Northern Powergrid Network Investment - A Finance Contract between the European Investment Bank and Northern Powergrid (Northeast) Ltd Newcastle upon Tyne, 1 December 2015 Luxembourg, 2 December 2015

THIS CONTRACT IS MADE BETWEEN:

of the first part, and

of the second part.

"Acceptable Security" means security for the Loan in the form of:

"Acceptable Security Event" means any of the following events, circumstances or occurrences:

in any other currency or currencies and, in the case of any of the foregoing, the same is not discharged within 14 (fourteen) days or if the Acceptable Security Provider petitions for the appointment of such an officer;

"Acceptable Security Document" means the Guarantee Agreement or any other document evidencing Acceptable Security.

"Acceptable Security Provider" means the Guarantor or any other provider of Acceptable Security.

"Acceptance Deadline" for a notice means:

(a)    16h00 Luxembourg time on the day of delivery, if the notice is delivered by 14h00 Luxembourg time on a Business Day; or

(b)    11h00 Luxembourg time on the next following day which is a Business Day, if the notice is delivered after 14h00 Luxembourg time on any such day or is delivered on a day which is not a Business Day.

"Authorisation" means any authorisation, consent, registration, filing, agreement, notarisation, certificate, licence, approval, permit, resolution, authority or exemption and any corporate, creditors' and shareholders' approval or consent. 

"Authority" means the Gas and Electricity Markets Authority, operating through OFGEM, and any successors thereto.

"Bonds" means the GBP 150,000,000 5.125% per cent. Guaranteed Bonds due 2035 issued by Northern Electric Finance plc.

"Borrower Material Adverse Change" means, in relation to the Borrower or any other member of the Group, any event or change of condition, as compared with the condition as at the date of this Contract, affecting the Borrower or its Group as a whole, which: (1) materially impairs the ability of the Borrower to perform its financial obligations under this Contract or to comply with any of the financial ratios set out in Article 6.13 or 6.14 of this Contract; or (2) materially impairs the business or financial condition of the Borrower or its Group as a whole.

"Business Day" means a day (other than a Saturday or Sunday) on which the Bank and commercial banks are open for general business in Luxembourg. 

"Calculation Date" has the meaning given to it in Article 6.14C.

"Cash Equivalents" has the meaning given to it in Article 6.14C.

"Change-of-Control Event" has the meaning given to it in Article 4.03A(3).

"Change-of-Law Event" has the meaning given to it in Article 4.03A(4).

“Code” means the U.S. Internal Revenue Code of 1986, as amended.

"Competition Act" means the Competition Act 1998.

"Compliance Certificate" means a certificate substantially in the form set out in Schedule C.3.

"Compulsory Prepayment Event" means any circumstance, event or occurrence which constitutes or which, with the giving of notice, the passage of time or the making of any determination, or any combination thereof, would constitute a prepayment event under Article 4.03A.

"Consent Letter" means the letter dated 6 August 2004 from the Gas and Electricity Markets Authority to the Borrower.

"Consolidated EBIT" has the meaning given to it in Article 6.14C.

"Consolidated Net Finance Charges" has the meaning given to it in Article 6.14C.

"Consolidated Senior Total Net Debt" has the meaning given to it in Article 6.14C.

"Contract" has the meaning given to it in Recital (4).

"Credit" has the meaning given to it in Article 1.01.

"Credit Facility" has the meaning given to it in Article 7.04(a).

“Criminal Offence” means any of the following criminal offences as applicable: fraud, corruption, coercion, collusion, obstruction, money laundering, financing of terrorism (each as defined in the Bank’s Anti-Fraud Policy dated 17 September 2013).

"Cross Default Obligation" means a term of any agreement or arrangement under which the Borrower’s liability to pay or repay any debt or other sum arises or is increased or accelerated or is capable of arising or of increasing or of being accelerated, because of a default (however it may be described or defined) by any person other than the Borrower, unless:

(a)    that liability can arise only as the result of a default by a Subsidiary of the Borrower;

(b)    the Borrower holds a majority of the voting shares in that Subsidiary and has the right to appoint or remove a majority of its board of directors; and

(c)    that Subsidiary carries on business only for a purpose within sub-paragraph (a) or (b) of the definition of "Permitted Purpose" set out in Standard Condition 1 of the Licence.

"Default" means any Event of Default or any event, circumstance or occurrence which, with the giving of notice, the passage of time or the making of any determination, or any combination thereof, would become an Event of Default.

“Deferment Indemnity” means an indemnity calculated on the amount of disbursement deferred or suspended at the percentage rate (if higher than zero) by which:

exceeds

-    LIBOR (one month rate) less 0.125% (12.5 basis points), unless this value is less than zero, in which case it will be set at zero.

Such indemnity shall accrue on a daily basis from the Scheduled Disbursement Date to the Disbursement Date or, as the case may be, until the date of cancellation of the Notified Tranche in accordance with this Contract.

“Disbursement Date” means the date on which actual disbursement of a Tranche is made by the Bank.

"Disbursement Notice" means a notice from the Bank to the Borrower pursuant to and in accordance with Article 1.02C.

"Disbursement Request" means a notice substantially in the form set out in Schedule C.1.

“Disruption Event” means either or both of:

(i) from performing its payment obligations under this Contract; or

(ii) from communicating with other parties,

and which disruption (in either such case as per (a) or (b) above) is not caused by, and is beyond the control of, the party whose operations are disrupted.

“EIB Group” means Bank and the European Investment Fund.

"Electricity Act" means the Electricity Act 1989, as amended by the Utilities Act 2000, the Enterprise Act 2002 and the Energy Act 2004, the Energy Act 2008, the Energy Act 2010, the Energy Act 2011,the Enterprise and Regulatory Reform Act 2013 and the Infrastructure Act 2015 or as otherwise amended from time to time.

"Energy Act" means the Energy Act 2004, as amended by the Energy Act 2008, the Energy Act 2011 and the Enterprise and Regulatory Reform Act 2013, or as otherwise amended from time to time

"Energy Administration Order" means an order made pursuant to Chapter 3 of Part 3 of the Energy Act, as amended by the Energy Act 2011 and the Enterprise and Regulatory Reform Act 2013.

"Enforcement Order" means a Final Order or a Provisional Order.

"Enterprise Act" means the United Kingdom Enterprise Act 2002.

"Environment" means the following, in so far as they affect human health and social well-being:

(a) fauna and flora;

(b) soil, water, air, climate and the landscape; and

(c) cultural heritage and the built environment,

and includes, without limitation, occupational and community health and safety 

“Environmental Approval” means any Authorisation required by Environmental Law.

"Environmental Claim" means any claim, proceeding or formal notice by any person in respect of any Environmental Law.

"Environmental Impact Assessment" or “EIA” has the meaning given to it in the relevant Environmental Law.

"Environmental Law" means EU law and national laws and regulations applicable in the United Kingdom, as well as applicable international treaties, of which a principal objective is the preservation, protection or improvement of the Environment.

"EUR" or "euro" means the lawful currency for the time being of the Participating Member States.

"Event of Default" means any one of the circumstances, events or occurrences specified in Article 10.01.

”Existing Bond Documentation” means the terms and conditions of the following bonds:

(a) the Bonds;

(b) the GBP 200,000,000 5.125% Guaranteed Bonds due 2035 issued by Northern Powergrid (Yorkshire) plc on 5 May 2005; and

(c) the GBP 200,00,000 7.25% Bonds due 2022 issued by the Guarantor on 15 December 1997.

“FATCA” means:

"Final Availability Date" means the date which is 12 (twelve) months after the date of this Contract. 

"Final Order" means a final order, as defined in section 25 of the Electricity Act.

"Final Determination" has the meaning given to it in Article 6.14C.

"Financial Indebtedness" means, at any time, any obligation of such person, whether incurred as principal or surety and whether present, future, actual or contingent, for the payment or repayment of money in respect of:

(a)    moneys borrowed;

(b)    any amount raised by acceptance under any acceptance credit facility or dematerialised equivalent;

(c)    any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument;

(d)    the amount of any liability in respect of any lease or hire purchase contract which would, in accordance with IFRS, be treated as a finance or capital lease;

(e)    receivables sold or discounted (other than any receivables to the extent they are sold on a non-recourse basis) and any bill discounting or factoring facilities;

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

(g)    leases (whether in respect of land, machinery, equipment or otherwise) entered into primarily as a method of raising finance or financing the acquisition of that asset;

(h)    any amount raised under any other transaction (including any forward sale or purchase agreement) having the commercial effect of a borrowing or raising money;

(i)    any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price (and, when calculating the value of any derivative transaction, only the marked to market value shall be taken into account);

(j)    any counter-indemnity obligation in respect of a guarantee, indemnity, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution;

(k)    any amount raised by the issue of redeemable shares which are by their terms capable of redemption before the 31 December 2036 in the case of a Tranche being repaid in instalments or 31 December 2028 in the case of a Tranche being repaid by a single instalment; and (without double counting) the amount of any liability in respect of any guarantee or indemnity in respect of any of the items referred to in paragraphs (a) to (k) above.

"First Currency" has the meaning given to it in Article 9.03(a).

"Fixed Rate" means an annual interest rate determined by the Bank in accordance with the applicable principles from time to time laid down by the governing bodies of the Bank for loans made at a fixed rate of interest, denominated in the currency of the Tranche and bearing equivalent terms for the repayment of capital and the payment of interest. Fixed Rate shall include the Margin.

"Fixed Rate Notified Tranche" means a Notified Tranche which is a Fixed Rate Tranche.

"Fixed Rate Tranche" means a Tranche on which Fixed Rate is applied.

"Floating Rate" means a fixed-spread floating interest rate, that is to say an annual interest rate equal to LIBOR plus the Spread, determined by the Bank for each successive Floating Rate Reference Period.

"Floating Rate Notified Tranche" means a Notified Tranche which is a Floating Rate Tranche.

"Floating Rate Reference Period" means each period from one Payment Date to the next relevant Payment Date and the first Floating Rate Reference Period shall commence on the date of disbursement of the Tranche.

"Floating Rate Tranche" means a Tranche on which Floating Rate is applied.

"GBP" means pounds sterling, the lawful currency for the time being of the United Kingdom.

"GIC" has the meaning given to it in Article 6.14C.

"Governmental Authority" means the government of any country, or of any political subdivision thereof, whether state, regional or local, and any agency, authority, branch, department, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government or any subdivision thereof (including any supra-national bodies and including, for the avoidance of doubt, the Authority), and all officials, agents and representatives of each of the foregoing.

"Group" means the Borrower and the Borrower's Subsidiaries (if any) from time to time.

"Guarantee" has the meaning given to it in Recital (6).

"Guarantee Agreement" has the meaning given to it in Recital (6). 

"Guarantor" has the meaning given to it in Recital (6). 

"Guarantor Group" means the Guarantor and the Guarantor's Subsidiaries from time to time.

"IFRS" means the international accounting standards within the meaning of IAS Regulation 1606/2002.

"Incorporated Provision" has the meaning given to it in Article 7.04(a).

"Indemnifiable Prepayment Event" means a prepayment event under Article 4.03A other than paragraphs 4.03A(2) and 4.03A(5). 

"Interest Cover" has the meaning given to it in Article 6.14C.

"Interest Revision/Conversion" means the determination of new financial conditions relative to the interest rate, specifically the same interest rate basis ("revision") or a different interest rate basis ("conversion") which can be offered for the remaining term of a Tranche or until a next Interest Revision/Conversion Date, if any, for an amount which, at the proposed Interest Revision/Conversion Date, is not less than GBP 10,000,000 (ten million pounds sterling).

"Interest Revision/Conversion Date" means the date, being a Payment Date, specified by the Bank pursuant to Article 1.02C in the Disbursement Notice or pursuant to Article 3 and Schedule D.

"Interest Revision/Conversion Proposal" means a proposal made by the Bank under Schedule D.

"Interest Revision/Conversion Request" means a written notice from the Borrower, delivered at least 75 (seventy-five) days before an Interest Revision/Conversion Date, requesting the Bank to submit to it an Interest Revision/Conversion Proposal. The Interest Revision/Conversion Request shall also specify:

(a)    Payment Dates chosen in accordance with the provisions of Article 3.01;

(b)    the preferred repayment schedule chosen in accordance with Article 4.01; and

(c)    any further Interest Revision/Conversion Date chosen in accordance with Article 3.01.

"LIBOR" has the meaning given to it in Schedule B.

"Licence" means the distribution licence granted to the Borrower under Section 6(1)(c) of the Electricity Act with respect to the distribution of electricity in the distribution service area as such area is defined in such licence, as such licence may be amended or replaced from time to time.

"Loan" means the aggregate amount of Tranches disbursed from time to time by the Bank under this Contract.

"Margin" means the component of the rate of interest quantified in Article 3.01.

“Market Disruption Event” means any of the following circumstances:

(A) the cost to the Bank of obtaining funds from its sources of funding, as determined by the Bank, for a period equal to the Floating Rate Reference Period of such Tranche (i.e. in the money market) would be in excess of the applicable Relevant Interbank Rate;

or

(B) the Bank determines that adequate and fair means do not exist for ascertaining the applicable Relevant Interbank Rate for the relevant currency of such Tranche or it is not possible to determine the Relevant Interbank Rate in accordance with the definition contained in Schedule B.

"Material Adverse Change" means (a) in relation to the Borrower, a Borrower Material Adverse Change; and (b) in relation to the Guarantor or any other member of the Guarantor Group, any event or change of condition, as compared with the condition as at the date of this Contract, affecting the Guarantor or the Guarantor Group, which: (1) materially impairs the ability of the Guarantor to perform its financial obligations under the Guarantee Agreement or to comply with any of the financial ratios set out in Article 6.01, 6.02 or 6.03 of the Guarantee Agreement; or (2) materially impairs the business or financial condition of the Guarantor or of the Guarantor Group as a whole.

"Maturity Date" means the last or sole repayment date of a Tranche specified pursuant to Article 4.01A(b)(iv) or Article 4.01B.

"Moody's" means Moody's Investors Service, Inc. or its successor.

"More Favourable Provision" has the meaning given to it in Article 7.04(a).

“Non-Technical Summary” has the meaning given to it in the relevant Environmental Law.

"Notified Tranche" means a Tranche in respect of which the Bank has issued a Disbursement Notice.

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

"Original Financial Statements" means the audited financial statements of the Borrower for the financial year ended 31 December 2014.

“Overdraft Agreement” means the overdraft letter between the Borrower and Lloyds TSB Bank plc dated 23 July 2013 as amended from time to time.

"Participating Member States" means any member state of the European Union that adopts or has adopted the euro as its lawful currency in accordance with legislation of the European Union relating to Economic and Monetary Union.

"Payment Date" means the annual, semi-annual or quarterly dates specified in the Disbursement Notice until the Interest Revision/Conversion Date, if any, or the Maturity Date, save that, in case any such date is not a Relevant Business Day, it means:

"Permitted Financial Indebtedness" means:

"Prepayment Amount" means the amount of a Tranche to be prepaid by the Borrower in accordance with Article 4.02A.

"Prepayment Date" means the date, which shall be a Payment Date, on which the Borrower proposes to effect prepayment of a Prepayment Amount.

“Prepayment Indemnity” means in respect of any principal amount to be prepaid or cancelled, the amount communicated by the Bank to the Borrower as the present value (as of the Prepayment Date) of the excess, if any, of:

The said present value shall be calculated at a discount rate equal to the Redeployment Rate, applied as of each relevant Payment Date.

"Prepayment Notice" means a written notice from the Bank to the Borrower in accordance with Article 4.02C.

“Prepayment Request” means a written request from the Borrower to the Bank to prepay all or part of the Loan, in accordance with Article 4.02A.

"Project" has the meaning given to it in Recital (1).

"Project Completion Report" means the information that the Borrower is obliged to deliver to the Bank in accordance with paragraph 4 of Schedule A.2.

“Promoter” means the Guarantor.

"Provisional Order" means a provisional order, as defined in section 25 of the Electricity Act.

"Quasi-Security" has the meaning given to it in Article 7.02(c).

"Rating Agency" has the meaning given to it in Article 6.14C.

"RAV" has the meaning given to it in Article 6.14C.

"Redeployment Rate" means the Fixed Rate excluding the Margin in effect on the day of the indemnity calculation for fixed-rate loans denominated in the same currency and which shall have the same terms for the payment of interest and the same repayment profile to the Interest Revision/Conversion Date, if any, or the Maturity Date as the Tranche in respect of which a prepayment is proposed or requested to be made.. For those cases where the period is shorter than 48 months (or 36 months in the absence of a repayment of principal during that period) the most closely corresponding money market rate equivalent will be used, that is LIBOR minus 0.125% (12.5 basis points) for periods of up to 12 (twelve) months. For periods falling between 12 and 36/48 months respectively, the bid point on the swap rates as published by Reuters for the related currency and observed by the Bank at the time of calculation will apply.

"Regulated Asset Value" has the meaning given to it in Article 6.14C.

"Relevant Business Day" means a day on which banks are open for general business in London.

"Relevant Interbank Rate" means LIBOR for an amount denominated in GBP.

"Relevant Period" has the meaning given to it in Article 6.14C.

"Revolving Facility Agreement" means the GBP 150,000,000 Multicurrency Revolving Facility Agreement dated 20 August 2012 as amended and restated on 30 April 2015 entered into between the Guarantor, the Borrower, Northern Powergrid (Yorkshire) plc, Abbey National Treasury Services plc, Lloyds Bank plc and The Royal Bank of Scotland plc.

"Scheduled Disbursement Date" means the date on which a Tranche is scheduled to be disbursed in accordance with Article 1.02C.

"Second Currency" has the meaning given to it in Article 9.03(a).

"Security" and "Security Interest" means any mortgage, pledge, lien, charge, assignment, hypothecation or security interest or any other agreement or arrangement having the effect of conferring security.

"Spread" means the fixed spread to LIBOR (being either plus or minus) determined by the Bank including the Margin and notified to the Borrower in the relevant Disbursement Notice or Interest Revision/Conversion Proposal.

"S&P" means Standard and Poor’s Ratings Group or its successor.

"Subsidiary":

"Sum" has the meaning given to it in Article 9.03(a).

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

"Technical Description" has the meaning given to it in Recital (1).

"Term Loan" has the meaning given to it in Article 4.03A(2).

"Tranche" means each disbursement made or to be made under this Contract. In case no Disbursement Notice has been delivered, Tranche shall mean a Tranche as requested under Article 1.02B.

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

"Yorkshire Finance Contract" has the meaning given to it in Recital (10).

In this Contract:

(a)    references to Articles, Recitals, Schedules and Annexes are, save if explicitly stipulated otherwise, references respectively to articles of, and recitals, schedules and annexes to, this Contract;

(b)    unless the context otherwise requires, words denoting the singular include the plural and vice versa;

(c)    a reference (i) to an amendment or to an agreement being amended includes a supplement, variation, assignment, novation, restatement or re-enactment, and (ii) to an agreement shall be construed as a reference to such agreement as it may be amended, supplemented or restated from time to time;

(d)    the headings and the Table of Contents are inserted for convenience of reference only and shall not affect the interpretation of this Contract;

(e)    any reference to "law" means any law (including, any common or customary law) and any treaty, constitution, statute, legislation, decree, normative act, rule, regulation, judgement, order, writ, injunction, determination, award or other legislative or administrative measure or judicial or arbitral decision in any jurisdiction which has the force of law;

(f)    any reference to a provision of law, is a reference to that provision as from time to time amended or re-enacted;

(g)    a reference to a "person" includes any person, natural or juridical entity, firm, company, corporation, government, state or agency of a state or any association, trust or partnership (whether or not having separate legal personality) or two or more of the foregoing and references to a "person" include its successors in title, permitted transferees and permitted assigns;

(h)    "including" and "include" shall be deemed to be followed by "without limitation" where not so followed;

(i)    a Default is "continuing" if it has not been remedied or waived in writing by the Bank; and

(j)    a reference to "indebtedness" includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent.

By this Contract the Bank establishes in favour of the Borrower, and the Borrower accepts, the credit in an amount of GBP 120,000,000 (one hundred and twenty million pounds sterling) for the financing of the Project (the "Credit").

The Bank shall disburse the Credit in up to 5 (five) Tranches. The amount of each Tranche, if not being the undrawn balance of the Credit, shall be in a minimum amount of GBP 10,000,000 (ten million pounds sterling).

(i)    the amount and currency (being GBP) of the Tranche;

(ii)    the preferred disbursement date for the Tranche, which shall be a Relevant Business Day falling at least 15 (fifteen) days after the date of the Disbursement Request and, in any event, on or before the Final Availability Date, it being understood that notwithstanding the Final Availability Date the Bank may disburse the Tranche up to 4 (four) calendar months from the date of the Disbursement Request;

(iii)    whether the Tranche is a Fixed Rate Tranche or a Floating Rate Tranche, each pursuant to the relevant provisions of Article 3.01;

(iv)    the preferred interest payment periodicity for the Tranche, chosen in accordance with Article 3.01;

(v)    the preferred terms for repayment of principal for the Tranche, chosen in accordance with Article 4.01;

(vi)    the preferred first and last dates for repayment of principal for the Tranche;

(vii)    the Borrower’s choice of Interest Revision/Conversion Date, if any, for the Tranche; and

(viii)     the IBAN code (or appropriate format in line with local banking practice) and SWIFT BIC of the bank account to which disbursement of the Tranche should be made in accordance with Article 1.02D.

(i)     in the case of a Fixed Rate Tranche, the fixed interest rate previously quoted by the Bank; and

(ii)    in the case of a Floating Rate Tranche, the aforementioned spread previously quoted by the Bank,

applicable until the Maturity Date or until the Interest Revision/Conversion Date, if any.

(vii) the applicable Payment Dates for the Tranche;

(viii) the Interest Revision/Conversion Date, if requested by the Borrower, for the Tranche; and

Disbursement shall be made to the account of the Borrower as the Borrower shall notify in writing to the Bank not later than 15 (fifteen) days before the Scheduled Disbursement Date (with IBAN code or with the appropriate format in line with local banking practice).

Only one account may be specified for each Tranche.

The Bank shall disburse each Tranche in GBP. 

The disbursement of the first Tranche under Article 1.02 is conditional upon receipt by the Bank in form and substance satisfactory to it, on or before the date falling 5 (five) Business Days before the Scheduled Disbursement Date, of the following documents or evidence:

The disbursement of each Tranche under Article 1.02, including the first, is conditional upon:

(ii) a copy of any other Authorisation or other document, opinion or assurance which the Bank has notified the Borrower is necessary or desirable in connection with (1) the entry into and performance of, and the transactions contemplated by, this Contract or the Guarantee or the validity and enforceability of the same or (2) the Project; and 

Upon the written request of the Borrower, the Bank shall defer the disbursement of any Notified Tranche in whole or in part to a date specified by the Borrower being a date falling not later than 6 (six) months from its Scheduled Disbursement Date and not later than 60 days prior to the first repayment date of the Tranche indicated in the Disbursement Notice. In such case, the Borrower shall pay the Deferment Indemnity calculated on the amount of disbursement deferred.

Any request for deferment shall have effect in respect of a Tranche only if it is made at least 5 (five) Business Days before its Scheduled Disbursement Date.

If for a Notified Tranche any of the conditions referred to in Article 1.04 is not fulfilled as at the specified date and at the Scheduled Disbursement Date (or the date expected for disbursement in case of a previous deferment), , disbursement will be deferred to a date

agreed between the Bank and the Borrower falling not earlier than 5 (five) Business Days following the fulfilment of all conditions of disbursement (without prejudice to the right of the Bank to suspend and/or cancel the undisbursed portion of the Credit in whole or in part pursuant to Article 1.06B). In such case, the Borrower shall pay the Deferment Indemnity calculated on the amount of disbursement deferred.

The Bank may, by notice in writing to the Borrower, cancel a disbursement which has been deferred under Article 1.05A by more than 6 (six) months in aggregate. The cancelled amount shall remain available for disbursement under Article 1.02.

The Borrower may at any time by notice in writing to the Bank cancel, in whole or in part and with immediate effect, the undisbursed portion of the Credit. However, the notice shall have no effect in respect of (i) a Notified Tranche which has a Scheduled Disbursement Date falling within 5 (five) Business Days of the date of the notice or (ii) a Tranche in respect of which a Disbursement Request has been submitted but no Disbursement Notice has been issued..

(iii) if a Market Disruption Event has occurred and is continuing; or

(iv) if the Credit (as such term is defined in the Yorkshire Finance Contract) or any part thereof is suspended and/or cancelled or if a Default or a Compulsory Prepayment Event (as such terms are defined in the Yorkshire Finance Contract) occurs under the Yorkshire Finance Contract.

1.06C(1) SUSPENSION

If the Bank suspends a Notified Tranche, whether upon an Indemnifiable Prepayment Event or an Event of Default, the Borrower shall pay to the Bank the Deferment Indemnity calculated on the amount of disbursement suspended.

1.06C(2) CANCELLATION

If, pursuant to Article 1.06A, the Borrower cancels:

If the Bank cancels

Save in these cases, no indemnity is payable upon cancellation of a Tranche by the Bank.

The indemnity shall be calculated as if the cancelled amount had been disbursed and repaid on the Scheduled Disbursement Date or, to the extent that the disbursement of the Tranche is currently deferred or suspended, on the date of the cancellation notice.

On the day following the Final Availability Date, and unless otherwise specifically agreed to in writing by the Bank, the part of the Credit in respect of which no Disbursement Request has been made in accordance with Article 1.02B shall be automatically cancelled, without any notice being served by the Bank to the Borrower and without liability arising on the part of either party.

The Borrower shall pay to the Bank an appraisal fee in an amount of GBP 120,000 (one hundred and twenty thousand pounds sterling) for the establishment of the Credit under this Contract. Such appraisal fee shall be payable as follows:

The amount due to the Bank under paragraphs (b) to (d) above shall be payable in GBP and shall be paid to the account indicated by the Bank to the Borrower.

The amount due to the Bank and deducted from the first Tranche upon the request of the Borrower under paragraph (a) above shall be considered as having been duly paid by the Borrower to the Bank on the Scheduled Disbursement Date of the first Tranche. For the purposes of Article 2.01, such amount shall also be considered as having been disbursed by the Bank.

Sums due under Articles 1.05 and 1.06 shall be payable in GBP. They shall be payable within 7 (seven) days of the Borrower’s receipt of the Bank’s demand or within any longer period specified in the Bank's demand.

The Loan shall comprise the aggregate amount of Tranches disbursed by the Bank under the Credit, as confirmed by the Bank pursuant to Article 2.03.

Interest, repayments and other charges payable in respect of each Tranche shall be made by the Borrower in the currency in which the Tranche is disbursed.

Any other payment shall be made in the currency specified by the Bank having regard to the currency of the expenditure to be reimbursed by means of that payment.

Within 10 (ten) days after disbursement of each Tranche, the Bank shall deliver to the Borrower the amortisation table referred to in Article 4.01, if appropriate, showing the Disbursement Date, currency, the amount disbursed, the repayment terms and the interest rate of and for that Tranche.

For the purposes of this Contract "Margin" means twenty six basis points (0.26%) per annum. 

Fixed Rates and Spreads are available for periods of not less than 4 (four) years or, in the absence of a repayment of principal during this period, not less than 3 (three) years.

The Borrower shall pay interest on the outstanding balance of each Fixed Rate Tranche at the Fixed Rate quarterly, semi-annually or annually in arrears on the relevant Payment Dates, as specified in the Disbursement Notice, commencing on the first such Payment Date following the Disbursement Date of the Tranche. If the period from the Disbursement Date to the first Payment Date is 15 days or less then the payment of interest accrued during such period shall be postponed to the following Payment Date.

Interest shall be calculated on the basis of Article 5.01(a).

The Borrower shall pay interest on the outstanding balance of each Floating Rate Tranche at the Floating Rate quarterly, semi-annually or annually in arrear on the relevant Payment Dates, as specified in the Disbursement Notice commencing on the first such Payment Date following the Disbursement Date of the Tranche. If the period from the Disbursement Date to the first Payment Date is 15 days or less then the payment of interest accrued during such period shall be postponed to the following Payment Date.

The Bank shall notify the Floating Rate to the Borrower within 10 (ten) days following the commencement of each Floating Rate Reference Period.

If pursuant to Articles 1.05 and 1.06 disbursement of any Floating Rate Tranche takes place after the Scheduled Disbursement Date the Relevant Interbank Rate applicable to the first Floating Rate Reference Period shall apply as though the disbursement had taken place on the Scheduled Disbursement Date but interest shall only accrue from the Disbursement Date.

Interest shall be calculated in respect of each Floating Rate Reference Period on the basis of Article 5.01(b). If the Floating Rate for any Floating Rate Reference Period is below zero it will be set at zero.

Where the Borrower exercises an option to revise or convert the interest rate basis of a Tranche, it shall, from the effective Interest Revision/Conversion Date (in accordance with the procedure set out in Schedule D) pay interest at a rate determined in accordance with the provisions of Schedule D.

Without prejudice to Article 10 and by way of exception to Article 3.01, if the Borrower fails to pay any amount payable by it under the Contract on its due date, interest shall accrue on any overdue sum payable under the terms of this Contract from the due date to the date of actual payment at an annual rate equal to:

(i) for overdue sums related to Floating Rate Tranches, the applicable Floating Rate plus 2% (200 basis points);

(ii) for overdue sums related to Fixed Rate Tranches, the higher of (a) the applicable Fixed Rate plus 2% (200 basis points) or (b) the Relevant Interbank Rate plus 2% (200 basis points);

(iii) for overdue sums other than under (i) or (ii) above, the Relevant Interbank Rate plus 2% (200 basis points)

and shall be payable in accordance with the demand of the Bank. For the purpose of determining the Relevant Interbank Rate in relation to this Article 3.02, the relevant periods within the meaning of Schedule B shall be successive periods of one month commencing on the due date.

If the overdue sum is in a currency other than the currency of the Loan, the following rate per annum shall apply, namely the relevant interbank rate that is generally retained by the Bank for transactions in that currency plus 2% (200 basis points), calculated in accordance with the market practice for such rate.

If at any time (i) from the issuance by the Bank of the Disbursement Notice in respect of a Tranche, and (ii) until the date falling thirty (30) calendar days prior to the Scheduled Disbursement Date, a Market Disruption Event occurs, the Bank may notify to the Borrower that this clause has come into effect. In such case, the rate of interest applicable to such Notified Tranche until the Maturity Date or the Interest Revision/Conversion Date if any, shall be the percentage rate per annum which is the sum of:

- the Margin and

- the rate (expressed as a percentage rate per annum) which is determined by the Bank to be the all-inclusive cost to the Bank for the funding of the relevant Tranche based upon the then applicable internally generated Bank reference rate or an alternative rate determination method reasonably determined by the Bank. The Borrower shall have the right to refuse in writing such disbursement within the deadline specified in the notification (any such deadline to be reasonable in the circumstances) and shall bear charges incurred as a result, if any, in which case the Bank shall not effect the disbursement and the corresponding Credit shall remain available for disbursement under Article 1.02B. If the Borrower does not refuse the disbursement in time, the parties agree that the disbursement and the conditions thereof shall be fully binding for both parties.

In each case the Spread or Fixed Rate previously notified by the Bank in the Disbursement Notice shall no longer be applicable.

Alternatively, the Borrower may repay the Tranche in a single instalment on a Payment Date specified in the Disbursement Notice, being a date falling not less than 3 (three) years or more than 12 (twelve) years from the Scheduled Disbursement Date.

Subject to Articles 4.02B, 4.02C and 4.04, the Borrower may prepay all or part of any Tranche, together with accrued interest and indemnities if any, upon giving a Prepayment Request with at least 1 (one) month's prior notice specifying (i) the Prepayment Amount,(ii) the Prepayment Date, (iii) if applicable, the choice of application method of the Prepayment Amount in line with Article 5.05(c)(i) and (iv) the contract number (“FI nr”) mentioned on the cover page of this Contract.

Subject to Article 4.02C the Prepayment Request shall be binding and irrevocable.

4.02B(1) FIXED RATE TRANCHE

4.02B(2) FLOATING RATE TRANCHE

The Borrower may prepay a Floating Rate Tranche without indemnity on any relevant Payment Date. If the Borrower has accepted an Interest Revision/Conversion Proposal to convert a Floating Rate Tranche to a Fixed Rate Tranche pursuant to Schedule D, then Article 4.02B(1) applies. 

Upon presentation by the Borrower to the Bank of a Prepayment Request, the Bank shall issue a Prepayment Notice to the Borrower, not later than 15 (fifteen) days prior to the Prepayment Date. The Prepayment Notice shall specify the Prepayment Amount, the accrued interest due thereon, the Prepayment Indemnity payable under Article 4.02B or, as the case may be, that no indemnity is due, the method of application of the Prepayment Amount and the Acceptance Deadline,.

If the Borrower accepts the Prepayment Notice by the Acceptance Deadline, it shall effect the prepayment. In any other case, the Borrower may not effect the prepayment.

The Borrower shall accompany the prepayment by the payment of accrued interest and indemnity, if any, due on the Prepayment Amount, as specified in the Prepayment Notice

4.03A(1) PROJECT COST REDUCTION 

If the total cost of the Project should be reduced from the figure stated in Recital (2) to a level at which the aggregate of (i) the amount of the Credit remaining available for disbursement and (ii) the Loan exceeds 50% (fifty per cent) of such cost, the Bank may, by notice to the Borrower, cancel the Credit and/or demand prepayment of the Loan in an amount not exceeding the amount required to ensure that the aggregate of (i) the Credit remaining available for disbursement and (ii) the Loan does not exceed 50% (fifty per cent) of the total cost of the Project as so reduced.

   

4.03A(2) PARI PASSU TO ANOTHER TERM LOAN 

If the Borrower (or any other member of the Group) voluntarily prepays a part or the whole of any other loan originally granted to it for a term of more than 3 (three) years (a "Term Loan") otherwise than out of the proceeds of a loan having a term at least equal to the unexpired term of the Term Loan prepaid, the Bank may, by notice to the Borrower, cancel the Credit and demand prepayment of the Loan, in such proportion as the prepaid amount of the Term Loan bears to the aggregate outstanding amount of all Term Loans.

The Bank shall address its notice to the Borrower within 30 (thirty) days of receipt of the relevant notice under Article 8.02(c)(iii).

For the purposes of this Article:

4.03A(3)    CHANGE OF CONTROL

The Borrower shall promptly inform the Bank if a Change-of-Control Event has occurred or is reasonably likely to occur. In such case, or if the Bank has reasonable cause to believe that a Change-of-Control Event has occurred or is about to occur, the Bank may request that the Borrower consult with it. Such consultation shall take place within 30 (thirty) days from the date of the Bank’s request. After the earlier of (a) the expiry of 30 (thirty) days from the date of such request for consultation; or (b) the occurrence of the anticipated Change-of-Control Event, the Bank may, by notice to the Borrower, cancel the Credit and demand prepayment of the Loan, together with accrued interest and all other amounts accrued and outstanding under this Contract. The Borrower shall effect payment of the amount demanded on the date specified by the Bank, such date being a date falling not less than 30 (thirty) days from the date of the demand.

For the purposes of this Article, a "Change-of-Control Event" occurs if:

4.03A(4)    CHANGE OF LAW

The Borrower shall promptly inform the Bank if a Change-of-Law Event has occurred or is reasonably likely to occur in respect to the Borrower. In such case, or if the Bank has reasonable cause to believe that a Change-of-Law Event has occurred or is about to occur, the Bank may request that the Borrower consult with it. Such consultation shall take place within 30 (thirty) days from the date of the Bank’s request. After the earlier of (a) the lapse of 30 (thirty) days from the date of such request for consultation or (b) the occurrence of the anticipated Change-of-Law Event, the Bank may, by notice to the Borrower, cancel the Credit and demand prepayment of the Loan, together with accrued interest and all other amounts accrued and outstanding under this Contract. The Borrower shall effect payment of the amount demanded on the date specified by the Bank, such date being a date falling not less than 30 (thirty) days from the date of the demand.

For the purposes of this Article "Change-of-Law Event" means the enactment, promulgation, execution or ratification of or any change in or amendment to any law, rule or regulation (or in the application or official interpretation of any law, rule or regulation) that occurs after the date of this Contract which results or is reasonably likely to result in a Borrower Material Adverse Change.

4.03A(5) ILLEGALITY

If it becomes unlawful in any applicable jurisdiction for the Bank to perform any of its obligations as contemplated in this Contract or to fund or maintain the Loan, the Bank shall promptly notify the Borrower and may immediately (i) suspend or cancel the undisbursed portion of the Credit and/or (ii) demand prepayment of the Loan, together with accrued interest and all other amounts accrued or outstanding under this Contract on the date indicated by the Bank in its notice to the Borrower.

4.03A(6)    ACCEPTABLE SECURITY EVENT

(a)    If an Acceptable Security Event occurs, the Borrower shall provide alternative Acceptable Security in replacement of the existing Acceptable Security.

Any sum demanded by the Bank pursuant to Article 4.03A, together with any interest or other amounts accrued and outstanding under this Contract including, without limitation, any indemnity due under Article 4.03C and Article 4.04, shall be paid on the date indicated by the Bank in its notice of demand, which date shall fall not less than 30 (thirty) days from the date of the Bank’s notice of demand.

In the case of an Indemnifiable Prepayment Event, the indemnity, if any, shall be determined in accordance with Article 4.02B(1) for a Fixed Rate Tranche.

A repaid or prepaid amount may not be reborrowed. This Article 4 shall not prejudice Article 10.

If, the Borrower prepays a Tranche on a date other than a relevant Payment Date, the Borrower shall indemnify the Bank in such amount as the Bank shall certify is required to compensate it for receipt of funds otherwise than on a relevant Payment Date.

Any amount due by way of interest, indemnity or fee from the Borrower under this Contract, and calculated in respect of a fraction of a year, shall be determined on the following respective conventions:

Unless otherwise specified, all sums other than sums of interest, indemnity and principal are payable within 7 (seven) days of the Borrower’s receipt of the Bank’s demand.

Each sum payable by the Borrower under this Contract shall be paid to the respective account notified by the Bank to the Borrower. The Bank shall indicate the account not less than 15 (fifteen) days before the due date for the first payment by the Borrower and shall notify any change of account not less than 15 (fifteen) days before the date of the first payment to which the change applies. This period of notice does not apply in the case of payment under Article 10.

The Borrower shall indicate in each payment made hereunder the contract number (“FI nr”) found on the cover page of this Contract.

A sum due from the Borrower shall be deemed paid when the Bank receives it.

Any disbursements by and payments to the Bank under this Contract shall be made using account(s) acceptable to the Bank. For the avoidance of doubt, any account in the name of the Borrower held with a duly authorized financial institution in the jurisdiction where the Borrower is incorporated or where the Project is undertaken is deemed acceptable to the Bank.

(a) The Bank may set off any matured obligation due from the Borrower under this Contract (to the extent beneficially owned by the Bank) against any obligation (whether or not matured) owed by the Bank to the Borrower regardless of the place of payment, booking branch or currency of either obligation. If the obligations are in different currencies, the Bank may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off. If either obligation is unliquidated or unascertained, the Bank may set off in an amount estimated by it in good faith to be the amount of that obligation. 

(b) All payments to be made by the Borrower under this Contract shall be calculated and be made without (and free and clear of any deduction for) set-off or counterclaim.

If either the Bank determines (in its discretion) that a Disruption Event has occurred or the Bank is notified by the Borrower that a Disruption Event has occurred:

Sums received from the Borrower shall only discharge its payment obligations if received in accordance with the terms of this Contract.

If the Bank receives a payment that is insufficient to discharge all the amounts then due and payable by the Borrower under this Contract, the Bank shall apply that payment:

(i)    first, in or towards payment pro rata of any unpaid fees, costs, indemnities and expenses due under this Contract;

(ii)    secondly, in or towards payment of any accrued interest due but unpaid under this Contract;

(iii)    thirdly, in or towards payment of any principal due but unpaid under this Contract; and

(iv)    fourthly, in or towards payment of any other sum due but unpaid under this Contract.

(i)    In case of:

of the outstanding instalments in inverse order of maturity or, at the request of the Borrower, pro rata to each outstanding instalment

(ii)    Sums received by the Bank following a demand under Article 10.01 and applied to a Tranche, shall reduce the outstanding instalments in inverse order of maturity. The Bank may apply sums received between Tranches at its discretion.

(iii)    In case of receipt of sums which cannot be identified as applicable to a specific Tranche, and on which there is no agreement between the Bank and the Borrower on their application, the Bank may apply these between Tranches at its discretion.

The undertakings in this Article 6 remain in force from the date of this Contract for so long as any amount is outstanding under this Contract or the Credit is in force.

A. Project undertakings 

The Borrower shall use the proceeds of the Loan exclusively for the execution of the Project.

The Borrower shall ensure that it has available to it the other funds listed in Recital (2) and that such funds are expended, to the extent required, on the financing of the Project.

The Borrower shall carry out the Project in accordance with the Technical Description as may be modified from time to time with the approval of the Bank, and complete it by the final date specified therein.

If the total cost of the Project exceeds the estimated figure set out in Recital (2), the Borrower shall obtain the finance to fund the excess cost without recourse to the Bank, so as to enable the Project to be completed in accordance with the Technical Description. The plans for funding the excess cost shall be communicated to the Bank without delay.

The Borrower shall purchase equipment, secure services and order works for the Project (a) in so far as they apply to it or to the Project, in accordance with EU law in general and in particular with the relevant EU Directives and (b) in so far as EU Directives do not apply, by procurement procedures which, to the satisfaction of the Bank, respect the criteria of economy and efficiency.

The Borrower shall:

(i) implement and operate the Project in conformity with Environmental Law;

(ii) obtain and maintain requisite Environmental Approvals for the Project; and

(iii) comply with any such Environmental Approvals.

take, within a reasonable timeframe, appropriate measures in respect of any member of its board of directors who has been convicted by a final and irrevocable court ruling of a Criminal Offence perpetrated in the course of the exercise of his/her professional duties, in order to ensure that such member is excluded from any Borrower’s activity in relation to the Loan or the Project

(g) Integrity Audit Rights:

ensure that all contracts under the Project to be procured after the date of signature of this Contract in accordance with EU Directives on procurement provide for:

The Borrower:

(a) shall not allocate any part of the Loan to any component of the Project that would require an Environmental Impact Assessment according to applicable EU or national law until the Environmental Impact Assessment with the integrated biodiversity assessment has been finalised and approved by the competent authority and found satisfactory by the Bank;

(b) shall send to the Bank an electronic copy of all Non-Technical Summaries and of the corresponding Authorisations as soon as the Environmental Impact Assessment is made available to the public;

(c) shall store and keep updated any documents as may be relevant for the Project supporting the compliance with the provisions of the EU Habitats and Birds Directives (Form A/B or equivalent declaration by the competent authority) and shall promptly upon request deliver such documents to the Bank.

(d) undertakes to take into account and implement conditions imposed on the Borrower in any screening-out decision or EIA consent granted by the competent authority for nature and environment.

B. General undertakings

For the purposes of this Article, "dispose" and "disposal" includes any act effecting sale, transfer, lease or other disposal.

in the case of the Borrower, the Licence and will do nothing (and procure that no member of the Group does anything) which could reasonably be expected to lead to the termination, suspension or revocation of any such Authorisation or the License.

(i) obtain, comply with and do all that is necessary to maintain in full force and effect; and

(ii) supply certified copies to the Bank of,

any Authorisation required under any law or regulation of its jurisdiction of incorporation to enable it to enter into this Contract and to ensure the legality, validity, enforceability or admissibility in evidence in its jurisdiction of incorporation of this Contract.

The Borrower shall procure that no substantial change is made to the general nature of the business of the Borrower or of the Group as a whole from that carried on at the date of this Contract.

The Borrower shall not, and shall ensure that no other member of the Group will, enter into any amalgamation, demerger, merger or corporate reconstruction provided that nothing in this Article 6.10 shall prohibit any Subsidiary of the Borrower from entering into any intra-Group amalgamation, de-merger, merger or corporate reconstruction on a solvent basis and which does not involve (a) an amalgamation, de-merger or corporate reconstruction of the Borrower; or (b) any transfer of assets, rights or obligations to or from the Borrower.

The Borrower shall ensure that all relationships between it and any other company shall be undertaken and conducted on an arms’ length basis save for any dealings that are not at arms' length but which are expressly permitted pursuant to the Consent Letter.

The Borrower shall not, after the date of this Contract, enter into any arrangement containing a Cross Default Obligation.

The Borrower shall not, and shall ensure that no member of the Group will, incur any Financial Indebtedness, except for Permitted Financial Indebtedness, unless the following conditions are satisfied:

The Borrower shall ensure that, at all times:

The value of the terms referred to in Article 6.14A shall be calculated and interpreted in accordance with IFRS (consistently applied) and, in each case, shall be expressed in GBP and:

(a)    in respect of each Relevant Period ending on 30 June in any year, shall be calculated on a consolidated basis using the consolidated management accounts of the Group most recently delivered to the Bank; and

(b)    in respect of each Relevant Period ending on 31 December in any year, shall be calculated (i) once on a consolidated basis using the consolidated management accounts of the Group most recently delivered to the Bank and (ii) once using the audited annual financial statements of the Borrower most recently delivered to the Bank (on an unconsolidated basis for so long as such audited annual financial statements are prepared on an unconsolidated basis and on a consolidated basis should such audited annual financial statements be prepared on a consolidated basis).

For the purposes of this Contract:

"Calculation Date" means each of 30 June and 31 December in any year save that the first Calculation Date shall be 31 December 2015.

"Cash Equivalents" means investments in GBP, EUR or USD demand or time deposits, certificates of deposit and short term debt obligations (including commercial paper), synthetic GBP, EUR or USD deposits, shares in money market liquidity funds or a guaranteed investment contract, provided that in all cases such investments have a maturity of not longer than 9 (nine) months from the date of their acquisition and meet the following credit criteria: (i) they are money market funds with a minimum credit rating of AAA or equivalent from any of the two Rating Agencies (or, in the case of shares in money market liquidity funds, from any single Rating Agency) and (ii) in the case of all other counterparties and other specific instruments, they have a minimum short term credit rating of A-1 from S&P or of P-1 from Moody's.

"Consolidated EBIT" means, for each Relevant Period, the profit shown in the relevant accounts or statements for the relevant period on the line entitled "operating profit":

(i)     before taking into account any items treated as exceptional items;

in each case, to the extent added, deducted or taken into account, as the case may be, for the purposes of determining the profit before tax of the Group (or, as the case may be, of the Borrower) and without double counting.

"Consolidated Net Finance Charges" means, for any Relevant Period, the aggregate amount of interest paid on Consolidated Senior Total Net Debt (net of interest received and after taking account of payments made and amounts received under any derivatives related to such Consolidated Senior Total Net Debt) included in the relevant cash flow statement of the Borrower or the Group, as applicable, in respect of that Relevant Period.

"Consolidated Senior Total Net Debt" means, at any time, the aggregate amount (without double counting) of all obligations of the Group (or, as the case may be, of the Borrower) for or in respect of Financial Indebtedness (other than between members of the Group) which rank at least pari passu with the Loan but:

repayment or redemption of such Financial Indebtedness is provided for by the purchase by a member of the Group (or, as the case may be, by the Borrower) of a GIC;

(iii) deducting the interest component of Financial Indebtedness in existence at the date of this Contract which interest has accrued but not as at the time when the Consolidated Senior Total Net Debt is being calculated fallen due for payment or been paid, provided that no material change is made to the basis upon which such interest accrues after the date of this Contract and that such interest component shall not exceed on an aggregate basis GBP 20,000,000 (twenty million pounds sterling) or its equivalent in any other currency or currencies,

and so that no amount shall be excluded more than once.

Final Determination" means the final determination document published by Ofgem for each electricity distribution price control review, as the same may be modified by the decisions of the Competition and Markets Authority.

"GIC" means each of (i) the investment agreement dated on or about 26 April 2005 between Ambac Capital Funding, Inc., Ambac Assurance UK Limited and the Borrower and (ii) any other guaranteed investment contract or similar investment agreement with a maturity of 60 months or less from the date of purchase and which is provided by a counterparty which has, or whose obligations under such guaranteed investment contract or other agreement are guaranteed by an entity that has, a credit rating of at least A+ from S&P and A1 from Moody's.

"Interest Cover" means, in respect of any Relevant Period, the ratio of Consolidated EBIT for that Relevant Period to Consolidated Net Finance Charges for that Relevant Period.

"Rating Agency" means each of S&P and Moody's.

"Regulated Asset Value" or "RAV" means the regulatory asset value of the Borrower, as set out in the most recent Final Determination, or, if any electricity distribution price control financial model has been published on Ofgem's website since the most recent Final Determination, the regulatory asset value of the Borrower as set out in such financial model, in each case adjusted for inflation, as of the 31 March nearest to (i) the relevant Calculation Date, in the case of a calculation of the ratios set out under Article 6.14A or, as the case may be, (ii) the date on which the relevant member of the Group proposes to incur any further Financial Indebtedness other than Permitted Financial Indebtedness (in the case of the covenant under Article 6.13), provided that there shall be included in any determination of RAV the value of any assets which were included in RAV as at 31 March 2015 but which (i) subsequently are excluded from RAV by OFGEM, (ii) have become subject to a separate price control arrangement, and (iii) are still owned by the Borrower as of the date of determination of RAV, and provided further that if at any time OFGEM alters its methodology of determining RAV in a manner which results in a change in RAV, the Bank may require the Borrower to enter into negotiations with a view to agreeing appropriate adjustments to this definition (and to other terms defined or described herein solely for the purposes of this definition), whereupon the Borrower and the Bank shall promptly in good faith negotiate such appropriate adjustments so that the original intent of the undertakings set forth in Articles 6.13 and 6.14 hereof is preserved and in the absence of agreement between the Bank and the Borrower within 60 (sixty) days from the date when the Bank has requested the entering into of such negotiations, such adjustments shall be determined by an independent accountant experienced in the regulated electricity distribution market selected by the Bank.

"Relevant Period" means each period of 12 (twelve) months ending on such Calculation Date.

The Borrower represents and warrants to the Bank that:

Adverse Change, nor is there subsisting against it or any of its subsidiaries any unsatisfied judgement or award with a value in aggregate in excess of GBP 2,000,000 (two million pounds sterling) or its equivalent in any other currency or currencies;

The representations and warranties set out above shall survive the execution of this Contract and are, except for the representation and warranty in paragraph (q) above, deemed repeated on each Scheduled Disbursement Date, on the date on which any Disbursement Request is submitted and on each Payment Date, by reference to the facts and circumstances then prevailing.

The Borrower acknowledges that it has made the representations and warranties contained in this Article 6.15 with the intention of inducing the Bank to enter into this Contract and that the Bank has entered into this Contract on the basis of, and in full reliance on, each of such representations and warranties.

The undertakings in this Article 7 remain in force from the date of this Contract for so long as any amount is outstanding under this Contract or the Credit is in force.

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

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

(iii) enter into any arrangement under which money or the benefit of a bank or other account may be applied, set-off or made subject to a combination of accounts; or

(iv) enter into any other preferential arrangement having a similar effect,

in circumstances where the arrangement or transaction is entered into primarily as a method of raising Financial Indebtedness or of financing the acquisition of an asset.

(i) any netting or set-off arrangement entered into by the Borrower or any member of the Group in the ordinary course of its banking arrangements for the purpose of netting debit and credit balances;

(ii) any lien arising by operation of law and in the ordinary course of trading;

(iii) any Security over or affecting (or transaction ("Quasi-Security") described in paragraph (b) above affecting) any asset acquired by the Borrower or any member of the Group after the date of this Contract if:

(iv) any Security entered into pursuant to this Contract; or

(v) any Security or Quasi-Security securing indebtedness the principal amount of which (when aggregated with the principal amount of any other indebtedness which has the benefit of Security or Quasi-Security given by any member of the Group other than any permitted under paragraphs (i) to (iv) above) does not exceed GBP 10,000,000 (ten million pounds sterling) or its equivalent in another currency or currencies,

provided in each case that no such Security or Quasi-Security is created or permitted to subsist over any assets forming part of the Project or over any shares in Subsidiaries holding assets forming part of the Project.    

The Borrower shall ensure that its payment obligations under this Contract rank, and will rank, not less than pari passu in right of payment with all other present and future unsecured and unsubordinated obligations under any of its debt instruments except for obligations mandatorily preferred by law applying to companies generally.

defaults or events of defaults or (iii) mandatory prepayment or "put" provision or provisions for collateral security (each such provision or clause hereinafter referred to as a "More Favourable Provision") that either:

the Borrower shall immediately and in any event within 10 (ten) Business Days of entering into or permitting the amendment of the Credit Facility inform the Bank in writing of the More Favourable Provision and provide the Bank with its wording including, if relevant, an English translation thereof. Thereupon such More Favourable Provision shall be deemed incorporated by reference in this Contract as if set forth fully herein, mutatis mutandis, effective as of the date when such More Favourable Provision became effective under such other Credit Facility (each such More Favourable Provision as incorporated herein being referred to as an "Incorporated Provision") and, subject to Article 7.04(c), no Incorporated Provision may thereafter be waived, amended or modified under this Contract without the prior written consent of the Bank. Thereafter, upon the request of the Bank, the Borrower shall execute an agreement to amend this Contract, evidencing the incorporation of such Incorporated Provision.

(b) Nothing in Article 7.04(a) shall apply to More Favourable Provisions included in the Existing Bond Documentation or as set out in clause 21.2(c) of the Revolving Facility Agreement (and in the case of the Revolving Facility Agreement only, as such facility may be renewed or extended, provided that following such renewal or extension, the total amount of financial indebtedness made available under such facility does not exceed GBP 250,000.000).

(c) If:

the Borrower may request that the relevant Incorporated Provision be amended, mutatis mutandis, as set out in the relevant Credit Facility or, as the case may be, that the Incorporated Provision no longer apply, and the Bank shall consent to such request provided however, for the avoidance of doubt, that nothing in this Article 7.04 shall in any way affect any of the provisions of this Contract as of the date hereof, which shall continue in full force and effect and shall not be affected by any amendment to any Incorporated Provision or any Incorporated Provision no longer applying pursuant to this Article 7.04(c).

The Borrower shall:

provided always that if such information or document is not delivered to the Bank on time, and the Borrower does not rectify the omission within a reasonable time set by the Bank in writing, the Bank may remedy the deficiency, to the extent feasible, by employing its own staff or a consultant or any other third party, at the Borrower’s expense and the Borrower shall provide such persons with all assistance necessary for the purpose;

(c) promptly inform the Bank of:

and set out the action to be taken with respect to such matters; and

(d) promptly provide to the Bank, if so requested:

The Borrower shall:

(a) deliver to the Bank:

(b) ensure that its accounting records fully reflect the operations relating to the financing, execution and operation of the Project; and

(vi) any fact or event that is reasonably likely to prevent the substantial fulfilment of any obligation of the Borrower under this Contract;

(vii) any Default or Material Adverse Change having occurred or being threatened or anticipated and the steps, if any, being taken to remedy it;

(viii) any proposed material changes to the Licence and, as soon as reasonably available, provide to the Bank a certified copy of any amendments or modifications to the Licence or replacement thereof;

(xii) any litigation, arbitration or administrative proceedings or investigation which is current, threatened or pending which might if adversely determined result in a Material Adverse Change;

(xiii) any investigations concerning the integrity of the members of the Borrower’s board of directors;

(xiv) to the extent permitted by law, any material litigation, arbitration, administrative proceedings or investigation carried out by a court, administration or similar public authority, which, to the best of its knowledge and belief, is current, imminent or pending against the Borrower or its controlling entities or members of the Borrower’s board of directors in connection with Criminal Offences related to the Loan or the Project;

(xv) any measure taken by the Borrower pursuant to Article 6.05(f) of this Contract.

The Borrower shall allow persons designated by the Bank, as well as persons designated by other institutions or bodies of the European Union when so required by the relevant mandatory provisions of European Union law, at reasonable times:

(a)    to visit the sites, installations and works comprising the Project and to conduct such checks as they may wish,

(b)    to interview representatives of the Borrower and not obstruct contacts with any other person involved in or affected by the Project; and

(c)    to review the Borrower’s books and records in relation to the execution of the Project and to be able to take copies of related documents to the extent permitted by the law.

The Borrower shall provide the Bank, or ensure that the Bank is provided, with all necessary assistance for the purposes described in this Article. Other than after the occurrence of a Default or Compulsory Prepayment Event which is continuing, the Bank shall provide reasonable notice of any such visits and any such persons shall comply with the Borrower’s or its contractor’s safety and security requirements.

The Borrower acknowledges that the Bank may be obliged to communicate information relating to the Borrower and the Project to any competent institution or body of the European Union in accordance with the relevant mandatory provisions of European Union law.

The Borrower shall pay all Taxes, duties, fees and other impositions of whatsoever nature, including stamp duty and registration fees, arising out of the execution or implementation of this Contract or any related document and in the creation, perfection, registration or enforcement of any security for the Loan to the extent applicable.

The Borrower shall pay all principal, interest, indemnity and other amounts due under this Contract gross without any withholding or deduction of any national or local impositions whatsoever required by law or an agreement with a Governmental Authority or otherwise; provided that, if the Borrower is obliged to make any such withholding or deduction, it will gross up the payment to the Bank so that after withholding or deduction, the net amount received by the Bank is equivalent to the sum due.

If the Borrower is obliged to deduct any amount under this Article and the Bank subsequently recovers any sum or obtains any credit against any tax payable by it in respect of any such payment, the Bank shall promptly upon receiving such sum or obtaining such credit pay a corresponding amount to the Borrower; provided that the Bank is not obliged to seek any such recovery or credit.

The Borrower shall bear all charges and expenses, including professional, banking or exchange charges incurred in connection with the preparation, execution, implementation, enforcement, administration, monitoring and termination of this Contract or any related document (including the Guarantee Agreement), any amendment, supplement or waiver in respect of this Contract or any related document (including the Guarantee Agreement), and in the amendment, creation, management and realisation of any security for the Loan.

(i) making or filing a claim or proof against the Borrower; or

(ii) obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings,

the Borrower shall as an independent obligation, within 3 (three) Business Days of demand, indemnify the Bank against any cost, loss or liability arising out of or as a result of the conversion including any discrepancy between (A) the rate of exchange used to convert that Sum from the First Currency into the Second Currency and (B) the rate or rates of exchange available to the Bank at the time of its receipt of that Sum.

The Borrower shall repay all or part of the Loan forthwith, together with accrued interest and other outstanding amounts, upon written demand being made by the Bank in accordance with the following provisions.

The Bank may make such demand immediately:

or any analogous procedure or step is taken in any jurisdiction, provided that no Event of Default shall occur under this paragraph (g) in respect of any frivolous or vexatious winding-up petition brought by a third party (other than the Guarantor or any of its Subsidiaries) which is discharged within 14 (fourteen) days of commencement or, if earlier, the date on which it is advertised;

Borrower to be ineffective in accordance with its terms or the Borrower evidences an intention to repudiate this Contract.

The Bank may also make such demand:

unless the non-compliance or circumstance giving rise to the non-compliance is capable of remedy and is remedied within 15 (fifteen) days of the earlier of (i) the Bank giving notice to the Borrower or (ii) the Borrower becoming aware of the non-compliance or circumstance.

Article 10.01 shall not restrict any other right of the Bank at law to require prepayment of the Loan.

In case of demand under Article 10.01 in respect of any Fixed Rate Tranche, the Borrower shall pay to the Bank the amount demanded together with the Prepayment Indemnity on any amount of principal due to be prepaid. Such Prepayment Indemnity shall accrue from the due date for payment specified in the Bank’s notice of demand and be calculated on the basis that prepayment is effected on the date so specified.

In case of demand under Article 10.01 in respect of a Floating Rate Tranche, the Borrower shall pay to the Bank the sum demanded together with a sum equal to the present value of 0.15% (fifteen basis points) per annum calculated and accruing on the amount of principal due to be prepaid in the same manner as interest would have been calculated and would have accrued, if that amount had remained outstanding according to the original amortisation schedule of the Tranche, until the Interest Revision/Conversion Date, if any, or the Maturity Date.

The value shall be calculated at a discount rate equal to the Redeployment Rate applied as of each relevant Payment Date.

Amounts due by the Borrower pursuant to this Article 10.03 shall be payable on the date of prepayment specified in the Bank’s demand.

No failure or delay or single or partial exercise by the Bank in exercising any of its rights or remedies under this Contract shall be construed as a waiver of such right or remedy. The rights and remedies provided in this Contract are cumulative and not exclusive of any rights or remedies provided by law.

This Contract and any non-contractual obligations arising out of or in connection with it shall be governed by English law.

The parties hereby submit to the jurisdiction of the courts of England. The Bank appoints The Securities Management Trust Limited whose present address is 8 Lothbury, London EC2R 7HH to be its agent for the purpose of accepting service of legal process.

In any legal action arising out of this Contract the certificate of the Bank as to any amount or rate due to the Bank under this Contract shall in the absence of manifest error be prima facie evidence of such amount or rate.

Notices and other communications given under this Contract addressed to either party to this Contract shall be made to the address or facsimile number as set out below, or to such other address or facsimile number as a party previously notifies to the other in writing:

Any notice or other communication given under this Contract must be in writing.

Notices and other communications for which fixed periods are laid down in this Contract or which themselves fix periods binding on the addressee may be made by hand delivery, registered letter or facsimile. The date of delivery, registration or, as the case may be, the stated date of receipt of transmission shall be conclusive for the determination of a period.

Other notices and communications may be made by hand delivery, registered letter or facsimile.

Without affecting the validity of any notice delivered by facsimile according to the paragraphs above, a copy of each notice delivered by facsimile shall also be sent by letter to the relevant party on the next following Business Day at the latest.

Notices issued by the Borrower pursuant to any provision of this Contract shall, where required by the Bank, be delivered to the Bank together with satisfactory evidence of the authority of the person or persons authorised to sign such notice on behalf of the Borrower and the authenticated specimen signature of such person or persons.

The Borrower may not assign or transfer any of its rights or obligations under this Contract without the prior written consent of the Bank.

The Bank may, with the prior consent of the Borrower (such consent not to be unreasonably withheld or delayed) assign all or part of its rights and benefits or transfer all or part of its rights, benefits and obligations under this Contract.

A person who is not a party to this Contract has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Contract. Notwithstanding any term of this Contract, the consent of any person who is not a party to this Contract is not required to rescind or vary this Contract at any time.

If more than one currency or currency unit is at the same time recognised by the Bank of England as a denomination of the lawful currency of the United Kingdom, then:

If a change in any currency of the United Kingdom occurs, this Contract will be amended to the extent determined by the Bank (acting reasonably and in consultation with the Borrower) to be appropriate to reflect the change in currency and to put the Bank and the Borrower in the same position, so far as possible, that they would have been in had no change in that currency occurred. Without prejudice to the foregoing, the Bank reserves the right to require the Borrower to agree such amendments to this Contract as may be necessary to reflect changes occurring in the Bank's funding arrangements in respect of the Loan as a result of such change of currency.

If a material change in IFRS occurs which is detrimental to either party, the parties shall consult and will discuss in good faith any change that may be required to this Contract.

This Contract constitutes the entire agreement between the Bank and the Borrower in relation to the provision of the Credit hereunder, and supersedes any previous agreement, whether express or implied, on the same matter.

If at any time any term of this Contract is or becomes illegal, invalid or unenforceable in any respect, or this Contract is or becomes ineffective in any respect, under the laws of any jurisdiction, such illegality, invalidity, unenforceability or ineffectiveness shall not affect:

Any amendment to this Contract shall be made in writing and shall be signed by the parties hereto.

The Recitals and following Schedules form part of this Contract:

The following Annexes are attached hereto:

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

IN WITNESS WHEREOF the parties hereto have caused this Contract to be executed in 4 (four) originals in the English language 

The operation is a 2-year investment programme over the period 2015 to 2016, aimed at refurbishing, upgrading and reinforcing the electricity distribution network of the Borrower, located in the North East of England. The implementation of the programme will primarily involve the refurbishment and replacement of overhead lines, cables, transformers and substations as well as the connection of around 18,000 new customers. The overall objective of the programme is to extend the network and maintain a high standard of safety and reliability.

The programme comprises a large number of independent and geographically dispersed schemes for refurbishing, upgrading and reinforcing the electricity distribution infrastructure of the Borrower, from 132 kV down to low voltage.

The programme schemes to be implemented and associated cost estimates are presented in Table A1 and A2 of Appendix A.1.

The time scale for the programme is January 2015-December 2016.

The information below has to be sent to the Bank under the responsibility of:

The Borrower shall deliver to the Bank the following information at the latest by the deadline indicated below.

The Borrower shall deliver to the Bank the following information on project progress during implementation at the latest by the deadline indicated below.

The Borrower shall deliver to the Bank the following information on project completion and initial operation at the latest by the deadline indicated below.

"LIBOR’’ means, in respect of GBP:

(the period for which the Screen Rate is taken or from which the Screen Rates are interpolated being the "Representative Period"),

For the purposes of paragraphs (b) and (c) above, “available” means “calculated and published” under the aegis of the ICE Benchmark Administration Limited (or any successor to that function of the ICE Benchmark Administration Limited as determined by the Bank) for given maturities.

“Screen Rate” means the rate of interest for deposits in GBP for the relevant period as set by the ICE Benchmark Administration Limited (or any successor to that function of the ICE Benchmark Administration Limited as determined by the Bank) and released by financial news providers at 11h00, London time, or at a later time acceptable to the Bank on the day (the “Reset Date”) on which the relevant period starts or, if that day is not a Business Day in London, on the next following day which is such a Business Day.

If such Screen Rate is not so released by any financial news provider acceptable to the Bank, the Bank shall request the principal London offices of 4 (four) major banks in the London interbank market, selected by the Bank, to quote the rate at which GBP deposits in a comparable amount are offered by each of them at approximately 11h00 London time on the Reset Date, to prime banks in the London interbank market for a period equal to the Representative Period. If at least 2 (two) such quotations are provided, the rate will be the arithmetic mean of the quotations provided.

If fewer than 2 (two) quotations are provided as requested, the rate will be the arithmetic mean of the rates quoted at approximately 11h00 London time on the Reset Date by major banks in London (selected by the Bank) for loans in GBP in a comparable amount to leading European banks for a period equal to the Representative Period.

If the rate resulting from the above is below zero, LIBOR will be deemed to be zero.

If no rate is available as provided above, LIBOR shall be the rate (expressed as a percentage rate per annum) which is determined by the Bank to be the all-inclusive cost to the Bank for the funding of the relevant Tranche based upon the then applicable internally generated Bank reference rate or an alternative rate determination method reasonably determined by the Bank.

For the purposes of the foregoing definitions:

(c)    The Bank shall inform the Borrower without delay of the quotations received by the Bank.

Please proceed with the following disbursement:

Borrower's account to be credited:    

Acc. N°: …………………………………………………………………………………………….

    

(please provide the appropriate format for the relevant currency)    

Bank name, address: …………………………………………………………………………

Please transmit information relevant to:    

Borrower's authorised name(s) and signature(s):

To:    European Investment Bank

From:    Northern Powergrid (Northeast) Ltd    

Date:    

FI number 85.424     Serapis number 2015-0155

______________________________________________________________________

Dear Sirs,

Terms defined in the Finance Contract have the same meaning when used in this letter.

For the purposes of Article 1.04 of the Finance Contract we hereby certify to you as follows:

Yours faithfully,

For and on behalf of Northern Powergrid (Northeast) Limited

Date:    

To:    European Investment Bank

From:    Northern Powergrid (Northeast) Limited    

Date:    

FI number 85.424     Serapis number 2015-0155

______________________________________________________________________

Dear Sirs,

We refer to the Finance Contract. This is a Compliance Certificate. Terms defined in the Finance Contract have the same meaning when used in this Compliance Certificate unless given a different meaning in this Compliance Certificate.

We confirm that:

(i)    Consolidated EBIT

[            ]

(ii)    Consolidated Net Finance Charges

[            ]

(i)    Consolidated Senior Total Net Debt

[            ]

(ii)    RAV

[            ]

[We confirm that no Default is continuing.] ² 

If an Interest Revision/Conversion Date has been included in the Disbursement Notice for a Tranche, the following provisions shall apply.

Upon receiving an Interest Revision/Conversion Request the Bank shall, during the period commencing 60 (sixty) days and ending 30 (thirty) days before the Interest Revision/Conversion Date, deliver to the Borrower an Interest Revision/Conversion Proposal stating:

The Borrower may accept in writing an Interest Revision/Conversion Proposal by the deadline specified therein.

Any amendment to the Contract requested by the Bank in this connection shall be effected by an agreement to be concluded not later than 15 (fifteen) days prior to the relevant Interest Revision/Conversion Date.

If the Borrower duly accepts in writing a Fixed Rate or a Spread in respect of an Interest Revision/Conversion Proposal, the Borrower shall pay accrued interest on the Interest Revision/Conversion Date and thereafter on the designated Payment Dates.

Prior to the Interest Revision/Conversion Date, the relevant provisions of the Contract and Disbursement Notice shall apply to the entire Tranche. From and including the Interest Revision/Conversion Date onwards, the provisions contained in the Interest Revision/Conversion Proposal relating to the new interest rate or Spread shall apply to the Tranche (or part thereof) until the new Interest Revision/Conversion Date, if any, or until the Maturity Date.

If the Borrower does not submit an Interest Revision/Conversion Request or does not accept in writing the Interest Revision/Conversion Proposal for the Tranche or if the parties fail to effect an amendment requested by the Bank pursuant to Paragraph A above, the Borrower shall repay the Tranche (or part thereof) on the Interest Revision/Conversion Date, without indemnity. The Borrower will repay on the Interest Revision/Conversion Date any part of a Tranche which is unaffected by the Interest Revision/Conversion.