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                                                                      EXHIBT 4.6

                                                                  CONFORMED COPY



                                   AGREEMENT


                             DATED 5th June, 2001


                             (Pounds)1,000,000,000


                    MULTICURRENCY REVOLVING CREDIT FACILITY


                                      FOR


                             SCOTTISH POWER UK PLC


                                  ARRANGED BY


                      THE BANK OF TOKYO-MITSUBISHI, LTD.
                 COMMERZBANK AKTIENGESELLSCHAFT, LONDON BRANCH
                                J.P. MORGAN PLC

                                      AND

                        THE ROYAL BANK OF SCOTLAND PLC





                                 ALLEN & OVERY
                                    London
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THIS AGREEMENT is dated 5th June, 2001 between:

(1)  SCOTTISH POWER UK PLC (Registered No. SC11712OP) (the "Company");

(2)  THE BANK OF TOKYO-MITSUBISHI, LTD., COMMERZBANK AKTIENGESELLSCHAFT, LONDON
     BRANCH, J.P. MORGAN PLC and THE ROYAL BANK OF SCOTLAND PLC as joint
     arrangers (in this capacity the "Joint Arrangers");

(3)  THE FINANCIAL INSTITUTIONS listed in Schedule 1 (Original Parties) as banks
     (the "Banks"); and

(4)  THE ROYAL BANK OF SCOTLAND PLC as agent (in this capacity the "Agent").

IT IS AGREED as follows:

1.   INTERPRETATION

1.1  Definitions

     In this Agreement:

     "Affiliate"

     means a Subsidiary or a Holding Company (as defined in Section 736 of the
     Companies Act 1985) of a person and any other Subsidiary of that Holding
     Company.

     "Agent's Spot Rate of Exchange"

     means the Agent's spot rate of exchange for the purchase of the relevant
     Optional Currency in the London foreign exchange market with Sterling at or
     about 11.00 a.m. on a particular day.

     "Appointee"

     means Southern Water Services Limited (registered number 2366670) a wholly
     owned subsidiary of SWP.

     "Appointment"

     means the instrument of appointment dated August 1989 of the Appointee as
     water undertaker and sewerage undertaker for the Franchise Area under the
     Water Act 1989 as subsequently repealed and replaced by the Water Act.

     "Balance Sheet"

     means, at any time, the latest published audited consolidated balance sheet
     of the Group on a historic cost basis.

     "Borrowings"

     means any indebtedness in respect of:

     (a)  moneys borrowed and debit balances at banks and other financial
          institutions;

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     (b)  any debt security including any bond, note or loan stock;

     (c)  any acceptance under any acceptance credit facility opened by a bank
          or other financial institution;

     (d)  the sale or discounting of receivables (except to the extent that such
          sale or discounting is on a non-recourse basis);

     (e)  any lease which the Company accounts for as a finance lease as such
          term is described in the Statement of Standard Accounting Practices
          No. 21 (or any successor statement or financial reporting standard);

     (f)  any accrued fixed or minimum premium payable on the repayment or
          redemption of any instrument referred to in paragraph (b) above;

     (g)  for the purposes of Clause 19.5 (Cross-default) only, interest rate
          swaps, currency swaps (including spot and forward exchange contracts),
          caps, collars, floors and similar obligations;

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

     (i)  any guarantee, indemnity and/or other form of assurance against
          financial loss by any member of the Group in respect of any
          indebtedness of any person of a type referred to in paragraphs (a) to
          (h) above (in the case of paragraph (g) above, for the purposes of
          Clause 19.5 (Cross default) only),

     but excluding any borrowings from PacifiCorp Group Holdings Company or
     Holdco to the Company provided that such borrowings do not bear interest
     and are subordinated to the rights of the Finance Parties on terms
     satisfactory to the Majority Banks.

     Any amount outstanding in a currency other than Sterling is to be taken
     into account at its Sterling equivalent calculated on the basis of the
     Agent's spot rate of exchange at 11.00 a.m. on the day the relevant amount
     falls to be calculated.  However, indebtedness owing by one member of the
     Group to another member of the Group shall not be taken into account as
     Borrowings and, for the purposes of calculating the amount of Borrowings at
     any time:

     (i)  deep discount borrowings will be valued at the amount attributed to
          them in the then latest Balance Sheet; and

     (ii) no item of indebtedness will be double counted by the inclusion of
          both the primary indebtedness and indebtedness arising under a
          guarantee, indemnity and/or other form of assurance with respect to
          that primary indebtedness.

     "Business Day"

     means a day (other than a Saturday or a Sunday) on which banks are open for
     business in:

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     (a)  London; and

     (b)  Glasgow; and

     (c)  in relation to a transaction involving an Optional Currency (other
          than euros) the principal financial centre of the country of that
          Optional Currency; and

     (d)  in relation to a transaction involving euros, a TARGET Day.

     "Commitment"

     means:

     (a)  in relation to a Bank which is a Bank on the date of this Agreement,
          the amount set opposite its name under the heading "Commitments" in
          Schedule 1 (Original Parties); and

     (b)  in relation to a Bank which becomes a Bank after the date of this
          Agreement, the amount of Commitment acquired by it under Clause 27
          (Changes to the Parties) or pursuant to any Finance Document,

     in each case, to the extent not cancelled, reduced or transferred under
     this Agreement.

     "Consolidated EBITDA"

     means in respect of any financial year of the Group, the consolidated
     profits of the Group before:

     (a)  Net Interest Payable;

     (b)  tax;

     (c)  depreciation;

     (d)  amortisation (including, for the avoidance of doubt, of goodwill); and

     (e)  extraordinary and exceptional items,

     but adjusted by deducting any amount attributable to minority interests.

     "Counter Guarantor"

     has the meaning given to it in Clause 27.4(a)(iii) (Accession).

     "Counter Guarantor Accession Agreement"

     means a deed substantially in the form of Part 2 of Schedule 8 with such
     amendments as the Agent may approve or reasonably require.

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     "Dangerous Substance"

     means any radioactive emissions and any natural or artificial substance
     (whether in solid or liquid form or in the form of a gas or vapour and
     whether alone or in combination with any other substance) capable (in each
     case) of causing harm to man or any other living organism or damaging the
     environment or public health or welfare, including (without limitation) any
     controlled, special, hazardous, toxic, radioactive or dangerous waste.

     "Default"

     means an Event of Default or an event which, with the giving of notice,
     lapse of time, or fulfilment of any other applicable condition (or any
     combination of the foregoing), would constitute an Event of Default.

     "Drawdown Date"

     means the date of the advance of a Loan.

     "EC"

     means the European Community and its successors.

     "EIB Facilities"

     means the credit facilities made available by the European Investment Bank
     which mature after the Final Repayment Date, and more particularly being:

     (a)  a (Pounds)144,000,000 credit facility dated 26th February, 1998 for
          Southern Water Services Limited and the Company, to be novated to
          Southern Water Services Limited;

     (b)  a (Pounds)50,000,000 credit facility dated 14th February, 2000 for
          Manweb plc; and

     (c)  a (Pounds)150,000,000 credit facility dated 14th December, 1998 as
          amended and restated on 19th and 22nd July, 1999 for the Company of
          which (Pounds)80,000,000 will be novated to SP Distribution and
          (Pounds)70,000,000 will be novated to SP Transmission.

     "Environmental Law"

     means all laws, regulations, codes of practice, circulars, guidance notices
     and the like (whether in the United Kingdom or elsewhere) whether or not
     having the force of law but if not having the force of law compliance with
     which is customary in the industry concerning the protection of human
     health or the environment or the conditions of the work place or the
     generation, transportation, storage, treatment or disposal of Dangerous
     Substances.

     "Environmental Licence"

     means any permit, licence, authorisation, consent or other approval
     required by any Environmental Law.

     "euro"

     means the single currency of the Participating Member States.

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     "Event of Default"

     means an event specified as such in Clause 19.1 (Events of Default).

     "Excluded Entity"

     means SWP, Manweb plc and Thus plc and any of their Subsidiaries.

     "Existing Facility"

     means the (Pounds)2,600,000,000 credit agreement dated 24th June, 1996 as
     amended by a supplemental agreement dated 12th March, 1999 made between
     (among others) the Company and the Agent.

     "Facility"

     means the facility referred to in Clause 2.1 (Facility).

     "Facility Office"

     means, subject to Clause 27.7 (Change of Facility Office), the office(s)
     notified by a Bank to the Agent:

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

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

     as the office(s) through which it will perform all or any of its
     obligations under this Agreement.

     "Fee Letter"

     means:

     (a)  the letter dated the date of this Agreement between the Joint
          Arrangers and the Company setting out the amount of various fees
          referred to in Clause 21.1 (Front-end fees); and

     (b)  the letter dated the date of this Agreement between the Agent and the
          Company setting out the amount various fees referred to in Clause 21.4
          (Agent's fee).

     "Final Repayment Date"

     means the fifth anniversary of the date of this Agreement.

     "Finance Document"

     means this Agreement, a Fee Letter, a Counter Guarantor Accession
     Agreement, a Guarantor Accession Agreement, a Novation Certificate or any
     other document designated as such by the Agent and the Company.

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     "Finance Party"

     means a Joint Arranger, a Bank or the Agent.

     "Franchise Area"

     means each of:

     (a)  the area described in paragraph 1 of Schedule 1 of the Appointment in
          respect of the Appointee's appointment as a water undertaker; and

     (b)  the area described in paragraph 2 of Schedule 1 of the Appointment in
          respect of the Appointee's appointment as a sewerage undertaker.

     "GEMA"

     means the Gas and Electricity Markets Authority.

     "GEMA Subsidiary"

     means a Subsidiary of the Company which has any assets or business of the
     Group transferred to it as a result of a Restructuring.

     "GEMA Subsidiary Guarantor"

     has the meaning given in Clause 27.4(a)(ii) (Accession).

     "Group"

     means at any time the Company and its Subsidiaries at that time.

     "Guarantor"

     means, subject to Clause 27.4(a) (Accession), a GEMA Subsidiary Guarantor
     or Holdco.

     "Guarantor Accession Agreement"

     means a deed substantially in the form of Part 1 of Schedule 8 with such
     amendments as the Agent may approve or reasonably require.

     "Hedging Liabilities"

     means indebtedness arising in respect of obligations of the type referred
     to in paragraph (g) of the definition of "Borrowings" in this Clause 1.1.

     "Holdco"

     means Scottish Power plc (Registered No. SC193794).

     "Holdco Group"

     means at any time Holdco and its Subsidiaries at that time.

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     "Interest Payable"

     means, in respect of any financial period, all interest, discount and
     acceptance commission and all other continuing, regular or periodic costs,
     charges and expenses in the nature of interest (whether paid, payable or
     capitalised) or treated for accounting purposes as interest, incurred by
     the Group in effecting, servicing or maintaining Total Consolidated
     Borrowings during that period.

     "Interest Receivable"

     means, in respect of any financial period, interest and amounts in the
     nature of interest received during that period by the Group from persons
     outside the Group.

     "Investments"

     means:

     (a)  cash on current account or cash on deposit with, or certificates of
          deposit issued by, or bills of exchange accepted by, any bank
          incorporated in an OECD country from which proceeds are readily
          remittable to the United Kingdom, and in each case, where the deposit
          or the maturity is for a duration of six months or less; and

     (b)  bonds or treasury bills issued by an OECD government or agency, bonds
          rated single-A or above by a major rating agency and commercial paper
          rated A1 or P1 by a major rating agency, in each case, where the
          proceeds of which are readily remittable to the United Kingdom.

     "LIBOR"

     means, in relation to a Loan:

     (a)  the rate per annum which appears on Telerate Page 3750 or Telerate
          Page 3740 (as appropriate); or

     (b)  if no such offered quotation appears on Telerate Page 3750 or Telerate
          Page 3740, the arithmetic mean (rounded upward to four decimal places)
          of the rates, as supplied to the Agent at its request quoted by the
          Reference Banks to leading banks in the London interbank market,

     in each case, at or about 11.00 a.m. on the applicable Rate Fixing Day for
     the offering of deposits in the currency of the relevant Loan for a period
     comparable to its Term.

     For the purposes of this definition, "Telerate Page 3750" or "Telerate Page
     3740" means the display designated as "Page 3750" or "Page 3740" (as
     appropriate) on the Telerate Service (or other such page as may replace
     Page 3750 or Page 3740 on that service) or such other service as may be
     nominated by the British Bankers' Association as the information vendor for
     the purpose of displaying British Bankers' Association Interest Settlement
     Rates for various currencies.

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     "Licence"

     means each licence granted by GEMA to a member of the Group under section
     6(1) of the Electricity Act 1989 (as amended, after section 30 of the
     Utilities Act 2000 comes into force).

     "Loan"

     means the principal amount of a borrowing by the Company under this
     Agreement or the principal amount outstanding of that borrowing.

     "Majority Banks"

     means, at any time, Banks whose Commitments:

     (a)  then aggregate more than 66 2/3 per cent. of the Total Commitments; or

     (b)  if no Loans are then outstanding and the Total Commitments have been
          reduced to zero, aggregated more than 66 2/3 per cent. 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 Agent under Schedule 3
     (Calculation of Mandatory cost).

     "Mandatory Subsidiaries"

     means SP Distribution, SP Generation and SP Transmission.

     "Margin"

     means, subject to Clause 8.2 (Margin adjustments), 0.45 per cent. per
     annum.

     "Net Interest Payable"

     means, in respect of any financial period, Interest Payable during that
     period less Interest Receivable during that period.

     "Novation Certificate"

     means a duly completed certificate, substantially in the form of Schedule 5
     (Form of Novation Certificate).

     "Obligor"

     means the Company, a Guarantor or a Counter Guarantor.

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     "Operating Profit"

     means the consolidated net pre-taxation profits (after adding back Net
     Interest Payable) of the Group for a financial year of the Group before
     taking account of any extraordinary profits (or losses).

     "Optional Currency"

     means US Dollars, euros or any other currency (other than Sterling) which
     is for the time being freely transferable and convertible into Sterling and
     deposits of which are readily available in the London interbank market.

     "Original Group Accounts"

     means the audited consolidated accounts of the Group for the year ended
     31st March, 2000.

     "Original Sterling Amount"

     means:

     (a)  the principal amount of a Loan denominated in Sterling; or

     (b)  the principal amount of a Loan denominated in an Optional Currency
          translated into Sterling on the basis of the Agent's Spot Rate of
          Exchange three Business Days before its Drawdown Date.

     "Outstandings"

     means at any time, the aggregate of each outstanding Loan.

     "PacifiCorp"

     means PacifiCorp (a company incorporated in Portland, Oregon).

     "Participating Member State"

     means a member state of the European Union that adopts a single currency in
     accordance with the treaty establishing the EC.

     "Party"

     means a party to this Agreement.

     "Permitted Security Interest"

     means:

     (a)  any Security Interest created or outstanding with the prior written
          consent of the Majority Banks;

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     (b)  any lien or hypothecation arising by operation of law or contained in
          a contract for the sale of goods, supply of services or joint
          operation of assets entered into in the ordinary course of trade of
          the company creating the same;

     (c)  Security Interests not otherwise permitted under paragraphs (a) and
          (b) above provided that the aggregate principal amount of the
          indebtedness secured by Security Interests permitted under this
          paragraph (c) shall not at any time exceed an amount equal to 15 per
          cent. of Tangible Consolidated Net Worth at that time; and

     (d)  any Security Interest created by a Project Finance Subsidiary to
          secure its Project Finance Borrowings.

     "Principal Subsidiary"

     means any Subsidiary of the Company:

     (a)  whose profits (before taxation and before extraordinary items and any
          taxation relating thereto) are 10 per cent. or more of the
          consolidated net profits of the Group (before taxation and before
          extraordinary items and any taxation relating thereto); or

     (b)  whose gross assets are 10 per cent. or more of the consolidated gross
          assets of the Group; or

     (c)  whose Net Assets are 10 per cent. or more of the consolidated Net
          Assets of the Group,

          all as shown (in the case of any Subsidiary) in its most recent annual
          accounts and (in the case of the Group) in the most recent annual
          consolidated accounts of the Group and for this purpose "Net Assets"
          in relation to any Subsidiary means its total assets (excluding
          goodwill) less its total liabilities and in relation to the Group
          means the total assets (excluding goodwill) of the Group less its
          total liabilities; and

     (d)  any other Subsidiary or Subsidiaries of the Company to whom all or
          substantially all of the assets or business of a Principal Subsidiary
          are transferred.

     "Project Finance Borrowings"

     means any Borrowing which finances, and any Hedging Liabilities incurred in
     the financing of the acquisition, development, ownership and/or operation
     of an asset:

     (a) which is incurred by a Project Finance Subsidiary; or

     (b)  in respect of which the person or persons to whom such Borrowing is or
          may be owed by the relevant debtor (whether or not a member of the
          Group) has or have no recourse whatsoever to any member of the Group
          (other than to a Project Finance Subsidiary) for the repayment thereof
          other than:

          (i)  recourse to such debtor for amounts limited to the cash flow or
               net cash flow (other than historic cash flow or historic net cash
               flow) from such asset; and/or
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          (ii)  recourse to such debtor for the purpose only of enabling amounts
                to be claimed in respect of such Borrowing in an enforcement of
                any Security Interest given by such debtor over such asset or
                the income, cash flow or other proceeds deriving therefrom (or
                given by any shareholder or the like in the debtor over its
                shares or like interest in the capital of the debtor) to secure
                such Borrowing, provided that (I) the extent of such recourse to
                such debtor is limited solely to the amount of any recoveries
                made on any such enforcement, and (II) such person or persons
                are not entitled, by virtue of any right or claim arising out of
                or in connection with such Borrowing, to commence proceedings
                for the winding up or dissolution of the debtor or to appoint or
                procure the appointment of any receiver, trustee or similar
                person or officer in respect of the debtor or any of its assets
                (save only for the assets the subject of such Security
                Interest); and/or

          (iii) recourse to such debtor generally, or directly or indirectly to
                a member of the Group, under any form of assurance, undertaking
                or support, which recourse is limited to a claim for damages
                (other than liquidated damages and damages required to be
                calculated in a specified way) for breach of an obligation (not
                being a payment obligation or an obligation to procure payment
                by another or an indemnity in respect thereof or any obligation
                to comply or to procure compliance by another with any financial
                ratios or other tests of financial condition) by the person
                against whom such recourse is available.

     "Project Finance Subsidiary"

     means any Subsidiary of the Company:

     (a)  which is a company whose principal assets and business are constituted
          by the ownership, acquisition, development and/or operation of an
          asset whether directly or indirectly;

     (b)  none of whose Borrowings in respect of the financing of such
          ownership, acquisition, development and/or operation of an asset
          benefits from any recourse whatsoever to any member of the Group
          (other than the Subsidiary itself or another Project Finance
          Subsidiary) in respect of the repayment thereof, except as expressly
          referred to in paragraph (b)(iii) of the definition of Project Finance
          Borrowings in this Clause 1.1; and

     (c)  which has been designated as such by the Company by written notice to
          the Agent, provided that the Company may give written notice to the
          Agent at any time that any Project Finance Subsidiary is no longer a
          Project Finance Subsidiary, whereupon it shall cease to be a Project
          Finance Subsidiary.

     "Qualifying Bank"

     means an institution which is:

     (a)  a bank 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

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          (as currently defined in section 840A of the Income and Corporation
          Taxes Act) at the time the Loan was made; or

     (b)  a financial institution lending through any other branch, affiliate or
          agency if, at the time such financial institution becomes a Party, the
          financial institution or affiliate (as the case may be) is a resident
          in a country with which the United Kingdom has an appropriate double
          taxation treaty pursuant to which the Company, upon receiving an
          appropriate direction from the UK Inland Revenue Financial
          Intermediaries and Claims Office, will be permitted to pay interest in
          respect of advances made by that financial institution under this
          Agreement without withholding of United Kingdom income tax.

     "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 an Optional Currency (other than euros); or

     (c)  the second TARGET Day before the first day of a Term for a Loan
          denominated in euros.

     "Reference Banks"

     means, subject to Clause 27.5 (Reference Banks), the principal London
     offices of The Royal Bank of Scotland plc, The Chase Manhattan Bank, The
     Bank of Tokyo-Mitsubishi, Ltd. and Commerzbank Aktiengesellschaft.

     "Relevant Group"

     means

     (a)  in the case of the Company, the Group; or

     (b)  in the case of Holdco, the Holdco Group.

     "Repayment Date"

     means the last day of a Term for a Loan.

     "Request"

     means a request made by the Company for a Loan, substantially in the form
     of Schedule 4 (Form of Request).

     "Reservations"

     means the qualifications as to matters of law only contained in the legal
     opinions set out in Schedule 6 (Form of legal opinion of Allen & Overy) and
     Schedule 7 (Form of legal opinion of Maclay Murray & Spens).

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     "Restructuring"

     means any restructuring of the Group required in order to comply with the
     Utilities Act 2000 and the Licences.

     "Ring Fenced Group"

     means Holdco and any Affiliate of Holdco that is not also a member of
     the Group.

     "Security Interest"

     means any mortgage, pledge, lien, charge, assignment by way of security or
     subject to a proviso for redemption, assignation in security, standard
     security, hypothecation or security interest or any other agreement or
     arrangement having the effect of conferring security.

     "SP Distribution"

     means SP Distribution Limited (Registered No. SC189125).

     "SP Generation"

     means Scottish Power Generation Limited (Registered No. SC189124).

     "SP Transmission"

     means SP Transmission Limited (Registered No. SC189126).

     "Sterling"

     means the lawful currency for the time being of the U.K.

     "Subsidiary"

     means a subsidiary within the meaning of Section 736 of the Companies Act
     1985, as amended by Section 144 of the Companies Act 1989.

     "SWP"

     means Southern Water PLC (registered number 2366620).

     "Tangible Consolidated Net Worth"

     means at any time the aggregate of:

     (a)  the amount paid up or credited as paid up on the issued share capital
          of the Company; and

     (b)  the amount standing to the credit of the consolidated capital and
          revenue reserves of the Group;

     based on the Balance Sheet but adjusted by:

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     (i)    adding any amount standing to the credit of the profit and loss
            account for the Group for the period ending on the date of the
            Balance Sheet, to the extent not included in sub-paragraph (b) above
            and to the extent the amount is not attributable to any dividend or
            other distribution declared, recommended or made by any member of
            the Group;

     (ii)   deducting any amount standing to the debit of the profit and loss
            account for the Group for the period ending on the date of the
            Balance Sheet, to the extent not included in sub-paragraph (b)
            above;

     (iii)  deducting any amount attributable to goodwill or any other
            intangible asset;

     (iv)   deducting any amount attributable to a revaluation of assets after
            31st March, 2000 or, in the case of assets of a company which
            becomes a member of the Group after that date, the date on which
            that company becomes a member of the Group unless in either case
            such revaluation is based on valuations by independent valuers;

     (v)    reflecting any variation in the amount of the issued share capital
            of the Company and the consolidated capital and revenue reserves of
            the Group after the date of the Balance Sheet;

     (vi)   reflecting any variation in the interest of the Company in any other
            member of the Group since the date of the Balance Sheet;

     (vii)  excluding any amounts required to be set aside for taxation payable
            by the Group;

     (viii) excluding any amount attributable to minority interests; and

     (ix)   eliminating inconsistencies between the accounting principles
            applied in connection with the Balance Sheet and those applied in
            connection with the Original Group Accounts.

     "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.

     "Term"

     means the period selected by the Company in a Request for which the
     relevant Loan is to be outstanding.

     "Total Commitments"

     means the aggregate for the time being of the Commitments, being
     (Pounds)1,000,000,000 at the date of this Agreement.

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     "Total Consolidated Borrowings"

     means, at any time, the aggregate principal amount (or amounts equivalent
     to principal, howsoever described) comprised in the Borrowings of the
     Company and its Subsidiaries at that time calculated on a consolidated
     basis.  Any amount outstanding in a currency other than Sterling is to be
     taken into account at its Sterling equivalent calculated on the basis of
     the Agent's Spot Rate of Exchange on the day the relevant amount falls to
     be calculated.

     "Total Consolidated Net Borrowings"

     means, at any time, Total Consolidated Borrowings less the aggregate
     principal amount of Investments beneficially owned by the Group free from
     Security Interests (to the extent the proceeds of the same are readily
     remittable to the U.K.) at that time.

     "U.K."

     means the United Kingdom.

     "Water Act"

     means the Water Industry Act 1991 and any subordinate legislation,
     regulations and codes of practice made or issued under it.

     "US Dollars"

     means the lawful currency for the time being of the United States of
     America.

1.2  Construction

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

     (i)    "assets" includes properties, revenues and rights of every
            description;

            an "authorisation" includes an authorisation, consent, approval,
            resolution, licence, exemption, filing, registration and
            notarisation;

            a "regulation" includes any regulation, rule, official directive,
            request or guideline (whether or not having the force of law) of any
            governmental body, agency, department or regulatory, self-regulatory
            or other authority or organisation;

     (ii)   a provision of a law is a reference to that provision as amended or
            re-enacted;

     (iii)  a Clause or a Schedule is a reference to a clause of or a schedule
            to this Agreement;

     (iv)   a person includes its permitted successors and assigns;

     (v)    a Finance Document or another document is a reference to that
            Finance Document or that other document as amended, novated or
            supplemented in writing; and

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

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                                      16
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(b)  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 sub-paragraph (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.

(c)  Unless the contrary intention appears, a term used in any other Finance
     Document or in any notice given under or in connection with any Finance
     Document has the same meaning in that Finance Document or notice as in this
     Agreement.

(d)  (i)   Terms used in the definitions of "Borrowings", "Consolidated EBITDA",
           "Interest Payable", "Interest Receivable", "Net Interest Payable",
           "Operating Profit", "Tangible Consolidated Net Worth", "Total
           Consolidated Borrowings" and "Total Consolidated Net Borrowings" in
           Clause 1.1 (Definitions) are to be calculated in accordance with the
           accounting principles applied in connection with the Original Group
           Accounts.

     (ii)  If there is a dispute as to any interpretation or computation for
           sub-paragraph (i) above, the interpretation or computation of the
           auditors for the time being of the Company will prevail.

(e)  The index to and the headings in this Agreement are for convenience only
     and are to be ignored in construing this Agreement.

(f)  (i)   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.

     (ii)  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 under) or termination of that Finance
           Document.

2.   THE FACILITY

2.1  Facility

(a)  Subject to the terms of this Agreement, the Banks grant to the Company a
     committed multicurrency revolving credit facility under which the Banks
     agree to make Loans to the Company.

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                                      17
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(b)  The Banks shall, when requested by the Company, make to the Company Loans
     up to an aggregate principal amount not exceeding, at any time, the Total
     Commitments at that time.

(c)  No Bank is obliged to lend more than its Commitment.

2.2  Number of Requests and Drawdowns

     No Request may specify a Drawdown Date which is within three Business Days
     of another Drawdown Date, although up to three Loans may be made on the
     same day.  Subject to the above, any number of Requests may be delivered on
     the same day and/or specifying the same Drawdown Date, whether or not the
     Terms requested are similar.

2.3  Limits

(a)  The aggregated Original Sterling Amount of all outstanding Loans shall not
     exceed the Total Commitments.

(b)  No Bank is obliged to participate if it would cause the Original Sterling
     Amount of its participations in the Loans to exceed its Commitment.

2.4  Nature of a Finance Party's rights and obligations

(a)  The obligations of a Finance Party under the Finance Documents are several.
     Failure of a Finance Party to carry out those obligations does not relieve
     any other Party of its obligations under the Finance Documents.  No Finance
     Party is responsible for the obligations of any other Finance Party under
     the Finance Documents.

(b)  The rights of a Finance Party under the Finance Documents are divided
     rights.  A Finance Party may, except as otherwise stated in the Finance
     Documents, separately enforce those rights.

2.5  Change of Currency

     If a change in any currency of a country occurs, this Agreement will be
     amended to the extent the Agent acting reasonably and in consultation with
     the Company specifies to be necessary to reflect the change in currency and
     to put the Banks in the same position, so far as possible, that they would
     have been in if no change in currency had occurred.

3.   PURPOSE

(a)  The Company shall apply each Loan towards its general corporate purposes
     and the refinancing of any outstanding amounts under the Existing Facility.

(b)  Without affecting the obligations of the Company in any way, no Finance
     Party is bound to monitor or verify the application of any Loan.

4.   CONDITIONS Precedent

4.1  Documentary conditions precedent

     The obligations of each Finance Party to the Company under this Agreement
     are subject to the condition precedent that the Agent has notified the
     Company and the Banks that it has

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<PAGE>

                                      18

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     received all of the documents set out in Part 1 of Schedule 2 in form and
     substance satisfactory to the Agent.

4.2  Further conditions precedent

     The obligations of each Bank to participate in a Loan are subject to the
     further conditions precedent that on both the date of the Request and the
     Drawdown Date for that Loan:

     (i)  the representations and warranties in Clause 17 (Representations and
          warranties) to be repeated on those dates are correct and will be
          correct immediately after the Loan is made; and

     (ii) no Default is outstanding or could reasonably be expected to result
          from the making of the Loan.

5.   DRAWDOWN

5.1  Receipt of Requests

     The Company may utilise the Facility if the Agent receives a duly completed
     Request, not later than:

     (a)  9.30 a.m. on the proposed Drawdown Date for a Loan denominated in
          Sterling which is to be used solely for the purposes of repayment of
          commercial paper which is due for repayment on that Drawdown Date; or

     (b)  12.00 noon one Business Day before the applicable Rate Fixing Day for
          a Loan denominated in:

          (i)  an Optional Currency; or

          (ii) Sterling if borrowed for a purpose other than that set out in
               paragraph (a) above.

5.2  Completion of Requests

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

     (a)  the Drawdown Date is a Business Day falling before the Final Repayment
          Date;

     (b)  the principal amount of the Loan is a minimum of (Pounds)25,000,000
          and an integral multiple of (Pounds)5,000,000 (or its equivalent in an
          Optional Currency) or the principal amount of the Loan is equal to the
          balance of the undrawn Total Commitments as at the proposed Drawdown
          Date;

     (c)  one Term is specified which:

          (i)  does not extend beyond the Final Repayment Date; and

          (ii) is a period of one, two, three or six months.

     (d)  the payment instructions comply with Clause 10 (Payments);

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<PAGE>

                                      19
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     (e)  the amount selected under paragraph (b) above does not cause Clause
          2.3 (Limits) to be contravened; and

     (f)  if the currency selected is an Optional Currency it complies with
          Clause 9 (Optional Currencies).

5.3  Amount of each Bank's participation in a Loan

     The amount of a Bank's participation in a Loan will be the proportion of
     that Loan which its Commitment bears to the Total Commitments on the date
     of receipt of the relevant Request.

5.4  Notification of the Banks

     The Agent shall promptly notify each Bank of the details of the requested
     Loan and the amount of its participation in the Loan.

5.5  Payment of proceeds

     Subject to the terms of this Agreement, each Bank shall make its
     participation in each Loan available to the Agent for the Company on the
     relevant Drawdown Date.

6.   REPAYMENT

     The Company shall repay each Loan in full on its Repayment Date to the
     Agent for the Banks.

7.   PREPAYMENT AND CANCELLATION

7.1  Automatic cancellation of the Total Commitments

     The Commitment of each Bank shall be automatically cancelled at close of
     business on the Final Repayment Date.

7.2  Voluntary cancellation

     The Company may, by giving not less than 10 days' prior notice to the
     Agent, cancel the unutilised portion of the Total Commitments in whole or
     in part (but, if in part, in a minimum Original Sterling Amount of
     (Pounds)25,000,000 and an integral multiple of (Pounds)5,000,000).  Any
     cancellation in part shall be applied against the Commitment of each Bank
     pro rata.

7.3  Additional right of prepayment and cancellation

     If any Obligor is required to pay any amount to or for the account of a
     Bank under Clause 11 (Taxes) or Clause 13 (Increased costs) the Company
     may, whilst the circumstances giving rise to the requirement continue,
     serve a notice of prepayment and cancellation on that Bank through the
     Agent.  On the date falling five Business Days after the date of service of
     the notice:

     (a)  the Company shall prepay that Bank's participation in all the Loans
          together with all other amounts payable by it to that Bank under this
          Agreement; and

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<PAGE>

                                      20
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     (b)  the Bank's Commitment shall be cancelled.

7.4  Miscellaneous provisions

(a)  Any notice of prepayment and/or cancellation under this Agreement is
     irrevocable. The Agent shall notify the Banks promptly of receipt of any
     such notice.

(b)  All prepayments under this Agreement shall be made together with accrued
     interest on the amount prepaid.

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

(d)  Any amount of a Loan repaid under this Agreement may subsequently be re-
     borrowed.

8.   INTEREST

8.1  Interest rate

     Subject to Clause 8.5 (Default interest), the rate of interest on each Loan
     for its Term is the rate per annum determined by the Agent to be the
     aggregate of the applicable:

     (a)  Margin;

     (b)  LIBOR; and

     (c)  Mandatory Cost.

8.2  Margin adjustments

(a)  In this Clause 8.2:

     "Accounting Reference Date" means the last day of each financial year and
     each financial half year of the Company.

     "Margin Certificate" is a certificate, substantially in the form of
     Schedule 9 (Form of Margin Certificate), setting out the amount of Total
     Consolidated Net Borrowings and Consolidated EBITDA for the period ending
     on the Accounting Reference Date.

(b)  The Company must supply to the Facility Agent a Margin Certificate on each
     date that it supplies the relevant accounts under Clause 18.2(a) or (b)
     (Financial Information).

(c)  A Margin Certificate must be signed by one of the senior officers of the
     Company.

(d)  Subject to paragraph (e) below, the Margin applicable to any Loan during a
     Term with an applicable Rate Fixing Day falling after the delivery of a
     Margin Certificate delivered on or after the date falling six months after
     the date of this Agreement but on or before delivery of the next Margin
     Certificate will be calculated by reference to the table below and the
     information set out in the relevant Margin Certificate:

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<PAGE>

                                      21
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

               Total Consolidated Net Borrowings                        Applicable Margin (%)
                     to Consolidated EBITDA                                   per annum
<S>                                                                    <C>
     Greater than or equal to 3.25:1                                             0.50

     Less than 3.25:1 but greater than or equal to 2.25:1                        0.45

     Less than 2.25:1                                                            0.40
</TABLE>

(e)  For so long as:

     (i)  the Company is in default of its obligations under this Agreement to
          provide a Margin Certificate; or


     (ii) a Default is outstanding,

     the Margin will be 0.50 per cent. per annum.

8.3  Non-Business Days

     If a Term would otherwise end on a day which is not a Business Day, that
     Term shall instead end on the next Business Day in that calendar month (if
     there is one) or the preceding Business Day (if there is not).

8.4  Due dates

     Except as otherwise provided in this Agreement, accrued interest on each
     Loan is payable by the Company on the last day of its Term and also, if the
     Term is longer than 6 months, on the date falling at 6 monthly intervals
     after the first day of that Term.

8.5  Default interest

(a)  If an Obligor fails to pay any amount payable by it under the Finance
     Documents, it shall forthwith on demand by the Agent pay interest on the
     overdue amount from the due date up to the date of actual payment, as well
     after as before judgment , at a rate (the "default rate") determined by the
     Agent to be one per cent. 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 such
     successive Terms of such duration as the Agent may determine (each a
     "Designated Term"), that default rate applying to those overdue amounts
     instead of the rate under Clause 8.1 (Interest rate).

(b)  The default rate will be determined on each Business Day or the first day
     of the relevant Designated Term, as appropriate.

(c)  If the Agent is informed that deposits in the currency of the overdue
     amount are not at the relevant time being made available by the Reference
     Banks to leading banks in the London interbank market, the default rate
     will be determined by reference to the cost of funds to the Agent from
     whatever sources it reasonably selects, after consultation with the
     Reference Banks.

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<PAGE>

                                      22
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(d)  Default interest will be compounded monthly (where paragraph (a)(i)
     applies) and at the end of each Designated Term (in each other case).

8.6  Notification of rates of interest

     The Agent shall promptly notify each relevant Party of the determination of
     a rate of interest under this Agreement.

9.   OPTIONAL CURRENCIES

9.1  Selection

(a)  The Company shall select the currency of a Loan in the relevant Request.

(b)  The currency of each Loan must be Sterling or an Optional Currency.

(c)  The Company may not choose a currency if as a result the Loans would be
     denominated at any time in more than 3 currencies.

(d)  The Agent shall notify each Bank of the currency and the Original Sterling
     Amount of each Loan and the applicable Agent's Spot Rate of Exchange
     promptly after they are ascertained.

9.2  Revocation of currency

     If, before 9.30 a.m. on any Rate Fixing Day, the Agent receives notice from
     a Bank that:

     (a)  it is impracticable for the Bank to fund its participation in the
          relevant Loan in the relevant Optional Currency during its Term in the
          ordinary course of business in the London interbank market; and/or

     (b)  the use of the proposed Optional Currency might contravene any law or
          regulation,

     the Agent shall give notice to the Company and to the Banks to that effect
     before 11.00 a.m. on that day.  In this event:

     (i)  the Company and the Banks may agree that the drawdown will not be
          made; or

     (ii) in the absence of agreement, that Bank's participation in the Loan
          (or, if more than one Bank is similarly affected, those Banks'
          participations in the Loan) shall be treated as a separate Loan
          denominated in Sterling during the relevant Term.

10.  PAYMENTS

10.1 Place

     All payments by an Obligor or a Bank under the Finance Documents shall be
     made to the Agent to its account at such office or bank as it may notify to
     the Obligors or that Bank for this purpose.

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<PAGE>

                                      23
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10.2  Funds

      Payments under the Finance Documents to the Agent shall be made for value
      on the due date at such times and in such funds as the 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.

10.3  Distribution

(a)   Each payment received by the Agent under this Agreement for another Party
      shall, subject to paragraphs (b) and (c) below, be made available by the
      Agent to that Party by payment (on the date and in the currency and funds
      of receipt) to its account with such office or bank:

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

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

      as it may notify to the Agent for this purpose by not less than 5 Business
      Days' prior notice.

(b)   The Agent may apply any amount received by it for an Obligor in or towards
      payment (on the date and in the currency and funds of receipt) of any
      amount due from an Obligor under the Finance Documents.

(c)   Where a sum is to be paid under the Finance Documents to the Agent for the
      account of another Party, the Agent is not obliged to pay that sum to that
      Party until it has established that it has actually received that sum. The
      Agent may, however, assume that the sum has been paid to it in accordance
      with this Agreement and, in reliance on that assumption, make available to
      that Party a corresponding amount. If the sum has not been made available
      but the Agent has paid a corresponding amount to another Party, that Party
      shall forthwith on demand refund the corresponding amount to the Agent
      together with interest on that amount from the date of payment to the date
      of refund, calculated at a rate determined by the Agent to reflect its
      cost of funds.

10.4  Currency

(a)   A repayment or prepayment of a Loan or any part of a Loan is payable in
      the currency in which the Loan is denominated on its due date.

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

(c)   Amounts payable in respect of costs, expenses, taxes and the like are
      payable in the currency in which they are incurred.

(d)   Any other amount payable under the Finance Documents is, except as
      otherwise provided in this Agreement, payable in Sterling.

10.5  Set-off and counterclaim

      All payments made by an Obligor under the Finance Documents shall be made
      without set-off or counterclaim.

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<PAGE>

                                      24
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10.6  Non-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 shall instead be the next
     Business Day in the same calendar month (if there is one) or the preceding
     Business Day (if there is not).

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

10.7  Partial payments

(a)  If the Agent receives a payment insufficient to discharge all the amounts
     then due and payable by the Obligors under the Finance Documents, the Agent
     shall apply that payment towards the obligations of the Obligors under the
     Finance Documents in the following order:

     (i)    first, in or towards payment of any unpaid costs and expenses of the
            Agent under the Finance Documents;

     (ii)   secondly, in or towards payment pro rata of any accrued fees due but
            unpaid under Clause 21.2 (Commitment fee);

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

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

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

(b)  The Agent shall, if so directed by all the Banks, vary the order set out in
     sub-paragraphs (a)(ii) to (v) above.

(c)  Paragraphs (a) and (b) above shall override any appropriation made by an
     Obligor.

10.8 Netting of payments

(a)  If on any date an amount (the "first amount") is to be advanced or paid by
     a Bank under this Agreement and an amount (the "second amount") is due from
     an Obligor to that Bank under the Finance Documents, the Obligor instructs
     that Bank to apply the first amount in or towards payment of the second
     amount.

(b)  The relevant Bank shall remain obliged to advance any excess (or, as the
     case may be, an Obligor shall remain obliged to pay any shortfall) in
     accordance with this Clause 10. Nothing in this Clause 10.8 shall be
     effective to create a charge.

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<PAGE>

                                      25
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11.   TAXES

11.1  Gross-up

      All payments by an Obligor under the Finance Documents shall be made free
      and clear of and without deduction for or on account of any taxes levied
      or imposed by or on behalf of the UK or any taxing authority thereof or
      therein except to the extent that the Obligor is required by law to make
      payment subject to any taxes. If any tax or amounts in respect of tax must
      be deducted from any amounts payable or paid by an Obligor, or paid or
      payable by the Agent to a Bank, under the Finance Documents, the Obligor
      shall pay such additional amounts as may be necessary to ensure that the
      relevant Bank receives a net amount equal to the full amount which it
      would have received had payment not been made subject to tax.

11.2  Tax receipts

      All taxes required by law to be deducted or withheld by an Obligor from
      any amounts paid or payable under the Finance Documents shall be paid by
      the relevant Obligor when due and the Obligor shall, within 30 days of the
      payment being made, deliver to the Agent for the relevant Bank an original
      or certified copy of an official receipt or such other evidence, if any,
      as is then customary, evidencing that such deduction or withholding has
      been made and has been accounted for to the appropriate authorities.

11.3  Qualifying Banks

(a)   If, otherwise than as a result of the introduction of, change in, or
      change in the interpretation, administration or application of, any law,
      treaty or regulation or any practice or concession of the UK Inland
      Revenue occurring after the date of this Agreement, a Bank is not or has
      ceased to be a Qualifying Bank or is not or has ceased to be beneficially
      entitled to all interest received by it in respect of advances made by it
      under this Agreement, no Obligor will be liable to pay to or for the
      account of that Bank under Clause 11.1 (Gross-up) any amount in respect of
      taxes levied or imposed by the U.K. or any taxing authority of or in the
      UK in excess of the amount it would have been obliged to pay if that Bank
      had been, or had not ceased to be a Qualifying Bank and had been
      beneficially entitled to all interest received by it in respect of
      advances made by it under this Agreement.

(b)   Each Bank warrants and represents to the Obligors on the date of this
      Agreement or (if later) on the date on which it becomes a Party that it is
      a Qualifying Bank and is beneficially entitled to all interest receivable
      by it in respect of advances made by it under this Agreement.

(c)   Each Bank which ceases to be a Qualifying Bank or which ceases to be
      beneficially entitled to interest received by it in respect of advances
      made by it under this Agreement will notify the Company forthwith upon
      becoming aware that it has so ceased.

11.4  Tax Credit

(a)   If an Obligor makes a payment pursuant to Clause 11.1 (Gross-up) for the
      account of any Bank and that Bank has received or been granted a credit
      against, or relief or remission or repayment of, any tax paid or payable
      by it (a "Tax Credit") which is attributable to that payment or the
      corresponding payment under the Finance Document that Bank shall, to the
      extent that it can do so without prejudice to the retention of the amount
      of such credit, relief, remission or repayment, pay to the Obligor
      concerned such amount as the Bank shall have

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<PAGE>

                                      26

      reasonably determined to be attributable to such payments and which will
      leave the Bank (after such payment) in no better or worse position than it
      would have been if the Obligor had not been required to make any deduction
      or withholding.

(b)   Nothing in this Clause 11.4 shall interfere with the right of a Bank to
      arrange its tax affairs in whatever manner it thinks fit and without
      limiting the foregoing no Bank shall be under any obligation, except as
      expressly stated in sub-clause (a) above, to claim a Tax Credit or to
      claim a Tax Credit in priority to any other claims, relief, credit or
      deduction available to it. No Bank shall be obliged to disclose any
      information relating to its tax affairs or any computations in respect
      thereof.

11.5  Double Tax Treaties

      For the purposes of Clause 11.3(a) above, a financial institution which is
      a Qualifying Bank by virtue of satisfying part (b) of the definition
      thereof shall nevertheless not be treated as a Qualifying Bank until the
      Obligors receive an appropriate direction as described in that part (b).

12.   MARKET DISRUPTION

12.1  Market disturbance

(a)   If LIBOR is to be determined in accordance with paragraph (b) of its
      definition and a Reference Bank does not supply an offered rate by 11.30
      a.m. on the applicable Rate Fixing Day, the applicable LIBOR shall,
      subject to paragraph (b) below, be determined on the basis of the
      quotations of the remaining Reference Banks.

(b)   If, in relation to any proposed Loan:

      (i)  LIBOR is to be determined in accordance with paragraph (b) of its
           definition and no, or only one, Reference Bank supplies a rate by
           11.30 a.m. on the applicable Rate Fixing Day for the purposes of
           determining the applicable LIBOR; or

      (ii) the Agent otherwise determines (which determination, made by the
           Agent acting reasonably, shall be conclusive and binding on all
           parties) that adequate and fair means do not exist for ascertaining
           the applicable LIBOR,

      the Agent shall promptly notify the Company and the relevant Banks of the
      fact and that this Clause 12 is in operation.

12.2  Alternative rates

      If the Agent gives a notice under Clause 12.1 (Market disturbance):

      (a)  the Company and the Banks may (through the Agent) agree that in the
           case of a Loan which has not been borrowed, that Loan shall not be
           borrowed; or

      (b)  in the absence of agreement, a Loan (if it has not been borrowed)
           shall still be made: and

           (i)  the Term of the Loans concerned shall be one month; and

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<PAGE>

                                      27
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          (ii) during the Term of each Loan the rate of interest applicable to
               that Loan shall be the applicable Margin plus the Mandatory Cost
               plus the rate per annum which is expressed as a percentage rate
               per annum of the cost to the Bank concerned of funding that Loan
               from whatever sources it may reasonably select, which rate shall
               be notified by the Bank concerned to the Agent before that last
               date of such Term.

13.  INCREASED COSTS

13.1 Increased costs

(a)  Subject to Clause 13.2 (Exceptions), the Company shall forthwith on demand
     by a Finance Party or any of its Affiliates pay that Finance Party the
     amount of any increased cost incurred by it as a result of:

     (i)   the introduction of, or any change in, or any change in the
           interpretation or application of, any law or regulation (including
           any relating to taxation or reserve asset, special deposit, cash
           ratio, liquidity or capital adequacy requirements or any other form
           of banking or monetary control); or

     (ii)  compliance with any law or regulation made after the date of this
           Agreement.

(b)  In this Agreement "increased cost" means:

     (i)   an additional cost incurred by a Finance Party or any of its
           Affiliates as a result of it having entered into, or performing,
           maintaining or funding its obligations under, this Agreement; or

     (ii)  that portion of an additional cost incurred by a Finance Party or any
           of its Affiliates in making, funding or maintaining all or any
           advances comprised in a class of advances formed by or including the
           participations in the Loans made or to be made under this Agreement
           as is attributable to it making, funding or maintaining those
           participations; or

     (iii) a reduction in any amount payable to a Finance Party or any of its
           Affiliates or the effective return to a Finance Party or any of its
           Affiliates under this Agreement or on its capital; or

     (iv)  the amount of any payment made by a Finance Party or any of its
           Affiliates, or the amount of interest or other return foregone by a
           Finance Party or any of its Affiliates, calculated by reference to
           any amount received or receivable by a Finance Party or any of its
           Affiliates from any other Party under this Agreement.

13.2  Exceptions

     Clause 13.1 (Increased costs) does not apply to any increased cost:

     (a)  compensated for by the payment of the Mandatory Cost;

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<PAGE>

                                      28
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     (b)  attributable to any tax or amounts in respect of tax which must be
          deducted from any amounts payable or paid by the Company or payable or
          paid by the Agent to a Finance Party or any of its Affiliates under
          the Finance Documents;

     (c)  attributable to any change in the rate of tax on the overall net
          income, profits or gains of a Bank (or the overall net income, profits
          or gains of a division or branch of the Bank) imposed in the
          jurisdiction in which its principal office or Facility Office is
          situate.

14.  ILLEGALITY AND MITIGATION

14.1 Illegality

     If it is or becomes unlawful in any jurisdiction for a Bank to give effect
     to any of its obligations as contemplated by this Agreement or to fund or
     maintain its participation in any Loan, then:

     (a)  the Bank may notify the Company through the Agent accordingly; and

     (b)  (i)  the Company shall to the extent required and within the period
               allowed by law or regulation or, if no period is allowed by law
               or regulation, forthwith prepay that Bank's participation in all
               the Loans together with all other amounts payable by it to that
               Bank under this Agreement; and

          (ii) the Bank's Commitment shall be cancelled.

14.2 Mitigation

     Notwithstanding the provisions of Clauses 11 (Taxes), 13 (Increased costs)
     and 14.1 (Illegality), if in relation to a Bank or (as the case may be) the
     Agent circumstances arise which would result in:

     (a)  any deduction, withholding or payment of the nature referred to in
          Clause 11 (Taxes); or

     (b)  any increased cost of the nature referred to in Clause 13 (Increased
          costs); or

     (c)  a notification pursuant to Clause 14.1 (Illegality),

     then without in any way limiting, reducing or otherwise qualifying the
     rights of that Bank or the Agent, that Bank shall upon becoming aware of
     the same notify the Agent thereof (whereupon the Agent shall notify the
     Company) and such Bank shall use reasonable endeavours to transfer its
     participation in the Facility and, in the case of the Agent or that Bank,
     its rights hereunder and under the Finance Documents to another financial
     institution or Facility Office not affected by the circumstances having the
     results set out in (a), (b) or (c) above and shall otherwise take such
     reasonable steps as may be open to it to mitigate the effects of such
     circumstances provided that such Bank or the Agent (as the case may be)
     shall not be under any obligation to take any such action if, in its
     reasonable opinion, to do so might have a material adverse effect upon its
     business, operations or financial condition or might involve it in any
     unlawful activity or any activity that is contrary to any request,

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     guidance or directive of any competent authority (whether or not having the
     force of law) or (unless indemnified to its satisfaction) might involve it
     in any expense or tax disadvantage.

15.  GUARANTEE

15.1 Guarantee

     Each Guarantor irrevocably and unconditionally and notwithstanding the
     release of the Company or any other person under the terms of any
     composition or arrangement with any creditors of any member of the Group:

     (a)  as principal obligor guarantees to each Finance Party prompt
          performance by the Company of all its obligations under the Finance
          Documents;

     (b)  undertakes with each Finance Party that, whenever the Company does not
          pay any amount when due under or in connection with any Finance
          Document, a Guarantor shall forthwith on demand by the Agent pay that
          amount as if that Guarantor, instead of the Company, were expressed to
          be the principal obligor; and

     (c)  indemnifies each Finance Party on demand against any loss or liability
          suffered by such Finance Party if any obligation guaranteed by a
          Guarantor is or becomes unenforceable, invalid or illegal.

15.2 Continuing guarantee

     This guarantee is a continuing guarantee and will extend to the ultimate
     balance of all sums payable by the Company under the Finance Documents and
     shall not be discharged by any intermediate payment or discharge in whole
     or in part.

15.3 Reinstatement

     (a)  Where any discharge (whether in respect of the obligations of any
          Obligor or any security for those obligations or otherwise) is made in
          whole or in part or any arrangement is made on the faith of any
          payment, security or other disposition which is avoided or must be
          restored on insolvency, liquidation or otherwise without limitation,
          the liability of a Guarantor under this Clause 15 shall continue as if
          the discharge or arrangement had not occurred.

     (b)  Each Finance Party may concede or compromise any claim that any
          payment, security or other disposition is liable to avoidance or
          restoration.

15.4 Waiver of defences

     The obligations of each Guarantor under this Clause 15 will not be affected
     by an act, omission, matter or thing which, but for this provision, would
     reduce, release or prejudice any of its obligations under this Clause 15 or
     prejudice or diminish those obligations in whole or in part, including
     (whether or not known to it or any Finance Party):

     (a)  any time or waiver granted to, or composition with, the Company or
          other person;

     (b)  the taking, variation, compromise, exchange, renewal or release of, or
          refusal or neglect to perfect, take up or enforce, any rights against,
          or security over assets of, the Company or other person or any non-
          presentation or non-observance of any

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          formality or other requirement in respect of any instrument or any
          failure to realise the full value of any security;

     (c)  any incapacity or lack of powers, authority or legal personality of or
          dissolution or change in the members of status of the Company or any
          other person;

     (d)  any variation (however fundamental) or replacement of a Finance
          Document or any other document or security so that references to that
          Finance Document in this Clause 15 shall include each variation or
          replacement;

     (e)  any unenforceability, illegality or invalidity of any obligation of
          any person under any Finance Document or any other document or
          security, to the intent that a Guarantor's obligations under this
          Clause 15 shall remain in full force and its guarantee be construed
          accordingly, as if there were no unenforceability, illegality or
          invalidity;

     (f)  any postponement, discharge, reduction, non-provability or other
          similar circumstance affecting any obligation of a Guarantor under a
          Finance Document resulting from any insolvency, liquidation or
          dissolution proceedings or from the law, regulation or order so that
          each such obligation shall for the purposes of a Guarantor's
          obligations under this Clause 15 be construed as if there were no such
          circumstances; or

     (g)  the release of the Company or any other person under the terms of any
          composition or arrangement with any creditor of any member of the
          Group.

15.5 Immediate recourse

     Each Guarantor waives any right it may have of first requiring any Finance
     Party (or any trustee or agent on its behalf) to proceed against or enforce
     any other rights or security or claim payment from any person before
     claiming from a Guarantor under this Clause 15.

15.6 Appropriations

     If a notice has been served on the Company under Clause 19.19
     (Acceleration) then, until all amounts which may be or become payable by
     the Obligors under or in connection with the Finance Documents have been
     irrevocably paid in full, each Finance Party (or any trustee or agent on
     its behalf) may:

     (a)  refrain from applying or enforcing any other moneys, security or
          rights held or received by that Finance Party (or any trustee or agent
          on its behalf) in respect of those amounts, or apply and enforce the
          same in such manner and order as it sees fit (whether against those
          amounts or otherwise), and a Guarantor shall not be entitled to the
          benefit of the same; and

     (b)  hold in a suspense account any moneys received from a Guarantor or on
          account of a Guarantor's liability under this Clause 15 which shall
          bear interest at an appropriate commercial rate as reasonably
          determined by such Finance Party.

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15.7 Non-competition

     Until all amounts which may be or become payable by the Obligors under or
     in connection with the Finance Documents have been irrevocably paid in
     full, a Guarantor shall not, after a claim has been made or by virtue of
     any payment or performance by it under this Clause 15:

     (a)  be subrogated to any rights, security or moneys held, received or
          receivable by any Finance Party (or any trustee or agent on its
          behalf) or be entitled to any right of contribution or indemnity in
          respect of any payment made or moneys received on account of a
          Guarantor's liability under this Clause 15;

     (b)  claim, rank, prove or vote as a creditor of the Company or its estate
          in competition with any Finance Party (or any trustee or agent on its
          behalf) unless otherwise required by law; or

     (c)  receive, claim or have the benefit of any payment, distribution or
          security from or on account of the Company, or exercise any right of
          set-off as against the Company.

     Each Guarantor shall hold in trust for and forthwith pay or transfer to the
     Agent for the Finance Parties any payment or distribution or benefit of
     security received by it contrary to this Clause 15.7 or if required by law
     as contemplated by paragraph (b) above or as directed by the Agent.

15.8 Additional security

     This guarantee is in addition to and is not in any way prejudiced by any
     other security now or subsequently held by any Finance Party.

16.  COUNTER GUARANTEE

16.1 Guarantee

     The provisions of this Clause 16 (Counter Guarantee) are subject to the
     terms of Clause 15 (Guarantee) of this Agreement.

16.2 Counter Guarantee

     Each Counter Guarantor irrevocably and unconditionally and notwithstanding
     the release of the Company, any Guarantor or any other person under the
     terms of any composition or arrangement with any creditors of any member of
     the Group:

     (a)  authorises each Guarantor to pay any demand made or purporting to be
          made under Clause 15 (Guarantee) without investigation by it or
          confirmation from a Counter Guarantor or any other person;

     (b)  agrees that, as between itself and any Guarantor, the demand will be
          conclusive evidence that the demand has been properly made;

     (c)  agrees that each Guarantor deals in documents only and shall not be
          concerned with the legality of the claim or any underlying transaction
          or any set-off, counterclaim or defence as between the Company, the
          Guarantors or any other person; and

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     (d)  agrees that this Clause 16.2 shall apply in respect of amounts paid
          under any demand made under Clause 15 (Guarantee) without regard to:

          (i)    the sufficiency, accuracy or genuineness of any demand or any
                 certificate or statement in connection with any demand;

          (ii)   any incapacity of, or limitation upon the powers of, any person
                 signing or issuing any demand or certificate or statement in
                 respect of any demand; or

          (iii)  any other condition.

16.3 Reimbursement and indemnity

     Each Counter Guarantor shall, forthwith on demand:

     (a)  pay to the relevant Guarantor an amount equal to each amount demanded
          of or paid out by a Guarantor in respect of Clause 15 (Guarantee)
          together with interest at the rate specified in Clause 8.5 (Default
          interest) from the date of payment by the relevant Guarantor to the
          date of the corresponding payment by the relevant Counter Guarantor
          under this Clause 16.3(a); and

     (b)  indemnify the relevant Guarantor against any loss or liability which
          it incurs under or in connection with Clause 15 (Guarantee) of this
          Agreement.

16.4 Continuing guarantee

     This counter guarantee is a continuing counter guarantee and will extend to
     the ultimate balance of all sums payable by a Guarantor under or in
     connection with the Finance Documents and shall not be discharged by any
     intermediate payment or discharge in whole or in part.

16.5 Reinstatement

     Where any discharge (whether in respect of the obligations of any Obligor
     or any security for those obligations or otherwise) is made in whole or in
     part or any arrangement is made on the faith of any payment, security or
     other disposition which is avoided or must be restored on insolvency,
     liquidation or otherwise without limitation, the liability of each Counter
     Guarantor under this Clause 16 shall continue as if the discharge or
     arrangement had not occurred.

16.6 Waiver of defences

     The obligations of each Counter Guarantor under this Clause 16 will not be
     affected by an act, omission, matter or thing which, but for this
     provision, would reduce, release or prejudice any of its obligations under
     this Clause 16 or prejudice or diminish those obligations in whole or in
     part, including (whether or not known to it or any Obligor):

     (a)  any time or waiver granted to, or composition with, any Obligor or
          other person;

     (b)  the taking, variation, compromise, exchange, renewal or release of, or
          refusal or neglect to perfect, take up or enforce, any rights against,
          or security over assets of, any Obligor or other person or any non-
          presentation or non-observance of any

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          formality or other requirement in respect of any instrument or any
          failure to realise the full value of any security;

     (c)  any incapacity or lack of powers, authority or legal personality of or
          dissolution or change in the members or status of any Obligor or other
          person;

     (d)  any variation (however fundamental) or replacement of a Finance
          Document or any other document or security so that references to that
          Finance Document or other document or security in this Clause 16 shall
          include each variation or replacement;

     (e)  any unenforceability, illegality or invalidity of any obligation of
          any person under any Finance Document or any other document or
          security, to the intent that each Counter Guarantor's obligations
          under this Clause 16 shall remain in full force and its counter
          guarantee be construed accordingly, as if there were no
          unenforceability, illegality or invalidity;

     (f)  any postponement, discharge, reduction, non-provability or other
          similar circumstance affecting any obligation of a Counter Guarantor
          or other person under a Finance Document or any other document
          resulting from any insolvency, liquidation or dissolution proceedings
          or from any law, regulation or order so that each such obligation
          shall for the purposes of a Counter Guarantor's obligations under this
          Clause 16 be construed as if there were no such circumstances; or

     (g)  the release of any Obligor or any other person under the terms of any
          composition or arrangement with any creditor of any member of the
          Group.

16.7 Immediate recourse

     Each Counter Guarantor waives any right it may have of first requiring any
     Guarantor  to proceed against or enforce any other rights or security or
     claim payment from any person before a claim is made from a Counter
     Guarantor under this Clause 16.

16.8 Appropriations

     If a notice has been served on the Company under Clause 19.19
     (Acceleration) then, until all amounts which may be or become payable by
     the Obligors under or in connection with the Finance Documents have been
     irrevocably paid in full, each Guarantor may:

     (a)  refrain from applying or enforcing any other moneys, security or
          rights held or received by that Guarantor in respect of those amounts,
          or apply and enforce the same in such manner and order as it sees fit
          (whether against those amounts or otherwise) and a Counter Guarantor
          shall not be entitled to the benefit of the same; and

     (b)  hold in a suspense account any moneys received from a Counter
          Guarantor or on account of a Counter Guarantor's liability under this
          Clause 16 which shall bear interest at an appropriate commercial rate
          as reasonably determined by such Guarantor.

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16.9 Non-competition

     Until all amounts which may be or become payable by the Obligors under or
     in connection with the Finance Documents have been irrevocably paid in
     full, a Counter Guarantor shall not, after a claim has been made or by
     virtue of any payment or performance by it under this Clause 16:

     (a)  be subrogated to any rights, security or moneys held, received or
          receivable by any Guarantor or be entitled to any right of
          contribution or indemnity in respect of any payment made or moneys
          received on account of a Counter Guarantor's liability under this
          Clause 16;

     (b)  claim, rank, prove or vote as a creditor of any Obligor or its estate
          in competition with any Guarantor unless otherwise required by law; or

     (c)  receive, claim or have the benefit of any payment, distribution or
          security from or on account of any Obligor, or execute any right of
          set-off as against any Obligor.

     Each Counter Guarantor shall hold in trust for and forthwith pay or
     transfer to the Guarantor any payment or distribution or benefit of
     security received by it contrary to this Clause 16.9 or if required by law
     as contemplated by paragraph (b) above or as directed by a Guarantor.

17.  REPRESENTATIONS AND WARRANTIES

17.1 Representations and warranties

     The Company and, on becoming an Obligor, Holdco (in respect of itself and
     the Relevant Group only) and each Obligor (in respect of itself only) makes
     the representations and warranties set out in this Clause 17
     (Representations and warranties) to each Finance Party.

17.2 Status

(a)  It is a limited liability company, duly incorporated and validly existing
     under the laws of the jurisdiction of its incorporation; and

(b)  each member of the Relevant Group has the power to own its assets and carry
     on its business as it is being conducted.

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, performance and delivery 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

     Each Finance Document to which it is or will be a party constitutes, or
     when executed in accordance with its terms will constitute, its legal,
     valid and binding obligation, enforceable (subject to the Reservations) in
     accordance with its terms.

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17.5 Non-conflict

     The entry into and performance by it of, and the transactions contemplated
     by, the Finance Documents do not and will not conflict with:

     (a)  any law or regulation or judicial or official order; or

     (b)  the constitutional documents of any member of the Relevant Group; or

     (c)  to the best of the knowledge, information and belief of its Directors,
          any document which is binding upon any member of the Relevant Group or
          any asset of any member of the Relevant Group,

     in any such case to an extent or in a manner which would have a material
     adverse effect on its ability to perform its obligations under this
     Agreement.

17.6 No default

(a)  No Default is outstanding or would result from the making of any Loan; and

(b)  no other event is outstanding which constitutes (or, with the giving of
     notice, lapse of time, determination of materiality or the fulfilment of
     any other applicable condition or any combination of the foregoing, is
     reasonably likely to constitute) a default under any document which is
     binding on any member of the Relevant Group or any asset of any member of
     the Relevant Group to an extent or in a manner which might have a material
     adverse effect on its ability to perform its obligations under the Finance
     Documents.

17.7 Authorisations

     All authorisations required 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 Licences

(a)  Each member of the Relevant Group which requires a Licence for the conduct
     of its business has been duly licensed.

(b)  The Appointee is the duly appointed water and sewerage undertaker for the
     Franchise Area pursuant to the Appointment.

17.9 Accounts

     The audited consolidated accounts of the Relevant Group most recently
     delivered to the Agent (which in respect of the Company only, at the date
     of this Agreement, are the Original Group Accounts):

     (a)  have been prepared in accordance with accounting principles and
          practices generally accepted in the United Kingdom consistently
          applied; and

     (b)  fairly represent the consolidated financial condition of the Relevant
          Group as at the date to which they were drawn up.

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17.10 Litigation

      Save as disclosed in writing to the Agent prior to the date of this
      Agreement, no litigation, arbitration or administrative proceedings in
      relation to any member of the Relevant Group are current or, to its
      knowledge, pending or threatened, which are reasonably expected to be
      adversely determined and which would, if adversely determined, be likely
      to have a material adverse effect on the ability of any Obligor to perform
      its obligations under this Agreement.

17.11 Information

(a)   All of the factual information (including all information relating to the
      Company provided in the information memorandum dated April, 2001) supplied
      by it to the Agent in connection with the Finance Documents is true in all
      material respects and not misleading in any respect and there are no facts
      or matters not disclosed in writing to the Agent the omission of which
      makes any such factual information incorrect or misleading in any respect.

(b)   Nothing has occurred since the date the information was provided which
      renders the information contained in it untrue or misleading in any
      material respect and which, if disclosed, may affect the decision of a
      person considering whether to enter into this Agreement.

17.12 Times for making representations and warranties

      The representations and warranties set out in this Clause 17:

      (a)  (i)   in the case of the Company, are made by it on the date of this
                 Agreement; and

           (ii)  in the case of each Guarantor and Counter Guarantor will be
                 deemed to be made by the relevant Guarantor or Counter
                 Guarantor (as the case may be) on the date it executes and
                 delivers a Guarantor Accession Agreement or Counter Guarantor
                 Accession Agreement (as the case may be) to the Agent in
                 accordance with Clause 27.4 (Accession); and

      (b)   other than Clause 17.11 (Information), are deemed to be repeated by
            the Obligors on the date of each Request, each Drawdown Date and the
            first day of each Term with reference to the facts and circumstances
            then existing.

18.   UNDERTAKINGS

18.1  Duration

      The undertakings in this Clause 18 (Undertakings) will remain in force
      from the date of this Agreement for so long as any amount is or may be
      outstanding under this Agreement or any Commitment is in force.

18.2  Financial information

      The Company, and, where relevant, the Company on behalf of each Obligor
      shall supply to the Agent in sufficient copies for all the Banks:

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     (a)  as soon as the same are available (and in any event within 180 days of
          the end of each of its financial years) its (including, for the
          avoidance of doubt, each Obligor's) audited financial statements and
          the audited consolidated accounts of the Relevant Group for that
          financial year;

     (b)  as soon as the same are available (and in any event within 90 days of
          the end of the first half-year of each of its financial years) the
          unaudited consolidated accounts of the Relevant Group for that half-
          year;

     (c)  (in respect of the Company only), together with the accounts specified
          in:

          (i)  paragraph (a) above, a certificate signed by one of its senior
               officers on its behalf setting out in reasonable detail
               computations establishing compliance with Clause 18.12 (Financial
               covenants) as at the date to which those accounts were drawn up;

          (ii) paragraph (b) above, a certificate signed by one of its senior
               officers on its behalf setting out in reasonable detail
               computations establishing compliance with Clause 18.12 (a)
               (Financial covenants) as at the date to which those accounts were
               drawn up; and

     (d)  as soon as the same are available (and in any event within 90 days
          from the end of the period for which they are produced) the quarterly
          unaudited consolidated accounts of the Relevant Group.


18.3 Information - Miscellaneous

     Each Obligor shall supply to the Agent:

     (a)  all documents despatched by it to its shareholders (or any class of
          them) or its creditors (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 on its ability to perform its obligations
          under the Finance Documents; and

     (c)  promptly, such further information in the possession or control of
          that Obligor regarding its financial condition as any Finance Party
          through the Agent may reasonably request,

     in sufficient copies for all of the Banks, if the Agent so requests.

18.4 Notification of Default

     Each Obligor shall notify the Agent of any Default (and the steps, if any,
     being taken to remedy it) promptly upon becoming aware of it.

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18.5 Compliance certificates

     Each Obligor shall supply to the Agent promptly at any time, if the
     Majority Banks so request and they have or the Agent has grounds for
     believing that a Default may be outstanding, a statement signed by one of
     its senior officers on its behalf incorporating such information as it has
     in its possession which may be relevant as to whether any Default is
     outstanding and, if a Default is stated to be outstanding, stating the
     steps if any being taken to remedy it.  Such statements shall contain such
     certificates as the Majority Banks may reasonably require as to questions
     of fact which are within the knowledge of the Obligor providing such
     statements.

18.6 Authorisations

     Each Obligor shall promptly:

     (a)  obtain, maintain and comply with the terms of; and

     (b)  if requested, supply certified copies to the Agent 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.

18.7 Pari passu ranking

(a)  Each Obligor shall procure that its obligations under the Finance Documents
     do and will rank at least pari passu with all its other present and future
     unsecured obligations, except for taxes, national insurance contributions,
     employee remuneration and benefits and any other obligations which from
     time to time are mandatorily preferred by law applying to companies
     generally.

(b)  The Company shall ensure that (except as permitted by Clause 18.8 (Negative
     Pledge)) the creditors in respect of any Borrowings of the Group (including
     without limitation the holders of its bonds, commercial paper and medium-
     term notes) will not, following or as a result of a Restructuring, be (in
     the opinion of the Majority Banks) in any more favourable guarantee,
     security or structural positions than the Banks under the Facility.

18.8 Negative pledge

(a)  Subject to paragraph (b) below, no Obligor shall, and the Company or (on
     becoming an Obligor) Holdco (as the case may be) shall procure that no
     other member of the Relevant Group will, create or permit to subsist, any
     Security Interest on any of its assets.

(b)  Notwithstanding paragraph (a) above, each member of the Relevant Group may
     create, or permit to subsist, Permitted Security Interests on its assets.

18.9 Disposals

(a)  No Obligor shall, and the Company or (on becoming an Obligor) Holdco (as
     the case may be) shall procure that no other member of, in the case of the
     Company, the Group and, (on becoming an Obligor) in the case of Holdco, the
     Ring Fenced Group will, either in a single transaction or in a series of
     transactions, whether related or not and whether voluntarily or
     involuntarily, sell, transfer, grant or lease or otherwise dispose of all
     or any material part of its assets.

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

      (i)   disposals made in the ordinary course of business of the disposing
            entity;

      (ii)  disposals of assets in exchange for other assets comparable or
            superior as to type, value and quality;

      (iii) the disposal of assets on arm's length terms;

      (iv)  sale and lease-back transactions the net financial effect of each of
            which (looking at the sale and any related lease-back together)
            represent a transaction on arm's length terms;

      (v)   other than in relation to a Restructuring, the disposal of assets to
            other members of, in the case of the Company, the Group (other than
            to a member of the Group which is not an Obligor) and, (on becoming
            an Obligor) in the case of Holdco, the Ring Fenced Group;

      (vi)  disposals of assets to a GEMA Subsidiary made as a result of a
            Restructuring provided that the aggregate total net assets of all
            Mandatory Subsidiaries and all other GEMA Subsidiary Guarantors and
            Counter Guarantors (when combined with the total un-consolidated net
            assets of the Company immediately after the Restructuring) and after
            deducting all net assets of the Group resulting from any
            intercompany arrangements between any member of the Group (other
            than an Excluded Entity) and an Excluded Entity, comprise no less
            than 80 per cent. (80%) of the Company's total un-consolidated net
            assets immediately prior to the Restructuring; and

      (vii) disposals to which the Majority Banks have agreed in writing.

18.10 GEMA Subsidiaries

      The Company will procure that each member of the Group ensures that at all
      times the aggregate total net assets of all Mandatory Subsidiaries and all
      other GEMA Subsidiary Guarantors and Counter Guarantors (when taken
      together with the total un-consolidated net assets of the Company at that
      time) and after deducting all net assets of the Group resulting from any
      intercompany arrangements between any member of the Group (other than an
      Excluded Entity) and an Excluded Entity, comprise no less than 80 per
      cent. (80%) of the Company's un-consolidated net assets immediately prior
      to such Restructuring.

18.11 Environmental matters

      Each Obligor will comply and the Company or (on becoming an Obligor)
      Holdco (as the case may be) will procure that each member of the Relevant
      Group complies in all material respects with:

      (a) the terms and conditions of all Environmental Licences applicable to
          it; and

      (b) all other applicable Environmental Law,

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       where failure to comply with the relevant Environmental Licence or
       Environmental Law might reasonably be expected to have a material adverse
       effect on its ability to comply with its obligations under the Finance
       Documents.

18.12  Financial covenants

(a)    The Company shall procure that as at the last day of each period of
       twelve months ending on the last day of each financial year and each
       financial half-year of the Company, the ratio of Total Consolidated Net
       Borrowings to Consolidated EBITDA does not at any time exceed 4.0:1.

(b)    The Company shall procure that the ratio of Operating Profit for a
       financial year of the Group to Net Interest Payable for the same
       financial year is not, with respect to any financial year, less than 2.50
       to 1.

18.13  Restriction on Borrowings of Subsidiaries

       The Company shall procure that none of its Subsidiaries will have
       outstanding any Borrowings, except for:

       (a)   Borrowings incurred by Relevant Subsidiaries in accordance with the
             terms of the Finance Documents;

       (b)   Borrowings incurred by Relevant Subsidiaries with the prior consent
             of the Majority Banks;

       (c)   Borrowings owed by Relevant Subsidiaries to other Relevant
             Subsidiaries;

       (d)   Borrowings of a Relevant Subsidiary which becomes a member of the
             Group after the date of this Agreement, which is not created in
             contemplation of or in connection with that company becoming a
             member of the Group, so long as the same is discharged on or before
             the date falling 6 months after it becomes a member of the Group or
             (if later) the first date upon which it can be so discharged
             without any premium or penalty (other than reimbursement to the
             relevant lender of any costs for breaking any fixture period
             relating to that lender's funding arrangements);

       (e)   Project Finance Borrowings by Relevant Subsidiaries not exceeding
             (Pounds)500,000,000 in aggregate at any one time outstanding;

       (f)   Borrowings by Relevant Subsidiaries under EIB Facilities and not
             exceeding (Pounds)500,000,000 in aggregate at any one time
             outstanding;

       (g)   Borrowings incurred by a Subsidiary which is a Guarantor or a
             Counter Guarantor;

       (h)   Borrowings of Relevant Subsidiaries which are non-trading financing
             vehicles:

             (i)  where the proceeds of the Borrowings are on lent to the
                  Company; or

             (ii) which are Hedging Liabilities,


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             and where the only assets of those Relevant Subsidiaries are those
             loans to the Company and receivables under instruments evidencing
             or creating those Hedging Liabilities;

       (i)   subject to paragraph (j) below, any other Borrowings of any
             Subsidiary of the Company so long as the amount of those
             Borrowings, when aggregated with the Borrowings of all other
             Subsidiaries of the Company permitted under this paragraph (i) does
             not exceed, at any time, (Pounds)100,000,000 (or its equivalent in
             other currencies) at that time; and

       (j)   Borrowings by Relevant Subsidiaries made by way of a tradable
             instrument in a maximum amount of (Pounds)100,000,000 and for a
             maximum period of 10 years commencing on 29th January, 1998 issued
             by the Appointee to assist it in fulfilling its obligations to the
             Director General of Water Services.

       In this Clause 18.13:

       (A)   Borrowings of a Subsidiary or Relevant Subsidiary (as the case may
             be) arising in respect of guarantees issued by it, at any time,
             shall be taken into account in an amount equal to the actual (and
             not the nominal) amount guaranteed by that guarantee at that time;
             and

       (B)   Borrowings of Subsidiaries or Relevant Subsidiaries (as the case
             may be) party to an intra-Group bank netting arrangement in
             relation to the usual operation of current accounts, at any time,
             shall be taken into account only in an amount equal to the net
             debit balance outstanding in respect of all accounts subject to
             that netting arrangement, at that time.

       For the purposes of this Clause 18.13, a "Relevant Subsidiary" means any
       Subsidiary of the Company (other than a GEMA Subsidiary which is not a
       GEMA Subsidiary Guarantor or a GEMA Subsidiary Counter Guarantor) which
       is not an Obligor.

18.14  Distributions

(a)    Subject to paragraph (b) and Clause 18.15(a) (Lending and guarantees)
       below, the Company shall not make any loans, provide any form of credit,
       or pay or make any dividends or distributions in respect of any class of
       equity or preference shares in cash or in kind (a "Distribution") to any
       member of the Ring Fenced Group.

(b)    Notwithstanding paragraph (a) above and subject to Clause 18.15(a)(ii)-
       (v) (inclusive) (Lending and guarantees) below, the Company may (provided
       no Default is outstanding or would result from the making of that
       Distribution), in any 12 month period, make Distributions to Holdco in an
       aggregate amount not exceeding an amount equal to the higher of:

       (i)   100 per cent. of dividends on ordinary share capital made in
             respect of that twelve month period by Holdco to its shareholders
             less the amount of any Distribution made by PacifiCorp to Holdco in
             that 12 month period; and

       (ii)  the consolidated post-taxation profits of the Company for that
             twelve month period.

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18.15  Lending and guarantees

(a)    Subject to paragraph (b) below, the Company shall not, and shall procure
       that no member of the Group will:

       (i)   subject to Clause 18.14(b) (Distributions), make any loans or
             provide any form of credit to members of the Ring Fenced Group; or

       (ii)  give any guarantee or indemnity to or for the benefit of members of
             the Ring Fenced Group or for the benefit of any person in respect
             of any obligation or enter into any document under which any member
             of the Group assumes the liability of members of the Ring Fenced
             Group; or

       (iii) either in a single transaction or in a series of transactions
             whether related or not and whether voluntarily or involuntarily,
             sell, transfer, grant or lease or otherwise dispose of all or any
             part of its assets to a member of the Ring Fenced Group; or

       (iv)  create or permit to subsist any Security Interest on any of its
             assets in respect of any indebtedness owed by members of the Ring
             Fenced Group; or

       (v)   enter into any agreement with members of the Ring Fenced Group
             unless it is on arm's length terms in the ordinary course of
             business,

       which together, in an aggregate amount exceed (Pounds)100,000,000 (or its
       equivalent).

(b)    Notwithstanding paragraph (a) above the Company may enter into a senior
       interest bearing loan facility with PacifiCorp provided that the
       aggregate amount of any loan outstanding to PacifiCorp thereunder does
       not exceed US Dollars 350,000,000 (or its equivalent).

19.    DEFAULT

19.1   Events of Default

       Each of the events set out in Clauses 19.2 (Non-payment) to 19.18
       (Enforceability) (inclusive) is an Event of Default (whether or not
       caused by any reason whatsoever outside the control of any Obligor or any
       other person).

19.2   Non-payment

       Any Obligor does not pay, within three Business Days of notification by
       the Agent that such amount is unpaid after having become due, any amount
       payable by it under the Finance Documents at the place at and in the
       currency in which it is expressed to be payable.

19.3   Breach of other obligations

       Any Obligor does not comply with any provision of the Finance Documents
       (other than those referred to in Clause 19.2 (Non-payment)) and such
       failure (if capable of remedy before the expiry of such period) continues
       unremedied for a period of 30 days from the date on which the Agent gives
       notice to that Obligor requiring the same to be remedied.


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19.4   Misrepresentation

       A representation, warranty or statement made or repeated by any Obligor
       in or in connection with any Finance Document or in any document
       delivered by or on behalf of that Obligor under or in connection with any
       Finance Document is incorrect in any material respect when made or deemed
       to be made or repeated.

19.5   Cross-default

(a)    Any Borrowings (other than Hedging Liabilities) of a member of the Group
       or Holdco are not paid when due or within any applicable grace period
       provided in the original documentation therefor; or

(b)    any Hedging Liabilities are not paid within a period of five Business
       Days of the due date or any applicable grace period provided in the
       original documentation therefor, whichever is the shorter; or

(c)    any Borrowings of a member of the Group or Holdco become prematurely due
       and payable or are placed on demand in each case as a result of an event
       of default or termination event (howsoever described) under the document
       relating to those Borrowings; or

(d)    any Security Interest securing Borrowings over any asset of a member of
       the Group or Holdco becomes enforceable and the holder thereof shall
       commence proceedings or appoint a receiver, manager or similar officer to
       take steps to enforce the same,

       except that this Clause 19.5 shall not apply to:

       (i)   Project Finance Borrowings; or

       (ii)  Borrowings:

             (A)    liability for payment of which is being contested in good
                    faith by appropriate proceedings provided that if the
                    Company's auditors determine that the amount in dispute
                    should be provided for in the relevant accounts, that the
                    auditors verify that such amount is fully provided against;
                    or

             (B)    the aggregate principal amount of which (taking into
                    account, in the case of Hedging Liabilities, the net payment
                    due to the relevant counterparties as the principal amount
                    for this purpose) is (Pounds)20,000,000 or less or its
                    equivalent in other currencies.

19.6   Insolvency

(a)    Any Obligor or a Principal Subsidiary is, or is deemed for the purposes
       of any law to be, unable to pay its debts (within the meaning of Section
       123(1) or, in the case of an Obligor only, 123(2) of the Insolvency Act
       1986 but, for the purposes of this Clause 19.6, Section 123(1)(a) of the
       Insolvency Act 1986 shall have effect as if for "(Pounds)750" there was
       substituted "(Pounds)250,000" or such higher figure as the Majority Banks
       may from time to time agree);


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(b)    any Obligor or a Principal Subsidiary suspends making payments on all or
       any class of its debts or announces an intention to do so, or a
       moratorium is declared in respect of any of its indebtedness; or

(c)    an Obligor or a Principal Subsidiary by reason of financial difficulties,
       begins negotiations with one or more of its creditors with a view to the
       readjustment or rescheduling of any of its indebtedness.

19.7   Administration

(a)    Any meeting of any Obligor or any Principal Subsidiary is convened for
       the purpose of considering any resolution to present an application for
       an administration order; or

(b)    any Obligor or any Principal Subsidiary passes a resolution to present an
       application for an administration order; or

(c)    an application for an administration order in relation to any Obligor or
       any Principal Subsidiary is presented to the court and either (i) that
       Obligor or such Principal Subsidiary does not apply to the court within
       30 days after the presentation of such petition requesting the court to
       refuse such petition or (ii) it does so apply but such petition is not
       refused by such court within 60 days after such application for the
       refusal of such petition; or

(d)    any Obligor or any Principal Subsidiary has an administration order made
       in relation to it or a special administration order is made under the
       Water Act in relation to the Appointee.

19.8   Compositions etc

       An Obligor or any Principal Subsidiary has any voluntary arrangement
       proposed in relation to it under Section 1 of the Insolvency Act 1986 or
       enters into any other composition, scheme of arrangement, compromise or
       arrangement involving that Obligor or such Principal Subsidiary and their
       respective creditors generally (other than for the purposes of
       reconstruction or amalgamation upon terms and within such period as may
       previously have been approved in writing by the Majority Banks).

19.9   Winding up

(a)    Any meeting of the shareholders of any Obligor or any Principal
       Subsidiary is convened for the purpose of considering any resolution for
       (or to petition for) its winding up (other than in connection with a
       reconstruction or amalgamation upon terms and within such period as may
       previously have been approved in writing by the Majority Banks); or

(b)    Any Obligor or any Principal Subsidiary passes any resolution for its
       winding up other than a resolution previously approved in writing by the
       Majority Banks (other than in connection with a reconstruction or
       amalgamation upon terms and within such period as may previously have
       been approved in writing by the Majority Banks); or

(c)    A petition for the winding up of any Obligor or any Principal Subsidiary
       is presented to the court and either (i) that Obligor or such Principal
       Subsidiary does not apply to the court within 30 days after the
       presentation of such petition requesting the court to refuse such
       petition, or (ii) it does so apply but such petition is not refused by
       such court within 60 days after such application for the refusal of such
       petition; or

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(d)    Any Obligor or any Principal Subsidiary becomes subject to a winding up
       order.

19.10  Appointment of receivers and managers

(a)    Any liquidator, trustee in bankruptcy, judicial custodian, compulsory
       manager, receiver, administrative receiver, administrator or the like is
       appointed in respect of any Obligor or any Principal Subsidiary or any
       material part of its assets or undertaking and (in the case of a receiver
       only) such appointment continues for more than 30 days; or

(b)    the directors of any Obligor or any Principal Subsidiary request the
       appointment of a liquidator, trustee in bankruptcy, judicial custodian,
       compulsory manager, receiver, administrative receiver, administrator or
       the like.

19.11  Creditors' process

       Any attachment, sequestration, distress, execution or diligence (whether
       on the dependence or otherwise) affects any material asset of any Obligor
       or any Principal Subsidiary and is not discharged within 21 days.

19.12  Analogous proceedings

       There occurs, in relation to any Obligor or any Principal Subsidiary, any
       event anywhere which corresponds to any of those mentioned in Clauses
       19.6 (Insolvency) to 19.11 (Creditors' process) (inclusive).

19.13  Unlawfulness

       It is or becomes unlawful for any Obligor to perform any of its
       obligations under the Finance Documents.

19.14  Revocation and Modification of Licences or Appointment etc

(a)    Any Licence or the Appointment is:

       (i)   revoked, surrendered, terminated or disposed of (or any notice of
             revocation or termination is issued by the relevant Secretary of
             State); or

       (ii)  modified; or

       (iii) in the case of the Appointment, varied under Section 7 of the Water
             Act,

       in any manner or circumstances which would have a material adverse effect
       on the ability of any Obligor to perform its obligations under this
       Agreement; or

(b)    any final enforcement order is made or any provisional enforcement order
       is confirmed with respect to the Appointee under the Water Act (other
       than where the Appointee demonstrates to the satisfaction of the Majority
       Banks that the order is being contested in good faith by the Appointee
       pursuant to the Water Act) and failure to comply with such order is
       likely to have a material adverse effect on the Company's ability to
       perform its obligations under this Agreement.


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19.15  Cessation of business

       Any Obligor ceases to carry on all or a substantial part of its business.

19.16  Change of control of Holdco, the Company, a Guarantor or a Counter
       Guarantor

(a)    Any person or group of persons acting in concert gains control of Holdco.

(b)    The Company ceases to be a wholly owned Subsidiary of Holdco.

(c)    A Guarantor (other than Holdco or a Mandatory Subsidiary) or a Counter
       Guarantor ceases to be a wholly owned Subsidiary of the Company and, as a
       result, the minimum aggregate total net asset test referred to in Clause
       18.10 (GEMA Subsidiaries) would be breached.

(d)    A Mandatory Subsidiary ceases to be a wholly owned Subsidiary of the
       Company.

(e)    In paragraph (a) above:

       "control" means the power to direct the management and policies of an
       entity, whether through the ownership of voting capital by contract or
       otherwise; and

       "acting in concert" has the meaning given to it in the City Code on
       Takeovers and Mergers.

19.17  Guarantee and Counter Guarantee

(a)    On the date upon which Holdco gives any guarantee, Security Interest,
       indemnity or enters into any other similar arrangement in respect of any
       of the obligations of any of its Subsidiaries (other than in respect of
       the EIB Facilities), Holdco does not enter into a Guarantor Accession
       Agreement in accordance with Clause 27.4 (Accession) or the documents set
       out in Part 2 of Schedule 2 in relation to Holdco are either not provided
       or are not in form or substance satisfactory to the Agent (acting
       reasonably) on that date.

(b)    (i)   Subject to Clause 27.4(b) (Accession), in the case of a GEMA
             Subsidiary Guarantor or any Counter Guarantor (other than a
             Mandatory Subsidiary), on the date falling 5 Business Days after
             the date upon which such GEMA Subsidiary Guarantor or Counter
             Guarantor has any assets transferred to it as a result of a
             Restructuring; and

       (ii)  in the case of a Mandatory Subsidiary, on the date upon which such
             Mandatory Subsidiary has any assets transferred to it as a result
             of a Restructuring or, if later, the date of this Agreement,

       such GEMA Subsidiary Guarantor (including a Mandatory Subsidiary) or
       Counter Guarantor (as the case may be) does not enter into a Guarantor
       Accession Agreement or Counter Guarantor Accession Agreement (as the case
       may be), in accordance with Clause 27.4 (Accession) or the documents set
       out in Part 2 of Schedule 2 in relation to that GEMA Subsidiary Guarantor
       or Counter Guarantor (including a Mandatory Subsidiary) (as the case may
       be) are either not provided or are not in form and substance satisfactory
       to the Agent (acting reasonably) on that date or GEMA revokes, surrenders
       or terminates (or any notice of revocation or termination is issued by
       GEMA) its consent to the giving of such guarantee or counter guarantee by
       a Guarantor or Counter Guarantor.

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                                      47
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19.18  Enforceability

       On or after the date a Guarantor or a Counter Guarantor (as the case may
       be) enters into a Guarantor Accession Agreement or a Counter Guarantor
       Accession Agreement (as the case may be), the guarantee in Clause 15
       (Guarantee) or the counter guarantee in Clause 16 (Counter Guarantee) (as
       the case may be) is not, or is alleged by a Guarantor or a Counter
       Guarantor (as the case may be) not to be, binding on or enforceable
       against a Guarantor or a Counter Guarantor (as the case may be).

19.19  Acceleration

       On and at any time after the occurrence of an Event of Default while such
       event is continuing the Agent may, and shall if so directed by the
       Majority Banks, by notice to the Company:

       (a)   cancel the Total Commitments; and/or

       (b)   demand that all of the Loans, together with accrued interest, and
             all other amounts accrued under this Agreement be immediately due
             and payable, whereupon they shall become immediately due and
             payable; and/or

       (c)   demand that all or part of the Loans be payable on demand,
             whereupon they shall immediately become payable on demand.

20.    THE AGENT AND THE JOINT ARRANGERS

20.1   Appointment and duties of the Agent

       Each Finance Party (other than the Agent) irrevocably appoints the Agent
       to act as its agent under and in connection with the Finance Documents,
       and irrevocably authorises the Agent on its behalf to perform the duties
       and to exercise the rights, powers and discretions that are specifically
       delegated to it under or in connection with the Finance Documents,
       together with any other incidental rights, powers and discretions. The
       Agent shall have only those duties which are expressly specified in this
       Agreement. Those duties are solely of a mechanical and administrative
       nature.

20.2   Role of the Joint Arrangers

       Except as otherwise provided in this Agreement, each Joint Arranger has
       no obligations of any kind to any other Party under or in connection with
       any Finance Document.

20.3   Relationship

       The relationship between the Agent and the other Finance Parties is that
       of agent and principal only. Nothing in this Agreement constitutes the
       Agent as trustee or fiduciary for any other Party or any other person and
       the Agent need not hold in trust any moneys paid to it for a Party or be
       liable to account for interest on those moneys.

20.4   Majority Banks' directions

       The Agent will be fully protected if it acts in accordance with the
       instructions of the Majority Banks in connection with 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

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       Majority Banks will be binding on all the Banks. In the absence of such
       instructions the Agent may act as it considers to be in the best
       interests of all the Banks.

20.5   Delegation

       The Agent may act under the Finance Documents through its personnel and
       agents.

20.6   Responsibility for documentation

       Neither the Agent nor a Joint Arranger is responsible to any other Party
       for:

       (a)   the execution, genuineness, validity, enforceability or sufficiency
             of any Finance Document or any other document;

       (b)   the collectability of amounts payable under any Finance Document;
             or

       (c)   the accuracy of any statements (whether written or oral) made in or
             in connection with any Finance Document.

20.7   Default

(a)    The Agent is not obliged to monitor or enquire as to whether or not a
       Default has occurred. The Agent will not be deemed to have knowledge of
       the occurrence of a Default. However, if the Agent receives notice from a
       Party referring to this Agreement, describing the Default and stating
       that the event is a Default, it shall promptly notify the Banks.

(b)    The 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 will or may incur in taking any proceedings or action arising
       out of or in connection with any Finance Document before it commences
       these proceedings or takes that action.

20.8   Exoneration

(a)    Without limiting paragraph (b) below, the Agent will not be liable to any
       other Party for any action taken or not taken by it under or 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 Agent in respect of any claim it might have against the Agent or
       in respect of any act or omission of any kind (including negligence or
       wilful misconduct) by that officer, employee or agent in relation to any
       Finance Document.

20.9   Reliance

       The 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 a director or employee of any person
             regarding any matters which may reasonably be assumed to be within
             his knowledge or within his power to verify; and

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                                      49
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       (c)   engage, pay for and rely on legal or other professional advisers
             selected by it (including those in the Agent's employment and those
             representing a Party other than the Agent).

20.10  Credit approval and appraisal

       Without affecting the responsibility of each Obligor for information
       supplied by it or on their behalf in connection with any Finance
       Document, each Bank confirms that it:

       (a)   has made its own independent investigation and assessment of the
             financial condition and affairs of the Obligors and their related
             entities in connection with its participation in this Agreement and
             has not relied exclusively on any information provided to it by the
             Agent or the Joint Arrangers in connection with any Finance
             Document; and

       (b)   will continue to make its own independent appraisal of the
             creditworthiness of the Obligors and their related entities while
             any amount is or may be outstanding under the Finance Documents or
             any Commitment is in force.

20.11  Information

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

(b)    The Agent shall promptly supply a Bank with a copy of each document
       received by the Agent under Clause 4 (Conditions precedent) upon the
       request and at the expense of that Bank.

(c)    Except where this Agreement specifically provides otherwise, the Agent is
       not obliged to review or check the accuracy or completeness of any
       document it forwards to another Party.

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

       (i)   either initially or on a continuing basis to provide any Bank with
             any credit or other information concerning the financial condition
             or affairs of any Obligor or any related entity of any Obligor
             whether coming into its possession or that of any of its related
             entities before, on or after the date of this Agreement; or

       (ii)  unless specifically requested to do so by a Bank in accordance with
             this Agreement, to request any certificates or other documents from
             any Obligor.

20.12  The Agent and each Joint Arranger individually

(a)    If it is also a Bank, each of the Agent and a Joint Arranger has the same
       rights and powers under this Agreement as any other Bank and may exercise
       those rights and powers as though it were not the Agent or a Joint
       Arranger.

(b)    Each of the Agent and a Joint Arranger may:

       (i)   carry on any business with any Obligor or its related entities;


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       (ii)   act as agent or trustee for, or in relation to any financing
              involving, any Obligor or its related entities; and

       (iii)  retain any profits or remuneration in connection with its
              activities under this Agreement or in relation to any of the
              foregoing.

20.13  Indemnities

(a)    Without limiting the liability of any Obligor under the Finance
       Documents, each Bank shall forthwith on demand indemnify the Agent for
       its proportion of any liability or loss incurred by the Agent in any way
       relating to or arising out of its acting as the Agent, except to the
       extent that the liability or loss arises directly from the Agent's gross
       negligence or wilful misconduct.

(b)    A Bank's proportion of the liability or loss set out in paragraph (a)
       above is the proportion which the Original Sterling Amount of its
       participation in the Loans (if any) bear to the Original Sterling Amount
       of all the Loans on the date of the demand. If, however, there are no
       Loans outstanding on the date of demand, then the proportion will be the
       proportion which its Commitment bears to the Total Commitments at the
       date of demand or, if the Total Commitments have been cancelled, bore to
       the Total Commitments immediately before being cancelled.

20.14  Compliance

(a)    The Agent may refrain from doing anything 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 of any
       jurisdiction.

(b)    Without limiting paragraph (a) above, the Agent need not disclose any
       information relating to any Obligor or any of its related entities if the
       disclosure might, in the opinion of the Agent, constitute a breach of any
       law or regulation or any duty of secrecy or confidentiality or be
       otherwise actionable at the suit of any person.

20.15  Resignation of Agent

(a)    Notwithstanding its irrevocable appointment, the Agent may resign by
       giving notice to the Banks and the Company, in which case the Agent may
       forthwith appoint one of its Affiliates as successor Agent or, failing
       that, the Majority Banks may appoint a successor Agent.

(b)    If the appointment of a successor Agent is to be made by the Majority
       Banks but they have not, within 30 days after notice of resignation,
       appointed a successor Agent which accepts the appointment, the retiring
       Agent may appoint a successor Agent.

(c)    The resignation of the retiring Agent and the appointment of any
       successor Agent will both become effective only upon the successor Agent
       notifying all the Parties that it accepts the appointment. On giving the
       notification, the successor Agent will succeed to the position of the
       retiring Agent and the term "Agent" will mean the successor Agent.

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(d)    The retiring Agent shall, at its own cost, make available to the
       successor Agent such documents and records and provide such assistance as
       the successor Agent may reasonably request for the purposes of performing
       its functions as the Agent under this Agreement.

(e)    Upon its resignation becoming effective, this Clause 20 shall continue to
       benefit the retiring Agent in respect of any action taken or not taken by
       it under or in connection with the Finance Documents while it was the
       Agent, and, subject to paragraph (d) above, it shall have no further
       obligation under any Finance Document.

20.16  Banks

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

20.17  Extraordinary management time and resources

       In addition to the fees (if any) paid or payable to the Agent pursuant to
       Clause 21 (Fees), an Obligor shall, on demand by the Agent, reimburse it
       for its own account at such reasonable daily or hourly rates as the Agent
       may separately agree with that Obligor from time to time, the reasonable
       cost of utilising its management time or other resources in connection
       with taking all such steps or other action which:

       (a)  that Obligor requests, in connection with:

            (i)   the granting or proposed granting of any waiver or consent
                  under any Finance Document; or

            (ii)  any amendment or proposed amendment to any Finance Document;
                  or

       (b)  which any Obligor or the Majority Banks request(s) in connection
with:

            (i)   any breach by any Obligor of its obligations under any Finance
                  Document or any investigations in respect of any such breach;
                  or

            (ii)  the preservation and enforcement of any of the rights of the
                  Finance Parties under the Finance Documents; or

            (iii) the occurrence of a Default.

21.    FEES

21.1   Front-end fees

       The Company shall pay to the Agent for the Joint Arrangers front-end fees
       in the amounts agreed in the relevant Fee Letter within one Business Day
       of the date of this Agreement which the Agent shall distribute to the
       Banks in the manner agreed between the Joint Arrangers and the Banks.

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21.2 Commitment fee

(a)  The Company shall pay to the Agent for each Bank a commitment fee computed
     at the rate of 0.225 per cent. per annum on the undrawn, uncancelled amount
     of that Bank's Commitment during the period from the date of this Agreement
     up to and including the Final Repayment Date.  For this purpose Loans are
     taken at their Original Sterling Amount.

(b)  Accrued commitment fee is payable quarterly in arrear.  Accrued commitment
     fee is also payable to the Agent for the relevant Bank(s) on the cancelled
     amount of its Commitment at the time the cancellation takes effect.

21.3 Utilisation fee

(a)  If, on any day, the Outstandings exceed 33.3 per cent. of the Total
     Commitments at that time, a utilisation fee shall be payable by the Company
     to the Agent, for the account of the Banks, on the amount of the
     Outstandings on that day.

(b)  Subject to paragraph (a) above, the utilisation fee, which shall accrue
     from day to day during the period beginning on the date of this Agreement
     and ending on the Final Repayment Date, shall be calculated at the rate of
     0.05 per cent. per annum on the Outstandings on that day.

(c)  The utilisation fee is payable quarterly in arrear.

21.4 Agent's fee

     The Company shall pay to the Agent for its own account an agency fee in the
     amount and at the times agreed in the relevant Fee Letter.

21.5 VAT

     Any fee referred to in this Clause 21 (Fees) is exclusive of any value
     added tax or any other tax which might be chargeable in connection with
     that fee.  If any value added tax or other tax is so chargeable, it shall
     be paid by the Company at the same time as it pays the relevant fee.

22.  EXPENSES

22.1 Initial and special costs

     The Company shall forthwith on demand pay the Agent and each Joint Arranger
     the amount of all reasonable costs and expenses (including legal fees)
     incurred by each of them in connection with:

     (a)  the negotiation, preparation, printing and execution of:

          (i)  this Agreement and any other documents referred to in this
               Agreement;

          (ii) any other Finance Document (other than a Novation Certificate)
               executed after the date of this Agreement;

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     (b)  any amendment, waiver, consent or suspension of rights (or any
          proposal for any of the foregoing) requested by or on behalf of an
          Obligor and relating to a Finance Document or a document referred to
          in any Finance Document; and

     (c)  any other matter, not of an ordinary administrative nature, arising
          out of or in connection with a Finance Document.

22.2 Enforcement costs

     The Company shall forthwith on demand pay to each Finance Party the amount
     of all reasonable costs and expenses (including legal fees) incurred by it:

     (a)  in connection with the enforcement of, or the preservation of any
          rights under, any Finance Document; or

     (b)  in investigating any possible Default.

23.  STAMP DUTIES

     The Company shall pay and forthwith on demand indemnify each Finance Party
     against any liability it incurs in respect of any stamp, registration and
     similar tax which is or becomes payable in connection with the entry into,
     performance or enforcement of any Finance Document.

24.  INDEMNITIES

24.1 Currency indemnity

(a)  If a Finance Party receives an amount in respect of an Obligor's liability
     under the Finance Documents or if that liability is converted into a claim,
     proof, judgment or order in a currency other than the currency (the
     "contractual currency") in which the amount is expressed to be payable
     under the relevant Finance Document:

     (i)   that Obligor shall indemnify that Finance Party as an independent
           obligation against any loss or liability arising out of or as a
           result of the conversion;

     (ii)  if the amount received by that Finance Party, when converted into the
           contractual currency at a market rate in the usual course of its
           business, is less than the amount owed in the contractual currency,
           the Obligor concerned shall forthwith on demand pay to that Finance
           Party an amount in the contractual currency equal to the deficit; and

     (iii) the Obligor shall pay to the Finance Party concerned on demand any
           exchange costs and taxes payable in connection with any such
           conversion.

(b)  Each Obligor 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.

24.2 Other indemnities

     The Company shall forthwith on demand indemnify each Finance Party against
     any loss or liability which that Finance Party incurs as a consequence of:

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     (a)  the occurrence of any Default;

     (b)  the operation of Clause 2.5 (Change of currency), 19.19 (Acceleration)
          or Clause 30 (Pro rata sharing);

     (c)  any payment of principal or an overdue amount being received from any
          source otherwise than on its Repayment Date and, for the purposes of
          this paragraph (c), the Repayment Date of an overdue amount is the
          last day of each Designated Term (as defined in Clause 8.5 (Default
          interest)); or

     (d)  (other than by reason of negligence or default by a Finance Party) a
          Loan not being made after the Company has delivered a Request for that
          Loan.

     The Company's liability in each case includes any loss of margin or other
     loss or expense on account of funds borrowed, contracted for or utilised to
     fund any amount payable under any Finance Document, any amount repaid or
     prepaid or any Loan.

25.  EVIDENCE AND CALCULATIONS

25.1 Accounts

     Accounts maintained by a Finance Party in connection with this Agreement
     are prima facie evidence of the matters to which they relate.

25.2 Certificates and determinations

     Any certification or determination by a Finance Party of a rate or amount
     under this Agreement is, in the absence of manifest error, conclusive
     evidence of the matters to which it relates.

25.3 Calculations

     Interest (including any applicable Mandatory Cost) and the fee payable
     under Clause 21.2 (Commitment fee) accrue from day to day and are
     calculated on the basis of the actual number of days elapsed and a year of
     365 days or, in the case of interest payable on an amount denominated in an
     Optional Currency only or where the market practice otherwise dictates, 360
     days.

26.  AMENDMENTS AND WAIVERS

26.1 Procedure

(a)  Subject to Clause 26.2 (Exceptions), any term of the Finance Documents may
     be amended or waived with the agreement of the Company (on behalf of each
     Obligor), the Majority Banks and the Agent.  The Agent may effect, on
     behalf of the Banks, an amendment to which they or the Majority Banks have
     agreed.

(b)  The Agent shall promptly notify the other Parties of any amendment or
     waiver effected under paragraph (a) above, and any such amendment or waiver
     shall be binding on all the Parties.

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26.2 Exceptions

     An amendment or waiver which relates to:

     (a)  the definition of "Majority Banks" in Clause 1.1;

     (b)  an extension of the date for, or a decrease in an amount or a change
          in the currency of, any payment under the Finance Documents;

     (c)  an increase in a Bank's Commitment;

     (d)  the incorporation of additional borrowers or the resignation or
          removal of any Guarantor or Counter Guarantor;

     (e)  a term of a Finance Document which expressly requires the consent of
          each Bank; or

     (f)  Clause 30 (Pro rata sharing) or this Clause 26,

     may not be effected without the consent of each Bank.

26.3 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 such right is not a waiver of
     that right.

27.  CHANGES TO THE PARTIES

27.1 Transfers by Obligors

     No Obligor may assign, transfer, novate or dispose of any of, or any
     interest in, its rights and/or obligations under this Agreement.

27.2 Transfers by Banks

(a)  A Bank (the "Existing Bank") may at any time assign, transfer or novate any
     of its rights and/or obligations under this Agreement (in a minimum amount
     equal to (Pounds)10,000,000 or, if less with respect to a particular Bank,
     the balance of that Bank's Commitment at the time of transfer) to another
     bank or financial institution which is a Qualifying Bank (the "New Bank").
     The prior consent of the Company is required for any such assignment,
     transfer or novation, unless:

     (i)  the New Bank is another Bank or an Affiliate of a Bank; or

     (ii) a Default is outstanding.

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     However, the prior consent of the Company must not be unreasonably withheld
     or delayed and will be deemed to have been given if, within 10 days of
     receipt by the Company of an application for consent, it has not been
     expressly refused.

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

     (i)  the obligations are novated in accordance with Clause 27.3 (Procedure
          for novations); or

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

(c)  Nothing in this Agreement restricts the ability of a Bank to sub-contract
     an obligation if that Bank remains liable under this Agreement for that
     obligation except that no Bank may sub-contract any such obligation if the
     effect of such contract would be that a person other than a Qualifying Bank
     has any beneficial entitlement to any interest received by it under this
     Agreement.

(d)  On each occasion that an Existing Bank assigns, transfers or novates any of
     its rights and/or obligations under this Agreement, the New Bank shall, on
     the date the assignment, transfer and/or novation takes effect, pay to the
     Agent for its own account a fee of (Pounds)1,000.

(e)  An Existing Bank is not responsible to a New Bank for:

     (i)    the execution, genuineness, validity, enforceability or sufficiency
            of any Finance Document or any other document;

     (ii)   the collectability of amounts payable under any Finance Document; or

     (iii)  the accuracy of any statements (whether written or oral) made in or
            in connection with any Finance Document.

(f)  Each New Bank confirms to the Existing Bank and the other Finance Parties
     that it:

     (i)    has made its own independent investigation and assessment of the
            financial condition and affairs of each Obligor and its related
            entities in connection with its participation in this Agreement and
            has not relied exclusively on any information provided to it by the
            Existing Bank in connection with any Finance Document; and

     (ii)   will continue to make its own independent appraisal of the
            creditworthiness of each Obligor and its related entities while any
            amount is or may be outstanding under this Agreement or any
            Commitment is in force.

(g)  Nothing in any Finance Document obliges an Existing Bank to:

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

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     (ii) support any losses incurred by the New Bank by reason of the non-
          performance by the Company of its obligations under this Agreement or
          otherwise.

(h)  Any reference in this Agreement to a Bank includes a New Bank, but excludes
     a Bank if no amount is or may be owed to or by that Bank under this
     Agreement and its Commitment has been cancelled or reduced to nil.

27.3 Procedure for novations

(a)  A novation is effected if the Existing Bank and the New Bank deliver to the
     Agent a Novation Certificate in the form of Schedule 5 and the Agent
     executes it.

(b)  Each Party (other than the Existing Bank and the New Bank) irrevocably
     authorises the Agent to execute any duly completed Novation Certificate in
     the form of Schedule 5 on its behalf.

(c)  To the extent that they are expressed to be the subject of the novation in
     the Novation Certificate:

     (i)   the Existing Bank and the other Parties (the "existing Parties") will
           be released from their obligations to each other (the "discharged
           obligations");

     (ii)  the New Bank and the existing Parties will assume obligations towards
           each other which differ from the discharged obligations only insofar
           as they are owed to or assumed by the New Bank instead of the
           Existing Bank;

     (iii) the rights of the Existing Bank against the existing Parties and vice
           versa (the "discharged rights") will be cancelled; and

     (iv)  the New Bank and the existing Parties will acquire rights against
           each other which differ from the discharged rights only insofar as
           they are exercisable by or against the New Bank instead of the
           Existing Bank,

     all on the date of execution of the Novation Certificate by the Agent or,
     if later, the date specified in the Novation Certificate.  The completed
     Novation Certificate must be delivered to the Agent at least 5 Business
     Days before the date on which it is stated to be effective or such other
     date agreed by the Agent.  If no agreement can be reached by the Agent the
     novation will not be effective.

27.4 Accession

(a)  (i)  In the event that Holdco guarantees any obligations of any of its
          Subsidiaries (other than in respect of any EIB Facility), the Company
          shall procure that, on or prior to the date it gives that guarantee,
          Holdco delivers to the Agent a Guarantor Accession Agreement, duly
          executed by it.

     (ii) The Company shall procure that each Mandatory Subsidiary and any other
          GEMA Subsidiary delivers to the Agent a Guarantor Accession Agreement
          (a "GEMA Subsidiary Guarantor"), duly executed by it unless (in the
          case of a GEMA Subsidiary which is not a Mandatory Subsidiary only) it
          is prohibited from doing so by any law or regulation or the terms of
          any Licence applicable to it.

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     (iii)  If, in accordance with sub-paragraph (ii) above, a GEMA Subsidiary
            (other than a Mandatory Subsidiary) is unable to deliver to the
            Agent a Guarantor Accession Agreement, then the Company shall
            procure that such GEMA Subsidiary (other than a Mandatory
            Subsidiary) delivers to the Agent a Counter Guarantor Accession
            Agreement (a "Counter Guarantor"), duly executed by it unless it is
            prohibited from doing so by any law or regulation or the terms of
            any Licence applicable to it.

(b)  No GEMA Subsidiary (other than a Mandatory Subsidiary) will be required to
     deliver a Guarantor Accession Agreement or a Counter Guarantor Accession
     Agreement if, at all times, the minimum aggregate total net asset test
     referred to in Clause 18.10 (GEMA Subsidiaries) is satisfied.

(c)  Upon execution and delivery of a Guarantor Accession Agreement or a Counter
     Guarantor Accession Agreement (as the case may be) and all those other
     documents listed in Part 2 of Schedule 2, in each case in form and
     substance satisfactory to the Agent (acting reasonably), each Guarantor or
     Counter Guarantor (as the case may be) agrees to be bound by the terms of
     the Finance Documents.

27.5 Reference Banks

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

27.6 Register

     The Agent shall keep a register of all the Parties and shall supply any
     other Party (at that Party's expense) with a copy of the register on
     request.

27.7 Change of Facility Office

     No Bank will change its Facility Office if, at the time of the change,
     circumstances exist which would oblige the Company to pay that Bank any
     amount under Clause 11.1 (Taxes) or Clause 13 (Increased costs) which it
     would not have been obliged to pay if that Bank had retained the same
     Facility Office.

28.  DISCLOSURE OF INFORMATION

(a)  A Bank may disclose to one of its Affiliates or any person with whom it is
     proposing to enter, or has entered into, any kind of transfer,
     participation or other agreement in relation to this Agreement:

     (i)   a copy of any Finance Document; and

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

     Provided that any such Affiliate or person has agreed in writing to
     maintain the confidentiality of any such document or information on the
     same terms (with appropriate consequential changes) as set out in paragraph
     (c) below.

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(b)  The prior written consent of the Company is required for any disclosure
     under paragraph (a) above unless:

     (i)   that person is another Bank or an Affiliate of a Bank; or

     (ii)  a Default is outstanding.

     However, the prior consent of the Company must not be unreasonably withheld
     or delayed and will be deemed to have been given if, within 10 Business
     Days of receipt by an Obligor of an application for consent, it has not
     been expressly refused.

(c)  Subject to paragraph (a) above, each Bank shall keep confidential and not,
     without the prior written consent of the Company, use any information
     (other than information which is publicly available unless as a result of a
     breach of this Clause 28) supplied by or on behalf of an Obligor under this
     Agreement otherwise than in connection with this Agreement.  However, each
     Bank is entitled to disclose any information:

     (i)   in connection with any legal proceedings arising out of or in
           connection with this Agreement; or

     (ii)  if required to do so by an order of a court of competent jurisdiction
           whether in pursuance of any procedure for discovering documents or
           otherwise; or

     (iii) pursuant to any law or regulation in accordance with which that Bank
           is required to act; or

     (iv)  to any governmental, banking or taxation authority of competent
           jurisdiction; or

     (v)   to its auditors or legal or other professional advisers.

29.  SET-OFF

     A Finance Party may set off any matured obligation owed by an Obligor under
     this Agreement (to the extent beneficially owned by that Finance Party)
     against any obligation (whether or not matured) owed by that Finance Party
     to that Obligor, 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.  If either obligation is unliquidated or unascertained, the
     Finance Party may set off in an amount estimated by it in good faith to be
     the amount of that obligation.

30.  PRO RATA SHARING

30.1 Redistribution

     If any amount owing by an Obligor under this Agreement to a Finance Party
     (the "recovering Finance Party") is discharged by payment, set-off or any
     other manner other than through the Agent in accordance with Clause 10
     (Payments) (a "recovery"), then:

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                                      60
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     (a)  the recovering Finance Party shall, within three Business Days, notify
          details of the recovery to the Agent;

     (b)  the Agent shall determine whether the recovery is in excess of the
          amount which the recovering Finance Party would have received had the
          recovery been received by the Agent and distributed in accordance with
          Clause 10 (Payments);

     (c)  subject to Clause 30.3 (Exception), the recovering Finance Party
          shall, within three Business Days of demand by the Agent, pay to the
          Agent an amount (the "redistribution") equal to the excess;

     (d)  the Agent shall treat the redistribution as if it were a payment by
          that Obligor under Clause 10 (Payments) and shall pay the
          redistribution to the Finance Parties (other than the recovering
          Finance Party) in accordance with Clause 10.7 (Partial payments); and

     (e)  after payment of the full redistribution, the recovering Finance Party
          will be subrogated to the portion of the claims paid under paragraph
          (d) above, and that Obligor will owe the recovering Finance Party a
          debt which is equal to the redistribution, immediately payable and of
          the type originally discharged.

30.2 Reversal of redistribution

     If under Clause 30.1 (Redistribution):

     (a)  a recovering Finance Party must subsequently return a recovery, or an
          amount measured by reference to a recovery, to an Obligor; and

     (b)  the recovering Finance Party has paid a redistribution in relation to
          that recovery,

     each Finance Party shall, within three Business Days of demand by the
     recovering Finance Party through the Agent, reimburse the recovering
     Finance Party all or the appropriate portion of the redistribution paid to
     that Finance Party. Thereupon the subrogation in Clause 30.1(e)
     (Redistribution) will operate in reverse to the extent of the
     reimbursement.

30.3 Exception

     A recovering Finance Party need not pay a redistribution to the extent that
     it would not, after the payment, have a valid claim against the Obligor
     concerned in the amount of the redistribution pursuant to Clause 30.1(e)
     (Redistribution).

31.  SEVERABILITY

     If a provision of any 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 provision of the Finance Documents; or

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

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32.  COUNTERPARTS

     This Agreement may be executed in any number of counterparts, and this has
     the same effect as if the signatures on the counterparts were on a single
     copy of this Agreement.

33.  NOTICES

33.1 Giving of notices

     All notices or other communications under or in connection with this
     Agreement shall be given in writing or by facsimile.  Any such notice will
     be deemed to be given as follows:

     (a)  if in writing, when delivered; and

     (b)  if by facsimile, when received.

     However, a notice given in accordance with the 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.

33.2 Addresses for notices

(a)  The address and facsimile number of each Party (other than the Agent) for
     all notices under or in connection with this Agreement are:

     (i)  that notified by that Party for this purpose to the Agent on or before
          it becomes a Party; or

     (ii) any other notified by that Party for this purpose to the Agent by not
          less than five Business Days' notice.

(b)  The address and facsimile number of the Agent is:

     The Royal Bank of Scotland plc
     Loans Administration
     PO Box 450
     Corporate Banking Office
     5-10 Great Tower Street
     London EC3P 3HX

     Facsimile number: 020 7220 7370

     or such other as the Agent may notify to the other Parties by not less than
     five Business Days' notice.

(c)  The Agent shall, promptly upon request from any Party, give to that Party
     the address, telex number or facsimile number of any other Party applicable
     at the time for the purposes of this Clause.

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34.  GOVERNING LAW

     This Agreement is governed by English law.

35.  JURISDICTION

(a)  Each of the parties hereto irrevocably agrees, for the benefit of the Agent
     and the Banks, that the courts of England shall have jurisdiction to hear
     and determine any suit, action or proceeding, and to settle any disputes,
     which may arise out of or in connection with this Agreement and, for such
     purposes, irrevocably submits to the jurisdiction of such courts.

(b)  The Company irrevocably waives any objection which it might now or
     hereafter have to the courts referred to in paragraph (a) above being
     nominated as the forum to hear and determine any suit, action or
     proceeding, and to settle any disputes, which may arise out of or in
     connection with  this Agreement and agrees not to claim that any such court
     is not a convenient or appropriate forum.

(c)  The submission to the jurisdiction of the courts referred to in paragraph
     (a) above shall not (and shall not be construed so as to) limit the right
     of the Agent or the Banks to take proceedings in any other court of
     competent jurisdiction nor shall the taking of proceedings in any one or
     more jurisdictions preclude the taking of proceedings in any other
     jurisdiction, whether concurrently or not.

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

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                                  SCHEDULE 1

                               ORIGINAL PARTIES



Name of Bank                                                        Commitments
                                                                      (Pounds)
The Bank of Tokyo-Mitsubishi, Ltd.                                   55,000,000
Commerzbank Aktiengesellschaft, London Branch                        55,000,000
The Chase Manhattan Bank                                             55,000,000
The Royal Bank of Scotland plc                                       55,000,000
Bank One, NA                                                         47,500,000
Bankgesellschaft Berlin AG, London Branch                            47,500,000
Barclays Bank PLC                                                    47,500,000
Bayerische Landesbank Girozentrale, London Branch                    47,500,000
BNP Paribas London Branch                                            47,500,000
Citibank, N.A.                                                       47,500,000
Credit Suisse First Boston                                           47,500,000
Danske Bank A/S                                                      47,500,000
Deutsche Bank AG London                                              47,500,000
Fleet National Bank                                                  47,500,000
HSBC Bank Plc                                                        47,500,000
ING Bank N.V.,  London Branch                                        47,500,000
National Australia Bank, ACN004044937                                47,500,000
Scotiabank (Ireland) Limited                                         47,500,000
The Dai-Ichi Kangyo Bank, Limited                                    21,250,000
The Fuji Bank, Limited                                               21,250,000
UBS AG                                                               42,500,000
Sumitomo Mitsui Banking Corporation                                  30,000,000

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

Total Commitments                                         (Pounds)1,000,000,000

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                                  SCHEDULE 2

                                    PART 1

             CONDITIONS PRECEDENT DOCUMENTS TO BE DELIVERED BEFORE
                                THE FIRST LOAN


1.   A copy of the memorandum and articles of association, certificate of
     incorporation and certificate of incorporation on change of name (if any)
     of the Company.

2.   A copy of a resolution of the board of directors of the Company:

     (i)   approving the terms of, and the transactions contemplated by the
           Finance Documents resolving that it execute the Finance Documents to
           which it is a party and any related and/or ancillary documents;

     (ii)  authorising a specified person or persons to execute the Finance
           Documents to which it is a party on its behalf; and

     (iii) authorising a specified person or persons, on its behalf, to sign
           and/or despatch all other documents and notices to be signed and/or
           despatched by it under or in connection with the Finance Documents.

3.   A certificate of a director of the Company certifying that the utilisation
     of the Facility in full would not cause any internal borrowing limit
     binding on the Company to be exceeded.

4.   A certificate of an authorised signatory of the Company certifying:

     (a)   that each copy document specified in this Part 1 of Schedule 2 is
           correct, complete and in full force and effect as at a date no
           earlier than the date of this Agreement; and

     (b)   the specimen signatures of its authorised signatories.

5.   A legal opinion of Allen & Overy, legal advisers to the Agent, addressed to
     the Finance Parties substantially in the form of Schedule 6.

6.   A legal opinion of Maclay Murray & Spens, legal advisers to the Agent in
     Scotland, addressed to the Finance Parties substantially in the form of
     Schedule 7.

Miscellaneous

7.   A copy of each Licence held by a member of the Group.

8.   Evidence that Existing Facility has been cancelled and any outstandings
     under the Existing Facility has been or will on the first Drawdown Date be
     repaid in full.

9.   Evidence that all fees and expenses then due and payable from the Company
     under this Agreement have been or will be paid by the first Drawdown Date.

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<PAGE>

                                      65
________________________________________________________________________________


10.  A copy of any other authorisation or other document, opinion or assurance
     which the Agent considers to be necessary or desirable in connection with
     the entry into and performance of, and the transactions contemplated by,
     any Finance Document or for the validity and enforceability of any Finance
     Document and which, in either case, is notified to the Company prior to the
     execution of this Agreement.

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<PAGE>

                                      66
________________________________________________________________________________


                                    PART 2

                        CONDITIONS PRECEDENT DOCUMENTS
              TO BE DELIVERED BY A GUARANTOR OR COUNTER GUARANTOR


Authorisations

1.   A copy of the memorandum and articles of association, certificate of
     incorporation and certificate of incorporation on change of name (if any)
     of each Guarantor or Counter Guarantor (as the case may be).

2.   A copy of a resolution of the board of directors of each Guarantor or
     Counter Guarantor (as the case may be):

     (a)  approving the terms of, and the transactions contemplated by the
          Guarantor Accession Agreement or Counter Guarantor Accession Agreement
          (as the case may be) and resolving that it execute the Guarantor
          Accession Agreement or Counter Guarantor Accession Agreement (as the
          case may be);

     (b)  authorising a specified person or persons to execute the Guarantor
          Accession Agreement or Counter Guarantor Accession Agreement (as the
          case may be) on its behalf; and

     (c)  authorising a specified person or persons, on its behalf, to sign
          and/or despatch all other documents and notices to be signed and/or
          despatched by it under or in connection with the Guarantor Accession
          Agreement or Counter Guarantor Accession Agreement (as the case may
          be).

3.   A certificate of a director of each Guarantor or Counter Guarantor (as the
     case may be) certifying that the execution of the Guarantor Accession
     Agreement or Counter Guarantor Accession Agreement (as the case may be)
     will not result in any breach or any restriction referred to in Clause 17.5
     (Non-conflict) binding on that Guarantor or Counter Guarantor (as the case
     may be).

4.   A certificate of an authorised signatory of each Guarantor or Counter
     Guarantor (as the case may be) certifying:

     (a)  that each copy document specified in Part 2 of this Schedule 2 is
          correct, complete and in full force and effect as at a date no earlier
          than the date of the Guarantor Accession Agreement or Counter
          Guarantor Accession Agreement (as the case may be); and

     (b)  the identity and specimen signatures of the directors, authorised
          signatories and secretary of that Guarantor or Counter Guarantor (as
          the case may be).

Legal opinion

5.   A legal opinion of Allen & Overy, legal advisers to the Agent, addressed to
     the Finance Parties.

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<PAGE>

                                      67
________________________________________________________________________________


6.   A legal opinion of Maclay Murray & Spens, legal advisers to the Agent in
     Scotland, addressed to the Finance Parties.

Miscellaneous

7.   Guarantor Accession Agreement or Counter Guarantor Accession Agreement (as
     the case may be) duly executed by the Guarantor or Counter Guarantor (as
     the case may be) .

8.   Written evidence that GEMA has consented to the Guarantor or Counter
     Guarantor (as the case may be) entering into the Guarantor Accession
     Agreement or Counter Guarantor Accession Agreement (as the case may be)
     notwithstanding the terms of any Licence held by such Guarantor or Counter
     Guarantor, together with details of any conditions to that consent.

9.   A copy of any other authorisation or other document, opinion or assurance
     which the Agent considers to be necessary in connection with the entry into
     and performance of the transactions contemplated by, the Guarantee or the
     Counter Guarantee (as the case may be) or for the validity and
     enforceability of the Guarantee or the Counter Guarantee (as the case may
     be).

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<PAGE>

                                      68
________________________________________________________________________________


                                  SCHEDULE 3

                       CALCULATION OF THE MANDATORY COST


(a)  The Mandatory Cost for each Loan for each period in respect of which
     interest is payable is the rate determined by the Agent to be equal to the
     rate notified by the Agent and calculated in accordance with the following
     formulae:

     in relation to a Loan denominated in Sterling:

     BY + S(Y-Z) + F x 0.01 % per annum = Mandatory Cost
     ----------------------
         100-(B + S)


     in relation to any other Loan:

     F x 0.01 % per annum = Mandatory Cost
     --------
        300


     where on the day of application of the formula:

     B     is the percentage of the Agent's eligible liabilities which the Bank
           of England requires the Agent to hold on a non-interest-bearing
           deposit account in accordance with its cash ratio requirements;

     Y     is the rate at which Sterling deposits are offered by the Agent to
           leading banks in the London interbank market at or about 11.00 a.m.
           on that day for the Term or Interest Period;

     S     is the percentage of the Agent's eligible liabilities which the Bank
           of England requires the Agent to place as a special deposit;

     Z     is the interest rate per annum allowed by the Bank of England on
           special deposits; and

     F     is the charge payable by the Agent to the Financial Services
           Authority under paragraph 2.02 or 2.03 (as appropriate) of the Fees
           Regulations (but where for this purpose, the figure in paragraph
           2.02b and 2.03b will be deemed to be zero) expressed in pounds per
           (Pounds)1 million of the fee base of the Agent.

(b)  For the purposes of this Schedule 3:

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

     (ii)  "fee base" has the meaning given to it in the Fees Regulations;

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<PAGE>

                                      69
________________________________________________________________________________

     (iii) "Fees Regulations" means:

           (A)  prior to 31st March, 1999, the Banking Supervision (Fees)
                Regulations 1998; and

           (B)  on and after 31st March, 1999, any regulations governing the
                payment of fees for banking supervision.

(c)  In the application of the formula, B, Y, S and Z are included in the
     formula as figures and not as percentages, e.g. if B = 0.5% and Y = 15%, BY
     is calculated as 0.5 x 15.

(d)  (i)   The formula is applied on the first day of each relevant period
           comprised in the relevant Term.

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

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

     (ii)  If a Bank fails to specify a rate under sub paragraph (i) above, the
           Agent will assume that the Bank has not incurred any such cost.

(f)  If the Agent determines (after consultation with the Banks) that a change
     in circumstances has rendered, or will render, the formula inappropriate,
     the Agent shall notify the Company of the manner in which the Mandatory
     Cost will subsequently be calculated.  The manner of calculation so
     notified by the Agent shall, in the absence of manifest error, be binding
     on all the parties to this Agreement.

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<PAGE>

                                      70

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

                                  SCHEDULE 4

                                FORM OF REQUEST



To:   THE ROYAL BANK OF SCOTLAND PLC as Agent

From: SCOTTISH POWER UK PLC
                                                            Date: [           ]


          Scottish Power UK plc-(Pounds)1,000,000,000 Revolving Credit Agreement
                  dated [                              ], 2001

1.    We wish to borrow a Loan as follows:

      (a) Drawdown Date: [             ]

      (b) Original Sterling Amount:  (Pounds)[             ]

      (c) Currency:  [                 ]

      (d) Term: [                   ]

      (e) Payment instructions: [               ]

2.    We confirm that each condition specified in Clause 4.2(a) (Further
      conditions precedent) (except as specified in paragraph (b) of that
      Clause) is satisfied on the date of this Request.

3.    We confirm that the Loan will be used [in accordance with Clause 3
      (Purpose)/solely for the purposes of repayment of commercial paper which
      is due for repayment on the Drawdown Date/outstanding amounts under the
      Existing Facility].

4.    We confirm that the borrowing of the above referenced Loan will not cause
      any borrowing limit binding on Scottish Power UK plc to be exceeded.


By:

SCOTTISH POWER UK PLC
Authorised Signatory


--------------------------------------------------------------------------------
<PAGE>

                                      71

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

                                  SCHEDULE 5

                         FORM OF NOVATION CERTIFICATE


To:   THE ROYAL BANK OF SCOTLAND PLC as Agent

From: [THE EXISTING BANK] and [THE NEW BANK]  Date: [          ]


      Scottish Power UK plc - (Pounds)1,000,000,000 Revolving Credit Agreement
                     dated [          ], 2001

We refer to Clause 27.3 (Procedure for novations).

1.    We [ ] (the "Existing Bank") and [      ] (the "New Bank") agree to the
      Existing Bank and the New Bank novating all the Existing Bank's rights and
      obligations referred to in the Schedule in accordance with Clause 27.3
      (Procedure for novations).

2.    The specified date for the purposes of Clause 27.3(c) is [date of
      novation].

3.    The Facility Office and address for notices of the New Bank for the
      purposes of Clause 33.2 (Addresses for notices) are set out in the
      Schedule.

4.    This Novation Certificate is governed by English law.


                                 THE SCHEDULE

                     Rights and obligations to be novated

[Details of the rights and obligations of the Existing Bank to be novated].

[New Bank]

[Facility Office             Address for notices]

[Existing Bank]           [New Bank]           THE ROYAL BANK OF SCOTLAND PLC

By:                       By:                  By:

Date:                     Date:                Date:


--------------------------------------------------------------------------------
<PAGE>

                                      72
________________________________________________________________________________


                                  SCHEDULE 6

                    FORM OF LEGAL OPINION OF ALLEN & OVERY


To:   The Royal Bank of Scotland plc
      135 Bishopsgate
      London EC2M 3UR

      (as Agent for the Finance Parties)


                                                                 [       ], 2001
Dear Sirs,


      Scottish Power UK plc (the "Company") - (Pounds)1,000,000,000 Revolving
               Credit Agreement dated [       ], 2001 (the "Credit Agreement")

We have acted as legal advisers in England to The Royal Bank of Scotland plc
(the "Agent") in connection with a Credit Agreement dated [ ], 2001 (the "Credit
Agreement") made between the Company as borrower, The Bank of Tokyo-Mitsubishi,
Ltd., Commerzbank Aktiengesellschaft, London Branch, J.P. Morgan plc and The
Royal Bank of Scotland plc as Joint Arrangers, the Banks (as defined therein)
and the Agent.

Terms defined in the Credit Agreement have the same meanings when used in this
opinion.

We have received instructions from and participated in discussions with the
Agent about the provisions contained in the Credit Agreement.

We have examined the following documents:

(a)   an executed copy of the Credit Agreement; and

(b)   the legal opinion of Maclay Murray & Spens legal advisers to the Agent in
      Scotland dated [       ], 2001 and addressed to the Finance Parties.

Except as stated above we have not examined any contracts, instruments or other
documents entered into by or affecting the Company or any corporate records of
the Company and have not made any other enquiries concerning the Company.

In giving this opinion, we have assumed:

(i)   the genuineness of all signatures;

(ii)  the authenticity and completeness of all documents submitted to us as
      originals;

(iii) the conformity to original documents of all documents submitted to us as
      copies and the authenticity and completeness of such original documents;


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<PAGE>

                                      73
________________________________________________________________________________

(iv)  the power and authority to execute and the due execution of the Credit
      Agreement by the Company, each Bank, each Joint Arranger and the Agent,
      and that the obligations expressed to be assumed by each Bank, each Joint
      Arranger and the Agent under the Credit Agreement are legally valid;

(v)   that, so far as the laws of Scotland are concerned, the Credit Agreement
      constitutes a valid and legally binding obligation of the Company in
      accordance with its terms; and

(vi)  that the certificates and other documents dated earlier than the date
      hereof and on which we have expressed reliance remain accurate and that
      there have been no variations to any such certificates or documents.

We have not investigated the laws of any country other than England and this
opinion is given only with respect to English law. We assume that no foreign law
which may apply with respect to the Credit Agreement or the transactions and
matters contemplated thereby would be such as to affect any of the conclusions
stated herein. We express no opinion as to matters of fact.

Based upon and subject to the foregoing and subject to any matters not disclosed
to us we are of the opinion that, so far as the present laws of England are
concerned and subject to the qualifications set out below:

(A)   Legal validity  The Credit Agreement constitutes valid and legally binding
      obligations of the Company.

(B)   Stamp duties  No stamp or registration duty or similar taxes or charges
      are payable in the United Kingdom in respect of the execution or delivery
      of the Credit Agreement.

(C)   Registrations  It is not necessary to register the Credit Agreement in any
      public office or elsewhere in England.

Notwithstanding the foregoing this opinion is subject to the following
qualifications:

(i)   The validity, performance and enforcement of the Credit Agreement may be
      limited by bankruptcy, insolvency, reorganisation or similar laws
      affecting creditors' rights generally.

(ii)  Remedies such as specific performance or the issue of an injunction are
      available only at the discretion of the court. Specific performance is not
      usually granted and an injunction is not usually issued where damages
      would be an adequate alternative.

(iii) The Credit Agreement provides for interest to be paid on overdue amounts.
      Such interest may amount to a penalty under English law and may therefore
      not be recoverable.

(iv)  We express no opinion as to the enforceability of Clause 30 (Pro rata
      sharing) of the Credit Agreement.

(v)   An English court may stay proceedings if concurrent proceedings are being
      brought elsewhere.

(vi)  There could be circumstances in which an English court would not treat as
      conclusive those certificates and determinations which the Credit
      Agreement states are to be so treated.


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<PAGE>

                                      74
________________________________________________________________________________


(vii)  The obligations contained in Clause 23 (Stamp duties) of the Agreement
       may be void in respect of stamp duty payable in the United Kingdom.

(viii) Clause 31 (Severability) of the Credit Agreement may not be effective in
       certain circumstances depending on the nature of the prohibition or
       unenforceability in question.

(ix)   The Credit Agreement may be amended orally by the parties thereto
       notwithstanding provisions therein to the contrary.

(x)    English courts may not give effect to any provision for reimbursement of
       legal costs incurred by an unsuccessful litigant.

(xi)   The effectiveness of terms exculpating a party from a liability or duty
       otherwise owed may be limited by law.

(xii)  There is no authority as to whether or not an English court would give
       effect to the currency indemnity contained in Clause 24.1 (Currency
       indemnity) of the Credit Agreement. However, the English courts will now
       render judgments in foreign currencies.

(xiii) On the assumption that a Novation Certificate is duly completed,
       executed, authorised and delivered to the Agent in accordance with the
       Credit Agreement and any conditions to which the Novation Certificate is
       expressed to be subject are satisfied, then the provisions of Clause 27.3
       (Procedure for novations) will operate in accordance with its terms.
       However, without prejudice to the preceding sentence, no opinion is
       expressed with respect to any Novation Certificate issued after the date
       of this opinion because we do not know the identity of the parties
       concerned and this opinion is given only as at today's date. In any
       event, it should be noted that in certain circumstances transactions
       employing Novation Certificates and assignments or transfers of interests
       in the Credit Agreement may require compliance with the Financial
       Services Act 1986.

(xiv)  A person may not be able to enforce a provision of the Credit Agreement
       expressed to be in his favour unless he is a party.

This opinion is given for the sole benefit of the Agent, the Joint Arrangers and
the Banks which are the original parties to the Credit Agreement and may not be
disclosed to, or relied upon by, any other person or be quoted or made public in
any way without our prior written consent.

Yours faithfully,



________________________________________________________________________________
<PAGE>

                                      75
________________________________________________________________________________


                                  SCHEDULE 7

                FORM OF LEGAL OPINION OF MACLAY MURRAY & SPENS


Ref: RJL/SMK
[        ], 2001

The Royal Bank of Scotland plc (the "Agent")
135 Bishopsgate
London EC2M 3UR
(as agent for the Finance Parties)



Dear Sirs,

You have asked for our opinion in connection with an agreement of even date with
this opinion between Scottish Power UK plc as borrower (the "Company"), The Bank
of Tokyo Mitsubishi, Ltd., Commerzbank Aktiengesellschaft, London Branch, J.P.
Morgan plc and The Royal Bank of Scotland plc as Joint Arrangers, the Banks (as
defined therein) and the Agent (the "Facility Agent").

Unless otherwise defined in this opinion, words and expressions defined in the
Facility Agreement shall bear the same meanings in this opinion.

For the purposes of this opinion, we have examined copies of and base our
opinion on the following documents, copies of which we have signed and attach
for the purposes of identification (other than the Company Search):

(a)  an executed copy of the Facility Agreement;

(b)  a certified copy of the Memorandum and Articles of Association of the
     Company;

(c)  a microfiche of the files of the Company obtained from the Registrar of
     Companies in Edinburgh on [        ], 2001 (the "Company Search");

(d)  a certified copy of the minutes of a meeting of the board of directors of
     the Company held on [        2001] (the "Directors' Minutes");

(e)  a certificate of a director of the Company confirming that the utilisation
     by the Company of the said Facility (as defined in the Facility Agreement)
     (the "Director Certificate") in full would not cause any internal borrowing
     limit binding on the Company to be exceeded; and

(f)  a certificate of an authorised signatory of the Company (the "Authorised
     Signatory Certificate") certifying that each of the items in paragraphs (b)
     and (d) is correct, complete and in full force. The Director Certificate
     and Authorised Signatory Certificate are herein together referred to as
     "the Certificates").


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<PAGE>

                                      76
________________________________________________________________________________


We have not made any other enquiries concerning the Company and in particular we
have not concerned ourselves with investigating or verifying any matters of fact
or opinion (whether set out in any of the documents referred to above or
elsewhere) other than as expressly stated herein.

We have assumed for the purposes of this opinion:

(i)    the capacity, power and authority of each of the Joint Arrangers, the
       Banks and the Agent to enter into and perform their respective
       obligations under the Facility Agreement and the due execution and
       delivery of the Facility Agreement by each of the Joint Arrangers, the
       Banks and the Agent;

(ii)   that the Facility Agreement has been signed by [        ] and [       ]
       on behalf of the Company and that the Facility Agreement has been duly
       delivered;

(iii)  the conformity to original documents of all documents supplied to us as
       photocopies, specimen or facsimile copies;

(iv)   that each of the statements contained in the Certificates (on which we
       have relied without further inquiry) is true and correct as at the date
       hereof;

(v)    that the meeting of the board of directors of the Company held on [    ],
       2001 was duly convened and held;

(vi)   that the information disclosed by the Company Search was accurate in all
       respects and that such Search did not fail to disclose any material
       information which had been delivered for registration but which did not
       appear on the microfiche supplied by the Companies Registry in Edinburgh;

(vii)  the Company has not passed a voluntary winding-up resolution, no petition
       has been presented or order made by the Court for the winding up,
       dissolution or administration of the Company and no receiver, trustee,
       administrator or similar official has been appointed in relation to the
       Company or any of its assets or revenues; and

(viii) that the Facility Agreement constitutes a legal, valid and binding
       obligation of the parties thereto under English law to which it is
       expressed to be subject and that the performance of the obligations
       thereunder is not illegal or unenforceable by virtue of the law of any
       jurisdiction (other than Scotland) in which they are to be performed.

We have not made any investigation of and do not express any opinion as to the
laws of any jurisdiction outside Scotland and this opinion relates only to the
laws of Scotland as they exist at the date hereof.

Based upon and subject to the foregoing and subject to the reservations
hereinafter referred to and to any matters not disclosed to us, we are of the
opinion that:

1.     The Company is a limited liability company duly incorporated under the
       laws of Scotland and has full corporate power and authority to execute,
       deliver and perform its obligations under the Facility Agreement.



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<PAGE>

                                      77
________________________________________________________________________________


2.   The execution and delivery by the Company of the Facility Agreement and the
     performance of its obligations thereunder have been duly authorised by all
     requisite corporate action on its part.

3.   The obligations of the Company under the Facility Agreement are valid and
     binding obligations of the Company under the law of Scotland and would be
     so treated in the Courts of Scotland.

4.   The entry into and performance of the Facility Agreement by the Company and
     the transaction and matters to be implemented thereunder do not violate (i)
     Scottish Law or (ii) the Memorandum and Articles of Association of the
     Company.

5.   It is not necessary to file, register or record the Facility Agreement with
     any court or authority in Scotland.

6.   No stamp, registration or other similar taxes or charges are payable in
     Scotland with respect to the execution or delivery of the Facility
     Agreement.

7.   The choice of English law to govern the Facility Agreement is valid and
     effective under the private international law of Scotland. Subject to the
     usual exceptions affecting such matters as procedure, the availability of
     remedies and any provision which is repugnant to the law of Scotland, the
     law of England will accordingly be applied by the Courts of Scotland if any
     dispute arising from or contractual claim connected with the Facility
     Agreement comes under their jurisdiction. A judgment rendered against the
     Company by a competent court in England and registered in Scotland pursuant
     to the provisions of the Civil Jurisdiction and Judgments Act 1982 will be
     enforceable by the Scottish Courts.

8.   The submission by the Company to the jurisdiction of the courts of England
     is valid and binding on the Company.

The foregoing opinion is subject to the following qualifications:

(a)  We do not express any view on the particular remedies available on
     enforcement, such as specific implement or interdict, which are
     discretionary remedies.

(b)  The enforcement of the Facility Agreement may be limited by applicable laws
     relating to prescription, limitation, bankruptcy, liquidation,
     receivership, administration, insolvency or other laws relating to
     creditors' rights generally or by the application of rules of equity or
     public policy.

(c)  A Scottish court may refuse to give effect to any provisions of the
     Facility Agreement providing for the payment of legal costs and other
     costs, charges and expenses in respect of the cost of unsuccessful
     litigation brought before such court or where that court has itself made an
     order for costs.

(d)  Any provision contained in the Facility Agreement to the effect that a
     calculation and/or certification will be conclusive and binding may not be
     effective if such calculation or certification is fraudulent or erroneous
     on its face and will not necessarily prevent judicial enquiry into the
     merit of any claim under the relative document.


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<PAGE>

                                      78
________________________________________________________________________________


(e)  Any provision in the Facility Agreement relating to default interest would
     be unenforceable if it were held to constitute a penalty and not a genuine
     and reasonable pre-estimate of the damage likely to be suffered as a result
     of the default in payment of the amount in question.

(f)  We express no opinion whether any provision in the Facility Agreement
     conferring on any party thereto a right of set off or similar right would
     be effective against a liquidator or creditor.

(g)  We have not been asked to advise you in connection with the preparation of
     the Facility Agreement and we therefore express no opinion on the
     implications of the Facility Agreement or on whether the Facility Agreement
     gives effect to the commercial intentions of the parties.

(h)  Any undertakings or indemnities in relation to United Kingdom stamp duties
     given by the Company may be void under the provisions of Section 117 of the
     Stamp Act 1891.

(i)  A Scottish court may stay proceedings if concurrent proceedings are being
     brought elsewhere.

(j)  The effectiveness of terms exculpating a party from a liability or duty
     otherwise owed is limited by law.

This opinion shall be governed by and construed in accordance with the law of
Scotland.

This opinion is strictly limited to the matters specifically stated herein and
is not to be read as extending by implication to any other matter.

This opinion is provided solely for the benefit of the person to which it is
addressed and may not be communicated to or relied upon by any other person,
firm or corporation whatsoever.

Yours faithfully,


________________________________________________________________________________
<PAGE>

                                      79
________________________________________________________________________________


                                  SCHEDULE 8

                                    PART 1

                         GUARANTOR ACCESSION AGREEMENT


To:   THE ROYAL BANK OF SCOTLAND plc as Agent

From: [GUARANTOR]



     Scottish Power UK plc (the "Company") - (Pounds)1,000,000,000 Revolving
                Credit Agreement dated [        ], 2001 (the "Credit Agreement")


We refer to Clause 27.4 (Accession) of the Credit Agreement.

We, [GUARANTOR] of [        ] agree to become, with effect from the date of this
Deed, a Guarantor under the Credit Agreement and to be bound by the terms of the
Finance Documents as an Obligor in accordance with Clause 27.4 (Accession).

Our address for notices for the purposes of Clause 33.2 (Addresses for notices)
is:

[


                 ]


This Agreement is intended to take effect as a deed under English law.

THE COMMON SEAL of          )
[GUARANTOR]                 )
was affixed in              )
the presence of:            )



Director


Director/Secretary


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<PAGE>

                                      80
________________________________________________________________________________


                                    PART 2

                     COUNTER GUARANTOR ACCESSION AGREEMENT


To:   THE ROYAL BANK OF SCOTLAND plc as Agent

From: COUNTER GUARANTOR]


      Scottish Power UK plc (the "Company") - (Pounds)1,000,000,000 Revolving
               Credit Agreement dated [         ], 2001 (the "Credit Agreement")


We refer to Clause 27.4 (Accession) of the Credit Agreement.

We, [COUNTER GUARANTOR] of [        ] (Registered no. [        ]) agree to
become, with effect from the date of this Deed, a Counter Guarantor under the
Credit Agreement and to be bound by the terms of the Finance Documents as an
Obligor in accordance with Clause 27.4 (Accession).

Our address for notices for the purposes of Clause 33.2 (Addresses for notices)
is:

[


                 ]


This Agreement is intended to take effect as a deed under English law.

THE COMMON SEAL of            )
[COUNTER GUARANTOR]           )
was affixed in                )
the presence of:              )



Director


Director/Secretary



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<PAGE>

                                      81
________________________________________________________________________________


                                  SCHEDULE 9

                          FORM OF MARGIN CERTIFICATE


To:   The Royal Bank of Scotland plc

From: Scottish Power UK plc

Date: [        ]


     Scottish Power UK plc - (Pounds)1,000,000,000 Revolving Credit Agreement
               dated [             ], 2001 (the "Credit Agreement")


1.   We refer to the Credit Agreement. This is a Margin Certificate.

2.   We confirm that as at [end date of relevant financial half year]:

     (a)  Total Consolidated Net Borrowings for the preceding twelve month
          period ending on that date was [        ];

     (b)  Consolidated EBITDA for the preceding twelve month period ending on
          that date was [        ];

     (c)  in accordance with Clause 8.2(d) (Margin adjustment) the Applicable
          Margin for any Loan during a Term with a Rate Fixing Day falling after
          the date of this certificate but on or before the delivery of the next
          Margin Certificate will be: [        ].

Scottish Power UK plc

By:                                By:




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<PAGE>

                                      82
________________________________________________________________________________


                     SIGNATORIES TO THE FACILITY AGREEMENT


Company

SCOTTISH POWER UK PLC

By:  A. J. M. COATS



Joint Arrangers

THE BANK OF TOKYO-MITSUBISHI, LTD.

By:  D. DALLISON



COMMERZBANK AKTIENGESELLSCHAFT, LONDON BRANCH

By:  J. THOMSON     J. R. BOURNE



J.P. MORGAN PLC

By:  M. TOULAN



THE ROYAL BANK OF SCOTLAND PLC

By:  J. H. M. HARE



Agent


THE ROYAL BANK OF SCOTLAND PLC

By:  J. H. M. HARE



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<PAGE>

                                      83
________________________________________________________________________________


Banks

THE BANK OF TOKYO-MITSUBISHI, LTD.

By:  D. DALLISON


COMMERZBANK AKTIENGESELLSCHAFT, LONDON BRANCH

By:  J. THOMSON     J. R. BOURNE


THE CHASE MANHATTAN BANK

By:  M. TOULAN


THE ROYAL BANK OF SCOTLAND PLC

By:  J. H. M. HARE

BANK ONE, NA

By:  DAVID G. ROBERTS


BANKGESELLSCHAFT BERLIN AG, LONDON BRANCH

By:  J. H. M. HARE (power of attorney)


BARCLAYS BANK PLC

By:  J. A. C. BATTERS


BAYERISCHE LANDESBANK GIROZENTRALE, LONDON BRANCH

By:  M. R. L. WILLIAMS


BNP PARIBAS LONDON BRANCH

By:  J. H. M. HARE (power of attorney)


CITIBANK, N.A.

By:  R. A. WELFORD



________________________________________________________________________________
<PAGE>

                                      84
________________________________________________________________________________


CREDIT SUISSE FIRST BOSTON

By:  N. BURNHAM     G. LYNSKEY


DANSKE BANK A/S

By:  J. H. M. HARE (power of attorney)


DEUTSCHE BANK AG LONDON

By:  M. STARMER-SMITH


FLEET NATIONAL BANK

By:  R. S. SULLIVAN


HSBC BANK PLC

By:  ANDREW AITKEN


ING BANK N.V., LONDON BRANCH

By:  ANJILA SHARMA


NATIONAL AUSTRALIA BANK, ACN004044937

By:  DAVID RAWSON


SCOTIABANK (IRELAND) LIMITED

By:  J. H. M. HARE (power of attorney)


THE DAI-ICHI KANGYO BANK, LIMITED

By:  TREVOR C. BAILEY


THE FUJI BANK, LIMITED

By:  KATSUNORI NOZUWA



________________________________________________________________________________
<PAGE>

                                      85
________________________________________________________________________________


UBS AG

By:  ANNETTE P. ALFORD


SUMITOMO MITSUI BANKING CORPORATION

By:  JEREMY P. G. SLATER



________________________________________________________________________________
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                                     INDEX


Clause                                                                    Page

1.   Interpretation.....................................................     1
2.   The Facility.......................................................    16
3.   Purpose............................................................    17
4.   Conditions precedent...............................................    17
5.   Drawdown...........................................................    18
6.   Repayment..........................................................    19
7.   Prepayment and cancellation........................................    19
8.   Interest...........................................................    20
9.   Optional Currencies................................................    22
10.  Payments...........................................................    22
11.  Taxes..............................................................    25
12.  Market disruption..................................................    26
13.  Increased Costs....................................................    27
14.  Illegality and mitigation..........................................    28
15.  Guarantee..........................................................    29
16.  Counter Guarantee..................................................    31
17.  Representations and warranties.....................................    34
18.  Undertakings.......................................................    36
19.  Default............................................................    42
20.  The Agent and the Joint Arrangers..................................    47
21.  Fees...............................................................    51
22.  Expenses...........................................................    52
23.  Stamp duties.......................................................    53
24.  Indemnities........................................................    53
25.  Evidence and calculations..........................................    54
26.  Amendments and waivers.............................................    54
27.  Changes to the Parties.............................................    55
28.  Disclosure of information..........................................    58
29.  Set-Off............................................................    59
30.  Pro Rata Sharing...................................................    59
31.  Severability.......................................................    60
32.  Counterparts.......................................................    61
33.  Notices............................................................    61
34.  Governing law......................................................    62
35.  Jurisdiction.......................................................    62


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Schedules
<TABLE>
<CAPTION>
<S>                                                                                               <C>
1.   Original Parties..........................................................................   63
2.   Part 1  Conditions precedent documents to be delivered before the first Loan..............   64
     Part 2  Conditions precedent documents to be delivered by a Guarantor or
     Counter-Guarantor.........................................................................   66
3.   Calculation of the Mandatory Cost.........................................................   68
4.   Form of Request...........................................................................   70
5.   Form of Novation Certificate..............................................................   71
6.   Form of legal opinion of Allen & Overy....................................................   72
7.   Form of legal opinion of Maclay Murray & Spens............................................   75
8.   Part 1 - Guarantor Accession Agreement....................................................   79
     Part 2 - Counter Guarantor Accession Agreement............................................   80
9.   Form of Margin Certificate................................................................   81

Signatories....................................................................................   82
</TABLE>
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