Exhibit 99.3
DATED 19 SEPTEMBER 2001
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CE ELECTRIC UK FUNDING COMPANY
AND
AMBAC ASSURANCE UK LIMITED
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SUPPLEMENTAL AGREEMENT
TO
INSURANCE AND INDEMNITY AGREEMENT
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FINANCE DIVISION
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THIS SUPPLEMENTAL AGREEMENT is made on 19 September 2001
BETWEEN:
(1) CE ELECTRIC UK FUNDING COMPANY, a company incorporated under the laws of
England and Wales with company registration number 3476201 (the "ISSUER");
and
(2) AMBAC ASSURANCE UK LIMITED, a company incorporated under the laws of
England and Wales with company registration number 3248674) ("AMBAC").
WHEREAS:
(A) The Issuer has issued (pound)200,000,000 7.25% guaranteed bonds due 2022
(the "BONDS") constituted by a Trust Deed dated 15 December 1997 (the
"TRUST DEED").
(B) In connection with the issue of the Bonds, the parties to this Supplemental
Agreement entered into an Insurance and Indemnity Agreement on 15 December
1997 (the "INSURANCE AGREEMENT").
(C) Upon completion of the transactions contemplated by a share sale agreement
dated 6 August 2001 between, among others, Innogy Holdings plc and CE
Electric UK plc and the arrangements connected with such share sale
agreement, inter alia, CE Electric UK plc will acquire 94.75% of the issued
share capital of Yorkshire Power Group Limited and Northern Electric plc
will dispose of its electricity supply and metering business and Northern
Electric and Gas Limited will dispose of its gas supply business.
(D) Upon the implementation of a statutory transfer scheme pursuant to the
Utilities ▇▇▇ ▇▇▇▇, the PES Licence will be split into separate
distribution and supply licences and the resulting distribution licence
will be vested in Northern Electric Distribution Ltd. (a Subsidiary of
Northern Electric plc) and the resulting electricity supply licence will be
vested in Northern Electric and Gas 2 Limited.
(E) Immediately after such implementation, and in furtherance of the
transactions described in recital (C) above, Northern Electric plc will
sell its entire interests in Northern Electric and Gas 2 Limited to an
Innogy Holdings plc group company.
(F) In consideration of Ambac providing the consent, and procuring the issue of
the consent letter, in each case referred to in Clause 2 (Consent), the
Issuer has agreed to provide to Ambac the additional undertakings referred
to in Clause 3.2 (Amendments) and the parties are entering into this
Supplemental Agreement for the purposes of amending and supplementing the
Insurance Agreement.
IT IS AGREED AS FOLLOWS:
1. DEFINITIONS AND INTERPRETATION
1.1 Unless the context otherwise requires or unless defined in this
Supplemental Agreement, words and expressions defined in the Insurance
Agreement as amended or supplemented (whether expressly or by
incorporation) shall have the same meanings when used in this
Supplemental Agreement.
1.2 In addition, the following terms shall have the meanings given to them
in this Clause 1.2:
"EFFECTIVE DATE" means the later of (i) the date of completion of
Project Black and (ii) the date on which the consent letter in the
form set out in the Schedule 1 to this Supplemental Agreement (as
countersigned by The Law Debenture Trust Corporation p.l.c.) is
delivered to the Issuer;
"INFORMATION" means the documents marked "Information" initialled for
and on behalf of the Issuer and Ambac on the date of this Supplemental
Agreement for the purposes of identification; and
"INITIAL CERTIFICATE" means the director's certificate to be provided
by the Issuer to Ambac pursuant to Clause 2.5.1.
1.3 References in this Supplemental Agreement to:
1.3.1 any agreement, instrument or document is a reference to that
agreement, instrument or document as amended, varied,
supplemented or novated; and
1.3.2 a provision of law is a reference to that provision as amended
or re-enacted.
1.4 Clause and Schedule headings are for ease of reference only.
2. CONSENT
2.1 At the request of the Issuer, Ambac hereby agrees, as the Controlling
Party and on the terms and conditions set out in this Supplemental
Agreement, that it will not certify pursuant to Condition 12 of the
Bonds that the sale of the electricity supply and metering business of
Northern Electric plc, the sale of the gas business of Northern
Electric and Gas Limited, or the subsequent sale of Northern Electric
and Gas 2 Limited, all on terms as described in the Information,
individually or in the aggregate, is or are materially adverse to the
interests of Ambac and, accordingly, shall not treat the disposal by
(i) Northern Electric plc of its electricity supply and metering
business, (ii) Northern Electric and Gas Limited of its gas business,
or (iii) the sale of Northern Electric and Gas 2 Limited, all on terms
as described in the Information, individually or in the aggregate, as
an Issuer Event of Default, Potential Issuer Event of Default or a
breach of covenant or undertaking.
2.2 The consent given by Ambac under this Supplemental Agreement is based
upon The description of Project Black contained in the Information.
The Issuer:
2.2.1 represents and warrants that such description is a fair and
accurate summary of Project Black; and
2.2.2 agrees that it will not agree to or allow any modification of
the transaction documents governing Project Black which would
cause the description in the Information to cease to be a fair
and in all material respects accurate summary of Project Black.
2.3 Upon (i) the execution of this Supplemental Agreement; (ii) the
payment of the consent fee in accordance with a side letter of even
date herewith; and (iii) the issue by the Issuer of the Initial
Certificate, Ambac shall (a) issue the consent letter in the form set
out in Schedule 1 to this Supplemental Agreement; (b) fully exercise
its Trust Rights (pursuant to clause 19 of the Trust Deed and
Condition 16 of the Bonds) relating thereto; and (c) (without limiting
the foregoing) use its reasonable endeavours to assist the Issuer in
procuring the countersigning of such consent letter by The Law
Debenture Trust Corporation p.l.c.
2.4 The consent given by Ambac under this Supplemental Agreement is given
solely for the purposes of the transactions contemplated by Project
Black, and without prejudice to such consent, Ambac may take account
of such transactions in any future deliberations it might make or be
required to make pursuant to the Insurance Agreement and/or the Trust
Deed in connection with any future confirmation, consent or otherwise.
2.5 The Issuer agrees that it will provide Ambac with a certificate
(signed by a director of the Issuer) in the form set out in Schedule
2:
2.5.1 on the date hereof or as soon as reasonably practicable
thereafter; and
2.5.2 on the date of completion of Project Black.
3. AMENDMENTS
With effect from the Effective Date, the Insurance Agreement shall be
amended as follows:
3.1 by the addition to Article I (Definitions) of the following
definitions:
"BASIC INVESTMENT CAP" means, in relation to any Investment Period:
(i) (pound)20,000,000 (if the Issuer's Leverage Ratio on the
Calculation Date on which the relevant Investment Period ends
(the "RELEVANT CALCULATION DATE") is more than 0.59:1 );
(ii) (pound)30,000,000 (if the Issuer's Leverage Ratio on the
relevant Calculation Date is 0.59:1 or less but more than
0.58:1);
(iii) (pound)40,000,000 (if the Issuer's Leverage Ratio on the
relevant Calculation Date is 0.58:1 or less but more than
0.57:1); or
(iv) (pound)50,000,000 (if the Issuer's Leverage Ratio on
the relevant Calculation Date is 0.57:1 or less),
provided that for the purposes of any calculations of Capital and
Reserves to be made for the purposes of calculating any Leverage Ratio
referred to above, (1) the amount of goodwill to be added pursuant to
paragraph (vi) of the definition of "Capital and Reserves" shall be
(pound)535,000,000 and (2) the amount of deferred tax to be added
pursuant to paragraph (viii) of the definition of "Capital and
Reserves" shall be (pound)118,000,000;
"CALCULATION DATE" means each 31 March, 30 June, 30 September and 31
December in each calendar year;
"COMPLETION DATE NON-DISTRIBUTION FIXED ASSETS" means the amount of
Non-Distribution Fixed Assets as at the date of completion of Project
Black, as certified by the Issuer in accordance with Section 2.02B
(Certifications);
"DISTRIBUTION SYSTEM FIXED ASSETS" means, in relation to any date, the
amount relating to "Distribution System" minus the amount relating to
"Customer Contributions", in each case, as at such date:
(i) (where such date is the last day of the Issuer's financial year)
as shown in the notes; or
(ii) (where such date is any other date) as calculated in a manner
consistent with the figures for the "Distribution System" amount
or, as the case may be, the "Customer Contributions" amount in
the notes,
to the most recent consolidated annual financial statements of the
Issuer prepared in accordance with UK GAAP and provided to Ambac
pursuant to Section 2.02 (g) of this Insurance Agreement;
"INVESTMENT CAP" means, in relation to any Investment Period, the
amount calculated in accordance with the following formula:
IC=CDNDFA + BIC + 0.75RP
where:
IC is the relevant amount of the Investment Cap for the relevant
Investment Period;
CDNDFA is the Completion Date Non-Distribution Fixed Assets;
BIC is the amount of the Basic Investment Cap in respect of the
relevant Investment Period; and
RP is the Retained Profits/Losses for the relevant Investment
Period;
"INVESTMENT PERIOD" means, in relation to any Calculation Date, the
period commencing on the Effective Date and ending on such Calculation
Date;
"NON-DISTRIBUTION FIXED ASSETS" means, in relation to any date:
(i) the consolidated fixed assets of the Issuer:
(a) where such date coincides with the last day of the period to
which the most recent of the annual, interim or quarterly
consolidated financial accounts of the Issuer prepared in
accordance with UK GAAP and provided to Ambac pursuant to
Section 2.02 (g) of this Insurance Agreement (the "RELEVANT
ACCOUNTS") relates, as shown in such relevant accounts; or
(b) where such date does not coincide with the last day of the
period to which any relevant accounts relate, as calculated
in a manner consistent with the figures presented in the
most recent of the relevant accounts.
minus
(ii) each of the following:
(a) the Distribution System Fixed Assets;
(b) the aggregate amount of goodwill attributable to the PES
Subsidiaries; and
(c) the aggregate amount of any Project Finance Indebtedness,
in each case, as at such date and on the basis that (ii)(b) and
(ii)(c) above will be determined by reference to books and records
maintained in accordance with UK GAAP;
"PROJECT BLACK" means the transactions contemplated by a share sale
agreement dated 6 August 2001 between, among others, Innogy Holdings
plc and CE Electric UK plc and the arrangements connected with such
share sale agreement pursuant to which, inter cilia, CE Electric UK
plc will acquire 94.75% of the issued share capital of Yorkshire Power
Group Limited and Northern Electric plc will dispose of its
electricity supply and metering business and Northern Electric and Gas
Limited will dispose of its gas supply business, and Northern Electric
plc will sell Northern Electric and Gas 2 Limited (all on terms
described in the Information);
"RETAINED PROFITS/LOSSES" means, in relation to any Investment Period,
the amount (expressed, in the case of losses, as a negative figure) of
the consolidated retained profits or, as the case may be, losses of
the Issuer and its Subsidiaries calculated in accordance with UK GAAP
but disregarding losses (as certified by the Issuer pursuant to
Section 2.02B (Certifications)) attributable to the completion of
Project Black;"
3.2 by the addition to Section 2.02 (Covenants of Issuer) of the following
covenants by the Issuer:
"(i) it will:
(i) ensure that its Non-Distribution Fixed Assets as at each
Calculation Date (other than the first Calculation Date
following the date of completion of Project Black) shall not
exceed the Investment Cap (or the equivalent amount in one
or more currencies) for the Investment Period relating to
such Calculation Date; and
(ii) deliver to Ambac a certificate of a Director of the Issuer
certifying the Non-Distribution Fixed Assets and the
Investment Cap relating to each Calculation Date (other than
the first Calculation Date following the date of completion
of Project Black) on a date falling no later than 60 days
after such Calculation Date;
(j) it will ensure that its Leverage Ratio on any Calculation Date
falling:
(i) in the period commencing on the Effective Date and ending
on 30 December 2002 does not exceed 0.64:1;
(ii) in the period commencing on 31 December 2002 and ending on
30 December 2003 does not exceed 0.63:1;
(iii) in the period commencing on 31 December 2003 and ending on
30 December 2006 does not exceed 0.62:1;
(iv) in the period commencing on 31 December 2006 and ending on
30 December 2007 does not exceed 0.61:1;
(v) in the period commencing on 31 December 2007 and ending on
30 December 2008 does not exceed 0.60:1; and.
(vi) on or after 31 December 2008 does not exceed 0.59:1,
provided that for the purposes of any calculations of Capital and
Reserves to be made pursuant to this Section 2.02 (j), (1) the amount
of goodwill to be added pursuant to paragraph (vi) of the definition
of "Capital and Reserves" shall be (pound)535,000,000 and (2) the
amount of deferred tax to be added pursuant to paragraph (viii) of the
definition of "Capital and Reserves" shall be (pound)118,000,000;
(k) it will procure that none of its Subsidiaries will incur or have
outstanding any Indebtedness For Borrowed Money other than:
(i) Project Finance Indebtedness;
(ii) Indebtedness For Borrowed Money owed to the Issuer;
(iii) in addition to Indebtedness For Borrowed Money permitted under
paragraphs (i), (ii), (iv) or (v) of this Section 2.02 (k),
Indebtedness For Borrowed Money which cannot and shall not be
accelerated and/or repaid if any Potential Issuer Event of
Default or Issuer Event of Default has occurred and, in each
case, is continuing;
(iv) Indebtedness For Borrowed Money in respect of or in connection
with:
(1) the(pound)100,000,000 8.875% bonds due 2020 issued by
Northern Electric Finance plc;
(2) the(pound)100,000,000 8.625% bonds due 2005 issued by
Northern Electric Finance plc;
(3) the (pound)200,000,000 9.25% bonds due 2020 issued by
Yorkshire Electricity Group plc or, as the case may be from
and including the date referred to in paragraph (a) of
Section 2.02C (PES Subsidiary), Yorkshire Electricity
Distribution plc;
(4) the (pound)200,000,000 7.25% bonds due 2028 issued by
Yorkshire Power Finance Limited;
(5) the (pound)155,000,000 reset notes due 2020 issued by
Yorkshire Power Finance 2 Limited and the related 8.25%
pass-through asset trust securities due 2005 of Yorkshire
Power Pass-Through Asset Trust 2000-1;
(6) the $275,000,000 8.08% junior subordinated deferrable
interest debentures due 2038 issued by Yorkshire Power
Finance Limited and the related 11,000,000 8.08% trust
securities of Yorkshire Capital Trust I;
(7) the $300,000,000 6.496% series B senior notes due 2008
issued by Yorkshire Power Finance Limited; and
(8) to the extent that the same have not been redeemed on the
Effective Date, (aa) the $350 million series B senior notes
due 2003 issued by Yorkshire Power Finance Limited and (bb)
the (pound)150 million 8 5/8% bonds due 2005 issued by
Yorkshire Electricity Group plc provided, in relation to
each of these debt instruments, that on or before the
Effective Date: (i) irrevocable notices of redemption have
been issued, (ii) the principal amounts required to redeem
such debt instruments
have been deposited with the relevant paying agent(s) by a
member of the Innogy group of companies and (iii)
irrevocable instructions have been given to such paying
agent(s) to pay such funds to the relevant instrument
holders and/or the relevant trustee,
provided that (in the case of each of the debt instruments
referred to in (1) to (8) inclusive of this paragraph (iv) of
Section 2.02 (k)) the principal amount of such Indebtedness for
Borrowed Money as at the Effective Date shall not be increased;
and/or
(v) in addition to Indebtedness For Borrowed Money permitted under
paragraphs (i), (ii), (iii) or (iv) of this Section 2.02 (k),
Indebtedness For Borrowed Money which:
(1) in the case of Northern Electric plc or any of its
Subsidiaries from time to time (the "NE GROUP"), does not
exceed an aggregate working capital amount of
(pound)50,000,000 for the NE Group (or the equivalent amount
in one or more other currencies); or
(2) in the case of Yorkshire Power Group Limited or any of its
Subsidiaries from time to time (the "YP GROUP"), does not
exceed an aggregate working capital amount of
(pound)75,000,000 for the YP Group (or the equivalent amount
in one or more other currencies);
(l) it will own directly or indirectly at least 51% of the ordinary share
capital of Yorkshire Power Group Limited;
(m) it will ensure that its Interest Coverage Ratio on any Calculation
Date is more than or equal to 2:1; and
(n) it will use all reasonable endeavours to procure that any public long
term unsecured, unguaranteed and unsubordinated debt of the Issuer is
assigned Investment Grade Ratings by both Rating Agencies and that
such Investment Grade Ratings are maintained."
3.3 by the addition of the following provisions as additional Sections after
Section 2.02 (Covenants of the Issuer) and before Section 2.03
(Representations and Warranties of AMBAC):
"Section 2.02A. RATIOS. For the purposes of calculating any Leverage Ratio
pursuant to Section 2.02 (i) or Section 2.02 (j) or any Interest Coverage
Ratio pursuant to Section 2.02 (m), references to "Measurement Date" in the
definition of "Leverage Ratio" or, as the case may be, "Interest Coverage
Ratio" shall be deemed to be replaced by references to "Calculation Date"
and be construed accordingly. Each calculation of any Leverage Ratio
pursuant to Section 2.02 (i) or Section 2.02 (j) or any Interest Coverage
Ratio pursuant to Section 2.02 (m) shall be certified by a Director of the
Issuer. Each such certificate shall be delivered to Ambac on a date falling
no later than 60 days after the Calculation Date to which the relevant
Leverage Ratio or Interest Coverage Ratio relates.
Section 2.02B. CERTIFICATIONS. The Issuer shall deliver to Ambac on a
date falling no later than 90 days after the date of completion of Project
Black a certificate of a Director certifying (i) the amount of losses on
disposal attributable to the completion of Project Black as determined in
accordance with UK GAAP, and (ii) the amount of the Non-Distribution Fixed
Assets as at the date of completion of Project Black.
Section 2.02C. PES SUBSIDIARY. The Issuer covenants that it shall comply
with the Transaction Documents as if references to PES Subsidiary include:
(a) at any time prior to the date on which the relevant transfer scheme
takes effect pursuant to the Utilities ▇▇▇ ▇▇▇▇, Yorkshire Electricity
Group plc; and
(b) from and including such date and until such time as it shall cease to
hold a licence to carry on all or any electricity distribution
business, Yorkshire Electricity Distribution plc and/or such other
Subsidiaries of Yorkshire Power Group Limited to which a licence to
carry on all or any electricity distribution business is granted.
4. MISCELLANEOUS
4.1 The terms of this Supplemental Agreement may be enforced only by a
party hereto and the operation of the Contracts (Rights of Third
Parties) ▇▇▇ ▇▇▇▇ is excluded.
4.2 The provisions of Section 7.01 (Amendments, Etc), Section 7.02
(Notices), Section 7.03 (Severability), Section 7.04 (Governing Law)
and Section 7.05 (Counterparts) of the Insurance Agreement shall apply
mutatis mutandis to this Supplemental Agreement save that references
in such provisions to the "Insurance Agreement" shall, for the
purposes of this Clause 4.2, be construed as references to "this
Supplemental Agreement".
IN WITNESS whereof the parties hereto have executed this Supplemental Agreement
on the date first above written.
SCHEDULE 1
FORM OF CONSENT LETTER
[To be typed on headed notepaper of Ambac Assurance UK Limited]
To: The Law Debenture Trust Corporation p.l.c. ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ Attention: Manager, Trust Administration/▇▇▇▇▇ ▇▇▇▇▇▇▇
Copy: CE Electric UK Funding Company c/o Northern Electric plc ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇-▇▇▇▇-▇▇▇▇ ▇▇▇ ▇▇▇ Attention: Company Secretary
____ September 2001
Dear Sirs
(pound)200,000,000 7.25 per cent bonds due 2022 Issued by CE Electric UK Funding
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Company and guaranteed by Ambac Assurance UK Limited (the "Bonds")
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1. We, Ambac Assurance UK Limited ("Ambac"), refer to the trust deed (the
"TRUST DEED") dated 15 December 1997 constituting the Bonds entered into
between CE Electric UK Funding Company (the "ISSUER"), Ambac and The Law
Debenture Trust Corporation p.l.c. (the "TRUSTEE"). Unless otherwise
defined in this letter or unless the context otherwise requires, terms
defined (expressly or by incorporation) in the Trust Deed have the same
meanings when used in this letter.
2. We have been advised by the Issuer that upon completion of the transactions
contemplated by a share sale agreement dated 6 August 2001 between, among
others, Innogy Holdings plc and CE Electric UK plc and the arrangements
connected with such share sale agreement, inter alia:
2.1 CE Electric UK plc will acquire 94.75% of the issued share capital of
Yorkshire Power Group Limited ("YPG");
2.2 Northern Electric plc, a Principal Subsidiary of the Issuer will
dispose of its electricity supply and metering business and Northern
Electric and Gas Limited will dispose of its gas supply business;
2.3 thereafter, upon the implementation of a statutory transfer scheme
pursuant to the Utilities ▇▇▇ ▇▇▇▇, the PES Licence will be split into
separate distribution and supply licences and the resulting
distribution licence will be vested in Northern Electric Distribution
Ltd. (a Subsidiary of Northern Electric plc) and the resulting
electricity supply licence will be vested in Northern Electric and Gas
2 Limited; and
2.4 immediately after such implementation, and in furtherance of the
transactions described above, Northern Electric plc will sell its
entire interests in Northern Electric and Gas 2 Limited to an Innogy
Holdings plc group company.
3. We have been advised by the Issuer and agree, based upon the information
that the Issuer has provided to us, that none of the circumstances referred
to in paragraph 2 above would give rise to a Restructuring Event under the
Bonds. In particular, the Issuer's view is that where, as described in
paragraph 2.3 above, a new distribution licence will be issued in respect
of the Group's Distribution Business:
3.1 the exception in paragraph (B) of paragraph (i) of the definition of
"Restructuring Event" will apply; and
3.2 the exception in paragraph (a) of paragraph (ii) of the definition of
"Restructuring Event" will apply,
in each case, even if (as described in paragraph 2.3 above) a new supply
licence is also granted.
4. However, to remove any potential doubt, at the request of the Issuer we, in
our capacity as Controlling Party, hereby exercise the Trust Rights in
respect of the Bonds and direct that you, as Trustee confirm pursuant to
Clause 12(K) of the Trust Deed that:
4.1 with regard to paragraph (i) of the definition of "Restructuring
Event" and, in particular, the exception contained therein:
4.1.1 the circumstances described in paragraph 2.3 above shall be
construed as falling exclusively within paragraph (B) of
such exception; and
4.1.2 accordingly and to the extent that paragraph (i) of the
definition of "Restructuring Event" applies, the operative
provision within the definition of "Restructuring Event"
relating to the deeming of references to the PES Licence and
Northern Electric plc shall be construed (in the context of
the circumstances described in paragraphs 2.3 and 2.4 above)
as only requiring, upon implementation of the relevant
statutory transfer scheme;
(A) references to the PES Licence to be deemed to be references
to the distribution licence to be granted to Northern
Electric Distribution Ltd. (being the licence relating to
the Group's Distribution Business); and
(B) references to Northern Electric plc to be deemed to be
references to Northern Electric Distribution Ltd. (being the
Relevant Transferee);
4.2 with regard to paragraph (ii) of the definition of "Restructuring
Event":
4.2.1 the circumstances described in paragraph 2.3 above shall be
construed as falling exclusively within sub-paragraph (a) of
such paragraph (ii); and
4.2.2 accordingly and to the extent that paragraph (ii) of the
definition of "Restructuring Event" applies, the operative
provision within such paragraph relating to the deeming of
references to the PES Licence and Northern Electric plc
shall be construed (in the context of the circumstances
described in paragraphs 2.3 and 2.4 above) as only
requiring, upon implementation of the relevant statutory
transfer scheme:
(A) references to the PES Licence to be deemed to be
references to the distribution licence to be granted to
Northern Electric Distribution Ltd. (being the licence
relating to the Group's Distribution Business); and
(B) references to Northern Electric plc to be deemed to be
references to Northern Electric Distribution Ltd.
(being the Applicable Transferee).
5. Please provide the confirmations referred to in paragraph 4 above by
counter-signing this letter (or a copy of the same) and providing to each
of the Issuer and us a counter-signed version of this letter.
Yours faithfully
................................................
For and on behalf of Ambac Assurance UK Limited
We agree to the contents of this letter and hereby provide to Ambac Assurance UK
Limited and CE Electric UK Funding Company each of the confirmations referred to
in paragraph 4 of the letter.
................................................................
For and on behalf of The Law Debenture Trust Corporation p.l.c.
SCHEDULE 2
FORM OF DIRECTOR'S CERTIFICATE
CE ELECTRIC UK FUNDING COMPANY
(COMPANY REGISTRATION NO. 3476201)
(THE "ISSUER")
To: Ambac Assurance UK Limited ("AMBAC")
Date: [Insert (as appropriate) date of Initial Certificate or date of
completion of Project Black]
Dear Sirs
DIRECTOR'S CERTIFICATE
1. I am a director of the Issuer.
2. I refer to the supplemental agreement dated [o] between Ambac and the
Issuer (the "AGREEMENT"). Unless otherwise defined in this certificate or
unless the context otherwise requires, terms defined (expressly or by
incorporation) in the Agreement shall have the same meanings when used in
this certificate.
3. Having made all reasonable enquires I confirm, for and on behalf of the
Issuer, that to the best of my knowledge, information and belief, as at the
date hereof [(taking into account the effects of the completion of Project
Black)]1:
3.1 no Issuer Event of Default or Potential Issuer Event of Default has
occurred since the date of the Trust Deed;
3.2 the Issuer is in compliance with all of the Issuer's covenants
contained in the Trust Deed and the Insurance Agreement;
3.3 the Issuer is not otherwise in breach of any of its obligations under
the Trust Deed or the Insurance Agreement;
3.4 the aggregate amount of 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 is [specify amount];
_______________________________
1 Reference to "taking into account the effects of the completion of Project
Black" to be deleted for the purposes of the Initial Certificate.
3.5 [To specify, where relevant, 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 ▇▇▇ ▇▇▇▇ as in force
on 11th December 1997; (7) any proposal of any amendment of the
provisions of the Reference Documents described in Condition 11(c);
and (8) any proposal of any modification to the Terms of Reference]2;
3.6 the Subsidiaries of the Issuer that are Principal Subsidiaries are
those listed in Part A of the annex to this certificate;
3.7 the Subsidiaries of the Issuer that are PES Subsidiaries are those
listed in Part B of the annex to this certificate;
3.8 the Subsidiaries of the Issuer that are Excluded Subsidiaries are
those listed in Part C of the annex to this certificate; and
3.9 the Subsidiaries of the Issuer that are Specified Subsidiaries are
those listed in Part D of the annex to this certificate.
Yours faithfully
................................
Director
For and on behalf of the Issuer
_______________________________
2 initial Certificate not to include paragraph 3.5; paragraph 3.5 (to the extent
relevant) will only be provided in relation to the certificate to be issued
pursuant to Clause 2.5.2 on the completion of Project Black.
ANNEX TO DIRECTOR'S CERTIFICATE OF THE ISSUER DATED [INSERT DATE]
-----------------------------------------------------------------
PART A (PRINCIPAL SUBSIDIARIES)
(to list relevant subsidiaries)
PART B (PES SUBSIDIARIES)
(to list relevant subsidiaries)
PART C (EXCLUDED SUBSIDIARIES)
(to list relevant subsidiaries)
PART D (SPECIFIED SUBSIDIARIES)
(to list relevant subsidiaries)
ISSUER
------
CE ELECTRIC UK FUNDING COMPANY
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title Director
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AMBAC
AMBAC ASSURANCE UK LIMITED
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ III
-----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇ III
Title Chairman
---------------------------------------