Document:

Deed of Amendment and Guarantee for BEG (UK) Limited dated March 31, 2003

 Exhibit 4.08 
  
 BNFL/BEG(UK) COMMERCIAL IN CONFIDENCE 
  
  
 Dated    July 2003 
  
  
  
 (1) BRITISH ENERGY GENERATION (UK) LIMITED 
  
  
 (2) BRITISH NUCLEAR FUELS plc 
  
  
 (3)
BRITISH ENERGY plc 
  
  
  
  
  
  

  
 DEED
OF AMENDMENT 
 relating to 
 Deed of
Amendment and Guarantee dated 31 March 2003 
  

 BNFL/BEG(UK) COMMERCIAL IN CONFIDENCE 
  

 THIS DEED OF AMENDMENT is made the    day of July 2003 
  
 BETWEEN 
  

	(1)	 	BRITISH ENERGY GENERATION (UK) LIMITED (formerly SCOTTISH NUCLEAR LIMITED), a company incorporated in Scotland (company number SC117121) whose registered office is at 3
Redwood Crescent, Peel Park, East Kilbride, G74 5PR (BEG(UK) which term shall include its successors in title and permitted assigns); 

  

	(2)	 	BRITISH NUCLEAR FUELS plc, a company incorporated in England and Wales (company number 1002607) whose registered office is at Risley, Warrington, Cheshire WA3 6AS (BNFL
which term shall include its successors in title and permitted assigns); and 

  

	(3)	 	BRITISH ENERGY plc, a company incorporated in Scotland (company number SC162273) whose registered office is at 3 Redwood Crescent, Peel Park, East Kilbride, G74 5PR (BE
which term shall include its successors in title and permitted assigns), 

  
 herein also referred to individually as Party and collectively as Parties as the context requires. 
  
 WHEREAS 
  

	(A)	 	On 31 March 2003 BEG(UK), BNFL and BE entered into a deed of amendment and guarantee (the March 2003 Deed) in connection with the agreement (as amended) relating to the supply
of fuel for use in advanced gas-cooled reactors from 1 April 1989 entered into by BEG(UK) and BNFL on 30 March 1995 (the Agreement). 

  

	(B)	 	The Parties wish to enter into this Deed of Amendment to make certain amendments to the March 2003 Deed with regard to the Termination Conditions set out in Clause 4.1 of the March 2003 Deed
and the parent-company guarantee set out in Clause 6 of the March 2003 Deed, and to amend Clause 33 of the Agreement. 

  
 NOW THIS DEED OF AMENDMENT WITNESSES as follows: 
  

	1.	 	INTERPRETATION 

  
 1.1 Unless the context otherwise requires or unless otherwise defined in this Deed of Amendment, words and expressions defined in, or to be construed in accordance with, the March 2003 Deed shall have the same meaning and
construction when used in this Deed of Amendment. 
  
 1.2 Words importing persons or Parties
shall include firms, corporations and any organisation having legal capacity. 
  

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 BNFL/BEG(UK) COMMERCIAL IN CONFIDENCE 
  

 1.3 Words importing the singular only also include the plural and vice versa where the context requires. 
  
 1.4 Headings in this Deed of Amendment are for ease of reference only and shall not be taken into
consideration in the interpretation or construction of this Deed of Amendment. 
  

	2.	 	COMMENCEMENT 

  
 This Deed of Amendment shall take effect as at and from the date of this Deed of Amendment. 
  

	3.	 	AMENDMENTS 

  
 3.1 The following amendments shall be made to the March 2003 Deed to reflect the changes described in Recital B. 
  

	(a)	 	The following clause shall be added between clause 3.1(w) and clause 3.1(x): 

  

	  	 	“(wA) Clause 33 shall be deleted and replaced with: 

  

	 	‘33.	 	ADJUSTMENT OF THE PAYMENT PROFILES BY SNL 

  

	 	  	 	33.1 SNL shall have an option exercisable at any time during the term of this Agreement to accelerate payments to BNFL subject to an aggregate upper limit of
[            ]* ([            ]* pounds) per annum after adjustment in accordance with Clause 33.1.2 (or such other sum as may be
agreed). For this purpose: 

  

	 	  	 	33.1.1 SNL shall give 36 months notice (or such other notice period as may be agreed) of any intent to accelerate payment; 

  

	 	  	 	33.1.2 SNL and BNFL shall discuss and agree which payments under this Agreement are to be accelerated and such payments shall be adjusted by a discount rate to be agreed by the Parties and
escalated in accordance with the provisions of Appendix 7 of this Agreement; 

  

	 	  	 	33.1.3 SNL and BNFL shall forthwith agree to and maintain a financial model to facilitate and record the application of this Clause 33; and 

  

	 	  	 	33.1.4 the payment profile identified in this Agreement shall be modified to reflect any Agreement reached under this Clause 33. In all other respects this Agreement shall continue in full
force and effect following such modification.’” 

  

	(b)	 	Clause 4.1(c) shall be deleted and replaced with the following: 

  
 * Confidential treatment requested. 
  

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 BNFL/BEG(UK) COMMERCIAL IN CONFIDENCE 
  

 “BE, the Material Creditors and HMG becoming bound under agreements and/or a scheme of arrangement of BE
to give effect to the terms of the Restructuring disclosed by BE to BNFL prior to or at the same time as BNFL entering into this Deed, and such agreements and/or scheme are not subject to any outstanding conditions (other than any condition in any
such agreement to the effect that the unconditionality of such agreement and/or scheme is dependent upon the unconditionality of this Deed or any other document listed in Schedule 2) and are consistent with the Heads of Terms;” 
  

	(c)	 	Clause 4.1(g) shall be deleted and replaced with: “4.1(g) [Not Used]”. 

  

	(d)	 	Clause 6.5 shall be deleted and replaced with the following: 

  
 “In the event that BE ceases to be the ultimate holding company of BEG(UK), BE shall forthwith notify BNFL thereof and, at the request of BNFL, BE shall assign
and part with its rights and obligations under (a) the Agreement (as amended by this Deed) and this Deed and (b) all other agreements and deeds entered into by BE, BNFL and either BEG(UK) or BEG (as the case may be) under which BE has any rights or
obligations, to the ultimate holding company of BEG(UK), subject to BE being released and discharged from all obligations, duties and liabilities under the Agreement (as amended by this Deed) and this Deed and any such other agreements and
deeds.” 
  
 3.2 Save as herein amended, the March 2003 Deed shall continue in full
force and effect. 
  

	4.	 	INCONSISTENCY 

  
 4.1 In the event of any inconsistency between this Deed of Amendment and provisions contained in or incorporated into the March 2003 Deed, this Deed of Amendment shall prevail. 
  
 5. GOVERNING LAW 
  
 This Deed of Amendment shall be governed by and construed in accordance with English law. 

 

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 BNFL/BEG(UK) COMMERCIAL IN CONFIDENCE 
  

 IN WITNESS WHEREOF the Parties hereto have caused this Deed of Amendment to be duly executed as their Deed the day and
year first before written. 
  

	 EXECUTED as a DEED by
	  	)
	 	  	)
	 as attorney for
	  	)
	 BRITISH ENERGY GENERATION
	  	)
	 (UK) LIMITED
	  	)
		
	 in the presence of:
	  	 
		
	 Signature of Witness:
	  	 
	 Name of Witness:
	  	 
	 Address of Witness:
	  	 
	 Occupation of Witness:
	  	 
		
	 The Common Seal of
	  	)
	 BRITISH NUCLEAR FUELS plc
	  	)
	 was hereunto affixed in the
	  	)
	 presence of
	  	)
		
	 Director
	  	 
		
	 Secretary/ Director
	  	 
		
	 EXECUTED as a DEED by
	  	)
	 	  	)
	 as attorney for
	  	)
	 BRITISH ENERGY plc
	  	)
		
	 in the presence of:
	  	 
		
	 Signature of Witness:
	  	 
	 Name of Witness:
	  	 
	 Address of Witness:
	  	 
	 Occupation of Witness:
	  	 

  

 4 

 BNFL/BEG(UK) COMMERCIAL IN CONFIDENCE 
  
 EXECUTION COPY 
  
  
 Dated 31 March 2003 
  
  
  
  
  
  
 BRITISH ENERGY GENERATION (UK) LIMITED 
  
  
  
 BRITISH NUCLEAR FUELS plc 
  
  
  
 BRITISH ENERGY plc 
  
  
  
  
  
  

  
 DEED OF AMENDMENT AND GUARANTEE 
  

  
 [LOGO OF FRESHFIELDS BRUCKHAUS DERINGER] 

 BNFL/BEG(UK) COMMERCIAL IN CONFIDENCE 
  

 CONTENTS 
  

	 CLAUSE

	  	 	  	PAGE

			
	1.	  	INTERPRETATION	  	1
			
	2.	  	COMMENCEMENT	  	2
			
	3.	  	AMENDMENTS TO THE AGREEMENT	  	2
			
	4.	  	TERMINATION CONDITIONS	  	28
			
	5.	  	COMPETITION	  	30
			
	6.	  	PARENT-COMPANY GUARANTEE AND FURTHER ASSURANCE	  	32
			
	7.	  	ACKNOWLEDGEMENTS BY BE AND BEG(UK)	  	33
			
	8.	  	INCONSISTENCY	  	33
			
	9.	  	GOVERNING LAW	  	33
			
	10.	  	DISPUTE RESOLUTION	  	33
		
	SCHEDULE 1 AMENDMENT AGREEMENTS	  	35
		
	SCHEDULE 2 DOCUMENTS FOR TERMINATION CONDITIONS	  	36

  

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 BNFL/BEG(UK) COMMERCIAL IN CONFIDENCE 
  

 THIS DEED OF AMENDMENT AND GUARANTEE is made the 31st day of March 2003 
  
 BETWEEN: 
  

	(1)	 	BRITISH ENERGY GENERATION (UK) LIMITED (formerly SCOTTISH NUCLEAR LIMITED) (company number SC117121), a company incorporated in Scotland whose registered office is at 3 Redwood
Crescent, Peel Park, East Kilbride, G74 5PR (BEG(UK) which term shall include its successors in title and permitted assigns); 

  

	(2)	 	BRITISH NUCLEAR FUELS plc (company number 1002607), a company incorporated in England and Wales whose registered office is at Risley, Warrington, Cheshire, WA3 6AS (BNFL
which term shall include its successors in title and permitted assigns); and 

  

	(3)	 	BRITISH ENERGY plc (company number SC162273), a company incorporated in Scotland whose registered office is at 3 Redwood Crescent, Peel Park, East Kilbride, G74 5PR (BE
which term shall include its successors in title and permitted assigns). 

  
 WHEREAS: 
  
 (A) On 30 March 1995 BNFL entered into an
agreement relating to the supply of fuel for use in advanced gas-cooled reactors from 1 April 1989 with BEG(UK), the said agreement being subsequently amended pursuant to the Amendment Agreements. References in this Deed to the Agreement are to the
said agreement as so amended. 
  
 (B) The parties wish to enter into this Deed to make
certain amendments to the Agreement with regard to the supply of fuel from 1 April 2003 to 31 March 2006 and for BE to provide a parent-company guarantee. 
  
 NOW THIS DEED WITNESSES as follows: 
  

	1.	 	INTERPRETATION 

  
 1.1 Unless the context otherwise requires or unless otherwise defined in this Deed, words and expressions defined in, or to be construed in accordance with, the Agreement shall have the same meaning and construction when used
in this Deed. 
  
 1.2 In this Deed, the following expressions shall have the following
meanings: 
  
 Amendment Agreements means the agreements listed in Schedule 1
to this Deed; 
  
 BEG means British Energy Generation Limited (formerly
Nuclear Electric Limited) (company number 3076445), a company incorporated in England and Wales whose registered office is at Barnett Way, Barnwood, Gloucestershire GL4 3RS; 
  
 EC Treaty means the Treaty Establishing the European Community of 25 March 1957 as from time to time amended; 
  
 Heads of Terms means the non-binding heads of terms as initialled by Mr. John Edwards and
Mr. Keith Lough, on behalf of BNFL and BE respectively, on 28 November 2002; 
  

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 BNFL/BEG(UK) COMMERCIAL IN CONFIDENCE 
  

 Historic Spent Fuel has the meaning given to the term “Fuel” in the Historic Spent Fuel
Agreement; 
  
 Historic Spent Fuel Agreement means the agreement
to be entered into by the parties relating to the storage and reprocessing of irradiated oxide fuel and related services in relation to Historic Spent Fuel; 
  
 HMG means the Government of the United Kingdom; 
  
 LIBOR means the three month London Inter-Bank Offer Rate for Sterling loans, quoted daily by the London edition of the Financial Times or, in the event that on a
particular day that publication is not published, the three month London Inter Bank Offer Rate at 11.00am as quoted by the National Westminster Bank plc for Sterling loans or such other rate as the parties agree; 
  
 Material Creditors means the “Creditors” as defined in the Standstill
Agreement; 
  
 Standstill Agreement means the standstill agreement between BE,
BNFL and the other companies and creditors listed in Schedule 2 and 3 thereto, dated 14 February 2003; 
  
 Termination Conditions means the conditions set out in clause 4.1 below. 
  
 1.3 Words importing persons or Parties shall include firms, corporations and any organisation having legal capacity. 
  
 1.4 Words importing the singular only also include the plural and vice versa where the context requires. 
  
 1.5 Headings in this Deed are for ease of reference only and shall not be taken into consideration in the interpretation or construction of this Deed.

  

	2.	 	COMMENCEMENT 

  
 This Deed shall take effect as at and from 1 April 2003. 
  

	3.	 	AMENDMENTS TO THE AGREEMENT 

  
 BEG(UK) and BNFL agree that: 
  
 3.1 The following amendments shall be made to the Agreement as at and from 1 April 2003 to reflect the changes described in Recital B. 
  

	(a)	 	The definition of “fuel supply period” contained in Clause 1.1 shall be deleted and replaced with the following: 

  

	  	 	“fuel supply period means the period from 1 April 1989 to 31 March 2006;” 

  

	(b)	 	The definitions of “Contracts”, “RPI or Retail Price Index” and “Working Day” shall be deleted and replaced, respectively, with the following:

  

	  	 	 “Contracts means (i) such of those contracts entered into by BNFL before 1 April 2003 for the provision of UOC and/or UF6 and/or Enriched UF6 and/or the conversion, enrichment
and/or storage of such material as were or are proposed to be entered into for the purposes of supplying fuel to SNL under this Agreement and (ii) 

  

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 BNFL/BEG(UK) COMMERCIAL IN CONFIDENCE 
  

	 	 
such of those contracts entered into by BNFL after 31 March 2003 and before 1 April 2006 for the provision of UOC and/or UF6 and/or Enriched UF6 and/or the conversion, enrichment
and/or storage of such material as have been or are proposed to be entered into for the purposes of supplying fuel to SNL under this Agreement solely before 1 April 2006; 

  

	  	 	RPI or Retail Price Index means the Retail Prices Index (All Items) published in the Monthly Digest of Statistics by the Office for National Statistics (or any successor entity
performing an equivalent function) of the United Kingdom, which shall be used to the full precision with which it is published. In the event that the Retail Price Index is discontinued or the basis of its calculation is modified, SNL and BNFL shall
adopt such alternative index as shall be specified in replacement by the body in the United Kingdom responsible for the production of such statistics or, in the absence of such alternative index being specified or the alternative being unacceptable
to SNL or BNFL, such index as may be agreed; 

  

	  	 	Working Day means any day from Monday to Friday between 0900 and 1600 inclusive, other than Christmas Day, Good Friday and statutory bank holidays in England or Scotland and
local public holidays in East Kilbride (or wherever else in Scotland SNL’s registered office may be situated);” 

  

	(c)	 	All references to “enriched uranium material”, “fuel pellet”, “UF6” and “U3O8” shall be replaced with and read as, respectively, “Enriched Uranium
Material”, “Fuel Pellet”, “UF6” and “U3O8” wherever they appear throughout the Agreement
and the existing definitions of “enriched uranium material”, “fuel pellet” and “UF6” shall be deleted and replaced, respectively, with the following: 

  

	  	 	“Enriched Uranium Material means products created or used during the processing of enriched fuel including but not limited to UF6, U02 and UOC powders, Fuel Pellets and process residues;

  

	  	 	Fuel Pellet means a uranium dioxide pellet manufactured to meet a Contract Specification; 

  

	  	 	UF6 means natural
uranium hexafluoride which has been accepted by the relevant supplier holding such material;” 

  

	(d)	 	The following definitions shall be added to Clause 1.1: 

  

	  	 	“Affiliate means, in relation to a Party, a company over which that Party has control or which controls that Party or which is controlled by the same company as controls
that Party (and, for the purposes of this definition, control has the meaning given to such term in Section 840 of the Income and Corporation Taxes Act 1988); 

  

	  	 	Assay means the total weight of U235 isotope divided by the total weight of all uranium isotopes expressed as a weight percent (wt%); 

  

	  	 	Enriched UF6 means
uranium hexafluoride having a content of the isotope uranium 235 higher than 0.711% w/w; 

  

	  	 	Financial Year 2003 means the financial year ending 31 March 2003; 

  

	  	 	Group means, in relation to a Party, that Party and each Affiliate of that Party; and Group Company means any company within such a Group;

  

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 BNFL/BEG(UK) COMMERCIAL IN CONFIDENCE 
  

	  	 	LCIA means the arbitral institution formerly known as the London Court of International Arbitration; 

  

	  	 	LMA means the Liabilities Management Authority or any other body established by the Government of the United Kingdom for the purpose of assuming responsibility for cleaning up
the “nuclear legacy”, as defined in and contemplated by the White Paper; 

  

	  	 	NE Agreement means the agreement between BNFL and Nuclear Electric Limited dated 3 June 1997 relating to the supply of fuel for use in advanced gas-cooled reactors from 1 April
2000 as amended; 

  

	  	 	New BEG(UK) Fuel Supply Agreement means the Agreement for the Supply of Fuel for use in Advanced Gas Cooled Reactors from 1 April 2006 to be entered into between BNFL, British
Energy Generation (UK) Limited (formerly SNL) and British Energy plc; 

  

	  	 	New BNFL means a new company to be created pursuant to the restructuring of BNFL and its businesses in connection with the establishment of the LMA, as such restructuring is
referred to in and contemplated by the White Paper; 

  

	  	 	New Contracts means such of those contracts entered into by BNFL for the provision of UOC and/or UF6 and/or Enriched UF6 and/or the conversion, enrichment and/or storage of such material as have
been or are proposed to be entered into for the purposes of supplying Fuel to SNL from 1 April 2006 under the New BEG(UK) Fuel Supply Agreement, excluding the Contracts; 

  

	  	 	New Uranics Commitment means the exercise of an option under, the extension of the term of, or the renegotiation of, any agreement between BNFL and a counterparty to a Contract
for the purposes, whether in whole or in part, of supplying fuel to SNL from 1 April 2006; 

  

	  	 	Stock and Procurement Strategy means the Stock and Procurement Strategy (as defined) under the NE Agreement; 

  

	  	 	UOC means natural uranium ore concentrate, also known as U3O8 (or triuranium octoxide), which has been accepted by the relevant supplier holding such material;

  

	  	 	Uranics Review Board means the Uranics Review Board (as defined) under the NE Agreement; 

  

	  	 	Uranium Material means uranium in any form, including UOC, UF6
or Enriched Uranium Material; 

  

	  	 	White Paper means the White Paper published by the Government of the United Kingdom with command number 5552 entitled “Managing the Nuclear Legacy: A Strategy for
Action”, presented to Parliament by the Secretary of State for Trade and Industry in July 2002;” 

  

	(e)	 	The following clause shall be inserted after Clause 1.4: 

  

	  	 	“1.5 All references to £ shall refer to pounds sterling.” 

  

	(f)	 	Clause 2 shall be deleted and replaced with: 

  

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 BNFL/BEG(UK) COMMERCIAL IN CONFIDENCE 
  

 “DURATION OF AGREEMENT 
  

	 	2.1	 	This Agreement shall be deemed to have commenced on 1 April 1989 and, subject to the provisions of Clauses 22 (Force Majeure), 24 (Non Performance) and 30 (Termination and Survival), shall
continue in force until 31 March 2006.” 

  

	 	2.2	 	Subject to Clause 2.3: 

  

	 	2.2.1	 	On 31 March 2006, SNL will: 

  

	 	(a)	 	purchase all stocks of U308, natural UF6 and Enriched UF6 from BNFL which have been acquired by BNFL in order to meet the requirements of SNL reasonably anticipated under this Agreement, and that at a price equal to
the cost of acquisition to BNFL of all such stocks (so long as such costs of acquisitions are reasonable); and 

  

	 	(b)	 	accept an assignment (in a form to be agreed between the parties and subject to all requisite consents) of all contracts which BNFL has entered into in order to meet the requirements of SNL
reasonably anticipated under this Agreement. 

  
 2.2.2 The
price payable by SNL pursuant to Clause 2.2.1(a) shall be payable in full within 7 Working Days of the date on which the Parties shall agree the level (in tonnes), Assay (in the case of Enriched UF6) and cost price of such stocks, or if the Parties cannot agree, the date on which the same may be determined by an arbiter pursuant to Clause 28. 
  

	 	2.3	 	If the New BEG(UK) Fuel Supply Agreement comes into force in accordance with its terms, Clause 2.2 shall not apply.” 

  

	(g)	 	Clause 4.2 shall be deleted and replaced with: 

  

	  	 	“4.2 BNFL shall provide all materials and services necessary to manufacture and deliver fuel to AGR power stations throughout the fuel supply period, save that in the case of any fuel
elements due for delivery in the period from 1 April 1989 to 31 March 1996, BNFL shall not be required to supply uranics”. 

  

	(h)	 	The following clause shall be inserted after Clause 4.2: 

  

	 	“4.2A	 	In the period 1 April 2005 to 31 March 2006, BNFL shall: 

  

	 	4.2A.1	 	comply with the Stock and Procurement Strategy proposed by BNFL pursuant to clause 3.8 of the NE Agreement and with the final Security of Supply Policy under the NE Agreement during such
period in procuring uranics for the purposes of manufacture into fuel for delivery to SNL pursuant to Clause 4.2; 

  

	 	4.2A.2	 	provide to SNL a report (the Portfolio Management Report) containing, information regarding the items listed in Appendix 21 on or before 1 May 2005, and an update (the
Quarterly Update to the Portfolio Management Report) to the information set out in the relevant Portfolio Management 

  

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 BNFL/BEG(UK) COMMERCIAL IN CONFIDENCE 
  

	 	 
Report on or before the last Working Day of each calendar quarter thereafter (containing the information set out in Appendix 21). The purpose of the Portfolio
Management Report is to provide SNL with information for its internal business planning; 

  

	 	4.2A.3	 	(subject to Clause 4.2A.1) use all reasonable endeavours to ensure that the value of uranic stocks procured to supply fuel to SNL pursuant to this Agreement, does not exceed £25 million
on 31 March 2006; and 

  

	 	4.2A.4	 	the Uranics Review Board operating during such period shall take into account considerations relating to BNFL’s procurement of uranics pursuant to this Agreement.”

  

	(i)	 	Clauses 4.8, 4.9 and 4.10 shall be deleted and replaced with: 

  

	  	 	“4.8 From 1 April 2005, BNFL shall provide to SNL, within 7 days of the end of each quarter, a statement of Enriched Uranium Material (other than the allowance for process losses) held
at Springfields for the purpose of supplying fuel to SNL under this Agreement. This statement shall be known as the Enriched Uranium Statement (WIP) and shall be in the format shown in Appendix 9 of this Agreement. 

  

	  	 	4.9 From 1 April 2005, BNFL shall provide to SNL, by 30 April, 31 July and 31 January in each year, a statement giving a breakdown of Enriched Uranium Material held at Springfields for the
purpose of supplying fuel to SNL under this Agreement. It is recognised by SNL that the breakdowns will constitute BNFL’s best estimate of the stock position. This statement shall be known as the Enriched Uranium Breakdown Statement and shall
be in the form of Appendix 5 of this Agreement. The statement provided on 30 April, 31 July and 31 January shall relate to the position on the preceding 31 March, 30 June and 31 December, respectively. 

  

	  	 	4.10 From 1 April 2005, BNFL shall provide to SNL, by 31 October in each year, a uranium breakdown statement based on the September Physical Inventory Verification audit carried out by
Euratom on behalf of the International Atomic Energy Agency. The statement shall be known as the Enriched Uranium Breakdown Statement (PIV) and shall be in the format shown in Appendix 6 of this Agreement.” 

  

	(j)	 	Clause 4.12 shall be deleted and replaced with: 

  

	 	“4.12	 	From 1 April 2003, BNFL shall not enter into a New Contract or New Uranics Commitment: 

  

	 	4.12.1	 	with a value (calculated by deriving the sum of all years of the contract from 1 April 2006 by multiplying the annual base quantity of the contract for each year of the contract by the base
price for that year, and factoring this by the relevant exchange rate if necessary, or if the price is market based, by multiplying the total base quantity of the contract for all years of the contract after from 1 April 2006 by the relevant market
price at the time of submission, and factoring this by the relevant exchange rate if necessary) exceeding [            ]*; or 

  
 * Confidential treatment requested. 
  

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 BNFL/BEG(UK) COMMERCIAL IN CONFIDENCE 
  

	 	4.12.2	 	which extends beyond 31 March 2006, with any other member of the BNFL Group or any company in which a member of the BNFL Group has the ability to exercise or right to obtain direct or
indirect control over that company’s affairs, in particular (without prejudice to the generality of the foregoing) the possession or entitlement to acquire 30% or more of the voting shares in that company, 

  

	 	  	 	without the prior written consent of SNL (such consent not to be unreasonably withheld or delayed).” 

  

	(k)	 	Clause 5.1.3 shall be deleted and replaced with: 

  

	 	“5.1.3	 	Charges for fuel fabrication of existing designs within the quantity range described in Clause 7.1.1 in the period 1 April 2003 to 31 March 2006 will comprise 3 elements Ao, Bo and Uo. Ao
will be an annual fixed charge payable in 12 equal monthly instalments (the Monthly Standing Charge) according to the following table: 

  

	 Year

	  	 Monthly instalment of Annual
Fixed Charge Ao.
 £

	 2003/4
	  	[            ]*
	 2004/5
	  	[            ]*
	 2005/6
	  	[            ]*

  

	 	  	 	Bo shall be a sum of [            ]* per fuel element delivered during the fuel supply period and Uo shall be a sum calculated in
accordance with the provisions of Appendix 11. 

  

	 	  	 	The above charges shall be Escalated from 1 October 1989 and shall cover all the costs and liabilities associated with providing the said fuel elements except where specifically provided for
elsewhere in this Agreement or other Agreements with SNL.” 

  

	(l)	 	The following clauses shall be added after Clause 5.15.1.1: 

  

	 	“5.15.1.1.1	 	If an accurate value for the annual charge (Ao) is not available, then SNL shall pay to BNFL on the first Working Day of each month an instalment of the estimated monthly standing charge
(Aoest) calculated in accordance with Appendix 16 payable for the Year in which that month occurs PROVIDED THAT BNFL has invoiced SNL for such instalment no later than 38 days prior to the end of the month preceding the month in which the instalment
is due to be paid. 

  

	 	5.15.1.1.2	 	Any difference between the actual value of the annual charge (Ao) and the estimated annual charge (Aoest) will be reconciled in accordance with Appendix 7.” 

  

	(m)	 	Clause 5.21 shall be deleted and replaced with “5.21 [NOT USED]”. 

  
 * Confidential treatment requested. 
  

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 BNFL/BEG(UK) COMMERCIAL IN CONFIDENCE 
  

	(n)	 	The following clause shall be added after Clause 5.22: 

  

	 	“5.23	 	The monthly standing charges Ao set out in Clause 5.1.3 shall be reduced by the amounts set out in Appendix 15.” 

  

	(o)	 	The following clauses shall be added after Clause 7.4.2: 

  

	 	“7.4.3	 	SNL shall confirm prior to the date the delivery is due to take place, as referred to in Clause 12.1, any changes to burnable poison cable requirements for said delivery in accordance with
Appendix 17; and 

  

	 	7.4.4	 	SNL shall provide, on a quarterly basis, forecasts of the fuel requirements for such a period that a combination of forecasts and firm orders is provided for the higher of 12 months and (n+3)
months (where “n” is as defined in Clause 3.6.2 of NE Agreement). The forecasts shall as a minimum detail SNL’s fuel requirements by Assay on a monthly basis. SNL shall use reasonable endeavours to ensure that the forecasts accurately
reflect its expected fuel requirements.” 

  

	(p)	 	Clause 13.1 shall be deleted and replaced with: 

  

	 	“13.1	 	If, before irradiation, SNL demonstrates or BNFL advises that any fuel element or ancillary component does not comply with the Contract Specifications including for U02 in respect of any fuel
delivered between 31 March 1996 and 31 March 2006 unless such non-compliance is caused by the negligence or wilful default of SNL, its servants or agents or, as a result of deterioration of the fuel resulting from storage at SNL sites after
unpacking, then unless SNL agrees to accept the said fuel notwithstanding such non-compliance with the Contract Specifications, BNFL shall, at its discretion and within a reasonable time either: 

  

	 	13.1.1	 	rectify the fuel element or ancillary component at the appropriate AGR power station or at Springfields so that it complies with the Contract Specifications; or 

  

	 	13.1.2	 	replace the fuel element or ancillary component provided that it has been returned to BNFL 

  

	 	  	 	and shall bear the cost of rectification or replacement as the case may be including any uranic recovery costs PROVIDED THAT subject to the consent of SNL, BNFL may, in respect of any fuel
element or ancillary component returned to them under this Clause and instead of the alternatives set out in Clauses 13.1.1 and 13.1.2, credit SNL with a sum which shall, in the case of a fuel element, take into account the charge which would have
been payable for and appropriate to the fuel element if it had been due for delivery on the date on which it was so returned or, in the case of an ancillary component, take into account the charge which would have been payable for the ancillary
component if it had been due for delivery as aforesaid. For the avoidance of doubt, in respect of any fuel elements delivered prior to 31 March 1996, BNFL will be responsible for the recovery of the enriched U02 content of the fuel so affected including any process losses and will carry out such recovery in a timely manner and will credit such recovered enriched U02 to SNL’s account at Springfields.” 

  

 8 

 BNFL/BEG(UK) COMMERCIAL IN CONFIDENCE 
  

	(q)	 	In Clause 20.5, the definitions of “BNFL Group Company”, “subsidiary” and “holding company” shall be deleted. 

  

	(r)	 	Clause 21.1 shall be deleted and replaced with: 

  

	 	“21.1	 	Neither Party shall, save as is set out in the remainder of this Clause 21, have any right to assign or to part with or to sub-contract any of its rights and obligations under this Agreement
without the prior written consent of the other Party. Such consent may only be withheld if an assignment is not Reasonable. 

  

	 	  	 	For the purposes of this Clause an assignment shall be Reasonable if: 

  

	 	21.1.1	 	the intended assignor can demonstrate that the intended assignee is financially and technically competent to carry out the obligations of this Agreement, and in particular the financial
obligations; and 

  

	 	21.1.2	 	if so requested in writing by the non-assigning Party, an appropriate parent-company guarantee is provided from the intended assignee’s parent company, if any, or the intended assignee
enters into a further agreement in relation to this Agreement containing such reasonable provisions as the non-assigning Party would reasonably need to ensure that the intended assignee is able to carry out the obligations of this Agreement until
each and every obligation has been fully discharged.” 

  

	(s)	 	Clauses 21.2 and 21.3 shall be deleted and replaced with: 

  

	 	“21.2	 	It is acknowledged and agreed by SNL that BNFL may, upon or at any time after the establishment of the LMA, assign or part with or sub-contract any of its rights and obligations under this
Agreement to the LMA to the extent required by or in consequence of, or to take a benefit available by reason of, any relevant legislation. No consent under Clause 21.1 shall be required for an assignment under this Clause 21.2.

  

	 	21.3	 	It is acknowledged and agreed by SNL that BNFL may assign or part with or sub-contract any of its rights and obligations under this Agreement to New BNFL with the prior written consent of
SNL, such consent not to be unreasonably withheld (but for the purposes of this Clause 21.3, the definition of “Reasonable” in Clause 21.1 shall not apply). For the avoidance of doubt the Parties acknowledge that, in determining whether or
not consent has been unreasonably withheld, any considerations may be taken into account, including without limitation those specified in Clauses 21.1.1 and 21.1.2. 

  

	 	21.4	 	 It is acknowledged and agreed by BNFL that SNL may at any time assign or part with or sub-contract any of its rights and obligations under this Agreement to any SNL Group
Company which holds a nuclear site licence in respect of any of SNL’s AGR power stations or NE’s advanced 

  

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 BNFL/BEG(UK) COMMERCIAL IN CONFIDENCE 
  

	 	 
gas-cooled reactor power stations. No consent under Clause 21.1 shall be required for an assignment under this Clause 21.4. 

  

	 	21.5	 	It is acknowledged and agreed by SNL that BNFL may at any time assign or part with or sub-contract any of its rights and obligations under this Agreement to any BNFL Group Company, subject to
a parent-company guarantee being provided by BNFL with the liability of the parent company in relation to each obligation guaranteed not being greater than that which BNFL would incur in respect of that obligation. No consent under Clause 21.1 shall
be required for an assignment under this Clause 21.5.” 

  

	(t)	 	Clause 28 shall be deleted and replaced with: 

  

	  	 	“DISPUTE RESOLUTION 

  

	 	28.1	 	Subject to Clause 28.3, in the event a dispute, controversy or claim arises out of or in connection with this Agreement (including any question regarding its existence, validity or
termination) (Dispute), a Party may give the other Party notice that a Dispute has arisen (a Dispute Notice). Following the service of the Dispute Notice the Parties shall use all reasonable endeavours to settle such
Dispute amicably within a period of 60 calendar days (or such longer period as the Parties may mutually agree) starting from the date of receipt of the Dispute Notice by the relevant Party. In the event that the Parties are unable to settle any
Dispute within such 60 calendar day period (or such longer period), then such Dispute shall be referred for resolution by negotiation between the respective Chief Executives of British Energy plc and BNFL. If the Parties are unable to settle a
Dispute by such negotiation within 60 calendar days (or such longer period as the Parties may mutually agree) of it being referred to the Chief Executives, then such Dispute shall be referred to arbitration in accordance with the terms of Clause
28.2. 

  

	 	28.2	 	Subject to Clause 28.1, any Dispute shall be referred to and finally resolved by arbitration under the LCIA Rules, which Rules are deemed to be incorporated by reference into this Clause. The
tribunal shall consist of one arbitrator. The seat of the arbitration shall be London. The language of the arbitration shall be English. 

  

	 	28.3	 	Any matter subject to determination by an Expert pursuant to Appendix 20 shall not be subject to Clauses 28.1 and 28.2.” 

  

	(u)	 	Clause 29 shall be deleted and replaced with “29 [NOT USED]”. 

  

	(v)	 	An additional sub-clause shall be inserted in Clause 30 as follows: 

  

	  	 	“Termination of this Agreement does not affect a Party’s accrued rights and obligations at the date of termination.” 

  

	(w)	 	Clause 31.1 shall be deleted and replaced with: 

  

	 	“31.1	 	 This Agreement constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes any prior written or oral agreement(s) or
arrangements between the Parties in relation thereto. No prior or collateral representation, promise, warranty or condition made or given by either of the Parties to the other Party and not contained herein 

  

 10 

 BNFL/BEG(UK) COMMERCIAL IN CONFIDENCE 
  

	 	 
shall be binding upon any of them and no amendment, modification or extension of this Agreement or waiver of any of the terms and conditions hereof shall be binding
upon either of them unless it is Agreed in writing by duly authorised representatives of each of the Parties. For the avoidance of doubt, this Clause 31.1 shall not exclude any liability for, or remedy in respect of, fraudulent misrepresentation by
any Party or any of its Connected Persons, where Connected Person means in each case, to the extent that they are involved on behalf of a Party, (a) a Party’s officers, employees, group undertakings, agents and advisers; (b)
officers, employees, agents and advisers of a Party’s group undertakings and (c) officers, employees and partners of any such agent or adviser or of any group undertaking of such agent or adviser.” 

  

	(x)	 	The following clause shall be added after Clause 34: 

  

	  	 	“NO RIGHTS UNDER CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999 

  

	  	 	35. A person who is not party to this Agreement shall have no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any of its terms.” 

  

	(y)	 	In Appendix 1, the Planned Life of Hunterston B shall be amended to read “35 years”. 

  

	(z)	 	Appendix 5 shall be amended by deleting column 1 of the table contained in Appendix 5 and replacing it with columns 1a and 1b entitled [UF6 not in WIP] and [UF6 in WIP] respectively.

  

	(aa)	 	Appendix 6 shall be amended by deleting column 1 of the table contained in Appendix 6 and replacing it with columns 1a and 1b entitled [UF6 not in WIP] and [UF6 in WIP] respectively.

  

	(bb)	 	Appendix 7 shall be deleted and replaced with: 

  
 “APPENDIX 7 
  
 ESCALATION FORMULA 
  

	  	 	FUEL FIXED AND VARIABLE CHARGES 

  

	  	 	The elements of the fixed Ao and variable Bo, Uo and INC charges set out in this Agreement are stated in either 1 October 1989, 1 August 1995, 1 April 1996, 1 January 1997 or Financial Year
2003 money values as stated in the specific clauses and shall be escalated in accordance with the following formulae: 

  

	For all charges escalated monthly
from October 1989, August 1995,
April 1996, January 1997 (or such
other month as is agreed) and D1
escalated monthly from
Financial
Year 2003	  	Cy    =	  	CoRm

	  	For Charges (other than D1)
escalated annually from
Financial Year 2003	  	Cy    =	  	CiRy

	  	  	Ro	  	  	  	Ri
	  	 	  	 	  	  	 	  	 
	  	 	  	 	  	  	 	  	 
	  	 	  	 	  	  	 	  	 
	  	  	  	  	 	  	 
	  	  	  	  	 	  	 

  

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 BNFL/BEG(UK) COMMERCIAL IN CONFIDENCE 
  

	  	 	Where, unless otherwise stated: 

  

	 	Cy	 	is the relevant charge as escalated; 

  

	 	Co	 	is for all charges with the exception of D2 the base charge in October 1989, August 1995, April 1996, January 1997 (or such other date as is agreed) money values as appropriate; and is for D1
the base charge in Financial Year 2003 money values; 

  

	 	Ci	 	are the base values of [            ]* and [            ]* used in the
calculation of D2; 

  

	 	Rm	 	is the Retail Price Index for the month in which the event occurs which gives rise to the charge due and shall be estimated as follows if the Retail Price Index for the month in question is
not available: 

  

	 	  	 	Rm = Rmn + n(Rmn – Rmn3); 

	                                       
                         3	 	

  

	  	 	Where 

  

	 	m	 	is the month for which the Retail Price Index is to be estimated; 

  

	 	n	 	is the number of months between the month of payment and the month in which the Retail Price Index has been most recently published; 

  

	 	Rmn	 	is the Retail Price Index for the month in which the index has been most recently published; 

  

	 	Rmn3	 	is the Retail Price Index for the month three months prior to Rmn; 

  

	 	Ro	 	is for all charges with the exception of D2 the appropriate Retail Price Index for the months of October 1989 (which is 117.5), August 1995 (which is 149), April 1996 (which is 152.6),
January 1997 (which is 154.4) or such other month as is agreed; and is for D1 the Retail Price Index Ri as defined below; 

  

	 	Ri	 	is derived by summing the 12 monthly Retail Price Indices for the period from 1 April 2002 until 31 March 2003 and dividing the summation by 12; and 

  

	 	Ry	 	is the Retail Price Index for the Year in which the event occurs which gives rise to the charge due, derived by summing the 12 monthly Retail Price Indices for that Year and dividing the
summation by 12 or by other agreement between the Parties. 

  

	  	 	14 days prior to the date on which BNFL is required to invoice SNL the Retail Price Index for the relevant Year shall be estimated according to the following formula:

  
 * Confidential treatment requested. 
  

 12 

 BNFL/BEG(UK) COMMERCIAL IN CONFIDENCE 
  

	 	Ryest	 	is the estimated Retail Price Index for the Year in which the event occurs which gives rise to the charge due, derived by summing the 12 monthly Retail Price Indices for that Year and
dividing the summation by 12. 

  

	  	 	Where a monthly Retail Price Index is not available it will be determined in accordance with the formula for Rm above. 

  

	  	 	Upon the later of (a) publication of the Retail Price Index for the month of March in each Year hereunder and (b) the derivation of the final values for OEP for the Year in accordance with
Appendix 20 (such date being referred to as the Reconciliation Date), BNFL shall calculate the value of all sums which would have been payable by either SNL or BNFL during that Year had the Retail Price Indices and Outturn Electricity
Prices been known at the times of invoicing and shall within 21 days after the Reconciliation Date render to SNL an adjusting invoice or credit note as the case may be equal in value to the difference between such calculated value and the value of
the sums actually paid by SNL and BNFL in that Year. Payment by either SNL or BNFL shall be due 38 days after the date of the invoice or credit note as the case may be. 

  

	  	 	In the event that the Reconciliation Date is later than 35 Working Days after the end of the Year to which it applies, an interim reconciliation shall take place using the best data available
on the 35th Working Day after the end of the Year. In such a case, invoicing and settlement on the basis of such data shall take place
as outlined above as if the Reconciliation Date were the 35th Working Day after the end of the Year. Following such an interim
reconciliation, subsequent reconciliations (including any final reconciliation as outlined above) for that Year shall take place in the following circumstances and no other: 

  

	 	(i)	 	In the event of manifest error in any relevant calculation or data used; 

  

	 	(ii)	 	In the event of the resolution of any relevant dispute between SNL and BNFL; 

  

	 	(iii)	 	If either SNL or BNFL believes in good faith that the impact of updated information will affect payments by more than
£[            ]*; or 

  

	 	(iv)	 	With the Agreement of SNL and BNFL. 

  

	  	 	ANCILLARY COMPONENT CHARGES 

  

	  	 	For the purposes of escalation of the ancillary component charges set out in Appendix 12, Rm is as defined above.” 

  

	(cc)	 	Paragraph 29 of Appendix 11 and the words “VARIABLE PRICE PER TONNE FOR FUEL ELEMENTS POST 1 APRIL 2006” appearing immediately above paragraph 29 of Appendix 11 shall be deleted.

  

	(dd)	 	The following appendixes shall be added after Appendix 14: 

  
 * Confidential treatment requested. 
  

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 BNFL/BEG(UK) COMMERCIAL IN CONFIDENCE 
  

 “APPENDIX 15 
  
 DISCOUNTS TO THE FIXED CHARGE 
  

	  	 	The following discounts ((1-Pi)*D1) being the fixed discount and ((1-Pi)*D2) being the electricity price dependent discount shall be applied to the fixed charge as required by Clause 5.23:

  

	  	 	Where 

  

	 	(1-Pi)	 	is the final SNL annual fixed charge discount proportion, (Pi being a value between zero and one) jointly agreed by NE and SNL and notified to BNFL, by SNL under this Agreement and by NE
under the NE Agreement, for use in the annual reconciliation. For the avoidance of doubt, Pi shall have the same numerical value when used both in this Agreement and in the NE Agreement. 

  

	  	 	The Fixed Discount 

  

	  	 	In each of the Years 2003/4, 2004/5 and 2005/6 an annual discount paid monthly of 

  

	  	 	((1-Pi)*D1) shall be applied 

  

	  	 	where D1 is [            ]* 

  

	  	 	The Electricity Price Dependent Discount 

  

	  	 	In each of the financial Years 2003/4, 2004/5 and 2005/6 an annual discount paid monthly of ((1-Pi)*D2) shall be applied as follows: 

  
 D2 equals the variable discount derived as follows: 
  
 D2 = the higher of (i) zero and (ii) the lower of
[            ]* and (([            ]* minus OEP)*5.0TWh) 
  

	  	 	Where OEP is derived in accordance with Appendix 20, and shall be specified to five significant figures. 

  

	  	 	The sums of [            ]*, [            ]* and
[            ]* are quoted in Financial Year 2003 money values and will be Escalated in accordance with Appendix 7. The multiplier of 5.0TWh is a fixed figure and shall not be subject to
Escalation. 

  

	  	 	In executing the algorithms outlined in this Appendix 15, all calculations will be performed to the maximum normal computational accuracy, with no imposed rounding to specific levels of
precision. 

  
 * Confidential treatment requested. 
  

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 BNFL/BEG(UK) COMMERCIAL IN CONFIDENCE 
  

 APPENDIX 16 
  
 ESTIMATION OF CHARGES FOR THE FOLLOWING YEAR 
  

	  	 	14 days prior to the date BNFL must invoice SNL in accordance with Clause 5.15 the estimated Annual Fixed Charge Aoest for the month of invoice shall be calculated according to the following
formula. 

  

	 Aoest
	  	= A1est minus ((1-Piest)*D1est) minus ((1-Piest)*D2est) minus D3est
		
	Where:	  	 
		
	 A1est
	  	is the value of the annual fixed charge stated as Ao in Clause 5.1.3 for the relevant month Escalated in accordance with Appendix 7.
		
	 Piest
	  	is for monthly invoicing purposes the fixed charge discount proportion agreed jointly between NE and SNL and notified to BNFL by SNL under this Agreement and by NE under the NE Agreement
prior to the said 14 days specified above to be employed in the invoice for the specified month, and being a value between zero and one. For the avoidance of doubt, Piest shall have the same numerical value when used both in this Agreement and in
the NE Agreement.
		
	 D1est
	  	is the estimated Escalated value of D1 for the relevant Year derived in accordance with Appendix 7.
		
	 D2est
	  	is the estimated value of D2 for the Year derived using a forecast value of OEP (= OEPest) and Escalating the terms in the equation defining D2 above in accordance with Appendix
7.
	
	Where OEPest is derived in accordance with Appendix 20, and shall be specified to five significant figures.
		
	 D3est
	  	is the estimated value of the discount related to the modification of manufacturing routes obtained from Annex 2 of Appendix 13 and Escalated in accordance with Appendix 7.

  

	  	 	The fixed charge invoiced in each month shall be adjusted such that the Year
to date value of the discount D2 as invoiced at that month end, equals the latest projected cumulative Year to date value of the discount D2 applicable at that month end. 

  

	  	 	In executing the algorithms outlined in this Appendix 16 all calculations will be performed to the maximum normal computational accuracy, with no imposed rounding to specific levels of
precision. 

  

 15 

 BNFL/BEG(UK) COMMERCIAL IN CONFIDENCE 
  

 APPENDIX 17 
  
 AGR BURNABLE POISON CABLE FLEXIBILITY 
  

	  	 	Whereas the Parties wish to trial certain methods for introducing further flexibilities to the fuel ordering process, the Parties propose to operate revised arrangements for a trial period
from 1 April 2003. 

  

	 	1.	 	Subject to both SNL and NE giving two months advance notice to BNFL, the arrangements detailed herein may be terminated with effect from or after 1 April 2004. 

  

	 	2.	 	Unless and until both NE and SNL give notice of reversal under the provisions of paragraph 1 hereof, the following shall continue in effect from 1 April 2003. 

  

	 	3.	 	When placing a firm order for fuel pursuant to Clause 7 SNL shall provide the combination in terms of number of cables and their gadolinium density for each Fuel Element applicable to that
order. 

  

	 	4.	 	SNL shall be entitled to amend the said cable combination at any time up to the third Friday of the third Month prior to delivery up to a maximum additional overall cable requirement of 1400
cables applying to all 7 advanced gas-cooled reactor power stations operated by NE and SNL combined, with no limitation on changes from cabled to uncabled or vice versa. SNL shall use all reasonable endeavours to provide the most accurate
information in terms of cabling requirements. 

  

	 	5.	 	Recognising that SNL in the past has amended its cable requirements at the third week of the third month prior to delivery and that due to unforeseen circumstances stations may need to change
cable requirements after this date, SNL shall also be entitled up to two calendar months prior to delivery to increase or decrease cables, up to a further maximum additional overall cable requirement of 1400 applying to all 7 advanced gas-cooled
reactor power stations operated by SNL and NE combined, with a maximum net change at any time during each delivery period from cabled to uncabled, or vice versa, of four stringers worth of Stage 3 fuel. 

  

	 	6.	 	BNFL will use all reasonable endeavours to meet SNL’s reasonable requirements above and beyond the flexibility provided in this Appendix. 

  

	 	7.	 	All charges for this arrangement are made under the NE Agreement. 

  

	 	8.	 	The aforementioned arrangements shall be reviewed periodically by the Parties until at least 31 December 2003 after which NE and SNL are required to provide a minimum of two months notice of
their requirement to terminate this arrangement. 

  

 16 

 BNFL/BEG(UK) COMMERCIAL IN CONFIDENCE 
  

 APPENDIX 18 
  
 [NOT USED] 
  

 17 

 BNFL/BEG(UK) COMMERCIAL IN CONFIDENCE 
  

 APPENDIX 19 
  
 [NOT USED] 
  

 18 

 BNFL/BEG(UK) COMMERCIAL IN CONFIDENCE 
  

 APPENDIX 20 
  
 CALCULATION OF OUTTURN ELECTRICITY PRICE 
  
 Intention 
  
 The Parties agree that it is their intention to establish a price index that reflects the baseload wholesale electricity price that the SNL Group’s advanced gas-cooled reactor
generation would be exposed to, subject to a specified treatment of any future environmental legislation. This price index (the Outturn Electricity Price or OEP) will be used to calculate rebates and surcharges on
contractual payments for fuel and receipt of spent fuel and so provide the SNL Group with a partial hedge of the electricity price risk associated with its advanced gas-cooled reactor output. 
  
 The price is calculated on the basis of publicly available market price indicators, with a weighting of
75% to contracts sold for a season during the preceding six months, and the remaining 25% to contracts sold on a month-ahead basis. For the Year commencing on 1 April 2003, an annual pricing mechanism shall be used in place of the seasonal
calculation, so as to ensure consistency of value with the non-binding heads of terms as initialled by Mr. John Edwards and Mr. Keith Lough, on behalf of BNFL and British Energy plc respectively, on 28 November 2002. 
  
 The Parties will establish a means of calculating, before all of the data are available that are
required to calculate the Outturn Electricity Price for a particular Year, a forecast of the Outturn Electricity Price for that Year (Forecast Outturn Electricity Price). 
  
 In this Appendix 20, the AGR Power Stations shall mean SNL’s AGR power stations and the NE AGR Power Stations shall
mean NE’s advanced gas cooled reactor power stations. 
  

	1.	 	THE OUTTURN ELECTRICITY PRICE 

  
 Definitions 
  
 Actual Level of AGR Generation
– defined in section 3. 
  
 Additional AGR Environmental
Value – for any Year, the additional effective price achievable by baseload advanced gas-cooled reactor generation beyond that captured in Initial Outturn Electricity Price, that arises directly from Environmental Legislation. The
calculation of such achievable price shall take into account the potential to access the most favourable price across different market segments (including for the avoidance of doubt sales directly to consumers), net of the incremental costs of
accessing such market segments to achieve such prices or any other costs imposed on nuclear generation associated with such Environmental Legislation. For the avoidance of doubt, the Additional AGR Environmental Value may only be a positive number
or zero. 
  
 Agreed Price Reporter – A Price Reporter whose prices the
Parties have agreed or the Expert has determined should be included in making the calculations required in this contract. 
  
 Average Price for the Month – the arithmetic mean of the Daily Price for the Month across all Trading Days that fall predominantly within the period from the
start of the previous Pricing Month to its end. 
  

 19 

 BNFL/BEG(UK) COMMERCIAL IN CONFIDENCE 
  

 Average Price for the Season – the arithmetic mean of the Daily Price for the Season across all Trading Days
that fall predominantly within the period from the start of the previous Pricing Season to its end. 
  
 Average Price for the Year – for any Year, the arithmetic mean across all Trading Days within the two Pricing Seasons that fall predominantly within the previous Year and across both Pricing Seasons that fall
predominantly within the Year, of the Daily Price for the Season for the two Pricing Seasons that fall predominantly within the Year. 
  
 Daily Price for the Month – for any Trading Day, the volume-weighted mean across all Agreed Price Reporters of the prices of contracts traded on that Trading Day
for baseload electricity for a particular Pricing Month. In the event that no such trades are reported by any Agreed Price Reporter for that Trading Day, the arithmetic mean of the bid and offer prices quoted on that day across all Agreed Price
Reporters for the relevant Pricing Month shall be used in place of the mean of the prices of contracts traded. 
  
 Daily Price for the Season – for any Trading Day, the volume-weighted mean across all Agreed Price Reporters of the prices of contracts traded on that Trading Day for baseload electricity for a particular
Pricing Season. In the event that no such trades are reported by any Agreed Price Reporter for that Trading Day, the arithmetic mean of the bid and offer prices quoted on that day across all Agreed Price Reporters for the relevant Pricing Season
shall be used in place of the mean of the prices of contracts traded. 
  
 Environmental Legislation – any carbon tax, exemption of nuclear generation from the Climate Change Levy, or any other climate change related measure put in place by the Government of the United Kingdom subsequent to 29
November 2002 which affects the value of nuclear generation (but for the avoidance of doubt excluding any changes in rates payable by NE or SNL). 
  
 Fuel Contract Equivalent Electricity Volume – shall be 5 TWh. 
  
 Initial Outturn Electricity Price – (a) for the Year ending 31 March 2004, the sum of 0.75 times the Average Price for the Year and
0.25 times the arithmetic mean of each Average Price for the Month for the twelve Pricing Months falling predominantly within that Year; and (b) for each subsequent Year, the sum of 0.75 times the arithmetic mean of each Average Price for the Season
for the two Pricing Seasons falling predominantly within that Year and 0.25 times the arithmetic mean of each Average Price for the Month for the twelve Pricing Months falling predominantly within that Year. 
  
 Outturn Electricity Price – for any Year, the Initial Outturn Electricity Price plus
the Additional AGR Environmental Value minus (the Prior Contract Value Pass-through divided by (the sum of 50% of the Actual Level of AGR Generation and the Fuel Contract Equivalent Electricity Volume)). 
  
 Price Reporter – an organisation which regularly publishes price indices and/or
traded prices that are generally accepted to correspond closely with the fair price obtainable in the market for baseload wholesale electricity contracts in the English and Welsh market (or following the introduction of the British Electricity
Trading and Transmission Arrangements (BETTA), the English, Welsh and Scottish market) covering Pricing Seasons and Pricing Months. 
  
 Pricing Month – a period of time for delivery of electricity, usually either 4 or 5 weeks in length, that corresponds to the delivery period for electricity
contracts referred to as “months” in the reports compiled by the Agreed Price Reporters. 
  

 20 

 BNFL/BEG(UK) COMMERCIAL IN CONFIDENCE 
  

 Pricing Season – a period of time for delivery of electricity, usually 26 weeks in length, that corresponds
to the delivery period for electricity contracts referred to as “seasons” (either summer or winter) in the reports compiled by the Agreed Price Reporters. 
  
 Prior Contract Value Pass-through – for any Year, the financial equivalent of all benefits arising from Environmental Legislation
passed from any company within the SNL Group to third parties other than BNFL as a result of contracts already in force as at 29 November 2002. 
  
 Trading Day – any day, other than a Saturday, a Sunday, Christmas Day, Good Friday, or a day which is a bank holiday in England within the meaning of the Banking
and Financial Dealings Act 1971. 
  

	2.	 	THE FORECAST OUTTURN ELECTRICITY PRICE 

  
 Definitions 
  
 Forecast AGR Generation in Year – The sum of Forecast NE AGR Generation in Year and Forecast SNL AGR Generation in Year. 
  
 Forecast NE AGR Generation in Year – The latest forecast provided by SNL to BNFL of the total metered generation delivered by the NE AGR Power Stations to the
electricity transmission system within the current Year. This will be on a basis consistent with any external announcements of forecast advanced gas-cooled reactor generation adjusted to be net of transmission losses as applicable. 
  
 Forecast SNL AGR Generation in Year – The latest forecast provided by SNL to BNFL of
the total metered generation delivered by the AGR Power Stations to the electricity transmission system within the current Year. This will be on a basis consistent with any external announcements of forecast advanced gas-cooled reactor generation
adjusted to be net of transmission losses as applicable. 
  
 Forecast Average Price
for the Month – (a) The Forecast Average Price for the Month for a Pricing Month that falls wholly or partly in the past shall equal the Average Price for the Month for that Pricing Month. (b) The Forecast Average Price for the Month
for Pricing Months that fall wholly in the future (but excluding the first Pricing Month that falls wholly in the future) shall equal the Spot Balance of Season Price for the Pricing Season in which the Pricing Month falls. (c) The Forecast Average
Price for the Month for the first Pricing Month that falls wholly in the future shall equal: 
  

	((d * (Arithmetic mean of the Daily Price for the Month calculated over the first d Trading Days for which data are available of the current Pricing Month)) +
((n-d)*(the Daily Price for the Month calculated on Trading Day d of the current Pricing Month for which data are available)))/(n)

  

	where d is the number of Trading Days for which data are available at the point of calculation and n is the total number of Trading Days in the current Pricing
Month

  
 Forecast Average Price for the
Season – (a) Prior to the start of the Pricing Season the Forecast Average Price for the Season shall equal 
  

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 BNFL/BEG(UK) COMMERCIAL IN CONFIDENCE 
  

	((D’ * (Arithmetic mean of the Daily Price for the Season on the first D’ Trading Days for which data are available of the previous Pricing Season)) +
((N’-D’)*(the Daily Price for the Season calculated on Trading Day D’ of the previous Pricing Season for which data are available)))/(N’)

  

	where D’ is the number of Trading Days for which data are available at the point of calculation and N’ is the total number of Trading Days in the previous Pricing
Season;

  
 and (b) during a Pricing Season, the Forecast
Average Price for the Season for that Pricing Season shall equal the Average Price for the Season for that Pricing Season. 
  
 Forecast Average Price for the Year – Prior to the start of the Year the Forecast Average Price for the Year shall equal the arithmetic mean of the Year Ahead
Forecast Season Price for the two Pricing Seasons falling predominantly within the Year. During the Year the Forecast Average Price for the Year shall equal the Average Price for the Year. 
  
 Forecast Environmental Adjustment – the latest estimate as provided by SNL, or as
determined by an Expert, of the expected difference between Outturn Electricity Price and Initial Outturn Electricity Price for any Year. 
  
 Forecast Initial Outturn Electricity Price – (a) for the Year ending 31 March 2004, the sum of 0.75 times the Forecast Average Price for the Year and 0.25 times
the arithmetic mean of each Forecast Average Price for the Month for the twelve Pricing Months falling predominantly within that Year; and (b) for each subsequent Year, the sum of 0.75 times the arithmetic mean of each Forecast Average Price for the
Season for the two Pricing Seasons falling predominantly within that Year and 0.25 times the arithmetic mean of each Forecast Average Price for the Month for the twelve Pricing Months falling predominantly within that Year. 
  
 Forecast Outturn Electricity Price – the sum of Forecast Initial Outturn Electricity
Price and Forecast Environmental Adjustment. 
  
 Spot Balance of Season Price
– The arithmetic mean across all Agreed Price Reporters of the bid-offer midpoints for the period starting on the first Trading Day of the second Pricing Month falling wholly in the future or the first Trading Day of the Pricing Season,
whichever is the later, and ending on the last Trading Day of the Pricing Season. The period mid points should be constructed from the finest granularity bid-offer data available from each Agreed Price Reporter. 
  
 Year Ahead Forecast Season Price – The Year Ahead Forecast Season Price for a
Pricing Season falling predominantly in a given Year shall equal: 
  

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 BNFL/BEG(UK) COMMERCIAL IN CONFIDENCE 
  

	 ((D * (Arithmetic mean of the Daily Price for the Season on the first D Trading Days for which data are available of the two Pricing Seasons that
fall predominantly within the previous Year)) + ((N-D)*(the Daily Price for the Season calculated on Trading Day D of the two Pricing Seasons that fall predominantly within the previous Year for which data are
available)))/(N), where D is the number of Trading Days for which data are available at the point of calculation and N is the total number of Trading Days in the two Pricing Seasons that fall predominantly within the previous
Year

  
 3. THE ACTUAL LEVEL OF AGR GENERATION

  
 The Actual Level of AGR Generation shall represent the total amount of electricity
delivered by the AGR Power Stations and the NE AGR Power Stations in the Year to the point on the electricity transmission system at which the Outturn Electricity Price is determined. 
  
 The Parties agree that the calculations below shall be used: 
  
 For England and Wales Stations: 
  
 Actual Level of NE AGR Generation in England and Wales =

 
  
 Where: 
  
 i = BM Units belonging to Reactors in the NE AGR Power Stations that have not permanently ceased
generation 
  
 j = Settlement Periods in Year 
  
 QMij=BMU Metered Volume for BMU i in Settlement Period j 
  
 TLMij=BMU Transmission Loss Multiplier for BMU i in Settlement Period j 
  
 For Scottish Stations: 
  
 Actual Level of SNL AGR Generation in Scotland =

 
  
 Where: 
  
 i= BM Units over the England and Wales system as a whole 
  
 j= Settlement Periods in Year 
  
 k = BM Units belonging to Reactors in the AGR Power Stations that have not permanently ceased generation 
  

 23 

 BNFL/BEG(UK) COMMERCIAL IN CONFIDENCE 
  

 QMi j+ = BMU Metered Volume for exporting BMU i in Settlement Period j 
  
 QMi j- = BMU Metered Volume for importing BMU i in Settlement Period j 
  
 a= the percentage share from time to time determined of the total net system losses attributable to the BM Units
that belong to delivering trading units (as those terms are used in paragraph T2 of the Balancing and Settlement Code) for Settlement Period j, which as at the date hereof is 45%. 
  
 Vj k= GNN Station output of Reactors
in the AGR Power Stations k in Settlement Period j. 
  
 GNN Station output represents the
electricity sent to the grid net of what is used on the power station site. 
  
 Actual
Level of AGR Generation = Actual Level of NE AGR Generation in England and Wales + Actual Level of SNL AGR Generation in Scotland. 
  
 Where appropriate, the terms above shall be used in the sense in which they are used in the Balancing and Settlement Code. 
  
 In the event that the allocation of transmission losses is varied, or BETTA is introduced, or the
ownership of any of the AGR Power Stations or the NE AGR Power Stations changes, or any of the terms above ceases to be available to either or both of the Parties, then the Parties shall agree such changes to the above calculation to give effect to
the principle outlined in the definition of Actual Level of AGR Generation. In the event that the Parties are unable to reach agreement on such changes, then the matter shall be referred to an Expert for determination. 
  
 In the event that some or all of the items of data required to calculate the Actual Level of AGR
Generation is not available to BNFL, SNL shall provide BNFL with such items of data that BNFL reasonably requires within 5 Trading Days of BNFL requesting said items of data. 
  
 PROTOCOL 
  
 Agreed Price Reporters 
  
 The Parties shall from time to time agree who shall represent the Agreed Price Reporters. Initially the Agreed Price Reporters shall be: 
  

	•	 	Argus European Energy Report 

  

	•	 	The Heren Report – European Daily Electricity Markets 

  
 There shall always be at least one and not more than five Agreed Price Reporters. If the Parties are unable to agree on the Price Reporters then the matter will be referred to an
Expert who will be required to determine which Price Reporters shall be the Agreed Price Reporters. The Parties may agree to exclude or adjust a price quoted from one or more Agreed Price Reporters. Any corrections issued by the Agreed Price
Reporters after the initial publication of their reports shall be taken into account in these calculations. The Parties may agree to exclude or adjust such corrections. 
  
 In the event that the relevant reported market prices become unavailable from any Agreed Price Reporter on either a temporary or permanent basis, or
that such prices have ceased to be appropriate for use (e.g. due to illiquidity underlying such index) such that the Outturn Electricity Price calculated by this methodology has ceased to provide a fair reflection of the baseload wholesale
electricity prices that the SNL Group’s advanced gas-cooled reactor 

  

 24 

 BNFL/BEG(UK) COMMERCIAL IN CONFIDENCE 
  

 
generation would be exposed to (subject to the specified treatment of any future environmental legislation), the Parties shall agree a suitable alternative, and/or an
adjustment to the overall mechanism for the establishment of the Initial Outturn Electricity Price, such that the commercial basis of the agreement is not altered. 
  
 In the event of any market developments or other changes, the effect of which is to render any part of the calculation of Outturn Electricity Price
unworkable or inappropriate, the Parties will negotiate in good faith to reach an agreement on such changes as are required to preserve the original economic intent. In the event that the Parties are unable to reach agreement on such changes, then
the matter shall be referred to an Expert for determination. 
  
 Environmental
Legislation 
  
 In the event that the Parties are unable to reach agreement on the
existence of any Environmental Legislation or the treatment of any of the calculations associated with such Environmental Legislation then the matter shall be referred to an Expert for determination. The scope of any Expert determination shall
include all aspects of the process of deriving Outturn Electricity Price from Initial Outturn Electricity Price except where both Parties explicitly waive this condition. 
  
 Provision of Estimates 
  
 SNL shall make good faith estimates of the Forecast Environmental Adjustment as required to meet the timescales of invoicing. In the absence of such an estimate for any particular
invoice, the last estimate provided or determined for that Year shall be used, where the initial estimates of Forecast Environmental Adjustment for each Year in the contract are deemed to be zero. In the event of any dispute by BNFL of the level of,
or requirement for, such an estimate that is not resolved within 10 Trading Days of the dispute being raised, either Party may refer the matter to an Expert for determination. 
  
 SNL shall make good faith estimates of the Forecast AGR Generation in Year as required to meet the timescales of invoicing. In the event of any
dispute by BNFL of the level of such an estimate that is not resolved within 10 Trading Days of the dispute being raised, either Party may refer the matter to an Expert for determination. 
  
 Expert Determination 
  
 If any matter is referred to an independent expert (the Expert) in accordance with this Appendix, the Expert shall be appointed by agreement between the Parties. If
the Parties fail to agree upon that appointment within 10 Trading Days of a Party notifying the other Party of its decision to refer the matter to an Expert, the President of the Law Society of England and Wales may appoint the Expert on the
application of either Party. 
  
 The Expert shall have power to make amendments to this
Agreement binding on the Parties consistent with any relevant requirements, purposes or restrictions concerning those amendments expressly provided for in this Agreement. The Parties agree that it is their intention that in the absence of their
ability to agree any required amendments to this Agreement, this Agreement should continue and not come to an end or be deemed to be void or voidable in accordance with the doctrine of frustration or any other legal theory. Accordingly, if the
Expert is unable to decide upon any amendments based on the express or implied intentions of the Parties, the Expert shall be entitled to have regard to the way in which similar issues or amendments are addressed or are proposed to be addressed by
other electricity industry participants and to substitute the Expert’s own view of what is reasonable in all the circumstances. 
  

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 BNFL/BEG(UK) COMMERCIAL IN CONFIDENCE 
  

 The Expert shall act as an expert and not as an arbitrator and shall give his or her determination in writing. In the absence
of fraud or manifest error, the determination of the Expert shall be final, conclusive and binding upon the Parties. 
  
 The Expert shall determine the procedure to be followed by the Expert for the purpose of making a determination provided that the Parties shall use their respective reasonable
endeavours to ensure that he or she makes his or her determination within 20 Trading Days of being appointed. Each of the Parties shall bear one half of the costs of the Expert unless the Expert determines otherwise. Pending the determination of any
amendments to this Agreement by the Parties or the Expert, the Parties shall continue to the extent possible to perform their obligations under this Agreement. 
  

Audit 
  
 In the event that BNFL is wholly reliant on information provided by SNL to enable BNFL to calculate or check SNL’s calculations of any of the factors required to calculate the Outturn Electricity Price, the Forecast
Outturn Electricity Price, or the Actual Level of AGR Generation, SNL shall at all times upon reasonable notice allow BNFL’s auditors, its officers, agents and other persons authorised by BNFL in writing (or, at SNL’s request, an
independent auditor agreed between the Parties or appointed by the Expert in the event that the Parties cannot agree) to have access to inspect the basis on which SNL has provided such information. SNL shall keep such books and records as BNFL may
reasonably require for the purpose of verifying said information. The records detailed in this clause shall be retained by SNL and made readily available upon reasonable notice for inspection by BNFL, its officers appointed agents or independent
auditor as applicable for a minimum period of 2 Years from the date of the record. 
  

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 BNFL/BEG(UK) COMMERCIAL IN CONFIDENCE 
  

 APPENDIX 21 
 PORTFOLIO MANAGEMENT REPORT AND 
 MONTHLY UPDATE TO THE PORTFOLIO MANAGEMENT REPORT 
  
 The Portfolio Management Report shall include the following information in relation to the supply to
SNL of uranics under this Agreement insofar as SNL has made available to BNFL the data required for completion by BNFL of paragraphs 1.1(a) and 1.2: 
  

	1.1	 	a monthly forecast for the following 3 year period in respect of (a) invoiced fuel and (b) procured uranics; 

  

	1.2	 	an annual forecast for the remaining lives of the AGR Power Stations; 

  

	1.3	 	a valuation of Uranium Material held by BNFL for the purpose of supplying fuel to SNL under this Agreement; and 

  

	1.4	 	commencing on 1 April 2005, a summary of planned and actual supplies into and out of the stocks held by BNFL pursuant to this Agreement in respect of each component of uranics or enrichment
and conversion services; and 

  

	1.5	 	a summary of uranics transactions in accordance with the Stock and Procurement Strategy. 

  

2. In respect of the items listed in paragraph 1 above, BNFL shall also include in the Portfolio Management Report information relating (but not limited to) the origin of the
uranics supplied or to be supplied by BNFL to SNL under this Agreement, relevant safeguards obligation codes of all uranics supplied under this Agreement, and applicable Euratom Supply Agency contract numbers. 
  
 3. The items listed in paragraphs 1 and 2 above may be amended upon agreement between SNL and BNFL.
Upon agreement as to the proposed amendments, SNL and BNFL shall conclude the amendments to this Appendix in writing, which amendments shall take immediate effect.” 
  
 3.2 Save as herein amended the Agreement shall continue in full force and effect. 
  

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 BNFL/BEG(UK) COMMERCIAL IN CONFIDENCE 
  

	4.	 	TERMINATION CONDITIONS 

  
 4.1 If any of the following Termination Conditions has not been satisfied (or waived) on or before 31 December 2004 (or such other date as is referred to in the relevant
Termination Condition) or such later date as is agreed by the Parties in order to ensure compliance with any conditions or obligations attached to a decision referred to in Clause 4.1(d)(ii) or if, at any time prior to that date, it becomes apparent
that one or more of the Termination Conditions which remain unsatisfied will not be satisfied on or before 31 December 2004 (or such other date as is referred to in the relevant Termination Condition), this Deed shall terminate and the provisions of
clause 4.4 below shall apply: 
  

	(a)	 	the documents listed in Schedule 2 having been executed and being subject to no outstanding conditions to their coming into full force and effect, other than any condition in any such
document to the effect that the unconditionality of such document is dependent on the unconditionality of this Agreement or any other document listed in Schedule 2; 

  

	(b)	 	prior to the Restructuring Date (as such term is defined in the Standstill Agreement, but save that for the purposes of this Clause, the definition of Restructuring Date shall be deemed not
to include any reference to the execution or delivery of this Agreement or any reference to the satisfaction or waiver of the conditions to the effectiveness of this Agreement) BEG(UK) not having received a notice in writing from BNFL, which notice
may only be served if the terms agreed between any BEG(UK) Group Company and any of the Material Creditors, particularly with respect to the timing of any payment of any sums, taking into account the respective circumstances of BNFL and such
Material Creditor, including the differing types of obligation owed by BEG(UK) Group Companies to BNFL and such Material Creditor, are more favourable to such Material Creditor than those agreed in writing with BNFL or, having received such notice,
such notice has been withdrawn by BNFL. BNFL shall withdraw any such advice where the relevant conditions cease to exist. For the purpose of evidencing satisfaction of this Termination Condition, BE shall: 

  

	 	(i)	 	make to BNFL full and complete disclosure as to the terms applicable to BE’s Material Creditors and HMG; and 

  

	 	(ii)	 	provide BNFL with sufficient information and data both on BE’s current financial position and on BE’s likely financial position post BE’s solvent Restructuring;

  

	(c)	 	the entry into by BE of agreements with the Material Creditors and HMG to give effect to the terms of the Restructuring disclosed by BE to BNFL prior to or at the same time as BNFL entering
into this Deed, and such agreements not being subject to any outstanding conditions (other than any condition in any such agreement to the effect that the unconditionality of such agreement is dependent on the unconditionality of this Agreement or
any other document listed in Schedule 2) and are consistent with the Heads of Terms; 

  

	(d)	 	the Commission of the European Communities (the Commission) adopting a decision or decisions under Article 88(2) of the EC Treaty that: 

  

	 	(i)	 	 the Restructuring does not involve any State aid granted by or through the resources of HMG within the scope of Article 87(1) of the EC Treaty, 

  

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 BNFL/BEG(UK) COMMERCIAL IN CONFIDENCE 
  

	 	 
whether to any member of the BEG(UK) Group or to any other person or undertaking; and/or 

  

	 	(ii)	 	to the extent that the Restructuring does involve State aid granted by or through the resources of HMG within the scope of Article 87(1) of the EC Treaty, whether to any member of the BEG(UK)
Group or to any other person or undertaking, such aid is nevertheless compatible with the common market; 

  

	(e)	 	to the extent that any modification or amendment of this Deed or any agreement or arrangement contemplated by it is required in order for the Commission to be able to adopt a decision
referred to in clause (d)(i) above or a decision referred to in clause (d)(ii) above is adopted by the Commission subject to conditions or obligations that require the modification or amendment of this Deed or any agreement or arrangement
contemplated by it, any such modifications or amendments being reasonably acceptable in terms and in form to each of BNFL and BE; 

  

	(f)	 	if a decision referred to in clause (d)(ii) above is adopted by the Commission subject to conditions or obligations, such conditions and obligations being in terms and in form reasonably
acceptable to each of BE and BNFL and to the extent that such conditions or obligations must be complied with or implemented prior to the date immediately following the date upon which all the Termination Conditions are satisfied any such conditions
or obligations having been implemented or otherwise complied with by HMG; and 

  

	(g)	 	prior to the Restructuring Date (as such term is defined in the Standstill Agreement, but save that for the purposes of this Clause, the definition of Restructuring Date shall be deemed not
to include any reference to the execution or delivery of this Agreement or any reference to the satisfaction or waiver of the conditions to the effectiveness of this Agreement) BEG(UK) not having received a notice in writing from BNFL, which notice
may only be served if, no appropriate assurances from HMG are existing, including arrangements having been made with the relevant BEG(UK) Group Companies and BNFL, with regards to the assumption by HMG of all liabilities associated with all Historic
Spent Fuel or, having received such a notice, such notice has been withdrawn. BNFL shall withdraw any such notice where the relevant conditions cease to exist. 

  
 For the purposes of this clause 4, Restructuring means the implementation of a restructuring plan intended to achieve the solvent
reconstruction and long-term financial viability of the BEG(UK) Group, as described in the State aid notification made by HMG to the Commission on 7 March 2003 (the State Aid Notification) and any other matters or measures arising
therefrom. 
  
 4.2 Each of BE, BEG(UK) and BNFL undertakes to use reasonable endeavours to
ensure the Termination Conditions are satisfied as soon as reasonably practicable and in any event by 31 December 2004, or such other date as is referred to in any such Termination Condition. 
  
 4.3 BNFL shall be entitled in its absolute discretion, by written notice (or written notices, from time
to time) to the other parties, to waive the Termination Conditions in clauses 4.1(a)-(d) above either in whole or in part (provided that at the same time BNFL waives the equivalent condition (if any) in each of the agreements listed in Schedule 2).

  
 4.4 If this Deed is terminated pursuant to clause 4.1 above: 
  

 29 

 BNFL/BEG(UK) COMMERCIAL IN CONFIDENCE 
  

	(a)	 	the Agreement shall be deemed to have continued in full force and effect for all purposes and shall be deemed never to have been amended by the provisions of this Deed;

  

	(b)	 	all payments made by BEG(UK) pursuant to the provisions of the Agreement amended by this Deed (the Amended Provisions) shall be deemed to have been made pursuant to the
unamended equivalent provisions of the Agreement (the Original Provisions); and 

  

	(c)	 	the difference between the payments made by BEG(UK) to BNFL pursuant to the Amended Provisions and the payments which would otherwise have been due pursuant to the Original Provisions shall
become immediately due and payable together with interest, in respect of each payment, from the due date of such payment under the Original Provisions until the date of actual payment (both before or after any judgment) accruing at the rate of 2%
per annum over the average LIBOR prevailing from the due date to the date of actual payment. 

  
 This clause 4.4 shall survive the termination of this Deed. 
  
 4.5
BNFL acknowledges and agrees that it will not claim that the terms of the Standstill Agreement fail to satisfy the Termination Condition set out in clause 4.1(b) above. For the avoidance of doubt, so far as concerns the non-binding heads of terms
annexed to the Standstill Agreement, this acknowledgement does not extend to any eventual arrangements other than as expressly provided in such heads of terms. 
  

	5.	 	COMPETITION 

  
 5.1 Immediately following the signing of this Deed, the parties shall jointly approach HMG to see what assistance the parties may be able to provide to HMG in relation to the State Aid Notification (as defined in clause 4
above) either immediately or at any time whilst the Commission is considering the State Aid Notification and in particular within the framework of an investigation under Article 88(2) of the EC Treaty. 
  
 5.2 The parties shall make, on or before 9 April 2003 or such later date as they may agree in respect
of this Deed and any other agreement or arrangement contemplated by it, a notification for negative clearance and an application for an individual exemption on Form A/B to the Commission pursuant to Council Regulation (EEC) No. 17/62 (as amended).
They shall also discuss and agree upon whether to make a notification and an application for a decision on Form N to the Office of Fair Trading pursuant to The Competition Act 1998 (Director’s Rules) Order 2000. 
  

	5.3	 	The parties shall: 

  

	5.3.1	 	use their reasonable endeavours and co-operate with each other to ensure that all information necessary or desirable for making (or responding to any requests for further information
following) any notification or filing made in respect of the Restructuring, this Deed or any agreement or arrangement contemplated by this Deed (whether such notification or filing is to be made by a party or by HMG) is supplied to the person
preparing such notification or filing (or response to any information request) and that such notifications, filings and responses to any information requests are properly, accurately and promptly made and in any event in accordance with any
applicable time limit laid down by applicable legislation, or set by the Commission or the Office of Fair Trading (as the case may be) or any extension permitted by the Commission or the Office of Fair Trading (as the case may be);

  

 30 

 BNFL/BEG(UK) COMMERCIAL IN CONFIDENCE 
  

	5.3.2	 	respond promptly and fully to any request for information by the Commission or the Office of Fair Trading (as the case may be) or in relation to the State Aid Notification to be made by HMG,
any request for information or other assistance that may be made by HMG; 

  

	5.3.3	 	before making any notification, filing, submission, response or other communication (whether orally, in writing, in electronic format, or otherwise), other than of a purely administrative
nature (each a Communication), with the Commission or the Office of Fair Trading (as the case may be) or, in relation to the State Aid Notification to be made by HMG, provide draft copies of the Communication (or in respect of an oral
Communication, an indication of the proposed content of such oral Communication), together with copies of any supporting documentation or other relevant material to the other parties and take due consideration of any reasonable comments that the
other parties may have, who shall communicate any comments promptly to the party that is proposing to make the Communication; and 

  

	5.3.4	 	keep each other informed on a timely basis of the progress of any notification to or investigation by the Commission or the Office of Fair Trading (as the case may be), including any meetings
or conference calls and shall to the extent permitted by the Commission, the Office of Fair Trading or HMG (as the case may be) permit the other parties and their advisers to attend any such meetings or participate in any such conference calls.

  
 5.4 Nothing in clause 5.3 above shall require a party to provide to the
other parties any confidential information or business secrets relating to any business of their respective group, insofar as the provisions of such information does not infringe any UK or EC competition laws. Furthermore, nothing in clause 5.3 or
elsewhere in this Deed shall require BE or any member of the BEG(UK) Group to provide any communication or other information (whether orally, in writing, in electronic format or otherwise) to BNFL in connection with the financial position of BE or
of any member of the BEG(UK) Group or with any financial assistance of any kind whatsoever that HMG may provide BE or any member of the BEG(UK) Group during the consideration by the Commission of the Restructuring, including in connection with the
aid measures approved by the Commission on 27 November 2002. 
  
 5.5 Following the making of
the notifications referred to in clauses 5.1 and 5.2, the parties shall use their reasonable endeavours to ensure, and shall not take any steps or commit any act that may reasonably be considered as prejudicial to, the obtaining of a decision by the
Commission that the Restructuring does not involve unlawful State aid and a negative clearance, exemption, or analogous decision (or decisions) by the Commission and/or the Office of Fair Trading under Article 81(1) EC and/or the Competition Act
1998 (as the case may be) in relation to this Agreement or any agreement or arrangement contemplated by this Agreement. 
  
 5.6 If, notwithstanding the parties’ compliance with their obligations under clause 5.5, in relation to any notification, filing or investigation (whether made by the parties
or HMG) the Commission and/or the Office of Fair Trading (as the case may be) shall indicate, or it becomes reasonably apparent to the parties or HMG that the Commission and/or the Office of Fair Trading (as the case may be) may indicate, that any
provision of the Restructuring, this Deed or any agreement or arrangement contemplated by it, requires to be amended, modified or deleted in order to obtain approval of the Restructuring or this Deed (or the granting of negative clearance, an
individual exemption or any similar or analogous decision), the parties shall promptly meet to enter into good faith negotiations with a view to meeting the requirements of the Commission and/or the Office of Fair Trading provided that if any
modifications or amendments to this Deed or any agreement or arrangement contemplated by 

  

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 BNFL/BEG(UK) COMMERCIAL IN CONFIDENCE 
  

 
it are required or advisable any such modifications or amendments are reasonably acceptable to BNFL and BE. 
  

	6.	 	PARENT-COMPANY GUARANTEE AND FURTHER ASSURANCE 

  
 6.1 In consideration of BNFL entering into this Deed, BE unconditionally and irrevocably guarantees as
a continuing obligation the proper and punctual performance by BEG(UK) (to the extent that performance by BE would not be illegal) of all its obligations under or pursuant to the Agreement (as amended by this Deed) and this Deed. BE shall take all
reasonable steps within its powers to ensure that it is not illegal for it to comply with its obligations under this clause 6. 
  
 6.2 BE acknowledges that, although BEG is not a party to the Agreement, the co-operation of BEG is necessary to implement and/or give effect to the Agreement. BE agrees to procure
the performance by BEG of all further acts and things as BNFL may reasonably require to implement and/or give effect to the Agreement (as amended by this Deed) and the transactions contemplated by it and for the purpose of vesting in BNFL the full
benefit of the Agreement (as amended by this Deed). 
  
 6.3 BE’s liability under this
clause 6 shall not be discharged or impaired by: 
  

	(a)	 	any amendment to or variation of the Agreement or this Deed, or any waiver of or departure from their terms, or any assignment of either of them or any part of them (including any assignment
pursuant to Clause 20 of the Agreement), or any document entered into under the Agreement or this Deed; 

  

	(b)	 	any release of, or granting of time or other indulgence to, BEG(UK) or any third party, or the existence or validity of any other security taken by BNFL in relation to the Agreement or this
Deed or any enforcement of or failure to enforce or the release of any such security; 

  

	(c)	 	any winding up, dissolution, reconstruction, arrangement or reorganisation, legal limitation, incapacity or lack of corporate power or authority or other circumstances of, or any change in
the constitution or corporate identity or loss of corporate identity by, BEG(UK) or any other person (or any act taken by BNFL in relation to any such event); or 

  

	(d)	 	any other act, event, neglect or omission whatsoever (whether or not known to BEG(UK), BNFL or BE) which would or might (but for this clause) operate to impair or discharge BE’s
liability under this clause or any obligation of BEG(UK) or to afford BE or BEG(UK) any legal or equitable defence. 

  
 6.4 In relation to each obligation of BEG(UK) guaranteed by BE pursuant to clause 6.1 above, BE’s liability under clause 6.1 above shall not be greater than that which BEG(UK)
would incur towards BNFL in respect of that obligation. 
  
 6.5 In the event that BEG(UK)
ceases to be a subsidiary of BE, BE shall forthwith notify BNFL thereof and, at the request of BNFL, BE shall assign and part with its rights and obligations under (a) the Agreement (as amended by this Deed) and this Deed, and (b) all other
agreements and deeds entered into by BE, BNFL and either BEG or BEG(UK) (as the case may be) under which BE has any rights or obligations, to the ultimate holding company of BEG(UK), subject to BE being released and discharged from all obligations,
duties, and liabilities under the Agreement (as amended by this Deed) and this Deed and any such other agreements and deeds. 
  

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	7.	 	ACKNOWLEDGEMENTS BY BE AND BEG(UK) 

  

7.1 BE and/or BEG(UK) have from time to time in the past made various statements concerning the terms of the Agreement and certain other agreements between BNFL and BEG(UK)
Group Companies, including, inter alia, that certain terms of the Agreement and such other agreements infringe or have infringed EU and/or UK competition law and circumstances exist or have existed that entitle or have entitled BEG(UK) to invoke the
“hardship” provisions of the Agreement and other agreements (the Past Statements). 
  
 7.2 In consideration of BNFL entering into this Deed, each of BE and BEG(UK) hereby acknowledges and agrees, for itself and on behalf of each BEG(UK) Group Company, that: 
  

	(a)	 	BNFL’s sole reason for entering into this Deed is to participate in a process that is intended to lead to the solvent restructuring of BE with a view to ensuring the long term financial
viability of a valuable customer; 

  

	(b)	 	any amendments to the Agreement under the terms of this Deed do not represent an admission by BNFL (whether express or implied) that any of the Past Statements have any merit or foundation;
and 

  

	(c)	 	neither it nor any BEG(UK) Group Company shall bring any claim in relation to the subject matter of the Past Statements, the Heads of Terms or the arrangements contemplated by the Heads of
Terms (whether implemented in this Deed or otherwise), in particular any claim that any of the terms of the Agreement, this Deed or the Heads of Terms infringe EU or UK competition law or that hardship conditions exist or have existed.

  

	8.	 	INCONSISTENCY 

  
 In the event of any inconsistency between this Deed and provisions contained in or incorporated into the Agreement this Deed shall prevail. 
  

	9.	 	GOVERNING LAW 

  
 This Deed shall be governed by and construed in accordance with English law. 
  

	10.	 	DISPUTE RESOLUTION 

  
 10.1 In the event a dispute, controversy or claim arises out of or in connection with this Deed (including any question regarding its existence, validity or termination)
(Dispute), a party may give the other parties notice that a Dispute has arisen (a Dispute Notice). Following the service of the Dispute Notice the parties shall use all reasonable endeavours to settle such Dispute
amicably within a period of 60 calendar days (or such longer period as the parties may mutually agree) starting from the date of receipt of the Dispute Notice by the relevant party. In the event that the parties are unable to settle any Dispute
within such 60 calendar day period (or such longer period), then such Dispute shall be referred for resolution by negotiation between the respective Chief Executives of BE and BNFL. If the parties are unable to settle a Dispute by such negotiation
within 60 calendar days (or such longer period as the parties may mutually agree) of it being referred to the Chief Executives, then such Dispute shall be referred to arbitration in accordance with the terms of clause 10.2 below. 
  
 10.2 Subject to clause 10.1 above, any Dispute shall be referred to and finally resolved by arbitration
under the LCIA Rules, which Rules are deemed to be incorporated by reference 

  

 33 

 BNFL/BEG(UK) COMMERCIAL IN CONFIDENCE 
  

 
into this Clause. The tribunal shall consist of one arbitrator. The seat of the arbitration shall be London. The language of the arbitration shall be English.

  

 34 

 BNFL/BEG(UK) COMMERCIAL IN CONFIDENCE 
  

 SCHEDULE 1 
  
 AMENDMENT AGREEMENTS 
  

	1.	 	Side letter dated 30 March 1995 

  

	2.	 	Deed of amendment no 2 dated 29 March 1996. 

  

	3.	 	Supplementary Fuel Supply Agreement dated 3 June 1997. 

  

	4.	 	Side letter dated 8 August 1997. 

  

	5.	 	Supplemental letter headed “Applicability of certain Terms and Conditions contained in contracts pertaining to the Supply of AGR Fuel by BNFL to Nuclear Electric Ltd (“NE”) and
Scottish Nuclear Limited (“SN”) in relation to the use of the Central Fuel Store” dated 21 December 1998. 

  

	6.	 	Supplemental letter headed “Amendment Number 1” dated 6 January 1999. 

  

	7.	 	Supplemental letter headed “Amendment Number 2” dated 11 April 2001 

  

	8.	 	Supplemental letter headed “Amendment Number 3” dated 11 April 2001. 

  

	9.	 	Supplemental letter headed “Amendment Number 4” dated 11 April 2001. 

  

	10.	 	Supplemental letter headed “Amendment Number 5” dated 25 June 2001. 

  

	11.	 	Supplemental letter headed “Amendment Number 6” dated 27 November 2001. 

  

	12.	 	Supplemental letter headed “Amendment Number 7” dated 27 November 2001. 

  

	13.	 	Supplemental letter headed “Amendment Number 8” dated 27 November 2001. 

  

	14.	 	Supplemental letter headed “Amendment Number 9” dated 27 November 2001. 

  

	15.	 	Supplemental letter headed “Amendment Number 10” dated 27 November 2001. 

  

	16.	 	Deed of amendment no 2 (also known as “Amendment Number 11”) dated 15 March 2002. 

  

	17.	 	Supplemental letter headed “Amendment Number 12” dated 30 September 2002. 

  

 35 

 BNFL/BEG(UK) COMMERCIAL IN CONFIDENCE 
  

 SCHEDULE 2 
  
 DOCUMENTS FOR TERMINATION CONDITIONS 
  
 Part A: Agreements between BNFL and BEG 
  

	1.	 	BACK-END AGREEMENTS 

  
 1.1 The Agreement for New Spent Fuel Management Services to be entered into between BNFL, BEG and BE. 
  
 1.2 Deed of Amendment to be entered into between BNFL and BEG, relating to the agreement for the Storage and Reprocessing of Irradiated Oxide Fuel and
Related Services between BNFL and Nuclear Electric plc dated 31 March 1995, as amended and novated. 
  
 1.3 Deed of Amendment to be entered into between BNFL and BEG, relating to the agreement for Spent Fuel Management Services between BNFL and Nuclear Electric Limited dated 3 June 1997 as amended. 
  
 1.4 Deed of Amendment to be entered into between BNFL and BEG, relating to the agreement for Oxide
Flask Maintenance between BNFL and Nuclear Electric plc dated 31 March 1996, as amended and novated. 
  
 1.5 Deed of Amendment to be entered into between BNFL and BEG, relating to the new agreement for Oxide Flask Maintenance between BNFL and Nuclear Electric Limited dated 3 June 1997, as amended. 
  
 1.6 Deed of Amendment to be entered into between BNFL and BEG, relating to the agreement for Rail
Transport Services of Irradiated Nuclear Fuel in the United Kingdom between BNFL and Nuclear Electric Limited dated 3 June 1997, as amended. 
  
 1.7 Deed of Amendment to be entered into between BNFL and BEG, relating to the agreement for Oxide Miscellaneous Services between BNFL and Nuclear Electric plc dated 31 March 1996,
as amended and novated. 
  

	2.	 	FRONT-END AGREEMENTS 

  
 2.1 Deed of Amendment and Guarantee between BNFL, BEG and BE dated the same date as this Deed, relating to the Agreement for the Supply of Fuel for Use in Advanced Gas Cooled
Reactors between BNFL and Nuclear Electric Limited dated 3 June 1997, as amended. 
  
 2.2
Agreement for the Supply of Fuel for Use in Advanced Gas Cooled Reactors from 1 April 2006 between BNFL, BEG and BE dated the same date as this Deed. 
  
 Part B: Agreements between BNFL and BEG(UK) 
  

	1.	 	BACK-END AGREEMENTS 

  
 1.1 The Agreement for New Spent Fuel Management Services to be entered into between BNFL, BEG(UK) and BE. 
  

 36 

 BNFL/BEG(UK) COMMERCIAL IN CONFIDENCE 
  

 1.2 Deed of Amendment to be entered into between BNFL, BEG(UK) and BE, relating to the agreement for the Storage and
Reprocessing of Irradiated Oxide Fuel and Related Services between BNFL and Scottish Nuclear Limited dated 30 March 1995, as amended, and to the agreement for the Long Term Storage of Irradiated Oxide Fuel and Related Services dated 30 March 1995
between BNFL and Scottish Nuclear Limited, as amended. 
  
 1.3 Deed of Amendment to be
entered into between BNFL and BEG(UK), relating to the agreement for Oxide Flask Maintenance between BNFL and Scottish Nuclear Limited, dated 29 March 1996, as amended. 
  
 1.4 Deed of Amendment to be entered into between BNFL and BEG(UK), relating to the new agreement for Oxide Flask Maintenance Services between BNFL and
Scottish Nuclear Limited, dated 3 June 1997, as amended. 
  
 1.5 Deed of Amendment to be
entered into between BNFL and BEG(UK), relating to the agreement for Rail Transport Services of Irradiated Nuclear Fuel in the United Kingdom between BNFL and Scottish Nuclear Limited, dated 3 June 1997, as amended. 
  
 1.6 Deed of Amendment to be entered into between BNFL and BEG(UK), relating to the agreement for Oxide
Miscellaneous Services between BNFL and Scottish Nuclear Limited, dated 29 March 1996, as amended. 
  

	2.	 	FRONT-END AGREEMENTS 

  
 2.1 Agreement for the Supply of Fuel for Use in Advanced Gas Cooled Reactors from 1 April 2006 between BNFL, BEG(UK) and BE dated the same date as this Deed. 
  

 37 

 BNFL/BEG(UK) COMMERCIAL IN CONFIDENCE 
  

 IN WITNESS WHEREOF the Parties have caused this Deed to be duly executed as their Deed the day and year first before written

  

	 EXECUTED as a DEED by
	  	)
	 	  	)
	 as attorney for
	  	)
	 BRITISH ENERGY GENERATION
	  	)
	 (UK) LIMITED
	  	)
		
	 in the presence of:
	  	 
		
	 Signature of Witness:
	  	 
	 Name of Witness:
	  	 
	 Address of Witness:
	  	 
	 Occupation of Witness:
	  	 
		
	 The Common Seal of
	  	)
	 BRITISH NUCLEAR FUELS plc
	  	)
	 was hereunto affixed in the presence of
	  	)
		
	 Director
	  	 
		
	 Secretary/Director
	  	 
		
	 EXECUTED as a DEED by
	  	)
	 	  	)
	 as attorney for
	  	)
	 BRITISH ENERGY plc
	  	)
		
	 in the presence of:
	  	 
		
	 Signature of Witness:
	  	 
	 Name of Witness:
	  	 
	 Address of Witness:
	  	 
	 Occupation of Witness:
	  	 

  

 38Credit Facility Agreement dated September 26, 2003

 Exhibit 4.12 
  
 Date 15th August 2003 
  

	 British Energy plc
	  	British Energy Generation Limited
	 3 Redwood Creescent
	  	c/o British Energy plc
	 Peel Park
	  	3 Redwood Crescent
	 East Kilbride
	  	Peel Park
	 G74 5PR, Scotland
	  	East Kilbride, G74 5PR, Scotland
		
	 Attention: Group Treasurer
	  	Attention: Group Treasurer
		
	 British Energy Generation (UK) Limited
	  	British Energy Power and Energy Trading
	 3 Redwood Crescent
	  	Limited
	 Peel Park East
	  	3 Redwood Crescent
	 East Kilbride
	  	Peel Park
	 G74 5PR, Scotland
	  	East Kilbride, G74 5PR, Scotland
		
	 Attention: Group Treasurer
	  	Attention: Group Treasurer
		
	 British Energy Investment Limited
	  	District Energy Limited
	 3 Redwood Crescent
	  	c/o British Energy plc
	 Peel Park
	  	3 Redwood Crescent
	 East Kilbride
	  	Peel Park
	 G74 5PR, Scotland
	  	East Kilbride, G74 5PR, Scotland
		
	 Attention: Group Treasurer
	  	Attention: Group Treasurer
		
	 British Energy International Holdings Limited
	  	District Energy US Holdings Inc
	 3 Redwood Crescent
	  	c/o British Energy Plc
	 Peel Park
	  	3 Redwood Crescent
	 East Kilbride
	  	Peel Park
	 G74 5PR, Scotland
	  	East Kilbride, G74 5PR, Scotland
		
	 Attention: Group Treasurer
	  	Attention: Group Treasurer
		
	 British Energy L.P.
	  	Peel Park Funding Limited
	 c/o British Energy plc
	  	c/o British Energy plc
	 3 Redwood Crescent
	  	3 Redwood Crescent
	 Peel Park
	  	Peel Park
	 East Kilbride
	  	East Kilbride
	 G74 5PR, Scotland
	  	G74 5PR, Scotland
		
	 Attention: Group Treasurer
	  	Attention: Group Treasurer

  
 Dear Sirs, 
  
 British Energy plc - Credit Facility Agreement 
 dated 26th September, 2002 (as extended, amended and restated) 
 (the “Credit Facility Agreement”) 
  

	1.	 	I refer to the Credit Facility Agreement. Unless otherwise stated: 

  

	 	a.	 	words and expressions defined in the Credit Facility Agreement have the same meanings when used in this letter; and 

  

	 	b.	 	references to clauses in the Schedule to this letter are to clauses of the Credit Facility Agreement. 

  

	2.	 	It is acknowledged that, pursuant to an Accession Letter dated 6 February, 2003, Peel Park Funding Limited became an Additional Guarantor under the Credit Facility 

 Agreement, and became bound by the terms and obligations of the Credit Facility Agreement as an Additional
Guarantor pursuant to clause 17.2 of the Credit Facility Agreement with effect from the date of such Accession Letter. Accordingly, Part II of Schedule 1 to the Credit Facility Agreement shall be amended to include Peel Park Funding Limited
(Registered No. 38259). 
  

	3.	 	I agree that, pursuant to clause 5.10(D) of the Credit Facility Agreement, the Company may invest any amount which it is required to deposit in the Cash Reserve Account under the terms of the
Credit Facility Agreement in money market funds with a minimum rating of “AAAm” from Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies, Inc.. 

  

	4.	 	I confirm my agreement in accordance with clause 6.2(B)(i) of the Credit Facility Agreement that no prepayment is required under clause 6.2 (B)(i)(d) of the Credit Facility Agreement as a
result of an Amergen Sale not having been agreed by 30 June, 2003. 

  

	5.	 	With effect from the date of this letter the amendments set out in the Schedule to this letter shall be made to the Credit Facility Agreement. 

  

	6.	 	The Credit Facility Agreement, as amended by this letter, will remain in full force and effect. References to the Credit Facility Agreement (however expressed) will be read and construed as
references to the Credit Facility Agreement as so amended. 

  

	7.	 	This letter is a Finance Document. 

  

	8.	 	This letter is governed by English law. 

  

	9.	 	Please would you acknowledge your agreement to the above by signing and returning to me the attached copy of this letter. 

  
 Yours faithfully, 
  
 [GRAPHIC APPEARS HERE] 
  
 We hereby acknowledge and agree to the terms of the above letter. 
  

	 For and behalf of behalf of
	  	for and on behalf of
	 British Energy plc
	  	British Energy Generation Limited
		
	 for and on behalf of
	  	for and on behalf of
	 British Energy Generation (UK) Limited
	  	British Energy Power and Energy Trading
	 	  	Limited
		
	 for and on behalf of
	  	for and on behalf of
	 British Energy Investment Limited
	  	District Energy Limited

	 for and on behalf of
	  	for and on behalf of
	 British Energy International Holdings
	  	British Energy US Holdings Inc
	 Limited
	  	 
		
	 for and on behalf of
	  	for and on behalf of
	 British Energy L.P.
	  	Peel Park Funding Limited

  

 Schedule 
  
 Amendments to the Credit Facility Agreement 
  

	l.	 	That the definition of “Trading Manuals and Guidelines” in clause 1.1 be amended by deleting the words “or as otherwise agreed by the Parties from time to time” and
substituting therefor “or by any of the Borrowers subject to (in the case of any material amendment) the prior written approval of the Secretary of State and for this purpose but without prejudice to the generality of the foregoing any change
to Section 1.2 Corporate Trading Strategy, Section 3 Key Control Areas (other than Section 3.4 Performance and Risk Management and Section 3.5 Trading Compliance Requirements) and Section 5.3 Risk Management of Green
Certificate Trading and any other change which results in, or could result in, any Borrower entering into a contract which would or could have a significant impact on the Group’s volume or price exposures, collateral requirements, overall
risk profile or which involves a change in the current permitted limits, markets or tradable instruments of any member of the Group shall be deemed to be a material amendment”. 

  

	2.	 	That clause 15.5(H)(iv) be amended by inserting the words “and, if any amount which the Company is required to deposit in the Cash Reserve Account is instead invested in other
investments approved in writing by the Secretary of State pursuant to Clause 5.10(D), a schedule setting out all such investments” after the words “Cash Reserve Account”. 

  

	3.	 	That clause 15.5(M) be amended by: 

  

	 	(A)	 	deleting the words “promptly on notification of, or agreement to, an amendment to the Trading Manuals and Guidelines,” and substituting therefor “a monthly report setting out
all amendments (if any) (and including an explanation of any such amendments, save for any amendment where the prior written approval of the Secretary of State has been obtained) to the Trading Manuals and Guidelines since the last such report and
(if applicable) a copy of’; and 

  

	 	(B)	 	deleting the words “with a letter explaining the changes”. 

  

	4.	 	That clause 15.25(A) be amended by deleting the words “, as such Trading Manuals and Guidelines may be amended with the prior written approval of the Secretary of State”.

 CONFORMED COPY 
  

FURTHER EXTENSION AND AMENDMENT AGREEMENT 
  
 THIS AGREEMENT is dated 7th March, 2003 and made by: 
  

	(1)	 	THE SECRETARY OF STATE FOR TRADE AND INDUSTRY of One Victoria Street, London SW1H 0ET (the “Secretary of State”); 

  

	(2)	 	BRITISH ENERGY PLC, a company registered in Scotland with number SC162273 (the “Company”); 

  

	(3)	 	THE PERSONS listed on the signature pages to this Agreement as borrowers (the “Initial Borrowers”); and 

  

	(4)	 	THE PERSONS listed on the signature pages to this Agreement as guarantors (the “Initial Guarantors”). 

  

	WHEREAS	 	

  

	(A)	 	By a credit facility agreement (the “Credit Facility Agreement”) dated 26th September, 2002 (as amended) and made between the Secretary of State, the Company, the Initial
Borrowers, the Initial Guarantors and others, the Secretary of State agreed to make available to the Borrowers certain revolving credit and cash collateral facilities. 

  

	(B)	 	The Secretary of State has agreed to extend the Availability Period of the Facilities. 

  

	(C)	 	The parties to the Credit Facility Agreement have agreed to amend the terms of the Credit Facility Agreement in accordance with the terms of this Agreement. 

  
 It is agreed as follows: 
  

	1.	 	INTERPRETATION 

  

	1.1	 	Interpretation 

  
 Unless otherwise stated: 
  

	 	(A)	 	the interpretation provisions contained in Clause 1 of the Credit Facility Agreement are deemed to be incorporated expressly in this Agreement and apply to this Agreement accordingly; and

  

	 	(B)	 	a reference to a Clause or a Schedule is a reference to a clause of, or a schedule to, the Credit Facility Agreement. 

  

	1.2	 	Scope 

  
 This Agreement is supplemental to and amends the Credit Facility Agreement. 

	2.	 	NOTICE OF EXTENSION 

  
 Pursuant to Clause 5.1 (Availability), the Secretary of State hereby notifies the Company that the Final Maturity Date shall be 30th September, 2004 (or such later
date as the Secretary of State may determine pursuant to Clause 5.1 (Availability)) and that the Availability Period shall accordingly be extended to one Business Day prior to that date. 
  

	3.	 	CONDITIONS PRECEDENT DOCUMENTS 

  
 No Borrower may deliver a Request on or after the date of this Agreement and the Secretary of State shall have no obligation pursuant to Clause 5 (Utilisation)
unless and until the Secretary of State has confirmed to the Company that she has received all of the documents set out in Schedule 1 (Conditions Precedent Documents) to this Agreement in form and substance satisfactory to her. 
  

	4.	 	AMENDMENT OF THE CREDIT FACILITY AGREEMENT 

  
 With effect from the date of this Agreement, the Credit Facility Agreement will be amended so that it will be read and construed as set out in Schedule 2 (Amended
and Restated Credit Facility Agreement) to this Agreement. The Credit Facility Agreement, as amended, will remain in full force and effect. References to the Credit Facility Agreement (however expressed) will be read and construed as references to
the Credit Facility Agreement as amended. 
  

	5.	 	CONTINUING OBLIGATIONS 

  
 Each of the Company, the Initial Borrowers and the Initial Guarantors confirms and acknowledges that the provisions of this Agreement do not release, discharge,
prejudice or affect in any way any of its obligations under the Credit Facility Agreement (save as amended by this Agreement) or the other Finance Documents and all of its obligations under the Finance Documents (including, without limitation, in
respect of any guarantee or security granted by it under or in connection with the Finance Documents) continue in full force and effect (save as amended by this Agreement). 
  

	6.	 	NOTIFICATION 

  
 The Secretary of State hereby notifies the Company that this Agreement is a Finance Document. 
  

	7.	 	REPETITION OF REPRESENTATIONS AND WARRANTIES 

  
 The representations and warranties in Clause 14 (Representations and Warranties) shall be deemed to be repeated by each Obligor on the date of this Agreement and on
the date of the first Request and Utilisation Date after the date of this Agreement as if made with reference to the facts and circumstances existing on each such day (and so that the representation and warranty in Clause 14.7 (Financial Statements
of the Borrowers) shall for this purpose refer to the audited consolidated financial statements of the Group delivered to the Secretary of State under the Credit Facility Agreement). 
  

 2 

	8.	 	NOTICES 

  
 Clause 23 (Notices) shall apply to this Agreement. 
  

	9.	 	GOVERNING LAW 

  
 This Agreement is governed by English law. 
  
 This Agreement has been
entered into on the date stated at the beginning of this Agreement. 
  
  

 3 

 SCHEDULE 1 
 CONDITIONS PRECEDENT DOCUMENTS 
  

	1.	 	All Obligors 

  
 A certificate of an authorised signatory of each Obligor certifying that each copy constitutional document provided as a condition precedent to utilisation under the Interim Facility Agreement remains correct, complete and in
full force and effect as at the date of this Agreement. 
  

	2.	 	Borrowers 

  

	 	(A)	 	A copy of a resolution of the board of directors of each Borrower (or of a committee of that board, accompanied by a copy of a resolution of that board appointing the relevant committee):

  

	 	(i)	 	approving the terms of, and the transactions contemplated by, and resolving that it execute this Agreement; 

  

	 	(ii)	 	authorising a specified person or persons to execute this Agreement on its behalf; and 

  

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

  

	 	(B)	 	a specimen of the signature of each person authorised by the resolution referred to in paragraph (A) above; and 

  

	 	(C)	 	a certificate of an authorised signatory of each Borrower certifying that each copy document specified in this paragraph 2 is correct, complete and in full force and effect as at a
date no earlier than the date of this Agreement. 

  

	3.	 	Guarantors 

  

	 	(A)	 	A copy of a resolution of the board of directors of each Guarantor (or of a committee of that board, accompanied by a copy of a resolution of that board appointing the relevant committee):

  

	 	(i)	 	approving the terms of, and the transactions contemplated by, and resolving that it execute this Agreement; 

  

	 	(ii)	 	authorising a specified person or persons to execute this Agreement on its behalf; and 

  

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

  

 4 

	 	(B)	 	a certificate of an authorised signatory of each Guarantor certifying that each copy document specified in this paragraph 3 is correct, complete and in full force and effect as at a
date no earlier than the date of this Agreement; and 

  

	 	(C)	 	a copy of a resolution of the shareholders of each Obligor (other than the Company) approving its entry into this Agreement. 

  

	4.	 	Legal opinions 

  

	 	(A)	 	A legal opinion of English legal advisers to the Company, in the form previously approved in writing by the Secretary of State (or her nominees or advisers), addressed to the Secretary of
State. 

  

	 	(B)	 	A legal opinion of Scottish legal advisers to the Company, in the form previously approved in writing by the Secretary of State (or her nominees or advisers), addressed to the Secretary of
State. 

  

	 	(C)	 	A legal opinion of U.S. legal advisers to the Company, in the form previously approved in writing by the Secretary of State (or her nominees or advisers), addressed to the Secretary of State.

  

	5.	 	Company Services 

  
 A search of each Obligor’s register of mortgages and charges and company file at the Companies Registry or Register showing, amongst other things, no Security
Interests (other than Permitted Security Interests) and no appointment of (or presentation of any petition in relation to any appointment of) a receiver, liquidator or administrator. 
  

 5 

 SCHEDULE 2 
 AMENDED AND RESTATED CREDIT FACILITY AGREEMENT 
  
 DATE:
26TH SEPTEMBER, 2002 AS AMENDED AND RESTATED ON 7TH MARCH, 2003 
  
 THE SECRETARY OF STATE FOR TRADE AND INDUSTRY 
  
 AND

  
 BRITISH ENERGY PLC 
  
 AND 
  
 OTHERS 
  

  
 REVOLVING CREDIT AND CASH COLLATERAL FACILITIES 

 

  

 6 

 CONTENTS 
  

	 1.
	  	INTERPRETATION	  	9
			
	 2.
	  	THE FACILITIES	  	29
			
	 3.
	  	PURPOSE	  	30
			
	 4.
	  	CONDITIONS PRECEDENT	  	30
			
	 5.
	  	UTILISATION	  	31
			
	 6.
	  	REPAYMENT OF LOANS	  	35
			
	 7.
	  	BORROWER’S LIABILITIES IN RELATION TO DEPOSITS	  	38
			
	 8.
	  	INTEREST PERIODS	  	42
			
	 9.
	  	INTEREST AND COMMITMENT FEE	  	42
			
	 10.
	  	COMMISSION ON DEPOSITS	  	43
			
	 11.
	  	NON STERLING DEPOSITS	  	44
			
	 12.
	  	PAYMENTS	  	44
			
	 13.
	  	GUARANTEE	  	45
			
	 14.
	  	REPRESENTATIONS AND WARRANTIES	  	47
			
	 15.
	  	UNDERTAKINGS	  	52
			
	 16.
	  	DEFAULT	  	65
			
	 17.
	  	CHANGES TO THE OBLIGORS	  	72
			
	 18.
	  	ADDITIONAL INDEMNITIES	  	73
			
	 19.
	  	REFINANCING	  	73
			
	 20.
	  	RESTRUCTURING PROPOSALS	  	74
			
	 21.
	  	COSTS AND EXPENSES	  	74
			
	 22.
	  	COUNTERPARTS	  	75
			
	 23.
	  	NOTICES	  	76

  

 7 

	 24.
	  	JURISDICTION	  	77
			
	 25.
	  	GOVERNING LAW	  	77

  
  
  

	 SCHEDULE 1 PART I BORROWERS
	  	79
		
	 SCHEDULE 1 PART II GUARANTORS
	  	80
		
	 SCHEDULE 2 PART I CONDITIONS PRECEDENT DOCUMENTS
	  	81
		
	 SCHEDULE 2 PART II CONDITIONS PRECEDENT DOCUMENTS FOR ADDITIONAL OBLIGORS
	  	84
		
	 SCHEDULE 3 PART I FORM OF LOAN REQUEST
	  	85
		
	 SCHEDULE 3 PART II FORM OF DEPOSIT REQUEST
	  	86
		
	 SCHEDULE 4 PART I FORM OF LEGAL OPINION OF CLIFFORD CHANCE
	  	87
		
	 SCHEDULE 4 PART II FORM OF LEGAL OPINION OF SCOTTISH LAWYERS
	  	88
		
	 SCHEDULE 4 PART III FORM OF LEGAL OPINION OF US LAWYERS
	  	89
		
	 SCHEDULE 5 FORM OF DEED OF CHARGE PART I
	  	90
		
	 SCHEDULE 5 FORM OF DEED OF CHARGE PART II (Suppliers)
	  	99
		
	 SCHEDULE 6 APPROVED WORKING CAPITAL PURPOSES
	  	107
		
	 SCHEDULE 7 APPROVED BENEFICIARIES
	  	108
		
	 SCHEDULE 8 FORM OF ACCESSION LETTER
	  	109
		
	 SCHEDULE 9 MONTHLY AVAILABLE AMOUNTS UNDER EACH FACILITY
	  	110

  

 8 

 THIS AGREEMENT is dated 26th September, 2002 as amended and restated on 7th March, 2003 and made by: 
  

	(1)	 	THE SECRETARY OF STATE FOR TRADE AND INDUSTRY of One Victoria Street, London SW1H 0ET (the “Secretary of State”); 

  

	(2)	 	BRITISH ENERGY PLC, a company registered in Scotland with number SC162273 (the “Company”); 

  

	(3)	 	THE PERSONS listed in Part I of Schedule 1 as borrowers (in this capacity the “Initial Borrowers”); and 

  

	(4)	 	THE PERSONS listed in Part II of Schedule 1 as guarantors (in this capacity the “Initial Guarantors”). 

  
 WHEREAS: 
  

	(A)	 	The Secretary of State has agreed with the Company that she will replace the facilities provided pursuant to an agreement made on 9th September 2002 with new short term working capital and
collateral deposit facilities on the terms set out in this Agreement and with a view to continuing to ensure nuclear safety and security of electricity supply in the United Kingdom. 

  

	(B)	 	The provision of credit and collateral facilities under this Agreement is conditional upon the creation by the Obligors of certain security interests in favour of the Secretary of State.

  
 IT IS AGREED as follows: 
  

	1.	 	INTERPRETATION 

  

	1.1	 	Definitions 

  

	 “Accession Letter”
	  	means a document substantially in the form of Schedule 8 (Accession Letter);
		
	 “Additional Borrower”
	  	means a company or person which has become a Borrower pursuant to Clause 17.2 (Additional Obligors);
		
	 “Additional Guarantor”
	  	means a company or person which has become a Guarantor pursuant to Clause 17.2 (Additional Obligors);
		
	 “Additional Obligor”
	  	means an Additional Borrower or an Additional Guarantor;

  

 9 

	 “Amergen Sale”
	  	means a sale, transfer or other disposal by a member of the Group (with the prior written consent of the Secretary of State) of all or part of its interest (direct or indirect)
in AmerGen Energy Company LLC or AmerGen Vermont LLC;
		
	 “Approved Beneficiary”
	  	means any person listed in Schedule 7 (Approved Beneficiaries) and such other persons as may be accepted as such in writing by the Secretary of State;
		
	 “Approved Working Capital
 Purpose”
	  	means any purpose specified in Schedule 6 (Approved Working Capital Purposes) and such other purpose of any Borrower as may be approved by the Secretary of State in
advance of any application for that purpose of any Loan;
		
	 “Availability Period”
	  	means the period from Financial Close until one Business Day prior to the Final Maturity Date;
		
	 “BACS Facilities
 Agreement”
	  	means the letter agreement (in the form provided to the Secretary of State on 19th February, 2003) dated 19th February, 2003 and entered into by the Company, BEGUK and
Clydesdale Bank plc under which Clydesdale Bank plc has agreed to provide BACS facilities to the Group;
		
	 “Balancing and Settlement
 Code”
	  	means the Balancing and Settlement Code as published by Elexon Limited and in force from time to time;
		
	 “Bank’s Spot Rate of
 Exchange”
	  	means the Bank of England’s rate of exchange for the purchase of the relevant currency with Sterling at or about 11.00 a.m. on a Business Day as published by Reuters on
page BoE/ERI;
		
	 “BEG”
	  	means British Energy Generation Limited;
		
	 “BEGUK”
	  	means British Energy Generation (UK) Limited;
		
	 “BEPET”
	  	means British Energy Power and Energy Trading Limited;
		
	 “BNFL”
	  	means British Nuclear Fuels plc;
		
	 “BNFL Contracts”
	  	means:
			
	 	  	(a)	  	the Agreement for the Storage and Reprocessing of Irradiated Oxide Fuel and

  

 10 

	 	  	 	  	Related Services between BNFL and Nuclear Electric plc dated 31st March, 1995 (as supplemented on 31st March, 1995 and 14th June, 1999 and amended on 31st March, 1996, 3rd June, 1997 and
30th March, 2001);
			
	 	  	(b)	  	the Agreement for Supply of Fuel for use in Advanced Gas Cooled Reactors from 1st April, 2000 between BNFL and Nuclear Electric Ltd dated 3rd June, 1997 (as amended by side letter dated 3rd
June, 1997 and by amendments 1-9);
			
	 	  	(c)	  	the Engineering Services Support Agreement (order no. 40042088) between BNFL and BEG dated 30th March, 2001;
			
	 	  	(d)	  	the Agreement for the Storage and Reprocessing of Irradiated and Oxide Fuel and Related Services between BNFL and Scottish Nuclear Limited dated 30th March, 1995 (as supplemented on 30th
March, 1995 and as amended on 29th March, 1996, 3rd June, 1997 and 30th March, 2001);
			
	 	  	(e)	  	the Agreement for Supply of Fuel for use in Advanced Gas Cooled Reactors between BNFL and Scottish Nuclear Limited dated 30th March, 1995 (as amended on 29th March, 1996 and by amendment
1-9 and supplemented on 30th March, 1995, 3rd June, 1997 and 8th August, 1997); and
			
	 	  	(f)	  	the Agreement for Technical Services between BNFL and Scottish Nuclear Limited dated 30th March, 1995 (as amended on 29th March, 1995 and 3rd June, 1997),
		
	 	  	(each as novated by a Deed of Novation dated 31st March, 1996);
		
	 “Bonds”
	  	means each series of guaranteed bonds issued by the Company and due, respectively, in 2003, 2006 and 2016;
		
	 “Bondholders”
	  	means the holders of the Bonds;
		
	 “Bondholders’
	  	means the proposed resolutions set out in a circular of

  

 11 

	 Resolutions”
	  	the Company to the Bondholders dated 18th February, 2003;
		
	 “Bondholders
 Restructuring Agreement”
	  	means the agreement dated 14th February, 2003 and made between the Company, BEG, BEGUK and certain Bondholders named therein;
		
	 “Borrowed Money”
	  	means Indebtedness, excluding Project Finance Indebtedness, incurred in respect of (without double-counting):
			
	 	  	(a)	  	money borrowed or raised, and debit balances (net of credit balances where a right of set-off in respect of such credit balances exists) at banks;
			
	 	  	(b)	  	any bond, note, loan stock, debenture or similar debt instrument;
			
	 	  	(c)	  	acceptance or documentary credit facilities;
			
	 	  	(d)	  	receivables sold or discounted (to the extent only of any recourse in relation thereto);
			
	 	  	(e)	  	deferred payments for assets or services acquired (other than credit obtained on normal trade credit terms in the ordinary course of day-to-day trading but such credit shall be included if
by its terms interest accrues on such credit) but excluding such payments arising under the BNFL Contracts;
			
	 	  	(f)	  	Capitalised Lease Obligations;
			
	 	  	(g)	  	any other transaction (including, without limitation, forward sale or purchase agreements) having the commercial effect of a borrowing of money or of any of (b) to (f) above;
and
			
	 	  	(h)	  	guarantees in respect of Indebtedness of any person falling within any of (a) to (g) above and (for the purposes of Clause 16.6 (Cross-Default), only) guarantees or
counter-indemnities in respect of any obligation under a letter of credit or a guarantee issued by a bank or other financial institution;
		
	 “Borrower”
	  	means an Initial Borrower or an Additional Borrower;

  

 12 

	 “Business Day”
	  	means a day (other than a Saturday or a Sunday) on which banks are open for general business in London and Glasgow; and in relation to a date for a Deposit to be made in a currency other
than sterling, in the country where the relevant Deposit Bank is situated;
		
	 “Capitalised Lease
 Obligations”
	  	means, with respect to any person, any rental obligation which, under generally accepted accounting principles in the United Kingdom, would be required to be treated as a finance lease or
otherwise capitalised on the books of such person, in accordance with such principles;
		
	 “Cash Reserve Account”
	  	means the account designated “Cash Reserve Account” of the Company with Clydesdale Bank with account number 10023460 (and/or such other account at such other bank as the Secretary
of State approves in writing), and includes any renewal or re-designation thereof;
		
	 “Cash Reserves”
	  	means the sums from time to time standing to the credit of the Cash Reserve Account including interest accruing on such sums;
		
	 “Chargee”
	  	means a person for whose benefit a Deposit is secured pursuant to a Deed of Charge or the Deposit Bank to which a Deposit is paid by way of collateral in connection with the issue of a
letter of credit pursuant to Clause 5.4 (Making of Deposit);
		
	 “Connection and Use of
 System Code”
	  	means the Connection and Use of System Code as in force from time to time;
		
	 “Debenture”
	  	means the debenture entered into by the Company, BEGUK, BEPET, British Energy Investment Limited, British Energy International Holdings Limited, BEG, District Energy Limited and the
Secretary of State, or her nominee, on or about the date of this Agreement, as amended from time to time;
		
	 “Decommissioning Fund”
	  	means the decommissioning fund of Nuclear Generation Decommissioning Fund Limited;
		
	 “Deed of Charge”
	  	means a deed of charge entered into by the Secretary of State in either of the forms provided by Schedule 5 (Form of Deed of Charge) or such other form as the Secretary of State may
agree with the person in whose

  

 13 

	 	  	favour Security Interests are created thereunder;
		
	 “Default”
	  	means an Event of Default or an event which, with the giving of notice under, or the lapse of a time period specified in Clause 16 (Default) (or any combination of the
foregoing), would constitute an Event of Default;
		
	 “Deposit”
	  	means a deposit by the Secretary of State of cash collateral under Facility A or Facility B, as the case may be;
		
	 “Deposit Bank”
	  	means HSBC Bank plc and such additional or substitute bank as the Secretary of State may from time to time designate;
		
	 “Deposit Request”
	  	means a request by a Borrower that the Secretary of State make a Deposit, substantially in the form of Part II of Schedule 3;
		
	 “Disposal”
	  	means an Amergen Sale;
		
	 “Disposal Proceeds”
	  	means, in respect of a Disposal, the gross cash consideration received by the member of the Group making the Disposal (including, when received, any cash consideration
receivable by way of a deferred instalment of any purchase price) less:
			
	 	  	(a)	  	all costs and expenses incurred in respect of that Disposal which are approved in writing by the Secretary of State before being paid;
			
	 	  	(b)	  	any tax incurred in respect of that Disposal; and
			
	 	  	(c)	  	the amount, if any, of any reserve established in relation to any contingent liability relating to that Disposal;
		
	 “ECTEF”
	  	means Enron Capital & Trade Europe Finance LLC;
		
	 “ECTRIC”
	  	means Enron Capital and Trade Resources International Corporation;

  

 14 

	 “Environmental Claim”
	  	means any claim, prosecution, demand, action, official warning, abatement or other order (conditional or otherwise) relating to Environmental Matters and any formal written
notification or order requiring compliance with the terms of any Environmental Licence or Environmental Law;
		
	 “Environmental Law”
	  	means all or any laws, statutes, rules, regulations, treaties, directives, by-laws, statutory codes of practice, circulars, guidance notes, orders, notices and demands,
decisions of the courts or anything like any of the foregoing of any governmental authority or agency or any regulatory body in any jurisdiction in which any Obligor does business or owns assets relating to Environmental Matters applicable to any
member of the Group, the properties owned, leased, otherwise occupied or controlled from time to time by any member of the Group and includes, without limitation, the Environmental Protection Act 1990, the Environment Act 1995, the Nuclear
Installations Act 1965, the Radioactive Substances Act 1993, the Radioactive Material (Road Transport) Act 1991, the Water Resources Act 1991, the Control of Pollution Act 1974, the Natural Heritage (Scotland) Act 1991, the Water Industry Act 1991
and the Health and Safety at Work Act 1974;
		
	 “Environmental Licence”
	  	means any permit, licence, authorisation, consent or other approval required at any time by any Environmental Law in relation to any member of the Group, the business carried on
by any member of the Group, the properties owned, leased to, otherwise occupied or controlled from time to time by any member of the Group;
		
	 “Environmental Matters”
	  	means:
			
	 	  	(a)	  	the generation, deposit, keeping, treatment, transportation, transmission, handling, importation, exportation, processing, collection, sorting, presence or manufacture of any
“waste” or “radioactive waste” (as defined in the Environmental Protection Act 1990 (as amended) or the Radioactive Substances Act 1993, respectively, or in any equivalent legislation or regulation in force in any
jurisdiction in which any member of the Group is incorporated, owns property or assets or carries

  

 15 

	 	  	 	 	on any business or operations), or any Relevant Substance;
			
	 	  	(b)	 	nuisance, noise, health and safety at work or elsewhere; and
			
	 	  	(c)	 	the pollution, conservation or protection of the environment (both natural and built) or of man or any living organisms supported by the environment or any other matter whatsoever affecting
the environment or any part of it;
		
	 “EPL”
	  	means Eggborough Power Limited;
		
	 “Event of Default”
	  	means an event specified as such in Clause 16 (Events of Default);
		
	 “Excluded Subsidiary”
	  	means any Subsidiary of an Obligor (other than a Guarantor):
			
	 	  	(a)	 	which is a single purpose company or limited liability undertaking whose principal assets and business are directly or indirectly constituted by the ownership, acquisition, development
and/or operation of an asset;
			
	 	  	(b)	 	none of whose Indebtedness for borrowed money in respect of the financing of such ownership, acquisition, development and/or operation of an asset is subject to any recourse whatsoever to
any member of the Group (other than such Subsidiary or another Excluded Subsidiary); and
			
	 	  	(c)	 	which has been designated as such by a Borrower by written notice to the Secretary of State provided that a Borrower may give written notice to the Secretary of State at any time that any
Excluded Subsidiary is no longer an Excluded Subsidiary.
		
	 “Facility”
	  	means Facility A or Facility B;
		
	 “Facility A”
	  	means the facility referred to in Clause 2(A)(i) (Facilities);
		
	 “Facility B”
	  	means the facility referred to in Clause 2(A)(ii) (Facilities);

  

 16 

		
	 “Final Maturity Date”
	  	means the earlier of :
			
	 	  	(a)	  	30th September, 2004 or such later date as the Secretary of State may determine pursuant to Clause 5.1 (Availability);
			
	 	  	(b)	  	any date notified by the Secretary of State to the Company on which repayment of amounts outstanding under this Agreement are required as a result of a decision of the European Commission
or any obligation under European Community law; or
			
	 	  	(c)	  	the date upon which documentation required to effect the Restructuring Proposals has been executed and delivered by or on behalf of the Company, BEG, BEGUK, BEPET, EPL and each Financial
Creditor and all conditions to the effectiveness of that documentation have been satisfied or waived and/or (if appropriate) the date upon which any scheme or schemes of arrangement implemented pursuant to the Companies Act 1985 (or any other
similar compromise or arrangement) has (or have), if necessary, been sanctioned by the High Court and become effective in accordance with its (or their) terms in order to give effect to the Restructuring Proposals;
		
	 “Finance Documents”
	  	means this Agreement, the Security Documents, each Deed of Charge, all Mandate Documentation, each Accession Letter and any other document notified as such by the Secretary of
State in writing to the Company, each as amended from time to time;
		
	 “Financial Close”
	  	means receipt by the Company of the Secretary of State’s confirmation pursuant to Clause 4.1 (Documentary conditions precedent);
		
	 “Financial Creditors”
	  	means:
			
	 	  	(a)	  	 BNFL;

			
	 	  	(b)	  	 the Bondholders;

			
	 	  	(c)	  	 the agent bank and the lenders (the

  

 17 

	 	  	 	  	“Eggborough Banks”) in relation to the loan facility agreement dated 13th July, 2000 (as amended prior to 28th November, 2002) between EPL, Barclays Capital, the financial
institutions named as banks therein and Barclays Bank PLC as agent and security trustee made for the purpose of financing the operation of Eggborough power station;
			
	 	  	(d)	  	the counterparties under the Power Purchase Agreements;
			
	 	  	(e)	  	The Royal Bank of Scotland plc as the issuer of an irrevocable letter of credit dated 1st December, 2000 (as amended) in favour of Barclays Bank plc as agent for the Eggborough
Banks;
			
	 	  	(f)	  	any person or persons acting on behalf of any of the persons mentioned in paragraphs (a) to (e) above; and
			
	 	  	(g)	  	any trustee or committee of any of the persons mentioned in paragraphs (a) to (e) above;
		
	 “Fixed Charge”
	  	means each fixed charge or standard security (as the case may be) entered into on or prior to 28th November, 2002 by BEGUK, in the case of power stations in Scotland, or on 3rd
December, 2002 by BEG, in the case of power stations in England, in each case in favour of the Secretary of State;
		
	 “Generation Licences”
	  	means, at any time, the electricity generation licences held by the members of the Group or, as the context may require, required to be held for the carrying on of the business
of the respective members of the Group at that time, including without limitation licences issued pursuant to Section 6 of the Electricity Act 1989 (in the case of the United Kingdom);
		
	 “Grid Code”
	  	means the code prepared by the National Grid Company Plc pursuant to its transmission licence relating to the National Grid;
		
	 “Group”
	  	means the Company and its Subsidiaries from time to time;

  

 18 

	 “Guarantor”
	  	means an Initial Guarantor or an Additional Guarantor;
		
	 “Heads of Terms”
	  	means the heads of terms dated 14th February, 2003 and agreed on a non-binding basis by the Company and each Financial Creditor (except for BNFL and the Bondholders) setting out the
restructuring proposals in respect of certain members of the Group;
		
	 “High Court”
	  	means the High Court of Justice of England and Wales or the Court of Session in Scotland (as appropriate);
		
	 “Indebtedness”
	  	means any obligation for the payment or repayment of moneys whether as principal or as surety and whether present or future, actual or contingent;
		
	 “Interest Period”
	  	means each period determined in accordance with Clause 8 (Interest Periods);
		
	 “Interim Deposit”
	  	means each Deposit (which for the purposes of this definition only is as defined in the Interim Facility Agreement) outstanding at Financial Close;
		
	 “Interim Facility
 Agreement”
	  	means the facility agreement dated 9th September, 2002 between the Secretary of State, British Energy plc and others;
		
	 “Interim Indebtedness”
	  	means all amounts outstanding under the Interim Facility Agreement at Financial Close, including each Interim Loan and each Interim Deposit;
		
	 “Interim Loan”
	  	means each Loan (which for the purposes of this definition only is as defined in the Interim Facility Agreement) outstanding at Financial Close;
		
	 “Intragroup Receivables”
	  	has the meaning ascribed to it in the Debenture;
		
	 “Investment”
	  	has the meaning ascribed to it in the Debenture;
		
	 “LIBOR”
	  	in relation to any Interest Period or other period, the rate per annum of the offered quotation for Sterling deposits for the relevant period which appears on Telerate Page 3750 on the
Telerate Monitor Service (or such other page as may replace Page 3750 on that Service or such other system as may be nominated by the British Banker’s Association as the information vendor for the purposes of displaying British Banker’s
Association Interest Settlement Rates) at or about 12 noon (showing the rate as at 11.00 a.m.) on the first

  

 19 

	 	  	day of the applicable period;
		
	 “Licences”
	  	means the Generation Licences, the Nuclear Site Licences and the Supply Licences;
		
	 “Loan”
	  	means, as the context requires, the principal amount of each borrowing by a Borrower under Facility B or the principal aggregate amount outstanding of such
borrowing;
		
	 “Loan Request”
	  	means a request made by a Borrower for a Loan, substantially in the form of Part I of Schedule 3;
		
	 “Mandate Documentation”
	  	means all documentation entered into by the Secretary of State with a Deposit Bank for the purpose of Clause 5.4 (Making of Deposit);
		
	 “Margin”
	  	means 1.0 per cent. per annum;
		
	 “Material Adverse Effect”
	  	means a material adverse effect on the financial condition of the Obligors (taken as a whole);
		
	 “Material Contracts”
	  	means the BNFL Contracts, the Nuclear Energy Agreement and such other material contracts as the Secretary of State may reasonably specify in writing from time to
time;
		
	 “Material Subsidiary”
	  	means at any time a Subsidiary of a Borrower:
			
	 	  	(a)	  	whose gross assets or whose profits (before interest and taxation) represent 10 per cent. or more of the consolidated gross assets or profits (before interest and taxation) of the Group,
all as calculated by reference to the then latest financial statements of such Subsidiary and the latest consolidated financial statements of the Group; or
			
	 	  	(b)	  	to which is transferred the whole or substantially the whole of the assets and undertaking of a Subsidiary of a Borrower which immediately prior to such transfer is a Material
Subsidiary,

  

 20 

	 	  	but excludes any Excluded Subsidiary.
		
	 	  	A report by the auditors of a Borrower that in their opinion a Subsidiary of that Borrower (other than an Excluded Subsidiary) is or is not or was or was not at any particular time or
throughout any specified period a Material Subsidiary within paragraph (a) above shall, in the absence of manifest error, be conclusive and binding on the parties to this Agreement;
		
	 “Maturity Date”
	  	means, in respect of a Loan, the last day of its Interest Period;
		
	 “New Electricity Trading
 Arrangements”
	  	means the new electricity trading arrangements in England and Wales, as implemented pursuant to the Utilities Act 2000 and as from time to time in effect;
		
	 “New Share Pledge”
	  	means the share pledge granted by BEGUK over the entire issued share capital of British Energy International Holdings Limited and British Energy Investment Limited on or prior to 28th
November, 2002;
		
	 “Nuclear Energy
 Agreement
	  	means the agreement dated 1st June, 1990 (as amended) pursuant to which BEGUK sells electricity output to Scottish Power Generation Limited and SSE Energy Supply Limited;
		
	 “Nuclear Site Licences”
	  	means at any time, the nuclear site licences held by members of the Group (or, as the context may require, required to be held for the carrying on of the business of the respective members
of the Group) at that time issued pursuant to the Nuclear Installations Act 1965 (in the case of the United Kingdom);
		
	 “Obligor”
	  	means a Borrower or a Guarantor;
		
	 “Original Accounting
 Principles”
	  	means those accounting principles, standards and practices which were used in the preparation of the audited accounts of the Group for the financial year ended 31st March, 2002 and
delivered to the Secretary of State prior to the date of this Agreement;
		
	 “Original Group Accounts”
	  	means the audited consolidated accounts of the Group for the financial year ended 31st March, 2002;
		
	 “Original Sterling Amount”
	  	in relation to a Deposit, means:

  

 21 

	 	  	(a)	  	if that Deposit is denominated in Sterling, the amount of that Deposit; or
			
	 	  	(b)	  	if that Deposit is denominated in any other currency, the equivalent in Sterling of the amount of that Deposit at the Bank’s Spot Rate of Exchange three Business Days before the
Utilisation Date for which such amount is determined;
		
	 “Party”
	  	means a party to this Agreement;
		
	 “Permitted Security
 Interest”
	  	means:
			
	 	  	(a)	  	any lien arising by operation of law (or by agreement to the same or no greater effect) including, without limitation, any rights of set-off with respect to demand or time deposits with
financial institutions and bankers’ liens with respect to property held by financial institutions;
			
	 	  	(b)	  	any Security Interest over goods or documents of title arising in the course of letter of credit transactions entered into in the ordinary course of business;
			
	 	  	(c)	  	any Security Interest over cash paid into an escrow account by any third party pursuant to any deposit or retention of purchase price arrangements entered into pursuant to any disposal or
acquisition made by a member of the Group and any Security Interest created over the proceeds of the purchase price (or part) of an asset disposed of by any member of the Group to secure any potential warranty claim arising from the
disposal;
			
	 	  	(d)	  	any Security Interest created by virtue of the operation of any cash pooling arrangements for members of the Group with their bankers providing for the setting-off or netting of debit and
credit balances on bank accounts of those members of the Group;
			
	 	  	(e)	  	any Security Interest over the assets of any member of the Group not being an Obligor

  

 22 

	 	  	 	  	established to hold assets of any management or employee share option, share incentive or like scheme securing any loan made available to such member of the Group to finance the acquisition
of such assets;
			
	 	  	 (f)
	  	any Security Interest created by a member of the Group in favour of another member of the Group, provided that no Obligor shall create such a Security Interest in favour of a member of the
Group which is an Excluded Subsidiary or which is not a Security Provider;
			
	 	  	 (g)
	  	title retention arrangements arising in the ordinary course of trading with suppliers of goods to the Company or any of its Subsidiaries or arising under conditional sale or hiring
arrangements in respect of goods supplied to the Company or any of its Subsidiaries in the ordinary course of trading;
			
	 	  	 (h)
	  	any Security Interest on the assets of an Excluded Subsidiary to secure Project Finance Indebtedness;
			
	 	  	 (i)
	  	any Security Interest on assets of a member of the Group which becomes a member of the Group after the date of this Agreement, to secure obligations of that member of the Group existing at
the date on which it becomes a member of the Group (but not any increase in principal amount (other than by capitalisation of interest) or extension of maturity of such obligations) provided that such Security Interest was not created in
contemplation of or in connection with such company becoming a member of the Group and, that such obligations are repaid in full within 180 days of such company becoming a member of the Group;
			
	 	  	 (j)
	  	any Security Interest existing at the time of acquisition on or over any asset acquired by any member of the Group after the date of this Agreement and not created in contemplation of or in
connection with that acquisition (provided that the principal amount of the obligations secured at the time of acquisition

  

 23 

	 	  	 	  	may not be increased (other than by capitalisation of interest) and the maturity of such obligations are not extended) and that such Security Interest is discharged within 180 days of the
relevant acquisition;
			
	 	  	 (k)
	  	any Security Interest created under or in connection with or arising out of the Balancing and Settlement Code, the Connection and Use of System Code or the Grid Code;
			
	 	  	 (l)
	  	any Security Interest created over cash in favour of Clydesdale Bank plc to the extent necessary to secure Clydesdale Bank plc’s liabilities under the BACS Facilities Agreement, the
amount of which does not exceed, in aggregate, £35,000,000;
			
	 	  	 (m)
	  	Security Interests created over cash in favour of HSBC Bank plc to the extent necessary to secure HSBC Bank plc’s liabilities under the corporate credit card scheme which it operates
for the Group, the amount of which does not exceed, in aggregate, £1,500,000;
			
	 	  	 (n)
	  	Security Interests created over cash of any Group member to secure contracts and obligations entered into in the ordinary course of trading and consistent with the Trading Manuals and
Guidelines;
			
	 	  	 (o)
	  	Security Interests created over cash of any Group member to secure the liabilities of suppliers to a Borrower who require collateral in relation to work or orders placed in the ordinary
course of business;
			
	 	  	 (p)
	  	Security Interests created by, or in accordance with, the Security Documents, or otherwise with the prior written consent of the Secretary of State or in accordance with this
Agreement;
			
	 	  	 (q)
	  	any Security Interests other than those referred to in paragraphs (a) to (p) above (inclusive) created prior to the date of this Agreement by a member of the Group as security for
Indebtedness not exceeding, in

  

 24 

	 	  	 	  	aggregate, £5,000,000;
		
	 “Power Purchase
 Agreements”
	  	means the following:
			
	 	  	(a)	  	the contract for differences dated 10th January, 1997 and made between Elf Exploration UK PLC and Nuclear Electric Ltd, (as amended and as novated to TotalFinaElf Gas and Power Limited and
to BEPET);
			
	 	  	(b)	  	the agreement dated 26th June, 1991 and made between Teesside Power Limited and South Wales Electricity plc (as amended and restated and as novated to BEPET pursuant to a Deed of Novation
dated 26th March, 2001); and
			
	 	  	(c)	  	the agreement dated 1st April, 1996 and made between ECTRIC (as novated to ECTEF) and BEG (as amended);
		
	 “Project Finance
 Indebtedness”
	  	means any Indebtedness of an Excluded Subsidiary;
		
	 “Quarter Date”
	  	means 31st March, 30th June, 30th September and 31st December in each year;
		
	 “Relevant Substance”
	  	means any substance whatsoever (whether in a solid or liquid form or in the form of a gas or vapour and whether alone or in combination with any other substance) and includes,
without limitation, “radioactive substances” (as defined in the Radioactive Substances Act 1993) or “waste” or “radioactive waste” (as defined in the Environmental Protection Act 1990 (as amended)
and in the Radioactive Substances Act 1993, respectively, or in any equivalent legislation or regulation in force in any jurisdiction in which any member of the Group is incorporated, owns property or assets or carries on any business or operations)
which is capable or causing harm to man or any other living organism supported by the environment, or damaging the environment or public health or welfare;
		
	 “Repeating
 Representations”
	  	means the representations and warranties repeated by virtue of Clause 14.19 (Repetition);

  

 25 

	 “Request”
	  	means a Deposit Request or a Loan Request;
		
	 “Restructuring
 Agreements”
	  	means the Standstill Agreement, the Bondholders Restructuring Agreement and each Supplemental Trust Deed;
		
	 “Restructuring Date”
	  	means the date upon which documentation required to effect the Restructuring Proposals has been executed and delivered by or on behalf of the Company, BEG, BEGUK, BEPET, EPL and
each Financial Creditor and/or (if appropriate) the date upon which the document to be filed at the High Court in respect of a scheme of arrangement implemented pursuant to the Companies Act 1985 (or any other similar compromise or arrangement) in
order to give effect to the Restructuring Proposals is filed;
		
	 “Restructuring Proposals”
	  	means:
			
	 	  	(a)	  	for each Financial Creditor (except for BNFL and the Bondholders) the restructuring proposals set out in the Heads of Terms;
			
	 	  	(b)	  	for BNFL the restructuring proposals set out in heads of terms dated 28th November, 2002 and agreed by BNFL and the Company; and
			
	 	  	(c)	  	for certain Bondholders party to the Bondholders Restructuring Agreement, the restructuring proposals set out in the Bondholders Restructuring Agreement;
		
	 “Secured Liabilities”
	  	has the meaning ascribed to it in the Debenture;
		
	 “Security Documents”
	  	means the Debenture, each Share Mortgage, each Fixed Charge, the New Share Pledge and all other deeds, agreements, documents, notices, authorisations and consents entered into
in connection with creating, perfecting or preserving the security contemplated hereunder or thereunder;
		
	 “Security Interest”
	  	means any mortgage, standard security, charge (whether fixed or floating), pledge, lien, hypothecation, assignment or assignation by way of security, trust arrangement or
security interest of any kind securing any obligation of any person (including without limitation title transfer and/or retention arrangements

  

 26 

	 	  	having a similar effect);
		
	 “Security Provider”
	  	means each member of the Group who has given fixed and floating security pursuant to the Debenture and each Fixed Charge which, for the avoidance of doubt, does not include British Energy
US Holdings Limited;
		
	 “Share Mortgage”
	  	means each mortgage of shares or pledge of shares or other interests in a Subsidiary entered into by an Obligor and the Secretary of State, or her nominee, on or about the date
hereof;
		
	 “Special Account”
	  	has the meaning ascribed to it in the Debenture;
		
	 “Standstill Agreement”
	  	means the standstill agreement dated 14th February, 2003 and made between the Company, BEG, BEGUK, BEPET, EPL and the Financial Creditors (except for the Bondholders);
		
	 “Sterling” or “£”
	  	means the lawful currency for the time being of the United Kingdom;
		
	 “Subsidiary”
	  	means a subsidiary undertaking within the meaning of Section 258 of the Companies Act 1985.
		
	 “Supplemental Trust Deed”
	  	means each supplemental deed to the Trust Deed proposed to be entered into by the Company, BEG, BEGUK and The Law Debenture Trust Corporation p.l.c. constituting standstill arrangements in
respect of the Bonds;
		
	 “Supply Licence”
	  	means any Licence for the supply of electricity granted by the Secretary of State to any member of the Group under Section 6 of the Electricity Act 1989;
		
	 “Trading Manuals and
 Guidelines”
	  	means the electricity trading manuals and guidelines applying to electricity trading by the Borrowers, delivered in accordance with Clause 4.1 (Documentary conditions precedent) and
initialled by the Parties for identification, as amended from time to time as a result of, or to reflect or comply with, any applicable law or regulation or as otherwise agreed by the Parties from time to time;
		
	 “Trust Deed”
	  	means the trust deed dated 25th March, 1999 and made between the Company, BEG, BEGUK and The

  

 27 

	 	  	Law Debenture Trust Corporation p.l.c.;
		
	 “U.K.”
	  	means the United Kingdom;
		
	 “Utilisation”
	  	means a Loan or a Deposit; and
		
	 “Utilisation Date”
	  	means the date of a utilisation of Facility A or Facility B.

  

	1.2	 	Construction 

  

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

  

	 	(i)	 	an “amendment” includes a supplement, novation or re-enactment and “amended” is to be construed accordingly; 

  

	 	    	 	“assets” includes present and future properties, revenues and rights of every description; 

  

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

  

	 	    	 	a “month” is a reference to a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month, except that:

  

	 	(1)	 	if there is no numerically corresponding day in the month in which that period ends, that period shall end on the last Business Day in that calendar month; or 

  

	 	(2)	 	if an Interest Period commences on the last Business Day of a calendar month, that Interest Period shall end on the last Business Day in the calendar month in which it is to end;

  

	 	    	 	a “person” includes any individual, company, unincorporated association or body of persons (including a partnership, joint venture or consortium), government, state, agency,
international organisation or other entity; 

  

	 	    	 	a “regulation” includes any regulation, rule, official directive, request or guideline (whether or not having the force of law but if not then being of a type with which a
person of the class to whom it applies would be accustomed to comply) of any governmental, inter-governmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation; 

  

	 	    	 	a reference to “set-off” shall be deemed to include analogous rights in other jurisdictions. 

  

 28 

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

  

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

  

	 	(iv)	 	a person includes its successors, transferees and assigns; 

  

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

  

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

  

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

  

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

  

	2.	 	THE FACILITIES 

  

	 	(A)	 	Subject to the terms of this Agreement, the Secretary of State makes available to the Borrowers: 

  

	 	(i)	 	a cash collateral deposit facility (“Facility A”); and 

  

	 	(ii)	 	a contingency facility (“Facility B”) available by way of Loan or Deposit. 

  

	 	(B)	 	The maximum aggregate principal amount available to be utilised under each Facility in each month in the period commencing on (and including) 7th March, 2003 and ending on (and including)
30th September, 2003 is set out in Schedule 9. For this purpose, “month” shall be construed by reference to the Group’s accounting year but the reference in Schedule 9 to the “First Month” shall be the period
from (and including) 7th March, 2003 to the end of the accounting month of March 2003. Each subsequent month referred to in Schedule 9 will be construed accordingly by reference to the Group’s accounting year. The maximum aggregate
principal amount available to be utilised under each Facility in each month in the six month periods commencing on 1st October, 2003 and 1st April, 2004 will be agreed by the Secretary of State and the Borrowers prior to the commencement of such
periods provided that, the aggregate principal amount of all the Facilities does not exceed £200,000,000. If no such agreement is reached, the maximum aggregate principal amount available to be utilised under each Facility in each month will
be the amounts available in the previous six month period. 

  

 29 

	 	(C)	 	The Secretary of State may, in her absolute discretion, agree that the amount of any Facility is increased (with a corresponding decrease in the amount of another Facility) provided that, the
aggregate principal amount of all the Facilities does not exceed £200,000,000. 

  

	3.	 	PURPOSE 

  

	 	(A)	 	Facility A shall be used for the provision of cash collateral in accordance with the terms of this Agreement to Approved Beneficiaries. 

  

	 	(B)	 	Facility B shall be used for Loans for Approved Working Capital Purposes, cash collateral for Approved Beneficiaries or for such other purpose as may be approved by the Secretary of State
from time to time. 

  

	4.	 	CONDITIONS PRECEDENT 

  

	4.1	 	Documentary conditions precedent 

  
 No Borrower may deliver the first Request and the Secretary of State shall have no obligation pursuant to Clause 5 (Utilisation), unless and until the
Secretary of State has confirmed to the Company that she has received all of the documents set out in Schedule 2 (Conditions Precedent), including the Security Documents, in form and substance satisfactory to her. 
  

	4.2	 	Further conditions precedent 

  
 The obligations of the Secretary of State to advance a Loan pursuant to Clause 5.3 (Advance of Loan) or Clause 5.6 (Loans for repayment of
Interim Loans) or to make any deposit of collateral pursuant to Clause 5.4 (Making of Deposit) or Clause 5.7 (Deposits to be made on Financial Close) are subject to the further conditions precedent that: 
  

	 	(A)	 	on both the date of the Request and the proposed Utilisation Date: 

  

	 	(i)	 	the Repeating Representations are correct and will be correct immediately after the Utilisation is made; and 

  

	 	(ii)	 	no Default (other than any Default under Clause 16.8 (Insolvency)) is outstanding or would result from the Utilisation; and 

  

	 	(B)	 	the Utilisation would not cause the aggregate amount outstanding under a Facility to exceed the amount available under that Facility in each month pursuant to Clause 2.

  

	 	(C)	 	in the case of any Loan: 

  

	 	(i)	 	the Secretary of State is satisfied that the proposed Loan will be applied for making payments under the BNFL Contracts or Approved Working Capital Purposes, as applicable; and

  

 30 

	 	(ii)	 	the Secretary of State is satisfied that the proceeds of the Loan will only be paid into and held in an account with a bank which has agreed in terms acceptable to the Secretary of State to
waive its rights of set-off in respect of all other indebtedness or which has confirmed to the Secretary of State that it has no exposure to any member of the Group; 

  

	 	(D)	 	in the case of any Deposit: 

  

	 	(i)	 	the Secretary of State is satisfied that the amount of the Deposit is appropriate having regard to relevant market practice, the terms of any contract between the relevant Borrower and the
proposed beneficiary and their respective commercial positions; 

  

	 	(ii)	 	the Secretary of State has agreed a form of Deed of Charge with the proposed beneficiary or, where the Deposit is to be used as collateral for the issue of a letter of credit to a proposed
beneficiary, the Secretary of State has agreed all documentation with the Deposit Bank in connection with the issue of such letter of credit and the form of the letter of credit with the proposed beneficiary; and 

  

	 	(iii)	 	the Secretary of State has approved the proposed currency of any proposed Deposit; 

  

	 	(E)	 	save as otherwise agreed by the Secretary of State, in the case of any Utilisation no proposal has been presented to the board of any member of the Group or otherwise made or received
involving any winding up, administration, receivership or any analogous proceeding or any composition, compromise or similar arrangement involving any member of the Group and all or any class of its creditors; and 

  

	 	(F)	 	if Clause 5.10(B) or (C) applies, the Secretary of State has given her prior written consent to the advance of the Loan or the making of the Deposit as required by Clause
5.10(B) or (C) (as the case may be). 

  

	5.	 	UTILISATION 

  

	5.1	 	Availability 

  

	 	(A)	 	In addition to the Utilisations to be made pursuant to Clause 5.6 (Loans for repayment of Interim Loans), Clause 5.7 (Deposits to be made on Financial Close) and Clause
5.9 (Accrued interest and expenses loan), a Borrower may request a Utilisation to be made on any Business Day during the Availability Period if the Secretary of State receives, not later than four Business Days before the proposed Utilisation
Date (or such later time as the Secretary of State may in her sole discretion permit) a duly completed Request. 

  

 31 

	 	(B)	 	The Availability Period may, by notice in writing to the Company, be extended by the Secretary of State at her sole discretion so that it ends on any Business Day falling after 30th
September, 2004. 

  

	 	(C)	 	If a Borrower requests a Utilisation under any Facility on shorter notice than that required under Clause 5.1(A) the Secretary of State will use her reasonable endeavours to make
such Utilisation available on the requested date. 

  

	5.2	 	Completion of Requests 

  

	 	(A)	 	A Request will not be regarded as having been duly completed unless it provides all the information (in full and in compliance with this Agreement) which is required by the form of Loan
Request set out in Part I of Schedule 3 or the form of Deposit Request set out in Part II of Schedule 3, as applicable; and 

  

	 	(B)	 	Each Request must specify one Utilisation only, but a Borrower may, subject to the other terms of this Agreement, deliver more than one Request on any one day. 

  

	5.3	 	Advance of Loan 

  
 Following receipt of a Loan Request pursuant to Clause 5.1(A) (Availability) and subject to the terms and conditions of this Agreement, the Secretary of
State shall on the proposed date for making the Loan, as stated in the relevant Request (or, if not a Business Day, the next Business Day) make such Loan available to the relevant Borrower. 
  

	5.4	 	Making of Deposit 

  
 Following receipt of a Deposit Request pursuant to Clause 5.1(A) (Availability) and subject to the terms and conditions of this Agreement, the Secretary of
State shall: 
  

	 	(A)	 	request that the proposed Deposit Bank establish an account on or before the proposed date for making the Deposit as stated in the relevant Request (or if not a Business Day, the next
Business Day) in the requested currency in the name of the Secretary of State and designated as relating to the beneficiary and contractual, regulatory or other requirement specified in the relevant Request (unless such an account secured for the
benefit of that beneficiary and for the purpose of supporting that requirement already exists with the specified Deposit Bank); 

  

	 	(B)	 	execute (provided that the form and substance thereof are satisfactory to the Secretary of State) and deliver to the Deposit Bank all documentation required by the Deposit Bank in connection
with the opening, maintenance and operation of such account; 

  

 32 

	 	(C)	 	credit to such account the requested amount in the relevant currency, to be held for the account of the Secretary of State subject to the Security Interest created pursuant to the relevant
Deed of Charge; and 

  

	 	(D)	 	execute and deliver to the relevant beneficiary (with a copy to the Borrower which requested the Deposit) and to the Deposit Bank a Deed of Charge in relation to that Deposit.

  
 As an alternative to paragraphs (A) to (D) above,
the Secretary of State may in her discretion: 
  

	 	(E)	 	request that the proposed Deposit Bank establish an account on or before the proposed date for making the Deposit as stated in the relevant Request (or if not a Business Day, the next
Business Day) in the requested currency in the name of the Secretary of State (unless an account for this purpose already exists with the specified Deposit Bank); 

  

	 	(F)	 	execute (provided that the form and substance thereof are satisfactory to the Secretary of State) and deliver to the Deposit Bank all documentation required by the Deposit Bank in connection
with the opening, maintenance and operation of such account; 

  

	 	(G)	 	credit to such account the requested amount in the relevant currency, to be held for the account of the Secretary of State subject to the rights of set-off of the Deposit Bank in respect of
the letter of credit referred to in (H) below; and 

  

	 	(H)	 	request that the Deposit Bank issues a letter of credit to the relevant beneficiary in such form as the Secretary of State may approve. 

  

	5.5	 	Ownership of cash deposit 

  
 For the avoidance of doubt, no Obligor shall at any time have any right, interest or title whatsoever in any sum deposited by the Secretary of State pursuant to
Clause 5.4 (Making of Deposit) or Clause 5.7 (Deposits to be made on Financial Close). 
  

	5.6	 	Loans for repayment of Interim Loans 

  
 As soon as reasonably practicable following Financial Close or, if later, on 27th September 2002, the Secretary of State shall, subject to the terms of this
Agreement, make a Loan under Facility B to each Borrower in an amount equal to the aggregate principal amount of all Interim Loans made to that Borrower and such Loan shall be applied to repay such Interim Loans. 
  

	5.7	 	Deposits to be made on Financial Close 

  
 As soon as reasonably practicable following Financial Close or, if later, on 27th September 2002, the Secretary of State shall, subject to the terms of this
Agreement, in order to facilitate the release of Security Interests over Interim Deposits or otherwise 
  

 33 

 satisfy the requirements of Clause 7.1 (Release of Security Interests) of the Interim Facility Agreement:

  

	 	(A)	 	make a Deposit under Facility A as applicable in each account established prior to Financial Close under Clause 5.4 (Making of Deposit) of the Interim Facility Agreement, by way of
alternative security for the purposes of the relevant Deed of Charge in an amount equal to any Interim Deposit standing to the credit of that account to be held for the account of the Secretary of State subject to the Security Interest created
pursuant to the relevant Deed of Charge; and 

  

	 	(B)	 	execute and deliver to the relevant beneficiary any further Deed of Charge required by such beneficiary in relation to such Deposit. 

  

	5.8	 	Netting 

  

	 	(A)	 	The Secretary of State may make any Loan required pursuant to Clause 5.6 (Loans for repayment of Interim Loans) to be made to a Borrower net of any amount payable on the date of such
Loan by that Borrower to the Secretary of State pursuant to Clause 6.1 (Repayment) of the Interim Loan Facility. 

  

	 	(B)	 	The Secretary of State may make any Deposit required to be made pursuant to Clause 5.7 (Deposits to be made on Financial Close) net of any sums which she is, on the same date entitled
to withdraw from the relevant account free of any security interest, provided that she does not make such withdrawal. 

  

	5.9	 	Accrued Interest and expenses loan 

  

	 	(A)	 	The Secretary of State shall as soon as reasonably practicable following Financial Close and subject to the terms of this Agreement make a Loan under Facility B to each Borrower in an amount
which the Secretary of State determines to be the aggregate of: 

  

	 	(i)	 	accrued but unpaid interest on each Interim Loan made to that Borrower and accrued but unpaid commission on each Interim Deposit made at the request of that Borrower; and

  

	 	(ii)	 	without prejudice to Clause 21 (Costs and Expenses), costs and expenses which have accrued for the account of such Borrower to Financial Close under Clause 21.1 of the Interim
Facility; 

  

	 	(B)	 	Loans made pursuant to Clause 5.9(A) shall be applied forthwith in repayment of the sums referred to in 5.9(A)(i) and (ii) above by netting the amount of the relevant new Loan against
such liabilities. 

  

	5.10	 	Cash Reserves 

  

	 	(A)	 	The Cash Reserves may only be withdrawn by the Company to be used for the following purposes: 

  

 34 

	 	(i)	 	the provision of cash collateral to Approved Beneficiaries; 

  

	 	(ii)	 	for Approved Working Capital Purposes; and 

  

	 	(iii)	 	any other purpose approved by the Secretary of State. 

  

	 	(B)	 	At any time, the amount available for utilisation under the Facilities will be reduced by an amount equal to the Cash Reserves at that time. The Facilities will be so reduced in the order of
A, B, C. The amount reduced may only be utilised with the prior written consent of the Secretary of State. 

  

	 	(C)	 	If the Cash Reserves are equal to or greater than £490,000,000, none of the Facilities shall be available for utilisation without the prior written consent of the Secretary of State.

  

	 	(D)	 	If, pursuant to the terms of this Agreement, the Company is required to deposit any amount in the Cash Reserve Account, it may instead invest that amount in any investment previously approved
in writing by the Secretary of State. 

  

	6.	 	REPAYMENT OF LOANS AND CANCELLATION 

  

	6.1	 	Repayment 

  

	 	(A)	 	Each Borrower shall repay each Loan made to it in full on its Maturity Date to the Secretary of State. 

  

	 	(B)	 	Each Borrower shall prepay each Loan made to it on such date and in such amount required by the Secretary of State under Clause 15.5(H)(i). 

  

	 	(C)	 	Each Borrower may, on 2 Business Days prior written notice, prepay the whole or any part of any Loan (but, if in part, being an amount of £5,000,000 or more) on the first Business Day
following delivery of a Weekly Report under Clause 15.5(H). 

  

	 	(D)	 	Any prepayment under this Agreement shall be made together with accrued interest on the amount prepaid and any other amounts due in respect thereof without premium or penalty.

  

	6.2	 	Application of Disposal Proceeds and Mandatory Prepayment 

  

	 	(A)	 	Disposal Proceeds 

  

	 	    	 	The Company shall procure that any Disposal Proceeds are applied to the full extent of any such Disposal Proceeds (converted, where applicable, into Sterling at the rate of exchange at which
the Secretary of State is able, as soon after the date of any payment or release as it is practicable for the Secretary of State to do so, to purchase Sterling with the currency of payment or release and 

  

 35 

	 	    	 	shall take into account any commission, premium and other costs of exchange and taxes in connection with such purchase) as follows: 

  

	 	(i)	 	first, in prepaying all Loans, together with accrued interest on the amount prepaid and any other amounts due in respect thereof, without premium or penalty; 

  

	 	(ii)	 	secondly, if there is any excess, using all reasonable endeavours to ensure (including, if necessary, by replacing each such Deposit with cash collateral) that each Deposit is released from
the Security Interests created pursuant to any Deed of Charge, so that the Secretary of State is able to withdraw each such Deposit, together with all interest accrued thereon and any other amounts due in respect thereof, free of all Security
Interests in favour of the Deposit Bank or the relevant beneficiary, failing which, in providing cash collateral in respect of the Borrowers’ obligations contained in Clauses 7.2(A) and (B) in respect of each such Deposit;

  

	 	(iii)	 	thirdly, if there is any excess, by depositing all such excess in the Cash Reserve Account, to be available for use in accordance with Clause 5.10 (Cash Reserves), if and to the extent
that the Cash Reserves do not exceed £490,000,000; and 

  

	 	(iv)	 	fourthly, if there is any excess, for use by the Group for its general working capital purposes. 

  

	 	(B)	 	Other 

  

	 	(i)	 	Unless the Secretary of State in her absolute discretion otherwise agrees in writing, prepayment will be required in accordance with this Clause 6.2(B) if any of the following events
occur: 

  

	 	(a)	 	any of the conditions subsequent referred to in clauses 9.2.1, 10.1 and 11.2 of the Standstill Agreement have not been satisfied or the EPL Facility Agent (as defined in the Standstill
Agreement) has not signed the Standstill Agreement by 24th March, 2003; 

  

	 	(b)	 	the Bondholders’ Resolutions are not validly passed by properly constituted meetings of the Bondholders by 25th March, 2003; 

  

	 	(c)	 	the entry of a final, non-appealable order by the United States Bankruptcy Court presiding over chapter 11 cases of Enron Corp. and certain of its subsidiaries (including ECTRIC) approving
and authorising the Standstill Agreement and the Heads of Terms and the rights and obligations of ECTEF thereunder does not occur by 14th May, 2003 (or such later 

  

 36 

 date as the Company agrees pursuant to the terms of the Standstill Agreement); 
  

	 	(d)	 	an Amergen Sale, on terms previously approved in writing by the Secretary of State, is not agreed by 30th June, 2003; 

  

	 	(e)	 	the Restructuring Date does not occur by 30th September, 2003; 

  

	 	(f)	 	any Financial Creditor or any member of the Group breaches a term of any Restructuring Agreement to which it is a party and such breach entitles any other Financial Creditor or (if the breach
is by any member of the Group) any Financial Creditor to terminate any such Restructuring Agreement to which it is a party; or 

  

	 	(g)	 	any Restructuring Agreement is terminated before the Restructuring Date. 

  

	 	(ii)	 	Without prejudice to Clause 6.2(B)(i), the Secretary of State may deliver a notice (the “Prepayment Notice”) to the Company requiring prepayment in accordance with
this Clause 6.2(B) if the Secretary of State is of the opinion that the Restructuring Proposals cannot be implemented in the manner or the time envisaged by the Restructuring Proposals. 

  

	 	(iii)	 	Within 5 Business Days of the occurrence of any event set out in paragraph (B)(i) above (unless the Secretary of State in her absolute discretion has otherwise agreed in writing) or
receipt of a Prepayment Notice: 

  

	 	(a)	 	each Borrower shall prepay each Loan made to it, together with accrued interest on the amount prepaid and any other amounts due in respect thereof, without premium or penalty;

  

	 	(b)	 	each Borrower which has procured a Deposit shall use all reasonable endeavours to ensure (including, if necessary, by replacing each such Deposit with cash collateral) that the Deposit is
released from the Security Interests created pursuant to any Deed of Charge, so that the Secretary of State is able to withdraw that Deposit, together with all interest accrued thereon and any other amounts due in respect thereof, free of all
Security Interests in favour of the Deposit Bank or the relevant beneficiary, failing which, that Borrower shall provide cash collateral in respect of the Borrowers’ obligations contained in Clauses 7.2(A) and (B) in respect of
each such Deposit; and 

  

 37 

	 	(c)	 	each Obligor shall pay any other fees, costs, expenses or any other amounts due and payable to the Secretary of State under any Finance Document. 

  

	 	(iv)	 	Unless the Secretary of State in her absolute discretion otherwise agrees in writing, on the date of the occurrence of any event set out in Clause 6.2(B)(i) or the date on which a
Prepayment Notice is served, the Secretary of State’s obligation (if any) to make the Facilities available will be cancelled. All amounts prepaid under Clause 6.2(B)(iii)(a) will not be available for re-borrowing and amounts equal to any
Deposits released under Clause 6.2(B)(iii)(b) will not be available for re-utilisation. 

  

	6.3	 	Re-utilisation 

  

	 	(A)	 	Subject to the other terms of this Agreement (and the extension of the Availability Period pursuant to Clause 5.1(B)), any amounts repaid or prepaid under Clause 6.1 may be
re-borrowed. 

  

	 	(B)	 	Subject to the other terms of this Agreement, an amount equal to any Deposit released from all Security Interests pursuant to any Deed of Charge shall be available for re-utilisation under
the relevant Facility. 

  

	6.4	 	Voluntary cancellation 

  
 The Company may, if it gives the Secretary of State not less than 2 Business Days’ prior written notice, cancel the whole or any part (but, if in part, being
an amount of £5,000,000 or more) of the amount available for utilisation under any Facility. 
  

	7.	 	BORROWER’S LIABILITIES IN RELATION TO DEPOSITS 

  

	7.1	 	Release of Security Interests 

  
 Each Borrower which has procured a Deposit shall ensure that the Deposit is released from the Security Interests created pursuant to any Deed of Charge, so that the
Secretary of State is able to withdraw that Deposit, together with all interest accruing thereon and any other amounts due in respect thereof, free of all Security Interests in favour of the Deposit Bank or the relevant beneficiary, on or before the
first to occur of: 
  

	 	(A)	 	the Final Maturity Date; or 

  

	 	(B)	 	the occurrence of an Event of Default and the giving by the Secretary of State of written notice pursuant to this Clause 7.1 to the Borrower. 

  

	7.2	 	Borrower’s indemnity 

  
 Each Borrower on whose request the Secretary of State has made any Deposit pursuant to Clause 5.4 (Making of Deposit) or 5.7 (Deposits to be made on
Financial 
  

 38 

 Close) shall irrevocably and unconditionally as a primary obligation indemnify the Secretary of State within five
Business Days of receipt of a written demand of the Secretary of State against: 
  

	 	(A)	 	any withdrawal from any Deposit account by the Chargee or any other person other than: 

  

	 	(i)	 	the Secretary of State; or 

  

	 	(ii)	 	any person authorised by her, 

  

	 	    	 	of any sums, whether following any breach by the relevant Borrower of any obligation and whether permitted pursuant to the applicable Deed of Charge or otherwise; 

  

	 	(B)	 	liabilities, costs, claims, losses and expenses arising from any failure by an Obligor to comply with its obligations under Clause 6.2 (Application of Disposal Proceeds and Mandatory
Prepayment), Clause 7.1 (Release of Security Interests) or Clause 15.5(H)(i) (Weekly reports and cash sweep); and 

  

	 	(C)	 	all liabilities, costs, claims, losses and expenses which the Secretary of State may at any time incur or sustain in connection with or arising out of any Deposit made at the request of that
Borrower. 

  

	7.3	 	Right to call for payment or collateral 

  

	 	(A)	 	At any time when: 

  

	 	(i)	 	an Event of Default has occurred and is continuing; and 

  

	 	(ii)	 	any Deposit or part thereof remains, notwithstanding the provisions of Clause 7.1(B), subject to any security or other interest created pursuant to a Deed of Charge or otherwise,

  

	 	    	 	the Secretary of State may by notice in writing to the Borrower on whose request such Deposit was made: 

  

	 	(a)	 	demand immediate payment to the Secretary of State of an amount equal to or less than the aggregate amount of the Deposits requested by that Borrower and subject to such interests (the
“Deposit Repayment Amount”); or 

  

	 	(b)	 	demand that an amount of not more than the Deposit Repayment Amount be deposited in a bank account specified by the Secretary of State and charged (on terms acceptable to the Secretary of
State) in her favour to secure performance of the Borrower’s obligation pursuant to Clause 7.1(B), 

  

 39 

 and that Borrower shall comply forthwith with such demand. 
  

	 	(B)	 	Payment in full of the Deposit Repayment Amount in accordance with a demand made pursuant to Clause 7.3(A) shall discharge the relevant Borrower’s obligation pursuant to Clause
7.1(B). If at any time following such payment in full, any Deposit is released from the Security Interests to which it has been subject, the Secretary of State shall take such steps as the Borrower may reasonably request to procure that such
Deposit is withdrawn from the relevant account and paid to that Borrower. 

  

	7.4	 	Preservation of rights 

  
 To the fullest extent permitted under applicable law, neither the obligations of the Borrowers set out in this Clause 6.4 nor the rights, powers and remedies
conferred on the Secretary of State by this Agreement or by law shall be discharged, impaired or otherwise affected by: 
  

	 	(A)	 	any assignment, transfer or other disposal of the rights and/or obligations of the Secretary of State for Trade and Industry to another Secretary of State or another body acting as agent for
and on behalf of the Crown; 

  

	 	(B)	 	the obligations of the Secretary of State under any Finance Document being or becoming illegal, invalid, unenforceable or ineffective in any respect; 

  

	 	(C)	 	time or other indulgence being granted or agreed to be granted to the relevant Borrower or any other person in respect of its obligations under any Finance Document; 

 

	 	(D)	 	any amendment to, or any variation, waiver or release of, any obligation of the Secretary of State under a Finance Document; 

  

	 	(E)	 	any other act, event or omission which, but for this Clause 6.4, might operate to discharge, impair or otherwise affect any of the obligations of the Borrowers set out in this
Clause 6.4 or any of the rights, powers or remedies conferred upon the Secretary of State by this Agreement or by law. 

  
 The obligations of the Borrowers set out in this Clause 6.4 shall be in addition to and independent of every other security which the Secretary of State may
at any time hold in respect of the Borrowers’ obligations under this Agreement. 
  

	7.5	 	Settlement conditional 

  
 Any settlement or discharge between a Borrower and the Secretary of State shall be conditional upon no security or payment to that Borrower being avoided or reduced
by virtue of any laws relating to bankruptcy, insolvency, liquidation or similar laws of general application and, if any such security or payment is so avoided or reduced, the Secretary of State shall be entitled to recover the value or amount of
such security or 
  

 40 

 payment from the relevant Borrower subsequently as if such settlement or discharge had not occurred. 
  

	7.6	 	Currency Indemnity 

  
 If, under any applicable law, whether pursuant to a judgment against any Obligor or the liquidation of any Obligor or for any other reason, any payment under or in
connection with this Agreement is made or falls to be satisfied in a currency (the “Other Currency”) other than the currency in which the relevant payment is expressed to be payable (the “Required Currency”), then,
to the extent that the payment actually received by the Secretary of State (when converted at the rate of exchange as soon afterwards as it is practicable for the Secretary of State to do so or, in the case of a liquidation, at the rate of exchange
on the latest date permitted by applicable law for the determination of liabilities in such liquidation) falls short of the amount expressed to be due or payable under or in connection with this Agreement, the Obligor shall, as an original and
independent obligation under this Agreement, indemnify and hold the Secretary of State harmless against the amount of such shortfall. For the purpose of this Clause 7.6 (Currency Indemnity), “rate of exchange” means the rate
at which the Secretary of State is able on the relevant date to purchase the Required Currency with the Other Currency and shall take into account any commission, premium and other costs of exchange and taxes payable in connection with such
purchase. 
  

	7.7	 	Provision of information in respect of Deposits 

  

	 	(A)	 	The capitalised terms set out in this Clause 7.7 (Provision of information in respect of Deposits) shall, unless inconsistent with the context, have the meanings ascribed to them in
the relevant Deed of Charge. 

  

	 	(B)	 	The Secretary of State agrees to notify the Company, upon the placing of the Deposit into the Account at the Deposit Bank, of the time and date that the Deposit was so transferred.

  

	 	(C)	 	At such time as a full or partial release of the Deposit occurs, as anticipated by the terms of each Deed of Charge, the Secretary of State will provide to the Company details of:

  

	 	(i)	 	the name of the relevant Chargee; 

  

	 	(ii)	 	the name of the relevant BE Company or BE Companies; 

  

	 	(iii)	 	the amount of the Deposit so released and details of the Facility under which it was originally utilised; and 

  

	 	(iv)	 	the date and time of the said release. 

  

 41 

	8.	 	INTEREST PERIODS 

  

	8.1	 	General 

  
 Each Loan has one Interest Period only. 
  

	8.2	 	Selection 

  

	 	(A)	 	A Borrower shall specify the Interest Period for a Loan in the relevant Request for that Loan. A Borrower may select an Interest Period of 1, 2, 3 or 6 months or any other period agreed
between the Company and the Secretary of State. 

  

	 	(B)	 	Each Interest Period for a Loan will commence on (and include) the Utilisation Date of such Loan. 

  

	8.3	 	Non-Business Days 

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

	8.4	 	No overrunning of the Final Maturity Date 

  
 If an Interest Period for a Loan would otherwise overrun the Final Maturity Date it shall be shortened so that it ends on the Final Maturity Date. 
  

	9.	 	INTEREST AND COMMITMENT FEE 

  

	9.1	 	Interest rate 

  
 The rate of interest on each Loan for its Interest Period is the rate per annum determined by the Secretary of State to be the aggregate of the applicable: 
  

	 	(A)	 	Margin; and 

  

	 	(B)	 	LIBOR. 

  

	9.2	 	Due dates 

  
 Except as otherwise provided in this Agreement, interest on each Loan shall accrue from day to day from and including the first day of its Interest Period to but excluding the last day, on the basis of the number of days
elapsed and a 365 day year and shall be payable by the relevant Borrower on the Maturity Date of such Loan. 
  

	9.3	 	Default interest 

  

	 	(A)	 	If an Obligor fails to pay any amount payable by it under the Finance Documents or to reduce any exposure required to be reduced pursuant to 

  

 42 

	 	    	 	Clause 7.3 (Right to call for payment or collateral), it shall, promptly following demand by the Secretary of State, pay interest on the overdue amount, or the amount of the
outstanding exposure, as applicable from the due date up to the date of actual payment, as well after as before decree or judgment, at a rate (the “default rate”) determined by the Secretary of State to be one per cent. per annum
above the higher of: 

  

	 	(i)	 	the rate on the overdue amount under Clause 9.1 (Interest rate) immediately before the due date (if of principal); and 

  

	 	(ii)	 	the rate which would have been payable if the overdue amount had, during the period of non-payment, constituted a Loan in the currency of the overdue amount, 

  

	 	    	 	in each case, for such successive interest periods of such duration as the Secretary of State may determine (each a “Designated Interest Period”). 

 

	 	(B)	 	The default rate will be determined by the Secretary of State on the first day of (in the case of sterling loans and exposures), or two Business Days before the first day of (in the case of
loans or exposures in other currencies), the relevant Designated Interest Period. 

  

	 	(C)	 	Default interest will be compounded at the end of each Designated Interest Period. 

  

	9.4	 	Notification of rates of interest 

  
 The Secretary of State shall promptly notify each relevant Party and the Company of the determination of a rate of interest under this Agreement. 
  

	9.5	 	Commitment Fee 

  
 The Company shall pay the Secretary of State a commitment fee computed at the rate of 0.5 per cent. per annum on the aggregate amount available under the Facilities, less the aggregate principal amounts of outstanding
Utilisations. The accrued commitment fee shall be payable on 30th June, 2003 and each Quarter Date thereafter. 
  

	10.	 	COMMISSION ON DEPOSITS 

  
 In relation to each Deposit, the relevant Borrower will pay to the Secretary of State commission on the amount of such Deposit at the Margin rate for the period for
which such Deposit remains subject to any Security Interest under a Deed of Charge or is provided to a Deposit Bank as collateral for the issue of a letter of credit as contemplated by paragraphs (E) to (H) of Clause 5.4 (Making of
Deposit), plus all other costs and expenses incurred by or on behalf of the Secretary of State in connection with establishing any Deposit, issuing any Deed of Charge, procuring any letter of credit or otherwise in relation to such arrangements.
Except as otherwise provided in this Agreement, commission on the amount of each Deposit shall accrue from day to day 
  

 43 

 from and including the day it is utilised to but excluding the day it is released, on the basis of the number of
days elapsed and a 365 day year. Accrued commission is payable on 30th June, 2003 and each Quarter Date thereafter and, if the Availability Period is extended beyond 30th September, 2004 pursuant to Clause 5.1(B), (to the extent applicable)
on the last day of each calendar month commencing on 31st October, 2004. Accrued commission on the amount of each Deposit shall become immediately due and payable when a Deposit is released pursuant to Clause 6.2 (Application of Disposal
Proceeds and Mandatory Prepayment), Clause 7.1 (Release of Security Interests) or Clause 15.5(H)(i) (Weekly reports and cash sweep). 
  

	11.	 	NON STERLING DEPOSITS 

  
 For the purpose of determining whether any Deposit would cause the facility amounts specified by Clause 2 (The Facilities) to be exceeded and for calculating
commission payable pursuant to Clause 10 (Commission on Deposits), the amount of any non-Sterling Deposit to be made or outstanding will be taken to be its Original Sterling Amount. 
  

	12.	 	PAYMENTS 

  

	12.1	 	Place 

  
 All payments by a Borrower under this Agreement shall be made to the Secretary of State to her account as she may notify the Company from time to time. 
  

	12.2	 	Funds 

  

	 	(A)	 	Payments under the Finance Documents to the Secretary of State shall be made for value on the due date in such funds for transmission as the Secretary of State may specify to the Obligor
concerned as being customary at the time for the settlement of transactions in the relevant currency in the place for payment. 

  

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

  

	12.3	 	Set-off and counterclaim 

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

	12.4	 	Non-Business Days 

  

	 	(A)	 	If a payment under the Finance Documents is due on a day which is not a Business Day, the due date for that payment shall instead be the next Business Day in the same calendar month (if there
is one) or the preceding Business Day (if there is not). 

  

 44 

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

  

	13.	 	GUARANTEE 

  

	13.1	 	Guarantee 

  
 Each Guarantor irrevocably, unconditionally, jointly and severally: 
  

	 	(A)	 	as principal obligor, guarantees to the Secretary of State prompt performance by each Obligor of all its obligations under the Finance Documents; 

  

	 	(B)	 	undertakes with the Secretary of State that whenever an Obligor does not pay any amount when due under or in connection with any Finance Document, that Guarantor shall forthwith on demand by
the Secretary of State pay that amount as if that Guarantor instead of the relevant Obligor were expressed to be the principal obligor; and 

  

	 	(C)	 	indemnifies the Secretary of State on demand against any loss or liability suffered by it if any obligation guaranteed by that Guarantor is or becomes unenforceable, invalid or illegal.

  

	13.2	 	Continuing guarantee 

  
 This guarantee is a continuing guarantee and will extend to the ultimate balance of all sums payable by the Obligors under the Finance Documents, regardless of any
intermediate payment or discharge in whole or in part. 
  

	13.3	 	Reinstatement 

  

	 	(A)	 	Where any discharge (whether in respect of the obligations of any Obligor or any security for those obligations or otherwise) is made in whole or in part or any arrangement is made on the
faith of any payment, security or other disposition which is avoided or must be restored on insolvency, liquidation or otherwise without limitation, the liability of each Guarantor under this Clause 13 shall continue as if the discharge or
arrangement had not occurred. 

  

	 	(B)	 	The Secretary of State may concede or compromise any claim that any payment, security or other disposition is liable to avoidance or restoration. 

  

	13.4	 	Waiver of defences 

  
 The obligations of each Guarantor under this Clause 13 will not be affected by any act, omission, matter or thing which, but for this provision, would
reduce, release or prejudice any of its obligations under this Clause 13 or prejudice or diminish those obligations in whole or in part, including (whether or not known to it or the Secretary of State): 
  

 45 

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

  

	 	(B)	 	the release of any Obligor or any other person under the terms of any composition or arrangement with any creditors of any member of the Group; 

  

	 	(C)	 	the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or security over assets of, any Obligor or other
person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security; 

  

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

  

	 	(E)	 	any variation (however fundamental) or replacement of a Finance Document or any other document or security so that references to that Finance Document in this Clause 13 shall include
each variation or replacement; 

  

	 	(F)	 	any unenforceability, illegality or invalidity of any obligation of any person under any Finance Document or any other document or security, to the intent that each Guarantor’s
obligations under this Clause 13 shall remain in full force and its guarantee be construed accordingly, as if there were no unenforceability, illegality or invalidity; 

  

	 	(G)	 	any postponement, discharge, reduction, non-provability or other similar circumstance affecting any obligation of any Obligor 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 Clause 13 shall be construed as if there were no such circumstance.

  

	13.5	 	Immediate recourse 

  
 Each Guarantor waives any right it may have of first requiring the Secretary of State (or any trustee or agent on its behalf) to proceed against or enforce any
other rights or security or claim payment from any person before claiming from that Guarantor under this Clause 13. 
  

	13.6	 	Appropriations 

  
 Until all amounts which may be or become payable by the Obligors under or in connection with the Finance Documents have been irrevocably paid in full (or would be once amounts held in suspense accounts have been applied), the
Secretary of State (or any trustee or agent on its behalf) may: 
  

	 	(A)	 	refrain from applying or enforcing any other moneys, security or rights held or received by the Secretary of State (or any trustee or agent on its behalf) in respect of those amounts, or
apply and enforce the same in such manner and 

  

 46 

	 	    	 	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 a suspense account any moneys received from any Guarantor or on account of any Guarantor’s liability under this Clause 13. 

  

	13.7	 	Non-competition 

  
 Until all amounts which may be or become payable by the Obligors under or in connection with the Finance Documents have been irrevocably paid in full, no Guarantor
shall, after a claim has been made or by virtue of any payment or performance by it under this Clause 13: 
  

	 	(A)	 	be subrogated to any rights, security or moneys held, received or receivable by the Secretary of State (or any trustee or agent on its behalf) or be entitled to any right of contribution or
indemnity in respect of any payment made or moneys received on account of that Guarantor’s liability under this Clause 13; 

  

	 	(B)	 	claim, rank, prove or vote as a creditor of any Obligor or its estate in competition with the Secretary of State (or any trustee or agent on its behalf); or 

  

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

  
 unless the Secretary of State otherwise directs. Each
Guarantor shall hold in trust for and forthwith pay or transfer to the Secretary of State any payment or distribution or benefit of security received by it contrary to this Clause 13.7 or as directed by the Secretary of State.

  

	13.8	 	Additional security 

  
 This guarantee is in addition to and is not in any way prejudiced by any other security now or hereafter held by the Secretary of State. 
  

	14.	 	REPRESENTATIONS AND WARRANTIES 

  

	14.1	 	Representations and warranties 

  
 Each Obligor makes the representations and warranties set out in this Clause 14 (Representations and Warranties) to the Secretary of State. 
  

	14.2	 	Due incorporation 

  
 It is duly incorporated and validly existing under the laws of the jurisdiction of its incorporation and has the power to carry on its businesses substantially as
they are now being conducted and to own its material assets. 
  

 47 

	14.3	 	Corporate power to borrow and give guarantees 

  
 It has the power to execute, deliver and perform its obligations under the Finance Documents to which it is a party and (in the case of the Borrowers) to utilise
the entire amount of the Facilities, all necessary corporate, shareholder, partner and other action has been taken by it to authorise the execution, delivery and performance of the same and no limitation on its powers to borrow will be exceeded as a
result of any Utilisation under this Agreement. 
  

	14.4	 	Binding obligations 

  
 Each Finance Document to which it is a party constitutes its valid and legally binding obligations enforceable in accordance with its terms (subject to the
reservations and qualifications set out in the legal opinions set out in Schedule 4). 
  

	14.5	 	No conflict with other obligations 

  
 The execution and delivery of, the performance of its obligations under, and compliance with the provisions of, the Finance Documents by it will not: 
  

	 	(A)	 	contravene any existing applicable law, statute, rule or regulation or any judgment, decree, authorisation or permit to which it is subject; 

  

	 	(B)	 	conflict with, or result in any breach of any of the terms of, or constitute a default under, any agreement or other instrument to which it is a party or is subject or by which it or any of
its property is bound; 

  

	 	(C)	 	contravene or conflict with any provision of its constitutional documents (including, as applicable, its Memorandum and Articles of Association, Articles of Incorporation and any applicable
Articles of Amendment and by-laws); or 

  

	 	(D)	 	result in the creation or imposition of or oblige it or any of its Subsidiaries to create any Security Interest (not being a Permitted Security Interest) on any of its or such
Subsidiaries’ undertakings, assets, rights or revenues. 

  

	14.6	 	No litigation 

  
 No litigation, arbitration or administrative proceeding is taking place, or to the knowledge of its officers after due enquiry is pending or threatened against it or any of its Subsidiaries which, if adversely determined, would
be reasonably likely to have a Material Adverse Effect. 
  

	14.7	 	Financial statements 

  

	 	(A)	 	The Original Group Accounts were prepared in accordance with generally accepted accounting principles and practices in the United Kingdom which have been consistently applied and present
fairly and accurately the consolidated financial position of the Group as at the date to which they were drawn up and 

  

 48 

	 	    	 	the consolidated results of the operations of the Group as at the date to which they were drawn up. 

  

	 	(B)	 	To the best of the Company’s knowledge and belief, the information provided by the Company in relation to the Group’s anticipated cash and collateral requirements for the period
from the date of this Agreement until the Final Maturity Date (which information has been initialled for the purpose of identification by the Secretary of State and the Company) has been prepared with due care and after a proper investigation of
such requirements, fairly presents such requirements and is not misleading in any material respect. 

  

	14.8	 	Consents obtained 

  
 Every authorisation or approval of, or registration with or declaration to, governmental or public bodies or authorities or courts required by it to authorise, or
required by it in connection with, the execution, delivery, validity, enforceability or admissibility in evidence of the Finance Documents to which it is a party or the performance by it of its obligations under the Finance Documents to which it is
a party has been obtained or made and is in full force and effect and there has been no default in the observance of the conditions or restrictions (if any) imposed in, or in connection with, any of the same. 
  

	14.9	 	Licences 

  
 Each member of the Group which is required to hold a Licence for the conduct of its business has obtained such a Licence which in each case is in full force and effect and there has been no material default in the observance of
the conditions or restrictions imposed in, or in connection with, the same. 
  

	14.10	 	Compliance with consents and licences 

  
 Without prejudice to Clause 14.9 (Licences), every material authorisation required by it and its Subsidiaries (including Environmental Licences) in
connection with the conduct of its business and the ownership, use, exploitation or occupation of their respective property and assets: 
  

	 	(A)	 	has been obtained and is in full force and effect or has been applied for in circumstances where the same can reasonably be expected to be forthcoming; 

  

	 	(B)	 	to the best knowledge of its officers, there are no facts or circumstances entitling any of the same to be revoked, suspended, amended, varied, withdrawn or not renewed;

  

	 	(C)	 	there has been no default in the observance of the conditions and restrictions (if any) imposed in, or in connection with, any of the same. 

  
 To the best knowledge of its officers, no circumstances have arisen whereby any
remedial action is likely to be required to be taken by, or at the expense of, any Obligor or any of its Subsidiaries under or pursuant to any law or regulation (including without 
  

 49 

 limitation Environmental Law) applicable to the business, property or assets of any Obligor or any of its
Subsidiaries. 
  

	14.11	 	Pari passu 

  
 Its obligations under the Finance Documents to which it is a party are its direct, general and unconditional obligations and rank at least pari passu with all its other present and future unsecured and unsubordinated
Indebtedness with the exception of any obligations which are mandatorily preferred by law and not by contract. 
  

	14.12	 	No defaults 

  

	 	(A)	 	Neither it nor any of its Subsidiaries is in breach in any material respect of, or in default in any material respect under, any agreement relating to Borrowed Money or any Material Contract
or under the Balancing and Settlement Code, The Connection and Use of System Code, the Grid Code, the Scottish Grid Code, the Scottish Distribution Use of Systems Contract or the connection agreements with Scottish Power UK plc.

  

	 	(B)	 	No Default (other than any Default under Clause 16.8) has occurred and is continuing. 

  

	14.13	 	Choice of law 

  
 In the case of any Obligor that is not incorporated in England and Wales, the choice of English law to govern this Agreement and the submission by it to the non-exclusive jurisdiction of the English courts are valid and
binding. 
  

	14.14	 	Regulatory Announcements 

  

	 	(A)	 	Save as disclosed between the date of the relevant announcement and the date of this Agreement, the information contained in all announcements made pursuant to the requirements of the Listing
Rules of the UK Listing Authority, the Admission Standards of the London Stock Exchange, the Financial Services and Markets Act 2000, the Rules of the New York Stock Exchange and the US Securities Exchange Act of 1934 was true and correct in all
material respects and not misleading in any material respect. 

  

	 	(B)	 	Except as publicly announced by the Company prior to the date of this Agreement through a regulatory information service approved by the UK Listing Authority, there has been no material
adverse change in the financial or trading position of the Borrower or the consolidated financial position of the Borrower and its Subsidiaries from that set forth in the Original Group Accounts. 

  

	14.15	 	Compliance with Environmental Laws 

  
 Each Obligor and its Subsidiaries: 
  

 50 

	 	(A)	 	as at the date of this Agreement complies; and 

  

	 	(B)	 	has (to the extent that non compliance would be reasonably likely to give rise to a material liability as at the date of this Agreement) at all times complied, 

  
 in all material respects with all Environmental Laws. 
  

	14.16	 	No Environmental Claims 

  

	 	(A)	 	No Environmental Claim is pending or has been made or threatened against any Borrower or any of its Subsidiaries or any of their respective officers in their capacity as such; and

  

	 	(B)	 	none of such companies nor any of their respective Subsidiaries is aware of any circumstances or situation which would be reasonably likely to result in it having any liability in relation to
Environmental Matters, 

  
 which, in either case, would be
reasonably likely to have a Material Adverse Effect. 
  

	14.17	 	No immunity 

  
 Neither it nor any of its assets are entitled to immunity on the grounds of sovereignty or otherwise from any legislation or proceeding (which shall include, without limitation, suit, attachment prior to judgment, execution or
other enforcement). 
  

	14.18	 	Material Disclosures 

  
 It has fully disclosed in writing to the Secretary of State or persons acting on her behalf all material facts relating to the Group known to it that could
reasonably be expected to influence the decision of the Secretary of State to make the Facilities available under this Agreement. 
  

	14.19	 	Repetition 

  
 The representations and warranties in this Clause 14, (other than Clauses 14.6 (No litigation), 14.8 (Consents obtained), 14.9 (Licences), 14.12 (No defaults), 14.14 (Regulatory
Announcements), 14.15 (Compliance with Environmental Laws), 14.16 (No Environmental Claims) and 14.17 (No immunity)) shall be deemed to be repeated by each Obligor on and as of the date of each Request and each Utilisation Date,
as if made with reference to the facts and circumstances existing on each such day (and so that the representation and warranty in Clause 14.7 (Financial statements) shall for this purpose refer to the audited consolidated financial
statements of the Group most recently delivered to the Secretary of State under this Agreement). 
  

 51 

	15.	 	UNDERTAKINGS 

  

	15.1	 	Duration 

  
 The undertakings in this Clause 15 will remain in force from the date of this Agreement for so long as any amount is, or may become, outstanding under any Finance Document. 
  

	15.2	 	Notice of Default 

  
 The Company shall: 
  

	 	(A)	 	inform the Secretary of State of any Default promptly after becoming aware of the same; and 

  

	 	(B)	 	if so requested by the Secretary of State, at any time, confirm to the Secretary of State in writing that, save as previously notified to the Secretary of State or as otherwise stated in such
confirmation, no Default has occurred and is continuing. 

  

	15.3	 	Consents and licences 

  
 Each Obligor shall obtain or cause to be obtained, maintain in full force and effect and comply in all material respects with the conditions and restrictions (if
any) imposed in, or in connection with, every consent, authorisation, licence or approval of governmental or public bodies or authorities or courts required by it in connection with the execution, delivery, validity, enforceability or admissibility
in evidence of the Finance Documents (other than the Secretary of State or the Secretary of State for Scotland in relation to any special share held individually or jointly by either such Secretary in any member of the Group) and do, or cause to be
done, all other acts and things which may from time to time be necessary under applicable law for the continued due performance of all its and its Subsidiaries’ respective obligations under the Finance Documents. 
  

	15.4	 	Pari passu 

  
 Each Obligor shall ensure that its obligations under the Finance Documents shall at all times rank at least pari passu with all its other present and future unsecured and unsubordinated Indebtedness with the exception of any
obligations which are mandatorily preferred by law and not by contract. 
  

	15.5	 	Information to be Provided 

  
 The Company shall provide the Secretary of State with: 
  

	 	(A)	 	Management Accounts  

  
 as soon as practicable (and in any event within ten Business Days of the end of each calendar month) the monthly management accounts of the Company and the Group in

  

 52 

 the form agreed with the Secretary of State from time to time, together with explanations of any significant
variances between the cash flow forecasts referred to in paragraph (F) below and the position shown in such accounts; 
  

	 	(B)	 	Unaudited Financial Statements  

  
 as soon as practicable (and in any event by 31st December in each year) the unaudited consolidated financial statements of the Group for the first half of the then
current financial year; 
  

	 	(C)	 	Audited Financial Statements  

  
 as soon as practicable (and in any event within 90 days after the end of the financial year) the audited financial statements of the Group; 
  

	 	(D)	 	Borrowing Lines  

  
 on the first Business Day in each week, a statement giving full details of committed and uncommitted borrowing lines available to the Company and the Group,
together with details of the levels of utilisation, such statement to be in a form acceptable to the Secretary of State; 
  

	 	(E)	 	Notices  

  
 all notices or other documents despatched by any member of the Group to its banks or financial institutions generally or its creditors generally (or any class thereof) at the same time as they are despatched; 
  

	 	(F)	 	Rolling Cashflow Forecast  

  
 for approval of the Secretary of State, a rolling six month cash flow forecast prepared by the Company in relation to its and the Group’s operations at the
same time as it delivers to the Secretary of State each set of Management Accounts referred to above; 
  

	 	(G)	 	Copies of New Contracts  

  
 copies of any contract or obligation (or any group of related contracts or obligations) undertaken or proposed to be undertaken after the date of this Agreement by
any member of the Group requiring expenditure or the undertaking of any liability in excess of £5,000,000 or any contract or obligation (or any group of related contracts or obligations) requiring expenditure or the undertaking of any
liability in excess of £1,000,000 and having a duration of longer than 6 months (or in each case such other sum or period as the Secretary of State and the Company may agree); 
  

	 	(H)	 	Weekly reports and cash sweep  

  
 on the first Business Day in each week, a report (in substantially the same form being delivered immediately before 7th March, 2003) up-to-date up to and including
the 
  

 53 

 immediately preceding Friday (or, if that Friday is not a Business Day, then the immediately preceding Business Day
before that Friday) including without limitation: 
  

	 	(i)	 	a schedule setting out the current cash position of the Group and detailing all payments, receipts and collateral requirements expected to be made, received or required, as the case may be,
by the Group in the next 7 day period after the date of such report. On the same day, the Company shall procure that all U.K. Free Cash (as defined below) is applied (converted, where applicable, into Sterling at the rate of exchange at which the
Secretary of State is able, as soon after the date of any payment or release as it is practicable for the Secretary of State to do so, to purchase Sterling with the currency of payment or release and shall take into account any commission, premium
and other costs of exchange and taxes in connection with such purchase) as follows: 

  

	 	(a)	 	first, in prepaying all Loans, together with accrued interest on the amount prepaid and any other amounts due in respect thereof, without premium or penalty; 

  

	 	(b)	 	secondly, if there is any excess, using all reasonable endeavours to ensure (including, if necessary, by replacing each such Deposit with cash collateral) that each Deposit is released from
the Security Interests created pursuant to any Deed of Charge, so that the Secretary of State is able to withdraw each such Deposit, together with all interest accrued thereon and any other amounts due in respect thereof, free of all Security
Interests in favour of the Deposit Bank or the relevant beneficiary, failing which, in providing cash collateral in respect of the Borrowers’ obligations contained in Clauses 7.2(A) and (B) in respect of each such Deposit;

  

	 	(c)	 	thirdly, if there is any excess, by depositing all such excess in the Cash Reserve Account, to be available for use in accordance with Clause 5.10 (Cash Reserves), if and to the extent
that the Cash Reserves do not exceed £490,000,000; and 

  

	 	(d)	 	fourthly, if there is any excess, for use by the Group for its general working capital purposes. 

  

	 	    	 	For the purpose of this paragraph (i), U.K. Free Cash shall be the amount by which cash not forecast to be required to meet payments of those members of the Group incorporated in or
otherwise carrying on business in the U.K. in the next 7 day period exceeds £10,000,000;  

  

	 	(ii)	 	a schedule of all expected Utilisations of Facility A in the next 7 day period, together with a report detailing those counterparties who are to 

  

 54 

	 	    	 	receive the benefit of the Deposits to be made available as a result of any such Utilisations and the amounts involved in each case; 

  

	 	(iii)	 	a schedule setting out all collateral provided by any member of the Group from the Group’s operating cash flow in the preceding 7 day period; and 

  

	 	(iv)	 	a schedule setting out all the payments from, and deposits into, the Cash Reserve Account. 

  

	 	(I)	 	Schedule of future Facility A utilisations  

  

	 	    	 	on the date of this Agreement (and on any date such schedule is subsequently updated or amended), a schedule, in a form approved by the Secretary of State, detailing all trading
counterparties of the Obligors who may now or in the future be eligible to receive the benefit of a Deposit made by the Secretary of State pursuant to Facility A, such schedule to include details of each such counterparty’s contractual
arrangements with each member of the Group and an estimate of the maximum Deposit or Deposits which may now or in the future be required in respect of each such counterparty; 

  

	 	(J)	 	Material Communications 

  

	 	    	 	promptly on receipt by an Obligor or (without prejudice to Clause 15.31 (Amendments and Communications)) on despatch by an Obligor, all material correspondence, notices and other
communications made by or on behalf of any member of the Group to, or received by any member of the Group from, any governmental, public or regulatory body or authority or courts or any Financial Creditor or any of its material trading
counterparties, but shall exclude any communications made by or on behalf of any member of the Group to, or received by or on behalf any member of the Group from, the Financial Services Authority or any person acting on its behalf in connection with
the investigation taking place as at the date of this Agreement; 

  

	 	(K)	 	Amergen Sale 

  

	 	    	 	promptly on receipt by an Obligor or (without prejudice to Clause 15.31 (Amendments and Communications)) on despatch by an Obligor, and subject to the Secretary of State agreeing to
comply with reasonable confidentiality commitments relating to disclosures outside of the Government, all material correspondence, documents, communications and other information in relation to any negotiations, proposals or offers or consideration
of any transaction for the sale, transfer or other disposal of all or part of its interest (direct or indirect), or change in control, in AmerGen Energy Company LLC or AmerGen Vermont LLC or any of their holding companies or any sale, transfer or
other disposal of any of their respective material assets or material businesses and keep the Secretary of State fully informed of the progress of any sale, transfer or disposal process (as the case may be) being undertaken or proposed in relation
to 

  

 55 

	 	    	 	AmerGen Energy Company LLC or AmerGen Vermont LLC or any of their holding companies; 

  

	 	(L)	 	Potential Purchasers 

  

	 	    	 	promptly on receipt by any member of the Group, full details of any offer or indicative offer received from a potential purchaser for any business or material assets (not being electricity
generated by any member of the Group) of any member of the Group and will procure that no member of the Group enters into any confidentiality or other arrangement that might prevent such notification and disclosure and shall obtain a fair market
valuation (or range of valuations) for the sale of such business or assets to an arm’s length willing buyer from an investment bank acceptable to the Secretary of State unless, because of pre-emption or other similar contractual rights of third
parties existing on 28th November, 2002, the Company (acting reasonably) determines that such a valuation would be unlikely to assist in obtaining the best price reasonably attainable; 

  

	 	(M)	 	Trading Manuals and Guidelines 

  

	 	    	 	promptly on notification of, or agreement to, an amendment to the Trading Manuals and Guidelines, the Trading Manuals and Guidelines as amended with a letter explaining the changes; and

  

	 	(N)	 	Monthly Report 

  

	 	    	 	at the same time as it provides management accounts pursuant to Clause 15.5(A) (Management Accounts), a written report, in the form to be agreed with the Secretary of State within 14
days of 7th March, 2003 and thereafter from time to time. 

  

	15.6	 	Notification of INES Incident 

  
 The Company shall promptly notify the Secretary of State of the occurrence of any incident applying to an Obligor which constitutes a Level 2 or above incident
under the International Nuclear Event Scale developed by the International Atomic Energy Agency. 
  

	15.7	 	Decommissioning Fund 

  
 The Company shall promptly notify the Secretary of State of any change or proposed change, of which it is aware, to the terms governing the Decommissioning Fund
which: 
  

	 	(A)	 	results or will result in any material increase in the contributions required to be made by the Company or any of its Subsidiaries to the Decommissioning Fund; and 

 

	 	(B)	 	is reasonably likely to have a Material Adverse Effect. 

  

 56 

	15.8	 	Shutdown or loss of output 

  
 The Company shall: 
  

	 	(A)	 	promptly notify the Secretary of State on each occasion of, any extended shutdown of, or any extended material reduction in output from, any member of the Group’s power stations, which
shutdown or reduction in output is not part of a planned shutdown or safety test, and each such notification shall contain reasonable details of the reason for, or cause of, such shutdown or reduction in output and, in particular, whether such
reason or cause is likely to affect the operation of any other power station of any Group member; and 

  

	 	(B)	 	if required by the Secretary of State, the Borrower will within 30 days of such notification, prepare and deliver to the Secretary of State a report on the likely impact of such reason or
cause on the Borrower and its Subsidiaries and on their respective power stations and businesses. 

  

	15.9	 	Provision of further information 

  

	 	(A)	 	The Company shall, without charge, provide the Secretary of State (including her representatives, advisers and nominees) with such financial and other information concerning it and its
Subsidiaries and their respective affairs (and such information shall be in such form and given within such time) as the Secretary of State may from time to time require, provided that the Company shall not be obliged to provide to the Secretary of
State any information which it certifies is subject to a confidentiality undertaking which prohibits such disclosure. The Company shall, and will procure that its Subsidiaries shall, use its reasonable endeavours to obtain a waiver of such
undertaking if requested by the Secretary of State. 

  

	 	(B)	 	Where correspondence or information is received by any member of the Group after the date of this Agreement which is expressly or implicitly confidential, the Company shall, and will procure
that its Subsidiaries shall, either obtain a waiver of such confidentiality to enable disclosure to the Secretary of State in accordance with this Agreement or return such correspondence to the sender without disclosure to the Secretary of State and
inform the sender that future correspondence and information will be disclosed to the Secretary of State in accordance with this Agreement. No disclosure shall be required by any term of this Agreement that would be illegal.

  

	15.10	 	Licences and Environmental Laws 

  
 Each Obligor shall: 
  

	 	(A)	 	obtain and maintain and procure that each member of the Group obtains and maintains in full force and effect each Licence required for the carrying on of its businesses; and

  

 57 

	 	(B)	 	obtain and maintain and procure that each member of the Group obtains and maintains in full force and effect all other material Environmental Licences and ensures that its business and the
business of each of its Subsidiaries complies in all material respects with all material Environmental Laws and all other material Environmental Licences. 

  

	15.11	 	Environmental Claims 

  
 The Company shall promptly upon receipt of formal written notice of the same inform the Secretary of State of any material Environmental Claim. 
  

	15.12	 	Notice of litigation 

  
 The Company shall upon becoming aware that the same is threatened or pending and in any case promptly after the commencement thereof, give to the Secretary of State
notice in writing of any litigation, arbitration or administrative proceedings or any dispute affecting any member of the Group or any of their respective assets, rights or revenues which, if determined against it, would be reasonably likely to have
a Material Adverse Effect. 
  

	15.13	 	Insurance 

  
 Each Obligor shall: 
  

	 	(A)	 	insure and will procure that each of its Subsidiaries will insure and keep insured all its properties and assets with underwriters or insurance companies of repute, or enter into insurance
arrangements in relation to such properties and assets considered by its directors to be prudent in each case to such extent and against such risks as are required by the terms of the Licences, statute or regulation and as prudent companies engaged
in business similar to those of that Obligor or the relevant Subsidiary normally insure or, in the case of other arrangements, enter into; 

  

	 	(B)	 	promptly notify the Secretary of State of any change, or proposed change, of which it becomes aware to the provisions of the Nuclear Installations Act 1965 (including, without limitation,
section 16 of that Act) which gives legislative force to the principles of the Paris Convention on Third Party Liability in the Field of Nuclear Energy and the Brussels Convention supplementary to the Paris Convention; and 

 

	 	(C)	 	and will procure that each of its Subsidiaries will only carry out advisory or other work in relation to nuclear generation to the extent that it is covered by insurance or other arrangements
constituting alternative safeguards considered prudent by its directors in relation to any liability which could arise from such work. 

  

 58 

	15.14	 	Negative pledge 

  
 No Obligor will and will procure that none of its Subsidiaries permit any Security Interest other than a Permitted Security Interest to subsist, arise or be created
or extended over all or any part of their respective present or future undertakings, assets, rights or revenues to secure or prefer any present or future Indebtedness of it or any of its Subsidiaries or any other person. 
  

	15.15	 	No merger 

  
 No Obligor will merge or consolidate with any other company or person. 
  

	15.16	 	Disposals 

  

	 	(A)	 	No Obligor will, and each Obligor will procure that none of its Subsidiaries will, sell, transfer, lease or otherwise dispose of any shares in any other entity or of all or any material part
of its present or future undertaking, assets, rights or revenues whether by one or a series of transactions related or not. 

  

	 	(B)	 	Paragraph (A) above does not apply to: 

  

	 	(i)	 	disposals with the prior written consent of the Secretary of State; 

  

	 	(ii)	 	disposals to a Security Provider; 

  

	 	(iii)	 	disposals by a member of the Group that is not a Security Provider to an Obligor; 

  

	 	(iv)	 	disposals by a member of the Group that is not an Obligor to another member of the Group that is not an Obligor 

  

	 	(v)	 	disposals on normal commercial terms of obsolete assets which are surplus to operational requirements; 

  

	 	(vi)	 	arm’s length disposals in the ordinary course of business; and 

  

	 	(vii)	 	disposals of cash in the ordinary course of business on terms not otherwise prohibited by this Agreement. 

  

	15.17	 	Accounting reference date 

  
 No Obligor will change its accounting reference date except with the prior written consent of the Secretary of State. 
  

	15.18	 	Change in business 

  
 No Obligor will, and each Obligor will procure that none of its Subsidiaries will, make any material change, whether by way of disposal, acquisition, merger or
otherwise, to 
  

 59 

 the nature of its business from that carried on as at the date of this Agreement which would constitute a material
change in the general nature of the business of the Obligors together and the Group taken as a whole. 
  

	15.19	 	Safety Regulations 

  
 Each Obligor shall, and shall procure that each of its Subsidiaries shall, conduct their respective businesses in compliance with all applicable laws, statues,
rules, regulations, statutory codes of practice, orders, notices, demands and decisions of the courts or anything like any of the foregoing of any governmental authority or agency or regulatory body in any jurisdiction relating to the safe operation
of power generation facilities and any related activities, nuclear safety and the security of nuclear installations and non-proliferation and the safeguards to be applied to fissile or radioactive material save where the result of non-compliance
would be immaterial. 
  

	15.20	 	New Contracts 

  
 No Obligor shall, and each Obligor will procure that no Subsidiary shall, without the prior written consent of the Secretary of State, enter into any contract or obligation requiring expenditure or the undertaking of any
liability in excess of £5,000,000 or any contract or obligation (or any group of related contracts or obligations) requiring expenditure or the undertaking of any liability in excess of £1,000,000 and having a duration of longer than 6
months, except for contracts and obligations entered into where such contracts and obligations are consistent with the Trading Manuals and Guidelines and obligations entered into in the ordinary course of trading relating to the procurement of
uranium and the provision of conversion, enrichment, fuel fabrication, storage, reprocessing and disposal services including but not limited to the BNFL Contracts.  
  

	15.21	 	Borrowed Money 

  
 No Obligor shall, and each Obligor will procure that none of its Subsidiaries shall, incur any Borrowed Money (other than swaps, interest or currency protection, hedging or financial futures transactions or arrangements, in
each case entered into in accordance with the Group’s existing treasury function as disclosed in writing to the Secretary of State prior to the date of this Agreement), without the prior written consent of the Secretary of State. 
  

	15.22	 	Loans and Guarantees 

  
 No Obligor shall make any loans, grant any credit or give or enter into any guarantee except with the prior written consent of the Secretary of State, or for:

  

	 	(A)	 	normal trade credit to third parties; 

  

	 	(B)	 	loans and credit to a Security Provider or other Obligor and guarantees in respect of obligations of a Security Provider or other Obligor, provided in each case such loans, credit or
guarantee are given pursuant to a written agreement governed by English or Scots law; 

  

 60 

	 	(C)	 	loans made to EPL pursuant to contractual obligations existing as at 9th September, 2002 in respect of committed capital expenditure; or 

  

	 	(D)	 	loans made in the ordinary course of business provided the aggregate amount of such loans (including outstanding interest) does not exceed £1,000,000. 

  

	15.23	 	No Acquisitions 

  
 No Obligor shall, and each Obligor will procure that none of its Subsidiaries shall, acquire any business of or shares or securities issued by any person or enter
into any agreement under which it may become bound to acquire any business of or shares or securities issued by any person, without the prior written consent of the Secretary of State. 
  

	15.24	 	Access 

  
 Each Obligor shall allow, and will procure that each of its Subsidiaries shall allow full access both during and outside normal business hours, to the premises, documents, systems and records of the Obligors and their
Subsidiaries by such investigating accountants, consultants and/or other professionals for purposes of reviewing the operations of the Group as the Secretary of State may require and that the Obligors and their Subsidiaries afford such assistance
and co-operation to such persons as the Secretary of State may reasonably require. 
  

	15.25	 	Electricity Trading Policy 

  

	 	(A)	 	Each Obligor shall, and shall procure that each of its Subsidiaries shall, conduct their respective electricity trading activities in compliance with the policies, procedures, strategies,
risk limits and other provisions contained in the Trading Manuals and Guidelines, as such Trading Manuals and Guidelines may be amended with the prior written approval of the Secretary of State. 

  

	 	(B)	 	An Obligor shall be entitled to purchase or sell ROCs (as defined in The Renewables Obligation Order 2002) provided such purchases or sales are in the ordinary course of such Obligor’s
business for the purpose of satisfying its or another Obligor’s renewables obligation (as defined in The Renewables Obligation Order 2002) and in accordance with the provisions of the Trading Manuals and Guidelines. 

  

	15.26	 	Security and Guarantors 

  

	 	(A)	 	Each Obligor shall, as soon as practicable and, in any event, within five Business Days of receiving instructions to do so from the Secretary of State, execute and deliver to the Secretary of
State such deeds, agreements and instruments and otherwise do such acts and things as the Secretary of State may require for the purpose of supplementing the Security Interests created under the Security Documents or for the purpose of creating such
further Security Interests over any or all of the assets and undertaking of the Obligors, 

  

 61 

	 	    	 	on such terms as the Secretary of State may require, for the purpose of securing the Obligors’ obligations under the Finance Documents, provided that the creation of such Security
Interests shall not cause a material default under any contract to which any member of the Group is party or breach of law. On creation of the relevant interest, the Company shall certify to the Secretary of State that there is no such default or
breach. 

  

	 	    	 	To the extent it is able to do so, each Obligor shall, and will procure that each of its Subsidiaries shall, promptly take all such action as the Secretary of State may require, including
without limitation prepaying and cancelling facilities which contain any negative pledge restricting the granting of Security Interests, which may, in the opinion of the Secretary of State, be necessary or desirable in connection with granting the
Security Interests as contemplated by this Clause. 

  

	 	(B)	 	Each Obligor shall, as soon as practicable and, in any event, within five Business Days of receiving instructions to do so from the Secretary of State, procure that any of its Subsidiaries
specified by the Secretary of State accede to this agreement as a Guarantor, provided that such accession shall not cause a material default under any contract to which any member of the Group is party or breach of law. On accession the relevant
Guarantor shall certify to the Secretary of State that there is no such default or breach. 

  

	 	    	 	To the extent it is able to do so, each Obligor shall, and will procure that each of its Subsidiaries shall, promptly take all such action as the Secretary of State may require, including
without limitation prepaying or cancelling facilities the terms of which may prohibit any Subsidiary from becoming a Guarantor, which may, in the opinion of the Secretary of State be necessary or desirable in order to facilitate any
Subsidiary’s becoming a Guarantor as contemplated by this Clause 15.26. 

  

	15.27	 	Payments in respect of Borrowed Money and payments to Financial Creditors 

  

	 	(A)	 	Save for the exceptions specified in paragraph (B) below, no Obligor shall, and each Obligor shall procure that none of its Subsidiaries shall, make any payments of principal,
interest, fees, commissions or any other amount in respect of Borrowed Money (including, for the avoidance of doubt, Intragroup Receivables) without the prior written consent of the Secretary of State. 

  

	 	(B)	 	No Obligor shall, and each Obligor shall procure that none of its Subsidiaries shall, without the prior written consent of the Secretary of State, make any payment of whatever nature to any
Financial Creditor except: 

  

	 	(i)	 	before the Restructuring Date, payments to any Financial Creditor in accordance with the terms of the Standstill Agreement; 

  

	 	(ii)	 	before the Restructuring Date, payments to Bondholders in accordance with the Bondholders Restructuring Agreement or the Trust Deed (as amended by the Supplemental Trust Deed); and

  

 62 

	 	(iii)	 	on and after the Restructuring Date, payments in accordance with the terms of the documentation effecting the Restructuring Proposals. 

  

	15.28	 	Dividends Distributions and Share Issues 

  

	 	(A)	 	No Obligor shall, and each Obligor will procure that none of its Subsidiaries shall declare or pay, directly or indirectly, any dividends or make any other distribution or pay any principal
or interest or other amounts (whether in cash or otherwise) on or in respect of any of its shares or securities or partnership interests or under debt instruments, except with the prior written consent of the Secretary of State.

  

	 	(B)	 	No Security Provider shall allot or issue any shares, securities or partnership interests, or other Investment, except with the prior written consent of the Secretary of State.

  

	15.29	 	Collateral Requirements 

  

	 	(A)	 	To the extent that any contract to which a Borrower is party requires the provision of collateral, and the amount of that collateral is not so clearly stated by the relevant contract as to
preclude negotiation, the relevant Borrower shall negotiate with the relevant counterparty with a view, subject to Clause 15.29(B), to reaching the most advantageous agreement possible in the prevailing circumstances.

  

	 	(B)	 	No Borrower shall, without the consent of the Secretary of State, enter into any agreement in relation to the provision of collateral which would require the amount of such collateral to be
reassessed by either party more than once in any period of seven days. 

  

	 	(C)	 	Borrowers shall keep the Secretary of State informed of the progress of all negotiations with counterparties which require or may require the provision of collateral.

  

	15.30	 	Regulatory Requirements 

  
 The Company shall make such announcements as may be required in compliance with the Listing Rules of the UK Listing Authority, the Admission Standards of the London
Stock Exchange, the Financial Services and Markets Act 2000, the Rules of the New York Stock Exchange and the US Securities Exchange Act of 1934 and all other applicable regulations and legislation. 
  

	15.31	 	Announcements and Communications 

  

	 	(A)	 	No Obligor shall make any public announcement or any written communication to any regulator, creditor or counterparty which refers to this Agreement, the Facilities or the financial position
of the Obligors without prior consultation with the Secretary of State. This shall not prevent any Obligor from making an 

  

 63 

 announcement or communication required by law or regulations or in case of emergency. 

 

	 	(B)	 	Clause 15.31(A) shall not apply to any statement to the extent that it repeats, refers to or paraphrases an announcement previously made in accordance with this Clause.

  

	15.32	 	Proceeds of Loans 

  
 Each Borrower shall ensure that the proceeds of any Loan are paid into and, pending application, are held in an account with a bank which has agreed in terms
acceptable to the Secretary of State to waive its rights of set-off in respect of all other indebtedness, or which has confirmed to the Secretary of State that it has no exposure to any member of the Group, and such proceeds are applied only for
Approved Working Capital Purposes, as applicable. 
  

	15.33	 	Intragroup Receivables and Special Accounts 

  
 Each Obligor shall comply with the covenants and undertakings in Clause 6.4 (Covenants) of the Debenture as if such clause was set out in full in this
Agreement and the references to an Obligor in such Clause are interpreted for this purpose as references to an Obligor as defined in this Agreement. 
  

	15.34	 	Title Deeds 

  
 Each Obligor will hold all the deeds and documents (apart from those already delivered to the Secretary of State) in respect of its Real Property (as defined in the Debenture) which it has charged to, or otherwise created a
Security Interest in favour of, the Secretary of State under the Debenture, to the order of the Secretary of State and undertakes to deliver all or any of them to the Secretary of State promptly on demand by the Secretary of State. 
  

	15.35	 	Sales 

  
 Each Obligor shall, and each Obligor will procure that each of its Subsidiaries shall, provide its reasonable assistance to facilitate a Disposal. 
  

	15.36	 	State Aid Approval 

  
 Each Obligor shall, and each Obligor will procure that each of its Subsidiaries shall, at the request of the Secretary of State (including her representatives,
advisers and nominees), take any action, or refrain from taking any action, reasonably so requested in connection with the terms of any relevant state aid approval by the European Commission. 
  

 64 

	15.37	 	Management Meetings 

  
 Each month (or at any other time specified by the Secretary of State on not less than 5 Business Days notice), each Obligor shall make available such of its
directors and officers as the Secretary of State specifies, to meet the Secretary of State’s representatives, advisers or nominees to discuss any matter in relation to the business and operations of the Group including, without limitation, the
latest management accounts delivered pursuant to Clause 15.5(A) (Management Accounts) and monthly report delivered pursuant to Clause 15.5(N) (Monthly Report). The date and time of, and agenda for, such meetings will be agreed in
advance of any meeting by those attending that meeting. The agenda for the monthly meeting held on or about 30th September, 2003 and 31st March, 2004 will include a review of the terms of this Agreement and any amendment necessary to it. 

 

	16.	 	DEFAULT 

  

	16.1	 	Events of Default 

  
 Each of the events set out in this Clause 16 is an Event of Default (whether or not caused by any reason whatsoever outside the control of any Obligor or any
other person). 
  

	16.2	 	Non-payment 

  
 Any Obligor fails to pay any sum due from it under the Finance Documents in the currency, at the time and in the manner stipulated. 
  

	16.3	 	(Intentionally left blank) 

  

	16.4	 	Breach of other obligations 

  
 An Obligor does not comply with any provision of the Finance Documents (other than those referred to in Clause 16.2 (Non-payment) and such default, if
capable of remedy, is not remedied within 7 days of the date on which that Obligor receives a notice from the Secretary of State requiring remedy. 
  

	16.5	 	Misrepresentation 

  
 A representation or warranty made or repeated (or deemed repeated) by or in respect of any Obligor in any Finance Document or in any written notice, certificate or
statement referred to in or delivered by an Obligor under any Finance Document is or proves to have been incorrect or misleading in any material respect and such misrepresentation, if capable of remedy, is not remedied within 7 days after the date
on which that Obligor receives notice from the Secretary of State requiring remedy. 
  

 65 

	16.6	 	Cross-default 

  

	 	(A)	 	Any Borrowed Money of any Obligor or any Material Subsidiary is not paid when due and payable (or within any originally applicable grace period); or 

  

	 	(B)	 	any Borrowed Money of any Obligor or any Material Subsidiary becomes (whether by declaration or automatically in accordance with the relevant agreement or instrument constituting the same)
due and payable prior to the date when it would otherwise have become due and payable (taking account of any originally applicable grace period); or 

  

	 	(C)	 	any creditor of any Obligor or any Material Subsidiary becomes entitled to declare any Borrowed Money due and payable prior to the date when it would otherwise have become due and payable
(taking account of any originally applicable grace period), other than as a result of any event described in or equivalent to that described in Clause 16.8 or any event of default triggered by any material adverse change relating to the
financial condition, ability of obligors to meet payment obligations or satisfy financial covenants, 

  
 in the case of (B) and (C), as a result of any default or event of default (howsoever described) on the part of that Obligor or Material Subsidiary; 
  

	 	(D)	 	in relation to any interest rate, currency swap, forward exchange contract, other hedging arrangement, derivative or similar transaction to which an Obligor or any Material Subsidiary is
party for the time being (other than any contract for the sale or purchase of electricity), the Obligor or Material Subsidiary fails to make payment of any sum on its due date; or 

  

	 	(E)	 	other than as a result of any event described in or equivalent to that described in Clause 16.8 or any event of default triggered by any material adverse change relating to the
financial condition or ability of Obligors to meet payment obligations or satisfy financial covenants, any relevant counterparty becomes entitled to terminate early any such transaction referred to in paragraph (D) above by reason of default or
event of default (howsoever described) on the part of the Obligor or any Material Subsidiary giving rise to a liability of that Obligor or relevant Material Subsidiary to such counterparty (calculated at any time when such counterparty is so
entitled, by reference to prevailing market conditions on such date), 

  
 unless the aggregate amount of such Borrowed Money referred to in paragraphs (A) to (C) (inclusive), such sum referred to in paragraph (D) and such liability referred to in paragraph (E) above does not exceed £5,000,000
(or its equivalent in other currencies).  
  

	16.7	 	Legal process 

  
 Any judgment or order in an amount of not less than £5,000,000 (or its equivalent in any other currencies) or any judgements or orders in an aggregate amount of not less than £10,000,000 (or its equivalent in any
other currencies) is made against any Obligor or 
  

 66 

 any Material Subsidiary 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 material part of the undertakings, assets, rights or revenues of any Obligor or any Material Subsidiary. 
  

	16.8	 	Insolvency 

  
 Any Obligor or any Material Subsidiary is deemed unable to pay its debts within the meaning of section 123(1)(a), (b) or (e) of the Insolvency Act 1986 or otherwise becomes insolvent or stops or suspends making payments
(whether of principal or interest) with respect to all or any class of its debts or announces an intention to do so. 
  

	16.9	 	Winding up 

  
 Any petition is presented or other step is taken for the purpose of winding up any Obligor or any Material Subsidiary (not being a petition which is frivolous, vexatious or an abuse of the process of the court) or an order is
made or resolution passed for the winding up of any Obligor or any Material Subsidiary or convening a meeting for the purpose of passing any such resolution. 
  

	16.10	 	Administration 

  

	 	(A)	 	Any petition is presented or other step is taken for the purpose of the appointment of an administrator of any Obligor or any Material Subsidiary (not being a petition which is frivolous,
vexatious or an abuse of the process of the court). 

  

	 	(B)	 	Any administration order is made in relation to any Obligor or any Material Subsidiary. 

  

	16.11	 	Appointment of receivers and managers 

  
 Any administrative or other receiver is appointed to any Obligor or any Material Subsidiary or any part of their respective assets and/or undertakings or any other
steps are taken to enforce any Security Interest over all or any part of the assets of any Obligor or any Material Subsidiary. 
  

	16.12	 	Compositions 

  
 Any steps are taken, or negotiations commenced, by any Obligor or any Material Subsidiary with a view to proposing any kind of composition, compromise or arrangement involving such company and all or any class of its creditors
unless such negotiations are commenced pursuant to Clause 20.1 (Restructuring Proposals). 
  

	16.13	 	Analogous proceedings 

  
 There occurs, in relation to any Obligor or any Material Subsidiary, in any country or territory in which any of them carries on business or to the jurisdiction of
whose courts 
  

 67 

 any part of their respective assets is subject, any event which in that country or territory corresponds with, or
has an effect equivalent or similar to, any of those mentioned in Clauses 16.9 to 16.12 (inclusive). 
  

	16.14	 	Cessation of business 

  
 Any Obligor or any Material Subsidiary suspends or ceases or threatens to suspend or cease to carry on their respective businesses. 
  

	16.15	 	Litigation 

  
 Any litigation, arbitration or administrative proceedings against or involving any member of the Group is determined against such member of the Group and is reasonably likely to have a Material Adverse Effect. 
  

	16.16	 	Seizure 

  
 All or any part of the undertakings, assets, rights or revenues of, or shares or other ownership interests in, any Obligor or any Material Subsidiary are seized, nationalised, expropriated or compulsorily acquired by or under
the authority of any government. 
  

	16.17	 	Change of Control 

  
 Any single person, or group of persons acting in concert acquires 30 per cent. or more in nominal value of the equity share capital of the Company. 
  

	16.18	 	Unlawfulness 

  
 It becomes unlawful at any time for any Obligor to perform all or any of its obligations under this Agreement. 
  

	16.19	 	Licences 

  

	 	(A)	 	any Licence is revoked, cancelled (including the enactment of any law revoking or cancelling any Licence) or surrendered (or any notice of revocation is issued in respect of any Licence)
other than in circumstances where a new replacement Licence takes effect immediately following such revocation, cancellation or surrender or where such revocation, cancellation or surrender results from an internal reorganisation of the Group or the
disposal of any property; or 

  

	 	(B)	 	any Licence is materially modified or, in the case of any replacement Licence contemplated by Clause 16.19(A), the terms and conditions of such replacement Licence differ in a material
respect from those of the Licence it replaces, and such modification, or difference in terms and conditions, is reasonably likely to have a Material Adverse Effect. 

  

 68 

	16.20	 	Compliance with Electricity Act 

  
 An Obligor or any of its Subsidiaries fails to comply with a final order (within the meaning of section 25 of the Electricity Act 1989) 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 1989 Act and such failure to
comply is reasonably likely to have a Material Adverse Effect. 
  

	16.21	 	Environmental Law 

  

	 	(A)	 	Without prejudice to Clause 16.19 (Licences), any member of the Group fails to comply with any Environmental Law or any Environmental Licence or an Environmental Claim is made against
any member of the Group if, in any such case, such non-compliance or claim or consequences thereof is reasonably likely to have a Material Adverse Effect; or 

  

	 	(B)	 	As a result of any change in or the introduction of any Environmental Law, any of the obligations or liabilities of any Obligor in respect of the Finance Documents becomes subordinated to an
extent considered material by the Secretary of State to the claims and rights of any competent agency of the United Kingdom, the European Community or of any other jurisdiction in which any member of the Group, is incorporated, owns property or
assets or carries on any business or operations. 

  

	16.22	 	Material Contracts 

  
 Any person: 
  

	 	(A)	 	terminates, cancels or repudiates any Material Contract to which it is a party or takes any action with regard to any such Material Contract or any other event occurs or circumstances exist
which cause the same not to be in full force and effect; or 

  

	 	(B)	 	any modification is made to a Material Contract in accordance with its terms or the enactment of any law terminating or modifying a Material Contract, 

  
 which termination, cancellation, modification, repudiation or other action, event or
circumstances is reasonably likely to have a Material Adverse Effect. 
  

	16.23	 	Decommissioning Fund 

  
 There occurs any change to the terms governing the Decommissioning Fund which is reasonably likely to have a Material Adverse Effect. 
  

 69 

	16.24	 	Grid Code 

  
 There occurs any change to the Grid Code, the Scottish Grid Code, the Scottish Distribution Use of Systems Contract or the connection agreements with Scottish Power UK plc which change is reasonably likely to have a Material
Adverse Effect. 
  

	16.25	 	Change to insurance arrangements 

  

	 	(A)	 	There occurs any material reduction (when compared to the position as at the date of this Agreement) in the amount that H.M. Government or other signatories to the Paris Convention on Third
Party Liability in the Field of Nuclear Energy and the Brussels Convention Supplementary to the Paris Convention undertake to provide as additional funds per site per incident over and above the amount the Obligors or their Subsidiaries must provide
by way of insurance per site per incident, and the Obligors do not in accordance with Clause 15.13 (Insurance) obtain insurance cover or other arrangements in respect of the full amount of such reduction in such additional funds are not
entered into; or 

  

	 	(B)	 	the Nuclear Installations Act 1965 is amended so as to remove the discretion of Parliament in section 16 of that Act to provide further funds over and above those referred to in paragraph (A)
above and is not replaced by a substantially similar provision for such discretion in some other law or regulation. 

  

	16.26	 	INES Incident 

  
 There occurs a Level 3 or above incident under the International Nuclear Event Scale developed by the International Atomic Energy Agency involving any member of the Group. 
  

	16.27	 	Repudiation 

  
 An Obligor repudiates any Finance Document or does or causes or permits to be done any act or thing evidencing an intention to repudiate a Finance Document. 
  

	16.28	 	(Intentionally left blank) 

  

	16.29	 	Compliance with laws and regulations 

  

	 	(A)	 	An Obligor fails to comply, or fails to procure that its Subsidiaries comply, to an extent which is reasonably likely to have a Material Adverse Effect: 

  

	 	(i)	 	with the terms and conditions of any applicable laws and regulations; or 

  

	 	(ii)	 	with any agreements, licences or concession material to the carrying on of their business. 

  

 70 

	 	(B)	 	An Obligor fails to comply, or fails to procure that its Subsidiaries comply, with the New Electricity Trading Arrangements, including the provisions of the Balancing and Settlement Code and
the Connection and Use of System Code or any decision is taken to suspend or expel any member of the Group under the Balancing and Settlement Code or the Connection and Use of System Code. 

  

	 	(C)	 	An Obligor fails to comply, or fails to procure that its Subsidiaries comply, with the Grid Code. 

  

	 	(D)	 	An Obligor fails to comply, or fails to procure that its Subsidiaries comply, with the Scottish Grid Code, the Scottish Distribution Use of Systems Contract and the connection agreements with
Scottish Power UK plc. 

  

	 	(E)	 	A Level 1 or Level 2 credit default occurs in relation to any member of the Group under the Balancing and Settlement Code. 

  

	16.30	 	Material events 

  
 On or after the date of this Agreement, any event occurs or circumstance arises which is reasonably likely to result in a material and adverse change in the
financial condition of the Obligors (taken together). 
  

	16.31	 	Acceleration 

  
 On and at any time after the occurrence of an Event of Default the Secretary of State may by notice to the Company: 
  

	 	(A)	 	cancel, in whole or in part, her obligation (if any) to make the Facilities available to the Borrowers (or any of them); and/or 

  

	 	(B)	 	demand payment in respect of any Deposit under the indemnity contained in Clause 7.2 (Borrower’s indemnity) or under the undertakings in Clause 7.3 (Right to call for
payment or collateral); and/or 

  

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

  

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

  

	16.32	 	Indemnification 

  

	 	(A)	 	Each Obligor agrees to fully indemnify and hold harmless the Secretary of State (and each of the persons referred to in paragraph (B) below) from and against all actions, claims, demands,
proceedings, investigations, liabilities or judgements (collectively “claims”) and any and all losses, damages, costs, 

  

 71 

 
charges and expenses (collectively “losses” and including all costs and expenses connected with investigating, preparing for or defending any such claim) of
whatever nature and in whatever jurisdiction and which refer or relate to or arise from, directly or indirectly: 
  

	 	(i)	 	any failure by any member of the Group to comply with any Environmental Law, any Environmental Licence, Licence or any other law, statute, regulation, code, consent, authorisation, licence or
approval of any governmental or public bodies or authorities or courts which is applicable to such member of the Group; and/or 

  

	 	(ii)	 	any Default by any Obligor; and/or 

  

	 	(iii)	 	the exercise, purported exercise or failure to exercise any of the rights or powers conferred under this Agreement or any Finance Document. 

  

	 	(B)	 	The references to the Secretary of State in paragraph (A) above include any agents, attorneys, employees and advisers working for or on behalf of the Secretary of State and this indemnity is
given to the Secretary of State for the Secretary of State’s own account and as trustee for the benefit of such persons. 

  

	 	(C)	 	The indemnity under this Clause 16.32 shall survive termination of this Agreement. 

  

	17.	 	CHANGES TO THE OBLIGORS 

  

	17.1	 	Assignments and transfer by Obligors 

  
 No Obligor may assign any of its rights or transfer any of its rights or obligations under any Finance Document. 
  

	17.2	 	Additional Obligors 

  

	 	(A)	 	The Company may request that any of its Subsidiaries become an Additional Borrower or an Additional Guarantor. If the Secretary of State in her discretion so agrees, that Subsidiary shall
become an Additional Borrower or an Additional Guarantor, as applicable, if: 

  

	 	(i)	 	the Company delivers to the Secretary of State a duty completed and executed Accession Letter; 

  

	 	(ii)	 	the Company confirms that no Default is continuing or would occur as a result of that Subsidiary becoming an Additional Borrower or an Additional Guarantor; and 

  

	 	(iii)	 	the Secretary of State has received all of the documents and other evidence listed in Part II of Schedule 2 (Conditions Precedent) in 

  

 72 

	 	 
relation to that Additional Borrower or Additional Guarantor, each in form and substance satisfactory to the Secretary of State. 

  

	 	(B)	 	The Secretary of State shall notify the Company promptly upon being satisfied that it has received (in form and substance satisfactory to it) all the documents and other evidence listed in
Part II of Schedule 2 (Conditions Precedent). 

  

	17.3	 	Repetition of Representations 

  
 Delivery of an Accession Letter constitutes confirmation by the relevant new Obligor that the Repeating Representations are true and correct in relation to it as at
the date of delivery as if made by reference to the facts and circumstances then existing. 
  

	18.	 	ADDITIONAL INDEMNITIES 

  
 The Company shall (or shall procure that a Borrower will), within three Business Days of demand, indemnify the Secretary of State against any cost, loss or
liability incurred by the Secretary of State as a result of: 
  

	 	(A)	 	the occurrence of any Event of Default; 

  

	 	(B)	 	a failure by a Borrower to pay any amount due under a Finance Document on its due date (including the making of any payment prior to its due date); or 

  

	 	(C)	 	funding, or making arrangements to fund, a Utilisation requested by a Borrower in a Utilisation Request but not made by reason of the operation of any one or more of the provisions of this
Agreement. 

  

	19.	 	REFINANCING 

  
 Following any notification from the Secretary of State that she is invoking the provisions of this Clause 19: 
  

	 	(A)	 	the Obligors shall use best endeavours to procure, within any timetable set by the Secretary of State, the replacement in whole or in part of the facilities under this Agreement with other
Government-backed financial arrangements for the provision of working capital and credit support to the Obligors by one or more banks or financial institutions. Such facilities are to be on terms acceptable to the Secretary of State in her sole
discretion; 

  

	 	(B)      (i)	 	the Obligors (acting reasonably) and the Secretary of State shall, within any timetable set by the Secretary of State, agree any amendments to this Agreement which are necessary to replace
Facilities B and C in whole or in part with a guarantee facility provided by the Secretary of State; and 

  

	 	(ii)	 	each Borrower which has procured a Deposit shall use its best endeavours to procure, or assist the Secretary of State in procuring, that 

  

 73 

	 	 
the Deposit is released from the Security Interests created pursuant to any Deed of Charge so that the Secretary of State is able to withdraw that Deposit, together
with all interest accrued thereon and any other amounts due in respect thereof free of all Security Interests in favour of the relevant beneficiary and that such Deed of Charge is replaced by way of alternative security with a guarantee from the
Secretary of State. 

  

	20.	 	RESTRUCTURING PROPOSALS 

  

	20.1	 	Restructuring Proposals 

  

	 	(A)	 	Each Obligor shall enter into negotiations with any one or more of the Financial Creditors and use its reasonable endeavours to reach agreements in accordance with the Restructuring Proposals
with such Financial Creditors by 30th September, 2003. 

  

	 	(B)	 	No Obligor will, and each Obligor will procure that none of its Subsidiaries will, make any offer, agree any compromise or enter into any other agreement (in accordance with the Restructuring
Proposals or otherwise) in relation to any amounts owed to any of the Financial Creditors without the prior written consent of the Secretary of State. 

  

	20.2	 	Information 

  
 Without prejudice to Clause 15.5(J) (Material Communications) or 15.31 (Announcements and Communications), each Obligor will, and will procure that each of its Subsidiaries will, give to the Secretary of State a
copy of all correspondence, documents, communications and other information in relation to any negotiations with any of the Financial Creditors conducted pursuant to Clause 20.1 (Restructuring Proposals). 
  

	20.3	 	Participation in Negotiations 

  
 The Secretary of State shall be entitled to participate in any negotiations conducted pursuant to Clause 20.1 (Restructuring Proposals) and in any
communications arising from such negotiations. 
  

	21.	 	COSTS AND EXPENSES 

  

	21.1	 	Transaction expenses 

  
 The Company shall promptly on demand pay the Secretary of State the amount of all costs and expenses (including legal fees) reasonably incurred by her in connection
with: 
  

	 	(A)	 	the negotiation, preparation and execution of the Interim Facility and any other documents referred to in, or entered into in connection with, the Interim Facility, including all costs and
expenses incurred by or on behalf of the Secretary of State in connection with establishing any Interim Deposit, issuing any deed of 

  

 74 

	 	    	 	charge, procuring any letter of credit or otherwise in relation to such arrangements which has not been repaid by way of commission under the Interim Facility; 

  

	 	(B)	 	the negotiation, preparation and execution of this Agreement (including any amendment or extension of this Agreement) and any other documents referred to in, or entered into in connection
with, this Agreement; 

  

	 	(C)	 	the negotiation, preparation and execution of any other Finance Documents executed on or after the date of this Agreement; 

  

	 	(D)	 	the negotiation, preparation and implementation of the Restructuring Agreements and any other document referred to in, or entered into in connection with, any Restructuring Agreement to the
extent incurred after 7th March, 2003; and 

  

	 	(E)	 	the negotiation and implementation of the Restructuring Proposals to the extent incurred after 7th March, 2003, 

  
 subject, in the case of paragraphs (D) and (E) above only, to any cap agreed by the Secretary of State and the Company from time to
time. 
  

	21.2	 	Amendment costs 

  
 If a Borrower requests an amendment, waiver or consent, the Company shall, within three Business Days of demand, reimburse the Secretary of State for the amount of
all costs and expenses (including legal fees) reasonably incurred by the Secretary of State in responding to, evaluating, negotiating or complying with that request or requirement. 
  

	21.3	 	Enforcement costs 

  
 The Company shall, within three Business Days of demand, pay to the Secretary of State the amount of all costs and expenses (including legal fees) incurred by the
Secretary of State in connection with the enforcement of, or the preservation of any rights under, any Finance Document. 
  

	22.	 	COUNTERPARTS 

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

 75 

	23.	 	NOTICES 

  

	23.1	 	Giving of notices 

  
 All notices or other communications under or in connection with this Agreement shall be given in writing and, unless otherwise stated, may be made by letter or
facsimile. Any such notice will be deemed to be given as follows: 
  

	 	(A)	 	if by letter, when delivered personally or on actual receipt; 

  

	 	(B)	 	if by facsimile, when received in legible form. 

  
 However, a notice given in accordance with the above but received on a non-working day or after business hours in the place of receipt will only be deemed to be
given on the next working day in that place. Any facsimile message to the Secretary of State shall be confirmed in writing, but failure to comply with this requirement shall not invalidate the relevant facsimile message. 
  

	23.2	 	Addresses for notices 

  

	 	(A)	 	All notices and other communications to the Secretary of State shall be addressed to: 

  

	 	    	 	The Department of Trade and Industry 

	 	    	 	One Victoria Street 

	 	    	 	London SW1H 0ET 

  

	 	    	 	Fax:                020 7215 0138 

	 	    	 	Attention:        Iain Ure 

  

	 	    	 	or to such other address or fax number or for the attention of such other person or department as the Secretary of State has notified to the Company by not less than five Business Days’
notice. 

  

	 	(B)	 	The address and facsimile number(s) of the Obligors are all to care of the Company at: 

  

	 	    	 	3 Redwood Crescent 

	 	    	 	Peel Park 

	 	    	 	East Kilbride 

	 	    	 	G74 5PR 

  

	 	    	 	Facsimile:        013 5526 2567 

	 	    	 	Attention:         The Group Treasurer 

  

	 	    	 	or to such other address or fax number or for the attention of such other person or department as the Borrowers may notify to the other Parties by not less than five Business Days’
notice. 

  

 76 

	24.	 	JURISDICTION 

  

	24.1	 	Submission 

  
 For the benefit of the Secretary of State, each Obligor agrees that the courts of England have jurisdiction to settle any disputes in connection with any Finance Document and accordingly submits to the jurisdiction of the
English courts. 
  

	24.2	 	Service of process 

  
 Without prejudice to any other mode of service, each Obligor (other than an Obligor incorporated in England and Wales): 
  

	 	(A)	 	irrevocably appoints BEG as its agent for service of process in relation to any proceedings before the English courts in connection with any Finance Document; 

  

	 	(B)	 	agrees that failure by a process agent to notify the relevant Obligor of the process will not invalidate the proceedings concerned; and 

  

	 	(C)	 	consents to the service of process relating to any such proceedings by prepaid posting of a copy of the process to its address for the time being applying under Clause 23.2 (Addresses
for notices). 

  

	24.3	 	Forum convenience and enforcement abroad 

  
 Each Obligor: 
  

	 	(A)	 	waives objection to the English courts on grounds of inconvenient forum or otherwise as regards proceedings in connection with a Finance Document; and 

  

	 	(B)	 	agrees that a judgment or order of an English court in connection with a Finance Document is conclusive and binding on it and may be enforced against it in the courts of any other
jurisdiction. 

  

	24.4	 	Non-exclusivity 

  
 Nothing in this Clause 24 limits the right of the Secretary of State to bring proceedings against an Obligor in connection with any Finance Document:

  

	 	(A)	 	in any other court of competent jurisdiction; or 

  

	 	(B)	 	concurrently in more than one jurisdiction. 

  

	25.	 	GOVERNING LAW 

  
 This Agreement is governed by English law. 
  

 77 

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

 78 

 SCHEDULE 1 
 PART I 
 BORROWERS 
  

		
	 British Energy plc
	 	 (Registered nos. SC162273)

	 British Energy Generation (UK ) Limited
	 	 (Registered No. SC117121)

		
	 British Energy Power and
 Energy Trading Limited
	 	 (Registered nos. SC200887)

		
	 British Energy Generation Limited
	 	 (Registered No. 3076445)

  

 79 

 SCHEDULE 1 
 PART II 
 GUARANTORS 
  

		
	 British Energy plc
	 	 (Registered No. SC162273)

		
	 British Energy Generation (UK) Limited
	 	 (Registered No. SC117121)

		
	 British Energy Generation Limited
	 	 (Registered No. 3076445)

		
	 British Energy Power and Energy Trading Limited
	 	 (Registered No. SC 200887)

		
	 British Energy Investment Limited
	 	 (Registered No. SC 173730)

		
	 District Energy Limited
	 	 (Registered No. 2362017)

		
	 British Energy International Holdings Limited
	 	 (Registered No. SC 138614)

		
	 British Energy US Holdings Inc.
	 	 
		
	 British Energy L.P.
	 	 

  
  

 80 

 SCHEDULE 2 
 PART I 
 CONDITIONS PRECEDENT DOCUMENTS 
  

	1.	 	All Obligors 

  
 A certificate of an authorised signatory of each Obligor certifying that each copy constitutional document provided as a condition precedent to utilisation under the Interim Facility Agreement remains correct, complete and in
full force and effect at the date of this Agreement. 
  

	2.	 	Borrowers 

  

	 	(A)	 	A copy of a resolution of the board of directors of each Borrower (or of a Committee of that board, accompanied by a copy of a resolution of that board appointing the relevant Committee):

  

	 	(i)	 	approving the terms of, and the transactions contemplated by, this Agreement and the other Finance Documents and resolving that it execute this Agreement and those Finance Documents to which
it is a party; 

  

	 	(ii)	 	authorising a specified person or persons to execute this Agreement and those Finance Documents to which it is a party; and 

  

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

  

	 	(B)	 	a specimen of the signature of each person authorised by the resolution referred to in paragraph (A) above; 

  

	 	(C)	 	a certificate of an authorised signatory of each Borrower certifying that each copy document specified in this paragraph 2 is correct, complete and in full force and effect as at
a date no earlier than the date of this Agreement. 

  

	3.	 	Guarantors 

  

	 	(A)	 	A copy of a resolution of the board of directors of each Guarantor (or of a Committee of that board, accompanied by a copy of a resolution of that board appointing the relevant Committee):

  

	 	(i)	 	approving the terms of, and the transactions contemplated by, this Agreement and the other Finance Documents and resolving that it execute this Agreement and those Finance Documents to which
it is a party; 

  

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

  

 81 

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

  

	 	(B)	 	a certificate of an authorised signatory of each Borrower certifying that each copy document specified in this paragraph 3 is correct, complete and in full force and effect as at
a date no earlier than the date of this Agreement; 

  

	 	(C)	 	a copy of a resolution of the shareholders of each Obligor (other than the Company) of the guarantees and security to be provided by that Company pursuant to the Finance Documents.

  

	4.	 	Legal opinions 

  

	 	(A)	 	A legal opinion of English legal advisers to British Energy PLC, substantially in the form of Schedule 4, Part 1, addressed to the Secretary of State.

  

	 	(B)	 	A legal opinion of Scottish legal advisers to British Energy PLC, substantially in the form of Schedule 4, Part II, addressed to the Secretary of State.

  

	 	(C)	 	A legal opinion of U.S. legal advisers to British Energy PLC, substantially in the form of Schedule 4, Part III addressed to the Secretary of State. 

  

	5.	 	Security Documents 

  

	 	(A)	 	The following documents in agreed form duly executed and delivered by all parties thereto: 

  

	 	(i)	 	the Debenture; 

  

	 	(ii)	 	the Share Mortgages 

  

	 	(iii)	 	any other Security Documents (provided that the Parties acknowledge that the security to be provided by British Energy US Holdings Inc. will be in a form satisfactory to the Secretary of
State save that the terms of such security will state that it shall not be effective to any extent that it would cause a material breach of any contract on the part of a Member of the Group). 

  

	 	(B)	 	The security notices, releases. consents necessary for the security to become effective. 

  

	 	(C)	 	Share certificates in relation to those shares subject to the Share Mortgages together with: 

  

	 	(i)	 	stamped executed stock transfer forms in favour of the Secretary of States or her nominee or other relevant transfer documents in relation to those shares; and 

  

 82 

	 	(ii)	 	a certified extract of the register of members of each company whose shares are subject to a legal mortgage, updated to reflect the stock transfers referred to in (i) above.

  

	6.	 	Company searches 

  
 A search of each Obligor’s register of mortgages and charges and company file at the Companies Registry or Register showing, amongst other things, no Security
Interests (other than Permitted Security Interests) and no appointment of (or presentation of any petition in relation to any appointment of) a receiver, liquidator or administrator. 
  

	7.	 	Other documents 

  

	 	(A)	 	A list of all Subsidiaries of the Company on the date of this Agreement. 

  

	 	(B)	 	A copy of the Trading Manuals and Guidelines. 

  

	 	(C)	 	A statement of anticipated cash and collateral requirements referred to in Clause 14.7(B) (Financial Statements). 

  

	 	(D)	 	The information to be provided to the Secretary of State under Clause 15.5 (Information to be Provided) on the date of this Agreement: 

  

	 	(i)	 	Borrowing Lines under paragraph (D); 

  

	 	(ii)	 	Weekly Report under paragraph (H); 

  

	 	(iii)	 	Schedule of trading counterparties and future Utilisations under paragraph (I). 

  

	 	(E)	 	The Original Group Accounts. 

  

 83 

 SCHEDULE 2 
 PART II 
 CONDITIONS PRECEDENT DOCUMENTS 
 FOR ADDITIONAL OBLIGORS 
  
 In respect of each proposed
Additional Obligor 
  

	 	(A)	 	A copy of a resolution of the board of directors of that company (or a Committee of that board, accompanied by a copy of a resolution of that board appointing the relevant Committee):

  

	 	(i)	 	approving the terms of this Agreement and of the Accession Letter; 

  

	 	(ii)	 	authorising a specified person or persons to execute the Accession Letter. 

  

	 	(iii)	 	authorising a specified person or persons on its behalf to sign and/or despatch all other documents and notices (including Requests) to be signed and/or despatched by it in accordance with
this Agreement. 

  

	 	(B)	 	A copy of the memorandum and articles of association and certificate of incorporation of the Additional Obligor. 

  

	 	(C)	 	A specimen of the signature of each person authorised by the resolution referred to in paragraph (A) above. 

  

	 	(D)	 	A certificate of an authorised signatory of the Additional Obligor certifying that each copy document specified in this Part II of Schedule 2 is correct, complete and in full force and effect
as at a date no earlier than the date of this Agreement. 

  

	 	(E)	 	Any additional documents required by the Secretary of State to enable the Secretary of State to be granted security on terms satisfactory to her, including Security Documents.

  

	 	(F)	 	Such other documents and legal opinions as the Secretary of State may reasonably require. 

  

 84 

 SCHEDULE 3 
 PART I 
 FORM OF LOAN REQUEST 
  
 To:        The Secretary of State for Trade and Industry 
  
 From:    [Relevant Borrower] 
  
 Date: [                     ] 
  
 British Energy plc Revolving Credit Facility dated [    ]
September, 2002 (as amended) 
  

	1.	 	We wish to borrow a Loan as follows: 

  

	 	(a)	 	Facility B 

  

	 	(b)	 	Utilisation Date: [                    ] 

  

	 	(c)	 	Amount: [                    ] 

  

	 	(c)	 	Interest Period: [                    ] 

  

	 	(c)	 	Payment instructions: [                    ] 

  

	 	(f)	 	Proposed use of loan (in reasonable detail): [                    ]

  

	2.	 	We attach the latest Weekly Report (unless previously provided) prepared pursuant to Clause 15.5 of the Agreement together with copies of such documents as are necessary or desirable
to explain the proposed use of the requested Loan and to enable the Secretary of State to determine whether such usage would be for an Approved Working Capital Purpose. We undertake to apply any Loan made only for an Approved Working Capital
Purpose. 

  

	3.	 	We confirm that each condition specified in Clause 4.2(A), (B) and (E) (Further conditions precedent) is satisfied on the date of this Request. 

 
 By: 
  
 [RELEVANT BORROWER] 
 Authorised Signatory 
  

 85 

 SCHEDULE 3 
 PART II 
 FORM OF DEPOSIT REQUEST 
  
 To:        The Secretary of State for Trade and Industry 
  
 From:    [Relevant Borrower] 
  
 Date: [                    ] 
  
 British Energy plc Revolving Credit Facility dated [    ]
September, 2002 (as amended) 
  

	1.	 	We request that the Secretary of State make a deposit as follows: 

  

	 	(a)	 	Utilisation Date: [                    ] 

  

	 	(b)	 	Amount and currency: [                    ] 

  

	 	(c)	 	Beneficiary: [                    ] 

  

	 	(d)	 	Details of contractual or other requirement for the provision of collateral in favour of the proposed
Beneficiary: [                    ] 

  

	 	(e)	 	Deposit Bank: [                    ] 

  

	 	(f)	 	Facility [A/B] 

  

	2.	 	We attach the latest Weekly Report (unless previously provided) together with [(i) a copy of our contract with the proposed beneficiary under which we are required to procure the provision of
cash collateral][if applicable]; and (ii)] copies of such other documents as are necessary or desirable to explain the purpose of the proposed Deposit and to enable the Secretary of State to determine whether the making of a Deposit secured
for the benefit of the proposed beneficiary would be made for an Approved Beneficiary, including a summary of relevant negotiations undertaken or in progress with the proposed beneficiary. 

  

	3.	 	We confirm that each condition specified in Clause 4.2(A), (B) and (E) (Further conditions precedent) is satisfied on the date of this Request and that the transaction to
be supported by the Deposit requested hereunder will [if concluded] be effected and conducted in accordance with all applicable law, regulation and contractual documentation. 

  
 By: 
  
 [RELEVANT BORROWER] 
 Authorised Signatory 
  

 86 

 SCHEDULE 4 
 PART I 
 FORM OF LEGAL OPINION OF CLIFFORD CHANCE 
  
 Form agreed by Clifford Chance and Slaughter and May. 
  

 87 

 SCHEDULE 4 
 PART II 
 FORM OF LEGAL OPINION OF SCOTTISH LAWYERS 
  
 Form agreed by Clifford Chance and Slaughter and May. 
  

 88 

 SCHEDULE 4 
 PART III 
 FORM OF LEGAL OPINION OF US LAWYERS 
  
 Form agreed by Clifford Chance and Slaughter and May. 
  

 89 

 SCHEDULE 5 
 FORM OF DEED OF CHARGE 
 PART I 
  
 THIS CHARGE ON CASH DEPOSIT dated [            ] 2003 is made as a deed 
  
 BY 
  
 THE SECRETARY OF STATE FOR TRADE AND INDUSTRY of One Victoria Street, London, SW1H 0ET (the “Chargor”) in favour of
[                    ] (the “Chargee”). 
  
 NOW THIS DEED WITNESSES as follows:- 
  

	1.	 	Definitions 

  
 In this deed:- 
  
 “Account” means
the account (number [                    ] designated “Secretary of State for Trade and Industry Re: [name of Chargee]”) of
the Chargor opened by the Chargor at the request of BE Company with the Deposit Bank, and includes any renewal or re-designation thereof. 
  
 “BE Company” means [                    ].

  
 “Charge” means all or any of the Security created, or
which may at any time be created, by or pursuant to this deed. 
  
 “Charge Period” means the period from and including the date of this deed to and including the earlier of: 
  

	 	(A)	 	the date on which alternative Security, or a guarantee, letter of credit or any other credit support (however described) from a person, reasonably acceptable to the Chargee or otherwise
sufficient under the terms of the Trading Contract has been provided in substitution for this deed; 

  

	 	(B)	 	the date on which no collateral, guarantee, letter of credit or other credit support (however described) is required to be provided or procured by BE Company under the Trading Contract; and

  

	 	(C)	 	the date on which no Transactions are outstanding. 

  
 “Deposit” means the sum of £ [            ] credited, or to be credited, to the
Account and any further sums from time to time standing to the credit of the Account (as such sums may be reduced in accordance with clause 11.2), and, subject to clause 3.2, all 
  

 90 

 
entitlements to interest and other Rights from time to time accruing to or arising in connection with such sums, and the debt represented thereby. 
  
 “Deposit Bank” means HSBC Bank plc, Poultry & Princess Street
Branch, of c/o Mr D. M. Phillips, 27-32 Poultry, London, EC2P 2BX. 
  
 “Event of Default” means a failure by BE Company during the Charge Period only to pay when due and payable (subject to any applicable grace period) any amount payable by it to the Chargee under the Trading Contract.

  
 “Facility Agreement” means the facility agreement
dated 9th September 2002 between (amongst others) British Energy plc and the Chargor. 
  
 “Rights” means rights, benefits, powers, privileges, authorities, discretions and remedies (in each case, of any nature whatsoever). 
  
 “Secured Sums” means all moneys and liabilities which become due and payable to the Chargee from or by BE Company
under the Trading Contract on or prior to the last day of the Charge Period. 
  
 “Security” means any mortgage, fixed or floating charge, encumbrance, lien (other than as may arise by operation of law), pledge, hypothecation or assignment by way of security and any agreement or arrangement having
substantially the same economic or financial effect as any of the foregoing (including any “hold back” or “flawed asset” arrangement). 
  
 “Trading Contract” means the contract specified in Schedule 1 and all transaction(s) entered into between BE Company and the Chargee under that
contract (the “Transactions”). 
  

	1.	 	Charge 

  
 The Chargor, as continuing security for the payment and discharge of all Secured Sums, charges the Deposit by way of first fixed charge in favour of the Chargee subject to the terms of this deed. 
  

	2.	 	Withdrawals and Interest 

  

	2.1	 	No Withdrawals 

  
 Subject to clauses 3.2 and 11.2, except with the prior written consent of the Chargee during the Charge Period the Chargor shall not withdraw all or any part of the Deposit. 
  

 91 

	2.2	 	Interest 

  
 Prior to the occurrence of an Event of Default, interest earned on the Deposit shall be for the account of the Chargor who shall be entitled to withdraw and retain all interest earned on the Deposit at any time prior to the
occurrence of an Event of Default. 
  

	3.	 	Instructions to Deposit Bank 

  
 The Chargor irrevocably authorises the Chargee following the occurrence of an Event of Default to give the Deposit Bank all instructions and notices which the
Chargee may from time to time and in its absolute and uncontrolled discretion consider necessary or appropriate in relation to any of the matters contemplated by this deed including, but without limitation, the enforcement of the Charge provided
that in each case the action required to be taken by the Deposit Bank would comply with all applicable laws and regulations. The Chargor shall do such things as the Chargee may reasonably require to ensure that the Chargee can exercise its rights
under this clause. 
  

	4.	 	Representations and Warranties 

  
 The Chargor represents and warrants to the Chargee that:- 
  

	 	(A)	 	it is the legal and beneficial owner of the Deposit; 

  

	 	(B)	 	no Security (other than the Charge) exists on, over or with respect to the Deposit or any part thereof; 

  

	 	(C)	 	it has not sold, transferred, assigned, parted with its interest in, closed or otherwise disposed of or dealt with the Account or the Deposit or any part thereof, or agreed to do any of the
foregoing (otherwise than pursuant to this deed); 

  

	 	(D)	 	it has the power to enter into, and perform and comply with its obligations under, this deed, and to create the Charge; 

  

	 	(E)	 	all actions, conditions and things required to be taken, fulfilled and done in order to (i) enable the Chargor lawfully to enter into, and perform and comply with its obligations under, this
deed, (ii) ensure that those obligations are valid, legal, binding and enforceable, (iii) permit the creation of the Charge and ensure that (subject to all necessary registrations thereof being made) the Charge is a valid, legal, binding and
enforceable first fixed charge over the Deposit, and (iv) make this deed admissible in evidence in the courts of England, have been taken, fulfilled and done; and 

  

	 	(F)	 	the obligations of the Chargor under this deed and (subject to all necessary registrations thereof being made) the Charge are and will be until fully discharged valid, legal, binding and
enforceable and the Charge constitutes a first fixed charge over the Deposit. 

  

 92 

	5.	 	Covenants 

  
 The Chargor shall:- 
  

	 	(A)	 	not create, attempt to create or permit to subsist any Security (other than the Charge) on, over or with respect to the Deposit or any part thereof; 

  

	 	(B)	 	not sell, transfer, assign, part with its interest in, close or otherwise dispose of or deal with, the Account or the Deposit or any part thereof, or agree to do any of the foregoing
(otherwise than pursuant to this deed); 

  

	 	(C)	 	take all action within its power to procure, maintain in effect and comply with all the terms and conditions of all approvals, authorisations, consents and registrations necessary or
appropriate for anything provided for on its part in this deed; and 

  

	 	(D)	 	ensure that the Charge will at all times be a legally valid and binding first fixed charge over the Deposit. 

  

	6.	 	Enforcement 

  

	6.1	 	Appropriation of Deposit 

  
 Upon the occurrence of an Event of Default, the Chargee shall be entitled, and is hereby irrevocably and unconditionally authorised, without giving prior notice to
the Chargor or obtaining the consent of the Chargor, during the Charge Period only to require payment by the Deposit Bank to the Chargee of such part of the Deposit as is equal to the Secured Sums which have become due and payable and to appropriate
the same in or towards payment of such Secured Sums or any part thereof. 
  

	6.2	 	Fixed period 

  
 Clause 7.1 shall apply notwithstanding that the Deposit or any part of it may have been made or deposited for a fixed period and that that period may not have expired. 
  

	7.	 	Continuing Security 

  
 The Charge shall until the end of the Charge Period be a continuing security for the Secured Sums and shall not be satisfied, discharged or affected by any
intermediate payment or settlement of account (whether or not any Secured Sums remain outstanding thereafter) or any other matter or thing whatsoever. 
  

	8.	 	Other Security 

  
 The Charge shall be in addition to and shall not be prejudiced by any other Security or any guarantee or indemnity or other document which the Chargee may at any time hold for the payment of the Secured Sums. 
  

 93 

	9.	 	Charge not to be Affected 

  
 Without prejudice to clauses 7 and 8, neither the Charge nor the liability of the Chargor for the Secured Sums shall be prejudiced or affected by anything
done or omitted or neglected to be done by the Chargee or any other person or any other dealing, fact, matter or thing which, but for this provision, might operate to prejudice or affect the liability of the Chargor for the Secured Sums. 

 

	10.	 	Changes to the Deposit 

  

	10.1	 	Full Release 

  

	 	(A)	 	Immediately upon the expiry of the Charge Period, the Deposit shall be released from the Charge and all the rights and obligations of the Chargee under or in connection with this deed shall
terminate. Upon such release and termination: 

  

	 	(i)	 	the Chargee shall have no further rights, liabilities or obligations under this deed, save that such release and termination shall not affect any rights, liabilities or obligations of the
Chargee with respect to any obligations due to be performed on or prior to the last day of the Charge Period; and 

  

	 	(ii)	 	the Chargee shall at the request of the Chargor execute such deeds and do all such acts and things as may be necessary to release the Deposit from the Charge. 

  

	 	(B)	 	Without limiting clause 11.1(A), if the Chargee is satisfied that all Secured Sums have been paid or discharged in full then the Chargee shall at the request of the Chargor execute
such deeds and do all such acts and things as may be necessary to release the Deposit from the Charge. 

  

	10.2	 	Partial Release 

  
 Prior to the occurrence of an Event of Default, the Chargee is required to: 
  

	 	(A)	 	determine in accordance with standard market practice or as may otherwise be provided in the Trading Contract at the close of business on Friday of each week the amount of collateral or
credit support (the “Determined Amount”) reasonably required to be provided or procured by BE Company in relation to Transactions outstanding under the Trading Contract at that time or, having regard to anticipated trading levels
and market volatility, reasonably likely to be required to be provided or procured by BE Company in relation to the Trading Contract in respect of Transactions entered into during the course of the following week; and 

  

	 	(B)	 	notify the Determined Amount to the Chargor no later than close of business on the following Monday. 

  

 94 

 If the Determined Amount is less than the amount of the Deposit by not less than £[·], then prior to the
occurrence of an Event of Default, the Chargor shall be entitled to withdraw and retain the amount by which the Determined Amount is less than the amount of the Deposit. 
  

	10.3	 	Increase 

  
 Without any obligation arising on the part of the Chargor in favour of the Chargee or any other person, the Chargor confirms that the Facility Agreement contemplates that further amounts may in the future be added to the
Deposit upon delivery of a request to the Chargor by or on behalf of BE Company, subject always to the terms and conditions governing the Facility Agreement including, without limitation, the need for the Chargor to be satisfied as to the
appropriateness of the amount to be added to the Deposit. 
  

	11.	 	Limited Recourse 

  
 Recourse against or to the Chargor in respect of the Secured Sums is in all cases limited to the Deposit. In the event that the Secured Sums exceed the amount of
the Deposit and if the Chargee would otherwise have any right to claim payment from the Chargor of any amount exceeding the amount of the Deposit, such right shall be automatically extinguished. 
  

	12.	 	Communications 

  

	12.1	 	Communications to be in Writing 

  
 Any communication given or made under or in connection with the matters contemplated by this deed shall be by fax or letter and will be effective on actual receipt
in legible form. 
  

	12.2	 	Chargor’s details 

  
 The relevant details for notices to the Chargor are:- 
  

	 Addressee    

	  	 Address

	  	 Fax No.

	The Department of Trade and Industry. Attention: Curtis Juman	  	One Victoria Street London, SW1H 0ET	  	020 7215 6357

  

	13.	 	Contracts (Rights of Third Parties) Act 1999 

  
 This deed confers a benefit on the Chargee and is intended to be enforceable by the Chargee by virtue of the Contracts (Rights of Third Parties) Act 1999. Save as
expressly provided in this clause, a person who is not a party to this deed shall have no right to enforce any of its terms by virtue of the Contracts (Rights of Third Parties) Act 1999. 
  

 95 

	14.	 	Governing Law 

  
 This deed shall be governed by and construed in accordance with English law. 
  

	15.	 	Waiver of Sovereign Immunity 

  

	 	(A)	 	The Chargor consents generally to the issue of any process in connection with any proceedings, suits or actions arising out of or in connection with this deed (“Proceedings”)
and to the giving of any type of relief or remedy against it, including the making, enforcement or execution against the Deposit of any order or judgment. 

  

	 	(B)	 	If Chargor or the Deposit is entitled in any jurisdiction to any immunity from service of process or of other documents relating to Proceedings, or to any immunity from jurisdiction, suit,
judgment, execution, attachment (whether before judgment, in aid of execution or otherwise) or other legal process, this is irrevocably waived to the fullest extent permitted by the law of that jurisdiction. 

  
 IN WITNESS WHEREOF the Chargor has executed this document as a deed the day and year first
before written. 
  

 96 

 SCHEDULE 1 
  
 Contract 
  

	Date

	 	Parties

	 	 	Contract Description

	 
	 [                    ]
	 	[                    	]	 	[                    	]

  

 97 

	 The Corporate Seal
 of the SECRETARY OF STATE
 FOR TRADE & INDUSTRY
 hereto affixed is authorised by
	 	  
  

 An Official of the Department
 of Trade &
Industry

  

 98 

 SCHEDULE 5 
 FORM OF DEED OF CHARGE 
 PART II (Suppliers) 
  
 THIS CHARGE ON CASH DEPOSIT dated [            ] 2003 is made as a deed 

 
 BY 
  

THE SECRETARY OF STATE FOR TRADE AND INDUSTRY of [                    ]
(the “Chargor”) in favour of [                    ] (the “Chargee”). 
  
 NOW THIS DEED WITNESSES as follows:- 
  

	1.	 	Definitions 

  
 In this deed:- 
  
 “Account” means
the [                    ] account (number [            ] designated
“[                ]”) of the Chargor opened by the Chargor at the request of BE Company with the Deposit Bank, and includes any renewal or re-designation
thereof. 
  
 “BE Company” means
[                    ]. 
  
 “Charge” means all or any of the Security created, or which may at any time be created, by or pursuant to this deed. 
  
 “Charge Period” means the period from and including the date of this
deed to and including the earlier of: 
  

	 	(A)	 	the date on which alternative Security, or a guarantee or a letter of credit from a person, reasonably acceptable to the Chargee has been provided in substitution for this deed;

  

	 	(B)	 	[DATE] or such earlier date notified by the Chargor on [    ] business days’ prior written notice; and 

  

	 	(C)	 	the date on which all Secured Sums have been paid and/or discharged in full. 

  
 “Deposit” means the sum of £[        ] credited, or to be credited, to the Account and any further
sums from time to time standing to the credit of the Account (as such sums may be reduced in accordance with clause 11.2), and, subject to clause 3.2, all entitlements to interest and other Rights from time to time accruing to or
arising in connection with such sums, and the debt represented thereby. 
  
 “Deposit Bank” means [                    ] of
[                    ]. 
  

 99 

 “Event of Default” means a failure by BE Company during the Charge Period only to pay when due and
payable (subject to any applicable grace period) any amount payable by it to the Chargee under any Trading Contract. 
  
 “Rights” means rights, benefits, powers, privileges, authorities, discretions and remedies (in each case, of any nature whatsoever). 
  
 “Secured Sums” means all moneys and liabilities which become due and
payable to the Chargee from or by BE Company under the Trading Contracts (or any of them) on or prior to the last day of the Charge Period. 
  
 “Security” means any mortgage, fixed or floating charge, encumbrance, lien (other than as may arise by operation of law), pledge, hypothecation or
assignment by way of security and any agreement or arrangement having substantially the same economic or financial effect as any of the foregoing (including any “hold back” or “flawed asset” arrangement). 
  
 “Trading Contracts” means the contracts specified in Schedule 1 (as
the same may be varied, amended or supplemented by written agreement between the parties thereto from time to time) and all transaction(s) entered into between BE Company and the Chargee under any of those contracts (the
“Transactions”). 
  

	2.	 	Charge 

  
 The Chargor, as continuing security for the payment and discharge of all Secured Sums, charges the Deposit by way of first fixed charge in favour of the Chargee subject to the terms of this deed. 
  

	3.	 	Withdrawals and Interest 

  

	3.1	 	No Withdrawals 

  
 Except with the prior written consent of the Chargee and subject to clauses 2.2 and 10.2, during the Charge Period the Chargor shall not withdraw all or any part of the Deposit. 
  

	3.2	 	Interest 

  
 Prior to the occurrence of an Event of Default, interest earned on the Deposit shall be for the account of the Chargor who shall be entitled to withdraw and retain all interest earned on the Deposit at any time prior to the
occurrence of an Event of Default. 
  

	4.	 	Instructions to Deposit Bank 

  
 The Chargor irrevocably authorises the Chargee following the occurrence of an Event of Default to give the Deposit Bank all instructions and notices which the
Chargee may from time to time and in its absolute and uncontrolled discretion consider necessary or appropriate in relation to any of the matters contemplated by this deed including, but without limitation, the enforcement of the Charge provided
that in each case the action 
  

 100 

 required to be taken by the Deposit Bank would comply with all applicable laws and regulations. The Chargor shall
do such things as the Chargee may reasonably require to ensure that the Chargee can exercise its rights under this clause. 
  

	5.	 	Representations and Warranties 

  
 The Chargor represents and warrants to the Chargee that:- 
  

	 	(A)	 	it is the legal and beneficial owner of the Deposit; 

  

	 	(B)	 	no Security (other than the Charge) exists on, over or with respect to the Deposit or any part thereof; 

  

	 	(C)	 	it has not sold, transferred, assigned, parted with its interest in, closed or otherwise disposed of or dealt with the Account or the Deposit or any part thereof, or agreed to do any of the
foregoing (otherwise than pursuant to this deed); 

  

	 	(D)	 	it has the power to enter into, and perform and comply with its obligations under, this deed, and to create the Charge; 

  

	 	(E)	 	all actions, conditions and things required to be taken, fulfilled and done in order to (i) enable the Chargor lawfully to enter into, and perform and comply with its obligations under, this
deed, (ii) ensure that those obligations are valid, legal, binding and enforceable, (iii) permit the creation of the Charge and ensure that (subject to all necessary registrations thereof being made) the Charge is a valid, legal, binding and
enforceable first fixed charge over the Deposit, and (iv) make this deed admissible in evidence in the courts of England, have been taken, fulfilled and done; and 

  

	 	(F)	 	the obligations of the Chargor under this deed and (subject to all necessary registrations thereof being made) the Charge are and will be until fully discharged valid, legal, binding and
enforceable and the Charge constitutes a first fixed charge over the Deposit. 

  

	6.	 	Covenants 

  
 The Chargor shall:- 
  

	 	(A)	 	not create, attempt to create or permit to subsist any Security (other than the Charge) on, over or with respect to the Deposit or any part thereof; 

  

	 	(B)	 	not sell, transfer, assign, part with its interest in, close or otherwise dispose of or deal with, the Account or the Deposit or any part thereof, or agree to do any of the foregoing
(otherwise than pursuant to this deed); 

  

	 	(C)	 	take all action within its power to procure, maintain in effect and comply with all the terms and conditions of all approvals, authorisations, consents and 

  

 101 

	 	    	 	registrations necessary or appropriate for anything provided for on its part in this deed; and 

  

	 	(D)	 	ensure that the Charge will at all times be a legally valid and binding first fixed charge over the Deposit. 

  

	7.	 	Enforcement 

  

	7.1	 	Appropriation of Deposit 

  
 Upon the occurrence of an Event of Default, the Chargee shall be entitled, and is hereby irrevocably and unconditionally authorised, without giving prior notice to
the Chargor or obtaining the consent of the Chargor, during the Charge Period only to require payment by the Deposit Bank to the Chargee of such part of the Deposit as is equal to the Secured Sums which have become due and payable and to appropriate
the same in or towards payment of such Secured Sums or any part thereof. 
  

	7.2	 	Fixed period 

  
 Clause 7.1 shall apply notwithstanding that the Deposit or any part of it may have been made or deposited for a fixed period and that that period may not have expired. 
  

	8.	 	Continuing Security 

  
 The Charge shall until the end of the Charge Period be a continuing security for the Secured Sums and shall not be satisfied, discharged or affected by any
intermediate payment or settlement of account (whether or not any Secured Sums remain outstanding thereafter) or any other matter or thing whatsoever. 
  

	9.	 	Other Security 

  
 The Charge shall be in addition to and shall not be prejudiced by any other Security or any guarantee or indemnity or other document which the Chargee may at any time hold for the payment of the Secured Sums. 
  

	10.	 	Charge not to be Affected 

  
 Without prejudice to clauses 8 and 9, neither the Charge nor the liability of the Chargor for the Secured Sums shall be prejudiced or affected by anything
done or omitted or neglected to be done by the Chargee or any other person or any other dealing, fact, matter or thing which, but for this provision, might operate to prejudice or affect the liability of the Chargor for the Secured Sums including,
without limitation, any variation of any of the Trading Contracts or any time, indulgence or waiver granted by the Chargee to the BE Company. 
  

	11.	 	Release of Deposit 

  

	11.1	 	Full Release 

  

 102 

	 	(A)	 	Immediately upon the expiry of the Charge Period, the Deposit shall be released from the Charge and all the rights and obligations of the Chargee under or in connection with this deed shall
terminate. Upon such release and termination: 

  

	 	(i)	 	the Chargee shall have no further rights, liabilities or obligations under this deed, save that such release and termination shall not affect any rights, liabilities or obligations of the
Chargee with respect to any obligations due to be performed on or prior to the last day of the Charge Period; and 

  

	 	(ii)	 	the Chargee shall at the request of the Chargor execute such deeds and do all such acts and things as may be necessary to release the Deposit from the Charge. 

  

	 	(B)	 	Without limiting clause 11.1(A), if the Chargee is satisfied that all Secured Sums have been paid or discharged in full then the Chargee shall at the request of the Chargor execute such deeds
and do all such acts and things as may be necessary to release the Deposit from the Charge. 

  

	11.2	 	Partial Release 

  
 Prior to the occurrence of an Event of Default, the Chargee is required to: 
  

	 	(A)	 	determine in accordance with standard market practice or as may otherwise be provided in the Trading Contracts at the close of business on Friday of each week the amount of collateral or
credit support (the “Determined Amount”) reasonably required to be provided or procured by BE Company in relation to the Trading Contracts at that time; and 

  

	 	(B)	 	notify the Determined Amount to the Chargor no later than close of business on the following Monday. 

  
 If the Determined Amount is less than the amount of the Deposit by not less than [·], then prior to the occurrence of an Event of Default,
the Chargor shall be entitled to withdraw and retain the amount by which the Determined Amount is less than the amount of the Deposit. 
  

	12.	 	Limited Recourse 

  
 Recourse against or to the Chargor in respect of the Secured Sums is in all cases limited to the Deposit. In the event that the Secured Sums exceed the amount of
the Deposit and if the Chargee would otherwise have any right to claim payment from the Chargor of any amount exceeding the amount of the Deposit, such right shall be automatically extinguished. 
  

 103 

	13.	 	Communications 

  

	13.1	 	Communications to be in Writing 

  
 Any communication given or made under or in connection with the matters contemplated by this deed shall be by fax or letter and will be effective on actual receipt
in legible form. 
  

	13.2	 	Chargor’s details 

  
 The relevant details for notices to the Chargor are:- 
  

	 Addressee    

	  	 Address

	  	 Fax No.

	 [             ]
	  	[            ]	  	[            ]

  

	14.	 	Contracts (Rights of Third Parties) Act 1999 

  
 This deed confers a benefit on the Chargee and is intended to be enforceable by the Chargee by virtue of the Contracts (Rights of Third Parties) Act 1999. Save as
expressly provided in this clause, a person who is not a party to this deed shall have no right to enforce any of its terms by virtue of the Contracts (Rights of Third Parties) Act 1999. 
  

	15.	 	Governing Law 

  
 This deed shall be governed by and construed in accordance with English law. 
  

	16.	 	Waiver of Sovereign Immunity 

  

	 	(A)	 	The Chargor consents generally to the issue of any process in connection with any proceedings, suits or actions arising out of or in connection with this deed (“Proceedings”)
and to the giving of any type of relief or remedy against it, including the making, enforcement or execution against the Deposit of any order or judgment. 

  

	 	(B)	 	If Chargor or the Deposit is entitled in any jurisdiction to any immunity from service of process or of other documents relating to Proceedings, or to any immunity from jurisdiction, suit,
judgment, execution, attachment (whether before judgment, in aid of execution or otherwise) or other legal process, this is irrevocably waived to the fullest extent permitted by the law of that jurisdiction. 

  
 IN WITNESS WHEREOF the Chargor has executed and delivered this document as a deed the day and
year first before written. 
  

 104 

 SCHEDULE 1 
  
 Contract 
  

	 Date

	  	 Parties

	  	 Contract Description

	 [                 ]
	  	[                ]	  	[                ]

  

 105 

	 The Corporate Seal
 of the SECRETARY OF STATE
 FOR TRADE & INDUSTRY
 hereto affixed is authorised by
	 	  
  

 An Official of the Department
 of Trade &
Industry

  

 106 

 SCHEDULE 6 
 APPROVED WORKING CAPITAL PURPOSES 
  

	(1)	 	As at 7th March, 2003, the Approved Working Capital Purposes are: 

  

	 	(a)	 	payment of amounts due to counterparties under electricity trading contracts entered into in accordance with the Trading Manuals and Guidelines and payments for ROCs in accordance with
Clause 15.25(B); 

  

	 	(b)	 	payment of amounts due under the Balancing and Settlement Code, Connection and Use of System Code, Grid Code and equivalent obligations in Scotland; 

  

	 	(c)	 	payment of wages, salaries, rents, other operating expenses and necessary capital expenditure arising in the ordinary course of trading of the Obligors; 

  

	 	(d)	 	payment of taxes; and 

  

	 	(e)	 	payments in accordance with Clause 15.27 (Payments in respect of Borrowed Money and payments to Financial Creditors). 

  

	(2)	 	For the avoidance of doubt, whether any bonuses or termination payments to any director or officer of any Obligor comprise an Approved Working Capital Purpose shall, on each Utilisation, be
at the discretion of the Secretary of State. 

  

 107 

 SCHEDULE 7 
 APPROVED BENEFICIARIES 
  
 Approved Beneficiaries are: 
  

	(1)	 	counterparties in respect of obligations arising out of trading under the New Electricity Trading Arrangements and in relation to trading arrangements in Scotland, ISDA agreements related to
electricity and other electricity trading agreements, that have been entered into by BEPET or BEG, in each case, in the ordinary course of its business and in accordance with the Trading Manuals and Guidelines; 

  

	(2)	 	Elexon Clear Limited and Elexon Limited in respect of obligations arising under or in connection with the Balancing and Settlement Code; 

  

	(3)	 	The National Grid Company plc in respect of obligations arising under the connection and use of System Code or the Grid Code and Scottish Power in relation to transmission arrangements in
Scotland and distribution company counterparties in relation to Distribution Use of System Contracts; 

  

	(4)	 	HSBC Bank plc in connection with Documentary Credit Number DCSLD1710262 issued in favour of Elexon Clear Limited in the amount of £5,000,000; 

  

	(5)	 	The Royal Bank of Scotland plc in connection with certain documentary credits and bonds as agreed by the Secretary of State prior to the date of this Agreement (but not including the letter
of credit issued by The Royal Bank of Scotland plc in favour of Barclays Bank PLC in its capacity as account bank under the Eggborough project financing facilities); 

  

	(6)	 	suppliers to a Borrower who require collateral in relation to work or orders placed in the ordinary course of business; and 

  

	(7)	 	HSBC Bank plc and Clydesdale Bank plc. 

  

 108 

 SCHEDULE 8 
 FORM OF ACCESSION LETTER 
  
 To:        The Secretary of State for Trade and Industry 
  
 From:    [New Obligor] and [Company] 
  
 [DATE] 
  
 Dear Sirs, 
  
 British Energy Credit Agreement 
 dated [            ] (as amended, the “Agreement”) 
  

	1.	 	We refer to the Agreement. This is an Accession Letter. Terms defined in the Agreement have the same meaning in this Accession Letter unless given a different meaning in this Accession
Letter. 

  

	2.	 	[New Obligor] agrees to become an [Additional Borrower/Additional Guarantor] and to be bound by the terms of the Agreement as an [Additional Borrower/ Additional Guarantor] pursuant to
Clause 17.2 (Additional Obligors) of the Agreement. [New Obligor] is a company duly incorporated under the laws of [name of relevant jurisdiction]. 

  

	3.	 	[New Obligor’s] administrative details are as follows: 

  
 Address: 
  
 Fax No.: 
  
 Attention: 
  

	4.	 	This Accession Letter is governed by English law. 

  

	 [Company] 
	 [New Obligor] 

  

 109 

 SCHEDULE 9 
 MONTHLY AVAILABLE AMOUNTS UNDER EACH FACILITY 
  
 (All
amounts are in Sterling) 
  

	 	  	FIRST
MONTH

	  	SECOND
MONTH

	  	THIRD
MONTH

	  	FOURTH
MONTH

	  	FIFTH
MONTH

	  	SIXTH
MONTH

	  	SEVENTH
MONTH

	 FACILITY A
	  	175,000,000	  	175,000,000	  	175,000,000	  	175,000,000	  	175,000,000	  	175,000,000	  	175,000,000
	 FACILITY B
	  	25,000,000	  	25,000,000	  	25,000,000	  	25,000,000	  	25,000,000	  	25,000,000	  	25,000,000

  
  

 110 

 SIGNATORIES 
  

	 SECRETARY OF STATE
 SIGNED by a senior official of
the Department of Trade and Industry duly authorised to sign on behalf of the Secretary of State
	  	 GRAHAM TURNOCK
	  	 
			
	 BORROWERS
 SIGNED for and on behalf of
 BRITISH ENERGY PLC acting by:
	  	 K G LOUGH
	  	 ROBERT ARMOUR

			
	 KEITH GEDDES LOUGH AND
 ROBERT MALCOLM ARMOUR
	  	 DIRECTOR
	  	 SECRETARY

			
	 SIGNED for and on behalf of
 BRITISH ENERGY GENERATION (UK)
LIMITED acting by:
	  	 K G LOUGH
	  	 ROBERT ARMOUR

			
	 KEITH GEDDES LOUGH AND
 ROBERT MALCOLM ARMOUR
	  	 DIRECTOR
	  	 SECRETARY

			
	 SIGNED for and on behalf of
 BRITISH ENERGY POWER ANDENERGY
TRADING LIMITED acting by:
	  	 K G LOUGH
	  	 ROBERT ARMOUR

			
	 KEITH GEDDES LOUGH AND
 ROBERT MALCOLM ARMOUR
	  	 DIRECTOR
	  	 SECRETARY

			
	 SIGNED for and on behalf of
 BRITISH ENERGY GENERATION LIMITED
acting by:
	  	 K G LOUGH
	  	 ROBERT ARMOUR

			
	 KEITH GEDDES LOUGH AND
 ROBERT MALCOLM ARMOUR
	  	 DIRECTOR
	  	 SECRETARY

  

 111 

 GUARANTORS 

	 SIGNED for and on behalf of
 BRITISH ENERGY PLC acting
by:
	  	 K G LOUGH
	  	 ROBERT ARMOUR

			
	KEITH GEDDES LOUGH AND ROBERT MALCOLM ARMOUR	  	 DIRECTOR
	  	 SECRETARY

			
	 SIGNED for and on behalf of
 BRITISH ENERGY GENERATION (UK)
LIMITED acting by:
	  	 K G LOUGH
	  	 ROBERT ARMOUR

			
	KEITH GEDDES LOUGH AND ROBERT MALCOLM ARMOUR	  	 DIRECTOR
	  	 SECRETARY

			
	 SIGNED for and on behalf of
 BRITISH ENERGY GENERATION LIMITED
acting by:
	  	 K G LOUGH
	  	 ROBERT ARMOUR

			
	KEITH GEDDES LOUGH AND ROBERT MALCOLM ARMOUR	  	 DIRECTOR
	  	 SECRETARY

			
	 SIGNED for and on behalf of
 BRITISH ENERGY POWER AND ENERGY
TRADING LIMITED acting by:
	  	 K G LOUGH
	  	 ROBERT ARMOUR

			
	KEITH GEDDES LOUGH AND ROBERT MALCOLM ARMOUR	  	 DIRECTOR
	  	 DIRECTOR/SECRETARY

			
	 SIGNED for and on behalf of
 BRITISH ENERGY INVESTMENT LIMITED
acting by:
	  	 K G LOUGH
	  	 ROBERT ARMOUR

			
	KEITH GEDDES LOUGH AND ROBERT MALCOLM ARMOUR	  	 DIRECTOR
	  	 DIRECTOR/SECRETARY

  

 112 

			
	 SIGNED for and on behalf of
 DISTRICT ENERGY LIMITED acting
by:
	  	 K G LOUGH
	  	 ROBERT ARMOUR

			
	KEITH GEDDES LOUGH AND ROBERT MALCOLM ARMOUR	  	 DIRECTOR
	  	 DIRECTOR/SECRETARY

			
	 SIGNED for and on behalf of
 BRITISH
ENERGY INTERNATIONAL HOLDINGS LIMITED acting by:
	  	 K G LOUGH
	  	 ROBERT ARMOUR

			
	KEITH GEDDES LOUGH AND ROBERT MALCOLM ARMOUR	  	 DIRECTOR
	  	 DIRECTOR

			
	 SIGNED for and on behalf of
 BRITISH ENERGY US HOLDINGS INC.
acting by:
	  	 K G LOUGH
	  	 JOHN YOUNG

			
	KEITH GEDDES LOUGH AND JOHN YOUNG	  	 DIRECTOR
	  	 SECRETARY

		
	 SIGNED for and on behalf of
 BRITISH ENERGY L.P. acting
by:
	  	 BRITISH ENERGY US INVESTMENTS LLC
 GENERAL PARTNER

			
	KEITH GEDDES LOUGH AND JOHN YOUNG	  	 K G LOUGH
	  	 JOHN YOUNG

			
	 	  	 DIRECTOR
	  	 SECRETARY

  
  
  

 113 

 CONFORMED COPY 
  
 DATE: 7th March, 2003 
  
 THE SECRETARY OF STATE FOR TRADE AND INDUSTRY 
  
 BRITISH ENERGY PLC 
  
 AND 
  
 OTHERS

  

  
 FURTHER EXTENSION AND AMENDMENT AGREEMENT 
 to a credit
facility agreement dated 
 26th September, 2002 (as amended) 
  

  
 Slaughter and May 
 One Bunhill Row 
 London EC1Y 8YY 
  
 (KIH/RCYS)

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