Exhibit 2
Dated 26th June 1998
DOMINION RESOURCES, INC. (1)
and
DR NOTTINGHAM INVESTMENTS (2)
and
DEI U.K., INC. (3)
and
POWERGEN INVESTMENTS LIMITED (4)
and
POWERGEN PLC (5)
AGREEMENT
relating to the sale and purchase
of the whole of the issued share capital of
DR Investments
LINKLATERS & PAINES
One Silk Street
London EC2Y 8HQ
Tel: (+44) 171 456 2000
Agreement for Purchase of Shares
This Agreement is made on 26th June 1998
Between:
(1) Dominion Resources, Inc. whose principal office is at 901 East Byrd
Street, Richmond, Virginia, 23219 (Dominion);
(2) The Persons named in Part 1 of Schedule 1 (the Vendors);
(3) PowerGen Investments Limited whose registered office is at 53 New
Broad Street, London EC2M 1JJ (the Purchaser); and
(4) PowerGen plc whose registered office is at 53 New Broad Street,
London EC2M 1JJ (PowerGen).
It is agreed as follows:
1 Interpretation
In this Agreement, including its Schedules, the headings shall not
affect its interpretation and, unless the context otherwise requires,
the provisions in this Clause 1 apply:
1.1 Definitions
Audited Accounts means the audited accounts of the Company and of each
of the Subsidiaries and the audited consolidated group accounts of the
Group for the financial periods from 7 November 1996 to 9 January 1997,
10 January 1997 to 31 March 1997 and 1 April 1997 to the Balance Sheet
Date and the EME Regulatory Accounts and the EME Audited Accounts;
Balance Sheet Date means 28 December 1997;
Borrowings means indebtedness (a) for money borrowed or raised by
whatever means (including finance leases); and (b) for the deferred
purchase price of assets (other than goods obtained on normal commercial
terms in the ordinary course of business);
Business Assets means the assets used in connection with the business of
the Group as carried on at the date hereof;
Business Day means a day on which banks are open for business in England
and in the Commonwealth of Virginia in the United States (excluding
Saturdays, Sundays and public holidays);
Circular means the circular to be sent by the Purchaser to its
shareholders which will contain a notice convening an Extraordinary
General Meeting of the Purchaser at which the resolution referred to in
Clause 4.1 will be proposed;
Company means DR Investments, details of which are contained in Part 2
of Schedule 1;
CHAPS means clearing houses automated payment systems;
Completion means the completion of the sale and purchase of the Shares
pursuant to Clause 6;
Costs means liabilities, losses, damages, reasonable costs properly
incurred (including reasonable legal costs) and reasonable expenses but
excluding the loss or denial of any Relief;
Disclosure Letter means the letter of even date with this Agreement from
the Vendors to the Purchaser disclosing information constituting
exceptions to the Warranties;
Dominion Audited Accounts means the consolidated group accounts of the
Company and its subsidiary undertakings for the financial period ended
on the Balance Sheet Date but shall not include the figures for the
periods ended 31 March 1997 which are referred to in those accounts;
Dominion UK means DR Investments (UK) PLC;
EME means East Midlands Electricity Plc;
EME Audited Accounts means the audited consolidated accounts of EME and
its subsidiary undertakings for the year ended 31 March 1997;
EME Regulatory Accounts means the regulatory accounts of EME for the
twelve month periods ended 31 March 1997 and 31 March 1998;
Encumbrance means any encumbrance or security interest of any kind
including, without limitation, any claim, charge, mortgage, security,
lien, pledge, option, equity, power of sale or hypothecation;
Group or Group Companies means the Company and the Subsidiaries and
Group Company means any one of them;
Intra-Group Guarantees means all guarantees, indemnities,
counter-indemnities and letters of comfort of any nature whatsoever
given to any third party by any Group Company in respect of a liability
of any member of the Retained Group and the guarantee dated
8 November 1990 in favor of Corby Power Limited and the related
Deed of Covenant;
LPMPA means the Law of Property (Miscellaneous Provisions) Act 1994;
Net Debt means as at a point in time, the aggregate principal amount of
Borrowings by Group Companies, expressed in sterling and determined on a
consolidated basis, less the aggregate amount of cash in hand at, or
deposited by, Group Companies with banks and other financial
institutions at that point in time;
Payment Account Details means, in relation to any payment to be made
under or pursuant to this Agreement, the name, account number, sort
code, account location and other details specified by the payee and
necessary to effect payment (whether by cheque, banker's draft,
telegraphic or other electronic means of transfer) to the payee;
Principal Group Company means the Company, Dominion UK and EME;
Purchaser's Group means the Purchaser and the subsidiary undertakings of
the Purchaser;
Purchaser's Solicitors means Freshfields of 65 Fleet Street, London EC4Y
1HS;
Reliefs means all reliefs losses trading and non-trading deficits
allowances and set offs relating to Taxation;
Retained Group means Dominion and its subsidiaries as at the date of
this Agreement (but excluding any Group Company);
Shares means 639,300,010 Ordinary Shares of (pound)1 each being the
whole of the issued share capital of the Company;
Subsidiaries means the subsidiary undertakings of the Company;
Vendors' Solicitors means Linklaters & Paines of One Silk Street, London
EC2Y 8HQ;
Warranties means the representations and warranties set out in Schedule
3.
1.2 Subordinate Legislation
Any reference to a statutory provision shall include any subordinate
legislation made from time to time under that provision;
1.3 Modification etc. of Statutes
Any reference to a statutory provision shall include such provision as
from time to time modified or re-enacted or consolidated whether before
or after the date of this Agreement so far as such modification,
re-enactment or consolidation applies or is capable of applying to any
transactions entered into under this Agreement prior to Completion and
(so far as liability thereunder may exist or can arise) shall include
also any past statutory provision (as from time to time modified,
re-enacted or consolidated) which such provision has directly or
indirectly replaced;
1.4 Companies Act 1985
The words holding company, subsidiary and subsidiary undertaking shall
have the same meanings in this Agreement as their respective definitions
in the Companies Act 1985;
1.5 Interpretation Act 1978
The Interpretation Act 1978 shall apply to this Agreement in the same
way as it applies to an enactment;
1.6 Schedules etc.
References to this Agreement shall include any Schedules to it and
references to Clauses and Schedules are to Clauses of and Schedules to
this Agreement;
1.7 Taxation
References to Taxation comprise all forms of taxation and statutory,
governmental, state, provincial, local governmental or municipal
impositions, duties, contributions and levies, in each case whether of
the United Kingdom or elsewhere in the world whenever imposed and
whether chargeable directly or primarily against or attributable
directly or primarily to a Group Company or any other person and all
penalties, charges, costs and interest relating thereto provided that
references to "Taxation" shall not extend to stamp duty or penalties or
interest in respect thereof;
1.8 Where any statement is qualified by the expression to the best of
knowledge of Dominion (and/or the Vendors) or so far as Dominion (and/or
the Vendors) is aware or any similar expression, such qualification
refers to the actual knowledge of Thos. E. Capps, Edgar M. Roach, Thomas
F. Farrell, II and Robert Davies and other officers of companies in the
Retained Group who are not officers or employees of EME; and
1.9 The Schedules comprise schedules to this Agreement and form part of this
Agreement.
2 Agreement to Sell the Shares
2.1 Sale of Shares
The Vendors (each as to those of the Shares specified against its name
in Part 1 of Schedule 1) shall sell (or procure to be sold) and Dominion
shall procure to be sold, and the Purchaser shall purchase and PowerGen
shall procure the purchase by the Purchaser of the Shares free from all
Encumbrances and together with all rights and advantages now and
hereafter attaching thereto.
The Shares shall be sold on the terms that the same covenants shall be
deemed to be given by the Vendors on Completion in relation to the
Shares as are implied under Part I of the LPMPA where a disposition is
expressed to be made with full title guarantee.
2.2 Rights of Pre-emption
The Vendors hereby waive irrevocably any and all rights of pre-emption
over the Shares conferred by the Articles of Association or otherwise
for the purposes of any transfer of the Shares pursuant to this
Agreement.
3 Consideration
3.1 The consideration for the purchase of the Shares shall be the cash sum
of (pound)850,552,666 which shall be divisible among the Vendors in
proportion to their shareholdings and paid on the Completion Date to the
account nominated by Dominion.
3.2 Payment of such sum shall be a good discharge to the payer of its
obligation to make such payment and the payer shall not be obliged (in
the case of a payment by the Purchaser) to see to the application of the
consideration as between the relevant Vendors.
4 Conditions
4.1 Condition Precedent
Completion of this Agreement is conditional upon the passing at a
general meeting of the Purchaser of a resolution to approve the
acquisition of the Shares.
4.2 Responsibility for Satisfaction
PowerGen hereby undertakes to use all reasonable endeavours to ensure
the satisfaction of the condition set out in Clause 4.1 and undertakes
to send the Circular to its shareholders (containing a recommendation
from the directors of PowerGen to vote in favour of the resolution
referred to in Clause 4.1) within 15 Business Days of the date of this
Agreement containing a notice convening an extraordinary general meeting
of PowerGen to be held within 24 days of the date of the Circular for
the purposes of considering the resolution referred to in Clause 4.1.
4.3 The Vendors and Dominion shall and shall procure that each Group Company
shall, prior to the finalisation of the Circular, give the Purchaser
such assistance as the Purchaser shall reasonably require in connection
with the preparation of the Circular in accordance with the Listing
Rules of the London Stock Exchange.
4.4 Non-Satisfaction
If the directors of PowerGen withdraw their recommendation to vote in
favour of the resolution referred to in Clause 4.2 and the resolution is
not passed or if the resolution is for any reason not put to the meeting
on or before the date specified in Clause 4.5 PowerGen shall pay to the
Vendors the sum of (pound)10 million to cover all the costs and expenses
incurred by the Vendors and/or any Group Company in connection with the
transaction the subject of this Agreement.
4.5 Consequences
The Purchaser shall promptly give notice to the Vendors of satisfaction
of the condition forthwith upon its being satisfied. If the condition in
Clause 4.1 is not satisfied on or before 13 August 1998 this Agreement
shall, save as expressly provided, lapse and no party shall have any
claim against any other under it, save for any claim under Clause 4.4.
5 Action Pending Completion
5.1 Vendors' General Obligations
The Vendors shall procure that, pending Completion:
5.1.1 Each Group Company will carry on business only in the ordinary
course, save in so far as agreed in writing by the Purchaser;
and
5.1.2 The Purchaser and its agents will, upon reasonable notice and by
arrangement with the Chief Executive of East Midlands, be
allowed access to the books and records of each Group Company
including, without limitation, the statutory books, minute
books, leases, licences, contracts, details of receivables,
intellectual property, supplier lists and customer lists in the
possession or control of any Group Company and will, upon
reasonable notice, be given such access as reasonable to the
premises, directors and senior employees of each Group Company
provided that the obligations of the Vendors under this Clause
shall not extend to allowing access to information which is
confidential to the activities of the Vendors otherwise than in
connection with the Group Companies.
5.2 Restrictions on the Vendors
Between the date of this Agreement and Completion Dominion and the
Vendors shall procure that each Group Company shall not without the
prior written consent of the Purchaser (such consent not to be
unreasonably withheld or delayed):
5.2.1 incur or enter into any agreement or commitment involving any
capital expenditure in excess of (pound)5,000,000 in aggregate;
5.2.2 increase the amount of Net Debt beyond its level at 24 May 1998
otherwise than in the ordinary course of business and payment of
accounts payable in the normal course including, for the
avoidance of doubt, the accounts payable referred to in the
Disclosure Letter;
5.2.3 pay accounts, other than in accordance with that Group Company's
normal payment practices; nor
5.2.4 acquire or agree to acquire or dispose of or agree to dispose of
any asset or assets involving consideration or expenditure in
excess of (pound)5,000,000 or, in the case of a series of
related acquisitions or disposals, any assets involving
consideration or expenditure in excess of (pound)10,000,000 in
aggregate (in each case, other than in the ordinary course of
business).
5.3 Pending Completion, the Vendors and Dominion shall ensure that, save
with the prior written consent of the Purchaser (such consent not to be
unreasonably withheld or delayed):
5.3.1 no amendment shall be made to any of the constitutional
documents of any Group Company and no resolution of any of the
members of any Group Company (in their capacity as members of
such Group Company) shall be voted on or approved;
5.3.2 (in relation to any of the Group Companies) save as provided in
the Disclosure Letter there is no declaration or authorisation
or payment of a dividend or other distribution or any reduction
of capital and (save for payment to Corby Power for power
pursuant to existing agreements) no transaction shall be entered
into between any Group Company and any member of the Retained
Group other than the payment or repayment of any debt or loan
existing between any Group Company and any member of the
Retained Group at the date of this Agreement as set out in the
Disclosure Letter;
5.3.3 (in relation to any of the Group Companies) no share or loan
capital or securities of such company or securities convertible
into any of the foregoing is created, allotted, issued,
purchased or redeemed nor is any option over or other right to
subscribe or purchase any such shares, loan capital or
securities granted;
5.3.4 no Encumbrance is granted or created over or affecting (i) the
Shares nor (ii) (except in the ordinary course of business, by
operation of law or as a consequence of or pursuant to
any agreement entered into prior to the date of this Agreement)
the whole or any part of the Business Assets;
5.3.5 no change shall be made in terms of employment, including
pension fund commitments, by any Group Company (other than those
required by law) which could increase the total staff costs of
the Group by more than (pound)750,000 per annum or the
remuneration of any one director or employee by more than
(pound)5,000 per annum;
5.3.6 no Group Company shall make any loan or advance to any person
otherwise than the granting of trade credit in the ordinary
course of business;
5.3.7 the liability of any Group Company under any Intra-Group
Guarantees existing at the date of this Agreement shall not be
increased or extended and no new Intra-Group Guarantees shall be
entered into by any Group Company;
5.3.8 no Group Company shall enter into any contract or commitment (or
make a bid or offer which may lead to a contract or commitment)
having a value or involving expenditure in excess of
(pound)5,000,000 or which is of a long term or unusual nature or
which could involve an obligation of a material nature or which
may result in any material change in the nature or scope of the
operations of the Group;
5.3.9 no Group Company shall enter into any material understanding or
commitment (as defined in paragraph 2(B) of Schedule 3) with any
regulator save as required by law;
5.3.10 no Group Company shall agree to any material variation of any
existing contract, licence, consent, permission or approval to
which that Group Company is a party and which may have a
material effect upon the nature or scope of the operations of
the Group;
5.3.11 no Group Company shall (whether in the ordinary and usual course
of business or otherwise) enter into any contract or arrangement
which may give rise to any liability pursuant to the debenture
dated 1 November 1990 made between EME and the Secretary of
State for Energy;
5.3.12 there is no material change in the cash management system of the
Group; and
5.3.13 each Group Company shall take all reasonable steps to preserve
and protect its assets.
6 Completion
6.1 Date and Place
Subject to Clause 4, Completion shall take place at the offices of the
Vendors' Solicitors on 29th July 1998 or two Business Days after the
condition set out in Clause 4.1 is satisfied or waived, whichever is the
later or at such other place or on such other date as may be agreed
between the Purchaser and the Vendors.
6.2 Vendors' Obligations on Completion
On Completion the Vendors shall deliver or make available to the
Purchaser:
6.2.1 duly executed transfers of the Shares in favour of the Purchaser
or such person as it may direct (a Nominee) accompanied by the
relative share certificates;
6.2.2 the written resignations in the agreed form of each of the
directors and secretaries of Group Companies specified in
Schedule 2 and resignation or removal of such other officers of
Group Companies as the Purchaser may notify Dominion from his
office to take effect on the date of Completion;
6.2.3 the certificates of incorporation, corporate seals (if any), and
statutory books of each Group Company (duly written up-to-date),
the share certificates in respect of all of the shares held by
each Group Company or Retained Group Company in Subsidiaries or
associated companies and transfers of all shares in the Group
Companies held by nominees for Retained Group Companies in
favour of the Purchaser or as it may direct;
6.2.4 all such other documents (including any necessary waivers of
pre-emption rights or other consents) as may be required to
enable the Purchaser and/or its nominee to be registered as the
holder(s) of the Shares;
6.2.5 a power of attorney in the agreed form duly executed as a deed
by each registered holder of the Shares;
6.2.6 a release in a form reasonably acceptable to the Purchaser duly
executed as a deed by the chargee releasing the Company and each
other Group Company from every charge entered into for the
benefit of the Retained Group;
6.2.7 letters of resignation in the agreed form duly executed by the
existing auditors of each Group Company, together with evidence
that such letters have been deposited at the registered office
of that company in accordance with section 392 of the Companies
Act, with a statement that there are no circumstances connected
with such resignation which they consider should be brought to
the attention of the members or creditors of such company;
6.2.8 a copy of a resolution of the Board of Directors (certified by a
duly appointed officer as true and correct) of each of Dominion
and the Vendors, authorising the execution of and the
performance by it of its obligations under this Agreement and
each other document to be executed by it;
6.2.9 a legal opinion from Dominion in the agreed form confirming the
due incorporation of Dominion and DEI UK, Inc. and that each is,
so far as appropriate, duly authorised to enter into this
Agreement and every other document to be executed by it and this
Agreement and such documents are valid and binding on and
enforceable against it;
6.2.10 an acknowledgement in the agreed form from Dominion and the
Vendors to the effect that there are no loans or other
indebtedness owing at Completion from any Group Company to any
member of the Retained Group; and
6.2.11 written confirmations in the agreed form as to the respective
bank balances of each Group Company as at the close of business
on the last Business Day prior to Completion.
6.3 Board Resolutions of the Principal Group Companies
On Completion the Vendors shall procure the passing of Board Resolutions
of each Group Company inter alia:
6.3.1 accepting the resignations referred to in Clause 6.2.2 and
appointing such persons (within the maximum number permitted by
the Articles of Association) as the Purchaser may nominate as
directors;
6.3.2 approving the registration of the share transfers referred to in
Clause 6.2 subject only to their being duly stamped;
6.3.3 accepting the resignations referred to in Clause 6.2 and
appointing Coopers & Lybrand or their successors as auditors of
each Group Company;
and shall hand to the Purchaser duly certified copies of such
Resolutions.
6.4 Shareholder Resolutions
On Completion, Dominion shall procure that the names of the Company and
Dominion UK and any other Group Company with the word Dominion in its
name are changed to a name nominated by PowerGen which shall be a name
not incorporating the word "Dominion" or any words resembling the same.
6.5 Payment of Price
Against compliance with the foregoing provisions the Purchaser shall
satisfy, and PowerGen procure satisfaction of, the purchase
consideration in the manner specified in Clause 3.
6.6 If Dominion or any of the Vendors fails or is unable to perform or
procure the performance of any material obligation required to be
performed pursuant to Clause 6 by the date on which Completion is
required to occur, without prejudice to any other right, remedy, action
or claim available to it, the Purchaser shall not be obligated to
complete the sale and purchase of the Shares and may, in its absolute
discretion, by written notice to Dominion:
(a) rescind this Agreement, without liability on the part of the
Purchaser; or
(b) elect to complete this Agreement on that date, to the extent
that Dominion and/or each of the Vendors is ready, able and
willing to do so, and specify and later date on which
Dominion and/or the Vendors shall be obliged to complete or
procure the completion of the outstanding obligations of
Dominion and/or the Vendors; or
(c) elect to defer the completion of this Agreement by not more
than five (5) Business Days to such other date as it may
specify in such notice, in which event the provisions of
this clause 6.6 shall apply, mutatis mutandis, if Dominion
and/or any of the Vendors fails or is unable to perform any
such obligations on such other date.
7 Warranties
7.1 Incorporation of Schedule 3
7.1.1 Dominion and the Vendors jointly and severally warrant and
represent to the Purchaser in the terms set out in Schedule 3
subject only to:
(i) any matter which is fairly disclosed in or pursuant to the
Disclosure Letter and any matter expressly referred to in
the Audited Accounts or expressly provided for under the
terms of this Agreement; and
(ii) any matter or thing hereafter done or omitted to be done
prior to Completion pursuant to this Agreement or otherwise
at the request in writing or with the approval in writing
of the Purchaser.
7.1.2 Each of Dominion and the Vendors agrees to waive the benefit of
all rights (if any) which any of them may have against any Group
Company, or any present or former officer or employee of any
such company, on whom any of them may have relied in agreeing to
any term of this Agreement or any statement set out in the
Disclosure Letter and each of them undertakes not to make any
claim in respect of such reliance.
7.1.3 Each of the Warranties shall be construed as a separate Warranty
and (save as expressly provided to the contrary) shall not be
limited or restricted by reference to or inference from the
terms of any other Warranty or any other term of this Agreement.
7.1.4 Each of Dominion and the Vendors shall, as soon as it becomes
aware thereof, notify the Purchaser of any fact or matter
occurring prior to Completion which would have
constituted a breach of warranty had it occurred and not been
disclosed prior to the date hereof.
7.2 Dominion undertakes to PowerGen as trustee for the Purchaser, the
Company and Dominion UK and the Nominee (together an Indemnified Person)
to indemnify and hold harmless and keep indemnified each Indemnified
Person against any Cost of the Company and/or Dominion UK other than any
liability to pay or repay interest or principal or other fees or
expenses in accordance with the terms of the financing agreements
specified as documents 15, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36,
39 in the Disclosure Documents as defined in the Disclosure Letter or
any failure to make such payments or arising from the holding or
ownership of the Shares in each case provided that such Cost shall arise
before or at Completion or after Completion by reason of any matter or
event existing or occurring before Completion save to the extent that:-
7.2.1 specific provision therefor (as evidenced by the working papers
made available by Deloitte and Touche to Coopers & Lybrand) has
been made in the Dominion Audited Accounts: or
7.2.2 the relevant Cost, is in respect of taxation and:
(a) such taxation was discharged (whether by payment or
by the utilisation of any relief, allowance or
credit in respect of taxation) prior to Completion;
or
(b) such taxation arises or is increased as a result of
any increase in rates of taxation or imposition of
new taxation legislation or any change in applicable
law, regulation or regulatory requirements or
practice made after Completion whether with or
without retrospective effect; or
(c) such taxation would not have arisen but for or is
increased by any voluntary act, omission,
transaction or arrangement of the Purchaser, any
Group Company or any Company controlled by the
Purchaser or a person or persons controlling the
Purchaser (construing "controlled" and "controlling"
in accordance with Section 416 of the Taxes Act
1988) after Completion; or
(d) such taxation would not have arisen but for, or has
been increased by:-
(l) a disclaimer, claim or election made or notice
or consent given after Completion by the
Purchaser or any Group Company otherwise than at
the request of the Vendors; or
(ll) a failure or omission by any Group Company to
make any claim, election, surrender or
disclaimer or give any notice or consent or do
any other thing after Completion the making,
giving or doing of which was taken into account
or assumed in computing the provision for
taxation (including the provision for the
deferred taxation) in the Audited Accounts or
which could have been made, given or done after
Completion or requested by the Vendors; or
(e) such taxation would not have arisen but for some
transaction occurring at the request or with the
approval of the Purchaser or its representatives; or
(f) such taxation arises from any change in accounting
or taxation policy or practice of or effecting any
Group Company, including the method of submission of
taxation returns, introduced or having effect on or
after Completion; or
(g) the Purchaser or any Group Company has a right of
recovery in respect of such taxation from a person
or persons other than the Vendors or any member of
the Retained Group.
7.3 If:-
(i) any provision or other liability taken into account in
compiling the Audited Accounts shall be found to be an
over-provision or excessive (the amount of such
over-provision or excess being hereinafter referred to as
an "Over-provision"); or
(ii) the assets of any Group Company shall be found to have been
understated in the Audited Accounts having regard to the
accounting practices and policies adopted in compiling
those accounts (the "Understatement"); or
(iii) any taxation which has resulted in a payment by the Vendors
hereunder falling due under this Agreement shall give rise
to an actual saving (the "Saving") of Taxation for a Group
Company or the Purchaser; or
(iv) any sum is received by a Group Company which has previously
been written-off as irrecoverable in the accounts of a
Group Company for any accounting period ended on or before
the Balance Sheet Date (the "Credit");
then the amount of the Over-provision, Understatement, Saving or
Credit shall be set-off against any payment then due from the
Vendors under Clause 7.2.
7.4 The Purchaser shall at the request of any of the Vendors procure that
any Group Company uses all Reliefs, (other than any Relief arising or
accruing after Completion) available to it or which would have been
available to it if such Relief had not been used after Completion
otherwise than at the request of the Vendors against any taxation for
which a claim could have been made under Clause 7.2 (including by way of
surrender from one company to another) and makes all elections, so as to
reduce or eliminate the Vendors' liability under Clause 7.2 or in
respect of the Vendors liability under the Warranty in paragraph 4.1 of
Schedule 3.
7.5 If the Vendors shall become liable to make any payment in respect of
taxation under Clause 7.2 or in respect of the Vendors liability under
the Warranty in paragraph 4.1 of Schedule 3 any of the Vendors may at
its option and wholly and partly instead of making a payment under
Clause 7.2 or in respect of the Vendors liability under the Warranty in
paragraph 4.1 of Schedule 3 surrender or procure the surrender (without
payment) to a Group Company of group relief (as defined in Section 402
of the Taxes Act 1988) or advance corporation tax in order to eliminate
or reduce the liability to make the payment of taxation which has given
rise to the claim. The Purchaser shall procure that the relevant Group
Company shall take without delay (and in any event within any applicable
statutory time limit) all such steps as may reasonably be required by
such Vendor to facilitate or permit the surrender of group relief or
advance corporation tax mentioned above.
7.6 Limitation of Liability
Notwithstanding the provisions of Clause 7.1 to 7.5 Dominion and the
Vendors shall not be liable under this Agreement:
7.6.1 Time Limits
In respect of any claim unless notice of such claim is given in
writing by the Purchaser to Dominion UK, Inc. on behalf of the
Vendors setting out in such detail as is reasonably practicable
of the matter in respect of which the claim is made including an
estimate of the amount of such claim, if practicable, within 15
months following Completion and any such claim shall (if it has
not been previously satisfied, settled or withdrawn) be deemed
to be withdrawn six months after the time limit set out above
(or, in the case of a claim in relation to a contingent
liability, six months after it becomes an actual liability
and due and payable) unless legal proceedings in respect of it
(i) have been commenced by being both issued and served and (ii)
are being pursued with reasonable diligence;
7.6.2 Minimum Claims
In respect of any claim arising from any single circumstance if
the amount of the claim does not exceed (pound)500,000 (save
that claims relating to a series of connected matters shall be
aggregated for this purpose) but the Vendors shall not be liable
for a claim in excess of that amount unless the liability
determined or agreed in respect of any such claim (excluding
interest, costs and expenses) also exceeds that amount;
7.6.3 Aggregate Minimum Claims
In respect of any claim unless the aggregate amount of all
claims for which the Vendors would otherwise be liable under
this Agreement exceeds (pound)5,000,000;
7.6.4 Maximum Claims
In respect of any claim to the extent that the aggregate amount
of the liability of the Vendors for all claims made under this
Agreement would exceed (pound)400,000,000;
7.6.5 Contingent Liabilities
In respect of any liability which is contingent unless and until
such contingent liability becomes an actual liability and is due
and payable on or before the date which is 27 months after the
date of Completion;
7.6.6 Provisions in the Accounts
In respect of any claim if and to the extent that proper
provision or reserve is specifically made (as evidenced by the
working papers made available by Deloitte and Touche to Coopers
& Lybrand) for the matter giving rise to the claim in the
Audited Accounts; or
7.6.7 In respect of any matter, act, omission or circumstance (or any
combination thereof) to the extent that the same would not have
occurred but for:
(i) Voluntary Acts of Purchaser
any voluntary act, omission or transaction of the
Purchaser or any member of the Purchaser's Group or any
of the Group Companies, or their respective directors,
employees or agents or successors in title, after
Completion done or omitted otherwise than in the
ordinary course of the business of the relevant company;
(ii) Changes in Legislation
the passing of, or any change in, after the date of this
Agreement, any law, rule, regulation or administrative
practice of any government, governmental department,
agency or regulatory body including (without prejudice
to the generality of the foregoing) any increase in the
rates of Taxation or any imposition of Taxation or any
withdrawal of relief from Taxation not actually (or
prospectively) in effect at the date of this Agreement;
(iii) Accounting and Taxation Changes
any change in accounting or Taxation policy, bases or
practice of the Purchaser or any of the Group Companies
introduced or having effect after Completion;
7.6.8 Insurance
In respect of any claim to the extent that any losses arising
from such claim (i) are covered by a policy of insurance in
force on the date of this Agreement or (ii) would
have been so covered had such policy of insurance been
maintained beyond the date of this Agreement (whether in respect
of any Group Company or any successor or assignee to the whole
or any part of any such company's trade, business, assets or
liabilities) in either case other than a policy with Coppice or
any other captive insurance company in the Group to the extent
liability has not been reinsured outside the Group;
7.6.9 Net Benefit
In respect of any claim for any losses suffered by the Purchaser
or any of the Group Companies to the extent of any corresponding
savings by or net benefit to the Purchaser or any other member
of the Purchaser's Group or any other Group Company arising
therefrom;
7.7 Mitigation of Loss
The Purchaser shall procure that all reasonable steps are taken and all
reasonable assistance is given to mitigate any potential losses which in
the absence of mitigation might give rise to a liability in respect of
any claim under this Agreement.
7.8 Conduct of Claims
7.8.1 If the Purchaser or any Group Company becomes aware of any
matter that is likely to give rise to a claim against Dominion
and/or the Vendors under this Agreement notice of that fact
shall be given as soon as reasonably practicable to Hackwood
Secretaries Limited on behalf of the Vendors.
7.8.2 Without prejudice to the validity of the claim or alleged claim
in question, the Purchaser shall give, and shall procure that
the relevant Group Companies give, subject to their being
indemnified against any liability, loss, damage or expense
arising therefrom and to the Vendors and/or their advisers
giving such undertakings relating to the maintenance of
confidentiality as the Purchaser shall reasonably require, all
such information of a non-confidential or privileged nature and
assistance, including access to premises and personnel, and the
right to examine assets, accounts, documents and records, as the
Vendors or their accountants or professional advisers may
reasonably require solely for the purpose of investigating the
matter or circumstances giving rise to the claim.
7.8.3 If the claim in question is a result of or in connection with a
claim or by liability to a third party then:
(i) no admission of liability shall be made by or on behalf
of the Purchaser or any Group Company and the claim
shall not be compromised, disposed of or settled without
the consent of Dominion UK, Inc (for itself and on
behalf of the other Vendor and Dominion) (such consent
not to be unreasonably withheld or delayed);
(ii) without prejudice to (i) above the Purchaser shall cause
the relevant Group Company to take such action as the
Vendors shall reasonably request to avoid, resist or
compromise any such claim (subject to the relevant Group
Company being entitled to employ its own legal advisers
and being indemnified and secured to its reasonable
satisfaction by Dominion against loss and damage and all
reasonable costs and expenses, including those of its
legal advisers, incurred in connection with such claim);
(iii) the Purchaser shall cause the relevant Group Company to
consult as full as is reasonably practicable with a
designated representative of the Vendors as regards
selection of solicitors, counsel and the conduct of
proceedings arising out of such claim.
7.9 Prior Receipt
If Dominion or the Vendors pay an amount in discharge of any claim under
this Agreement and the Purchaser or any Group Company subsequently
recovers (whether by payment, discount, credit, relief or otherwise)
from a third party a sum which is referable to the subject matter of the
claim and which would not otherwise have been received by the Purchaser,
the Purchaser shall pay, or shall procure that the relevant Group
Company pays, to the Vendors an amount equal to (i) the sum recovered
from the third party less any reasonable costs and expenses incurred in
obtaining such recovery or (ii) if less, the amount previously paid by
Dominion and/or the Vendors to the Purchaser in respect of the claim.
7.10 Double Claims
The Purchaser shall not be entitled to recover from Dominion and the
Vendors under this Agreement full reimbursement more than once in
respect of the same damage suffered.
7.11 Tax
In calculating the liability of the Vendors for any breach of this
Agreement, there shall be taken into account the amount (if any) by
which any Taxation for which the Purchaser or any Group Company would
otherwise have been accountable or liable to be assessed is actually
reduced or extinguished as a result of the matter giving rise to such
liability.
7.12 Effect of Completion
The Warranties and all other provisions of this Agreement insofar as the
same shall not have been performed at Completion shall not be
extinguished or affected by Completion, or by any other event or matter
whatsoever (including, without limitation, any satisfaction of the
condition contained in Clause 4.1), except by a waiver or release by the
Purchaser.
8 Indemnity and Section 338 Election
8.1 Indemnity
With effect from Completion the Purchaser shall indemnify the Vendors,
as trustees for themselves and any other member of the Retained Group
who was a shareholder in the Company in the preceding twelve months,
from and against any claim in respect of a liability which has been
contracted prior to the date hereof and which has been disclosed to the
Purchaser in the Disclosure Letter which may be made against any of them
in the winding-up of the Company as contributories by reason that they
were past members of the Company.
8.2 Section 338 Election
The Purchaser agrees that, if requested by Dominion, it shall cooperate
with Dominion in making an election under Section 338 of the Internal
Revenue Code of 1986 with respect to the sale of the Shares, provided
that Dominion shall indemnify the Purchaser for any costs or increase in
tax liability incurred as a result of making the Section 338 election.
Upon receiving such request, the Purchaser shall, having made reasonable
enquiries, notify Dominion of any liabilities which are likely to give
rise to a claim under such indemnity and upon receiving such
notification, Dominion may withdraw the relevant request.
9 Access to Records
The Purchaser acknowledges that the Vendors and their accountants and
any competent regulatory body will require access to the books and
records of the Group Companies after Completion in order to enable the
Vendors to prepare their accounts, to avail themselves of any US tax
credit for foreign taxes paid and to file any returns or provide any
information required by any regulatory body and to defend any returns
and to participate in any audit on such returns. The Purchaser shall
give, and shall procure that the relevant Group Companies give, all such
information and assistance, including access to premises and personnel,
and the right to examine and copy any accounts, documents and records of
the relevant Group Companies as the Vendors or their accountants may
reasonably request subject to the Vendors and/or their accountants
giving such undertaking relating to the maintenance of confidentiality
as the Purchaser shall reasonably require.
10 Other Provisions
10.1 Following Completion, Dominion and the Vendors undertake to the
Purchaser to use reasonable endeavours to obtain the release of each
Group Company from any Intra-Group Guarantees to which it is a party
and, pending such release, to indemnify the relevant Group Company
against all amounts paid by it after the date of the Agreement to any
third party pursuant to any such Intra-Group Guarantee in respect of any
liability of any member of the Retained Group (and all Costs incurred
in connection with such liability) arising on or after the date of this
Agreement.
10.2 Announcements
10.2.1 Pending Completion, the Vendors and the Purchaser shall, subject
to the requirements of law or any regulatory body or the rules
and regulations of any recognised stock exchange, consult
together as to the terms of, the timetable for and manner of
publication of, any formal announcement or circular to
shareholders, employees, customers, suppliers, distributors and
sub-contractors and to any recognised stock exchange or other
authorities or to the media or otherwise which either may desire
or be obliged to make regarding this Agreement. Any other
communication which the Purchaser or the Vendors may make
concerning the foregoing matters shall, subject to the
requirements of law or any regulatory body or the rules and
regulations of any recognised stock exchange, be consistent with
any such formal announcement or circular as aforesaid.
10.2.2 Subject to Clause 10.2.1, neither party shall pending Completion
make or authorise or issue any formal announcement or circular
concerning the subject matter of this Agreement or any other
document or transaction referred to in or contemplated by this
Agreement save to the extent required by the rules and
regulations of any stock exchange, regulatory authority or by
law.
10.2.3 If Completion does not take place the Purchaser shall forthwith
hand over or procure the handing over of all accounts, records,
documents and papers of or relating to the Vendors and each
Group Company which shall have been made available to it and all
copies or other records derived from such materials, and expunge
any information derived from such materials or otherwise
concerning the subject matter of this Agreement from any
computer, wordprocessor or other device containing information
Provided that this shall not apply to information available from
public records or information lawfully acquired (which shall not
include any information acquired in breach of any
confidentiality obligations) by the Purchaser otherwise than
from the Vendors or their agents or any Group Company.
10.3 Successors and Assigns
10.3.1 Subject to Clause 10.3.2, this Agreement is personal to the
parties to it. Accordingly, neither the Purchaser nor the
Vendors may, without the prior written consent of the others,
assign the benefit of all or any of the other's obligations
under this Agreement, nor any benefit arising under or out of
this Agreement nor shall the Purchaser be entitled to make any
claim against the Vendors in respect of any loss which it does
not suffer in its own capacity as beneficial owner of the
Shares.
10.3.2 Except as otherwise expressly provided in this Agreement, either
the Vendors or the Purchaser may, without the consent of the
other, assign to a connected company the benefit of all or any
of the other party's obligations under this Agreement provided
however that such assignment shall not be absolute but shall be
expressed to have effect only for so long as the assignee
remains a connected company. For the purposes of this sub-clause
a connected company is a company which is a subsidiary of the
party concerned or which is a holding company of such party or a
subsidiary of such holding company.
10.4 Remedies
10.4.1 This Agreement contains the whole agreement between the parties
relating to the subject matter of this Agreement at the date
hereof to the exclusion of any terms implied by law which may be
excluded by contract. The Purchaser acknowledges that it has not
been induced to enter into this Agreement by, and so far as is
permitted by law and except in the case of fraud, hereby waives
any remedy in respect of, any warranties, representations and
undertakings not incorporated into this Agreement.
10.4.2 So far as is permitted by law and except in the case of fraud,
the parties agree and acknowledge that the only right and remedy
which shall be available to the Purchaser in connection with or
arising out of or related to any of the statements contained in
this Agreement shall be damages in contract for breach of this
Agreement and not rescission of this Agreement, nor damages in
tort or under statute (whether under the Misrepresentation Act
1967 or otherwise), nor any other remedy.
10.4.3 Each party to this Agreement confirms it has received
independent legal advice relating to all the matters provided
for in this Agreement, including the provisions of this Clause,
and agrees having considered the terms of this Clause and the
Agreement as a whole, that the provisions of this Clause are
fair and reasonable.
10.4.4 In Clauses 10.4.1 to 10.4.3 "the Agreement" includes the
Disclosure Letter and all documents entered into pursuant to
this Agreement.
10.5 Authorities and Consents
Each of the parties represents and warrants to the other parties that
(i) it has the corporate power and authority to enter into and
perform its obligations under this Agreement;
(ii) its entry into this Agreement and performance of its
obligations hereunder do not require the consent of any
governmental authority or (except in the case of PowerGen
approval of its shareholders) other third party; and
(iii) its obligations constitute valid and binding obligations
and will be enforceable in accordance with their terms
except as may be provided by the provisions of any
applicable insolvency or similar laws and general
principles of equity.
10.6 Variation
No variation of this Agreement shall be effective unless in writing and
signed by or on behalf of each of the parties to this Agreement.
10.7 Time of the Essence
Any time, date or period referred to in any provision of this Agreement
may be extended by mutual agreement between the parties but as regards
any time, date or period originally fixed or any time, date or period so
extended time shall be of the essence.
10.8 Further Assurance
At any time after the date of this Agreement the Vendors shall and shall
use their best endeavours to procure that any necessary third party
shall at the cost of the Purchaser execute such documents and do such
acts and things as the Purchaser may reasonably require for the purpose
of giving to the Purchaser the full benefit of all the provisions of
this Agreement.
10.9 Costs
The Vendors shall bear all legal, accountancy and other costs and
expenses incurred by them in connection with this Agreement and the sale
of the Shares. The Purchaser shall bear all such costs and expenses
incurred by it.
10.10 Interest
If the Vendors or the Purchaser default in the payment when due of any
sum payable under this Agreement (whether determined by agreement or
pursuant to an order of a court or otherwise) the liability of the
Vendors or the Purchaser (as the case may be) shall be increased to
include interest on such sum from the date when such payment is due
until the date of actual payment (as well after as before judgment) at a
rate per annum of 10 per cent. Such interest shall accrue from day to
day.
10.11 Notices
10.11.1 Any notice or other communication requiring to be given or
served under or in connection with this Agreement shall be in
writing and shall be sufficiently given or served if delivered
or sent:
In the case of any of the Vendors to Dominion Resources, Inc.
at:
901 E. Byrd Street
Richmond
Virginia 23219
Fax: (804) 775 5819
Attention: James F. Stutts
In the case of PowerGen or the Purchaser to at:
PowerGen plc
53 New Broad Street
London
EC2M 1JJ
Fax: 0171 826 2716
Attention: The Company Secretary
10.11.2 Any such notice or other communication shall be delivered by
hand or sent by courier, fax or prepaid first class post. If
sent by courier or fax such notice or communication shall
conclusively be deemed to have been given or served at the time
of despatch, in case of service in the United Kingdom, or on the
following Business Day in the case of international service. If
sent by post such notice or communication shall conclusively be
deemed to have been received two Business Days from the time of
posting, in the case of inland mail in the United Kingdom or
three Business Days from the time of posting in the case of
international mail. If delivered by hand such notice or
communication shall conclusively be deemed to have been given or
served at the time of delivery.
10.12 Severance
If any term or provision in this Agreement is be held to be illegal or
unenforceable, in whole or in part, under any enactment or rule of law,
such term or provision or part shall to that extent be deemed not to
form part of this Agreement but the enforceability of the remainder of
this Agreement shall not be affected.
10.13 Counterparts
This Agreement may be executed in any number of counterparts each of
which shall be deemed an original, but all the counterparts shall
together constitute one and the same instrument.
10.14 Restrictive Trade Practices
Notwithstanding any other provision of this Agreement, no provision of
this Agreement which is of such a nature as to make the Agreement liable
to registration under the Restrictive Trade Practices Act 1976 shall
take effect until the day after that on which particulars thereof have
been duly furnished to the Director General of Fair Trading pursuant to
the said Act. This Clause shall not apply if this Agreement is a
non-notifiable agreement within the meaning of Section 27A of the
Restrictive Trade Practices Act. For the purposes of this Clause 10.12,
the term "Agreement" shall include every other agreement which forms
part of the same arrangement.
10.15 Governing Law and Submission to Jurisdiction
10.15.1 This Agreement and the documents to be entered into pursuant to
it, save as expressly referred to therein, shall be governed by
and construed in accordance with English law and all the parties
irrevocably agree that the courts of England are to have
jurisdiction to settle any disputes which may arise out of or in
connection with this Agreement and such documents.
10.15.2 Dominion and the Vendors irrevocably agree that a final judgment
or order (which is not subject to any appeal) of any court
referred to in this Clause in connection with this Agreement is
conclusive and binding on each of them and may be enforced
against it in the courts of any other jurisdiction.
10.15.3 Dominion and the Vendors irrevocably consent to service of
process or any other documents in connection with proceedings in
any court by facsimile transmission, personal service, delivery
at any address specified in this Agreement or any other usual
address, mail or in any other manner permitted by English law,
the law of the place of service or the law of the jurisdiction
where proceedings are instituted.
10.15.4 Dominion and the Vendors shall maintain an agent for service of
process and any other documents in proceedings in England or any
other proceedings in connection with this Agreement for a period
of two years from the date of this Agreement. Such agent shall
initially be Hackwood Secretaries Limited currently of One Silk
Street, London EC2Y 8HQ and any writ, judgment or other notice
of legal process shall be sufficiently served on Dominion and
the Vendors if delivered to such agent at its address for the
time being. Dominion and the Vendors irrevocably undertake not
to revoke the authority of the above agent during the two year
period referred to above.
10.15.5 The Vendors hereby appoint Hackwood Secretaries Limited, at its
registered office for the time being, (being at the date hereof
at One Silk Street, London EC2Y 8HQ), to act as its agent to
accept service of process out of the English Courts in relation
to all matters arising out of this Agreement.
In witness whereof this Agreement has been duly executed.
SIGNED by Thos. E. Capps
on behalf of DOMINION
RESOURCES, INC.
in the presence of:
A.G. Hickinbottom
SIGNED by Thomas F. Farrell, II Vice
President of DEI UK, Inc.
on behalf of DR NOTTINGHAM
INVESTMENTS
in the presence of:
A.G. Hickinbottom
SIGNED by Edgar M. Roach
on behalf of DEI U.K., INC.
in the presence of:
A.G. Hickinbottom
SIGNED by (NOT LEGIBLE)
on behalf of POWERGEN
INVESTMENTS LIMITED
in the presence of:
(NOT LEGIBLE)
SIGNED by (NOT LEGIBLE)
on behalf of POWERGEN PLC
in the presence of:
A.G. Hickinbottom
Schedule 1
Part 1
Particulars of Vendors, Shares Sold etc.
(1) (2)
Names and Addresses of Shares Sold
Vendors
DR Nottingham Investments 636,742,800
PO Box 444, Woodyard
Lane, Wollaton, Nottingham
NG8 1EZ
DEI U.K., Inc. 2,557,210
901 E. Byrd Street
Richmond
Virginia 23219
Part 2
Particulars of the Company
Registered Number: 3277352
Registered Office: PO Box 444, Woodyward Lane,
Wollaton, Nottingham NG8 1EZ
Date and place of incorporation: 7th November 1996, England & Wales
Directors: DEI UK, Inc., Dominion Energy
U.K., Inc.
Secretary: DEI UK, Inc.
Issued and fully paid-up 639,300,010 Ordinary Shares of
Share Capital: (Pound)1 each
Schedule 2
Directors of Group Companies to resign on Completion
Name
Thos. E. Capps
Thomas F. Farrell, II
Edgar M. Roach
William G. Thomas
James L. Trueheart
Thomas N. Chewning
David L. Heavenridge
DEI UK Inc.
Dominion Energy UK Inc.
Schedule 3
1 Authority and Capacity of the Vendors
1.1 Each of the Vendors and the Group Companies are companies duly
incorporated and validly existing under their respective laws of
incorporation.
1.2 Each of the Vendors has the requisite power and authority to enter into
and perform this Agreement and any other documents to be executed by the
Vendors pursuant to or in connection with this Agreement which when
executed will constitute valid and binding obligations on each Vendor,
in accordance with their respective terms.
1.3 The Vendors are entitled to sell and transfer to the Purchaser the full
legal and beneficial ownership of the Shares set opposite their names in
Part 1 of Schedule 1 on the terms of this Agreement without the consent
of any third party. The Shares comprise the whole of the allotted and
issued share capital of the Company, have been properly and validly
allotted and issued and are each fully paid.
1.4 The Company or a Subsidiary is the sole beneficial owner of the issued
share capital, debentures or other securities of each of the
Subsidiaries. With the exception of the Shares, the Retained Group has
no interest in any shares, debentures in or other securities of any
Group Company. There is no security interest over or affecting any of
the Shares or, so far as the Vendors are aware, the shares of the
Subsidiaries held by Group Companies.
1.5 No Group Company has any interest in the share capital of any other
company representing 20 per cent. or more of such company's issued share
capital (except in Group Companies) nor any interest in shares,
debentures or other securities of any company involving an undischarged
or continuing liability to make any payments.
1.6 Neither the Company nor Dominion UK has at any time since its
incorporation, traded.
1.7 So far as the Vendors are aware, no order has been made, petition
presented, resolution passed or meeting convened for the winding up of
any Group Company.
1.8 So far as the Vendors are aware, no petition has been presented or other
proceedings commenced for an administration order to be made in relation
to any Group Company, nor has any such order been made.
1.9 So far as the Vendors are aware, no Group Company is insolvent or unable
to pay its debts as they fall due.
2 Compliance
2.1 So far as the Vendors are aware each Group Company has, since 31 March
1997, conducted its business and corporate affairs in all material
respects with all applicable laws and so far as the Vendors are aware no
Group Company has since 31 March 1997 received notification that any
investigation or inquiry is being or has been conducted by any
authority, governmental agency or regulator nor in respect of the
business or affairs of the Group which will or is reasonably likely to
have a material adverse effect on the Group.
2.2 So far as the Vendors are aware, none of the Group Companies has since
March 1997 entered into any material commitment or understanding with
any regulator which has not been disclosed to the Purchaser prior to the
date hereof. For the purposes of this warranty any commitment or
understanding is considered to be material if it would result in any
Group Company incurring expenditure in excess of (Pounds)5,000,000 or
would directly result in the turnover of the Group being reduced by
such amount.
3 Accounts
3.1 Dominion Audited Accounts
The Dominion Audited Accounts give a true and fair view of the state of
affairs of the Group as at 28 December 1997 and of its results for the
financial period ended on that date and have been prepared in accordance
with the Companies Act 1985 and accountancy principles generally
accepted at that date in the United Kingdom.
3.2 Changes since Balance Sheet Date
Since the Balance Sheet Date, there have been no dividends or other
distributions declared, made or paid by the Company to its members and
the business of the Group has been carried on in the normal course.
3.3 Financial matters
There are no outstanding contracts between any Group Company and any
member of the Retained Group or any person who is a director of any
member of the Retained Group and no outstanding contracts entered into
by any Group Company under which such Group Company has in aggregate
guaranteed or provided indemnities in respect of indebtedness,
liabilities or obligations of any member of the Retained Group (other
than any other Group Company) or has made any loan to any member of the
Retained Group (other than trade credit in the ordinary course of
business).
3.4 Litigation
Except as plaintiff in the collection of debts arising in the ordinary
course of business, so far as the Vendors are aware no Group Company is
a plaintiff or defendant in or otherwise a party to any litigation,
arbitration or administrative proceedings which are in progress or
threatened and which would have a material impact on the financial
position of the Group or, so far as the Vendors are aware, pending by or
against or concerning any Group Company or any of its assets. For the
purposes of this warranty any such proceedings are considered to be
material if they would directly result in any Group Company incurring a
liability in excess of (Pounds)5,000,000.
3.5 Material Transactions
Since 31 March 1997, no Group Company has entered into any transaction
which would have constituted a Class 2 or Superclass 1 transaction
pursuant to Chapter 10 of the Listing Rules of the London Stock Exchange
(the Rules) had the shares in EME remained listed on the Official List
of the London Stock Exchange. For the purposes of this paragraph 3.5 the
percentage ratios in Chapter 10 of the Rules shall be construed by
reference to the EME Audited Accounts; and the references to "market
capitalisation" in Chapter 10 of the Rules shall be deemed to be a
reference to the cash consideration payable on Completion pursuant to
this Agreement.
4 Tax
4.1 Since the Balance Sheet Date no Group Company has been involved in any
transaction which has given or is likely to give rise to a material
liability to tax on any Group Company other than tax in respect of
normal trading income or receipts of the Group Company concerned arising
from transactions entered into by it in the ordinary course of business.
4.2 All stamp duty or stamp duty reserve tax on the acquisition of EME by
Dominion UK plc has been duly paid or accounted for.
5 Net Debt
As at 24 May 1998, the Net Debt of the Group (Pounds)1,049,447,334 and,
since that date, has not increased otherwise than as a result of
transactions in the ordinary course of business or as a result of
payments of any debt referred to in Schedule 2 to the Disclosure Letter.