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Exhibit 4.21    
    

CONFORMED COPY  

   

   

   

EUR 325,000,000 

SECURED
FACILITY AGREEMENT 

dated
12 May 2005 

for 

SBS
BROADCASTING S.A. 

arranged
by 

ABN
AMRO BANK N.V.

CITIGROUP GLOBAL MARKETS LIMITED

DEUTSCHE BANK AG LONDON

and 

THE
ROYAL BANK OF SCOTLAND PLC 

with

ABN
AMRO BANK N.V. 

acting
as Facility Agent 

and 

ABN
AMRO BANK N.V. 

acting
as Security Agent 

  

MULTICURRENCY
REVOLVING FACILITY AGREEMENT 

   

  

  

 
 

CONTENTS    
    

	Clause
 
	 	Page

	1.	Definitions and Interpretation	 	1
	

2.	

The Facility	
 	

15
	

3.	

Purpose	
 	

15
	

4.	

Conditions Of Utilisation	
 	

15
	

5.	

Utilisation	
 	

18
	

6.	

Optional Currencies	
 	

18
	

7.	

Repayment	
 	

20
	

8.	

Prepayment And Cancellation	
 	

20
	

9.	

Interest	
 	

25
	

10.	

Interest Periods	
 	

25
	

11.	

Changes To The Calculation Of Interest	
 	

26
	

12.	

Fees	
 	

27
	

13.	

Tax Gross-Up And Indemnities	
 	

28
	

14.	

Increased Costs	
 	

30
	

15.	

Other Indemnities	
 	

32
	

16.	

Mitigation By The Lenders	
 	

33
	

17.	

Costs And Expenses	
 	

33
	

18.	

Guarantee And Indemnity	
 	

35
	

19.	

Representations	
 	

39
	

20.	

Information undertakings	
 	

43
	

21.	

Financial Covenants	
 	

46
	

22.	

General undertakings	
 	

47
	

23.	

Events of Default	
 	

54
	

24.	

Changes to the Lenders	
 	

57
	

25.	

Changes to the Obligors	
 	

59
	

26.	

Role of the Facility Agent and the Arrangers	
 	

62
	

27.	

Role of Security Agent	
 	

67
	

28.	

Conduct of Business by the Finance Parties	
 	

71
	

29.	

Sharing among the Finance Parties	
 	

71
	

30.	

Payment mechanics	
 	

73
	

31.	

Set-off	
 	

75
	

32.	

Application of Proceeds	
 	

75
	

33.	

Notices	
 	

76
	

34.	

Calculations and Certificates	
 	

79
	 	 	 	 

	

35.	

Partial Invalidity	
 	

79
	

36.	

Remedies and Waivers	
 	

79
	

37.	

Amendments and Waivers	
 	

79
	

38.	

Counterparts	
 	

81
	

39.	

Governing law	
 	

82
	

40.	

Enforcement	
 	

82

	

SCHEDULE 1	
THE ORIGINAL PARTIES	
 	

83
	 	
 The Original Lenders	
 	

84
	

SCHEDULE 2	
CONDITIONS PRECEDENT	
 	

85
	 	
 Part I	

Conditions precedent to initial Utilisation	
 	

85
	 	
 Part II	

Conditions Precedent required to be delivered by an Additional Obligor	
 	

87
	

SCHEDULE 3	
UTILISATION REQUEST	
 	

89
	

SCHEDULE 4	
MANDATORY COST FORMULAE	
 	

90
	

SCHEDULE 5	
FORM OF TRANSFER CERTIFICATE	
 	

91
	

SCHEDULE 6	
FORM OF ACCESSION LETTER	
 	

92
	

SCHEDULE 7	
FORM OF RESIGNATION LETTER	
 	

93
	

SCHEDULE 8	
FORM OF COMPLIANCE CERTIFICATE	
 	

94
	

SCHEDULE 9	
EXISTING SECURITY	
 	

95
	

SCHEDULE 10	
LMA FORM OF CONFIDENTIALITY UNDERTAKING	
 	

96
	

SCHEDULE 11	
TIMETABLES	
 	

99

  

THIS AGREEMENT is dated 12 May 2005 and made between: 

	(1)
	SBS BROADCASTING S.A. (the "Company");

	(2)
	THE SUBSIDIARIES of the Company listed in Schedule 1 (The Original Parties) as
original borrowers (together with the Company, the "Original Borrowers");

	(3)
	THE SUBSIDIARIES of the Company listed in Schedule 1 (The Original Parties) as
original guarantors (together with the Company, the "Original Guarantors");

	(4)
	ABN AMRO BANK N.V., CITIGROUP GLOBAL MARKETS LIMITED, DEUTSCHE BANK AG LONDON and THE ROYAL BANK OF SCOTLAND
PLC as mandated lead arrangers (the "Arrangers");

	(5)
	THE FINANCIAL INSTITUTIONS listed in Schedule 1 (The Original Parties) as
lenders (the "Original Lenders");

	(6)
	ABN AMRO BANK N.V. as agent of the other Finance Parties (the "Facility Agent"); and

	(7)
	ABN AMRO BANK N.V. as security agent for the Secured Parties (the "Security Agent"). 

IT IS AGREED as follows: 

 
 

SECTION 1
  INTERPRETATION    
    

	1.
	DEFINITIONS AND INTERPRETATION

	1.1
	Definitions

In
this Agreement: 

"Accession Letter" means a document substantially in the form set out in Schedule 6 (Form of Accession
Letter). 

"Acquisition" means the acquisition of the whole or any part of a business or undertaking including by way of the purchase or other acquisition of
shares or other equity interests in, or assets or revenues of, and/or the assumption of any liability and/or indebtedness of, such business or undertaking. 

"Additional Borrower" means a company which becomes an Additional Borrower in accordance with Clause 25 (Changes to the
Obligors). 

"Additional Cost Rate" has the meaning given to it in Schedule 4 (Mandatory Cost Formulae). 

"Additional Guarantor" means a company which becomes an Additional Guarantor in accordance with Clause 25 (Changes to the
Obligors). 

"Additional Obligor" means an Additional Borrower or an Additional Guarantor. 

"Affiliate" means, in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of that Holding
Company. 

"Authorisation" means an authorisation, consent, approval, resolution, licence, (including, but not limited to, any broadcasting licence) exemption,
filing, notarisation or registration. 

"Availability Period" means the period from and including the date of this Agreement to and including the date which is one Month prior to the
applicable Termination Date. 

"Available Commitment" means a Lender's Commitment minus: 

	(a)
	the
Base Currency Amount of its participation in any outstanding Loans; and 

1

 

	(b)
	in
relation to any proposed Utilisation, the Base Currency Amount of its participation in any Loans that are due to be made on or before the proposed Utilisation Date, 

other
than any Loans that are due to be repaid or prepaid on or before the proposed Utilisation Date. 

"Available Facility" means the aggregate for the time being of each Lender's Available Commitment. 

"Base Currency" means euro. 

"Base Currency Amount" means, in relation to a Loan, the amount specified in the Utilisation Request delivered by a Borrower for that Loan (or, if the
amount requested is not denominated in the Base
Currency, that amount converted into the Base Currency at the Facility Agent's Spot Rate of Exchange on the date which is three Business Days before the Utilisation Date or, if later, on the date the
Facility Agent receives the Utilisation Request) adjusted to reflect any repayment, prepayment, consolidation or division of the Loan. 

"Borrower" means an Original Borrower or an Additional Borrower unless it has ceased to be a Borrower in accordance with Clause 25
(Changes to the Obligors). 

"Break Costs" means the amount (if any) by which: 

	(a)
	the
interest (excluding the Margin and any applicable Mandatory Cost) which a Lender should have received for the period from the date of receipt of all or any part of its
participation in a Loan or Unpaid Sum to the last day of the current Interest Period in respect of that Loan or Unpaid Sum, had the principal amount or Unpaid Sum received been paid on the last day of
that Interest Period; 

exceeds:

	(b)
	the
amount which that Lender would be able to obtain by placing an amount equal to the principal amount or Unpaid Sum received by it on deposit with a leading bank in the Relevant
Interbank Market for a period starting on the Business Day following receipt or recovery and ending on the last day of the current Interest Period. 

"Bridge Facility" means the EUR 300,000,000 committed bilateral bridge facility made available pursuant to the Bridge Facility Agreement. 

"Bridge Facility Agreement" means the facility agreement dated 7 March 2005 between the Company as borrower and the ABN AMRO Bank N.V. as lender. 

"Business Day" means a day (other than a Saturday or Sunday) on which banks are open for general business in London, Luxembourg and Sweden and: 

	(a)
	(in
relation to any date for payment or purchase of a currency other than euro) the principal financial centre of the country of that currency; or

	(b)
	which
is (in relation to any date for payment or purchase of euro) a TARGET Day. 

"Capital Stock" means: 

	(a)
	in
the case of a corporation, corporate stock;

	(b)
	in
the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;

	(c)
	in
the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and 

2

 

	(d)
	any
other interest or participation that confers on a person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing person. 

"Cash Equivalents" means: 

	(a)
	securities
denominated in sterling, dollars or EUR with maturities less than 12 months issued or fully guaranteed or insured by the Government of the United States of America
or any member state of the European Union (or any agency thereof) which is rated at least AA by Standard & Poor's Rating Group or Aa by Moody's Investors Service, Inc.;

	(b)
	commercial
paper or other debt security issued by an issuer rated at least A-1 by Standard & Poor's Rating Group or P-1 by Moody's Investors
Service, Inc. and with a maturity of less than 12 months;

	(c)
	certificates
of deposit of any commercial bank having maturities of less than 12 months; or

	(d)
	such
other securities approved by the Facility Agent. 

"Charged Shares" means all the assets of the Obligors which from time to time are, or are expressed to be, the subject of the Transaction Security. 

"Commitment" means: 

	(a)
	in
relation to an Original Lender, the amount in the Base Currency set opposite its name under the heading "Commitment" in Part II of Schedule 1
(The Original Parties) and the amount of any other Commitment transferred to it under this Agreement; and

	(b)
	in
relation to any other Lender, the amount in the Base Currency of any Commitment transferred to it under this Agreement, 

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

"Compliance Certificate" means a certificate substantially in the form set out in Schedule 8 (Form of Compliance
Certificate). 

"Confidentiality Undertaking" means a confidentiality undertaking substantially in a recommended form of the LMA as set out in Schedule 10
(LMA Form of Confidentiality Undertaking) or in any other form agreed between the Company and the Facility Agent. 

"Consolidated Net Finance Charges" means, for any Relevant Period, the aggregate amount of the accrued interest, commission, periodic fees, discounts,
prepayment penalties or premiums and other finance payments in respect of Financial Indebtedness whether paid, payable or capitalised by any member of the Group in respect of that Relevant Period: 

	(a)
	excluding
any such obligations to any other member of the Group;

	(b)
	including
the interest element of finance or capital leases;

	(c)
	including
any accrued commission, periodic fees, discounts and other finance payments payable by any member of the Group under any interest rate hedging arrangement; and

	(d)
	deducting
any accrued commission, periodic fees, discounts and other finance payments owing to any member of the Group under any interest rate hedging instrument; and

	(e)
	deducting
any accrued interest owing to any member of the Group on any deposit or bank account or from any Cash Equivalents. 

"Default" means an Event of Default or any event, act or omission which would (with the passing of any specified time period, the giving of any notice
or satisfaction of any condition) be an Event of Default. 

3

 

"Delegate" means any delegate, agent, attorney or co-agent appointed by the Security Agent. 

"Disposal" means any sale, transfer or other disposal (whether voluntary or involuntary and whether as a single transaction or a series of transactions)
by a member of the Group of any asset, other than any such disposal: 

	(a)
	which
constitutes the creation or granting of any Security;

	(b)
	which
is a disposal to any other member of the Group; or

	(c)
	which
is a disposal of cash or any Cash Equivalents and which is not prohibited by this Agreement (including, without limitation, as a result of the defeasance and redemption of the
Senior Notes). 

"Disposal Proceeds" means the cash consideration received by a member of the Group for any Disposal after deducting: 

	(a)
	reasonable
costs and expenses incurred or to be incurred by such member of the Group with respect to that Disposal to any person which is not a member of the Group;

	(b)
	any
Tax incurred or to be incurred (and amounts reasonably reserved in respect of Taxes) and required to be paid by the seller in connection with that Disposal (as reasonably
determined by the seller, on the basis of existing rates and taking account of any available credit, deduction or allowance); and

	(c)
	(subject
to Clause 8.3(j) (Mandatory Prepayment and Cancellation) any Trapped Cash which forms part of such cash consideration. 

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

"Environmental Law" means any applicable law in any jurisdiction in which any member of the Group conducts business which relates to the pollution or
protection of the environment or harm to or the protection of human health or the health of animals or plants. 

"Environmental Permits" means any permit, licence, consent, approval and other authorisation and the filing of any notification, report or assessment
required under any Environmental Law for the operation of the business of any member of the Group conducted on or from the properties owned or used by the relevant member of the Group. 

"Equity or Debt Proceeds" means the net proceeds of any Equity or Debt Transaction received in cash by a member of the Group after deducting: 

	(a)
	reasonable
costs and expenses incurred or to be incurred by such member of the Group with respect to the Equity or Debt Proceeds;

	(b)
	any
Tax incurred or to be incurred by such member of the Group required to be paid by such member of the Group in connection with such Equity or Debt Proceeds (as reasonably
determined by such member of the Group, on the basis of existing rates and taking account of any available credit, deduction or allowance); and

	(c)
	(subject
to Clause 8.3(j) (Mandatory Prepayment and Cancellation)) any Trapped Cash which forms part of such net cash proceeds. 

"Equity or Debt Transaction" means: 

	(a)
	any
issue or allotment, or agreement for the issue or allotment, of any shares or any equity interest of any nature of or in a member of the Group (other than any such issue or
allotment to any other member of the Group); 

4

 

	(b)
	any
issue or allotment, or agreement for the issue or allotment, of debt securities, warrants, options or any other instrument convertible or exchangeable into share capital (or any
other equity interest) of or in a member of the Group (other than any such issue or allotment to any other member of the Group);

	(c)
	the
issuance by a member of the Group of any debt (including, without limitation, pursuant to any private placement or the issue of commercial paper, medium term notes, bonds,
debentures or other similar instruments and whether or not subordinated to any other indebtedness) in any debt capital market; or

	(d)
	any
transaction pursuant to which any bilateral or syndicated bank debt is raised by a member of the Group, 

provided always that "Equity or Debt Transaction" shall not include: 

	(i)
	any
overdraft or working capital facility entered into by a member of the Group in the ordinary course of business; or

	(ii)
	the
issue of any shares or other equity interest in the share capital of a member of the Group pursuant to the exercise of any stock option granted or issued pursuant to any share
incentive scheme operated by such member of the Group for the benefit of directors, managers, officers, employees of such member of the Group or any other member of the Group and other eligible
persons in accordance with the terms of such share incentive scheme. 

"EURIBOR" means, in relation to any Loan in euro: 

	(a)
	the
applicable Screen Rate; or

	(b)
	(if
no Screen Rate is available for the Interest Period of that Loan) the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Facility Agent at
its request which are quoted by the Reference Banks to leading banks in the European interbank market, 

as
of the Specified Time on the Quotation Day for the offering of deposits in euro for a period comparable to the Interest Period of the relevant Loan. 

"Event of Default" means any event or circumstance specified as such in Clause 23 (Events of
Default). 

"Extended Termination Date" means the date falling 72 Months from the date of this Agreement. 

"Extension Option" means the right of the Company to request the Lenders to agree (at their sole discretion) to extend the Facility to the Extended
Termination Date pursuant to Clause 4.5 (Extension of the Facility). 

"Extension Request" shall have the meaning ascribed to such term in Clause 4.6 (Extension of the
Facility). 

"Facility" means the multicurrency revolving loan facility in aggregate amount of EUR 325,000,000 made available under this Agreement as described in
Clause 2 (The Facility), to the extent not cancelled or reduced under this Agreement. 

"Facility Agent's Spot Rate of Exchange" means the Facility Agent's spot rate of exchange for the purchase of the relevant currency with the Base
Currency in the London foreign exchange market at or about 11:00 a.m. on a particular day. 

"Facility Office" means the office or offices notified by a Lender to the Facility Agent in writing on or before the date it becomes a Lender (or,
following that date, by not less than five Business 

5

 

Days'
written notice) as the office or offices through which it will perform its obligations under this Agreement. 

"FAPL Guarantee" means a guarantee provided by the Company or any other member of the Group in favour of Skandinaviska Enskilda Banken AB
("SEB") in connection with the performance guarantee provided by SEB to the Football Association Premier League Limited in respect of television rights
granted to C More Entertainment AB in Sweden, Norway, Finland, Denmark and Greenland. 

"Fee Letter" means any letter or letters dated on or before the date of this Agreement between any of the Arrangers and the Company (or the Facility
Agent and the Company) setting out any of the fees referred to in Clause 12 (Fees).

"Finance Document" means this Agreement, the Security Documents, any Fee Letter, any Accession Letter, any Resignation Letter and any other document
designated as such by the Facility Agent and the Company. 

"Finance Party" means each of the Facility Agent, the Security Agent, the Arrangers and the Lenders. 

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

	(a)
	moneys
borrowed;

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

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

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

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

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

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

	(h)
	any
counter-indemnity obligation in respect of a guarantee, indemnity, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution
if one of the primary reasons for the entry into the relevant instrument is to raise finance;

	(i)
	any
amount raised by the issue of redeemable shares;

	(j)
	any
amount of any liability under an advance or deferred purchase agreement if one of the primary reasons behind the entry into this agreement is to raise finance; and

	(k)
	(without
double counting) the amount of any liability in respect of any guarantee or indemnity for any of the items referred to in paragraphs (a) to (j) above. 

"GAAP" means the general accepted accounting principles applied in the jurisdiction of incorporation of any entity. 

"Group" means the Company and its Subsidiaries for the time being. 

6

 

"Group EBIT" means, for any Relevant Period, the consolidated pro forma profits of the Group (taking into account the acquisition of C More Group AB and
any other Acquisition for the applicable Relevant Period as if such acquisition had occurred on the first day of that Relevant Period) from its activities before interest, taxation, equity income or
losses of unconsolidated subsidiaries, foreign exchange gains or losses, minority interests, investment gains or losses, other income or expenses net and non-recurring gains or losses. 

"Group EBITDA" means, for any Relevant Period, Group EBIT before deducting any amount attributable to amortisation of intangible assets, including
licences and goodwill, or the depreciation of tangible assets and non-cash compensation. 

"Guarantor" means an Original Guarantor or an Additional Guarantor, unless it has ceased to be a Guarantor in accordance with Clause 25
(Changes to the Obligors). 

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

"Information Memorandum" means the document concerning the Group which, at the Company's request and on its behalf, is to be prepared in relation to
this transaction and distributed by the Arrangers to selected financial institutions in connection with the syndication of the Facility. 

"Initial Termination Date "means the date falling 60 Months from the date of this Agreement. 

"Interest Period" means, in relation to a Loan, each period determined in accordance with Clause 10 (Interest
Periods) and, in relation to an Unpaid Sum, each period determined in accordance with Clause 9.3 (Default interest). 

"Insurance Proceeds" means any insurance proceeds received by any member of the Group in respect of physical loss of or damage to assets net of any
reasonable costs or expenses incurred by such member of the Group in making the relevant insurance claim and (subject to Clause 8.3 (j) (Mandatory Prepayment and
Cancellation)) less any Trapped Cash which forms part of such insurance proceeds. 

"Investments" means, with respect to any person, all investments by such person in other persons (including Affiliates) in the forms of direct or
indirect loans, for the sake of clarity, to the extent of the full commitment of such loans (including Financial Indebtedness or other obligations, but excluding accounts receivable made in the
ordinary course of business and payable or dischargeable in accordance with customary trade terms), any advances or capital contributions (excluding commission, travel and similar advances to the
officers and employees made in the ordinary course of business), and any
purchases or other acquisitions by such person of any stock, bonds, notes, debentures or other securities of any other person (including, for the avoidance of doubt, any obligations to make any
deferred payments in connection with such purchases or acquisitions), together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP;
provided that, for the avoidance of doubt, capitalized interest on a loan shall not be deemed to be a further Investment. If the Company or any Subsidiary of the Company sells or otherwise disposes of
any equity interests of any direct or indirect Subsidiary of the Company such that, after giving effect to any such sale or disposition, such person is no longer a Subsidiary of the Company, the
Company shall be deemed to have made an Investment on the date of any such sale or disposition equal to the fair market value of the Company's or a Subsidiary's equity interests of such Subsidiary not
sold or disposed of. 

"Legal Opinions" means the legal opinions delivered to the Facility Agent pursuant to Clause 4.1 (Initial conditions
precedent). 

7

 

"Lender" means: 

	(a)
	any
Original Lender; and

	(b)
	any
bank, financial institution, trust, fund or other entity which has become a Party in accordance with Clause 24 (Changes to the
Lenders), 

which
in each case has not ceased to be a Party in accordance with the terms of this Agreement. 

"LIBOR" means, in relation to any Loan in an Optional Currency: 

	(a)
	the
applicable Screen Rate; or

	(b)
	(if
no Screen Rate is available for the currency or Interest Period of that Loan) the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Facility
Agent at its request which are quoted by the Reference Banks to leading banks in the Relevant Interbank Market, 

as
of the Specified Time on the Quotation Day for the offering of deposits in the currency of that Loan and for a period comparable to the Interest Period for that Loan. 

"LMA" means the Loan Market Association. 

"Loan" means a loan made or to be made under the Facility or the principal amount outstanding for the time being of that loan. 

"Majority Lenders" means: 

	(a)
	if
there are no Loans then outstanding, a Lender or Lenders whose Commitments aggregate more than 662/3% of the Total Commitments (or, if the Total Commitments have
been reduced to zero, aggregated more than 662/3% of the Total Commitments immediately prior to the reduction); or

	(b)
	at
any other time, a Lender or Lenders whose participations in the Loans then outstanding aggregate more than 662/3% of all the Loans then outstanding. 

"Mandatory Cost" means the percentage rate per annum calculated by the Facility Agent in accordance with Schedule 4
(Mandatory Cost Formulae). 

"Mandatory Prepayment Account" means an interest bearing account held in The Netherlands with the Facility Agent in the name of the Company identified
by the Company and the Facility Agent as the Mandatory Prepayment Account for the purposes of this Agreement (as the same may be redesignated, substituted or replaced from time to time), such account
(if required by the Facility Agent) to be subject to Security created in favour of the Security Agent with respect to amounts owing to the Finance Parties pursuant to the Finance Documents on terms
satisfactory to the Security Agent. 

"Margin" means 0.75 per cent. per annum or, if: 

	(a)
	no
Event of Default has occurred and is continuing; and

	(b)
	the
Senior Leverage Ratio in respect of the most recently completed Relevant Period (as shown by a Compliance Certificate in respect of that Relevant Period) is within a range set 

8

 

out
below, then the Margin shall be the percentage rate per annum set out opposite such range: 

	Senior Leverage Ratio
 
	 	Margin (%)

	> 3.5	 	1.50
	

3.0 £ 3.5	
 	

1.20
	

2.5 £ 3.0	
 	

0.95
	

2.0 £ 2.5	
 	

0.80
	

1.5 £ 2.0	
 	

0.75
	

< 1.5	
 	

0.70

(and
any change in the Margin shall take effect on the date which is 5 Business Days after receipt by the Facility Agent of the Compliance Certificate for that Relevant Period pursuant to
Clause 22.2 (Compliance Certificate)). 

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

	(a)
	the
business or financial condition of the Group taken as a whole;

	(b)
	the
ability of an Obligor to perform its obligations under the Finance Documents; or

	(c)
	the
validity or enforceability of the Finance Documents. 

"Material Company" means, at any time, a Subsidiary of the Company which: 

	(a)
	has
revenues representing ten per cent. or more of consolidated total revenues of the Group; or

	(b)
	has
total assets representing ten per cent. or more of consolidated Total Assets, 

in
each case calculated on an unconsolidated basis in respect of that Subsidiary and determined in accordance with (and on the basis of information provided under) Clause 20.4
(Determination of Material Companies) and in accordance with US GAAP. 

"Month" means a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month, except that: 

	(a)
	(subject
to paragraph (c) below) if the numerically corresponding day is not a Business Day, that period shall end on the next Business Day in that calendar month in which that
period is to end if there is one, or if there is not, on the immediately preceding Business Day;

	(b)
	if
there is no numerically corresponding day in the calendar month in which that period is to end, that period shall end on the last Business Day in that calendar month; and

	(c)
	if
an Interest Period begins on the last Business Day of a calendar month, that Interest Period shall end on the last Business Day in the calendar month in which that Interest Period
is to end. 

The
above rules will only apply to the last Month of any period. 

"Non-Obligor" means any member of the Group that is not an Obligor. 

"Obligor" means a Borrower, a Guarantor or EBS International N.V. 

"Optional Currency" means a currency (other than the Base Currency) which complies with the conditions set out in Clause 4.3
(Conditions relating to Optional Currencies). 

9

 

"Original Financial Statements" means: 

	(a)
	in
relation to the Company, the audited consolidated financial statements of the Group for the financial year ended 31 December 2003; and

	(b)
	in
relation to Kanal 5 Holding AB, its audited unconsolidated financial statements for its financial year ended 31 December 2003. 

"Original Obligor" means an Original Borrower, an Original Guarantor or EBS International N.V. 

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

"Party" means a party to this Agreement. 

"Permitted Business" means any business of a kind in which the Company or any of its Subsidiaries is engaged on the date of this Agreement or any
business reasonably related, incidental, complementary or ancillary thereto. 

"Permitted Financial Indebtedness" means: 

	(a)
	any
Financial Indebtedness incurred pursuant to the Finance Documents;

	(b)
	any
Financial Indebtedness represented by capital and finance lease obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing
all or any part of the purchase price or cost of construction or improvement of property, plant or equipment used in the business of any member of the Group provided that the aggregate principal
amount of such Financial Indebtedness does not exceed EUR 10,000,000 (or its equivalent in other currencies) at any time;

	(c)
	any
Financial Indebtedness incurred by any member of the Group pursuant to any hedging agreements or other derivative transactions entered into for the purpose of hedging the currency
or interest rate exposure of such member of the Group incurred in the ordinary course of trading (and not, for the avoidance of doubt, for speculative purpose);

	(d)
	any
Financial Indebtedness incurred by any member of the Group and owing to another member of the Group (provided that such Financial Indebtedness does not arise as a result of any
loan made, credit granted, guarantee or indemnity given or liability assumed in contravention of Clause 22.11 (Loans and Guarantees));

	(e)
	any
Financial Indebtedness incurred by any member of the Group pursuant to the honouring by a bank or other financial institution of a cheque, draft or similar instrument
inadvertently drawn by such member of the Group against insufficient funds in the ordinary course of business provided that such Financial Indebtedness is fully repaid or otherwise extinguished within
five Business Days of its incurrence;

	(f)
	any
Financial Indebtedness which is unsecured subordinated debt of a member of the Group that is expressly subordinated to the obligations of the Obligors under the Finance Documents
on terms satisfactory (with respect to the effective subordination of such Financial Indebtedness) to a Lender or Lenders (acting reasonably) whose participations in the Loans then outstanding are in
aggregate more than 85% of all of the Loans then outstanding;

	(g)
	any
Financial Indebtedness represented by any letter of credit for the account of any member of the Group in order to provide security for claims, payment obligations or similar
requirements in each case in connection with self-insurance and in the ordinary course of business provided that the aggregate principal amount or accreted value of such outstanding 

10

 

Financial
Indebtedness (as applicable) does not at any time exceed EUR 10,000,000 (or its equivalent in other currencies); and 

	(h)
	(to
the extent not otherwise permitted by paragraphs (a) to (g) above) any Financial Indebtedness incurred by (i) a Non-Obligor or (ii) an
Obligor incorporated in Norway where the aggregate principal amount or accreted value (as applicable) thereof does not at any time exceed EUR 60,000,000 (or its equivalent in other currencies). 

"Permitted Usage" means proceeds received and used (a) to acquire all or substantially all of the assets of, or a controlling interest in, a
Permitted Business; or (b) to acquire Productive Assets for use in a Permitted Business; or (c) to make any capital expenditure by any member of the Group. 

"Productive Assets" means assets (including Capital Stock or its substantial equivalent or other Investments) that are used or usable by the Company and
its Subsidiaries in a Permitted Business (or in the case of Capital Stock or its substantial equivalent or other Investments, that represent direct, or
indirect (via a holding company), ownership or other interests held by the Company or any Subsidiary in entities engaged in Permitted Business. 

"Quotation Day" means, in relation to any period for which an interest rate is to be determined: 

	(a)
	(if
the currency is domestic sterling) the first day of that period;

	(b)
	(if
the currency is euro) two TARGET Days before the first day of that period; or

	(c)
	(for
any other currency) two Business Days before the first day of that period, 

unless
market practice differs in the Relevant Interbank Market for a currency, in which case the Quotation Day for that currency will be determined by the Facility Agent in accordance with market
practice in the Relevant Interbank Market (and if quotations would normally be given by leading banks in the Relevant Interbank Market on more than one day, the Quotation Day will be the last of those
days). 

"Receiver" means a receiver or receiver and manager or administrative receiver of the whole or any part of the Charged Shares. 

"Reference Banks" means, in relation to LIBOR and Mandatory Costs, the principal London offices of ABN AMRO Bank N.V., Citibank, N.A., Deutsche Bank AG
and The Royal Bank of Scotland PLC and, in relation to EURIBOR, the principal offices in Amsterdam of ABN AMRO Bank N.V., Citibank, N.A. and Deutsche Bank AG or such other banks as may be appointed by
the Facility Agent in consultation with the Company. 

"Relevant Interbank Market" means in relation to euro, the European interbank market, and, in relation to any other currency, the London interbank
market. 

"Relevant Period" means each period of twelve months ending on the last day of each financial year and each financial quarter of the Company. 

"Repeating Representations" means each of the representations set out in Clauses 19.1 (Status) to 19.6
(Governing law and enforcement), Clause 19.10 (No default), paragraph (d) of
Clause 19.11 (No misleading information), Clause 19.13 (Pari passu ranking),
Clause 19.14 (No proceedings pending or threatened) and Clause 19.21 (Ranking) to
Clause 19.24 (Legal and Beneficial Owner). 

"Resignation Letter" means a letter substantially in the form set out in Schedule 7 (Form of Resignation
Letter). 

"Rollover Loan" means one or more Loans: 

	(a)
	made
or to be made on the same day that a maturing Loan is due to be repaid; 

11

 

	(b)
	the
aggregate amount of which is equal to or less than the maturing Loan;

	(c)
	in
the same currency as the maturing Loan (unless it arose as a result of the operation of Clause 6.2 (Unavailability of a
currency)); and

	(d)
	made
or to be made to the same Borrower for the purpose of refinancing a maturing Loan. 

"Screen Rate" means: 

	(a)
	in
relation to LIBOR, the British Bankers' Association Interest Settlement Rate for the relevant currency and period; and

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

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

"Secured Obligations" means all obligations at any time due, owing or incurred by any Obligor to any Secured Party under the Finance Documents, whether
present or future, actual or contingent (and whether incurred solely or jointly and whether as principal or surety or in some other capacity). 

"Secured Parties" means any Receiver or Delegate, the Facility Agent, the Security Agent, the Arrangers and each Lender from time to time party to this
Agreement. 

"Security" means a mortgage, charge, pledge, lien or other security interest securing any obligation of any person or any other agreement or arrangement
having a similar effect. 

"Security Documents" means each of the documents listed as being a Security Document in paragraph 2(a) of Part I of Schedule 2
(Conditions Precedent) and any document required to be delivered to the Facility Agent under paragraph 9 of Part II of Schedule 2
(Conditions Precedent) together with any other document entered into by any Obligor creating or expressed to create any Security over all or any part of
its assets in respect of the obligations of any of the Obligors under any of the Finance Documents. 

"Senior Leverage Ratio" has the meaning given to it in Clause 21.1 (Financial definitions). 

"Senior Net Debt" has the meaning given to it in Clause 21.1 (Financial definitions). 

"Senior Notes" means the 12% senior notes due 2008 referred to in the indenture entered between The Bank of New York, as trustee and the Company dated
14 June 2001 as amended by the Amendment No. 1 to Indenture dated 13 July 2001 and the SEC registered notes exchanged therefore. 

"Specified Time" means a time determined in accordance with Schedule 11 (Timetables). 

"Stand Alone Financed Acquisition" means any member of the Group which is not an Obligor where the providers of any Financial Indebtedness incurred by
such member of the Group do not have any recourse of any nature to any other member of the Group and where no other member of the Group directly or indirectly supports, has guaranteed or is or might
otherwise become liable (on an contingent basis or otherwise) in respect of any such Financial Indebtedness. 

"Subsidiary" means in relation to any company or corporation, a company or corporation: 

	(a)
	which
is controlled, directly or indirectly, by the first mentioned company or corporation;

	(b)
	more
than half the issued share capital of which is beneficially owned, directly or indirectly by the first mentioned company or corporation; or 

12

 

	(c)
	which
is a Subsidiary of another Subsidiary of the first mentioned company or corporation, 

and
for this purpose, a company or corporation shall be treated as being controlled by another if that other company or corporation is able to direct its affairs and/or to control the composition of
its board of directors or equivalent body. 

"Syndication Date" means the day agreed between the Arrangers and the Company as the day on which primary syndication of the Facility is completed. 

"TARGET" means Trans-European Automated Real-time Gross Settlement Express Transfer payment system. 

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

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

"Termination Date" means (subject to the Extension Option) either the Initial Termination Date or, as applicable, the Extended Termination Date. 

"Total Assets" means, at any time, the total consolidated assets of the Group, determined in accordance with US GAAP. 

"Total Commitments" means the aggregate of the Commitments, being EUR 325,000,000 at the date of this Agreement. 

"Transaction Security" means the Security created or expressed to be created pursuant to the Security Documents. 

"Transfer Certificate" means a certificate substantially in one of the forms set out in Schedule 5 (Form of Transfer
Certificates) or any other form agreed between the Facility Agent and the Company. 

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

	(a)
	the
proposed Transfer Date specified in the Transfer Certificate; and

	(b)
	the
date on which the Facility Agent executes the Transfer Certificate. 

"Trapped Cash" means any credit balance on any deposit, savings, current or other account, or cash in hand, which cannot be applied immediately for the
purpose of repaying the Facility and, in particular, which cannot be upstreamed or transferred to a Borrower which would be able to apply it immediately for the purpose of repaying the Facility or to
a member of the Group which would be able to transfer or upstream it to a Borrower without (i) breaching a financial assistance prohibition or other legal restriction or requirement applicable
to a member of the Group (or any of its directors); or (ii) any member of the Group incurring material cost, whether as a result of paying additional taxes or
otherwise (where for this purpose whether or not a cost is material will be determined, inter alia, by having regard to the applicable cost relative to the aggregate amount of the funds concerned); or
(iii) breaching a contractual obligation of any member of the Group under any shareholder or partnership agreement or arrangement which in any such case can not be varied or waived without the
consent or agreement of the other shareholder or partner. 

"Treasury Transaction" means any cap or collar agreement, forward rate agreement, interest rate or currency future or option contract, foreign exchange
or currency purchase or sale agreement, interest rate swap, currency swap or combined interest rate and currency swap agreement and any other similar agreement. 

13

 

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

"US GAAP" means generally accepted accounting principles of the United States of America. 

"Utilisation" means a utilisation of the Facility. 

"Utilisation Date" means the date of a Utilisation, being the date on which the relevant Loan is to be made. 

"Utilisation Request" means a notice substantially in the form set out in Schedule 3 (Requests). 

"VAT" means value added tax and any other tax of a similar nature. 

	1.2
	Construction

	(a)
	Unless
a contrary indication appears any reference in this Agreement to:

	(i)
	the
"Facility Agent", the "Arrangers", the "Security
Agent", any "Finance Party", any "Secured Party", any
"Lender", any "Obligor", any "Party" or any other person
shall be construed so as to include its successors in title, permitted assign and permitted transferees and any reference to the "Security Agent"
includes a reference to the Security Agent in its capacity as a trustee under any of the Security Documents;

	(ii)
	"assets" includes present and future properties, revenues and rights of every description;

	(iii)
	the
"equivalent" on any date in one currency (the "first currency") of an amount denominated in another currency (the "second
currency") is a reference to the amount of the first currency which could be purchased with the amount of the second currency at the spot rate of exchange quoted by the Facility Agent at or about
11.00 a.m. on such date for the purchase of the first currency with the second currency;

	(iv)
	a
"Finance Document" or any other agreement or instrument is a reference to that Finance Document or other agreement or instrument as
amended or novated;

	(v)
	"indebtedness" includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether
present or future, actual or contingent;

	(vi)
	a
"person" includes any person, firm, company, corporation, government, state or agency of a state or any association, trust or
partnership (whether or not having separate legal personality) of two or more of the foregoing;

	(vii)
	a
"regulation" includes any regulation, rule, official directive, request or guideline (whether or not having the force of law) of
any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation;

	(viii)
	a
provision of law is a reference to that provision as amended or re-enacted; and

	(ix)
	a
time of day is a reference to London time.

	(b)
	Section,
Clause and Schedule headings are for ease of reference only.

	(c)
	Unless
a contrary indication appears, a term used in any other Finance Document or in any notice given under or in connection with any Finance Document has the same meaning in that
Finance Document or notice as in this Agreement.

	(d)
	A
Default or an Event of Default is "continuing" if it has not been remedied or waived.

	1.3
	Currency Symbols and Definitions

"USD" denotes the lawful currency of the United States of America, "GBP" denotes lawful currency of the
United Kingdom and "EUR" and "euro" means the single currency unit of the Participating Member States. 

	1.4
	Third party rights

A
person who is not a Party has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Agreement. 

14

  

 
 

SECTION 2
  THE FACILITY    
    

	2.
	THE FACILITY

	2.1
	The Facility

Subject
to the terms of this Agreement, the Lenders make available to the Borrowers a multicurrency revolving loan facility in an aggregate amount equal to the Total Commitments. 

	2.2
	Finance Parties' rights and obligations

	(a)
	The
obligations of each Finance Party under the Finance Documents are several. Failure by a Finance Party to perform its obligations under the Finance Documents does not affect the
obligations of any other Party under the Finance Documents. No Finance Party is responsible for the obligations of any other Finance Party under the Finance Documents.

	(b)
	The
rights of each Finance Party under or in connection with the Finance Documents are separate and independent rights and any debt arising under the Finance Documents to a Finance
Party from an Obligor shall be a separate and independent debt.

	(c)
	A
Finance Party may, except as otherwise stated in the Finance Documents, separately enforce its rights under the Finance Documents.

	3.
	PURPOSE

	3.1
	Purpose

Each
Borrower shall apply all amounts borrowed by it under the Facility (including, without limitation, through the repayment of intercompany loans) towards: 

	(a)
	refinancing
all or part of the Bridge Facility;

	(b)
	refinancing
all or part of the Senior Notes (or to make a deposit to defease all or part of the Senior Notes prior to refinancing all or part of the Senior Notes);

	(c)
	funding
the payment of fees, costs and expenses in connection with the establishment of the Facility and the refinancing of the Bridge Facility and the Senior Notes together with any
taxes, redemption premium or accrued interest;

	(d)
	financing
acquisitions by the Group; and

	(e)
	general
corporate purposes and working capital purposes of the Group.

	3.2
	Monitoring

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

	4.
	CONDITIONS OF UTILISATION

	4.1
	Initial conditions precedent

No
Borrower may deliver a Utilisation Request unless the Facility Agent has received all of the documents and other evidence listed in Schedule 2 (Conditions
Precedent) in form and substance satisfactory to the Facility Agent. The Facility Agent shall notify the Company and the Lenders promptly upon being so satisfied. 

15

 
	4.2
	Further conditions precedent

	(a)
	The
Lenders will only be obliged to comply with Clause 5.4 (Lenders' participation) if on the date of the Utilisation Request
and on the proposed Utilisation Date:

	(i)
	in
the case of a Rollover Loan, no notice of acceleration of the Facility has been given under Clause 23.15 (Acceleration); and

	(ii)
	in
the case of any other Loan:

	(A)
	no
Default is continuing or would result from the proposed Loan; and

	(B)
	the
Repeating Representations to be made by each Obligor are true in all material respects.

	4.3
	Further Undertaking

The
Company shall deliver to the Facility Agent evidence of filing for registration with the applicable registry in Norway or Sweden of any amendments to the constitutional documents of any Obligor
incorporated in either Norway or Sweden (and which were amended prior to the date of this Agreement in connection with any Transaction Security) within 5 Business Days of the date of this Agreement. 

	4.4
	Conditions relating to Optional Currencies

	(a)
	A
currency will constitute an Optional Currency in relation to a Loan if:

	(i)
	it
is readily available in the amount required and freely convertible into the Base Currency in the Relevant Interbank Market on the Quotation Day and the Utilisation Date for that
Loan; and

	(ii)
	it
has been approved by the Facility Agent (acting on the instructions of all the Lenders) on or prior to receipt by the Facility Agent of the relevant Utilisation Request for that
Loan.

	(b)
	If
the Facility Agent has received a written request from the Company for a currency to be approved under paragraph (a)(ii) above, the Facility Agent will confirm to the
Company by the Specified Time:

	(i)
	whether
or not the Lenders have granted their approval; and

	(ii)
	if
approval has been granted, the minimum amount for any subsequent Utilisation in that currency.

	4.5
	Maximum number of Loans

	(a)
	A
Borrower may not deliver a Utilisation Request if as a result of the proposed Utilisation 10 or more Loans would be outstanding.

	(b)
	Any
Loan made by a single Lender under Clause 6.2 (Unavailability of a currency) shall not be taken into account in this
Clause 4.5.

	4.6
	Extension of the Facility

	(a)
	The
Company shall be entitled to request an extension of the Facility until the Extended Termination Date, by giving notice to the Facility Agent (the
"Extension Request") on or before the date falling 12 Months from the date of this Agreement. Such notice shall be made in writing, be unconditional,
irrevocable and binding on the Company. The Company shall not be entitled to submit an Extension Request more than once. No Extension Request may be delivered if a Default has occurred and is
continuing. 

16

 

	(b)
	The
Facility Agent shall forward a copy of the Extension Request to the Lenders as soon as practicable after receipt of it.

	(c)
	If
a Lender, in its individual and sole discretion, agrees to the extension requested by the Company, it shall give notice to the Facility Agent (a "Notice of
Extension") no later than 15 Business Days after receipt by such Lender of the Extension Request pursuant to paragraph (b) above. If a Lender does not give such Notice
of Extension by such date, then that Lender shall be deemed to have refused that extension.

	(d)
	Nothing
shall oblige a Lender to agree to an Extension Request.

	(e)
	If
one or more (but not all) of the Lenders give Notices of Extension pursuant to paragraph (c), then the Facility Agent shall notify the Company, identifying in that
notification which Lenders have not given a Notice of Extension.

	(f)
	If
a Lender agrees to extend the Facility by giving a Notice of Extension under paragraph (c) above, the Initial Termination Date shall be extended to the Extended Termination
Date provided that:

	(i)
	the
Commitments of any Lender not agreeing to so extend shall be reduced to zero on the Initial Termination Date; and

	(ii)
	the
Borrowers shall, on the Initial Termination Date, repay in full such part of the outstanding Loans under the Facility which have been made available by any Lender not agreeing to
so extend, together with accrued interest and all other amounts accrued under or in respect of such Lender's participation in any Loans.

	(g)
	The
Facility Agent shall promptly inform the Company and the Lenders of the size of the Facility if reduced. 

17

 

 
 

SECTION 3
  UTILISATION    
    

	5.
	UTILISATION

	5.1
	Delivery of a Utilisation Request

A
Borrower may utilise the Facility by delivery to the Facility Agent of a duly completed Utilisation Request not later than the Specified Time (or on the first Utilisation Date, in relation to any
Utilisations on the first Utilisation Date). 

	5.2
	Completion of a Utilisation Request

	(a)
	Each
Utilisation Request is irrevocable and will not be regarded as having been duly completed unless:

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

	(ii)
	the
currency and amount of the Utilisation comply with Clause 5.3 (Currency and amount); and

	(iii)
	the
proposed Interest Period complies with Clause 10 (Interest Periods).

	(b)
	Only
one Loan may be requested in each Utilisation Request.

	5.3
	Currency and amount

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

	(b)
	The
amount of the proposed Loan must be:

	(i)
	if
the currency selected is the Base Currency, a minimum of EUR 5,000,000 and an integral multiple of EUR 1,000,000 or, if less, the Available Facility; or

	(ii)
	if
the currency selected is an Optional Currency, the minimum amount specified by the Facility Agent pursuant to paragraph (b) (ii) of Clause 4.3
(Conditions relating to Optional Currencies) or, if less, the Available Facility; and

	(iii)
	in
any event such that its Base Currency Amount is less than or equal to the Available Facility.

	5.4
	Lenders' participation

	(a)
	If
the conditions set out in this Agreement have been met, each Lender shall make its participation in each Loan available by the Utilisation Date through its Facility Office.

	(b)
	The
amount of each Lender's participation in each Loan will be equal to the proportion borne by its Available Commitment to the Available Facility immediately prior to making the
Loan.

	(c)
	The
Facility Agent shall determine the Base Currency Amount of each Loan which is to be made in an Optional Currency and shall notify each Lender of the amount, currency and the Base
Currency Amount of each Loan and the amount of its participation in that Loan, in each case by the Specified Time.

	6.
	OPTIONAL CURRENCIES

	6.1
	Selection of currency

A
Borrower (or the Company on behalf of a Borrower) shall select the currency of a Loan in a Utilisation Request. 

18

 
	6.2
	Unavailability of a currency

If
before the Specified Time on any Quotation Day: 

	(a)
	a
Lender notifies the Facility Agent that the Optional Currency requested is not readily available to it in the amount required; or

	(b)
	a
Lender notifies the Facility Agent that compliance with its obligation to participate in a Loan in the proposed Optional Currency would contravene a law or regulation applicable to
it, 

the
Facility Agent will give notice to the relevant Borrower to that effect by the Specified Time on that day. In this event, any Lender that gives notice pursuant to this Clause 6.2 will be
required to participate in the Loan in the Base Currency (in an amount equal to that Lender's proportion of the Base Currency Amount of that Loan) and its participation will be treated as a separate
Loan denominated in the Base Currency during that Interest Period. 

19

 
 
 

SECTION 4
  REPAYMENT, PREPAYMENT AND CANCELLATION    
    

	7.
	REPAYMENT

Repayment of Loans

Each
Borrower which has drawn a Loan shall repay that Loan on the last day of its Interest Period. 

	8.
	PREPAYMENT AND CANCELLATION

	8.1
	Illegality

If,
at any time, it is or will become unlawful in any applicable jurisdiction for a Lender to perform any of its obligations as contemplated by this Agreement or to fund or maintain its participation
in any Loan: 

	(a)
	that
Lender shall promptly notify the Facility Agent upon becoming aware of that event, whereupon the Facility Agent shall notify the Company;

	(b)
	upon
the Facility Agent notifying the Company, the Commitment of that Lender will be immediately cancelled; and

	(c)
	each
Borrower shall repay that Lender's participation in the Loans made to that Borrower on the last day of the Interest Period for each Loan occurring after the Facility Agent has
notified the Company or, if earlier, the date specified by the Lender in the notice delivered to the Facility Agent (being no earlier than the last day of any applicable grace period permitted by
law).

	8.2
	Change of control

	(a)
	If
any person or group of persons acting in concert gains control of the Company:

	(i)
	the
Company shall promptly notify the Facility Agent upon becoming aware of that event;

	(ii)
	no
Lender shall be obliged to fund a Utilisation (except for a Rollover Loan); and

	(iii)
	if
a Lender so requires and notifies the Facility Agent within 10 days of the Company notifying the Facility Agent of the event, the Facility Agent shall, by not less than
10 days notice to the Company, cancel the Commitment of that Lender and declare the participation of that Lender in all outstanding Loans, together with accrued interest and all other amounts
accrued under or in respect of that Lender's participation in all outstanding Loans due and payable, whereupon the Commitment of that Lender will be cancelled and all such outstanding amounts will
become immediately due and payable.

	(b)
	For
the purpose of paragraph (a) above "control" means:

	(i)
	the
power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to:

	(A)
	cast,
or control the casting of, more than one-half of the maximum number of votes that might be cast at a general meeting of the Company; or

	(B)
	appoint
or remove all, or the majority, of the directors or other equivalent officers of the Company; or

	(C)
	give
directions with respect to the operating and financial policies of the Company which the directors or other equivalent officers of the Company are obliged to comply with; or 

20

 

	(ii)
	the
holding of more than one-half of the issued share capital of the Company (excluding any part of that issued share capital that carries no right to participate beyond
a specified amount in a distribution of either profits or capital).

	(iii)
	For
the purpose of paragraph (a) above "acting in concert" means, a group of persons who, pursuant to an agreement or
understanding (whether formal or informal), actively co-operate, through the acquisition by any of them, either directly or indirectly, of shares in the Company, to obtain or consolidate
control of the Company.

	8.3
	Mandatory Prepayment and Cancellation

	(a)
	The
Company shall notify the Facility Agent in writing promptly upon receipt by a member of the Group of any Equity or Debt Proceeds or any Disposal Proceeds, giving details of the
recipient and the amount of the relevant Equity or Debt Proceeds or Disposal Proceeds.

	(b)
	If
a member of the Group receives any Equity or Debt Proceeds, where such Equity or Debt Proceeds (when aggregated with any other Equity or Debt Proceeds received by any member of the
Group) exceed EUR 50,000,000 or its equivalent in any other currencies (any such excess, the "Relevant Equity or Debt Proceeds") and the Senior Leverage
Ratio was greater than 3.5:1.0 in respect of the most recent Relevant Period in relation to which a Compliance Certificate has been delivered by the Company to the Facility Agent, then (i) on
the date on which such Equity or Debt Proceeds are received (or, in relation to any Equity or Debt Proceeds where convertible bonds are issued, on the date which is the later of (A) the
settlement date in relation to such convertible bonds and (B) the date on which the Equity or Debt Proceeds in relation to such convertible bonds are received) the Facility shall be reduced and
cancelled by an amount equal to the Senior Leverage Ratio Adjustment Amount and (ii) (subject to the following provisions of this Clause 8.3) within 10 Business Days of receipt the
Borrowers shall, to the extent necessary, prepay Loans such that (after such prepayment) the aggregate amount of all outstanding Loans does not exceed the Facility (after its reduction pursuant to
(i) above). 

For
the purposes of this paragraph (c) the "Senior Leverage Ratio Adjustment Amount" means the lesser of (i) the amount by which Senior
Net Debt (on the last day of the most recent Relevant Period) would have been required to be reduced such that, were the Senior Leverage Ratio to have been determined in respect of the most recent
Relevant Period on the basis of such reduced Senior Net Debt, the Senior Leverage Ratio in respect of that Relevant Period would have been 3.5:1.0 and (ii) the Relevant Equity or Debt Proceeds. 

	(c)
	If
a member of the Group receives any Disposal Proceeds or Insurance Proceeds in excess of EUR 25,000,000 in aggregate in any financial year of the Group (the amount by which such
Disposal Proceeds or Insurance Proceeds exceed EUR 25,000,000, the "Relevant Proceeds") then (i) either (a) on the date on which such
Disposal Proceeds or Insurance Proceeds are received the Facility shall be reduced and cancelled by an amount equal to the Relevant Proceeds or (b) if the Company notifies the Facility Agent
that it (or such member of the Group or another member of the Group to which such Disposal Proceeds or Insurance Proceeds have been or may be transferred in compliance with this Agreement) wishes to
reinvest the relevant Disposal Proceeds in assets which are similar to those to which those Disposal Proceeds relate or in a Permitted Usage, or wishes to apply the relevant Insurance Proceeds in or
towards replacement or repair of the assets to which those Insurance Proceeds relate or in a Permitted Usage, on the date which is 12 Months after the date on which such Disposal Proceeds or Insurance
Proceeds are received the Facility shall be reduced and cancelled by an amount equal to the Relevant Proceeds to the extent that they have not been reinvested in similar assets (or in a Permitted
Usage) or applied in or towards such replacement or repair (or in a Permitted Usage) within such 12 Month Period and (ii) (subject 

21

 

to
the following provisions of this Clause 8.3) within 10 Business Days of the date of any reduction of the Facility pursuant to (i) above the Borrowers shall, to the extent necessary,
prepay Loans such that (after such prepayment) the aggregate amount of all outstanding Loans does not exceed the Facility (after its reduction pursuant to (i) above). 

	(d)
	For
the purposes of this Clause 8.3, to the extent that any Equity or Debt Proceeds, Disposal Proceeds or Insurance Proceeds are denominated in a currency other than euro the
Company shall ensure that such Equity or Debt Proceeds, Disposal Proceeds or Insurance Proceeds shall be converted into euro by the relevant member of the Group on or as soon as practicable after the
date on which they were received by the relevant member of the Group at prevailing market rates reasonably available to the relevant member of the Group and the amount of such Equity or Debt Proceeds,
Disposal Proceeds or Insurance Proceeds shall be such euro amount net of any reasonable costs and expenses of such conversion.

	(e)
	If
a prepayment is to be made under this Clause 8.3, the Borrowers may give the Facility Agent notice in writing not less than 5 Business Days before the date on which,
pursuant to paragraphs (b) or (c) (as the case may be) of this Clause 8.3, the prepayment would be required to be made, specifying that prepayment of each of the outstanding Loans
will be made on the last day of the then current Interest Period for each such Loan. If no such notice is given in accordance with this paragraph (e), prepayment shall be made at the time and
in the manner set out in the foregoing provisions of this Clause 8.3.

	(f)
	If
pursuant to paragraph (e), the Borrowers request that prepayment of each outstanding Loan is to be made on the last day of the then current Interest Period relating thereto
and ensures that the amount required to be prepaid is credited to the Mandatory Prepayment Account on the date on which the prepayment would otherwise be required to be made, the relevant prepayment
date in relation to each outstanding Loan shall be delayed in accordance with such request until the last day of the then current Interest Period for such Loan.

	(g)
	The
Company irrevocably authorises the Facility Agent to withdraw monies from the Mandatory Prepayment Account and to apply such monies against prepayments which are due to be made
hereunder (and the Facility Agent shall make such withdrawal and application on the last day of the relevant Interest Period for each Loan in respect of which a prepayment is to be made) or, upon the
occurrence of an Event of Default which is continuing, against any amounts due and payable under the Finance Documents.

	(h)
	The
Lenders acknowledge and agree that interest shall accrue at normal commercial rates on amounts standing to the credit of the Mandatory Prepayment Account and that the Company
shall be entitled to receive such interest (which shall be paid in accordance with the mandate relating to the Mandatory Prepayment Account).

	(i)
	If
any Equity or Debt Proceeds (where convertible bonds are issued) are received before the date on which the relevant convertible bonds to which those Equity or Debt Proceeds relate
are to be settled, such Equity or Debt Proceeds shall be promptly paid to and retained in the Mandatory Prepayment Account until (i) the settlement of the relevant convertible bonds (at which
time such Equity or Debt Proceeds shall be applied in accordance with paragraph (b) above) or (ii) such time that the Facility Agent is satisfied that such convertible bonds will not be
settled, at which time such Equity or Debt Proceeds may be withdrawn from the Mandatory Prepayment Account. 

22

 

	(j)
	If
at any time any Trapped Cash (or an amount equal thereto) which is excluded from any Equity or Debt Proceeds, Disposal Proceeds or Insurance Proceeds ceases to be Trapped Cash
then:

	(i)
	the
Facility shall be reduced and cancelled on the date on which such Trapped Cash (or an amount equal thereto) ceases to be Trapped Cash; and

	(ii)
	the
Borrowers shall (within 10 Business Days of the date on which such Trapped Cash (or an amount equal thereto) ceases to be Trapped Cash) prepay Loans, 

in
each case (A) to the extent that the Facility would have been cancelled, or the Borrowers would have been required to prepay Loans, had such Trapped Cash not been Trapped Cash on the date of
receipt by the relevant member of the Group of the relevant Equity or Debt Proceeds, Disposal Proceeds or Insurance Proceeds and (B) in accordance with and subject to the other provisions of
this Clause 8.3. The Company shall (and shall procure that each other member of the Group shall) take such commercially reasonable steps as are legally available to it (and which would not, for
the avoidance of doubt, result in any material cost to the Group) to procure that any Trapped Cash ceases to be Trapped Cash as soon as reasonably practicable after the date of receipt by any member
of the Group of any Equity or Debt Proceeds, Disposal Proceeds or Insurance Proceeds. 

	8.4
	Voluntary cancellation

The
Company may, if it gives the Facility Agent not less than 5 Business Days' (or such shorter period as the Majority Lenders may agree) prior notice, cancel the whole or any part (being a minimum
amount of EUR 5,000,000 and an integral multiple of EUR 1,000,000) of the Available Facility. Any cancellation under this Clause 8.4 shall reduce the Commitments of the Lenders rateably under
the Facility. 

	8.5
	Voluntary Prepayment of Loans

The
Borrower to which a Loan has been made may, if it gives the Facility Agent not less than 5 Business Days' (or such shorter period as the Majority Lenders may agree) prior notice, prepay the whole
or any part of a Loan (but if in part, being an amount that reduces the Base Currency Amount of the Loan by a minimum amount of EUR 5,000,000 and an integral multiple of EUR 1,000,000). 

	8.6
	Right of repayment and cancellation in relation to a single Lender

	(a)
	If:

	(i)
	any
sum payable to any Lender by an Obligor is required to be increased under paragraph (c) of Clause 13.2 (Tax
gross-up); or

	(ii)
	any
Lender claims indemnification from the Company under Clause 13.3 (Tax indemnity) or Clause 14.1
(Increased costs); or

	(iii)
	any
Lender notifies the Facility Agent of its Additional Cost Rate under paragraph 3 of Schedule 4 (Mandatory Cost
Formulae), 

the
Company may, whilst (in the case of paragraphs (i) and (ii) above) the circumstance giving rise to the requirement or indemnification continues or (in the case of
paragraph (iii) above) that Additional Cost Rate is greater than zero, give the Facility Agent notice of cancellation of the Commitment of that Lender and its intention to procure the repayment
of that Lender's participation in the Loans. 

	(b)
	On
receipt of a notice referred to in paragraph (a) above, the Commitment of that Lender shall immediately be reduced to zero. 

23

 

	(c)
	On
the last day of each Interest Period which ends after the Company has given notice under paragraph (a) above (or, if earlier, the date specified by the Company in that
notice), each Borrower to which a Loan is outstanding shall repay that Lender's participation in that Loan.

	8.7
	Restrictions

	(a)
	Any
notice of cancellation or prepayment given by any Party under this Clause 8 shall be irrevocable and, unless a contrary indication appears in this Agreement, shall specify
the date or dates upon which the relevant cancellation or prepayment is to be made and the amount of that cancellation or prepayment.

	(b)
	Any
prepayment under this Agreement shall be made together with accrued interest on the amount prepaid and, subject to any Break Costs (if applicable) without premium or penalty.

	(c)
	Unless
a contrary indication appears in this Agreement, any part of the Facility which is prepaid may be reborrowed in accordance with the terms of this Agreement.

	(d)
	The
Borrowers shall not repay or prepay all or any part of the Loans and the Company may not cancel all or any part of the Facility or the Commitments except at the times and in the
manner expressly provided for in this Agreement.

	(e)
	No
amount of the Facility or the Commitments cancelled under this Agreement may be subsequently reinstated.

	(f)
	If
the Facility Agent receives a notice under this Clause 8 it shall promptly forward a copy of that notice to either the Company or the affected Lender, as appropriate. 

24

 

 
 

SECTION 5
  COSTS OF UTILISATION    
    

	9.
	INTEREST

	9.1
	Calculation of interest

The
rate of interest on each Loan for each Interest Period is the percentage rate per annum which is the aggregate of the applicable: 

	(a)
	Margin
(from time to time);

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

	(c)
	Mandatory
Cost, if any.

	9.2
	Payment of interest

The
Borrower to which a Loan has been made shall pay accrued interest on that Loan on the last day of each Interest Period (and, if the Interest Period is longer than six Months, on the dates falling
at six Monthly intervals after the first day of the Interest Period). 

	9.3
	Default interest

	(a)
	If
an Obligor fails to pay any amount payable by it under a Finance Document on its due date, interest shall accrue on the overdue amount from the due date up to the date of actual
payment (both before and after judgment) at a rate which, subject to paragraph (b) below, is one per cent higher than the rate which would have been payable if the overdue amount had, during
the period of non-payment, constituted a Loan in the currency of the overdue amount for successive Interest Periods, each of a duration selected by the Facility Agent (acting reasonably).
Any interest accruing under this Clause 9.3 shall be immediately payable by such Obligor on demand by the Facility Agent.

	(b)
	If
any overdue amount consists of all or part of a Loan which became due on a day which was not the last day of an Interest Period relating to that Loan:

	(i)
	the
first Interest Period for that overdue amount shall have a duration equal to the unexpired portion of the current Interest Period relating to that Loan; and

	(ii)
	the
rate of interest applying to the overdue amount during that first Interest Period shall be one per cent. higher than the rate which would have applied if the overdue amount had
not become due.

	(c)
	Default
interest (if unpaid) arising on an overdue amount will be compounded with the overdue amount at the end of each Interest Period applicable to that overdue amount but will
remain immediately due and payable.

	9.4
	Notification of rates of interest

The
Facility Agent shall notify the Lenders and the relevant Borrower of the determination of a rate of interest under this Agreement as soon as reasonably practicable after the making of such
determination in accordance with the provisions of this Agreement. 

	10.
	INTEREST PERIODS

	10.1
	Selection of Interest Periods

	(a)
	A
Borrower (or the Company on behalf of a Borrower) may select an Interest Period for a Loan in the Utilisation Request for that Loan. 

25

 

	(b)
	Subject
to this Clause 10, a Borrower (or the Company) may select an Interest Period of one, two, three or six Months or any other period agreed between the Company and the
Facility Agent (acting on the instructions of the Majority Lenders).

	(c)
	An
Interest Period for a Loan shall not extend beyond the applicable Termination Date.

	(d)
	Each
Interest Period for a Loan shall start on the Utilisation Date.

	(e)
	A
Loan has one Interest Period only.

	(f)
	Prior
to the Syndication Date, Interest Periods shall be one Month or such other period as the Facility Agent and the Company may agree and any Interest Period which would otherwise
end during the month preceding or extend beyond the Syndication Date shall end on the Syndication Date.

	10.2
	Non-Business Days

If
an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period will instead end on the next Business Day in that calendar month (if there is one) or the preceding
Business Day (if there is not). 

	11.
	CHANGES TO THE CALCULATION OF INTEREST

	11.1
	Absence of quotations

Subject
to Clause 11.2 (Market disruption), if LIBOR or, if applicable, EURIBOR is to be determined by reference to the Reference Banks but a
Reference Bank does not supply a quotation by the Specified Time on the Quotation Day, the applicable LIBOR or EURIBOR shall be determined on the basis of the quotations of the remaining Reference
Banks. 

	11.2
	Market disruption

	(a)
	If
a Market Disruption Event occurs in relation to a Loan for any Interest Period, then the rate of interest on each Lender's share of that Loan for the Interest Period shall be the
rate per annum which is the sum of:

	(i)
	the
Margin (from time to time);

	(ii)
	the
rate notified to the relevant Borrower by that Lender as soon as practicable and in any event before interest is due to be paid in respect of that Interest Period, to be that
which expresses as a percentage rate per annum the cost to that Lender of funding its participation in that Loan from whatever source it may reasonably select; and

	(iii)
	the
Mandatory Cost, if any, applicable to that Lender's participation in the Loan.

	(b)
	In
this Agreement "Market Disruption Event" means:

	(i)
	at
or about noon on the Quotation Day for the relevant Interest Period the Screen Rate is not available and none or only one of the Reference Banks supplies a rate to the Facility
Agent to determine LIBOR or, if applicable, EURIBOR for the relevant currency and Interest Period; or

	(ii)
	before
close of business in London on the Quotation Day for the relevant Interest Period, the Facility Agent receives notifications from a Lender or Lenders (whose participations in
a Loan exceed 35 per cent. of that Loan) that the cost to it of obtaining matching deposits in the Relevant Interbank Market would be in excess of LIBOR or, if applicable, EURIBOR. 

26

 

	11.3
	Alternative basis of interest or funding

	(a)
	If
a Market Disruption Event occurs and the Facility Agent or the Company so requires, the Facility Agent and the Company shall enter into negotiations (for a period of not more than
thirty days) with a view to agreeing a substitute basis for determining the rate of interest.

	(b)
	Any
alternative basis agreed pursuant to paragraph (a) above shall, with the prior consent of all the Lenders and the Company, be binding on all Parties.

	11.4
	Break Costs

	(a)
	Each
Borrower shall, within three Business Days of demand by a Finance Party, pay to that Finance Party its Break Costs attributable to all or any part of a Loan or Unpaid Sum being
paid by that Borrower on a day other than the last day of an Interest Period for that Loan or Unpaid Sum.

	(b)
	Each
Lender shall, as soon as reasonably practicable after a demand by the Facility Agent, provide a certificate confirming the amount of its Break Costs for any Interest Period in
which they accrue.

	12.
	FEES

	12.1
	Commitment fee

	(a)
	The
Company shall pay (or procure the payment) to the Facility Agent (for the account of each Lender) a fee in the Base Currency computed at the rate of 40 per cent. of the Margin
from time to time on the Available Facility during the Availability Period.

	(b)
	The
accrued commitment fee is payable on the last day of each successive period of three Months which ends during the Availability Period, on the last day of the Availability Period
and, if cancelled in full, on the cancelled amount of any Lender's Commitment at the time the cancellation is effective.

	12.2
	Up-front fee

The
Company shall pay (or procure the payment) to the Arrangers an up-front fee in the amount and at the time agreed in a Fee Letter. 

	12.3
	Agency fee

The
Company shall pay (or procure the payment) to the Facility Agent (for its own account) an agency fee in the amount and at the times agreed in a Fee Letter. 

27

  

 
 

SECTION 6
  ADDITIONAL PAYMENT OBLIGATIONS    
    

	13.
	TAX GROSS-UP AND INDEMNITIES

	13.1
	Definitions

In
this Agreement: 

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

"Tax Credit" means a credit against, relief or remission for, or repayment of any Tax. 

"Tax Deduction" means a deduction or withholding for or on account of Tax from a payment under a Finance Document. 

"Tax Payment" means either the increase in a payment made by an Obligor to a Finance Party under Clause 13.2 (Tax
gross-up) or a payment under Clause 13.3 (Tax indemnity). 

"Tax Relief" means a deduction, exemption or other relief in computing the amount of any Tax. 

	13.2
	Tax gross-up

	(a)
	Each
Obligor shall make all payments to be made by it without any Tax Deduction, unless a Tax Deduction is required by law.

	(b)
	The
Company shall promptly upon becoming aware that an Obligor must make a Tax Deduction (or that there is any change in the rate or the basis of a Tax Deduction) notify the Facility
Agent accordingly. Similarly, a Lender shall notify the Facility Agent on becoming so aware in respect of a payment payable to that Lender. If the Facility Agent receives such notification from a
Lender it shall notify the Company and that Obligor.

	(c)
	If
a Tax Deduction is required by law to be made by an Obligor, the amount of the payment due from that Obligor shall be increased to an amount which (after making any Tax Deduction)
leaves an amount equal to the payment which would have been due if no Tax Deduction had been required.

	(d)
	An
Obligor is not required to make an increased payment to a Lender under paragraph (c) above for a Tax Deduction if the Tax Deduction arises as a result of the gross
negligence or wilful default of that Lender or the failure of that Lender to complete any procedural formalities necessary (including, but without limitation, in relation to an Obligor incorporated or
tax resident in Luxembourg the formalities applicable under the Council Directive 2003/48/EC of 3 June 2003 on taxation of savings income in the form of interest payments) to enable such
Obligor to obtain an authorisation to make the relevant payment without a Tax Deduction which that Lender has been reasonably requested to perform by such Obligor or the relevant tax authorities and
which it is within the control of that Lender to complete (without incurring any cost or expense other than any cost or expense which that Lender considers to be immaterial or which is met by such
Obligor).

	(e)
	If
an Obligor is required to make a Tax Deduction, that Obligor shall make that Tax Deduction and any payment required in connection with that Tax Deduction within the time allowed
and in the minimum amount required by law.

	(f)
	Within
thirty days of making either a Tax Deduction or any payment required in connection with that Tax Deduction, the Obligor making that Tax Deduction shall deliver to the Facility
Agent for the Finance Party entitled to the payment evidence reasonably satisfactory to that 

28

 

Finance
Party that the Tax Deduction has been made or (as applicable) any appropriate payment paid to the relevant taxing authority. 

	13.3
	Tax indemnity

	(a)
	The
Company shall (within three Business Days of demand by the Facility Agent) pay to a Protected Party (through the Facility Agent) an amount equal to the loss, liability or cost
which that Protected Party determines (in its discretion, but acting in good faith) will be or has been (directly or indirectly) suffered for or on account of Tax by that Protected Party in respect of
a Finance Document.

	(b)
	Paragraph (a)
above shall not apply:

	(i)
	with
respect to any Tax assessed on a Finance Party:

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

	(B)
	under
the law of the jurisdiction in which that Finance Party's Facility Office is located in respect of amounts received or receivable in that jurisdiction, 

if
that Tax is imposed on or calculated by reference to the net income received or receivable (but not any sum deemed to be received or receivable) by that Finance Party; 

	(ii)
	with
respect to any other payment of or for or on account of Tax by a Finance Party under the law of any jurisdiction referred to in sub-paragraph (i) above except
where the same is incurred in connection with any requirement of the Company to make a deduction or withholding for or on account of Tax, or to make a payment on account of Tax, in each case in
respect of a Tax liability of that Finance Party, in respect of any payments under this Agreement (including a failure to comply with such requirement); or

	(iii)
	to
the extent a loss, liability or cost:

	(A)
	is
compensated for by an increased payment under Clause 13.2 (Tax gross-up); or

	(B)
	would
have been compensated for by an increased payment under Clause 13.2 (Tax gross-up) but was not so compensated
solely because one of the exclusions in paragraph (d) of Clause 13.2 (Tax gross-up) applied; or

	(C)
	arises
as a result of the gross negligence or wilful default of a Finance Party or the failure of that Finance Party to complete any procedural formalities in connection with any Tax
which that Finance Party has been reasonably requested to perform by the Company or the relevant tax authorities and which it is within the control of that Finance Party to complete (without incurring
any cost or expense other than any cost or expense which that Finance Party considers to be immaterial or which is met by the Company).

	(c)
	A
Protected Party making, or intending to make a claim under paragraph (a) above shall promptly notify the Facility Agent of the event which will give, or has given, rise to
the claim, following which the Facility Agent shall notify the Company.

	(d)
	A
Protected Party shall, on receiving a payment from an Obligor under this Clause 13.3, notify the Facility Agent. 

29

 

	13.4
	Tax Credit

	(a)
	If
an Obligor makes a Tax Payment and the relevant Finance Party determines (in its discretion, but acting in good faith) that:

	(i)
	a
Tax Credit is attributable either to an increased payment of which that Tax Payment forms part, or to that Tax Payment; and

	(ii)
	that
Finance Party has obtained, utilised and retained that Tax Credit, 

the
Finance Party shall pay an amount to the Obligor which that Finance Party determines will leave it (after that payment) in the same after-Tax position as it would have been in had the
Tax Payment not been required to be made by the Obligor. 

	(b)
	If
a Finance Party makes any payment to an Obligor pursuant to paragraph (a) above and that Finance Party subsequently determines (in its discretion, but acting in good faith)
that the Tax Credit in respect of which such payment was made was not available or has been withdrawn or that it was unable to use such Tax Credit in full, the relevant Obligor shall reimburse that
Finance Party such amount (being an amount no greater than the amount paid to the relevant Obligor pursuant to paragraph (a) above) as that Finance Party determines (in its discretion, but
acting in good faith) is necessary to place it in the same after-tax position as it would have been in if such Tax Credit had been obtained and fully used and retained by the relevant
Obligor.

	13.5
	Stamp taxes

The
Company shall pay and, within three Business Days of demand, indemnify each Finance Party against any cost, loss or liability that Finance Party incurs in relation to all stamp duty, registration
and other similar Taxes payable in respect of any Finance Document. 

	13.6
	Value added tax

	(a)
	All
amounts set out, or expressed to be payable under a Finance Document by any Party to a Finance Party which (in whole or in part) constitute the consideration for VAT purposes
shall be deemed to be exclusive of any VAT which is chargeable on such supply, and accordingly, subject to paragraph (b) below, if VAT is chargeable on any supply made by any Finance Party to
any Party under a Finance Document, that Party shall pay to the Finance Party (in addition to and at the same time as paying the consideration) an amount equal to the amount of the VAT (and such
Finance Party shall promptly provide an appropriate VAT invoice to such Party).

	(b)
	Where
a Finance Document requires a Party to reimburse a Finance Party for any costs or expenses, that Party shall also at the same time pay and indemnify the Finance Party against
all VAT incurred by the Finance Party in respect of the costs or expenses to the extent that the Finance Party reasonably determines (acting in good faith) that neither it nor any other member of any
group of which it is a member for VAT purposes is entitled to credit or repayment from the relevant tax authority in respect of the VAT.

	14.
	INCREASED COSTS

	14.1
	Increased costs

	(a)
	Subject
to Clause 14.3 (Exceptions) the Company shall, within three Business Days of a demand by the Facility Agent, pay for the
account of a Finance Party the amount of any Increased Costs incurred by that Finance Party or any of its Affiliates as a result of (i) the introduction of or any change in (or in the
interpretation, administration or application of) 

30

 

any
law or regulation or (ii) compliance with any law or regulation made after the date of this Agreement. 

	(b)
	In
this Agreement "Increased Costs" means:

	(i)
	a
reduction in the rate of return from the Facility or on a Finance Party's (or its Affiliate's) overall capital;

	(ii)
	an
additional or increased cost; or

	(iii)
	a
reduction of any amount due and payable under any Finance Document, 

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

	14.2
	Increased cost claims

	(a)
	A
Finance Party intending to make a claim pursuant to Clause 14.1 (Increased costs) shall notify the Facility Agent of the event
giving rise to the claim, following which the Facility Agent shall promptly notify the Company.

	(b)
	Each
Finance Party shall, as soon as practicable after a demand by the Facility Agent, provide a certificate confirming the amount of its Increased Costs.

	14.3
	Exceptions

	(a)
	Clause 14.1
(Increased costs) does not apply to the extent any Increased Cost is:

	(i)
	attributable
to a Tax Deduction required by law to be made by an Obligor;

	(ii)
	compensated
for by Clause 13.3 (Tax indemnity) (or would have been compensated for under Clause 13.3
(Tax indemnity) but was not so compensated solely because any of the exclusions in paragraph (b) of Clause 13.3 (Tax
indemnity) applied);

	(iii)
	attributable
to the failure of a Finance Party to complete any procedural formalities in connection with any Tax which such Finance Party has been reasonably requested to perform by
the Company or the relevant tax authorities and which is within the control of the Finance Party to complete (without incurring any cost or expense other than any cost or expense which the Finance
Party considers to be immaterial or which is met by the Company);

	(iv)
	(without
prejudice to paragraph (b) of Clause 13.4 (Tax Credit)) attributable to any loss or reduction of any Tax Credit or Tax
Relief (including, without limitation, any Tax Credit or Tax Relief in connection with any financing or hedging arrangements of any Finance Party) received or receivable by a Finance Party under the
laws of any jurisdiction in which it is incorporated or, if different, the jurisdiction (or jurisdictions) in which it is treated as resident for tax purposes, or the jurisdiction in which its
Facility Office is located (other than the loss or reduction of any such Tax Credit or Tax Relief received or receivable by the a Finance Party where such loss or reduction is due to the gross
negligence or wilful breach of the Borrowers or any other member of the Group of any law or regulation or any Event of Default);

	(v)
	compensated
for by the payment of the Mandatory Cost; or

	(vi)
	attributable
to the wilful breach by the relevant Finance Party or its Affiliates of any law or regulation. 

31

 

	(b)
	For
the avoidance of doubt an Increased Cost shall not arise or be deemed to arise solely by reason of any fluctuation in EURIBOR or LIBOR.

	(c)
	In
this Clause 14.3, a reference to a "Tax Credit", "Tax Deduction" or
"Tax Relief" has, in each case, the same meaning given to such term in Clause 13.1 (Definitions).

	15.
	OTHER INDEMNITIES

	15.1
	Currency indemnity

	(a)
	If
any sum due from an Obligor under the Finance Documents (a "Sum"), or any order, judgment or award given or made in relation to a
Sum, has to be converted from the currency (the "First Currency") in which that Sum is payable into another currency (the
"Second Currency") for the purpose of:

	(i)
	making
or filing a claim or proof against that Obligor;

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

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

	(b)
	Each
Obligor waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency or currency unit other than that in which it is expressed to
be payable.

	15.2
	Other indemnities

The
Company shall (or shall procure that an Obligor will), within three Business Days of written demand, indemnify each Finance Party against any cost, loss or liability incurred by that Finance Party
as a result of: 

	(a)
	the
occurrence of any Event of Default;

	(b)
	a
failure by an Obligor to pay any amount due under a Finance Document on its due date, including without limitation, any cost, loss or liability arising as a result of
Clause 29 (Sharing among the Finance Parties);

	(c)
	funding,
or making arrangements to fund, its participation in a Loan requested by a Borrower in a Utilisation Request but not made by reason of the operation of any one or more of the
provisions of this Agreement (other than by reason of default or negligence by that Finance Party alone); or

	(d)
	a
Loan (or part of a Loan) not being prepaid in accordance with a notice of prepayment given by a Borrower or the Company.

	15.3
	Indemnity to the Facility Agent

The
Company shall promptly indemnify the Facility Agent against any cost, loss or liability incurred by the Facility Agent (acting reasonably) as a result of: 

	(a)
	investigating
any event which it reasonably believes is a Default; or

	(b)
	acting
or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised. 

32

 

	15.4
	Indemnity to the Security Agent

	(a)
	Each
Obligor shall promptly indemnify the Security Agent and every Receiver and Delegate against any cost, loss or liability incurred by any of them as a result of:

	(i)
	the
taking, holding, protection or enforcement of the Transaction Security;

	(ii)
	the
exercise of any of the rights, powers, discretions and remedies vested in the Security Agent and each Receiver and Delegate by the Finance Documents or by law; and

	(iii)
	any
default by any Obligor in the performance of any of the obligations expressed to be assumed by it in the Finance Documents.

	(b)
	The
Security Agent may, in priority to any payment to the Secured Parties, indemnify itself out of the Charged Shares in respect of, and pay and retain, all sums necessary to give
effect to the indemnity in this Clause 15.4 and shall have a lien on the Transaction Security and the proceeds of the enforcement of the Transaction Security for all moneys payable to it.

	16.
	MITIGATION BY THE LENDERS

	16.1
	Mitigation

	(a)
	Each
Finance Party shall, in consultation with the Company, take all reasonable steps to mitigate any circumstances which arise and which would result in any amount becoming payable
under or pursuant to, or cancelled pursuant to, any of Clause 8.1 (Illegality), Clause 13 (Tax
gross-up and indemnities), Clause 14 (Increased costs) or paragraph 3 of Schedule 4
(Mandatory Cost Formulae) including (but not limited to) transferring its rights and obligations under the Finance Documents to another Affiliate or
Facility Office.

	(b)
	Paragraph (a)
above does not in any way limit the obligations of any Obligor under the Finance Documents.

	16.2
	Limitation of liability

	(a)
	The
Company shall indemnify each Finance Party for all costs and expenses reasonably incurred by that Finance Party as a result of steps taken by it under Clause 16.1
(Mitigation).

	(b)
	A
Finance Party is not obliged to take any steps under Clause 16.1 (Mitigation) if, in the opinion of that Finance Party (acting
reasonably), to do so might be prejudicial to it.

	17.
	COSTS AND EXPENSES

	17.1
	Transaction expenses

The
Company shall promptly on demand pay the Facility Agent and the Arrangers the amount of all costs and expenses (including legal fees up to a maximum aggregate amount agreed between the Company and
the Facility Agent (on behalf of itself and the Arrangers)) reasonably incurred by any of them, in connection with the negotiation, preparation, printing, execution and syndication of: 

	(a)
	this
Agreement and any other documents referred to in this Agreement (up to a cap agreed upon or to be agreed upon between the parties); and

	(b)
	any
other Finance Documents executed after the date of this Agreement.

	17.2
	Amendment costs

If
(a) an Obligor requests an amendment, waiver or consent or (b) an amendment is required pursuant to Clause 30.9 (Change of
currency), the Company shall, within three Business Days of demand, reimburse the Facility Agent for the amount of all costs and expenses (including legal 

33

 

fees)
reasonably incurred by the Facility Agent in responding to, evaluating, negotiating or complying with that request or requirement. 

	17.3
	Security Agent's ongoing costs

	(a)
	In
the event of the occurrence of (i) a Default or (ii) the Security Agent considering it necessary or expedient or (iii) being requested by an Obligor or the
Majority Lenders to undertake duties which the Security Agent and the Company agree to be of an exceptional nature and/or outside the scope of the normal duties of the Security Agent under the Finance
Documents, the Company shall pay to the Security Agent any additional remuneration (together with any applicable VAT) that may be agreed between them.

	(b)
	If
the Security Agent and the Company fail to agree upon the nature of the duties or upon any additional remuneration, that dispute shall be determined by a investment bank (acting as
an expert and not as an arbitrator) selected by the Security Agent and approved by the Company or, failing approval, nominated (on the application of the Security Agent) by the President for the time
being of the Law Society of England and Wales (the costs of the nomination and of the investment bank being payable by the Company) and the determination of any investment bank shall be final and
binding upon the parties to this Agreement.

	17.4
	Enforcement costs

The
Company shall, within three Business Days of demand, pay to each Finance Party the amount of all costs and expenses (including legal fees) incurred by that Finance Party in connection with the
enforcement of, or the preservation of any rights under, any Finance Document. 

34

 
 
 

SECTION 7
  GUARANTEE    
    

	18.
	GUARANTEE AND INDEMNITY

	18.1
	Guarantee and indemnity

Each
Guarantor irrevocably and unconditionally jointly and severally: 

	(a)
	guarantees
to each Finance Party punctual performance by each Obligor of all that Obligor's obligations under the Finance Documents;

	(b)
	undertakes
with each Finance Party that whenever an Obligor does not pay any amount when due under or in connection with any Finance Document, that Guarantor shall immediately on
demand pay that amount as if it was the principal obligor; and

	(c)
	indemnifies
each Finance Party immediately on demand against any cost, loss or liability suffered by that Finance Party if any obligation guaranteed by it is or becomes unenforceable,
invalid or illegal. The amount of the cost, loss or liability shall be equal to the amount which that Finance Party would otherwise have been entitled to recover.

	18.2
	Continuing guarantee

This
guarantee is a continuing guarantee and will extend to the ultimate balance of sums payable by any Obligor under the Finance Documents, regardless of any intermediate payment or discharge in
whole or in part. 

	18.3
	Reinstatement

If
any payment by an Obligor or any discharge given by a Finance Party (whether in respect of the obligations of any Obligor or any security for those obligations or otherwise) is avoided or reduced
as a result of insolvency or any similar event: 

	(a)
	the
liability of each Obligor shall continue as if the payment, discharge, avoidance or reduction had not occurred; and

	(b)
	each
Finance Party shall be entitled to recover the value or amount of that security or payment from each Obligor, as if the payment, discharge, avoidance or reduction had not
occurred.

	18.4
	Waiver of defences

The
obligations of each Guarantor under this Clause 18 will not be affected by an act, omission, matter or thing which, but for this Clause, would reduce, release or prejudice any of its
obligations under this Clause 18 (without limitation and whether or not known to it or any Finance Party) including: 

	(a)
	any
time, waiver or consent granted to, or composition with, any Obligor or other person;

	(b)
	the
release of any other Obligor or any other person under the terms of any composition or arrangement with any creditor of any member of the Group;

	(c)
	the
taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or security over assets of, any Obligor
or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any
security;

	(d)
	any
incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of an Obligor or any other person; 

35

 

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

	(f)
	any
unenforceability, illegality or invalidity of any obligation of any person under any Finance Document or any other document or security; or

	(g)
	any
insolvency or similar proceedings.

	18.5
	Immediate recourse

Each
Guarantor waives any right it may have of first requiring any Finance Party (or any security agent or agent on its behalf) to proceed against or enforce any other rights or security or claim
payment from any person before claiming from that Guarantor under this Clause 18. This waiver applies irrespective of any law or any provision of a Finance Document to the contrary. 

	18.6
	Appropriations

Until
all amounts which may be or become payable by the Obligors under or in connection with the Finance Documents have been irrevocably paid in full, each Finance Party (or any security agent or
agent on its behalf) may: 

	(a)
	refrain
from applying or enforcing any other moneys, security or rights held or received by that Finance Party (or any security agent or agent on its behalf) in respect of those
amounts, or apply and enforce the same in such manner and order as it sees fit (whether against those amounts or otherwise) and no Guarantor shall be entitled to the benefit of the same; and

	(b)
	hold
in an interest-bearing suspense account any moneys received from any Guarantor or on account of any Guarantor's liability under this Clause 18.

	18.7
	Deferral of Guarantors' rights

Until
all amounts which may be or become payable by the Obligors under or in connection with the Finance Documents have been irrevocably paid in full and unless the Agent otherwise directs, no
Guarantor will exercise any rights which it may have by reason of performance by it of its obligations under the Finance Documents: 

	(a)
	to
be indemnified by an Obligor;

	(b)
	to
claim any contribution from any other guarantor of any Obligor's obligations under the Finance Documents; and/or

	(c)
	to
take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Finance Parties under the Finance Documents or of any other guarantee or
security taken pursuant to, or in connection with, the Finance Documents by any Finance Party.

	18.8
	Release of Guarantors' right of contribution

If
any Guarantor (a "Retiring Guarantor") ceases to be a Guarantor in accordance with the terms of the Finance Documents for the purpose of any sale or
other disposal of that Retiring Guarantor then on the date such Retiring Guarantor ceases to be a Guarantor: 

	(a)
	that
Retiring Guarantor is released by each other Guarantor from any liability (whether past, present or future and whether actual or contingent) to make a contribution to any other
Guarantor arising by reason of the performance by any other Guarantor of its obligations under the Finance Documents; and

	(b)
	each
other Guarantor waives any rights it may have by reason of the performance of its obligations under the Finance Documents to take the benefit (in whole or in part and whether 

36

 

by
way of subrogation or otherwise) of any rights of the Finance Parties under any Finance Document or of any other security taken pursuant to, or in connection with, any Finance Document where such
rights or security are granted by or in relation to the assets of the Retiring Guarantor. 

	18.9
	Additional security

This
guarantee is in addition to and is not in any way prejudiced by any other guarantee or security now or subsequently held by any Finance Party. 

	18.10
	Limitation relating to Swedish Guarantors

The
guarantee and indemnity obligations of each Guarantor incorporated in Sweden (a "Swedish Guarantor") under this Clause 18 shall be limited if
(and only if) required by an application of the provisions of the Swedish Companies Act (Sw. aktiebolagslagen (1975:1385)) regulating prohibited loans
and guarantees and distribution of assets taking into account also any other security granted, guarantee and/or undertaking given by such Swedish Guarantor subject to the corresponding limitation, and
it is understood that the obligations of each Swedish Guarantor for such obligations and liabilities under this Clause 18 shall apply only to the extent permitted by the above-mentioned
provisions as applied together with other applicable provisions of the Swedish Companies Act, and the guarantee and indemnity obligations under this Clause 18 shall be limited in accordance
herewith. 

	18.11
	Limitation relating to Norwegian Guarantors

The
guarantee and indemnity obligations of each Guarantor incorporated in Norway (each a "Norwegian Guarantor") under this Clause 18 and any
obligation of a Norwegian Guarantor under any other Finance Document shall not include and shall not be construed as, any indemnity, guarantee, liability or security in respect of any indebtedness or
obligation incurred or undertaken by any Obligor to the extent that the same would constitute a violation of the of the Norwegian Act of 13 June 1997 no 44 on private limited companies clauses
8-7, 8-10 and 1-4, as at any time amended (the "Norwegian Companies Act"). 

	18.12
	General limitation

Without
limiting the representations and warranties of the Obligors in Clause 19 (Representations), the guarantees, obligations, liabilities,
indemnities and undertakings of any Guarantor under this Agreement or under any other Finance Document shall be deemed not to be undertaken or incurred to the extent that the same would constitute
unlawful financial assistance in any jurisdiction and such guarantees, obligations, liabilities, indemnities and undertakings shall be construed accordingly. 

	18.13
	Limitation relating to Dutch Guarantors

Notwithstanding
any other provision of this Clause 18 (Guarantee and Indemnity) the guarantee, indemnity and other obligations of any Guarantor
expressed to be assumed in this Clause 18 (Guarantee and Indemnity) shall be deemed not to be assumed by such Guarantor to the extent that the
same would constitute unlawful financial assistance within the meaning of Section 2:207(c) or 2:98(c) of the Dutch Civil Code (or any analogous unlawful activity) (the
"Prohibition") and the provisions of this Agreement and the other Finance Documents shall be construed accordingly. For the avoidance of doubt, it is
expressly acknowledged that the relevant Guarantors will continue to guarantee all such obligations which, if included, do not constitute a violation of the Prohibition. 

37

 
	18.14
	Limitation relating to SBS Belgium N.V.

Notwithstanding
any other provision of the Finance Documents to the contrary, the guarantee and indemnity obligations of SBS Belgium NV under this Clause 18 and Clause 27.17 shall be
limited to the greatest (as at the date on which the demand is made hereunder) of: 

	(i)
	an
amount equal to EUR 7,105,500, being 50 per cent of the net assets ("netto-actief"/"actif net") of SBS Belgium NV as of 31 December 2003; or

	(ii)
	an
amount equal to 50 per cent of the net assets ("netto-actief"/"actif net") of SBS Belgium NV as per the latest available non-consolidated balance sheet of SBS Belgium
NV; or

	(iii)
	the
highest aggregate amount since the date hereof of all funds on-lent to and not repaid by SBS Belgium NV out of the proceeds of this Agreement. 

38

  

 
 

SECTION 8
  REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT    
    

	19.
	REPRESENTATIONS

Each
Obligor makes the representations and warranties set out in this Clause 19 to each Finance Party on the date of this Agreement save that the representations set out in Clause 19.11
(No misleading information) (other than paragraph (d) thereof) will be made on the date on which the Information Memorandum is approved by the
Company. 

	19.1
	Status

	(a)
	It
is a corporation, duly incorporated and validly existing under the law of its jurisdiction of incorporation.

	(b)
	It
and each of its Material Companies has the power to own its assets and carry on its business as it is being conducted.

	19.2
	Binding obligations

The
obligations expressed to be assumed by it in each Finance Document are, subject to any general principles of law as at the date of this Agreement limiting its obligations which are specifically
referred to in any Legal Opinion, legal, valid, binding and enforceable obligations. 

	19.3
	Non-conflict with other obligations

The
entry into and performance by it of, and the transactions contemplated by, the Finance Documents do not and will not conflict with: 

	(a)
	any
law or regulation applicable to it;

	(b)
	its
or any of its Subsidiaries' constitutional documents; or

	(c)
	any
agreement or instrument binding upon it or any of its Subsidiaries or any of its or any of its Subsidiaries' assets to an extent or in a manner which might reasonably be expected
to have a Material Adverse Effect.

	19.4
	Power and authority

It
has the power to enter into, perform and deliver, and has taken all necessary action to authorise its entry into, performance and delivery of, the Finance Documents to which it is a party and the
transactions contemplated by those Finance Documents. 

	19.5
	Validity and admissibility in evidence

All
Authorisations required or desirable: 

	(a)
	to
enable it lawfully to enter into, exercise its rights and comply with its obligations in the Finance Documents to which it is a party; and

	(b)
	to
make the Finance Documents to which it is a party admissible in evidence in its jurisdiction of incorporation (subject to compliance with any applicable enforcement procedures of
that jurisdiction), 

have
been obtained or effected and are in full force and effect. 

	19.6
	Governing law and enforcement

	(a)
	Subject
to any legal reservations set out in any Legal Opinions, the choice of English law as the governing law of the Finance Documents will be recognised and enforced in its
jurisdiction of incorporation. 

39

 

	(b)
	Subject
to any legal reservations set out in any Legal Opinions, any judgment obtained in England in relation to a Finance Document will be recognised and enforced in its jurisdiction
of incorporation.

	19.7
	Deduction of Tax

It
is not required to make any deduction for or on account of Tax from any payment it may make under any Finance Document, save for any deductions that may be made from any payments made by an Obligor
incorporated in Belgium or by an Obligor which is incorporated in or tax resident in the United Kingdom. 

	19.8
	No filing or stamp taxes

Under
the law of its jurisdiction of incorporation it is not required that the Finance Documents be filed, recorded or enrolled with any court or other authority in that jurisdiction (save for the
purposes of the perfection of any of the security created under the Security Documents) or (save in relation to any enforcement of any of the security created under the Security Documents or any
transfer of shares pursuant to any such enforcement) that any stamp, registration or similar tax be paid on or in relation to the Finance Documents or the transactions contemplated by the Finance
Documents. 

	19.9
	No Insolvency

No
corporate action, legal proceeding or other procedure or step described in Clause 23.7 (Insolvency proceedings) has been taken or, to its
knowledge, threatened in relation to any Obligor or any Material Company and none of the circumstances described in Clause 23.6 (Insolvency)
applies to any Obligor or any Material Company. 

	19.10
	No default

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

	(b)
	No
other event or circumstance is outstanding which constitutes a default under any other agreement or instrument which is binding on it or any Material Company or to which its (or
any Material Company's) assets are subject which might have a Material Adverse Effect.

	19.11
	No misleading information

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

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

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

	(d)
	All
written information (other than the Information Memorandum) supplied by any member of the Group to any Finance Party in connection with the Finance Documents is true, complete and
accurate in all material respects as at the date it was given and is not misleading in any material respect. 

40

 

	19.12
	Financial statements

	(a)
	The
Original Financial Statements of the Company were prepared in accordance with US GAAP consistently applied and fairly represent the Company's consolidated financial condition and
operations during the relevant financial year.

	(b)
	The
Original Financial Statements of Kanal 5 Holding AB were prepared in accordance with GAAP consistently applied and fairly represent Kanal 5 Holding AB's unconsolidated financial
condition and operations during the relevant financial year.

	(c)
	There
has been no material adverse change in its business or financial condition since 31 December 2004.

	19.13
	Pari passu ranking

Its
payment obligations under the Finance Documents rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors,
except for obligations mandatorily preferred by law applying to companies generally. 

	19.14
	No proceedings pending or threatened

No
litigation, arbitration or administrative proceedings of or before any court, arbitral body or agency which, if adversely determined, might reasonably be expected to have a Material Adverse Effect
have (to the best of its knowledge and belief) been started or threatened against it or any member of the Group. 

	19.15
	Environmental compliance

It
and each member of the Group has performed and observed in all material respects all Environmental Law, Environmental Permits and all other material covenants, conditions, restrictions or
agreements directly or indirectly concerned with any contamination, pollution or waste or the release or discharge of any toxic or hazardous substance in connection with any real property which is or
was at any time owned, leased or occupied by it or any member of the Group or on which it or any member of the Group has conducted any activity where failure to do so might reasonably be expected to
have a Material Adverse Effect. 

	19.16
	Environmental Claims

No
Environmental Claim has been commenced or (to the best of its knowledge and belief) is threatened against it or any member of the Group where that claim would be reasonably likely, if determined
against it or that member of the Group to have a Material Adverse Effect. 

	19.17
	Taxation

	(a)
	It
and each Material Company has duly and punctually paid and discharged all Taxes imposed upon it or its assets, and each other member of the Group has duly and punctually paid and
discharged all material Taxes imposed upon it or its assets, in each case within the time period allowed without incurring penalties, save to the extent that:

	(i)
	each
of the following applies:

	(A)
	payment
is being contested in good faith;

	(B)
	it
or the relevant member of the Group has maintained adequate reserves for those Taxes; and

	(C)
	payment
can be lawfully withheld; or

	(ii)
	settlement
and rescheduling has been reached with the appropriate tax authorities prior to the date of this Agreement in relation to such Taxes. 

41

 

	(b)
	No
member of the Group is materially overdue in the filing of any Tax returns.

	(c)
	No
material claims or investigations are being or are reasonably likely to be asserted against any member of the Group with respect to Taxes.

	19.18
	No Immunity

In
any proceedings taken in its jurisdiction of incorporation in relation to this Agreement, it will not be entitled to claim for itself or any of its assets immunity from suit, execution, attachment
or other legal process. 

	19.19
	Private and commercial acts

Its
execution of the Finance Documents constitutes, and its exercise of its rights and performance of its obligations hereunder will constitute, private and commercial acts done and performed for
private and commercial purposes. 

	19.20
	Security

No
Security exists over all or any of the present or future assets of any member of the Group other than any Security permitted under Clause 22.3 (Negative
Pledge). 

	19.21
	Ranking

The
Transaction Security has or will have first ranking priority and it is not subject to any prior ranking or pari passu ranking Security unless
mandatorily preferred by law. 

	19.22
	Transaction Security

Each
Security Document to which it is a party validly creates the Security which is expressed to be created by that Security Document and evidences the Security it is expressed to evidence. 

	19.23
	Good Title Assets

It
has good, valid and marketable title to, or valid leases or licences of, and all appropriate Authorisations to use, all material assets necessary to carry on its business as presently conducted. 

	19.24
	Legal and Beneficial Owner

It
is the absolute legal owner and beneficial owner of the assets subject to any Transaction Security created or evidenced by any Security Document to which it is a party. 

	19.25
	Shares

The
shares which are subject to the Transaction Security are fully paid and not subject to any option to purchase or similar rights. The constitutional documents of companies whose shares are subject
to the Transaction Security do not restrict or inhibit any transfer of those shares on creation or on enforcement of the Transaction Security, save for the restrictions on the transfer of shares in
SBS Nederlands B.V. contained in its Articles of Association, a shareholders' agreement entered into on May 23, 1996 (as amended or supplemented) and a shareholders' agreement entered into on
September 1, 2003. 

	19.26
	Supervision on credit institutions

Each
Obligor incorporated in The Netherlands is in compliance with the Dutch Act on the Supervision on Credit Institutions (Wet toezicht kredietwezen
1992) (the "Dutch Banking Act") and any regulations issued pursuant thereto (including but not limited to (i) the 2005
Dutch Central Bank's Policy Guidelines issued in relation to the exemption regulation dated 26 June 2002 of the Ministry of Finance of the Netherlands, as promulgated in connection with the
Dutch Banking Act (the "Exemption Regulation") and (ii) the Exemption Regulation). 

42

 
	19.27
	Repetition

The
Repeating Representations are deemed to be made by each Obligor (by reference to the facts and circumstances then existing) on the date of each Utilisation Request and the first day of each
Interest Period. 

	20.
	INFORMATION UNDERTAKINGS

The
undertakings in this Clause 20 remain in force from the date of this Agreement for so long as any amount is outstanding under the Finance Documents or any Commitment is in force. 

	20.1
	Financial statements

The
Company shall supply to the Facility Agent in sufficient copies for all the Lenders: 

	(a)
	as
soon as the same become available, but in any event within 180 days after the end of each of its financial years, its audited financial statements for that financial year
(as contained in its Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission pursuant to the U.S. Securities Exchange Act of 1934, if applicable);

	(b)
	as
soon as the same become available (but only to the extent that the same are available), and in any event within 180 days after the end of each of the relevant Obligor's
financial years, the financial statements prepared in accordance with applicable GAAP (audited, if available) of each Obligor (other than the Company) for that financial year; and

	(c)
	as
soon as the same become available, but in any event within 90 days after the end of each financial quarter of each of its financial years, its financial results (as
contained in the submissions made by it with the U.S. Securities and Exchange Commission on Form 6-K pursuant to the U.S. Securities Exchange Act of 1934, if applicable) for that
financial quarter.

	20.2
	Compliance Certificate

	(a)
	The
Company shall supply to the Facility Agent, with each set of financial statements delivered pursuant to paragraphs (a) and (c) of Clause 20.1
(Financial statements), a Compliance Certificate setting out (in reasonable detail) computations as to compliance with Clause 21
(Financial Covenants) as at the date as at which those financial statements were drawn up.

	(b)
	Each
Compliance Certificate shall be signed by two senior officers of the Company (one from whom shall be the Chief Financial Officer or the Chief Accounting Officer) and, with
respect to any Compliance Certificate which is delivered together with any financial statements delivered pursuant to paragraph (a) of Clause 20.1 (Financial
statements), shall be reported on by the Company's auditors in the form agreed by the Company and the Facility Agent prior to the date of this Agreement.

	20.3
	Requirements as to financial statements

	(a)
	Each
set of financial statements delivered by the Company pursuant to paragraphs (a) and (c) of Clause 20.1 (Financial
statements) shall be certified by the Chief Financial Officer, the Chief Accounting Officer or a director of the Company as fairly representing the Group's financial condition
as at the date as at which those financial statements were drawn up.

	(b)
	The
Company shall procure that each set of financial statements delivered pursuant to paragraphs (a) and (c) of Clause 20.1 (Financial
statements) is prepared using US GAAP. To the extent that there is any change in US GAAP, or to the extent that the accounting practices and financial reference periods applied
in the preparation of the Company's Original Financial Statements are different to those applied under US GAAP, the Company shall notify the 

43

 

Facility
Agent accordingly (if such change would result in any change in the calculation or determination of any of the financial ratios contained in Clause 21.2
(Financial Condition)). 

	(c)
	If
reasonably requested by the Facility Agent the Company must promptly supply to the Facility Agent (if the change referred to in paragraph (b) above would result in any
change in the calculation or determination of any of the financial ratios contained in Clause 21.2 (Financial Condition)):

	(i)
	a
full description of any change notified under paragraph (b) above; and

	(ii)
	a
statement (the "Reconciliation Statement") signed by the Chief Financial Officer of the Company showing sufficient information, in
such detail and format as may be reasonably required by the Facility Agent, to enable the Finance Parties:

	(A)
	to
make a proper comparison between the financial position shown by the set of financial statements prepared on the changed basis and the Original Financial Statements of the Company;
and

	(B)
	to
test the financial covenants in Clause 21 (Financial Covenants) as if the set of financial statements of the Company prepared
on the changed basis had been prepared according to US GAAP as used in the preparation of the Original Financial Statements of the Company, 

and
any reference in this Agreement to such financial statements as prepared on the changed basis shall be a reference to such financial statements as adjusted in accordance with the Reconciliation
Statement. 

	(d)
	If
requested by the Facility Agent acting on the instructions of the Majority Lenders, the Company must enter into discussions for a period of not more than 30 days with a view
to agreeing any amendments required to be made to this Agreement to place the Finance Parties in the same position as they would have been in if the change notified under paragraph (b) above
had not happened. Any agreement between the Company and the Facility Agent (acting on the instructions of the Majority Lenders) will be binding on all the Parties.

	(e)
	For
the avoidance of doubt, if and to the extent that an agreement is reached under paragraph (d) above regarding amendments to this Agreement, upon implementation of such
amendments or if the Facility Agent (acting on the instructions of the Majority Lenders) has confirmed in writing that no amendments will be required, the Company will be under no further obligation
to continue to provide Reconciliation Statements in respect of the change in the US GAAP which led to such amendments (or confirmation that no amendments are required to be made).

	(f)
	The
Company will procure that, if requested by the Facility Agent (acting on the instructions of the Majority Lenders), the auditors of the Company confirm to the Finance Parties the
accuracy of the information in any Reconciliation Statement.

	20.4
	Determination of Material Companies

Whether
or not a member of the Group is a Material Company shall be determined on the basis of the most recent audited annual financial statements of the Group delivered to the Facility Agent pursuant
to Clause 20.1(a) (Financial statements) and such other information as the Facility Agent (acting reasonably) may specify to the Company for the
purpose of determining whether or not a member of the Group is a Material Company. The Company agrees to deliver such financial statements and other information to the Facility Agent as the Facility
Agent may reasonably require for this purpose. 

44

 
	20.5
	Information: miscellaneous

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

	(a)
	promptly
upon the reasonable request of the Facility Agent, all documents dispatched by the Company to its shareholders (or any class of them) or its creditors generally;

	(b)
	promptly
upon becoming aware of them, the details of any litigation, arbitration or administrative proceedings which are current, threatened or pending against any member of the
Group, and which might, if adversely determined, have a Material Adverse Effect; and

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

	20.6
	Notification of default and disposal of SBS Broadcasting B.V. shares

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

	(b)
	Promptly
upon a request by the Facility Agent, the Company shall supply to the Facility Agent a certificate signed by two of its directors or senior officers on its behalf certifying
that no Default is continuing (or if a Default is continuing, specifying the Default and the steps, if any, being taken to remedy it).

	(c)
	The
Company shall, as soon as reasonably practicable, notify the Facility Agent of any proposed disposal by SBS Nederlands B.V. (or any other member of the Group) of any of the shares
of SBS Broadcasting B.V. or of the occurrence of any event pursuant to which SBS Nederlands B.V. (or any other member of the Group) may subsequently be required to dispose of any of the shares in SBS
Broadcasting B.V.

	20.7
	"Know your customer" checks

	(a)
	If:

	(i)
	the
introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement; or

	(ii)
	any
change in the status of an Obligor or the composition of the shareholders of an Obligor after the date of this Agreement; or

	(iii)
	a
proposed assignment or transfer by a Lender of any of its rights or obligations under this Agreement to a party that is not a Lender prior to such assignment or transfer, 

obliges
the Facility Agent or any Lender (or, in the case of paragraph (iii) above, any prospective new Lender) to comply with "know your customer" or similar identification procedures in
circumstances where the necessary information is not already available to it, each Obligor shall promptly upon the request of the Facility Agent (for itself or on behalf of any Lender) supply, or
procure the supply of, such documentation and other evidence as is reasonably requested by the Facility Agent (for itself or on behalf of any Lender or prospective new Lender, provided that such new
Lender has executed a Confidentiality Undertaking) in order for the Facility Agent, such Lender or, in the case of the event described in paragraph (iii) above, any prospective new Lender to
carry out and be satisfied it has complied with all necessary "know your customer" or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the
Finance Documents. 

45

 

	21.
	FINANCIAL COVENANTS

	21.1
	Financial definitions

In
this Clause 21: 

"Adjusted Consolidated Net Finance Charges" means, in respect of any Relevant Period, Consolidated Net Finance Charges for that Relevant Period adjusted
to exclude any component of Consolidated Net Finance Charges attributable to Relevant Stand Alone Financed Acquisitions; 

"Adjusted EBITDA" means, in respect of any Relevant Period, Group EBITDA for that Relevant Period adjusted to exclude any component of Group EBITDA
attributable to Relevant Stand Alone Financed Acquisitions; 

"Consolidated Net Debt" means, at any time, the aggregate amount of all obligations of the Group for or in respect of Financial Indebtedness but: 

	(a)
	excluding
any such obligations owed to any other member of the Group; and

	(b)
	deducting
the aggregate amount of freely available cash and Cash Equivalents held by any member of the Group at such time save for any cash and Cash Equivalents held by any member of
the Group for the purpose of defeasance of the Senior Notes; and

	(c)
	excluding
any Financial Indebtedness under paragraph (g) of the definition of "Financial Indebtedness" and excluding any Financial Indebtedness under paragraph (f) of
the definition of "Permitted Financial Indebtedness", 

and
so that no amount shall be included or excluded more than once; 

"Senior Leverage Ratio" means, in respect of any Relevant Period, the ratio of Senior Net Debt on the last day of that Relevant Period to Adjusted
EBITDA for that Relevant Period; and 

"Senior Net Debt" means, at any time, Consolidated Net Debt adjusted to exclude the aggregate amount of all Financial Indebtedness incurred by Relevant
Stand Alone Financed Acquisitions and all cash or Cash Equivalents held by Relevant Stand Alone Financed Acquisitions. 

	21.2
	Financial condition

	(a)
	The
Company shall ensure that the Senior Leverage Ratio for each Relevant Period shall not be greater than 3.5:1.0, provided that, if any member of the Group successfully completes an
Acquisition (the "Relevant Acquisition"), the Senior Leverage Ratio for any subsequent Relevant Period ending after the date on which the Relevant
Acquisition was successfully completed may exceed 3.5:1.0 (if such increase in the Senior Leverage Ratio is a consequence of such Relevant Acquisition (in the opinion of the Facility Agent acting
reasonably)), provided that it does not exceed 4.0:1.0, and provided further that the Senior Leverage Ratio for the last Relevant Period which ends before the date which is 9 Months after the date on
which the Relevant Acquisition was successfully completed does not exceed 3.5:1.0.

	(b)
	The
Company shall ensure that the ratio of Adjusted EBITDA to Adjusted Consolidated Net Finance Charges for each Relevant Period shall be greater than 4.0:1.0.

	21.3
	Financial testing

The
financial covenants set out in Clause 21.2 (Financial condition) shall be tested by reference to each of the financial statements and/or each
Compliance Certificate delivered pursuant to Clause 20 (Information Undertakings). 

46

 
	21.4
	Relevant Stand Alone Financed Acquisitions

For
the purposes of this Clause 21 a "Relevant Stand Alone Financed Acquisition" means any Stand Alone Financed Acquisition in respect of which the Company has not given written notice to the
Facility Agent specifying that such Stand Alone Financed Acquisition shall no longer be a "Relevant Stand Alone Financed Acquisition" for the purposes of this Clause 21. The Company may at any
time and by written notice to the Facility Agent specify that a Stand Alone Financed Acquisition shall no longer be a "Relevant Stand Alone Financed Acquisition" for the purposes of this
Clause 21 and in that event all future determinations of the Senior Leverage Ratio and the ratio of Adjusted EBITDA to Adjusted Consolidated Net Finance Charges shall be determined on the basis
that the applicable Stand Alone Financed Acquisition is not a "Relevant Stand Alone Financed Acquisition". For the avoidance of doubt, if the Company specifies that a Stand Alone Financed Acquisition
shall no longer be a "Relevant Stand Alone Financed Acquisition" for the purposes of this Clause 21 the Company may not subsequently designate that Stand Alone Financed Acquisition as a
"Relevant Stand Alone Financed Acquisition" for the purposes of this Clause 21. 

	22.
	GENERAL UNDERTAKINGS

The
undertakings in this Clause 22 remain in force from the date of this Agreement for so long as any amount is outstanding under the Finance Documents or any Commitment is in force. 

	22.1
	Authorisations

Each
Obligor shall promptly: 

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

	(b)
	if
so requested by the Facility Agent (acting reasonably), supply certified copies to the Facility Agent of, 

any
Authorisation required under any law or regulation of its jurisdiction of incorporation to enable it to perform its obligations under the Finance Documents and to ensure the legality, validity,
enforceability or admissibility in evidence in its jurisdiction of incorporation of any Finance Document. 

	22.2
	Compliance with laws

Each
Obligor shall comply in all respects with all laws to which it may be subject, if failure so to comply would materially impair its ability to perform its obligations under the Finance Documents. 

	22.3
	Negative pledge

	(a)
	Except
as provided for in paragraph (c) below, no Obligor shall (and the Company shall ensure that neither it nor any other member of the Group will) create or permit to
subsist any Security over any of its assets.

	(b)
	Except
as provided for in paragraph (c) below, no Obligor shall (and the Company shall ensure that neither it nor any other member of the Group will):

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

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

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

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

47

 

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

	(c)
	Paragraphs
(a) and (b) above do not apply to:

	(i)
	any
Security listed in Schedule 9 (Existing Security) (each an "Existing
Security") or any Security over the same asset or assets which replaces such Existing Security (as a result of a refinancing of the Financial Indebtedness secured by such
Existing Security) except to the extent the principal amount secured by that Existing Security (or replacement Security) exceeds the amount stated in that Schedule;

	(ii)
	any
Security entered into by any Non-Obligor or Obligor incorporated in Norway on arm's length terms to secure any Permitted Financial Indebtedness  provided that the aggregate amount thereby secured does
not exceed the aggregate amount of such Permitted Financial Indebtedness;

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

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

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

	(A)
	the
Security or Quasi-Security was not created in contemplation of the acquisition of that asset by a member of the Group;

	(B)
	the
principal amount secured has not been increased in contemplation of, or since the acquisition of that asset by a member of the Group; and

	(C)
	(unless
the Security or Quasi-Security is otherwise permitted pursuant to this paragraph (c)) the Security or Quasi-Security is removed or discharged within three months of the
date of acquisition of such asset;

	(vi)
	any
Security or Quasi-Security over or affecting any asset of any company which becomes a member of the Group after the date of this Agreement, where the Security or Quasi-Security
is created prior to the date on which that company becomes a member of the Group, if:

	(A)
	the
Security or Quasi-Security was not created in contemplation of the acquisition of that company;

	(B)
	the
principal amount secured has not increased in contemplation of or since the acquisition of that company; and

	(C)
	(unless
the Security or Quasi-Security is otherwise permitted pursuant to this paragraph (c)) the Security or Quasi-Security is removed or discharged within three months of
that company becoming a member of the Group;

	(vii)
	the
Transaction Security;

	(viii)
	any
Security entered into pursuant to any Finance Document;

	(ix)
	any
Security or Quasi-Security created or incurred by an Obligor with respect to its obligations where such obligations do not exceed in aggregate (and in respect of all Obligors)
EUR 40,000,000 (or its equivalent in other currencies) at any one time, where 

48

 

such
Security is not otherwise permitted pursuant to the other provisions of this Clause 22.3; 

	(x)
	any
Security created or incurred by any member of the Group to secure the performance of statutory or regulatory obligations, surety or appeal bonds, performance bonds or other
obligations of a like nature in each case granted in the ordinary course of business by such member of the Group provided that where such Security is
created or incurred by the Company, the aggregate amount thereby secured does not exceed EUR 20,000,000 at any time;

	(xi)
	any
Security created or incurred by any member of the Group (other than the Company) encumbering deposits made to secure obligations directly or indirectly arising from or in
connection with statutory or regulatory requirements applicable to such member of the Group, including rights of offset and set-off provided
that any such statutory or regulatory requirements arise in the ordinary course of business of such member of the Group;

	(xii)
	any
Security created or incurred by any member of the Group (other than the Company) for taxes, assessments or governmental charges or claims that are not yet delinquent or that are
being contested in good faith by appropriate proceedings promptly instituted and diligently conducted, provided that any reserve or other appropriate
provision as shall be required in conformity with US GAAP shall have been made therefor;

	(xiii)
	any
Security created or incurred by any member of the Group (other than the Company) arising by reason of any judgment, decree or order of any court  provided that any appropriate legal proceedings that may
have been duly initiated for the review of such judgment, decree or order shall not have been
fully terminated or the period within which such proceedings may be initiated shall not have expired;

	(xiv)
	purchase
money Security created or incurred by any member of the Group (other than the Company) to finance the acquisition of property or assets in the ordinary course of business
by such member of the Group where such Security is created within 90 days of such acquisition and provided that the related purchase money
Financial Indebtedness is:

	(A)
	Permitted
Financial Indebtedness;

	(B)
	the
aggregate amount thereof does not exceed the cost of such property or assets; and

	(C)
	not
secured by any property or assets other than the property and assets so acquired;

	(xv)
	any
Security created or incurred by any member of the Group (other than the Company) or deposits made in the ordinary course of business by any member of the Group (other than the
Company) in connection with workers' compensation, unemployment insurance and other types of social security, including any Security created or incurred by such member of the Group securing letters of
credit issued in the ordinary course of business consistent with past practice of such member of the Group in connection therewith, or to secure the performance of tenders, statutory obligations,
surety and appeal bonds, bids, leases and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money) of such member of the
Group;

	(xvi)
	any
Security created in respect of cash held by any member of the Group in a bank account for the specific purpose of paying salaries and other amounts due to employees of any
member of the Group;

	(xvii)
	any
Security created or incurred by any member of the Group (other than the Company) in the ordinary course of business of such member of the Group securing reimbursement 

49

 

obligations
with respect to any commercial letter of credit and which encumbers documents and other property relating to such letters of credit and products and proceeds thereof; 

	(xviii)
	any
Security created by a member of the Group in favour of another member of the Group in the ordinary course of business, other than Security created by an Obligor in favour of a
Non-Obligor or in favour of an Obligor incorporated in Norway; and

	(xix)
	any
Security or Quasi-Security arising under clause 18 or clause 19 of the general terms and conditions (Algemene
Voorwaarden) of any member of the Dutch Bankers Association (Nederlandse Vereniging von Banken) or similar term applied by a
financial institution in The Netherlands pursuant to its general terms and conditions.

	22.4
	Financial Indebtedness

	(a)
	Except
as permitted under paragraph (b) below the Company shall ensure that (i) no Non-Obligor and (ii) no Obligor incorporated in Norway will incur
or allow to remain outstanding any Financial Indebtedness.

	(b)
	Paragraph (a)
above does not apply to Financial Indebtedness which is Permitted Financial Indebtedness.

	22.5
	Merger

No
Obligor shall (and the Company shall ensure that no other member of the Group will) enter into any amalgamation, demerger, merger or corporate reconstruction other than any amalgamation or merger
between any two or more members of the Group (other than the Company or any member of the Group to which any of the circumstances described in Clause 23.6
(Insolvency) apply (as if references to "Material Company" therein were references to any member of the Group)). 

	22.6
	Change of business

The
Company shall procure that no substantial change is made to the general nature of the business of the Group from that carried on at the date of this Agreement. 

	22.7
	Insurance

Each
Obligor shall (and the Company shall ensure that it and each Material Company will) maintain insurances on and in relation to its business and assets with reputable underwriters or insurance
companies against those risks and to the extent as is usual for companies carrying on the same or substantially similar business. 

	22.8
	Environmental Compliance

Each
Obligor shall (and the Company shall ensure that it and each Material Company will) comply in all material respects with all Environmental Law and obtain and maintain any Environmental Permits
and take all reasonable steps in anticipation of known or expected future changes to or obligations under the same where failure to do so might reasonably be expected to have a Material Adverse
Effect. 

	22.9
	Environmental Claims

The
Company shall inform the Facility Agent in writing as soon as reasonably practicable upon becoming aware of the same: 

	(a)
	if
any Environmental Claim has been commenced or (to the best of the Company's knowledge and belief) is threatened against the Company or any Material Company, or 

50

 

	(b)
	of
any facts or circumstances which will or are reasonably likely to result in any Environmental Claim being commenced or threatened against the Company or any Material Company, 

where
the claim would be reasonably likely, if determined against that Material Company, to have a Material Adverse Effect. 

	22.10
	Taxation

Each
Obligor shall (and the Company shall ensure that it and each Material Company will duly and punctually pay and discharge all Taxes imposed upon it or its assets, and that each other member of the
Group will) duly and punctually pay and discharge all material Taxes imposed upon it or its assets, in each case within the time period allowed without incurring penalties, save to the extent that: 

	(a)
	each
of the following applies:

	(i)
	payment
is being contested in good faith;

	(ii)
	it
or the relevant member of the Group has maintained adequate reserves for those Taxes; and

	(iii)
	payment
can be lawfully withheld; or

	(b)
	settlement
and rescheduling has been reached with the appropriate tax authorities prior to the date of this Agreement in relation to such Taxes.

	22.11
	Loans and Guarantees

No
Obligor shall (and the Company shall ensure that neither it nor any other member of the Group will) make any loans, grant any credit (save in the ordinary course of business) or (except as required
under any of the Finance Documents) give any guarantee or indemnity in respect of Financial Indebtedness (where for this purpose, and for the avoidance of doubt, any such guarantee or indemnity shall
exclude any performance bond or performance guarantee given by any member of the Group in its ordinary course of business, including without limitation the FAPL Guarantee) to or for the benefit of any
person or otherwise voluntarily assume any liability, whether actual or contingent, in respect of any obligation of any person, other than: 

	(a)
	(i) any
guarantee given by any Non-Obligor or Obligor incorporated in Norway on arm's length terms in respect of or which constitutes Permitted Financial
Indebtedness, (ii) any guarantee given by an Obligor in respect of Financial Indebtedness incurred by another Obligor (other than an Obligor incorporated in Norway), (iii) any loan made
by an Obligor to another Obligor (other than an Obligor incorporated in Norway) or guarantee granted by an Obligor in favour of another Obligor (other than an Obligor incorporated in Norway), in
either case on arm's length terms or (iv) any loan made by a Non-Obligor to any other member of the Group or guarantee granted by a Non-Obligor in favour of any other
member of the Group, in either case on arm's length terms;

	(b)
	any
loan made, or any guarantee given, by any member of the Group in each case to a company in which such member of the Group holds an equity interest provided
that such loan or guarantee was entered into prior to the date of this Agreement and on arm's length terms;

	(c)
	any
loan made by any member of the Group in the ordinary course of business to an employee thereof provided that the aggregate amount
of all such loans made by such member of the Group does not exceed at any time EUR 2,500,000 (or its equivalent in other currencies); 

51

 

	(d)
	any
loan made by any member of the Group to or for the benefit of any director, employee or member of management thereof not permitted pursuant to paragraph (c) above where
such loan is made as part of an incentive scheme or employment plan, agreement or arrangement in the ordinary course of business and provided that the
aggregate amount of all such loans made by all members of the Group does not exceed at any time EUR 2,500,000 (or its equivalent in other currencies);

	(e)
	any
loan made, or credit or guarantee granted, by an Obligor to or in favour of a Non-Obligor (or to or in favour of an Obligor incorporated in Norway) provided that
(i) the Company is satisfied that the requirements of Clause 22.18 (Guarantor Coverage) will be complied with (notwithstanding the making
of such loan or granting of such credit or guarantee) on (or, in respect of revenues, by reference to the Relevant Period ending on) the last day of the then current financial quarter of the Group
(being the next date as of which the requirements of Clause 22.18 (Guarantor Coverage) are to be reported pursuant to a Compliance Certificate)
and (ii) the Facility Agent has not received any evidence to the effect that the requirements of Clause 22.18 (Guarantor Coverage), as
described in (i) above, will not be complied with; or

	(f)
	any
loan made or guarantee granted which is not permitted pursuant to paragraphs (a) to (e) above where the aggregate amount of Financial Indebtedness or other actual or
contingent liabilities incurred pursuant to all such loans and guarantees does not exceed EUR 15,000,000 (or its equivalent in other currencies).

	22.12
	Dividends

The
Company shall not pay, make or declare any dividend or other distribution in respect of any financial year of the Group if the Senior Leverage Ratio (as defined in Clause 21
(Financial Covenants)) is greater than 3.5:1.00 in respect of the Relevant Period which ended on the last day of that financial year. 

	22.13
	Syndication

The
Company shall provide reasonable assistance to the Arrangers in the preparation of the Information Memorandum and the primary syndication of the Facility (including, without limitation, by making
senior management available for the purpose of making presentations to, or meeting, potential lending institutions) and will comply with all reasonable requests for information from potential
syndicate members prior to completion of syndication. 

	22.14
	Treasury Transactions

No
Obligor shall (and the Company shall ensure that no member of the Group shall) enter into any Treasury Transaction other than a Treasury Transaction entered into in the ordinary course of business
(and not for investment or speculative purposes) to hedge interest rate or currency exposures incurred by any member of the Group. For the avoidance of doubt, any Treasury Transactions entered into to
hedge interest rate or currency exposures in connection with this Agreement shall be treated as being entered into in the ordinary course of business (and not for investment or speculative purposes). 

	22.15
	Shares in C More Group AB

The
Company shall procure that on or before 30 June 2005 all shares in C More Group AB are pledged in favour of the Security Agent (to the extent that they have not already been pledged)
pursuant to a Security Document. The Company shall ensure that all necessary registrations and other perfection requirements are completed as soon as is reasonably possible after the date of such
Security Document. 

52

 
	22.16
	Shares in SBS Broadcasting B.V.

The
Company shall procure that in the event the Company owns (either directly or indirectly) 100 per cent. of the shares in SBS Broadcasting B.V. it shall pledge (or shall procure that the owner of
such shares pledges) all shares in SBS Broadcasting B.V. (to the extent not previously pledged in favour of the Security Agent) on the same terms or substantially the same terms as the pledge of
shares delivered pursuant to Clause 4.1 (Initial conditions precedent) in respect of SBS Nederlands B.V. The Company shall ensure that all
necessary registrations and other perfection requirements are completed as soon as is reasonably practicable after the date on which such shares are pledged. 

	22.17
	Restrictions in relation to shares

The
Company shall procure that, on and after the date on which any security is created over the shares of any member of the Group pursuant to a Security Document (a) any restrictions on the
transfer of those shares or other restrictions in relation to those shares which are contained in any relevant shareholders' agreement or other agreement in relation to those shares on the date on
which such security is created are not amended or modified in a manner which would be adverse to the interests of the Finance Parties or which would adversely affect their ability to enforce such
security and (b) no restrictions on the transfer of those shares or other restrictions in relation to those shares (and which were not in force on the date on which such security was created)
are subsequently created pursuant to any shareholders' agreement or other agreement in relation to those shares. 

	22.18
	Guarantor Coverage

The
Company shall ensure that at all times: 

	(a)
	the
aggregate total consolidated assets (which shall exclude all receivables owed by one member of the Group to another member of the Group and any interests of any member of the
Group held in another member of the Group) of the Obligors represent not less than 70% of the Total Assets; and

	(b)
	the
aggregate consolidated revenues of the Obligors (including, but not limited to, C More Group AB and any other Acquisition where the acquired entity is an Obligor, calculated on a
pro forma basis in respect of any period prior to the date on which C More Group AB or any other such acquired entity is reflected in the consolidated financial statements of the Group) represents not
less than 70% of the total consolidated revenues of the Group, 

in
each case determined in accordance with US GAAP. 

	22.19
	Disposals of Pledged Shares

No
Obligor shall (and the Company shall ensure that no Obligor shall) sell, transfer or otherwise dispose of all or any of the shares in any member of the Group which are the subject of any of the
Transaction Security provided that an Obligor may sell, transfer or otherwise dispose of any such shares to another Obligor (i) where the
guarantee obligations of the acquiring Obligor under this Agreement are no less extensive (in terms of the underlying obligations guaranteed) than the guarantee obligations of the selling,
transferring or disposing Obligor and (ii) the Security Agent is satisfied (acting reasonably) that upon such sale, transfer or other disposal taking effect such shares will remain subject to
first ranking, fully perfected Transaction Security on the same terms as those which applied to the Transaction Security in relation to those shares prior to such sale, transfer or disposal. 

53

 
	22.20
	Acquisitions

No
Obligor shall (and the Company shall ensure that no other member of the Group will) acquire any company or business unless the company or business acquired constitutes (or relates to) a Permitted
Business. 

	23.
	EVENTS OF DEFAULT

Each
of the events or circumstances set out in Clause 23 is an Event of Default. 

	23.1
	Non-payment

An
Obligor does not pay on the due date any amount payable pursuant to a Finance Document at the place at and in the currency in which it is expressed to be payable unless: 

	(a)
	its
failure to pay is caused by administrative or technical error; and

	(b)
	payment
is made within 3 Business Days of its due date for payment.

	23.2
	Financial covenants

Any
requirement of Clause 21 (Financial covenants) is not satisfied. 

	23.3
	Other obligations

	(a)
	An
Obligor does not comply with any provision of the Finance Documents (other than those referred to in Clause 23.1
(Non-payment) and Clause 23.2 (Financial Covenants)).

	(b)
	No
Event of Default under paragraph (a) above will occur if the failure to comply is capable of remedy and is remedied within 15 Business Days of the Facility Agent giving
notice to the Company or (as applicable) the Company becoming aware of the failure to comply.

	23.4
	Misrepresentation

Any
representation or statement made or deemed to be made by an Obligor in the Finance Documents or any other document delivered by or on behalf of any Obligor under or in connection with any Finance
Document is or proves to have been incorrect or misleading in any material respect when made or deemed to be made. 

	23.5
	Cross default

	(a)
	Any
Financial Indebtedness of any member of the Group is not paid when due (after the expiry of any originally applicable grace period, if applicable).

	(b)
	Any
Financial Indebtedness of any member of the Group is declared to be or otherwise becomes due and payable prior to its specified maturity as a result of an event of default
(however described).

	(c)
	Any
commitment for any Financial Indebtedness of any member of the Group is cancelled or suspended by a creditor of any member of the Group as a result of an event of default (however
described).

	(d)
	Any
creditor of any member of the Group becomes entitled to declare any Financial Indebtedness of any member of the Group due and payable prior to its specified maturity as a result
of an event of default (however described).

	(e)
	No
event of default will occur under this Clause 23.5 if the aggregate amount of Financial Indebtedness or commitment for Financial Indebtedness falling within paragraphs
(a) to (d) above is less than EUR 10,000,000 (or its equivalent in other currencies). 

54

 

	23.6
	Insolvency

	(a)
	An
Obligor or any Material Company is unable or admits inability to pay its debts as they fall due, suspends making payments on any of its debts or, by reason of actual or anticipated
financial difficulties, commences negotiations with one or more of its creditors with a view to rescheduling any of its indebtedness.

	(b)
	The
value of the assets of an Obligor or any Material Company is less than its liabilities.

	(c)
	A
moratorium is declared in respect of any indebtedness of an Obligor or any Material Company.

	23.7
	Insolvency proceedings

	(a)
	Except
as provided in paragraph (b) below legal proceedings or other procedure or step is taken in relation to:

	(i)
	the
suspension of payments, a moratorium of any indebtedness, winding-up, dissolution, administration or reorganisation (by way of voluntary arrangement, scheme of
arrangement or otherwise) of an Obligor or any Material Company other than a solvent liquidation or reorganisation of a Material Company;

	(ii)
	a
composition, compromise, assignment or arrangement with any creditor of an Obligor or any Material Company;

	(iii)
	the
appointment of a liquidator (other than in respect of a solvent liquidation of a Material Company), receiver, administrative receiver, administrator, compulsory manager or other
similar officer in respect of an Obligor or any Material Company or any of its assets; or

	(iv)
	enforcement
of any Security over any assets of an Obligor or any Material Company, 

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

	(b)
	Paragraph (a)
above does not apply to any winding-up petition which is frivolous or vexatious in nature or is being contested in good faith and which is discharged,
stayed or dismissed within 20 Business Days of commencement or, if earlier, the date on which it such petition is advertised.

	23.8
	Creditors' process

Any
expropriation, attachment, sequestration, distress or execution affects any asset or assets of any member of the Group and is not discharged within 20 Business Days unless the base currency
equivalent of the aggregate value of that asset or those assets is less than EUR 10,000,000 (or its equivalent in any other currencies). 

	23.9
	Failure to Comply with Final Judgements

Any
member of the Group fails to comply with or pay any sum due from it under any final judgement or any final order made or given by any court of competent jurisdiction provided that any such failure
to comply or pay shall not be an Event of Default under this Clause 23.9 if the amount due is less than EUR 10,000,000 (or its equivalent in any other currencies). 

	23.10
	Unlawfulness

It
is or becomes unlawful for an Obligor to perform any of its obligations under the Finance Documents or any Transaction Security created or expressed to be created or evidenced by the Security
Documents ceases to be effective. 

55

 
	23.11
	Repudiation

An
Obligor repudiates a Finance Document or any of the Transaction Security or evidences an intention to repudiate a Finance Document or any of the Transaction Security. 

	23.12
	Governmental Intervention

By
or under the authority of any government: 

	(a)
	the
management of an Obligor or any Material Company is wholly or substantially displaced or the authority of an Obligor or any Material Company in the conduct of its business is
wholly or substantially curtailed; or

	(b)
	all
or a majority of the issued shares of an Obligor or any Material Company or the whole or a substantial part of its revenues or assets is seized, nationalised, expropriated or
compulsorily acquired. 

	23.13
	Transaction Security

	(a)
	At
any time any of the Transaction Security is or becomes unlawful or is not, or ceases to be legal, valid, binding or enforceable.

	(b)
	At
any time, any of the Transaction Security fails to have first ranking priority (other than as a result of mandatory provisions of law) or is subject to any prior ranking or pari
passu ranking Security.

	23.14
	Material adverse change

Any
event or circumstance occurs which the Majority Lenders reasonably believe might have a Material Adverse Effect. 

	23.15
	Acceleration

On
and at any time after the occurrence of an Event of Default which is continuing the Facility Agent may, and shall if so directed by the Majority Lenders by notice to the Company: 

	(a)
	cancel
the Total Commitments whereupon they shall immediately be cancelled;

	(b)
	declare
that all or part of the Loans, together with accrued interest, and all other amounts accrued or outstanding under the Finance Documents be immediately due and payable,
whereupon they shall become immediately due and payable; and/or

	(c)
	declare
that all or part of the Loans be payable on demand, whereupon they shall immediately become payable on demand by the Facility Agent on the instructions of the Majority
Lenders; and/or

	(d)
	exercise,
or direct the Security Agent to exercise, any or all of its rights, remedies and powers under any of the Finance Documents. 

56

  

 
 

SECTION 9
  CHANGES TO THE PARTIES    
    

	24.
	CHANGES TO THE LENDERS

	24.1
	Assignments and transfers by the Lenders

Subject
to this Clause 24, a Lender (the "Existing Lender") may: 

	(a)
	assign
any of its rights; or

	(b)
	transfer
by novation any of its rights and obligations, 

under
any Finance Document to another bank or financial institution or to a trust, fund or other entity which is regularly engaged in or established for the purpose of making, purchasing or investing
in loans, securities or other financial assets (the "New Lender"). 

	24.2
	Conditions of assignment or transfer

	(a)
	The
consent of the Company is required for an assignment or transfer by an Existing Lender, unless the assignment or transfer is to another Lender or an Affiliate of a Lender.

	(b)
	The
consent of the Company to an assignment or transfer must not be unreasonably withheld or delayed. The Company will be deemed to have given its consent ten Business Days after the
Existing Lender has requested it unless consent is expressly refused by the Company within that time.

	(c)
	The
consent of the Company to an assignment or transfer must not be withheld solely because the assignment or transfer may result in an increase to the Mandatory Cost.

	(d)
	An
assignment will only be effective on:

	(i)
	receipt
by the Facility Agent of written confirmation from the New Lender (in form and substance satisfactory to the Facility Agent, acting reasonably) that the New Lender will assume
the same obligations to the other Finance Parties and the other Secured Parties as it would have been under if it was an Original Lender; and

	(ii)
	performance
by the Facility Agent of all "know your customer" or other checks relating to any person that it is required to carry out in relation to such assignment to a New Lender,
the completion of which the Facility Agent shall promptly notify to the Existing Lender and the New Lender.

	(e)
	A
transfer will only be effective if the procedure set out in Clause 24.5 (Procedure for transfer) is complied with.

	(f)
	If:

	(i)
	a
Lender assigns or transfers any of its rights or obligations under the Finance Documents or changes its Facility Office; and

	(ii)
	as
a result of circumstances existing at the date the assignment, transfer or change occurs, an Obligor would be obliged to make a payment to the New Lender or Lender acting through
its new Facility Office under Clause 13 (Tax gross-up and indemnities) or Clause 14 (Increased
costs), 

then
the New Lender or Lender acting through its new Facility Office is only entitled to receive payment under those Clauses to the same extent as the Existing Lender or Lender acting through its
previous Facility Office would have been if the assignment, transfer or change had not occurred. 

57

 

	24.3
	Assignment or transfer fee

The
New Lender shall, on the date upon which an assignment or transfer takes effect, pay to the Facility Agent (for its own account) a fee of EUR 2,500. 

	24.4
	Limitation of responsibility of Existing Lenders

	(a)
	Unless
expressly agreed to the contrary, an Existing Lender makes no representation or warranty and assumes no responsibility to a New Lender for:

	(i)
	the
legality, validity, effectiveness, adequacy or enforceability of the Finance Documents, the Transaction Security or any other documents;

	(ii)
	the
financial condition of any Obligor;

	(iii)
	the
performance and observance by any Obligor of its obligations under the Finance Documents or any other documents; or

	(iv)
	the
accuracy of any statements (whether written or oral) made in or in connection with any Finance Document or any other document, 

and
any representations or warranties implied by law are excluded. 

	(b)
	Each
New Lender confirms to the Existing Lender and the other Finance Parties that it:

	(i)
	has
made (and shall continue to make) its own independent investigation and assessment of the financial condition and affairs of each Obligor and its related entities in connection
with its participation in this Agreement and has not relied exclusively on any information provided to it by the Existing Lender in connection with any Finance Document; and

	(ii)
	will
continue to make its own independent appraisal of the creditworthiness of each Obligor and its related entities whilst any amount is or may be outstanding under the Finance
Documents or any Commitment is in force.

	(c)
	Nothing
in any Finance Document obliges an Existing Lender to:

	(i)
	accept
a re-transfer from a New Lender of any of the rights and obligations assigned or transferred under this Clause 24; or

	(ii)
	support
any losses directly or indirectly incurred by the New Lender by reason of the non-performance by any Obligor of its obligations under the Finance Documents or
otherwise.

	24.5
	Procedure for transfer

	(a)
	Subject
to the conditions set out in Clause 24.2 (Conditions of assignment or transfer) a transfer is effected in accordance
with paragraph (c) below when the Facility Agent executes an otherwise duly completed Transfer Certificate delivered to it by the Existing Lender and the New Lender. The Facility Agent shall,
subject to paragraph (b) below, as soon as reasonably practicable after receipt by it of a duly completed Transfer Certificate appearing on its face to comply with the terms of this Agreement
and delivered in accordance with the terms of this Agreement, execute that Transfer Certificate.

	(b)
	The
Facility Agent shall only be obliged to execute a Transfer Certificate delivered to it by the Existing Lender and the New Lender once it is satisfied it has complied with all
necessary "know your customer" or other similar checks under all applicable laws and regulations in relation to the transfer to such New Lender. 

58

 

	(c)
	On
the Transfer Date:

	(i)
	to
the extent that in the Transfer Certificate the Existing Lender seeks to transfer by novation its rights and obligations under the Finance Documents and in respect of the
Transaction Security each of the Obligors and the Existing Lender shall be released from further obligations towards one another under the Finance Documents and in respect of the Transaction Security
and their respective rights against one another shall be cancelled (being the "Discharged Rights and Obligations");

	(ii)
	each
of the Obligors and the New Lender shall assume obligations towards one another and/or acquire rights against one another which differ from the Discharged Rights and Obligations
only insofar as that Obligor and the New Lender have assumed and/or acquired the same in place of that Obligor and the Existing Lender;

	(iii)
	the
Facility Agent, the Arrangers, the Security Agent, the New Lender and other Lenders shall acquire the same rights and assume the same obligations between themselves and in
respect of the Transaction Security as they would have acquired and assumed had the New Lender been an Original Lender with the rights and/or obligations acquired or assumed by it as a result of the
transfer and to that extent the Facility Agent, the Arrangers, the Security Agent and the Existing Lender shall each be released from further obligations to each other under the Finance Documents; and

	(iv)
	the
New Lender shall become a Party as a "Lender".

	24.6
	Copy of Transfer Certificate to Company

The
Facility Agent shall, as soon as reasonably practicable after it has executed a Transfer Certificate, send to the Company a copy of that Transfer Certificate. 

	24.7
	Disclosure of information

Any
Lender may disclose to any of its Affiliates and any other person: 

	(a)
	to
(or through) whom that Lender assigns or transfers (or may potentially assign or transfer) all or any of its rights and obligations under this Agreement;

	(b)
	with
(or through) whom that Lender enters into (or may potentially enter into) any sub-participation in relation to, or any other transaction under which payments are to
be made by reference to, this Agreement or any Obligor; or

	(c)
	to
whom, and to the extent that, information is required to be disclosed by any applicable law or regulation, 

any
information about any Obligor, the Group and the Finance Documents as that Lender shall consider appropriate if, in relation to paragraphs (a) and (b) above, the person to whom the
information is to be given has entered into a Confidentiality Undertaking. 

	25.
	CHANGES TO THE OBLIGORS

	25.1
	Assignment and transfers by Obligors

No
Obligor may assign any of its rights or transfer any of its rights or obligations under the Finance Documents. 

59

 
	25.2
	Additional Borrowers

	(a)
	Subject
to compliance with the provisions of paragraphs (c) and (d) of Clause 20.7 ("know your customer" checks),
the Company may request that any of its Subsidiaries becomes an Additional Borrower. That Subsidiary shall become an Additional Borrower if:

	(i)
	the
Majority Lenders approve the addition of that Subsidiary;

	(ii)
	the
Company delivers to the Facility Agent a duly completed and executed Accession Letter;

	(iii)
	the
Company confirms that no Event of Default is continuing or would occur as a result of that Subsidiary becoming an Additional Borrower; and

	(iv)
	the
Facility Agent has received all of the documents and other evidence listed in Part II of Schedule 2 (Conditions
Precedent) in relation to that Additional Borrower, each in form and substance satisfactory to the Facility Agent.

	(b)
	The
Facility Agent shall notify the Company and the Lenders promptly upon being satisfied that it has received (in form and substance satisfactory to it) all the documents and other
evidence listed in Part II of Schedule 2 (Conditions Precedent).

	25.3
	Resignation of a Borrower

	(a)
	The
Company may request that a Borrower (other than the Company) ceases to be a Borrower by delivering to the Facility Agent a Resignation Letter.

	(b)
	The
Facility Agent shall accept a Resignation Letter and notify the Company and the Lenders of its acceptance if:

	(i)
	no
Event of Default is continuing or would result from the acceptance of the Resignation Letter (and the Company has confirmed this is the case); and

	(ii)
	the
Borrower is under no actual or contingent obligations as a Borrower under any Finance Documents, 

whereupon
that company shall cease to be a Borrower and shall have no further rights or obligations under the Finance Documents and the Security Agent shall be instructed by the Facility Agent to
release any Transaction Security granted by the Borrower, in accordance with Clause 27.13 (Releases). 

	25.4
	Additional Guarantors

	(a)
	Subject
to compliance with the provisions of Clause 20.7 ("know your customer" checks), the Company may request that any of its
Subsidiaries become an Additional Guarantor. That Subsidiary shall become an Additional Guarantor if:

	(i)
	the
Company delivers to the Facility Agent a duly completed and executed Accession Letter; and

	(ii)
	the
Facility Agent has received all of the documents and other evidence listed in Part II of Schedule 2 (Conditions
Precedent) in relation to that Additional Guarantor, each in form and substance satisfactory to the Facility Agent.

	(b)
	The
Facility Agent shall notify the Company and the Lenders promptly upon being satisfied that it has received (in form and substance satisfactory to it) all the documents and other
evidence listed in Part II of Schedule 2 (Conditions Precedent). 

60

 

	25.5
	Repetition of Representations

Delivery
of an Accession Letter constitutes confirmation by the relevant Subsidiary that the Repeating Representations are true and correct in relation to it as at the date of delivery as if made by
reference to the facts and circumstances then existing. 

	25.6
	Resignation of a Guarantor

	(a)
	The
Company may request that a Guarantor (other than the Company) ceases to be a Guarantor by delivering to the Facility Agent a Resignation Letter.

	(b)
	The
Facility Agent shall accept a Resignation Letter and notify the Company and the Lenders of its acceptance if:

	(i)
	no
Event of Default is continuing or would result from the acceptance of the Resignation Letter (and the Company has confirmed this is the case); and

	(ii)
	either
(A) all the Lenders have consented to the Company's request or (B) (where shares which are the subject of Transaction Security are sold, transferred or otherwise
disposed of by one Obligor to another Obligor in accordance with Clause 22.19 (Disposals of Pledged Shares)) (x) the relevant Guarantor
which is to resign is the Obligor which sold, transferred or otherwise disposed of those shares, (y) the Company is satisfied that the requirements of Clause 22.18
(Guarantor Coverage) will be complied with (notwithstanding such resignation) on (or, in respect of revenues, by reference to the Relevant Period ending
on) the last day of the then current financial quarter of the Group (being the next date as of which the requirements of Clause 22.18 (Guarantor
Coverage) are to be reported pursuant to a Compliance Certificate) and (z) the Facility Agent has not received any evidence to the effect that the requirements of
Clause 22.18 (Guarantor Coverage), as described in (y) above, will not be complied with.

	(c)
	If
the resignation of a Guarantor is accepted in accordance with paragraph (b) of this Clause 25.6 the Facility Agent shall instruct the Security Agent to release any
Transaction Security granted by that Guarantor (other than, for the avoidance of doubt, any Transaction Security previously granted by that Guarantor in respect of shares where such shares are sold,
transferred or otherwise disposed of by that Guarantor to another Obligor in accordance with Clause 22.19 (Disposals of Pledged Shares)) in
accordance with Clause 27.13 (Releases). 

61

 

 
 

SECTION 10
  THE FINANCE PARTIES    
    

	26.
	ROLE OF THE FACILITY AGENT AND THE ARRANGERS

	26.1
	Appointment of the Facility Agent

	(a)
	Each
other Finance Party (other than the Security Agent) appoints the Facility Agent to act as its agent under and in connection with the Finance Documents.

	(b)
	Each
other Finance Party authorises the Facility Agent to exercise the rights, powers, authorities and discretions specifically given to the Facility Agent under or in connection with
the Finance Documents together with any other incidental rights, powers, authorities and discretions.

	26.2
	Duties of the Facility Agent

	(a)
	The
Facility Agent shall promptly forward to a Party the original or a copy of any document which is delivered to the Facility Agent for that Party by any other Party.

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

	(c)
	If
the Facility Agent receives notice from a Party referring to this Agreement, describing a Default and stating that the circumstance described is a Default, it shall promptly notify
the other Finance Parties.

	(d)
	If
the Facility Agent is aware of the non-payment of any principal, interest, commitment fee or other fee payable to a Finance Party (other than the Facility Agent, the
Arrangers or the Security Agent) under this Agreement it shall promptly notify the other Finance Parties.

	(e)
	The
Facility Agent's duties under the Finance Documents are solely mechanical and administrative in nature.

	26.3
	Role of the Arrangers

Except
as specifically provided in the Finance Documents, the Arrangers have no obligations of any kind to any other Party under or in connection with any Finance Document. 

	26.4
	No fiduciary duties

	(a)
	Nothing
in this Agreement constitutes the Facility Agent or the Arrangers as a agent or fiduciary of any other person.

	(b)
	Neither
the Facility Agent nor the Arrangers shall be bound to account to any Lender for any sum or the profit element of any sum received by it for its own account.

	26.5
	Business with the Group

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

	26.6
	Rights and discretions of the Facility Agent

	(a)
	The
Facility Agent may rely on:

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

62

 

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

	(b)
	The
Facility Agent may assume (unless it has received notice to the contrary in its capacity as agent for the Lenders) that:

	(i)
	no
Default has occurred (unless it has actual knowledge of a Default arising under Clause 23.1 (Non-payment));

	(ii)
	any
right, power, authority or discretion vested in any Party or the Majority Lenders has not been exercised; and

	(iii)
	any
notice or request made by the Company (other than a Utilisation Request) is made on behalf of and with the consent and knowledge of all the Obligors.

	(c)
	The
Facility Agent may engage, pay for and rely on the advice or services of any lawyers, accountants, surveyors or other experts.

	(d)
	The
Facility Agent may act in relation to the Finance Documents through its personnel and agents.

	(e)
	The
Facility Agent may disclose to any other Party any information it reasonably believes it has received as agent under this Agreement.

	(f)
	Notwithstanding
any other provision of any Finance Document to the contrary, neither the Facility Agent nor the Arrangers are obliged to do or omit to do anything if it would or might
in its reasonable opinion constitute a breach of any law or regulation or a breach of a fiduciary duty or duty of confidentiality.

	26.7
	Majority Lenders' instructions

	(a)
	Unless
a contrary indication appears in a Finance Document, the Facility Agent shall (i) exercise any right, power, authority or discretion vested in it as Facility Agent in
accordance with any instructions given to it by the Majority Lenders (or, if so instructed by the Majority Lenders, refrain from exercising any right, power, authority or discretion vested in it as
Facility Agent) and (ii) not be liable for any act (or omission) if it acts (or refrains from taking any action) in accordance with an instruction of the Majority Lenders.

	(b)
	Unless
a contrary indication appears in a Finance Document, any instructions given by the Majority Lenders will be binding on all the Finance Parties other than the Security Agent.

	(c)
	The
Facility Agent may refrain from acting in accordance with the instructions of the Majority Lenders (or, if appropriate, the Lenders) until it has received such security as it may
require for any cost, loss or liability (together with any associated VAT) which it may incur in complying with the instructions.

	(d)
	In
the absence of instructions from the Majority Lenders, (or, if appropriate, the Lenders) the Facility Agent may act (or refrain from taking action) as it considers to be in the
best interest of the Lenders.

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

63

 

	26.8
	Responsibility for documentation

None
of the Facility Agent, the Arrangers and the Security Agent: 

	(a)
	is
responsible for the adequacy, accuracy and/or completeness of any information (whether oral or written) supplied by the Facility Agent, the Arrangers, the Security Agent, an
Obligor or any other person given in or in connection with any Finance Document or the Information Memorandum or the transactions contemplated in the Finance Documents; or

	(b)
	is
responsible for the legality, validity, effectiveness, adequacy or enforceability of any Finance Document or the Transaction Security or any other agreement, arrangement or
document entered into, made or executed in anticipation of or in connection with any Finance Document or the Transaction Security.

	26.9
	Exclusion of liability

	(a)
	Without
limiting paragraph (b) below, neither the Facility Agent nor the Security Agent will be liable for any action taken by it under or in connection with any Finance
Document or the Transaction Security, unless directly caused by its gross negligence or wilful misconduct.

	(b)
	No
Party (other than the Facility Agent or, as the case may be, the Security Agent) may take any proceedings against any officer, employee or agent of the Facility Agent or the
Security Agent in respect of any claim it might have against the Facility Agent or Security Agent or in respect of any act or omission of any kind by that officer, employee or agent in relation to any
Finance Document and any officer, employee or agent of the Facility Agent or may rely on this Clause.

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

	(d)
	Nothing
in this Agreement shall oblige the Facility Agent or the Arrangers to carry out any "know your customer" or other checks in relation to any person on behalf of any Lender and
each Lender confirms to the Facility Agent and the Arrangers that it is solely responsible for any such checks it is required to carry out and that it may not rely on any statement in relation to such
checks made by the Facility Agent or the Arrangers.

	(e)
	The
Security Agent will not be liable for any losses to any person or any liability arising as a result of taking or refraining from taking any action in relation to any of the
Finance Documents or the Transaction Security or otherwise, whether in accordance with an instruction from the Facility Agent or otherwise;

	(f)
	The
Security Agent will not be liable for (i) the exercise of, or the failure to exercise, any judgment, discretion or power given to it by or in connection with any of the
Finance Documents, the Transaction Security or any other agreement, arrangement or document entered into, made or executed in anticipation of, or in connection with the Finance Documents or the
Transaction Security or (ii) any shortfall which arises on the enforcement of the Transaction Security.

	26.10
	Lenders' indemnity to the Facility Agent and Security Agent

Each
Lender shall (in proportion to its share of the Total Commitments or, if the Total Commitments are then zero, to its share of the Total Commitments immediately prior to their reduction to zero)
indemnify each of the Facility Agent and the Security Agent, within three Business Days of demand, against any cost, loss or liability incurred by the Facility Agent or the 

64

 

Security
Agent (otherwise than by reason of the Facility Agent's or the Security Agent's gross negligence or wilful misconduct) in acting as Facility Agent or as Security Agent under the Finance
Documents (unless the Facility Agent or the Security Agent has been reimbursed by an Obligor pursuant to a Finance Document). 

	26.11
	Resignation of the Facility Agent

	(a)
	The
Facility Agent may resign and appoint one of its Affiliates acting through an office in London as successor by giving notice to the other Finance Parties and the Company.

	(b)
	Alternatively
the Facility Agent may resign by giving notice to the other Finance Parties and the Company, in which case the Majority Lenders (after consultation with the Company) may
appoint a successor Facility Agent.

	(c)
	If
the Majority Lenders have not appointed a successor Facility Agent in accordance with paragraph (b) above within 30 days after notice of resignation was given, the
Facility Agent (after consultation with the Company) may appoint a successor Facility Agent (acting through an office in London).

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

	(e)
	The
Facility Agent's resignation notice shall only take effect upon the appointment of a successor.

	(f)
	Upon
the appointment of a successor, the retiring Facility Agent shall be discharged from any further obligation in respect of the Finance Documents but shall remain entitled to the
benefit of this Clause 26. Its successor and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if such successor had been an
original Party.

	(g)
	After
consultation with the Company, the Majority Lenders may, by notice to the Facility Agent, require it to resign in accordance with paragraph (b) above. In this event, the
Facility Agent shall resign in accordance with paragraph (b) above.

	26.12
	Confidentiality

	(a)
	In
acting as agent for the Finance Parties or, as the case may be, security agent for the Secured Parties, the Facility Agent and the Security Agent shall be regarded as acting
through its agency division, or as appropriate, security agent division which shall be treated as a separate entity from any other of its divisions or departments.

	(b)
	If
information is received by another division or department of the Facility Agent or the Security Agent, it may be treated as confidential to that division or department and neither
the Facility Agent nor the Security Agent shall not be deemed to have notice of it.

	26.13
	Relationship with the Lenders

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

	(b)
	Each
Lender shall supply the Facility Agent with any information required by the Facility Agent in order to calculate the Mandatory Cost in accordance with Schedule 4
(Mandatory Cost Formulae). 

65

 

	(c)
	Each
Secured Party shall supply the Facility Agent with any information that the Security Agent may reasonably specify (through the Facility Agent) as being necessary or desirable to
enable the Security Agent to perform its functions as security agent. Each Lender shall deal with the Security Agent exclusively through the Facility Agent and shall not deal directly with the
Security Agent.

	26.14
	Credit appraisal by the Secured Parties

Without
affecting the responsibility of any Obligor for information supplied by it or on its behalf in connection with any Finance Document, each Secured Party confirms to the Facility Agent, the
Arrangers and the Security Agent that it has been, and will continue to be, solely responsible for making its own independent appraisal and investigation of all risks arising under or in connection
with any Finance Document including but not limited to: 

	(a)
	the
financial condition, status and nature of each member of the Group;

	(b)
	the
legality, validity, effectiveness, adequacy or enforceability of any Finance Document and the Transaction Security and any other agreement, arrangement or document entered into,
made or executed in anticipation of, under or in connection with any Finance Document or the Transaction Security;

	(c)
	whether
that Secured Party has recourse, and the nature and extent of that recourse, against any Party or any of its respective assets under or in connection with any Finance
Document, the Transaction Security, the transactions contemplated by the Finance Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or
in connection with any Finance Document;

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

	(e)
	the
right or title of any person in or to, or the value or sufficiency of any part of the Charged Shares, the priority of any of the Transaction Security or the existence of any
Security affecting the Charged Shares.

	26.15
	Reference Banks

If
a Reference Bank (or, if a Reference Bank is not a Lender, the Lender of which it is an Affiliate) ceases to be a Lender, the Facility Agent shall (in consultation with the Company) appoint another
Lender or an Affiliate of a Lender to replace that Reference Bank. 

	26.16
	Facility Agent's Management Time

Any
amount payable to the Facility Agent under Clause 15.3 (Indemnity to the Facility Agent), Clause 17 (Costs and
expenses) and Clause 26.10 (Lenders' indemnity to the Facility Agent) shall include the cost of utilising the Facility
Agent's management time or other resources and will be calculated on the basis of such reasonable daily or hourly rates as the Facility Agent may notify to the Company and the Lenders, and is in
addition to any fee paid or payable to the Facility Agent under Clause 12 (Fees). 

	26.17
	Deduction from amounts payable by the Facility Agent

If
any Party owes an amount to the Facility Agent under the Finance Documents the Facility Agent may, after giving notice to that Party, deduct an amount not exceeding that amount from any payment to
that Party which the Facility Agent would otherwise be obliged to make under the 

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Finance
Documents and apply the amount deducted in or towards satisfaction of the amount owed. For the purposes of the Finance Documents that Party shall be regarded as having received any amount so
deducted. 

	27.
	ROLE OF SECURITY AGENT

	27.1
	No Independent Power

The
Secured Parties shall not have any independent power to enforce, or have recourse to, any of the Transaction Security or to exercise any rights or powers arising under the Security Documents
except through the Security Agent. 

	27.2
	Security Agent's Instructions

The
Security Agent shall: 

	(a)
	unless
a contrary indication appears in a Finance Document, act in accordance with any instructions given to it by the Facility Agent and shall be entitled to assume that
(i) any instructions received by it from the Facility Agent are duly given by or on behalf of the Majority Lenders or, as the case may be, all Lenders in accordance with the terms of the
Finance Documents and (ii) unless it has received actual notice of revocation that any instructions or directions given by the Facility Agent have not been revoked;

	(b)
	be
entitled to request instructions, or clarification of any direction, from the Facility Agent as to whether, and in what manner, it should exercise or refrain from exercising any
rights, powers and discretions and the Security Agent may refrain from acting unless and until those instructions or clarification are received by it; and

	(c)
	be
entitled to, carry out all dealings with the Lenders through the Facility Agent and may give to the Facility Agent any notice or other communication required to be given by the
Security Agent to the Lenders.

	27.3
	Security Agent's Actions

Subject
to the provisions of this Clause 27: 

	(a)
	the
Security Agent may, in the absence of any instructions to the contrary, take such action in the exercise of any of its powers and duties under the Finance Documents which in its
absolute discretion it considers to be for the protection and benefit of all the Secured Parties; and

	(b)
	at
any time after receipt by the Security Agent of notice from the Facility Agent directing the Security Agent to exercise all or any of its rights, remedies, powers or discretions
under any of the Finance Documents, the Security Agent may, and shall if so directed by the Facility Agent, take any action as in its sole discretion it thinks fit to enforce the Transaction Security.

	27.4
	Security Agent's Discretions

	(a)
	The
Security Agent may assume (unless it has received actual notice to the contrary in its capacity as security agent for the Secured Parties) that:

	(i)
	no
Default has occurred and no Obligor is in breach of or default under its obligations under any of the Finance Documents; and

	(ii)
	any
right, power, authority or discretion vested in any person has not been exercised.

	(b)
	The
Security Agent may, if it receives any instructions or directions from the Facility Agent to take any action in relation to the Transaction Security, assume that all applicable
conditions under the Finance Documents for taking that action have been satisfied. 

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	(c)
	The
Security Agent may engage, pay for and rely on the advice or services of any lawyers, accountants, surveyors or other experts (whether obtained by the Security Agent or by any
other Secured Party).

	(d)
	The
Security Agent may rely upon any communication or document believed by it to be genuine and, as to any matters of fact which might reasonably be expected to be within the
knowledge of a Secured Party or an Obligor, upon a certificate signed by or on behalf of that person.

	(e)
	The
Security Agent may refrain from acting in accordance with the instructions of the Facility Agent or Lenders (including bringing any legal action or proceeding arising out of or in
connection with the Finance Documents) until it has received any indemnification and/or security that it may in its absolute discretion require (whether by way of payment in advance or otherwise) for
all costs, losses and liabilities which it may incur in bringing such action or proceedings.

	27.5
	Security Agent's Obligations

The
Security Agent shall promptly inform the Facility Agent of: 

	(a)
	the
contents of any notice or document received by it in its capacity as Security Agent from any Obligor under any Finance Document; and

	(b)
	the
occurrence of any Default of which the Security Agent has received notice from any other party to this Agreement.

	27.6
	Excluded Obligations

The
Security Agent shall not: 

	(a)
	be
bound to enquire as to the occurrence or otherwise of any Default or the performance, default or any breach by an Obligor of its obligations under any of the Finance Documents;

	(b)
	be
bound to account to any other Secured Party for any sum or the profit element of any sum received by it for its own account;

	(c)
	be
bound to disclose to any other person (including any Secured Party) (i) any confidential information or (ii) any other information if disclosure would, or might in
its reasonable opinion, constitute a breach of any law or be a breach of fiduciary duty;

	(d)
	be
under any obligations other than those which are specifically provided for in the Finance Documents; or

	(e)
	have
or be deemed to have any duty, obligation or responsibility to, or relationship of trust or agency with, any Obligor.

	27.7
	No responsibility to perfect Transaction Security

The
Security Agent shall not be liable for any failure to: 

	(a)
	require
the deposit with it of any deed or document certifying, representing or constituting the title of any Obligor to any of the Charged Shares;

	(b)
	obtain
any licence, consent or other authority for the execution, delivery, legality, validity, enforceability or admissibility in evidence of any of the Finance Documents or the
Transaction Security;

	(c)
	register,
file or record or otherwise protect any of the Transaction Security (or the priority of any of the Transaction Security) under any applicable laws in any jurisdiction or to
give notice 

68

 

to
any person of the execution of any of the Finance Documents or of the Transaction Security; 

	(d)
	take,
or to require any of the Obligors to take, any steps to perfect its title to any of the Charged Shares or to render the Transaction Security effective or to secure the creation
of any ancillary Security under the laws of any jurisdiction; or

	(e)
	require
any further assurances in relation to any of the Security Documents.

	27.8
	Insurance by Security Agent

The
Security Agent shall not be under any obligation to insure any of the Charged Shares, to require any other person to maintain any insurance or to verify any obligation to arrange or maintain
insurance contained in the Finance Documents. The Security Agent shall not be responsible for any loss which may be suffered by any person as a result of the lack of or inadequacy of any such
insurance. 

	27.9
	Custodians and Nominees

The
Security Agent may appoint and pay any person to act as a custodian or nominee on any terms in relation to any assets of the trust as the Security Agent may determine, including for the purpose of
depositing with a custodian this Agreement or any document relating to the trust created under this Agreement and the Security Agent shall not be responsible for any loss, liability, expense, demand,
cost, claim or proceedings incurred by reason of the misconduct, omission or default on the part of any person appointed by it under this Agreement or be bound to supervise the proceedings or acts of
any person. 

	27.10
	Acceptance of Title

The
Security Agent shall be entitled to accept without enquiry, and shall not be obliged to investigate, the right and title as each of the Obligors may have to any of the Charged Shares and shall not
be liable for or bound to require any Obligor to remedy any defect in its right or title. 

	27.11
	Refrain from Illegality

The
Security Agent may refrain from doing anything which in its opinion will or may be contrary to any relevant law, directive or regulation of any jurisdiction which would or might otherwise render
it liable to any person, and the Security Agent may do anything which is, in its opinion, necessary to comply with any law, directive or regulation. 

	27.12
	Business with the Obligors

The
Security Agent may accept deposits from, lend money to, and generally engage in any kind of banking or other business with any of the Obligors. 

	27.13
	Releases

Upon
a disposal of any of the Charged Shares or the resignation of an Obligor in accordance with Clause 25 (Changes to the Obligors): 

	(a)
	pursuant
to the enforcement of the Transaction Security by a Receiver or the Security Agent; or

	(b)
	if
that disposal is permitted under the Finance Documents; or

	(c)
	if
the Security Agent is instructed to release the Transaction Security granted by the resigning Obligor under the terms of Clause 25 (Changes to the
Obligors), 

the
Security Agent shall (at the cost of the Obligors) release that property from the Transaction Security or the Transaction Security given by that Obligor and is authorised to execute, without the 

69

 

need
for any further authority from the Secured Parties, any release of the Transaction Security or other claim over that asset or Obligor and to issue any certificates of
non-crystallisation of floating charges that may be required or desirable. 

	27.14
	Resignation of Security Agent

	(a)
	The
Security Agent may resign and appoint one of its Affiliates as successor by giving notice to the Company and to the Facility Agent on behalf of the Lenders.

	(b)
	Alternatively
the Security Agent may resign by giving notice to the other Parties (or to the Facility Agent on behalf of the Lenders) in which case the Majority Lenders may appoint a
successor Security Agent.

	(c)
	If
the Majority Lenders have not appointed a successor Security Agent in accordance with paragraph (b) above within 30 days after the notice of resignation was given,
the Security Agent (after consultation with the Facility Agent) may appoint a successor Security Agent.

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

	(e)
	The
Security Agent's resignation notice shall only take effect upon (i) the appointment of a successor and (ii) the transfer of all of the Transaction Security to that
successor.

	(f)
	Upon
the appointment of a successor, the retiring Security Agent shall be discharged from any further obligation in respect of the Finance Documents but shall remain entitled to the
benefit of Clause 28 (Conduct of Business by the Finance Parties), Clause 29 (Sharing among the Finance
Parties) and Clause 27 (Role of Security Agent). Its successor and each of the other Parties shall have the same rights
and obligations amongst themselves as they would have had if such successor had been an original Party.

	(g)
	The
Majority Lenders may, by notice to the Security Agent, require it to resign in accordance with paragraph (b) above. In this event, the Security Agent shall resign in
accordance with paragraph (b) above.

	27.15
	Delegation

	(a)
	The
Security Agent may, at any time, delegate by power of attorney or otherwise to any person for any period, all or any of the rights, powers and discretions vested in it by any of
the Finance Documents.

	(b)
	The
delegation may be made upon any terms and conditions (including the power to sub-delegate) and subject to any restrictions as the Security Agent may think fit in the
interests of the Secured Parties and it shall not be bound to supervise, or be in any way responsible for any loss incurred by reason of any misconduct or default on the part of any delegate or
sub-delegate.

	27.16
	Additional Security Agents

	(a)
	The
Security Agent may at any time appoint (and subsequently remove) any person to act as a separate agent or as a co-agent jointly with it (i) if it considers that
appointment to be in the interests of the Secured Parties or (ii) for the purposes of conforming to any legal requirements, restrictions or conditions which the Security Agent deems to be
relevant or (iii) for obtaining or enforcing any judgment in any jurisdiction, and the Security Agent shall give prior notice to the Borrower and the Facility Agent of that appointment. 

70

 

	(b)
	Any
person so appointed shall have the rights, powers and discretions (not exceeding those conferred on the Security Agent by this Agreement) and the duties and obligations that are
conferred or imposed by the instrument of appointment.

	(c)
	The
remuneration that the Security Agent may pay to any person, and any costs and expenses incurred by that person in performing its functions pursuant to that appointment shall, for
the purposes of this Agreement, be treated as costs and expenses incurred by the Security Agent.

	27.17
	Parallel Debt

	(a)
	Notwithstanding
any other provision of this Agreement, each Obligor hereby irrevocably and unconditionally undertakes to pay to the Security Agent, as creditor in its own right and
not as representative of the other Finance Parties, sums equal to and in the currency of each amount payable by such Obligor to each of the Finance Parties under each of the Finance Documents as and
when that amount falls due for payment under the relevant Finance Document or would have fallen due but for any discharge resulting from failure of another Finance Party to take appropriate steps, in
insolvency proceedings affecting that Obligor, to preserve its entitlement to be paid that amount.

	(b)
	The
Security Agent shall have its own independent right to demand payment of the amounts payable by each Obligor under this Clause 27.17, irrespective of any discharge of such
Obligor's obligation to pay those amounts to the other Finance Parties resulting from failure by them to take appropriate steps, in insolvency proceedings affecting that Obligor, to preserve their
entitlement to be paid those amounts.

	(c)
	Any
amount due and payable by an Obligor to the Security Agent under this Clause 27.17 (Parallel Debt) shall be decreased to the
extent that the other Finance Parties have received (and are able to retain) payment in full of the corresponding amount under the other provisions of the Finance Documents and any amount due and
payable by an Obligor to the other Finance Parties under those provisions shall be decreased to the extent that the Security Agent has received (and is able to retain) payment in full of the
corresponding amount under this Clause 27.17.

	28.
	CONDUCT OF BUSINESS BY THE FINANCE PARTIES

No
provision of this Agreement will: 

	(a)
	interfere
with the right of any Finance Party to arrange its affairs (tax or otherwise) in whatever manner it thinks fit;

	(b)
	oblige
any Finance Party to investigate or claim any credit, relief, remission or repayment available to it or the extent, order and manner of any claim; or

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

	29.
	SHARING AMONG THE FINANCE PARTIES

	29.1
	Payments to Finance Parties

If
a Finance Party (a "Recovering Finance Party") receives or recovers any amount from an Obligor other than in accordance with Clause 30
(Payment mechanics) or Clause 32 (Application of Proceeds) and applies that amount to a payment
due under the Finance Documents then: 

	(a)
	the
Recovering Finance Party shall, within three Business Days, notify details of the receipt or recovery, to the Facility Agent; 

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	(b)
	the
Facility Agent shall determine whether the receipt or recovery is in excess of the amount the Recovering Finance Party would have been paid had the receipt or recovery been
received or made by the Facility Agent and distributed in accordance with Clause 30 (Payment mechanics), without taking account of any Tax which
would be imposed on the Facility Agent in relation to the receipt, recovery or distribution; and

	(c)
	the
Recovering Finance Party shall, within three Business Days of demand by the Facility Agent, pay to the Facility Agent an amount (the "Sharing
Payment") equal to such receipt or recovery less any amount which the Facility Agent determines may be retained by the Recovering Finance Party as its share of any payment to
be made, in accordance with Clause 30.5 (Partial payments).

	29.2
	Redistribution of payments

The
Facility Agent shall treat the Sharing Payment as if it had been paid by the relevant Obligor and distribute it between the Finance Parties (other than the Recovering Finance Party) in accordance
with Clause 30.5 (Partial payments). 

	29.3
	Recovering Finance Party's rights

	(a)
	On
a distribution by the Facility Agent under Clause 29.2 (Redistribution of payments), the Recovering Finance Party will be
subrogated to the rights of the Finance Parties which have shared in the redistribution.

	(b)
	If
and to the extent that the Recovering Finance Party is not able to rely on its rights under paragraph (a) above, the relevant Obligor shall be liable to the Recovering
Finance Party for a debt equal to the Sharing Payment which is immediately due and payable.

	29.4
	Reversal of redistribution

If
any part of the Sharing Payment received or recovered by a Recovering Finance Party becomes repayable and is repaid by that Recovering Finance Party, then: 

	(a)
	each
Finance Party which has received a share of the relevant Sharing Payment pursuant to Clause 29.2 (Redistribution of
payments) shall, upon request of the Facility Agent, pay to the Facility Agent for account of that Recovering Finance Party an amount equal to the appropriate part of its share
of the Sharing Payment (together with an amount as is necessary to reimburse that Recovering Finance Party for its proportion of any interest on the Sharing Payment which that Recovering Finance Party
is required to pay); and

	(b)
	that
Recovering Finance Party's rights of subrogation in respect of any reimbursement shall be cancelled and the relevant Obligor will be liable to the reimbursing Finance Party for
the amount so reimbursed.

	29.5
	Exceptions

	(a)
	This
Clause 29 shall not apply to the extent that the Recovering Finance Party would not, after making any payment pursuant to this Clause, have a valid and enforceable claim
against the relevant Obligor.

	(b)
	A
Recovering Finance Party is not obliged to share with any other Finance Party any amount which the Recovering Finance Party has received or recovered as a result of taking legal or
arbitration proceedings, if:

	(i)
	it
notified that other Finance Party of the legal or arbitration proceedings; and

	(ii)
	that
other Finance Party had an opportunity to participate in those legal or arbitration proceedings but did not do so as soon as reasonably practicable having received notice and
did not take separate legal or arbitration proceedings. 

72

  

 
 

SECTION 11
  ADMINISTRATION    
    

	30.
	PAYMENT MECHANICS

	30.1
	Payments to the Facility Agent

	(a)
	On
each date on which an Obligor or a Lender is required to make a payment under a Finance Document, that Obligor or Lender shall make the same available to the Facility Agent (unless
a contrary indication appears in a Finance Document) for value on the due date at the time and in such funds specified by the Facility Agent as being customary at the time for settlement of
transactions in the relevant currency in the place of payment.

	(b)
	Payment
shall be made to such account in the principal financial centre of the country of that currency (or, in relation to euro, in a principal financial centre in a Participating
Member State) with such bank as the Facility Agent specifies.

	30.2
	Distributions by the Facility Agent

Each
payment received by the Facility Agent under the Finance Documents for another Party shall, subject to Clause 30.3 (Distributions to an
Obligor), Clause 30.4 (Clawback) and Clause 26.17 (Deduction from amounts payable by the
Facility Agent) be made available by the Facility Agent as soon as practicable after receipt to the Party entitled to receive payment in accordance with this Agreement (in the
case of a Lender, for the account of its Facility Office), to such account as that Party may notify to
the Facility Agent by not less than five Business Days' notice with a bank in the principal financial centre of the country of that currency (or, in relation to euro, in the principal financial centre
of a Participating Member State). 

	30.3
	Distributions to an Obligor

The
Facility Agent may (with the consent of the Obligor or in accordance with Clause 31 (Set-off)) apply any amount received by it
for that Obligor in or towards payment (on the date and in the currency and funds of receipt) of any amount due from that Obligor under the Finance Documents or in or towards purchase of any amount of
any currency to be so applied. 

	30.4
	Clawback

	(a)
	Where
a sum is to be paid to the Facility Agent under the Finance Documents for another Party, the Facility Agent is not obliged to pay that sum to that other Party (or to enter into
or perform any related exchange contract) until it has been able to establish to its satisfaction that it has actually received that sum.

	(b)
	If
the Facility Agent pays an amount to another Party and it proves to be the case that the Facility Agent had not actually received that amount, then the Party to whom that amount
(or the proceeds of any related exchange contract) was paid by the Facility Agent shall on demand refund the same to the Facility Agent together with interest on that amount from the date of payment
to the date of receipt by the Facility Agent, calculated by the Facility Agent to reflect its cost of funds.

	30.5
	Partial payments

	(a)
	If
the Facility Agent receives a payment that is insufficient to discharge all the amounts then due and payable by an Obligor under the Finance Documents, the Facility Agent shall
apply 

73

 

that
payment towards the obligations of that Obligor under the Finance Documents in the following order: 

	(i)
	first, in or towards payment pro rata of any unpaid fees, costs and expenses of the Facility Agent, the Security Agent (including of
any Receiver or Delegate) and the Arrangers under the Finance Documents;

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

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

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

	(b)
	The
Facility Agent shall, if so directed by the Majority Lenders, vary the order set out in paragraphs (a)(ii) to (iv) above.

	(c)
	Paragraphs
(a) and (b) above will override any appropriation made by an Obligor.

	30.6
	No set-off by Obligors

All
payments to be made by an Obligor under the Finance Documents shall be calculated and be made without (and free and clear of any deduction for) set-off or counterclaim. 

	30.7
	Business Days

	(a)
	Any
payment which is due to be made on a day that is not a Business Day shall be made on the next Business Day in the same calendar month (if there is one) or the preceding Business
Day (if there is not).

	(b)
	During
any extension of the due date for payment of any principal or Unpaid Sum under this Agreement interest is payable on the principal or Unpaid Sum at the rate payable on the
original due date.

	30.8
	Currency of account

	(a)
	Subject
to paragraphs (b) to (e) below, the Base Currency is the currency of account and payment for any sum due from an Obligor under any Finance Document.

	(b)
	A
repayment of a Loan or Unpaid Sum or a part of a Loan or Unpaid Sum shall be made in the currency in which that Loan or Unpaid Sum is denominated on its due date.

	(c)
	Each
payment of interest shall be made in the currency in which the sum in respect of which the interest is payable was denominated when that interest accrued.

	(d)
	Each
payment in respect of costs, expenses or Taxes shall be made in the currency in which the costs, expenses or Taxes are incurred.

	(e)
	Any
amount expressed to be payable in a currency other than the Base Currency shall be paid in that other currency.

	30.9
	Change of currency

	(a)
	Unless
otherwise prohibited by law, if more than one currency or currency unit are at the same time recognised by the central bank of any country as the lawful currency of that
country, then:

	(i)
	any
reference in the Finance Documents to, and any obligations arising under the Finance Documents in, the currency of that country shall be translated into, or paid in, 

74

 

the
currency or currency unit of that country designated by the Facility Agent (after consultation with the Company); and 

	(ii)
	any
translation from one currency or currency unit to another shall be at the official rate of exchange recognised by the central bank for the conversion of that currency or currency
unit into the other, rounded up or down by the Facility Agent (acting reasonably).

	(b)
	If
a change in any currency of a country occurs, this Agreement will, to the extent the Facility Agent (acting reasonably and after consultation with the Company) specifies to be
necessary, be amended to comply with any generally accepted conventions and market practice in the Relevant Interbank Market and otherwise to reflect the change in currency.

	31.
	SET-OFF

A
Finance Party may set off any matured obligation due from an Obligor under the Finance Documents (to the extent beneficially owned by that Finance Party) against any matured obligation owed by that
Finance Party to that Obligor, regardless of the place of payment, booking branch or currency of either obligation. If the obligations are in different currencies, the Finance Party may
convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off. 

	32.
	APPLICATION OF PROCEEDS

	32.1
	Order of Application

All
moneys from time to time received or recovered by the Security Agent under Clause 27.17 (Parallel Debt) and/or in connection with the
realisation or enforcement of all or any part of the Transaction Security shall be held by the Security Agent on trust to apply them at such times as the Security Agent sees fit, to the extent
permitted by applicable law, in the following order of priority: 

	(a)
	in
discharging any sums owing to the Security Agent (in its capacity as security agent), any Receiver or any Delegate;

	(b)
	in
payment to the Facility Agent, on behalf of the Secured Parties, for application towards the discharge of all sums due and payable by any Obligor under any of the Finance Documents
in accordance with Clause 30.5 (Partial Payments);

	(c)
	if
none of the Obligors is under any further actual or contingent liability under any Finance Document, in payment to any person to whom the Security Agent is obliged to pay in
priority to any Obligor; and

	(d)
	the
balance, if any, in payment to the relevant Obligor.

	32.2
	Investment of Proceeds

Prior
to the application of the proceeds of the Transaction Security in accordance with Clause 32.1 (Order of Application) the Security Agent
may, at its discretion, hold all or part of those proceeds in an interest bearing suspense or impersonal account(s) in the name of the Security Agent or Facility Agent with any financial institution
(including itself) and for so long as the Security Agent thinks fit (the interest being credited to the relevant account) pending the application from time to time of those monies at the Security
Agent's discretion in accordance with the provisions of this Clause 32. 

75

 
	32.3
	Currency Conversion

	(a)
	For
the purpose of or pending the discharge of any of the Secured Obligations the Security Agent may convert any moneys received or recovered by the Security Agent from one currency
to another, at the spot rate at which the Security Agent is able to purchase the currency in which the Secured Obligations are due with the amount received.

	(b)
	The
obligations of any Obligor to pay in the due currency shall only be satisfied to the extent of the amount of the due currency purchased after deducting the costs of conversion.

	32.4
	Permitted Deductions

The
Security Agent shall be entitled (a) to set aside by way of reserve amounts required to meet and (b) to make and pay, any deductions and withholdings (on account of Tax or otherwise)
which it is or may be required by any applicable law to make from any distribution or payment made by it under this Agreement, and to pay all Tax which may be assessed against it in respect of any of
the Charged Shares, or as a consequence of performing its duties, or by virtue of its capacity as security agent under any of the Finance Documents or otherwise (except in connection with its
remuneration for performing its duties under this Agreement). 

	32.5
	Discharge of Secured Obligations

	(a)
	Any
payment to be made in respect of the Secured Obligations by the Security Agent may be made to the Facility Agent on behalf of the Lenders and that payment shall be a good
discharge to the extent of that payment.

	(b)
	The
Security Agent is under no obligation to make payment to the Facility Agent in the same currency as that in which any Unpaid Sum is denominated.

	32.6
	Sums received by Obligors

If
any of the Obligors receives any sum which, pursuant to any of the Finance Documents, should have been paid to the Security Agent, that sum shall promptly be paid to the Security Agent for
application in accordance with this Clause. 

	32.7
	Application and consideration

In
consideration for the covenants given to the Security Agent by each Obligor in Clause 27.17 (Parallel Debt), the Security Agent agrees with
each Obligor to apply all moneys from time to time paid by such Obligor to the Security Agent in accordance with the provisions of Clause 32.1 (Order of
Application). 

	33.
	NOTICES

	33.1
	Communications in writing

Any
communication to be made under or in connection with the Finance Documents shall be made in writing and, unless otherwise stated, may be made by fax, letter or, subject to Clause 33.5
(Limitation on use of email), email. 

	33.2
	Addresses

The
address, fax number or email address (and the department or officer, if any, for whose attention the communication is to be made) of each Party for any communication or document to be made or
delivered under or in connection with the Finance Documents is: 

	(a)
	in
the case of the Company, that identified with its name below;

	(b)
	in
the case of each Lender or any other Original Borrower, that notified in writing to the Facility Agent on or prior to the date on which it becomes a Party; and 

76

 

	(c)
	in
the case of the Facility Agent and Security Agent, that identified with its name below, 

or
any substitute address, fax number or email address or department or officer as the Party may notify to the Facility Agent (or the Facility Agent may notify to the other Parties, if a change is
made by the Facility Agent) by not less than five Business Days' notice. 

	33.3
	Delivery

	(a)
	Any
communication or document made or delivered by one person to another under or in connection with the Finance Documents will only be effective:

	(i)
	if
by way of fax, when received in legible form; or

	(ii)
	if
by way of letter, when it has been left at the relevant address or five Business Days after being deposited in the post postage prepaid in an envelope addressed to it at that
address; or

	(iii)
	if
by way of email, when a delivery receipt is received by the sender confirming that the email has been delivered to the recipient's correct email address, 

and,
if a particular department or officer is specified as part of its address details provided under Clause 33.2 (Addresses), if addressed to
that department or officer. 

	(b)
	Any
communication or document to be made or delivered to the Facility Agent or to the Security Agent will be effective only when actually received by the Facility Agent or the
Security Agent and then only if it is expressly marked for the attention of or delivered to the email address of the department or officer identified with the Facility Agent's or the Security Agent's
signature below (or any substitute department or officer as the Facility Agent shall specify for this purpose).

	(c)
	All
notices from or to an Obligor shall be sent through the Facility Agent.

	(d)
	Any
communication or document made or delivered to the Company in accordance with this Clause will be deemed to have been made or delivered to each of the Obligors.

	(e)
	All
notices to a Lender from the Security Agent shall be sent through the Facility Agent.

	(f)
	Any
notice delivered in accordance with this Clause 33.3 after 4.00 p.m. on a Business Day, or on any day which is not a Business Day, will be deemed to have been
delivered at 10.00 a.m. on the next Business Day.

	33.4
	Notification of address and fax number

Promptly
upon receipt of notification of an address, fax number or email address or change of address, fax number or email address pursuant to Clause 33.2
(Addresses) or changing its own address, fax number or email address, the Facility Agent shall notify the other Parties. 

	33.5
	Limitation on use of email

	(a)
	Email
shall not be used for any of the following communications to be made under or in connection with the Finance Documents:

	(i)
	delivery
of a Utilisation Request under Clause 5.1 (Delivery of a Utilisation Request);

	(ii)
	notification
of a change of control under Clause 8.2 (Change of control);

	(iii)
	delivery
of a Compliance Certificate under Clause 20.2 (Compliance Certificate);

	(iv)
	any
other notification or correspondence on which the Facility Agent, acting reasonably, requires a hard-copy signature; 

77

 

	(v)
	supply
of any of the information required to be delivered to the Facility Agent under Clause 20.5 (Information: miscellaneous);
or

	(vi)
	a
notification under Clause 20.6 (Notification of default and disposal of SBS Broadcasting B.V. shares).

	(b)
	If
the Company supplies the Facility Agent with financial statements pursuant to Clause 20.1 (Financial statements) by email,
the Company shall supply a hard copy of those financial statements within five Business Days to any Finance Party which notifies the Company that it requires a hard copy of those financial statements
because of a governmental requirement.

	33.6
	Use of websites

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

	(i)
	the
Facility Agent and the Company agree;

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

	(iii)
	both
the Company and the Facility Agent are aware of the address of and any relevant password specifications for the website; and

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

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

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

	(i)
	if
so requested to do so by the Facility Agent; and

	(ii)
	if
so required by a governmental requirement, 

within
ten Business Days of receipt of the request or notification to the Company of the requirement. 

	(c)
	The
Facility Agent must promptly upon becoming aware of its occurrence, notify the Company and Lenders if:

	(i)
	the
website cannot be accessed;

	(ii)
	the
website or any information on the website is infected by an electronic virus or similar software;

	(iii)
	the
relevant password specification for the website is changed; or

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

In
the event the circumstances in paragraphs (i) or (ii) above occur, the Company must supply any information required under this Agreement in paper form. 

	33.7
	English language

	(a)
	Any
notice given under or in connection with any Finance Document must be in English.

	(b)
	All
other documents provided under or in connection with any Finance Document must be:

	(i)
	in
English; or 

78

 

	(ii)
	if
not in English, and if so required by the Facility Agent (acting reasonably), accompanied by a certified English translation and, in this case, the English translation will
prevail unless the document is a constitutional, statutory or other official document.

	(c)
	For
the avoidance of doubt none of the latest available audited financial statements of the Original Obligors referred to in paragraph 5 (c) of Part 1 of
Schedule 2 (Conditions Precedent) are (if not in English) required to be accompanied by an English translation.

	34.
	CALCULATIONS AND CERTIFICATES

	34.1
	Accounts

In
any litigation or arbitration proceedings arising out of or in connection with a Finance Document, the entries made in the accounts maintained by a Finance Party are prima
facie evidence of the matters to which they relate. 

	34.2
	Certificates and Determinations

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

	34.3
	Day count convention

Any
interest, commission or fee accruing under a Finance Document will accrue from day to day and is calculated on the basis of the actual number of days elapsed and a year of 360 days or, in
any case where the practice in the Relevant Interbank Market differs, in accordance with that market practice. 

	35.
	PARTIAL INVALIDITY

If,
at any time, any provision of the Finance Documents is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or
enforceability of the remaining provisions nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired. 

	36.
	REMEDIES AND WAIVERS

No
failure to exercise, nor any delay in exercising, on the part of any Secured Party or the Arrangers, any right or remedy under the Finance Documents shall operate as a waiver, nor shall any single
or partial exercise of any right or remedy prevent any further or other exercise or the exercise of any other right or remedy. The rights and remedies provided in this Agreement are cumulative and not
exclusive of any rights or remedies provided by law. 

	37.
	AMENDMENTS AND WAIVERS

	37.1
	Required consents

	(a)
	Subject
to Clause 37.2 (Exceptions) and Clause 27.13 (Releases) any term
of the Finance Documents may be amended or waived only with the consent of the Majority Lenders and the Obligors and any such amendment or waiver will be binding on all Parties.

	(b)
	The
Facility Agent, or in respect of the Security Documents the Security Agent, may effect, on behalf of any Finance Party, any amendment or waiver permitted by this Clause. 

79

 

	37.2
	Exceptions

	(a)
	An
amendment or waiver that has the effect of changing or which relates to:

	(i)
	the
definition of "Majority Lenders" in Clause 1.1 (Definitions) or paragraph (f) of the definition of "Permitted
Financial Indebtedness" in Clause 1.1 (Definitions);

	(ii)
	an
extension to the date of payment of any amount under the Finance Documents (other than as a result of the operation of Clause 8.3 (Mandatory
Prepayment and Cancellation));

	(iii)
	a
reduction in the Margin or a reduction in the amount of any payment of principal, interest, fees or commission payable to the Finance Parties under the Finance Documents (other
than as a result of the operation of Clause 8.3 (Mandatory Prepayment and Cancellation));

	(iv)
	an
increase in or an extension of any Commitment;

	(v)
	a
change to the Borrowers or Guarantors other than in accordance with Clause 25 (Changes to the Obligors);

	(vi)
	any
provision which expressly requires the consent of all the Lenders;

	(vii)
	Clause 2.2
(Finance Parties' rights and obligations), Clause 24 (Changes to the
Lenders) or this Clause 37; or

	(viii)
	the
nature or scope of the Charged Shares or the manner in which the proceeds of enforcement of the Transaction Security are distributed; 

shall
not be made without the prior consent of all the Lenders. 

	(b)
	An
amendment or waiver which relates to the rights or obligations of the Facility Agent, the Security Agent or the Arrangers may not be effected without the consent of the Facility
Agent, the Security Agent or the Arrangers.

	37.3
	Non-consenting Banks

	(a)
	In
this Clause 37.3: 

"Non-Consenting Bank" means a Lender which does not agree to a consent or amendment to, or a waiver of, a provision of a Finance Document
requested by an Obligor where: 

	(i)
	the
consent, waiver or amendment requires the consent of all the Lenders;

	(ii)
	a
period of not less than 10 Business Days has elapsed from the date the consent, waiver or amendment was requested; and

	(iii)
	a
Supermajority Instructing Group has agreed to the consent, waiver or amendment. 

"Replacement Bank" means any other person or persons selected by (a) a Supermajority Instructing Group, (b) the Company or (c) the
Borrowers, which is willing to assume all of the obligations of a Non-Consenting Bank. 

"Supermajority Instructing Group" means: 

	(i)
	whilst
no Loans are outstanding, a Lender or Lenders whose Commitments amount (or, if each Lender's Commitment has been reduced to zero, did immediately before such reduction to zero,
amount) in aggregate to more than 90 per cent. of the Total Commitments; and

	(ii)
	whilst
at least one Loan is outstanding, a Lender or Lenders whose participation in any Loans then outstanding aggregate more than 90% of all the Loans then outstanding. 

80

 

	(b)
	Subject
to paragraph (e) below, a Supermajority Instructing Group or the Company may, on giving 10 Business Days' prior notice to the Facility Agent and a
Non-Consenting Bank (and provided that such Non-Consenting Bank has not given its consent to the relevant consent, amendment or waiver prior to the end of such notice period)
require that Non-Consenting Bank to transfer all of its rights and obligations under this Agreement to a Replacement Bank.

	(c)
	On
receipt of a notice under paragraph (b) above the Non-Consenting Bank must (unless it has given its consent to the relevant consent, amendment or waiver before
the end of the notice period referred to in paragraph (b) above) transfer all of its rights and obligations under this Agreement:

	(i)
	in
accordance with Clause 24.1 (Assignments and transfers by the Lenders);

	(ii)
	on
the date specified in the notice;

	(iii)
	to
the Replacement Bank specified in the notice; and

	(iv)
	for
a purchase price equal to the aggregate of:

	(A)
	the
par value of the Non-Consenting Bank's participation in the outstanding Loans;

	(B)
	any
break costs payable to the Non-Consenting Bank as a result of the transfer; and

	(C)
	all
accrued interest, fees and other amounts payable to the Non-Consenting Bank under this Agreement as at the transfer date. 

No
member of the Group may make any payment or assume any obligation to or on behalf of the Replacement Bank to become a Lender, other than as provided in this Clause 37.3. 

	(d)
	Subject
to paragraph (e) below and with the written consent of each Lender which comprises the Supermajority Instructing Group the Company may on giving ten Business Days prior
notice to the Non-Consenting Bank and the Facility Agent (and provided that such Non-Consenting Bank has not given its consent to the relevant consent, amendment or waiver
prior to the end of such notice period) procure the repayment of such Non-Consenting Bank's share of the outstanding Loans and any Non-Consenting Bank for whose account such
repayment is made shall not be obliged to participate in any Loans made on or after the date on which the Facility Agent receives the Company's notice to repay such Non-Consenting Bank's
share of the outstanding Loans and such Non-Consenting Banks Commitment shall be reduced to zero.

	(e)
	Notwithstanding
the above, the right of a Supermajority Instructing Group or the Company to replace or repay a Non-Consenting Bank may only be exercised within
45 days after the date the consent, waiver or amendment was requested by the Company.

	(f)
	Any
notice of cancellation or prepayment given by the Company pursuant to this Clause 37 shall be irrevocable and shall oblige the relevant Borrower to make such prepayment on
such date.

	38.
	COUNTERPARTS

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

81

 
 
 

SECTION 12
  GOVERNING LAW AND ENFORCEMENT    
    

	39.
	GOVERNING LAW

This
Agreement is governed by English law. 

	40.
	ENFORCEMENT

	40.1
	Jurisdiction

	(a)
	The
courts of England have non-exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement (including a dispute regarding the
existence, validity or termination of this Agreement) (a "Dispute").

	(b)
	Without
prejudice to paragraph (a) above, the Parties agree that the courts of England are the most appropriate and convenient courts to settle Disputes and accordingly no
Party will argue to the contrary.

	(c)
	This
Clause 40.1 is for the benefit of the Finance Parties only. As a result, no Finance Party shall be prevented from taking proceedings relating to a Dispute in any other
courts with jurisdiction. To the extent allowed by law, the Finance Parties may take concurrent proceedings in any number of jurisdictions.

	40.2
	Service of process

Without
prejudice to any other mode of service allowed under any relevant law, each Obligor (other than an Obligor incorporated in England and Wales): 

	(a)
	irrevocably
appoints SBS Services UK Limited (whose registered office is in Carmelite House, 50 Victoria Embankment, Blackfriars, London, EC4Y ODX) as its agent for service of process
in relation to any proceedings before the English courts in connection with any Finance Document; and

	(b)
	agrees
that failure by an agent for service of process to notify the relevant Obligor of the process will not invalidate the proceedings concerned. 

This Agreement has been entered into on the date stated at the beginning of this Agreement.

82

  

 
 

SCHEDULE 1    
    
    THE ORIGINAL PARTIES    
    

The Original Obligors  

Name of Original Borrower

Kanal
5 Holding AB 

SBS
Broadcasting SA 

   

   

Name of Original Guarantor

Broadcast
Norge AS 

TV
Norge AS 

C
More Entertainment AB 

C
More Group AB 

Kanal
5 AB 

Kanal
5 Holding AB 

SBS
Belgium NV 

SBS
Broadcasting SA 

SBS
Nederlands BV 

VT4 Ltd

   

________________________________________________

EBS International N.V. (as an Original Obligor) 

83

 
The Original Lenders  

	Name of Original Lender
 
	 	Commitment EUR

	ABN AMRO Bank N.V.	 	175,000,000
	

Citibank International plc	
 	

50,000,000
	

Deutsche Bank AG London	
 	

50,000,000
	

The Royal Bank of Scotland PLC	
 	

50,000,000

84

 
 
 

SCHEDULE 2    
    
    CONDITIONS PRECEDENT    
    

 
 

Part I    
    
    Conditions precedent to initial Utilisation    
    

	1.
	Original Obligors: Corporate Documents

	(a)
	A
copy of the constitutional documents of each Original Obligor.

	(b)
	A
copy of the minutes of a meeting of the board of directors of each Original Obligor:

	(i)
	approving
the terms of, and the transactions contemplated by, the Finance Documents to which it is a party and resolving that it execute the Finance Documents to which it is a party;

	(ii)
	authorising
a specified person or persons to execute the Finance Documents to which it is a party on its behalf; and

	(iii)
	authorising
a specified person or persons, on its behalf, to sign and/or despatch all documents and notices (including, if relevant, any Utilisation Request) to be signed and/or
despatched by it under or in connection with the Finance Documents to which it is a party.

	(c)
	A
specimen of the signature of each person authorised by the resolution referred to in paragraph (b) above.

	(d)
	If
necessary or desirable a copy of a resolution signed by all the holders of the issued shares in each Original Obligor (other than the Company), approving the terms of, and the
transactions contemplated by, the Finance Documents to which the Original Obligor is a party.

	(e)
	A
certificate of the Company (signed by two senior officers, one of whom shall be the Chief Financial Officer or the Chief Accounting Officer) confirming that borrowing or
guaranteeing, as appropriate, the Total Commitments would not cause any borrowing, guaranteeing or similar limit binding on any Original Obligor to be exceeded.

	(f)
	A
certificate of an authorised signatory of the relevant Original Obligor, certifying that each copy document relating to it specified in Part I of this Schedule 2 is
correct, complete and in full force and effect as at a date no earlier than the date of this Agreement.

	2.
	Security Documents

	(a)
	The
following Security Documents:

	(i)
	pledge
of shares by the Company in Kanal 5 Holding AB, SBS Nederlands BV, Broadcast Norge AS and VT4 Ltd duly executed by the Company and the Security Agent;

	(ii)
	pledge
of shares by Kanal 5 Holding AB of 96.5% of the shares of C More Group AB and Kanal 5 AB duly executed by Kanal 5 Holding AB and the Security Agent;

	(iii)
	pledge
of shares by C More Group AB in C More Entertainment AB duly executed by C More Group AB and the Security Agent;

	(iv)
	pledge
of shares by VT4 Ltd in relation to its 99.93 per cent. of shares in SBS Belgium NV, duly executed by VT4 Ltd and the Security Agent; 

85

 

	(v)
	pledge
of shares by Broadcast Norge AS in TVNorge AS duly executed by Broadcast Norge and the Security Agent; and

	(vi)
	pledge
of shares by EBS International NV in relation to its 0.07 per cent. of shares in SBS Belgium NV.

	(b)
	Evidence
of the discharge of any Security or guarantees granted by any member of the Group which is not permitted by Clause 22.3 (Negative
Pledge) on or immediately prior to the date of this Agreement.

	3.
	Shares

	(a)
	If
applicable, all share certificates and stock transfer forms duly executed by the relevant Original Obligor in blank in relation to the certificated shares subject to or expressed
to be subject to the Transaction Security.

	(b)
	If
applicable, a copy of the register of members of each member of the Group, whose shares are subject to or expressed to be subject to the Transaction Security.

	(c)
	A
copy of the constitutional documents of each member of the Group whose shares are expressed to be subject to the Transaction Security and any shareholders' agreement or resolution
amending or varying the rights attaching to those shares.

	4.
	Legal Opinions

	(a)
	A
legal opinion of Clifford Chance LLP, Amsterdam legal advisers to the Arrangers and the Facility Agent in relation to English law.

	(b)
	A
legal opinion of Clifford Chance LLP, Amsterdam legal advisers to the Arrangers and the Facility Agent in relation to Dutch law.

	(c)
	A
legal opinion of Clifford Chance LLP, Luxembourg legal advisers to the Arrangers and the Facility Agent.

	(d)
	A
legal opinion of Clifford Chance LLP, Brussels legal advisers to the Arrangers and the Facility Agent.

	(e)
	A
legal opinion of Vinge, Swedish legal advisers to the Arrangers and the Facility Agent.

	(f)
	A
legal opinion of Wikborg Rein, Norwegian legal advisers to the Arrangers and the Facility Agent.

	5.
	Other documents and evidence

	(a)
	Evidence
that the process agent referred to in Clause 40.2 (Service of process), has accepted its appointment.

	(b)
	A
copy of any other Authorisation or other document, opinion or assurance which the Facility Agent considers to be necessary or desirable (if it has notified the Company accordingly)
in connection with the entry into and performance of the transactions contemplated by any Finance Document or for the validity or enforceability of any Finance Document or of the Transaction Security.

	(c)
	The
latest available audited financial statements of each Original Obligor.

	(d)
	The
executed Fee Letters.

	(e)
	Evidence
that the Bridge Facility has been or will be cancelled and repaid in full on or before the first Utilisation Date. 

86

 

 
 

Part II    
    
    Conditions Precedent required to be
  delivered by an Additional Obligor    
    

	1.
	An
Accession Letter, duly executed by the Additional Obligor and the Company.

	2.
	A
copy of the constitutional documents of the Additional Obligor.

	3.
	A
copy of a resolution of the board of directors of the Additional Obligor:

	(a)
	approving
the terms of, and the transactions contemplated by, the Accession Letter and the Finance Documents and resolving that it execute the Accession Letter and any other Finance
Document to which it is a party;

	(b)
	authorising
a specified person or persons to execute the Accession Letter and other Finance Documents on its behalf;

	(c)
	authorising
a specified person or persons, on its behalf, to sign and/or despatch all other documents and notices (including, in relation to an Additional Obligor, any Utilisation
Request) to be signed and/or despatched by it under or in connection with the Finance Documents to which it is a party; and

	(d)
	authorising
the Company to act as its agent in connection with the Finance Documents.

	4.
	A
specimen of the signature of each person authorised by the resolution referred to in paragraph 3 above.

	5.
	If
necessary or desirable a copy of a resolution signed by all the holders of the issued shares of the Additional Guarantor, approving the terms of, and the transactions contemplated
by, the Finance Documents to which the Additional Guarantor is a party.

	6.
	A
certificate of the Additional Obligor (signed by a director) confirming that borrowing or guaranteeing, as appropriate, the Total Commitments would not cause any borrowing,
guaranteeing or similar limit binding on it to be exceeded.

	7.
	A
certificate of an authorised signatory of the Additional Obligor certifying that each copy document listed in this Part II of Schedule 2 is correct, complete and in
full force and effect as at a date no earlier than the date of the Accession Letter.

	8.
	If
available, the latest audited financial statements of the Additional Obligor.

	9.
	A
Security Document pursuant to which security is granted in favour of the Security Agent over the shares of that Additional Obligor, duly executed by the shareholder or shareholders
of that Additional Obligor and the Security Agent (such security, for the avoidance of doubt, to be subject to any restrictions on the transfer of those shares or other restrictions in relation to
those shares to the extent that the same are contained in any relevant shareholders' agreement or other agreement in relation to those shares as in force on the date on which such Additional Obligor
accedes to this Agreement).

	10.
	Any
notices or documents required to be given or executed or made under the terms of the Security Documents entered into by the Additional Obligor.

	11.
	A
copy of any other Authorisation or other document, opinion or assurance which the Facility Agent considers to be necessary or desirable in connection with the entry into and
performance of the transactions contemplated by the Accession Letter and each Finance Document to which the Additional Obligor is a party or for the validity and enforceability of any Finance Document
or of any Transaction Security created or intended to be created by the Additional Obligor. 

87

 
	12.
	A
legal opinion of Clifford Chance LLP, Amsterdam, legal advisers to the Arrangers and the Facility Agent in England.

	13.
	If
the Additional Obligor is incorporated in a jurisdiction other than England and Wales, a legal opinion of the legal advisers to the Arrangers and the Facility Agent in the
jurisdiction in which the Additional Obligor is incorporated.

	14.
	If
the proposed Additional Obligor is incorporated in a jurisdiction other than England and Wales, evidence that the agent for service of process specified in Clause 40.2
(Service of process), if not an Obligor, has accepted its appointment in relation to the proposed Additional Obligor. 

88

 
 
 

SCHEDULE 3    
    
    Utilisation Request    
    

	From:
	SBS
Broadcasting S.A./Kanal 5 Holding AB

	To:
	ABN
AMRO Bank N.V.

250 Bishopsgate

London

EC2M 4AA

The United Kingdom 

Fax:
+44 207 678 6021 

Attention:
Mark Satchel/Mark Stevens 

with
copy to: 

ABN
AMRO Bank N.V.

Credit Portfolio Management (HQ6055)

P.O. Box 283

1000 EA Amsterdam

The Netherlands 

Fax:
+31 20 6296270 

Attention:
Susan Janssen-Ossenblok 

Dated:

Dear
Sirs 

SBS Broadcasting S.A.—EUR 325,000,000 Facility Agreement

dated 12 May 2005 (the "Agreement")  

	1.
	We
refer to the Agreement. This is a Utilisation Request. Terms defined in the Agreement have the same meaning in this Utilisation Request unless given a different meaning in this
Utilisation Request.

	2.
	We
wish to borrow a Loan on the following terms: 

	Proposed Utilisation Date:	 	[            ] (or, if that is not a Business Day, the next Business Day)
	

Currency of Loan:	
 	

[            ]
	

Amount:	
 	

[            ] or, if less, the Available Facility
	

Interest Period:	
 	

[            ]

	3.
	We
confirm that each condition specified in Clause 4.2 (Further conditions precedent) is satisfied on the date of this
Utilisation Request.

	4.
	The
proceeds of this Loan should be credited to [account].

	5.
	This
Utilisation Request is irrevocable. 

Yours
faithfully 

  

________________________

authorised signatory for

SBS Broadcasting S.A./Kanal 5 Holding AB 

89

 
 
 

SCHEDULE 4    
    
    MANDATORY COST FORMULAE    
    

	1.
	The
Mandatory Cost is an addition to the interest rate to compensate Lenders for the cost of compliance with (a) the requirements of the Financial Services Authority (or any
other authority which replaces all or any of its functions) or (b) the requirements of the European Central Bank.

	2.
	On
the first day of each Interest Period (or as soon as possible thereafter) the Lender shall calculate, as a percentage rate, a rate (the "Mandatory Cost"), in accordance with the
paragraphs set out below.

	3.
	The
Mandatory Cost for the Lenders lending from a Facility Office in a Participating Member State will be the percentage determined by that Lender. This percentage will be the Lenders'
reasonable determination of the cost (expressed as a percentage of the Lenders' participation in all Loans made from that Facility Office) of complying with the minimum reserve requirements of the
European Central Bank in respect of loans made from that Facility Office.

	4.
	The
Mandatory Cost for the Lenders lending from a Facility Office in the United Kingdom will be calculated by the Lenders as follows: 

	E × 0.01
 300	 	per cent. per annum.

Where:

	E
	is
the rate of charge payable by the Lender to the Financial Services Authority pursuant to the Fees Rules (calculated for this purpose by the Lender as being the average of the Fee
Tariffs applicable to the Lender) and expressed in pounds per £1,000,000 of the Tariff Base of the Lender.

	5.
	For
the purposes of this Schedule:

	(a)
	"Fees Rules" means the rules on periodic fees contained in the FSA Supervision Manual or such other law or regulation as may be in
force from time to time in respect of the payment of fees for the acceptance of deposits;

	(b)
	"Fee Tariffs" means the fee tariffs specified in the Fees Rules under the activity group A.1 Deposit acceptors (ignoring any minimum
fee or zero rated fee required pursuant to the Fees Rules but taking into account any applicable discount rate); and

	(c)
	"Tariff Base" has the meaning given to it in, and will be calculated in accordance with, the Fees Rules.

	6.
	The
Lenders shall have no liability to any person if such determination results in an Additional Cost Rate which over or under compensates the Lender.

	7.
	Any
determination by the Lenders pursuant to this Schedule in relation to a formula, the Mandatory Cost, or any amount payable to the Lenders shall, in the absence of manifest error,
be conclusive and binding on all Parties.

	8.
	The
Lenders may from time to time, after consultation with the Company, determine and notify to the Company any amendments which are required to be made to this Schedule in order to
comply with any change in law, regulation or any requirements from time to time imposed by the Financial Services Authority or the European Central Bank (or, in any case, any other authority which
replaces all or any of its functions) and any such determination shall, in the absence of manifest error, be conclusive and binding on all Parties. 

90

  

 
 

SCHEDULE 5
  FORM OF TRANSFER CERTIFICATE    
    

To:
ABN AMRO Bank N.V. as Facility Agent 

From:
[The Existing Lender] (the "Existing Lender") and
[The New Lender] (the "New Lender") 

Dated: 

SBS Broadcasting S.A.—EUR 325,000,000 Facility Agreement

dated 12 May 2005 (the "Agreement")  

	1.
	We
refer to the Agreement. This is a Transfer Certificate. Terms defined in the Agreement have the same meaning in this Transfer Certificate unless given a different meaning in this
Transfer Certificate.

	2.
	We
refer to Clause 24.5 (Procedure for transfer):

	(a)
	The
Existing Lender and the New Lender agree to the Existing Lender transferring to the New Lender by novation all or part of the Existing Lender's Commitment, rights and obligations
referred to in the Schedule in accordance with Clause 24.5 (Procedure for transfer).

	(b)
	The
proposed Transfer Date is [    ].

	(c)
	The
Facility Office and address, fax number and attention details for notices of the New Lender for the purposes of Clause 33.2
(Addresses) are set out in the Schedule.

	3.
	The
New Lender expressly acknowledges the limitations on the Existing Lender's obligations set out in paragraph (c) of Clause 24.4 (Limitation of
responsibility of Existing Lenders).

	4.
	This
Transfer Certificate may be executed in any number of counterparts and this has the same effect as if the signatures on the counterparts were on a single copy of this Transfer
Certificate.

	5.
	This
Transfer Certificate is governed by English law. 

THE SCHEDULE

Commitment/rights and obligations to be transferred
  [insert relevant details]

[Facility Office address, fax number and attention details for notices and account details for payments,] 

	

[Existing Lender]	
 	

                        [New Lender]
	

By:	
 	

By
	

This Transfer Certificate is accepted by the Facility Agent and the Transfer Date is confirmed as
[                        ].
	

[Facility Agent]	
 	

 
	

By:	
 	

 

91

 
 
 

SCHEDULE 6
  Form of Accession Letter    
    

To:
ABN AMRO Bank N.V. as Facility Agent 

From:
[Subsidiary] and SBS Broadcasting S.A. 

Dated: 

Dear
Sirs 

SBS Broadcasting S.A.—EUR 325,000,000 Facility Agreement

dated 12 May 2005 (the "Agreement")  

	1.
	We
refer to the Agreement. This is an Accession Letter. Terms defined in the Agreement have the same meaning in this Accession Letter unless given a different meaning in this Accession
Letter.

	2.
	[Subsidiary] agrees to become an Additional
[Borrower]/[Guarantor] and to be bound by the terms of the Agreement as an Additional
[Borrower]/[Guarantor] pursuant to Clause [25.2 (Additional
Borrowers)]/[Clause 25.4 (Additional Guarantors)] of the Agreement.
[Subsidiary] is a company duly incorporated under the laws of [name of relevant
jurisdiction].

	3.
	[Subsidiary's] administrative details are as follows: 

Address: 

Fax
No: 

Attention: 

	4.
	This
Accession Letter is governed by English law.

	

	[This
Guarantor Accession Letter is entered into by a deed.] 

	

[Company]	
 	

[Subsidiary]

92

 
 
 

SCHEDULE 7
  Form of Resignation Letter    
    

To:
ABN AMRO Bank N.V. as Facility Agent 

From:
[resigning Obligor] and SBS Broadcasting S.A. 

Dated: 

Dear
Sirs 

SBS Broadcasting S.A.-EUR 325,000,000 Facility Agreement

dated 12 May 2005 (the "Agreement")  

	1.
	We
refer to the Agreement. This is a Resignation Letter. Terms defined in the Agreement have the same meaning in this Resignation Letter unless given a different meaning in this
Resignation Letter.

	2.
	Pursuant
to [Clause 25.3 (Resignation of a Borrower)]/[Clause 25.6
(Resignation of a Guarantor)], we request that [resigning Obligor]
be released from its obligations as a [Borrower]/[Guarantor] under the Agreement.

	3.
	We
confirm that:

	(a)
	no
Default is continuing or would result from the acceptance of this request; and

	(b)
	[                        ]*

	4.
	This
Resignation Letter is governed by English law. 

	

[Company]	
 	

[Subsidiary]
	

By:	
 	

By:

	*
	Insert
any other conditions required by the Facility Agreement. 

93

 
 
 

SCHEDULE 8
  Form of Compliance Certificate    
    

To:
ABN AMRO Bank N.V. as Facility Agent 

From:
[Company] 

Dated:

Dear
Sirs 

SBS Broadcasting S.A.-EUR 325,000,000 Facility Agreement

dated 12 May 2005 (the "Agreement")  

	1.
	We
refer to the Agreement. This is a Compliance Certificate. Terms defined in the Agreement have the same meaning when used in this Compliance Certificate unless given a different
meaning in this Compliance Certificate.

	2.
	We
confirm that:

	(a)
	[insert names of Material Company/ies] [are/is a] Material
Compan[y/ies]. [insert name of Material Company/ies] [has/have]:

	(i)
	revenues
representing [] per cent. of total consolidated revenues of the Group; and

	(ii)
	total
assets representing [] per cent. of consolidated Total Assets;

	(b)
	the
aggregate total consolidated assets (which shall exclude all receivables owed by one member of the Group to another member of the Group and any interests of any member of the
Group held in another member of the Group) of the Obligors represent not less than 70% of the Total Assets, calculated as follows (and determined in accordance with US GAAP):

	

	[insert calculation];

	(c)
	the
aggregate consolidated revenues of the Obligors (including, but not limited to, C More Group AB and any other Acquisitions where the acquired entity is an Obligor, calculated on a
pro forma basis in respect of any period prior to the date on which C More Group AB or any other such acquired entity is reflected in the consolidated financial statements of the Group) represents not
less than 70% of the total consolidated revenues of the Group, calculated as follows (and determined in accordance with US GAAP):

	

	[insert calculation].

	3.
	We
confirm that:

	

	[insert details of financial covenants and whether the Company is in compliance with those
covenants]

	4.
	[We
confirm that no Default is continuing.]* 

	

Signed: ..........................................................	
 	

.................................................................
	               Senior Officer of SBS Broadcasting S.A.	 	Senior Officer of SBS Broadcasting S.A.

[insert applicable certification language]** 

.....................

for and on behalf of [name of auditors of the Company]*** 

	*
	If
this statement cannot be made, the certificate should identify any Default that is continuing and the steps, if any, being taken to remedy it. 
	**
	To
be agreed with the Company's auditors and the Lenders prior to signing the Agreement. 
	***
	Only
applicable if the Compliance Certificate accompanies the audited financial statements and is to be signed by the auditors. To be agreed with the auditors prior to signing the
Agreement. 

94

 
 
 

SCHEDULE 9
  Existing Security    
    

	

Name of Group Member	
 	

Security	
 	

Total Principal Amount of Indebtedness Secured (EUR)
	

TV Norge AS	
 	

First priority pledge of present and future receivables, plant and machinery and programming.	
 	

2,439,024
	

C More Entertainment	
 	

Finance leases of cars	
 	

541,176
	

AB Broadcast Text International AB	
 	

Bank Overdraft Facility floating charge over chattels	
 	

65,934
	

MTM-SBS Televízió Rt	
 	

Fixed and floating charge and charge on all assets and a charge on the bank account for the guarantee from K&H to ORTT (local broadcasting authority) plus an overdraft facility with same K&H bank	
 	

8,700,000
	

Radio City Stockholm AB	
 	

Floating charge/chattel mortgage	
 	

241,099

95

  

 
 

SCHEDULE 10
  LMA Form of Confidentiality Undertaking    
    

To:

	
	 	[insert name of Potential Lender]
	    	 	 
	    	 	 
	    	 	 
	    	 	 
	
	 	 
	    	 	 
	Re: The Facility	 	 
	
	 	 
	    Company:	 	 
	    Amount:	 	 
	    Facility Agent:	 	 
	    	 	 
	
	 	 

Dear Sirs 

We
understand that you are considering participating in the Facility. In consideration of us agreeing to make available to you certain information, by your signature of a copy of this letter you agree
as follows: 

	1.
	Confidentiality
Undertaking you undertake:

	(a)
	to
keep the Confidential Information confidential and not to disclose it to anyone except as provided for by paragraph 2 below and to ensure that the Confidential Information
is protected with security measures and a degree of care that would apply to your own confidential information;

	(b)
	to
keep confidential and not disclose to anyone the fact that the Confidential Information has been made available or that discussions or negotiations are taking place or have taken
place between us in connection with the Facility;

	(c)
	to
use the Confidential Information only for the Permitted Purpose;

	(d)
	to
use all reasonable endeavours to ensure that any person to whom you pass any Confidential Information (unless disclosed under paragraph 2(b) below) acknowledges and complies
with the provisions of this letter as if that person were also a party to it; and

	(e)
	not
to make enquiries of any member of the Group or any of their officers, directors, employees or professional advisers relating directly or indirectly to the Facility.

	2.
	Permitted Disclosure we agree that you may disclose confidential information:

	(f)
	to
members of the Participant Group and their officers, directors, employees and professional advisers to the extent necessary for the Permitted Purpose and to any auditors of members
of the Participant Group;

	(g)
	(i) where
requested or required by any court of competent jurisdiction or any competent judicial, governmental, supervisory or regulatory body, (ii) where required by
the rules of any stock exchange on which the shares or other securities of any member of the Participant Group are listed or (iii) where required by the laws or regulations of any country with
jurisdiction over the affairs of any member of the Participant Group; or

	(h)
	with
the prior written consent of us and the Company. 

96

 

	3.
	Notification of Required or Unauthorised Disclosure You agree (to the extent permitted by law) to inform us of the full circumstances of
any disclosure under paragraph 2(b) or upon becoming aware that Confidential Information has been disclosed in breach of this letter.

	4.
	Return of Copies If we so request in writing, you shall return all Confidential Information supplied to you by us and destroy or
permanently erase all copies of Confidential Information made by you and use all reasonable endeavours to ensure that anyone to whom you have supplied any Confidential Information destroys or
permanently erases such Confidential Information and any copies made by them, in each case save to the extent that you or the recipients are required to retain any such Confidential Information by any
applicable law, rule or regulation or by any competent judicial, governmental, supervisory or regulatory body or in accordance with internal policy, or where the Confidential Information has been
disclosed under paragraph 2(b) above.

	5.
	Continuing Obligations The obligations in this letter are continuing and, in particular, shall survive the termination of any
discussions or negotiations between you and us. Notwithstanding the previous sentence, the obligations in this letter shall cease (a) if you become a party to or otherwise acquire (by
assignment or sub participation) an interest, direct or indirect in the Facility or (b) twelve months after you have returned all Confidential Information supplied to you by us and destroyed or
permanently erased all copies of Confidential Information made by you (other than any such Confidential Information or copies which have been disclosed under paragraph 2 above (other than
sub-paragraph 2(a)) or which, pursuant to paragraph 4 above, are not required to be returned or destroyed).

	6.
	No Representation; Consequences of Breach, etc You acknowledge and agree that:

	(a)
	neither
we nor any of our officers, employees or advisers (each a "Relevant Person") (i) make any representation or warranty,
express or implied, as to, or assume any responsibility for, the accuracy, reliability or completeness of any of the Confidential Information or any other information supplied by us or any member of
the Group or the assumptions on which it is based or (ii) shall be under any obligation to update or correct any inaccuracy in the Confidential Information or any other information supplied by
us or any member of the Group or be otherwise liable to you or any other person in respect to the Confidential Information or any such information; and

	(b)
	we
or members of the Group may be irreparably harmed by the breach of the terms of this letter and damages may not be an adequate remedy; each Relevant Person or member of the Group
may be granted an injunction or specific performance for any threatened or actual breach of the provisions of this letter by you.

	7.
	No Waiver; Amendments, etc This letter sets out the full extent of your obligations of confidentiality owed to us in relation to the
information the subject of this letter. No failure or delay in exercising any right, power or privilege under this letter will operate as a waiver thereof nor will any single or partial exercise of
any right, power or privilege preclude any further exercise thereof or the exercise of any other right, power or privileges under this letter. The terms of this letter and your obligations under this
letter may only be amended or modified by written agreement between us.

	8.
	Inside Information You acknowledge that some or all of the Confidential Information is or may be price-sensitive information and that
the use of such information may be regulated or prohibited by applicable legislation relating to insider dealing and you undertake not to use any Confidential Information for any unlawful purpose.

	9.
	Nature of Undertakings The undertakings given by you under this letter are given to us and (without implying any fiduciary obligations
on our part) are also given for the benefit of the Company and each other member of the Group. 

97

 
	10.
	Third party rights

	(a)
	Subject
to paragraph 6 and paragraph 9 the terms of this letter may be enforced and relied upon only by you and us and the operation of the Contracts (Rights of Third
Parties) Act 1999 is excluded.

	(b)
	Notwithstanding
any provisions of this letter, the parties to this letter do not require the consent of any Relevant Person or any member of the Group to rescind or vary this letter
at any time.

	11.
	Governing Law and Jurisdiction This letter (including the agreement constituted by your acknowledgement of its terms) shall be governed
by and construed in accordance with the laws of England and the parties submit to the non-exclusive jurisdiction of the English courts.

	12.
	Definitions In this letter (including the acknowledgement set out below):

	

	"Confidential Information" means any information relating to the Company, the Group, and the Facility including, without
limitation, the information memorandum, provided to you by us or any of our affiliates or advisers, in whatever form, and includes information given orally and any document, electronic file or any
other way of representing or recording information which contains or is derived or copied from such information but excludes information that (a) is or becomes public knowledge other than as a
direct or indirect result of any breach of this letter or (b) is known by you before the date the information is disclosed to you by us or any of our affiliates or advisers or is lawfully
obtained by you after that date, other than from a source which is connected with the Group and which, in either case, as far as you are aware, has not been obtained in violation of, and is not
otherwise subject to, any obligation of confidentiality;

	

	"Group" means the Company and each of its holding companies and subsidiaries and each subsidiary of each of its holding
companies (as each such term is defined in the Companies Act 1985);

	

	"Participant Group" means you, each of your holding companies and subsidiaries and each subsidiary of each of your holding
companies (as each such term is defined in the Companies Act 1985); and

	

	"Permitted Purpose" means considering and evaluating whether to enter into the Facility. 

Please
acknowledge your agreement to the above by signing and returning the enclosed copy. 

Yours
faithfully 

...................................

For and on behalf of 

[Facility
Agent] 

	To:
	[Facility
Agent]

The Company and each other member of the Group 

We
acknowledge and agree to the above: 

...................................

For and on behalf of

[Potential Lender] 

98

  

 
 

SCHEDULE 11
  Timetables    
    

	 	 	  

Loans in euro
	 	Loans in domestic

sterling
	 	Loans in other

currencies

	Facility Agent notifies the Company if a currency is approved as an Optional Currency in accordance with Clause 4.3 (Conditions relating to Optional Currencies)	 	—	 	—	 	U-4
	

Delivery of a duly completed Utilisation Request (Clause 5.1 (Delivery of a Utilisation Request)	
 	

U-3

9.30am	
 	

U-1

9.30am	
 	

U-3

9.30am
	

Facility Agent determines (in relation to a Utilisation) the Base Currency Amount of the Loan, if required under Clause 5.4 (Lenders' participation)	
 	

U-3

noon	
 	

U-1

noon	
 	

U-3

noon
	

Facility Agent notifies the Lenders of the Loan in accordance with Clause 5.4 (Lenders' participation)	
 	

U-3

3.00pm	
 	

U-1

3.00pm	
 	

U-3

3.00pm
	

Facility Agent receives a notification from a Lender under Clause 6.2 (Unavailability of a currency)	
 	

 	
 	

 	
 	

 
	

Facility Agent gives notice in accordance with Clause 6.2 (Unavailability of a currency)	
 	

 	
 	

 	
 	

 
	

LIBOR or EURIBOR is fixed	
 	

Quotation Day as of 11:00 a.m. London time in respect of LIBOR and as of 11.00 a.m. Brussels time in respect of EURIBOR	
 	

Quotation Day as of 11:00 a.m.	
 	

Quotation Day as of 11:00 a.m.

"U" = date of utilisation 

"U—X" =
X Business Days prior to date of utilisation 

99

  

 
 

SIGNATURES    
    

	
THE COMPANY
	

SBS BROADCASTING S.A.
	

By:	
 	

ERIK MOE

JUERGEN VON SCHWERIN
	
Name:	
 	

 
	

Address:	
 	

8-10 rue Mathias Hardt

L-1717 Luxembourg
	

Fax:	
 	

+352 2612 3301
	

Telephone:	
 	

+352 2612 15
	

Attention:	
 	

Corporate Secretary
	

With a copy to:	
 	

SBS Services B.V.

Rietlandpark 353

1019 EM Amsterdam

The Netherlands
	

Fax:	
 	

+31 20 519 1996
	

Telephone:	
 	

+31 20 519 1919
	

Attention:	
 	

Attn: Erik T. Moe/Juergen von Schwerin
	
THE ORIGINAL BORROWERS
	

SBS BROADCASTING S.A.
	

By:	
 	

ERIK MOE

JUERGEN VON SCHWERIN
	

KANAL 5 HOLDING AB
	

By:	
 	

ERIK MOE

JUERGEN VON SCHWERIN
	

THE ORIGINAL GUARANTORS
	

BROADCAST NORGE AS
	

By:	
 	

ERIK MOE

JUERGEN VON SCHWERIN
	

TVNORGE AS
	

By:	
 	

ERIK MOE

JUERGEN VON SCHWERIN
	

C MORE ENTERTAINMENT AB
	

By:	
 	

ERIK MOE

JUERGEN VON SCHWERIN
	 	 	 

100

 

	

C MORE GROUP AB
	

By:	
 	

ERIK MOE

JUERGEN VON SCHWERIN
	

KANAL 5 AB
	

By:	
 	

ERIK MOE

JUERGEN VON SCHWERIN
	

KANAL 5 HOLDING AB
	

By:	
 	

ERIK MOE

JUERGEN VON SCHWERIN
	

SBS BELGIUM NV
	

By:	
 	

ERIK MOE

JUERGEN VON SCHWERIN
	

SBS BROADCASTING S.A.
	

By:	
 	

ERIK MOE

JUERGEN VON SCHWERIN
	

SBS NEDERLANDS B.V.
	

By:	
 	

ERIK MOE

JUERGEN VON SCHWERIN
	

VT4 LTD.
	

By:	
 	

ERIK MOE

JUERGEN VON SCHWERIN
	

EBS INTERNATIONAL N.V. (AS AN OBLIGOR)
	

EBS INTERNATIONAL N.V.
	

By:	
 	

ERIK MOE

JUERGEN VON SCHWERIN
	

THE ARRANGERS
	

ABN AMRO BANK N.V.
	
By:	
 	

CEES HEILIG
	

Address:	
 	

ABN AMRO Bank N.V.

250 Bishopsgate

London

EC2M 4AA
	

Fax:	
 	

0207 678 6021
	

Attention:	
 	

Cees Heilig

Remco Beerbaum
	 	 	 

101

 

	
CITIGROUP GLOBAL MARKETS LIMITED
	
By:	
 	

ROMEET SHANKARDASS
	

Address:	
 	

Citigroup Centre

Canada Square

Canary Wharf

London

E14 5LB
	

Fax:	
 	

020 7986 8278
	

Attention:	
 	

Carlos Barona

Kim McNamara
	
DEUTSCHE BANK AG LONDON
	
By:	
 	

DAVID BUGGE

JURGEN STEIN
	

Address:	
 	

Winchester House

1 Great Winchester Street

London

EC2N 2DB
	

Fax:	
 	

020 7545 1239
	

Attention:	
 	

Tom Hatfield
	
THE ROYAL BANK OF SCOTLAND PLC
	
By:	
 	

DANIEL JOHAR
	

Address:	
 	

135 Bishopsgate

London

EC2M 3UR
	

Fax:	
 	

0207 085 8941
	

Attention:	
 	

Mike Cunningham

Daniel Johar
	
THE FACILITY AGENT
	

ABN AMRO BANK N.V.
	
By:	
 	

CEES HEILIG

MARK STEVENS
	

Address:	
 	

ABN AMRO Bank N.V.

250 Bishopsgate

London

EC2M 4AA
	

Fax:	
 	

0207 678 6021
	

Attention:	
 	

Administration contacts: Mark Satchel/Lee Donnithorne
	

 	
 	

Credit contacts: Mark Stevens/Nick Little

102

 

	
THE SECURITY AGENT
	

ABN AMRO BANK N.V.
	
By:	
 	

CEES HEILIG

MARK STEVENS
	

Address:	
 	

ABN AMRO Bank N.V.

250 Bishopsgate

London

EC2M 4AA
	

Fax:	
 	

0207 678 6021
	

Attention:	
 	

Mark Stevens

Nick Little
	
THE ORIGINAL LENDERS
	

ABN AMRO BANK N.V.
	
By:	
 	

CEES HEILIG
	

Address:	
 	

ABN AMRO Bank N.V.

250 Bishopsgate

London

EC2M 4AA
	

Fax:	
 	

0207 678 6021
	

Attention:	
 	

Cees Heilig

Remco Beerbaum
	
CITIBANK INTERNATIONAL PLC
	
By:	
 	

ROMEET SHANKARDASS

MATTHEW HOLLAND
	

Address:	
 	

Citigroup Centre

Canada Square

Canary Wharf

London

E14 5LB
	

Fax:	
 	

0208 430 437
	

Attention:	
 	

Anjuli Rao

Matthew Butler
	
DEUTSCHE BANK AG LONDON
	
By:	
 	

DAVID BUGGE

JURGEN STEIN
	

Address:	
 	

Winchester House

1 Great Winchester Street

London

EC2N 2DB
	

Fax:	
 	

020 7545 1239
	

Attention:	
 	

Mark Barry

Thomas Hatfield
	
THE ROYAL BANK OF SCOTLAND PLC
	
By:	
 	

DANIEL JOHAR
	

Address:	
 	

135 Bishopsgate

London

EC2M 3UR
	

Fax:	
 	

0207 085 8941
	

Attention:	
 	

Mike Cunningham

Daniel Johar

103

QuickLinks

Exhibit 4.21

CONTENTS

SECTION 1 INTERPRETATION

SECTION 2 THE FACILITY

SECTION 3 UTILISATION

SECTION 4 REPAYMENT, PREPAYMENT AND CANCELLATION

SECTION 5 COSTS OF UTILISATION

SECTION 6 ADDITIONAL PAYMENT OBLIGATIONS

SECTION 7 GUARANTEE

SECTION 8 REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT

SECTION 9 CHANGES TO THE PARTIES

SECTION 10 THE FINANCE PARTIES

SECTION 11 ADMINISTRATION

SECTION 12 GOVERNING LAW AND ENFORCEMENT

SCHEDULE 1 THE ORIGINAL PARTIES

SCHEDULE 2 CONDITIONS PRECEDENT

Part I Conditions precedent to initial Utilisation

Part II Conditions Precedent required to be delivered by an Additional Obligor

SCHEDULE 3 Utilisation Request

SCHEDULE 4 MANDATORY COST FORMULAE

SCHEDULE 5 FORM OF TRANSFER CERTIFICATE

SCHEDULE 6 Form of Accession Letter

SCHEDULE 7 Form of Resignation Letter

SCHEDULE 8 Form of Compliance Certificate

SCHEDULE 9 Existing Security

SCHEDULE 10 LMA Form of Confidentiality Undertaking

SCHEDULE 11 Timetables

SIGNATURESExhibit 4.4

 

Execution Copy

 

 

SEALY CORPORATION

 

10% Senior Subordinated Notes due
2015

 

Common Stock, par value $0.01 per
share

 

 

 

 

NOTE AND STOCK PURCHASE AGREEMENT

 

 

Dated as of July 16, 2004

 

 

between

 

 

SEALY CORPORATION

 

 

and

 

 

THE PURCHASERS LISTED ON SCHEDULE
1 HERETO

 

 

 

 

TABLE OF CONTENTS

 

	
  ARTICLE
  ONE

  
	
   

  
	
  DEFINITIONS
  AND OTHER PROVISIONS

  
	
  OF
  GENERAL APPLICATION

  
	
   

  	
   

  
	
  SECTION 101. Definitions

  	
   

  
	
  SECTION 102. Notices, Etc., to Corporation

  	
   

  
	
  SECTION 103. Notice to Holders; Waiver

  	
   

  
	
  SECTION 104. Effect of Headings and Table of Contents

  	
   

  
	
  SECTION 105. Integration and Severability

  	
   

  
	
  SECTION
  106. Benefits of Agreement

  	
   

  
	
  SECTION 107. GOVERNING LAW

  	
   

  
	
  SECTION
  108. Legal Holidays

  	
   

  
	
  SECTION
  109. No Personal Liability of Directors, Officers, Employees and Stockholders

  	
   

  
	
  SECTION 110. Counterparts

  	
   

  
	
  SECTION 111. Submission to Jurisdiction.

  	
   

  
	
   

  	
   

  
	
  ARTICLE
  TWO

  
	
   

  
	
  REPRESENTATIONS AND WARRANTIES

  
	
   

  	
   

  
	
  SECTION 201. Representations of the Corporation

  	
   

  
	
  SECTION 202. Representations of the Purchasers

  	
   

  
	
  SECTION
  203. ERISA

  	
   

  
	
   

  	
   

  
	
  ARTICLE
  THREE

  
	
   

  	
   

  
	
  THE
  NOTES AND THE SHARES

  
	
   

  	
   

  
	
  SECTION 301. Form, Dating and Terms of the Notes

  	
   

  
	
  SECTION 302. Denominations

  	
   

  
	
  SECTION 303. Execution of the Notes

  	
   

  
	
  SECTION 304. Holder Lists for the Notes

  	
   

  
	
  SECTION 305. Transfer and Exchange of Notes

  	
   

  
	
  SECTION 306. Replacement Notes

  	
   

  
	
  SECTION 307. Outstanding Notes

  	
   

  
	
  SECTION
  308. Cancellation

  	
   

  
	
  SECTION 309. Defaulted Interest on the Note

  	
   

  
	
  SECTION
  310. The Shares

  	
   

  

 

 

	
  ARTICLE
  FOUR

  
	
   

  	
   

  
	
  PURCHASE
  OF THE NOTES AND THE SHARES

  
	
   

  	
   

  
	
  SECTION 401. Purchase of the Notes and the Shares

  	
   

  
	
  SECTION 402. Payment of Purchase Price; Closing

  	
   

  
	
  SECTION 403. Fees and Expenses

  	
   

  
	
  SECTION 404. Conditions Precedent

  	
   

  
	
   

  	
   

  
	
  ARTICLE
  FIVE

  
	
   

  	
   

  
	
  REMEDIES

  
	
   

  	
   

  
	
  SECTION
  501. Events of Default

  	
   

  
	
  SECTION 502. Increase in Interest Rate

  	
   

  
	
  SECTION 503. Acceleration of Maturity; Rescission and Annulment

  	
   

  
	
  SECTION 504. Unconditional Right of Holders to Receive Principal,
  Premium and Interest

  	
   

  
	
  SECTION 505. Restoration of Rights and Remedies

  	
   

  
	
  SECTION 506. Rights and Remedies Cumulative

  	
   

  
	
  SECTION 507. Delay or Omission Not Waiver

  	
   

  
	
  SECTION 508. Waiver of Past Defaults

  	
   

  
	
   

  	
   

  
	
  ARTICLE
  SIX

  
	
   

  	
   

  
	
  SUCCESSOR COMPANY

  
	
   

  	
   

  
	
  SECTION 601. Corporation May Consolidate, Etc., Only on Certain Terms

  	
   

  
	
  SECTION 602. Successor Substituted

  	
   

  
	
   

  	
   

  
	
  ARTICLE
  SEVEN

  
	
   

  	
   

  
	
  AMENDMENTS
  AND WAIVERS

  
	
   

  	
   

  
	
  SECTION 701. Amendments With Consent of Holders Not To Be
  Unreasonably Withheld

  	
   

  
	
  SECTION 702. Amendments or Waivers with Consent of Holders

  	
   

  
	
  SECTION 703. Effect of Amendments or Waivers

  	
   

  
	
  SECTION 704. Notice of Amendments and Waivers

  	
   

  
	
   

  	
   

  
	
  ARTICLE
  EIGHT

  
	
   

  	
   

  
	
  COVENANTS

  
	
   

  	
   

  
	
  SECTION 801. Payment of Principal, Premium,
  if any, and Interest

  	
   

  
	
  SECTION 802. Corporate Existence

  	
   

  
	
  SECTION 803. Reports and Other Information

  	
   

  

 

ii

 

 

	
  SECTION 804. Limitation on Restricted Payments

  	
   

  
	
  SECTION
  805. Incurrence of Indebtedness and Issuance of Disqualified Stock

  	
   

  
	
  SECTION
  806. Limitation on Liens

  	
   

  
	
  SECTION
  807. Limitations on Transactions with Affiliates

  	
   

  
	
  SECTION
  808. Change of Control

  	
   

  
	
  SECTION
  809. Asset Sales

  	
   

  
	
  SECTION
  810. Notice of Default

  	
   

  
	
  SECTION
  811. Waiver of Certain Covenants

  	
   

  
	
   

  	
   

  
	
  ARTICLE NINE

  
	
   

  	
   

  
	
  REDEMPTION OF NOTES

  
	
   

  	
   

  
	
  SECTION
  901. Optional Redemption

  	
   

  
	
  SECTION
  902. Procedures for Redemption

  	
   

  
	
   

  	
   

  
	
  ARTICLE TEN

  
	
   

  	
   

  
	
  SUBORDINATION OF NOTES

  
	
   

  	
   

  
	
  SECTION
  1001. Agreement to Subordinate

  	
   

  
	
  SECTION
  1002. Liquidation; Dissolution; Bankruptcy.

  	
   

  
	
  SECTION
  1003. Default on Designated Senior Indebtedness

  	
   

  
	
  SECTION
  1004. Acceleration of Notes

  	
   

  
	
  SECTION
  1005. When Distribution Must Be Paid Over

  	
   

  
	
  SECTION
  1006. Subrogation

  	
   

  
	
  SECTION
  1007. Relative Rights

  	
   

  
	
  SECTION
  1008. Subordination May Not Be Impaired by Corporation

  	
   

  
	
  SECTION
  1009. Distribution or Notice to Representative

  	
   

  

 

	
  SCHEDULES AND EXHIBITS

  
	
   

  
	
  SCHEDULE 1

  
	
  EXHIBIT A – Form of Note

  
	
  EXHIBIT B – Form of Certificate of Common
  Stock

  
	
  EXHIBIT C – Form of Stockholders Agreement

  
	
  EXHIBIT D – Form of Opinion of Simpson
  Thacher & Bartlett LLP

  
	
  EXHIBIT E – Form of Opinion of General
  Counsel

  
	
  EXHIBIT F – Form of Opinion of Pepe &
  Hazard LLP

  

 

iii

 

 

NOTE AND STOCK PURCHASE AGREEMENT, dated as
of July 16, 2004 (this “Agreement”), between SEALY CORPORATION, a
Delaware corporation (the “Corporation”) and the Purchasers listed on
Schedule 1 hereto (collectively, the “Purchasers”) .

 

Each party to this Agreement agrees, for the
benefit of the other parties and for the equal and ratable benefit of the
Holders of the Corporation’s Notes and Shares, as follows:

 

ARTICLE ONE

 

DEFINITIONS AND OTHER
PROVISIONS

OF GENERAL APPLICATION

 

SECTION 101. 
Definitions.

 

For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires:

 

(a)           the terms defined in this Article have the meanings assigned
to them in this Article, and include the plural as well as the singular;

 

(b)           the words “herein”, “hereof” and “hereunder” and other words
of similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision.

 

“Affiliate”
of any specified Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such specified Person.  For purposes of
this definition, “control” (including, with correlative meanings, the terms “controlling,”
“controlled by” and “under common control with”), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or
otherwise.  For purposes of this
Agreement, the Purchasers shall be deemed not to be Affiliates of the
Corporation or any of its Subsidiaries.

 

“Affiliate
Transaction” has the meaning specified in Section 807 of this Agreement.

 

“Agreement”
has the meaning set forth in the preamble to this Agreement.

 

“Acquired
Indebtedness” means, with respect to any specified Person:

 

(1)           Indebtedness
of any other Person existing at the time such other Person is merged with or
into or became a Restricted Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Restricted Subsidiary of such specified Person; and

 

 

(2)           Indebtedness
secured by a Lien encumbering any asset acquired by such specified Person.

 

“Asset
Sale” means:

 

(3)           the
sale, conveyance, transfer or other disposition, whether in a single
transaction or a series of related transactions, of property or assets (including
by way of a sale and leaseback) of the Corporation or any Restricted Subsidiary
(each referred to in this definition as a “disposition”), or

 

(4)           the
issuance or sale of Equity Interests of any Restricted Subsidiary, whether in a
single transaction or a series of related transactions, in each case, other
than:

 

(a)           a
disposition of Cash Equivalents or Investment Grade Securities or obsolete or
worn out equipment in the ordinary course of business or inventory or goods
held for sale in the ordinary course of business;

 

(b)           the
disposition of all or substantially all of the assets of the Corporation in a
manner permitted pursuant to Article Six or any disposition that constitutes a
Change of Control pursuant to this Agreement;

 

(c)           the
making of any Restricted Payment or Permitted Investment that is permitted to
be made, and is made, under Section 804;

 

(d)           any
disposition of assets or issuance or sale of Equity Interests of any Restricted
Subsidiary in any transaction or series of transactions with an aggregate fair
market value of less than $2.5 million;

 

(e)           any
disposition of property or assets or issuance of securities by a Restricted
Subsidiary to the Corporation or by the Corporation or a Restricted Subsidiary
to a Restricted Subsidiary;

 

(f)            to
the extent allowable under Section 1031 of the Internal Revenue Code of 1986,
any exchange of like property (excluding any boot thereon) for use in a Similar
Business;

 

(g)           the
lease, assignment or sub-lease of any real or personal property in the ordinary
course of business;

 

(h)           any
sale of Equity Interests in, or Indebtedness or other securities of, an
Unrestricted Subsidiary (with the exception of Investments in Unrestricted
Subsidiaries acquired pursuant to clause (x) of the definition of Permitted Investments);

 

(i)            foreclosures
on assets;

 

(j)            sales
of accounts receivable, or participations therein, in connection with any
Receivables Facility; and

 

2

 

(k)           any financing transaction with respect to property built or
acquired by the Corporation or any Restricted Subsidiary after the Senior
Subordinated Notes Issue Date, including, without limitation, sale leasebacks
and asset securitizations permitted by this Agreement.

 

“Asset
Sale Offer” has the meaning specified in Section 809 of this Agreement.

 

“Bankruptcy
Law” means Title 11, United States Bankruptcy Code of 1978, as amended, or any similar United States federal or state law
relating to bankruptcy, insolvency, receivership, winding-up, liquidation, reorganization
or relief of debtors or any amendment to, succession to or change in any such
law.

 

“Board of Directors” means:

 

(1)           with respect to a corporation, the board of directors of the
corporation or any duly authorized committee of such board;

 

(2)           with respect to a partnership, the board of directors of the
general partner or manager of the partnership; and

 

(3)           with respect to any other Person, the board or committee of
such Person serving a similar function.

 

“Business
Day” means each Monday, Tuesday, Wednesday, Thursday and Friday which is
not a day on which banking institutions in The City of New York are authorized
or obligated by law, regulation or executive order to close (other than by
virtue of a moratorium or general banking holiday exceeding four days).

 

“Capital
Stock” means:

 

(i)            in the case of a corporation,
corporate stock;

 

(ii)           in
the case of an association or business entity, any and all shares, interests,
participations, rights or other equivalents (however designated) of corporate
stock;

 

(iii)          in the case of a partnership or
limited liability company, partnership or membership interests (whether general
or limited); and

 

(iv)          any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.

 

“Capitalized
Lease Obligation” means, at the time any determination thereof is to be
made, the amount of the liability in respect of a capital lease that would at
such time be required to be capitalized and reflected as a liability on a
balance sheet (excluding the footnotes thereto) in accordance with GAAP.

 

3

 

“Cash
Equivalents” means:

 

(i)            U.S.
dollars:

 

(ii)           pounds sterling;

 

(iii)          (A)
euro, or any national currency of any participating member state in the
European Union or (B) in the case of any Foreign Subsidiary that is a
Restricted Subsidiary, such local currencies held by them from time to time in
the ordinary course of business;

 

(iv)          securities
issued or directly and fully and unconditionally guaranteed or insured by the
United States government or any agency or instrumentality thereof the
securities of which are unconditionally guaranteed as a full faith and credit
obligation of such government with maturities of 24 months or less from the
date of acquisition;

 

(v)           certificates
of deposit, time deposits and eurodollar time deposits with maturities of one
year or less from the date of acquisition, bankers’ acceptances with maturities
not exceeding one year and overnight bank deposits, in each case with any
commercial bank having capital and surplus in excess of $500.0 million;

 

(vi)          repurchase
obligations for underlying securities of the types described in clauses (iv)
and (v) above, entered into with any financial institution meeting the
qualifications specified in clause (v) above;

 

(vii)         commercial
paper rated at least P-1 by Moody’s or at least A-1 by S&P and in each case
maturing within 12 months after the date of creation thereof;

 

(viii)        investment funds investing 95% of their assets in securities
of the types described in clauses (i) through (vii) above;

 

(ix)           readily
marketable direct obligations issued by any state of the United States of
America or any political subdivision thereof having one of the two highest
rating categories obtainable from either Moody’s or S&P with maturities of
24 months or less from the date of acquisition; and

 

(x)            Indebtedness
or preferred stock issued by Persons with a rating of “A” or higher from
S&P or “A2” or higher from Moody’s with maturities of 12 months or less
from the date of acquisition.

 

Notwithstanding the foregoing, Cash
Equivalents shall include amounts denominated in currencies other than those
set forth in clauses (i) through (iii) above, provided
that such amounts are converted into any currency listed in clauses (i) through
(iii) above, as promptly as practicable and in any event within ten Business
Days following the receipt of such amounts.

 

4

 

“Change
of Control” means the occurrence of any of the following:

 

(i)            the
sale, lease, transfer or other conveyance, in one or a series of related
transactions, of all or substantially all of the assets of the Corporation and
its Subsidiaries, taken as a whole, to any Person other than a Permitted
Holder; or

 

(ii)           (a) Kohlberg
Kravis Roberts & Co. L.P., its Affiliates, Permitted Holders and the
Management Investors shall at any time not own, in the aggregate, directly or
indirectly, beneficially and of record, at least 30% of the outstanding Voting
Stock of the Corporation (other than as the result of one or more widely
distributed offerings of the Corporation common stock, in each case whether by
the Corporation, or by Kohlberg Kravis Roberts & Co. L.P., its Affiliates,
Permitted Holders or the Management Investors) and/or (b) any person,
entity or “group” (within the meaning of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended) shall at any time have acquired
direct or indirect beneficial ownership of a percentage of the outstanding
Voting Stock of the Corporation that exceeds the percentage of such Voting
Stock then beneficially owned, in the aggregate, by Kohlberg Kravis Roberts
& Co. L.P., its Affiliates, Permitted Holders and Management Investors,
unless, in the case of either clause (a) or (b) above, Kohlberg Kravis
Roberts & Co. L.P., its Affiliates, Permitted Holders and Management
Investors have, at such time, the right or the ability by voting power, contract
or otherwise to elect or designate for election a majority of the Board of
Directors of the Corporation.

 

“Change
of Control Offer” has the meaning specified in Section 808 of this
Agreement.

 

“Change
of Control Payment” has the meaning specified in Section 808 of this
Agreement.

 

“Change
of Control Payment Date” has the meaning specified in Section 808 of this
Agreement.

 

“Code”
means the Internal Revenue Code of 1986, as amended from time to time, and the
rules and regulations promulgated thereunder from time to time.

 

“Commission”
means the Securities and Exchange Commission, as from time to time constituted,
created under the Exchange Act, or if at any time
after the Issue Date such Commission is not existing and performing the duties
now assigned to it under the Securities Act and Exchange Act then the body
performing such duties at such time.

 

“Common
Stock” means the shares of common stock, par value $0.01, of the
Corporation.

 

“consolidated” or “Consolidated” means, with
respect to any Person, such Person consolidated with its Restricted
Subsidiaries, and shall not include any Unrestricted Subsidiary.

 

5

 

“Consolidated
Depreciation and Amortization Expense” means with respect to any Person for
any period, the total amount of depreciation and amortization expense,
including the amortization of deferred financing fees and other non-cash
charges, excluding any non-cash item that represents an accrual or reserve for
a cash expenditure for a future period, of such Person and its Restricted
Subsidiaries for such period on a consolidated basis and otherwise determined
in accordance with GAAP.

 

“Consolidated
Interest Expense” means, with respect to any Person for any period, the
sum, without duplication, of:

 

(i)            consolidated
interest expense of such Person and its Restricted Subsidiaries for such
period, to the extent such expense was deducted in computing Consolidated Net
Income (including amortization of original issue discount resulting from the
issuance of Indebtedness at less than par, the interest component of
Capitalized Lease Obligations and net payments, if any, pursuant to interest
rate Hedging Obligations, and excluding non-cash interest expense, amortization
of deferred financing fees and any expensing of bridge or other financing
fees), plus

 

(ii)           consolidated capitalized interest of such Person and its
Restricted Subsidiaries for such period, whether paid or accrued, less

 

(iii)          interest income for such period.

 

“Consolidated
Net Income” means, with respect to any Person for any period, the aggregate
of the Net Income of such Person and its Restricted Subsidiaries for such
period, on a consolidated basis, and otherwise determined in accordance with
GAAP; provided, however, that

 

(i)            any net after-tax extraordinary, non-recurring or unusual
gains or losses (less all fees and expenses relating thereto) or expenses
(including, without limitation, relating to severance, relocation, new product
introductions and the Transactions) shall be excluded,

 

(ii)           the Net Income for such period shall not include the
cumulative effect of a change in accounting principles during such period,

 

(iii)          any net after-tax income (loss) from disposed or
discontinued operations and any net after-tax gains or losses on disposal of
disposed or discontinued operations shall be excluded,

 

(iv)          any
net after-tax gains or losses (less all fees and expenses relating thereto)
attributable to asset dispositions other than in the ordinary course of
business, as determined in good faith by the Board of Directors of the
Corporation, shall be excluded,

 

(v)           the
Net Income for such period of any Person that is not a Subsidiary, or is an
Unrestricted Subsidiary, or that is accounted for by the equity method of
accounting, shall be excluded; provided
that Consolidated Net Income

 

6

 

of the
Corporation shall be increased by the amount of dividends or distributions or
other payments that are actually paid in cash (or to the extent converted into
cash) to the referent Person or a Restricted Subsidiary thereof in respect of
such period,

 

(vi)          solely
for the purpose of determining the amount available for Restricted Payments
under Section 804(A)(c) of this Agreement, the Net Income for such period of
any Restricted Subsidiary shall be excluded if the declaration or payment of
dividends or similar distributions by that Restricted Subsidiary of its Net
Income is not at the date of determination wholly permitted without any prior
governmental approval (which has not been obtained) or, directly or indirectly,
by the operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule, or governmental regulation applicable
to such Restricted Subsidiary or its stockholders, unless such restriction with
respect to the payment of dividends or in similar distributions (x) has been
legally waived or (y) is contained in any Existing Indebtedness or any
refinancing thereof or any other Indebtedness with restrictions, taken as a
whole, not materially more restrictive than those in the most restrictive of
such Existing Indebtedness, provided
that Consolidated Net Income of the Corporation shall be increased by the
amount of dividends or other distributions or other payments actually paid in
cash (or to the extent converted into cash) to the Corporation or a Restricted
Subsidiary thereof in respect of such period, to the extent not already
included therein,

 

(vii)         any
increase in amortization or depreciation or other non-cash charges resulting
from the application of purchase accounting in relation to the Transactions or
any acquisition that is consummated after the Senior Subordinated Notes Issue
Date, net of taxes, shall be excluded,

 

(viii)        any net after-tax income (loss) from the early extinguishment
of Indebtedness or Hedging Obligations or other derivative instruments shall be
excluded,

 

(ix)           any
impairment charge or asset write-off pursuant to Financial Accounting Standards
Board Statement No. 142 and No. 144 and the amortization of intangibles arising
pursuant to No. 141 shall be excluded, and

 

(x)            any non-cash compensation expense recorded from grants of
stock appreciation or similar rights, stock options or other rights to
officers, directors or employees shall be excluded.

 

Notwithstanding the foregoing, for the
purpose of Section 804(A) of this Agreement only (other than clause (c)(iii)
thereof), there shall be excluded from Consolidated Net Income any income
arising from any sale or other disposition of Restricted Investments made by
the Corporation and the Restricted Subsidiaries, any repurchases and
redemptions of Restricted Investments from the Corporation and the Restricted
Subsidiaries, any repayments of loans and advances which constitute Restricted
Investments by the Corporation or any Restricted

 

7

 

Subsidiary,
any sale of the stock of an Unrestricted Subsidiary or any distribution or
dividend from an Unrestricted Subsidiary, in each case only to the extent such
amounts increase the amount of Restricted Payments permitted under such
covenant pursuant to clause (c)(iii) thereof.

 

“Contingent
Obligations” means, with respect to any Person, any obligation of such
Person guaranteeing any leases, dividends or other obligations that do not constitute
Indebtedness (“primary obligations”) of any other Person (the “primary obligor”)
in any manner, whether directly or indirectly, including, without limitation,
any obligation of such Person, whether or not contingent,

 

(i)            to purchase any such primary
obligation or any property constituting direct or indirect security therefor,

 

(ii)           to advance or supply funds

 

(A)          for the purchase or
payment of any such primary obligation or

 

(B)           to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, or

 

(iii)          to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such
primary obligation against loss in respect thereof.

 

“Corporation”
means Sealy Corporation, a Delaware corporation, until a successor Person shall
have become such pursuant to the applicable provisions of this Agreement, and
thereafter “Corporation” shall mean such successor Person.

 

“Credit
Agreement” means the Credit Agreement, dated as of April 6, 2004, by and
among Sealy Mattress Corporation, the Corporation, Sealy Canada, Ltd., SMC, the
other credit parties signatory thereto, J.P. Morgan Securities Inc., Goldman
Sachs Credit Partners L.P., General Electric Capital Corporation, ING Financial
Markets LLC, Royal Bank of Canada, the lenders signatory thereto from time to
time and JPMorgan Chase Bank, as Administrative Agent, including any guarantees,
collateral documents, instruments and agreements executed in connection
therewith, and any amendments, supplements and modifications thereto.

 

“Credit
Facilities” means, with respect to the Corporation, SMC or any of their
Restricted Subsidiaries, one or more debt facilities, including, without
limitation, the Senior Credit Facilities and the Senior Unsecured Term Loan, or
commercial paper facilities with banks or other institutional lenders or
investors or indentures providing for revolving credit loans, term loans,
receivables financing, including through the sale of receivables to such
lenders or to special purpose entities formed to borrow from such lenders
against receivables, letters of credit or other long-term indebtedness,
including any guarantees, collateral documents, instruments and agreements
executed in connection therewith, and any amendments, supplements,
modifications, extensions, renewals, restatements or refundings thereof and any
indentures or credit facilities or

 

8

 

commercial paper facilities with banks or other
institutional lenders or investors that replace, refund or refinance any part
of the loans, notes, other credit facilities or commitments thereunder,
including any such replacement, refunding or refinancing facility or indenture
that increases the amount borrowable thereunder or alters the maturity thereof.

 

“Default”
means any event which is, or after notice or passage of time or both would be,
an Event of Default.

 

“Designated
Non-cash Consideration” means the fair market value of non-cash
consideration received by the Corporation or a Restricted Subsidiary in
connection with an Asset Sale that is so designated as Designated Non-cash
Consideration pursuant to an Officer’s Certificate, setting forth the basis of
such valuation, executed by an executive vice president and the principal
financial officer of the Corporation, less the amount of cash or Cash
Equivalents received in connection with a subsequent sale of such Designated
Non-cash Consideration.

 

“Designated
Preferred Stock” means Preferred Stock of the Corporation, SMC or any
direct or indirect parent entity of the Corporation formed to hold
substantially all of the common stock of the Corporation, as applicable (other
than Disqualified Stock), that is issued for cash (other than to the
Corporation or any of its Subsidiaries or an employee stock ownership plan or
trust established by the Corporation or any of its Subsidiaries) and is so
designated as Designated Preferred Stock, pursuant to an Officer’s Certificate
of the Corporation, on the issuance date thereof, the cash proceeds of which
are excluded from the calculation set forth in Section 804(A)(c) of this
Agreement.

 

“Designated
Senior Indebtedness” means:

 

(1)           any
Indebtedness outstanding under the Senior Credit Facilities; and

 

(2)           any other Senior Indebtedness permitted under this
Agreement, the principal amount of which is $25.0 million or more and that has
been designated by the Corporation as “Designated Senior Indebtedness.”

 

“Disqualified
Stock” means, with respect to any Person, any Capital Stock of such Person
which, by its terms (or by the terms of any security into which it is
convertible or for which it is putable or exchangeable), or upon the happening
of any event, matures or is mandatorily redeemable (other than as a result of a
change of control or asset sale), pursuant to a sinking fund obligation or
otherwise, or is redeemable at the option of the holder thereof (other than as
a result of a change of control or asset sale), in whole or in part, in each
case prior to the date 91 days after the earlier of July 15, 2015 or the date
the Notes are no longer outstanding; provided,
however, that if such Capital Stock is issued to any plan for the
benefit of employees of the Corporation or its Subsidiaries or by any such plan
to such employees, such Capital Stock shall not constitute Disqualified Stock
solely because it may be required to be repurchased by the Corporation or its
Subsidiaries in order to satisfy applicable statutory or regulatory
obligations.

 

“EBITDA”
means, with respect to any Person for any period, the Consolidated Net Income
of such Person for such period plus:

 

9

 

(i)            provision
for taxes based on income or profits, plus franchise or similar taxes, of such
Person for such period deducted in computing Consolidated Net Income, plus

 

(ii)           Consolidated
Interest Expense and any non-cash interest expense of such Person for such
period to the extent the same was deducted in calculating such Consolidated Net
Income, plus

 

(iii)          Consolidated
Depreciation and Amortization Expense of such Person for such period to the
extent such depreciation and amortization were deducted in computing
Consolidated Net Income, plus

 

(iv)          any
expenses or charges related to any Equity Offering, Permitted Investment,
acquisition, disposition, recapitalization or Indebtedness permitted to be
incurred by this Agreement (whether or not successful), including such fees,
expenses or charges related to the offering of SMC’s 8.25% Senior Subordinated
Notes due June 15, 2014 and the Credit Facilities, and deducted in computing
Consolidated Net Income, plus

 

(v)           the
amount of any restructuring charge deducted in such period in computing Consolidated
Net Income, including any one-time costs incurred in connection with
acquisitions after the Senior Subordinated Notes Issue Date, plus

 

(vi)          without duplication, any other non-cash charges reducing
Consolidated Net Income for such period, excluding any such charge that
represents an accrual or reserve for a cash expenditure for a future period, plus

 

(vii)         the
amount of any minority interest expense deducted in calculating Consolidated
Net Income (less the amount of any cash dividends paid to the holders of such
minority interests), plus

 

(viii)        any net gain or loss resulting from currency exchange risk
Hedging Obligations, plus

 

(ix)           the
amount of management, monitoring, consulting and advisory fees and related
expenses paid to Bain Capital, LLC or Kohlberg Kravis Roberts & Co., L.P.
or any of their respective affiliates, plus

 

(x)            expenses related to the
implementation of enterprise resource planning systems, plus

 

(xi)           without duplication, the Historical
Adjustments, less

 

(xii)          non-cash items increasing Consolidated Net Income of such
Person for such period, excluding any items which represent the reversal of any
accrual of, or cash reserve for, anticipated cash charges in any prior period.

 

10

 

“EMU”
means economic and monetary union as contemplated in the Treaty on European
Union.

 

“Equity
Interests” means Capital Stock and all warrants, options or other rights to
acquire Capital Stock, but excluding any debt security that is convertible into, or exchangeable for, Capital Stock.

 

“Equity
Offering” means any public or private sale of common stock or preferred
stock of the Corporation or any or its direct or indirect parent entities
(excluding Disqualified Stock), other than (i) public offerings with respect to
Common Stock of the Corporation or of any direct or indirect parent entity of
the Corporation registered on Form S-8 and (ii) any such public or private sale
that constitutes an Excluded Contribution.

 

“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended from time
to time, and the rules and regulations promulgated thereunder from time to time
in effect.

 

“euro” means the single currency of participating
member states of the EMU.

 

“Event
of Default” has the meaning set forth in Section 501 of this Agreement.

 

“Excess
Proceeds” has the meaning set forth in Section 809 of this Agreement.

 

“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules
and regulations of the Commission promulgated thereunder.

 

“Excluded
Contribution” means net cash proceeds, marketable securities or Qualified
Proceeds, in each case received by the Corporation or SMC from:

 

(i)            contributions to its common equity capital; and

 

(ii)           the
sale (other than to a Subsidiary or to any management equity plan or stock
option plan or any other management or employee benefit plan or agreement of
the Corporation or any Subsidiary) of Capital Stock (other than Disqualified
Stock),

 

in each case
designated as Excluded Contributions pursuant to an Officer’s Certificate of
the Corporation on the date such capital contributions are made or the date
such Equity Interests are sold, as the case may be, which are excluded from the
calculation set forth in Section 804(A)(c) of this Agreement.

 

“Existing
Indebtedness” means Indebtedness of the Corporation and its Subsidiaries in
existence on the Issue Date, plus
interest accruing thereon.

 

“Fixed
Charge Coverage Ratio” means, with respect to any Person for any period,
the ratio of EBITDA of such Person for such period to the Fixed Charges of such
Person for such period. In the event that the Corporation or any Restricted
Subsidiary incurs, assumes, guarantees or redeems any Indebtedness or issues or
redeems Disqualified Stock or preferred stock

 

11

 

subsequent to the commencement of the period for which
the Fixed Charge Coverage Ratio is being calculated but prior to the event for
which the calculation of the Fixed Charge Coverage Ratio is made (the “Calculation
Date”), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such incurrence,
assumption, guarantee or redemption of Indebtedness, or such issuance or
redemption of Disqualified Stock or preferred stock, as if the same had
occurred at the beginning of the applicable four-quarter period.

 

For purposes of making the computation
referred to above, Investments, acquisitions, dispositions, mergers,
consolidations and disposed operations (as determined in accordance with GAAP)
that have been made by such Person or any Restricted Subsidiary thereof during
the four quarter reference period or subsequent to such reference period and on
or prior to or simultaneously with the Calculation Date shall be calculated on
a pro forma basis assuming that
all such Investments, acquisitions, dispositions, mergers, consolidations and
disposed operations (and the change in any associated fixed charge obligations
and the change in EBITDA resulting therefrom) had occurred on the first day of
the four-quarter reference period.  If
since the beginning of such period any other Person (that subsequently became a
Restricted Subsidiary or was merged with or into such Person or any Restricted
Subsidiary thereof since the beginning of such period) shall have made any
Investment, acquisition, disposition, merger, consolidation or disposed
operation that would have required adjustment pursuant to this definition, then
the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect thereto for such period
as if such Investment, acquisition, disposition, merger, consolidation or
disposed operation had occurred at the beginning of the applicable four quarter
period.

 

For purposes of this definition, whenever pro forma effect is to be given to a transaction,
the pro forma calculations shall be made in good faith by a responsible
financial or accounting officer of the Corporation. If any Indebtedness bears a
floating rate of interest and is being given pro forma effect, the interest on
such Indebtedness shall be calculated as if the rate in effect on the
Calculation Date had been the applicable rate for the entire period (taking
into account any Hedging Obligations applicable to such Indebtedness).  Interest on a Capitalized Lease Obligation
shall be deemed to accrue at an interest rate reasonably determined by a
responsible financial or accounting officer of the Corporation to be the rate
of interest implicit in such Capitalized Lease Obligation in accordance with
GAAP.  For purposes of making the computation
referred to above, interest on any Indebtedness under a revolving credit
facility computed on a pro forma
basis shall be computed based upon the average daily balance of such
Indebtedness during the applicable period. 
Interest on Indebtedness that may optionally be determined at an
interest rate based upon a factor of a prime or similar rate, a eurocurrency
interbank offered rate, or other rate, shall be deemed to have been based upon
the rate actually chosen, or, if none, then based upon such optional rate
chosen as the Corporation or SMC may designate.

 

“Fixed
Charges” means, with respect to any Person for any period, the sum of (i)
Consolidated Interest Expense of such Person for such period, (ii) all cash
dividends payments (excluding items eliminated in consolidation) on any series
of preferred stock (including any Designated Preferred Stock) or any Refunding
Capital Stock of such Person, and (iii) all cash dividend payments (excluding
items eliminated in consolidation) on any series of Disqualified Stock.

 

12

 

“Foreign
Subsidiary” means, with respect to any Person, any Restricted Subsidiary of
such Person that is not organized or existing under the laws of the United
States, any state thereof, the District of Columbia, or any territory thereof.

 

“GAAP”
means generally accepted accounting principles in the United States in effect
on the Senior Subordinated Notes Issue Date.

 

“Government
Securities” means securities that are

 

(i)            direct obligations of the United States of America for the
timely payment of which its full faith and credit is pledged, or

 

(ii)           obligations
of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America the timely payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States of America,

 

which, in
either case, are not callable or redeemable at the option of the issuers
thereof, and shall also include a depository receipt issued by a bank (as
defined in Section 3(a)(2) of the Securities Act), as custodian with respect to
any such Government Securities or a specific payment of principal of or
interest on any such Government Securities held by such custodian for the
account of the holder of such depository receipt; provided that (except as required by law) such custodian is
not authorized to make any deduction from the amount payable to the holder of
such depository receipt from any amount received by the custodian in respect of
the Government Securities or the specific payment of principal of or interest
on the Government Securities evidenced by such depository receipt.

 

“guarantee” means a guarantee (other than by
endorsement of negotiable instruments for collection in the ordinary course of
business), direct or indirect, in any manner (including, without limitation,
through letters of credit or reimbursement agreements in respect thereof), of
all or any part of any Indebtedness or other obligations.

 

“Hedging
Obligations” means, with respect to any Person, the obligations of such
Person under:

 

(i)            currency
exchange, interest rate or commodity swap agreements, currency exchange,
interest rate or commodity cap agreements and currency exchange, interest rate
or commodity collar agreements; and

 

(ii)           other agreements or arrangements designed to protect such
Person against fluctuations in currency exchange, interest rates or commodity
prices.

 

“Historical
Adjustments” means with respect to any Person, without duplication, the
following items to the extent incurred prior to the Senior Subordinated Notes
Issue Date:

 

(i)            costs and expenses associated with the introduction of new
products (as determined by management of the Corporation or SMC);

 

13

 

(ii)           management fees incurred by the Corporation or SMC relating
to Bain Capital Management;

 

(iii)          consulting fees incurred by the Corporation or SMC relating
to Bain Consulting;

 

(iv)          charges associated with changes in estimates related to
workers compensation and vacation pay reserves;

 

(v)           facilities rationalization and closed facilities expenses;

 

(vi)          non cash charges associated with: (A) write offs and
impairments related to affiliates, (B) deferred debt and derivative costs and
(C) stock based compensation;

 

(vii)         unusual relocation costs (as determined by management of the
Corporation or SMC);

 

(viii)        accounts receivable process improvement costs; and

 

(ix)           other
unusual gains or expenses (as determined by management of the Corporation or
SMC) consisting of: (A) consulting expenses incurred in connection with
establishment of a financial subsidiary, (B) changes in preference claim
reserves, (C) severance expenses associated with former employees, (D)
exclusion of gains associated with affiliate notes receivable, (E) cancellation
of a management consulting contract, (F) interest income and (G) write off of
accounts receivable associated with Homelife.

 

“Holder”
means a holder of Notes.

 

“incur” has the meaning specified in Section 805(A) of
this Agreement.

 

“Indebtedness”
means, with respect to any Person,

 

(i)            any indebtedness (including principal and premium) of such
Person, whether or not contingent:

 

(A)          in
respect of borrowed money;

 

(B)           evidenced by bonds, notes, debentures or similar instruments
or letters of credit (or, without double counting, reimbursement agreements in
respect thereof);

 

(C)           representing the balance deferred and unpaid of the purchase
price of any property (including Capitalized Lease Obligations), except any
such balance that constitutes a trade payable or similar obligation to a trade
creditor, in each case accrued in the ordinary course of business; or

 

14

 

(D)          representing any Hedging Obligations,

 

if and to the extent that any of the foregoing
Indebtedness (other than letters of credit and Hedging Obligations) would
appear as a liability upon a balance sheet (excluding the footnotes thereto) of
such Person prepared in accordance with GAAP;

 

(ii)           to the extent not otherwise included, any obligation by such
Person to be liable for, or to pay, as obligor, guarantor or otherwise, on the
Indebtedness of another Person, other than by endorsement of negotiable
instruments for collection in the ordinary course of business; and

 

(iii)          to the extent not otherwise included, Indebtedness of
another Person secured by a Lien on any asset owned by such Person, whether or
not such Indebtedness is assumed by such Person;

 

provided, however, that Contingent Obligations
incurred in the ordinary course of business shall be deemed not to constitute
Indebtedness; and obligations under or in respect of Receivables Facilities
shall not be deemed to constitute Indebtedness.

 

“Independent
Financial Advisor” means an accounting, appraisal or investment banking
firm or consultant to Persons engaged in Similar Businesses of
nationally-recognized standing that is, in the good faith judgment of the
Corporation or SMC, qualified to perform the task for which it has been
engaged.

 

“Intellectual
Property” has the meaning set forth in Section 201(k) of this Agreement.

 

“Interest
Payment Date” has the meaning specified in Exhibit A hereto.

 

“Interest
Rate” has the meaning specified in Exhibit A hereto.

 

“Investment
Company Act” has the meaning set forth in Section 201(o) of this Agreement.

 

“Investment
Grade Securities” means:

 

(i)            securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof (other than Cash
Equivalents);

 

(ii)           debt
securities or debt instruments with a rating of BBB- or higher by S&P or
Baa3 or higher by Moody’s or the equivalent of such rating by such rating
organization, or, if no rating of S&P or Moody’s then exists, the
equivalent of such rating by any other nationally recognized securities rating
agency, but excluding any debt securities or instruments constituting loans or
advances among the Corporation and its Subsidiaries;

 

15

 

(iii)          investments
in any fund that invests exclusively in investments of the type described in
clauses (i) and (ii) above, which fund may also hold immaterial amounts of cash
pending investment and/or distribution; and

 

(iv)          corresponding instruments in countries other than the United
States customarily utilized for high quality investments.

 

“Investments”
means, with respect to any Person, all investments by such Person in other
Persons (including Affiliates) in the form of loans (including guarantees),
advances or capital contributions (excluding accounts receivable, trade credit,
advances to customers, commission, travel and similar advances to officers and
employees, in each case made in the ordinary course of business), purchases or
other acquisitions for consideration of Indebtedness, Equity Interests or other
securities issued by any other Person and investments that are required by GAAP
to be classified on the balance sheet (excluding the footnotes) of the
Corporation in the same manner as the other investments included in this
definition to the extent such transactions involve the transfer of cash or
other property.  For purposes of the
definition of “Unrestricted Subsidiary” and Section 804 of this Agreement,

 

(i)            “Investments”
shall include the portion (proportionate to the Corporation’s equity interest
in such Subsidiary) of the fair market value of the net assets of a Subsidiary
of the Corporation at the time that such Subsidiary is designated an
Unrestricted Subsidiary; provided,
however, that upon a
redesignation of such Subsidiary as a Restricted Subsidiary, the Corporation
shall be deemed to continue to have a permanent “Investment” in an Unrestricted
Subsidiary in an amount (if positive) equal to:

 

(x)            the Corporation’s “Investment” in such Subsidiary at the
time of such redesignation less

 

(y)           the portion (proportionate to the Corporation’s equity
interest in such Subsidiary) of the fair market value of the net assets of such
Subsidiary at the time of such redesignation; and

 

(ii)           any property transferred to or from an Unrestricted Subsidiary
shall be valued at its fair market value at the time of such transfer, in each
case as determined in good faith by the Corporation.

 

“Issue
Date” means July 16, 2004.

 

“Lien”
means, with respect to any asset, any mortgage, lien, pledge, charge, security
interest or encumbrance of any kind in respect of such asset, whether or not
filed, recorded or otherwise perfected under applicable law, including any
conditional sale or other title retention agreement, any lease in the nature
thereof, any option or other agreement to sell or give a security interest in
and any filing of or agreement to give any financing statement under the
Uniform Commercial Code (or equivalent statutes) of any jurisdiction; provided that in no event shall an
operating lease be deemed to constitute a Lien.

 

16

 

“Management
Group” means at any time, the Chairman of the Board, any President, any
Executive Vice President or Vice President, any Managing Director, any
Treasurer and any Secretary or other executive officer of any of the
Corporation or any Subsidiary at such time.

 

“Management Investors”
means the management officers and employees of the Corporation and its
Subsidiaries who are investors in the Corporation on July 16, 2004.

 

“Material
Adverse Effect” has the meaning set forth in Section 201(b) of this
Agreement.

 

“Moody’s”
means Moody’s Investors Service, Inc.

 

“Net
Income” means, with respect to any Person, the net income (loss) of such
Person, determined in accordance with GAAP and before any reduction in respect
of preferred stock dividends.

 

“Net
Proceeds” means the aggregate cash proceeds received by the Corporation or
any Restricted Subsidiary in respect of any Asset Sale, including, without
limitation, any cash received upon the sale or other disposition of any
Designated Non-cash Consideration received in any Asset Sale, net of the direct
costs relating to such Asset Sale and the sale or disposition of such
Designated Non-cash Consideration, including, without limitation, legal,
accounting and investment banking fees, and brokerage and sales commissions,
any relocation expenses incurred as a result thereof, taxes paid or payable as
a result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), amounts required to be applied to
the repayment of principal, premium, if any, and interest on Senior
Indebtedness required (other than required by Section 809(b)(1)) to be paid as
a result of such transaction and any deduction of appropriate amounts to be
provided by the Corporation as a reserve in accordance with GAAP against any
liabilities associated with the asset disposed of in such transaction and
retained by the Corporation after such sale or other disposition thereof, including,
without limitation, pension and other post-employment benefit liabilities and
liabilities related to environmental matters or against any indemnification
obligations associated with such transaction.

 

“Notes”
means the Corporation’s 10% Senior Subordinated Notes due 2015 issued pursuant
to this Agreement.

 

“Obligations”
means any principal, interest, penalties, fees, indemnifications,
reimbursements (including, without limitation, reimbursement obligations with
respect to letters of credit and banker’s acceptances), damages and other
liabilities, and guarantees of payment of such principal, interest, penalties,
fees, indemnifications, reimbursements, damages and other liabilities, payable
under the documentation governing any Indebtedness.

 

“Officer”
means the Chairman of the Board of Directors, the Chief Executive Officer, the
President, any Executive Vice President, Senior Vice President or Vice
President, the Treasurer, or Secretary of the Corporation.

 

17

 

“Officer’s
Certificate” means a certificate signed on behalf of the Corporation by one
Officer of the Corporation that meets the requirements set forth in this
Agreement.

 

“Permitted
Asset Swap” means the concurrent purchase and sale or exchange of Related
Business Assets or a combination of Related Business Assets and cash or Cash
Equivalents between the Corporation or any of its Restricted Subsidiaries and
another Person; provided,
that any cash or Cash Equivalents received must be applied in accordance with
Section 809.

 

“Permitted
Holders” means Kohlberg Kravis Roberts & Co. L.P., its Affiliates and
the Management Group.

 

“Permitted
Investments” means:

 

(i)            any Investment in the Corporation or any Restricted
Subsidiary;

 

(ii)           any Investment in cash and Cash Equivalents or Investment
Grade Securities;

 

(iii)          any Investment by the Corporation or any Restricted
Subsidiary of the Corporation in a Person that is engaged in a Similar Business
if as a result of such Investment;

 

(A)          such Person becomes a Restricted Subsidiary, or

 

(B)           such
Person, in one transaction or a series of related transactions, is merged,
consolidated or amalgamated with or into, or transfers or conveys substantially
all of its assets to, or is liquidated into, the Corporation or a Restricted
Subsidiary;

 

(iv)          any
Investment in securities or other assets not constituting cash or Cash
Equivalents and received in connection with an Asset Sale made pursuant to
Section 809, or any other disposition of assets not constituting an Asset Sale;

 

(v)           any Investment existing on the Issue Date;

 

(vi)          advances to employees not in excess of $10.0 million
outstanding at any one time, in the aggregate;

 

(vii)         any Investment acquired by the Corporation or any Restricted
Subsidiary

 

(A)          in
exchange for any other Investment or accounts receivable held by the
Corporation or any such Restricted Subsidiary in connection with or as a result
of a bankruptcy, workout, reorganization or recapitalization of the Corporation
of such other Investment or accounts receivable or

 

18

 

(B)           as a result of a foreclosure by the Corporation or any
Restricted Subsidiary with respect to any secured Investment or other transfer
of title with respect to any secured Investment in default;

 

(viii)        Hedging
Obligations permitted under Section 805(B)(9) of this
Agreement;

 

(ix)           loans
and advances to officers, directors and employees for business related travel
expenses, moving expenses and other similar expenses, in each case incurred in
the ordinary course of business;

 

(x)            any
Investment in a Similar Business having an aggregate fair market value, taken
together with all other Investments made pursuant to this clause (x) that are
at that time outstanding (without giving effect to the sale of an Unrestricted
Subsidiary to the extent the proceeds of such sale do not consist of cash
and/or marketable securities), not to exceed the greater of (x) $100.0 million
and (y) 10% of Total Assets at the time of such Investment (with the fair
market value of each Investment being measured at the time made and without
giving effect to subsequent changes in value);

 

(xi)           Investments
the payment for which consists of Equity Interests of the Corporation, or any
of its direct or indirect parent entities (exclusive of Disqualified Stock); provided, however, that such Equity
Interests shall not increase the amount available for Restricted Payments under
Section 804(A)(c) of this Agreement;

 

(xii)          guarantees of Indebtedness permitted under Section 805 of
this Agreement;

 

(xiii)         any
transaction to the extent it constitutes an investment that is permitted and
made in accordance with Section 807(B) (except transactions described in
clauses (2), (7), (8) and (12) thereof) of this Agreement;

 

(xiv)        Investments
consisting of purchases and acquisitions of inventory, supplies, material or
equipment or the licensing or contribution of intellectual property pursuant to
joint marketing arrangements with other Persons;

 

(xv)         additional
Investments having an aggregate fair market value, taken together with all
other Investments made pursuant to this clause (xv) that are at that time
outstanding (without giving effect to the sale of an Unrestricted Subsidiary to
the extent the proceeds of such sale do not consist of cash and/or marketable
securities), not to exceed the greater of (x) $50.0 million and (y) 5.0% of
Total Assets at the time of such Investment (with the fair market value of each
Investment being measured at the time made and without giving effect to
subsequent changes in value);

 

(xvi)        Investments
relating to any special purpose wholly owned subsidiary of the Corporation
organized in connection with a Receivables Facility

 

19

 

that,
in the good faith determination of the Board of Directors of the Corporation or
SMC, are necessary or advisable to effect such Receivables Facility; and

 

(xvii)       and Investment permitted by the terms of the Senior Credit
Facilities and the SMC Senior Subordinated Notes.

 

“Permitted
Liens” means, with respect to any Person:

 

(1)           pledges
or deposits by such Person under workmen’s compensation laws, unemployment
insurance laws or similar legislation, or good faith deposits in connection
with bids, tenders, contracts (other than for the payment of Indebtedness) or
leases to which such Person is a party, or deposits to secure public or
statutory obligations of such Person or deposits of cash or U.S. government
bonds to secure surety or appeal bonds to which such Person is a party, or
deposits as security for contested taxes or import duties or for the payment of
rent, in each case incurred in the ordinary course of business;

 

(2)           liens
imposed by law, such as carriers’, warehousemen’s and mechanics’ Liens, in each
case for sums not yet due or being contested in good faith by appropriate
proceedings or other Liens arising out of judgments or awards against such
Person with respect to which such Person shall then be proceeding with an
appeal or other proceedings for review;

 

(3)           Liens
for taxes, assessments or other governmental charges not yet due or payable or
subject to penalties for nonpayment or which are being contested in good faith
by appropriate proceedings;

 

(4)           Liens
in favor of issuers of performance and surety bonds or bid bonds or with respect
to other regulatory requirements or letters of credit issued pursuant to the
request of and for the account of such Person in the ordinary course of its
business;

 

(5)           minor
survey exceptions, minor encumbrances, easements or reservations of, or rights
of others for, licenses, rights-of-way, sewers, electric lines, telegraph and
telephone lines and other similar purposes, or zoning or other restrictions as
to the use of real properties or Liens incidental, to the conduct of the
business of such Person or to the ownership of its properties which were not
incurred in connection with Indebtedness and which do not in the aggregate
materially adversely affect the value of said properties or materially impair
their use in the operation of the business of such Person;

 

(6)           (A)  Liens securing Senior Indebtedness permitted
to be incurred pursuant to Section 805 hereof and (B) Liens securing
Indebtedness pursuant to Section 805(B)(6) or 805(B)(15) hereof;

 

(7)           Liens
existing on the Issue Date;

 

(8)           Liens
on property or shares of stock of a Person at the time such Person becomes a
Subsidiary; provided, however, such Liens are not created or
incurred in connection with, or in contemplation of, such other Person becoming
such a subsidiary;

 

20

 

provided, further, however, that such Liens may not extend to any other
property owned by the Corporation or any Restricted Subsidiary;

 

(9)           Liens
on property at the time the Corporation or any of its Restricted Subsidiaries
acquired the property, including any acquisition by means of a merger or
consolidation with or into the Corporation or any Restricted Subsidiary; provided, however,
that such Liens are not created or incurred in connection with, or in
contemplation of, such acquisition; provided,
further, however, that the Liens may not extend to any other
property owned by the Corporation or any Restricted Subsidiary;

 

(10)         Liens
securing Indebtedness or other obligations of SMC or a Restricted Subsidiary of
SMC owing to the Corporation, SMC or another Restricted Subsidiary of SMC
permitted to be incurred in accordance with Section 805 hereof;

 

(11)         Liens
securing Hedging Obligations so long as the related Indebtedness is, and is
permitted under this Agreement to be, secured by a Lien on the same property
securing such Hedging Obligations;

 

(12)         Liens
on specific items of inventory of other goods and proceeds of any Person
securing such Person’s obligations in respect of bankers’ acceptances issued or
created for the account of such Person to facilitate the purchase, shipment or
storage of such inventory or other goods;

 

(13)         leases
and subleases of real property which do not materially interfere with the
ordinary conduct of the business of the Corporation or any of its Restricted Subsidiaries;

 

(14)         Liens
arising from Uniform Commercial Code financing statement filings regarding
operating leases entered into by the Corporation and its Restricted
Subsidiaries in the ordinary course of business;

 

(15)         Liens
in favor of the Corporation or any of its Restricted Subsidiaries;

 

(16)         Liens
on equipment of the Corporation or any of its Restricted Subsidiaries granted
in the ordinary course of business to the Corporation’s client at which such
equipment is located;

 

(17)         Liens
on accounts receivable and related assets incurred in connection with a
Receivables Facility;

 

(18)         Liens
to secure any refinancing, refunding, extension, renewal or replacement (or
successive refinancing, refunding, extensions, renewals or replacements) as a
whole, or in part, of any Indebtedness secured by any Lien referred to in the
foregoing clauses (6)(B), (7), (8), (9), (10), (11) and (15); provided however, that (x) such new Lien
shall be limited to all or part of the same property that secured the original
Lien (plus improvements on such property), and (y) the Indebtedness secured by
such Lien at such time is not increased to any amount greater than the sum of
(A) the outstanding principal amount or, if greater, committed amount of the
Indebtedness described under

 

21

 

clauses (6)(B), (7), (8), (9), (10), (11) and (15) at the time the
original Lien became a Permitted Lien under this Agreement, and (B) an amount
necessary to pay any fees and expenses, including premiums, related to such
refinancing, refunding, extension, renewal or replacement; and

 

(19)         other Liens securing obligations incurred in the ordinary
course of business which obligations do to exceed $25 million at any one time
outstanding.

 

“Person”
means any individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.

 

“preferred stock” means any Equity Interest
with preferential rights of payment of dividends upon liquidation, dissolution
or winding up.

 

“Purchasers”
has the meaning set forth in the preamble to this Agreement.

 

“Receivables
Facility” means one or more receivables financing facilities, as amended
from time to time, the Indebtedness of which is non-recourse (except for
standard representations, warranties, covenants and indemnities made in
connection with such facilities) to the Corporation and the Restricted
Subsidiaries pursuant to which the Corporation and/or any of its Restricted
Subsidiaries sells its accounts receivable to a Person that is not a Restricted
Subsidiary.

 

“Receivables
Fees” means distributions or payments made directly or by means of
discounts with respect to any participation interest issued or sold in
connection with, and other fees paid to a Person that is not a Restricted
Subsidiary in connection with, any Receivables Facility.

 

“Redemption
Date” with respect to any Note, means the date on which such Note is redeemed
by the Corporation.

 

“Redemption
Notice” has the meaning specified in Section 902 of this Agreement.

 

“Redemption
Price” means the consideration due to the Holders on a Redemption Date as
specified in Section 901 of this Agreement.

 

“Refinancing
Indebtedness” has the meaning specified in Section 805 of this Agreement.

 

“Refunding
Capital Stock” has the meaning specified in Section 804(B) of this
Agreement.

 

“Regular
Record Date” has the meaning specified in Exhibit A hereto.

 

“Related
Business Assets” means assets (other than cash or Cash Equivalents) used or
useful in a Similar Business, provided that
any assets received by the Corporation or a

 

22

 

Restricted Subsidiary in exchange for assets transferred
by the Corporation or a Restricted Subsidiary shall not be deemed to be Related
Business Assets if they consist of securities of a Person, unless upon receipt
of the securities of such Person, such Person would become a Restricted
Subsidiary.

 

“Restricted
Investment” means an Investment other than (x) a Permitted Investment and
(y) any payments made with respect to the Notes.

 

“Restricted
Payment” has the meaning specified in Section 804(A) of this Agreement.

 

“Restricted
Subsidiary” means, at any time, any direct or indirect Subsidiary of the
Corporation (including any Foreign Subsidiary) that is not then an Unrestricted
Subsidiary (including Sealy Mattress Corporation and SMC); provided, however, that upon the
occurrence of an Unrestricted Subsidiary ceasing to be an Unrestricted
Subsidiary, such Subsidiary shall be included in the definition of “Restricted
Subsidiary.”

 

“Retired
Capital Stock” has the meaning specified in Section 804(B) of this
Agreement.

 

“S&P”
means Standard and Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc.

 

“Securities
Act” means the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.

 

“Senior
Credit Facilities” means the Credit Agreement, dated as of April 6, 2004,
by and among Sealy Mattress Corporation, the Corporation, Sealy Canada, Ltd.,
SMC, the other credit parties signatory thereto, J.P. Morgan Securities Inc.,
Goldman Sachs Credit Partners L.P., General Electric Capital Corporation, ING
Financial Markets LLC, Royal Bank of Canada, the lenders signatory thereto from
time to time and JPMorgan Chase Bank, as Administrative Agent, including any
guarantees, collateral documents, instruments and agreements executed in
connection therewith, and any amendments, supplements, modifications,
extensions, renewals, restatements or refundings thereof and any indentures or
credit facilities or commercial paper facilities with banks or other
institutional lenders or investors that replace, refund or refinance any part
of the loans, notes, other credit facilities or commitments thereunder,
including any such replacement, refunding or refinancing facility or indenture
that increases the amount borrowable thereunder or alters the maturity thereof.

 

“Senior
Indebtedness” means:

 

(1)           all
Indebtedness of the Corporation outstanding under the Credit Facilities
(including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization of the Corporation, regardless of whether or
not a claim for post-filing interest is allowed in such proceedings);

 

(2)           all
Hedging Obligations (and guarantees thereof) permitted to be incurred under the
terms of this Agreement;

 

23

 

(3)           any
other Indebtedness of the Corporation permitted to be incurred under the terms
of this Agreement, unless the instrument under which such Indebtedness is
incurred expressly provides that it is on a parity with or subordinated in
right of payment to the Notes; and

 

(4)           all Obligations with respect to the items listed in the
preceding clauses (1), (2) and (3).

 

“Senior
Subordinated Indebtedness” means Indebtedness of the Corporation which
ranks equal in right of payment to the Notes.

 

“Senior
Subordinated Notes Issue Date” means April 6, 2004.

 

“Senior
Unsecured Term Loan” means the Senior Unsecured Credit Agreement, dated as
of April 6, 2004, among SMC, Sealy Mattress Corporation, the Corporation, J.P.
Morgan Securities, Inc., as joint lead arranger and joint bookrunner, Goldman
Sachs Credit Parties L.P., as joint lead arranger, joint bookrunner and
syndication agent, and JPMorgan Chase Bank, as Administrative Agent, and the
other agents and the lenders party thereto, including any guarantees,
instruments and agreements executed in connection therewith, and any
amendments, supplements, modifications, extensions, renewals, restatements or
refundings thereof and any indentures or credit facilities or commercial paper
facilities with banks or other institutional lenders or investors that replace,
refund or refinance any part of the loans, notes, other credit facilities or
commitments thereunder, including any such replacement, refunding or
refinancing facility or indenture that increases the amount borrowable
thereunder or alters the maturity thereof.

 

“Shares”
means shares of the Corporation’s Common Stock sold to the Purchasers pursuant
to this Agreement.

 

“Significant
Subsidiary” means any Restricted Subsidiary that would be a “significant
subsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act, as such regulation is in effect on the date
hereof.

 

“Similar
Business” means any business conducted or proposed to be conducted by the
Corporation and its Restricted Subsidiaries on the date of this Agreement or
any business that is similar, reasonably related, incidental or ancillary
thereto.

 

“SMC”
means Sealy Mattress Company, a subsidiary of Sealy Mattress Corporation, a
Delaware corporation, or any successor thereto by merger, consolidation or otherwise.

 

“SMC
Senior Subordinated Notes” means the 8.25% Senior Subordinated Notes due
June 15, 2014 and any refinancing thereof.

 

“Stockholders
Agreement” means the agreement among the stockholders of the Corporation
named therein substantially in the form of Exhibit C hereto.

 

24

 

“Subordinated
Indebtedness” means any Indebtedness of the Corporation which is by its
terms subordinated in right of payment to the Notes.

 

“Subsidiary”
means, with respect to any Person:

 

(i)            any
corporation, association, or other business entity (other than a partnership,
joint venture, limited liability company or similar entity) of which more than
50% of the total voting power of shares of Capital Stock entitled (without regard
to the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time of determination owned or
controlled, directly or indirectly, by such Person or one or more of the other
Subsidiaries of that Person or a combination thereof; and

 

(ii)           any partnership, joint venture, limited liability company or
similar entity of which:

 

(x)            more
than 50% of the capital accounts, distribution rights, total equity and voting
interests or general or limited partnership interests, as applicable, are owned
or controlled, directly or indirectly, by such Person or one or more of the
other Subsidiaries of that Person or a combination thereof whether in the form
of membership, general, special or limited partnership or otherwise, and

 

(y)           such Person or any Restricted Subsidiary of such Person is a
controlling general partner or otherwise controls such entity.

 

“Successor
Corporation” has the meaning specified in Section 601 of this Agreement.

 

“Total
Assets” means the total consolidated assets of the Corporation and its
Restricted Subsidiaries, as shown on the most recent balance sheet of the
Corporation.

 

“Transactions”
means the (i) the merger of an entity controlled by affiliates of Kohlberg
Kravis Roberts & Co., L.P. pursuant to the merger agreement dated March 3,
2004, whereby this entity merged with and into the Corporation, with the
Corporation being the surviving entity; (ii) the equity investment by Kohlberg
Kravis Roberts & Co., L.P. in the Corporation of approximately $436.1
million; (iii) the repayment in full of all of SMC’s outstanding junior
subordinated promissory notes dated December 31, 2003; (iv) the closing of SMC’s
Senior Credit Facilities and the Senior Unsecured Term Loan on April 6, 2004;
(v) the receipt of approximately $13.6 million from the settlement of remaining
notes receivable from Mattress Firm, Inc; (vi) the issuance of the 8.25% Senior
Subordinated Notes due 2014 of SMC; (vii) the repayment of SMC’s outstanding
$300 million aggregate principal amount of 97/8% Senior
Subordinated Notes due December 15, 2007 and $128 million aggregate principal
amount of 107/8% Senior Subordinated Discount Notes due
December 15, 2007; (viii) the repayment in full of outstanding indebtedness
under that certain Credit Agreement, dated as of February 14, 2001, as amended,
among Sealy Canada Ltd./LTEE, the lenders from time to time thereto, and Bank
of America Canada, as agent, and that certain Amended and Restated Credit
Agreement, dated as of November 8, 2002, as amended, among SMC, the
Corporation, the lenders from time

 

25

 

to time party thereto, JPMorgan Chase Bank, as
administrative agent, Goldman Sachs Credit Partners L.P., as co-lead arranger
and syndication agent, and JPMorgan Securities Inc., as co-lead arranger; and
(ix) the issuance, after April 6, 2004, of new options to purchase shares of
Class A common stock to certain members of management relating to the election
by such members of management on or prior to April 6, 2004 to rollover their
outstanding options to purchase common stock of the Corporation in connection
with the merger described in clause (i).

 

“Uniform
Commercial Code” means the New York Uniform Commercial Code as in effect
from time to time.

 

“Unrestricted
Subsidiary” means:

 

(i)            any Subsidiary of the Corporation which at the time of
determination is an Unrestricted Subsidiary (as designated by the Board of
Directors of the Corporation, as provided below), and

 

(ii)           any Subsidiary of an Unrestricted Subsidiary.

 

The Board of Directors of the Corporation may
designate any Subsidiary of the Corporation (including any existing Subsidiary
and any newly acquired or newly formed Subsidiary) to be an Unrestricted
Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Equity
Interests or Indebtedness of, or owns or holds any lien on, any property of,
the Corporation or any Subsidiary of the Corporation (other than any Subsidiary
of the Subsidiary to be so designated), provided
that

 

(A)          any Unrestricted
Subsidiary must be an entity of which shares of the Capital Stock or other
equity interests (including partnership interests) entitled to cast at least a
majority of the votes that may be cast by all shares or equity interests having
ordinary voting power for the election of directors or other governing body are
owned, directly or indirectly, by the Corporation,

 

(B)           such
designation complies with Section 804 of this Agreement, and

 

(C)           each
of the Subsidiary to be so designated and its Subsidiaries has not at the time
of designation, and does not thereafter, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable with respect to any
Indebtedness pursuant to which the lender has recourse to any of the assets of
the Corporation or any Restricted Subsidiary.

 

The Board of Directors of the Corporation may
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that, immediately after giving
effect to such designation either:

 

(x)            in
the case of any Subsidiary of the Corporation other than SMC and any of its
Subsidiaries, either

 

26

 

(1)           the Corporation
could incur at least $1.00 of additional Indebtedness pursuant to the Fixed
Charge Coverage Ratio test set forth in Section 805(A)(1) of this Agreement or

 

(2)           the Fixed Charge
Coverage Ratio for the Corporation and its Restricted Subsidiaries would be
greater than immediately prior to such designation, in each case on a pro forma basis taking into account such
designation, and

 

(y)           in
the case of SMC and any of its Subsidiaries, either

 

(1)           SMC could incur at
least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage
Ratio test set forth in Section 805(A)(2) of this Agreement or

 

(2)           the Fixed Charge
Coverage Ratio for SMC and its Restricted Subsidiaries would be greater than
immediately prior to such designation, in each case on a pro forma basis taking into account such
designation.

 

“Voting
Stock” of any Person as of any date means the Capital Stock of such Person
that is at the time entitled to vote in the election of the Board of Directors
of such Person.

 

“Weighted
Average Life to Maturity” means, when applied to any Indebtedness,
Disqualified Stock or preferred stock, as the case may be, at any date, the
quotient obtained by dividing:

 

(i)            the sum of the
products of the number of years from the date of determination to the date of
each successive scheduled principal payment of such Indebtedness or redemption
or similar payment with respect to such Disqualified Stock or preferred stock multiplied by the amount of such payment,
by

 

(ii)           the sum of all such
payments.

 

“Wholly
Owned Subsidiary” of any Person means a Subsidiary of such Person, 100% of
the outstanding Capital Stock or other ownership interests of which (other than
directors’ qualifying shares) shall at the time be owned by such Person or by
one or more Wholly Owned Subsidiaries of such Person.

 

27

 

SECTION
102.  Notices,
Etc., to Corporation.

 

Any request, demand, authorization,
direction, notice, consent, waiver or Act of Holders or other document provided
or permitted by this Agreement to be made upon, given or furnished to, or filed
with the Corporation by any Holder shall be sufficient for every purpose
hereunder (unless otherwise herein expressly provided) if made, given,
furnished or delivered in writing and mailed, first-class postage
prepaid, or delivered by recognized overnight courier, to the Corporation
addressed to it at the address set forth below, or at any other address
previously furnished in writing to the Holders by the Corporation.

 

c/o Sealy
Mattress Company

One Office Parkway

Trinity, North Carolina  27230

Attention:  Secretary

 

SECTION
103.  Notice to
Holders; Waiver.

 

Where this Agreement provides for notice of
any event to Holders by the Corporation, such notice shall be sufficiently given
(unless otherwise herein expressly provided) if in writing and mailed, first-class
postage prepaid or sent by a nationally recognized overnight courier to each
Holder affected by such event, at the address set forth on the signature pages
to this Agreement or at any other address previously furnished in writing by a
Holder to the Corporation, not later than the latest date, and not earlier than
the earliest date, prescribed for the giving of such notice.  In any case where notice to Holders is given
by mail, neither the failure to mail such notice, nor any defect in any notice
so mailed, to any particular Holder shall affect the sufficiency of such notice
with respect to other Holders.  Notices
given by first-class mail, postage prepaid, shall be deemed given five calendar
days after mailing.

 

Where this Agreement provides for notice in
any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice.

 

SECTION
104.  Effect
of Headings and Table of Contents.

 

The Article and Section headings herein and
the Table of Contents are for convenience only and shall not affect the
construction hereof.

 

SECTION
105.  Integration
and Severability.

 

This Agreement (including the schedules and
exhibits hereto) and the Notes embody the entire agreement and understanding
between the parties hereto and supersede all prior agreements and
understandings relating to the subject matter hereof.  In case any provision in this Agreement or in
the Notes shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.

 

28

 

SECTION
106.  Benefits
of Agreement.

 

Nothing in this Agreement or in the Notes,
express or implied, shall give to any Person, other than the parties hereto,
and the Holders any benefit or any legal or equitable right, remedy or claim
under this Agreement.  None of the rights
set forth in Section 503 are assignable.

 

SECTION
107.  GOVERNING LAW.

 

THIS AGREEMENT AND
THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.

 

SECTION
108.  Legal
Holidays.

 

In any case where any Interest Payment Date,
Redemption Date or stated maturity or maturity of any Note shall not be a
Business Day, then (notwithstanding any other provision of this Agreement or of
the Notes) payment of principal (or premium, if any) or interest need not be
made on such date, but may be made on the next succeeding Business Day with the
same force and effect as if made on the Interest Payment Date, Redemption Date,
or at the stated maturity or maturity; provided
that no interest shall accrue for the period from and after such Interest
Payment Date, Redemption Date, stated maturity or maturity, as the case may be.

 

SECTION
109.  No Personal
Liability of Directors, Officers, Employees and Stockholders.

 

No director, officer, employee, incorporator
or stockholder of the Corporation or any of its parent companies shall have any
liability for any obligations of the Corporation under the Notes or this
Agreement or for any claim based on, in respect of, or by reason of such
obligations. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for issuance of
the Notes.

 

SECTION
110.  Counterparts.

 

This Agreement may be executed in any number
of counterparts, each of which shall be original; but such counterparts shall
together constitute but one and the same instrument.

 

SECTION
111.  Submission
to Jurisdiction. 

 

Each party to this Agreement agrees that any
suit, action or proceeding against such party arising out of or relating to
this Agreement or the Notes may be instituted in any New York state or U.S.
federal court in the Borough of Manhattan, The City of New York, New York, and
any appellate court from any thereof, and each such party irrevocably submits
to the non-exclusive jurisdiction of such courts in any suit, action or
proceeding.  Each party to this Agreement
irrevocably waives, to the fullest extent permitted by law, any objection to
any suit, action, or proceeding that may be brought in connection with this
Agreement or the Notes, including such actions, suits or proceedings relating
to securities laws of the Unites States of America or any state thereof, in
such courts whether on the grounds of venue, residence or

 

29

 

domicile or on
the ground that any such suit, action or proceeding has been brought in an
inconvenient forum.  Each party to this
Agreement agrees that final judgment in any such suit, action or proceeding
brought in such court shall be conclusive and binding upon such party and may
be enforced in any court to the jurisdiction of which such party is subject by
a suit upon such judgment.

 

ARTICLE TWO

 

REPRESENTATIONS AND
WARRANTIES

 

SECTION
201.  Representations
of the Corporation

 

The Corporation represents and warrants to,
and agrees with, each of the Purchasers that:

 

(a)           The
Corporation has not sustained since the date of the latest audited financial
statements provided to the Purchasers any material loss or interference with
its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree; and, since the date of the latest audited financial
statements provided to the Purchasers, there has not been any material change
in the capital stock or long-term debt of the Corporation (other than as a
result of the Transactions and the issuance of the Notes) or any material
adverse change, or any development involving a prospective material adverse
change, in or affecting the general affairs, management, financial position,
stockholders’ equity or results of operations of the Corporation;

 

(b)           The
Corporation has good and marketable title in fee simple to all real property
and good and marketable title to all personal property owned by it, in each
case free and clear of all liens, encumbrances and defects except as do not
materially affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Corporation; and except as
could not reasonably be expected to have a material adverse effect on the
business, properties, financial condition or earnings of the Corporation and
its consolidated subsidiaries, taken as a whole (a “Material Adverse Effect”),
any real property and buildings held under lease by the Corporation are held by
it under valid, subsisting and enforceable leases;

 

(c)           The
Corporation has been duly incorporated and is validly existing as a corporation
in good standing under the laws of the State of Delaware with power and
authority (corporate and other) to own its properties and conduct its business
as currently conducted, and has been duly qualified as a foreign corporation
for the transaction of business and is in good standing under the laws of each
other jurisdiction in which it owns or leases properties or conducts any
business so as to require such qualification, except where the failure to so
qualify or to be in good standing could not reasonably be expected to have a
Material Adverse Effect;

 

(d)           All
of the issued shares of Capital Stock of the Corporation have been duly and
validly authorized and issued and are fully paid and non-assessable;

 

30

 

(e)           Each
of this Agreement and the Stockholders Agreement has been duly authorized,
executed and delivered by the Corporation;

 

(f)            The
Notes have been duly authorized and executed by the Corporation and, when
issued and delivered against payment therefor as provided in this Agreement,
will have been duly authorized, executed, issued and delivered and will
constitute valid and legally binding obligations of the Corporation;

 

(g)           The
Shares have been duly authorized and issued by the Corporation and, when
delivered against payment therefor as provided in this Agreement, will have
been duly authorized, issued and delivered and will be fully paid and
non-assessable and free of preemptive rights on the part of others;

 

(h)           The
issue and sale of the Notes and the Shares and the compliance by the
Corporation with all of the provisions of the Notes, this Agreement and the
Stockholders Agreement and the consummation of the transactions herein and
therein contemplated will not, except as could not reasonably be expected to
have a Material Adverse Effect, conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Corporation is a party or by which the Corporation is bound
or to which any of the property or assets of the Corporation is subject, nor
will such action result in any violation of the provisions of the Certificate
of Incorporation or By-laws of the Corporation or, except as could not
reasonably be expected to have a Material Adverse Effect, any statute, order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Corporation or any of its properties; and no consent,
approval, authorization, order, registration or qualification of or with any
such court or governmental agency or body is required for the issue and sale of
the Notes and the Shares or the consummation by the Corporation of the
transactions contemplated by this Agreement and the Stockholders Agreement;

 

(i)            The
Corporation is not in violation of its Certificate of Incorporation or By-laws
or, except as could not reasonably be expected to have a Material Adverse
Effect, in default in the performance or observance of any material obligation,
covenant or condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a party or by
which it or any of its properties may be bound;

 

(j)            There
are no legal or governmental proceedings pending to which the Corporation is a
party or of which any property of the Corporation is the subject which, if
determined adversely to the Corporation, could, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
current or future financial position, stockholders’ equity or results of
operations of the Corporation and its subsidiaries, taken as a whole; and, to
the Corporation’s knowledge, no such proceedings are threatened or contemplated
by governmental authorities or threatened by others;

 

(k)           The
Corporation is not, and after giving effect to the offering and sale of the
Notes and the Shares, will not be, an “investment company”, as such term is
defined

 

31

 

in the United States Investment Company Act
of 1940, as amended (the “Investment Company Act”);

 

(l)            No
registration of the under the Securities Act is required for the sale of the
Notes and the Shares to the Purchasers in the manner contemplated by this
Agreement;

 

(m)          The
Corporation has complied in all respects with all laws, regulations and orders
applicable to it or its businesses the violation of which could reasonably be
expected to have a Material Adverse Effect;

 

(n)           (i)
No labor disturbance by the employees of the Corporation exists or, to the
knowledge of the Corporation, is imminent and (ii) there are no unfair labor
practice complaints pending against the Corporation or, to the knowledge of the
Corporation, threatened against it, which, in the case of either (i) or (ii),
could reasonably be expected to result in a Material Adverse Effect; and

 

(o)           The
Corporation owns or possesses or has the right to use the patents, patent
rights, licenses, inventions, copyrights, know-how (including trade secrets and
other unpatented and/or unpatentable proprietary or confidential information,
systems or procedures), trademarks, service marks and trade names
(collectively, the “Intellectual Property”) presently employed by it in
connection with, and material to, collectively or in the aggregate, the
operation of the businesses now operated by it, and, the Corporation has not
received any notice of infringement of or conflict with asserted rights of
others with respect to the foregoing which, individually or in the aggregate,
if the subject of an unfavorable decision, ruling or finding, would result in a
Material Adverse Effect;

 

(p)           The
Corporation has delivered to the Holders the offering memorandum dated March
30, 2004 relating to the offer and sale of the SMC Senior Subordinated Notes
(the “Memorandum”).  As of its date,
the Memorandum did not contain any untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein not
misleading in light of the circumstances under which they were made; and

 

(q)           The
authorized capital of the Corporation immediately prior to the Closing consists
of 150,000,000 shares of Common Stock, 95,150,519.5426 of which are outstanding
and 92,487,082.5405 of which will be outstanding after the Closing and
50,000,000 shares of Preferred Stock, none of which are outstanding.  Other than options granted pursuant to the
Corporation’s 1998 Stock Option Plan, there are, (i) no subscriptions,
warrants, options, convertible security, or other right (contingent or other)
to purchase or otherwise acquire from the Corporation (or, to the best of the
Corporation’s knowledge, from any other person or entity) any equity securities
of the Corporation outstanding, and (ii) other than pursuant to this Agreement
and Share Subscription Agreement dated July 16, 2004 between the Corporation
and Sealy Paterson LLC, there is no commitment by the Corporation to issue
Common stock, Preferred Stock, subscriptions, warrants, options, convertible
securities, or other such rights or to distribute to holders of any of its
equity securities any evidence of indebtedness or assets.

 

32

 

Except for the Stockholders Agreement, the
Stockholders Agreement dated April 6, 2004 between the Corporation and certain
of its stockholders and the several Management Stockholders Agreements between
the Corporation and certain members of management of the Corporation, there are
no voting trusts or agreements investors’ rights agreements, pledge agreements,
buy-sell agreements, rights of first refusal, rights of first offer, calls,
preemptive rights, proxies relating to any securities of the Corporation or any
of its subsidiaries (whether or not the Corporation or any of its subsidiaries
is a party thereto) or other rights or other agreements or commitments or any
character obligating the Corporation to issue, purchase, transfer or sell any
of equity securities.

 

SECTION
202.  Representations
of the Purchasers.

 

Each Purchaser hereby represents and warrants
to, and agrees with, the Corporation that:

 

(a)           It
is knowledgeable, sophisticated and experienced in making, and is qualified to
make, decisions with respect to investments in securities representing an
investment decision like that involved in the purchase of the Notes and the
Shares, and has requested, received, reviewed and considered all information it
deems relevant in making an informed decision to purchase the Notes and the
Shares; it is acquiring the Notes and the Shares to be purchased by it under
this Agreement for its own account in the ordinary course of its business, for
investment only and not with a view to the distribution hereof within the
meaning of the Securities Act; it has been furnished with, or has had access
to, all materials relating to the business, finances and operations of the
Corporation and its subsidiaries and materials relating to the offer and sale
of the Notes and the Shares which have been requested by it; it has been
afforded the opportunity to ask questions of the Corporation; and it understands
that its investment in the Notes and the Shares involves a significant degree
of risk including a risk of total loss of its investment, and it is fully aware
of and understands all the risk factors related to its purchase of the Notes
and the Shares;

 

(b)           It
understands that (a) neither the Notes or the Shares have been registered under
the Securities Act or any state securities laws, by reason of their issuance by
the Corporation in a transaction exempt from the registration requirements
thereof, (b) neither the Notes nor the Shares may not be sold unless such
disposition is registered under the Securities Act and applicable state
securities laws or is exempt from registration thereunder and (c) the Shares
will be subject to the provisions of the Stockholders Agreement, which provides
for certain restrictions on the transferability of the Shares; and it agrees
that it will comply with all applicable securities laws in connection with any
transfer of the Notes;

 

(c)           It
further understands that the exemption from registration afforded by Rule 144
(the provisions of which are known to it) promulgated under the Securities Act
depends on the satisfaction of various conditions, and that, if applicable,
Rule 144 may afford the basis for sales only in limited amounts;

 

33

 

(d)           It
has not employed any broker or finder in connection with the transactions
contemplated by this Agreement;

 

(e)           It
is an institutional “accredited investor” (as defined in Rule 501(a) of
Regulation D under the Securities Act);

 

(f)            It
is duly organized and validly existing under the laws of the state of its
organization and has all power and authority to enter into and perform this
Agreement and the Stockholders Agreement; and each of this Agreement and the
Stockholders Agreement has been duly authorized by all necessary action on the
part of it;

 

(g)           The
execution, delivery and performance by it of this Agreement and the
Stockholders Agreement and the consummation by it of the transactions
contemplated hereby will not violate any statute, order, rule or regulation of
any court or governmental agency or body having jurisdiction over it or any of
its properties;

 

(h)           Each
certificate representing a Note will bear a legend to the following effect
unless the Corporation determines otherwise in compliance with applicable law:

 

“THE NOTES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE
SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION.  THE NOTES HAVE BEEN ACQUIRED FOR INVESTMENT
AND NEITHER THIS NOTE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT.”

 

(i)            Each
certificate representing a Share will bear a legend to the following effect
unless the Corporation determines otherwise in compliance with applicable law:

 

“THE SHARES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE
SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION.  THE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT
AND NEITHER THIS SHARE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT.

 

THE SHARES
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER
SET FORTH IN THE STOCKHOLDERS AGREEMENT BETWEEN THE CORPORATION AND THE
ORIGINAL HOLDER OF THESE SHARES.  A COPY
OF SUCH AGREEMENT MAY BE OBTAINED AT

 

34

 

THE PRINCIPAL
OFFICE OF THE CORPORATION.  SUCH TRANSFER
RESTRICTIONS ARE BINDING UPON TRANSFEREES OF THESE SHARES.”

 

(j)            It
acknowledges that the Corporation and others will rely upon the truth and
accuracy of the foregoing acknowledgements, representations and agreements.

 

SECTION
203.  ERISA.

 

(a)           The
Corporation represents and warrants that either (i) the Corporation is not, and
its assets are not the assets of, an “employee benefit plan” (as defined in
Section 3(3) of ERISA) subject to Title I of ERISA or a “plan” described in
Section 4975 of the Code or (ii) subject to the accuracy of the
representations, warranties and agreements set forth in Section 203(b) the
purchase and holding of the Shares and Notes or any interest therein by the
Purchaser will not constitute a non-exempt prohibited transaction under Section
406 of ERISA or Section 4975 of the Code, for the entire period during which
such Purchaser holds an interest in the Shares and Notes.

 

(b)           Each
Purchaser hereby does (and any subsequent transferee, at the time of, and as a
condition to, any such transfer, shall) represent, warrant and agree that for
the entire period during which it holds any interest in the Shares or Notes
that either (i) it is not, and is not using the assets of, an “employee benefit
plan” (as defined in Section 3(3) of ERISA) subject to Title I of ERISA or a
“plan” described in Section 4975 of the Code to purchase or hold the Shares and
Notes or (ii) the purchase and holding of the Shares and Notes or any interest
therein will not constitute a non-exempt prohibited transaction under Section
406 of ERISA or Section 4975 of the Code (including pursuant to Prohibited
Transaction Class Exemption 95-60).

 

ARTICLE THREE

 

THE NOTES AND THE SHARES

 

SECTION
301.  Form, Dating
and Terms of the Notes.

 

The Notes shall each be substantially in the
form of Exhibit A hereto, which is hereby incorporated in and expressly made a
part of this Agreement.  The Notes may
have notations, legends or endorsements required by law, or this
Agreement.  Each Note shall be dated the
date of its issuance.

 

SECTION
302.  Denominations.

 

The Notes shall be issuable only in registered
form without interest coupons and only in denominations of $250,000 and
integral multiples of $100,000 in excess thereof.  Except as otherwise provided herein, the
Notes will be limited to $75,000,000 in aggregate principal amount outstanding.

 

35

 

SECTION
303.  Execution
of the Notes.

 

One Officer shall sign the Notes for the
Corporation by manual or facsimile signature. 
If an Officer whose signature is on a Note no longer holds that office
at the time of execution of the Note, the Note shall be valid nevertheless.

 

SECTION
304.  Holder
Lists for the Notes.

 

The Corporation shall preserve in as current
a form as is reasonably practicable the most recent list available to it of the
names and addresses of Holders.  The
Corporation shall furnish to any Holder upon written request a list in such
form and as of such date as such Holder may reasonably require of the names and
addresses of Holders.

 

SECTION
305.  Transfer and Exchange
of Notes.

 

The Notes shall be issued in registered form
and shall be transferable only upon the surrender of a Note for registration of
transfer and in compliance with this Section 305.  When a Note is presented to the Corporation
with a request to register a transfer, the Corporation shall register the
transfer as requested if its requirements therefor are met; provided that no transfer of any Note to
any transferee other than the Corporation, a Permitted Holder, a Purchaser
named on Schedule 1 to this Agreement or an Affiliate of a Purchaser named on
Schedule 1 of this Agreement, shall be permitted until the earlier of July 15,
2009 and a Change of Control; provided,
however, any such transfer restrictions shall not be applicable upon
the occurrence of an Event of Default pursuant to Section 501(6).  In addition, any Note surrendered for
transfer:

 

(a)           shall
be duly endorsed or accompanied by a written instrument of transfer in form
satisfactory to the Corporation, duly executed by the Holder thereof or his
attorney duly authorized in writing; and

 

(b)           shall
be accompanied by the following additional information and documents:

 

(i)            if
such Note is being delivered to the Corporation by a Holder for transfer to a
Permitted Holder or a Purchaser, a certification from such Holder to that
effect (in the form set forth on the reverse side of the Note); or

 

(ii)           if
such Note is being transferred to the Corporation, a certification to that
effect (in the form set forth on the reverse side of the Note); or

 

(iii)          if
such Note is being transferred pursuant to an exemption from registration under
the Securities Act in accordance with Rule 144 under the Securities Act or in
reliance upon another exemption from the registration requirements of the
Securities Act, (x) a certification to that effect (in the form set forth on
the reverse side of the Note) and (y) if the Corporation so requests, an
opinion of counsel (which may be in-house counsel of the Holder)or other
evidence reasonably satisfactory to it as to the compliance with the restrictions
set forth in the legend set forth in Section 202(h).

 

36

 

No service charge shall be made for any
registration of transfer, but the Corporation may require payment of a sum
sufficient to pay all taxes, assessments or other governmental charges in
connection with any transfer or exchange pursuant to this Section 305.  The Corporation shall not be required to
register transfers of Notes called for redemption (except, in the case of Notes
to be redeemed in part, the portion thereof not to be redeemed).

 

Prior to the due presentation for
registration of transfer of any Note, the Corporation may deem and treat the
Person in whose name a Note is registered as the absolute owner of such Note
for the purpose of receiving any payment, on such Note and for all other
purposes whatsoever, whether or not such Note is overdue, and the Corporation
shall not be affected by notice to the contrary.

 

All Notes issued upon any transfer pursuant
to the terms of this Agreement will evidence the same debt and will be entitled
to the same benefits under this Agreement as the Notes surrendered upon such
transfer.

 

Each Note shall bear a legend in
substantially the form set forth in Section 202(h) of this Agreement.

 

SECTION
306.  Replacement
Notes.

 

If a mutilated Note is surrendered to the
Corporation or if the Holder of a Note claims that the Note has been lost,
destroyed or wrongfully taken, the Corporation shall issue a replacement Note
if the requirements of Section 8-405 of the Uniform Commercial Code are met,
such that the Holder (a) satisfies the Corporation within a reasonable time
after such Holder has notice of such loss, destruction or wrongful taking and
the Corporation does not register a transfer prior to receiving such notification
and (b) makes such request to the Corporation prior to the Note being acquired
by a protected purchaser as defined in Section 8-303 of the Uniform Commercial
Code (a “protected purchaser”). 
If required by the Corporation, such Holder shall provide an unsecured
indemnity agreement in respect of any loss that the Corporation may suffer if a
Note is replaced.  In the event any such
mutilated, lost, destroyed or wrongfully taken Note has become or is about to
become due and payable, the Corporation in its sole discretion may pay such
Note instead of issuing a new Note in replacement thereof.

 

The provisions of this Section 306 are
exclusive and shall preclude (to the extent lawful) all other rights and
remedies with respect to the replacement or payment of mutilated, lost,
destroyed or wrongfully taken Notes.

 

SECTION
307.  Outstanding
Notes.

 

Notes outstanding at any time are all Notes
issued by the Corporation except for those described in this Section 307 as not
outstanding.

 

In determining whether the Holders of the
required principal amount of Notes have concurred in any direction, waiver or
consent, Notes owned by the Corporation or by any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Corporation or any Subsidiary of the Corporation shall be disregarded and

 

37

 

deemed not to
be outstanding.  Subject to the
foregoing, a Note does not cease to be outstanding because the Corporation or an
Affiliate of the Corporation holds the Note.

 

If a Note is replaced pursuant to Section
306, it ceases to be outstanding unless the Corporation receives proof
satisfactory to it that the replaced Note is held by a protected purchaser (as
such term is defined in Section 306).

 

SECTION
308.  Cancellation.

 

The Corporation and no one else shall cancel
all Notes surrendered for registration of transfer, payment or cancellation and
shall dispose of canceled Notes in accordance with its customary
procedures.  The Corporation may not
issue new Notes to replace Notes it has redeemed, paid or canceled.

 

SECTION
309.  Defaulted
Interest on the Note.

 

If the Corporation defaults in a payment of
interest on the Notes at its stated final maturity, the Corporation shall pay
the defaulted interest (plus interest on such defaulted interest to the extent
lawful) on demand.

 

SECTION
310.  The
Shares.

 

The Shares shall be issued to the Purchasers
pursuant to Article Four hereof, shall be substantially in the form of Exhibit
B hereto and shall be subject to the terms and provisions of the Stockholders
Agreement set forth in Exhibit C hereto (including without limitation the
restrictions on transfer set forth therein). 
The Shares shall be entitled to all the rights and be subject to all the
terms and provisions of the Delaware General Corporation Law and the Amended
and Restated Certificate of Incorporation and By-Laws of the Corporation.

 

ARTICLE FOUR

 

PURCHASE OF THE NOTES AND THE
SHARES

 

SECTION
401.  Purchase
of the Notes and the Shares.

 

On the basis of the representations,
warranties and agreements contained herein, and subject to the terms and
conditions set forth below, the Corporation agrees to issue and sell to each of
the Purchasers, severally and not jointly, and each of the Purchasers,
severally and not jointly, agrees to purchase from the Corporation (i) the
principal amount of Notes set forth opposite the name of such Purchaser on
Schedule 1 hereto at a purchase price equal to 100% of the principal amount
thereof and (ii) the number of Shares set forth opposite the name of such
Purchaser on Schedule 1 hereto at a purchase price equal to $4.38331 per share.

 

SECTION
402.  Payment of
Purchase Price; Closing.

 

The Corporation will deliver the Notes and
the Shares to each Purchaser, against payment by or on behalf of such Purchaser
of the purchase price therefor (as set forth above in

 

38

 

Section 401)
by wire transfer in immediately available funds to the account designated by
the Corporation.  The time and date of
such delivery and payment shall be 9:30 a.m., New York City time, on the Issue
Date (such time being referred to herein as the “Closing”).

 

The documents to be delivered at the Closing
by or on behalf of the parties hereto pursuant to this Article Four, including
the cross-receipt for the Notes and the Shares and any additional documents
requested by the Purchasers pursuant to this Article Four, will be delivered on
the Issue Date at the offices of Simpson Thacher & Bartlett LLP, 425
Lexington Avenue, New York, New York 10017.

 

SECTION
403.  Fees and
Expenses.

 

The Corporation agrees with each of the
Purchasers that the Corporation will pay or cause to be paid the following: (i)
the fees, disbursements and expenses of the counsel to the Corporation and the
counsel to the Purchasers in connection with the issue of the Notes and the
Shares (with the Purchasers’ fees, disbursements and expenses not to exceed
$40,000); (ii) the cost of printing or reproducing this Agreement and the
Stockholders Agreement, closing documents (including any compilations thereof)
and any other documents in connection with the purchase, sale and delivery of
the Notes and the Shares; (iii) the cost of preparing the certificates
representing the Notes and the Shares; and (iv) all other costs and expenses
incident to the performance of the Corporation’s obligations hereunder which
are not otherwise specifically provided for in this Section 403.

 

SECTION
404.  Conditions Precedent.

 

The obligations of the Purchasers hereunder
shall be subject to the condition that all representations and warranties and
other statements of the Corporation herein are, at and as of the Closing, true
and correct, the condition that the Corporation shall have performed all of its
obligations hereunder theretofore to be performed, and the following additional
conditions:

 

(a)           Simpson
Thacher & Bartlett LLP, counsel for the Corporation, shall have furnished
to you their written opinion, dated as of the Closing, in substantially the
form set forth in Exhibit D hereto;

 

(b)           Kenneth
Walker, General Counsel of the Corporation, shall have furnished to you his
written opinion, dated as of the Closing, in substantially the form set forth
in Exhibit E hereto;

 

(c)           Pepe
& Hazard LLP, special counsel to the Purchasers, shall have furnished you
their written opinion, dated as of the Closing, in substantially the form set
forth in Exhibit F hereto;

 

(d)           The
Corporation shall have furnished or caused to be furnished to the Purchasers at
the Closing certificates of (i) an Officer of the Corporation certifying as to
the performance of the Corporation’s obligations to be performed by the Closing
pursuant to this Agreement and as to the truth and correctness of the
representations and warranties of the Corporation contained in this Agreement
as of the Closing and (ii) a certificate of the secretary or assistant
secretary of the Corporation attaching copies of the resolutions

 

39

 

duly adopted by the Board of Directors with
respect to the issuance and sale of the Notes and the Shares hereunder and as
to incumbency and such other matters as the Purchasers may reasonably request;

 

(e)           On
the date of the Closing, the Purchasers’ purchase of Notes shall (i) be
permitted by the laws and regulations of each jurisdiction to which Purchasers
are subject, without recourse to provisions (such as Section 1405(a)(8) of the
New York Insurance Law) permitting limited investments by insurance companies
without restriction as to the character of the particular investment, (ii) not
violate any applicable law or regulation (including, without limitation,
Regulation G, T or X of the Board of Governors of the Federal Reserve System)
and (iii) not subject the Purchasers to any tax, penalty or liability under or
pursuant to any applicable law or regulation, which law or regulation was not
in effect on the date hereof;

 

(f)            A
Private Placement number issued by Standard & Poor’s CUSIP Service Bureau
(in cooperation with the Securities Valuation Office of the National
Association of Insurance Commissioners) shall have been obtained for the Notes;
and

 

(g)           The
Stockholders Agreement shall have been executed by the Purchasers, the
Corporation and Sealy Paterson LLC.

 

ARTICLE FIVE

 

REMEDIES

 

SECTION
501.  Events
of Default.

 

“Event of Default”, wherever used
herein, means one of the following events (whatever the reason for such Event
of Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):

 

(1)           default in payment
when due and payable, upon redemption, acceleration or otherwise, of principal
of, or premium, if any, on the Notes issued under this Agreement whether or not
such payment shall be prohibited by Article Ten hereof;

 

(2)           default at stated
final maturity in the payment of interest on or with respect to the Notes
issued under this Agreement whether or not such payment shall be prohibited by
Article Ten hereof;

 

(3)           failure by the
Corporation for 45 days after receipt of written notice given by the
Holders of at least 51% in principal amount of the Notes then outstanding and
issued under this Agreement to comply with the provisions of Sections 802
through 810 of this Agreement;

 

(4)           default, upon
receipt of written notice by the Holders of at least 51% in principal amount of
the Notes then outstanding and issued under this Agreement of such

 

40

 

default, under
any agreement, mortgage, indenture or instrument under which there is issued or
by which there is secured or evidenced any Indebtedness for money borrowed by
the Corporation or any Restricted Subsidiary or the payment of which is
guaranteed by the Corporation or any Restricted Subsidiary, other than
Indebtedness owed to the Corporation or a Restricted Subsidiary, whether such
Indebtedness or guarantee now exists or is created after the issuance of the
Notes, if both:

 

(A)          such default either
(x) results from the failure to pay any such Indebtedness at its stated final
maturity (after giving effect to any applicable grace periods) or (y) relates
to an obligation other than the obligation to pay principal of any such
Indebtedness at its stated final maturity and results in the holder or holders
of such Indebtedness causing such Indebtedness to become due prior to its
stated maturity; and

 

(B)           the principal amount
of such Indebtedness, together with the principal amount of any other such
Indebtedness in default for failure to pay principal at stated final maturity
(after giving effect to any applicable grace periods), or the maturity of which
has been so accelerated, aggregate $50.0 million or more at any one time
outstanding;

 

(5)           failure, upon
receipt of written notice by the Holders of at least 51% in principal amount of
the Notes then outstanding and issued under this Agreement of such failure, by
the Corporation to pay final judgments aggregating in excess of $50.0 million,
which final judgments remain unpaid, undischarged and unstayed for a period of
more than 75 days after such judgment becomes final, and in the event such
judgment is covered by insurance, an enforcement proceeding has been commenced
by any creditor upon such judgment or decree which is not promptly stayed; or

 

(6)           any of the following
events with respect to the Corporation or any Significant Subsidiary:

 

(A)          the Corporation or
any Significant Subsidiary pursuant to or within the meaning of any Bankruptcy
Law:

 

(i)            commences
a voluntary case;

 

(ii)           consents
to the entry of an order for relief against it in an involuntary case;

 

(iii)          consents
to the appointment of a custodian of it or for any substantial part of its
property;

 

(iv)          takes
any comparable action under any foreign laws relating to insolvency, or

 

(B)           a court of competent
jurisdiction enters an order or decree under any Bankruptcy Law that:

 

41

 

(i)            is
for relief against the Corporation or any Significant Subsidiary in an
involuntary case;

 

(ii)           appoints
a custodian of the Corporation or any Significant Subsidiary or for any
substantial part of its property; or

 

(iii)          orders
the winding up or liquidation of the Corporation or any Significant Subsidiary and
the order or decree remains unstayed and in effect for 60 days.

 

SECTION
502.  Increase
in Interest Rate.

 

If an Event of Default occurs and is
continuing, the Interest Rate shall increase to 12% per annum and shall further
increase to 13% per annum in the event that Sealy Holding LLC and the
Corporation are unable to cause the Event of Default Directors to be elected to
the Board of Directors of the Corporation pursuant to the first paragraph of
Section 503 below.

 

Upon the cure or waiver as provided in
Section 508 by the Holders of a majority in aggregate principal amount of the
Outstanding Notes of the Event of Default giving rise to the increase in the
Interest Rate, the Interest Rate shall automatically be reset to 10% per annum.

 

SECTION
503.  Acceleration
of Maturity; Rescission and Annulment.

 

Prior to or on April 6, 2013, if an Event of
Default occurs and is continuing, then the Corporation agrees, to the
extent permitted by law, to take such action as may be required under applicable
law to (i) include (1) one director nominated by the Teachers Insurance and
Annuity Association of America and (2) one director nominated by The
Northwestern Mutual Life Insurance Company (the “Event of Default Directors”)
in any slate of nominees for directors recommended by the Board of Directors
for election by the stockholders of the Corporation and (ii) to use its
reasonable best efforts to cause the election of the Event of Default Directors
to the Board of Directors, including nominating such individuals, to be elected
as directors.  Sealy Holding LLC
agrees, to the extent permitted by law, to take such action as may be
required under applicable law to use its reasonable best efforts to cause the
election of the Event of Default Directors to the Board of Directors, including
voting in favor of such individuals to be elected as directors.  At any time such Event of Default has been
cured or waived in accordance herewith, Sealy Holding LLC and the Corporation shall
have no obligations pursuant to this Section 503 and shall be entitled to take
all action necessary to remove any such Event of Default Directors from the
Board of Directors of the Corporation; provided
further once an Event of Default is cured or waived, Teachers
Insurance and Annuity Association of America and The Northwestern Mutual Life
Insurance Company shall cause such Event of Default Directors to resign
immediately.

 

After April 6, 2013, if an Event of Default
(other than an Event of Default specified in Section 501(6) above) occurs and
is continuing, then the Holders of at least 67% in principal amount of the
Outstanding Notes issued under this Agreement may declare the principal,
premium,

 

42

 

if any, and
interest on all the Outstanding Notes to be due and payable immediately, by a
notice in writing to the Corporation.

 

Upon the effectiveness of such declaration,
such principal and interest will be due and payable immediately.  Notwithstanding the foregoing, if after April
6, 2013 an Event of Default specified in Section 501(6) above occurs and is
continuing, then the principal amount of and interest, and to the extent
permitted by applicable law, premium on all Outstanding Notes shall ipso facto become and be immediately due
and payable without any notice, declaration or other act on the part of any
Holder.

 

At any time after a declaration of
acceleration has been made and before a judgment or decree for payment of the
money due has been obtained by any Holder, the Holders of 67% in aggregate
principal amount of the Outstanding Notes, by written notice to the
Corporation, may rescind and annul such declaration and its consequences if:

 

(a)           the
Corporation has paid:

 

(A)          all
unpaid principal of (and premium, if any, on) any Outstanding Notes which has
become due otherwise than by such declaration of acceleration, and interest on
such unpaid principal at the rate borne by the Notes; and

 

(B)           to
the extent that payment of such interest is lawful, interest on overdue
interest at the rate borne by the Notes; and

 

(b)           Events
of Default, other than the non-payment of amounts of principal of (or
premium, if any, on) or interest on Notes which have become due solely by such
declaration of acceleration, have been cured or waived as provided in Section 508,

 

no such rescission shall affect any subsequent default
or impair any right consequent thereon.

 

Notwithstanding the preceding paragraph, in
the event of any Event of Default specified in Section 501(4) above, such Event
of Default and all consequences thereof (excluding any resulting payment
default) shall be annulled, waived and rescinded, automatically and without any
action by the Holders, if within 30 days after such Event of Default
arose,

 

(x)            the Indebtedness or guarantee that
is the basis for such Event of Default has been discharged, or

 

(y)           the holders thereof have rescinded or
waived the acceleration, notice or action (as the case may be) giving rise to
such Event of Default, or

 

(z)            if the default that is the basis for
such Event of Default has been cured.

 

SECTION
504.  Unconditional
Right of Holders to Receive Principal, Premium and Interest.

 

Notwithstanding any other provision in this
Agreement, the Holder of any Note shall have the right, which is absolute and
unconditional, to receive payment, as provided herein

 

43

 

and in such
Note of the principal of (and premium, if any) and interest on such Note on the
stated maturity expressed in such Note (or, subject to the terms of the Senior
Credit Facilities, in the case of redemption, on the Redemption Date) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.

 

SECTION
505.  Restoration
of Rights and Remedies.

 

If any Holder has instituted any proceeding
to enforce any right or remedy under this Agreement and such proceeding has
been discontinued or abandoned for any reason, or has been determined adversely
to such Holder, then and in every such case, subject to any determination in
such proceeding, the Corporation, any other obligor of the Notes and the
Holders shall be restored severally and respectively to their former positions
hereunder and thereafter all rights and remedies of the Holders shall continue as
though no such proceeding had been instituted.

 

SECTION
506.  Rights and
Remedies Cumulative.

 

Except as otherwise provided with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Notes in the
last paragraph of Section 306, no right or remedy herein conferred upon or
reserved to the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise.  The assertion or employment of any right or
remedy hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.

 

SECTION
507.  Delay or Omission
Not Waiver.

 

No delay or omission of any Holder of any
Note to exercise any right or remedy accruing upon any Event of Default shall
impair any such right or remedy or constitute a waiver of any such Event of
Default or an acquiescence therein. 
Every right and remedy given by this Article or by law to the Holders
may be exercised from time to time, and as often as may be deemed expedient, by
the Holders, as the case may be.

 

SECTION
508.  Waiver of
Past Defaults.

 

Subject to Sections 507 and 702, the Holders
of not less than a majority in principal amount of the Outstanding Notes may on
behalf of the Holders of all such Notes waive any past Default hereunder and
its consequences, except a continuing Default or Event of Default (1) in
respect of the payment of interest on, premium, if any, or the principal of any
such Note held by a non-consenting Holder, or (2) in respect of a covenant or
provision hereof which under Article Seven cannot be modified or amended
without the consent of the Holder of each Outstanding Note affected.

 

Upon any such waiver, such Default shall
cease to exist, and any Event of Default arising therefrom shall be deemed to
have been cured, for every purpose of this Agreement, but no such waiver shall
extend to any subsequent or other Default or Event of Default or impair any
right consequent thereon.

 

44

 

ARTICLE SIX

 

SUCCESSOR COMPANY

 

SECTION 601.  Corporation May
Consolidate, Etc., Only on Certain Terms.

 

The Corporation may not consolidate or merge
with or into or wind up into (whether or not the Corporation is the surviving
corporation), or sell, assign, transfer, lease, convey or otherwise dispose of
all or substantially all of its properties or assets in one or more related
transactions, to any Person unless:

 

(1)           the Corporation is
the surviving corporation or the Person formed by or surviving any such
consolidation or merger (if other than the Corporation) or to which such sale,
assignment, transfer, lease, conveyance or other disposition will have been
made is a corporation organized or existing under the laws of the United
States, any state thereof, the District of Columbia, or any territory thereof
(such Person, as the case may be, being herein called the “Successor
Corporation”);

 

(2)           the Successor
Corporation, if other than the Corporation, expressly assumes all the
obligations of the Corporation set forth in this Agreement in respect of the
Notes pursuant to documents in form reasonably satisfactory to Holders of a
majority in principal amount of the Outstanding Notes;

 

(3)           immediately after
such transaction no Event of Default exists; and

 

(4)           immediately after
giving pro forma effect to such
transaction, as if such transaction had occurred at the beginning of the
applicable four-quarter period, either

 

(A)          the Successor
Corporation would be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in
Section 805(A)(1) of this Agreement (it being understood, in each case, that
for purposes of calculating the Fixed Charge Coverage Ratio for this purpose
only, any of the Corporation’s non-cash interest expense, amortization of
original issue discount and non-cash dividend payments shall be excluded) or

 

(B)           the Fixed Charge
Coverage Ratio for the Successor Corporation and its Restricted Subsidiaries
would be greater than such Ratio for the Corporation and its Restricted
Subsidiaries immediately prior to such transaction (it being understood, in each
case, that for purposes of calculating the Fixed Charge Coverage Ratio for this
purpose only, any of the Corporation’s non-cash interest expense, amortization
of original issue discount and non-cash dividend payments shall be excluded);

 

SECTION
602.  Successor
Substituted.

 

The Successor Corporation shall succeed to,
and be substituted for the Corporation in respect of the Notes.  Notwithstanding clauses (3) and (4) of
Section 601,

 

45

 

(1)           any Restricted Subsidiary
may consolidate with, merge into or transfer all or part of its properties and
assets to the Corporation and

 

(2)           the Corporation may
merge with an Affiliate incorporated solely for the purpose of reincorporating
the guarantor or the Corporation in another State of the United States so long
as the amount of Indebtedness of the Corporation and the Restricted
Subsidiaries is not increased thereby.

 

ARTICLE SEVEN

 

AMENDMENTS AND WAIVERS

 

SECTION
701.  Amendments
With Consent of Holders Not To Be Unreasonably Withheld.

 

With the consent of Holders of a majority in
aggregate principal amount of the Outstanding Notes (which shall not be
unreasonably withheld or delayed), the Corporation, at any time and from time
to time, may amend this Agreement or the Notes for any of the following
purposes:

 

(1)           to cure any
ambiguity, omission, defect or inconsistency;

 

(2)           to provide for
uncertificated Notes in addition to or in place of certificated Notes;

 

(3)           to comply with
Article Six hereof;

 

(4)           to evidence the succession
of another Person to the Corporation and to provide the assumption of the
Corporation’s obligations to Holders;

 

(5)           to make any change
that would provide any additional rights or benefits to the Holders or that
does not adversely affect the legal rights under this Agreement of any such
Holder;

 

(6)           to add covenants for
the benefit of the Holders or to surrender any right or power conferred in this
Agreement upon the Corporation; or

 

(7)           to add a guarantor
under this Agreement.

 

SECTION
702.  Amendments
or Waivers with Consent of Holders.

 

With the consent of the Holders of not less
than a majority in principal amount of the Outstanding Notes (67% in the case
of amendments to (a) Section 808 and related definitions and (b) the first
paragraph of Section 305), the Corporation may amend this Agreement or the
Notes for the purpose of adding any provisions hereto or thereto, changing in
any manner or eliminating any of the provisions or of modifying in any manner
the rights of the Holders hereunder or thereunder and any existing Default,
Event of Default or compliance with any

 

46

 

provision of
this Agreement or the Notes may be waived with the consent of the Holders of
not less than a majority in principal amount of the Outstanding Notes (67% in
the case of amendments to (a) Section 808 and related definitions and (b) the
first paragraph of Section 305), other than Notes beneficially owned by the
Corporation or its Affiliates (including, without limitation, consents obtained
in connection with a purchase of or tender offer or exchange offer for Notes); provided, however, that no such amendment
or waiver shall, without the consent of the Holder of each Outstanding Note
affected thereby:

 

(1)           reduce the principal
amount of Notes whose Holders must consent to an amendment, supplement or
waiver;

 

(2)           reduce the principal
of or change the maturity of any such Note or alter or waive the provisions
with respect to the redemption of the Notes (other than Sections 808 and 809
and related definitions);

 

(3)           reduce the rate of
or change the time for payment of interest on any Note;

 

(4)           waive a Default or
Event of Default in the payment of principal of or premium, if any, or interest
on the Notes issued under this Agreement, except a rescission of acceleration
of the Notes by the Holders of at least a majority in aggregate principal
amount of such Notes and a waiver of the Default that resulted from such
acceleration, or in respect of a covenant or provision contained in this
Agreement which cannot be amended or modified without the consent of all
Holders;

 

(5)           make any Note
payable in a currency other than that stated in such Notes;

 

(6)           make any change in
Section 508 or the rights of Holders to receive payments of principal of or
premium, if any, or interest on the Notes;

 

(7)           make any change in
these amendment and waiver provisions;

 

(8)           impair the right of
any Holder to receive payment of principal of, or interest on such Holder’s
Notes on or after the due dates therefor or to institute suit for the
enforcement of any payment on or with respect to such Holder’s Notes; or

 

(9)           make any change in
Article Ten of this Agreement that would adversely affect the Holders.

 

SECTION
703.  Effect of Amendments
or Waivers.

 

Upon the execution of any amendment or waiver
under this Article Seven, this Agreement shall be modified in accordance
therewith, and such amendment or waiver shall form a part of this Agreement for
all purposes; and every Holder of Notes theretofore or thereafter delivered
hereunder shall be bound thereby.

 

47

 

SECTION
704.  Notice of Amendments
and Waivers.

 

Promptly after the execution by the
Corporation of any amendment or receipt of waivers pursuant to the provisions
of Section 702, the Corporation shall give notice thereof to the Holders
of each Outstanding Note affected, in the manner provided for in
Section 104, setting forth in general terms the substance of such
amendment or waiver.

 

ARTICLE EIGHT

 

COVENANTS

 

SECTION 801.  Payment of
Principal, Premium, if any, and Interest.

 

The Corporation covenants and agrees for the
benefit of the Holders that it will duly and punctually pay the principal of
(and premium, if any) and interest on the Notes in accordance with the terms of
the Notes and this Agreement by wire transfer of immediately available funds
for the accounts of the Holders in accordance with the wiring instructions set
forth under each Holder’s signature on the signature pages to this Agreement; provided that the Corporation shall not be
required to pay interest in cash at any time prior to July 15, 2015.

 

SECTION
802.  Corporate
Existence.

 

Subject to Article Six, the Corporation will
do or cause to be done all things necessary to preserve and keep in full force
and effect the corporate existence and the corporate rights (charter and
statutory) and franchises of the Corporation; provided,
however, that the Corporation shall not be required to preserve any
such right or franchise if the Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Corporation and its Subsidiaries as a whole.

 

SECTION
803.  Reports and
Other Information.

 

(A) The Corporation will furnish to each
Purchaser:

 

(1)           Annual Financial
Statements.  On or before the date
that is the later of 15 days after the filing of Sealy Mattress
Corporation’s Annual Report on Form 10-K and 90 days after the end of each such
fiscal year, the unaudited (or audited, if either a designation for the Notes
by the National Association of Insurance Commissioners is dependent on such
financial statements being audited or such audited financial statements are
required by law or regulation to be provided to permit the Notes or Shares to
be an admitted asset under applicable insurance law) consolidated and
consolidating balance sheet of the Corporation and its Restricted Subsidiaries
as at the end of such year and the related consolidated and consolidating
statements of income and retained earnings and of cash flows of the Corporation
and its Restricted Subsidiaries for such year;

 

(2)           Quarterly
Financial Statements.  On or before
the date that is the later of 5 days after the filing of Sealy Mattress
Corporation’s Quarterly Report on

 

48

 

Form 10-Q and
45 days after the end of each such quarterly accounting period, the unaudited
consolidated and consolidating balance sheet of the Corporation and its
Restricted Subsidiaries as at the end of such quarterly period and the related
consolidated and consolidating statement of operations for such quarterly
accounting period and for the elapsed portion of the fiscal year ended with the
last day of such quarterly period and the related consolidated and consolidating
statement of cash flows for the elapsed portion of the fiscal year ended with
the last day of such quarterly period;

 

all such
financial statements shall be prepared in accordance with GAAP applied
consistently throughout periods reflected therein and with prior periods.  To the extent that audited financial
statements are not required, the financial statements furnished pursuant to
this Section 803 will omit substantially all written disclosure required by GAAP
(primarily related to financial statement notes).

 

(B) Either Sealy Mattress Corporation or SMC
shall file with the Commission (and the Corporation shall make available to the
Holders of the Notes (without exhibits), without cost to each Holder, within 15
days after it files with the Commission):

 

(1)           within 90 days (or
the successor time period then in effect under the rules and regulations of the
Exchange Act) after the end of each fiscal year, annual reports on Form 10-K,
or any successor or comparable form, containing the information required to be
contained therein, or required in such successor or comparable form;

 

(2)           within 45 days (or
the successor time period then in effect under the rules and regulations of the
Exchange Act) after the end of each of the first three fiscal quarters of each
fiscal year, reports on Form 10-Q, containing the information required to be
contained therein, or any successor or comparable form;

 

(3)           promptly from time
to time after the occurrence of an event required to be therein reported, such
other reports on Form 8-K, or any successor or comparable form; and

 

(4)           any other
information, documents and other reports which Sealy Mattress Corporation or
SMC would be required to file with the Commission if it were subject to Section
13 or 15(d) of the Exchange Act;

 

provided that neither Sealy Mattress
Corporation nor SMC shall be obligated to file such reports with the Commission
if the Commission does not permit such filing, in which event Sealy Mattress
Corporation or SMC shall make available such information to the Holders of the
Notes within 15 days after the time Sealy Mattress Corporation or SMC, as
applicable, would be required to file such information with the Commission, if
it were subject to Sections 13 or 15(d) of the Exchange Act.

 

(C) Notwithstanding the foregoing, the
requirements set forth above in this Section 803(B) shall be deemed satisfied
prior to completion of the registered exchange offer for the SMC Senior
Subordinated Notes by the filing with the Commission by Sealy Mattress

 

49

 

Corporation or
SMC of a registration statement and any amendment thereto (including financial
information that satisfies the requirements of Regulation S-X of the Securities
Act).

 

SECTION
804.  Limitation
on Restricted Payments.

 

(A)          The Corporation shall
not, and shall not permit any Restricted Subsidiary to, directly or indirectly:

 

(1)           declare or pay any
dividend or make any distribution on account of the Corporation’s or any
Restricted Subsidiary’s Equity Interests, including any dividend or
distribution payable in connection with any merger or consolidation other than

 

(a)           dividends
or distributions by the Corporation payable in Equity Interests (other than
Disqualified Stock) of the Corporation or in options, warrants or other rights
to purchase such Equity Interests or

 

(b)           dividends
or distributions by a Restricted Subsidiary so long as, in the case of any
dividend or distribution payable on or in respect of any class or series of
securities issued by a Subsidiary other than a Wholly Owned Subsidiary, the
Corporation or a Restricted Subsidiary receives at least its pro rata share of such dividend or
distribution in accordance with its Equity Interests in such class or series of
securities;

 

(2)           purchase, redeem, defease
or otherwise acquire or retire for value any Equity Interests of the
Corporation or of any direct or indirect parent entity of the Corporation,
including in connection with any merger or consolidation;

 

(3)           make any principal
payment on, or redeem, repurchase, defease or otherwise acquire or retire for
value in each case, prior to any scheduled repayment, sinking fund payment or
maturity, any Subordinated Indebtedness, other than;

 

(a)           Indebtedness
permitted under clause (7) of Section 805(B); or

 

(b)           the
purchase, repurchase or other acquisition of Subordinated Indebtedness
purchased in anticipation of satisfying a sinking fund obligation, principal
installment or final maturity, in each case due within one year of the date of
purchase, repurchase or acquisition; or

 

(4)           make any Restricted
Investment;

 

(all such
payments and other actions set forth in clauses (1) through (4) above being
collectively referred to as “Restricted Payments”), unless, at the time
of such Restricted Payment:

 

50

 

(a)           no
Event of Default shall have occurred and be continuing or would occur as a
consequence thereof;

 

(b)           (i)
with respect to a Restricted Payment by the Corporation or any Restricted
Subsidiary of the Corporation other than SMC and its Restricted Subsidiaries,
the Corporation would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such
Restricted Payment had been made at the beginning of the applicable
four-quarter period, have been permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in
Section 805(A)(1) of this Agreement (it being understood that for purposes of
calculating such Fixed Charge Coverage Ratio for this purpose only, any of the
Corporation’s non-cash interest expense, amortization of original issue
discount or non-cash dividend payments shall be excluded) or (ii) with respect
to a Restricted Payment by SMC or any Restricted Subsidiary of SMC, SMC would,
at the time of such Restricted Payment and after giving pro forma effect thereto as if such
Restricted Payment had been made at the beginning of the applicable
four-quarter period, have been permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in
Section 805(A)(2) of this Agreement; and

 

(c)           such
Restricted Payment, together with the aggregate amount of all other Restricted
Payments made by the Corporation and its Restricted Subsidiaries after the
Issue Date (including Restricted Payments permitted by clauses (1), (2) (with
respect to the payment of dividends on Refunding Capital Stock pursuant to
clause (b) thereof only), (6)(a) and (c) and (9) of paragraph (B) below, but
excluding all other Restricted Payments permitted by such paragraph (B)), is
less than the sum of

 

(i)            50%
of the Consolidated Net Income (it being understood that for purposes of
calculating Consolidated Net Income pursuant to this clause (c)(i) only, any of
the Corporation’s non-cash interest expense, amortization of original issue
discount or non-cash dividend payments shall be excluded) of the Corporation
for the period (taken as one accounting period) from July 1, 2004 to the end of
the Corporation’s most recently ended fiscal quarter for which internal
financial statements are available at the time of such Restricted Payment, or,
in the case such Consolidated Net Income for such period is a deficit, minus
100% of such deficit, plus

 

(ii)           100%
of the aggregate net cash proceeds and the fair market value, as determined in
good faith by the Board of Directors, of marketable securities or other
property received by the Corporation since immediately after the Senior
Subordinated Notes Issue Date (other than net cash proceeds to the extent such

 

51

 

net cash proceeds have been used to incur Indebtedness, Disqualified
Stock or preferred stock pursuant to Section 805(B)(11) of this Agreement) from
the issue or sale of:

 

(x)            Equity Interests of the Corporation,
including Retired Capital Stock (as defined below), but excluding cash proceeds
and the fair market value, as determined in good faith by the Board of
Directors, of marketable securities or other property received from the sale of

 

(A)                              Equity
Interests to members of management, directors or consultants of the
Corporation, any direct or indirect parent entity of the Corporation and the
Corporation’s Subsidiaries after the Senior Subordinated Notes Issue Date to
the extent such amounts have been applied to Restricted Payments made in
accordance with paragraph (B)(4) below; and

 

(B)                                Designated
Preferred Stock

 

and to the
extent actually contributed to the Corporation, Equity Interests of the
Corporation’s direct or indirect parent entities (excluding contributions of
the proceeds from the sale of Designated Preferred Stock of such corporations);
or

 

(y)           debt securities of the Corporation
that have been converted into such Equity Interests of the Corporation; provided, however, that this clause (ii)
shall not include the proceeds from (a) Refunding Capital Stock (as defined
below), (b) Equity Interests or converted debt securities of the Corporation
sold to a Restricted Subsidiary or the Corporation, as the case may be, (c)
Disqualified Stock or debt securities that have been converted into
Disqualified Stock or (d) Excluded Contributions plus

 

(iii)          100%
of the aggregate amount of cash and the fair market value, as determined in
good faith by the Board of Directors, of marketable securities or other
property contributed to the capital of the Corporation following the Senior
Subordinated Notes Issue Date (other than net cash proceeds to the extent such
net cash proceeds have been used to incur Indebtedness, Disqualified Stock or
preferred stock pursuant to Section 805(B)(11) of this Agreement) (other than
by a Restricted Subsidiary and other than by any Excluded Contributions) plus

 

52

 

(iv)          100%
of the aggregate amount received in cash and the fair market value, as
determined in good faith by the Board of Directors, of marketable securities or
other property received by means of

 

(A)                              the
sale or other disposition (other than to the Corporation or a Restricted
Subsidiary) of Restricted Investments made by the Corporation and its
Restricted Subsidiaries and repurchases and redemptions of such Restricted
Investments from the Corporation and its Restricted Subsidiaries and repayments
of loans or advances which constitute Restricted Investments by the Corporation
and its Restricted Subsidiaries or

 

(B)                                the
sale (other than to the Corporation or a Restricted Subsidiary) of the stock of
an Unrestricted Subsidiary or a distribution from an Unrestricted Subsidiary
(other than in each case to the extent the Investment in such Unrestricted
Subsidiary was made by the Corporation or a Restricted Subsidiary pursuant to
paragraph (B)(10) below or to the extent such Investment constituted a
Permitted Investment) or a dividend from an Unrestricted Subsidiary plus

 

(v)           in
the case of the redesignation of an Unrestricted Subsidiary as a Restricted
Subsidiary, the fair market value of the Investment in such Unrestricted
Subsidiary, as determined by the Board of Directors in good faith or if, in the
case of an Unrestricted Subsidiary, such fair market value may exceed $25.0
million, in writing by an independent investment banking firm of nationally
recognized standing, at the time of the redesignation of such Unrestricted
Subsidiary as a Restricted Subsidiary, other than an Unrestricted Subsidiary to
the extent the Investment in such Unrestricted Subsidiary was made by the
Corporation or a Restricted Subsidiary pursuant to paragraph (B)(10) below or
to the extent such Investment constituted a Permitted Investment.

 

(B)           The foregoing
provisions shall not prohibit:

 

(1)           the payment of any
dividend within 60 days after the date of declaration thereof, if at the date
of declaration such payment would have complied with the provisions of this
Agreement;

 

(2)           (a) the redemption,
repurchase, retirement or other acquisition of any Equity Interests (“Retired
Capital Stock”) or Subordinated Indebtedness of

 

53

 

the
Corporation, or any Equity Interests of any direct or indirect parent entity of
the Corporation, in exchange for, or out of the proceeds of the substantially
concurrent sale (other than to a Restricted Subsidiary) of, Equity Interests of
the Corporation (in each case, other than any Disqualified Stock) (“Refunding
Capital Stock”) and (b) if immediately prior to the retirement of Retired
Capital Stock, the declaration and payment of dividends thereon was permitted
under clause (6) of this paragraph (B), the declaration and payment of
dividends on the Refunding Capital Stock (other than Refunding Capital Stock
the proceeds of which were used to redeem, repurchase, retire or otherwise
acquire any Equity Interests of any direct or indirect parent entity of the
Corporation) in an aggregate amount per year no greater than the aggregate
amount of dividends per annum that was declarable and payable on such Retired
Capital Stock immediately prior to such retirement;

 

(3)           the redemption,
repurchase or other acquisition or retirement of Subordinated Indebtedness of
the Corporation made by exchange for, or out of the proceeds of the
substantially concurrent sale of, new Indebtedness of the Corporation which is
incurred in compliance with Section 805 so long as

 

(A)          the principal amount
of such new Indebtedness does not exceed the principal amount of the
Subordinated Indebtedness being so redeemed, repurchased, acquired or retired
for value, plus the amount of any reasonable premium required to be paid under
the terms of the instrument governing the Subordinated Indebtedness being so
redeemed, repurchased, acquired or retired,

 

(B)           such Indebtedness is
subordinated to Senior Indebtedness and the Notes at least to the same extent
as such Subordinated Indebtedness so purchased, exchanged, redeemed,
repurchased, acquired or retired for value,

 

(C)           such Indebtedness
has a final scheduled maturity date equal to or later than the final scheduled
maturity date of the Subordinated Indebtedness being so redeemed, repurchased,
acquired or retired and

 

(D)          such Indebtedness has
a Weighted Average Life to Maturity equal to or greater than the remaining
Weighted Average Life to Maturity of the Subordinated Indebtedness being so
redeemed, repurchased, acquired or retired;

 

(4)           a Restricted Payment
to pay for the repurchase, retirement or other acquisition or retirement for
value of common Equity Interests of the Corporation or any of its direct or
indirect parent entities held by any future, present or former employee,
director or consultant of the Corporation, any of its Subsidiaries or any of
its direct or indirect parent entities pursuant to any management equity plan
or stock option plan or any other management or employee benefit plan or
agreement; provided, however, that the aggregate
Restricted Payments made

 

54

 

under this
clause (3) do not exceed in any calendar year $10.0 million (with unused amounts in
any calendar year being carried over to succeeding calendar years subject to a
maximum (without giving effect to the following proviso) of $20.0
million in any calendar year); provided further
that such amount in any calendar year may be increased by an amount not to
exceed

 

(a)           the
cash proceeds from the sale of Equity Interests of the Corporation and, to the
extent contributed to the Corporation, Equity Interests of any of the
Corporation’s direct or indirect parent entities, in each case to members of
management, directors or consultants of the Corporation, any of its
Subsidiaries or any of its direct or indirect parent entities that occurs after
the Senior Subordinated Notes Issue Date, to the extent the cash proceeds from
the sale of such Equity Interests have not otherwise been applied to the
payment of Restricted Payments by virtue of paragraph (A)(c) above, plus

 

(b)           the
cash proceeds of key man life insurance policies received by the Corporation
and its Restricted Subsidiaries after the Senior Subordinated Notes Issue Date,
less

 

(c)           the
amount of any Restricted Payments previously made pursuant to clauses (a) and
(b) of this clause (4);

 

and provided
further that cancellation of Indebtedness owing to the Corporation
from members of management of the Corporation, any of its direct or indirect
parent entities or any Restricted Subsidiary in connection with a repurchase of
Equity Interests of the Corporation or any of its direct or indirect parent
entities will not be deemed to constitute a Restricted Payment for purposes of
this covenant or any other provision of this Agreement;

 

(5)           the declaration and
payment of dividends to holders of any class or series of Disqualified Stock of
the Corporation or any other Restricted Subsidiary issued in accordance with
the covenant described under Section 805 of this Agreement to the extent such
dividends are included in the definition of Fixed Charges;

 

(6)           (a) the declaration
and payment of dividends to holders of any class or series of Designated
Preferred Stock (other than Disqualified Stock) issued by the Corporation after
the Senior Subordinated Notes Issue Date;

 

(b) the declaration and payment of dividends
to a direct or indirect parent entity of the Corporation formed to hold
substantially all of the common stock of the Corporation, the proceeds of which
will be used to fund the payment of dividends to holders of any class or series
of Designated Preferred Stock (other than Disqualified Stock) of such parent
entity issued after the Senior Subordinated Notes Issue Date, provided that the amount of dividends paid
pursuant to this clause (b) shall not exceed

 

55

 

the aggregate amount of cash actually contributed to the Corporation
from the sale of such Designated Preferred Stock; or

 

(c) the declaration and payment of dividends
on Refunding Capital Stock in excess of the dividends declarable and payable
thereon pursuant to clause (2) of this paragraph (B);

 

provided, however, in the case of each of
(a), (b) and (c) of this clause (6), that for the most recently ended four full
fiscal quarters for which internal financial statements are available
immediately preceding the date of issuance of such Designated Preferred Stock
or the declaration of such dividends on Refunding Capital Stock, after giving
effect to such issuance or declaration on a pro
forma basis, (i) in the case of Designated Preferred Stock of the
Corporation or any direct or indirect parent entity of SMC or of the
Corporation, the Corporation would have had a Fixed Charge Coverage Ratio of at
least 2.00 to 1.00 (it being understood, in each case, that for purposes of
calculating the Fixed Charge Coverage Ratio for this purpose only, any of the
Corporation’s non-cash interest expense, amortization of original issue
discount and non-cash dividend payments shall be excluded) or (ii) in the case
of Designated Preferred Stock of SMC or any of its subsidiaries, SMC would have
had a Fixed Charge Coverage Ratio of at least 2.00 to 1.00;

 

(7)           Investments in
Unrestricted Subsidiaries having an aggregate fair market value, taken together
with all other Investments made pursuant to this clause (7) that are at the
time outstanding, without giving effect to the sale of an Unrestricted
Subsidiary to the extent the proceeds of such sale do not consist of cash
and/or marketable securities, not to exceed $50.0 million at the time of such
Investment (with the fair market value of each Investment being measured at the
time made and without giving effect to subsequent changes in value);

 

(8)           repurchases of
Equity Interests deemed to occur upon exercise of stock options or warrants if
such Equity Interests represent a portion of the exercise price of such options
or warrants;

 

(9)           the payment of
dividends on the Corporation’s Common Stock, following the first public
offering of the Corporation’s Common Stock or the common stock of any of its
direct or indirect parent entities formed to hold substantially all of the
common stock of the Corporation after the Issue Date, of up to 6% per annum of
the net proceeds received by or contributed to the Corporation in such public
offering, other than public offerings with respect to the Corporation’s Common
Stock registered on Form S-8 and other than any public sale constituting an
Excluded Contribution;

 

(10)         Investments that are
made with Excluded Contributions;

 

(11)         other Restricted
Payments in an aggregate amount not to exceed $60.0 million;

 

56

 

(12)         the
declaration and payment of dividends by the Corporation to, or the making of
loans to, a direct parent entity formed to hold substantially all of the common
stock of the Corporation in amounts required for either of their respective
direct or indirect parent entities to pay

 

(a)           franchise taxes and
other fees, taxes and expenses required to maintain their corporate existence,

 

(b)           federal, state and
local income taxes, to the extent such income taxes are attributable to the
income of the Corporation and the Restricted Subsidiaries and, to the extent of
the amount actually received from its Unrestricted Subsidiaries, in amounts
required to pay such taxes to the extent attributable to the income of such
Unrestricted Subsidiaries,

 

(c)           customary salary, bonus
and other benefits payable to officers and employees of any direct or indirect
parent entity of the Corporation to the extent such salaries, bonuses and other
benefits are attributable to the ownership or operation of the Corporation and
the Restricted Subsidiaries, and

 

(d)           general corporate
overhead expenses of any direct or indirect parent entity of the Corporation to
the extent such expenses are attributable to the ownership or operation of the
Corporation and the Restricted Subsidiaries;

 

(13)         distributions
or payments of Receivables Fees;

 

(14)         cash
dividends or other distributions on the Corporation’s or any Restricted
Subsidiary’s Capital Stock used to fund the Transactions and the fees and
expenses related thereto or owed to Affiliates, in each case to the extent
permitted by Section 807 of this Agreement;

 

(15)         the
repurchase, redemption or other acquisition or retirement for value of any
Subordinated Indebtedness pursuant to the provisions similar to those described
under Sections 808 and 809 hereof; provided that
all Notes tendered by Holders in connection with a Change of Control Offer or
Asset Sale Offer, as applicable, have been repurchased, redeemed or acquired
for value; and

 

(16)         without
duplication of any of the foregoing, any Restricted Payment by the Corporation
or any of its Restricted Subsidiaries that is otherwise permitted by, or is
made with the proceeds from Restricted Payments permitted by, the terms of the
Senior Credit Facilities and the SMC Senior Subordinated Notes;

 

provided
however, that at
the time of, and after giving effect to, any Restricted Payment permitted under
clauses (5), (6), and (11) of this Section 804(B), no Default or Event of
Default shall have occurred and be continuing or would occur as a consequence thereof.

 

57

 

(C)           As
of the Issue Date, all of the Corporation’s Subsidiaries shall be Restricted
Subsidiaries.  The Corporation shall not
permit any Unrestricted Subsidiary to become a Restricted Subsidiary except
pursuant to the last sentence of the definition of “Unrestricted Subsidiary” in
this Agreement.  For purposes of
designating any Restricted Subsidiary as an Unrestricted Subsidiary, all
outstanding Investments by the Corporation and its Restricted Subsidiaries
(except to the extent repaid) in the Subsidiary so designated shall be deemed
to be Restricted Payments in an amount determined as set forth in the last
sentence of the definition of “Investment.” 
Such designation will be permitted only if a Restricted Payment in such
amount would be permitted at such time, whether pursuant to paragraph (A) above
or under clauses (7), (10) or (11) of paragraph (B) above, or pursuant to the
definition of “Permitted Investments,” and if such Subsidiary otherwise meets
the definition of an Unrestricted Subsidiary. Unrestricted Subsidiaries shall
not be subject to any of the restrictive covenants set forth in this Agreement.

 

SECTION 805.  Incurrence of Indebtedness and Issuance of
Disqualified Stock.

 

(A)          The
Corporation shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, (collectively,
“incur” and collectively, an “incurrence”) with respect to any
Indebtedness (including Acquired Indebtedness) and the Corporation will not
issue any shares of Disqualified Stock and will not permit any Restricted
Subsidiary to issue any shares of Disqualified Stock or preferred stock; provided, however, that

 

(1)           the
Corporation may incur Indebtedness (including Acquired Indebtedness) or issue
shares of Disqualified Stock, and any Restricted Subsidiary of the Corporation
other than SMC and any of its Restricted Subsidiaries may incur Indebtedness
(including Acquired Indebtedness), issue shares of Disqualified Stock and issue
shares of preferred stock if the Fixed Charge Coverage Ratio of the Corporation
for the most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on which such
additional Indebtedness is incurred or such Disqualified Stock or preferred
stock is issued would have been at least 2.00 to 1.00, and

 

(2)           SMC
and any of its Restricted Subsidiaries may incur Indebtedness (including
Acquired Indebtedness) or issue Disqualified Stock or preferred stock if the
Fixed Charge Coverage Ratio of SMC for the most recently ended four full fiscal
quarters for which internal financial statements are available immediately
preceding the date on which such additional Indebtedness is incurred or such
Disqualified Stock or preferred stock is issued would have been at least 2.00
to 1.00,

 

in each case determined on a pro
forma basis (including a pro
forma application of the net proceeds therefrom), as if the
additional Indebtedness had been incurred or the Disqualified Stock or
preferred stock had been issued, as the case may be, and the

 

58

 

application of proceeds therefrom had occurred at the beginning of such
four-quarter period.

 

(B)           The
limitations in paragraph (A) above shall not apply to:

 

(1)           the
incurrence of Indebtedness under Credit Facilities (other than the Senior
Unsecured Term Loan) by the Corporation, SMC or any of their Restricted
Subsidiaries and the issuance and creation of letters of credit and bankers’
acceptances thereunder (with letters of credit and bankers’ acceptances being
deemed to have a principal amount equal to the face amount thereof), up to an
aggregate principal amount of $900.0 million outstanding at any one time;

 

(2)           the
incurrence of the Senior Unsecured Term Loan, up to an aggregate principal
amount of $100.0 million outstanding at any one time, by the Corporation, SMC
or any of their Restricted Subsidiaries;

 

(3)           Existing
Indebtedness (including Indebtedness represented by the Notes) (other than
Indebtedness described in clauses (1) and (2) above);

 

(4)           Indebtedness
(including Capitalized Lease Obligations), Disqualified Stock and preferred stock
incurred by the Corporation, SMC or any of their Restricted Subsidiaries, to
finance the purchase, lease or improvement of property (real or personal) or
equipment that is used or useful in a Similar Business, whether through the
direct purchase of assets or the Capital Stock of any Person owning such
assets, in an aggregate principal amount which, when aggregated with the
principal amount of all other Indebtedness, Disqualified Stock and preferred
stock then outstanding and incurred pursuant to this clause (4) and including
all Refinancing Indebtedness incurred to refund, refinance or replace any other
Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this
clause (4), does not exceed the greater of (x) $100.0 million and (y) 10.0% of
Total Assets.

 

(5)           Indebtedness
incurred by the Corporation, SMC or any of their Restricted Subsidiaries
constituting reimbursement obligations with respect to letters of credit issued
in the ordinary course of business, including without limitation letters of
credit in respect of workers’ compensation claims, or other Indebtedness with
respect to reimbursement type obligations regarding workers’ compensation
claims; provided, however, that
upon the drawing of such letters of credit or the incurrence of such
Indebtedness, such obligations are reimbursed within 30 days following such
drawing or incurrence;

 

(6)           Indebtedness
arising from agreements of the Corporation, SMC or any of their Restricted
Subsidiaries providing for indemnification, adjustment of purchase price or
similar obligations, in each case, incurred or assumed in connection with the
disposition of any business, assets or a Subsidiary, other than guarantees of
Indebtedness incurred by any Person acquiring all or any portion of

 

59

 

such business,
assets or a Subsidiary for the purpose of financing such acquisition; provided, however, that

 

(a)           such Indebtedness is
not reflected on the balance sheet of the Corporation, SMC or any of their
Restricted Subsidiaries (contingent obligations referred to in a footnote to
financial statements and not otherwise reflected on the balance sheet shall not
be deemed to be reflected on such balance sheet for purposes of this clause
(6)(a)) and

 

(b)           the maximum assumable
liability in respect of all such Indebtedness shall at no time exceed the gross
proceeds including non-cash proceeds (the fair market value of such non-cash
proceeds being measured at the time received and without giving effect to any
subsequent changes in value) actually received by the Corporation, SMC or any
of their Restricted Subsidiaries in connection with such disposition;

 

(7)           Indebtedness
of the Corporation owed to and held by SMC or any other of its Restricted
Subsidiaries or Indebtedness of SMC or any other Restricted Subsidiary owed to
and held by the Corporation, SMC or any other Restricted Subsidiary; provided, however, that any subsequent
issuance or transfer of any Capital Stock or any other event which results in
any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any
other subsequent transfer of any such Indebtedness (except to the Corporation,
SMC or any Restricted Subsidiary) shall be deemed, in each case to be an
incurrence of such Indebtedness by the issuer thereof;

 

(8)           shares
of preferred stock of a Restricted Subsidiary issued to the Corporation, SMC or
any other Restricted Subsidiary; provided
that any subsequent issuance or transfer of any Capital Stock or any other
event which results in SMC or any such Restricted Subsidiary ceasing to be a
Restricted Subsidiary of the Corporation or any other subsequent transfer of
any such shares of preferred stock (except to the Corporation, SMC or any
Restricted Subsidiary) shall be deemed in each case to be an issuance of such
shares of preferred stock;

 

(9)           Hedging
Obligations (excluding Hedging Obligations entered into for speculative
purposes) for the purpose of limiting:

 

(a)           interest rate risk with
respect to any Permitted Indebtedness; or

 

(b)           exchange rate risk with
respect to any currency exchange; or

 

(c)           commodity risk;

 

(10)         obligations
in respect of performance, bid, appeal and surety bonds and completion
guarantees provided by the Corporation, SMC or any of their

 

60

 

Restricted
Subsidiaries or obligations in respect of letters of credit related thereto, in
each case in the ordinary course of business;

 

(11)         Indebtedness,
Disqualified Stock and preferred stock of the Corporation, SMC or any of their
Restricted Subsidiaries not otherwise permitted hereunder in an aggregate
principal amount or liquidation preference, which when aggregated with the
principal amount and liquidation preference of all other Indebtedness,
Disqualified Stock and preferred stock then outstanding and incurred pursuant
to this clause (11), does not at any one time outstanding exceed the sum of:

 

(x)            $175.0
million; and

 

(y)           100%
of the net cash proceeds received by the Corporation since immediately after
the Senior Subordinated Notes Issue Date from the issue or sale of Equity
Interests of the Corporation or cash contributed to the capital of the
Corporation (in each case other than proceeds of Disqualified Stock or sales of
Equity Interests to the Corporation or any of its Subsidiaries) as determined
in accordance with clauses (c)(ii) and (c)(iii) of Section 804(A) of this
Agreement to the extent such net cash proceeds or cash have not been applied
pursuant to such clauses to make Restricted Payments or to make other
investments, payments or exchanges pursuant to Section 804(B) of this Agreement
or to make Permitted Investments (other than Permitted Investments specified in
clauses (i) and (iii) of the definition thereof),

 

(it being
understood that any Indebtedness, Disqualified Stock or preferred stock
incurred pursuant to this clause (11) shall cease to be deemed incurred or
outstanding for purposes of this clause (11) but shall be deemed incurred for
the purposes of Section 805(A) above from and after the first date on which the
Corporation or such Restricted Subsidiary could have incurred such
Indebtedness, Disqualified Stock or preferred stock under Section 805(A) above
without reliance on this clause (11);

 

(12)         (a)  any guarantee by the Corporation or a
Restricted Subsidiary of Indebtedness or other obligations of any Restricted
Subsidiary so long as the incurrence of such Indebtedness incurred by such
Restricted Subsidiary is permitted under the terms of this Agreement; or

 

(b)           any guarantee by a
Restricted Subsidiary of Indebtedness of the Corporation or SMC;

 

(13)         the
incurrence by the Corporation, SMC or any of their Restricted Subsidiaries of
Indebtedness, Disqualified Stock or preferred stock which serves to refund or
refinance any Indebtedness, Disqualified Stock or preferred stock incurred as
permitted under Section 805(A) and clause (3) above, this clause (13) and
clause (14) below or any Indebtedness, Disqualified Stock or preferred stock

 

61

 

issued to so
refund or refinance such Indebtedness, Disqualified Stock or preferred stock
including additional Indebtedness, Disqualified Stock or preferred stock
incurred to pay premiums and fees in connection therewith (the “Refinancing
Indebtedness”) prior to its respective maturity; provided, however, that such Refinancing Indebtedness

 

(a)           has a Weighted Average
Life to Maturity at the time such Refinancing Indebtedness is incurred which is
not less than the remaining Weighted Average Life to Maturity of the
Indebtedness, Disqualified Stock or preferred stock being refunded or
refinanced,

 

(b)           to the extent such
Refinancing Indebtedness refinances (i) Indebtedness subordinated or pari passu to the Notes, such Refinancing
Indebtedness is subordinated or pari passu
to the Notes at least to the same extent as the Indebtedness being refinanced
or refunded or (ii) Disqualified Stock or preferred stock, such Refinancing
Indebtedness must be Disqualified Stock or preferred stock, respectively, and

 

(c)           shall not include (x)
Indebtedness, Disqualified Stock or preferred stock of a Subsidiary that
refinances Indebtedness, Disqualified Stock or preferred stock of the
Corporation or (y) Indebtedness, Disqualified Stock or preferred stock of the
Corporation, SMC or any of their Restricted Subsidiaries that refinances
Indebtedness, Disqualified Stock or preferred stock of an Unrestricted
Subsidiary;

 

and provided, further, that subclauses (a) and
(b) of this clause (13) shall not apply to any refunding or refinancing of any
Indebtedness of a Restricted Subsidiary and subclause (a) shall not apply to
any Senior Indebtedness.

 

(14)         Indebtedness,
Disqualified Stock or preferred stock of Persons that are acquired by the
Corporation, SMC or any of their Restricted Subsidiaries or merged into the
Corporation, SMC or any of their Restricted Subsidiaries in accordance with the
terms of this Agreement; provided
that such Indebtedness, Disqualified Stock or preferred stock is not incurred
in contemplation of such acquisition or merger; and provided, further, that after giving effect to such
acquisition or merger, either

 

(a)           with respect to an
acquisition by or merger with the Corporation or any Restricted Subsidiary of
the Corporation other than SMC and its Restricted Subsidiaries, either (i) the
Corporation would be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in
clause (1) of paragraph (A) above or (ii) the Fixed Charge Coverage Ratio of
the Corporation would be greater than immediately prior to such acquisition or

 

(b)           with respect to an
acquisition by or merger with SMC or any Restricted Subsidiary of SMC, either
(i) SMC or such Restricted

 

62

 

Subsidiary of
SMC would be permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in clause (2) of
paragraph (A) above or (ii) the Fixed Charge Coverage Ratio of SMC would be
greater than immediately prior to such acquisition;

 

(15)         Indebtedness
arising from the honoring by a bank or other financial  institution of a check, draft or similar
instrument drawn against insufficient funds in the ordinary course of business,
provided that such Indebtedness
is extinguished within two Business Days of its incurrence;

 

(16)         Indebtedness
of the Corporation, SMC or any of their Restricted Subsidiaries supported by a
letter of credit issued pursuant Credit Facilities, in a principal amount not
in excess of the stated amount of such letter of credit;

 

(17)         Indebtedness
of the Corporation or any Restricted Subsidiary consisting of (a) the financing
of insurance premiums or (b) take-or-pay obligations contained in supply
arrangements, in each case, in the ordinary course of business; and

 

(18)         Without
duplication of any of the above, Indebtedness of SMC or any of its Restricted
Subsidiaries permitted under the terms of the Senior Credit Facilities and SMC
Senior Subordinated Notes.

 

(C)           For
purposes of determining compliance with this Section 805, in the event that an
item of Indebtedness, Disqualified Stock or preferred stock meets the criteria
of more than one of the categories of Permitted Indebtedness, Disqualified
Stock or preferred stock described in clauses (1) through (17) of Section
805(B) of this Agreement or is entitled to be incurred pursuant to Section
805(A) of this Agreement, the Corporation shall, in its sole discretion,
classify or reclassify such item of Indebtedness in any manner that complies
with this Section 805 and such item of Indebtedness, Disqualified Stock or
preferred stock shall be treated as having been incurred pursuant to only one
of such clauses of Section 805(B) above or pursuant to Section 805(A) above
except as otherwise set forth in clause (11) of Section 805(B).  Accrual of interest, the accretion of
accreted value and the payment of interest in the form of additional
Indebtedness, Disqualified Stock or preferred stock shall not be deemed to be
an incurrence of Indebtedness, Disqualified Stock or preferred stock for
purposes of this Section 805.

 

(D)          For
purposes of determining compliance with any U.S. dollar denominated restriction
on the incurrence of Indebtedness, the U.S. dollar equivalent principal amount
of Indebtedness denominated in a foreign currency shall be calculated based on
the relevant currency exchange rate in effect on the date such Indebtedness was
incurred, in the case of term debt, or first committed, in the case of
revolving credit debt; provided that
if such Indebtedness is incurred to refinance other Indebtedness denominated in
a foreign currency, and such refinancing would cause the applicable U.S. dollar
denominated restriction to be exceeded if calculated at the relevant currency
exchange rate in effect on the date of such refinancing, such U.S. dollar denominated
restriction

 

63

 

shall be
deemed not to have been exceeded so long as the principal amount of such
refinancing Indebtedness does not exceed the principal amount of such
Indebtedness being refinanced.

 

(E)           The
principal amount of any Indebtedness incurred to refinance other Indebtedness,
if incurred in a different currency from the Indebtedness being refinanced,
shall be calculated based on the currency exchange rate applicable to the
currencies in which such respective Indebtedness is denominated that is in
effect on the date of such refinancing.

 

SECTION 806.  Limitation on Liens.

 

The Corporation shall not,  directly or
indirectly, create, incur, assume or suffer to exist any Lien (except Permitted
Liens) that secures obligations under any Senior Subordinated Indebtedness or
Subordinated Indebtedness on any asset or property of the Corporation, or any
income or profits therefrom, or assign or convey any right to receive income
therefrom, unless the Notes are equally and ratably secured with, or senior to,
in the event the Lien relates to Subordinated Indebtedness, the obligations so
secured until such time as such obligations are no longer secured by a Lien.

 

SECTION 807.  Limitations on Transactions with
Affiliates

.

(A)          The
Corporation shall not, and shall not permit any Restricted Subsidiary to, make
any payment to, or sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into
or make or amend any transaction, contract, agreement, understanding, loan,
advance or guarantee with, or for the benefit of, any Affiliate of the
Corporation (each of the foregoing, an “Affiliate Transaction”)
involving aggregate payments or consideration in excess of $5.0 million, unless

 

(1)           such
Affiliate Transaction is on terms that are not materially less favorable to the
Corporation or the relevant Restricted Subsidiary than those that would have
been obtained in a comparable transaction by the Corporation or such Restricted
Subsidiary with an unrelated Person; and

 

(2)           with
respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate payments or consideration in excess of $10.0
million, the majority of the Board of Directors approves such Affiliate
Transaction and certifies that such Affiliate Transaction complies with clause
(1) above.

 

(B)           The
foregoing provisions of paragraph (A) will not apply to the following:

 

(1)           transactions
between or among the Corporation and/or any of the Restricted Subsidiaries;

 

(2)           Restricted
Payments permitted by Section 804 of this Agreement and the definition of “Permitted
Investment”;

 

64

 

(3)           the
payment of management, consulting, monitoring and advisory fees and related
expenses to Kohlberg Kravis Roberts & Co. L.P. and its Affiliates;

 

(4)           the
payment of reasonable and customary fees paid to, and indemnities provided on
behalf of, officers, directors, employees or consultants of the Corporation,
any of its direct or indirect parent entities or any Restricted Subsidiary;

 

(5)           payments
by the Corporation or any Restricted Subsidiary to Kohlberg Kravis Roberts
& Co. L.P., and its Affiliates made for any financial advisory, financing,
underwriting or placement services or in respect of other investment banking
activities, including, without limitation, in connection with acquisitions or
divestitures which payments are approved by a majority of the Board of
Directors of the Corporation in good faith;

 

(6)           transactions
in which the Corporation or any Restricted Subsidiary, as the case may be,
delivers a letter from an Independent Financial Advisor stating that such
transaction is fair to the Corporation or such Restricted Subsidiary from a
financial point of view or meets the requirements of Section 807(A)(1) of this
Agreement;

 

(7)           payments
or loans (or cancellation of loans) to employees or consultants of the
Corporation, any of its direct or indirect parent entities or any Restricted
Subsidiary which are approved by a majority of the Board of Directors of the
Corporation in good faith;

 

(8)           any
agreement as in effect as of the Issue Date, or any amendment thereto (so long
as any such amendment is not disadvantageous to the holders in any material
respect);

 

(9)           the
existence of, or the performance by the Corporation or any of its Restricted
Subsidiaries of its obligations under the terms of, any stockholders agreement
(including any registration rights agreement or purchase agreement related
thereto) to which it is a party as of the Issue Date and any similar agreements
which it may enter into thereafter; provided,
however, that the existence of, or the performance by the
Corporation or any Restricted Subsidiary of obligations under any future
amendment to any such existing agreement or under any similar agreement entered
into after the Issue Date shall only be permitted by this clause (9) to the
extent that the terms of any such amendment or new agreement are not otherwise
disadvantageous to the Holders of the Notes in any material respect;

 

(10)         the
Transactions and the payment of all fees and expenses related to the
Transactions;

 

(11)         transactions
with customers, clients, suppliers, or purchasers or sellers of goods or
services, in each case in the ordinary course of business and

 

65

 

otherwise in
compliance with the terms of this Agreement which are fair to the Corporation
and the Restricted Subsidiaries, in the reasonable determination of the Board
of Directors of the Corporation or the senior management thereof, or are on
terms at least as favorable as might reasonably have been obtained at such time
from an unaffiliated party;

 

(12)         the
issuance of Equity Interests (other than Disqualified Stock) of the Corporation
to any Permitted Holder or to any director, officer, employee or consultant;
and

 

(13)         sales
of accounts receivable, or participations therein, in connection with any
Receivables Facility.

 

SECTION 808.  Change of Control.

 

(a)           If a Change of Control occurs and all obligations under the
Senior Credit Facilities shall have been repaid, the Corporation shall make an offer to purchase all of the Notes
pursuant to the offer described below (the “Change of Control Offer”) at
a price in cash (the “Change of Control Payment”) equal to 101% of the
aggregate principal amount thereof plus accrued and unpaid interest to the date
of purchase, subject to the right of Holders of record on the relevant Regular
Record Date to receive interest due on the relevant Interest Payment Date.
Within 90 days following any Change of Control, the Corporation shall send
notice of such Change of Control Offer by first class mail to each Holder with
the following information:

 

(1)           a Change of Control Offer is being made pursuant
to this Section 808 and that all Notes properly tendered pursuant to such
Change of Control Offer will be accepted for payment;

 

(2)           the purchase price and the purchase date, which
will be no earlier than 30 days nor later than 60 days from the date
such notice is mailed (the “Change of Control Payment Date”);

 

(3)           any
Note not properly tendered will remain
outstanding and continue to accrue interest;

 

(4)           unless
the Corporation defaults in the payment of
the Change of Control Payment, all Notes accepted for payment pursuant to the
Change of Control Offer will cease to accrue interest on the Change of Control
Payment Date;

 

(5)           Holders
electing to have any Notes purchased
pursuant to a Change of Control Offer will be required to surrender the Notes,
with the form entitled “Option of Holder to Elect Purchase” on the reverse of
the Notes completed, to the Corporation prior to the close of business on the
third Business Day preceding the Change of Control Payment Date;

 

(6)           Holders will be entitled to withdraw their
tendered Notes and their election to require the Corporation to purchase such
Notes, provided that the
Corporation receives, not later than the close of business on the third
Business Day preceding the Change of

 

66

 

Control Payment Date, a telegram, facsimile transmission or letter
setting forth the name of the Holder of the Notes, the principal amount of
Notes tendered for purchase, and a statement that such Holder is withdrawing
his tendered Notes and his election to have such Notes purchased; and

 

(7)           that Holders whose Notes are being purchased only
in part will be issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered, which unpurchased portion must be equal to
$100,000 in principal amount or an integral multiple thereof.

 

(b)           Prior to complying with the provisions of this Section 808,
but in any event within 90 days following a Change of Control, to the extent
required to permit the Corporation to repurchase the Notes pursuant to Section
808, the Corporation shall either repay all outstanding obligations of the
Corporation and its Subsidiaries under the Credit Agreement or obtain the
requisite consents, if any, under all agreements governing obligations
thereunder.  Until the requirements of
the immediately preceding sentence are satisfied, the Corporation shall not
repurchase, and shall not be obligated to repurchase, any Notes pursuant to a
Change of Control Offer.

 

(c)           On or before the Change of Control Payment Date, the
Corporation shall, to the extent lawful accept for payment and pay for all
Notes properly tendered and not withdrawn pursuant to the Change of Control
Offer.

 

The Corporation will promptly deliver by wire
transfer to each Holder of Notes properly tendered and not withdrawn the Change
of Control Payment for such repurchased Notes, and the Corporation shall
promptly execute and mail to each Holder a new certificate equal to any
unrepurchased portion of the Notes surrendered, if any.

 

(d)           The Corporation shall not be required to make a Change of
Control Offer upon a Change of Control if a third party makes a change of
control offer in the manner, at the times and otherwise in compliance with the
requirements set forth in this Section 808 applicable to a Change of Control
Offer made by the Corporation and such third party purchases all Notes properly
tendered and not withdrawn under such change of control offer; provided that the requirement of the
Corporation to make a Change of Control Offer shall be not be affected in the
event such third party breaches its obligations to purchase any such Notes.

 

(e)           To the extent that the provisions of
any securities laws or regulations conflict with the provisions of this
Agreement, the Corporation shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations described
in this Agreement by virtue thereof.

 

SECTION 809.  Asset Sales.

 

(a)           The Corporation shall not, and shall not permit any
Restricted Subsidiary to, cause, make or suffer to exist an Asset Sale, unless:

 

(1)           the
Corporation or such Restricted Subsidiary,
as the case may be, receives consideration at the time of such Asset Sale at
least equal to the fair market value (as

 

67

 

determined in good faith by the Corporation) of the assets sold or
otherwise disposed of and

 

(2)           except in the case of a Permitted Asset Swap, at
least 75% of the consideration therefor received by the Corporation or such
Restricted Subsidiary, as the case may be, is in the form of cash or Cash
Equivalents; provided that the
amount of

 

(A)          any liabilities (as shown on the Corporation’s, or
such Restricted Subsidiary’s, most recent balance sheet or in the notes
thereto) of the Corporation or any Restricted Subsidiary, other than
liabilities that are by their terms subordinated to the Notes, that are assumed
by the transferee of any such assets and for which the Corporation and all
Restricted Subsidiaries have been validly released by all creditors in writing,

 

(B)           any securities received by the Corporation or such
Restricted Subsidiary from such transferee that are converted by the
Corporation or such Restricted Subsidiary into cash (to the extent of the cash
received) within 270 days following the closing of such Asset Sale and

 

(C)           any Designated Non-cash Consideration received by
the Corporation or any Restricted Subsidiary in such Asset Sale having an
aggregate fair market value, taken together with all other Designated Non-cash
Consideration received pursuant to this clause (C) that is at that time
outstanding, not to exceed the greater of (x) $100.0 million and
(y) 10.0% of Total Assets at the time of the receipt of such Designated
Non-cash Consideration, with the fair market value of each item of Designated
Non-cash Consideration being measured at the time received and without giving
effect to subsequent changes in value,

 

shall be deemed to be cash for purposes of this provision and for no
other purpose.

 

(b)           Within 455 days after the Corporation’s or any Restricted Subsidiary’s receipt of the Net
Proceeds of any Asset Sale, the Corporation or such Restricted Subsidiary, at
its option, may apply the Net Proceeds from such Asset Sale

 

(1)           to permanently reduce:

 

(A)          Obligations under the Senior Credit Facilities or
the Senior Unsecured Term Loan, and to correspondingly reduce commitments with
respect thereto,

 

(B)           Obligations under other Senior Indebtedness (and
to correspondingly reduce commitments with respect thereto) or Senior
Subordinated Indebtedness provided
that if the Corporation shall so
reduce Obligations under Senior Subordinated Indebtedness, it shall equally and
ratably reduce Obligations under the Notes if the Notes are then prepayable or,
if the Notes may not then be prepaid, the Corporation shall make an offer (in
accordance with the procedures set forth below for an Asset Sale

 

68

 

Offer) to all Holders to purchase their Notes at 100% of the principal
amount thereof, plus the amount of accrued but unpaid interest, if any, on the
amount of Notes that would otherwise be prepaid, or

 

(C)           Indebtedness of a Restricted Subsidiary, other
than Indebtedness owed to the Corporation or another Restricted Subsidiary;
provided that if an offer to repurchase Indebtedness of SMC or any of its
Restricted Subsidiaries is made in accordance with the terms of such
Indebtedness, the obligation to repay Indebtedness of a Restricted Subsidiary
pursuant to this clause (C) will be deemed to be satisfied to the extent of the
amount of the offer, whether or not accepted by the holders thereof, and no Net
Proceeds will be deemed to exist following such offer,

 

(2)           to an investment in (a) any one or more
businesses, provided that such
investment in any business is in the form of the acquisition of Capital Stock
and results in the Corporation or a Restricted Subsidiary, as the case may be,
owning an amount of the Capital Stock of such business such that it constitutes
a Restricted Subsidiary, (b) capital expenditures or (c) acquisitions
of other assets, in each of (a), (b) and (c), used or useful in a
Similar Business, and/or

 

(3)           to an investment in (a) any one or more
businesses, provided that such
investment in any business is in the form of the acquisition of Capital Stock
and results in the Corporation or a Restricted Subsidiary, as the case may be,
owning an amount of the Capital Stock of such business such that it constitutes
a Restricted Subsidiary, (b) properties or (c) other assets that, in
each of (a), (b) and (c) replace the businesses, properties and
assets that are the subject of such Asset Sale.

 

(c)           Any Net Proceeds from the Asset Sale
that are not invested or applied as provided and within the time period set
forth in Section 809(a) shall be deemed to constitute “Excess Proceeds”.
When the aggregate amount of Excess Proceeds exceeds $15.0 million, the
Corporation shall, subject to the terms of the Senior Credit Facilities, make
an offer to all Holders of the Notes (an “Asset Sale Offer”), to
purchase the maximum principal amount of Notes, that is an integral multiple of
$100,000 that may be purchased out of the Excess Proceeds at an offer price in
cash in an amount equal to 100% of the principal amount thereof, plus accrued
and unpaid interest to the date fixed for the closing of such offer, in
accordance with the procedures set forth in this Agreement. The Corporation
shall commence an Asset Sale Offer with respect to Excess Proceeds within ten
Business Days after the date that Excess Proceeds exceeds $15.0 million by
mailing the notice required pursuant to the terms of this Agreement.  To the extent that the aggregate amount of
Notes tendered pursuant to an Asset Sale Offer is less than the Excess
Proceeds, the Corporation may use any remaining Excess Proceeds for general
corporate purposes, subject to other covenants contained in this
Agreement.  If the aggregate principal
amount of Notes surrendered by such holders thereof exceeds the amount of
Excess Proceeds, the Corporation shall select the Notes to be purchased on a pro rata basis based on the principal
amount of the Notes tendered  Upon
completion of any such Asset Sale Offer, the amount of Excess Proceeds shall be
reset at zero.

 

69

 

(d)           Pending the final application of any
Net Proceeds pursuant to this Section 809, the Corporation or the applicable
Restricted Subsidiary may apply such Net Proceeds temporarily to reduce
Indebtedness outstanding under a revolving credit facility or otherwise invest
such Net Proceeds in any manner not prohibited by this Agreement.

 

(e)           To the extent that the provisions of
any securities laws or regulations conflict with the provisions of this
Agreement, the Corporation shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations described
in this Agreement by virtue thereof.

 

(f)            Notices of
purchase or redemption shall be mailed by first class mail, postage prepaid, at
least 30 but not more than 60 days before the purchase or redemption date
to each Holder to be purchased or redeemed. 
If any Note is to be purchased or redeemed in part only, any notice of
purchase or redemption that relates to such Note shall state the portion of the
principal amount thereof that has been or is to be purchased or redeemed.

 

(g)           A new Note in principal amount equal to the unpurchased or
unredeemed portion of any Note purchased or redeemed in part shall be issued in
the name of the Holder thereof upon cancellation of the original Note. On and
after the purchase or redemption date, unless the Corporation defaults in
payment of the purchase or Redemption Price, interest shall cease to accrue on
Notes or portions thereof purchased or called for redemption.

 

SECTION 810.    Notice
of Default. 

 

When any Default or Event of Default has
occurred and is continuing under this Agreement, the Corporation shall deliver
to the Holders by registered or certified mail or facsimile transmission an
Officer’s Certificate specifying such event, notice or other action within five
Business Days of its occurrence.

 

SECTION 811.  Waiver of Certain Covenants.

 

The Corporation and the Restricted
Subsidiaries may omit in any particular instance to comply with any term,
provision or condition set forth in or Section 802, if before or after the
time for such compliance the Holders of at least a majority in principal amount
of the Outstanding Notes, by Act of such Holders, waive such compliance in such
instance with such term, provision or condition, but no such waiver shall
extend to or affect such term, provision or condition except to the extent so
expressly waived, and, until such waiver shall become effective, the
obligations of the Corporation in respect of any such term, provision or
condition shall remain in full force and effect.

 

70

 

ARTICLE NINE

REDEMPTION OF NOTES

 

SECTION 901.  Optional Redemption.

 

(A)          The
Corporation may (subject to contractual and other restrictions with respect
thereto), at its option, redeem at any time, from any source of funds legally
available therefor, in whole or in part, in the manner provided in Section 902
of this Agreement, any or all Notes, on the following basis:

 

(1)           at
any time or from time to time prior to July 15, 2007, the Corporation may, at
its option, redeem some or all of the Notes then outstanding, in whole or in
part; provided, that the funds
used for redemption under this paragraph (A)(1) are the proceeds from an Equity
Offering, at a Redemption Price equal to 101.0% of the principal amount
thereof, plus accrued and unpaid interest to the Redemption Date; and

 

(2)           at
any time or from time to time, the Corporation may, at its option, redeem some
or all of the Notes then outstanding, in whole or in part, at the applicable
Redemption Price set forth below (expressed as a percentage of the principal
amount thereof), plus accrued and unpaid interest, to the Redemption Date, if
redeemed during the twelve-month period beginning on July 15 of each of the
years indicated below:

 

	
  Year

  	
   

  	
  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2004

  	
   

  	
  105.0

  	
  %

  
	
  2005

  	
   

  	
  102.5

  	
  %

  
	
  2006

  	
   

  	
  101.0

  	
  %

  
	
  2007 and thereafter

  	
   

  	
  100.0

  	
  %

  

 

(B)           In
the event of a redemption of only a portion of the then outstanding Notes, the
Corporation shall effect such redemption as it determines, pro rata
according to the principal amount of Notes held by each Holder.

 

SECTION 902.  Procedures for Redemption.

 

(A)          At
least 10 days and not more than 60 days prior to the Redemption Date fixed for
any redemption of Notes, written notice (the “Redemption Notice”) shall
be given by certified first class mail, postage prepaid, to each Holder of
record on the record date fixed for such redemption; provided
that no failure to give such notice nor any deficiency therein shall affect the
validity of the procedure for the redemption of any Notes to be redeemed except
as to the Holder or Holders to whom the Corporation has failed to give said
notice or except as to the Holder or Holders whose notice was defective.  The Redemption Notice shall state:

 

71

 

(1)           whether
the redemption is pursuant to paragraph (A)(1) or (A)(2) of Section 901;

 

(2)           the
Redemption Price and the basis on which it has been calculated;

 

(3)           whether
all or less than all the outstanding Notes are to be redeemed and the principal
amount of Notes being redeemed;

 

(4)           the
principal amount of Notes held, as of the appropriate record date, by the
Holder that the Corporation intends to redeem;

 

(5)           the
Redemption Date; and

 

(6)           that
interest on the Notes to be redeemed shall cease to accrue on such Redemption
Date unless the Corporation defaults in the payment of the Redemption Price.

 

(B)           Each Holder of Notes
shall surrender to the Corporation the certificate or certificates representing
such Notes to be redeemed, duly endorsed, in the manner and at the place
designated in the Redemption Notice, and on the Redemption Date the full
Redemption Price for such shares shall be payable in cash to such Holder.  In the event that less than all of the
principal amount of the Notes represented by any such certificate are redeemed,
a new certificate shall be issued representing the unredeemed Notes upon
presentation by a Holder for such purpose.

 

(C)           The
Corporation shall, on or before the Redemption Date, pay the Redemption Price
for each Holder’s Notes to be redeemed by wire transfer of immediately
available funds to such Holder.

 

(D)          Unless
the Corporation defaults in the payment in full of the Redemption Price,
interest on the Notes called for redemption shall cease to accrue on the
Redemption Date, and the Holders of such redeemed Notes shall cease to have any
further rights with respect thereto on the Redemption Date, other than the
right to receive the Redemption Price without interest.

 

(E)           In the case of any
partial redemption of the Notes by the Corporation, the Corporation shall
select the Notes to be redeemed on a pro rata bases among all Holders.

 

(F)           Any offers to
repurchase the Notes made by the Corporation to the Holders will be made on a
pro rata bases among all Holders.

 

72

 

ARTICLE TEN

SUBORDINATION OF NOTES

 

SECTION 1001.  Agreement to Subordinate.

 

The Corporation agrees, and each Holder by
accepting a Note agrees, that the Indebtedness evidenced by the Notes is
subordinated in right of payment, to the extent and in the manner provided in
this Article Ten, to the prior payment in full of all Senior Indebtedness of
the Corporation (whether outstanding on the date hereof or hereafter created,
incurred, assumed or guaranteed), and that the subordination is for the benefit
of the holders of Senior Indebtedness.

 

SECTION 1002.  Liquidation; Dissolution;
Bankruptcy.

 

Upon any distribution to creditors of the
Corporation in a liquidation or dissolution of the Corporation, in a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Corporation or its property, in an assignment for the benefit
of creditors or in any marshaling of the Corporation’s assets and liabilities:

 

(1)           holders
of Senior Indebtedness shall be entitled to receive payment in full in cash or
Cash Equivalents of all Obligations due in respect of Senior Indebtedness of
the Corporation (including interest after the commencement of any bankruptcy
proceeding at the rate specified in the documentation governing the applicable
Senior Indebtedness of the Corporation whether or not such interest is an
allowed claim in any such proceeding) before the Holders of Notes will be entitled
to receive any payment or distribution with respect to the Notes; and

 

(2)           until
all Obligations with respect to Senior Indebtedness of the Corporation (as
provided in clause (1) above) are paid in full, any distribution to which
Holders would be entitled but for this Article Ten will be made to holders of
Senior Indebtedness of the Corporation, as their interests may appear.

 

SECTION 1003.  Default on Designated Senior Indebtedness.

 

(a)           The Corporation may not make any payment or distribution in
respect of the Notes if:

 

(1)           a
payment default on Designated Senior Indebtedness of the Corporation occurs and
is continuing beyond any applicable grace period; or

 

(2)           any
other default occurs and is continuing on any series of Designated Senior
Indebtedness of the Corporation that permits holders of that series of
Designated Senior Indebtedness of the Corporation to accelerate its maturity,
and the Corporation receives a notice of such default (a “Payment Blockage Notice”) from
the Corporation or the Representative of any Designated Senior Indebtedness of
the Corporation.  If the Corporation
receives any such Payment Blockage Notice, no subsequent Payment Blockage
Notice may be delivered or will be effective for purposes of this Section 1003
unless and until (A) at least 360 days have elapsed since the delivery of the
immediately

 

73

 

prior Payment
Blockage Notice, and (B) all scheduled payments of principal, interest and
premium and Special Interest, if any, on the Notes that have come due have been
paid in full in cash.

 

Notwithstanding the foregoing, the
Corporation may make payment on the Notes if the Corporation receives written
notice approving such payment from the Representative of the Designated Senior Indebtedness
of the Corporation with respect to which either of the events set forth in
clauses (1) and (2) above has occurred and is continuing.

 

Not more than one Payment Blockage Notice may
be given in any consecutive 365-day period, irrespective of the number of
defaults with respect to all Designated Senior Indebtedness of the Corporation
during such period, provided that
if any Payment Blockage Notice is delivered to the Corporation by or on behalf
of the holders of Designated Senior Indebtedness of the Corporation (other than
the holders of Indebtedness under the Senior Credit Facilities), a
Representative of holders of Indebtedness under the Senior Credit Facilities
may give another Payment Blockage Notice within such period. However, in no
event may the total number of days during which any Payment Blockage Period or
periods on the Notes is in effect exceed 179 days in the aggregate during any
consecutive 365-day period, and there must be at least 186 days during any
consecutive 365-day period during which no Payment Blockage Period is in
effect.

 

The failure to make any payment on the Notes
by reason of this Article Ten will not be construed as preventing the
occurrence of an Event of Default with respect to the Notes by reason of the
failure to make a required payment. Upon termination of any period of payment
blockage, the Corporation will be required to resume making any and all
required payments under the Notes, including any missed payments. No nonpayment
default that existed or was continuing on the date of delivery of any Payment
Blockage Notice to the Corporation will be, or be made, the basis for a
subsequent Payment Blockage Notice.

 

(b)           The Corporation may and will resume payments on and
distributions in respect of the Notes and may acquire them upon the earlier of:

 

(1)           in
the case of a payment default on Designated Senior Indebtedness, upon the date
on which such default is cured or waived; and

 

(2)           in
the case of a nonpayment default on Designated Senior Indebtedness, upon the
earlier of the date on which such nonpayment default is cured or waived or 179
days after the date on which the applicable Payment Blockage Notice is
received, unless the maturity of any Designated Senior Indebtedness of the
Corporation has been accelerated,

 

(c)           if this Article Ten otherwise permits the payment,
distribution or acquisition at the time of such payment or acquisition.  Notwithstanding the foregoing, the
Corporation may make payment on the Notes if the Corporation receives written
notice approving such payment from the Representative of the Designated Senior
Indebtedness of the Corporation with respect to which either of the events set
forth in clauses (1) and (2) of this paragraph has occurred and is
continuing.

 

74

 

SECTION 1004.  Acceleration of Notes.

 

If payment of the Notes is accelerated
because of an Event of Default, the Corporation will promptly notify the
Representative of Designated Senior Indebtedness of the acceleration.

 

SECTION 1005.  When Distribution Must Be Paid Over.

 

If any Holder receives a payment in respect
of the Notes when: (1) the payment is prohibited by this Article Ten; and (2)
such Holder has actual knowledge that such payment is prohibited by this
Article Ten, then such payment will be held by such Holder in trust for the
benefit of, and will be paid forthwith over and delivered, upon written
request, to, the holders of Senior Indebtedness of the Corporation as their
interests may appear or their Representative under the agreement, indenture or
other document (if any) pursuant to which Senior Indebtedness of the
Corporation may have been issued, as their respective interests may appear, for
application to the payment of all Obligations with respect to Senior
Indebtedness of the Corporation remaining unpaid to the extent necessary to pay
such Obligations in full in accordance with their terms, after giving effect to
any concurrent payment or distribution to or for the holders of Senior
Indebtedness of the Corporation.

 

SECTION 1006.  Subrogation.

 

After all Senior Indebtedness is paid in full
and until the Notes are paid in full, Holders of Notes will be subrogated
(equally and ratably with all other Indebtedness pari passu
with the Notes) to the rights of holders of Senior Indebtedness to receive
distributions applicable to Senior Indebtedness to the extent that
distributions otherwise payable to the Holders of Notes have been applied to
the payment of Senior Indebtedness.  A
distribution made under this Article Ten to holders of Senior Indebtedness that
otherwise would have been made to Holders of Notes is not, as between the
Corporation and Holders, a payment by the Corporation on the Notes.

 

SECTION 1007.  Relative Rights.

 

This Article Ten defines the relative rights
of Holders of Notes and holders of Senior Indebtedness.  Nothing in this Agreement will:

 

(1)           impair,
as between the Corporation and Holders of Notes, the obligation of the
Corporation, which is absolute and unconditional, to pay principal of, premium,
if any, and interest on the Notes in accordance with their terms;

 

(2)           affect
the relative rights of Holders of Notes and creditors of the Corporation other
than their rights in relation to holders of Senior Indebtedness; or

 

(3)           prevent
any Holder of Notes from exercising its available remedies upon a Default or
Event of Default, subject to the rights of holders and owners of Senior
Indebtedness to receive distributions and payments otherwise payable to Holders
of Notes.

 

75

 

(b)           If the Corporation fails because of this Article Ten to pay
principal of, premium, if any, or interest on a Note on the due date, the
failure is still a Default or Event of Default.

 

SECTION 1008.  Subordination May Not Be Impaired by
Corporation.

 

No right of any holder of Senior Indebtedness
to enforce the subordination of the Indebtedness evidenced by the Notes may be
impaired by any act or failure to act by the Corporation or any Holder or by
the failure of the Corporation or any Holder to comply with this Agreement.

 

SECTION 1009.  Distribution or Notice to Representative.

 

Whenever a distribution is to be made or a
notice given to holders of Senior Indebtedness, the distribution may be made
and the notice given to their Representative.

 

Upon any payment or distribution of assets of
the Corporation referred to in this Article Ten, the Holders of Notes will be
entitled to rely upon any order or decree made by any court of competent
jurisdiction or upon any certificate of such Representative or of the
liquidating trustee or agent or other Person making any distribution to the
Holders of Notes for the purpose of ascertaining the Persons entitled to
participate in such distribution, the holders of the Senior Indebtedness and
other Indebtedness of the Corporation, the amount thereof or payable thereon,
the amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article Ten.

 

76

 

IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed as of the day and year first above
written.

 

 

	
   

  	
  SEALY
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
					

 

77

 

	
   

  	
  THE NORTHWESTERN
  MUTUAL LIFE

  INSURANCE COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  The Northwestern
  Mutual Life Insurance Company

  
	
   

  	
  720 East
  Wisconsin Avenue

  
	
   

  	
  Milwaukee,
  Wisconsin 53202

  
	
   

  	
  Attention:
  Treasury & Investment Operations Department

  
	
   

  	
  Facsimile No.:
  414-665-6998

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Wiring
  Instructions:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Deutsche Bank
  Trust Company Americas

  
	
   

  	
  16 Wall Street

  
	
   

  	
  Insurance Unit-4th
  Floor

  
	
   

  	
  New York, NY
  10005

  
	
   

  	
  ABA# 0210-0103-3

  
	
   

  	
   

  
	
   

  	
  For the account
  of:

  
	
   

  	
   

  
	
   

  	
  The Northwestern
  Mutual Life Insurance Company

  
	
   

  	
  Account No.
  00-000-027

  
	
   

  	
   

  
	
   

  	
  Re: Sealy
  Corporation

  
					

 

 

	
   

  	
  TEACHERS
  INSURANCE AND ANNUITY

  ASSOCIATION OF AMERICA

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TIAA CREF

  
	
   

  	
  730 Third Avenue

  
	
   

  	
  New York, New
  York 10017-3206

  
	
   

  	
  Attention:
  Estelle Simsolo, Director

  
	
   

  	
  Facsimile No.:
  212-916-6004

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  with a copy
  to:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TIAA CREF

  
	
   

  	
  730 Third Avenue

  
	
   

  	
  New York, New
  York 10017-3206

  
	
   

  	
  Attention:
  Robert Hayne, Senior Counsel

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Wiring
  Instructions:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Chase Manhattan
  Bank

  
	
   

  	
  ABA No.
  021-000-021

  
	
   

  	
  Account of:
  Teachers Insurance and Annuity

  
	
   

  	
   

  	
  Association of
  America

  
	
   

  	
  Account No.:
  900-9-000200

  
	
   

  	
  For further Credit
  to the TIAA Account Number:

  
	
   

  	
   

  	
  G07040

  
	
   

  	
  Reference: Sealy
  Corporation

  
							

 

 

	
   

  	
  Notices:

  	
   

  
	
   

  	
   

  
	
   

  	
  Contemporaneous
  with the above electronic funds transfer, advice setting forth (1) the full
  name, private placement number and interest rate of the Note, (2) allocation
  of payment between principal, interest, premium and any special payment; and
  (3) name and address of Bank (or Trustee) from which wire transfer was sent,
  shall be delivered, mailed or faxed to:

  
	
   

  	
   

  
	
   

  	
  Teachers
  Insurance and Annuity Association of

  America

  
	
   

  	
  730 Third Avenue

  
	
   

  	
  New York, New
  York 10017-3206

  
	
   

  	
  Attention:
  Securities Accounting Division

  
	
   

  	
  Telephone: 

  	
  212-916-6004

  
	
   

  	
  Fax: 

  	
  212-916-6955

  
					

 

 

	
   

  	
  FOR THE PURPOSES
  OF THE SECOND AND

  THIRD SENTENCES OF SECTION 503 ONLY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SEALY HOLDING
  LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Kohlberg Kravis
  Roberts & Co. L.P.

  
	
   

  	
  9 West 57th
  Street, 42nd floor

  
	
   

  	
  New York, New
  York 10019

  
	
   

  	
  Attention: Brian
  Carroll

  
					

 

 

Schedule 1

 

	
  Name of Purchaser

  	
   

  	
  Principal Amount

  of Notes

  	
   

  	
  Number of Shares

  of Common Stock

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  The Northwestern Mutual Life Insurance
  Company

  	
   

  	
  $

  	
  50,000,000

  	
   

  	
  5,703,454.2094

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Teachers Insurance and Annuity Association
  of America

  	
   

  	
  $

  	
  25,000,000

  	
   

  	
  2,851,727.1047

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  $

  	
  75,000,000

  	
   

  	
  8,555,181.3141

  	
   

  

 

 

EXHIBIT
A

 

[FACE OF NOTE]

 

SEALY CORPORATION

 

10% Senior Subordinated Note due 2015

 

	
  CUSIP No.:                

  	
   

  	
   

  
	
  No.                   

  	
   

  	
  $                   

  

 

SEALY CORPORATION, a Delaware corporation
(the “Corporation”), for value received, promises to pay to                  ,
or its registered assigns, the principal sum of                                                         
Dollars ($                       ),
on July 15, 2015.

 

	
  Interest
  Rate:

  	
   

  	
  10% per
  annum, payable in kind.

  
	
  Interest
  Payment Dates:

  	
   

  	
  January 15
  and July 15 of each year, commencing January 15, 2005.

  
	
  Regular
  Record Dates:

  	
   

  	
  January 1
  and July 1 of each year.

  

 

Reference is
hereby made to the further provisions of this Note set forth on the reverse
hereof, which further provisions shall for all purposes have the same effect as
if set forth at this place.

 

A-1

 

IN WITNESS WHEREOF, the Corporation has
caused this Note to be signed manually or by facsimile by one of its duly
authorized officers.

 

 

	
   

  	
  SEALY
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

A-2

 

[REVERSE OF NOTE]

 

SEALY CORPORATION

 

10% Senior Subordinated Note due 2015

 

1.             Principal
and Interest; Subordination.

 

The Corporation will pay the principal of
this Note on July 15, 2015.

 

The Corporation promises to pay interest on
the principal amount of this Note on each Interest Payment Date, as set forth
below, at the rate of 10% per annum; provided, however,
that during the continuance of any Event of Default, interest shall accrue on
the principal amount of the Notes at 12% per annum and shall further increase
to 13% per annum in the event that Sealy Holding LLC and the Corporation are
unable to cause the Event of Default Directors to be elected to the Board of
Directors of the Corporation pursuant to the first paragraph of Section 503 of
the Agreement.  Interest will be payable
semi-annually (to the Holders of record of the Notes at the close of business on
the January 1 or July 1 immediately preceding the Interest Payment Date) on
each Interest Payment Date, commencing January 15, 2005; provided that the Corporation shall not be
required to pay interest in cash at any time prior to July 15, 2015.  If the Corporation elects not to pay interest
in cash, interest on this Note will accrue in the form of an increase of the
principal amount of this Note on each Interest Payment Date commencing January
15, 2005.

 

Interest on this Note will accrue from the
most recent date to which interest has been paid or, if no interest has been
paid, from July 16, 2004.  Interest will
be computed on the basis of a 360-day year of twelve 30-day months and will
compound semi-annually on each Interest Payment Date.

 

The indebtedness evidenced by the Notes is,
to the extent and in the manner provided in the Agreement (as defined below),
subordinate and subject in right of payment to the prior payment in full of all
Senior Indebtedness, and this Note is issued subject to such provisions.  Each Holder of this Note, by accepting the
same, agrees to and shall be bound by such provisions.

 

2.             Method
of Payment.

 

The Corporation will pay interest (except
defaulted interest) on the principal amount of the Notes on each January 15 and
July 15 to the Persons who are Holders (at the close of business on the January
1 and July 1 immediately preceding the Interest Payment Date), in each case,
even if the Note is cancelled on registration of transfer or registration of
exchange after such Regular Record Date; provided
that the Corporation shall not be required to pay interest in cash at any time
prior to July 15, 2015; provided further
that, with respect to the payment of principal, the Corporation will make
payment to the Holder that surrenders this Note to the Corporation on or after
July 15, 2015.

 

A-3

 

The Corporation will pay principal (premium,
if any) and interest at maturity in money of the United States that at the time
of payment is legal tender for payment of public and private debts by wire
transfer of immediately available funds to an account located in the United
States maintained by the payee.  If a
payment date is a date other than a Business Day at a place of payment, payment
may be made at that place on the next succeeding day that is a Business Day and
no interest shall accrue for the intervening period.

 

3.             Agreement;
Limitations.

 

The Corporation issued the Notes under an
Agreement dated as of July 16, 2004 (the “Agreement”), between the
Corporation and Purchasers named therein. 
Capitalized terms herein are used as defined in the Agreement unless
otherwise indicated.  The terms of the
Notes include those stated in the Agreement. 
The Notes are subject to all such terms, and Holders are referred to the
Agreement for a statement of all such terms. 
To the extent permitted by applicable law, in the event of any
inconsistency between the terms of this Note and the terms of the Agreement,
the terms of the Agreement shall control.

 

The Notes are unsecured senior subordinated
obligations of the Corporation.

 

4.             Redemption.

 

Except as described below, the
Notes are not redeemable at the Corporation’s or the Holder’s option.

 

The Corporation may redeem the
Notes, in whole or in part, upon not less than 10 nor more than 60 days’
prior notice by first class mail, postage prepaid to each Holder of Notes at
the Redemption Prices (expressed as percentages of principal amount) set forth
below, plus accrued and unpaid interest thereon to the applicable redemption
date, subject to the right of Holders of record on the relevant Regular Record
Date to receive interest due on the relevant Interest Payment Date, if redeemed
during the twelve-month period beginning on July 15 of each of the years
indicated below: 

 

	
  Year

  	
   

  	
  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2004

  	
   

  	
  105.0

  	
  %

  
	
  2005

  	
   

  	
  102.5

  	
  %

  
	
  2006

  	
   

  	
  101.0

  	
  %

  
	
  2007 and thereafter

  	
   

  	
  100.0

  	
  %

  

 

In addition, prior to July 15, 2007, the Corporation may, at its
option, redeem the Notes, in whole or in part, at a Redemption Price equal to
101.0% of the aggregate principal amount thereof, plus accrued and unpaid
interest thereon to the Redemption Date, subject to the right of Holders of
record on the relevant Regular Record Date to receive interest due on the
relevant interest payment date, with the net proceeds of one or more Equity
Offerings of the Corporation.

 

A-4

 

5.             Repurchase
upon a Change of Control and Asset Sales.

 

Upon the occurrence of (a) a Change of
Control and repayment of all obligations under the Senior Credit Facilities,
the Holders of the Notes will have the right to require that the Corporation
purchase such Holder’s outstanding Notes, in whole or in part, at a purchase
price of 101% of the principal amount thereof, plus accrued and unpaid interest
to the date of purchase and (b) Asset Sales, the Corporation may be obligated
to, subject to the terms of the Senior Credit Facilities, make offers to
purchase Notes with a portion of the Net Proceeds of such Asset Sales at a
redemption price of 100% of the principal amount thereof plus accrued and
unpaid interest, if any, to the date of purchase.

 

6.             Denominations;
Transfer; Exchange.

 

The Notes are in registered form without
coupons, in denominations of $250,000 and multiples of $100,000 in excess
thereof.  A Holder may register the
transfer of Notes in accordance with the Agreement.  The Corporation may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents and to
pay any taxes and fees required by law or permitted by the Agreement.  The Corporation need not register the
transfer or exchange of any Notes selected for redemption (except the
unredeemed portion of any Note being redeemed in part).

 

7.             Amendment;
Waiver.

 

Subject to certain exceptions, the Agreement
or the Notes may be amended or supplemented with the consent of the Holders of
at least a majority in aggregate principal amount of the Outstanding Notes, and
any existing Default or compliance with any provision may be waived with the consent
of the Holders of a majority in aggregate principal amount of the Outstanding
Notes.  With the consent of Holders of a
majority in aggregate principal amount of the Outstanding Notes (which consent
shall not be unreasonably withheld or delayed), the Corporation may amend the
Agreement or the Notes to, among other things, cure any ambiguity, defect or
inconsistency and make any change that does not adversely affect the rights of
any Holder.

 

8.             Restrictive
Covenants.

 

The Agreement contains certain covenants,
including, without limitation, covenants with respect to the following
matters:  (i) Incurrence of Indebtedness
and Issuance of Disqualified Stock; (ii) Restricted Payments;
(iii) transactions with Affiliates; (iv) Liens; (v) purchase of Notes upon
a Change of Control; (vi) disposition of proceeds of Asset Sales; and
(vii) merger and certain transfers of assets.

 

9.             Successor
Persons.

 

When a successor Person or other entity
assumes all the obligations of its predecessor under the Notes and the Agreement,
the predecessor Person will be released from those obligations.

 

A-5

 

10.           Remedies
for Events of Default.

 

Upon the occurrence of an Event of Default,
as defined in the Agreement, the Interest Rate on the Notes shall increase to
12% per annum and shall further increase to 13% per annum in the event that
Sealy Holding LLC and the Corporation are unable to cause the Event of Default
Directors to be elected to the Board of Directors of the Corporation pursuant
to the first paragraph of Section 503 of the Agreement.

 

Prior to or on April 6, 2013, if an Event of Default occurs and is continuing,
then the Corporation agrees, to the extent permitted by law, to
take such action as may be required under applicable law to the Event of Default Directors in any slate
of nominees for directors recommended by the Board of Directors for election by
the stockholders of the Corporation and (ii) to use its reasonable best
efforts to cause the election of the Event of Default Directors to the Board of
Directors, including nominating such individuals, to be elected as directors.

 

After April 6, 2013, if an Event of Default
occurs and is continuing, the Holders of at least 67% in principal amount of
the Outstanding Notes may declare all the Notes to be immediately due and
payable.  After April 6, 2013, if a
bankruptcy or insolvency default with respect to the Corporation occurs and is
continuing, the Notes automatically become immediately due and payable.

 

Except as set forth above in this Paragraph
10 and in Article Five of the Agreement there are no remedies for an Event of
Default.

 

11.           Abbreviations.

 

Customary abbreviations may be used in the
name of a Holder or an assignee, such as: 
TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT
TEN (= joint tenants with right of survivorship and not as tenants in common),
CUST (= Custodian) and U/G/M/A (= Uniform Gifts to Minors Act).

 

The Corporation will furnish to any Holder upon written request and
without charge a copy of the Agreement. 
Requests may be made to Sealy Corporation, c/o Sealy Mattress Company,
One Office Parkway, Trinity, North Carolina 27230, Attention:  General Counsel.

 

A-6

 

OPTION OF HOLDER TO ELECT PURCHASE

 

If you want to elect to have this Note
purchased by the Corporation pursuant to Section 808 or Section 809 of the
Agreement, check the appropriate box below:

 

o
Section 808                                     o
Section 809

 

If you want to elect to have only part of the
Note purchased by the Corporation pursuant to Section 808 or Section 809 of the
Agreement, state the amount you elect to have purchased:

 

$                      

 

Date: 
                      

 

	
   

  	
  Your
  Signature:

  	
   

  
	
   

  	
   

  	
  (Sign
  exactly as your name appears on the face of this Note)

  
	
   

  	
   

  	
   

  
	
   

  	
  Tax
  Identification No.:

  	
   

  
					

 

	
  Signature
  Guarantee*:

  	
   

  	
   

  

 

*              Participant
in a recognized Signature Guarantee Medallion Program (or other signature
guarantor acceptable to the Trustee).

 

A-7

 

EXHIBIT
B

 

FORM OF COMMON STOCK
CERTIFICATE

 

B-1

 

EXHIBIT C

 

FORM OF STOCKHOLDERS
AGREEMENT

 

C-1

 

EXHIBIT D

 

FORM OF OPINION OF
SIMPSON THACHER & BARTLETT LLP

 

D-1

 

EXHIBIT E

 

FORM OF OPINION OF
GENERAL COUNSEL

 

(i)            The
Corporation has been duly organized and is validly existing as a corporation in
good standing under the laws of Delaware, with power and authority (corporate
and other) to own its properties and conduct its business;

 

(ii)           All
of the issued shares of capital stock of the Corporation have been duly and
validly authorized and issued and are fully paid and non-assessable;

 

(iii)          The
Corporation has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties or conducts any business so
as to require such qualification, or is subject to no material liability or
disability by reason of the failure to be so qualified in any such jurisdiction
(such counsel being entitled to rely in respect of the opinion in this clause
upon certificates of public officials and in respect of matters of fact upon
certificates of officers of the Corporation, provided that such counsel shall
state that they believe that both you and they are justified in relying upon
such opinions and certificates);

 

(iv)          To
such counsel’s knowledge, there are no legal or governmental proceedings
pending to which the Corporation is a party or of which any property of the
Corporation is the subject which, if determined adversely to the Corporation,
would individually or in the aggregate have a material adverse effect on the
current consolidated financial position, stockholders’ equity or results of
operations of the Corporation and its consolidated subsidiaries, taken as a
whole; and, to such counsel’s knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;

 

(v)           This
Agreement has been duly authorized, executed and delivered by the Corporation;

 

(vi)          The
Stockholders Agreement has been duly authorized, executed and delivered by the
Corporation;

 

(vii)         The
Notes have been duly authorized, executed, issued and delivered by the
Corporation;

 

(viii)        The
Shares have been duly authorized, issued and delivered by the Corporation;

 

(ix)           The
issue and sale of the Notes and the Shares and the compliance by the
Corporation with all of the provisions of the Notes, the Shares, this Agreement
and the Stockholders Agreement and the consummation of the transactions herein
and therein contemplated will not, except as could not reasonably be expected
to result in a Material Adverse Effect, conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument known to such counsel to which the Corporation is a party or by
which the Corporation is bound or to which any of the property or assets of the
Corporation is subject,

 

E-1

 

nor will such actions result in
any violation of the provisions of the Certificate of Incorporation or By-laws
of the Corporation; and

 

(x)            No
consent, approval, authorization, order, registration or qualification of or
with any such court or governmental agency or body is required for the issue
and sale of the Notes or the Shares, or the consummation by the Corporation of
the transactions contemplated by this Agreement, except such consents,
approvals, authorizations, registrations or qualifications or of which the
failure to obtain could not reasonably be expected to result in a Material
Adverse Effect.

 

E-2

 

EXHIBIT
F

 

FORM OF OPINION OF
PEPE & HAZARD LLP

 

F-1

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