Exhibit 10(a)

                                                                  CONFORMED COPY


                               DATED 24 March 1999





                              FACILITIES AGREEMENT

                                       for

                     (pound)1,275,000,000 Credit Facilities






                          TXU Eastern Holdings Limited                      (1)
                               as Primary Borrower


                           TU Finance (No. 2) Limited                       (2)
                             TU Acquisitions Limited


                               Chase Manhattan plc                          (3)
                     Lehman Brothers International (Europe)
                        Merrill Lynch Capital Corporation
                             as Joint Lead Arrangers


                 The financial institutions listed in Schedule 1            (4)
                                    as Banks


                            The Chase Manhattan Bank                        (5)
                                 as Issuing Bank


                      Chase Manhattan International Limited                 (6)
                                as Facility Agent









                              Lovell White Durrant
                                     London




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                                    Contents


1.  PURPOSE AND DEFINITIONS...................................................1

2.  THE COMMITMENTS..........................................................29

3.  THE CONDITIONS...........................................................30

4.  ADVANCES AND LETTERS OF CREDIT...........................................31

5.  INTEREST AND INTEREST PERIODS............................................38

6.  REPAYMENT, PREPAYMENT, CANCELLATION AND REDUCTIONS.......................41

7.  FEES AND EXPENSES........................................................44

8.  PAYMENTS AND TAXES; ACCOUNTS AND CALCULATIONS............................46

9.  REPRESENTATIONS AND WARRANTIES...........................................54

10. INFORMATION UNDERTAKINGS.................................................58

11. GENERAL UNDERTAKINGS.....................................................60

12. EVENTS OF DEFAULT........................................................70

13. INDEMNITIES..............................................................75

14. UNLAWFULNESS, INCREASED COSTS, ALTERNATIVE INTEREST RATES................77

15. SET-OFF AND PRO-RATA PAYMENTS............................................80

16. ASSIGNMENT, SUBSTITUTION AND LENDING OFFICES.............................82

17. FACILITY AGENT...........................................................85

18. POWERS ..................................................................87

19. DUTIES ..................................................................90

20. EXONERATION..............................................................91

21. GUARANTEE................................................................95

22. DETERMINATION OF MATTERS.................................................95

23. BASIS OF DECISIONS.......................................................97

24. MATTERS CONCERNING THE BORROWERS.........................................99

25. NOTICES AND OTHER MATTERS...............................................101

26. GOVERNING LAW AND JURISDICTION..........................................104




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                                     - ii -



Schedule 1

The Banks and their Commitments.............................................105

Schedule 2

Forms of Drawdown Notice....................................................107

Schedule 3

Conditions Precedent........................................................110

Schedule 4

Calculation of Mandatory Cost Rate..........................................112

Schedule 5

Form of Substitution Certificate............................................114

Schedule 6

Form of Accession Certificate...............................................118

Schedule 7

Terms of Borrowers' Indemnity...............................................120

Schedule 8

Terms of Interbank Guarantee and Indemnity..................................123

Schedule 9

Terms of Guarantee..........................................................126



EXECUTION PAGES.............................................................130




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THIS AGREEMENT is made as of the 24th day of March 1999


BETWEEN:

(1)  TXU Eastern  Holdings  Limited (a company  registered  in England and Wales
     with company number 3505836) (the "Primary Borrower");

(2)  TU Finance (No. 2) Limited a company  registered  in England and Wales with
     company number 3514100 ("Finco 2") and TU Acquisitions  Limited,  a company
     registered in England and Wales with company number 3455523 ("Bidco");

(3)  Chase  Manhattan plc, Lehman  Brothers  International  (Europe) and Merrill
     Lynch Capital Corporation as joint lead arrangers;

(4)  The financial institutions listed in Schedule 1 as the initial Banks;

(5)  The Chase Manhattan Bank as the initial Issuing Bank; and

(6)  Chase Manhattan International Limited as the initial Facility Agent.


IT IS AGREED as follows:


1.     PURPOSE AND DEFINITIONS

1.1    Purpose

       This  Agreement  sets out the terms and  conditions  upon and  subject to
       which the Banks agree,  according to their several  obligations,  to make
       available:

       (a)    Term Facility

              to the  Primary  Borrower,  a term  facility  in Sterling of up to
              (pound)750,000,000  which shall be available  for the financing or
              refinancing of the Acquisition;

       (b)    Revolving Credit Facility Tranche A

              to  the  Primary  Borrower  and  (subject  to  accession  to  this
              Agreement under clause 24 (Matters  Concerning the Borrowers)) the
              Additional   Borrowers,   a  364  day  (subject  to  extension  in
              accordance  with clause 6.2  (Repayment  of  Revolving  Advances))
              multicurrency revolving credit facility of up to a Sterling Amount
              of (pound)200,000,000 to be used for the Group's general corporate
              purposes.

       (c)    Revolving Credit Facility Tranche B

              to  the  Primary  Borrower  and  (subject  to  accession  to  this
              Agreement under clause 24 (Matters  Concerning the Borrowers)) the
              Additional Borrowers,  a four year multicurrency  revolving credit
              facility of up to a Sterling  Amount of  (pound)325,000,000  to be
              used for the Group's general corporate purposes.


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                                     - 2 -



       For the avoidance of doubt,  no Revolving  Advance may be used to finance
       or   refinance   the   Acquisition   save  as  envisaged  by  clause  4.3
       (Utilisations generally).

       No amounts borrowed under any of the Facilities may be used,  directly or
       indirectly,  to repay or refinance  the minimum  equity  contribution  of
       (pound)1,678,082,000  required to be made under the terms of the Original
       Facilities Agreement.

       This  Agreement  is being  entered into for the  purpose,  in effect,  of
       amending and restating the Original Facilities Agreement.

1.2    Definitions

       In this Agreement, unless the context otherwise requires:

       "Accession  Certificate" means an accession  certificate (by way of deed)
       substantially  in the form of schedule 6 (Form of Accession  Certificate)
       and entered  into or to be entered  into by an  acceding  Obligor and the
       Facility Agent;

       "Acquisition" means the acquisition by Bidco of the Target Shares;

       "Act" means the Companies Act 1985;

       "acting in concert"  has the meaning  given to that term in the City Code
       on Takeovers and Mergers;

       "Additional  Borrower"  means (a) Finco 2 and (b) any Permitted  Borrower
       which  accedes to this  Agreement as an Additional  Borrower  pursuant to
       clause 24 (Matters  Concerning the Borrowers) for so long as it remains a
       Permitted Borrower;

       "Additional  Guarantor"  means any member of the Group  which  accedes to
       this Agreement as a Guarantor  pursuant to clause 24 (Matters  Concerning
       the Borrowers) for so long as it remains a Guarantor;

       "Adjusted  Share  Capital  and  Reserves"  means  the  aggregate  of  the
       following items namely:

       (a)    the  nominal  amount of the share  capital of Finco 2 for the time
              being  issued and paid up or  credited  as paid up  excluding  any
              Qualifying Preference Shares issued by Finco 2;

       (b)    the amounts standing to the credit of the consolidated reserves of
              the  Group  (including  any  share  premium  account  and  capital
              redemption reserve),

       but  adjusted,  to the extent that the  following  items have not already
       been added,  deducted or excluded in arriving at the figures  referred to
       in (a) or (b) above:

              (i)    by  deducting  the  amounts  standing  to the  debit of the
                     consolidated reserves of the Group;

              (ii)   by  deducting  any amounts  attributable  to  interests  of
                     non-Group members in Subsidiaries of Finco 2;

              (iii)  by deducting any reserves set aside for deferred taxation;



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                                     - 3 -



              (iv)   by deducting  the amount by which the net book value of any
                     fixed  asset  has been  written  up after  the date of this
                     Agreement (or, in the case of a person becoming a member of
                     the Group  after that date,  the date on which it becomes a
                     member  of  the  Group)  by way  of  revaluation  or on its
                     transfer  from one member of the Group to  another  (but no
                     such deduction shall be made if the amount of this write up
                     is  supported by and does not exceed the amount shown by an
                     independent written valuation);

              (v)    by deducting any amounts  attributable to the consolidation
                     of  the  assets   and   liabilities   of  Project   Finance
                     Subsidiaries  or,  if the  value  of such  Project  Finance
                     Subsidiaries  or the shares of any Group Company over which
                     security  has  been  given  as  contemplated  in  paragraph
                     (c)(ii) of the definition of Project  Finance  Borrowing is
                     represented  by  `investment  in  subsidiaries'  (or  other
                     investments)  in  the  books  of  their  relevant   holding
                     companies, deducting the amount of such investment;

              (vi)   by  deducting  the  amount of any  outstanding  loan from a
                     member of the Group or (other than an Equity-Financed Loan)
                     the Primary Borrower to, or for the benefit of, any Project
                     Finance  Subsidiary or any Relevant  Person or expended on,
                     or in support of, any  Project in respect of which  Project
                     Finance Borrowings have been incurred and the book value of
                     any  assets   over  which   security   has  been  given  as
                     contemplated  in  paragraph  (c)(ii) of the  definition  of
                     Project Finance  Borrowing (to the extent,  in either case,
                     not deducted  under  paragraph  (v) above  (without  double
                     counting));

              (vii)  by adding back (aa) to capital  reserves,  goodwill written
                     off by reason  of the  Acquisition  and (bb) to  cumulative
                     revenue  reserves,  any goodwill arising on the Acquisition
                     and  subsequently  amortised  through  the  profit and loss
                     account;

       but so that no amount to be added,  deducted  or  excluded as a result of
       any of the foregoing shall be added,  deducted or excluded more than once
       in the same  calculation  and, where the  calculation is being made as at
       the  end of a Test  Period  or in the  context  of  paragraph  (d) of the
       definition  of Permitted  Security  Interest or in the context of clauses
       11.1 (Financial  ratios) or 11.17 (Project  Finance  Subsidiaries),  each
       such amount shall be determined by reference to the most recent financial
       statements and compliance  certificates  delivered  hereunder as adjusted
       pursuant to the provisions of clause 11.2 (Change of Accounting policies)
       and  the  terms  of  this  definition  or any  relevant  clause  of  this
       Agreement;

       "Advance" means any Term Advance or Revolving Advance and, as the context
       requires,  includes  the full  amount  of such  Advance  when made or the
       amount of an Advance which is outstanding at any relevant time;

       "Affected  Bank" has the meaning given to it in clause 14.4  (Mitigation)
       (except that the  definition of "Affected  Bank" and "Affected  Banks" in
       clause 4.14 (Unavailability of Optional Currency) shall have that meaning
       in that clause only);

       "Affiliate"  means,  in relation to any person,  any  Subsidiary  of that
       person,  any holding  company of that person and any other  Subsidiary of
       that holding company;

       "Applicable Fees Rate" means at any time in respect of:



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                                     - 4 -



       (a)    the Revolving  Credit  Facility  Tranche A, 40% of the  Applicable
              Margin for Revolving Credit Facility Tranche A;

       (b)    the Revolving  Credit  Facility  Tranche B, 50% of the  Applicable
              Margin for Revolving Credit Facility Tranche B;

       "Applicable  Margin"  means,  at any time,  0.875% per annum or if at the
       date hereof or subsequently the most recent determination of the Leverage
       Ratio under clause 11.1 (Financial  Ratios) shows that the Leverage Ratio
       is less than 65%, the rate per annum determined as follows:

              Leverage Ratio       and not less than:      Applicable Margin is:
              is less than:


              65%                         60%                       0.75%
              60%                         55%                       0.625%
              55%                         --                        0.5%

       (a)    any  reduction  or increase in the  Applicable  Margin  shall have
              effect 5 Banking Days following the date of delivery of any set of
              audited or management  accounts for a Quarter under clause 10.3(a)
              (Annual  audited  financial  statements)  and 10.3 (b)  (Unaudited
              management   accounts),   together  with  the  financial  covenant
              compliance  certificate  by the  Primary  Borrower  referred to in
              clause 10.3(c)  (Compliance  with financial  undertakings),  until
              (but  excluding) the effective  date for any subsequent  change in
              the Applicable Margin in accordance with this definition;

       (b)    during the continuance of any Default,  any margin reduction under
              this definition will not apply, and the Applicable Margin shall be
              0.875%;

       "Appropriate Accounting Principles" means:

       (a)    the  accounting  principles,  policies,  standards,  practices and
              bases (being generally accepted in the United Kingdom), as adopted
              in the Original Group Accounts; or

       (b)    where any change has  occurred and (if  required)  has been agreed
              under clause 11.2 (Change of Accounting policies), such accounting
              principles, standards, practices and bases as have so occurred and
              (if required) have been so agreed;

       "Arrangers"  means Chase  Manhattan plc,  Lehman  Brothers  International
       (Europe) and Merrill Lynch Capital Corporation;

       "Auditors"  means  PricewaterhouseCoopers  or such other  internationally
       recognised firm of chartered  accountants as may be auditors to the Group
       for the time being;

       "Available  Amount" means,  at any time and in respect of any Facility or
       Tranche,  the aggregate of the Available  Commitments of all the Banks in
       respect of such Facility or Tranche at such time;

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                                     - 5 -



       "Available Commitment" means, in relation to a Bank and save as otherwise
       provided in this Agreement:

       (a)    in respect of the Revolving Credit Facility Tranche A at any time,
              its Commitment in respect of such Tranche at such time less:

              (i)    its  Contribution to the Sterling Amount of all outstanding
                     Revolving Credit Facility Tranche A Advances at such time;

              (ii)   its  Proportion of the Sterling  Amount at that time of the
                     Outstanding  Contingent  Liabilities  under all  Letters of
                     Credit then  outstanding  under  Revolving  Credit Facility
                     Tranche A; and

              (iii)  its  proportion  of the Sterling  Amount of any amount paid
                     out by the  Issuing  Bank  under a Letter of Credit  issued
                     under  Revolving  Credit  Facility  Tranche  A and  not yet
                     reimbursed;

       (b)    in respect of the Revolving Credit Facility Tranche B at any time,
              its Commitment in respect of such Tranche at such time less:

              (i)    its  Contribution to the Sterling Amount of all outstanding
                     Revolving Credit Facility Tranche B Advances at such time;

              (ii)   its  Proportion of the Sterling  Amount at that time of the
                     Outstanding  Contingent  Liabilities  under all  Letters of
                     Credit then  outstanding  under  Revolving  Credit Facility
                     Tranche B; and

              (iii)  its  proportion  of the Sterling  Amount of any amount paid
                     out by the  Issuing  Bank  under a Letter of Credit  issued
                     under  Revolving  Credit  Facility  Tranche  B and  not yet
                     reimbursed;

       "Available Commitment  Termination Date" means save as otherwise provided
       herein:

       (a)    in relation to the  Revolving  Credit  Facility  Tranche A, eleven
              months after the date of this Agreement;

       (b)    in relation to the Revolving  Credit Facility Tranche B, one month
              before the Final Repayment Date;

       (c)    in  relation to the Term  Facility,  thirty days after the date of
              this Agreement  (subject to clause 3.4 (Repayment and Cancellation
              of Original Facilities Agreement));

       "Banking  Day" means a day (other  than a Saturday  or a Sunday) on which
       banks are open for general business in London and New York City, and:

       (a)    in relation to a transaction involving an Optional Currency (other
              than Euros, Euro Units or national currency units),  the principal
              financial centre of the country of that Optional Currency; and

       (b)    in  relation  to a  transaction  involving  Euros,  Euro  Units or
              national  currency units,  in Frankfurt am Main,  Germany (or such
              other principal  financial  centre(s) of any Participating  Member
              State(s) as the Facility Agent may from time to time reasonably



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                                     - 6 -



              nominate for this purpose) and,  being a day on which  payments in
              Euros are settled in the Trans-European  Automated Real-time Gross
              settlement Express Transfer (TARGET) system;

       "Banks"  means the  original  banks  listed in  schedule 1 (The Banks and
       their Commitments) and includes their successors in title,  assignees and
       Substitutes;

       "Bidco" means TU Acquisitions Limited (company no 3455523);

       "Bidco/Primary  Borrower Guarantee" means the guarantee given by Bidco in
       favour of the Primary  Borrower of all Finco 2's payment  obligations  to
       the  Primary  Borrower  under the intra  Group  loans made by the Primary
       Borrower to Finco 2, both those  existing at the date of this  Agreement,
       and  those  subsequently  required  to be  made  by or  pursuant  to this
       Agreement;

       "Borrowed Money" means any present or future Indebtedness (whether by way
       of principal or premium) for or in respect of:

       (a)    money borrowed or raised;

       (b)    any recourse  arising from the discounting of receivables save for
              recourse for  disputed or  ineligible  debts or similar  rights of
              recourse typical in a securitisation transaction;

       (c)    liabilities  under or in respect of any  acceptance  or acceptance
              credit or documentary  credit facility or standby credit facility,
              other  than  (i)  any  such  credit   facility   relating  to  the
              acquisition cost of assets or services to the extent that the same
              involves  deferral  of payment of any sum for one year or less and
              (ii) exposure  under any such credit issued to back  completion or
              performance  obligations  (including  any obligation to lodge cash
              margin  payments  in  case  of a  specified  decline  in  a  Group
              Company's rating), except to the extent that:

              (aa)   such obligations are for the payment of Borrowed Monies, or
                     for the payment of liquidated  damages the payment of which
                     is triggered by an event or  circumstance  which has (as of
                     the relevant date on which any calculation is made) already
                     occurred,  and, in the case of a decline in rating,  if the
                     rating agency  concerned  has reduced the relevant  rating,
                     the amount taken into account will be the amount which has,
                     or will, become payable by reason of such decline; or

              (bb)   provision  has been made in the  accounts  of the  relevant
                     Group  Company  for an  amount  due  under  the  underlying
                     obligation,  or, were the relevant Group Company to prepare
                     accounts as of the date on which a  compliance  certificate
                     is issued to the Facility Agent under clause 10.3 (Delivery
                     of financial  statements),  such a provision should be made
                     in accordance with Appropriate Accounting Principles;

       (d)    any notes, bonds, debentures, debenture stock, loan stock or other
              debt security  offered,  issued or  distributed  whether by way of
              public  offer,  private  placing,   acquisition  consideration  or
              otherwise and whether issued for cash or in whole or in part for a
              consideration   other  than  cash,  other  than  any  bond,  note,
              debenture or other debt security referred to in (f) below;


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                                     - 7 -



       (e)    any outstanding Qualifying Preference Shares in issue;

       (f)    any  outstanding  balance  of the  acquisition  cost of  assets or
              services to the extent payable on deferred payment terms after the
              time of  acquisition  or  possession  thereof by the person liable
              (but only to the extent that the same:

              (i)    involves  deferral  of payment of any sum for more than one
                     year;

              (ii)   is not a cost in respect of the  expansion,  development or
                     renewal  of all or  part  of the  "licensee's  distribution
                     system" (as defined in the PES Licence); and

              (iii)  exceeds  (pound)25,000,000 in respect of any transaction or
                     series of related transactions)

              whether or not any  instalments  for  payment are  evidenced  by a
              bond,  note,  debenture  or  other  debt  security  issued  by the
              obligor;

       (g)    any Finance Lease;

       (h)    any  guarantee,  indemnity  or  other  legally  binding  assurance
              against (or other legally binding arrangement  intended to prevent
              or limit) loss arising under any Borrowed  Money of any person who
              is not a Group member;

       (i)    for the  purpose  of  clause  12.1(d)  (Cross-default)  only,  any
              Derivative Transaction (calculated at the mark-to-market value for
              close-out);

       (j)    any liability  which has arisen under any transaction by virtue of
              which:

              (i)    a capital sum is received by a person as consideration  for
                     the sale or disposal (whether by outright alienation or the
                     grant of a lease or other  interest  or  otherwise)  of any
                     assets; and

              (ii)   a third  party  making or funding  the  payment  receives a
                     guarantee,  indemnity or other  legally  binding  assurance
                     from a  member  of the  Group  against  (or  other  legally
                     binding arrangement intended to prevent or limit) loss as a
                     result of the assets not generating or being realised for a
                     specific  amount  or an  amount  calculated  in  an  agreed
                     manner;

       (k)    any  amount  raised  under  any  other   transaction   having  the
              commercial  effect of a borrowing and entered into  primarily as a
              means of raising finance;

       (l)    such part (if any) of the amounts made  available to any person as
              a  result  of  any  securitisation  as,  in  accordance  with  the
              Appropriate  Accounting  Principles,  is or is to be  treated as a
              creditor  rather than as a deduction  from or reduction in debtors
              or other assets;

       Provided that:

              (i)    Subordinated Debt shall be excluded;

              (ii)   indebtedness  of a member of the Group to another member of
                     the Group shall be excluded except that indebtedness of any
                     member of the Group to the


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                                     - 8 -



                     Primary  Borrower  shall  (to  the  extent  that  any  such
                     indebtedness  would have fallen  within the  definition  of
                     Borrowed  Money if owed to a third  party)  be  treated  as
                     Borrowed Money.  Where Borrowed Money is incurred by an SPV
                     and on-lent  indirectly to Finco 2 by the Borrowed Money in
                     question being on-lent by such SPV to the Primary  Borrower
                     and then  being  on-lent  by that  person  to Finco 2, such
                     Borrowed   Money   shall  be  counted   only  once  in  any
                     calculation of the Leverage Ratio or of any other Financial
                     Covenant;

              (iii)  indebtedness  of a member of the Group to a Relevant Person
                     shall (to the extent that any such indebtedness  would have
                     fallen within the definition of Borrowed Money if owed to a
                     third party) be treated as Borrowed Money;

              (iv)   any interest,  dividends,  commissions,  fees or other like
                     financing charges shall be included to the extent that they
                     have been  capitalised and remain payable but have not been
                     discharged;

              (v)    in respect of paragraph (d) (where the item  concerned is a
                     bond, note, debenture, debenture stock, loan stock or other
                     debt  security  issued at a  discount)  and in  respect  of
                     paragraph  (e),  only the  issue  price  of any  such  debt
                     security or Qualifying Preference Share falling thereunder,
                     together with any  applicable  discount  required under the
                     Appropriate  Accounting  Principles to be recognised in the
                     relevant   person's  most  recently   published   financial
                     statements, shall be included;

              (vi)   in respect of paragraph  (g),  only the  capitalised  value
                     established  in  accordance  with the Statement of Standard
                     Accounting Practice 21 (as supplemented, varied or replaced
                     from  time to  time)  of a  Finance  Lease  as shown in the
                     relevant   person's  most  recently   published   financial
                     statements  (or as would  be  shown  in the next  following
                     financial  statements,  if such  Finance  Lease was entered
                     into in a period  for which  there  are not yet  statements
                     available) shall be included;

              (vii)  Indebtedness   for  or  in  respect   of  Project   Finance
                     Borrowings shall be excluded; and

              (viii) adjustments  shall  be made to the  exchange  rate at which
                     such  Borrowings  are  converted  into Sterling in order to
                     take account of the effect of any relevant currency swap;

       (and so that no amount shall be included or excluded more than once);

       "Borrowers"  means the Primary Borrower and the Additional  Borrowers (if
       any), and "Borrower" means any one of them;

       "Capitalisation"  means at any  time  the  aggregate  of  Adjusted  Share
       Capital and Reserves and Consolidated Net Borrowings;

       "Change in Control" shall be deemed to have occurred if:

       (a)    any person or group of related persons (other than the Parent, any
              Subsidiary  of  the  Parent,  or any  pension,  savings  or  other
              employee  benefit  plan for the benefit of employees of the Parent
              and/or any Subsidiary of the Parent) shall have acquired



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                                     - 9 -



              beneficial  ownership of more than 30% of the  outstanding  Voting
              Shares of the Parent (within the meaning of section 13(d) or 14(d)
              of the  Securities  Exchange  Act of 1934 of the United  States of
              America,  as amended,  and the  applicable  rules and  regulations
              thereunder); provided that a Change in Control shall not be deemed
              to have occurred if such  acquisition has been approved,  prior to
              the Parent Acquisition Date and the date on which any tender offer
              for Voting  Shares of the Parent was  commenced,  by a majority of
              the Disinterested Directors of the Parent; or

       (b)    during any period of 12 consecutive months, commencing on or after
              2nd March  1998,  individuals  who on the first day of such period
              were  directors of the Parent  (together  with any  replacement or
              additional  directors who were  nominated or elected by a majority
              of directors then in office) cease to constitute a majority of the
              board of directors of the Parent;

       "Commitment"  means, in relation to a Bank and in respect of any Facility
       or Tranche at any  relevant  time,  the amount set  opposite  its name in
       relation  to the  relevant  Facility  or Tranche  (as the case may be) in
       schedule  1  (The  Banks  and  their  Commitments)  or,  in the  case  of
       Commitments  under Tranche A of the Revolving Credit Facility,  after the
       original Final Repayment  Date, the amounts  notified by each Bank as the
       amount of its  Tranche  A  Commitment  which it agrees to make  available
       under a new 364 day facility (in accordance  with clause 6.2) and/or,  in
       the case of a Substitute,  the amount novated in relation to the relevant
       Facility  as  specified  in the  relevant  Substitution  Certificate,  as
       reduced, in each case, by any relevant term of this Agreement;

       "Consolidated  Net  Borrowings"  means,  at any time,  in  respect of the
       Group,  the aggregate of the Borrowed Money of the Group, as shown in the
       then  latest  compliance  certificate  most  recently  delivered  to  the
       Facility  Agent  pursuant to clause  10.3(c)  (Compliance  with Financial
       Undertakings)  (the "relevant  balance  sheet"),  less the aggregate book
       value of:

       (a)    all Liquid Assets which are in, or are freely transferable to, the
              United  Kingdom  and which are owned by Finco 2 or a  wholly-owned
              member  of the  Group or (in the case of the  Liquid  Assets  of a
              member of the Group which is a  partly-owned  member of the Group)
              the  proportion  of the total  amount for the time being of Liquid
              Assets held by such member which  corresponds to the proportion of
              the total  nominal  amount of the issued  equity share  capital of
              such member which is beneficially  owned directly or indirectly by
              Finco 2 (exclusive of Liquid Assets  constituting  or representing
              obligations of any member or members of the Group); and

       (b)    in the case of a partly-owned  member of the Group, the proportion
              of total amounts for the time being  outstanding of Borrowed Money
              owing by such partly owned member of the Group  otherwise  than to
              another member of the Group which corresponds to the proportion of
              the total  nominal  amount of the issued  equity share  capital of
              such  partly  owned  member of the Group  not  beneficially  owned
              directly or indirectly by Finco 2 (the "Minority Proportion");

       but adding the aggregate book value (as included in the relevant  balance
       sheet) of the Minority  Proportion of the total  amount,  if any, for the
       time being  outstanding of Borrowed Money owing to a partly-owned  member
       of the Group by any other member of the Group;

       "Contribution"  means, in relation to a Bank, the principal amount of any
       or all  (as  the  context  requires)  of the  Term  Advances  and/or  the
       Revolving  Advances  and its  Proportion  of the  Outstanding  Contingent
       Liabilities owing to such Bank at any relevant time;



<PAGE>
                                     - 10 -



       "Default"  means any Event of Default or any event  which with the giving
       of notice,  lapse of time,  determination of materiality or fulfilment of
       any other  applicable  condition (or any  combination  of the  foregoing)
       would, if unremedied, constitute an Event of Default;

       "Derivatives  Transaction"  means a contract,  agreement  or  transaction
       which is:

       (a)    a rate swap,  basis swap,  forward  rate  transaction,  equity (or
              equity or other index) swap or option, bond option,  interest rate
              option,  foreign  exchange  transaction,  cap,  collar  or  floor,
              currency swap,  currency option or any other similar  transaction;
              and/or

       (b)    any combination of such transactions,

       in each case, whether on-exchange or otherwise;

       "Director  General"  means the person  appointed from time to time by the
       Secretary of State to hold office as the Director  General of Electricity
       Supply for the purposes of the Electricity Act;

       "Disinterested  Director" shall mean any member of the Board of Directors
       of the Parent who:

       (a)    is not affiliated,  directly or indirectly, with, or appointed by,
              a person or group of related  persons (other than the Parent,  any
              Subsidiary  of  the  Parent,  or any  pension,  savings  or  other
              employee  benefit  plan for the benefit of employees of the Parent
              and/or any  Subsidiary  of the Parent)  acquiring  the  beneficial
              ownership of more than 30% of the outstanding Voting Shares of the
              Parent  (within  the  meaning  of  section  13(d)  or 14(d) of the
              Securities  Exchange Act of 1934 of the United  States of America,
              as amended, and the applicable rules and regulations  thereunder);
              and

       (b)    either was a member of the board of  directors of the Parent prior
              to the Parent  Acquisition Date or was recommended for election by
              a majority of the  Disinterested  Directors in office prior to the
              Parent Acquisition Date;

       "Distribution  Business"  means the  business  of REC,  or any  successor
       undertaking  to that  business  within the Group,  in or ancillary to the
       distribution  (whether for its own account or that of any other party) of
       electricity  through the Group's  distribution  system and  includes  any
       business of providing connections to the Group's distribution system;

       "Distribution  Business  Tangible Net Worth" means,  at any time, the net
       assets as shown in the most recently  published  audited balance sheet of
       the Distribution  Business  prepared pursuant to the PES Licence less any
       amounts  shown in such  audited  balance  sheet in respect of goodwill or
       intangible assets of the Distribution Business;

       "double  taxation  treaty" means any convention or agreement  between the
       government  of the  United  Kingdom  and  any  other  government  for the
       avoidance of double  taxation and the  prevention of fiscal  evasion with
       respect to taxes on income and capital gains;

       "Drawdown Date" means the date on which an Advance is, or is to be, made;

       "Drawdown Notice" means, in respect of a Facility, a notice substantially
       in the  terms of the  relevant  Part of  schedule  2 (Forms  of  Drawdown
       Notice);


<PAGE>
                                     - 11 -



       "EBITDA" means, in respect of any Test Period, the total operating profit
       of the Group for continuing  operations,  acquisitions (as a component of
       continuing  operations) and discontinued  operations (excluding any share
       of  consolidated  profits  or losses  which is  attributable  to  Project
       Finance  Subsidiaries  or to a business  the assets or cash flow of which
       constitute  security for Project  Finance  Borrowings as  contemplated in
       paragraphs  (c)(i) and  (c)(ii)  of the  definition  of  Project  Finance
       Borrowings) before taking into account:

       (a)    interest payable and interest receivable;

       (b)    amounts provided for depreciation and amortisation of goodwill;

       (c)    exceptional items;

       (d)    Taxes (other than VAT); and

       (e)    the deduction of any Acquisition costs;

       for that Test Period (calculated on a consolidated basis disregarding any
       portion  of any item  taken into  account  in that  calculation  which is
       attributable  to any  minority  interests in  Subsidiaries,  but for this
       purpose  treating  Finco 2 as a  wholly-owned  Subsidiary  of the Primary
       Borrower)  all as  determined  by reference to the most recent  financial
       statements  and  compliance  certificates  delivered  under  clause  10.3
       (Delivery of Financial  Statements),  as adjusted pursuant to clause 11.2
       (Change of Accounting policies);

       "Electricity Act" means the Electricity Act 1989;

       "EMU" means  Economic and Monetary  Union as  contemplated  in the Treaty
       establishing the European Community;

       "EMU Legislation" means legislative  measures of the European Council for
       the  introduction  of,  changeover to or operation of a single or unified
       European currency (whether known as the Euro or otherwise), being in part
       the  implementation  of the third stage of Economic and Monetary Union as
       contemplated in the Treaty on European Union;

       "Enforcement  Date" means the date of the first  declaration  made by the
       Facility Agent pursuant to clause 12.2 (Acceleration);

       "Equity-Financed  Loan" means the  aggregate  of any loans by the Primary
       Borrower  (other than to a member of the Group) to the extent that at any
       time  they do not  exceed  an  amount  equal  to the  excess  (if any) of
       dividends  received by the Primary  Borrower over and above the amount of
       dividends paid out or declared by the Primary Borrower;

       "Euro" means the single currency of Participating Member States;

       "EURIBOR"  means, in relation to any Advance or unpaid sum denominated in
       Euros,  the percentage rate per annum determined by the Facility Agent to
       be equal to:

       (a)    the rate which appears on the page of the Bridge  Telerate  Screen
              which  displays for spot value the EURIBOR  rate  sponsored by the
              Banking  Federation  of the  European  Union for deposits in Euros
              (currently page "248") for the specified period; or



<PAGE>
                                     - 12 -



       (b)    if such  page or such  service  shall  cease  to be  available  or
              relevant, such other page or such other service for the purpose of
              displaying the EURIBOR rate for Euros as the Facility Agent, after
              consultation  with  the  Banks  and the  Primary  Borrower,  shall
              select;

       "Euro Unit" means the currency unit of the Euro;

       "Event of Default" means any of the events or circumstances  described in
       clause 12.1 (Events of Default);

       "Excess  Equity  Funding"  means the amount  owing by Bidco to the Parent
       pursuant  to the note issued by Bidco to the Parent in  consideration  of
       the issue of the Parent's shares,  which shares  constituted a portion of
       the  consideration  for the Target Shares acquired by Bidco in connection
       with the Acquisition;

       "Expiry  Date"  means  the date  stated  in a Letter  of Credit to be its
       expiry  date or (if later) the  latest  date on which  demand may be made
       under it;

       "Facilities"  means both or either (as the context  requires) of the Term
       Facility and the Revolving Credit Facility and (as the context  requires)
       "Facility" means either of them;

       "Facility  Agent"  means  Chase  Manhattan  International  Limited of 125
       London  Wall,  London EC2Y 5AJ or such other  person as may be  appointed
       Facility Agent for the Banks pursuant to clause 17 (Facility Agent);

       "Facility  Office" means,  in relation to the Facility Agent or any Bank,
       the office identified in Schedule 1 (or, in the case of a Substitute,  at
       the end of the  Substitution  Certificate  to  which  it is a party  as a
       Substitute)  or such  other  office  as it may from  time to time  select
       provided  written  notice thereof has been given by the Facility Agent or
       such Bank to the Primary Borrower;

       "Fee  Letters"   means  the  fee  letters   referred  to  in  clause  7.1
       (Arrangement, underwriting, participation and agency fees), in the agreed
       form, and "Fee Letter" shall mean any one of them;

       "Fee  Payment  Date"  means each of the dates  falling  at three  monthly
       intervals after the date of this Agreement;

       "Final  Repayment  Date"  means  2  March  2003  or,  in the  case of the
       Revolving  Credit Facility Tranche A only, 364 days from the date of this
       Agreement (or as amended in accordance with clause 6.2 if applicable);

       "Finance Documents" means this Agreement,  any L/C-Related Document, each
       Drawdown Notice, each Accession Certificate and the Fee Letters;

       "Finance  Lease" means any lease under which a member of the Group is the
       lessee which is or should be treated as a finance or capital  lease under
       the  Appropriate  Accounting  Principles  (and includes any hire purchase
       contract or other arrangement which is or should be similarly treated);

       "Finance  Parties"  means the  Facility  Agent,  the  Issuing  Bank,  the
       Arrangers  and the Banks and (as the context  requires)  "Finance  Party"
       means any one of them;


<PAGE>
                                     - 13 -



       "Finance  Period" means the period from the date of this Agreement  until
       the date on which the Facility Agent acting reasonably confirms that none
       of the  Finance  Parties  and  none of the  Obligors  has any  actual  or
       contingent liabilities or obligations under any of the Finance Documents;

       "Financial  Covenants"  means the financial  undertakings  in clause 11.1
       (Financial ratios);

       "Financial  Definitions"  means the definitions of Adjusted Share Capital
       and  Reserves,  Capitalisation,   Consolidated  Net  Borrowings,  EBITDA,
       Leverage Ratio, Net Interest Costs and Test Period;

       "Gas  Framework  Agreement"  means the  agreement  dated  1st March  1996
       between British Gas Transco and Eastern Natural Gas (Retail) Limited;

       "Generation  Business" means the business of the Group in or ancillary to
       the generation of electricity (whether for its own account or that of any
       other party);

       "Generation  Business  Tangible Net Worth"  means,  at any time,  the net
       assets as shown in the most recently  published  audited balance sheet of
       the  Generation  Business  prepared  pursuant to the PES Licence less any
       amounts  shown in such  audited  balance  sheet in respect of goodwill or
       intangible assets of the Generation Business;

       "Generation  Licence"  means  each  of  those  licences  granted  by  the
       Secretary of State under section 6(1) of the  Electricity Act authorising
       the relevant licensee to carry on Generation  Business and any activities
       ancillary  thereto,  or any replacement  licence or licences granted from
       time to time to any member of the Group (or,  if more than one,  the most
       recent such replacement);

       "Government  Entity" means and includes  (whether having a distinct legal
       personality  or not) any  supra-national,  national  or local  government
       authority, regulatory body, central bank, board, commission,  department,
       division,  organ,  instrumentality,  court or agency and any association,
       organisation  or institution of which any of the foregoing is a member or
       to  whose  jurisdiction  any of the  foregoing  is  subject  or in  whose
       activities any of the foregoing is a participant;

       "Group" means the Primary  Borrower and all its Subsidiaries for the time
       being  (except  Project  Finance   Subsidiaries)  save  that,  where  the
       reference  to the Group is used in respect of the  Financial  Definitions
       used in  calculating  the  Leverage  Ratio,  Group shall mean the Primary
       Borrower's  Subsidiaries (except Project Finance  Subsidiaries) and shall
       not include the Primary  Borrower  itself,  and in either case "member of
       the Group" or "Group Company" means any one of them;

       "Guarantee"  means  the  guarantee  set  out  in  schedule  9  (Terms  of
       Guarantee)  to be  given  by each  Guarantor  and  "Guarantees"  shall be
       construed accordingly;

       "Guarantors" means (a) the Primary Borrower and each Additional  Borrower
       for so long as that person is an Additional Borrower, and each Additional
       Guarantor,  if any,  which in each  case has not been  released  from the
       Guarantee,  and (b) for so long as any part of the Excess Equity  Funding
       remains outstanding but not thereafter,  Bidco, and "Guarantor" means any
       one of them;


<PAGE>
                                     - 14 -



       "Indebtedness"  means  any  obligation  of a person  for the  payment  or
       repayment of money, whether as principal or as surety and whether present
       or future, actual or contingent;

       "Interest Payment Date" means the last day of an Interest Period;

       "Interest Period" means in relation to any Term Advance,  each period for
       the  calculation  of interest in respect of such Advance  ascertained  in
       accordance  with clause 5.2 (Interest  Period for the Term  Advances) (or
       otherwise in this Agreement);

       "Issue"  means with  respect to any Letter of Credit,  to issue or extend
       the expiry of, or to renew or  increase  the  amount of,  such  Letter of
       Credit;   and  the  terms   "Issued",   "Issuing"  and  "Issuance"   have
       corresponding meanings;

       "Issue  Date" means in relation to a Letter of Credit,  the date on which
       that Letter of Credit was Issued,  or, as the context requires,  is to be
       Issued under clause 4.5 (Issue of Letters of Credit);

       "Issuing  Bank" means The Chase  Manhattan Bank or any  alternative  Bank
       which has been notified by the Primary  Borrower to the Facility Agent as
       the issuer of any Letter of Credit in  accordance  with the terms of this
       Agreement;

       "L/C-Related  Documents" means each Letter of Credit, any Drawdown Notice
       or other  application  for a Letter  of  Credit  and any  other  document
       relating to any Letter of Credit;

       "Letter of Credit"  means a letter of credit or a bank  guarantee (as the
       case may be) Issued or to be Issued by the  Issuing  Bank on the terms of
       this Agreement;

       "Leverage  Ratio"  means,  at any relevant  date,  the  percentage  which
       Consolidated Net Borrowings is of Capitalisation of the Group;

       "LIBOR"  means,  in relation  to any Advance or unpaid sum,  the rate per
       annum determined by the Facility Agent to be equal to:

       (a)    in the case of Euros, EURIBOR; or

       (b)    in the  case of any  other  currency,  the  offered  rate (if any)
              appearing on the relevant  page of the  Telerate  screen,  or such
              other pages as may replace such page of the Telerate screen, which
              displays "BBA LIBOR" for deposits in the relevant currency and for
              the specified period (where "specified  period" means the Interest
              Period or Maturity  Period of such Advance or, as the case may be,
              the period for which LIBOR falls to be  determined  in relation to
              such unpaid sum); or

       (c)    if  the  relevant  screen  is  generally  inaccessible  or if  the
              relevant  rate does not appear on the relevant  page or such other
              page as may  replace  such  page,  the  arithmetic  mean  (rounded
              upwards,  if not already such a multiple,  to four decimal places)
              of the rates (as notified to the Facility  Agent) at which each of
              the Reference  Banks was offering to, in the case of Euros,  prime
              banks in the  European  inter-bank  market and, in the case of any
              other  currency,  leading banks in the London  inter-bank  market,
              deposits in the relevant currency and for the specified period,

       in each case at or about 11.00 am (London  time or, in the case of Euros,
       Central European Time) on the Quotation Date for such period;


<PAGE>
                                     - 15 -



       "Licence  Undertaking" means any and each undertaking or assurance by any
       one or more of the Parent,  the  Primary  Borrower,  Finco 2, Bidco,  the
       Target or The  Energy  Group  Limited  (company  number  3613919)  or any
       Affiliate of any of them to the Director General, the Director General of
       Gas Supply or the Secretary of State  concerning  the  management  and/or
       ownership of and/or other matters concerning any Licensee;

       "Licences" means those licences granted by the Secretary of State:

       (a)    under  the  Electricity  Act to the  REC  or any  other  Principal
              Subsidiary  authorising  each  relevant  licensee  to carry on the
              Distribution  Business,  the Supply Business, a Second-Tier Supply
              Business  or  (or  part  of)  the  Generation   Business  and  any
              activities ancillary thereto;

       (b)    under section 7 of the Gas Act 1986 to a Principal Subsidiary; or

       (c)    being a replacement licence or licences,  from time to time to REC
              or any other Principal  Subsidiary (or, if more than one, the most
              recent such replacement);

       as amended and/or extended from time to time;

       "Licensees" means REC and any such other Principal  Subsidiary as, at any
       time,  is the licensee  under a Licence and  "Licensee"  means any one of
       them;

       "Liquid  Assets"  means as at any date,  the aggregate  (calculated  on a
       consolidated basis) of:

       (a)    cash at  bank  and in hand  in a  jurisdiction  where  (if not the
              United  Kingdom)  such  amounts  are   transferable  out  of  that
              jurisdiction  and  convertible  into  currencies  dealt  in on the
              London foreign exchange market;

       (b)    short term deposits and money at call, with a recognised financial
              institution;

       (c)    certificates of deposit, from a recognised financial  institution,
              the term of which has twelve months or less remaining to maturity;

       (d)    gilts the term of which has  twelve  months or less  remaining  to
              maturity;

       (e)    deposits made with the  Commissioners of Inland Revenue in respect
              of which  certificates  of tax  deposit  have  been  issued by Her
              Majesty's Treasury;

       (f)    Sterling bills of exchange  eligible for rediscount at the Bank of
              England;

       (g)    any  other  negotiable  money  market  instrument  with a  maximum
              remaining maturity of 12 months or less excluding commercial paper
              issued by any person  other than a state entity or a person with a
              credit  rating of AAA from  Standard & Poor's or  equivalent  or a
              short term credit rating of A1 or equivalent;

       (h)    any obligation owing to a Group Company in respect of a securities
              repurchase  agreement  by a  counterparty  which is  rated  AAA or
              equivalent or has a short term credit rating of A1 or  equivalent,
              or in the  absence  of such a rating,  where  such  obligation  is
              backed by a margin deposit substantially sufficient to make up for
              any  shortfall  as  between  the   mark-to-market   price  of  the
              underlying securities and the amount owing;


<PAGE>
                                     - 16 -



       provided that:

       (i)    where Liquid Assets are deposited subject to restrictions in order
              that they are held as security  for a  liability  or can be offset
              against  a  liability,  such  Liquid  Assets  shall be taken  into
              account  only to the  extent  that such  liability  is taken  into
              account under Consolidated Net Borrowings; and

       (ii)   when the aggregate  amount of Liquid  Assets  required to be taken
              into account for the purposes of this definition on any particular
              day is being  ascertained,  any such Liquid Assets  denominated or
              repayable  or in respect of which monies are payable in a currency
              other  than  Sterling  shall  be  converted  for the  purposes  of
              calculating  the  Sterling  equivalent  at the  rate  of  exchange
              prevailing  on that day in London  by  taking  the Spot Rate as of
              11.00 a.m.  on such date for the  purchase of such  currency  with
              Sterling;

       "Majority  Banks" means subject to clause 23.2 (Notice to Majority Banks)
       at any relevant time, Banks:

       (a)    the aggregate of whose Contributions to all the Facilities exceeds
              66 2/3 per cent. of the Total  Contributions in respect of all the
              Facilities; or

       (b)    (if no principal amounts are outstanding under this Agreement) the
              aggregate of whose  Commitments  in respect of all the  Facilities
              exceeds 66 2/3 per cent.  of the Total  Commitments  in respect of
              all  the  Facilities  but  so  that  if at  such  time  the  Total
              Commitments  in respect of any Facility  have been reduced to zero
              references  to a Bank's  Commitment  in relation to such  Facility
              shall be construed  as amongst the Finance  Parties (and not so as
              to give any  rights to any other  person) as a  reference  to that
              Bank's  Commitment in relation to such Facility  immediately prior
              to such reduction to zero;

       "Mandatory  Cost Rate"  means,  in relation to any period,  a  percentage
       calculated  for such period at an annual rate  determined  in  accordance
       with schedule 4 (Calculation of Mandatory Cost Rate);

       "Material Adverse Effect" is a reference to:

       (a)    something  having a material  adverse effect on the ability of any
              Obligor to perform its payment or Financial  Covenant  obligations
              under any of the Finance Documents; or

       (b)    something  (other than the  Reservations)  which results in any of
              the Finance  Documents  not being legal,  valid and binding on, or
              enforceable  in accordance  with their terms  against,  any of the
              Obligors in a manner and to an extent reasonably considered by the
              Majority  Banks to be  materially  adverse to the interests of the
              Banks;

       "Maturity Date" means, in relation to any Revolving Advance, the last day
       of the period for which that Revolving Advance is drawn down;

       "Maturity Period" means, in relation to any Revolving Advance, the period
       beginning on its Drawdown Date and ending on its Maturity Date;


<PAGE>
                                     - 17 -



       "month" or "months"  means a period  beginning in one calendar  month and
       ending  in the  relevant  later  calendar  month  on the day  numerically
       corresponding  to the day of the  calendar  month in  which  it  started,
       provided  that (a) if the  period  started on the last  Banking  Day in a
       calendar month or if there is no such numerically  corresponding  day, it
       shall end on the last Banking Day in such later calendar month and (b) if
       such numerically corresponding day is not a Banking Day, the period shall
       end on the next following Banking Day in such later calendar month but if
       there is no such  Banking Day it shall end on the  preceding  Banking Day
       and "monthly" shall be construed accordingly;

       "national currency unit" means the currency unit (other than a Euro Unit)
       of a Participating Member State.

       "Net  Interest  Costs"  means,  in respect of any period,  the  aggregate
       accruing  during such period  (whether or not paid or payable within such
       period) of interest,  guarantee and other ancillary facility fees, letter
       of credit  commission and fronting fees and  commitment  fees incurred by
       the  Group  (disregarding  any  portion   attributable  to  any  minority
       interests in Subsidiaries,  other than the minority  interest in Finco 2)
       charged and  amortised  under FRS4,  including  the  interest  equivalent
       element of Finance Leases adjusted by:

       (a)    excluding interest,  fees or commission or the interest equivalent
              element  of Finance  Leases  accrued by or to members of the Group
              from or to other members of the Group;

       (b)    deducting  credit interest  accrued during such period which would
              be shown as interest receivable in the relevant accounts delivered
              under clause 10.3 (Delivery of Financial Statements),  as adjusted
              pursuant to clause 11.2 (Change of Accounting Policies);

       (c)    excluding any nominal imputed  interest charge that arises only as
              a result of an accounting procedure;

       (d)    adding amounts payable,  and deducting amounts  receivable,  under
              interest rate hedging  transactions entered into by the Group from
              time to time; and

       (e)    deducting the amount of income  accrued to any member of the Group
              in  respect  of  the  actual  or  prospective  repurchase  by  the
              counterparty of securities  under any such  securities  repurchase
              agreement as is referred to in paragraph (h) of the  definition of
              Liquid Assets established by reference to the increase in price as
              between the original sale and the repurchase;

       "Obligor" means any Borrower and any Guarantor;

       "Optional  Currency"  means any currency  (other than Sterling)  which is
       freely transferable and freely convertible into Sterling;

       "Original Facilities  Agreement" means the agreement dated 2nd March 1998
       (as  subsequently  re-stated) made between the Joint Lead Arrangers,  the
       Facility  Agent,  the  Issuing  Bank,  the  Primary  Borrower  and others
       providing for facilities of (pound)3,625,000,000  for the purposes of the
       Acquisition;

       "Original Group Accounts" means the audited consolidated  accounts of the
       Target for the year ended 31st March 1998;


<PAGE>
                                     - 18 -



       "Outstanding Contingent Liabilities" at any time under a Letter of Credit
       means the face value of that Letter of Credit at that time in  accordance
       with its express provisions less:

       (a)    the  aggregate  amount of any cash cover (not  including  any cash
              cover  lodged  by any Bank)  held in  relation  to that  Letter of
              Credit at that time; and

       (b)    (save to the extent that this is taken into account in the express
              provisions  of  that  Letter  of  Credit  or  unless  the  context
              otherwise  requires)  the  aggregate of all  payments  made by the
              Issuing Bank, pursuant to demands made under that Letter of Credit
              on or prior to such time, for which it has been  reimbursed by the
              relevant Borrower;

       or such lesser  amount as the  Facility  Agent and the  Issuing  Bank may
       agree in good faith represents the maximum  liability of the Issuing Bank
       in respect thereof;

       "Parent" means Texas Utilities  Company whose principal place of business
       is at 1601 Bryan Street, Dallas, Texas, 75201;

       "Parent  Acquisition  Date"  shall  mean the date as of which a person or
       group of related  persons first acquires more than 30% of the outstanding
       Voting Shares of the Parent (within the meaning of section 13(d) or 14(d)
       of the  Securities  Exchange Act of 1934 of the United States of America,
       as amended, and the applicable rules and regulations thereunder);

       "Participating  Member  State"  means each state so  described in any EMU
       legislation;

       "Peabody  Companies" means Peabody Holding Company,  Inc., a company duly
       incorporated  in the state of New York,  Darex  Capital Inc, a Panamanian
       company, Peabody (Australia) Limited,  incorporated in England and Wales,
       and  Citizens  Power  LLC,  and  Goldfields  Mining   Corporation,   each
       incorporated in the State of Delaware;

       "Permitted  Borrower"  means any Subsidiary or holding company of Eastern
       Group plc which is a wholly-owned  subsidiary of Finco 2 and incorporated
       in England and Wales, except the REC;

       "Permitted  Security  Interest"  means  any of the  following,  namely  a
       Security Interest:

       (a)    subsisting  at the date of this  Agreement and notified in writing
              to the  Facility  Agent on or prior to that date or  securing  the
              amounts  outstanding under the Original Facilities  Agreement,  or
              arising whether before,  on or after the date of this Agreement by
              operation of law in the ordinary course of business;

       (b)    over  goods  and/or  documents  of title  thereto  arising  in the
              ordinary course of letter of credit transactions;

       (c)    arising by way of  retention  of title to goods by the supplier of
              those goods arising in the ordinary course of business;

       (d)    created  after  the date  hereof  provided  that the  Indebtedness
              secured  thereby,  when  aggregated  with any  other  Indebtedness
              secured by any subsisting Security Interest permitted by (and only
              by) this  paragraph  (d)  whether or not such  Indebtedness  is in
              respect of any member of the Group, does not at any time exceed an
              amount  equal  to 15 per  cent.  of  Adjusted  Share  Capital  and
              Reserves;


<PAGE>
                                     - 19 -



       (e)    created  after the date hereof  securing  Borrowed  Money which is
              refinanced by a Project Finance  Borrowing  within 6 months of the
              date of such Security Interest's creation, provided that:

              (i)    at any one time  Borrowed  Money  permitted  to be  secured
                     under this clause (e) shall not exceed  (pound)200,000,000,
                     or its equivalent in another currency; and

              (ii)   the Primary Borrower shall have notified the Facility Agent
                     on or before the creation of such  Security  Interest  that
                     the related  Borrowed  Money is  intended  to be  temporary
                     bridging  finance pending  refinancing by a Project Finance
                     Borrowing;

       (f)    existing  on or  created  after  the date  hereof  (i) to secure a
              Project  Finance  Borrowing  and/or (ii) over an asset  and/or the
              shares of a Project Finance Subsidiary;

       (g)    over or  affecting  any  asset  acquired  by a member of the Group
              after the date hereof and subject to which such asset is acquired,
              provided that:

              (i)    such  Security  Interest  was not created at the request of
                     any member of the Group in contemplation of the acquisition
                     of such asset by a member of the Group; and

              (ii)   the amount thereby  secured (or the amount of the facility,
                     drawings  under which are or would be thereby  secured) has
                     not been  increased  at the  request  of any  member of the
                     Group  in  contemplation  of,  or since  the  date of,  the
                     acquisition of such asset by a member of the Group; or

       (h)    over or affecting any assets of any company which becomes a member
              of the Group after the date hereof,  where such Security  Interest
              is  created  prior to the date on which  such  company  becomes  a
              member of the Group provided that:

              (i)    such  Security  Interest  was not created at the request of
                     any member of the Group in  contemplation  of such  company
                     becoming a member of the Group; and

              (ii)   the amount thereby  secured (or the amount of the facility,
                     drawings  under which are or would be thereby  secured) has
                     not been  increased  at the  request  of any  member of the
                     Group  in  contemplation  of,  or since  the date of,  such
                     company becoming a member of the Group; or

       (i)    created  after the date hereof with the prior  written  consent of
              the Facility Agent (acting in accordance with the  instructions of
              the Majority  Banks)  provided that the amount thereby secured (or
              the amount of the facility,  drawings  under which are or would be
              thereby  secured)  has not been  increased  beyond  the  amount so
              consented to; or

       (j)    any order of a court  affecting any asset or assets of a member of
              the Group to the extent  that such order is  discharged  within 28
              days  after  it is made and the  consequences  thereof  would  not
              constitute an Event of Default; or


<PAGE>
                                     - 20 -



       (k)    created or arising to secure any Indebtedness incurred and applied
              in or towards the  refinancing  of any  Indebtedness  secured by a
              Permitted  Security  Interest as permitted by paragraphs (a), (g),
              (h), (i) or (m) of this definition but only to the extent that:

              (i)    the amount of the  Indebtedness  secured  by such  Security
                     Interest  (or,  if  higher,  the  amount  of the  facility,
                     drawings under which are or would be thereby  secured) does
                     not exceed the amount  secured by such  Permitted  Security
                     Interest at the date of the refinancing; and

              (ii)   the amount secured by such Permitted  Security  Interest is
                     thereby reduced by an amount equal to the amount secured by
                     such Security Interest; or

       (l)    consisting  of a  contractual  right (in  personam and not in rem)
              restricting the payment of:

              (i)    cash deposits  made by way of support of  counter-indemnity
                     obligations  of  a  member  of  the  Group  in  respect  of
                     guarantees  given  or  analogous   contingent   liabilities
                     incurred  by the  holder  of  such  cash  deposits  for the
                     account of a member of the Group; and/or

              (ii)   credit  balances on bank  accounts as part of general Group
                     banking  arrangements  having as their  intention or effect
                     the  netting  of  exposure  of the bank to  members  of the
                     Group; or

       (m)    over any asset acquired by a member of the Group after the date of
              this Agreement as security for Indebtedness incurred to finance or
              refinance  (within 6 months of the acquisition) all or part of the
              consideration for the acquisition of that asset, provided that the
              Indebtedness  secured by Security  Interests  under this paragraph
              (m) and, to the extent it  refinances  Indebtedness  secured under
              this   paragraph   (m),    paragraph   (k),   shall   not   exceed
              (pound)1,000,000 in aggregate at any time; or

       (n)    arising under the terms of Derivatives Transactions or as a result
              of  trading  of shares or other  securities  where  such  Security
              Interest  arises  under  the  rules of the  relevant  exchange  or
              clearing system;

       "PES Licence" means the licence  granted to REC by the Secretary of State
       under  Section 6 of the  Electricity  Act  authorising  REC to distribute
       and/or supply electricity within an authorised area to the public, or any
       additional or replacement  licence(s) for the supply and/or  distribution
       of electricity  granted from time to time to any member of the Group (or,
       if more than one replacement, the most recent such replacement),  each as
       amended or modified from time to time;

       "Pooling  and  Settlement  Agreement"  means the pooling  and  settlement
       agreement  dated 30 March 1990 made  between  REC and the  National  Grid
       Company  Plc and  others  setting  out the rules and  procedures  for the
       operation of an  electricity  trading pool and of a settlement  system in
       England and Wales and any agreement replacing such pooling and settlement
       agreement from time to time;


<PAGE>
                                     - 21 -



       "Principal Subsidiary" means:

       (a)    any member of the Group whose unconsolidated net assets or pre-tax
              profit at the date of, or for, any period ending after the date of
              this Agreement, equals or exceeds 10 per cent of the net assets or
              pre-tax profit of the Group at that time or for that period,  and,
              during any financial  year, such other members of the Group as may
              be named in the notification  provided to the Agent by the Primary
              Borrower  pursuant  to  clause  10.3(b)(i)  (Unaudited  management
              accounts), and for the purpose of the above:

              (i)    the net  assets or  pre-tax  profit  of the Group  shall be
                     ascertained by reference to the latest audited consolidated
                     accounts of the Group; and

              (ii)   the net assets or pre-tax  profit of any such member  shall
                     be ascertained by reference to the latest audited  accounts
                     of that Subsidiary;

              for the  purposes  of the  above,  "net  assets" in respect of the
              Group or any such member means the fixed assets and current assets
              of the  Group or that  member  (as the case may be) but  excluding
              investments  in any  Subsidiary  and any loan to another member of
              the Group; or

       (b)    a member of the Group to which has been  transferred  (whether  by
              one transaction or a series of  transactions,  related or not) the
              whole or a material part of the business, undertaking or assets of
              a Subsidiary which immediately  prior to those  transactions was a
              Principal  Subsidiary  provided  that it  shall  not  continue  by
              operation of this paragraph (b) to be a Principal Subsidiary after
              the delivery to the Facility Agent of the accounts  referred to in
              (a) above covering the period in which the transfer occurred, if:

              (i)    the   transferor  was  and  continues  to  be  a  Principal
                     Subsidiary  by  virtue  of  paragraph  (a)  above  or was a
                     Principal Subsidiary only by virtue of paragraph (c) below;
                     and

              (ii)   where the transferor  was a Licensee,  it continues to be a
                     Licensee;

       (c)    any member of the Group  which is a holding  company,  directly or
              indirectly, of a Principal Subsidiary;

       "Project"  means any project or investment  (these terms being treated as
       including  a  series  of  related   projects  or   investments   and  any
       modifications  thereto or  developments or expansions of such projects or
       investments);

       "Project  Finance  Borrowings"  means,  at any date, any  Indebtedness to
       finance or refinance, or in respect of the financing or refinancing of, a
       Project:

       (a)    which is or has been incurred by a single purpose company (whether
              or not a  Subsidiary  of the  Primary  Borrower)  whose  principal
              assets and business are, at such date, constituted by such Project
              and whose liabilities in respect of such Indebtedness are, at such
              date,  not  directly or  indirectly  the  subject of a  guarantee,
              indemnity  or other  form of  assurance,  undertaking  or  support
              (having  substantially similar effect to a guarantee or indemnity)
              from any member of the Group  except as  expressly  referred to in
              paragraph (c) below (a "Project Finance Subsidiary"); or


<PAGE>
                                     - 22 -



       (b)    which is or has  been  incurred  by a  Subsidiary  of the  Primary
              Borrower in its capacity as a partner in, and whose only  material
              asset is its interest in, a single purpose  partnership  where the
              partnership's  principal  assets and  business  are, at that date,
              constituted  by such  Project  and where the  liabilities  of such
              Subsidiary in respect of such  Indebtedness are not, at that date,
              directly or  indirectly  the subject of a guarantee,  indemnity or
              other  form  of   assurance,   undertaking   or  support   (having
              substantially similar effect to a guarantee or indemnity) from any
              member of the Group except as  expressly  referred to in paragraph
              (c) below (also a "Project Finance Subsidiary"); or

       (c)    in   respect   of  which  the  person  or  persons  to  whom  such
              Indebtedness  is or may be owed by the  obligor in respect of such
              Indebtedness (whether or not a Subsidiary of the Primary Borrower)
              have no recourse whatsoever to any member of the Group (whether or
              not  the  obligor)  for the  repayment  of or  payment  of any sum
              relating to such Indebtedness other than:

              (i)    recourse  to  such  obligor  for  amounts  limited  to  the
                     aggregate cash flow or net cash flow received or receivable
                     by it (other than  historic  cash flow or historic net cash
                     flow) from such Project; and/or

              (ii)   recourse to such  obligor for the purpose  only of enabling
                     amounts to be claimed in respect of such Indebtedness in an
                     enforcement of any  Encumbrance  given by such obligor over
                     the  assets  comprised  in such  Project  (or,  where  such
                     obligor is a single purpose  company or a Subsidiary of the
                     Primary  Borrower as described in sub-clause  (b), given by
                     any  shareholder or the like in the obligor over its shares
                     or the like in the  capital of the  obligor) to secure such
                     Indebtedness  or any  recourse  referred to in (iii) below,
                     Provided  that  (A) the  extent  of such  recourse  to such
                     obligor (or its  shareholder or the like) is limited solely
                     to the amount of any recoveries  made on such  enforcement,
                     and (B) such person or persons are not entitled,  by virtue
                     of any right or claim arising out of or in connection  with
                     such Indebtedness,  to commence proceedings for the winding
                     up or dissolution of the obligor (or its shareholder or the
                     like) or to  appoint  or  procure  the  appointment  of any
                     administrator,  receiver,  administrative receiver, trustee
                     or similar person or official in respect of the obligor (or
                     its shareholder or the like) or any of its assets (save for
                     the assets the subject of such Encumbrance); and/or

              (iii)  recourse  to  such  obligor   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 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.

       For  the  purpose  of  each  of  paragraphs  (a),  (b)  and  (c) of  this
       definition:

       (aa)   an off-take  agreement  entered into between a Group Company and a
              Project  Finance  Subsidiary,  or an obligor in respect of Project
              Finance  Borrowing  described in paragraph  (c),  which is on arms
              length terms shall not of itself be deemed to be a


<PAGE>
                                     - 23 -



              guarantee,  indemnity or other form of assurance,  undertaking  or
              support or to involve liability or recourse; and

       (bb)   any right of recourse against a member of the Group as a result of
              its shareholding in an unlimited  company,  partnership or similar
              entity will be deemed to be a  guarantee,  indemnity or other form
              of assurance, undertaking or support (having substantially similar
              effect to a guarantee or indemnity);

       "Project Finance  Subsidiary" has the meaning set out in paragraph (a) or
       (b) of Project  Finance  Borrowing  and also means any  Subsidiary of any
       such person;

       "Proportion"  means,  in relation to a Bank, the proportion  borne by its
       Commitment to the Total  Commitments  (or, if the Total  Commitments  are
       then zero, by its Commitment to the Total  Commitments  immediately prior
       to their  reduction  to zero) in each case with  respect to the  relevant
       Tranche of the Revolving Facility;

       "Qualifying Bank" means:

       (a)    a person which:

              (i)    is a bank within the meaning of Section  840A of the Income
                     and Corporation Taxes Act 1988; and

              (ii)   is or will (on becoming a Bank) be beneficially entitled to
                     any  interest  paid and to be paid to it (as a Bank)  under
                     this Agreement; and

              (iii)  is within the charge to United Kingdom  corporation  tax as
                     respects such interest,

              except  that,  if Section  349 or  Section  840A of the Income and
              Corporation  Taxes Act 1988 is  repealed,  modified,  extended  or
              re-enacted,  the  Facility  Agent may at any time and from time to
              time (after  consultation with the Primary Borrower and the Banks)
              amend this paragraph (a) in such manner as it may determine acting
              reasonably  to be  appropriate  by giving  notice  of the  amended
              paragraph (a) to the Primary  Borrower and the Banks so as, so far
              as  practicable,  to put the  Banks in the same  position  as they
              would otherwise have been in; or

       (b)    a Treaty Lender;

       "Qualifying Preference Shares" means on any date preference shares of any
       member of the Group expressed (whether by law, agreement or otherwise) to
       be redeemable at the option of the issuer,  any other person or otherwise
       on or before the Final Repayment Date;

       "Quarter" means each three-month  period ending on the last day in March,
       June, September and December in each year;

       "Quarter Date" means the final day of each Quarter;

       "Quotation  Date"  means,  in relation to an  Interest  Period,  Maturity
       Period or other period for which LIBOR is to be determined:

       (a)    the first day of such period if the Advance is in Sterling;


<PAGE>
                                     - 24 -



       (b)    the second  Banking  Day  before the first day of such  period (or
              such other date on which quotations would  customarily be provided
              by leading  banks in the London  interbank  market for deposits in
              the  relevant  currency  for  delivery  on the  first  day of such
              period), if the Advance is in an Optional Currency;

       "REC" means Eastern Electricity plc (company no. 2366906 or any successor
       as the Licensee in respect of the Distribution Business);

       "Recovering  Bank" has the  meaning  given to that  term in  clause  15.2
       (Pro-rata payments);

       "Reference  Banks" means The Chase Manhattan Bank and any two other banks
       selected by the Facility  Agent with the consent of the Primary  Borrower
       (which is not to be unreasonably  withheld),  or if any of them ceases to
       so act,  such other bank or banks as shall be  selected  by the  Facility
       Agent in accordance with clause 23.7 (Change of Reference Banks);

       "Related  Persons"  each of the Facility  Agent,  the Issuing  Bank,  any
       successor  Facility  Agent  or  Issuing  Bank  arising  under  clause  17
       (Facility  Agent)  and the  Arrangers,  together  with  their  respective
       Affiliates and the officers,  directors,  employees, agents, trustees and
       attorneys-in-fact of such persons and Affiliates;

       "Relevant Company" means any of the Obligors,  Finco 2, Bidco, The Energy
       Group Limited (company no. 3613919) and the Principal Subsidiaries;

       "Relevant  Person"  means the  Parent  and any  Affiliate  or  Associated
       Company of the Parent which is neither the Primary  Borrower nor a member
       of the Group nor a Project Finance Subsidiary;

       "Reservations"  means (a) the principle  that  equitable  remedies may be
       granted or refused at the discretion of the court,  (b) the limitation on
       enforcement  by laws  of  general  application  relating  to  insolvency,
       liquidation, reorganisation, court schemes or administration, and (c) the
       time barring of claims under the Limitation Act 1980;

       "Revolving  Advance" means each borrowing made or to be made by way of an
       advance under the Revolving Credit Facility or (as the context  requires)
       the principal amount of that borrowing outstanding at any relevant time;

       "Revolving  Credit  Facility" means the facility  granted by the Banks to
       the Borrowers in accordance with clauses 2.1(b) and (c) (The Facilities);

       "Second-Tier Supply Business" has the same meaning as in the PES Licence;

       "Secretary  of State" means the Secretary of State for Trade and Industry
       from  time to time or such  other  person  as may for the  time  being be
       fulfilling the functions of the Secretary of State under the  Electricity
       Act or the Gas Acts;

       "Security Interest" means any mortgage,  pledge, lien, charge, assignment
       by way of security,  deposit of cash subject to contractual  restrictions
       on  re-drawing,  arrangement  for  retention of title,  hypothecation  or
       security  interest,  or any other  agreement  or  arrangement  having the
       effect of conferring security or a security interest;


<PAGE>
                                     - 25 -



       "Spot Rate"  means,  in respect of any sum  denominated  in any  currency
       other than  Sterling,  the  Facility  Agent's  spot rate of exchange  for
       purchase  of that sum in that  currency  in the London  foreign  exchange
       market with Sterling at or about 11.00 am on a particular day;

       "SPV"  means  any  company  or  other  entity   directly  or   indirectly
       wholly-owned   by  the  Primary   Borrower,   incorporated  or  otherwise
       established,  and used,  solely for the  purpose  of issuing  one or more
       capital market  instruments  for the purpose of raising finance on behalf
       of the Group and, if applicable, carrying out all functions falling to be
       carried out by it under a securitisation  or other financing  arrangement
       for which it was established;

       "Sterling" and "(pound)"  mean the lawful  currency for the time being of
       the United  Kingdom and in respect of all  payments to be made under this
       Agreement in Sterling mean  immediately  available,  freely  transferable
       cleared funds;

       "Sterling Amount" means:

       (a)    in respect of Outstanding Contingent  Liabilities,  the sum of the
              amount in Sterling of the Outstanding Contingent Liabilities under
              Letters  of  Credit  denominated  in  Sterling  and the  amount of
              Sterling   required  to  purchase  the  currency   amount  of  the
              Outstanding   Contingent   Liabilities  under  Letters  of  Credit
              denominated  in  each  other  currency  at the  Spot  Rate  at the
              relevant  time  and  so  that  such   Sterling   Amount  shall  be
              recalculated by the Facility Agent:

              (i)    in any event, on every Quarter Date; and

              (ii)   on each  date on  which  the  Majority  Banks  request  the
                     Facility  Agent to do so in accordance  with the provisions
                     of clause 4.11 (Currency Fluctuations),

              and the  recalculated  amount shall  thereupon  and until the next
              recalculation  required by this Agreement  constitute the Sterling
              Amount of Outstanding  Contingent Liabilities under any Letters of
              Credit for all purposes of this Agreement;

       (b)    in respect of each  Advance,  if such  Advance is  denominated  in
              Sterling,  the amount of the  Advance  requested  in the  Drawdown
              Notice  relating  to the  Advance,  or, in the case of an  Advance
              denominated  in  an  Optional  Currency  the  amount  of  Sterling
              required to purchase  such amount  calculated  at the Spot Rate on
              the Quotation  Date in each case as reduced by the amount (if any)
              of such Advance which has been repaid;

       "Subordinated  Debt"  means  Indebtedness  incurred on terms which to the
       reasonable satisfaction of the Facility Agent:

       (a)    prohibit   repayment  or  prepayment  of  any  principal   amounts
              (including capitalised interest) during the Finance Period;

       (b)    prohibit  the  holder of that  Indebtedness  from  exercising  any
              rights or remedies  which it might  otherwise have to recover such
              Indebtedness during the Finance Period; and

       (c)    provide that in the event of insolvency, dissolution,  liquidation
              or  other  insolvency   proceedings  such  Indebtedness  shall  be
              effectively subordinated in right of payment to all liabilities of
              the Obligors under the Finance Documents.


<PAGE>
                                     - 26 -



       "Subsidiary" means:

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

       (b)    for the purposes of the definition of "Affiliate"  and "Group" and
              clauses  10.2   (Preparation   of  Financial   Statements),   11.1
              (Financial  Ratios),  11.2 (Change of Accounting  policies),  20.7
              (Pre-contractual  effect of  exoneration)  and schedule 6 (Form of
              Accession  Certificate) only, a subsidiary  undertaking within the
              meaning of section 258 of the Act;

       "Substitute"   has  the  meaning  given  to  that  term  in  clause  16.3
       (Substitution);

       "Substitution Certificate" means a certificate substantially in the terms
       of schedule 5 (Form of Substitution Certificate);

       "Supply Business" means, in the case of a Licensee under the PES Licence,
       its  authorised  business  as  a  public  electricity   supplier  in  the
       authorised  area as such terms are used in its PES  Licence  from time to
       time;

       "Target"  means  the  company  formerly  known as The  Energy  Group  PLC
       (company no. 3257256) and  subsequently  re-named as Energy Holdings (No.
       3) Limited;

       "Target  Shares"  means the issued and to be issued shares in the capital
       of the Target;

       "Taxes" includes all present and future taxes, levies,  imposts,  duties,
       fees or charges of  whatever  nature  including  without  limitation  any
       interest or penalties  payable in connection with any failure or delay in
       paying any of the same and "Taxation" shall be construed accordingly;

       "Term Advance"  means each  borrowing  under the Term Facility or (as the
       context  requires) the principal amount of that borrowing  outstanding at
       any relevant time;

       "Term  Facility"  means the  facility  granted by the Banks under  clause
       2.1(a) (The Facilities);

       "Test Period" means:

       (a)    each  twelve-month  period ending on the last day of each Quarter;
              and

       (b)    each accounting  reference  period (as defined in Part VIII of the
              Companies  Act 1985) of the Primary  Borrower or, where it applies
              to the  Leverage  Ratio,  Finco 2,  ending on 31  December in each
              year;

       "Total  Commitments"  means,  in respect of a Facility or (as the context
       requires)  the  Facilities  at any relevant  time,  and save as otherwise
       provided herein, the total of the Commitments of all the Banks in respect
       of such Facility or Facilities (as appropriate) at such time;

       "Total  Contributions"  means,  in  respect  of any  Facility  or (as the
       context  requires) the  Facilities at any relevant time, the total of the
       Contributions  of all the Banks in respect of such Facility or Facilities
       (as appropriate) at such time;


<PAGE>
                                     - 27 -



       "Treaty  Lender"  means a person  which (a) is resident  (as such term is
       defined in the  appropriate  double  taxation  treaty) in a country  with
       which the United Kingdom has a double taxation treaty giving residents of
       that country complete exemption from the imposition of any withholding or
       deduction for or on account of United Kingdom Taxes on interest;  and (b)
       does not carry on  business  in the United  Kingdom  through a  permanent
       establishment with which the Indebtedness under this Agreement in respect
       of which the interest is paid is effectively connected;

       "Treaty on European  Union" means the Treaty of Rome of 25 March 1957, as
       amended by the Single European Act 1986 and the Maastricht  Treaty (which
       was  signed at  Maastricht  on 1  February  1992 and came into force on 1
       November 1993), as amended from time to time;

       "Utilisation"  means the making of an Advance or the Issue of a Letter of
       Credit; and

       "Voting Shares" means outstanding shares of capital stock of any class of
       the Parent  entitled  to vote in the  election  of  directors,  excluding
       shares entitled so to vote only upon the happening of some contingency.

1.3    Headings

       Clause headings and the table of contents are inserted for convenience of
       reference  only  and  shall  be  ignored  in the  interpretation  of this
       Agreement.

1.4    Construction of certain terms

       In this Agreement, unless the context otherwise requires:

       (a)    references  to  clauses  and  schedules  are  to be  construed  as
              references to the clauses of, and schedules to, this Agreement and
              references to this Agreement include its schedules;

       (b)    references to (or to any specified provision of) this Agreement or
              any  other  document  shall be  construed  as  references  to this
              Agreement  (including any Accession  Certificate and  Substitution
              Certificate),  that provision or that document as in force for the
              time  being  and  as  from  time  to  time  amended,   novated  or
              supplemented in accordance with its terms, or, as the case may be,
              with the agreement of the relevant parties and (where such consent
              is,  by the  terms of this  Agreement  or the  relevant  document,
              required to be obtained as a  condition  to such  amendment  being
              permitted) the prior written consent of the Facility Agent;

       (c)    references  to  a  "regulation"  include  any  present  or  future
              regulation,  rule,  directive,  requirement,  request or guideline
              (whether or not having the force of law) of any Government Entity;

       (d)    references  to an  "authorisation"  mean and include any  consent,
              authorisation, licence, approval and permit;

       (e)    words  importing  the plural  shall  include the singular and vice
              versa;

       (f)    references to a time of day are to London time;


<PAGE>
                                     - 28 -



       (g)    references to a "person" includes any individual,  firm,  company,
              corporation,  government,  state  or  agency  of a  state  or  any
              unincorporated body of persons, undertaking (within the meaning of
              Section 259(1) of the Act) or other joint venture, organisation or
              association  (whether or not having separate legal personality) or
              any two or more of the foregoing;

       (h)    references  to  "assets"  include  all or  part  of any  business,
              undertaking,  real  property,  personal  property,  shareholdings,
              assets, revenues,  uncalled capital and any rights (whether actual
              or contingent,  present or future) to receive, or require delivery
              of, any of the foregoing;

       (i)    references  to  the  "equivalent"  of  an  amount  specified  in a
              particular  currency (the  "specified  currency  amount") shall be
              construed  as a  reference  to the  amount of the  other  relevant
              currency which can be purchased with the specified currency amount
              at the Spot Rate on the day on which the  calculation  falls to be
              made for spot delivery, as conclusively determined by the Facility
              Agent;

       (j)    references to any enactment shall be deemed to include  references
              to such enactment as re-enacted, amended or extended;

       (k)    references to documents  being in the "agreed form" mean documents
              initialled  on behalf of the Facility  Agent and the Arrangers and
              on behalf of the Obligors,  or if there is no such  document,  the
              form reasonably required by the Facility Agent;

       (l)    references to "VAT" are to be construed as including references to
              any similar Tax;

       (m)    "including"   and  "in   particular"   shall   not  be   construed
              restrictively but shall mean "including,  without prejudice to the
              generality  of the  foregoing"  and "in  particular,  but  without
              prejudice to the generality of the foregoing" respectively;

       (n)    references  to  documents  being  "certified  copies"  mean copies
              certified as being true,  complete and  up-to-date  copies as of a
              date no earlier  than the date of this  Agreement by an officer of
              the  Primary  Borrower  who is at such  time  duly  authorised  to
              execute  or  certify  such  documents  on  behalf  of the  Primary
              Borrower;

       (o)    "arms  length  terms"  means  on terms  which  are no more or less
              favourable  to the other party to the  relevant  transaction  than
              could  reasonably  be  expected  to be  obtained  in a  comparable
              transaction with a person unconnected with the Group;

       (p)    references to "holding company",  save as otherwise defined, shall
              bear the same meaning as in section 736 of the Act, as if extended
              to bodies corporate wherever incorporated;

       (q)    a Letter of Credit being "repaid" or "prepaid" is effected by:

              (i)    providing  the Issuing Bank with cash cover in the currency
                     in which that Letter of Credit is denominated;

              (ii)   reducing (in  accordance  with the terms of this  Agreement
                     and the  relevant  Letter of Credit) the amount that may be
                     demanded  under that  Letter of Credit  (or by such  amount
                     automatically  reducing in accordance with the terms of the
                     relevant Letter of Credit); or

<PAGE>
                                     - 29 -




              (iii)  cancelling  that Letter of Credit by returning the original
                     to the Issuing Bank together with written  confirmation (in
                     form and substance  satisfactory  to the Issuing Bank) from
                     the  beneficiary  that  the  Issuing  Bank  has no  further
                     liability under that Letter of Credit;

       (r)    any provision of this  Agreement  stated to have effect on, after,
              or as from, 1 January 1999 will,  to the extent that the provision
              relates to any  currency of a state  which is not a  Participating
              Member  State on 1 January  1999,  have effect in relation to that
              currency  on the date on which it becomes a  Participating  Member
              State;

       (s)    unless the context requires otherwise,  expressions defined in the
              Act shall have the same  meanings in this  Agreement,  except that
              the   expression   "company"   shall  include  a  body   corporate
              established outside Great Britain;

       (t)    "Associated  Company"  shall have the  meaning  given to it in the
              Appropriate Accounting Principles; and

       (u)    references to a  "wholly-owned"  or  "partly-owned"  member of the
              Group or  Subsidiary of the Primary  Borrower  shall be construed:
              (i) to refer to Subsidiaries  whether directly or indirectly owned
              by the  Primary  Borrower;  and  (ii) on the  assumption  that the
              Primary Borrower owns 100% of Finco 2; and

       (v)    for the  avoidance of doubt,  neither a lease nor a Finance  Lease
              entered  into on  arm's  length  terms  shall  be  regarded  as an
              agreement or arrangement having the effect of conferring  security
              or a security interest.

2.     THE COMMITMENTS

2.1    The Facilities

       The Banks,  relying upon each of the  representations  and  warranties in
       clause 9  (Representations  and  Warranties)  and upon and subject to the
       conditions hereof, agree to make available:

       (a)    to the Primary Borrower, the Term Facility in the principal sum of
              (pound)750,000,000;

       (b)    to  the  Primary  Borrower  and  the  Additional  Borrowers,   the
              Revolving  Credit  Facility  Tranche  A in  the  principal  sum of
              (pound)200,000,000; and

       (c)    to  the  Primary  Borrower  and  the  Additional  Borrowers,   the
              Revolving  Credit  Facility  Tranche  B in  the  principal  sum of
              (pound)325,000,000.

       The obligations of each Bank under this Agreement shall be to participate
       in each Advance in the proportion  which its Commitment in respect of the
       Term Facility or the relevant  Tranche of the Revolving  Credit Facility,
       as the case may be, bears to the Total Commitments in respect of the Term
       Facility or such Tranche of the Revolving  Credit Facility but so that no
       Bank shall be under any obligation to participate in an Advance if and to
       the extent its Commitment in respect of the Term Facility or the relevant
       Tranche of the Revolving Credit Facility would thereby be exceeded.


<PAGE>
                                     - 30 -



2.2    Finance Parties' obligations several

       The  obligations  of each Finance Party under this Agreement are several;
       the failure of any Finance  Party to perform such  obligations  shall not
       relieve any other Finance Party or any Obligor of any of their respective
       obligations  or  liabilities  under this  Agreement nor shall any Finance
       Party be responsible for the obligations of any other Finance Party under
       this Agreement.

2.3    Finance Parties' interests several

       Notwithstanding  any other term of this Agreement (but without  prejudice
       to the  provisions of this Agreement  relating to or requiring  action by
       the Majority  Banks) the interests of the Finance Parties are several and
       the amount due to each of the Finance  Parties (for its own account) is a
       separate and independent  debt.  Without prejudice to any other provision
       of this Agreement (including any requirement for action to be approved or
       instigated  by, or with the consent or approval of, the  Majority  Banks)
       each of the Finance  Parties  shall have the right to protect and enforce
       its rights in respect of amounts  which have become due and payable to it
       under this  Agreement and it shall not be necessary for any other Finance
       Party to be joined as an  additional  party in any  proceedings  for this
       purpose.

3.     THE CONDITIONS

3.1    Documents and evidence

       No  Utilisation  may be  made  until  the  Facility  Agent,  or its  duly
       authorised representative, shall have received the documents and evidence
       specified in Part A of Schedule 3 (Conditions Precedent), in each case in
       form and substance  satisfactory  to the Facility  Agent and the Facility
       Agent  shall,  once it is so  satisfied,  so  confirm  in  writing to the
       Primary Borrower.

3.2    General conditions precedent

       Subject to clause 3.3  (Waiver of  conditions  precedent),  in respect of
       each Facility, the obligation of each Bank to contribute to a Utilisation
       is subject to the further  conditions  that at the date of each  Drawdown
       Notice and on each Drawdown Date:

       (a)    the applicable  representations and warranties set out in clause 9
              (Representations and Warranties) are true and correct on and as of
              each such date as if each such  representation  and warranty  were
              made with respect to the facts and circumstances  existing at such
              date; and

       (b)    no Default shall have  occurred and be  continuing  (which has not
              been waived) or would result from the making of such  Utilisation,
              but this  clause  3.2(b)  shall not  prevent  the  rollover  of an
              existing  Revolving Credit Advance (without  increasing the amount
              thereof)  for a  Maturity  Period of no more than one month at any
              time  when no Event of  Default  has  occurred  and is  continuing
              (which has not been waived).

3.3    Waiver of conditions precedent

       The conditions  specified in this clause 3 (The  Conditions) are inserted
       solely for the benefit of the Banks and may be waived on their  behalf in
       whole or in part and with or without


<PAGE>
                                     - 31 -



       conditions  by the  Facility  Agent  acting  on the  instructions  of the
       Majority Banks in respect of any Advance.

3.4    Repayment and cancellation of Original Facilities Agreement

       (a)    No Utilisation may be made:

              (i)    until  the  Finance  Period  (as  defined  in the  Original
                     Facilities Agreement) expires, except, subject to the terms
                     of this Agreement, a Utilisation used solely in refinancing
                     the whole of the obligations under the Original  Facilities
                     Agreement; and

              (ii)   unless a notice of  cancellation in respect of the whole of
                     the obligations under the Original Facilities Agreement has
                     been delivered to the facility agent under such agreement.

       (b)    If the  Finance  Period  (as  defined in the  Original  Facilities
              Agreement)  has not expired  within  thirty days after the date of
              this  Agreement  or such  later  date as may be  agreed  with  the
              Facility Agent (acting on the instructions of Majority Banks), all
              Commitments under this Agreement shall be completely cancelled and
              no Utilisations made.

4.     ADVANCES AND LETTERS OF CREDIT

4.1    Term Facility

       (a)    Repayment of outstandings under the Original Facilities Agreement

              Subject  to the  terms  and  conditions  of this  Agreement,  Term
              Advances  may only be  drawn  down in  order  to  re-finance  term
              advances  under the Original  Facilities  Agreement,  any interest
              rolled up  thereon,  and any  revolving  advances  drawn under the
              Original Facilities  Agreement to pay interest on such outstanding
              term advances, and only following receipt by the Facility Agent of
              an appropriately  completed Drawdown Notice in the form set out in
              Part A of  Schedule  2 (Term  Facility)  signed  on  behalf of the
              Primary  Borrower  not later than 11am two Banking Days before the
              proposed  Drawdown  Date.  No Term  Advance  may be made after the
              Available Commitment Termination Date.

       (b)    Book entries

              The  implementation  of clause 4.1 (a) (Repayment of  outstandings
              under the Original  Facilities  Agreement)  shall where  identical
              amounts  are due to and  from  the  same  Banks  be by way of book
              entries.  The Banks shall  participate in each Term Advance on the
              basis of the  notifications  made by the Facility Agent to achieve
              the above.

4.2    Revolving Credit Facility

       (a)    Drawdown

              Subject to the terms and conditions of this  Agreement,  Revolving
              Advances  shall be made to any Borrower  following  receipt by the
              Facility Agent from such Borrower of


<PAGE>
                                     - 32 -



              an  appropriately   completed  Drawdown  Notice  relating  to  the
              Revolving  Credit  Facility  and in the  form set out in Part B of
              Schedule 2 (Revolving  Credit  Facility)  signed on behalf of that
              Borrower not later than 11 a.m. two Banking Days,  or, in the case
              of  non-sterling  Advances,  3 p.m.  three Banking Days before the
              proposed Drawdown Date.

       (b)    Amount

              Each Drawdown  Notice  delivered to the Facility Agent pursuant to
              clause 4.2(a) (Drawdown) shall be irrevocable and shall specify:

              (i)    the proposed  Drawdown  Date,  which shall be a Banking Day
                     falling prior to the Available Commitment  Termination Date
                     of the relevant Tranche of the Revolving Credit Facility;

              (ii)   the currency of denomination of the Advance (being Sterling
                     or an Optional Currency);

              (iii)  the  amount of the  Revolving  Advance,  which  shall be of
                     (pound)10,000,000  or any larger  sum which is an  integral
                     multiple of  (pound)5,000,000  (or if such Advance is to be
                     denominated in an Optional  Currency,  an integral multiple
                     of 1,000,000 of the largest  currency unit of that Optional
                     Currency  but in an  amount  at  least  the  equivalent  of
                     (pound)5,000,000)  or,  if less,  the  Available  Amount in
                     respect of the  relevant  Tranche of the  Revolving  Credit
                     Facility on the relevant Drawdown Date;

              (iv)   the  Maturity  Period which shall be of 1, 2, 3 or 6 months
                     (or such other period as the Facility Agent,  acting on the
                     instructions of the Majority Banks, shall agree) ending not
                     later than the Final Repayment Date of the relevant Tranche
                     of the Revolving Credit Facility;

              (v)    the account to which the proceeds of the  proposed  Advance
                     are to be paid.

       (c)    Number of Advances

              There shall be no more than 15 Revolving  Advances  outstanding at
              any time,  and not more  than one  Revolving  Advance  may be made
              under each Tranche of the Revolving  Credit Facility in any period
              of 5 consecutive Banking Days.

       (d)    Calculation of Available Commitment

              For the  purpose of  calculating  the  Available  Commitment,  the
              Outstanding  Contingent  Liabilities under a Letter of Credit will
              initially  be its  Sterling  Amount on the Issue Date,  subject to
              recalculation  by  the  Facility  Agent  in  accordance  with  the
              definition  of  "Sterling   Amount"  and  clause  4.11   (Currency
              fluctuations).

       (e)    Cancellation on the Available Commitment Termination Date

              Without  prejudice to any other provision of this  Agreement,  the
              Total Commitments under the Revolving Credit Facility shall in any
              event be reduced to zero on the Available  Commitment  Termination
              Date of the relevant Tranche of the Revolving

<PAGE>
                                     - 33 -



              Credit  Facility and no Advance may be drawn by any Borrower under
              that Tranche thereafter.

       (f)    Netting

              If, on any Maturity  Date,  a Bank is required to provide  another
              Revolving  Credit  Advance  to  the  same  Borrower  in  the  same
              currency,  the  Facility  Agent shall apply the amount  which that
              Bank is required to make available in respect of the new Revolving
              Credit  Advance  in  or  towards  the  repayment  (or,  if it is a
              different currency, the purchase of the relevant currency required
              for the repayment) for the account of the relevant Borrower of the
              amount  of the  Revolving  Credit  Advance  (in  its  currency  of
              denomination)  which is then due to be  repaid to that  Bank.  Any
              difference  between  the amount  which is due to that Bank and the
              amount  which  that Bank is  required  to make  available  on that
              Maturity  Date shall remain  payable by the  relevant  Borrower or
              that Bank, as the case may be.

4.3    Utilisations generally

       (a)    A Drawdown Notice (or notice  purporting to be such) shall only be
              effective if it complies with this  Agreement and only upon actual
              receipt  by  the  Facility   Agent  and,  once  given,   shall  be
              irrevocable.

       (b)    As soon as  practicable  after  receipt  of each  Drawdown  Notice
              complying with this Agreement the Facility Agent shall notify each
              Bank of such receipt and of the date on which the proposed Advance
              is to be made and of the relevant  Interest Period or, as the case
              may be, the relevant  Maturity  Period and each Bank shall on such
              Drawdown  Date  or,  the  case  may be,  on the  first  day of the
              relevant  Interest  Period  participate  in such Advance by making
              available  to the  Facility  Agent its portion of such  Advance in
              accordance with clause 8.2 (Payments by the Banks or by Obligors).

       (c)    For the purpose of calculating the Available Amount, the amount of
              any  Advance  outstanding  in an  Optional  Currency  shall be its
              Sterling  Amount.  Where an  Advance  denominated  in an  Optional
              Currency is to be repaid and a new Advance denominated in the same
              Optional  Currency  is to be  drawn  down  on the  same  day,  the
              currency  amounts to be repaid and re-drawn may be netted off, and
              the Sterling  Amount of the new Advance and the  Available  Amount
              which can be drawn on that day will be recalculated accordingly.

       (d)    The  Primary  Borrower  shall  not  be  entitled  to  utilise  the
              Revolving Credit Facility except that:

              (i)    subject to paragraph  4.3(d)(ii),  the Primary Borrower may
                     draw down Revolving Advances (including  Revolving Advances
                     to  finance  payment to the  holders  of loan notes  issued
                     pursuant  to the  Acquisition  if  and  when  such  holders
                     require  redemption  of  those  loan  notes)  if and to the
                     extent that it shall immediately on-lend the amount thereof
                     to other  members  of the  Group  by  means of the  Primary
                     Borrower first lending the relevant amount to Finco 2; and

              (ii)   the  Primary  Borrower  may draw  down  Revolving  Advances
                     otherwise than in compliance  with clause  4.3(d)(i)  above
                     only up to an aggregate  amount  outstanding at any time of
                     (pound)25,000,000; and


<PAGE>
                                     - 34 -




       (e)    Subject to clause 3 (The  Conditions),  utilisations of letters of
              credit under the  Original  Facilities  Agreement  which are still
              open and any Letters of Credit opened in renewal or replacement of
              such  letters of credit  shall be deemed to have been drawn  under
              this  Agreement by Finco 2 for all purposes of this Agreement and,
              by  its   execution  of  this   Agreement,   Finco  2  agrees  (in
              consideration  of the  execution  of this  Agreement by the Banks)
              that it will assume, all liabilities under the Original Facilities
              Agreement  and/or  this  Agreement,  relating  to such  letters of
              credit and the Finance  Parties  agree that the  Primary  Borrower
              shall be  liable  under  this  Agreement  only as a  Guarantor  in
              respect of such drawings.  The Banks agree that the Facility Agent
              may execute a release in a form satisfactory to the Facility Agent
              in favour of the  issuing  bank and the banks (if they so request)
              under the Original Facilities Agreement in relation to the letters
              of credit under the Original Facilities Agreement.

4.4    Application of proceeds

       None  of the  Finance  Parties  shall  have  any  responsibility  for the
       application of the proceeds of any Advance by any Borrower.

4.5    Issue of Letters of Credit

       Subject to the provisions of this Agreement,  the Issuing Bank will Issue
       a Letter of Credit  specified in a Drawdown  Notice at the request of any
       Borrower,  if the Facility  Agent has received the Drawdown  Notice for a
       Letter of Credit in the form set out in Part C of  Schedule 2 (Letters of
       Credit)  signed on behalf of that  Borrower  not later than 11.00 am five
       Banking Days prior to the proposed Issue Date and:

       (a)    the  proposed  Issue Date is a Banking  Day on or before the Final
              Repayment  Date of the relevant  Tranche of the  Revolving  Credit
              Facility;

       (b)    the face value of each Letter of Credit is or is  equivalent  to a
              minimum Sterling Amount of (pound)1,000,000;

       (c)    the Expiry  Date  falls on or before the  earlier of (i) 12 months
              from  the  Issue  Date or (ii)  the  Final  Repayment  Date of the
              relevant Tranche of the Revolving Credit Facility;

       (d)    the Issuing Bank and (if different) the Facility Agent have agreed
              its terms;

       (e)    the  Sterling  Amount of the Letter of Credit  requested  does not
              exceed the Available  Amount in respect of the relevant Tranche of
              the Revolving Credit Facility;

       (f)    after such Issue, there will be no more than ten Letters of Credit
              outstanding;

       (g)    no  order,   judgment  or  decree  of  any  Government  Entity  or
              arbitrator  shall be  outstanding  which by its terms  purports to
              enjoin or restrain  the Issuing  Bank from  Issuing such Letter of
              Credit, nor shall any requirement of law applicable to the Issuing
              Bank or any request or directive  (whether or not having the force
              of law) from any Governmental  Entity with  jurisdiction  over the
              Issuing  Bank  prohibit,  or request that the Issuing Bank refrain
              from,  the Issuance of Letters of Credit  generally or such Letter
              of Credit in particular or shall impose upon the Issuing Bank with
              respect  to such  Letter of Credit  any  restriction,  reserve  or
              capital requirement (for which the


<PAGE>
                                     - 35 -



              Issuing Bank is not otherwise  compensated  hereunder and which is
              not in effect on the date of this Agreement), or shall impose upon
              the Issuing Bank any unreimbursed  loss, cost or expense which was
              not applicable on the date of this Agreement and which the Issuing
              Bank in good faith deems material to it;

       (h)    the  currency  in which  the  relevant  Letter  of Credit is to be
              denominated  is, in the opinion of the Issuing Bank, not likely to
              be subject to undue fluctuation  against Sterling and is likely to
              be freely  convertible  and  available  in  sufficient  amounts to
              enable the Issuing Bank to discharge its  obligations as they fall
              due;

       (i)    the Issuing Bank has approved  (and been approved by) the relevant
              beneficiary; and

       (j)    the  total   Sterling   Amount  of  all   Outstanding   Contingent
              Liabilities under all Letters of Credit then outstanding would not
              exceed (pound)400,000,000.

4.6    Letters of Credit

       (a)    Issuing Bank as principal:  the Issuing Bank will act as principal
              of  each  Letter  of  Credit  Issued  by it  and  each  Bank  will
              counter-indemnify  the Issuing Bank in respect of the  Outstanding
              Contingent Liabilities thereunder in the relevant Proportion;

       (b)    Obligors'    Authorisation    and    Indemnity:    each    Obligor
              unconditionally and irrevocably:

              (i)    authorises the Issuing Bank to comply with any demand which
                     appears  to be duly made by a third  party in  respect of a
                     Letter of  Credit  without  any  further  reference  to the
                     relevant Borrower on the terms set out in Schedule 7 (Terms
                     of Borrowers' Indemnity);

              (ii)   agrees that its  authorisation  under clause  4.6(b)(i) and
                     its  indemnity  referred  to  in  clauses  4.6(b)(iii)  and
                     4.6(b)(iv)  shall remain in full force and effect and shall
                     not be  discharged  until such date as the  Facility  Agent
                     (acting on the  instructions  of the  Issuing  Bank)  shall
                     notify the relevant  Borrower that it is satisfied  (acting
                     reasonably)   that  the  Issuing  Bank  remains   under  no
                     liability  (actual or  contingent) in respect of any Letter
                     of Credit;

              (iii)  agrees that each Letter of Credit is Issued  subject to and
                     with the benefit of the  provisions of Schedule 7 (Terms of
                     Borrowers' Indemnity); and

              (iv)   if a Finance Party suffers any liabilities, damages, costs,
                     expenses,  losses and charges  whatsoever in relation to or
                     arising  out of any Letter of Credit  Issued or in relation
                     to or  arising  out of clause  4.7  (Banks'  Guarantee  and
                     Indemnity),  the benefit of Schedule 7 (Terms of Borrowers'
                     Indemnity)  shall extend to such Finance  Party. A Borrower
                     may finance a payment under such  indemnity by drawing down
                     a  Revolving  Advance  if it is then  entitled  to do so in
                     accordance with the terms of this Agreement.

       (c)    Non-contravention  of US law: No Obligor will request the Issue of
              a Letter of Credit which would  contravene  any of the laws of the
              United States Of America.


<PAGE>
                                     - 36 -



4.7    Banks' Guarantee and Indemnity

       Each Bank hereby irrevocably and unconditionally:

       (a)    subject to clause 4.7(b),  guarantees to and  indemnifies (in each
              case on the  terms  set out in  Schedule  8  (Terms  of  Interbank
              Guarantee  and  Indemnity))  the  Issuing  Bank  severally  in its
              Proportion and on demand by the Issuing Bank, the due and punctual
              performance  by any relevant  Borrower of all its  obligations  in
              respect of each Letter of Credit Issued by the Issuing Bank;

       (b)    if it is not  permitted  by its  constitutional  documents  or any
              applicable law to grant guarantees,  agrees that, upon any failure
              of a relevant Borrower to make timely payment of any amount due in
              respect of a Letter of Credit,  such Bank shall take (and upon the
              occurrence of an Event of Default  specified in clauses 12.1(e) to
              (n)  (Events of  Default)  (or any event  occurs  which  under the
              applicable  law of any  relevant  jurisdiction  has an  analogous,
              similar or  equivalent  effect to any such events) shall be deemed
              to have taken without any further action,  as of the Issue Date of
              each  outstanding  Letter of Credit),  an undivided  participating
              interest   from  the  Issuing   Bank  in  each  Letter  of  Credit
              outstanding  at such  time in a  proportion  equal to such  Bank's
              Proportion.  Each Bank shall hold the Issuing  Bank  harmless  and
              indemnify the Issuing Bank for such Bank's  proportionate share of
              any  drawing  under any  Letter of Credit in which it has taken an
              undivided participating interest under this clause 4.7;

       (c)    as a separate and independent  stipulation  agrees that any sum of
              money  intended  to be the  subject  of the  guarantee  in  clause
              4.7(a),  shall be recoverable  from it (in its Proportion) as sole
              principal  debtor even if such sum would not be  recoverable  from
              any  relevant   Borrower  by  reason  of  any  legal   limitation,
              disability  or  incapacity  or  liquidation  of any of them or any
              other fact or  circumstance  (whether known to the Issuing Bank or
              not) but which  would have been  recoverable  from such Bank if it
              were the sole or principal  debtor in respect of such liability in
              place of any such Borrower.

4.8    Calculation of Interest if Bank makes a Guarantee or Indemnity Payment

       Any payment  made or to be made by a Bank  pursuant to clause 4.7 (Banks'
       Guarantee and Indemnity) and any  unreimbursed  amount due to the Issuing
       Bank shall (for the purpose of calculating  interest thereon which is due
       from the relevant Borrower) be deemed to have been made available to that
       Borrower by way of a Revolving  Advance on the date such  payment is made
       or is to be made (or  reimbursed) and accordingly is subject to the terms
       and  conditions  hereof and, after the earliest date on which a Revolving
       Advance  could have been drawn down to fund such  liability,  such amount
       shall be treated as if it were an overdue sum with an initial term of one
       month but (for all other  purposes)  shall be immediately due and payable
       by the relevant Borrower.

4.9    Defaulting Banks

       If a Bank (a "Defaulting  Bank") fails to make payment on its due date of
       any  amount  (an  "overdue  amount")  due from it for the  account of the
       Issuing Bank pursuant to clause 4.7 (Banks' Guarantee and Indemnity) then
       until the Issuing Bank (or the Facility Agent on its behalf) has received
       payment of such  overdue  amount in full (and  without  prejudice  to any
       other rights or remedies of the Issuing Bank in respect of such failure):


<PAGE>
                                     - 37 -



       (a)    the Issuing  Bank shall be  entitled  to receive any  remuneration
              which such  Defaulting  Bank would otherwise have been entitled to
              receive in respect of the Revolving Credit Facility; and

       (b)    the overdue amount shall bear interest at the rate of one per cent
              per annum  over LIBOR  plus the  Mandatory  Cost Rate for the time
              being  from the due date  until the date of  payment  and any such
              interest which accrues shall be compounded monthly.

4.10   Subrogation of Banks making guarantee payments

       (a)    Each  Obligor  agrees  that if any Bank  makes any  payment  under
              clause 4.7 (Banks' Guarantee and Indemnity) it will immediately be
              subrogated  to any  rights  that the  Issuing  Bank may then  have
              against  the  relevant  Borrower in respect of the amount paid and
              such  subrogation will be subject to the terms set out in Schedule
              7 (Terms of Borrowers' Indemnity).

       (b)    Each Obligor agrees to indemnify the Bank making such a payment in
              respect  of that  payment  and all  costs  and  expenses  properly
              incurred by the Bank in  recovering  or  attempting to recover any
              amount pursuant to such rights of subrogation.

4.11   Currency Fluctuations

       In addition and without  prejudice to the Banks' other rights  hereunder,
       the Facility  Agent shall on every Quarter Date (and at any other time at
       which it is  requested  to do so by the  Majority  Banks)  calculate  the
       aggregate  of  the  Sterling   Amounts  of  all  Outstanding   Contingent
       Liabilities under all Letters of Credit then outstanding.

4.12   Clawback

       If the Facility  Agent at any time issues a certificate  addressed to the
       Primary  Borrower  that in its  opinion  the  aggregate  of the  Sterling
       Amounts of Outstanding Contingent Liabilities under all Letters of Credit
       then  outstanding is equal to or exceeds 105% of the aggregate  amount of
       the Banks'  Commitments  under the  Revolving  Credit  Facility  less the
       amount of all outstanding  Revolving  Advances at that time, the Facility
       Agent may give notice to the Primary  Borrower  requiring  it within five
       Banking Days either to:

       (a)    make  arrangements to repay  Revolving  Advances and/or reduce the
              amount of the  Letters  of Credit  outstanding  so as to bring the
              Sterling Amount of all such Outstanding  Contingent Liabilities to
              an amount equal to or below 100% of that aggregate amount; or

       (b)    provide the Issuing  Bank with cash cover in the currency in which
              any Letter of Credit is  denominated of such amount as would cause
              the requirements of this clause 4.12 to be satisfied.

4.13   Cash Cover

       Where cash cover is provided by an Obligor  under clause 4.12  (Clawback)
       or otherwise under this  Agreement,  the Issuing Bank undertakes to place
       the relevant  cash  deposit in an account  with it bearing  interest at a
       rate and on the standard terms applicable to corporate  customers of such
       Bank making deposits of an equivalent size and for an equivalent duration
       (or on such other terms as such Bank and the relevant Obligor may agree).
       Interest accruing on cash


<PAGE>
                                     - 38 -



       deposited  as cash  cover  shall be for the  account  of and paid to such
       Obligor  but shall not be paid to any Obligor  (but shall be  compounded)
       during the  continuance  of an Event of Default which shall not have been
       waived.

4.14   Unavailability of Optional Currency

       If a Borrower  requests  that an Advance be  denominated  in an  Optional
       Currency  during its  Maturity  Period as provided  in clause  4.2(b)(ii)
       (Amount), and:

       (a)    no later than 10.00 a.m. on the  Quotation  Date for such Advance,
              any Bank or Banks (in this clause 4.14 only,  an  "Affected  Bank"
              or, if more than one, the "Affected  Banks") notifies the Facility
              Agent (providing detailed reasons and justification therefor) that
              it is not able to comply with such request; or

       (b)    no later than 11.00 a.m. on the  Quotation  Date for such Advance,
              the Facility  Agent  notifies the relevant  Borrower and the Banks
              that by reason of  circumstances  affecting  the London  Interbank
              Market generally it is not feasible for such Advance to be made in
              such Optional Currency or, as the case may be, denominated in such
              Optional Currency for the relevant Maturity Period; or

       (c)    to give effect to such request would cause the Advances  under the
              relevant  Tranche of the Facility to be  denominated  in more than
              four Optional Currencies,

              then:

              (i)    if the circumstances in paragraph (a) above only apply, the
                     relevant  Borrower  and the  Facility  Agent shall agree to
                     adjust   the  amount  of  such   Advance  to  exclude   the
                     participation  therein  of the  Affected  Bank or  Affected
                     Banks and the Affected Bank or Affected  Banks shall make a
                     separate  Advance  in  Sterling  in  the  amount  of  their
                     scheduled  participation  in such Advance  Provided  always
                     that the  Maturity  Period  thereof ends on the same day as
                     the Maturity Period of such Advance; and/or

              (ii)   if the  circumstances in (b) and/or (c) apply, such Advance
                     shall not be made unless the relevant Borrower specified in
                     the  Drawdown  Notice in  respect of such  Advance  and the
                     Banks   otherwise   agree  that  such  Advance   should  be
                     denominated  in  Sterling  and/or  in one or more  Optional
                     Currencies  in  such  circumstances,  in  which  case  such
                     Advance  shall be made in Sterling  and/or (as the case may
                     be) in such Optional Currency or Currencies in the Sterling
                     Amount relating to such Advance.

5.     INTEREST AND INTEREST PERIODS

5.1    Interest on the Term Advances

       The Primary  Borrower  shall pay interest on each Term Advance in respect
       of each Interest Period on the relevant Interest Payment Date (or, in the
       case of Interest Periods of more than six months,  by instalments,  every
       six months from the  commencement of the relevant  Interest Period and on
       the relevant  Interest  Payment Date) at the rate per annum determined by
       the Facility Agent to be the aggregate of (a) the Applicable  Margin, (b)
       the Mandatory Cost Rate and (c) LIBOR.


<PAGE>
                                     - 39 -



5.2    Interest Periods for the Term Advances

       (a)    The Primary  Borrower may by notice received by the Facility Agent
              not later  than 11 a.m.  on the  second  Banking  Day  before  the
              beginning of each Interest  Period in respect of each Term Advance
              specify  whether such Interest  Period shall have a duration of 1,
              2, 3 or 6 months  (or such  other  period as the  Facility  Agent,
              acting on the instructions of the Majority Banks, may agree).

       (b)    Every Interest  Period in respect of each Term Advance shall be of
              the duration  specified by the Primary Borrower pursuant to clause
              5.2(a) but so that:

              (i)    each Interest  Period in respect of each such Advance shall
                     commence on the date of the expiry of the previous Interest
                     Period;

              (ii)   if  otherwise  there  would be more  than 10 Term  Advances
                     outstanding  with different  Interest  Payment  Dates,  the
                     Primary  Borrower  shall select  Interest  Periods for such
                     Advances  ending  on  the  same  day as  the  then  current
                     Interest  Period for another  such  Advance and on the last
                     day  of  such  Interest   Period  such  Advances  shall  be
                     consolidated into and shall thereafter  constitute a single
                     Advance;

              (iii)  if any Interest  Period in respect of a Term Advance  would
                     otherwise  overrun the Final  Repayment Date, such Interest
                     Period shall end on such date;

              (iv)   if the Primary  Borrower fails to select the duration of an
                     Interest Period in respect of an Advance in accordance with
                     the  provisions  of clause  5.2(a) and this clause  5.2(b),
                     such  Interest  Period  shall have a  duration  of 3 months
                     subject to this clause 5.2(b).

5.3    Interest under the Revolving Credit Facility

       The relevant Borrower shall pay interest on each Revolving Advance on its
       Maturity Date (or, in the case of a Revolving  Advance  having a Maturity
       Period of more than six months, by instalments, every six months from the
       relevant Drawdown Date and on the relevant Maturity Date) at the rate per
       annum  determined  by the Facility  Agent to be the  aggregate of (a) the
       Applicable Margin, (b) the Mandatory Cost Rate and (c) LIBOR.

5.4    Interest on unpaid sums

       (a)    If  any  Obligor  fails  to  pay  any  sum   (including,   without
              limitation,  any sum  payable  pursuant to this clause 5.4) on its
              due date for payment under this  Agreement  such Obligor shall pay
              interest  on such sum  from the due date up to the date of  actual
              payment (after as well as before judgment) at a rate determined by
              the Facility Agent pursuant to this clause 5.4.

       (b)    The period beginning on the due date for payment and ending on the
              date of actual payment shall be divided into successive periods of
              not more than  three  months as  selected  by the  Facility  Agent
              (after   consultation   with  the  Banks  so  far  as   reasonably
              practicable  in the  circumstances)  each of which (other than the
              first,  which shall  commence on such due date) shall  commence on
              the  last  day of the  preceding  such  period  but so that if the
              unpaid sum is an amount of  principal  which shall have become due
              and payable  prior to the next  succeeding  Interest  Payment Date
              relating


<PAGE>
                                     - 40 -



              thereto  or, as the case may be,  prior to the  relevant  Maturity
              Date,  then the first such period  selected by the Facility  Agent
              shall end on such  Interest  Payment  Date or, as the case may be,
              such Maturity Date.

       (c)    The rate of  interest  applicable  to each  period  referred to in
              clause 5.4(b) shall (subject to clause 5.6  (Alternative  Interest
              Rates)) be the aggregate (as determined by the Facility  Agent) of
              (i) one per cent per annum,  (ii) the Applicable  Margin (iii) the
              Mandatory  Cost Rate and (iv)  LIBOR but so that if the unpaid sum
              is an amount  of  principal  (as  referred  to in  clause  5.4(b))
              interest  shall be  payable  on such  unpaid  sum during the first
              period determined pursuant to clause 5.4(b) at a rate one per cent
              above the rate applicable thereto immediately before it fell due.

       (d)    Interest  under this  clause  5.4 shall be due and  payable on the
              last day of each period  determined by the Facility Agent pursuant
              to this clause 5.4 or, if earlier, on the date on which the sum in
              respect of which such interest is accruing  shall actually be paid
              or on such  date or other  dates  which  the  Facility  Agent  may
              specify by written  notice to the Primary  Borrower  (but not more
              frequently  than once a month).  Any interest  payable  under this
              clause  5.4  which is not paid  when due shall be deemed an unpaid
              sum and shall itself bear interest accordingly.

5.5    Notification of Interest Periods and interest rate

       The Facility  Agent shall notify the Primary  Borrower  (who shall notify
       any other  relevant  Borrower) and the Banks  promptly of the duration of
       each Interest Period, Maturity Period or other period for the calculation
       of interest (or, as the case may be,  default  interest) and of each rate
       of interest determined by it under this clause 5.

5.6    Alternative interest rates

       If:

       (a)    in  attempting  to  calculate  LIBOR  under  paragraph  (c) of the
              definition  of LIBOR for a  specified  period the  Facility  Agent
              determines  at 11.00 a.m.  (London  time or, in the case of Euros,
              Central  European Time) on the Quotation Date that it is unable to
              obtain  quotations  for LIBOR from any of the  Reference  Banks in
              respect of the  relevant  Advance or unpaid sum for the  specified
              period; or

       (b)    before its close of business on such day, the  Facility  Agent has
              been  notified in writing by a Bank or group of Banks to which 35%
              or more of the  relevant  Advance  or  unpaid  sum is (or,  if the
              relevant  Advance  were  made,  would  then  be) owed  that  LIBOR
              calculated in  accordance  with its  definition in this  Agreement
              does not  accurately  reflect  the cost to them of  funding  their
              participation; or

       (c)    the Facility Agent, acting reasonably,  determines that, by reason
              of circumstances  affecting the London Inter-bank Market, adequate
              and fair means do not or will not exist for  determining  the rate
              of interest applicable to the specified period,

       then:

              (i)    the  Facility  Agent shall  promptly  notify in writing the
                     Primary   Borrower   and  the   Banks  of  such   event  or
                     circumstance;


<PAGE>
                                     - 41 -



              (ii)   the  Facility  Agent (on  behalf of and after  consultation
                     with the Banks)  shall,  within three  Banking Days of such
                     notice,  negotiate with the Primary Borrower with a view to
                     agreeing a substitute  basis on which the relevant  part of
                     the Facility may be maintained;

              (iii)  any  substitute  basis  agreed in writing  by the  Facility
                     Agent (on behalf of and with the  consent of all the Banks)
                     and the  Primary  Borrower  within  30 days of such  notice
                     shall take effect in accordance with its terms and interest
                     shall be  calculated  as if the  substitute  basis had come
                     into effect from the  beginning  of the  relevant  specific
                     period;

              (iv)   in  default  of  agreement  within  30  days,  each  Bank's
                     participation  in the  Advance or unpaid sum (if any) shall
                     during that  specific  period  bear  interest at the annual
                     rate equal to the cost to that Bank (as  certified by it to
                     the Primary  Borrower within ten days of the end of that 30
                     day period and expressed as a percentage rate per annum) of
                     funding its  participation  during that specific  period by
                     whatever means that Bank determines to be most  appropriate
                     plus the Applicable  Margin and the Mandatory Cost Rate and
                     if and to the extent  that clause 5.4  (Interest  on unpaid
                     sums) applies, a further one per cent.

6.     REPAYMENT, PREPAYMENT, CANCELLATION AND REDUCTIONS

6.1    Repayment of the Term Advances

       The Primary Borrower shall repay in full all outstanding Term Advances on
       the Final Repayment Date.

6.2    Repayment of Revolving Advances

       The relevant  Borrower shall repay each Revolving  Advance in full on its
       Maturity  Date,  without  prejudice  to the  right  of that or any  other
       Borrower,  subject to the terms of this  Agreement,  to  continue to make
       utilisations up to the Available Amount.

       On the Final  Repayment  Date for each  Tranche of the  Revolving  Credit
       Facility,  the balance of all outstanding  Revolving  Advances under such
       Tranche shall in any event be repaid in full and may not be reborrowed.

       The Primary  Borrower  shall notify the  Facility  Agent not less than 60
       days  prior to the Final  Repayment  Date of  Tranche A of the  Revolving
       Credit Facility if it wishes to extend the Final Repayment Date of all or
       part of that Tranche by a further 364 days. The Facility Agent shall seek
       the instructions of all the Banks,  which shall use their best endeavours
       to  respond to such  request  by not later than 30 days  before the Final
       Repayment Date. If any of the Banks agree,

       (a)    Tranche A of the Revolving Credit Facility shall from the original
              Final  Repayment  Date  of  Tranche  A  consist  of the  aggregate
              commitments which one or more Banks have agreed to continue,

       (b)    the Final  Repayment  Date of Tranche A shall be so  extended by a
              further 364 days from and including the original  Final  Repayment
              Date and the  definitions of  "Commitment",  and "Final  Repayment
              Date" shall be construed accordingly, and


<PAGE>
                                     - 42 -



       (c)    the  Primary  Borrower  shall repay on its  original  due date any
              amount  outstanding  under  Tranche  A  of  the  Revolving  Credit
              Facility to those Banks which have not elected to extend the Final
              Repayment Date of Tranche A.

6.3    Optional prepayment of all the Banks

       The relevant  Borrower may,  subject to clause 6.6  (Cancellation  of the
       Facilities), prepay:

       (a)    a  Term   Advance   in  whole   or  part   (if  in   part,   being
              (pound)10,000,000  or any larger sum which is an integral multiple
              of  (pound)5,000,000) on the next succeeding Interest Payment Date
              in respect of such Advance or, together with any relevant  amounts
              payable pursuant to clause 13.1 (Miscellaneous  Indemnities),  any
              Banking Day,  which amount shall be applied by the Facility  Agent
              in  prepayment to the Banks to whom such Advance is owing on a pro
              rata basis;

       (b)    a Revolving  Advance in whole (but not in part)  together with any
              relevant  amounts payable  pursuant to clause 13.1  (Miscellaneous
              Indemnities).

6.4    Affected Banks

       (a)    The relevant Borrower may and, where required under this Agreement
              shall, prepay (in whole but not in part only),  without premium or
              penalty,  subject to clause 6.6  (Cancellation of the Facilities),
              the  whole  of the  Contributions  to all  the  Facilities  of any
              Affected  Bank.  Upon any such  notice  of such  prepayment  being
              given,  or as  provided  for in clause  14.1  (Unlawfulness),  the
              Commitments  of the relevant  Bank to all the relevant  Facilities
              shall be  reduced  to zero and the  undrawn  amount  of the  Total
              Commitments  in  respect  of all the  Facilities  shall be reduced
              accordingly.

       (b)    Instead  of, or in addition  to, its rights  under  clause  6.4(a)
              above the relevant Borrower may on payment of the amounts referred
              to under clause 6.5 (Prepayments Generally),  without prejudice to
              clause 14.4  (Mitigation),  require the Affected  Bank to transfer
              pursuant to clause 16.5  (Substitution  Certificate) at par all of
              its Commitments and  Contributions  to a Qualifying Bank nominated
              by the Borrower provided that the relevant  Qualifying Bank agrees
              (in its absolute  discretion) to accept the transfer to it and, in
              the case of clause 14.1 (Unlawfulness), that Bank is lawfully able
              to do so  and  the  transfer  is  to  take  effect  prior  to  the
              prepayment date specified by the Facility Agent thereunder.

6.5    Prepayments generally

       (a)    No  prepayment  may be made  pursuant  to  clauses  6.3  (Optional
              Prepayment  of all the Banks) or 6.4  (Affected  Banks) unless the
              Primary  Borrower  shall have given the  Facility  Agent 5 Banking
              Days prior  notice  (or in the case of a  prepayment  pursuant  to
              clause 14.1 (Unlawfulness) such notice as is required under clause
              14.1   (Unlawfulness))   specifying   the  proposed  date  of  the
              prepayment  and the amount to be prepaid.  Every such notice shall
              be effective only on actual receipt by the Facility  Agent,  shall
              be irrevocable and shall oblige the relevant  Borrower to make the
              relevant prepayment on the date specified.

       (b)    No amount of the Term  Facility  which is repaid or prepaid may be
              reborrowed.


<PAGE>
                                     - 43 -



       (c)    Prepayments  required  to be made to an  Affected  Bank  should be
              applied  first  against  the  Affected   Bank's   Contribution  to
              outstanding Term Advances, and then in the following order:

              (i)    in repayment  of that Bank's  Contribution  to  outstanding
                     Revolving   Credit  Facility  Tranche  B  Advances  and  in
                     permanent   reduction  of  the  Revolving  Credit  Facility
                     Tranche B;

              (ii)   to provide  cash cover for that  Bank's  Proportion  of the
                     Outstanding  Contingent  Liabilities  under  the  Revolving
                     Credit Facility Tranche B;

              (iii)  in repayment  of that Bank's  Contribution  to  outstanding
                     Revolving   Credit  Facility  Tranche  A  Advances  and  in
                     permanent   reduction  of  the  Revolving  Credit  Facility
                     Tranche A;

              (iv)   to provide  cash cover for that  Bank's  Proportion  of the
                     Outstanding  Contingent  Liabilities  under  the  Revolving
                     Credit Facility Tranche A.

       (d)    All  prepayments  shall be made together with (to the extent these
              relate to the amounts prepaid):

              (i)    accrued interest to the date of prepayment;

              (ii)   any   additional   amount   payable   under   clauses   8.5
                     (Grossing-up for Taxes) or 14.2 (Increased Costs); and

              (iii)  all other sums  payable by the Borrower to the Banks or the
                     relevant  Bank  under  this  Agreement  including,  without
                     limitation, any accrued commitment commission payable under
                     clause  7.2  (Commitment   Fees),   any  Letter  of  Credit
                     commission  and fees  under  clause  7.3  (Letter of Credit
                     Fees), expenses under clause 7.4 (Expenses) and any amounts
                     payable under clause 13.1 (Miscellaneous Indemnities).

       (e)    No Borrower shall prepay all or any part of an Advance outstanding
              under  this  Agreement  except  at the  times  and  in the  manner
              expressly provided in this Agreement.

6.6    Cancellation of the Facilities

       The Primary  Borrower may at any time prior to the  Available  Commitment
       Termination  Date in respect  of the  relevant  Tranche of the  Revolving
       Credit Facility by notice to the Facility Agent (effective only on actual
       receipt)  cancel with  effect  from a date not less than 10 Banking  Days
       after the receipt by the  Facility  Agent of such notice the whole or any
       part (if in part, being  (pound)10,000,000  or any larger sum which is an
       integral  multiple of  (pound)5,000,000)  of the Available  Amount of the
       relevant  Tranche,  in each case  which is not the  subject of a Drawdown
       Notice at such time.  Such notice  shall  specify the Tranche to which it
       refers,  the date  upon  which  such  cancellation  is to be made and the
       amount of such cancellation. Any such notice of cancellation, once given,
       shall be  irrevocable  and  upon  such  cancellation  taking  effect  the
       Commitments  of the Banks in respect  of the  relevant  Tranche  shall be
       reduced accordingly (pro-rata their respective  Commitments in respect of
       the relevant Tranche).



<PAGE>
                                     - 44 -



6.7    Termination

       The Commitment of each Bank shall be automatically  cancelled and reduced
       to zero at the close of  business  in London  on the  relevant  Available
       Commitment Termination Date.

7.     FEES AND EXPENSES

7.1    Arrangement, underwriting, participation and agency fees

       The Primary  Borrower  shall pay to the Facility  Agent or shall  procure
       that there is paid,  whether or not any part of the  Commitments  is ever
       advanced:

       (a)    on the date of this Agreement fees of an amount agreed between the
              Primary  Borrower and the  Facility  Agent in a letter dated on or
              about the date of this Agreement;

       (b)    on the  date of this  Agreement  and on each  anniversary  thereof
              until  the  end of the  Finance  Period,  for the  account  of the
              Facility  Agent,  an agency fee of an amount  agreed  between  the
              Primary  Borrower and the  Facility  Agent in a letter dated on or
              about the date of this Agreement.

7.2    Commitment fees

       The Primary Borrower shall pay to the Facility Agent,  whether or not any
       part of the Commitments is ever advanced, from the date of this Agreement
       on each Fee  Payment  Date  after the date of this  Agreement  and on the
       Available  Commitment  Termination Date in respect of each Tranche of the
       Revolving Credit Facility, for the account of each of the Banks (pro-rata
       to their  respective  Commitments for the relevant  Tranche),  commitment
       commission  computed in arrears at the Applicable  Fees Rate on the daily
       amount by which the Total  Commitments in respect of the relevant Tranche
       exceeds the  aggregate  of the  Contributions  in respect of the relevant
       Tranche. Accrued commitment commission will also be payable on the amount
       of any Commitment when cancelled on the date of its cancellation.

7.3    Letter of Credit Fees

       (a)    Each  relevant  Borrower  shall  (on the  dates  set out in clause
              7.3(c)) pay  commission in Sterling to the Facility  Agent for the
              account  of the  Banks (in their  respective  Proportions)  on the
              Issue of any  Letter  of  Credit  requested  by such  Borrower  in
              Sterling at a  percentage  rate per annum equal to the  Applicable
              Margin  on  the  Sterling  Amount  of the  Outstanding  Contingent
              Liabilities under such Letter of Credit calculated in each case on
              the date of Issue and  recalculated  on each Quarter Date from the
              Issue  Date of such  Letter of Credit  until  the  earlier  of its
              Expiry  Date or such date as the  Issuing  Bank and the Banks have
              ceased to be under any liability (actual or contingent) in respect
              thereof,  and on the  basis  of a 365 day  year.  If the  relevant
              Borrower  has  provided  cash cover for any Letter of Credit,  the
              percentage  rate per annum  payable on cash covered  amounts shall
              instead be 0.25%.

       (b)    Each  relevant  Borrower  shall pay a fronting fee to the Facility
              Agent  for the  account  of the  Issuing  Bank on the Issue of any
              Letter  of  Credit  at a rate of 0.2% per  annum  on the  Sterling
              Amount of the face amount of the relevant Letter of Credit payable
              in  advance  on the  date  of  Issue  and  on  each  Quarter  Date
              thereafter.


<PAGE>
                                     - 45 -




       (c)    The  commission  and fronting fee payable under clauses 7.3(a) and
              7.3(b)  respectively  in respect of each Letter of Credit shall be
              paid in advance  on the  relevant  Issue Date and on each  Quarter
              Date in each year during the  continuance of such Letter of Credit
              (or if such day is not a Banking  Day,  on the  preceding  Banking
              Day)  commencing on the first Quarter Date falling on or after the
              Issue of the relevant  Letter of Credit.  If a Letter of Credit is
              terminated leaving no Outstanding  Contingent Liabilities before a
              Quarter Date, that part of the commission paid in advance which is
              attributable to the period from the date of cancellation until the
              next Quarter  Date shall be repaid to the Borrower  which made the
              advance commission payment by set-off against any amounts then due
              from the Obligor to any Finance  Party or, if no such  amounts are
              due, by payment in cash.

       (d)    For the avoidance of doubt,  the Issuing Bank's  Proportion of the
              commission at the rate and  calculated in the manner  specified in
              clause  7.3(a)  shall be payable to the Issuing Bank in respect of
              its residual liability in its capacity as a Bank,  notwithstanding
              that it does not purport to  guarantee  itself in its  capacity as
              Issuing Bank.

       (e)    The relevant  Borrower  shall pay interest on the amount  demanded
              and  outstanding  under the indemnity  given by them in respect of
              Letters of Credit in accordance  with clause 4.8  (Calculation  of
              Interest  if Bank  makes a  Guarantee  or  Indemnity  Payment)  in
              addition  to the  commission  and other  fees  payable  under this
              Agreement in respect of the Revolving Credit Facility.

7.4    Expenses

       The Primary  Borrower shall  reimburse the  Arrangers,  the Banks and the
       Facility  Agent from time to time within three Banking Days of receipt of
       demand:

       (a)    all reasonable costs and expenses  (including  without  limitation
              legal, printing and out-of-pocket  expenses) together with any VAT
              thereon  incurred  by the  Facility  Agent  and the  Arrangers  in
              connection with the negotiation,  preparation and execution of the
              Finance   Documents  and  the   completion  of  the   transactions
              contemplated  in  the  Finance  Documents,  and  the  negotiation,
              preparation and execution of any amendment or extension of, or the
              granting  of any  waiver  or  consent  under,  any of the  Finance
              Documents; and

       (b)    without prejudice to the generality of (c) below, all expenses and
              costs  (including  without  limitation  the fees and  expenses  of
              lawyers,   accountants,    surveyors,    valuers,    environmental
              consultants  and other  professional  advisers  and  out-of-pocket
              expenses)  incurred by the Facility  Agent in connection  with the
              obtaining  of reports  and/or  advice  and/or the  undertaking  of
              investigations  by or on  behalf  of the  Facility  Agent  into or
              concerning  the  Primary  Borrower  or  the  Group  following  the
              occurrence of a Default and whilst it is continuing  (or where the
              Majority  Banks'  reasonable  opinion  is that a Default  may have
              occurred)  and the Primary  Borrower  undertakes  to give,  and to
              procure that its Subsidiaries give, all such reasonable assistance
              (including,   without  limitation,  access  to  its  and/or  their
              properties  and financial  and other  records) at all times as the
              Facility  Agent  shall  reasonably  require  for  the  purpose  of
              enabling   such   reports  or  advice  to  be   prepared  or  such
              investigations to be undertaken; and

       (c)    after a Default has  occurred,  all costs and expenses  (including
              without limitation legal


<PAGE>
                                     - 46 -



              and out-of-pocket expenses) incurred by any of the Finance Parties
              in  contemplation   of,  or  otherwise  in  connection  with,  the
              enforcement  or  attempted  enforcement  of,  or  preservation  or
              attempted  preservation  of any rights  under,  any of the Finance
              Documents,  or otherwise in respect of the recovery,  or attempted
              recovery,  of moneys owing under the same,  together with interest
              at the rate  referred to in clause 5.4  (Interest  on Unpaid Sums)
              from the date on which such  expenses were incurred to the date of
              payment (as well after as before judgment).

7.5    Value Added Tax

       All fees,  costs and expenses  payable pursuant to this clause 7 shall be
       paid together  with an amount equal to any VAT thereon  payable by any of
       the Finance  Parties in respect of such fees and expenses  against a duly
       executed VAT invoice.

7.6    Stamp and other duties

       The  Primary   Borrower   shall  pay  all  proper   stamp,   documentary,
       registration, notarisation or other duties or Taxes (including any duties
       or Taxes payable by, or assessed on, the Finance  Parties)  imposed on or
       in  connection  with the  negotiation,  preparation,  implementation  and
       execution of any of the Finance Documents and shall indemnify the Finance
       Parties against any liability  arising by reason of any delay or omission
       by the Primary Borrower to pay such duties or Taxes.

8.     PAYMENTS AND TAXES; ACCOUNTS AND CALCULATIONS

8.1    No set-off or counterclaim; distribution to the Banks

       All payments to be made by any Obligor under this Agreement shall be:

       (a)    made in full, without any set-off or counterclaim  whatsoever and,
              subject as provided in clause 8.5  (Grossing-up  for Taxes),  free
              and clear of any  deductions or  withholdings,  on the due date to
              the  account of the  Facility  Agent at such bank as the  Facility
              Agent may from time to time specify for this purpose;

       (b)    made in respect of:

              (i)    each repayment or prepayment of, or payment of interest on,
                     or  participation  by a  Bank  in,  a  Utilisation,  in the
                     currency in which the Utilisation is denominated;

              (ii)   any payment of costs and expenses, in the currency in which
                     they were incurred;

              (iii)  all fees and/or commission payable under clause 7 (Fees and
                     expenses)  shall be paid in Sterling  unless the Parent and
                     the Facility Agent otherwise agree;

              (iv)   any other amount  expressed  in any Finance  Document to be
                     payable in a currency, in that currency;

       (c)    for the  account of all the Banks,  and the  Facility  Agent shall
              forthwith  distribute  such payments in like funds as are received
              by the Facility Agent to the Banks rateably for


<PAGE>
                                     - 47 -



              the  account  of  such  Banks'  respective   Facility  Offices  in
              accordance with their  Commitments or  Contributions,  as the case
              may be provided that where this  Agreement  provides for a payment
              to be made  for the  account  of a  particular  Finance  Party  or
              Finance Parties, in which case the Facility Agent shall distribute
              the  relevant  payment to the  relevant  Finance  Party or Finance
              Parties concerned.

8.2    Payments by the Banks or by Obligors

       (a)    All  payments by an Obligor or a Bank under the Finance  Documents
              shall be made to the Facility  Agent to its account at such office
              or bank:

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

              (ii)   in the case of Euro Units or national  currency  units,  in
                     Frankfurt  am  Main,   Germany  (or  such  other  principal
                     financial  centre of a  Participating  Member  State as the
                     Facility  Agent  may from  time to time  nominate  for this
                     purpose),

              as it may from  time to time  notify to that  Obligor  or Bank for
              this purpose.

       (b)    Payments  under the Finance  Documents to the Facility Agent shall
              be made for value on the due date at such times and in immediately
              available,  freely transferable cleared funds (or such other funds
              as the Facility Agent may specify to the Party  concerned as being
              customary at the time for the  settlement of  transactions  in the
              relevant currency).

       (c)    Each  payment  received  by the  Facility  Agent under the Finance
              Documents for another Party shall, subject to paragraph (d) below,
              be made  available by the Facility  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  country of the
                     relevant currency; or

              (ii)   in the case of Euro Units or national  currency  units,  in
                     Frankfurt  am  Main,   Germany  (or  such  other  principal
                     financial  centre of a  Participating  Member  State as the
                     Facility  Agent  may from  time to time  nominate  for this
                     purpose),

                     as it may from time to time notify the  Facility  Agent for
                     this purpose by prior written notice.

       (d)    The  Facility  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 this
              Agreement  or in or  towards  the  purchase  of any  amount of any
              currency to be so applied.

8.3    Non-Banking Days

       When any payment  under this  Agreement  would  otherwise be due on a day
       which is not a Banking Day,  the due date for payment  shall be postponed
       to the next  following  Banking Day unless such  Banking Day falls in the
       next  calendar  month,  in  which  case  payment  shall  be  made  on the
       immediately preceding Banking Day.



<PAGE>
                                     - 48 -



8.4    Facility Agent may assume receipt

       (a)    Where any sum is to be paid under this  Agreement  to the Facility
              Agent for the account of another  person,  the Facility  Agent may
              assume that the  payment  will be made when due and may (but shall
              not be  obliged  to) make  such sum  available  to the  person  so
              entitled.

       (b)    If it proves to be the case that such  payment was not made to the
              Facility Agent, then:

              (i)    the person to whom such sum was so made available  shall on
                     request refund such sum to the Facility Agent together with
                     interest  thereon  sufficient  to  compensate  the Facility
                     Agent  for the  cost of  making  available  such  sum up to
                     (and/or, as the case may be, the cost to the relevant other
                     person of not  receiving  such sum  until) the date of such
                     repayment; and

              (ii)   the person by whom such sum was payable shall indemnify the
                     Facility  Agent (or the relevant  other person) for any and
                     all  loss or  expense  which  the  Facility  Agent  (or the
                     relevant   other   person)   may  sustain  or  incur  as  a
                     consequence  of such sum not  having  been  paid on its due
                     date  together  with any  interest,  expenses and penalties
                     payable or incurred in connection therewith.

8.5    Grossing-up for Taxes

       (a)    If at any time any Obligor is required  to make any  deduction  or
              withholding  in respect of Taxes  from any  payment  due under any
              Finance  Document for the account of any Finance  Party (or if the
              Facility   Agent  is  required  to  make  any  such  deduction  or
              withholding  from a payment to a Finance Party),  the sum due from
              the relevant Obligor in respect of such payment shall,  subject to
              clause 8.6 (Qualifying Bank), be increased to the extent necessary
              to ensure that,  after the making of such deduction or withholding
              (and any further  deduction and withholding which may be levied on
              the  additional  amounts  paid by  reason  of this  clause),  each
              Finance  Party  receives  on the due date for  such  payment  (and
              retains,  free from any liability in respect of such  deduction or
              withholding)  a net sum  equal  to the sum  which  it  would  have
              received and so retained had no such deduction or withholding been
              made or required to be made.

       (b)    Each Obligor shall (without prejudice to the foregoing  provisions
              of this clause 8.5)  indemnify each Finance Party on demand by the
              Facility Agent against any losses or costs incurred by any of them
              together  with any  interest,  expenses and  penalties  payable or
              incurred in connection  therewith by reason of any failure of such
              Obligor to make any such deduction or withholding.

       (c)    Each Obligor  shall  promptly  deliver to the  Facility  Agent any
              receipts,  certificates or other proof  evidencing the amounts (if
              any)  paid  or  payable  in  respect  of  any  such  deduction  or
              withholding.

8.6    Qualifying Bank

       (a)    If:

              (i)    any Bank is not or ceases to be a Qualifying Bank; and


<PAGE>
                                     - 49 -




              (ii)   as a result an Obligor is  required  to deduct or  withhold
                     United  Kingdom  income  tax  in  respect  of  payments  of
                     interest to be made by such  Obligor to that Bank under any
                     Finance  Document or would  otherwise have been required to
                     make an indemnity  payment or a greater  indemnity  payment
                     under clause 8.5 (Grossing-up for Taxes) or 14.2 (Increased
                     Costs),

              then such Obligor  shall (as the case may be) not be liable to pay
              under  clause 8.5  (Grossing-up  for Taxes) in respect of any such
              payment of interest any amount in excess of the amount (if any) it
              would  have been  obliged  to pay if such  Bank were a  Qualifying
              Bank,  nor shall it be liable to make an  indemnity  payment  or a
              greater indemnity payment under clause 8.5 (Grossing-up for Taxes)
              or, as the case may be, clause 14.2  (Increased  Costs) than would
              have been required (if any) if the aforesaid  Bank had been or had
              not ceased to be a Qualifying Bank.

       (b)    This clause 8.6 shall not apply, and such Obligor shall be obliged
              to comply with its obligations  under clause 8.5  (Grossing-up for
              Taxes),  or as the case may be 14.2  (Increased  Costs),  if on or
              after the date of this Agreement:

              (i)    there  shall have been any  change  in, or in the  official
                     interpretation  or application  of, any relevant law or the
                     practice of the United  Kingdom  Inland Revenue (or, in the
                     case of a  Treaty  Lender,  any  Government  Entity  in the
                     country  in which it is  resident  for the  purpose  of the
                     relevant  double  taxation  treaty) and as a result thereof
                     the Bank is not or ceases to be a Qualifying Bank, or

              (ii)   the Bank referred to in clause 8.6(a) has  transferred  its
                     Facility  Office in respect  of any  Facility  outside  the
                     United  Kingdom  or  has  become  a Bank  hereunder  with a
                     Facility  Office  outside the United  Kingdom in respect of
                     any Facility, in each case, with the consent of the Primary
                     Borrower.

       (c)    A  person  intending  to  make a  claim  pursuant  to  clause  8.5
              (Grossing-up for Taxes) shall,  promptly after such person becomes
              aware  of the  circumstances  giving  rise to such  claim  and the
              amount of such claim,  deliver to the Primary Borrower through the
              Facility Agent a certificate to that effect  specifying the amount
              of such claim and  setting out in  reasonable  detail the basis of
              such claim,  provided  that nothing  shall  require such person to
              disclose any confidential information relating to the organisation
              of its affairs.

       (d)    If at any time after the date of this  Agreement any Bank is aware
              that it is not or will cease to be a Qualifying Bank (for whatever
              reason), it shall promptly notify the Primary Borrower.

       (e)    A  Treaty  Lender  will  submit  such  claim  to  the  appropriate
              authorities  (together with such forms,  papers,  other  documents
              and/or  evidence as necessary) as may be required for the Obligors
              to make payment of interest to such Treaty  Lender on its Advances
              free of withholding or deduction on account of United Kingdom Tax.
              No  Obligor  will be liable  to pay any  additional  amount  under
              clause 8.5  (Grossing-up  for Taxes) in respect of the withholding
              or deduction on account of United Kingdom income tax from any such
              interest unless such claim has been submitted to those authorities
              promptly after that Treaty Lender became a party to this Agreement
              as a Treaty Lender or the proviso to clause 8.6(a) applies.


<PAGE>
                                     - 50 -



8.7    Claw-back of Tax benefit

       (a)    If following any such  deduction or  withholding as is referred to
              in clause 8.5 (Grossing-up for Taxes) any Finance Party determines
              in its sole  discretion  that it has  received  or been  granted a
              credit  against or  remission  for any Taxes  payable by it,  such
              Finance Party shall,  subject to the relevant  Obligor having made
              any increased  payment in accordance with clause 8.5  (Grossing-up
              for  Taxes)  and  subject  to there not being any Event of Default
              which is continuing, and to the extent that such Finance Party can
              do so  without  prejudicing  the  retention  of the amount of such
              credit or  remission  and without  prejudice  to the right of such
              Finance Party to obtain any other relief or allowance which may be
              available to it,  reimburse the relevant  Obligor with such amount
              as such Finance Party shall in its absolute  discretion certify to
              be the  proportion  of such credit or remission as will leave such
              Finance Party (after such reimbursement) in no worse position than
              it  would  have  been  in had  there  been no  such  deduction  or
              withholding from the payment by the relevant Obligor as aforesaid.

       (b)    Such reimbursement shall be made forthwith upon such Finance Party
              certifying  that the amount of such credit or  remission  has been
              received by it,  provided that the Finance Party shall be the sole
              judge of the amount of any such  benefit  and of the date on which
              it was received.

       (c)    Nothing contained in this Agreement shall interfere with the right
              of any Finance Party to arrange its tax affairs in whatever manner
              it  thinks  fit nor  oblige  any  Finance  Party to  disclose  any
              information  regarding its tax affairs and  computations.  Without
              prejudice to the generality of the foregoing, no Obligor shall, by
              virtue of this  clause  8.7,  be  entitled  to  enquire  about any
              Finance Party's tax affairs or computations.

       (d)    The Finance Parties are under no obligation to investigate whether
              any tax credit is available or to claim any tax credit. Any amount
              paid by any Finance Party to an Obligor under this clause shall be
              conclusive  evidence of the amount payable and will be accepted by
              the Obligor in full and final settlement of its claim.

8.8    Bank accounts

       Each Bank shall  maintain,  in accordance  with its usual  practices,  an
       account or accounts  evidencing  the  amounts  from time to time lent by,
       owing to and paid to it under this  Agreement.  The Facility  Agent shall
       maintain a control  account showing the utilisation of the Facilities and
       other sums owing by each Obligor under this Agreement and all payments in
       respect  thereof  made by each  Obligor  from time to time.  In any legal
       action  arising out of or in  connection  with the Finance  Documents the
       entries  made in the  accounts  maintained  pursuant  to this  clause 8.8
       shall,  in the absence of manifest  error, be conclusive as to the amount
       from time to time owing by each Obligor under this Agreement.

8.9    Partial payments

       If:

       (a)    on any date on which a  payment  is due to be made by any  Obligor
              under this  Agreement,  the amount  received by the Facility Agent
              from such  Obligor  falls short of the total amount of the payment
              due to be made by such Obligor on such date; or


<PAGE>
                                     - 51 -



       (b)    on any date on which the Facility  Agent  receives or recovers any
              payment  from  an  Obligor  or   otherwise   receives  any  amount
              representing  proceeds of realisations or other  recoveries  under
              any of the Finance Documents,  the amount of such payment or other
              receipt  falls  short of the  total  amount  owing to the  Finance
              Parties under this Agreement on such date,

       then (in any such  case),  without  prejudice  to any rights or  remedies
       available to the Finance Parties under any of the Finance Documents,  the
       Facility  Agent  shall  apply the amount  actually  received  by it in or
       towards discharge of the obligations of such Obligor under this Agreement
       in the  following  order,  notwithstanding  any  appropriation  made,  or
       purported to be made, by such Obligor:

              (i)    first, in or towards  payment,  on a pro-rata basis, of any
                     unpaid  costs and  expenses  of the  Facility  Agent or the
                     Arrangers under this Agreement;

              (ii)   secondly, in or towards payment to the Banks, on a pro-rata
                     basis,  of any amount  owing to the Banks under clause 20.2
                     (Indemnity from Banks);

              (iii)  thirdly,  in or towards  payment to the Facility  Agent, of
                     any  portion  of  the  fees  payable  under  clause  7.1(a)
                     (Arrangement,  underwriting, participation and agency fees)
                     which remains unpaid;

              (iv)   fourthly, in or towards payment to the Facility Agent, on a
                     pro-rata  basis,  of any portion of the fees payable  under
                     clause 7.1(b) (Arrangement, underwriting, participation and
                     agency fees) which remains unpaid;

              (v)    fifthly,  in or towards payment to the Banks, on a pro-rata
                     basis, of any accrued  commitment  commission payable under
                     clause 7.2  (Commitment  fees)  which shall have become due
                     but remains unpaid;

              (vi)   sixthly,  in or towards payment to the Banks, on a pro-rata
                     basis, of any accrued interest, Letter of Credit commission
                     and (in the case of the  Issuing  Bank)  Letter  of  Credit
                     fronting fees or commission which shall have become due but
                     remain unpaid,  but so that any amount payable by virtue of
                     clause 8.5 (Grossing-up for Taxes) shall be excluded;

              (vii)  seventhly,  in  or  towards  payment  to  the  Banks,  on a
                     pro-rata  basis,  of any principal  which shall have become
                     due but remains unpaid;

              (viii) eighthly,  in or towards  payment to any such  Banks,  on a
                     pro-rata  basis,  of any  amount  payable  to any  Banks by
                     virtue of clause 8.5  (Grossing-up for Taxes) which remains
                     unpaid; and

              (ix)   ninthly, in or towards payment of any other sum which shall
                     have become due but remains  unpaid (and,  if more than one
                     such sum so remains unpaid, on a pro-rata basis).

       Each  reference  in clause  8.9(i) to (ix)  (inclusive)  to a category of
       unpaid sums shall include  interest  thereon  payable in accordance  with
       this Agreement  (including,  without  limitation,  default interest under
       clause 5.4 (Interest on unpaid sums)). Accordingly,  clause 8.9(vi) shall
       be construed as referring to interest on principal  and accrued  interest
       thereon which remain unpaid to the extent due.


<PAGE>
                                     - 52 -



       The order of  application  set out in this clause 8.9(v) to 8.9(ix) shall
       be varied by the Facility Agent if the Majority Banks so direct,  without
       any reference to, or consent or approval from, the Obligors.

8.10   Calculations

       All interest and other  payments of an annual nature under this Agreement
       or any of the  Finance  Documents  shall  accrue  from  day to day and be
       calculated on the basis of the actual number of days elapsed,  and in the
       case of Sterling a 365 day year and in the case of other currencies a 360
       day year (or, in any case where market  practice  differs,  in accordance
       with market  practice).  In calculating the actual number of days elapsed
       in a period  which  is one of a series  of  consecutive  periods  with no
       interval  between  them or a period on the last day of which any  payment
       falls to be made in respect of such period,  the first day of such period
       shall be included but the last day excluded.

       Where the  Applicable  Margin or Mandatory  Cost Rate changes  during any
       period,  interest and  commitment  fees shall be  calculated  on the rate
       prevailing from day to day.

8.11   Certificates prima facie evidence

       Any certificate of, or  determination  by, a Finance Party as to any rate
       of interest or any other amount  payable  under this  Agreement or any of
       the Finance  Documents  shall, in the absence of manifest error, be prima
       facie evidence of such rate or amount on each Obligor and (in the case of
       a certificate of or determination by the Facility Agent) on the Banks.

8.12   Effect of monetary union

       The provisions of clauses 8.12 (a) to (h)  (inclusive)  apply in relation
       to any amount  payable in the  currency of a  Participating  Member State
       provided  that,  if and to the extent that any  provision  relates to any
       state (or the  currency  of such  state)  which  was not a  Participating
       Member State on 1 January 1999,  such provision shall come into effect in
       relation  to such  state  (and the  currency  of such  state) on and with
       effect from the date on which such state becomes a  Participating  Member
       State.

       (a)    Redenomination and Alternative  Currencies.  Each obligation under
              this  Agreement  of a  party  to this  Agreement  which  has  been
              denominated  in the  national  currency  unit  of a  Participating
              Member  State  shall  be  redenominated  into  the  Euro  Unit  in
              accordance  with EMU  legislation,  provided  that,  if and to the
              extent that any EMU legislation  provides that following 1 January
              1999 an amount  denominated  either in the Euro or in the national
              currency unit of a  Participating  Member State and payable within
              that  Participating  Member  State by  crediting an account of the
              creditor  can be paid by the debtor  either in the Euro Unit or in
              that national currency unit, each party to this Agreement shall be
              entitled to pay or repay any such  amount  either in the Euro Unit
              or in such national currency unit.

       (b)    Advances.  Any Advance in the currency of a  Participating  Member
              State shall be made in the Euro Unit.

       (c)    Payments to the Facility Agent.  Clause 8.2 (Payments by the Banks
              or  Obligors)  shall be  construed  so that,  in  relation  to the
              payment  of any  sum  denominated  in the  Euro  or in a  national
              currency  unit,  such sum shall be made  available to the Facility
              Agent by  payment  in the Euro Unit or,  as the case may be,  such
              national currency


<PAGE>
                                     - 53 -



              unit and in immediately  available,  freely transferable,  cleared
              funds to the account notified by it under clause 8.2(a)(ii).

       (d)    Payments by the Facility Agent to the Banks. Any amount payable by
              the  Facility  Agent to the  Banks  under  this  Agreement  in the
              currency of a Participating Member State shall be paid in the Euro
              Unit.

       (e)    Payments by the Facility  Agent.  The Facility  Agent shall not be
              liable to the  Borrower or any of the Banks in any way  whatsoever
              for any delay, or the  consequences of any delay, in the crediting
              to any account of any amount required by this Agreement to be paid
              by the Facility  Agent if the Facility  Agent shall have taken all
              relevant steps to achieve, on the date required by this Agreement,
              the  payment  of such  amount  in  immediately  available,  freely
              transferable,  cleared funds (in the Euro Unit or, as the case may
              be, in a national  currency  unit) to the account with the Bank in
              the principal  financial centre in the Participating  Member State
              which any  Borrower  or, as the case may be,  any Bank  shall have
              specified for such purpose.  In this clause  8.12(e) "all relevant
              steps" means all such steps as may be prescribed from time to time
              by the  regulations  or operating  procedures  of such clearing or
              settlement  system  as the  Facility  Agent  may from time to time
              after  consultation  with  the  Primary  Borrower  and  the  Banks
              determine for the purpose of clearing or settling  payments of the
              Euro.

       (f)    Basis  of  Accrual.  If,  in  relation  to  the  currency  of  any
              Participating  Member  State,  the basis of accrual of interest or
              commitment  commission  expressed in this  Agreement in respect of
              that  currency  shall  be  inconsistent  with  any  convention  or
              practice in the London  Interbank  Market for the basis of accrual
              of interest or commitment  commission in respect of the Euro, such
              expressed basis shall be replaced by such convention or practice.

       (g)    Rounding and Other Consequential Changes. Without prejudice and in
              addition to any method of conversion or rounding prescribed by any
              EMU   legislation   and  without   prejudice  to  the   respective
              liabilities for  indebtedness of any Borrower to the Banks and the
              Banks to any  Borrower  under or pursuant to this  Agreement  (and
              after consultation with the Primary Borrower and the Banks):

              (i)    each reference in this Agreement to a minimum amount (or an
                     integral  multiple  thereof) in a national currency unit to
                     be paid to or by the Facility  Agent shall be replaced by a
                     reference  to such  reasonably  comparable  and  convenient
                     amount (or an integral  multiple  thereof) in the Euro Unit
                     as the Facility Agent may from time to time specify; and

              (ii)   save as  expressly  provided in this clause  8.12(g),  each
                     provision  of  this  Agreement  shall  be  subject  to such
                     reasonable  changes of  construction  as the Facility Agent
                     may  from  time  to  time   specify  to  be   necessary  or
                     appropriate  to  reflect  the  changeover  to the  Euro  in
                     Participating Member States.

       (h)    Amendments.  After  consultation with the Primary Borrower and the
              Banks and  notwithstanding  clause 22  (Determination of Matters),
              the  Facility  Agent  shall be  entitled to make from time to time
              such  amendments  to this  Agreement  as it may  determine in good
              faith to be necessary  to take  account of monetary  union and any
              consequent   changes  in  market  practices  (whether  as  to  the
              settlement  or  rounding  of   obligations,   the  calculation  of
              interest, place of payment or otherwise howsoever).


<PAGE>
                                     - 54 -




       Any  amendment so made to this  Agreement by the Facility  Agent shall be
       promptly  notified to the other Finance Parties and the Primary  Borrower
       by the  Facility  Agent and  shall be  binding  on all the other  Finance
       Parties and any Obligor and any other party to this Agreement.

8.13   Confirmation of end of Finance Period

       The Facility  Agent  undertakes  with the Obligors that the  confirmation
       referred to in the definition of "Finance Period" shall be given by it to
       all the other parties to this Agreement  promptly upon the Facility Agent
       determining, acting reasonably, that none of the Finance Parties and none
       of the Obligors has any actual or contingent  liabilities  or obligations
       under any of the Finance Documents.

9.     REPRESENTATIONS AND WARRANTIES

9.1    Representations and warranties

       Each Obligor for itself makes the  representation  and warranties set out
       in this clause 9 to each Finance Party.

9.2    Status

       (a)    It and each Principal  Subsidiary is duly  incorporated  under the
              laws of the jurisdiction of its incorporation and has power and is
              able lawfully to own its respective  property and assets and carry
              on its respective businesses.

       (b)    It has power and is able  lawfully  to execute  and  deliver  each
              Finance Document and to exercise its respective rights and perform
              its   respective   obligations   under  this   Agreement  and  the
              transactions contemplated hereby and all corporate or other action
              required to be taken by it in order to authorise the execution and
              delivery by it of each Finance  Document and the performance by it
              of its respective obligations has been duly taken.

9.3    Legal validity

       The Finance Documents to which it is a party constitute its legal,  valid
       and binding obligations.

9.4    Non-contravention

       The execution and delivery by it of the Finance  Documents to which it is
       a party and the  performance by it of its  obligations  under the Finance
       Documents will not:

       (a)    contravene  any  provision  of any  law,  statute  (including  the
              Electricity Act), decree, rule,  regulation or code of practice to
              which it or any of its assets or revenues  is  subject,  or of any
              order, judgement, injunction, decree, resolution, determination or
              award of any court or any judicial, administrative or Governmental
              Entity or organisation  having  applicability  to it or any of its
              assets or revenues; or

       (b)    result in any breach of any of the terms, covenants, conditions or
              provisions of, or

<PAGE>
                                     - 55 -



              constitute  a default  under,  any  indenture,  mortgage,  deed of
              trust, bond,  agreement or other instrument or obligation to which
              it is a party or by which it or any of its assets or revenues  may
              be bound or affected; or

       (c)    violate any provision of its constitutive documents.

9.5    No default

       No Default has occurred which is continuing.

9.6    Consents

       All consents, approvals,  authorisations,  exemptions,  registrations and
       filings and all acts,  conditions  and things  required  to be  obtained,
       done, fulfilled and performed in order to:

       (a)    enable it to enter into and  exercise  its rights and  perform its
              obligations under each Finance Document to which it is party; and

       (b)    make the Finance Documents legal, valid and binding and admissible
              in evidence in England and Wales,

       have been  obtained  and are in full  force and effect or have been done,
       fulfilled or performed (as the case may be).

9.7    Accounts

       The Original Group Accounts, and thereafter, the most recent consolidated
       audited  financial  statements of the Group,  were prepared in accordance
       with the Appropriate  Accounting Principles and consistently applied from
       one period to the next  (except as shown in those  financial  statements)
       and give a true and fair view of the financial  condition of, in the case
       of  the  Original   Group   Accounts,   the  Target  and  its  subsidiary
       undertakings, and in the case of subsequent accounts, of the Group, as at
       the date as of which the same were prepared.

9.8    No Material Adverse Effect

       Since 31 March 1998 there has been no change in the  business,  assets or
       condition of itself, or any other member of the Group,  having a Material
       Adverse Effect.

9.9    Litigation

       No action or proceeding of or before any court,  administrative tribunal,
       government body or regulatory authority  (including,  without limitation,
       the  Monopolies  and  Mergers  Commission  or the  Office of  Electricity
       Regulation)  has been  commenced,  or (to the best of its  knowledge)  is
       threatened  against any member of the Group  which,  in each case,  has a
       Material Adverse Effect.

9.10   Indebtedness

       Its Indebtedness  under the Finance Documents to which it is a party will
       rank at least pari passu with all its other  unsubordinated and unsecured
       Indebtedness  with the  exception of that which is preferred by operation
       of law.


<PAGE>
                                     - 56 -



9.11   No breach

       It is not in breach of or  default  under  any  agreement  to which it is
       party or which is binding on it or any of its assets to an extent or in a
       manner which has a Material Adverse Effect.

9.12   No encumbrance

       No  Security  Interest  exists  over all or any of the  present or future
       revenues  or  assets  of any  member  of the  Group,  save for  Permitted
       Security Interests.

9.13   No obligation to create encumbrance

       The execution of the Finance Documents and the exercise of its rights and
       performance  of  its  obligations  thereunder  will  not  result  in  the
       existence  of nor oblige it to create any Security  Interest  over all or
       any of its present and future  revenues or assets other than in favour of
       the Finance Parties.

9.14   Licences

       Each Licensee has been duly licensed to conduct its business as presently
       conducted,  no  notice  has  been  given to  revoke  any  Licence  and no
       modification  of or amendment to any of the terms of any Licence has been
       made or proposed by the  Secretary of State or any other person  having a
       right to do so which has a Material Adverse Effect.

9.15   No contravention of licences

       No  Licensee  is in  contravention  of  any  term  or  condition  of  its
       Licence(s) or any  requirement of the  Electricity Act or any regulations
       made thereunder or any other statutory  requirement or any final order or
       confirmed  provisional  order  made  under  the  Electricity  Act  or any
       undertaking given by it to the Director General or the Secretary of State
       in  relation to the  conduct of its  business  as a  generator  or Public
       Electricity Supplier,  which contravention and/or any consequence thereof
       has a Material Adverse Effect.

9.16   Electricity supply

       REC or the relevant  Licensee has been duly  licensed by the Secretary of
       State as the Public  Electricity  Supplier (as defined in the Electricity
       Act) to supply  electricity to any premises in the area designated in the
       PES Licence and is duly  licensed  to conduct its  business as  presently
       conducted and the PES Licence is in full force and effect and neither the
       Director  General nor the  Secretary  of State has given  notice to it to
       revoke  the PES  Licence  except  in  circumstances  where a  replacement
       Licence for the distribution  and/or supply of electricity is or is to be
       granted to any other member of the Group.

9.17   No modification of PES Licence

       No  modification  or amendment of any of the terms of the PES Licence has
       been made or proposed by way of consideration  with interested parties by
       the Director General or the Secretary of State pursuant to Section 11, 14
       or 15 of the Electricity Act or in accordance with the conditions set out
       in the PES Licence which has a Material Adverse Effect.


<PAGE>
                                     - 57 -



9.18   No variation of authorised area

       No variation of the  authorised  area in respect of which the PES Licence
       has been  granted  has been  made  pursuant  to  Section  6(1)(c)  of the
       Electricity Act which has a Material Adverse Effect.

9.19   Environmental law

       There has been no  non-compliance  by any  member  of the Group  with any
       applicable  environmental  or  safety  law  applicable  to it which has a
       Material Adverse Effect.

9.20   Wholly-owned Subsidiary

       REC,  Eastern  Group  plc and each  Guarantor  (other  than  the  Primary
       Borrower and Finco 2), if any, is a wholly-owned Subsidiary of Finco 2.

9.21   No dispute

       There is no dispute subsisting between any Obligor and any other party to
       any of the Finance Documents and no material amendments have been made to
       any of the Finance Documents without the consent of the Facility Agent.

9.22   Year 2000

       Neither:

       (a)    the  year  2000  problem  (that  is the  risk  that  any  computer
              equipment  (including  both  hardware  or  software)  or any other
              equipment  operated by  electronic  means used by the Group may be
              unable to recognise and perform properly date-sensitive  functions
              involving a date before, on or after 31 December 1999); nor

       (b)    the cost to the Group of:

              (i)    any  reprogramming  or testing  required to ensure that any
                     reference  to or use  of a  date  before,  on or  after  31
                     December 1999 in the operation of such equipment; or

              (ii)   the reasonably  foreseeable  consequences  of the year 2000
                     problem  (including,   without  limitation,   reprogramming
                     errors and the failure of others' systems or equipment);

       is reasonably likely to have a Material Adverse Effect.

9.23   Times for making representations and warranties

       The representations and warranties set out in this clause 9:

       (a)    are made by each Obligor on the date of this Agreement; and

       (b)    are  deemed to be  repeated  by each  Obligor  on the date of each
              Notice of Drawdown, Utilisation and the first day of each Interest
              Period with reference to the facts and circumstances then existing
              (other than in the case of any representation and warranty


<PAGE>
                                     - 58 -



              as  to  the  Group's  audited  financial   statements  where  such
              representation  and  warranty  shall  be  read  and  construed  as
              referring  to the  Group's  then  most  recent  audited  financial
              statements,  including  notes to such  statements)  save  that the
              following  representations shall not be repeated:  clauses 9.5 (No
              default), 9.8 (No material adverse effect), 9.9 (Litigation), 9.12
              (No  encumbrance)  9.13 (No obligation to create  encumbrance) and
              9.21 (No Dispute).

9.24   Obligors' Acknowledgement

       Each  Obligor  party  hereto  acknowledges  that the Finance  Parties are
       relying  on the  representations  and  warranties  but  not on any  other
       information  contradictory  to them or varying  them of which the Finance
       Parties or any of them or their  respective  agents or advisers  may have
       actual or constructive knowledge.


10.    INFORMATION UNDERTAKINGS

10.1   Undertakings

       Each of the Obligors (for itself) or as applicable the specified  Obligor
       gives  the  undertakings  in  this  clause  10  and  clause  11  (General
       Undertakings) to each Finance Party (such undertakings to remain in force
       throughout the Finance Period).

10.2   Preparation of financial statements

       The Primary Borrower will:

       (a)    Annual audited financial statements:  beginning with the financial
              year ending 31 December 1998, prepare financial  statements (which
              shall in any  event  include  a  balance  sheet,  profit  and loss
              account, statement of total recognised gains and losses, cash flow
              statement, and notes to such statements) in respect of:

              (i)    itself and consolidated  financial statements in respect of
                     the Group; and

              (ii)   consolidated financial statements of Finco 2;

              in  accordance   with  the   Appropriate   Accounting   Principles
              (consistently applied) in respect of each financial year and cause
              the same to be reported on by the Auditors; and

       (b)    Quarterly financial statements: prepare:

              (i)    unaudited consolidated financial statements (which shall in
                     any event include a balance sheet,  profit and loss account
                     and cash flow statement) of the Group; and

              (ii)   consolidated financial statements (which shall in any event
                     include a balance  sheet,  profit and loss account and cash
                     flow  statement) of Finco 2 (together with (aa) a pro forma
                     consolidation with the Subsidiaries of the Primary Borrower
                     which  are  not  Finco  2 or its  Subsidiaries  and  (bb) a
                     notification setting out any changes in the identity of the
                     Principal  Subsidiaries  (or, if there are no  changes,  so
                     stating),


<PAGE>
                                     - 59 -



              in respect of each Quarter in each  financial  year in  accordance
              with the Appropriate Accounting Principles  (consistently applied)
              in a form reasonably agreed with the Facility Agent.

10.3   Delivery of financial statements

       The Primary  Borrower  will  deliver,  or will procure  delivery,  to the
       Facility  Agent  sufficient  copies  for  all  the  Banks  of each of the
       following documents:

       (a)    Annual audited  financial  statements:  (i) within fifteen days of
              issue  thereof to the  shareholders  of the Primary  Borrower  and
              Finco 2, but in any event not later than 180 days after the end of
              the  financial  year to which they relate,  sufficient  copies for
              distribution  to  all  of  the  Banks  of  the  audited  financial
              statements referred to in clause 10.2(a) (Annual audited financial
              statements)  for each financial year together,  in each case, with
              the  report  of the  Auditors  thereon,  the  notes  thereto,  the
              directors'  report  thereon  and the  certificate  referred  to in
              clause 10.3(c) (Compliance with Financial  Undertakings) and (ii),
              in respect of the Parent,  its annual accounts most recently filed
              with the US Securities and Exchange Commission;

       (b)    Unaudited management accounts: (i) within 60 days after the end of
              each  Quarter  in  each  financial  year,  sufficient  copies  for
              distribution  to all of the Banks of the  consolidated  management
              accounts for the Group and for Finco 2 (together  with a pro forma
              consolidation  of all the Subsidiaries of the Primary Borrower and
              the  notification  referred  to  in  clause  10.2  (b)  (Quarterly
              financial  statements))  in respect of such  Quarter  prepared  in
              accordance  with the  requirements  of clause  10.2(b)  (Quarterly
              financial  statements)  together  with (in relation to the Quarter
              ending December 1998 and  thereafter) the certificate  referred to
              in clause 10.3(c)  (Compliance with Financial  Undertakings)  and,
              (ii) in the  case  of the  Parent,  its  quarterly  accounts  most
              recently filed with the US Securities and Exchange Commission from
              time to time;

       (c)    Compliance with Financial Undertakings:  with each set of accounts
              delivered by it under clauses 10.3(a)  (Annual  audited  financial
              statements)  and (b)  (Unaudited  management  accounts)  above the
              Primary  Borrower will deliver to the Facility Agent a certificate
              signed by a director of the Primary Borrower:

              (i)    confirming  compliance  or  otherwise  with  the  financial
                     undertakings  in clause 11.1  (Financial  Ratios) as at the
                     end of the relevant Test Period; and

              (ii)   setting out in reasonable detail and in a form satisfactory
                     to the Facility Agent the  computations  (including for the
                     purpose of the Leverage  Ratio a detailed  statement of the
                     calculation  of Adjusted  Share  Capital and  Reserves  and
                     Consolidated Net Borrowings)  necessary to demonstrate such
                     compliance or otherwise.

              The  Facility  Agent  may  from  time to time  request  a  further
              director's  certificate  setting  out  in  reasonable  detail  the
              calculation of the Leverage Ratio (including a detailed  statement
              of the  calculation  of Adjusted  Share  Capital and  Reserves and
              Consolidated Net Borrowings) if the Facility Agent is requested to
              do so by the Majority Banks or if, acting reasonably, the Facility
              Agent  determines  that the amount of Adjusted  Share  Capital and
              Reserves and Consolidated Net Borrowings may have


<PAGE>
                                     - 60 -



              changed   materially   since  the  date  of  the  last  compliance
              certificate. The Primary Borrower shall provide such a certificate
              within ten Banking Days of any such request.

       (d)    PES Regulatory Accounts:  as soon as practicable after their issue
              to the relevant  Government Entity or regulator,  all accounts and
              other financial statements or financial information required under
              any law or  regulation  to be provided to any  Government  Entity,
              industry regulator or similar body or person and which are thereby
              placed in the public domain;

       (e)    Reports  and notices to  shareholders  and  creditors:  as soon as
              practicable after the issue thereof every report, circular, notice
              or like document  issued by the Primary  Borrower,  Finco 2 and/or
              Bidco to its shareholders or creditors  generally and every notice
              convening  a  meeting  of its  shareholders  or any  class  of its
              shareholders; and

       (f)    Further   information:   promptly  upon   request,   such  further
              information concerning the financial position of the Group (or any
              member of it) as the Facility Agent shall reasonably require.

10.4   Notice of Default

       Each Obligor will inform the Facility  Agent promptly upon becoming aware
       of the occurrence of any material  Default or any actual Event of Default
       and,  upon receipt of a request to that effect from the  Facility  Agent,
       confirm to the  Facility  Agent and the Banks  that,  save as  previously
       notified to the Facility  Agent or as notified in such  confirmation,  no
       Default has occurred which is continuing.

11.    GENERAL UNDERTAKINGS

11.1   Financial ratios

       (a)    The Primary  Borrower  will procure that,  throughout  the Finance
              Period:

              (i)    for each Test  Period,  the ratio of EBITDA to Net Interest
                     Costs is not less than 2:1;

              (ii)   at all  times  the  Leverage  Ratio  is not  more  than 70%
                     although  the  Leverage  Ratio  shall  be  tested  only  by
                     reference to the compliance  certificate provided quarterly
                     with the un-audited management accounts unless the Facility
                     Agent  shall at any time  exercise  the right to  request a
                     further  certificate  in  accordance  with  clause  10.3(c)
                     (Compliance with Financial Undertakings).

       (b)    Where a Test Period commenced prior to 19 May 1998 the calculation
              of the Financial Definitions shall be amended so that:

              (i)    for the  purposes of  calculating  Net  Interest  Costs the
                     whole  amount  of  the   Advances   drawn  down  and  other
                     Utilisations  as at the  end of the  relevant  Test  Period
                     shall be  deemed to have been made on the first day of such
                     Test Period and no amount in respect of Net Interest  Costs
                     attributable to Indebtedness  which, by the last day of the
                     Test Period,  has been  refinanced in  connection  with the
                     Acquisition shall be brought into account; and

              (ii)   for  all  purposes  the  Peabody  Companies  and  the  coal
                     business conducted by


<PAGE>
                                     - 61 -



                     them will be deemed not to have been part of the Group, nor
                     shall they be included in the Group's consolidated results.

11.2   Change of Accounting policies

       (a)    The Primary Borrower and the Facility Agent hereby undertake that,
              in the event that:

              (i)    there is a change  in the  manner  in which  the  financial
                     statements  in  clause  10.2   (Preparation   of  Financial
                     Statements) are prepared or in the accounting principles or
                     standards  applied in the  preparation  of those  financial
                     statements; and

              (ii)   such change  affects the amounts  utilised for the purposes
                     of determining  whether or not an Obligor has complied with
                     the covenants contained in clause 11.1 (Financial Ratios);

              they  will  renegotiate  each of the  covenants  affected  by such
              change  with a view to  putting  in place  covenants  that  fairly
              reflect that change.

       (b)    In the event that the  Primary  Borrower  and the  Facility  Agent
              (acting in accordance with the instructions of the Majority Banks)
              fail to  agree on the  revised  terms  of the  covenants  within 5
              Banking  Days,  the matter may be referred  by either  party to an
              independent  firm of chartered  accountants  agreed by the Primary
              Borrower and the Facility  Agent  (acting in  accordance  with the
              instructions  of the  Majority  Banks) or, in default of agreement
              within 10 Banking  Days after the expiry of the previous 5 Banking
              Day  period,  to an  independent  firm  of  chartered  accountants
              nominated by the  President for the time being of the Institute of
              Chartered  Accountants in England and Wales, on the application of
              the Borrower or the Facility Agent (acting in accordance  with the
              instructions  of the  Majority  Banks),  and in either case at the
              expense of the Primary Borrower.

       (c)    The firm so agreed or nominated  shall act as expert and not as an
              arbitrator and shall be instructed to provide its decision  within
              30 days of its appointment and its decision concerning the revised
              terms of the  covenants  will, in the absence of fraud or manifest
              error, be final and binding.

       (d)    If the ratio of EBITDA to Net Interest  Costs under clause 11.1(a)
              above is less than 2:1 due to the payment or proper accrual of any
              exceptional,    special   or   windfall   tax   or   levy,   then,
              notwithstanding  the  provisions of clause 12 (Events of Default),
              no Event of Default shall occur as a result thereof except:

              (i)    the Borrower and the Facility  Agent  (acting in accordance
                     with the  instructions of the Majority Banks) shall consult
                     for a period not  exceeding 30 days with a view to agreeing
                     a revised basis for  calculation  of the ratio or a revised
                     ratio; and

              (ii)   the  failure  to agree a basis  for such  calculation  or a
                     revised  ratio  by the  end of  that  30-day  period  shall
                     constitute an Event of Default under clause 12.1(b) (Breach
                     of  other  obligations)  which,  for the  purposes  of that
                     clause, shall not be capable of remedy.


<PAGE>
                                     - 62 -



11.3   Authorisation

       Each Obligor shall obtain and comply with and do all that is necessary to
       maintain in full force and effect all consents, authorisations, approvals
       and licences required by law or regulation to enable it to enter into and
       perform  its  obligations  under the Finance  Documents  to which it is a
       party or to ensure their legality, validity or admissibility in evidence.

11.4   Disposals

       No Obligor  shall,  and the Primary  Borrower  will procure that no other
       member of the Group will,  (either in a single transaction or in a series
       of  transactions,  whether  related or not)  sell,  convey,  transfer  or
       otherwise dispose of:

       (a)    any  shares in Finco 2,  Bidco,  The Energy  Group  Limited or any
              Principal Subsidiary;

       (b)    any loans to or other claims on any Principal Subsidiary;

       (c)    the whole or a substantial  part of the  undertaking  or assets of
              (i) the Distribution Business or (ii) the Generation Business as a
              whole; or

       (d)    any other significant assets.

       The restrictions will not apply:

       (i)    with  respect to  paragraph  (c) above to (A) the  expenditure  or
              application of cash, or (B) any disposal in the ordinary course of
              business  (including by way of securitisation) or (C) any disposal
              where  the  net  book  value  of  the  assets  disposed  of,  when
              aggregated  with the net book  value of any other  assets  forming
              part of the  Distribution  Business  or (as the  case  may be) the
              Generation  Business  disposed of  otherwise  than in the ordinary
              course  of  operating  the  respective   businesses  in  the  same
              financial  year of the  Group,  does not exceed 10 per cent of the
              Distribution  Business  Tangible  Net  Worth or 10 per cent of the
              Generation Business Tangible Net Worth (as the case may be) at the
              end of the previous financial year;

       (ii)   to a disposal made by any member of the Group to another member of
              the Group; or

       (iii)  with  respect to  paragraph  (d) above,  to any  disposal  on arms
              length terms (including by way of securitisation); or

       (iv)   to any sale,  conveyance,  transfer or other disposal with respect
              to the King's  Lynn  generating  facility  which  otherwise  would
              infringe  sub-clause (iii) above provided that none of the parties
              to any such  transaction is a Relevant  Person or Project  Finance
              Subsidiary.

11.5   Negative pledge

       No Obligor shall,  and the Primary Borrower will procure that none of its
       Subsidiaries shall:

       (a)    create or permit to subsist  any  Security  Interests  (other than
              Permitted  Security  Interests)  upon the whole or any part of its
              present or future revenues or assets; or


<PAGE>
                                     - 63 -



       (b)    (i)    sell, transfer or otherwise dispose of any of its assets on
                     terms whereby it is or may be leased to or re-acquired by a
                     member of the Group or any of its Associated Companies; or

              (ii)   sell,   transfer  or  otherwise   dispose  of  any  of  its
                     receivables  on  recourse  terms  (save  for  recourse  for
                     disputed or ineligible debts or similar rights of recourse)
                     except  for  the  discounting  of  bills  or  notes  in the
                     ordinary course of trading,

              in  circumstances  where the transaction is entered into primarily
              as a method of raising  finance or of financing the acquisition of
              an asset,  unless  the  aggregate  disposal  proceeds  of all such
              transactions  during any Accounting  Reference Period is less than
              (pound)50,000,000,   provided  that  the   restriction  in  clause
              11.5(b)(i)  above  shall not apply to any sale,  transfer or other
              disposal  and  leaseback  or  re-acquisition  with  respect to the
              King's Lynn generating facility for so long as none of the parties
              to any such  transaction is a Relevant  Person or Project  Finance
              Subsidiary.

11.6   Pari passu Indebtedness

       Each  Obligor  shall  ensure  that its  Indebtedness  under  the  Finance
       Documents  to which it is a party  will rank at least pari passu with all
       its other unsubordinated and unsecured Indebtedness with the exception of
       that preferred by operation of law.

11.7   Guarantees and distributions

       No Obligor shall,  and the Primary Borrower will procure that none of its
       Subsidiaries shall:

       (a)    give any guarantee,  indemnity or other legally binding  assurance
              against  loss to any person  (other than a member of the Group) in
              respect of the obligations of any Relevant Person;

       (b)    enter into any transaction under which (or do anything as a result
              of or by which) cash or other assets are transferred by or from it
              to any Relevant Person;

       provided that this clause 11.7 shall not prohibit:

              (i)    provided  that no Default is  outstanding  or would  result
                     from  the  dividend,   distribution   or   provision,   the
                     declaration,  payment or making of any lawful  dividends or
                     other distributions or the provision of loans,  deposits or
                     other  credit  but  excluding   guarantees  or  indemnities
                     entered into in favour of or in respect of the indebtedness
                     of any Relevant Person or  distributions as a result of any
                     reduction in share capital; or

              (ii)   anything  done  pursuant to a  transaction  entered into on
                     terms no more onerous to the  relevant  member of the Group
                     than a transaction entered into on an arm's length basis on
                     normal commercial terms.

11.8   Licensees

       (a)    In so far as is  necessary to prevent a Material  Adverse  Effect,
              each Obligor shall take, and procure that each Licensee takes, all
              appropriate  steps efficiently to perform and discharge its duties
              and functions in accordance with the provisions of the Electricity
              Act,  the  terms  and  conditions  of the  relevant  Licence,  the
              provisions of any final order

<PAGE>
                                     - 64 -



              or confirmed  provisional order made under the Electricity Act and
              all  undertakings  (if any)  given by a Licensee  to the  Director
              General  and/or the  Secretary  of State in respect of the matters
              referred to in Section 25(5) of the Electricity Act.

       (b)    The Primary  Borrower shall promptly  inform the Facility Agent of
              any material  undertaking  given by any member of the Group to the
              Director General and/or the Secretary of State.

       (c)    The Primary  Borrower  shall,  forthwith upon receipt of the same,
              deliver to the Facility Agent in sufficient  copies for the Banks,
              copies of all notices or orders  served on any member of the Group
              by the Director  General or the  Secretary of State in exercise of
              the powers  conferred on him by the  Electricity  Act and keep the
              Facility  Agent  informed of any  references to the Monopolies and
              Mergers  Commission  or the exercise or purported  exercise by the
              Secretary of State or the Director General of the powers conferred
              on him by the Fair  Trading  Act 1973,  the  Competition  Act 1980
              and/or Section 12 of the Electricity Act.

       (d)    The Primary Borrower shall procure that the relevant Licensee will
              not consent to any  revocation of the PES Licence  (except where a
              public  electricity  supply  licence is granted to a member of the
              Group in its place) or to any material  modification  or amendment
              to or  restriction  in the terms and conditions of the PES Licence
              if such revocation,  modification,  amendment or restriction ought
              to have a Material Adverse Effect.

       (e)    The Primary  Borrower  shall ensure at all times that the Licensee
              under the PES Licence has  sufficient  working  capital to finance
              the   performance   and  discharge  of  its  duties  as  a  Public
              Electricity  Supplier in  accordance  with the  provisions  of the
              Electricity Act and the terms and conditions of the PES Licence.

11.9   No outstanding loans

       The  Primary   Borrower  shall  procure  that  (except  for   investments
       constituting  Liquid Assets) no Licensee will have outstanding at any one
       time any loans to (other  than  deposits  with,  or  investments  in debt
       instruments of, any institution authorised under the Banking Act 1987, or
       the Building Societies Act 1986 or any European Authorised Institution as
       defined in the Banking Act 1987) or  investments in any person other than
       a member of the Group in excess of an aggregate of (pound)5 million.

11.10  Environmental and safety laws

       Each Obligor  shall,  and the Primary  Borrower  shall  procure that each
       other member of the Group will,  comply with any  environmental or safety
       laws  applicable  to it where  failure  to do so has a  Material  Adverse
       Effect.

11.11  Insurance

       Each Obligor  shall,  and the Primary  Borrower  shall  procure that each
       member of the Group will have insurance and maintain insurance in respect
       of property damage, third party liability and such other risks in respect
       of its business and assets is in accordance with good industry practice.

11.12  Generation Business


<PAGE>
                                     - 65 -




       The Primary  Borrower  shall  procure that any Licensee from time to time
       licensed to carry on the whole or part of the  Generation  Business  will
       not consent to any revocation of the relevant  Generation Licence (except
       where a  Generation  Licence  is  granted to a member of the Group in its
       place) or to any material  modification or amendment to or restriction in
       the terms and conditions of such Generation  Licence if such  revocation,
       modification,  amendment or restriction  might  reasonably be expected to
       have a Material Adverse Effect.

11.13  Business of REC

       Each Obligor  shall procure that the REC will not enter into or engage in
       any business or activity  other than the Supply  Business,  a Second-Tier
       Supply Business or the Distribution Business or the business of a holding
       company of the  company  carrying  on any such  business,  other than any
       business  or  activity  the  aggregate  turnover of which does not in any
       financial year exceed 5 per cent. of the aggregate turnover of the Supply
       Business, the Second-Tier Supply Businesses and the Distribution Business
       (excluding the turnover on transactions which the Supply Business, any of
       the Second-Tier  Supply Businesses and/or the Distribution  Business made
       with each other) in the immediately preceding financial year.

11.14  Change in business

       No Obligor  shall,  and the Primary  Borrower  will procure that no other
       member of the Group shall,  carry on any business  other than those which
       are usual for energy  companies  and  electricity  companies  (including,
       without limitation,  electricity distribution,  supply and generation and
       energy   trading   and   business   activities   related   to  the   gas,
       telecommunications  and water  industries) in Europe or the business of a
       holding  company of any company  carrying on any such business.  Provided
       that the limitation of business activities contained in this clause 11.14
       will not apply to any other business  activities carried on by members of
       the Group as long as such other  business  activities do not in aggregate
       account  for  more  than  10%  of  the   consolidated   gross  assets  or
       consolidated  gross  revenues of the Group (as  calculated  in accordance
       with the Appropriate Accounting Principles).

11.15  Functions of the Primary Borrower

       (a)    The Primary  Borrower  shall not carry on any business  other than
              being the holding  company of the Group (and any  Project  Finance
              Subsidiaries)  and anything  ancillary to any of the other matters
              described in this clause 11.15.

       (b)    The Primary  Borrower shall not own any material assets other than
              any Liquid Assets held by it from time to time,  its  shareholding
              in Finco 2 and its  direct or  indirect  interest  in all SPVs and
              holding  companies of SPVs (provided always that each such holding
              company's  sole  purpose  is to hold  directly  or  indirectly  an
              interest in an SPV and, if applicable, act as a conduit as between
              the SPV and the Primary  Borrower  for any sums lent or arising in
              connection  with the  SPV's  issue or  issues  of  capital  market
              instruments), and Indebtedness due to the Primary Borrower.

       (c)    The Primary  Borrower shall not incur any liabilities  (whether or
              not in connection with Borrowed Money) other than:

              (i)    as  a  result  of   borrowing   under  this   Agreement  or
                     liabilities  otherwise  incurred  in  connection  with this
                     Agreement or the  Original  Facilities  Agreement,  or as a
                     result of borrowing  (subject,  in the case of any proposed
                     Borrowed Money


<PAGE>
                                     - 66 -



                     from Finco 2 or Bidco,  to clause  11.18  (Indebtedness  of
                     Finco 2 to the Primary  Borrower  and of Bidco to Finco 2))
                     from other members of the Group or other persons  (provided
                     that each amount  borrowed  other than  borrowings  falling
                     within  clause 4.3 (d) (ii)  (Utilisations  generally),  is
                     on-lent to Finco 2), or liabilities  incurred in connection
                     with the Acquisition; or

              (ii)   incurred  as a result of the Primary  Borrower's  existence
                     and  administrative  operation in accordance with the terms
                     of this Agreement, including, without limitation, audit and
                     legal fees,  taxation and other expenses  incurred by it in
                     acting as contemplated by this Agreement; or

              (iii)  under any  guarantee,  indemnity or similar  instrument  in
                     respect of Borrowed Money incurred by: (aa) a member of the
                     Group  which  is,  and  for  so  long  as  such  guarantee,
                     indemnity or similar instrument is outstanding,  remains, a
                     holding company of the REC, or (bb) an SPV; or

              (iv)   under  any  guarantee,  undertaking,  performance  bond  or
                     similar  instrument or obligation,  not being in respect of
                     Borrowed  Money,  in  respect  of  the  liabilities  and/or
                     obligations of members of the Group; or

              (v)    under  any  guarantee  given  by the  Primary  Borrower  in
                     replacement  of, or in respect of the same  obligations  as
                     are guaranteed  under,  certain  guarantees given by Energy
                     Holdings (No. 3) Limited (formerly The Energy Group PLC) on
                     or prior to 22 October  1998 in respect of the  obligations
                     of  former  direct  and  indirect  Subsidiaries  of  Energy
                     Holdings (No. 3) Limited.

11.16  Derivative Transactions

       No Obligor  shall,  and the Primary  Borrower  will procure that no other
       member of the Group shall,  enter into any Derivatives  Transaction other
       than:

       (a)    in connection with the management of foreign  currency or interest
              rate exposures likely to be incurred in the conduct of the Group's
              business or that of any Project Finance Subsidiary, and/or

       (b)    any  contracts  where the exposure is  principally  related to the
              future generation,  availability,  supply, distribution or pricing
              of fuel, power or energy, or other energy-related risks.

11.17  Project Finance Subsidiaries

       All transactions  and arrangements  between the Group on the one hand and
       Project Finance  Subsidiaries  (or members of the Group who incur Project
       Finance  Borrowings  falling  within  paragraph (c) of the  definition of
       Project  Finance  Borrowing  but only in  connection  with the Project to
       which such Project Finance Borrowing directly relates) on the other shall
       be (a) on arm's  length  terms,  and (b) to the extent that they  involve
       liability  of, or  recourse  to the Group in respect of  Indebtedness  to
       finance or refinance, or in respect of the financing or refinancing of, a
       Project,  such  liability  or recourse  shall be limited to the degree of
       recourse described in paragraph (c) of the definition of "Project Finance
       Borrowing"  unless the Primary  Borrower shall promptly on the incurrence
       of such liability or right of recourse notify the Facility Agent that the
       relevant Project Finance Borrowing which is the subject of such liability
       or right of recourse shall have ceased or shall  thereupon  cease to be a
       Project Finance


<PAGE>
                                     - 67 -



       Borrowing,  attaching a detailed  re-calculation  of the  Leverage  Ratio
       showing the effect of such re-designation.

11.18  Indebtedness of Finco 2 to the Primary Borrower and of Bidco to Finco 2

       (a)    Until the Excess Equity Funding shall have been repaid in full the
              Primary Borrower will procure that:

              (i)    Finco 2 will not  repay,  forgive  or novate  nor shall the
                     Primary  Borrower  accept  the  repayment  or  novation  of
                     amounts outstanding from Finco 2 to the Primary Borrower if
                     and  to  the  extent  that  such  repayment,   novation  or
                     forgiveness of any indebtedness  from time to time due from
                     Finco 2 to the Primary  Borrower (after  application of the
                     proceeds of such repayment,  forgiveness or novation by the
                     Primary  Borrower)  would  result (and shall ensure that it
                     does  not  subsequently  result)  in the net  amount  owing
                     (including any accrued  interest) by Finco 2 to the Primary
                     Borrower  falling  short  of  the  aggregate  of  the  Term
                     Advance,  the  Revolving  Advances  and all other  Borrowed
                     Money of the Primary Borrower by more than(pound)25,000,000
                     (without double counting where Borrowed Money guaranteed by
                     the Primary Borrower is also lent to it) (including in each
                     case any  accrued  interest)  unless the  Primary  Borrower
                     shall  immediately  repay an equivalent  amount of the Term
                     Advance  and  to  the  extent  that  no  Term   Advance  is
                     outstanding,  repay an  equivalent  amount of the Revolving
                     Credit Facility; and

              (ii)   Bidco will not repay Finco 2 amounts outstanding from Bidco
                     to Finco 2 if and to the extent that such repayment  (after
                     application  of the  proceeds of such  repayment by Finco 2
                     and, in due course, the Primary Borrower) would result (and
                     shall ensure that it does not  subsequently  result) in the
                     net amount owing (including any accrued  interest) by Bidco
                     to Finco 2 when aggregated with Bidco's liability under the
                     Bidco-Primary  Borrower  Guarantee  falling  short  of  the
                     aggregate  of the Term Advance and the  Revolving  Advances
                     and all other  Borrowed  Money of the  Primary  Borrower by
                     more  than(pound)25,000,000  (without double counting where
                     Borrowed Money  guaranteed by the Primary  Borrower is also
                     lent to it) (including in each case accrued  interest) and,
                     without  double  counting,   Finco  2  unless  the  Primary
                     Borrower shall  immediately  repay an equivalent  amount of
                     the Term  Advance and to the extent that no Term Advance is
                     outstanding,  repay an  equivalent  amount of the Revolving
                     Credit Facility; and

              (iii)  the Bidco-Primary Borrower Guarantee will not be released.

       (b)    After the Excess  Equity  Funding  has been repaid in full Finco 2
              will not repay,  forgive or novate nor shall the Primary  Borrower
              accept the repayment or novation of amounts outstanding from Finco
              2 to the Primary Borrower if and to the extent that such repayment
              (after  application  of the  proceeds  of  such  repayment  by the
              Primary  Borrower) would result (and shall ensure that it does not
              subsequently  result)  in the  net  amount  owing  (including  any
              accrued interest) by Finco 2 to the Primary Borrower falling short
              of the  aggregate of the Term Advance and the  Revolving  Advances
              and all other Borrowed Money of the Primary  Borrower by more than
              (pound)25,000,000  (without  double  counting where Borrowed Money
              guaranteed by the Primary  Borrower is also lent to it) (including
              in each case any accrued  interest)  unless the  Primary  Borrower
              shall immediately repay an equivalent amount of the Term Advance


<PAGE>
                                     - 68 -



              and to the extent that no Term  Advance is  outstanding,  repay an
              equivalent amount of the Revolving Credit Facility.

       (c)    Once the Term  Advance has been repaid in full and no other amount
              is due  owing  or  incurred  by the  Primary  Borrower  under  the
              Facilities  none of the  restrictions  in this clause  11.18 shall
              apply until and unless the Primary Borrower shall draw any further
              Revolving Advance and for so long as any such Revolving Advance is
              outstanding.

       (d)    Any amount  which  purports to be lent from Finco 2 to the Primary
              Borrower  shall  for the  purpose  of this  clause be deemed to be
              applied in repayment of any existing indebtedness due from Finco 2
              to the Primary Borrower at the relevant time and the provisions of
              this  clause  shall  therefore  apply to the  lending  of any such
              amount exactly as if it had been a repayment of debt.

       (e)    The liability of Bidco under the Bidco-Primary Borrower guarantee,
              shall at all times  before  the  Excess  Equity  Funding  has been
              repaid  in full be  expressed  to be  equal to the  amount  of all
              intercompany  loans from the Primary  Borrower to Finco 2 provided
              always that the total amount claimable shall be the aggregate of:

              (i)    the difference between the intercompany  indebtedness owing
                     by Finco 2 to the  Primary  Borrower  and the  intercompany
                     indebtedness owing by Bidco to Finco 2; and

              (ii)   such additional amount as would give the Primary Borrower a
                     claim on Bidco which will  compensate the Primary  Borrower
                     for the dilutive effect of Finco 2 having other creditors;

              Bidco shall not lend any amount to the Primary  Borrower  directly
              until the Excess Equity Funding has been repaid.

       (f)    Any  amount  lent down by the  Primary  Borrower  to Finco 2 which
              represents   the  on-lending  of  Borrowed   Monies   incurred  or
              guaranteed  by the Primary  Borrower (the  "Connected  Borrowing")
              shall bear a rate of interest at least equal to that applicable to
              the Connected Borrowing from time to time.

       (g)    The Primary  Borrower  shall procure that each loan owing from The
              Energy Group Limited to Energy Group  Overseas B.V.  ("EGO B.V."),
              which  originally  came into  being as a result of the  on-lending
              through the Group of the  proceeds of the  issuance by EGO B.V. of
              $500,000,000   aggregate   principal   amount  of  unsecured  debt
              securities  ("Yankee  Bonds")  in October  1997  carries a rate of
              interest  at least equal to that of the  respective  series of the
              Yankee Bonds and is not discharged, novated or assigned in any way
              which would either:

              (i)    cause the ultimate  obligor to be a company  which is not a
                     holding company of the REC; or

              (ii)   cause the  ultimate  beneficiary  of the  series of related
                     indebtedness  to be a person  other than the Group  Company
                     which is the obligor under the Yankee Bonds.


<PAGE>
                                     - 69 -



11.19  Ranking of bond issuer

       (a)    Where the Primary  Borrower  issues a guarantee of the obligations
              of an SPV in respect of a raising  of  Borrowed  Money by that SPV
              the  amount  raised by such SPV shall be  on-lent  to the  Primary
              Borrower on terms that the obligations of the Primary  Borrower in
              respect of repayment of that loan are  expressly  subordinated  to
              the claims of all other unsecured and unsubordinated  creditors of
              the Primary Borrower in the event of the insolvency of the Primary
              Borrower or such loan is made on such terms as are, in the opinion
              of the Facility  Agent (acting  reasonably),  effective to provide
              that the  creditors of the SPV under the relevant  capital  market
              instrument  will not (after taking  account of the  possibility of
              the SPV making an intra-group  claim against the Primary Borrower,
              in  addition to the claim of the  creditors  of such SPV under the
              Primary  Borrower's  guarantee) become entitled to a claim against
              the Primary  Borrower  that ranks  better than pari passu with the
              claims of the Finance  Parties  under the Finance  Documents  on a
              liquidation of the Primary Borrower.

       (b)    Where the SPV is an  unlimited  company (or any other entity whose
              immediate  owner would have unlimited  liability for that entity's
              liabilities and obligations),  the Primary Borrower shall hold its
              interest in the SPV indirectly,  by virtue of the Primary Borrower
              being  the  holder  of the  issued  share  capital  of one or more
              private  limited  companies (or any other entities whose immediate
              owner would have limited  liability (by  reference  only to unpaid
              share capital or a similar concept) for that entity's  liabilities
              or obligations) which is the direct or indirect owner of such SPV.

       (c)    The Primary Borrower shall ensure that no Group Company other than
              the Primary  Borrower or any holding  company of the  relevant SPV
              shall:

              (i)    transfer cash or assets to an SPV or holding  company of an
                     SPV; or

              (ii)   give any  guarantee,  indemnity or other  assurance for the
                     obligations of an SPV or holding  company of an SPV, unless
                     the Facilities shall simultaneously be equally and rateably
                     secured by a guarantee from the same Group Company.

       (d)    The Primary  Borrower  shall not and shall  ensure that no holding
              company of the relevant SPV shall:

              (i)    transfer cash or assets to an SPV or holding  company of an
                     SPV save only to the extent  required to service  interest,
                     principal  and/or  premium  payable under  capital  markets
                     instruments  issued by the SPV or as the  Primary  Borrower
                     may be  required  to pay  pursuant to the terms of any loan
                     between the SPV and the Primary  Borrower  made pursuant to
                     clause  11.19(a)  or  as  may  be  required   initially  to
                     capitalise an SPV in accordance  with  professional  advice
                     received or to meet  liabilities  of such SPV arising  from
                     its  existence and  administration  operation in accordance
                     with the terms of this Agreement  including audit and legal
                     fees, taxation and other expenses incurred by it; or

              (ii)   give any  guarantee,  indemnity or other  assurance for the
                     Borrowed  Money  of an SPV or  holding  company  of an SPV,
                     unless the Facilities shall  simultaneously  be equally and
                     rateably secured by a guarantee from the same Group Company
                     (save  for any  guarantee  given  by the  Primary  Borrower
                     pursuant to clause 11.19(a)).


<PAGE>
                                     - 70 -




11.20  Restrictions related to Excess Equity Funding

       (a)    Until  such time as the  Excess  Equity  Funding  shall  have been
              repaid in full, no dividends or other  distributions shall be paid
              by the Primary  Borrower to any Relevant Person nor shall loans be
              made by members of the Group to any Relevant Person.

       (b)    Any Borrowed Money which is raised with a view to repaying,  or is
              used to repay, all or part of the Excess Equity Funding,  or which
              is raised to refinance an Indebtedness which was incurred for that
              purpose or so used, shall rank pari passu with the Facilities, and
              shall be raised by the Primary Borrower or by an SPV guaranteed by
              the Primary Borrower, and not by any other member of the Group.

12.    EVENTS OF DEFAULT

12.1   Events of Default

       Each of the events set out below is an Event of Default  (whether  or not
       caused by any reason  whatsoever  outside  the  control  of any  Relevant
       Company (or any other person)) namely if:

       (a)    Non-payment:  any  Obligor  fails to pay any sum due from it under
              any  of the  Finance  Documents  on its  due  date  in the  manner
              stipulated  in the  relevant  Finance  Document  (or within  three
              Banking  Days of the due date if the delay is caused by  technical
              difficulties or administrative error in the transfer of funds); or

       (b)    Breach of other obligations: any Borrower or other Obligor commits
              any  breach  of or  omits to  observe  any of the  obligations  or
              undertakings  expressed  to be  assumed  by it  under  any  of the
              Finance Documents (other than any such obligations  referred to in
              clause 12.1(a) (Non-payment)) and in respect of any such breach or
              omission which,  in the reasonable  opinion of the Majority Banks,
              is capable of remedy,  such action as shall remedy the same to the
              reasonable  satisfaction of the Majority Banks shall not have been
              taken within 21 days of the  relevant  Obligor  becoming  aware of
              such default; or

       (c)    Misrepresentation:  any representation, warranty or statement made
              or deemed to be made or repeated  by or on behalf of any  Borrower
              or other  Obligor in, or in  connection  with,  any of the Finance
              Documents  or in any notice,  accounts,  certificate  or statement
              referred to in or delivered under any of the Finance  Documents is
              or proves to have been  incorrect or misleading  and if capable of
              being remedied,  in the reasonable  opinion of the Majority Banks,
              is not  remedied to the  reasonable  satisfaction  of the Majority
              Banks 21 days after the date on which the relevant  Group  Company
              becomes aware of such misrepresentation; or

       (d)    Cross-default:

              (i)    any  Borrowed  Money of a member  of the  Group is not paid
                     when due or within any originally  stated  applicable grace
                     period; or

              (ii)   (by  reason of an event of  default  or  default  howsoever
                     described)  any Borrowed  Money of a member of the Group is
                     declared or becomes capable



<PAGE>
                                     - 71 -



                     of  being  declared  to be or  otherwise  becomes  due  and
                     payable prior to its specified maturity; or

              (iii)  any  Borrowed  Money  of a  member  of the  Group  which is
                     repayable on demand is not repaid on demand being made,

              in circumstances where, in all or any of the above paragraphs, the
              Borrowed  Money  amounts in aggregate at any one time to more than
              (pound)20,000,000 or, if higher, an amount of 2% of Adjusted Share
              Capital and Reserves or its equivalent in other currencies, unless
              the  alleged  default  is being  disputed  in good  faith  and the
              Primary  Borrower has shown to the Facility  Agent's  satisfaction
              (acting  reasonably)  that it has adequate  cash  resources to pay
              that Borrowed Money and its other debts as they fall due; or

       (e)    Legal process:  (without  prejudice to any other provision of this
              Agreement)  any final  judgment  or order in an  amount  exceeding
              (pound)2,000,000  (or its  equivalent  in other  currencies)  made
              against any  Relevant  Company is not stayed or  complied  with or
              paid  within  28 days  (or in the case of  payments,  when due (if
              later))  or a  creditor  attaches  or takes  possession  of,  or a
              distress,  execution,  sequestration or other process is levied or
              enforced upon or sued out against,  any part of the  undertakings,
              assets,  rights or revenues of any  Relevant  Company  with a book
              value or market  value in excess  of  (pound)2,000,000  and is not
              discharged or stayed within 14 days; or

       (f)    Insolvency: any Relevant Company:

              (i)    is  deemed  unable  to pay its  debts  in  accordance  with
                     Section 123(1)(a),  (b) or (e) or (2) of the Insolvency Act
                     1986  unless,  in the case of  Section  123(1)(a)  only,  a
                     statutory  notice has been  withdrawn,  stayed or dismissed
                     within 14 days; or

              (ii)   is unable generally to pay its debts as they fall due; or

       (g)    Administration:

              (i)    any meeting of the  directors  of any  Relevant  Company is
                     convened for the purpose of  considering  any resolution to
                     present an application for an administration order; or

              (ii)   a petition for an  administration  order in relation to any
                     Relevant   Company  is   presented   to  the  court  or  an
                     administration order is sought of the court on the basis of
                     an undertaking to subsequently present a petition which, if
                     in  either  case  it is  being  contested  by the  Relevant
                     Company  in  good  faith   with   appropriate   proceedings
                     diligently pursued, is not discharged within 21 days; or

              (iii)  any  Relevant  Company  passes a  resolution  to present an
                     application for an administration order; or

              (iv)   an administration order is made in relation to any Relevant
                     Company; or

       (h)    Compositions etc: any steps are taken, or negotiations  commenced,
              by any Relevant Company or by its creditors  generally with a view
              to proposing any kind of


<PAGE>
                                     - 72 -


              composition, scheme of arrangement,  compromise or arrangement, in
              each case involving such company and its creditors generally; or

       (i)    Appointment of receivers and managers:

              (i)    any  administrative  or other  receiver  or any  manager is
                     appointed of any Relevant  Company or any material  part of
                     its assets and/or undertaking; or

              (ii)   the directors of any Relevant Company request any person to
                     appoint such a receiver or manager; or

              (iii)  any other steps are taken to enforce any Security  Interest
                     over  all  or  any  material  part  of  the  assets  and/or
                     undertakings of any Relevant Company; or

       (j)    Winding up:

              (i)    any meeting of any  Relevant  Company is  convened  for the
                     purpose of  considering  any resolution for (or to petition
                     for) its winding up; or

              (ii)   any Relevant Company passes such a resolution; or

              (iii)  any person  presents any petition for the winding up of any
                     Relevant  Company  (not being a petition  which the Primary
                     Borrower  can  demonstrate  to  the   satisfaction  of  the
                     Facility  Agent is  frivolous  vexatious or an abuse of the
                     process of the court) which is not  dismissed or discharged
                     within 14 days of service thereof; or

              (iv)   an order for the  winding  up of any  Relevant  Company  is
                     made,  not (in any case) being a winding-up of a Subsidiary
                     of  the  Primary  Borrower  involving  an  amalgamation  or
                     reorganisation  on a solvent  basis which has been approved
                     in advance by the Facility Agent (acting reasonably); or

       (k)    Dissolution:  any corporate,  legal or administrative  proceedings
              are commenced by any person (including,  without  limitation,  the
              Registrar  of  Companies)  with a view to the  dissolution  of any
              Relevant   Company,   not  being  a   dissolution   involving   an
              amalgamation or  reorganisation  on a solvent basis which has been
              approved in advance by the Facility Agent (acting reasonably); or

       (l)    Analogous  proceedings:  there occurs, in relation to any Relevant
              Company,  in any  country  or  territory  in which it  carries  on
              business or to the  jurisdiction  of whose  courts any part of its
              assets is subject,  any event which, in the reasonable  opinion of
              the  Majority   Banks,   appears  in  that  country  or  territory
              corresponds  with,  or has an effect  equivalent  to, any of those
              mentioned in clauses 12.1(e) (Legal process) to (k)  (Dissolution)
              (inclusive) or any Relevant Company otherwise becomes subject,  in
              any such country or territory,  to a legal  procedure under of any
              law relating to insolvency, bankruptcy or liquidation; or

       (m)    Cessation  of  business:  other  than in  relation  to a  disposal
              permitted under this Agreement,  any Relevant  Company suspends or
              ceases or  threatens  to suspend or cease to carry on its business
              unless another member of the Group carries on such business in its
              place; or


<PAGE>
                                     - 73 -



       (n)    Change of Control:

              (i)    Bidco ceases to be a wholly-owned  subsidiary (as that term
                     is used in section 736 of the Act) of Finco 2; or

              (ii)   Finco  2  ceases  to be a  wholly-owned  Subsidiary  of the
                     Parent  (other than as permitted by paragraph  (iii) below)
                     and at least a 90% owned direct  subsidiary  of the Primary
                     Borrower; or

              (iii)  less  than 100%  (until  19 May 1999) or 75%  (until 19 May
                     2000) or 60%  (thereafter)  of the equity share  capital of
                     the  Primary  Borrower is held by the Parent  (directly  or
                     indirectly) at any time; or

              (iv)   Bidco at any time  reduces its  shareholding  in The Energy
                     Group Limited; or

              (v)    REC or  any  other  Licensee  ceases  to be a  wholly-owned
                     Subsidiary of the Primary Borrower; or

              (vi)   there is a Change in Control of the Parent; or

       (o)    Distribution Business/Generation Business:

              (i)    the Group  ceases,  or threatens to cease,  to carry on the
                     Distribution  Business  or  the  Generation  Business  as a
                     whole;

              (ii)   all or a majority of the issued  shares of any  Licensee or
                     any other  Relevant  Company  or the whole or any  material
                     part of the  assets or  revenues  of (aa) the  Distribution
                     Business or (bb) the Generation Business (taken as a whole)
                     are  seized,  nationalised,  expropriated  or  compulsorily
                     acquired by or under the authority of a Government Entity;

              (iii)  any  change  is  made  in  the   statutory  or   regulatory
                     requirements applicable to the Distribution Business or the
                     Generation  Business  or any new  statutory  or  regulatory
                     requirements  are imposed on it which  would be  reasonably
                     likely to have a Material Adverse Effect; or

       (p)    Licences:

              (i)    the Secretary of State or any other person with the ability
                     to do so gives  notice in  writing of the  revocation  of a
                     Licence  for any  reason or a Licence  ceases to be in full
                     force and effect in any  material  respect  except  where a
                     similar  licence is or licences  are granted to a member of
                     the Group in its place;

              (ii)   without  prejudice to paragraph (i) above,  any legislation
                     (whether  primary  or  subordinate)   with  regard  to  the
                     creditors of Licensees or the ability of Licensees to raise
                     finance  under a Licence or with  regard to  generators  or
                     electricity or public  electricity  suppliers  generally is
                     enacted and that  enactment  would be reasonably  likely to
                     have a Material Adverse Effect;

              (iii)  any  amendment  is made to the  terms and  conditions  of a
                     Licence and the  amendment  would be  reasonably  likely to
                     have a Material Adverse Effect; or


<PAGE>
                                     - 74 -



       (q)    Electricity Act:

              (i)    any of  the  provisions  of the  Electricity  Act  (or  any
                     subordinate  legislation)  detailing  the  rights,  powers,
                     authorities,  obligations  and duties of the  Secretary  of
                     State or the Director General,  or the manner in or time at
                     which they are to be exercised,  are repealed or amended in
                     a manner which would be  reasonably  likely (in the opinion
                     of the Majority  Banks) to have a Material  Adverse Effect;
                     or

              (ii)   the  relevant  Licensee  fails to comply with a final order
                     (within the meaning of section 25 of the  Electricity  Act)
                     or with a  provisional  order  (within  the meaning of that
                     section) which has been confirmed under that section and in
                     either case which has not been  revoked  under that section
                     or the  validity  of which  has not been  questioned  under
                     section  27 of the  Electricity  Act,  if such  failure  to
                     comply  would  be  reasonably  likely  to  have a  Material
                     Adverse Effect; or

       (r)    Pooling and Settlement  Agreement:  REC or any other member of the
              Group  ceases  to  be  a  party  to  the  Pooling  and  Settlement
              Agreement,  or any notice requiring REC or any other member of the
              Group  to  cease  to be a  party  to the  Pooling  and  Settlement
              Agreement is given to such company  under the relevant  clauses of
              the Pooling and Settlement Agreement,  except where another member
              of the  Group  becomes a party to that  agreement  in its place or
              such  cesser  occurs or such  notice is given in the  context of a
              general disbandment of the Pooling and Settlement Agreement; or

       (s)    Gas Framework  Agreement:  the relevant member of the Group ceases
              to be a party to the Gas Framework  Agreement  where this would be
              reasonably  likely to lead to a Material  Adverse  Effect,  except
              where  another  member  of the  Group  becomes  a  party  to  that
              agreement in its place;

       (t)    Finance  Documents:  any  Finance  Document is not or ceases to be
              legal,  valid and  binding  on or  (subject  to the  Reservations)
              enforceable  against any Obligor or is alleged by any  Borrower or
              other Obligor to be ineffective for any reason; or

       (u)    Unlawfulness:  it becomes unlawful at any time for any Borrower or
              other  Obligor to perform all or any of its  material  obligations
              under any of the Finance Documents; or

       (v)    Material  Adverse  Effect:  At any  time  after  the  date of this
              Agreement  there  is a change  in the  financial  condition  of an
              Obligor which has a Material Adverse Effect.

12.2   Acceleration

       The Facility  Agent may,  and, if so  requested  by the  Majority  Banks,
       shall, without prejudice to any other rights of the Finance Parties after
       the  happening  of an  Event  of  Default,  and so  long  as the  same is
       continuing, by notice to the Primary Borrower:

       (i)    declare that the  obligation of each Bank to make its  Commitments
              available shall be terminated,  whereupon the Total Commitments in
              respect of all  Facilities  shall be  reduced  to zero  forthwith;
              and/or


<PAGE>
                                     - 75 -



       (ii)   declare that the Advances and all  interest,  fees and  commitment
              commission  accrued and all other sums  payable  under the Finance
              Documents  have  become  due and  payable  or have  become due and
              payable on demand,  whereupon  the same shall,  immediately  or in
              accordance  with the terms of such notice,  become due and payable
              or become obligations payable on demand; and/or

       (iii)  demand full cash cover for the Outstanding  Contingent Liabilities
              under all Letters of Credit then  outstanding  in the  currency in
              which those Letters of Credit are denominated; and/or

       (iv)   declare  that  the   Guarantees  (or  any  of  them)  have  become
              enforceable (in whole or in part).

       On or at any time after the making of any such declaration,  the Facility
       Agent shall be entitled, to the exclusion of the Borrowers, to select the
       duration of Interest Periods.

13.    INDEMNITIES

13.1   Miscellaneous indemnities

       The Primary  Borrower shall within three Banking Days of demand indemnify
       each Finance Party,  without prejudice to any of their other rights under
       any of the Finance  Documents,  against any cost,  loss,  claim,  expense
       (including  loss of  Applicable  Margin  and  legal  fees)  or  liability
       together  with any Tax thereon  which such Finance Party shall certify as
       sustained or incurred by it as a consequence of:

       (a)    any  default in payment by any Obligor of any sum under any of the
              Finance Documents when due,

       (b)    the occurrence of any other Default,

       (c)    any  prepayment  of the  Facilities  or part  thereof  being  made
              otherwise than on an Interest Payment Date or, as the case may be,
              Maturity Date relative thereto,

       (d)    any Utilisation not being made for any reason (excluding, but only
              to the  extent  of the  indemnification  of a  particular  Finance
              Party,  any gross  negligence  or wilful  default by such  Finance
              Party) after a Drawdown Notice has been given, or

       (e)    any notice sent by telefax failing to be received,

       including,  in any such  case,  but not  limited  to, any loss or expense
       sustained or incurred in maintaining or funding its  Contributions or any
       part  thereof  or in  liquidating  or  re-employing  deposits  from third
       parties  acquired  or  contracted  for to  fund  all or any  part  of its
       Contributions or any other amount owing to such Finance Party.

13.2   Currency of account; currency indemnity

       (a)    No payment by any Obligor under any of the Finance Documents which
              is  made in a  currency  other  than  the  currency  ("Contractual
              Currency")  in which such payment is required to be made  pursuant
              to the relevant  Finance  Documents shall discharge the obligation
              in  respect  of which it is made  except to the  extent of the net
              proceeds in the


<PAGE>
                                     - 76 -



              Contractual  Currency received by the Facility Agent upon the sale
              of the currency so received, after taking into account any premium
              and costs of exchange in connection with such sale.

       (b)    The  Finance  Parties  shall not be  obliged  to  accept  any such
              payment in a  currency  other than the  Contractual  Currency  nor
              shall the Finance Parties be liable to any Obligor for any loss or
              alleged loss arising from  fluctuations  in exchange rates between
              the date on which such  payment  is so  received  by the  Facility
              Agent and the date on which the Facility  Agent effects such sale,
              as to which the  Facility  Agent shall (as against  each  Obligor)
              have an absolute discretion.

       (c)    If any sum due from any Obligor under any Finance Documents or any
              order or judgment given or made in relation  hereto is required to
              be  converted  from the  Contractual  Currency or the  currency in
              which the same is payable under such order or judgment (the "first
              currency") into another  currency (the "second  currency") for the
              purpose  of (i)  making  or  filing a claim or proof  against  any
              Obligor, (ii) obtaining an order or judgment in any court or other
              tribunal or (iii) enforcing any order or judgment given or made in
              relation  to any of the  Finance  Documents,  each  Obligor  shall
              indemnify  and hold  harmless  each Finance Party from and against
              any loss  suffered as a result of any  difference  between (A) the
              rate of  exchange  used for such  purpose  to  convert  the sum in
              question from the first currency into the second  currency and (B)
              the rate or rates of exchange at which each such Finance Party may
              in the ordinary  course of business  purchase  the first  currency
              with  the  second  currency  upon  receipt  of a sum paid to it in
              satisfaction,  in whole or in part,  of any such order,  judgment,
              claim or proof.

       (d)    Any amount due from any Obligor under the  indemnity  contained in
              this clause 13.2 shall be due as a separate  debt and shall not be
              affected by judgment  being  obtained for any other sums due under
              or in respect of any of the Finance  Documents  and the term "rate
              of exchange" includes any premium and costs of exchange payable in
              connection with the purchase of the first currency with the second
              currency.

13.3   Acquisition finance indemnity

       The Primary  Borrower  shall  forthwith on demand  indemnify each Finance
       Party and each of their  respective  Affiliates and  Subsidiaries and its
       respective  directors  officers and employees (each being an "Indemnified
       Person")  from and  against any cost,  claim,  loss,  expense  (including
       without  limitation,  the fees,  costs  and  expenses  of legal  advisors
       arising from any legal procedures  (including,  without  limitation,  any
       administrative regulatory or judicial actions or investigations) to which
       that Indemnified Person becomes subject or joined as a party or which may
       be threatened or pending  against it) or liability  together with any Tax
       thereon which may be incurred or asserted against such Indemnified Person
       arising out of or in connection  with the  Acquisition  or it agreeing to
       finance or refinance  any  acquisition  by Bidco or any person  acting in
       concert with Bidco of any shares or share  options of any class in Target
       or the use of the  proceeds of any  Advance  (save to the extent any such
       loss or liability  arises as a result of the gross  negligence  or wilful
       default of the relevant Finance Party).

13.4   ECB reserve requirements

       The Primary Borrower shall on demand indemnify each Finance Party against
       any cost or loss  suffered by it as a result of complying  with  European
       Central Bank reserve requirements to



<PAGE>
                                     - 77 -



       the  extent  such  requirements   relate  to  its  participation  in  the
       Facilities  and are  not  recoverable  by such  Bank  under  clause  14.2
       (Increased Costs).

13.5   No settlement without consent

       The Primary Borrower agrees on its own behalf and on behalf of each other
       member of the  Group  that,  without  the prior  written  consent  of the
       Facility  Agent and the  Majority  Banks,  no  member  of the Group  will
       settle, compromise or consent to the entry of any judgment in any pending
       or  threatened  claim,  action,  suit or  proceeding  in respect of which
       indemnification  could be sought under the indemnification  provisions of
       clauses  7.6 (Stamp and other  duties),  8.4  (Facility  Agent may assume
       receipt),   8.5  (Grossing-up  for  Taxes),  8.6  (Qualifying  Bank),  13
       (Indemnities)  or  20.2  (Indemnity  from  Banks)  (whether  or  not  any
       indemnitee  thereunder (the "Indemnitee") is an actual or potential party
       to such claim,  action,  suit or  proceeding),  unless  such  settlement,
       compromise  or consent does not include any  statement as to an admission
       of fault, culpability or failure to act by or on behalf of any Indemnitee
       and  does  not  involve  any  payment  of  money  or  other  value by any
       Indemnitee or any injunctive  relief or factual  findings or stipulations
       binding on any Indemnitee.


14.    UNLAWFULNESS, INCREASED COSTS, ALTERNATIVE INTEREST RATES

14.1   Unlawfulness

       (a)    If it is or becomes  contrary to any law or regulation or contrary
              to any request from or requirement of any fiscal monetary or other
              authority  (with which such Finance Party would  normally  comply)
              for a  Finance  Party  to  contribute  to  any  Utilisation  or to
              maintain  its  Commitments  in respect  of a Facility  or fund its
              Contribution  to a Facility,  such  Finance  Party shall  promptly
              after  becoming  aware of the same,  through the  Facility  Agent,
              notify the Primary  Borrower  whereupon  (a) such Finance  Party's
              Commitments  shall be reduced to zero (and,  if it is the  Issuing
              Bank,  it shall have no  further  obligation  to Issue  Letters of
              Credit if to do so would in the opinion of the Issuing  Bank be or
              become  contrary  to any  law or  regulation  or  contrary  to any
              request  from or  requirement  of any  fiscal  monetary  or  other
              authority  (with which such Finance Party would normally  comply))
              and (b) if the  Facility  Agent on behalf of the Finance  Party so
              requires  each  relevant  Borrower  shall be obliged to prepay the
              Contribution  of such Finance  Party to such  Facility and provide
              full cash cover to the Issuing Bank for any Outstanding Contingent
              Liabilities  of  the  relevant  Finance  Party  on a  future  date
              specified by the Facility  Agent not being earlier than the latest
              date  permitted by the relevant law or  regulation or not contrary
              to such request or  requirement.  Any prepayment  pursuant to this
              clause 14.1 shall be made together with all amounts referred to in
              clause 6.5 (Prepayments generally).

       (b)    When any relevant  Borrower makes any prepayment under this clause
              14.1 the  Issuing  Bank  shall  not  release  the  amount  of such
              prepayment  which is cash  cover  for any  Outstanding  Contingent
              Liabilities to such Finance Parties but shall place such monies on
              suspense  account and such money may be used as collateral for the
              actual and the contingent liabilities of that Finance Party to the
              Issuing  Bank,  which  liabilities  shall remain in full force and
              effect  notwithstanding  such  prepayment;  and such Finance Party
              shall  remain  liable under all the  relevant  provisions  of this
              Agreement to the Issuing Bank to pay in cash any shortfall between
              the amount held by the Facility  Agent and its  liabilities  under
              this Agreement.


<PAGE>
                                     - 78 -



14.2   Increased costs

       If the result of any change in, or in the  interpretation  or application
       of, or the introduction of, (after the date of this Agreement):

       (a)    any law or

       (b)    any  regulation,  request or requirement  (which if not having the
              force of law is one of a kind  with  which  the  relevant  Finance
              Party  or,  as the case may be,  its  holding  company  habitually
              complies), including those relating to Taxation, capital adequacy,
              European  monetary union,  liquidity,  reserve assets,  cash ratio
              deposits  and  special  deposits or  requested  or required by any
              central bank (including  without  limitation the European  Central
              Bank) or other fiscal monetary or other authority,

       is to:

              (i)    subject any Finance  Party or its holding  company to Taxes
                     or change the basis of Taxation  of any Finance  Party with
                     respect to any  payment  under this  Agreement  (other than
                     Taxes or Taxation  on the  overall  net income,  profits or
                     gains of such Finance Party imposed in the  jurisdiction in
                     which  it is  resident  or  incorporated  or its  principal
                     office or Facility Office is located); and/or

              (ii)   increase the cost to, or impose an additional  cost on, any
                     Finance  Party or its holding  company in entering  into or
                     performing  its  obligations  under the  Finance  Documents
                     and/or in making or keeping  available  all or part of such
                     Finance Party's  Commitments  and/or maintaining or funding
                     all or part of such Finance Party's  Contributions  (and/or
                     providing  any  guarantee or indemnity of any other Finance
                     Party's obligations); and/or

              (iii)  reduce the amount  payable or the  effective  return to any
                     Finance Party under this Agreement; and/or

              (iv)   reduce any Finance Party's or its holding company's rate of
                     return on its overall  capital by reason of a change in the
                     manner  in  which  it  is  required  to  allocate   capital
                     resources  in  respect  of all or  any of the  advances  or
                     obligations comprised in a class of advances or obligations
                     formed  by or  including  such  Finance  Party's  share  in
                     Utilisations  made  or to be  made  under  this  Agreement;
                     and/or

              (v)    require any Finance Party or its holding  company to make a
                     payment or forgo a return  calculated by reference to or on
                     any amount  received or  receivable  by such Finance  Party
                     under this Agreement; and/or

              (vi)   require any Finance  Party or its holding  company to incur
                     or  sustain a loss  (including  a loss of future  potential
                     profits)  by reason of being  obliged to deduct all or part
                     of such Finance Party's  Commitments or Contributions  from
                     its capital for regulatory purposes,

              then and in each such case (but subject to clause 8.6  (Qualifying
              Bank) and 14.3 (Exceptions)):


<PAGE>
                                     - 79 -



                     (aa)   such Finance Party shall notify the Primary Borrower
                            through the Facility  Agent in writing of such event
                            promptly upon its becoming aware of the same; and

                     (bb)   following  such  notification  the Primary  Borrower
                            shall,   whether   or  not  such   Finance   Party's
                            Contribution to any Facility has been repaid, pay to
                            the Facility Agent on demand for the account of such
                            Finance  Party the amount which such  Finance  Party
                            specifies (in a certificate  setting forth the basis
                            of the  computation of such amount but not including
                            any matters  which such Finance Party or its holding
                            company  regards as  confidential)  is  required  to
                            compensate  such  Finance  Party  and/or its holding
                            company in its sole discretion for such liability to
                            Taxes,  increased  or  additional  cost,  reduction,
                            payment, forgone return or loss.

       For the purposes of this clause 14.2 each Finance Party may in good faith
       allocate or spread costs and/or  losses among its assets and  liabilities
       (or any class  thereof)  on such basis as it  considers  appropriate  and
       fair.

       Each  Finance  Party shall use all  reasonable  endeavours  to notify the
       Primary Borrower as soon as reasonably  practicable of any such increased
       cost, reduction, payment or forgone return which is to result in a demand
       under clause 14.2(bb).

       For the  purposes  of this  clause  14.2  and  clause  14.4  (Mitigation)
       "holding  company" means, in relation to a Finance Party,  the company or
       entity (if any) within the consolidated supervision of which such Finance
       Party is included.

       For the purposes of this clause 14.2, the Obligors  acknowledge  that any
       requirement that the Finance Parties treat interest hereunder as anything
       other  than  interest  shall  be a  change  in law or the  interpretation
       thereof.

14.3   Exceptions

       Nothing in clause 14.2 (Increased  costs) shall entitle any Finance Party
       to receive any amount in respect of  compensation  for any such liability
       to Taxes,  increased or  additional  cost,  reduction,  payment,  forgone
       return or loss to the extent that the same:

       (a)    is taken into account in calculating the Mandatory Cost Rate; or

       (b)    is (or would be if the  Finance  Party were or  continued  to be a
              Qualifying  Lender) the  subject of an  additional  payment  under
              clause 8.5 (Grossing-up for Taxes); or

       (c)    arises  as  a  consequence   of  (or  of  any  law  or  regulation
              implementing) (i) the proposals for  international  convergence of
              capital  measurement and capital standards  published by the Basle
              Committee on Banking Regulations and Supervisory Practices in July
              1988 and/or (ii) any  applicable  directive of the European  Union
              unless  (in each  case) it  results  from any change in, or in the
              interpretation  or  application  of,  such  proposals  or any such
              applicable  directive (or any law or regulation  implementing  the
              same) occurring after the date hereof; or

       (d)    is  attributable  to  Taxation  save where it is  recovered  under
              clause 14.2(i) (Increased Costs); or


<PAGE>
                                     - 80 -




       (e)    is  attributable  to the wilful  default or gross  negligence of a
              Finance Party.

       For the purposes of clause 14.3(c) the term "applicable  directive" means
       (exclusively)  each of the Own Funds Directive  (89/299/EEC of 17th April
       1989),  the Solvency Ratio  Directive  (89/647/EEC of 18th December 1989)
       and the Capital  Adequacy  Directive  (93/6/EEC  of 15 March 1993) as the
       foregoing have been amended up to the date of this Agreement.

14.4   Mitigation

       If, in respect of any Finance Party (an "Affected  Bank"),  circumstances
       arise or exist which would result in:

       (a)    any Obligor  being  required to make an increased  payment to that
              Finance Party pursuant to clause 8.5 (Grossing-up for Taxes);

       (b)    the reduction of that Finance Party's Commitment in respect of any
              Facility  to zero or any  Borrower  being  required to prepay that
              Finance Party's  Contribution  to any Facility  pursuant to clause
              14.1 (Unlawfulness);

       (c)    any Obligor being  required to make a payment to any Finance Party
              to  compensate  such  Finance  Party or its holding  company for a
              liability  to Taxes,  increased  or  additional  cost,  reduction,
              payment,  forgone  return  or loss  pursuant  to  clause  14.2(bb)
              (Increased Costs); or

       (d)    any Obligor not being  entitled to a deduction for UK  corporation
              tax purposes in respect of interest  payable under this  Agreement
              to that Finance Party;

       then, without in any way limiting,  reducing or otherwise  qualifying the
       obligations  of any Obligor under clause 8 (Payments and Taxes,  Accounts
       and  Calculations)  and this clause 14  (Unlawfulness,  increased  costs,
       alternative  interest  rates) (and subject to the Obligor's  rights under
       clause  6.5  (Prepayments  generally),   such  Finance  Party  shall,  in
       consultation  with the Facility Agent,  endeavour to take such reasonable
       steps (and/or, in the case of clause 14.2(bb) (Increased Costs) and where
       the increased or additional cost, reduction,  payment,  forgone return or
       loss is that of its  holding  company,  endeavour  to  procure  that  its
       holding  company takes such  reasonable  steps) as are open to it (or, as
       the  case may be,  its  holding  company)  to  mitigate  or  remove  such
       circumstances  unless the taking of such steps  might (in the  opinion of
       such Finance Party) be prejudicial to such Finance Party (or, as the case
       may be, its holding  company) and provided  that such Finance Party shall
       be under no  obligation to take any such action if in the opinion of such
       Finance  Party to do so might have any adverse  effect upon its business,
       operations or financial condition.


15.    SET-OFF AND PRO-RATA PAYMENTS

15.1   Set-off

       (a)    Each  Obligor  hereby  agrees that each  Finance  Party may at any
              time, whilst any Default shall be continuing  notwithstanding  any
              settlement  of  account  or other  matter  whatsoever,  combine or
              consolidate all or any of its then existing  accounts  wheresoever
              situate  (including  accounts in the name of such Finance Party or
              of such Obligor  jointly with  others),  whether such accounts are
              current, deposit, loan or of


<PAGE>
                                     - 81 -



              any other nature whatsoever, whether they are subject to notice or
              not and whether they are  denominated  in Sterling or in any other
              currency,  and set-off or transfer  any sum standing to the credit
              of any one or more such accounts in or towards satisfaction of any
              moneys,  obligations or  liabilities  which are due and payable by
              such Obligor to such Finance Party under the Finance Documents but
              are unpaid.

       (b)    For this purpose each Finance Party is authorised to purchase with
              the  moneys  standing  to the  credit of such  account  such other
              currencies  as may be  necessary  to effect such  application.  No
              Finance  Party shall be obliged to exercise  any right given to it
              by this clause 15.1.

       (c)    Each Finance Party shall notify the Facility  Agent  promptly upon
              the  exercise  or  purported  exercise  of any right of set-off in
              relation  to any  member  of the  Group  giving  full  details  in
              relation  thereto and the  Facility  Agent shall  inform the other
              Finance Parties.

15.2   Pro-rata payments

       (a)    If at any  time any  Bank  (the  "Recovering  Bank")  receives  or
              recovers  any  amount  owing  to  it by  any  Obligor  under  this
              Agreement by direct  payment,  set-off or in any manner other than
              by  payment  through  the  Facility  Agent  (not  being a  payment
              received  from a Substitute  or a  sub-participant  in such Bank's
              Contribution to any Facility or any other payment of an amount due
              to the Recovering Bank for its sole account),  the Recovering Bank
              shall,  within two  Banking  Days of such  receipt or  recovery (a
              "Relevant Receipt") notify the Facility Agent of the amount of the
              Relevant Receipt. If the Relevant Receipt exceeds the amount which
              the  Recovering  Bank would have received if the Relevant  Receipt
              had been received by the Facility Agent then:

              (i)    within two Banking  Days of demand by the  Facility  Agent,
                     the  Recovering  Bank  shall pay to the  Facility  Agent an
                     amount equal to the excess;

              (ii)   the Facility Agent shall treat the excess amount so paid by
                     the  Recovering  Bank as if it were a  payment  made by the
                     relevant Obligor and shall distribute the same to the Banks
                     (other than the Recovering Bank); and

              (iii)  as between the relevant  Obligor and the  Recovering  Bank,
                     the excess amount so re-distributed shall be treated as not
                     having  been  paid  but  the  obligations  of the  relevant
                     Obligor  to the other  Banks  shall,  to the  extent of the
                     amount so re-distributed to them, be treated as discharged.

       (b)    If any part of a Relevant Receipt subsequently has to be wholly or
              partly refunded by the Recovering Bank (whether to a liquidator or
              otherwise)  each Bank to which any part of such  Relevant  Receipt
              was so  re-distributed  shall on request from the Recovering  Bank
              repay to the  Recovering  Bank such Bank's  pro-rata  share of the
              amount which has to be refunded by the Recovering Bank.

       (c)    Each Bank  shall on  request  supply to the  Facility  Agent  such
              information  as the  Facility  Agent may from time to time request
              for the purpose of this clause 15.2.

       (d)    Notwithstanding  the foregoing  provisions of this clause 15.2, no
              Recovering  Bank shall be obliged  to share any  Relevant  Receipt
              which it receives or recovers pursuant


<PAGE>
                                     - 82 -



              to legal  proceedings  taken by it to recover any sums owing to it
              under this  Agreement with any other party which has a legal right
              to, but does not, either join in such  proceedings or commence and
              diligently  pursue  separate  proceedings to enforce its rights in
              the same or another  court (unless the  proceedings  instituted by
              the Recovering  Bank are instituted by it in breach of clause 22.3
              (Majority Bank matters: enforcement).

       (e)    The  amounts due from each  relevant  Obligor to each of the Banks
              shall reflect any payments and receipts among the Banks prescribed
              by this clause.

       (f)    Nothing in this  clause 15.2 shall  prevent the Issuing  Bank from
              recovering  from the  relevant  Borrowers  any amounts due under a
              Letter of Credit issued by the Issuing Bank or  appropriating  any
              cash cover  provided by an Obligor under this  Agreement  provided
              that any cash cover not ultimately applied in respect of an amount
              due under a Letter of Credit  shall be turned over to the Facility
              Agent and treated as a Relevant Receipt to which the provisions of
              this clause 15.2 will generally apply.

15.3   No release

       For the  avoidance  of doubt it is hereby  declared  that  failure by any
       Recovering  Bank to comply with the  provisions of clause 15.2  (Pro-rata
       payments)  shall not  release any other  Recovering  Bank from any of its
       obligations or liabilities under clause 15.2 (Pro-rata payments).

15.4   No charge

       The provisions of this clause 15 (Set-off and pro-rata  payments) are not
       intended to, shall not, and shall not be construed so as to, constitute a
       charge by a Bank.  In  particular  it is not  intended to create a charge
       over all or any part of a sum  received or  recovered  by any Bank in the
       circumstances mentioned in clause 15.2 (Pro-rata payments).

16.    ASSIGNMENT, SUBSTITUTION AND LENDING OFFICES

16.1   Benefit and burden

       This  Agreement  shall be binding upon, and enure for the benefit of, the
       Finance  Parties  and  the  Obligors  and  their  respective  successors,
       transferees and assigns.

16.2   No assignment by the Obligors

       The Obligors may not assign or otherwise transfer any of their respective
       rights or obligations under any of the Finance Documents.

16.3   Substitution

       Each Bank (an  "Existing  Bank") may at any time assign all or any of its
       rights and benefits  under the Finance  Documents or novate in accordance
       with clauses 16.5 (Substitution  Certificate) and 16.12  (Restrictions on
       novations)  (but not otherwise)  all or any part of its rights,  benefits
       and/or obligations under the Finance Documents to another Qualifying Bank
       (a  "Substitute")  with the  consent of the  Issuing  Bank,  and with the
       consent of the  Primary  Borrower  (not to be  unreasonably  withheld  or
       delayed).


<PAGE>
                                     - 83 -



16.4   Assignment

       If any Bank  assigns  all or any of its  rights  and  benefits  under the
       Finance  Documents in accordance with clause 16.3  (Substitution),  then,
       unless and until the assignee has agreed with the other  Finance  Parties
       and the Obligors that it shall be under the same obligations towards each
       of them as it would have been if it had been an original party thereto as
       a Bank,  the other Finance  Parties and the Obligors shall not be obliged
       to recognise  that  assignee as having the rights  against each or any of
       them which it would have had if it had been such a party thereto.

16.5   Substitution Certificate

       Subject to clause 16.6 (Reliance on Substitution Certificate) , if a duly
       completed Substitution Certificate duly executed by the Existing Bank and
       the  Substitute is delivered to and  countersigned  by the Facility Agent
       (for  itself  and the other  parties  to this  Agreement  other  than the
       Existing  Bank),  then  on the  Effective  Date  (as  specified  in  that
       Substitution  Certificate) to the extent that the Existing Bank's rights,
       benefits and  obligations  under the Finance  Documents  are expressed in
       such  Substitution  Certificate to be the subject of a novation in favour
       of the Substitute effected pursuant to this clause 16.5:

              (i)    the  existing  parties  to the  Finance  Documents  and the
                     Existing  Bank  shall be  released  from  their  respective
                     obligations towards one another under the Finance Documents
                     ("discharged  obligations") except for any obligation which
                     the Existing  Bank has to the Issuing Bank under clause 4.7
                     (Bank's  Guarantee and Indemnity)  before the date on which
                     the novation takes place unless otherwise agreed in writing
                     by the Issuing Bank and their respective rights against one
                     another under the Finance Documents  ("discharged  rights")
                     (except  with  respect  to  antecedent  breaches)  shall be
                     cancelled;

              (ii)   the Substitute party to such  Substitution  Certificate and
                     the existing parties to the Finance  Documents shall assume
                     obligations  towards  each  other  which  differ  from  the
                     discharged  obligations only insofar as they are owed to or
                     assumed  by  such  Substitute  instead  of to  or  by  such
                     Existing Bank;

              (iii)  the Substitute party to such  Substitution  Certificate and
                     the existing parties to the Finance Documents shall acquire
                     rights  against each other which differ from the discharged
                     rights only insofar as they are  exercisable  by or against
                     such  Substitute  instead  of by or against  such  Existing
                     Bank; and

              (iv)   the  Finance  Parties  shall  acquire  the same  rights and
                     benefits and assume the same obligations between themselves
                     as they would have acquired and assumed had such Substitute
                     been an  original  party  hereto as a Bank with the rights,
                     benefits and/or obligations  acquired or assumed by it as a
                     result of such transfer;

              and,  on such  Effective  Date,  the  Substitute  shall pay to the
              Facility  Agent  for  its own  account  a fee of  (pound)750.  The
              Facility Agent shall promptly deliver a copy of such  Substitution
              Certificate to the Primary Borrower.

16.6   Reliance on Substitution Certificate

       The Facility  Agent (on behalf of itself) and the Obligors shall be fully
       entitled  to  rely  on  any  Substitution  Certificate  delivered  to the
       Facility Agent in accordance with the foregoing


<PAGE>
                                     - 84 -



       provisions  of this  clause  16  (Assignment,  Substitution  and  Lending
       offices)  which  is  complete  and  regular  on its face as  regards  its
       contents  and  purportedly  signed  on behalf  of the  relevant  Existing
       Bank(s)  and the  Substitute(s)  and none of the  Facility  Agent and the
       Obligors  shall have any  liability or  responsibility  to any party as a
       consequence of placing reliance on and acting in accordance with any such
       Substitution  Certificate  if it  proves to be the case that the same was
       not authentic or duly authorised.

16.7   Authorisation of Facility Agent

       Each party to this Agreement irrevocably authorises the Facility Agent to
       counter-sign each Substitution Certificate on its behalf for the purposes
       of clause 16.5 (Substitution Certificate) without any further consent of,
       or  consultation  with,  such party  except,  in the case of the  Primary
       Borrower, the consent required pursuant to clause 16.3 (Substitution).

16.8   Accession Deeds

       The Obligors shall from time to time at the request of the Facility Agent
       promptly do any act or thing or execute such documents as directed by the
       Facility  Agent in  connection  with the  transfer  of rights or benefits
       under clause 16.3 (Substitution).

16.9   Construction of certain references

       If any  Bank  novates  all or  any  part  of  its  rights,  benefits  and
       obligations  as  provided  in clause  16.3  (Substitution)  all  relevant
       references in this  Agreement to such Bank shall  thereafter be construed
       as a reference to such Bank and/or its  Substitute to the extent of their
       respective interests.

16.10  Lending offices

       Each Bank  shall lend  through  its office at the  address  specified  in
       Schedule  1 or,  as the  case  may be,  in or  pursuant  to any  relevant
       Substitution  Certificate  or  through  any  other  office  of such  Bank
       selected from time to time by such Bank through which such Bank wishes to
       lend for the purposes of this Agreement  (with the consent of the Primary
       Borrower,  if such changed lending office is outside the United Kingdom).
       If the office through which a Bank is lending is changed pursuant to this
       clause 16.10,  such Bank shall notify the Facility Agent promptly of such
       change. No Bank shall exercise its rights under this clause in any manner
       which might reasonably be expected to result in it not being a Qualifying
       Bank.

16.11  Disclosure of information

       The Obligors party to this Agreement  agree that the Finance  Parties may
       at any time disclose  such  information  relating to the Obligors,  their
       Affiliates and Associated  Companies as shall come into their possession,
       whether or not in relation to the Facilities:

       (a)    to any prospective assignee, Substitute or sub-participant;

       (b)    to their respective advisers, professional or otherwise;

       (c)    to any Affiliate of such Finance Party;

       (d)    to the other Finance Parties;


<PAGE>
                                     - 85 -



       (e)    if  required  to do  so  by  an  order  of a  court  of  competent
              jurisdiction;

       (f)    under  any  law  or  regulation  or to any  applicable  regulatory
              authority   (including  the  Bank  of  England)  in  any  relevant
              jurisdiction; and

       (g)    where such  information  shall  have  already  entered  the public
              domain  other  than by  breach  of  confidence  on the part of the
              relevant Finance Party,

       and in the case of (a) above,  subject to first requiring and receiving a
       written confirmation from the recipient of the information  addressed to,
       inter alios,  the Primary  Borrower  itself and its  Affiliates  that the
       recipient will, and will cause its Affiliates to, treat in confidence any
       confidential  information  so  disclosed  to it and  not  use it for  any
       unauthorised purpose and, upon receipt of such confirmation, such Finance
       Party shall in no way be liable or responsible  for such  information not
       being kept  confidential by such proposed  assignee,  Substitute or other
       person.

16.12  Restrictions on novations

       Any  novation by a Bank which is  transferring  part (but not all) of its
       Commitment  may only be made if (a) it is made in respect of a Commitment
       of  (pound)5,000,000  or any larger integral multiple of (pound)5,000,000
       and (b) as a consequence  of such  novation (or as a consequence  of that
       and any other novation  between the same or related parties taking effect
       at or about the same time) the  Commitment  of the Existing Bank would be
       not less than (pound)5,000,000.

16.13  No obligation

       The Existing Bank shall not be obliged by any Finance Document to:

       (a)    accept a  re-transfer  from the  Substitute  of any of the  rights
              and/or  obligations  assigned or transferred  under this clause 16
              (Assignment, Substitution and Lending offices); or

       (b)    indemnify the  Substitute  for any losses arising by reason of any
              Obligor's  failure to perform  its  obligations  under any Finance
              Documents or otherwise.

17.    FACILITY AGENT

17.1   Appointment of Facility Agent

       Each  Finance  Party  (except the Facility  Agent)  appoints the Facility
       Agent to act as its agent in  connection  with the Finance  Documents  to
       which the Facility Agent is a party, and authorises the Facility Agent to
       exercise  such  rights,   remedies,   powers  and   discretions   as  are
       specifically  delegated  to it by the  terms  of this  Agreement  and the
       Finance Documents, together with all reasonably incidental rights, powers
       and  discretions.  The  Obligors  shall be  entitled  to assume  that the
       Facility  Agent  represents  the Finance  Parties  (except  the  Facility
       Agent),  the Reference  Banks or the Majority Banks (as the case may be),
       and that all  consents and notices  given by the Facility  Agent on their
       behalf are validly given.

17.2   Separate treatment of syndication division

       In acting as Facility Agent,  the Facility Agent's  syndication  division
       (or such other division as may undertake such task) shall be treated as a
       separate entity from any other of its divisions


<PAGE>
                                     - 86 -



       or departments and, despite the provisions of clauses 17 (Facility Agent)
       to 21  (Guarantee),  if the Facility Agent or any Related Person acts for
       or transacts  business with any member of a group  comprising  the Parent
       and its Affiliates or Associated  Companies  (the "Parent  Group") or any
       other person which may be a trade competitor of the Parent Group or Group
       or any  member of either  such  group or may  otherwise  have  commercial
       interests  similar to those of any member of such groups in any  capacity
       in  relation  to  any  other  matter  (including  as a  Bank  under  this
       Agreement), any information acquired by the Facility Agent or any Related
       Person in such  other  capacity  may be treated  as  confidential  by the
       Facility  Agent.  The  Obligors  hereby  expressly  acknowledge  that the
       Finance  Parties and Related  Persons may be  providing  debt  financing,
       equity capital or other services (including  financial advisory services)
       to other  persons with whom the Parent or the Group may have  conflicting
       interests in respect of the Facilities or otherwise.

17.3   Actions of Facility Agent

       Each action  taken or  decision  made by the  Facility  Agent under or in
       relation to any Finance  Document  with  requisite  authority  under this
       Agreement, including on the basis of the requisite instructions, shall be
       binding on all the Finance Parties.

17.4   Notification of retirement of Facility Agent or Issuing Bank

       Each of the  Facility  Agent  and/or  the  Issuing  Bank may  resign  its
       appointment under this Agreement at any time without assigning any reason
       therefor  by giving not less than 30 days' prior  written  notice to that
       effect to each of the other  parties to this  Agreement  Provided that no
       such  resignation  shall be effective until a successor for such Facility
       Agent or Issuing  Bank (as the case may be) is  appointed  in  accordance
       with the succeeding provisions of this clause.

17.5   Successor Facility Agent or Issuing Bank

       If the Facility  Agent or Issuing  Bank gives  notice of its  resignation
       pursuant to clause 17.4  (Notification of retirement of Facility Agent or
       Issuing Bank), then any reputable and experienced bank or other financial
       institution with an office in London may, with the consent of the Primary
       Borrower (such consent not to be unreasonably  withheld), be appointed as
       a successor to such  Facility  Agent or Issuing Bank (as the case may be)
       by the  Majority  Banks but, if no such  successor is so  appointed,  the
       Facility  Agent or Issuing  Bank (as the case may be) may appoint  such a
       successor itself.

17.6   Provisions relating to successor Facility Agent or Issuing Bank

       With effect from the date that a successor is  appointed  and accepts the
       office  of  Facility  Agent  or,  as the  case may be,  Issuing  Bank and
       executes  such  necessary  documentation  under this clause 17  (Facility
       Agent):

       (a)    as  regards  the other  Finance  Parties  and the  Obligors,  such
              successor  shall  become  bound  by  all  the  obligations  of the
              Facility Agent or, as the case may be, the Issuing Bank and become
              entitled to all the rights,  privileges,  powers,  authorities and
              discretions  of the  Facility  Agent or,  as the case may be,  the
              Issuing Bank under the Finance Documents;

       (b)    the agency of the retiring  Facility Agent or, as the case may be,
              the duties of the Issuing  Bank shall  terminate  and the retiring
              Facility  Agent or, as the case may be, the retiring  Issuing Bank
              shall be discharged from any further liability or obligation


<PAGE>
                                     - 87 -



              under  the  Finance  Documents,   but  without  prejudice  to  any
              liabilities  which the retiring Facility Agent or, as the case may
              be, the retiring  Issuing Bank may have incurred  (including  with
              respect to the retiring Issuing Bank any then  outstanding  Issued
              Letter  of  Credit)   before  the   termination   of  its  agency,
              trusteeship and/or duties;

       (c)    the costs, charges and expenses of the retiring Facility Agent or,
              as the case may be, the retiring  Issuing Bank shall be discharged
              if recoverable under the provisions of this Agreement;

       (d)    the provisions of the Finance  Documents  shall continue in effect
              for the benefit of any retiring Facility Agent or, as the case may
              be, the retiring  Issuing Bank in respect of any actions  taken or
              omitted  to be  taken  by it or any  event  occurring  before  the
              termination of its agency,  trusteeship  and/or duties  (including
              with  respect to the retiring  Issuing  Bank any then  outstanding
              Issued Letter of Credit); and

       (e)    the retiring  Facility Agent or Issuing Bank shall (at the expense
              of the Primary Borrower) provide its successor with copies of such
              of its records as its successor  reasonably  requires to carry out
              its functions as such.

17.7   Merger of Facility Agent or Issuing Bank

       Any corporation  into which the Facility Agent or the Issuing Bank may be
       merged or converted or any  corporation  with which the Facility Agent or
       the Issuing Bank may be consolidated  or any  corporation  resulting from
       any   merger,   conversion,   amalgamation,    consolidation   or   other
       reorganisation to which the Facility Agent or the Issuing Bank shall be a
       party shall, to the extent  permitted by applicable law, be the successor
       Facility Agent, or, as the case may be, Issuing Bank under this Agreement
       and the other Finance Documents (as appropriate) without the execution or
       filing  of any  document  or any  further  act on the  part of any of the
       parties  to this  Agreement  or, as the case may be,  the  other  Finance
       Documents   save  that  notice  of  merger,   conversion,   amalgamation,
       consolidation  or other  reorganisation  shall  forthwith be given to the
       Primary Borrower and the Banks.

17.8   Role of Issuing Bank

       The  Issuing  Bank shall act on behalf of the Banks  with  respect to any
       Letters of Credit  Issued by it and the  documents  associated  therewith
       until such time and except for so long as the Facility Agent may agree at
       the  request  of the  Majority  Banks to act for such  Issuing  Bank with
       respect thereto.

18.    POWERS

18.1   General powers

       Each of the Facility Agent and the Arrangers may:

       (a)    assume that the  Facility  Office of each Bank is that  identified
              with its signature  below (or, in the case of a  Substitute,  that
              identified in the Substitution Certificate under which it became a
              party to this  Agreement)  until it has received  from such Bank a
              notice  designating some other office of such Bank as its Facility
              Office,  and may act  upon  any  such  notice  until  the  same is
              superseded by a further such notice;


<PAGE>
                                     - 88 -



       (b)    engage  and  pay  for  the  advice  or  services  of any  lawyers,
              accountants  or other  advisers  whose advice or services may seem
              necessary,  expedient  or  desirable  to it and may rely  upon any
              advice so obtained;

       (c)    rely as to matters of fact which might  reasonably  be expected to
              be within  the  knowledge  of an  Obligor  upon a  certificate  or
              statement signed by or on behalf of that Obligor;

       (d)    rely  upon any  communication  or  document  believed  by it to be
              genuine and correct and to have been communicated or signed by the
              person by whom it purports to be communicated or signed;

       (e)    refrain from exercising any right,  power or discretion  vested in
              it under any Finance  Document unless and until  instructed by the
              Majority Banks or, where required,  all of the Banks as to whether
              or not such right,  power or discretion is to be exercised and, if
              it is to be  exercised,  as to the  manner  in which it  should be
              exercised,  and it shall not be liable  for  acting or  refraining
              from  acting  in  accordance  with  or  in  the  absence  of  such
              instructions;

       (f)    refrain  from  taking any step to protect or enforce the rights of
              any Finance  Party under any Finance  Document and from  beginning
              any legal  action or  proceeding  arising out of or in  connection
              with any Finance  Document  until it has been  indemnified  and/or
              secured as it may require (whether by way of payment in advance or
              otherwise) against all costs,  claims,  expenses  (including legal
              fees)  and  liabilities  which it will or may  expend  or incur in
              complying with such instructions;

       (g)    refrain from doing anything which would or might in its opinion be
              contrary to any applicable law or any requirements (whether or not
              having  the  force  of  law)  of  any  governmental,  judicial  or
              regulatory body or otherwise  render it liable to any person,  and
              do anything  which is in its opinion  necessary to comply with any
              such applicable law or requirement;

       (h)    do any act or  thing  in the  exercise  of any of its  powers  and
              duties under the Finance  Documents which may lawfully be done and
              which  in its  absolute  discretion  it  deems  advisable  for the
              protection and benefit of the Finance Parties collectively;

       (i)    perform any of its duties,  obligations and responsibilities under
              the Finance Documents by or through its personnel or agents; and

       (j)    accept  deposits  from,  lend money  (secured or unsecured) to and
              generally engage in any kind of banking or other business with, be
              the owner or holder of any  shares  or other  securities  of,  and
              provide   advisory  or  other  services  to  the  Parent  and  its
              Affiliates,  and/or  the  Group  or any of  the  Finance  Parties,
              without any liability to account.

18.2   Specific powers of Facility Agent

       The Facility Agent:


<PAGE>
                                     - 89 -



       (a)    may assume that:

              (i)    any representation made by the Obligors in or in connection
                     with the Finance Documents is true;

              (ii)   no Default has occurred;

              (iii)  no Obligor is in breach of or default under its obligations
                     under any Finance Document; and

              (iv)   any right, power,  authority or discretion vested in any of
                     the Finance  Documents upon the Majority Banks,  all Banks,
                     or any  other  person  or  group  of  persons  has not been
                     exercised,

              unless the  Facility  Agent has in its  capacity  as agent for the
              relevant  Finance  Parties  received actual notice to the contrary
              from any other party to any Finance Document;

       (b)    shall be at liberty to place any  Finance  Document  and any other
              instruments,  documents or deeds delivered to it pursuant  thereto
              or in connection therewith for the time being in its possession in
              any safe  deposit,  safe or  receptacle  selected by the  Facility
              Agent,  as the case may be, or with any bank,  any  company  whose
              business includes undertaking the safe custody of documents or any
              firm of lawyers of good repute and may make any such  arrangements
              as it thinks fit for allowing the Primary  Borrower  access to, or
              its  solicitors or auditors  possession  of, such  documents  when
              necessary or convenient and, in the absence of gross negligence or
              wilful default on its part,  shall not be responsible for any loss
              thereby incurred;

       (c)    may,  whenever  it thinks  fit,  delegate  by power of attorney or
              otherwise  to any  person  or  persons  all or any of the  rights,
              trusts,  powers,  authorities  and discretion  vested in it by any
              Finance  Document and such  delegation may be made upon such terms
              and subject to such conditions and subject to such  regulations as
              the  Facility  Agent  may  think  fit and  shall  not be  bound to
              supervise the  proceedings or (in the absence of gross  negligence
              or wilful default on its part) be in any way  responsible  for any
              loss  incurred by reason of any  misconduct or default on the part
              of any such delegate;

       (d)    notwithstanding  anything else herein contained,  may refrain from
              doing  anything which would or might in its opinion be contrary to
              any relevant law of any jurisdiction or any relevant  directive or
              regulation  of any  agency  of any  state or which  would or might
              otherwise  render  it liable to any  persons  and may do  anything
              which is, in its  opinion,  necessary  or desirable to comply with
              any such law, directive or regulations;

       (e)    may indemnify itself and/or every attorney,  agent or other person
              appointed by it under any Finance Document against all Liabilities
              (as  defined in clause  20.2  (Indemnity  from  Banks))  and/or in
              respect of any other matter or thing done or omitted to be done in
              any way relating to any Finance  Document or by law and/or  acting
              as Facility Agent;

       (f)    shall have the power to institute,  prosecute and defend any suits
              or actions or other  proceedings  affecting the Facility Agent and
              to  compromise  any matter or difference or submit any such matter
              to  arbitration  and to  compromise or compound any debts owing to
              the  Facility  Agent or any other  claims  against  it or any such
              terms as it shall deem  sufficient  and to make petition upon such
              terms as it shall deem desirable;


<PAGE>
                                     - 90 -




       (g)    save as otherwise  expressly provided herein,  shall have absolute
              discretion  as to the  exercise  or non  exercise  (and  as to the
              manner  and  time of any  such  exercise)  of all  rights,  trust,
              powers,  authorities  and  discretions  vested in it by any of the
              Finance Documents but shall be entitled to refrain from exercising
              any right,  power or  discretion  vested in it as agent or trustee
              under any  Finance  Document  unless and until  instructed  by the
              Majority Banks or, where required under this Agreement,  all Banks
              as to  whether or not such  right,  power or  discretion  is to be
              exercised and, if it is to be exercised, as to the manner in which
              it should be exercised; and

       (h)    shall have absolute  discretion as to the exercise or non-exercise
              (and as to the  manner  and  time  of any  such  exercise)  of all
              rights, trust, powers,  authorities and discretions in relation to
              any matter, or in any context,  not expressly provided for by this
              Agreement  to act or, as the case may be,  refrain  from acting in
              accordance with the instructions of the Majority Banks;

       (i)    shall (subject to clause 19 (Duties)) be entitled (in its own name
              or in the names of  nominees)  to invest  moneys from time to time
              which,  in the  opinion  of the  Facility  Agent,  it would not be
              practicable  to  distribute  immediately  by  placing  the same on
              deposit in the name or under the control of itself as it may think
              fit  without  being  under any duty to  diversify  the same and it
              shall  not be  responsible  for any loss due to  interest  rate or
              exchange rate fluctuations;

       (j)    with respect to its own  Commitments and  Contributions  (if any),
              shall have the same rights and powers under this Agreement and the
              other  Finance  Documents  as any other Bank and may  exercise the
              same as though it were not  performing  the duties  and  functions
              delegated  to it under this  Agreement  and/or  the other  Finance
              Documents and the term "Banks" shall,  unless the context  clearly
              otherwise indicates,  include the Facility Agent in its individual
              capacity as Bank.

19.    DUTIES

19.1   Specific duties of the Facility Agent

       The Facility  Agent (for the benefit of the other  Finance  Parties only)
       shall:

       (a)    promptly  upon  receipt  inform  each Bank of the  contents of any
              notice or document or other information received by it on or after
              the date of this Agreement in its capacity as Facility Agent under
              this Agreement from any Obligor;

       (b)    promptly  notify each Bank of the occurrence of any Default or any
              material  breach  by any  Obligor  in the due  performance  of its
              obligations  under this Agreement or any Finance Document of which
              the  Facility  Agent has  received  written  notice from any other
              party to any Finance Document;

       (c)    save as otherwise  provided  herein,  act in  accordance  with any
              instructions given to it by the Majority Banks (which instructions
              shall be binding on all of the Finance Parties);



<PAGE>
                                     - 91 -



       (d)    if so  instructed  by the  Majority  Banks (or,  where so required
              under this  Agreement,  all Banks),  refrain from  exercising  any
              right,  remedy power or discretion  vested in it under the Finance
              Documents;

       (e)    except as regards purely  administrative  acts,  consult  whenever
              reasonably  practicable  with the Banks before doing or refraining
              from doing any act or thing in the exercise of its powers as agent
              and/or trustee;

       (f)    to the extent that it receives or recovers  monies  following  the
              service of a notice in accordance with clause 12.2  (Acceleration)
              pursuant to or as a result of any breach of any  Finance  Document
              to be applied in  discharging  any obligation  (whether  actual or
              contingent,  present or future) of any  Obligor  under any Finance
              Document,  apply such monies (without  prejudice to the respective
              rights of the Facility Agent  pursuant to any Finance  Document to
              credit any  monies  received  by it to any  suspense  account)  as
              between the Finance Parties in accordance with clause 8.9 (Partial
              payments) as if they were a partial payment; and

       (g)    shall make each such application and/or distribution as soon as is
              practicable   after  the  relevant  moneys  are  received  by,  or
              otherwise become available to, it save that the Facility Agent may
              credit any moneys received by it to a suspense account for so long
              and in such  manner  as the  Facility  Agent may from time to time
              determine  with a view to  preserving  the  rights of the  Finance
              Parties or any of them to prove for the whole of their  respective
              claims against any Obligor or any other person liable.

20.    EXONERATION

20.1   Absence of obligation on initial Finance Parties

       Despite  anything  to the  contrary  expressed  or implied in any Finance
       Document,  each of the Facility Agent, the Issuing Bank and the Arrangers
       shall:

       (a)    not be  bound  to  enquire  as to and will  have no  liability  in
              respect of:

              (i)    whether or not any  representation  or warranty made by any
                     Obligor under or in connection with any Finance Document is
                     true complete or adequate;

              (ii)   the occurrence or otherwise of any Default;

              (iii)  the performance by any Obligor of its obligations under any
                     Finance Document; or

              (iv)   any  breach  or  default  by any  Obligor  of or under  its
                     obligations under any Finance Document;

       (b)    not be bound to account to any Finance  Party for any fee or other
              sum or the profit  element of any sum  received  by it for its own
              account;

       (c)    not be bound to  disclose  to any  other  person  any  information
              relating  to any member of the Group if such  disclosure  would or
              might in its opinion  constitute a breach of any law or regulation
              or duty of confidentiality or be otherwise  actionable at the suit
              of any person;


<PAGE>
                                     - 92 -




       (d)    not be under any fiduciary or other duty towards any Finance Party
              or under any obligations  other than those expressly  provided for
              in any Finance Documents;

       (e)    not be  liable  (in the  absence  of its own gross  negligence  or
              wilful default):

              (i)    for any failure,  omission, or defect in the due execution,
                     delivery,  validity,   legality,   adequacy,   performance,
                     enforceability, or admissibility in evidence of any Finance
                     Document  or any  communication,  report or other  document
                     delivered under any Finance Document; or

              (ii)   in respect of its  exercise or failure to  exercise  any of
                     its powers and duties under any Finance Document; or

       (f)    not have any duties,  obligations or liabilities  other than those
              expressly  provided for in this Agreement and have no liability or
              responsibility  (in the  absence  of its own gross  negligence  or
              wilful default) of any kind to:

              (i)    any member of the Group  arising  out of or in  relation to
                     any  failure or delay in the  performance  or breach by any
                     Finance Party (other than itself) of any of its obligations
                     under or in connection with any Finance Document; or

              (ii)   any Finance Party arising out of or in relation to:

                     (aa)   the financial  condition of any member of the Group;
                            or

                     (bb)   any failure or delay in the performance or breach by
                            any  Obligor of any of its  obligations  under or in
                            connection   with  any   Finance   Document  or  the
                            Facilities;

       (g)    not be bound to check or  enquire  on behalf of any other  Finance
              Party  into or  liable  for  the  adequacy,  accuracy,  execution,
              genuineness,   enforceability,   admissibility   in   evidence  or
              completeness of any communication delivered to it under any of the
              Finance   Documents,   any  legal  or  other  opinions,   reports,
              valuations, certificates,  appraisals or other documents delivered
              or made  or  required  to be  delivered  or  made  at any  time in
              connection with any of the Finance  Documents,  any security to be
              constituted  thereby  or  any  other  report  or  other  document,
              statement or information  circulated,  delivered or made,  whether
              orally or otherwise  and whether  before,  on or after the date of
              this Agreement;

       (h)    be entitled to accept  without  enquiry,  requisition or objection
              such right and title as any  Obligor  may have to that part of the
              property  belonging  to it (or  any  part  thereof)  which  is the
              subject  matter  of any  Finance  Document  and  not be  bound  or
              concerned  to  investigate  or make any enquiry  into the right or
              title of such person to such  property  (or any part  thereof) or,
              without  prejudice  to the  foregoing,  to require  such person to
              remedy any defect in such person's right or title as aforesaid;

       (i)    in determining the respective entitlements of the Finance Parties,
              be entitled to rely on its own account;

       (j)    be entitled to invest  monies which in the opinion of the Facility
              Agent may not be paid out promptly  following  receipt in the name
              or under the control of such Facility Agent


<PAGE>
                                     - 93 -



              in any of the investments for the time being authorised by law for
              the  investment  by  trustees  of  trust  monies  or in any  other
              investments  whether  similar to the aforesaid or not which may be
              requested by the Majority  Banks or by placing the same on deposit
              in the name or under  the  control  of the  Facility  Agent as the
              Facility  Agent may think  fit and the  Facility  Agent may at any
              time vary or transpose any such investments for or into any others
              of a like nature and (in the absence of gross negligence or wilful
              default  on  the  part  of  such  Facility  Agent)  shall  not  be
              responsible  for  any  loss  thereby   incurred   whether  due  to
              depreciation  in value of such  investments  or any  other  reason
              whatever;

       (k)    not be bound  to take  any  steps or  perform  any  obligation  or
              exercise  any right or fulfil any request if to do so might in its
              sole opinion  breach or conflict with or contradict or be contrary
              to any rule, regulation, law, regulatory requirement,  court order
              or judgment in any  jurisdiction  or expose the Facility  Agent or
              the Arrangers to liabilities in any  jurisdiction  or be otherwise
              actionable at the suit of any person;

       (l)    not be liable for any failure:

              (i)    to obtain any licence,  consent or other  authority for the
                     execution,    delivery,   validity,   legality,   adequacy,
                     performance, enforceability or admissibility in evidence of
                     any of the Finance Documents;

              (ii)   to register or notify any of the  foregoing  in  accordance
                     with the provisions of any of the documents of title of any
                     of the Obligors;

       (m)    have no  liability  (save as  otherwise  provided  in  clauses  17
              (Facility  Agent)  to  23  (Basis  of  decisions))   otherwise  in
              connection with the Facilities or their negotiations or for acting
              (or as the case may be refraining  from acting) in connection with
              the instructions of the Majority Banks.

20.2   Indemnity from Banks

       Each Bank and the Issuing Bank shall, in its Proportion, on demand by the
       Facility Agent or any Arranger from time to time,  indemnify the Facility
       Agent or, as the case may be, any Arranger,  against any and all fees (to
       the extent properly  chargeable by the Facility Agent or, as the case may
       be, such Arranger under any Finance  Document but not promptly  recovered
       from the Obligors),  costs, claims and expenses and liabilities including
       any VAT thereon  (other than those  arising from the Facility  Agent's or
       any such Arranger's gross negligence or wilful misconduct):

       (a)    to which the Facility Agent becomes subject by reason of it acting
              as agent; or

       (b)    which it is otherwise entitled to recover from any Obligor,

       in each case  under any of the  Finance  Documents  or by law,  including
       those relating to all actions, proceedings, claims and demands in respect
       of any matter or thing done or omitted in any way relating to the Finance
       Documents any exercise or non exercise of any right, power or discretion,
       and all  amounts due to the  Facility  Agent by way of  remuneration  for
       acting as agent  under any of the  Finance  Documents  (collectively  the
       "Liabilities").  Each Obligor shall  counter-indemnify  the Banks and the
       Issuing Bank  against all  payments by them under this clause 20.2.  If a
       Bank  or  the  Issuing  Bank  (referred  to  in  this  clause  20.2  as a
       "defaulting   Bank")  fails  to  pay  its  due  contribution  under  this
       indemnity, then the Facility


<PAGE>
                                     - 94 -



       Agent may (without prejudice to its other rights and remedies) deduct the
       amount  due from the  defaulting  Bank  from any sums  which  are then or
       afterwards  in its  possession  which would  otherwise  be payable to the
       defaulting Bank.

20.3   Disclaimer

       Neither the Facility Agent,  nor any Arranger accepts  responsibility  to
       any other  Finance  Party for the  accuracy  and/or  completeness  of any
       information  supplied in connection with any Finance  Document or for the
       legality,  validity,  effectiveness,  adequacy or  enforceability  of any
       Finance  Document and neither the Facility Agent,  nor any Arranger shall
       be under any  liability to any other  Finance Party as a result of taking
       or  omitting  to take any  action in  relation  to any  Finance  Document
       (except in the case of its gross negligence or wilful misconduct).

20.4   No actions against individuals

       Each of the  Banks  agrees  that it will  not  assert  or seek to  assert
       against any  director,  officer or employee of the Facility  Agent or any
       Arranger  any claim it may have  against  any of them in  respect  of the
       matters  referred to in clause 20.1  (Absence  of  obligation  on initial
       Finance Parties).

20.5   Credit appraisals

       It is agreed by each Bank, by virtue of its  execution of this  Agreement
       or its  accession to this  Agreement,  that it has itself been,  and will
       continue  to be,  solely  responsible  for  making  its  own  independent
       appraisal   of  and   investigations   into  the   financial   condition,
       creditworthiness, condition, affairs, status and nature of each member of
       the Group, and, accordingly, each Bank confirms to the Facility Agent and
       each Arranger that it:

       (a)    does not enter into this  Agreement  nor accede to it on the basis
              of and has not  relied  on and  will  not  rely on any  statement,
              opinion,  forecast or other  representation  (whether negligent or
              innocent)  or warranty  or other  provision  (in any case  whether
              oral,  written,  express  or  implied)  made by, or agreed to, the
              Facility  Agent,  any  Arranger  or any Bank to induce it to enter
              into  this  Agreement  or any  other  Finance  Document  except as
              expressly set out therein and the remedies available in respect of
              any such  misrepresentation  or untrue statement made to such Bank
              shall be  limited  to a claim for  breach of  contract  under this
              Agreement; and

       (b)    has not  relied on and will not rely on the  Facility  Agent,  any
              Arranger or any Bank:

              (i)    to check  or  enquire  on its  behalf  into  the  adequacy,
                     accuracy or completeness of any information  provided by or
                     on behalf of any member of the Group in connection with any
                     Finance  Document and/or the  transactions  contemplated in
                     the Finance Documents  (whether or not such information has
                     been or is after the date of this  Agreement  circulated to
                     such Bank by the  Facility  Agent or any Arranger or as the
                     case may be any other Bank); or

              (ii)   to assess or keep under review on its behalf the  financial
                     condition, creditworthiness,  condition, affairs, status or
                     nature of any member of the Group.


<PAGE>
                                     - 95 -



       Provided  that  clause  20.5(a)  shall  not  apply  to any  statement  or
       representation  made fraudulently,  or to any provision of this Agreement
       which was induced by fraud for which the remedies  available shall be all
       those available under English law.

20.6   Exoneration of Related Persons

       All the  provisions  of this  clause  20  (Exoneration)  and of any other
       provision of any Finance Document protecting (including  indemnifying) or
       limiting  the  liability of any Finance  Party,  or  exonerating  it from
       liability  or  responsibility,  which  may enure to the  benefit  of such
       Finance  Party  shall  also be deemed to be given for the  benefit of all
       Related  Persons to whom they are  capable of  relating  or in respect of
       whom they are capable of taking effect.

20.7   Pre-contractual effect of exoneration

       For the avoidance of doubt,  the guarantee,  indemnity,  exonerations and
       other  protections in favour of the Facility Agent, the Arrangers and the
       Related Persons  contained in the Finance  Documents shall take effect in
       respect  of  all  events,  action  and  omissions  occurring  before  the
       execution and completion of this Agreement as well as events, actions and
       omissions  occurring on or after its execution and  completion and to the
       extent that any liability  should be adjudged to have arisen prior to the
       date of this Agreement, such liability is hereby completely released.

21.    GUARANTEE

       Each Guarantor  covenants and guarantees on, and in accordance  with, the
       terms of the Guarantee set out in Schedule 9 (Terms of Guarantee).

22.    DETERMINATION OF MATTERS

22.1   Majority Bank matters: amendments and waivers

       Except as  provided  in clause  22.4 (All Bank  matters:  amendments  and
       waivers) and 22.5 (New  Obligors),  with the prior written consent of the
       Majority Banks:

       (a)    the Facility Agent and the Primary  Borrower may from time to time
              enter into written amendments, supplements or modifications to the
              Finance Documents (however  fundamental) for the purpose of adding
              any provisions to the Finance  Documents or changing in any manner
              the rights and/or obligations of any of the Obligors, the Facility
              Agent and the Banks; and

       (b)    the  Facility  Agent may from time to time  execute and deliver to
              any  Obligor  a  written  instrument   waiving   prospectively  or
              retrospectively,  on such  terms and  conditions  as the  Facility
              Agent may specify in such  instrument,  any of the requirements of
              any of the Finance Documents,  or giving any consents or approvals
              thereunder.

22.2   Documentation of Majority Bank changes

       Any action so authorised  and effected by the Facility Agent under clause
       22.1 (Majority Bank matters:  amendments and waivers) shall be documented
       in such manner as the  Facility  Agent  shall  (with the  approval of the
       Majority Banks) determine, shall be promptly notified to the


<PAGE>
                                     - 96 -



       Banks by the Facility  Agent and (without  prejudice to the generality of
       clause  17.3  (Actions of  Facility  Agent))  shall be binding on all the
       Banks.

22.3   Majority Bank matters: enforcement

       If  the   Facility   Agent  makes  a   declaration   under   clause  12.2
       (Acceleration)  the Facility Agent shall,  in the names of all the Banks,
       take such  action on behalf of the Banks and  conduct  such  negotiations
       with any  Obligor  and any  other  members  of the  Group  and  generally
       administer  the  Advances in  accordance  with the wishes of the Majority
       Banks. All the Banks shall be bound by the provisions of this clause 22.3
       and no Bank shall be entitled to take action (in  relation to the tactics
       or means of enforcement)  independently  against any Obligor or any other
       member of the Group without the prior consent of the Majority  Banks.  In
       determining any matter under this clause 22.3, no consent by the Majority
       Banks  shall be  effective  to  approve  either (a) the  recovery  of any
       particular  Bank's or Banks' debt in priority to any other Bank's debt or
       (b) the  effective  discontinuation  of recovery  procedures or the final
       waiver of any of the  claims  of the Banks  under  this  Agreement.  Such
       determinations  shall be for the  purpose  of  effectively  pursuing  the
       Banks' rights and claims under this Agreement.

22.4   All Bank matters: amendments and waivers

       Except  with the prior  written  consent of all the Banks,  the  Facility
       Agent shall not have  authority  on behalf of the Banks to agree with any
       Obligor any amendment or modification to the Finance Documents or to vary
       or waive breaches of or defaults under or otherwise excuse performance of
       any provision of the Finance  Documents by any Obligor,  if the effect of
       such would be to:

       (a)    postpone  the due date or  reduce  the  amount of any  payment  of
              principal, interest, commitment commission or other amount payable
              or which may  become  payable  by any  Obligor  under the  Finance
              Documents;

       (b)    except in  accordance  with  clause  8.1(b)(iii)  (No  set-off  or
              counterclaim;  distribution  to the  Banks)  and 8.12  (Effect  of
              Monetary  Union),  change  the  currency  in which  any  amount is
              payable by any Obligor under the Finance Documents;

       (c)    have the effect of changing the amount of any Facility, any Bank's
              Commitment  or, except in  accordance  with clause 8.12 (Effect of
              Monetary  Union),  the principal or face amount or currency of any
              Advance;

       (d)    extend any period during which a Drawdown  Notice may be delivered
              (subject to clause 3.4  (Repayment  and  Cancellation  of Original
              Facilities Agreement));

       (e)    change any  provision  of the Finance  Documents  which  expressly
              requires  the  approval  or consent of all the Banks such that the
              relevant  approval or consent may be given otherwise than with the
              sanction of all the Banks;

       (f)    change the definition of Majority Banks;

       (g)    change clause 15.2 (Pro-rata Payments); or

       (h)    change  this  clause 22  (Determination  of  matters) or clause 23
              (Basis of Decisions).


<PAGE>
                                     - 97 -



22.5   New Obligors

       For the  purposes  of this  clause 22  (Determination  of  matters) it is
       expressly  agreed and  acknowledged  that the  execution  of a  guarantee
       and/or deed of adherence by a new Subsidiary or other Obligor or proposed
       Obligor  or any  deed  or  instrument  pursuant  to a  further  assurance
       provision in this  Agreement  or the other  Finance  Documents  shall not
       constitute an amendment or  modification  to, or variation of, any of the
       Finance Documents.

22.6   Veto of Facility Agent

       Regardless of any other provision in this  Agreement,  the Facility Agent
       shall not be obliged to agree to any such waiver,  amendment,  supplement
       or modification if it would:

       (a)    amend,   modify  or  waive  any   provision   of  this  clause  22
              (Determination of matters); or

       (b)    otherwise  amend,  modify or waive any of the Facility  Agent's or
              the  Arrangers'  rights  under  any of the  Finance  Documents  or
              subject the Facility  Agent to any  additional  obligations  under
              such documents.

22.7   Administrative determinations

       The Facility Agent may determine  purely  administrative  matters without
       reference to the Banks.

23.    BASIS OF DECISIONS

23.1   Meaning of Majority Banks

       Where  any of  the  Finance  Documents  provides  for  any  matter  to be
       determined  by  reference  to the  opinion  of, or to be  subject  to the
       consent or request of, the  Majority  Banks or for any action to be taken
       on the instructions of the Majority Banks, such opinion, consent, request
       or  instructions  shall (as between the Banks) only be regarded as having
       been validly given or issued by the Majority Banks if all the Banks shall
       have received prior notice of the matter on which such opinion,  consent,
       request or  instructions  are  required to be obtained  and the  relevant
       majority  of Banks  shall have  given or issued  such  opinion,  consent,
       request or  instructions,  but so that (as between the  Obligors  and the
       Finance  Parties)  the  Obligors  shall each be  entitled  (and bound) to
       assume  that such notice  shall have been duly  received by each Bank and
       that the  relevant  majority  shall  have  been  obtained  to  constitute
       Majority Banks when notified to this effect by the Facility Agent whether
       or not this is the case.

23.2   Notice to Majority Banks

       If, within 10 Banking Days of the Facility Agent despatching to each Bank
       a notice requesting  instructions (or confirmation of instructions)  from
       the Banks or the agreement of the Banks to any  amendment,  modification,
       waiver,  variation  or excuse of  performance  for the purposes of, or in
       relation to, any of the Finance  Documents,  the  Facility  Agent has not
       received a reply specifically giving or confirming or refusing to give or
       confirm the relevant  instructions  or, as the case may be,  approving or
       refusing  to  approve  the  proposed  amendment,   modification,  waiver,
       variation or excuse of  performance,  then  (subject to clause 23.4 (Late
       responses))  the  Facility  Agent  shall  treat any Bank which has not so
       responded as having


<PAGE>
                                     - 98 -



       indicated a desire to be bound by the wishes of 66 2/3 per cent. of those
       Banks (measured in terms of the relevant  Contributions  or, if none, the
       relevant  Commitments  of those Banks) which have so responded.  Any Bank
       which  notifies the  Facility  Agent of a wish or intention to abstain on
       any particular issue shall be treated as if it had not responded.

23.3   Meaning of all Banks

       (a)    Where this  Agreement or any other Finance  Document  provides for
              any matter to be  determined by reference to the opinion of, or to
              be  subject to the  consent of or request  of, all of the Banks or
              the Banks acting  unanimously or for any action to be taken on the
              instruction of all the Banks,  such opinion,  consent,  request or
              instructions  shall (as  between  the Banks)  only be  regarded as
              having been validly given or issued by all the Banks (or the Banks
              acting  unanimously)  if all the Banks shall have  received  prior
              notice (the "Facility Agent's Notice") of such matter containing a
              request for written  instructions from such Bank to be received by
              the Facility  Agent within ten Banking Days of the receipt (or the
              deemed receipt pursuant to clause 25.1(b) (Address for Notice)) of
              the Facility  Agent's Notice.  Before the expiry of such deadline,
              the Facility Agent will use  reasonable  endeavours to contact any
              Bank which has not  responded  to the Facility  Agent's  Notice in
              order to obtain a response from such Bank.

       (b)    If, in respect of a Bank, the Facility Agent:

              (i)    shall not have received written  instructions in respect of
                     such matter from such Bank; and

              (ii)   the Facility Agent shall have received written instructions
                     in respect of such matter from at least five other Banks,

              in each case within  such time period (and  subject to clause 23.4
              (Late  responses)),  such Bank shall be deemed to have irrevocably
              renounced  and  waived  its right to make any such  determination,
              approval, consent or provide instructions to the Facility Agent in
              respect of such  matter;  shall not have any  rights,  recourse or
              remedy against the Facility  Agent in respect of such matter;  and
              shall  be  bound  (as  shall   each  of  the   Obligors)   by  the
              determination,  approval,  consent  or  instructions  of the other
              Banks in respect of such  matter.  This clause  23.3(b)  shall not
              apply in so far as it would  create  any  obligation  on a Bank to
              provide an increased Commitment without such Bank having expressed
              such increased Commitment in writing.

       (c)    Clauses  23.1  (Meaning  of  Majority  Banks) and 23.2  (Notice to
              Majority Banks) shall not apply in relation to those matters which
              are to be decided by all the Banks.

23.4   Late responses

       In any case where a Bank fails to respond  within the time limit set down
       under  clauses  23.2 (Notice to Majority  Banks) or 23.3  (Meaning of All
       Banks), such Bank's response,  if it responds before any determination or
       instruction is acted upon or communicated  to any Obligor,  will be taken
       into account as if it had been  received  within the time limit  Provided
       that the  Facility  Agent has  received  actual  notice of such  response
       before any such action or communication.


<PAGE>
                                     - 99 -



23.5   Costs

       If any Obligor requests,  or if the Facility Agent requires in accordance
       with  any  provision  of  this  Agreement,  any  amendment,   supplement,
       modification   or  waiver  under  clause  22.1  (Majority  Bank  matters:
       amendments and waivers) or clauses 22.4 (All Bank matters: amendments and
       waivers) or 22.5 (New  Obligors),  then the Obligors  shall, on demand by
       the  Facility  Agent,  reimburse  the  Facility  Agent  for all costs and
       expenses (including legal fees),  together with any VAT on them, incurred
       by the Facility Agent in the  negotiation,  preparation  and execution of
       any  written  instrument  contemplated  by  clause  22.1  (Majority  Bank
       matters:  amendments  and  waivers)  or clauses  22.4 (All Bank  matters:
       amendments and waivers) or 22.5 (New Obligors).

23.6   No partnership

       This Agreement shall not and shall not be construed so as to constitute a
       partnership between the parties or any of them.

23.7   Change of Reference Banks

       If:

       (a)    the whole of the  Contributions (if any) of any Reference Bank are
              prepaid;

       (b)    the Commitments (if any) of any Reference Bank are reduced to zero
              prior to the end of the Finance Period;

       (c)    a Reference  Bank novates the whole of its rights and  obligations
              (if any) as a Bank under this Agreement; or

       (d)    a Reference  Bank  ceases to provide  quotations  to the  Facility
              Agent upon  request for the purposes of  determining  LIBOR (where
              such  quotations  are required  having regard to the definition of
              "LIBOR" in clause 1.2 (Definitions))

       the Facility Agent may, acting on the instructions of the Majority Banks,
       terminate the  appointment of such Reference Bank and after  consultation
       with the Primary  Borrower appoint another Bank to replace such Reference
       Bank.

24.    MATTERS CONCERNING THE BORROWERS

24.1   Additional Obligors

       The Primary  Borrower may, at any time during the term of this  Agreement
       (unless a Default  shall have  occurred  and be  continuing),  notify the
       Facility  Agent  that a  Permitted  Borrower  is to be  designated  as an
       additional  Borrower under the Revolving Credit Facility or that a member
       of the Group is to be designated as an additional Guarantor.  Such notice
       shall be in writing and signed by the Primary  Borrower  and the relevant
       Permitted Borrower or member of the Group,  respectively,  and shall take
       effect in accordance with its terms on the condition that:

       (a)    such  Permitted  Borrower  or member of the  Group,  respectively,
              shall have entered into an Accession Certificate with the Facility
              Agent which, subject to (b) below, the


<PAGE>
                                    - 100 -



              Facility  Agent shall execute on behalf of all the parties to this
              Agreement  (and all such parties so authorise  the Facility  Agent
              without any further consent of, or consultation with, such party);
              and

       (b)    such  Permitted  Borrower  or member of the  Group,  respectively,
              before  entering  into such an Accession  Certificate,  shall have
              fulfilled all appropriate conditions precedent, as notified to the
              Primary Borrower by the Facility Agent, to the satisfaction of the
              Facility Agent including,  in the case of the Permitted  Borrower,
              the delivery to the Facility  Agent of the  documents and evidence
              referred to in Part B of Schedule 3 (Conditions Precedent) in form
              and substance satisfactory to the Facility Agent.

       Upon satisfaction of such conditions such Permitted Borrower or member of
       the Group shall become a party to this  Agreement in the capacity also of
       an  Additional  Guarantor  and, in the case of such  Permitted  Borrower,
       Additional  Borrower,  of the Revolving  Credit Facility and shall assume
       all the  obligations  and rights of such a Guarantor  and, in the case of
       such Permitted Borrower, Borrower, under this Agreement.

24.2   Primary Borrower as Obligors' Agent

       Each  Obligor  by  its  execution  of  this  Agreement  or  an  Accession
       Certificate,  as the case may be, irrevocably appoints and authorises the
       Primary Borrower:

       (a)    as agent (the  "Obligor's  Agent") for such Obligor to receive all
              notices,  requests,  demands  or other  communications  under this
              Agreement  which shall,  without  prejudice to any other effective
              mode of  serving  the same,  be  properly  served  on the  Obligor
              concerned  if served on the Primary  Borrower in  accordance  with
              clause 25.1 (Address for Notice); and

       (b)    to  give  all  notices   (including  any  Drawdown   Notices)  and
              instructions  and make such agreements  expressed to be capable of
              being given or made by such Obligor or Obligors in this  Agreement
              (including  an agreement for the  continuance  of any guarantee or
              security)  notwithstanding  that  they  may  affect  such  Obligor
              without further  reference to, or the consent of, such Obligor and
              such  Obligor  shall,  as regards  the Finance  Parties,  be bound
              thereby as though  such  Obligor  itself had given such  notice or
              instructions or made such agreement.

24.3   Obligations unconditional

       The  obligations  of each Obligor  under this  Agreement  and the Finance
       Documents  are  unconditional  and  irrevocable  (subject  to the express
       provisions of this Agreement or any Finance Document) and shall not be in
       any way  affected or  discharged  by reason of any matter  affecting  the
       Acquisition. Each Obligor acknowledges that any approval or authorisation
       given under this  Agreement or a Finance  Document by a Finance  Party in
       relation to the Acquisition  shall not constitute any  representation  or
       warranty  by  such  (or  any)  Finance   Party  as  to  the  adequacy  or
       effectiveness of such Acquisition,  the purchase consideration payable by
       Bidco, the commercial  advisability of any Obligor or Bidco entering into
       the arrangements contemplated thereby or otherwise.


<PAGE>
                                    - 101 -



24.4   Obligations Several

       The  obligations  of each Obligor  under this  Agreement  and the Finance
       Documents are several  (unless  otherwise  stated) and the failure of any
       Obligor to perform such  obligations  shall not release any other Obligor
       of its obligations under this Agreement.

25.    NOTICES AND OTHER MATTERS

25.1   Address for Notice

       Every notice, request, demand or other communication under this Agreement
       shall:

       (a)    be in  writing  delivered  personally  or by  first-class  prepaid
              letter (airmail if available) or telefax;

       (b)    be deemed to have been received,  subject as otherwise provided in
              this Agreement, in the case of a letter, when delivered personally
              or 2 days after it has been put into the post and,  in the case of
              a telefax,  when a complete  and  legible  copy is received by the
              addressee  (unless  the time of  despatch  of any telefax is after
              close of  business  in which  case it shall be deemed to have been
              received at the opening of business on the next Banking Day); and

       (c)    be sent:

              (i)    to the Primary Borrower (for itself, Bidco, Finco 2 and any
                     other Obligors) at:

                     c/o Norton Rose
                     Kempson House
                     Camomile Street
                     London EC3A 7AN

                     Telefax:      + 44 171 283 6500
                     Attention:    Andrew Bamber

                     with a copy for information only to:

                     Eastern Group plc
                     Wherstead Park
                     Wherstead
                     Ipswich
                     Suffolk

                     Telefax:      +44 1473 555002
                     Attention:    Group Finance Director

                     and,

                     Texas Utilities Company
                     Energy Plaza
                     1601 Bryan Street


<PAGE>
                                    - 102 -



                     Dallas
                     Texas

                     Telefax:      214 812 2488
                     Attention:    Treasurer

              (ii)   to the Facility Agent at:

                     Chase Manhattan International Ltd
                     Trinity Tower
                     9 Thomas More Street
                     London E1 9YT

                     Telefax:      +44 171 777 2360
                     Attention:    Stephen Clarke

              (iii)  to the Issuing Bank at:

                     The Chase Manhattan Bank
                     Trinity Tower
                     9 Thomas More Street
                     London E1 9YT

                     Telefax:      +44 171 777 2360
                     Attention:    Stephen Clarke

              (iv)   to each Bank at its address or telefax number  specified in
                     Schedule  1 (The  Banks  and their  Commitments)  or in, or
                     pursuant to, any relevant Substitution Certificate

              (v)    to the Arrangers:

                     Chase Manhattan plc
                     125 London Wall
                     London EC2Y 5AJ

                     Telefax:      +44 171 777 3840
                     Attention:    Cheryl Boucher/Kristian Orssten

                     Lehman Brothers International (Europe)
                     One Broadgate
                     London EC2M 7HA

                     Telefax:      +44 171 256 4018
                     Attention:    Julian Entwisle



<PAGE>
                                    - 103 -



                     Merrill Lynch Capital Corporation
                     c/o Merrill Lynch & Co
                     World Financial Center
                     North Tower
                     250 Vesey Street
                     New York
                     NY 10281

                     Telefax:      001 212 447 9461
                     Attention:    Pete Wersching

              or to such other  address or telefax  number as is notified by the
              Primary  Borrower,  or a Finance Party, as the case may be, to the
              other parties to this Agreement.

25.2   Notice to Facility Agent

       Every notice, request, demand or other communication under this Agreement
       to be given by an Obligor  shall be given by the Primary  Borrower and by
       the Primary  Borrower  to any other party shall be given to the  Facility
       Agent  for  onward  transmission  as  appropriate  and to be  given to an
       Obligor shall (except as otherwise  provided in this  Agreement) be given
       by the Facility Agent to the Primary Borrower.

25.3   No implied waiver, remedies cumulative

       No failure or delay on the part of the Finance  Parties or any of them to
       exercise any power,  right or remedy under this  Agreement or any Finance
       Document  shall  operate  as a waiver  thereof,  nor shall any  single or
       partial  exercise  by the  Finance  Parties  or any of them of any power,
       right or remedy  preclude  any other or further  exercise  thereof or the
       exercise of any other power,  right or remedy.  The remedies  provided in
       this  Agreement and each of the Finance  Documents are cumulative and are
       not exclusive of any remedies provided by law.

25.4   English translations

       All  certificates,  instruments and other documents to be delivered under
       or supplied in  connection  with this  Agreement  shall be in the English
       language or shall be accompanied by a certified English  translation upon
       which the Finance Parties shall be entitled to rely.

25.5   Counterparts

       This Agreement may be executed in any number of  counterparts  and by the
       different  parties  on  separate  counterparts,  each  of  which  when so
       executed and delivered shall be an original,  but all counterparts  shall
       together constitute one and the same instrument.

25.6   Severance

       If any  provision  of this  Agreement  is held to be illegal,  invalid or
       unforceable in whole or in part this Agreement shall continue to be valid
       as to its other provisions and the remainder of the affected provision.


<PAGE>
                                    - 104 -



26.    GOVERNING LAW AND JURISDICTION

26.1   Law

       This Agreement shall be governed by English law.

26.2   Submission to jurisdiction

       The  parties  to this  Agreement  agree for the  benefit  of the  Finance
       Parties that:

       (a)    if any party has any claim  against any other arising out of or in
              connection  with this  Agreement,  such claim  shall  (subject  to
              clause  26.2(c))  be  referred  to the High  Court of  Justice  in
              England,  to  the  jurisdiction  of  which  each  of  the  parties
              irrevocably submits;

       (b)    the  jurisdiction of the High Court of Justice in England over any
              such claim  against  any Finance  Party  shall be a  non-exclusive
              jurisdiction; and

       (c)    nothing in this  clause  26.2 shall limit the right of any Finance
              Party to refer any such  claim  against  any  Obligor to any other
              court  of  competent   jurisdiction   outside   England,   to  the
              jurisdiction  of which any Obligor  hereby  irrevocably  agrees to
              submit,  nor shall the taking of  proceedings by any Finance Party
              before the courts in one or more jurisdictions preclude the taking
              of proceedings in any other jurisdiction  whether  concurrently or
              not.

IN WITNESS  whereof the parties to this  Agreement have caused this Agreement to
be duly executed on the date first above written.


<PAGE>
                                    - 105 -


                                   Schedule 1

                         The Banks and their Commitments


<TABLE>
<CAPTION>
=================================================================================================
     Bank                                                      Commitments
-------------------------------------------------------------------------------------------------
                                           Term Facility     Revolving Credit    Revolving Credit
                                             (pound)            Facility            Facility
                                                                Tranche A           Tranche B
                                                                 (pound)             (pound)
-------------------------------------------------------------------------------------------------
<S>                                       <C>                <C>                <C>
The Chase Manhattan Bank                   24,757,891.18       6,602,104.31      10,728,419.51
-------------------------------------------------------------------------------------------------
Lehman Commercial Paper Inc.               24,757,891.18       6,602,104.31      10,728,419.51
-------------------------------------------------------------------------------------------------
Merrill Lynch Capital Corporation          24,757,891.18       6,602,104.31      10,728,419.51
-------------------------------------------------------------------------------------------------
Bank of America NT and SA                  24,757,891.18       6,602,104.31      10,728,419.51
-------------------------------------------------------------------------------------------------
Barclays Bank PLC                          24,757,891.18       6,602,104.31      10,728,419.51
-------------------------------------------------------------------------------------------------
Bayerische Hypo- und Vereinsbank AG,       24,757,891.18       6,602,104.31      10,728,419.51
London Branch
-------------------------------------------------------------------------------------------------
Bayerische Landesbank Girozentrale,        24,757,891.18       6,602,104.31      10,728,419.51
London Branch
-------------------------------------------------------------------------------------------------
CIBC Wood Gundy plc                        24,757,891.18       6,602,104.31      10,728,419.51
-------------------------------------------------------------------------------------------------
Citibank, N.A                              24,757,891.18       6,602,104.31      10,728,419.51
-------------------------------------------------------------------------------------------------
Commerzbank Aktiengesellschaft,            24,757,891.18       6,602,104.31      10,728,419.51
London Branch
-------------------------------------------------------------------------------------------------
Credit Lyonnais                            24,757,891.18       6,602,104.31      10,728,419.51
-------------------------------------------------------------------------------------------------
Credit Suisse First Boston                 24,757,891.18       6,602,104.31      10,728,419.51
-------------------------------------------------------------------------------------------------
Den Danske Bank Aktieselskab               24,757,891.18       6,602,104.31      10,728,419.51
-------------------------------------------------------------------------------------------------
Deutsche Bank AG London                    24,757,891.18       6,602,104.31      10,728,419.51
-------------------------------------------------------------------------------------------------
First Union National Bank, London          24,757,891.18       6,602,104.31      10,728,419.51
Branch
-------------------------------------------------------------------------------------------------
ING Bank N.V., London Branch               24,757,891.18       6,602,104.31      10,728,419.51
-------------------------------------------------------------------------------------------------
KBC Bank N.V., London Branch               24,757,891.18       6,602,104.31      10,728,419.51
-------------------------------------------------------------------------------------------------
National Australia Bank Limited (ACN       24,757,891.18       6,602,104.31      10,728,419.51
004044937)
-------------------------------------------------------------------------------------------------
The Royal Bank of Scotland plc             24,757,891.18       6,602,104.31      10,728,419.51
-------------------------------------------------------------------------------------------------
Societe Generale, London Branch            24,757,891.18       6,602,104.31      10,728,419.51
-------------------------------------------------------------------------------------------------
The Toronto-Dominion Bank                  24,757,891.18       6,602,104.31      10,728,419.51
-------------------------------------------------------------------------------------------------
</TABLE>


<PAGE>
                                    - 106 -


<TABLE>
<CAPTION>
=================================================================================================
     Bank                                                      Commitments
-------------------------------------------------------------------------------------------------
                                           Term Facility     Revolving Credit    Revolving Credit
                                             (pound)            Facility            Facility
                                                                Tranche A           Tranche B
                                                                 (pound)             (pound)
-------------------------------------------------------------------------------------------------
<S>                                       <C>                <C>                <C>
Westdeutsche Landesbank Girozentrale       24,757,891.18       6,602,104.31      10,728,419.51
-------------------------------------------------------------------------------------------------
ABN AMRO Bank N.V                          18,005,738.24       4,801,530.20       7,802,486.57
-------------------------------------------------------------------------------------------------
The Bank of New York                       18,005,738.24       4,801,530.20       7,802,486.57
-------------------------------------------------------------------------------------------------
The Dai-Ichi Kangyo Bank, Limited          18,005,738.24       4,801,530.20       7,802,486.57
-------------------------------------------------------------------------------------------------
Mellon Bank N.A                            18,005,738.24       4,801,530.20       7,802,486.57
-------------------------------------------------------------------------------------------------
The Sanwa Bank, Limited                    18,005,738.24       4,801,530.20       7,802,466.57
-------------------------------------------------------------------------------------------------
Abbey National Treasury Services plc       13,504,304.12       3,601,147.76       5,851,865.12
-------------------------------------------------------------------------------------------------
National Westminster Bank Plc              13,504,304.12       3,601,147.76       5,851,865.12
-------------------------------------------------------------------------------------------------
UBS AG                                     13,504,304.12       3,601,147.76       5,851,865.12
-------------------------------------------------------------------------------------------------
ABC International Bank plc                  9,002,869.41       2,400,765.18       3,901,243.41
-------------------------------------------------------------------------------------------------
Banca Monte dei Paschi di Siena SpA,        9,002,869.41       2,400,765.18       3,901,243.41
London Branch
-------------------------------------------------------------------------------------------------
The Bank of Nova Scotia                     9,002,869.41       2,400,765.18       3,901,243.41
-------------------------------------------------------------------------------------------------
The Bank of Tokyo-Mitsubishi, Ltd           9,002,869.41       2,400,765.18       3,901,243.41
-------------------------------------------------------------------------------------------------
Banque Nationale de Paris London            9,002,869.41       2,400,765.18       3,901,243.41
Branch
-------------------------------------------------------------------------------------------------
Christiania Bank og Kreditkasse ASA         9,002,869.41       2,400,765.18       3,901,243.41
-------------------------------------------------------------------------------------------------
Banca Nazionale del Lavoro S.p.A.,          5,882,352.94       1,568,627.45       2,549,019.61
London Branch
-------------------------------------------------------------------------------------------------
Caisse Centrale de Caisses d'Epargne et     5,882,352.94       1,568,627.45       2,549,019.61
de Prevoyance (CCCEP)
-------------------------------------------------------------------------------------------------
AIB International Finance                   4,501,434.12       1,200,382.43       1,950,621.45
-------------------------------------------------------------------------------------------------
Arab Bank plc                               4,501,434.12       1,200,382.43       1,950,621.45
-------------------------------------------------------------------------------------------------
TOTAL                                     750,000,000.00     200,000,000.00     325,000,000.00
=================================================================================================
</TABLE>


<PAGE>
                                    - 107 -



                                   Schedule 2

                            Forms of Drawdown Notice


                                     Part A

                                  Term Facility



To:    [Name and address of Facility Agent]
                                                                          [DATE]

Attention:  |_|


   (pound)1,275,000,000 Facilities Agreement dated 24 March 1999 (as amended)

1.     We refer to the above  Agreement  and hereby give you notice that we wish
       to draw down a Term Advance under the Term Facility:

       (a)    on |_| 19|_| ;

       (b)    in the sum of (pound)|_|;

       (c)    [with a first Interest Period in respect thereof of ..............
              months.]  [with the first  Interest  Period in respect  thereof to
              expire on ............................. |_|] ; and

       (d)    the proceeds of such Advance to be credited to [name and number of
              account] at [name of bank in London]

2.     We confirm that each condition  specified in clause 3 (The Conditions) is
       satisfied on the date of this Drawdown Notice.

3.     Words  and  expressions  defined  in the  Agreement  shall  have the same
       meanings where used herein.

                              For and on behalf of

                               [relevant Borrower]


                         ------------------------------
                                    Director


<PAGE>
                                    - 108 -



                                     Part B

                            Revolving Credit Facility


To:    [Name and address of Facility Agent]
                                                                          [DATE]

Attention:  |_|


   (pound)1,275,000,000 Facilities Agreement dated 24 March 1999 (as amended)



1.     We refer to the above  Agreement  and hereby give you notice that we wish
       to draw a Revolving Credit Advance under Tranche [A/B]:

       (a)    on |_| 19|_| ;

       (b)    in the sum of (pound)|_| [or currency |_|];

       (c)    with a Maturity Period in respect thereof of |_| months; and

       (d)    the  proceeds  of such fund to be  credited to [name and number of
              account] with [details of bank in London].

2.     We confirm that each condition  specified in clause 3 (The Conditions) is
       satisfied on the date of this Drawdown Notice.

3.     Words  and  expressions  defined  in the  Agreement  shall  have the same
       meanings where used herein.


                              For and on behalf of
                               [Name of Borrower]


                         ------------------------------
                                    Director



<PAGE>
                                    - 109 -



                                     Part C

                                Letters of Credit


To:    [Name and address of Facility Agent]
                                                                          [DATE]

Attention:  |_|


   (pound)1,275,000,000 Facilities Agreement dated 24 March 1999 (as amended)

1.     We refer to the above  Agreement and hereby give you notice that [name of
       Borrower]  requests  the Issue of a Letter of  Credit  as  follows  under
       Revolving Credit Facility Tranche [A/B]:

       (a)    Drawdown Date: [ _ ]

       (b)    Expiry Date: [ _ ]

       (c)    Currency: [ _ ]

       (d)    Beneficiary: [ _ ]

       (e)    Amount: [ _ ]

       (f)    Purpose: [ _ ]

       (g)    Issue instructions: [ _ ]

       (h)    Documents required to be presented: [ _ ].

2.     We confirm that:

       (a)    no event or  circumstance  has  occurred and is  continuing  which
              constitutes a Default that has not been waived; and

       (b)    the applicable  representations and warranties contained in clause
              9  (Representations  and Warranties) of the Agreement are true and
              correct  at the date  hereof as if made with  respect to the facts
              and circumstances existing at such date.

3.     Words  and  expressions  defined  in the  Agreement  shall  have the same
       meanings where used herein.


                              For and on behalf of
                               [Name of Borrower]

                         ------------------------------
                                    Director


<PAGE>
                                    - 110 -



                                   Schedule 3

                              Conditions Precedent

        Part A - Documents and Evidence required as Conditions Precedent

1.     Certified  copies of the memorandum  and articles of association  and the
       certificate of incorporation  and any change of name certificates of each
       Obligor, in the agreed form.

2.     Certified  copies of  resolutions  of the  shareholders  of Bidco and the
       board of  directors  of each  Obligor in the agreed  form  approving  the
       execution  and  delivery  of and  the  performance  of  their  respective
       obligations  under the  Finance  Documents  to which they are a party and
       authorising  a person or persons  (specified by name or office) on behalf
       of each of them to sign  such  documents  and any other  documents  to be
       delivered by them under such documents.

3.     A certificate of a duly authorised  signatory of each Obligor setting out
       the names and specimen  signatures  of the persons  authorised to sign on
       behalf of such Obligor the documents  referred to in clause (b) above and
       any other  documents to be delivered by such companies  pursuant to them,
       and confirming that the resolutions referred to in (b) above are still in
       effect and have not been varied or rescinded.

4.     The opinion of Lovell White Durrant,  English solicitors for the Facility
       Agent.

5.     The Fee  Letters,  duly  executed  and  countersigned,  and the  fees and
       expenses payable under the Fee Letters having been paid.

6.     Certified copy of the Bidco/Primary Borrower Guarantee.


               Part B - To be delivered by each Permitted Borrower


1.     A certified copy of the certificate of  incorporation  and the memorandum
       and articles of association of the Permitted Borrower.

2.     A certified  copy of the  resolutions  of the board of  directors  of the
       Permitted Borrower  evidencing approval of this Agreement and the Finance
       Documents  (to  which  that  company  is a  party)  and  authorising  its
       appropriate  duly  authorised   officers  to  execute  and  deliver  this
       Agreement  and those  Finance  Documents and to give all notices and take
       all other action  required by the relevant  company under this  Agreement
       and those Finance Documents.

3.     Specimen signatures, authenticated by the company secretary or a director
       of the Permitted  Borrower,  of the persons authorised in the resolutions
       of the board of directors referred to in paragraph 2 above.


<PAGE>
                                    - 111 -



4.     The Accession Certificate duly executed by the Permitted Borrower.

5.     A certificate of a director of the Permitted Borrower certifying that the
       borrowing and/or  guaranteeing of the liabilities  guaranteed by it would
       not cause any borrowing  limit  binding on the  Permitted  Borrower to be
       exceeded.


<PAGE>
                                    - 112 -



                                   Schedule 4

                       Calculation of Mandatory Cost Rate

The  Mandatory  Cost  Rate  is an  addition  to the  interest  rate  on a sum to
compensate the Banks for the cost  resulting  from the  imposition  from time to
time under the Bank of England Act 1998 and/or by the Bank of England and/or the
Financial Services  Authority (the "FSA") (or other United Kingdom  governmental
authorities  or agencies) of a requirement  to place  non-interest-bearing  cash
ratio deposits or Special  Deposits  (whether  interest bearing or not) with the
Bank  of  England  and/or  pay  fees  to the  FSA  calculated  by  reference  to
liabilities used to fund the sum.

The Mandatory Cost Rate will be the rate  determined by the Facility Agent to be
the arithmetic mean (rounded  upward,  if necessary,  to four decimal places) of
the rates  notified by each  Reference  Bank to the  Facility  Agent as the rate
resulting from the application of the formula:

          for sterling sums:       XL + S(L - D) + F x 0.01
                                   ------------------------
                                        100 - (X + S)

          for other sums:          F x 0.01
                                   --------
                                     300

where on the day of application:

X      is the  percentage  of  Eligible  Liabilities  (in  excess of any  stated
       minimum) by reference to which such  Reference Bank is required under the
       Bank of England Act 1998 to maintain cash ratio deposits with the Bank of
       England;

L      is the BBA  sterling  LIBOR rate  quoted at or about  11.00 a.m.  (London
       time) on Telerate (now at page 3750) on that day;

F      is the rate  payable  by such  Reference  Bank to the FSA  under the Fees
       Regulations,  expressed in pounds per (pound)1  million of such Reference
       Bank's fee base;

S      is  the  level  of  interest-bearing  Special  Deposits,  expressed  as a
       percentage of Eligible Liabilities, which such Reference Bank is required
       to maintain by the Bank of England (or other United Kingdom  governmental
       authorities or agencies); and

D      is the  percentage  rate per annum payable by the Bank of England to such
       Reference Bank on Special Deposits.

(X,  L, S and D are to be  expressed  in  the  formula  as  numbers  and  not as
percentages.  A negative  result  obtained  from  subtracting  D from L shall be
counted as zero.)

If any Reference Bank fails to notify any such rate to the Facility  Agent,  the
Mandatory Cost Rate shall be determined on the basis of the rate(s)  notified to
the Facility Agent by the remaining Reference Bank(s).

The Mandatory Cost Rate attributable to a sum for any period shall be calculated
at or about  11.00 a.m.  (London  time) on the first day of such  period for the
duration of such period.



<PAGE>
                                    - 113 -



The  determination  of the  Mandatory  Cost Rate for any  period  shall,  in the
absence of manifest error,  be conclusive and binding on the parties hereto.  If
the Facility Agent  determines that a change in circumstances  has rendered,  or
will render, the formula  inappropriate,  the Facility Agent (after consultation
with the Banks and the Primary  Borrower)  shall notify the Primary  Borrower of
the manner in which the Mandatory Cost Rate will subsequently be calculated.

For the purposes of this Schedule:

       The terms "Eligible Liabilities" and "Special Deposits" have the meanings
       given  to them  under  the  Bank of  England  Act  1998 or by the Bank of
       England (as appropriate) on the date of application of the formula.

       "fee base" has the meaning given to it in the Fees Regulations.

       "Fees Regulations" means, as appropriate, either:

       (a)    the Banking Supervision (Fees) Regulations 1998; or

       (b)    such  regulations as may be in force from time to time relating to
              the payment of fees for banking supervision after 31 March 1999.


<PAGE>
                                    - 114 -



                                   Schedule 5

                        Form of Substitution Certificate
             (referred to in clause 16.5 (Substitution Certificate))


NB 1.  Banks are advised not to employ Substitution Certificates or otherwise to
       assign,  novate or transfer  interests  in the  Agreement  without  first
       ensuring  that the  transaction  complies  with all  applicable  laws and
       regulations,  including the Financial  Services Act 1986 and  regulations
       made thereunder.

   2.  It is expected that Banks will enter into separate  arrangements  dealing
       with the  monies to be paid to the  Existing  Bank by the  Substitute  in
       consideration of the novation (e.g. principal, accrued interest, fees and
       any  mismatched  funding  adjustment).  Unless  the  Effective  Date is a
       rollover date, mismatches of parties' funding may arise. This Certificate
       does not deal with these  issues,  nor does it deal with any interim risk
       participation  the Existing Bank may grant to the Substitute  pending the
       Effective Date.


To:    [Name of  Facility  Agent] on its own behalf,  as  Facility  Agent and on
       behalf of each other party to the Agreement mentioned below.

Attention: |_|                                                            [DATE]

                            Substitution Certificate

This  Substitution  Certificate  relates  to a  (pound)1,275,000,000  Facilities
Agreement (the "Agreement") dated 24 March 1999 between TXU Eastern Holdings Ltd
as the initial  Borrower (1) TU Finance (No.2) Ltd and TU  Acquisitions  Limited
(2), Chase Manhattan plc, Lehman Brothers International (Europe),  Merrill Lynch
Capital  Corporation as Arrangers (3), various banks and financial  institutions
as Banks (4) The Chase  Manhattan  Bank as Issuing Bank (5) and Chase  Manhattan
International  Limited as Facility Agent (6) (as amended).  Terms defined in the
Agreement shall have the same meaning in this Substitution Certificate.

1.     [_Existing  Bank_] (the "Existing Bank") (a) confirms the accuracy of the
       summary of its  participation  in the  Agreement  set out in the schedule
       below; and (b) requests  [_Substitute Bank_] (the "Substitute") to accept
       by way of novation  the portion of such  participation  specified  in the
       schedule  to  this  Substitution   Certificate  by  counter-signing   and
       delivering  this  Substitution  Certificate  to the Facility Agent at its
       address for the service of notices specified in the Agreement.

2.     The Substitute  hereby  requests the Facility Agent (on behalf of itself,
       the other  Finance  Parties,  the Obligors  and all other  parties to the
       Agreement) to accept this Substitution  Certificate as being delivered to
       the  Facility  Agent  pursuant  to and for the  purposes  of clause  16.5
       (Substitution  Certificate)  of the  Agreement  so as to take  effect  in
       accordance with the terms of such clause 16.5 (Substitution  Certificate)
       on [_date of transfer_] (the  "Effective  Date") or on such later date as
       may be determined in accordance with the terms of the Agreement.

3.     The Facility Agent (on behalf of itself,  the other Finance Parties,  the
       Obligors and all other  parties to the  Agreement)  confirms the novation
       effected by this Substitution Certificate pursuant


<PAGE>
                                    - 115 -



       to and for the purposes of clause 16.5 (Substitution  Certificate) of the
       Agreement  so as to take  effect  in  accordance  with the  terms of such
       clause 16.5 (Substitution Certificate).

4.     The Substitute confirms:

       (a)    that it has  received  a copy  of the  Agreement  and  each of the
              Finance  Documents  and all other  documentation  and  information
              required by it in connection with the transactions contemplated by
              this Substitution Certificate;

       (b)    that it has not relied upon any  statement,  opinion,  forecast or
              other  representation or warranty made by the Existing Bank or any
              other  party  to  induce  it  to  enter  into  this   Substitution
              Certificate;

       (c)    that it has made and will  continue to make,  without  reliance on
              the Existing  Bank or any other Finance  Party,  and based on such
              documents as it considers  appropriate,  its own  appraisal of the
              creditworthiness  of  any  Obligor  and  the  Group  and  its  own
              independent  investigation of the financial  condition,  prospects
              and affairs of any Obligor  and the Group in  connection  with the
              making and  continuation of the Facilities under the Agreement and
              the other Finance Documents;

       (d)    that neither the Existing  Bank nor any other  Finance Party shall
              at  any   time  be   deemed   to  have  had  or  have  a  duty  or
              responsibility,  either historically, initially or on a continuing
              basis,  to  provide  the  Substitute  with  any  credit  or  other
              information with respect to any Obligor or any other member of the
              Group whether coming into its possession  before the making of any
              Advance  or at any time or times  thereafter,  other  than (in the
              case of the Facility  Agent) as provided in clause 19.1  (Specific
              duties of the Facility Agent) of the Agreement;

       (e)    that it has made and will  continue to make its own  assessment of
              the legality,  validity,  enforceability  and  sufficiency  of the
              Agreement,  any  other  Finance  Document  and  this  Substitution
              Certificate  and has not relied and will not rely on the  Existing
              Bank or any other Finance Party or any  statements  made by any of
              them in that respect;

       (f)    that, accordingly, none of the Existing Bank nor any other Finance
              Party makes any  representations  or  warranties in respect of, or
              shall have any liability or  responsibility  to the  Substitute in
              respect  of,  any of the  foregoing  matters  or any other  matter
              referred to in clause 20 (Exoneration) of the Agreement;

       (g)    that it is a Qualifying Bank; and

       (h)    that it has  signed  an  appropriate  confidentiality  undertaking
              issued by the Existing Bank.

5.     The  Substitute  hereby  undertakes  to the  Existing  Bank,  the Finance
       Parties, the Obligors and each of the other parties to the Agreement that
       it will perform in accordance with its terms all those  obligations which
       by  the   terms  of  the   Agreement   will  be   assumed   by  it  after
       counter-signature of this Substitution Certificate by the Facility Agent.

6.     The  Substitute   irrevocably  and  unconditionally   guarantees  to  and
       indemnifies  the  Issuing  Bank as  required  under  clause  4.7  (Banks'
       Guarantee and Indemnity).

7.     Without  limiting  the above  paragraphs,  nothing  in this  Substitution
       Certificate obliges the Existing Bank to:


<PAGE>
                                    - 116 -




       (a)    accept any  re-transfer  from the Substitute of any of the rights,
              benefits and/or obligations hereby transferred; or

       (b)    support  any losses  incurred by the  Substitute  by reason of any
              non-performance  by  the  Obligors  or  any  other  party  to  the
              Agreement or any of the Finance Documents or any document relating
              thereto of any of its obligations under the same.

8.     This  Substitution  Certificate  and the  rights and  obligations  of the
       parties  hereunder  shall be governed by and construed in accordance with
       English law.

Note:         This  Substitution  Certificate  is not a  security,  bond,  note,
              debenture, investment or similar instrument.

AS  WITNESS  the hands of the  authorised  signatories  of the  parties  to this
Substitution Certificate on the date appearing below.


                                  The Schedule



Term Facility

Commitment ((pound))                               Portion Transferred ((pound))

      [_]                                                      [_]

Contribution ((pound))                             Portion Transferred ((pound))

      [_]                                                      [_]

                           Next Interest Payment Date

                                       [_]




Revolving Credit Facility Tranche A

Commitment ((pound))                               Portion Transferred ((pound))

      [_]                                                      [_]

Contribution ((pound))                             Portion Transferred ((pound))

      [_]                                                      [_]

                              Next Maturity Date(s)

                                       [_]


Transferor's share of                              Portion of Letters of Credit
Outstanding Letters of Credit                      Transferred

      [_]                                                      [_]



<PAGE>
                                    - 117 -



Revolving Credit Facility Tranche B

Commitment ((pound))                               Portion Transferred ((pound))

      [_]                                                      [_]

Contribution ((pound))                             Portion Transferred ((pound))

      [_]                                                      [_]

                              Next Maturity Date(s)

                                       [_]

Transferor's share of                              Portion of Letters of Credit
Outstanding Letters of Credit                      Transferred

      [_]                                                      [_]

                      Administrative Details of Substitute

Lending Office:

Account for payments:

Telephone:

Telefax:

Attention:

[Existing Bank]                                    [Substitute]

By:                                                By:
   -------------------------                          -------------------------


Date:                                              Date:


The Facility Agent

By:
   -------------------------

Date:

on its own behalf and on behalf of all other  parties  to the  Agreement  (other
than the Existing Bank)


<PAGE>
                                    - 118 -



                                   Schedule 6

                          Form of Accession Certificate


To: [name of Facility  Agent] on its own behalf as Facility  Agent and on behalf
of each other party to the Agreement.

Attention:                                                                [Date]

                              Accession Certificate

This  Accession  Certificate  relates  to  a   (pound)1,275,000,000   Facilities
Agreement  (the  "Agreement")  dated 24 March 1999 between,  among  others,  the
Primary  Borrower  (1),  Finco 2 and Bidco  (2),  Chase  Manhattan  plc,  Lehman
Brothers International (Europe),  Merrill Lynch Capital Corporation as Arrangers
(3),  various banks and financial  institutions as Banks (4) The Chase Manhattan
Bank as Issuing Bank (5) and Chase Manhattan  International  Limited as Facility
Agent (6) (as  amended).  Terms  defined  in the  Agreement  shall have the same
meaning in this Accession Certificate.

1.     [|_|] (the  "Acceding  [|_|Borrower/Guarantor|_|]")  hereby  requests the
       Facility  Agent  (on  behalf  of  itself  and all  other  parties  to the
       Agreement) to accept this Accession Certificate as being delivered to the
       Facility   Agent  pursuant  to  and  for  the  purposes  of  clause  24.1
       (Additional Obligors) of the Agreement so as to take effect in accordance
       with the respective terms thereof on the date hereof.

2.     [|_|The  Acceding  Borrower is,  pursuant to this Accession  Certificate,
       acceding  to the  Agreement  as a Borrower  in  respect of the  Revolving
       Credit  Facility  and  accordingly  shall,  subject  to the terms of this
       Accession  Certificate and the Agreement,  become an Additional  Borrower
       and Additional Guarantor under the Agreement.|_|]

       [|_|The  Acceding  Guarantor is, pursuant to this Accession  Certificate,
       acceding  to the  Agreement  as a Guarantor  in respect of the  Revolving
       Credit  Facility  and  accordingly  shall,  subject  to the terms of this
       Accession  Certificate and the Agreement,  become an Additional Guarantor
       under the Agreement.|_|]

3.     The  Facility  Agent (on  behalf of itself  and all other  parties to the
       Agreement)  confirms the novation effected by this Accession  Certificate
       pursuant to and for the purposes of clause 24.1 (Additional  Obligors) of
       the Agreement so as to take effect in accordance with the terms thereof.

4.     The Acceding [|_|Borrower/Guarantor|_|] hereby undertakes to the Facility
       Agent (on behalf of itself and the other  Finance  Parties)  that it will
       perform in accordance with their terms all those obligations which by the
       terms  of  the  Agreement  will  be  assumed  by it as a  Borrower  after
       acceptance of this Accession Certificate by the Facility Agent.

5.     [This  Accession  Certificate  is  intended  to  take  effect  as a  Deed
       notwithstanding that the Facility Agent may execute it under hand only.]

6.     This Accession  Certificate and the rights and obligations of the parties
       hereunder  shall be governed by and construed in accordance  with English
       law.

IN WITNESS whereof this Accession Certificate has been entered into as a Deed on
the date above.


<PAGE>
                                    - 119 -



              Notice Details of Acceding [|_|Borrower/Guarantor|_|]

Address:

Telephone:

Telefax:

Attention:


The Acceding [|_|Borrower/Guarantor|_|]

[Execution  particulars  - Acceding  [|_|Borrower/Guarantor|_|]  to execute as a
Deed]




The Facility Agent

By:

|_|

on its own behalf and on behalf of
all the other parties to the Facility Agreement.


<PAGE>
                                    - 120 -



                                   Schedule 7

                          Terms of Borrowers' Indemnity


1.     The relevant Borrower  unconditionally and irrevocably  undertakes to the
       Issuing Bank as follows:

       (a)    the relevant  Borrower  will at all times on demand  indemnify the
              Issuing  Bank  against all actions,  suits,  proceedings,  claims,
              demands, liabilities, damages, costs, expenses, losses and charges
              whatsoever  (except  those  arising from the gross  negligence  or
              wilful  misconduct  of the Issuing Bank) in relation to or arising
              out of the Issue of any Letter of Credit and the relevant Borrower
              will pay to the Facility Agent for the account of the Issuing Bank
              in  immediately  available  funds and in the currency in which the
              relevant  Letter  of  Credit  is  denominated  the  amount  of all
              payments made (whether directly or by way of set-off, counterclaim
              or otherwise howsoever) and all losses, costs or expenses suffered
              or incurred from time to time by the Issuing  Bank,  arising under
              any liability  which the Issuing Bank has incurred under the Issue
              of any  Letter  of  Credit  and  any of the  indemnities  relating
              thereto;

       (b)    the liability of the relevant  Borrower under this indemnity shall
              not be affected by any time being given or by anything  being done
              by  the  Issuing  Bank  unless  the  same  constitutes  the  gross
              negligence or wilful misconduct of the Issuing Bank.

2.     The relevant Borrower  specifically  releases and indemnifies the Issuing
       Bank against the consequences of:

       (a)    the failure of the Issuing Bank or any other person to receive any
              telex or telephone  message in a form in which it was  despatched;
              and

       (b)    any delay that may occur during the course of the  transmission of
              any such message

       save in respect  of any  failure  arising  from the gross  negligence  or
       wilful misconduct of the Issuing Bank.

3.     (a)    The  obligations  of any  Borrower  under this  Agreement  and any
              L/C-Related  Document to reimburse  the Issuing Bank for a drawing
              under a Letter of Credit and to repay any  drawing  under a Letter
              of Credit which is converted into Advances, shall be unconditional
              and irrevocable, and shall be paid strictly in accordance with the
              terms of this Agreement and each such other  L/C-Related  Document
              under all circumstances, including the following (save in the case
              of gross negligence or wilful default):

              (i)    any lack of validity or enforceability of this Agreement or
                     any L/C-Related Document;

              (ii)   any change in the time,  manner or place of payment  of, or
                     in any other term of, all or any of the  obligations of the
                     relevant Borrower in respect of any Letter of Credit or any
                     other  amendment  or waiver of or any consent to  departure
                     from all or any of the L/C-Related Documents;

              (iii)  the existence of any claim, set-off, defence or other right
                     that the relevant Borrower may have at any time against any
                     beneficiary or any transferee of



<PAGE>
                                    - 121 -



                     any  Letter  of  Credit  (or any  person  for whom any such
                     beneficiary  or any such  transferee  may be  acting),  the
                     Issuing  Bank or any other  person,  whether in  connection
                     with this Agreement,  the transactions  contemplated hereby
                     or  by  the   L/C-Related   Documents   or  any   unrelated
                     transaction;

              (iv)   (save where the Issuing Bank should decline to make payment
                     under the terms of the  Uniform  Customs and  Practice  for
                     Documentary  Credits (1993) (ICC  Publication  No. 500 (the
                     "UCPDC")) any draft, demand,  certificate or other document
                     presented  under any Letter of Credit proving to be forged,
                     fraudulent,  invalid or  insufficient in any respect or any
                     statement   therein  being  untrue  or  inaccurate  in  any
                     respect;  or any  loss  or  delay  in the  transmission  or
                     otherwise  of any  document  required  in  order  to make a
                     drawing under any Letter of Credit;

              (v)    any payment by the Issuing  Bank under any Letter of Credit
                     against  presentation  of a draft or certificate  that does
                     not strictly comply with the terms of any Letter of Credit;
                     or any payment made by the Issuing Bank under any Letter of
                     Credit  to  any  person  purporting  to  be  a  trustee  in
                     bankruptcy, debtor- in-possession, assignee for the benefit
                     of creditors,  liquidator, receiver or other representative
                     of or successor to any  beneficiary  or  transferee  of any
                     Letter of Credit,  including any arising in connection with
                     any  voluntary  or  involuntary   proceeding,   process  or
                     arrangement under any law, regulation or procedure relating
                     to insolvency in any jurisdiction  including in relation to
                     winding  up,  bankruptcy,  administration,   administrative
                     receivership,  receivership  and management,  receivership,
                     judicial   custodianship,   judicial   trusteeship  or  the
                     appointment of a judicial  conservator or other official or
                     the reconstruction,  rescheduling, readjustment, moratorium
                     or suspension of payments of any Indebtedness;

              (vi)   any exchange,  release or non-perfection of any collateral,
                     or any  release  or  amendment  or waiver of or  consent to
                     departure from any other  guarantee,  for all or any of the
                     obligations  of the  relevant  Borrower  in  respect of any
                     Letter of Credit; or

              (vii)  any other circumstance or happening whatsoever,  whether or
                     not similar to any of the  foregoing,  including  any other
                     circumstance  that  might  otherwise  constitute  a defence
                     available to, or a discharge of, the relevant Borrower;

       (b)    The  obligations  of  the  relevant  Borrower  under  the  Finance
              Documents  shall not be  affected in any way by reason of any time
              or other indulgence which may be granted:

              (i)    to the  Issuing  Bank by any  beneficiary  of any Letter of
                     Credit; or

              (ii)   by the  Issuing  Bank to any  person  from whom it may seek
                     reimbursement  in  respect of sums paid out by it under any
                     Letter of Credit or any other  obligation  pursuant thereto
                     or pursuant to this Agreement, as the case may be.

4.     The Issuing Bank may, at any time, without affecting any security created
       by,  pursuant to or in relation to this  Agreement or the rights,  powers
       and remedies conferred upon it by this Agreement, any such security or by
       law:


<PAGE>
                                    - 122 -



       (a)    offer or agree to or enter into  agreement  for the  extension  or
              variation  of the Issue of any Letter of Credit  (provided it does
              so  in  accordance  with  written  instructions  of  the  relevant
              Borrower); or

       (b)    offer or agree to give any time or other  indulgence  for any sums
              paid  out by it under  any  Letter  of  Credit  or any  obligation
              pursuant to any Letter of Credit.

5.     Any rights  conferred on the Issuing Bank by this  Agreement  and by each
       document  executed in relation to this Agreement  shall be in addition to
       and not in  substitution  for or derogation of any other rights which the
       Issuing  Bank may at any time have to seek from any person  reimbursement
       of or indemnification against payments made or liabilities incurred under
       any  Letter  of  Credit,  any  obligation  pursuant  thereto  or to  this
       Agreement.

6.     Any  satisfaction  of obligations  by the relevant  Borrower or any other
       person to the Issuing Bank or any discharge  given by the Issuing Bank to
       that  Borrower or any other person in respect of  obligations  under this
       Agreement  or any related  agreement  between  the Issuing  Bank and that
       Borrower or any other person shall be, and be deemed always to have been,
       void if any act  satisfying  any of such  obligations  or on the faith of
       which any such discharge was given or any such agreement was entered into
       is subsequently  avoided by law (otherwise than as a result of any act or
       default by the Issuing Bank).

7.     Any Letter of Credit  shall be  considered  to be  outstanding  until the
       later of:

       (a)    its Expiry  Date,  or a  reasonable  time after its Expiry Date to
              allow for the presentation of documents  through an advising bank;
              and

       (b)    if, in the opinion of the Issuing Bank,  its  liability  under the
              Letter of Credit  does not  expire on its  stated  Expiry  Date or
              there is any doubt as to its  Expiry  Date,  the date of return of
              the  document  evidencing  the  Issuing  Bank's  liability  to the
              relevant beneficiary under any Letter of Credit.

8.     That Borrower confirms and agrees that:

       (a)    the Issuing  Bank shall make any payment  that  appears to be duly
              requested  or  demanded  in writing by any  beneficiary  under any
              Letter of Credit subject to its compliance (where applicable) with
              its  obligations  as Issuing  Bank under the UCPDC  regardless  of
              whether or not the relevant Borrower shall be in any way in breach
              of any of its obligations under or by virtue of the transaction in
              connection  with which the Letter of Credit was Issued and without
              making any  further  reference  to the  relevant  Borrower  or any
              investigation as to the bona fide nature,  validity or genuineness
              of any such request or demand (unless,  under  applicable law, the
              Issuing Bank is under no obligation to make such payment), and

       (b)    the  liability  of  such  Borrower  hereunder  and the  right  and
              obligation of the Issuing Bank to make such payment shall be in no
              way  diminished or prejudiced if it should appear that, as between
              the relevant Borrower and that  beneficiary,  that beneficiary was
              not  entitled  for  whatever  reason to demand  payment  under the
              Letter  of Credit or that  such  demand  was not valid or  genuine
              (subject as mentioned in paragraph 8(a) above).


<PAGE>
                                    - 123 -



                                   Schedule 8

                   Terms of Interbank Guarantee and Indemnity


1.     Each Bank  agrees to pay to the  Facility  Agent for the  account  of the
       Issuing Bank on demand made  through the Facility  Agent under clause 4.7
       (Banks'  Guarantee and  Indemnity) to such account as the Facility  Agent
       may have specified for the purpose in immediately  available funds and in
       the currency in which the relevant Letter of Credit is  denominated,  its
       Proportion of:

       (a)    any and every sum of money which such Borrower  shall from time to
              time be  liable  to pay to the  Issuing  Bank in  respect  of that
              Letter of Credit in full without  set-off or  counterclaim  on the
              later of the date that the Issuing Bank has itself to make payment
              under the Letter of Credit (as notified by the  Facility  Agent to
              such Bank in the  demand) and two  Banking  Days after  receipt by
              such Bank of such demand; and

       (b)    full cash cover for the Outstanding  Contingent  Liabilities under
              that  Letter  of Credit at any time  after  the  Issuing  Bank has
              become entitled to demand an indemnity  through the Facility Agent
              in respect thereof from the relevant  Borrower and which shall not
              have been paid at the time such demand is made.

2.     Where a Bank makes a payment  pursuant  to  paragraph 1 after the date on
       which the Issuing  Bank makes the  relevant  payment  under the Letter of
       Credit in question, such Bank shall pay on demand to the Issuing Bank its
       Proportion (as calculated in clause 4.7 (Banks' Guarantee and Indemnity))
       of such amount as the Issuing Bank  certifies as necessary to  compensate
       it for funding the amount demanded in the interim.

3.     No  assurance,  security  or payment  avoided  under any law  relating to
       bankruptcy, liquidation, insolvency,  reconstruction or reorganisation or
       any similar  laws and no release,  settlement,  arrangement  or discharge
       which  may have been  given or made on the  basis of any such  assurance,
       security or payment  shall  prejudice  or affect the right of the Issuing
       Bank to  recover  from  each of the  Banks  to the full  extent  of their
       obligations under clause 4.7 (Banks' Guarantee and Indemnity).

4.     The  obligations  of each Bank under  clause 4.7  (Banks'  Guarantee  and
       Indemnity)  shall not be  impaired,  affected  or revoked  (except to the
       extent  arising  from the Facility  Agent's  gross  negligence  or wilful
       default) by any act, omission,  matter, thing or circumstance  whatsoever
       which but for this  provision  might operate to release or exonerate such
       Bank from all or any part of its  obligations  under  clause 4.7  (Banks'
       Guarantee and Indemnity) or reduce,  impair or affect such obligations or
       cause all or any part of such  obligations  to be  irrecoverable  from or
       unenforceable  against any  Obligor or to  discharge,  reduce,  affect or
       impair any of such obligations, including without limitation:

       (a)    any  time,  waiver  or  indulgence  granted  to any  person or the
              forbearance  of the Issuing Bank in enforcing the  obligations  of
              any person  under any Finance  Document or in respect of any other
              guarantee, security, obligation, right or remedy;

       (b)    the recovery of any  judgment  against any person or any action to
              enforce the same;

       (c)    the taking of any other  security  from any person or the failure,
              refusal,  or neglect  to take,  perfect or  enforce,  any  rights,
              remedies  or  securities  from or against any person or all or any
              part of the security constituted by any of the Finance Documents;



<PAGE>
                                    - 124 -




       (d)    any alteration in the constitution of any Obligor or any defect in
              or  irregular  exercise of the  borrowing  or other  powers of any
              person or any legal  limitation,  disability,  incapacity or other
              circumstance  relating  to any  person  or any  legal  limitation,
              disability,  incapacity  or  other  circumstance  relating  to any
              person  whether  arising in relation  to any  Finance  Document or
              otherwise howsoever;

       (e)    subject to clause 22.4 (All Bank matters:  amendments and waivers)
              and  22.5  (New  Obligors),  any  amendment  or  supplement  to or
              variation  of any L/C -  Related  Document  or any  other  Finance
              Document;

       (f)    the  insolvency,   bankruptcy,   liquidation,   reconstruction  or
              reorganisation of, or analogous proceedings relating to any person
              or any  composition  or  arrangement  made by any of them with the
              Issuing  Bank,  any Bank or any other  person or any  transfer  or
              extinction  of any  liabilities  of any Obligor by any law,  order
              regulation, decree, court order or similar instrument;

       (g)    any   irregularity,   unenforceability   or   invalidity   of  any
              obligations  of any person  under any security or document (to the
              intent  that such  Bank's  obligations  under  clause 4.7  (Banks'
              Guarantee  and  Indemnity)  shall remain in full force as if there
              were no such irregularity, unenforceability or invalidity);

       (h)    the occurrence of an Event of Default;

       (i)    the existence of any claim,  set-off  defence or other right which
              any Obligor  may have  against  any  beneficiary  of any Letter of
              Credit or any other person; or

       (j)    any draft,  certificate or any other document  presented under any
              Letter of Credit  proving  to be  forged,  fraudulent,  invalid or
              insufficient in any respect or any statement  therein being untrue
              or inaccurate in any respect.

5.     The Issuing  Bank shall be entitled  to enforce the  obligations  of each
       Bank under clause 4.7 (Banks' Guarantee and Indemnity) without making any
       demand on or taking any proceedings  against or filing any proof of claim
       in any insolvency,  winding up,  dissolution or liquidation of any person
       or exhausting any right or remedy against any person or taking any action
       to enforce any part of the  security  constituted  or evidenced by any of
       the Finance Documents.

6.     The  obligations  of each Bank under  clause 4.7  (Banks'  Guarantee  and
       Indemnity)  shall be  continuing  obligations  and  shall  extend  to the
       ultimate  balance of the  obligations  referred to  therein.  If, for any
       reason, such obligations cease to be continuing obligations,  the Issuing
       Bank may open a new account with or continue  any  existing  account with
       any  person  and  the  liability  of  each  Bank in  respect  of  amounts
       guaranteed by it pursuant to clause 4.7 (Banks'  Guarantee and Indemnity)
       at the date of such cessation shall remain  regardless of any payments in
       or out of any such account.

7.     The  Issuing  Bank's  rights  under  clause  4.7  (Banks'  Guarantee  and
       Indemnity)  shall be in addition to and shall be in no way  prejudiced by
       any other  rights of or security  held by the Issuing Bank in relation to
       the  obligations  of any Obligor.  The Issuing Bank's rights under clause
       4.7  (Banks'  Guarantee  and  Indemnity)  are in  addition to and are not
       exclusive of those provided by law.




<PAGE>
                                    - 125 -



8.     A  certificate  of the  Issuing  Bank as to any amount due to it from any
       Bank  pursuant to clause 4.7 (Banks'  Guarantee and  Indemnity)  shall be
       conclusive (in the absence of manifest error).




<PAGE>
                                    - 126 -



                                   Schedule 9

                               Terms of Guarantee


1.     Guarantee

       Each Guarantor irrevocably, unconditionally, jointly and severally:

       (a)    as principal obligor, and not merely as surety, guarantees to each
              Finance Party prompt performance by each other Obligor (other than
              the  Primary  Borrower)  (the  "Guaranteed  Parties")  of all  its
              obligations  under the Revolving  Credit  Facility and the payment
              when due of all sums from  time to time  payable  to each  Finance
              Party by each other  Guaranteed  Party under or in connection with
              the Revolving Credit Facility;

       (b)    undertakes with each Finance Party that whenever a Borrower (other
              than the Primary  Borrower) does not pay any amount when due under
              or in  connection  with  obligations  under the  Revolving  Credit
              Facility, that Guarantor shall forthwith on demand by the Facility
              Agent pay that amount as if that Guarantor instead of the relevant
              Borrower  (other than the Primary  Borrower)  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 that  Guarantor  pursuant to this  Guarantee  is or
              becomes unenforceable, invalid or illegal.

       Provided that this guarantee shall not extend to:

              (i)    any  obligation  under  or  in  connection  with  the  Term
                     Facility;

              (ii)   interest,  commission,  fees,  charges,  costs or  expenses
                     relating to any of the matters  excluded from the guarantee
                     by sub-clause (i) above.

2.     Continuing guarantee

       This guarantee is a continuing  guarantee and will extend (subject to the
       proviso in paragraph 1 above) to the ultimate balance of all sums payable
       by the  Guaranteed  Parties  or any of them under the  Finance  Documents
       under or in connection with the Revolving Credit Facility,  regardless of
       any intermediate payment or discharge in whole or in part.

3.     Reinstatement

       (a)    Where any discharge  (whether in respect of the obligations of any
              Guaranteed  Party  or  any  security  for  those   obligations  or
              otherwise) in whole or in part of 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  Guarantor
              under this  schedule 9 (Terms of Guarantee)  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.


<PAGE>
                                    - 127 -



4.     Waiver of defences

       The  obligations  of each  Guarantor  under  this  schedule  9 (Terms  of
       Guarantee)  will  not be  affected  by any act,  circumstance,  omission,
       matter or thing which, but for this provision,  would reduce,  release or
       prejudice  any of  its  obligations  under  this  schedule  9  (Terms  of
       Guarantee)  or prejudice  or diminish  those  obligations  in whole or in
       part,  including  without  limitation  (whether or not known to it or any
       other party):

       (a)    any time,  indulgence or waiver granted to, or  composition  with,
              any Guaranteed Party 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 or  remedies  against,  or  security  over  assets  of, any
              Guaranteed  Party  or  other  person  or any  non-presentation  or
              non-observance of the full value of any security;

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

       (d)    any variation (however fundamental and whether or not involving an
              increase in liability of any Guaranteed Party) or replacement of a
              Finance  Document  or any  other  document  or  security  so  that
              references  to that Finance  Document in this schedule 9 (Terms of
              Guarantee) shall include each variation or replacement;

       (e)    any unenforceability, illegality, invalidity or frustration of any
              obligation  of any person under any Finance  Document or any other
              document or security  or any  failure of any  Guaranteed  Party or
              proposed  Guaranteed  Party to  become  bound by the  terms of any
              Finance Document;

       (f)    any postponement,  discharge, reduction,  non-provability or other
              similar  circumstance  affecting any  obligation of any Guaranteed
              Party  under a Finance  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 the Guarantor's
       obligations  under this  schedule 9 (Terms of  Guarantee)  remain in full
       force  and be  construed  as if  there  were no such  act,  circumstance,
       variation, omission, matter or thing.

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 or file any
       proof  or  claim  in any  insolvency  proceedings  of any  person  before
       claiming from the Guarantor under this schedule 9 (Terms of Guarantee).



<PAGE>
                                    - 128 -



6.     Appropriations

       Until  all  amounts  which  may be or become  payable  by the  Guaranteed
       Parties under or in connection  with the Revolving  Credit  Facility 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 monies,  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 no Guarantor  shall be
              entitled to the benefit of the same; and

       (b)    hold in an interest  bearing  suspense account any monies received
              from any  Guarantor  or on  account of any  Guarantor's  liability
              under this schedule 9 (Terms of Guarantee).

7.     Non-competition

       Until  all  amounts  which  may be or become  payable  by the  Guaranteed
       Parties under or in connection  with the Revolving  Credit  Facility have
       been irrevocably paid in full, no Guarantor shall, after a claim has been
       made or by virtue of any payment or performance by it under this schedule
       9 (Terms of Guarantee):

       (a)    be subrogated to any rights,  security or monies 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 monies  received on account of
              that  Guarantor's  liability  under  this  schedule  9  (Terms  of
              Guarantee)  and, to the extent that any Guarantor is so subrogated
              or  entitled  by  law,  that  Guarantor  (to  the  fullest  extent
              permitted by law) waives and agrees not to exercise or claim those
              rights,  security  or  money  or that  right  of  contribution  or
              indemnity;

       (b)    claim,  rank,  prove or vote as a creditor of any Guaranteed Party
              or its  estate  in  competition  with any  Finance  Party  (or any
              trustee or agent on its behalf) unless  otherwise  required by the
              Facility  Agent or by law (in which case any proceeds of any claim
              in respect of any rights,  security or monies of any Finance Party
              to  which  such  Guarantor  was  subrogated  will  be paid by such
              Guarantor to the Facility  Agent to be applied in accordance  with
              the provisions of the Finance Documents); or

       (c)    receive, claim or have the benefit of any payment, distribution or
              security from or on account of any Guaranteed  Party,  or exercise
              any right of set-off as against any Guaranteed  Party (and without
              prejudice to the foregoing,  each Guarantor shall forthwith pay to
              the  Facility  Agent for the  benefit  of the  Finance  Parties an
              amount equal to any amount so set-off by it).

       Each  Guarantor  shall hold in trust for and forthwith pay or transfer to
       the Facility Agent for the Finance Parties any payment or distribution or
       benefit of security  received by it contrary to this schedule 9 (Terms of
       Guarantee).



<PAGE>
                                    - 129 -



8.     Additional security

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

9.     Financial assistance

       Notwithstanding  any other  provision of this  guarantee,  this guarantee
       shall not operate to  guarantee,  or create any  indemnity in respect of,
       any money or  liability if and insofar as such money was borrowed or such
       liability  was  incurred  directly or  indirectly  for the purpose of the
       acquisition  by any  person  of shares in the  Guarantor  or its  holding
       company or the reduction or discharge of any existing  liability incurred
       for the  purpose of such  acquisition  and if and for so long as it would
       not be lawful  under  Chapter VI, Part V, of the  Companies  Act 1985 for
       such money or liability to be guaranteed by this guarantee.



<PAGE>
                                    - 130 -



                                 EXECUTION PAGES


PRIMARY BORROWER, FINCO 2 AND BIDCO

Signed for and on behalf of
TXU Eastern Holdings Limited
(company number 3505836)


[H. JARRELL GIBBS]
-----------------------------------



Signed for and on behalf of
TU Finance (No.  2) Limited
(company number 3514100)



[H. JARRELL GIBBS]
-----------------------------------



Signed for and on behalf of
TU Acquisitions Limited
(company number 3455523)



[H. JARRELL GIBBS]
-----------------------------------



JOINT LEAD ARRANGERS

Signed for and on behalf of
Chase Manhattan plc
as Arranger



[MARIAM TOULAN]
-----------------------------------





<PAGE>
                                    - 131 -



Signed for and on behalf of
Lehman Brothers International (Europe)
as Arranger



[ROGER BROOKES]
-----------------------------------



Signed for and on behalf of
Merrill Lynch Capital Corporation
as Arranger



[STEVE PARAS]
-----------------------------------



ORIGINAL BANKS

Signed for and on behalf of
Abbey National Treasury Services plc



[MARIAM TOULAN]
-----------------------------------



Signed for and on behalf of
ABC International Bank plc



[MARIAM TOULAN]
-----------------------------------



Signed for and on behalf of
ABN AMRO Bank N.V.



[MATTHEW CURRAN]
-----------------------------------


<PAGE>
                                    - 132 -




Signed for and on behalf of
AIB International Finance



[MARIAM TOULAN]
-----------------------------------



Signed for and on behalf of
Arab Bank plc



[I.R. GREENWOOD]                           [M. COOPER]
-----------------------------------        -----------------------------------




Signed for and on behalf of
Banca Monte dei Paschi di Siena SpA, London Branch



[ROBERTO BOCCANERA]                        [DUNCAN ROUSE]
-----------------------------------        -----------------------------------



Signed for and on behalf of
Banca Nazionale del Lavoro S.p.A., London Branch



[M. DAVIDSON-GAY]                          [D. ROSSER]
-----------------------------------        -----------------------------------



Signed for and on behalf of
Bank of America NT & SA



[JOHN WADE]
-----------------------------------



<PAGE>
                                    - 133 -



Signed for and on behalf of
The Bank of New York



[GERRY DORKIN]
-----------------------------------



Signed for and on behalf of
The Bank of Nova Scotia


[MARGOT WADDUP]
-----------------------------------



Signed for and on behalf of
The Bank of Tokyo-Mitsubishi, Ltd



[DAVID DALLISON]
-----------------------------------



Signed for and on behalf of
Banque Nationale de Paris London Branch



[RICHARD HITE]
-----------------------------------



Signed for and on behalf of
Barclays Bank PLC



[MICHAEL JOYNER]
-----------------------------------




<PAGE>
                                    - 134 -



Signed for and on behalf of
Bayerische Hypo- und Vereinsbank AG, London Branch



[STEPHEN J.B. PEECOCK]                     [TREVOR J.T. HEAP]
-----------------------------------        -----------------------------------



Signed for and on behalf of
Bayerische Landesbank Girozentrale, London Branch



[TIMOTHY R. HALL]
-----------------------------------



Signed for and on behalf of
Caisse Centrale de Caisses d'Epargne et de Prevoyance (CCCEP)


[MARIAM TOULAN]
-----------------------------------



Signed for and on behalf of
The Chase Manhattan Bank



[MARIAM TOULAN]
-----------------------------------



Signed for and on behalf of
Christiania Bank og Kreditkasse ASA



[MARIAM TOULAN]
-----------------------------------




<PAGE>
                                    - 135 -



Signed for and on behalf of
CIBC Wood Gundy plc



[DAVID R. AUSTIN]
-----------------------------------



Signed for and on behalf of Citibank, N.A.


[NIELS C. KIRK]
-----------------------------------



Signed for and on behalf of
Commerzbank Aktiengesellschaft, London Branch



[J.  R.  BOURNE]                           [H.L. NUTTALL]
-----------------------------------        -----------------------------------



Signed for and on behalf of
Credit Lyonnais



[MARGARET STEWART]
-----------------------------------



Signed for and on behalf of
Credit Suisse First Boston



[N.D. HORNE]                               [R. SMITH-MORGAN]
-----------------------------------        -----------------------------------


<PAGE>
                                    - 136 -



Signed for and on behalf of
The Dai-Ichi Kangyo Bank, Limited



[COLIN VITTERY]
-----------------------------------


Signed for and on behalf of
Den Danske Bank Aktieselskab



[A.J. PETTIGREW]
-----------------------------------


Signed for and on behalf of
Deutsche Bank AG London



[MICHAEL STARMER-SMITH]                    [RICHARD SEDLACEK]
-----------------------------------        -----------------------------------


Signed for and on behalf of
First Union National Bank, London Branch



[TOM QUIGLEY]
-----------------------------------


Signed for and on behalf of
ING Bank N.V., London Branch



[ANDREW PRECIOUS]
-----------------------------------


Signed for and on behalf of
KBC Bank N.V., London Branch


[MARIAM TOULAN]
-----------------------------------



<PAGE>
                                    - 137 -




Signed for and on behalf of
Lehman Commercial Paper Inc.



[ROGER BROOKS]
-----------------------------------


Signed for and on behalf of
Mellon Bank N.A.



[KEITH BRACKLEY]
-----------------------------------



Signed for and on behalf of
Merrill Lynch Capital Corporation



[STEVE PARAS]
-----------------------------------



Signed for and on behalf of
National Australia Bank Limited (ACN 004044937)



[DAVID RAWSON]
-----------------------------------



Signed for and on behalf of
National Westminster Bank Plc



[STEVE BARLOW]
-----------------------------------




<PAGE>
                                    - 138 -



Signed for and on behalf of
The Royal Bank of Scotland plc



[LEE MORSE]
-----------------------------------



Signed for and on behalf of
The Sanwa Bank, Limited



[PETER LUCAS]
-----------------------------------



Signed for and on behalf of
Societe Generale, London Branch



[MARIAM TOULAN]
-----------------------------------



Signed for and on behalf of
The Toronto-Dominion Bank



[MARIAM TOULAN]
-----------------------------------



Signed for and on behalf of
UBS AG



[MARIAM TOULAN]
-----------------------------------




<PAGE>
                                    - 139 -


Signed for and on behalf of
Westdeutsche Landesbank Girozentrale



[GILES TAYLOR]
-----------------------------------





ISSUING BANK



Signed for and on behalf of
The Chase Manhattan Bank
as Issuing Bank



[MARIAM TOULAN]
-----------------------------------



FACILITY AGENT

Signed for and on behalf of
Chase Manhattan International Limited
as Facility Agent



[KATHRYN JEPSON]
-----------------------------------






<PAGE>