Exhibit 99.1

Dated 1 March 2011

AVON ENERGY PARTNERS HOLDINGS

and

EAST MIDLANDS ELECTRICITY DISTRIBUTION HOLDINGS

and

E.ON UK PLC

and

E.ON AG

and

WPD INVESTMENT HOLDINGS LIMITED

and

PPL CORPORATION

SHARE PURCHASE AGREEMENT

relating to the sale and purchase of the whole of the issued share capital of the Group Companies
and the transfer of certain assets and liabilities to, and from, the Group

Linklaters

Linklaters LLP
One Silk Street
London EC2Y 8HQ

Telephone (+44) 20 7456 2000
Facsimile (+44) 20 7456 2222

Ref Matthew Middleditch/Roger Barron/David Martin

Table of Contents

Contents		Page
1 Interpretation			2
2 Agreement to Sell the Shares			14
3 Consideration and Leakage			14
4 Conditions			15
5 Termination			16
6 Pre-Closing			17
7 Closing			23
8 Separation and Other Matters			27
9 Warranties			30
10 Limitation of Sellers’ Liability			31
11 Claims			36
12 Restrictive Covenants			38
13 Confidentiality			39
14 Insurance			40
15 Guarantees			42
16 Wrong Pocket			45
17 Other Provisions			46
Schedule 1 The Companies and the Subsidiaries			58
Schedule 2 The Material Properties			63
Schedule 3 Closing Obligations (Clause 7)			67
Schedule 4 Permitted Leakage			70
Schedule 5 Warranties given by the Sellers			73
Schedule 6 Warranties given by the Purchaser			96

Contents		Page
Schedule 7 Sellers’ Awareness under Clause 9.1.3			97
Schedule 8 Transferring Properties			98
Schedule 9 Transferring Assets (Clause 8.2)			130
Schedule 10 Pensions (Clause 8.3)			139
Schedule 11 Transferring Intellectual Property Rights (Clause 8.4)			148
Schedule 12 Intellectual Property Rights			149
Schedule 13 Guarantees etc. (Clause 15.1)			152
Schedule 14 Locked Box Accounts			153
Schedule 15 Form of Degrouping Election			154

Share Purchase Agreement

This Agreement is made on 1 March 2011

between:

(1)

AVON ENERGY PARTNERS HOLDINGS (company number 03196714), a company incorporated in England and Wales whose registered office is at Westwood Way, Westwood Business Park, Coventry, CV4 8LG (“Avon Energy Partners”);

(2)

EAST MIDLANDS ELECTRICITY DISTRIBUTION HOLDINGS (company number 04254217), a company incorporated in England and Wales whose registered office is at Westwood Way, Westwood Business Park, Coventry, CV4 8LG (“EMEDH”);

(each a “Seller” and together, the “Sellers”);

(3)

E.ON UK PLC (company number 02366928), a company incorporated in England and Wales whose registered office is at Westwood Way, Westwood Business Park, Coventry, CV4 8LG (the “Sellers’ Guarantor”);

(4)

E.ON AG, a company incorporated in Germany whose registered office is at E.ON Platz 1, 40479 Düsseldorf, Germany ( “E.ON AG”);

(5)

WPD INVESTMENT HOLDINGS LIMITED (company number 04066211) a company incorporated in England and Wales whose registered office is at Avonbank, Feeder Road, Bristol, Avon, BS2 0TB (the “Purchaser”); and

(6)

PPL CORPORATION a company incorporated in Pennsylvania whose head office is in Two North Ninth Street, Allentown, PA18101, Pennsylvania (the “Purchaser’s Guarantor”).

each being a “party” to this Agreement and together comprising the “parties” to this Agreement.

Whereas:

(A)

Each Relevant Seller has agreed, on and subject to the terms and conditions hereof, to sell the Shares (as defined below) and to assume the obligations imposed on the Relevant Seller under this Agreement;

(B)

The Purchaser has agreed, on and subject to the terms and conditions hereof, to purchase the Shares and to assume the obligations imposed on the Purchaser under this Agreement;

(C)

E.ON AG has agreed to transfer, or procure the transfer of, the Transferring Assets (as defined below) pursuant to Schedule 9 of this Agreement, and, on and subject to the terms and conditions hereof, the Purchaser and the Asset Transferee have agreed to assume the obligations imposed on each of them in respect of the Transferring Assets under this Agreement;

(D)

Each Relevant Seller has agreed to transfer, or procure the transfer of, the Transferring Properties and the Transferring Intellectual Property Rights (as defined below) pursuant to Schedule 8 and Schedule 11 of this Agreement respectively, and, on and subject to the terms and conditions hereof, the Purchaser and the Asset Transferee have agreed to assume the obligations imposed on each of them in respect of the Transferring Properties and the Transferring Intellectual Property Rights under this Agreement;

(E)

The Sellers’ Guarantor has agreed to guarantee the obligations of the Sellers and any member of the Sellers’ Group in the manner set out in this Agreement; and

(F)

The Purchaser Guarantor has agreed to guarantee the obligations of the Purchaser and any member of the Purchaser’s Group in the manner set out in this Agreement.

It is agreed as follows:

1

Interpretation

In this Agreement, unless the context otherwise requires, the provisions in this Clause 1 apply:

1.1		Definitions
		“ASB” means the Accounting Standards Board in the United Kingdom.
		“Accounts Date” means 31 December 2010;
		“Actual Amount” has the meaning given to it in Clause 7.3.2;
		“Affiliate” means, in relation to any person, any subsidiary undertaking or parent undertaking of that person and any subsidiary undertaking of any such parent undertaking;
		“Agreed Rate” means five per cent above the base rate from time to time of Barclays Bank plc;
		“Agreed Terms” has the meaning given to it in Clause 1.12 of this Agreement;
		“Agreed Terms Documents” means the documents in the Agreed Terms as at the date of this Agreement set out in Schedule 2 to the Disclosure Letter;
		“Alliance Agreements” means the agreements between (i) Central Networks West plc and Enterprise Managed Services Limited, (ii) Central Networks East plc, Morgan Est plc and Morgan Sindall (Infrastructure) plc, and (iii) Central Networks West plc, Central Networks East plc and Morrison Utility Services Limited;
		“Asset Transferee” means such Group Company as is the principal user of the relevant asset as shall be agreed between the Sellers and the Purchaser on or prior to Closing, such agreement not to be unreasonably withheld or delayed;
		“Budget” means the list of potential capital expenditure items (Data Room reference 2.20.1);
		“Business Day” means a day which is not a Saturday, a Sunday or a public holiday and on which banks in London, New York and Frankfurt are open for business;
		“Business Information” means all information (in whatever form held) including all:

	(a)		formulae, designs, specifications, drawings, know-how, manuals and instructions;
	(b)		customer lists, sales, marketing and promotional information;
	(c)		business plans and forecasts;
	(d)		technical or other expertise; and
	(e)		computer software and all accounting and tax records, correspondence, orders and inquiries;

“Business IP” means the Owned IP and all other Intellectual Property Rights used by the Group Companies as at the date of this Agreement;

“Business IT” has the meaning given to it in paragraph 5.2.1 of Schedule 5;

“Business Plan” means the business plan for the Group Companies which is materially consistent with the DLT’s cash flow forecast set out in Section 3.2 of Volume II of the Vendor’s Due Diligence Report;

“Central Networks East Shares” means the 198,381,191 ordinary shares of 56⁹/₁₁ pence each in Central Networks East plc which are registered in the name of EMEDH and being the whole of the issued ordinary share capital of Central Networks East plc;

“Central Networks Limited Shares” means the 496,655,789 ordinary shares of 25 pence each in Central Networks Limited which are registered in the name of Avon Energy Partners and being the whole of the issued ordinary share capital of Central Networks Limited;

“Closing” means the completion of the sale of the Shares pursuant to Clause 7 of this Agreement;

“Closing Date” means the date on which Closing takes place;

“Company” means each of (i) Central Networks Limited and (ii) Central Networks East plc, details of which are set out in paragraph 1 of Schedule 1 and “Companies” means both of them;

“Confidentiality Agreement” means the confidentiality agreement dated 18 January 2011 between E.ON AG and Purchaser Guarantor pursuant to which Central Networks Limited made available to the Purchaser and Purchaser Guarantor certain confidential information and Business Information relating to the Group;

“Corporation Tax Recharge Payment” means either (i) £22.6 million, being the amount owed by the Group Companies in respect of a recharge pursuant to the Group Payment Arrangement as a result of the payment made by E.ON UK plc to HMRC on 14 January 2011 in respect of the third Corporation Tax instalment payment for the tax period ended on 31 December 2010 or (ii) if Closing occurs on or after 14 April 2011, £47.6 million, being the amount referred to in (i) above plus the £25.0 million that will be recharged to the Group Companies pursuant to the Group Payment Arrangement, as a result of the payment required to be made by E.ON UK plc to HMRC on 14 April 2011 in respect of the final Corporation Tax instalment payment for the tax period ended on 31 December 2010, provided that E.ON UK plc has actually made such payment to HMRC;

“CTA” or “CTA 2009” means the UK Corporation Tax Act 2009;

“CTA 2010” means the UK Corporation Tax Act 2010;

“Customer Contributions Claim” has the meaning given in the Tax Indemnity;

“Data Room” means the electronic data room (at http address www.datasite.merrillcorp.com) containing documents and information relating to the Group, made available by the Sellers prior to 7.00 pm on 28 February 2011, the contents of which are contained on DVDs or a hard disk prepared by Merrill Corporation and provided to the parties as at the date of this Agreement;

“Debt Financing Sources” means the entities that have committed to provide or otherwise entered into agreements in connection with any debt financings in connection with the transactions contemplated hereby, including, without limitation, any joinder agreements, indentures or credit agreements entered into pursuant thereto or relating thereto together with their Affiliates, officers, directors, employees and representatives involved in the debt financing and their successors and assigns.

“Degrouping Election” has the meaning given to it in the Tax Indemnity;

“Degrouping Taxation” has the meaning given to it in the Tax Indemnity;

“Deloitte Agreement” means the agreement entered into by Central Networks Limited with Deloitte prior to Closing in relation to the provision of professional advisory services by Deloitte in connection with the Customer Contributions Claim;

“Directors’ Deed of Covenant” means the deed of covenant between Avon Energy Partners and the Purchaser in the Agreed Terms to be entered into on or prior to Closing;

“Disclosure Letter” means the letter dated on the same date as this Agreement from the Sellers to the Purchaser disclosing:

	(a)		information constituting exceptions to the Sellers’ Warranties; and
	(b)		details of other matters referred to in this Agreement;

“DLT” means the distribution leadership team, comprising the Group’s senior management (including John Crackett, Jim O’Sullivan, Graeme Thompson, John Glasgow, Chris Kingston, Paul Meneely, Neill Yates and Chantal Thomas);

“DUoS” means the Distribution Use of System Charges paid by E.ON UK’s energy supply business for the distribution of electricity through Central Networks’ distribution system;

“Encumbrance” means any claim, charge, mortgage, lien, option, equity, power of sale, hypothecation, easement, retention of title, right of pre-emption, right of first refusal or other third party right, claim or other encumbrance or security interest of any kind or an agreement, arrangement or obligation to create any of the foregoing;

“Environment”, “Environmental Authority”, “Environmental Law” and “Environmental Permit” have the meanings given to them in paragraph 9.1 of Schedule 5;

“E.ON AG Group” means E.ON AG and any of its subsidiaries and subsidiary undertakings from time to time other than the Group Companies, and “member of the E.ON AG Group” shall be construed accordingly;

“E.ON UK Group Pension Scheme” means the E.ON UK Group of the Electricity Supply Pension Scheme;

“E.ON UK Life Plan” means the E.ON UK Group Life Scheme established by a trust deed and rules executed on 1 December 2008;

“E.ON UK Pension Plan” means a group personal pension plan provided by Fidelity called the E.ON UK Pension Plan;

“Expert” has the meaning given to it in Clause 7.5.4.

“Framework Agreement” means the framework agreement for the provision of certain support services between E.ON UK plc, Central Networks East plc and Central Networks West plc dated 27 July 2010;

“GAAP” means generally accepted accounting principles in the United Kingdom;

“Governmental Order” means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Regulatory Authority;

“Group” means the Group Companies, taken as a whole;

“Group Companies” means the Companies and their Subsidiaries and “Group Company” means any one of them;

“Group Insurance Policies” means all insurance policies held exclusively for the benefit of the Group Companies and “Group Insurance Policy” means any one of them;

“Group Payment Arrangement” has the meaning given to it in the Tax Indemnity;

“Group Retirement Benefit Arrangements” means the E.ON UK Group Pension Scheme, the E.ON UK Life Plan and the E.ON UK Pension Plan;

“Group Tax Relief” has the meaning given to it in the Tax Indemnity;

“Hazardous Substances” has the meaning given to it in paragraph 9.1 of Schedule 5;

“HMRC” has the meaning given to it in the Tax Indemnity;

“Indebtedness” means:

(a)

the principal of, accrued interest or premiums (if any) of and due and payable and unpaid make-wholes or penalties arising as a result of prepayment of, liabilities for borrowed money, including all cash borrowings and indebtedness in the nature of cash borrowings whether secured or unsecured, and obligations evidenced by bonds, debentures, notes or similar debt instruments and liabilities, contingent or otherwise, for reimbursement in respect of any letter of credit, banker’s acceptance or similar credit transaction;

(b)

liabilities for the deferred purchase price of any property outside the ordinary and usual course of business of the Group Companies;

(c)

liabilities in respect of any lease of (or other arrangements conveying the right to use) real or personal property, or a combination thereof, which liabilities are required to be classified and accounted for under GAAP as capital leases; and

(d)

any guarantee, pledge or grant of a security interest in respect of or securing obligations of a type described in the foregoing clause (a), (b) and (c) to the extent of the obligation secured;

but excluding any indebtedness under or in the nature of Ordinary Trading Items;

“Individual Accounts” means each Group Company’s audited individual accounts (as the term is used in sections 394 and 395 of the Companies Act 2006) for the financial year ended on the Accounts Date, the auditors’ report on those accounts, the directors’ report for that year and the notes to those accounts;

“Information Technology” has the meaning given to it in paragraph 5.2.1 of Schedule 5;

“Intellectual Property Rights” means trade marks, service marks, rights in trade names, business names, rights in logos or get-up, patents, utility models, rights in inventions, registered and unregistered design rights, copyrights, semiconductor topography rights, database rights, rights in domain names and URLs, rights in know-how, rights to sue for passing off and in unfair competition, and all other similar rights in any part of the world including, where such rights are obtained or enhanced by registration, any registration of such rights and applications and rights to apply for such registrations;

“Intra-Group Payables” means all Indebtedness owed by a Group Company to a member of the E.ON AG Group;

“Intra-Group Receivables” means all Indebtedness owed by a member of the E.ON AG Group to a Group Company excluding any DUoS related payments;

“Intra-Group Services Termination Deeds” means the deeds governing the termination of arrangements for the supply of certain services prior to the Closing Date entered into by the Sellers’ Guarantor and E.ON IT UK Limited, as suppliers, and Central Networks Limited, as customer, dated 16 February 2011 (Data Room references 18.1.10.1 and 18.1.10.3);

“Law” means any local or foreign statute, code, ordinance, rule or regulation enacted, issued, promulgated, enforced or entered by any Regulatory Authority and common law, including any judicial or administrative interpretation thereof;

“Leakage” means:

(a)

any dividend or distribution of profits or assets declared or any payments in lieu of any dividend or distribution, paid or made or any repurchase, redemption or return of share or loan capital paid or agreed to be paid, in each case by a Group Company to, for the benefit of or at the direction of the Sellers or any member of the E.ON AG Group;

(b)

the waiver by any Group Company of any amount, right, value or benefit owed to that Group Company by the Sellers or any member of the E.ON AG Group;

(c)

any transfer of an asset or right to or the assumption or incurring of a liability or obligation by a Group Company at an overvalue, in each case from the Sellers or any member of the E.ON AG Group;

(d)

any transfer of an asset or right to or the assumption or incurring of a liability or obligation by the Sellers or a member of the E.ON AG Group at an undervalue, in each case from a Group Company;

(e)

any Encumbrance created over any of the assets of a Group Company to or for the benefit of the Sellers or any member of the E.ON AG Group;

(f)

the incurring or payment by any member of the Group of any third party costs or expenses relating to the transactions contemplated by this Agreement, including to any member of the E.ON AG Group;

(g)

any payment of cash by the Group to or on behalf of any member of the E.ON AG Group;

(h)

the incurring by any Group Company of any management charges payable to any member of the Sellers’ Group; and

(i)

any agreement, arrangement or understanding to do any of the foregoing,

but does not include (a) any Permitted Leakage Payment or (b) any Indebtedness to the extent that such Indebtedness has been taken into account and reflected in a reduction of the Purchase Price in accordance with Clauses 7.5.4(iii) or 7.6 and, for the purposes of this definition, references to the Sellers or any member of the E.ON AG Group shall include any nominee or agent or any person receiving monies on behalf of any such person;

“Locked Box Accounts” means the unaudited pro forma consolidated balance sheet of the Group Companies as at the Accounts Date which accounts have assumed, for the purposes of their preparation, that the Reorganisation had occurred immediately prior to the Accounts Date and as set out in Schedule 14 and derived as set out in the Locked Box Report as defined in Schedule 4 of the Disclosure Letter;

“Long Stop Date” has the meaning given to it in Clause 5.1.1;

“Losses” means all losses, liabilities, costs (including legal costs and experts’ and consultants’ fees), charges, expenses, actions, proceedings, claims, demands, damages, fees, fines, interest, awards, settlements, recourses, judgments and penalties;

“Make-Wholes” means premia, penalties or other make-wholes arising as a result of prepayment of liabilities in respect of Intra-Group Payables or Intra-Group Receivables during the period from the Accounts Date to (and including) the Closing Date;

“Management Accounts” means the unaudited profit and loss account and capital expenditure breakdown relating to the Group drawn up in respect of January 2011 and provided by the Sellers to the Purchaser prior to the date hereof (Data Room reference 2.21.1), which have been prepared on the basis that the Reorganisation had not been implemented and not taking into account any of the adjustments made in the Locked Box Accounts;

“Material Properties” means the properties set out in Schedule 2 and “Material Property” shall mean the relevant property, as appropriate;

“Minority Shareholdings” means:

(a)

the 6,401 ordinary shares in GemServ Limited held by Central Networks East plc;

(b)

the one ordinary share in DCUSA Limited held by Central Networks East plc;

(c)

the 782 ordinary shares in Electralink Limited held by Central Networks East plc;

(d)

the one ordinary share in MRA Service Company Limited held by Central Networks East plc;

(e)

the guarantee interest in Energy Networks Association Limited by Central Networks East plc;

(f)

the 6,401 ordinary shares in GemServ Limited held by Central Networks West plc;

(g)

the 782 ordinary shares in Electralink Limited held by Central Networks West plc;

(h)

the one ordinary share in MRA Service Company Limited held by Central Networks West plc;

(i)

the one ordinary share in DCUSA Limited held by Central Networks West plc;

(j)

the ten ordinary shares in Electricity Association Services Limited held by Central Networks West plc;

(k)

the guarantee interests in Northmere Limited held by Central Networks Limited and Central Networks East plc;

“MMB Transfer Agreement” means the agreement between E.ON UK Energy Services Limited and Cell Site Connection Services Limited dated 25 February 2011 in relation to the transfer of the Mobile Masts Business (Data Room reference 17.4.3 );

“Mobile Masts Business” means the business of providing sites for mobile telephony transmitter masts and equipment and access to a fibre optic network by utilising the assets of Central Networks East plc and Central Networks West plc to mobile telecommunication and other services providers carried on by Cell Site Connection Services Limited;

“MTN Programme” means the Medium Term Notes Programme (up to £3,000,000,000) established by Central Networks East plc and Central Networks West plc pursuant to a prospectus dated 26 November 2010;

“Net Intra Group Debt” means total Intra-Group Payables less total Intra-Group Receivables;

“Notice of Actual Amounts Disagreement” has the meaning given to it in Clause 7.5.4 hereof;

“Notice of Intra-Group Items Disagreement” has the meaning given to it in Clause 7.5.4 hereof;

“Ofgem” means the Office of the Gas and Electricity Markets (including the Gas and Electricity Markets Authority).

“Ordinary Trading Items” means (i) any amounts owing by or paid from members of the Group to members of the E.ON AG Group or vice versa in connection with (a) the provision of goods and services by or to a member of the E.ON AG Group or a third party to or by any member of the Group or the provision by a member of the E.ON AG Group to a Group Company of short term funding of amounts owed by the Group to persons other than members of the E.ON AG Group, in each case, arising in the ordinary and usual course of business consistent with past practice or (b) any cash sweep of the free cashflow of the Group Companies to a member of the E.ON AG Group, to the extent such cash sweep directly increases, on a £ for £ basis, the receivables owed by the E.ON AG Group to the Group Companies or, (ii) any Permitted VAT Recharge;

“Owned IP” means the Intellectual Property Rights owned by the Group Companies as at the date of this Agreement, the details of the rights which are registered are set out in Part 1 of Schedule 12;

“Pension Documents” means the Apportionment Arrangement, Sectionalisation Deed and the Transfer Agreement, all as defined in Schedule 10;

“Pension Head of Terms” means the Heads of Terms in relation to pensions in the Agreed Terms;

“Pensions Deed of Covenant” means the Deed of Covenant in relation to pensions in the Agreed Terms;

“Permitted Leakage Payments” means those payments and matters set out in Schedule 4 and “Permitted Leakage Payment” means any one of them;

“Permitted VAT Recharge” means any recharge for VAT to the extent that such recharge would have qualified as Permitted Leakage under paragraph 8 of Schedule 4 had it been paid between the Accounts Date and Closing;

“Purchase Price” has the meaning given to it in Clause 3.1 hereof;

“Purchaser’s Group” means the Purchaser, any parent undertakings of the Purchaser and any subsidiary undertakings of the Purchaser or any of the Purchaser Guarantor undertakings from time to time, and, from Closing, shall include the Group Companies, and “member of the Purchaser’s Group” shall be construed accordingly;

“Purchaser’s Guaranteed Obligations” shall have the meaning set out in Clause 15.3.1;

“Purchaser’s Relief” has the meaning given to it in the Tax Indemnity;

“Purchaser’s Warranties” means the warranties given by the Purchaser pursuant to Clause 9.5 and Schedule 6 and “Purchaser’s Warranty” means any one of them;

“Registered Owned IP” means all Owned IP which is registered or which is the subject of an application for registration;

“Regulation 13/14 Losses” means any Losses relating to any failure by the Sellers’ Guarantor, E.ON IT UK Limited and/or the relevant Company to comply with Regulation 13 and/or Regulation 14 of the Transfer Regulations in connection with the transfer of employment of the Transferred Employees to the relevant Company prior to the Closing Date and any reasonable legal costs incurred by the Purchaser’s Group in connection therewith;

“Regulatory Authority” means Ofgem, the Office of Fair Trading, the Competition Commission and any other local or foreign regulatory authority or governmental department or authority or body, arbitrator, commission, court or other legislative, executive, regulatory or judicial entity or instrumentality in any applicable jurisdiction;

“Relevant Employees” means those employees of the Group Companies who are immediately prior to Closing employed in the Group (including, for the avoidance of doubt, the Senior Employees and the Transferred Employees) and “Relevant Employee” means any one of them;

“Relevant Period” has the meaning given to it in paragraph 9.1 of Schedule 5;

“Relevant Proportion” means the proportion that the additional capital allowances in respect of a Customer Contributions Claim that are attributable to any period ending on, or prior to, the Accounts Date bears to the aggregate additional capital allowances that are expected by the parties, acting reasonably, to arise in respect of the Customer Contributions Claim;

“Relevant Seller” has the meaning given to it in Clause 1.16.1;

“Relief” has the meaning given to it in the Tax Indemnity;

“Reorganisation” means the transactions undertaken by members of the Sellers’ Group and the Group Companies on or prior to the date of this Agreement in accordance with the steps set out in the Restructuring Paper and the documentation required to effect the same, including but not limited to the transfers of properties and assets and the assignments of intra-group debt referred to therein and the assignment of UK trade mark registration no. 2255287 for the mark EAST MIDLANDS ELECTRICITY from The Power Generation Company Limited to Central Networks East plc;

“Restructuring Paper” means the restructuring paper in the Agreed Terms;

“Retention Bonuses” means any bonus (or similar payment or arrangement calculated on a gross basis and including any national insurance contributions) but excluding any Transaction Bonus to which any Relevant Employee is (or may become) entitled at any time after the Closing Date which has been offered by any member of the Seller’s Group (or any Group Company) (in the case of Group Companies, restricted to any such offer having been made in the period prior to the Closing Date) in relation to their participation in the sale or proposed sale of the Group Companies (or any of them) and/or their continued employment with any Group Company following such sale or proposed sale expressly including the part 2 payments referred to in document references 1.23.1 to 1.23.4, 1.23.7 and 1.23.8 in the sensitive documents section in the Data Room to be paid to addressees of those letters and to those people referred to in document reference 1.23.6 in the sensitive documents section in the Data Room;

“Reverse Transitional Services Agreement” means the agreement in the Agreed Terms, to be entered into at Closing in respect of the provision of certain services by the Group Companies to the Sellers’ Group;

“SDLT” means Stamp Duty Land Tax;

“SEC” means the United States Securities Exchange Commission;

“Seller Insurance Policies” means all insurance policies (whether under policies maintained with third party insurers or any member of the Sellers’ Group), other than Group Insurance Policies, maintained by a member of the Sellers’ Group under which, immediately prior to the Closing Date, any Group Company is entitled to any benefit, and “Seller Insurance Policy” means any one of them;

“Sellers’ Group” means the Sellers’ Guarantor and any of its subsidiaries and subsidiary undertakings from time to time other than the Group Companies, and “member of the Sellers’ Group” shall be construed accordingly;

“Sellers’ Guaranteed Obligations” shall have the meaning set out in Clause 15.1.1;

“Sellers’ Lawyers” means Linklaters LLP of One Silk Street, London EC2Y 8HQ;

“Sellers’ VAT Group” has the meaning given to it in the Tax Indemnity;

“Sellers’ Warranties” means the warranties given by the Sellers pursuant to Clause 9 and Schedule 5 and “Sellers’ Warranty” means any one of them;

“Senior Employee” means any employee employed or engaged in relation to the Group on a base annual salary (on the basis of full-time employment) in excess of £70,000 or local equivalent;

“Share Plan” means an incentive plan involving securities in which any Relevant Employee participates including share option plans, long term incentive plans, restricted share plans, SAYE plans and Share Incentive Plans, and “Share Plans” will be construed accordingly;

“Shares” means (i) with respect to Avon Energy Partners, the Central Networks Limited Shares; and (ii) with respect to EMEDH, the Central Networks East Shares;

“Stated Amount” has the meaning given to it in Clause 7.3.2;

“Subsidiaries” means the subsidiaries and subsidiary undertakings of the Companies, details of which are set out in paragraph 2 of Schedule 1 and “Subsidiary” means any one of them;

“Taxation” or “Tax” has the meaning given to it in the Tax Indemnity;

“Tax Authority” has the meaning given to it in the Tax Indemnity;

“Tax Balancing Payment” has the meaning given to it in the Tax Indemnity;

“Tax Claim” means a claim in respect of any breach of the Tax Warranties or of any other Sellers’ Warranty to the extent that the loss arising from such claim primarily relates to Tax;

“Tax Indemnity” means the deed of covenant in respect of Taxation in the Agreed Terms to be entered into at Closing;

“Tax Warranties” means the warranties in paragraph 12 of Schedule 5;

“TCGA” means the Taxation of Chargeable Gains Act 1992;

“Third Party Claim” has the meaning given to it in Clause 11.5;

“Third Party IT Agreement” has the meaning given to it in paragraph 5.2.2 of Schedule 5;

“Transaction” means the acquisition by the Purchaser of the Shares, the Transferring Properties referred to in Part 1 of Schedule 8, the Transferring Assets and the Transferring Intellectual Property Rights, and the acquisition by the Sellers’ Group of the Transferring Properties referred to in Part 2 of Schedule 8, in each case subject to the conditions and pursuant to the terms of this Agreement and the Transaction Documents;

“Transaction Bonus” means any bonus (or similar payment or arrangement calculated on a gross basis and including any national insurance contributions) but excluding any Retention Bonus to which any Relevant Employee is (or may become) entitled at or around the Closing Date which has been offered by any member of the Sellers’ Group (or any Group Company) to any Relevant Employee in relation to their participation in the sale or proposed sale of the Group Companies (or any of them) expressly including the part 1 payments referred to in document references 1.23.1 to 1.23.4, 1.23.7 and 1.23.8 in the sensitive documents section in the Data Room to be paid to addressees of those letters and to those people referred to in document reference 1.23.6 in the sensitive documents section in the Data Room;

“Transaction Documents” means this Agreement and any other document entered into or to be entered into pursuant to this Agreement, including:

(a)

the Tax Indemnity;

(b)

the Transitional Services Agreement and the Reverse Transitional Services Agreement;

(c)

the MMB Transfer Agreement;

(d)

the Disclosure Letter;

(e)

the Transitional Trade Mark Licence;

(f)

the agreements necessary to effect the Reorganisation;

(g)

of Intra-group Services Termination Deeds;

(h)

the Pension Documents; and

(i)

any other documents included in the Agreed Terms Documents;

“Transfer Regulations” means the Transfer of Undertakings (Protection of Employment) Regulations 2006, as amended;

“Transferred Employees” means the employees of the Sellers’ Group wholly or mainly assigned to provide all or any of the services under the terms of the Intra-Group Services Termination Deeds immediately prior to the date of termination of such services;

“Transferring Assets” has the meaning given to it in Schedule 9;

“Transferring Intellectual Property Rights” means the domain names set out in Part 3 of Schedule 12;

“Transferring Properties” means the properties referred to in Parts 1 and 2 of Schedule 8;

“Transitional Services Agreement” means the agreement, in the Agreed Terms, to be entered into on Closing in respect of the provision of certain services by the Sellers’ Group to the Group Companies;

“Transitional Trade Mark Licence” means the trade mark licence between E.ON AG and the Companies in the Agreed Terms to be entered into on Closing;

“VAT” has the meaning given to it in the Tax Indemnity;

“VATA 1994” means the Value Added Tax Act 1994;

“Vendor’s Due Diligence Report” means the vendor’s due diligence report prepared by PricewaterhouseCoopers LLP dated 31 January 2011, as supplemented on 14 February 2011, 25 February 2011, 28 February 2011 and 1 March 2011; and

“Vendor’s Legal Due Diligence Report” means the key legal disclosures report prepared by the Sellers’ Lawyers dated 31 January 2011.

1.2

Modification etc. of Statutes

References to a statute or statutory provision shall be construed as a reference to the same as it may have been, or may from time to time be, amended, modified or re-enacted.

1.3

Singular, plural, gender

References to one gender include all genders and references to the singular include the plural and vice versa.

1.4

References to persons and companies

References to:

1.4.1

a person include any individual, firm, company, corporation, body corporate, Regulatory Authority, joint venture, partnership or unincorporated association (whether or not having separate legal personality); and

1.4.2

a company include any company, corporation or any body corporate, wherever and however incorporated or established.

1.5

References to subsidiaries and holding companies

The words “holding company”, “parent undertaking”, “subsidiary” and “subsidiary undertaking” shall have the same meaning in this Agreement as their respective definitions in the Companies Act 2006.

1.6

Accounts

Except as otherwise stated herein, any reference to “accounts” shall, in the case of audited accounts, include the directors’ and auditors’ reports, relevant balance sheets and profit and loss accounts and related notes together with all documents which are or would be required by applicable law to be sent to members in respect of the accounting reference period in question.

1.7

Schedules etc.

References to this Agreement shall include any Recitals and Schedules to it and references to Clauses and Schedules are to Clauses of, and Schedules to, this Agreement. References to paragraphs are to paragraphs of the Schedules.

1.8

Headings

Headings shall be ignored in interpreting this Agreement.

1.9

Information

References to books, records or other information mean books, records or other information in any form including paper, electronically stored data, magnetic media, film and microfilm.

1.10

Legal Terms

References to any English legal term shall, in respect of any jurisdiction other than England and Wales, be construed as references to the term or concept which most nearly corresponds to it in that jurisdiction.

1.11

Time

References to time of day are to London time.

1.12

Agreed Terms

References to documents in agreed form or on “Agreed Terms” are to documents the contents and form of which have been agreed between or on behalf of the Sellers and the Purchaser on or prior to the date hereof and initialled by or on behalf of them for the purposes of identification with such alterations as may be agreed in writing between the Sellers and the Purchaser from time to time.

1.13

References to agreements etc.

References to any agreement, instrument or deed shall be to such agreement, instrument or deed as amended, varied, modified, supplemented, extended, novated, renewed or replaced from time to time.

1.14

Non-limiting effect of words

The words “including”, “include”, “in particular” and words of similar effect shall not be deemed to limit the general effect of the words that precede them.

1.15

References to applicable law

References to “applicable law” shall include any applicable law, regulation or ordinance or any direction, instruction, pronouncement, requirement, decision of, or contractual obligation owed to, an applicable Regulatory Authority.

1.16

Rights and Liabilities of the Relevant Sellers

1.16.1

For the purposes of this Agreement, the “Relevant Seller” means (i) Avon Energy Partners, to the extent that a liability, transaction or any matter relates to or affects any Group Company other than Central Networks East plc, and (ii) EMEDH, to the extent that a liability, transaction or any matter relates to or affects Central Networks East plc and where it is not possible to determine which Seller is the Relevant Seller for the purposes of this Clause 1.16.1, both Sellers shall be the Relevant Sellers (and reference to the Relevant Seller in this Agreement shall be read where necessary as references to the Relevant Sellers) and the relevant rights or liabilities shall be allocated between them in the proportion to which the part of the Purchase Price received by each Seller bears to the total Purchase Price provided for in Clause 3.1.

1.16.2

The rights and liabilities (including in relation to payment) of the Relevant Sellers under or in relation to a breach of this Agreement (or any agreement entered into under this Agreement) are several.

2

Agreement to Sell the Shares

2.1.1

On and subject to the terms and conditions of this Agreement, each Relevant Seller agrees to sell with full title guarantee, and the Purchaser agrees to purchase, the Shares with each right attaching to the Shares at or after Closing.

2.1.2

The Shares shall be sold by the Sellers free from Encumbrances and together with all rights and advantages attaching to them as at Closing (including the right to receive all dividends or distributions declared, made or paid on or after Closing).

2.1.3

Each Relevant Seller shall procure that on or prior to Closing any and all rights of pre-emption over the Shares are waived irrevocably by the persons (if any) entitled thereto.

3

Consideration and Leakage

3.1

Amount

3.1.1

Subject to Clauses 3.6 and 7.3.2, the consideration for the purchase of the Shares under this Agreement shall be an amount in cash equal to the sum of:

(i)

£1,294,000,000 in respect of the Central Networks Limited Shares; and

(ii)

£1,257,000,000 in respect of the Central Networks East Shares,

(together the “Purchase Price”).

3.2

Leakage

3.2.1

Each Relevant Seller warrants, covenants and undertakes to the Purchaser that in the period from (and excluding) the Accounts Date up to (and including) the Closing Date there has not been any Leakage and that there will not be any Leakage.

3.2.2

In the event of any breach of Clause 3.2.1 the Relevant Seller shall pay to the Purchaser (as its exclusive remedy) (or any member of the Group as the Purchaser directs) on demand an aggregate amount (on a £ for £ basis) in cash equal to the amount of the Leakage received by or given for the benefit of the Relevant Seller, any member of the E.ON AG Group, any nominee, any agent or any other person receiving any Leakage on behalf of any of the foregoing.

3.2.3

Each Relevant Seller undertakes to the Purchaser to notify the Purchaser in writing as soon as reasonably practicable after becoming aware of any Leakage, during the period between the Accounts Date up to (and including) Closing.

3.3

Transferring Property

Subject to Clause 3.6, the provisions in Schedule 8 shall apply in respect of the consideration for any Transferring Property.

3.4

Transferring Assets

Subject to Clause 3.6, the provisions in Schedule 9 shall apply in respect of the consideration for any Transferring Assets.

3.5

Transferring Intellectual Property Rights

Subject to Clause 3.6, the provisions in Schedule 11 shall apply in respect of the consideration for any Transferring Intellectual Property Rights.

3.6

Reduction of Consideration

3.6.1

If any payment is made by a Relevant Seller to the Purchaser in respect of any Leakage, any claim for any breach of this Agreement or pursuant to an indemnity, compensation or reimbursement provision or other covenant to pay under this Agreement or pursuant to the Tax Indemnity (or any agreement entered into under this Agreement), or if any adjustment is made to the Purchase Price in accordance with Clauses 7.5 and 7.6 the payment shall be treated as an adjustment of the relevant consideration paid by the Purchaser pursuant to this Agreement for the Shares, the Transferring Properties referred to in Part 1 of Schedule 8, the Transferring Assets or the Transferring Intellectual Property Rights to which the payment and/or claim and/or adjustment relates and the relevant consideration shall be deemed to have been reduced by the amount of such payment.

3.6.2

If the payment and/or claim and/or adjustment does not relate solely to the Shares, the Transferring Properties referred to in Part 1 of Schedule 8, the Transferring Assets or the Transferring Intellectual Property Rights, such payment shall to the extent possible be allocated in a manner which reflects the impact of the matter to which the payment and/or claim and/or adjustment relates, failing which it shall, to the extent possible, be allocated rateably by reference to the proportion of the consideration for each of the Shares, the Transferring Properties referred to in Part 1 of Schedule 8, the Transferring Assets and the Transferring Intellectual Property Rights bears to the total consideration.

4

Conditions

4.1

Conditions Precedent

4.1.1

The obligations of the Purchaser to complete the transactions contemplated by this Agreement are conditional on the satisfaction or waiver by the Purchaser of the following conditions at or before Closing, or their satisfaction subject only to Closing:

(i)

the Sellers’ Warranties in paragraphs 1.1.1, 1.1.2, 1.1.3, 1.1.5, 1.1.7, 1.1.10 and 15.1 of Schedule 5 hereof shall be true and correct as at the date of this Agreement and as at the Closing Date;

(ii)

the Seller shall in all material respects have performed the covenants contained in the following paragraphs of Clause 6.1.2 (except to the extent that any such non-performance has been remedied or cured):

(i), (v), (vi), (vii), (xii), (xiii), (xiv), (xv), (xviii) or (except to an extent which is immaterial) (xxvi)

(iii)

each Relevant Seller having delivered to the Purchaser a certificate, dated the Closing Date and signed by a senior executive officer, certifying that the conditions in Clauses 4.1.1(i) and 4.1.1(ii) have been satisfied;

4.1.2

The obligations of the Sellers to complete the transactions contemplated by this Agreement are conditional on the satisfaction or waiver by the Sellers of the following conditions at or before Closing, or their satisfaction subject only to Closing:

(i)

the Purchaser shall have in all material respects performed all obligations and complied with all covenants required by this Agreement to be performed or complied with by it prior to Closing; and

(ii)

the Purchaser shall have delivered to the Sellers a certificate dated the Closing Date and signed by a senior executive officer, certifying that the condition in Clauses 4.1.2(i) has been satisfied.

4.2

Responsibility for Satisfaction

The parties shall use all reasonable endeavours to ensure the satisfaction of the conditions set out in Clause 4.1 in each case as soon as possible.

4.3

Non-Satisfaction/Waiver

4.3.1

The Purchaser may at any time waive in whole or in part and conditionally or unconditionally the conditions set out in Clause 4.1.1 by notice in writing to the Sellers.

4.3.2

The Sellers may at any time waive in whole or in part and conditionally or unconditionally the conditions set out in Clause 4.1.2 by notice in writing to the Purchaser.

4.3.3

If the conditions in Clause 4.1 are not satisfied or waived on or before the Long Stop Date save as expressly provided, this Agreement (other than Clauses 1, 13, 17.3, 17.4, 17.5, 17.8, 17.12, 17.14 and 17.15) shall lapse and the Purchaser or the Sellers may, in its or their sole discretion, terminate this Agreement and, except under such Clauses, neither the Sellers nor the Purchaser shall have any claim against the other under it, save for any claim arising from breach of any obligation contained in Clause 4.2, provided, however, the right to terminate this Agreement pursuant to this Clause 4.3.1 shall not be available to any party seeking to terminate this Agreement if that party has failed to perform in any material respect its obligations under this Agreement.

5

Termination

5.1

Termination Events

5.1.1

The Agreement may be terminated at any time prior to Closing:

(i)

by mutual written consent of the Seller and Purchaser; or

(ii)

by either the Sellers or the Purchaser if Closing has not occurred before 1 June 2011 (the “Long Stop Date”), provided, however, that, the right to terminate this Agreement pursuant to this Clause 5.1.1 shall not be available to any party seeking to terminate this Agreement if such party has failed to perform (i) in any material respect its obligations under this Agreement; or (ii) its obligations under Clause 4.2 of this Agreement.

5.2

Effect of Termination

5.2.1

Notwithstanding anything to the contrary herein, this Clause 5.2 and Clauses 1, 13, 17.3, 17.4, 17.5, 17.8, 17.12, 17.14 and 17.15 (the “Surviving Provisions”) shall remain in effect following any termination of this Agreement.

5.2.2

Nothing in this Agreement shall relieve any party hereto from any liability or damages to another party hereto resulting from any willful misconduct or fraud or any willful material breach of this Agreement occurring prior to such termination.

6

Pre-Closing

6.1

The Sellers’ Obligations in Relation to the pre-Closing Conduct of Business

6.1.1

Each Relevant Seller undertakes to procure that between the date of this Agreement and Closing each Group Company shall carry on its business as a going concern and in all material respects in the ordinary and usual course of business as carried on prior to the date of this Agreement except (i) where necessary in order to comply with applicable law; (ii) as may be required to give effect to and to comply with the Transaction Documents; (iii) in accordance with the Group’s Business Plan or as set out in the Budget; (iv) to the extent that the action constitutes a Permitted Leakage Payment or (v) as may be required to respond to, or prepare for, an emergency situation or (vi) to the extent agreed in writing by the Purchaser, such consent not to be unreasonably withheld or delayed

6.1.2

Without limiting the generality of Clause 6.1.1, each Relevant Seller undertakes to procure that between the date of this Agreement and Closing, each Group Company shall not, except: (i) as may be required to give effect to and to comply with the Transaction Documents; (ii) where prior written consent of the Purchaser has been obtained (such consent not to be unreasonably withheld or delayed); (iii) where necessary in order to comply with applicable law; (iv) to the extent that the action constitutes a Permitted Leakage Payment; or (v) in accordance with the Group’s Business Plan or as set out in the Budget; or (vi) as may be required to respond to, or prepare for, an emergency situation:

(i)

enter into any agreement or incur any commitment involving any capital expenditure in excess of £7,000,000 per item and £60,000,000 in the aggregate, in each case exclusive of VAT, or fail, to the extent reasonably permissible and practicable, to undertake any capital expenditure in excess of £7,000,000 per item and £60,000,000 in the aggregate, in each case exclusive of VAT and which is specifically provided for in the Budget to be undertaken during the period from the date of this Agreement to Closing;

(ii)

enter into or materially amend any agreement, or incur any commitment, which is material to the Group and is not capable of being terminated without compensation at any time with 12 months’ notice or less or which involves or may involve total annual expenditure in excess of £5,000,000, exclusive of VAT, or which involves a cash payment in the first three months of more than £1,000,000;

(iii)

acquire or dispose of, or agree to acquire or dispose of, or create or amend or agree to create or amend or redeem or agree to redeem any Encumbrance over any revenues, asset, property, business or undertaking which is not in the ordinary and usual course of business;

(iv)

alter or agree to alter any terms of any existing Indebtedness (including any Intra-Group Payables) or create, incur, or agree to create or incur, any additional Indebtedness (including any Intra-Group Payables) on behalf of the Group or alter or agree to alter the terms of any Ordinary Trading Item so as to provide for the payment of any interest or any premia, penalties or make-wholes thereon;

(v)

create, allot or issue any share capital or loan capital of any Group Company;

(vi)

repay, redeem, repurchase or acquire any share capital or loan capital of any Group Company;

(vii)

declare, make or pay any dividend or other distribution to shareholders;

(viii)

make or agree to make any loan or grant or agree to grant any credit (other than the granting of any trade credit in the ordinary and usual course of business to the extent loaned or granted to entities that are not in the E.ON AG Group) to any person;

(ix)

give, or agree to give, a guarantee, indemnity or other agreement to secure, or incur financial or other obligations with respect to, another person’s obligation, being a person that is not a Group Company;

(x)

take any action or fail to take any action which would cause either or both of Central Networks East plc and Central Networks West plc to breach any of their obligations under their electricity distribution licences, other than an action or failure to act which singly or taken together is not material in the context of the Group taken as a whole;

(xi)

make any change to its accounting practices or policies, otherwise than as required by applicable accounting principles;

(xii)

give or agree to give any option, right to acquire or call (whether by conversion, subscription or otherwise) in respect of any of its share or loan capital;

(xiii)

dispose of or agree to dispose of or acquire or agree to acquire an interest in any corporate body, partnership or other venture;

(xiv)

pass any shareholder resolution or circulate any shareholder written resolution (including any resolution to make any alteration to its articles of association);

(xv)

other than in the ordinary and usual course of business, enter into, modify (in any material respect) or terminate any contracts which are material to the continued operation of the business of the Group taken as a whole;

(xvi)

initiate any litigation or arbitration proceedings or settle, compromise or abandon any litigation or arbitration proceedings or any action, demand or dispute or waive a right in relation to any litigation or arbitration proceedings except, in any case, in relation to (a) debt collection or (b) litigation or arbitration where the monetary value of each claim does not exceed £500,000;

(xvii)

make any amendment to the terms and conditions of employment (including remuneration and benefits) of any Senior Employee or (to the extent material) any grade or group of any Relevant Employees (other than increases in the ordinary and usual course of business or consistent with past practice which the Sellers shall notify to the Purchaser as soon as reasonably possible or pursuant to the current pay negotiations, details of which have been disclosed in the Data Room and in respect of which the Seller shall undertake reasonable consultation with the Purchaser) or provide, or agree to provide, a gratuitous payment or benefit to any Senior Employee or any grade or group of any Relevant Employees, including Transferred Employees, (or their dependants);

(xviii)

enter into, amend (other than in respect of current pay negotiations, details of which have been disclosed in the Data Room) or terminate any agreement with any trade union;

(xix)

(a) dismiss any Senior Employee (other than for cause) or employ or engage (or offer to employ or engage) any person who would become a Senior Employee or (b) engage or dismiss any employee who is not a Senior Employee, otherwise than in the ordinary and usual course of business;

(xx)

make any proposal for the winding-up or liquidation of any Group Company or any scheme or plan of arrangement, reconstruction, amalgamation or demerger;

(xxi)

enter into any material agreement, contract or transaction, or cause a material expansion of any existing obligation, in each case with any member of the E.ON AG Group, a director or former director of a Group Company or a person connected with any of them otherwise than in the ordinary and usual course of business and on arm’s length terms;

(xxii)

undertake any action in breach of the provisions of any Group Retirement Benefit Arrangement applicable to them as participating employers or which may prejudice the status of any such arrangement or make any material change to such provisions;

(xxiii)

sell or transfer or exclusively licence any Owned IP or Transferring Intellectual Property Rights, or allow any Registered Owned IP or Transferring Intellectual Property Rights to lapse or be abandoned, or fail to take such steps as the Sellers consider reasonable to protect, defend and enforce the Owned IP and Transferring Intellectual Property Rights;

(xxiv)

other than as specifically provided for in the Transaction Documents, permit any Group Company to incur any cost or liability associated with the implementation of the Reorganisation;

(xxv)

fail to refinance any Indebtedness owed by the Group Companies to the E.ON AG Group upon its scheduled maturity on the same terms and for the same principal amount as the refinanced Indebtedness;

(xxvi)

make or vary a claim or election which could affect the chargeable gain or allowable loss which would arise in the event of a disposal after the Accounts Date by any Group Company of an asset owned by any Group Company, including (without limitation) a claim under section 152 or 153 of the TCGA;

(xxvii)

agree to take any of the actions or make any omission prohibited by the foregoing clauses (i) to (xxvi).

6.1.3

Between the execution of this Agreement and Closing, each Relevant Seller shall notify the Purchaser promptly if it becomes aware of a fact or circumstance which constitutes, or which it believes would be likely to constitute, a breach (whether repudiatory in nature or not) of this Agreement.

6.1.4

Other than in the ordinary and usual course of business of the Group Companies, between the date of this Agreement and Closing, each Relevant Seller shall not, and shall procure that the Group Companies do not and the Purchaser shall not, make any submissions whether written or oral to Ofgem or the Office of Fair Trading with respect to the Group or the Transaction without the other party being provided with a reasonable opportunity to comment on any such submissions in advance, and the party making the submission shall have due regard to any such comments.

6.1.5

To the extent that any liability (including an intra-group payable) in respect of an obligation to make either a payment for the surrender or allocation of Group Tax Relief and/or a Tax Balancing Payment is included in the Locked Box Accounts, then the Relevant Seller agrees to procure, to the extent not already carried out, that after Closing appropriate surrenders and allocations of Group Tax Relief and/or corresponding adjustments are made that result in an equivalent Corporation Tax saving by the Group Companies as soon as reasonably practicable after the time it is first possible to make the relevant claims.

6.2

Insurance

6.2.1

Between the date of this Agreement and Closing each Relevant Seller undertakes that it will maintain, without material amendment, in force all Group Insurance Policies inter alia for the benefit of the Group Companies.

6.2.2

Between the date of this Agreement and Closing each Relevant Seller undertakes that it will not, and that it will procure that no member of the Sellers’ Group will, without the prior written consent of the Purchaser, such consent not to be unreasonably withheld or delayed, settle any material insurance claim for loss of or damage to any property or asset of any Group Company made by or on behalf of any Group Company materially below the amount claimed.

6.3

VAT Matters

6.3.1

As soon as reasonably practicable after the date of this Agreement, the Sellers shall procure that (if one has not already been made) an application shall be made to HMRC pursuant to Section 43B of the VATA 1994 for the exclusion of each Group Company from the bodies treated as members of the Sellers’ VAT Group and for such exclusion to take effect on Closing or, if HMRC do not permit this, at the earliest date following Closing permitted by Section 43B.

6.3.2

Pending the taking effect of such application and for so long thereafter as may be necessary, each of the Sellers and the Purchaser shall procure that such information is provided to the other as may be required to enable the continuing representative member of the Sellers’ VAT Group to make all the returns required of it in respect of the Sellers’ VAT Group.

6.4

Other Sellers’ Obligations Prior to Closing

Without prejudice to the generality of Clause 6, from the date of this Agreement up to and including Closing, the Sellers shall, and shall procure that the Group Companies shall:

6.4.1

allow the Purchaser and its agents, upon reasonable notice, reasonable access to: (i) the books, records and documents of the Group; and (ii) the premises used by, and management of the Group, in each case to the extent reasonably required for the purpose of planning implementation of the transactions contemplated by this Agreement, provided that the obligations of the Sellers under this Clause 6.4.1 shall not extend to allowing access to information which is reasonably regarded as confidential to the activities of the Sellers otherwise than in relation to the Group Companies;

6.4.2

cooperate with reasonable requests made by the Purchaser with the intention of ensuring the efficient continuation of management and operations of the relevant Company after Closing and preparing for the introduction of the Purchaser’s normal working procedures on or after Closing.

6.5

Financing Co-operation

6.5.1

From the date hereof, each Relevant Seller shall, and (prior to Closing) shall cause each Group Company, and its, and (prior to Closing) their respective, officers and employees, and to the extent they are reasonably able to do so and in accordance with market practice and appropriate professional standards, advisers, including legal and accounting advisers, to provide to the Purchaser (at the Purchaser’s cost and expense) all cooperation reasonably requested on reasonable notice by Purchaser in order for Purchaser to consummate an issuance of equity or debt securities in the United States or the United Kingdom (the “Permanent Financing”) within the period that is 12 months following Closing, or to comply with other applicable SEC or ASB requirements. Without limitation to the foregoing, such reasonable cooperation may include:

(i)

providing on a periodic basis as and when required to complete the Permanent Financing, or to comply with other applicable SEC or ASB requirements, including all historical financial information related to the Group and the members reasonably required by Purchaser for Purchaser to produce combined financial statements required under SEC Regulation S-X (and any comparable legal standard in the United Kingdom) for equity or debt securities offerings of Purchaser or the Group Companies to the public, including, without limitation, combined consolidated balance sheets, cash flow statements and income statements of the Group as of and for (x) the financial years ended 31 December 2008, 31 December 2009 and 31 December 2010, and any subsequent annual periods to the extent expired prior to consummation of the Permanent Financing, and the notes to those accounts; and (y) the quarterly periods ended after 31 December, 2010 but prior to consummation of the Permanent Financing and comparable periods in prior years, prepared in each case on the assumption that the Reorganisation had been completed prior to the periods and dates presented therein and, in the case of clause (x), audited in accordance with applicable law, GAAP and (to the extent necessary to consummate the Permanent Financing) reconciled to generally accepted accounting principles in the United States (audited in accordance with generally accepted accounting standards in the United States) or, in the case of clause (y), subjected to a SAS 100 review;

(ii)

prior to Closing, causing the management of the Group to participate for a reasonable period of time in a reasonable and limited number of meetings, presentations, due diligence sessions, drafting sessions and sessions with prospective lenders, investors and rating agencies in connection with the Permanent Financing;

(iii)

assisting on a reasonable basis prior to Closing with the preparation of materials for rating agency presentations, bank information memoranda, offering circulars, prospectuses and prospectus supplements and similar documents required in connection with the Permanent Financing;

(iv)

requesting any consents of accountants for use of their reports in any materials relating to the Permanent Financing or compliance with other applicable SEC or ASB requirements and the delivery of comfort letters and customary representation letters; and

(v)

providing such other financial and other information regarding the Group Companies as is in the possession of the Sellers’ Group and as is reasonably necessary for Purchaser to effect, or prepare to effect, the Permanent Financing;

provided, however, that nothing in this Clause 6.5 shall require any cooperation to the extent that it would unreasonably interfere in any material respect with the business or operations of the Sellers’ Group or its advisers or, prior to Closing, the Group. The Purchaser shall promptly, upon request by the Sellers, reimburse the Sellers for all costs and expenses (including attorneys’ and accountants’ fees and including internal costs and expenses on a reasonable time and materials basis) incurred by the Sellers’ Group in connection with the cooperation contemplated this Clause 6.5. The Purchaser shall indemnify, defend and hold harmless the Sellers’ Group from and against any and all Losses actually suffered or incurred by the Sellers’ Group to the extent arising out of any action taken by the Sellers’ Group at the request of Purchaser pursuant to this Clause 6.5 or in connection with the arrangement of the Permanent Financing or any information utilised in connection therewith (other than information with respect to the Sellers’ Group provided to Purchaser in writing by Sellers expressly for use in connection with offering documents or prospectuses for the Permanent Financing), and this indemnification shall survive termination of this Agreement. Notwithstanding anything to the contrary contained herein, the failure by Sellers to comply with this Clause 6.5 shall not result in a failure to satisfy any closing condition set forth in Clause 4 hereof.

6.6

Notification of Emergencies

The Sellers shall notify the Purchaser promptly of any emergency situation which arises after the date of this Agreement and before Closing and which requires any action to be taken, being action which would have required the consent of the Purchaser in accordance with Clause 6.1.2 were it not for the provisions of sub paragraph (v) of Clause 6.1 or sub paragraph (v) of the preamble to Clause 6.1.2.

7

Closing

7.1

Date and Place

Subject to Clause 4, Closing shall take place on 1 April 2011 at 10 a.m. at Simpson Thacher & Bartlett LLP at One Ropemaker Street, London EC2Y 9HU or at such other location, time or date as may be agreed between the Purchaser and the Sellers.

7.2

Closing Events

On Closing, the Sellers and the Purchaser shall comply with their respective obligations specified in Schedule 3. The Purchaser may waive some or all of the obligations of the Sellers as set out in paragraph 1 of Schedule 3 by giving written notice to the Sellers of such waiver and the Sellers may waive some or all of the obligations of the Purchaser as set out in paragraph 2 of Schedule 3 by giving written notice to the Purchaser of such waiver.

7.3

Payments on Closing

7.3.1

On Closing, subject to Clause 7.3.2, the Purchaser shall pay amounts in cash to the Sellers in accordance with the allocation in Clause 3.1.1 which together are equal to the Purchase Price.

7.3.2

The Parties acknowledge that the Purchase Price has been determined after deducting from an enterprise value of the Group, amongst other things, the Net Intra Group Debt as at the Accounts Date as stated on the balance sheet included in the Locked Box Accounts of £951 million (the “Stated Amount”). Accordingly, if and to the extent it is determined by the Sellers that the actual Net Intra Group Debt as at the Accounts Date (the “Actual Amount”) differs from the Stated Amount then, if the Actual Amount is less than the Stated Amount, the Purchase Price shall be increased on a £ for £ basis by the amount of the difference and if the Actual Amount is greater than the Stated Amount, the Purchase Price shall be decreased on a £ for £ basis by the amount of the difference. For the avoidance of doubt, any such increase or decrease in the Purchase Price shall not affect the liability of any debtor or creditor in respect of any Net Intra-Group Debt.

7.4

Breach of Closing Obligations

7.4.1

Without prejudice to Clause 5, if any of the Sellers or the Purchaser fail to comply with any material obligation in Clauses 7.2, 7.3 or Schedule 3, the Purchaser, in the case of non-compliance by the Sellers, or the Sellers, in the case of non-compliance by the Purchaser, shall be entitled (in addition to and without prejudice to all other rights or remedies available including the right to claim damages or other compensation) by written notice to the other served on, or before, the Closing Date:

(i)

to effect Closing so far as practicable having regard to the defaults which have occurred (without limiting its rights under this Agreement); or

(ii)

to fix a new date for Closing (being not more than 20 Business Days after the agreed date for Closing) in which case the provisions of Schedule 3 shall apply to Closing as so deferred.

7.4.2

If the Sellers or the Purchaser fail to perform any outstanding material obligation in Clauses 7.2, 7.3 or Schedule 3 by the date specified under Clause 7.4.1(ii), the Purchaser, in the case of non-compliance by the Sellers, or the Sellers, in the case of non-compliance by the Purchaser, may by written notice either fix a new date for Closing in which case the provisions of Clause 7.4.1(ii) shall apply to such new date or terminate this Agreement (other than Clauses 1, 13, 17.3, 17.4, 17.5, 17.8, 17.12, 17.14 and 17.15) without liability on its part. In such event, neither party nor any of its Affiliates shall have any claim under this Agreement of any nature against the other party or any of its Affiliates (except in respect of any rights and liabilities which have accrued before termination, whether in respect of the defaulting party’s failure to perform any material obligation or otherwise, or under Clauses 1, 13, 17.3, 17.4, 17.5, 17.8, 17.12, 17.14 and 17.15).

For the purposes of this Clause 7.4, paragraphs 1.1.1 to 1.1.6 and paragraph 2 of Schedule 3 shall constitute “material obligations”.

7.5

Intra-Group Indebtedness

7.5.1

Not less than four Business Days prior to the Closing Date, the Sellers shall notify the Purchaser of the (i) Intra-Group Payables, (ii) the Intra-Group Receivables, (iii) the amount of any short term funding provided by the E.ON AG Group to the Group to fund the payment of amounts owed by the Group to persons other than members of the E.ON AG Group, (the “Short Term Funding Closing Balance”) and of the amount of any cash sweep owed by the E.ON AG Group to the Group as at Closing as referred to in subparagraph (ii) of the definition of Ordinary Trading Items (the “Closing Cash Sweep Balance”), in each case as at the Closing Date and in each case specifying the relevant debtor and creditor in respect of each such item (the “Intra-Group Items Notice”). For the avoidance of doubt, the Corporation Tax Recharge Payment shall be repaid in accordance with Clause 7.7 and this Clause 7.5 shall not apply to such repayment, which will not be included in the Intra-Group Items Notice.

7.5.2

On Closing, subject to Clause 3 hereof:

(i)

the Purchaser shall procure that each relevant Group Company repays to the relevant member of the E.ON AG Group the amount of any Intra-Group Payables and Short Term Funding Closing Balance as at Closing and shall acknowledge on behalf of each relevant Group Company the payment of the Intra-Group Receivables in accordance with Clause 7.5.2(ii); and

(ii)

the Sellers shall procure that each relevant member of the E.ON AG Group repays to the relevant Group Company the amount of any Intra-Group Receivables and Closing Cash Sweep Balance and shall acknowledge on behalf of each relevant member of the E.ON AG Group the payment of the Intra-Group Payables and Short Term Funding Closing Balance in accordance with Clause 7.5.2(i),

in each case as notified in accordance with Clause 7.5.1.

7.5.3

Any Ordinary Trading Items (other than the Short Term Funding Balance and the Closing Cash Sweep Balance) including DUoS related payments between any member of the E.ON AG Group and any Group Company shall be settled in accordance with their terms or, if there are no terms, in accordance with past practice but, in each case by no later than the date falling 20 days after Closing.

7.5.4

(i)

Within 60 days following the Closing Date, the Purchaser or the Sellers may notify the other party in writing if it disagrees with the amounts that were set forth in the Intra-Group Items Notice (the “Notice of Intra-Group Items Disagreement”) or with the Actual Amount determined pursuant to Clause 7.3.2 (“Notice of Actual Amount Disagreement”). Any such notice is referred to as a “Notice of Disagreement”. If no Notice of Disagreement is served within such 60 day period, there shall be no adjustment of the Purchase Price in accordance with this Clause. Any Notice of Disagreement shall set forth in reasonable detail the basis for such disagreement, the amounts involved and the party’s determination of the amount of the Net Intra-Group Debt, the Short Term Funding Closing Balance, the Closing Cash Sweep Balance or the Actual Amount, as the case may be. The Sellers and the Purchaser shall seek in good faith to resolve any disagreement that they may have with respect to the matters specified in any Notice of Disagreement. If the Sellers and the Purchaser are unable to resolve such disagreements, the Sellers and the Purchaser shall submit all matters that remain in dispute to Deloitte & Touche L.L.P. (or, if Deloitte & Touche L.L.P. refuses or is unable to act, another independent accounting firm in the United Kingdom of national recognition selected by the parties or, if the parties cannot agree, by the President of the Institute of Chartered Accountants in England and Wales) acting as an expert and not as an arbitrator (the “Expert”) for a binding resolution of the matters in dispute.

(ii)

In the event that upon final resolution or determination, pursuant to this Clause 7.5.4, of the actual amount of Net Intra-Group Debt at Closing, (plus the Short Term Funding Closing Balance and Closing Cash Sweep Balance) (together the “Adjusted Net Intra-Group Debt”)), the Adjusted Net Intra Group Debt set forth in the Intra-Group Items Notice exceeds such actual Adjusted Net Intra-Group Debt, then the Relevant Seller shall pay to the Purchaser (or if it so directs the relevant Group Companies) an amount equal to such excess. In the event that upon final resolution or determination, pursuant to this Clause 7.5.4, of the actual amount of Adjusted Net Intra-Group Debt at Closing, the Adjusted Net Intra-Group Debt set forth in the Intra-Group Items Notice is less than the actual Adjusted Net Intra-Group Debt, then the Purchaser shall pay or procure that the relevant Group Companies shall pay, to the Relevant Seller an amount equal to such shortfall.

(iii)

In the event that upon final determination, pursuant to this Clause 7.5.4, of the Actual Amount, the Actual Amount as determined pursuant to Clause 7.3.2 exceeds the Actual Amount as determined pursuant to this Clause 7.5.4, the Sellers shall pay to the Purchaser an amount equal to such excess by way of reduction of the Purchase Price. In the event that upon final resolution or determination, pursuant to this Clause 7.5.4, of the Actual Amount, the Actual Amount determined pursuant to Clause 7.3.2 is less than the Actual Amount as determined pursuant to this Clause 7.5.4, the Purchaser shall pay to the Sellers an amount equal to such shortfall by way of increase in the Purchase Price.

(iv)

The fees of the Expert shall be borne equally by the Sellers and the Purchaser.

(v)

Any such payments shall be made by wire transfer of immediately available funds to an account designated by the Purchaser or Sellers, as the case may be, within two (2) Business Days after the date on which a final resolution or determination of the actual Adjusted Net Intra-Group Debt or Actual Amount, as the case may be, is made pursuant to this Clause 7.5.4.

7.5.5

Except to the extent that the Sellers and the Purchaser agree otherwise in writing, the Expert shall determine its own procedures and:

(i)

apart from procedural matters and as otherwise set out in this Agreement shall determine only whether any of the arguments put forward in any Notice of Disagreement is correct in whole or in part;

(ii)

shall consistently apply the accounting principles, policies, procedures, methods, practices and techniques applied in the preparation of the Individual Accounts and the Locked Box Accounts;

(iii)

shall make its determination above as soon as is reasonably practicable, and in any event within 60 days of its engagement; and

(iv)

the procedure of the Expert shall:

(a)

give the Sellers and the Purchaser a reasonable opportunity to make written and oral representations to it;

(b)

require that each party supply the other with a copy of any written representations at the same time as they are made to the Expert;

(c)

permit each party to be present while oral submissions are being made by the other party; and

(d)

for the avoidance of doubt, entitle the Expert to determine the scope of its own jurisdiction.

7.5.6

The determination of the Expert pursuant to Clause 7.5.4 shall:

(i)

be made in writing and be notified at the same time to each of the Sellers and the Purchaser; and

(ii)

unless otherwise agreed by the Sellers and the Purchaser include reasons for each relevant determination.

7.5.7

The determination by the Expert of any matter falling within its jurisdiction shall be final and binding on the parties save in the event of fraud or manifest error (when the relevant part of its determination shall be void and, in the case of manifest error only, the matter shall be remitted to the Expert for correction).

7.5.8

The Sellers and the Purchaser shall co-operate with the Expert and comply with its reasonable requests made in connection with the carrying out of its duties under this Agreement, including giving the Expert reasonable access to their respective personnel, books, records and working papers during normal office hours during the period from the appointment of the Expert to the making of the relevant determination.

7.6

Further adjustment of the Purchase Price

7.6.1

If the total amount (as agreed or determined in accordance with this Clause 7.6) of Make-Wholes payable between members of the E.ON AG Group on the one hand and members of the Group on the other (in whichever direction) exceeds or is less than a net Make-Whole payable by the Group to the E.ON AG Group of £11 million, the Purchase Price shall be reduced or increased by an amount equal to 72 per cent. of such excess or shortfall, as the case may be.

7.6.2

If the total amount (as agreed or determined in accordance with this Clause 7.6) of interest payable by the Group in respect of Intra-Group Payables after deducting interest received by the Group in respect of Intra-Group Receivables, in each case in respect of the period from the Accounts Date to the Closing Date, exceeds or is less than £2.4 million, the Purchase Price shall be reduced or increased by an amount equal to 72 per cent. of such excess or shortfall.

7.6.3

Either a Relevant Seller or the Purchaser may serve notice on the other within 60 days after the Closing Date claiming that the Purchase Price should be adjusted in accordance with this Clause 7.6, such notice to contain reasonable details of the relevant claim and the basis for the proposed adjustment. If no such notice is served within such period, the Purchase Price shall not be adjusted in accordance with this Clause.

7.6.4

Any adjustment of the Purchase Price in accordance with this Clause 7.6 shall be agreed or determined in accordance with the provisions regarding the resolution and determination of the adjustments contained in Clause 7.5, which shall apply mutatis mutandis.

7.6.5

Any increase in the Purchase Price agreed or determined in accordance with this Clause 7.6 shall be paid by the Purchaser to the Relevant Seller and any decrease in the Purchase Price so agreed or determined shall be paid by the Relevant Seller to the Purchaser in accordance with Clause 7.5.4(v) which shall apply mutatis mutandis. No such increase or decrease in the Purchase Price shall affect the liability of any debtor or creditor in respect of any Make-Whole or interest on Intra Group Payables or Intra Group Receivables.

7.7

Payment of the Corporation Tax Recharge Payment

The Purchaser shall procure that the Corporation Tax Recharge Payment will be paid on Closing by the relevant Group Companies in full and final settlement of the Corporation Tax Recharge Payment and/or any Intra-Group Payable or any liability in respect of an Ordinary Trading Item created in respect thereof.

8

Separation and Other Matters

8.1

Transferring Properties

The provisions in Schedule 8 shall apply in respect of the Transferring Properties.

8.2

Transferring Assets

The provisions of Schedule 9 shall apply in respect of the Transferring Assets.

8.3

Pensions

The provisions of Schedule 10 shall apply in respect of pensions.

8.4

Transferring Intellectual Property Rights

The provisions of Schedule 11 shall apply in respect of the Transferring Intellectual Property Rights.

8.5

Employees

8.5.1

The Relevant Seller shall indemnify the Purchaser from and against all Regulation 13/14 Losses suffered by the Purchaser and/or a Group Company arising from (i) the failure by the parties to the Intra-Group Services Termination Deeds to comply with Regulation 13 and/or Regulation 14 of the Transfer Regulations in respect of the transfer of the Transferred Employees and/or (ii) the dismissal before the Closing Date of any employee who, but for their dismissal, would have been a Transferred Employee.

8.5.2

If the number of Transferred Employees who transfer to Central Networks Limited or another Group Company (or allege to have so transferred) exceeds 402, after the Closing Date (“Additional Employees”) the Purchaser may procure that Central Networks Limited or any relevant Group Company terminates the contracts of employment of such number of Additional Employees provided it does so in accordance with the following provisions:

(i)

the Purchaser shall notify either of the Sellers in writing as soon as reasonably practicable and in any event within 10 days of becoming aware of the transfer of more than 402 Transferred Employees of the number and identity of the Additional Employees (“Notification”).

(ii)

within 21 days of Notification, the Relevant Seller may or may procure that a member of the Sellers’ Group will offer employment to each Additional Employee. If such offer is accepted, the Purchaser shall procure that Central Networks Limited or any relevant Group Company shall immediately release the Additional Employee from its employment;

(iii)

if no such offer of employment has been made or procured to be made by the Relevant Seller or such offer has been made but not accepted, then the Relevant Seller must notify the Purchaser in writing of this fact (“Failure Notification”). Upon receipt of a Failure Notification the Purchaser may, following the Purchaser’s notification to the Relevant Seller in writing in advance (and in any event within 14 days of a receipt of the relevant Failure Notification) terminate the employment of the Additional Employee.

Subject to the provisions of this Clause 8.5.2 (i) to (iii) being followed (or the Sellers and the Purchaser acting in any other way as may be agreed between them), the Relevant Seller will indemnify the Purchaser against all Losses suffered by the Purchaser and/or any relevant Group Company arising out of such termination (including any costs incurred as a result of employing any such Additional Employee from the date of transfer but only until termination in accordance with this clause within 14 days of receipt of the relevant Failure Notification).

8.5.3

The indemnity provided in Clause 8.5.2 shall be limited in the following ways:

(i)

it will not apply in relation to any Notification which is served on the Sellers more than two months after the date upon which the Intra-Group Services Deeds are terminated;

(ii)

if a Relevant Seller’s liability under Clause 8.5.2 arises from and/or is increased by any claim which is due to any act or omission by the Purchaser or Central Networks Limited after the Closing Date and which is not a claim for unfair dismissal, then the indemnity shall not apply to that portion of liability which is attributable to such act or omission of the Purchaser and/or Central Networks Limited.

8.5.4

Provided the Transferred Employees consent to them doing so, the Sellers shall provide to the Purchaser within 7 days of the date of this Agreement the name, salary and job title of each Transferred Employee. If any Transferred Employee does not consent to the disclosure of such information, the Sellers shall provide details of such Transferred Employee’s salary and job title in a manner compliant with the Data Protection Act 1998.

8.5.5

The Sellers’ Guarantor shall be responsible for payment of all Transaction Bonuses before the Closing Date, without any liability accruing to any Group Company in relation to such payments.

8.5.6

The Purchaser shall comply (and shall procure compliance by the relevant Group Companies) with any obligations imposed on the relevant Group Companies under the terms of the Intra-Group Services Termination Deeds, including without limitation those relating to the pension arrangements of the Transferred Employees.

8.5.7

The Sellers covenant to pay to the Purchaser an amount equal to the amount of the Retention Bonuses that are payable by any of the Group Companies and any employer’s national insurance contributions that become payable thereon after taking into account any Relief arising as a result of the payment of the Retention Bonuses. The due date for payment of any amount payable under this Clause 8.5.7 will be five Business Days before the Retention Bonus is payable to the relevant employee or employees.

8.5.8

The Seller’s Guarantor shall indemnify the Purchaser against any Losses suffered by the Purchaser and/or a Group Company arising in respect of any claim by any Relevant Employee in respect of any non-payment (or partial non-payment) of any Transaction Bonus and/or Retention Bonus or any other dispute whatsoever in relation to any Transaction Bonus and/or Retention Bonus (including without limitation any claim or dispute raised in relation to the level of award made in respect of any Transaction Bonus and/or Retention Bonus) save that no such indemnity protection shall be afforded to the extent that (in relation to Retention Bonus payments) the Purchaser has been put in funds by the Sellers’ Guarantor in respect of any Retention Bonus amount determined by the Sellers’ Guarantor and has subsequently failed to pass such payment(s) onto any Relevant Employee.

8.5.9

The Sellers’ Guarantor will make the payments due to Relevant Employees under the share performance plan and the medium term incentive plan set out in document 1.25 in the sensitive documents folder of the Data Room before Closing.

8.6

Degrouping Elections

The Sellers and the Purchaser undertake to enter into or procure that a member of the Sellers’ Group shall enter into, a Degrouping Election with each relevant Group Company substantially in the form shown in Schedule 15 on or prior to Closing in respect of any Degrouping Taxation for which any such Degrouping Election is capable of being made.

8.7

Customers Contributions Claim

8.7.1

Subject to 8.7.2 below, Avon Energy Partners covenants to pay to the Purchaser an amount equal to the Relevant Proportion of any professional fees payable by Central Networks Limited to Deloitte pursuant to the Deloitte Agreement (after giving credit for the Relevant Proportion of any Relief arising to Central Networks Limited in respect of the payment of any such professional fees).

8.7.2

Avon Energy Partners shall not be required to pay any amount pursuant to Clause 8.7.1 above to the extent that the amount would not have been payable but for any amendment or other change to the Deloitte Agreement that is made after Closing.

9

Warranties

9.1

The Sellers’ Warranties

9.1.1

Subject to Clause 9.2 and to the extent provided in Clause 1.16, each Relevant Seller warrants to the Purchaser that each of the Sellers’ Warranties set out in Schedule 5 is true and accurate as of the date of this Agreement.

9.1.2

Each of the Sellers’ Warranties is to be construed separately and (except where this Agreement provides otherwise) is not limited by a provision of this Agreement or another Sellers’ Warranty.

9.1.3

Any Sellers’ Warranty qualified by the expression “so far as the Sellers are aware” or any similar expression shall, unless otherwise stated be deemed to refer only to the actual knowledge of the persons whose names are set out in Schedule 7 (with no imputation of the knowledge of any other person), each having made reasonable enquiries if they have reasonable cause to believe that specific circumstances exist which would or would be reasonably likely to cause a warranty to be breached or untrue if an appropriate disclosure is not made, as at the date of this Agreement, it being recognised that the level of enquiry which has been made has been constrained by the confidentiality of the transaction contemplated by this Agreement.

9.1.4

The Purchaser acknowledges and agrees that the Sellers do not give or make any warranty or representation as to the accuracy of the forecasts, estimates, projections, statements of intent or statements of opinion provided to the Purchaser or any of its directors, officers, employees agents or advisers on or prior to the date of this Agreement.

9.1.5

Each Relevant Seller hereby confirms that each of the persons whose names appear in Schedule 7 will, within three Business Days after the date of this Agreement, be provided with a copy of this Agreement and will be instructed, in the period between the date of this Agreement and the Closing Date, to fulfil his or her respective function with a view to seeking to ensure that there would be no breach of the Sellers’ Warranties for which the Sellers would be liable hereunder if such Sellers’ Warranties were repeated on the Closing Date. No party to this Agreement shall have any liability to any other party if such persons do not act in such manner and as a result the Sellers’ Warranties would be untrue or not accurate if they were repeated on the Closing Date.

9.2

Sellers’ Disclosures

9.2.1

The Sellers’ Warranties are subject to any matter to the extent it is fairly disclosed in this Agreement or in the Disclosure Letter.

9.2.2

The Purchaser hereby acknowledges that it is a professional counterparty with experience of undertaking due diligence on businesses similar to the Group’s business and prior to the date of this Agreement it, and its professional advisers, were given the opportunity to (i) review the documents disclosed in the Data Room, including vendor diligence reports, and to ask questions in respect of such documents, and (ii) attend a management presentation.

9.3

Updating of the Sellers’ Warranties to Closing

Subject to Clause 9.2, each Relevant Seller further warrants to the Purchaser that the Sellers’ Warranties in paragraphs 1.1 and 15 of Schedule 5 will be true and accurate at Closing in all material respects as if they had been repeated at Closing.

9.4

The Sellers’ Waiver of Rights against the Group

Save in the case of fraud, each Relevant Seller undertakes to the Purchaser and to the Group Companies and their respective directors, officers and agents and to the Relevant Employees to waive any rights, remedies or claims which it may have in respect of any misrepresentation, inaccuracy or omission in or from any information or advice supplied or given by the Group Companies or their respective directors, officers or agents or the Relevant Employees in connection with assisting the Sellers in the giving of any Sellers’ Warranty or the preparation of the Disclosure Letter.

9.5

The Purchaser’s Warranties

The Purchaser warrants to each Relevant Seller that each of the Purchaser’s Warranties set out in Schedule 6 is true and accurate as of the date of this Agreement.

9.6

Effect of Closing

The Sellers’ Warranties and all other provisions of this Agreement, to the extent such other provisions have not been performed by Closing, shall not be extinguished or affected by Closing or by any other event or matter (including any satisfaction and/or waiver of any condition contained in Clause 4.1), except by a specific and duly authorised written waiver or release by the Purchaser.

10

Limitation of Sellers’ Liability

10.1

Time Limitation for Claims

The Sellers shall not be liable under this Agreement or the Tax Indemnity in respect of any claim referred to below unless a notice of such claim is given by the Purchaser to the Sellers:

10.1.1

in the case of any Tax Claim or any claim under the Tax Indemnity, within six years following Closing;

10.1.2

in the case of any claim in respect of matters set out in paragraph 9 of Schedule 5, within two years following Closing;

10.1.3

in the case of any other claim for a breach of Sellers’ Warranties or Clause 6, within 18 months following Closing,

except that there shall be no time limitation for giving notice of any claim under paragraphs 1.1 or 15 of Schedule 5.

10.2

Minimum Claims

10.2.1

The Sellers shall not be liable under this Agreement in respect of any individual claim (or a series of claims arising from the same or substantially the same facts or circumstances) for a breach of Clause 6.1.1 or for a breach of a Sellers’ Warranty where the liability agreed or determined (disregarding the provisions of this Clause 10.2) in respect of any such claim or series of claims does not exceed £2,000,000 except in the case of any claim in relation to the Sellers’ Warranties under paragraphs 1.1, 13.8, 15.1, and 17 of Schedule 5.

10.2.2

Where the liability agreed or determined in respect of any such claim or series of claims exceeds £2,000,000, the liability of the Sellers shall be for the aggregate amount of the claim or series of claims as agreed or determined and not just the excess.

10.3

Aggregate Minimum Claims

10.3.1

The Sellers shall not be liable under this Agreement in respect of any claim for a breach of Clause 6.1.1 or for a breach of a Sellers’ Warranty unless the aggregate amount of all claims for which the Sellers would otherwise be liable for breach of Clause 6.1.1 or Sellers’ Warranty (disregarding the provisions of this Clause 10.3) exceeds £40,000,000 except in the case of any claim in relation to the Sellers’ Warranties under paragraphs 1.1, 13.8, 15.1 and 17 of Schedule 5.

10.3.2

Where the liability agreed or determined in respect of all claims referred to in Clause 10.3.1 exceeds £40,000,000 the liability of the Sellers shall be for the aggregate amount of the claim or series of claims as agreed or determined and not just the excess.

10.3.3

The Sellers shall not be liable under this Agreement in respect of any claim for a breach of Clause 6.1.2 unless the aggregate amount of all claims for which the Sellers would otherwise be liable for breaches of Clause 6.1.2 (disregarding the provisions of this Clause 10.3.3) exceeds £10,000,000.

10.3.4

Where the liability agreed or determined in respect of all claims referred to in Clause 10.3.3 exceeds £10,000,000 the liability of the Sellers shall be for the excess only.

10.4

Maximum Liability

Subject to the provisions of the Tax Indemnity, the maximum aggregate liability of the Sellers in respect of all breaches of Clause 6 and the Sellers’ Warranties and under the Tax Indemnity shall not exceed £650,000,000 except in the case of any breach of the Sellers’ Warranties under paragraphs 1.1 and 15 of Schedule 5 to this Agreement in respect of which the maximum aggregate liability of the Sellers (when added to the liability of the Sellers for all other breaches of this Agreement) shall not exceed the sum of the Purchase Price and the Net Intra-Group Debt as at the Closing Date.

10.5

Contingent Liabilities

The Sellers shall not be liable under this Agreement (other than for a Tax Claim) in respect of any liability which is contingent unless and until such contingent liability becomes an actual liability and is due and payable provided that this Clause 10.5 shall not prevent the giving of notice of a claim in respect of a matter which is contingent within the applicable time limit specified in Clause 10.1.

10.6

Losses

The parties shall not be liable under this Agreement in respect of any loss of production, loss of profit, loss of revenue, loss of contract, loss of goodwill, loss of claim or any indirect or consequential losses of the parties but this Clause 10.6 shall not operate to exclude liability for any loss or damage which would fairly and reasonably be considered as arising naturally from the relevant breach or liability.

10.7

Provisions

The Sellers shall not be liable under this Agreement (other than for a Tax Claim) in respect of any claim if and to the extent that specific and proper allowance, provisions or reserve is made in the Locked Box Accounts for the matter giving rise to the claim.

10.8

Matters Arising Subsequent to this Agreement

The Sellers shall not be liable under this Agreement (other than for a Tax Claim) in respect of any matter to the extent that the same would not have occurred but for:

10.8.1

Agreed matters

any matter or thing done or omitted to be done pursuant to and in compliance with the Transaction Documents or otherwise at the request in writing or with the approval in writing of the Purchaser;

10.8.2

Acts of the Purchaser

any voluntary act, omission or transaction of the Purchaser or any member of the Purchaser’s Group or any of the Group Companies, or their respective directors, officers, employees or agents or successors in title, after Closing, otherwise than in the ordinary and usual course of business or pursuant to a legally binding commitment to which the Group is subject on or before Closing or to comply with applicable law;

10.8.3

Changes in legislation

(i)

the passing of, or any change in, after the date of this Agreement, any law, rule, regulation or administrative practice of any Regulatory Authority including (without prejudice to the generality of the foregoing) any increase in the rates of Taxation or any imposition of Taxation or any withdrawal of relief from Taxation not actually (or prospectively) in effect at the date of this Agreement; or

(ii)

any change after the date of this Agreement of any generally accepted interpretation or application of any legislation; or

10.8.4

Accounting and Taxation Policies

any change in accounting or Taxation policy, basis or practice of the Purchaser or any of the Group Companies introduced or having effect after Closing.

10.9

Insurance

Without prejudice to Clause 14, the Sellers shall not be liable under this Agreement (other than for a Tax Claim) in respect of any claim to the extent that the Losses in respect of which such claim is made (i) are covered by a policy of insurance and the Purchaser or Group Company actually recovers under that policy (after taking account of any deductible or excess and less any Taxation suffered on the proceeds and any costs reasonably incurred in making such recovery) or (ii) would have been covered if policies of insurance equivalent to those maintained for the benefit of the Group Companies and in force at the date of Closing had been maintained after Closing on no less favourable terms solely to the extent that such insurance could have been obtained by the Group on commercially available and reasonable terms at the relevant time.

10.10

Net Financial Benefit

The Sellers shall not be liable for any claim under this Agreement (other than a Tax Claim) in respect of any Losses suffered by the Purchaser or a Group Company to the extent of any corresponding savings by or net quantifiable financial benefit to any member of the Purchaser’s Group arising directly from such Losses or the facts giving rise to such Losses (for example where the amount (if any) by which any Taxation for any member of the Purchaser’s Group would otherwise have been accountable or liable to be assessed is actually reduced or extinguished as a result of the matter giving rise to such liability).

10.11

Purchaser’s Right to Recover

If the Sellers may be liable to pay, or a Relevant Seller has paid, an amount in discharge of any claim under this Agreement (other than a Tax Claim) and or any Transaction Document and any member of the Purchaser’s Group is entitled to recover from a third party a sum (or to the extent quantifiable and attributable to the relevant matter is entitled to a discount, credit or relief from a third party) which indemnifies or compensates such member of the Purchaser’s Group (in whole or in part) in respect of the loss or liability which was the subject matter of the claim, the Purchaser shall procure that, subject to the Sellers indemnifying the Purchaser against any Losses incurred by the relevant member of the Purchaser’s Group in pursuing such recovery, such steps are taken as the Sellers may reasonably require to enforce such recovery and:

10.11.1

where the Sellers have not at the relevant time paid an amount in discharge of any such claim, upon receipt or realisation of any such recovery, such recovery (less any costs, charges and expenses not so indemnified (including any Tax arising as a result of such recovery after taking into account any Tax Relief available in respect of any matter giving rise to the claim or in respect of the payment that would have been due pursuant to clause 10.11.2 had the Sellers already paid an amount in discharge of the claim) incurred in obtaining such recovery) shall reduce or satisfy, as the case may be, such claim to the extent of such recovery; or

10.11.2

where the Sellers have already paid an amount in discharge of any such claim, the Purchaser shall pay (or shall procure the payment to) the Sellers as soon as practicable after receipt or realisation of the benefit, respectively, an amount equal to:

(i)

the amount so recovered or otherwise so realised from the third party less any costs, charges and expenses (including any Tax arising as a result of such recovery after taking into account any Tax Relief available in respect of any matter giving rise to the claim or in respect of the payment pursuant hereto) incurred in obtaining such recovery and not otherwise indemnified by the Sellers; or, if less

(ii)

the amount previously paid by the Sellers to the Purchaser less any Taxation attributable to it.

10.12

Double Claims

The Purchaser shall not be entitled to recover from the Sellers under this Agreement or the Tax Indemnity more than once in respect of the same Losses suffered and, without prejudice to the generality of the foregoing, the Sellers shall not be liable in respect of:

10.12.1

any breach of the Agreement if and to the extent that the Losses resulting from or connected with such breach are or have been included in a claim under the Tax Indemnity which has been satisfied; or

10.12.2

a claim under the Tax Indemnity if and to the extent that the Losses in respect of which such claim was made are or have been included in a claim for breach of the Agreement which has been satisfied.

10.13

Mitigation of Losses

The Purchaser shall procure that all reasonable steps are taken and all reasonable assistance is given to avoid or mitigate any Losses which in the absence of mitigation are likely to give rise to a liability in respect of any claim under this Agreement.

10.14

Purchaser’s knowledge

The Sellers shall not be liable in respect of any claim for any material breach of a Sellers’ Warranty to the extent that the facts, matters or circumstances giving rise to the relevant claim were within the actual knowledge of any of the following persons and to the extent that any of such persons ought reasonably to have realised (having regard to the provisions of Clause 9.2.2) that such facts, matter or circumstances would or would be likely to cause any Sellers’ Warranty to be untrue:

Paul Farr, Jeremy McGuire, Charl Oosthuizen, Rick Klingensmith, Thomas Douglass, Robert Symons, Tadd Henninger, Kindra Walker, Sue Underwood and Ian Cutter.

10.15

Fraud

None of the limitations contained in this Clause 10 shall apply to any claim under this Agreement or the Tax Indemnity which arises or is increased, or to the extent to which it arises or is increased, as the consequence of, or which is delayed as a result of, fraud or wilful misconduct by the Sellers.

10.16

E.ON AG Group

Notwithstanding any provisions to the contrary, the aggregate liability of the E.ON AG Group under this Agreement and the Tax Indemnity shall not exceed any limit on the liability of the Sellers in this Agreement and the Tax Indemnity and the provisions of this Clause 10 shall apply mutatis mutandis to each member of the E.ON AG Group who may have liability under this Agreement and the Tax Indemnity as if such member is the Sellers.

11

Claims

11.1

Notification of Potential Claims

If the Purchaser or any Group Company becomes aware of any fact, matter or circumstance that is reasonably likely to give rise to a claim against the Sellers under this Agreement other than a Tax Claim (ignoring for these purposes the application of Clause 10.2 or 10.3), the Purchaser shall as soon as reasonably practicable give a notice in writing to the Sellers setting out such information as is available to the Purchaser or Group Company (as applicable) as is reasonably necessary to enable the Sellers to assess the merits of the claim, to act to preserve evidence and to make such provision as the Sellers may consider necessary (including, where the claim is the result of or in connection with a Third Party Claim, evidence of the Third Party Claim). Subject to Clause 10.1, failure to give notice within such period shall not affect the rights of the Purchaser provided that the Sellers shall not be liable to the Purchaser to the extent that the amount of the claim is materially increased, or is not reduced, as a result of such non-compliance.

11.2

Notification of Claims

Notices of claims under this Agreement shall be given by the Purchaser to the Sellers within the time limits specified in Clause 11.1.

11.3

Commencement of Proceedings

Any claim notified pursuant to Clause 11.2 shall (if it has not been previously satisfied, settled or withdrawn) be deemed to be irrevocably withdrawn 12 months after the notice is given pursuant to Clause 11.2 or, in the case of any contingent liability, 12 months after such contingent liability becomes an actual liability and is due and payable, unless at the relevant time legal proceedings in respect of the claim have been commenced by being both issued and served.

11.4

Investigation by the Sellers

In connection with any matter or circumstance that is reasonably likely to give rise to a claim against the Sellers under this Agreement (other than a Tax Claim):

11.4.1

the Purchaser shall allow, and shall procure that the relevant Group Company allows, the Sellers and its financial, accounting or legal advisers upon reasonable notice to investigate the matter or circumstance alleged to give rise to a claim and whether and to what extent any amount is payable in respect of such claim; and

11.4.2

the Purchaser shall, at the written request of the Sellers, disclose to the Sellers all material of which the Purchaser is aware which relates to the claim and shall, and shall procure that any other relevant members of the Purchaser’s Group shall, give, subject to their being paid all reasonable costs and expenses, all such information and assistance, including access to premises and personnel, and the right to examine and copy or photograph any assets, accounts, documents and records, as the Sellers or their financial, accounting or legal advisers may reasonably request upon reasonable notice subject to the Sellers agreeing in such form as the Purchaser may reasonably require to keep all such information confidential and to use it only for the purpose of investigating and defending the claim in question, provided that nothing in this Clause 11.4 shall entitle the Sellers or its financial, accounting or legal advisers to have access to any information which relates to legal advice or any other privileged advice or documents in respect of any claim for breach of this Agreement.

11.5

Conduct of Third Party Claims

If the matter or circumstance that would be reasonably likely to give rise to a claim against the Sellers under this Agreement (other than a Tax Claim) is a result of or in connection with a claim by a third party (a “Third Party Claim”) then:

11.5.1

the Purchaser shall consult with the Sellers so far as reasonably practicable in relation to the conduct of the Third Party Claim and shall take reasonable account of the views of the Sellers before taking any action in relation to the Third Party Claim;

11.5.2

no admissions in relation to the Third Party Claim shall be made by or on behalf of the Purchaser or any member of the Purchaser’s Group and the Third Party Claim shall not be compromised, disposed of or settled without the written consent of the Sellers (such consent not to be unreasonably withheld or delayed);

11.5.3

subject to the Sellers indemnifying the Purchaser or member of the Purchaser’s Group concerned against all reasonable costs and expenses (including legal and professional costs and expenses) that may be incurred thereby, the Purchaser shall, or the Purchaser shall procure that the members of the Purchaser’s Group shall, take such action as the Sellers may reasonably request to avoid, dispute, deny, defend, resist, appeal, compromise or contest the Third Party Claim; and

11.5.4

each Relevant Seller shall be entitled at its own expense and in its absolute discretion, by notice in writing to the Purchaser accepting any potential resulting liability for such claim, to take such action as it shall deem necessary to avoid, dispute, deny, defend, resist, appeal, compromise or contest the Third Party Claim (including making counterclaims or other claims against third parties) and to have the conduct of any related proceedings, negotiations or appeals, provided no admissions in relation to the Third Party Claim shall be made by or on behalf of the Sellers or any member of the Sellers’ Group without the Sellers’ consent (such consent not to be unreasonably withheld or delayed) and any settlement is limited to monetary payment;

11.5.5

if the Relevant Seller sends a notice to the Purchaser pursuant to Clause 11.5.4, the Purchaser shall, and the Purchaser shall procure that any member of the Purchaser’s Group shall give, subject to their being paid all reasonable costs and expenses, all such information and assistance including access to premises and personnel, and the right to examine and copy or photograph any assets, accounts, documents and records, as the Relevant Seller may reasonably request, including instructing such professional or legal advisers as the Relevant Seller may nominate to act on behalf of the Purchaser or other member of the Purchaser’s Group concerned but in accordance with the Relevant Seller’s instructions; and

11.5.6

notwithstanding Clauses 11.5.2 and 11.5.3, neither the Purchaser nor any member of the Purchaser’s Group shall be required to take any action or refrain from taking any action, if the Purchaser, or member of the Purchaser’s Group concerned, reasonably considers such action or omission may be materially prejudicial to a regulated Group Company. The Relevant Seller agrees not to do anything in the course of exercising its rights under Clause 11.5 that will, or is reasonably likely to, be materially prejudicial to a regulated Group Company and that nothing shall entitle the Sellers or their financial, accounting or legal advisers to have access to any information which relates to legal advice or any other privileged advice or document in respect of any claim for breach of this Agreement.

11.6

Tax Warranties

The provisions of the Tax Indemnity shall apply to any Tax Claims where specified in the Tax Indemnity.

12

Restrictive Covenants

12.1

Restrictions

Each of the Sellers, E.ON AG and the Sellers’ Guarantor undertakes with the Purchaser and the Group Companies that no member of the E.ON AG Group nor any of its Affiliates will (whether alone, jointly with another, directly or indirectly) during the Restricted Period induce or seek to induce any present Restricted Employee to become employed or engaged whether as employee, consultant or otherwise by any member of the E.ON AG Group, whether or not such Restricted Employee would thereby commit a breach of his contract of employment or service. The placing of an advertisement of a post available to a member of the public generally and the recruitment of a person through an employment agency shall not constitute a breach of this Clause 12 provided that no member of the E.ON AG Group encourages or advises such agency to approach any Restricted Employee.

12.2

Exceptions

The restrictions in Clause 12.1 shall not operate to prohibit any member of the E.ON AG Group or any of its Affiliates from fulfilling any obligation pursuant to this Agreement, any agreement to be entered into pursuant to this Agreement or any Transaction Document.

12.3

Reasonableness of Restrictions

Each of the Sellers, E.ON AG and the Sellers’ Guarantor agrees that the restrictions contained in this Clause 12 are no greater than is reasonable and necessary for the protection of the interests of the Purchaser and the Group Companies but if any such restriction shall be held to be void but would be valid if deleted in part or reduced in application, such restriction shall apply with such deletion or modification as may be necessary to make it valid and enforceable.

12.4

Interpretation

The following terms shall have the following meanings respectively in this Clause 12:

12.4.1

“Restricted Employee” means any Relevant Employee who (a) has access to trade secrets or other material confidential information of the Group; or (b) was employed by the relevant Company in skilled or managerial work at any time during the 12 months proceeding the Closing Date; and

12.4.2

“Restricted Period” means two years commencing on Closing or such shorter period of time recognised by applicable law as being binding on the Sellers.

13

Confidentiality

13.1

Announcements

For a period of 12 months from the date of this Agreement, no formal public announcement or circular in connection with the existence or the subject matter of this Agreement shall be made or issued by or on behalf of any member of the Sellers’ Group or the E.ON AG Group or any member of the Purchaser’s Group without the prior written approval of the Sellers and the Purchaser (such approval not to be unreasonably withheld or delayed). This shall not affect any formal public announcement or circular required by applicable law or any Regulatory Authority or the rules of any stock exchange on which the shares of a party or its parent undertakings are listed but the party with an obligation to make an announcement or issue a circular shall consult with the other party insofar as is reasonably practicable and is permitted by law before complying with such an obligation.

13.2

Confidentiality

13.2.1

The Confidentiality Agreement shall cease to have any force or effect from the Closing Date.

13.2.2

Subject to Clauses 13.1 and 13.2.3, the Sellers, the Purchaser, E.ON AG and the Sellers’ Guarantor shall treat as strictly confidential and not disclose or use any information received or obtained as a result of entering into this Agreement (or any agreement entered into pursuant to this Agreement) which relates to:

(i)

the existence and the provisions of this Agreement and of any agreement entered into pursuant to this Agreement;

(ii)

the negotiations relating to this Agreement (and any such other agreements);

(iii)

(in the case of the Sellers, E.ON AG and the Sellers’ Guarantor) any information relating to the business, financial or other affairs (including future plans and targets) of the Purchaser’s Group and, with effect from Closing, any information relating to the Group Companies; or

(iv)

(in the case of the Purchaser) any information relating to the business, financial or other affairs (including future plans and targets) of the E.ON AG Group.

13.2.3

Clause 13.2.2 shall not prohibit disclosure or use of any information if and to the extent:

(i)

the disclosure or use is required by applicable law, any regulatory body or any stock exchange on which the shares of either party or its parent undertakings are listed;

(ii)

the disclosure or use is required to vest the full benefit of this Agreement in a party including to permit the Purchaser to operate the Group Companies after Closing;

(iii)

the disclosure or use is required for the purpose of any judicial proceedings arising out of this Agreement or any other agreement entered into under or pursuant to this Agreement or the disclosure is made to a Tax Authority in connection with the Tax affairs of the disclosing party;

(iv)

the disclosure is made on a need-to-know basis to employees, agents, officers, actual or potential financing parties (and their professional advisers), ratings agencies and professional advisers of the disclosing party who are bound to the disclosing party by a duty of confidentiality which applies to any information so disclosed;

(v)

the information is made available to a Regulatory Authority;

(vi)

the information is or becomes publicly available (other than by breach of the Confidentiality Agreement or of this Agreement);

(vii)

the non-disclosing party has given prior written approval to the disclosure or use; or

(viii)

the information is independently developed after Closing,

provided that prior to disclosure or use of any information pursuant to Clause 13.2.3(i), (ii), (iii) or (v) except in the case of disclosure to a Tax Authority, the disclosing party shall, if practicable, promptly notify the non-disclosing party of such requirement with a view to providing that non-disclosing party with the opportunity to contest such disclosure or use or otherwise to agree the timing and content of such disclosure or use.

13.2.4

The Sellers shall procure the assignment to the Purchaser of the benefit of the confidentiality provisions of all confidentiality obligations and undertakings given by any other potential purchaser of a Group Company but only to the extent that:

(i)

such assignment is permitted by the terms of such agreements and undertakings; and

(ii)

such confidentiality provisions relate to the business of the Group.

14

Insurance

14.1

No cover under Seller Insurance Policies from Closing

The Purchaser acknowledges and agrees that from the Closing Date, subject to Clauses 14.2 and 14.3:

14.1.1

no Group Company shall have or be entitled to the benefit of any Seller Insurance Policy in respect of any event, act or omission that takes place after the Closing Date and it shall be the sole responsibility of the Purchaser to ensure that adequate insurances are put in place for the Group with effect from the Closing Date; and

14.1.2

the Sellers shall not be required to maintain any Seller Insurance Policy for the benefit of any Group Company, provided that it shall not cancel with retrospective effect any ‘occurrence based’ Seller Insurance Policy under which any Group Company continues to be insured in accordance with Clause 14.3.

14.2

Existing claims under Seller Insurance Policies

The Sellers shall use reasonable endeavours after the Closing Date (at the cost of the Purchaser or the relevant Group Company) to recover all monies due from insurers in respect of any claim relating to loss of or damage to any property or asset of a Group Company (including, if applicable, any Transferring Assets, Transferring Properties and Transferring Intellectual Property Rights) which has been made before the Closing Date by or on behalf of any Group Company under any Seller Insurance Policy and shall, to the extent that the Group has not already been indemnified prior to the Closing Date in respect of the Losses in respect of which the claim is made, pay any monies received in respect of such claim (after taking into account any deductible or excess and less any Taxation suffered on the proceeds and any out of pocket expenses suffered or incurred by the Sellers or any member of the Sellers’ Group in connection with such claim and not already reimbursed to it by the Purchaser) to the Purchaser or, at the Purchaser’s written direction, the relevant Group Company as soon as practicable after receipt by the Sellers.

14.3

New claims under occurrence-based policies

14.3.1

With respect to any event, act or omission relating to any employee, officer, product, operation, property or asset of a Group Company that occurred or existed prior to the Closing Date that is covered by an “occurrence based” Seller Insurance Policy, the Sellers shall, at the direction of the Purchaser or the relevant Group Company, make a claim under such insurance policy, provided that:

(i)

(in respect of a claim under a Seller Insurance Policy relating to material damage, business interruption, crime, personal accident or travel) the claim is notified to the Sellers within 30 calendar days of the Purchaser becoming aware of the claim and in any event within 12 months after the Closing Date;

(ii)

(in respect of a claim under a Seller Insurance Policy relating to public and products liability, directors and officers liability or motor) the claim is notified to the Sellers within 30 calendar days of the Purchaser becoming aware of the claim and in any event within six years after the Closing Date;

(iii)

(in respect of a claim under a Seller Insurance Policy relating to employers liability) the claim is notified to the Sellers within 30 Business Days of the Purchaser becoming aware of the claim;

(iv)

the relevant Group Company shall be liable for any deductible or excess payable in respect of the claim;

(v)

the Purchaser agrees to reimburse the Sellers or relevant other member of the Sellers’ Group for any retrospective premium increases under the insurance policy under which the claim is made, as such amounts are determined in accordance with that insurance policy as a result of any such claim made pursuant to this Clause 14.3.1 and notified in writing to the Purchaser.

14.3.2

In the event a Group Company notifies a claim pursuant to Clause 14.3.1, the Sellers shall, at the Purchaser’s cost, make all necessary notifications and claims under the relevant Seller Insurance Policy and the relevant Group Company shall be entitled to be paid any proceeds actually received under the Seller Insurance Policy (less any deductible or excess actually paid by the Sellers or any member of the Sellers’ Group and less any Taxation suffered on the proceeds and any reasonable out of pocket expenses suffered or incurred by the Sellers or any member of the Sellers’ Group) provided that:

(i)

the Sellers shall not be required, pursuant to any requests made by the Purchaser or any Group Company:

(a)

to undertake or threaten litigation; or

(b)

incur any expenditure or liability without being put in funds by the Purchaser or such Group Company prior to incurring any such expenditure or liability;

(ii)

neither the Purchaser nor any Group Company shall be entitled to any proceeds received by the Sellers’ Group under any Seller Insurance Policy except to the extent that such proceeds relate to a claim made pursuant to Clause 14.3.1 in respect of:

(a)

an event, act or omission connected with the carrying on of the business of the Group prior to the Closing Date;

(b)

Losses for which the relevant Group Company has not already been reimbursed, indemnified or otherwise compensated whether under this Agreement or otherwise;

(iii)

the Purchaser shall provide (and shall procure that the relevant Group Company also provides) all assistance, information and co-operation reasonably requested by the Sellers or the Sellers’ representatives (including the Sellers’ insurers, appointed claims handlers or any lawyers instructed in relation to such claim);

(iv)

the Purchaser shall or shall procure that the relevant Group Company shall pay or bear any costs and expenses incurred in connection with, and any deductible or excess element of, any such claim; and

(v)

the Sellers will advise the Purchase as soon as practicable of any shortfall or other limitations breached on any claims which will become the Purchaser’s liability.

15

Guarantees

15.1

Sellers’ Guarantee

15.1.1

The Sellers’ Guarantor unconditionally and irrevocably guarantees to the Purchaser the due and punctual performance and observance by the Sellers of all their obligations, commitments, undertakings, warranties and indemnities under or pursuant to this Agreement, the Tax Indemnity and any other agreement entered into pursuant to this Agreement (the “Sellers’ Guaranteed Obligations”) to the extent of any limit on the liability of the Sellers in this Agreement, the Tax Indemnity or any other agreement entered into pursuant to this Agreement.

15.1.2

If and whenever the Sellers default for any reason whatsoever in the performance of any of the Sellers’ Guaranteed Obligations, the Sellers’ Guarantor shall forthwith upon demand unconditionally perform (or procure performance of) and satisfy (or procure the satisfaction of) the Sellers’ Guaranteed Obligations in regard to which such default has been made in the manner prescribed by this Agreement, the Tax Indemnity and any agreement entered into pursuant to this Agreement and so that the same benefits shall be conferred on the Purchaser as it would have received if the Sellers’ Guaranteed Obligations had been duly performed and satisfied by the Sellers.

15.1.3

The Sellers’ Guarantor’s obligations under this Clause 15 are primary obligations and not those of a mere surety.

15.1.4

This guarantee is to be a continuing guarantee and accordingly is to remain in force until all the Sellers’ Guaranteed Obligations shall have been performed or satisfied. This guarantee is in addition to and without prejudice to and not in substitution for any rights or security which the Purchaser or any member of the Purchaser’s Group may now or hereafter have or hold for the performance and observance of the Sellers’ Guaranteed Obligations.

15.1.5

The Sellers’ Guarantor’s obligations under Clauses 15.1.1, 15.1.2 and 15.1.3 are not satisfied, discharged or affected by an intermediate payment or settlement of account by, or a change in the constitution or control of, or merger or consolidation with any other person of, or the insolvency of, or bankruptcy, winding up or analogous proceedings relating to, the Sellers.

15.1.6

As a separate and independent obligation the Sellers’ Guarantor agrees that any of the Sellers’ Guaranteed Obligations (including, without limitation, any moneys payable) which may not be enforceable against or recoverable from the Sellers by reason of any legal limitation, disability or incapacity on or of the Sellers or any other fact or circumstances (other than any limitation imposed by this Agreement or the Tax Indemnity) shall nevertheless be enforceable against and recoverable from the Sellers’ Guarantor as though the same had been incurred by the Sellers’ Guarantor and the Sellers’ Guarantor were the sole or principal obligor in respect thereof and shall be performed or paid by the Sellers’ Guarantor on demand.

15.2

Liability of the Sellers’ Guarantor

15.2.1

Without affecting the generality of Clause 15.1, the Purchaser may at any time as it thinks fit and without reference to the Sellers’ Guarantor and without prejudice to the Sellers’ Guarantor’s obligations under these Clauses 15.1 and 15.2:

(i)

grant a time for payment or grant another indulgence or agree to an amendment, variation, waiver or release in respect of any obligation of the Sellers under this Agreement, the Tax Indemnity or any other agreement entered into pursuant to this Agreement;

(ii)

give up, deal with, vary, exchange or abstain from perfecting or enforcing other securities or guarantees held by the Purchaser;

(iii)

discharge a party to other securities or guarantees held by the Purchaser and realise all or any of those securities or guarantees; or

(iv)

compound with, accept compositions from and make other arrangements with the Sellers or a person or persons liable on other securities or guarantees held or to be held by the Purchaser.

15.2.2

The Sellers’ Guarantor’s liabilities under Clauses 15.1.1, 15.1.2 and 15.1.3 are not affected by the avoidance of an assurance, security or payment or release, settlement or discharge which is given or made on the faith of an assurance, security or payment, in either case, under an enactment relating to bankruptcy or insolvency.

15.2.3

The Sellers’ Guarantor waives any right it may have of first requiring the Purchaser (or any trustee or agent on its behalf) to proceed against or enforce any other rights or security or claim payment from any person before claiming from the Sellers’ Guarantor under these Clauses 15.1 and 15.2. This waiver applies irrespective of any law or any provision of this Agreement, the Tax Indemnity or any other agreement entered into pursuant to this Agreement to the contrary.

15.3

Purchaser Guarantor’s Guarantee

15.3.1

The Purchaser’s Guarantor unconditionally and irrevocably guarantees to the Sellers the due and punctual performance and observance by the Purchaser of all its obligations, commitments, undertakings, warranties and indemnities under or pursuant to this Agreement, the Tax Indemnity and any other agreement entered into pursuant to this Agreement (the “Purchaser’s Guaranteed Obligations”) to the extent of any limit on the liability of the Purchaser in this Agreement, the Tax Indemnity or any other agreement entered into pursuant to this Agreement.

15.3.2

If and whenever the Purchaser defaults for any reason whatsoever in the performance of any of the Purchaser’s Guaranteed Obligations, the Purchaser’s Guarantor shall forthwith upon demand unconditionally perform (or procure performance of) and satisfy (or procure the satisfaction of) the Purchaser’s Guaranteed Obligations in regard to which such default has been made in the manner prescribed by this Agreement, the Tax Indemnity and any agreement entered into pursuant to this Agreement and so that the same benefits shall be conferred on the Sellers as it would have received if the Purchaser’s Guaranteed Obligations had been duly performed and satisfied by the Purchaser.

15.3.3

The Purchaser’s Guarantor’s obligations under this Clause 15.3 are primary obligations and not those of a mere surety.

15.3.4

This guarantee is to be a continuing guarantee and accordingly is to remain in force until all the Purchaser’s Guaranteed Obligations shall have been performed or satisfied. This guarantee is in addition to and without prejudice to and not in substitution for any rights or security which the Sellers or any member of the Sellers’ Group may now or hereafter have or hold for the performance and observance of the Purchaser’s Guaranteed Obligations.

15.3.5

The Purchaser’s Guarantor’s obligations under Clauses 15.3.1, 15.3.2 and 15.3.3 are not satisfied, discharged or affected by an intermediate payment or settlement of account by, or a change in the constitution or control of, or merger or consolidation with any other person of, or the insolvency of, or bankruptcy, winding up or analogous proceedings relating to, the Purchaser.

15.3.6

As a separate and independent obligation the Purchaser’s Guarantor agrees that any of the Purchaser’s Guaranteed Obligations (including, without limitation, any moneys payable) which may not be enforceable against or recoverable from the Purchaser by reason of any legal limitation, disability or incapacity on or of the Purchaser or any other fact or circumstances (other than any limitation imposed by this Agreement or the Tax Indemnity) shall nevertheless be enforceable against and recoverable from the Purchaser’s Guarantor as though the same had been incurred by the Purchaser’s Guarantor and the Purchaser’s Guarantor were the sole or principal obligor in respect thereof and shall be performed or paid by the Purchaser’s Guarantor on demand.

15.4

Liability of the Purchaser’s Guarantor

15.4.1

Without affecting the generality of Clause 15.3, each Relevant Seller may at any time as it thinks fit and without reference to the Purchaser’s Guarantor and without prejudice to the Purchaser’s Guarantor’s obligations under these Clauses 15.3 and 15.4:

(i)

grant a time for payment or grant another indulgence or agree to an amendment, variation, waiver or release in respect of any obligation of the Purchaser under this Agreement, the Tax Indemnity or any other agreement entered into pursuant to this Agreement;

(ii)

give up, deal with, vary, exchange or abstain from perfecting or enforcing other securities or guarantees held by the Sellers;

(iii)

discharge a party to other securities or guarantees held by the Sellers and realise all or any of those securities or guarantees; or

(iv)

compound with, accept compositions from and make other arrangements with the Purchaser or a person or persons liable on other securities or guarantees held or to be held by the Sellers.

15.4.2

The Purchaser’s Guarantor’s liabilities under Clauses 15.3.1, 15.3.2 and 15.3.3 are not affected by the avoidance of an assurance, security or payment or release, settlement or discharge which is given or made on the faith of an assurance, security or payment, in either case, under an enactment relating to bankruptcy or insolvency.

15.4.3

The Purchaser’s Guarantor waives any right it may have of first requiring the Sellers (or any trustee or agent on their behalf) to proceed against or enforce any other rights or security or claim payment from any person before claiming from the Purchaser’s Guarantor under these Clauses 15.3 and 15.4. This waiver applies irrespective of any law or any provision of this Agreement, the Tax Indemnity or any other agreement entered into pursuant to this Agreement to the contrary.

16

Wrong Pocket

16.1

Subject to the terms and conditions of this Clause 16, the Sellers shall, and shall procure that each member of the Sellers’ Group shall, with effect from Closing, hold as trustee for the benefit of the Purchaser (subject to being indemnified by the Purchaser in respect of any related liabilities arising out of the holding or receipt of such assets or cash):

16.1.1

any assets (excluding real estate assets but including any cash received by a member of the Sellers’ Group on behalf of the Group Companies) which at Closing were held, or which after Closing are received, by any member of the Sellers’ Group and which were reflected in the Locked Box Accounts of any Group Company or (in the case of cash) which belongs or is attributable to a Group Company; and

16.1.2

any real estate assets which are on the date of this Agreement used exclusively or principally in the business of a Group Company but which at Closing are held by a member of the Sellers’ Group,

(in each case, a “Group Company Primary Asset”), and shall, or shall procure that such member of the Sellers’ Group shall, transfer such Group Company Primary Asset as soon as reasonably practicable to the Purchaser or such Group Company/ies as the Purchaser shall nominate without consideration, provided that, if any third party consent or approval is required for the transfer of a particular Group Company Primary Asset to be effective and lawful, then Schedule 9 shall apply to such Group Company Primary Asset mutatis mutandis as if such Group Company Primary Asset were a Transferring Contract.

16.2

The provisions of Clause 16.1.1 shall apply mutatis mutandis to any assets (including cash and real estate assets) which at Closing were held, or which after Closing are received, by any Group Company and which, in the case of cash, belongs or is attributable to a member of the Sellers’ Group or, in the case of assets other than cash or real estate assets, are reflected in the accounts of a member of the Sellers’ Group and not in the Locked Box Accounts or, in the case of real estate assets, are used exclusively or principally in the business of a member of the Sellers’ Group.

17

Other Provisions

17.1

Further Assurances

17.1.1

Each Relevant Seller (at its own cost) shall execute and deliver, or cause to be executed and delivered all such documents and take all such actions, or cause all such actions to be taken as the Purchaser may from time to time reasonably require in order to give full effect to the provisions of any Transaction Document and to secure to the Purchaser the full benefit of the rights, powers and remedies conferred upon it in any Transaction Document.

17.1.2

The Parties shall refrain from taking any actions that could reasonably be expected to impair, delay or impede Closing.

17.1.3

The Purchaser shall, and following Closing shall procure that each Group Company shall, execute and deliver, or cause to be executed and delivered, all such documents and perform such acts and things (in each case at the Purchaser’s own cost save as provided in Part 4 of Schedule 8) as the Sellers may from time to time require to transfer the Shares, the Transferring Properties, the Transferring Assets and the Transferring Intellectual Property Rights to the Purchaser (or the Sellers in respect of the Sellers’ Group Transfer Properties as provided in Part 4 of Schedule 8) and to give full effect to the provisions of any Transaction Document and to secure to the Sellers the full benefit of the rights, powers and remedies conferred upon it in any Transaction Document.

17.1.4

Pending registration of the Purchaser as owner of the Shares, the Sellers shall exercise all voting and other rights in relation to such Shares in accordance with the Purchaser’s instructions.

17.1.5

The Purchaser shall, and shall procure that the relevant Group Companies shall, retain for a period of seven years from Closing any books, records and documents of the Group Companies to the extent they relate to the period prior to Closing and shall, and shall procure that the relevant Group Companies shall, if reasonably requested by the Sellers, allow the Sellers reasonable access to such books, records and documents, including the right to take copies, at the Sellers’ expense.

17.1.6

Release of Guarantees

(i)

The Purchaser shall use reasonable endeavours to procure by Closing or, to the extent not done by Closing, as soon as reasonably practicable thereafter, the release of the Sellers or any member of the Sellers’ Group from any securities, guarantees or indemnities given by or binding upon the Sellers or any member of the Sellers’ Group in respect of any liability of the Group Companies, including without limitation, those set out in Part A of Schedule 13. Pending such release the Purchaser shall indemnify the Sellers and any member of the Sellers’ Group on demand against all amounts paid by any of them pursuant to (or Losses otherwise incurred in connection with) any such securities, guarantees and indemnities in respect of such liability of the Group Companies.

(ii)

The Sellers shall use reasonable endeavours to procure, by Closing or, to the extent not done by Closing, as soon as reasonably practicable thereafter, the release of each Group Company from any securities, guaranties or indemnities given by or binding upon the Group Company in respect of any liability of the Sellers or any member of the Sellers’ Group including, without limitation, those set out in Part B of Schedule 13. Pending such release, the Sellers shall indemnify the Group Companies on demand against all amounts paid by any of them pursuant to (or Losses otherwise incurred in connection with) any such securities, guarantees and indemnities in respect of such liability of the relevant member of the Sellers’ Group.

17.2

Whole Agreement

17.2.1

The Transaction Documents contain the whole agreement and understanding between the parties and supersedes any previous written or oral agreements, understandings or arrangements between the parties in relation to the matters dealt with in the Transaction Documents.

17.2.2

Each of the Purchaser and each Relevant Seller acknowledges that it has not been induced to enter into this Agreement by any representation, warranty or undertaking not expressly incorporated into it.

17.2.3

So far as is permitted by applicable law and except in the case of fraud, each of the Sellers and the Purchaser agrees and acknowledges that its only right and remedy in relation to any representation, warranty or undertaking made or given in connection with the Transaction Documents shall be for breach of the terms of the relevant Transaction Document to the exclusion of all other rights and remedies (including those in tort or arising under statute).

17.2.4

The Purchaser’s Subsidiaries (except the Purchaser) and the members of the Sellers’ Group (except the Sellers), advisers to the Purchaser, advisers to the Sellers and providers of finance to the Purchaser may enforce the terms of this Clause 17.2 subject to and in accordance with the provisions of the Contracts (Rights of Third Parties) Act 1999.

17.2.5

Nothing in this Clause 17.2 shall have the effect of limiting any liability arising from fraud.

17.3

Assignment

17.3.1

Except as permitted by Clause 17.3.2, or as otherwise expressly provided in this Agreement, no party may, without the prior written consent of the other parties, assign, grant any security interest over, hold on trust or otherwise transfer the benefit of the whole or any part of any Transaction Document nor shall the Purchaser be entitled to make any claim against the Sellers in respect of any Losses which it does not suffer directly or in its own capacity as beneficial owner of the Shares.

17.3.2

Each Relevant Seller or the Purchaser may, without the consent of the other parties, assign to an Affiliate the benefit of the whole or any part of any Transaction Document provided that:

(i)

if the assignee ceases to be an Affiliate of the Sellers or the Purchaser (as the case may be), it shall before ceasing to be so assign the benefit so far as assigned to it to the Sellers, the Purchaser or another Affiliate of the Sellers or the Purchaser, as the case may be;

(ii)

the assignee shall not be entitled to receive under this Agreement any greater benefit than that to which the assigning party would have been entitled.

17.4

Third Party Rights

17.4.1

Subject to Clauses 17.2, 17.3.2, 17.4.2 and 17.4.3, a person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of, or enjoy any benefit under, this Agreement, provided that, the Debt Financing Sources shall be express third party beneficiaries hereof with respect to Clause 17.15.

17.4.2

Any member of the E.ON AG Group may enforce and rely on Schedule 9 to the same extent as if it were a party.

17.4.3

Any member of the Purchaser’s Group and any other person referred to in Clause 9.3 may enforce and rely on Clause 9.3 to the same extent as if it were a party.

17.4.4

Save in relation to the Purchaser, the Purchaser’s Guarantor, the Sellers, E.ON AG and the Sellers’ Guarantor, this Agreement may be terminated and any term may be amended or waived without the consent of the persons named in Clause 17.4.2.

17.5

Variation and Waiver

17.5.1

No variation, modification of or supplement to this Agreement shall be effective unless in writing and signed by or on behalf of all parties to such agreement.

17.5.2

No provision of this Agreement or any other Transaction Document may be waived except by a written instrument signed by the party or parties against whom the waiver is to be effective.

17.5.3

No failure or delay of any party in exercising any right or remedy under this Agreement shall operate as a waiver of such right or remedy nor shall any single or partial exercise of any right or remedy preclude any other or further exercise of such right or remedy or any other right or remedy under this Agreement.

17.5.4

The parties’ rights and remedies contained in this Agreement are cumulative and are not exclusive of rights and remedies provided by law.

17.6

Time of the Essence

Time shall be of the essence of this Agreement both as regards any dates and periods mentioned and as regards any dates and periods which may be substituted for them in accordance with this Agreement or by agreement in writing between the parties.

17.7

Set Off

17.7.1

Any payments pursuant to this Agreement shall be made in full, without any set off, counterclaim, restriction or condition and without any deduction or withholding (save as may be required by applicable law or as otherwise agreed), except that, to the extent lawful, payments due between the parties in relation to repayments of the Intra-Group Payables and Intra-Group Receivables pursuant to Clause 7.5, may be netted against each other to produce a net sum.

17.7.2

Any payments pursuant to this Agreement shall be effected by crediting for same day value the account specified by the Sellers or the Purchaser (as the case may be) on behalf of the party entitled to the payment (reasonably in advance and in sufficient detail to enable payment by telegraphic or other electronic means to be effected) on or before the due date for payment.

17.7.3

Payment of a sum in accordance with this Clause 17.7 shall constitute a payment in full of the sum payable and shall be a good discharge to the payer (and those on whose behalf such payment is made) of the payer’s obligation to make such payment and the payer (and those on whose behalf such payment is made) shall not be obliged to see to the application of the payment as between those on whose behalf the payment is received.

17.8

Costs

Except where any Transaction Document (including Clause 17.9) provides otherwise, each party shall pay its own costs and expenses in relation to the negotiation, preparation and implementation of any Transaction Document or otherwise incurred in relation to it with a view to effecting the Transaction.

17.9

Stamp Duty, Fees and Taxes

Save as provided in Schedule 8, the Purchaser shall bear the cost of all SDLT, stamp duty reserve tax, stamp duty, any notarial fees and all registration and transfer taxes and duties or their equivalents in all jurisdictions where such fees, taxes and duties are payable as a result of the transactions contemplated by this Agreement (which, for the avoidance of doubt, does not include the Reorganisation except in relation to SDLT on the transfer of properties to the Group pursuant to the Reorganisation). The Purchaser shall be responsible for arranging the payment of such SDLT, stamp duty reserve tax, stamp duty and all other such fees, taxes and duties, including fulfilling any administrative or reporting obligation imposed by the jurisdiction in question in connection with the payment of such taxes and duties. The Purchaser shall indemnify the Sellers or any other member of the Sellers’ Group against any Losses suffered by the Sellers or member of the Sellers’ Group as a result of the Purchaser failing to comply with its obligations under this Clause 17.9.

17.10

Interest

If any party defaults in the payment when due of any sum payable under this Agreement or the Tax Indemnity its liability shall be increased to include interest on such sum from the date when such payment is due until the date of actual payment (after as well as before judgment) at a rate per annum of two per cent. above three-month LIBOR. Such interest shall accrue from day to day and shall be compounded monthly.

17.11

Grossing-up of Indemnity Payments, VAT

17.11.1

All sums payable under this Agreement shall be paid free and clear of all deductions, withholdings, set-offs or counterclaims whatsoever save only as may be required by applicable law, except, that, to the extent lawful, the payments due between the parties in relation to repayments of the Intra-Group and Intra-Group Receivables pursuant to Clause 6.5 may be netted against each other to produce a net sum. If any deductions or withholdings are required by applicable law the party making the payment shall (except in the case of any sum payable under Clause 14 or interest payable under Clause 17.10) be obliged to pay to the other party such sum as will after such deduction or withholding has been made leave the other party with the same amount as it would have been entitled to receive in the absence of any such requirement to make a deduction or withholding, provided that if either party to this Agreement shall have assigned or novated the benefit in whole or in part of this Agreement then the liability of the other party under this Clause 17.11.1 shall be limited to that (if any) which it would have been had no such assignment or novation taken place.

17.11.2

If any Tax Authority charges to Taxation any payment made under this Agreement pursuant to an indemnity, compensation or reimbursement provision, (other than Taxation attributable to a payment being treated for the Purchaser as an adjustment to the consideration for the Shares under the terms of the Agreement or Taxation attributable to a payment made under Clause 14) and any payments made by the Asset Transferee to E.ON AG under Schedule 9 (Transferring Assets) then, except to the extent that the amount of the indemnity, compensation or reimbursement provision has been increased to take account of the Taxation that will be charged on receipt, the amount so payable shall be grossed up by such amount as will ensure that after payment of the Taxation so charged there shall be left (after taking into account any Relief arising from the matter giving rise to the payment) a sum equal to the amount that would otherwise be payable under this Agreement, provided that if either party to this Agreement shall have assigned or novated the benefit in whole or in part of this Agreement then the liability of the other party under this Clause 17.11.2 shall be limited to that (if any) which it would have been had no such assignment or novation taken place.

17.11.3

The recipient of an amount paid under this Clause 17 shall claim from the appropriate Tax Authority any exemption, rate reduction, refund, credit or similar benefit (including pursuant to any relevant double tax treaty) to which it is entitled in respect of any deduction or withholding in respect of which a payment has been made pursuant to Clause 17.11.1 and, for such purposes shall, within any applicable time limits, submit any claims, notices, returns or applications and send a copy thereof to the payer.

17.11.4

If the recipient of a payment made under this Agreement receives a credit for or refund of any Taxation payable by it or similar benefit by reason of any deduction or withholding for or on account of Taxation then it shall reimburse to the other party such part of such additional amounts paid to it pursuant to Clause 17.11.1 above as the recipient of the payment certifies to the other party will leave it (after such reimbursement) in no better and no worse position than it would have been if the other party had not been required to make such deduction or withholding.

17.11.5

Where under the terms of this Agreement one party is liable to indemnify or reimburse another party in respect of any costs, charges or expenses, the payment shall be increased so as to include an amount equal to any VAT thereon not otherwise recoverable by the other party, subject to that party using all reasonable endeavours to recover such amount of VAT as may be practicable.

17.11.6

If any payment under this Agreement constitutes the consideration for a taxable supply for VAT purposes, then in addition to that payment the payer shall pay any VAT due against receipt of a valid VAT invoice.

17.12

Notices

17.12.1

Any notice or other communication in connection with this Agreement (each, a “Notice”) shall be:

(i)

in writing in English; and

(ii)

delivered by hand, sent by fax (provided that it is followed by a copy of the notice by post), registered post or courier using an internationally recognised courier company or, in the case of any request for a consent from the Purchaser in accordance with Clause 6.1, by electronic mail.

	17.12.2		A Notice to the Sellers or the Sellers’ Guarantor shall be sent to the following address, or such other person or address as the Sellers may notify to the Purchaser from time to time:
			E.ON UK plc
			Westwood Way Westwood Business Park Coventry CV4 8LG
			Fax: +44 2476 182210
			Attention: Company Secretary
			With a copy to:
			Dr Michael Moser at E.ON AG, E.ON-Platz 1, 40479 Düsseldorf, Germany.
			Matthew Middleditch and Roger Barron at Linklaters, One Silk Street, London EC2Y 8HQ.

	17.12.3		A Notice to E.ON AG shall be sent to the following address, or such other person or address as E.ON AG may notify to the Purchaser from time to time:
			E.ON AG
			E.ON-Platz 1 40479 Düsseldorf Germany
			Fax: +49 (211) 4579 14565
			Attention: Dr Michael Moser
			With a copy to:
			Matthew Middleditch and Roger Barron at Linklaters, One Silk Street, London EC2Y 8HQ.
			Fax: +44 20 7456 2222

	17.12.4		A Notice to the Purchaser shall be sent to the following address, or such other person or address as the Purchaser may notify to the Sellers from time to time:
			WPD Investment Holdings Limited
			Avonbank Feeder Road Bristol BS2 0TB
			Email address: dcoosthuizen@westernpower.co.uk (for requests under Clause 6)
			Attention: Sally A. Jones, Company Secretary
			With a copy to:
			Adam Signy at Simpson Thacher & Bartlett, LLP, CityPoint, One Ropemaker Street, London, EC1Y 9HU
			Fax: +44 20 7275 6502

	17.12.5		A Notice to the Purchaser’s Guarantor shall be sent to the following address, or such other person or address as the Purchaser’s Guarantor may notify to the Sellers from time to time:
			PPL Corporation
			Office of General Counsel Two North Ninth Street Allentown, PA 18101
			Fax: +1 610 774 4455 Attention: General Counsel
			With a copy to:
			Vince Pagano at Simpson Thacher & Bartlett, LLP, 425 Lexington Avenue, New York, NY 10017
			Fax: +212 455 2501
	17.12.6		A Notice shall be effective upon receipt and shall be deemed to have been received:

(i)

on the third day after posting, or if posted to or from a place outside the United Kingdom, the seventh day after posting, if delivered by registered post;

(ii)

at the time of delivery, if delivered by hand or courier; or

(iii)

at the time of transmission in legible form or evidenced by a transmission report from the machine from which the fax was sent which indicates that it was sent in its entirety to the fax number of the recipient, if delivered by fax;

provided that where delivery of a Notice occurs after 5.30pm in the relevant jurisdiction on any day, such Notice shall be deemed to have been received at 9.30am in the relevant jurisdiction on the next following Business Day.

17.13

Invalidity

17.13.1

If any provision in this Agreement shall be held to be illegal, invalid or unenforceable, in whole or in part, the provision shall apply with whatever deletion or modification is necessary so that the provision is legal, valid and enforceable and gives effect to the commercial intention of the parties.

17.13.2

To the extent it is not possible to delete or modify the provision, in whole or in part, under Clause 17.13.1, then such provision or part of it shall, to the extent that it is illegal, invalid or unenforceable, be deemed not to form part of this Agreement and the legality, validity and enforceability of the remainder of this Agreement shall, subject to any deletion or modification made under Clause 17.13.1, not be affected.

17.14

Counterparts

This Agreement may be entered into in any number of counterparts, all of which taken together shall constitute one and the same instrument. The parties may enter into this Agreement by executing any such counterpart.

17.15

Governing Law and Submission to Jurisdiction

17.15.1

This Agreement and the other Transaction Documents, save as expressly referred to therein, and any non-contractual obligations arising out of or in connection with them shall be governed by English law.

17.15.2

Subject to Clause 17.15.3, each of the Relevant Seller and the Purchaser irrevocably agrees that the courts of England are to have exclusive jurisdiction to settle any dispute which may arise out of or in connection with this Agreement and the documents to be entered into pursuant to it and that accordingly any proceedings arising out of or in connection with this Agreement and the documents to be entered into pursuant to it shall be brought in such courts. Each of the Relevant Seller and the Purchaser irrevocably submits to the jurisdiction of such courts and waives any objection to proceedings in any such court on the ground of venue or on the ground that proceedings have been brought in an inconvenient forum.

17.15.3

Notwithstanding the foregoing, each of the parties hereto agrees that it will not bring or support any civil, criminal or administrative claim, notice of claim, action, suit, order, proceeding or arbitration, at law or in equity, by or before any governmental authority, including but not limited to any action, cause of action, claim, cross-claim or third-party claim of any kind or description, whether in law or in equity, whether in contract or in tort or otherwise, against the Debt Financing Sources in any way relating to this Agreement or any of the transactions contemplated by this Agreement, including but not limited to any dispute arising out of or relating in any way to any agreement entered into by the Debt Financing Sources in connection with this Agreement or the performance thereof, in any forum other than the Supreme Court of the State of New York, County of New York, or, if under applicable law exclusive jurisdiction is vested in the Federal courts, the United States District Court for the Southern District of New York (and appellate courts thereof). The parties hereto further agree to irrevocably waive the right to trial by jury for any action, cause of action, claim, cross-claim or third party claim referenced in this paragraph. Nothing in this clause 18.16.4 will create or evidence or suggest exists (i) a cause of action or basis of claim against the Debt Financing Sources or (ii) a duty of care or other legal relationship owed by the Debt Financing Sources to any other person that would not otherwise have existed.

17.16

Appointment of Process Agent

17.16.1

E.ON AG hereby irrevocably appoints the Sellers’ Guarantor as its agent to accept service of process in any legal action or proceedings arising out of this Agreement, service upon whom shall be deemed completed whether or not forwarded to or received by E.ON AG.

17.16.2

The Purchaser’s Guarantor hereby irrevocably appoints the Purchaser as its agent to accept service of process in any legal action or proceedings arising out of this Agreement, service upon whom shall be deemed completed whether or not forwarded to or received by the Purchaser.

17.16.3

Nothing in this Agreement shall affect the right to serve process in any other manner permitted by law or the right to bring proceedings in any other jurisdiction for the purposes of the enforcement or execution of any judgment or other settlement in any other courts.

In witness whereof this Agreement has been duly executed.

SIGNED by on behalf of AVON ENERGY PARTNERS HOLDINGS:		}
SIGNED by on behalf of EAST MIDLANDS ELECTRICITY DISTRIBUTION HOLDINGS:		}
SIGNED by on behalf of E.ON AG:		}
SIGNED by on behalf of E.ON UK PLC:		}

SIGNED by on behalf of WPD INVESTMENT HOLDINGS LIMITED:		}
Name:
Title:

SIGNED by on behalf of PPL CORPORATION:		}
Name:
Title:

Schedule 1
The Companies and the Subsidiaries

1

Particulars of the Companies

1.1

Central Networks Limited

Name of Company:		Central Networks Limited
Registered number:		02366928
Registered office:		Westwood Way
		Westwood Business Park
		Coventry
		CV4 8LG
Date and place of incorporation:		1 April 1989, United Kingdom
Issued share capital:		496,655,789 ordinary shares of £0.25 each
Registered and beneficial shareholders and shares held:		Avon Energy Partners (496,655,789 ordinary shares)
Directors:		Fiona Scott Stark
		Brian Jefferson Tear
		E.ON UK Secretaries Limited
		E.ON UK Directors Limited
Secretary:		Deborah Gandley
Accounting reference date:		31 December
Auditors:		PricewaterhouseCoopers LLP

1.2

Central Networks East plc

Name of Company:		Central Networks East plc
Registered number:		02366923
Registered office:		Westwood Way
		Westwood Business Park
		Coventry
		CV4 8LG
Date and place of incorporation:		1 April 1989, United Kingdom
Issued share capital:		198,381,191 ordinary shares of 56
		9/11 pence each

Registered and beneficial shareholders and shares held:		EMEDH (198,381,191 ordinary shares)
Directors:		John Crackett
		Paul Golby
		Graeme Mark Thompson
Secretary:		Chantal Thomas
Accounting reference date:		31 December
Auditors:		PricewaterhouseCoopers LLP

2

Particulars of the Subsidiaries

2.1

Cell Site Connection Services Limited

Name of Company:		Cell Site Connection Services Limited
Registered number:		04566781
Registered office:		Westwood Way
		Westwood Business Park
		Coventry
		CV4 8LG
Date and place of incorporation:		18 October 2002, United Kingdom
Issued share capital:		1 ordinary share of £1
Registered and beneficial shareholder and shares held:		Central Networks Limited (1 ordinary share)
Directors:		Graeme Mark Thompson
		E.ON UK Directors Limited
Secretary:		E.ON UK Secretaries Limited
Accounting reference date:		31 December
Auditors:		None

2.2

Central Networks West plc

Name of Subsidiary:		Central Networks West plc
Registered number:		03600574
Registered office:		Westwood Way
		Westwood Business Park
		Coventry
		CV4 8LG
Date and place of incorporation:		20 July 1998, United Kingdom
Issued share capital:		50,000 ordinary shares of £1 each
Registered and beneficial shareholders and shares held:		Central Networks Limited (50,000 ordinary shares)
Directors:		John Crackett
		Paul Golby
		Graeme Mark Thompson
Secretary:		Chantal Thomas
Accounting reference date:		31 December
Auditors:		PricewaterhouseCoopers LLP

2.3

Central Networks Services Limited

Name of Subsidiary:		Central Networks Services Limited
Registered number:		03600545
Registered office:		Westwood Way
		Westwood Business Park
		Coventry
		CV4 8LG
Date and place of incorporation:		20 July 1998, United Kingdom
Issued share capital:		2 ordinary shares of £1 each
Registered and beneficial shareholder and shares held:		Central Networks Limited (2 ordinary shares)
Directors:		John Crackett
		John Colin Glasgow
		Christopher David Kingston
		James Christopher O’Sullivan
		Graeme Mark Thompson
Secretary:		E.ON UK Secretaries Limited
Accounting reference date:		31 December
Auditors:		PricewaterhouseCoopers LLP

2.4

Central Networks Contracting Limited

Name of Subsidiary:		Central Networks Contracting Limited
Registered number:		02710658
Registered office:		Westwood Way
		Westwood Business Park
		Coventry
		CV4 8LG
Date and place of incorporation:		29 April 1992
Issued share capital:		2 ordinary shares of £1 each

Registered and beneficial shareholder and shares held:		Central Networks Limited (2 ordinary shares)
Directors:		Graeme Mark Thompson
		E.ON Directors Limited
Secretary:		E.ON Secretaries Limited
Accounting reference date:		31 December
Auditors:		None

Schedule 2
The Material Properties

LEASEHOLD INFORMATION

Registered

Lease

Rent

Building

Property Address

Tenure

Title

Owner/Lessee

Rent (pa)

commencement

Lease end

Reviews

Landlord

Bilborough

E.ON Offices, Woolsthorpe Close, off Wigman Road, Bilborough

Leasehold

NT442026

E.ON UK plc

£142,500

22/11/2007

21/11/2016

3 yrly

Nottingham City Council

Castle Donington EA

Castle Donington Engineering Centre, Unit 1b, Sills Road, Willow Farm Business Park, Castle Donington, DE74 2US

Freehold

LT378253

Central Networks Services Limited

Castle View Logistics Hub

CN Logistics Hub, Birmingham New Road, Tipton, DY4 8JW

Leasehold

WM929793

E.ON UK plc

£146,158

25/01/2008

24/01/2023

5 yrly

Thomas Dudley Group Ltd, Dauntless Works, PO Box 28, Birmingham New Road, Dudley, DY1 4SN

Gloucester DC

Saw Mills End, Off Corinium Avenue, Gloucester, GL4 3BH

Freehold

GR330822

Central Networks Limited

Heckington Logistics (Station Rd)

Station Road, Heckington, Sleaford, NG34 9NF

Leasehold

LL320182

Central Networks East plc

£63,250

01/07/2010

30/06/2020

5 yrly

Melbourne Holdings Ltd, Station Road, Heckington, Sleaford, NG34 9NF

LEASEHOLD INFORMATION

Registered

Lease

Rent

Building

Property Address

Tenure

Title

Owner/Lessee

Rent (pa)

commencement

Lease end

Reviews

Landlord

Hereford RC

Westfields Trading Estate, Grandstand Road, Hereford, HR4 9NS

Freehold

HE40345

Central Networks West plc

Hinckley DC

Hammonds Way, Hinckley, Leicestershire, LE10 3EQ

Freehold

LT420979

Central Networks East plc

Huthwaite Logistics Centre

Gate 1, Nunn Brook Road, Huthwaite, Notts, NG17 2HZ

Freehold

NT455225

Central Networks East plc

Kettering Logistics (part of DC site)

Robinson Way, Kettering

Freehold

NN86760

Central Networks East plc

Ludlow RC

Ridings Road, Ludlow, Shropshire, SY8 1HR

Leasehold

SL131515

Central Networks Limited

£55,000

05/07/2000

04/07/2025

5 yrly, rent set at 2005 review

Pemberstone Partnership (no. 2) LLP, Whittington Hall, Whittington, Worcester

Moorgreen (Unit A)

Unit A Birch Park, Coombe Road, Moorgreen, Eastwood

Leasehold

Application pending

E.ON UK plc

£47,625

27/06/2006

26/06/2016

3 yrly, rent set at 2009 review

Maplebeck Holdings Limited, Maple House, Moorgreen Industrial Park, Eastwood, Notts, NG16 3QU

Moorgreen DC

Coombe Road, Off Engine Lane, Moorgreen Industrial Park, Eastwood, NG16 3QU

Leasehold

NT446546

E.ON UK plc

£85,720

28/12/2000

27/12/2015

5 yrly, review not implemented

RVB Investments Ltd

LEASEHOLD INFORMATION

Registered

Lease

Rent

Building

Property Address

Tenure

Title

Owner/Lessee

Rent (pa)

commencement

Lease end

Reviews

Landlord

Northampton (Riverside) RC

Museum Way, Riverside Park, Northampton, NN3 9HW

Leasehold

Unregistered

Central Networks East plc

£82,272

23/10/2000

22/10/2015

5 yrly, review not implemented

Goodshare Investments Ltd

Pegasus

Pegasus Business Park, East Midlands Airport, Castle Donington, Derbys, DE74 2TU

Leasehold

LT313433

Central Networks Services Limited

One Peppercorn

15/06/1999

14/06/2149

N/A

East Midlands International Airport Limited

Sleaford DC

East Road, Sleaford, Lincolnshire, NG34 7BY

Freehold

LL184945

Central Networks East plc

Stoke DC (excl Call Centre & S&S Club)

234 Victoria Road, Fenton, Stoke-On-Trent, ST4 2JA

Freehold

SF111112

Central Networks Limited

Telford RC

Waterloo Road, Ketley, Telford, TF1 5AZ

Freehold

SL 196868

Central Networks Limited

Tipton DC & Meter Station

Toll End Road, Tipton, West Midlands, DY4 0HH

Freehold

WM976597 (Believe part to be unregistered)

Central Networks Limited

Tipton Main block

Toll End Road, Tipton, West Midlands, DY4 0HH

Freehold

WM976597 (Believe part to be unregistered)

Central Networks Limited

LEASEHOLD INFORMATION

Registered

Lease

Rent

Building

Property Address

Tenure

Title

Owner/Lessee

Rent (pa)

commencement

Lease end

Reviews

Landlord

Tipton Training Academy

Toll End Road, Tipton, West Midlands, DY4 0HH

Freehold

WM976597 (Believe part to be unregistered)

Central Networks Limited

Warstock Road

Warstock Road, Birmingham, B14 4RJ

Freehold

WK185426 WM950457

Central Networks Limited

Worcester DC

Blackpole Road, Worcester, WR4 9TB

Freehold

WR124196

Central Networks West plc

Schedule 3
Closing Obligations
(Clause 7)

1		Sellers’ Obligations
1.1		General Obligations

On Closing, the Sellers shall deliver or make available to the Purchaser the following:

	1.1.1		evidence of the due fulfilment of the conditions set out in Clause 4 for which the Sellers are responsible;
	1.1.2		the Transitional Services Agreement duly executed by the Sellers’ Guarantor and Central Networks Limited;
	1.1.3		the Tax Indemnity duly executed by the Sellers;
	1.1.4		as evidence that each Relevant Seller and the Sellers’ Guarantor are authorised to execute this Agreement and the Tax Indemnity

	(i)		a copy of the minutes of a duly held meeting of the directors of each Relevant Seller (or a duly constituted committee thereof) authorising the execution by each Relevant Seller of this Agreement and the Tax Indemnity and any other agreements contemplated by the Transaction and, where such execution is authorised by a committee of the board of directors of each Relevant Seller, a copy of the minutes of the duly held meeting of the directors constituting such committee or relevant extract thereof;
	(ii)		a copy of any power of attorney conferring the authority,

in each case certified to be a true copy by a director or the secretary of each Relevant Seller or the Sellers’ Lawyers;

	1.1.5		(if the Purchaser so requires) an irrevocable power of attorney in a form reasonably required by the Purchaser duly executed by each Relevant Seller and any other registered owner of the Shares in favour of the Purchaser or its nominee(s) to enable the Purchaser (pending registration of the relevant transfers) to exercise all voting and other rights attaching to the Shares and to appoint proxies generally in respect of the Shares in a form reasonably required by the Purchaser;
	1.1.6		transfers of the Shares duly executed by the registered holders in favour of the Purchaser or as it may direct accompanied by the relative share certificates (or an express indemnity in a form reasonably satisfactory to the Purchaser in the case of any certificate found to be missing);
	1.1.7		duly executed transfers of the Transferring Properties capable of being transferred at Closing, together with the relative documents of title, where applicable, any applicable Property Third Party Consents in respect of the Transferring Properties in accordance with Schedule 8;

	1.1.8		the written resignations on customary terms to take effect on the date of Closing of any directors of any Group Company who are not members of the DLT (it being understood that the Sellers will use reasonable endeavours to facilitate such other resignations of directors of Group Companies as may be requested by the Purchaser not later than seven days before Closing);
	1.1.9		the written resignations of the auditors of each Group Company to take effect on the date of Closing, with acknowledgements signed by each of them in a form satisfactory to the Purchaser to the effect that they have no claim against any Group Company and containing the statement referred to in Section 519 of the Companies Act 2006 of the circumstances connected with their resignation, unless they consider there are no circumstances which need to be brought to the notice of the members or creditors of the Group Company;
	1.1.10		the common seal (if any), certificates of incorporation, statutory books of each Group Company (duly written up-to-date) and the share certificates in respect of the issued shares of each of the Subsidiaries;
	1.1.11		a copy of each bank mandate of each Group Company;
	1.1.12		copies of all forms for the transfer of the Transferring Intellectual Property Rights to the relevant Group Company that the relevant members of the Sellers’ Group and the E.ON AG Group are required to file pursuant to paragraph 1.1 of Schedule 11;
	1.1.13		the Degrouping Elections required to be made pursuant to Clause 8.6 of this Agreement;
	1.1.14		the Reverse Transitional Services Agreement duly executed by the Sellers’ Guarantor and Central Networks Limited;
	1.1.15		a duly executed deed of termination in relation to the Framework Agreement;
	1.1.16		the Directors’ Deed of Covenant duly executed by Avon Energy Partners and WPD Investment Holdings Limited; and
	1.1.17		the Transitional Trade Mark Licence duly executed by E.ON AG, Central Networks Limited and Central Networks East plc.

1.2

Board Resolutions of the Group Companies

1.2.1

On Closing, each Relevant Seller shall procure the passing of Board Resolutions of each Group Company inter alia:

	(i)		(in the case of the Companies) approving the registration of the share transfers referred to in paragraph 1.1.5 of this Schedule subject only to their being duly stamped;
	(ii)		accepting the resignations referred to in paragraph 1.1.8 of this Schedule and, subject to any necessary regulatory approvals, appointing such persons (within the maximum number permitted by the Articles of Association) as the Purchaser may nominate as directors and secretary;

	(iii)		accepting the resignations referred to in paragraph 1.1.9 of this Schedule and appointing as auditors of each Group Company such firm as the Purchaser may nominate;
	(iv)		changing its accounting reference date in accordance with instructions given by the Purchaser;
	(v)		changing the relevant Company’s registered office to a place nominated by the Purchaser; and
	(vi)		with effect from the end of the meeting, authorising the secretary to notify the specimen signatures of the new officers of the relevant Company in connection with each existing mandate given by the relevant Company for the operation of its bank accounts,