EXHIBIT 10.1
Dated 23 JANUARY 2007
(1) RIDGEWOOD UK LLC
(2) ARBUTUS ENERGY LIMITED
(3) RIDGEWOOD ROC 2003 LLC
(4) RIDGEWOOD ROC II 2003 LLC
(5) RIDGEWOOD ROC III 2003 LLC
(6) RIDGEWOOD ROC IV 2004 LLC
(7) MEIF LG ENERGY LIMITED
- --------------------------------------------------------------------------------
Agreement
- --------------------------------------------------------------------------------
For the sale and purchase
of the entire issued share capital of CLPE Holdings Limited and assets relating
to Ridgewood ROC Projects
Eversheds LLP T +44 (0) 845 497 1000
115 Colmore Row F +44 (0) 845 497 1900
Birmingham DX 13004 Birmingham
B3 3AL www.eversheds.com
CONTENTS
Clause Page
1 INTERPRETATION.............................................................1
2 SHARE SALE AND PURCHASE...................................................19
3 ASSET SALE AND PURCHASE...................................................20
4 CONSIDERATION.............................................................21
5 WORKING CAPITAL STATEMENT AND ROC RECEIVABLE..............................23
6 CONDITIONS................................................................25
7 COMPLETION................................................................30
8 BUSINESS CONTRACTS........................................................31
9 RECORDS AND ACCESS........................................................31
10 FUTURE ENQUIRIES AND ASSISTANCE...........................................31
11 WARRANTIES AND RELEVANT CLAIMS............................................32
12 TERMINATION...............................................................35
13 BREAK FEE.................................................................36
14 CONFIDENTIALITY...........................................................38
15 BUYER'S WARRANTIES AND COVENANTS..........................................40
16 POST-COMPLETION PROVISIONS................................................41
17 ANNOUNCEMENTS.............................................................42
18 COSTS.....................................................................42
19 NOTICES...................................................................43
20 ASSIGNMENT................................................................45
21 FURTHER ASSURANCE.........................................................46
22 RIGHTS OF THIRD PARTIES...................................................46
23 ENTIRE AGREEMENT..........................................................46
24 GENERAL...................................................................46
25 GOVERNING LAW AND JURISDICTION............................................47
26 COUNTERPARTS..............................................................47
27 EXECUTION.................................................................47
Schedules
1 The Share Sellers.........................................................48
2 Part 1....................................................................49
Details of the Company....................................................49
Part 2....................................................................49
Part 3 Dormant Companies.................................................49
3 Part 1 - Share Warranties.................................................50
SELLER....................................................................50
ACCOUNTS AND RECORDS......................................................52
CHANGES SINCE THE ACCOUNTING DATE.........................................52
ASSETS....................................................................53
PROPERTY..................................................................55
ENVIRONMENTAL/HEALTH AND SAFETY (EHS) MATTERS.............................56
CONTRACTS.................................................................60
COMPLIANCE, DISPUTES......................................................64
Part 2 - ROC Warranties...................................................67
SELLER....................................................................67
ASSETS....................................................................67
CONTRACTS.................................................................68
4 Taxation..................................................................72
PART 1 - INTERPRETATION...................................................72
PART 2 - TAX COVENANT.....................................................77
PART 3 - TAX WARRANTIES...................................................88
PART 4 - ROC BUSINESS ASSETS..............................................92
5 Completion Arrangements...................................................94
6 The Property.............................................................101
7 Limitations on the Sellers' liability....................................102
8 Sellers Obligations......................................................108
9 Working Capital Statement................................................111
10 Purchase Price Allocation................................................116
ROC 1 Assets:............................................................116
ROC 2 Assets:............................................................116
ROC 3 Assets:............................................................116
ROC 4 Assets:............................................................117
11 The ROC Business Contracts...............................................118
PART 1 - ROC 1...........................................................118
PART 2 - ROC 2...........................................................118
PART 3 - ROC 3...........................................................118
PART 4 - ROC 4...........................................................118
12 The Plant and Equipment..................................................119
PART 1 - ROC 1...........................................................119
PART 2 - ROC 2...........................................................119
PART 3 - ROC 3...........................................................119
PART 4 - ROC 4...........................................................119
13 Project Companies........................................................120
14 Adjustment to the Purchase Price a result in change of Interest Rates....121
APPENDIX I...............................................................124
Long Term Liabilities....................................................124
THIS AGREEMENT is made on 23 JANUARY 2007
BETWEEN
(1) RIDGEWOOD UK LLC a Delaware registered company whose registered office is
at 947 Linwood Avenue, Ridgewood, New Jersey, 07450, USA ("Ridgewood");
(2) ARBUTUS ENERGY LIMITED a company incorporated in Jersey with company number
77281, whose registered office is at Charter Place, 23-27 Seaton Place, St
Helier, Jersey, JE1 1JY, Channel Islands ("Arbutus");
(3) RIDGEWOOD ROC 2003 LLC a Delaware registered company trading in the UK
whose registered office is at 947 Linwood Avenue, Ridgewood, New Jersey,
07450, USA ("ROC 1");
(4) RIDGEWOOD ROC II 2003 LLC a Delaware registered company trading in the UK
whose registered office is at 947 Linwood Avenue, Ridgewood, New Jersey,
07450, USA ("ROC 2");
(5) RIDGEWOOD ROC III 2003 LLC a Delaware registered company trading in the UK
whose registered office is at 947 Linwood Avenue, Ridgewood, New Jersey,
07450, USA ("ROC 3");
(6) RIDGEWOOD ROC IV 2004 LLC a Delaware registered company trading in the UK
whose registered office is at 947 Linwood Avenue, Ridgewood, New Jersey,
07450, USA ("ROC 4"),
(each a "Seller" and together the "Sellers"); and
(7) MEIF LG ENERGY LIMITED a company registered in England and Wales with
registered number 06048951 whose registered address is at Level 28,
Citypoint, 1 Ropemaker Street, London EC2Y 9HD (the "Buyer").
OPERATIVE CLAUSES
1. INTERPRETATION
In this Agreement:
1.1 the following expressions have the following meanings unless inconsistent
with the context:
"Accounting Date" 31 December 2005
"Accounts" the audited balance sheet as at the
Accounting Date and the audited profit
and loss account for the financial year
ended on the Accounting Date of each
Group Member including, in the case of
the Company, the audited consolidated
balance sheet as at that date, and the
audited consolidated profit and loss
account and the audited consolidated
cash flow statement for that financial
year and, in each case, the directors'
report and notes
1
"Affiliate" any subsidiary, parent company and any
subsidiary or subsidiaries of such
parent company
"Arbutus Shares" the 1,098,138 `B' ordinary shares of
(pound sterling)1.00 each in the capital
of the Company registered in the name of
Arbutus
"Bank Facilities" each of the loan facilities made
available to certain Group Members by
BoS pursuant to the facility agreement
dated 5 July 2000 as amended and
restated on 16 October 2001, 12
September 2003, 30 September 2004 as
further amended on 4 May 2006 and the
credit facility dated 4 May 2006
"Bonus Amount" the aggregate amount (after deduction of
the amount paid erroneously to the
participants (other than Randy Holmes
and Doug Wilson) in or around July 2006)
payable to and to be received by Harry
Wyndham, Dominic Greenough, Andrew West
and Alexandra Pentecost by the Company
as a result of Completion pursuant to
the CLPE Holdings Management Incentive
Plan, dated 6 August 2003 (and, for the
avoidance of doubt, ignoring any PAYE or
employer's or employee's national
insurance contributions in relation to
such payments)
"BoS" the Governor and Company of the Bank of
Scotland
"Break Fee A" the sum of (pound sterling)3,600,000
"Break Fee B" the sum of (pound sterling)1,500,000
"Business Day" any day (other than a Saturday or
Sunday) on which banks are open in
London for normal banking business
2
"Buyer's Group" any of the following from time to time:
the Buyer, Macquarie, Macquarie Bank
Limited and any of their Affiliates or
any funds controlled or managed by
Macquarie, Macquarie Bank Limited or any
of their Affiliates (including,
following Completion, each member of the
Group) and "member of the Buyer's Group"
will be construed accordingly
"Buyer's Solicitors" Berwin Leighton Paisner LLP of Adelaide
House, London Bridge, London EC4R 9HA
"CA 1985" the Companies Act 1985
"Company" CLPE Holdings Limited (details of which
are set out in Part 1 of Schedule 2)
"Completion" completion of the sale and purchase of
the Shares and the ROC Business Assets
in accordance with clause 7
"Completion Date" the date of Completion in accordance
with clause 7
"Computer Systems" all computer hardware and Software which
is used exclusively in any Group
Member's business or is in the
possession of any Group Member
"Confidential Information" all information used in or otherwise
relating to, where relevant, any Group
Member's or any member of the Buyer's
Group's business, customers, or
financial or other affairs or any
information relating to any of the
Sellers, the Ridgewood Funds, the
Managing Shareholder or any member of
the Buyer's Group, in each case, which
amounts to a trade secret and which is
not publicly known
"Consideration" the aggregate consideration for the sale
of the Shares and ROC Business Assets as
calculated pursuant to clause 4
3
"Contract" any legally binding agreement or
commitment
"D&P" Duff & Phelps LLC, financial advisor to
the Ridgewood Funds, Arbutus and the
Managing Shareholder or any other entity
or entities serving in such capacity
"DA" in relation to each ROC Seller, the
Development Services Agreements entered
into from time to time prior to the
Effective Date by and among the relevant
ROC Seller and CLP Developments Limited,
copies of which are identified at
Documents ZZZ3, AAA4, BBB4, BBB5 and
CCC4 in the Disclosure Documents
"DSA" in relation to each ROC Seller, the ROC
Project Development and Services
Agreements entered into from
time-to-time prior to the Effective Date
by and among one or more Group Members
and the relevant ROC Seller, copies of
which are identified at Document ZZZ2,
ZZZ5, AAA2, AAA3, BBB2, BBB3, CCC2 and
CCC3 in the Disclosure Documents
"Debt" as at the Effective Date, excluding the
amount of the Term Debt as at the
Effective Date, the amount (gross of any
unamortised capitalised arrangement
fees) outstanding (including all accrued
interest and breakage costs (excluding
any costs and expenses associated with
or which may be incurred in connection
with terminating the Term Debt or the
Hedging Arrangements) assuming, for the
purpose of the Working Capital
Statement, that these are or would be
due and payable on the Effective Date)
on a consolidated basis under (i) any
indebtedness and (ii) any other
indebtedness in the nature of borrowings
of the Group (excluding any indebtedness
under the DSA's or the DA's other than
the ROC Payable) including, without
limitation, any liabilities in respect
of any and all borrowings, overdrafts,
loans, notes, bonds, debentures, bills
of exchange, letters of credit, hedging
arrangements (excluding the Hedging
Arrangements), derivative financial
instruments, debtor factoring or other
arrangement the purpose of which is to
borrow money, finance leases, dividends
and/or redemption of share capital
declared but not paid and any other
accrued bonuses or sums payable pursuant
to any long term incentive arrangement
4
"Disclosed" facts, matters or other information
fairly disclosed by or in the Disclosure
Documents. For these purposes "fairly
disclosed" means if, on a review of the
Disclosure Documents, a reasonable buyer
would be or might reasonably be aware of
the specific fact, matter or other
information and be in a position to make
a reasonably informed assessment of the
fact, matter or other information
"Disclosure Documents" the Disclosure Letter and the two
identical bundles of disclosure
documents (or CD-Roms) collated by or on
behalf of the Sellers and attached to
the same, the outside covers of which
have been signed for identification by
or on behalf of the Sellers and the
Buyer
"Disclosure Letter" the letter having the same date as this
Agreement from the Sellers to the Buyer
qualifying the Warranties, the receipt
of which has been acknowledged by the
Buyer or on its behalf by the Buyer's
Solicitors
"Dormant Companies" those companies listed in Part 3 of
Schedule 2
"Effective Date" 11:59pm on 31 December 2006
"EHS Law" all applicable law, European Union
decision (insofar as legally binding),
government circular, official code of
practice, or official instruction or
decision of any competent regulatory
body in force from time to time relating
to EHS Matters
5
"EHS Matters" all or any matters relating to the
pollution or protection of the
Environment or harm to or the protection
of human health and safety or the health
of animals and plants
"EHS Permits" all or any permits, consents, licences
and other authorisations required by EHS
Law for the operation of the business of
the relevant Group Member as conducted
at the date of this Agreement
"Encumbrance" any mortgage, charge, pledge, lien,
assignment, option, restriction, claim,
right of first refusal, third party
right or interest, other encumbrance or
security interest of any kind, or other
type of preferential arrangement having
similar effect
"Environment" all or any of the following media: land
(including any building structure or
receptacle in, on, over or under it)
water (including surface, coastal and
ground waters and waters in drains and
sewers) and air (including the
atmosphere within any natural or
man-made structure or receptacle above
or below ground)
"Fairness Opinions" the written opinions prepared for and
delivered to each of the Ridgewood
Funds, Arbutus and the Managing
Shareholder by D&P; such opinions to be
dated the date of this Agreement and to
be in a form reasonably satisfactory to
legal counsel to the Ridgewood Funds,
Arbutus and the Managing Shareholder
"Funding Agreement" the definitive loan agreement and
necessary ancillary documentation with a
provider of finance for the purpose of
funding the Buyer's payment obligations
under paragraph 6 of Schedule 5 which is
subject to no further approvals by the
lender and which contains warranties
from the Buyer and conditions precedent
to draw down the agreement and the
documentation being in the agreed terms
"Governmental Entity" any governing body, including any
regulatory authority, agency, commission
or other governmental entity, existing
under the laws of England, Wales, the
European Union, or the United States or
any other governmental body with
competent jurisdiction
6
"Gross Macquarie Payment" the maximum aggregate amount payable by
the Buyer pursuant to this Agreement
"Group Member" any company which is a member of the
Group
"Group" the Company and each of its subsidiaries
(as defined at sections 736 and 736A CA
1985) at the date of this Agreement but
excluding the Dormant Companies
"Hedging Arrangements" the ISDA Master Agreement dated 6
September 2000 and made between HBOS
Treasury Services plc (1) and CLPE
Projects 2 Limited (2) together with any
schedules thereto.
"ICTA" Income and Corporation Taxes Act 1988
"Insider" a Seller or any person who is a director
of any Group Member, or any person who
is connected (as defined in section 839
ICTA) with a Seller or any such director
"Intellectual Property Rights" all patents, trade marks, copyright,
moral rights, rights to prevent passing
off, rights in designs, in each case
whether registered or unregistered
"Law" any applicable law, statute, ordinance,
rule, regulation, judgment, order,
injunction, decree, agency requirement,
license, permit, administrative and
judicial doctrines, of any Governmental
Entity, including, without limitation,
EHS Law
"LECs" means levy exemption certificates issued
by OFGEM pursuant to Schedule 6 of the
Finance Act 2000 to qualifying
renewables generators as evidence that
electricity has been generated from an
eligible renewable source, which
certificates will entitle the holder
thereof to an exemption from the Climate
Change Levy
7
"Liabilities" all costs, expenses, losses, damages,
awards, fines, (including reasonable
legal and other professional fees and
expenses)
"Long Stop Date" 15 April 2007 or such later date as may
be agreed between the Buyer and the
Share Sellers
"Macquarie" MEIF European Investment Fund LP
"Macquarie Letter of Undertaking" the letter from Macquarie Investment
Management (UK) Limited (acting in its
capacity as manager for Macquarie) to
the Sellers in the agreed terms with
respect to certain undertakings to be
performed by Macquarie
"Management Accounts" the unaudited consolidated monthly
management accounts of the Group for the
period from the Accounting Date to the
Effective Date
"Managing Shareholder" Ridgewood Renewable Power LLC, a New
Jersey limited liability company
"Operational Warranties" the Warranties (other than the Title
Warranties) in Part 1 of Schedule 3
"Order" shall mean any law, executive order,
ruling or other order, whether
temporary, preliminary or permanent that
is enacted, issued, promulgated,
enforced or entered by any Governmental
Entity
"Pension Scheme" the stakeholder pension scheme provided
by Clerical Medical
"Project" the operation of electricity generating
plants by the Group using landfill gas
extracted from a landfill site
"Project Companies" the project companies listed in Schedule
13 and each of them shall be a "Project
Company"
8
"Property" the property specified in Schedule 6
"Purchase Price" (pound sterling)120,000,000 (one hundred
and twenty million pound sterling) (as
adjusted, subject to clause 4.8, to
account for changes in the rate of
interest in accordance with Schedule 14)
"Relevant Claim" any claim for any breach of this
Agreement or any other claim under this
Agreement other than any claim(s)
pursuant to:
(i) clause 4.7 (payment of termination
costs incurred in repaying the Term Debt
and terminating the Hedging
Arrangements);
(ii) clause 5.8 (payment of the Negative
Amount);
(iii) clause 6.8 (breach of Schedule 8
which benefits Seller or Affiliates);
(iv) clause 13 (payment of the Break
Fee);
(v) clauses 16.1; or
(vi) any claim for an amount in excess
of the estimated amount of the Tax
payable pursuant to the Withholding Tax
Claim (as defined in Schedule 4) as set
out in Schedule 9 paragraph 2.26
"Relevant Proportions" the proportions set out in Schedule 1 in
respect of each Share Seller
"Renewables Obligation means a certificate or certificates
Certificates" issued by the OFGEM under section 32B of
the Electricity Act 1989 as the same is
referred to in the Renewables Obligation
Order 2006 (or referred to as a SROC in
the Renewables Obligation (Scotland)
Order 2006 if the relevant ROC Project
is situated in Scotland), or such
analogous certificate, certificates or
evidence as either the Secretary of
State (or, if the ROC Project is
situated in Scotland, the Scottish
Ministers) or OFGEM shall determine from
time to time
9
"Repeated Warranties" shall have the meaning ascribed to it in
clause 11.7
"Repeated Warranties Bring shall have the meaning ascribed to it in
Down Certificate" clause 11.15
"Representative" shall have the meaning ascribed to it in
clause 5.1
"Ridgewood Funds" the Ridgewood Powerbanks, Ridgewood
Electric Power Trust V LLC and The
Ridgewood Power Growth Fund,
collectively
"Ridgewood Letter of Undertaking" the letter from the Ridgewood Funds to
the Buyer in the agreed terms with
respect to certain undertakings to be
performed by the Ridgewood Funds
"Ridgewood Powerbanks" Ridgewood Renewable Powerbank LLC,
Ridgewood Renewable Powerbank II LLC,
Ridgewood Renewable Powerbank III LLC,
and Ridgewood Renewable Powerbank IV
LLC, collectively
"Ridgewood Shares" the 8,053,012 'A' ordinary shares of
(pound sterling)1.00 each in the capital
of the Company registered in the name of
Ridgewood
"Ridgewood Solicitation the materials, including without
Materials" limitation, any proxy statement or
consent solicitation (each as may be
amended or supplemented) to be used by
any of the Ridgewood Funds for the
solicitation of the approval of this
Agreement and the transactions
contemplated hereby by its shareholders
"ROC 1 Assets" all of the business and assets owned by
ROC1 or used in ROC 1's ROC Business
including assets as follows:
(a) the Contracts listed in Part 1
of Schedule 11 entered into by
or on behalf of ROC 1 which
are unperformed (wholly or
partly) as at the Completion
Date;
10
(b) subject to the contractual
obligations referred to in
paragraph (a) above, the
plant, machinery and
equipment, fittings and other
chattels listed in Part 1 of
Schedule 12;
(c) goodwill attributable to the
ROC 1 operations;
(d) receivables due to ROC 1 at
the Effective Date under the
relevant DA and DSA
(irrespective of when they
become due)
but excluding all cash (whether in hand
or at bank)
"ROC 2 Assets" all of the business and assets owned by
ROC2 or used in ROC 2's ROC Business
including assets as follows:
(a) the Contracts listed in Part 2
of Schedule 11 entered into by
or on behalf of ROC 2 which
are unperformed (wholly or
partly) as at Completion;
(b) subject to the contractual
obligations referred to in
paragraph (a) above, the
plant, machinery and
equipment, fittings and other
chattels listed in Part 2 of
Schedule 12;
(c) goodwill attributable to the
ROC 2 operations;
(d) receivables due to ROC 2 at
the Effective Date under the
relevant DA and DSA
(irrespective of when they
become due)
but excluding all cash (whether in hand
or at bank)
11
"ROC 3 Assets" all of the business and assets owned by
ROC3 or used in ROC 3's ROC Business
including assets as follows:
(a) the Contracts listed in Part 3
of Schedule 11 entered into by
or on behalf of ROC 3 which
are unperformed (wholly or
partly) as at Completion;
(b) subject to the contractual
obligations referred to in
paragraph (a) above, the
plant, machinery and
equipment, fittings and other
chattels listed in Part 3 of
Schedule 12:
(c) goodwill attributable to the
ROC 3 operations;
(d) receivables due to ROC 3 at
the Effective Date under the
relevant DA and DSA
(irrespective of when they
become due)
but excluding all cash (whether in hand
or at bank)
"ROC 4 Assets" all of the business and assets owned by
ROC4 or used in ROC 4's ROC Business
including assets as follows:
(a) the Contracts listed in Part 4
of Schedule 11 entered into by
or on behalf of ROC 4 which
are unperformed (wholly or
partly) as at Completion;
(b) subject to the contractual
obligations referred to in
paragraph (a) above, the
plant, machinery and
equipment, fittings and other
chattels listed in Part 4 of
Schedule 12;
(c) goodwill attributable to the
ROC 4 operations;
12
(d) receivables due to ROC 4 at
the Effective Date under the
relevant DA and DSA
(irrespective of when they
become due)
but excluding all cash (whether in hand
or at bank)
"ROC Adjustment" the Purchase Price less
(pound sterling)120,000,000 (one hundred
and twenty million pound sterling) as
then multiplied by:
(a) in the case of ROC 1,
12.8457%;
(b) in the case of ROC 2,
21.2872%;
(c) in the case of ROC 3,
23.8564%; and
(d) in the case of ROC 4, 11.0107%
"ROC Business Assets" the aggregate of the ROC 1 Assets, ROC 2
Assets, ROC 3 Assets and ROC 4 Assets
"ROC Business Contracts" all contracts relating to the ROC
Business, other than to the extent such
contracts relate to the Dormant
Companies, including all contracts
listed in Schedule 11 entered into by or
on behalf of a ROC Seller which are
unperformed (wholly or partly) as at
Completion, and, which have been
attached to the Disclosure Letter
"ROC Business" the development and operation of the ROC
Projects solely carried on by each ROC
Seller at the date of this Agreement
pursuant to the relevant ROC Business
Contract
"ROC Consideration" the consideration payable for the ROC
Business Assets in accordance with
clause 4.3 but ignoring, for the purpose
of this definition, any deduction in
respect of any breach(es) of Schedule 8
by any of the ROC Sellers
13
"ROC Payable" the aggregate of all amounts due from
the relevant Group Member to any ROC
Seller in the books and ledgers of the
relevant Group Member accrued and earned
as at the Effective Date in respect of
fixed and variable payments under the
DSA's and amounts of interest accrued
pursuant to advances from the ROC
Sellers to the relevant Group Member
under the DA's, as agreed or determined
in accordance with clause 5 and Schedule
9 in the Working Capital Statement
"ROC Plant and Equipment" the plant, machinery and equipment,
fittings and other chattels of each ROC
Seller listed in Schedule 12
"ROC Projects" the development and operation of
electricity generating plants by a ROC
Seller using landfill gas extracted from
a landfill site with a view to
generating and selling electricity along
with its associated regulatory benefits
pursuant to electricity sales agreements
entered into by the relevant Group
Member
"ROC Receivable" the aggregate of all amounts due from
the relevant Group Member to any ROC
Seller in the books and ledgers of the
relevant ROC Seller accrued and earned
as at the Effective Date in respect of
fixed and variable payments under the
DSA's and amounts of interest accrued
pursuant to advances from the ROC
Sellers to the relevant Group Member
under the DA's, as agreed or determined
in accordance with clause 5 and Schedule
9 in the Working Capital Statement
"ROC Seller" each of ROC 1, ROC 2, ROC 3, and ROC 4
and "ROC Sellers" shall mean all of them
"ROC Warranties" the Warranties set out in Part 2 of
Schedule 3
"Royalties" royalty or licence payments accrued or
invoiced as at the Effective Date and
payable by a Group Member to landfill
site owners pursuant to the gas
agreements entered into by a Group
Member in respect of each project site
14
"SEC" the U.S. Securities and Exchange
Commission
"Sellers Agreement" the agreement dated the date of this
Agreement between each of the Sellers
relating to, amongst other things, the
apportionment of the Share Consideration
"Sellers' Solicitors Undertaking" the undertaking in the agreed terms
given by the Sellers' Solicitors to the
Buyer's Solicitors in relation to the
holding of the Consideration on or
before Completion and the distribution
of the Consideration and other payments
following Completion
"Sellers' Solicitors" Eversheds LLP of Senator House, 85 Queen
Victoria Street, London EC4V 4JL
"Sellers' Solicitors' Client Account Number 90639443 with Barclays
Account Bank PLC with sort code 20-18-15
"Share Consideration" the aggregate consideration for the sale
of the Shares as stated in clause 4.1
"Share Sellers" Ridgewood and Arbutus
"Share Warranties" the Warranties set out in Part 1 of
Schedule 3 and Part 3 of Schedule 4
"Shares" all the issued and to be issued shares
in the capital of the Company comprising
the Arbutus Shares and the Ridgewood
Shares
"Software" any form of computer program whether in
source or object code form
"Stock" Stocks (as defined in Statement of
Standard Accounting Practice No 9
adopted by the Accounting Standards
Board) of each Group Member on a
consolidated basis
"Superior Offer" shall have the meaning ascribed to it in
clause 12.2
"Surviving Provisions" clauses 1 (Interpretation), 13 (Break
Fee), clause 14 (Confidentiality), 17
(Announcements), 18 (Costs), 19
(Notices), 23 (Entire Agreement) and 25
(Governing Law and jurisdiction)
15
"Tax" and "Taxation" shall have the meaning ascribed thereto
in Part 1 of Schedule 4
"Tax Covenant" the covenants by the Sellers in Part 2
of Schedule 4
"Tax Warranties" the warranties set out in Part 3 of
Schedule 4
"Term Debt" the principal amount (including interest
or accrued interest) of the term debt
owed by certain Group Members to BoS
pursuant to the Bank Facilities less the
restricted cash reserve with BOS in
connection with the same and the amount
due from the relevant Group Member under
the 2 Clarke Energy Equipment Leases
"Title Warranties" the Warranties at paragraphs 1 and 2 of
Part 1 of Schedule 3
"Warranty and Indemnity the insurance policy insuring against
Insurance" loss for breaches of the Warranties and
claims under the Tax Covenant in the
agreed terms
"United Kingdom" the United Kingdom of Great Britain and
Northern Ireland
"VAT" Value Added Tax
"VATA" Value Added Tax Act 1994
"Warranties" the warranties set out or referred to in
clause 11, Schedule 3 and Part 3 of
Schedule 4
"Working Capital" the working capital is the aggregate of,
as of the Effective Date:
(i) current assets;
(ii) current liabilities;
(iii) Debt;
(iv) Working Capital Liabilities; and
(v) the amount derived from paragraph
2.24 of Part 2 of Schedule 9,
16
in each case of the Group (on a
consolidated basis),
but excluding, as at the Effective Date:
(a) any liabilities under the
DSA's and the DA's due from
any Group Member to a ROC
Seller, other than the ROC
Payable;
(b) work-in-progress and assets in
the course of construction,
including any capitalised
interest thereon
(c) deferred income recognised on
the commissioning of a project
in respect of the excess of
construction advances on the
project over the cost of
construction of the project;
(d) deferred expenditure
recognised on the
commissioning of a project in
respect of the excess of the
cost of construction of the
project over the construction
advances on the project;
(e) deferred tax assets;
(f) deferred tax liabilities;
(g) the restricted cash reserve
with BOS (which is referred to
in the definition of Term
Debt) as at the Effective
Date; and
(h) any unamortised capitalised
arrangement fees included
within current assets or
current liabilities
"Working Capital Liabilities" the liabilities of the Group (on a
consolidated basis):
(i) in respect of any Tax estimated to
be due or payable (on a consolidated
basis) by the Group in respect of the
period up to and including the Effective
Date;
17
(ii) (pound sterling)630,000, being the
aggregate of the amounts (net of VAT) of
capital expenditure as at the Effective
Date which the parties have agreed is
required following the Effective Date to
be spent in respect of certain new wells
and engines and, in addition, the
replacement of certain pistons, liners
and rings; and
(iii) in respect of any amounts due from
the Sellers to the Buyer in respect of a
breach of their obligations under
Schedule 8 which is agreed or determined
in accordance with clause 6.8
"Working Capital Statement" the statement prepared by the Sellers
and agreed or determined in accordance
with clause 5 and Schedule 9 for the
purpose of calculating the Working
Capital and the ROC Receivable in
accordance with clause 5 and Schedule 9
(a proforma of which is set out in Part
3 of Schedule 9)
1.2 references to any statute or statutory provision include, unless the
context otherwise requires, a reference to the statute or statutory
provision as modified, replaced or re-enacted and in force from time
to time prior to Completion and any subordinate legislation made
under the relevant statute or statutory provision (as so modified,
replaced or re-enacted) in force prior to Completion;
1.3 references to a person includes a reference to any individual, firm,
company, limited liability company, business trust, corporation or
other body corporate, government, state or agency of a state or any
unincorporated association, joint venture or partnership (whether or
not having a separate legal personality);
1.4 references to statutory provisions or to a legal or accounting
principle applying under English law shall, where the context
requires, be treated as including references to the nearest
corresponding provision or principle in the local jurisdiction and
references to a governmental, local governmental or administrative
authority or agency in the United Kingdom shall be treated as
including references to the nearest equivalent governmental local
governmental or administrative authority or agency in that
jurisdiction provided that, in each case, the liability of the
Sellers shall, as a result of such treatment, be no greater than it
would have been under English law or under governmental, local
governmental or administrative authority or agency in the United
Kingdom;
18
1.5 the masculine, feminine or neuter gender respectively includes the
other genders and the singular will include the plural (and vice
versa);
1.6 references to a document being "in the agreed terms" are to that
document in the form agreed and for the purposes of identification
initialled by or on behalf of the Sellers and the Buyer;
1.7 unless expressly stated otherwise, all obligations, covenants,
undertakings, representations and warranties on the part of two or
more persons or entities are entered into, given or made by such
persons severally but not jointly;
1.8 references to clauses and Schedules are to clauses of and Schedules
to this Agreement, and references to paragraphs or Parts are to
paragraphs in or Parts of the Schedule in which such references
appear;
1.9 the Schedules and Appendices form part of this Agreement and will
have the same force and effect as if expressly set out in the body of
this Agreement;
1.10 the headings in this Agreement will not affect its interpretation;
1.11 any phrase introduced by the term "include", "including", "in
particular" or any similar expression will be construed as
illustrative and will not limit the sense of the words preceding that
term;
1.12 reference to time shall be to the time in London, England; and
1.13 references to a "subsidiary undertaking" or "parent undertaking" is
to be construed in accordance with section 258 of the CA 1985;
references to a "subsidiary" or "holding company" is to be construed
in accordance with section 736 of the CA 1985; and references to a
"current assets" and "current liabilities" is to be construed in
accordance with the CA 1985.
2. SHARE SALE AND PURCHASE
2.1 At Completion, Ridgewood agrees to and will sell, with full title
guarantee, and the Buyer agrees to and will buy, the Ridgewood
Shares.
2.2 At Completion, Arbutus agrees to and will sell, with full title
guarantee, and the Buyer agrees to and will buy the Arbutus Shares.
2.3 In each case the Shares will be sold free of any Encumbrance and with
all rights attached or accruing to them at or after the date of this
Agreement.
2.4 Each of the Share Sellers severally waives any rights of pre-emption
or other right or option conferred on them under the articles of
association of the Company or otherwise in respect of any of the
Shares.
19
2.5 Ridgewood warrants that the Ridgewood Shares when taken together with
the Arbutus Shares constitute all the Shares in the Company.
2.6 Arbutus warrants that the Arbutus Shares when taken together with the
Ridgewood Shares constitute all the Shares in the Company.
2.7 The Share Sellers hereby waive any rights of pre-emption in favour of
them or requirements for consent required from them in connection
with or which are necessary to transfer the Shares.
3. ASSET SALE AND PURCHASE
3.1 At Completion, ROC 1 agrees to and will sell and transfer with full
title guarantee to the Buyer (or as it directs in accordance with
clause 3.7) and the Buyer agrees to and will buy as at Completion the
ROC1 Assets.
3.2 At Completion, ROC 2 agrees to and will sell and transfer with full
title guarantee to the Buyer (or as it directs in accordance with
clause 3.7) and the Buyer agrees to and will buy as at Completion the
ROC2 Assets.
3.3 At Completion, ROC 3 agrees to and will sell and transfer with full
title guarantee to the Buyer (or as it directs in accordance with
clause 3.7) and the Buyer agrees to and will buy as at Completion the
ROC3 Assets.
3.4 At Completion, ROC 4 agrees to and will sell and transfer with full
title guarantee to the Buyer (or as it directs in accordance with
clause 3.7) and the Buyer agrees to and will buy as at Completion the
ROC4 Assets.
3.5 Each of the ROC Business Assets will be sold and bought free from any
Encumbrance and with all rights attached to it.
3.6 Except as otherwise provided in the Agreement:
3.6.1 beneficial ownership and risk in each of the ROC Business
Assets in respect of which beneficial ownership is to pass
to the Buyer will pass to the Buyer on Completion;
3.6.2 title to all ROC Business Assets in respect of which
beneficial ownership is to pass to the Buyer which can be
transferred by delivery will pass on delivery and such
delivery will be deemed to take place at Completion but
with effect from the Effective Date; and
3.6.3 each ROC Seller will hold the ROC Business Assets of that
ROC Seller for the benefit of the Buyer from Completion
but with effect from the Effective Date until they have
been actually delivered and/or, in the case of ROC
Business Assets not capable of transfer by delivery,
transferred or assigned to the Buyer
20
3.7 The ROC Sellers confirm and agree that the Buyer shall be entitled,
prior to Completion by notice in writing to the ROC Sellers, to
substitute a wholly owned subsidiary of the Buyer as the purchaser of
any of the ROC Business Assets and references in this Agreement to
the Buyer shall be deemed to refer to such substituted purchaser, if
applicable, where the context requires provided that (i) such
substituted purchaser shall be an additional obligor of all the
obligations that relate to the Buyer in relation to such ROC Business
Assets; (ii) the obligations of the Buyer will remain in full force
and effect notwithstanding such substitution; and (ii) the liability
of the ROC Sellers under this Agreement and the documents
contemplated or referred to herein shall not be increased or extended
as a result of such substitution.
3.8 The provisions of Schedule 4 will apply in relation to Taxation
matters but the provisions of paragraph 2 of Part 2 of Schedule 4
shall have effect only from Completion.
4. CONSIDERATION
4.1 The aggregate consideration for the sale of the Shares shall be an
amount equal to the sum of the Purchase Price less
(pound sterling)10,237,407.61 (ten million two hundred and thirty
seven thousand four hundred and seven pounds sterling 61 pence).
4.1.1 less the ROC Consideration (but excluding for the purpose
of this clause 4.1.1 the amount of the ROC Receivable);
4.1.2 plus the Positive Amount (as such term is defined in
clause 5.9) or less the Negative Amount (as such term is
defined in clause 5.8);
4.1.3 less the amount of any claim for a breach of Part I of
Schedule 8 which is agreed or determined in accordance
with clause 6.8.2; and
4.1.4 less the aggregate of the Bonus Amount and all PAYE and
employer's and employee's national insurance contributions
applicable to such Bonus Amount.
4.2 Each Share Seller shall receive the Share Consideration in the manner
to be determined in accordance with the Sellers' Agreement.
4.3 The consideration for:
4.3.1 the sale of the ROC 1 Assets will be the sum of (pound
sterling)15,414,893.62 (fifteen million four hundred and
fourteen thousand eight hundred and ninety three pounds
sterling 62 pence) (plus the relevant ROC Adjustment) (i)
less the amount of any claim for a breach by ROC 1 of its
obligations under Part II of Schedule 8 which has been
agreed or determined in accordance with clause 6.8.2 (ii)
plus, on behalf of the relevant Group Member, the amount
of the ROC Receivable payable to ROC 1;
21
4.3.2 the sale of the ROC 2 Assets will be the sum of (pound
sterling)25,544,680.85 (twenty five million five hundred
and forty four thousand six hundred and eighty pounds
sterling 85 pence) (plus the relevant ROC Adjustment) (i)
less the amount of any claim for a breach by ROC 2 of its
obligations under Part II of Schedule 8 which has been
agreed or determined in accordance with clause 6.8.2 (ii)
plus, on behalf of the relevant Group Member, the amount
of the ROC Receivable payable to ROC 2;
4.3.3 the sale of the ROC 3 Assets will be the sum of (pound
sterling)28,627,659.57 (twenty eight million six hundred
and twenty seven thousand six hundred and fifty nine
pounds sterling 57 pence) (plus the relevant ROC
Adjustment) (i) less the amount of any claim for a breach
by ROC 3 of its obligations under Part II of Schedule 8
which has been agreed or determined in accordance with
clause 6.8.2 (ii) plus, on behalf of the relevant Group
Member, the amount of the ROC Receivable payable to ROC 3;
4.3.4 the sale of the ROC 4 Assets will be the sum of (pound
sterling)13,212,765.96 (thirteen million two hundred and
twelve thousand seven hundred and sixty five pounds
sterling 96 pence) (plus the relevant ROC Adjustment) (i)
less the amount of any claim for a breach by ROC 4 of its
obligations under Part II of Schedule 8 which has been
agreed or determined in accordance with clause 6.8.2 (ii)
plus, on behalf of the relevant Group Member, the amount
of the ROC Receivable payable to ROC 4,
and will be allocated, for tax purposes, as set out in Schedule 10.
4.4 The Consideration to be paid in clauses 4.1 and 4.3 shall be applied
in accordance with paragraphs 6.1 and 6.2 of Schedule 5 accordingly.
4.5
4.5.1 If the Working Capital Statement has not been agreed or
determined in accordance with clause 5 prior to
Completion, the consideration payable for the Shares on
Completion shall be paid without taking into account the
Positive Amount or the Negative Amount and such
consideration will be adjusted following Completion when,
within 2 Business Days of the agreement or determination
of the Working Capital Statement in accordance with clause
5, the Buyer will pay to the Share Sellers the Positive
Amount or the Share Sellers will pay to the Buyer the
Negative Amount, as the case may be.
22
4.5.2 If that part of the ROC Receivable payable to one or more
of the ROC Sellers has not been agreed or determined in
accordance with clause 5 prior to Completion, the
consideration payable for the ROC Business Assets on
Completion shall be paid without taking into account such
part of the ROC Receivable and such consideration will be
increased following Completion when, within 2 Business
Days of the agreement or determination of such part of the
ROC Receivable in accordance with clause 5, the Buyer will
pay to each ROC Seller such part only of the ROC
Receivable to which each ROC Seller is entitled (and has
not yet received).
4.6 All amounts expressed in this Agreement as being payable by the Buyer
are expressed exclusive of any VAT (if applicable) which may be
chargeable.
4.7 The Share Sellers undertake to pay to the Buyer an amount equal to
all costs and expenses incurred by the Group associated with or
incurred in connection with terminating the Term Debt and the Hedging
Arrangements following Completion.
4.8 If, as a result of the adjustment set out in Schedule 14, the
Purchase Price is reduced to less than (pound sterling)110,000,000:
4.8.1 the Buyer shall have the right but not the obligation to
complete this Agreement in which event the Purchase Price
will be deemed to be (pound sterling)110,000,000;
4.8.2 if the Buyer has not exercised its right under clause
4.8.1 by the Long Stop Date, the Sellers shall have the
right to terminate this Agreement pursuant to clause
12.2(iii).
5. WORKING CAPITAL STATEMENT AND ROC RECEIVABLE
5.1 For the purposes of this clause 5, clause 11.9 and Schedule 9, the
Sellers shall be represented by and hereby appoint Mr Douglas Wilson
as their representative (the "Representative") and the Buyer and its
advisors and the Independent Accountant (referred to and defined
below) shall be entitled to treat and rely on the notices, consents,
approvals and directions of the Representative as being issued on
behalf of and with the express authority of each of the Sellers who
agree to be bound by the decision of the Representative and not to
challenge his/her decisions or actions. References to Sellers in the
definition of "Working Capital Statement", clause 5 (other than
clause 5.10), clause 11.9 and Schedule 9 shall be deemed to refer to
the Representative.
5.2 The Sellers shall procure that a draft of the Working Capital
Statement together with full supporting documentation and working
papers shall be prepared, in accordance with Schedule 9 and delivered
to the Buyer within 20 days following the date of this Agreement.
23
5.3 If the Buyer notifies the Sellers within 30 days of receipt of such
draft Working Capital Statement that they do not accept the
correctness of it and their reasons for such non-acceptance, the
parties shall use their reasonable endeavours to reach agreement on
the draft Working Capital Statement as soon as possible after such
notification. If the Buyer does not so notify the Sellers within such
30 day period then the parties shall be deemed to accept the
correctness of the draft which shall become the Working Capital
Statement for the purposes of this Agreement and shall be final and
binding on the parties (in the absence of manifest error) and be
deemed to be in accordance with Schedule 9 upon the expiry of the 30
days.
5.4 If the parties are unable to reach agreement within 5 days following
the notification of objections by the Buyer to the Share Sellers, the
matter in dispute will be referred to an independent accountant (the
"Independent Accountant"). If the parties are unable to agree the
identity of the Independent Accountant, or if the proposed
Independent Accountant refuses to act, the matter shall be referred
by any party to this Agreement to the President of the Institute of
Chartered Accountants who shall decide who shall be the Independent
Accountant. The decision of the Independent Accountant shall be given
within 20 days of the matter being referred to him pursuant to this
clause. In giving his decision the Independent Accountant shall
determine those adjustments (if any) which are necessary to the draft
Working Capital Statement in order to resolve the matters notified by
the Buyer pursuant to clause 5.3. The draft Working Capital Statement
as so adjusted or not (as the case may be) shall become the Working
Capital Statement for the purposes of this Agreement and (in the
absence of manifest error) be final and binding on the parties, and
be deemed to be in accordance with Schedule 9, upon the written
notification of such decision to the Sellers and the Buyer and shall
be used for calculating the Consideration in accordance with clauses
4.1 and 4.3.
5.5 The Buyer and the Sellers shall co-operate fully with the Independent
Accountant at all times including in relation to agreeing the
Independent Accountant's terms of engagement.
5.6 Any determination by the Independent Accountant pursuant to clause
5.4 shall be binding on all concerned and shall be given by him as an
expert and not as an arbitrator and the Arbitration Acts 1950 and
1996 shall not apply.
5.7 The Sellers shall procure that the Buyer and its advisors shall have
full and unfettered access to all relevant papers, documents, records
and personnel of the Group (for the sole purpose of agreeing or
determining the Working Capital Statement) and of the ROC Sellers
(for the sole purpose of agreeing or determining the ROC Receivable).
If the Working Capital Statement has not been agreed prior to
Completion, the Buyer shall procure that the Sellers, their advisors
and the Independent Accountant shall have full and unfettered access
to all relevant papers, documents, records and personnel of the Group
for the purposes of preparing and agreeing or determining the Working
Capital Statement.
24
5.8 If, as determined by the Working Capital Statement, the Working
Capital shall show net liabilities (the amount of such net
liabilities being, the "Negative Amount") such amount shall be
deducted from the Consideration in accordance with clause 4.1.
5.9 If, as determined by the Working Capital Statement, the Working
Capital shall show net assets (the amount of such net assets being,
the "Positive Amount") such amount shall be added to the
Consideration in accordance with clause 4.1.
5.10 All costs incurred by the Sellers in reviewing and agreeing the
Working Capital Statement shall be borne by the Sellers and all such
costs incurred by the Buyer in reviewing and agreeing the Working
Capital Statement shall be borne by the Buyer. The fees of the
Independent Accountant shall be payable by the Sellers and the Buyer
in such proportions as the Independent Accountant determines (or
failing such determination half shall be payable by the Buyer and
half by the Sellers).
5.11 Any agreement or determination of the Working Capital pursuant to
this clause 5 shall specifically identify the values attributed to
each liability and asset.
5.12 Any agreement or determination of the ROC Receivable pursuant to this
clause 5 shall specifically identify the value attributable to that
part of the ROC Receivable due to each ROC Seller.
6. CONDITIONS
6.1 Completion is conditional on the following conditions being
satisfied:
6.1.1 the receipt of a certificate approving the terms of this
Agreement and the transactions contemplated by it by each
of the following:
6.1.1.1 Ridgewood receiving a certificate from
Ridgewood Electric Power Trust V LLC
certifying, to the extent required by law, the
approval of this Agreement and the transactions
contemplated by it by the Managing Shareholder;
6.1.1.2 Ridgewood receiving a certificate from
Ridgewood Power Growth Fund certifying, to the
extent required by law, the approval of this
Agreement and the transactions contemplated by
it by the Managing Shareholder;
25
6.1.1.3 ROC 1 receiving a certificate from Ridgewood
Renewable Powerbank LLC certifying, to the
extent required by law, the approval of this
Agreement and the transactions contemplated by
it by the Managing Shareholder and the
shareholders of Ridgewood Renewable Powerbank
LLC;
6.1.1.4 ROC 2 receiving a certificate from Ridgewood
Renewable Powerbank II LLC certifying, to the
extent required by law, the approval of this
Agreement and the transactions contemplated by
it by the Managing Shareholder and the
shareholders of Ridgewood Renewable Powerbank
II LLC;
6.1.1.5 ROC 3 receiving a certificate from Ridgewood
Renewable Powerbank III LLC certifying, to the
extent required by law, the approval of this
Agreement and the transactions contemplated by
it by the Managing Shareholder and the
shareholders of Ridgewood Renewable Powerbank
III LLC; and
6.1.1.6 ROC 4 receiving a certificate of approval from
Ridgewood Renewable Powerbank IV LLC
certifying, to the extent required by law, the
approval of this Agreement and the transactions
contemplated by it by the Managing Shareholder
and the shareholders of Ridgewood Renewable
Powerbank IV LLC;
6.1.2 the Fairness Opinions not having been withdrawn by D&P and
each Fairness Opinion being in full force and effect on
Completion;
6.1.3 no Governmental Entity shall have enacted, issued,
promulgated, enforced or entered any Order, that is then
in effect and has the effect of preventing or prohibiting
Completion or otherwise imposing material limitations on
the ability of the Sellers to accomplish the conditions
set out in clause 6.1.1 or 6.1.2; provided, however, that
each of the parties hereto shall use their reasonable
commercial efforts to have any such Order vacated;
6.1.4 no injunction, or other order by any court of competent
jurisdiction in any jurisdiction remaining outstanding
which has the effect of preventing or prohibiting
Completion or otherwise imposing material limitations on
the ability of the Sellers to accomplish the conditions
set out in clause 6.1.1 or 6.1.2 or claims for damages;
provided, however, that each of the parties hereto shall
use their reasonable commercial efforts to have any such
injunction or Order vacated;
26
6.1.5 there shall be no pending suit, action or proceeding by
any Governmental Entity (i) seeking to prohibit, or impose
any material limitations upon any material terms set forth
in this Agreement, (ii) seeking to restrain or prohibit
Completion or the performance of any of the other
transactions contemplated by this Agreement, or seeking to
obtain from the Sellers, the Managing Shareholder, the
Company or the Ridgewood Funds any damages that are
material to them, or (iii) which otherwise would have a
material adverse effect on the transactions contemplated
by this Agreement; and
6.1.6 the Agreement not having been terminated pursuant to
clause 12.
6.2 The Sellers (or any one of them) will give evidence (in a form
reasonably satisfactory to the Buyer) of satisfaction of the
conditions in clauses 6.1.1, and 6.1.2, such evidence to be given as
soon as possible after the relevant condition is satisfied.
6.3 If any of the Sellers or the Buyer becomes aware of any fact or
matter that prejudices the satisfaction of a condition, then such
Seller or Buyer will as soon as practicable inform the other parties.
6.4 This Agreement will automatically terminate if:
6.4.1 a condition set out in clause 6.1.1 to 6.1.5 has not been
satisfied or agreed to be waived by all the parties to
this Agreement on or before the Long Stop Date; or
6.4.2 this Agreement does not complete in accordance with its
terms for any other reason other than in circumstances
where a specific right of termination exists pursuant to
clauses 4.8, 6.4.1 and 12 on or before the Long Stop Date.
6.5 Upon termination of the Agreement pursuant to clause 6.4 the
following provisions will apply (save for where the Buyer is required
to keep a copy by law or regulatory authority, or in respect of
professional advisers being entitled to keep a copy in accordance
with applicable professional rules and conduct):
6.5.1 the Buyer will return to the Sellers all information (and
all copies of such information) which has been supplied to
the Buyer or its advisers by the Sellers or their advisers
before such date;
6.5.2 the Buyer will destroy all reports, analyses, studies and
other documents prepared by it or its advisers which
contain or otherwise reflect information supplied to it or
its advisers by the Sellers and their advisers and will
provide the Sellers with a certificate confirming the
same;
27
6.5.3 each of the Buyer and the Sellers will bear their own
costs relating to the negotiation, preparation, execution
or termination of this Agreement or the satisfaction of
any condition set out in clauses 6 and 12.1; and
6.5.4 each of the parties' further rights and obligations cease
immediately on termination, including in respect of any
breach of contract for failure to provide the Warranty and
Indemnity Insurance, but termination does not affect the
parties' rights and obligations accrued prior to
termination in relation to
(i) any of the Surviving Provisions or,
(ii) in circumstances where the Agreement
has been terminated pursuant to
clause 6.4.2, a failure by a party
to comply with Schedule 5.
6.6 Immediately following the Effective Date and pending Completion:
6.6.1 the Share Sellers will comply with the requirements set
out in Part I of Schedule 8 and each ROC Seller will
comply with the requirements set out in Part II of
Schedule 8 insofar as it relates to that ROC Seller;
6.6.2 the Share Sellers shall procure that, at the written
request of the Buyer, notice (the form and content of
which is first approved in writing by or on behalf of the
Buyer) is given to the relevant site operators by the
relevant Project Companies under the gas agreements for
Jameson Road Energy Limited, Whinney Hill Energy 2
Limited, Connon Bridge Energy Limited and United Mines
Energy Limited of the change of control which will be
triggered on Completion, such draft notices to be provided
to the Buyer for approval within 3 Business Days of such
request and will be sent to the relevant site operator
within 3 Business Days of approval by the Buyer; and
6.6.3 the Buyer shall cooperate with and provide, in a timely
manner, documentation to the Sellers and the Managing
Shareholder in connection with the preparation of the
Ridgewood Solicitation Materials and the preparation of
the Fairness Opinions by D&P to the extent that the
preparation of such materials reasonably requires
information about the Buyer or Macquarie or any of its
Affiliates.
28
6.7 The Buyer acknowledges that it has received from the Share Sellers
the Management Accounts.
6.8 In the event of any breach(es) by any of the Sellers of the
provisions relating to them set out in Schedule 8, to the extent that
the value of such breach is agreed or determined before Completion in
accordance with clause 6.8.2, the Consideration payable at Completion
shall be reduced by such amount and to the extent the value of such
breach is agreed or determined in accordance with clause 6.8.2 after
Completion, the relevant Seller shall, following Completion, pay to
the Buyer an amount equal to all Liabilities incurred by the Buyer or
the Group (as applicable) as a result of such breach and the
Consideration shall be accordingly reduced by any amounts so paid to
the Buyer in each case, provided that:
6.8.1 the Sellers will not be liable for any claim under this
clause 6.8 unless, within a period of 30 days after the
date of Completion, the Share Sellers receive written
notice of such claim specifying the quantum of such claim
and the nature of such claim in reasonable detail;
6.8.2 if the Sellers and the Buyer are unable to agree the
validity and/or value of such claim within 5 days of the
Share Sellers receiving notice of such claim under clause
6.8.1, the Sellers and the Buyer shall immediately procure
that the claim will be referred to a Queens Counsel
barrister of not less than 10 years standing (nominated by
them but otherwise appointed by the President of the Law
Society of England and Wales) who shall be instructed to
provide an opinion on the likelihood of the success of,
and likely quantum, of such claim within 10 days of such
referral and his/her determination shall be final and
binding on all concerned and shall be given by him/her as
an expert and not as arbitrator;
6.8.3 the Sellers' maximum aggregate liability under this clause
6.8 including the Buyer's costs and expenses incurred in
successfully bringing such a claim shall not exceed
(pound sterling)40,000,000.
6.9 The (pound sterling)40,000,000 cap on liability set out in clause
6.8.3 shall be reduced after the expiry of the 30 day period referred
to in clause 6.8.1 to an amount equal to the aggregate value of all
claims made which remain outstanding and which have not been agreed
or determined in accordance with clause 6.8.2 and all claims which
have been agreed or determined in accordance with clause 6.8.2 (such
amount being the "New Cap Amount") and the Sellers shall be free to
distribute the difference between (pound sterling)40,000,000 and the
New Cap Amount as they, in their absolute discretion, deem fit. The
value of a claim which has not been agreed or determined in
accordance with clause 6.8.2 shall only be included in the New Cap
Amount to the extent that it represents a reasonable assessment by
the Buyer of the correct value of such claim.
29
6.10 The Sellers shall procure that the Buyer shall have unfettered access
to all relevant papers, documents, records and personnel of the Group
for the sole purpose of identifying whether the Buyer has any claims
under clause 6.8.
6.11 The Buyer warrants to the ROC Sellers, the Share Sellers and the
Managing Shareholder prior to Completion that none of the information
supplied or to be supplied by the Buyer or its representatives
pursuant to clause 6.6.2 shall, at the dates such materials are
supplied by the Buyer, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in the light of
the circumstances under which they are made, nor is such information
misleading in any material respect. The Buyer further warrants to the
Share Sellers, the ROC Sellers and the Managing Shareholder that it
will promptly inform the Share Sellers, the ROC Sellers and the
Managing Shareholder of any fact, matter or event which renders such
information supplied by the Buyer or its representatives pursuant to
clause 6.6.2 materially untrue or incorrect.
6.12 Between the period from the date of this Agreement and the Long Stop
Date, the Sellers undertake not to solicit other offers for the
business of the Group or the Shares or for any of the ROC Business
Assets except that this provision shall not prohibit the Sellers,
once they or any of them receive an indication of a possible Superior
Offer, from negotiating with such offeror(s).
7. COMPLETION
7.1 Subject to earlier termination pursuant to this Agreement and the
provisions of this clause 7, Completion will take place at the
offices of the Sellers' Solicitors on the tenth Business Day after
the date on which the last of the conditions set out in clauses 6.1.1
to 6.1.7 (inclusive) have all been satisfied or evidence of
satisfaction given in accordance with clause 6.2 (or waived in
accordance with clause 6.4) or on such earlier date as may be agreed
between the Sellers and the Buyer, provided always that the condition
at clause 6.1.6 is satisfied at Completion.
7.2 Completion will not be deemed to have taken place unless the Sellers
and the Buyer comply with the provisions of Schedule 5.
7.3 The Sellers' Solicitors are authorised to receive the Consideration
on behalf of the Sellers and payment to them will be a good and
sufficient discharge to the Buyer and the Buyer will not be further
concerned as to the application of the moneys so paid whether under
the Sellers' Agreement or otherwise (including pursuant to any
release of sums by the Sellers' Solicitors to the Sellers pursuant to
paragraph 6 of Schedule 5).
30
7.4 No party is obliged to complete this Agreement unless the purchase of
all the Shares and the purchase of all of the ROC Business Assets is
completed simultaneously.
8. BUSINESS CONTRACTS
On Completion each ROC Seller shall assign to the Buyer, such
assignment being deemed to be with effect from the Effective Date all
its rights, title and interest under or pursuant to all the ROC
Business Contracts to which that ROC Seller is a party.
9. RECORDS AND ACCESS
9.1 Without prejudice to any other provision of this Agreement, the Buyer
and its agents will be entitled for a period of seven years from
Completion on giving reasonable notice to a ROC Seller to have access
during normal business hours and to take copies (at its own expense)
of any books, documents or other records in the ROC Seller's
possession relating to the ROC Business or the ROC Business Assets
and which have not been delivered to the Buyer.
9.2 Each Seller, the Managing Shareholder and each Ridgewood Fund, and
each of its agents, will, where necessary for any legitimate business
purpose and subject to providing confidentiality undertakings in a
form reasonably acceptable to the Buyer, including but not limited
to, the completion of its accounts or tax returns or for dealing with
any Relevant Claims be entitled for a period of seven years from
Completion on giving reasonable notice to the Buyer to have access
during normal business hours and to take copies of (at its own
expense) any of the records which were delivered to the Buyer
pursuant to this Agreement.
10. FUTURE ENQUIRIES AND ASSISTANCE
10.1 Each Seller will after Completion refer enquiries received by it
relating to the ROC Business as carried out at Completion or to the
Group to the Buyer; provided, however, that in the event that a
Seller receives an enquiry relating to the ROC Business or to the
Group that is made by or on behalf of any Governmental Entity,
including, without limitation, the SEC or any adjudicatory body with
competent jurisdiction, or in the event of litigation involving the
ROC Business or the Group, the Seller shall notify the Buyer of such
enquiry or such litigation, but may also refer such enquiry or
litigation to the Managing Shareholder, the Ridgewood Funds and their
respective shareholders, and their legal, accounting and other
advisors.
10.2 The Share Sellers shall use reasonable endeavours to correct the
error contained in OFGEM's records in respect of the RO and CCL
accreditation for all landfill gas generation capacity installed by
or on its behalf at the landfill site at which Jameson Road Energy
Limited operates and shall keep the Buyer reasonably informed of the
progress of such correction.
31
10.3 Arbutus shall use reasonable endeavours to obtain, as soon as
reasonably practicable following Completion, a deed of termination in
a form reasonably approved by the Buyer, duly signed by all the
parties, to the agreement dated 18 July 1996 between (1) Redland
Aggregates Limited (2) Mountsorrel Energy Limited (3) Hambro Group
Investments Limited (4) Combined Landfill Projects Limited (now known
as CLPE 1991 Limited) (the "Mountsorrel Agreement"). Until the
delivery of a certified copy of such deed of termination to the Buyer
and subject to the Buyer acting reasonably in approving the deed of
termination and provided that the Buyer procures that CLPE 1991
Limited enters into such approved form deed of termination, Arbutus
shall indemnify, keep indemnified and hold harmless CLPE 1991 Limited
against all Liabilities incurred by CLPE 1991 Limited in connection
with any payment required to be made by CLPE 1991 Limited under the
Mountsorrel Agreement.
11. WARRANTIES AND RELEVANT CLAIMS
11.1 Each Share Seller severally, but not jointly, warrants to the Buyer
in the terms of the Title Warranties with respect of itself and the
shares being sold by that Share Seller as at the date of the
Agreement.
11.2 Each Share Seller jointly and severally warrants to the Buyer in the
terms of the Tax Warranties.
11.3 Each Share Seller jointly and severally warrants to the Buyer in the
terms of the Operational Warranties as at the date of this Agreement.
11.4 Each ROC Seller severally, but not jointly, warrants to the Buyer in
the terms of the ROC Warranties in respect of itself and the ROC
Business Assets being sold by that ROC Seller only.
11.5 The Warranties are qualified by all facts, matters and information
Disclosed.
11.6 Each Warranty is to be construed independently and is not limited or
restricted by any other Warranty or any other term of this Agreement.
11.7 Subject to clauses 11.8, 11.9 and 11.15, the Warranties given by the
Share Sellers and the ROC Sellers (as appropriate) will be deemed to
be repeated on a several basis immediately before the Completion Date
by reference to the facts and circumstances existing at the
Completion Date (the "Repeated Warranties" and "Repeated Warranty"
shall be any of them). For this purpose only, where in a Repeated
Warranty there is an express or implied reference to the "the date of
this Agreement" or an equivalent term, that reference is to be
construed as a reference to the Completion Date.
32
11.8 The Repeated Warranties will only relate to facts, matters or events
existing at or immediately prior to the Completion Date and, will all
(other than the Title Warranties) be qualified by those matters
Disclosed in the Disclosure Letter. The Buyer's only remedy for
breach or breaches of the Repeated Warranties shall be if the breach
or breaches of the Repeated Warranties has, taking account of the
limitations on liability set out in Schedule 7 (but, for the purposes
of this clause 11.8, excluding the provisions of paragraph 2 of
Schedule 7), an aggregate value exceeding (pound sterling)6,000,000
in which case the only remedy shall be that available to it under
clause 12.1.1. For clarity, the Buyer will have no remedy in the case
of any breach or breaches of the Repeated Warranties the aggregate
value of which is equal to or less than (pound sterling)6,000,000.
11.9 For the purposes of determining the aggregate value of the breach or
breaches under clause 11.8 and subject to clause 5.1 (where the
context requires), in the event that the parties fail to agree on the
value within five Business Days of the Sellers receiving notice of
termination, the value will be determined by a Queens Counsel of at
least 10 years' standing (nominated jointly by the Representative
referred to in clause 5 and the Buyer or otherwise appointed by the
President of the Law Society of England and Wales) on the application
of any party to this Agreement who shall be instructed to provide an
opinion on the likelihood of the success of such claim and the likely
quantum of such claim and his/her determination shall be binding on
all concerned and shall be given by him/her as an expert and not as
an arbitrator and the Arbitration Acts 1950 and 1966 shall not apply
to the same. For the avoidance of doubt, save where the value of any
breach(es) has been agreed by the parties to be in excess of (pound
sterling)6,000,000, the Agreement shall not be terminated unless and
until such barrister determines that the aggregate value of all
breaches exceeds (pound sterling)6,000,000.
11.10 Where any Warranty or Repeated Warranty refers to the knowledge,
information, belief or awareness of a Seller (or similar expression),
each Seller will be deemed to be aware of all information of which it
has actual knowledge and all information it received after making due
enquiry of the persons listed below or which it would have received
had such due enquiry been made as at the date the Warranties or
Repeated Warranties are given but no Seller will be deemed to have
made enquiry of any other person and will not be liable for breach of
Warranty or Repeated Warranty should a fact or circumstance which
would otherwise constitute a breach of Warranty or Repeated Warranty
be known to any person other than those listed below:
Harry Wyndham;
Douglas Wilson;
Randall Holmes;
33
Robert Swanson
Alexandra Pentecost;
Aidan Marsh;
John Paul Yates;
Andrew West; and
Dominic Greenough.
11.11 Each of the Sellers shall promptly disclose in writing to the Buyer
anything which becomes known to it prior to Completion which is
(taking into account the provisions of paragraph 2.2 of Schedule 7)
inconsistent with the Warranties or the contents of the Disclosure
Letter.
11.12 Notwithstanding any other provision of this Agreement, the liability
of the Sellers in respect of any Relevant Claim will be limited in
accordance with the provisions of Schedule 7.
11.13 Each Seller waives and may not enforce any right which that Seller
may have against any Group Member, or any officer, employee, agent or
professional adviser of any Group Member, on which or on whom that
Seller may have relied in agreeing to any term of this Agreement or
any statement in the Disclosure Letter save to the extent of any
fraud or misconduct or omission that is dishonest, reckless or wilful
by such person towards the Seller in this regard.
11.14 The Buyer waives and may not enforce on behalf of itself and each
other member of the Buyer's Group any right which the Buyer may have
against any officer, employee, agent, representative or professional
adviser of any Seller or the Managing Shareholder on which it may
have relied before agreeing to any term of this Agreement or any
other agreement entered into pursuant to this Agreement save to the
extent of any fraud or misconduct or omission that is dishonest,
reckless or wilful by such person towards the Buyer in this regard.
11.15 On the Completion Date, the Sellers shall deliver to the Buyer a
certificate relating to the Repeated Warranties (the "Repeated
Warranties Bring Down Certificate") a proforma for which is in the
agreed terms. The Repeated Warranties Bring Down Certificate will set
out exceptions to the Repeated Warranties but will not result in or
create any liability for the Sellers save as provided in this clause
11.
34
12. TERMINATION
12.1 The Buyer may by notice in writing to the Sellers at or at any time
prior to Completion elect to terminate this Agreement without
liability on the part of the Buyer if :
12.1.1 any fact, matter or event comes to the notice of the Buyer
at or at any time prior to Completion which amounts to a
breach or breaches of one or more Repeated Warranty by
reference to facts or matters existing at that time and
not previously Disclosed in the Disclosure Letter, and
such breach or breaches taking account of the limitations
of liability set out in Schedule 7 (other than paragraph
2), give rise to a Relevant Claim or Relevant Claims, the
value of which, in aggregate, exceeds (pound
sterling)6,000,000;
12.1.2 the Renewables Obligation Order 2006 and/or the Renewables
Obligation Order (Scotland) 2006 and/or the Renewables
Obligation Order (Northern Ireland) 2006 (the "Orders") is
repealed with no replacement legislation being proposed or
implemented providing for a similar regime covering the
generation of electricity from qualifying renewable
sources as defined in the Orders;
12.1.3 all Non-Fossil Fuel Obligation Contracts entered into
between the Non Fossil Purchasing Agency Limited and
generators pursuant to section 32 Electricity Act 1989 are
terminated; or
12.1.4 in accordance with clause 6.8, a breach or breaches of the
Sellers' obligations which gives rise to a claim or claims
for breach of contract which, in aggregate, exceed
(pound sterling)6,000,000;
12.1.5 the Gross Macquarie Payment increases above (pound
sterling)130,000,000 or reduces below (pound
sterling)110,000,000 as a result of the interest rate
adjustment to the Purchase Price under Schedule 14; or
12.1.6 without prejudice to the Buyer's rights under clause 13,
if the Ridgewood Letter of Undertaking is withdrawn or the
Managing Shareholder attempts to vary the same provided
that nothing in this clause 12.1.6 shall limit the
obligations of the Managing Shareholder under the same.
12.2 Ridgewood and the ROC Sellers may jointly by notice in writing to the
Buyer at or at any time prior to Completion elect to terminate this
Agreement without liability on the part of any of the Sellers:
35
(i) if they receive a Superior Offer. A "Superior Offer" is an
unsolicited, bona fide, written proposal to any of Ridgewood
or the ROC Sellers, any of the Ridgewood Funds or their
respective shareholders, the Managing Shareholder or the
board of the Company, with committed financing in place or
without a financing condition, relating to the acquisition
of the Shares and the ROC Business Assets which Ridgewood
and the ROC Sellers jointly determine or the Managing
Shareholder determines in good faith, after advice from
their financial adviser, is more favourable to the
shareholders of the Ridgewood Funds than the transaction
contemplated by this Agreement. Arbutus shall be bound by
any notice given by Ridgewood and the ROC Sellers pursuant
to this clause 12.2 and shall have no right to challenge the
decisions or actions of the Managing Shareholder, Ridgewood
and the ROC Sellers under this clause 12.2; or
(ii) if Macquarie withdraws or attempts to vary the Macquarie
Letter of Undertaking provided that nothing in this clause
shall limit the obligations of Macquarie under the same; or
(iii) if the Buyer has not exercised its right under clause 4.8.1
by the Long Stop Date.
12.3 Subject to clause 6.8, if the Buyer does not elect to terminate
irrespective of its rights under clause 12.1 then the parties confirm
that no right to damages or compensation pursuant to clause 12.1 will
arise in favour of the Buyer in respect of the facts or circumstances
giving rise to such Buyer's rights in clause 12.1. For the avoidance
of doubt nothing in this clause restricts or prohibits the Buyer from
enforcing its rights under clause 6.8.
13. BREAK FEE
13.1 In the event of a Sale (as defined in clause 13.2) at any time within
the period of eighteen months from the termination of this Agreement
pursuant to clause 12.2(i) other than to the Buyer (or such person
pursuant to clause 3.7 or such other person agreed between the
parties to this Agreement) then the Sellers will pay Break Fee A in
cash in cleared funds to the Buyer within 10 Business Days after
completion of the Sale.
13.2 For the purposes of clauses 13.1, 13.6, 13.8 and 13.10, a Sale shall
mean one single transaction or a series of related transactions
whereby majority ownership of (i) the Company and (ii) such ROC
Sellers or ROC Business Assets (which together account for more than
19 mega watts of electricity generation from land fill gas) is
transferred (directly or indirectly including via any affiliated
entity of any Seller) to a single third party buyer or affiliated
third party buyers.
13.3 In the event of a Sale (as defined in clause 13.4) at any time within
a period of eighteen months from the termination of this Agreement
pursuant to clause 12.2(i) other than to the Buyer (or such person
pursuant to clause 3.7 or such other persons agreed between the
parties to this Agreement) then the Sellers will pay Break Fee B in
cash in cleared funds to the Buyer within 10 Business Days after
completion of the Sale.
36
13.4 For the purposes of clauses 13.3, 13.7, 13.9 and 13.10, a Sale shall
mean one single transaction or a series of related transactions
whereby majority ownership of the Company or more than 50% of the
value of its assets is transferred (directly or indirectly including
via any associated entity of any Seller) to a single third party
Buyer or affiliated third party buyers.
13.5 For the purposes of this clause 13, a Sale shall not include
transfers among the Sellers or Affiliates of any Seller or to any
entity controlled by the Managing Shareholder or transfers to any
shareholder or shareholders of any Ridgewood Fund or any transfer
pursuant to any dissolution, reorganisation, assignment for the
benefit of creditors, or bankruptcy of any Seller or any Affiliate of
any Seller or any Ridgewood Fund or transfers to any member of the
Group.
13.6 In the event of a Sale (as defined in clause 13.2) at any time within
the period of eighteen months from the termination of this Agreement
pursuant to clause 6.4 as a result of a withdrawal of the Fairness
Opinions, the Sellers will pay Break Fee A in cash in cleared funds
to the Buyer within 10 Business Days after completion of the Sale.
13.7 In the event of a Sale (as defined in clause 13.4), at any time
within the period of eighteen months from the termination of this
Agreement pursuant to clause 6.4 as a result of a withdrawal of the
Fairness Opinions, the Sellers will pay Break Fee B in cash in
cleared funds to the Buyer within 10 Business Days after completion
of the Sale.
13.8 In the event of a Sale (as defined in clause 13.2, at any time within
the period of eighteen months from the date on which the Managing
Shareholder fails to recommend the approval of the transactions
contemplated in this Agreement (on the terms set out in this
Agreement and the documents contemplated or referred to herein) to
the shareholders of the Sellers (in each case to the extent each such
approval is required by law), then the Sellers will pay Break Fee A
in cash in cleared funds to the Buyer within 10 Business Days after
completion of the Sale.
13.9 In the event of a Sale (as defined in clause 13.4) at any time within
the period of eighteen months from the date on which the Managing
Shareholder fails to recommend the approval of the transactions
contemplated in this Agreement (on the terms set out in this
Agreement and the documents contemplated or referred to herein) to
the shareholders of the Sellers (in each case to the extent each such
approval is required by law), then the Sellers will pay Break Fee B
in cash in cleared funds to the Buyer within 10 Business Days after
completion of the Sale.
37
13.10 In the event of a Sale (as defined in either clause 13.2 or clause
13.4) at any time within the period of nine months from the
termination of this Agreement as a result of a failure by the Sellers
to provide the certificates referred to in clause 6.1.1, then the
Sellers will pay the sum of (pound sterling)1,200,000 in cleared
funds to the Buyer within 10 Business Days of the Sale.
13.11 For the avoidance of doubt, the Sellers will not be obliged to pay
more than one break fee under this clause 13 and, if a break fee is
payable under this clause 13, the Buyer shall have no further right
to make any further claim under this Agreement for damages or
otherwise and the Sellers' liability to the Buyer under this
Agreement shall be limited to the relevant break fee payable.
14. CONFIDENTIALITY
14.1 Each Seller severally undertakes to the Buyer and each Group Member,
and the Buyer undertakes to each Seller and each Group Member, each
on its own behalf and on behalf of its officers, directors,
employees, agents and representatives, that it will not, at any time
prior to or after Completion, make use of, disclose or cause any
unauthorised disclosure to any person (except those authorised by the
other party in writing to know) of any Confidential Information
except:
(i) so far as required by Law, or to the extent relevant, the
SEC, any stock exchange or listing authority or the Panel on
Takeovers and Mergers (provided that the disclosing party
adheres to the standards set forth in clause 14.3),
(ii) so far as required by judicial proceeding or action by a
Governmental Entity, (provided that the disclosing party
adheres to the standards set forth in clause 14.4),
(iii) as necessary for performance of any of such party's duties
hereunder or the duties of the Managing Shareholder or any of
the Ridgewood Funds in connection with the transactions
contemplated by this Agreement, or as expressly provided
herein, and
(iv) for disclosures to officers, directors, or employees of the
Sellers or their affiliates and to their auditors, legal
counsel, and other advisors (provided, however, that such
persons have a need to know and have been informed of the
confidential nature of the information).
(v) for disclosures to the provider of finance to the Buyer for
the purposes of funding the Buyer's financial obligations
under this Agreement and such finance provider's advisers.
14.2 As to any party to this Agreement, the Managing Shareholder and the
Ridgewood Funds, Confidential Information does not include any
information, which:
38
(i) is independently developed by such person without violating
that person's obligations hereunder or in connection
herewith, or
(ii) was publicly available prior to such person's receipt of such
information or thereafter became publicly available (other
than as a result of disclosure by such party or such person's
employees, agents or representatives in violation of the
terms of this Agreement).
Information shall be deemed "publicly available" if it becomes a
matter of public knowledge or is contained in materials available to
the public or is obtained from any source other than the party
providing such information (or that person's directors, officers,
employees, agents or outside advisors), provided that such source is
not to such person's knowledge prohibited from disclosing such
information by a legal, contractual or fiduciary obligation to the
relevant person and did not obtain the information from an entity or
person prohibited from disclosing such information by a legal,
contractual or fiduciary obligation to the relevant person.
14.3 In the event that any party to this Agreement, the Managing
Shareholder or any of the Ridgewood Funds, or any of such person's
employees, agents or representatives, believe that they are required
by Law, or to the extent relevant, the SEC, any stock exchange or
listing authority or government entity or the Panel on Takeovers and
Mergers to disclose all or any part of the Confidential Information,
such person agrees to (i) promptly so notify the person whose
Confidential Information is requested, (ii) cause their legal counsel
to consult with legal counsel to the person whose Confidential
Information is requested regarding such obligation, and (iii)
endeavour to preserve the confidentiality of the Confidential
Information to the greatest extent possible consistent with any
obligation to comply with such Law, or to the extent relevant, the
SEC, any stock exchange or listing authority or the Panel on
Takeovers and Mergers. Any person making disclosure in accordance
with this paragraph shall not be liable for such disclosure unless
such disclosure was caused by or resulted from a previous disclosure
by that party or any of such person's employees, agents or
representatives not permitted by this Agreement.
14.4 In the event that any party to this Agreement, the Managing
Shareholder or any of the Ridgewood Funds, or any of such person's
employees, agents or representatives, is requested in any judicial
proceeding or action by a Governmental Entity to disclose any
Confidential Information, such person will provide the person whose
Confidential Information is requested, with prompt prior written
notice so that the person whose Confidential Information is requested
may seek a protective order or other appropriate remedy and/or waive
compliance with the provisions of this Agreement. In the event that
the person whose Confidential Information is requested is unable to
obtain such protective order or other appropriate remedy, the person
subject to the judicial proceeding or action by a Governmental Entity
will (i) furnish only that portion of the Confidential Information
which such person is advised by its legal counsel is legally
required, (ii) give the person whose Confidential Information is
requested written notice of the information to be disclosed as far in
advance as practicable, and (iii) exercise commercially reasonable
efforts to obtain assurance that confidential treatment will be
accorded the Confidential Information so disclosed.
39
15. BUYER'S WARRANTIES AND COVENANTS
15.1 The Buyer warrants to each Seller as at the date of this Agreement
and at Completion that:
15.1.1 it is a private limited company incorporated and validly
existing under the laws of England and Wales;
15.1.2 the Buyer has full power to enter into and perform this
Agreement and that this Agreement constitutes a binding
obligation on the Buyer in accordance with its terms;
15.1.3 the execution and delivery of and the performance by the
Buyer of its obligations under this Agreement will not:
15.1.3.1 result in breach of any provision of its
memorandum or articles of association; or
15.1.3.2 result in a breach of, or constitute a default
under, any:
(a) agreement, licence or other instrument; or
(b) order, judgment or decree of any court,
governmental agency of regulatory body to which
it is a party or by which it is bound;
15.1.4 save as provided in this Agreement, all consents,
permissions, approvals and agreements of the shareholders
of the Buyer or any third parties which are necessary or
desirable for the Buyer to obtain in order to enter into
and perform this Agreement in accordance with its
respective terms have been unconditionally obtained in
writing and have been disclosed in writing to the Sellers;
and
15.1.5 the Buyer (and all other parties thereto) have all duly
entered into the Funding Agreements and that such Funding
Agreements are conditional only upon the matters set out
in the Funding Agreements.
15.2 Upon the Funding Agreements being entered into, the Buyer covenants
that it will not amend any of the conditions precedent or conditions
to drawdown as set out in the Funding Agreements nor amend any other
provisions of the Funding Agreement to the extent such amendment does
or could materially adversely affect the Sellers.
40
15.3 The Buyer will at no cost to the Buyer or the Group after Completion
procure that the Company provides all reasonable assistance and
reasonable access to all relevant records to Douglas Wilson and Randy
Holmes for the purpose of enabling them to recover any Tax and
National Insurance Contributions paid by them or the Company on the
receipt of the bonus amounts which were inadvertently paid to them
and which they each are repaying to the Company on Completion in
accordance with paragraph 7 of Schedule 5.
16. POST-COMPLETION PROVISIONS
16.1 To assure to the Buyer the full benefit of the business and goodwill
of the Group and the ROC Business Assets, each of the Sellers
undertakes by way of further consideration for the obligations of the
Buyer under this Agreement, as separate and independent agreements,
that it will not without the Buyer's prior written consent:
16.1.1 for a period of 3 years from Completion directly or
indirectly, solicit for services of any employee of a
member of the Group earning over (pound sterling)30,000
per annum;
16.1.2 for a period of 3 years from Completion, directly or
indirectly carry on a business activity in the United
Kingdom under a name which is the same as, or similar to,
the name of a member of the Group or a name used for
business purposes by a member of the Group; or
16.1.3 for a period of 3 years at any time after Completion, make
adverse public comments in relation to the Buyer, the
Group or their respective businesses or employees
excluding in connection with any litigation or proceedings
between the parties (including in the case of the Buyer,
the Buyer's Group).
16.2 The Sellers agree that the covenants and undertakings contained in
clause 16.1 are reasonable and are entered into for the purpose of
protecting the goodwill, confidential information and trade
connections of the businesses of the members of the Group and the ROC
Business Assets.
16.3 Each undertaking contained in clause 16.1 shall be construed as a
separate undertaking. If one or more of them is held to be against
the public interest or unlawful or an unreasonable restraint of
trade, the remaining undertakings shall continue to bind the Sellers.
41
17. ANNOUNCEMENTS
17.1 Subject to clause 17.2, no party will from the date of this Agreement
until the Business Day following Completion make or send any press or
other public announcement, communication or circular (whether to
shareholders, employees, customers, suppliers or otherwise)
concerning the transactions contemplated by this Agreement or any
matter ancillary to it unless it has first obtained prior written
approval of the Buyer (in the case of the Sellers) or with the prior
written approval of Ridgewood UK LLC, Arbutus Energy Limited and the
Managing Shareholder for and on behalf of the ROC Sellers (in the
case of the Buyer or any member of the Buyer's Group).
17.2 Clause 17.1 does not apply to any announcement, communication or
circular:
17.2.1 of any of the Sellers or any of the Ridgewood Funds sent
to their respective shareholders, or of the Managing
Shareholder sent to any such shareholders or of the
Managing Shareholder to funds operated by it or to
Affiliates of it, after the date of this Agreement in
relation to the transactions contemplated by this
Agreement (provided that it has first been approved by the
Buyer, such approval not to be unreasonably withheld or
delayed);
17.2.2 made or sent by the Buyer after Completion to a customer,
client or supplier of the Group informing it of the
Buyer's purchase of the Shares; or
17.2.3 required by the law of any relevant jurisdiction or, to
the extent relevant, the regulations of the SEC or any
stock exchange or listing authority or the Panel on
Takeovers and Mergers, or any other governmental or
regulatory organisation provided, if reasonably
practicable, that the party required to make it has first
consulted and taken into account the reasonable
requirements of the other parties as to its timing,
content and manner of making or despatch.
17.3 Each party will, for a period of 90 Business Days from the date of
Completion, give the others not less than 1 Business Day's notice of
the content of any proposed press release concerning the transactions
contemplated by this Agreement or any matter ancillary to it provided
that, for the avoidance of doubt, nothing in this clause 17.3 shall
apply to any release circulated to those persons specified in clause
17.2.1.
18. COSTS
18.1 Except where expressly stated otherwise in this Agreement, each party
to this Agreement will bear such party's own costs and expenses
relating to the negotiation, preparation and implementation of this
Agreement. No Group Member will bear any part of such costs and
expenses.
42
18.2 For the avoidance of doubt, the Buyer will pay any stamp duty in
relation to the transfer of the Shares and the ROC Business Assets.
19. NOTICES
19.1 Any notice or other communication given in connection with this
Agreement will be in writing and will be delivered personally or sent
by courier or recorded delivery or by fax to the recipient's address
set out at clause 19.3 or to any other address which the recipient
has notified in writing to the sender received not less than 7
Business Days before the notice was despatched.
19.2 A notice or other communication is deemed given:
19.2.1 if delivered personally, upon delivery at the address
provided for in this clause; or
19.2.2 if sent by courier or recorded delivery upon delivery and
receipt at the address provided for in this clause; or
19.2.3 if sent by fax, when confirmation of its transmission has
been received by the sender's fax machine
provided that, if it is delivered personally or sent by fax on a day
which is not a Business Day or after 4.00 pm on a Business Day, it
will instead be deemed to have been given or made on the next
Business Day.
19.3 The addresses referred to in clause 19.1 are:
Ridgewood
To: Ridgewood UK LLC
Address: 947 Linwood Avenue,
Ridgewood, New Jersey,
07450, USA
For the attention of: Mr Douglas Wilson
Fax: 001 201447 0474
43
The Arbutus Seller
To: Arbutus Energy Limited
Address: Charter Place
23-27 Seaton Place
St. Helier, Jersey,
JE1 1JY
Channel Islands
For the attention of: Mark Baker
Fax: 01534 835 888
ROC 1
To: Ridgewood ROC 2003 LLC
Address: 947 Linwood Avenue,
Ridgewood, New Jersey
07450, USA
For the attention of: Douglas Wilson
Fax: 001 201 447 0474
ROC 2
To: Ridgewood ROC II 2003 LLC
Address: 947 Linwood Avenue,
Ridgewood, New Jersey
07450, USA
For the attention of: Douglas Wilson
Fax: 001 201 447 0474
ROC 3
To: Ridgewood ROC III 2003 LLC
Address: 947 Linwood Avenue,
Ridgewood, New Jersey
07450, USA
For the attention of: Douglas Wilson
Fax: 001 201 447 0474
44
ROC 4
To: Ridgewood ROC IV 2004 LLC
Address: 947 Linwood Avenue,
Ridgewood, New Jersey
07450, USA
For the attention of: Douglas Wilson
Fax: 001 201 447 0474
The Buyer
To: MEIF LG Energy Limited
Address: Level 28, CityPoint,
1 Ropemaker Street,
London, EC2Y 9HD
For the attention of: David Tilstone
Fax: 0207 065 2041
19.4 The provisions of this clause will not apply, in the case of service
of court documents, to the extent that such provisions are
inconsistent with the Civil Procedure Rules.
20. ASSIGNMENT
20.1 Subject to clause 20.2, no party may assign the benefit of, and any
of its rights under, this Agreement without the prior consent of the
other parties, such consent not to be unreasonably withheld or
delayed.
20.2 Notwithstanding clause 20.1, the Buyer shall be entitled to assign
the benefit of any of its rights under this Agreement to any member
from time to time of the Buyer's Group and/or any lender, bank or
financial institution which provides funding to the buyer or the
Buyer's Group, in each case without requiring the consent of any of
the Sellers provided that if such member of the Buyer's Group ceases
to be a member of the Buyer's Group the benefit transferred to it
shall automatically and unconditionally be transferred back to a
member of the Buyer's Group and further provided that the liability
of the Sellers shall not be increased or extended as a result of such
assignment. For clarity, the burden of any of the Buyer's rights
under this Agreement shall remain with the Buyer.
45
21. FURTHER ASSURANCE
Each party will use all reasonable endeavours to (at the other
party's cost) do, or procure the doing of, all acts and things and
execute, or procure the execution of, all documents as any other
party reasonably considers necessary to give full effect to the terms
of this Agreement including, without limitation, the transfer of the
ROC Business Assets.
22. RIGHTS OF THIRD PARTIES
Other than the Ridgewood Funds and the Managing Shareholders for the
account of the Ridgewood Funds, and Douglas Wilson and Randy Holmes
in relation to clause 15.3, who shall have the right to enforce the
terms of this Agreement by virtue of the Contracts (Rights of Third
Parties) Act 1999, the parties to this Agreement do not intend that
any of its terms will be enforceable by virtue of the Contracts
(Rights of Third Parties) Act 1999 by any person not a party to it.
23. ENTIRE AGREEMENT
23.1 This Agreement and the documents referred to in it constitute the
entire agreement between the parties and supersede and replace any
previous agreement, understanding, undertaking, representation,
warranty or arrangement of any nature whatsoever between the parties
relating to the subject matter of this Agreement.
23.2 The Buyer acknowledges and agrees that in entering into this
Agreement, and the documents referred to in it, it has not relied on,
and will have no remedy in equity, contract, tort, under the
Misrepresentation Act 1967 or otherwise in respect of, any
representation other than as set out in this Agreement and each
document referred to in it.
23.3 Save for the termination rights expressly provided for in clause 12,
the only remedy available to the Buyer in respect of this Agreement
and the documents referred to in it is damages for breach of contract
and, for the avoidance of doubt, it will not save in accordance with
clause 12 have the right to rescind or terminate this Agreement or
the documents referred to in it for breach of contract, negligent or
innocent misrepresentation or otherwise.
23.4 Nothing in this clause will have the effect of limiting or
restricting any liability of the parties arising as a result of any
fraud.
24. GENERAL
24.1 Unless otherwise provided, any outstanding obligation contained in
this Agreement will remain in force notwithstanding Completion.
46
24.2 Failure or delay by any party in exercising any right or remedy under
this Agreement will not in any circumstances operate as a waiver of
it, nor will any single or partial exercise of any right or remedy in
any circumstances preclude any other or further exercise of it or the
exercise of any other right or remedy.
24.3 Any waiver of any breach of, or any default under, any of the terms
of this Agreement will not be deemed a waiver of any subsequent
breach or default and will in no way affect the other terms of this
Agreement.
24.4 No variation of this Agreement will be valid unless it is in writing
and signed by or on behalf of each party to this Agreement but no
variation will require the consent of any Group Member.
24.5 Save as expressly provided in this Agreement all rights or remedies
provided by law are excluded.
25. GOVERNING LAW AND JURISDICTION
25.1 The formation, existence, construction, performance, validity and all
aspects whatsoever of this Agreement or of any term of this Agreement
will be governed by the law of England and Wales.
25.2 The courts of England and Wales will have exclusive jurisdiction to
settle any dispute which arises out of or in connection with this
Agreement. The parties irrevocably agree to submit to that
jurisdiction.
26. COUNTERPARTS
This Agreement may be executed in any number of counterparts and by
the parties to it on separate counterparts, each of which when
executed and delivered will be an original, but all the counterparts
will together constitute one and the same agreement.
27. EXECUTION
The parties have shown their acceptance of the terms of this
Agreement by executing it at the end of the Schedules.
47
SCHEDULE 1
The Share Sellers
Name and address of Number and class Relevant Proportion
registered and of Shares
beneficial owner to be sold
RIDGEWOOD UK LLC 8,053,012 'A' ordinary 88%
947 Linwood Avenue, shares of (pound sterling)1.00
Ridgewood,
New Jersey,07450,
USA
ARBUTUS ENERGY LIMITED 1,098,138 'B' ordinary 12%
Charter Place, shares of (pound sterling)1.00
23-27 Seaton Place,
St Helier,
Jersey,
JE1 1JY,
Channel Islands
48
SCHEDULE 2
Part 1
Details of the Company
[OMITTED]
Part 2
Details of other Group Members
[OMITTED]
Part 3
Dormant Companies
[OMITTED]
49
SCHEDULE 3
Part 1 - Share Warranties
1. Schedules 1 & 2; Capital
1.1 The information contained in Schedules 1 and 2 is true and accurate
in all respects.
1.2 The Shares and the issued shares of each other Group Member are fully
paid and are legally and beneficially owned and registered as set out
in Schedules 1 and 2 free from any Encumbrance and were not issued at
a discount.
1.3 No Group Member has allotted or issued any share capital other than
the shares shown in Schedules 1 and 2 as being issued.
1.4 No Group Member has any interest in the share capital of any body
corporate save as specified in Schedule 2 and no Group Member has
agreed to acquire shares or loan capital of a body corporate which is
not listed in Schedule 2.
1.5 Except as required by this Agreement, there are no agreements or
arrangements in force which provide for the issue, allotment or
transfer of, or grant to any person the right (whether conditional
otherwise) to call for the issue, allotment or transfer of, share or
loan capital of a Group Member (including an option or right of
pre-emption or conversion).
1.6 The Register of Member of each Group Member has been properly kept
and contains an accurate record at the date of this Agreement of the
matters with which it should deal and no notice or allegation has
been received that the register of members of each Group Member is
incorrect or should be rectified.
SELLER
2. Capacity
Subject to the approval of the Sellers and the shareholders of each
of the Ridgewood Funds, each Share Seller has full power to enter
into and perform this Agreement and this Agreement constitutes
obligations binding on such Share Seller in accordance with its
terms.
3. Insiders' interests
3.1 There is not outstanding any Contract to which any Group Member is or
was a party and in which any Insider is or was interested in any way
whatsoever (excluding any Contract of employment between any Group
Member and any of its directors Disclosed).
50
3.2 No Insider has so far as each Share Seller is aware any interest,
direct or indirect, in any trade or business which competes with any
Group Member's business.
3.3 None of the Sellers, nor any Insider, will at Completion be indebted
to a Group Member.
3.4 No Group Member will immediately following Completion be indebted to
a Seller.
4. Transactions involving directors
No Group Member has been a party to a transaction to which sections
320 or 330 CA 1985 may apply.
5. General Corporate
5.1 No power of attorney given by a Group Member is in force other than
those given to BoS pursuant to the Bank Facilities (which will be
revoked and cancelled at Completion).
5.2 No authorities (express or implied) by which a person (other than an
officer of any Group Member) may enter into a contract or commitment
on behalf of a Group Member are outstanding.
5.3 No Group Member has a liability as a result of having had only one
member or has been in breach of law and no Group Member has failed to
comply with a requirement applicable to it as a result of having any
company having had only one member at any time.
5.4 The statutory books and registers of each Group Member have been
properly kept in all material respects and contain a materially
accurate record at the date of this Agreement of the matters with
which they should deal and no notice or allegation has been received
that it is incorrect or should be rectified.
5.5 None of the Shares was, or represents assets which were, the subject
of a transfer at an undervalue (within the meaning of section 238 or
339 Insolvency Act 1986) within the past five years.
5.6 All material returns, particulars, resolutions and documents required
to be filed with the Registrar of Companies in respect of each Group
Member have been duly filed.
51
ACCOUNTS AND RECORDS
6. The Accounts
6.1 The Accounts (a copy of which is enclosed in the Disclosure
Documents) have been prepared in accordance with all applicable law
and accounting standards (as that term is defined in section 256 of
CA 1985) and with generally accepted accounting principles and
practices of the United Kingdom ("UK GAAP") then in force. The
Accounts give a true and fair view, in accordance with UK GAAP, of
the state of the affairs of the Group at the Accounting Date and, in
each case, have been prepared on a basis consistent with the audited
financial statements for the year ended 31 December 2004.
6.2 The monthly management accounts for the period from 1 January 2006 to
31 October 2006 have been, and the Management Accounts will be,
prepared with due care and attention on a basis consistent with
management accounts for the period from 1 January 2005 to 31 December
2005 and such management accounts do, and the Management Accounts
will (in each case, taking into account (i) that such accounts are
not produced to an audited level and do not contain footnote
disclosures which would otherwise be required, and (ii) the purpose
for which they were prepared which is to give the management of the
Group a high level view of the operations of the Group), present with
reasonable accuracy the assets and liabilities and the profits and
losses on a consolidated basis for the periods to which they relate,
subject to (in the case of the Management Accounts only) any
subsequent adjustments made in any quarterly or annual financial
statements of the Group or its Shareholders prior to the Effective
Date and which have been Disclosed.
6.3 As at 31 October 2006, the Group had no liabilities of a long term
nature (being liabilities which will not mature or be satisfied,
released or waived, within 12 months of the Effective Date) save as
set out in Appendix I and save in respect of liabilities assumed
pursuant to the Term Debt and the ROC Business Contracts.
7. Records
Each Group Member's records and information are exclusively owned by
it or under its direct control.
CHANGES SINCE THE ACCOUNTING DATE
8. General
Since the Accounting Date:
52
8.1 the business of each Group Member has been carried on in the ordinary
and usual course;
8.2 there has been no material adverse change to the business of the
Group as a whole;
8.3 no Group Member has acquired, or agreed to acquire, any single asset
having a value in excess of (pound sterling)50,000 or assets having
an aggregate value in excess of (pound sterling)50,000;
8.4 no Group Member has disposed of, or agreed to dispose of, any asset
which has a value reflected in the Accounts in excess of (pound
sterling)50,000 or which has been acquired since the Accounting Date
other than as contemplated by this Agreement;
8.5 no Group Member has borrowed or raised any money or taken up any
financial facilities or repaid any borrowing or indebtedness in
advance of its stated maturity other than trade credit and working
capital facility in the ordinary course of its business;
8.6 no Group Member has sold or agreed to sell a debt and no debt has
been released, deferred, subordinated or written off by any Group
Member;
8.7 no dividend has been declared, paid or made by any Group Member;
8.8 no Group Member has changed its accounting reference date;
8.9 no share or loan capital has been allotted, issued, repaid or
redeemed or agreed to be allotted, issued, repaid or redeemed by any
Group Member;
8.10 no resolution of the shareholders of any Group Member has been
passed; and
8.11 no Group Member has created, or granted, or agreed to create or
grant, a security interest or other encumbrance in respect of fixed
assets included in the Accounts (excluding the Property), or acquired
or agreed to be acquired since the Accounts, otherwise than as
Disclosed, in the normal course of its trading business or pursuant
to any retention or reservation of title or lien arising in the
ordinary course of business.
ASSETS
9. Unencumbered title; possession
9.1 Each asset included in the Accounts or used by any Group Member as at
the date of this Agreement is legally and beneficially owned by the
relevant Group Member free from any Encumbrance except those
encumbrances which would not have a material adverse effect on the
transactions contemplated under this Agreement and which have arisen
in the normal course of that Group Member's business.
53
9.2 None of the assets, undertaking or goodwill of a Group Member is
subject to, and no Group Member has agreed to grant, an option,
charge, lien or encumbrance, or right of pre-emption otherwise than
as Disclosed, in the normal course of its trading business or
pursuant to any retention or reservation of title or lien arising in
the ordinary course of business.
10. Stock
10.1 The Stock held by each Group Member and not written off in the
Management Accounts is at a level which is in accordance with the
Group's normal course of business consistent with past practice.
10.2 The Stock of each Group Member is in satisfactory condition and is
capable of being used in the normal course of the Group's business.
11. Plant
The plant and machinery which is material to the business of each
Group Member is in a satisfactory state of repair and condition and
is in satisfactory working order.
12. Information Technology
All information and communications technologies used by any Group
Member including computer hardware, software (proprietary and third
party) operating systems, data, Internet and web sites, firmware,
networking, peripherals and all associated documentation or other
infrastructure equipment or systems:
12.1 have not been affected by any defects or other faults that have, in
either case, caused any material or repeated interruption to the
Group's business at any time during the 12 months prior to the date
of this Agreement; and
12.2 are under the exclusive ownership or direction of the Group and are
not outsourced to or otherwise administered or controlled by, or
shared with, any third party.
13. Intellectual Property Rights
13.1 No Group Member has any interest in Intellectual Property Rights save
for the Intellectual Property Rights detailed in the Disclosure
Letter.
13.2 So far as each Share Seller is aware, all Intellectual Property
Rights used in any Group Member's business (save for Intellectual
Property Rights licensed to any Group Member under any Contract) are
legally and beneficially owned by the relevant Group Member.
54
13.3 There are and have been in the last six years no proceedings, actions
or claims brought against any Group Member, and, so far as each Share
Seller is aware, none are pending or threatened, impugning the title,
validity or enforceability of any of the Intellectual Property Rights
owned by any Group Member and the Share Sellers have not received
notice from a third party alleging any breach by a Group Member of
any third party's Intellectual Property Rights.
13.4 The Disclosure Letter contains a full list of domain names and other
addresses in connection with the Internet or Worldwide Web which are
held or used by each Group Member.
PROPERTY
14. Details of the Property
14.1 The particulars of the Property shown in Schedule 6 are true,
complete and accurate in all material respects and, together with any
land on which any electricity generating plant operated or developed
by a Seller is situated, include all the freehold, heritable or
leasehold properties owned or used by any Group Member.
14.2 The title deeds to the Property are in the relevant Group Member's
possession.
14.3 No Group Member owns, uses, has a right to use, is in occupation of
or is entitled to any estate or interest (whether legal or equitable)
in any freehold, heritable or leasehold property other than the
Property and any land on which any electricity generating plant
operated or developed by a Seller is situated. No Group Member is
party to any uncompleted agreement to acquire or dispose of any
freehold, heritable or leasehold property.
14.4 Except in relation to the Property and any land on which any
electricity generating plant operated or developed by a Seller is
situated, no Group Member has any liability (whether actual or
contingent) in relation to any freehold, heritable or leasehold
property.
14.5 The Property is occupied exclusively by the Group Members and there
is no lease, sub-lease, tenancy, service occupancy, licence or
agreement affecting the Property (other than those Disclosed) nor is
there any person in occupation or possession or who has or claims any
right of easement in respect of the Property by adverse possession or
by prescription.
14.6 All documents relating to title have been disclosed to the Buyer's
Solicitors.
55
ENVIRONMENTAL/HEALTH AND SAFETY (EHS) MATTERS
15. EHS Permits
15.1 Copies of all EHS Permits obtained by each Group Member are enclosed
in the Disclosure Documents.
15.2 Each Group Member has obtained and is in possession of all material
EHS Permits and each such EHS Permit is in full force and effect and
the relevant Group Member has complied with all material conditions
of each such EHS Permit.
15.3 No Share Seller has received notice that the operator of any landfill
site on which a Group Member carries on its business has not obtained
or has not in its possession or has not complied with all material
conditions of all permits and licences required under EHS Law in
respect of that landfill site and is not aware of any such permits
and licences not being in full force and effect.
15.4 No Share Seller has received notice of any circumstances which they
ought reasonably to know will cause the revocation or suspension or
prejudice the renewal of any EHS Permit or any permit or licence held
by the operator of any landfill site on which the Group carried on
its business.
16. Compliance with EHS Law
16.1 So far as each Share Seller is aware, no works or costs are currently
necessary to obtain or secure compliance with or maintain any EHS
Permit, or otherwise to comply in all material respects with EHS Law.
16.2 So far as each Share Seller is aware, each Group Member complies in
all material respects with EHS Law.
16.3 No Group Member has received any written communication from any
relevant authority from which it is alleged to be in breach of EHS
Law. No Group Member has received any written communication from an
operator of any landfill site on which a Group Member carries on its
business that such operator has received written communication from
any relevant authority from which the operator is alleged to be in
breach of EHS Law.
16.4 No Group Member has operated a land fill site nor are any currently
doing so.
17. Liability
17.1 No proceedings are in existence or, so far as each Share Seller is
aware, are threatened or pending against any Group Member nor so far
as the Share Sellers are aware, has any Group Member received any
written communication from an operator of any landfill site on which
a Group Member carries on its business that such operator has
received written communication concerning proceedings pending or
threatened in relation to EHS Matters.
56
17.2 No Group Member has received any written notice of any complaint or
claim from any person in respect of EHS Matters.
18. Planning
18.1 The present use of each of the Projects and the landfill sites where
there is a Project is the permitted use for the purposes of the
Planning Acts (meaning all applicable legislation relevant to town
and country planning) and no such use is stated to be personal.
18.2 All necessary planning, building warrant and other necessary
permissions and all necessary local authority building warrant
completion certificates are held by, or are under the control of,
each Group Member in regard to each Project and the works executed at
each Project and, so far as the Share Sellers are aware, the Group
has not received notice that any necessary planning, building warrant
and other necessary permissions and any necessary local authority
building warrant completion certificates are not held by the
operators of the landfill sites where a Project is located.
18.3 So far as the Share Sellers are aware, the Group Members are
complying with and have not received notice of non-compliance of:
18.3.1 the terms of all planning permissions relating to each of
the Projects and to each of the landfill sites where there
is a Project;
18.3.2 the provisions of any legal agreement relating to each of
the Projects and to each of the landfill sites where there
is a Project which is entered into pursuant to:
18.3.2.1 the Planning Acts or any predecessor statute;
18.3.2.2 any applicable bye laws or other applicable
regulations relevant to planning; and
18.3.2.3 no enforcing authority has commenced or given
notice to the Group of any proceedings for a
breach of any of the above.
18.4 So far as each Share Seller is aware, no member of the Group has
received any notice under the Planning Acts in relation to the
Projects or the landfill sites where there is a Project.
57
18.5 So far as each Share Seller is aware, no member of the Group has
received notice that a current planning permission granted in respect
of any of the Projects or the landfill sites where there is a Project
is to be suspended.
18.6 So far as each Share Seller is aware, no member of the Group has
received any of the following in relation to a Project or a the
landfill sites where there is a Project:
18.6.1 a confirmed compulsory purchase order (and there are no
proposals to acquire compulsorily any of the landfill
sites where there is a Project);
18.6.2 a purchase notice; or
18.6.3 a blight notice.
18.7 Building regulation consents have been obtained and complied with in
all material respects at all times with respect to all development of
and alterations and improvements to each of the Projects and to each
of the landfill sites where there is a Project.
EMPLOYEES
19. Remuneration and employees
19.1 The Disclosure Documents contain anonymised details of the job
titles, dates of commencement of employment (or appointment to
office), dates of birth, material terms and conditions of employment,
salary and other benefits of each employee of each Group Member.
19.2 So far as each Share Seller is aware, there are no amounts owing to
any present or former officers, workers or employees of any Group
Member, other than remuneration accrued (but not yet due for payment)
in respect of the calendar month in which this Agreement is executed
or for reimbursement of business expenses incurred during such month
and no past or present employee of any Group Member has any right to
any payment or other benefit by virtue of the sale of the Shares
(save for the persons entitled to the Bonus Amount who are listed in
the Disclosure Letter) and no bonuses or long term incentive plan
payments are payable or accrued other than the Bonus Amount, which
the Share Sellers warrant represents the total sum due pursuant to
the CLPE Holdings Management Incentive Plan.
19.3 There are no employees who have been absent due to sickness or
maternity leave for more than 3 continuous months in the 12 month
period ending on the date of this Agreement.
19.4 No Group Member has formally recognised a trade union and no Group
Member is party to any agreement with any trade union in respect of
its employees.
58
19.5 No Group Member is involved in any industrial action in respect of
its employees.
19.6 No Group Member operates any short time working scheme or arrangement
or any redundancy or redeployment scheme or arrangement, whether
formal or informal, contractual or non-contractual, which provides
for payments greater than those required by statute or for notice
periods greater than those set out in contracts of employment or
engagement.
19.7 So far as each Share Seller is aware, there is no person previously
employed or engaged by any Group Member who now has or may have
statutory or contractual right to return to work or to be reinstated
or to be reengaged by the relevant Group Member and there is no
outstanding right of any such person to compensation against any
Group Member.
19.8 The contracts of employment to which any Group Member is a party are
terminable at any time on three months' notice or less without
compensation (other than compensation in accordance with the
Employment Rights Act 1996).
19.9 No Group Member has given or received notice to terminate the
employment or engagement of any person employed or engaged by it and
no person has ceased to be employed or engaged by any Group Member,
in either case since the Accounting Date or where such notice has not
yet expired.
19.10 No Group Member has employed or made any offers to employ any person
since the Accounting Date where such employment will take effect
after the date of this Agreement.
19.11 Each Group Member has complied in all material respects with all
material laws relating to its employees and workers.
20. Pensions
20.1 The Pension Scheme is the only arrangement to which any Group Member
has any liability for the purpose of providing benefits on retirement
or death (or similar entitlement).
20.2 The Share Sellers have supplied to the Buyer all material documents
containing details of the Pension Scheme and of each Group Member's
obligations and liabilities under it.
20.3 The Pension Scheme is an approved scheme (within the meaning of
Chapter I or IV of Part XIV of ICTA).
59
CONTRACTS
21. Insurance
21.1 Particulars of each Group Member's current insurances and of all
claims made against those insurances in the last 2 years are enclosed
in the Disclosure Documents.
21.2 All premiums due in relation to each Group Member's insurances have
been paid.
21.3 No claim under any Group Member's current insurances are outstanding
and, so far as each Share Seller is aware, there are no circumstances
which might result in any insurance claim.
21.4 All the assets and undertakings of each Group Member of an insurable
nature are, and have at all material times been, insured in a manner
considered prudent by the Share Sellers.
21.5 All insurances of each Group Member are in full force. No Group
Member has been refused insurance or had any insurance policies
terminated nor has any Group Member received notice from its
insurance broker of any intention to refuse or terminate or make void
any insurance of a Group Member.
22. Financing and working capital
22.1 No indebtedness of any Group Member is due and payable and no
security over any of the assets of any Group Member is now
enforceable. No Group Member has received notice (whether formal or
informal) from a lender of money, requiring repayment or intimating
the enforcement of a security; and so far as each Share Seller is
aware there is nothing which will give rise to such a notice.
22.2 No person (other than a Group Member) has given any guarantee of or
security for any overdraft, loan, other financial facility granted to
any Group Member or other liability of any Group Member.
22.3 No Group Member has applied for or received any grant, subsidy or
financial assistance from any government department or other body. No
Group Member has done or omitted to do anything which could and the
sale of the Company will not result in all or part of a grant,
subsidy or other similar payments made or due to be made to it
becoming repayable, or being forfeited or withheld.
22.4 The total amount borrowed by each Group Member (as determined in
accordance with the relevant instrument) does not exceed any
limitation on its borrowing powers contained in its articles of
association or other documents.
22.5 No Group Member has outstanding or has agreed to create or issue any
loan capital; has engaged in financing of a type which would not
require to be shown or reflected in the Accounts; or has borrowed
money which it has not repaid, apart from borrowings not exceeding
the amounts shown in the Accounts.
60
22.6 No Group Member has lent money which has not been repaid to it or is
the creditor in respect of a debt (whether or not due for payment)
which has arisen otherwise than in the normal course of its business.
22.7 There has been no exercise, so far as the Share Sellers are aware,
purported exercise or claim for a charge, lien, encumbrance or equity
over assets of a Group Member.
22.8 No Group Member has been the tenant of, or a guarantor in respect of,
leasehold property other than the Property.
22.9 Other than as Disclosed, no Group Member has a material contractual
exposure in relation to interest or exchange rate fluctuations.
22.10 Since the date of each bank statement referred to in Schedule 5,
there have been no payments out of the account to which the statement
relates, except for payments in the normal course of trading
business.
22.11 The Disclosure Documents set out accurate and complete details
(together with accurate copies of all relevant documentation) of the
Bank Facilities.
22.12 Save for the declared but unpaid dividends referred to in the
Disclosure Letter, there is no amount due and payable by a Group
Member which has been due for more than 3 months.
23. Material contracts
23.1 No Group Member is a party to, liable under or subject to, any
Contract which remains outstanding or unperformed (in whole or in
part) and which:
23.1.1 involves hire purchase, conditional sale, credit sale,
leasing or hiring arrangements in excess of (pound
sterling)50,000;
23.1.2 involves any capital expenditure by the relevant Group
Member in excess of (pound sterling)50,000;
23.1.3 is a guarantee, indemnity, surety or form of comfort in
respect of the obligations of a third party under which
any liability or contingent liability is outstanding; or
23.1.4 is not on arm's length terms or is otherwise than in the
ordinary course of the Group's business.
61
23.2 No Group Member has received written notice that it is in breach of
any material Contract to which it is a party which has not been
remedied to the satisfaction of the other contracting parties and, so
far as the Share Sellers are aware, no other party to any such
material Contract is in material breach of it.
23.3 All material Contracts to which a Group Member is a party and which
remain outstanding or unperformed (in whole or in part) are disclosed
in the Disclosure Documents.
23.4 All conditions precedent to the effectiveness of any material
contract to which a Group Member is a party and, in the case of a gas
agreement, once the relevant Project thereunder has been commissioned
have been satisfied or waived in accordance with its terms.
23.5 The Share Sellers have received no notice that any conditions
precedent to the occurrence of the following material dates under the
Contracts specified below have not been satisfied or waived by the
relevant parties:
23.5.1 the "Connection Date" (or any comparable term used) under
and as defined in each Project Company's arrangements for
the connection of its generating assets (including ROC
Business Assets used by it) to the relevant distribution
network;
23.5.2 the "Commencement Date" (or any comparable term used)
under and as defined in any Project Company's arrangements
with Smartest Energy Limited for the sale of any
electricity generated by that Project Company's generating
assets (including any ROC Business Assets used by it); and
23.5.3 the "Effective Date" under and as defined in any Project
Company's other arrangements for the sale of any
electricity generated by that Project Company's generating
assets (including any ROC Business Assets used by it).
23.6 So far as the Share Sellers are aware, no Group Member has any
material outstanding obligations or liabilities under any material
Contracts to which it has been a party which have been terminated.
23.7 None of the Dormant Companies have or will at Completion have any
outstanding obligations or liabilities under any Contract whether
written or oral, to which any Group Member is or has been a party.
23.8 Summerston Energy Limited has not paid any amounts under clause 4 of
the undated landfill gas agreement it has entered into with
Caledonian Properties Limited and Glasgow City Council for which it
has to be reimbursed by either of the other parties, in respect of
which no such reimbursement has been received.
62
23.9 So far as each Share Seller is aware, no material Contract to which
any Group Member is a party is terminable upon the change of control
of a Group Member or of the holding company of such Group Member.
23.10 The Renewables NFFO5 Replacement Power Purchase Agreement (Non-BSC
Party Contract) entered into by the landfill operator at the Todhills
Landfill site on 8 March 2001 remains in full force and effect.
23.11 The Renewables NFFO5 Replacement Power Purchase Agreement (Non-BSC
Party contract) in respect of Chelson Meadow Energy Limited has been
Disclosed and is in full force and effect.
24. Outstanding offers
No offer, tender or the like with a value in excess of (pound
sterling)15,000 is outstanding which may be converted into an
obligation of a Group Member by acceptance by, or other act of,
another person.
25. Guarantees and indemnities
Other than as Disclosed, there is no subsisting guarantee or
agreement for indemnity or for suretyship given by a Group Member or
for its accommodation.
26. Agreements relating to the management and business
26.1 There are no agreements or arrangements between a Group Member and a
person (including the Share Sellers) who is a shareholder, or the
beneficial owner of an interest, in it, or in a company in which a
Group Member is interested, or an Insider of such a person, relating
to:
26.1.1 the management of a Group Member's business;
26.1.2 the appointment or removal of directors of a Group Member;
26.1.3 the ownership, transfer of ownership or letting of assets
of a Group Member;
26.1.4 the provision, supply or purchase of finance, goods,
services or other facilities to, by or from a Group
Member; or
26.1.5 in any other respect relating to its affairs.
27. Agency agreements and agreements restricting business
27.1 No Group Member is a party to an agency, distributorship, marketing,
purchasing, manufacturing or licensing agreement or arrangement or a
restrictive agreement or arrangement which restricts its freedom to
carry on its business as it thinks fit.
63
27.2 No Group Member is bound by an undertaking or assurance given to a
court.
28. Other business matters
28.1 No Group Member uses, for any purpose, any name other than its own
corporate name or any other name specified in the Disclosure Letter.
28.2 All material licences and consents of each Group Member have been
Disclosed and in the Share Sellers' reasonable opinion no other
licences or consents which are material to the business of the Group
are necessary in order for such business to be carried on after
Completion in the same manner as it was carried on immediately prior
to Completion.
28.3 No Group Member is, or has agreed to become, a participant in or
member of a joint venture, consortium, partnership or other
unincorporated association.
28.4 No Group Member is, or has agreed to become, a party to an agreement
or arrangement for sharing commissions or other income.
COMPLIANCE, DISPUTES
29. General legal compliance
29.1 So far as each Share Seller is aware:
29.1.1 each Group Member and their officers and employees have
conducted its business in all material respects in
accordance with all applicable legal and administrative
requirements in the United Kingdom and any requirements of
any other rules, codes and other documents applicable to
electricity generators in the United Kingdom;
29.1.2 each Group Member has carried on business and conducted
its affairs in accordance with its memorandum and articles
of association; and
29.1.3 each Group Member has the power and is qualified to carry
on business in the jurisdictions in which it carries on
business.
29.2 So far as each Share Seller is aware, there is not pending, or in
existence, any investigation or enquiry by, or on behalf of, any
governmental or other regulatory body in respect of the affairs of
any Group Member.
29.3 Each Project Company has obtained accreditation to receive LECs and
Renewables Obligation Certificates ("CCL Accreditation" and "RO
Accreditation", respectively) in respect of any electricity generated
by the installed capacity of its Projects as at the date of this
Agreement. Each such accreditation is in full force and effect and
the relevant Project Company has complied with all material
conditions thereof.
64
29.4 The Share Sellers are not aware of, and have not been informed by the
Department of Trade and Industry, OFGEM or any other competent
authority of, any circumstances which might cause the revocation or
suspension of any such CCL or RO Accreditation.
29.5 The Share Sellers are not aware of, and have not been informed by the
Department of Trade and Industry, OFGEM or any other competent
authority of, any matter or fact which prevents or is reasonably
likely to prevent any of the ROC Projects being treated as an
"eligible renewable source" (as defined in the Renewables Obligation
Order 2006 and the Renewables Obligation (Scotland) Order 2006) and a
"renewable source of electricity" (as defined in the Climate Change
Levy (General) Regulations 2001 as amended from time to time) or
which would (so far as the Share Sellers are aware) prevent the issue
of Renewables Obligation Certificates or LECs being issued by any
competent authority in respect of any electricity generated by any of
the ROC Projects.
29.6 None of the Group Members nor, so far as the Sellers are aware, any
of the land on which any Group Member carries on its business or on
which a ROC Project is situated has ever been the subject of any
"qualifying arrangement" as defined in the Renewables Obligation
Order 2006 and the Renewables Obligation (Scotland) Order 2006 which
has not been disclosed to the Buyer. Where such a "qualifying
arrangement" has been disclosed but has been terminated, such
termination was not due to the operator of the generating station to
which it applied having committed an unremedied breach of it.
30. Litigation
30.1 No Group Member is a party to (whether as claimant, defendant or
otherwise) any civil, criminal, tribunal, arbitration, administrative
or other proceedings and, so far as each Share Seller is aware, no
such proceedings are pending or threatened.
30.2 There is no outstanding or unsatisfied judgment, decree, order, award
or decision of a court, tribunal, arbitrator or governmental agency
against any Group Member and no Group Member is party to any current
undertaking or assurance given to a court, tribunal or any other
person in connection with the determination or settlement of any
claim or proceedings which remains outstanding.
30.3 There is no dispute with a Taxation Authority (as defined in Schedule
4 in relation to the affairs of a Group Member); and, so far as each
Share Seller is aware, no such dispute is pending or threatened.
65
31. Insolvency
31.1 No order has been made, petition presented or resolution passed for
the winding up of any Group Member. No administrative receiver,
receiver or receiver and manager has been appointed of the whole or
any part of the property, assets or undertaking of any Group Member.
31.2 No distress, execution or similar process has been levied and remains
undischarged in respect of any Group Member.
31.3 No Group Member has stopped or suspended the payment of its debts or
received a written demand pursuant to section 123(1)(a) Insolvency
Act 1986 and no Group Member is insolvent or unable to pay its debts
within the meaning of section 123 Insolvency Act 1986.
31.4 No administrator has been appointed in respect of any Group Member
and no steps or actions have been taken in connection with the
appointment of an administrator in respect of any Group Member.
31.5 No voluntary arrangement has been proposed or approved under Part 1
Insolvency Act 1986 and no compromise or arrangement has been
proposed, agreed to or sanctioned under section 425 CA 1985 in
respect of any Group Member.
32. Effects of the Agreement
32.1 Neither Share Seller has received any written notice from any third
party contracting with the Group of its intention to terminate any
arrangements or Contracts with the Group as a result of the
acquisition by the Buyer of the Shares.
32.2 No Group Member has received written notice that a third party to a
material Contract intends to terminate such Contract as a result of
the sale of the Group to the Buyer.
66
Part 2 - ROC Warranties
1. Schedules
The information concerning the warranting ROC Seller contained in
Schedules 11 and 12 is true and accurate and complete in all material
respects.
SELLER
2. Capacity
Subject to the approval of the Shareholders of each relevant ROC
Seller, the warranting ROC Seller has full power to enter into and
perform this Agreement and this Agreement constitutes obligations
binding on such ROC Seller in accordance with its terms.
3. Breaches
Neither the execution and delivery of this Agreement by the
warranting ROC Seller nor the transactions contemplated by this
Agreement are prohibited by, or violate any provision of, and will
not result in a breach of:
3.1 any applicable law, rule, regulation, judgment, decree, order or
other requirements of any government, quasi-government, statutory,
administrative or regulatory body, court or agency; or
3.2 the constitutional documents of that warranting ROC Seller.
4. Contracts
The only contracts which the ROC Sellers have entered into which are
relevant to the ROC Business Assets being acquired are the DSA's and
the DA's.
ASSETS
5. Unencumbered title; possession
5.1 The following warranty is made by the warranting ROC Seller with
respect to the assets listed under its name in Schedule 11 and
Schedule 12:
5.1.1 the ROC Plant and Equipment listed under ROC 1's name is
legally and beneficially owned with good and marketable
title, by ROC 1 free from any Encumbrance;
5.1.2 the ROC Plant and Equipment listed under ROC 2's name is
legally and beneficially owned with good and marketable
title, by ROC 2 free from any Encumbrance;
67
5.1.3 the ROC Plant and Equipment listed under ROC 3's name is
legally and beneficially owned with good and marketable
title, by ROC 3 free from any Encumbrance;
5.1.4 the ROC Plant and Equipment listed under ROC 4's name is
legally and beneficially owned with good and marketable
title, by ROC 4 free from any Encumbrance.
5.2 Each of the warranting ROC Sellers warrants that the assets listed
under its name in Schedule 11 and Schedule 12 are all the ROC
Business Assets owned or used by it.
6. Plant and Equipment, etc
The ROC Plant and Equipment owned by each of the warranting ROC
Sellers as set out in Schedule 12 is:
6.1 in a satisfactory state of repair and condition and is in
satisfactory working order; and
6.2 in that warranting ROC Sellers' possession and control and are their
absolute property.
7. The Stock as it relates to the ROC Business Assets is at a level and
is adequate for the carrying on in the normal course of business
consistent with past practice.
8. All consents and agreements of third parties which are required for
the transfer of the ROC Business Assets (including in relation to any
Contracts to which any Group Member is a party) to the Buyer have
been obtained in writing and are attached to the Disclosure
Documents.
CONTRACTS
9. Insurances
All the ROC Plant and Equipment of an insurable nature is, and has at
all material times been, insured in a manner considered prudent by
that ROC Seller.
10. Material contracts
10.1 All of the ROC Business Contracts of the warranting ROC Seller have
been disclosed to the Buyer in the Disclosure Documents.
10.2 Other than the ROC Business Contracts of the warranting ROC Seller,
there are no other Contracts which such ROC Seller has entered into
relating to the ROC Business Assets of such ROC Seller and true and
68
complete copies of the ROC Business Contracts have been Disclosed and
material particulars of any amendments to them have been notified to
the Buyer.
10.3 The warranting ROC Seller has not received written notice alleging or
claiming a breach by such ROC Seller of any ROC Business Contract of
such ROC Seller and so far as such ROC Seller is aware, there are no
circumstances giving rise to a breach of a ROC Business Contract on
the part of such ROC Seller.
11. Compliance with statutes and licences
11.1 Short particulars of each licence and consent required to carry on
the ROC Business are set out in the Disclosure Letter; all such
licences and consents are valid and subsisting; and the ROC Sellers
are not in breach of any of them and no notice has been received by a
ROC Seller that would prejudice their continuation or renewal in the
places and in the manner in which the ROC Business is now carried on.
11.2 So far as each warranting ROC Seller is aware, it has conducted
its ROC Business in accordance with all applicable laws and
regulations.
11.3 So far as each warranting ROC Seller is aware, there have been no
investigations or enquiries, by or on behalf of, a governmental or
other body in respect of any aspect of the ROC Business and none are
taking place or pending.
12. Environmental matters
The ROC Business and the warranting ROC Seller has, so far as the
warranting ROC Seller is aware, complied in all material respects
with EHS Law.
13. Litigation
13.1 The warranting ROC Seller is not, nor so far as such warranting ROC
Seller is aware, any person for whose acts such ROC Seller may be
contractually or vicariously liable is, party to (whether as
claimant, defendant or otherwise) any civil, criminal, tribunal,
arbitration, administrative or other proceedings in respect of the
ROC Business Assets of such ROC Seller and, so far as such ROC Seller
is aware, no such proceedings are pending or threatened.
13.2 There is no outstanding or unsatisfied judgment, decree, order, award
or decision of a court, tribunal, arbitrator or governmental agency
against the warranting ROC Seller in relation to the ROC Business
Assets of such ROC Seller and such ROC Seller is not party to any
current undertaking or assurance given to a court, tribunal or any
other person in connection with the determination or settlement of
any claim or proceedings in relation to the ROC Business Assets of
such ROC Seller which remains outstanding.
69
14. Insolvency
14.1 No order has been made, petition presented or resolution passed for
the winding up of the warranting ROC Seller. No administrative
receiver, receiver or receiver and manager has been appointed of the
whole or any part of the property, assets or undertaking of such ROC
Seller.
14.2 No distress, execution or similar process has been levied and remains
undischarged in respect of any of the ROC Business Assets of the
warranting ROC Seller.
14.3 The warranting ROC Seller has not stopped or suspended the payment of
its debts or received a written demand pursuant to section 123(1)(a)
Insolvency Act 1986 and such ROC Seller is not insolvent or unable to
pay its debts within the meaning of section 123 Insolvency Act 1986.
14.4 No administrator has been appointed in respect of the warranting ROC
Seller and no steps or actions have been taken in connection with the
appointment of an administrator in respect of such ROC Seller.
14.5 No voluntary arrangement has been proposed or approved under Part 1
Insolvency Act 1986 and no compromise or arrangement has been
proposed, agreed to or sanctioned under section 425 CA 1985 in
respect of the warranting ROC Seller.
15. Employees
There are no employees (other than persons employed by Group Members)
in the ROC Business.
16. Taxation
16.1 General
16.1.1 Neither HMRC nor any other fiscal or regulatory authority
has operated or agreed to operate any special arrangement
(being an arrangement which is not based on relevant
legislation or any published practice) in relation to the
ROC Business Assets of the warranting ROC Seller.
16.1.2 So far as the warranting ROC Seller is aware, at the date
of this Agreement no dispute exists between such ROC
Seller and HMRC or any regulatory authority in relation
to a ROC Business Asset of such ROC Seller.
70
16.2 Capital Allowances
16.2.1 None of the Plant and Equipment of the warranting ROC
Seller has been treated as a long life asset in
accordance with Part 1 Chapter 10 of CAA, or been the
subject of a short life election in accordance with
section 83 Capital Allowances Act 2001 ("CAA").
16.2.2 No person other than the warranting ROC Seller is
entitled to be treated as the owner of any item of fixed
Plant and Equipment of such ROC Seller in accordance with
the provisions of Part 2 Chapter 14 CAA, and such ROC
Seller's right to be so treated does not depend on any
election under section 183 CAA.
16.2.3 None of the ROC Plant and Equipment of the warranting ROC
Seller is subject to an equipment lease with a third
party who is not a member of the Group other than the
powerbank lessors.
71
SCHEDULE 4
Taxation
PART 1 - INTERPRETATION
1. Interpretation
In this Schedule 4:
1.1 the following expressions have the following meanings unless
inconsistent with the context:
"the Auditors" the auditors for the time being
of the Group
"Corresponding Relief" (a) any Relief arising as a result
of a Liability to Taxation in
respect of which the Share
Sellers or any of them have
made a payment under paragraph
2 or in respect of the
Taxation Warranties; or
(b) any Relief arising as a result
of or in connection with the
Events which gave rise to a
Liability to Taxation in
respect of which the Share
Sellers or any of them have
made a payment under paragraph
2 or in respect of the
Taxation Warranties; or
(c) any Relief which:
(i) was claimed in respect of
the accounting period of
any Group Member current
at Completion or in
respect of any earlier
accounting period;
(ii) was disallowed by a
Taxation Authority so as
to give rise to a
Liability to Taxation in
72
respect of which the
Share Sellers or any of
them have made a payment
under paragraph 2 or in
respect of the Taxation
Warranties; and
(iii) remains available to be
used in an accounting
period of the Group
Member other than the one
in respect of which it
was originally claimed;
or
(d) any Relief arising as a result
of or in connection with any
deduction, withholding or
Taxation referred to in
paragraph 5.2
"Dispute" any dispute, appeal, negotiations or
other proceedings in connection with a
Tax Claim
"Event" any event, action or transaction including the earning,
receipt or accrual for any Taxation
purpose (as opposed to any accounting
purpose)of any income, profits or gains
"FA" Finance Act
"Future Relief" any Relief (other than a Corresponding
Relief) which arises wholly or mainly as
a result of any Event which has occurred
or occurs after Completion
"Group Relief" (a) any relief surrendered or
claimed pursuant to Chapter IV
of Part X ICTA;
(b) any refund of Taxation
surrendered or claimed
73
pursuant to section 102 FA
1989; and
(c) any relief obtained as a
result of an election made
jointly with another company
under sections 171A or 179A
TCGA or under paragraph 66 of
Schedule 29 FA 2002
"HMRC" H.M. Revenue and Customs and any
predecessor body including the Board of
the Inland Revenue and the Commissioners
of Customs and Excise
"ITEPA" Income Tax (Earnings and Pensions) Act
2003
"Liability to Taxation" (a) any liability of any Group
Member to make an actual
payment of Taxation; and
(b) the use by any Group Member of
any Future Relief to reduce or
eliminate any liability of any
Group Member to make an actual
payment of Taxation in respect
of which the Share Sellers or
any of them would otherwise
have been liable under
paragraph 2
"Over Provision" (a) the amount by which any
provision for Taxation in the
Working Capital Statement
proves to be an over
provision; and
(b) the amount by which any
repayment of Taxation which is
treated (or which could have
been treated) as an asset in
the Working Capital Statement
proves to be understated
"Relief" (a) any relief, allowance,
exemption, set-off, deduction
74
or credit available from,
against or in relation to
Taxation or in the computation
for any Taxation purpose of
income, profits or gains; and
(b) any right to a repayment of
Taxation
"Repayment" the obtaining by the Company of:
(a) a repayment of Taxation where
the Share Sellers or any of
them have made a payment under
paragraph 2 or in respect of
the Taxation Warranties in
respect of the same Taxation
which is the subject of the
repayment; or
(b) a repayment of Taxation by the
use of any Share Sellers'
Relief or any Corresponding
Relief
"Saving" the reduction or elimination of any
liability of any Group Member, the Buyer
or any member of the Buyer's Group to
make an actual payment of Taxation in
respect of which the Share Sellers would
not have been liable under paragraph 2,
by the use of any Share Seller's Relief
or any Corresponding Relief
"Share Seller's Relief" any Relief other than a Future Relief
"Taxation" and "Tax" (a) any tax and any impost
withholding or levy in the
nature of tax, of the United
Kingdom or elsewhere, whether
national or local, including
national insurance and social
security contributions and
value added tax (or similar)
but excluding all business
rates, water rates and local
75
authority or utility charges;
and
(b) any fine, penalty, surcharge,
or interest relating to any
tax, impost or levy mentioned
in paragraph (a) of this
definition
"Taxation Authority" any authority, whether of the United
Kingdom or elsewhere, competent to
impose, assess or collect Taxation,
including but not limited to HMRC
"Taxation Statute" any statute (and all regulations and
other documents having the force of law
under such statute) published, enacted,
issued or coming into force on or before
the date of this Agreement relating to
Taxation
"Taxation Warranties" the Warranties at Part 3 of this
Schedule 4
"Tax Claim" any notice, demand, assessment, letter
or other document issued, or action
taken, by or on behalf of any Taxation
Authority and the submission of any
Taxation form, return or computation
from which, in either case, it appears
that any Group Member is or may be
subject to a Liability to Taxation or
other liability inrespect of which the
Sellers are or may be liable under
paragraph 2 or for breach of any of the
Taxation Warranties
"TCGA" Taxation of Chargeable Gains Act 1992
"TMA" Taxes Management Act 1970
"VAT Group" any group of companies for the
purposes of section 43 VATA of which any
Group Member is or has been a member on
or before Completion
76
"Withholding Tax Claim" the disclosure and negotiations
to be made to and with HMRC and/or IRS
in connection with obtaining of
confirmation of (a) the amount of Tax
which should have been withheld by the
Company on the payment of interest to
Ridgewood in respect of any loan made by
Ridgewood to the Company prior to
Completion and/or (b) the amount of any
interest or penalties payable by the
Company arising as a result of the
failure by the Company to withhold tax
on payment of such interest
1.2 references to Events include Events which are deemed to have occurred
for any Taxation purpose and references to income, profits or gains
earned, received or accrued for any Taxation purpose include income,
profits or gains which are deemed to have been earned, received or
accrued for any Taxation purpose (as opposed to any accounting
purpose).
PART 2 - TAX COVENANT
2. Covenant
Subject to the provisions of this Part 2 of this Schedule 4 and
paragraphs 2, 7, 8, 10, 13 and 14 of Schedule 7, each of the Share
Sellers severally, but not jointly, covenants with the Buyer to pay to
the Buyer an amount equal to that Share Seller's relevant proportion
of the amount of:
2.1 any Liability to Taxation which has arisen or arises as a result of
any Event which occurred on or before Completion;
2.2 a Group Member having a Liability to Taxation in consequence of the
failure by any other company (other than another Group Member):
2.2.1 which was, prior to Completion, a member of a group (as
defined for any relevant Tax purposes) of which the Company
was, prior to Completion, a member; or
2.2.2 which was, prior to Completion, under the control of any
person or persons that directly or indirectly controlled the
Group Member prior to Completion
to discharge Tax within a specified period or otherwise.
2.3 any inheritance tax which:
77
2.3.1 at Completion has given rise to a charge on any of the shares in or
assets of a Group Member or gives the power to sell, mortgage or
charge any of the shares or assets of the Company; or
2.3.2 after Completion gives rise to a charge on or gives the power to sell,
mortgage or charge any of the shares in or assets of any Group Member,
being a liability in respect of additional inheritance tax payable on
the death of any person within seven years after a transfer of value
which occurred before Completion (and, in determining for the purposes
of this paragraph whether a charge on or power to sell, mortgage or
charge any of the shares or assets of a Group Member exists at any
time, the fact that the inheritance tax is not yet payable, or may be
paid by instalments, shall be disregarded and such Tax shall be
treated as becoming due and a charge or power to sell, mortgage or
charge as arising on the date of the transfer of value or other date
or event on or in respect of which it becomes payable or arises) and
the provisions of section 213 IHTA shall be deemed not to apply;
2.4 any Liability to Taxation pursuant to the Withholding Tax Claim.
2.5 any reasonable costs, fees or expenses reasonably and properly
incurred by any Group Member or the Buyer as a result of successfully
bringing a claim against the Share Sellers in respect of any Liability
to Taxation or other liability in respect of which the Share Sellers
are liable under paragraph 2.1.
3. Quantification
For the purposes of paragraph 2 the amount of a Liability to Taxation
mentioned will be determined as follows:
3.1 the amount of a Liability to Taxation falling within paragraph (a) of
the definition of that expression in paragraph 1.1 will be the amount
of the actual payment of Taxation which the relevant Group Member is
liable to make;
3.2 the amount of a Liability to Taxation falling within paragraph (b) of
the definition of that expression in paragraph 1.1 will be the amount
of Taxation saved by the relevant Group Member as a result of the use
of the Future Relief.
4. Exclusions
4.1 The Share Sellers will not be liable under paragraph 2 or for breach
of any of the Taxation Warranties in respect of a Liability to
Taxation or other liability of any Group Member to the extent to
which:
4.1.1 such Liability to Taxation or other liability was
discharged:
4.1.1.1 on or before the Effective Date; or
78
4.1.1.2 between the Effective Date and Completion
(including Completion) at no cost to the Buyer or
any Group Member; or
4.1.2 such Liability to Taxation or other liability arises as a
result of an any Event which occurred in the ordinary course
of business of the relevant Group Member after the Effective
Date and on or before Completion; or
4.1.3 payment has already been made in respect of such Liability
to Taxation or other liability under any other provision of
this Agreement; or
4.1.4 such Liability to Taxation or other liability would not have
arisen but for a change in legislation (including but not
limited to an increase in rates of Taxation) or in the
published practice of any Taxation Authority or but for any
decision of any court or tribunal in each case first
enacted, announced, published or delivered after the date of
this Agreement having retrospective effect; or
4.1.5 such Liability to Taxation or other liability would not have
arisen but for a voluntary act, transaction or omission of
any Group Member, the Buyer, any member of the Buyer's Group
or any successor in title to any of them after Completion
otherwise than in the ordinary course of business of the
relevant Group Member as carried on at Completion and, for
this purpose, an act or omission is not voluntary if; or
4.1.5.1 it is carried out to avoid a breach of a
subsisting binding obligation or to comply with
statutory or regulatory requirements in force at
Completion; or
4.1.5.2 it is required to achieve compliance with GAAP in
force at Completion.
4.1.6 provision or reserve was made for such Liability to Taxation
or other liability or otherwise taken into account in the
Working Capital Statement or such Liability to Taxation or
other liability was taken into account in any adjustment to
the consideration for the Shares under clause 6.8; or
4.1.7 such Liability to Taxation or other liability is in respect
of the actual (as opposed to deemed) earning, receipt or
accrual for any Taxation purposes of any income, profit or
gain which is not recognised in the Accounts or the Working
Capital Statement; or
79
4.1.8 such Liability to Taxation or other liability would not have
arisen but for any Group Member changing any of its
accounting policies, bases or practices (including the date
to which the Group Member prepares its accounts, the
treatment of timing differences, the bases on which the
Group Member values its assets and Taxation reporting
practice) after Completion whether as a result of a change
in generally accepted accounting principles or otherwise
except where such change is required to comply with GAAP in
force at the Effective Date or is a requirement of the
Auditors of a Group Member in order to obtain a clean audit
report in respect of the period of account in which
Completion takes place; or
4.1.9 such Liability to Taxation or other liability would not have
arisen but for any Group Member ceasing to carry on any
trade or business after Completion or effecting a major
change in the nature or conduct of any trade or business
carried on by it at Completion; or
4.1.10 such Liability to Taxation or other liability would not have
arisen or would have been reduced or eliminated but for the
failure or omission on the part of the Group Member or the
Buyer on or after Completion to make any claim, election,
surrender or disclaimer or to give any notice or consent or
to do any other thing, the making, giving or doing of which
was taken into account in the preparation of the Accounts
and/or the Working Capital Statement and of which the Buyer
was aware; or
4.1.11 such Liability to Taxation or other liability would not have
arisen but for the withdrawal or amendment by or on behalf
of the Buyer or any Group Member after Completion of any
election, claim, surrender, disclaimer, notice or consent
made by the Group Member in relation to any Relief; or
4.1.12 such Liability to Taxation or other liability would not have
arisen but for any failure or delay by the Buyer or any
Group Member in paying over to any Taxation Authority any
payment previously made by the Share Sellers or any of them
under paragraph 2 or under the Taxation Warranties or
otherwise under this Agreement; or
4.1.13 payment has already been made by the Share Sellers or any of
them in respect of the Liability to Taxation pursuant to
section 767A ICTA; or
4.1.14 any Relief which was not included in the Working Capital
Statement and which is attributable to any period ending on
or before the Working Capital Date is available and can be
utilised to eliminate or reduce the liability and the Buyer
80
will procure that the relevant Group Member takes such
action as the Share Sellers reasonably requests to give
effect to the provisions of this paragraph to the extent
permitted by law; or
4.1.15 any Liability to Taxation in relation to the Withholding Tax
Claim to the extent not taken into account in calculating
the consideration for the Shares; or
4.1.16 any Liability to Taxation which arises as a result of the
Buyer or any Member of the Buyer's Group (not being a Group
Member) being treated as a Member of the same VAT group as
any Group Member with effect from any time on or after
Completion; or
4.1.17 any Liability to Taxation or other liability to pay or
account for income tax or employee or employers national
insurance contributions which may become payable as a result
of the payment of all or any part of the Bonus Amount and
any interest or penalties relating thereto or to any
obligation to report of all or any part of the Bonus Amount
to HMRC.
5. Deductions from payments
5.1 Except as required by law or as permitted by this Agreement all
payments by any of the Share Sellers under this Part 2 of this
Schedule 4 will be made free and clear of all deductions and
withholdings (whether in respect of Taxation or otherwise).
5.2 If any deduction or withholding is required by law to be made from any
payment by a Share Seller under this Part 2 of this Schedule 4 or if
the Buyer is subject to Taxation in respect of any payment by a Share
Seller under this Part 2 of this Schedule 4, that Share Seller
severally (but not jointly) covenants with the Buyer to pay to the
Buyer such additional amount as is necessary to ensure that the net
amount received and retained by the Buyer (after taking account of
such deduction or withholding or Taxation) is equal to the amount
which the Buyer would have received and retained had the payment in
question not been subject to the deduction or withholding or Taxation.
5.3 In the event of the assignment of this Agreement each Share Sellers'
liability to the assignee under this Schedule 4 will be no greater
than it would have been to the Buyer here meaning only the Buyer named
as such in this Agreement.
6. Due date for payment
6.1 The due date for the making of a payment by a Share Seller under this
Schedule 4 will be the later of:
81
6.1.1 the date falling five Business Days after the Buyer has
served a notice on that Share Seller demanding such payment;
and
6.1.2 the date falling five clear Business Days before the last
date upon which the payment is required to be made to the
person entitled thereto (after taking into account any
postponement of the due date for payment of any Taxation
which is obtained) or would have been required to be made
but for the use of a Future Relief.
7. Claims procedure
7.1 The Buyer will give notice of any Tax Claim to each of the Share
Sellers as soon as reasonably practicable, and in any event within 15
Business Days of the Buyer or any Group Member becoming aware that
there may be a Tax Claim provided that the timely giving of such
notice shall not be a condition precedent for the Share Sellers'
liability under this Schedule.
7.2 Provided that the Share Sellers indemnify in their Relevant
Proportions the relevant Group Member and the Buyer to the reasonable
satisfaction of the Buyer against all reasonable costs and expenses
which may be properly incurred thereby, the Buyer will procure that
the relevant Group Member, at the Share Sellers' reasonable cost and
expense in their Relevant Proportions, takes such action and gives
such information and assistance in connection with its Taxation
affairs as the Share Seller may reasonably request to dispute, appeal
against, settle or compromise any Tax Claim, including, but not
limited to applying to postpone (so far as legally possible) the
payment of any Taxation.
7.3 The Buyer will not without the prior written consent of the Share
Sellers, such consent not to be unreasonably withheld or delayed, take
any action in relation to any Dispute including, but not limited to:
7.3.1 the transmission of any communication (whether written or
otherwise) to any Taxation Authority;
7.3.2 the settlement or compromise of the relevant Tax Claim; and
7.3.3 the agreement of any matter which is likely to affect the
amount of the relevant Tax Claim or any future Liability to
Taxation.
7.4 Neither the Buyer nor the Company shall be obliged to take any action
under clause 7.2, or enter into any correspondence with a Tax
Authority which, acting reasonably, it considers will have an material
prejudicial effect on the Tax affairs of the Company or on the
Company's relationship with that Tax Authority, or which is
misleading, inaccurate or incomplete in any way.
82
7.5 For the avoidance of doubt the provisions of paragraphs 7.1 to 7.4
shall not apply to a Withholding Tax Claim and the Share Sellers shall
have exclusive conduct of the Withholding Tax Claim provided that the
Share Sellers shall not settle with the relevant Taxation Authority
the amount of Tax payable pursuant thereto without the prior consent
of the Buyer, such consent not to be unreasonably withheld or delayed.
7.6 If the Tax Claim involves any fraudulent act or omission on the part
of a Group Member prior to Completion or the Share Sellers at any
time, then the Buyer shall be free to take or procure that the Company
take such action as the Buyer in its reasonable discretion thinks fit.
7.7 If a dispute arises between the Buyer and the Share Sellers as to
whether a Tax Claim should be settled in full, or contested in whole
or in part, the dispute shall be referred to the determination of a
senior tax counsel (acting as expert and not as arbitrator), of at
least five years' standing (or his equivalent in any foreign
jurisdiction), appointed by agreement between the Buyer and the Share
Sellers. Counsel shall be asked to advise whether, in his opinion, the
relevant appeal against the Tax Claim is more likely to succeed than
not. If counsel is of the opinion that the appealing against the Tax
Claim is more likely to succeed than not then the Buyer shall be
obliged to dispute and/or appeal such Tax Claim in accordance with
this paragraph 7. The cost of obtaining counsel's advice shall be
borne as counsel shall determine having regard to the relative merits
of the parties in respect of the disagreement and such determination
as to costs will be conclusive and binding on the parties.
7.8 The Buyer may rely on any written request received by it from any of
the Share Sellers or their professional advisers and if more than one
conflicting request is received in relation to any Tax Claim or
dispute then the Buyer shall be entitled to rely on the first to be
received of such requests.
8. Time limit
No Share Sellers will be liable under paragraph 2 in respect of a
Liability to Taxation or other liability of any Group Member, or in
respect of a breach of the Tax Warranties, unless within 6 years after
the end of the accounting period in which Completion takes place the
Buyer has given written notice containing full details to that Share
Seller of any Tax Claim whatsoever relating to such Liability to
Taxation or other liability.
9. Savings, Repayments and Over Provisions
9.1 If any Group Member obtains a Saving or a Repayment or it becomes
apparent that an Over Provision has been made, the Saving, Repayment
or Over Provision (as the case may be) will be apportioned between
each of the Share Sellers in their Relevant Proportions (an amount so
apportioned to a Share Seller is referred to in this clause 9.1 as an
83
Apportioned Amount) and each Apportioned Amount shall be applied as
follows:
9.1.1 first, the Apportioned Amount, the Saving, Repayment or Over
Provision will be set off against any payment then due under
paragraph 2 or in respect of the Taxation Warranties from
the Share Seller to whom such Apportioned Amount is
apportioned;
9.1.2 secondly, to the extent that there is an excess, the Buyer
will, within two Business Days, pay to the Share Sellers to
whom such Apportioned Amount was apportioned the lesser of:
9.1.2.1 the amount of the excess; and
9.1.2.2 any amount previously paid by that Share Seller
under paragraph 2 or in respect of the Taxation
Warranties;
9.1.3 thirdly, to the extent that the excess referred to in
paragraph 9.1.2 is not exhausted, the remainder of that
excess will be carried forward and set off against any
future liability of the Share Seller to whom such
Apportioned Amount was apportioned under paragraph 2 or in
respect of the Taxation Warranties.
9.2 The Buyer will procure that each Group Member uses reasonable
endeavours to utilise any Relief available to it which would give rise
to a Saving or Repayment as soon as it is reasonably practicable for
the Group Member to do so provided that the Group Member shall not be
compelled to organise its Tax affairs in a particular way in order to
utilise such Relief.
9.3 The Buyer will inform each of the Share Sellers as soon as reasonably
practicable after it or any Group Member becomes aware that a Group
Member may obtain a Saving or a Repayment or that there may be an Over
Provision.
9.4 If the parties cannot agree as to the existence and/or the quantum of
any Saving, Repayment or Over Provision or the date on which any
Saving or Repayment is obtained, such disagreement may be referred by
either party to the Auditors for determination and, in making such
determination, the Auditors will act as experts and not as arbitrators
and their determination will (in the absence of manifest error) be
conclusive and binding on the parties. The costs of the Auditors shall
be borne as the Auditors shall determine having regard to the relative
merits of the parties in respect of the disagreement and such
determination as to costs will be conclusive and binding on the
parties.
9.5 The provisions of paragraph 7 will apply, with the appropriate
modifications to this paragraph 9 so that, subject to the requirements
and limitations in paragraph 7, the Buyer will procure that each Group
84
Member at the Share Sellers' reasonable cost and expense in their
Relevant Proportions, takes such action and gives such information as
the Share Sellers may require to obtain a Repayment.
10. Recovery from other persons
10.1 If a Group Member, the Buyer or any member of the Buyer's Group
recovers from any other person (other than under the Warranty and
Indemnity Insurance) any amount which is referable to a Liability to
Taxation or other liability of the Group Member in respect of which
the Share Sellers or any of them have made a payment under paragraph 2
or in respect of the Taxation Warranties then the amount of such
recovery shall be apportioned to the Share Sellers in their Relevant
Proportions and the Buyer will repay to each of the Share Sellers the
lesser of:
10.1.1 that Share Seller apportioned amount or the amount so
recovered (less its Relevant Proportion of any costs and
expenses incurred by the relevant Group Member, Buyer or
member of the Buyer's Group in obtaining the recovery); and
10.1.2 the amount paid by that Share Seller under paragraph 2 in
respect of the Taxation Warranties or in respect of the
Liability to Taxation or other liability in question less
any part of such amount previously repaid to that Share
Seller under any provision of this Agreement or otherwise.
10.2 If the Buyer becomes aware that any Group Member is entitled to
recover any amount mentioned in paragraph 10.1, the Buyer will as soon
as reasonably practicable give notice of that fact to each of the
Share Sellers and provided that the Share Sellers reasonably indemnify
in their Relevant Proportions the relevant Group Member and the Buyer
against all costs and expenses which may be incurred thereby, the
Buyer will procure that the relevant Group Member, at the Share
Sellers' cost and expense, takes such action as the Share Sellers may
reasonably request to effect such recovery. The provisions of
paragraph 7.8 apply in relation to requests made under this paragraph
10.2 as they apply to requests made under paragraph 7.
11. Outstanding tax returns
11.1 The Share Sellers' duly authorised agents will, at their own cost and
expense prepare the corporation tax returns and computations of each
Group Member for all accounting periods ended on or before Completion
(PROVIDED THAT the Share Sellers will not be obliged to reimburse any
Group Member for costs and expenses incurred prior to Completion in
respect of such corporation tax returns and computations) in a manner
consistent with prior periods, to the extent that they have not been
85
prepared before Completion, and submit them to the Buyer for review at
the Company's cost and expense.
11.2 The Buyer will procure that each Group Member causes the returns and
computations mentioned in paragraph 11.1 to be authorised, signed and
submitted to the relevant Taxation Authority without amendment or with
such amendments as the Share Sellers acting reasonably shall agree
after considering any comments made by the Buyer. The Buyer shall not
be obliged to authorise or sign any return which is inaccurate,
incomplete or misleading in any way.
11.3 The Share Sellers' duly authorised agents will, at their own cost and
expense prepare all documentation and deal with all matters (including
correspondence) relating to the corporation tax returns and
computations of each Group Member and agreeing the same for all
accounting periods ended on or before Completion provided that the
Share Sellers will not without the prior written consent of the Buyer
(not to be unreasonably withheld or delayed) transmit any
communication (whether written or otherwise) to the relevant Taxation
Authority or agree any matter with the relevant Taxation Authority.
11.4 The Buyer will procure that each Group Member affords the Share
Sellers and their duly authorised agents such access to their books,
accounts and records as is necessary and reasonable to enable the
Share Sellers or their duly authorised agents to prepare the
corporation tax returns and computations of each Group Member for all
accounting periods ended on or before Completion and conduct matters
relating to them in accordance with this paragraph 11.
11.5 The Buyer or its duly authorised agents will, at the cost and expense
of each Group Member, prepare the corporation tax returns and
computations of each Group Member for the accounting period current at
Completion. The Share Sellers will provide all assistance reasonably
required by the Buyer in order to carry out its obligations under this
paragraph 11.5.
11.6 The Buyer will not submit the corporation tax returns and computations
for the accounting period current at Completion or any correspondence
relating to such corporation tax returns and computations to the
relevant Taxation Authority before giving each of the Share Sellers a
reasonable opportunity to make comments thereon.
11.7 The Buyer will procure that no Group Member will unreasonably refuse
to adopt into such correspondence, corporation tax returns and
computations as referred to in paragraph 11.6 any reasonable comments
of the Share Sellers to the extent such comments relate to the Share
Sellers' period of ownership. In the case of a dispute as to whether
such comments should be incorporated, the opinion of the Company's
Auditors shall be final and binding on the parties.
86
11.8 The Buyer or its duly authorised agents will, at the cost and expense
of each Group Member, prepare all documentation and deal with all
matters (including correspondence) relating to the corporation tax
returns and computations of each Group Member and agreeing the same
for the accounting period current at Completion provided that the
Buyer will not without the prior written consent of each of the Share
Sellers (not to be unreasonably withheld or delayed) transmit any
communication (whether written or otherwise) to the relevant Taxation
Authority or agree any matter with the relevant Taxation Authority to
the extent that the subject matter of the correspondence relates to
Tax for a period or in respect of an Event on or prior to Completion.
The Share Sellers will provide all assistance reasonably required by
the Buyer in order to carry out its obligations under this paragraph
11.8.
11.9 The Buyer will procure that each Group Member affords to each of the
Share Sellers and their respective professional advisers such access
to their books, accounts and records as is necessary and reasonable to
enable the Share Sellers or their professional advisers to comment on
the corporation tax returns and computations of each Group Member for
the accounting period current at Completion.
12. Buyer's Covenants
Secondary tax liabilities
12.1 The Buyer undertakes to each of the Share Sellers to pay to that Share
Seller by way of adjustment to the price paid for the Shares sold by
that Seller under this Agreement an amount equal to any liability of
that Share Seller, or any other person falling within Section 767A(2)
or 767AA(4) ICTA, section 132 (3) FA 1988, section 190 (3) TCGA,
paragraph 68 of Schedule 29 or paragraph 8(2) of Schedule 34 FA 2002
by virtue of a relationship which that person has or has had with that
Share Seller, to tax (and any related interest, penalties, costs and
expenses) under Sections 767A, 767AA, 767B ICTA, section 132 FA 1988,
section 190 TCGA or paragraph 68 of Schedule 29 or paragraph 8 of
Schedule 34 FA 2002 as a result of the failure by any Group Member to
pay any tax payable by it.
12.2 The undertaking contained in paragraph 12.1 will not apply to any
Taxation in respect of which the Buyer could make a claim under this
Schedule or to any Taxation which any of the Share Sellers or any
other such person as is mentioned in paragraph 12.1 will have
recovered from the Buyer under any statutory right of recovery (save
in either such case in circumstances where the relevant Share Seller
has paid an amount in respect of the Tax in question to the Buyer and
the relevant liability of any Group Member nevertheless remains
unpaid) and each of the Share Sellers will procure that no recovery
87
under such statutory right is sought to the extent that payment has
been made to that Share Seller by the Buyer under paragraph 12.1 in
respect of that Taxation.
12.3 Paragraphs 5 (deductions from payments), (due date for payment) and 7
(claims procedure) will apply to the covenants in paragraphs 12.1 to
12.2 as they apply to the covenants contained in paragraph 2,
replacing references to the relevant Share Seller and the Buyer (and
vice versa) and making any other necessary modifications.
13. General
All payments by any Share Seller under this Part 2 of this Schedule 4
will be treated as repayments by that Share Seller of the
Consideration paid for the Shares sold by that Share Seller pursuant
to this Agreement, provided that this paragraph 13 will not operate in
any way to limit the liability of the Share Sellers under this Part 2
of this Schedule 4.
PART 3 - TAX WARRANTIES
14. Returns, disputes and clearances
14.1 All notices, returns, computations, registrations and payments which
should have been made by each Group Member for any Taxation purpose
have been made within the requisite periods and are, in all material
respects, correct and based on full and accurate disclosure of all
material facts and circumstances and none of them is the subject of
any dispute with any Taxation Authority.
14.2 No Group Member is involved in any dispute with any Taxation Authority
concerning any matter likely to affect in any way the liability of any
Group Member to Taxation.
14.3 None of the Taxation affairs of any Group Member has ever been the
subject of any investigation or enquiry by any Taxation Authority
(other than routine questions and audit visits) and no Taxation
Authority has indicated to a Group Member that it intends to
investigate the Taxation affairs of any Group Member.
14.4 Each Group Member has sufficient records and information available in
order to prepare the tax computations and returns for the accounting
period ending on 31 December 2006.
14.5 The disposal of any beneficial interest in any property by any Group
Member where such disposal is referred to in the Disclosure Letter has
been properly treated as a disposal for tax purposes by the relevant
Group Member in the appropriate accounting period, where required to
be so treated for tax purposes, and where required to be so treated
for tax purposes, such disposal was reflected in the tax return of the
relevant Group Member for the accounting period in which such disposal
88
took place or was treated as taking place for the relevant tax
purpose.
15. Penalties and interest
15.1 No Group Member has since the Accounting Date paid any fine, penalty,
charge, surcharge or interest charged by virtue of any of the
provisions of TMA or any other Taxation Statute.
15.2 As far as the warranting Share Seller is aware there are no
circumstances which are likely to cause any Group Member to become
liable to pay any fine, penalty, charge, surcharge or interest, or
become subject to any forfeiture, as mentioned in paragraph 15.1.
16. Distributions and payments
16.1 Each Group Member has deducted and properly accounted to the
appropriate Taxation Authority for all amounts which it has been
obliged to deduct in respect of Taxation, has complied in all material
respects with all reporting requirements relating to all such amounts
and has (where required by the applicable Taxation Statute) duly
provided certificates of deduction of tax to the recipients of
payments from which deductions have been made.
16.2 No Group Member has at any time declared, paid or made any dividend or
other payment which is, or could be treated as, a distribution for the
purposes of Part VI ICTA or section 418 ICTA except any dividend
disclosed in its audited statutory accounts nor is it bound to make
such a distribution.
17. Close companies
No Group Member is, or has ever been, a close investment-holding
company within the meaning of section 13A ICTA.
18. Group transactions
No Group Member has in the six years ending on Completion:
18.1 acquired any asset from any company not being another Group Member
which at the time of the acquisition was a member of the same group of
companies as defined in section 170 TCGA;
18.2 entered into or been otherwise involved in any transaction to which
section 774 ICTA applies;
18.3 surrendered or claimed or agreed or arranged to surrender or claim
(and prior to Completion will not surrender or claim or agree or
arrange to surrender or claim) any amount by way of Group Relief
pursuant to sections 402 to 413 (inclusive) ICTA other than from or to
89
another Group Member nor made or received and is not liable to make or
entitled to receive a payment for Group Relief to or from any person
(not being another Group Member); or
18.4 been a party to any such reconstruction as is described in section 343
ICTA;
19. Capital Allowances
Each Group Member has in its possession details of all capital
allowances claimed by it in respect of the accounting period ended on
the Accounting Date in respect of each asset or pool of assets in
respect of which separate computations for capital allowances are
required to be made or, as a result of any election, are made.
20. Gifts
20.1 There is no outstanding Inland Revenue charge (as defined in section
237 IHTA) over any asset of any Group Member or over any of the Shares
to be sold pursuant to this Agreement by the warranting Share Seller.
20.2 There are in existence no circumstances by virtue of which any such
power as is mentioned in section 212 IHTA could be exercised in
relation to any asset of any Group Member or to any of the Shares to
be sold pursuant to this Agreement by the warranting Share Seller or
by virtue of which any such power could be exercised but for the
provisions of section 204(6) IHTA.
21. Capital gains
21.1 No Group Member has at any time made an election under section 35(5)
TCGA.
21.2 Each Group Member has sufficient records relating to past events to
enable it to calculate its liability to Taxation on capital gains or
relief from Taxation on capital gains which would arise on a disposal
or realisation of its assets.
22. VAT: general
22.1 Each Group Member is duly registered and is a taxable person for the
purposes of VAT.
22.2 Each Group Member has complied in all material respects with all
statutory requirements, orders, provisions, directions or conditions
relating to VAT.
22.3 Each Group Member maintains in all material respects correct and
up-to-date records for the purposes of all legislation relating to
VAT.
22.4 No Group Member:
90
22.4.1 is in arrears with any payment or returns under legislation
relating to VAT or excise duties, or liable to any abnormal
or non-routine payment of VAT, or any forfeiture or penalty,
or to the operation of any penal provision;
22.4.2 has been or applied for treatment as a member of a group for
VAT purposes under section 43 VATA; or
22.4.3 is, or has agreed to become, an agent, manager or factor for
the purposes of section 47 VATA of any person who is not
resident in the United Kingdom.
23. VAT: property transactions
Neither any Group Member nor any relevant associate (within the
meaning of paragraph 3(7) Schedule 10 VATA) has made any election
under paragraph 2(1) Schedule 10 VATA in respect of any land in, over
or in respect of which the Group Member has any interest, right or
licence to occupy.
24. Residence and offshore interests
Each Group Member is and has at all times been resident in the United
Kingdom for the purposes of all Taxation Statutes and has not at any
time been resident outside the United Kingdom for the purposes of any
Taxation Statute or any double taxation arrangements.
25. Tax avoidance
No Group Member has entered into any transaction or series of
transactions, scheme or arrangement of which the main purpose, or one
of the main purposes, was the avoidance or reduction of a Taxation
liability or for which there was no commercial purpose.
26. Transfer pricing
No transactions or arrangements involving a Group Member have taken
place which are such that the provisions of section 770, 770A or
schedule 28AA ICTA or equivalent legislation or legal principles in
any other jurisdiction have been or could be applied thereto. No Group
Member is, nor has it been, involved in any correspondence, enquiry or
dispute in any jurisdiction concerning the adjustment of profits of
associated enterprises for Taxation purposes.
27. Stamp duty
All documents in the possession of each Group Member or to the
production of which it is entitled and which attract stamp or transfer
duty in the United Kingdom or elsewhere have been properly stamped. No
91
Group Member owns any interest in UK land or buildings which is
evidenced by an uncompleted contract.
28. Special Arrangements
No Tax Authority has agreed to operate any special arrangement (being
an arrangement not based on a strict and detailed application of the
relevant legislation which is not generally available to companies
such as the Group Members) in relation to the affairs of any Group
Member, nor has a Group Member taken any action which would or might
alter, prejudice or in any way disturb any arrangement or agreement
which it has negotiated with any Tax Authority nor will any
transaction carried out pursuant to this Agreement have such an
effect.
29. Clearances and consents
All clearances and consents obtained by any Group Member from any Tax
Authority were based on full and accurate disclosure of all the facts
and circumstances material to the decision of the Tax Authority. Each
Group Member has complied in all material respects with any conditions
to which any such consents or clearances are subject and has not so
far as the Share Sellers are aware taken any action which might alter,
prejudice or in any way disturb any such consent or clearance nor will
anything done pursuant to this Agreement have such an effect.
PART 4 - ROC BUSINESS ASSETS
30. Definitions
In this Part 4 of this Schedule:
"Special Provisions Order" means the Value Added Tax (Special
Provisions) Order 1995
31. VAT provisions
31.1 All amounts expressed in this Agreement as being payable by the Buyer
are expressed exclusive of VAT which may be chargeable and the Buyer
agrees to pay to the ROC Seller in addition to such amounts, any VAT
for which the ROC Seller is liable to account to HMRC in respect of
any supply made by the ROC Seller to the Buyer under or in connection
with this Agreement forthwith on production of a valid VAT invoice by
the ROC Seller.
31.2 The parties intend that section 49 VATA and Article 5 Special
Provisions Order will apply to the transfer of the ROC Business Assets
to be transferred by each ROC Seller and each ROC Seller and the Buyer
will each use its reasonable endeavours to secure that pursuant to the
provisions referred to above the sale of the ROC Business Assets to be
92
sold by the relevant ROC Seller is treated as neither a supply of
goods nor a supply of services for the purposes of VAT but as the
transfer of a business as a going concern. Provided always that
nothing in this paragraph 31.2 shall require any ROC Seller to request
a review of any determination by HMRC or any notification by HMRC that
section 49 VATA and Article 5 Special Provisions Order does not apply
to the transfer of ROC Business Assets in whole or in part.
31.3 Each ROC Seller represents, warrants and undertakes to the Buyer in
respect of itself only that it is duly and properly registered for the
purposes of VAT.
31.4 The Buyer represents, warrants and undertakes to each of the ROC
Sellers that it is duly and properly registered for the purposes of
VAT or that it is a taxable person and has applied to become so
registered.
31.5 The Buyer warrants to each of the ROC Sellers that the Buyer will
following Completion use the ROC Business Assets in carrying on the
same kind of business as the ROC Business (whether or not as part of
any existing business of the Buyer).
31.6 If HMRC notify a ROC Seller that they do not agree that the sale of
the ROC Business Assets to be sold by that ROC Seller (or any part of
them) pursuant to this Agreement falls within section 49 VATA and
Article 5 Special Provisions Order, that ROC Seller will forthwith on
receipt of such notification or on Completion (whichever is the later)
issue to the Buyer a valid VAT invoice in respect of the sale of the
relevant ROC Business Assets. The Buyer will forthwith on receipt of
such invoice pay to that ROC Seller the VAT charged on the sale of the
relevant ROC Business Assets in addition to the Consideration payable
thereon.
31.7 The Buyer undertakes to indemnify and hold harmless each ROC Seller
(on an after tax basis) in respect of any liability of a ROC Seller to
pay HMRC any interest, penalty or surcharge by reason of the late
payment of any VAT charged on the sale of the ROC Business Assets to
be sold by that ROC Seller (or any part of them) pursuant to the
provisions of this Agreement.
93
SCHEDULE 5
Completion Arrangements
Part 1 - On or around Exchange
1. The Sellers shall deliver to the Buyer:
1.1 on execution of this Agreement:
1.1.1 the Disclosure Documents duly executed on behalf of the
Sellers;
1.1.2 an extract of a resolution of the board of directors of each
Seller authorising the execution of this Agreement and the
Disclosure Letter; and
1.1.3 the Ridgewood Letter of Undertaking duly executed by or on
behalf of the Managing Shareholder; and
1.2 within 5 Business Days of execution of this Agreement, legal opinions
(in the agreed terms) in respect of each of the Sellers; and
1.3 within 10 Business Days of execution of this Agreement, the Share
Sellers shall deliver to the Buyer:
1.3.1 the consent to the change of control following Completion
pursuant to the gas agreement with Plymouth City Council in
respect of Chelson Meadow Energy Limited (or any amendment
or variation to such gas agreement the effect of which is
that the consent of Plymouth City Council to any change of
control is no longer required); and
1.3.2 the gas agreements with Cornwall County Council and SITA UK
Limited, in respect of Connon Bridge Energy Limited and
United Mines Energy Limited, executed with change of control
provisions which are in materially the same form as the
those set out in the gas agreement for Jameson Road Energy
Limited.
2. On execution of the Agreement:
2.1 the Buyer shall deliver:
2.1.1 to the Sellers the Macquarie Letter of Undertaking duly
executed by Macquarie Investment Management (UK) Limited;
and
94
2.1.2 to New Hampshire Insurance Company the Signing No Claims
Declaration set out in Appendix B1 to the Warranty and
Indemnity Insurance; and
2.2 or as soon as reasonably practicable following the date of this
Agreement, the Sellers shall deliver to the Buyer a binding offer of
the Warranty and Indemnity Insurance in the agreed terms.
Part 2 - Completion
At Completion the following will take place:
3. Items For Delivery
The following items will be produced and delivered by the Sellers (or,
in relation to paragraphs 3.11 and 3.12, left at the Property) to the
Buyer:
Share Transfers
3.1 Executed transfers of each Share Seller's Shares in favour of the
Buyer (or its nominee(s)) and, immediately following Completion,
executed transfers of all shares in the capital of any Group Member
(other than a Dormant Company) which are registered in the name of
BoS, or any company acting as nominee for BoS, in favour of the
beneficial owner of such Group Member.
3.2 Any waiver, consent or other document necessary to give the Buyer (or
its nominee(s)) full legal and beneficial ownership of the Shares.
3.3 Share certificates in respect of all the issued shares of each Group
Member (or in the case of any lost certificate an indemnity
satisfactory to the Buyer in relation to it).
Authorisations
3.4 A copy of a resolution or extract of a resolution of the board of
directors (certified by a duly appointed officer as true and complete)
of each Group Member authorising the execution of and the performance
by the relevant company of its obligations under each of the documents
to be executed by it.
3.5 An irrevocable power of attorney in the agreed terms by each
registered holder of the Shares which enables the Buyer or its nominee
to attend and vote at general meetings of the Company pending
registration of the transfer of the Shares.
Resignations and Appointments
95
3.6 A letter of resignation in the agreed terms from Alexandra Helen
Pentecost, Andrew West, Dominic Andrew Greenough, Douglas Ralph
Wilson, Randall Duane Holmes and Robert Ernest Swanson as director of
each Group Member, together with a letter of resignation in the agreed
terms from Harry Hugh Patrick Wyndham as director of CLPE Holdings
Limited, CLP Envirogas Limited CLP Organogas S.L. and CLP Envirogas
S.L.
3.7 A letter of resignation in the agreed terms from each secretary of
each Group Member.
3.8 A copy of a letter in the agreed terms to each Group Member from its
auditors resigning from office with effect from Completion and
containing the statement required by section 394 CA 1985, the original
of the letter having been deposited at the registered office of the
relevant company.
Company Documentation
3.9 The certificate of incorporation, any certificate(s) of incorporation
on change of name, the common seal and the statutory books and
registers of each Group Member written up to but not including
Completion and reflecting the details of each Group Member as set out
in Part 1 and Part 2 of Schedule 2.
3.10 All deeds and documents relating to the title of any Group Member to
the Property.
3.11 All cheque books in current use of each Group Member.
3.12 All papers, books, records, keys, credit cards and other property (if
any) of each Group Member which are in the possession or under the
control of the Seller or any other person who resigns as an officer of
any Group Member in accordance with this Schedule.
Financial
3.13 A copy of the bank mandate of each Group Member and copies of bank
statements in respect of each account of each Group Member as at the
close of business on the last Business Day prior to Completion.
3.14 A deed of release in the agreed terms executed by BoS in respect of
all the fixed charges and debentures granted to BoS by each Group
Member together with forms 403a, duly executed by the relevant Group
Member, to ensure that no outstanding indebtedness to or security in
favour of BoS exists at Completion.
3.15 Statement of the bank accounts, for each Group Member as at a date not
more than 2 Business Days prior to the Completion Date.
Other
96
3.16 All of the ROC Business Assets that are capable of transfer by
delivery.
3.17 Assignments in the agreed terms of the ROC Business Contracts.
3.18 The Company will pay the Bonus Amount to the following individuals:
(i) Harry Wyndham;
(ii) Dominic Greenough;
(iii) Andrew West;
(iv) Alexandra Pentecost,
and the Buyer will procure that the Company, following Completion,
pays to HMRC all PAYE and employees and employers National Insurance
Contributions in relation to the Bonus Amount.
3.19 An executed deed of termination of the Operations and Maintenance
Agreement between Landfill Services Limited, Ridgewood CLP Management
Limited and Ridgewood dated 1 July 1999.
3.20 The Repeated Warranties Bring Down Certificate.
3.21 A deed of release in the agreed terms by each Dormant Company of its
right, title and interest in or to any ROC Business Contract or any
other Contract to which a Group Member is a party together with a
release of any liabilities owed to such Dormant Company by Group
Members.
3.22 In relation to the waiver under the CLPE Holdings Management Incentive
Plan (the "Plan") by the Associated Participants (as such term is
defined in the Plan) of the amount that would have been payable to
them but for such waiver:
(i) a copy of the board minutes of the Company in the agreed
terms dated 22 January 2007 to request the Associated
Participants to waive their personal rights under the Plan;
and
(ii) a copy of the deed of waiver in the agreed terms dated 22
January 2007 duly executed by Randy Holmes and Doug Wilson
relating to the waiver of their personal rights under the
Plan;
(iii) copies of letters in the agreed terms dated 22 January 2007
to each of the Associated Participants to explain the waiver
by Randy Holmes and Doug Wilson of their personal rights
under the Plan and to request execution of deeds of
acknowledgement; and
(iv) copies of a deed of acknowledgement in the agreed terms
dated 22 January 2007 from each of the Associated
Participants under which such Associated Participant
97
acknowledges that his entitlement to a bonus is unchanged by
the waivers and notes the withholding of the erroneous July
bonuses.
3.23 A certificate from the Managing Shareholder in accordance with clause
6.1.1.
3.24 Written confirmation from the Sellers to the Buyer's reasonable
satisfaction that the Dormant Companies together with CLP Organogas
S.L. and CLP Envirogas S.L. have been transferred to an entity which
is not a Group Member.
3.25 Completion Legal opinions in respect of each of the Sellers in the
agreed terms.
3.26 A deed of release in the agreed terms by each Seller of all claims
against Group Members and releasing any security held over the
property and assets of Group Members.
3.27 A deed of release in the agreed terms from Arbutus Projects Limited
releasing each Group Member from all liabilities owed by such Group
Member to Arbutus Projects Limited.
3.28 A deed of release in the agreed terms from each Group Member
indemnifying non-Group Members against any liability under guarantees
given in favour of third parties in relation to the performance by the
Group Members under contractual arrangements including the gas
agreements.
3.29 A compromise agreement between Douglas Wilson and the Company in the
agreed terms, duly executed, and countersigned by an independent
solicitor confirming that Mr Wilson has taken independent legal advice
and understands and agrees to the terms of his termination.
3.30 The Sellers' Solicitors' Undertaking in the agreed terms.
3.31 The Sellers will pay the premium due under the Warranty and Indemnity
Insurance to New Hampshire Insurance Company.
3.32 The Buyer will deliver to New Hampshire Insurance Company the
Completion No Claims Declaration set out in Appendix B2 to the
Warranty and Indemnity Insurance.
4. Convening of Meetings
4.1 The Share Sellers will procure that duly convened board meetings of
each relevant Group Member are held at which:
4.1.1 the transfers referred to in paragraphs 3.1 (subject to
stamping if not previously effected) are approved for
registration in the books of the Company;
98
4.1.2 the accounting reference date of each Group Member is
changed to 31 March;
4.1.3 the resignations of directors, secretaries and auditors
referred to in each of paragraphs 3.6, 3.7 and 3.8 are
accepted with effect from the end of the relevant board
meeting;
4.1.4 such persons as are nominated by the Buyer as directors,
secretary and auditors of each Group Member are appointed
with effect from the end of the relevant board meeting; and
4.1.5 all existing instructions to the bankers of each Group
Member are revoked and new instructions given to such
bankers as the Buyer may nominate, in such form as the Buyer
directs.
5. Financial Assistance Whitewash
The relevant Group Members will undertake the "whitewash" procedure
set out in Section 155 of the Companies Act 1985 so as to ensure that
the relevant Group Members (acting by the directors to be appointed by
the Buyer) can (i) repay the Term Debt without any liability on the
Company or any of its directors and (ii) assume a new loan from the
Buyer's funders and secure its assets in respect of the same (iii)
receive an inter-company loan from the Buyer (or a member of the
Buyer's Group) and undertake to repay such loan, with interest and the
Buyer will procure that the directors mentioned in this paragraph will
swear and execute such documents and attend such meetings of the Group
Members as are necessary to complete such "whitewash" procedure and
the Share Sellers shall procure that they exercise their voting
rights, or procure the exercise by the relevant shareholder(s) in the
relevant Group Members required, to approve any shareholder
resolutions required in relation to the foregoing prior to Completion
(including any consent to short notice and/or signing written
resolutions in respect of the matters above).
6. Payments
6.1 The Buyer will pay into the Sellers' Solicitor's Client Account:
6.1.1 a sum equal to the amounts payable under clauses 4.1 and
4.3;
6.1.2 a sum equal to the Bonus Amount; and
6.1.3 the sum equal to the amount necessary to repay the Term Debt
in full at Completion in full and final settlement of the
same for and on behalf of the relevant Group Company,
less the following amounts:
99
6.1.4 the amount required to be paid by the Share Sellers to the
Buyer pursuant to clause 4.7;
6.1.5 the full amount of the premium payable to purchase the
Warranty and Indemnity Insurance (the cost of which the
Sellers agree shall be borne by them); and
6.1.6 the amount due from the Share Sellers to the Company
pursuant to paragraph 8 of this Schedule 5
and the deduction of such amounts at paragraphs 6.1.4 to
6.1.6 shall constitute good and sufficient discharge to the
Sellers under clause 4.7 and paragraphs 3.31 and 8 of this
Schedule 5 respectively.
6.2 The Buyer will instruct the Sellers' Solicitors to release from the
Sellers' Solicitor's Client Account:
6.2.1 to the Share Sellers and the ROC Sellers, the sum equal to
the amounts payable under clauses 4.1 and 4.3 (as may be
adjusted pursuant to paragraph 6.1);
6.2.2 to those persons referred to in paragraph 3.1.8, an amount
equal to the Bonus Amount; and
6.2.3 to BoS and Clarke Energy Limited, the sum equal to the
amount necessary to repay the Term Debt in full at
Completion in full and final settlement of the same.
7. Repayment of prior bonuses
Ridgewood shall procure that Douglas Wilson and Randy Holmes shall pay
the sums of (pound sterling)9,091.00 and (pound sterling)1,818.20
respectively to the Company representing the gross amounts
inadvertently received by them as a bonus under the CLPE Holdings
Management Incentive Plan, details of which are set out in the
disclosure against warranty 8.7 in paragraph 3 of the Disclosure
Letter.
8. Repayment of Shareholder's Loans
On Completion, the Share Sellers will severally repay the sum of
(pound sterling)319,996.16 (in the case of Ridgewood) and (pound
sterling)43,635.84 (in the case of Arbutus), being the amounts due
from them to the Company and the Company will issue letters of
satisfaction and release in the agreed terms to such Sellers.
100
SCHEDULE 6
The Property
- --------------------------------------------------------------------------------------------------------------------------------
Description Tenant Title number Date of lease and parties to it Term and current rent
and quality of
title if reg'd
- --------------------------------------------------------------------------------------------------------------------------------
Lease of land at Queens Park Queens Park unregistered Lease dated 1 August 2000 between 15 years from 1 August 2000
Road, being 32 square yards Road Energy the Council of the Borough of rent increased with effect
or thereabouts situate on Limited Burnley and Queens Park Road Energy from 31 December 2006 to
the North Easterly side of Limited (pound sterling)11,250 p.a.
Queen's Park Road Burnley exclusive of VAT
Lancashire
- --------------------------------------------------------------------------------------------------------------------------------
Lease of Units 14 & 15 CLP Envirogas unregistered Lease dated 13 June 2003 between 5 years from 21 May 2003
Queensbrook, Bolton (1) North West Development Agency, (pound sterling)27,000 p.a
Technology Exchange, Spa (2) CLP Envirogas Limited and (3)
Road,Bolton, BL1 4AY CLPE 1991 Limited
- --------------------------------------------------------------------------------------------------------------------------------
Lease of 4th floor, 20-22 CLP Envirogas unregistered Tenancy dated 9 August 2006 between One year from 1 August 2006
Queen Street, Mayfair, (1)Paprika Limited and (2) CLP (pound sterling)38,355 p.a
London, W1J 5 PR Envirogas Limited
- --------------------------------------------------------------------------------------------------------------------------------
101
SCHEDULE 7
Limitations on the Sellers' liability
1. The provisions of this Schedule will apply notwithstanding any
provisions to the contrary in this Agreement.
2. Financial limitations
2.1 The Sellers' maximum aggregate liability in respect of all Relevant
Claims including the Buyer's costs and expenses incurred in
successfully bringing such a claim and the costs and expenses incurred
by the Group in successfully defending such a claim under this
Agreement shall not exceed, and the Sellers will not be liable for any
amount which exceeds, the amount actually recovered under the Warranty
and Indemnity Insurance and the Buyer's only right of recovery for any
Relevant Claim shall be under the Warranty and Indemnity Insurance.
2.2 Subject always to paragraph 2.1 above, the Sellers will not be liable
for any Relevant Claim unless the amount of the liability in respect
of that Relevant Claim exceeds (pound sterling)50,000.
2.3 Subject always to paragraph 2.1 above, the Sellers will not be liable
for any Relevant Claim unless and until the amount of the liability in
respect of that Relevant Claim, when aggregated with the amount of the
liability in respect of all other Relevant Claims (excluding any
amounts in respect of a Relevant Claim for which the Sellers have no
liability because of paragraph 2.2), exceeds (pound sterling)1,000,000
in which event the Sellers will be liable for the whole amount of such
liability. For the avoidance of doubt, in determining whether any
thresholds referred to in this paragraph 2.3 have been reached, all
Relevant Claims (excluding any amounts in respect of a Relevant Claim
for which the Sellers have no liability because of paragraph 2.2)
shall be aggregated.
3. Time limitation
3.1 No Seller will be liable for a Relevant Claim (other than a claim
under the Tax Covenant or a claim arising as a result of a breach of
the Tax Warranties) unless:
3.1.1 within a period of nine (9) months after the Completion
Date, the relevant Seller receives written notice of such
Relevant Claim from the Buyer specifying in reasonable
detail (to the extent such information is available at the
time of the claim) the matter which gives rise to the claim,
the nature of the claim and the amount claimed in respect of
such claim; and
102
3.1.2 provided the Relevant Claim has not otherwise been
satisfied, settled or withdrawn, proceedings in respect of
the Relevant Claim are issued and served on the relevant
Seller within a period of three (3) months starting on the
day of notification of the Relevant Claim.
4. Limitations on Title Warranties
Paragraphs 2 and 3 will not apply in respect of a Relevant Claim
concerning the Title Warranties.
5. Specific limitations
No Seller will have any liability in respect of any Relevant Claim
(other than a claim under the Tax Covenant or a claim arising as a
result of a breach of the Tax Warranties):
5.1 to the extent that it arises or is increased as a result of the
passing of, after the date of this Agreement, or a change in, any law,
rule, regulation, interpretation of the law or administrative practice
of a government, government department, agency or regulatory body
after the date of this Agreement in any case after the date of this
Agreement;
5.2 if it would not have arisen but for any act, omission, transaction or
arrangement carried out at the request of or with the written consent
of the Buyer before Completion;
5.3 if it would not have arisen but for any voluntary act, omission,
transaction or arrangement carried out after Completion by the Buyer
or after Completion by any Group Member or any of their respective
directors, employees or agents or successors in title;
5.4 other than pursuant to the Warranty and Indemnity Insurance, to the
extent that it relates to any loss for which the Buyer or any Group
Member makes recovery whether by contribution or indemnity by
insurance or would have been entitled to recover if valid and adequate
insurance:
5.4.1 had been maintained at any time after Completion; and
5.4.2 was of a type as in force in relation to the business or the
relevant Group Member as the case may be at the Completion
Date;
5.5 to the extent that the subject matter of the Relevant Claim is a
matter specifically provided for, or specifically included as a
liability, or disclosed, in the Accounts;
103
5.6 to the extent that the subject matter of the Relevant Claim is a
matter specifically and identifiably provided for, or included as a
liability, in the Working Capital Statement;
5.7 to the extent that the subject matter of the Relevant Claim is
specifically and identifiably taken into account in determining the
Working Capital determined in accordance with Schedule 9; or
5.8 to the extent of any corporation tax credits, reliefs, benefits or
accruals obtained by the Group by reason of or arising out of the
fact, matter, events or circumstances giving rise to the Relevant
Claim.
6. Recovery from third parties
6.1 If the Buyer or any Group Member or any member of the Buyer's Group is
entitled to recover from some other person (for the avoidance of doubt
including insurers (other than the Warranty and Indemnity Insurance)
and Taxation authorities or the obtaining of any Taxation credit,
relief, benefit or accrual) any sum in respect of any matter or event
which could give rise to a Relevant Claim, the Buyer will (or will
procure that the relevant Group Member will) take all reasonable steps
to recover that sum and any sum recovered will reduce the amount of
such Relevant Claim after deduction of all reasonable costs and
expenses of recovery.
6.2 If a Seller pays the Buyer or any Group Member a sum to settle or
discharge a Relevant Claim and the Buyer or any Group Member or any
member of the Buyer's Group subsequently recovers whether by payment,
discount, credit, relief, accrual or otherwise from any third party
(including any Taxation authority) a sum which is referable to the
Relevant Claim then:
6.2.1 either the Buyer will (or will procure that the relevant
Group Member will) repay the relevant Seller immediately the
amount recovered from the third party less any reasonable
costs and expenses incurred in recovering the same; or
6.2.2 if the figure resulting under paragraph 6.2.1 above is
greater than the amounts paid by the relevant Seller to
settle or discharge the Relevant Claim in question, then the
Buyer is only obliged to repay to that Seller such amount as
is equivalent to the sum paid by that Seller in settlement
or discharge of that Relevant Claim.
7. No double recovery
The Buyer is not entitled to recover damages or otherwise obtain
payment, reimbursement or restitution under this Agreement more than
once in respect of the same loss or liability (other than a recurring
loss or liability).
104
8. To the extent that any of the Share Sellers have made a payment to the
Buyer in respect of a Relevant Claim prior to the determination of the
Working Capital Statement in accordance with clause 5 and Schedule 9
and to the extent that the liability or matter which is the subject
matter of the Relevant Claim has been provided for in the Working
Capital Statement, the Buyer shall ensure that such liability or
matter (to the extent of the payment made by the Share Sellers in
respect thereof) is excluded from the Working Capital Statement prior
to the same being agreed or determined. To the extent that a Relevant
Claim has been made or agreed and not yet paid, then to the extent
that this matter has been provided for in the Working Capital
Statement, such claim shall be deemed to have been withdrawn or
reduced (as the case may be) and the Buyer shall be deemed to accept
that the compensation for the same is the agreement or determination
of the Consideration pursuant to clause 5.
9. Contingent Liabilities
If any potential Relevant Claim (not being a claim under Part 2 of
Schedule 4) arises as a result of a contingent or unquantifiable
liability of any Group Member, no Share Seller will be obliged to pay
any sum in respect of the potential Relevant Claim until the liability
either ceases to be contingent or becomes quantifiable but the time
limits referred to in paragraph 3.1.2 shall be deemed to extend until
three months following the date on which the Buyer becomes aware that
such contingent or unquantifiable liability has crystallised provided
that such contingent or unquantifiable liability crystallises or
becomes quantifiable within 9 months of the date on which the Buyer
gave notice of such liability to the Sellers under clause 3.1.1.
10. The Buyer's Group
The liability of the Share Sellers to the Buyer or any Group Member
will cease and any subsisting Relevant Claim will (to the extent that
it related to that Group Company) be withdrawn upon the relevant Group
Member ceasing to be a member of the Buyer's Group after Completion.
11. Conduct of Relevant Claims
11.1 If the Buyer or the relevant Group Member becomes aware that matters
have arisen which will or are likely to give rise to a Relevant Claim
(not being a Tax Claim as defined in Part 1 of Schedule 4, to which
the provisions of paragraph 7 of Schedule 4 shall apply to the
exclusion of this paragraph 11), the Buyer will (or will procure that
the relevant Group Member will):
11.1.1 as soon as reasonably practicable notify the relevant
Seller(s) in writing of the potential Relevant Claim and of
the matters which will or are likely to give rise to such
Relevant Claim;
105
11.1.2 not make any admission of liability, agreement or compromise
with any person, body or authority in relation to the
potential Relevant Claim without prior consultation with the
relevant Seller(s);
11.1.3 at all times disclose in writing to the relevant Seller(s)
all material information and documents relating to the
potential Relevant Claim or the matters which will or are
likely to give rise to the potential Relevant Claim;
11.1.4 if requested by a Seller give that Seller and its
professional advisers reasonable access to:
11.1.4.1 the personnel of the Buyer and/or the relevant
Group Member in order to interview the personnel;
and
11.1.4.2 any relevant premises, chattels, accounts,
documents and records within the power, possession
or control of the Buyer and/or the relevant Group
Member in order to, at the Seller's own expense,
examine and photograph the premises and chattels
and to examine, photograph and take copies of the
accounts, documents and records;
11.1.5 take such action as the relevant Seller(s) may reasonably
request to avoid, resist, contest, defend, compromise or
remedy the potential Relevant Claim or the matters which
will or are likely to give rise to such Relevant Claim
provided that each Seller has first provided the Buyer with
adequate security against all reasonable costs which may be
incurred as a result of a request by that Seller.
11.2 If in the reasonable opinion of the Buyer, the procedures detailed in
paragraph 11.1 above would have a materially detrimental affect on the
business of the Buyer's Group (including, following Completion, the
Group) then the Buyer shall have no obligations to comply with
paragraph 11.1 and the Sellers shall have no right against the Buyer
in respect thereof.
12. Mitigation
Nothing in this Schedule 7 will in any way restrict or limit the
Buyer's or the relevant Group Member's common law duty to mitigate its
loss.
13. No Limitations for Fraud
Nothing in this Schedule 7 will have the effect of limiting or
restricting any liability of a Seller in respect of a Relevant Claim
arising as a result of any fraud or wilful misconduct or omission by
or on behalf of that Seller.
106
14. Payment of Relevant Claim or Tax Claim to be reduction in
consideration
Any payment made by a Seller in respect of any Relevant Claim will be
deemed to be a reduction in the Consideration payable to that Seller
in accordance with clause 4 of this Agreement.
15. Buyer's Awareness
The Sellers shall have no liability under this Agreement for or in
respect of any Warranty if the Buyer, or any member of the Buyer's
Group, had actual knowledge, prior to the date of this Agreement of
any facts or circumstances which could constitute a breach of any of
such Warranty.
107
SCHEDULE 8
Sellers Obligations
Part I - Share Sellers Obligations
1. The Share Sellers:
(i) confirm that, from the Effective Date to the date of this
Agreement, each Group Member has complied with paragraphs
1.1 to 1.25 (inclusive) below and, for the purposes of this
paragraph (i) such provisions shall be deemed to be in the
past tense; and
(ii) will immediately following the date of this Agreement and
pending Completion procure that each Group Member will,
except as required by law or relevant regulatory authority
or with the written consent of the Buyer, such consent not
to be unreasonably conditioned withheld or delayed:
1.1 not incur expenditure on capital account on any single item in excess
of (pound sterling)50,000 (fifty thousand pounds) or items having an
aggregate capital expenditure in excess of (pound sterling)250,000
(two hundred and fifty thousand pounds) and in either case not enter
into any commitment to do so;
1.2 not sell any part of its assets except Stock in the ordinary course of
trading;
1.3 not borrow any money, except under its existing credit facilities from
its bankers where the borrowing does not exceed the amount available
to be drawn under those facilities, or amend or agree to amend the
terms of its borrowings under its existing credit facilities;
1.4 not make any payments out of or drawings on its bank account other
than routine payments or make any single routine payment which exceeds
(pound sterling)150,000 (one hundred and fifty thousand pounds);
1.5 not enter into any guarantee or indemnity or other agreement to
secure, or incur financial or other obligations with respect to,
another person's obligations;
1.6 not enter into any long term Contract (meaning a term in excess of one
year) or commitment other than as required pursuant to this Agreement;
1.7 not grant any lease, licence or third party right or terminate, or
give notice to terminate, a lease, licence or third party right in
respect of any part of the Property;
1.8 not change the existing use or assign or otherwise dispose of any part
of the Property;
108
1.9 not make any loan or gifts to any person save for an advance of
expenses to employees in the normal course;
1.10 not enter into any leasing, hire purchase or other agreement or
arrangement for payment on deferred terms save for in the ordinary
course of business;
1.11 not declare, make or pay any dividend or other distribution;
1.12 not create an Encumbrance over the Property or another asset of a
Group Member;
1.13 not appoint any additional director;
1.14 not take on any new employee, officer or director or terminate or give
notice to terminate (other than for cause) the employment or
engagement of any employee, officer or director or make or propose to
make any change in the terms or conditions of employment or engagement
or remuneration or pension benefits of any employee, officer or
director;
1.15 not create, allot, issue, grant or agree to grant any option over,
acquire, repay or redeem any class of share or loan capital and not
vary or agree to vary the rights of, any class of share or loan
capital;
1.16 not make any payment or transfer any value (or enter into any
Contracts or incur any legally binding commitment to pay or transfer
any value) from any Group Member to any of the Dormant Companies or to
the Sellers and/or their Affiliates;
1.17 not enter into any Contract or incur any legally binding commitment
which results in Liabilities being incurred to any third parties save
in the ordinary course of business and ordinary course means a
contract which requires payments by a Group Member to a third party of
less of (pound sterling)10,000 in one quarter;
1.18 not enter into any Contract or incur any legally binding commitment
which results in Liabilities being incurred by the Group Member in
favour of the Dormant Companies or to the Sellers and/or their
Affiliates;
1.19 not make any payment of (or enter into any Contract or incur any
legally binding commitment to pay) any transaction costs or bonuses or
fees in connection with this Agreement or the transactions
contemplated by it
1.20 not forgive or write off or agree to reduce any liabilities (including
any inter-company loans within the Group);
1.21 not commence or settle any litigation (other than routine debt
collection in the ordinary course of business) nor settle with HMRC
any disputed Liability to Tax other than in relation to the
Withholding Tax Claim, as defined in Schedule 4 Part 1. The Sellers
109
shall be entitled to deal with and settle the Withholding Tax Claim in
such manner as it thinks fit acting reasonably but shall not settle
with the relevant Taxation Authority the amount of Tax payable
pursuant thereto without the prior consent of the Buyer, such consent
not to be unreasonably withheld or delayed and the Share Sellers shall
keep the Buyer fully informed of all material correspondence with HMRC
relating to the Withholding Tax Claim;
1.22 not materially amend or vary, waive or terminate any rights under any
Contract with any purchaser of electricity or environmental
attributes, or gas supplier (except for those agreements currently
being amended of which the Buyer is aware at the date of this
Agreement), the DSA's and contracts relating to the ROC Business
Assets, contracts for spare parts, contracts with funders and
contracts relating to the Property;
1.23 to the extent that the Share Sellers are aware of relevant legal
requirements, comply with such legal requirements;
1.24 not make, or enter into any new Contract or incur any new legally
binding commitment to make, any payments due under a DSA or a DA from
any Group Member to a ROC Seller after the Effective Date;
1.25 not alter the memorandum or articles of association of any member of
the Group nor adopt any articles of association nor pass any
resolutions inconsistent the memorandum and articles of association in
place at the date of this Agreement.
Part II - ROC Sellers Obligations
2. Each of the ROC Sellers:
(i) confirm that, from the Effective Date to the date of this
Agreement, they have complied with paragraphs 2.1 to 2.3
(inclusive) below and for the purposes of this paragraph (i)
such provisions shall be deemed to be in the past tense; and
(ii) will immediately following the date of this Agreement and
pending Completion, in respect of the ROC Business Assets to
be sold by it pursuant to clause 3.1, except as required by
law or relevant authority or with the written consent of the
Buyer, such consent not to be unreasonably withheld or
delayed:
2.1 not assign, lease or dispose of any part of the ROC Business Assets
owned by it save in the ordinary course of business;
2.2 not create an Encumbrance over the any of the ROC Business Assets
owned by it; and
2.3 not accept any payments due under a DSA or DA from any Group Member
after the Effective Date.
110
SCHEDULE 9
Working Capital Statement
Part 1
1. Working Capital Statement
1.1 The Working Capital Statement will show the items set out in the
proforma at Part 3 of this Schedule at the Effective Date and, in
calculating the Working Capital, the following accounting principles,
policies, bases, conventions, rules, practices and estimation
techniques shall be applied in the following order of priority:
1.1.1 in accordance with the specific accounting principles,
policies, bases, conventions, rules, practices and
estimation techniques set out in Part 2 of this Schedule;
1.1.2 to the extent there is no conflict with paragraph 1.1.1
adopting the accounting principles, policies, bases,
conventions, rules, practices and estimation techniques
applied for the purposes of the Accounts; and
1.1.3 to the extent there is no conflict with paragraphs 1.1.1 and
1.1.2 in accordance with Generally Accepted Accounting
Practices in the United Kingdom in force at the Accounting
Date.
For the avoidance of doubt and notwithstanding any other provision of
this Schedule 9 (other than paragraph 2.26 of this Schedule 9), in the
preparation of the Working Capital Statement, the terms of paragraph
1.1.1 shall take precedence over the terms of paragraphs 1.1.2 and
1.1.3 and the provisions of paragraph 1.1.2 shall take precedence over
paragraph 1.1.3.
1.2 For the avoidance of doubt and notwithstanding any other provision of
this Schedule 9 (other than paragraphs 2.23, 2.25 and 2.26 of this
Schedule 9), in preparing the Working Capital Statement, account shall
be made for any Tax estimated to be due and payable (on a consolidated
basis) by the Group in respect of the period up to and including the
Effective Date but no account shall be taken of any other Tax,
deferred tax asset or deferred tax liability.
1.3 The provisions of Parts 1 and 2 of this Schedule (and the other
provisions of this Agreement) shall prevail over the proforma set out
in Part 3 of this Schedule.
Part 2
2. Specific Accounting Policies
2.1 The Working Capital Statement for the Group shall be prepared on a
consolidated basis. Except as specifically required elsewhere in this
111
Schedule, the principles of consolidation shall be those applied in
the consolidation of the Accounts.
2.2 Except as specifically required elsewhere in this Part 2, the balances
included in the Working Capital Statement shall be calculated by
reference to the nominal ledgers of each Group Member or ROC Seller
(as the context requires) made up to the Effective Date.
2.3 Intercompany balances between Group Members shall be fully reconciled
and eliminated and any residual debit balances written off.
2.4 The ROC Payable shall be fully reconciled to the ROC Receivable and
any residual debit and credit balances written off.
2.5 No item or balance shall be included in the Working Capital Statement
more than once, and the provisions of this Part 2 shall be interpreted
so as to avoid any double-counting (whether positive or negative) of
any item or balance to be included in the Working Capital Statement.
2.6 The Working Capital Statement shall be stated in Pounds Sterling. For
this purposes any foreign currency balances shall be translated into
Pounds Sterling at the mid-point "spot" exchange rates published in
the London edition of the Financial Times (the "FT") on the day after
the Effective Date. Should no FT be published on this day, reference
shall be made to the first FT to be published thereafter.
2.7 Adjusting Events (as defined in FRS 21 "Events After the Balance Sheet
Date") occurring after the Effective Date shall be taken into account
in the Working Capital Statement until the date of delivery of the
draft Working Capital Statement to the Buyer.
2.8 No asset which is in the nature of a fixed asset (including for the
avoidance of doubt fixed asset investments, tangible or intangible
fixed assets, and assets in the course of construction) or which was
classified as a fixed asset in the Accounts or the 31 October 2006
management accounts shall be included in the Working Capital
Statement.
2.9 No materiality limits shall be applied in preparing the Working
Capital Statement.
2.10 Cash per the nominal ledger(s) shall be fully reconciled to the bank
statements or other applicable third party confirmation, and any
unreconciled debit balances shall be written off.
2.11 Sales of electricity under offtake agreements (including revenue
earned in relation to the associated Renewable Obligation
Certificates) shall be accrued upon supply of the electricity to third
parties. The sales value of such supply shall be calculated by
112
reference to the latest available meter reading prior to the Effective
Date and the relevant contractual unit price.
2.12 Revenue in relation to TRIAD benefits shall be recognised upon cash
receipt or if earlier, formal written confirmation of entitlement from
the relevant electricity supplier.
2.13 Provision shall be made for all receivables to the extent (a) a
receivable is disputed by the counterparty, or (b) prior to the
Effective Date, the counterparty enters or files for bankruptcy or
administration or otherwise becomes insolvent, or (c) a credit note is
issued after the Effective Date but before the date on which the
Sellers deliver the draft Working Capital Statement to the Buyer in
accordance with clause 5, or (d) with the exception of accrued revenue
and amounts receivable in relation to Renewable Obligation
Certificates and LECs, the receivables concerned are more than 90 days
old.
2.14 Prepayments and deferred expenditure shall be recognised only to the
extent they represent payment for goods and services which are of
continuing value to the Group post Completion.
2.15 Amounts received or receivable in advance of revenue recognition will
be accrued in the Working Capital Statement as deferred income.
2.16 Accrual shall be made for all goods and services received or
receivable but not paid for as at the Effective Date. For this
purpose, Royalties shall be accrued at the same point of time as the
revenue to which they relate is recognised.
2.17 Accrual shall be made for all audit and accountancy fees and costs in
relation to tax returns relating to the financial years ending on or
before 31 December 2006.
2.18 Any proceeds received or receivable from the disposal of fixed assets
(being those assets which are excluded from the calculation of the
Working Capital) between 31 October 2006 and the Effective Date shall
be deducted from Working Capital.
2.19 Insurance receivables shall be recognised to the extent cash or formal
written confirmation of settlement has been received from the insurers
by the date the draft Working Capital Statement is submitted to the
Buyer by the Representative. Full provision shall be made for the cost
of repairing or replacing any damaged assets.
2.20 Insurance receivables that relate to claims for loss of profits after
the Effective Date shall be excluded from Working Capital.
113
2.21 All debt and borrowings shall be stated gross of any unamortised
capitalised arrangement fees except that all costs and expenses
associated or arising in connection with the termination of the Term
Debt and the Hedging Arrangements shall be excluded.
2.22 The sum of (pound sterling)363,632.00 being the aggregate of loans
made by the Company to certain Shareholders (which amount will be
repaid at Completion in accordance with paragraph 8 of Schedule 5)
will be included in Working Capital as a receivable.
2.23 The amounts of (pound sterling)5,349.60 and (pound sterling)1,418.24
representing respectively the repayments (net of PAYE and employee's
National Insurance Contributions) by each of Douglas Wilson and Randy
Holmes of the bonus inadvertently paid to them and repaid to the
Company on Completion in accordance with paragraph 7 of Schedule 5
shall be included as a receivable.
2.24 The amount by which the Term Debt as at the Effective Date is a
greater liability than (pound sterling)10,237,407.61 shall be included
in Working Capital as a liability. The amount by which the Term Debt
as at the Effective Date is a lesser liability than (pound
sterling)10,237,407.61 shall be included in Working Capital as an
asset.
2.25 (pound sterling)1,110,188, being the agreed (as between the parties)
estimated amount of the Tax payable pursuant to the Withholding Tax
Claim as defined in Schedule 4, shall be included as a liability in
Working Capital.
2.26 The Bonus Amount (and all PAYE and employers and employees National
Insurance Contributions in relation to such Bonus Amount) shall be
excluded.
114
Part 3
Working Capital Statement Pro-forma
Current Assets (pound sterling)
---------------------
(pound sterling)
Current Liabilities (pound sterling)( )
Debt (pound sterling)( )
Working Capital Liabilities (pound sterling)( )
Term Debt adjustment (pound sterling)
(being the amount derived ---------------------
from paragraph 2.24 of
Schedule 9)
Working Capital (pound sterling)
ROC Receivable (pound sterling)
115
SCHEDULE 10
Purchase Price Allocation
ROC 1 Assets:
ASSET PURCHASE PRICE
(i) ROC 1 ROC Receivable (pound sterling)[AMOUNT AS AT EFFECTIVE DATE]
(ii) Estimated 2007 DSA and DA ROC 1 The amount to be estimated at Completion
Accrual
(iii) Fixed Assets (representing tangible (pound sterling)4,654,239
moveable properties) ----------------------------------------------------
(iv) Goodwill (reflecting intangible and Total for ROC 1 Assets minus the amounts referred to
other contractual assets) at (i) to (iii) above
----------------------------------------------------
Total (pound sterling)15,414,893.62 (excluding the amounts at
(i) and (ii) above)
----------------------------------------------------
ROC 2 Assets:
ASSET PURCHASE PRICE
(i) ROC 2 ROC Receivable (pound sterling)[AMOUNT AS AT EFFECTIVE DATE]
(ii) Estimated 2007 DSA and DA ROC 2 The amount to be estimated at Completion
Accrual
(iii) Fixed Assets (representing tangible (pound sterling)7,712,754
moveable properties) ----------------------------------------------------
(iv) Goodwill (reflecting intangible and other Total for ROC 2 Assets minus the
contractual assets) amounts referred to at (i) to (iii) above
----------------------------------------------------
Total (pound sterling)25,544,680.85 (excluding the amounts at
(i) and (ii) above)
----------------------------------------------------
ROC 3 Assets:
ASSET PURCHASE PRICE
(i) ROC 3 ROC Receivable (pound sterling)[AMOUNT AS AT EFFECTIVE DATE]
(ii) Estimated 2007 DSA and DA ROC 3 The amount to be estimated at Completion
Accrual
(iii) Fixed Assets (representing tangible (pound sterling)8,643,623
moveable properties) ----------------------------------------------------
(iv) Goodwill (reflecting intangible and other Total for ROC 3 Assets minus the
contractual assets) amounts referred toat (i) to (iii) above
----------------------------------------------------
Total (pound sterling)28,627,659.57 (excluding the amounts at
(i) and (ii) above)
----------------------------------------------------
116
ROC 4 Assets:
ASSET PURCHASE PRICE
(i) ROC 4 ROC Receivable (pound sterling)[AMOUNT AS AT EFFECTIVE DATE]
(ii) Estimated 2007 DSA and DA ROC 4 The amount to be estimated at Completion
Accrual
(iii) Fixed Assets (representing tangible (pound sterling)3,989,384
moveable properties) ----------------------------------------------------
(iv) Goodwill (reflecting intangible and Total for ROC 4 Assets minus the
other contractual assets) amounts referred to at (i) to (iii) above
----------------------------------------------------
Total (pound sterling)13,212,765.96 (excluding the amounts at
(i) and (ii) above)
----------------------------------------------------
117
SCHEDULE 11
The ROC Business Contracts
PART 1 - ROC 1
[OMITTED]
PART 2 - ROC 2
[OMITTED]
PART 3 - ROC 3
[OMITTED]
PART 4 - ROC 4
[OMITTED]
118
SCHEDULE 12
The Plant and Equipment
PART 1 - ROC 1
[OMITTED]
PART 2 - ROC 2
[OMITTED]
PART 3 - ROC 3
[OMITTED]
PART 4 - ROC 4
[OMITTED]
119
SCHEDULE 13
Project Companies
[OMITTED]
120
SCHEDULE 14
Adjustment to the Purchase Price a result in change of Interest Rates
The Purchase Price will be adjusted to reflect the effect of interest rate
changes between 7 December 2006 and the Completion Date, calculated based on the
following:
Interest Rate Adjustment Mechanism
- --------------------------------------------------------------------------------
12 year Tullet Prebon rate(1) Purchase Price Adjustment
((pound sterling)`000)23
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1.50) % 10,264
- --------------------------------------------------------------------------------
(1.25) % 8,117
- --------------------------------------------------------------------------------
(1.00) % 6,714
- --------------------------------------------------------------------------------
(0.75) % 5,005
- --------------------------------------------------------------------------------
(0.50) % 3,330
- --------------------------------------------------------------------------------
(0.40) % 2,660
- --------------------------------------------------------------------------------
(0.30) % 1,996
- --------------------------------------------------------------------------------
(0.20) % 1,332
- --------------------------------------------------------------------------------
(0.10) % 666
- --------------------------------------------------------------------------------
Bid Case Rate (4.81%) (Bid 7th Dec) 120,000
- --------------------------------------------------------------------------------
0.10 % (673)
- --------------------------------------------------------------------------------
0.20 % (1,345)
- --------------------------------------------------------------------------------
0.30 % (2,012)
- --------------------------------------------------------------------------------
0.40 % (2,673)
- --------------------------------------------------------------------------------
0.50 % (3,340)
- --------------------------------------------------------------------------------
0.75 % (4,997)
- --------------------------------------------------------------------------------
1.00 % (6,691)
- --------------------------------------------------------------------------------
1.25 % (8,187)
- --------------------------------------------------------------------------------
1.50 % (10,261)
- --------------------------------------------------------------------------------
- ---------------------------------
(1) 12 year Tullet Prebon Rate as set at market close, Reuters Page
TTKLINFP. The interest rate will be set based on the average of the
Bid rate for the 12 year Tullet Prebon on the day preceding
Completion. However, should on the day of completion, the Tullet
Prebon open more than 10 basis points above the previous day's
closing position, the pricing will be reset to reflect the trading as
at 11:00am GMT of the day of completion.
(2) Total adjustment to be applied to the Purchase Price
(3) Values to be linearly interpolated for Tullett Prebon rates between
the values stated
121
SIGNED by )
duly authorised for and on behalf of ) DOUGLAS R. WILSON
RIDGEWOOD UK LLC )
in the presence of: R. Franklin )
Witness signature: RICHARD FRANKLIN
Name:
Address: 1 CALLAGHAN SQUARE, CARDIFF
Occupation: SOLICITOR
SIGNED by )
duly authorised for and on behalf of ) MARK BAKER
ARBUTUS ENERGY LIMITED ) RICHARD KEARSEY
in the presence of: )
Witness signature: SIOBHAN TOBIN
Name: SIOBHAN TOBIN
Address: CHARTER PLACE, 23/27 SEATON PLACE, ST HELIER, JERSEY
Occupation: MANAGER, TRUST COMPANY
SIGNED by )
duly authorised for and on behalf of ) DOUGLAS R. WILSON
RIDGEWOOD ROC 2003 LLC )
in the presence of: )
Witness signature: RICHARD FRANKLIN
Name:
Address: AS ABOVE
Occupation:
SIGNED by )
duly authorised for and on behalf of ) DOUGLAS R. WILSON
RIDGEWOOD ROC II 2003 LLC )
in the presence of: )
Witness signature: RICHARD FRANKLIN
Name:
Address: AS ABOVE
Occupation:
122
SIGNED by )
duly authorised for and on behalf of ) DOUGLAS R. WILSON
RIDGEWOOD ROC III 2003 LLC )
in the presence of: )
Witness signature: RICHARD FRANKLIN
Name: RICHARD FRANKLIN
Address: 1 CALLAGHAN SQUARE, CARDIFF
Occupation: SOLICITOR
SIGNED by )
duly authorised for and on behalf of ) DOUGLAS R. WILSON
RIDGEWOOD ROC IV 2004 LLC )
in the presence of: )
Witness signature: RICHARD FRANKLIN
Name:
Address: AS ABOVE
Occupation:
SIGNED by )
duly authorised for and on behalf of ) DAVID PAUL TILSTONE
MEIF LG ENERGY LIMITED )
in the presence of: )
Witness signature: RICHARD FRANKLIN
Name:
Address: AS ABOVE
Occupation:
123
APPENDIX I
Long Term Liabilities
ING Lease (UK) (pound sterling)263 (excl vat)
(London franking machine)
GE Commercial Finance Equipment leasing (pound sterling)1,995 (excl vat)
(Bolton franking machine)
CIT Vendor finance (UK) Limited (pound sterling)2,647 (excl vat)
(Bolton photocopier)
Capital Bank (pound sterling)29,500
(Vehicles)
Clarke Energy Limited (pound sterling)293,442 (total
(Jameson Road & Feltwell NFFO engines) outstanding as at the Effective
Date)
Deferred Income (pound sterling) 3,473,246
BoS Term Loan (pound sterling) 8,668,156
(gross of (pound sterling)215,707 set up cost DR bal)
Deferred Tax (pound sterling) 808,037
Other (pound sterling) 243
PowerBank Finance Leases (pound sterling) 21,042,924
124