FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of November, 1999
CENARGO INTERNATIONAL PLC
(Translation of registrant's name into English)
Puttenham Priory
Puttenham
Surrey GU3 1AR
United Kingdom
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will
file annual reports under cover Form 20-F or Form 40-F.
Form 20-F X Form 40-F
Indicate by check mark whether the registrant by furnishing
the information contained in this Form is also thereby furnishing
the information to the commission pursuant to Rule 12g3-2(b)
under the Securities Exchange Act of 1934.
Yes No X
INFORMATION CONTAINED IN THIS FORM 6-K REPORT
Cenargo International Plc ("Cenargo") purchased 100% of the
outstanding share capital of Norse Irish Ferries Limited ("NIF"),
a private company incorporated in the Isle of Man, on October 1,
1999. NIF operates freight and passenger ferry services in the
Irish Sea market. Its fleet consists of two modern RoPax ferries
on timecharters. NIF provides the only passenger and freight
service between Liverpool (England) and Belfast (Northern
Ireland).
On October 22, 1999, Cenargo purchased Eaglescliffe Logistics
Center ("Eaglescliffe"), a 114 acre multi-warehouse facility
which Cenargo operates as its freight logistics center located in
northeast England, from the Ministry of Defence of the United
Kingdom.
Cenargo closed these transactions following the successful
consent solicitation of the holders of its 9 3/4% First Priority
Ship Mortgage Notes due 2008 (the "Notes") that approved
amendments to the Indenture pursuant to which the Notes were
issued in order to allow Cenargo to apply funds held as
collateral for the Notes to fund a portion of the purchase price
of NIF and Eaglescliffe. Cenargo received consents from holders
of more than 99% of the principal amount of its Notes to those
amendments.
On October 22, 1999, Cenargo applied the remainder of the
funds held as collateral for the Notes to purchase two vessels,
the RIVER LUNE and the SAGA MOON, which Cenargo had previously
leased. These vessels are roll-on, roll-off ferries employed in
the Company's Heysham to Dublin route. The two vessels, upon
their acquisition, became part of the collateral securing the
Notes. As a consequence of terminating the leases, Cenargo has
reduced its total indebtedness.
2
Exhibits
NIF Purchase Agreement...................................A
Eaglescliffe Purchase Agreement..........................B
Consent Solicitation Documents
Consent Solicitation Statement.......................C
Supplement No. 1 to Consent Solicitation Statement...D
Form of Consent......................................E
Substitute Form W-9..................................F
3
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly
authorized.
CENARGO INTERNATIONAL PLC
(registrant)
Dated: November 10, 1999 By: /s/ Michael Hendry
___________________
Michael Hendry
Chairman
4
Exhibit A
Date 16 July 1999
GROVER STAR SHIPPING CORPORATION
- and -
CENARGO INTERNATIONAL PLC
_____________________________
AGREEMENT FOR THE SALE
AND PURCHASE OF SHARES OF
NORSE IRISH FERRIES LIMITED
_______________________________
INDEX
Clause Page
1 INTERPRETATION 1
2 AGREEMENT FOR SALE 3
3 CONDITIONS 3
4 UNDERTAKINGS 5
5 CONSIDERATION 5
6 COMPLETION 5
7 WARRANTIES 7
8 LIMITATIONS ON THE SELLER'S LIABILITY 8
9 TERMINATION 11
10 NON-COMPETITION 11
11 ANNOUNCEMENTS AND CONFIDENTIAL INFORMATION 12
12 COSTS 12
13 GENERAL 13
14 ASSIGNMENT 15
15 NOTICES 15
16 GOVERNING LAW AND JURISDICTION 15
17 CAPACITY AND AUTHORITY 16
SCHEDULE 1 INFORMATION ABOUT THE COMPANY 17
SCHEDULE 2 WARRANTIES 18
SCHEDULE 3 ACTION PENDING COMPLETION 22
SCHEDULE 4 TAX INDEMNITY 24
EXECUTION PAGE 27
THIS AGREEMENT is made on 16 July 1999
BETWEEN
(1) GROVER STAR SHIPPING CORPORATION, a company incorporated
with limited liability in Liberia, whose administrative
office is at 2nd Floor, Sir Walter Raleigh House, 48-5-
The Esplanade, St. Helier, Jersey JE4 8NX (the "Seller");
and
(2) CENARGO INTERNATIONAL PLC, a company incorporated with
limited liability in England, whose registered office is
at Puttenham Priory, Puttenham, Surrey GU3 1AR registered
number 01787672 (the "Buyer").
WHEREAS
(A) The Seller has agreed to sell and the Buyer has agreed to
purchase the Sale Shares subject to the terms and
conditions set out in this Agreement.
(B) In order to sell the Sale Shares to the Buyer, the Seller
must comply with the pre-emption provisions set out in the
Articles.
THE PARTIES AGREE as follows:
1 INTERPRETATION
1.1 In this Agreement:
"A Sale Shares" means the 4,444,089 fully paid "A"
ordinary shares of 1 pound sterling each in the capital of
the Company to be sold by the Seller to the Buyer pursuant
to this Agreement;
"Accounts" means the audited financial statements of the
Company as at, and for the accounting reference period
ended on, the Accounts Date (including the directors' and
auditor's reports thereon) initialed (for the purposes of
identification only) by the Buyer's Solicitors and the
Seller's Solicitors;
"Accounts Date" means 31 December 1998;
"Act" means the Isle of Man Companies Acts 1931-1993;
"Agreement" means this agreement and includes the
schedules hereto;
1
"Agreed Form" means, in relation to any document, in a
form signed for the purpose of identification by, or on
behalf of, the parties to this Agreement;
"Articles" means the articles of association of the
Company as at the date of this Agreement;
"B Sale Shares" means the 590,124 fully paid "B" ordinary
shares of 1 pound sterling each in the capital of the
Company to be sold by the Seller to the Buyer pursuant to
the terms of the Offer Letter (as defined in Clause 2.2
below);
"Business Day" means a day other than a Saturday or Sunday
or public holiday in England and Wales;
"Buyer's Solicitors" means Stephenson Harwood of One, St.
Paul's Churchyard, London EC4M 8SH;
"Company" means Norse Irish Ferries Limited, short details
of which are set out in schedule 1;
"Completion" means completion of the sale and purchase of
the Sale Shares in accordance with Clause 6 of this
Agreement;
"Confidentiality Agreement" means the confidentiality
agreement entered into on 2 March 1999 between the Buyer
and Seller;
"Consultancy Agreement" means the consultancy agreement
between the Buyer and the Seller in the Agreed Form to be
entered into on Completion;
"Disclosure Letter" means the letter from the Seller to
the Buyer in relation to the Warranties and the Tax
Indemnity having the same date as this Agreement;
"Encumbrance" means a mortgage, charge (whether fixed or
floating), pledge, lien, option, restriction, right of
first refusal, right of pre-emption, third-party right or
interest, other encumbrance or security interest of any
kind, or another type of preferential arrangement
(including, without limitation, a title transfer and
retention arrangement) having similar effect;
"Escrow Account" means the account in the joint names of
the Seller's Solicitors and the Buyer's Solicitors to be
operated in accordance with the Escrow Letter;
2
"Escrow Letter" means the letter in the Agreed Form from
the Buyer's Solicitors and the Seller's Solicitors to the
Buyer and the Seller to be entered into contemporaneously
with the signing of this Agreement;
"Interim Accounts Date" means 30 June 1999;
"IOM Tax" and "IOM Taxation" have the meaning given in the
Tax Indemnity;
"IOM Tax Indemnity Claim" means a claim under the Tax
Indemnity in respect of IOM Tax;
"Relevant Claim" means a claim by the Buyer involving or
relating to a breach of Clause 7.1;
"Revenue Letter" has the meaning given to it in Clause
6.3(a);
"Sale Shares" means together the A Sale Shares and the B
Sale Shares;
"Seller's Auditors" means PricewaterhouseCoopers;
"Seller's Solicitors" means Watson, Farley & Williams of
15 Appold Street, London EC2A 2HB;
"Tax Indemnity" means the tax indemnity between the Seller
and the Buyer set out in schedule 4;
"UK Tax" and "UK Taxation" have the meaning given in the
Tax Indemnity;
"UK Tax Indemnity Claim" means a claim under the Tax
Indemnity in respect of UK Tax; and
"Warranty" means a statement contained in schedule 2 and
"Warranties" means all those statements.
1.2 In this Agreement, a reference to:
(a) a statutory provision includes a reference to the
statutory provision as modified or enacted or both from
time to time before the date of this Agreement and any
subordinate legislation made under the statutory provision
before the date of this Agreement;
(b) a person includes a reference to a body corporate,
association or partnership;
3
(c) a person includes a reference to that person's legal
personal representatives and successors; and
(d) a Clause, paragraph or schedule, unless the context
otherwise requires, is a reference to a Clause or
paragraph of or schedule to this Agreement.
1.3 The headings in this Agreement do not affect its
interpretation
1.4 A reference in schedule 2 to a person's knowledge,
information, belief or awareness is deemed to include
knowledge, information, belief or awareness which the
person would have after due and careful enquiry of the
directors of the Company only.
2 AGREEMENT FOR SALE
2.1 Subject to other provisions of this Agreement, the Seller
agrees to sell with full title guarantee and the Buyer
agrees to buy the A Sale Shares, and each right attaching
to the A Sale Shares at or after the date of Completion,
free of any Encumbrance.
2.2 Within five Business Days following the signature of this
Agreement the Buyer shall make an offer to purchase the B
Sale Shares and the "B" ordinary shares held by the
shareholders of the Company other than the Seller (the
"Minority Shareholders") at a price of US$7.6869 per share
on the terms of the offer letter in the Agreed Form (the
"Offer Letter") to be sent by the Buyer to the Seller and
immediately upon acceptance of such offer, serve a
Transfer Notice as defined in, and in accordance with, the
Articles and in the Agreed Form, in respect of the B Sale
Shares to the directors of the Company, which notice shall
include a Total Transfer Condition (as defined in the
Articled) whereby the Minority Shareholders may not
exercise their pre-emption rights to acquire less than all
of the B Sale Shares.
3 CONDITIONS
3.1 The provisions of this Agreement (other than Clauses 1,
3.1 to 3.6, 4, 5.2, 5.3, 9 and 11 to 17) are conditional
upon:
(a) the Minority Shareholders either:
(i) not exercising their rights of pre-emption under
the Articles so as to satisfy the Total Transfer
4
Condition referred to in Clause 2.2 and Clause
3.4(a); or
(ii) waiving all such rights as referred to in Clause
3.4(b);
(b) (i) it being confirmed to the satisfaction of the Buyer
that the Secretary of State for Trade and Industry
does not intend to refer purchase of the Sale
Shares contemplated hereunder or any part thereof
to the Competition Commission ("CC"); or
(ii) in the event of the purchase of the Sale Shares
being referred to the CC, the Secretary of State
for Trade and Industry confirming in terms
acceptable to the Buyer that the purchase of the
Sale Shares contemplated hereunder can proceed; and
(c) the holders of the Buyer's 9 3/4% first priority ship
mortgage notes due 15 June 2008 (the "Notes") consenting
to amendments to the Indenture for the Notes to allow the
Buyer to use the proceeds of the sale of its vessels that
had been mortgaged for the benefit of those holders to
purchase the Sale Shares.
3.2 If the conditions set out in Clause 3.1(b) and (c) are not
satisfied by 21 September 1999 (or the Seller terminates
in accordance with the provisions of clause 3.3), the
parties shall be relieved of their obligations under this
Agreement and shall have no claim against each other in
connection therewith except for any obligation or claim
which either party may have in connection with any
antecedent breach by either party of any provision of this
Agreement or any breach of the Confidentiality Agreement.
3.3 The parties shall use all reasonable endeavors to procure
that the conditions set out in Clause 3.1 are satisfied
and shall keep each other notified of all matters which
may affect the satisfaction of the conditions and procure
that their respective solicitors will report to each other
on a weekly basis as to the progress towards the
satisfaction of those conditions. If it becomes apparent
that it will not be possible for any of the conditions set
out in Clause 3.1 above to be satisfied, the party
becoming so aware will, immediately upon becoming so
aware, give written notice to the other. Upon receiving
such notice (or, if it is the party giving such notice,
contemporaneously with the giving of such notice) the
Seller shall be entitled to terminate this Agreement by
written notice to the Buyer.
5
3.4 Without prejudice to Clause 3.3, the Seller shall:
(a) on the same date as the Seller gives a Transfer Notice
under Clause 2.2, also give a Transfer Notice as defined
in, and in accordance with, the Articles and in the Agreed
Form, in respect of the A Sale Shares to the directors of
the Company, which notice shall include a Total Transfer
Condition (as defined in the Articles) whereby the
Minority Shareholders may not exercise their pre-emption
rights to acquire less than all of the A Sale Shares; and
(b) notwithstanding Clause 3.4(a) and the terms of the Offer
Letter, use its reasonable endeavors to obtain from each
Minority Shareholder a waiver of its pre-emption rights
under the Articles;
(c) notify the Buyer in writing immediately the condition set
out in Clause 3.1 is satisfied.
3.5 Without prejudice to Clause 3.3, the Buyer shall on the
day following signature of this Agreement commence the
procedure for the solicitation of the holders of the Notes
to the amendments to the Indenture described in Clause
3.1(c), including the circulation as soon as reasonably
practicable to those holders of a consent solicitation
statement, the terms of which will provide, amongst other
things, for an original expiration of the solicitation
period on no later than 27 August 1999.
3.6 If the conditions set out in Clause 3.1 (b) and (c) are
satisfied by the date set out in clause 3.2 above, the
Buyer shall immediately give written notice to the Seller.
Within two Business Days of service on the Seller of such
notice, the Seller shall procure that, for a period of
five Business Days thereafter, the Buyer and its agents
and representatives are (subject as set out below) given
such reasonable access to the senior management, books and
records of the Company so as to:
(a) verify the financial information in the Interim Accounts
and shall provide management accounts for July and August
1999 (produced on a consistent basis with the Interim
Accounts) and such management information as it has for
September (provided that, whilst it shall give details of
debtors outstanding for more than 60 days, the Seller
shall not be required to disclose customer rates,
discounts or volumes to the Buyer); and
(b) review the Year 2000 compliance programme of the Company.
6
4 UNDERTAKINGS
Between the execution of this Agreement and Completion the
Seller shall comply with schedule 3 and shall procure that
the Interim Accounts are audited as soon as reasonably
practicable, and in any event by the end of the period
referred to in Clause 3.5.
5 CONSIDERATION
5.1 The consideration for the sale of the A Sale Shares shall
be the sum of US$34,161,268 (equivalent to US$7.6869 per A
Sale Share) payable in cash by the Buyer on Completion
(the "Consideration"). If Completion does not occur by 16
September 1999, the Consideration shall be increased by an
amount of US$10,665.81 (equivalent to US$0.0024 per A Sale
Share) for each day of delay from and including 16
September 1999 to and including the date of Completion
save where such delay results solely from the failure to
satisfy the condition set out in Clause 3.1(a) or to the
extent that such delay results solely from the Seller's
failure to comply with any material obligations under
Clause 6.2 and the Buyer exercises its rights under Clause
6.5(b).
5.2 The Buyer shall, on the date of signature of this
Agreement, pay into the Escrow Account a deposit of
US$500,000 (the "Deposit"). The Deposit shall:
(a) if Completion occurs, reduce the amount otherwise payable
into the Escrow Account in accordance with Clause
6.3(a)(and if the amount payable under that Clause is
calculated to be less than US$500,000, the excess over the
amount otherwise payable into the Escrow Account under
that clause shall be paid to the Seller and shall reduce
the amount otherwise payable by the Buyer to the Seller in
accordance with Clause 6.3(b)); or
(b) if Completion does not occur:
(i) because the Buyer has terminated this Agreement in
accordance with the provisions of Clause 9 or
because the condition set out in Clause 3.1(a) has
not been satisfied or because the Seller has failed
to comply with any material obligation under Clause
6.2 and the Buyer exercises its rights under Clause
6.5(c), be paid to the Buyer (together with all
interest accrued thereon); or
(ii) for any other reason, be paid to the Seller
(together with all interest accrued thereon).
7
5.3 On the signing of this Agreement, the Buyer and the Seller
shall execute the Escrow Letter.
6 COMPLETION
6.1 Completion shall take place at the registered office of
the Company (or such other place as the Seller shall
determine) on 1 October 1999 (or, if the Buyer shall give
not less than five Business Days notice to the Seller, on
any Business Day in September 1999).
6.2 At Completion the Seller shall:
(a) deliver or cause to be delivered to the Buyer duly
executed transfer(s) in respect of the Sale Shares in
favour of the Buyer or as it shall in writing direct and
the share certificate(s) for the Sale Shares;
(b) deliver or cause to be delivered to the Buyer the
statutory and minute books, books of account, certificate
of incorporation, company seal and other documents and
records of or relating to the Company which are in the
possession of the Seller or its advisers or agents;
(c) deliver to the Buyer a copy of the minutes of the meeting
of the directors of the Seller authorising the execution
and performance by the Seller of its obligations under
this Agreement certified a true copy by a director of the
Seller;
(d) deliver to the Buyer:
(i) a copy of a letter between Norse Management(UK)
Limited ("NML") and the Company terminating the
consultancy agreement entered into on 1 August 1997
without further liability to each other save as to
fees accrued to the date of Completion and
confirming that there are not other management,
consultancy or other such agreements between NML
and the Company nor any liability led by NML to the
Company; and
(ii) a duly executed copy of the Consultancy Agreement.
(e) deliver to the Buyer a copy of the final invoice rendered
by Capco Trust I.O.M. Limited ("Capco") to the Company for
company secretarial services provided to the Company by
Capco up to the date of Completion together with
confirmation by Capco that the invoice has been paid in
full by the Company and that there are not other
management, consultancy or other such agreements between
8
Capco and the Company nor any further liabilities owed by
the Company to Capco;
(f) ensure that the persons nominated by the Buyer are duly
appointed as additional directors of the Company;
(g) ensure that each of the present directors (other than
Phillip Shepherd and Allister Mulligan) and secretary of
the Company resigns from office and delivers a letter to
the Company in the Agreed Form executed by him as a deed;
and
(h) deliver to the Buyer a letter under seal confirming that
there are no management, consultancy or other such
agreements between the Company and the Seller other than
the Consultancy Agreement nor any further liabilities owed
by the Company to the Seller.
6.3 At Completion the Buyer shall:
(a) (if, prior to the date of Completion, the Seller has not
produced to the Buyer a letter or other notification from
the Inland Revenue (or an extract (certified by the
Seller's Solicitors as being a true extract) of an
agreement with the Inland Revenue and with a written
confirmation from the Seller's Solicitors that there is
nothing in the agreement that adversely affects the
meaning of the extract) either:
(i) accepting that the Company is resident in the Isle
of Man; or
(ii) confirming that the Inland Revenue will not seek to
establish that the Company is resident in the
United Kingdom; or
(iii) accepting that there is no additional Tax liability
on the Company, in each case for the period prior
to the Accounts Date (such letter, notification or
extract, the "Revenue Letter"), pay into the Escrow
Account an amount equal to the US dollar equivalent
as at the date of Completion (quoted by such bank
in the City of London as the Seller shall determine
as being its spot buying rate for US dollars with
sterling at the close of business two Business Days
prior to the date of Completion) of 450,000 pounds
sterling;
(b) pay the balance of the Consideration to the Seller (or as
the Seller directs in writing) by transfer of cleared
funds on the day of transfer to such account as the Seller
9
shall specify at least two Business Days prior to
Completion;
(c) deliver to the Seller a duly executed copy of the
Consultancy Agreement; and
(d) deliver to the Seller a copy of the minutes of the meeting
of the directors of the Buyer authorising the execution
and performance by the Buyer of its obligations under this
Agreement certified a true copy by a director of the
Buyer.
6.4 A party is not obliged to complete this Agreement unless
the other party complies with all its obligations under
Clause 6.
6.5 If Completion does not take place on the date set for
Completion in Clause 6.1 because either party fails to
comply with any of its obligations under this Clause 6,
the other party may by notice to the defaulting party:
(a) proceed to Completion to the extent reasonably practicable
but without prejudice to the parties' rights under this
Agreement;
(b) postpone Completion to a date not more than:
(i) if the condition in Clause 3.1(a)(ii) is not
satisfied, 80 days after the date on which the
first of the Transfer Notices referred to in
Clauses 2.2 and 3.4(a) was received by the Company;
and
(ii) in any event, shall be for a date no later than 14
days after the original date set for Completion; or
(c) terminate this Agreement.
6.6 If a party postpones Completion to another date in
accordance with Clause 6.5(b), the provisions of this
Agreement apply as if that other date is the date set for
Completion in Clause 6.1.
6.7 If a party terminates this Agreement pursuant to Clause
6.5(c), each party's further rights and obligations cease
immediately on termination, but termination does not
affect the terminating party's accrued rights and
obligations at the date of termination.
10
7 WARRANTIES
7.1 The Seller warrants to the Buyer in the terms of schedule
2 at the date of this Agreement.
7.2 The Seller waives and may not enforce a right which it may
have in respect of a misrepresentation, inaccuracy or
omission in or from information or advice supplied or
given by the Company or a director, officer or employee of
the Company for the purpose of assisting the Seller to
make a representation, give a Warranty or prepare the
Disclosure Letter.
7.3 No representation, warranty or undertaking is given by the
Seller in this Agreement or otherwise as to the
profitability of the Company following 30 June 1999 and
the Seller shall have no liability in respect of any
Relevant Claim to the extent that such claim derives from
a reduction in such profitability following 30 June 1999.
8 LIMITATIONS ON THE SELLER'S LIABILITY
8.1 The Seller shall not be liable in respect of a Relevant
Claim, UK Tax Indemnity Claim or IOM Tax Indemnity Claim,
or a series of Relevant Claims, UK Tax Indemnity Claims or
IOM Tax Indemnity Claims arising from the same fact or
circumstance, unless and until the amount that would
otherwise be recoverable from the Seller (but for this
Clause 8.1) in respect of that Relevant Claim, UK Tax
Indemnity Claim or IOM Tax Indemnity Claim, or the
aggregate amount that would otherwise be recoverable from
the Seller (but for this Clause 8.1) in respect of such
series of Relevant Claims, UK Tax Indemnity Claims or IOM
Tax Indemnity Claims, exceeds US$20,000.
8.2 The Seller shall not be liable in respect of a Relevant
Claim or IOM Tax Indemnity Claim unless and until the
amount that would otherwise be recoverable from the Seller
(but for this Clause 8.2) in respect of that Relevant
Claim or IOM Tax Indemnity Claim, when aggregated with any
other amount or amounts recoverable in respect of other
Relevant Claims or IOM Tax Indemnity Claims (excluding any
amounts in respect of a Relevant Claim or IOM Tax
Indemnity Claim for which the Seller has no liability
because of Clause 8.1) exceeds US$300,000 and in the event
that the aggregated amounts exceed US$300,000, the Seller
shall be liable solely for the excess over such amount.
8.3 The Seller's total liability in respect of all Relevant
Claims, IOM Tax Indemnity Claims and UK Tax Indemnity
Claims is limited to the amount of US$38,697,492.
11
8.4 The Seller shall not be liable for a Relevant Claim, IOM
Tax Indemnity Claim or UK Tax Indemnity Claim unless the
Buyer has given the Seller notice of the Relevant Claim,
IOM Tax Indemnity Claim or UK Tax Indemnity Claim, stating
in reasonable detail the nature of the Relevant Claim, IOM
Tax Indemnity Claim or UK Tax Indemnity Claim and, if
practicable, the amount claimed:
(a) in respect of a Relevant Claim in respect of a Warranty
contained in paragraph 5 of schedule 2 or IOM Tax
Indemnity Claim, on or before the date which is seven
years from the date of Completion; and
(b) in respect of another Relevant Claim, on or before 31
March 2000.
8.5 The Seller shall be liable once only under the Warranties
and the Tax Indemnity in respect of the same loss or
liability arising from the same act or matter or thing.
8.6 The Seller shall be under no liability whatsoever in
respect of any Relevant Claim, IOM Tax Indemnity Claim or
UK Tax Indemnity Claim:
(a) to the extent that provision or allowance for the matter
or liability which would otherwise give rise to the
Relevant Claim, IOM Tax Indemnity Claim or UK Tax
Indemnity Claim has been made in the Accounts or Interim
Accounts;
(b) if and to the extent that any fact, matter or circumstance
which renders any of the Warranties untrue or misleading
or which causes them to be breached or which might result
in a Relevant Claim, UK Tax Indemnity Claim or IOM Tax
Indemnity Claim or possible Relevant Claim, UK Tax
Indemnity Claim or IOM Tax Indemnity Claim has been fairly
disclosed in the Disclosure Letter (provided that, in
relation to a UK Tax Indemnity Claim, nothing in this sub-
clause 8.6(b) shall limit the Seller's liability under
paragraph 2.1(iv) of the Tax Indemnity); or
(c) if and to the extent that a Relevant Claim, IOM Tax
Indemnity Claim or UK Tax Indemnity Claim arises wholly
from or, having arisen, is increased as a result of, an
act, omission or transaction carried out on or after
Completion by the Company or the Buyer (or their
respective directors, employees, agents or successors in
title); or
(d) if and to the extent that a Relevant Claim, IOM Tax
Indemnity Claim or UK Tax Indemnity Claim arises wholly
12
from or, having arisen, is increased as a result of, an
act or omission compelled by law or as a result of the
passing of an enactment or other government regulation
with retrospective effect after Completion or the
introduction of, or any changes in, or in the
interpretation of, law or administrative practice after
Completion; or
(e) if and to the extent that a Relevant Claim, IOM Tax
Indemnity Claim or UK Tax Indemnity Claim arises wholly
from or, having arisen, is increased as a result of, an
act or omission compelled by law or as a result of the
passing of an enactment or other government regulation
with retrospective effect after Completion or the
introduction of, or any changes in, or in the
interpretation of, law or administrative practice after
Completion; or
(e) if and to the extent that a Relevant Claim, IOM Tax
Indemnity Claim or UK Tax Indemnity Claim arises or is
increased as a result of a failure by the Buyer to comply
with its obligations under Clause 8.14; or
(g) if and to the extent that the IOM Tax Indemnity Claim or
UK Tax Indemnity Claim relates to Tax arising in the
ordinary course of business of the Company after the
Accounts Date; or
(h) if and to the extent that any Relief (except to the extent
that it arises in respect of an Event occurring or period
commencing after Completion) is available to the Company
to set against or otherwise mitigate a IOM Tax Indemnity
Claim or UK Tax Indemnity Claim.
8.7 If the Seller pays to the Buyer an amount pursuant to a
Relevant Claim, IOM Tax Indemnity Claim or UK Tax
Indemnity Claim and the Buyer or the Company subsequently
receives from a third party an amount or Relief which is
referable to that claim, the Buyer shall (or, as
appropriate, shall procure that the Company shall) pay to
the Seller the amount received or the amount that the
Buyer or the Company saves by utilisation of the Relief,
less all reasonable expenses properly incurred by the
Buyer or the Company in obtaining that payment and in
recovering that amount from the third party or in
obtaining such Relief and less any UK Tax or IOM Tax
(together, "Tax") computed by reference to any amount
recovered by the Buyer or the Company from such third
party which is payable by the Buyer or the Company, or any
Tax that would have been payable but for the use or set-
13
off of any Relief, on the same basis as Tax is payable by
the Company prior to Completion.
8.8 The Buyer waives any rights to which it is or may become
entitled by virtue or in respect of any statement made by
or on behalf of the Seller about any matter relating to
the business or affairs of the Company or the sale of the
Sale Shares or any matter connected with that sale unless
that statement is set out or referred to in schedule 2 or
the Tax Indemnity, provided that nothing in this Clause
8.8 shall limit or exclude any liability for fraud.
8.9 If a Relevant Claim, IOM Tax Indemnity Claim or UK Tax
Indemnity Claim shall arise by reason of some liability
which at the time that the Relevant Claim, IOM Tax
Indemnity Claim or UK Tax Indemnity Claim is notified to
the Seller is contingent only, the Seller shall not be
under any obligation to make any payment to the Buyer
thereunder until such contingent liability ceases to be so
contingent.
8.10 The Seller shall not be liable in respect of any Relevant
Claim, IOM Tax Indemnity Claim or UK Tax Indemnity Claim
to the extent that the amount of such Relevant Claim, IOM
Tax Indemnity Claim or UK Tax Indemnity Claim would be
recoverable from insurers if the policies of insurance
effected by or for the benefit of the Company were
maintained on no less favourable terms than those existing
at the date hereof.
8.11 Nothing in this Clause 8 shall in any way restrict or
limit the general obligation at law of the Buyer to
mitigate, or procure, so far as it is able, that the
Company mitigates, any loss or damage which it may suffer
in consequence of any breach by the Seller of the terms of
this Agreement or any fact, matter, event or circumstance
giving rise to a Relevant Claim.
8.12 Subject to Clause 9, the sole remedy of the Buyer for any
breach of any of the Warranties or any other breach of
this Agreement by the Seller shall be in damages or by way
of indemnity and the Buyer shall not be entitled to
rescind this Agreement.
8.13 Subject to Clause 9, if the Buyer becomes aware of any
third party claim, potential claim, matter or event (a
"third party claim") which might reasonably be expected to
lead to:
(a) a Relevant Claim or IOM Tax Indemnity Claim being made
(subject, in the case of Clauses 8.13(a)(iii) and (iv), to
14
being fully indemnified to its reasonable satisfaction by
the Seller against all reasonable out-of-pocket costs and
expenses incurred by the Buyer or the Company) the Buyer:
(i) shall procure that notice thereof is given to the
Seller within 30 days of the Buyer or the Company
becoming aware of such claim, potential claim,
matter or event;
(ii) shall not make (or, as appropriate, procure that
the Company shall not make) any admission of
liability, agreement or compromise with any person,
body or authority in relation to such third party
claim without the prior agreement of the Seller
(not to be unreasonably withheld or delayed);
(iii) shall take (or, as appropriate, procure that the
Company shall take) such action as the Seller may
reasonably request to avoid, dispute, resist,
appeal, compromise or defend such third party claim
or any adjudication in respect thereof provided
that the Buyer shall not be required to take or to
procure the Company to take nay action which in the
opinion of the Buyer acting reasonably would
materially damage or prejudice the business
interests or goodwill of the Company or the Buyer,
and
(iv) if so required by the Seller in writing, shall
ensure (or, as appropriate, procure that the
Company shall ensure) that the Seller is placed in
a position to take on or take over the conduct of
all proceedings and/or negotiations of whatsoever
nature arising in connection with the third party
claim in question and provide (or, as appropriate,
procure that the Company provides) such information
and assistance as the Seller may reasonably require
in connection with the preparation for and conduct
of such proceedings and/or negotiations; and
(b) a UK Tax Indemnity Claim being made, the Buyer shall:
(i) procure that notice thereof is given to the Seller
as soon as reasonably practicable and within 10
days of the Buyer or the Company becoming aware of
such claim, potential claim, matter or event;
(ii) shall not make (or, as appropriate, procure that
the Company shall not make) any admission of
liability, agreement or compromise with any person,
body or authority in relation to such third party
15
claim without the prior agreement of the Seller
(not to be unreasonably withheld or delayed); and
(iii) shall ensure (or, as appropriate, procure that the
Company shall ensure) that the Seller is placed in
a position to take on or take over (at the Seller's
cost) the conduct of all proceedings and/or
negotiations of whatsoever nature arising in
connection with the third party claim in question
and provide (or, as appropriate, procure that the
Company provides) such information and assistance
as the Seller may require in connection with the
preparation for and conduct of such proceedings
and/or negotiations.
8.14 Where the Company or the Buyer is entitled (whether by
reason of insurance or payment discount or otherwise) to
recover from some other person any sum in respect of Tax
or any other liability, loss or damage which is the
subject of a Relevant Claim, IOM Tax Indemnity Claim or UK
Tax Indemnity Claim or for which such a claim could be
made (and whether before or after the Seller has made
payment hereunder), the Buyer shall (or, as appropriate,
shall co-operate to procure that the Company shall):
(a) notify the Seller as soon as reasonably practicable and
provide such information as the Seller may reasonably
require relating to such liability or dispute and the
steps taken or to be taken by the Buyer or the Company in
connection with it;
(b) if so required by the Seller (subject to the Buyer being
fully indemnified to its reasonable satisfaction by the
Seller against all reasonable out-of-pocket costs and
expenses incurred by the Buyer or the Company) and before
seeking to enforce recovery of any amount from the Seller
under this Agreement or the Tax Indemnity, first take all
steps (whether by way of a claim against its insurers or
otherwise including but without limitation proceedings) as
the Seller may reasonably require to enforce such
recovery; and
(c) keep the Seller informed of the progress of any action
taken,
and thereafter any claim against the Seller shall be
limited (in addition to the limitations on the liability
of the Seller referred to in this Clause) to the amount by
which the loss or damage suffered by the Buyer or the
Company as a result of such breach shall exceed the amount
so recovered.
16
9 TERMINATION
9.1 If, before Completion, any breach of Clause 4 or of the
Warranties comes to the notice of the Buyer (or anything
occurs before Completion which, had it occurred on or
before the date of this Agreement, would have constituted
a breach of the Warranties) and the breach or notional
breach would (or would notionally under the terms of this
Agreement) entitle the Buyer to damages in excess of
US$1,600,000, then the Buyer may elect to terminate this
Agreement by giving notice in writing to the Seller to
that effect at any time before Completion and neither
party shall have any liability to the other under or in
connection with this Agreement.
9.2 The Buyer shall notify the Seller as soon as reasonably
practicable after becoming aware that it has the right to
terminate this Agreement.
9.3 If, notwithstanding being entitled to terminate this
Agreement under Clause 9.1, the Buyer proceeds to
Completion, the Buyer shall be treated as having waived
its rights to claim damages for any breach or notional
breach of the Warranties referred to in Clause 9.1.
10 NON-COMPETITION
10.1 In this Clause 10, the following expressions have the
following meanings:
"Prohibited Business" the ferry business carried on
by the Company at the date of
this Agreement and any other
ferry business in the
Territory; and
"Territory" the Irish Sea.
10.2 The Seller undertakes to the Buyer that it will not
directly or indirectly on its own account or on account of
any other person and whether as principal, shareholder or
partner within the Territory during the period of three
years after Completion carry on or be concerned or
interested or engaged (except as a shareholder in a public
listed company holding not more than five per cent of the
share capital of any class or such public company) in (i)
any business competing with the Prohibited Business or
(ii) the setting up of any business which would compete
with the Prohibited Business.
17
10.3 The restrictions contained in Clause 10.2 are considered
reasonable by the parties and are intended to be separate
and severable. If any of those restrictions are held void,
but would be valid if part of the wording were deleted,
such restrictions shall apply with such deletion and/or
amendment as maybe necessary to make it valid and
effective.
11 ANNOUNCEMENTS AND CONFIDENTIAL INFORMATION
11.1 Subject to Clause 11.2, neither party may, before or after
Completion, make or send a public announcement,
communication or circular concerning the transactions
referred to in this Agreement unless it has first obtained
the other party's written consent.
11.2 Clause 11.1 does not apply to:
(a) the Transfer Notices;
(b) any announcement by the Seller and the Buyer in the Agreed
Form to employees of the Company;
(c) an announcement by the Seller and the Buyer in the Agreed
Form to the press;
(d) a public announcement, communication or circular required
by law or a regulation of a stock exchange, if the party
required to make or send it has, if practicable, first
consulted and taken into account the reasonable
requirements of the other party; or
(e) the Offer Letter.
11.3 Each party (the "defaulting party") shall be liable for
and shall indemnify the other party (the "non-defaulting
party") upon demand for:
(a) any breach of the provisions of the Confidentiality
Agreement by the defaulting party or any of its directors,
officers, employees, agents or advisers (and the non-
defaulting party shall be entitled to damages for each
such breach); and
(b) all costs, charges and expenses which the non-defaulting
party incurs in relation to any breach by the defaulting
party, its directors, officers, agents or advisers of the
provisions of the Confidentiality Agreement.
11.4 Each party further agrees that in relation to any breach
of clause 1.1 of the Confidentiality Agreement by the
18
other party or any of its directors, officers, employees,
agents or advisers, damages may not be an adequate remedy
and that the non-defaulting party shall be entitled to
immediate injunctive relief (without prejudice to or
limitation of any other rights available to the non-
defaulting party whether at law or equity) and the parties
agree not to object to the granting of injunctive relief
without proof of damage.
12 COSTS
Except as specifically set out in this Agreement, each
party shall pay its own costs relating to the negotiation,
preparation, execution and performance of this Agreement
and of each document referred to herein.
13 GENERAL
13.1 A variation of this Agreement is valid only if it is in
writing and signed by or on behalf of each party.
13.2 The failure to exercise or delay in exercising a right or
remedy provided by this Agreement or by law does not
constitute a waiver of the right or remedy or a waiver of
other rights or remedies. No single or partial exercise
of a right or remedy provided by this Agreement or by law
prevents further exercise of the right or remedy or the
exercise of another right or remedy.
13.3 Subject as expressly provided in this Agreement, the
Buyer's rights and remedies contained in this Agreement
are cumulative and not exclusive of rights or remedies
provided by law.
13.4 Except to the extent that they have been performed and
except where this Agreement provides otherwise, the
obligations contained in this Agreement remain in force
after Completion.
13.5 Following Completion, on receiving the other party's
reasonable request:
(a) a party shall (at the cost of the requesting party) do and
execute, or arrange for the doing and executing of each
act, document and thing necessary to implement this
Agreement; and
(b) the Seller (at the Buyer's cost save where such
information should have been provided to the Buyer
pursuant to Clause 6.2) shall give to the Buyer all
information it possesses or to which it has access
19
relating to the Company's business which is relevant to
the on-going business of the Company and allow the Buyer
to copy any document containing that information unless
such information is required by the buyer in relation to
litigation involving the Seller, in which circumstances
the provision of information to the buyer shall be
governed by the law of the relevant jurisdiction.
13.6 The Seller or its duly authorised agents shall at the
Company's reasonable cost and expense prepare any accounts
and/or tax returns required to be prepared in respect of
the Company for all accounting periods ended prior to
Completion to the extent that the same shall not have been
prepared before Completion.
13.7 The parties shall procure that the Company shall cause the
returns mentioned in Clause 13.6 to be authorised, signed
and submitted to the appropriate authority without
amendment or with such amendments as the Seller shall
reasonably agree, and each of the parties shall, so far as
it is able, procure that the Company shall, at the
relevant person's sole cost and expense, give the Seller
or its agents such assistance as may be required to agree
those returns with the appropriate authorities.
13.8 Time is of the essence in relation to this Agreement.
13.9 This Agreement and the Confidentiality Agreement (and the
documents referred to in this Agreement) constitute the
entire agreement between the parties relating to the
transactions contemplated by this Agreement and supersede
all previous agreements between the parties relating to
these transactions. Each of the parties acknowledges that
in agreeing to enter into this Agreement it has not relied
on any representation, warranty, collateral contract or
other assurance (except those set out in this Agreement)
made by or on behalf of any other party before the
signature of this Agreement. Each of the parties waives
all rights and remedies which, but for this Clause 13.9,
might otherwise be available to it in respect of any such
representation, warranty, collateral contract or other
assurance, provided that nothing in this Clause 13.9 shall
limit or exclude any liability for fraud.
14 ASSIGNMENT
14.1 A party may not assign or transfer or purport to assign or
transfer any of its rights or obligations under this
Agreement save that the Buyer may assign any of its rights
or obligations under this Agreement to a wholly owned
subsidiary of the Buyer (a "100% Subsidiary") provided
20
that if and when the 100% Subsidiary ceases to be a wholly
owned subsidiary of the Buyer, then it shall cease to have
any rights under this Agreement.
14.2 In the event that the Buyer assigns any of its rights or
obligations to a 100% Subsidiary, then:
(a) the Buyer unconditionally and irrevocably as primary
obligor:
(i) guarantees by way of continuing guarantee to the
Seller the due performance by the 100% Subsidiary
of its all obligations under or pursuant to this
Agreement; and
(ii) agrees that if and each time the 100% Subsidiary
fails after proper demands have been made to make
any payment to the Seller when it is due under or
pursuant to this Agreement, the Buyer shall within
7 days of such demand being made of it pay that
amount to the Seller;
(b) each payment to be made by the Buyer under this Clause
shall be made in the currency in which the relevant amount
is payable by the 100% Subsidiary; and
(c) the Buyer's obligations under this Clause 14 shall not be
affected by any matter or thing which but for this
provision might operate to affect or prejudice those
obligations, including without limitation:
(i) any time or indulgence granted to, or composition
with, the 100% Subsidiary or any other person;
(ii) the taking, variation, renewal or release of, or
neglect to perfect or enforce the Agreement or any
right, guarantee, remedy or security from or
against either the 100% Subsidiary or any other
person.
15 NOTICES
15.1 A notice or other communication under or in connection
with this Agreement shall be in writing and shall be
delivered personally or sent by air mail or by fax to the
party due to receive the notice or communication, in the
case of each party, at its address set out at the head of
this Agreement, or, in each case, such other address
specified by that party by written notice to the other.
21
15.2 In the absence of evidence of earlier receipt, a notice or
other communication is deemed given:
(a) if delivered personally, when left at the address referred
to in Clause 15.1;
(b) if sent by first class prepaid mail, 2 days after posting
it; and
(c) if sent by fax, on completion of its transmission.
16 GOVERNING LAW AND JURISDICTION
16.1 This Agreement is governed by English law.
16.2 The courts of England have exclusive jurisdiction to hear
and decide any suit, action or proceedings, and to settle
any disputes, which may arise out of or in connection with
this Agreement (respectively, "Proceedings" and
"Disputes") and, for these purposes, each party
irrevocably submits to the jurisdiction of the courts of
England.
16.3 Each party irrevocably waives any objection which it might
at any time have to the courts of England being nominated
as the forum to hear and decide any Proceedings and to
settle any Disputes and agrees not to claim that the
courts of England are not a convenient or appropriate
forum.
17 CAPACITY AND AUTHORITY
The Buyer represents and warrants to the Seller that:
(a) Rights, power, authority and action
The Buyer has the right, power and authority and has taken
all action necessary to execute and deliver, and to
exercise its rights and perform its obligations under,
this Agreement and each document to be executed at or
before Completion.
(b) Binding agreements
The Buyer's obligations under this Agreement and each
document to be executed at or before Completion are, or
when the relevant document is executed will be,
enforceable in accordance with their terms.
(c) Incorporation and existence
22
The Buyer is a limited company incorporated under English
law and has been in continuous existence since
incorporation.
IN WITNESS whereof this Agreement has been executed by or on
behalf of the parties the day and year first above written.
23
SCHEDULE 1
INFORMATION ABOUT THE COMPANY
1. Date of incorporation: 16 August 1991
2. Place of incorporation: Isle of Man
3. Address of registered office: Capco House
31-37 North Quay
Douglas
Isle of Man
4. Type of company: Private company limited by
shares
5. Authorised share capital: 5,500,000 "A" ordinary
shares
4,500,000 "B" ordinary
shares
6. Issued shared capital: 4,444,089 "A" ordinary
shares
627,124 "B" ordinary
shares
7. Percentage owned by the 99.27%
Seller: 4,444,089 "A" ordinary
shares (100%)
590,124 "B" ordinary
shares (94.1%)
8. Directors: Haydn Brickell
David Capps
David Cooil
Ruth Douthwaite
Allister Mulligan
Phillip Shepherd
9. Secretary: Haydn Brickell
Assistant Secretary: Ruth Douthwaite
10. Accounting reference date: 31 December
11. Auditors: PricewaterhouseCoopers
24
SCHEDULE 2
WARRANTIES
1 CAPACITY AND AUTHORITY
(a) Incorporation and existence. The Seller is a limited
company incorporated under Liberian law and has been in
continuous existence since incorporation.
(b) Rights, power, authority and action:
(i) The Seller has the right, power and authority and
has taken all action necessary to execute and
deliver, and to exercise its rights and perform its
obligations under, this Agreement and each document
to be executed at or before Completion.
(ii) The Company has the right, power and authority to
conduce its business as conducted at the date of
this agreement.
(c) Binding agreements. The Seller's obligations under this
Agreement and each document to be executed at or before
Completion are, or when the relevant document is executed
will be, enforceable in accordance with their terms.
2 SHARES AND THE COMPANY
(a) The Sale Shares:
(i) The Seller is the legal and beneficial owner of the
Sale Shares.
(ii) The Seller has no interest, right or claim
howsoever arising over any of the issued shares
capital of the Company other than the Sale Shares.
(iii) The Sale Shares comprise 99.27% of the issued share
capital of the Company, have been properly allotted
and issued and are fully paid or credited as fully
paid.
(iv) There is no Encumbrance, and there is no agreement,
arrangement or obligation to create or give an
Encumbrance, in relation to any of the Sale Shares
or unissued shares in the capital of the Company.
No person has claimed to be entitled to an
Encumbrance in relation to any of the Sale Shares.
25
(v) Other than this Agreement, there is not agreement,
arrangement or obligation requiring the creation,
allotment, issue, transfer, redemption or repayment
of, or the grant to a person of the right
(conditional or not) to require the allotment,
issue, transfer, redemption or repayment of, a
share in the capital of the Company (including,
without limitation, an option or right of pre-
emption or conversion).
(b) The Company
(i) The Company has no interest in, nor has it agreed
to acquire an interest in, any corporate body.
(ii) The Company has not has, since incorporation, any
subsidiary other than Northern Sound Shipping
Company Limited (wherever incorporated).
3 ACCOUNTS AND FINANCIAL MATTERS
(a) The Accounts and the Interim Accounts:
(i) comply with the requirements of the Act, all other
relevant legislation and all Statements of Standard
Accounting Practice and Financial Reporting
Standards published by the Accounting Standards
Board in the United Kingdom which were current at
the dates of the reports of the auditors on the
Accounts and all other United Kingdom legislation
and regulations applicable thereto;
(ii) have been prepared under the historical cost
convention (or otherwise on such recognised and
consistent basis as is set out in the Accounts) and
on the same basis and in accordance with the same
accounting policies as the corresponding accounts
for the preceding three financial years and that
each of such financial years was for a period of 12
months;
(iii) give a true and fair view of the state of affairs
of the Company as at the Accounts Date and the
Interim Accounts Date respectively and of the
results of the Company for the financial year of
the Company ended on the Accounts Date and the six
months ended on the Interim Accounts Date
respectively;
(iv) get out all the assets and make provision for (or
contain a note in accordance with good accounting
26
practice respecting) all liabilities (whether
actual, disputed, deferred or contingent,
liquidated or unliquidated) (including IOM Taxation
and bad and doubtful debt) and all outstanding
capital commitments of the Company at the Accounts
Date and the Interim Accounts Date respectively;
and
(v) are not affected by any unusual or non-recurring
item or by any factor rendering the profits or net
assets contained or referred to therein unusually
high or low.
(b) The books and records of the Company have been properly
written up and accurately presented and reflect in
accordance with generally accepted accounting principles
and standards and transactions entered into by the Company
or to which the Company has been a party.
(c) Since the Interim Accounts Date the Company has operated
its business in the way it has been conducted prior to the
Interim Accounts Date and taking into account the future
requirements of its business and, save as disclosed in the
Disclosure Letter, has not done any of the matters listed
in paragraphs 1 to 10 and 13 of Schedule 3.
4 ASSETS
(a) Title. Each asset owned or acquired by the Company as at
the Interim Accounts Date is:
(i) legally and beneficially owned by the Company free
form any Encumbrance; and
(ii) where capable of possession, in the possession or
under the control of the Company,
and no such asset of material importance to the business
or operations of the Company is subject to any option,
right of pre-emption or factoring arrangements.
(b) Hire purchase and leased assets. The Company is not a
party to, or liable under, a lease or hire, hire purchase,
credit sale or conditional sale agreement.
(c) Real Property. The Company does not own, use or occupy
any land or premises the value of which or the actual or
contingent liabilities in respect of which are material to
it. There are no contingent liabilities on the part of
the Company (including liabilities by privity of contract
whether as tenant or surety) in respect of premises which
27
have been disposed of. There are not outstanding notices,
complaints or disputes which are material in any respect
with any person or authority (including neighbouring
owners or occupiers) concerning any premises used by the
Company or the use of such premises.
(d) Vessels.
(i) So far as the Seller is aware, the m.v. "MERSEY
VIKING" is owned by Visentini Francesco Trasporti
Fluvio Marittimi and bare boat chartered to
Levantina Transporti S.R.L. Bari ("Levantina"), the
m.v. "LAGAN VIKING" (together with the m.v. "MERSEY
VIKING", the "Vessels") is owned by Levantina and
each Vessel is registered on the Italian flag.
(ii) Neither of the Vessels has been off-hire or
otherwise incapable of service for longer than
twelve hours in the twelve month period on the
Interim Accounts Date.
(iii) The Vessels have performed substantially in
accordance with the purposed and performance
criteria set out in the Charters.
(iv) Each of the Vessels have been let on time charter
to the Company on the terms of the charterparties
disclosed pursuant to the Disclosure Letter
(together, the "Charters"). Each of the Charters
was validly entered into by the Company (and, so
far as the Seller is aware, the counterparty) is,
so far as the Seller is aware, valid and binding in
all respects and neither party is in default
thereunder. There are not material claims
outstanding relating to either of the Charters.
(v) Each of the Vessels is entered with the Skuld P&I
Club in both protection and indemnity classes.
5 EMPLOYEES
(a) The persons whose names and details are set out in the
list annexed to the Disclosure Letter are all the
employees of the Company. No changes have been made to
the terms of employment of such employees since 1 March
1999 and, since that date, none of such employees has been
paid, or become entitled to be paid, any bonus or payment
in the nature of a bonus by the Company.
28
(b) No employee of the Company employed in a managerial or
executive capacity has given, or has given, notice of
termination of his employment which is outstanding.
6 LIABILITIES
(a) Indebtedness. Except as disclosed in the Disclosure
Letter, the Company does not have outstanding and has not
agreed to create or incur, loan capital, borrowing or
indebtedness in the nature of borrowing, including,
without limitation, a bank overdraft, a liability under an
acceptance (other than a normal trade bill) and an
acceptance credit.
(b) Guarantees and indemnities.
(i) The Company is not a party to or liable (including,
without limitation, contingently) under a
guarantee, indemnity or other agreement to secure
or incur a financial or other obligation with
respect to another person's obligation except as
disclosed in the Disclosure Letter.
(ii) No part of the loan capital, borrowing or
indebtedness in the nature of borrowing of the
Company is dependent on the guarantee or indemnity
of, or security provided by another person except
as disclosed in the Disclosure Letter.
(c) Event of default. No event has occurred or been alleged
which:
(i) constitutes an event of default, or otherwise gives
rise to an obligation to repay, under an agreement
relating to borrowing or indebtedness in the nature
of borrowing (or will do so with the giving of
notice or lapse of time or both); or
(ii) will lead to an Encumbrance being constituted or
created in connection with borrowing or
indebtedness in the nature of borrowing, a
guarantee, an indemnity or other obligation of the
Company becoming enforceable (or will do so with
the giving of notice or lapse of time or both).
7 LITIGATION AND COMPLIANCE WITH LAW
(a) Litigation
(i) Neither the Company nor any person for whose acts
or defaults the Company may be vicariously liable
29
is involved, or has during the two years ending on
the date of this Agreement been involved, in a
civil, criminal, arbitration, administrative or
other proceeding in any jurisdiction which has not
been the subject of a legally binding and full
settlement. No written notice has been received by
the Seller or the Company that any civil, criminal,
arbitration, administrative or other proceeding in
any jurisdiction is pending or threatened by or
against the Company or a person for whose acts or
defaults the Company may be vicariously liable.
(ii) So far as the Seller is aware, no fact or
circumstance exists which might give rise to a
civil, criminal, arbitration, administrative or
other proceeding in any jurisdiction involving the
Company or a person for whose acts or defaults the
Company may be vicariously liable.
(iii) So far as the Seller is aware, no judgment, order,
decree, arbitral award or decision of a court,
tribunal, arbitrator or governmental agency in any
jurisdiction against the Company or a person for
whose acts or defaults the Company may be
vicariously liable is outstanding.
(b) Compliance with law. The Company has conducted its
business and dealt with its assets in all material
respects in accordance with all applicable legal and
administrative requirements in the United Kingdom or the
Isle of Man, including without limitation, all legislation
relating to environmental matters.
(c) Investigations. No written notice has been received by
the Seller or the Seller or the Company of any
governmental or other investigation, enquiry or
disciplinary proceeding concerning the Company in any
jurisdiction or that any is pending or threatened and the
Seller has not received written notice that such
investigation, enquiry or proceeding is pending or
threatened. No written notice has been received by the
Seller or the Company of any fact or circumstance
reasonable likely to give rise to an investigation,
enquiry or proceeding of the type.
8 CONSTITUTION, REGISTERS AND RETURNS
(a) Constitution. The Company is operating and has always
operated its business in all material respects in
accordance with its constitutional documents at the
relevant time.
30
(b) Returns etc. All material returns, particulars,
resolutions and other documents required to be delivered
by the Company to any governmental or other authority or
agency have been properly prepared and delivered.
31
SCHEDULE 3
ACTION PENDING COMPLETION
The Seller shall ensure, so far as it is lawfully able, that the
Company will operate its business in the way its has been
conducted to the date of this Agreement and taking into account
the future requirements of its business and in all material
respects in compliance with applicable laws and regulations and,
subject thereto, will not (save with the prior written consent of
the Buyer, such consent not be unreasonable withheld or delayed):
1 create, allot, issue, acquire, repay or redeem any share
or loan capital or agree, arrange or undertake to do nay
of those things or acquire or agree to acquire, an
interest in a corporate body;
2 acquire or dispose of, or agree to acquire or dispose of,
an asset except in the ordinary course of business (being
determined as such way as the business has been conducted
to the date of this Agreement and taking into account the
future requirements of its business) or assume or incur,
or agree to assume or incur, a liability, obligation or
expense (actual or contingent) except in the ordinary
course of business (determined on the same basis as
aforesaid);
3 declare, pay or make a dividend or distribution;
4 pass a shareholders' resolution;
5 create, or agree to create, an Encumbrance over an asset
or redeem, or agree to redeem, an existing Encumbrance
over an asset;
6 do or omit to do anything which would make any current
policy of insurance taken out by the Company (a "Policy")
void or voidable or might result in an increase in the
premium payable under a Policy or prejudice the ability to
effect equivalent insurance in the future;
7 enter into a material agreement, arrangement or
obligation, and any agreement, arrangement or obligation
of the chartering, purchase, building or leasing of a
vessel (other than the chartering of a vessel to cover
only the period of the non-availability or off-hire and
related positioning and repositioning of either Vessel)
shall be deemed material for the purposes of this
Agreement;
32
8 amend or terminate a material agreement, arrangement or
obligation to which it is a party;
9 amend, or agree to amend, the terms of its borrowing or
indebtedness in the nature of borrowing or create, incur,
or agree to create or incur, borrowing or indebtedness in
the nature of borrowing (except pursuant to facilities
disclosed in the Disclosure Letter where the borrowing or
indebtedness in the nature of borrowing does not exceed
the amount available to be drawn by the Company under
those facilities);
10 give, or agree to give, a guarantee, indemnity or other
agreement to secure, or incur financial or other
obligations with respect to, another person's obligation;
11 start litigation or arbitration proceedings (other than
the collection of debts);
12 compromise, settle, release, discharge or compound
litigation or arbitration proceedings or a liability,
claim, action, demand or dispute, or waive a right in
relation to litigation or arbitration proceedings; or
13 enter into an agreement, arrangement or obligation in
which the Seller, a director or former director of the
Company or a person connected with any of them is
interested; for this purpose, connected has the meaning
given by section 839 of the United Kingdom Income and
Corporation Taxes Act 1988, except that in construing
section 839 'control' has the meaning given by section 840
or section 416 of that Act so that there is control
whenever section 840 or 416 requires.
33
SCHEDULE 4
TAX INDEMNITY
1 INTERPRETATION
1.1 In this schedule 4:
"Assessment" means a claim, assessment, notice, demand or
other document issued or action taken by or on behalf of a
Tax Authority by which the Company is liable or is sought
to be another person (whether or not the payment is
primarily payable by the Company and whether or not the
Company has or may have a right of reimbursement against
another person) or is denied or sought to be denied a
Relief;
"Event" means an event, act, transaction or omission,
including, without limitation, a receipt or accrual of
income or gains, distribution, failure to distribute,
acquisition, disposal, transfer, payment, loan or advance;
"IOM Tax" and "IOM Taxation" mean and form of taxation,
levy, duty, charge, contribution or impost of whatever
nature (including any related find, penalty, surcharge or
interest) imposed by an IOM Tax Authority; and
"IOM Tax Authority" and "IOM Taxation Authority" mean any
local, municipal, governmental, state, federal or other
fiscal, revenue, customs or excise authority, body or
official in the Isle of Man;
"Relief" means any loss, relief, allowance, exemption,
set-off, deduction, right to repayment or credit or other
relief of a similar nature granted by or available in
relation to Tax pursuant to any legislation or otherwise;
"UK Tax" and "UK Tax Taxation" mean any form of taxation,
levy, duty, charge, contribution or impost of whatever
nature (including any related fine, penalty, surcharge or
interest) imposed by a UK Tax Authority; and
"UK Tax Authority" and "UK Taxation Authority" mean any
local, municipal, governmental, state federal or other
fiscal, revenue, customers or excise authority, body or
official in the United Kingdom (and together with an IOM
Tax Authority, a "Tax Authority").
1.2 Reference to an Event included an Event deemed to have
occurred for the purposes of any IOM Tax or UK Tax.
34
1.3 Reference to an Event on or before the Accounts Date
includes:
(a) any combination of events only the first or some of which
has or have taken place on or before the Accounts Date
provided that any liability of the Seller in such
circumstances will be limited to such proportion of the
relevant liability for IOM Tax and/or UK Tax as is just
and reasonable having regard to the cause or causes of the
liability; and
(b) an Event which is deemed for the purposes of any IOM Tax
and/or UK Tax to have occurred on or before the Accounts
Dates.
1.4 In paragraph 2.1(b) "control" has the same meaning as in
section 767A of the United Kingdom Income and Corporation
Taxes Act 1988 and "controlled" is to be construed
accordingly.
2 THE SELLER'S OBLIGATIONS
2.1 The Seller shall pay to the Buyer an amount equal to:
(a) 100% of the amount of the Company's liability for IOM Tax;
and
(b) US$300,000 less than 100% of the amount of the Company's
liability for UK Tax, in each case:
(i) which arises in consequence of an Event occurring
on or before the Accounts Date whether or not the
IOM Tax or UK Tax is chargeable against or
attributable to another person;
(ii) which would have arisen in consequence of an Event
occurring on or before the Accounts Date and which
is not payable in consequence of the utilisation or
set-off of some Relief where the Relief arises in
respect of an Event occurring after the Accounts
Date;
(iii) arising in consequence of an Event occurring at any
time and for which the Company is liable as a
result of having at any time before the Accounts
Date been controlled by an person; or
(iv) which arises in consequence of the Company being
regarded as resident in the UK or as having traded
in the United Kingdom through a branch/permanent
establishment,
35
provided that the Seller's obligations under this Tax
Indemnity in relation to UK Tax shall cease and determine
on the production by the Seller of the Revenue Letter.
2.2 Any IOM Tax and/or UK Tax which would have been repaid but
for the loss, reduction, set-off or cancellation of a
right to repayment of IOM Tax and/or UK Tax in consequence
of an Event occurring on or before the Accounts Date is
for the purposes of paragraph 2.1(a) deemed to the IOM Tax
and/or UK Tax for which the Company is liable and which
arises in consequence of the Event.
2.3 The Seller shall pay to the Buyer an amount equal to 100%
of the amount of any liability of the Company or to the
amount of any liability of the Buyer for reasonable costs
properly incurred by the Company or the Buyer in
connection with a liability as mentioned in paragraph 2.1.
2.4 None of the following is regarded for the purposes of
Clauses 8.6(c) or 8.6(g) as an Event which has occurred in
the Company's ordinary course of trading:
(a) an Event giving rise to a liability under any legislation
relating to tax avoidance;
(b) a distribution;
(c) an acquisition, disposal or supply or deemed acquisition,
disposal or supply of assets, goods, services or business
facilities or any kind (including a loan of money or a
letting, hiring or licensing of tangible or intangible
property) for consideration which is treated for IOM Tax
and/or UK Tax purposes as different from the actual
consideration;
(d) an Event which results in the Company being liable for IOM
tax and/or UK Tax for which it is not primarily liable;
(e) an Event in respect of which IOM Tax and/or UK arises as a
result of the Company's failure to deduct or account for
IOM Tax and/or UK Tax or pay IOM Tax and/or UK Tax when
due; and
(f) a disposal of capital assets.
2.5 The Seller's obligations under this schedule 4 are subject
to the limitations on the Seller's liability under Clause
8 as stated therein.
36
3 PAYMENTS FREE OF WITHHOLDING, ETC.
3.1 All payments made by the Seller under this Schedule 4
shall be made gross, free of any right of counterclaim or
set-off and without deduction or withholding of any kind
other than any deduction or withholding required by law.
3.2 If the Seller makes a deduction or withholding required by
law from a payment under this schedule 4, the sum due from
the Seller shall be increased to the extent necessary to
ensure that, after the making of any deduction or
withholding, the Buyer receives a sum equal to the sum it
would have received has no deduction or withholding or
withholding been made.
3.3 If a payment under paragraph 2 or 3.2 will be or has been
subject to IOM Tax and/or UK Tax, the Seller shall on
demand from the Buyer pay the Buyer the amount (after
taking into account IOM Tax and/or UK Tax payable in
respect to the amount) that will ensure that the Buyer
receives and retains a net sum equal to the sum it would
have received has the payment not been subject to IOM Tax
and/or UK Tax.
3.4 If the Seller makes an increased payment pursuant to
paragraph 3.2 or 3.3 in respect of which the Buyer obtains
or is entitled to obtain a tax credit, the Buyer shall
reimburse the Seller such amount as shall leave the Buyer
in the same after-tax position as it would have been in
had no such deduction or withholding been made.
4 DATE FOR PAYMENT AND INTEREST
4.1 If a liability for IOM Tax and/or UK Tax arises as
mentioned in paragraphs 2.1(a), 2.1(b) or 2.1(c), the
Seller shall pay to the Buyer the relevant amount in
cleared funds on or before the date which is the later of
the fifth Business Day before (i) the date on which the
IOM Tax and/or UK Tax is finally payable or, (ii) in the
case of a liability under paragraph 2.1(b), the date on
which the IOM Tax and/or UK Tax would have been finally
payable but for the utilisation or set-off of the Relief.
4.2 If a liability arises a mentioned in paragraphs 2.1(b) or
3.3, the Buyer shall notify the Seller of the amount
payable.
4.3 If the Seller requests within 14 days starting on the day
after delivery of the notice, the Buyer shall ensure that
(at the Seller's cost) the Buyer's auditors (acting as
experts and not as arbitrators) confirm the amount
37
referred to in paragraph 4.2. This confirmation is
(except for manifest error) conclusive and binding on the
Seller.
4.4 If any sum due and payable by the Seller under this
schedule 4 is not paid on the due date in accordance with
the provisions hereof, the Seller shall in addition to
that sum pay interest to the Buyer from the date for
payment of the sum to and including the day of actual
payment of the sum (or the next Business Day if the day of
actual payment is not a Business Day). The interest
accrues from day to day (before and after judgment) at the
rate of 3% per year above the base rate of Barclays Bank
plc (or if there is no base rate, at a similar rate
reasonable selected by the Buyer).
38
EXECUTION PAGE
SIGNED by )
for an on behalf of )
GROVER STAR SHIPPING CORPORATION )
in the presence of: )
Witness' signature:
Witness' name:
Witness' address:
SIGNED by )
for an on behalf of )
CENARGO INTERNATIONAL PLC )
in the presence of: )
Witness' signature:
Witness' name:
Witness' address:
39
Exhibit B
DATED 1999
SECRETARY OF STATE FOR DEFENCE
- to -
CENARGO PROPERTY LIMITED
_______________________________________
AGREEMENT
for sale and purchase of
RNSD EAGLESCLIFFE
CLEVELAND
_______________________________________
PARTICULARS
COLUMN 1 COLUMN 2
Date 1999
The Seller SECRETARY OF STATE FOR DEFENCE
The Buyer CENARGO PROPERTY LIMITED whose
registered office is Puttenham
Priory Puttenham Guildford Surrey
GU3 1AR (Company Registration Number
3080449)
The Property Royal Navy Spares Depot
Eaglescliffe Stockton-on-Tees more
particularly described in the form
of Transfer
The Price FIVE HUNDRED AND FIFTY FIVE THOUSAND
POUNDS (555,000 pound sterling)
The Completion Date 1999
The Seller's Solicitors BOND PEARCE of Bristol Bridge House
Red Cliff Street Bristol BS1 6BJ
(Ref: 251483.3)
The Buyer's Solicitors MESSRS D J FREEMAN of 1 Fetter Lane
London EC4A 1BR (Ref: JNC)
The Deposit FIFTY FIVE THOUSAND FIVE HUNDRED
POUNDS (55,500 pounds sterling)
The Roots of Title (a) as to part a Conveyance dated
1st day of May 1944 and made
1
between Thomas Tyerman (1) the
Minister of Aircraft Production
(2)
(b) as to part a Conveyance dated
the 30th day of March 1948 and
made between Bertie Thomas
Grainge and Albert Edward
Grainge (1) the Minister of
Supply (2)
(c) as to part a Conveyance dated
the 17th day of July 1945 and
made between Charles Henry
Baker and William Scriven
Blincoe (1) the Minister of
Aircraft Production (2)
(d) as to part a Conveyance dated
the 29th day of September 1944
and made between Henry James
Hargraves (1) National
Provincial Bank Limited (2) the
Minister of Aircraft Production
(3)
(e) as to part a Conveyance dated
the 1st day of March 1945 and
made between Percy Edmund
2
Atkinson (1) the Minister of
Aircraft Production (2)
(f) as to the remainder a
Conveyance dated the 9th day of
May 1944 made between The
Eaglescliffe Chemical Company
Limited (1) the Minster of
Aircraft Production (2)
THIS AGREEMENT is made on the date first shown in the Particulars
BETWEEN the Seller (1) and the Buyer (2) respectively specified
in the Particulars
WHEREBY IT IS AGREED as follows:-
1. DEFINITIONS AND INTERPRETATION
IN this Agreement:-
1.1 The words and expressions in Column 1 of the Particulars
(meaning the details and description in the preceding
pages which comprise part of this Agreement) shall
(subject as herein provided) have the meanings
respectively set against them in Column 2 of the
Particulars
1.2 "the General Conditions" means the Standard
Conditions of Sale (Third
Edition)
1.3 "the Form of Transfer" means the draft Transfer
annexed hereto
3
1.4 The following expressions shall have the following
meanings:-
"Acceptable Institution" means any of:-
(a) an Authorised
Institution within
the meaning of the
Banking Act 1987
(b) a Building Society
registered with the
Registrar of Friendly
Societies
(c) an insurance company
authorised pursuant
to the Insurance
Companies Act 1982
(d) any other institution
which bona fide
carries on the
business of taking
deposits and/or
lending money
(whether or not it
carries on any other
business) approved by
the Seller (which
4
approval shall not be
unreasonably refused
or delayed)
"the Buyer's Radiological means Entec UK Limited or
Consultant" such other environmental
consultant as the Buyer
shall reasonably nominate
and the Seller shall
reasonably agree (such
agreement not to be
unreasonably withheld or
delayed) and who is to
fulfil the functions
allotted to the Buyer's
Radiological Consultant by
this Agreement
"the Consultants Appointment" shall mean the
appointment of the
Supervising Consultant
made pursuant to clause
18.2
"the Consultant's Warranty" means the warranty to be
given to the Seller by the
Supervising Consultant
pursuant to clause 19.1
5
"the Contractor's Warranty" means the warranty to be
given to the Seller by the
Remediation Contractor
pursuant to clause 19.2
"the Remediation Contractor" shall mean the engineering
contractor from time to
time appointed under the
Remediation Contract
"Cost Overrun Insurance" shall mean insurance
against the actual cost of
Remediation exceeding the
Buyer's estimate of such
cost
"Environmental Impairment shall mean insurance
Insurance" against any liability of
the owner or occupier of
the Property including the
Buyer as previous owner or
occupier of the Property
and each part and against
the cost and expense which
such owners and occupiers
may incur in consequence
of the Property remaining
6
contaminated after
Practical Completion
"Environmental Insurance" shall mean both the Cost
Overrun Insurance and the
Environmental Impairment
Insurance
"Event of Insolvency" means if the Buyer goes
into liquidation (whether
compulsory or voluntary)
but not a voluntary
winding up for the
amalgamation or
reconstruction of a
solvent company; or if a
receiver administrator or
provisional liquidator is
appointed; or if a
voluntary arrangement or a
scheme of arrangement is
made
"Funder" means any Acceptable
Institution financing the
purchase of the Property
and/or the Remediation
Retention which has
7
entered into a Funder's
Deed and has given written
notice to the Seller that
it is to be treated as a
Funder for the purposes of
this Agreement
"Funders Deed" means a deed in the form
annexed to this Agreement
or a deed to a similar
effect in such a form as
any Funder shall
reasonably require and the
Seller shall approve (such
approval not to be
unreasonably withheld)
PROVIDED THAT no such deed
shall confer on the Funder
a right to draw from the
Remediation Account any
greater sum than the Buyer
is permitted to draw
pursuant to the terms of
this Agreement
"Practical Completion" means the Practical
Completion of the
8
Remediation Works under
the Remediation Contract
and references to "the
date of Practical
Completion " are to the
date on which the
Certificate of Practical
Completion is issued by
the Supervising Consultant
under the Remediation
Contract or the issue of
such other evidence of
Practical Completion
having taken place as is
contemplated by the
Remediation Contract
"Seller's Remediation Account shall mean a charge in the
Charge" form annexed
"Remediation" the Remediation of the
Property to the
Remediation Standard and
the appropriate sentencing
and disposal of retrieved
wastes having regard to
the concentration of
9
contaminants such
remediation being
performed in a manner
which will ensure that all
foreseeable doses of
radiation received both
during and following the
remediation of the
Property will be as low as
reasonably practicable
"the Remediation Account" means the account to be
kept pursuant to clause 20
"the Remediation Contract" shall mean the engineering
contract from time to time
in place under which
Remediation is to be
carried out
"the Remediation Retention" means the sum of 3,000,000
pounds sterling to be
placed in the Remediation
Account pursuant to clause
20.1 and such expression
includes the balance from
time to time on that
account
10
"the Remediation Standard" The removal from the
Property of radioactive
contamination identified
by the Supervising
Consultant:-
(i) from those parts of
the Property covered by
buildings to the extent
necessary to allow for the
commercial use of those
parts; and
(ii) from all other parts
of the Property to the
extent necessary to allow
for residential use and
development of those parts
"the Remediation Programme" means a design and
programme of works annexed
hereto and the expression
"the Remediation
Programme" shall include
such variations to the
programme as may be
proposed by the Buyer and
agreed by the Seller (such
11
agreement not to be
unreasonably withheld or
delayed)
"the Remediation Works" means the works to be
carried out at the
Property pursuant to the
Remediation Contract in
accordance with the
Remediation Programme
"the Requisite Consents" means those permissions
and consents approvals
licences certificates and
permits in legally
effectual form as may be
necessary lawfully to
commence carry out and
complete the Remediation
Works including (but
without limitation):-
(a) consents or approvals
required under any
conditions of the
planning permission
obtained by the Buyer
12
in respect of the
Remediation Works
(b) approvals required to
be issued by the
Health and Safety
Executive
(c) approvals required to
be issued by the
Environment Agency
(d) any other approvals
required to be issued
under the Radioactive
Substances Act 1993
or the Ionising
Radiations
Regulations 1985
(e) any consents or
approvals required
for the storage on or
removal from the
Property or the
disposal to any
reasonable location
of contaminated
material (including
13
consent to dispose of
wastes to BNFL Drigg
or other like
facility)
(f) any other such
permissions and
consents etc required
from any competent
authority permitting
or regulating the
Remediation Works or
any activities
ancillary thereto
"the Step-in Date" means three years from the
date of completion of the
sale of the Property
pursuant to this Agreement
PROVIDED THAT the Step-in
Date shall be extended
upon any one or more
occasions as follows:-
(a) by the aggregate of
the periods of
extension allowed to
the Remediation
14
Contractor by the
Supervising
Consultant in his
capacity as engineer
under the Remediation
Contract except where
the extension is
attributable to the
fault of the Buyer;
and
(b) by the aggregate of
such periods (to be
certified by the
Supervising
Consultant acting as
an expert) as is
reasonable in all the
circumstances in
respect of any other
delays beyond the
reasonable control of
the Buyer
"the Supervising Consultant" means Entec UK Limited or
such other environmental
consultant as the Buyer
15
shall nominate and the
Seller shall reasonably
agree (such agreement not
to be unreasonably
withheld or delayed) and
who is to fulfil the
functions allotted to the
Supervising Consultant by
this Agreement
"Third Party Determination" means the determination of
a matter between the Buyer
and the Seller under
clause 22 of this
Agreement
1.5 Words importing one gender shall be construed as
importing any gender
1.6 Words importing the singular shall be construed as
importing the plural and vice versa
1.7 Reference to persons include bodies corporate and vice
versa
1.8 Where any party comprises more than one person the
obligations and liabilities of that party under this
agreement shall be joint and several obligations and
liabilities of those persons
16
1.9 The clause headings do not form part of this Agreement
and shall not be taken into account in its construction
or interpretation
1.10 Save where otherwise stated any reference to a numbered
clause or schedule means the clause or schedule in this
agreement which is so numbered
2. AGREEMENTS FOR SALE
The Seller shall sell and the Buyer shall purchase the Property
for the Price
3. DEPOSIT
The Buyer shall on or before the date of this Agreement pay the
Deposit to the Seller's Solicitors as stakeholders by means of
cash or telegraphic or other direct transfer banker's draft or a
cheque drawn on a Solicitor's client account
4. COMPLETION AND CONDITIONALITY
4.1 Completion of the sale and purchase and payment of the
balance of the Price (less the Deposit) shall take place
on the Completion Date at the offices of the Seller's
Solicitors or where they may reasonably direct
4.2 For the avoidance of doubt the Buyer shall complete the
Remediation Works notwithstanding that the cost of the
Remediation Works may exceed the Remediation Retention
and any costs of the Remediation Works in excess of the
Remediation Retention shall be the responsibility of the
Buyer (the amount by which the cost of the Remediation
17
Works shall fall short of the Remediation Retention being
dealt with pursuant to clause 20)
5. CAPACITY
The Seller sells and will convey with limited title guarantee
6. POSSESSION
The Property is sold subject to the Lease and Tenancy Agreement
referred to in the Form of Transfer but otherwise with vacant
possession on the Completion Date
7. TITLE
7.1 Title shall be deduced and shall commence with the Roots
of Title
7.2 Having regard to Section 14 of the Defence Act 1842
certified copies of the Roots of Title shall be supplied
and no further abstract shall be required and the Buyer
shall admit the Seller's title to the Property free from
encumbrances (save only as mentioned or referred to in
the Form of Transfer without requisition or enquiry
Provided that the Buyer shall be entitled to raise
requisitions in relation to any land charges or other
entries disclosed by the Buyer's pre-completion searches
7.3 By virtue of the Defence (Transfer of Functions) Act 1964
the Property became and is now vested in the Seller
18
8. ENCUMBRANCES
8.1 The Property is sold subject to and (where appropriate)
with the benefit of the matters contained or referred to
in the Form of Transfer
8.2 The Buyer or the Buyer's Solicitors having been supplied
with copies of such matters prior to the date of this
Agreement the Buyer shall be deemed to purchase with full
notice and knowledge of the same and shall not raise any
requisition or make any objection in relation to them
9. MATTERS AFFECTING THE PROPERTY
The Property is sold subject to the following matters:-
9.1 All local land charges where registered before the date
of this Agreement and all matters capable of registration
as local land charges whether or not actually so
registered
9.2 All notices served and order demands proposals or
requirements made by any local public or other competent
authority whether before or after the date of this
Agreement
9.3 All actual or proposed charges notices matters
restrictions agreements conditions or other matters
arising under the legislation relating to Town and
Country Planning
9.4 The Property is sold subject to all and any rights in
respect of existing pipes cables sewers or other
19
apparatus in or under the Property (whether or not
specifically referred to in the Particulars of Sale of
this Agreement) and the Seller shall not be required to
provide any evidence or further details as to the
location of such services
PROVIDED THAT the Seller warrants that it has prior to the date
of this Agreement revealed in writing to the Purchaser all such
matters of which he is aware
10. TOWN AND COUNTRY PLANNING
10.1 The Seller warrants to the Buyer that it is not aware of
any threat or proposal by any competent authority to take
enforcement proceedings in respect of wartime breaches of
planning control at the Property pursuant to Section 302
of the Town and Country Planning Act 1990
10.2 Save as mentioned in 10.1 or in replies to the Buyer's
Solicitor's preliminary enquiries no warranty shall be
implied as to the permitted use of the Property
AND the Seller will indemnify the Buyer and the Buyer's
successors in title and those persons deriving title under the
Buyer and such successors against all claims demands actions and
proceedings incurred in consequence (directly or indirectly) of a
breach of any warranty set out in clauses 10.1
20
11. DISCLAIMER
11.1 The Buyer admits:-
11.1.1 That it has inspected the Property and purchases the same
with full knowledge of the actual state and condition of
it and takes the Property as it stands
11.1.2 That it has before the date hereof undertaken surveys and
tests to determine whether the Property or any part of it
constitutes and may constitute contaminated land as
defined in Sections 78A of the Environmental Protection
Act 1990 (as amended by Section 78 of the Environmental
Protection Act 1995)
11.1.3 Such tests have revealed that the Property is
contaminated land and the price originally tendered for
the Property by the Buyer has been reduced by the amount
of the Remediation Retention which is pursuant to the
provisions of Clause 20 of this Agreement to be used to
Remediate such contaminated land
11.2.1 The Seller will at all times continue to accept liability
imposed by and will comply with the requirements of all
legislation relating to environmental matters or
apportioned by the Environment Agency or other competent
authority under Section 78 et seq of the Environmental
Protection Act 1990 (as amended by the Environment Act
1995) or regulations or guidance subsidiary thereto or
any legislation (primary or secondary) or regulations
21
which might replace those provisions arising out of
radiological contamination existing at the date of this
Agreement save to the extent that it should have been
remediated by the Buyer under the terms of this Agreement
11.2.2 Should the Seller incur such liability as is referred to
in clause 11.2.1 the Buyer shall to the extent that such
liability would be reduced or mitigated by a claim made
by the Buyer under the Environmental Impairment Insurance
make and diligently pursue such a claim and to the extent
that such claim is met will expend any insurance money
coming into the hands of the Buyer upon those works in
respect of which the claim is paid by insurers PROVIDED
THAT the reasonable and proper fees and expenses of the
Buyer incurred with the consent of the Seller (such
consent not to be unreasonably withheld or delayed) in
making such claim shall be reimbursed by the Seller to
the extent they are not reimbursed by the insurers
11.3 The Buyer further admits:-
11.3.1 that it enters into this Agreement solely as a result of
its own inspection and on the basis of the terms of this
Agreement and not in reliance upon any representation or
warranty either written or oral or implied made by or on
behalf of the Seller (save for any representation or
warranty contained herein or in written replies given by
the Seller's Solicitor to any preliminary enquiries
22
raised by the Buyer or the Buyer's Solicitors subject to
any terms or conditions upon which the replies were
expressed to be given)
11.3.2 that this agreement contains the entire agreement between
the parties
12. INCORPORATION OF CONDITIONS OF SALE
The General Conditions shall apply to this Agreement in so far as
they are applicable to a sale by private treaty and are not
inconsistent with the terms of this Agreement but subject to the
following variations and provisions:-
(a) Sub-condition 1.1.1(g) shall be deemed to read as
follows:- "the Contract Rate" means 3% above the Base
Rate from time to time of the National Westminster Bank
plc"
(b) Sub-conditions 2.2.2 2.2.3 3.4.3 and 4.5.5(b) shall not
apply
(c) In sub-condition 1.3.1 the words "and shall be served on
the Solicitor (if any) appointed to act for the Seller or
Buyer (as the case may be)" shall be added to the end
thereof
(d) Having regard to the status of the Seller sub-condition
3.1.2(c) shall apply to those encumbrances which the
Seller does not actually know about whether or not the
Seller could know about them
23
(e) In sub-condition 3.1.2(d) delete the word "those" and
insert the words "mortgages and charges protected by such
entries in registers"
(f) At the end of sub-condition 3.1.2 add a new condition
3.1.2(f) as follows:-
"(f) overriding interests or what would be overriding
interests if the title were registered"
(g) The Property is not insured and sub-conditions 5.1.1 and
5.1.2 and 8.1.3 shall not apply and the Seller has no
duty of care to protect and secure the Property which is
at the risk of the Buyer from the date of the contract
(h) In sub-condition 5.2.2(b) the following shall be
substituted:-
"may permit only the buyer or its agents first identified
to and approved by the Seller to occupy the Property"
(i) In sub-condition 6.3.5 the words "twenty working days"
shall be substituted for the words "ten working days"
(j) In sub-condition 6.5.2 the words "or where the Buyer is
in material breach of Contract and the Seller lawfully
refuses to complete on that ground" shall be added to the
end thereof
(k) In sub-condition 6.7 reference "legal tender" as a means
of payment shall be excluded
24
(l) In sub-condition 7.1.1 after the words "leading to it"
there shall be inserted "(made or confirmed in writing by
or on behalf of the Seller)"
13. MERGER ON COMPLETION
The provisions of this Agreement shall not merge on completion of
the transfer of the Property so far as they remain to be
performed
14. DUPLICATE TRANSFER
If the Seller so requires the Buyer shall without cost to the
Seller execute a duplicate Transfer to be prepared by and at the
expense of the Buyer and shall produce the Transfer duly stamped
to enable such duplicate to be denoted
15. NATURE OF THIS AGREEMENT
This writing is the whole contract and if any other term has been
agreed such agreement is hereby expressly declared to be a
separate agreement forming no part of this Agreement
16. ASSIGNMENT OF AGREEMENT
The Buyer may require the Property to be transferred to a
subsidiary company or holding company (as defined by Section 736
of the Companies Act 1985) or an associated company (as defined
by Section 416 of the Income and Corporation Taxes Act 1988)
which:-
16.1 enters in the Form of Transfer (amended to accommodate
the change of Transferee)
25
16.2 deposits the Remediation Retention in the Remediation
Account
16.3 enters into an agreement directly with the Seller to
observe and perform the obligations of the Buyer under
this Agreement
17. VALUE ADDED TAX
The Seller warrants that he has not elected nor will he elect
before completion of the sale to waive the exemption from Value
Added Tax and the Purchase Price is inclusive of Value Added Tax
18. DESIGN AND EXECUTION OF REMEDIATION WORKS
Modifications to Remediation Programme
18.1.1 The Buyer may if the Buyer's Radiological Consultant
considers it desirable to achieve the Remediation make
modifications to the Remediation Programme with the
Seller's consent (which shall not be unreasonably
withheld or delayed)
18.1.2 If the Buyer considers at any time that the Seller is
unreasonably withholding or delaying its approval of any
modification to the Remediation Programme the matter may
be referred by the Buyer at any time to Third Party
Determination
Appointment of Supervising Consultant
18.2.1 The Buyer will appoint the Supervising Consultant to
fulfil the role of Supervising Consultant in the
Remediation as described in the Remediation Programme
26
upon such terms and in a form of appointment to be
determined by the Buyer and approved by the Seller (such
approval not to be unreasonably withheld or delayed) and
if such terms or form of the Consultant's Appointment
cannot be agreed the matter may be referred by either
party at any time to Third Party Determination
18.2.2 The Buyer will:-
(a) diligently take all steps necessary effectually to
procure the due performance and observance of the
obligations and duties of the Supervising
Consultant under the Consultant's Appointment
(b) not vary the terms of the Consultant's Appointment
without the consent of the Seller (such consent
not to be unreasonably withheld or delayed)
18.3 Appointment of Remediation Contractor
18.3.1 The Buyer will as soon as reasonably practicable after
completion of this Agreement invite competitive tenders
for carrying out the Remediation Works from not less than
three contractors as may be approved by the Seller (such
approval not to be unreasonably withheld or delayed)
18.3.2 The Buyer shall not appoint the Remediation Contractor
without the prior approval of the Seller (which shall not
be unreasonably withheld or delayed) and shall in making
such appointment be entitled to take into account the
27
reputation experience competence and suitability of any
contractor as well as the price tendered
18.3.3 Upon completion of the tender process the Buyer will
appoint a contractor as the Remediation Contractor upon
such terms and in a form of engineering contract to be
determined by the Buyer and approved by the Seller (such
approval not to be unreasonably withheld or delayed) and
if such terms or the form of the Remediation Contract
cannot be agreed the matter may be referred by either
party at any time to Third Party Determination
18.3.4 The Buyer will:-
(a) diligently take all steps necessary effectually to
procure the due performance and observance of the
obligations of the Remediation Contractor or under
the Remediation Contract
(b) not vary the terms of the Remediation Contract
without the consent of the Seller (such consent
not to be unreasonably withheld)
(c) insofar as it may reasonably do so exercise its
role as employer under the Consultant's
Appointment and the Remediation Contract so as to
ensure that the Supervising Consultant and the
Remediation Contractor carry out their respective
obligations in a cost effective manner
28
18.4 The Seller shall give the Buyer all reasonable assistance
in connection with the Remediation (including the giving
of information which might reasonably be required)
provided that it is not of a secret or confidential
nature
18.6 The Seller will procure that Aspinwall & Company Limited
gives the Buyer a warranty in the form annexed as soon as
reasonably practicable after the date hereof in relation
to the following reports:-
Aspinwall and Company Reports Project No. 09162
-- RNSD Eaglescliffe (Alienated Sites) - Land Quality
Assessment Phase 1 Desk Study Land Quality
Statement - Final Report
-- RNSD Eaglescliffe Land Quality Assessment Phase 3
Radiological Survey Land Quality Statement - Final
Report
-- RNSD Eaglescliffe - Land Quality Assessment Phase
3 Radiological Survey Land Quality Summary - Final
Report
-- RNSD Eaglescliffe - Land Quality Assessment Phase
3 Radiological Survey Appendices (Volume 1) -
Final Report
-- RNSD Eaglescliffe Land Quality Assessment Phase 3
Radiological Survey Appendices (Volume 2) - Final
Report
29
19. WARRANTIES IN FAVOUR OF SELLER
19.1 The Buyer will procure that contemporaneously with
entering into the Consultant's Appointment the
Supervising Consultant enters into a deed of warranty
with the Seller in the form annexed with such variations
as the Seller may approve (such approval not to be
unreasonably withheld or delayed)
19.2 The Buyer will procure that contemporaneously with
entering into the Remediation Contract the Remediation
Contractor enters into a deed of warranty with the Seller
in a form prepared by the Buyer and approved by the
Seller (such approval not to be unreasonably withheld or
delayed)
20. THE REMEDIATION RETENTION
20.1.1 On completion of this Agreement and as a pre-condition of
completion taking place the Buyer will place the sum of
3,000,000 pounds sterling in an interest bearing deposit
account with an Acceptable Institution in the name of the
Buyer entitled "Eaglescliffe Remediation Retention
Account" and the institution holding the Remediation
Account will be mandated in the form of mandate annexed
only to allow drawings on the Remediation Account made in
accordance with the provisions of this Clause
20.1.2 The Remediation Retention will at all times remain the
property of the Buyer subject to the provisions of this
30
Agreement and the rights of any Funder arising pursuant
to Clause 20.7 under a Funder's Deed and of the Seller
under the Seller's Remediation Account Charge
20.1.3 The interest earned on the Remediation Account is to be
paid to the Buyer when payable by the institution holding
the Remediation Account
20.1.4 (a) At any time when the Remediation Account is not
charged to a Funder pursuant to the provisions of
clause 20.7 (including on each occasion a Funder's
Account Charge is released) the Remediation
Account shall be charged to the Seller in the form
of the Seller's Remediation Account Charge
(b) The Seller agrees to release any Seller's
Remediation Account Charge while a Funder's
Account Charge is in place
20.2 The Buyer and the Seller agree that only items of cost
and expenditure properly incurred in order to achieve the
Remediation of the Property may be drawn from the
Remediation Account which without prejudice to the
generality of the foregoing shall include:-
20.2.1 the fees of the Buyer's Radiological Consultant for work
carried out after 23 February 1998 incurred in preparing
and settling with the Seller and the Seller's
Radiological Consultant the Remediation Programme
(including work done in consequence of resolving any
31
dispute in that connection) fees for work done in
obtaining any of the Requisite Consents or consulting
with any person or authority responsible for the issuing
of any of the Requisite Consents and all work done in
preparation for the Remediation up to the point where
fees are payable under the head of expenditure referred
to at Clause 20.2.2
20.2.2 the fees of the Supervising Consultant properly paid
under the terms of the Consultant's Appointment and all
work done in preparation for the Remediation beyond the
point where fees are payable under the head of
expenditure referred to at Clause 20.2.1
20.2.3 payments properly made to the Remediation Contractor
under the Remediation Contract
20.2.4 the reasonable and proper fees and charges of any person
carrying out any work or providing any goods or services
in connection with the Remediation previously approved by
the Seller such approval not to be unreasonably withheld
or delayed
20.2.5 the costs and expenses of acquiring or hiring any plant
equipment or apparatus to be wholly exclusively and
necessarily used in connection with the Remediation Works
or of hiring or employing any person (other than the
Buyer's Remediation Consultant and the Remediation
Contractor) previously approved by the Seller such
32
approval not to be unreasonably withheld or delayed in
order to facilitate the Remediation
20.2.6 the reasonable and proper costs and expenses of obtaining
any of the Requisite Consents (including any fees payable
to any authority responsible for issuing a Requisite
Consent and the cost of appealing against refusal of any
Requisite Consent or the imposition of any terms or
conditions unacceptable to the Buyer)
20.2.7 the reasonable and proper costs and expenses of
negotiating and concluding any agreement (but not this
Agreement) with any party properly entered into in order
to facilitate the Remediation (including any payment made
to such party under any such agreement)
20.2.8 the reasonable and proper costs and expenses of storing
(whether on or off site but not the cost of permanent on-
site storage) taking off site and disposing of any
material during the Remediation (including any fee or
other payment therefor made to a third party and in
particular any fees or charges payable to any operator of
a landfill site or the operator of BNFL Drigg or other
like facility))
20.2.9 the reasonable and proper costs and expenses of taking
precautionary or protective measures (whether in relation
to the business and property of the Buyer or some other
party) during the Remediation Works
33
20.2.10 reasonable and proper costs fees and expenses incurred in
any dispute other than a dispute between the parties
hereto arising (which disputes the Buyer agrees it will
not incite without the previous consent of the Seller
(such consent not to be unreasonably withheld or
delayed)) in consequence of the Remediation (including
any damages or money paid to settle such a dispute)
20.2.11 any reasonable and proper costs incurred in or incidental
to resolving any dispute under terminating or putting in
place a replacement for the Consultant's Appointment or
the Remediation Contract
PROVIDED THAT the Buyer shall notify the Seller at the point
where it becomes likely that any dispute referred to in 20.2.10
or 20.2.11 will result in expenditure of the nature referred to
in those provisions and shall take any steps reasonably proposed
by the Seller towards the resolution of such dispute except that
where the Buyer disagrees the steps to be taken shall be referred
to Third Party Determination
20.2.12 irrecoverable Value Added Tax
20.3.1 The Buyer shall be entitled to make such drawings from
the Remediation Account until either the Funder or the
Seller have become entitled to make drawings pursuant to
clause 20.6 or any Funders Deed or an Event of Insolvency
occurs
34
20.3.2 Drawings from the Remediation Account shall be made as
follows:-
Supervising Consultant's fees under Consultant's
Appointment
(a) Any invoice issued by the Supervising Consultant
under the Consultant's Appointment which is for an
amount and which is payable at a time specified in
the Consultant's Appointment shall be copied to
the Seller whereupon the amount so invoiced may be
drawn from the Remediation Account
Certified Payments under the Remediation Contract
(b) Any interim or final certificate issued by the
Supervising Consultant in its capacity as engineer
under the Remediation Contract or other party
responsible for the issue of such certificates
shall be copied to the Seller whereupon the amount
so certified may be drawn from the Remediation
Account
Other Expenditure
(c) In the case of any other expenditure which the
Buyer wishes to draw a copy of the relevant
invoice or other appropriate particulars of the
sum to be drawn shall be supplied to the Seller at
least ten working days before drawing is intended
to be made and:-
35
(i) if no objection in writing is made by the
Seller to the Buyer before that intended
date of drawing that drawing may be made
from the Remediation Account
(ii) if an objection is made in writing by the
Seller to the Buyer before that intended
date of drawing then the question of
whether that drawing may properly be made
under this Agreement is to be referred to
Third Party Determination and whether or
not such drawing can be made from the
Remediation Account will be dependent upon
the outcome of such determination
20.4.1 the institution holding the Remediation Account is hereby
directed by the Buyer and the Seller for so long as the
Buyer is entitled to make payments from the Remediation
Account to make payments out of the Remediation Account
upon presentation of cheques drawn on the Remediation
Account signed by the Buyer and countersigned by the
Supervising Consultant
20.4.2 the Consultant's Appointment will oblige the Supervising
Consultant to countersign cheques only where the
procedures set out in this clause 20 have been followed
20.5.1 upon the date two months after the issue of the
certificate of Practical Completion under the Remediation
36
Contract (or upon such earlier date as the Buyer may
specify in a written notice to the Seller) an account
will be taken between the Buyer and the Seller and
(subject to Clause 20.5.2) the unexpended balance of the
Remediation Retention will be divided between the parties
as follows:-
(a) There will first be deducted and paid to the Buyer
a sum equal to the aggregate of the following
amounts:-
(i) the premium(s) (including premium tax) paid
for any policy of Environmental Insurance
(ii) the fees (together with Value Added Tax)
payable to any broker in relation to any
policy of Environmental Insurance
(iii) the fees of the Buyer's Environmental
Consultant for work carried out prior to
23rd day of February 1998 amounting to
64,939.95 pounds sterling
(b) A further amount will be deducted from any
unexpended balance of the Remediation Retention
equal to the amount of the excess deductible or
other like sum payable or non-indemnifiable under
any policy of Environmental Insurance and shall be
retained by the Buyer in a separately designated
deposit account in the joint names of the Buyer
37
and the Seller which sum may be utilised in the
payment of any excess in the event of a claim
under such policy and after the expiration of the
period of such insurance (or after the
determination of any claim pending at the
expiration of such period) any unutilised balance
of such sum shall be divided between the Buyer
and the Seller in proportions referred to at
Clause 20.5.1(c)
(c) After the deductions referred to at subclause
20.5.1 (a) and (b) 20% of the unexpended balance
in the Remediation Account will be paid to the
Buyer and 80% to the Seller
20.5.2 If at the date stipulated by clause 20.5.1 for the taking
of the account the Supervising Consultant is able to
demonstrate to the reasonable satisfaction of the Seller
that there is a reasonable prospect that further
expenditure which may properly be drawn from the
Remediation Account may have to be paid at some future
time then (notwithstanding clause 20.5.1) a reasonable
sum (which sum is to be agreed between the Buyer and the
Seller or if the parties cannot agree then the matter is
to be referred to Third Party Determination on the
application of either the Buyer or the Seller) will be
retained in the Remediation Account as a contingency sum
38
to meet any further expenditure which may properly be
drawn from the Remediation Account
20.5.3 At that date when there is no longer any reasonable
prospect of such further expenditure (which date is to be
agreed between the Buyer and the Seller or if the parties
cannot agree then the matter is to be referred to Third
Party Determination on the application of either the
Buyer or the Seller) then any unexpended balance on the
Remediation Account will be divided between the parties
in the manner referred to at Clause 20.5.1
20.6 In the event that Practical Completion does not occur by
the Step-in Date or if at any time before the Step-In-
Date an Event of Insolvency occurs in relation to the
Buyer:-
20.6.1 if at the date the Seller wishes to exercise the rights
conferred by this Clause 20.6 by service of a Step-in
Notice (as defined below) there is no Funder who has
entered into a Funder's Deed then the Seller may serve
written notice "a Step-in Notice" on the Buyer specifying
a reasonable period within which the Buyer must have
achieved Practical Completion (which period is if
disputed by the Buyer in writing to the Seller within ten
working days of receipt of a Step-in Notice to be fixed
by Third Party Determination) and if Practical Completion
is not achieved within the period specified in the Step-
39
in Notice (or substituted on a Third Party Determination)
then
(a) The Buyer's right to make drawings from the
Remediation Fund shall cease
(b) The Seller shall be allowed to enter onto the
Property as licensee of the Buyer for the purpose
of completing the Remediation Works and the Buyer
shall afford to the Seller all reasonable
assistance and co-operation to achieve that end
(c) The Seller shall exercise its Step-in-Rights under
the Consultant's Warranty and under the
Contractor's Warranty and in the exercise of such
rights shall:-
(i) diligently take all steps necessary
effectually to procure the due performance
and observance of the obligations and
duties of the Supervising Consultant under
the Consultant's Appointment; and
(ii) diligently take all steps necessary
effectually to procure the due performance
and observance of the obligations and
duties of the Remediation Contractor under
the Remediation Contract
AND in so far as it may reasonably do so exercise its
role as employer under the Consultant's Appointment and
40
under the Remediation Contract so as to ensure that the
Supervising Consultant and the Remediation Contractor
carry out their respective obligations in a cost
effective manner
(d) The Seller shall draw from the Remediation Account
the same items of cost and expenditure which the
Buyer was entitled to draw under the provisions of
Clause 20.2 above and shall follow the same
procedures as referred to in Clause 20.3 above as
if those procedures were set out in full in this
clause with references to "the Seller" and "the
Buyer" being reversed and with such other changes
as are necessary as a consequence of such
references being reversed
(e) The Seller shall be entitled to give notice to the
Insurers under the Cost Overrun Insurance
substituting itself as the insured thereunder
(f) Any unexpended balance in the Remediation Account
shall be dealt with as referred to in clause 20.5
20.6.2 If a Funder's Deed is in place at any time when any
action or other step falls to be taken then the
provisions of the Funder's Deed shall have effect but if
the Remediation Retention is reassigned to the Buyer
pursuant to any provision in the Funder's Deed for
Reassignment then upon discharge of the indebtedness
41
thereby secured the provisions of Clause 20.6.1 shall
then have effect
20.7 The Seller acknowledges that the Buyer may assign or
charge the rights and interest of the Buyer in the
Remediation Retention to a Funder and the Seller will
enter into such agreement as such Funder shall reasonably
require effectively to secure for the Funder the benefit
of those rights and interest whether by executing a
Funder's Deed or otherwise PROVIDED THAT a Funder shall
have no right to draw from the Remediation Account any
greater sum than the Buyer is permitted to draw pursuant
to the terms of this Agreement or would be permitted to
draw had an Event of Insolvency not occurred
21. CLAWBACK
The Buyer shall in the Transfer enter into covenants to make
further payments (in addition to the Purchase Price) as set out
in the Form of Transfer
22. THIRD PARTY DETERMINATION
22.1.1 where in this Agreement:-
(a) there is a stipulation for a matter to be resolved
by Third Party Determination; or
(b) it is provided that the consent or agreement of
either the Buyer or the Seller is not to be
unreasonably withheld and/or delayed
42
(but in no other case) then the provisions of this Clause
shall apply
22.1.2 if the difference or question relates to the terms or
form of the Consultant's Appointment or the Remediation
Contract the matter will be referred to a solicitor of at
least ten years qualification having particular expertise
in relation to construction and engineering contracts as
the parties shall agree or as shall be appointed pursuant
to Clause 22.3
22.1.3 any such reference shall if the parties are so agreed in
writing be deemed to be a reference to an expert (and not
an arbitrator) whose decision shall be final and binding
but shall otherwise be deemed to be a reference to an
arbitrator pursuant to the Arbitration Act 1996 and any
statutory amendment variation substitution or re-
enactment thereof
22.2 if the person to whom a matter is referred hereunder
shall act as an expert pursuant to the terms of this
clause then either party shall be entitled to submit to
him representations and cross-representations with such
supporting evidence as they shall respectively consider
necessary and he shall have regard thereto in making his
decision which he shall deliver in writing and the
reference to him shall include authority to determine in
what manner all the costs of the referral shall be paid
43
22.3 if the parties are unable to agree as to the appointment
of such arbitrator or expert within five working days of
one party serving notice on the other calling for the
appointment of an arbitrator or expert then such
arbitrator or expert shall be appointed on the
application of either party by the President or Vice
President of the Law Society in respect of a matter
referred to in Clause 22.1.2 or if the parties have not
prior to such a dispute arising agreed in writing
(specifically referring to this clause) some other
mechanism for appointing an appropriate person then by
the Chairman or Vice-Chairman for the time being of the
Environmental Law Sub-Committee of the City of London Law
Society in respect of any other dispute to be determined
pursuant to this clause 22
22.4.1 Any consent agreement or approval of the Seller required
under this Agreement shall be deemed given if within
twenty-one days of a written request for such consent
agreement or approval by or on behalf of the Buyer no
written response is received
22.4.2 If a written refusal is received within such twenty-one
day period the Buyer may by a further written notice to
the Seller refer to Third Party Determination the
question of whether any such consent agreement or
44
approval should be granted under the terms of this
Agreement
23. The Buyer acknowledges that prior to the date hereof
23.1.1 There has been made available to the Buyer the
following reports:-
-- Sovereign Consultants, RNSD Eaglescliffe Closure
Plan dated 4 April 1995
-- AEA Technology Report, Ref:
AEA/WMES/RJVD/21502001/Final Vols 1, 2, Site
Investigation and Assessment: RNSD Eaglescliffe,
Stockton-on-Tees dated October 1995
-- NSC (MOD) Report, Colette Walmsley ES350al, Ref:
ScET/ES350/96/01, RNSD Eaglescliffe follow up
investigation and Assessment dated January 1996
(all hereinafter called "the Reports) and that the Buyer
is aware that previous use of the Property is capable of
having resulted in the presence of a range of pollutants
at the Property identified by the Reports in addition to
the contamination being addressed by the Remediation
Contract
23.1.2 The Buyer has carried out or had an opportunity of
carrying out any survey or inspection that it wishes to
conduct
45
23.2.1 The Buyer acknowledges that the terms of the sale of the
Property (including as to price) take into account the
capability referred to in clause 23.1.1 above
23.2.2 The Seller makes no representation or warranty that the
Property is fit for the Buyer's intended use or for any
other future use
23.2.3 It is hereby agreed that any obligation that may remain
with the Seller after completion of this Agreement to
carry out remedial work to any contamination on or in the
soil of the Property recommended by the Reports (other
than the Remediation) is with effect from completion
transferred to the Buyer (save for any obligation arising
under any contract with a third party not disclosed to
the Buyer or any obligation arising from a claim made
against the Seller prior to the date of this Agreement
and not disclosed to the Buyer)
46
SCHEDULES OMITTED
Exhibit C
CENARGO INTERNATIONAL PLC
CONSENT SOLICITATION STATEMENT
SOLICITATION OF CONSENTS TO
PROPOSED AMENDMENTS TO THE INDENTURE
GOVERNING ITS
9 3/4% FIRST PRIORITY SHIP MORTGAGE NOTES
DUE JUNE 15, 2008
SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN THIS CONSENT
SOLICITATION STATEMENT (THIS "SOLICITATION STATEMENT"), CENARGO
INTERNATIONAL PLC (THE "COMPANY") WILL ACCEPT ALL PROPERLY
COMPLETED, EXECUTED AND DATED CONSENT FORMS (THE "CONSENTS")
RECEIVED BY CHASEMELLON CONSULTING (THE "SOLICITATION AGENT")
(AND NOT SUBSEQUENTLY REVOKED) AFTER 5:00 P.M., NEW YORK CITY
TIME, ON AUGUST 9, 1999 AND AT OR PRIOR TO 5:00 P.M., NEW YORK
CITY TIME, ON AUGUST 27, 1999 (AND, AS SUCH TIME AND DATE MAY BE
EXTENDED AT THE COMPANY'S OPTION, THE "EXPIRATION DATE"; SUCH
PERIOD, AS IT MAY BE SO EXTENDED, THE "SOLICITATION PERIOD"),
FROM REGISTERED HOLDERS ("HOLDERS") OF THE COMPANY'S 9 3/4% FIRST
PRIORITY SHIP MORTGAGE NOTES DUE JUNE 15, 2008 (THE "NOTES").
THE COMPANY WILL NOT BE OBLIGATED TO ACCEPT ANY CONSENTS RECEIVED
AFTER THE CLOSE OF THE SOLICITATION PERIOD. ONLY REGISTERED
HOLDERS OF RECORD OF THE NOTES AS OF 5:00 P.M., NEW YORK CITY
TIME ON AUGUST 6, 1999 (THE "RECORD DATE"), AS REFLECTED IN THE
RECORDS OF BANKERS TRUST COMPANY (THE "TRUSTEE"), OR A BENEFICIAL
OWNER WHO HAS COMPLIED WITH THE PROCEDURES SET FORTH IN THE
"INSTRUCTIONS FOR HOLDERS" CONTAINED IN THE CONSENT ENCLOSED
HEREWITH, WILL BE ELIGIBLE TO CONSENT TO THE PROPOSED AMENDMENTS
(AS DEFINED BELOW) OR TO RECEIVE THE CONSENT FEE (AS DEFINED
BELOW) WITH RESPECT THERETO. CONSENTS MAY BE REVOKED AT ANY TIME
PRIOR TO THE EFFECTIVE DATE (AS DEFINED BELOW).
The Company is soliciting (the "Solicitation") the Consents
of the Holders of its Notes to amendments (the "Proposed
Amendments"), described herein, to the Indenture dated June 19,
1998 (the "Indenture"), pursuant to which the Notes were issued.
Unless defined herein or the context otherwise requires,
capitalized terms used herein shall have the meanings assigned to
such terms in the Indenture.
THE DATE OF THIS SOLICITATION STATEMENT IS AUGUST 9, 1999
TABLE OF CONTENTS
Solicitation Information..................................1
Introduction.........................................1
Recent Developments..................................2
Financial Results....................................2
Business Strategy....................................2
Description and Benefits of NIF Acquisition..........4
Description and Benefits of the Acquisition
of Eaglescliffe....................................6
Current Fleet and Collateral.........................7
Summary of Proposed Amendments.......................8
Solicitation Procedures..................................10
General.............................................10
Expiration Date; Effective Date; Termination
of Solicitation...................................10
Modifications.......................................11
Failure to Obtain Requisite Consents or to
Purchase NIF......................................11
Consent Procedures..................................11
Revocation of Consents..............................13
Solicitation Agent..................................13
Financial Advisor...................................14
Miscellaneous.......................................14
Additional Information..............................14
Certain Income Tax Considerations........................16
General.............................................16
Consequences of the Proposed Amendments.............16
Treatment of the Consent Fee........................16
Backup Withholding..................................17
ii
CENARGO INTERNATIONAL PLC
SOLICITATION INFORMATION
INTRODUCTION
On July 16, 1999, the Company signed an agreement (the
"Agreement") to purchase a minimum of 99.27% of the issued share
capital of Norse Irish Ferries Limited ("NIF," the shares of NIF
to be purchased, the "NIF Shares") for a total consideration of
$38.7 million. The Company anticipates the total cost of the
purchase, including consent fees to be paid to the Holders and
related transaction expenses, will equal approximately $42.0
million. NIF operates freight and passenger ferry services in
the Irish Sea market with a fleet of two modern roll-on/roll-off
passenger and freight ("RoPax") ferries and is a major operator
in the Irish Sea ferry market and a direct competitor with the
Company's existing Irish Sea services.
Pursuant to the Indenture, the Company must deposit Sale
Redemption Amounts1 from the sale of its Mortgaged Vessels with
the Trustee. The Company is required to apply the applicable
Sale Redemption Amounts within two years of the sale of a
Mortgaged Vessel to purchase another vessel that qualifies as a
Qualified Substitute Vessel or to redeem Securities, in whole or
in part, at a specified redemption price. The Company has
previously sold three Mortgaged Vessels and deposited Sale
Redemption Amounts relating to those Vessels with the Trustee.
On July 30, 1999, the Company purchased the MISTRAL, a
passenger/car ferry previously leased by the Company for use in
its Spanish/Moroccan operations, for total consideration of $16
million. Following that purchase, the Trustee currently holds
Sale Redemption Amounts in the amount of $37.8 million (the
"Escrow Funds"). The Company desires to use a portion of the
Escrow Funds to fund a part of the purchase price of NIF and to
acquire the Eaglescliffe Logistics Center ("Eaglescliffe"), a 114
acre multi-warehouse facility which the Company currently
operates as its freight logistics center located in northeast
England.
____________________
1. The Sale Redemption Amount is defined as an amount equal to
the Vessel Percentage applicable to the Sold Mortgaged Vessel
multiplied by the principal amount of Securities outstanding
on the date of such sale. See "Current Fleet and
Collateral." Where applicable, amounts are translated in
this Solicitation Statement from Pounds Sterling at the rate
of $1.60/pound sterling.
1
The Proposed Amendments are designed to permit the Company to
utilize Sale Redemption Amounts of (i) $26 million to partially
fund the acquisition of NIF and (ii) $6 million to acquire
Eaglescliffe's land and buildings. The balance of $16.0 million
to acquire NIF will come from unrestricted cash balances of the
Company. As a result of this amendment, NIF, its assets and
revenue stream and Eaglescliffe's land and buildings will become
part of the collateral that secures the Notes. The Company
believes that utilizing the Escrow Funds in this manner provides
benefit for both the Company and the Holders of the Notes and
constitutes the best use of such funds at the current time.
Pursuant to the Indenture, the consent of the majority of the
Holders of the aggregate outstanding principal amount of Notes is
required in order to effectuate the Proposed Amendments (the
"Requisite Consents"). The Expiration Date for the Solicitation
is currently set for August 27, 1999. Following the Expiration
Date, the Company does not intend to accept additional Consents.
The Company is offering to pay $15 in cash (the "Consent
Fee") for each $1,000 in principal amount of Notes with respect
to which a Consent is received as of the Expiration Date and not
revoked as of the Effective Date. The Effective Date will be the
date on which all of the closing conditions relating to the
purchase of NIF have been fulfilled or waived, the Proposed
Amendments come into effect, and the purchase of NIF is
completed, not later than October 15, 1999. The Consent Fee will
be paid as promptly as practicable after the Effective Date.
Notwithstanding anything else contained herein, no Consent
Fee will be made to any Holder of Notes unless at the Effective
Date the Company has the Requisite Consents and the purchase of
NIF is completed.
RECENT DEVELOPMENTS
On July 30, 1999, the Company used $16.0 million of the Sale
Redemption Amounts to purchase the ferry MISTRAL, a roll-on/roll-
off ("RoRo") passenger/car ferry that was employed under a five
year lease with Lombard Initial Finance Limited in the Company's
Spanish-Moroccan ferry route. The expiration date of the lease
was in April 2002.
The Company has entered into agreements to sell its two
remaining deepsea vessels, the MERCHANT PREMIER and the MERCHANT
PRINCIPAL. These vessels are multipurpose vessels. Neither of
these vessels are Mortgaged Vessels. The sale price of each
vessel is $1.1 million. The closing of the sale is expected to
take place on August 11, 1999.
2
FINANCIAL RESULTS
The Company's audited financial statements for the years
ended September 30, 1996, 1997 and 1998, are contained in the
Company's Report on Form 20-F for the year ended September 30,
1998, and the Company's interim unaudited financial statements
for the periods ended December 31, 1998 and 1999, and March 31,
1998 and 1999, are contained in its Reports on Form 6-K filed on
March 25, 1999, and July 7, 1999, both of which are incorporated
by reference and available upon request.
The Company expects to file and circulate to Holders a Report
on Form 6-K containing its unaudited interim financial statements
for the period ended June 30, 1998 and 1999, during the week of
August 16, 1999.
BUSINESS STRATEGY
The Company is a diversified transportation group
specializing in European freight and passenger ferry services, as
well as the movement of surface and air freight and the
management of freight logistics. The Company continues to pursue
its strategy of increasing its revenues and generating consistent
and predictable cash flows and profitability by further expanding
its freight and passenger ferry services and its logistics
operations.
IRISH SEA. The Irish Sea ferry market has grown at a rate of
over 7.7% per annum over the last ten years. Currently, there
are six ferry operators, including the Company, competing in the
Irish Sea freight ferry market. MDS Transmodal, an independent
ferry consultant, estimates that in 1998, the Company had a
market share of approximately 17% of all trailer traffic carried
across the Irish Sea. The Company's principal competitors
include P&O European Ferries (Ireland) Ltd., Stena Line UK Ltd.,
Irish Ferries of Irish Continental Group and NIF, whose market
shares are estimated by the Company to be 37%, 22%, 11% and 8%,
respectively.
At present, the Company operates three services between
England and Ireland. The Company operates a RoRo service between
Heysham (England) and Belfast (Northern Ireland) with four RoRo
vessels offering four sailings per day in both directions and a
RoRo service between Heysham and Dublin (Ireland) operated with
two RoRo vessels offering two sailings per day in both
directions. In February, 1999, the Company also started a new
RoPax service with two RoPax vessels offering two roundtrip
sailings per day between Liverpool (England) and Dublin to carry
passengers as well as freight.
3
The addition of the two RoPax ferries in 1999 increased the
Company's capacity in the Irish Sea from 250,000 equivalent
trailer units per year to 400,000 equivalent trailer units per
year. These two vessels as well as two RoPax vessels anticipated
to be delivered in the first half of 2000 ("RoPax 3" and "RoPax
4") have and will continue to permit the Company to increase
operating efficiency by (i) replacing older, smaller and less
efficient vessels, (ii) operating multiple routes out of hub
ports in the U.K. and Ireland and (iii) operating sister ships on
complementary routes.
The acquisition of NIF represents an important strategic
acquisition for the Company in connection with the expansion of
its North Irish Sea ferry services. The purchase will enable the
Company to provide a comprehensive matrix of services across the
Irish Sea linking the major ports of Dublin, Belfast, Liverpool
and Heysham. The benefits of the acquisition are discussed below
under "Description and Benefits of the NIF Acquisition."
SPANISH-MOROCCAN FERRY SERVICE. Since 1994, the Company has
operated a passenger and car ferry service between Almeria, in
southern Spain, and Nador, Morocco, under the trade name
Ferrimaroc. The Company employs the ferries MISTRAL and SCIROCCO
on this service. In fiscal 1998, Ferrimaroc carried 294,000
passengers, 61,000 cars and 3,400 equivalent trailer units, as
compared to 271,000 passengers, 55,000 cars and 3,400 units in
fiscal 1997. In accordance with Moroccan government regulations,
Ferrimaroc operates year round, although approximately 58% of
revenues are generated in July and August. Ferrimaroc's customer
base is largely made up of the Moroccans who work in Europe
during the year and return home in the summer months. The
Company estimates that the purchase of the MISTRAL, which the
Company formerly leased, will increase EBITDA by $3.2 million on
an annualized basis.
FREIGHT LOGISTICS. The Company's logistics operations,
conducted through its subsidiaries, involve arranging the
worldwide transportation of a wide variety of commercial and
consumer products, specialized goods and documents. Flair
Forwarding (U.K.) Limited ("Flair") specializes in providing
just-in-time air freight services for customers who require on
time delivery of specific goods, often to difficult locations and
on short notice. StockGlobal Limited ("Duncan"), formerly Duncan
International Trading Limited, specializes in sea freight
forwarding to Africa. The freight forwarding services provided
by Duncan include the procurement and sourcing of consumer
products for its African-based customers.
The Company operates through two freight forwarding hubs
located at Heathrow and Eaglescliffe. The acquisition of
Eaglescliffe represents an important strategic and economic
4
acquisition for the Company in connection with the expansion of
its air freight and freight logistics businesses. Strategically
located near major English rail and road arteries in northern
England, Eaglescliffe has been leased by the Company since 1997
from the British Ministry of Defence on a short-term lease.
Ownership of Eaglescliffe will enable the Company to offer long-
term contracts to customers in a warehousing and distribution
complex that has a low cost base and is unique in its size, scope
and security in the Northeast of England. Foreign companies
which have located into the Northeast of England include Samsung,
Lucky Gold Star, Sanyo Electric Co., Ltd and Nissan Motor Corp.
The Company believes that Eaglescliffe is ideally situated to
develop its range of services to these companies a majority of
which are already its clients.
For additional information concerning the Company and its
operations since the issuance of the Notes, Holders are referred
to the Company's Annual Report on Form 20-F for the fiscal year
ended September 30, 1998, and its Reports on Form 6-K including
its quarterly reports. See "Additional Information."
DESCRIPTION AND BENEFITS OF NIF ACQUISITION
DESCRIPTION OF THE NIF ACQUISITION. On July 16, 1999, the
Company signed the Agreement to purchase NIF for a total
consideration of $38.7 million. As of June 30, 1999, the total
assets of NIF were $16.7 million including $7.6 million of cash
and $6.2 million of receivables. For the year ended December 31,
1998, NIF had total revenues and EBITDA of $40.2 million and $2.6
million, respectively. For the twelve months ended June 30,
1999, NIF had total revenues and EBITDA of $42.4 million and $4.2
million, respectively.
DESCRIPTION OF NIF. Established in 1991, NIF operates
freight and passenger ferry services in the Irish Sea market.
NIF's fleet consists of two modern RoPax ferries on timecharters,
the LAGAN VIKING and the MERSEY VIKING. These ferries,
constructed in 1995, which entered the NIF service in late 1997,
provide the only passenger and freight service between Liverpool
and Belfast and currently provide three roundtrips and three
single voyages per week between those cities. For the six months
ended June 30, 1999, NIF transported 45,000 passengers and 65,000
equivalent trailer units. In 1998, NIF transported 116,000
equivalent trailer units, an increase of 22% from 1997, making it
the fastest growing ferry operator in 1998. For the year ended
December 31, 1998, NIF's market share of the Irish Sea freight
ferry market was estimated to be approximately 8%.
The following table sets forth certain selected financial
data of NIF excluding the results of a discontinued subsidiary.
The information for the years ended December 31, 1996, 1997, and
5
1998, has been derived from NIF's audited consolidated financial
statements which are enclosed herewith. The information for the
six months ended June 30, 1998 and 1999 has been derived from
NIF's interim unaudited consolidated financial statements. All
of this information has been provided to the Company by the
sellers of NIF. The audited consolidated financial statements
present NIF's results on a consolidated basis including the
results from the discontinued subsidiary and NIF's balance sheets
both on an unconsolidated and consolidated basis.
NIF SELECTED FINANCIAL INFORMATION
SIX SIX
MONTHS MONTHS
ENDED ENDED
YEAR ENDED DECEMBER 31, JUNE 30, JUNE 30,
1996 1997 1998 1998 1999
_____________________________________________________________________________
($ IN MILLIONS)
Revenues $28.4 $30.0 $38.3 $18.8 $20.4
EBITDA 2.3 0.9 2.6 0.6 2.2
BENEFITS OF THE ACQUISITION OF NIF. The Company currently
operates daily ferry service between (i) Heysham and Belfast,
(ii) Heysham and Dublin, and (iii) Liverpool and Dublin which
began on February 19, 1999. NIF currently operates three
roundtrips and three single voyages per week between Liverpool
and Belfast. The acquisition of NIF will create a freight and
passenger hub in Liverpool to complement the Company's existing
freight hub in Heysham. As a result, the Company will become the
second largest freight ferry operator on the Irish Sea with
annual capacity of approximately 525,000 equivalent trailer units
based on current routing and an estimated 1998 market share of
25%. The Company's range of services will encompass the main
port hubs in the Irish Sea (Dublin, Belfast, Liverpool and
Heysham) with Liverpool, in the Company's view, becoming
particularly dominant on the English side. In addition, the
Company will become the only significant ferry operator into
Belfast, the major port in Northern Ireland. The Company
believes that the ability to offer services and sailings to and
from multiple ports will greatly enhance the marketability of the
services it provides to existing and future customers thereby
increasing revenues and enhancing profitability.
The Company believes that the synergies which will be
realized following the acquisition of NIF will be substantial.
Combining NIF's ferry services with those of the Company will
enable the Company to substantially increase EBITDA through ship
and overhead rationalization. The Company will be able to
consolidate operations and routes, offer increased frequency of
6
service and reduce the size of the combined Company and NIF
fleet. For example, with the completion of a riverberth in
Liverpool (anticipated at the end of 2000), the Company will have
the opportunity to make a daily roundtrip between Liverpool and
Belfast, thus increasing carrying capacity and eliminating the
need for one vessel in the Company's Belfast services. In
addition, NIF's two present RoPax vessels are time chartered in
with catering crews at a cost of approximately US$27,500 per day.
The Company has the opportunity to renegotiate the charter rate
on or before the charter expirations in September, 2001, and
January, 2002, or to substitute these vessels with its own new
RoPax 3 and RoPax 4 scheduled for delivery in 2000. The Company
also intends to consolidate the Company's and NIF's operations
centers and systems in Liverpool and Belfast, resulting in lower
overhead.
Management believes that the acquisition of NIF is a crucial
step towards solidifying the Company's position in the Irish Sea
ferry market. NIF is the last significant independent ferry
operator in the Irish Sea. The acquisition of NIF will enable
the Company to increase its market share by approximately 50% by
acquiring an established competitor currently operating at near
full capacity. Opportunities to expand market share through the
addition of new vessels and routes are greatly constrained by the
lack of available berthing facilities and corresponding
economically viable slots.
DESCRIPTION AND BENEFITS OF THE ACQUISITION OF EAGLESCLIFFE
DESCRIPTION OF EAGLESCLIFFE. The Company's principal
warehousing space is Eaglescliffe, a 114 acre logistics site
located in the Northeast of England, part of which the Company
currently leases from the U.K. Ministry of Defence. It consists
of seven separate warehouse structures providing approximately
393,000 square feet of storage space, a 27,890 square foot modern
office building and a commercial container storage park with
potential for rail link connection. It also has 24 hour manned
security, including a reception gate and full perimeter fence, a
medical center, incident control room and automatic emergency
generators. Eaglescliffe's size, scope and security make it
unique in the Northeast of England.
Eaglescliffe is located near major English rail and road
arteries in the heart of a designated inward development area,
which the Company believes renders it extremely well placed to
serve as a logistics center in the general freight forwarding
business. The Company has been granted a Customs Bond by the
U.K. customs service, allowing goods to be held on the site
without import duty and value added tax having to be paid. The
Company has also been granted "ICD status" by the U.K. customs
service which allows the Company's customers to bring imported
7
containers from seaports to the Eaglescliffe site without first
clearing customs. Eaglescliffe is the only site with ICD status
within a 20 mile radius. As a result of its Customs Bond and ICD
status, all importing formalities can be completed at
Eaglescliffe, thus avoiding delays in the seaport areas.
BENEFITS OF THE ACQUISITION OF EAGLESCLIFFE. The ownership
of Eaglescliffe will provide the Company with the opportunity to
expand its logistics business. The facility is a substantial,
modern bonded warehousing and distribution complex with
significant growth potential. The facility is being acquired at
a low price, creating a competitive cost base for the Company in
the future. Approximately one-half of the site is undeveloped,
offering further growth potential for the Company. Moreover, the
site can be connected to the rail system, which will
strategically position Eaglescliffe as the rail freight systems
develop in the United Kingdom and Europe, a stated objective of
the British Government.
CURRENT FLEET AND COLLATERAL
Following the closing of the sale of its last two deepsea
vessels (which are not Mortgaged Vessels) the Company's fleet
consists of 11 vessels, seven of which are Mortgaged Vessels.
The Mortgaged Vessels currently include three RoRo freight
ferries, two RoRo passenger/car ferries and two RoPax ferries.
Since the offering of the Notes on June 19, 1998, the Company has
sold three Mortgaged Vessels: the MERCHANT PARAMOUNT, the
MERCHANT PRESTIGE and the MOONDANCE. The MERCHANT PARAMOUNT, a
Capesize bulk carrier, was sold for $29.1 million on October 9,
1998. The MERCHANT PRESTIGE, the Company's other Capesize bulk
carrier, was sold for $29.1 million on October 26, 1998. The
MOONDANCE, a RoRo ferry which was being chartered to Seatruck
Ferries Limited ("Seatruck"), was sold to Seatruck on October 22,
1998, for $4.8 million pursuant to an option to purchase
contained in the charter of that vessel. On July 30, 1999, the
Company purchased the MISTRAL, which has been added as a
Mortgaged Vessel.
Pursuant to Section 4.20 of the Indenture, after the purchase
of the MISTRAL, $37.8 million of the Net Available Cash (a
portion equal to the combined "Sale Redemption Amounts") from the
sale of two of these vessels remains deposited with the Trustee.
The Company must apply any Sale Redemption Amounts, as defined in
the Indenture, within two years of the sale of a Mortgaged Vessel
to purchase another vessel that qualifies as a Qualified
Substitute Vessel or to redeem Securities, in whole or in part,
at a specified redemption price. Accordingly, $8,521,054 must be
applied by October 9, 2000, $4,148,435 must be applied by
October 22, 2000 and $25,144,426 must be applied by October 26,
2000.
8
The Collateral pool totaling $219.4 million, currently
consists of $37.8 million in cash and Mortgaged Vessels with the
aggregate appraised value of $181.6 million, as appraised by
Mason Shipbrokers Limited in June 1999:
VESSEL YEAR BUILT TYPE APPRAISED VALUE
Dawn Merchant 1998 RoPax $69.3 million (1)
Brave Merchant 1999 RoPax $69.3 million (1)
Scirocco 1974 Passenger/Car Ferry $8.0 million
Mistral 1981 Passenger/Car Ferry $16.0 million
Merchant Bravery 1978 RoRo $7.5 million
Merchant Brilliant 1979 RoRo $7.5 million
Merchant Venture 1979 RoRo $4.0 million
____________
(1) Midpoint of range of $68.5 million to $70.0 million.
SUMMARY OF PROPOSED AMENDMENTS
The Proposed Amendments to the Indenture as more fully
described in the form of Supplement No. 2 to the Indenture (a
copy of which is annexed hereto as Exhibit 1) include among other
things:
1. An amendment to the definition of "Qualified Substitute
Vessel" to include NIF and Eaglescliffe, each as a "Qualified
Substitute Vessel."
2. An amendment to the definition of "Independent
Appraiser" to include appraisers qualified to appraise companies
and real estate.
3. The definition of the "Eaglescliffe Collateral" which
shall be the land and buildings which are to be purchased with
the $6 million in Sale Redemption Amounts released by the
Trustee.
4. An amendment to the definition of "Security Agreements"
to expand that definition to include, for the purchase of NIF,
(1) a pledge of the NIF Shares and (2) a first priority fixed and
floating charge over all assets (including cash and accounts
receivable) of NIF in favor of the Trustee, and for the purchase
of Eaglescliffe, (3) a first priority fixed and floating charge
over the Eaglescliffe Collateral.
5. An amendment to the definition of "Vessel" to include
NIF and Eaglescliffe.
9
6. An amendment to the definition of "Collateral" to
include the NIF Shares, related NIF assets and the Eaglescliffe
Collateral.
7. An amendment to Section 4.21(b) providing that upon the
purchase of NIF, the Company shall deliver, or shall cause NIF to
deliver to the Trustee:
(a) a pledge of all the NIF Shares,
(b) a first priority, fixed and floating charge over
NIF's assets (including cash and accounts receivable),
(c) an officer's certificate stating that NIF is
solvent, free from any Senior Indebtedness and any Liens other
than Permitted Liens, and
(d) an opinion or opinions of counsel to the Company
(i) expert in the laws of the jurisdiction in which NIF is
incorporated and where the fixed and floating charges over NIF's
assets are to be recorded and (ii) expert in the laws of the
jurisdiction governing each of its Security Agreements with
respect to NIF, in each case substantially to the effect of the
corresponding opinions delivered in connection with the Mortgages
and other Security Documents at the time of the initial issuance
of the Securities.
8. An amendment to Section 4.21 providing that upon the
purchase of Eaglescliffe, the Company shall deliver, or shall
cause the Restricted Subsidiary that acquired Eaglescliffe, to
deliver to the Trustee:
(a) a first priority fixed and floating charge over the
Eaglescliffe Collateral in favor of the Trustee,
(b) an officer's certificate stating that the
Eaglescliffe Collateral is free from any Senior Indebtedness and
any Liens other than Permitted Liens, and
(c) an opinion or opinions of counsel to the Company
(i) expert in the laws of the jurisdiction in which the fixed and
floating charges on the Eaglescliffe Collateral are to be
recorded and (ii) expert in the laws of the jurisdiction
governing each of its Security Agreements with respect to
Eaglescliffe, in each case substantially to the effect of the
corresponding opinions delivered in connection with the Mortgages
and other Security Documents at the time of the initial issuance
of the Securities.
9. Other amendments necessary to effectuate the Proposed
Amendments which the Company certifies are not, in the aggregate,
10
adverse to Holders of the Notes (compared to the terms of this
Solicitation and the Proposed Amendments described herein).
11
SOLICITATION PROCEDURES
GENERAL
Upon the terms and subject to the conditions as set forth
herein, the Company is soliciting the Consent of the Holders of
the Notes to the Proposed Amendments and, if the Proposed
Amendments are made effective, will make a payment of $15 in cash
(the Consent Fee) for each $1,000 in principal amount of Notes
for which a validly delivered and unrevoked Consent has been
received by the Solicitation Agent at or prior to the end of the
Solicitation Period from the Holder thereof on the Record Date.
If the Consent of a Holder is not accepted pursuant to the
Solicitation, or such Holder's Consent is either received after,
or revoked and not properly redelivered at or prior to, the end
of the Solicitation Period, such Holder will not receive the
Consent Fee, even though the Proposed Amendments, if effected,
will be effective as to such Holder's Notes.
Upon the close of the Solicitation Period, if the Company has
received the Requisite Consents, the Company intends to proceed
with the purchase of NIF in accordance with the terms of the
Agreement.
On the Effective Date, the Trustee, the Company and the
Guarantors will execute Supplement No. 2 to the Indenture, the
Proposed Amendments will become effective, and the Company will
complete the purchase of NIF. The Consent Fee will be paid as
soon as practicable following the Effective Date. Under the
Indenture, Holders are permitted to revoke their Consents until
the Indenture amendments have been effected on the Effective
Date.
The Proposed Amendments are being presented as one proposal.
Consequently, the delivery of a Consent by a Holder of Notes is a
consent to all of the Proposed Amendments. See "Summary of
Proposed Amendments" and Exhibit 1 for a form of the Proposed
Amendments.
Only a Holder of Notes at the close of business on the Record
Date may execute and deliver a valid Consent or be eligible to
receive the Consent Fee. A duly executed Consent (unless revoked
as herein provided) shall bind the Holder executing the same and
any subsequent registered holder or transferee of the Notes to
which such Consent relates. However, a Consent may be revoked by
the Holder of the Notes to which such Consent relates in the
manner described herein under "Revocation of Consents."
12
EXPIRATION DATE; EFFECTIVE DATE; TERMINATION OF SOLICITATION
The Expiration Date will be 5:00 P.M., New York City time, on
August 27, 1999, unless the Solicitation Period is extended.
The Company expressly reserves the right (i) to extend the
Solicitation Period, from time to time, until the Requisite
Consents have been obtained, (ii) to terminate the Solicitation
at any time prior to the Effective Date including prior to the
end of the Solicitation Period (whether or not the Requisite
Consents have been received) and (iii) to amend, at any time or
from time to time, the terms of the Solicitation. Any such
extension of the Solicitation Period shall be effective if the
Company gives oral or written (by facsimile or otherwise) notice
thereof to the Trustee by the close of the first Business Day
following any previously announced Expiration Date. Any
termination or amendment of the Solicitation shall be effective
upon written notice thereof from the Company to the Trustee. As
promptly as practicable following any such extension, termination
or amendment, notice thereof shall be given by the Company to
each Holder by press release or other public announcement (or, at
the election of the Company, by written notice to each Holder of
the Notes). As promptly as practicable following the close of
the purchase of NIF or a decision not to complete the purchase,
notice thereof shall be given by the Company to each Holder by
press release or other public announcement (or, at the election
of the Company, by written notice to each Holder of the Notes).
MODIFICATIONS
The Company is not bound by the language of the Proposed
Amendments set forth in Exhibit 1. Until the closing of the
purchase of the NIF Shares, the Company expressly reserves the
right to modify, at any time or from time to time, the terms of
this Solicitation and the Proposed Amendments in any manner it
deems necessary or advisable, if the Company certifies that such
modifications are not, in the aggregate, adverse to Holders of
the Notes (compared to the terms of this Solicitation and the
Proposed Amendments described herein). Consents given prior to
such modifications will remain valid and effective and will
constitute Consents to the Proposed Amendments, as so modified.
The Company will not be obligated to deliver notice of such
amendments to the Holders of the Notes prior to the Effective
Date.
FAILURE TO OBTAIN REQUISITE CONSENTS OR TO PURCHASE NIF
In the event that the Requisite Consents are not obtained by
the close of the Solicitation Period, the Company does not have
the Requisite Consents on the Effective Date or the Company is
unable to complete the purchase of NIF, the Consents theretofore
13
received will be voided and the Proposed Amendments will not be
effectuated.
CONSENT PROCEDURES
Only those persons who are Holders of the Notes as of August
6, 1999 (the Record Date), may execute and deliver a Consent. A
beneficial owner of Notes who is not the Holder of such Notes on
the Record Date (e.g., a beneficial holder whose Notes are
registered in the name of a nominee such as a brokerage firm)
must (i) arrange for the Holder to execute the Consent and
deliver it to the Solicitation Agent on such beneficial owner's
behalf or to such beneficial owner for forwarding to the
Solicitation Agent by such beneficial owner or (ii) obtain a duly
executed proxy from the Holder authorizing the beneficial holder
to execute and deliver to the Solicitation Agent a Consent on
behalf of such registered holder. A form of proxy that may be
used for such purpose is included in the Consent.
ANY BENEFICIAL OWNER OF NOTES HELD OF RECORD BY THE
DEPOSITORY TRUST COMPANY ("DTC") OR ITS NOMINEE, THROUGH
AUTHORITY GRANTED BY DTC ("BOOK ENTRY NOTES"), MAY DIRECT THE DTC
PARTICIPANT THROUGH WHICH SUCH BENEFICIAL OWNER'S BOOK ENTRY
NOTES ARE HELD IN DTC TO EXECUTE, ON SUCH BENEFICIAL OWNER'S
BEHALF, OR MAY OBTAIN A PROXY FROM SUCH DTC PARTICIPANT AND
EXECUTE DIRECTLY, AS IF SUCH BENEFICIAL OWNER WERE A REGISTERED
HOLDER, A CONSENT WITH RESPECT TO BOOK ENTRY NOTES BENEFICIALLY
OWNED BY SUCH BENEFICIAL OWNER ON THE DATE OF EXECUTION. FOR
PURPOSES HEREOF, THE TERM "RECORD HOLDER" OR "REGISTERED HOLDER"
SHALL BE DEEMED TO INCLUDE DTC PARTICIPANTS. A FORM OF PROXY
WHICH MAY BE USED FOR THIS PURPOSE IS ATTACHED TO THE CONSENT.
HOLDERS OF NOTES WHO WISH TO CONSENT TO THE PROPOSED
AMENDMENTS SHOULD MAIL, HAND DELIVER, SEND BY OVERNIGHT COURIER
OR FAX (CONFIRMED ON OR BEFORE THE EXPIRATION DATE BY PHYSICAL
DELIVERY) THEIR PROPERLY COMPLETED AND EXECUTED CONSENTS TO THE
SOLICITATION AGENT AT THE ADDRESS SET FORTH ON THE CONSENT IN
ACCORDANCE WITH THE INSTRUCTIONS SET FORTH HEREIN AND THEREIN.
All Consents that are properly completed, signed and
delivered to the Solicitation Agent will be given effect in
accordance with the specifications thereof (unless such Consent
is revoked prior to the Effective Date). If none of the boxes on
the Consent are marked, but the Consent is otherwise properly
completed and signed, the Holder will be deemed to have consented
to the Proposed Amendments.
A Consent must be executed by the Holders in exactly the same
manner as such Holder(s) name appears on such Holder's Notes. If
Notes to which a Consent relates are held of record by two or
more joint holders, all such holders must sign the Consent. If a
14
Consent is signed by a trustee, executor, administrator,
guardian, attorney-in-fact, or other person acting in a fiduciary
capacity, such person must so indicate when signing and must
submit with the Consent appropriate evidence of authority to
execute the Consent. In addition, if a Consent relates to less
than the total principal amount of Notes registered in the name
of such Holder, the Holder must list the certificate numbers (if
applicable) and principal amount of Notes registered in the name
of such Holder to which the Consent relates. If Notes are
registered in different names, separate Consents must be executed
covering each form of registration. If a Consent is executed by
a person other than the Holder, then it must be accompanied by
the proxy set forth on the Consent duly executed by the Holder.
All questions as to the validity, form, eligibility
(including time of receipt) for Consent Fees and revocation of
Consents will be determined by the Company in its sole
discretion, which determination will be conclusive and binding
subject to such final review as may be prescribed by the Trustee
concerning proof of execution and ownership. The Company
reserves the absolute right to reject any or all Consents that
are not in proper form or the acceptance of which would, in the
opinion of the Company or its counsel, be unlawful. The Company
also reserves the right, subject to such final review as the
Trustee prescribes for proof of execution and ownership, to waive
any defects or irregularities in connection with deliveries of a
particular Consent. Unless waived, any defects or irregularities
in connection with deliveries of Consents must be cured within
such time as the Company determines. None of the Company, any of
its affiliates, the Trustee, the Solicitation Agent or any other
person shall be under any duty to give any notification of any
such defects, irregularities or waivers, nor shall any of them
incur any liability for failure to give such notification.
Deliveries of Consents will not be deemed to have been made until
any irregularities or defects therein have been cured or waived.
The Company's interpretation of the terms and conditions of this
Solicitation shall be conclusive and binding.
REVOCATION OF CONSENTS
Pursuant to the Indenture, only the Holder of Notes as of the
Record Date is entitled to revoke a Consent previously given with
respect to such Notes, notwithstanding any transfer of the Notes
after the Record Date. Each properly completed and executed
Consent will be counted, notwithstanding any transfer of the
Notes to which such Consent relates, unless prior to the
Effective Date the Solicitation Agent receives written notice of
revocation from the Holder of such Notes as of the Record Date.
Consequently, the purchaser of a Note with respect to which a
Consent has been delivered by the Holder thereof will be bound by
such Consent.
15
A notice of revocation of a Consent must indicate the
certificate number or numbers of the Note(s) to which such
revocation relates (or information sufficient to enable the
Company to identify such Note (s)), as well as the aggregate
principal amount represented by such Note(s). A properly
executed Consent with the "Does Not Consent" box marked,
submitted in accordance with the foregoing procedures, will be
treated as a revocation of a Consent.
A revocation of a Consent shall be effective only as to the
Notes listed on the revocation and only if such revocation
complies with the provisions of this Solicitation Statement. If
a revocation is signed by a trustee, executor, administrator,
guardian, attorney-in-fact, or other person acting in a fiduciary
capacity, such person must so indicate when signing and must
submit with the revocation appropriate evidence of authority to
execute the revocation. A beneficial owner of Notes who is not
the Holder of such Notes as of the Record Date must (i) arrange
with the Holder as of the Record Date to execute and deliver
either to the Solicitation Agent on such beneficial owner's
behalf, or to such beneficial owner for forwarding to the
Solicitation Agent by such beneficial owner, a revocation of any
Consent already given with respect to such Notes or (ii) obtain a
duly executed proxy from the Holder as of the Record Date
authorizing such beneficial holder to act on behalf of such
Holder as to such Consent.
The Company reserves the right to contest the validity of any
revocation, and all questions as to validity (including time of
receipt) of any revocation will be determined by the Company in
its sole discretion, which determination will be conclusive and
binding subject only to such final review as may be prescribed by
the Trustee concerning proof of execution and ownership. None of
the Company, any of its affiliates, the Trustee, the Solicitation
Agent or any other person will be under any duty to give
notification of any defects or irregularities with respect to any
revocation nor shall any of them incur any liability for failure
to give such notification.
SOLICITATION AGENT
The Company has retained ChaseMellon Consulting as the
Solicitation Agent in connection with this Solicitation. In such
capacity the Solicitation Agent will solicit and collect
Consents, may request brokers, dealers, commercial banks, trust
companies and other nominees to forward this statement and
related materials to beneficial owners of Notes, and will respond
to inquiries of Holders of the Notes. The Solicitation Agent
will receive a fee for its services as such and the Company has
agreed to reimburse the Solicitation Agent for certain expenses
incurred in connection with this Solicitation.
16
Requests for additional copies of this Solicitation Statement
and the Consent and other related documents should be directed to
the Solicitation Agent:
ChaseMellon Consulting
450 West 33rd St.
14th Floor
New York, New York 10001
Attn: Peter Henshaw
Tel: (212) 273-8035
Fax: (212) 273-8100
FINANCIAL ADVISOR
The Company has retained PaineWebber Incorporated
("PaineWebber" or the "Financial Advisor") as its financial
advisor in connection with this Solicitation. The Financial
Advisor has not been retained to render an opinion as to the
fairness of this Solicitation. PaineWebber will receive a fee in
connection with this Solicitation and will be reimbursed for its
reasonable out-of-pocket expenses. The Company has agreed to
indemnify the Financial Advisor against certain liabilities and
expenses, including liabilities under securities laws, in
connection with this Solicitation.
Questions with respect to the terms of this Solicitation
should be directed to:
PaineWebber Incorporated
1285 Avenue of the Americas
New York, NY 10019
Mark Bernstein Dana Sands
Tel: (212) 713-4789 Tel: (212) 713-4066
Fax: (212) 713-9684
MISCELLANEOUS
The Company will also pay brokerage houses and other
custodians, nominees and fiduciaries the reasonable out-of-pocket
expenses incurred by them in forwarding copies of this
Solicitation Statement and related documents to the beneficial
owners of the Notes and in handling or forwarding deliveries of
Consents by their customers.
ADDITIONAL INFORMATION
The Company is subject to the information requirements of the
Section 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act") applicable to "foreign private issuers." In
addition, the Company is required by the Indenture to file with
the Securities and Exchange Commission (the "Commission") Annual
17
Reports on Form 20-F, including annual financial statements
audited by an internationally recognized independent public
accountant with respect to such year and prepared in accordance
with U.S. GAAP, Reports on Form 6-K containing unaudited
consolidated financial statements (including a balance sheet and
statements of income, changes in stockholders' equity and cash
flows, for and as of the end of each of the first three quarters
of each fiscal year and, in respect of the statements of income
and cash flows, for the period between the end of the preceding
fiscal year and the end of the most recent fiscal quarter (with
comparable financial statements for such periods of the
immediately preceding fiscal year)) and a related Management's
Discussion and Analysis of Financial Condition and Results of
Operations, and after the occurrence of an event required to be
therein reported, such other Reports on Form 6-K containing
substantially the same information required to be contained in a
Report on Form 8-K. Such material may also be accessed
electronically at the Commission's site on the World Wide Web
located at http://www.sec.gov.
Holders of the Notes may refer to the following documents
filed with the Commission pursuant to the Exchange Act, which are
incorporated herein by reference: (1) the Company's Annual Report
on Form 20-F for the fiscal year ended September 30, 1998 and (2)
the Company's Reports on Form 6-K containing its quarterly
reports for the periods ended December 31, 1998, and March 31,
1999. Holders of the Notes are encouraged to consult with their
own counsel and tax and financial advisers regarding the effects
of the Proposed Amendments. ON OR AFTER AUGUST 27, 1999, THE
SOLICITATION AGENT WILL ADVISE HOLDERS UPON REQUEST WHETHER THE
REQUISITE CONSENTS HAVE BEEN OBTAINED AND/OR WHETHER THE
SOLICITATION PERIOD HAS BEEN EXTENDED.
18
CERTAIN INCOME TAX CONSIDERATIONS
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following discussion summarizes the principal United
States federal income tax consequences arising out of the
proposed transactions described in this Solicitation Statement
that are expected to apply to the Holders of Notes. The
discussion is based upon existing provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), the existing
Treasury Regulations promulgated thereunder, and the current
judicial and administrative interpretations thereof as in effect
on the date of this Solicitation Statement, all of which are
subject to possible prospective or retroactive change. The
discussion does not address all aspects of United States federal
income taxation that may be relevant to particular Holders in
light of their personal investment or tax circumstances or to
certain types of Holders subject to special treatment under the
United States federal income tax laws (for example, financial
institutions, insurance companies, non-United States persons and
entities, tax-exempt entities, broker-dealers and taxpayers
subject to the alternative minimum tax). The discussion further
assumes that Holders hold their Notes as "capital assets"
(generally, property held for investment) within the meaning of
Section 1221 of the Code. Finally, the discussion below does not
address any state, local or foreign income tax consequences is
therefore included herein for general information only. EACH
HOLDER IS ADVISED TO CONSULT SUCH HOLDER'S OWN TAX ADVISOR AS TO
THE SPECIFIC TAX CONSEQUENCES TO SUCH HOLDER OF THE TRANSACTIONS
DESCRIBED IN THIS SOLICITATION STATEMENT, INCLUDING THE
APPLICATION AND EFFECT OF STATE, LOCAL AND FOREIGN INCOME AND
OTHER TAX LAWS.
CONSEQUENCES OF THE PROPOSED AMENDMENTS
In June, 1996, the Treasury Department issued final
regulations (the "Regulations") dealing with the tax consequences
of the modification of debt instruments. Under the Regulations,
the modification of the terms of an existing debt instrument,
including by means of an amendment, will result in a deemed
taxable exchange of the old instrument for a new modified
instrument if the modification constitutes a "significant
modification." The Company believes that the Proposed Amendments
will not be regarded as a significant modification within the
meaning of the Regulations, and the Company therefore intends to
treat the Notes as not having been exchanged for new notes.
19
TREATMENT OF THE CONSENT FEE
While not entirely clear under current U.S. federal income
tax laws, the Company believes that a Consent Fee received by a
Holder that executes and timely delivers a Consent to the
Proposed Amendments should be treated for United States federal
income tax purposes as ordinary income at the time it accrues or
is paid in accordance with the Holder's method of accounting for
such purposes.
BACKUP WITHHOLDING
Certain noncorporate holders of Notes may be subject to
backup withholding at the rate of 31% with respect to receipt of
the Consent Fee. Generally, backup withholding is applied only
when: (a) the taxpayer (i) fails to furnish or certify its
correct taxpayer identification number (which, in the case of an
individual, would be his or her social security number) to the
payor in the manner required, or (ii) under certain
circumstances, fails to certify that it has not been notified by
the IRS that it is subject to backup withholding for failure to
report certain payments, or (b) the IRS has notified the payor
that the taxpayer identification number furnished by the taxpayer
is incorrect or has otherwise notified the payor that backup
withholding is required. Amounts withheld under the backup
withholding rules will be allowed as a refund or credit against a
Holders' federal income tax liability, provided that such Holder
furnishes certain required information to the IRS.
20
EXHIBIT 1
SUPPLEMENT NO. 2 TO INDENTURE
Supplement No. 2, dated as of _____________, 1999
("Supplement No. 2") to the Indenture, dated as of June 19, 1998,
as amended (the "Indenture"), between Cenargo International plc
(the "Company"), the Subsidiary Guarantors (as defined therein)
and Bankers Trust Company, as Trustee. Terms not defined herein
shall have the meaning set forth in the Indenture.
WITNESSETH
WHEREAS, the Company has requested that the Indenture be
amended to make certain changes to permit the Company to purchase
Norse Irish Ferries Limited ("NIF") which operates vessels in the
Irish Sea ferry market, and the Eaglescliffe Logistics Center
("Eaglescliffe"), such amendments to be made with the consent of
the majority of registered holders of the Company's 9 3/4% First
Priority Ship Mortgage Notes due 2008 (the "Holders").
NOW, THEREFORE, in consideration of the premises and
mutual covenants herein contained, the parties hereto agree as
follows:
1. Definitions. Unless otherwise amended by the terms
of this Supplement No. 2, capitalized terms used but not defined
herein shall have the respective meanings assigned to them as set
forth in the Indenture.
2. Authority for this Supplement No. 2. This
Supplement No. 2 is entered into by the parties hereto pursuant
to and in accordance with the terms and conditions set forth in
Section 9.02 of the Indenture.
3. Amendments. The Indenture is hereby amended as
follows:
(a) Add the following definitions to Section 1.01
DEFINITIONS:
"Eaglescliffe Collateral" consists of the land and
buildings that comprise the Eaglescliffe Logistics
Center ("Eaglescliffe"), located in Stockton on
Tees, England.
(b) Amend the definition of "Collateral" by inserting
at the end of the definition the following: "and
(6) all of the Company's right, title and interest
21
in (i) the issued and outstanding A and B share
capital of Norse Irish Ferries Limited ("NIF")
that were purchased by the Company (the "NIF
Shares"), (ii) NIF's assets and accounts
receivable and (iii) the Eaglescliffe Collateral
(as defined below)."
(c) Delete the definition of "Independent Appraiser"
in its entirety and replace it with the following:
"Independent Appraiser" means a Person (i)
engaged in a business which includes appraising
ships from time to time or, for the appraisal of
NIF, engaged in a business which includes the
appraisal of companies or, for the appraisal of
Eaglescliffe, engaged in a business which includes
appraising real estate and (ii) who (a) is in fact
independent of the parties to the transaction in
question and their Affiliates, (b) does not have
any direct financial interest or any material
indirect financial interest in Cenargo or any of
its Restricted Subsidiaries or any of their
respective Affiliates and (c) is not connected
with Cenargo, any of the Restricted Subsidiaries
or any such Affiliates as an officer, director,
employee, promoter, underwriter, trustee, partner
or person performing similar functions.
(d) Delete the definition of "Qualified Substitute
Vessel" in its entirety and replace it with the
following:
"Qualified Substitute Vessel" means, as of any
date, (x) if the vessel is a ship, one or more
ships which (i) are not Mortgaged Vessels as of
such date, (ii) will be, upon acquisition thereof,
wholly owned by Cenargo or a Wholly Owned
Restricted Subsidiary and (iii) are registered
under the laws of Eligible Jurisdictions, (y) NIF
or (z) Eaglescliffe.
(e) Delete the definition of "Security Agreements" in
its entirety and replace it with the following:
"Security Agreements" includes the Mortgages, the
Assignments of Contract Rights, the Assignments of
Freights and Hires and the Manager's Subordination
Letters; in respect of NIF, a pledge of the NIF
Shares and a first priority fixed and floating
charge over all assets and accounts receivable of
NIF; in respect of Eaglescliffe, a first priority
22
fixed and floating charge over the Eaglescliffe
Collateral; in respect of the m.v. Moondance, a
tripartite agreement among Proofbrand Limited,
Seatruck Ferries Limited and the Trustee and an
assignment of charter earnings and other earnings
between Proofbrand Limited and the Trustee; and
all additional security agreements executed
pursuant to Section 2.13 of this Indenture.
(f) Delete the definition of "Vessel" in its entirety
and replace it with the following:
"Vessel" means (x) a ship owned by and registered
(or to be owned by and registered) in the name of
Cenargo and any of its Subsidiaries or operated by
Cenargo or any of its Subsidiaries pursuant to a
lease or other operating agreement constituting a
Capital Lease Obligation or a U.K. Tax Lease, (y)
NIF or (z) Eaglescliffe, in each case together
with any related equipment, fixtures, and
additions or improvements.
(g) Section 4.21 is amended by adding the following
language:
(i) to the end of Subsection (b) after "with respect
to the Qualified Substitute Vessel;" the
following: "and if the Qualified Substitute Vessel
is NIF, (x) a fully executed, first priority,
fixed and floating charge over all of NIF's assets
and accounts receivable in appropriate form for
recording or registration in the appropriate
governmental offices if required by applicable law
in order to perfect the security interests therein
created and (y) a pledge of the NIF Shares; and if
the Qualified Substitute Vessel is Eaglescliffe, a
first priority fixed and floating charge over the
Eaglescliffe Collateral, in favor of the Trustee."
(ii) To the end of Subsection (c), the words "except
when the Qualified Substitute Vessel is NIF or
Eaglescliffe."
(iii) In Subsection (d), the words ", NIF or
Eaglescliffe" after the words "of such vessels."
(iv) To the end of Subsection (e), the words "except
when the Qualified Substitute Vessel is NIF or
Eaglescliffe."
23
(v) To the end of Subsection (f), the words "except
when the Qualified Substitute Vessel is NIF or
Eaglescliffe."
(vi) To the end of Subsection (i), the following: "or
if the Qualified Substitute Vessel is NIF, a
signed Opinion or Opinions of Counsel to the
Company (a) expert in the laws of the jurisdiction
where the fixed and floating charge over NIF's
assets and accounts receivable and the pledge of
the NIF Shares and the fixed and floating charge
over the Eaglescliffe Collateral are to be
recorded or otherwise perfected and (b) expert in
the laws of the jurisdiction governing each of its
other Security Agreements with respect to NIF and
Eaglescliffe, and (c) expert in the laws of the
jurisdiction of incorporation of NIF, in each case
substantially to the effect of the corresponding
opinions delivered in connection with the
Mortgages and other Security Documents at the time
of initial issuance of the Securities."
4. Governing Law. This Supplement No. 2 shall be
governed by, and construed in accordance with, the laws of the
State of New York, but without giving effect to applicable
principles of conflicts of law to the extent that the application
of the laws of another jurisdiction would be required thereby.
5. Effectiveness. Except as expressly modified,
amended or supplemented hereby, the Indenture shall remain in
full force and effect.
6. Counterparts. This Supplement No. 2 may be
executed in any number of counterparts, and by different parties
hereto on separate counterparts, each of which, when so executed
and delivered shall be an original but all such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Supplement No. 2 to be duly executed and
delivered as of the date first above written.
CENARGO INTERNATIONAL PLC
By:_____________________________
Name:
Title:
BELFAST FREIGHT FERRIES LIMITED
CENARGO BROKING SERVICES LIMITED
CENARGO FAST FERRIES (NO. 2) PLC
24
CENARGO FINANCE LIMITED
CENARGO LIMITED
CENARGO MARINE LIMITED
CENARGO NAVIGATION (HONG KONG) LIMITED
CENARGO NAVIGATION LIMITED
CENARGO PROPERTY LIMITED
CENARGO SHIPPING LIMITED
DUNCAN INTERNATIONAL TRADING LIMITED
FERRIMAROC LIMITED
FLOOD (STEVEDORES) LIMITED
J. LEETE & SON LIMITED
IMPERIAL WHARF CO. (GREENWICH) LIMITED
ISOLINE LIMITED
MERCHANT FERRIES (HOLDINGS) LIMITED
MERCHANT FERRIES LIMITED
MERCHANT FERRIES (IRELAND) LIMITED
M.T.S. (SHIPPING) LIMITED
PROOFBAND LIMITED
SCRUTTONS ADVANCE MATERIALS LIMITED
SCRUTTONS FINANCE LIMITED
SCRUTTONS INTERNATIONAL LIMITED
SCRUTTONS MALTBY LIMITED
SCRUTTONS (NI) LIMITED
SCRUTTONS OVERSEAS HOLDINGS LIMITED
SCRUTTONS PLC
SCRUTTONS SECURITY GROUP LIMITED
VICTORIA DEEP WATER TERMINAL LIMITED
By: _______________________________
Name:
Title:
BANKERS TRUST COMPANY, not in its individual capacity, but solely
as Trustee.
By:_____________________________
Name:
Title:
25
Exhibit D
CENARGO INTERNATIONAL PLC
SUPPLEMENT NO. 1 TO CONSENT SOLICITATION STATEMENT
SOLICITATION OF CONSENTS TO
PROPOSED AMENDMENTS TO THE INDENTURE
GOVERNING ITS
9 3/4% FIRST PRIORITY SHIP MORTGAGE NOTES
DUE JUNE 15, 2008
THIS IS SUPPLEMENT NO. 1 TO THE CONSENT SOLICITATION STATEMENT
DATED AUGUST 9, 1999 (THE "SOLICITATION STATEMENT"). SUBJECT TO
THE TERMS AND CONDITIONS SET FORTH IN THE SOLICITATION STATEMENT,
AS MODIFIED HEREBY AND FROM TIME TO TIME, CENARGO INTERNATIONAL
PLC (THE "COMPANY") WILL ACCEPT ALL PROPERLY COMPLETED, EXECUTED
AND DATED CONSENT FORMS (THE "CONSENTS") RECEIVED BY CHASEMELLON
SHAREHOLDER SERVICES, L.L.C. (THE "SOLICITATION AGENT") (AND NOT
SUBSEQUENTLY REVOKED) AFTER 5:00 P.M., NEW YORK CITY TIME, ON
AUGUST 9, 1999 AND AT OR PRIOR TO 5:00 P.M., NEW YORK CITY TIME,
ON SEPTEMBER 17, 1999 (AND, AS SUCH TIME AND DATE MAY BE FURTHER
EXTENDED AT THE COMPANY'S OPTION, THE "EXPIRATION DATE"; SUCH
PERIOD, AS IT MAY BE SO EXTENDED, THE "SOLICITATION PERIOD"),
FROM REGISTERED HOLDERS ("HOLDERS") OF THE COMPANY'S 9 3/4% FIRST
PRIORITY SHIP MORTGAGE NOTES DUE JUNE 15, 2008 (THE "NOTES").
THE COMPANY WILL NOT BE OBLIGATED TO ACCEPT ANY CONSENTS RECEIVED
AFTER THE CLOSE OF THE SOLICITATION PERIOD. ONLY REGISTERED
HOLDERS OF RECORD OF THE NOTES AS OF 5:00 P.M., NEW YORK CITY
TIME ON AUGUST 6, 1999 (THE "RECORD DATE"), AS REFLECTED IN THE
RECORDS OF BANKERS TRUST COMPANY (THE "TRUSTEE"), OR A BENEFICIAL
OWNER WHO HAS COMPLIED WITH THE PROCEDURES SET FORTH IN THE
"INSTRUCTIONS FOR HOLDERS" CONTAINED IN THE CONSENT ENCLOSED WITH
THE SOLICITATION STATEMENT, WILL BE ELIGIBLE TO CONSENT TO THE
PROPOSED AMENDMENTS OR TO RECEIVE THE CONSENT FEE WITH RESPECT
THERETO. CONSENTS MAY BE REVOKED AT ANY TIME PRIOR TO THE
EFFECTIVE DATE.
The terms of the Solicitation, are hereby amended and
modified in the manner set forth in this supplement ("Supplement
No. 1"). All terms and conditions set forth in the Solicitation
Statement which are not expressly amended or modified herein
shall remain in effect. The Solicitation Statement is hereby
incorporated by reference in its entirety.
Unless defined herein or the context otherwise requires,
capitalized terms used herein shall have the meanings assigned to
such terms in the Indenture and the Solicitation Statement.
THE DATE OF THIS SUPPLEMENT NO. 1 IS SEPTEMBER 10, 1999
CENARGO INTERNATIONAL PLC
SUPPLEMENT NO. 1 TO THE SOLICITATION STATEMENT
INTRODUCTION
The Solicitation Statement has been amended and modified
by the Company as set forth herein.
The terms of the Solicitation are amended hereby as
follows:
-- the Expiration Date is extended to September 17,
1999, and
-- the Consent Fee to be paid by the Company is
increased from $15 to $20 for each $1,000 in
principal amount of the Notes with respect to which
a Consent is received as of the Expiration Date and
not revoked as of the Effective Date.
In addition, the Proposed Amendments to the Indenture have
been modified hereby as follows (such Proposed Amendments, as
modified hereby, being referred to as the "Proposed Amendments,
as modified"):
-- to reduce the date by which the Company has agreed
to file its Annual Reports on Form 20-F from 120
days to 90 days after the end of each fiscal year;
-- to reduce the date by which the Company has agreed
to file its quarterly reports on Form 6-K from 60
days to 45 days after the end of each of the first
three fiscal quarters each fiscal year;
-- to reduce the aggregate amount of distributions
(Restricted Payments) the Company may make to its
shareholders by $10 million;
-- to provide that upon the sale of a Mortgaged
Vessel, the funds applied to the collateral pool
will be the GREATER OF the Sale Redemption Amount
(the amount presently required to be applied) and
the Net Available Cash received from the sale of
such Mortgaged Vessel; and
-- to reflect a revision in the permitted application
of the Escrow Funds such that the amount of Escrow
Funds to be applied to the acquisitions of NIF and
Eaglescliffe will be reduced to $24.1 million from
2
$32.0 million in the aggregate, with the balance of
the Escrow Funds ($13.7 million) to be applied to
the purchase of two Qualified Substitute Vessels,
as currently permitted pursuant to the Indenture.
These changes to the Solicitation and the Proposed Amendments
are designed to induce the Holders of a majority of the aggregate
principal amount of the Notes to consent to the Proposed
Amendments, as modified. The Company believes that the Proposed
Amendments, as modified, are in the best interests of both the
Company and the Holders of the Notes.
HOLDERS MAY ONLY CONSENT TO ALL OF THE PROPOSED AMENDMENTS, AS
MODIFIED, WHICH INCLUDE THE PROPOSED AMENDMENTS DESCRIBED IN THE
SOLICITATION STATEMENT AND THE CHANGES TO THE PROPOSED AMENDMENTS
TO THE INDENTURE DESCRIBED IN THIS SUPPLEMENT NO. 1. THE
PROPOSED AMENDMENTS, AS MODIFIED, ARE BEING PRESENTED AS ONE
PROPOSAL, AS MORE FULLY DESCRIBED IN THE REVISED FORM OF
SUPPLEMENT NO. 2 TO THE INDENTURE, ANNEXED HERETO AND MARKED FOR
CHANGES FROM THAT ATTACHED TO THE SOLICITATION STATEMENT.
CONSEQUENTLY, THE DELIVERY OF A CONSENT BY A HOLDER OF NOTES IS A
CONSENT TO ALL OF THE PROPOSED AMENDMENTS, AS MODIFIED.
THIS SUPPLEMENT NO. 1 INCORPORATES BY REFERENCE THE COMPLETE
SOLICITATION STATEMENT. ALL TERMS OF THE SOLICITATION STATEMENT
NOT EXPRESSLY AMENDED OR MODIFIED HEREIN REMAIN IN EFFECT.
THE CHANGES TO THE TERMS OF THE SOLICITATION MADE BY THIS
SUPPLEMENT NO. 1 ARE AS FOLLOWS:
EXPIRATION DATE; SOLICITATION PERIOD
The Expiration Date has been extended to 5:00 P.M., New York
City time, on September 17, 1999, unless extended again at the
Company's option.
The Solicitation Period will end at the Expiration Date.
The purpose of this extension is to give the Holders of the
Notes sufficient time to consider and consent to the Proposed
Amendments, as modified by the additional proposed amendments to
the Indenture set forth herein.
CONSENT FEE
The Consent Fee being offered by the Company has been raised
from $15 to $20.
Subject to the terms and conditions set forth in the
Solicitation Statement, the Company will make a payment of $20 in
cash for each $1,000 in principal amount of Notes for which a
validly delivered and unrevoked Consent has been received by the
3
Solicitation Agent at or prior to the end of the Solicitation
Period from the Holder thereof on the Record Date, provided,
however, that no Consent Fee shall be paid unless the Proposed
Amendments, as modified, are effectuated. If the Consent of a
Holder is not accepted pursuant to the Solicitation, or such
Holder's Consent is either received after, or revoked and not
properly redelivered at or prior to, the end of the Solicitation
Period, such Holder will not receive the Consent Fee, even though
the Proposed Amendments, as modified, if effected, will be
effective as to such Holder's Notes. Please refer to the section
labeled "Solicitation Procedures," beginning on page 10 of the
Solicitation Statement.
As noted, the Company will pay the Consent Fee only if
(1) the Holders of a majority in principal amount of the Notes
submit Consents and (2) the Proposed Amendments, as modified, are
effectuated.
EFFECT OF A CONSENT
The Proposed Amendments, as modified, are being presented as
one proposal, as more fully described in the revised form of
Supplement No. 2 to the Indenture, annexed hereto and marked for
changes from that attached to the Solicitation Statement.
Consequently, the delivery of a Consent by a Holder of Notes is a
consent to all of the Proposed Amendments, as modified, including
the additional proposed amendments set forth in this Supplement
No. 1.
Pursuant to the Indenture, the consent of the Holders of a
majority of the aggregate principal amount of the Notes is
required to effectuate the Proposed Amendments, as modified.
THE MODIFICATIONS MADE BY THIS SUPPLEMENT NO. 1 TO THE PROPOSED
AMENDMENTS ARE AS FOLLOWS:
CHANGE TO TIMELY PERIODIC REPORTING REQUIREMENT
The Company is currently required by Section 4.02 of the
Indenture to file with the SEC and provide the Trustee and
Holders (i) an Annual Report on Form 20-F within 120 days after
the end of each fiscal year and (ii) a quarterly report on Form
6-K within 60 days after the end of each of the first three
fiscal quarters of each fiscal year. The Company hereby proposes
amending Section 4.02 to reduce the time before which the Company
must release these periodic reports to 90 days for Annual Reports
and 45 days for quarterly reports. These changes will bring the
Company in line with the timing requirements to which U.S.
domestic corporations are subject for annual and quarterly
reports pursuant to the Securities Exchange Act of 1934.
4
ELIMINATION OF $10 MILLION OF RESTRICTED PAYMENTS
Restricted Payments, as defined in the Indenture, include
dividends and distributions to equity holders, payments to redeem
outstanding equity for value, repayments of loans that are
subordinate to the Notes, and investments that are not otherwise
permitted under the Indenture. Pursuant to Section 4.04(E) of
the Indenture, the Company is currently permitted to make $10
million of Restricted Payments. The Company proposes eliminating
that $10 million basket of permissible Restricted Payments.
INCREASE THE AMOUNT REQUIRED TO BE APPLIED TO COLLATERAL UPON
THE SALE OF A MORTGAGED VESSEL
Presently, the Indenture requires that upon the sale of a
Mortgaged Vessel, the Company must apply funds equal to the Sale
Redemption Amount to the Collateral and that such amount must be
used to purchase a Qualified Substitute Vessel or to redeem
Securities. Any remaining sale proceeds were available to the
Company on an unrestricted basis. The proposed amendment to the
Indenture would require that the Company apply to the Collateral
funds equal to THE GREATER OF the Sale Redemption Amount and the
Net Available Cash received, following the sale of a Mortgaged
Vessel. If effected, this amendment will require that at least
the entire amount of the net proceeds received by the Company
from the sale of a Mortgaged Vessel be applied to purchases of
new Collateral.
APPLICATION OF ESCROW FUNDS
The Escrow Funds currently aggregate $37.8 million. The
Company proposes to utilize the $37.8 million to acquire NIF,
Eaglescliffe and the vessels RIVER LUNE and SAGA MOON, as
described below.
The Company proposes to use $24.1 million of the Escrow Funds
to partially fund the purchases of NIF and Eaglescliffe.
Specifically, the Company proposes to use (i) $18.5 million of
the Escrow Funds to partially fund the purchase of NIF and (ii)
$5.6 million of the Escrow Funds to fund the entire purchase of
Eaglescliffe. This constitutes a reduction in the amount of
Escrow Funds to be applied to the acquisitions of NIF and
Eaglescliffe from an aggregate of $32.0 million set forth in the
Solicitation Statement. The Company anticipates using
approximately $24.4 million of unrestricted cash to fund the
balance of the cost of purchase of NIF as well as consent fees to
be paid to the Holders and related transaction expenses.
The Company, by November 15, 1999, will utilize the balance
of $13.7 million of Escrow Funds to acquire the vessels RIVER
LUNE and SAGA MOON, two roll-on, roll-off (or "RoRo") vessels
5
currently employed on the Company's Heysham to Dublin route. The
RIVER LUNE and SAGA MOON are both Qualified Substitute Vessels,
and the application of the Escrow Funds to their purchase is
currently permitted by the Indenture. The market value of the
two vessels is $15.5 million. Under the terms of the Indenture,
these assets will upon their acquisition constitute collateral
securing the Notes.
The employment of the vessels RIVER LUNE and SAGA MOON by the
Company is currently financed through capitalized leases. The
Company believes that the acquisition of the vessels will result
in a reduction of $3.0 million in annual expenses related to the
operation of the vessels for the term of the leases and will
eliminate $12.7 million of capitalized lease obligations from the
Company's balance sheet. The immediate effect of the purchases
will, therefore, be to increase cash flow and to reduce
indebtedness.
THE FORMS OF CONSENT AND PROXY WHICH WERE ENCLOSED WITH THE
SOLICITATION STATEMENT REMAIN VALID AND SHOULD BE USED BY THOSE
HOLDERS AND BENEFICIAL OWNERS OF NOTES WHO WISH TO CONSENT TO THE
PROPOSED AMENDMENTS, AS MODIFIED. PLEASE REFER TO THE SECTION
LABELED "SOLICITATION PROCEDURES: CONSENT PROCEDURES," ON PAGE 11
OF THE SOLICITATION STATEMENT FOR COMPLETE INSTRUCTIONS.
Requests for additional copies of this Supplement No. 1, the
Solicitation Statement and the Consent and other related
documents should be directed to the Solicitation Agent:
ChaseMellon Consulting
450 West 33rd St.
14th Floor
New York, New York 10001
Attn: Peter Henshaw
Tel: (212) 273-8035
Fax: (212) 273-8100
Questions with respect to the terms of this Solicitation
should be directed to:
PaineWebber Incorporated
1285 Avenue of the Americas
New York, NY 10019
Mark Bernstein
Tel: (212) 713-4786
Fax: (212) 713-9684
6
Exhibit E
CENARGO INTERNATIONAL PLC
CONSENTS TO AMENDMENT OF THE INDENTURE GOVERNING ITS
9 3/4% FIRST PRIORITY SHIP MORTGAGE NOTES DUE JUNE 15, 2008
BEFORE COMPLETING THIS CONSENT FORM,
PLEASE READ THE INSTRUCTIONS SET FORTH HEREIN.
The undersigned is a registered holder as of the close of
business on August 6, 1999 (a "Holder"), of 9 3/4% First Priority
Ship Mortgage Notes due June 15, 2008 ( the "Notes") of Cenargo
International Plc (the "Company"), issued under an indenture
dated as of June 19, 1998 (the "Indenture") between the Company,
the Subsidiary Guarantors (as defined therein) and Bankers Trust
Company, as trustee (in such capacity, the "Trustee"), which
Notes are identified on Exhibit A hereto.
CONSENT TO PROPOSED AMENDMENTS
As a Holder of such Notes, the undersigned hereby:
CONSENTS / / DOES NOT CONSENT / /
to the proposed amendments (the "Proposed Amendments") to be made
to the Indenture described in the Solicitation Statement
(hereinafter defined) in consideration of the Consent Fee.
The Proposed Amendments are described in the Company's
Consent Solicitation Statement dated August 9, 1999 (the
"Solicitation Statement"). If no election is specified, any
otherwise properly completed and signed consent form (the
"Consent") will be deemed a consent to the Proposed Amendments.
By execution hereof, the undersigned acknowledges receipt of the
Solicitation Statement and the exhibits and schedules thereto.
Such Consent is given hereunder in consideration of the
Consent Fee as described in the Solicitation Statement, which is
contingent on receipt of the Requisite Consents (hereinafter
defined) and such Holder's Consent.
Upon receipt by the Company prior to the Expiration Date of
Consents to the Proposed Amendments from the Holders of at least
a majority in aggregate principal amount of the Notes not owned
by the Company or any of its subsidiaries or affiliates (the
Requisite Consents), and subsequent presentation of the Requisite
Consents to the Solicitation Agent, the Company will proceed with
the purchase of NIF in accordance with the terms of the
Agreement. On the Effective Date, the Trustee, the Company and
the Subsidiary Guarantors will execute an amendment to the
Indenture in the form of Supplement No. 2 to the Indenture
evidencing the Proposed Amendments. The Proposed Amendments will
become effective on the Effective Date (as defined in the
Solicitation Statement).
Notwithstanding anything else contained herein, no Consent
Fee will be made to any holder of Notes unless at the Effective
Date the Company has the Requisite Consents and the purchase of
NIF is completed.
Unless otherwise specified by the undersigned, this Consent
relates to all Notes of which the undersigned is the Holder. If
this Consent relates to less than the aggregate principal amount
of Notes registered in the name of the Holder(s) list only the
certificate or account numbers and principal amounts of Notes to
which this Consent relates on Exhibit A attached hereto.
Otherwise, this Consent will be deemed to relate to the aggregate
principal amount of Notes registered in the name of such
Holder(s) or Participant(s).
A Consent hereby given, if effective, will be binding upon
the Holder of the Notes who gives such Consent and upon any
subsequent transferee or transferees of such Notes, subject only
to revocation by the delivery of a written notice of revocation
from the Holder thereof prior to the Effective Date, executed and
filed in the manner described in the Solicitation Statement.
This fully completed and executed Consent should be mailed,
hand delivered, sent by overnight courier, or telecopied
(confirmed by physical delivery), to:
By Mail:
ChaseMellon Shareholder Services
PO Box 3301
South Hackensack, NJ 07606
Attn: Reorganization Department
By Hand:
ChaseMellon Shareholder Services
120 Broadway
13th Floor
New York NY 10271
Attn: Reorganization Department
2
By Overnight:
ChaseMellon Shareholder Services
85 Challenger Road, Mail Drop-Reorg
Ridgefield Park, NJ 07660
Attn: Reorganization Department
Facsimile Transmission: (201) 296-4293
(for eligible institutions only)
Confirm facsimile by telephone ONLY(201) 296-4860
CONSENTS MUST BE RECEIVED BY THE SOLICITATION AGENT AS
SPECIFIED ABOVE, BEFORE 5:00 P.M. NEW YORK CITY TIME, ON AUGUST
27, 1999, UNLESS THE EXPIRATION DATE IS EXTENDED.
Date:
_________________________________
Signature(s) of Holder(s)
_________________________________
Signature(s) of Holder(s)
(WHEN SIGNING AS AN ATTORNEY, TRUSTEE OR GUARDIAN, PLEASE GIVE
YOUR FULL TITLE AS SUCH)
INSTRUCTIONS FOR EXECUTION BY BENEFICIAL OWNERS OF NOTES WHICH
ARE HELD OF RECORD BY DEPOSITORY TRUST COMPANY ("DTC") OR ITS
NOMINEE:
Any beneficial owner of Notes held of record by DTC or its
nominee, through authority granted by DTC, may direct the DTC
Participant through which such beneficial owner's Notes are held
in DTC to execute, on such beneficial owner's behalf, or may
obtain a proxy from such DTC Participant and execute directly, as
if such beneficial owner were a Holder, a Consent with respect to
Notes beneficially owned by such beneficial owner on the date of
execution. For purposes hereof, the term "record holder" or
"Holder" shall be deemed to include DTC Participants. A form of
proxy which may be used for this purpose is attached to this
Consent.
ACCORDINGLY, EITHER (I) DTC PARTICIPANTS WHO ARE BENEFICIAL
OWNERS OR DIRECTED BY BENEFICIAL OWNERS SHOULD SIGN ABOVE OR
(II) BENEFICIAL OWNERS WHO HAVE OBTAINED A PROXY FROM A DTC
PARTICIPANT SHOULD SIGN ABOVE AS AN ATTORNEY-IN-FACT FOR SUCH DTC
PARTICIPANT.
3
INSTRUCTION
IMPORTANT--READ CAREFULLY
This Consent must be executed by the Holder(s) in exactly the
same manner as the name(s) appear(s) on their Notes. Joint
owners must all sign. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact or other person acting
in a fiduciary capacity, such person should so indicate when
signing and should submit to the Company appropriate evidence
(satisfactory to the Company) of such person's authority so to
act. Signatures need not be guaranteed if the person executing
the Consent is a bank, broker, dealer, credit union, savings
association or other entity that is a member in good standing of
a medallion program approved by the Securities Transfer
Association, Inc. (each being hereinafter referred to as an
"Eligible Institution") or if the person executing the Consent is
the Holder of the Notes. IN ALL OTHER CASES, ALL SIGNATURES MUST
BE GUARANTEED BY AN ELIGIBLE INSTITUTION. If Notes owned by a
Holder are registered in different names, separate Consents must
be executed covering each form of registration.
IMPORTANT TAX INFORMATION
Under the federal tax law, payments that are made to a Holder
with respect to its Consent may be subject to backup withholding.
A Holder whose Consent is accepted is required by law to provide
the Company with his, her or its correct taxpayer identification
number on Substitute Form W-9 attached in order to avoid backup
withholding. If such Holder is an individual, the taxpayer
identification number is his or her social security number. In
addition, if the Company is not provided with the correct
taxpayer identification number, the Holder may be subject to a
$50 penalty imposed by the Internal Revenue Service.
Exempt Holders (including, among others, all corporations and
certain foreign individuals) are not subject to these backup
withholding and reporting requirements. In order for a foreign
individual to qualify as an exempt recipient, that Holder must
submit a statement, signed under penalties of perjury, attesting
to that individual's exempt status. See the enclosed Guidelines
for Certification of Taxpayer Identification Number on Substitute
Form W-9 for additional instructions.
If backup withholding applies, the Company is required to
withhold 31 percent of any such payments made to the Holder.
Backup withholding is not an additional tax. Rather, the tax
withheld pursuant to the backup withholding rule will be
available as a credit against such person's overall tax
liability. If withholding results in an overpayment of taxes, a
refund may be obtained from the Internal Revenue Service.
4
WHAT NUMBER TO GIVE THE COMPANY
The Holder is required to give the Company the taxpayer
identification number of the Holder of the Notes. If the Notes
are registered in more than one name or are not registered in the
name of the actual owner, consult the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute
Form W-9 to determine which number to report.
5
DESCRIPTION OF NOTES
____________________________________________________________________________
Name(s) and Address(es) Certificate(s) as to which Consent
is Given of Holders
(Attach additional list, if necessary)
____________________________________________________________________________
Aggregate Principal
Principal Amount
Amount of of Notes
Certificate Notes Represented as to which
Number(s) by Certificate(s) Consent is Given
____________________________________________________________________________
6
FORM OF PROXY WITH RESPECT TO THE SOLICITATION
The undersigned hereby irrevocably appoints
_________________________ as attorney and proxy of the
undersigned, with full power of substitution, to execute and
deliver the Consent on which this form of proxy is set forth with
respect to the Notes consisting of 9 3/4% First Priority Mortgage
Notes due June 15, 2008 of Cenargo International Plc in
accordance with the terms of the Solicitation described in the
Solicitation Statement dated August 9, 1999, with all the power
the undersigned would possess if consenting personally. THIS
PROXY IS IRREVOCABLE AND IS COUPLED WITH AN INTEREST AND SHALL
EXPIRE ON December 31, 1999. The aggregate principal amount and
serial numbers of Notes as to which this Proxy is given are set
forth below.
Aggregate Principal Amount of Notes Certificate Number(s)
___________________________________ ______________________
_________________
* Insert name of beneficial owner.
IF THE NOTES ARE OWNED BY TWO OR MORE PERSONS, EACH SHOULD SIGN.
EXECUTORS, ADMINISTRATORS, TRUSTEES, GUARDIANS, AND ATTORNEYS IN
FACT SHOULD ADD THEIR TITLES. IF A SIGNER IS A CORPORATION,
PLEASE GIVE FULL CORPORATE NAME AND HAVE A DULY AUTHORIZED
OFFICER SIGN, STATING TITLE. IF A SIGNER IS A PARTNERSHIP OR
TRUST, PLEASE SIGN IN PARTNERSHIP OR TRUST NAME BY A DULY
AUTHORIZED PERSON.
Signature: ____________________
Name: ____________________
Title: ____________________
Dated: ____________________
Signature: ____________________
Name: ____________________
Title: ____________________
Dated: ____________________
7
Exhibit F
Payer's Name: Cenargo International Plc
SUBSTITUTE
FORM W-9
Department of the Treasury
Internal Revenue
Part 1 - PLEASE PROVIDE YOUR TAXPAYER IDENTIFICATION NUMBER
("TIN") IN THE BOX AT RIGHT AND CERTIFY BY SIGNING AND DATING
BELOW. For individuals, this is your social security number
(SSN). Resident aliens that do not have or are not eligible to
receive a SSN may use your individual TIN. For other entities,
this is your employer identification number (EIN). For sole
proprietorships, either your SSN or EIN may be used.
Social security number
______________ or
________________
Employer
Identification
Number
Payer's Request for Taxpayer Identification Number (TIN) and
Certification
Part 2 - CERTIFICATION- UNDER THE PENALTIES OF PERJURY, I CERTIFY
THAT
(1) the number shown on this form is my correct TIN (or I am
waiting for a number to be issued to me) and
(2) I am not subject to backup withholding because: (a) I am
exempt from backup withholding; or (b) I have not been notified
by the IRS that I am subject to backup withholding as a result of
a failure to report all interest or dividends; or (c) the IRS has
notified me that I am no longer subject to backup withholding.
Certification instructions--You must cross out Item (2) above if
you have been notified by the IRS that you are currently subject
to backup withholding because of underreporting interest or
dividends on your tax return.
Signature__________________ Date_________________
PART 3
AWAITING TIN \ \
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY DISTRIBUTIONS PAYMENTS MADE TO
YOU BY THE COMPANY. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE
FORM W-9 FOR ADDITIONAL DETAILS.
2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER OF SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER
TO GIVE THE PAYER.--Social Security numbers have nine digits
separated by two hyphens: i.e. 000-00-0000. Employer
identification numbers have nine digits separated by only one
hyphen: i.e. 00-0000000. The table below will help determine
the number to give the payer.
For this type Give the SOCIAL
of account SECURITY number of--
1. An individuals account The individual
2. Two or more individuals (joint account) The actual owner of the account or, if
combined funds, any one of the
individuals(1)
3. Husband and wife (joint account) The actual owner of the account or, if
joint funds, either person(1)
4. Custodian account of a minor (Uniform
Gift to Minors Act) The minor(2)
5. Adult and minor (joint account)The adult
or, if the minor is the only contributor,
the minor(1)
6. Account in the name of guardian or
committee for a designated ward, minor,
or incompetent person The ward, minor or incompetent person(3)
7. (a) The usual revocable savings trust
account (grantor is also trustee) The grantor-trustee
(b) So-called trust account that is not a
legal or valid trust under State law The actual owner(1)
8. Sole proprietorship account The owner(4)
3
For this type Give the EMPLOYER
of account: IDENTIFICATION number of--
9. A valid trust, estate, or pension trust The legal entity (Do not furnish the
identifying number of the personal
representative or trustee unless the legal
entity itself is not designated in the
account title.(5)
10. Corporate account The corporation
11. Religious, charitable or educational
organization account The organization
12. Partnership account held in the name of
the business The partnership
13. Association, club, or other tax-exempt
organization The organization
14. A broker or registered nominee The broker or nominee
15. Account with the Department of
Agriculture in the name of a public
entity (such as a State or local
government, school district, or prison)
that received agricultural program
payments The public entity
______________________________________________________________________________
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension
trust.
Note: If no name is circled when there is more than one name, the number
will be considered to be that of the first name listed.
4
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you
don't know your number, obtain Form SS-5, Application for a
Social Security Number Card, or Form SS-4, Application for
Employer Identification Number, at the local office of the Social
Security Administration or the Internal Revenue Service and apply
for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL
payments include the following:
-- A corporation.
-- A financial institution.
-- An organization exempt from tax under section
501(a), or an individual retirement plan.
-- The United States or any agency or instrumentality
thereof.
-- A State, the District of Columbia, a possession of
the United States, or any subdivision or
instrumentality thereof.
-- A foreign government, a political subdivision of a
foreign government, or any agency or
instrumentality thereof.
-- An international organization or any agency, or
instrumentality thereof.
-- A registered dealer in securities or commodities
registered in the U.S. or a possession of the U.S.
-- A real estate investment trust.
-- A common trust fund operate by a bank under section
584(a).
-- An exempt charitable remainder trust, or a non-
exempt trust described in section 4947(a)(1).
-- An entity registered at all times under the
Investment Company Act of 1940.
-- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally
subject to backup withholding include the following:
-- Payments to nonresident aliens subject to
withholding under Section 1441.
-- Payments to partnerships not engaged in a trade or
business in the U.S. and which have at least one
nonresidential partner.
-- Payments of patronage dividends where the amount
received is not paid in money.
-- Payments made by certain foreign organizations.
-- Payments made to a nominee.
5
Payments of interest not generally subject to backup
withholding include the following:
-- Payments of interest on obligations issued by
individuals. Note: You may be subject to backup
withholding if the interest if $600 or more and is
paid in the course of the payer's trade or business
and you have not provided your correct taxpayer
identification number to the payer.
-- Payments of tax-exempt interest (including exempt-
interest dividends under Section 852).
-- Payments described in section 6049(b)(5) to non-
resident aliens.
-- Payments on tax-free covenant bonds under section
1451.
-- Payments made by certain foreign organizations.
-- Payments made to a nominee.
Exempt payees described above should file Form W-9
to avoid possible erroneous backup withholding.
FILE THIS FORM WITH THE PAYER. FURNISH YOUR
TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON
THE FACE OF THE FORM, AND RETURN IT TO THE PAYER.
IF THE PAYMENTS ARE INTEREST, DIVIDENDS OR
PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and
patronage dividends, that are not subject to information
reporting are also not subject to backup withholding. For
details, see the regulations under sections 6041, 6041(a), 6045
and 6050A.
PRIVACY ACT NOTICE--Section 6109 requires most recipients of
dividend, interest, or other payments to give taxpayer
identification numbers to payers who must report the payments to
IRS. IRS uses the numbers for identification purposes. Payers
must be given the numbers whether or not recipients are required
to file tax returns. Beginning January 1, 1994, payers must
generally withhold 20% of taxable interest, dividend, and certain
other payments to a payee who does not furnish a taxpayer
identification number to a payer. Certain penalties may also
apply.
PENALTIES
(1) Penalty for Failure to Furnish Taxpayer Identification
Number--If you fail to furnish your taxpayer
identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure
is due to reasonable cause and not to willful neglect.
6
(2) Failure to Report Certain Dividend and Interest
Payments--If you fail to include any portion of an
includible payment for interest, dividends, or patronage
dividends in gross income, such failure will be treated
as being due to negligence and will be subject to a
penalty of 5% on any portion of an underpayment
attributable to that failure unless there is clear and
convincing evidence to the contrary.
(3) Civil Penalty for False Information With Respect to
Withholding--If you make a false statement with no
reasonable basis which results in no imposition of
backup withholding, you are subject to a penalty of
$500.
(4) Criminal Penalty for Falsifying Information--Falsifying
certificates or affirmations may subject you to criminal
penalties including fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE
INTERNAL REVENUE SERVICE.
You must complete the following certificate if you checked the
box in Part 3 of Substitute Form W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties that a taxpayer identification
number has not been issued to me, and either (a) I have mailed or
delivered an application to receive a taxpayer identification
number to the appropriate Internal Revenue Service Center or
Social Security Administration Office, or (b) I intend to mail or
deliver an application in the near future. I understand that if
I do not provide a taxpayer identification number by the time of
payment, 31% of all reportable payments made to me will be
withheld, but that such amounts will be refunded to me if I then
provide a Taxpayer Identification Number within sixty (60) days.
_________________________________ ______________________
Signature Date
7
02442004.AA5