Document:

exhibit10t

EXECUTION VERSION  Dated ___________________ 2020  WESTERN POWER DISTRIBUTION  (EAST MIDLANDS) PLC  (as the Company)  and  MUFG BANK, LTD.  (as the Lender)  AMENDMENT AND RESTATEMENT  AGREEMENT  relating to an inflation linked loan dated 24 May 2016  99 Bishopsgate  London EC2M 3XF  United Kingdom  Tel: +44.20.7710.1000  www.lw.com  30 SEPTEMBER Exhibit 10(t) 

 

EU-DOCS\29917305.5  CONTENTS  Clause Page  1. INTERPRETATION ............................................................................................................... 3  2. AMENDMENT AND RESTATEMENT OF THE ORIGINAL FACILITY AGREEMENT ......................................................................................................................... 4  3. INTEREST AND SWAP BREAK COSTS ............................................................................ 4  4. REPRESENTATIONS AND WARRANTIES ...................................................................... 5  5. COSTS AND EXPENSES ....................................................................................................... 5  6. MISCELLANEOUS ................................................................................................................. 5  7. GOVERNING LAW ................................................................................................................ 5  SCHEDULE 1........................................................................................................................................ 6  CONDITIONS PRECEDENT  SCHEDULE 2........................................................................................................................................ 7  AMENDED AND RESTATED FACILITY AGREEMENT  

 

EU-DOCS\29917305.5  THIS AMENDMENT AND RESTATEMENT AGREEMENT (the “Agreement”) is dated  ___________________ 2020  BETWEEN:  (1) WESTERN POWER DISTRIBUTION (EAST MIDLANDS) PLC (registered number 02366923) (the “Company”); and (2) MUFG BANK, LTD. (formerly known as the Bank of Tokyo-Mitsubishi UFJ, Ltd.) (the “Lender”). BACKGROUND  (A) The Company and the Lender entered into an inflation-linked facility agreement dated 24 May 2016 (the “Original Facility Agreement”) pursuant to which the Lender advanced the Loan to the Company in an amount equal to the Commitment on the Drawdown Date. (B) The parties hereto have agreed to amend and restate the Original Facility Agreement on the terms set out herein. IT IS AGREED as follows:  1. INTERPRETATION 1.1 Definitions In this Agreement: “Effective Date” means the later of the date upon which: (a) each party has signed this Agreement (whether the same or different counterparts); and (b) the Lender has notified the Company that it has received the documents and evidence set out in Schedule 1 (Conditions Precedent) in form and substance satisfactory to it (such notification to be given as soon as reasonably practicable upon the Lender being so satisfied). “Financial Statements” means the audited consolidated financial statements of the Company  for the year ended 31 March 2020.  “Original Interest Period” means the Interest Period for the Loan commencing on 31 March  2020 and ending on 30 September 2020.  “Restated Facility Agreement” means the Original Facility Agreement, as amended and  restated by this Agreement or, as the context requires, the form of amended and restated facility  agreement set out in Schedule 2 (Amendment and Restated Facility Agreement).  1.2 Construction  (a) Unless otherwise defined in this Agreement, terms defined in the Original Facility Agreement shall have the same meaning when used in this Agreement. (b) Clause 1.2 (Construction) of the Original Facility Agreement will be deemed to be set out in full in this Agreement, but as if references in such clauses to “this Agreement” were references to this Agreement. 30 SEPTEMBER 

 

EU-DOCS\29917305.5  1.3 Finance Document  The Company and the Lender hereby designate this Agreement as a “Finance Document” under  and as defined in the Original Facility Agreement and the Restated Facility Agreement.  2. AMENDMENT AND RESTATEMENT OF THE ORIGINAL FACILITY AGREEMENT  2.1 Facility Agreement  With effect from (and including) the Effective Date, the Original Facility Agreement is  amended and restated so that it reads and shall be construed for all purposes as set out in  Schedule 2 (Amended and Restated Facility Agreement).  2.2 Continuing Effect  (a) If the Effective Date does not occur, the Original Facility Agreement shall continue in full force and effect. (b) Any reference in the Restated Facility Agreement or any other Finance Document to the Original Facility Agreement or to any provision of the Original Facility Agreement will be construed as a reference to the Restated Facility Agreement or that provision, as amended and restated by this Agreement. 2.3 Further assurance  The Company shall, at the reasonable request of the Lender and at its own expense, do all such  acts and things necessary or desirable to give effect to the amendment and restatement effected  or to be effected pursuant to this Agreement.  2.4 No Novation  Each of the parties to this Agreement confirms that the amendment of the Original Facility  Agreement pursuant to this Agreement shall not constitute a novation of the Original Facility  Agreement.  3. INTEREST AND SWAP BREAK COSTS 3.1 The Original Interest Period in respect of the Loan shall cease to accrue as at the date immediately preceding the Effective Date. 3.2 Any interest payable under Clause 3.1 above: (a) will be calculated at the relevant rate specified in the Original Facility Agreement for the period from and including the first day of the Original Interest Period to but excluding the Effective Date; and (b) will be settled by the Company within three Business Days of the Effective Date. 3.3 The parties to this Agreement agree, for the avoidance of doubt, that the Company shall not be  liable to the Lender for any Swap Break Costs payable by the Lender as a result of the Lender  closing out or unwinding the Related Swap Agreement on or about the date of this Agreement  in connection with the entry into of this Agreement by the parties hereto and/or the amendment  and restatement of the Original Facility Agreement on the Effective Date contemplated herein.  

 

EU-DOCS\29917305.5  4. REPRESENTATIONS AND WARRANTIES On the date of this Agreement and on the Effective Date, in each case by reference to the facts and circumstances then existing, the Company makes the representations set out in Clause 14 (Representations) of the Restated Facility Agreement as if references to “this Agreement” in or incorporated in such Repeating Representations are construed as references to this Agreement. 5. COSTS AND EXPENSES The Company shall, promptly on demand, pay to the Lender the amount of all costs and expenses (including legal fees) reasonably incurred by it in connection with the negotiation, preparation, printing and execution of this Agreement, in each case not exceeding any applicable caps or other limitations agreed with the Company prior to such costs and expenses being incurred. 6. MISCELLANEOUS 6.1 Counterparts This Agreement may be executed in any number of counterparts and this has the same effect as if the signatures on the counterparts were on a single copy of this Agreement. 6.2 Partial Invalidity If any provision of this Agreement is or becomes invalid, illegal or unenforceable in any respect under any law or regulations, the validity, legality or enforceability of the remaining provisions shall not be affected or impaired in any way. 6.3 Remedies and Waivers No failure to exercise, nor any delay in exercising, on the part of any party to this Agreement, any right or remedy under this Agreement shall operate as a waiver, nor shall any single or partial exercise of any right or remedy prevent any further or other exercise or the exercise of any other right or remedy. The rights and remedies provided in this Agreement are cumulative and not exclusive of any rights or remedies provided by law. 7. GOVERNING LAW This Agreement and any non-contractual obligations arising out of or in connection with it are governed by English law and the provisions of Clause 32.1 (Jurisdiction) of the Original Facility Agreement shall apply to this Agreement as if references in that Clause 32.1 to “this Agreement” were references to this Agreement. 

 

SCHEDULE 1  CONDITIONS PRECEDENT  1. CORPORATE DOCUMENTS 1.1 A copy of the constitutional documents of the Company. 1.2 A copy of a written resolution of the directors of the Company approving the terms of, and the transactions contemplated by, this Agreement. 1.3 A specimen of the signature of each person authorised on behalf of the Company to execute or witness the execution of this Agreement or to sign or send any document or notice in connection with this Agreement. 1.4 A certificate of the Company (signed by a director) confirming that borrowing the Commitment (as defined in the Restated Facility Agreement) would not cause any borrowing limit binding on the Company to be exceeded. 1.5 A certificate of an authorised signatory of the Company certifying that each copy document relating to it specified in this Schedule 1 is correct, complete and in full force and effect as at a date no earlier than the date of this Agreement. 2. LEGAL OPINIONS A legal opinion of Latham & Watkins, legal advisers to the Company, addressed to the Lender, substantially in the form distributed to the Lender prior to signing this Agreement. 

 

EU-DOCS\29917305.5  SCHEDULE 2  AMENDED AND RESTATED FACILITY AGREEMENT  

 

EU-DOCS\29914380.5  DATED 24 May 2016  as amended and restated as at the Effective Date (as defined herein) Between  WESTERN POWER DISTRIBUTION (EAST MIDLANDS) PLC  as the Company  and  MUFG BANK, LTD.   (formerly known as The Bank of Tokyo-Mitsubishi UFJ, Ltd.)  as Lender AMENDED AND RESTATED  INFLATION-LINKED TERM LOAN  AGREEMENT  GBP100,000,000  99 Bishopsgate  London EC2M 3XF    United Kingdom  Tel: +44.20.7710.1000  www.lw.com  RESTATED VERSION  

 

i  EU-DOCS\29914380.5  CONTENTS  Clause Page  1. INTERPRETATION ............................................................................................................... 1  2. THE FACILITY ..................................................................................................................... 14  3. PURPOSE ............................................................................................................................... 14  4. CONDITIONS PRECEDENT .............................................................................................. 14  5. DRAWDOWN ........................................................................................................................ 14  6. REPAYMENT ........................................................................................................................ 15  7. PREPAYMENT AND CANCELLATION .......................................................................... 15  8. INTEREST ............................................................................................................................. 16  9. TAX GROSS-UP AND INDEMNITIES .............................................................................. 17  10. INDEXATION ........................................................................................................................ 24  11. INCREASED COSTS ............................................................................................................ 27  12. MITIGATION ........................................................................................................................ 28  13. PAYMENTS ........................................................................................................................... 29  14. REPRESENTATIONS .......................................................................................................... 29  15. INFORMATION COVENANTS .......................................................................................... 33  16. FINANCIAL COVENANTS ................................................................................................. 35  17. GENERAL COVENANTS .................................................................................................... 37  18. DEFAULT ............................................................................................................................... 43  19. EVIDENCE AND CALCULATIONS .................................................................................. 47  20. INDEMNITY .......................................................................................................................... 47  21. EXPENSES ............................................................................................................................. 48  22. AMENDMENTS AND WAIVERS ....................................................................................... 49  23. CHANGES TO THE PARTIES ........................................................................................... 49  24. CONFIDENTIALITY AND DISCLOSURE OF INFORMATION .................................. 52  25. BAIL-IN .................................................................................................................................. 55  26. SET-OFF ................................................................................................................................. 57  27. SEVERABILITY ................................................................................................................... 57  28. COUNTERPARTS ................................................................................................................. 57  29. NOTICES ................................................................................................................................ 57  30. LANGUAGE ........................................................................................................................... 59  31. GOVERNING LAW .............................................................................................................. 59  32. ENFORCEMENT .................................................................................................................. 59  SCHEDULE 1...................................................................................................................................... 60  CONDITIONS PRECEDENT DOCUMENTS  SCHEDULE 2...................................................................................................................................... 61  

 

ii  EU-DOCS\29914380.5  FORM OF TRANSFER CERTIFICATE  SCHEDULE 3...................................................................................................................................... 64  FORM OF COMPLIANCE CERTIFICATE  SCHEDULE 4...................................................................................................................................... 65  FORM OF SUBORDINATION DEED  ANNEX 1 ............................................................................................................................................. 70  FORM OF SUBORDINATED CREDITOR ACCESSION DEED  ANNEX 2 ............................................................................................................................................. 73  FORM OF CERTIFICATE  

 

1  EU-DOCS\29914380.5  THIS AGREEMENT is dated 24 May 2016 and amended and restated as at the Effective Date and  made  BETWEEN:  (1) WESTERN POWER DISTRIBUTION (EAST MIDLANDS) PLC (registered number 02366923) (the “Company”); and (2) MUFG BANK, LTD. (formerly known as the Bank of Tokyo-Mitsubishi UFJ, Ltd.) (the “Lender”); IT IS AGREED as follows:  1. INTERPRETATION 1.1 Definitions In this Agreement: “2008 ISDA Inflation Derivatives Definitions” means the 2008 ISDA Inflation Derivatives Definitions published by the International Swaps and Derivatives Association, Inc. in 2008, as amended, supplemented or substituted prior to the Effective Date. “Acceptable Bank” means: (a) the Lender; (b) a bank or financial institution which has a rating for its long-term unsecured and non credit-enhanced debt obligations of A- or higher by Standard & Poor’s Rating Services or A- or higher by Fitch Ratings Ltd or A3 or higher by Moody’s Investor Services Limited or a comparable rating from an internationally recognised credit rating agency; or (c) any other bank or financial institution approved by the Lender (acting reasonably). “Acceptable Jurisdiction” means:  (a) the United States of America; (b) the United Kingdom; or (c) any other member state of the European Union or any Participating Member State where such country has long term sovereign credit rating of A- or higher by Standard & Poor’s Rating Services or A3 or higher from Moody’s Investor Services Limited or A- or higher from Fitch Ratings Ltd. “Accretion Mechanism” means, in relation to the Loan, multiplying £100,000,000 (being the  Commitment) by the Index Ratio calculated on the Rate Fixing Day for the then current  Interest Period, unless:  (a) such adjustment results in an amount less than £100,000,000, in which case the Loan is £100,000,000; or (b) such adjustment results in an amount greater than £200,000,000, in which case the Loan is £200,000,000. 

 

2  EU-DOCS\29914380.5  “Act” means the Electricity Act 1989 and, unless the context otherwise requires, all  subordinate legislation made pursuant thereto.  “Affiliate” means, in relation to any person, a Subsidiary or a Holding Company of that  person or any other Subsidiary of that Holding Company.  “Amendment and Restatement Agreement” means the amendment and restatement  agreement dated 30 September 2020 between the Company and the Lender amending and  restating this Agreement.  “Applicable Accounting Principles” means those accounting principles, standards and  practices generally accepted in the United Kingdom and the accounting and reporting  requirements of the Companies Act 2006, in each case as used in the audited consolidated  financial statements of the Company for the year ended 31 March 2020.  “Balancing and Settlement Code” means the document, as modified from time to time,  setting out the electricity balancing and settlement arrangements designated by the Secretary  of State and adopted by National Grid Electricity Transmission plc (Registered No. 2366977)  or its successor pursuant to its transmission licence.  “Balancing and Settlement Code Framework Agreement” means the agreement of that  title, in the form approved by the Secretary of State, as amended from time to time, to which  the Company is a party and by which the Balancing and Settlement Code is made binding  upon the Company.  “Bank Levy” means any amount payable by any Lender or any of its Affiliates on the basis  of, or in relation to, its balance sheet or capital base or any part of that person or its liabilities  or minimum regulatory capital or any combination thereof, including, without limitation, the  UK bank levy as set out in the Finance Act 2011, the French taxe bancaire de risque  systémique as set out in Article 235 ter ZE of the French Code Général des impôts, the  German bank levy as set out in the German Restructuring Fund Act 2010  (Restrukturierungsfondsgesetz) (as amended), the Dutch bankenbelasting as set out in the  bank levy act (Wet bankenbelasting), the Swedish bank levy as set out in the Swedish Act on  State Support to Credit Institutions (Sw. lag (2008:814) (lag om statligt stöd till  kreditinstitut)), or the Spanish bank levy (Impuesto sobre los Depósitos en las Entidades de  Crédito) as set out in the Law 16/2012 of 27 December 2012 and any levy or other Tax in any  jurisdiction levied on a similar basis or for a similar purpose or any financial activities taxes  (or other taxes) of a kind contemplated in the European Commission consultation paper on  financial sector taxation dated 22 February 2011 in each case, in the form existing on the  Effective Date or which has been formally announced as at the Effective Date, or if later the  date on which the Lender becomes a Lender under this Agreement.  “Base Index Figure” means the UKRPI figure published for March 2016 by the Office of  National Statistics, being 261.1.  “Basel III” means:  (a) the agreements on capital requirements, a leverage ratio and liquidity standards contained in “Basel III: A global regulatory framework for more resilient banks and banking systems”, “Basel III: International framework for liquidity risk measurement, standards and monitoring” and “Guidance for national authorities operating the countercyclical capital buffer” published by the Basel Committee on Banking Supervision in December 2010, each as amended, supplemented or restated; (b) the rules for global systematically important banks contained in “Global systematically important banks: assessment methodology and the additional loss 

 

3  EU-DOCS\29914380.5  absorbency requirement – Rules text” published by the Basel Committee on Banking  Supervision in November 2011, as amended, supplemented or restated; and  (c) any further guidance or standards published by the Basel Committee on Banking Supervision relating to “Basel III”. “Business Day” means a day (other than a Saturday or a Sunday) on which commercial banks  are open for general business in London, United Kingdom and Tokyo, Japan.  “Code” means the US Internal Revenue Code of 1986.  “Commitment” means £100,000,000, or zero if the Commitment has been cancelled or  transferred by the Lender pursuant to this Agreement.  “Compliance Certificate” means a certificate substantially in the form of Schedule 3 (Form  of Compliance Certificate) setting out, among other things, calculations of the financial  covenants.  “Confidential Information” means all information relating to the Company, the Group, the  Finance Documents or the Loan of which the Lender becomes aware in its capacity as, or for  the purpose of becoming, the Lender or which is received by the Lender in relation to, or for  the purpose of becoming the Lender under, the Finance Documents or the Loan from any  member of the Group or any of its advisers in whatever form, and includes information given  orally and any document, electronic file or any other way of representing or recording  information which contains or is derived or copied from such information but excludes  information that:   (a) is or becomes public information other than as a direct or indirect result of any breach by the Lender of Clause 24 (Confidentiality and Disclosure of Information); or (b) is identified in writing at the time of delivery as non-confidential by any member of the Group or any of its advisers; or (c) is known by the Lender before the date the information is disclosed to it by the relevant member of the Group or is lawfully obtained by the Lender after that date, from a source which is, as far as the Lender is aware, unconnected with the Group and which, in either case, as far as the Lender is aware, has not been obtained in breach of, and is not otherwise subject to, any obligation of confidentiality. “Confidentiality Undertaking” means a confidentiality undertaking substantially in a  recommended form of the LMA or in any other form agreed between the Company and the  Lender.  “Contribution Notice” means a contribution notice issued by the Pensions Regulator under  section 38 or section 47 of the Pensions Act 2004.  “CRD IV” means:  (a) Regulation (EU) No. 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms; and (b) Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms. “CTA” means the Corporation Tax Act 2009.  

 

4  EU-DOCS\29914380.5  “Default” means:  (a) an Event of Default; or (b) an event specified in Clause 18 (Default) which would be (with the lapse of time, the expiry of a grace period, the giving of notice or the making of any determination under the Finance Documents or any combination of them) an Event of Default. “Disruption Event” means either or both of:  (a) a material disruption to those payment or communications systems or to those financial markets which are, in each case, required to operate in order for payments to be made in connection with the Finance Documents (or otherwise in order for the transactions contemplated by the Finance Documents to be carried out) which disruption is not caused by, and is beyond the control of, any of the Parties; or (b) the occurrence of any other event which results in a disruption (of a technical or systems-related nature) to the treasury or payments operations of a Party preventing that, or any other Party: (i) from performing its payment obligations under the Finance Documents; or (ii) from communicating with other Parties in accordance with the terms of the Finance Documents, and which (in either such case) is not caused by, and is beyond the control of, the  Party whose operations are disrupted.   “Dodd-Frank” means the Dodd-Frank Wall Street Reform and Consumer Protection Act,  Pub. L. No. 111-203, 124 stat. 1376 (2010) and all requests, rules, guidelines or directives in  connection therewith.  “Drawdown Date” means 31 May 2016.  “Effective Date” has the meaning given to that term in the Amendment and Restatement  Agreement.  “Environment” means humans, animals, plants and all other living organisms including the  ecological systems of which they form part and the following media:  (a) air (including, without limitation, air within natural or man-made structures, whether above or below ground); (b) water (including, without limitation, territorial, coastal and inland waters, water under or within land and water in drains and sewers); and (c) land (including, without limitation, land under water). “Environmental Claim” means any claim, proceeding, formal notice or investigation by any  person in respect of any Environmental Law.  “Environmental Law” means any applicable law or regulation which relates to:  (a) the pollution or protection of the Environment; (b) the conditions of the workplace; or 

 

5  EU-DOCS\29914380.5  (c) the generation, handling, storage, use, release or spillage of any substance which, alone or in combination with any other, is capable of causing harm to the Environment, including, without limitation, any waste. “Event of Default” means an event specified as such in this Agreement.  “Facility Office” means the office notified by the Lender in writing to the Company on or  before the date of this Agreement through which it will perform its obligations under this  Agreement (or, in the case of a New Lender, the office notified to the Company in writing on  or prior to the date on which it becomes a New Lender) or such other office as it may from  time to time select by not less than five Business Days’ notice to the Company.  “FATCA” means:  (a) sections 1471 to 1474 of the Code or any associated regulations; (b) any treaty, law or regulation of any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of any law or regulation referred to in paragraph (a) above; or (c) any agreement pursuant to the implementation of any treaty, law or regulation referred to in paragraphs (a) or (b) above with the US Internal Revenue Service, the US government or any governmental or taxation authority in any other jurisdiction. “FATCA Application Date” means:  (a) in relation to a “withholdable payment” described in section 1473(1)(A)(i) of the Code (which relates to payments of interest and certain other payments from sources within the US), 1 July 2014; or (b) in relation to a “passthru payment” described in section 1471(d)(7) of the Code not falling within paragraph (a) above, the first date from which such payment may become subject to a deduction or withholding required by FATCA. “FATCA Deduction” means a deduction or withholding from a payment under a Finance  Document required by FATCA.  “FATCA Exempt Party” means a Party that is entitled to receive payments free from any  FATCA Deduction.  “Final Maturity Date” means 30 September 2030.  “Finance Document” means:  (a) this Agreement; (b) a Transfer Certificate; or (c) any other document designated as such by the Lender and the Company. “Financial Indebtedness” means any indebtedness for or in respect of:  (a) moneys borrowed; (b) any acceptance credit; 

 

   6  EU-DOCS\29914380.5  (c) any bond, note, debenture, loan stock or other similar instrument;  (d) any redeemable preference share;  (e) any finance or capital lease;  (f) receivables sold or discounted (otherwise than on a non-recourse basis);  (g) the acquisition cost of any asset to the extent payable after its acquisition or  possession by the party liable where the deferred payment is arranged primarily as a  method of raising finance or financing the acquisition of that asset;  (h) any derivative transaction protecting against or benefiting from fluctuations in any  rate or price (and, except for non-payment of an amount, the then mark to market  value of the derivative transaction will be used to calculate its amount);  (i) any other transaction (including any forward sale or purchase agreement) which has  the commercial effect of a borrowing;  (j) any counter-indemnity obligation in respect of any guarantee, indemnity, bond, letter  of credit or any other instrument issued by a bank or financial institution; or  (k) any guarantee, indemnity or similar assurance against financial loss of any person in  respect of any item referred to in paragraphs (a) to (j) above.  “Financial Support Direction” means a financial support direction issued by the Pensions  Regulator under section 43 of the Pensions Act 2004.  “Fixed Rate” means 28.50 bps (being 0.2850 per cent.).  “Group” means the Company and its Subsidiaries.  “Holding Company” means in relation to a person, any other person in respect of which it is  a Subsidiary.  “Increased Cost” means:  (a) an additional or increased cost;  (b) a reduction in the rate of return under a Finance Document or on the Lender’s (or its  Affiliate’s) overall capital; or  (c) a reduction of an amount due and payable under any Finance Document,  which is incurred or suffered by the Lender or any of its Affiliates but only to the extent  attributable to the Lender having entered into any Finance Document or funding or  performing its obligations under any Finance Document.  “Index” means the UKRPI or any Successor Index determined in accordance with the terms  of this Agreement.  “Index Figure” means, in respect of an Interest Period, the UKRPI figure published by the  Office of National Statistics for the Reference Month falling two calendar months prior to the  month in which the Interest Payment Date falls for such Interest Period.  “Index Ratio” means the Index Figure divided by the Base Index Figure (rounded to five  decimal places).  

 

   7  EU-DOCS\29914380.5  “Index Sponsor” means the entity that publishes or announces the Index Figure.   “Interest Payment Amount” has the meaning given to that term in Clause 8.1 (Calculation  of interest).   “Interest Payment Date” means the last day of each Interest Period.  “Interest Period” means each period determined in accordance with Clause 8.3 (Interest  Periods).  “ISDA Master Agreement” means the 1992 Master Agreement as published by the  International Swaps and Derivatives Association, Inc.  “ITA” means the Income Tax Act 2007.  “Legal Reservations” means:  (a) the principle that equitable remedies may be granted or refused at the discretion of a  court and the limitation of enforcement by laws relating to insolvency, reorganisation  and other laws generally affecting the rights of creditors;  (b) the time barring of claims under the Limitation Act 1980 and the Foreign Limitation  Periods Act 1984, the possibility that an undertaking to assume liability for or  indemnify a person against non-payment of UK stamp duty may be void and defences  of set-off or counterclaim;   (c) similar principles, rights and defences under the laws of any jurisdiction in which a  member of the Group or a Holding Company of the Company is incorporated; and  (d) any other matters which are set out as qualifications or reservations as to matters of  law of general application in any legal opinion provided under Schedule 1  (Conditions Precedent Documents) or under the Amendment and Restatement  Agreement.  “Licence” means:  (a) the electricity distribution licence made and treated as granted to the Company under  Section 6(1)(c) of the Act pursuant to a licensing scheme made by the Secretary of  State under Part II of Schedule 7 to the Utilities Act 2000 on 28 September 2001; or  (b) any statutory amendment or replacement licence or licences granted pursuant to the  Utilities Act 2000 which permit the Company to distribute electricity in the area it is  certified to operate in.  “LMA” means the Loan Market Association.  “Loan” means the loan made or to be made under this Agreement as adjusted on each Interest  Payment Date in accordance with the Accretion Mechanism.  “Mandatory Prepayment Event” has the meaning given to that term in Clause 10.1 (Delay  or Cessation of Publication).  “Material Adverse Effect” means a material adverse effect on:  (a) the business, assets or financial condition of the Group taken as a whole;   

 

   8  EU-DOCS\29914380.5  (b) the ability of the Company to perform its payment obligations under the Finance  Documents or its obligations under Clauses 16.3 (Interest Cover) or 16.4 (Asset  Cover) of this Agreement; or  (c) the validity or enforceability of the Finance Documents or the rights or remedies of  the Lender under any of the Finance Documents.  “Material Subsidiary” means, at any time, a Subsidiary of the Company whose gross assets  or gross revenues (on a consolidated basis and excluding intra-Group items) then equal or  exceed 10 per cent. of the gross assets or gross revenues of the Group.  For this purpose:  (a) the gross assets or gross revenues of a Subsidiary of the Company will be determined  from its financial statements (consolidated if it has Subsidiaries) upon which the latest  audited financial statements of the Group have been based;  (b) if a Subsidiary of the Company becomes a member of the Group after the date on  which the latest audited financial statements of the Group have been prepared, the  gross assets or gross revenues of that Subsidiary will be determined from its latest  financial statements;  (c) the gross assets or gross revenues of the Group will be determined from the  Company’s latest audited financial statements, adjusted (where appropriate) to reflect  the gross assets or gross revenues of any company or business subsequently acquired  or disposed of; and  (d) if a Material Subsidiary disposes of all or substantially all of its assets to another  Subsidiary of the Company, it will immediately cease to be a Material Subsidiary and  the other Subsidiary (if it is not already) will immediately become a Material  Subsidiary; the subsequent financial statements of those Subsidiaries and the Group  will be used to determine whether those Subsidiaries are Material Subsidiaries or not.  If there is a dispute as to whether or not a company is a Material Subsidiary, a certificate of  the auditors of the Company will be, in the absence of manifest error, conclusive.  “New Lender” has the meaning given to that term in Clause 23 (Changes to the Parties).  “OFGEM” means the Office of Gas and Electricity Markets.  “Original Financial Statements” means the audited consolidated financial statements of the  Company for the year ended 31 March 2015.  “Participating Member State” means any member state of the European Union that has the  euro as its lawful currency in accordance with legislation of the European Union relating to  Economic and Monetary Union.  “Party” means a party to this Agreement.  “Pensions Regulator” means the body corporate called the Pensions Regulator established  under Part I of the Pensions Act 2004.  “PUHCA” means the Public Utility Holding Company Act of 2005, as amended, of the  United States of America.  “Qualifying Lender” has the meaning given to such term in Clause 9.1 (Definitions).  

 

   9  EU-DOCS\29914380.5  “Quasi-Security Interest” has the meaning given to such term in Clause 17.5 (Negative  pledge).  “Rate Fixing Day” means, in respect of an Interest Period, the day falling five Business Days  prior to the Interest Payment Date for such Interest Period.  “Reference Banks” means the principal London offices of such banks as may be appointed  by the Lender in consultation with the Company and with the consent of the bank so  appointed.  “Reference Gilt” means such bond selected by the Lender and issued on or before the  Effective Date by or on behalf of HM Treasury which pays a coupon or redemption amount  which is calculated by reference to the Index with a maturity which falls on:  (a) the same day as the Final Maturity Date;  (b) the next longest maturity after the Final Maturity Date if there is no such bond  maturing on the Final Maturity Date; or  (c) the next shortest maturity before the Final Maturity Date if no bond defined in  paragraphs (a) or (b) above is available for selection by the Lender;  provided that: (i) if there is more than one inflation-linked bond maturing on the same date,  the Reference Gilt shall be selected by the Lender from those bonds; and (ii) if the bond  selected by the Lender in accordance with paragraphs (a) to (c) (inclusive) above is redeemed,  the Lender will select a new bond on the same basis, but selected from all eligible bonds in  issue at the time the originally selected bond redeems (including any bond for which the  redeemed bond is exchanged).  “Reference Month” has the meaning given to that term in the 2008 ISDA Inflation  Derivatives Definitions.  “Related Fund” in relation to a fund (the “first fund”), means a fund which is managed or  advised by the same investment manager or investment adviser as the first fund or, if it is  managed by a different investment manager or investment adviser, a fund whose investment  manager or investment adviser is an Affiliate of the investment manager or investment adviser  of the first fund.  “Related Swap Agreement” means an agreement entered into by the Lender and a  counterparty in the form of an ISDA Master Agreement, subject to any amendments and  elections as may be agreed between the Lender and such counterparty, provided that such  agreement incorporates without amendment and does not contain any provisions which  conflicts with or overrides:  (a) the definition of Settlement Amount and Unpaid Amount (in each case as defined in  section 14 of the ISDA Master Agreement); and  (b) section 6(e) (Payments of Early Termination) of the ISDA Master Agreement and, for  such purposes, the application of Second Method and Market Quotation (in each case  as defined in the ISDA Master Agreement),  and applies such provisions in the determination of amounts payable upon the occurrence of  an Early Termination Date (as defined in section 14 of the ISDA Master Agreement).  “Related Swap Transaction” means any swap transaction entered into by the Lender under  the Related Swap Agreement on or around the date of the Amendment and Restatement  

 

   10  EU-DOCS\29914380.5  Agreement in order to hedge its exposure to the Index in connection with this Agreement,  provided that:  (a) the confirmation in respect of such transaction incorporates without amendment or  does not contain any provision which conflicts with or overrides the provisions of the  2008 ISDA Inflation Derivatives Definitions which are equivalent to the provisions of  Clause 10.1 (Delay or Cessation of Publication) to Clause 10.4 (Manifest Error in  Publication) (inclusive);   (b) such Related Swap Agreement includes an additional termination event in respect of  the Related Swap Transaction which would occur if a party to such swap  agreement(s) (or an agent appointed for the purpose) were to determine that there is  no appropriate alternative index in accordance with the provisions of such swap  agreement(s) which are equivalent to paragraphs (d) to (g) of Clause 10.1 (Delay or  Cessation of Publication); and  (c) the notional amount in respect of such transaction shall not, in aggregate for all such  agreements, exceed the amount of the Loan.  “Repeating Representations” means each of the representations and warranties set out in  Clause 14.2 (Status) to Clause 14.8 (Financial statements) (inclusive), Clause 14.10  (Litigation), Clause 14.12 (Non-Violation of other Agreements) and Clause 14.13 (Governing  Law and Enforcement).   “Representative” means any delegate, agent, manager, administrator, nominee, attorney,  trustee or custodian.  “Request” has the meaning given to that term in paragraph 5(a) of Clause 5 (Drawdown).  “Sanctioned Person” means any Person who is: (a) as relevant, listed on and/or targeted by  any Sanctions; (b) resident, operating, or organized under the laws of, a country or territory  comprehensively subject to Sanctions; or (c) directly or indirectly owned or controlled by any  such Person or Person(s).  “Sanctions” means any financial, economic or trade sanctions laws, regulations, rules,  decisions, embargoes and/or restrictive measures imposed by the Government of Japan, the  Government of the United States, the United Nations Security Council, the European Union  or Her Majesty’s Treasury.  “Secretary of State” means the Secretary of State for Business, Energy and Industrial  Strategy.  “Security Interest” means any mortgage, pledge, lien, charge, assignment, hypothecation or  security interest or any other agreement or arrangement having a similar effect.  “SONIA” means, on any day, the daily Sterling Overnight Index Average (SONIA) rate  provided by the then current administrator of SONIA (being, as at the Effective Date, the  Bank of England) to authorised distributors and as published by such distributors (either on  such day or on the Business Day immediately following such day in accordance with then- current practice of authorised distributors) or, if such rate is not provided by the administrator  of SONIA, or such rate is not published by such authorised distributors, the rate determined  by the Lender (acting reasonably) to be equal to the average of the rates at which overnight  deposits in Sterling are offered to prime banks in the London Interbank Market by the  Reference Banks at 11.00a.m. on such day.  “Sterling” and “£” mean the lawful currency of the United Kingdom.  

 

   11  EU-DOCS\29914380.5  “Subordination Deed” means a document in the form set out in Schedule 4 (Form of  Subordination Deed) duly completed and executed by the parties thereto.  “Subsidiary” means:  (a) a subsidiary within the meaning of section 1159 of the Companies Act 2006; and  (b) unless the context otherwise requires, a subsidiary undertaking within the meaning of  section 1162 of the Companies Act 2006.  “Successor Index” has the meaning given to that term in Clause 10.1 (Delay or Cessation of  Publication).  “Swap Break Costs” means the amount determined in accordance with paragraph (d) of  Clause 20.1 (Indemnity).  “Tax” means any tax, levy, impost, duty or other charge or withholding of a similar nature  (including any penalty, or interest payable in connection with any failure to pay or any delay  in paying any of the same).  “Tax Payment” means either an increase in a payment made by the Company to the Lender  under Clause 9.2 (Tax gross-up) or a payment under Clause 9.3 (Tax indemnity).  “Transfer Certificate” means a certificate, substantially in the form of Schedule 2 (Form of  Transfer Certificate), or any other form agreed between the Lender and the Company.  “Transfer Date” means, in relation to a transfer, the proposed Transfer Date specified in the  relevant Transfer Certificate.  “UK” means the United Kingdom of Great Britain and Northern Ireland.  “UKRPI” has the meaning given to the term “GBP – Non-revised Retail Price Index  (UKRPI)” in Annex A to the 2008 ISDA Inflation Derivatives Definitions.  “US” means the United States of America.  “VAT” means:  (a) any tax charged in accordance with the UK Value Added Tax Act 1994, as may be  amended or substituted from time to time;  (b) any tax imposed in compliance with the Council Directive of 28 November 2006 on  the common system of value added tax (EC Directive 2006/112); and  (c) any other tax of a similar nature, whether imposed in a member state of the European  Union in substitution for, or levied in addition to, such tax referred to in paragraph (b)  above, or imposed elsewhere.  1.2 Construction  (a) The following definitions have the meanings given to them in Clause 16 (Financial  Covenants):  (i) Cash;  (ii) Cash Equivalent Investments;  

 

   12  EU-DOCS\29914380.5  (iii) Consolidated EBITDA;  (iv) Interest Payable;   (v) Measurement Period;  (vi) Regulatory Asset Base; and  (vii) Total Net Debt.  (b) In this Agreement, unless the contrary intention appears, a reference to:  (i) an “amendment” includes a supplement, novation, restatement or re- enactment and “amended” will be construed accordingly;  (ii) “assets” includes present and future properties, revenues and rights of every  description;  (iii) an “authorisation” includes an authorisation, consent, approval, resolution,  licence, exemption, filing, registration or notarisation;  (iv) “disposal” means a sale, transfer, grant, lease or other disposal, whether  voluntary or involuntary, and dispose will be construed accordingly;  (v) “indebtedness” includes any obligation (whether incurred as principal or as  surety) for the payment or repayment of money;  (vi) “know your customer requirements” are the identification checks that a  Lender requests in order to meet its obligations under any applicable law or  regulation to identify a person who is (or is to become) its customer;  (vii) a “person” includes any individual, company, corporation, unincorporated  association or body (including a partnership, trust, joint venture or  consortium), government, state, agency, organisation or other entity whether  or not having separate legal personality;  (viii) a “regulation” includes any regulation, rule, official directive, request or  guideline (whether or not having the force of law but, if not having the force  of law, being of a type with which any person to which it applies is  accustomed to comply) of any governmental, inter-governmental or  supranational body, agency, department or regulatory, self-regulatory or other  authority or organisation;  (ix) the “winding-up” of a person includes the administration, dissolution or  liquidation or other like process of that person, any composition or  arrangement with the creditors, amalgamation, reconstruction, reorganisation  or consolidation pursuant to Part XXVI of the Companies Act 2006 proposed  or carried out in respect of that person or a company voluntary arrangement  pursuant to the Insolvency Act 1986 carried out or proposed in respect of that  person;  (x) a currency is a reference to the lawful currency for the time being of the  relevant country;  (xi) a Default (other than an Event of Default) being “outstanding” means that it  has not been remedied or waived and an Event of Default being  “outstanding” means that it has not been waived;  

 

   13  EU-DOCS\29914380.5  (xii) a provision of law is a reference to that provision as extended, applied,  amended or re-enacted from time to time and includes any subordinate  legislation;  (xiii) a Clause, a Subclause, a paragraph or a Schedule is a reference to a clause,  subclause or paragraph of, or a schedule to, this Agreement;  (xiv) a person includes its successors in title, permitted assigns and permitted  transferees;  (xv) a Finance Document or another document is a reference to that Finance  Document or other document as amended;   (xvi) a time of day is a reference to London time; and  (xvii) a reference to “the date of this Agreement” is a reference to the original date  of this Agreement, being 24 May 2016.  (c) Unless the contrary intention appears, a reference to a “month” or “months” is a  reference to a period starting on one day in a calendar month and ending on the  numerically corresponding day in the next calendar month or the calendar month in  which it is to end, except that:  (i) if the numerically corresponding day is not a Business Day, the period will  end on the next Business Day in that month (if there is one) or the preceding  Business Day (if there is not);  (ii) if there is no numerically corresponding day in that month, that period will  end on the last Business Day in that month; and  (iii) notwithstanding paragraph (c)(i) above, a period which commences on the  last Business Day of a month will end on the last Business Day in the next  month or the calendar month in which it is to end, as appropriate.  (d) Unless expressly provided to the contrary in a Finance Document, a person who is not  a party to a Finance Document has no right under the Contracts (Rights of Third  Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Agreement and  notwithstanding any term of any Finance Document, the consent of any person who is  not a Party is not required to rescind or vary this Agreement at any time.  (e) Unless the contrary intention appears:  (i) a reference to a Party will not include that Party if it has ceased to be a Party  under this Agreement;  (ii) a word or expression used in any other Finance Document or in any notice  given in connection with any Finance Document has the same meaning in that  Finance Document or notice as in this Agreement; and  (iii) any obligation of the Company under the Finance Documents which is not a  payment obligation remains in force for so long as any payment obligation of  the Company is or may be outstanding under the Finance Documents.  (f) The headings in this Agreement do not affect its interpretation.  

 

   14  EU-DOCS\29914380.5  2. THE FACILITY  2.1 The Loan  Subject to the terms of this Agreement, the Lender agrees to make available to the Company a  committed term loan in Sterling in an amount equal to the Commitment in one advance only.  2.2 Availability  The Loan may not be made at any time after close of business on the Drawdown Date.  3. PURPOSE  3.1 Purpose  The Company shall apply the proceeds of the Loan towards the general corporate purposes of  the Group and in compliance with the Licence.  3.2 No obligation to monitor  Without affecting the obligations of the Company in any way, the Lender is not bound to  monitor or verify the application of the proceeds of the Loan.  4. CONDITIONS PRECEDENT  4.1 Conditions Precedent Documents  The Lender will only be obliged to comply with paragraph 5(b) of Clause 5 (Drawdown) if,  on or before the date of this Agreement, it has received all of the documents and evidence set  out in Schedule 1 (Conditions Precedent Documents) in form and substance satisfactory to it,  unless it has waived its entitlement to do so. The Lender shall notify the Company promptly  upon being so satisfied.  4.2 Further conditions precedent  The Loan shall not be advanced under this Agreement unless on both the date of the Request  and the Drawdown Date:  (a) the Repeating Representations are correct in all material respects; and  (b) no Default is outstanding or would result from the Loan.  5. DRAWDOWN  (a) On the date of this Agreement, the Company shall be deemed to have made an  irrevocable request (the “Request”) to the Lender to borrow the Loan on the  following terms:  (i) the proposed drawdown date will be the Drawdown Date;  (ii) the amount requested will be equal to the Commitment;  (iii) the first Interest Period complies with  Clause 8.3 (Interest Periods) and the  first Interest Period will end on 30 November 2016; and  (iv) the Company’s payment instructions are:  

 

   15  EU-DOCS\29914380.5  Western Power Distribution (East Midlands) plc   HSBC Bank plc   Account number 32676133   Sort Code 40-14-13.  (b) The Lender shall, subject to the terms of this Agreement, be obliged, through its  Facility Office, to make the Loan available to the Company for value on the  Drawdown Date.  6. REPAYMENT  Repayment   (a) The Company must repay the Loan to the Lender in full on the Final Maturity Date.  (b) No amount of the Loan, once repaid or prepaid, may be re-borrowed.  7. PREPAYMENT AND CANCELLATION  7.1 Mandatory prepayment  (a) The Lender must notify the Company promptly if:  (i) it becomes aware that it is unlawful in any jurisdiction for it to perform any of  its obligations under a Finance Document or to fund or maintain the Loan; or  (ii) a Mandatory Prepayment Event occurs under Clause 10.1 (Delay or Cessation  of Publication).  (b) After notification under paragraph (a) above:  (i) the Company must repay or prepay the Loan together with all other amounts  payable by it under this Agreement on the date specified in paragraph (c)  below; and  (ii) the Commitment will be immediately cancelled.  (c) The date for repayment or prepayment of the Loan will be:  (i) the last day of the then current Interest Period in respect of the Loan; or  (ii) if later, the latest date allowed by the relevant law.   (d) Clause 20 (Indemnity) applies to any prepayment under this Clause.  7.2 Voluntary prepayment  Without prejudice to Clause 20 (Indemnity), the Company may, if it gives the Lender not less  than 15 Business Days’ (or such shorter period as the Lender may agree) prior notice, prepay  the whole (but not part) of the Loan plus any accrued but unpaid interest.  7.3 Tax and increased costs  (a) If the Company is, or will be required to pay to the Lender a Tax Payment or an  Increased Cost, the Company may, while the requirement continues, give notice to the  Lender requesting prepayment of the Loan.   

 

   16  EU-DOCS\29914380.5  (b) After notification under paragraph (a) above, the Company must repay or prepay the  Loan made to it on the date specified in paragraph (c) below.  (c) The date for repayment or prepayment of the Loan then outstanding will be the next  occurring Interest Payment Date or, if earlier, the date specified by the Company in its  notification.  7.4 Miscellaneous provisions  (a) Any notice of prepayment and/or cancellation under this Agreement is irrevocable  and must specify the relevant date(s).  (b) All prepayments under this Agreement must be made together with accrued interest  up to and including the date of prepayment on the amount prepaid and any other  amounts due under this Agreement in respect of that prepayment (including, but not  limited to, any amounts payable under Clause 20 (Indemnity)) without penalty or  premium.  (c) No prepayment or cancellation is allowed except in accordance with the express terms  of this Agreement.  (d) No amount of the Commitment cancelled under this Agreement may subsequently be  reinstated.  8. INTEREST  8.1 Calculation of interest  (a) The amount of interest payable in respect of any Interest Period shall be the Interest  Payment Amount.  (b) In this Clause 8 (Interest), “Interest Payment Amount” means, for each Interest  Period:  (i) the Commitment; multiplied by  (ii) the Index Ratio; multiplied by  (iii) the Fixed Rate; multiplied by  (iv) the actual number of days in the relevant Interest Period in respect of which  payment is being made divided by 365,  rounded to five decimal places.  8.2 Payment of interest  Except where it is provided to the contrary in this Agreement, each Interest Payment Amount  is payable by the Company on each Interest Payment Date.  8.3 Interest Periods  (a) The term of the Loan is divided into successive Interest Periods ending on  30 September and 31 March in each calendar year or such other period as the Parties  may agree from time to time (each, an “Interest Period”) for the calculation of  interest.  

 

   17  EU-DOCS\29914380.5  (b) An Interest Period for the Loan shall not extend beyond the Final Maturity Date.  (c) Each Interest Period and each Interest Payment Date shall be subject to adjustment in  accordance with Clause 13.5 (Business Days) except that the final Interest Payment  Date shall fall on the Final Maturity Date or on the Business Day immediately  preceding the Final Maturity Date if the Final Maturity Date is not a Business Day.  8.4 Interest on overdue amounts  (a) If the Company fails to pay any amount payable by it under this Agreement (an  “overdue amount”), it must promptly on demand by the Lender pay default interest  on the overdue amount from the due date up to the date of actual payment, both  before, on and after judgment, at a rate (the “Default Rate”) which, subject to  paragraph (b) below, is 1% per annum above SONIA, as if the overdue amount had,  during such period of non-payment, constituted a Loan for such successive Interest  Periods of such duration as the Lender may determine (each a “Default Term”).   (b) If the overdue amount consists of all or part of the Loan and becomes due and payable  on a day which was not the last day of an Interest Period relating to the Loan, then:  (i) the first Interest Period for that overdue amount shall have a duration equal to  the unexpired portion of the then current Interest Period relating to the Loan  (if any); and  (ii) the rate of interest applying to the overdue amount during the first Interest  Period shall be 1% above the rate which would have applied if the overdue  amount had not become due.  (c) The Default Rate will be determined on the first day of, or two Business Days before  the first day of, the relevant Default Term, as appropriate.   (d) Default interest (if unpaid) on an overdue amount will be compounded with that  overdue amount at the end of each Interest Period applicable to that overdue amount  but will remain immediately due and payable.  8.5 Notification of rates of interest  The Lender must promptly and, in respect of amounts to be paid on each Interest Payment  Date, within one Business Day of the relevant Rate Fixing Day, notify the Company of each  amount of interest payable by it under this Agreement (together with reasonable details  thereof).  9. TAX GROSS-UP AND INDEMNITIES  9.1 Definitions  (a) In this Agreement:  “Qualifying Lender” means:  (i) a Lender (other than a Lender within paragraph (ii) below) which is  beneficially entitled to interest payable to that Lender in respect of an advance  under a Finance Document and is:  (A) a Lender  

 

   18  EU-DOCS\29914380.5  (1) which is a bank (as defined for the purpose of section 879 of  ITA) making an advance under a Finance Document and  which is within the charge to United Kingdom corporation tax  as respects any payments of interest made in respect of that  advance or would be within such charge as respects such  payments apart from section 18A of the CTA; or  (2) in respect of an advance made under a Finance Document by  a person that was a bank (as defined for the purpose of  section 879 of ITA) at the time that that advance was made  and which is within the charge to United Kingdom  corporation tax as respects any payments of interest made in  respect of that advance; or  (B) a Lender which is:  (1) a company resident in the United Kingdom for United  Kingdom tax purposes;  (2) a partnership each member of which is:  (aa) a company so resident in the United Kingdom; or  (bb) a company not so resident in the United Kingdom  which carries on a trade in the United Kingdom  through a permanent establishment and which brings  into account in computing its chargeable profits  (within the meaning of section 19 of the CTA) the  whole of any share of interest payable in respect of  that advance that falls to it by reason of Part 17 of the  CTA; or  (3) a company not so resident in the United Kingdom which  carries on a trade in the United Kingdom through a permanent  establishment and which brings into account interest payable  in respect of that advance in computing the chargeable profits  (within the meaning of section 19 of the CTA) of that  company; or  (C) a Treaty Lender; or  (ii) a Lender which is a building society (as defined for the purpose of  section 880 of ITA) making an advance under a Finance Document.  “Tax Confirmation” means a confirmation by a Lender that the person beneficially  entitled to interest payable to that Lender in respect of an advance under a Finance  Document is either:  (iii) a company resident in the United Kingdom for United Kingdom tax purposes;  (iv) a partnership each member of which is:  (A) a company so resident in the United Kingdom; or  (B) a company not so resident in the United Kingdom which carries on a  trade in the United Kingdom through a permanent establishment and  which brings into account in computing its chargeable profits (within  

 

   19  EU-DOCS\29914380.5  the meaning of section 19 of the CTA)   the whole of any share of  interest payable in respect of that advance that falls to it by reason of  Part 17 of the CTA; or  (v) a company not so resident in the United Kingdom which carries on a trade in  the United Kingdom through a permanent establishment and which brings  into account interest payable in respect of that advance in computing the  chargeable profits (within the meaning of section 19 of the CTA) of that  company.  “Tax Credit” means a credit against, relief or remission for, or repayment of any Tax.  “Tax Deduction” means a deduction or withholding for or on account of Tax from a  payment under a Finance Document, other than a FATCA Deduction.  “Treaty Lender” means a Lender which:  (vi) is treated as a resident of a Treaty State for the purposes of the Treaty;  (vii) does not carry on a business in the United Kingdom through a permanent  establishment with which that Lender’s participation in the Loan is effectively  connected; and  (viii) meets all other conditions which must be met under the Treaty for residents of  such Treaty State to obtain full exemption from tax on interest imposed by the  United Kingdom, except that for this purpose it shall be assumed that the  following are satisfied:  (A) any condition which relates (expressly or by implication) to the  amounts or terms of any Loan or the Finance Documents or any  condition which relates (expressly or by implication) to there not  being a special relationship between the Company and the Lender or  between them both and another person; and   (B) any necessary procedural formality.   “Treaty State” means a jurisdiction having a double taxation agreement (a “Treaty”)  with the United Kingdom which makes provision for full exemption from tax  imposed by the United Kingdom on interest.  “UK Non-Bank Lender” means:  (i) MUFG Bank, Ltd.; and  (ii) where a Lender becomes a Party after the day on which this Agreement is  entered into, a Lender which gives a Tax Confirmation in the assignment  agreement or Transfer Certificate which it executes on becoming a Party.  (b) Unless a contrary indication appears, in this Clause 9 a reference to “determines” or  “determined” means a determination made in the absolute discretion of the person  making the determination.  9.2 Tax gross-up  (a) The Company shall make all payments to be made by it without any Tax Deduction,  unless a Tax Deduction is required by law.  

 

   20  EU-DOCS\29914380.5  (b) The Company shall promptly upon becoming aware that it must make a Tax  Deduction (or that there is any change in the rate or the basis of a Tax Deduction)  notify the Lender accordingly. Similarly, the Lender shall notify the Company on  becoming so aware in respect of a payment payable to that Lender.   (c) If a Tax Deduction is required by law to be made by the Company, the amount of the  payment due from the Company shall be increased to an amount which (after making  any Tax Deduction) leaves an amount equal to the payment which would have been  due if no Tax Deduction had been required.  (d) A payment shall not be increased under paragraph (c) above by reason of a Tax  Deduction on account of Tax imposed by the United Kingdom, if on the date on  which the payment falls due:  (i) the payment could have been made to the Lender without a Tax Deduction if  the Lender had been a Qualifying Lender, but on that date the Lender is not or  has ceased to be a Qualifying Lender other than as a result of any change after  the date it became the Lender under this Agreement in (or in the  interpretation, administration, or application of) any law or Treaty, or any  published practice or published concession of any relevant taxing authority;  or  (ii) the Lender is a Qualifying Lender solely by virtue of paragraph (i)(B) of the  definition of Qualifying Lender and:  (A) an officer of HM Revenue & Customs has given (and not revoked) a  direction (a “Direction”) under section 931 of the ITA which relates  to the payment and the Lender has received from the Company a  certified copy of that Direction; and  (B) the payment could have been made to the Lender without any Tax  Deduction if that Direction had not been made; or  (iii) the Lender is a Qualifying Lender solely by virtue of paragraph (i)(B) of the  definition of Qualifying Lender and:  (A) the Lender has not given a Tax Confirmation to the Company; and  (B) the payment could have been made to the Lender without any Tax  Deduction if the Lender had given a Tax Confirmation to the  Company on the basis that the Tax Confirmation would have enabled  the Company to have formed a reasonable belief that the payment was  an “excepted payment” for the purpose of section 930 of the ITA; or   (iv) the Lender is a Treaty Lender and the Company making the payment is able  to demonstrate that the payment could have been made to the Lender without  the Tax Deduction had that Lender complied with its obligations under  paragraph (g) below.  (e) If the Company is required to make a Tax Deduction, the Company shall make that  Tax Deduction and any payment required in connection with that Tax Deduction  within the time allowed and in the minimum amount required by law.  (f) Within 30 days of making either a Tax Deduction or any payment required in  connection with that Tax Deduction, the Company shall deliver to the Lender a  statement under Section 975 of the ITA, or other evidence reasonably satisfactory to  

 

21  EU-DOCS\29914380.5  the Lender that the Tax Deduction has been made or (as applicable) any appropriate  payment paid to the relevant taxing authority.  (g)  (i) Subject to paragraph (ii) below, a Treaty Lender and the Company which  makes a payment to which that Treaty Lender is entitled shall co-operate in  completing any procedural formalities necessary for that Company to obtain  authorisation to make that payment without a Tax Deduction. (ii) Nothing in paragraph (i) above shall require a Treaty Lender to: (A) register under the HMRC DT Treaty Passport scheme; (B) apply the HMRC DT Treaty Passport scheme to any Loan if it has so  registered; or (C) file Treaty forms if it has included an indication to the effect that it  wishes the HMRC DT Treaty Passport scheme to apply to this  Agreement in accordance with paragraph (a) of Clause 9.5 (HMRC  DT Treaty Passport scheme confirmation) and the Company making  that payment has not complied with its obligations under paragraph (b) of Clause 9.5 (HMRC DT Treaty Passport scheme confirmation). (h) A UK Non-Bank Lender which becomes a Party on the day on which this Agreement is entered into gives a Tax Confirmation to the Company by entering into this Agreement. (i) A UK Non-Bank Lender shall promptly notify the Company if there is any change in the position from that set out in the Tax Confirmation. (j) Any Lender which has confirmed that it is entitled to use its DT Treaty Passport in accordance with paragraph (a) of Clause 9.5 will reasonably promptly notify the Company if at any time it ceases to holds a passport under the HMRC DT Treaty Passport scheme or if it ceases to be able to use such passport as a Lender. (k) If a Lender has not included an indication to the effect that it wishes the HMRC DT Treaty Passport scheme to apply to this Agreement in accordance with paragraph (a) of Clause 9.5 (HMRC DT Treaty Passport scheme confirmation), the Company shall not file any form relating to the HMRC DT Treaty Passport scheme in respect of that Lender’s Commitment or its participation in any Loan. 9.3 Tax indemnity  (a) Except as provided below, the Company must, within three Business Days of demand, indemnify the Lender against any loss or liability which the Lender (in its absolute discretion) determines will be or has been suffered (directly or indirectly) by the Lender for or on account of Tax in relation to a payment received or receivable (or any payment deemed for the purposes of Tax to be received or receivable) under a Finance Document. (b) Paragraph (a) above does not apply to any Tax assessed on the Lender under the laws of the jurisdiction in which: (i) the Lender is incorporated or, if different, the jurisdiction (or jurisdictions) in which the Lender is treated as resident for tax purposes; or 

 

   22  EU-DOCS\29914380.5  (ii) the Lender’s Facility Office is located in respect of amounts received or  receivable in that jurisdiction,  if that Tax is imposed on or calculated by reference to the net income received or  receivable by the Lender. However, any payment deemed to be received or  receivable, including any amount treated as income but not actually received by the  Lender, such as a Tax Deduction, will not be treated as net income received or  receivable for this purpose.  (c) Paragraph (a) above does not apply to any Tax assessed on the Lender to the extent  the loss or liability:  (i) is compensated for by an increased payment under Clause 9.2 (Tax gross-up);   (ii) would have been compensated for by an increased payment under Clause 9.2  (Tax gross-up) but was not so compensated solely because one of the  exclusions in Clause 9.2 (Tax gross-up) applied;  (iii) relates to a FATCA Deduction required to be made by a Party; or  (iv) attributable to any Bank Levy (or any payment attributable to, or liability  arising as a consequence of, a Bank Levy).  (d) If the Lender makes or intends to make a claim under paragraph (a) above, it must  promptly notify the Company of the event which will give, or has given, rise to the  claim.   9.4 Tax Credit  If the Company makes a Tax Payment and the Lender determines (acting reasonably) that:  (a) Tax Credit is attributable to an increased payment of which that Tax Payment forms  part, to that Tax Payment or to a Tax Deduction in consequence of which that Tax  Payment was required; and  (b) that Lender has obtained and utilised that Tax Credit,  the Lender must pay an amount to the Company which the Lender determines (in its  discretion, acting reasonably) will leave it (after that payment) in the same after-Tax position  as it would have been in if the Tax Payment had not been required to be made by the  Company. The Lender shall take those steps it considers in its opinion reasonable to seek and  claim any tax credit.  9.5 HMRC DT Treaty Passport scheme confirmation  (a) A New Lender that is a Treaty Lender that holds a passport under the HMRC DT  Treaty Passport scheme, and which wishes that scheme to apply to this Agreement,  shall include an indication to that effect (without liability to the Company) in the  Transfer Certificate which it executes by including its scheme reference number and  its jurisdiction of tax residence in that Transfer Certificate.  (b) Where a New Lender includes the indication described in paragraph (a) above of  Clause 9.5 in the relevant Transfer Certificate the Company shall file a duly  completed form DTTP2 in respect of such Lender with HM Revenue & Customs  within 30 days of the date of that Transfer Certificate and shall promptly provide the  Lender with a copy of that filing.  

 

   23  EU-DOCS\29914380.5  9.6 Lender Status Confirmation  (a) Each Lender which becomes a Party to this Agreement after the date of this  Agreement shall indicate (without liability to the Company), in the assignment  agreement or Transfer Certificate which it executes on becoming a Party which of the  following categories it falls in:  (i) not a Qualifying Lender;  (ii) a Qualifying Lender (other than a Treaty Lender); or  (iii) a Treaty Lender.  (b) If such a Lender fails to indicate its status in accordance with this Clause 9.6 then  such Lender shall be treated for the purposes of this Agreement as if it is not a  Qualifying Lender until such time as it notifies the Company which category applies.  For the avoidance of doubt, an assignment agreement or Transfer Certificate shall not  be invalidated by any failure of a Lender to comply with this Clause 9.6.  9.7 Stamp taxes  The Company shall pay and, within three Business Days of demand, indemnify the Lender  against any cost, loss or liability the Lender incurs in relation to all stamp duty, registration  and other similar Taxes payable in respect of any Finance Document, except for any such Tax  payable in respect of a Transfer Certificate or other transfer or disposal of the Lender’s rights  or obligations under a Finance Document.  9.8 VAT  (a) All amounts set out, or expressed in a Finance Document to be payable by any Party  to the Lender which (in whole or in part) constitute the consideration for a supply or  supplies for VAT purposes shall be deemed to be exclusive of any VAT which is  chargeable on such supply or supplies, and accordingly, if VAT is or becomes  chargeable on any supply made by the Lender to any Party under a Finance  Document, and such Lender is required to account to the relevant tax authority for the  VAT, that Party shall pay to the Lender (in addition to and at the same time as paying  any other consideration for such supply) an amount equal to the amount of such VAT  (and the Lender shall promptly provide an appropriate VAT invoice to such Party).  (b) Where a Finance Document requires any Party to reimburse or indemnify the Lender  for any cost or expense, that Party shall reimburse or indemnify (as the case may be)  the Lender for the full amount of such cost or expense, including such part thereof as  represents VAT, save to the extent that the Lender reasonably determines that it is  entitled to credit or repayment in respect of such VAT from the relevant tax authority.  (c) Any reference in this Clause 9.8 to any Party shall, at any time when such Party is  treated as a member of a group for VAT purposes, include (where appropriate and  unless the context otherwise requires) a reference to the representative member of  such group at such time (the term “representative member” to have the same meaning  as in the Value Added Tax Act 1994).  9.9 FATCA Information  (a) Subject to paragraph (c) below, each Party shall, within ten Business Days of a  reasonable request by another Party:  (i) confirm to that other Party whether it is:  

 

   24  EU-DOCS\29914380.5  (A) a FATCA Exempt Party; or  (B) not a FATCA Exempt Party; and  (ii) supply to that other Party such forms, documentation and other information  relating to its status under FATCA as that other Party reasonably requests for  the purposes of that other Party’s compliance with FATCA;  (iii) supply to that other Party such forms, documentation and other information  relating to its status as that other Party reasonably requests for the purposes of  that other Party’s compliance with any other law, regulation, or exchange of  information regime.   (b) If a Party confirms to another Party pursuant to paragraph (a)(i) above that it is a  FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased  to be a FATCA Exempt Party, that Party shall notify that other Party reasonably  promptly.  (c) Paragraph (a) above shall not oblige the Lender to do anything, and paragraph (a)(iii)  above shall not oblige any other Party to do anything, which would or might in its  reasonable opinion constitute a breach of:  (i) any law or regulation;  (ii) any fiduciary duty; or  (iii) any duty of confidentiality.   (d) If a Party fails to confirm whether or not it is a FATCA Exempt Party or to supply  forms, documentation or other information requested in accordance with paragraph  (a)(i) or (a)(ii) above (including, for the avoidance of doubt, where paragraph (c)  above applies), then such Party shall be treated for the purposes of the Finance  Documents (and payments under them) as if it is not a FATCA Exempt Party until  such time as the Party in question provides the requested confirmation, forms,  documentation or other information.   9.10 FATCA Deduction  (a) Each Party may make any FATCA Deduction it is required to make by FATCA, and  any payment required in connection with that FATCA Deduction, and no Party shall  be required to increase any payment in respect of which it makes such a FATCA  Deduction, or otherwise compensate the recipient of the payment for that FATCA  Deduction.  (b) Each Party shall promptly, upon becoming aware that it must make a FATCA  Deduction (or that there is any change in the rate or the basis of such FATCA  Deduction), notify the Party to whom it is making the payment.  10. INDEXATION  10.1 Delay or Cessation of Publication  (a) If, by the Rate Fixing Day for the relevant Interest Period, the Index Figure for a  Reference Month required for the calculation of a payment under this Agreement has  not been published or announced by the Index Sponsor, then the Lender shall  promptly give notice to the Company stating that such event has occurred and shall  

 

   25  EU-DOCS\29914380.5  determine the Index Figure applicable for such purposes (the “Substitute Index  Figure”) by using the following methodology:  (i) if applicable, the Lender will take the same action to determine the Substitute  Index Figure as that taken by the calculation agent pursuant to the terms and  conditions of the Reference Gilt; or  (ii) if no such Substitute Index Figure is determined pursuant to paragraph (a)(i)  above, then the Lender shall determine the Substitute Index Figure as follows:  Substitute Index Figure = Base Level x (Latest Level / Reference Level)  where:  “Base Level” means the Index Figure (excluding any “flash” estimates) published or  announced by the Index Sponsor for the month falling 12 (twelve) calendar months  prior to the month in respect of which the Substitute Index Figure is being  determined;  “Latest Level” means the latest Index Figure (excluding any “flash” estimates)  published or announced by the Index Sponsor prior to the month in respect of which  the Substitute Index Figure is being calculated; and  “Reference Level” means the Index Figure (excluding any “flash” estimates) for the  month falling 12 (twelve) calendar months prior to the month referred to in the  definition of “Latest Level” above.  (b) If an Index Figure is published or announced at any time after the Rate Fixing Day,  such Index Figure will not be used in any calculations. The Substitute Index Figure so  determined pursuant to this Clause 10.1, will be the definitive level for that Reference  Month.  (c) If the Index has not been published or announced for two consecutive months or the  Index Sponsor announces that it will no longer continue to publish or announce the  Index, then the Lender shall promptly give notice to the Company stating that such  event has occurred and shall determine an appropriate successor index (a “Successor  Index”) (in lieu of any previously applicable Index) in accordance with the following  paragraphs of this Clause 10.1. The determination of any Successor Index, and any  such adjustment, shall take effect as of a date decided by the Lender.  (d) If at any time (other than after a Mandatory Prepayment Event has occurred pursuant  to paragraph (h) below) a successor index has been designated for the purposes of the  Reference Gilt, such successor index shall be the “Successor Index” in respect of the  Loan, notwithstanding that any other Successor Index may previously have been  determined under paragraphs (e), (f) or (g) below.  (e) If a Successor Index has not been determined under paragraph (d) above (and a  Mandatory Prepayment Event has not occurred pursuant to paragraph (h) below) and  a notice has been given or an announcement has been made by the Index Sponsor  specifying that the Index will be superseded by a replacement Index specified by the  Index Sponsor, and the Lender determines that such replacement index is calculated  using the same or substantially similar formula or method of calculation as used in the  calculation of the previously applicable Index, such replacement index shall be the  “Successor Index”.  

 

   26  EU-DOCS\29914380.5  (f) If a Successor Index has not been determined under paragraph (d) or (e) above (and a  Mandatory Prepayment Event has not occurred pursuant to paragraph (h) below) and  a replacement index has been determined under the Related Swap Agreement, such  replacement index shall be the “Successor Index”.  (g) If, by the fifth Business Day prior to the next Interest Payment Date which would be  affected by the failure to determine a Successor Index, a Successor Index has not been  determined under paragraphs (d), (e) or (f) above, the Lender shall select a  “Successor Index”, taking into account the practice in the market for swaps linked to  the Index.  (h) If the Lender determines that there is no appropriate Successor Index, then a  “Mandatory Prepayment Event” will be deemed to have occurred.  10.2 Rebasing of the Index  If the Lender determines that the Index has been or will be rebased at any time, the Index as  so rebased (the “Rebased Index”) will be used for the purposes of determining the level of an  Index from the date of such rebasing, provided however, that the Lender shall make such  adjustments as are made by the calculation agent pursuant to the terms and conditions of the  Reference Gilt, if any, to the levels of the Rebased Index so that the Rebased Index levels  reflect the same rate of inflation as the Index before it was rebased. Any such rebasing shall  not affect any prior payments made under the Loan.  10.3 Material Modification Prior to an Interest Payment Date  If the Index Sponsor announces that it will make a material change to the Index, then the  Lender shall make any such adjustments to the Index consistent with adjustments made to the  Reference Gilt. Any change announced by the Index Sponsor later than five Business Days  prior to the date on which any payment is due hereunder shall be disregarded for the purposes  of that payment.  10.4 Manifest Error in Publication  If, within 30 days of publication, the Lender determines that the Index Sponsor has corrected  the level of the Index to remedy a manifest error in its original publication, the Lender will:  (a) notify the Company of that correction;  (b) notify the Company of the amount which is payable by the Company or to be  refunded to the Company as a result of that correction; and   (c) take such other action as it may deem necessary to give effect to such correction.  provided that any amount payable pursuant to paragraph (b) above shall be paid or refunded,  as applicable (with no interest accruing thereon):  (i) in connection with an Index Sponsor’s correction to remedy a manifest error  in the level of an Index for a Reference Month for which the scheduled  Interest Payment Date has occurred, within five Business Days after notice by  the Lender of such amount payable by the Lender;  (ii) in connection with an Index Sponsor’s correction to remedy a manifest error  in the level of an Index for a Reference Month for which the scheduled  Interest Payment Date has not occurred, as an adjustment to the payment  obligation on the next scheduled Interest Payment Date; or  

 

   27  EU-DOCS\29914380.5  (iii) if there is no further scheduled Interest Payment Date, within five Business  Days after notice of such amount payable by the Lender.  10.5 Correction of the Index  To the extent that the Index Sponsor has corrected the level of the Index in the period from the  Final Maturity Date until the date ending three months after the Final Maturity Date, the terms  of paragraphs (b) and (c) of Clause 10.4 shall apply and the relevant Party shall, within five  Business Days of the notice given by the Lender pursuant to paragraph (b) above of Clause  10.4, make such payments to the other as may be required to put them in the position they  would have been in had the corrected Index originally been published.  11. INCREASED COSTS  11.1 Increased Costs  Except as provided below in this Clause, the Company must, within 5 Business Days of  demand by the Lender, pay to the Lender the amount of any Increased Cost incurred by the  Lender or any of its Affiliates as a result of:  (a) the introduction of, or any change in, or any change in the interpretation or  application of, any law or regulation;   (b) compliance with any law or regulation made after the date of this Agreement provided  that for the purposes of this Agreement and any other Finance Document, Dodd-Frank  shall be deemed to be a law or regulation made after the date of this Agreement; or  (c) the implementation or application of, or compliance with, Basel III or CRD IV or any  law or regulation that implements or applies Basel III or CRD IV.  11.2 Exceptions  The Company need not make any payment for an Increased Cost to the extent that the  Increased Cost is:  (a) compensated for under Clause 9.3 (Tax indemnity) or would have been but for an  exception to that Clause;  (b) attributable to a Tax Deduction (as defined in Clause 9.1 (Definitions)) required by  law to be made by the Company;  (c) a Tax on the overall net income of the Lender or any of its Affiliates;  (d) attributable to a FATCA Deduction required to be made by a Party;  (e) attributable to any Bank Levy (or any payment attributable to, or liability arising as a  consequence of, a Bank Levy);  (f) attributable to the Lender or its Affiliate wilfully failing to comply with any law or  regulation;  (g) attributable to the implementation or application of or compliance with the  “International Convergence of Capital Measurement and Capital Standards, a Revised  Framework” published by the Basel Committee in June 2004 in the form existing on  the date of this Agreement (but excluding any amendment arising out of Basel III)  (“Basel II”) or any other law or regulation which implements Basel II (whether such  

 

   28  EU-DOCS\29914380.5  implementation, application or compliance is by a government, regulator, the Lender  or any of its Affiliates);   (h) attributable to Basel III or CRD IV (or any other law or regulation which implements  Basel III or CRD IV) where the Lender was or reasonably should have been able to  calculate that Increased Cost on the date of this Agreement; or   (i) not notified by the Lender to the Company within three Months of the Lender  becoming aware of such Increased Cost.  11.3 Claims  If the Lender intends to make a claim for an Increased Cost, it must notify the Company  promptly of the circumstances giving rise to, and the amount of, the claim.  12. MITIGATION  12.1 Mitigation  (a) The Lender must, in consultation with the Company, take all reasonable steps to  mitigate any circumstances which arise and which result or would result in the Loan  ceasing to be available or:  (i) any Tax Payment or Increased Cost being payable to the Lender;   (ii) the Lender being able to exercise any right of prepayment and/or cancellation  under this Agreement by reason of any illegality; or  (iii) the Lender incurring any cost of complying with the minimum reserve  requirements of the European Central Bank,  including transferring its rights and obligations under the Finance Documents to an  Affiliate or changing its Facility Office.  (b) The Lender is not obliged to take any step under this Clause 12 if, in the opinion of  the Lender (acting reasonably), to do so might be prejudicial to it.  (c) The Lender must promptly notify the Company of any circumstances as described in  paragraphs (a)(i) to (a)(iii) of this Clause 12.1.  (d) The Company must indemnify the Lender for all costs and expenses reasonably  incurred by it as a result of any step taken under this Clause 12.1.  (e) This Clause does not in any way limit the obligations of the Company under the  Finance Documents.  12.2 Conduct of business by the Lender   No term of this Agreement will:  (a) interfere with the right of the Lender to arrange its affairs (Tax or otherwise) in  whatever manner it thinks fit or oblige the Lender to investigate or claim any Tax  Credit; or  (b) oblige the Lender to disclose any information relating to its affairs (Tax or otherwise)  or any computation in respect of Tax.   

 

   29  EU-DOCS\29914380.5  13. PAYMENTS  13.1 Place  All payments by the Company under the Finance Documents must be made to the Lender to  its account at such office or bank in London as the Lender may notify to the Company for this  purpose and by not less than five Business Days’ prior notice.  13.2 Funds  Payments under the Finance Documents to the Lender must be made for value on the due date  at such times and in such funds as the Lender may specify to the Company as being  customary at the time for the settlement of transactions in the relevant currency in the place of  payment.  13.3 Currency of account  Each amount payable under the Finance Documents is payable in Sterling.  13.4 No set-off or counterclaim  All payments made by the Company under the Finance Documents must be made without  set-off or counterclaim.  13.5 Business Days  (a) If a payment under the Finance Documents is due on a day which is not a Business  Day, the due date for that payment will instead be the next Business Day in the same  calendar month (if there is one) or the preceding Business Day (if there is not).  (b) During any extension of the due date for payment of any principal (or overdue  amount) under this Agreement interest is payable on that principal (or overdue  amount) at the rate payable on the original due date.  13.6 Partial payments  (a) If the Lender receives a payment insufficient to discharge all the amounts then due  and payable by the Company under this Agreement, the Lender shall apply that  payment towards the obligations of the Company under the Finance Documents in  any order selected by the Lender.  (b) This Clause will override any appropriation made by the Company.  13.7 Timing of payments  If a Finance Document does not provide for when a particular payment is due to the Lender,  that payment will be due within three Business Days of demand by the Lender.  14. REPRESENTATIONS  14.1 Representations  The representations set out in this Clause are made by the Company to the Lender on the date  of this Agreement.  

 

   30  EU-DOCS\29914380.5  14.2 Status  It is a limited liability company, duly incorporated and validly existing under the Companies  Act 2006 in England and Wales.  14.3 Powers and authority  It has the power to enter into and perform, and has taken all necessary action to authorise the  entry into and performance of, the Finance Documents to which it is or will be a party and the  transactions contemplated by those Finance Documents.  14.4 Legal validity  Subject to the Legal Reservations, each Finance Document to which it is a party is its legally  binding, valid and enforceable obligation.  14.5 Non-conflict  The entry into and performance by it of, and the transactions contemplated by, the Finance  Documents do not conflict with any borrowing or other power or restriction granted or  imposed by:  (a) any law or regulation applicable to it and violation of which has or is likely to have a  Material Adverse Effect; or  (b) its constitutional documents.  14.6 No default  (a) No Event of Default is outstanding or might reasonably be expected to result from the  making of the Loan.  (b) No other event or circumstance is outstanding which constitutes a default under any  other agreement or instrument which is binding on it or any of its Subsidiaries or to  which its (or any of its Subsidiaries’) assets are subject which might have a Material  Adverse Effect.  14.7 Authorisations  All authorisations required by it (including any authorisations required under PUHCA or the  Act, if any):  (a) in connection with the entry into, performance, validity and enforceability of, and the  transactions contemplated by, the Finance Documents; and  (b) to make the Finance Documents admissible in evidence in England and Wales,  have been obtained or effected (as appropriate) and are in full force and effect.  14.8 Financial statements  Its audited consolidated financial statements most recently delivered to the Lender (which, at  the Effective Date, are the audited consolidated financial statements for the year ended 31  March 2020):  (a) have been prepared in accordance with accounting principles and practices generally  accepted in its jurisdiction of incorporation, consistently applied; and  

 

   31  EU-DOCS\29914380.5  (b) fairly present its consolidated financial condition as at the date to which they were  drawn up,  except, in each case, as disclosed to the contrary in those financial statements.  14.9 No material adverse change  Other than as disclosed in writing to the Lender prior to the Effective Date, there has been no  material adverse change in its consolidated financial condition since the date to which audited  financial consolidated statements most recently delivered to the Lender (which, at the  Effective Date, are the audited consolidated financial statements for the year ended 31 March  2020), were drawn up.  14.10 Litigation  No litigation, arbitration or administrative proceedings are current or, to its knowledge,  pending or threatened which are reasonably likely to be adversely determined and, if  adversely determined, could reasonably be expected to have a Material Adverse Effect.  14.11 Winding Up  No meeting has been convened for its winding-up and, so far as it is aware, no petition,  application or the like is outstanding for its winding-up.  14.12 Non-Violation of other Agreements  Its entry into, exercise of its rights and/or performance of or compliance with its obligations  under this Agreement do not and will not violate, to an extent or in a manner which has or is  likely to have a Material Adverse Effect on it, any agreement to which it is a party or which is  binding on it.  14.13 Governing Law and Enforcement  (a) The choice of English law as the governing law of the Finance Documents will be  recognised and enforced in its jurisdiction of incorporation.  (b) Any judgement obtained in England in relation to a Finance Document will be  recognised and enforced in its jurisdiction of incorporation.  14.14 Deduction of Tax  It is not required to make any deduction for or on account of Tax from any payment it may  make under any Finance Document to the Lender if the Lender is:  (a) a Qualifying Lender:  (i) falling within paragraph (i)(A) of the definition of Qualifying Lender; or  (ii) except where a Direction has been given under section 931 of the ITA in  relation to the payment concerned, falling within paragraph (i)(B) of the  definition of Qualifying Lender; or  (iii) falling within paragraph (ii) of the definition of Qualifying Lender or;  (b) a Treaty Lender and the payment is one specified in a direction given by the  Commissioners of Revenue & Customs under Regulation 2 of the Double Taxation  Relief (Taxes on Income) (General) Regulations 1970 (SI 1970/488).  

 

   32  EU-DOCS\29914380.5  14.15 No filing or stamp taxes  Under the law of its jurisdiction of incorporation it is not necessary that the Finance  Documents be filed, recorded or enrolled with any court or other authority in that jurisdiction  or that any stamp, registration or similar tax be paid on or in relation to the Finance  Documents (which for these purposes does not include a Transfer Certificate or other transfer  or disposal of the Lender’s rights or obligations under a Finance Document) or the  transactions contemplated by the Finance Documents.  14.16 No misleading information  Save as disclosed in writing to the Lender prior to the Effective Date:   (a) any written factual information provided by any member of the Group or on its behalf  was true and accurate in all material respects as at the date of the relevant report or  document or as at the date (if any) at which it is stated to be given;  (b) the financial projections provided have been prepared on the basis of recent historical  information and on the basis of reasonable assumptions as at the date provided; and  (c) no event or circumstance has occurred or arisen and no information has been given or  withheld that results in the information, opinions, intentions, forecasts or projections  contained in such written information being untrue or misleading in any material  respect.  14.17 Pari Passu ranking  Its payment obligations under the Finance Documents rank at least pari passu with the claims  of all its other unsecured and unsubordinated creditors, except for obligations mandatorily  preferred by law applying to companies generally.  14.18 Licence  The Licence is in full force and effect and there is no investigation or proceeding current,  pending or threatened which could, if adversely determined, result in the termination of the  Licence.   14.19 Sanctions  No member of the Group or, to the knowledge of the Company, any director, officer,  employee, agent or representative of any member of the Group, is a Sanctioned Person, nor is  any member of the Group located, organized or resident in a country or territory that is the  subject of country-wide or territory-wide Sanctions. The Company represents for itself and on  behalf of other members of the Group that no member of the Group will, directly or indirectly,  use the proceeds of the transaction, or lend, contribute or otherwise make available such  proceeds to any subsidiary, joint venture partner or other Person who is a Sanctioned Person,  to fund any activities of or business with any such Sanctioned Person, or in Syria, Cuba, Iran,  North Korea, Sudan or in any other country or territory, that, at the time of such funding, is  the subject of country-wide or territory-wide Sanctions, or in any other manner that will result  in a violation by any such Sanctioned Person (including any Person participating in the  transaction, whether as underwriter, advisor, investor or otherwise).  14.20 Anti-Corruption  Each member of the Group has conducted its business in compliance with applicable  anti-corruption laws and has instituted and maintained policies and procedures designed to  promote and achieve compliance by that member of the Group with such laws.  

 

   33  EU-DOCS\29914380.5  14.21 Times for making representations  (a) The representations set out in this Clause are made by the Company on the date of  this Agreement and the Effective Date.  (b) The Repeating Representations are deemed to be repeated by the Company on the  first date of each Interest Period.   (c) When a representation is repeated, it is applied to the circumstances existing at the  time of repetition.  15. INFORMATION COVENANTS  15.1 Financial statements  (a) The Company must supply to the Lender:  (i) its audited consolidated financial statements for each of its financial years;  and  (ii) its interim consolidated financial statements for the first half-year of each of  its financial years.  (b) All financial statements must be supplied as soon as they are available and:  (i) in the case of the Company’s audited consolidated financial statements,  within 180 days; and  (ii) in the case of the Company’s interim financial statements, within 90 days,  of the end of the relevant financial period.  15.2 Form of Financial Statement  If any financial statement delivered or to be delivered to the Lender under Clause 15.1 is not  to be or, as the case may be, has not been prepared in accordance with Applicable Accounting  Principles:  (a) if either Party so requests, the Parties shall negotiate in good faith with a view to  agreeing such amendments to the financial ratios and/or the definitions of the terms  used in Clause 16 (Financial Covenants) as are necessary to give the Lender  comparable protection to that contemplated at the date of this Agreement;   (b) if amendments are agreed by the Parties within 25 days, those amendments shall take  effect in accordance with the terms of that agreement; and  (c) if such amendments are not so agreed within 25 days, the Company shall:  (i) within 30 days after the end of that 25 day period; and  (ii) with all subsequent financial statements to be delivered to the Lender under  Clause 15.1,  deliver to the Lender details of all such adjustments as need to be made to the relevant  financial statements to bring them into line with the Companies Act 2006 (as in effect  on the date of this Agreement) and Applicable Accounting Principles.  

 

   34  EU-DOCS\29914380.5  15.3 Compliance Certificate  (a) The Company must supply to the Lender a Compliance Certificate with each set of its  financial statements sent to the Lender under this Agreement.  (b) Each Compliance Certificate must be signed by two directors of the Company.  15.4 Information – miscellaneous  The Company must supply to the Lender:  (a) copies of all documents despatched by the Company to its creditors generally (or any  class of them) in each case at the same time as they are despatched;  (b) promptly upon becoming aware of them, details of any litigation, arbitration or  administrative proceedings which are current, threatened or pending against any  member of the Group and which might, if adversely determined, have a Material  Adverse Effect;  (c) promptly, details of the loss of the Licence or any communication from OFGEM or  other government agency regarding any potential or threatened loss of the Licence;  (d) a copy of all material information relating to any matter which is reasonably likely to  have a Material Adverse Effect which the Company supplies to, or receives from, any  applicable regulatory body (including OFGEM) (at the same time as it is supplied to,  or promptly following its receipt from, the applicable regulatory body);   (e) written notice of the details of any proposed changes to the Licence as soon as  reasonably practicable after becoming aware of the same (other than changes of a  formal, minor or technical nature);  (f) within five Business Days of receiving them, details of any change to the rating by  Moody’s or Standard & Poor’s of the long-term, unsecured and non credit-enhanced  debt obligations of the Company;  (g) promptly on request, a list of the then current Material Subsidiaries; and   (h) promptly on request, such further information regarding the financial condition,  business and operations of the Group as the Lender may reasonably request.  15.5 Notification of Default  (a) The Company must notify the Lender of any Default (and the steps, if any, being  taken to remedy it) promptly upon becoming aware of its occurrence.  (b) Promptly on request by the Lender, the Company must supply to the Lender a  certificate signed by two of its directors on its behalf, certifying that no Default is  outstanding or, if a Default is outstanding, specifying the Default and the steps, if any,  being taken to remedy it.  15.6 Direct electronic delivery by the Company  Except as provided below, the Company may deliver any information under this Agreement  to the Lender by delivering that information directly to the Lender in accordance with Clause  29.4 (Electronic communication).  

 

   35  EU-DOCS\29914380.5  15.7 Know your customer requirements  If:   (a) the introduction of or any change in (or in the interpretation, administration or  application of) any law or regulation made after the date of this Agreement;  (b) any change in the status of the Company after the date of this Agreement; or  (c) a proposed assignment or transfer by the Lender of any of its rights and obligations  under this Agreement,  obliges the Lender (or, in the case of paragraph (c) above, any prospective new Lender) to  comply with “know your customer” or similar identification procedures in circumstances  where the necessary information is not already available to it, the Company shall promptly  upon the request of the Lender supply, or procure the supply of, such documentation and other  evidence as is reasonably requested by the Lender (for itself or, in the case of the event  described in paragraph (iii) above, on behalf of any prospective new Lender) in order for the  Lender or, in the case of the event described in paragraph (iii) above, any prospective new  Lender to carry out and be satisfied it has complied with all necessary “know your customer”  or other similar checks under all applicable laws and regulations pursuant to the transactions  contemplated in the Finance Documents.  16. FINANCIAL COVENANTS  16.1 Definitions  In this Clause:  “Cash” means, at any time, cash denominated in a currency of the United States of America,  the United Kingdom, any member state of the European Union or any Participating Member  State in hand or at bank and (in the latter case) credited to an account in the name of a  member of the Group with an Acceptable Bank and to which a member of the Group is alone  (or together with other members of the Group) beneficially entitled and for so long as:  (a) that cash is repayable:  (i) if that cash is deposited with the Lender, within 180 days after the relevant  date of calculation; or  (ii) if that cash is deposited with any other lender or financial institution, within  45 days after the relevant date of calculation;  (b) repayment of that cash is not contingent on the prior discharge of any other  indebtedness of any member of the Group or of any other person whatsoever or on the  satisfaction of any other condition;  (c) there is no Security Interest over that cash other than Security Interests permitted  under paragraph (c)(xi) of Clause 17.5 (Negative pledge); and  (d) the cash is freely and (except as mentioned in paragraph (a) above) immediately  available to be applied in repayment or prepayment of the Loan.  “Cash Equivalent Investments” means at any time:  (a) certificates of deposit maturing within one year after the relevant date of calculation  and issued by an Acceptable Bank;  

 

   36  EU-DOCS\29914380.5  (b) any investment in marketable debt obligations issued or guaranteed by the  government of an Acceptable Jurisdiction or by an instrumentality or agency of any of  them having an equivalent credit rating, maturing within one year after the relevant  date of calculation and not convertible or exchangeable to any other security;   (c) commercial paper not convertible or exchangeable to any other security:  (i) for which a recognised trading market exists;  (ii) issued by an issuer incorporated in an Acceptable Jurisdiction;  (iii) which matures within one year after the relevant date of calculation; and  (iv) which has a credit rating of either A-1 or higher by Standard & Poor’s Rating  Services or F1 or higher by Fitch Ratings Ltd or P-1 or higher by Moody’s  Investor Services Limited, or, if no rating is available in respect of the  commercial paper, the issuer of which has, in respect of its long-term  unsecured and non-credit enhanced debt obligations, an equivalent rating;  (d) Sterling bills of exchange eligible for rediscount at the Bank of England (or their  dematerialised equivalent) and accepted by an Acceptable Bank;  (e) any investment in money market funds which:  (i) have a credit rating of either A-1 or higher by Standard & Poor’s Rating  Services or F1 or higher by Fitch Ratings Ltd or P-1 or higher by Moody’s  Investor Services Limited;  (ii) which invest substantially all their assets in securities of the types described  in paragraphs (a) to (d) above; and   (iii) can be turned into cash on not more than 30 days’ notice; or  (f) any other debt security approved by the Lender,  in each case, denominated in a currency of an Acceptable Jurisdiction and to which any  member of the Group is alone (or together with other members of the Group beneficially  entitled at that time) and which is not issued or guaranteed by any member of the Group or  subject to any Security Interest (other than Security Interests permitted under paragraphs  (c)(xii) and (c)(xi) of Clause 17.5 (Negative pledge)).  “Consolidated EBITDA” means the consolidated net pre-taxation profits of the Group for a  Measurement Period as adjusted by:  (a) adding back Interest Payable;  (b) taking no account of any exceptional or extraordinary item;  (c) excluding any amount attributable to minority interests;  (d) adding back depreciation and amortisation; and  (e) taking no account of any revaluation of an asset or any loss or gain over book value  arising on the disposal of an asset (otherwise than in the ordinary course of trading)  by a member of the Group during that Measurement Period.  

 

   37  EU-DOCS\29914380.5  “Interest Payable” means, in relation to any Measurement Period, all interest payable and  similar charges of the Group expressed in Sterling and determined on a consolidated basis in  accordance with Applicable Accounting Principles but excluding interest payable or similar  charges of the Group in relation to intra-Group items, loans from Affiliates and shareholder  loans to the extent that such intra-Group items, loans from Affiliates and/or shareholder loans  are subordinated on the terms set out in a Subordination Deed.  “Measurement Period” means each period of 12 months ending on 31 March or  30 September.  “Regulatory Asset Base” means at any date, the regulatory asset base of the Company for  such date as last determined and notified to the Company by OFGEM (interpolated as  necessary and adjusted for additions to the regulatory asset base and adjusted as appropriate  for out-turn inflation/regulatory depreciation).  “Total Net Debt” means, at any time, the consolidated Financial Indebtedness of the Group  which is required to be accounted for as debt in the consolidated annual financial statements  of the Group less the aggregate at such time of all Cash or Cash Equivalent Investments held  by any member of the Group excluding intra-Group items, loans from Affiliates and  shareholder loans to the extent that such intra-Group items, loans from Affiliates and/or  shareholder loans are subordinated on the terms set out in a Subordination Deed.  16.2 Interpretation  (a) Except as provided to the contrary in this Agreement, an accounting term used in this  Clause is to be construed in accordance with the principles applied in connection with  the audited consolidated financial statements of the Company for the year ended 31  March 2020.  (b) Any amount in a currency other than Sterling is to be taken into account at its Sterling  equivalent calculated on the basis of the relevant rates of exchange used by the  Company in, or in connection with, its financial statements for the relevant period.  (c) No item must be credited or deducted more than once in any calculation under this  Clause.  16.3 Interest Cover  The Company must ensure that the ratio of Consolidated EBITDA to Interest Payable is not,  on the last day of each Measurement Period, less than 3 to 1.  16.4 Asset Cover  The Company must ensure that on the last day of each Measurement Period, Total Net Debt  does not exceed 85% of its Regulatory Asset Base.   17. GENERAL COVENANTS  17.1 General  The Company agrees to be bound by the covenants set out in this Clause relating to it and,  where the covenant is expressed to apply to each Material Subsidiary or each member of the  Group, the Company must ensure that each of its Material Subsidiaries or each of its  Subsidiaries, as the case may be, performs that covenant.  

 

   38  EU-DOCS\29914380.5  17.2 Authorisations  The Company must promptly obtain, maintain and comply with the terms of any authorisation  required under any law or regulation to enable it to perform its obligations under, or, subject  to the Legal Reservations, for the validity or enforceability of, any Finance Document.  17.3 Compliance with laws  Each member of the Group must comply in all respects with all laws to which it is subject  where failure to do so is reasonably likely to have a Material Adverse Effect.  17.4 Pari passu ranking  The Company must ensure that its payment obligations under the Finance Documents rank at  least pari passu with all its other present and future unsecured payment obligations, except for  obligations mandatorily preferred by law applying to companies generally.  17.5 Negative pledge  In this Clause 17.5, “Quasi-Security Interest” means an arrangement or transaction  described in paragraph (b) below.  (a) Except as provided below, neither the Company nor any Material Subsidiary may  create or allow to exist any Security Interest or Quasi-Security Interest on any of its  assets.  (b) Except as provided below, neither the Company nor any Material Subsidiary may:  (i) sell, transfer or otherwise dispose of any of its assets on terms whereby they  are or may be leased to or re-acquired by the Company or any Material  Subsidiary;  (ii) sell, transfer or otherwise dispose of any of its receivables on recourse terms;  (iii) enter into any arrangement under which money or the benefit of a bank or  other account may be applied, set-off or made subject to a combination of  accounts; or  (iv) enter into any other preferential arrangement having a similar effect,  in circumstances where the arrangement or transaction is entered into primarily as a  method of raising Financial Indebtedness or of financing the acquisition of an asset.  (c) Paragraphs (a) and (b) above do not apply to:   (i) any lien arising by operation of law and in the ordinary course of trading;  (ii) any netting or set-off arrangement entered into by the Company in the  ordinary course of its banking arrangements for the purpose of netting debit  and credit balances of members of the Group;  (iii) any Security Interest or Quasi-Security Interest created under or in connection  with or arising out of the Balancing and Settlement Code or any transactions  or arrangements entered into in connection with the management of risks  relating thereto;  

 

   39  EU-DOCS\29914380.5  (iv) in respect of overdue amounts which have not been overdue for more than 30  days and/or are being contested in good faith, liens arising solely by operation  of law or by order of a court or tribunal (or by an agreement of similar effect)  and/or in the ordinary course of day to day business or operations;  (v) any Security Interest or Quasi-Security Interest arising out of title retention  provisions in a supplier’s standard conditions of supply of goods acquired in  the ordinary course of business or operations;  (vi) any Security Interest or Quasi-Security Interest created on any asset acquired  after the date of this Agreement for the sole purpose of financing or re- financing that acquisition and securing a principal, capital or nominal amount  not exceeding the cost of that acquisition, provided that the Security Interest  or Quasi-Security Interest is removed or discharged within six months of the  date of acquisition of such asset;  (vii) any Security Interest or Quasi-Security Interest outstanding on or over any  asset acquired after the date of this Agreement and in existence at the date of  such acquisition, provided that the Security Interest or Quasi-Security  Interest is removed or discharged within six months of the date of acquisition  of such asset;  (viii) any Security Interest or Quasi-Security Interest created or outstanding on or  over any asset of any company which becomes a Material Subsidiary of the  Company after the date of this Agreement where such Security Interest or  Quasi-Security Interest is created prior to the date on which such company  becomes a Material Subsidiary of the Company and is not created or  increased in contemplation of such company being acquired and/or becoming  a Material Subsidiary of the Company and the Security Interest or Quasi- Security Interest is removed or discharged within six months of the date of  such company becoming a Material Subsidiary of the Company;  (ix) any Quasi-Security Interest arising as a result of a disposal which is a disposal  permitted under paragraph (b) of Clause 17.6;  (x) any netting arrangements under any swap or other hedging transaction which  is on standard market terms;  (xi) any Security Interest or Quasi-Security Interest over bank accounts of the  Company in favour of the account holding bank with whom it maintains a  banking relationship in the ordinary course of trade and granted as part of that  bank’s standard terms and conditions;  (xii) any Security Interest or Quasi-Security Interest created or outstanding with  the prior approval of the Lender; and  (xiii) any Security Interest or Quasi-Security Interest created or outstanding on or  over assets of the Company or any of its Material Subsidiaries provided that  the aggregate outstanding principal or nominal amount secured by all Security  Interests and Quasi-Security Interest created or outstanding under this  exception on or over such assets shall not at any time exceed £25,000,000 or  its equivalent.  

 

   40  EU-DOCS\29914380.5  17.6 Disposals  (a) Except as provided below, no member of the Group may, either in a single transaction  or in a series of transactions and whether related or not, dispose of all or any part of  its assets (other than cash) where the higher of the market value and the net  consideration receivable (when aggregated with the higher of the market value and  the net consideration receivable from any previous disposal by members of the  Group) exceeds £10,000,000 (or its equivalent) in total during the term of this  Agreement.  (b) Paragraph (a) above does not apply to:   (i) any disposal made in the ordinary course of day to day business or operations  of the disposing entity (including, without limitation, disposals of subsidiaries  or lines of business, provided that this shall not include a disposal of the core  electricity distribution business);   (ii) disposals on normal commercial terms of obsolete assets or assets no longer  required for the purpose of the relevant member of the Group’s business or  operations;  (iii) any realisation of investments acquired, purchased or made by the temporary  application of funds not immediately required in the relevant member of the  Group’s business or operations;  (iv) the exchange of assets for other assets of a similar or superior nature and  value, or the sale of assets on normal commercial terms for cash which is  payable in full on the completion of the sale and is to be, and is, applied in or  towards the purchase of similar assets within 12 months of that disposal (or, if  contractually committed to be used within 12 months, are actually used within  18 months of that disposal);  (v) the disposal of assets by one wholly-owned Subsidiary of the Company to  another or (if the consideration for the disposal does not exceed a normal  commercial consideration) to the Company by one of its Subsidiaries;  (vi) disposals in connection with sale-and-leaseback or sale and repurchase  transactions or any other form of “off balance sheet” financing, provided  that the aggregate book value (in the books of the disposing party) of all  assets the subject of all such disposals made during the period commencing  on the date of this Agreement and ending on the date when no amount  remains to be lent or remains payable under this Agreement shall not exceed  £100,000,000;  (vii) any disposal which the Lender has agreed shall not be taken into account;   (viii) arising as a result of any Security Interest or Quasi-Security Interest permitted  under paragraph (c) above of Clause 17.5;  (ix) the application or disposal of cash not otherwise prohibited under the Finance  Documents;  (x) any disposal by a member of Group compulsorily required by law or  regulation having the force of law or any order of any government entity  made thereunder and having the force of law provided that and to the extent  permitted by such law or regulation:  

 

   41  EU-DOCS\29914380.5  (A) such disposal is made for fair market value; and  (B) such disposal does not have a Material Adverse Effect.  17.7 Environmental matters  (a) The Company will and will ensure that its Material Subsidiaries will comply with all  applicable Environmental Law and other regulations, orders or other law applicable to  the conduct of the business of the supply or distribution of electricity, in each case,  where failure to do so would have a Material Adverse Effect.  (b) The Company will, promptly upon becoming aware of the same, inform the Lender in  writing of:  (i) any Environmental Claim against any member of the Group which is current,  pending or threatened; and  (ii) any facts or circumstances which are reasonably likely to result in any  Environmental Claim being commenced or threatened against any member of  the Group,  where the claim, if determined against that member of the Group, would have a  Material Adverse Effect.  17.8 Insurance  Each member of the Group must insure its business and assets with insurance companies to  such an extent and against such risks as that member of the Group reasonably considers to be  appropriate, having regard to the insurance arrangements of companies engaged in similar  business.  17.9 Merger  (a) The Company shall not enter into any amalgamation, demerger, merger or corporate  reconstruction.  (b) Clause (a) above shall not apply to any sale, lease, transfer or other disposal permitted  pursuant to Clause 17.6 (Disposals).  17.10 Change of business  The Company shall procure that no substantial change is made to the general nature of the  business of the Company or the Group from that carried on at the date of this Agreement.  17.11 Acquisitions  (a) Except as provided below, neither the Company nor any Material Subsidiary may  acquire a company or any shares or securities or a business or undertaking (or, in each  case, any interest in any of them).  (b) Provided that no Event of Default is outstanding on the date of the acquisition or  would occur as a result of the acquisition, paragraph (a) above does not apply to:  (i) an acquisition by a member of the Group of an asset sold, leased, transferred  or otherwise disposed of by another member of the Group as permitted under  paragraph (b) of Clause 17.6 (Disposals) above;  

 

   42  EU-DOCS\29914380.5  (ii) an acquisition where the consideration (including associated costs and  expenses) for the acquisition (when aggregated with the consideration  (including associated costs and expenses) for any other acquisition permitted  under this paragraph) during the term of this Agreement does not exceed 5%  of the sum of the issued share capital, share premium and consolidated  reserves (including retained earnings) of the Company, as shown by its most  recent audited consolidated financial statements; and  (iii) any acquisition which the Lender has consented to in writing.  17.12 Prohibition on Subsidiary Financial Indebtedness  The Company shall procure that no member of the Group (other than the Company) will incur  or allow to remain outstanding any Financial Indebtedness unless the relevant member of the  Group is a special purpose vehicle incorporated solely for the purpose of incurring such  Financial Indebtedness and which does not undertake any other activities.   17.13 Arm’s length transactions  The Company shall not (and the Company shall ensure no member of the Group will) enter  into any transaction with any person except on arm’s length terms and for full market value  where to do so would be in contravention of the Licence, provided that if, at any time, the  Licence is not in effect, the Company shall not (and shall ensure no member of the Group  will) enter into any transaction with any person except on arm’s length terms and for full  market value.  17.14 Pensions  (a) The Company shall ensure that no action or omission is taken by any member of the  Group in relation to a pension scheme which has or is reasonably likely to have a  Material Adverse Effect (including, without limitation, the termination or  commencement of winding-up proceedings of any such pension scheme).  (b) Except for in respect of the Electricity Supply Pension Scheme (and in particular the  Central Networks Group, the EATL Group and in the case of merger, the WPD  Group), the Company shall ensure that no member of the Group is an employer (for  the purposes of sections 38 to 51 of the Pensions Act 2004) of an occupational  pension scheme which is not a money purchase scheme (both terms as defined in the  Pension Schemes Act 1993) or “connected” with or an “associate” of (as those terms  are used in sections 38 or 43 of the Pensions Act 2004) such an employer.  (c) The Company shall promptly notify the Lender if it receives a Financial Support  Direction or a Contribution Notice from the Pensions Regulator.   17.15 Licence  The Company will at all times:  (a) comply with the terms of the Licence in all material respects;  (b) without prejudice to the generality of paragraph (a) above of Clause 17.15, comply  with the ring fencing provisions of the Licence in all respects; and  (c) not take any action or make any omission which is reasonably likely to result in the  revocation or termination of the Licence.   

 

   43  EU-DOCS\29914380.5  17.16 Investment Grade Rating  The Company shall procure that the long-term, unsecured and non credit-enhanced debt  obligations of the Company shall be rated Baa3/BBB-, or such higher rating as required by  the Licence, or above, by at least one of Moody’s and Standard and Poor’s and shall not be  rated below Baa3/BBB-, or such higher rating as required by the Licence, by either of  Moody’s or Standard and Poor’s.  17.17 Sanctions  (a) Neither the Company, nor any other member of the Group, shall be the subject of any  Sanctions, and no member of the Group shall be located, organized or resident in a  country or territory that is the subject of country-wide or territory-wide Sanctions.  (b) The Company undertakes that no member of the Group will, directly or indirectly, use  the proceeds of the transaction, or lend, contribute or otherwise make available such  proceeds to any subsidiary, joint venture partner or other individual, entity or any  other Person who is a Sanctioned Person, to fund any activities of or business with  such Sanctioned Person, or in Syria, Cuba, Iran, North Korea, Sudan or in any other  country or territory, that, at the time of such funding, is the subject of country-wide or  territory-wide Sanctions, or in any other manner that will result in a violation by any  such Sanctioned Person (including any Person participating in the transaction,  whether as underwriter, advisor, investor or otherwise).  (c) The Company shall ensure that the source of any funds for discharging its obligations  under this Agreement is not obtained from any designated target of any Sanctions or  any of Syria, Cuba, Iran, North Korea, Sudan or any other country or territory, that, at  the time of such payment, is the subject of country-wide or territory-wide Sanctions.  17.18 Anti-Corruption  (a) The Company shall not (and shall ensure that no other member of the Group will) use  the proceeds, or cause or permit the proceeds of any Loan to be used, directly or  indirectly, in any way that would be in breach of applicable anti-corruption laws.  (b) The Company shall (and shall ensure that each other member of the Group will):  (i) conduct its businesses in compliance with applicable anti-corruption laws;  and  (ii) maintain policies and procedures designed to promote and achieve  compliance with such laws.  18. DEFAULT  18.1 Events of Default  Each of the events set out in this Clause is an Event of Default.  18.2 Non-payment  The Company fails to pay any sum payable under any Finance Document when due unless its  failure to pay is caused by:  (a) administrative or technical error; or  (b) a Disruption Event,   

 

   44  EU-DOCS\29914380.5  and payment is made within five Business Days of its due date.   18.3 Breach of other obligations  (a) The Company does not perform or comply with its obligations under Clause 16  (Financial Covenants).  (b) The Company does not perform or comply with any of its other obligations under any  Finance Document in any material respect or any representation or warranty by the  Company in this Agreement or in any document delivered under it is or proves to  have been incorrect when made or deemed repeated, unless the non-compliance or  circumstances giving rise to the misrepresentation, as the case may be, is capable of  remedy and is not remedied within 20 Business Days of the earlier of the Lender  giving notice requiring the same to be remedied and the Company becoming aware of  such non-compliance or misrepresentation, as the case may be.   18.4 Cross-default  (a) Any Financial Indebtedness of any member of the Group is not paid when due nor  within any originally applicable grace period.  (b) Any Financial Indebtedness of any member of the Group is declared to be or  otherwise becomes due and payable prior to its specified maturity as a result of an  event of default (however described).  (c) Any commitment for any Financial Indebtedness of any member of the Group is  cancelled or suspended by a creditor of that member of the Group as a result of an  event of default (however described).  (d) Any creditor of any member of the Group becomes entitled to declare any Financial  Indebtedness of any member of the Group due and payable prior to its specified  maturity as a result of an event of default (however described).  (e) No Event of Default will occur under this Clause 18.4 unless and until the aggregate  amount of such Financial Indebtedness falling within paragraphs (a) to (d) above is  more than £20,000,000 or its equivalent in any other currency or currencies.  18.5 Insolvency  (a) Any of the following occurs in respect of the Company:  (i) it is unable to pay its debts generally as they fall due or it is deemed by a  court of competent jurisdiction to be insolvent;   (ii) it suspends making payments on all or any class of its debts or publicly  announces an intention to do so;  (iii) by reason of actual or anticipated financial difficulties, it begins negotiations  with all or any class of its creditors for the general rescheduling of its  indebtedness; or  (iv) a moratorium is declared in respect of any of its indebtedness.  (b) If a moratorium occurs in respect of the Company, the ending of the moratorium will  not remedy any Event of Default caused by the moratorium.  

 

   45  EU-DOCS\29914380.5  18.6 Insolvency proceedings  (a) Except as provided below, any of the following occurs in respect of the Company:  (i) a suspension of payments, a moratorium of any indebtedness or a  reorganisation (by way of voluntary arrangement, scheme of arrangement or  otherwise);  (ii) any person presents a petition for its winding-up, administration or  dissolution;   (iii) an order for its winding-up, administration or dissolution is made;   (iv) any liquidator, trustee in bankruptcy, judicial custodian, compulsory manager,  receiver, administrative receiver, administrator or similar officer is appointed  in respect of it or any of its assets;   (v) its directors or other officers request the appointment of a liquidator, trustee in  bankruptcy, judicial custodian, compulsory manager, receiver, administrative  receiver, administrator or similar officer;  (vi) enforcement of any Security Interest over any of its assets; or  (vii) any other analogous step or procedure is taken in any jurisdiction.  (b) Paragraph (a) above does not apply to:  (i) a petition for winding-up presented by a creditor which is being actively  contested in good faith and with due diligence and with a reasonable prospect  of success; or  (ii) a voluntary solvent winding-up, amalgamation, reconstruction or  reorganisation or otherwise part of a solvent scheme of arrangement, in each  case which is on terms approved by the Lender.  18.7 Creditors’ process  A distress, attachment, execution or other legal process material in relation to the Company’s  ability to perform its payment obligations under this Agreement is levied, enforced or sued  out on or against the assets of the Company. No Event of Default will occur under this Clause  if the distress, attachment, execution or other legal process is being contested in good faith  and with due diligence and is discharged within 30 days.  18.8 Licence  Either:  (a) notice is given to revoke or terminate the Licence unless such termination is being  contested in good faith and such notice is revoked or cancelled within 14 days of  notice being given; or  (b) the Licence is revoked,   in either case, other than in circumstances which permit the Company or its Subsidiaries to  carry on the distribution business of the Company either without a licence as a result of any  change in the Act or regulatory regime or with a new licence, permitting the distribution of  

 

   46  EU-DOCS\29914380.5  electricity in the authorised areas covered by the Licence, issued under the Act or pursuant to  the Utilities Act 2000.  18.9 Balancing and Settlement Code  The Company:  (a) ceases to be a party to the Balancing and Settlement Code Framework Agreement  other than in circumstances where the Company is able to carry on its distribution  business; or  (b) breaches the Balancing and Settlement Code and such breach has or is reasonably  likely to have a Material Adverse Effect.  18.10 Unlawfulness and invalidity  (a) It is or becomes unlawful for the Company to perform any of its obligations under the  Finance Documents in any material respect.  (b) Any obligation or obligations of the Company under any Finance Documents are not  (subject to the Legal Reservations) or cease to be legal, valid, binding or enforceable  and the cessation individually or cumulatively materially and adversely affects the  interests of the Lender under the Finance Documents.  18.11 Cessation of business  The Company suspends or ceases to carry on (or threatens to suspend or cease to carry on) all  or a material part of its business except as a result of a disposal permitted by Clause 17.6  (Disposals).  18.12 Repudiation and rescission of agreements  The Company rescinds or purports to rescind or repudiates or purports to repudiate a Finance  Document or evidences an intention to rescind or repudiate a Finance Document.  18.13 Ownership of other Group companies  The Company ceases to own (directly or indirectly) 100% of the shares in any of its  Subsidiaries:  (a) which is engaged in the core electricity distribution business; or  (b) in respect of which it has any actual or contingent financial obligations other than as a  result of a solvent liquidation or reorganisation so long as any payments or assets  distributed as a result of such solvent liquidation or reorganisation are distributed to  other members of the Group.  18.14 Acceleration  If an Event of Default is outstanding, the Lender may by notice to the Company:  (a) cancel the Commitment; and/or  (b) declare that all or part of any amounts outstanding under the Finance Documents are:  (i) immediately due and payable; and/or  

 

   47  EU-DOCS\29914380.5  (ii) payable on demand by the Lender.  Any notice given under this Clause 18.14 will take effect in accordance with its terms.  19. EVIDENCE AND CALCULATIONS  19.1 Accounts  Accounts maintained by the Lender in connection with this Agreement are prima facie  evidence of the matters to which they relate for the purpose of any litigation or arbitration  proceedings.  19.2 Certificates and determinations  Any certification or determination by the Lender of a rate or amount under the Finance  Documents will be, in the absence of manifest error, conclusive evidence of the matters to  which it relates.  19.3 Calculations  Any interest or fee accruing under this Agreement accrues from day to day and is calculated  on the basis of, the actual number of days elapsed in the relevant period divided by 365 and  shall be rounded to five decimal places.  20. INDEMNITY  20.1 Indemnity  (a) Subject to paragraph (b) below, the Company shall, within five Business Days of a  demand by the Lender indemnify the Lender against any cost, loss or liability which  the Lender incurs as a consequence of:   (i) the occurrence of any Event of Default;  (ii) the acceleration of the Loan;  (iii) a failure by the Company to pay any amount due under a Finance Document  on its due date;  (iv) the Lender’s funding or making arrangements to fund the Loan requested by  the Company in a Request but not made by reason of the operation of any one  or more of the provisions of this Agreement (other than by reason of  negligence or default by the Lender alone);   (v) the Loan or part of the Loan not being prepaid in accordance with a notice of  prepayment given by the Company; or   (vi) any prepayment of the Loan being made under any provision of this  Agreement.  (b) If:  (i) any cost, loss or liability incurred by the Lender under paragraph (a) above is  in respect of any Swap Break Costs, the provisions of paragraphs (c) to (e)  (inclusive) below shall apply; and  

 

   48  EU-DOCS\29914380.5  (ii) any Swap Break Costs are received by the Lender under any Related Swap  Transaction due to the termination by the Lender of the Related Swap  Transaction as a result of any event specified in paragraph (a) above, the  provisions of paragraphs (c) to (e) (inclusive) below shall apply and the  Lender shall pay the amount of such Swap Break Costs to the Company in  accordance therewith.  (c) On the date of termination by the Lender of the Related Swap Transaction as a result  of an event specified in paragraph (a) above, the Lender shall notify the Company that  such termination has occurred.  (d) The “Swap Break Costs” shall be the amount certified in writing (including  reasonable details of calculations by the Lender to be the amount determined pursuant  to section 6(e)(i)(3) (Payments on Early Termination) of the Related Swap Agreement  as a result of the occurrence of an “Early Termination Date” in respect of which the  Related Swap Transaction is the sole “Terminated Transaction” or the sole “Affected  Transaction” (as applicable) and the Lender is the “Defaulting Party” or the sole  “Affected Party” (as applicable) (each such term as defined in the Related Swap  Agreement) provided, however, that such amounts shall be calculated based on the  assumption that no “Unpaid Amounts” (as defined in the Related Swap Agreement)  are owing by either party under the Related Swap Agreement and such certification  shall be delivered by the Lender to the Company as soon as reasonably practicable  after determination of such amount under the Related Swap Agreement.  (e) No Swap Break Costs shall be payable by any Party until the amount of the Swap  Break Costs has been determined in accordance with this Clause. If the Swap Break  Costs are a cost or loss to the Lender, the Company shall within two Business Days of  demand pay such amount to the Lender. If the Swap Break Costs are a receipt or gain  by the Lender, the Lender shall within two Business Days of demand pay such  amount to the Company.   (f) The Lender agrees that it shall not:  (i) waive its rights under the Related Swap Agreement; or  (ii) request that the counterparty to the Related Swap Agreement waives its rights  thereunder,  in each case without the prior consent of the Company.   21. EXPENSES  21.1 Initial costs  Subject to any cap agreed between the Parties, the Company must pay to the Lender promptly  on demand the amount of all costs and expenses (including legal fees) reasonably incurred by  it in connection with the negotiation, preparation, printing and execution of the Finance  Documents.  21.2 Subsequent costs  Subject to any cap agreed between the Parties, the Company must pay to the Lender promptly  on demand the amount of all costs and expenses (including legal fees) reasonably incurred by  it in connection with:  

 

   49  EU-DOCS\29914380.5  (a) the negotiation, preparation, printing and execution of any Finance Document (other  than a Transfer Certificate) executed after the date of this Agreement; and  (b) any amendment, waiver or consent requested by or on behalf of the Company or  specifically allowed by this Agreement.  21.3 Enforcement costs  The Company must pay to the Lender the amount of all costs and expenses (including legal  fees) incurred by it in connection with the enforcement of, or the preservation of any rights  under, any Finance Document.  22. AMENDMENTS AND WAIVERS  22.1 Procedure  The Lender and the Company may agree to amend or waive any term of the Finance  Documents.  22.2 Change of currency  Unless otherwise prohibited by law, if more than one currency or currency unit are at the  same time recognised by the central bank of any country as the lawful currency of that  country, then:  (a) any reference in the Finance Documents to, and any obligations arising under the  Finance Documents in, the currency of that country shall be translated into, or paid in,  the currency or currency unit of that country designated by the Lender (after  consultation with the Company); and  (b) any translation from one currency or currency unit to another shall be at the official  rate of exchange recognised by the central bank for the conversion of that currency or  currency unit into the other, rounded up or down by the Lender (acting reasonably).  If a change in any currency of a country occurs, this Agreement will, to the extent the Lender  (acting reasonably and after consultation with the Company) specifies to be necessary, be  amended to comply with any generally accepted conventions and market practice and  otherwise to reflect the change in currency.  22.3 Waivers and remedies cumulative  The rights of the Lender under the Finance Documents:  (a) may be exercised as often as necessary;  (b) are cumulative and not exclusive of its rights under the general law; and  (c) may be waived only in writing and specifically.  Delay in exercising or non-exercise of any right is not a waiver of that right.  23. CHANGES TO THE PARTIES  23.1 Assignments and transfers by the Company  The Company may not assign or transfer any of its rights and obligations under the Finance  Documents without the prior consent of the Lender.  

 

   50  EU-DOCS\29914380.5  23.2 Assignments and transfers by the Lender  (a) The Lender (the “Existing Lender”) may, subject to the following provisions of this  Clause 23, at any time assign or transfer (including by way of novation) in whole but  not in part its rights and obligations under this Agreement to any bank, financial  institution or trust, fund or other entity which is regularly engaged in or established  for the purpose of making, purchasing or investing in loans, securities or other  financial assets (the “New Lender”).  (b) The Existing Lender must first obtain the consent of the Company (such consent not  to be unreasonably withheld or delayed and which shall be deemed to have been given  if, after five Business Days following receipt of notice, the Company has not refused  its consent) before it may make a transfer or assignment unless:  (i) the New Lender to whom the transfer or assignment is proposed to be made is  an Affiliate of the Existing Lender; or  (ii) the transfer or assignment is made at a time when an Event of Default has  occurred and is continuing.  (c) An assignment of rights or a transfer of rights and obligations will be effective only if  either:  (i) the obligations are novated in accordance with the following provisions of  this Clause 23; or  (ii) the New Lender confirms to the Company that it is bound by the terms of this  Agreement as a Lender. On the assignment or transfer becoming effective in  this manner the Existing Lender will be released from its rights and  obligations under this Agreement to the extent that they are assigned or  transferred to the New Lender.  (d) Any reference in this Agreement to a Lender includes a New Lender but excludes a  Lender if no amount is or may be owed to or by it under this Agreement and its  Commitment has been cancelled or reduced to nil.  23.3 Procedure for transfer by way of novation  In this Clause:  (a) A novation is effected if the Existing Lender and the New Lender execute a duly  completed Transfer Certificate.  (b) On the Transfer Date:  (i) the New Lender will assume the rights and obligations of the Existing Lender  expressed to be the subject of the novation in the Transfer Certificate in  substitution for the Existing Lender; and  (ii) the Existing Lender will be released from those obligations and cease to have  those rights.  23.4 Limitation of responsibility of Existing Lender  (a) Unless expressly agreed to the contrary, an Existing Lender is not responsible to a  New Lender for the legality, validity, adequacy, accuracy, completeness or  performance of:  

 

   51  EU-DOCS\29914380.5  (i) any Finance Document or any other document; or  (ii) any statement or information (whether written or oral) made in or supplied in  connection with any Finance Document,   and any representations or warranties implied by law are excluded.  (b) The New Lender confirms to the Existing Lender that it:  (i) has made, and will continue to make, its own independent appraisal of all  risks arising under or in connection with the Finance Documents (including  the financial condition and affairs of the Company and its related entities and  the nature and extent of any recourse against any Party or its assets) in  connection with its participation in this Agreement; and  (ii) has not relied exclusively on any information supplied to it by the Existing  Lender in connection with any Finance Document.  (c) Nothing in any Finance Document requires an Existing Lender to:  (i) accept a re-transfer or re-assignment from a New Lender of any of the rights  and obligations assigned or transferred under this Clause; or  (ii) support any losses incurred by the New Lender by reason of the non- performance by the Company of its obligations under any Finance Document  or otherwise.  23.5 Costs resulting from change of Lender or Facility Office  If:  (a) the Lender assigns or transfers any of its rights and obligations under the Finance  Documents or changes its Facility Office; and  (b) as a result of circumstances existing at the date the assignment, transfer or change  occurs, the Company would be obliged to make a payment to the New Lender or  Lender acting through its new Facility Office under Clause 9 (Tax Gross-Up and  Indemnities) or Clause 11 (Increased Costs),  then the New Lender or Lender acting through its new Facility Office is only entitled to  receive payment under those Clauses to the same extent as the Existing Lender or Lender  acting through its previous Facility Office would have been if the assignment, transfer or  change had not occurred. This Clause 23.5 shall not apply in relation to Clause 9 (Tax Gross- Up and Indemnities), to a Treaty Lender that has included an indication to the effect that it  wishes the HMRC DT Treaty Passport scheme to apply to this Agreement in accordance with  paragraph (a) of Clause 9.5 (HMRC DT Treaty Passport scheme confirmation) if the  Company making the payment has not complied with its obligations under paragraph (b) of  Clause 9.5 (HMRC DT Treaty Passport scheme confirmation).  23.6 Copy of Transfer Certificate to the Company  The Existing Lender shall, as soon as reasonably practicable after it has executed a Transfer  Certificate, send to the Company a copy of that Transfer Certificate.  

 

   52  EU-DOCS\29914380.5  23.7 Security over Lender’s rights  In addition to the other rights provided to Lender under this Clause 23, the Lender may  without consulting with or obtaining consent from the Company, at any time charge, assign or  otherwise create security in or over (whether by way of collateral or otherwise) all or any of  its rights under any Finance Document to secure its obligations including, without limitation:  (a) any charge, assignment or other security to secure obligations to a federal reserve or  central bank; and  (b) any charge, assignment or other security granted to any holders (or trustee or  representatives of holders) of obligations owed, or securities issued, by the Lender as  security for those obligations or securities,  except that no such charge, assignment or Security Interest shall:  (i) release the Lender from any of its obligations under the Finance Documents  or substitute the beneficiary of the relevant charge, assignment or other  security for the Lender as a party to any of the Finance Documents; or  (ii) require any payments to be made by the Company or grant to any person any  more extensive rights than those required to be made or granted to the Lender  under the Finance Documents.  24. CONFIDENTIALITY AND DISCLOSURE OF INFORMATION  24.1 Confidential Information   The Lender agrees to keep all Confidential Information confidential and not to disclose it to  anyone, save to the extent permitted by Clause 24.2 (Disclosure of Confidential Information)  and Clause 24.3 (Disclosure to numbering service providers), and to ensure that all  Confidential Information is protected with security measures and a degree of care that would  apply to its own confidential information.  24.2 Disclosure of Confidential Information   The Lender may disclose:   (a) to any of its Affiliates and Related Funds and any of its or their officers, directors,  employees, professional advisers, auditors, partners and Representatives such  Confidential Information as the Lender shall consider appropriate if any person to  whom the Confidential Information is to be given pursuant to this paragraph (a) is  informed in writing of its confidential nature and that some or all of such Confidential  Information may be price-sensitive information except that there shall be no such  requirement to so inform if the recipient is subject to professional obligations to  maintain the confidentiality of the information or is otherwise bound by requirements  of confidentiality in relation to the Confidential Information;  (b) to any person:  (i) to (or through) whom it assigns or transfers (or may potentially assign or  transfer) all or any of its rights and/or obligations under one or more Finance  Documents or which succeeds (or which may potentially succeed) it as  Lender and, in each case, to any of that person’s Affiliates, Related Funds,  Representatives and professional advisers;  

 

   53  EU-DOCS\29914380.5  (ii) with (or through) whom it enters into (or may potentially enter into), whether  directly or indirectly, any sub-participation in relation to, or any other  transaction under which payments are to be made or may be made by  reference to, one or more Finance Documents and/or the Company and to any  of that person’s Affiliates, Related Funds, Representatives and professional  advisers;  (iii) appointed by the Lender or by a person to whom paragraph (b)(i) or (b)(ii)  above applies to receive communications, notices, information or documents  delivered pursuant to the Finance Documents on its behalf;   (iv) who invests in or otherwise finances (or may potentially invest in or  otherwise finance), directly or indirectly, any transaction referred to in  paragraph (b)(i) or (b)(ii) above;  (v) to whom information is required or requested to be disclosed by any court of  competent jurisdiction or any governmental, banking, taxation or other  regulatory authority or similar body, the rules of any relevant stock exchange  or pursuant to any applicable law or regulation;  (vi) to whom or for whose benefit the Lender charges, assigns or otherwise creates  security (or may do so) pursuant to Clause 23.7 (Security over Lender’s  rights);   (vii) to whom information is required to be disclosed in connection with, and for  the purposes of, any litigation, arbitration, administrative or other  investigations, proceedings or disputes;  (viii) who is a Party; or  (ix) with the consent of the Company;  in each case, such Confidential Information as the Lender shall consider appropriate  if:  (A) in relation to paragraph (b)(i), (b)(ii) and (b)(iii) above, the person to  whom the Confidential Information is to be given has entered into a  Confidentiality Undertaking except that there shall be no requirement  for a Confidentiality Undertaking if the recipient is a professional  adviser and is subject to professional obligations to maintain the  confidentiality of the Confidential Information;  (B) in relation to paragraph (b)(vi) above, the person to whom the  Confidential Information is to be given has entered into a  Confidentiality Undertaking or is otherwise bound by requirements of  confidentiality in relation to the Confidential Information they receive  and is informed that some or all of such Confidential Information may  be price-sensitive information;  (C) in relation to paragraph (b)(v), (b)(vi) and (b)(vii) above, the person  to whom the Confidential Information is to be given is informed of its  confidential nature and that some or all of such Confidential  Information may be price-sensitive information except that there shall  be no requirement to so inform if, in the opinion of the Lender, it is  not practicable so to do in the circumstances;  

 

   54  EU-DOCS\29914380.5  (c) to any person appointed by the Lender or by a person to whom paragraph (b)(i) or  (b)(ii) above applies to provide administration or settlement services in respect of one  or more of the Finance Documents including without limitation, in relation to the  trading of participations in respect of the Finance Documents, such Confidential  Information as may be required to be disclosed to enable such service provider to  provide any of the services referred to in this paragraph (c) of Clause 24.2 if the  service provider to whom the Confidential Information is to be given has entered into  a confidentiality agreement substantially in the form of the LMA Master  Confidentiality Undertaking for Use With Administration/Settlement Service  Providers or such other form of confidentiality undertaking agreed between the  Company and the Lender;  (d) to any rating agency (including its professional advisers) such Confidential  Information as may be required to be disclosed to enable such rating agency to carry  out its normal rating activities in relation to the Finance Documents and/or the  Company if the rating agency to whom the Confidential Information is to be given is  informed of its confidential nature and that some or all of such Confidential  Information may be price-sensitive information.  24.3 Disclosure to numbering service providers  (a) The Lender may disclose to any national or international numbering service provider  appointed by the Lender to provide identification numbering services in respect of  this Agreement, the Loan and/or the Company the following information:  (i) name of the Company;  (ii) country of domicile of the Company;  (iii) place of incorporation of the Company;  (iv) date of this Agreement;  (v) Clause 31 (Governing Law);  (vi) date of each amendment and restatement of this Agreement;  (vii) amount of Commitment;  (viii) currency of the Loan;  (ix) type of Loan;  (x) ranking of Loan;  (xi) Final Maturity Date;  (xii) changes to any of the information previously supplied pursuant to paragraphs  (i) to (xi) above; and  (xiii) such other information agreed between the Lender and the Company,  to enable such numbering service provider to provide its usual syndicated loan  numbering identification services.  (b) The Parties acknowledge and agree that each identification number assigned to this  Agreement, the Loan and/or the Company by a numbering service provider and the  

 

   55  EU-DOCS\29914380.5  information associated with each such number may be disclosed to users of its  services in accordance with the standard terms and conditions of that numbering  service provider.  (c) The Company represents that none of the information set out in paragraphs (a)(i) to  (a)(xiii) above is, nor will at any time be, unpublished price-sensitive information.  (d) The Lender shall notify the Company of:  (i) the name of any numbering service provider appointed by the Lender in  respect of this Agreement, the Loan and/or the Company; and  (ii) the number or, as the case may be, numbers assigned to this Agreement, the  Loan and/or the Company by such numbering service provider.  24.4 Continuing obligations  The obligations in this Clause 24 are continuing and, in particular, shall survive and remain  binding on the Lender for a period of twelve months from the earlier of:  (a) the date on which the Loan has been repaid in full; and  (b) the date on which the Lender otherwise ceases to be the lender pursuant to this  Agreement.  25. BAIL-IN  25.1 Contractual recognition of bail-in  Notwithstanding any other term of any Finance Document or any other agreement,  arrangement or understanding between the Parties, each Party acknowledges and accepts that  any liability of any Party to any other Party under or in connection with the Finance  Documents may be subject to Bail-In Action by the relevant Resolution Authority and  acknowledges and accepts to be bound by the effect of:   (a) any Bail-In Action in relation to any such liability, including (without limitation):  (i) a reduction, in full or in part, in the principal amount, or outstanding amount  due (including any accrued but unpaid interest) in respect of any such  liability;  (ii) a conversion of all, or part of, any such liability into shares or other  instruments of ownership that may be issued to, or conferred on, it; and  (iii) a cancellation of any such liability; and  (b) a variation of any term of any Finance Document to the extent necessary to give effect  to any Bail-In Action in relation to any such liability.  25.2 Definitions  "Article 55 BRRD" means Article 55 of Directive 2014/59/EU establishing a framework for  the recovery and resolution of credit institutions and investment firms.    "Bail-In Action" means the exercise of any Write-down and Conversion Powers.  "Bail-In Legislation" means:  

 

   56  EU-DOCS\29914380.5  (a) in relation to an EEA Member Country which has implemented, or which at any time  implements, Article 55 BRRD, the relevant implementing law or regulation  as  described in the EU Bail-In Legislation Schedule from time to time; and   (b) in relation to any state other than such an EEA Member Country or (to the extent that  the United Kingdom is not such an EEA Member Country) the United Kingdom, any  analogous law or regulation from time to time which requires contractual recognition  of any Write-down and Conversion Powers contained in that law or regulation.   "EEA Member Country" means any member state of the European Union, Iceland,  Liechtenstein and Norway.  "EU Bail-In Legislation Schedule" means the document described as such and published by  the Loan Market Association (or any successor person) from time to time.  "Resolution Authority" means any body which has authority to exercise any Write-down and  Conversion Powers.  "UK Bail-In Legislation" means (to the extent that the United Kingdom is not an EEA  Member Country which has implemented, or implements, Article 55 BRRD) Part I of the  United Kingdom Banking Act 2009 and any other law or regulation applicable in the United  Kingdom relating to the resolution of unsound or failing banks, investment firms or other  financial institutions or their affiliates (otherwise than through liquidation, administration or  other insolvency proceedings).  "Write-down and Conversion Powers" means:  (a) in relation to any Bail-In Legislation described in the EU Bail-In Legislation Schedule  from time to time, the powers described as such in relation to that Bail-In Legislation  in the EU Bail-In Legislation Schedule;  (b) in relation to any other applicable Bail-In Legislation:  (i) any powers under that Bail-In Legislation to cancel, transfer or dilute shares  issued by a person that is a bank or investment firm or other financial  institution or affiliate of a bank, investment firm or other financial institution,  to cancel, reduce, modify or change the form of a liability of such a person or  any contract or instrument under which that liability arises, to convert all or  part of that liability into shares, securities or obligations of that person or any  other person, to provide that any such contract or instrument is to have effect  as if a right had been exercised under it or to suspend any obligation in  respect of that liability or any of the powers under that Bail-In Legislation that  are related to or ancillary to any of those powers; and  (ii) any similar or analogous powers under that Bail-In Legislation ; and  (c) in relation to any UK Bail-In Legislation:   (i) any powers under that UK Bail-In Legislation to cancel, transfer or dilute  shares issued by a person that is a bank or investment firm or other financial  institution or affiliate of a bank, investment firm or other financial institution,  to cancel, reduce, modify or change the form of a liability of such a person or  any contract or instrument under which that liability arises, to convert all or  part of that liability into shares, securities or obligations of that person or any  other person, to provide that any such contract or instrument is to have effect  as if a right had been exercised under it or to suspend any obligation in  

 

   57  EU-DOCS\29914380.5  respect of that liability or any of the powers under that UK Bail-In Legislation  that are related to or ancillary to any of those powers; and  (ii) any similar or analogous powers under that UK Bail-In Legislation.  26. SET-OFF  The Lender may set off any matured obligation owed to it by the Company under the Finance  Documents (to the extent beneficially owned by the Lender) against any obligation (whether  or not matured) owed by the Lender to the Company, regardless of the place of payment,  booking branch or currency of either obligation. If the obligations are in different currencies,  the Lender may convert either obligation at a market rate of exchange in its usual course of  business for the purpose of the set-off. If the Lender exercises its rights of set-off or  conversion it must as soon as reasonably practicable notify the Company of such exercise.  27. SEVERABILITY  If a term of a Finance Document is or becomes illegal, invalid or unenforceable in any  jurisdiction, that shall not affect:  (c) the legality, validity or enforceability in that jurisdiction of any other term of the  Finance Documents; or  (d) the legality, validity or enforceability in other jurisdictions of that or any other term of  the Finance Documents.  28. COUNTERPARTS  Each Finance Document may be executed in any number of counterparts. This has the same  effect as if the signatures on the counterparts were on a single copy of the Finance Document.  29. NOTICES  29.1 In writing  (a) Any communication in connection with a Finance Document must be in writing and,  unless otherwise stated, may be given in person, by post, or fax or any other  electronic communication agreed between the Parties.  (b) Unless it is agreed to the contrary, any consent or agreement required under a Finance  Document must be given in writing. For the purposes of the Finance Documents and  this Subclause (b), an electronic communication will be treated as being in writing.  29.2 Contact details  (a) Except as provided below, the contact details of each Party for all communications in  connection with the Finance Documents are those notified by that Party for this  purpose to the other Party on or before the date it becomes a Party.  (b) The contact details of the Company for this purpose are:  Address: Avonbank, Feeder Road, Bristol BS2 0TB  Phone number: 01179 332 374  Email: dhole@westernpower.co.uk  

 

   58  EU-DOCS\29914380.5  Attention: David Hole  The contact details of the Lender for this purpose are:   Address: MUFG Bank, Ltd., Ropemaker Place, 25 Ropemaker Street, London     EC2Y 9AN  Fax number(s): +44 207 577 1559  Attention: The Manager – Loan Participation Service  Emal:  loanparticipations@uk.mufg.jp  (c) Any Party may change its contact details by giving five Business Days’ notice to the  other Party.  (d) Where a Party nominates a particular department or officer to receive a  communication, a communication will not be effective if it fails to specify that  department or officer.  29.3 Effectiveness  (a) Except as provided below, any communication in connection with a Finance  Document will be deemed to be given as follows:  (i) if delivered in person, at the time of delivery;  (ii) if posted, five days after being deposited in the post, postage prepaid, in a  correctly addressed envelope; and  (iii) if by fax, when received in legible form.  (b) A communication given under paragraph (a) above but received on a non-working  day or after business hours in the place of receipt will only be deemed to be given on  the next working day in that place.  (c) A communication to the Lender will only be effective on actual receipt by it.  29.4 Electronic communication  (a) Any communication or document to be made or delivered by one Party to another  under or in connection with the Finance Documents may be made or delivered by  electronic mail or other electronic means (including, without limitation, by way of  posting to a secure website)  (b) Any such electronic communication or document as specified in paragraph (a) above  made or delivered by one Party to another will be effective only when actually  received (or made available) in readable form.  (c) Any electronic communication or document which becomes effective, in accordance  with paragraph (c) above, after 5:00 p.m. in the place in which the Party to whom the  relevant communication or document is sent or made available has its address for the  purpose of this Agreement shall be deemed only to become effective on the following  day.  

 

   59  EU-DOCS\29914380.5  (e) Any reference in a Finance Document to a communication being sent or received or a  document being delivered shall be construed to include that communication or  document being made available in accordance with this Clause 29.4.  30. LANGUAGE  (a) Any notice given in connection with a Finance Document must be in English.  (b) Any other document provided in connection with a Finance Document must be:  (i) in English; or  (ii) accompanied by a certified English translation. In this case, the English  translation prevails unless the document is a statutory or other official  document.  31. GOVERNING LAW  This Agreement and any non-contractual obligations arising out of or in connection with it are  governed by English law.  32. ENFORCEMENT  32.1 Jurisdiction  (a) The English courts have exclusive jurisdiction to settle any dispute in connection with  any Finance Document including a dispute relating to any non-contractual obligation  arising out of or in connection with this Agreement.  (b) The English courts are the most appropriate and convenient courts to settle any such  dispute and the Company waives objection to those courts on the grounds of  inconvenient forum or otherwise in relation to proceedings in connection with any  Finance Document.  (c) This Clause is for the benefit of the Lender only. To the extent allowed by law, the  Lender may take:  (i) proceedings in any other court; and   (ii) concurrent proceedings in any number of jurisdictions.  THIS AGREEMENT has been entered into on the date stated at the beginning of this Agreement.  

 

   60  EU-DOCS\29914380.5  SCHEDULE 1  CONDITIONS PRECEDENT DOCUMENTS  1. CORPORATE DOCUMENTS  (a) A certified copy of the constitutional documents of the Company.  (b) A certified copy of a resolution provided in lieu of a meeting of the board of directors  or a committee of the board of directors of the Company approving the terms of, and  the transactions contemplated by, the Finance Documents.  (c) A specimen of the signature of each person authorised on behalf of the Company to  execute or witness the execution of any Finance Document or to sign or send any  document or notice in connection with any Finance Document.  (d) A certificate of the Company (signed by a director) confirming that borrowing the  Commitment would not cause any borrowing limit binding on the Company to be  exceeded.  (e) A certificate of an authorised signatory of the Company certifying that each copy  document relating to it specified in this Schedule 1 is correct, complete and in full  force and effect as at a date no earlier than the date of this Agreement.  2. FINANCE DOCUMENTS  This Agreement executed by the Company.  3. LEGAL OPINIONS  A legal opinion of Allen & Overy LLP, legal advisers to the Company addressed to the  Lender.  4. OTHER DOCUMENTS AND EVIDENCE  (a) The Original Financial Statements.  (b) Evidence that the Lender has carried out and is satisfied it has complied with all  necessary “know your customer” or other similar checks under all applicable laws and  regulations pursuant to the transactions contemplated by the Finance Documents.  

 

   61  EU-DOCS\29914380.5  SCHEDULE 2  FORM OF TRANSFER CERTIFICATE  To: MUFG Bank, Ltd. as Lender  From: [THE EXISTING LENDER] (the “Existing Lender”) and [THE NEW LENDER] (the “New  Lender”)  Date: [  ]  Western Power Distribution (East Midlands) plc – £100,000,000 Inflation-Linked   Loan Agreement dated 24 May 2016 (as amended and/or restated from time to time) (the  “Agreement”)  We refer to the Agreement. This is a Transfer Certificate. Terms defined in the Agreement have the  same meaning in this Transfer Certificate unless given a different meaning in this Transfer Certificate.  1. The Existing Lender and the New Lender agree to the Existing Lender transferring by  novation to the New Lender, and in accordance with Clause 23.3 (Procedure for transfer by  way of novation) of the Agreement, all of the Existing Lender’s rights and obligations under  the Agreement and the other Finance Documents (the “Transfer”).  2. The proposed Transfer Date is [  ].  3. The administrative details of the New Lender for the purposes of the Agreement are set out in  the Schedule.  4. The New Lender expressly acknowledges the limitations on the Existing Lender’s obligations  set out in Clause 23.4 (Limitation of responsibility of Existing Lender) of the Agreement.  5. The New Lender confirms, without liability to the Company that, as at the date hereof, it is:  (a) [a Qualifying Lender (other than a Treaty Lender);]  (b) [a Treaty Lender;]  (c) [not a Qualifying Lender].*  6. [The New Lender confirms that the person beneficially entitled to interest payable to that  Lender in respect of an advance under a Finance Document is either:  (a) a company resident in the United Kingdom for United Kingdom tax purposes; or  (b) a partnership each member of which is:  (i) a company so resident in the United Kingdom; or  (ii) a company not so resident in the United Kingdom which carries on a trade in  the United Kingdom through a permanent establishment and which brings  into account in computing its chargeable profits (within the meaning of  section 19 of the CTA) the whole of any share of interest payable in respect of  that advance that falls to it by reason of Part 17 of the CTA; or  (c) a company not so resident in the United Kingdom which carries on a trade in the  United Kingdom through a permanent establishment and which brings into account  

 

   62  EU-DOCS\29914380.5  interest payable in respect of that advance in computing the chargeable profits (within  the meaning of section 19 of the CTA) of that company.]**  7. [The New Lender confirms that it is a Treaty Lender that holds a passport under the HMRC  DT Treaty Passport scheme (reference number [  ]), and is tax resident in [  ] *** so that  interest payable to it by borrowers is generally subject to full exemption from UK withholding  tax and notifies the Company that it wishes the scheme to apply to the Agreement.]****  8. This Transfer Certificate may be executed in any number of counterparts and this has the  same effect as if the signatures on the counterparts were on a single copy of this Transfer  Certificate.  9. This Transfer Certificate and any non-contractual obligations arising out of or in connection  with it are governed by English law.  10. This Transfer Certificate has been entered into on the date stated at the beginning of this  Transfer Certificate.  NOTES:  * Delete as applicable – each New Lender is required to confirm which of these three categories  it falls within.  ** Include if New Lender comes within paragraph (i)(B) of the definition of Qualifying Lender  in Clause 9.1 (Definitions) of the Agreement.  *** Insert jurisdiction of tax residence.  **** This confirmation must be included if the New Lender holds a passport under the HMRC DT  Treaty Passport scheme and wishes that scheme to apply to the Agreement.  

 

   63  EU-DOCS\29914380.5  THE SCHEDULE  Rights and obligations to be transferred by novation  [insert relevant details]  Administrative details of the New Lender  [insert details of Facility Office, address for notices and payment details etc.]  [EXISTING LENDER] [NEW LENDER]  By:   By:     The Transfer Date is [  ]  [  ]  By:      

 

   64  EU-DOCS\29914380.5  SCHEDULE 3  FORM OF COMPLIANCE CERTIFICATE  To: MUFG Bank, Ltd. as Lender  From: Western Power Distribution (East Midlands) plc  Date: [  ]  Western Power Distribution (East Midlands) plc – £100,000,000 Inflation-Linked   Loan Agreement dated 24 May 2016 (as amended and/or restated from time to time) (the  “Agreement”)  1. We refer to the Agreement. This is a Compliance Certificate. Terms defined in the Agreement  have the same meaning in this Compliance Certificate unless given a different meaning in this  Compliance Certificate.  2. We confirm that as at [relevant testing date], Consolidated EBITDA was [  ] and Interest  Payable was [  ], therefore the ratio of Consolidated EBITDA to Interest Payable was [  ]  to 1.  3. We confirm that as at [relevant testing date], Regulatory Asset Base was [  ] and Total Net  Debt was [  ]; therefore Total Net Debt does not exceed 85% of the Regulatory Asset Base.  4. We set out below calculations establishing the figures in paragraphs 2 and 3 above:  [  ].  5. We confirm that the following companies were Material Subsidiaries at [relevant testing  date]:   [  ].  6. [We confirm that no Default is outstanding as at [relevant testing date].]1  WESTERN POWER DISTRIBUTION (EAST MIDLANDS) PLC   By:   Director    Director                                                        1 If this statement cannot be made, the certificate should identify any Default that is outstanding and the steps, if  any, being taken to remedy it.  

 

   65  EU-DOCS\29914380.5  SCHEDULE 4  FORM OF SUBORDINATION DEED  THIS SUBORDINATION DEED is entered into as a deed on [  ] and is made   BETWEEN:  (1) WESTERN POWER DISTRIBUTION (EAST MIDLANDS) PLC (registered number  02366923) (the “Company”);  (2) [SUBORDINATED CREDITOR] (the “Subordinated Creditor”); and  (3) MUFG Bank, Ltd. (the “Lender”).  1. INTERPRETATION  1.1 Definitions  In this Deed:  “Agreement” means the £100,000,000 Inflation-Linked Loan Agreement dated 24 May 2016  between the Company and the Lender.  “Certificate” means a document substantially in the form set out in Annex 2 (Form of  Certificate).  “Party” means a party to this Deed.  “Permitted Subordinated Debt Payment” means:  (a) the repayment or prepayment of any principal amount (or capitalised interest)  outstanding under the Subordinated Finance Document;  (b) the payment of any interest, fee or charge accrued or due under or any other amount  payable in connection with the Subordinated Finance Document; or  (c) the purchase, redemption, defeasance or discharge of any amount outstanding under  the Subordinated Finance Document,  provided that the Company, prior to any action referred to in paragraphs (a) to (c) above  being taken, delivers to the Lender a Certificate, signed by two directors of the Company,  certifying that, taking into account any such action, the Company will be in compliance with  its obligations under Clause 16 (Financial Covenants) of the Agreement in respect of each of  the next two Measurement Periods.  “Senior Debt” means any present or future liability (actual or contingent) payable or owing  by the Company to the Lender under or in connection with the Finance Documents.  “Senior Debt Discharge Date” means the date on which all the Senior Debt has been  unconditionally and irrevocably paid and discharged in full and the Lender has no  commitment or liability, whether present or future, actual or contingent, in relation to the  Loan, as determined by the Lender.  “Subordinated Creditor Accession Deed” means a deed substantially in the form set out in  Annex 1 (Form of Subordinated Creditor Accession Deed).  

 

   66  EU-DOCS\29914380.5  “Subordinated Debt” means any present or future liability (actual or contingent) payable or  owing by the Company to the Subordinated Creditor under or in connection with any  Subordinated Finance Document.  “Subordinated Finance Document” means [  ].  1.2 Construction  (a) Capitalised terms defined in the Agreement have the same meaning in this Deed,  unless given a different meaning in this Deed.  (b) The principles of construction set out in the Agreement will have effect as if set out in  this Deed.  (c) Any undertaking by the Subordinated Creditor in this Deed remains in force from the  date of this Deed to the Senior Debt Discharge Date.  1.3 Third Party rights  Unless otherwise indicated and save in respect of any other creditor under any of the Finance  Documents, a person who is not a party to this Deed has no right under the Contracts (Rights  of Third Parties) Act 1999 (or any other applicable law) to enforce any term of this Deed.  2. SUBORDINATION  2.1 Ranking  Each of the Parties hereby agrees that the Senior Debt, whether secured or unsecured, shall  rank senior in priority to the Subordinated Debt.  2.2 Undertakings of the Company  The Company must not without the prior consent of the Lender:  (a) make any payment whatsoever in respect of the Subordinated Debt other than a  Permitted Subordinated Debt Payment;   (b) secure, in any manner, all or any part of the Subordinated Debt;   (c) defease, in any manner, all or any part of the Subordinated Debt;   (d) give any financial support (including the taking of any participation, the giving of any  guarantee or other assurance or the making of any deposit) to any person in  connection with all or any part of the Subordinated Debt; o  (e) procure any other person to do any of the acts or take any of the actions referred to  paragraphs (a) to (d) above of Clause 2.2.  2.3 Undertakings of the Subordinated Creditor  (a) The Subordinated Creditor will not without the prior written consent of the Lender:  (i) allow to exist or receive the benefit of any Security Interest, guarantee,  indemnity or other assurance against loss in respect of all or any of the  Subordinated Debt or all or any rights which it may have against the  Company in respect of all or any part of the Subordinated Debt; or  

 

   67  EU-DOCS\29914380.5  (ii) take or omit to take any action or step whereby the subordination of all or any  of the Subordinated Debt might be terminated, impaired or adversely affected.  (b) The Subordinated Creditor will not without the prior written consent of the Lender  receive any payment save where such payment is a Permitted Subordinated Debt  Payment.  (c) The Subordinated Creditor will not without the prior written consent of the Lender:  (i) demand payment, declare prematurely due and payable or otherwise seek to  accelerate payment of or place on demand all or any part of the Subordinated  Debt or enforce the Subordinated Debt by execution or otherwise;  (ii) initiate or support or take any steps with a view to, or which may lead to:  (A) any insolvency, liquidation, reorganisation, administration or  dissolution proceedings;  (B) any voluntary arrangement or assignment for the benefit of creditors;  or  (C) any similar proceedings,  involving the Company or any of its Subsidiaries, whether by petition,  convening a meeting, voting for a resolution or otherwise;  (iii) bring or support any legal proceedings against the Company or any of its  Subsidiaries; or  (iv) otherwise exercise any remedy for the recovery of all or any part of the  Subordinated Debt (including, without limitation, the exercise of any right of  set-off, counterclaim or lien).  (d) If the Subordinated Creditor receives any payment which is in breach of any Finance  Document, it shall hold such sums on trust for the Lender and pay them immediately  to the Lender to be applied against the Senior Debt.  (e) The Subordinated Creditor and the Company hereby agree for the benefit of the  Lender that, notwithstanding the terms of the Subordinated Finance Document and  any agreement relating to the Subordinated Debt, the Subordinated Debt is made  available on terms such that it is not, save for a Permitted Subordinated Debt Payment  or otherwise with the consent of the Lender, repayable unless and until the Senior  Debt Discharge Date shall have occurred.  2.4 Subordination on insolvency  If there occurs any payment, distribution, division or application, partial or complete,  voluntary or involuntary, by operation of law or otherwise, of all or any part of the assets of  any kind or character of the Company or the proceeds thereof, to creditors of the Company, by  reason of the liquidation, dissolution or other winding-up of the Company or its businesses or  any bankruptcy, reorganisation, receivership or insolvency or similar proceeding or any  assignment for the benefit of creditors or there is a marshalling of the assets and liabilities of  the Company, or the Company becomes subject to any event mentioned in Clause 18.6  (Insolvency proceedings) of the Agreement or a voluntary arrangement, then and in any such  event:  (a) the Subordinated Debt shall continue to be subordinated to the Senior Debt;  

 

   68  EU-DOCS\29914380.5  (b) any payment or distribution of any kind or character and all and any rights in respect  thereof, whether in cash, securities or other property which is payable or deliverable  upon or with respect to the Subordinated Debt or any part thereof by a liquidator,  administrator or receiver (or the equivalent thereof) of the Company or its estate (the  “rights”) made to or paid to, or received by the Subordinated Creditor or to which the  Subordinated Creditor is entitled shall be held on trust by the Subordinated Creditor  for the Lender and shall forthwith be paid or, as the case may be, transferred or  assigned to the Lender to be applied against the Senior Debt;  (c) if the trust referred to in paragraph (b) above or paragraph (d) of Clause 2.3 above  fails or cannot be given effect to or if the Subordinated Creditor receives and retains  the relevant payment or distribution, the Subordinated Creditor will pay over such  rights in the form received to the Lender) to be applied against the Senior Debt;  (d) the Subordinated Creditor acknowledges the rights of the Lender to demand, sue and  prove for, collect and receive every payment or distribution referred to in paragraph  (b) above of Clause 2.4 and give acquittance therefore and to file claims and take such  other proceedings, in the Lender’s own name or otherwise, as the Lender may deem  necessary or advisable for the enforcement of this Deed; and  (e) the Subordinated Creditor by way of security for its obligations under this Deed  irrevocably appoints the Lender to be its attorney in order to enable the Lender to  enforce any and all claims upon or with respect to the Subordinated Debt or any part  thereof, and to collect and receive any and all payments or distributions referred to in  paragraph (b) above of Clause 2.4 or to do anything which that Subordinated Creditor  has authorised the Lender or any other Party to do under this Deed or is itself required  to do under this Deed but has failed to do (and the Lender may delegate that power on  such terms as it sees fit).  3. SET-OFF  (a) The Subordinated Creditor shall not set off against the Subordinated Debt any amount  payable by the Subordinated Creditor to the Company.  (b) If any part of the Subordinated Debt is discharged in whole or in part by way of  set-off, the Subordinated Creditor will promptly pay to the Lender for application in  accordance with the terms of paragraph (b) of Clause 2.4 (Subordination on  insolvency) an amount equal to the amount of the Subordinated Debt discharged by  such set-off.  4. NEW MONEY  The Subordinated Creditor hereby agrees that the Lender may, at its discretion, increase the  facility made available to the Company and make further advances to the Company, and each  such advance will be deemed to be made under the terms of the Agreement.  5. PROTECTION OF SUBORDINATION  (a) The subordination in this Deed is a continuing subordination and benefits the ultimate  balance of the Senior Debt.  (b) Except as provided in this Deed, the subordination is, and the Subordinated Creditor’s  obligations under this Deed will, not be affected by any act, omission or thing which,  but for this provision, would reduce, release or prejudice the subordination or any of  the Subordinated Creditor’s obligations under this Deed.  

 

   69  EU-DOCS\29914380.5  6. MISCELLANEOUS  (a) This Deed overrides anything in any Subordinated Finance Document to the contrary.  (b) Any communication in respect of this Deed must be in writing. Contact details for  each Party are set out opposite their name, below.  (c) This Deed is a Finance Document.  7. ASSIGNMENT  (a) The Lender shall have the full and unfettered right to assign or otherwise transfer the  whole or any part of the benefit of this Deed to any person to whom all or a  corresponding part of its rights, benefits and obligations under any of the Finance  Documents are assigned or transferred in accordance with their provisions.  (b) The Subordinated Creditor shall not assign or transfer all or any of its rights, title,  benefit and interest in or to all or any part of the Subordinated Debt unless in full and  on or prior to such assignment or transfer the assignee or transferee accedes to this  Deed as Subordinated Creditor pursuant to the Subordinated Creditor Accession  Deed.  8. TERMINATION  Subject to Clause 4 (New Money), on the Senior Debt Discharge Date, the terms of this Deed  shall terminate.  9. GOVERNING LAW  This Deed and any non-contractual obligations arising out of or in connection with it are  governed by English law.  10. JURISDICTION  The English courts have exclusive jurisdiction to settle any dispute including a dispute  relating to non-contractual obligations arising out of or in connection with this Deed and the  Parties submit to the exclusive jurisdiction of the English courts.  IN WITNESS whereof this Deed has been duly executed by the Parties on the day and year first  above written.  

 

   70  EU-DOCS\29914380.5  ANNEX 1  FORM OF SUBORDINATED CREDITOR ACCESSION DEED  To: MUFG Bank, Ltd. as Lender.  To: WESTERN POWER DISTRIBUTION (EAST MIDLANDS) PLC  From: [Acceding Subordinated Creditor]  THIS DEED is made on [date] by [Acceding Subordinated Creditor] (the “Acceding Subordinated  Creditor”) in relation to the subordination deed (the “Subordination Deed”) dated [  ] between,  among others, Western Power Distribution (East Midlands) plc) as Company, MUFG Bank, Ltd. as  Lender and the Subordinated Creditor (as defined in the Subordination Deed). Terms defined in the  Subordination Deed shall, unless otherwise defined in this Deed, bear the same meanings when used  in this Deed.  In consideration of the Acceding Subordinated Creditor being accepted as the Subordinated Creditor  for the purposes of the Subordination Deed, the Acceding Subordinated Creditor confirms that, as  from [date], it intends to be party to the Subordination Deed as the Subordinated Creditor and  undertakes to perform all the obligations expressed in the Subordination Deed to be assumed by the  Subordinated Creditor and agrees that it shall be bound by all the provisions of the Subordination  Deed, as if it had been an original party to the Subordination Deed as the Subordinated Creditor.  This Deed and any non-contractual obligations arising out of or in connection with it are governed by  English law.  IN WITNESS whereof this Deed has been duly executed by the Parties on the day and year first  above written.  

 

   71  EU-DOCS\29914380.5  SIGNATORIES  Company    EXECUTED as a DEED )   by WESTERN POWER DISTRIBUTION (EAST  MIDLANDS) PLC  )   acting by )     Director      In the presence of:    Witness’s Signature:    Name:    Address:    Company contact details:  Address: Avonbank, Feeder Road,   Bristol BS2 0TB  Phone number: 01179 332 374  Email: dhole@westernpower.co.uk  Attention: David Hole    Acceding Subordinated Creditor  EXECUTED as a DEED )   by [ACCEDING SUBORDINATED CREDITOR] )   acting by )      Director      In the presence of:    Witness’s Signature:    Name:    Address:    Subordinated Creditor contact details:  Address:   Fax number:   Phone number:   Email:   Attention:     

 

   72  EU-DOCS\29914380.5    Lender  EXECUTED as a DEED )   by MUFG BANK, LTD. )   acting by )     [  ]        

 

   73  EU-DOCS\29914380.5  ANNEX 2  FORM OF CERTIFICATE  To: MUFG BANK, LTD. as Lender  From: Western Power Distribution (East Midlands) plc  Date: [  ]  Western Power Distribution (East Midlands) plc – £100,000,000 Inflation-Linked Loan  Agreement dated 24 May 2016 and Subordination Deed dated [  ] (the “Deed”)  1. We refer to the Agreement and the Deed. Capitalised terms defined in the Deed have the same  meaning in this Certificate, unless given a different meaning in this Certificate.  2. We confirm that the Company will make [insert type of payment] of [insert amount and  currency] under [insert description of relevant Subordinated Finance Document] on [insert  date of payment].  3. We confirm that, taking into account such payment, the Company will be in compliance with  its obligations under Clause 16 (Financial Covenants) of the Agreement on [the last day of  ]each of the next two Measurement Periods (as such term is defined in the Agreement).    WESTERN POWER DISTRIBUTION (EAST MIDLANDS) PLC    By:   .......................................................................   Director    By:   .......................................................................   Director  

 

   74  EU-DOCS\29914380.5  SIGNATORIES  Company  EXECUTED as a DEED )   by WESTERN POWER DISTRIBUTION (EAST  MIDLANDS) PLC  )   acting by )     Director      In the presence of:    Witness’s Signature:    Name:    Address:    Company contact details:  Address: Avonbank, Feeder Road,   Bristol BS2 0TB  Phone number: 01179 332 374  Email: dhole@westernpower.co.uk  Attention: David Hole    Subordinated Creditor  EXECUTED as a DEED )   by [SUBORDINATED CREDITOR] )   acting by )     Director      In the presence of:    Witness’s Signature:    Name:    Address:    Subordinated Creditor contact details:  Address:   Fax number:   Phone number:   Email:   Attention:     

 

   75  EU-DOCS\29914380.5  Lender  EXECUTED as a DEED )   by MUFG BANK, LTD. )   acting by )     Director          

 

   76  EU-DOCS\29914380.5  SIGNATORIES  THE COMPANY    SIGNED )  for and on behalf of )     )  WESTERN POWER DISTRIBUTION   (EAST MIDLANDS) PLC )    By     Name     Title       Address:  Avonbank   Feeder Road  Bristol BS2 0TB    

 

   77  EU-DOCS\29914380.5  LENDER  SIGNED )  for and on behalf of )     )    )  MUFG BANK, LTD.    By           Name           Title           Address: MUFG Bank, Ltd., Ropemaker Place, 25 Ropemaker Street, London      EC2Y 9AN  Fax number(s): +44 207 577 1559  Attention: The Manager – Loan Participation Service  Email:  loanparticipations@uk.mufg.jp    

 

SIGNATORIES THE COMPANY For and on behalfof WESTERN POWER DTSTRIBUTION (EAST MIDLANDS) PLC By ' tt''t)L'- Name ' \ *^I L) ruuirry ritte . fi H) trlcz. \r [fr;rOU- [Anrcndmenl qnd Restatemetrt Agreentenl Signature PageJDocument

Exhibit 10.11
SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT (this “Agreement”), dated as of December 15, 2020, is made and entered into by and between Materion Corporation, an Ohio corporation (the “Company”), and Shelly Chadwick (the “Executive”).
WITNESSETH:
WHEREAS, the Executive is an executive of the Company and is expected to make major contributions to the growth and financial strength of the Company; and
WHEREAS, the Company desires to provide additional inducement for the Executive to continue to remain in the employ of the Company by providing certain severance benefits in the event of the Executive’s termination by the Company; and
WHEREAS, the Company recognizes that the possibility of a Change in Control (as defined below) exists and that such possibility, and the uncertainty it may create among management, may result in the distraction or departure of management personnel, to the detriment of the Company and its shareholders; and
WHEREAS, the Company desires to assure itself of the continuity of management and desires to establish certain minimum severance benefits for certain of its executives, including the Executive, applicable in the event of a Change in Control; and 
WHEREAS, the Company wishes to ensure that its executives are not unduly distracted by the circumstances attendant to the possibility of a Change in Control and to encourage the continued attention and dedication of such executives, including the Executive, to their assigned duties with the Company; and
WHEREAS, the Company and the Executive desire for this Agreement to take into account certain changes in the Company’s compensation and employee benefit programs.
NOW, THEREFORE, the Company and the Executive agree as follows:
1.     Certain Defined Terms.  In addition to terms defined elsewhere herein, the following terms have the following meanings when used in this Agreement with initial capital letters:
(a)    “Affiliate” means with respect to any Person, any holder of more than 10% of the outstanding shares or equity interests of such Person or any other Person which directly or indirectly controls, is controlled by or is under common control with such Person.  A Person shall be deemed to control another Person if such Person possesses, directly or indirectly, the 

 

power to direct or cause the direction of the management and policies of the “controlled” Person, whether through ownership of voting securities, by contract or otherwise.
(b)    “Base Pay” means the Executive’s annual base salary rate as in effect from time to time.
(c)    “Board” means the Board of Directors of the Company.
(d)    “Cause” means that the Executive shall have:
(i)    been convicted of a criminal violation involving fraud, embezzlement, theft or violation of federal antitrust statutes or federal securities laws in connection with his duties or in the course of his employment with the Company or any Affiliate of the Company;
(ii)    committed intentional wrongful damage to property of the Company or any Affiliate of the Company;
(iii)    committed intentional wrongful disclosure of secret processes or confidential information of the Company or any Affiliate of the Company; or
(iv)    intentionally engaged in any activity in violation of Section 8;
and any such act shall have been demonstrably and materially harmful to the Company.  For purposes of this Agreement, no act or failure to act on the part of the Executive shall be deemed “intentional” if it was due primarily to an error in judgment or negligence, but shall be deemed “intentional” only if done or omitted to be done by the Executive not in good faith and without reasonable belief that the Executive’s action or omission was in the best interest of the Company.  Notwithstanding the foregoing, the Executive shall not be deemed to have been terminated for “Cause” hereunder unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three quarters of the Board then in office at a meeting of the Board called and held for such purpose, after reasonable notice to the Executive and an opportunity for the Executive, together with the Executive’s counsel (if the Executive chooses to have counsel present at such meeting), to be heard before the Board, finding that, in the good faith opinion of the Board, the Executive had committed an act constituting “Cause” as herein defined and specifying the particulars thereof in detail.  Nothing herein will limit the right of the Executive or his beneficiaries to contest the validity or propriety of any such determination.
(e)    “Change in Control” means
(i)    The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d3 promulgated under the Exchange Act) of voting securities of the Company where 
2

 

such acquisition causes such Person to own (X) 30% or more of the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”) without the approval of the Incumbent Board as defined in (ii) below or (Y) 35% or more of the Outstanding Voting Securities of the Company with the approval of the Incumbent Board; provided, however, that for purposes of this subsection (i), the following acquisitions shall not be deemed to result in a Change of Control:  (A) any acquisition directly from the Company that is approved by the Incumbent Board (as defined in subsection (ii), below), (B) any acquisition by the Company or a subsidiary of the Company, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, (D) any acquisition by any Person pursuant to a transaction described in clauses (A), (B) and (C) of subsection (iii) below, or (E) any acquisition by, or other Business Combination (as defined in (iii) below) with, a person or group of which employees of the Company or any subsidiary of the Company control a greater than 25% interest (a “MBO”) but only if the Executive is one of those employees of the Company or any subsidiary of the Company that are participating in the MBO; provided, further, that if any Person’s beneficial ownership of the Outstanding Company Voting Securities reaches or exceeds 30% or 35%, as the case may be, as a result of a transaction described in clause (A) or (B) above, and such Person subsequently acquires beneficial ownership of additional voting securities of the Company, such subsequent acquisition shall be treated as an acquisition that causes such Person to own 30% or 35% or more, as the case may be, of the Outstanding Company Voting Securities; and provided, further, that if at least a majority of the members of the Incumbent Board determines in good faith that a Person has acquired beneficial ownership (within the meaning of Rule 13d3 promulgated under the Exchange Act) of 30% or more of the Outstanding Company Voting Securities inadvertently, and such Person divests as promptly as practicable a sufficient number of shares so that such Person beneficially owns (within the meanings of Rule 13d3 promulgated under the Exchange Act) less than 30% of the Outstanding Company Voting Securities, then no Change of Control shall have occurred as a result of such Person’s acquisition; or
(ii)    individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) (as modified by this clause (ii)) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without objection to such nomination) shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or
3

 

(iii)    the consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company or the acquisition of assets of another corporation, or other transaction (a “Business Combination”) excluding, however, such a Business Combination pursuant to which (A) the individuals and entities who were the ultimate beneficial owners of voting securities of the Company immediately prior to such Business Combination beneficially own, directly or indirectly, more than 65% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity that as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries), (B) no Person (excluding any employee benefit plan (or related trust) of the Company, the Company or such entity resulting from such Business Combination) beneficially owns, directly or indirectly 30% or more, if such Business Combination is approved by the Incumbent Board or 35% or more, if such Business Combination is not approved by the Incumbent Board, of the combined voting power of the then outstanding securities entitled to vote generally in the election of directors of the entity resulting from such Business Combination and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or
(iv)    approval by the shareholders of the Company of a complete liquidation or dissolution of the Company except pursuant to a Business Combination described in clauses (A), (B) and (C) of subsection (iii), above.
(f)    “Change in Control Severance Period” means the period of time commencing on the date of the first occurrence of a Change in Control and continuing until the earlier of (i) the second anniversary of the occurrence of the Change in Control, or (ii) the Executive’s death; provided, however, that commencing on each anniversary of the Change in Control, the Change in Control Severance Period will automatically be extended for an additional year unless, not later than 90 calendar days prior to such anniversary date, either the Company or the Executive shall have given written notice to the other that the Change in Control Severance Period is not to be so extended.  
(g)    “Code” means the Internal Revenue Code of 1986, as amended, and the regulations thereunder.
(h)    “Employee Benefits” means the benefits and service credit for benefits as provided under any and all employee retirement income and welfare benefit policies, plans, programs or arrangements in which Executive is entitled to participate, including without limitation any stock purchase, savings, pension, supplemental executive retirement, or other retirement income or welfare benefit, deferred compensation, group or other life, health, medical/hospital or other insurance (whether funded by actual insurance or self-insured by the Company 
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or an Affiliate of the Company), disability, expense reimbursement and other employee benefit policies, plans, programs or arrangements.
(i)    “Incentive Pay” means the annual bonus, incentive or other payment of compensation under the Management Incentive Plan or, if such Management Incentive Plan is no longer in effect, the annual bonus, incentive or other payment of compensation in addition to Base Pay, made or to be made in regard to services rendered in any year or other period pursuant to any bonus, incentive, profit-sharing, performance, discretionary pay or similar agreement, policy, plan, program or arrangement (whether or not funded) of the Company or an Affiliate of the Company, or any successor thereto.
(j)    “Subsidiary” means an entity in which the Company directly or indirectly beneficially owns 50% or more of the Outstanding Company Voting Securities.
(k)    “Term” means the period commencing as of the date hereof and expiring on the close of business on December 31, 2022; provided, however, that (i) commencing on January 1, 2023 and each January 1 thereafter, the Term will automatically be extended for an additional year unless, not later than September 30 of the immediately preceding year, the Company or the Executive shall have given notice that it or the Executive, as the case may be, does not wish to have the Term extended; (ii) if a Change in Control occurs during the Term, the Term shall expire and this Agreement will terminate at the expiration of the Change in Control Severance Period; and (iii) subject to the last sentence of Section 9, if, prior to a Change in Control, the Executive ceases for any reason to be an employee of the Company and any Affiliate of the Company, thereupon without further action the Term shall be deemed to have expired and this Agreement will immediately terminate and be of no further effect.  For purposes of this Section 1(k), the Executive shall not be deemed to have ceased to be an employee of the Company and any Affiliate of the Company by reason of the transfer of Executive’s employment between the Company and any Affiliate of the Company, or among any Affiliates of the Company.
(l)    “Termination Date” means the date on which the Executive’s employment is terminated (the effective date of which shall be the date of termination, or such other date that may be specified by the Executive if the termination is pursuant to Section 2(b) or 3(b)), provided that in each case such date constitutes a “separation from service,” as defined for purposes of Section 409A of the Code.
2.     Termination Following a Change in Control.
(a)    In the event of the occurrence of a Change in Control during the Term, the Executive’s employment may be terminated by the Company or an Affiliate of the Company during the Change in Control Severance Period and the Executive shall be entitled to the benefits provided by Section 4(a) unless such termination is the result of the occurrence of one or more of the following events:
(i)    The Executive’s death;
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(ii)    If the Executive becomes permanently disabled within the meaning of, and begins actually to receive disability benefits pursuant to, the long-term disability plan in effect for, or applicable to, Executive immediately prior to the Change in Control; or
(iii)    Cause.
(b)    In the event of the occurrence of a Change in Control during the Term, the Executive may terminate employment with the Company and any Affiliate of the Company during the Change in Control Severance Period with the right to severance compensation as provided in Section 4(a) upon the occurrence of one or more of the following events (regardless of whether any other reason, other than Cause as hereinabove provided, for such termination exists or has occurred, including, without limitation, other employment):
(i)    Failure to elect or reelect or otherwise to maintain the Executive in the office or the position, or a substantially equivalent or better office or position, of or with the Company and/or an Affiliate of the Company (or any successor thereto by operation of law or otherwise), as the case may be, which the Executive held immediately prior to a Change in Control, or the removal of the Executive as a Director of the Company and/or an Affiliate of the Company (or any successor thereto) if the Executive shall have been a Director of the Company and/or an Affiliate of the Company immediately prior to the Change in Control;
(ii)    (A) A significant adverse change in the nature or scope of the authorities, powers, functions, responsibilities or duties attached to the position with the Company and any Affiliate of the Company which the Executive held immediately prior to the Change in Control, (B) a reduction in the aggregate of the Executive’s Base Pay and Incentive Pay opportunity received from the Company and any Affiliate of the Company, or (C) the termination or denial of the Executive’s rights to Employee Benefits or any long-term, stock option, performance share, performance unit, or similar equity or equity-based award opportunity or a reduction in the scope or value thereof, any of which is not remedied by the Company within 10 calendar days after receipt by the Company of written notice from the Executive of such change, reduction or termination, as the case may be;
(iii)    The liquidation, dissolution, merger, consolidation or reorganization of the Company or the transfer of all or substantially all of its business and/or assets, unless the successor or successors (by liquidation, merger, consolidation, reorganization, transfer or otherwise) to which all or substantially all of its business and/or assets have been transferred (by operation of law or otherwise) assumed all duties and obligations of the Company under this Agreement pursuant to Section 11(a);
(iv)    The Company relocates its principal executive offices (if such offices are the principal location of Executive’s work), or requires the Executive to have his principal location of work changed, to any location that, in either case, is in excess of 50 miles from the location thereof immediately prior to the Change in Control, or requires the Executive to travel away from his office in the course of discharging his 
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responsibilities or duties hereunder at least 20% more (in terms of aggregate days in any calendar year or in any calendar quarter when annualized for purposes of comparison to any prior year) than was required of Executive in any of the three full years immediately prior to the Change in Control without, in either case, his prior written consent; or
(v)    Without limiting the generality or effect of the foregoing, any material breach of this Agreement by the Company or any successor thereto which is not remedied by the Company within 10 calendar days after receipt by the Company of written notice from the Executive of such breach.
(c)    A termination by the Company pursuant to Section 2(a) or by the Executive pursuant to Section 2(b) will not affect any rights that the Executive may have pursuant to any agreement, policy, plan, program or arrangement of the Company or an Affiliate of the Company providing Employee Benefits or covering long-term or equity (or equity-based) awards (except as provided in Section 4(a) and Annex A), which rights shall be governed by the terms thereof.
3.     Involuntary Termination.
(a)    In the event that the Executive’s employment terminates other than during the Change in Control Severance Period, the Executive shall be entitled to the benefits provided by Section 4(b) unless such termination is the result of the occurrence of one or more of the following events: 
(i)    The Executive’s death;
(ii)    If the Executive becomes permanently disabled within the meaning of, and begins actually to receive disability benefits pursuant to, the long-term disability plan in effect for, or applicable to, Executive immediately prior to his Termination Date; 
(iii)    A termination of Executive’s employment by the Company or any Affiliate of the Company for Cause; or 
(iv)    A termination of Executive’s employment by the Executive for any reason other than as provided in Section 3(b) below.
(b)    Notwithstanding the foregoing, the Executive may terminate employment with the Company and any Affiliate of the Company with the right to severance compensation as provided in Section 4(b) upon the occurrence of one or more of the following events (regardless of whether any other reason, other than Cause as hereinabove provided, for such termination exists or has occurred, including without limitation other employment): 
(i)    Failure to elect or reelect or otherwise to maintain the Executive in the office or the position, or a substantially equivalent or better office or position, of or with the Company and/or an Affiliate of the Company (or any successor thereto by operation of law or otherwise), as the case may be, which the Executive holds as of the commencement of your employment or the removal of the Executive as a Director of the 
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Company and/or an Affiliate of the Company (or any successor thereto) if the Executive is elected or appointed as a Director of the Company and/or an Affiliate of the Company;
(ii)    (A) A significant adverse change in the nature or scope of the authorities, powers, functions, responsibilities or duties attached to the position with the Company and any Affiliate of the Company which the Executive holds as of the commencement of your employment, (B) a reduction in the aggregate of the Executive’s Base Pay and Incentive Pay opportunity received from the Company and any Affiliate of the Company, provided however, that such a reduction in the aggregate of the Executive’s Base Pay, Incentive Pay and long-term equity opportunity is not part of a general reduction in executive officer compensation opportunity, or (C) the termination or denial of the Executive’s rights to Employee Benefits or any long-term, stock option, performance share, performance unit, or similar equity or equity-based award opportunity or a reduction in the scope or value thereof;
(iii)    The liquidation, dissolution, merger, consolidation or reorganization of the Company or the transfer of all or substantially all of its business and/or assets, unless the successor or successors (by liquidation, merger, consolidation, reorganization, transfer or otherwise) to which all or substantially all of its business and/or assets have been transferred (by operation of law or otherwise) assumed all duties and obligations of the Company under this Agreement pursuant to Section 11(a); 
(iv)     Receipt of notice from the Company or its successor not to extend the Term; or
(v)    Without limiting the generality or effect of the foregoing, any material breach of this Agreement by the Company or any successor thereto.
The Executive will only have the right to receive the severance benefits set forth in Section 4(b) if, upon the occurrence of  any of the events set forth in this Section 3(b), the Executive provides the Company with written notice of the occurrence of such event within 90 calendar days after the Executive has knowledge of such occurrence, the Company fails to remedy the event within 30 calendar days after receipt by the Company of such written notice from the Executive, and the Executive terminates his employment with the Company and any Affiliate of the Company within 60 calendar days following the expiration of such 30-day cure period.  
(c)    A termination by the Company pursuant to Section 3(a) or by the Executive pursuant to Section 3(b) will not affect any rights that the Executive may have pursuant to any agreement, policy, plan, program or arrangement of the Company or an Affiliate of the Company providing Employee Benefits or covering long-term or equity (or equity-based) awards (except as provided in Section 4(b) and Annex B), which rights shall be governed by the terms thereof.
4.     Severance Compensation.
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(a)    If, following the occurrence of a Change in Control during the Term, the Company or an Affiliate of the Company terminates the Executive’s employment during the Change in Control Severance Period other than pursuant to Section 2(a)(i), 2(a)(ii) or 2(a)(iii), or if the Executive terminates his employment pursuant to Section 2(b) (if Section 2(b) is operative), then, provided the Executive signs, returns and does not revoke a release of claims in a form provided by the Company within 30 days after his Termination Date, the Company (subject to Section 4(e)) will pay to the Executive the lump sum payment amounts described in Annex A on the 30th day after the Termination Date (the “Payment Date”) and will continue to provide to the Executive the benefits described in Annex A for the periods described therein.  There shall be no duplication of amounts paid or benefits provided under this Agreement and long-term or equity (or equity-based) awards.
(b)    If the Company or an Affiliate of the Company terminates the Executive’s employment other than during the Change in Control Severance Period and other than pursuant to Section 3(a)(i), 3(a)(ii), 3(a)(iii) or 3(a)(iv), or if the Executive terminates his employment pursuant to Section 3(b), then, provided the Executive signs, returns and does not revoke a release of claims in a form provided by the Company within 30 days after his Termination Date, the Company (subject to Section 4(e)) will pay to the Executive the lump sum payment amounts described in Annex B on the Payment Date (or such other date as specified in Annex B) and will continue to provide to the Executive the benefits described in Annex B for the periods described therein. In no event shall the Executive be entitled to the amounts described in both Annex A and Annex B, and there shall be no other duplication of benefits payable pursuant to this Agreement.
(c)    Notwithstanding any provision of this Agreement to the contrary, the parties’ respective rights and obligations under this Section 4 and under Sections 5, 7, 8, 9 and 13 will survive any termination or expiration of this Agreement or the termination of the Executive’s employment following a Change in Control for any reason whatsoever.
(d)    Unless otherwise expressly provided by the applicable plan, program or agreement, after the occurrence of a Change in Control during the Term, the Company shall pay in cash to the Executive a lump sum amount equal to the value of any annual bonus (including, without limitation, incentive-based annual cash bonuses and performance units, but not including any long-term or equity-based compensation or compensation provided under a qualified plan) earned or accrued with respect to the Executive’s service during the performance period or periods that includes the date on which the Change in Control occurred, disregarding any applicable vesting requirements; provided that such amount shall be calculated at the plan target or payout rate, but prorated to base payment only on the portion of the Executive’s service that had elapsed during the applicable performance period.  Such payment shall take into account service rendered through the Termination Date.  To the extent such payment is exempt under Section 409A of the Code, it shall be made on the Payment Date.  To the extent such payment constitutes “deferred compensation” under Section 409A of the Code, it shall be made at the same time it would have been made in the absence of the Change in Control.
(e)    Notwithstanding the foregoing provisions of this Section 4, Annex A and Annex B, if the Executive is a “specified employee,” determined pursuant to procedures adopted by the 
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Company in compliance with Section 409A of the Code, on his Termination Date, amounts that would otherwise be payable pursuant to this Agreement that are nonexempt nonqualified deferred compensation under Section 409A of the Code during the six-month period immediately following the Executive’s Termination Date (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s Termination Date (such period, the “Delay Period”) will instead be paid or made available on the earlier of (i) the first business day of the seventh month after Executive’s Termination Date, or (ii) the Executive’s death (the applicable date, the “Permissible Payment Date”).
(f)    Each payment to be made to the Executive under the provisions of this Section 4, Annex A and Annex B shall be considered to be a separate payment and not one of a series of payments for purposes of Section 409A of the Code.  Further, coverages provided during one taxable year shall not affect the degree to which coverages will be provided in any other taxable year.
5.     Limitation on Payments and Benefits.  If any amount or benefit to be paid or provided under this Agreement or otherwise pursuant to or by reason of any other agreement, policy, plan, program or arrangement, including without limitation any stock option, performance share, performance unit, stock appreciation right or similar right, or the lapse or termination of any restriction on or the vesting or exercisability of any of the foregoing would be an “Excess Parachute Payment” within the meaning of Section 280G of the Code (or any successor provision thereto), but for the application of this sentence, then the payments and benefits to be paid or provided under this Agreement or otherwise shall be reduced to the minimum extent necessary (but in no event to less than zero) so that no portion of any such payment or benefit, as so reduced, constitutes an Excess Parachute Payment; provided, however, that the foregoing reduction shall be made only if and to the extent that such reduction would result in an increase in the aggregate payments and benefits to be provided, determined on an after-tax basis (taking into account the excise tax imposed pursuant to Section 4999 of the Code, or any successor provision thereto, any tax imposed by a comparable provision of state law, and any applicable federal, state and local income taxes (“Excise Tax”)).  The determination of whether any reduction in such payments or benefits to be provided under this Agreement or otherwise is required pursuant to the preceding sentence shall be made by an independent accounting firm selected by the Company (the “Accounting Firm”), which Accounting Firm shall provide detailed supporting calculations both to the Company and the Executive within 15 business days of the Termination Date or such earlier time as is requested by the Company and, if requested by the Executive, an opinion that he has substantial authority not to report any Excise Tax on the Executive’s Federal income tax return with respect to the Excess Parachute Payments.  Any such determination by the Accounting Firm will be binding upon the Company and the Executive.  The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 5 shall not of itself limit or otherwise affect any other rights of the Executive.  In the event that any payment or benefit intended to be provided under this Agreement or otherwise is required to be reduced pursuant to this Section 5, the Company shall reduce the Executive’s payments and/or benefits, to the extent required, in the following order:  (i) the lump sum payment described in paragraph (1) of Annex A; (ii) the lump 
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sum payment described in Section 4(d) of this Agreement; (iii) the benefits described in Paragraph (4) of Annex A; (iv) the benefits described in Paragraph (2) of Annex A; and (v) the accelerated vesting of long-term and equity or equity-based awards (if any) described in Paragraph (3) of Annex A.
6.     No Mitigation Obligation.  The Company hereby acknowledges that it will be difficult and may be impossible for the Executive to find reasonably comparable employment following the Termination Date.  Accordingly, the payment of the severance compensation by the Company to the Executive in accordance with the terms of this Agreement is hereby acknowledged by the Company to be reasonable, and the Executive will not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise, nor will any profits, income, earnings or other benefits from any source whatsoever create any mitigation, offset, reduction or any other obligation on the part of the Executive hereunder or otherwise, except as expressly provided in the last sentences of Paragraph (2)(a) on both Annex A and Annex B.
7.     Legal Fees and Expenses.
(a)    It is the intent of the Company that the Executive not be required to incur legal fees and the related expenses associated with the reasonable interpretation, enforcement or defense of Executive’s rights under this Agreement by litigation or otherwise because the reasonable cost and expense thereof would substantially detract from the benefits intended to be extended to the Executive hereunder.  Accordingly, if it should appear to the Executive that the Company has failed to comply with any of its obligations under this Agreement or in the event that the Company or any other person takes or threatens to take any action to declare this Agreement void or unenforceable, or institutes any litigation or other action or proceeding designed to deny, or to recover from, the Executive the benefits provided or intended to be provided to the Executive hereunder, the Company irrevocably authorizes the Executive from time to time to retain counsel of Executive’s choice, at the reasonable expense of the Company as hereafter provided, to advise and represent the Executive in connection with any such reasonable interpretation, enforcement or defense, including without limitation the initiation or defense of any litigation or other legal action, whether by or against the Company or any Director, officer, stockholder or other person affiliated with the Company, in any jurisdiction.  Notwithstanding any existing or prior attorney-client relationship between the Company and such counsel, the Company irrevocably consents to the Executive’s entering into an attorney-client relationship with such counsel, and in that connection the Company and the Executive agree that a confidential relationship shall exist between the Executive and such counsel.  Without respect to whether the Executive prevails, in whole or in part, in connection with any of the foregoing, the Company will pay and be solely financially responsible for any and all reasonable attorneys’ and related fees and reasonable expenses incurred by the Executive in connection with any of the foregoing.  Such payments shall be made no later than December 31 of the year following the year in the which the Executive incurs the expenses, provided that in no event will the amount of expenses eligible for reimbursement in one year affect the amount of expenses to be reimbursed, or in-kind benefits to be provided, in any other taxable year.
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(b)    Without limiting the obligations of the Company pursuant to Section 7(a) hereof, in the event a Change in Control occurs during the Term, the performance of the Company’s obligations under this Agreement, including, without limitation, this Section 7 and Annex A, shall be secured by amounts deposited or to be deposited in trust pursuant to certain trust agreements to which the Company shall be a party providing that the benefits to be provided hereunder and the reasonable fees and expenses of counsel selected from time to time by the Executive pursuant to Section 7(a) shall be paid, or reimbursed to the Executive if paid by the Executive, either in accordance with the terms of such trust agreements, or, if not so provided, on a regular, periodic basis upon presentation by the Executive to the trustee of a statement or statements prepared by such counsel in accordance with its customary practices.  Any failure by the Company to satisfy any of its obligations under this Section 7(b) shall not limit the rights of the Executive hereunder.  Subject to the foregoing, the Executive shall have the status of a general unsecured creditor of the Company and shall have no right to, or security interest in, any assets of the Company or any Affiliate of the Company.  Notwithstanding anything contained in this Agreement to the contrary, in no event shall any amount be transferred to a trust described in this Section 7(b) if, pursuant to Section 409A(b)(3)(A) of the Code, such amount would, for purposes of Section 83 of the Code, be treated as property transferred in connection with the performance of services.
8.     Competitive Activity; Confidentiality; Nonsolicitation.
(a)    Acknowledgements and Agreements.  The Executive hereby acknowledges and agrees that in the performance of the Executive’s duties to the Company during the Term, the Executive will be brought into frequent contact with existing and potential customers of the Company throughout the world.  The Executive also agrees that trade secrets and confidential information of the Company, more fully described in Section 8(j) of this Agreement, gained by the Executive during the Executive’s association with the Company, have been developed by the Company through substantial expenditures of time, effort and money and constitute valuable and unique property of the Company.  The Executive further understands and agrees that the foregoing makes it necessary for the protection of the business of the Company that the Executive not compete with the Company during the Term and not compete with the Company for a reasonable period thereafter, as further provided in the following subsections.
(b)    Covenants During the Term.  During the Term and prior to the Termination Date, the Executive will not compete with the Company.  In accordance with this restriction, but without limiting its terms, during the term of the Executive’s employment, the Executive will not:
(i)    enter into or engage in any business which competes with the business of the Company;
(ii)    solicit customers, business, patronage or orders for, or sell, any products or services in competition with, or for any business that competes with, the business of the Company;
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(iii)    divert, entice or otherwise take away any customers, business, patronage or orders of the Company or attempt to do so; or
(iv)    promote or assist, financially or otherwise, any person, firm, association, partnership, corporation or other entity engaged in any business which competes with the business of the Company.
(c)    Covenants Following Termination.  For a period of two (2) years following the Termination Date, if the Executive has received or is receiving benefits under this Agreement, the Executive will not:
(i)    enter into or engage in any business which competes with the Company’s business within the Restricted Territory (as defined in Section 8(g));
(ii)    solicit customers, business, patronage or orders for, or sell, any products or services in competition with, or for any business, wherever located, that competes with, the Company’s business within the Restricted Territory;
(iii)    divert, entice or otherwise take away any customers, business, patronage or orders of the Company within the Restricted Territory, or attempt to do so; or
(iv)    promote or assist, financially or otherwise, any person, firm, association, partnership, corporation or other entity engaged in any business which competes with the Company’s business within the Restricted Territory.
(d)    Indirect Competition.  For the purposes of Sections 8(b) and 8(c), inclusive, but without limitation thereof, the Executive will be in violation thereof if the Executive engages in any or all of the activities set forth therein directly as an individual on the Executive’s own account, or indirectly as a partner, joint venturer, employee, agent, salesperson, consultant, officer and/or director of any firm, association, partnership, corporation or other entity, or as a stockholder of any corporation in which the Executive or the Executive’s spouse, child or parent owns, directly or indirectly, individually or in the aggregate, more than five percent (5%) of the outstanding stock.
(e)    The Company.  For the purposes of this Section 8, the Company shall include any and all direct and indirect subsidiary, parent, affiliated, or related companies of the Company for which the Executive worked or had responsibility at the time of termination of the Executive’s employment and at any time during the two (2) year period prior to such termination.
(f)    The Company’s Business.  For the purposes of Sections 8(b), 8(c), 8(k) and 8(l), inclusive, the Company’s business is defined to be the manufacture, marketing and sale of high performance engineered materials serving global telecommunications, computer, automotive electronics, industrial components and optical media markets, as further described in any and all manufacturing, marketing and sales manuals and materials of the Company as the same may be altered, amended, supplemented or otherwise changed from time to time, or of any other 
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products or services substantially similar to or readily substitutable for any such described products and services.
(g)    Restricted Territory.  For the purposes of Section 8(c), the Restricted Territory shall be defined as and limited to:
(i)    any geographic areas serviced by the Company during the two (2) year period following the Termination Date as to any business segment, product, service, or activity for which the Executive worked, to which the Executive was assigned or had  any responsibility (either direct or supervisory), in which the Executive was involved in research and/or development, or about which the Executive had access to any trade secrets or confidential business and technical information of the Company, at the time of the Termination Date and at any time during the two (2) year period prior to the Termination Date; and
(ii)    all of the specific customer accounts, whether within or outside of the geographic area described in (i) above, with which the Executive had any contact or for which the Executive was assigned or had any responsibility (either direct or supervisory), in which the Executive was involved in solicitation or development, or about which the Executive had access to any trade secrets or confidential business and technical information of the Company, at the time of Termination Date and at any time during the two (2) year period prior to the Termination Date.
(h)    Extension.  If it shall be judicially determined that the Executive has violated any of the Executive’s obligations under Section 8(c), then the period applicable to each obligation that the Executive shall have been determined to have violated shall automatically be extended by a period of time equal in length to the period during which such violation(s) occurred.
(i)    Non-Solicitation.  The Executive will not directly or indirectly, during the period of two (2) years following the Termination Date, solicit or induce or attempt to solicit or induce any employee(s), sales representative(s), agent(s) or consultant(s) of the Company and/or of its parent, or its other subsidiary, affiliated or related companies to terminate their employment, representation or other association with the Company and/or its parent or its other subsidiary, affiliated or related companies.
(j)    Further Covenants.
(i)    The Executive will keep in strict confidence, and will not, directly or indirectly, at any time during or after the Executive’s employment with the Company, disclose, furnish, disseminate, make available or, except in the course of performing the Executive’s duties of employment, use any trade secrets or confidential business and technical information of the Company or its customers or vendors, including without limitation as to when or how the Executive may have acquired such information.  Such confidential information shall include, without limitation, the Company’s unique selling, manufacturing and servicing methods and business techniques, training, service and business manuals, promotional materials, training courses and other training and 
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instructional materials, vendor and product information, customer and prospective customer lists, other customer and prospective customer information and other business information.  The Executive specifically acknowledges that all such confidential information, whether reduced to writing, maintained on any form of electronic media, or maintained in the Executive’s mind or memory and whether compiled by the Company, and/or the Executive, derives independent economic value from not being readily known to or ascertainable by proper means by others who can obtain economic value from its disclosure or use, that reasonable efforts have been made by the Company to maintain the secrecy of such information, that such information is the sole property of the Company and that any retention and use of such information by the Executive during the Executive’s employment with the Company (except in the course of performing the Executive’s duties and obligations to the Company) or after the termination of the Executive’s employment shall constitute a misappropriation of the Company’s trade secrets.
(ii)    The U.S. Defend Trade Secrets Act of 2016 (“DTSA”) provides that an individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that (A) is made in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney, and solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.  In addition, the DTSA provides that an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal and does not disclose the trade secret, except pursuant to court order.
(iii)    The Executive agrees that upon termination of the Executive’s employment with the Company, for any reason, the Executive shall return to the Company, in good condition, all property of the Company, including without limitation, the originals and all copies of any materials which contain, reflect, summarize, describe, analyze or refer or relate to any items of information listed in Section 8(j)(i) of this Agreement.  In the event that such items are not so returned, the Company will have the right to charge the Executive for all reasonable damages, costs, attorneys’ fees and other expenses incurred in searching for, taking, removing and/or recovering such property.
(iv)    Nothing in this Agreement prevents the Executive from providing, without prior notice to the Company, information to governmental authorities regarding possible legal violations or otherwise testifying or participating in any investigation or proceeding by any governmental authorities regarding possible legal violations (and for purpose of clarity the Executive is not prohibited from providing information voluntarily to the Securities and Exchange Commission pursuant to Section 21F of the Exchange Act.
(k)    Discoveries and Inventions; Work Made for Hire.
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(i)    The Executive hereby assigns and agrees to assign to the Company, its successors, assigns or nominees, all of the Executive’s rights to any discoveries, inventions and improvements, whether patentable or not, made, conceived or suggested, either solely or jointly with others, by the Executive while in the Company’s employ, whether in the course of the Executive’s employment with the use of the Company’s time, material or facilities or that is in any way within or related to the existing or contemplated scope of the Company’s business.  Any discovery, invention or improvement relating to any subject matter with which the Company was concerned during the Executive’s employment and made, conceived or suggested by the Executive, either solely or jointly with others, within two (2) years following termination of the Executive’s employment under this Agreement or any successor agreements shall be irrebuttably presumed to have been so made, conceived or suggested in the course of such employment with the use of the Company’s time, materials or facilities.  Upon request by the Company with respect to any such discoveries, inventions or improvements, the Executive will execute and deliver to the Company, at any time during or after the Executive’s employment, all appropriate documents for use in applying for, obtaining and maintaining such domestic and foreign patents as the Company may desire, and all proper assignments therefor, when so requested, at the expense of the Company, but without further or additional consideration.
(ii)    The Executive acknowledges that, to the extent permitted by law, all work papers, reports, documentation, drawings, photographs, negatives, tapes and masters therefor, prototypes and other materials (hereinafter, “items”), including without limitation, any and all such items generated and maintained on any form of electronic media, generated by the Executive during the Executive’s employment with the Company shall be considered a “work made for hire” and that ownership of any and all copyrights in any and all such items shall belong to the Company.  The item will recognize the Company as the copyright owner, will contain all proper copyright notices , e.g., “(creation date) Materion Corporation, All Rights Reserved,” and will be in condition to be registered or otherwise placed in compliance with registration or other statutory requirements throughout the world.
(l)    Communication of Contents of Agreement.  During the Executive’s employment and for two (2) years thereafter, the Executive will communicate the contents of this Section 8 of this Agreement to any person, firm, association, partnership, corporation or other entity which the Executive intends to be employed by, associated with, or represent and which is engaged in a business that is competitive to the business of the Company.
(m)    Relief.  The Executive acknowledges and agrees that the remedy at law available to the Company for breach of any of the Executive’s obligations under this Agreement would be inadequate.  The Executive therefore agrees that, in addition to any other rights or remedies that the Company may have at law or in equity, temporary and permanent injunctive relief may be granted in any proceeding which may be brought to enforce any provision contained in Sections 8(b), 8(c), 8(i), 8(j), 8(k) and 8(l), inclusive, of this Agreement, without the necessity of proof of actual damage.
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(n)    Reasonableness.  The Executive acknowledges that the Executive’s obligations under this Section 8 are reasonable in the context of the nature of the Company’s business and the competitive injuries likely to be sustained by the Company if the Executive was to violate such obligations.  The Executive further acknowledges that this Agreement is made in consideration of, and is adequately supported by the agreement of the Company to perform its obligations under this Agreement and by other consideration, which the Executive acknowledges constitutes good, valuable and sufficient consideration.  
9.     Employment Rights.  Nothing expressed or implied in this Agreement will create any right or duty on the part of the Company or the Executive to have the Executive remain in the employment of the Company or any Affiliate of the Company.  Any termination of employment of the Executive or the removal of the Executive from the office or position in the Company or any Affiliate of the Company that occurs following the commencement of any discussion with a third person that ultimately results in a Change in Control, shall be deemed to be a termination or removal of the Executive after a Change in Control for purposes of this Agreement.
10.    Withholding of Taxes.  The Company may withhold from any amounts payable under this Agreement all federal, state, city or other taxes as the Company is required to withhold pursuant to any applicable law, regulation or ruling.
11.    Successors and Binding Agreement.
(a)    The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation, reorganization or otherwise) to all or substantially all of the business or assets of the Company, by agreement in form and substance reasonably satisfactory to the Executive, expressly to assume and agree to perform this Agreement in the same manner and to the same extent the Company would be required to perform if no such succession had taken place.  This Agreement will be binding upon and inure to the benefit of the Company and any successor to the Company, including without limitation any persons acquiring directly or indirectly all or substantially all of the business or assets of the Company whether by purchase, merger, consolidation, reorganization or otherwise (and such successor shall thereafter be deemed the “Company” for the purposes of this Agreement), but will not otherwise be assignable, transferable or delegable by the Company.
(b)    This Agreement will inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees and legatees.
(c)    This Agreement is personal in nature and neither of the parties hereto shall, without the consent of the other, assign, transfer or delegate this Agreement or any rights or obligations hereunder except as expressly provided in Sections 11(a) and 11(b).  Without limiting the generality or effect of the foregoing, the Executive’s right to receive payments hereunder will not be assignable, transferable or delegable, whether by pledge, creation of a security interest, or otherwise, other than by a transfer by Executive’s will or by the laws of descent and distribution and, in the event of any attempted assignment or transfer contrary to this 
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Section 11(c), the Company shall have no liability to pay any amount so attempted to be assigned, transferred or delegated.
12.    Notices.  For all purposes of this Agreement, all communications, including without limitation notices, consents, requests or approvals, required or permitted to be given hereunder will be in writing and will be deemed to have been duly given when hand delivered or dispatched by electronic facsimile transmission (with receipt thereof orally confirmed), or five business days after having been mailed by United States registered or certified mail, return receipt requested, postage prepaid, or three business days after having been sent by a nationally recognized overnight courier service such as FedEx or UPS, addressed to the Company (to the attention of the Secretary of the Company) at its principal executive office and to the Executive at his principal residence, or to such other address as any party may have furnished to the other in writing and in accordance herewith, except that notices of changes of address shall be effective only upon receipt.
13.    Compliance with Section 409A of the Code.  To the extent applicable, it is intended that this Agreement be exempt from or comply with the provisions of Section 409A of the Code.  This Agreement shall be administered in a manner consistent with this intent.  References to Section 409A shall include any proposed, temporary or final regulation, or any other formal guidance, promulgated with respect to such section by the U.S. Department of Treasury or the Internal Revenue Service.
14.    Governing Law; Choice of Forum.  The validity, interpretation, construction and performance of this Agreement will be governed by and construed in accordance with the substantive laws of the State of Ohio, without giving effect to the principles of conflict of laws of such State.  Further, any litigation arising out of this Agreement shall be venued in a court of competent jurisdiction located in Cuyahoga County, Ohio.  In executing this Agreement, the Executive acknowledges that the Executive has purposefully availed himself or herself of the benefits and privileges of the jurisdictions of such courts, that the Executive waives any objections of the basis of forum, venue, and/or jurisdiction, and that the Executive willfully and knowingly submits himself or herself to the jurisdiction of such courts.  The Executive further agrees that any litigation concerning, in whole or in part, Section 8 of this Agreement shall be filed either in the United States District Court for the Northern District of Ohio located in Cleveland, Ohio or in the Cuyahoga County Court of Common Pleas, Commercial Docket located in Cleveland, Ohio.
15.    Validity.  If any provision of this Agreement or the application of any provision hereof to any person or circumstance is held invalid, unenforceable or otherwise illegal, the remainder of this Agreement and the application of such provision to any other person or circumstance will not be affected, and the provision so held to be invalid, unenforceable or otherwise illegal will be reformed to the extent (and only to the extent) necessary to make it enforceable, valid or legal.
16.    Miscellaneous.  No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by the Executive and the Company.  No waiver by either party hereto at any time of any breach by the 
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other party hereto or compliance with any condition or provision of this Agreement to be performed by such other party will be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.  No agreements or representations, oral or otherwise, expressed or implied with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement.  References to Sections are to Sections of this Agreement.
17.    Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the date first above written.
MATERION CORPORATION

			
	By: /s/ Jugal Vijayvargiya
	Jugal Vijayvargiya
	Chief Executive Officer
	
	/s/ Shelly Chadwick
	Shelly Chadwick
	
	
	
	
	

 

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Annex A
CHANGE IN CONTROL SEVERANCE COMPENSATION
(1)    A lump sum payment in an amount equal to two times the sum of (A) Base Pay (at the highest rate in effect for any period prior to the Termination Date), plus (B) Incentive Pay (in an amount equal to not less than the higher of (1) the average aggregate Incentive Pay earned in the three fiscal years immediately preceding the year in which the Termination Date occurred or (2) the plan target opportunity amount for the year in which the Termination Date occurred).
(2)    (a)    For a period of 24 months following the Termination Date (the “Change in Control Continuation Period”), the Company will arrange to provide the Executive with Employee Benefits that are welfare benefits including, without limitation, medical and life insurance (but not perquisites, stock option, performance share, performance unit, stock purchase, stock appreciation or similar compensatory benefits or benefits covered by Paragraph (3) below) substantially similar (except with respect to the cost of health care benefits) to those that the Executive was receiving or entitled to receive immediately prior to the Termination Date (or, if greater, immediately prior to the reduction, termination, or denial described in Section 2(b)(ii)).  If and to the extent that any benefit described in this Paragraph (2) is not or cannot be paid or provided under any policy, plan, program or arrangement of the Company or any Affiliate of the Company, as the case may be, then the Company will itself pay or provide for the payment to the Executive, his dependents and beneficiaries, of such Employee Benefits along with, in the case of any benefit described in this Paragraph (2) which is subject to tax because it is not or cannot be paid or provided under any such policy, plan, program or arrangement of the Company or any Affiliate of the Company, an additional amount such that after payment by the Executive, or his dependents or beneficiaries, as the case may be, of all taxes so imposed, the recipient retains an amount equal to such taxes.  Without otherwise limiting the purposes or effect of Section 6, Employee Benefits otherwise receivable by the Executive pursuant to this Paragraph (2) will be reduced to the extent comparable welfare benefits are actually received by the Executive from another employer during the Change in Control Continuation Period following the Executive’s Termination Date, and any such benefits actually received by the Executive shall be reported by the Executive to the Company.
(b)    The Executive will pay the full cost for health care continuation coverage (including medical, dental and vision coverage) described in Paragraph (2)(a) on an after-tax basis.  On the Payment Date and on January 2 of the following year, the Company will make a payment (the “Health Plans Premium Reimbursement”) to the Executive equal to the difference between (i) the amount the Executive will be required to pay during the calendar year of payment for such health care continuation coverage, and (ii) the amount the Executive would have been required to pay if the Executive were only required to pay the amount a similarly situation active employee would pay for such coverage, provided that the Company will not provide any payment pursuant to this Paragraph (2)(b) after the date on which the Executive becomes employed (other than on a part-time or temporary basis) by any other person or entity that makes health care coverage available to the Executive and his eligible dependents.  The 
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Company shall reimburse the amount of any federal, state and local taxes imposed on the Executive as a result of the Health Plans Premium Reimbursement or the receipt of benefits under the health care continuation coverage, such reimbursement to be made subject to Section 4(e) and no later than December 31 of the year following the year in which the Executive remits the applicable taxes.
(c)    Notwithstanding the foregoing, or any other provision of the Agreement, for purposes of determining the period of continuation coverage to which the Executive or any of his dependents is entitled pursuant to Section 4980B of the Code (or any successor provision thereto) under the Company’s medical, dental and other group health plans, or successor plans, the Executive’s “qualifying event” shall be the termination of the Change in Control Continuation Period.  Further, for purposes of the immediately preceding sentence and for any other purpose including, without limitation, the calculation of service or age to determine Executive’s eligibility for benefits under any retiree medical benefits or life insurance plan or policy, the Executive shall be considered to have remained actively employed on a full-time basis through the termination of the Change in Control Continuation Period.
(3)    Upon the occurrence of a Change in Control, the provisions of the applicable long-term and equity (or equity-based) award agreements and plans, or any other documents or arrangements applicable at such time that provide for the treatment of such long-term and equity (or equity-based) awards in connection with or after a change in control, will govern the treatment of all long-term and equity (or equity-based) awards held by the Executive.
(4)    Reasonable fees for outplacement services, by a firm selected by the Executive, at the expense of the Company in an amount not in excess of $20,000; provided that Executive incurs such outplacement services no later than December 31 of the second year following the year in which Executive’s Termination Date occurs, and provided further that the payment of fees for outplacement services will not be made any later than the last day of the third year following the year in which Executive’s Date of Termination occurs.

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Annex B
INVOLUNTARY TERMINATION SEVERANCE COMPENSATION
(1)    A lump sum payment in an amount equal to 1 times the sum of (A) Base Pay (at the highest rate in effect for any period prior to the Termination Date), plus (B) Incentive Pay (in an amount equal to (1) if the Termination Date occurs prior to the end of the third fiscal year following the date hereof, the plan target opportunity amount for the year in which the Termination Date occurred or (2) if the Termination Date occurs on or after the end of the third fiscal year following the date hereof, the average aggregate Incentive Pay earned in the three fiscal years immediately preceding the year in which the Termination Date occurred).
(2)    (a)  For a period of 12 months following the Termination Date (the “Continuation Period”), the Company will arrange to provide the Executive with Employee Benefits that are welfare benefits including, without limitation, medical and life insurance (but not perquisites, stock option, performance share, performance unit, stock purchase, stock appreciation or similar compensatory benefits or benefits) substantially similar (except with respect to the cost of health care benefits) to those that the Executive was receiving or entitled to receive immediately prior to the Termination Date (or, if greater, immediately prior to the reduction, termination, or denial described in Section 2(b)(ii)).  If and to the extent that any benefit described in this Paragraph (2) is not or cannot be paid or provided under any policy, plan, program or arrangement of the Company or any Affiliate of the Company, as the case may be, then the Company will itself pay or provide for the payment to the Executive, his dependents and beneficiaries, of such Employee Benefits along with, in the case of any benefit described in this Paragraph (2) which is subject to tax because it is not or cannot be paid or provided under any such policy, plan, program or arrangement of the Company or any Affiliate of the Company, an additional amount such that after payment by the Executive, or his dependents or beneficiaries, as the case may be, of all taxes so imposed, the recipient retains an amount equal to such taxes.  Without otherwise limiting the purposes or effect of Section 6, Employee Benefits otherwise receivable by the Executive pursuant to this Paragraph (2) will be reduced to the extent comparable welfare benefits are actually received by the Executive from another employer during the Continuation Period following the Executive’s Termination Date, and any such benefits actually received by the Executive shall be reported by the Executive to the Company.
(b)    The Executive will pay the full cost for health care continuation coverage (including medical, dental and vision coverage) described in Paragraph (2)(a) on an after-tax basis.  On the Payment Date and on January 2 of the following year, the Company will make a payment (the “Health Plans Premium Reimbursement”) to the Executive equal to the difference between (i) the amount the Executive will be required to pay during the calendar year of payment for such health care continuation coverage, and (ii) the amount the Executive would have been required to pay if the Executive were only required to pay the amount a similarly situation active employee would pay for such coverage, provided that the Company will not provide any payment pursuant to this Paragraph (2)(b) after the date on which the Executive becomes employed (other than on a part-time or temporary basis) by any other person or entity that makes health care coverage available to the Executive and his eligible dependents.  The 

Company shall reimburse the amount of any federal, state and local taxes imposed on the Executive as a result of the Health Plans Premium Reimbursement or the receipt of benefits under the health care continuation coverage, such reimbursement to be made subject to Section 4(e) and no later than December 31 of the year following the year in which the Executive remits the applicable taxes.
(c)    Notwithstanding the foregoing, or any other provision of the Agreement, for purposes of determining the period of continuation coverage to which the Executive or any of his dependents is entitled pursuant to Section 4980B of the Code (or any successor provision thereto) under the Company’s medical, dental and other group health plans, or successor plans, the Executive’s “qualifying event” shall be the termination of the Continuation Period.  Further, for purposes of the immediately preceding sentence and for any other purpose including, without limitation, the calculation of service or age to determine Executive’s eligibility for benefits under any retiree medical benefits or life insurance plan or policy, the Executive shall be considered to have remained actively employed on a full-time basis through the termination of the Continuation Period.
(3)    Vesting acceleration of all time-based equity (or equity-based) awards then-held by the Executive, to the extent they remain unvested, prorated based on the number of days that the Executive was employed during the period from the applicable date of grant (or last vesting date, as applicable) until the Executive’s Date of Termination, and settlement of such vested awards on the date(s) on which payment would otherwise have been made pursuant to the applicable award agreement if the Executive had continued employment through such date(s).
(4)    Vesting of all performance-based equity (or equity-based) awards then-held by the Executive based on actual achievement of the applicable performance conditions if the Executive had remained employed until the last day of the applicable performance period (as determined by the Board or a committee thereof after completion of the performance period), prorated based on the number of days that the Executive was employed during such performance period.   
(5)    Reasonable fees for outplacement services, by a firm selected by the Executive, at the expense of the Company in an amount not in excess of $20,000; provided that Executive incurs such outplacement services no later than December 31 of the second year following the year in which Executive’s Termination Date occurs, and provided further that the payment of fees for outplacement services will not be made any later than the last day of the third year following the year in which Executive’s Date of Termination occurs.

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