Document:

form8k-exhibit10_2.htm

Exhibit 10.2

 

CLIFFORD CHANCE LLP

C L I F F O R D

C H A N C E

CONFORMED COPY

	  	  
	  	  
	
Dated 4 April 2011

 

 

	
WESTERN POWER DISTRIBUTION (EAST MIDLANDS) PLC

<as the Company>

 

ABBEY NATIONAL TREASURY SERVICES PLC (TRADING AS SANTANDER GLOBAL BANKING & MARKETS), BANC OF AMERICA SECURITIES LIMITED, BARCLAYS CAPITAL, CREDIT SUISSE AG, LONDON BRANCH, HSBC BANK PLC, LLOYDS TSB BANK PLC, MIZUHO CORPORATE BANK, LTD and THE ROYAL BANK OF SCOTLAND PLC

as Mandated Lead Arrangers

 

ROYAL BANK OF CANADA

as Lead Arranger

 

BANC OF AMERICA SECURITIES LIMITED

as Bookrunner

 

BANC OF AMERICA SECURITIES LIMITED

as Facility Agent

 

and

 

BANK OF AMERICA, N.A.

as Issuing Bank

 

	  	
<£300,000,000 MULTICURRENCY REVOLVING FACILITY AGREEMENT>

	  

  

  

  

 

	
CONTENTS

	
Clause

	
Page

	
1.

	
Interpretation

	
1

	
2.

	
The Facilities

	
18

	
3.

	
Purpose

	
21

	
4.

	
Conditions Precedent

	
21

	
5.

	
Utilisation - Loans

	
21

	
6.

	
Utilisation – Letters of Credit

	
23

	
7.

	
Letters of Credit

	
27

	
8.

	
Optional Currencies

	
34

	
9.

	
Repayment

	
35

	
10.

	
Prepayment and Cancellation

	
36

	
11.

	
Interest

	
39

	
12.

	
Terms

	
41

	
13.

	
Market Disruption

	
41

	
14.

	
Tax gross-up and indemnities

	
42

	
15.

	
Increased Costs

	
50

	
16.

	
Mitigation

	
51

	
17.

	
Payments

	
53

	
18.

	
Representations

	
56

	
19.

	
Information Covenants

	
59

	
20.

	
Financial Covenants

	
63

	
21.

	
General Covenants

	
66

	
22.

	
Default

	
72

	
23.

	
The Administrative Parties

	
76

	
24.

	
Evidence and Calculations

	
82

	
25.

	
Fees

	
83

	
26.

	
Indemnities and Break Costs

	
84

	
27.

	
Expenses

	
85

	
28.

	
Amendments and Waivers

	
85

	
29.

	
Changes to the Parties

	
88

	
30.

	
Disclosure of Information

	
92

	
31.

	
Set-off

	
94

	
32.

	
Pro rata sharing

	
94

	
33.

	
Severability

	
95

	
34.

	
Counterparts

	
95

	
35.

	
Notices

	
95

	
36.

	
Language

	
97

	
37.

	
Governing law

	
97

	
38.

	
Enforcement

	
97

	
Schedule 1 Original Parties

	
99

	
Schedule 2 Conditions Precedent Documents

	
100

	
Schedule 3 Requests

	
101

	
Schedule 4 Calculation of the mandatory cost

	
103

	
Schedule 5 Form of Transfer Certificate

	
106

	
Schedule 6 Form of Letter of Credit

	
109

	
Schedule 7 Form of Compliance Certificate

	
117

	
Schedule 8 Form of Increase Confirmation

	
118

  

  

  

THIS AGREEMENT is dated 4 April 2011

 

BETWEEN:

 

	
(1)

	
WESTERN POWER DISTRIBUTION (EAST MIDLANDS) PLC (registered number 02366923) (the "Company");

 

	
(2)

	
ABBEY NATIONAL TREASURY SERVICES PLC (TRADING AS SANTANDER GLOBAL BANKING & MARKETS), BANC OF AMERICA SECURITIES LIMITED, BARCLAYS CAPITAL, CREDIT SUISSE AG, LONDON BRANCH, HSBC BANK PLC, LLOYDS TSB BANK PLC, MIZUHO CORPORATE BANK, LTD and THE ROYAL BANK OF SCOTLAND PLC as mandated lead arrangers (the "Mandated Lead Arrangers");

 

	
(3)

	
ROYAL BANK OF CANADA as lead arranger (the "Lead Arranger");

 

	
(4)

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

 

	
(5)

	
BANC OF AMERICA SECURITIES LIMITED as facility agent (the "Facility Agent"); and

 

	
(6)

	
BANK OF AMERICA, N.A. as issuing bank (the "Issuing Bank").

 

IT IS AGREED as follows:

 

	
1.

	
INTERPRETATION

 

	
1.1

	
Definitions

 

In this Agreement:

 

"Acceptable Bank" means 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 A2 or higher by Moody’s Investor Services Limited or a comparable rating from an internationally recognised credit rating agency.

 

"Act" means the Electricity Act 1989 and, unless the context otherwise requires, all subordinate legislation made pursuant thereto.

 

"Administrative Party" means an Arranger, the Facility Agent or the Issuing Bank.

 

"Affiliate" means a Subsidiary or a Holding Company of a person or any other Subsidiary of that Holding Company. Notwithstanding the foregoing and in so far as it relates to The Royal Bank of Scotland plc as a Lender, the term "Affiliate" shall not include (i) the UK government or any member or instrumentality thereof, including Her Majesty's Treasury and UK Financial Investments Limited (or any directors, officers, employees or entities thereof) or (ii) any persons or entities controlled by or under common control with the UK government or any member or instrumentality thereof (including Her Majesty's Treasury and UK Financial Investments Limited) and which are not part of The Royal Bank of Scotland Group plc and its subsidiary or subsidiary undertakings.

 

"Agent's Spot Rate of Exchange" means the Facility Agent's spot rate of exchange for the purchase of the relevant currency in the London foreign exchange market with Sterling at or about 11.00 a.m. on a particular day.

 

"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 Original Financial Statements.

 

"Arranger" means the Mandated Lead Arrangers and the Lead Arranger, whether acting individually or together.

 

"Authority" means The Gas and Electricity Markets Authority established under Section 1 of the Utilities Act 2000.

 

"Available Commitment" means, in relation to a Facility, a Lender's Commitment under that Facility minus:

 

	
  

	
(a)

	
the amount of its participation in any outstanding Utilisations under that Facility; and

 

	
  

	
(b)

	
in relation to any proposed Utilisation, the amount of its participation in any Utilisations that are due to be made under that Facility on or before the proposed Utilisation Date,

 

other than that Lender's participation in any Utilisations under that Facility that are due to be repaid or prepaid on or before the proposed Utilisation Date.

 

"Available Facility" means, in relation to a Facility, the aggregate for the time being of each Lender's Available Commitment in respect of that Facility.

 

"Availability Period" means the period from and including the date of this Agreement to and including the date falling one month prior to the Final Maturity Date.

 

"Balancing and Settlement Code" means the document, as modified from time to time, setting out the electricity balancing and settlement arrangements designated by the Secretary of State and adopted by The National Grid Company plc (Registered No. 2366977) or its successor pursuant to its transmission licence.

 

"Balancing and Settlement Code Framework" means the agreement of that title, in the form approved by the Secretary of State, as amended from time to time, to which the Company is a party and by which the Balancing and Settlement Code is made binding upon the Company.

 

"Base Currency" means Sterling.

 

"Base Currency Amount" means, in relation to a Utilisation, the amount specified in the Request delivered by the Company for that Utilisation (or, if the amount requested is not denominated in the Base Currency, that amount converted into the Base Currency at the Agent's Spot Rate of Exchange on the date which is one Business Day before the Rate Fixing Day for a Loan or three Business Days before the Utilisation Date for a Letter of Credit or, if later, on the date the Facility Agent receives the Request and, in the case of a Letter of Credit, as adjusted under Clause 6.9 (Revaluation of Letters of Credit)) adjusted to reflect any repayment, prepayment, consolidation or division of the Utilisation.

 

"Basel III" means 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 on 16 December 2010.

 

"Break Costs" means the amount (if any), calculated in accordance with Clause 26.3 (Break Costs), which a Lender is entitled to receive under this Agreement as compensation if any part of a Loan or overdue amount is prepaid.

 

"Business Day" means a day (other than a Saturday or a Sunday) on which commercial banks are open in London and:

 

	
  

	
(c)

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

 

	
  

	
(d)

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

 

"Commitment" means a Facility A Commitment or Facility B Commitment.

 

"Compliance Certificate" means a certificate substantially in the form of Schedule 7 (Form of Compliance Certificate) setting out, among other things, calculations of the financial covenants.

 

"Contribution Notice" means a contribution notice issued by the Pensions Regulator under section 38 or section 47 of the Pensions Act 2004.

 

"CTA" means the Corporation Tax Act 2009.

 

"Debt Purchase Transaction" means, in relation to a person, a transaction where such person:

 

	
  

	
(a)

	
purchases by way of assignment or transfer;

 

	
  

	
(b)

	
enters into any sub-participation in respect of; or

 

	
  

	
(c)

	
enters into any other agreement or arrangement having an economic effect substantially similar to a sub-participation in respect of,

 

any Commitment or amount outstanding under this Agreement.

 

"Default" means:

 

	
  

	
(a)

	
an Event of Default; or

 

	
  

	
(b)

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

 

"Defaulting Lender" means any Lender:

 

	
  

	
(a)

	
which has failed to make its participation in a Loan available or has notified the Facility Agent that it will not make its participation in a Loan available by the Utilisation Date of that Loan in accordance with Clause 5.3 (Advance of Loan) or has failed to provide cash collateral (or has notified the Issuing Bank that it will not provide cash collateral) in accordance with Clause 7.6 (Cash collateral by Non-Acceptable L/C Lender);

 

	
  

	
(b)

	
which has otherwise rescinded or repudiated a Finance Document; or

 

	
  

	
(c)

	
with respect to which an Insolvency Event has occurred and is continuing,

 

unless, in the case of paragraph (a) above:

 

	
  

	
(i)

	
its failure to pay is caused by:

 

	
  

	
(A)

	
administrative or technical error; or

 

	
  

	
(B)

	
a Disruption Event,

 

 and payment is made within 5 Business Days of its due date; or

 

	
  

	
(ii)

	
the Lender is disputing in good faith whether it is contractually obliged to make the payment in question.

 

"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.

 

"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

 

	
  

	
(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.

 

"euro or euros or €" means the single currency of the Participating Member States.

 

"EURIBOR" means for a Term of any Loan or overdue amount:

 

	
  

	
(a)

	
the applicable Screen Rate; or

 

	
  

	
(b)

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

 

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

 

"Event of Default" means an event specified as such in this Agreement.

 

"Facility" means Facility A or Facility B.

 

"Facility A" means the revolving credit facility made available under this Agreement as described in sub-Clause 2.1.1 of Clause 2 (The Facilities) and identified therein as facility A.

 

"Facility A Commitment" means:

 

	
  

	
(a)

	
in relation to an Original Lender, the Sterling amount set opposite its name under the heading "Facility A Commitment" in Schedule 1 (Original Parties) and the amount of any other Facility A Commitment transferred to it under this Agreement or assumed by it in accordance with Clause 2.2 (Increase); and

 

	
  

	
(b)

	
in relation to any other Lender, the Sterling amount of any Facility A Commitment transferred to it under this Agreement or assumed by it in accordance with Clause 2.2 (Increase),

 

to the extent not cancelled, reduced or transferred by it under this Agreement.

 

"Facility B" means the revolving credit facility made available under this Agreement as described in sub-Clause 2.1.2 of Clause 2 (The Facilities) and identified therein as facility B.

 

"Facility A Utilisation" means:

 

	
  

	
(a)

	
a Loan made or to be made under Facility A; or

 

	
  

	
(b)

	
a Letter of Credit.

 

"Facility B Commitment" means:

 

	
  

	
(a)

	
in relation to an Original Lender, the Sterling amount set opposite its name under the heading "Facility B Commitment" in Schedule 1 (Original Parties) and the amount of any other Facility B Commitment transferred to it under this Agreement or assumed by it in accordance with Clause 2.2 (Increase); and

 

	
  

	
(b)

	
in relation to any other Lender, the Sterling amount of any Facility B Commitment transferred to it under this Agreement or assumed by it in accordance with Clause 2.2 (Increase),

 

to the extent not cancelled, reduced or transferred by it under this Agreement.

 

"Facility B Utilisation" means a Loan made or to be made under Facility B.

 

"Facility Office" means the office(s) notified by a Lender to the Facility Agent:

 

	
  

	
(a)

	
on or before the date it becomes a Lender; or

 

	
  

	
(b)

	
by not less than five Business Days' notice,

 

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

 

"Fee Letter" means any letter entered into by reference to the Facilities between one or more Administrative Parties and the Company setting out the amount of certain fees referred to in the Agreement.

 

"Final Maturity Date" means the fifth anniversary of the date of this Agreement.

 

"Finance Document" means:

 

	
  

	
(a)

	
this Agreement;

 

	
  

	
(b)

	
a Fee Letter;

 

	
  

	
(c)

	
a Transfer Certificate; or

 

	
  

	
(d)

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

 

"Finance Party" means a Lender or an Administrative Party.

 

"Financial Indebtedness" means any indebtedness for or in respect of:

 

	
  

	
(a)

	
moneys borrowed;

 

	
  

	
(b)

	
any acceptance credit;

 

	
  

	
(c)

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

 

	
  

	
(d)

	
any redeemable preference share;

 

	
  

	
(e)

	
any finance or capital lease;

 

	
  

	
(f)

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

 

	
  

	
(g)

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

 

	
  

	
(h)

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

 

	
  

	
(i)

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

 

	
  

	
(j)

	
any counter-indemnity obligation in respect of any guarantee, indemnity, bond, letter of credit or any other instrument issued by a bank or financial institution excluding any counter indemnity given in respect of a Letter of Credit issued under Facility A in favour of Central Networks Trustee Limited in an amount not exceeding £70,000,000; 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.

 

"Group" means the Company and its Subsidiaries.

 

"Holding Company" means in relation to a company or corporation, any other company or corporation in respect of which it is a Subsidiary.

 

"Impaired Agent" means the Facility Agent at any time when:

 

	
  

	
(a)

	
it has failed to make (or has notified a Party that it will not make) a payment required to be made by it under the Finance Documents by the due date for payment;

 

	
  

	
(b)

	
the Facility Agent otherwise rescinds or repudiates a Finance Document;

 

	
  

	
(c)

	
(if the Facility Agent is also a Lender) it is a Defaulting Lender under paragraph (a) or (b) of the definition of "Defaulting Lender"; or

 

	
  

	
(d)

	
an Insolvency Event has occurred and is continuing with respect to the Facility Agent;

 

unless, in the case of paragraph (a) above:

 

	
  

	
(i)

	
its failure to pay is caused by:

 

	
  

	
(A)

	
administrative or technical error; or

 

	
  

	
(B)

	
a Disruption Event,

 

 and payment is made within 5 Business Days of its due date; or

 

	
  

	
(ii)

	
the Facility Agent is disputing in good faith whether it is contractually obliged to make the payment in question.

 

"Increase Confirmation" means a confirmation substantially in the form set out in Schedule 8 (Form of Increase Confirmation).

 

"Increase Lender" has the meaning given to that term in Clause 2.2 (Increase).

 

"Increased Cost" means:

 

	
  

	
(a)

	
an additional or increased cost;

 

	
  

	
(b)

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

 

	
  

	
(c)

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

 

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

 

"Information Package" means the information package in the form approved by the Company concerning the Group which, at the Company’s request and on its behalf, was prepared in relation to this transaction and distributed by the Arranger to selected financial institutions before the date of this Agreement and which includes, amongst other things, a document entitled: 'Lender Presentation 8 March 2011'.

 

"Insolvency Event" in relation to a Finance Party means that the Finance Party:

 

	
  

	
(a)

	
is dissolved (other than pursuant to a consolidation, amalgamation or merger);

 

	
  

	
(b)

	
becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due;

 

	
  

	
(c)

	
makes a general assignment, arrangement or composition with or for the benefit of its creditors;

 

	
  

	
(d)

	
institutes or has instituted against it, by a regulator, supervisor or any similar official with primary insolvency, rehabilitative or regulatory jurisdiction over it in the jurisdiction of its incorporation or organisation or the jurisdiction of its head or home office, a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors' rights, or a petition is presented for its winding up or liquidation by it or such regulator, supervisor or similar official;

 

	
  

	
(e)

	
has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors' rights, or a petition is presented for its winding up or liquidation, and, in the case of any such proceeding or petition instituted or presented against it, such proceeding or petition is instituted or presented by a person or entity not described in paragraph (d) above and:

 

	
  

	
(i)

	
results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding up or liquidation; or

 

	
  

	
(ii)

	
is not dismissed, discharged, stayed or restrained in each case within 30 days of the institution or presentation thereof;

 

	
  

	
(f)

	
has a resolution passed for its winding up, official management or liquidation (other than pursuant to a consolidation, amalgamation or merger);

 

	
  

	
(g)

	
seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all its assets;

 

	
  

	
(h)

	
has a secured party take possession of all or substantially all its assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its assets and such secured party maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case within 30 days thereafter;

 

	
  

	
(i)

	
causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in paragraphs (a) to (h) above; or

 

	
  

	
(j)

	
takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts.

 

"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 2 (Conditions Precedent Documents).

 

"Lender" means:

 

	
  

	
(a)

	
an Original Lender; or

 

	
  

	
(b)

	
any person which becomes a Lender after the date of this Agreement in accordance with Clause 2.2 (Increase) or Clause 29 (Changes to the Parties).

 

"Letter of Credit" means a letter of credit, substantially in the form set out in Schedule 6 (Form of Letter of Credit) or in any other form requested by the Company and agreed by the Facility Agent and the Issuing Bank.

 

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

 

	
  

	
(a)

	
the applicable Screen Rate; or

 

	
  

	
(b)

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

 

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

 

"Licence" means:

 

	
  

	
(a)

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

 

	
  

	
(b)

	
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.

 

"Loan" means, unless otherwise stated in this Agreement, the principal amount of each borrowing under this Agreement or the principal amount outstanding of that borrowing.

 

"Majority Lenders" means, at any time, Lenders:

 

	
  

	
(a)

	
whose share in the outstanding Utilisations and whose undrawn Commitments then aggregate 662/3 per cent. or more of the aggregate of all the outstanding Utilisations and the undrawn Commitments of all the Lenders;

 

	
  

	
(b)

	
if there are no Utilisations then outstanding, whose undrawn Commitments then aggregate 662/3 per cent. or more of the Total Commitments; or

 

	
  

	
(c)

	
if there are no Utilisations then outstanding and the Total Commitments have been reduced to zero, whose Commitments aggregated 662/3 per cent. or more of the Total Commitments immediately before the reduction.

 

"Mandatory Cost" means the cost of complying with certain regulatory requirements, expressed as a percentage rate per annum and calculated by the Facility Agent under Schedule 4 (Calculation of the Mandatory Cost).

 

"Margin" means, provided that at least one of Moody's Investor Services Limited ("Moody's") and Standard & Poor's Ratings Services ("Standard & Poor's") has provided a current rating in respect of the long-term, unsecured and non credit-enhanced debt obligations of the Company, the rate set out in the table below:

 

	
Rating (Moody's)

	
Rating (Standard & Poor's)

	
Margin (per annum)

	
lower than Baa3

	
lower than BBB-

	
1.15%

	
Baa3

	
BBB-

	
0.95%

	
Baa2

	
BBB

	
0.85%

	
Baa1

	
BBB+

	
0.75%

	
A3 or higher

	
A- or higher

	
0.65%

 

If the current Moody's and Standard & Poor's ratings in respect of the Company imply different Margin rates, the Margin shall be the average of the two Margin rates implied. If only one of Moody's and Standard & Poor's provides a rating in respect of the long-term, unsecured and non credit-enhanced debt obligations of the Company, that rating alone shall be used to determine the applicable Margin. If neither Moody's nor Standard & Poor's provides a rating in respect of the long-term, unsecured and non credit-enhanced debt obligations of the Company, the applicable Margin shall be 1.15% per annum. Any increase or decrease in the Margin shall take effect on the date on which the Moody's and/or Standard & Poor's rating in respect of the long-term, unsecured and non credit-enhanced debt obligations of the Company is published or, as the case may be, changed.

 

"Material Adverse Effect" means a material adverse effect on:

 

	
  

	
(a)

	
the business, assets or financial condition of the Group taken as a whole;

 

	
  

	
(b)

	
the ability of the Company to perform its payment obligations under the Finance Documents or its obligations under Clauses 20.3 (Interest Cover) or 20.4 (Asset Cover) of this Agreement; or

 

	
  

	
(c)

	
the validity or enforceability of the Finance Documents or the rights or remedies of any Finance Party 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 (unconsolidated if it has Subsidiaries) upon which the latest audited financial statements of the Group have been based;

 

	
  

	
(b)

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

 

	
  

	
(c)

	
the gross assets or gross revenues of the Group will be determined from 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.

 

"Maturity Date" means the last day of the Term of a Loan.

 

"Non-Acceptable L/C Lender" means a Lender which:

 

	
  

	
(a)

	
is not an Acceptable Bank (other than a Lender which the Issuing Bank has agreed is acceptable to it notwithstanding that fact); or

 

	
  

	
(b)

	
is a Defaulting Lender; or

 

	
  

	
(c)

	
has failed to make (or has notified the Facility Agent that it will not make) a payment to be made by it under Clause 7.5 (Indemnities) or sub-clause 23.11.1 of Clause 23.11 (Indemnities) or any other payment to be made by it under the Finance Documents to or for the account of any other Finance Party in its capacity as Lender by the due date for payment unless the failure to pay falls within the description of any of those items set out at (i) – (ii) of the definition of Defaulting Lender.

 

"OFGEM" means the Office of Gas and Electricity Markets.

 

"Optional Currency" means any currency (other than Sterling) which complies with the conditions set out in Clause 8 (Optional Currencies).

 

"Original Financial Statements" means the audited consolidated financial statements of the Company for the year ended 31 December 2010.

 

"Participating Member State" means a member state of the European Community that adopts or has adopted the euro as its lawful currency under the legislation of the European Community 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.

 

"Pre-approved Currency" means U.S.$ and euro.

 

"Pro Rata Share" means:

 

	
  

	
(a)

	
for the purpose of determining a Lender's share in a Utilisation, the proportion which its Available Commitment bears to the Available Facility immediately prior to making the Loan; and

 

	
  

	
(b)

	
for any other purpose on a particular date:

 

	
  

	
(i)

	
the proportion which its Commitment bears to the Total Commitments on that date; or

 

	
  

	
(ii)

	
if the Total Commitments have been cancelled, the proportion which its Commitments bore to the Total Commitments immediately before being cancelled.

 

"PUHCA" means the Public Utility Holding Company Act of 2005, as amended, of the United States of America.

 

"Rate Fixing Day" means:

 

	
  

	
(a)

	
the first day of a Term for a Utilisation denominated in Sterling; or

 

	
  

	
(b)

	
the second Business Day before the first day of a Term (or, in the case of a Letter of Credit, the second Business Day before the date of Utilisation) for a Utilisation denominated in any other currency;

 

or such other day as the Facility Agent determines is generally treated as the rate fixing day by market practice in the relevant interbank market.

 

"Reference Banks" means Bank of America, N.A., Abbey National Treasury Services plc and The Royal Bank of Scotland plc and any other bank or financial institution appointed as such by the Facility Agent (after consultation with the Company) under this Agreement.

 

"Repeating Representations" means the representations which are deemed to be repeated under this Agreement.

 

"Request" means a request for a Utilisation, substantially in the relevant form set out in Schedule 3 (Requests).

 

"Rollover Loan" means one or more Loans:

 

	
  

	
(a)

	
made or to be made on the same day that (i) a maturing Loan is due to be repaid or (ii) the Company is obliged to pay to the Facility Agent for the Issuing Bank the amount of any claim under a Letter of Credit;

 

	
  

	
(b)

	
the aggregate amount of which is equal to or less than (i) the maturing Loan (unless it arose as a result of the operation of Clause 8.3 (Revocation of a currency))  or (ii) the amount of the claim under the Letter of Credit;

 

	
  

	
(c)

	
under the same Facility as (i) the maturing Loan or (ii) the Letter of Credit in respect of which the claim has been made;

 

	
  

	
(d)

	
in the same currency as (i) the maturing Loan (unless it arose as a result of the operation of Clause 8.3 (Revocation of a currency))  or (ii) the claim under the Letter of Credit; and

 

	
  

	
(e)

	
made or to be made to the Company for the purpose of (i) refinancing a maturing Loan or (ii) satisfying the obligations of the Company to pay the amount of a claim under the Letter of Credit to the Facility Agent for the Issuing Bank.

 

"Screen Rate" means:

 

	
  

	
(a)

	
in relation to LIBOR, the British Bankers' Association Interest Settlement Rate for the relevant currency and Term; and

 

	
  

	
(b)

	
in relation to EURIBOR, the percentage rate per annum determined by the Banking Federation of the European Union for the relevant period,

 

displayed on the appropriate page of the Reuters screen. If the relevant page is replaced or the service ceases to be available, the Facility Agent (after consultation with the Company and the Lenders) may specify another page or service displaying the appropriate rate.

 

"Secretary of State" means the Secretary of State for Trade and Industry.

 

"Security Interest" means any mortgage, pledge, lien, charge, assignment, hypothecation or security interest or any other agreement or arrangement having a similar effect.

 

"Sterling" and "£" mean the lawful currency of the United Kingdom.

 

"Subsidiary" means:

 

	
  

	
(c)

	
a subsidiary within the meaning of section 1159 of the Companies Act 2006; and

 

	
  

	
(d)

	
unless the context otherwise requires, a subsidiary undertaking within the meaning of section 1162 of the Companies Act 2006.

 

"TARGET2" means the Trans-European Automated Real-time Gross Settlement Express Transfer payment system which utilises a single platform and which was launch on 19 November 2007.

 

"TARGET Day" means any day on which TARGET2 is open for the settlement of payments in euro.

 

"Tax" means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any penalty, addition to tax or any interest payable in connection with any failure to pay or any delay in paying any of the same).

 

"Term" means, in respect of a Loan, each period determined under this Agreement by reference to which interest on a Loan or an overdue amount is calculated and, in respect of a Letter of Credit, each period determined under this Agreement for which the Issuing Bank is under a liability under a Letter of Credit.

 

"Total Commitments" means the aggregate of the Total Facility A Commitments and the Total Facility B Commitments, being £300,000,000 at the date of this Agreement.

 

"Total Facility A Commitments" means the aggregate of the Facility A Commitments, being £80,000,000 at the date of this Agreement.

 

"Total Facility B Commitments" means the aggregate of the Facility B Commitments, being £220,000,000 at the date of this Agreement.

 

"Transfer Certificate" means a certificate, substantially in the form of Schedule 5 (Form of Transfer Certificate), with such amendments as the Facility Agent may approve or reasonably require or any other form agreed between the Facility Agent and the Company.

 

"Transfer Date" means, in relation to a transfer, the later of:

 

	
  

	
(a)

	
the proposed Transfer Date specified in the relevant Transfer Certificate; and

 

	
  

	
(b)

	
the date on which the Facility Agent executes the relevant Transfer Certificate.

 

"U.K. " means the United Kingdom.

 

"U.S. Dollars" and "U.S.$" means the lawful currency for the time being of the United States of America.

 

"Unpaid Sum" means any sum due and payable but unpaid by the Company under the Finance Documents.

 

"Utilisation" means a Facility A Utilisation or a Facility B Utilisation.

 

"Utilisation Date" means each date on which a Utilisation is made.

 

"VAT" means value added tax as provided for in the Value Added Tax Act 1994 and any other tax of a similar nature.

 

	
1.2

	
Construction

 

	
  

	
1.2.1

	
The following definitions have the meanings given to them in Clause 20 (Financial Covenants):

 

	
  

	
(a)

	
Consolidated EBITDA;

 

	
  

	
(b)

	
Interest Payable;

 

	
  

	
(c)

	
Measurement Period;

 

	
  

	
(d)

	
Regulatory Asset Base; and

 

	
  

	
(e)

	
Total Net Debt.

 

	
  

	
1.2.2

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

 

	
  

	
(a)

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

 

	
  

	
(b)

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

 

	
  

	
(c)

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

 

	
  

	
(d)

	
Barclays Capital is a reference to Barclays Capital, the investment banking division of Barclays Bank PLC;

 

	
  

	
(e)

	
disposal means a sale, transfer, grant, lease or other disposal, whether voluntary or involuntary, and dispose will be construed accordingly;

 

	
  

	
(f)

	
indebtedness includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money;

 

	
  

	
(g)

	
know your customer requirements are the identification checks that a Finance Party requests in order to meet its obligations under any applicable law or regulation to identify a person who is (or is to become) its customer;

 

	
  

	
(h)

	
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;

 

	
  

	
(i)

	
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;

 

	
  

	
(j)

	
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;

 

	
  

	
(k)

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

 

	
  

	
(l)

	
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;

 

	
  

	
(m)

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

 

	
  

	
(n)

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

 

	
  

	
(o)

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

 

	
  

	
(p)

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

 

	
  

	
(q)

	
a time of day is a reference to London time.

 

	
  

	
1.2.3

	
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:

 

	
  

	
(a)

	
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);

 

	
  

	
(b)

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

 

	
  

	
(c)

	
notwithstanding sub-clause 1.2.3(a) 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.

 

	
  

	
1.2.4

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

 

	
  

	
1.2.5

	
Unless the contrary intention appears:

 

	
  

	
(a)

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

 

	
  

	
(b)

	
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

 

	
  

	
(c)

	
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.

 

	
  

	
1.2.6

	
The headings in this Agreement do not affect its interpretation.

 

	
2.

	
THE FACILITIES

 

	
2.1

	
The Facilities

 

Subject to the terms of this Agreement, the Lenders make available to the Company:

 

	
  

	
2.1.1

	
a revolving credit facility hereby designated as Facility A and denominated in Sterling in an aggregate amount equal to the Total Facility A Commitments; and

 

	
  

	
2.1.2

	
a revolving credit facility hereby designated as Facility B and denominated in Sterling in an aggregate amount equal to the Total Facility B Commitments.

 

	
2.2

	
Increase

 

	
  

	
2.2.1

	
The Company may by giving prior notice to the Facility Agent by no later than the date falling 10 Business Days after the effective date of a cancellation of:

 

	
  

	
(a)

	
the Available Commitments of a Defaulting Lender in accordance with sub-clause 10.6.4 of Clause 10.6 (Involuntary prepayment and cancellation); or

 

	
  

	
(b)

	
the Commitments of a Lender in accordance with Clause 10.1 (Mandatory prepayment – illegality),

 

request that the Total Commitments be increased (and the Total Commitments shall be so increased) in an aggregate amount in the Base Currency of up to the amount of the Available Commitments or Commitments so cancelled as follows:

 

	
  

	
(c)

	
the increased Commitments will be assumed by one or more Lenders or other banks, financial institutions, trusts, funds or other entities (each an "Increase Lender") selected by the Company (each of which shall not be a member of the Group and which is further acceptable to the Facility Agent (acting reasonably)) and each of which confirms its willingness to assume and does assume all the obligations of a Lender corresponding to that part of the increased Commitments which it is to assume, as if it had been an Original Lender;

 

	
  

	
(d)

	
the Company and any Increase Lender shall assume obligations towards one another and/or acquire rights against one another as the Company and the Increase Lender would have assumed and/or acquired had the Increase Lender been an Original Lender;

 

	
  

	
(e)

	
each Increase Lender shall become a Party as a "Lender" and any Increase Lender and each of the other Finance Parties shall assume obligations towards one another and acquire rights against one another as that Increase Lender and those Finance Parties would have assumed and/or acquired had the Increase Lender been an Original Lender;

 

	
  

	
(f)

	
the Commitments of the other Lenders shall continue in full force and effect; and

 

	
  

	
(g)

	
any increase in the Total Commitments shall take effect on the date specified by the Company in the notice referred to above or any later date on which the conditions set out in sub-clause 2.2.2 below are satisfied.

 

	
  

	
2.2.2

	
An increase in the Total Commitments will only be effective on:

 

	
  

	
(a)

	
the execution by the Facility Agent of an Increase Confirmation from the relevant Increase Lender;

 

	
  

	
(b)

	
in relation to an Increase Lender which is not a Lender immediately prior to the relevant increase:

 

	
  

	
(i)

	
the performance by the Facility Agent of all necessary "know your customer" or other similar checks under all applicable laws and regulations in relation to the assumption of the increased Commitments by that Increase Lender, the completion of which the Facility Agent shall promptly notify to the Company, the Increase Lender and the Issuing Bank; and

 

	
  

	
(ii)

	
the Issuing Bank consenting to that increase.

 

	
  

	
(c)

	
Each Increase Lender, by executing the Increase Confirmation, confirms (for the avoidance of doubt) that the Facility Agent has authority to execute on its behalf any amendment or waiver that has been approved by or on behalf of the requisite Lender or Lenders in accordance with this Agreement on or prior to the date on which the increase becomes effective.

 

	
  

	
(d)

	
Unless the Facility Agent otherwise agrees or the increased Commitment is assumed by an existing Lender, the Company shall, on the date upon which the increase takes effect, pay to the Facility Agent (for its own account) a fee of £1,750 and the Company shall promptly on demand pay the Facility Agent the amount of all costs and expenses (including legal fees) reasonably incurred by it in connection with any increase in Commitments under this Clause 2.2.

 

	
  

	
(e)

	
The Company may pay to the Increase Lender a fee in the amount and at the times agreed between the Company and the Increase Lender in a letter between the Company and the Increase Lender setting out that fee.  A reference in this Agreement to a Fee Letter shall include any letter referred to in this paragraph.

 

	
  

	
(f)

	
Clause 29.4 (Limitation of responsibility of Existing Lender) shall apply mutatis mutandis in this Clause 2.2 in relation to an Increase Lender as if references in that Clause to:

 

	
  

	
(i)

	
an "Existing Lender" were references to all the Lenders immediately prior to the relevant increase;

 

	
  

	
(ii)

	
the "New Lender" were references to that "Increase Lender"; and

 

	
  

	
(iii)

	
a "re-transfer" and "re-assignment" were references to respectively a "transfer" and "assignment"."

 

	
  

	
(g)

	
Each Party (other than the Increase Lender and the Issuing Bank) irrevocably authorises the Facility Agent to execute any duly completed Increase Confirmation on its behalf.

 

	
2.3

	
Nature of a Finance Party's rights and obligations

 

Unless otherwise agreed by all the Finance Parties:

 

	
  

	
2.3.1

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

 

	
  

	
2.3.2

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

 

	
  

	
2.3.3

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

 

	
  

	
2.3.4

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

 

	
  

	
2.3.5

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

 

	
  

	
2.3.6

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

 

	
3.

	
PURPOSE

 

	
3.1

	
Purpose

 

The Company shall apply all amounts borrowed by it under the Facilities towards the general corporate purposes of the Group and in compliance with the Licence.

 

	
3.2

	
No obligation to monitor

 

No Finance Party is bound to monitor or verify any amount borrowed pursuant to this Agreement.

 

	
4.

	
CONDITIONS PRECEDENT

 

	
4.1

	
Conditions precedent documents

 

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

 

	
4.2

	
Further conditions precedent

 

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

 

	
  

	
4.2.1

	
the Repeating Representations are correct in all material respects; and

 

	
  

	
4.2.2

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

 

	
4.3

	
Maximum number

 

Unless the Facility Agent agrees, a Request may not be given if, as a result, there would be more than:

 

	
  

	
4.3.1

	
10 Facility A Loans outstanding;

 

	
  

	
4.3.2

	
10 Facility B Loans outstanding; and

 

	
  

	
4.3.3

	
5 Letters of Credit outstanding.

 

	
5.

	
UTILISATION - LOANS

 

	
5.1

	
Giving of Requests

 

	
  

	
5.1.1

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

 

	
  

	
5.1.2

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

 

	
  

	
5.1.3

	
Each Request is irrevocable.

 

	
5.2

	
Completion of Requests

 

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

 

	
  

	
5.2.1

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

 

	
  

	
5.2.2

	
it identifies the Facility to be utilised;

 

	
  

	
5.2.3

	
the amount of the Loan requested is:

 

	
  

	
(a)

	
a minimum of £5,000,000 or its equivalent in accordance with Clause 8.4 (Optional Currency equivalents), and an integral multiple of 1,000,000 units of that currency;

 

	
  

	
(b)

	
the Available Commitment on the proposed Utilisation Date; or

 

	
  

	
(c)

	
such other amount as the Facility Agent may agree; and

 

	
  

	
5.2.4

	
the proposed Term complies with this Agreement.

 

Only one Loan may be requested in a Request.

 

	
5.3

	
Advance of Loan

 

	
  

	
5.3.1

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

 

	
  

	
5.3.2

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

 

	
  

	
5.3.3

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

 

	
  

	
(a)

	
its share in the Base Currency Amount of the Utilisations under the relevant Facility would exceed its Commitment under that Facility; or

 

	
  

	
(b)

	
the Base Currency Amount of the Utilisations under the relevant Facility would exceed the Total Facility A Commitments or the Total Facility B Commitments (as the case may be).

 

	
  

	
5.3.4

	
If the conditions set out in this Agreement have been met, and subject to Clause 9.2 (Cashless Rollover), each Lender must make its share in the Loan available to the Facility Agent for the Company by no later than 2.00 pm on the Utilisation Date.

 

	
  

	
5.3.5

	
The Facility Agent shall determine the Base Currency Amount of each Loan which is to be made in an Optional Currency and shall notify each Lender of the amount, currency and the Base Currency Amount of each Loan and the amount of its participation in that Loan, in each case by noon one Business Day before the Rate Fixing Day for the proposed borrowing.

 

	
6.

	
UTILISATION – LETTERS OF CREDIT

 

	
6.1

	
General

 

	
  

	
6.1.1

	
In this Clause 6 and Clause 7 (Letters of Credit):

 

	
  

	
(a)

	
"Expiry Date" means, for a Letter of Credit, the last day of its Term;

 

	
  

	
(b)

	
"L/C Proportion" means, in relation to a Lender in respect of any Letter of Credit, the proportion (expressed as a percentage) borne by that Lender's Available Commitment to the Available Facility (in each case in respect of Facility A) immediately prior to the issue of that Letter of Credit, adjusted to reflect any assignment or transfer under this Agreement to or by that Lender; and

 

	
  

	
(c)

	
"Renewal Request" means a written notice delivered to the Facility Agent in accordance with Clause 6.7 (Renewal of a Letter of Credit).

 

	
  

	
6.1.2

	
Any reference in this Agreement to:

 

	
  

	
(a)

	
an amount borrowed includes any amount utilised by way of Letter of Credit;

 

	
  

	
(b)

	
a Utilisation made or to be made to the Company includes a Letter of Credit issued on its behalf;

 

	
  

	
(c)

	
a Lender funding its share in a Utilisation includes a Lender participating in a Letter of Credit;

 

	
  

	
(d)

	
amounts outstanding under this Agreement include amounts outstanding under or in respect of any Letter of Credit;

 

	
  

	
(e)

	
an outstanding amount of a Letter of Credit at any time is the maximum amount that is or may be payable by the Company in respect of that Letter of Credit at that time;

 

	
  

	
(f)

	
the Company "repaying" or "prepaying" a Letter of Credit means:

 

	
  

	
(i)

	
the Company providing cash cover for that Letter of Credit;

 

	
  

	
(ii)

	
the maximum amount payable under the Letter of Credit being reduced in accordance with its terms; or

 

	
  

	
(iii)

	
the Issuing Bank being satisfied that it has no further liability under that Letter of Credit,

 

and the amount by which a Letter of Credit is repaid or prepaid under sub-paragraphs (f)(i) and (f)(ii) above is the amount of the relevant cash cover or reduction; and

 

	
  

	
(g)

	
the Company providing "cash cover" for a Letter of Credit means the Company paying an amount in the currency of the Letter of Credit to an interest-bearing account in the name of the Company and the following conditions are met:

 

	
  

	
(i)

	
the account is with the Facility Agent, the Issuing Bank or an Acceptable Bank;

 

	
  

	
(ii)

	
subject to sub-clause 7.7.2 of Clause 7.7 (Cash cover by the Company) withdrawals from the account may only be made to pay the relevant Finance Party amounts due and payable to it under this Agreement in respect of that Letter of Credit until no amount is or may be outstanding under that Letter of Credit; and

 

	
  

	
(iii)

	
the Company has executed a security document, in form and substance satisfactory to the Facility Agent or the Issuing Bank creating a first ranking security interest over that account.

 

	
  

	
6.1.3

	
Clause 5 (Utilisation - Loans) does not apply to a Utilisation by way of Letter of Credit.

 

	
  

	
6.1.4

	
In determining the amount of the Available Facility and a Lender's L/C Proportion of a proposed Letter of Credit for the purposes of this Agreement the Available Commitment of a Lender will be calculated ignoring any cash cover provided for outstanding Letters of Credit.

 

	
6.2

	
Facility A

 

Facility A may be utilised by way of Letters of Credit in an aggregate Base Currency Amount not exceeding £80,000,000.

 

	
6.3

	
Delivery of a Request for a Letter of Credit

 

The Company may request a Letter of Credit to be issued by delivery to the Facility Agent of a duly completed Request substantially in the form of Part B of Schedule 3 (Requests) not later than 11.00 am on the date which is three Business Days before the proposed Utilisation Date.

 

	
6.4

	
Completion of a Request for a Letter of Credit

 

Each Request for a Letter of Credit is irrevocable and will not be regarded as having been duly completed unless:

 

	
  

	
6.4.1

	
it specifies that it is for a Letter of Credit;

 

	
  

	
6.4.2

	
the Facility to be utilised is Facility A;

 

	
  

	
6.4.3

	
the proposed Utilisation Date is a Business Day within the Availability Period;

 

	
  

	
6.4.4

	
the currency and amount of the Letter of Credit comply with Clause 6.5 (Currency and amount);

 

	
  

	
6.4.5

	
the form of Letter of Credit is attached;

 

	
  

	
6.4.6

	
the Expiry Date of the Letter of Credit is no more than one year later than the Utilisation Date in respect of that Letter of Credit and falls on or before the Termination Date;

 

	
  

	
6.4.7

	
the delivery instructions for the Letter of Credit are specified; and

 

	
  

	
6.4.8

	
the identity of the beneficiary of the Letter of Credit is Central Networks Trustee Limited, Axa Corporate Solutions, Royal and Sun Alliance Insurance PLC or any other beneficiary approved by the Majority Lenders.

 

	
6.5

	
Currency and amount

 

	
  

	
6.5.1

	
The currency specified in a Request must be the Base Currency or an Optional Currency.

 

	
  

	
6.5.2

	
The amount of the proposed Letter of Credit must be an amount whose Base Currency Amount is not more than the Available Facility and which is:

 

	
  

	
(a)

	
if the currency selected is the Base Currency, a minimum of £5,000,000 or, if less, the Available Facility; or

 

	
  

	
(b)

	
if the currency selected is an Optional Currency, the minimum amount (and if required, integral multiple) specified by the Facility Agent or, if less, the Available Facility.

 

	
6.6

	
Issue of Letters of Credit

 

	
  

	
6.6.1

	
If the conditions set out in this Agreement have been met, the Issuing Bank shall issue the Letter of Credit on the Utilisation Date.

 

	
  

	
6.6.2

	
The Issuing Bank will only be obliged to comply with sub-clause 6.6.1 above if on the date of the Request or Renewal Request and on the proposed Utilisation Date:

 

	
  

	
(a)

	
in the case of a Letter of Credit renewed in accordance with Clause 6.7 (Renewal of a Letter of Credit), no Event of Default is outstanding or would result from the proposed Utilisation and, in the case of any other Utilisation, no Default is outstanding or would result from the proposed Utilisation;

 

	
  

	
(b)

	
the Repeating Representations to be made by the Company are correct in all material respects.

 

	
  

	
6.6.3

	
The amount of each Lender's participation in each Letter of Credit will be equal to the proportion borne by its Available Commitment to the Available Facility immediately prior to the issue of the Letter of Credit.

 

	
  

	
6.6.4

	
The Facility Agent shall determine the Base Currency Amount of each Letter of Credit which is to be issued in an Optional Currency and shall notify the Issuing Bank and each Lender of the details of the requested Letter of Credit and its participation in that Letter of Credit by 5.00 p.m. on the date which is three Business Days before the proposed Utilisation Date (or, in respect of a Letter of Credit to be renewed, 5.00 pm five business days before the renewal date).

 

	
6.7

	
Renewal of a Letter of Credit

 

	
  

	
6.7.1

	
The Company may request any Letter of Credit issued on its behalf be renewed by delivery to the Facility Agent of a Request by 3.00pm five Business Days before the renewal date.

 

	
  

	
6.7.2

	
The Finance Parties shall treat any such Renewal Request in the same way as an initial Request for a Letter of Credit except that the conditions set out in sub-clauses 6.4.5 and 6.4.8 of Clause 6.4 (Completion of a Request for Letters of Credit) shall not apply.

 

	
  

	
6.7.3

	
The terms of each renewed Letter of Credit shall be the same as those of the relevant Letter of Credit immediately prior to its renewal, except that:

 

	
  

	
(a)

	
its amount may be less than the amount of the Letter of Credit immediately prior to its renewal; and

 

	
  

	
(b)

	
its Term shall start on the date which was the Expiry Date of the Letter of Credit immediately prior to its renewal, and shall end on the proposed Expiry Date specified in the Renewal Request.

 

	
  

	
6.7.4

	
If the conditions set out in this Agreement have been met, the Issuing Bank shall amend and re-issue any Letter of Credit pursuant to a Renewal Request.

 

	
6.8

	
Reduction of a Letter of Credit

 

	
  

	
6.8.1

	
If, on the proposed Utilisation Date of a Letter of Credit, any of the Lenders is a Non-Acceptable L/C Lender and:

 

	
  

	
(a)

	
that Lender has failed to provide cash collateral to the Issuing Bank in accordance with Clause 7.6 (Cash collateral by Non-Acceptable L/C Lender); and

 

	
  

	
(b)

	
either:

 

	
  

	
(i)

	
the Issuing Bank has not required the Company to provide cash cover pursuant to Clause 7.7 (Cash cover by the Company); or

 

	
  

	
(ii)

	
the Company has failed to provide cash cover to the Issuing Bank in accordance with Clause 7.7 (Cash cover by the Company),

 

the Issuing Bank may reduce the amount of that Letter of Credit by an amount equal to the amount that is or may be payable by that Non-Acceptable L/C Lender in respect of that Letter of Credit and that Non-Acceptable L/C Lender shall be deemed not to have any participation (or obligation to indemnify the Issuing Bank) in respect of that Letter of Credit for the purposes of the Finance Documents.

 

	
  

	
6.8.2

	
The Issuing Bank shall notify the Facility Agent of each reduction made pursuant to this Clause 6.8.

 

	
  

	
6.8.3

	
This Clause 6.8 shall not affect the participation of each other Lender in that Letter of Credit.

 

	
6.9

	
Revaluation of Letters of Credit

 

	
  

	
6.9.1

	
If any Letter of Credit is denominated in an Optional Currency, the Facility Agent shall at six monthly intervals after the date of the Letter of Credit, recalculate the Base Currency Amount of that Letter of Credit by notionally converting into the Base Currency the outstanding amount of that Letter of Credit on the basis of the Agent's Spot Rate of Exchange on the date of calculation.

 

	
  

	
6.9.2

	
The Company shall, if requested by the Facility Agent within five Business Days of any calculation under sub-clause 6.9.1 above, ensure that within three Business Days sufficient Utilisations are prepaid to prevent the Base Currency Amount of the Utilisations exceeding the Total Commitments following any adjustment to a Base Currency Amount under paragraph (a) above.

 

	
7.

	
LETTERS OF CREDIT

 

	
7.1

	
Immediately payable

 

If a Letter of Credit or any amount outstanding under a Letter of Credit becomes immediately payable under this Agreement, the Company shall repay or prepay that amount immediately.

 

	
7.2

	
Assignments and transfers

 

	
  

	
7.2.1

	
Notwithstanding any other provision of this Agreement, the consent of the Issuing Bank is required for any assignment or transfer of any Lender's rights and/or obligations under Facility A.

 

	
  

	
7.2.2

	
If sub-clause 7.2.1 and the conditions and procedure for transfer specified in Clause 29 (Changes to the Parties) are satisfied, then on the Transfer Date (as such term is defined in Clause 29.3 (Procedure for transfer by way of novations)) the Issuing Bank and the New Lender shall acquire the same rights and assume the same obligations between themselves as they would have acquired and assumed had the New Lender been an Original Lender with the rights and/or obligations acquired or assumed by it as a result of the transfer and to that extent the Issuing Bank and the Existing Lender shall each be released from further obligations to each other under this Agreement.

 

	
7.3

	
Fee payable in respect of Letters of Credit

 

	
  

	
7.3.1

	
The Company shall pay to the Issuing Bank a fronting fee in respect of each Letter of Credit requested by it in the amount and at the times agreed in the letter dated on or prior to the date of this Agreement between the Issuing Bank and the Company.  A reference in this Agreement to a Fee Letter shall include the letter referred to in this sub-clause.

 

	
  

	
7.3.2

	
The Company shall pay to the Facility Agent (for the account of each Lender) a letter of credit fee in the Base Currency computed at the same rate as the Margin on the outstanding amount of each Letter of Credit requested by it for the period from the issue of that Letter of Credit until its Expiry Date.  This fee shall be distributed according to each Lender's L/C Proportion of that Letter of Credit.

 

	
  

	
7.3.3

	
The accrued letter of credit fee on a Letter of Credit shall be payable on the last day of each successive period of three months starting on the date of issue of that Letter of Credit and on the Final Maturity Date.  Accrued letter of credit fee is also payable on the cancelled amount of any Lender's Commitment at the time a cancellation in full is effective.

 

	
  

	
7.3.4

	
If the Company cash covers any part of a Letter of Credit then:

 

	
  

	
(a)

	
the fronting fee payable to the Issuing Bank and the letter of credit fee payable for the account of each Lender shall continue to be payable until the expiry of the Letter of Credit;

 

	
  

	
(b)

	
the Company will be entitled to withdraw the interest accrued on the cash cover to pay those fees.

 

	
7.4

	
Claims under a Letter of Credit

 

	
  

	
7.4.1

	
The Company irrevocably and unconditionally authorises the Issuing Bank to pay any claim made or purported to be made under a Letter of Credit requested by it and which appears on its face to be in order (a "claim").

 

	
  

	
7.4.2

	
The Company shall immediately on demand pay to the Facility Agent for the Issuing Bank an amount equal to the amount of any claim under that Letter of Credit.

 

	
  

	
7.4.3

	
The Company acknowledges that the Issuing Bank:

 

	
  

	
(a)

	
is not obliged to carry out any investigation or seek any confirmation from any other person before paying a claim; and

 

	
  

	
(b)

	
deals in documents only and will not be concerned with the legality of a claim or any underlying transaction or any available set-off, counterclaim or other defence of any person.

 

	
  

	
7.4.4

	
The obligations of the Company under this Clause will not be affected by:

 

	
  

	
(a)

	
the sufficiency, accuracy or genuineness of any claim or any other document; or

 

	
  

	
(b)

	
any incapacity of, or limitation on the powers of, any person signing a claim or other document.

 

	
7.5

	
Indemnities

 

	
  

	
7.5.1

	
The Company shall immediately on demand indemnify the Issuing Bank against any cost, loss or liability incurred by the Issuing Bank (otherwise than by reason of the Issuing Bank's gross negligence or wilful misconduct) in acting as the Issuing Bank under any Letter of Credit requested by the Company.

 

	
  

	
7.5.2

	
Each Lender shall (according to its L/C Proportion) immediately on demand indemnify the Issuing Bank against any cost, loss or liability incurred by the Issuing Bank (otherwise than by reason of the Issuing Bank's gross negligence or wilful misconduct) in acting as the Issuing Bank under any Letter of Credit (unless the Issuing Bank has been reimbursed by the Company pursuant to a Finance Document).

 

	
  

	
7.5.3

	
The Company shall immediately on demand reimburse any Lender for any payment it makes to the Issuing Bank under this Clause 7.5 (Indemnities) in respect of that Letter of Credit.

 

	
  

	
7.5.4

	
The obligations of each Lender under this Clause are continuing obligations and will extend to the ultimate balance of sums payable by that Lender in respect of any Letter of Credit, regardless of any intermediate payment or discharge in whole or in part.

 

	
  

	
7.5.5

	
The obligations of any Lender under this Clause will not be affected by any act, omission, matter or thing which, but for this Clause, would reduce, release or prejudice any of its obligations under this Clause  (without limitation and whether or not known to it or any other person) including:

 

	
  

	
(a)

	
any time, waiver or consent granted to, or composition with, the Company, any beneficiary under a Letter of Credit or other person;

 

	
  

	
(b)

	
the release of any other person under the terms of any composition or arrangement;

 

	
  

	
(c)

	
the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or security over assets of, the Company, any beneficiary under a Letter of Credit or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security;

 

	
  

	
(d)

	
any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of the Company, any beneficiary under a Letter of Credit or any other person;

 

	
  

	
(e)

	
any amendment (however fundamental) or replacement of a Finance Document, any Letter of Credit or any other document or security;

 

	
  

	
(f)

	
any unenforceability, illegality or invalidity of any obligation of any person under any Finance Document, any Letter of Credit or any other document or security; or

 

	
  

	
(g)

	
any insolvency or similar proceedings.

 

	
7.6

	
Cash collateral by Non-Acceptable L/C Lender

 

	
  

	
7.6.1

	
If, at any time, a Lender is a Non-Acceptable L/C Lender, the Issuing Bank may, by notice to that Lender, request that Lender to pay and that Lender shall pay, on or prior to the date falling 5 Business Days after the request by the Issuing Bank, an amount equal to that Lender's L/C Proportion of the outstanding amount of a Letter of Credit and in the currency of that Letter of Credit to an interest-bearing account held in the name of that Lender with the Issuing Bank.

 

	
  

	
7.6.2

	
The Non-Acceptable L/C Lender to whom a request has been made in accordance with sub-clause 7.6.1 above shall enter into a security document or other form of collateral arrangement over the account, in form and substance satisfactory to the Issuing Bank, as collateral for any amounts due and payable under the Finance Documents by that Lender to the Issuing Bank in respect of that Letter of Credit.

 

	
  

	
7.6.3

	
Until no amount is or may be outstanding under that Letter of Credit, withdrawals from the account may only be made to pay to the Issuing Bank amounts due and payable to the Issuing Bank by the Non-Acceptable L/C Lender under the Finance Documents in respect of that Letter of Credit.

 

	
  

	
7.6.4

	
Each Lender shall notify the Facility Agent and the Company:

 

	
  

	
(a)

	
on the date of this Agreement or on any later date on which it becomes such a Lender in accordance with Clause 2.2 (Increase) or Clause 29 (Changes to the Parties) whether it is a Non-Acceptable L/C Lender; and

 

	
  

	
(b)

	
as soon as practicable upon becoming aware of the same, that it has become a Non-Acceptable L/C Lender,

 

and an indication in Schedule 1 (Original Parties), in a Transfer Certificate or in an Increase Confirmation to that effect will constitute a notice (in the case of Schedule 1 (Original Parties)) to the Facility Agent and the Company under paragraph (a) above on the date of this Agreement and (in the case of a Transfer Certificate or an Increase Confirmation) to the Facility Agent on delivery to the Facility Agent in accordance with Clause 29.3 (Procedure for transfer by way of novations) or Clause 2.2 (Increase) respectively and to the Company on delivery in accordance with Clause 29.7 (Copy of Transfer Certificate or Increase Confirmation to Company).

 

	
  

	
7.6.5

	
Any notice received by the Facility Agent pursuant to sub-clause 7.6.4 above shall constitute notice to the Issuing Bank of that Lender's status and the Facility Agent shall, upon receiving each such notice, promptly notify the Issuing Bank of that Lender's status as specified in that notice.

 

	
  

	
7.6.6

	
If a Lender who has provided cash collateral in accordance with this Clause 7.6:

 

	
  

	
(a)

	
ceases to be a Non-Acceptable L/C Lender; and

 

	
  

	
(b)

	
no amount is due and payable by that Lender in respect of a Letter of Credit,

 

that Lender may, at any time it is not a Non-Acceptable L/C Lender, by notice to the Issuing Bank request that an amount equal to the amount of the cash provided by it as collateral in respect of that Letter of Credit (together with any accrued interest) standing to the credit of the relevant account held with the Issuing Bank be returned to it and the Issuing Bank shall pay that amount to the Lender within five Business Days after the request from the Lender (and shall cooperate with the Lender in order to procure that the relevant security or collateral arrangement is released and discharged).

 

	
7.7

	
Cash cover by the Company

 

	
  

	
7.7.1

	
If a Lender which is a Non-Acceptable L/C Lender fails to provide cash collateral (or notifies the Issuing Bank that it will not provide cash collateral) in accordance with Clause 7.6 (Cash collateral by Non-Acceptable L/C Lender) and the Issuing Bank notifies the Company (with a copy to the Facility Agent) that it requires the Company to provide cash cover to an account with the Issuing Bank in an amount equal to that Lender's L/C Proportion of the outstanding amount of that Letter of Credit and in the currency of that Letter of Credit then the Company shall do so within five Business Days after the notice is given.

 

	
  

	
7.7.2

	
Notwithstanding paragraph (g) of sub-clause 6.1.2 of Clause 6.1 (General), the Issuing Bank may agree to the withdrawal of amounts up to the level of that cash cover from the account if:

 

	
  

	
(a)

	
it is satisfied that the relevant Lender is no longer a Non-Acceptable L/C Lender; or

 

	
  

	
(b)

	
the relevant Lender's obligations in respect of the relevant Letter of Credit are transferred to a New Lender in accordance with the terms of this Agreement; or

 

	
  

	
(c)

	
an Increase Lender has agreed to undertake the obligations in respect of the relevant Lender's L/C Proportion of the Letter of Credit.

 

	
  

	
7.7.3

	
To the extent that the Company has complied with its obligations to provide cash cover in accordance with this Clause 7.7, the relevant Lender's L/C Proportion in respect of that Letter of Credit will remain (but that Lender's obligations in relation to that Letter of Credit may be satisfied in accordance with paragraph (g)(ii) of sub-clause 6.1.2 of Clause 6.1 (General) by making withdrawals from the account).  However, the Company's obligation to pay any letter of credit fee in relation to the relevant letter of credit to the Facility Agent (for the account of that Lender) in accordance with paragraph (b) of Clause 7.3 (Fee payable in respect of Letters of Credit) will be reduced proportionately as from the date on which it complies with that obligation to provide cash cover (and for so long as the relevant amount of cash cover continues to stand as collateral).

 

	
  

	
7.7.4

	
The Issuing Bank shall promptly notify the Facility Agent of the extent to which the Company provides cash cover pursuant to this Clause 7.7 and of any change in the amount of cash cover so provided.

 

	
7.8

	
Rights of contribution

 

The Company shall not be entitled to any right of contribution or indemnity from any Finance Party in respect of any payment it may make under this Clause 7.

 

	
7.9

	
Role of the Issuing Bank

 

	
  

	
7.9.1

	
Nothing in this Agreement constitutes the Issuing Bank as a trustee or fiduciary of any other person.

 

	
  

	
7.9.2

	
The Issuing Bank shall not be bound to account to any Lender for any sum or the profit element of any sum received by it for its own account.

 

	
  

	
7.9.3

	
The Issuing Bank may accept deposits from, lend money to and generally engage in any kind of banking or other business with any member of the Group.

 

	
  

	
7.9.4

	
The Issuing Bank may rely on:

 

	
  

	
(a)

	
any representation, notice or document believed by it to be genuine, correct and appropriately authorised; and

 

	
  

	
(b)

	
any statement made by a director, authorised signatory or employee of any person regarding any matters which may reasonably be assumed to be within his knowledge or within his power to verify.

 

	
  

	
7.9.5

	
The Issuing Bank may engage, pay for and rely on the advice or services of any lawyers, accountants, surveyors or other experts.

 

	
  

	
7.9.6

	
The Issuing Bank may act in relation to the Finance Documents through its personnel and agents.

 

	
  

	
7.9.7

	
The Issuing Bank is not responsible for:

 

	
  

	
(a)

	
the adequacy, accuracy and/or completeness of any information (whether oral or written) provided by the Facility Agent, any Party (including itself), or any other person under or in connection with any Finance Document, the transactions contemplated by the Finance Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document; or

 

	
  

	
(b)

	
the legality, validity, effectiveness, adequacy or enforceability of any Finance Document or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document.

 

	
7.10

	
Exclusion of liability

 

	
  

	
7.10.1

	
Without limiting sub-clause 7.10.2 below, the Issuing Bank will not be liable for any action taken by it under or in connection with any Finance Document, unless directly caused by its gross negligence or wilful misconduct.

 

	
  

	
7.10.2

	
No Party (other than the Issuing Bank) may take any proceedings against any officer, employee or agent of the Issuing Bank in respect of any claim it might have against the Issuing Bank or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Finance Document and any officer, employee or agent of the Issuing Bank may rely on this Clause subject to sub-clause 1.2.4 of Clause 1.2 (Construction) and the provision of the Contracts (Rights of Third Parties) Act 1999.

 

	
7.11

	
Credit appraisal by the Lenders

 

Without affecting the responsibility of the Company for information supplied by it or on its behalf in connection with any Finance Document, each Lender confirms to the Issuing Bank that it has been, and will continue to be, solely responsible for making its own independent appraisal and investigation of all risks arising under or in connection with any Finance Document including, but not limited to, those listed in sub-clause 29.4.2 of Clause 29.4 (Limitation of responsibility of Existing Lender).

 

	
7.12

	
Address for notices

 

The address and fax number (and the department or officer, if any, for whose attention the communication is to be made) of the Issuing Bank for any communication or document to be made or delivered under or in connection with the Finance Documents is that notified in writing to the Facility Agent prior to the date of this Agreement or any substitute address, fax number or department or officer as the Issuing Bank may notify to the Facility Agent by not less than five Business Days' notice.

 

	
7.13

	
Amendments and Waivers

 

Notwithstanding any other provision of this Agreement, an amendment or waiver which relates to the rights or obligations of the Issuing Bank may not be effected without the consent of the Issuing Bank.

 

	
8.

	
OPTIONAL CURRENCIES

 

	
8.1

	
Selection

 

	
  

	
8.1.1

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

 

	
  

	
8.1.2

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

 

	
8.2

	
Selection of Optional Currencies

 

	
  

	
8.2.1

	
A Utilisation may be denominated in an Optional Currency in relation to a Utilisation if:

 

	
  

	
(a)

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

 

	
  

	
(b)

	
that Optional Currency is a Pre-approved Currency or has been previously approved by the Facility Agent (acting on the instruction of all the Lenders) on or prior to receipt by the Facility Agent of the relevant Request for that Utilisation.

 

	
  

	
8.2.2

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

 

	
  

	
(a)

	
whether or not the Lenders have given their approval; and

 

	
  

	
(b)

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

 

	
8.3

	
Revocation of currency

 

	
  

	
8.3.1

	
Notwithstanding any other term of this Agreement, if before 12 noon on any Rate Fixing Day the Facility Agent receives notice from a Lender that:

 

	
  

	
(a)

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

 

	
  

	
(b)

	
participating in a Utilisation in the proposed Optional Currency might contravene any law or regulation applicable to it,

 

the Facility Agent must give notice to the Company to that effect promptly and in any event before 5.00 p.m. on that day.

 

	
  

	
8.3.2

	
In this event:

 

	
  

	
(a)

	
that Lender must participate in the Utilisation in Sterling; and

 

	
  

	
(b)

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

 

	
  

	
8.3.3

	
Any part of a Utilisation treated as a separate Utilisation under this sub-clause will not be taken into account for the purposes of any limit on the number of Utilisations or currencies outstanding at any one time.

 

	
  

	
8.3.4

	
A Loan will still be treated as a Rollover Loan if it is not denominated in the same currency as the maturing Utilisation by reason only of the operation of this sub-clause.

 

	
8.4

	
Optional Currency equivalents

 

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

 

	
  

	
8.4.1

	
whether any limit under this Agreement has been exceeded;

 

	
  

	
8.4.2

	
the amount of a Utilisation;

 

	
  

	
8.4.3

	
the share of a Lender in a Utilisation;

 

	
  

	
8.4.4

	
the amount of any repayment of a Utilisation; or

 

	
  

	
8.4.5

	
the undrawn amount of a Lender's Commitment,

 

is its Base Currency Amount.

 

	
8.5

	
Notification

 

The Facility Agent must notify the Lenders and the Company of the relevant Base Currency Amount (and the applicable Agent's Spot Rate of Exchange) by 3:00pm one Business Day before the Rate Fixing Date.

 

	
9.

	
REPAYMENT

 

	
9.1

	
Repayment of Loans

 

	
  

	
9.1.1

	
The Company must repay each Loan in full on its Maturity Date.  No Loan may be outstanding after the applicable Final Maturity Date.

 

	
  

	
9.1.2

	
Subject to the other terms of this Agreement, any amounts repaid under sub-clause 9.1.1 above may be re-borrowed.

 

	
9.2

	
Cashless Rollover

 

	
  

	
9.2.1

	
Without prejudice to the Company's obligation under Clause 9.1 above, if one or more Loans are to be made available to the Company:

 

	
  

	
(a)

	
under the same Facility as the maturing Loan;

 

	
  

	
(b)

	
on the same day that a maturing Loan is due to be repaid by the Company;

 

	
  

	
(c)

	
in the same currency as the maturing Loan (unless it arose as a result of the operation of Clause 8.3 (Revocation of currency); and

 

	
  

	
(d)

	
in whole or in part for the purpose of refinancing the maturing Loan,

 

the aggregate amount of the new Loans shall be treated as if applied in or towards repayment of the maturing Loan so that:

 

	
  

	
(i)

	
if the amount of the maturing Loan exceeds the aggregate amount of the new Loans:

 

	
  

	
(A)

	
the Company will only be required to pay an amount in cash in the relevant currency equal to that excess; and

 

	
  

	
(B)

	
each Lender's participation (if any) in the new Loans shall be treated as having been made available and applied by the Company in or towards repayment of that Lender's participation (if any) in the maturing Loan and that Lender will not be required to make its participation in the new Loans available in cash; and

 

	
  

	
(ii)

	
if the amount of the maturing Loan is equal to or less than the aggregate amount of the new Loans:

 

	
  

	
(A)

	
the Company will not be required to make any payment in cash; and

 

	
  

	
(B)

	
each Lender will be required to make its participation in the new Loans available in cash only to the extent that its participation (if any) in the new Loans exceeds that Lender's participation (if any) in the maturing Loan and the remainder of that Lender's participation in the new Loans shall be treated as having been made available and applied by the Company in or towards repayment of that Lender's participation in the maturing Loan.

 

	
  

	
10.

	
PREPAYMENT AND CANCELLATION

 

	
10.1

	
Mandatory prepayment - illegality

 

	
  

	
10.1.1

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

 

	
  

	
10.1.2

	
After notification under clause 10.1.1 above:

 

	
  

	
(a)

	
the Company must repay or prepay the share of that Lender in each Utilisation made to it on the date specified in clause 10.1.3 below; and

 

	
  

	
(b)

	
the Commitments of that Lender will be immediately cancelled.

 

	
  

	
10.1.3

	
The date for repayment or prepayment of a Lender's share in a Utilisation will be:

 

	
  

	
(a)

	
the Business Day following receipt by the Company of notice from the Lender under sub-clause 10.1.1 above; or

 

	
  

	
(b)

	
if later, the latest date allowed by the relevant law.

 

	
  

	
10.1.4

	
If it becomes unlawful for the Issuing Bank to issue any Letter of Credit, the Issuing Bank shall promptly notify the Facility Agent upon becoming aware of that event, and upon the Facility Agent notifying the Company, Facility A shall cease to be available for the issue of Letters of Credit.

 

	
10.2

	
Mandatory prepayment - change of control

 

If, except in the context of a group reorganisation where the Company continues to be controlled directly or indirectly by PPL Corporation (a company incorporated in Pennsylvania, U.S.A. whose head office is in Two North Ninth Street, Allentown, PA18101, Pennsylvania, U.S.A., registered number 2570936), the Company becomes aware of any person (whether alone or together with any associated person or persons) gaining control of the Company (for these purposes "associated person" means, in relation to any person, a person who is (i) "acting in concert" (as defined in the City Code on Takeovers and Mergers) with that person or (ii) a "connected person" (as defined in section 839 of the Taxes Act) of that person and "control" means the relevant person satisfies any of the criteria set out in paragraphs (1)(a) to (c) of Section 1159 of the Companies Act 2006):

 

	
  

	
10.2.1

	
within 5 days of such date, the Company shall give notice of such change of control to the Facility Agent;

 

	
  

	
10.2.2

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

 

	
  

	
10.2.3

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

 

	
  

	
(a)

	
any Lender may on 10 days' notice to the Facility Agent and to the Company require the repayment of its share in each Utilisation and cancel its Commitment; and

 

	
  

	
(b)

	
the Majority Lenders may on 10 days' notice to the Company require repayment in full of all outstanding Utilisations and cancel the Total Commitments; and

 

	
  

	
10.2.4

	
a Lender shall not be obliged to fund any further utilisations of the Facilities (except for a Rollover Loan) during the negotiation period set out in sub-clause 10.2.2, and if no agreement is reached within such negotiation period, during the 10 day notice period set out in sub-clause 10.2.3.

 

	
10.3

	
Voluntary prepayment

 

	
  

	
10.3.1

	
The Company may, by giving not less than five Business Days' prior written notice to the Facility Agent, prepay any Utilisation at any time in whole or in part.

 

	
  

	
10.3.2

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

 

	
  

	
10.3.3

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

 

	
  

	
10.3.4

	
A prepayment of part of a Utilisation drawn in euros must be in a minimum amount of €5,000,000 and an integral multiple of €1,000,000.

 

	
10.4

	
Automatic cancellation

 

The Commitments of each Lender will be automatically cancelled at the close of business on the last day of the relevant Availability Period.

 

	
10.5

	
Voluntary cancellation

 

	
  

	
10.5.1

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

 

	
  

	
10.5.2

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

 

	
  

	
10.5.3

	
Any cancellation in part will be applied between Facility A and Facility B pro rata and any cancellation in part of a Facility shall be applied against the Commitment of each Lender under that Facility pro rata.

 

	
10.6

	
Involuntary prepayment and cancellation

 

	
  

	
10.6.1

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

 

	
  

	
10.6.2

	
After notification under sub-clause 10.6.1 above:

 

	
  

	
(a)

	
the Company must repay or prepay that Lender's share in each Utilisation made to it on the date specified in sub-clause 10.6.3 below; and

 

	
  

	
(b)

	
the Commitments of that Lender will be immediately cancelled.

 

	
  

	
10.6.3

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

 

	
  

	
10.6.4

	 

 

	
  

	
(i)

	
If any Lender becomes a Defaulting Lender, the Company may, at any time whilst the Lender continues to be a Defaulting Lender, give the Facility Agent 5 Business Days' notice of cancellation of the Available Commitment of that Lender.

 

	
  

	
(ii)

	
On the notice referred to in paragraph (i) above becoming effective, the Available Commitment of the Defaulting Lender shall immediately be reduced to zero.

 

	
  

	
(iii)

	
The Facility Agent shall as soon as practicable after receipt of a notice referred to in paragraph (i) above, notify all the Lenders.

 

	
10.7

	
Re-borrowing of Utilisations

 

Any voluntary prepayment of a Utilisation may be re-borrowed on the terms of this Agreement.  Any mandatory or involuntary prepayment of a Utilisation may not be re-borrowed.

 

	
10.8

	
Miscellaneous provisions

 

	
  

	
10.8.1

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

 

	
  

	
10.8.2

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

 

	
  

	
10.8.3

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

 

	
  

	
10.8.4

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

 

	
  

	
10.8.5

	
Subject to Clause 2.2 (Increase), no amount of the Total Commitments cancelled under this Agreement may subsequently be reinstated.

 

	
  

	
10.8.6

	
Each prepayment under this Agreement shall be applied against the Facility A Utilisations and the Facility B Utilisations pro rata, provided that no prepayment of a Letter of Credit shall be required unless the Facility B Utilisations have been repaid in full and all Facility B Commitments have been cancelled.

 

	
11.

	
INTEREST

 

	
11.1

	
Calculation of interest

 

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

 

	
  

	
11.1.1

	
Margin;

 

	
  

	
11.1.2

	
LIBOR or, in relation to any Loan in euro, EURIBOR; and

 

	
  

	
11.1.3

	
Mandatory Cost.

 

	
11.2

	
Payment of interest

 

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

 

	
11.3

	
Interest on overdue amounts

 

	
  

	
11.3.1

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

 

	
  

	
11.3.2

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

 

	
  

	
(a)

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

 

	
  

	
(b)

	
determine the appropriate Rate Fixing Day for that Term.

 

	
  

	
11.3.3

	
Notwithstanding sub-clause 11.3.2 above, if the overdue amount is a principal amount of a Loan and becomes due and payable prior to the last day of its current Term, then:

 

	
  

	
(a)

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

 

	
  

	
(b)

	
the rate of interest on the overdue amount for that first Term will be one per cent. per annum above the rate then payable on that Loan.

 

After the expiry of the first Term for that overdue amount, the rate on the overdue amount will be calculated in accordance with sub-clause 11.3.2 above.

 

	
  

	
11.3.4

	
Interest (if unpaid) on an overdue amount will be compounded with that overdue amount at the end of each of its Terms but will remain immediately due and payable.

 

	
11.4

	
Notification of rates of interest

 

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

 

	
12.

	
TERMS

 

	
12.1

	
Selection

 

	
  

	
12.1.1

	
Each Loan has one Term only.

 

	
  

	
12.1.2

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

 

	
  

	
12.1.3

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

 

	
  

	
12.1.4

	
The Company shall not use its right under paragraph 12.1.3 above to select for a Loan a Term of less than one month's duration more than six times in any calendar year.

 

	
  

	
12.1.5

	
A Term for a Loan shall start on the Utilisation Date for that Loan.

 

	
12.2

	
No overrunning the Final Maturity Date

 

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

 

	
12.3

	
Other adjustments

 

	
  

	
12.3.1

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

 

	
  

	
12.3.2

	
Subject to Clause 12.3.3 below, if two or more Terms in respect of Loans under the same Facility end on the same date, those Loans will, unless the Company specifies to the contrary in the Request for the next Term, be consolidated into, and treated as, a single Loan on the last day of the Term.

 

	
  

	
12.3.3

	
Subject to Clause 4.3 (Maximum Number), Clause 5.2 (Completion of Requests) and Clause 6.4 (Completion of a Request for a Letter of Credit) if the Company requests in a Request that a Loan be divided into two or more Loans, that Loan will, on the last day of its Term, be so divided with Base Currency Amounts specified in that Request, having an aggregate Base Currency Amount equal to the Base Currency Amount of the Loan immediately before its division.

 

	
12.4

	
Notification

 

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

 

	
13.

	
MARKET DISRUPTION

 

	
13.1

	
Failure of a Reference Bank to supply a rate

 

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

 

	
13.2

	
Market disruption

 

	
  

	
13.2.1

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

 

	
  

	
(a)

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

 

	
  

	
(b)

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

 

	
  

	
13.2.2

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

 

	
  

	
13.2.3

	
After notification under sub-clause 13.2.2 above, the rate of interest on each Lender's share in the affected Loan for the relevant Term will be the aggregate of the applicable:

 

	
  

	
(a)

	
Margin;

 

	
  

	
(b)

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

 

	
  

	
(c)

	
Mandatory Cost.

 

	
13.3

	
Alternative basis of interest or funding

 

	
  

	
13.3.1

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

 

	
  

	
13.3.2

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

 

	
14.

	
TAX GROSS-UP AND INDEMNITIES

 

	
14.1

	
Definitions

 

	
  

	
14.1.1

	
In this Agreement:

 

"Protected Party" means a Finance Party which is or will be subject to any liability, or required to make any payment, for or on account of Tax in relation to a sum received or receivable (or any sum deemed for the purposes of Tax to be received or receivable) under a Finance Document.

 

"Qualifying Lender" means:

 

	
  

	
(a)

	
a Lender (other than a Lender within paragraph (b) below) which is beneficially entitled to interest payable to that Lender in respect of an advance under a Finance Document and is:

 

	
  

	
(i)

	
a Lender:

 

	
  

	
(A)

	
which is a bank (as defined for the purpose of section 879 of ITA) making an advance under a Finance Document; or

 

	
  

	
(B)

	
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

 

	
  

	
(ii)

	
a Lender which is:

 

	
  

	
(A)

	
a company resident in the United Kingdom for United Kingdom tax purposes;

 

	
  

	
(B)

	
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 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 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

 

	
  

	
(iii)

	
a Treaty Lender; or

 

	
  

	
(b)

	
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:

 

	
  

	
(i)

	
a company resident in the United Kingdom for United Kingdom tax purposes;

 

	
  

	
(ii)

	
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 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 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.

 

"Tax Payment" means either the increase in a payment made by an Obligor to a Finance Party under Clause 14.2 (Tax gross-up) or a payment under Clause 14.3 (Tax indemnity).

 

"Treaty Lender" means a Lender which:

 

	
  

	
(i)

	
is treated as a resident of a Treaty State for the purposes of the Treaty;

 

	
  

	
(ii)

	
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

 

	
  

	
(iii)

	
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 Finance Party 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 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.

 

	
  

	
14.1.2

	
Unless a contrary indication appears, in this Clause 14 a reference to "determines" or "determined" means a determination made in the absolute discretion of the person making the determination.

 

	
14.2

	
Tax gross-up

 

	
  

	
14.2.1

	
The Company shall make all payments to be made by it without any Tax Deduction, unless a Tax Deduction is required by law.

 

	
  

	
14.2.2

	
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 Facility Agent accordingly.  Similarly, a Lender shall notify the Facility Agent on becoming so aware in respect of a payment payable to that Lender.  If the Facility Agent receives such notification from a Lender it shall notify the Company.

 

	
  

	
14.2.3

	
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.

 

	
  

	
14.2.4

	
A payment shall not be increased under sub-clause 14.2.3 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:

 

	
  

	
(a)

	
the payment could have been made to the relevant Lender without a Tax Deduction if the Lender had been a Qualifying Lender, but on that date that Lender is not or has ceased to be a Qualifying Lender other than as a result of any change after the date it became a Lender under this Agreement in (or in the interpretation, administration, or application of) any law or Treaty, or any published practice or published concession of any relevant taxing authority; or

 

	
  

	
(b)

	
the relevant Lender is a Qualifying Lender solely by virtue of paragraph (a)(ii) of the definition of Qualifying Lender; and

 

	
  

	
(i)

	
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 that Lender has received from the Company a certified copy of that Direction; and

 

	
  

	
(ii)

	
the payment could have been made to the Lender without any Tax Deduction if that Direction had not been made; or

 

	
  

	
(c)

	
the relevant Lender is a Qualifying Lender solely by virtue of paragraph (a)(ii) of the definition of Qualifying Lender; and

 

	
  

	
(i)

	
the relevant Lender has not given a Tax Confirmation to the Company; and

 

	
  

	
(ii)

	
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 Borrower to have formed a reasonable belief that the payment was an "excepted payment" for the purpose of section 930 of the ITA; or

 

	
  

	
(d)

	
the relevant 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 sub-clause 14.2.7 below.

 

	
  

	
14.2.5

	
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.

 

	
  

	
14.2.6

	
Within thirty days of making either a Tax Deduction or any payment required in connection with that Tax Deduction, the Company making that Tax Deduction shall deliver to the Facility Agent for the Finance Party entitled to the payment a statement under Section 975 of the ITA, or other evidence reasonably satisfactory to that Finance Party that the Tax Deduction has been made or (as applicable) any appropriate payment paid to the relevant taxing authority.

 

	
  

	
14.2.7

 

	
  

	
(a)

	
Subject to paragraph (b) 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.

 

	
  

	
(b)

	
Nothing in paragraph (a) above shall require a Treaty Lender to:

 

	
  

	
(i)

	
register under the HMRC DT Treaty Passport scheme;

 

	
  

	
(ii)

	
apply the HMRC DT Treaty Passport scheme to any Loan if it has so registered; or

 

	
  

	
(iii)

	
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 14.2.10 below or paragraph 14.2.1 of Clause 14.6 (HMRC DT Treaty Passport scheme confirmation) and the Company making that payment has not complied with its obligations under paragraph 14.2.11 below or paragraph 14.2.2 of Clause 14.6 (HMRC DT Treaty Passport scheme confirmation).

 

	
  

	
14.2.8

	
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.

 

	
  

	
14.2.9

	
A UK Non-Bank Lender shall promptly notify the Company and the Facility Agent if there is any change in the position from that set out in the Tax Confirmation.

 

	
14.2.10     

	
A Treaty Lender which becomes a Party on the day on which this Agreement is entered into 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 (for the benefit of the Facility Agent and without liability to the Company) by including its scheme reference number and its jurisdiction of tax residence opposite its name in ‎Schedule 1 (Original Parties).

 

	
14.2.11     

	
Where a Lender includes the indication described in paragraph 14.2.10 above in Schedule 1 (Original Parties), 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 this Agreement and shall promptly provide the Lender with a copy of that filing provided that the Company shall not be liable in respect of any non-compliance with its obligations under this Clause 14.2.11 where such non-compliance is due to circumstances beyond the control of the Company (including, without limitation, any delay, failure or omission on the part of the relevant Lender or the Facility Agent to comply with any obligation owed to the Company, or to any inaccuracy in any information provided by the relevant Lender or the Facility Agent in connection with the DT Treaty Passport scheme).

 

	
14.2.12     

	
Any Lender which has confirmed that it is entitled to use its DT Treaty Passport in accordance with Clause 14.2.10 or Clause 14.6.1 will reasonably promptly notify the Facility Agent and 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.

 

	
14.2.13     

	
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 ‎(j) above or paragraph ‎(a) of Clause 14.6 (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.

 

	
14.3

	
Tax indemnity

 

	
  

	
14.3.1

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

 

	
  

	
14.3.2

	
Sub-clause 14.3.1 above does not apply to any Tax assessed on a Finance Party under the laws of the jurisdiction in which:

 

	
  

	
(a)

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

 

	
  

	
(b)

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

 

if that Tax is imposed on or calculated by reference to the net income received or receivable by that Finance Party. However, any payment deemed to be received or receivable, including any amount treated as income but not actually received by the Finance Party, such as a Tax Deduction, will not be treated as net income received or receivable for this purpose.

 

	
  

	
14.3.3

	
Sub-clause 14.3.1 above does not apply to any Tax assessed on a Finance Party to the extent the loss or liability:

 

	
  

	
(a)

	
is compensated for by an increased payment under Clause 14.2 (Tax gross-up); or

 

	
  

	
(b)

	
would have been compensated for by an increased payment under Clause 14.2 (Tax gross-up) but was not so compensated solely because one of the exclusions in Clause 14.2 (Tax gross-up) applied.

 

	
  

	
14.3.4

	
A Finance Party making, or intending to make, a claim under sub-clause 14.3.1 above must promptly notify the Company of the event which will give, or has given, rise to the claim.

 

	
14.4

	
Tax Credit

 

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

 

	
14.5

	
Lender Status Confirmation

 

Each Lender which becomes a Party to this Agreement after the date of this Agreement shall indicate, in the Transfer Certificate or Assignment Agreement which it executes on becoming a Party, and for the benefit of the Facility Agent and without liability to any Obligor, which of the following categories it falls in:

 

	
  

	
14.5.1

	
not a Qualifying Lender;

 

	
  

	
14.5.2

	
a Qualifying Lender (other than a Treaty Lender); or

 

	
  

	
14.5.3

	
a Treaty Lender.

 

If a New Lender fails to indicate its status in accordance with this Clause 14.5 then such New 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 Facility Agent which category applies (and the Facility Agent, upon receipt of such notification, shall inform the Company).  For the avoidance of doubt, a Transfer Certificate or Assignment Agreement shall not be invalidated by any failure of a Lender to comply with this Clause 14.5.

 

	
14.6

	
HMRC DT Treaty Passport scheme confirmation

 

	
  

	
14.6.1

	
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 (for the benefit of the Facility Agent and 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.

 

	
  

	
14.6.2

	
Where a New Lender includes the indication described in paragraph 14.6.1 above 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 relevant Transfer Date and shall promptly provide the Lender with a copy of that filing.

 

	
14.7

	
Stamp taxes

 

The Company shall pay and, within three Business Days of demand, indemnify each Finance Party against any cost, loss or liability that Finance Party 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 a Lender's rights or obligations under a Finance Document.

 

	
14.8

	
VAT

 

	
  

	
14.8.1

	
All amounts set out, or expressed in a Finance Document to be payable by any Party to a Finance Party 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, subject to sub-clause 14.8.2 below, if VAT is or becomes chargeable on any supply made by any Finance Party to any Party under a Finance Document, that Party shall pay to the Finance Party (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 such Finance Party shall promptly provide an appropriate VAT invoice to such Party).

 

	
  

	
14.8.2

	
If VAT is or becomes chargeable on any supply made by any Finance Party (the "Supplier") to any other Finance Party (the "Recipient") under a Finance Document, and any Party other than the Recipient (the "Subject Party") is required by the terms of any Finance Document to pay an amount equal to the consideration for such supply to the Supplier (rather than being required to reimburse the Recipient in respect of that consideration), such Party shall also pay to the Supplier (in addition to and at the same time as paying such amount) an amount equal to the amount of such VAT.  The Recipient will promptly pay to the Subject Party an amount equal to any credit or repayment obtained by the Recipient from the relevant tax authority which the Recipient reasonably determines is in respect of such VAT.

 

	
  

	
14.8.3

	
Where a Finance Document requires any Party to reimburse or indemnify a Finance Party for any cost or expense, that Party shall reimburse or indemnify (as the case may be) such Finance Party for the full amount of such cost or expense, including such part thereof as represents VAT, save to the extent that such Finance Party reasonably determines that it is entitled to credit or repayment in respect of such VAT from the relevant tax authority.

 

	
  

	
14.8.4

	
Any reference in this Clause 14.8 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).

 

	
15.

	
INCREASED COSTS

 

	
15.1

	
Increased Costs

 

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

 

	
  

	
15.1.1

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

 

	
  

	
15.1.2

	
compliance with any law or regulation made after the date of this Agreement; or

 

	
  

	
15.1.3

	
the implementation or application of, or compliance with, Basel III or any law or regulation that implements or applies Basel III.

 

	
15.2

	
Exceptions

 

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

 

	
  

	
15.2.1

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

 

	
  

	
15.2.2

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

 

	
  

	
15.2.3

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

 

	
  

	
15.2.4

	
other than in respect of Increased Costs incurred as a result of the implementation or application of, or compliance with, Basel III or any law or regulation that implements or applies Basel III, incurred in any period or periods ending prior to the date falling 90 days before the date any demand in relation to that Increased Cost is made (save where the relevant Finance Party (after due enquiry) was unaware of the existence of such Increased Cost or where such Increased Cost is caused by reason of a change in (or in the interpretation, administration or application of) law with retrospective effect).

 

	
15.3

	
Claims

 

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

 

	
16.

	
MITIGATION

 

	
16.1

	
Mitigation

 

	
  

	
16.1.1

	
Each Finance Party must, in consultation with the Company (other than upon the occurrence of an event referred to at paragraph (d) below where no such consultation is required), take all reasonable steps to mitigate any circumstances which arise and which result or would result in the Facilities ceasing to be available or:

 

	
  

	
(a)

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

 

	
  

	
(b)

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

 

	
  

	
(c)

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

 

	
  

	
(d)

	
the occurrence of any market disruption event,

 

including transferring its rights and obligations under the Finance Documents to an Affiliate or changing its Facility Office.

 

	
  

	
16.1.2

	
A Finance Party is not obliged to take any step under this Clause 16 if, in the opinion of that Finance Party (acting reasonably), to do so might be prejudicial to it.

 

	
  

	
16.1.3

	
Each Finance Party must promptly notify the Company of any circumstances as described in paragraphs (a) to (d) of sub-clause 16.1.1 of this Clause 16.1.

 

	
  

	
16.1.4

	
The Company must indemnify each Finance Party for all costs and expenses reasonably incurred by it as a result of any step taken under this Clause 16.1.

 

	
  

	
16.1.5

	
This Clause does not in any way limit the obligations of the Company under the Finance Documents.

 

	
16.2

	
Substitution

 

Notwithstanding Clause 16.1 (Mitigation), if any circumstances arise which result in:

 

	
  

	
16.2.1

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

 

	
  

	
16.2.2

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

 

	
  

	
16.2.3

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

 

	
  

	
16.2.4

	
the occurrence of any market disruption event,

 

then the Company, at its expense, at any time within 180 days after the occurrence of the relevant event or circumstance, so long as no Default is outstanding, may by notice to such Finance Party require it (and, if applicable, its Affiliate) to novate all (and not part only) its rights and obligations hereunder (including its Commitments and its share of any Utilisations) in accordance with Clause 29 (Changes to the Parties) to a bank or financial institution specified by the Company and acceptable to the Facility Agent which is willing to take such a novation as aforesaid provided that:

 

	
  

	
16.2.5

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

 

	
  

	
16.2.6

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

 

Notwithstanding the above, the Company shall not be entitled to require a novation under this Clause 16.2 with respect to any Finance Party if:

 

	
  

	
16.2.7

	
the relevant Finance Party shall have mitigated the effect of the relevant event or circumstance as provided in sub-clause 16.1.1, and the novation would have no greater or further mitigating effect; or

 

	
  

	
16.2.8

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

 

	
16.3

	
Conduct of business by a Finance Party

 

No term of this Agreement will:

 

	
  

	
16.3.1

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

 

	
  

	
16.3.2

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

 

	
17.

	
PAYMENTS

 

	
17.1

	
Place

 

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

 

	
  

	
17.1.1

	
in the principal financial centre of the country of the relevant currency; or

 

	
  

	
17.1.2

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

 

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

 

	
17.2

	
Funds

 

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

 

	
17.3

	
Distribution

 

	
  

	
17.3.1

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

 

	
  

	
(a)

	
in the principal financial centre of the country of the relevant currency; or

 

	
  

	
(b)

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

 

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

 

	
  

	
17.3.2

	
The Facility Agent may apply any amount received by it for the Company in or towards payment (as soon as practicable after receipt) of any amount due from the Company under the Finance Documents or in or towards the purchase of any amount of any currency to be so applied.

 

	
  

	
17.3.3

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

 

	
17.4

	
Currency

 

	
  

	
17.4.1

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

 

	
  

	
17.4.2

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

 

	
  

	
17.4.3

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

 

	
  

	
17.4.4

	
Amounts payable in respect of costs and expenses and Taxes are payable in the currency in which they are incurred.

 

	
  

	
17.4.5

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

 

	
  

	
17.4.6

	
Any amount expressed to be payable in a currency other than Sterling shall be paid in that other currency.

 

	
17.5

	
No set-off or counterclaim

 

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

 

	
17.6

	
Business Days

 

	
  

	
17.6.1

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

 

	
  

	
17.6.2

	
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.

 

	
17.7

	
Impaired Agent

 

	
  

	
17.7.1

	
If, at any time, the Facility Agent becomes an Impaired Agent, the Company or a Lender which is required to make a payment under the Finance Documents to the Facility Agent in accordance with Clause 17.1 (Place) may instead either pay that amount direct to the required recipient or pay that amount to an interest bearing account held with an Acceptable Bank and in relation to which no Insolvency Event has occurred and is continuing, in the name of the Company or the Lender making the payment and designated as a trust account for the benefit of the Party or Parties beneficially entitled to that payment under the Finance Documents.  In each case such payments must be made on the due date for payment under the Finance Documents.

 

	
  

	
17.7.2

	
All interest accrued on the amount standing to the credit of the trust account shall be for the benefit of the beneficiaries of that trust account pro rata to their respective entitlements.

 

	
  

	
17.7.3

	
A Party which has made a payment in accordance with this Clause 17.7 shall be discharged of the relevant payment obligation under the Finance Documents and shall not take any credit risk with respect to the amounts standing to the credit of the trust account.

 

	
  

	
17.7.4

	
Promptly upon the appointment of a successor Facility Agent in accordance with Clause 23.14 (Replacement of the Facility Agent), each Party which has made a payment to a trust account in accordance with this Clause 17.7 shall give all requisite instructions to the bank with whom the trust account is held to transfer the amount (together with any accrued interest) to the successor Facility Agent for distribution in accordance with Clause 17.3 (Distribution).

 

	
  

	
17.7.5

	
For the purposes of this Clause 17.7 only, an Acceptable Bank shall include any bank or financial institution approved by the Facility Agent or, if the Facility Agent is an Impaired Agent, the Majority Lenders.

 

	
17.8

	
Partial payments

 

	
  

	
17.8.1

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

 

	
  

	
(a)

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

 

	
  

	
(b)

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

 

	
  

	
(c)

	
thirdly, in or towards payment pro rata of any principal amount due but unpaid under this Agreement and any amount due but unpaid under Clauses 7.4 (Claims under a Letter of Credit) and 7.5 (Indemnities); and

 

	
  

	
(d)

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

 

	
  

	
17.8.2

	
The Facility Agent must, if so directed by all the Lenders, vary the order set out in paragraphs (a) to (d) of sub-clause 17.8.1 of this Clause 17.8.

 

	
  

	
17.8.3

	
This Clause will override any appropriation made by the Company.

 

	
17.9

	
Timing of payments

 

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

 

	
18.

	
REPRESENTATIONS

 

	
18.1

	
Representations

 

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

 

	
18.2

	
Status

 

It is a limited liability company, duly incorporated and validly existing under the Companies Act 2006 in England and Wales.

 

	
18.3

	
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.

 

	
18.4

	
Legal validity

 

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

 

	
18.5

	
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:

 

	
  

	
18.5.1

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

 

	
  

	
18.5.2

	
its constitutional documents.

 

	
18.6

	
No default

 

	
  

	
18.6.1

	
No Event of Default is continuing or might reasonably be expected to result from the making of any Utilisation.

 

	
  

	
18.6.2

	
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.

 

	
18.7

	
Authorisations

 

All authorisations required by it (including any authorisations required under PUHCA or the Act, if any):

 

	
  

	
18.7.1

	
in connection with the entry into, performance, validity and enforceability of, and the transactions contemplated by, the Finance Documents; and

 

	
  

	
18.7.2

	
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.

 

	
18.8

	
Financial statements

 

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

 

	
  

	
18.8.1

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

 

	
  

	
18.8.2

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

 

except, in each case, as disclosed to the contrary in those financial statements..

 

	
18.9

	
No material adverse change

 

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

 

	
18.10

	
Litigation

 

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

 

	
18.11

	
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.

 

	
18.12

	
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.

 

	
18.13

	
Governing Law and Enforcement

 

	
18.13.1    

	
The choice of English law as the governing law of the Finance Documents will be recognised and enforced in its jurisdiction of incorporation.

 

	
18.13.2     

	
Any judgement obtained in England in relation to a Finance Document will be recognised and enforced in its jurisdiction of incorporation.

 

	
18.14

	
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 a Lender which is:

 

	
18.14.1    

	
a Qualifying Lender:

 

	
  

	
(a)

	
falling within paragraph (a)(i) of the definition of Qualifying Lender; or

 

	
  

	
(b)

	
except where a Direction has been given under section 931 of the ITA in relation to the payment concerned, falling within paragraph (a)(ii) of the definition of Qualifying Lender; or

 

	
  

	
(c)

	
falling within paragraph (b) of the definition of Qualifying Lender or;

 

	
18.14.2    

	
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).

 

	
18.15

	
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 a Lender's rights or obligations under a Finance Document) or the transactions contemplated by the Finance Documents.

 

	
18.16

	
No misleading information

 

	
18.16.1    

	
Any factual information provided by any member of the Group for the purposes of the Information Package was true and accurate in all material respects as at the date it was provided or as at the date (if any) at which it is stated.

 

	
18.16.2    

	
The financial projections contained in the Information Package have been prepared on the basis of recent historical information and on the basis of reasonable assumptions.

 

	
18.16.3    

	
Nothing has occurred or been omitted from the Information Package and no information has been given or withheld that results in the information contained in the Information Package being untrue or misleading in any material respect.

 

	
18.17

	
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.

 

	
18.18

	
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.

 

	
18.19

	
Times for making representations

 

	
18.19.1    

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

 

	
18.19.2    

	
The representations in Clauses 18.2 to 18.8 (inclusive) and Clauses 18.10 to 18.13 (inclusive) are deemed to be repeated by the Company on the date of each Request and the first day of each Term.

 

	
18.19.3    

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

 

	
19.

	
INFORMATION COVENANTS

 

	
19.1

	
Financial statements

 

	
  

	
19.1.1

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

 

	
  

	
(a)

	
its audited consolidated financial statements for each of its financial years; and

 

	
  

	
(b)

	
its interim consolidated financial statements for the first half-year of each of its financial years.

 

	
  

	
19.1.2

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

 

	
  

	
(a)

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

 

	
  

	
(b)

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

 

of the end of the relevant financial period.

 

	
19.2

	
Form of Financial Statement

 

If any financial statement delivered or to be delivered to the Facility Agent under Clause 19.1 is not to be or, as the case may be, has not been prepared in accordance with Applicable Accounting Principles:

 

	
  

	
19.2.1

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

 

	
  

	
19.2.2

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

 

	
  

	
19.2.3

	
if such amendments are not so agreed within 25 days, the Company shall:

 

	
  

	
(a)

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

 

	
  

	
(b)

	
with all subsequent financial statements to be delivered to the Facility Agent under Clause 19.1,

 

deliver to the Facility Agent details of all such adjustments as need to be made to the relevant financial statements to bring them into line with the Companies Act 2006 (as in effect on the date of this Agreement) and Applicable Accounting Principles.

 

	
19.3

	
Compliance Certificate

 

	
  

	
19.3.1

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

 

	
  

	
19.3.2

	
Each Compliance Certificate must be signed by two directors of the Company.

 

	
19.4

	
Information - miscellaneous

 

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

 

	
  

	
19.4.1

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

 

	
  

	
19.4.2

	
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;

 

	
  

	
19.4.3

	
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;

 

	
  

	
19.4.4

	
promptly on receiving them, details of any modification of an Authorisation or other material regulatory notices from OFGEM or other government agency;

 

	
  

	
19.4.5

	
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);

 

	
  

	
19.4.6

	
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);

 

	
  

	
19.4.7

	
within 5 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;

 

	
  

	
19.4.8

	
the Company shall deliver to the Facility Agent at such times as those reports are prepared in order to comply with the then current statutory or auditing requirements (as applicable either to the trustees of any relevant schemes or to the Company), actuarial reports in relation to all pension schemes mentioned in sub-clause 21.15.1. This obligation shall apply to only those pension schemes (or groups of the Electricity Supply Pension Scheme) of which the Company is at that time a participating employer and to those reports which have been provided to the Company;

 

	
  

	
19.4.9

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

 

	
19.4.10     

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

 

	
19.5

	
Notification of Default

 

	
  

	
19.5.1

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

 

	
  

	
19.5.2

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

 

	
19.6

	
Use of websites

 

	
  

	
19.6.1

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

 

	
  

	
(a)

	
the Facility Agent and the Lender agree;

 

	
  

	
(b)

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

 

	
  

	
(c)

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

 

	
  

	
(d)

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

 

The Facility Agent must supply each relevant Lender with the address of and password for the website.

 

	
  

	
19.6.2

	
Notwithstanding the above, the Company must supply to the Facility Agent in paper form a copy of any information posted on the website together with sufficient copies for:

 

	
  

	
(a)

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

 

	
  

	
(b)

	
any other Lender within ten Business Days of request by that Lender.

 

	
  

	
19.6.3

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

 

	
  

	
(a)

	
the website cannot be accessed;

 

	
  

	
(b)

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

 

	
  

	
(c)

	
the password for the website is changed; or

 

	
  

	
(d)

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

 

If the circumstances in paragraphs (a) or (b) above occur, the Company must supply any information required under this Agreement in paper form.

 

	
19.7

	
Know your customer requirements

 

	
  

	
19.7.1

	
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 a Lender of any of its rights and obligations under this Agreement to a party that is not a Lender prior to such assignment or transfer,

 

obliges the Facility Agent or any 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 Facility Agent or any Lender supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Facility Agent (for itself or on behalf of any Lender) or any 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 Facility Agent, such 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.

 

	
20.

	
FINANCIAL COVENANTS

 

	
20.1

	
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 a 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 sub-clause 21.5.3(i) of Clause 21.5 (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 Facilities.

 

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;

 

	
  

	
(b)

	
any investment in marketable debt obligations issued or guaranteed by the government of the United States of America, the United Kingdom, any member state of the European Union or any Participating Member State 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 the United States of America, the United Kingdom, any member state of the European Economic Area or any Participating Member State;

 

	
  

	
(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 Clauses (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 Majority Lenders,

 

in each case, denominated in a currency of the United States of America, the United Kingdom, any member state of the European Economic Area or any Participating Member State 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 sub-clause 21.5.3(i) of Clause 21.5 (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.

 

Interest Payable means, in relation to any Measurement Period, all interest payable and similar charges of the Group expressed in Sterling and determined on a consolidated basis in accordance with Applicable Accounting Principles.

 

Measurement Period means each period of twelve 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 subject to subordination arrangements satisfactory to the Facility Agent.

 

	
20.2

	
Interpretation

 

	
  

	
20.2.1

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

 

	
  

	
20.2.2

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

 

	
  

	
(a)

	
the Agent's Spot Rate of Exchange for the purchase of the relevant currency in the London foreign exchange market with Sterling at or about 11.00 a.m. on the day the relevant amount falls to be calculated; or

 

	
  

	
(b)

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

 

	
  

	
20.2.3

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

 

	
20.3

	
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.

 

	
20.4

	
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.

 

	
20.5

	
Calculation of Interest Payable

 

For the purpose of the financial covenant set out in Clause 20.3 (Interest cover), in relation to any Measurement Period ending less than 12 months from the date of this Agreement, Interest Payable shall be calculated ignoring any amounts accrued before the date of this Agreement and in respect of the period after the date of this Agreement shall be increased by a factor of A/B where 'A' is 365 and 'B' is the total number of calendar days between the date of this Agreement and the last day of such Measurement Period.

 

	
  

	
21.

	
GENERAL COVENANTS

 

	
21.1

	
General

 

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

 

	
21.2

	
Authorisations

 

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

 

	
21.3

	
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.

 

	
21.4

	
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.

 

	
21.5

	
Negative pledge

 

In this Clause 21.5, "Quasi-Security" means an arrangement or transaction described in sub-clause 21.5.2 below.

 

	
  

	
21.5.1

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

 

	
  

	
21.5.2

	
Except as provided below, neither the Company nor any Material Subsidiary may:

 

	
  

	
(a)

	
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;

 

	
  

	
(b)

	
sell, transfer or otherwise dispose of any of its receivables on recourse terms;

 

	
  

	
(c)

	
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

 

	
  

	
(d)

	
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.

 

	
  

	
21.5.3

	
Sub-clause 21.5.1 does not apply to:

 

	
  

	
(a)

	
any Security Interest or Quasi-Security 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;

 

	
  

	
(b)

	
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;

 

	
  

	
(c)

	
any Security Interest or Quasi-Security 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;

 

	
  

	
(d)

	
any Security Interest or Quasi-Security 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 is removed or discharged within 6 months of the date of acquisition of such asset;

 

	
  

	
(e)

	
any Security Interest or Quasi-Security 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 is removed or discharged within 6 months of the date of acquisition of such asset;

 

	
  

	
(f)

	
any Security Interest or Quasi-Security 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 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 is removed or discharged within 6 months of the date of such company becoming a Material Subsidiary of the Company;

 

	
  

	
(g)

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

 

	
  

	
(h)

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

 

	
  

	
(i)

	
any Security Interest or Quasi-Security created or outstanding with the prior approval of the Majority Lenders; and

 

	
  

	
(j)

	
any Security Interest or Quasi-Security 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 created or outstanding under this exception on or over such assets shall not at any time exceed £25,000,000 or its equivalent.

 

	
21.6

	
Disposals

 

	
  

	
21.6.1

	
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 £5,000,000 (or its equivalent) in total during the term of this Agreement.

 

	
  

	
21.6.2

	
Sub-clause 21.6.1 does not apply to:

 

	
  

	
(a)

	
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);

 

	
  

	
(b)

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

 

	
  

	
(c)

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

 

	
  

	
(d)

	
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 6 months;

 

	
  

	
(e)

	
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;

 

	
  

	
(f)

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

 

	
  

	
(g)

	
any disposal which the Majority Lenders shall have agreed shall not be taken into account.

 

	
21.7

	
Environmental matters

 

	
  

	
21.7.1

	
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.

 

	
  

	
21.7.2

	
The Company will, promptly upon becoming aware of the same, inform the Facility Agent in writing of:

 

	
  

	
(a)

	
any Environmental Claim against any member of the Group which is current, pending or threatened; and

 

	
  

	
(b)

	
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.

 

	
21.8

	
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.

 

	
21.9

	
Merger

 

The Company shall not enter into any amalgamation, demerger, merger or corporate reconstruction.

 

	
21.10

	
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.

 

	
21.11

	
Acquisitions

 

	
21.11.1  

	
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).

 

	
21.11.2  

	
Provided that no Event of Default is outstanding on the date of the acquisition or would occur as a result of the acquisition, sub-clause 21.11.1 does not apply to:

 

	
  

	
(a)

	
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 sub-clause 21.6.2 above;

 

	
  

	
(b)

	
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 2.5% 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

 

	
  

	
(c)

	
any acquisition which the Majority Lenders shall have consented to in writing.

 

	
21.12

	
Prohibition on the Debt Purchase Transactions of the Group

 

The Company shall not, and shall procure that each other member of the Group shall not, enter into any Debt Purchase Transaction or beneficially own all or any part of the share capital of a company that is a Lender or a party to a Debt Purchase Transaction of the type referred to in paragraphs (b) and (c) of the definition of Debt Purchase Transaction.

 

	
21.13

	
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.

 

	
21.14

	
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.

 

	
21.15

	
Pensions

 

	
21.15.1  

	
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).

 

	
21.15.2  

	
Except for in respect of the Electricity Supply Pension Scheme (and in particular the E.On Group, Networks 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.

 

	
21.15.3  

	
The Company shall promptly notify the Facility Agent of any material change in the rate of contributions payable  to any of the pension schemes mentioned in sub-clause 21.15.2 above paid or required (by law or otherwise).

 

	
21.15.4  

	
The Company shall immediately notify the Facility Agent of any investigation or proposed investigation by the Pensions Regulator which may lead to the issue of a Financial Support Direction or a Contribution Notice to any member of the Group.

 

	
21.15.5  

	
The Company shall immediately notify the Facility Agent if it receives a Financial Support Direction or a Contribution Notice from the Pensions Regulator.

 

	
21.16

	
Licence

 

The Company will at all times:

 

	
21.16.1  

	
comply with the terms of the Licence in all material respects;

 

	
21.16.2  

	
without prejudice to the generality of sub-Clause 21.16.1 above, comply with the ring fencing provisions of the Licence in all respects; and

 

	
21.16.3  

	
not take any action or make any omission which is reasonably likely to result in the revocation or termination of the Licence.

 

	
21.17

	
Investment Grade Rating

 

The Company shall procure that the long-term, unsecured and non credit-enhanced debt obligations of the Company shall be rated Baa2/BBB or above by at least one of Moody's and Standard and Poor's and shall not be rated below Baa2/BBB by either of Moody's or Standard and Poor's.

 

	
22.

	
DEFAULT

 

	
22.1

	
Events of Default

 

Each of the events set out in this Clause is an Event of Default.

 

	
22.2

	
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,

 

and payment is made within 5 Business Days of its due date.

 

	
22.3

	
Breach of other obligations

 

	
  

	
22.3.1

	
The Company does not perform or comply with its obligations under Clause 20 (Financial Covenants), Clause 21.5 (Negative pledge), Clause 21.6 (Disposals) or Clause 21.11 (Acquisitions).

 

	
  

	
22.3.2

	
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 Facility Agent giving notice requiring the same to be remedied and the Company becoming aware of such non-compliance or misrepresentation, as the case may be.

 

	
22.4

	
Cross-default

 

	
  

	
22.4.1

	
Any Financial Indebtedness of any member of the Group is not paid when due nor within any originally applicable grace period.

 

	
  

	
22.4.2

	
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).

 

	
  

	
22.4.3

	
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).

 

	
  

	
22.4.4

	
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).

 

	
  

	
22.4.5

	
No Event of Default will occur under this Clause 22.4 unless and until the aggregate amount of such Financial Indebtedness falling within sub-clauses 22.4.1 to 22.4.4 above is more than £20,000,000 or its equivalent in any other currency or currencies.

 

	
22.5

	
Insolvency

 

	
  

	
22.5.1

	
Any of the following occurs in respect of the Company:

 

	
  

	
(a)

	
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;

 

	
  

	
(b)

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

 

	
  

	
(c)

	
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

 

	
  

	
(d)

	
a moratorium is declared in respect of any of its indebtedness.

 

	
  

	
22.5.2

	
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.

 

	
22.6

	
Insolvency proceedings

 

	
  

	
22.6.1

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

 

	
  

	
(a)

	
a suspension of payments, a moratorium of any indebtedness or a reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise);

 

	
  

	
(b)

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

 

	
  

	
(c)

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

 

	
  

	
(d)

	
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;

 

	
  

	
(e)

	
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;

 

	
  

	
(f)

	
enforcement of any Security over any of its assets; or

 

	
  

	
(g)

	
any other analogous step or procedure is taken in any jurisdiction.

 

	
  

	
22.6.2

	
Sub-clause 22.6.1 does not apply to:

 

	
  

	
(a)

	
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

 

	
  

	
(b)

	
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 Majority Lenders.

 

	
22.7

	
Creditors' process

 

A distress, attachment, execution or other legal process material in relation to the Company's ability to perform its payment obligations under this Agreement is levied, enforced or sued out on or against the assets of the Company and is not discharged or stayed within 30 days.

 

	
22.8

	
Licence

 

Either:

 

	
  

	
22.8.1

	
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

 

	
  

	
22.8.2

	
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 electricity in the authorised areas covered by the Licence, issued under the Act or pursuant to the Utilities Act, 2000.

 

	
22.9

	
Balancing and Settlement Code

 

	
  

	
22.9.1

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

 

	
  

	
22.9.2

	
the Company breaches the Balancing and Settlement Code and such breach has or is reasonably likely to have a Material Adverse Effect.

 

	
22.10

	
Unlawfulness and invalidity

 

	
22.10.1    

	
It is or becomes unlawful for the Company to perform any of its obligations under the Finance Documents in any material respect.

 

	
22.10.2   

	
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 Lenders under the Finance Documents.

 

	
22.11

	
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 21.6.

 

	
22.12

	
Repudiation and rescission of agreements

 

The Company (or any other relevant party other than a Finance Party) 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.

 

	
22.13

	
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.

 

	
22.14

	
Material Adverse Effect

 

Any event or circumstance occurs which has or is reasonably likely to have a Material Adverse Effect.

 

	
22.15

	
Acceleration

 

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

 

	
22.15.1  

	
cancel the Total Commitments; and/or

 

	
22.15.2  

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

 

	
  

	
(a)

	
immediately due and payable;

 

	
  

	
(b)

	
payable on demand by the Facility Agent acting on the instructions of the Majority Lenders; and/or

 

	
22.15.3  

	
declare that full cash cover in respect of each Letter of Credit is immediately due and payable whereupon it shall become immediately due and payable.

 

Any notice given under this subclause will take effect in accordance with its terms.

 

	
23.

	
THE ADMINISTRATIVE PARTIES

 

	
23.1

	
Appointment and duties of the Facility Agent

 

	
  

	
23.1.1

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

 

	
  

	
23.1.2

	
Each Finance Party irrevocably authorises the Facility Agent to:

 

	
  

	
(a)

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

 

	
  

	
(b)

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

 

	
  

	
23.1.3

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

 

	
  

	
23.1.4

	
The Facility Agent shall provide to the Company within three Business Days of a request by the Company (but no more frequently than once per calendar month), a list (which may be in electronic form) setting out the names of the Lenders as at the date of that request, their respective Commitments, the address and fax number (and the department or officer, if any, for whose attention any communication is to be made) of each Lender for any communication to be made or document to be delivered under or in connection with the Finance Documents, the electronic mail address and/or any other information required to enable the sending and receipt of information by electronic mail or other electronic means to and by each Lender to whom any communication under or in connection with the Finance Documents may be made by that means and the account details of each Lender for any payment to be distributed by the Facility Agent to that Lender under the Finance Documents.

 

	
23.2

	
Role of the Arranger

 

Except as specifically provided in the Finance Documents, the Arranger does not have any obligations of any kind to any other Party in connection with any Finance Document.

 

	
23.3

	
No fiduciary duties

 

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

 

	
23.4

	
Individual position of an Administrative Party

 

	
  

	
23.4.1

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

 

	
  

	
23.4.2

	
Each Administrative Party may:

 

	
  

	
(a)

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

 

	
  

	
(b)

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

 

	
23.5

	
Reliance

 

The Facility Agent may:

 

	
  

	
23.5.1

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

 

	
  

	
23.5.2

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

 

	
  

	
23.5.3

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

 

	
  

	
23.5.4

	
act under the Finance Documents through its personnel and agents.

 

	
23.6

	
Majority Lenders' instructions

 

	
  

	
23.6.1

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

 

	
  

	
23.6.2

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

 

	
  

	
23.6.3

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

 

	
23.7

	
Responsibility

 

	
  

	
23.7.1

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

 

	
  

	
(a)

	
any Finance Document or any other document; or

 

	
  

	
(b)

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

 

	
  

	
23.7.2

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

 

	
  

	
(a)

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

 

	
  

	
(b)

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

 

	
  

	
23.7.3

 

	
  

	
(a)

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

 

	
  

	
(b)

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

 

	
23.8

	
Exclusion of liability

 

	
  

	
23.8.1

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

 

	
  

	
23.8.2

	
The Facility Agent will not be liable for any delay (or any related consequences) in crediting an account with an amount required under the Finance Documents to be paid by the Facility Agent, if the Facility Agent has taken all necessary steps as soon as reasonably practicable to comply with the regulations or operating procedures of any recognised clearing or settlement system used by the Facility Agent for that purpose.

 

	
  

	
23.8.3

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

 

	
23.9

	
Default

 

	
  

	
23.9.1

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

 

	
  

	
23.9.2

	
If the Facility Agent:

 

	
  

	
(a)

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

 

	
  

	
(b)

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

 

it must promptly notify the Lenders.

 

	
23.10

	
Information

 

	
23.10.1  

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

 

	
23.10.2  

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

 

	
23.10.3  

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

 

	
  

	
(a)

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

 

	
  

	
(b)

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

 

	
23.10.4  

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

 

	
23.10.5  

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

 

	
23.10.6  

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

 

	
23.10.7  

	
Without prejudice to the generality of the foregoing, the Facility Agent may disclose the identity of a Defaulting Lender to the other Finance Parties and the Company and shall disclose the same upon the written request of the Company or the Majority Lenders.

 

	
23.11

	
Indemnities

 

	
23.11.1  

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

 

	
23.11.2  

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

 

	
23.11.3  

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

 

	
  

	
(a)

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

 

	
  

	
(b)

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

 

	
23.12

	
Compliance

 

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

 

	
23.13

	
Resignation of the Facility Agent

 

	
23.13.1  

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

 

	
23.13.2  

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

 

	
23.13.3  

	
If no successor Facility Agent has been appointed under sub-clause 23.13.2 above within 30 days after notice of resignation was given, the Facility Agent may appoint a successor Facility Agent.

 

	
23.13.4  

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

 

	
23.13.5  

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

 

	
23.13.6  

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

 

	
23.13.7  

	
Upon its resignation becoming effective, this Clause will continue to benefit the retiring Facility Agent in respect of any action taken or not taken by it in connection with the Finance Documents while it was the Facility Agent, and, subject to Clause 23.13.6 above, it will have no further obligations under any Finance Document.

 

	
23.14

	
Replacement of the Facility Agent

 

	
23.14.1  

	
After consultation with the Company, the Majority Lenders may, by giving 30 days' notice to the Facility Agent (or, at any time the Facility Agent is an Impaired Agent, by giving any shorter notice determined by the Majority Lenders) replace the Facility Agent by appointing a successor Facility Agent (acting through an office in the United Kingdom).

 

	
23.14.2  

	
The retiring Facility Agent shall (at its own cost if it is an Impaired Agent and otherwise at the expense of the Lenders) make available to the successor Facility Agent such documents and records and provide such assistance as the successor Facility Agent may reasonably request for the purposes of performing its functions as Facility Agent under the Finance Documents.

 

	
23.14.3  

	
The replacement of the Facility Agent and the appointment of the successor Facility Agent shall take effect on the date specified in the notice from the Majority Lenders to the retiring Facility Agent.  As from this date, the retiring Facility Agent shall be discharged from any further obligation in respect of the Finance Documents but shall remain entitled to the benefit of this Clause 23 (and any agency fees for the account of the retiring Facility Agent shall cease to accrue from (and shall be payable on) that date).

 

	
23.14.4  

	
Any successor Facility Agent and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if such successor had been an original Party.

 

	
23.15

	
Relationship with Lenders

 

	
23.15.1  

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

 

	
23.15.2  

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

 

	
23.15.3  

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

 

	
23.16

	
Facility Agent's management time

 

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

 

	
23.17

	
Notice period

 

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

 

	
24.

	
EVIDENCE AND CALCULATIONS

 

	
24.1

	
Accounts

 

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

 

	
24.2

	
Certificates and determinations

 

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

 

	
24.3

	
Calculations

 

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

 

	
25.

	
FEES

 

	
25.1

	
Agency fee

 

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

 

	
25.2

	
Arrangement fee

 

The Company must pay an upfront fee in the manner agreed between the Arranger and the Company.

 

	
25.3

	
Commitment fee

 

	
  

	
25.3.1

	
The Company must pay a commitment fee computed at the rate of 35 per cent. of the applicable Margin on the undrawn, uncancelled amount of each Lender's Commitment for the Availability Period calculated from the date of this Agreement.

 

	
  

	
25.3.2

	
The commitment fee is payable quarterly in arrears during the Availability Period and on the last day of the Availability Period.  Accrued commitment fee is also payable to the Facility Agent for a Lender on the date its Commitment is cancelled in full.

 

	
  

	
25.3.3

	
No commitment fee is payable to the Facility Agent (for the account of a Lender) on any Available Commitment of that Lender for any day on which that Lender is a Defaulting Lender.

 

	
25.4

	
Utilisation fee

 

	
  

	
25.4.1

	
The Company must pay to the Facility Agent for each Lender a utilisation fee computed at the rate of 0.20 per cent. per annum on the aggregate principal amount of the Utilisations for each day on which the aggregate Base Currency Amount of all Utilisations exceeds 33.3 per cent. of the Total Commitments.

 

	
  

	
25.4.2

	
The Company must pay to the Facility Agent for each Lender a utilisation fee computed at the rate of 0.40 per cent. per annum on the aggregate principal amount of the Utilisations for each day on which the Base Currency Amount of all Utilisations exceeds 66.6 per cent. of the Total Commitments. For the avoidance of doubt, the fee described in sub-clause 25.4.1 above is not payable in respect of any day for which the fee described in this sub-clause 25.4.2 is payable.

 

	
  

	
25.4.3

	
Utilisation fee is payable on the amount of each Lender's share in the Utilisations.

 

	
  

	
25.4.4

	
Accrued utilisation fee is payable quarterly in arrears.  Accrued utilisation fee is also payable to the Facility Agent for a Lender on the date its Commitment is cancelled in full.

 

	
  

	
26.

	
INDEMNITIES AND BREAK COSTS

 

	
26.1

	
Currency indemnity

 

	
  

	
26.1.1

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

 

	
  

	
(a)

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

 

	
  

	
(b)

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

 

in a currency other than the currency in which the amount is expressed to be payable under the relevant Finance Document.

 

	
  

	
26.1.2

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

 

	
26.2

	
Other indemnities

 

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

 

	
  

	
26.2.1

	
the occurrence of any Event of Default;

 

	
  

	
26.2.2

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

 

	
  

	
26.2.3

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

 

	
26.3

	
Break Costs

 

	
  

	
26.3.1

	
The Company must pay to each Lender its Break Costs within three Business Days of demand.

 

	
  

	
26.3.2

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

 

	
  

	
(a)

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

 

exceeds

 

	
  

	
(b)

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

 

	
  

	
26.3.3

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

 

	
27.

	
EXPENSES

 

	
27.1

	
Initial costs

 

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

 

	
27.2

	
Subsequent costs

 

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

 

	
  

	
27.2.1

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

 

	
  

	
27.2.2

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

 

	
27.3

	
Enforcement costs

 

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

 

	
28.

	
AMENDMENTS AND WAIVERS

 

	
28.1

	
Procedure

 

	
  

	
28.1.1

	
Except as provided in this Clause 28, any term of the Finance Documents may be amended or waived with the agreement of the Company and the Majority Lenders.  The Facility Agent may effect, on behalf of any Finance Party, an amendment or waiver allowed under this Clause.

 

	
  

	
28.1.2

	
The Facility Agent must promptly notify the other Parties of any amendment or waiver effected by it under sub-clause 28.1.1 above.  Any such amendment or waiver is binding on all the Parties.

 

	
28.2

	
Exceptions

 

	
  

	
28.2.1

	
An amendment or waiver which relates to:

 

	
  

	
(a)

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

 

	
  

	
(b)

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

 

	
  

	
(c)

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

 

	
  

	
(d)

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

 

	
  

	
(e)

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

 

	
  

	
(f)

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

 

	
  

	
(g)

	
this Clause,

 

may only be made with the consent of all the Lenders.

 

	
  

	
28.2.2

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

 

	
28.3

	
Disenfranchisement of Defaulting Lenders

 

	
  

	
28.3.1

	
For so long as a Defaulting Lender has any Available Commitment, in ascertaining the Majority Lenders or whether any given percentage (including, for the avoidance of doubt, unanimity) of the Total Commitments has been obtained to approve any request for a consent, waiver, amendment or other vote under the Finance Documents, that Defaulting Lender's Commitments will be reduced by the amount of its Available Commitments.

 

	
  

	
28.3.2

	
For the purposes of this Clause 28.3, the Facility Agent may assume that the following Lenders are Defaulting Lenders:

 

	
  

	
(a)

	
any Lender which has notified the Facility Agent that it has become a Defaulting Lender;

 

	
  

	
(b)

	
any Lender in relation to which it is aware that any of the events or circumstances referred to in paragraphs (a), (b) or (c) of the definition of "Defaulting Lender" has occurred where, in the case of the events or circumstances referred to in paragraph (a), none of the exceptions to that paragraph apply,

 

unless it has received notice to the contrary from the Lender concerned (together with any supporting evidence reasonably requested by the Facility Agent) or the Facility Agent is otherwise aware that the Lender has ceased to be a Defaulting Lender.

 

	
28.4

	
Replacement of a Defaulting Lender

 

	
  

	
28.4.1

	
The Company may, at any time a Lender has become and continues to be a Defaulting Lender, by giving 10 Business Days' prior written notice to the Facility Agent and such Lender:

 

	
  

	
(a)

	
replace such Lender by requiring such Lender to (and to the extent permitted by law such Lender shall) transfer pursuant to Clause 29 (Changes to the Parties) all (and not part only) of its rights and obligations under this Agreement; or

 

	
  

	
(b)

	
require such Lender to (and to the extent permitted by law such Lender shall) transfer pursuant to Clause 29 (Changes to the Parties) all (and not part only) of the undrawn Commitment of the Lender.

 

to a Lender or other bank, financial institution, trust, fund or other entity (a "Replacement Lender") selected by the Company, and which is acceptable to the Facility Agent (unless the Facility Agent is an Impaired Agent) and to the Issuing Bank (each acting reasonably), which confirms its willingness to assume and does assume all the obligations or all the relevant obligations of the transferring Lender (including the assumption of the transferring Lender's participations or unfunded participations (as the case may be) on the same basis as the transferring Lender) for a purchase price in cash payable at the time of transfer equal to the outstanding principal amount of such Lender's participation in the outstanding Utilisations and all accrued interest and/or Letter of Credit fees, Break Costs and other amounts payable in relation thereto under the Finance Documents.

 

	
  

	
28.4.2

	
Any transfer of rights and obligations of a Defaulting Lender pursuant to this Clause shall be subject to the following conditions:

 

	
  

	
(a)

	
the Company shall have no right to replace the Facility Agent;

 

	
  

	
(b)

	
neither the Facility Agent nor the Defaulting Lender shall have any obligation to the Company to find a Replacement Lender;

 

	
  

	
(c)

	
the transfer must take place no later than 14 days after the notice referred to in sub-clause 28.4.1 above; and

 

	
  

	
(d)

	
in no event shall the Defaulting Lender be required to pay or surrender to the Replacement Lender any of the fees received by the Defaulting Lender pursuant to the Finance Documents.

 

	
28.5

	
Change of currency

 

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

 

	
28.6

	
Waivers and remedies cumulative

 

The rights of each Finance Party under the Finance Documents:

 

	
  

	
28.6.1

	
may be exercised as often as necessary;

 

	
  

	
28.6.2

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

 

	
  

	
28.6.3

	
may be waived only in writing and specifically.

 

Delay in exercising or non-exercise of any right is not a waiver of that right.

 

	
  

	
29.

	
CHANGES TO THE PARTIES

 

	
29.1

	
Assignments and transfers by the Company

 

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

 

	
29.2

	
Assignments and transfers by Lenders

 

	
  

	
29.2.1

	
A Lender (the Existing Lender) may, subject to the following provisions of this Clause 29, at any time assign or transfer (including by way of novation) any of 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).

 

	
  

	
29.2.2

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

 

	
  

	
29.2.3

	
An Existing Lender must consult with the Company for no more than five Business Days before it may make an assignment or transfer unless the New Lender is another Lender or an Affiliate of a Lender or an Event of Default has occurred and is outstanding.

 

	
  

	
29.2.4

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

 

	
  

	
29.2.5

	
A transfer of obligations will be effective only if either:

 

	
  

	
(a)

	
the obligations are novated in accordance with the following provisions of this Clause 29; or

 

	
  

	
(b)

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

 

	
  

	
29.2.6

	
Unless the Facility Agent otherwise agrees, the New Lender must pay to the Facility Agent for its own account, on or before the date any assignment or transfer occurs, a fee of £1,750.

 

	
  

	
29.2.7

	
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.

 

	
29.3

	
Procedure for transfer by way of novations

 

	
  

	
29.3.1

	
In this Clause:

 

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

 

	
  

	
(a)

	
the proposed Transfer Date specified in that Transfer Certificate; and

 

	
  

	
(b)

	
the date on which the Facility Agent executes that Transfer Certificate.

 

	
  

	
29.3.2

	
A novation is effected if:

 

	
  

	
(a)

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

 

	
  

	
(b)

	
the Facility Agent executes it.

 

Subject to sub-clause 29.2.4 of Clause 29.2 (Assignments and transfers by Lenders), the Facility Agent must execute as soon as reasonably practicable a Transfer Certificate delivered to it and which appears on its face to be in order.

 

	
  

	
29.3.3

	
Each Party (other than the Existing Lender and the New Lender) irrevocably authorises the Facility Agent to execute any duly completed Transfer Certificate on its behalf.

 

	
  

	
29.3.4

	
On the Transfer Date:

 

	
  

	
(a)

	
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

 

	
  

	
(b)

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

 

	
29.4

	
Limitation of responsibility of Existing Lender

 

	
  

	
29.4.1

	
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:

 

	
  

	
(a)

	
any Finance Document or any other document; or

 

	
  

	
(b)

	
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.

 

	
  

	
29.4.2

	
Each New Lender confirms to the Existing Lender and the other Finance Parties that it:

 

	
  

	
(a)

	
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

 

	
  

	
(b)

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

 

	
  

	
29.4.3

	
Nothing in any Finance Document requires an Existing Lender to:

 

	
  

	
(a)

	
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

 

	
  

	
(b)

	
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.

 

	
29.5

	
Costs resulting from change of Lender or Facility Office

 

If:

 

	
  

	
29.5.1

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

 

	
  

	
29.5.2

	
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 14 (Tax gross-up and indemnities) or Clause 15 (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 29.5 shall not apply:

 

	
  

	
(i)

	
in respect of an assignment or transfer made in the ordinary course of the primary syndication of the Facilities; or

 

	
  

	
(ii)

	
in relation to Clause 14 (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 14.1.1 of Clause 14.6 (HMRC DT Treaty Passport scheme confirmation) if the Obligor making the payment has not complied with its obligations under paragraph 14.1.2 of Clause 14.6 (HMRC DT Treaty Passport scheme confirmation).

 

	
29.6

	
Changes to the Reference Banks

 

	
  

	
29.6.1

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

 

	
  

	
29.6.2

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

 

	
29.7

	
Copy of Transfer Certificate or Increase Confirmation to Company

 

The Facility Agent shall, as soon as reasonably practicable after it has executed a Transfer Certificate or an Increase Confirmation, send to the Company a copy of that Transfer Certificate or Increase Confirmation.

 

	
29.8

	
Security over Lenders' rights

 

In addition to the other rights provided to Lenders under this Clause 29, each 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 obligations of that Lender including, without limitation:

 

	
  

	
(a)

	
any charge, assignment or other security to secure obligations to a federal reserve or central bank; and

 

	
  

	
(b)

	
in the case of any Lender which is a fund, any charge, assignment or other security granted to any holders (or trustee or representatives of holders) of obligations owed, or securities issued, by that Lender as security for those obligations or securities,

 

except that no such charge, assignment or Security shall:

 

	
  

	
(i)

	
release a 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 relevant Lender under the Finance Documents.

 

	
30.

	
DISCLOSURE OF INFORMATION

 

	
30.1

	
Confidentiality and Disclosure

 

	
  

	
30.1.1

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

 

	
  

	
(a)

	
which is publicly available, other than as a result of a breach by that Finance Party of this Clause 30;

 

	
  

	
(b)

	
in connection with any legal or arbitration proceedings;

 

	
  

	
(c)

	
if required to do so under any law or regulation;

 

	
  

	
(d)

	
to a governmental, banking, taxation or other regulatory authority;

 

	
  

	
(e)

	
to its professional advisers;

 

	
  

	
(f)

	
to the extent allowed under sub-clause 30.1.2 below; or

 

	
  

	
(g)

	
with the agreement of the Company.

 

	
  

	
30.1.2

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

 

	
  

	
(a)

	
a copy of any Finance Document; and

 

	
  

	
(b)

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

 

However, before a participant may receive any confidential information, it must agree with the relevant Finance Party to keep that information confidential on the terms of sub-clause 30.1 above.

 

	
  

	
30.1.3

	
Any Lender may also disclose the size and term of the Facilities and the name of the Company to any investor or a potential investor in a securitisation (or similar transaction of broadly equivalent economic effect) of that Lender's rights or obligations under the Finance Documents.

 

This Clause 30.1 supersedes any previous confidentiality undertaking given by a Finance Party in connection with this Agreement prior to it becoming a Party.

 

	
30.2

	
Disclosure to numbering service providers

 

	
  

	
30.2.1

	
Any Finance Party may disclose to any national or international numbering service provider appointed by that Finance Party to provide identification numbering services in respect of this Agreement, the Facilities and/or the Company the following information:

 

	
  

	
(a)

	
name of the Company;

 

	
  

	
(b)

	
country of domicile of the Company;

 

	
  

	
(c)

	
place of incorporation of the Company;

 

	
  

	
(d)

	
date of this Agreement;

 

	
  

	
(e)

	
the names of the Facility Agent and the Arranger;

 

	
  

	
(f)

	
date of each amendment and restatement of this Agreement;

 

	
  

	
(g)

	
amount of Total Commitments;

 

	
  

	
(h)

	
currencies of the Facilities;

 

	
  

	
(i)

	
type of Facilities;

 

	
  

	
(j)

	
ranking of Facilities;

 

	
  

	
(k)

	
Termination Date for Facilities;

 

	
  

	
(l)

	
changes to any of the information previously supplied pursuant to paragraphs (a) to (k) above; and

 

	
  

	
(m)

	
such other information agreed between such Finance Party and the Company,

 

to enable such numbering service provider to provide its usual syndicated loan numbering identification services.

 

	
  

	
30.2.2

	
The Parties acknowledge and agree that each identification number assigned to this Agreement, the Facilities and/or the Company by a numbering service provider and the 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.

 

	
  

	
30.2.3

	
The Company represents that none of the information set out in paragraphs (a) to (m) of sub-clause 30.2.1 above is, nor will at any time be, unpublished price-sensitive information.

 

	
  

	
30.2.4

	
The Facility Agent shall notify the Company and the other Finance Parties of:

 

	
  

	
(a)

	
the name of any numbering service provider appointed by the Facility Agent in respect of this Agreement, the Facilities and/or the Company; and

 

	
  

	
(b)

	
the number or, as the case may be, numbers assigned to this Agreement, the Facilities and/or the Company by such numbering service provider.

 

	
31.

	
SET-OFF

 

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

 

	
32.

	
PRO RATA SHARING

 

	
32.1

	
Redistribution

 

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

 

	
  

	
32.1.1

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

 

	
  

	
32.1.2

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

 

	
  

	
32.1.3

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

 

	
32.2

	
Effect of redistribution

 

	
  

	
32.2.1

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

 

	
  

	
32.2.2

	
When the Facility Agent makes a distribution under sub-clause 32.2.1 above, the recovering Lender will be subrogated to the rights of the Finance Parties which have shared in that redistribution.

 

	
  

	
32.2.3

	
If and to the extent that the recovering Lender is not able to rely on any rights of subrogation under sub-clause 32.2.2 above, the Company will owe the recovering Lender a debt which is equal to the redistribution, immediately payable and of the type originally discharged.

 

	
  

	
32.2.4

	
If:

 

	
  

	
(a)

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

 

	
  

	
(b)

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

 

each Finance Party must reimburse the recovering Lender all or the appropriate portion of the redistribution paid to that Finance Party, together with interest for the period while it held the re-distribution.  In this event, the subrogation in sub-clause 32.2.2 above will operate in reverse to the extent of the reimbursement.

 

	
32.3

	
Exceptions

 

Notwithstanding any other term of this Clause 32, a recovering Lender need not pay a redistribution to the extent that:

 

	
  

	
32.3.1

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

 

	
  

	
32.3.2

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

 

	
  

	
(a)

	
the recovering Lender notified the Facility Agent of those proceedings; and

 

	
  

	
(b)

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

 

	
33.

	
SEVERABILITY

 

	
33.1

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

 

	
  

	
33.1.1

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

 

	
  

	
33.1.2

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

 

	
34.

	
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.

 

	
35.

	
NOTICES

 

	
35.1

	
In writing

 

	
  

	
35.1.1

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

 

	
  

	
(a)

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

 

	
  

	
(b)

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

 

	
  

	
35.1.2

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

 

	
  

	
35.1.3

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

 

	
35.2

	
Contact details

 

	
  

	
35.2.1

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

 

	
  

	
35.2.2

	
The contact details of the Company for this purpose are:

 

 

	 	
Address:  

Fax number: 

Phone number:

E-mail:     

Attention: 

	
Avonbank, Feeder Road, Bristol BS2 0TB

01179 332 108

01179 332 354

 jhunt9@westernpower.co.uk

 Julie Hunt

	 	

 

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

 

	 
	 	Address:   

Fax number: 

E-mail:     

Attention: 

	
5 Canada Square, London E14 5AQ

 +44 208313 2149

emea.7115loansagency@bankofamerica.com

Loans Agency

	 

                                                                                                                                                              

                          

	
  

	
35.2.3

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

 

	
  

	
35.2.4

	
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.

 

	
35.3

	
Effectiveness

 

	
  

	
35.3.1

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

 

	
  

	
(a)

	
if delivered in person, at the time of delivery;

 

	
  

	
(b)

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

 

	
  

	
(c)

	
if by fax, when received in legible form.

 

	
  

	
35.3.2

	
A communication given under sub-clause 35.3.1 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.

 

	
  

	
35.3.3

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

 

	
35.4

	
The Company

 

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

 

	
35.5

	
Communication when Facility Agent is Impaired Agent

 

If the Facility Agent is an Impaired Agent the Parties may, instead of communicating with each other through the Facility Agent, communicate with each other directly and (while the Facility Agent is an Impaired Agent) all the provisions of the Finance Documents which require communications to be made or notices to be given to or by the Facility Agent shall be varied so that communications may be made and notices given to or by the relevant Parties directly.  This provision shall not operate after a replacement Facility Agent has been appointed.

 

	
36.

	
LANGUAGE

 

	
  

	
36.1.1

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

 

	
  

	
36.1.2

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

 

	
  

	
(a)

	
in English; or

 

	
  

	
(b)

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

 

	
37.

	
GOVERNING LAW

 

This Agreement and any non-contractual obligations arising out of or in connection with it are governed by English law.

 

	
38.

	
ENFORCEMENT

 

	
38.1

	
Jurisdiction

 

	
  

	
38.1.1

	
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.

 

	
  

	
38.1.2

	
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.

 

	
  

	
38.1.3

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

 

	
  

	
(a)

	
proceedings in any other court; and

 

	
  

	
(b)

	
concurrent proceedings in any number of jurisdictions.

 

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

  

  

  

 

SCHEDULE 1

ORIGINAL PARTIES

 

	
Name of Original Lender

	
Facility A Commitment

	
Facility B Commitment

	
Treaty Passport scheme reference number and jurisdiction of tax residence (if applicable)

	
Abbey National Treasury Services plc (trading 

as Santander Global Banking & Markets)

	
£9,333,333.33

	
£25,666,666.67

	  
	
Bank of America, N.A.

	
£18,666,666.69

	
£16,333,333.31

	  
	
Barclays Bank PLC

	
£9,333,333.33

	
£25,666,666.67

	  
	
Credit Suisse AG, London Branch

	
£9,333,333.33

	
£25,666,666.67

	  
	
HSBC Bank plc

	
£9,333,333.33

	
£25,666,666.67

	  
	
Lloyds TSB Bank plc

	  	
£35,000,000

	  
	
Mizuho Corporate Bank, Ltd

	
£9,333,333.33

	
£25,666,666.67

	  
	
The Royal Bank of Scotland plc

	
£9,333,333.33

	
£25,666,666.67

	  
	
Royal Bank of Canada

	
£5,333,333.33

	
£14,666,666.67

	  
	
Total

	
£80,000,000

	
£220,000,000

	  

  

  

  

SCHEDULE 2

CONDITIONS PRECEDENT DOCUMENTS

 

	
  

	
The Company

 

	
1.

	
A certified copy of the constitutional documents of the Company.

 

	
2.

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

 

	
3.

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

 

	
4.

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

 

	
5.

	
A certificate of an authorised signatory of the Company certifying that each copy document relating to it specified in this Schedule 2 is correct, complete and in full force and effect as at a date no earlier than the date of this Agreement.

 

Legal opinions

 

	
6.

	
A legal opinion of Clifford Chance LLP, legal advisers to the Arranger and the Facility Agent addressed to the Finance Parties.

 

Other documents and evidence

 

	
7.

	
Evidence that all fees and expenses then due and payable from the Company under this Agreement have been or will be paid no later than the first Utilisation Date.

 

	
8.

	
The Original Financial Statements.

 

	
9.

	
The Information Package.

 

	
10.

	
A copy of any other Authorisation or other document, opinion or assurance which the Facility Agent notifies the Company is necessary or desirable in connection with the entry into and performance of the transactions contemplated by any Finance Document or for the validity and enforceability of any Finance Document.

  

  

  

SCHEDULE 3

REQUESTS

 

Part A - Loans

 

To:             Banc of America Securities Limited as Facility Agent

 

From:         Western Power Distribution (East Midlands) plc

 

Date:          [•]

 

Western Power Distribution (East Midlands) plc - £300,000,000 Facilities Agreement dated 4 April 2011 (as amended and restated from time to time) (the "Agreement")

 

	
1.

	
We refer to the Agreement.  This is a Request.

 

	
2.

	
We wish to borrow a Loan on the following terms:

 

	
(a)

	
Utilisation Date: [•]

 

	
(b)

	
Facility to be utilised: [Facility A][Facility B]

 

	
(c)

	
Amount/currency: [•]

 

	
(d)

	
Term: [•]

 

	
3.

	
Our payment instructions are: [•]

 

	
4.

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

 

	
5.

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

 

	
6.

	
We confirm that as at [relevant testing date] Regulatory Asset Base was [•] and Total Net Debt was [•]; therefore, Total Net Debt does not exceed an amount equal to 85% of the Regulatory Asset Base.

 

	
7.

	
This Request is irrevocable.

 

By:

 

Western Power Distribution (East Midlands) plc

  

  

  

Part B – Letters of Credit

 

 

To:             Banc of America Securities Limited as Facility Agent

 

From:         Western Power Distribution (East Midlands) plc

 

Date:          [•]

 

 

Western Power Distribution (East Midlands) plc - £300,000,000 Facilities Agreement dated 4 April 2011 (as amended and restated from time to time) (the "Agreement")

 

	
1.

	
We wish to arrange for a Letter of Credit to be issued by the Issuing Bank on the following terms:

 

	 	
Proposed Utilisation Date:

	
[•] (or, if that is not a Business Day, the next Business Day)

	 	 	 
	 	
Facility to be utilised:

	
Facility A

	 	 	 
	 	
Amount:

	
[•] or, if less, the Available Facility

	 	 	 
	 	
Beneficiary:

	
[•]

	 	 	 
	 	
Term or Expiry Date:

	
[•]

	
2.

	
We confirm that each condition specified in sub-clause 6.6.2 of Clause 6.6 (Issue of Letters of Credit) is satisfied on the date of this Request.

 

	
3.

	
We attach a copy of the proposed Letter of Credit.

 

	
4.

	
This Request is irrevocable.

 

	
  

	
Delivery Instructions:

 

	
  

	
[specify delivery instructions]

 

 

	
  

	
Yours faithfully

 

 

	
  

	
......................................

 

	
  

	
authorised signatory for Western Power Distribution (East Midlands) plc

  

  

 

SCHEDULE 4

CALCULATION OF THE MANDATORY COST

 

	
1.

	
The Mandatory Cost is an addition to the interest rate to compensate Lenders for the cost of compliance with (a) the requirements of the Bank of England and/or the Financial Services Authority (or, in either case, any other authority which replaces all or any of its functions) or (b) the requirements of the European Central Bank.

 

	
2.

	
On the first day of each Term (or as soon as possible thereafter)  the Facility Agent shall calculate, as a percentage rate, a rate (the "Additional Cost Rate") for each Lender, in accordance with the paragraphs set out below.  The Mandatory Cost will be calculated by the Facility Agent as a weighted average of the Lenders' Additional Cost Rates (weighted in proportion to the percentage participation of each Lender in the relevant Loan) and will be expressed as a percentage rate per annum.

 

	
3.

	
The Additional Cost Rate for any Lender lending from a Facility Office in a Participating Member State will be the percentage notified by that Lender to the Facility Agent.  This percentage will be certified by that Lender in its notice to the Facility Agent to be its reasonable determination of the cost (expressed as a percentage of that Lender's participation in all Loans made from that Facility Office) of complying with the minimum reserve requirements of the European Central Bank in respect of loans made from that Facility Office.

 

	
4.

	
The Additional Cost Rate for any Lender lending from a Facility Office in the United Kingdom will be calculated by the Facility Agent as follows:

 

	
(a)

	
in relation to a sterling Loan:

 

	  	
AB+C(B-D)+Ex0.01

        100-(A+C)         per cent annum

	
(b)

	
in relation to a Loan in any currency other than sterling:

 

	  	
Ex0.01

   300   per cent. per annum

Where:

 

	
  

	
A

	
is the percentage of Eligible Liabilities (assuming these to be in excess of any stated minimum) which that Lender is from time to time required to maintain as an interest free cash ratio deposit with the Bank of England to comply with cash ratio requirements.

 

	
  

	
B

	
is the percentage rate of interest (excluding the Margin and the Mandatory Cost and, if the Loan is an Unpaid Sum, the additional rate of interest specified in sub-clause 11.3.1 of Clause 11.3 (Interest on overdue amounts)) payable for the relevant Term on the Loan.

 

	
  

	
C

	
is the percentage (if any) of Eligible Liabilities which that Lender is required from time to time to maintain as interest bearing Special Deposits with the Bank of England.

 

	
  

	
D

	
is the percentage rate per annum payable by the Bank of England to the Facility Agent on interest bearing Special Deposits.

 

	
  

	
E

	
is designed to compensate Lenders for amounts payable under the Fees Rules  and is calculated by the Facility Agent as being the average of the most recent rates of charge supplied by the Reference Banks to the Facility Agent pursuant to paragraph 7 below and expressed in pounds per £1,000,000.

 

	
5.

	
For the purposes of this Schedule:

 

	
(a)

	
"Eligible Liabilities" and "Special Deposits" have the meanings given to them from time to time under or pursuant to the Bank of England Act 1998 or (as may be appropriate) by the Bank of England;

 

	
(b)

	
"Fees Rules" means the rules on periodic fees contained in the FSA Supervision Manual or such other law or regulation as may be in force from time to time in respect of the payment of fees for the acceptance of deposits;

 

	
(c)

	
"Fee Tariffs" means the fee tariffs specified in the Fees Rules under the activity group A.1 Deposit acceptors (ignoring any minimum fee or zero rated fee required pursuant to the Fees Rules but taking into account any applicable discount rate);

 

	
(d)

	
"Tariff Base" has the meaning given to it in, and will be calculated in accordance with, the Fees Rules; and

 

	
(e)

	
"Unpaid Sum" means any sum due and payable but unpaid by the Company under the Finance Documents.

 

	
6.

	
In application of the above formulae, A, B, C and D will be included in the formulae as percentages (i.e. 5 per cent. will be included in the formula as 5 and not as 0.05).  A negative result obtained by subtracting D from B shall be taken as zero.  The resulting figures shall be rounded to four decimal places.

 

	
7.

	
If requested by the Facility Agent, each Reference Bank shall, as soon as practicable after publication by the Financial Services Authority, supply to the Facility Agent, the rate of charge payable by that Reference Bank to the Financial Services Authority pursuant to the Fees Rules in respect of the relevant financial year of the Financial Services Authority (calculated for this purpose by that Reference Bank as being the average of the Fee Tariffs applicable to that Reference Bank for that financial year) and expressed in pounds per £1,000,000 of the Tariff Base of that Reference Bank.

 

	
8.

	
Each Lender shall supply any information required by the Facility Agent for the purpose of calculating its Additional Cost Rate. In particular, but without limitation, each Lender shall supply the following information on or prior to the date on which it becomes a Lender:

 

	
(a)

	
the jurisdiction of its Facility Office; and

 

	
(b)

	
any other information that the Facility Agent may reasonably require for such purpose.

 

Each Lender shall promptly notify the Facility Agent of any change to the information provided by it pursuant to this paragraph.

 

	
9.

	
The percentages of each Lender for the purpose of A and C above and the rates of charge of each Reference Bank for the purpose of E above shall be determined by  the Facility Agent based upon the information supplied to it pursuant to paragraphs 7 and 8 above and on the assumption that, unless a Lender notifies  the Facility Agent to the contrary, each Lender's obligations in relation to cash ratio deposits and Special Deposits are the same as those of a typical bank from its jurisdiction of incorporation with a Facility Office in the same jurisdiction as its Facility Office.

 

	
10.

	
The Facility Agent shall have no liability to any person if such determination results in an Additional Cost Rate which over or under compensates any Lender and shall be entitled to assume that the information provided by any Lender or Reference Bank pursuant to paragraphs 3, 7 and 8 above is true and correct in all respects.

 

	
11.

	
The Facility Agent shall distribute the additional amounts received as a result of the Mandatory Cost to the Lenders on the basis of the Additional Cost Rate for each Lender based on the information provided by each Lender and each Reference Bank pursuant to paragraphs 3, 7 and 8 above.

 

	
12.

	
Any determination by the Facility Agent pursuant to this Schedule in relation to a formula, the Mandatory Cost, an Additional Cost Rate or any amount payable to a Lender shall, in the absence of manifest error, be conclusive and binding on all Parties.

 

	
13.

	
The Facility Agent may from time to time, after consultation with the Company and the Lenders, determine and notify to all Parties any amendments which are required to be made to this Schedule in order to comply with any change in law, regulation or any requirements from time to time imposed by the Bank of England, the Financial Services Authority or the European Central Bank (or, in any case, any other authority which replaces all or any of its functions) and any such determination shall, in the absence of manifest error, be conclusive and binding on all Parties.

  

  

SCHEDULE 5

FORM OF TRANSFER CERTIFICATE

 

To:             Banc of America Securities Limited as Facility Agent

 

	
From:

	
[THE EXISTING LENDER] (the Existing Lender) and [THE NEW LENDER] (the New Lender)

 

Date:             [•]

 

 

Western Power Distribution (East Midlands) plc - £300,000,000 Facilities Agreement dated 4 April 2011 (as amended and restated from time to time) (the "Agreement")

 

We refer to the Agreement.  This is a Transfer Certificate.

 

	
1.

	
The Existing Lender transfers by novation to the New Lender the Existing Lender's rights and obligations referred to in the Schedule below in accordance with the terms of the Agreement.

 

	
2.

	
The proposed Transfer Date is [•].

 

	
3.

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

 

	
4.

	
The New Lender confirms, for the benefit of the Facility Agent and without liability to the Company, that it is:

 

	
(a)

	
[a Qualifying Lender falling within paragraph (a)(i) or paragraph (b) of the definition of Qualifying Lender;]

 

	
(b)

	
[a Treaty Lender;]

 

	
(c)

	
[not a Qualifying Lender].*

 

	
5.

	
[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 interest payable in respect of that advance in computing the chargeable profits (within the meaning of section 19 of the CTA) of that company.]**

 

	
6.

	
[The New Lender confirms (for the benefit of the Facility Agent and without liability to the Company) 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 the Company is generally subject to full exemption from UK withholding tax and notifies the Company that the Company must make an application to HM Revenue & Customs under form DTTP2 within 30 days of the Transfer Date.]****

 

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 (a)(ii) of the definition of Qualifying Lender in Clause 14.1 (Definitions).

	
***

 

	
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.

 

	
7.

	
This Transfer Certificate and any non-contractual obligations arising out of or in connection with it are governed by English law.

 

THE SCHEDULE

 

Rights and obligations to be transferred by novation

 

[insert relevant details, including applicable Commitment (or part)]

 

Administrative details of the New Lender

 

[insert details of Facility Office, address for notices and payment details etc.]

 

 

[EXISTING LENDER]                              [NEW LENDER]

 

By:                                                               By:

 

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

 

[•]

 

By:

  

  

SCHEDULE 6

FORM OF LETTER OF CREDIT

 

Part A – Pensions trustee Letter of Credit

 

To:           the Networks Trustee (the "Beneficiary")

 

Date

 

Dear Sirs

 

Irrevocable Standby Letter of Credit no. [•]

 

At the request of [•], [Issuing Bank] (the "Issuing Bank") issues this irrevocable standby Letter of Credit ("Letter of Credit") in your favour on the following terms and conditions.

 

	
1.

	
Definitions

 

In this Letter of Credit:

 

"Business Day" means a day (other than a Saturday or a Sunday) on which banks are open for general business in [London].*

 

"Deed of Covenant" means the deed of covenant entered into by WPD Investment Holdings relating to the Central Networks Group of the Electricity Supply Pension Scheme dated on or around 1 April 2011.

 

"Demand" means a demand for a payment validly presented under this Letter of Credit in the form of the schedule to this Letter of Credit.

 

"Expiry Date" means the earlier of (1) [insert date – to be no more than 365 days from the date of the Letter of Credit] and (2) the date on which WPD East Midlands plc certifies in writing to the Issuing Bank that either: (i) the receipt of the last payment by the Central Networks Group Trustee under clause 2.1 of the Deed of Covenant has occurred; or (ii) a formal actuarial valuation of the Central Networks Group reveals that the Central Networks Group has sufficient assets to cover its technical provisions (as defined in the Pensions Act 2004 in accordance with clause 2.4 of the Deed of Covenant).

 

"Networks Trustee" means Central Networks Trustees Limited (Company Number 7561556). 

 

"Total L/C Amount" means £[70],000,000 ([seventy]) million pounds).

 

	
2.

	
Issuing Bank's agreement

 

	
  

	
(a)

	
The Beneficiary may request a drawing or drawings under this Letter of Credit by giving to the Issuing Bank a duly completed Demand.  A Demand must be received by the Issuing Bank by no later than [•] p.m. ([London] time) on the Expiry Date.

 

	
  

	
(b)

	
Subject to the terms of this Letter of Credit, the Issuing Bank unconditionally and irrevocably undertakes to the Beneficiary that, within [ten] Business Days of receipt by it of a Demand, it must pay to the Beneficiary the amount demanded in that Demand.

 

	
  

	
(c)

	
The Issuing Bank will not be obliged to make a payment under this Letter of Credit if as a result the aggregate of all payments made by it under this Letter of Credit would exceed the Total L/C Amount.

 

	
3.

	
Expiry

 

	
  

	
(a)

	
The Issuing Bank will be released from its obligations under this Letter of Credit on the date (if any) notified by the Beneficiary to the Issuing Bank as the date upon which the obligations of the Issuing Bank under this Letter of Credit are released.

 

	
  

	
(b)

	
Unless previously released under paragraph (a) above, at [•] p.m.([London] time) on the Expiry Date the obligations of the Issuing Bank under this Letter of Credit will cease with no further liability on the part of the Issuing Bank except for any Demand validly presented under the Letter of Credit that remains unpaid.

 

	
  

	
(c)

	
When the Issuing Bank is no longer under any further obligations under this Letter of Credit, the Beneficiary must return the original of this Letter of Credit to the Issuing Bank.

 

	
4.

	
Payments

 

All payments under this Letter of Credit shall be made in sterling and for value on the due date to the account of the Beneficiary specified in the Demand.

 

	
5.

	
Delivery of Demand

 

Each Demand shall be in writing, and, unless otherwise stated, may be made in person, by letter or fax, by recorded delivery mail or Swift and must be received in legible form by the Issuing Bank at its address and by the particular department or office (if any) as follows:

 

Bank of America N.A. (Guarantees Department)

 

26 Elmfield Road

 

Bromley BR1 1WA

 

	
6.

	
Assignment

 

The Beneficiary's rights under this Letter of Credit may not be assigned or transferred.

 

	
7.

	
ISP

 

Except to the extent it is inconsistent with the express terms of this Letter of Credit, this Letter of Credit is subject to the International Standby Practices (ISP 98), International Chamber of Commerce Publication No. 590.

 

	
8.

	
Governing Law

 

This Letter of Credit and any non-contractual obligations arising out of or in connection with it are governed by English law.

 

	
9.

	
Jurisdiction

 

The courts of England have exclusive jurisdiction to settle any dispute arising out of or in connection with this Letter of Credit (including a dispute relating to any non-contractual obligation arising out of or in connection with this Letter of Credit).

 

Yours faithfully

 

[Issuing Bank]

 

By:

 

 

NOTES:

 

	
*

	
This may need to be amended depending on the currency of payment under the Letter of Credit.

  

  

  

THE SCHEDULE

Form Of Demand

 

To:           [ISSUING BANK]

 

[Date]

 

Dear Sirs

 

Standby Letter of Credit no. [•] issued in favour of [BENEFICIARY] (the "Letter of Credit")

 

We refer to the Letter of Credit.  Terms defined in the Letter of Credit have the same meaning when used in this Demand.

 

	
1.

	
We certify that the sum of [•] is due [and has remained unpaid for at least [•] Business Days] under the Deed of Covenant entered into by WPD Investment Holdings Limited on or about 1 April 2011.  We therefore demand payment of the sum of [•].

 

	
2.

	
Payment should be made to the following account:

 

	 	
Name:

	  
	 	
Account Number:

	  
	 	
Bank:

	  

 

3.           The date of this Demand is not later than the Expiry Date.

 

Yours faithfully

 

 

	
(Authorised Signatory)

	
(Authorised Signatory)

 

 

For

[BENEFICIARY]

  

  

  

Part B – Letters of Credit for other purposes

 

To:           [Beneficiary](the "Beneficiary")

 

Date

 

Dear Sirs

 

Irrevocable Standby Letter of Credit no. [•]

 

At the request of [•], [Issuing Bank] (the "Issuing Bank") issues this irrevocable standby Letter of Credit ("Letter of Credit") in your favour on the following terms and conditions:

 

	
1.

	
Definitions

 

In this Letter of Credit:

 

"Business Day" means a day (other than a Saturday or a Sunday) on which banks are open for general business in [London].*

 

"Demand" means a demand for a payment validly presented under this Letter of Credit in the form of the schedule to this Letter of Credit.

 

"Expiry Date" means [•].

 

"Total L/C Amount" means [•].

 

	
2.

	
Issuing Bank's agreement

 

	
  

	
(a)

	
The Beneficiary may request a drawing or drawings under this Letter of Credit by giving to the Issuing Bank a duly completed Demand.  A Demand must be received by the Issuing Bank by no later than [•] p.m. ([London] time) on the Expiry Date.

 

	
  

	
(b)

	
Subject to the terms of this Letter of Credit, the Issuing Bank unconditionally and irrevocably undertakes to the Beneficiary that, within [ten] Business Days of receipt by it of a Demand, it must pay to the Beneficiary the amount demanded in that Demand.

 

	
  

	
(c)

	
The Issuing Bank will not be obliged to make a payment under this Letter of Credit if as a result the aggregate of all payments made by it under this Letter of Credit would exceed the Total L/C Amount.

 

	
3.

	
Expiry

 

	
  

	
(a)

	
The Issuing Bank will be released from its obligations under this Letter of Credit on the date (if any) notified by the Beneficiary to the Issuing Bank as the date upon which the obligations of the Issuing Bank under this Letter of Credit are released.

 

	
  

	
(b)

	
Unless previously released under paragraph (a) above, at [•] p.m.([London] time) on the Expiry Date the obligations of the Issuing Bank under this Letter of Credit will cease with no further liability on the part of the Issuing Bank except for any Demand validly presented under the Letter of Credit that remains unpaid.

 

	
  

	
(c)

	
When the Issuing Bank is no longer under any further obligations under this Letter of Credit, the Beneficiary must return the original of this Letter of Credit to the Issuing Bank.

 

	
4.

	
Payments

 

All payments under this Letter of Credit shall be made in [•] and for value on the due date to the account of the Beneficiary specified in the Demand.

 

	
5.

	
Delivery of Demand

 

Each Demand shall be in writing, and, unless otherwise stated, may be made in person, by letter, fax or telex and must be received in legible form by the Issuing Bank at its address and by the particular department or office (if any) as follows:

 

[

 

 

]

 

	
6.

	
Assignment

 

The Beneficiary's rights under this Letter of Credit may not be assigned or transferred.

 

	
7.

	
ISP

 

Except to the extent it is inconsistent with the express terms of this Letter of Credit, this Letter of Credit is subject to the International Standby Practices (ISP 98), International Chamber of Commerce Publication No. 590.

 

	
8.

	
Governing Law

 

This Letter of Credit and any non-contractual obligations arising out of or in connection with it are governed by English law.

 

	
9.

	
Jurisdiction

 

The courts of England have exclusive jurisdiction to settle any dispute arising out of or in connection with this Letter of Credit (including a dispute relating to any non-contractual obligation arising out of or in connection with this Letter of Credit).

 

Yours faithfully

 

[Issuing Bank]

 

By:

 

 

NOTES:

 

	
*

	
This may need to be amended depending on the currency of payment under the Letter of Credit.

  

  

  

THE SCHEDULE

Form Of Demand

 

To:           [ISSUING BANK]

 

[Date]

 

Dear Sirs

 

Standby Letter of Credit no. [•] issued in favour of [BENEFICIARY] (the "Letter of Credit")

 

We refer to the Letter of Credit.  Terms defined in the Letter of Credit have the same meaning when used in this Demand.

 

	
1.

	
We certify that the sum of [•] is due [and has remained unpaid for at least [•] Business Days] [under [set out underlying contract or agreement]].  We therefore demand payment of the sum of [•].

 

	
2.

	
Payment should be made to the following account:

 

	 	
Name:

	  
	 	
Account Number:

	  
	 	
Bank:

	  

 

3.           The date of this Demand is not later than the Expiry Date.

 

Yours faithfully

 

 

	
(Authorised Signatory)

	
(Authorised Signatory)

 

 

For

[BENEFICIARY]

  

  

  

SCHEDULE 7

FORM OF COMPLIANCE CERTIFICATE

 

To:             Banc of America Securities Limited as Facility Agent

 

From:         Western Power Distribution (East Midlands) plc

 

Date:         [•]

 

Western Power Distribution (East Midlands) plc - £300,000,000 Facilities Agreement dated 4 April 2011 (as amended and restated from time to time) (the "Agreement")

 

	
1.

	
We refer to the Agreement.  This is a Compliance Certificate.

 

	
2.

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

 

	
3.

	
We confirm that as at [relevant testing date], Regulatory Asset Base was [•] and Total 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.

  

  

  

SCHEDULE 8

FORM OF INCREASE CONFIRMATION

 

	
To:

	
Banc of America Securities Limited as Facility Agent, Bank of America, N.A. as Issuing Bank and Western Power Distribution (East Midlands) plc as Company

 

From:       [the Increase Lender] (the "Increase Lender")

 

Dated:      [•]

 

	
  

	
Western Power Distribution (East Midlands) plc - £300,000,000 Facilities Agreement dated 4 April 2011 (as amended and restated from time to time) (the "Agreement")

 

	
1.

	
We refer to the Agreement.  This is an Increase Confirmation.  Terms defined in the Agreement have the same meaning in this Increase Confirmation unless given a different meaning in this Increase Confirmation.

 

	
2.

	
We refer to Clause 2.2 (Increase) of the Agreement.

 

	
3.

	
In accordance with the terms of the Agreement, the Increase Lender agrees to assume and will assume all of the obligations corresponding to the Commitment specified in the Schedule (the "Relevant Commitment") as if it was an Original Lender under the Agreement.

 

	
4.

	
The proposed date on which the increase in relation to the Increase Lender and the Relevant Commitment is to take effect (the "Increase Date") is [•].

 

	
5.

	
On the Increase Date, the Increase Lender becomes party to the Finance Documents as a Lender.

 

	
6.

	
The Facility Office and address, fax number and attention details for notices to the Increase Lender are set out in the Schedule.

 

	
7.

	
The Increase Lender expressly acknowledges the limitations on the Lenders' obligations referred to in Clause 2.2 (Increase).

 

	
8.

	
The Increase Lender confirms that it [is]/[is not]* a Non-Acceptable L/C Lender.

 

	
9.

	
The Increase Lender confirms, for the benefit of the Facility Agent and without liability to the Company, that it is:

 

	
  

	
9.1.1

	
[a Qualifying Lender falling within paragraph (a)(i) or paragraph (b) of the definition of Qualifying Lender;]

 

	
  

	
9.1.2

	
[a Treaty Lender;]

 

	
  

	
9.1.3

	
[not a Qualifying Lender].*

 

	
10.

	
[The Increase Lender confirms that the person beneficially entitled to interest payable to that Lender in respect of an advance under a Finance Document is either:

 

	
  

	
10.1.1

	
a company resident in the United Kingdom for United Kingdom tax purposes; or

 

	
  

	
10.1.2

	
a partnership each member of which is:

 

	
  

	
(1)

	
a company so resident in the United Kingdom; or

 

	
  

	
(2)

	
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

 

	
  

	
10.1.3

	
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.]**

 

	
11.

	
[The Increase Lender confirms (for the benefit of the Facility Agent and without liability to the Company) 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 the Company is generally subject to full exemption from UK withholding tax and notifies the Company that the Company must make an application to HM Revenue & Customs under form DTTP2 within 30 days of the Transfer Date.]****

 

NOTES:

 

	
*

	
Delete as applicable - each Increase Lender is required to confirm which of these three categories it falls within.

	
**

	
Include if Increase Lender comes within paragraph (a)(ii) of the definition of Qualifying Lender in Clause 14.1 (Definitions).

	
***

	
Insert jurisdiction of tax residence.

	
****

	
This confirmation must be included if the Increase Lender holds a passport under the HMRC DT Treaty Passport scheme and wishes that scheme to apply to the Agreement.

 

	
  

	
12.

	
This Increase Confirmation 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 Increase Confirmation.

 

	
  

	
13.

	
This Increase Confirmation and any non-contractual obligations arising out of or in connection with it are governed by English law.

 

	
  

	
14.

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

 

_______________________________

*    Delete as applicable.

 

  

  

  

THE SCHEDULE

 

Relevant Commitment/rights and obligations to be assumed by the Increase Lender

 

[insert relevant details]

 

[Facility office address, fax number and attention details for notices and account details for payments]

 

[Increase Lender]

 

By:

 

This Increase Confirmation is confirmed as an Increase Confirmation for the purposes of the Agreement by the Facility Agent and the Issuing Bank and the Increase Date is confirmed as [•].

 

	
Facility Agent

	
Issuing Bank

	
By:

	
By:

	
as Facility Agent for and on behalf of each of the parties to the Agreement (other than the Issuing Bank and the Increase Lender)

	  

  

  

SIGNATORIES

 

  

	
THE COMPANY

	  	  
	  	  	  	  
	  	  	  	  
	
WESTERN POWER DISTRIBUTION (WEST MIDLANDS) PLC

	  	  
	  	  	  	  
	
By:

	
/s/ D.C.S. OOSTHUIZEN

	  	  
	
Address:

	
Avonbank, Feeder Rd, Bristol, BS2 0TB

	  	  
	
Fax:

	
+44 117 933 2022

	  	  

 

  

  

  

	
THE MANDATED LEAD ARRANGERS

	  	  
	  	  	  	  
	
ABBEY NATIONAL TREASURY SERVICES PLC (TRADING AS SANTANDER

	
GLOBAL BANKING & MARKETS)

	  	  
	  	  	  	  
	
By:

	
/s/ GRAEME MARKS

	  	
/s/ STEVEN WAHNON

	  	
Graeme Marks

	  	
Steven Wahnon

	
Address:

	
Attn: Paul Finney / Jim Inches / David Navalón

2 Triton Square, Regent's Place, London, NW1 3AN

	  	  
	
Fax:

	
+44 207 756 5816 / +44 845 602 7837

	  	  
	  	  	  	  
	  	  	  	  
	
BANC OF AMERICA SECURITIES LIMITED

	  	  
	  	  	  	  
	
By:

	
/s/ MARIAM TOULAN

	  	  
	  	
Mariam Toulan

	  	  
	
Address:

	
2 King Edward Street, London EC1A 1HQ

	  	  
	
Fax:

	
+44 (0)20 7995 2886

	  	  
	  	  	  	  
	  	  	  	  
	
BARCLAYS CAPITAL

	  	  
	  	  	  	  
	
By:

	
/s/ MARK POPE

	  	  
	  	
Mark Pope

	  	  
	
Address:

	
5 The North Colonnade, Canary Wharf, London E14 4BB.

	  	  
	
Fax:

	
0207 - 773 - 1840

	  	  
	  	  	  	  
	
 

	  	  	  
	
CREDIT SUISSE AG, LONDON BRANCH

	  	  
	  	  	  	  
	
By:

	
/s/ GARRETT LYNSKEY

	  	
/s/ BRIAN FITZGERALD

	  	
Garrett Lynskey

	  	
Brian Fitzgerald

	  	
Director

	  	
V.P.

	
Address:

	
One Cabot Square, London E14 4QJ

	  	  
	
Fax:

	
+44 207 888 8398

	  	  
	  	  	  	  
	  	  	  	  
	
HSBC BANK PLC

	  	  
	  	  	  	  
	
By:

	
/s/ MICHAEL MILLER

	  	  
	  	
Michael Miller

	  	  
	
Address:

	
Sharon Daw

	  	  
	
 

	
West & Wales Corporate Banking Centre

	  	  
	  	
3 Rivergate

	  	  
	  	
Bristol BS1 6ER.

	  	  
	
Fax:

	
08455 877941

	  	  
	  	  	  	  
	  	  	  	  
	
LLOYDS TSB BANK PLC

	  	  
	  	  	  	  
	
By:

	
/s/ NICHOLAS WALKER

	  	  
	  	
Nicholas Walker, Relationship Director

	  	  
	
Address:

	
10 Gresham Street, London, EC2V 7AE

	  	  
	
Fax:

	
0207 158 3297

	  	  
	  	  	  	  
	  	  	  	  
	
MIZUHO CORPORATE BANK, LTD

	  	  
	  	  	  	  
	
By:

	
/s/ CHRISTOPHER GRAY

	  	  
	
Address:

	
Bracken House, One Friday Street, EC4M 9JA London

	  	  
	
Fax:

	
020 7012 4301

	  	  
	  	  	  	  
	  	  	  	  
	
THE ROYAL BANK OF SCOTLAND PLC

	  	  
	  	  	  	  
	
By:

	
/s/ J P JONES

	  	  
	  	
J P JONES

	  	  
	
Address:

	
135 Bishopsgate, London

	  	  
	
Fax:

	
020 7085 8762

	  	  
	  	  	  	  
	  	  	  	  
	
THE LEAD ARRANGER

	  	  
	  	  	  	  
	  	  	  	  
	
ROYAL BANK OF CANADA

	  	  
	  	  	  	  
	
By:

	
/s/ MICHAEL ATHERTON

	  	  
	  	
Michael Atherton

	  	  
	
Address:

	
Thames Court, One Queenhithe, London EC4V 4DE

	  	  
	
Fax:

	
+44 20 7029 7912

	  	  
	  	  	  	  
	
 

	  	  	  
	
THE ORIGINAL LENDERS

	  	  
	  	  	  	  
	  	  	  	  
	
ABBEY NATIONAL TREASURY SERVICES PLC (TRADING AS SANTANDER

	
GLOBAL BANKING & MARKETS)

	  	  
	  	  	  	  
	  	  	  	  
	
By:

	
/s/ GRAEME MARKS

	  	
/s/ STEVEN WAHNON

	  	
Graeme Marks

	  	
Steven Wahnon

	
Address:

	
Attn: Paul Finney / Jim Inches / David Navalón

2 Triton Square, Regent's Place, London, NW1 3AN

	  	  
	
Fax:

	
+44 207 756 5816 / +44 845 602 7837

	  	  
	  	  	  	  
	  	  	  	  
	
BANK OF AMERICA, N.A.

	  	  
	  	  	  	  
	
By:

	
/s/ MARIAM TOULAN

	  	  
	  	
Mariam Toulan

	  	  
	
Address:

	
2 King Edward Street, London EC1A 1HQ

	  	  
	
Fax:

	
+44 (0)20 7995 2886

	  	  
	  	  	  	  
	  	  	  	  
	
BARCLAYS BANK PLC

	  	  
	  	  	  	  
	
By:

	
/s/ MARK POPE

	  	  
	  	
Mark Pope

	  	  
	
Address:

	
5 The North Colonnade, Canary Wharf, London E14 4BB.

	  	  
	
Fax:

	
0207 - 773 - 1840

	  	  
	  	  	  	  
	
 

	  	  	  
	
CREDIT SUISSE AG, LONDON BRANCH

	  	  
	  	  	  	  
	
By:

	
/s/ GARRETT LYNSKEY

	  	
/s/ BRIAN FITZGERALD

	  	
Garrett Lynskey

	  	
Brian Fitzgerald

	 	Director	 	V.P. 
	
Address:

	
One Cabot Square, London E14 4QJ

	  	  
	
Fax:

	
+44 207 888 8398

	  	  
	  	  	  	  
	  	  	  	  
	
HSBC BANK PLC

	  	  
	  	  	  	  
	
By:

	
/s/ MICHAEL MILLER

	  	  
	  	
Michael Miller

	  	  
	
Address:

	
Sharon Daw

	  	  
	
 

	
West & Wales Corporate Banking Centre

	  	  
	  	
3 Rivergate

	  	  
	  	
Bristol BS1 6ER.

	  	  
	
Fax:

	
08455 877941

	  	  
	  	  	  	  
	  	  	  	  
	
LLOYDS TSB BANK PLC

	  	  
	  	  	  	  
	
By:

	
/s/ NICHOLAS WALKER

	  	  
	  	
Nicholas Walker, Relationship Director

	  	  
	
Address:

	
10 Gresham Street, London, EC2V 7AE

	  	  
	
Fax:

	
0207 158 3297

	  	  
	  	  	  	  
	
 

	  	  	  
	
MIZUHO CORPORATE BANK, LTD

	  	  
	  	  	  	  
	
By:

	
/s/ CHRISTOPHER GRAY

	  	  
	
Address:

	
Bracken House, One Friday Street, EC4M 9JA London

	  	  
	
Fax:

	
020 7012 4301

	  	  
	  	  	  	  
	  	  	  	  
	
THE ROYAL BANK OF SCOTLAND PLC

	  	  
	  	  	  	  
	
By:

	
/s/ J P JONES

	  	  
	  	
J P JONES

	  	  
	
Address:

	
135 Bishopsgate, London

	  	  
	
Fax:

	
020 7085 8762

	  	  
	  	  	  	  
	  	  	  	  
	
ROYAL BANK OF CANADA

	  	  
	  	  	  	  
	
By:

	
/s/ MICHAEL ATHERTON

	  	  
	  	
Michael Atherton

	  	  
	
Address:

	
Thames Court, One Queenhithe, London EC4V 4DE

	  	  
	
Fax:

	
+44 20 7029 7912

	  	  
	  	  	  	  
	
 

	  	  	  
	
THE FACILITY AGENT

	  	  
	  	  	  	  
	  	  	  	  
	
BANC OF AMERICA SECURITIES LIMITED

	  	  
	  	  	  	  
	
By:

	
/s/ MARIAM TOULAN

	  	  
	  	
Mariam Toulan

	  	  
	
Address:

	
2 King Edward Street, London EC1A 1HQ

	  	  
	
Fax:

	
+44 (0)20 7995 2886

	  	  
	  	  	  	  
	  	  	  	  
	
THE ISSUING BANK

	  	  
	  	  	  	  
	  	  	  	  
	
BANK OF AMERICA, N.A.

	  	  
	  	  	  	  
	
By:

	
/s/ MARIAM TOULAN

	  	  
	  	
Mariam Toulan

	  	  
	
Address:

	
2 King Edward Street, London EC1A 1HQ

	  	  
	
Fax:

	
+44 (0)20 7995 2886Exhibit 4.1

FORM OF TRUST AGREEMENT

ETF SECURITIES USA LLC,

as Sponsor

and

___________________,

as Trustee

Trust Agreement

ETFS Physical Base Metals Trust

Dated as of ____________, 2011

TABLE OF CONTENTS

	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 Page

 
	
  

 	
  

 	
  

 	

 

 
	
 Article I. DEFINITIONS AND RULES OF CONSTRUCTION

 	
  

 	
 1

 
	
  

 	
  

 	
  

 
	
 Section 1.1

 	
 Definitions

 	
  

 	
 1

 
	
  

 	
  

 	
  

 	
  

 
	
 Section 1.2

 	
 Rules of Construction

 	
  

 	
 4

 
	
  

 	
  

 	
  

 	
  

 
	
 Article II. CREATION AND DECLARATION OF
 TRUSTS; FORM OF CERTIFICATES; DEPOSIT; DELIVERY, REGISTRATION OF TRANSFER AND
 SURRENDER OF SHARES

 	
  

 	
 4

 
	
  

 	
  

 	
  

 
	
 Section 2.1

 	
 Creation and Declaration of Trust; Business
 of the Trust

 	
  

 	
 4

 
	
  

 	
  

 	
  

 	
  

 
	
 Section 2.2

 	
 Form of Certificates; Book-Entry System;
 Transferability of Shares

 	
  

 	
 5

 
	
  

 	
  

 	
  

 	
  

 
	
 Section 2.3

 	
 Deposit

 	
  

 	
 6

 
	
  

 	
  

 	
  

 	
  

 
	
 Section 2.4

 	
 Delivery of Shares

 	
  

 	
 7

 
	
  

 	
  

 	
  

 	
  

 
	
 Section 2.5

 	
 Registration and Registration of Transfer
 of Shares; Combination and Split-up of Certificates

 	
  

 	
 7

 
	
  

 	
  

 	
  

 	
  

 
	
 Section 2.6

 	
 Surrender of Shares and Withdrawal of Trust
 Property

 	
  

 	
 7

 
	
  

 	
  

 	
  

 	
  

 
	
 Section 2.7

 	
 Limitations on Delivery, Registration of
 Transfer and Surrender of Shares

 	
  

 	
 8

 
	
  

 	
  

 	
  

 	
  

 
	
 Section 2.8

 	
 Lost Certificates, Etc

 	
  

 	
 9

 
	
  

 	
  

 	
  

 	
  

 
	
 Section 2.9

 	
 Cancellation and Destruction of Surrendered
 Certificates

 	
  

 	
 9

 
	
  

 	
  

 	
  

 	
  

 
	
 Section 2.10

 	
 Splits and Reverse Splits of Shares

 	
  

 	
 9

 
	
  

 	
  

 	
  

 	
  

 
	
 Article III. CERTAIN OBLIGATIONS OF REGISTERED OWNERS OF SHARES

 	
  

 	
 10

 
	
  

 	
  

 	
  

 
	
 Section 3.1

 	
 Liability of Registered Owner for Taxes and
 Other Governmental Charges

 	
  

 	
 10

 
	
  

 	
  

 	
  

 	
  

 
	
 Section 3.2

 	
 Warranties on Deposit of Metal

 	
  

 	
 10

 
	
  

 	
  

 	
  

 	
  

 
	
 Article IV. ADMINISTRATION OF THE TRUST

 	
  

 	
 10

 
	
  

 	
  

 	
  

 
	
 Section 4.1

 	
 Evaluation of Metal

 	
  

 	
 10

 
	
  

 	
  

 	
  

 	
  

 
	
 Section 4.2

 	
 Responsibility of the Trustee for
 Evaluations

 	
  

 	
 11

 

i

	
  

 	
  

 	
  

 	
  

 
	
 Section 4.3

 	
 Trust Evaluation

 	
  

 	
 11

 
	
  

 	
  

 	
  

 	
  

 
	
 Section 4.4

 	
 Cash Distributions

 	
  

 	
 11

 
	
  

 	
  

 	
  

 	
  

 
	
 Section 4.5

 	
 Other Distributions

 	
  

 	
 12

 
	
  

 	
  

 	
  

 	
  

 
	
 Section 4.6

 	
 Fixing of Record Date

 	
  

 	
 12

 
	
  

 	
  

 	
  

 	
  

 
	
 Section 4.7

 	
 Payment of Expenses; Metal Sales

 	
  

 	
 12

 
	
  

 	
  

 	
  

 	
  

 
	
 Section 4.8

 	
 Statements and Reports

 	
  

 	
 14

 
	
  

 	
  

 	
  

 	
  

 
	
 Section 4.9

 	
 Further Provisions for Metal Sales

 	
  

 	
 14

 
	
  

 	
  

 	
  

 	
  

 
	
 Section 4.10

 	
 Counsel

 	
  

 	
 15

 
	
  

 	
  

 	
  

 	
  

 
	
 Section 4.11

 	
 Grantor Trust

 	
  

 	
 15

 
	
  

 	
  

 	
  

 	
  

 
	
 Article V. THE TRUSTEE AND THE SPONSOR

 	
  

 	
 15

 
	
  

 	
  

 	
  

 
	
 Section 5.1

 	
 Maintenance of Office and Transfer Books by
 the Trustee

 	
  

 	
 15

 
	
  

 	
  

 	
  

 	
  

 
	
 Section 5.2

 	
 Prevention or Delay in Performance by the
 Sponsor or the Trustee

 	
  

 	
 15

 
	
  

 	
  

 	
  

 	
  

 
	
 Section 5.3

 	
 Obligations of the Sponsor and the Trustee

 	
  

 	
 16

 
	
  

 	
  

 	
  

 	
  

 
	
 Section 5.4

 	
 Resignation or Removal of the Trustee;
 Appointment of Successor Trustee

 	
  

 	
 20

 
	
  

 	
  

 	
  

 	
  

 
	
 Section 5.5

 	
 The Metal
       Agent

 	
  

 	
 21

 
	
  

 	
  

 	
  

 	
  

 
	
 Section 5.6

 	
 Indemnification

 	
  

 	
 21

 
	
  

 	
  

 	
  

 	
  

 
	
 Section 5.7

 	
 Charges of Trustee

 	
  

 	
 22

 
	
  

 	
  

 	
  

 	
  

 
	
 Section 5.8

 	
 Charges of Sponsor

 	
  

 	
 23

 
	
  

 	
  

 	
  

 	
  

 
	
 Section 5.9

 	
 Retention of Trust Documents

 	
  

 	
 23

 
	
  

 	
  

 	
  

 	
  

 
	
 Section 5.10

 	
 Federal Securities Law Filings

 	
  

 	
 24

 
	
  

 	
  

 	
  

 	
  

 
	
 Section 5.11

 	
 Prospectus Delivery

 	
  

 	
 24

 
	
  

 	
  

 	
  

 	
  

 
	
 Section 5.12

 	
 Discretionary Actions by Trustee;
 Consultation

 	
  

 	
 24

 
	
  

 	
  

 	
  

 	
  

 
	
 Section 5.13

 	
 Dissolution of the Sponsor Not to Terminate
 Trust

 	
  

 	
 25

 
	
  

 	
  

 	
  

 	
  

 
	
 Article VI. AMENDMENT AND TERMINATION

 	
  

 	
 25

 

ii

	
  

 	
  

 	
  

 	
  

 
	
 Section 6.1

 	
 Amendment

 	
  

 	
 25

 
	
  

 	
  

 	
  

 	
  

 
	
 Section 6.2

 	
 Termination

 	
  

 	
 25

 
	
  

 	
  

 	
  

 	
  

 
	
 Article VII. MISCELLANEOUS

 	
  

 	
 27

 
	
  

 	
  

 	
  

 
	
 Section 7.1

 	
 Counterparts

 	
  

 	
 27

 
	
  

 	
  

 	
  

 	
  

 
	
 Section 7.2

 	
 Third-Party Beneficiaries

 	
  

 	
 27

 
	
  

 	
  

 	
  

 	
  

 
	
 Section 7.3

 	
 Severability

 	
  

 	
 28

 
	
  

 	
  

 	
  

 	
  

 
	
 Section 7.4

 	
 Certain Matters Relating to Beneficial
 Owners

 	
  

 	
 28

 
	
  

 	
  

 	
  

 	
  

 
	
 Section 7.5

 	
 Notices

 	
  

 	
 28

 
	
  

 	
  

 	
  

 	
  

 
	
 Section 7.6

 	
 Agent for Service; Submission to
 Jurisdiction

 	
  

 	
 29

 
	
  

 	
  

 	
  

 	
  

 
	
 Section 7.7

 	
 Governing Law

 	
  

 	
 30

 

iii

STATUTORY TRUST AGREEMENT

          THIS
STATUTORY TRUST AGREEMENT dated as of _____________, 2011, between ETF
SECURITIES USA LLC, a Delaware limited liability company, as sponsor, and
______________________, a __________________ corporation, as trustee. 

W I T N E S S E T H:

          WHEREAS the
Sponsor established a trust, known as the “ETFS Physical Base Metals Trust”,
pursuant to the laws of the State of Delaware, on _______________, 2011 and the
series therein listed in Schedule A (each a “Fund”); and 

          WHEREAS
    the Sponsor desires to establish the terms on which Metal (as herein defined)
    may be deposited in the trust and provide for the creation of shares in the
    series of ETFS Physical Base Metals Trust in Creation Units (as herein defined)
    representing fractional undivided interests in the net assets of the trust
    and the execution and delivery of Certificates (as herein defined) evidencing
    the shares; and 

          WHEREAS the
Sponsor desires to provide for other terms and conditions upon which the trust
shall be established and administered, as hereinafter provided; 

          NOW,
THEREFORE, in consideration of the premises and of the mutual agreements herein
contained, the Sponsor and the Trustee hereby agree as follows: 

ARTICLE I.

DEFINITIONS AND RULES OF CONSTRUCTION

	
  

 	
  

 	
  

 
	
  

 	
 Section 1.1

 	
 Definitions.

 

          Except as
otherwise specified in this Depositary Trust Agreement or as the context may
otherwise require, the following terms have the respective meanings set forth
below for all purposes of this Depositary Trust Agreement. 

          “Adjusted
Net Asset Value” means the adjusted net asset value of the Trust as determined
under Section 4.3. 

          “Agreement”
means this Depositary Trust Agreement, as amended or supplemented in accordance
with its terms. 

          “Authorized
Participant” means a Person that, at the time of submitting a Purchase Order or
a Redemption Order (i) is a registered broker-dealer, (ii) is a DTC Participant
or an Indirect Participant and (iii) has in effect a valid Authorized
Participant Agreement. 

          “Authorized
Participant Agreement” means an agreement among the Trustee, the Sponsor and an
Authorized Participant that authorizes the Authorized Participant to submit
Purchase Orders and Redemption Orders under this Agreement. 

1

          “Creation
    Unit”
means 50,000 Shares, except that the Trustee, in consultation with the Sponsor,
may from time to time increase or decrease the number of Shares comprising a
Creation
Unit. 

          “Creation
    Unit
Amount” is the amount of metal that must be deposited for issuance of one
Creation
    Unit or that is deliverable upon Surrender of one Creation
    Unit. The Creation
    Unit Amount
will be determined as provided in Section 2.3(b). 

          “Beneficial
Owner” means any Person owning a beneficial interest in any Shares. 

          “Business
Day” means any day other than (i) a Saturday or Sunday or (ii) a day on which
the Exchange is not open for regular trading. 

          “Certificate”
means a certificate that is executed and delivered by the Trustee under this Agreement
evidencing Shares. 

          “CFTC”
means the Commodity Futures Trading Commission or any successor governmental
agency in the United States. 

          “Commission”
means the Securities and Exchange Commission of the United States or any
successor governmental agency in the United States. 

          “Corporate
Trust Office” means the office of the Trustee at which its depositary receipt
business is administered which, at the date of this Agreement, is located at
101 Barclay Street, New York, New York 10286. 

          “Depository”
means DTC and such other successor depository of Shares as may be selected by
the Sponsor and the Trustee as provided herein. 

          “DTC” means
The Depository Trust Company, its nominees and their respective successors. 

          “DTC
Participant” means a Person that, pursuant to DTC’s governing documents, is
entitled to deposit securities with DTC in its capacity as a “participant”. 

          “Exchange”
means the exchange or other securities market on which the Shares are
principally traded, as specified from time to time by the Sponsor. 

          “Exchange
Act” has the meaning ascribed to such term in Section 4.8(b) hereof. 

          “Indirect
Participant” means a Person that, by clearing securities through, or maintaining
a custodial relationship with, a DTC participant, has access to the DTC
clearing system. 

          “Initial
    Metal Agent
” means _____________________________________________________________. 

          “Internal
Control Over Financial Reporting” has the meaning ascribed to such term in
Rules 13a-15(f) and 15(d)-15(f) adopted by the Commission under the Exchange
Act. 

          “Net Asset
Value” means the net value of the Trust determined under Section 4.3. 

2

          “Net Asset
Value per Share” means the value of a Share determined under Section 4.3. 

          “Order
Cutoff Time” means, with respect to any Business Day, (i) _____ p.m. (New York
time) on such Business Day or (ii) another time agreed to by the Sponsor and
the Trustee and of which Registered Owners and all existing Authorized
Participants have been notified by the Trustee. 

          “Order
Date” means, with respect to a Purchase Order, the date specified in Section
2.3(a) and, with respect to a Redemption Order, the date specified in Section
2.6(a). 

          “Person”
means any natural person or any limited liability company, corporation,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof. 

          “Procedures”
means the procedures for Purchase Orders and Redemption Orders attached to the
Authorized Participant Agreement, as modified by the Trustee from time to time.

          “Purchase
Order” is defined in Section 2.3. 

          “Qualified
Bank” means a bank, trust company, corporation or national banking association
organized and doing business under the laws of the United States or any State
of the United States that is authorized under those laws to exercise corporate
trust powers and that (i) is a DTC Participant or a participant in such other
Depository as is then acting with respect to the Shares; (ii) unless counsel to
the Sponsor, the appointment of which is acceptable to the Trustee, determines
that the following requirement is not necessary for the exception under Section
408(m) of the Internal Revenue Code of 1986, as amended (the “Code”), to apply,
is a banking institution as defined in Section 408(n) of the Code and (iii)
had, as of the date of its most recent annual financial statements, an
aggregate capital, surplus and undivided profits of at least $150,000,000. 

          “Redemption
Order” is defined in Section 2.6. 

          “Registered
Owner” means the Person in whose name Shares are registered on the books of the
Trustee maintained for that purpose. 

          “Registrar”
means any bank or trust company that is appointed to register Shares and
transfers of Shares as herein provided. 

          “Shares”
means ETFS Physical Base Metals Shares created under this Agreement, each
representing a fractional undivided ownership interest in the net assets of the
Trust, which interest shall equal a fraction, the numerator of which is 1 and
the denominator of which is the total number of Shares outstanding. 

          “Sponsor”
means ETF Securities USA LLC, a Delaware limited liability company, or its
successor. 

          “Surrender”
means, when used with respect to Shares, one or more book-entry transfers of
Shares to the Depository account of the Trustee. 

3

           “Trust”
means the ETFS Physical Base Metals Trust, the trust entity created by this
Agreement. 

          “Trustee”
means ________________, a ______________, in its capacity as trustee under this
Agreement, or any successor as trustee under this Agreement. 

	
  

 	
  

 	
  

 
	
  

 	
 Section 1.2

 	
 Rules of
 Construction.

 

          Unless the
context otherwise requires: 

                              (i)
a term has the meaning assigned to it; 

                              (ii)
an accounting term not otherwise defined has the meaning assigned to it in
accordance with generally accepted accounting principles as in effect in the
United States; 

                              (iii)
“or” is not exclusive; 

                              (iv)
the words “herein,” “hereof,” “hereunder” and other words of similar import
refer to this Agreement as a whole and not to any particular Article, Section
or other subdivision; 

                              (v)
“including” means including without limitation; 

                              (vi)
words in the singular include the plural and words in the plural include the
singular; and 

                              (vii)
a term defined in any part of speech shall have the corresponding meaning when
capitalized and used herein in another part of speech. 

ARTICLE II.

CREATION AND DECLARATION OF TRUSTS; 

FORM OF CERTIFICATES; DEPOSIT;

DELIVERY, REGISTRATION OF TRANSFER AND SURRENDER OF SHARES

	
  

 	
  

 	
  

 
	
  

 	
 Section 2.1

 	
 Creation and
 Declaration of Trust; Business of the Trust.

 

                    (a)
The Trustee declares that the initial deposit and all other Trust Property
shall be owned by the Trust and the Trustee as trustee thereof for the benefit
of the Registered Owners for the purposes of, and subject to and limited by the
terms and conditions set forth in, this Agreement. The trust created by this
Agreement shall be known as the “ETFS Physical Base Metals Trust”. 

                    (b)
The Trust shall not engage in any business or activities other than those
authorized by this Agreement or incidental and necessary to carry out the
duties and 

4

responsibilities set forth in this Agreement. Other than issuance of
the Shares, the Trust shall not issue or sell any certificates or other
obligations or, except as provided in this Agreement, otherwise incur, assume
or guarantee any indebtedness for money borrowed. 

	
  

 	
  

 	
  

 
	
  

 	
 Section 2.2

 	
 Form of
 Certificates; Book-Entry System; Transferability of Shares.

 

                    (a)
The Certificates evidencing Shares shall be substantially in the form set forth
in Exhibit A annexed to this Agreement, with appropriate insertions,
modifications and omissions, as hereinafter provided. No Shares shall be
entitled to any benefits under this Agreement or be valid or obligatory for any
purpose unless a Certificate evidencing those Shares has been executed by the
Trustee by the manual or facsimile signature of a duly authorized signatory of
the Trustee and, if a Registrar (other than the Trustee) for the Shares shall
have been appointed, countersigned by the manual signature of a duly authorized
officer of the Registrar. The Trustee shall maintain books on which the
registered ownership of each Share and transfers, if any, of such registered
ownership shall be recorded. Certificates evidencing Shares bearing the manual
or facsimile signature of a duly authorized signatory of the Trustee and the
manual signature of a duly authorized officer of the Registrar, if applicable,
who was, at the time such Certificates were executed, a proper signatory of the
Trustee or Registrar, if applicable, shall bind the Trustee, notwithstanding
that such signatory has ceased to hold such office prior to the delivery of
such Certificates. 

                    (b)
The Certificates may be endorsed with or have incorporated in the text thereof
such legends or recitals or modifications not inconsistent with the provisions
of this Agreement as may be required by the Trustee or required to comply with
any applicable law or regulations thereunder or with the rules and regulations
of any securities exchange upon which Shares may be listed or to conform with
any usage with respect thereto, or to indicate any special limitations or
restrictions to which the Shares evidenced by a particular Certificate are
subject. 

                    (c)
The Sponsor and the Trustee will apply to DTC for acceptance of the Shares in
its book-entry settlement system. Shares deposited with DTC shall be evidenced
by one or more global Certificates 

                    (d)
So long as the Shares are eligible for book-entry settlement with DTC and such
settlement is available, unless otherwise required by law, notwithstanding the
provisions of Sections 2.2(a) and (b), all Shares shall be evidenced by one or
more global Certificates the Registered Owner of which is DTC or a nominee of
DTC and (i) no Beneficial Owner of Shares will be entitled to receive a
separate Certificate evidencing those Shares, (ii) the interest of a Beneficial
Owner in Shares represented by a global Certificate will be shown only on, and
transfer of that interest will be effected only through, records maintained by
DTC or a DTC Participant or Indirect Participant through which the Beneficial
Owner holds that interest and (iii) the rights of a Beneficial Owner with
respect to Shares represented by a global Certificate will be exercised only to
the extent allowed by, and in compliance with, the arrangements in effect
between such Beneficial Owner and DTC or the DTC Participant or Indirect
Participant through which that Beneficial Owner holds an interest in Shares. So
long as DTC or another authorized Depository selected by the Sponsor or the
Trustee is the Registered Owner, the Trustee and the Sponsor may treat DTC or
such other Depository as the absolute owner of the 

5

Shares for all purposes whatsoever, including without limitation, the
payment of distributions, and the giving of notices of redemption, tender and
other matters with respect to the Shares. 

                    (e)
If, at any time when Shares are evidenced by a global Certificate, DTC ceases
to make its book-entry settlement system available for such Shares, the Trustee
shall execute and deliver separate Certificates evidencing Shares to a
successor authorized Depository identified by the Sponsor and available to act,
or, if no successor Depository is identified and able to act, the Trustee shall
terminate the Trust in accordance with Section 6.2. 

                    (f)
Title to a Certificate evidencing Shares (and to the Shares evidenced thereby),
when properly endorsed or accompanied by proper instruments of transfer, shall
be transferable by delivery with the same effect as in the case of a negotiable
instrument under the laws of New York; provided, however, that the Trustee,
notwithstanding any notice to the contrary, may treat the Registered Owner of
Shares as the absolute owner thereof for the purpose of determining the person
entitled to any distribution or to any notice provided for in this Agreement
and for all other purposes. 

	
  

 	
  

 	
  

 
	
  

 	
 Section 2.3

 	
 Deposit.

 

                    (a)
After the initial deposit in the Trust, the issuance and Delivery of Shares
will take place only in integral numbers of Creation
    Units and in compliance with the
provisions of this Agreement, as supplemented by the Procedures, to the extent
those Procedures are consistent with this Agreement. Authorized Participants
wishing to acquire from the Trustee one or more Creation
    Units must place an order
with the Trustee (a “Purchase Order”) no later than ______ p.m. (New
York time) on any Business Day. Purchase Orders received by the Trustee prior
to the Order Cutoff Time on a Business Day on which the Benchmark Price is announced
will have that Business Day as the Order Date. Purchase Orders received by the
Trustee on or after the Order Cutoff Time on a Business Day, or on a Business
Day on which the Benchmark Price is not announced, will have as their Order
Date the next Business Day on which the Benchmark Price is announced. 

                    (b)
The Trustee shall determine the Creation
    Unit Amount for each Business Day, and the
Trustee’s determination of the Creation
    Unit Amount and resolution of questions
concerning the composition of such Creation
    Unit Amount shall be final and binding on
all persons interested in the Trust. The initial “Creation Unit Amount” is
____________. After the initial deposit, the “Creation Unit Amount” for
each Business Day shall be an amount equal to the result obtained by subtracting
the number constituting the unpaid expense accrual and then dividing by the number
of Creation
    Units outstanding. Fractions included in the Creation
    Unit Amount smaller than
_______ shall be disregarded. The Sponsor intends to publish, or may designate
other persons to publish, for each Business Day, the Creation
Unit Amount. 

                    (c)
If the Trust Property includes money or any property other than metal, no
deposits of metal will be accepted until after a record date for distribution
of that money or property, or proceeds of that property, has passed. 

                    (d)
All deposited metal shall be owned by the Trust and held for the Trust. 

6

	
  

 	
  

 	
  

 
	
  

 	
 Section 2.4

 	
 Delivery of
 Shares.

 

          Upon
receipt by the Trustee of a Purchase Order and the other documents required as
above specified, if any, and a confirmation from the Metal Agent that the Creation
    Unit
Amount has been Delivered to the Metal Agent for each Creation
    Unit of Shares requested
in such Purchase Order and the Metal Agent is holding that metal for the account
of the Trust, the Trustee, subject to the terms and conditions of this
Agreement and the Procedures, shall Deliver to the Depositor the number of
Creation
    Units of Shares issuable in respect of such deposit as requested in the
corresponding Purchase Order, but only upon payment to the Trustee of the fees
and expenses of the Trustee as provided in Section 5.7 and of all taxes and
governmental charges and fees payable in connection with such deposit, the
transfer of the metal and the issuance and Delivery of the Shares. 

	
  

 	
  

 	
  

 
	
  

 	
 Section 2.5

 	
 Registration
 and Registration of Transfer of Shares; Combination and Split-up of
 Certificates.

 

                    (a)
The Trustee shall keep or cause to be kept a register of Registered Owners of
Shares and shall provide for the registration of Shares and the registration of
transfers of Shares. 

                    (b)
The Trustee, subject to the terms and conditions of this Agreement, shall
register transfers of ownership of Shares on its transfer books from time to
time, upon any surrender of a Certificate evidencing such Shares, by the
Registered Owner in person or by a duly authorized attorney, properly endorsed
or accompanied by proper instruments of transfer, and duly stamped as may be
required by the laws of the State of New York and of the United States of
America. Thereupon, the Trustee shall execute a new Certificate or Certificates
evidencing such Shares, and deliver the same to or upon the order of the Person
entitled thereto. 

                    (c)
The Trustee, subject to the terms and conditions of this Agreement, shall, upon
surrender of a Certificate or Certificates evidencing Shares for the purposes
of effecting a split-up or combination of that certificate or certificates,
execute and deliver one or more new Certificates evidencing those Shares. 

                    (d)
The Trustee may, with the written approval of the Sponsor (which approval shall
not be unreasonably withheld), appoint one or more co-transfer agents for the
purpose of effecting registration of transfers of Shares and combinations and
split-ups of Certificates at designated transfer offices on behalf of the
Trustee. In carrying out its functions, a co-transfer agent may require
evidence of authority and compliance with applicable laws and other
requirements by Registered Owners or Persons entitled to Shares and will be
entitled to protection and indemnity to the same extent as the Trustee. 

                    (e)
The previous paragraphs of this Section notwithstanding, so long as the Shares
are eligible for deposit with a Depository, the sole Registered Owners shall be
such Depository or its nominee and transfer of Shares shall be effected solely
by the Depository in accordance with its customary practices in effect from
time to time. 

	
  

 	
  

 	
  

 
	
  

 	
 Section 2.6

 	
 Surrender of
 Shares and Withdrawal of Trust Property.

 

                    (a)
Upon Surrender of any integral number of Creation
    Units for the purpose of withdrawal
of the amount of Trust Property represented thereby, and upon payment of the
fee of the Trustee in connection with the Surrender of Shares as provided in
Section 5.7 and payment of

7

all taxes and charges payable in connection with
    such Surrender and withdrawal of Trust Property, and subject to the terms
    and conditions of this Agreement, the Procedures and the practices of the
    Depository, an Authorized Participant acting on authority of the Registered
    Owner of those Shares will be entitled to Delivery, in accordance with the
    provisions of this Agreement, as supplemented by any procedures attached
    to an applicable Authorized Participant Agreement, to the extent those procedures
    are consistent with this Agreement, of the amount of Trust Property at the
    time represented by such Creation Units,
including the Creation
    Unit Amounts corresponding to such Creation
    Units on the applicable
Order Date (determined as provided below). Authorized Participants wishing to
redeem one or more Creation
    Units must place an order with the Trustee (a “Redemption
Order”) no later than _____________ p.m. (New York time) on any Business Day.
Redemption Orders received by the Trustee prior to the Order Cutoff Time on a
Business Day on which the Benchmark Price is announced will have that Business
Day as the Order Date. Redemption Orders received by the Trustee on or after
the Order Cutoff Time on any Business Day, or on a Business Day on which the
Benchmark Price is not announced, will have as their Order Date the next
Business Day on which the Benchmark Price is announced. 

                    (b)
The Trustee may require that a Certificate evidencing Shares Surrendered for
the purpose of withdrawal is properly endorsed in blank or accompanied by
proper instruments of transfer in blank. Upon a Surrender of an integral number
of Creation
    Units of Shares and satisfaction of all the conditions for withdrawal of
Trust Property, the Trustee shall instruct the Metal Agent to Deliver, as
provided in the preceding paragraph, to or to the order of the Surrendering
Authorized Participant the amount of metal represented by the Surrendered
Creation
    Units of Shares and the Trustee shall pay or deliver to or to the order of
the Surrendering Authorized Participant the amount of any other Trust Property
represented by the Surrendered Creation
    Units of Shares. Any Delivery of metal other
than by credit to an account of the Authorized Participant maintained by the
Metal Agent on an Unallocated Basis will be at the expense and risk of the
Authorized Participant. The Trustee is not required to effect any physical
movement of metal from one custody location to another to meet any request by
a Surrendering Authorized Participant as to where metal will be Delivered. 

                    (c)
The Sponsor and the Trustee may, but shall have no obligation to, amend this
Agreement to provide for redemption of any quantity of Shares for quantities
    of metal that may be smaller or larger than a Creation
    Unit Amount by Beneficial Owners
who are not Authorized Participants. 

                    (d)
The Sponsor and the Trustee may, but shall have no obligation to, amend this
Agreement to provide for the sale of metal to pay cash proceeds upon the
redemption of Shares. 

	
  

 	
  

 	
  

 
	
  

 	
 Section 2.7

 	
 Limitations
 on Delivery, Registration of Transfer and Surrender of Shares.

 

                    (a)
As a condition precedent to the Delivery, registration of transfer, split-up,
combination or Surrender of any Shares or withdrawal of any Trust Property, the
Trustee or Registrar may require payment from the Depositor or the Authorized
Participant Surrendering the Shares of a sum sufficient to reimburse it for any
tax or other governmental charges and any stock transfer or registration fee
with respect thereto (including any such tax or charge and fee with respect to
any securities being withdrawn) and payment of any applicable fees as herein

8

provided, may require the production of proof satisfactory to it as to
the identity and genuineness of any signature and may also require compliance
with any regulations the Trustee may establish consistent with the provisions
of this Agreement, including, without limitation, this Section 2.7. 

                    (b)
The Delivery of Shares against deposits and the registration of transfer of
Shares may be suspended generally, or refused with respect to particular
requested Deliveries, during any period when the transfer books of the Trustee
are closed or if any such action is deemed necessary or advisable by the
Trustee or the Sponsor for any reason at any time or from time to time. Except
as otherwise provided elsewhere in this Agreement, the Surrender of Shares for
purposes of withdrawing Trust Property may be suspended only (i) during any
period in which regular trading on the Exchange is suspended or restricted or
the Exchange is closed (other than scheduled holiday or weekend closings), or
(ii) during an emergency as a result of which Delivery, disposal or evaluation
of metal is not reasonably practicable. 

	
  

 	
  

 	
  

 
	
  

 	
 Section 2.8

 	
 Lost
 Certificates, Etc.

 

          The Trustee
shall execute and deliver a new Certificate of like tenor in exchange and
substitution for a mutilated Certificate upon cancellation thereof, or in lieu
of and in substitution for a destroyed, lost or stolen Certificate if the
Registered Owner thereof has (a) filed with the Trustee (i) a request for such
execution and delivery before the Trustee has notice that the Shares evidenced
by the Certificate have been acquired by a protected purchaser and (ii) a
sufficient indemnity bond, and (b) satisfied any other reasonable requirements
imposed by the Trustee. 

	
  

 	
  

 	
  

 
	
  

 	
 Section 2.9

 	
 Cancellation
 and Destruction of Surrendered Certificates.

 

          All
Certificates Surrendered to the Trustee shall be canceled by the Trustee. The
Trustee is authorized to destroy certificates so canceled. 

	
  

 	
  

 	
  

 
	
  

 	
 Section 2.10

 	
 Splits and
 Reverse Splits of Shares.

 

          If
requested in writing by the Sponsor, the Trustee shall effect a split or
reverse split of the Shares as of a record date set by the Trustee in
accordance with procedures determined by the Trustee and the Depository. 

          If so
directed by the Sponsor, the Trustee shall not distribute any fraction of a
Share in connection with a split or reverse split of the Shares. The Trustee
may sell the aggregated fractions of Shares that would otherwise be distributed
in a split or reverse split of the Shares or the amount of Trust Property that
would be represented by those Shares and distribute the net proceeds of those
Shares or that Trust Property to the Record Owners entitled to them. 

          The
    amount of Trust Property represented by each Share and the Creation
    Unit Amount shall be
adjusted as appropriate as of the open of business on the Business Day
following the record date for a split or reverse split of the Shares. 

9

ARTICLE III. 

CERTAIN OBLIGATIONS OF REGISTERED OWNERS OF SHARES

	
  

 	
  

 	
  

 
	
  

 	
 Section 3.1

 	
 Liability of
 Registered Owner for Taxes and Other Governmental Charges.

 

          If any tax
or other governmental charge shall become payable by the Trustee with respect
to any transfer or redemption of Shares, such tax or other governmental charge
shall be payable by the Registered Owner of such Shares to the Trustee. The
Trustee shall refuse to effect any registration of transfer of such Shares or
any withdrawal of Trust Property represented by such Shares until such payment is
made, and may withhold any distributions, or may sell for the account of the
Registered Owner thereof such Trust Property or Shares, and may apply such
distributions or the proceeds of any such sale in payment of such tax or other
governmental charge, and the Registered Owner of such Shares shall remain
liable for any deficiency. The Trustee shall distribute any net proceeds of a
sale made under the preceding sentence that remain, after payment of the tax or
other governmental charge, to the Registered Owners entitled thereto as in the
case of a distribution in cash. 

	
  

 	
  

 	
  

 
	
  

 	
 Section 3.2

 	
 Warranties
 on Deposit.

 

          Every
Person depositing metal under this Agreement shall be deemed thereby to
represent and warrant that the metal meets the requirements and contains the
required number of tons, that the person making such deposit is duly authorized
to do so and that, at the time of delivery, the metal is free and clear of any
lien, pledge, encumbrance, right, charge or claim (other than the rights created
by this Agreement). All representations and warranties deemed made under this
Section 3.2 shall survive the deposit of metal, Delivery or Surrender of Shares
or termination of this Agreement. 

ARTICLE IV. 

ADMINISTRATION OF THE TRUST

	
  

 	
  

 	
  

 
	
  

 	
 Section 4.1

 	
 Evaluation.

 

          As promptly
as practicable after ____ p.m. (New York time), on each Business Day, the
Trustee shall determine the value of the metal held or receivable by the Trust
on the basis of the Benchmark Price for that day. If no Benchmark Price is
announced on a Business Day, the Trustee shall determine the value of the metal
held or receivable by the Trust for that day on the basis of the most recently
announced Benchmark Price prior to the evaluation time. However, if the Sponsor
determines that the price specified in the two preceding sentences is
inappropriate as a basis for evaluation, it shall identify an alternative basis
for evaluation to be employed by the Trustee. Metal deliverable under a
Purchase Order shall be included in the evaluation beginning on the Order Date.
Metal deliverable under a Redemption Order shall not be included in the
evaluation on and after the Order Date. Neither the Trustee nor the Sponsor
shall be liable to any Person for the determination that the most recently announced
Benchmark Price is not appropriate as a basis for evaluation of the metal held
or receivable by the Trust or for any determination as to the alternative basis
for evaluation, provided that such determination is made in good faith. 

          If the
Sponsor determines that Benchmark Price will have the meaning set forth in part
(ii) of the definition of that term, the Trustee shall give notice to the
Registered Owners, and the Trustee shall not apply the new definition of
Benchmark Price until 60 days after the date of that notice. 

10

	
  

 	
  

 	
  

 
	
  

 	
 Section 4.2

 	
 Responsibility
 of the Trustee for Evaluations.

 

          The
Sponsor, Depositors, Registered Owners and Beneficial Owners may rely on any
evaluation or determination of any amount made by the Trustee, and the Sponsor
shall have no responsibility for the accuracy thereof. The determinations made
by the Trustee under this Agreement shall be made in good faith upon the basis
of, and the Trustee shall not be liable for any errors contained in, information
reasonably available to it. The Trustee shall be under no liability to the
Sponsor, or to Depositors, Registered Owners or Beneficial Owners, for errors
in judgment; provided, however, that this provision shall not protect the
Trustee against any liability to which it would otherwise be subject by reason
of gross negligence or bad faith in the performance of its duties. 

	
  

 	
  

 	
  

 
	
  

 	
 Section 4.3

 	
 Trust
 Evaluation.

 

          As promptly
as practicable after completion of the evaluation required under Section 4.1 on
each Business Day, the Trustee shall subtract all accrued fees (other than the
fees accruing for such Business Day computed by reference to the value of the
Trust or its assets), expenses and other liabilities of the Trust from the
total value of the deposited metal determined by the Trustee pursuant to
Section 4.1 and all other assets of the Trust. The resulting figure is the
“Adjusted Net Asset Value” of the Trust. All fees accruing for any Business Day
computed by reference to the value of the Trust or its assets shall be
calculated on the Adjusted Net Asset Value calculated for such Business Day.
The Trustee shall subtract from the Adjusted Net Asset Value the amount of
accrued fees so computed and the resulting figure is the “Net Asset Value” of the
Trust. The Trustee shall also divide the Net Asset Value of the Trust by the
number of Shares outstanding as of the close of business on the date of the
evaluation then being made, which figure is the “Net Asset Value per Share.”
All fees, expenses and other liabilities of the Trust that are or will be
incurred or accrued through the close of business on a Business Day shall be
included in the calculations required by this Section 4.3 for that Business
Day. Shares deliverable under a Purchase Order shall be considered to be
outstanding for purposes of this Section 4.3 beginning on the Order Date.
Shares deliverable under a Redemption Order shall not be considered to be
outstanding for purposes of this Section 4.3 on and after the Order Date. 

          Adjusted
Net Asset Value, Net Asset Value and Net Asset Value per Share shall be
computed in accordance with generally accepted accounting principles in the
United States. Any estimate of the expenses and liabilities of the Trust for
purposes of the computations required by this Section made by the Trustee in
good faith shall be conclusive upon all Persons interested in the Trust, and no
revision or correction in any computation made under this Agreement will be
required by reason of any difference in amounts estimated from those actually
paid. 

	
  

 	
  

 	
  

 
	
  

 	
 Section 4.4

 	
 Cash
 Distributions.

 

          Whenever
the Trustee distributes any cash, the Trustee shall distribute the amount
available for the distribution to the Registered Owners entitled thereto, in
proportion to the number of Shares held by them respectively; provided,
however, that in the event that the Trustee shall be required to withhold and
does withhold from such cash an amount on account of taxes, the amount
distributed to the Registered Owners shall be reduced accordingly. The Trustee 

11

shall distribute only such amount, however, as can be distributed
without attributing to any Registered Owner a fraction of one cent. Any such
fractional amounts shall be rounded down to the nearest whole cent and so
distributed to Registered Owners entitled thereto. 

	
  

 	
  

 	
  

 
	
  

 	
 Section 4.5

 	
 Other Distributions. 

 

          Whenever
the Trustee receives any property in respect of Trust Property other than cash
proceeds of a sale of Trust Property (including any claim that accrues in favor
of the Trust on account of any loss of deposited metal or other Trust
Property), the Trustee shall cause the securities or other property received by
it to be distributed to the Registered Owners entitled thereto, in proportion
to the number of Shares held by them respectively, after deduction or upon
payment of the expenses of the Trustee, in any manner that the Trustee may deem
lawful, equitable and feasible for accomplishing such distribution; provided,
however, that if in the opinion of the Trustee such distribution cannot be made
proportionately among the Registered Owners entitled thereto, or if for any
other reason (including, but not limited to, any requirement that the Trustee
withhold an amount on account of taxes or other governmental charges or that
securities must be registered under the Securities Act of 1933 in order to be
distributed to Registered Owners) the Trustee deems such distribution not to be
lawful or feasible, the Trustee shall adopt such method as it deems lawful,
equitable and feasible for the purpose of effecting such distribution and as
the Sponsor shall direct, after deduction or upon payment of the expenses of
the Trustee, including, but not limited to, the public or private sale of the
securities or property thus received, or any part thereof, and the net proceeds
of any such sale shall be distributed by the Trustee to the Registered Owners
entitled thereto as in the case of a distribution received in cash. The Trustee
shall not be liable for any loss or depreciation resulting from any sale or
other disposition of property made by the Trustee pursuant to the Sponsor’s
instruction or otherwise made by the Trustee in good faith in accordance with
this Agreement. 

	
  

 	
  

 	
  

 
	
  

 	
 Section 4.6

 	
 Fixing of Record Date. 

 

          Whenever
any distribution will be made, or whenever the Trustee receives notice of any
solicitation of proxies or consents from Registered Owners, or whenever for any
reason there is split, reverse split or other change in the outstanding Shares,
or whenever the Trustee shall find it necessary or convenient in respect of any
matter, the Trustee, in consultation with the Sponsor, shall fix a record date
for the determination of the Registered Owners who shall be (i) entitled to
receive such distribution or the net proceeds of the sale thereof, (ii) entitled
to give such proxies or consents in respect of any such solicitation, (iii)
entitled to receive shares as a result of any such split, reverse split or
other change, or (iv) entitled to act in respect of any other matter for which
the record date was set. 

	
  

 	
  

 	
  

 
	
  

 	
 Section 4.7

 	
 Payment of Expenses; Sales. 

 

                    (a)
The following charges are or may be accrued and paid by the Trust: 

                              
(i) the service fee payable to the Sponsor as set forth in Section 5.8; 

                              (ii)
expenses of the Trust not assumed by the Sponsor pursuant to Section 5.3(g); 

12

                              (iii)
taxes and other governmental charges; 

                              (iv)
expenses and costs of any extraordinary services performed by the Trustee or
the Sponsor on behalf of the Trust or action taken by the Trustee or the
Sponsor to protect the Trust or the interests of Registered Owners; 

                              (v)
indemnification of the Trustee as provided in Section 5.6(a); and

                              (vi)
indemnification of the Sponsor as provided in Section 5.6(b). 

                    (b)
Subject to paragraph (d) of this Section, the Trustee will endeavor to sell the
smallest amounts of metal needed to pay expenses in order to minimize the
Trust’s holdings of assets other than metal.

          The Trustee
shall, when directed by the Sponsor, and, in the absence of such direction,
may, in its discretion, sell metal in such quantity and at such times, as may
be necessary to permit payment of expenses under this Agreement. The Trustee
shall endeavor to sell metal at such times and in the smallest amounts required
to permit payment of expenses as they come due without producing sale proceeds
in excess of the amount required for payment of expenses, it being the
intention to avoid or minimize the Trust’s holdings of assets other than metal.
If the Trustee cannot sell metal in the precise amount required for the payment
of expenses as they come due, and the Sponsor shall have agreed to advance
funds for such expenses as authorized hereby, the Trustee shall sell the
maximum amount of metal which it can sell without producing excess proceeds.
The Sponsor is authorized and may, but is not required to, pay on behalf of the
Trust the amount of such expenses remaining unpaid immediately after such metal
sale; provided, however, that the Trust shall accrue a liability, without
interest, to the Sponsor for reimbursement of such expense amounts so paid by
the Sponsor until such amounts can be wholly repaid in tons of metal delivered
to the Sponsor in the same manner as, together with, and in addition to, the
next payment of the fees of the Sponsor pursuant to paragraph (d) of this
Section. In the event such reimbursement of the Sponsor cannot be wholly repaid
in tons of metal at the next payment of the Sponsor’s fee, the Trust shall
continue to accrue, without interest, the amount of its reimbursement
obligation to the Sponsor (together with any other reimbursement obligations to
the Sponsor) until such reimbursement amounts can be wholly repaid in tons of
metal on a payment date for the Sponsor’s fee. Neither the Trustee nor the
Sponsor shall have any liability for loss or depreciation resulting from sales
of metal so made. The Trustee shall not be liable or responsible in any way for
depreciation or loss incurred by reason of any sale made pursuant to the
Sponsor’s direction or otherwise in accordance with this Section. 

                    (c)
If at any time and from time to time, the Trustee and Sponsor determine that
the amount of cash included in the Trust Property exceeds the anticipated
expenses of the Trust during the following month, the Trustee shall distribute
the excess to the Registered Owners under Section 4.4.

                    (d)
Payment of the fees of the Sponsor provided in Section 5.8(a) hereof and the
reimbursement of expenses paid by the Sponsor pursuant to paragraph (b) of this
Section shall be made by delivery to an account maintained by the Metal Agent
    for the Sponsor on an

13

Unallocated Basis, monthly on the first Business Day of the month in
respect of fees payable in respect of the prior month, of that number of tons
of metal which shall equal (i) the daily accrual of the Sponsor’s fee for such
prior month calculated at the Benchmark Price for the day of accrual and (ii)
the amount of any outstanding expense reimbursement obligation calculated at
the Benchmark Price available on the date of the Trust’s payment of such
reimbursement obligation. 

	
  

 	
  

 	
  

 
	
  

 	
 Section 4.8

 	
 Statements and Reports. 

 

                    (a)
After the end of each fiscal year and within the time period required by
applicable laws, rules and regulations, at the Sponsor’s expense, the Trustee
shall send to the Registered Owners at the end of such fiscal year, an annual
report of the Trust containing financial statements that will be prepared by
the Trustee and audited by independent accountants designated by the Sponsor
and such other information as may be required by such laws, rules and
regulations or otherwise, or which the Sponsor determines shall be included.
The Trustee may distribute the annual report by any means acceptable to the
Registered Owners. 

                    (b)
The Trustee shall provide the Sponsor with such certifications, supporting
documents and other evidence regarding the Internal Control Over Financial
Reporting established and maintained by the Trust, and used by the Trustee in
connection with its preparation of the financial statements of the Trust, as
may be reasonably necessary in order to enable the Sponsor to prepare and file
or furnish to the Commission any certifications regarding such matters which
may be required to be included with the Trust’s periodic reports under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”).

                    (c)
The fiscal year of the Trust shall initially be the period ending December 31
of each year. The Sponsor shall have the continuing right to select an
alternate fiscal year.

	
  

 	
  

 	
  

 
	
  

 	
 Section 4.9

 	
 Further Provisions for Sales. 

 

          In addition
to selling metal in accordance with Section 4.7, the Trustee shall sell metal
whenever any one or more of the following conditions exists: 

                    (a)
the Sponsor has notified the Trustee that such sale is required by applicable
law or regulation; or 

                    (b)
this Agreement has been terminated and the Trust Property is to be liquidated
in accordance with Section 6.2. 

          When
selling metal, the Trustee shall endeavor to place orders with dealers (which
may include the Metal Agent) as directed by the Sponsor, or in the absence of
such direction, with dealers through which the Trustee may reasonably expect
    to obtain a favorable price and good execution of orders. The Metal Agent
may be the purchaser at the Benchmark Price.

          The Trustee
and the Sponsor shall not be liable or responsible in any way for depreciation
or loss incurred by reason of any sale made pursuant to this Section 4.9. 

14

	
  

 	
  

 	
  

 
	
  

 	
 Section 4.10

 	
 Counsel. 

 

          The Sponsor
may from time to time employ counsel to act on behalf of the Trust and perform
any legal services in connection with the metal and the Trust, including any
legal matters relating to the possible disposition or acquisition of any metal.
The fees and expenses of such counsel shall be paid by the Sponsor. 

	
  

 	
  

 	
  

 
	
  

 	
 Section 4.11

 	
 Grantor Trust. 

 

          Nothing
    in this Agreement, any agreement with a Metal Agent, or otherwise, shall
    be construed to give the Trustee the power to vary the investment of the
Beneficial Owners within the meaning of Section 301.7701-4(c) or any similar
    or successor provision of the regulations under the Code, nor shall the Sponsor
give the Trustee any direction that would vary the investment of the Beneficial
Owners. However, the Trustee shall not be liable to any Person for any failure
of the Trust to qualify as a grantor trust under the Code or any comparable
provision of the laws of any State or other jurisdiction where that treatment
is sought, except that this sentence shall not limit the Trustee’s
responsibility for the administration of the Trust in accordance with this
Agreement. 

ARTICLE
V.

THE
TRUSTEE AND THE SPONSOR

	
  

 	
  

 	
  

 
	
  

 	
 Section 5.1

 	
 Maintenance of Office and Transfer Books by the Trustee.
 

 

                    (a)
Until termination of this Agreement in accordance with its terms, the Trustee
shall maintain facilities for the execution and Delivery, registration,
registration of transfers and Surrender of Shares in accordance with the
provisions of this Agreement. 

                    (b)
The Trustee shall keep a copy of this Agreement and books for the registration
of Shares and registration of transfers of Shares which at all reasonable times
shall be open for inspection by the Registered Owners during normal business
hours upon reasonable notice. 

                    (c)
The Trustee may, and at the reasonable written request of the Sponsor shall,
close the transfer books at any time or from time to time if such action is
deemed necessary or advisable in the reasonable judgment of the Trustee or the
Sponsor. 

                    (d)
If any Shares are listed on one or more stock exchanges in the United States,
the Trustee shall act as Registrar or, with the written approval of the Sponsor
(which approval shall not be unreasonably withheld), appoint a registrar or one
or more co-registrars for registry of such Shares in accordance with any
requirements of such exchange or exchanges. 

	
  

 	
  

 	
  

 
	
  

 	
 Section 5.2

 	
 Prevention or Delay in Performance by the Sponsor or the Trustee.
 

 

          Neither the
Sponsor nor the Trustee nor any of their respective directors, employees,
agents or affiliates shall incur any liability to any Registered Owner,
Beneficial Owner or Depositor if, by reason of any provision of any present or
future law or regulation of the United States or any other country, or of any
governmental or regulatory authority or stock exchange, or by reason of any act
of God or war or terrorism or other circumstances beyond its control, the
Sponsor or the Trustee is prevented or forbidden from, or would be subject to
any civil or

15

criminal penalty on account of, or is delayed in, doing or performing
any act or thing which by the terms of this Agreement it is provided shall be
done or performed and accordingly the Sponsor or the Trustee does not do that
thing or does that thing at a later time than would otherwise be required. The
Sponsor and the Trustee will not incur any liability to any Registered Owner or
Beneficial Owner or Depositor by reason of any non-performance or delay in the
performance of any act or thing which by the terms of this Agreement it is
provided may be done or performed, or by reason of any exercise of, or failure
to exercise, any discretion provided for in this Agreement.

	
  

 	
  

 	
  

 
	
  

 	
 Section 5.3

 	
 Obligations of the Sponsor and the Trustee. 

 

                    (a)
Neither the Sponsor nor the Trustee assumes any obligation nor shall either of
them be subject to any liability under this Agreement to any Registered Owner
or Beneficial Owner or Depositor (including, without limitation, liability with
respect to the worth of the Trust Property), except that each of them agrees to
perform its obligations specifically set forth in this Agreement without gross
negligence, willful misconduct or bad faith. 

                    (b)
Neither the Sponsor nor the Trustee shall be under any obligation to prosecute
any action, suit or other proceeding in respect of any Trust Property or in
respect of the Shares on behalf of a Registered Owner, Beneficial Owner, Depositor
or other Person. 

                    (c)
Neither the Sponsor nor the Trustee shall be liable for any action or
non-action by it in reliance upon the advice of or information from legal
counsel, accountants, any Depositor, any Registered Owner or any other person
believed by it in good faith to be competent to give such advice or
information. 

                    (d)
(i) The Trustee shall not be liable for any acts or omissions made by a
successor Trustee whether in connection with a previous act or omission of the
Trustee or in connection with any matter arising wholly after the resignation
of the Trustee, provided that in connection with the issue out of which such
potential liability arises the Trustee performed its obligations without gross
negligence, willful misconduct or bad faith while it acted as Trustee. 

                              (ii)
The Sponsor is authorized to negotiate the terms of the Authorized Participant
Agreement to be entered into with each Authorized Participant and shall have no
liability for any loss or damage incurred by the Trust resulting from any such
agreement negotiated in good faith. The Trustee shall have no liability with
respect to the negotiation of the terms of any Authorized Participant Agreement
or the form of any Authorized Participant Agreement (other than the Trustee’s
due execution, delivery and performance thereof). The terms of an Authorized
Participant Agreement shall not adversely affect the duties, rights and
responsibilities of the Trustee unless the Trustee expressly consents thereto,
which consent shall be evidenced by the Trustee’s execution and delivery of
such Authorized Participant Agreement.

                    (e)
The Trustee and the Sponsor shall have no obligation to comply with any
direction or instruction from any Registered Owner or Beneficial Owner or
Depositor regarding Shares except to the extent specifically provided in this
Agreement. 

                    (f)
The Trustee shall be a fiduciary under this Agreement; provided, however, that the
fiduciary duties and responsibilities and liabilities of the Trustee shall be
limited by, and

16

shall be only those specifically set forth in, this Agreement. Without
limiting the foregoing, all duties, rights, privileges and liabilities of the
Trustee set forth in this Agreement are subject to the following:

                              (i)
The Trustee shall not be under any obligation to appear in, prosecute or defend
any action that in its opinion may involve it in expense or liability, unless
it shall be furnished with reasonable security and indemnity against such
expense or liability. Subject to the foregoing, the Trustee shall, in its
discretion, undertake such action as it may deem necessary at any and all times
to protect the Trust and the rights and interest of all Beneficial Owners
pursuant to the terms of this Agreement.

                              (ii)
Trust assets of the Trust, exclusive of metal or cash, shall be held by the
Trustee either directly or through the Federal Reserve/ Treasury Book Entry
System for United States and federal agency securities (the “Book Entry
System”), DTC, or through any other clearing agency or similar system (a
“Clearing Agency”), if available. The Trustee shall have no responsibility and
shall not be liable for ascertaining or acting upon any calls, conversions,
exchange offers, tenders, interest rates changes, or similar matters relating
to securities held at the Depository or with any Clearing Agency unless the
Trustee shall have received actual and timely written notice of the same, nor
shall the Trustee have any responsibility or liability for the actions or
omissions to act of the Book Entry System, the Depository or any Clearing
Agency. All moneys held by the Trustee hereunder shall be held by it, without
interest thereon or investment thereof, as a deposit for the account of the
Trust. Such monies held hereunder shall be deemed segregated by maintaining
such monies in an account or accounts for the exclusive benefit of the Trust.
The Trustee may also employ custodians for Trust assets other than metal,
agents, attorneys, accountants, auditors and other professionals and shall not
be answerable for the default or misconduct of any such custodians, agents,
attorneys, accountants, auditors and other professionals if such custodians,
agents, attorneys, accountants, auditors or other professionals shall have been
selected with reasonable care.

                              (iii)
If at any time the Trustee is served with any judicial or administrative order,
judgment, decree, writ or other form of judicial or administrative process that
in any way affects the Trust or its property (including but not limited to
orders of attachment or garnishment or other forms of levies or injunctions or
stays relating to the transfer of any assets of the Trust), the Trustee is
authorized to comply therewith in any manner that it or legal counsel of its
own choosing deems appropriate; however, the Trustee to the extent practicable
will inform the Sponsor of such order, judgment, decree, writ or other form of
judicial or administrative process that in any way affects the Trust and
consult in good faith with the Sponsor as to the course of action by the
Trustee. If the Trustee complies with any such judicial or administrative order,
judgment, decree, writ or other form of judicial or administrative process, the
Trustee shall not be liable to any of the parties hereto or to any other person
or entity even though such order, judgment, decree, writ or process may be
subsequently modified or vacated or otherwise determined to have been without
legal force or effect.

                              (iv)
In no event shall the Trustee be liable for acting in accordance with or
conclusively relying upon any instruction, notice, demand, certificate or
document (a) from the Sponsor or a Metal Agent, or any entity acting on behalf
    of either, which the Trustee believes is given pursuant to or is authorized
by this Agreement or a Custody Agreement, respectively; or

17

(b) from or on behalf of any Authorized Participant which the Trustee
believes is given pursuant to or is authorized by an Authorized Participant
Agreement (provided that the Trustee has complied with the verification
procedures specified in the Authorized Participant Agreement); for any
indirect, consequential, punitive or special damages, regardless of the form of
action and whether or not any such damages were foreseeable or contemplated; or
for an amount in excess of the value of the assets of the Trust. The Trustee
may consult with legal counsel of its own choosing as to any matter relating to
this Agreement and the Trustee shall not incur any liability in acting in good
faith in accordance with any advice from such counsel. The expense of such
counsel shall be paid as provided in Section 5.7(b) and (c), as applicable.

                              (v)
The Trustee shall be entitled to rely conclusively upon any order, judgment,
certification, demand, notice, instrument or other writing delivered to it
under this Agreement without being required to determine the authenticity or
the correctness of any fact stated therein or the propriety or validity or the
service thereof. The Trustee may act in conclusive reliance upon any instrument
or signature reasonably believed by it to be genuine and may assume that any
person purporting to give receipt or advice or to make any statement or execute
any document in connection with the provisions of this Agreement or any
Authorized Participant Agreement has been duly authorized to do so, provided, however,
that where a list of authorized officials of a person and their signatures are
on file with the Trustee, the Trustee shall compare such manual signatures to
the signature on any such documents. Such requirement shall not apply to
“personal identification numbers” or “PINS” or other forms of electronic
security devices which function as a proxy for a manual signature.

                              (vi)
The Trustee shall not be responsible for or in respect of the recitals herein,
the validity or sufficiency of this Agreement, the Custody Agreements, any
Authorized Participant Agreement or any other custody or other agreement
entered into by the Trustee at the direction or with the approval of the
Sponsor or otherwise in connection with the Trustee’s administration of
the Trust, or for the due execution hereof by the Sponsor or of the Custody
Agreements by the Initial Metal Agent, or for the due execution of any other
agreement entered into by the Trustee in connection with the administration of
the Trust by any party thereto other than the Trustee.

                              (vii)
The Trustee shall not be responsible in any respect for the form, execution,
validity, value, collectability or genuineness of documents, instruments or
securities deposited with or delivered to or held by it under this Agreement,
or for any description therein, or for the identity, authority or rights of
persons executing or delivering or purporting to execute or deliver any such
document, instrument or security. 

                              (viii)
At any time the Trustee may request an instruction in writing in English from
the Sponsor or an Authorized Participant with respect to any action which the
Sponsor or an Authorized Participant is authorized to direct the Trustee hereunder,
or under the Custody Agreements, any Authorized Participant Agreement or any
other agreement entered into by the Trustee in connection with the Trustee’s
administration of the Trust, and may, at its own option, include in such
request the course of action it proposes to take and the date on which it
proposes to act, regarding any matter arising in connection with its duties and
obligations under any such agreement. The Trustee shall not be liable for
acting in accordance with such a proposal on or after the date specified
therein, provided that the specified date shall be at least three (3)

18

Business Days after the Sponsor or Authorized Participant receives the
Trustee’s request for instructions and its proposed course of action, and
provided further that, prior to so acting, the Trustee has not received the
written instructions requested.

                              (ix)
When the Trustee acts on any information, instructions, communications
(including communications with respect to the delivery of securities or the
wire transfer of funds) sent by telex, facsimile, email or other form of
electronic or data transmission, the Trustee, absent gross negligence, shall
not be responsible or liable in the event such communication is not an authorized
or authentic communication of the party sending it or is not in the form the
party sent or intended to send (whether due to fraud, distortion or otherwise),
provided that this paragraph shall not limit the Trustee’s obligation to obtain
such confirmations as may be specified in this Agreement or any Authorized
Participant Agreement. The Trustee shall be indemnified as provided in Section
5.6 hereof against any loss, liability, claim or expense (including legal fees
and expenses) it may incur in acting in accordance with any such communication.

                              (x)
The Trustee may construe any provision of this Agreement that it believes to be
ambiguous or inconsistent with any other provisions hereof, and any reasonable
construction of any such provision hereof by the Trustee in good faith shall be
binding upon the parties hereto, each Authorized Participant and all Beneficial
Owners. In the event of any ambiguity or inconsistency or any other uncertainty
in any notice, instruction or other communication received by the Trustee under
this Agreement, the Trustee shall notify the Sponsor and the giver thereof, and
may, in its sole discretion, refrain from taking any action other than to
retain possession of the property of the Trust, unless the Trustee receives
such further written instructions, from the Sponsor or otherwise, that
eliminate such ambiguity, inconsistency or uncertainty.

                              (xi)
The Trustee shall have no responsibility for the contents of any writing of the
arbitrators or any third party that may be used as a means to resolve disputes
among third parties with respect to their interest in the Trust, Trust Property
or Shares and may conclusively rely without any liability upon the contents
thereof.

                              (xii)
In no event shall the Trustee be personally liable for any taxes or other
governmental charges imposed upon or in respect of the metal or its custody,
moneys or other assets from time to time held hereunder, or on the income
therefrom or the sale or proceeds of sale thereof, or upon it as Trustee
hereunder or upon or in respect of the Trust or the Shares, which it may be
required to pay under any present or future law of the United States of America
or of any other taxing authority having jurisdiction in the premises. For all
such taxes and charges and for any expenses, including counsel’s fees, which
the Trustee may sustain or incur with respect to such taxes or charges, the
Trustee shall be reimbursed and indemnified out of the assets of the Trust and
the payment of such amounts shall be secured by a lien on the Trust. This
paragraph shall survive notwithstanding any termination of this Agreement and
the Trust or the resignation or removal of the Trustee.

                              (xiii)
The Trustee shall not be answerable for the default of the Initial Metal Agent
    or any Metal Agent employed at the direction of the Sponsor or selected by
    the Trustee with reasonable care. The Trustee may also employ custodians
for Trust assets other than metal,

19

agents, attorneys, accountants, auditors and other professionals and
shall not be answerable for the default or misconduct of any such custodians,
agents, attorneys, accountants, auditors and other professionals if such
custodians, agents, attorneys, accountants, auditors or other professionals
shall have been selected with reasonable care. The fees and expenses charged by
such custodians, agents, attorneys, accountants, auditors or other
professionals, exclusive of fees for services to be performed by the Trustee,
shall be paid as provided in Section 5.7(b) and 5.7(c), as applicable. Fees
paid for custody of assets other than metal shall be an expense of the Trustee.

                              (xiv)
The Trustee in its individual or any other capacity may own or hold Shares, or
be an underwriter or dealer in respect of Shares, and may deal in any manner
with the same with the same rights and powers as if it were not the Trustee
hereunder.

                    (g)
The Sponsor shall be responsible for all organizational expenses of the Trust,
and for the following administrative and marketing expenses of the Trust: fees
for the Trustee’s ordinary services and reimbursement of its out-of-pocket
expenses as provided in Section 5.7(b), the Metal Agent’s fee and expenses
reimbursable to a Metal Agent pursuant to a Custody Agreement, listing fees of
the Exchange, registration fees charged by the Commission, printing and mailing
costs, audit fees and expenses and legal fees and expenses not in excess of ____________
per year. 

	
  

 	
  

 	
  

 
	
  

 	
 Section 5.4

 	
 Resignation or Removal of the Trustee; Appointment of Successor
 Trustee. 

 

                    (a)
The Trustee may at any time resign as Trustee hereunder by written notice of
its election so to do, delivered to the Sponsor, and such resignation shall
take effect upon the appointment of a successor Trustee and its acceptance of
such appointment as hereinafter provided. 

                    (b)
The Sponsor may remove the Trustee in its discretion by written notice delivered
to the Trustee in the manner provided in Section 7.5 at least 90 days prior to
the fifth anniversary of the date of this Agreement or, thereafter, by written
notice delivered to the Trustee at least 90 days prior to the last day of any
subsequent three-year period. 

                    (c)
If at any time the Trustee 

                              (i)
ceases to be a Qualified Bank, 

                              (ii)
is in material breach of its obligations under this Agreement and fails to cure
such breach within 30 days after receipt of written notice from the Sponsor or
Registered Owners acting on behalf of at least 25% of the outstanding Shares
specifying such default and requiring the Trustee to cure such default, or 

                              (iii)
fails to consent to the implementation of an amendment to the Trust’s initial
Internal Control Over Financial Reporting deemed necessary by the Sponsor and,
after consultations with the Sponsor, the Sponsor and the Trustee fail to
resolve their differences regarding such proposed amendment, the Sponsor,
acting on behalf of the Registered Owners, may remove the Trustee by written
notice delivered to the Trustee in the manner provided in

20

Section 7.5, and such removal shall take effect upon the appointment of
a successor Trustee and its acceptance of such appointment as hereinafter
provided. 

                    (d)
If the Trustee acting hereunder resigns or is removed, the Sponsor, acting on
behalf of the Registered Owners, shall use its reasonable efforts to appoint a
successor Trustee, which shall be a Qualified Bank. Every successor Trustee
shall execute and deliver to its predecessor and to the Sponsor, acting on
behalf of the Registered Owners, an instrument in writing accepting its
appointment hereunder, and thereupon such successor Trustee, without any
further act or deed, shall become fully vested with all the rights, powers,
duties and obligations of its predecessor; but such predecessor, nevertheless,
upon payment of all sums due it and on the written request of the Sponsor,
acting on behalf of the Registered Owners, shall execute and deliver an
instrument transferring to such successor all rights and powers of such
predecessor hereunder, shall duly assign, transfer and deliver all right, title
and interest in the Trust Property to such successor, and shall deliver to such
successor a list of the Registered Owners of all outstanding Shares. The
Sponsor or any such successor Trustee shall promptly mail notice of the
appointment of such successor Trustee to the Registered Owners. 

                    (e)
Any corporation into which the Trustee may be merged, consolidated or converted
in a transaction in which the Trustee is not the surviving corporation shall be
the successor of the Trustee without the execution or filing of any document or
any further act. During the 90-day period following the effectiveness of a
merger, consolidation or conversion described in the preceding sentence, the
Sponsor may, by written notice to the Trustee, remove the Trustee and designate
a successor Trustee in compliance with the provisions of subsection (c) above. 

	
  

 	
  

 	
  

 
	
  

 	
 Section 5.5

 	
 The
 Metal Agent. 

 
	
  

 
	
  

 	
           (a)

 	
 [To be added.] 

 
	
  

 

	
  

 	
  

 	
  

 
	
  

 	
 Section 5.6

 	
 Indemnification.
 

 

                    (a)
The Trustee, its directors, employees and agents (each, a “Trustee Indemnified
Party”) shall be indemnified from the Trust and held harmless against any loss,
liability or expense (including, but not limited to, the reasonable fees and
expenses of counsel) arising out of or in connection with the performance of
its obligations under this Agreement and under each other agreement entered
into by the Trustee in furtherance of the administration of the Trust
(including, without limiting the scope of the foregoing, the Custody Agreements
and any Authorized Participant Agreement, including the Trustee’s
indemnification obligations thereunder) or by reason of the Trustee’s
acceptance of the Trust incurred without (1) gross negligence, bad faith,
willful misconduct or willful malfeasance on the part of such Trustee
Indemnified Party in connection with the performance of its obligations under
this Agreement or any such other agreement or any actions taken in accordance
with the provisions of this Agreement or any such other agreement or (2)
reckless disregard on the part of such Trustee Indemnified Party of its
obligations and duties under this Agreement or any such other agreement. Such
indemnity shall include payment from the Trust of the costs and expenses 

21

incurred by such Trustee Indemnified Party in defending itself against
any claim or liability in its capacity as Trustee. Any amounts payable to a
Trustee Indemnified Party under this Section 5.6(a) may be payable in advance
or shall be secured by a lien on the Trust. 

                    (b)
The Sponsor and its members, managers, directors, officers, employees,
affiliates (as such term is defined under the Securities Act of 1933, as
amended) and subsidiaries (each, a “Sponsor Indemnified Party”) shall be
indemnified from the Trust and held harmless against any loss, liability or
expense (including, but not limited to, the reasonable fees and expenses of
counsel) arising out of or in connection with the performance of its
obligations under this Agreement and under each other agreement entered into by
the Sponsor, in furtherance of the administration of the Trust (including,
without limiting the scope of the foregoing, Authorized Participant Agreements
to which the Sponsor is a party, including the Sponsor’s indemnification
obligations thereunder) or any actions taken in accordance with the provisions
of this Agreement incurred without (1) gross negligence, bad faith, willful
misconduct or willful malfeasance on the part of such Sponsor Indemnified Party
in connection with the performance of its obligations under this Agreement or
any such other agreement or any actions taken in accordance with the provisions
of this Agreement or any such other agreement or (2) reckless disregard on the
part of such Sponsor Indemnified Party of its obligations and duties under this
Agreement. Such indemnity shall include payment from the Trust of the costs and
expenses incurred by such Sponsor Indemnified Party in defending itself against
any claim or liability in its capacity as Sponsor. Any amounts payable to a
Sponsor Indemnified Party under this Section 5.6(b) may be payable in advance
or shall be secured by a lien on the Trust. The Sponsor may, in its discretion,
undertake any action which it may deem necessary or desirable in respect of
this Agreement and the rights and duties of the parties hereto and the
interests of the Registered Owners and, in such event, the legal expenses and
costs of any such actions shall be expenses and costs of the Trust and the
Sponsor shall be entitled to be reimbursed therefor by the Trust. 

                    (c)
The indemnities provided by this section shall survive notwithstanding any
termination of this Agreement and the Trust or the resignation or removal of
the Trustee or the Sponsor, respectively. 

	
  

 	
  

 	
  

 
	
  

 	
 Section 5.7

 	
 Charges of
 Trustee. 

 

                    (a)
Each Depositor, and each person surrendering Shares for the purpose of
withdrawing Trust Property, shall pay to the Trustee a fee of $500 per transaction
for the Delivery of Shares pursuant to Section 2.4 and the Surrender of Creation
    Units of Shares pursuant to Section 2.6 or 6.2 (or such other fee as the
    Trustee, with the prior written consent of the Sponsor, may from time to
    time announce).

                    (b)
The Trustee is entitled to receive from the Sponsor fees for its ordinary
services and reimbursement for its out-of-pocket expenses in accordance with
written agreements between the Sponsor and the Trustee. Should the Sponsor fail
to pay the same, the Trustee shall be authorized to charge the same to the
Trust to the extent of amounts which could be charged to the Trust under
Section 5.8(a) hereof in respect of the Sponsor’s fee (and the Trustee may
charge the same to the Trust to such extent without regard to whether, because
of the Sponsor’s default, fee waiver or other reason, the Sponsor may not then
be entitled to payment pursuant to Section 5.8(a)), and any amount paid to the
Sponsor pursuant to Section 

22

5.8(a) shall be net of amounts so withheld. The Trustee’s right of
reimbursement shall be secured by a lien on amounts chargeable to the Trust
under Section 5.8(a), without giving effect to any fee waiver then in effect,
prior to the interest of the Sponsor, the Beneficial Owners and any other
Person. 

                    (c)
The Trustee is entitled to charge the Trust for all expenses and disbursements
incurred by it hereunder exclusive of amounts specified in the preceding
Section 5.7(b), including the fees and disbursements of its legal counsel and
those expenses identified in any Custody Agreement as payable by the Trustee,
except that the Trustee is not entitled to charge the Trust for (i) expenses
and disbursements incurred by it prior to the commencement of trading of Shares
on the Exchange and (ii) fees of agents for performing services the Trustee is
required to perform under this Agreement. The Trustee’s right of reimbursement
for expenses and disbursements under this paragraph shall be deductible from,
and constitute a lien against, the assets of the Trust. 

                    (d)
Any pecuniary cost of the Trustee resulting from actions taken to protect the
Trust and the rights and interest of the Registered Owners pursuant to the
terms of this Agreement, including, without limitation, the Trustee’s
appearance in, prosecution of or defense of any action that it considers
necessary or desirable to protect the Trust or the interests of the Beneficial
Owners, shall be deductible from, and constitute a lien against, the assets of
the Trust. 

	
  

 	
  

 	
  

 
	
  

 	
 Section 5.8

 	
 Charges of
 Sponsor. 

 

                    (a)
The Sponsor is entitled to receive from the Trust, chargeable as an expense of
the Trust, a fee for services that will accrue daily and be paid monthly in
arrears in the manner provided in Section 4.7(d) at an annualized rate of 0.39%
of Adjusted Net Asset Value. The Sponsor may, at its sole discretion and from
time to time, waive all or a portion of its fee payable under this Section
5.8(a) for such periods of time as shall be specified in the Sponsor’s written
notice of such fee waiver to the Trustee. The Sponsor is under no obligation to
waiver its fees hereunder, and any such waiver shall create no obligation to
waive fees during any period not covered by the applicable waiver. Any fee
waiver by the Sponsor shall not operate to reduce Sponsor’s obligations
hereunder, including, but not limited to, the Sponsor’s obligations under
Section 5.3(g). 

                    (b)
The Sponsor is entitled to receive reimbursement from the Trust for all
expenses and disbursements incurred by it under the last sentence of Section
5.6(b) or that are of the type described in Sections 4.7(a)(ii), (iii), (iv),
and (vi) of this Agreement, except that the Sponsor is not entitled to charge
the Trust for (i) expenses and disbursements incurred by it prior to the
commencement of trading of Shares on the Exchange and (ii) fees of agents for
performing services the Sponsor is required to perform under this Agreement. 

	
  

 	
  

 	
  

 
	
  

 	
 Section 5.9

 	
 Retention of
 Trust Documents. 

 

          The Trustee
is authorized to destroy those documents, records, bills and other data
compiled during the term of this Agreement at the times permitted by the laws
or regulations governing the Trustee, unless the Sponsor reasonably requests the
Trustee in writing to retain those items for a longer period. 

23

	
  

 	
  

 	
  

 
	
  

 	
 Section 5.10

 	
 Federal
 Securities Law Filings. 

 

                    (a)
The Sponsor shall (i) prepare and file a registration statement with the
Commission and take such action as is necessary from time to time to qualify
the Shares for offering and sale under the federal securities laws of the
United States, including the preparation and filing of amendments and
supplements to such registration statement, (ii) promptly notify the Trustee of
any amendment or supplement to the registration statement or prospectus, of any
order preventing or suspending the use of any prospectus, of any request for
the amending or supplementing of the registration statement or prospectus or if
any event or circumstance occurs which is known to the Sponsor as a result of
which the registration statement or prospectus, as then amended or
supplemented, would include an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, (iii) provide
the Trustee from time to time with copies, including copies in electronic form,
of the prospectus, as amended and supplemented, in such quantities as the
Trustee may reasonably request and (iv) prepare and file any periodic reports
or updates that may be required under the Exchange Act. The Trustee shall
furnish to the Sponsor any information from the records of the Trust that the
Sponsor reasonably requests in writing that is needed to prepare any filing or
submission that the Sponsor or the Trust is required to make under the federal
securities laws of the United States, and the Sponsor is entitled to rely on
such information so furnished by the Trustee. 

                    (b)
The Sponsor shall have all necessary and exclusive power and authority to (i)
from time to time adopt, implement or amend such disclosure controls and
procedures as are necessary or desirable, in the Sponsor’s reasonable judgment,
to ensure compliance with the disclosure and ongoing reporting obligations
under any applicable securities laws; (ii) appoint and remove the auditors of
the Trust; and (iii) seek from the relevant securities or other regulatory
authorities such relief, clarification or other action as the Sponsor shall
deem necessary or desirable regarding the disclosure or financial reporting
obligations of the Trust. 

                    (c)
The policies and procedures comprising the Trust’s initial Internal Control
Over Financial Reporting have been adopted as of the date of this Agreement and
copies thereof have been delivered to the appropriate officers of the Sponsor
and the Trustee. Amendments to such initial Internal Control Over Financial
Reporting may be proposed from time to time by the Sponsor, but such amendments
may not be adopted in connection with the preparation of the Trust’s financial
statements without the Trustee’s consent (which consent will not be
unreasonably withheld or delayed). 

	
  

 	
  

 	
  

 
	
  

 	
 Section 5.11

 	
 Prospectus
 Delivery. 

 

          The Trustee
shall, if required by the federal securities laws of the United States, in any
manner permitted by such laws, deliver at the time of issuance of Shares, a
copy of the relevant prospectus, as most recently furnished to the Trustee by
the Sponsor, to each Depositor. 

	
  

 	
  

 	
  

 
	
  

 	
 Section 5.12

 	
 Discretionary
 Actions by Trustee; Consultation. 

 

                    (a)
The Trustee may, in its discretion, undertake any action that it considers
necessary or desirable to protect the Trust or the interests of the Registered
Owners. The 

24

expenses incurred by the Trustee in connection with taking any action
under the preceding sentence (including the fees and disbursements of legal
counsel) shall be expenses of the Trust, and the Trustee shall be entitled to
be reimbursed for those expenses by the Trust. 

                    (b)
The Trustee shall notify and consult with the Sponsor before undertaking any
action under subsection (a) above or if the Trustee becomes aware of any
development or event that affects the administration of the Trust but is not
contemplated or provided for in this Agreement. 

                    (c)
The Sponsor shall notify and consult with the Trustee before undertaking any
action under the last sentence of Section 5.6(b) or if the Sponsor becomes
aware of any development or event that affects the administration of the Trust
but is not contemplated or provided for in this Agreement. 

	
  

 	
  

 	
  

 
	
  

 	
 Section 5.13

 	
 Dissolution
 of the Sponsor Not to Terminate Trust. 

 

          The
dissolution of the Sponsor, or its ceasing to exist as a legal entity from, or
for, any cause, shall not operate to terminate this Agreement insofar as the
duties and obligations of the Trustee are concerned unless the Trust is terminated
pursuant to Section 6.2. 

ARTICLE VI. 

AMENDMENT AND TERMINATION

	
  

 	
  

 	
  

 
	
  

 	
 Section 6.1

 	
 Amendment.
 

 

          Subject
    to Section 4.11 hereof, the Trustee and the Sponsor may amend any provisions
    of this Agreement without the consent of any Registered Owner. Any amendment
    that imposes or increases any fees or charges (other than taxes and other
governmental charges, registration fees or other such expenses), or that
otherwise prejudices any substantial existing right of the Registered Owners
will not become effective as to outstanding Shares until 30 days after notice
of such amendment is given to the Registered Owners. Amendments pursuant to
Sections 2.6(c) or (d) shall not require notice pursuant to the preceding
sentence. Every Registered Owner and Beneficial Owner, at the time any
amendment so becomes effective, shall be deemed, by continuing to hold any
Shares or an interest therein, to consent and agree to such amendment and to
    be bound by this Agreement as amended thereby. In no event shall any amendment
impair the right of the Registered Owner of Shares to Surrender Creation
    Units of
Shares and receive therefor the amount of Trust Property represented thereby,
except in order to comply with mandatory provisions of applicable law. 

	
  

 	
  

 	
  

 
	
  

 	
 Section 6.2

 	
 Termination.
 

 

                    (a)
The Trustee shall set a date on which this Agreement will terminate and mail
notice of that termination to the Registered Owners at least 30 days prior to
the date set for termination if any of the following occurs: 

25

                              (i)
The Trustee is notified that the Shares are delisted from a national securities
exchange and are not approved for listing on another national securities
exchange within five business days of their delisting; 

                              (ii)
Registered Owners acting in respect of at least 75% of the outstanding Shares
notify the Trustee that they elect to terminate the Trust; 

                              (iii)
60 days have elapsed since the Trustee notified the Sponsor of the Trustee’s
election to resign and a successor trustee has not been appointed and accepted
its appointment as provided in Section 5.4; 

                              (iv)
the Commission determines that the Trust is an investment company under the
Investment Company Act of 1940, as amended, and the Trustee has actual
knowledge of such Commission determination; 

                              (v)
the aggregate market capitalization of the Trust, based on the closing price
for the Shares, was less than $350 million (as adjusted for inflation by
reference to the Consumer Price Index as published by the Bureau of Labor
Statistics) at any time after the first anniversary after the Trust’s formation
and the Trustee receives, within six months after the last of those trading
days, notice from the Sponsor of its decision to terminate the Trust; 

                              (vi)
the CFTC determines that the Trust is a commodity pool under the Commodity
Exchange Act of 1936, as amended, and the Trustee has actual knowledge of that
determination; 

                              (vii)
the Trust fails to qualify for treatment, or ceases to be treated, for United
States federal income tax purposes, as a grantor trust, and the Trustee
receives notice from the Sponsor that the Sponsor determines that, because of
that tax treatment or change in tax treatment, termination of the Trust is
advisable; 

                              (viii)
60 days have elapsed since DTC ceases to act as depository with respect to the
Shares and the Sponsor has not identified another Depository which is willing
to act in such capacity; or 

                              (ix)
as provided in paragraph (c) of this Section 6.2. 

                    (b)
On and after the date of termination of this Agreement, the Registered Owner of
Shares will, upon (i) Surrender of those Shares, (ii) payment of the fee of the
Trustee for the Surrender of Shares provided in Section 5.7, and (iii) payment
of any applicable taxes or other governmental charges, be entitled to Delivery,
to him or upon his order, of the amount of Trust Property represented by those
Shares. The Trustee shall not accept any deposits of metal after the date of
termination of this Agreement. If any Shares remain outstanding after the date
of termination of this Agreement, the Trustee thereafter shall discontinue the
registration of transfers of Shares, shall not make any distributions to
Registered Owners, and shall not give any further notices or perform any
further acts under this Agreement, except that the Trustee shall continue to
collect distributions pertaining to Trust Property and hold the same uninvested
and without liability for interest, pay the Trust’s expenses and sell metal as
necessary to meet those expenses and shall continue to deliver Trust Property,
together with any distributions received 

26 

with respect thereto and the net proceeds of the sale of any other
property, in exchange for Shares Surrendered to the Trustee (after deducting or
upon payment of, in each case, the fee of the Trustee set forth in Section 5.7
for the Surrender of Shares, any expenses for the account of the Registered
Owner of such Shares in accordance with the terms and conditions of this
Agreement, and any applicable taxes or other governmental charges). At any time
after the expiration of 90 days following the date of termination of this
Agreement, the Trustee shall sell the Trust Property then held under this
Agreement and may thereafter hold uninvested the net proceeds of any such sale,
together with any other cash then held by it under this Agreement, without
liability for interest, for the pro rata benefit of the Registered Owners of
Shares that have not theretofore been Surrendered. After making such sale, the
Trustee shall be discharged from all obligations under this Agreement, except
to account for such net proceeds and other cash (after deducting, in each case,
any fees, expenses, taxes or other governmental charges payable by the Trust,
the fee of the Trustee for the Surrender of Shares and any expenses for the
account of the Registered Owner of such Shares in accordance with the terms and
conditions of this Agreement, and any applicable taxes or other governmental
charges). Upon the termination of this Agreement, the Sponsor shall be
discharged from all obligations under this Agreement except that its
obligations to the Trustee under Sections 5.6, 5.7 and 5.8 shall survive
termination of this Agreement. 

                    (c)
If the Sponsor shall be adjudged bankrupt or insolvent, or a receiver of the Sponsor
or of its property shall be appointed, or a trustee or liquidator or any public
officer shall take charge or control of the Sponsor or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then in
any such case the Sponsor shall be deemed conclusively to have resigned with
such resignation being effective immediately upon the occurrence of any of the
specified events, and the Trustee may terminate and liquidate the Trust and
distribute its remaining assets pursuant to this Section 6.2. The Trustee shall
have no obligation to appoint a successor Sponsor or to assume the duties of
the Sponsor and shall have no liability to any person because the Trust is or
is not terminated pursuant to this paragraph. 

ARTICLE VII. 

MISCELLANEOUS

	
  

 	
  

 	
  

 
	
  

 	
 Section 7.1

 	
 Counterparts.
 

 

          This
Agreement may be executed in any number of counterparts, each of which shall be
deemed an original and all of such counterparts shall constitute one and the
same instrument. Copies of this Agreement shall be filed with the Trustee and
shall be open to inspection by any Registered Owner during the Trustee’s
business hours. 

	
  

 	
  

 	
  

 
	
  

 	
 Section 7.2

 	
 Third-Party
 Beneficiaries. 

 

          This
Agreement is for the exclusive benefit of the parties hereto, any Sponsor
Indemnified Party or any Trustee Indemnified Party and the Beneficial Owners,
and shall not be deemed to give any legal or equitable right, remedy or claim
whatsoever to any other person. 

27 

	
  

 	
  

 	
  

 
	
  

 	
 Section 7.3

 	
 Severability. 

 

          In case any
one or more of the provisions contained in this Agreement should be or become
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions of this Agreement shall in no way be
affected, prejudiced or disturbed thereby. 

	
  

 	
  

 	
  

 
	
  

 	
 Section 7.4

 	
 Certain
 Matters Relating to Beneficial Owners. 

 

                    (a)
By the purchase and acceptance or other lawful delivery and acceptance of
Shares, each Beneficial Owner thereof shall be deemed to be a beneficiary of
the Trust created by this Agreement and vested with beneficial undivided
interest in the Trust to the extent of the Shares owned beneficially by such
Beneficial Owner, subject to the terms and conditions of this Agreement. Upon
issuance as provided herein, Shares shall be fully paid and non-assessable. 

                    (b)
Subject to and in accordance with Section 2.6, Shares may at any time prior to
the date specified by the Trustee in connection with the termination of the
Trust be tendered to the Trustee for redemption. 

                    (c)
The death or incapacity of any Beneficial Owner shall not operate to terminate
this Agreement or the Trust, nor entitle such Beneficial Owner’s legal
representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the Trust, nor
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them. Each Beneficial Owner expressly waives any right such Beneficial
Owner may have under any rule of law, or the provisions of any statute, or
otherwise, to require the Trustee at any time to account, in any manner other
than as expressly provided in the Agreement, in respect of the Trust Property
from time to time received, held and applied by the Trustee hereunder. 

                    (d)
No Beneficial Owner shall have any right to vote or in any manner otherwise to
control the operation and management of the Trust, or the obligations of the
parties hereto. Nothing set forth in this Agreement shall be construed so as to
constitute the Beneficial Owners from time to time as partners or members of an
association; nor shall any Beneficial Owner ever be liable to any third person
by reason of any action taken by the parties to this Agreement, or for any
other cause whatsoever. 

                    (e)
The rights of Beneficial Owners must be exercised by DTC Participants or
Participants of any successor Depository acting on their behalf in accordance
with its rules and procedures 

	
  

 	
  

 	
  

 
	
  

 	
 Section 7.5

 	
 Notices.
 

 

                    (a)
All notices given under this Agreement must be in writing. 

                    (b)
Any and all notices to be given to the Trustee or the Sponsor shall be deemed
to have been duly given (i) when it is actually delivered by a messenger or
recognized courier service, (ii) five days after it is mailed by registered or
certified mail, postage paid or (iii) when receipt of a facsimile transmission
is acknowledged via a return receipt or receipt confirmation as requested by
the original transmission, in each case to or at the address set forth below: 

28

To the Trustee: 

or any other place to which the Trustee may have
transferred its Corporate Trust Office with notice to the Sponsor. 

To the Sponsor: 

ETF SECURITIES USA LLC

Ordnance House

31 Pier Road

St. Helier, Jersey JE48PW

Channel Islands

Telephone: 011 44 207 448-4330

Attention: President

          with
a copy to:

or any other place to
which the Sponsor may have transferred its principal office with notice to the
Trustee. 

                    (c)
Any and all
notices to be given to a Registered Owner shall be deemed to have been duly
given (i) when actually delivered by messenger or a recognized courier service,
(ii) when mailed, postage prepaid or (iii) when sent by facsimile
transmission confirmed by letter, in each case at or to the address of such Registered
Owner as it appears on the transfer books of the Trustee, or, if such Registered
Owner shall have filed with the Trustee a written request that any notice or
communication intended for such Registered Owner be delivered to some other
address, at the address designated in such request. Notices to Beneficial
Owners shall be delivered to Authorized Participants and DTC Participants
designated by DTC or any successor Depository.

	
  

 	
  

 	
  

 
	
  

 	
 Section 7.6

 	
 Agent for Service; Submission to Jurisdiction.
 

 

          The
Sponsor hereby (i) irrevocably designates and appoints
__________________________, in the State of _____________, as the Sponsor’s
authorized agent upon which process may be served in any suit or proceeding
arising out of or relating to the Shares, the Trust Property or this Agreement,
(ii) consents and submits to the jurisdiction of any state or federal court in
The City of New York, State of New York, in which any such suit or proceeding
may be instituted, and (iii) agrees that service of process upon said
authorized agent shall be deemed in every respect effective service of process
upon the Sponsor in any such suit or proceeding. The Sponsor agrees to deliver,
upon the execution and delivery of this Agreement, a written acceptance by such
agent of its appointment as such agent. The Sponsor further agrees to take any
and all action, including the filing of any and all such documents and
instruments, as may be necessary to continue such designation and appointment
in full force and effect for so long as any Shares remain outstanding or this
Agreement remains in force. In the 

29

event the Sponsor fails
to continue such designation and appointment in full force and effect, the
Sponsor hereby waives personal service of process upon it and consents that any
such service of process may be made by certified or registered mail, return
receipt requested, directed to the Sponsor at its address last specified for
notices hereunder, and service so made shall be deemed completed five (5) days
after the same shall have been so mailed. 

          Each
party hereto, each Authorized Participant by its delivery of an Authorized
Participant Agreement and each Beneficial Owner by the acceptance of a Share,
irrevocably consents to the jurisdiction of the courts of the State of New York
and of any Federal Court located in the Borough of Manhattan in such State in
connection with any action, suit or other proceeding arising out of or relating
to this Agreement or any action taken or omitted hereunder, and waives any claim
of forum non conveniens and any objections as to laying of venue. Each party
further waives personal service of any summons, complaint or other process and
agrees that service thereof may be made by certified or registered mail
directed to such person at such person’s address for purposes of notices
hereunder.

	
  

 	
  

 	
  

 
	
  

 	
 Section 7.7

 	
 Governing Law. 

 

          This
Agreement shall be interpreted under, and all rights and duties under this
Agreement shall be governed by, the internal substantive laws (but not the choice
of law rules) of the State of New York. 

30

          IN
WITNESS WHEREOF, ETF SECURITIES USA LLC and _______________ have duly executed
this Depositary Trust Agreement as of the day and year first set forth above. 

	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 ETF SECURITIES USA LLC

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 By:

 	
  

 	
  

 
	
  

 	
  

 	
  

 	

 

 
	
  

 	
  

 	
 Name:

 	
  

 
	
  

 	
  

 	
 Title:

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 WITNESSED:

 	
 WITNESSED:

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 By:

 	
  

 	
 By:

 	
  

 	
  

 
	
  

 	

 

 	
  

 	

 

 
	
 Name:

 	
 Name:

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	

 

 	
  ,

 
	
  

 	
  

 	
 as Trustee

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 By:

 	
  

 	
  

 
	
  

 	
  

 	
  

 	

 

 
	
  

 	
  

 	
 Name:

 	
  

 
	
  

 	
  

 	
 Title:

 	
  

 

 [Signature Page to ETFS Physical
Base Metals Depositary Trust Agreement]

 [Depositary Trust Agreement acknowledgment, Trustee]

	
  

 	
  

 
	
 STATE OF NEW YORK

 	
 )

 
	
  

 	
 ) ss.:

 
	
 COUNTY OF NEW YORK

 	
 )

 

On the __ day of __________, 2011 before me, the undersigned, personally appeared _____________,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his capacity, and that by his
signature on the instrument, the individual, or the person upon behalf of which
the individual acted, executed the instrument.

	
  

 	
  

 
	
  

 	

 

 
	
  

 	
 Notary Public

 

(Notarial Seal)

SCHEDULE
A

	
  

 	
  

 	
  

 
	
  

 	
 •

 	
 ETFS Physical Aluminum

 
	
  

 
	
  

 	
 •

 	
 ETFS Physical Copper

 
	
  

 
	
  

 	
 •

 	
 ETFS Physical Lead

 
	
  

 
	
  

 	
 •

 	
 ETFS Physical Nickel

 
	
  

 
	
  

 	
 •

 	
 ETFS Physical Tin

 
	
  

 
	
  

 	
 •

 	
 ETFS Physical Zinc

 
	
  

 
	
  

 	
 •

 	
 ETFS Physical IM Basket 

 

A-1

EXHIBIT
A

[Form of
Certificate]

A-2

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00187-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00187-of-00352.parquet"}]]