Exhibit 10(x)
 
AGREEMENT
NOVEMBER 2006
£100,000,000
 
CREDIT FACILITY
 
FOR
 
WESTERN POWER DISTRIBUTION (SOUTH WEST) PLC
 
ARRANGED BY
 
BARCLAYS CAPITAL
BAYERISCHE LANDESBANK acting through its London Branch
LLOYDS TSB BANK plc
as Mandated Lead Arrangers
 
WITH
 
LLOYDS TSB BANK plc
as Facility Agent
 

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CONTENTS
 

Clause
Page

1.
Interpretation
1
2.
Facilities
10
3.
Purpose
11
4.
Conditions Precedent
11
5.
Utilisation
11
6.
Extension Option
12
7.
Optional Currencies
13
8.
Repayment
16
9.
Prepayment and Cancellation
16
10.
Interest
18
11.
Terms
20
12.
Market Disruption
21
13.
Taxes
22
14.
Increased Costs
24
15.
Mitigation
25
16.
Payments
26
17.
Representations
28
18.
Information Covenants
30
19.
Financial Covenants
32
20.
General Covenants
34
21.
Default
37
22.
The Administrative Parties
39
23.
Evidence and Calculations
44
24.
Fees
44
25.
Indemnities and Break Costs
45
26.
Expenses
46
27.
Amendments and Waivers
46
28.
Changes to the Parties
47
29.
Disclosure of Information
50
30.
Set-off
50
31.
Pro Rata Sharing
51
32.
Severability
52
33.
Counterparts
52
34.
Notices
52
35.
Language
53
36.
Governing Law
54
37.
Enforcement
54

 

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Schedule
Page

 
1.
Original Parties
55
2.
Conditions precedent documents
56
3.
Form of Request
57
4.
Calculation of the Mandatory Cost
58
5.
Form of Transfer Certificate
60
6.
Form of Compliance Certificate
62

 

Signatories
63

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THIS AGREEMENT is dated            November 2006
 
BETWEEN:
 
(1)
WESTERN POWER DISTRIBUTION (SOUTH WEST) PLC (registered number 02366894) (the
Company);

 
(2)
BARCLAYS CAPITAL, BAYERISCHE LANDESBANK acting through its London Branch, and
LLOYDS TSB BANK plc each in this capacity as a Mandated Lead Arranger and
together in this capacity, the Mandated Lead Arrangers;

 
(3)
THE FINANCIAL INSTITUTIONS listed in Schedule 1 (Original Parties) as original
lenders (the Original Lenders); and

 
(4)
LLOYDS TSB BANK plc as facility agent (in this capacity the Facility Agent).

 
IT IS AGREED as follows:
 
1.
INTERPRETATION

 
1.1
Definitions

 
In this Agreement:
 
Act means the Electricity Act 1989 and, unless the context otherwise requires,
all subordinate legislation made pursuant thereto.
 
Administrative Party means a Mandated Lead Arranger or the Facility Agent.
 
Affiliate means a Subsidiary or a Holding Company of a person or any other
Subsidiary of that Holding Company.
 
Applicable Accounting Principles means those accounting principles, standards
and practices generally accepted in the United Kingdom and the accounting and
reporting requirements of the Companies Act 1985, in each case as used in the
Original Financial Statements.
 
Authority means The Gas and Electricity Markets Authority established under
Section 1 of the Utilities Act 2000.
 
Availability Period means the period from and including the date of this
Agreement to and including the date that is the Final Maturity Date.
 
Balancing and Settlement Code means the document, as modified from time to time,
setting out the electricity balancing and settlement arrangements designated by
the Secretary of State and adopted by The National Grid Company plc (Registered
No. 2366977) or its successor pursuant to its transmission licence.
 
Balancing and Settlement Code Framework means the agreement of that title, in
the form approved by the Secretary of State, as amended from time to time, to
which the Company is a party and by which the Balancing and Settlement Code is
made binding upon the Company.
 
Break Costs means the amount (if any) which a Lender is entitled to receive
under this Agreement as compensation if any part of a Loan or overdue amount is
prepaid.
 
Business Day means a day (other than a Saturday or a Sunday) on which commercial
banks are open in London and:
 

 
(a)
if on that day a payment in or a purchase of a currency (other than euro) is to
be made, the principal financial centre of the country of that currency; or

 

 
(b)
if on that day a payment in or purchase of euro is to be made, which is also a
TARGET Day.

 
Commitment means:
 

 
(a)
for an Original Lender, the amount set opposite its name in Schedule 1 (Original
Parties) under the heading "Commitments" and the amount of any other Commitment
it acquires; and

 

 
(b)
for any other Lender, the amount of any other Commitment it acquires,

 
to the extent not cancelled, transferred or reduced under this Agreement.
 
Compliance Certificate means a certificate substantially in the form of Schedule
6 (Form of Compliance Certificate) setting out, among other things, calculations
of the financial covenants.
 
Default means:
 

 
(a)
an Event of Default; or

 

 
(b)
an event which would be (with the lapse of time, the expiry of a grace period,
the giving of notice or the making of any determination under the Finance
Documents or any combination of them) an Event of Default.

 
Environmental Law means all regulations and other laws concerning the protection
of human health or the environment;
 
euro or euros or € means the single currency of the Participating Member States.
 
Event of Default means an event specified as such in this Agreement.
 
Extended Final Maturity Date means the date specified as such in the notice
exercising the Extension Option provided by the Company under Clause 6
(Extension Option) , being a date falling no later than the day falling 364 days
after the then current Final Maturity Date.
 
Extension Option means the option of the Company under Clause 6 (Extension
Option) to extend the Final Maturity Date of the Facility.
 
Facility means the revolving credit facility (incorporating a term-out option
and an extension option) made available under this Agreement and described in
Clause 2.1 (Facility).
 
Facility Office means the office(s) notified by a Lender to the Facility Agent:
 

 
(a)
on or before the date it becomes a Lender; or

 

 
(b)
by not less than five Business Days' notice,

 
as the office(s) through which it will perform its obligations under this
Agreement.
 
Fee Letter means any letter entered into by reference to this Agreement between
one or more Administrative Parties and the Company setting out the amount of
certain fees referred to in the Agreement.
 
Final Maturity Date means:
 

 
(a)
the date which falls 364 days after (and including) the date of this Agreement
(unless extended in accordance with Clause 2.3 (Term-out Option) or Clause 6
(Extension Option));

 

 
(b)
if the Extension Option is exercised, the Extended Final Maturity Date; or

 

 
(c)
if the Term-out Option is exercised, the Term-out Repayment Date.

 
Finance Document means:
 

 
(a)
this Agreement;

 

 
(b)
a Fee Letter;

 

 
(c)
a Transfer Certificate; or

 

 
(d)
any other document designated as such by the Facility Agent and the Company.

 
Finance Party means a Lender or an Administrative Party.
 
Financial Indebtedness means any indebtedness for or in respect of:
 

 
(a)
moneys borrowed;

 

 
(b)
any acceptance credit;

 

 
(c)
any bond, note, debenture, loan stock or other similar instrument;

 

 
(d)
any redeemable preference share;

 

 
(e)
any finance or capital lease;

 

 
(f)
receivables sold or discounted (otherwise than on a non-recourse basis);

 

 
(g)
the acquisition cost of any asset to the extent payable after its acquisition or
possession by the party liable where the deferred payment is arranged primarily
as a method of raising finance or financing the acquisition of that asset;

 

 
(h)
any derivative transaction protecting against or benefiting from fluctuations in
any rate or price (and, except for non-payment of an amount, the then mark to
market value of the derivative transaction will be used to calculate its
amount);

 

 
(i)
any other transaction (including any forward sale or purchase agreement) which
has the commercial effect of a borrowing;

 

 
(j)
any counter-indemnity obligation in respect of any guarantee, indemnity, bond,
letter of credit or any other instrument issued by a bank or financial
institution; or

 
any guarantee, indemnity or similar assurance against financial loss of any
person in respect of any item referred to in paragraphs (a) to (j) above.
 
Group means the Company and its Subsidiaries.
 
Holding Company means a holding company within the meaning of section 736 of the
Companies Act 1985.
 
Increased Cost means:
 

 
(a)
an additional or increased cost;

 

 
(b)
a reduction in the rate of return under a Finance Document or on its overall
capital; or

 

 
(c)
a reduction of an amount due and payable under any Finance Document,

 
which is incurred or suffered by a Finance Party or any of its Affiliates but
only to the extent attributable to that Finance Party having entered into any
Finance Document or funding or performing its obligations under any Finance
Document.
 
Lender means:
 

 
(a)
an Original Lender; or

 

 
(b)
any person which becomes a Lender after the date of this Agreement.

 
LIBOR means for a Term of any Loan or overdue amount:
 

 
(a)
the applicable Screen Rate; or

 

 
(b)
if no Screen Rate is available for the relevant currency or Term of that Loan or
overdue amount, the arithmetic mean (rounded upward to four decimal places) of
the rates, as supplied to the Facility Agent at its request, quoted by the
Reference Banks to leading banks in the London interbank market,

 
as of 11.00 a.m. on the Rate Fixing Day for the offering of deposits in the
currency of that Loan or overdue amount for a period comparable to that Term.
 
Licence means:
 

 
(a)
the electricity distribution licence made and treated as granted to the Company
under Section 6(1)(c) of the Act pursuant to a licensing scheme made by the
Secretary of State under Part II of Schedule 7 to the Utilities Act 2000 on 28
September 2001; or

 

 
(b)
by any statutory amendment or replacement licence or licences granted pursuant
to the Utilities Act 2000 which permit the Company to distribute electricity in
the Authorised Area;

 
Loan means, unless otherwise stated in this Agreement, the principal amount of
each borrowing under this Agreement or the principal amount outstanding of that
borrowing.
 
Majority Lenders means, at any time, Lenders:
 

 
(a)
whose share in the outstanding Loans and whose undrawn Commitments then
aggregate 662/3% or more of the aggregate of all the outstanding Loans and the
undrawn Commitments of all the Lenders;

 

 
(b)
if there is no Loan then outstanding, whose undrawn Commitments then aggregate
662/3% or more of the Total Commitments; or

 

 
(c)
if there is no Loan then outstanding and the Total Commitments have been reduced
to zero, whose Commitments aggregated 662/3% or more of the Total Commitments
immediately before the reduction.

 
Mandatory Cost means the cost of complying with certain regulatory requirements,
expressed as a percentage rate per annum and calculated by the Facility Agent
under Schedule 4 (Calculation of the Mandatory Cost).
 
Margin means the percentage rate per annum determined to be the Margin in
accordance with Clause 10.5(a) (Margin), as adjusted from time to time in
accordance with Clauses 10.5(b) to 10.5(e) (Margin).
 
Material Adverse Effect means something having a material adverse effect on the
Company's ability to perform its payment obligations under this Agreement.
 
Material Subsidiary means, at any time, a Subsidiary of the Company whose gross
assets or gross revenues (excluding intra-Group items) then equal or exceed 15%
of the gross assets or gross revenues of the Group.
 
For this purpose:
 

 
(a)
the gross assets or gross revenues of a Subsidiary of the Company will be
determined from its financial statements (unconsolidated if it has Subsidiaries)
upon which the latest audited financial statements of the Group have been based;

 

 
(b)
if a Subsidiary of the Company becomes a member of the Group after the date on
which the latest audited financial statements of the Group have been prepared,
the gross assets or gross revenues of that Subsidiary will be determined from
its latest financial statements;

 

 
(c)
the gross assets or gross revenues of the Group will be determined from its
latest audited financial statements, adjusted (where appropriate) to reflect the
gross assets or gross revenues of any company or business subsequently acquired
or disposed of; and

 

 
(d)
if a Material Subsidiary disposes of all or substantially all of its assets to
another Subsidiary of the Company, it will immediately cease to be a Material
Subsidiary and the other Subsidiary (if it is not already) will immediately
become a Material Subsidiary; the subsequent financial statements of those
Subsidiaries and the Group will be used to determine whether those Subsidiaries
are Material Subsidiaries or not.

 
If there is a dispute as to whether or not a company is a Material Subsidiary, a
certificate of the auditors of the Company will be, in the absence of manifest
error, conclusive.
 
Maturity Date means the last day of the Term of a Loan (other than a Term-Out
Loan) and in the case of a Term-Out Loan the date specified as such in the
Request for that Term-Out Loan.
 
Moody's means Moody's Investors' Services, Inc. (or any successor to its ratings
business).
 
OFGEM means the Office of Gas and Electricity Markets.
 
Original Financial Statements means the audited consolidated financial
statements of the Company for the year ended 31 March 2006.
 
Participating Member States means a member state of the European Community that
adopts the euro as its lawful currency under the legislation of the European
Union for European Monetary Union.
 
Party means a party to this Agreement.
 
Pro Rata Share means:
 

   (a)
for the purpose of determining a Lender's share in a utilisation of a Facility,
the proportion which its Commitment under that Facility bears to all the
Commitments under that Facility; and

 

 
(b)
for any other purpose on a particular date:

 

 
(i)
the proportion which a Lender's share of the Loans (if any) bears to all the
Loans;

 

 
(ii)
if there is no Loan outstanding on that date, the proportion which its
Commitment bears to the Total Commitments on that date;

 

 
(iii)
if the Total Commitments have been cancelled, the proportion which its
Commitments bore to the Total Commitments immediately before being cancelled; or

 

 
(iv)
when the term is used in relation to a particular Facility, the above
proportions but applied only to the Loans and Commitments for that Facility.

 
For the purpose of subparagraph (iv) above, the Facility Agent will determine,
in the case of a dispute whether the term in any case relates to a particular
Facility.
 
PUHCA means the Public Utility Holding Company Act of 1935, as amended, of the
United States of America.
 
Rate Fixing Day means:
 

 
(a)
the first day of a Term for a Loan denominated in Sterling; or

 

 
(b)
the second Business Day before the first day of a Term for a Loan denominated in
any other currency;

 
or such other day as the Facility Agent determines is generally treated as the
rate fixing day by market practice in the relevant interbank market.
 
Reference Banks means the Facility Agent, Barclays Bank PLC and Bayerische
Landesbank acting through its London branch and any other bank or financial
institution appointed as such by the Facility Agent under this Agreement.
 
Repeating Representations means the representations which are deemed to be
repeated under this Agreement.
 
Request means a request for a Loan, substantially in the form of Schedule 3
(Form of Request).
 
Rollover Loan means one or more Loans (other than a Term-Out Loan):
 

 
(a)
to be made on the same day that a maturing Loan is due to be repaid;

 

 
(b)
the aggregate amount of which is equal to or less than the maturing Loan;

 

 
(c)
in the same currency as the maturing Loan; and

 

 
(d)
to be made for the purpose of refinancing a maturing Loan.

 
S&P means Standard & Poor's Corporation (a division of the McGraw-Hill
Companies, Inc) (or any successor to its ratings business).
 
Screen Rate means the British Bankers Association Interest Settlement Rate (if
any) for the relevant currency and Term displayed on the appropriate page of the
Telerate screen selected by the Facility Agent. If the relevant page is replaced
or the service ceases to be available, the Facility Agent (after consultation
with the Company and the Lenders) may specify another page or service displaying
the appropriate rate.
 
Secretary of State means the Secretary of State for Trade and Industry.
 
Security Interest means any mortgage, pledge, lien, charge, assignment,
hypothecation or security interest or any other agreement or arrangement having
a similar effect.
 
Sterling and £ mean the lawful currency of the United Kingdom.
 
Subsidiary means:
 

 
(a)
a subsidiary within the meaning of section 736 of the Companies Act 1985; and

 

 
(b)
unless the context otherwise requires, a subsidiary undertaking within the
meaning of section 258 of the Companies Act 1985.

 
TARGET Day means a day on which the Trans-European Automated Real-time Gross
Settlement Express Transfer payment system is open for the settlement of
payments in euro.
 
Tax means any tax, levy, impost, duty or other charge or withholding of a
similar nature (including any related penalty or interest).
 
Tax Deduction means a deduction or withholding for or on account of Tax from a
payment under a Finance Document.
 
Tax Payment means a payment made by the Company to a Finance Party in any way
relating to a Tax Deduction or under any indemnity given by the Company in
respect of Tax under any Finance Document.
 
Term means each period determined under this Agreement by reference to which
interest on a Loan or an overdue amount is calculated.
 
Term-Out Loans means the Loans (if any) drawn under Clause 2.3 (Term-out
Option).
 
Term-Out Option means the option of the Company in Clause 2.3 (Term-out Option)
to draw Loans as Term-Out Loans.
 
Term-out Repayment Date means the date specified as such in the notice
exercising the Term-Out Option provided by the Company under Clause 2.3
(Term-out Option), being a date falling no later than one year after the Final
Maturity Date (as determined before the exercise of the Term-out Option).
 
Total Commitments means the aggregate of the Commitments of all the Lenders
being the total amount specified as such in Schedule 1 (Original Parties) at the
date of this Agreement.
 
Transfer Certificate means a certificate, substantially in the form of Schedule
5 (Form of Transfer Certificate), with such amendments as the Facility Agent may
approve or reasonably require or any other form agreed between the Facility
Agent and the Company.
 
U.K. means the United Kingdom.
 
U.S. Dollars and U.S.$ means the lawful currency for the time being of the
United States of America.
 
Utilisation Date means each date on which a Facility is utilised.
 
1.2
Construction

 
(a)
The following definitions have the meanings given to them in Clause 19.1
(Financial Covenants):

 

 
(i)
Consolidated EBITDA;

 

 
(ii)
Interest Payable;

 

 
(iii)
Measurement Period;

 

 
(iv)
Regulatory Asset Base; and

 

 
(v)
Total Gross Debt.

 
(b)
In this Agreement, unless the contrary intention appears, a reference to:

 

 
(i)
an amendment includes a supplement, novation, restatement or re-enactment and
amended will be construed accordingly;

 
assets includes present and future properties, revenues and rights of every
description;
 
an authorisation includes an authorisation, consent, approval, resolution,
licence, exemption, filing, registration or notarisation;
 
Barclays Capital is a reference to Barclays Capital, the investment banking
division of Barclays Bank PLC;
 
disposal means a sale, transfer, grant, lease or other disposal, whether
voluntary or involuntary, and dispose will be construed accordingly;
 
indebtedness includes any obligation (whether incurred as principal or as
surety) for the payment or repayment of money;
 
know your customer requirements are the identification checks that a Finance
Party requests in order to meet its obligations under any applicable law or
regulation to identify a person who is (or is to become) its customer;
 
a person includes any individual, company, corporation, unincorporated
association or body (including a partnership, trust, joint venture or
consortium), government, state, agency, organisation or other entity whether or
not having separate legal personality;
 
a regulation includes any regulation, rule, official directive, request or
guideline (whether or not having the force of law but, if not having the force
of law, being of a type with which any person to which it applies is accustomed
to comply) of any governmental, inter-governmental or supranational body,
agency, department or regulatory, self-regulatory or other authority or
organisation;
 
the Winding-up of a person also includes the administration, dissolution or
liquidation or other like process of that person, any composition or arrangement
with the creditors, amalgamation, reconstruction, reorganisation or
consolidation pursuant to Part XIII of the Companies Act 1985 proposed or
carried out in respect of that person or a company voluntary arrangement
pursuant to the Insolvency Act 1986 carried out or proposed in respect of that
person;
 

 
(ii)
a currency is a reference to the lawful currency for the time being of the
relevant country;

 

 
(iii)
a Default being outstanding means that it has not been remedied or waived;

 

 
(iv)
a provision of law is a reference to that provision as extended, applied,
amended or re-enacted and includes any subordinate legislation;

 

 
(v)
a Clause, a Subclause or a Schedule is a reference to a clause or subclause of,
or a schedule to, this Agreement;

 

 
(vi)
a person includes its successors in title, permitted assigns and permitted
transferees;

 

 
(vii)
a Finance Document or another document is a reference to that Finance Document
or other document as amended; and

 

 
(viii)
a time of day is a reference to London time.

 
(c)
Unless the contrary intention appears, a reference to a month or months is a
reference to a period starting on one day in a calendar month and ending on the
numerically corresponding day in the next calendar month or the calendar month
in which it is to end, except that:

 

 
(i)
if the numerically corresponding day is not a Business Day, the period will end
on the next Business Day in that month (if there is one) or the preceding
Business Day (if there is not);

 

 
(ii)
if there is no numerically corresponding day in that month, that period will end
on the last Business Day in that month; and

 

 
(iii)
notwithstanding subparagraph (i) above, a period which commences on the last
Business Day of a month will end on the last Business Day in the next month or
the calendar month in which it is to end, as appropriate.

 
(d)
Unless expressly provided to the contrary in a Finance Document, a person who is
not a party to a Finance Document may not enforce any of its terms under the
Contracts (Rights of Third Parties) Act 1999 and notwithstanding any term of any
Finance Document, the consent of any third party is not required for any
variation (including any release or compromise of any liability) or termination
of that Finance Document.

 
(e)
Unless the contrary intention appears:

 

 
(i)
a reference to a Party will not include that Party if it has ceased to be a
Party under this Agreement;

 

 
(ii)
a word or expression used in any other Finance Document or in any notice given
in connection with any Finance Document has the same meaning in that Finance
Document or notice as in this Agreement; and

 

 
(iii)
any obligation of the Company under the Finance Documents which is not a payment
obligation remains in force for so long as any payment obligation of the Company
is or may be outstanding under the Finance Documents.

 
(f)
The headings in this Agreement do not affect its interpretation.

 
2.
FACILITIES

 
2.1
Facility

 
Subject to the terms of this Agreement, the Lenders make available to the
Company a revolving loan facility with an extension option and a term-out option
denominated in Sterling in an aggregate amount equal to the Total Commitments.
 
2.2
Nature of a Finance Party's rights and obligations

 
Unless otherwise agreed by all the Finance Parties:
 

 
(a)
the obligations of a Finance Party under the Finance Documents are several;

 

 
(b)
failure by a Finance Party to perform its obligations does not affect the
obligations of any other Party under the Finance Documents;

 

 
(c)
no Finance Party is responsible for the obligations of any other Finance Party
under the Finance Documents;

 

 
(d)
the rights of a Finance Party under the Finance Documents are separate and
independent rights;

 

 
(e)
a debt arising under the Finance Documents to a Finance Party is a separate and
independent debt; and

 

 
(f)
a Finance Party may, except as otherwise stated in the Finance Documents,
separately enforce those rights.

 
2.3
Term-out Option

 
(a)
The Company may on one occasion only, by delivery of a notice to the Facility
Agent (who shall send a copy of the same to the Lenders) not earlier than 45
days prior to the then applicable Final Maturity Date, elect to draw one or more
Loans (each a Term-Out Loan) each with the same Utilisation Date falling prior
to the then applicable Final Maturity Date and each with the same Maturity Date
being a date after the then current Final Maturity Date, but no later than the
date falling one year after the then applicable Final Maturity Date (such
selected date being the Term-out Repayment Date). The delivery of this notice
constitutes the exercise of the Term-Out Option by the Company.

 
(b)
Any Loan outstanding after the date of the exercise of the Term-Out Option must
be repaid on its Maturity Date.

 
3.
PURPOSE

 
3.1
Loans

 
Each Loan may be used for the core working capital requirements of the Company
and in compliance with the Licence.
 
3.2
No obligation to monitor

 
No Finance Party is bound to monitor or verify the utilisation of a Facility.
 
4.
CONDITIONS PRECEDENT

 
4.1
Conditions precedent documents

 
A Request may not be given until the Facility Agent has notified the Company and
the Lenders that it has received all of the documents and evidence set out in
Schedule 2 (Conditions precedent documents) in form and substance satisfactory
to the Facility Agent. The Facility Agent must give this notification to the
Company and the Lenders promptly upon being so satisfied.
 
4.2
Further conditions precedent

 
The obligations of each Lender to participate in any Loan are subject to the
further conditions precedent that on both the date of the Request and the
Utilisation Date for that Loan:
 

 
(a)
the Repeating Representations are correct in all material respects; and

 

 
(b)
no Default or, in the case of a Rollover Loan, no Event of Default is
outstanding or would result from the Loan.

 
4.3
Maximum number

 
Unless the Facility Agent agrees, a Request may not be given if, as a result,
there would be more than 15 Loans outstanding.
 
5.
UTILISATION

 
5.1
Giving of Requests

 
(a)
The Company may borrow a Loan by giving to the Facility Agent a duly completed
Request.

 
(b)
Unless the Facility Agent otherwise agrees, the latest time for receipt by the
Facility Agent of a duly completed Request is 11.00 a.m. one Business Day before
the Rate Fixing Day for the proposed borrowing.

 
(c)
Each Request is irrevocable.

 
5.2
Completion of Requests

 
A Request for a Loan will not be regarded as having been duly completed unless:
 

 
(a)
it identifies the Facility the Loan applies to;

 

 
(b)
the Utilisation Date is a Business Day falling within the Availability Period;

 

 
(c)
The amount of the Loan requested is:

 

 
(i)
a minimum of £5,000,000 or its equivalent in accordance with Clause 7.5
(Optional Currency equivalents), and an integral multiple of 1,000,000 units of
that currency;

 

 
(ii)
the maximum undrawn amount available under this Agreement for Loans under the
relevant Facility on the proposed Utilisation Date; or

 

 
(iii)
such other amount as the Facility Agent may agree; and

 

 
(d)
the proposed Term complies with this Agreement.

 
Only one Loan may be requested in a Request.
 
5.3
Advance of Loan

 
(a)
The Facility Agent must promptly notify each Lender of the details of the
requested Loan and the amount of its share in that Loan.

 
(b)
The amount of each Lender's share of the Loan will be its Pro Rata Share on the
proposed Utilisation Date.

 
(c)
No Lender is obliged to participate in a Loan if as a result:

 

 
(i)
its share in the Loans under a Facility would exceed its Commitment for that
Facility; or

 

 
(ii)
the Loans would exceed the Total Commitments.

 
(d)
If the conditions set out in this Agreement have been met, each Lender must make
its share in the Loan available to the Facility Agent for the Company on the
Utilisation Date.

 
6.
EXTENSION OPTION

 
(a)
The Company may request that the Final Maturity Date for all the Lenders be
extended for a further period of 364 days by giving notice to the Facility Agent
no more than 60 days and not less than 45 days before the Final Maturity Date
for all the Lenders. Promptly upon receipt of such notice the Facility Agent
shall inform each Lender that the Company has requested the extension of the
Final Maturity Date under this Clause.

 
(b)
The Company may only request the extension of the Final Maturity date under
paragraph (a) above, if it has not exercised the Term-out Option.

 
(c)
If any Lender agrees to the request by the date falling 30 days before the Final
Maturity Date its Final Maturity Date will be extended for a further period of
364 days. However, the Commitment of each Lender which did not agree to the
request will be automatically cancelled on its Final Maturity Date. Each Lender
will notify the Facility Agent whether it agrees to an extension of its Final
Maturity Date under this Clause by the date falling 30 days before the Final
Maturity Date.

 
(d)
The Facility Agent will notify the Company of each Lender's decision promptly
after it has received notice from each Lender under paragraph (c) above.

 
(e)
Any request for an extension under this Clause is irrevocable.

 
7.
OPTIONAL CURRENCIES

 
7.1
General

 
In this Clause:
 
Agent's Spot Rate of Exchange means the Facility Agent's spot rate of exchange
for the purchase of the relevant currency in the London foreign exchange market
with Sterling at or about 11.00 a.m. on a particular day.
 
Optional Currency means any currency (other than Sterling) in which a Loan may
be denominated under this Agreement.
 
Pre-approved Currency means U.S.$ and euro.
 
Sterling Amount of a Loan or part of a Loan means:
 

 
(a)
if the Loan is denominated in Sterling, its amount; or

 

 
(b)
in the case of any Loan denominated in an Optional Currency, its equivalent in
Sterling calculated on the basis of the Agent's Spot Rate of Exchange one
Business Day before the Rate Fixing Day for that Term.

 
7.2
Selection

 
(a)
The Company must select the currency of a Loan in its Request. The Company may
select Sterling or an Optional Currency for a Loan.

 
(b)
Unless the Facility Agent otherwise agrees, the Loans may not be denominated at
any one time in more than three currencies.

 
7.3
Selection of Optional Currencies

 
(a)
A Loan may be denominated in an Optional Currency for a Term if:

 

 
(i)
that Optional Currency is readily available in the amount required and freely
convertible into Sterling in the relevant interbank market on the Rate Fixing
Day and the first day of that Term; and

 

 
(ii)
that Optional Currency is a Pre-approved Currency or has been previously
approved by the Facility Agent (acting on the instruction of all the Lenders).

 
(b)
If the Facility Agent has received a request from the Company for a currency to
be approved as an Optional Currency (other than a Pre-approved Currency), the
Facility Agent must, within five Business Days, confirm to the Company:

 

 
(i)
whether or not the Lenders have given their approval; and

 

 
(ii)
if approval has been given, the minimum amount (and, if required, integral
multiples) for any Loan in that currency.

 
7.4
Revocation of currency

 
(a)
Notwithstanding any other term of this Agreement, if before 9.30 a.m. on any
Rate Fixing Day the Facility Agent receives notice from a Lender that:

 

 
(i)
the Optional Currency requested is not readily available to it in the relevant
interbank market in the amount and for the period required; or

 

 
(ii)
participating in a Loan in the proposed Optional Currency might contravene any
law or regulation applicable to it,

 
the Facility Agent must give notice to the Company to that effect promptly and
in any event before 11.00 a.m. on that day.
 
(b)
In this event:

 

 
(i)
that Lender must participate in the Loan in Sterling; and

 

 
(ii)
the share of that Lender in the Loan and any other similarly affected Lender(s)
will be treated as a separate Loan denominated in Sterling during that Term.

 
(c)
Any part of a Loan treated as a separate Loan under this Subclause will not be
taken into account for the purposes of any limit on the number of Loans or
currencies outstanding at any one time.

 
(d)
A Loan will still be treated as a Rollover Loan if it is not denominated in the
same currency as the maturing Loan by reason only of the operation of this
Subclause.

 
7.5
Optional Currency equivalents

 
(a)
Except as expressly provided in this Agreement, the equivalent in Sterling of a
Loan or part of a Loan in an Optional Currency for the purposes of calculating:

 

 
(i)
whether any limit under this Agreement has been exceeded;

 

 
(ii)
the amount of a Loan;

 

 
(iii)
the share of a Lender in a Loan;

 

 
(iv)
the amount of any repayment of a Loan; or

 

 
(v)
the undrawn amount of a Lender's Commitment,

 
is its Sterling Amount.
 
(b)
The rate of exchange to be used for calculating the amount in Sterling of any
repayment or prepayment of a Term-Out Loan in an Optional Currency is that last
used for determining the amount of the Term-Out Loan in that Optional Currency.

 
7.6
Term-Out Loans - change of currency

 
(a)
A Term-Out Loan will remain denominated in the same currency through successive
Terms, unless the currency is changed under paragraph (c) below.

 
(b)
The Company may change the currency of a Term-Out Loan with effect from the
start of a Term by giving notice to the Facility Agent by 9.00 a.m. three
Business Days before the first day of that Term. The Term-Out Loan will remain
denominated in that currency until it is changed again under this Subclause.

 
(c)
If a Term-Out Loan is to be denominated in different currencies during
successive Terms:

 

 
(i)
the Company must repay that Term-Out Loan on the last day of its current Term in
the currency in which it is then denominated (the old currency); and

 

 
(ii)
the Lenders must, subject to the terms of this Agreement, re-advance the
Term-Out Loan in the currency in which the Company requires the Term-Out Loan to
be denominated for the next Term (the new currency).

 
The amount of the Loan in the new currency will be calculated by reference to
its Sterling Amount.
 
(d)
Alternatively, if the Facility Agent and the Company agree:

 

 
(i)
the Facility Agent may apply the amount (or so much of that amount as is
necessary) of the Term-Out Loan in the new currency to purchase an amount of the
old currency sufficient to discharge the obligation of the Company to repay the
Term-Out Loan in the old currency;

 

 
(ii)
the Facility Agent must apply any amount of the old currency purchased under
subparagraph(i) above towards repaying the Term-Out Loan in the old currency;

 

 
(iii)
the Facility Agent will promptly notify the Company if there is a shortfall or
an excess;

 

 
(iv)
if there is a shortfall, the Company must pay to the Facility Agent on the date
the Term-Out Loan is due to be repaid in the old currency an amount in the old
currency equal to the shortfall; and

 

 
(v)
if there is an excess, the Facility Agent must pay to the Company on the date
the Term-Out Loan is due to be repaid in the old currency an amount in the new
currency equal to the excess.

 
If the day on which the old currency is due to be repaid is not also a Business
Day for the new currency:
 

 
(vi)
the Facility Agent must notify the Company and the Lenders promptly;

 

 
(vii)
the Term-Out Loan will remain in the old currency until the next day which is a
Business Day for both the old and the new currencies; and

 

 
(viii)
during this period, the Term-Out Loan will have Terms running from one Business
Day to the next Business Day.

 
The Company must indemnify the Facility Agent against any loss or liability
incurred by the Facility Agent as a result of any foreign exchange contract
entered into for the purpose of this Clause.
 
7.7
Term-Out Loans - continuing in same Optional Currency

 
(a)
If a Term-Out Loan is to be denominated in the same Optional Currency during two
successive Terms, the Facility Agent must calculate the amount of the Term-Out
Loan in the Optional Currency for the second of those Terms.

 
(b)
The amount of the Term-Out Loan in the Optional Currency for the second Term
will be the amount determined by notionally converting into that Optional
Currency the Sterling Amount of the Term-Out Loan on the basis of the Agent's
Spot Rate of Exchange one Business Day before the Rate Fixing Day for that Term.

 
(c)
If the amount calculated is less than the existing amount of that Term-Out Loan
in the Optional Currency during the first Term, the Company must pay, subject to
paragraph (e) below, on the last day of the first Term an amount equal to the
difference.

 
(d)
If the amount calculated is more than the existing amount of that Term-Out Loan
in the Optional Currency during the first Term, each Lender must pay, subject to
paragraph (e) below, on the last day of the first Term its Pro Rata Share of the
difference.

 
(e)
If the calculation made by the Facility Agent under paragraph (a) above shows
that the amount of the Term-Out Loan in the Optional Currency has increased or
decreased by less than 5% since it was borrowed or (if later) the most recent
adjustment under paragraph (c) or (d) above, no payment is required under
paragraph (c) or (d) above.

 
7.8
Notification

 
The Facility Agent must notify the Lenders and the Company of the relevant
Sterling Amount (and the applicable Agent's Spot Rate of Exchange) promptly
after they are ascertained.
 
8.
REPAYMENT

 
8.1
Repayment of Loans

 
(a)
The Company must repay each Loan (other than a Term-Out Loan) in full on its
Maturity Date. No Loan may be outstanding after the applicable Final Maturity
Date.

 
(b)
Subject to the other terms of this Agreement, any amounts repaid under paragraph
(a) above may be re-borrowed.

 
8.2
Repayment of Term-Out Loans

 
The Company must repay all Term-Out Loans in full on the Term-out Repayment
Date.
 
9.
PREPAYMENT AND CANCELLATION

 
9.1
Mandatory prepayment - illegality

 
(a)
A Lender must notify the Company promptly if it becomes aware that it is
unlawful in any jurisdiction for that Lender to perform any of its obligations
under a Finance Document or to fund or maintain its share in any Loan.

 
(b)
After notification under paragraph (a) above:

 

 
(i)
the Company must repay or prepay the share of that Lender in each Loan made to
it on the date specified in paragraph (c) below; and

 

 
(ii)
the Commitments of that Lender will be immediately cancelled.

 
(c)
The date for repayment or prepayment of a Lender's share in a Loan will be:

 

 
(i)
the Business Day following receipt by the Company of notice from the Lender
under paragraph (a) above; or

 

 
(ii)
if later, the latest date allowed by the relevant law.

 
9.2
Mandatory prepayment - change of control

 
If, except in the context of a group reorganisation where the Company continues
to be controlled directly or indirectly, by PPL Corporation, the Company becomes
aware of any person (whether alone or together with any associated person or
persons) gaining control of the Company (for these purposes associated person
means, in relation to any person, a person who is (i) "acting in concert" (as
defined in the City Code on Takeovers and Mergers) with that person or (ii) a
"connected person" (as defined in section 839 of the Income and Corporation
Taxes Act 1988) of that person and control has the meaning given to it in
Section 416 of the Income and Corporation Taxes Act 1988):
 

 
(a)
within five days of such date, the Company shall give notice of such change of
control to the Facility Agent;

 

 
(b)
the Lenders and the Company shall immediately enter into negotiations for a
period of not more than 45 days from the date of the change of control with a
view to agreeing whether the Facility shall continue to be made available and on
what terms; and

 

 
(c)
if no such agreement is reached within the said period of 45 days then:

 

 
(i)
any Lender may on ten days' notice to the Facility Agent and to the Company
require the repayment of its share in each Loan and cancel its Commitment; and

 

 
(ii)
the Majority Lenders may on ten days' notice to the Company require repayment in
full of all outstanding Loans and cancel the Total Commitments.

 
9.3
Voluntary prepayment

 
(a)
The Company may, by giving not less than three Business Days' prior notice to
the Facility Agent, prepay any Loan at any time in whole or in part.

 
(b)
A prepayment of part of a Loan drawn in US Dollars must be in a minimum amount
of $5,000,000 and an integral multiple of U.S. $1,000,000.

 
(c)
A prepayment of part of a Loan drawn in Sterling must be in a minimum amount of
£5,000,000 and an integral multiple of £1,000,000.

 
9.4
Automatic cancellation

 
(a)
The Commitments of each Lender in relation to the Facility will be automatically
cancelled at the close of business on the last day of the Availability Period.

 
(b)
If a Lender does not agree to an extension requested under Clause 6 (E), the
Commitments of this Lender will be automatically cancelled on his Final Maturity
Date.

 
9.5
Voluntary cancellation

 
(a)
The Company may, by giving not less than three Business Days' prior notice to
the Facility Agent, cancel the unutilised amount of the Total Commitments in
whole or in part.

 
(b)
Partial cancellation of the Total Commitments must be in a minimum amount of
£5,000,000 and an integral multiple of £1,000,000.

 
(c)
Any cancellation in part will be applied against the relevant Commitment of each
Lender pro rata.

 
9.6
Involuntary prepayment and cancellation

 
(a)
If the Company is, or will be, required to pay to a Lender a Tax Payment or an
Increased Cost, the Company may, while the requirement continues, give notice to
the Facility Agent requesting prepayment and cancellation in respect of that
Lender.

 
(b)
After notification under paragraph (a) above:

 

 
(i)
the Company must repay or prepay that Lender's share in each Loan made to it on
the date specified in paragraph (c) below; and

 

 
(ii)
the Commitments of that Lender will be immediately cancelled.

 
(c)
The date for repayment or prepayment of a Lender's share in a Loan will be the
last day of the current Term for that Loan or, if earlier, the date specified by
the Company in its notification.

 
9.7
Partial prepayment of Term-Out Loans

 
No amount of a Term-Out Loan repaid or prepaid under this Agreement may
subsequently be re-borrowed.
 
9.8
Re-borrowing of Loans (other than Term-Out Loans)

 
Any voluntary prepayment of a Loan (other than a Term-Out Loan) may be
re-borrowed on the terms of this Agreement. Any mandatory or involuntary
prepayment of a Loan may not be re-borrowed.
 
9.9
Miscellaneous provisions

 
(a)
Any notice of prepayment and/or cancellation under this Agreement is irrevocable
and must specify the relevant date(s) and the affected Loans and Commitments.
The Facility Agent must notify the Lenders promptly of receipt of any such
notice.

 
(b)
All prepayments under this Agreement must be made with accrued interest on the
amount prepaid. No premium or penalty is payable in respect of any prepayment
except for Break Costs.

 
(c)
The Majority Lenders may agree a shorter notice period for a voluntary
prepayment or a voluntary cancellation.

 
(d)
No prepayment or cancellation is allowed except in accordance with the express
terms of this Agreement.

 
(e)
No amount of the Total Commitments cancelled under this Agreement may
subsequently be reinstated.

 
10.
INTEREST

 
10.1
Calculation of interest

 
The rate of interest on each Loan for each Term is the percentage rate per annum
equal to the aggregate of the applicable:
 

 
(a)
Margin;

 

 
(b)
LIBOR; and

 

 
(c)
Mandatory Cost.

 
10.2
Payment of interest

 
Except where it is provided to the contrary in this Agreement, the Company must
pay accrued interest on each Loan made to it on the last day of each Term and
also, if the Term is longer than six months, on the dates falling at six-monthly
intervals after the first day of that Term.
 
10.3
Interest on overdue amounts

 
(a)
If the Company fails to pay any amount payable by it under the Finance
Documents, it must immediately on demand by the Facility Agent pay interest on
the overdue amount from its due date up to the date of actual payment, both
before, on and after judgment.

 
(b)
Interest on an overdue amount is payable at a rate determined by the Facility
Agent to be 1% per annum above the rate which would have been payable if the
overdue amount had, during the period of non-payment, constituted a Loan in the
currency of the overdue amount. For this purpose, the Facility Agent may (acting
reasonably):

 

 
(i)
select successive Terms of any duration of up to three months; and

 

 
(ii)
determine the appropriate Rate Fixing Day for that Term.

 
(c)
Notwithstanding paragraph (b) above, if the overdue amount is a principal amount
of a Loan and becomes due and payable prior to the last day of its current Term,
then:

 

 
(i)
the first Term for that overdue amount will be the unexpired portion of that
Term; and

 

 
(ii)
the rate of interest on the overdue amount for that first Term will be 1% per
annum above the rate then payable on that Loan.

 
After the expiry of the first Term for that overdue amount, the rate on the
overdue amount will be calculated in accordance with paragraph (b) above.
 
(d)
Interest (if unpaid) on an overdue amount will be compounded with that overdue
amount at the end of each of its Terms but will remain immediately due and
payable.

 
10.4
Notification of rates of interest

 
The Facility Agent must promptly notify each relevant Party of the determination
of a rate of interest under this Agreement.
 
10.5
Margin

 
(a)
The applicable Margin for all Loans will be determined in accordance with the
table below, with the applicable Margin for Loans being determined by reference
to the percentage rate per annum specified in Column 2 as set out below opposite
the long term credit rating assigned to the Company and published by Moody's
and/or S&P as specified in Column 1:

 
 
Column 1 Credit Rating (S&P/Moody's)
Column 2 Margin
%

 
A-/A3 (or higher)
0.30

 
BBB+/Baa1
0.35

 
BBB/Baa2
0.45

 
BBB-/Baa3 (or lower)
0.55

 
(b)
Initially the applicable Margin shall be 0.35 per cent.

 
(c)
During any period in which (i) an Event of Default is outstanding; and/or (ii)
there is no long term credit rating assigned to the Company by either S&P or
Moody's, the applicable Margin shall be 0.55% per annum.

 
(d)
In the event that the long term credit ratings assigned to the Company by S&P
and Moody's would indicate a different Margin under (a) above then the lower of
the two credit ratings shall apply to determine the applicable Margin, save
that, in the event that there is more than one notch difference between the two
credit ratings, then the middle level shall apply to determine the applicable
Margin and, in the event that there are an even number of levels between the two
credit ratings (and therefore no middle level) the higher of the two middle
levels shall be used to determine the applicable Margin.

 
(e)
Any adjustment to the Margin pursuant to paragraphs (a) to (d) above shall be
made on the date of publication by S&P and/or Moody's of a long term credit
rating of the Company (or an amendment of a previously published rating) or on
the date in which no long term credit rating is assigned to the Company, if such
publication (or amendment) would result in a change in the Margin as provided
above and, for the avoidance of doubt, such adjustment shall apply to Loans
currently outstanding at such date of publication and with effect from such
date.

 
(f)
Promptly after becoming aware of the same, the Company shall inform the Facility
Agent in writing if any of the circumstances contemplated by subclauses 10.5(c)
through (d) apply.

 
11.
TERMS

 
11.1
Selection - Term-Out Loans

 
(a)
Each Term-Out Loan has successive Terms.

 
(b)
The Company must select the first Term-Out for a Term-Out Loan in the relevant
notice under Clause 2.3 (Term-out Option) and each subsequent Term in an
irrevocable notice received by the Facility Agent not later than 11.00 a.m. one
Business Day before the Rate Fixing Day for that Term. Each Term for a Term-Out
Loan will start on its Utilisation Date or on the expiry of its preceding Term.

 
(c)
If the Company fails to select a Term for an outstanding Term-Out Loan under
paragraph (b) above, that Term will, subject to the other provisions of this
Clause, be one month.

 
(d)
Subject to the following provisions of this Clause, each Term for a Term-Out
Loan will be one, two, three or six months or any other period agreed by the
Company and the Lenders.

 
11.2
Selection - Loans

 
(a)
Each Loan (other than a Term-Out Loan) has one Term only.

 
(b)
The Company must select the Term for a Loan in the relevant Request.

 
(c)
Subject to the following provisions of this Clause, each Term for a Loan will be
one, two, three or six months or for a period of one to thirty days duration as
selected by the Company or any other period agreed by the Company and the
Lenders.

 
11.3
Consolidation - Term-Out Loans

 
(a)
Unless the Company otherwise requests, a Term for a Term-Out Loan will end on
the same day as the current Term for any other Term-Out Loan denominated in the
same currency as that Term-Out Loan. On the last day of those Terms, those
Term-Out Loans will be consolidated and treated as one Term-Out Loan.

 
(b)
The Company may select different Terms for any portion of a Term-Out Loan on the
last day of the Term of that Term-Out Loan provided such portion is a minimum of
£5,000,000 and an integral multiple of £1,000,000. Any such portion shall be
treated as a separate Loan.

 
11.4
No overrunning the Final Maturity Date

 
If a Term would otherwise overrun the Final Maturity Date, it will be shortened
so that it ends on the Final Maturity Date.
 
11.5
Other adjustments

 
The Facility Agent and the Company may enter into such other arrangements as
they may agree for the adjustment of Terms and the consolidation and/or
splitting of Loans.
 
11.6
Notification

 
The Facility Agent must notify the Company and the Lenders of the duration of
each Term promptly after ascertaining its duration.
 
12.
MARKET DISRUPTION

 
12.1
Failure of a Reference Bank to supply a rate

 
If LIBOR is to be calculated by reference to the Reference Banks but a Reference
Bank does not supply a rate by 12.00 noon on a Rate Fixing Day, the applicable
LIBOR will, subject as provided below, be calculated on the basis of the rates
of the remaining Reference Banks.
 
12.2
Market disruption

 
(a)
In this Clause, each of the following events is a market disruption event:

 

 
(i)
LIBOR is to be calculated by reference to the Reference Banks but no, or only
one, Reference Bank supplies a rate by 12.00 noon on the Rate Fixing Day; or

 

 
(ii)
the Facility Agent receives by close of business on the Rate Fixing Day
notification from Lenders whose shares in the relevant Loan exceed 50% of that
Loan that such Lenders are unable to obtain matching deposits in the relevant
interbank market or the rate at which they can do so is in excess of LIBOR for
the relevant Term.

 
(b)
The Facility Agent must promptly notify the Company and the Lenders of a market
disruption event.

 
(c)
After notification under paragraph (b) above, the rate of interest on each
Lender's share in the affected Loan for the relevant Term will be the aggregate
of the applicable:

 

 
(i)
Margin;

 

 
(ii)
rate notified to the Facility Agent by that Lender as soon as practicable, and
in any event before interest is due to be paid in respect of that Term, to be
that which expresses as a percentage rate per annum the cost to that Lender of
funding its share in that Loan from whatever source it may reasonably select;
and

 

 
(iii)
Mandatory Cost.

 
12.3
Alternative basis of interest or funding

 
(a)
If a market disruption event occurs and the Facility Agent or the Company so
requires, the Company and the Facility Agent must enter into negotiations for a
period of not more than 30 days with a view to agreeing an alternative basis for
determining the rate of interest and/or funding for the affected Loan and any
future Loan.

 
(b)
Any alternative basis agreed will be, with the prior consent of all the Lenders,
binding on all the Parties.

 
13.
TAXES

 
13.1
General

 
In this Clause:
 
Tax Credit means a credit against any Tax or any relief or remission for Tax (or
its repayment).
 
U.K. Lender means a Lender which is within the charge to U.K. corporation tax in
respect of, and beneficially entitled to, a payment of interest on a Loan made
by a person that was a bank for the purposes of section 349 of the Income and
Corporation Taxes Act 1988 (as currently defined in section 840A of the Income
and Corporation Taxes Act 1988) at the time the Loan was made.
 
13.2
Tax gross-up

 
(a)
The Company must make all payments to be made by it under the Finance Documents
without any Tax Deduction, unless a Tax Deduction is required by law.

 
(b)
If:

 

 
(i)
a Lender is not, or ceases to be, a U.K. Lender; or

 

 
(ii)
the Company or a Lender is aware that the Company must make a Tax Deduction (or
that there is a change in the rate or the basis of a Tax Deduction),

 
it must promptly notify the Facility Agent. The Facility Agent must then
promptly notify the affected Parties.
 
(c)
Except as provided below, if a Tax Deduction is required by law to be made by
the Company or the Facility Agent, the amount of the payment due from the
Company will be increased to an amount which (after making the Tax Deduction)
leaves an amount equal to the payment which would have been due if no Tax
Deduction had been required.

 
(d)
Except as provided below, the Company is not required to make an increased
payment under paragraph (c) above to a Lender that is not, or has ceased to be,
a U.K. Lender in excess of the amount that the Company would have had to pay had
the Lender been, or not ceased to be, a U.K. Lender.

 
(e)
Paragraph (d) above will not apply if the Lender has ceased to be a U.K. Lender
by reason of any change after the date it became a Lender under this Agreement
in (or in the interpretation, administration, or application of) any law or
double taxation agreement or any published practice or concession of any
relevant taxing authority.

 
(f)
Where a Lender fails to give notice under paragraph (b) above within 60 days
after it obtains knowledge (or, after reasonable due enquiry, ought to have
obtained knowledge) of such event, then such Lender shall, with respect to any
claim made by it under this Clause 13.2 (Tax gross-up), only be entitled to
claim an increased payment for the period from and after the date that is 60
days prior to the date on which the Lender does give notice.

 
(g)
If the Company is required to make a Tax Deduction, it must make the minimum Tax
Deduction and must make any payment required in connection with that Tax
Deduction within the time allowed by law.

 
(h)
Within 30 days of making either a Tax Deduction or a payment required in
connection with a Tax Deduction, the Company must deliver to the Facility Agent
for the relevant Finance Party evidence satisfactory to that Finance Party
(acting reasonably) that the Tax Deduction has been made or (as applicable) the
appropriate payment has been paid to the relevant taxing authority.

 
13.3
Tax indemnity

 
(a)
Except as provided below, the Company must indemnify a Finance Party against any
loss or liability which that Finance Party (in its absolute discretion)
determines will be or has been suffered (directly or indirectly) by that Finance
Party for or on account of Tax in relation to a payment received or receivable
(or any payment deemed to be received or receivable) under a Finance Document.

 
(b)
Paragraph (a) above does not apply to any Tax assessed on a Finance Party under
the laws of the jurisdiction in which:

 

 
(i)
that Finance Party is incorporated or, if different, the jurisdiction (or
jurisdictions) in which that Finance Party is treated as resident for tax
purposes; or

 

 
(ii)
that Finance Party's Facility Office is located in respect of amounts received
or receivable in that jurisdiction,

 
if that Tax is imposed on or calculated by reference to the net income received
or receivable by that Finance Party. However, any payment deemed to be received
or receivable, including any amount treated as income but not actually received
by the Finance Party, such as a Tax Deduction, will not be treated as net income
received or receivable for this purpose.
 
(c)
A Finance Party making, or intending to make, a claim under paragraph (a) above
must promptly notify the Company of the event which will give, or has given,
rise to the claim.

 
13.4
Tax Credit

 
If the Company makes a Tax Payment and the relevant Finance Party has obtained
and used any Tax Credit that is attributable to that Tax Payment, then, if in
its discretion (acting reasonably) it can do so without any further adverse
consequences for it, that Finance Party must pay an amount to the Company which
that Finance Party determines (in its discretion, acting reasonably) will leave
it (after that payment) in the same after-tax position as it would have been in
if the Tax Payment had not been required to be made by the Company. The relevant
Finance Party shall take those steps it considers reasonable to seek and claim
any tax credit.
 
13.5
Tax Warranty of Lenders

 
Each Lender severally warrants to the Company on the date it becomes a Lender
that it is a U.K. Lender. A Lender must promptly notify the Company if it ceases
to be a U.K. Lender after this Agreement is entered into.
 
13.6
Stamp taxes

 
The Company must pay and indemnify each Finance Party against any stamp duty,
registration or other similar Tax payable in connection with the entry into,
performance or enforcement of any Finance Document, except for any such Tax
payable in connection with the entry into of a Transfer Certificate.
 
13.7
Value added taxes

 
(a)
All costs and expenses payable under a Finance Document by the Company is
exclusive of any value added tax or any other Tax of a similar nature which
might be chargeable in connection with that amount. If any such Tax is
chargeable, the Company must pay to the Finance Party (in addition to and at the
same time as paying that amount) an amount equal to the amount of that Tax.

 
(b)
The obligation of the Company under paragraph (a) above will be reduced to the
extent that the Finance Party determines (acting reasonably) that it is entitled
to repayment or a credit in respect of the relevant Tax.

 
14.
INCREASED COSTS

 
14.1
Increased Costs

 
Except as provided below in this Clause, the Company must pay to a Finance Party
the amount of any Increased Cost incurred by that Finance Party or any of its
Affiliates as a result of:
 

 
(a)
the introduction of, or any change in, or any change in the interpretation or
application of, any law or regulation; or

 

 
(b)
compliance with any law or regulation,

 
made after the date of this Agreement.
 
14.2
Exceptions

 
The Company need not make any payment for an Increased Cost to the extent that
the Increased Cost is:
 

 
(a)
compensated for under another Clause or would have been but for an exception to
that Clause;

 

 
(b)
a Tax on the overall net income of a Finance Party or any of its Affiliates;

 

 
(c)
attributable to a Finance Party or its Affiliate wilfully failing to comply with
any law or regulation; or

 

 
(d)
attributable to the implementation or application of or compliance with the
"International Convergence of Capital Measurement and Capital Standards, a
Revised Framework" published by Basel Committee on Banking and Supervision in
June 2004 in the form existing on the date of this Agreement (Basel II) or any
other law or regulation which implements Basel II (whether such implementation,
application or compliance is by a government, regulator, Finance Party or any of
its Affiliates); or

 

 
(e)
incurred in any period or periods ending prior to the date falling 60 days
before the date any demand in relation to that Increased Cost is made (save
where the relevant Finance Party (after due enquiry) was unaware of the
existence of such Increased Cost or where such Increased Cost is caused by
reason of a change in (or in the interpretation, administration or application
of) law with retrospective effect).

 
14.3
Claims

 
A Finance Party intending to make a claim for an Increased Cost must notify the
Company promptly of the circumstances giving rise to, and the amount of, the
claim.
 
15.
MITIGATION

 
15.1
Mitigation

 
(a)
Each Finance Party must, in consultation with the Company, take all reasonable
steps to mitigate any circumstances which arise and which result or would result
in:

 

 
(i)
any Tax Payment or Increased Cost being payable to that Finance Party;

 

 
(ii)
that Finance Party being able to exercise any right of prepayment and/or
cancellation under this Agreement by reason of any illegality;

 

 
(iii)
that Finance Party incurring any cost of complying with the minimum reserve
requirements of the European Central Bank; or

 

 
(iv)
the occurrence of any market disruption event,

 
including transferring its rights and obligations under the Finance Documents to
an Affiliate or changing its Facility Office.
 
(b)
A Finance Party is not obliged to take any step under this Subclause if, in the
opinion of that Finance Party (acting reasonably), to do so might be prejudicial
to it.

 
(c)
Each Finance Party must promptly notify the Company of any circumstances as
described in 15.1(a)(i) to (iv).

 
(d)
The Company must indemnify each Finance Party for all costs and expenses
reasonably incurred by it as a result of any step taken under this Clause 15.1
(Mitigation).

 
15.2
Substitution

 
Notwithstanding Clauses 15.1, if any circumstances arise which result in:
 

 
(a)
any Tax Payment or Increased Cost being payable to that Finance Party;

 

 
(b)
that Finance Party being able to exercise any right of prepayment and/or
cancellation under this Agreement by reason of any illegality;

 

 
(c)
that Finance Party incurring any cost of complying with the minimum reserve
requirements of the European Central Bank; or

 

 
(d)
the occurrence of any market disruption event,

 
then the Company, at its expense, at any time within 180 days after the
occurrence of the relevant event or circumstance, so long as no Default is
outstanding, may by notice to such Finance Party require it (and, if applicable,
its Affiliate) to novate its rights and obligations hereunder (including its
Commitments and its share of any Loans) in accordance with Clause 28 (Changes to
the Parties) to a bank or financial institution specified by the Company and
acceptable to the Facility Agent which is willing to take such a novation as
aforesaid provided that:
 

 
(e)
such novation shall not conflict with or violate any law applicable to or
binding on such Finance Party (or, if applicable, its Affiliate); and

 

 
(f)
the Company shall have paid to the Finance Party (or, if applicable, its
Affiliate) all amounts accrued and owing hereunder.

 

 
(g)
Notwithstanding the above, the Company shall not be entitled to require a
novation under this Clause 15.2 with respect to any Finance Party if:

 

 
(h)
the relevant Finance Party shall have mitigated the effect of the relevant event
or circumstance as provided in Clause 15.1(a), and the novation would have no
greater or further mitigating effect; or

 

 
(i)
the relevant event or circumstances are applicable to all Finance Parties.

 
15.3
Conduct of business by a Finance Party

 
No term of this Agreement will:
 

 
(a)
interfere with the right of any Finance Party to arrange its affairs (Tax or
otherwise) in whatever manner it thinks fit or oblige any Finance Party to
investigate or claim any Tax Credit; or

 

 
(b)
oblige any Finance Party to disclose any information relating to its affairs
(Tax or otherwise) or any computation in respect of Tax.

 
16.
PAYMENTS

 
16.1
Place

 
Unless a Finance Document specifies that payments under it are to be made in
another manner, all payments by a Party (other than the Facility Agent) under
the Finance Documents must be made to the Facility Agent to its account at such
office or bank:
 

 
(a)
in the principal financial centre of the country of the relevant currency; or

 

 
(b)
in the case of euro, in the principal financial centre of a Participating Member
State or London,

 
as it may notify to that Party for this purpose by not less than five Business
Days' prior notice.
 
16.2
Funds

 
Payments under the Finance Documents to the Facility Agent must be made for
value on the due date at such times and in such funds as the Facility Agent may
specify to the Party concerned as being customary at the time for the settlement
of transactions in the relevant currency in the place for payment.
 
16.3
Distribution

 
(a)
Each payment received by the Facility Agent under the Finance Documents for
another Party must, except as provided below, be made available by the Facility
Agent to that Party by payment (as soon as practicable after receipt) to its
account with such office or bank:

 

 
(i)
in the principal financial centre of the country of the relevant currency; or

 

 
(ii)
in the case of euro, in the principal financial centre of a Participating Member
State or London,

 
as it may notify to the Facility Agent for this purpose by not less than five
Business Days' prior notice.
 
(b)
The Facility Agent may apply any amount received by it for the Company in or
towards payment (as soon as practicable after receipt) of any amount due from
the Company under the Finance Documents or in or towards the purchase of any
amount of any currency to be so applied.

 
(c)
Where a sum is paid to the Facility Agent under this Agreement for another
Party, the Facility Agent is not obliged to pay that sum to that Party until it
has established that it has actually received it. However, the Facility Agent
may assume that the sum has been paid to it, and, in reliance on that
assumption, make available to that Party a corresponding amount. If it
transpires that the sum has not been received by the Facility Agent, that Party
must immediately on demand by the Facility Agent refund any corresponding amount
made available to it together with interest on that amount from the date of
payment to the date of receipt by the Facility Agent at a rate calculated by the
Facility Agent to reflect its cost of funds.

 
16.4
Currency

 
(a)
Unless a Finance Document specifies that payments under it are to be made in a
different manner, the currency of each amount payable under the Finance
Documents is determined under this Clause.

 
(b)
Interest is payable in the currency in which the relevant amount in respect of
which it is payable is denominated.

 
(c)
A repayment or prepayment of any principal amount is payable in the currency in
which that principal amount is denominated on its due date.

 
(d)
Amounts payable in respect of costs and expenses are payable in the currency in
which they are incurred.

 
(e)
Each other amount payable under the Finance Documents is payable in Sterling.

 
16.5
No set-off or counterclaim

 
All payments made by the Company under the Finance Documents must be made
without set-off or counterclaim.
 
16.6
Business Days

 
(a)
If a payment under the Finance Documents is due on a day which is not a Business
Day, the due date for that payment will instead be the next Business Day in the
same calendar month (if there is one) or the preceding Business Day (if there is
not) or whatever day the Facility Agent determines is market practice.

 
(b)
During any extension of the due date for payment of any principal under this
Agreement interest is payable on that principal at the rate payable on the
original due date.

 
16.7
Partial payments

 
(a)
If any Administrative Party receives a payment insufficient to discharge all the
amounts then due and payable by the Company under the Finance Documents, the
Administrative Party must apply that payment towards the obligations of the
Company under the Finance Documents in the following order:

 

 
(i)
first, in or towards payment pro rata of any unpaid fees, costs and expenses of
the Administrative Parties under the Finance Documents;

 

 
(ii)
secondly, in or towards payment pro rata of any accrued interest or fee due but
unpaid under this Agreement;

 

 
(iii)
thirdly, in or towards payment pro rata of any principal amount due but unpaid
under this Agreement; and

 

 
(iv)
fourthly, in or towards payment pro rata of any other sum due but unpaid under
the Finance Documents.

 
(b)
The Facility Agent must, if so directed by all the Lenders, vary the order set
out in subparagraphs (a)(ii) to (iv) above.

 
(c)
This Subclause will override any appropriation made by the Company.

 
16.8
Timing of payments

 
If a Finance Document does not provide for when a particular payment is due,
that payment will be due within three Business Days of demand by the relevant
Finance Party.
 
17.
REPRESENTATIONS

 
17.1
Representations

 
The representations set out in this Clause are made by the Company to each
Finance Party.
 
17.2
Status

 
It is a limited liability company, duly incorporated and validly existing under
the Companies Act 1985 in England and Wales.
 
17.3
Powers and authority

 
It has the power to enter into and perform, and has taken all necessary action
to authorise the entry into and performance of, the Finance Documents to which
it is or will be a party and the transactions contemplated by those Finance
Documents.
 
17.4
Legal validity

 
Subject to any general principles of law limiting its obligations and referred
to in any legal opinion required under this Agreement, each Finance Document to
which it is a party is its legally binding, valid and enforceable obligation.
 
17.5
Non-conflict

 
The entry into and performance by it of, and the transactions contemplated by,
the Finance Documents do not conflict with any borrowing or other power or
restricted granted or imposed by:
 

 
(a)
any law or regulation applicable to it and violation of which has or is likely
to have a Material Adverse Effect; or

 

 
(b)
its constitutional documents.

 
17.6
No Event of Default

 
No Event of Default is outstanding or will result from the execution of, or the
performance of any transaction contemplated by, any Finance Document.
 
17.7
Authorisations

 
All authorisations required by it (including any authorisations required under
PUHCA or the Act, if any) in connection with the entry into, performance,
validity and enforceability of, and the transactions contemplated by, the
Finance Documents have been obtained or effected (as appropriate) and are in
full force and effect.
 
17.8
Financial statements

 
Its audited consolidated financial statements most recently delivered to the
Facility Agent (which, at the date of this Agreement, are the Original Financial
Statements):
 

 
(a)
have been prepared in accordance with accounting principles and practices
generally accepted in its jurisdiction of incorporation, consistently applied;
and

 

 
(b)
fairly represent its consolidated financial condition as at the date to which
they were drawn up,

 
except, in each case, as disclosed to the contrary in those financial
statements.
 
17.9
No material adverse change

 
Other than as disclosed in writing to the Mandated Lead Arrangers prior to the
date of this Agreement there has been no material adverse change in its
consolidated financial condition since the date to which the Original Financial
Statements were drawn up.
 
17.10
Litigation

 
No litigation, arbitration or administrative proceedings are current or, to its
knowledge, pending or threatened, which, if adversely determined, are reasonably
likely to have a Material Adverse Effect.
 
17.11
Winding Up

 
No meeting has been convened for its Winding-up and, so far as it is aware, no
petition, application or the like is outstanding for its Winding up.
 
17.12
Non-Violation of other Agreements:

 
Its entry into, exercise of its rights and/or performance of or compliance with
its obligations under this Agreement do not and will not violate, to an extent
or in a manner which has or is likely to have a Material Adverse Effect on it,
any agreement to which it is a party or which is binding on it.
 
17.13
Times for making representations

 
(a)
The representations set out in this Clause are made by the Company on the date
of this Agreement.

 
(b)
The representations in Clauses 17.2 to 17.7 (inclusive) are deemed to be
repeated by the Company on the date of each Request and the first day of each
Term.

 
(c)
When a representation is repeated, it is applied to the circumstances existing
at the time of repetition.

 
18.
INFORMATION COVENANTS

 
18.1
Financial statements

 
(a)
The Company must supply to the Facility Agent in sufficient copies for all the
Lenders:

 

 
(i)
its audited consolidated financial statements for each of its financial years;
and

 

 
(ii)
its interim financial statements for the first half-year of each of its
financial years.

 
(b)
All financial statements must be supplied as soon as they are available and:

 

 
(i)
in the case of the Company's audited consolidated financial statements, within
180 days; and

 

 
(ii)
in the case of the Company's interim financial statements, within 90 days,

 
(c)
of the end of the relevant financial period.

 
18.2
Form of Financial Statement

 
If any financial statement delivered or to be delivered to the Facility Agent
under Clause 18.1 is not to be or, as the case may be, has not been prepared in
accordance with Applicable Accounting Principles:
 

 
(a)
The Company and the Facility Agent (on behalf of and after consultation with all
the Lenders) shall, on the request of the Facility Agent or the Company,
negotiate in good faith with a view to agreeing such amendments to the above
financial ratio and/or the definitions of the terms used in it as are necessary
to give the Lenders comparable protection to that contemplated at the date of
this Agreement;

 

 
(b)
If amendments are agreed by the Company and the Majority Lenders within 25 days,
those amendments shall take effect in accordance with the terms of that
agreement;

 

 
(c)
If such amendments are not so agreed within 25 days, the Company shall:

 

 
(i)
within 30 days after the end of that 25 day period; and

 

 
(ii)
with all subsequent financial statements to be delivered to the Facility Agent
under Clause 18.1,

 
deliver to the Facility Agent details of all such adjustments as need to be made
to the relevant financial statements to bring them into line with the Companies
Act 1985 (as in effect on the date of this Agreement) and Applicable Accounting
Principles.
 
18.3
Compliance Certificate

 
(a)
The Company must supply to the Facility Agent a Compliance Certificate with each
set of its financial statements, sent to the Facility Agent under this
Agreement.

 
(b)
A Compliance Certificate must be signed by two directors of the Company.

 
18.4
Information - miscellaneous

 
The Company must supply to the Facility Agent, in sufficient copies for all the
Lenders if the Facility Agent so requests:
 

 
(a)
copies of all documents despatched by the Company to its creditors generally or
any class of them at the same time as they are despatched;

 

 
(b)
promptly upon becoming aware of them, details of any litigation, arbitration or
administrative proceedings which are current, threatened or pending and which
might, if adversely determined, have a Material Adverse Effect;

 

 
(c)
promptly on request, a list of the then current Material Subsidiaries; and

 

 
(d)
promptly on request, such further information regarding the financial condition
and operations of the Group as any Finance Party through the Facility Agent may
reasonably request.

 
18.5
Notification of Default

 
(a)
The Company must notify the Facility Agent of any Default (and the steps, if
any, being taken to remedy it) promptly upon becoming aware of its occurrence.

 
(b)
Promptly on request by the Facility Agent, the Company must supply to the
Facility Agent a certificate signed by two of its directors on its behalf,
certifying that no Default is outstanding or, if a Default is outstanding,
specifying the Default and the steps, if any, being taken to remedy it.

 
18.6
Use of websites

 
(a)
Except as provided below, the Company may deliver any information under this
Agreement to a Lender by posting it on to an electronic website if:

 

 
(i)
the Facility Agent and the Lender agree;

 

 
(ii)
the Company and the Facility Agent designate an electronic website for this
purpose;

 

 
(iii)
the Company notifies the Facility Agent of the address of and password for the
website; and

 

 
(iv)
the information posted is in a format agreed between the Company and the
Facility Agent.

 
The Facility Agent must supply each relevant Lender with the address of and
password for the website.
 
(b)
Notwithstanding the above, the Company must supply to the Facility Agent in
paper form a copy of any information posted on the website together with
sufficient copies for:

 

 
(i)
any Lender not agreeing to receive information via the website; and

 

 
(ii)
within ten Business Days of request any other Lender, if that Lender so
requests.

 
(c)
The Company must promptly upon becoming aware of its occurrence, notify the
Facility Agent if:

 

 
(i)
the website cannot be accessed;

 

 
(ii)
the website or any information on the website is infected by any electronic
virus or similar software;

 

 
(iii)
the password for the website is changed; or

 

 
(iv)
any information to be supplied under this Agreement is posted on the website or
amended after being posted.

 
If the circumstances in paragraphs (i) or (ii) above occur, the Company must
supply any information required under this Agreement in paper form.
 
18.7
Know your customer requirements

 
(a)
The Company must promptly on the request of any Finance Party supply to that
Finance Party any documentation or other evidence which is reasonably requested
by that Finance Party (whether for itself, on behalf of any Finance Party or any
prospective new Lender) to enable a Finance Party or prospective new Lender to
carry out and be satisfied with the results of all applicable know your customer
requirements.

 
(b)
Each Lender must promptly on the request of the Facility Agent supply to the
Facility Agent any documentation or other evidence which is reasonably required
by the Facility Agent to carry out and be satisfied with the results of all know
your customer requirements.

 
19.
FINANCIAL COVENANTS

 
19.1
Definitions

 
In this Clause:
 
Consolidated EBITDA means the consolidated net pre-taxation profits of the Group
for a Measurement Period as adjusted by:
 

 
(a)
adding back Interest Payable;

 

 
(b)
taking no account of any exceptional or extraordinary item;

 

 
(c)
excluding any amount attributable to minority interests;

 

 
(d)
adding back depreciation and amortisation; and

 

 
(e)
taking no account of any revaluation of an asset or any loss or gain over book
value arising on the disposal of an asset (otherwise than in the ordinary course
of trading) by a member of the Group during that Measurement Period.

 
Interest Payable means, in relation to any Measurement Period, all interest
payable and similar charges of the Group expressed in Sterling and determined on
a consolidated basis in accordance with Applicable Accounting Principles.
 
Measurement Period means a half-year of the Company.
 
Regulatory Asset Base means the regulatory asset base of the Company most
recently published by OFGEM.
 
Total Gross Debt means, in respect of the Company, at any time the consolidated
Financial Indebtedness of the Company which is required to be accounted for as
debt in the annual financial statements of the Company.
 
19.2
Interpretation

 
(a)
Except as provided to the contrary in this Agreement, an accounting term used in
this Clause is to be construed in accordance with the principles applied in
connection with the Original Financial Statements.

 
(b)
Any amount in a currency other than Sterling is to be taken into account at its
Sterling equivalent calculated on the basis of:

 

 
(i)
the Facility Agent's spot rate of exchange for the purchase of the relevant
currency in the London foreign exchange market with Sterling at or about 11.00
a.m. on the day the relevant amount falls to be calculated; or

 

 
(ii)
if the amount is to be calculated on the last day of a financial period of the
Company, the relevant rates of exchange used by the Company in, or in connection
with, its financial statements for that period.

 
(c)
No item must be credited or deducted more than once in any calculation under
this Clause.

 
19.3
Interest cover

 
The Company must ensure that the ratio of Consolidated EBITDA to Interest
Payable is not, at the end of each Measurement Period, less than 3 to 1.
 
19.4
Asset Cover

 
The Company must ensure that the Regulatory Asset Base will exceed Total Gross
Debt by at least £150,000,000 at all times.
 
20.
GENERAL COVENANTS

 
20.1
General

 
The Company agrees to be bound by the covenants set out in this Clause relating
to it and, where the covenant is expressed to apply to each member of the Group,
the Company must ensure that each of its Subsidiaries performs that covenant.
 
20.2
Authorisations

 
The Company must promptly obtain, maintain and comply with the terms of any
authorisation required under any law or regulation to enable it to perform its
obligations under, or for the validity or enforceability of, any Finance
Document.
 
20.3
Compliance with laws

 
Each member of the Group must comply in all respects with all laws to which it
is subject where failure to do so is reasonably likely to have a Material
Adverse Effect.
 
20.4
Pari passu ranking

 
The Company must ensure that its payment obligations under the Finance Documents
rank at least pari passu with all its other present and future unsecured payment
obligations, except for obligations mandatorily preferred by law applying to
companies generally.
 
20.5
Negative pledge

 
(a)
Except as provided below, neither the Company nor any Material Subsidiary may
create or allow to exist any Security Interest on any of its assets.

 
(b)
Paragraph (a) does not apply to:

 

 
(i)
any Security Interest created under or in connection with or arising out of the
Balancing and Settlement Code or any transactions or arrangements entered into
in connection with the management of risks relating thereto;

 

 
(ii)
in respect of overdue amounts which have not been overdue for more than 30 days
and/or are being contested in good faith, liens arising solely by operation of
law or by order of a court or tribunal (or by an agreement of similar effect)
and/or in the ordinary course of business or operations;

 

 
(iii)
any Security Interest created after the date of this Agreement for the sole
purpose of re-financing all or any part of either Facility (at the option of the
Company) provided that the monies borrowed or raised on such Security Interest
shall, to that extent, be applied reasonably promptly in accordance with this
Agreement in or towards repayment of the relevant Facility;

 

 
(iv)
any Security Interest arising out of title retention provisions in a supplier's
standard conditions of supply of goods acquired in the ordinary course of
business or operations;

 

 
(v)
any Security Interest created on any asset acquired after the date of this
Agreement for the sole purpose of financing or re-financing that acquisition and
securing a principal, capital or nominal amount not exceeding the cost of that
acquisition, provided that the Security Interest is removed or discharged within
six months of the date of acquisition of such asset;

 

 
(vi)
any Security Interest outstanding on or over any asset acquired after the date
of this Agreement and in existence at the date of such acquisition, provided
that the Security Interest is removed or discharged within six months of the
date of acquisition of such asset;

 

 
(vii)
any Security Interest created or outstanding on or over any asset of any company
which becomes a Material Subsidiary of the Company after the date of this
Agreement where such Security Interest is created prior to the date on which
such company becomes a Material Subsidiary of the Company and is not created or
increased in contemplation of such Company being acquired and/or becoming a
Material Subsidiary of the Company and the Security Interest is removed or
discharged within six months of the date of such company becoming a Material
Subsidiary of the Company;

 

 
(viii)
any Security Interest created on any asset to secure any Financial Indebtedness
incurred in connection with the financing of any asset or project in respect of
which the repayment of that Financial Indebtedness is to be made from the
revenues arising out of, or other proceeds of realisation from, that asset or
project, with recourse to those revenues and proceeds and other assets used in
connection with, or forming the subject matter of, that asset or project but
without recourse (or with such limited recourse as the Majority Banks may from
time to time agree) to any other assets of the Group;

 

 
(ix)
any netting arrangements under any swap or other hedging transaction which is on
standard market terms;

 

 
(x)
any Security Interest created or outstanding with the prior approval of the
Majority Banks; and

 

 
(xi)
any Security Interest created or outstanding on or over assets of the Company or
any of its Material Subsidiaries provided that the aggregate outstanding
principal or nominal amount secured by all Security Interests created or
outstanding under this exception on or over such assets shall not at any time
exceed £25,000,000 or its equivalent.

 
20.6
Disposals

 
(a)
Except as provided below, no member of the Group may, either in a single
transaction or in a series of transactions and whether related or not, dispose
of all or any part of its assets (other than cash) which is substantial in the
context of the consolidated total assets of the Group.

 
(b)
Paragraph (a) does not apply to:

 

 
(i)
any disposal made in the ordinary course of business or operations of the
disposing entity (including, without limitation, disposals of subsidiaries or
lines of business, provided that this shall not include a disposal of the core
electricity distribution business);

 

 
(ii)
disposals on normal commercial terms of obsolete assets or assets no longer
required for the purpose of the relevant Person's business or operations;

 

 
(iii)
any realisation of investments acquired, purchased or made by the temporary
application of funds not immediately required in the relevant Person's business
or operations;

 

 
(iv)
the exchange of assets for other assets of a similar or superior nature and
value, or the sale of assets on normal commercial terms for cash which is
payable in full on the completion of the sale and is to be, and is, applied in
or towards the purchase of similar assets within six months;

 

 
(v)
the disposal of assets by one wholly-owned Subsidiary of the Company to another
or (if the consideration for the disposal does not exceed a normal commercial
consideration) to the Company by one of its Subsidiaries;

 

 
(vi)
disposals of any National Grid shares on normal commercial terms;

 

 
(vii)
disposals in connection with sale-and-leaseback or sale and repurchase
transactions or any other form of "off balance sheet" financing, provided that
the aggregate book value (in the books of the disposing party) of all assets the
subject of all such disposals made during the period commencing on the date of
this Agreement and ending on the date when no amount remains to be lent or
remains payable under this Agreement shall not exceed £50,000,000; and

 

 
(viii)
any disposal which the Majority Banks shall have agreed shall not be taken into
account.

 
20.7
Change of business

 
The Company shall procure that no substantial change is made to the general
nature of the business of the Company or the Group.
 
20.8
Environmental matters

 
The Company will and will ensure that its Material Subsidiaries will comply with
all applicable Environmental Law and other regulations, orders or other law
applicable to the conduct of the business of the supply or distribution of
electricity, in each case, where failure to do so would have a Material Adverse
Effect.
 
20.9
Insurance

 
Each member of the Group must insure its business and assets with insurance
companies to such an extent and against such risks as that member of the Group
reasonably considers to be appropriate, having regard to the insurance
arrangements of companies engaged in similar business.
 
20.10
Licence

 
The Company will:
 

 
(a)
comply in all respects with the terms of its Licence where failure to comply
would have a Material Adverse Effect or would have a material adverse effect on
the Company's ability to perform its obligations under the Licence;

 

 
(b)
promptly notify the Facility Agent upon receipt by the Company of any notice
from the government, any court or any regulatory authority or agency of a
revocation, termination, material adverse amendment, suspension or withdrawal of
the Licence unless contemporaneously that Licence is to be replaced, substituted
or reissued on the same, or substantially the same or improved terms; and

 

 
(c)
comply with the requirements of all applicable rules, regulations, orders and
other requirements of the Secretary of State and/or OFGEM under the Act of any
other law applicable to the conduct of the business of the distribution of
electricity, where failure to comply would have a Material Adverse Effect or
would have a material adverse effect on the Company's ability to perform its
obligations under the Licence.

 
20.11
Arm's Length Transactions

 
The Company shall not (and the Company shall ensure that no member of the Group
shall) enter into any transactions with any member of the Group, a Holding
Company or any Affiliate of such Group or Holding Company except on arm's length
terms and for full market value (or on terms which are more favourable to the
Group).
 
21.
DEFAULT

 
21.1
Events of Default

 
Each of the events set out in this Clause is an Event of Default.
 
21.2
Non-payment

 
The Company fails to pay any sum payable under any Finance Document when due
unless:
 

 
(a)
its failure to pay is caused by administrative or technical error; and

 

 
(b)
payment is made within five Business Days of its due date.

 
21.3
Breach of other obligations

 
(a)
The Company does not perform or comply with its obligations under Clause 19
(Financial Covenants), Clause 20.5 (Negative pledge) or Clause 20.6 (Disposals).

 
(b)
The Company does not perform or comply with any of its other obligations under
any Finance Document in any material respect or any representation or warranty
by the Company in this Agreement or in any document delivered under it is or
proves to have been incorrect when made or deemed repeated, unless the
non-compliance or circumstances giving rise to the misrepresentation, as the
case may be, is capable of remedy and is not remedied within 45 days of the
earlier of the Facility Agent giving notice requiring the same to be remedied
and the Company becoming aware of such non-compliance or misrepresentation, as
the case may be.

 
21.4
Cross-acceleration

 
Any other Financial Indebtedness or commitment for Financial Indebtedness of the
Company is cancelled or terminated or becomes due and payable before its normal
maturity (whether by declaration or automatically), in each case, by reason of
default on the part of the Company or is not paid when due nor within any
applicable grace period, other than in circumstances where such default or
liability to pay is being contested in good faith and by appropriate
proceedings. However, no Event of Default will occur under this Clause 21.4
unless and until the aggregate amount of such Financial Indebtedness in respect
of which one or more of the events mentioned above in this Clause 21.4 has
occurred exceeds £20,000,000 or its equivalent.
 
21.5
Insolvency

 
(a)
Any of the following occurs in respect of the Company:

 

 
(i)
it is unable to pay its debts generally as they fall due or it is deemed by a
court of competent jurisdiction to be insolvent;

 

 
(ii)
it suspends making payments on all or any class of its debts or publicly
announces an intention to do so;

 

 
(iii)
by reason of actual or anticipated financial difficulties, it begins
negotiations with all or any class of its creditors for the general rescheduling
of its indebtedness; or

 

 
(iv)
a moratorium is declared in respect of any of its indebtedness.

 
(b)
If a moratorium occurs in respect of the Company, the ending of the moratorium
will not remedy any Event of Default caused by the moratorium.

 
21.6
Insolvency proceedings

 
(a)
Except as provided below, any of the following occurs in respect of the Company:

 

 
(i)
any person presents a petition for its winding-up, administration or
dissolution;

 

 
(ii)
an order for its winding-up, administration or dissolution is made;

 

 
(iii)
any liquidator, trustee in bankruptcy, judicial custodian, compulsory manager,
receiver, administrative receiver, administrator or similar officer is appointed
in respect of it or any of its assets;

 

 
(iv)
its directors or other officers request the appointment of a liquidator, trustee
in bankruptcy, judicial custodian, compulsory manager, receiver, administrative
receiver, administrator or similar officer; or

 

 
(v)
any other analogous step or procedure is taken in any jurisdiction.

 
(b)
Paragraph (a) does not apply to (i) a petition for winding-up presented by a
creditor which is being actively contested in good faith and with due diligence
and with a reasonable prospect of success or (ii) a voluntary solvent
winding-up, amalgamation, reconstruction or reorganisation or otherwise part of
a solvent scheme of arrangement, in each case on terms approved by the Majority
Lenders.

 
21.7
Creditors' process

 
A distress, attachment, execution or other legal process material in relation to
the Company's ability to perform its payment obligations under this Agreement is
levied, enforced or sued out on or against the assets of the Company and is not
discharged or stayed within 90 days.
 
21.8
Licence

 
(a)
The Licence is revoked or surrendered or ceases to be held by the Company other
than in circumstances which permit the Company or its Affiliates to carry on the
distribution business of the Company either without a licence as a result of any
change in the Act or regulatory regime or with a new licence, permitting the
distribution of electricity in the authorised areas covered by the Licence,
issued under the Act or pursuant to the Utilities Act, 2000; or

 
(b)
the Licence is amended in a manner that would have a Material Adverse Effect
(excluding as a result of a price control review by OFGEM).

 
21.9
Balancing and Settlement Code

 
(a)
The Company ceases to be a party to the Balancing and Settlement Code Framework
Agreement other than in circumstances where the Company is able to carry its
distribution business; or

 
(b)
the Company breaches the Balancing and Settlement Code and such breach has or is
reasonably likely to have a Material Adverse Effect other than in circumstances
where the Company is able to carry on its distribution business.

 
21.10
Unlawfulness

 
It is or becomes unlawful for the Company to perform any of its obligations
under this Agreement in any material respect.
 
21.11
Repudiation

 
The Company repudiates a Finance Document or evidences an intention to repudiate
a Finance Document.
 
21.12
Acceleration

 
If an Event of Default is outstanding, the Facility Agent may, and must if so
instructed by the Majority Lenders, by notice to the Company:
 

 
(a)
cancel the Total Commitments; and/or

 

 
(b)
declare that all or part of any amounts outstanding under the Finance Documents
are:

 

 
(i)
immediately due and payable; and/or

 

 
(ii)
payable on demand by the Facility Agent acting on the instructions of the
Majority Lenders.

 
Any notice given under this subclause will take effect in accordance with its
terms.
 
22.
THE ADMINISTRATIVE PARTIES

 
22.1
Appointment and duties of the Facility Agent

 
(a)
Each Finance Party (other than the Facility Agent) irrevocably appoints the
Facility Agent to act as its agent under the Finance Documents.

 
(b)
Each Finance Party irrevocably authorises the Facility Agent to:

 

 
(i)
perform the duties and to exercise the rights, powers and discretions that are
specifically given to it under the Finance Documents, together with any other
incidental rights, powers and discretions; and

 

 
(ii)
execute each Finance Document expressed to be executed by the Facility Agent.

 
(c)
The Facility Agent has only those duties which are expressly specified in the
Finance Documents. Those duties are solely of a mechanical and administrative
nature.

 
22.2
Role of the Mandated Lead Arranger

 
Except as specifically provided in the Finance Documents, no Mandated Lead
Arranger has any obligations of any kind to any other Party in connection with
any Finance Document.
 
22.3
No fiduciary duties

 
Except as specifically provided in a Finance Document, nothing in the Finance
Documents makes an Administrative Party a trustee or fiduciary for any other
Party or any other person. No Administrative Party need hold in trust any moneys
paid to it for a Party or be liable to account for interest on those moneys.
 
22.4
Individual position of an Administrative Party

 
(a)
If it is also a Lender, each Administrative Party has the same rights and powers
under the Finance Documents as any other Lender and may exercise those rights
and powers as though it were not an Administrative Party.

 
(b)
Each Administrative Party may:

 

 
(i)
carry on any business with the Company or its related entities (including acting
as an agent or a trustee for any other financing); and

 

 
(ii)
retain any profits or remuneration it receives under the Finance Documents or in
relation to any other business it carries on with the Company or its related
entities.

 
22.5
Reliance

 
The Facility Agent may:
 

 
(a)
rely on any notice or document believed by it to be genuine and correct and to
have been signed by, or with the authority of, the proper person;

 

 
(b)
rely on any statement made by any person regarding any matters which may
reasonably be assumed to be within his knowledge or within his power to verify;

 

 
(c)
engage, pay for and rely on professional advisers selected by it (including
those representing a Party other than the Facility Agent); and

 

 
(d)
act under the Finance Documents through its personnel and agents.

 
22.6
Majority Lenders' instructions

 
(a)
The Facility Agent is fully protected if it acts on the instructions of the
Majority Lenders in the exercise of any right, power or discretion or any matter
not expressly provided for in the Finance Documents. Any such instructions given
by the Majority Lenders will be binding on all the Lenders. In the absence of
instructions, the Facility Agent may act as it considers to be in the best
interests of all the Lenders.

 
(b)
The Facility Agent is not authorised to act on behalf of a Lender (without first
obtaining that Lender's consent) in any legal or arbitration proceedings in
connection with any Finance Document.

 
(c)
The Facility Agent may require the receipt of security satisfactory to it,
whether by way of payment in advance or otherwise, against any liability or loss
which it may incur in complying with the instructions of the Majority Lenders.

 
22.7
Responsibility

 
(a)
No Administrative Party is responsible to any other Finance Party for the
adequacy, accuracy or completeness of:

 

 
(i)
any Finance Document or any other document; or

 

 
(ii)
any statement or information (whether written or oral) made in or supplied in
connection with any Finance Document.

 
(b)
Without affecting the responsibility of the Company for information supplied by
it or on its behalf in connection with any Finance Document, each Lender
confirms that it:

 

 
(i)
has made, and will continue to make, its own independent appraisal of all risks
arising under or in connection with the Finance Documents (including the
financial condition and affairs of the Company and its related entities and the
nature and extent of any recourse against any Party or its assets); and

 

 
(ii)
has not relied exclusively on any information provided to it by any
Administrative Party in connection with any Finance Document.

 
(c)
(i)
Nothing in this Agreement will oblige the Facility Agent to satisfy any know
your customer requirement in relation to the identity of any person on behalf of
any Finance Party.

 

 
(ii)
Each Finance Party confirms to the Facility Agent that it is solely responsible
for any know your customer requirements it is required to carry out and that it
may not rely on any statement in relation to those requirements made by any
other person.

 
22.8
Exclusion of liability

 
(a)
The Facility Agent is not liable or responsible to any other Finance Party for
any action taken or not taken by it in connection with any Finance Document,
unless directly caused by its gross negligence or wilful misconduct.

 
(b)
No Party may take any proceedings against any officer, employee or agent of the
Facility Agent in respect of any claim it might have against the Facility Agent
or in respect of any act or omission of any kind by that officer, employee or
agent in connection with any Finance Document. Any officer, employee or agent of
the Facility Agent may rely on this Subclause and enforce its terms under the
Contracts (Rights of Third Parties) Act 1999.

 
22.9
Default

 
(a)
The Facility Agent is not obliged to monitor or enquire whether a Default has
occurred. The Facility Agent is not deemed to have knowledge of the occurrence
of a Default.

 
(b)
If the Facility Agent:

 

 
(i)
receives notice from a Party referring to this Agreement, describing a Default
and stating that the event is a Default; or

 

 
(ii)
is aware of the non-payment of any principal or interest or any fee payable to a
Lender under this Agreement,

 
it must promptly notify the Lenders.
 
22.10
Information

 
(a)
The Facility Agent must promptly forward to the person concerned the original or
a copy of any document which is delivered to the Facility Agent by a Party for
that person.

 
(b)
Except where a Finance Document specifically provides otherwise, the Facility
Agent is not obliged to review or check the adequacy, accuracy or completeness
of any document it forwards to another Party.

 
(c)
Except as provided above, the Facility Agent has no duty:

 

 
(i)
either initially or on a continuing basis to provide any Lender with any credit
or other information concerning the risks arising under or in connection with
the Finance Documents (including any information relating to the financial
condition or affairs of the Company or its related entities or the nature or
extent of recourse against any Party or its assets) whether coming into its
possession before, on or after the date of this Agreement; or

 

 
(ii)
unless specifically requested to do so by a Lender in accordance with a Finance
Document, to request any certificate or other document from the Company.

 
(d)
In acting as the Facility Agent, the agency division of the Facility Agent is
treated as a separate entity from its other divisions and departments. Any
information acquired by the Facility Agent which, in its opinion, is acquired by
it otherwise than in its capacity as the Facility Agent may be treated as
confidential by the Facility Agent and will not be treated as information
possessed by the Facility Agent in its capacity as such.

 
(e)
The Facility Agent is not obliged to disclose to any person any confidential
information supplied to it by a member of the Group solely for the purpose of
evaluating whether any waiver or amendment is required to any term of the
Finance Documents.

 
(f)
The Company irrevocably authorises the Facility Agent to disclose to the other
Finance Parties any information which, in its opinion, is received by it in its
capacity as the Facility Agent.

 
22.11
Indemnities

 
(a)
Without limiting the liability of the Company under the Finance Documents, each
Lender must indemnify the Facility Agent for that Lender's Pro Rata Share of any
loss or liability incurred by the Facility Agent in acting as the Facility
Agent, except to the extent that the loss or liability is caused by the Facility
Agent's gross negligence or wilful misconduct.

 
(b)
The Facility Agent may deduct from any amount received by it for a Lender any
amount due to the Facility Agent from that Lender under a Finance Document but
unpaid.

 
(c)
The Company must indemnify the Facility Agent against any loss or liability
properly incurred by the Facility Agent as a result of:

 

 
(i)
investigating any event which the Facility Agent reasonably believes to be a
Default; or

 

 
(ii)
acting or relying on any notice which the Facility Agent reasonably believes to
be genuine, correct and appropriately authorised.

 
22.12
Compliance

 
The Facility Agent may refrain from doing anything (including disclosing any
information) which might, in its opinion, constitute a breach of any law or
regulation or be otherwise actionable at the suit of any person, and may do
anything which, in its opinion, is necessary or desirable to comply with any law
or regulation.
 
22.13
Resignation of the Facility Agent

 
(a)
The Facility Agent may resign and appoint any of its Affiliates as successor
Facility Agent by giving notice to the Lenders and the Company.

 
(b)
Alternatively, the Facility Agent may resign by giving notice to the Lenders and
the Company, in which case the Majority Lenders may appoint a successor Facility
Agent.

 
(c)
If no successor Facility Agent has been appointed under paragraph (b) above
within 30 days after notice of resignation was given, the Facility Agent may
appoint a successor Facility Agent.

 
(d)
The person(s) appointing a successor Facility Agent must, if practicable,
consult with the Company prior to the appointment. Any successor Facility Agent
must have an office in the U.K.

 
(e)
The resignation of the Facility Agent and the appointment of any successor
Facility Agent will both become effective only when the successor Facility Agent
notifies all the Parties that it accepts its appointment. On giving the
notification, the successor Facility Agent will succeed to the position of the
Facility Agent and the term Facility Agent will mean the successor Facility
Agent.

 
(f)
The retiring Facility Agent must, at its own cost, make available to the
successor Facility Agent such documents and records and provide such assistance
as the successor Facility Agent may reasonably request for the purposes of
performing its functions as the Facility Agent under the Finance Documents.

 
(g)
Upon its resignation becoming effective, this Clause will continue to benefit
the retiring Facility Agent in respect of any action taken or not taken by it in
connection with the Finance Documents while it was the Facility Agent, and,
subject to paragraph (f) above, it will have no further obligations under any
Finance Document.

 
(h)
The Majority Lenders may, by notice to the Facility Agent, require it to resign
under paragraph (b) above.

 
22.14
Relationship with Lenders

 
(a)
The Facility Agent may treat each Lender as a Lender, entitled to payments under
this Agreement and as acting through its Facility Office(s) until it has
received not less than five Business Days' prior notice from that Lender to the
contrary.

 
(b)
The Facility Agent may at any time, and must if requested to do so by the
Majority Lenders, convene a meeting of the Lenders.

 
(c)
The Facility Agent must keep a register of all the Parties and supply any other
Party with a copy of the register on request. The register will include each
Lender's Facility Office(s) and contact details for the purposes of this
Agreement.

 
22.15
Facility Agent's management time

 
If the Facility Agent requires, any amount payable to the Facility Agent by any
Party under any indemnity or in respect of any costs or expenses incurred by the
Facility Agent under the Finance Documents after the date of this Agreement may
include the cost of using its management time or other resources and will be
calculated on the basis of such reasonable daily or hourly rates as the Facility
Agent may notify to the relevant Party. This is in addition to any amount in
respect of fees or expenses paid or payable to the Facility Agent under any
other term of the Finance Documents.
 
22.16
Notice period

 
Where this Agreement specifies a minimum period of notice to be given to the
Facility Agent, the Facility Agent may, at its discretion, accept a shorter
notice period.
 
23.
EVIDENCE AND CALCULATIONS

 
23.1
Accounts

 
Accounts maintained by a Finance Party in connection with this Agreement are
prima facie evidence of the matters to which they relate for the purpose of any
litigation or arbitration proceedings.
 
23.2
Certificates and determinations

 
Any certification or determination by a Finance Party of a rate or amount under
the Finance Documents will be, in the absence of manifest error, conclusive
evidence of the matters to which it relates.
 
23.3
Calculations

 
Any interest or fee accruing under this Agreement accrues from day to day and is
calculated on the basis of the actual number of days elapsed and a year of 360
or 365 days or otherwise, depending on what the Facility Agent determines is
market practice.
 
24.
FEES

 
24.1
Facility Agent's fee

 
The Company must pay to the Facility Agent for its own account an agency fee in
the manner agreed between the Facility Agent and the Company.
 
24.2
Arrangement fee

 
The Company must pay an arrangement and participation fee in the manner agreed
between the Mandated Lead Arrangers and the Company.
 
24.3
Commitment fee

 
(a)
The Company must pay a commitment fee computed at the rate of 40% of the Margin
from time to time on the undrawn, uncancelled amount of each Lender's Commitment
calculated from the date of this Agreement.

 
(b)
Accrued commitment fee is payable quarterly in arrear. Accrued commitment fee is
also payable to the Facility Agent for a Lender on the date its Commitment is
cancelled in full.

 
24.4
Term-Out Fee

 
The Company shall pay to the Facility Agent for the Lenders a term-out fee in an
amount equal to 0.1% flat of the amount of the Term-Out Loans termed-out under
Clause 2.3 (Term-out Option) as calculated on the initial Final Maturity Date .
The term-out fee shall be payable within five Business days after the initial
Final Maturity Date.
 
24.5
Extension Fee

 
The Company must pay to each Lender whose Commitment is extended under Clause
6 (Extension Option) an extension fee in the manner agreed between the Company
and the Facility Agent on behalf of those Lenders.
 
25.
INDEMNITIES AND BREAK COSTS

 
25.1
Currency indemnity

 
(a)
The Company must, as an independent obligation, indemnify each Finance Party
against any loss or liability which that Finance Party incurs as a consequence
of:

 

 
(i)
that Finance Party receiving an amount in respect of the Company's liability
under the Finance Documents; or

 

 
(ii)
that liability being converted into a claim, proof, judgment or order,

 
in a currency other than the currency in which the amount is expressed to be
payable under the relevant Finance Document.
 
(b)
Unless otherwise required by law, the Company waives any right it may have in
any jurisdiction to pay any amount under the Finance Documents in a currency
other than that in which it is expressed to be payable.

 
25.2
Other indemnities

 
The Company shall within 15 days of demand indemnify the Facility Agent and each
Lender against any funding or other cost, loss, expense or liability in an
amount certified by it in reasonable detail (together with documentation in
support) sustained or incurred by it as a direct result of:
 

 
(a)
the occurrence of any Event of Default;

 

 
(b)
(other than by reason of negligence or default by a Finance Party) a Loan not
being made after a Request has been delivered for that Loan; or

 

 
(c)
the receipt or recovery by any party (or the Facility Agent on its behalf) of
all or any part of a Loan or overdue sum due from the Company otherwise than on
the Final Maturity Date or Maturity Date (as relevant) of that Loan or, in the
case of an overdue sum, the last day of an interest period relating to that
overdue sum, as the case may be or a Loan or any part thereof not being prepaid
in accordance with a notice of prepayment.

 
25.3
Break Costs

 
(a)
The Company must pay to each Lender its Break Costs.

 
(b)
Break Costs are the amount (if any) determined by the relevant Lender by which:

 

 
(i)
the interest which that Lender would have received for the period from the date
of receipt of any part of its share in a Loan or an overdue amount to the last
day of the applicable Term for that Loan or overdue amount if the principal or
overdue amount received had been paid on the last day of that Term;

 
exceeds
 

 
(ii)
the amount which that Lender would be able to obtain by placing an amount equal
to the amount received by it on deposit with a leading bank in the appropriate
interbank market for a period starting on the Business Day following receipt and
ending on the last day of the applicable Term.

 
(c)
Each Lender must supply to the Facility Agent for the Company details of the
amount of any Break Costs claimed by it under this Subclause.

 
26.
EXPENSES

 
26.1
Initial costs

 
The Company must pay to each Administrative Party the amount of all costs and
expenses (including legal fees) reasonably incurred by it in connection with the
negotiation, preparation, printing, execution and syndication of the Finance
Documents.
 
26.2
Subsequent costs

 
The Company must pay to the Facility Agent the amount of all costs and expenses
(including legal fees) reasonably incurred by it in connection with:
 

 
(a)
the negotiation, preparation, printing and execution of any Finance Document
(other than a Transfer Certificate) executed after the date of this Agreement;
and

 

 
(b)
any amendment, waiver or consent requested by or on behalf of the Company or
specifically allowed by this Agreement.

 
26.3
Enforcement costs

 
The Company must pay to each Finance Party the amount of all costs and expenses
(including legal fees) incurred by it in connection with the enforcement of, or
the preservation of any rights under, any Finance Document.
 
27.
AMENDMENTS AND WAIVERS

 
27.1
Procedure

 
(a)
Except as provided in this Clause, any term of the Finance Documents may be
amended or waived with the agreement of the Company and the Majority Lenders.
The Facility Agent may effect, on behalf of any Finance Party, an amendment or
waiver allowed under this Clause.

 
(b)
The Facility Agent must promptly notify the other Parties of any amendment or
waiver effected by it under paragraph (a) above. Any such amendment or waiver is
binding on all the Parties.

 
27.2
Exceptions

 
(a)
An amendment or waiver which relates to:

 

 
(i)
the definition of Majority Lenders in Clause 1.1 (Definitions);

 

 
(ii)
an extension of the date of payment of any amount to a Lender under the Finance
Documents;

 

 
(iii)
a reduction in the Margin or a reduction in the amount of any payment of
principal, interest, fee or other amount payable to a Lender under the Finance
Documents;

 

 
(iv)
an increase in, or an extension of, a Commitment or the Total Commitments;

 

 
(v)
a term of a Finance Document which expressly requires the consent of each
Lender;

 

 
(vi)
the right of a Lender to assign or transfer its rights or obligations under the
Finance Documents; or

 

 
(vii)
this Clause,

 
may only be made with the consent of all the Lenders.
 
(b)
An amendment or waiver which relates to the rights or obligations of an
Administrative Party may only be made with the consent of that Administrative
Party.

 
27.3
Change of currency

 
If a change in any currency of a country occurs (including where there is more
than one currency or currency unit recognised at the same time as the lawful
currency of a country), the Finance Documents will be amended to the extent the
Facility Agent (acting reasonably and after consultation with the Company)
determines is necessary to reflect the change.
 
27.4
Waivers and remedies cumulative

 
The rights of each Finance Party under the Finance Documents:
 

 
(a)
may be exercised as often as necessary;

 

 
(b)
are cumulative and not exclusive of its rights under the general law; and

 

 
(c)
may be waived only in writing and specifically.

 
Delay in exercising or non-exercise of any right is not a waiver of that right.
 
28.
CHANGES TO THE PARTIES

 
28.1
Assignments and transfers by the Company

 
The Company may not assign or transfer any of its rights and obligations under
the Finance Documents without the prior consent of all the Lenders.
 
28.2
Assignments and transfers by Lenders

 
(a)
A Lender (the Existing Lender) may, subject to the following provisions of this
Subclause, at any time assign or transfer (including by way of novation) any of
its rights and obligations under this Agreement to any other person (the New
Lender).

 
(b)
Unless the Company and the Facility Agent otherwise agree, a transfer of part of
a Commitment or rights and obligations under this Agreement by the Existing
Lender must be in a minimum amount of £5,000,000.

 
(c)
The consent of the Company is required for any assignment or transfer unless the
New Lender is another Lender or an Affiliate of a Lender. The consent of the
Company must not be unreasonably withheld or delayed. The Company will be deemed
to have given its consent five Business Days after the Lender has requested it
unless consent is expressly refused by the Company within that time.

 
(d)
The Facility Agent is not obliged to execute a Transfer Certificate until it has
completed all know your customer requirements to its satisfaction. The Facility
Agent must promptly notify the Existing Lender and the New Lender if there are
any such requirements.

 
(e)
The Company may not withhold its consent solely because the assignment or
transfer might increase the Mandatory Cost.

 
(f)
A transfer of obligations will be effective only if either:

 

 
(i)
the obligations are novated in accordance with the following provisions of this
Clause; or

 

 
(ii)
the New Lender confirms to the Facility Agent and the Company in form and
substance satisfactory to the Facility Agent that it is bound by the terms of
this Agreement as a Lender. On the transfer becoming effective in this manner
the Existing Lender will be released from its obligations under this Agreement
to the extent that they are transferred to the New Lender.

 
(g)
Unless the Facility Agent otherwise agrees, the New Lender must pay to the
Facility Agent for its own account, on or before the date any assignment or
transfer occurs, a fee of £2,000.

 
(h)
Any reference in this Agreement to a Lender includes a New Lender but excludes a
Lender if no amount is or may be owed to or by it under this Agreement.

 
28.3
Procedure for transfer by way of novations

 
(a)
In this Subclause:

 
Transfer Date means, for a Transfer Certificate, the later of:
 

 
(i)
the proposed Transfer Date specified in that Transfer Certificate; and

 

 
(ii)
the date on which the Facility Agent executes that Transfer Certificate.

 
(b)
A novation is effected if:

 

 
(i)
the Existing Lender and the New Lender deliver to the Facility Agent a duly
completed Transfer Certificate; and

 

 
(ii)
the Facility Agent executes it.

 
The Facility Agent must execute as soon as reasonably practicable a Transfer
Certificate delivered to it and which appears on its face to be in order.
 
(c)
Each Party (other than the Existing Lender and the New Lender) irrevocably
authorises the Facility Agent to execute any duly completed Transfer Certificate
on its behalf.

 
(d)
On the Transfer Date:

 

 
(i)
the New Lender will assume the rights and obligations of the Existing Lender
expressed to be the subject of the novation in the Transfer Certificate in
substitution for the Existing Lender; and

 

 
(ii)
the Existing Lender will be released from those obligations and cease to have
those rights.

 
28.4
Limitation of responsibility of Existing Lender

 
(a)
Unless expressly agreed to the contrary, an Existing Lender is not responsible
to a New Lender for the legality, validity, adequacy, accuracy, completeness or
performance of:

 

 
(i)
any Finance Document or any other document; or

 

 
(ii)
any statement or information (whether written or oral) made in or supplied in
connection with any Finance Document,

 
and any representations or warranties implied by law are excluded.
 
(b)
Each New Lender confirms to the Existing Lender and the other Finance Parties
that it:

 

 
(i)
has made, and will continue to make, its own independent appraisal of all risks
arising under or in connection with the Finance Documents (including the
financial condition and affairs of the Company and its related entities and the
nature and extent of any recourse against any Party or its assets) in connection
with its participation in this Agreement; and

 

 
(ii)
has not relied exclusively on any information supplied to it by the Existing
Lender in connection with any Finance Document.

 
(c)
Nothing in any Finance Document requires an Existing Lender to:

 

 
(i)
accept a re-transfer from a New Lender of any of the rights and obligations
assigned or transferred under this Clause; or

 

 
(ii)
support any losses incurred by the New Lender by reason of the non-performance
by the Company of its obligations under any Finance Document or otherwise.

 
28.5
Costs resulting from change of Lender or Facility Office

 
If:
 

 
(a)
a Lender assigns or transfers any of its rights and obligations under the
Finance Documents or changes its Facility Office; and

 

 
(b)
as a result of circumstances existing at the date the assignment, transfer or
change occurs, the Company would be obliged to pay a Tax Payment or an Increased
Cost,

 
the Company need only pay that Tax Payment or Increased Cost to the same extent
that it would have been obliged to if no assignment, transfer or change had
occurred.
 
28.6
Changes to the Reference Banks

 
(a)
If a Reference Bank (or, if a Reference Bank is not a Lender, the Lender of
which it is an Affiliate) ceases to be a Lender, the Facility Agent must (in
consultation with the Company) appoint another Lender or an Affiliate of a
Lender to replace that Reference Bank.

 
(b)
If a Reference Bank ceases to have a London office or novates or assigns all its
rights and obligations under this Agreement or if any Commitments of any
Reference Bank are cancelled or if Loans it has advanced are prepaid it shall be
replaced as a Reference Bank by such other Bank with an office in London as the
Facility Agent (after consultation with the Company) shall designate by notice
to the Company and the Banks.

 
29.
DISCLOSURE OF INFORMATION

 
(a)
Each Finance Party must keep confidential any information supplied to it by or
on behalf of the Company in connection with the Finance Documents. However, a
Finance Party is entitled to disclose information:

 

 
(i)
which is publicly available, other than as a result of a breach by that Finance
Party of this Clause;

 

 
(ii)
in connection with any legal or arbitration proceedings;

 

 
(iii)
if required to do so under any law or regulation;

 

 
(iv)
to a governmental, banking, taxation or other regulatory authority;

 

 
(v)
to its professional advisers;

 

 
(vi)
to the extent allowed under paragraph (b) below; or

 

 
(vii)
with the agreement of the Company.

 
(b)
A Finance Party may disclose to an Affiliate or any person with whom it may
enter, or has entered into, any kind of transfer, participation or other
agreement in relation to this Agreement (a participant):

 

 
(i)
a copy of any Finance Document; and

 

 
(ii)
any information which that Finance Party has acquired under or in connection
with any Finance Document.

 
However, before a participant may receive any confidential information, it must
agree with the relevant Finance Party to keep that information confidential on
the terms of paragraph (a) above.
 
This Clause supersedes any previous confidentiality undertaking given by a
Finance Party in connection with this Agreement prior to it becoming a Party.
 
30.
SET-OFF

 
A Finance Party may set off any matured obligation owed to it by the Company
under the Finance Documents (to the extent beneficially owned by that Finance
Party) against any obligation (whether or not matured) owed by that Finance
Party to the Company, regardless of the place of payment, booking branch or
currency of either obligation. If the obligations are in different currencies,
the Finance Party may convert either obligation at a market rate of exchange in
its usual course of business for the purpose of the set-off.
 
31.
PRO RATA SHARING

 
31.1
Redistribution

 
If any amount owing by the Company under this Agreement to a Lender (the
recovering Lender) is discharged by payment, set-off or any other manner other
than through the Facility Agent under this Agreement (a recovery), then:
 

 
(a)
the recovering Lender must, within three Business Days, supply details of the
recovery to the Facility Agent;

 

 
(b)
the Facility Agent must calculate whether the recovery is in excess of the
amount which the recovering Lender would have received if the recovery had been
received by the Facility Agent under this Agreement; and

 

 
(c)
the recovering Lender must pay to the Facility Agent an amount equal to the
excess (the redistribution).

 
31.2
Effect of redistribution

 
(a)
The Facility Agent must treat a redistribution as if it were a payment by the
Company under this Agreement and distribute it among the Lenders, other than the
recovering Lender, accordingly.

 
(b)
When the Facility Agent makes a distribution under paragraph (a) above, the
recovering Lender will be subrogated to the rights of the Finance Parties which
have shared in that redistribution.

 
(c)
If and to the extent that the recovering Lender is not able to rely on any
rights of subrogation under paragraph (b) above, the Company will owe the
recovering Lender a debt which is equal to the redistribution, immediately
payable and of the type originally discharged.

 
(d)
If:

 

 
(i)
a recovering Lender must subsequently return a recovery, or an amount measured
by reference to a recovery, to the Company; and

 

 
(ii)
the recovering Lender has paid a redistribution in relation to that recovery,

 
each Finance Party must reimburse the recovering Lender all or the appropriate
portion of the redistribution paid to that Finance Party, together with interest
for the period while it held the re-distribution. In this event, the subrogation
in paragraph (b) above will operate in reverse to the extent of the
reimbursement.
 
31.3
Exceptions

 
Notwithstanding any other term of this Clause, a recovering Lender need not pay
a redistribution to the extent that:
 

 
(a)
it would not, after the payment, have a valid claim against the Company in the
amount of the redistribution; or

 

 
(b)
it would be sharing with another Finance Party any amount which the recovering
Lender has received or recovered as a result of legal or arbitration
proceedings, where:

 

 
(c)
the recovering Lender notified the Facility Agent of those proceedings; and

 

 
(d)
the other Finance Party had an opportunity to participate in those proceedings
but did not do so or did not take separate legal or arbitration proceedings as
soon as reasonably practicable after receiving notice of them.

 
32.
SEVERABILITY

 
If a term of a Finance Document is or becomes illegal, invalid or unenforceable
in any jurisdiction, that shall not affect:
 

 
(a)
the legality, validity or enforceability in that jurisdiction of any other term
of the Finance Documents; or

 

 
(b)
the legality, validity or enforceability in other jurisdictions of that or any
other term of the Finance Documents.

 
33.
COUNTERPARTS

 
Each Finance Document may be executed in any number of counterparts. This has
the same effect as if the signatures on the counterparts were on a single copy
of the Finance Document.
 
34.
NOTICES

 
34.1
In writing

 
(a)
Any communication in connection with a Finance Document must be in writing and,
unless otherwise stated, may be given:

 

 
(i)
in person, by post, or fax or any other electronic communication approved by the
Facility Agent; or

 

 
(ii)
if between the Facility Agent and a Lender and the Facility Agent and the Lender
agree, by e-mail or other electronic communication.

 
(b)
For the purpose of the Finance Documents, an electronic communication will be
treated as being in writing.

 
(c)
Unless it is agreed to the contrary, any consent or agreement required under a
Finance Document must be given in writing.

 
34.2
Contact details

 
(a)
Except as provided below, the contact details of each Party for all
communications in connection with the Finance Documents are those notified by
that Party for this purpose to the Facility Agent on or before the date it
becomes a Party.

 
(b)
The contact details of the Company for this purpose are:

 
 
Address:
 
Avonbank,
 
Feeder Road,
 
Bristol,
 
BS2 0TB
 
Fax number:
 
+44 (0) 1179 332108
E-mail:
irwilliams@westernpower.co.uk
Attention:
Ian Williams.

 
(c)
The contact details of the Facility Agent for this purpose are:

 
 
Address:
 
Loans Administration Department
 
Lloyds TSB Bank plc
 
Bank House
 
Wine Street
  Bristol  
S1 2AN
 
Fax number:
 
+44 (0)1179 233367
Attention:
The Manager.

 
(d)
Any Party may change its contact details by giving five Business Days' notice to
the Facility Agent or (in the case of the Facility Agent) to the other Parties.

 
(e)
Where a Party nominates a particular department or officer to receive a
communication, a communication will not be effective if it fails to specify that
department or officer.

 
34.3
Effectiveness

 
(a)
Except as provided below, any communication in connection with a Finance
Document will be deemed to be given as follows:

 

 
(i)
if delivered in person, at the time of delivery;

 

 
(ii)
if posted, five days after being deposited in the post, postage prepaid, in a
correctly addressed envelope; and

 

 
(iii)
if by fax, when received in legible form.

 
(b)
A communication given under paragraph (a) above but received on a non-working
day or after business hours in the place of receipt will only be deemed to be
given on the next working day in that place.

 
(c)
A communication to the Facility Agent will only be effective on actual receipt
by it.

 
34.4
The Company

 
All formal communication under the Finance Documents to or from the Company must
be sent through the Facility Agent.
 
35.
LANGUAGE

 
(a)
Any notice given in connection with a Finance Document must be in English.

 
(b)
Any other document provided in connection with a Finance Document must be:

 

 
(i)
in English; or

 

 
(ii)
(unless the Facility Agent otherwise agrees) accompanied by a certified English
translation. In this case, the English translation prevails unless the document
is a statutory or other official document.

 
36.
GOVERNING LAW

 
This Agreement is governed by English law.
 
37.
ENFORCEMENT

 
37.1
Jurisdiction

 
(a)
The English courts have exclusive jurisdiction to settle any dispute in
connection with any Finance Document.

 
(b)
The English courts are the most appropriate and convenient courts to settle any
such dispute and the Company waives objection to those courts on the grounds of
inconvenient forum or otherwise in relation to proceedings in connection with
any Finance Document.

 
(c)
This Clause is for the benefit of the Finance Parties only. To the extent
allowed by law, a Finance Party may take:

 

 
(i)
proceedings in any other court; and

 

 
(ii)
concurrent proceedings in any number of jurisdictions.

 
THIS AGREEMENT has been entered into on the date stated at the beginning of this
Agreement.

--------------------------------------------------------------------------------

 
SCHEDULE 1 
 
ORIGINAL PARTIES
 
 
Name of Original Lender
Commitments
   
Barclays Bank PLC
£33,333,333
   
Bayerische Landesbank acting through its London branch
£33,333,333
   
Lloyds TSB Bank plc
£33,333,334
       
Total Tranche A Commitments
£100,000,000

--------------------------------------------------------------------------------

 
SCHEDULE 2 
 
CONDITIONS PRECEDENT DOCUMENTS
 
Company
 
1.
A certified copy of the constitutional documents of the Company.

 
2.
A certified copy of a resolution of the board of directors or a committee of the
board of directors of the Company approving the terms of, and the transactions
contemplated by, the Finance Documents.

 
3.
A specimen of the signature of each person authorised on behalf of the Company
to execute or witness the execution of any Finance Document or to sign or send
any document or notice in connection with any Finance Document.

 
4.
A certificate of the Company (signed by a director) confirming that borrowing
the Total Commitments would not cause any borrowing limit binding on the Company
to be exceeded.

 
Legal opinions
 
A legal opinion of Allen & Overy LLP, legal advisers to the Company addressed to
the Finance Parties.
 
Other documents and evidence
 
1.
Evidence that all fees and expenses then due and payable from the Company under
this Agreement have been or will be paid no later than the first Utilisation
Date.

 
2.
The Original Financial Statements.

 

--------------------------------------------------------------------------------

 
SCHEDULE 3 
 
FORM OF REQUEST
 
To: LLOYDS TSB BANK PLC as Facility Agent
 
From: [                 ]
 
Date: [                 ]
 
 
 
WESTERN POWER DISTRIBUTION (SOUTH WEST) PLC - £100,000,000 Credit Agreement
dated [          ] 2006 (as amended and restated from time to time) (the
Agreement)
 
1.
We refer to the Agreement. This is a Request.

 
2.
We wish to borrow a Loan on the following terms:

 

 
(a)
Utilisation Date: [                 ]

 

 
(b)
Amount/currency: [                 ]

 

 
(c)
Term: [                 ].

 
3.
Our payment instructions are: [                 ].

 
4.
We confirm that each condition precedent under the Agreement which must be
satisfied on the date of this Request is so satisfied.

 
5.
We confirm that as at [relevant testing date] Consolidated EBITDA was
[                 ] and Interest Payable was [                 ]; therefore, the
ratio of Consolidated EBITDA to Interest Payable was [                 ] to 1.

 
6.
We confirm that as at [relevant testing date] Regulatory Asset Base was
[           ] and Total Gross Debt was [                ]; therefore, Regulatory
Asset Base exceeded Total Gross Debt by [               ].

 
7.
This Request is irrevocable.

 
By:
 
[                 ]

--------------------------------------------------------------------------------

 
SCHEDULE 4 
 
CALCULATION OF THE MANDATORY COST
 
1.
General

 
The Mandatory Cost is the weighted average of the rates calculated below by the
Facility Agent on the first day of a Term. The Facility Agent must distribute
each amount of Mandatory Cost among the Lenders on the basis of the rate for
each Lender.
 
2.
For a Lender lending from a Facility Office in the U.K.

 
(a)
The relevant rate for a Lender lending from a Facility Office in the U.K. is the
arithmetic mean of the rates notified by that Lender to the Facility Agent and
calculated in accordance with the following formulae:

 
for a Loan in Sterling: 

AB + C(B-D) + E x 0.01
   100-(A+C)
 % per annum

for any other Loan:

 E x 0.01 
   300 
% per annum

 
where on the day of application of the formula:

 
 A
is the percentage of the Lender's eligible liabilities (in excess of any stated
minimum) which the Bank of England requires it to hold on a non-interest-bearing
deposit account in accordance with its cash ratio requirements;
       
 B
is LIBOR for that Term;
       
 C
is the percentage of the Lender's eligible liabilities which the Bank of England
requires it to place as a special deposit;
       
 D
is the interest rate per annum allowed by the Bank of England on a special
deposit; and
       
 E
is the charge payable by the Lender to the Financial Services Authority under
the fees rules (but, for this purpose, calculated by the Facility Agent on a
notional basis as being the average of the fee tariffs within fee-block Category
A1 (Deposit acceptors) of the fees rules, applying any applicable discount and
ignoring any minimum fee required under the fees rules) and expressed in pounds
per £1 million of the tariff base of that Lender.

 
(b)
For the purposes of this paragraph 2:

 

 
(i)
eligible liabilities and special deposit have the meanings given to them at the
time of application of the formula by the Bank of England;

 

 
(ii)
fees rules means the then current rules on periodic fees in the Supervision
Manual of the FSA Handbook; and

 

 
(iii)
tariff base has the meaning given to it in the fees rules.

 
(c)
(i)
In the application of the formulae, A, B, C and D are included as figures and
not as percentages, e.g. if A = 0.5% and B = 15%, AB is calculated as 0.5 x 15.
A negative result obtained by subtracting D from B is taken as zero.

 

 
(ii)
Each rate calculated in accordance with a formula is, if necessary, rounded
upward to four decimal places.

 
(d)
(i)
Each Lender must supply to the Facility Agent the information required by it to
make a calculation of the rate for that Lender. The Facility Agent may assume
that this information is correct in all respects.

 

 
(ii)
If a Lender fails to do so, the Facility Agent may assume that the Lender's
obligations in respect of cash ratio deposits, special deposits and the fees
rules are the same as those of a typical bank from its jurisdiction of
incorporation with a Facility Office in the same jurisdiction as its Facility
Office.

 

 
(iii)
The Facility Agent has no liability to any Party if its calculation over or
under compensates any Lender.

 
3.
For a Lender lending from a Facility Office in a Participating Member State

 
(a)
The relevant rate for a Lender lending from a Facility Office in a Participating
Member State is the percentage rate per annum notified by that Lender to the
Facility Agent as its cost of complying with the minimum reserve requirements of
the European Central Bank.

 
(b)
If a Lender fails to specify a rate under paragraph 3(a) above, the Facility
Agent will assume that the Lender has not incurred any such cost.

 
4.
Changes

 
The Facility Agent may, after consultation with the Company and the Lenders,
notify all the Parties of any amendment to this Schedule which is required to
reflect:
 

 
(a)
any change in law or regulation; or

 

 
(b)
any requirement imposed by the Bank of England, the Financial Services Authority
or the European Central Bank (or, in any case, any successor authority).

 
Any notification will be, in the absence of manifest error, conclusive and
binding on all the Parties.

--------------------------------------------------------------------------------

 
SCHEDULE 5 
 
FORM OF TRANSFER CERTIFICATE
 
 
 
To: LLOYDS TSB BANK PLC as Facility Agent
 
From: [THE EXISTING LENDER] (the Existing Lender) and [THE NEW LENDER] (the New
Lender)
 
Date: [               ]
 
 
 
WESTERN POWER DISTRIBUTION (SOUTH WEST) PLC - £100,000,000 Credit Agreement
dated [        ] 2006 (as amended and restated from time to time) (the
Agreement)
 
We refer to the Agreement. This is a Transfer Certificate.
 
 
1.   The Existing Lender transfers by novation to the New Lender the Existing
Lender's rights and obligations
       referred to in the Schedule below in accordance with the terms of the
Agreement.

 
 
2.   The proposed Transfer Date is [      ].

 
 
3.    The administrative details of the New Lender for the purposes of the
Agreement are set out in the Schedule.

 
 
4.    Transfer Certificate is governed by English law.

--------------------------------------------------------------------------------

 
THE SCHEDULE
 
Rights and obligations to be transferred by novation
[insert relevant details, including applicable Commitment (or part)]
 
Administrative details of the New Lender
[insert details of Facility Office, address for notices and payment details
etc.]
 
 
 
 
 
[EXISTING LENDER]
 
[NEW LENDER]

 
By:
By:

 
The Transfer Date is confirmed by the Facility Agent as [                  ].
 
[               ]
 
By:

--------------------------------------------------------------------------------

 
SCHEDULE 6 
 
FORM OF COMPLIANCE CERTIFICATE
 
To: LLOYDS TSB BANK PLC as Facility Agent
 
From: WESTERN POWER DISTRIBUTION (SOUTH WEST) PLC
 
Date: [                     ]
 
WESTERN POWER DISTRIBUTION (SOUTH WEST) PLC - £100,000,000 Credit Agreement
dated [         ] 2006 (as amended and restated from time to time) (the
Agreement)
 
1.
We refer to the Agreement. This is a Compliance Certificate.

 
2.
We confirm that as at [relevant testing date], Consolidated EBITDA was
[                     ] and Interest Payable was [                     ],
therefore the ratio of Consolidated EBITDA to Interest Payable was
[                     ] to 1.

 
3.
We confirm that as at [relevant testing date], Regulatory Asset Base was
[                     ] and Total Gross Debt was [                     ];
therefore Regulatory Asset Base exceeded Total Gross Debt by
[                     ].

 
4.
We set out below calculations establishing the figures in paragraph 2 above:

 
[                     ].
 
5.
We confirm that the following companies were Material Subsidiaries at [relevant
testing date]:

 
[                     ].
 
6.
[We confirm that no Default is outstanding as at [relevant testing date].] 1

 
WESTERN POWER DISTRIBUTION (SOUTH WEST) PLC
 
By: 
 
 
1  If this statement cannot be made, the certificate should identify any Default
that is outstanding and the steps, if any, being taken to remedy it.

--------------------------------------------------------------------------------

 
SIGNATORIES
 
 
 
Company
 
WESTERN POWER DISTRIBUTION (SOUTH WEST) PLC
 
By:
 
 

Mandated Lead Arrangers
 
BARCLAYS CAPITAL
 
By:
 

 
BAYERISCHE LANDESBANK
acting through its London Branch
 
By:
 

 
LLOYDS TSB BANK PLC
 
By:
 

 
Original Lenders
 
BARCLAYS BANK PLC
 
By:
 

 
BAYERISCHE LANDESBANK
acting through its London Branch
 
By:
 

LLOYDS TSB BANK PLC
 
By:
 

 

Facility Agent
 
LLOYDS TSB BANK PLC
 
By: