
time after such money and liabilities have become due for payment or
discharge in accordance with the Facility Agreement, the Hedging
Agreements or this Debenture);
in either case, whether on or after such demand, whether actually or
contingently, whether solely or jointly with any other person, whether as
principal or surety, including all interest,
commission, fees, charges, costs and expenses which each Beneficiary may
charge or incur in respect of any Company or its affairs in accordance with
the Facility Agreement, the Hedging Agreements or this Debenture and so
that interest shall be computed and compounded in accordance with the
Facility Agreement (after as well as before any demand or judgment); but
the guarantee in clause 2.1(b) shall not extend to the repayment of amounts
outstanding under the stand-alone revolving credit facility contemplated by
clause 24.5 of the Facility Agreement.
2.2 Terms of Guarantee: The guarantee contained in clause 2.1(b) (Covenant to
Pay) is given subject to, and with the benefit of, the provisions set out
in the Second Schedule.
2.3 Guarantee Binding: Each Charging Company agrees to be bound by the
guarantee contained in clause 2.1(b) (Covenant to Pay), even if any other
Charging Company which was intended to execute this Debenture may not do so
or may not be effectually bound.
2.4 Demand by Security Agent: The making of one demand under this Debenture
will not preclude the Security Agent making any further demands.
2.5 Third Parties: No demand may be made under this Debenture unless the
Facility Agent or the relevant Beneficiaries have become entitled to make a
demand under clause 12.2 of the Facility Agreement, but any third party
dealing with the Security Agent or the Receiver appointed under this
Debenture shall not be concerned to see or enquire as to the validity of
any demand under this Debenture.
3. CHARGING CLAUSE
3.1 Charging Clause: Each Charging Company with full title guarantee hereby
charges to the Security Agent with the payment or discharge of all Secured
Sums:
(a) Registered property: by way of legal mortgage, all freehold and
leasehold Land in England and Wales now vested in such Charging
Company and registered at H M Land Registry;
(b) Unregistered property: by way of legal mortgage, all other freehold
and leasehold Land in England and Wales now vested in such Charging
Company and not registered at H M Land Registry;
(c) Future Land: by way of first fixed charge, all Land in the future
becoming the property of such Charging Company;
(d) Interests in Land: by way of fixed charge, all interests in Land or
the proceeds of sale of Land now or in the future belonging to such
Charging Company which have not already been charged under the
preceding provisions of this clause 3.1 (Charging Clause) and all
licences now or in the future held by such Charging Company to enter
upon, use or exploit Land and the benefit of all options, easements,
agreements for lease and other agreements relating to the acquisition,
use, exploitation or disposal of Land to which such Charging Company
is or may in the future become entitled;
(e) Plant and machinery and fixtures: by way of fixed charge, all plant
and machinery of such Charging Company now or in the future attached
to any Land which, or an interest in which, is charged under the
preceding provisions of this clause 3.1 (Charging Clause) and all
rights and interests of such Charging Company under all
present and future agreements for the purchase, maintenance or use of
plant and machinery so attached;
(f) Rental and income from Land: by way of fixed charge, all rental and
other income and all debts and claims now or in the future due or
owing to such Charging Company under or in connection with any lease,
agreement or licence relating to Land;
(g) Securities: by way of fixed charge, all Securities belonging to such
Charging Company;
(h) Contracts and policies of insurance and assurance: by way of fixed
charge, all contracts and policies of insurance and assurance now or
in the future held by or otherwise benefiting such Charging Company
and all rights and interests of such Charging Company in every such
contract and policy (including the benefit of all claims arising and
all money payable under such contracts and policies);
(i) Goodwill and uncalled capital: by way of fixed charge, all the
goodwill and uncalled capital for the time being of such Charging
Company;
(j) Intellectual Property Rights: by way of fixed charge, all intellectual
property rights of such Charging Company capable of being validly
charged by fixed charge;
(k) Book and other debts: by way of fixed charge, all book and other debts
now or in the future owing to such Charging Company and all rights and
claims of such Charging Company against third parties, present and
future, capable of being satisfied by the payment of money (except
rights and claims effectively charged under the preceding provisions
of this clause 3.1) (Charging Clause);
(l) Negotiable instruments etc: by way of fixed charge, the benefit of all
negotiable instruments, guarantees, bonds, debentures, legal or
equitable charges and all other security, reservation of proprietary
rights, rights of tracing, unpaid vendor's liens and all other rights
and remedies now or in the future available to such Charging Company
as security for any Receivable or for the performance by any third
party of any obligation now or in the future owed to such Charging
Company;
(m) Loan Note Collateral Account and Collection Account balances: by way
of fixed charge, all money at any time standing to the credit of the
Loan Note Collateral Account or any Collection Account relating to
such Charging Company, including the proceeds of all its Receivables,
which proceeds shall, for the avoidance of doubt, on payment into such
Collection Account cease to be subject to the charges contained in the
preceding provisions of this clause 3.1 (Charging Clause) but shall be
subject to the fixed charge contained in this paragraph (m);
(n) Floating Charge Assets: by way of floating charge:
(i) all Assets now or in the future owned by such Charging Company
except to the extent that such Assets are for the time being
effectively charged by any fixed charge contained in the
preceding provisions of this clause 3.1 (Charging Clause) or
effectively assigned by clause 3.2 (Assignment of Rights),
including any Assets comprised within a charge which is
reconverted under clause 3.7 (Decrystallisation of Floating
Charge); and
(ii) without exception all Assets insofar as they are for the time
being situated in Scotland;
but in each case so that such Charging Company shall not create any
mortgage or any fixed or floating charge or other security over any
Floating Charge Asset (whether having priority over, or ranking pari passu
with or subject to, this floating charge) or take any other step referred
to in clause 6.1 (Negative Pledge and other Restrictions) with respect to
any Floating Charge Asset and such Charging Company shall not, without the
prior written consent of the Security Agent, sell, transfer, part with or
dispose of any Floating Charge Asset except by way of sale in the ordinary
course of its business.
3.2 Assignment of Rights: (a) Bidco hereby assigns and agrees to assign to the
Security Agent as continuing security for the payment, discharge and
performance of the Secured Sums the Offer Rights together with the benefit
of all powers and remedies for enforcing the same, in favour of the
Security Agent; (b) each Charging Company hereby assigns and agrees to
assign to the Security Agent as continuing security for the payment,
discharge and performance of the Secured Sums all indebtedness due to such
Charging Company from any other Charging Company including all such
indebtedness arising or in any way connected with the Offer or the
financing of the Offer.
3.3 Notice Relating to the Assignment and the Charge over Target Shares: Bidco
shall:
(a) execute the notice of the assignment and the charge over the Offer
Rights constituted by this deed in the form set out in Part I of the
Third Schedule on the date hereof and:
(i) forthwith deliver the same to the Receiving Banker; and
(ii) procure the execution and delivery to the Security Agent by the
Receiving Banker of the acknowledgement and undertaking
substantially in the form set out in Part II of the Third
Schedule; and
(b) execute the contol agreement substantially in the form set out in Part
III of the Third Schedule on the date hereof and:
(i) forthwith deliver the same to the US Depositary for the Offer,
Bank of New York; and
(ii) procure the execution and delivery to the Security Agent by such
US Depositary of such control agreement.
3.4 Crystallisation of Floating Charge: The floating charge created by any
Charging Company in clause 3.1(n) (Charging Clause) may be crystallised
into a fixed charge by notice in writing given at any time on or after the
Enforcement Date by the Security Agent to such Charging Company. Such
crystallisation shall take effect over such Floating Charge Assets or class
or classes of Floating Charge Assets as shall be specified in the notice.
If no Floating Charge Assets are so specified, it shall take effect over
all Floating Charge Assets of the relevant Charging Company.
3.5 Automatic Crystallisation: If any Charging Company, without the Security
Agent's prior written consent, resolves to take or takes any step to charge
(whether by way of fixed or floating charge) or otherwise encumber any of
its Floating Charge Assets or to create a trust
over any such Floating Charge Asset or to dispose of any such Floating
Charge Asset except by way of sale or other disposition in the ordinary
course of such Charging Company's business, or if any person resolves to
take or takes any step to levy any distress, execution, sequestration or
other process against any Floating Charge Asset, then the floating charge
created by clause 3.1(n) (Charging Clause) shall be automatically
crystallised (without the necessity of notice) into a fixed charge over
such Floating Charge Asset instantly on the occurrence of such event.
3.6 Floating Charge Assets acquired after Crystallisation: Except as otherwise
stated in any notice given under clause 3.4 (Crystallisation of Floating
Charge) or unless such notice relates to all Floating Charge Assets,
Floating Charge Assets acquired by any Charging Company after
crystallisation has occurred under clause 3.4 (Crystallisation of Floating
Charge) or 3.5 (Automatic Crystallisation) shall continue subject to the
floating charge created by clause 3.1(n) (Charging Clause), so that the
crystallisation shall be effective only as to its Floating Charge Assets in
existence at the date of crystallisation.
3.7 Decrystallisation of Floating Charge: Any charge by a Charging Company
which has crystallised under clause 3.4 (Crystallisation of Floating
Charge) or 3.5 (Automatic Crystallisation) may, by notice in writing given
at any time by the Security Agent to such Charging Company, be reconverted
into a floating charge in relation to the Assets or class or classes of
Assets specified in such notice.
3.8 Priority of Fixed Security: Any mortgage, fixed charge or other fixed
security whenever and however created by a Charging Company and subsisting
in favour of the Security Agent shall (save as the Security Agent may
otherwise declare at or after the time of its creation) have priority over
the floating charge created by clause 3.1(n) (Charging Clause).
3.9 Future Security subject to this Debenture: Any debentures, mortgages or
charges (fixed or floating) created in the future by a Charging Company
(except those in favour of the Security Agent) shall be expressed to be
subject to this Debenture and shall rank in order of priority behind the
charges created by this Debenture.
4. TITLE DOCUMENTS AND VOTING RIGHTS
4.1 Deposit of Title Deeds and Documents: Except as otherwise expressly agreed
in writing by the Security Agent, each Charging Company shall:
(a) deposit with the Security Agent, and the Security Agent shall be
entitled to retain, all deeds and documents of title relating to all
its Assets charged by way of fixed charge under clause 3.1 (Charging
Clause) (including policies of insurance and assurance and
certificates evidencing the entitlement of the Charging Companies to
the Securities);
(b) promptly have registered in the name of the Security Agent or its
nominee on the date of receipt by it and/or, in relation to the Target
Shares, the Receiving Banker, the Target Shares in certificated form,
and in the case of all other Securities certificates and documents of
title relating to such other Securities in certificated form and
undated transfers executed in blank and such other Documents as the
Security Agent may require to perfect title to such other Securities
(duly executed by the registered holder) or for vesting or enabling it
to vest the same in itself, its nominees or any purchaser Provided
that this sub-clause shall be satisfied in relation to the Target
Shares held by
the Receiving Banker if the Security Agent receives from the Receiving
Banker a duly executed Receiving Banker's Undertaking.
4.2 Charging Companies to retain voting rights and dividends until Debenture
enforceable: Unless and until this Debenture becomes enforceable or the
Security Agent otherwise directs at any time while a Default is continuing:
(a) for so long as the relevant Charging Company remains the registered
owner of the Securities:
(i) all voting and other rights (including the right to receive
dividends) attaching to Securities shall continue to be exercised
by the relevant Charging Company for so long as it remains their
registered owner, Provided that the relevant Charging Company
undertakes not to exercise any voting or other rights in a way
which is likely to prejudice the value of the Securities or
otherwise jeopardise the security constituted by this Debenture;
and
(ii) the relevant Charging Company shall be free to deal with all
dividends and interest paid thereon, subject to the provisions of
the Facilities Agreement;
(b) if Securities are registered in the name of the Security Agent or its
nominee:
(i) all voting and other rights attaching to them shall be exercised
by the Security Agent or its nominee in accordance with
instructions in writing from time to time received from the
relevant Charging Company, Provided that the relevant Charging
Company undertakes not to give any instructions to exercise any
voting or other rights in a way which is in the reasonable
opinion of the Security Agent likely to prejudice the value of
the Securities or otherwise jeopardise the security created by
this Debenture; in the absence of any such instructions, the
nominee shall refrain from exercising any such rights; and
(ii) all dividends, distributions, interest and other moneys paid on
and received by the Security Agent in respect of the Securities
shall be collected by the Agent as agent for the relevant
Charging Company and paid to such Charging Company to such
account as it may from time to time specify.
4.3 Security Agent to have voting rights and dividends after Debenture
enforceable: At any time after this Debenture has become enforceable:
(a) the Security Agent may (in the name of the relevant Charging Company
or otherwise and without any further consent or authority on the part
of such Charging Company) exercise all voting and other rights
attaching to the Securities and any rights attaching to the Securities
to nominate or remove a director as if the Security Agent was the sole
beneficial owner of the Securities;
(b) all Derivative Securities shall, if received by the relevant Charging
Company or its nominee, be held on trust for and forthwith paid or
transferred to the Security Agent; and
(c) each Charging Company shall (and shall procure that its nominees
shall) accept short notice for and attend any meeting of the holders
of any Securities, appoint proxies and
exercise voting and other rights and powers exercisable by the holders
of the Securities as the Security Agent may direct from time to time.
5. COLLECTION OF RECEIVABLES
5.1 Treatment of Receivables: Each Charging Company shall collect and realise
all Receivables and shall pay into such Charging Company's account with the
Security Agent or such other account of such Charging Company as the
Security Agent may direct (a "Collection Account") all money which it may
receive in respect of them immediately on receipt. Each Charging Company
shall, pending such payment, hold all money so received upon trust for the
Security Agent and shall not, without the prior written consent of the
Security Agent, charge, factor, discount, assign, postpone, subordinate,
release or waive its rights in respect of any Receivable in favour of any
other person or purport to do so. The Collection Account shall be operated
by the Beneficiary with which it is maintained (if not the Security Agent
itself) as trustee for the Security Agent.
5.2 Delivery of Particulars and Receivables: Each Charging Company shall
deliver to the Security Agent such particulars as to the amount and nature
of its Receivables as the Security Agent may from time to time reasonably
require.
6. NEGATIVE PLEDGE AND OTHER RESTRICTIONS
6.1 Negative Pledge and other restrictions: No Charging Company shall, without
the prior written consent of the Security Agent:
(a) create, or agree or attempt to create, or permit to subsist, any
Security Interest except this Debenture;
(b) sell, or otherwise dispose of any Assets to any persons on terms which
will or are intended to result in such Assets being leased or licenced
back or re-acquired by such Charging Company or any other Group
Company;
(c) permit any person other than the Security Agent or its nominee to be
registered as the holder of any Target Shares;
(d) do anything which would prejudice the Security Interest of the
Security Agent over the Securities.
6.2 Application to Land Registrar: Each Charging Company hereby applies to the
Chief Land Registrar for a restriction to be entered on the register of
title of all present registered freehold and leasehold Land in England and
Wales of such Charging Company, and agrees to apply for such a restriction
when requested by the Security Agent in respect of all freehold and
leasehold Land in England and Wales acquired by such Charging Company after
the date of this Debenture, in the following terms:
"Except under an order of the Registrar, no disposition by the proprietor
of the land is to be registered without the consent of the proprietor for
the time being of [the charge hereby created]."
7. FURTHER ASSURANCE
7.1 Further Assurance: Each Charging Company shall on demand by the Security
Agent in writing execute and deliver to the Security Agent at the cost of
such Charging Company and in such form as the Security Agent may require:
(a) a valid legal mortgage of standard security or other hypothecation any
Land now or in the future belonging to such Charging Company;
(b) a valid fixed charge over any interest, not capable of being charged
by way of legal mortgage, in any Land now or in the future belonging
to such Charging Company;
(c) a legal assignment or other fixed security over all or any of its
intellectual property rights or Receivables;
(d) a legal charge over all or any of its Securities;
(e) any Documents, instruments or directions relating to any Securities in
uncertificated form required to protect or preserve the Security
Agent's title to and security over such Securities;
(f) a chattel mortgage over such chattels, plant, machinery, computers
and/or other equipment of such Charging Company as the Security Agent
may specify;
(g) a fixed charge or other fixed security over any of its Floating Charge
Assets;
(h) where any of its Assets are situated outside England and Wales, such
fixed security under the law of the place where the Asset is situated
as the Security Agent may require;
(i) a notice to the US Depositary (as defined in the Offer Document)
regarding the Security Agent's interest in the American Depositary
Shares which are the subject of the Offer, and an acknowledgement from
the US Depositary of such notice; and
(j) such other documents as the Security Agent may in its discretion think
fit further to secure the payment of the Secured Sums, or to perfect
this Debenture, or to vest title to any Asset in itself or its nominee
or any purchaser.
8. CONTINUING SECURITY
This Debenture shall be a continuing security to the Security Agent and the
Beneficiaries, notwithstanding any intermediate payment or settlement of
account or any other matter whatever, and shall be in addition to and shall
not prejudice or be prejudiced by any right of lien, set-off, combination
or other rights exercisable by the Security Agent and the Beneficiaries as
bankers against the Charging Companies or any security, guarantee,
indemnity and/or negotiable instrument now or in the future held by the
Security Agent or any Beneficiary.
9. GENERAL COVENANTS
9.1 Acquisition of Land or Intellectual Property Rights: Each Charging Company
shall at all times immediately notify the Security Agent in writing of its
acquisition of any interest or right in or to any Land or any intellectual
property rights;
9.2 Negative Covenant regarding Receivables: No Charging Company shall,
without the prior written consent of the Security Agent, seek to
compromise, compound, discharge, postpone, release, set-off, settle or
subordinate any of its Receivables or waive its rights of action in
connection with them, or do or omit to do anything which may delay or
prejudice their full recovery.
9.3 Negative Covenant regarding Loan Note Collateral Account: No Charging
Company shall utilise, or draw down, or otherwise deal with or seek to
utilise, draw down, or otherwise deal with the Loan Note Collateral
Account except as permitted by and in accordance with Clause 4.1(f) of the
Facility Agreement.
10. COVENANTS REGARDING SECURITIES
Each Charging Company covenants with the Security Agent that it shall:
10.1 Restriction on consolidation, subdivision etc: save with the prior
written consent of the Security Agent, not cause or permit any of
the Securities to be consolidated, sub-divided or converted and
shall take such action as the Security Agent may direct in respect
of any proposed compromise, arrangement, capital organisation,
conversion, exchange, repayment or takeover offer affecting any of
its Securities or any proposal to vary or abrogate any rights
attaching to any of the Securities;
10.2 Pay calls promptly: promptly pay direct to the company in which it
holds Securities any calls on any Securities which are not fully
paid, and if it defaults the Security Agent may (but need not) do so
on behalf of the relevant Charging Company (and any amount so
expended shall be a cost receivable under clause 19.1);
10.3 Forward notices etc: forward to the Security Agent any notices,
reports, accounts, circulars and other documents relating to the
Securities as soon as they are received;
10.4 Execute documents etc required to convert to uncertificated form:
(at its expense) execute and deliver to the Security Agent or as it
directs such documents, transfers and powers of attorney, give such
instructions and perform such other acts as the Security Agent may
reasonably require at any time to convert any Securities in
certificated form into uncertificated form;
10.5 Covenant regarding ADR's: ensure that as regards all ADR holders who
accept the Offer, the American Depositary Shares which such ADR's
represent are immediately exchanged for certificated Ordinary Shares
in the Target registered in the name of the Security Agent and that
such ADR's are then cancelled.
11. LEASES, POSSESSION OF LAND AND CONSOLIDATION OF MORTGAGES
11.1 No Leasing, etc: No Charging Company shall, without the prior written
consent of the Security Agent, exercise any power of leasing, or accepting
surrenders of leases of, any Land,
nor (save where obliged to do so by law) extend, renew or vary any lease
or tenancy agreement or give any licence to assign or underlet.
11.2 No Parting with Possession No Charging Company shall part with possession
(except on the determination of any lease, tenancy or licence granted to
such Charging Company) of any Land or share the occupation of it with any
other person, or agree to do so, without the prior written consent of the
Security Agent.
11.3 Section 93 LPA 1925: Section 93 of the Law of Property Act 1925, dealing
with the consolidation of mortgages, shall not apply to this Debenture.
12. POWERS OF SALE, LEASING AND ACCEPTING SURRENDERS
12.1 Debenture to become Enforceable: This Debenture shall be immediately
enforceable if the Enforcement Date shall occur.
12.2 Statutory Power of Sale: Section 103 of the Law of Property Act 1925 shall
not apply to this Debenture, but the statutory power of sale shall (as
between the Security Agent and a purchaser from the Security Agent) arise
on, and be exercisable at any time after, the execution of this Debenture.
However, the Security Agent shall not exercise such power of sale until
the Enforcement Date has occurred, or a Receiver has been appointed, but
this provision shall not affect a purchaser or require him to ask whether
a demand or appointment has been made.
12.3 Powers of Security Agent to Grant Leases: The statutory powers of sale,
leasing and accepting surrenders exercisable by the Security Agent by
virtue of this Debenture are extended so as to authorise the Security
Agent (whether in its own name or that of the Charging Company concerned)
to grant a lease or leases of any Land vested in a Charging Company or in
which it has an interest, with such rights relating to other such Land,
and containing such covenants on the part of such Charging Company, and
generally on such terms and conditions, as the Security Agent shall think
fit.
12.4 Power to Sever Fixtures: The statutory power of sale exercisable by the
Security Agent is extended so as to authorise the Security Agent to sever
any fixtures from Land and sell them separately.
12.5 Third Parties not to be concerned with Validity of Demand: No person
dealing with the Security Agent or any Receiver, its agents or brokers,
shall be concerned to enquire whether this Debenture has become
enforceable, or whether any power exercised or purported to be exercised
has become exercisable, or whether any Secured Sums remain due upon this
Debenture, or as to the necessity or expediency of any stipulations and
conditions subject to which the sale of any Assets shall be made, or
otherwise as to the propriety or regularity of the sale of any Asset, or
to see to the application of any money paid to the Security Agent or such
Receiver, or its agents or brokers, and each such dealing shall be deemed
to be within the powers hereby conferred and to be valid and effectual
accordingly.
12.6 Exclusion of liability: The Security Agent shall not be liable (save in
the event of its gross negligence or wilful misconduct) for:
(a) any loss arising out of such sale or other disposal of any of the
Securities or the exercise of or failure to exercise any of the
Security Agent's powers of sale over any Securities under this
Debenture, however caused and whether or not a better price could or
might
have been obtained by deferring or advancing the date of such sale
or other disposal and the Security Agent shall not be liable to
account as mortgagee in possession for any of the Securities; or
(b) any neglect or default to pay any call or instalment or to accept
any offer or to notify the relevant Charging Company of any matter
or for any other loss of any nature whatsoever in connection with
any of the Securities.
13. OPENING OF NEW ACCOUNTS
13.1 Ruling off Accounts: On receiving notice that any Charging Company has
encumbered or disposed of any of its Assets, the Security Agent and/or any
Beneficiary may rule off such Charging Company's account or accounts and
open a new account or accounts with such Charging Company.
13.2 Credits not to reduce Indebtedness: If the Security Agent or any
Beneficiary does not open a new account or accounts immediately on receipt
of such notice, it shall nevertheless be treated as if it had done so at
the time when it received such notice and as from that time all payments
made by such Charging Company to the Security Agent or such Beneficiary
shall be treated as having been credited to such new account or accounts
and shall not operate to reduce the amount owing from such Charging
Company to the Security Agent or such Beneficiary at the time when it
received such notice.
14. APPOINTMENT AND POWERS OF A RECEIVER
14.1 Appointment of Receiver: At any time:
(a) on or after the Enforcement Date; or
(b) if so requested by the Primary Borrower and/or any Charging Company
in respect of its own Assets;
the Security Agent may appoint by writing any person or persons to be a
receiver and manager or receivers and managers of all or any part of the
Assets of the Primary Borrower and/or such Charging Company (as the case
may be).
14.2 Power of Receivers Joint and Several: Where more than one Receiver is
appointed, they shall have power to act separately unless the Security
Agent shall in the appointment specify to the contrary.
14.3 Security Agent to Determine Remuneration of Receiver: The Security Agent
may from time to time determine the remuneration of the Receiver.
14.4 Removal of Receiver: The Security Agent may (subject to Section 45 of the
Insolvency Act 1986) remove the Receiver from all or any of the Assets of
which he is the Receiver.
14.5 Further Appointment: Such an appointment shall not preclude (i) the
Security Agent from making any subsequent appointment of a Receiver over
all or any Assets over which a Receiver has not previously been appointed
or has ceased to act, or (ii) a Receiver, while continuing to act,
consenting to the appointment of an additional Receiver to act with him.
14.6 Receiver to Act as Agent: The Receiver shall be the agent of the Charging
Company concerned (which shall be solely liable for his acts, defaults and
remuneration) unless and until such Charging Company goes into
liquidation, after which he shall act as principal and shall not become
the agent of the Security Agent or the Beneficiaries.
14.7 Powers of Receiver: The Receiver shall have and be entitled to exercise in
relation to the Charging Company concerned all the powers set out in
Schedules 1 and 2 to the Insolvency Act 1986 and in particular, by way of
addition and without limiting such powers (and without prejudice to the
powers of the Security Agent and the Beneficiaries), the Receiver shall
have power:
(a) to take possession of, collect and get in all or any part of the
Assets of the relevant Charging Company and to take and defend any
proceedings (including proceedings for its winding up or proceedings
by way of arbitration) in its name or otherwise as he shall think
fit;
(b) to carry on or concur in carrying on the business of the relevant
Charging Company and raise money from any Beneficiary or others
without security or on the security of all or any of its Assets;
(c) to sell or concur in selling (where necessary with the leave of the
Court), lease or concur in leasing, licence or concur in licensing,
grant options over and, without the need to observe any of the
provisions of Sections 99 and 100 of the Law of Property Act 1925,
let or concur in letting and to terminate or to accept surrenders of
leases, licences or tenancies of all or any of the Assets of the
relevant Charging Company in such manner and generally on such terms
and conditions as he shall think fit in his absolute and unfettered
discretion and any such sale or disposition may be for cash,
debentures, securities or other valuable consideration (in each case
payable in a lump sum or by instalments) and to carry any such
transactions into effect in the name of and on behalf of such
Charging Company;
(d) to promote the formation of a Subsidiary or Subsidiaries of the
relevant Charging Company with a view to such Subsidiary or
Subsidiaries purchasing, leasing, licensing or otherwise acquiring
interests in all or any of the Assets of such Charging Company;
(e) to arrange for such Subsidiary or Subsidiaries to trade or cease to
trade as the Receiver may think fit from time to time;
(f) to sever any fixtures from the Land of which they form part;
(g) to exercise all voting and other rights attaching to Securities
owned by the relevant Charging Company;
(h) to arrange for the purchase, lease, licence or acquisition of all or
any Assets of the relevant Charging Company by any such Subsidiary
on a basis whereby the consideration may be for cash, shares,
debentures, loan stock, convertible loan stock or other securities,
shares of profits or sums calculated by reference to profits or
turnover or royalties or licence fees or otherwise, whether or not
secured on the assets of such Subsidiary and whether or not such
consideration is payable or receivable in a lump sum or by
instalments over such period as the Receiver may think fit;
(i) to make any arrangement or compromise with the Security Agent or any
Beneficiary as he shall think fit;
(j) to make and effect all repairs, renewals and improvements to the
Assets of the relevant Charging Company and to effect, renew or
increase insurances on such terms and against such risks as he shall
think fit;
(k) to appoint managers, officers and agents for the above purposes at
such salaries as the Receiver may determine;
(l) to call up all or any portion of the uncalled capital of the
relevant Charging Company;
(m) to redeem any prior Security Interest and to settle and pass the
accounts of the encumbrancer and any accounts so settled and passed
shall (subject to any manifest error) be conclusive and binding on
the relevant Charging Company and the money so paid shall be deemed
an expense properly incurred by the Receiver;
(n) to pay the proper administrative charges of the Security Agent
and/or the Beneficiaries in respect of time spent by their agents
and employees in dealing with matters raised by the Receiver or
relating to the receivership of the relevant Charging Company;
(o) to commence and/or complete any building operations upon any
freehold or leasehold Land of the relevant Charging Company and to
apply for and obtain any planning permissions, building regulation
consents or licences in each case as he may in his absolute
discretion think fit;
(p) to vary the terms of the leases of any such freehold and leasehold
Land;
(q) to take all steps necessary to effect all registrations, renewals,
applications and notifications as the Receiver will in his
discretion think prudent to maintain in force or protect any of the
relevant Charging Company's Intellectual Property Rights;
(r) to do all such other acts and things as may be considered by the
Receiver to be incidental or conducive to any of the above matters
or powers or otherwise incidental or conducive to the preservation,
improvement or realisation of the relevant Assets.
14.8 No Obligation to Account as Mortgagee in Possession: Neither the Security
Agent nor any Beneficiary nor the Receiver shall be liable to account as
mortgagee in possession or otherwise for any money not actually received
by it or him respectively.
14.9 Third Parties: A person dealing with the Receiver in good faith and for
full value shall not be concerned to enquire whether the Receiver is
validly appointed or acting within his powers. Neither the Security Agent
nor any Beneficiary nor the Receiver shall be liable to account as
mortgagee in possession or otherwise for any money not actually received
by it or him respectively, whether by way of payment, set-off,
counterclaim or otherwise.
14.10 Section 109, Law of Property Act 1925: Section 109 of the Law of Property
Act 1925 shall not apply to this Debenture.
15. POWER OF ATTORNEY
15.1 Power of Attorney: Each Charging Company by way of security hereby
irrevocably appoints the Security Agent (whether or not a Receiver has
been appointed) and any Receiver separately the attorney of such Charging
Company (with full power to appoint substitutes and to delegate) for such
Charging Company, in its name and on its behalf, and as its act and deed
or otherwise, at any time to execute and deliver and otherwise perfect any
agreement, assurance, deed, instrument or Document, perform any act or
give any instructions in relation to Securities under the rules and
practices of a Relevant System or otherwise, which may be required of such
Charging Company under and in accordance with the terms of this Debenture
and which such Charging Company has failed to do within 14 days of being
notified by the Security Agent that it is required, or (on or after the
Enforcement Date) as may be deemed by such attorney necessary or desirable
for any purpose of this Debenture or to enhance or perfect the security
intended to be constituted by it or to convey or transfer legal ownership
of any Assets.
15.2 Ratification: Without prejudice to the generality of the provisions
contained in clause 15.1 (Power of Attorney), each Charging Company hereby
covenants with the Security Agent and separately with any Receiver that if
required so to do such company will ratify and confirm:
(a) all transactions entered into by it or (as the case may be) them at
its or (as the case may be) their instance in the proper exercise of
its or (as the case may be) their powers in accordance with this
Debenture; and
(b) all transactions entered into by it or (as the case may be) them in
signing, sealing, delivering and otherwise perfecting any
assignment, mortgage, charge, security, deed, assurance, document or
act as aforesaid;
and each Charging Company irrevocably acknowledges and agrees that such
power of attorney is (inter alia) given to the Security Agent, or as the
case may be, the Receiver or both, to secure the performance of these
obligations owed to him or them by the Charging Companies.
16. ADJUSTMENT OF ACCOUNT
If the state of account between the Security Agent or any Beneficiary and
a Company by reference to which any Secured Sums are calculated for the
purposes of this Debenture requires adjustment at any time because of any
claim made against the Security Agent or such Beneficiary by an
officeholder (within the meaning of Section 234 of the Insolvency Act
1986) then, notwithstanding any other provision of this Debenture:
(a) such Company's liability to the Security Agent or such Beneficiary
will be correspondingly adjusted; and
(b) the Security Agent or such Beneficiary may treat any release or
settlement made by it with such Company or any Charging Company
before any such adjustment is required as being of no effect; and
(c) the Security Agent or such Beneficiary may recover from such Company
or any Charging Company such sum as will place the Security Agent or
such Beneficiary in the same position as if such release or
settlement had not been made.
If any claim is made against the Security Agent or any Beneficiary under
any insolvency law, the Security Agent or such Beneficiary may agree the
claim or settle it on any terms it chooses without asking for the relevant
Company's or any Charging Company's agreement. If the Security Agent or
such Beneficiary does agree or settle the claim, the Primary Borrower will
be liable under this Debenture as if a court order had been made
containing the terms which the Security Agent or Beneficiary have agreed.
The Primary Borrower will be responsible for all costs and expenses which
the Security Agent or such Beneficiary properly incurs in defending such a
claim.
17. OTHER POWERS EXERCISABLE BY THE SECURITY AGENT
17.1 Security Agent may Exercise Receiver's Powers: All powers of the Receiver
conferred by this Debenture may be exercised by the Security Agent
following demand by the Security Agent whether as attorney of the Charging
Companies or otherwise and whether or not the Receiver shall have been
appointed and so that clause 14.7(m) (Powers of Receiver) shall be read
and construed as if the words "be charged on the Assets of the relevant
Charging Company" were substituted for the words "be deemed an expense
properly incurred by the Receiver."
17.2 Security Agent Empowered to receive Book Debts: The Security Agent or any
manager or officer of the Security Agent is hereby irrevocably empowered
to receive all book debts and other debts and claims which may be assigned
to the Security Agent pursuant to clause 7 and on payment to give an
effectual discharge for them and on non-payment to take and institute (if
the Security Agent in its sole discretion so decides) all steps and
proceedings either in the name of the relevant assignor or in the name of
the Security Agent for their recovery and also to agree accounts and to
make allowances and to give time to any surety. The relevant assignor
hereby undertakes to ratify and confirm whatever the Security Agent or any
manager or officer of the Security Agent shall do or purport to do under
this clause 17.
17.3 Security Agent not obliged to take action relating to Book Debts: The
Security Agent shall have no liability or responsibility to any Charging
Company arising out of the exercise or non-exercise of the rights
conferred on it by this clause 17, except for gross negligence and wilful
default. The Security Agent shall not be obliged to make any enquiry as to
the sufficiency of any sums received by it in respect of any book debts or
other debt or claim so assigned to it or to make any claim or take any
other action to collect in or enforce them.
18. APPLICATION OF MONEY RECEIVED
BY THE SECURITY AGENT OR A RECEIVER
18.1 Application of Recoveries: Any money received under the powers conferred
by this Debenture shall, subject to the discharge of any prior-ranking
claims, be paid or applied in the order of priority set out in clause 8.9
of the Facility Agreement.
18.2 Suspense Accounts: The Security Agent may, in its absolute discretion on
or at any time or times after demand and pending the payment to the
Security Agent of the whole of the Secured Sums, place and keep to the
credit of a separate or suspense account any money received, recovered or
realised by the Security Agent by virtue of this Security for so long and
in such manner as the Security Agent may determine without any
intermediate obligation to apply it in or towards the discharge of any
Secured Sum.
19. COSTS AND INTEREST ON OVERDUE AMOUNTS
19.1 Costs and Charges: All costs, charges and liabilities (including all
professional fees and disbursements and Value Added Tax and/or any similar
tax) and all other sums paid or incurred by the Security Agent, the
Beneficiaries and/or any Receiver under this Debenture, shall be
recoverable (on a full indemnity basis) as a debt payable on demand from
such of the Charging Companies as the Security Agent may select, may be
debited without notice to any account of such Charging Companies, shall
bear interest accordingly and shall be charged on the Assets of such
Charging Companies. Without prejudice to the generality of the foregoing,
the costs recoverable by the Security Agent, the Beneficiaries and/or any
Receiver under this Debenture shall include (i) all costs incurred by the
Security Agent and the Beneficiaries in preparing and administering this
Debenture or perfecting the security created by it, (ii) all costs
(whether or not allowable on a taxation by the Court) of all proceedings
for the enforcement of this Debenture or for the recovery or attempted
recovery of the Secured Sums, (iii) all money expended and all costs
arising out of the exercise of any power, right or discretion conferred by
this Debenture, (iv) all costs and losses arising from any default by any
Charging Company in the payment when due of any Secured Sums or the
performance of its obligations under this Debenture and (v) all
administrative charges of the Security Agent and the Beneficiaries based
on time spent by its employees and agents in connection with the affairs
of the Companies.
19.2 Overdue Amounts: Any overdue amounts secured by this Debenture shall carry
interest at the rate and in accordance with the terms contained in clause
5.4 of the Facility Agreement in relation to overdue sums or at such other
rate agreed between the relevant Company and the Security Agent or the
relevant Beneficiary from time to time.
19.3 Currency Indemnity: Moneys received or held by the Security Agent or any
Beneficiary pursuant to this Debenture may from time to time after demand
has been made be converted into such currency as the Security Agent or any
Beneficiary considers necessary or desirable to discharge the Secured Sums
in that currency at the Security Agent or that Beneficiary's then
prevailing spot rate of exchange (as conclusively determined by the
Security Agent or that Beneficiary acting in good faith) for purchasing
the currency to be acquired with the existing currency.
20. SET-OFF
(a) Each Beneficiary may, on or after the Enforcement Date, retain any
money standing to the credit of any Charging Company with such
Beneficiary in any currency upon any account or otherwise (in any
country and whether or not in such Charging Company's name) as cover
for any Secured Sums and/or at any time or times without notice to
such Charging Company combine or consolidate all or any of such
money with all or such part of the Secured Sums as such Beneficiary
may select (whether presently payable or not) and such Beneficiary
may purchase with any such money any other currency required to
effect such combination.
(b) Each Charging Company irrevocably authorises the Security Agent and
each Beneficiary on or after the Enforcement Date in its name and at
its expense to perform such acts and sign such documents as may be
required to give effect to any set-off or transfer pursuant to
clause 20(a), including the purchase with the money standing to the
credit of any such account of such other currencies as may be
necessary to effect such set-off or transfer.
(c) The foregoing provisions of this clause shall be in addition to and
without prejudice to such rights of set-off, combination,
consolidation, lien and other rights whatsoever conferred on the
Security Agent and the Beneficiaries by law.
(d) If the Security Agent or a Beneficiary exercises its rights under
this clause 20, it shall as soon as practicable notify the Primary
Borrower.
21. SECURITY AGENT AS TRUSTEE,
PERPETUITY PERIODS AND NO PARTNERSHIP
21.1 Security Agent: The Security Agent hereby declares itself to be a trustee
of this Debenture (and any other security in its favour created pursuant
to this Debenture) for the Beneficiaries. The retirement of the Security
Agent from being trustee and the appointment of any new trustee shall be
effected in the manner provided in the Facility Agreement.
21.2 Perpetuity Period: The perpetuity period applicable to the trust hereby
constituted shall be 80 years.
21.3 No Partnership: Nothing in this Security shall constitute or be deemed to
constitute a partnership between the Beneficiaries.
22. FORBEARANCE AND SEVERABILITY
22.1 No Waivers: All rights, powers and privileges under this Debenture shall
continue in full force and effect, regardless of the Security Agent or any
Beneficiary exercising, delaying in exercising or omitting to exercise any
of them.
22.2 Invalidity and Severability:
(a) None of the covenants and guarantees given and none of the charges
created by the Charging Companies under this Debenture shall be
avoided or invalidated by reason only of one or more of such
covenants, guarantees or charges being invalid or unenforceable.
(b) Any provision of this Debenture which for any reason is or becomes
illegal, invalid or unenforceable shall be ineffective only to the
extent of such illegality, invalidity and unenforceability, without
invalidating the remaining provisions of this Debenture.
23. VARIATIONS AND CONSENTS
23.1 Variations to be in writing signed by all parties: No variation of this
Debenture shall be considered valid and as constituting part of this
Debenture, unless such variation shall have been made in writing and
signed by the Security Agent (on behalf of the Beneficiaries) and the
Primary Borrower (on behalf of the Charging Companies).
23.2 Variation: The expression 'variation' shall include any variation,
supplement, extension, deletion or replacement however effected.
23.3 Conditional Consents: Save as otherwise expressly specified in this
Debenture, any consent of the Security Agent may be given absolutely or on
any terms and subject to any conditions as Security Agent may determine in
its entire discretion.
24. AUTHORITY OF PRIMARY BORROWER
Each Charging Company (except the Primary Borrower) hereby irrevocably
authorises the Primary Borrower to act on its behalf in administering the
terms of this Debenture and in signing on its behalf any document varying,
supplementing, restating and/or replacing the terms and conditions
contained in this Debenture or any document ancillary to it.
25. SERVICE OF DEMANDS AND NOTICES
25.1 Addresses:
(a) A demand for payment or any other demand or notice under this
Debenture may be made or given by any manager or officer of the
Security Agent in writing addressed to the Charging Company
concerned and served on it at the address of such Charging Company
stated above or its existing or last known place of business (or, if
more than one, any one of such places), or by facsimile transmission
to the facsimile number last known to the Security Agent or by any
other form of electronic communication which may be available.
(b) Any communication to be given to any Beneficiary under this
Debenture must be given to the Security Agent in writing served on
it at the address for service of the Security Agent given in Part B
of the First Schedule or the address last notified to the Primary
Borrower by the Security Agent in writing.
25.2 Deemed Service: A notice or demand shall be deemed to be duly served on a
Charging Company:
(a) if delivered by hand, when left at such an address;
(b) if sent by post, at noon on the next day following the day of
posting and shall be effective even if it is misdelivered or
returned undelivered;
(c) if given or made by facsimile or other electronic communication, at
the time of transmission;
Provided that, where delivery or transmission occurs after 6.00 p.m. on a
Business Day or on a day which is not a Business Day, service shall be
deemed to occur at 9.00 a.m. on the next Business Day.
26. COUNTERPARTS
This Debenture may be executed by any of the Charging Companies in any
number of copies, all of which taken together shall constitute a single
Debenture.
27. ASSIGNMENT
Each Beneficiary may assign or transfer all or any of their respective
rights hereunder or hold their rights hereunder on trust for their
successors or assigns or transferees subject always to the provisions of
clause 16 of the Facility Agreement.
28. SECURITY AGENT
The provisions of clauses 17 - 21 of the Facility Agreement shall apply to
the Security Agent's rights, obligations and duties under this Debenture
as if set out in this Debenture in full.
29. JOINT AND SEPARATE LIABILITY
Unless the context otherwise requires, all covenants, agreements,
representations and warranties on the part of the Charging Companies
contained in this Debenture are given by them jointly and separately and
shall be construed accordingly.
30. THE GIVING AND ACKNOWLEDGEMENT OF NOTICE OF ASSIGNMENT
For the purposes of Section 136 of the Law of Property Act 1925 and
generally the Security Agent hereby gives, and each Charging Company which
is or will become a debtor of any other Charging Company hereby
acknowledges, receipt of notice of the assignment by way of security and
charge to the Security Agent under this Debenture of all such present
and/or future indebtedness.
31. GOVERNING LAW
31.1 This Debenture shall be governed by and construed in accordance with
English law.
31.2 Each Charging Company hereby submits, for the exclusive benefit of the
Security Agent and the Beneficiaries, to the jurisdiction of the English
Courts, but without prejudice to the right of the Security Agent and/or
the Beneficiaries to commence proceedings against such Charging Company in
any other jurisdiction.
THIS GUARANTEE AND DEBENTURE has been executed by each Charging Company as a
Deed and signed by the Security Agent and it shall take effect on the day and
year first above written.
THE FIRST SCHEDULE
Part A
The Charging Companies
Address and fax or
Name of Company Registered Number Telex Number
TU Finance (No. 1) Limited 3505836 Norton Rose,
(as Primary Borrower) Kempson House,
Camomile Street,
London EC3A 7AN
Fax: 44 171 283 6500
Attention: Andrew Bamber/
Marcus Dougherty
TU Finance (No. 2) Limited 3514100 Norton Rose,
Kempson House,
Camomile Street,
London EC3A 7AN
Fax: 44 171 283 6500
Attention: Andrew Bamber/
Marcus Dougherty
TU Acquisitions PLC 3455523 Norton Rose,
Kempson House,
Camomile Street,
London EC3A 7AN
Fax: 44 171 283 6500
Attention: Andrew Bamber/
Marcus Dougherty
Part B
The Security Agent
Address for Service
Name of Company Registered Number and Fax or Telex Number
Chase Manhattan International 938937 Trinity Tower
Limited 9 Thomas More Street
London E1 9YT
Fax: + 44 171 777 2360
Attention: Stephen Clarke
THE SECOND SCHEDULE
Terms of Guarantee
1. Continuing Security: This Guarantee is a continuing security to the
Security Agent and each Beneficiary and will continue in full force until
no sum remains payable under the Finance Documents and the Beneficiaries
have irrevocably received or recovered all sums payable under the Finance
Documents irrespective of whatever dealings may occur on any account
between the Security Agent or such Beneficiary and the Principal.
2. Opening of New Accounts: If this Guarantee ceases for any reason to be
binding on the Guarantor as a continuing security in relation to the
Principal, then each Beneficiary may break such accounts of the Guarantor
and the Principal with such Beneficiary as such Beneficiary deems
appropriate and open new accounts for the account holders affected.
If that is done, no money credited to such new account at that time or
later will have the effect of reducing the amount due to such Beneficiary
on the original account. If that is not done, such Beneficiary will still
be treated as if it had broken all such accounts at the time when such
notice expired or this Guarantee ceased to be a continuing security and as
if all payments made to such Beneficiary then or later had been credited
to a new account with the same result.
Such Beneficiary may also refuse payment (without notice to the Guarantor)
of any cheque or order which, if paid or honoured, would reduce or further
reduce the Guarantor's credit balances below the amount of its liability
to such Beneficiary under this Guarantee at such time.
3. Payments: All payments falling to be made by a Guarantor under this
Guarantee will be made to the Security Agent or the relevant Beneficiary
without any set-off or counterclaim and free from any deduction or
withholding for or on account of any taxes or other charges in the nature
of taxes imposed by any competent authority. If any such deduction or
withholding is required by law, the Guarantor will pay to the relevant
Beneficiary any additional amount necessary to ensure that such Security
Agent receives and retains the full amount of the relevant payment as if
such deduction or withholding had not been made.
4. Suspense Account: The Security Agent and/or any Beneficiary may at any
time (without prejudice to its other rights) place and keep for such time
as the Security Agent or such Beneficiary may think prudent any money
received, recovered or realised under or by virtue of this Guarantee on a
separate or suspense account to the credit of either the Security Agent or
such Beneficiary or the Guarantor (as the Security Agent or such
Beneficiary thinks fit), without any intermediate obligation on its part
to apply such money or any part of it in or towards discharge of the
Secured Sums.
5. Additional to Other Security: This Guarantee is to be in addition to and
is not to prejudice or be prejudiced by any other guarantee or security
(including any other guarantee signed by the Guarantor) which the Security
Agent or any Beneficiary may hold from or on account of the Principal
either now or in the future. This Guarantee may be enforced at any time on
or after the Enforcement Date without the Security Agent or any
Beneficiary first making demand on the Principal or taking any steps or
proceedings against the Principal or having recourse to any such other
guarantee or security.
6. Restriction on each Guarantor: The Guarantor shall have no right to:
(i) make any claim (whether by way of proof in liquidation or otherwise)
against the Principal or any property of the Principal; or
(ii) participate in any security held or money received by the Security
Agent or any Beneficiary on account of the Secured Sums; or
(iii) stand in the place of the Security Agent or any Beneficiary in
respect of any such security or money;
until in each case all Secured Sums have been repaid to the Security Agent
and/or the Beneficiaries in full.
However, if so directed by the Security Agent but not otherwise, the
Guarantor shall prove in the Principal's liquidation for the whole or any
part of the money due or owing to the Guarantor from the Principal in any
manner whatever and the benefit of such proof and of all money received by
the Guarantor in respect of it shall be held on trust for the Security
Agent and applied in reduction of the Secured Sums.
7. Right to act without affecting the Guarantee: The Security Agent or any
Beneficiary may at any time (without affecting its rights against the
Guarantor under this Guarantee) grant, extend, increase, renew, vary,
determine or refuse any credit or facility to the Principal, or take,
hold, exchange, vary, release, abstain from perfecting or enforcing any
guarantee or security for the Secured Sums, or compromise with or extend
time or grant waivers, releases or any indulgence to the Principal or any
co-surety, or make any arrangement, concession or settlement with any of
them or do or omit or neglect to do anything whatever which, but for this
provision, might exonerate or discharge the Guarantor's obligations under
this Guarantee (except for a specific written release given by the
Security Agent of such obligations).
8. Receipt of Payments: After this Guarantee becomes enforceable, no payment
received by the Security Agent or any Beneficiary from any source (except
the Principal) in respect of the Secured Sums will be treated (regardless
of the manner in which the Security Agent or such Beneficiary may deal
with it in its books or otherwise) as reducing the Guarantor's liability
to the Security Agent or such Beneficiary under this Guarantee, so that
until the Security Agent or such Beneficiary has received payment in full
of all Secured Sums, it will be deemed, as between the Security Agent or
such Beneficiary and the Guarantor and except for any payment by the
Principal, to remain wholly unsatisfied.
9. Adjustments: If the state of account between the Security Agent or any
Beneficiary and the Principal (by reference to which any Secured Sums are
calculated for the purposes of this Guarantee) requires adjustment at any
time because of any claim made against the Security Agent or such
Beneficiary by an office-holder (within the meaning of Section 234 of the
Insolvency Act 1986), then, notwithstanding any other provision of this
Guarantee:
(a) the Guarantor's liability to the Security Agent or such Beneficiary
will be correspondingly adjusted, and
(b) the Security Agent or such Beneficiary may treat any release or
settlement made by it with the Guarantor before any such adjustment
is required as being of no effect, and
(c) the Security Agent or such Beneficiary may recover from the
Guarantor such sum as will place the Security Agent or such
Beneficiary in the same position as if such release or settlement
had not been made.
If any claim is made against the Security Agent or any Beneficiary under
any insolvency law, the Security Agent or such Beneficiary may agree the
claim or settle it on any terms it chooses without the necessity of asking
for the Guarantor's agreement. If the Security Agent or such Beneficiary
does agree or settle the claim, the Guarantor will be liable under this
Guarantee as if a court order had been made containing the terms which the
Security Agent or such Beneficiary have agreed. The Guarantor will be
responsible for all costs and expenses which the Security Agent or such
Beneficiary properly incurs in defending such a claim.
10. Retention: The Security Agent may keep the security held by it for the
Guarantor's liability under this Guarantee in order to protect the
Security Agent and the Beneficiaries against any possible claim under
insolvency law for such period after all Secured Sums have been satisfied
as the Security Agent reasonably considers to be necessary to avoid any
risk under applicable insolvency law. If a claim is made against the
Security Agent or any Beneficiary within that period, the Security Agent
may keep the security until that claim has finally been dealt with.
11. Guaranteed Liabilities Continue to be Payable: The winding-up or
dissolution of the Principal will not affect the Guarantor's liability
under this Guarantee and any sum payable to the Security Agent or any
Beneficiary at the date of the commencement of such winding-up or
immediately prior to such dissolution (as the case may be) will be treated
as continuing payable until actually paid in full.
12. Capacity of Principal: If any question arises as to the capacity of the
Principal in relation to any dealing between the Principal and the
Security Agent or any Beneficiary, or as to the capacity, authority or
power of any officer, employee or agent of the Principal to bind it to any
transaction with the Security Agent or any Beneficiary, or as to whether
any of the Secured Sums are immediately due and payable, that question
shall, as between the Security Agent or such Beneficiary and the
Guarantor, be disregarded and the Guarantor will for the purposes of this
Guarantee be and continue to be liable to the Security Agent or such
Beneficiary in respect of any such dealing, transaction and/or Secured
Sums as if the Guarantor were a principal debtor.
13. Currency Conversion: Any money received by the Security Agent or any
Beneficiary under or by virtue of this Guarantee may be converted by the
Security Agent or such Beneficiary at any time as it thinks fit (and
notwithstanding any previous conversion) into any currency in which any
part of the Secured Sums is due or owing to the Security Agent or such
Beneficiary, in which event the net amount available to the Security Agent
or such Beneficiary in such other currency (after allowing for all costs
of conversion) shall be deemed to be the amount received by the Security
Agent or such Beneficiary under or by virtue of this Guarantee.
14. Admission and Acknowledgement of Indebtedness: Any admission or
acknowledgement in writing by the Principal or on its behalf of the amount
of any Secured Sums or otherwise in relation to this Guarantee, or any
judgment or award obtained by the Security Agent or any Beneficiary
against the Principal, or any proof by the Security Agent or any
Beneficiary in winding up which is admitted, or any statement of account
furnished by the Security Agent or any Beneficiary the correctness of
which is certified by any one of its directors, regional directors or
managers, will be binding and conclusive on the Guarantor (except in the
case of manifest error).
15. Financial Assistance: Notwithstanding any other provision of this
Guarantee, this Guarantee shall not operate to guarantee any money or
liability if and insofar as such money was borrowed or such liability was
incurred directly or indirectly for the purpose of the acquisition by any
person of shares in the Guarantor or its holding company or the reduction
or discharge of any existing liability incurred for the purpose of such
acquisition and if and for so long as it would not be lawful under Chapter
VI, Part V, of the Companies Act 1985 for such money or liability to be
guaranteed by this Guarantee.
16. Disability or Incapacity of any Principal: As a separate and independent
stipulation and without prejudice to the provisions of clause 2 (Covenant
to Pay), the Guarantor agrees that all sums of money which have become due
hereunder and which may not be recoverable from it on the footing of a
guarantee whether by reason of any legal limitation on or disability or
incapacity of any Company or any other fact or circumstance, and whether
known to any Beneficiary or not, shall as to an equivalent amount thereof
nevertheless be recoverable from the Guarantor as sole or principal debtor
or debtors in respect thereof and shall be paid on demand in writing made
by the Security Trustee.
17. No Termination: Other than with the prior written consent of the Security
Agent, the Guarantor shall not terminate its guarantee contained in this
Debenture whilst any part of the Secured Sums remains outstanding.
THE THIRD SCHEDULE
PART I
Form of Notice and Instructions to Receiving Banker
To: [The Receiving Banker] [ ] 1998
Dear Sirs,
Offer Document dated [ ] 1998 made relating to an offer for The Energy
Group PLC (the "Agreement"); agreement with the receiving banks to the offer
dated [ ] 1998 (the "Receiving Banker Agreement");
1. We refer to the Agreement and the Receiving Banker Agreement. We attach a
copy of a guarantee and debenture (the "Deed") dated [ ] 1998 made
between, inter alia, Chase Manhattan Bank Limited (the "Security Agent")
and ourselves. Terms defined in the Deed are to have the same meanings in
this letter.
2. We hereby give you notice that the Offer Rights (which include our rights
under both the Agreement and the Receiving Banker Agreement) have been
assigned to the Security Agent by the Deed and all the ordinary shares of
[ ] each in The Energy Group PLC (the "Shares") in respect of which
acceptances are received by you pursuant to the Offer for the purchase by
us of the Shares have been charged to the Security Agent.
3. We irrevocably and unconditionally instruct and authorise you
(notwithstanding any previous directions which we may have given you to
the contrary):
(a) unless otherwise directed by the Security Agent, to furnish or
disclose to the Security Agent in addition to ourselves all notices,
matters or things required under the Agreement to be furnished and
disclosed to ourselves;
(b) to accept from and agree with the Security Agent (and not ourselves)
all claims under, discharges for and waivers, variations,
terminations and cancellations of the Offer Rights without any
reference to or further authority from us;
(c) to register or cause to be registered in the name of the Security
Agent (or as the Security Agent may otherwise direct) all the Shares
in respect of which acceptances are received by you pursuant to the
Offer;
(d) to deliver or cause to be delivered to the Security Agent
certificates for the Shares so registered, together with any other
documents of title relating thereto;
(e) pending such registration and delivery, to treat all Shares in
respect of which acceptances are received by you pursuant to the
Offer as charged to the Security Agent and to keep in safe custody
all acceptances, certificates and/or other documents of title
relating thereto and not to part with possession of the same without
the prior written consent of the Security Agent;
(f) to provide to the Security Agent such information as it may require
from time to time in connection with the Shares charged to it,
without further authority from us and without further reference to
us.
4. This notice and the instructions and authorisations herein contained are
irrevocable and may not be amended, abrogated or withdrawn without the
Security Agent's express prior written consent. These instructions
supersede and override any previous instructions given by us in relation
to the matters dealt with in this letter.
5. This letter shall be governed by and construed in accordance with the laws
of England.
6. Please confirm your acknowledgement of this Notice by signing the enclosed
form of acknowledgement and undertaking and by returning the same to
Messrs Lovell White Durrant at 65 Holborn Viaduct, London EC1A 2DY (Ref
A1/PM/MJC) and Chase Manhattan International Limited at Trinity Tower, 9
Thomas More Street, London E1 9YT marked for the attention of Stephen
Clarke.
Signed by
................................
for and on behalf of
TU Acquisitions PLC
PART II
Form of Acknowledgement
and Undertaking by Receiving Banker
To: Lovell White Durrant
65 Holborn Viaduct
London EC1A 2DY
Ref: A1/PM/MJC
Chase Manhattan International Limited
Trinity Tower
9 Thomas More Street
London E1 9YT
Attention: Stephen Clarke
Date:
Dear Sirs
The Energy Group PLC
1. We hereby acknowledge receipt of a letter dated [ ] 1998 addressed
to us by TU Acquisitions PLC (a copy of which is annexed) together with a
copy of the Deed referred to in it. Expressions defined in the annexed
letter and the Deed shall have the same meanings in this letter, unless
the context otherwise requires.
2. We confirm our acceptance of the instructions contained in the annexed
letter and we undertake to you to act in accordance with and comply with
those instructions in all respects.
3. We confirm that we have not received notice of any other assignment of the
Offer Document Rights.
4. We acknowledge that all Shares in respect of which acceptances are
received by us pursuant to the Offer shall (subject to the Offer becoming
or being declared unconditional) be treated as charged to you as provided
in the Deed and registered in your name or as you may direct and we
undertake not to do or omit to do anything inconsistent with the terms of
the Deed.
5. The above acknowledgements and undertakings are given in the knowledge
that they are required by you pursuant to the Deed and the Facility
Agreement and in consideration of your making facilities available to the
Borrowers on the terms set out in the Facility Agreement.
Yours faithfully
for and on behalf of
[Receiving Banker]
...........................
Director
PART III
Form of control agreement to be executed by among others
the US Depositary for the Offer and Bidco
EXECUTED and DELIVERED as a )
Deed by TU FINANCE (NO. 1) LIMITED )
(pursuant to a resolution of its Board )
of Directors) acting by: )
[L Anderson] Attorney in fact
[R Shapard] Attorney in fact
EXECUTED and DELIVERED as a )
Deed by TU FINANCE (NO. 2) LIMITED )
(pursuant to a resolution of its Board )
of Directors) acting by: )
[L Anderson] Attorney in fact
[R Shapard] Attorney in fact
EXECUTED and DELIVERED as a )
Deed by TU ACQUISITIONS PLC )
(pursuant to a resolution of its Board )
of Directors) acting by: )
[L Anderson] Attorney in fact
[R Shapard] Attorney in fact
SIGNED by [J Ritchie] )
for and on behalf of )
CHASE MANHATTAN INTERNATIONAL LIMITED )