Exhibit 99.1
CONFORMED COPY
Dated 15th December 1997
CE ELECTRIC UK FUNDING COMPANY
and
AMBAC INSURANCE UK LIMITED
and
THE LAW DEBENTURE TRUST CORPORATION p.l.c.
------------------------------------------
TRUST DEED
CONSTITUTING
(POUND)200,000,000
7.25% GUARANTEED BONDS DUE 2022
UNCONDITIONALLY AND IRREVOCABLY GUARANTEED AS TO
SCHEDULED PAYMENTS OF PRINCIPAL AND INTEREST PURSUANT TO
A FINANCIAL GUARANTEE INSURANCE POLICY ISSUED BY
AMBAC INSURANCE UK LIMITED
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For the Trustee as to English Law: For the Issuer as to English Law:
Skadden, Arps, Slate, Meagher & Flom LLP Allen & Overy
One Canada Square One New Change
Canary Wharf London EC4M 9QQ
London E14 5DS
CONTENTS
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1. INTERPRETATION 1
2. AMOUNT OF THE BONDS AND COVENANT TO PAY 6
3. FORM AND ISSUE OF THE BONDS 8
4. STAMP DUTIES AND TAXES 10
5. THE TRUST DEED, THE BONDS AND THE BOND POLICY 11
6. APPLICATION OF MONEYS RECEIVED BY THE TRUSTEE 11
7. AMBAC AND THE BOND POLICY 12
8. COVENANTS 13
9. COVENANTS BY AMBAC 18
10. COVENANTS BY THE ISSUER IN FAVOR OF AMBAC 19
11. REMUNERATION AND INDEMNIFICATION OF THE TRUSTEE 21
12. PROVISIONS SUPPLEMENTAL TO THE TRUSTEE ACT 1925 23
13. TRUSTEE LIABLE FOR NEGLIGENCE 26
14. WAIVER 26
15. TRUSTEE NOT PRECLUDED FROM ENTERING INTO CONTRACTS 27
16. MODIFICATION AND SUBSTITUTION 27
17. APPOINTMENT, RETIREMENT AND REMOVAL OF THE TRUSTEE 29
18. COUPONS 30
19. CONTROLLING PARTY 30
20. CURRENCY INDEMNITY 31
21. COMMUNICATIONS 31
22. GOVERNING LAW 32
23. COUNTERPARTS 32
SCHEDULE 1 - PART A - FORM OF TEMPORARY GLOBAL BOND 33
SCHEDULE 1 - PART B - FORM OF PERMANENT GLOBAL BOND 44
SCHEDULE 2 - FORM OF DEFINITIVE BOND; FORM OF COUPON 51
SCHEDULE 3 - PROVISIONS FOR MEETINGS OF BONDHOLDERS 79
SCHEDULE 4 - EXCLUDED RIGHTS OF THE TRUSTEE 86
THIS TRUST DEED is made on l5th December, 1997 BETWEEN:
(1) CE ELECTRIC UK FUNDING COMPANY (the "Issuer" or the "Company"), a company
incorporated in England and Wales with unlimited liability under registered
number 3476201;
(2) AMBAC INSURANCE UK LIMITED ("AMBAC"), a company incorporated in England
and Wales with limited liability under registered number 3248674: and
(3) THE LAW DEBENTURE TRUST CORPORATION p.l.c. a company incorporated in
England and Wales with limited liability under registered number 1675231
(the "Trustee", which expression shall, where the context so admits,
include all persons for the time being the trustee or trustees of this
Trust Deed (as defined below)).
WHEREAS:-
(A) The Issuer has authorised the issue of (pound)200,000,000 7.25%
Guaranteed Bonds due 2022 to be constituted by this Trust Deed.
(B) The Trustee has agreed to act as trustee of this Trust Deed on the
following terms and conditions.
(C) Pursuant to a financial guarantee insurance policy and endorsement
thereto dated the date hereof issued by AMBAC to the Trustee (the `Bond
Policy"), AMBAC unconditionally and irrevocably guarantees the scheduled payment
of principal of and interest on such Bonds and certain additional amounts.
NOW THIS DEED WITNESSES AND IT IS HEREBY DECLARED as follows:-
1. INTERPRETATION
(A) DEFINITIONS: The following expressions shall have the following
meanings:
"AUTHORISED SIGNATORY" means:
(a) in relation to the Issuer, a director of the Issuer or any person in
respect of whom the Issuer has supplied to the Trustee and AMBAC a
copy, certified by a director or the secretary of the Issuer to be a
true copy and in full force and effect, of a resolution or resolutions
of the board of directors of the Issuer authorizing such person to
sign on behalf of the Issuer all such certificates and other documents
as are referred to therein, together with a certified specimen
signature of such person, and in respect of whom the Trustee and AMBAC
have received written notification from the Issuer that such person
has ceased to be so authorised; and
(b) in relation to AMBAC, a director of AMBAC or any person in respect of
whom AMBAC has supplied to the Trustee a copy, certified by a director
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or the secretary of AMBAC to be a true copy and in full force and
effect, of a resolution or resolutions of the board of directors of
AMBAC authorizing such person to sign on behalf of AMBAC all such
certificates and other documents as are referred to therein, together
with a certified specimen signature of such person, and in respect of
whom the Trustee has nor received written notification from AMBAC that
such person has ceased to be so authorised;
"BONDHOLDER" and (in relation to a Bond) "holder" means the bearer of
a Bond;
"BONDS" means the (pound)200,000,000 7.25% Guaranteed Bonds due 2022
constituted by this Trust Deed and, for the time being outstanding or,
as the context may require, a specific number of them and includes the
Temporary Global Bond (or any part thereof), the Permanent Global Bond
(or any part thereof) and the Definitive Bonds (or any of them),
including any replacement Definitive Bonds issued pursuant to
Condition 17;
"CEDEL BANK" means Cedel Bank, societe anonyme;
"CONDITIONS" means the terms and, conditions set out in Schedule 2 as
modified, with respect to any Bonds represented by a Global Bond, by
the provisions of such Global Bond and as from time to time modified
in accordance with this Trust Deed and any reference to a particularly
numbered Condition shall be construed accordingly;
"COUPONHOLDER" and (in relation to a Coupon) "ho1der" means the bearer
of a Coupon;
"COUPONS" means the bearer interest coupons appertaining to the
Definitive Bonds in or substantially in the form set out in Schedule
2, or, as the context may require, a specific number of them and
includes any replacement Coupons issued pursuant to Condition 17;
"DEFINITIVE BONDS" means the Bonds in definitive form to be issued
pursuant to, and in the circumstances specified in, Clause 3(C), in or
substantially in the form set out in Schedule 2, and includes any
replacements therefore issued pursuant to Condition 17;
"EUROCLEAR" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system;
"EXCLUDED RIGHTS" means the rights, powers, authorities and
discretions of, or exercisable by, the Trustee set out in Schedule 4;
"EXTRAORDINARY RESOLUTION" has the meaning set out in paragraph 21 of
Schedule 3;
"GLOBAL BONDS" means the Temporary Global Bond and the Permanent
Global Bond and "GLOBAL BOND" means either of them;
"ISSUER EVENT OF DEFAULT" means any of the events set out in Condition
12;
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"OUTSTANDING" means, in relation to the Bonds, all the Bonds issued
other than (a) those Bonds which have been redeemed in full and
cancelled pursuant to Conditions 8 or 14 or otherwise pursuant to this
Trust Deed; (b) those Bonds in respect of which the date for
redemption in accordance with the Conditions has occurred and, in any
such case, the redemption moneys for which (including all interest
payable thereon) have been duly paid to the Trustee or to the
Principal Paying Agent in the manner provided in the Paying Agency
Agreement (and, where appropriate, notice to that effect has been
given to the Bondholders in accordance with Condition 18) and remain
available for payment against presentation of the relevant Bonds
and/or Coupons; (c) those Bonds which have been purchased and
surrendered for cancellation in accordance with Condition 8(e); (d)
those Bonds which have become void under Condition 10; (e) those
mutilated or defaced Definitive Bonds which have been surrendered and
cancelled and in respect of which replacements have been issued
pursuant to Condition 17; (f) (for the purpose only of ascertaining
the amount of Bonds outstanding and without prejudice to the status
for any other purpose of the relevant Bonds) those Definitive Bonds
which are alleged to have been lost, stolen or destroyed and in
respect of which replacements have been issued pursuant to Condition
17; (g) the Temporary Global Bond to the extent that it shall have
been exchanged for the Permanent Global Bond pursuant to the
provisions contained therein and in Clause 3(C); and (h) the Permanent
Global Bond to the extent that it shall be exchanged for the
Definitive Bonds pursuant to the provisions contained therein and in
Clause 3(C);
PROVIDED THAT for each of the following purposes, namely:-
(i) the right to attend and vote at any meeting of the Bondholders;
(ii) the determination of how many and which Bonds are for the time
being outstanding for the purposes of the Conditions and
paragraphs 3, 6, 7 and 11 of Schedule 3;
(iii)any discretion, power or authority contained in this Trust Deed
which the Trustee is required, expressly or impliedly, to
exercise in or by reference to the interests of any of the
Bondholders; and
(iv) the determination by the Trustee (if it is the Controlling Party)
whether any of the events specified in Condition 12 is materially
adverse to the interests of the Bondholders,
those Bonds which are for the time being held beneficially by or for
the account of the Issuer, or any of the Issuer's Subsidiaries or
holding companies, or any other Subsidiaries of such holding companies
shall (unless and until ceasing to be so held) be deemed not to remain
outstanding and provided further that notwithstanding anything herein
to the contrary, in the event that the principal of and/or interest
due on any Bond is paid by AMBAC pursuant to this Trust Deed and the
Bond Policy, for the purpose of the rights of subrogation of AMBAC
under the Bond Policy, all such Bonds and/or Coupons (as the case may
be) shall remain outstanding and shall not be deemed to have been
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satisfied or paid by the Issuer, and all covenants and other
obligations of the Issuer to the Bondholders under this Trust Deed and
the Bonds shall continue to exist for the benefit of AMBAC, and AMBAC
shall be subrogated to the rights of all Bondholders under this Trust
Deed and the Bonds who have received such payment from AMBAC;
"PAYING AGENCY AGREEMENT" means the Paying Agency Agreement dated 15th
December, 1997, as altered from time to time, between the Issuer, the
Trustee, the Principal Paying Agent and the other Paying Agent whereby
the Paying Agents were appointed and includes any other agreements
approved in writing by the Trustee appointing Successor Paying Agents
or altering any such agreements;
"PAYING AGENTS" means the institutions (including the Principal Paying
Agent) at their respective specified offices referred to in Condition
7 and/or any Successor Paying Agents, in each case at their respective
specified offices;
"PERMANENT GLOBAL BOND" means the permanent global Bond to be issued
by the Issuer pursuant to Clause 3(A) representing the Bonds, in or
substantially in the form set out in Part B of Schedule 1;
"POTENTIAL ISSUER EVENT OF DEFAULT" means an event or circumstance
which would with the giving of notice and/or lapse of time and/or the
issuing of a certificate become an Issuer Event of Default;
"PRINCIPAL", "PRINCIPAL AMOUNT" and "PRINCIPAL MONEYS" in relation to
any payment in respect of Bonds includes, where applicable, the
Redemption Price referred to in Condition 8(b)(ii);
"PRINCIPAL PAYING AGENT" means Bankers Trust Company or any Successor
Principal Paying Agent appointed under the Paying Agency Agreement;
"SCHEDULED AMOUNT" means, in respect of any Scheduled Payment Date,
the amount of interest and (if applicable) principal in respect of the
Bonds and/or the Coupons (as the case may be) which the Issuer is
scheduled to pay on such Scheduled Payment Date;
"SPECIFIED OFFICE" means, in relation to any Paying Agent, either the
office identified with its name at the end of the Conditions or any
other office approved by the Trustee and notified to the Bondholders
pursuant to Clause 8(L);
"STATUTORY OBLIGATION" means any obligation or liability which a
person becomes liable to satisfy by virtue of being a member or
director of, or under common control with, a corporate entity,
pursuant to the provisions of any applicable statute;
"SUBSCRIPTION AGREEMENT" means the subscription agreement dated 11th
December. 1997 between the Issuer, AMBAC, Credit Suisse First Boston
(Europe) Limited, Lehman Brothers International (Europe) and Dresdner
Bank AG London branch relating to the Bonds;
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"SUCCESSOR" means, in relation to the Paying Agents, such other or
further person as may from time to time be appointed by the Issuer as
a Paying Agent, with the written approval of, and on terms approved in
writing by, the Trustee and AMBAC (so long as AMBAC is the Controlling
Party), and notice of whose appointment is given to Bondholders
pursuant to Clause 8(L);
"TEMPORARY GLOBAL BOND" means the temporary global Bond to be issued
by the Issuer pursuant to Clause 3(A) representing the Bonds, in or
substantially in the form set out in Part A of Schedule 1;
"THIS TRUST DEED" means this Deed, the Schedules (as from time to time
altered in accordance with this Deed), the Conditions, the Bonds and
the Coupons and any other document executed in accordance with this
Deed (as from time to time altered in accordance with its terms) and
expressed to be supplemental to this Deed; and
"TRUST CORPORATION" means a corporation entitled by rules made under
the Public Trustee Act 1906 or entitled pursuant to any other
legislation applicable to a trustee in any jurisdiction other than
England to carry out the functions of a custodian trustee.
(B) TERMS DEFINED ELSEWHERE: Unless otherwise defined herein, terms
defined in the Conditions or the Bond Policy shall have the same
meanings in this Trust Deed.
(C) CONSTRUCTION OF CERTAIN REFERENCES: REFERENCES TO:
(1) costs, charges, remuneration or expenses shall include any
value added tax, turnover tax or similar tax charged in
respect thereof;
(2) "(POUND)", "POUNDS" and "STERLING" shall be construed as
references to the lawful currency for the time being of the
United Kingdom;
(3) any action, remedy or method of judicial proceedings for the
enforcement of rights of creditors shall include, in respect
of any jurisdiction other than England, references to such
action, remedy or method of judicial proceedings available
or appropriate in such jurisdiction as shall most nearly
approximate thereto; and
(4) all references in this Trust Deed or the Conditions
involving compliance by the Trustee with a test of
reasonableness shall be deemed to include a reference to a
requirement that such reasonableness shall be determined by
reference primarily to the interests of the holders of the
Bonds of the relevant one or more series as a class and in
the event of any conflict between such interests and the
interests of any other person, the former shall prevail as
being paramount.
(5) In this Trust Deed references to Coupons and Couponholders
shall apply only if Definitive Bonds have been issued by the
Issuer in accordance with Clause 3.
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(D) Headings: Headings shall be ignored in construing this Trust Deed.
(E) Schedules: The Schedules are part of this Trust Deed and shall
have effect accordingly.
2. AMOUNT OF THE BONDS AND COVENANT TO PAY
(A) AMOUNT OF THE BONDS: The aggregate principal amount of the Bonds is
limited to (pound)200,000,000.
(B) COVENANT TO PAY: The Issuer will in accordance with this Trust Deed on
any date when the Bonds or any of them become due to be redeemed unconditionally
pay to or to the order of the Trustee in London in pounds sterling in
immediately available funds the principal amount of the Bonds becoming due for
redemption on that date together with any applicable premium and will (subject
to the Conditions) until such payment (both before and after judgment of a court
of competent jurisdiction) unconditionally pay to or to the order of the Trustee
as aforesaid interest on the principal amount of the Bonds outstanding as set
out in the Conditions provided that (1) subject to Clause 2(D)(2), every payment
of any sum due in respect of the Bonds made to the Principal Paying Agent as
provided in the Paying Agency Agreement shall, to such extent, satisfy such
obligation except to the extent that there is failure in its subsequent payment
(in the case of the Global Bonds) to or to the order of the bearer thereof in
accordance with the provisions of the Temporary Global Bond or the Permanent
Global Bond, as the case may be, or (in the case of the Definitive Bonds) to the
relevant Bondholders or (as the case may be) Couponholders under the Conditions
or (but only for the purpose of AMBAC's rights of subrogation under the Bond
Policy) to the extent that the relevant payment is made by AMBAC under the Bond
Policy and (2) in the case of any payment made after the due date or pursuant to
Condition 12, payment will be deemed to have been made when the full amount due
has been received by the Principal Paying Agent or the Trustee and notice to
that effect has been given to the Bondholders (if required in accordance with
Clause 8(I)), except to the extent that there is failure in the subsequent
payment to the relevant Bondholders or (as the case may be) Couponholders under
the Conditions or (but only for the purpose of AMBAC's rights of subrogation
under the Bond Policy) to the extent that the relevant payment is made by AMBAC
under the Bond Policy. The Trustee will hold the benefit of this covenant on
trust for the Bondholders and Couponholders.
(C) DISCHARGE: Subject to sub-Clause (D), any payment to be made in respect
of the Bonds, the Coupons, this Trust Deed or the Bond Policy, as the case may
be, by the Issuer, the Trustee or AMBAC may be made as provided in the
Conditions and the Paying Agency Agreement and any payment so made will (subject
to sub-Clause (D)) to such extent be a good discharge to the Issuer, the Trustee
or AMBAC, as the case may be, subject to any rights of subrogation which AMBAC
may acquire against the Issuer by virtue of making any such payment under the
Conditions and the Bond Policy.
(D) PAYMENT AFTER A DEFAULT: At any time after an Issuer Event of Default
or a Potential Issuer Event of Default has occurred and is continuing the
Trustee may:-
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(1) by notice in writing to AMBAC, the Issuer and the Paying Agents,
require the Paying Agents, until notified by the Trustee to the contrary,
so far as permitted by any applicable law:-
(a) to act as Paying Agents of the Trustee under this Trust Deed and
the Bonds on the terms of the Paying Agency Agreement (with
consequential amendments as necessary and except that the Trustee's
liability for the indemnification, remuneration and all other
out-of-pocket expenses of the Paying Agents will be limited to the
amounts for the time being held by the Trustee in respect of the Bonds
on the terms of this Trust Deed) and thereafter to hold all Definitive
Bonds and Coupons and all moneys, documents and records held by them
in respect of the Bonds and Coupons to the order of the Trustee; or
(b) to deliver all Definitive Bonds and Coupons and all moneys,
documents and records held by them in respect of the Bonds and Coupons
(save for such documents and records which the Paying Agents are
obliged not to release by virtue of any applicable law or regulation
or by order of any court of competent jurisdiction) to the Trustee or
as the Trustee directs in such notice; and
(2) by notice in writing to the Issuer require it to make all subsequent
payments in respect of the Bonds and Coupons to or to the order of the
Trustee and not to the Principal Paying Agent.
(E) FURTHER ISSUES:
(1) The Issuer shall be at liberty from time to time (but subject always to
the provisions of this Trust Deed) without the consent of the Bondholders
or Couponholders to create and issue further bonds or notes (whether in
bearer or registered form) ranking pari passu in all respects (or in all
respects save for the first payment of interest thereon), and so that the
same shall be consolidated and form a single series, with the Bonds and/or
any further bonds or notes of any series, provided that:
(a) AMBAC has consented (in its absolute discretion) to amend or
substitute the Bond Policy so that the Bond Policy also covers
such further bonds or notes on the same terms mutatis mutandis as
apply to the Bonds;
(b) the Trustee is satisfied that the rating granted in respect of
the Bonds by S&P and Moody's will not thereby be adversely
affected; and
(c) the Issuer shall not create and issue such further bonds or notes
while any default exists in relation to any payment by the Issuer
of any amounts due under this Trust Deed.
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(2) Any further bonds or notes which are to be created and issued pursuant
to the provisions of paragraph (1) above shall be constituted by a trust
deed supplemental to this Trust Deed. In such case the Issuer shall, prior
to the issue of such further bonds or notes, execute and deliver to the
Trustee and AMBAC a trust deed supplemental to this Trust Deed (in relation
to which all applicable stamp duties or other documentation fees, duties or
taxes have been paid and, if applicable, duly stamped or denoted
accordingly) and containing a covenant by the Issuer in the form mutatis
mutandis of Clause 2(B) in relation to the principal, premium (if any) and
interest in respect of such further bonds or notes and such other
provisions (corresponding to the provisions contained in this Trust Deed)
as the Trustee shall require.
(3) A memorandum of every such supplemental Trust Deed shall be endorsed by
the Trustee on this Trust Deed and by the Issuer and AMBAC on their
duplicates of this Trust Deed.
(4) Whenever it is proposed to create and issue any further bonds or notes
the Issuer shall give to the Trustee and AMBAC not less than 14 days'
notice in writing of its intention so to do stating the amount of further
bonds or notes proposed to be created and issued.
3. FORM AND ISSUE OF THE BONDS
(A) THE GLOBAL BONDS: The Bonds will initially be represented by the
Temporary Global Bond without Coupons in the principal amount at the date hereof
of (pound)200,000,000 which, when duly executed and authenticated, will be
deposited by the Issuer with Bankers Trust Company (the "Common Depositary") as
common depositary for Euroclear and Cedel Bank on the date hereof on terms that
the Common Depositary shall hold the Temporary Global Bond to or to the order of
the Issuer against payment of the net proceeds of the issue of the Bonds in
accordance with the Subscription Agreement, following which it shall hold the
Temporary Global Bond for the account of the Bondholders. The Issuer shall also
deposit on the date hereof the Permanent Global Bond without Coupons in the
principal amount of up to (pound)200,000,000 with the Common Depositary who
shall hold the Permanent Global Bond pending exchange of the Temporary Global
Bond (in whole or in part) therefore in accordance with their respective terms.
Following exchange of the Temporary Global Bond in whole for the Permanent
Global Bond in accordance with their respective terms the Bonds shall (subject
as provided in Clause 3(C) below) thereafter be represented by the Permanent
Global Bond.
The procedures as regards the issue, exchange, execution, authentication,
delivery, surrender, cancellation, presentation and endorsement of the Temporary
Global Bond and the Permanent Global Bond (or part thereof) and any other
matters to be carried out by the relevant parties upon such exchange (in whole
or in part) shall be made in accordance with this Clause 3, their respective
terms and the rules and procedures of Euroclear and Cedel Bank for the time
being.
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(B) SIGNATURE AND AUTHENTICATION: The Global Bonds and the Definitive Bonds
will be signed manually or in facsimile by a Director of the Issuer. The Issuer
may use the facsimile signature of any person who at the date of this Trust Deed
is a Director of the Issuer even if at the time of issue of any Bonds he/she no
longer holds such office. The Issuer shall procure that, prior to the issue and
delivery of each Global Bond, each Global Bond will be authenticated by an
authorised signatory on behalf of the Principal Paying Agent and no Global Bond
shall be valid for any purpose unless and until so authenticated. The Bonds so
executed and, if applicable, so authenticated shall be binding and valid
obligations of the Issuer. Until it (or part thereof) has been exchanged
pursuant to Clause 3(A) or (C) (but without prejudice to the escrow arrangements
referred to in Clause 3(A), each Global Bond (or part thereof) shall in all
respects be entitled to the same benefits as a Definitive Bond and each Global
Bond shall be subject to the provisions hereof except that the bearer thereof
shall be the only person entitled to receive payments of principal and interest
as set out therein.
(C) EXCHANGE FOR DEFINITIVE BONDS: If while the Bonds are represented by
one or more Global Bonds (i) an AMBAC Event of Default shall have occurred or
(ii) either Euroclear or Cedel Bank is closed for business for a continuous
period of 14 days (other than by reason of holiday, statutory or otherwise) or
announces an intention permanently to cease business or (iii) as a result of any
change in, or amendment to, the laws or regulations of the United Kingdom or of
any political sub-division of, or any authority in, the United Kingdom having
power to tax or any change in the application or official interpretation of such
laws or regulations which becomes effective on or after 11th December 1997, the
Issuer, AMBAC or any Paying Agent is or will be required to make any withholding
or deduction from any payment in respect of the Bonds which would not be
required if the Bonds were in definitive form, then the Issuer shall (subject as
mentioned below), within 30 days of the occurrence of such relevant event but
not prior to the expiry of a period of 40 days commencing on the date hereof,
issue Definitive Bonds (with all unmatured Coupons attached) in exchange for the
whole (or the remaining part(s) outstanding) of the Permanent Global Bond. If
any of the events mentioned in (i), (ii) or (iii) occurs whilst the Bonds are
represented by the Temporary Global Bond (or part thereof) the Temporary Global
Bond (or that part) shall forthwith be exchanged for the Permanent Global Bond
(or part thereof) in accordance with its terms and Clause 3(A) above so that the
Bonds are then represented solely by the Permanent Global Bond. All Definitive
Bonds shall be printed, proofed, executed and delivered as aforesaid but shall
be held by the Principal Paying Agent until a Bondholder requests the Issuer
through the Principal Paying Agent that his interest in the Permanent Global
Bond be exchanged for Definitive Bonds whereupon such Definitive Bonds shall be
issued to such Bondholder as aforesaid without charge. The procedures to be
carried out by the relevant parties upon such exchange shall be made in
accordance with the provisions of the Permanent Global Bond and the rules and
procedures of Euroclear and Cedel Bank for the time being. The Permanent Global
Bond shall be endorsed by or on behalf of the Principal Paying Agent in respect
of those Definitive Bonds which are so delivered.
(D) THE DEFINITIVE BONDS: The Definitive Bonds shall be serially numbered
and issued in bearer form in the denominations of (pound)10,000 and
(pound)100,000 each with all unmatured Coupons attached. The Definitive Bonds
and the Coupons will be security printed in accordance with all applicable stock
exchange requirements in or substantially in the respective forms set out in
Schedule 2 and the Definitive Bonds will be endorsed with the Conditions.
(E) ENTITLEMENT TO TREAT HOLDER AS OWNER: The holder of any Bond or Coupon
will (except as otherwise required by law) be treated as its absolute owner for
all purposes (whether or not it is overdue and regardless of any notice of
ownership, trust, or any interest in it, any writing on it, or its theft or
loss) and no person will be liable for so treating the holder.
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4. STAMP DUTIES AND TAXES
(A) STAMP DUTIES: The Issuer will pay any stamp, issue, registration,
documentary or other taxes and duties, including interest and penalties, payable
in Belgium, Luxembourg and the United Kingdom in respect of the creation, issue
and offering of the Bonds and the Coupons and the execution or delivery of this
Trust Deed. The Issuer will also indemnify the Trustee, AMBAC, the Bondholders
and the Couponholders from and against all stamp, issue, registration,
documentary or other taxes paid by any of them in any jurisdiction in connection
with any action properly taken by or on behalf of the Trustee, AMBAC or, as the
case may be, (where entitled under Condition 15 to do so) the Bondholders or the
Couponholders to enforce the obligations of the Issuer under this Trust Deed,
the Bonds or the Coupons.
(B) CHANGE OF TAXING JURISDICTION: If the Issuer becomes subject generally
to the taxing jurisdiction of any territory or any authority of or in that
territory having power to tax other than or in addition to the United Kingdom or
any such authority of or in the United Kingdom then the Issuer will (unless the
Trustee otherwise agrees) in a trust deed supplemental hereto give to the
Trustee an undertaking in form and manner satisfactory to the Trustee in terms
corresponding to the terms of Condition 9 with the substitution for, or (as the
case may be) the addition to, the references in that Condition to the United
Kingdom or any authority thereof or therein having power to tax of references to
that other or additional territory or authority to whose taxing jurisdiction the
Issuer has become so subject and in such event this Trust Deed, the Bonds and
the Coupons will be read accordingly. In addition, such supplemental trust deed
shall also modify Condition 8(c) by the substitution for, or (as the case may
be) the addition to, the references in that Condition to the United Kingdom or
any authority in or of the United Kingdom having power to tax, of references to
that other territory or authority to whose taxing jurisdiction the Issuer has
become so subject and in such event this Trust Deed, the Bonds and the Coupons
will be read accordingly.
5. THE TRUST DEED, THE BONDS AND THE BOND POLICY
(A) BONDS INCORPORATED BY REFERENCE: The Issuer hereby covenants with the
Trustee and AMBAC that it will perform and comply with its obligations under the
Bonds which are expressed to be binding on it. Subject to Conditions 15 and 16
and Clause 19, the Trustee shall be entitled to enforce the obligations of the
Issuer under the Bonds and the Coupons in the manner therein provided as if the
Bonds and the Coupons were incorporated in this Trust Deed, which shall be read
and construed as one document with the Bonds. The provisions contained in
Schedule 3 shall have effect in the same manner as if herein set forth.
(B) BONDS AND BOND POLICY SUBJECT TO TRUST DEED: The Bonds and the Bond
Policy shall be subject to the provisions of this Trust Deed, all of which shall
be binding upon the Issuer, AMBAC, the Bondholders and the Couponholders and all
persons claiming through or under them respectively.
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(C) EVIDENCE OF DEFAULT: If the Trustee makes any claim, institutes any
legal proceeding or lodges any proof in a winding up of the Issuer and/or AMBAC,
proof that the Issuer or AMBAC, as the case may be, has failed to pay any
principal or interest due and payable in respect of any particular Bond or
Coupon shall (unless the contrary is proved) be sufficient evidence that the
Issuer or AMBAC, as the case may be, has made the same default as regards all
other Bonds or Coupons in respect of which a corresponding payment is due and
payable.
6. APPLICATION OF MONEYS RECEIVED BY THE TRUSTEE
(A) DECLARATION OF TRUST: All moneys received by the Trustee from the
Issuer in respect of the Bonds and all other amounts payable under this Trust
Deed will be held by the Trustee upon trust to apply them (subject to sub-Clause
(B)):
first, in payment of all costs, charges, expenses and liabilities incurred
by the Trustee (including remuneration payable to the Trustee) in carrying
out its functions under this Trust Deed;
secondly, in payment of any interest owing in respect of the Bonds
(including any amounts owing to AMBAC pursuant to its rights of subrogation
following any payment of interest by AMBAC under the Bond Policy) pari
passu and rateably;
thirdly, in payment of any principal and premium (if any) owing in respect
of the Bonds (including any amounts of principal owing to AMBAC pursuant to
its rights of subrogation following any payment of principal by AMBAC under
the Bond Policy) pari passu and rateably; and
fourthly, in payment of the balance (if any) to the Issuer for itself.
Without prejudice to this sub-Clause (A), if the Trustee holds any moneys which
represent principal, premium or interest in respect of Bonds or Coupons which
have become void under Condition 10, the Trustee will hold such moneys upon the
above trusts provided that the Trustee shall be required to treat the payments
of interest and/or principal and/or premium as having been satisfied and no
amounts as outstanding or owing in respect thereof. The Trustee shall as soon as
practicable apply such moneys as aforesaid and promptly thereafter return such
moneys (or the balance thereof, as the case may be) to the Issuer.
(B) ACCUMULATION: If the amount of the moneys at any time available for
payment in respect of the Bonds under sub-Clause (A) is less than 10 per cent of
the principal amount of the Bonds then outstanding, the Trustee may, at its
discretion, invest such moneys. The Trustee may retain such investments and
accumulate the resulting income until the investments and the accumulations,
together with any other funds for the time being under the control of the
Trustee and available for such payment, amount to at least 10 per cent of the
principal amount of the Bonds then outstanding and then such investments,
accumulations and funds (after deduction of, or provision for, any applicable
taxes) will be applied as specified in sub-Clause (A).
(C) INVESTMENT: Any moneys held by the Trustee may be invested in the name
or under the control of the Trustee in any investments or other assets in any
part of the world whether or not they produce income or are placed on deposit in
the name or under the control of the Trustee at such bank or other financial
institution and in such currency as the Trustee may, in its absolute discretion,
think fit. The Trustee may at any time vary or transpose any such investments
for or into other such investments or convert any moneys so deposited into any
other currency, and will not be responsible for any loss occasioned thereby,
whether by depreciation in value, fluctuation in exchange rates or otherwise.
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7. AMBAC AND THE BOND POLICY
(A) NOTICES OF CLAIM: The Issuer shall procure that the Trustee is notified
by no later than close of business on the sixth business day before each
Scheduled Payment Date if the amount available to the Issuer for payment of the
interest and (if applicable) principal which the Issuer is scheduled to pay on
such Scheduled Payment Date in respect of the Bonds and/or Coupons, as the case
may be, is less than the Scheduled Amount. If such amount is insufficient for
payment of the Scheduled Amount, the Trustee shall deliver a Notice of Claim to
AMBAC with a copy to the Issuer and the Principal Paying Agent requiring AMBAC
to pay the shortfall in accordance with the terms of the Bond Policy.
(B) PAYMENTS UNDER BOND POLICY AT AMBAC'S OPTION: Any election by AMBAC
under the Bond Policy to pay any amount of principal in respect of the Bonds and
any accrued interest thereon which has become immediately due and payable
(whether by virtue of acceleration, prepayment or otherwise) other than on the
relevant Scheduled Payment Date shall be made by notice in writing to the
Trustee, with a copy to the Issuer and the Principal Paying Agent, specifying
the date on which such amount will be paid by AMBAC.
(C) PAYMENTS UNDER BOND POLICY TO GO TO PRINCIPAL PAYING AGENT: The Trustee
shall direct AMBAC to pay all sums payable under the Bond Policy to the
Principal Paying Agent; provided that at any time after the occurrence of an
Issuer Event of Default, a Potential Issuer Event of Default or an AMBAC Event
of Default or in the event that the Trustee considers that it would be
inappropriate for such sums to be paid to the Principal Paying Agent, the
Trustee may require AMBAC to make payments to the Trustee or as it may otherwise
direct.
(D) NOTICE OF AMBAC'S TRANSFER INSTRUCTIONS: At least one business day
before each date on which AMBAC is obliged to make a payment under the Bond
Policy, it shall notify the Trustee, the Issuer and the Principal Paying Agent
of its irrevocable instructions to the bank effecting payment on its behalf to
transfer such amount in accordance with the relevant Notice of Claim.
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(E) THE ISSUER NOT DISCHARGED: The Issuer shall not be discharged from its
obligations under the Bonds and this Trust Deed by any payment under the Bond
Policy: provided that this sub-clause shall operate only for the purpose of the
rights of subrogation of AMBAC contemplated by sub-clause (G).
(F) RETURN OF BOND POLICY: The Trustee will return the Bond Policy to AMBAC
for cancellation upon:
(a) the redemption in full of the Bonds by the Issuer, the payment in full
of accrued interest thereon and the expiry of any applicable preference
period during which the amount of any payments in respect of the Bonds
which are subsequently avoided in whole or in part as a preferential
transaction under applicable law may be required to be paid by AMBAC under
the Bond Policy; or
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(b) the payment in full of all amounts which are or may become due under
the Bond Policy.
(G) SUBROGATION: Without prejudice to its other rights and remedies, AMBAC
shall be subrogated to all and any rights of the bearers of the Global Bonds,
the Bondholders, the Couponholders and the Trustee against the Issuer to the
extent of amounts due and payable in respect of the Bonds which have been paid
by AMBAC under the Bond Policy.
(H) CONFLICT: To the extent that the provisions of this Trust Deed and the
Bond Policy conflict, the provisions of the Bond Policy shall prevail.
8. COVENANTS
So long as any Bond is outstanding, the Issuer will:
(A) BOOKS OF ACCOUNT: keep proper books of account and, at any time after
the occurrence of an Issuer Event of Default or a Potential Issuer Event of
Default or if the Trustee or AMBAC (so long as it is the Controlling Party) has
reasonable grounds to believe that any such event has occurred so far as
permitted by applicable law, allow and procure that each of its Principal
Subsidiaries will allow the Trustee, AMBAC (so long as it is the Controlling
Party) and anyone appointed by either of them access to the books of account of
the Issuer and/or the relevant Principal Subsidiary respectively at all
reasonable times during normal business hours and to discuss the same with a
responsible officer of the Issuer;
(B) NOTICE OF ISSUER EVENT OF DEFAULT: notify the Trustee and AMBAC in
writing immediately upon becoming aware of the occurrence of any Issuer Event of
Default or Potential Issuer Event of Default;
(C) INFORMATION: so far as permitted by applicable law and regulations,
give to the Trustee and AMBAC such information as they shall require for the
performance or the discharge of their respective duties, powers, trusts,
authorities and discretions hereunder or under the Bond Policy or, in the case
of the Trustee, vested in it by operation of law;
(D) FINANCIAL STATEMENTS ETC.: send to the Trustee and AMBAC (so long as it
is the Controlling Party) at the time of their issue and in the case of annual
financial statements in any event not more than 180 days after the end of each
financial year four copies (in the English language) of every balance sheet and
profit and loss account prepared (in either case) in accordance with United
Kingdom generally accepted accounting standards applied on a consistent basis
(unless otherwise stated in the notes thereto) and four copies of every other
document issued or sent by the Issuer to the holders of its publicly held
securities generally and, if so requested by the Trustee or AMBAC (so long as it
is the Controlling Party), four copies of its quarterly balance sheet and profit
and loss account when generally available;
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(E) CERTIFICATE OF DIRECTOR: send to the Trustee and AMBAC, within 14 days
of its annual audited balance sheet and profit and loss account being made
available to its members, and also within 14 days after any request by the
Trustee and AMBAC, a certificate of the Issuer signed by any Director to the
effect that, having made all reasonable enquiries, to the best of the knowledge,
information and belief of the Director as at a date (the "CERTIFICATION DATE")
being not more than five days before the date of the certificate no Issuer Event
of Default or Potential Issuer Event of Default had occurred since the date of
this Trust Deed or, if later, the Certification Date of the last such
certificate (if any) and is continuing or, if such an event had occurred, giving
details of it, provided however that the Issuer shall not be required to provide
any such certificate more than twice in any calendar year unless the Trustee and
or AMBAC reasonably believes that an issuer Event of Default or a Potential
Issuer Event of Default has occurred (in which case the Issuer shall not be
required to provide a certificate more than once in any two week period);
(F) NOTICES TO BONDHOLDERS: send to the Trustee and to AMBAC at least five
business days before the date of publication, a copy of the form of each notice
to the Bondholders to be published in accordance with Condition 18 and upon
publication two copies of each notice so published, (such notice to be in a form
approved by the Trustee (such approval not to be unreasonably withheld or
delayed)) and AMBAC (so long as it is the Controlling Party), but such approval
shall not, unless so stated, constitute approval of such notice as an investment
advertisement for the purposes of section 57 of the Financial Services Act 1986;
(G) FURTHER ASSURANCE: so far as permitted by applicable law, all times
execute all such further documents and do all such further acts and things as
may be necessary in the opinion of the Trustee and AMBAC (so long as it is the
Controlling Party) to give effect to the Issuer's obligations under this Trust
Deed;
(H) NOTICE OF NON-PAYMENT: use its best efforts to procure that the
Principal Paying Agent notifies the Trustee forthwith in accordance with the
Paying Agency Agreement in the event that it does not receive unconditionally
the full amount in the relevant currency of the moneys payable on the date on
which such amount is to be received by the Principal Paying Agent in accordance
with the terms of the Paying Agency Agreement:
(I) NOTICE OF LATE PAYMENT: forthwith upon request by the Trustee give
notice to AMBAC and to the Bondholders of any unconditional payment to the
Principal Paying Agent or the Trustee of any sum due in respect of the Bonds or
Coupons made after the due date for such payment;
(J) LISTING: use all reasonable endeavors to maintain the listing of the
Bonds on the Luxembourg Stock Exchange. If, however, it is unable to do so,
having used such endeavors, or if the maintenance of such listing is agreed by
the Trustee and AMBAC (if then the Controlling Party) to be unduly onerous and
the Trustee is satisfied that the interests of the Bondholders would not be
thereby materially prejudiced, the Issuer will instead use all reasonable
endeavors to obtain and maintain a listing of the Bonds on such other stock
exchange, which shall be in any case a "RECOGNISED STOCK EXCHANGE" for the
purposes of section 841 of the UK Income and Corporation Taxes Act 1988, as it
may (with the written approval of the Trustee and AMBAC (if then the Controlling
Party)) decide, and the Issuer shall also use all reasonable endeavors to
procure that there will at all times be furnished to any stock exchange on which
the Bonds are for the time being listed such information as such stock exchange
may require to be furnished in accordance with its normal requirements or in
accordance with any arrangements for the time being made with any such stock
exchange;
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(K) MAINTENANCE OF PAYING AGENTS: at all times maintain a Principal Paying
Agent having a specified office in London and, while the Bonds are listed on the
Luxembourg Stock Exchange, a Paying Agent with a specified office in Luxembourg;
(L) CHANGE IN AGENTS: give not less than 14 days' prior notice to the
Bondholders and to AMBAC of any future appointment or any resignation or removal
of any Paying Agent or of any change by any Paying Agent of its specified office
and not make any such appointment or removal or change without the written
approval of the Trustee and AMBAC (so long as it is the Controlling Party);
(M) EARLY REDEMPTION: give prior notice to the Trustee and to AMBAC (so
long as it is the Controlling Party) of any proposed redemption pursuant to
Condition 8(b) or (c) and redeem Bonds accordingly;
(N) PES SUBSIDIARIES: give to the Trustee and to AMBAC (so long as no AMBAC
Event of Default has occurred and is continuing) at the same time as sending the
certificate referred to in sub-Clause (E) or within 14 days of a request by the
Trustee or AMBAC, a certificate of a Director of the Issuer listing those
Subsidiaries of the Issuer which as at the last day of the financial year of the
Issuer or as at the date specified in such request (being no later than 14 days
before the date of such request) were PES Subsidiaries;
(O) CHANGE IN SUBSIDIARIES: give to the Trustee and to AMBAC (so long as no
AMBAC Event of Default has occurred and is continuing), as soon as reasonably
practicable after the acquisition or disposal of any company which thereby
becomes or ceases to be a Principal Subsidiary or after any transfer is made to
any Subsidiary of the Issuer which thereby becomes a Principal Subsidiary and as
soon as reasonably practicable after any change in the list of companies
comprising the Principal Subsidiaries, a certificate by the Auditors to such
effect;
(P) NEGATIVE PLEDGE: give notice to the Trustee and to AMBAC (so long as no
AMBAC Event of Default has occurred and is continuing) as soon as practicable
after the Issuer or any PES Subsidiary has formed the intention to create or
permit to arise or subsist any Security Interest to secure any Relevant
Indebtedness or any guarantee of or indemnity in respect of any Relevant
Indebtedness or become aware of the existence of any such Security Interest, in
each case where the creation or existence of which would oblige the Security
Interest to be extended to the Bonds pursuant to Condition 5 or Condition 11;
(Q) OBLIGATIONS UNDER PAYING AGENCY AGREEMENT: comply with and perform all
its obligations under the Paying Agency Agreement and use all its best endeavors
to procure that the Paying Agents comply with and perform all their respective
obligations hereunder and any notice given by the Trustee pursuant to Clause
2(D)( 1) and notify the Trustee and AMBAC (if then the Controlling Party)
forthwith on being notified in writing by the relevant Paying Agent of any
material breach of the Paying Agency Agreement by such Paying Agent and not make
any amendment or modification to such Agreement without the prior written
approval of the Trustee and AMBAC (if then the Controlling Party);
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(R) LIST OF AUTHORISED SIGNATORIES: upon the execution of this Trust Deed
and thereafter upon any change of the same, deliver to the Trustee (with a copy
to the Principal Paying Agent) a list of the authorised signatories of the
Issuer, together with a certified specimen signature of each such authorised
signatory;
(S) AUDITORS CERTIFICATES: use its best endeavors to give to AMBAC a
certificate of the Auditors specifying the amount of the Northern Consolidated
Tangible Net Worth for the purposes of Condition 11, such certificate to be
provided before the Issuer creates or has outstanding a Security Interest in
respect of any Relevant Indebtedness and/or guarantee within Condition 11.
(T) DIRECTOR'S CERTIFICATE: give to the Trustee and AMBAC a certificate of
a Director of the Issuer:
(a) specifying the aggregate amount of any Relevant Indebtedness of the
Issuer or a PES Subsidiary or guaranteed by the Issuer or a PES Subsidiary
and in respect of which a Security Interest or Security Interests has or
have been created or is or are outstanding, such certificate to be provided
before the Issuer or a PES Subsidiary creates or has outstanding any new
Security Interest in respect of Relevant Indebtedness;
(b) specifying the Issuer's then current Leverage Ratio and Interest
Coverage Ratio, such certificate to be provided before the Issuer
recommends, makes or pays any Distribution to any of its shareholders;
(c) specifying details of: (1) any revocation or surrender of, or any
modification to the terms and conditions of the PES Licence or the Proposed
PES Licence Modifications; (2) any termination or modification (other than
a modification which is of a formal, minor or technical nature) and (if
applicable) replacement of the Pooling and Settlement Agreement; (3) any
notice being given to the Issuer under Clause 66.1.3 of the Pooling and
Settlement Agreement requiring it to cease to be a party thereto; (4) any
notice declaring an event of default under Clause 66.1.1 or 66.2.1 of the
Pooling and Settlement Agreement being given to the Issuer; (5) the Issuer
otherwise ceasing to be a party to the Pooling and Settlement Agreement;
(6) any legislation enacted which removes, qualifies or amends the duties
of the Secretary of State for Trade and Industry (or any successor) and/or
the Director General of Electricity Supply (or any successor) under Section
3 of the Electricity Act 1989 as in force on 11th December, 1997; (7) any
proposal of any amendment to the provisions of the Reference Documents
described in Condition 11(c); and (8) any proposal of any modification to
the Terms of Reference, each such certificate to be provided promptly upon
any such modification, termination or enactment being made;
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(d) specifying the amount of the Capital and Reserves for the purposes of
Condition 5, such certificate to be provided before the Issuer creates or
has outstanding a Security Interest in respect of any Relevant Indebtedness
and/or guarantee within Condition 5;
(e) specifying that a Subsidiary of the issuer is a Principal Subsidiary
and/or a Specified Subsidiary, such certificate or certificates to be
provided within 10 days of any request by the Trustee and/or AMBAC for its
provision; and
(f) specifying the amount of the Capital and Reserves for the purposes of
Condition 12(c), such certificate to be provided within 10 days of any
request by the Trustee and/or AMBAC for its provision; and
(U) In order to enable the Trustee to ascertain the amount of Bonds for the
time being outstanding and AMBAC to ascertain the extent of the Insured
Obligations, deliver to the Trustee and A.MBAC within 28 days of being requested
by the Trustee or AMBAC, as the case may be, a certificate in writing signed by
a Director of the Company setting our the total number and principal amount of
Bonds which up to and including the date being no more than 10 days before the
date of the certificate have been purchased and not cancelled and are held by or
on behalf of the Company or any Subsidiary of the Company, provided that neither
the Trustee nor AMBAC may request such a certificate more than once in any
calendar year.
9. COVENANTS BY AMBAC
AMBAC hereby covenants with the Trustee and, in respect of sub-clauses (A),
(C), (D), (E), (F), (G), (H) and (I) below, with the Issuer, that so long as any
of the Bonds remain outstanding, it will:
(A) FINANCIAL INFORMATION OF AMBAC: send to the Trustee and to the Issuer
at the time of issue thereof and in any event not more than 180 days after the
end of each of its financial years four copies of every audited balance sheet
and audited income statement prepared (in either case) in accordance with United
Kingdom generally accepted accounting standards applied on a consistent basis
(unless otherwise stated in the notes to such financial statements) and, if so
requested by the Trustee or the Issuer, four copies of its quarterly balance
sheet and income statement when generally available:
(B) INFORMATION: so far as permitted by applicable law and regulatory
requirements, at all times give to the Trustee such information as may be
required for the purpose of the discharge of the duties, powers, trusts,
authorities and discretions vested in it by this Trust Deed or by operation of
law;
(C) INFORMATION FOR STOCK EXCHANGE: use its reasonable endeavors to procure
that, at the request of the Issuer, there will at all times be furnished at the
expense of the Issuer to any stock exchange on which the Bonds are for the time
being listed such information concerning AMBAC and the Bond Policy as such stock
exchange may require to be furnished in accordance with its normal requirements
or in accordance with any arrangements for the time being made by the Issuer
with such stock exchange with the prior approval of AMBAC (such approval not to
be unreasonably withheld or delayed);
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(D) FURTHER ASSURANCE: so far as permitted by applicable law and regulatory
requirements, execute all such further documents and do all further acts and
things which are necessary at any time in the opinion of the Trustee or the
Issuer to give effect to the provisions of this Trust Deed and the Bond Policy;
(E) NOTIFICATION OF AMBAC EVENT OF DEFAULT: give notice in writing to the
Trustee, with a copy to the Issuer, forthwith upon becoming aware of the
occurrence of any AMBAC Event of Default;
(F) CONFIRMATION OF NO AMBAC EVENT OF DEFAULT: deliver to the Trustee, with
a copy to the Issuer, at least once in every financial year (at the same time as
delivery of the annual financial statements referred to in paragraph (A) above)
and as soon as practicable after being so requested in writing by the Trustee or
the Issuer a certificate of AMBAC signed by an authorised signatory of AMBAC
certifying that at the date thereof, to the best of AMBAC's knowledge and belief
having made all reasonable enquiries, no AMBAC Event of Default has occurred or,
if it has, specifying such AMBAC Event of Default and stating when it occurred
and whether it is continuing, provided, however, that AMBAC shall not be
required to provide such a certificate more than twice in any calendar year
unless the Trustee and/or the Issuer reasonably believe that an AMBAC Event of
Default has occurred (in which event AMBAC shall not be required to provide such
a certificate more than once in any two week period);
(G) NOTICE TO BONDHOLDERS: send to the Trustee, with a copy to the Issuer,
a copy of the form of any notice to be given to the Bondholders by AMBAC and
will not publish any such notice until the same has been approved by the Trustee
(which approval shall not, unless so stated, constitute approval of such notice
as an investment advertisement for the purposes of section 57 of the Financial
Services Act 1986);
(H) LIST OF AUTHORISED SIGNATORIES: upon the execution of this Trust Deed
and thereafter forthwith upon any change of the same, deliver to the Trustee
(with a copy to the Principal Paying Agent and the Issuer) a list of the
authorised signatories of AMBAC, together with a certified specimen signature of
each such authorised signatory; and
(I) COMPLIANCE BY AMBAC: it will at all times comply with and perform all
its obligations under each of this Trust Deed and the Bond Policy.
10. COVENANTS BY THE ISSUER IN FAVOUR OF AMBAC
The Issuer hereby covenants with AMBAC that so long as any of the Bonds
remain outstanding and for so long as no AMBAC Event of Default has occurred and
is continuing, it shall:
(A) not modify or amend, or agree to any modification or amendment to the
PES Licence or the Proposed PES Licence Modifications without the consent of the
Regulator;
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(B) use all reasonable endeavors to procure that the underlying or shadow
credit rating of the Bonds and any existing public long term unsecured,
unguaranteed and unsubordinated debt of Northern Electric plc are assigned
Investment Grade Ratings by both Rating Agencies, and that such Investment Grade
Ratings are maintained;
(C) not, without the prior written consent of AMBAC, agree to any amendment
to the provisions of the Reference Documents that (i) restrict the activities in
which any of the Company, CE Electric UK Holdings, CE Electric UK plc or
Northern Electric plc may engage or participate in, (ii) limit the disposal by
any such company of any or all of its assets, revenues or properties of any
nature whatsoever and (iii) limit the Incurrence of Indebtedness by any such
company, provided that this paragraph shall not apply to any such amendment
required by the Regulator;
(D) procure that the Board of Directors of the Company and Northern
Electric plc each, include an Independent Director and that the Terms of
Reference of such an Independent Director are not modified in any respect
without the prior written consent of AMBAC, provided that this paragraph shall
not apply to any such modification required by the Regulator;
(E) procure that no Security Interest is created or granted upon, or with
respect to, any of the present or future ordinary shares of the Company and the
Specified Subsidiaries and not sell, transfer or otherwise dispose or permit the
sale, transfer or other disposal of the present and future ordinary shares of
the Specified Subsidiaries;
(F) ensure that no Security Interest is created or granted upon, or with
respect to, any of the present or future business, undertaking, assets or
revenues (including any uncalled share capital) of the Company, CE Electric UK
Holdings and CE Electric UK plc unless the Company shall, at the same time as
the creation of the Security Interest, take any and all action necessary to
ensure that all amounts payable by it under the Bonds, the Coupons, the Trust
Deed and the Insurance and Indemnity Agreement (to the extent of the Insured
Amounts) are secured equally and rateably by such, Security Interest;
(G) not, without the prior written consent of AMBAC, modify or amend, or
consent to any modification or amendment of any Existing Negative Pledge; and
(H) ensure that no Relevant Indebtedness of Northern Electric plc or any
PES Subsidiary or of any other person and no guarantee by Northern Electric plc
or any PES Subsidiary of any Relevant Indebtedness of any other person will be
secured by a Security Interest upon, or with respect to, any of the present or
future business, undertaking, assets or revenues (including any uncalled
capital) of Northern Electric plc or any PES Subsidiary unless Northern Electric
plc shall, before or at the same time as the creation of the Security Interest,
take any and all action necessary to ensure that:
(a) all amounts payable by the Issuer under the Bonds, the Coupons,
the Trust Deed and the Insurance and Indemnity Agreement (to the
extent of the Insured Amounts) are secured to the satisfaction of
AMBAC equally and rateably with the Relevant Indebtedness or guarantee
of Relevant Indebtedness, as the case may be, by such Security
Interest; or
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(b) such other Security Interest or guarantee or other arrangement
(whether or not including the giving of a Security Interest) is
provided in respect of all amounts payable by the Issuer under the
Bonds, the Coupons, the Trust Deed and the Insurance and Indemnity
Agreement (to the extent of the Insured Amounts) as AMBAC shall in its
absolute discretion deem not materially less beneficial to the
interests of AMBAC;
save that Northern Electric plc or any PES Subsidiary may create or
have outstanding a Security Interest in respect of any of its Relevant
Indebtedness and/or any guarantees given by Northern Electric plc or
any PES Subsidiary in respect of any Relevant Indebtedness of any
other person (without the obligation to provide a Security Interest or
guarantee or other arrangement in respect of the Bonds, the Coupons
and the Trust Deed) where such Relevant Indebtedness has an initial
maturity falling not earlier than 31st December, 2022 and is of a
maximum aggregate amount outstanding at any time not exceeding the
greater of (pound)50,000,000 and 20 per cent, of the Northern
Consolidated Tangible Net Worth (as defined below).
For the purposes of this Clause 10 (H):
(1) "Northern Consolidated Tangible Net Worth" means at any
particular time the aggregate of the amount paid up on Northern
Electric plc's issued share capital and the consolidated
distributable and non-distributable reserves of the Northern
Group (as shown in the most recently published audited
consolidated financial statements of the Northern Group), after:
(i) deducting the total of any debit balance on the profit and
loss account and the book value of any intangible assets
including but not limited to goodwill;
(ii) excluding any minority interests in Subsidiary Undertakings;
and
(iii) adding the amount shown in respect of deferred taxation;
but adjusted as may be necessary in respect of any variation in
the paid-up share capital or share premium account of the
Northern Group since the date of that balance sheet and further
adjusted as may be necessary to reflect any change since the date
of that balance sheet in the Subsidiary Undertakings comprising
the Northern Group.
A report by the Auditors as to the amount of the Northern
Consolidated Tangible Net Worth at any given time shall, in the
absence of manifest error, be conclusive and binding on all
parties.
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(2) "Northern Group" means Northern Electric plc and its
Subsidiary Undertakings.
(3) "Subsidiary Undertaking" shall have the meaning given to it
by Section 258 of the Companies Act 1985 (but shall exclude
any undertakings (as defined in the Companies Act 1985)
whose accounts are not included in the then latest published
audited consolidated accounts of Northern Electric plc, nor
(in the case of an undertaking which has first become a
subsidiary undertaking of a member of the Northern Group
since the date as at which any such audited accounts were
prepared) would its accounts have been so included or
consolidated if it had become so on or before that date.
(4) Any reference to an obligation being guaranteed shall
include a reference to any indemnity being given in respect
of the obligation.
11. REMUNERATION AND INDEMNIFICATION OF THE TRUSTEE
(A) NORMAL REMUNERATION: So long as any Bond is outstanding the Issuer will
pay to the Trustee by way of remuneration for its services as Trustee such sum
as may from time to time be agreed between them. Such remuneration will accrue
from day to day from the date of this Trust Deed and shall be payable on such
dates as may from time to time be agreed between the Issuer and the Trustee.
However, if any payment to a Bondholder or Couponholder of the moneys due in
respect of any Bond or Coupon is improperly withheld or refused upon due
presentation of such Bond or Coupon, such remuneration will again accrue as from
the date of such presentation until payment to such Bondholder or Couponholder
is duly made.
(B) EXTRA REMUNERATION: At any time after the occurrence of an Issuer Event
of Default or an AMBAC Event of Default or if the Trustee finds it expedient or
necessary or is requested by the Issuer to undertake duties which the Trustee
and the Issuer agree to be of an exceptional nature or otherwise outside the
scope of the normal duties of the Trustee under this Trust Deed, the Issuer will
pay such additional remuneration as may be agreed between them or, failing
agreement as to any of the matters in this sub-Clause (or as to such sums
referred to in sub-Clause (A)), as determined by a merchant or investment bank
(acting as an expert) selected by the Trustee and approved by the Issuer or,
failing such approval, nominated by the President for the time being of The Law
Society of England and Wales, the expenses involved in such nomination and the
fee of such merchant or investment bank being paid by the Issuer. The
determination of such merchant or investment bank will be conclusive and binding
on the Issuer, the Trustee, the Bondholders and the Couponholders, save in the
case of manifest error.
(C) EXPENSES: The Issuer will also pay or discharge all costs, charges,
liabilities and expenses properly incurred by the Trustee in relation to the
preparation and execution of this Trust Deed and the carrying out of its
functions under this Trust Deed including, but not limited to, legal and
travelling expenses and any stamp, registration, documentary or other taxes or
duties paid by the Trustee in connection with any legal proceedings brought or
contemplated by the Trustee against the Issuer for enforcing any obligation of
the Issuer under this Trust Deed, the Bonds or the Coupons.
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(D) PAYMENT OF EXPENSES: All costs, charges, liabilities and expenses
properly incurred and payments properly made by the Trustee in the lawful
performance of its functions under this Trust Deed will be payable or
reimbursable by the Issuer on demand by the Trustee and:-
(1) in the case of payments made by the Trustee prior to such demand will
carry interest from the date on which the demand is made at the rate of 2
per cent per annum over the base rate of National Westminster Bank Plc on
the date on which such payments were made by the Trustee; and
(2) in all other cases will carry interest at such rate from 30 days after
the date on which the demand is made or (where the demand specifies that
payment is to be made on an earlier date) from such earlier date.
(E) INDEMNITY: Subject to the provisions of Clause 13, the Issuer will
indemnify the Trustee in respect of all liabilities and expenses properly
incurred by it or by anyone appointed by it or to whom any of its functions may
be delegated by it in the carrying out of its functions under this Trust Deed
and against any loss, liability, cost, claim, action, demand or expense
(including, but not limited to, all costs, charges and expenses paid or incurred
in disputing or defending any of the foregoing) which any of them may incur or
which may be made against any of them arising out of or in relation to or in
connection with, its appointment or the proper exercise of its functions.
(F) PROVISIONS CONTINUING: The provisions of sub-Clauses (C), (D) and (E)
will continue in full force and effect in relation to the Trustee even if it may
have ceased to be Trustee.
12. PROVISIONS SUPPLEMENTAL TO THE TRUSTEE ACT 1925
By way of supplement to the Trustee Act 1925 it is expressly declared as
follows:-
(A) ADVICE: The Trustee may act on the opinion or advice of or information
obtained from, any expert (whether obtained by the Issuer, AMBAC, the Trustee,
the Principal Paying Agent, or any other person whatsoever) and will not be
responsible to anyone for any loss occasioned by so acting. Any such opinion,
advice or information may be sent or obtained by letter, telex or facsimile
transmission and the Trustee will not be liable to anyone for acting in good
faith on any opinion, advice or information purporting to be conveyed by such
means even if it contains some error or is not authentic.
(B) TRUSTEE TO ASSUME DUE PERFORMANCE: The Trustee need not notify anyone
of the execution of this Trust Deed or do anything to ascertain whether any
Issuer Event of Default, Potential Issuer Event of Default, Restructuring Event,
Negative Rating Event, Rating Downgrade or any event which could lead to the
occurrence of or could constitute an Issuer Event of Default, a Potential Issuer
Event of Default, a Restructuring Event, a Negative Rating Event or a Rating
Downgrade has occurred and, until it has actual knowledge or express notice to
the contrary, the Trustee may assume that no such event has occurred and that
the Issuer is performing all of its obligations under this Trust Deed, the Bonds
and the Coupons.
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(C) RESOLUTIONS OF BONDHOLDERS: The Trustee will not be responsible for
having acted in good faith upon a resolution purporting to have been passed at a
meeting of Bondholders in respect of which minutes have been made and signed
even though it may later be found that there was a defect in the constitution of
such meeting or the passing of such resolution or that such resolution was not
valid or binding upon the Bondholders or the Couponholders.
(D) CERTIFICATE SIGNED BY A DIRECTOR OR AUTHORISED SIGNATORY: The Trustee
may call for and may accept as sufficient evidence of any fact or matter or of
the expediency of any act a certificate of the Issuer signed by any Director or
Authorised Signatory of the Issuer or AMBAC (as the case may be) as to any fact
or matter upon which the Trustee may, in the exercise of any of its functions,
require to be satisfied or to have information to the effect that, in the
opinion of the person so certifying, any particular act is expedient and the
Trustee need not call for further evidence and will not be responsible for any
loss that may be occasioned by acting on any such certificate.
(E) DEPOSIT OF DOCUMENTS: The Trustee may deposit this Trust Deed and any
other documents in any part of the world with any banker or banking company or
entity whose business includes undertaking the safe custody of documents or with
any lawyer or firm of lawyers believed by it to be of good repute and may pay
all sums to be paid on account of or in respect of any such deposit.
(F) DISCRETION OF TRUSTEE: Subject to Conditions 11, 15 and 16 and Clause
19, the Trustee will have absolute and uncontrolled discretion as to the
exercise of its functions and, subject to Clause 13, will not be responsible for
any loss, liability, cost, claim, action, demand, expenses or inconvenience
which may result from their exercise or non-exercise.
(G) AGENTS: Whenever it considers it expedient in the interests of the
Bondholders, the Trustee may, in the conduct of its trust business, instead of
acting personally, employ and pay an agent selected by it, whether or not a
lawyer or other professional person, to transact or conduct, or concur in
transacting or conducting, any business and to do or concur in doing all acts
required to be done by the Trustee (including the receipt and payment of money).
Provided it has exercised reasonable care in the selection of such agent, the
Trustee will not be responsible to anyone for any misconduct or omission on the
part of any such agent so employed by it or is bound to supervise the
proceedings or acts of any such agent.
(H) DELEGATION: Whenever it considers it expedient in the interests of the
Bondholders, the Trustee may delegate to any person and on any terms (including
power to sub-delegate) all or any of its functions. If the Trustee exercises
reasonable care in the selection of such delegate, it will not be under any
obligation to supervise such delegate or be responsible for any loss, liability,
cost, claim, action, demand or expense incurred by reason of any misconduct or
default by any such delegate or sub-delegate.
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(I) FORGED BONDS: The Trustee will not be liable to the Issuer, AMBAC or
any Bondholder or Couponholder by reason of having accepted as valid or not
having rejected any Bond or Coupon purporting to be such and later found to be
forged or not authentic.
(J) CONFIDENTIALITY: Unless ordered to do so by a court of competent
jurisdiction the Trustee shall not be required to disclose to any Bondholder or
Couponholder any confidential financial or other information made available to
the Trustee by the Issuer or any of its Subsidiaries.
(K) DETERMINATIONS CONCLUSIVE: Subject to Conditions 15 and 16 and Clause
19, as between itself and the Bondholders and Couponholders the Trustee may
determine all questions and doubts arising in relation to any of the provisions
of this Trust Deed. Every such determination whether made upon such a question
actually raised or implied in the acts or proceedings of the Trustee, will be
conclusive and shall bind the Trustee, AMBAC, the Bondholders and the
Couponholders.
(L) CURRENCY CONVERSION: Where it is necessary or desirable to convert any
sum from one currency to another, it will (unless otherwise provided hereby or
required by law) be converted at such rate or rates, in accordance with such
method and as at such date as may be specified by the Trustee but having regard
to current rates of exchange, if available. Any rate, method and date so
specified will be binding on the Issuer, the Bondholders and the Couponholders.
This sub-clause applies both to actual conversions and to notional conversions
made for the purposes of establishing the equivalent of a sum in one currency in
another currency.
(M) ISSUER EVENTS OF DEFAULT: Subject to Conditions 11, 12 and 16 and
Clause 19, the Trustee may determine whether or not a default in the performance
or observance by the Issuer of any of its obligations under this Trust Deed is
in its opinion capable of remedy and/or whether or not any event is in its
opinion materially adverse or prejudicial (as applicable) to the interests of
the Bondholders. Any such determination will be conclusive and binding upon the
Issuer, AMBAC, the Bondholders and the Couponholders.
(N) PAYMENT FOR AND DELIVERY OF BONDS: The Trustee will not be responsible
for the receipt or application by the Issuer of the proceeds of the issue of the
Bonds, the exchange of the Global Bond for the definitive Bonds or the delivery
of definitive Bonds to the persons entitled to them.
(O) RESPONSIBILITY: The Trustee, assumes no responsibility for the
correctness of Recitals (A) and (C) to this Trust Deed which shall be taken as
statements by the Issuer and AMBAC respectively, nor shall the Trustee by the
execution of these presents be deemed to make any representation as to the
validity, sufficiency or enforceability of this Trust Deed or any part thereof
and makes no representation with respect thereto.
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(P) TRUSTEE'S DISCRETION: Save as expressly otherwise provided in this
Trust Deed (including the Conditions), the Trustee shall have absolute and
uncontrolled discretion as to the exercise or non-exercise of its trusts,
powers, authorities and discretions under these presents (the exercise or
non-exercise of which as between the Trustee, the Bondholders and the
Couponholders shall be conclusive and binding on AMBAC, the Bondholders and
Couponholders) and, subject to Clause 13, shall not be responsible for any loss,
liability, cost, claim, action, demand, expense or inconvenience which may
result from their exercise or non-exercise.
(Q) CONSENTS: Save as expressly otherwise provided in this Trust Deed
(including the Conditions), any consent or approval given by the Trustee for the
purposes of this Trust Deed may be given on such terms and subject to such
conditions (if any) as the Trustee thinks fit and notwithstanding anything to
the contrary in this Trust Deed may be given retrospectively.
(R) PROFESSIONAL CHARGES: Any trustee of this Trust Deed being a lawyer,
accountant, broker or other person engaged in any professional or business shall
be entitled to charge and be paid all usual professional and other charges for
business transacted and acts done by him or his firm in connection with the
trusts of this Trust Deed and also his reasonable charges in addition to
disbursements for all other work and business done and all time spent by him or
his firm in connection with matters arising in connection with this Trust Deed.
(S) BONDHOLDERS AS A CLASS: In connection with the exercise of its trusts,
powers or discretions (including but not limited to those in relation to any
proposed modification, waiver, authorisation, or substitution) the Trustee shall
have regard to the general interests of the Bondholders as a class and, in
particular, but without limitation, shall not have regard to the consequences of
such exercise for individual Bondholders and Couponholders resulting from their
being for any purpose domiciled or resident in, or otherwise connected with, or
subject to the jurisdiction of, any particular territory and the Trustee shall
not be entitled to require, nor shall any Bondholder or Couponholder be entitled
to claim, from the Issuer, AMBAC or the Trustee any indemnification or payment
in respect of any tax consequences of any such exercise upon individual
Bondholders or Couponholders except to the extent provided for in Condition 9
and/or any undertaking given in addition to, or in substitution for, Condition 9
pursuant to this Trust Deed.
(T) RATINGS: The Trustee shall have no responsibility for the maintenance
of any rating of the Bonds by any rating agency or any other person.
(U) VALIDITY OF DOCUMENTS: The Trustee shall not be responsible for the
execution, delivery, legality, effectiveness, adequacy, genuineness, validity,
enforceability or admissibility in evidence of this Trust Deed or any other
document relating or expressed to be supplemental thereto and shall not be
liable for any failure to obtain any licence, consent or other authority for the
execution, delivery, legality, effectiveness, adequacy, genuineness, validity,
performance, enforceability or admissibility in evidence of this Trust Deed or
any other document relating to or expressed to be supplemental thereto.
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13. TRUSTEE LIABLE FOR NEGLIGENCE
Nothing in this Trust Deed shall in any case in which the Trustee has
failed to show the degree of care and diligence required of it as trustee
relieve or indemnify it from or against any liability which by virtue of any
rule of law would otherwise attach to it in respect of any negligence, default,
breach of duty or breach of trust of which it may be guilty.
14. WAIVER
(A) WAIVER: Subject to Condition 16 and Clause 19, the Trustee may, subject
to the prior written consent of AMBAC (if AMBAC is then the Controlling Party),
without the consent of the Bondholders or Couponholders and without prejudice to
its rights in respect of any subsequent breach, from time to time and at any
time, if in its opinion the interests of the Bondholders will not be materially
prejudiced thereby, waive or authorize, on such terms and conditions as seems
expedient to it, any breach or proposed breach by the Issuer of any of the
provisions of this Trust Deed or the Bonds or determine that any event,
condition or act which would otherwise be an Issuer Event of Default or
Potential Issuer Event of Default will not be treated as such provided that
where the Trustee is the Controlling Party, it will not do so in contravention
of any express direction given by an Extraordinary Resolution or a written
request made pursuant to Condition 12 but no such direction or request will
affect any previous waiver, authorisation or determination. Any such waiver,
authorisation or determination will be binding on the Bondholders and the
Couponholders and, if the Trustee so requires, will be notified to the
Bondholders as soon as practicable.
(B) PROCEEDINGS: At any time after amounts in respect of principal of and
interest on the Bonds shall have become due and payable, the Trustee may, at its
discretion, and without further notice but subject as mentioned below, take such
proceedings against:
(i) the Issuer as it may think fit to enforce the provisions of this
Trust Deed; and/or
(ii) AMBAC as it may think fit to enforce the provisions of the Bond
Policy.
If the Trustee is not the Controlling Party it shall not be permitted to
take any such proceedings against the Issuer and/or AMBAC unless it has been
directed by the Controlling Party to do so and shall only be bound to take
proceedings against the Issuer at the direction of the Controlling Party if it
has been indemnified to its satisfaction by the Controlling Party (or, if the
Trustee is the Controlling Party, unless it has been indemnified to its
satisfaction by the Bondholders).
(C) NO ACTION BY BONDHOLDERS OR COUPONHOLDERS: Subject as provided in this
Trust Deed (including the Conditions) only the Trustee may pursue the remedies
available under general law or under this Trust Deed to enforce the rights of
the Bondholders or Couponholders and no such holder will be entitled to proceed
against the Issuer or AMBAC unless the Trustee, having become bound to act in
accordance with the terms of this Trust Deed, fails to do so and such failure is
continuing. If, in connection with any insolvency, bankruptcy, administration,
dissolution, liquidation or analogous procedure relating to the Issuer, a
payment on the Bonds by the Issuer is claimed to be or is avoided as a
preferential transfer, AMBAC may (provided that AMBAC is then the Controlling
Party) direct all matters relating to such claim or avoidance on behalf of the
Trustee, the Bondholders and the Couponholders.
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15. TRUSTEE NOT PRECLUDED FROM ENTERING INTO CONTRACTS
No person, whether acting for itself or in any other capacity, will be
precluded from becoming the owner of, or acquiring any interest in, holding or
disposing of any Bond or Coupon or any shares or securities of the Issuer or any
of its subsidiary, holding or associated companies with the same rights as it
would have had if the Trustee were not Trustee or from entering into or being
interested in any contracts or transactions with the Issuer or its subsidiary,
holding or associated companies or from acting on, or as depositary or agent
for, any committee or body of holders of any securities of the Issuer or its
subsidiary, holding or associated companies and will not be liable to account
for any profit.
16. MODIFICATION AND SUBSTITUTION
Subject to Condition 16 and Clause 19:
(A) MODIFICATION: Subject to the prior written consent of AMBAC (if AMBAC
is then the Controlling Party) the Trustee may, without the consent of the
Bondholders or Couponholders, agree (i) to any modification to this Trust Deed
or the Conditions or the Bond Policy which is of a formal, minor or technical
nature or is made to correct a manifest error or (ii) to any modification to
this Trust Deed, the Conditions or the Bond Policy which is in its opinion not
materially prejudicial to the interests of the Bondholders. Any such
modification shall be binding on the Bondholders and the Couponholders and,
unless the Trustee agrees otherwise, the Issuer shall cause such modification to
be notified to the Bondholders as soon as practicable thereafter in accordance
with the Conditions. Notwithstanding the provisions of the foregoing, the Issuer
and AMBAC may, without the consent of the Bondholders or Couponholders, agree to
any modification to Condition 11 and to Clause 10 of this Trust Deed.
(B) SUBSTITUTION:
(1) The Trustee may, without the consent of the Bondholders or
Couponholders, agree with the Issuer, with the consent of AMBAC (such
consent not to be unreasonably withheld or delayed), to the substitution of
any wholly-owned Subsidiary of the Issuer (the "SUBSTITUTED OBLIGOR") in
place of the Issuer (or of any previous substitute under this sub-Clause)
as the principal debtor under this Trust Deed, the Bonds and the Coupons
provided that, in the opinion of the Trustee, the interests of the
Bondholders will not be materially prejudiced thereby and also provided
that:
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(a) a trust deed is executed or some other form of undertaking is
given by the Substituted Obligor to the Trustee, in form and manner
satisfactory to the Trustee, agreeing to be bound by the terms of this
Trust Deed, the Bonds and the Coupons with any consequential
amendments which the Trustee may deem appropriate as fully as if the
Substituted Obligor had been named in this Trust Deed and on the Bonds
and Coupons as the principal debtor in place of the Issuer;
(b) where the Substituted Obligor is subject generally to the taxing
jurisdiction of any territory or any authority of or in that territory
having power to tax (the "SUBSTITUTED TERRITORY") other than the
territory to the taxing jurisdiction of which (or to any such
authority of or in which) the Issuer is subject generally (the
"ISSUER'S TERRITORY"), the Substituted Obligor will (unless the
Trustee otherwise agrees) give to the Trustee an undertaking in form
and manner satisfactory to the Trustee in terms corresponding to the
terms of Condition 9 with the substitution for the references in that
Condition to the Issuer's Territory of references to the Substituted
Territory and Condition 8(c) shall be modified accordingly; and in
such event the Trust Deed, the Bonds and the Coupons will be read
accordingly;
(c) if any two of the Directors of the Substituted Obligor certify
that it will be solvent immediately after such substitution, the
Trustee need not have regard to the financial condition, profits or
prospects of the Substituted Obligor or compare them with those of the
Issuer;
(d) the Issuer and the Substituted Obligor comply with such other
requirements as the Trustee may direct in the interests of the
Bondholders; and
(e) (unless the Issuer's successor in business is the Substituted
Obligor) the obligations of the Substituted Obligor under this Trust
Deed, the Bonds and the Coupons are unconditionally and irrevocably
guaranteed by the Issuer in form and manner satisfactory to the
Trustee.
(2) RELEASE OF SUBSTITUTED ISSUER: Any such agreement by the Trustee
pursuant to sub-Clause (B) will, if so expressed, operate to release the
Issuer (or any such previous substitute) from any or all of its obligations
under this Trust Deed, the Bonds and the Coupons. Not later than 14 days
after the execution of any such documents and after compliance with such
requirements, notice of the substitution will be given to the Bondholders.
(3) COMPLETION OF SUBSTITUTION: Upon the execution of such documents and
compliance with such requirements, the Substituted Obligor will be deemed
to be named in this Trust Deed and the Bond Policy and on the Bonds and
Coupons as the principal debtor in place of the Issuer (or of any; previous
substitute under sub-Clause (B)) and this Trust Deed, the Bond Policy, the
Bonds and the Coupons will be deemed to be modified in such manner as shall
be necessary to give effect to the substitution.
17. APPOINTMENT, RETIREMENT AND REMOVAL OF THE TRUSTEE
(A) APPOINTMENT: The Issuer will have the power of appointing new trustees
but no person will be so appointed unless previously approved by an
Extraordinary Resolution of Bondholders and approved in writing by AMBAC (if
then the Controlling Party). A trust corporation will at all times be a Trustee
and may be the sole Trustee. Any appointment of a new Trustee will be notified
by the Issuer to the Bondholders as soon as practicable.
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(B) RETIREMENT AND REMOVAL: The Trustee may not resign its appointment
unless a successor, willing to act in such capacity, has been appointed by the
Issuer with the prior consent of AMBAC (if AMBAC is then the Controlling Party)
and the Bondholders by Extraordinary Resolution, provided that the Trustee shall
not be prevented from resigning its appointment if, having given notice in
writing to the Issuer and AMBAC (if AMBAC is then the Controlling Party) of its
intention to resign its appointment, a successor is not appointed within the
period of three months from the date of such notice. The Bondholders may by
Extraordinary Resolution remove any Trustee provided that the retirement or
removal of any sole trustee or sole trust corporation will not become effective
until a trust corporation is appointed as successor Trustee. If a sole trustee
or sole trust corporation gives notice of retirement or an Extraordinary
Resolution is passed for its removal under this Clause, the Issuer will use its
best endeavors to procure that another trust corporation be appointed as
Trustee.
(C) CO-TRUSTEES: The Trustee may, despite sub-Clause (A), by notice in
writing to the Issuer appoint anyone to act as an additional Trustee jointly
with the Trustee:
(a) if the Trustee considers such appointment to be in the interests of the
Bondholders and/or the Couponholders;
(b for the purpose of conforming with any legal requirement, restriction or
condition in any jurisdiction in which any particular act is to be
performed; or
(c) for the purpose of obtaining a judgment in any jurisdiction or the
enforcement in any jurisdiction against the Issuer of either a judgment
already obtained or any of the provisions of this Trust Deed,
Subject to the provisions of this Trust Deed the Trustee may confer on any
person so appointed such functions as it thinks fit, The Trustee may by notice
in writing to the Issuer and such person remove any person so appointed. At the
request of the Trustee, the Issuer will forthwith do all things as may be
required to perfect such appointment or removal and it irrevocably appoints the
Trustee to be its attorney in its name and on its behalf to do so.
(D) COMPETENCE OR A MAJORITY OF TRUSTEES: If there are more than two
Trustees the majority of such Trustees will (provided such majority includes a
trust corporation) be competent to carry out all or any of the Trustee's
functions.
18. COUPONS
(A) NOTICES: Neither the Trustee nor the Issuer need give any notice to the
Couponholders and the Couponholders will be deemed to have notice of the
contents of any notice given to the Bondholders in accordance with the
Conditions.
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(B) BONDHOLDERS ASSUMED TO HOLD COUPONS: Even if it has express notice to
the contrary, whenever the Trustee is required to exercise any of its functions
by reference to the interests of the Bondholders, the Trustee will assume that
each Bondholder is the holder of all Coupons appertaining to each Bond of which
he is the bearer. The holders of Coupons shall be bound by and subject to the
terms of this Trust Deed to the same extent as if they were Bondholders;
provided that no holder of a Coupon shall have any right of action by virtue of
this Trust Deed or its holding of such Coupon.
19. CONTROLLING PARTY
Subject to (i) AMBAC being at that time the Controlling Party and (ii)
AMBAC giving notice to the Trustee that it intends to exercise the Trust Rights,
AMBAC shall have exclusive control to exercise the Trust Rights or to direct the
exercise of the Trust Rights (as applicable) without regard to the interests of
any other person, and will not be a fiduciary or owe any fiduciary duties to any
person under the Trust Deed and will be exclusively authorised to direct and
refrain from directing, the Trustee under this Trust Deed in the exercise of the
Trust Rights without regard to the interests of any other person, provided that
such power shall not extend to permit AMBAC (i) to exercise or direct the
exercise of the Excluded Rights, which shall, so long as any of the Bonds remain
outstanding, be exercisable by the Trustee in its sole discretion without regard
to the provisions of Condition 16 or this Clause 19, or (ii) to require any
modification as is mentioned in the proviso to paragraph 19 of Schedule 3.
20. CURRENCY INDEMNITY
(A) CURRENCY OF ACCOUNT AND PAYMENT: Pounds sterling (the "CONTRACTUAL
CURRENCY") is the sole currency of account and payment for all sums payable by
the Issuer under or in connection with this Trust Deed, the Bonds and the
Coupons, including damages.
(B) EXTENT OF DISCHARGE: Any amount received or recovered in a currency
other than the Contractual Currency (whether as a result of, or of the
enforcement of, a judgment or order of a court of any jurisdiction, in the
winding-up or dissolution of the Issuer or otherwise), by the Trustee any
Bondholder or Couponholder in respect of any sum expressed to be due to it from
the Issuer will only constitute a discharge to the Issuer to the extent of the
Contractual Currency amount which the recipient is able to purchase with the
amount so received or recovered in that other currency on the date of that
receipt or recovery (or, if it is not practicable to make that purchase on that
date, on the first date on which it is practicable to do so).
(C) INDEMNITIES: If that Contractual Currency amount is less than the
Contractual Currency amount expressed to be due to the recipient under this
Trust Deed, the Bonds or the Coupons, the Issuer will indemnify it against any
loss sustained by it as a result. In any event, the Issuer will indemnify the
recipient against the cost of making any such purchases.
(D) INDEMNITIES SEPARATE: These indemnities constitute a separate and
independent obligation from the other obligations in this Trust Deed, will give
rise to a separate and independent cause of action, will apply irrespective of
any indulgence granted by the Trustee and/or any Bondholder or Couponholder and
will continue in full force and effect despite any judgment, order, claim or
proof for a liquidated amount in respect of any sum due under this Trust Deed,
the Bonds and/or the Coupons or any judgment or order. No proof of evidence of
any actual loss may be required.
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21. COMMUNICATIONS
Any communication shall be by letter or facsimile transmission:
in the case of the Issuer, to it:
c/o Northern Electric plc
Carliol House, Market Street
Newcastle upon Tyne NE1 6NE
Fax no.: 0191 210 2409
Attention: Company Secretary
in the case of AMBAC, to it at:
St. Helen's, One Undershaft, London EC3A 8JL
Fax no.: 0171 444 7227
Attention: General Counsel
and in the case of the Trustee, to it at:
Princes House, 95 Gresham Street, London EC2V 7LY
Telex no.: 888347 or 8956803 LAWDEB
Fax no.: 0171 696 5261
Attention: Manager, Trust Administration
Any such communication will take effect, in the case of delivery, at the time of
delivery or, in the case of telex or facsimile transmission, at the time of
despatch.
Any communication not by letter shall be confirmed by letter but failure to send
or receive the letter of confirmation shall not invalidate the original
communication.
22. GOVERNING LAW
This Trust Deed shall be governed by and construed in accordance with
English law.
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23. COUNTERPARTS
This Trust Deed may be executed in any number of counterparties and by the
parties hereto on separate counterparts, each of which shall be an original, but
all the counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF this Trust Deed has been executed as a deed by the
parties hereto and is intended to be and is hereby delivered the day and year
first before written.
-32-
SCHEDULE 1
----------
PART A
FORM OF TEMPORARY GLOBAL BOND
THIS TEMPORARY GLOBAL BOND HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). NEITHER THIS
TEMPORARY GLOBAL BOND NOR ANY PORTION HEREOF MAY BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO ANY U.S. PERSON UNLESS AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT IS AVAILABLE.
ANY UNITED STATES PERSON (AS DEFINED IN THE INTERNAL REVENUE CODE) WHO HOLDS
THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME
TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF
THE INTERNAL REVENUE CODE
CE ELECTRIC UK FUNDING COMPANY
(Incorporated in England and Wales with unlimited
liability under registered number 3476201)
TEMPORARY GLOBAL BOND
representing
(pound)200,000,000 7.25% Guaranteed Bonds due 2022
unconditionally and irrevocably guaranteed as to scheduled payments
of principal and interest pursuant to a financial guarantee insurance policy
issued by AMBAC Insurance UK Limited
This Bond is a Temporary Global Bond without interest coupons in respect of a
duly authorised issue of Bonds of CE Electric UK Funding Company (the "Issuer"),
designated as specified in the title hereof (the "Bonds"), limited to the
aggregate principal amount of
Two Hundred Million Pounds Sterling ((pound)200,000,000)
or, if less, that amount as shall be shown by the latest
entry duly made in each of the Schedules hereto,
and constituted by a Trust Deed dated 15th December 1997 (the "TRUST DEED")
between the Issuer, AMBAC Insurance UK Limited ("AMBAC") and The Law Debenture
Trust Corporation plc, as trustee (the "TRUSTEE"). References herein to the
Conditions (or to any particular numbered Condition) shall be to the Terms and
Conditions of the Bonds (or that particular one of them) set out in Schedule 2
to the Trust Deed.
-33-
If the Issuer becomes obliged to issue definitive Bonds pursuant to Clause 3(C)
of the Trust Deed, this Temporary Global Bond will be exchangeable in whole upon
the request of the bearer hereof for interests in a Permanent Global Bond in or
substantially in the form set out in Part B of Schedule 1 to the Trust Deed on
and subject to the terms and conditions set out below and in the Trust Deed.
The Issuer hereby promises to pay to the bearer hereof the principal sum of this
Temporary Global Bond being at the date hereof:
TWO HUNDRED MILLION POUNDS STERLING ((POUND)200,000,000)
or such lesser amount as may from time to time be represented by this Temporary
Global Bond (or such part thereof or such greater amount as may become repayable
pursuant to the Conditions) on such date(s) as the said principal sum (or part
thereof) and premium, if any, may become repayable in accordance with the
Conditions and the Trust Deed and to pay interest in arrear on each Interest
Payment Date (as defined in Condition 6) on the principal amount outstanding of
this Temporary Global Bond at the rate specified in Condition 6 all subject to
and in accordance with the certification requirements described in this
Temporary Global Bond, the Conditions and the Trust Deed, which shall be binding
upon the bearer hereof (as if references in the Conditions to the Bonds and the
Bondholders were references to this Temporary Global Bond and the bearer hereof
respectively and as if the same had been set out herein in full mutatis
mutandis), except as otherwise provided herein.
Payments of interest (if any) on this Temporary Global Bond or any part of this
Temporary Global Bond due to be made prior to the date or dates on which
interests in this Temporary Global Bond (or that part) are exchanged for
interests in a Permanent Global Bond (as provided below) which date or dates
shall be no earlier than the Exchange Date (as defined below) may, at the
direction of the bearer hereof, be made on each due date for any such payment to
Morgan Guaranty Trust Company of New York, Brussels office, as operator of the
Euroclear system ("EUROCLEAR") and/or Cedel Bank, societe anonyme ("CEDEL BANK")
for credit to the accounts of the persons appearing in the records of Euroclear
and/or Cedel Bank as being entitled thereto provided that any such payment shall
only be made in respect of the Bonds in relation to which there shall have been
presented to Bankers Trust Company in its capacity as principal paying agent in
respect of the Bonds (the "PRINCIPAL PAYING AGENT") at its head office in London
for the time being, a certificate in the form set out in Exhibit A hereto from
Euroclear and/or Cedel Bank, as the case may be, to the effect that it has
received from or in respect of such persons, a certificate from such persons in
the form of Exhibit B hereto. Otherwise no interest will be paid on this
Temporary Global Bond or any part of this Temporary Global Bond until this
Temporary Global Bond (or that part) is so exchanged for a Permanent Global
Bond.
Upon any payment of principal, premium (if any) and/or interest on the Bonds as
referred to above details of such payment shall be endorsed by or on behalf of
the Issuer on the First Schedule hereto and, in the case of payments of
principal, the principal amount outstanding hereof shall be reduced for all
purposes by the amount so paid and endorsed. All payments of any amounts payable
and paid to the bearer of this Temporary Global Bond shall be valid and, to the
extent of the sums so paid, effectual to satisfy and discharge the liability for
the moneys payable hereon, on the Permanent Global Bond and on the relative
Definitive Bonds and Coupons.
-34-
On or after the date which is not earlier than 40 days after the date of the
issue of the Bonds represented by this Temporary Global Bond (the "EXCHANGE
DATE"), this Temporary Global Bond may be exchanged in whole or in part (free of
charge to the holder) for a Permanent Global Bond in the form set out in Part B
of Schedule 1 to the Trust Deed upon presentation of this Temporary Global Bond
by the bearer hereof to the Principal Paying Agent at its head office in London
for the time being (or such other place outside the United States of America,
its territories, its possessions and other areas subject to its jurisdiction as
the Trustee may agree). The Permanent Global Bond shall be delivered in exchange
for only that part of this Temporary Global Bond in respect of which there shall
have been presented to the Principal Paying Agent by Euroclear or Cedel Bank a
certificate, in the form set out in Exhibit A hereto, to the effect that it has
received from or in respect of a person or persons entitled to a Bond or Bonds
comprising or comprised in such part (as shown by its records) a certificate
from such person or persons in or substantially in the form set out in Exhibit B
hereto. On an exchange of part only of this Temporary Global Bond, details of
such exchange shall be entered by or on behalf of the Issuer in the Second
Schedule hereto and the relevant space in the Second Schedule hereto recording
such exchange shall be signed by or on behalf of the Issuer whereupon the
principal amount of the Bonds to which this Temporary Global Bond relates shall
be reduced for all purposes by the principal amount so exchanged and endorsed
and the Second Schedule to the Permanent Global Bond shall be marked accordingly
by or on behalf of the Issuer whereupon the principal amount of the Permanent
Global Bond shall be increased by such amount. If, following the date of issue
hereof, any Bonds represented by this Temporary Global Bond are purchased by or
on behalf of the Issuer or any of its Subsidiaries (as defined in the
Conditions) and surrendered for cancellation, the Principal Paying Agent shall
endorse the Second Schedule hereto to reflect the decrease in the aggregate
principal amount of this Temporary Global Bond due to such purchase and
cancellation, whereupon the principal amount hereof shall be decreased for all
purposes by the principal amount of the Bonds so purchased and cancelled. On an
exchange of the whole of this Temporary Global Bond, this Temporary Global Bond
shall be surrendered to or to the order of the Principal Paying Agent. If,
following the issue of a Permanent Global Bond in exchange for this Temporary
Global Bond, further Bonds are to be exchanged pursuant to this paragraph, such
exchange may be effected, without the issue of a new Permanent Global Bond, by
the Principal Paying Agent endorsing the Second Schedule of the Permanent Global
Bond previously issued to reflect an increase in the aggregate principal amount
of such Permanent Global Bond by an amount equal to the aggregate principal
amount of the Permanent Global Bond which would otherwise have been issued on
such exchange.
Any certificate referred to in this Temporary Global Bond which is delivered by
Euroclear or Cedel Bank may be relied upon by the Issuer, the Trustee, AMBAC and
the Principal Paying Agent as conclusive evidence that the corresponding
certification or certifications have been delivered to Euroclear or Cedel Bank,
as the case may be, as contemplated by the terms of this Temporary Global Bond.
-35-
So long as all the Bonds are represented by this Temporary Global Bond and the
same is/are held on behalf of Euroclear and/or Cedel Bank, notices to
Bondholders may be given by delivery to Euroclear and Cedel Bank for
communication by them to the persons for the time being shown in the records of
Euroclear and Cedel Bank (other than Cedel Bank if Cedel Bank shall be an
accountholder of Euroclear and other than Euroclear if Euroclear shall be an
accountholder of Cedel Bank) as being holders of the Bonds ("accountholders") in
which regard any certificate or other document issued by Cedel Bank or Euroclear
as to the principal amount of Bonds standing to the account of any person shall
be conclusive and binding for all purposes (other than for the purposes of
payments in respect thereof, the right to which shall be vested, as against the
Issuer and the Trustee, solely in the bearer of this Temporary Global Bond or
the Permanent Global Bond in accordance with and subject to their respective
terms and the terms of the Trust Deed), in substitution for publication as
required by the conditions; provided that, so long as the Bonds are listed on
the Luxembourg Stock Exchange and the rules of that exchange so require, notices
shall also be published in a leading newspaper having general circulation in
Luxembourg (which is expected to be the Luxemburger Wort).
In considering the interests of Bondholders while this Temporary Global Bond is
held on behalf of Euroclear or Cedel Bank, the Trustee may have regard to any
information provided to it by such clearing system as to the identity (either
individually or by category) of its accountholders with entitlement to this
Temporary Global Bond and may consider such interests as if such accountholders
were the holders of the Bonds represented by this Temporary Global Bond.
For so long as all the Bonds are represented by this Temporary Global Bond, no
drawing of Bonds will be required under Condition 8(b) in the event that the
Issuer exercises its option in Condition 8(b) while the Bonds are represented by
this Temporary Global Bond in respect of less than the aggregate principal
amount of Bonds outstanding at such time. Bonds will be selected for redemption
in accordance with the rules and procedures from time to time of Euroclear and
Cedel Bank.
The Bondholders' option in Condition 14 may be exercised by the holder of this
Temporary Global Bond giving notice to the Principal Paying Agent of the
principal amount of Bonds in respect of which the option is exercised and
presenting this Temporary Global Bond for endorsement of exercise within the
time limits specified in Condition 14.
This Temporary Global Bond is subject to the Conditions and the Trust Deed and
until the whole of this Temporary Global Bond shall have been exchanged for
equivalent interests in the Permanent Global Bond its holder shall be entitled
to the same benefits as if he were the holder of the Permanent Global Bond (or
the relevant part of it as the case may be) except that, save as provided above,
no person shall be entitled to receive any payment on this Temporary Global
Bond.
This Temporary Global Bond shall become void unless presented for payment within
ten years (in respect of payment of principal and premium (if any)) or five
years (in respect of payment of interest), respectively, from the Relevant Date
(as defined in Condition 9) for payment in respect thereof, subject to the
provisions of Condition 7. All references in this Temporary Global Bond to
Euroclear or Cedel Bank shall be deemed to include such substitute or successor
clearing system as may be approved by the Trustee from time to time.
-36-
This Temporary Global Bond shall not become valid for any purpose unless and
until the Certificate of Authentication hereon has been signed by an authorised
signatory of the Principal Paying Agent.
This Temporary Global Bond is governed by, and shall be construed in accordance
with, the laws of England.
IN WITNESS whereof the Issuer has caused this Temporary Global Bond to be signed
manually or in facsimile by a Director of the Issuer on its behalf.
CE ELECTRIC UK FUNDING COMPANY
By: .............................................
Director
CERTIFICATE OF AUTHENTICATION
This is the Temporary Global Bond referred to in, and entitled to the benefits
of, the above-mentioned Trust Deed.
This Temporary Global Bond is authenticated by or on behalf of Bankers Trust
Company as Principal Paying Agent, without recourse, warranty or liability.
By: ..............................................
Authorised signatory
Issued on 15th December 1997.
-37-
THE FIRST SCHEDULE
------------------
PAYMENTS OF PRINCIPAL, PREMIUM AND/OR INTEREST ON THE BONDS
The following payments of principal, premium and/or interest in respect of the
Bonds represented by this Temporary Global Bond have been made:
Date made Amount Amount of Amount Amount of Amount Amount of Remaining Notation
of premium of principal of interest principal by or
principal due and interest paid premium paid amount on
due and payable due and paid of this behalf
payable payable Temporary of the
Global Issuer
Bond
following
such
payment
(pound) (pound) (pound) (pound) (pound) (pound) (pound)
- ------------ --------- ---------- --------- ---------- --------- ---------- ---------- ---------
- ------------ --------- ---------- --------- ---------- --------- ---------- ---------- ---------
- ------------ --------- ---------- --------- ---------- --------- ---------- ---------- ---------
- ------------ --------- ---------- --------- ---------- --------- ---------- ---------- ---------
- ------------ --------- ---------- --------- ---------- --------- ---------- ---------- ---------
- ------------ --------- ---------- --------- ---------- --------- ---------- ---------- ---------
- ------------ --------- ---------- --------- ---------- --------- ---------- ---------- ---------
- ------------ --------- ---------- --------- ---------- --------- ---------- ---------- ---------
- ------------ --------- ---------- --------- ---------- --------- ---------- ---------- ---------
- ------------ --------- ---------- --------- ---------- --------- ---------- ---------- ---------
- ------------ --------- ---------- --------- ---------- --------- ---------- ---------- ---------
-38-
THE SECOND SCHEDULE
-------------------
EXCHANGES FOR PERMANENT GLOBAL BOND.
------------------------------------
PURCHASES AND CANCELLATION
--------------------------
The following exchanges of a part of this Temporary Global Bond for a like part
of the Permanent Global Bond and/or purchases and cancellations of a part of
this Temporary Global Bond have been made:
Date made Part of Part of Aggregate Notation
principal principal principal made by or
amount of amount of amount of on behalf
this this this of the
Temporary Temporary Temporary Issuer
Global Bond Global Bond Global Bond
exchanged purchased following
for a like and such
part of the cancelled exchange or
Permanent purchase
Global Bond and
cancellation
(pound) (pound) (pound)
- ---------------- ------------- ------------- ------------- -------------
- ---------------- ------------- ------------- ------------- -------------
- ---------------- ------------- ------------- ------------- -------------
- ---------------- ------------- ------------- ------------- -------------
- ---------------- ------------- ------------- ------------- -------------
- ---------------- ------------- ------------- ------------- -------------
- ---------------- ------------- ------------- ------------- -------------
- ---------------- ------------- ------------- ------------- -------------
-39-
Exhibit A
---------
CERTIFICATE OF CLEARING SYSTEM
------------------------------
CE ELECTRIC UK FUNDING COMPANY
(pound)200,000,000 7.25% Guaranteed Bonds due 2022
unconditionally and irrevocably guaranteed as to scheduled
payments of principal and interest pursuant to a financial guarantee
insurance policy issued by AMBAC Insurance UK Limited
This is to certify that based solely on certifications we have received in
writing, by tested telex or by electronic transmission from member organizations
appearing in our records as persons being entitled to a portion of the principal
amount set forth below (our "MEMBER ORGANIZATIONS") substantially to the effect
set forth in the Trust Deed, as of the date hereof, ___________ principal amount
of the above-captioned Bonds (i) is owned by persons that are not citizens or
residents of the United States, domestic partnerships, domestic corporations or
any estate or trust the income of which is subject to United States Federal
income taxation regardless of its source ("UNITED STATES PERSONS"), (ii) is
owned by United States persons that (a) are foreign branches of United States
financial institutions (as defined in the U.S. Treasury Regulations Section
1.165- 12(c)(1)(v) ("FINANCIAL INSTITUTIONS")) purchasing for their own account
or for resale, or (b) are acquiring the Bonds through foreign branches of United
States financial institutions and who hold the Bonds through such United States
financial institutions on the date hereof (and in either case (a) or (b), each
such United States financial institution has agreed, on its own behalf or
through its agent, that we may advise the Issuer or the Issuer's agent that it
will comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the
Internal Revenue Code of 1986, as amended, and the regulations hereunder), or
(iii) is owned by United States or foreign financial institutions for purposes
of resale during the restricted period (as defined in U.S. Treasury Regulations
Section 1.163-5(c)(2)(i)(D)(7)), and to the further effect that United States or
foreign financial institutions described in clause (iii) above (whether or not
also described in clause (i) or (ii)) have certified that they have not acquired
the Bonds for purposes of resale directly or indirectly to a United States
person within the United States or its possessions.
If the Bonds are of the category contemplated in Section 230.903(c)(3) of
Regulation S under the Securities Act 1933, as amended (the "ACT") then this is
also to certify with respect to such principal amount of Bonds set forth above
that we have received in writing, by tested telex or by electronic transmission,
from our Member Organizations entitled to a portion of such principal amount,
certifications with respect to such portion, substantially to the effect set
forth in the Trust Deed.
We further certify (i) that we are not making available herewith for exchange
(or, if relevant, exercise of any rights or collection of any interest) any
portion of the Temporary Global Bonds except as set forth herein and (ii) that
as of the date hereof we have not received any notification from any of our
Member Organizations to the effect that the statements made by such Member
Organizations with respect to any portion of the part submitted herewith for
exchange (or, if relevant, exercise of any rights or collection of any interest)
are no longer true and cannot be relied upon as of the date hereof.
-40-
We understand that this certification is required in connection with certain tax
laws and, if applicable, certain securities laws of the United States. In
connection therewith, if administrative or legal proceedings are commenced or
threatened in connection with which this certification is or would be relevant,
we irrevocably authorize you to produce this certification to any interested
party in such proceedings.
Dated: ............................ 19 *
Yours faithfully
** MORGAN GUARANTY TRUST
.. COMPANY OF NEW YORK,
Brussels Office, as
Operator of the Euroclear System
or
** Cedel Bank, societe anonyme
By:............................
________________________________________________________________________________
* To be dated no earlier than the date which is no less than 40 days after
the date of the issue of the Bonds referred to above.
** Delete as appropriate.
-41-
Exhibit B
---------
CERTIFICATE INCORPORATED BY REFERENCE TO CERTIFICATE OF
-------------------------------------------------------
CLEARING SYSTEM
---------------
CE ELECTRIC UK FUNDING COMPANY
(pound)200,000,000 7.25% Guaranteed Bonds due 2022
unconditionally and irrevocably guaranteed as to scheduled
payments of principal and interest pursuant to a financial guarantee
insurance policy issued by AMBAC Insurance UK Limited
This is to certify that as of the date hereof, and except as set forth below,
the above-captioned Bonds held by you for our account (i) are owned by person(s)
that are not citizens or residents of the United States, domestic partnerships,
domestic corporations or any estate or trust the income of which is subject to
United States Federal income taxation regardless of its source ("UNITED STATES
PERSON(s)"), (ii) are owned by United States person(s), that (a) are foreign
branches of United States financial institutions (as defined in U.S. Treasury
Regulations Section 1.165-12(c)(1)(v)) ("FINANCIAL INSTITUTIONS") purchasing for
their own account or for resale, or (b) are acquiring the Bonds through foreign
branches of United States financial institutions and who hold the Bonds through
such United States financial institutions on the date hereof (and in either case
(a) or (b), each such United States financial institution hereby agrees, on its
own behalf or through its agent, that you may advise the Issuer or the Issuer's
agent that it will comply with the requirements of Section 1.165(j)(3)(A), (B)
or (C) hereunder), or (iii) are owned by United States or foreign financial
institution(s) for purposes of resale during the restricted period (as defined
in U.S. Treasury Regulations Section 1.163(c)(2)(i)(D)(7)), and in addition if
the owner of the Bonds is a United States or foreign Financial institution
described in Clause (iii) above (whether or not also described in Clause (i) or
(ii)) this is to further certify that such financial institution has not
acquired the Bonds for purposes of resale directly or indirectly to a United
States person or to a person within the United States or its possessions.
If the Bonds are of the category contemplated in Section 230.903(c)(3) of
Regulation S under the Securities Act of 1933, as amended (the "ACT") then this
is also to certify that, except as set forth below, (i) in the case of debt
securities, the Bonds are beneficially owned by (a) non-U.S. person(s) or (b)
U.S. person(s) who purchased the Bonds in transactions which did not require
registration under the Act; or (ii) in the case of equity securities, the Bonds
are owned by (x) non-U.S. person(s) (and such person(s) are not acquiring the
Bonds for the account or benefit of U.S. person(s) or (y) U.S. person(s) who
purchased the Bonds in a transaction which did not require registration under
the Act. If this certification is being delivered in connection with the
exercise of warrants pursuant to Section 230.902(m) of Regulation S under the
Act, then this is further to certify that, except as set forth below, the Bonds
are being exercised by and on behalf of non-U.S. person(s). As used in this
paragraph the term "U.S. PERSON" has the meaning given to it by Regulation S
under the Act.
As used herein, "UNITED STATES" means the United States of America (including
the States of the District of Colombia); and its "POSSESSIONS" include Puerto
Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the
Northern Mariana Islands.
-42-
We undertake to advise you promptly by tested telex on or prior to the date on
which you intend to submit your certification relating to the Bonds held by you
for our account in accordance with your operating procedures if any applicable
statement herein is not correct on such date, and in the absence of any such
notification it may be assumed that this certification applies as of such date.
This certification excepts and does not relate to (pound)_____ of such interest
in the above Bonds in respect of which we are not able to certify and as to
which we understand exchange and delivery of definitive Bonds (or, if relevant,
exercise of any rights or collection of any interest) cannot be made until we do
so certify.
We understand that this certification is required in connection with certain tax
laws and, if applicable, certain securities laws of the United States. In
connection therewith, if administrative or legal proceedings are commenced or
threatened in connection with which this certification is or would be relevant,
we irrevocably authorize you to produce this certification to any interested
party in such proceedings.
Date: ......................... 19 *
Name of Person Making Certification
by: ..................................
As, or as agent for, the beneficial owner(s) of the Bonds to which the
certificate relates.
________________________________________________________________________________
* To be dated no earlier than 15 days prior to the date which is no less than
40 days after the date of the issue of the Bonds referred to above.
-43-
SCHEDULE 1
----------
PART B
------
FORM OF PERMANENT GLOBAL BOND
-----------------------------
THIS PERMANENT GLOBAL BOND HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), NEITHER THIS
PERMANENT GLOBAL BOND NOR ANY PORTION HEREOF MAY BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO ANY U.S. PERSON UNLESS AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT IS AVAILABLE.
ANY UNITED STATES PERSON (AS DEFINED IN THE INTERNAL REVENUE CODE) WHO HOLDS
THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME
TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(J) AND 1287 (A) OF
THE INTERNAL REVENUE CODE.
CE ELECTRIC UK FUNDING COMPANY
(INCORPORATED IN ENGLAND AND WALES WITH UNLIMITED
LIABILITY UNDER REGISTERED NUMBER 3476201)
PERMANENT GLOBAL BOND
REPRESENTING UP TO
(POUND)200,000,000 7.25% GUARANTEED BONDS DUE 2022
UNCONDITIONALLY AND IRREVOCABLY GUARANTEED AS TO SCHEDULED PAYMENTS
OF PRINCIPAL AND INTEREST PURSUANT TO A FINANCIAL GUARANTEE INSURANCE POLICY
ISSUED BY AMBAC INSURANCE UK LIMITED
This Bond is a Permanent Global Bond without interest coupons in respect of a
duly authorized issue of Bonds of CE Electric UK Funding Company (the "Issuer"),
designated as specified in the title hereof (the "Bonds"), limited to the
aggregate principal amount of up to
TWO HUNDRED MILLION POUNDS STERLING ((POUND)200,000,000)
and constituted by a Trust Deed dated 15th December 1997 (the "Trust Deed")
between the Issuer, AMBAC Insurance UK Limited and The Law Debenture Trust
Corporation plc, as trustee (the "Trustee"). Reference herein to the Conditions
(or to any particular numbered Condition) shall be to the Terms and Conditions
of the Bonds (or that particular one of them) set out in Schedule 2 to the Trust
Deed.
-44-
The Bonds represented by this Permanent Global Bond were originally represented
by a Temporary Global Bond. Unless such Temporary Global Bond has been exchanged
in whole for this Permanent Global Bond, such Temporary Global Bond may be
further exchanged, on the terms and conditions set out therein, for this
Permanent Global Bond. If any such exchange occurs following the date of issue
hereof, the Principal Paying Agent shall endorse the Second Schedule hereto to
reflect the increase in the aggregate principal amount of this Permanent Global
Bond due to each such exchange, whereupon the principal amount hereof shall be
increased for all purposes by the amount so exchanged and endorsed.
If, following the date of issue hereof, any Bonds represented by this Permanent
Global Bond are purchased by or on behalf of the Issuer or any of its
Subsidiaries (as defined in the Conditions) and surrendered for cancellation,
the Principal Paying Agent shall endorse the Second Schedule hereto to reflect
the decrease in the aggregate principal amount of this Permanent Global Bond due
to such purchase and cancellation, whereupon the principal amount hereof shall
be decreased for all purposes by the principal amount of the Bonds so purchased
and cancelled.
If the Issuer becomes obliged to issue Bonds in definitive form pursuant to
Clause 3(C) of the Trust Deed, this Permanent Global Bond will be exchangeable
in whole but not in part free of charge upon the request of the bearer hereof
for Bonds in definitive form in the form set out in Schedule 2 to the Trust Deed
only on and subject to the terms and conditions set out in the Trust Deed and as
provided below. If the Issuer has become so obliged to issue Bonds in definitive
form pursuant to Clause 3(C) of the Trust Deed, this Permanent Global Bond may
be exchanged in whole but not in part at the offices of the Principal Paying
Agent in London (or such other place outside the United States of America, its
territories, its possessions and other areas subject to its jurisdiction as the
Trustee may agree) for Bonds in definitive form and the Issuer shall procure
that the Principal Paying Agent shall issue and deliver duly executed and
authenticated Bonds in definitive form (together with the Coupons appertaining
thereto) in aggregate principal amount equal to the principal amount of this
Permanent Global Bond submitted for exchange. On an exchange of the whole of
this Permanent Global Bond, this Permanent Global Bond shall be surrendered to
the Principal Paying Agent and cancelled. The Bonds in definitive form to be
issued on such exchange will be in bearer form, serially numbered, in the
denominations of (pound)10,000 and (pound)100,000 each with all unmatured
Coupons attached. If the Issuer fails to meet its obligations to issue Bonds in
definitive form, this shall be without prejudice to the Issuer's obligations
with respect to the Bonds under the Trust Deed and this Permanent Global Bond.
The Issuer hereby promises to pay to the bearer hereof the principal amount
shown as outstanding in the fourth column of the Second Schedule hereto (or such
part thereof or such greater amount as may become repayable pursuant to the
Conditions) on such date(s) as the said principal amount (or part thereof) and
premium, if any, may become repayable in accordance with the Conditions and the
Trust Deed and to pay interest in arrear on each Interest Payment Date (as
defined in Condition 6) on the principal amount outstanding of the Bonds
represented by this Permanent Global Bond at the rate specified in Condition 6
all subject to and in accordance with the Conditions and the Trust Deed, which
shall be binding upon the bearer hereof (as if references in the Conditions to
the Bonds and the Bondholders were references to this Permanent Global Bond and
the bearer hereof respectively and as if the same had been set out herein in
full mutatis mutandis), except as otherwise provided herein.
-45-
Upon any payment of principal, premium (if any) and/or interest on the Bonds due
to be made hereunder details of such payment shall be endorsed by or on behalf
of the Issuer on the First Schedule hereto in accordance with the provisions of
the Paying Agency Agreement (as defined in the Trust Deed) and, in the case of
payments of principal, the principal amount hereof outstanding shall be reduced
for all purposes by the amounts so paid and endorsed. All payments of any
amounts payable and paid to the bearer of this Permanent Global Bond shall be
valid and, to the extent of the sums so paid, effectual to satisfy and discharge
the liability for the moneys payable hereon and on the Definitive Bonds and
Coupons.
So long as all the Bonds are represented by this Permanent Global Bond and the
same is held on behalf of Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system ("EUROCLEAR") and/or Cedel Bank,
societe anonyme ("CEDEL BANK"), notices to Bondholders may be given by delivery
to Euroclear and Cedel Bank for communication by them to the persons for the
time being shown in the records of Euroclear and Cedel Bank (other than Cedel
Bank if Cedel Bank shall be an accountholder of Euroclear and other than
Euroclear if Euroclear shall be an accountholder of Cedel Bank) as being holders
of the Bonds ("ACCOUNTHOLDERS") in which regard any certificate or other
document issued by Cedel Bank or Euroclear as to the principal amount of Bonds
standing to the account of any person shall be conclusive and binding for all
purposes (other than for the purposes of payments in respect thereof, the right
to which shall be vested, as against the Issuer and the Trustee, solely in the
bearer of this Permanent Global Bond or the Temporary Global Bond in accordance
with and subject to their respective terms and the terms of the Trust Deed), in
substitution for publication as required by the Conditions; provided that, so
long as the Bonds are listed on the Luxembourg Stock Exchange and the rules of
that exchange so require, notices shall also be published in a leading newspaper
having general circulation in Luxembourg (which is expected to be the
Luxemburger Wort).
Upon any cancellation of any Bond represented by this Permanent Global Bond, the
portion of the principal amount so cancelled shall be endorsed by or on behalf
of the Issuer on the Second Schedule hereto, whereupon the outstanding principal
amount hereof shall be reduced for all purposes by the amount so cancelled and
endorsed.
In considering the interests of Bondholders while this Permanent Global Bond is
held on behalf of Euroclear and/or Cedel Bank, the Trustee may have regard to
any information provided to it by such clearing system as to the identity
(either individually or by category) of its accountholders with entitlement to
this Permanent Global Bond and may consider such interests as if such
accountholders were the holders of the Bonds represented by this Permanent
Global Bond.
For so long as all the Bonds are represented by this Permanent Global Bond, no
drawing of Bonds will be required under Condition 8(b) in the event that the
Issuer exercises its call option hereunder in respect of less than the aggregate
principal amount of Bonds outstanding at such time. Bonds will be selected for
redemption in accordance with the rules and procedures from time to time of
Euroclear and Cedel Bank.
-46-
The Bondholders' put option in Condition 14 may be exercised by the holder of
this Permanent Global Bond giving notice to the Principal Paying Agent of the
principal amount of Bonds in respect of which the option is exercised and
presenting this Permanent Global Bond for endorsement of exercise within the
time limits specified in Condition 14.
This Permanent Global Bond shall become void unless presented for payment within
ten years (in respect of payment of principal and premium (if any)) or five
years (in respect of payment of interest), respectively, from the Relevant Date
(as defined in Condition 9) for payment in respect thereof, subject to the
provisions of Condition 7. All references in this Permanent Global Bond to
Euroclear or Cedel Bank shall be deemed to include such substitute or successor
clearing system as may be approved by the Trustee from time to time.
This Permanent Global Bond shall not become valid for any purpose unless and
until the Certificate of Authentication hereon has been signed by an authorised
signatory of the Principal Paying Agent.
This Permanent Global Bond is governed by, and shall be construed in accordance
with, the laws of England.
IN WITNESS whereof the Issuer has caused this Permanent Global Bond to be signed
manually or in facsimile by a Director of the Issuer on its behalf.
CE ELECTRIC UK FUNDING COMPANY
By: .........................
Director
-47-
CERTIFICATE OF AUTHENTICATION
This is the Permanent Global Bond referred to in, and entitled to the benefits
of, the above-mentioned Trust Deed.
This Permanent Global Bond is authenticated by or on behalf of Bankers Trust
Company as Principal Paying Agent without recourse, warranty or liability
By: ........................
Authorised Signatory
Issued on 15th December 1997.
-48-
THE FIRST SCHEDULE
------------------
PAYMENTS OF PRINCIPAL, PREMIUM AND/OR INTEREST ON THE BONDS
-----------------------------------------------------------
The following payments of principal, premium and/or interest in respect of the
Bonds represented by this Permanent Global Bond have been made:
Date made Amount Amount of Amount Amount of Amount Amount of Remaining Notation
of premium of principal of interest principal by or on
principal due and interest paid premium paid amount behalf
due and payable due and paid of this of the
payable payable Permanent Issuer
Global
Bond
following
such
payment
(pound) (pound) (pound) (pound) (pound) (pound) (pound)
- ------------ --------- ---------- --------- ---------- --------- ---------- --------- ----------
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THE SECOND SCHEDULE
-------------------
INCREASE/DECREASE IN VALUE
--------------------------
The following increases or decreases in value consequent upon exchanges of the
Temporary Global Bond or the exercise of the options provided for in Condition
8(b) and Condition 14 have been made:
Date made Amount of Amount of Aggregate Notation
increase in decrease in principal made by or
principal principal amount of on behalf
amount of amount of this of the
this this Permanent Issuer
Permanent Permanent Global Bond
Global Bond Global Bond following
due to due to such
exchanges exercise of exchanges
of the or option
interests put/call exercise
in the option
Temporary
Global Bond
for like
interests
in this
Permanent
Global Bond
(pound) (pound) (pound)
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SCHEDULE 2
----------
FORM OF DEFINITIVE BOND
-----------------------
On the front:
Denomination ISIN Series Certificate Number
- ------------ ---- ------ ------------------
(pound)[10,000]/[100,000] XS0082800375
CE ELECTRIC UK FUNDING COMPANY
(INCORPORATED IN ENGLAND AND WALES
WITH UNLIMITED LIABILITY UNDER REGISTERED NUMBER 3476201)
(POUND)200,000,000
7.25% GUARANTEED BONDS DUE 2022
UNCONDITIONALLY AND IRREVOCABLY GUARANTEED AS TO
SCHEDULED PAYMENTS OF PRINCIPAL AND INTEREST PURSUANT TO
A FINANCIAL GUARANTEE INSURANCE POLICY ISSUED BY
AMBAC INSURANCE UK LIMITED
This Bond forms part of a series designated as specified in the title (the
"BONDS") of CE Electric UK Funding Company (the "ISSUER") and constituted by the
Trust Deed referred to on the reverse hereof. The Bonds are subject to, and have
the benefit of, that Trust Deed and the terms and conditions (the "CONDITIONS")
set out on the reverse hereof.
The Issuer for value received hereby promises to pay to the bearer of this
Bond on 15th December, 2022, or on such earlier date as this Bond may become
repayable in accordance with the Conditions, the principal sum of:
(pound) [l0,000]/[l00,000] ([tenl/[one hundred] thousand pounds sterling)
together with premium (if any) together with interest on such principal sum from
15th December, 1997 at the rate of 7.25% per annum payable annually in arrear on
15th December in each year, subject to and in accordance with the Conditions.
This Bond shall not be valid or become obligatory for any purpose until
authenticated by or on behalf of the Principal Paying Agent.
This Bond is governed by, and shall be construed in accordance with,
English law.
-51-
In witness whereof the Issuer has caused this Bond to be signed in facsimile on
its behalf.
Date [ ]
CE ELECTRIC UK FUNDING COMPANY
By:
Director
This Bond is authenticated by or on behalf of Bankers Trust Company, as
principal Paying Agent without recourse, warranty or liability.
By:
Authorised Signatory
ANY UNITED STATES PERSON (AS DEFINED IN THE UNITED STATES INTERNAL REVENUE CODE)
WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES
INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS l65(j) AND
1287(a) OF SUCH CODE.
-52-
TERMS AND CONDITIONS OF THE BONDS
The (pound)200,000,000 7.25% Guaranteed Bonds due 2022 (the "Bonds", which
expression shall, unless the context otherwise requires, include any Further
Bonds (as defined in Condition 3)) of CE Electric UK Funding Company (the
"Company" or the "Issuer") are constituted by a trust deed dated 15th December
1997 (as the same may be amended and or supplemented from time to time, the
"Trust Deed") between the Company, AMBAC Insurance UK Limited ("AMBAC") and The
Law Debenture Trust Corporation p.l.c. (the "Trustee" which expression shall,
wherever the context so admits, include its successors as trustee under the
Trust Deed) as trustee for the holders of the Bonds (the "Bondholders"). The
Bonds are unconditionally and irrevocably guaranteed as to scheduled payments of
principal and interest and in respect of certain additional amounts in respect
of United Kingdom withholding taxes pursuant to a financial guarantee insurance
policy and the endorsement thereto dated 15th December 1997 (the "Bond Policy")
issued by AMBAC to the Trustee. The issue of the Bonds was authorised by
resolutions of the Board of Directors of the Company passed at a meeting held on
4th December 1997. The statements in these Terms and Conditions include
summaries of and are subject to the detailed provisions of the Trust Deed.
Copies of the Trust Deed and the Paying Agency Agreement dated 15th December
1997 (the "Paying Agency Agreement") between the Company, AMBAC, the Paying
Agents referred to below and the Trustee will be available for inspection by
Bondholders and the holders of the interest coupons appertaining to the Bonds
(respectively, the "Couponholders" and the "Coupons") at the registered office
for the time being of the Trustee, being as of the date hereof at Princes House,
95 Gresham Street, London, England EC2V 7LY and at the specified office(s) of
each of the Paying Agents. The Bondholders and the Couponholders are entitled to
the benefit of, are bound by, and are deemed to have notice of all the
provisions of the Trust Deed and the provisions of the Paying Agency Agreement
applicable to them.
1. FORM, DENOMINATION AND TITLE
The Bonds are serially numbered and in bearer form in the denominations of
(pound)10,000 and (pound)100,000 each with Coupons attached on issue and title
thereto and to the Coupons will pass by delivery. Bonds of one denomination may
not be exchanged for Bonds of the other denomination. The holder of any Bond or
Coupon will (except as otherwise required by law) be treated as its absolute
owner for all purposes (whether or not it is overdue and regardless of any
notice of ownership, trust, or any interest in it, any writing on it, or its
theft or loss) and no person will be liable for so treating the holder.
-53-
2. STATUS AND BOND POLICY
(a) Status
The Bonds and Coupons constitute direct, unconditional and (subject to the
provisions of Condition 5) unsecured obligations of the Company and rank pari
passu and without any preference among themselves. The payment obligations of
the Company under the Bonds and the Coupons shall, subject as aforesaid and save
for such exceptions as may be provided by applicable legislation, at all times
rank at least equally with all its present and future unsecured and
unsubordinated obligations.
(b) Bond Policy
The Bonds have the benefit of the Bond Policy (which has been issued by
AMBAC pursuant to an insurance and indemnity agreement dated 15th December 1997
between the Company and AMBAC) (the "Insurance and Indemnity Agreement") under
which AMBAC unconditionally and irrevocably guarantees Insured Amounts which are
Due for Payment subject only to the Trustee being required to make a claim under
and in accordance with the Bond Policy, all as more particularly described in
the Bond Policy.
The terms of the Bond Policy provide that amounts of principal on any Bonds
which have become immediately due and payable (whether by virtue of
acceleration, prepayment or otherwise) other than on the relevant Scheduled
Payment Date will not be treated as Insured Amounts which are Due for Payment
unless AMBAC in its sole discretion elects so to do by notice in writing to the
Trustee. If no such election is made, AMBAC will continue to be liable to make
payments in respect of the Bonds pursuant to the Bond Policy on the dates on
which such payments would have been required to be made as if the Bonds had not
become immediately due and payable.
3. DEFINITIONS
"AMBAC Additional Amounts" has the same meaning as the term "Additional
Amounts" as defined in the Bond Policy.
"AMBAC Event of Default" means any of the events set out in Condition 13.
"Auditors" means the auditors for the time being of the Company or, in the
event of their being unable or unwilling to carry out any action requested of
them pursuant to the terms of the Trust Deed, such other firm of internationally
recognised chartered accountants as the Company may select for the purpose.
"Authorised Area" means the authorised area of Northern Electric plc as
provided in the PES Licence.
"Capital and Reserves" is defined to mean the aggregate of:
-54-
(i) the amount (including any share premium) of the share capital of
the Company for the time being issued and paid up or credited as paid up;
and
(ii) the amounts standing to the credit of all capital and revenue
reserve accounts and the consolidated profit and loss of the Group;
but adjusted to the extent that the following items have not already been added,
deducted or excluded in arriving at the figures referred to in (i) or (ii)
above:
(iii) by adding the outstanding amount of any subordinated debt;
(iv) by deducting the amounts standing to the debit of all capital and
revenue reserve accounts and the consolidated profit and loss
account of the Group;
(v) by deducting any amounts shown in respect of interests of
non-Group members in Group subsidiaries;
(vi) by adding the amount of goodwill arising upon and in respect of
the acquisition of the preference shares and ordinary shares of
Northern Electric plc;
(vii)by deducting the amount of any distribution declared or made by
the Company or any of its subsidiaries (other than to another
member of the Group) out of profits included within reserves to
the extent that these reserves have not already been reduced on
account thereof; and
(viii) by adding the amount shown in respect of deferred taxation;
all as shown in the Latest Consolidated Balance Sheet.
"Capitalised Lease Obligations" is defined to mean all lease obligations of
the Company and its Subsidiaries which, under UK GAAP, are or will be required
to be capitalized, in each case taken at the amount thereof accounted for as
indebtedness in conformity with such principles.
"Companies Act" means the Companies Act 1985 as amended or re-enacted from
time to time and all subordinate legislation made pursuant thereto.
"Consolidated Current Liabilities" is defined to mean the consolidated
current liabilities of the Company and its Subsidiaries, but excluding the
current portion of long term Indebtedness which would otherwise be included
therein, as determined on a consolidated basis in accordance with UK GAAP.
"Consolidated Debt" is defined to mean, at any time, the sum of the
aggregate outstanding principal amount or all Indebtedness For Borrowed Money
(including, without limitation, the principal component of Capitalised Lease
Obligations, but excluding all Currency or Interest Rate Agreements and
Consolidated Current Liabilities and Project Finance Indebtedness) of the
Company and its Subsidiaries, less cash and cash equivalents, as determined on a
consolidated basis in conformity with UK GAAP.
-55-
"Consolidated EBITDA" is defined to mean, for any period, the sum of the
amounts for such period of the Company's (i) Consolidated Net Operating Income,
(ii) Consolidated Interest Expense, (iii) income taxes and deferred taxes (other
than income taxes and deferred taxes (either positive or negative) attributable
to extraordinary and non-recurring gains or losses or sales of assets). (iv)
depreciation expense, (v) amortization expense and (vi) all other non-cash items
reducing Consolidated Net Operating Income, less all non-cash items increasing
Consolidated Net Operating Income, all as determined on a consolidated basis in
conformity with UK GAAP: provided that, to the extent that the Company has any
Subsidiary that is not a wholly owned Subsidiary, Consolidated EBITDA shall be
reduced by an amount equal to the Consolidated Net Operating Income of such
Subsidiary multiplied by the quotient of (A) the number of issued ordinary
shares in the capital of such Subsidiary not owned on the last day of such
period by the Company or any Subsidiary of the Company, divided by (B) the total
number of issued ordinary shares in the capital of such Subsidiary on the last
day of such period.
"Consolidated Interest Expense" is defined to mean, for any period, the
aggregate amount of interest in respect of Indebtedness For Borrowed Money
(including amortization of original issue discount on any Indebtedness for
Borrowed Money and the interest portion of any deferred payment obligation,
calculated in accordance with the effective interest method of accounting; and
all commissions, discounts and other fees and charges owed with respect to
bankers' acceptance financing) and the net costs associated with Interest Rate
Agreements and all but the principal component of rentals in respect of
Capitalized Lease Obligations, paid, accrued or scheduled to be paid or to be
accrued by the Company and each of its Subsidiaries during such period,
excluding, however, any amount of such interest to any Subsidiary of the Company
if the net operating income (or loss) of such Subsidiary is excluded in the
calculation of Consolidated Net Operating Income for such Subsidiary pursuant to
clause (ii) of the definition thereof (but only in the same proportion as the
net operating income (or loss) of such Subsidiary is excluded), less
consolidated interest income, all as determined on a consolidated basis in
conformity with UK GAAP, provided that, to the extent that the Company has any
Subsidiary that is not a wholly-owned Subsidiary, Consolidated Interest Expense
shall be reduced by an amount equal to such interest expense of such Subsidiary
multiplied by the quotient of (A) the number of the issued ordinary shares in
the capital of such Subsidiary not owned on the last day of such period by the
Company or any Subsidiary of the Company divided by (B) the total number of
issued ordinary shares in the capital of such Subsidiary on the last day of such
period.
"Consolidated Net Operating Income" is defined to mean, for any period, the
aggregate of the net operating income (or loss) of the Company and its
Subsidiaries for such period, as determined on a consolidated basis in
conformity with UK GAAP; provided that the following items shall be excluded in
computing Consolidated Net Operating Income (without duplication): (i) the net
operating income (or loss) of any person (other than a Subsidiary) in which any
other person has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid to the Company or another
Subsidiary of the Company during such period, (ii) the net operating income (or
loss) of any Subsidiary to the extent that the declaration or payment of
dividends or similar distributions by such Subsidiary of such net operating
income is not at the time permitted by the operation of the terms of its
constitutive documents or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation or licence and (iii) all extraordinary
gains and extraordinary losses.
-56-
"Controlling Party" at any time means AMBAC unless either (i) an AMBAC
Event of Default has occurred and is continuing or (ii) AMBAC's claims-paying
ability ceases to be rated at least BBB, by S&P and Baa3 by Moody's, and, in the
case of (ii) an Issuer Event of Default has occurred and is continuing, in which
event, "Controlling Party" shall mean the Trustee.
"Currency or Interest Rate Agreement" is defined to mean an agreement or
transaction involving any currency or interest rate swap, cap or collar
arrangement, forward exchange transaction, option, warrant, forward rate
agreement, futures contract or other derivative instrument of any kind for the
hedging or management of foreign exchange or interest rate risks. "Distribution"
means any dividend, distribution or payment (including by way of redemption,
repurchase, retirement, return or repayment) in respect of the share capital of
the Company.
"Duff & Phelps" means Duff & Phelps Credit Rating Co., or its Subsidiaries
with expertise in the electric utility industry or successors, or, in any case,
if such person ceases to rate the Bonds for reasons outside the control of the
Company, any other "nationally recognised statistical rating organization"
within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the U.S. Securities
Exchange Act of 1934, as amended (the "Exchange Act") with expertise in the
electric utility industry selected by the Company as a replacement Rating
Agency.
"Due for Payment" means, in relation to principal, interest, AMBAC
Additional Amounts or Issuer Additional Amounts, that the Scheduled Payment Date
for such amount has been reached. "Due for Payment" does not refer to any
earlier date upon which payment of any principal, interest. AMBAC Additional
Amounts or Issuer Additional Amounts may become due under the Bonds by reason of
prepayment, acceleration of maturity or otherwise.
"Electricity Act" means the Electricity Act 1989 as amended or re-enacted
from time to time and all subordinate legislation made pursuant thereto.
"Excluded Licence" means a licence granting the right to supply electricity
in or in any part of the Authorised Area in circumstances where another entity
may be entitled to supply electricity on a like or similar basis in the relevant
area and/or granting the right to supply and/or distribute electricity solely
outside the Authorised Area.
"Excluded Subsidiary" means any Subsidiary of the Company (other than a PES
Subsidiary:
(i) in respect of which neither the Company nor any Subsidiary of the
Company (other than another Excluded Subsidiary) has undertaken any legal
obligation to give any guarantee for the benefit of the holders of any
Indebtedness For Borrowed Money (other than to another member of the Group)
other than in respect of any statutory obligation (as defined in the Trust
Deed) and the Subsidiaries of which are all Excluded Subsidiaries; and
-57-
(ii) which has been designated as such by the Company by written
notice to the Trustee; provided that the Company may give written notice to
the Trustee at any time that any Excluded Subsidiary is no longer an
Excluded Subsidiary whereupon it shall cease to be an Excluded Subsidiary.
"Existing Negative Pledge" means the obligations contained in each of (i)
Condition 3 of the terms and conditions of Northern Electric Finance plc's
(pound)100,000,000 8.875 per cent, Guaranteed Bonds due 2020, (ii) Condition 3
of the terms and conditions of Northern Electric Finance plc's
(pound)100,000,000 8.625 per cent, Guaranteed Bonds due 2005, and (iii)
Condition 3 of the terms and conditions of Northern Electric plc's
(pound)55,000,000 12.661 per cent, Bonds due 1999.
"Further Bonds" means all further bonds created and issued by the Company
in accordance with Condition 21 and for the time being outstanding or, as the
context may require, a specific proportion thereof.
"Group" means the Company and its Subsidiaries and "member of the Group"
shall be construed accordingly.
"Group's Distribution Business" means the business carried on by Northern
Electric plc or any other member of the Group from time to time pursuant to the
terms of the PES Licence compromising, ancillary to, the distribution (whether
for its own account or that of third parties) of electricity through the Group s
Distribution System (including any business in providing connections to the
Group's Distribution System) but shall not include any activities exclusively
forming part of the Generation Business, Second-Tier Supply Business or Supply
Business (as such terms are defined in the PES Licence) carried on or to be
carried on by any member of the Group.
"Group's Distribution System" means the system of electric lines situated
wholly or partly within the Authorised Area owned or operated by Northern
Electric plc or any other member of the Group from time to time for distribution
of electricity between the grid supply points or generation sets or other entry
points and the points where it is delivered to customers or authorised
electricity operators, and includes any remote transmission assets owned by The
National Grid Company plc operated by Northern Electric plc or any other member
of the Group and any electrical plant and meters owned or operated by Northern
Electric plc or any other member of the Group in connection with the
distribution of electricity but shall not include any part of the system
exclusively forming part of the Generation Business, Second-Tier Supply Business
or Supply Business (as such terms are defined in the PES Licence) earned on or
to be earned on by any member of the Group.
"Incur" is defined to mean, with respect to any Indebtedness, to incur,
create, issue, assume or guarantee such Indebtedness.
-58-
"Indebtedness" is defined to mean, with respect to the Company or any of
its Subsidiaries at any date of determination (without duplication), (i) all
Indebtedness for Borrowed Money, (ii) all obligations in respect of letters of
credit or other similar instruments (including reimbursement obligations with
respect thereto), (iii) all obligations to pay the deferred and unpaid purchase
price of property or services, which purchase price is due more than six months
after the date of placing such property in service or taking delivery and title
thereto or the completion of such services, except trade payables, (iv) all
Capitalised Lease Obligations, (v) all indebtedness of other persons secured by
a mortgage, charge, lien, pledge or other security interest on any asset of the
Company or any of its Subsidiaries, whether or not such indebtedness is assumed:
provided that the amount of such Indebtedness shall be the lesser of (A) the
fair market value of such asset at such date of determination and (B) the amount
of the secured indebtedness, (vi) all indebtedness of other persons of the types
specified in the preceding clauses (i) to (v) to the extent such indebtedness is
guaranteed by the Company or any of its Subsidiaries, and (vii) to the extent
not otherwise included in this definition, obligations under Currency or
Interest Rate Agreements. The amount of Indebtedness at any date shall be the
outstanding balance at such date of all unconditional obligations as described
above and, upon the occurrence of the contingency giving rise to the obligation,
the maximum liability of any contingent obligations of the types specified in
the preceding clauses (i) to (vii) at such date; provided that the amount
outstanding at any time of any Indebtedness issued with original issue discount
is the face amount of such Indebtedness less the remaining unamortized portion
of the original issue discount of such Indebtedness at such time as determined
in conformity with UK GAAP.
"Indebtedness For Borrowed Money" is defined to mean any indebtedness
(whether being principal, premium, interest or other amounts) for (i) money
borrowed, (ii) payment obligations under or in respect of any acceptance or
acceptance credit, or (iii) any notes, bonds, debentures, debenture stock, loan
stock or other debt securities offered, issued or distributed whether by way of
public offer, private placing, acquisition consideration or otherwise and
whether issued for cash or in whole or in part for a consideration other than
cash.
"Independent Director" means a director of the Company and/or Northern
Electric plc, as the case may be, who is independent of the management and
controlling shareholders of such companies and free from any business or other
relationship with them which could materially interfere with the exercise of his
independent judgment, apart from his customary directors' fees.
"Insured Amounts" means, with respect to any Scheduled Payment Date, the
sum of (i) the interest (calculated in accordance with the provisions of the
Trust Deed) due on the Bonds as of such Scheduled Payment Date, (ii) the
principal due on the Bonds on such Scheduled Payment Date (net of any amount of
premium or of such principal in excess of par) and (iii) AMBAC Additional
Amounts, if any, and Issuer Additional Amounts, if any, due in respect of the
interest and principal amounts referred to in (i) and (ii) of this definition
due on the Bonds on such Scheduled Payment Date.
"Interest Coverage Ratio" is defined to mean, with respect to the Company
on any Measurement Date, the ratio of (i) the aggregate amount of Consolidated
EBITDA of the Company for the four fiscal quarters for which financial
information in respect thereof is available immediately prior to such
Measurement Date to (ii) the aggregate Consolidated Interest Expense during such
four fiscal quarters.
-59-
"Investment Grade Rating" means a credit rating assigned by a Rating Agency
of BBB- (in the case of such ratings assigned by S&P) or Baa3 (in the case of
such ratings assigned by Moody's) or the equivalents of such ratings for the
time being, or better.
"Issuer Additional Amounts" means, with respect to any Schedule Payment
Date, any sums payable by the Company to a Bondholder pursuant to Condition 9
"Issuer Event of Default" means any of the events set out in Condition 12.
"Latest Consolidated Balance Sheet" means, at any date, the then latest
consolidated balance sheet forming part of the group accounts of the Company
prepared for the purpose of the Companies Act, which have been audited and have
been reported on by the Auditors as the main accounts of the Company and
prepared in accordance with the historical cost convention modified, if
applicable, by the revaluation of land and buildings or any other basis from
time to time permitted by applicable law but adjusted as may be necessary in
respect of any variation in the liabilities, paid up share capital or share
premium account of the Company since the date of that balance sheet and further
adjusted as may be necessary to reflect any change since the date of that
balance sheet in the Subsidiaries of the Company and/or as the Company may
consider appropriate.
"Leverage Ratio" is defined to mean the ratio of Consolidated Debt to Total
Capital, calculated on the basis of the Latest Consolidated Balance Sheet,
adjusted by the Company to reflect the financial condition of the Company and
its Subsidiaries as of a date not more than 60 days prior to a Measurement Date.
"Measurement Date" is defined to mean the record date for any Distribution.
"Moody's" means Moody's Investors Service. Inc., or its Subsidiaries with
expertise in the electric utility industry or successors, or, in any case, if
such person ceases to rate the Bonds for reasons outside the control of the
Company, any other "nationally recognised statistical rating organization"
(within the meaning of Rule 15c3-l(c)(2)(vi)(F) under the Exchange Act) with
expertise in the electric utility industry elected by the Company as a
replacement Rating Agency.
A "Negative Rating Event" shall be deemed to have occurred if (i) the
Company does not, either prior to or no later than 14 days after the date of a
Negative Certification (as defined in Condition 14) in respect of the Relevant
Restructuring Event, seek, and thereupon use all reasonable endeavours to
obtain, from a Rating Agency, a rating of the Reference Rated Securities or any
other unsecured and unsubordinated debt of the Company (or of any Subsidiary of
the Company and which is guaranteed on an unsecured and unsubordinated basis by
the Company) having an initial maturity of five years or more or (ii) if it does
so seek and use such endeavours, it is unable, as a result of such Restructuring
Event, to obtain such a rating which is an Investment Grade Rating.
"PES Licence" means the public electricity supply licence granted by the
Secretary of State for Energy to Northern Electric plc under the Electricity Act
in relation to its Authorised Area (but for the avoidance of doubt excluding any
second tier licence) as in effect on 11th December 1997.
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"PES Subsidiary" means any Subsidiary of the Company which carries on all
or any part of the Group's Distribution Business pursuant to a public
electricity supply licence granted under the Electricity Act.
"Pooling and Settlement Agreement" means the agreement dated 30th March
1990 (as amended and restated at 22nd April 1994) made by Northern Electric plc
with National Grid Company plc and others setting out the rules and procedures
for the operation of an electricity trading pool and of a settlement system and,
while the same has effect, the initial Settlement Agreement also dated 30th
March 1990 and made between the same parties, in each case as in force on 11th
December 1997.
"Principal Subsidiary" means, at any time, a Subsidiary (which term for the
purposes of this definition shall not include a subsidiary undertaking) of the
Company (other than an Excluded Subsidiary (i) whose (a) profits on ordinary
activities before tax and exceptional items or (b) net assets, represent more
than 20% of the consolidated profits on ordinary activities before tax and
exceptional items of the Group or consolidated net assets of the Group, in each
case by reference to the most recent audited accounts or, as the case may be,
audited consolidated accounts of the Company and such Subsidiary (and its
Subsidiaries, if any) or (ii) to which its transferred after the latest date as
at and to which the relevant accounts of the transferee company were made up the
whole or substantially the whole of the assets and undertaking of a Subsidiary,
which immediately prior to such transfer was a Principal Subsidiary. A
certificate signed by a Director of the Company on behalf of the Company stating
that a Subsidiary of the Company is or is not or was or was not at any
particular time or throughout any particular period a Principal Subsidiary may
be relied on by the Trustee and/or the Controlling Party without further enquiry
or evidence and if relied upon by the Trustee and/or the Controlling Party
shall, in the absence of manifest error, be conclusive and binding on all
parties.
"Project Finance Indebtedness" means any Indebtedness to finance or
refinance the ownership, acquisition development, design, engineering,
procurement, construction, servicing management and/or operation of any project
or asset:
(i) which is incurred by an Excluded Subsidiary; or
(ii) in respect of which the person or persons to whom any such
Indebtedness is or may be owed by the relevant borrower (whether or
not a member of the Group) has or have no recourse whatsoever to any
member of the Group (other than an Excluded Subsidiary for the
repayment thereof other than;
(a) recourse to such member of the Group for amounts limited to the
cash flow or net cash flow (other than historic cash flow or historic net
cash flow) from, or ownership interests or other investments in, such
project or asset; and/or
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(b) recourse to such member of the Group for the purpose only of
enabling amounts to be claimed in respect of such Indebtedness in an
enforcement to any encumbrance given by such member of the Group over such
project or asset or the income, cash flow or other proceeds deriving
therefrom (or given by any shareholder or the like or other investor in the
borrower or in the owner of such project or asset over its shares or the
like in the capital of or other investment in the borrower or in the owner
of such project or asset) to secure such Indebtedness, provided that (aa)
the extent of such recourse to such member of the Group is limited solely
to the amount of any recoveries made on any such enforcement, and (bb) such
person or persons is/are not entitled, by virtue of any right or claim
arising out of or in connection with such Indebtedness, to commence
proceedings for the winding up or dissolution of the Company or a PES
Subsidiary or to appoint or procure the appointment of any receiver,
trustee or similar person or officer in respect of the Company or a PES
Subsidiary or any of its assets (save for the assets the subject of such
encumbrance); and/or
(c) recourse to such borrower generally, or directly or indirectly to
a member of the Group, under any form of assurance, undertaking or support,
which recourse is principally limited to a claim for damages (other than
liquidated damages and damages required to be calculated in a specified
way) for breach of an obligation (not being a payment obligation or an
obligation to procure payment by another or an indemnity in respect thereof
or any obligation to comply or to procure compliance by another with any
financial ratios or other tests of financial condition) by the person
against which such recourse is available.
For the avoidance of doubt, recourse as permitted by (a), (b) or (c)
above shall not be had to the cashflow of a PES Subsidiary other than to
the extent of the amount of cashflow derived solely from an investment or
investments in the relevant project or asset.
"Proposed PES Licence Modifications" means the modifications to the PES
Licence as set out in the consultation document issued by the Regulator on 21st
October 1997.
A "Put Event" occurs on the date of the last to occur of (i) a
Restructuring Event, (ii) either a Rating Downgrade or, as the case may be, a
Negative Rating Event, and (iii) the relevant Negative Certification.
"Rating Agency" is defined to mean each of S&P and Moody's.
A "Rating Downgrade" shall be deemed to have occurred if the then current
rating assigned to the Reference Rated Securities by any Rating Agency (whether
provided by a Rating Agency at the invitation of the Company or by its own
volition) is withdrawn or reduced from an Investment Grade Rating to a
non-investment Grade Rating (BB-Ba1, or their respective equivalents for the
time being, or worse) of if any Rating Agency shall then have already assigned a
non-Investment Grade Rating (as described above) to the Reference Rated
Securities, the rating is lowered one full rating category.
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"Reference Documents" means the Terms of Reference and the memorandum and
articles of association for the time being of the Company CE Electric UK
Holdings, CE Electric UK plc and Northern Electric plc.
"Reference Rated Securities" means the US$125,000,000 6.853% Senior Notes
due 2004 and the US$237,000,000 6.995% Senior Notes due 2007 of the Company
being issued concurrently with the issue of the Bonds, if at any time and for so
long as they shall have a rating from a Rating Agency, and otherwise any other
unsecured and unsubordinated debt of the Company (or of any Subsidiary of the
Company and which is guaranteed on an unsecured and unsubordinated basis by the
Company) having an initial maturity of five years or more which is rated by a
Rating Agency.
"Regulator" means the Director General of Electricity Supply for the time
being.
"Relevant Indebtedness" means any indebtedness (whether being principal,
premium, interest or other amounts) in the form of or represented by notes,
bonds, debentures, debenture stock, loan stock or other securities, whether
issued for cash or in whole or in part for a consideration other than cash, and
which, with the agreement of the person issuing the same, are quoted, listed or
ordinarily dealt in on any stock exchange or recognised over-the-counter or
other securities market, but shall not in any event include Project Finance
Indebtedness.
"Restructuring Event" means the occurrence of any one or more of the
following events:
(i) (a) the Secretary of State for Trade and Industry (or any
successor) giving Northern Electric plc written notice of revocation of the
PES Licence provided that the giving of notice pursuant to paragraph 3 of
Part 1 of the PES Licence in effect on 11th December 1997, or any similar
provision in any other licence or licences referred to in this paragraph
(a)) shall not be deemed to constitute the revocation of the PES Licence or
(b) Northern Electric plc agreeing in writing with the Secretary of State
for Trade and Industry (or any successor) to any revocation or surrender of
the PES Licence or (c) any legislation (whether primary or subordinate)
being enacted terminating or revoking the PES Licence, except in any such
case in circumstances where either (A) a licence or licences or (B) a
licence or licences relating to the Group's Distribution Business, as the
case may be, is or are granted to Northern Electric plc, the Company or
another Subsidiary of the Company (not being an Excluded Subsidiary) at
least 51% of the ordinary share capital of which is owned directly or
indirectly by the Company (the "Relevant Transferee") and provided that the
terms of such licence or licenses or, as the case may be, licence or
licences relating to the Group's Distribution Business are substantially no
less favourable than the terms of the PES Licence or the terms of the PES
Licence related to the Group's Distribution Business, as applicable, in
which event all references in these Terms and Conditions to the PES Licence
and Northern Electric plc shall hereafter be deemed to be references to the
licence or licences on substantially no less favourable terms or, as the
case may be, the licence or licences relating to the Group's Distribution
Business and the Relevant Transferee respectively; or
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(ii) any modification (other than a modification which is of a formal,
minor or technical nature) being made to the terms and conditions of the
PES Licence on or after 11th December 1997 unless two Directors of the
Company have certified in good faith to the Trustee that the terms and
conditions of the PES Licence as modified are not materially less
favourable to the business of Northern Electric plc. For the purposes of
this paragraph (ii) a modification which (a) results in a licence or
licences in relation to the Group's Distribution Business being granted to
Northern Electric plc, the Company or another subsidiary of the Company
(not being an Excluded Subsidiary) at least 51% of the ordinary share
capital of which is owned directly or indirectly by the Company
(collectively, the "Applicable Transferees") and provided that the terms of
such licence are substantially no less favourable than the terms of the PES
Licence, in so far as the terms of the PES Licence relate to the Group s
Distribution Business, (b) results in a licence or licences being granted
to an Applicable Transferee provided that the terms at such licence are
substantially no less favourable than the terms of the PES Licence or (c)
results from the grant of an Excluded Licence, shall not be deemed to be a
modification within this paragraph (ii). In the event of such a
modification as is referred to in (a), (b) or (c) all references in these
Terms and Conditions to the PES Licence and Northern Electric plc shall
thereafter be deemed to re references to, in the case of (a) the licence or
licences in relation to the Group's Distribution Business granted to the
Applicable Transferee and the Applicable Transferee, respectively, in the
case of (b), the replacement licence or licences and the Applicable
Transferee, respectively, and, in the case of (c), the PES Licence
excluding the business covered by the Excluded Licence and Northern
Electric plc respectively; or
(iii) (a) the Pooling and Settlement Agreement being terminated under
Clause 67.4 thereof and not replaced by one of more agreements, commercial
arrangements or open market mechanism or frameworks (in each case on terms
which two Directors of the Company certify in good faith to the Trustee to
be not materially less favourable to the business of Northern Electric plc)
or (b) Northern Electric plc being given notice pursuant to Clause 67.3.2
of the Pooling and Settlement Agreement requiring it to cease to be a party
thereto or (c) any notice declaring an event of default (as defined in the
Pooling and Settlement Agreement) being given to Northern Electric plc
under Clause 66.1 or 66.2.1 thereof and such default remaining unremedied
or unwaived or (d) any modification (other than a modification which is of
a formal, minor or technical nature) being made to the Pooling and
Settlement Agreement on or after 11th December 1997 or (e) Northern
Electric plc ceasing to be a party to the Pooling and Settlement Agreement
for any reason (other than pursuant to (b) or (c) above), except where a
licence is granted to a Relevant Transferee as contemplated by Paragraph
(i) above and at or about the same time all rights and obligations of
Northern Electric plc pursuant to the Pooling and Settlement Agreement
which are attributable to such licence are assigned and transferred to such
Relevant Transferee in such manner as the Trustee may approve or such
Relevant Transferee enters into one or more agreements, commercial
arrangements or open market mechanisms or frameworks in relation to such
licence which two Directors of the Company certify in good faith to be not
materially less favourable to the business of Northern Electric plc,
unless, in the case of (d), two Directors of the Company have certified in
good faith to the Trustee that any such modification has not had and will
not have a materially adverse effect on the amount or nature of any payment
made or to be made by or to Northern Electric plc pursuant to the Pooling
and Settlement Agreement or a materially adverse effect on the financial
rights or obligations of Northern Electric plc under the Pooling and
Settlement Agreement or a materially adverse effect on the business of
Northern Electric plc provided that any such modification shall, to the
extent it grants or confers powers or discretions on the Regulator (or any
successor) under or in respect of the Pooling and Settlement Agreement, be
deemed not to have a materially adverse effect as aforesaid, but for the
avoidance of doubt any modification to the Pooling and Settlement Agreement
made by the Regulator (or any successor) by virtue of or pursuant to any
such powers or discretions and which otherwise would have a materially
adverse effect as provided above shall not by virtue of this paragraph be
deemed not to have such an effect; or
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(iv) any legislation (whether primary or subordinate) is enacted which
removes, qualifies or amends (other than an amendment which is of a formal,
minor or technical nature) the duties of the Secretary of State for Trade
and Industry (or any successor) and/or the Director General of Electricity
Supply (or any successor) under Section 3 of the Electricity Act as in
force on 11th December 1997, unless two Directors of the Company have
certified in good faith to the Trustee that such removal, qualification or
amendment does not have a materially adverse effect on the financial
condition of Northern Electric plc.
"Restructuring Period" means:
(i) if at the time a Restructuring Event occurs there are Reference
Rated Securities, the period of 90 days starting from and including the day
on which the Restructuring Event occurs; or
(ii) if at the time a Restructuring Event occurs there are not
Reference Rated Securities, the period starting from and including the day
on which the Restructuring event occurs and ending on the day 90 days
following the later of (a) the date on which the Company shall seek to
obtain a rating pursuant to the definition of Negative Rating Event prior
to the expiry of the 14 days referred to in the definition of Negative
Rating Event and (b) the date on which a Negative Certification shall have
been given to the Company in respect of the Restructuring Event.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw-Hill
Inc., or its Subsidiaries with expertise in the electric utility industry or
successors, or, in any case, if such person ceases to rate the Bonds for reasons
outside the control of the Company, any other "nationally recognised statistical
rating organization" (within the meaning of Rule 15c3.1(c)(2)(vi)(F) under the
Exchange Act) with expertise in the electric utility industry selected by the
Company as a replacement Rating Agency.
"Scheduled Payment Date" means (i) with respect to interest on the Bonds,
15th December in each year commencing 1998 and to and including 2022, (ii) with
respect to principal of the Bonds, 15th December 2022, or any earlier date for
the payment of principal of or interest on the Bonds to which AMBAC shall have
given its prior consent in writing, (iii) with respect to AMBAC Additional
Amounts, each date upon which AMBAC is required by the Bond Policy to pay the
amount in respect of the Bonds to which such AMBAC Additional Amount relates,
and (iv) with respect to issuer Additional Amounts, each date upon which the
Issuer is required by Condition 9 of the Bonds to pay such Issuer Additional
Amounts.
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"Security Interest" means a mortgage, charge, lien, pledge or other
security interest.
"Specified Subsidiaries" means each of CE Electric UK Holdings, CE Electric
UK plc, Northern Electric plc, Northern Electric Distribution Ltd., Northern
Electric Supply Ltd., and any Subsidiary of the Company (other than an Excluded
Subsidiary) whose (a) profits on ordinary activities before tax and exceptional
items or (b) net assets, represent more than 20% of the consolidated profits on
ordinary activities before tax and exceptional items of the Group or
consolidated net assets of the Group, in each case by reference to the most
recent audited accounts or, as the case may be, audited consolidated accounts of
the Company and such Subsidiary (and its Subsidiaries, if any).
"Subsidiary" means a subsidiary or subsidiary undertaking within the
meaning of the Companies Act.
"Terms of Reference" means (i) the terms of reference for the Independent
Director set out in the document entitled "Terms of Reference for an Independent
Non-Executive Director" tabled and approved at the meeting of the board of
directors of Northern Electric plc held on 22nd October 1997 and (ii) the terms
of reference for the Independent Director set out in the document entitled
"Terms of Reference for an Independent Non-Executive Director" tabled and
approved at the meeting of the board of directors of the Company held on 4th
December 1997.
"Total Capital" is defined to mean the sum of total liabilities plus
Capital and Reserves of the Company and its Subsidiaries, as determined on a
consolidated basis in accordance with UK GAAP.
"UK GAAP" means generally accepted accounting principles in the United
Kingdom.
4. LIMITATION ON DISTRIBUTIONS
So long as any of the Bonds remain outstanding (as defined in the Trust
Deed), the Company shall only declare, recommend, make or pay any Distribution
to any of its shareholders if (A) (i) no Issuer Event of Default has occurred
and is continuing, and (ii) no Issuer Event of Default will result from the
making of such Distribution and, (B) either:
(i) at the time and as a result of such Distribution.
(a) the Company's Leverage Ratio does not exceed 0.62:1; and
(b) the Company's Interest Coverage Ratio is not less than 2.2:1.
(in the case of (a) and (b), each certified by a Director of the
Company to the Trustee and AMBAC), or
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(c) if the Company is not in compliance with the foregoing ratios,
both the Trustee and AMBAC receive written confirmation that at such
time the Company's unsubordinated, unsecured long term debt is rated
at least BBB (or its then equivalent) by S&P and Duff & Phelps and
Baa2 (or it then equivalent) by Moody's from each of S&P and Duff &
Phelps and Moody's respectively.
In the event that at any time the Trustee and AMBAC receive
written confirmation from each of S&P, Duff & Phelps and Moody's that
the Company's long-term unsubordinated, unsecured debt has been or
would be assigned a rating of BBB- (for its then equivalent) by S&P
and Duff & Phelps and Baa1 (or its then equivalent) by Moody's, or
better, notwithstanding the release of the Company from its
obligations under this Condition, the foregoing restrictions on the
making of Distributions shall permanently cease to have effect and the
Company shall thereafter cease to be bound by the provisions of this
Condition.
5. NEGATIVE PLEDGE
So long as any of the Bonds remain outstanding, the Company will ensure
that no Relevant Indebtedness of the Company or of any PES Subsidiary or of any
other person and no guarantee by the Company or any PES Subsidiary of any
Relevant Indebtedness of any other person will be secured by a Security Interest
upon, or with respect to, any of the present or future business, undertaking,
assets or revenues (including any uncalled capital) of the Company or any PES
Subsidiary unless the Company shall, before or at the same time as the creation
of the Security Interest, take any and all action necessary to ensure that:
(a) all amounts payable by it under the Bonds, the Coupons and the
Trust Deed are secured equally and rateably with the Relevant Indebtedness
or guarantee of Relevant indebtedness, as the case may be, by such Security
Interest; or
(b) such other Security Interest or guarantee or other arrangement
(whether or not including the giving of a Security Interest) is provided in
respect of all amounts payable by the Company under the Bonds, the Coupons
and the Trust Deed either (i) as the Trustee shall in its absolute
discretion deem not materially less beneficial to the interests of the
Bondholders or (ii) as shall be approved by an Extraordinary Resolution (as
defined in the Trust Deed) of the Bondholders.
save that the Company or any PES Subsidiary may create, assume or have
outstanding a Security Interest in respect of any Relevant Indebtedness and/or
any guarantees given by the Company or any PES Subsidiary in respect of any
Relevant Indebtedness of any person (without the obligation to provide a
Security Interest or guarantee or other arrangement in respect of all amounts
payable by the Company under the Bonds, the Coupons and the Trust Deed as
aforesaid) where (1) such Relevant Indebtedness has an initial maturity falling
not earlier than 31st December 2022 and is of a maximum aggregate amount
outstanding at any time not exceeding the greater of (pound)200,000,000 and 20
per cent, of the Capital and Reserves, (2) such Security Interest existed in
respect of a company that becomes a PES Subsidiary of the Company after 11th
December 1997 (provided that such Security Interest was not created in
contemplation of such company becoming a PES Subsidiary and the principal amount
secured at the time of such company becoming a PES Subsidiary is not
subsequently increased), (3) such Security Interest existed on the date of
original issue of the Bonds or (4) with respect to Security Interests described
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in (2) and (3), such Security Interests are extended, renewed or replaced (or
extensions, renewals or replacements for such Security Interests are themselves
extended, renewed or replaced) to secure Relevant Indebtedness in an aggregate
principal amount which does not exceed the aggregate principal amount of the
Relevant Indebtedness secured by the Security Interest so extended, renewed or
replaced, provided that such extension, renewal or replacement Security Interest
is limited to all or part of the same property or assets which were subject to
the Security Interest so extended, renewed or replaced, as such property or
assets may be improved from time to time.
6. INTEREST
The Bonds bear interest ("Scheduled Interest") from (and including) 15th
December 1997 (the "Issue Date") at the rate of 7.25 % per annum payable
annually in arrear on 15th December in each year (each an "Interest Payment
Date"). Each Bond will cease to bear Scheduled Interest from the due date for
redemption thereof, unless, upon due presentation, payment of principal or
premium (if any) is improperly withheld or refused. In such event, each Bond
shall continue to bear interest ("Default Interest") at such rate both before
and after judgment until whichever is the earlier of (i) the day on which all
sums due in respect of such Bond up to that day are received by or on behalf of
the relevant holder and (ii) the day seven days after the Trustee or the
Principal Paying Agent has notified Bondholders in accordance with Condition 18
of receipt of all sums then due in respect of all the Bonds up to that seventh
day except to the extent that there is failure in the subsequent payment to the
relevant holder under these Terms and Conditions. If Scheduled Interest or
Default Interest is required to be calculated for a period of less than one
year, it will be calculated on the basis of a 360 day year consisting of 12
months of 30 days each and, in the case of an incomplete month, the number of
days elapsed.
DEFAULT INTEREST DOES NOT ACCRUE ON SCHEDULED INTEREST OR DEFAULT INTEREST.
THE PAYMENT OF DEFAULT INTEREST IS NOT GUARANTEED UNDER THE BOND POLICY.
7. PAYMENTS
Payments of principal, premium (if any) or interest in respect of the Bonds
will be made against surrender of Bonds or, in the case of payments of interest
due on an Interest Payment Date, against surrender of Coupons, at the specified
office of any Paying Agent by a sterling cheque drawn on, or at the option of
the holder, by transfer to a sterling account maintained by the payee with a
branch of a bank in the City of London, subject in all cases to any fiscal or
other laws and regulations applicable in the place of payment, but without
prejudice to the provisions of Condition 9.
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Upon the due date for redemption of any Bond, unmatured Coupons relating to
such Bond (whether or not attached) shall become void and no payment shall be
made in respect of them. Where any Bond is presented for redemption without all
unmatured Coupons relating to it, redemption shall be made only against the
provision of such indemnity as the Company and AMBAC may require.
If the due date for redemption of any Bond is not 15th December in any
year, interest accrued in respect of such Bond from (and including) the last
preceding 15th December will be paid only against presentation and surrender of
such Bond.
If the due date for payment of any amount in respect of any Bond or Coupon
is not a business day, then the holder thereof shall not be entitled to payment
of the amount due until the next following business day nor to any further
interest or other payment in respect of such delay. The expression "business
day" in this Condition means a day other than a Saturday or Sunday on which
banks are open (for business in the place where the Bond or Coupon is presented
and, in the case of payment by transfer to a sterling account as referred to
above, in the City of London.
The names of the initial Principal Paying Agent and the other initial
Paying Agents and their initial specified offices are set out at the end of
these Terms and Conditions. The Company reserves the right, subject to the prior
written approval of the Trustee and the Controlling Party, at any time to vary
or terminate the appointment of any Paying Agent and to appoint additional or
other Paying Agents provided that it will at all times maintain two Paying
Agents having specified offices in separate European cities approved by the
Trustee, one of which, so long as any of the Bonds are listed on the Luxembourg
Stock Exchange and the rules of the Luxembourg Stock Exchange so require, shall
be Luxembourg. Notice of any such termination or appointment and of any changes
in the specified offices of the Paying Agents will be given to the Bondholders
in accordance with Condition 18 as soon as practicable thereafter. UNDER NO
CIRCUMSTANCES WILL INTEREST BE PAYABLE IN THE UNITED STATES OF AMERICA OR ANY
POSSESSION OF THE UNITED STATES OF AMERICA.
8. REDEMPTION AND PURCHASE
(a) Unless previously redeemed or purchased and cancelled, the Company
will redeem the Bonds on 15th December 2022 at their principal amount.
(b) The Company may, having given not less than 30 nor more than 45
days' notice in accordance with Condition 18 (which notice shall be
trrevocable), redeem the whole or part (in principal amount of
(pound)5,000,000 or integral multiples thereof) of the Bonds at any time
prior to 15th December 2022 at a price which shall be the higher of the
following, together with Scheduled Interest accrued up to and including the
date of redemption:
(i) par; and
(ii) that price (the "Redemption Price") expressed as a percentage
(rounded to three decimal places, 0.0005 being rounded upwards), at
which the Gross Redemption Yield (calculated as described below) on
the Bonds, if they were to be purchased at such price on the third
dealing day prior to the due date for redemption, would be equal to
the Gross Redemption Yield on such dealing day of 8% Treasury Stock
due 7th June 2021 or, if such stock is no longer in issue, of such
other United Kingdom government stock as the Trustee, with the advice
of three brokers or market-makers operating in the gilt-edged market,
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shall determine to be appropriate (the "Reference Stock"), on the
basis of the middle market price of the Reference Stock prevailing at
11:00 am on such dealing day, as determined by Credit Suisse First
Boston (Europe) Limited (or such other person as the Trustee may
approve). Any reference in these Terms and Conditions to principal
shall be deemed to include any sum payable as the Redemption Price.
Notices of redemption will specify the date fixed for redemption,
the applicable Redemption Price and, in the case of partial
redemption, the aggregate principal amount of the Bonds to be
redeemed, the serial numbers of the Bonds called for redemption, the
serial numbers of the Bonds previously called for redemption and not
presented for payment and the aggregate principal amount of the Bonds
to remain outstanding after the redemption. Upon the expiry of any
notice of redemption the Company shall be bound to redeem the Bonds
called for redemption at the applicable Redemption Price. Any partial
redemption of the Bonds shall be on the basis of selection by drawings
(the method of such drawings to be approved by the Trustee in its
absolute discretion).
The "Gross Redemption Yield" on the Bonds and the Reference Stock will
be expressed as a percentage and will be calculated on the basis
indicated by the Joint Index and Classification Committee of the
Institute and Faculty of Actuaries as reported in the Journal of the
Institute of Actuaries, Vol. 105 Part 1, 1978, page 18 or on such
other basis as the Trustee may approve.
(c) If, as a result of any change in, or amendment to, the laws
or regulations of the United Kingdom or any political subdivision of,
or any authority in, or of, the United Kingdom having power to tax, or
any change in the application or official interpretation of such laws
or regulations, which change or amendment becomes effective after 11th
December 1997, the Company has or will become obliged to pay
additional amounts as provided or referred to in Condition 9 (and such
amendment or change has been evidenced by the delivery by the Company
to the Trustee and AMBAC (who shall, in the absence of manifest error,
accept such certificate and opinion as sufficient evidence thereof) of
a certificate signed by a Director of the Company on behalf of the
Company stating that such amendment or change has occurred
(irrespective of whether such amendment or change is then effective),
describing the facts leading thereto and stating that such obligation
cannot be avoided by the Company taking reasonable measures available
to it) the Company may at its option, having given not less than 30
nor more than 60 days notice to the Bondholders in accordance with
Condition 18 (which notice shall be irrevocable), redeem all the Bonds
(other than Bonds in respect of which the Company shall have given a
notice of redemption pursuant to Condition 8(b) prior to any notice
being given under this Condition 8(c)), but not some only, at their
principal amount together with interest accrued to (but excluding) the
date of redemption, provided that no notice of redemption shall be
given earlier than 90 days before the earliest date on which the
Company would be required to pay the additional amounts were a payment
in respect of the Bonds than due.
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UNDER THE TERMS OF THE BOND POLICY. AMBAC DOES NOT GUARANTEE ANY
OF THE AMOUNTS PAYABLE BY THE COMPANY FOLLOWING AN EARLY REDEMPTION OF
THE BONDS PURSUANT TO CONDITION 8(B) OR (C). AMBAC WILL NOT BE OBLIGED
UNDER ANY CIRCUMSTANCES TO ACCELERATE PAYMENT UNDER THE BOND POLICY;
IF IT DOES SO, THE AMOUNT PAYABLE WILL BE THE PAR VALUE OF THE BONDS
TOGETHER WITH ACCRUED INTEREST AS AT THE DATE OF ACCELERATION. ANY
AMOUNT OF PRINCIPAL ON THE BONDS IN EXCESS OF PAR WLL NOT BE
GUARANTEED BY AMBAC UNDER THE BOND POLICY.
(d) The Company or any of its Subsidiaries may at any time
purchase or otherwise acquire Bonds provided that all unmatured
Coupons are attached thereto or are surrendered therewith at any price
in the open market or otherwise. If purchases are made by tender,
tenders must be available to all Bondholders alike.
(e) All Bonds which are redeemed pursuant to this Condition shall
be cancelled (together with all relative unmatured Coupons attached
thereto or surrendered therewith) and accordingly may not be reissued
or resold. Bonds purchased by or on behalf of the Company or any or
its Subsidiaries may be held or reissued or resold or surrendered for
cancellation.
9. TAXATION
(a) All payments in respect of the Bonds and Coupons by the
Company shall be made without withholding or deduction for, or on
account of, any present or future taxes, duties, assessments or
governmental charges of whatever nature ("Taxes") imposed or levied by
or on behalf of the United Kingdom, or any political subdivision of,
or authority in, or of, the United Kingdom having power to tax, unless
the withholding or deduction of the Taxes is required by law. In that
event, the Company will pay such additional amounts as may be
necessary in order that the net amounts received by the Bondholders
and Couponholders after the withholding or deduction shall equal the
respective amounts which would have been receivable in respect of the
Bonds or, as the case may be. Coupons in the absence of the
withholding or deduction; except that no additional amounts shall be
payable in relation to any payment in respect of any Bond or Coupon:
(i) to, or to a third party on behalf of, a holder who is
liable to the Taxes in respect of the Bond or Coupon by reason of
his having some connection with the United Kingdom other than the
mere holding of the Bond or Coupon; or
(ii) presented for payment in the United Kingdom; or
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(iii) to, or to a third party on behalf of, a holder who
would not be liable or subject to the withholding or deduction by
making a declaration of non-residence or other similar claim for
exemption to the relevant tax authority; or
(iv) presented for payment more than 30 days after the
Relevant Date except to the extent that the holder would have
been entitled to additional amounts on presenting the same for
payment on the last day of the period of 30 days.
(b) In these Terms and Conditions, "Relevant Date" means the date
on which the payment first becomes due, but if the full amount of the
money payable has not been received in London by the Principal Paying
Agent or the Trustee on or before the due date, it means the date on
which, the full amount of the money having been so received, notice to
that effect shall have been duly given to the Bondholders by the
Company in accordance with Condition 18.
(c) Any reference in these Terms and Conditions to any amounts in
respect of the Bonds shall be deemed also to refer to any additional
amounts which may be payable under this Condition or under any
undertakings given in addition to, or in substitution for, this
Condition 9 pursuant to the Trust Deed.
10. PRESCRIPTION
Bonds and Coupons will become void unless presented for payment within
periods of ten years and five years respectively, from the Relevant Date for
payment in respect thereof, subject to the provisions of Condition 7.
11. THE COMPANY'S COVENANTS TO AMBAC
The Company has undertaken with AMBAC that so long as any of the Bonds
remain outstanding and for so long as no AMBAC Event of Default has occurred and
is continuing, the Company will comply with certain covenants and restrictions
set forth in the Trust Deed which include, inter alia, that the Company shall:
(a) not modify or amend, or agree to any modification or amendment to
the PES Licence or Proposed PES Licence Modifications without the consent
of the Regulator;
(b) use all reasonable endeavours to procure that the underlying or
shadow credit rating of the Bonds and any existing public long term
unsecured, unguaranteed and unsubordianted debt of Northern Electric plc
are assigned Investment Grade Ratings by both Rating Agencies, and that
such Investment Grade Ratings are maintained;
(c) not, without the prior written consent or AMBAC, agree to any
amendment to the provisions of the Reference Documents that (i) restrict
the activities in which any of the Company, CE Electric UK Holdings, CE
Electric UK plc or Northern Electric plc may engage or participate in, (ii)
limit the disposal by any such company of any or all of its assets,
revenues or properties of any nature whatsoever and (iii) limit the
Incurrence of Indebtedness by any such company, provided that this
paragraph shall not apply to any such amendment required by the Regulator;
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(d) procure that the Board of Directors of the Company and Northern
Electric plc each include an Independent Director and that the Terms of
Reference of such an Independent Director are not modified in any respect
without the prior written consent of AMBAC, provided that this paragraph
shall not apply to any such modification required by the Regulator;
(e) procure that no Security Interest is created or granted upon, or
with respect to, any of the present or future ordinary shares of the
Company and the Specified Subsidiaries and not sell, transfer or otherwise
dispose or permit the sale, transfer or other disposal of the present and
future ordinary shares of the Specified Subsidiaries;
(f) ensure that no Security Interest is created or granted upon, or
with respect to, any of the present or future business, undertaking, assets
or revenues (including any uncalled share capital) of the Company, CE
Electric UK Holdings and CE Electric UK plc unless the Company shall, at
the same time as the creation of the Security Interest, take any and all
action necessary to ensure that all amounts payable by it under the Bonds,
the Coupons, the Trust Deed and the Insurance and Indemnity Agreement (to
the extent of the Insured Amounts) are secured equally and rateably by such
Security Interest;
(g) not, without the prior written consent of AMBAC, modify or amend,
or consent to any modification or amendment of any Existing Negative
Pledge; and
(h) ensure that no Relevant indebtedness of Northern Electric plc or
any PES Subsidiary or of any other person and no guarantee by Northern
Electric plc or any PES Subsidiary of any Relevant Indebtedness of any
other person will be secured by a Security Interest upon, or with respect
to, any of the present or future business, undertaking, assets or revenues
(including any uncalled capital) of Northern Electric plc or any PES
Subsidiary unless Northern Electric plc shall, before or at the same time
as the creation of the Security Interest, take any and all action necessary
to ensure that:
(a) all amounts payable by the Company under the Bonds, the
Coupons, the Trust Deed and the Insurance and Indemnity Agreement (to
the extent of the Insured Amounts) are secured to the satisfaction of
AMBAC equally and rateably with the Relevant Indebtedness or guarantee
of Relevant Indebtedness, as the case may be, by such Security
Interest; or
(b) such other Security Interest or guarantee or other
arrangement (whether or not including the giving of a Security
Interest) is provided in respect of all amounts payable by the Company
under the Bonds, the Coupons, the Trust Deed and the Insurance and
Indemnity Agreement (to the extent of the Insured Amounts) as AMBAC
shall in its absolute discretion deem not materially less beneficial
to the interests of AMBAC;
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save that Northern Electric plc or any PES Subsidiary may create or have
outstanding a Security Interest in respect of any of its Relevant
Indebtedness and/or any guarantees given by Northern Electric plc or any
PES Subsidiary in respect of any Relevant Indebtedness of any other person
(without the obligation to provide a Security Interest or guarantee or
other arrangement in respect of the Bonds, the Coupons and the Trust Deed)
where such Relevant Indebtedness has an initial maturity rating not earlier
than 31st December 2022 and is of maximum aggregate amount outstanding at
any time not exceeding the greater (pound)50,000,000 and 20 per cent of the
Northern Consolidated Tangible Net Worth (as defined below).
For the purposes of this paragraph:
(1) "Northern Consolidated Tangible Net Worth" means at any particular
time the aggregate of the amount paid up on Northern Electric plc's issued
share capital and the consolidated distributable and nondistributable
reserves of the Northern Group (as shown in the most recently published
audited consolidated financial statements of the Northern Group), after:
(i) deducting the total of any debit balance on the profit and
loss account and the book value of any intangible assets including but
not limited to goodwill;
(ii) excluding any minority interests in Subsidiary Undertakings;
and
(iii) adding the amount shown in respect of deferred taxation;
but adjusted as may be necessary in respect of any variation in the paid-up
share capital or share premium account of the Northern Group since the date
of that balance sheet and further adjusted as may be necessary to reflect
any change since the date of that balance sheet in the Subsidiary
Undertakings comprising the Northern Group.
A report by the Auditors as to the amount of the Northern Consolidated
Tangible Net Worth at any given time shall, in the absence of manifest
error, be conclusive and binding on all parties.
(2) "Northern Group" means Northern Electric plc and its Subsidiary
Undertakings.
(3) "Subsidiary Undertaking" shall have the meaning given to it by
Section 258 of the Companies Act 1985 (but shall exclude any undertakings
(as defined in the Companies Act 1985) whose accounts are not included in
the then latest published audited consolidated accounts of Northern
Electric plc, nor (in the case of an undertaking which has first become a
subsidiary undertaking of a member of the Northern Group since the date as
at which any such audited accounts were prepared) would its accounts have
been so included or consolidated if it had become so on or before that
date.
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(4) Any reference to an obligation being guaranteed shall include a
reference to any indemnity being given in respect of the obligation.
12. ISSUER EVENTS OF DEFAULT
If:
(a) default is made in the payment of any principal or premium (if
any) in respect of any Bond pursuant to Condition 8, or for a period of 5
days or more in the payment of any interest due in respect of the Bonds; or
(b) the Company fails to perform or observe any of its other
obligations, covenants, conditions or provisions under the Bonds, the Trust
Deed or the Insurance and Indemnity Agreement and (except where the
Controlling Party shall have certified to the Company in writing that it
considers such failure to be incapable of remedy in which case no such
notice or continuation as is hereinafter mentioned will be required) such
failure continues for the period of 60 days (or such longer period as the
Trustee may, with the approval of the Controlling Party, permit) next
following the service by the Trustee on the Company of notice requiring the
same to be remedied; or
(c) (i) any other Indebtedness For Borrowed Money of the Company or
any Principal Subsidiary becomes due and repayable prior to its stated
maturity by reason of an event of default (however described) or (ii) any
such Indebtedness For Borrowed Money (including as aforesaid) is not paid
when due or (iii) the Company or any Principal Subsidiary fails to pay when
due any amount payable by it under any present or future guarantee for, or
indemnity in respect of any Indebtedness For Borrowed Money of any person
or (iv) any security given by the Company or any Principal Subsidiary for
any Indebtedness For Borrowed Money of any person or any guarantee or
indemnity of Indebtedness For Borrowed Money of any person becomes
enforceable by reason of default in relation thereto and steps are taken to
enforce such security save in any such case where there is a bona fide
dispute as to whether the relevant Indebtedness For Borrowed Money or any
such guarantee or indemnity as aforesaid shall be due and payable, provided
that the aggregate amount of the relevant Indebtedness For Borrowed Money
in respect of which any one or more of the events mentioned above in this
sub-paragraph (c) has or have occurred equals or exceeds whichever is the
greater of (pound)25,000,000 or its equivalent in other currencies (as
determined by the Trustee) and two per cent of the Capital and Reserves and
such event shall continue unremedied or unwaived for more than 14 days (or
such longer grace period as may have been originally provided in the
applicable instrument) and the time for payment of such amount has not been
expressly extended (until such time as any payment default is remedied,
cured or waived). For the purposes of this sub-paragraph (c), "Indebtedness
for Borrowed Money" shall exclude Project Finance Indebtedness; or
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(d) the Company ceases to own directly or indirectly at least 51% of
the ordinary share capital of Northern Electric plc; or
(e) any order shall be made by any competent court or any resolution
shall be passed for the winding up or dissolution of the Company, save for
the purposes of amalgamation, merger, consolidation, reorganisation,
reconstruction or other similar arrangement on terms previously approved in
writing by the Controlling Party or (where the Controlling Party is the
Trustee) by an Extraordinary Resolution of the Bondholders; or
(f) any order shall be made by any competent court or any resolution
shall be passed and not validly revoked or cancelled within 30 days for the
winding up or dissolution of a Principal Subsidiary, save for the purposes
of amalgamation, merger, consolidation, reorganisation, reconstruction or
other similar arrangement (i) not involving or arising out of the
insolvency of such Principal Subsidiary and under which all the surplus
assets of such Principal Subsidiary are transferred to the Company or any
of its other Subsidiaries (not being an Excluded Subsidiary) or (ii) the
terms of which have previously been approved in writing by the Controlling
Party or (where the Controlling Party is the Trustee), by an Extraordinary
Resolution of the Bondholders; or
(g) he Company or any Principal Subsidiary shall cease to carry on the
whole or substantially the whole of its business, save in each case for the
purposes of amalgamation, merger, consolidation, reorganisation,
reconstruction or other arrangement (i) not involving or arising out of the
insolvency of the Company or such Principal Subsidiary and under which all
or substantially all of its assets are transferred, in the case of the
Company, to a Subsidiary of the Company or, in the case of a Principal
Subsidiary, to the Company or another Subsidiary of the Company (in each
case not being an Excluded Subsidiary) or to a transferee which is, or
immediately upon such transfer becomes, a Principal Subsidiary or (ii)
under which all or substantially all of its assets are transferred to a
third party or parties (whether a Subsidiary or Subsidiaries of the Company
or not) for full consideration by the Company or a Principal Subsidiary on
an arm's length basis or (iii) the terms of which have previously been
approved in writing by the Controlling Party or (where the Controlling
Party is the Trustee) by an Extraordinary Resolution of the Bondholders
provided that (A) if Northern Electric plc shall cease to hold or shall
transfer the PES Licence (other than where the PES Licence is revoked,
terminated or surrendered in the circumstances envisaged by paragraph
(i)(a), (b) or (c) of the definition of Restructuring Event in Condition 3
and such revocation, termination or surrender does not constitute a
Restructuring Event pursuant to paragraph (i) of such definition) the
Company shall be deemed to have ceased to carry on the whole or
substantially the whole of its business (and neither of exceptions (i) and
(ii) above shall apply) unless the transferee of the PES Licence is the
Company or a Subsidiary of the Company (not being an Excluded Subsidiary),
at least 51% of the ordinary share capital of which is owned directly or
indirectly by the Company (the "NE Transferee") and in either such event
all references in these Terms and Conditions to Northern Electric plc shall
hereafter be deemed to be references to the NE Transferee; or (B) if an
Excluded Licence is granted to any person, the transfer by the Company or a
Principal Subsidiary of the business relating to such Excluded Licence for
full consideration on an arms length basis and the consequent cessation at
such business of the Company or such Principal Subsidiary shall be deemed
not to fail within this paragraph (g); or
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(h) the Company or any principal Subsidiary shall suspend or shall
threaten to suspend payment of its debts generally or shall be declared or
adjudicated by a competent court to be unable, or shall admit in writing
its inability, to pay its debts (within the meaning of Section 123(1) or
(2) of the Insolvency Act 1986) as they fall due, or shall be adjudicated
or found insolvent by a competent court or shall enter into any composition
or other similar arrangement with its creditors under Part I of the
Insolvency Act 1986; or
(i) a receiver, administrative receiver, administrator or other
similar official shall be appointed in relation to the Company or any
Principal Subsidiary or in relation to the whole or a substantial part of
the undertaking or assets of any of them or a distress, execution or other
process shall be levied or enforced upon or sued out against, or any
encumbrancer shall take possession of, the whole or a substantial part of
the assets of any of them and in any of the foregoing cases it or he shall
not be paid out or discharged within 20 days (or such longer period as the
Trustee may in its absolute discretion permit);
and, in the case of sub-paragraphs (b), (c) and (f) to (i) (inclusive) the
Controlling Party shall have certified in writing that the relevant event is in
its opinion materially adverse to (1) where the Controlling Party is AMBAC, the
interests of AMBAC or (2) where the Controlling Party is the Trustee, the
interests of the Bondholders, the Controlling Party may at its discretion (and
if the Controlling Party is the Trustee it shall on the request in writing of
the holders of at least one quarter in principal amount of the Bonds then
outstanding or upon being so directed by an Extraordinary Resolution of the
Bondholders), by notice in writing to the Company declare that the Bonds are,
and they shall accordingly thereby forthwith become, immediately due and
repayable at their principal amount together with accrued interest (as provided
in the Trust Deed), provided always that the giving of any notice in relation to
any Issuer Event of Default shall not operate as a waiver of any of the
Controlling Party's rights (including the right to gave a further notice) or
prevent the Controlling Party from giving a further notice in the manner
referred to above in relation to that Issuer Event of Default at any time
thereafter, and provided further that for the purposes of sub-paragraphs (c) and
(f) to (i) (inclusive), the term "Principal Subsidiary" shall include each of CE
Electric UK Holdings, CE Electric UK plc and Northern Electric plc.
So long as any of the Bonds remain outstanding the Company will, forthwith
upon becoming aware of any issuer Event of Default, give notice in writing
thereof to the Trustee and to AMBAC.
For the purpose of sub-paragraph (i) above, Section 123(1)(a) of the
Insolvency Act 1986 shall have effect as if for "(pound)750" there was
substituted "(pound)250,000" or such higher figure as the Director (as referred
to in the PES Licence) may from time to time determine by notice in writing to
the Secretary of State (as referred to in the PES Licence) and Northern Electric
plc.
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Neither the Company nor any Principal Subsidiary shall be deemed to be
unable to pay its debts for the purposes of sub-paragraph (i) above if any such
demand as is mentioned in Section 123(1)(a) of the Insolvency Act 1986 is being
contested in good faith by the Company or the relevant Principal Subsidiary with
recourse to all appropriate measures and procedures.
WHILE AMBAC IS THE CONTROLLING PARTY, NEITHER THE BONDHOLDERS NOR THE
TRUSTEE WILL HAVE ANY RIGHT TO CALL FOR REPAYMENT OF THE BONDS FOLLOWING THE
OCCURRENCE OF AN ISSUER EVENT OF DEFAULT.
13. AMBAC EVENTS OF DEFAULT
(i) Each of the following events is an AMBAC Event of Default:
(a) any Insured Amount which is Due for Payment is not paid by AMBAC
on the date stipulated in the Bond Policy;
(b) AMBAC disclaims, disaffirms, repudiates and/or challenges the
validity of any of its obligations under the Bond Policy or seeks to
do so;
(c) a court or competent jurisdiction enters a final and
non-appealable order, judgment or decree for the winding up, or the
appointment of an administrator or receiver including an
administrative receiver or manager), of AMBAC (or, as the case may be,
of a material part of its Property or assets); or
AMBAC:
(1) presents any petition or takes any proceedings for the winding up,
or the appointment or an administrator or receiver (including an
administrative receiver or manager), of AMBAC or, as the case may be, of a
material part of its property or assets;
(2) makes or enters into any general assignment, composition,
arrangement (including, without limitation, a voluntary arrangement under
Part I of the Insolvency Act 1986) or compromise with or for the benefit of
its creditors; or
(3) becomes unable to pay its debts within the meaning of either
section 123(2) or section 123(l)(e) of such Insolvency Act or admits in
writing its inability, or fails generally, to pay its debts as they become
due.
(ii) So long as any of the Bonds remain outstanding, AMBAC will, forthwith
upon becoming aware of any AMBAC Event of Default, give notice in writing
thereof to the Trustee and the Company.
AN AMBAC EVENT OF DEFAULT WILL NOT RESULT IN AN ISSUER EVENT OF DEFAULT OR
IN THE BONDS BECOMING REPAYABLE EARLY. FOLLOWING AN AMBAC EVENT OF DEFAULT,
AMBAC SHALL CEASE TO BE THE CONTROLLING PARTY.
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14. RESTRUCTURING EVENT
(a) (i) If, at any time following the occurrence of an AMBAC
Event of Default, while any of the Bonds remains outstanding, a
Restructuring Event occurs and prior to the commencement of or during
the Restructuring Period an Independent Financial Adviser (as defined
below) shall have certified in writing to the Trustee that such
Restructuring Event will not be or is not, in its opinion, materially
prejudicial to the interests of the Bondholders, the following
provisions of this Condition shall cease to have any further effect in
relation to such Restructuring Event.
(ii) if, at any time following the occurrence of an AMBAC Event of
Default while any of the Bonds remains outstanding, a Restructuring Event
occurs and (subject to (a)(i) above):
(A) within the Restructuring Period, either:
(i) if at the time such Restructuring Event occurs there are
Reference Rated Securities, a Rating Downgrade in respect of such
Restructuring Event also occurs; or
(ii) if at such time there are not Reference Rated
Securities, a Negative Rating Event also occurs; and
(B) an Independent Financial Adviser shall have certified in
writing to the Trustee that such Restructuring Event is, in its
opinion, materially prejudicial to the interests of the
Bondholders (a "Negative Certification"),
then, unless at any time the Company shall have given a notice under
Condition 8(b) or Condition 8(c), in each case expiring prior to the Put
Date (as defined below), the holder of each Bond will, upon the giving of a
Put Event Notice (as defined below), have the option (the "Put Option") to
require the Company to redeem or, at the option of the Company, purchase
(or procure the purchase of) that Bond on the Put Date at its principal
amount together with (or, where purchased, together with an amount equal
to) interest (if any) accrued to (but excluding) the Put Date.
A Restructuring event shall be deemed not to be materially prejudicial to
the interests or the Bondholders it, notwithstanding the occurrence of a Rating
Downgrade or a Negative Rating Event, the rating assigned to the Reference Rated
Securities by any Rating Agency is subsequently increased to, or, as the case
may be, there is assigned to the Reference Rated Securities by any Rating Agency
an Investment Grade Rating or, in the event that the rating assigned to the
Reference Rated Securities immediately prior to the occurrence to the Rating
Downgrade or Negative Rating Event was not an Investment Grade Rating, if such
rating is restored, in either case prior to any Negative Certification being
issued.
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Any certificate by an Independent Financial Adviser as aforesaid as to
whether or not, in its opinion, any Restructuring Event is materially
prejudicial to the interest of the Bondholders shall, in the absence of manifest
error, be conclusive and binding on the Trustee, the Company and the
Bondholders. For the purposes of this Condition, an "Independent Financial
Adviser" means a financial adviser appointed by the Company and approved by the
Trustee (such approval not to be unreasonably withheld or delayed) or, it the
Company shall not have appointed such an adviser within 21 days after becoming
aware of the occurrence to such Restructuring Event and the Trustee is
indemnified to its satisfaction against the costs of such adviser, appointed by
the Trustee following consultation with the Company.
A Rating Downgrade or a Negative Rating Event or a non-Investment Grade
Rating shall be deemed not to have occurred as a result of or in respect of a
Restructuring Event if the Rating Agency making the relevant reduction in rating
or, where applicable, declining to assign an Investment Grade Rating as provided
in this Condition does not announce or publicly confirm or inform the Trustee in
writing at its request that the reduction or, where applicable, declining to
assign a rating of at least investment grade was the result, in whole or in
part, of any event or circumstance comprised in or arising as a result of the
applicable Restructuring Event.
The Trust Deed provides that the Trustee is under no obligation to
ascertain whether a Restructuring Event, a Negative Rating Event, a Rating
Downgrade or any event which could lead to the occurrence of or could constitute
a Restructuring Event, a Negative Rating Event or a Rating Downgrade has
occurred and until it shall have actual knowledge or express notice pursuant to
the Trust Deed to the contrary the Trustee may assume that no Restructuring
Event, Negative Rating Event, Rating Downgrade or other such event has occurred.
(b) Promptly upon the Company becoming aware that a Put Event (as
defined in Condition 3) has occurred, and in any event not later than 14
days after the occurrence of a Put Event, the Company shall, and at any
time upon the Trustee becoming similarly so aware the Trustee may, and if
so requested by the holders of at least one-quarter in principal amount of
the Bonds then outstanding shall, give notice (a "Put Event Notice") to the
Bondholders in accordance with Condition 18 specifying the nature of the
Put Event and the procedure for exercising the Put Option.
(c) To exercise the Put Option, the holder of a Bond must deliver such
Bond to the specified office of any Paying Agent, on a day which is a
business day (as defined in Condition 7) in London and in the place of such
specified office falling within the period (the "Put Period") of 45 days
after that on which a Put Event Notice is given, accompanied by a duly
completed and signed notice of exercise in the form (for the time being
current) obtainable from any specified office of any Paying Agent (a "Put
Notice") and in which the holder may specify a bank account complying with
the requirements of Condition 7 to which payment is to be made under this
Condition. Each Bond should be delivered together with all Coupons
appertaining thereto maturing after the day (the "Put Date") being the
fifteenth day after the date of expiry of the Put Period, failing which any
such missing Coupon will become void and no payment shall be made in
respect of it. The Paying Agent to which such Bond and Put Notices are
delivered shall issue to the Bondholder concerned a non-transferable
receipt in respect of the Bond so delivered. Payment in respect of any Bond
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so delivered shall be made, if the holder duly specifies a bank account in
the Put Notice to which payment is to be made on the Put Date, by transfer
to that bank account and, in every other case, on or after the Put Date, in
each case against presentation and surrender or (as the case may be)
endorsement of such receipt at any specified office of any Paying Agent,
subject in any such case as provided in Condition 7. A Put Notice once
given shall be irrevocable. For the purposes of Conditions 10, 12, 15, 17
and 19 receipts issued pursuant to this Condition shall be treated as if
they were Bonds. The Company shall redeem or, at the option of the Company,
purchase (or procure the purchase of) the relevant Bond on the applicable
Put Date unless previously redeemed or purchased.
THE BOND POLICY DOES NOT GUARANTEE THE PAYMENT OF ANY SUMS DUE TO
BONDHOLDERS UPON EXERCISE OF THE PUT OPTION PURSUANT TO CONDITION 14.
15. ENFORCEMENT
(a) Limitation on Bondholders: Save as provided below, only the
Trustee may pursue the remedies available under general law or under the
Trust Deed to enforce the rights of the Bondholders and Couponholders and
no such holder will be entitled to proceed against the Company or AMBAC
unless the Trustee, having become bound to act in accordance with the terms
of the Trust Deed, fails to do so and such failure is continuing. If, in
connection with any insolvency, bankruptcy, administration, dissolution,
liquidation or analogous procedure relating to the Company, a payment on
the Bonds by the Company is claimed to be or is avoided as a preferential
transfer, AMBAC may (provided that AMBAC is then the Controlling Party)
direct all matters relating to such claim or avoidance on behalf of the
Trustee, the Bondholders and the Couponholders.
(b) Enforcement Proceedings: At any time after amounts in respect of
princtpai of and interest on the Bonds shall have become due and payable,
the Trustee may, at its discretion and without further notice but subject
as mentioned below, take such proceedings against:
(i) the Company as it may think fit to enforce the provisions of
the Trust Deed; and/or
(ii) AMBAC as it may think fit to enforce the provisions of the
Bond Policy.
If the Trustee is not the Controlling Party it shall not be permitted to
take any such proceedings against the Company and/or AMBAC unless it has been
directed by the Controlling Party to do so and shall only be bound to take
proceedings against the Company at the direction of the Controlling Party if it
has been indemnified to its satisfaction by the Controlling Party (or, if the
Trustee is the Controlling Party, unless it has been indemnified to its
satisfaction by the Bondholders).
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16. CONTROLLING PARTY
Subject to (i) the terms of the Trust Deed, (ii) AMBAC being at that time
the Controlling Party and (iii) AMBAC giving notice to the Trustee that it
intends to exercise the Trust Rights. AMBAC shall have exclusive control to
exercise the Trust Rights or to direct the exercise of the Trust Rights (as
applicable) without regard to the interests of any other person, and will not be
a fiduciary or owe any fiduciary duties to any person under the Trust Deed and
will be exclusively authorised to direct and refrain from directing the Trustee
under the Trust Deed in the exercise of the Trust Rights without regard to the
interests of any other person.
For these purposes "Trust Rights" means (i) the right to direct the Trustee
to consent to any amendment, waiver, modification and/or extension of any of the
provisions of the Trust Deed or any document entered into pursuant to the Trust
Deed and (ii) the right to direct the Trustee with respect to each and every
right, power and discretion of, or exercisable by, the Trustee under any
provisions of the Trust Deed or any document entered into pursuant to the Trust
Deed.
17. REPLACEMENT OF BONDS AND COUPONS
Should any Bond or Coupon be lost, stolen, mutilated, defaced or destroyed
it may, subject to all applicable laws and stock exchange requirements, be
replaced at the specified office of the Principal Paying Agent or such other
Paying Agent as may be approved by the Trustee for such purpose) upon payment by
the claimant of the expenses, taxes and duties incurred in connection therewith
and on such terms as to evidence and indemnity as the Company may reasonably
require. Mutilated or defaced Bonds or Coupons must be surrendered before
replacements will be issued.
18. NOTICES
All notices to Bondholders shall be valid if published (i) in a leading
English language national daily newspaper (which is expected to be the Financial
Times) or, if this is not practicable, in such leading English language daily
newspaper with a circulation in Europe as the Trustee may approve and (ii) (so
long as the Bonds are listed on the Luxembourg Stock Exchange so require) in a
leading newspaper having general circulation in Luxembourg (which is expected to
be the Luxemburger Wort). Such notices shall be deemed to have been given on the
date of such publication or, if published more than once or on different dates,
on the date of the first such publication in both such newspapers. If
publication is not practicable, notice shall be given in such other manner, and
shall be deemed to have been given on such date, as the Trustee may approve.
Couponholders will be deemed for all purposes to have notice of the
contents of any notice given to the Bondholders in accordance with this
Condition.
19. MEETINGS OF BONDHOLDERS, MODIFICATION AND WAIVER
The Trust Deed contains provisions for convening meetings of the
Bondholders to consider any matter affecting their interests, including
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modification by Extraordinary Resolution of these Terms and Conditions or the
provisions of the Trust Deed. The quorum at any such meeting for passing an
Extraordinary Resolution shall be one or more persons holding or representing a
clear majority in principal amount of the Bonds for the time being outstanding,
or at any adjourned such meeting one or more persons being or representing
Bondholders whatever the principal amount of the Bonds so held or represented,
except that, at any meeting the business of which includes the modification of
certain of these Terms and Conditions and certain of the provisions of the Trust
Deed (including altering the currency of payment of the Bonds or Coupons), the
necessary quorum for passing an Extraordinary Resolution will be one or more
persons holding or representing not less than two-thirds, or at any adjourned
such meeting not less than one-third, in principal amount of the Bonds for the
time being outstanding. An Extraordinary Resolution passed at any meeting of
Bondholders shall be binding on all Bondholders, whether or not they are present
or represented at the meeting, and on all Couponholders.
Subject as provided in the Trust Deed, AMBAC is entitled to receive notice
of and to attend meetings of Bondholders but is not entitled to vote.
Subject to the prior written consent of AMBAC (if AMBAC is then the
Controlling Party), the Trustee may, without the consent of the Bondholders or
Couponholders, agree (i) to any modification to these Terms and Conditions or to
any of the provisions of the Trust Deed or the Bond Policy or to any waiver or
authorisation of any breach or proposed breach by the Company of these Terms and
Conditions or of any of the provisions of the Trust Deed or determine that any
event, condition or act which would otherwise be an Issuer Event of Default
shall not be so treated provided that, in the opinion of the Trustee, so to do
would not be materially prejudicial to the interests of the Bondholders, or (ii)
to any modification to these Terms and Conditions or to any of the provisions of
the Trust Deed or the Bond Policy which is made to correct a manifest error or
which is of a formal, minor or technical nature, provided that the Company and
AMBAC may, without the consent of the Bondholders or Couponholders, agree to any
modification to Condition 11.
In connection with the exercise of its trusts, powers, authorities or
discretions (including, but not limited to, any modification, waiver,
authorisation or substitution), the Trustee shall have regard to the interests
of Bondholders as a class and, in particular, but without limitation, shall not
have regard to the consequences of the exercise of its trusts, powers or
discretions for individual Bondholders and Couponholders resulting from their
being for any purpose domiciled or resident in, or otherwise connected with, or
subject to the jurisdiction of, any particular territory and the trustee snail
not be entitled to require, nor shall the Bondholder or Couponholder be entitled
to claim, from the Company, AMBAC or any other person any indemnification or
payment in respect of any tax consequence of any such exercise upon individual
Bondholders or Couponholders, except to the extent already provided for in
Condition 9 and/or any undertaking given to, or in substitution for, Condition 9
pursuant to the Trust Deed.
Any modification to these Terms and Conditions or to any of the provisions
of the Trust Deed or the Bond Policy or any waiver or authorisation of any
breach or proposed breach by the Company of these Terms and Conditions or any of
the provisions of the Trust Deed shall be binding on the Bondholders and the
Couponholders and, unless the Trustee agrees otherwise, any modification shall
be notified by the Company to the Bondholders as soon as practicable thereafter
in accordance with Condition 18.
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20. SUBSTITUTION
The Trustee may, without the consent of the Bondholders or Couponholders,
agree with the Company, with the consent of AMBAC (such consent not to be
unreasonably withheld or delayed) to the substitution of any wholly-owned
Subsidiary of the Company in place of the Company (or of any previous substitute
under this Condition) as the principal debtor under the Bonds, the Coupons and
the Trust Deed, subject to the Trustee being of the opinion that the interests
of the Bondholders will not be materially prejudiced thereby and certain other
conditions set out in the Trust Deed being complied with including the Company
unconditionally and irrevocably guaranteeing that Subsidiary's obligations in
respect of the Bonds and the Coupons).
21. FURTHER BONDS
(a) Subject as mentioned below, power will be reserved to the Company
to create and issue Further Bonds forming (or so as to form after the first
payment of interest thereon) a single series with the Bonds provided that:
(i) AMBAC has consented (in its absolute discretion) to amend or
substitute the Bond Policy so that the Bond Policy also covers such
Further Bonds on the same terms as the Bonds;
(ii) the Trustee is satisfied that the rating granted in respect
of the Bonds by S&P and Moody's will not thereby be adversely
affected; and
(iii) such issue shall be constituted by a deed supplemental to
the Trust Deed (in such form as the Trustee may approve).
(b) The Company shall not be entitled to exercise the power reserved
in this Condition 21 while any default exists in relation to any payment by
the Company of any amounts due under the Trust Deed.
22. TRUSTEE
The Trust Deed contains provisions governing the responsibility of the
Trustee and providing for its indemnification in certain circumstances,
including provisions relieving it from taking proceedings against the Company
and/or AMBAC unless indemnified to its satisfaction. The Trustee may not resign
its appointment unless a successor, willing to act in such capacity, has been
appointed by the Company with the prior consent of AMBAC (if then the
Controlling Party) and the Bondholders by Extraordinary Resolution, provided
that the Trustee shall not be prevented from resigning its appointment if,
having given notice in writing to the Company and AMBAC (if then the Controlling
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Party) of its intention to so resign its appointment, a successor is not
appointed within the period of three months from the date of such notice.
23. GOVERNING LAW
The Trust Deed, the Bonds, the Coupons and the Bond Policy are governed by,
and shall be construed in accordance with, English law.
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On the back:
PRINCIPAL PAYING AGENT
Bankers Trust Company
1 Appold Street
Broadgate
London EC2A 2HE
PAYING AGENT
Bankers Trust Luxembourg S.A.
P.O. Box 807
14 Boulevard F.D. Roosevelt
L-2450 Luxembourg
-86-
FORM OF COUPON
On the front:
CE ELECTRIC UK FUNDING COMPANY
(POUND)200,000,000 7.25% GUARANTEED BONDS DUE 2022
UNCONDITIONALLY AND IRREVOCABLY GUARANTEED AS TO
SCHEDULED PAYMENTS OF PRINCIPAL AND INTEREST PURSUANT TO
A FINANCIAL GUARANTEE INSURANCE POLICY ISSUED BY
AMBAC INSURANCE UK LIMITED
Coupon for(pound)[ ]
This Coupon is payable to bearer (subject to the Conditions endorsed on the Bond
to which this Coupon appertains, which shall be binding upon the holder of this
Coupon whether or not it is for the time being attached to such Bond) at the
specified offices of the Paying Agents set out on the reverse hereof (or any
further or other Paying Agents or specified offices duly appointed or nominated
and notified to the Bondholders).
The Bond to which this Coupon relates may, in certain circumstances specified in
the Conditions, fall due for redemption in full before the maturity date of this
Coupon. In such event, this Coupon shall become void and no payment will be made
in respect hereof.
ANY UNITED STATES PERSON (AS DEFINED IN THIS UNITED STATES INTERNAL REVENUE
CODE) WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED
STATES INCOME TAX LAWS. INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j)
AND 1287(a) OF SUCH CODE.
CE ELECTRIC UK FUNDING COMPANY
By:
Director
Coupon No.
Denomination ISIN Series Certificate No.
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On the back:
PRINCIPAL PAYING AGENT
Bankers Trust Company
1 Appold Street
Broadgate
London EC2A 2HE
PAYING AGENT
Bankers Trust Luxembourg S. A.
P.O. Box 807
14 Boulevard F.D. Roosevelt
L-2450 Luxembourg
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SCHEDULE 3
PROVISIONS FOR MEETINGS OF BONDHOLDERS
(1) The following expressions shall have the following meanings:
(i) "VOTING CERTIFICATE" means a certificate in the English language issued
by a Paying Agent and dated in which it is stated:
A. that on that date Bonds (not being Bonds in respect of which a block
voting instruction has been issued and is outstanding in respect of the
meeting specified in such voting certificate or any adjournment of such
meeting) bearing specified serial numbers were deposited with such Paying
Agent (or to its order at a bank or other depositary) and that such Bonds
will not be released until the earlier of:
1) the conclusion of the meeting specified in such certificate or any
adjournment of it; and
2) the surrender of the certificate to the Paying Agent which issued it;
and
B. that its bearer is entitled to attend and vote at such meeting or any
adjournment of it in respect of the Bonds represented by such certificate;
(ii) "BLOCK VOTING INSTRUCTION" means a document in the English language
issued by a Paying Agent and dated in which:
A. it is certified that Bonds (not being Bonds in respect of which a voting
certificate has been issued and is outstanding in respect of the meeting
specified in such block voting instruction or any adjournment of it) have
been deposited with such Paying Agent (or to its order at a bank or other
depositary) and that such Bonds will not be released until the earlier of:
1) the conclusion of the meeting specified in such document or any
adjournment of it; and
2) the surrender, not less than 48 hours before the time fixed for such
meeting or adjournment, of the receipt for each such deposited Bond which
is to be released to the Paying Agent which issued it and the notification
of such surrender by such Paying Agent to the Issuer;
B. it is certified that each depositor of such Bonds or a duly authorised
agent on his behalf has instructed such Paying Agent that the votes
attributable to his Bonds so deposited should be cast in a particular way
in relation to the resolution to be put to such meeting or any adjournment
of it and that all such instructions are, during the period of 48 hours
before the time fixed for such meeting or adjourned meeting, neither
revocable nor subject to amendment;
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C. the total number and the serial numbers of the Bonds so deposited are
listed, distinguishing with regard to each such resolution between those in
respect of which instructions have been so given (i) to vote for, and (ii)
to vote against, the resolution; and
D. any person named in such document (a "PROXY") is authorised and
instructed by such Paying Agent to vote in respect of the Bonds so listed
in accordance with the instructions referred to in (C) above as set out in
such document.
(iii) "24 HOURS" shall mean a period of 24 hours including all or part of a
day upon which banks are open for business in both the place where the
relevant meeting is to be held and in each of the places where the Paying
Agents have their specified offices (disregarding for this purpose the day
upon which such meeting is to be held) and such period shall be extended by
one period or, to the extent necessary, more periods of 24 hours until
there is included as aforesaid all or part of a day upon which banks are
open for business in all of the places as aforesaid; and
(iv) "48 HOURS" shall mean a period of 48 hours including all or part of a
day upon which banks are open for business in both the place where the
relevant meeting is to be held and in each of the places where the Paying
Agents have their specified offices (disregarding for this purpose the day
upon which such meeting is to be held) and such period shall be extended by
one period or, to the extent necessary, more periods of 24 hours until
there is included as aforesaid all or part of two days upon which banks are
open for business in all of the places as aforesaid.
(2) A holder of a Bond may obtain a voting certificate from a Paying Agent
or require a Paying Agent to issue a block voting instruction by depositing
his Bond with such Paying Agent not later than 48 hours before the time
fixed for any meeting. Voting certificates and block voting instructions
shall be valid until the relevant Bonds are released pursuant to paragraph
1 and until then the holder of any such voting certificate or (as the case
may be) the proxy named in any such block voting instruction shall, for all
purposes in connection with any meeting or proposed meeting of Bondholders,
be deemed to be the holder of the Bonds to which such voting certificate or
block voting instruction relates and the Paying Agent with which (or to the
order of which) such Bonds have been deposited shall be deemed for such
purposes not to be the holder of those Bonds.
(3) Each of the Issuer, AMBAC and the Trustee at any time may, and the
Trustee (subject to its being indemnified to its satisfaction against all
costs and expenses thereby occasioned) upon a request in writing of
Bondholders holding not less than one-tenth in principal amount of the
Bonds for the time being outstanding shall, convene a meeting of
Bondholders. Whenever any such party is about to convene any such meeting
it shall forthwith give notice in writing to the other parties of the day,
time and place of the meeting and of the nature of the business to be
transacted at it. Every such meeting shall be held at such time and place
as the Trustee may approve.
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(4) At least 21 days' notice (exclusive of the day on which the notice is
given and of the day on which the meeting is held) specifying the day, time
and place of meeting shall be given to the Bondholders (with a copy to the
Issuer and AMBAC or, where the meeting is convened by the Issuer, AMBAC and
the Trustee). A copy of the notice shall in all cases be given by the party
convening the meeting to the other parties. Such notice shall also specify,
unless in any particular case the Trustee otherwise agrees, the nature of
the resolutions to be proposed and shall include a statement to the effect
that Bonds may be deposited with (or to the order of) any Paying Agent for
the purpose of obtaining voting certificates or appointing proxies not
later than 48 hours before the time fixed for the meeting.
(5) A person (who may, but need not, be a Bondholder) nominated in writing
by the Trustee may take the chair at every such meeting but if no such
nomination is made or if at any meeting the person nominated shall not be
present within 15 minutes after the time fixed for the meeting the
Bondholders present shall choose one of their number to be chairman,
failing which the Issuer may appoint a chairman. The chairman of an
adjourned meeting need not be the same person as was chairman of the
original meeting.
(6) At any such meeting any one or more persons present in person holding
Bonds or voting certificates and holding or representing in the aggregate
not less than one-tenth in principal amount of the Bonds for the time being
outstanding shall (except for the purpose of passing an Extraordinary
Resolution) form a quorum for the transaction of business and no business
(other than the choosing of a chairman) shall be transacted at any meeting
unless the requisite quorum be present at the commencement of business. The
quorum at any such meeting for passing an Extraordinary Resolution shall
(subject as provided below) be one or more persons present in person
holding Bonds or voting certificates and holding or representing in the
aggregate a clear majority in principal amount of the Bonds for the time
being outstanding provided that at any meeting the business of which
includes any of the matters specified in the proviso to paragraph 19 the
quorum shall be one or more persons present in person holding Bonds or
voting certificates and holding or representing in the aggregate not less
than two-thirds in principal amount of the Bonds for the time being
outstanding.
(7) If within 15 minutes from the time fixed for any such meeting a quorum
is not present the meeting shall, if convened upon the requisition of
Bondholders, be dissolved. In any other case it shall stand adjourned
(unless the Issuer, AMBAC and the Trustee agree that it be dissolved) for
such period, not being less than 14 days nor more than 42 days, and to such
place, as may be decided by the chairman. At such adjourned meeting one or
more persons present in person holding Bonds or voting certificates
(whatever the principal amount of the Bonds so held or represented) shall
form a quorum and may pass any resolution and decide upon all matters which
could properly have been dealt with at the meeting from which the
adjournment took place had a quorum been present at such meeting provided
that at any adjourned meeting at which is to be proposed an Extraordinary
Resolution for the purpose of effecting any of the modifications specified
in the proviso to paragraph 19 the quorum shall be one or more persons so
present holding Bonds or voting certificates and holding in the aggregate
not less than one-third in principal amount of the Bonds for the time being
outstanding.
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(8) The chairman may with the consent of (and shall if directed by) any
meeting adjourn such meeting from time to time and from place to place but
no business shall be transacted at any adjourned meeting except business
which might lawfully have been transacted at the meeting from which the
adjournment took place.
(9) At least 10 days' notice of any meeting adjourned through want of a
quorum shall be given in the same manner as for an original meeting and
such notice shall state the quorum required at such adjourned meeting. It
shall not, however, otherwise be necessary to give any notice of an
adjourned meeting.
(10) Every question submitted to a meeting shall be decided in the first
instance by a show of hands and in case of equality of votes the chairman
shall both on a show of hands and on a poll have a casting vote in addition
to the vote or votes (if any) which he may have as a Bondholder or as a
holder of a voting certificate.
(11) At any meeting, unless a poll is (before or on the declaration of the
result of the show of hands) demanded by the chairman, the Issuer, AMBAC,
the Trustee or by one or more persons holding one or more Bonds or voting
certificates and holding or representing in the aggregate not less than
one-fiftieth in principal amount of the Bonds for the time being
outstanding, a declaration by the chairman that a resolution has been
carried or carried by a particular majority or lost or not carried by any
particular majority shall be conclusive evidence of the fact without proof
of the number or proportion of the votes recorded in favour of or against
such resolution.
(12) If at any meeting a poll is so demanded, it shall be taken in such
manner and (subject as provided below) either at once or after such an
adjournment as the chairman directs and the result of such poll shall be
deemed to be the resolution of the meeting at which the poll was demanded
as at the date of the taking of the poll. The demand for a poll shall not
prevent the continuation of the meeting for the transaction of any business
other than the question on which the poll has been demanded.
(13) Any poll demanded at any meeting on the election of a chairman or on
any question of adjournment shall be taken at the meeting without
adjournment.
(14) The Issuer, the Trustee and AMBAC (through their respective
representatives) and their respective financial and legal advisers may
attend and speak at any meeting of Bondholders. No one else may attend at
any meeting of Bondholders or join with others in requesting the convening
of such a meeting unless he is the holder of a Bond or a voting
certificate.
(15) At any meeting on a show of hands every person who is present in
person and who produces a Bond or voting certificate shall have one vote
and on a poll very person who is so present shall have one vote in respect
of each (pound)10,000 principal amount of Bonds so produced or represented
by the voting certificate. Without prejudice to the obligations of proxies
named in any block voting instruction, any person entitled to more than one
vote need not use all his votes or cast all the votes to which he is
entitled in the same way.
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(16) The proxy named in any block voting instruction need not be a
Bondholder.
(17) Each block voting instruction shall be deposited at the registered
office (of the Issuer, or at such other place as the Trustee shall
designate or approve, not less than 24 hours before the time appointed for
holding the meeting or adjourned meeting at which the proxy named in the
block voting instruction proposes to vote and in default the block voting
instruction shall not be treated as valid unless the chairman of the
meeting decides otherwise before such meeting or adjourned meeting proceeds
to business. A notarially certified copy of each such block voting
instruction and satisfactory proof (if applicable) shall if required by the
Trustee be produced by the proxy at the meeting or adjourned meeting but
the Trustee shall not thereby be obliged to investigate or be concerned
with the validity of, or the authority of, the proxy named in any such
block voting instruction.
(18) Any vote given in accordance with the terms of a block voting
instruction shall be valid even if the block voting instruction or any of
the Bondholders' instructions pursuant to which it was executed has been
previously revoked or amended, provided that no intimation in writing of
such revocation or amendment shall have been received from the relevant
Paying Agent by the Issuer or the Trustee at its registered office or by
the chairman of the meeting in each case not less than 24 hours before the
time fixed for the meeting or adjourned meeting at which the block voting
instruction is used.
(19) A meeting of Bondholders shall, subject to the Conditions, in addition
to the powers given above, but without prejudice to any powers conferred on
other persons by this Trust Deed, have power exercisable by Extraordinary
Resolution:
(A) to sanction any proposal by the Issuer or AMBAC for any modification,
abrogation, variation or compromise of, or arrangement in respect of, the
rights of the Bondholders and/or the Couponholders against the Issuer
(whether such rights shall arise under this Trust Deed or otherwise) or the
obligations of AMBAC under the Bond Policy;
(B) to sanction the exchange or substitution for the Bonds of, or the
conversion of the Bonds into, shares, bonds, or other obligations or
securities of the Issuer or any other body corporate formed or to be
formed;
(C) to assent to any modification of this Trust Deed, the Bonds or the
Coupons which shall be proposed by the Issuer or the Trustee;
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(D) to authorise anyone to concur in and do all such things as may be
necessary to carry out and give effect to any Extraordinary Resolution;
(E) to give any authority, direction or sanction which under this Trust
Deed or the Bonds is required to be given by Extraordinary Resolution;
(F) to appoint any persons (whether Bondholders or not) as a committee or
committees to represent the interests of the Bondholders and to confer upon
such committee or committees any powers or discretions which the
Bondholders could themselves exercise by Extraordinary Resolution;
(G) to approve a person proposed to be appointed as a new Trustee and to
remove any Trustee;
(H) to approve the substitution of any entity for the Issuer (or any
previous substitute) as principal debtor under this Trust Deed or the
substitution of any person for AMBAC as guarantor under the Bond Policy;
(I) to discharge or exonerate the Trustee from any liability in respect of
any act or omission for which it may become responsible under this Trust
Deed, the Bonds or the Coupons; and
(J) to waive or authorise any breach by the Issuer or AMBAC of their
respective obligations under this Trust Deed and the Bond Policy;
provided that the special quorum provisions contained in the proviso to
paragraph 6 and, in the case of an adjourned meeting, in the proviso to
paragraph 7 shall apply in relation to any Extraordinary Resolution for the
purpose of paragraph 19(B) or (H) or for the purpose of making any
modification to the provisions contained in this Trust Deed, the Bonds or
the Coupons which would have the effect of:
1)postponing the maturity of the Bonds or the dates on which interest is
payable in respect of the Bonds; or
2)reducing or cancelling the principal amount of, any premium payable on
redemption of, or interest on the Bonds; or
3) changing the currency of payment of the Bonds; or
4)modifying the provisions contained in this Schedule concerning the quorum
required at any meeting of Bondholders or the majority required to pass an
Extraordinary Resolution; or
5) amending this proviso.
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(20) An Extraordinary Resolution passed at a meeting of Bondholders
duly convened and held in accordance with this Trust Deed shall be binding
upon all the Bondholders, whether or not present at such meeting, and upon
all the Couponholders and each of the Bondholders and Couponholders shall
be bound to give effect to it accordingly. The passing of any such
resolution shall be conclusive evidence that the circumstances of such
resolution justify the passing of it.
(21) The expression "EXTRAORDINARY RESOLUTION" means a resolution
passed at a meeting of Bondholders duly convened and held in accordance
with these provisions by a majority consisting of noc less than
three-quarters of the votes cast.
(22) Minutes of all resolutions and proceedings at every such meeting
shall be made and entered in the books to be from time to time provided for
that purpose by the Issuer or the Trustee and any such minutes, if
purporting to be signed by the chairman of the meeting at which such
resolutions were passed or proceedings transacted or by the chairman of the
next succeeding meeting of Bondholders, shall be conclusive evidence of the
matters contained in them and until the contrary is proved every such
meeting in respect of the proceedings of which minutes have been so made
and signed shall be deemed to have been duly convened and held and all
resolutions passed or proceedings transacted at it to have been duly passed
and transacted.
(23) Subject to all other provisions contained in this Trust Deed the
Trustee may without the consent of the Bondholders prescribe such further
regulations regarding the holding of meetings of Bondholders and attendance
and voting at them as the Trustee may in its sole discretion determine
including particularly (but without prejudice to the generality of the
foregoing) such regulations and requirements as the Trustee thinks
reasonable:
(A) so as to satisfy itself that persons who purport to requisition a
meeting in accordance with paragraph 3 or who purport to make any
requisition to the Trustee in accordance with this Trust Deed are in fact
Bondholders; and
(B) as to the form of voting certificates or block voting instructions
to be issued pursuant to paragraph 1 so as to satisfy itself that persons
who purport to attend or vote at any meeting of Bondholders are entitled to
do so in accordance with this Trust Deed.
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SCHEDULE 4
EXCLUDED RIGHTS OF THE TRUSTEE
"EXCLUDED RIGHTS" means each and every right, power, authority and
discretion of, or exercisable by the Trustee:
(a) except as otherwise specifically provided herein and subject to the
rights of the Controlling Party, to make any determination contemplated or
required under this Trust Deed (including any determination as to the
occurrence or otherwise of an AMBAC Event of Default) (but for the
avoidance of doubt, save as otherwise specifically provided herein,
Excluded Rights shall not include the right to exercise any rights
consequent on such determination);
(b) to agree to make any amendment or any repeated waiver or consent which
has the effect of resulting in or permitting any amendment to the
provisions of the Bond Policy;
(c) to make any claim under, enforce or agree to any amendment to the Bond
Policy;
(d) which is provided for the purpose of enabling the Trustee to protect
its own interests;
(e) which relates to the application by the Trustee of (i) the principal
and premium (if any) of the Bonds on a redemption of the Bonds, or (ii) any
interest payable on the Bonds from time to time;
(f) to determine amounts due in relation to indemnities in favour of the
Trustee under this Trust Deed;
(g) to require the making of any payment due and payable to it or the
Bondholders;
(h) unless at such time AMBAC is the Controlling Party, to determine
whether to require prepayment of the Bonds in accordance with Condition 12
of the Bonds;
(i) to determine the amount of sums due in relation to expenses and stamp
duties pursuant to this Trust Deed; and
(j) to make a claim for expenses under this Trust Deed.
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/s/ Gregory Abel
EXECUTED as a DEED and ) -----------------
delivered by CE ELECTRIC ) Director Gregory Abel
UK FUNDING COMPANY acting by )
a Director and the Secretary ) Secretary /s/ Valerie Giles
------------------
Valerie Giles
EXECUTED and DELIVERED as a ) Seal
DEED under the Common Seal of ) /s/ DW Wallis
AMBAC INSURANCE UK ) ----------------
LMITED in the presence of: ) DW Wallis
Director
EXECUTED and DELIVERED )
as a DEED under the Common ) Seal
Seal of THE LAW DEBENTURE )
TRUST CORPORATION p.l.c. )
in the presence of: )
Director /s/ Julian Mason-Jebb
-----------------------
Julian Mason-Jebb
Authorised Signatory /s/ C. Rakstrow
----------------
C. Rakstrow
-97-